Full Year Results

Thursday 18 June 2015

Statement of Results for the twelve months ended 30 April 2015

Delivering our strategic plan - "Nouvelle Confiance"

· Investment in our growth initiatives:

o 39 franchise stores opened in the year delivering strong sales uplifts;

o Over 22 per cent increase in web generated sales in France following the acquisition of Mistergooddeal.com, bringing web penetration to over 17 per cent of product sales;

o Expanded the kitchen offer into 16 further stores increasing the total to 71 stores; and

o Built on an improved performance at BCC with the acquisition of 18 profitable stores to become the leading multi-channel retailer in the Netherlands.

· Market outperformance in both France and the Netherlands.

· Completed the elimination of losses in our non-core markets with the sale of our shareholding in Datart in the Czech Republic and Slovakia.

Financial summary for the 12 months ended 30 April 2015

· Group revenue up 3.2 per cent to €3,512.1 million (2014: €3,404.4 million). Like-for-like sales down 1.6 per cent, against strong comparatives and challenging market conditions.

· Operating profit increased to €60.3 million (2014: €53.4 million) with a reduction in exceptional charges as we conclude our restructuring, more than off-setting a decline in retail profit.

· Profit for the year of €13.8 million (2014 loss: €6.6 million). Basic earnings per share of 2.7 cents (2014 loss per share: 0.6 cents).

· Cash generated from operations was €60.7 million (2014: €18.4 million). Net cash outflow including discontinued operations of €36.5 million (2014: €39.5 million). Net debt at the end of the period of €223.8 million (2014: €185.2 million).

· The Board is recommending a final dividend of 2.625 cents per share (2014: 2.625 cents) bringing the total dividend for the year to 3.5 cents per share (2014: 3.5 cents).

· Group retail profit1 €74.9 million (2014: €85.5 million), impacted by negative like-for-like sales and gross margin pressure, partially off-set by cost savings and the investments in Mistergooddeal.com and the expansion of the kitchen offer.

· Adjusted2 Group profit before tax of €51.3 million (2014: €72.1 million), reflecting increased finance costs following the refinancing. Adjusted earnings per share of 5.8 cents (2014: 6.5 cents).

Chairman Alan Parker commented:

"In difficult market conditions we have delivered on our Nouvelle Confiance strategic plan. We have completed the elimination of our non-core businesses, continued to make market share gains and reached our target of €50 million cost savings ahead of schedule. We have also identified and started to implement our new growth initiatives.

"We still have more to do to ensure growth in shareholder value in the medium term but we have a strong platform for the future. Given the progress we have made I am pleased that the Board is recommending a final dividend of 2.625 cents cent per share, giving an unchanged total dividend of 3.5 cents per share."

Chief Executive Régis Schultz added:

"The last year has seen us deliver on Nouvelle Confiance, positioning us well to build further on our multi-channel market leading services offer. Across the Group we delivered on new initiatives, particularly in France, where we have introduced same day delivery and after-sales service offers, up-dated our web site, launched 'Le Bouton', a 24-hour connected service device, digitalised our stores and recently developed a new connected store card. In addition, we acquired 18 profitable stores in the Netherlands making us the leading multi-channel retailer in that market. Our activities led to market share gains in France and the Netherlands.

"We also continued to invest in our growth initiatives in France and over the year we opened 39 franchise stores, increased our web generated sales by over 22 per cent with the help of sales from Mistergooddeal.com and extended our kitchen offer to a further 16 stores, bringing it to a total of 71 stores.

"Whilst we have started to see signs of improvement in consumer confidence, the product cycle will continue to have an impact on our markets which are expected to remain challenging. We are focussed on building on what we have achieved through Nouvelle Confiance by investing in our customer proposition, reducing the cost base and delivering improved profitability."

1 Retail profit represents total operating profit before the share of joint venture and associates' interest and taxation, the movement in options and related charges over non-controlling interests, gain on disposal of available for sale investments, legacy UK retirement benefit scheme expenses, exceptional items and amortisation and impairment of acquisition related intangible assets.

2 Excludes the share of joint venture and associates' interest and taxation, the movement in options and related charges over non-controlling interests, gain on disposal of available for sale investments, legacy UK retirement benefit scheme expenses, exceptional items, net interest on pension schemes and amortisation and impairment of acquisition related intangible assets.

There will be a presentation to analysts and institutions at 09:00 today at UBS, 1 Finsbury Avenue, London, EC2M 2PP. A live video webcast of the event will be available via our website www.dartygroup.com, and recorded for access later in the day.

Darty plc will issue an Interim Management Statement on 10 September 2015 for the first quarter trading period of 1 May 2015 to 31 July 2015.

Enquiries

Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future results in forward looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, Darty plc does not undertake any obligation to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.

Chief Executive's report

In December 2012, we launched our "Nouvelle Confiance" strategic plan, the principal components of which were to:

· eliminate losses at our non-core businesses and refocus on core markets;

· create value from our market leadership and efficiency savings; and

· identify future growth opportunities.

Following our exit from our businesses in the UK, Italy, Spain and Turkey, we completed the elimination of losses in our non-core markets with the disposal of our majority shareholding in Datart in the Czech Republic and Slovakia in August 2014. We are now totally focussed on our core businesses in France, Belgium and the Netherlands.

In February 2015, our business in the Netherlands, BCC, completed the acquisition of 18 profitable stores from HiM Retail, strengthening its market position. The stores geographically complement the current portfolio and bring the total number of BCC stores to 75, making it the leading multi-channel electrical retailer in the market. Most stores have now been rebranded to BCC and are showing on average a 15 per cent sales uplift.

The '4Ds'

In order to create value from our market leadership, drive greater efficiency and reduce costs in 2013, we also developed a four-point plan (the '4Ds'), focusing on our principal business in France, to:

1. Drive trading by delivering on our promise to customers;

2. Digitalise Darty by further enhancing our multi-channel offer and leading websites;

3. Develop our brand by improving our product and market-leading service offerings as well as expanding our customer base; and

4. Deliver cost efficiency by implementing cost savings.

1. Drive trading

During the period we launched a number of events to drive trading. A successful World Cup campaign helped deliver strong vision sales during May and June and the July Sale received a positive response from customers. The "Back to school" campaign held from late August through September delivered sales below expectations due to limited stock and the January Sale was impacted by events in Paris at the beginning of the month. We supported these campaigns by weekly monitoring of our in-store and on-line prices to confirm our competitiveness. On a 'service included' basis we continue to compare very favourably against all store based retailers and all pure web players and we have recovered our number one position in the TNS Sofres survey. In addition, during the year we celebrated 40 years of 'Contrat du Confiance', our price, choice and service promise to our customers, and we took the opportunity to simplify and modernise the Contrat providing us with a unique marketing platform.

As part of the Darty service offer, delivery, installation and after sales service have historically been included for free with the majority of product purchases. A premium 'paid for' delivery is now available for specific two hour time slots from 7am to 9am, and between 5pm and 9pm and 'Chronopost' next day delivery is available for non-bulky items if ordered before 1pm. In March we enhanced the service offer with 'paid for' same day delivery for large appliances in the Paris and Lyon regions, if ordered before 4pm and delivered by 9pm, and in Paris same day after sales service intervention if contacted by 4pm. As a result we have regained the leading position in home delivery and extended our lead against all our competitors for after sales service (source: TNS Survey).

After the end of the financial year we launched a new store card, "Carte de credit connectée", with the objective of providing customers with greater value beyond purely a financing solution. For a €15 annual fee, which is subsequently refunded in Darty vouchers, customers receive a Visa debit/credit card which is also a loyalty card. Every time a customer uses the card to complete three transactions worth over €50 each at Darty they will be given a €10 gift card. Additional benefits include free

subscription to "Le Bouton", our new 24/7 after-sales service initiative launched last year, special offers on products, VIP shopping evenings and access to flexible financing offers and free credit.

2. Digitalise Darty

As a successful multi-channel retailer, we continue to develop a seamless approach between our web sites and stores. During the period we continued the programme of digitalising the store network which includes free wi-fi, equipping sales staff with tablets to demonstrate products and provide price and availability and large display screens. By the end of the financial year we had digitalised 64 stores including two franchises, with over 1200 tablets being utilised by staff, and we installed over 340 screens across 30 stores. Throughout the year we saw an improvement in the level of sales made utilising a tablet, reaching 14 per cent of store sales at the end of the period, with the best stores approaching 40 per cent. We plan to digitalise a further 60 stores during 2015/16.

Visits to Darty.com grew over 22 per cent for the year to over 160 million and towards the end of the period the web site was refreshed to improve its look, feel and content, making it more modern, clear and user friendly.

During the year we saw significant increases in penetration of our "click and collect" service, where customers can reserve on line and collect an hour later from their chosen store, or from a click and collect locker in certain high traffic stores. Penetration of click and collect increased by 540 basis points to 20 per cent of web sales, with penetration reaching 30 per cent in the peak trading month of December compared to just over 20 per cent the prior year.

3. Develop our brand

Building on Darty's long heritage for service and its famous 'Contrat de Confiance', a new initiative, "Le Bouton", was launched nationwide in October. By pushing a dedicated wireless 'button' or via a mobile app, customers can make direct contact with Darty's market leading after sales service support, 24 hours a day, seven days a week. We aim for a service assistant to call the customer back within two minutes to assess and solve the problem either over the phone or by a subsequent home visit. The service is available for all electrical products but for those not originally bought from Darty or out of warranty there is a charge for any repairs required. The service is available for a small monthly subscription of €3/month, or €8/month including multimedia products, plus €25 for the wireless button. Over 35,000 buttons had been issued by the end of the year, including six, 12 or 24 month subscriptions bundled with extended warranty purchases. Our intention is to fully integrate the button into the extended warranty offer.

As market leader in France we continue to receive support from leading manufacturers in gaining access to exclusive products, with particular emphasis on being 'first to market' for new products. During the year this was evidenced by significant sales of large screen OLED and Ultra HD/4K televisions, particularly ahead of the football World Cup in May and June. Increasingly connected products and dedicated areas in-store and on-line are being introduced into our customer offer for both the home and health, such as connected security, lighting, thermostats and fitness trackers.

In recognition of the recent progress we have made with the brand, our net promoter score increased over the second half of the year. We also won a number of awards during the year including one from LSA for our 'Click & Collect' service, the 'Nuit des Rois' digital marketing award for 'Le Bouton' and the 'IREF Satisfactions Clients' award for the electricals sector. In addition, we have seen improving colleague engagement through our annual staff opinion survey.

4. Deliver cost efficiency

Throughout the Group, we had targeted annual gross cost savings over three years of €50 million per annum by 2015/16, through delivering a more efficient operating model, continuing to adapt our cost structure and leveraging synergies between our operating companies. To accelerate the achievement of the savings by 2014/15, a social plan was implemented in France last year and proceeded as planned. €30 million of benefits were achieved over the prior two years with the final benefit of €20 million achieved in full this financial year. Total Group underlying costs excluding the Mistergooddeal.com acquisition were down €27 million, over two per cent, despite incremental costs related to our increased store activity. While this major programme has now been completed, we continue to work on all opportunities to improve cost efficiency in the business, with a particular focus in France in 2015/16 on the after sales service infrastructure and increasing 'Click and Collect' penetration to further reduce home delivery costs.

We also continue to manage our freehold property to ensure maximum value to the Group. Following over €45 million of total proceeds from disposals in the prior two years, €13.9 million was delivered this financial year, with a similar amount expected in 2015/16.

Growth initiatives

As previously announced, in 2013 we identified and introduced initiatives to help secure our future growth, including:

· expanding the Darty portfolio into smaller catchment areas with the opening of franchise stores;

· extending our low price/pay-as-you-go services offer through the Mistergooddeal.com channel; and

· a programme to increase the number of stores in France with the kitchen offer.

Franchise stores

Darty is the market leader in France with 70 per cent of consumers within a 30 minute drive time of a store. The remaining 30 per cent of consumers represent an opportunity to further exploit the existing infrastructure of our multi-channel offer. Typically these consumers will reside in smaller catchment areas, usually below 100,000 inhabitants, where it is uneconomic to open a typical Darty store. To address these smaller catchment areas we established a franchise operation last financial year.

The independent owner invests to refurbish their own store to a Darty store, consistent in terms of both branding and offer with the rest of the store portfolio. We charge the franchisee for the supply of product ranges and provision of home delivery and after sales services. A franchise fee is also charged for use of the brand and marketing support.

At the end of the financial year we had opened 43 stores including four overseas. Performance has been encouraging with significant sales uplifts and a net promoter score above the Darty average. We expect to open around 25 additional stores in 2015/16, bringing the total to around 70 stores.

Mistergooddeal.com

To increase Darty's share of the fast growing market for an entry price offer, we acquired Mistergooddeal.com towards the end of the last financial year. Mistergooddeal.com is a leading French electricals website, predominantly in white goods at the entry price end of the market, with no service included.

We have retained the brand name and are extending the product offer with the introduction of own label brands. Darty's existing service infrastructure is now being used to offer Mistergooddeal.com customers additional services on a pay-as-you-go basis, with home delivery being offered from October 2014 and all suitable Darty stores can now be used as customer collection points.

Initial trading was weaker than expected due to very competitive activity in the entry price end of the market. With a new management team in place from October 2014 we deepened and accelerated the integration of the business into the main Darty operation to help speed up and deliver further cost savings. The head office was integrated in January 2015 followed by the IT and warehousing in April 2015. A new look web site was launched at the end of the year, on Darty's IT platform. We are also making changes to the product offer, exiting non-core categories such as furniture and extending small domestic appliance and vision ranges. The retail loss for 2014/15 was €7.7 million but with the actions being taken commercially and particularly on the cost base, we expect to approach breakeven for 2015/16.

Kitchens

Our kitchens business in France is an example of our ability to continually develop the Darty brand further, and move into a new, related product area, build a relevant market position and drive profitability. The kitchen market has solid fundamentals with the fitted kitchen equipment rate in France being only 62 per cent compared to a European average of around 80 per cent, and a growing electricals built-in market. At the same time, competitors are consolidating and, as Darty builds scale, consumer recognition of our kitchens offer is consistently improving year on year.

As a result of increasing the density of merchandising in other product categories, we are now able to install the kitchen offer in smaller stores in the portfolio. We now have 71 stores with the offer generating over €80 million of revenue. Commercial initiatives during the year included interest free credit offers as well as a partnership with house builder, Bouygues Immobilier, for customers to select a Darty kitchen to be installed in their new property.

Given the acceleration of openings in the year, the time to reach maturity and pre-opening costs incurred ahead of recognition of the initial customer orders, a loss was made in 2014/15 of around €4 million. At the end of the period a new catalogue was launched in print and on-line, featuring 32 different kitchen models, supported by a TV campaign from early May. With a further 13 stores planned to have the offer in 2015/16, together with changes to the management team and infrastructure and planned productivity improvements we expect to move to profitability in the current financial year.

Outlook

Whilst we have started to see signs of improvement in consumer confidence, the product cycle will continue to have an impact on our markets which are expected to remain challenging. We are focussed on building on what we have achieved through Nouvelle Confiance by investing in our customer proposition, reducing the cost base and delivering improved profitability. 

GROUP OVERVIEW

Results

*including Mistergooddeal.com

**restated following the CVAE reclassification from operating profit to taxation

Financial review

Revenue and retail profit

Group revenue at €3,512.1 million, was up 3.2 per cent including Mistergooddeal.com and the franchise stores. On a like-for-like basis Group revenue was down 1.6 per cent, with slower second and third quarters against much stronger comparatives from the prior year (quarterly revenue performance is provided as an appendix to this statement). In terms of product categories we saw continued strong growth in communications and progression in white goods. The rate of decline in vision slowed significantly, with growth in May and June reflecting a successful football World Cup campaign with strong sales of new technologies (OLED and Ultra HD) and large screen sizes. We saw a significant fall in multimedia due to declining volumes and average selling prices for Tablets and a poor Digital Camera market.

Our web-generated sales continued to grow and including Mistergooddeal.com were up over 22 per cent, now representing over 16 per cent of total product sales in the year. Our Click and collect service proved increasingly popular with customers and represented over 24 per cent of all web sales.

Underlying gross margin declined by around 80 basis points for the period with the benefit from an improving product mix insufficient to off-set ongoing product category margin pressure in challenging and promotional market conditions. After taking into account the business mix effect of the lower margin Mistergooddeal.com and franchise operations, total gross margin was down 150 basis points.

Underlying costs, excluding Mistergoodeal.com, were down €27 million, over two per cent, reflecting the benefits of our cost savings programme in France. Total costs including Mistergooddeal.com were broadly flat.

Group retail profit was €74.9 million compared to €85.5 million for the same period last year, including losses of €7.7 million from Mistergooddeal.com (2014: Retail loss €0.9m), an improvement in Belgium and the Netherlands from €9.3 million to €14.8 million and a reduction in head office costs from €11.0 million to €9.9 million.

Exceptional items

Exceptional items totalled €13.7 million (2014: €29.4 million). €14.5 million related to property charges and impairment costs in France, mainly as a result of a programme to improve store portfolio performance. €7.1 million related to reorganisation costs associated with integrating Mistergooddeal.com into the Darty business (€4.8 million) and other reorganisation costs mainly relating to the transfer of some head office functions from London to Paris (€2.3 million). In addition, there was a €7.9 million exceptional gain (€6.4 million in France and €1.5 million in Belgium and the Netherlands) arising following the review of absorption of distribution costs into the carrying value of inventory.

Operating profit

Reported operating profit was €60.3 million (2014: €53.4 million) with reduced exceptional charges off-setting a decline in retail profit.

Net finance costs

The net finance costs were €23.6 million (2014: €13.4 million) excluding IAS 19 pension interest of €3.8 million (2014: €2.6 million). The net finance cost increase reflects the full year impact of the refinancing of the Group in February 2014.

Adjusted profit before tax

The adjusted profit before tax was €51.3 million (2014: €72.1 million).

Taxation

The effective tax rate for the continuing group on adjusted profit before exceptional items, including the share of joint venture and associates' tax was 23.2 per cent (2014: 44.4 per cent) and including the CVAE reclassification of €10.7 million (2014: €11.1 million) from operating profit to taxation was 39.3 per cent (2014: 52.6 per cent). The decrease in tax rate from 2014 is due primarily to lower French group profits which being taxed at a higher rate than the group tax rate has a beneficial impact on the group tax rate. This impact is partially offset by an improved performance in the Netherlands where tax credits are not currently recognised on losses.

The company has received a demand from the French Tax Authority, claiming up to €15.3 million in unpaid taxes and penalties relating to the group's holding company structure. Extensive professional advice has been obtained and the company believes it has a very strong defence and much of the claim is without merit. A provision has been made based on our best estimate of the expected outcome.

Based on a total charge of €18.7 million (2014: €27.4 million) the total tax rate is 55.3 per cent (2014: 71.7 per cent) on unadjusted profits, reflecting that tax relief is not recognised on all exceptional and other non-retail profit items. The effective tax rate for the Continuing Group on adjusted profit before exceptional items, including the share of joint venture and associates' tax is expected to be mid 30s per cent in 2015/16 including the CVAE charge of around €11 million.

Profit for the period

The profit for the period from continuing operations increased to €15.1 million (2014: €10.8 million). Loss for the period from discontinued operations reduced to €1.3 million (2014: loss €17.4 million). Total profit for the period increased to €13.8 million (2014: loss €6.6 million).

Earnings per share

Adjusted earnings per share, excluding the IAS 19 net interest on pension schemes, was 5.8 cents (2014: 6.5 cents). Continuing basic and diluted earnings per share was 2.9 cents (2014: 2.1 cents).

Cash flow 

Cash generated from operations was €60.7 million (2014: €18.4 million) principally as a result of a reduction in cash outflows related to discontinued operations. Net capital expenditure was €36.8 million (2014: €32.2 million), reflecting lower proceeds from property disposals of €13.9 million (2014: €29.7 million). Proceeds from the sale of operations relating to the sale of Darty Turkey and Datart was €10.1 million. Cash costs of acquisitions mainly for stores at BCC in the Netherlands was €9.8 million. Interest paid was €22.9 million (2014: €21.4 million) and tax paid was €21.2 million (2014: €9.9 million) reflecting phasing of payments in France. The dividend payment remained unchanged at 3.5 cents per share, but the strengthening of sterling against the euro for shareholders electing a sterling dividend payment increased the cash payment to €18.4 million (2014: €18.0 million).

Net cash outflow from continuing operations was €30.9 million (2014: net cash inflow €18.0 million). Net cash outflow from the discontinued operations was €5.6 million (2014: €57.5 million). Total net cash outflow was €36.5 million (2014: €39.5 million).

Net debt

Closing net debt was €223.8 million compared to €185.2 million on 30 April 2014. As at 30 April 2015 €57 million was drawn under the Group's committed facilities (30 April 2014: €20 million) in addition to the Group's €250 million Bond.

Retirement benefit obligations

The IAS 19 net pension liability was €103.4 million (2014: €104.6 million), split €38.2 million (2014: €60.1 million) in the UK and €65.2 million (2014: €44.5 million) in France. The movement in the UK net liability benefitted from the performance of the assets outstripping liabilities. The deficit of the UK scheme in sterling was £27.9 million. The increase in the net liability in the French schemes mainly reflects a fall in corporate bond yields.  The cash cost of the UK scheme was €12.9 million and the French schemes was €0.9 million.

Balance sheet

Following the disposal and closure of discontinued operations from 2012 onwards including Comet, Darty Italy, Darty Spain and Darty Turkey and exceptional items from recent restructuring, we have reported net liabilities. At 30 April 2015 net liabilities totalled €323.9 million (2014: €316.9 million). Under our accounting policies, freehold property is carried at cost. Our freehold property portfolio in France, representing in the main around one third of the store portfolio, has a carrying value of €102 million, compared with a market valuation of approximately €350 million. In addition we carry no internally generated goodwill for our market leading brands.

Dividends

The Board is recommending an unchanged final dividend of 2.625 cents per share. The final dividend date will be 22 October 2015, the record date will be 23 October 2015 and the payment date will be 13 November 2015.

Financial presentation

Datart has been reclassified as a discontinued operation following the signature of a sale and purchase agreement with SEW-1001 a.s. to sell the Group's 60 per cent shareholding on 22 July 2014. The prior year comparatives have been restated accordingly.

Two accounting treatments are possible for the business tax, CVAE (Cotisation sur la Valeur Ajoutée des Entreprises) - either as an operating expense or as income tax. In line with the treatment adopted by listed French retail peers the decision has been taken to reclassify from an operational expense in the retail profit of the France reported segment, to income tax. CVAE was €10.7 million for the year ended 30 April 2015 (2014: €11.1 million). This reclassification has negligible impact on earnings.

In addition, having reviewed possible treatments under IAS19 Revised, retirement benefit scheme expenses of €1.3 million (2014: €1.4 million) relating to the legacy UK pension scheme have been reclassified from finance costs to operating profit in line with most common practice. These costs have been reclassified as an operating cost, outside of retail profit, as they relate to Comet, a discontinued business.

BUSINESS REVIEW

France

*restated following the CVAE reclassification from operating profit to taxation

**39 in France, 4 overseas

Total revenue was up 3.5 per cent including Mistergooddeal.com and the franchise business and the Darty brand again outperformed the market for the year. Like-for-like sales fell 2.0 per cent reflecting strong comparatives from the prior year (like-for-like sales up 2.8 per cent), particularly in the second and third quarters. We saw continued strong growth in communications and white goods was also positive. The rate of decline in vision slowed significantly, with growth in May and June reflecting a successful football World Cup campaign with strong sales of new technologies (OLED and Ultra HD) and large screen sizes. We saw a fall in multimedia due to declining volumes and average selling prices for Tablets and a poor Digital Camera market.

Overall web-generated sales continued to grow, albeit in a slower market, to over 15 per cent of total product sales, and to over 17 per cent including Mistergooddeal.com. Click and collect at Darty.com was increasingly popular with customers, rising over 40 per cent to 20 per cent of web sales.

Underlying gross margin was down around 90 basis points reflecting competitive market conditions not fully off-set by an improving product mix. Overall gross margin for France was down around 180 basis points after taking account of the lower margin franchise and Mistergooddeal.com operations which had an impact on gross margin of 70 and 20 basis points respectively.

Underlying total costs (excluding Mistergooddeal.com) reduced by €25 million, three per cent, reflecting the benefit of the cost programme implemented last year. Total costs were broadly flat.

Retail profit was €70.0 million compared to €87.2 million in the prior year. This included €7.7 million (2014: €0.9 million) retail loss for Mistergooddeal.com, a loss of around €4 million for the kitchen business and a break-even performance from the franchise operation.

During the period five stores were opened, six closed, five relocated, three extended and three rightsized or refurbished. We also opened 39 franchise stores and added the kitchen offer to 16 additional stores. Plans for 2015/16 are for six relocations, five refurbishments and four rightsizings. We expect to open around 25 more franchise stores and introduce the kitchen offer to a further 13 stores.

For more detail on the initiatives implemented at Darty, please refer to the '4Ds' on pages 3 to 5 of this document.

At Vanden Borre in Belgium and BCC in the Netherlands overall revenue was up 1.7 per cent, and down 0.3 per cent on a like-for-like basis. Web-generated sales continued to grow strongly, up over 20 per cent, to over 13 per cent of total product sales, with click and collect sales up 10 per cent to over 27 per cent of web sales.

With a new local management team in place, BCC saw a continued improvement in performance, first seen at the end of last year. We saw positive like-for-like sales in store and particularly on the web, market share gains in all major product categories and an improved gross margin. The acquisition of 18 profitable stores from a competitor completed in February, with the majority of stores converted to BCC by the year end. The acquired stores accounted for €8.0 million revenue in 2014/15 and are expected to contribute around €45 million revenue in 2015/16.

Earlier in the period Vanden Borre focused trading on margin in a more promotional market with inevitably some impact on revenue against a strong performance last year. The like-for-like sales trend improved in the second half of the year and web sales saw strong growth following the introduction of 'next' and 'same day' delivery.

Overall gross margin saw a small improvement of 20 basis points, with total costs flat. Retail profit significantly improved to €14.8 million compared to €9.3 million in the prior year with a strong reduction in losses at BCC, even after incurring some acquired stores integration costs, and further growth in profits at Vanden Borre.

Excluding the acquired stores there was one store closure at BCC and one new store opening at Vanden Borre. For 2015/16 we plan to close one store at BCC and open one at Vanden Borre.

BOARD CHANGES

Directorate change

On 18 July 2014 Darty announced that it would be transferring a number of the central support functions based in London to Paris as it further consolidates its head office function. Dominic Platt also informed the Board of his intention to step down as Finance Director. Following completion of the 2014/15 financial year, Dominic steps down as director of the Group today and will leave the Group on 30 June.

On 18 November 2014 Darty announced that it had recruited Albin Jacquemont as its new Finance Director. Albin joined the Group in March 2015 and joins the Board today (18 June 2015).

Eric Knight resigned as a Non-Executive Director on 11 September 2014.

APPENDIX - QUARTERLY REVENUE PERFORMANCE (UNAUDITED)

Total revenue change 2014/15

Like-for-like 2014/15

Total revenue change 2013/14

Like-for-like 2013/14

Notes

a) Retail profit represents total operating profit before the share of joint venture and associates' interest and taxation, movement in options and related charges over non-controlling interests, gain on disposal of available for sale investments, legacy UK retirement benefit scheme expenses, exceptional items and amortisation and impairment of acquisition related intangible assets.

b) Restated following the sale of Datart, now classified as discontinued operations, the CVAE reclassification from operating profit to taxation (note 5) and the legacy UK retirement benefit scheme expenses reclassification from finance costs to operating profit (note 4).

c) The notes on pages 20 to 33 form part of thesefinancial statements.

a) Restated following the sale of Datart, now classified as discontinued operations, and the CVAE reclassification from operating profit to taxation (note 5).

b) The notes on pages 20 to 33 form part of these financial statements.

a) Restated following the sale of Datart, now classified as discontinued operations, and the CVAE reclassification from operating profit to taxation (note 5).

The demerger reserve represents a reserve created on demerger and is non-distributable. Other reserves comprise a reserve arising from the first time adoption of IAS 39 in February 2006, a redenomination reserve created upon the redenomination of ordinary shares in September 2010 and the hedging reserve comprising the fair value movements on forward foreign exchange contracts.

The financial statements on pages 15 to 33 were authorised for issue and approved by the Board of Directors on 17 June 2015 and signed on its behalf by

Notes to the financial statements

1. Accounting policies

The preliminary results for the year ended 30 April 2015 have been extracted from audited accounts which have not yet been delivered to the Registrar of Companies. They have been prepared on the basis of the accounting policies set out in the Group's 2015 Financial Statements, all of which have been applied consistently throughout the year and the preceding year. The statutory accounts of the Company for the year ended 30 April 2014, on which the auditors have given an unqualified opinion, have been filed with the Registrar of Companies. The financial information set out in this Preliminary Announcement does not constitute statutory accounts for the year ended 30 April 2015 or year ended 30 April 2014 within the meaning of sections 434-436 of the Companies Act 2006. The financial information for the year ended 30 April 2015 is derived from the statutory accounts for that period. The report of the auditors on the statutory accounts for the year ended 30 April 2015 was unqualified and did not contain a statement under Section 498 of the Companies Act 2006.

Basis of preparation

These consolidated financial statements have been prepared in accordance with EU endorsed International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of foreign currency swaps, forward foreign currency contracts, available-for-sale financial assets, financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and also on a going concern basis.

Use of adjusted measures

Darty plc believes that retail profit, adjusted profit before tax, EBITDA and adjusted earnings per share provide additional useful information on underlying trends and business performance to shareholders. Each is defined below:

- Retail profit represents total operating profit before the share of joint venture and associate's interest and taxation, movement in options and related charges over non-controlling interests, gain on disposal of available for sale investments, legacy UK retirement benefit scheme expenses, exceptional items and amortisation and impairment of acquisition related intangible assets.

- EBITDA represents earnings before interest, taxation, depreciation and amortisation and profit/(loss) on disposal of property, plant and equipment and intangible assets including write-offs.

- Adjusted profit before tax represents retail profit less finance costs excluding net the IAS19 interest on pension schemes.

- Adjusted earnings per share exclude the effects of discontinued operations, movement in options and related charges over non-controlling interests, gain on disposal of available for sale investments, legacy UK retirement benefit scheme expenses, exceptional items, amortisation and impairment of acquisition related intangible assets, net interest on pension schemes and tax effects of exceptional and other non-retail profit items. A reconciliation of adjusted earnings per share to basic earnings per share is provided in note 7, 'Earnings per share'.

A reconciliation from retail profit to GAAP measurement of profit is provided in the Group Income Statement. A reconciliation from EBITDA to GAAP measurement of profit is provided in note 3, 'Segmental analysis'.

These measures are used by the Group for internal performance analysis and incentive compensation arrangements for employees.

These terms are not defined by IFRS and may therefore not be comparable with similarly titled profit measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measurements of profit.

2.  Continuing Groupoperating profit

Group total revenue includesrevenue from servicesin the year ended 30 April 2015 of €244.9m(2014: €237.6m). Such revenues predominantly comprise those relating to customer supportagreements, delivery and installation, productrepairs and product support. This figure also includesroyalties received totalling €6.0m (2014: €9.7m).

Other income is from the sub-leasing of property.

The gain on disposalof available for sale investments arose from the sale of Go Sport S.A. €1.4m (2014: €2.7m) was received during the current year, when the purchaser of these Go Sport shares completed a takeover of the rest of the company for a higher price, which triggered additional proceeds of €1.4m for the Group under the share sale contract.

Restated following the sale of Datart, now classified as discontinued operations, the CVAE reclassification from operating profit to taxation (note 5) and the legacy UK retirement benefit scheme expenses reclassification from finance costs to operating costs (note 4).

3. Segmental analysis

The Group bases its internal reportingsystems on certainreportable segments. These segments are used by the chief operating decision-maker, identified as the Chief Executive, for assessing performance and allocating resources.

The reportable segments,all of which derive their revenue primarilyfrom the retail of electricalgoods, are as follows:

- France (Darty and Mistergooddeal)

- Belgium & the Netherlands (Vanden Borre and BCC)

Datart was classified as a discontinued operation on 22 July 2014 following the signature of a sale and purchase agreement with SEW-1001 a.s., a company based in the Czech Republic. Its results have been excluded from the Continuing Group.

Darty Spain was classified as a discontinued operation on 30 June 2013, following the closure of its stores, and its results have been excluded from the Continuing Group.

Darty Turkey was classified as a discontinued operation on 22 January 2014, following the signature of a sale and purchase agreement with Bimeks A.S., an electrical retailer in Turkey. Its results have been excluded from the Continuing Group.

Sales between segmentsare carried out at arm's length.  There is no material difference between revenue by origin and destination.

* EBITDA is defined as retail profit before depreciation and amortisation and profit/(loss) on disposal of property, plant and equipment and intangible assets including write-offs.

The share of operating profits of the joint venture and associates included within the retail profit for France is €2.3m. The share of post tax profits of the joint venture and associates included within the operating profit of France is €0.9m.

EBITDA includes reversals of impairment totalling€0.4m all of which are in the France segment.

Investments in equity accountedjoint venture and associates of €15.1mare included within the segment assets of France.

Segment assets include available for sale and equity accounted investments, property, plant and equipment, goodwill, intangible assets, inventories, receivables, other current assets and cash that is not held centrally. Unallocated assets include centrally held cash and other liquid assets and financial assets, as well as interest and tax related prepaid expenses and accrued income.

Segment liabilities include operating liabilities such as accounts payable, overdrafts that are not held centrally, prepaid income, accrued expenses and provisions, excluding those relating to interest and taxes that are held centrally. Unallocated liabilities include loan and finance lease liabilities as well as interest and tax related prepaid income, accrued expenses and provisions.

3. Segmental analysis (continued)

The share of operating profits of the joint venture and associates included within the retail profit for France is €3.2m. The share of post tax profits of the joint venture and associates included within the operating profit of France is €2.4m.

* EBITDA is defined as retail profit before depreciation and amortisation and profit/(loss) on disposal of property, plant and equipment and intangible assets including write-offs.

EBITDA is net of impairment charges including reversals totalling  €3.3m all of which are in the France segment.

Investments in equity accounted joint venture and associates of €15.3mare included within the segment assets of France.

Segment assets include available for sale and equity accounted investments, property, plant and equipment, goodwill, intangible assets, inventories, receivables, other current assets and cash that is not held centrally. Unallocated assets include centrally held cash and other liquid assets and financial assets, as well as interest and tax related prepaid expenses and accrued income.

Segment liabilities include operating liabilities such as accounts payable, overdrafts that are not held centrally, prepaid income, accrued expenses and provisions, excluding those relating to interest and taxes that are held centrally. Unallocated liabilities include loan and finance lease liabilities as well as interest and tax related prepaid income, accrued expenses and provisions.

a) Restated following the sale of Datart, now classified as discontinued operations, and the CVAE reclassification from operating profit to taxation (note 5) and the legacy UK retirement benefit scheme expenses reclassification from finance costs to operating costs (note 4).

4. Continuing Group finance costs

Foreign exchange gains and losses arise on the retranslation of short term deposits and loans denominated in a currency other than the operation's functional currency.

Following the implementation of IAS19 Revised, the Group has reclassified the administration costs associated with the legacy UK pension scheme as an operating cost. This is to bring the Group into line with how others are reporting such costs and is being treated as a prior year adjustment. As a result, finance costs in 2014 have reduced by €1.4m. These costs have been reclassified as an operating cost outside of retail profit as they relate to Comet, a discontinued business.

Factors affecting tax charge for the year

The tax for the year is higher (2014: higher) than the standard rate of corporation tax. The differences are explained below:

Losses not recognised as a deferred tax asset for the current year principally include tax losses arising in BCC, France and UK Head office companies (2014: BCC and UK Head Office companies).

Non-retail profit items is the sum of total operating profit less retail profit excluding share of joint venture and associates' taxation plus net interest on pensions.

The standard rate of corporation tax in the UK changed from 21% to 20% with effect from 1 April 2015. Although the effective tax rate is 20.98% the company's profits for this accounting period are taxed at 21% as the difference between rates is not considered material, at less than €0.1m difference to adjustments in respect of foreign tax rates. 

5. Continuing Group Income tax expense (continued)

The effect of the changes announced in the Finance Act 2013 will have no impact on the Group's deferred tax liability in the current year or in future years. This is due to Management's expectation that future UK taxable profits are unlikely, with a consequence that there are no deferred tax assets / liabilities recognised in the UK tax group at the balance sheet date.

Management have assessed the potential tax risks, which takes into account ongoing tax audits underway around the Group, and have made provision accordingly. The Company has received a demand from the French Tax Authority, claiming up to €15.3 million in unpaid taxes and penalties relating to the Group's holding company structure. Extensive professional advice has been obtained and the Company believes it has a very strong defence and much of the claim is without merit. A provision has been made based on our best estimate of the expected outcome.

In order to be consistent with other French retailers, the Group has reclassified the French business tax - la cotisation sur la valeur ajoutee des enterprises ("CVAE") - as an income tax rather than as previously classified as an operating cost. This change has resulted in in a prior year adjustment resulting in a €1.0m increase in opening net liabilities at May 2013 due to an increase in non-current deferred tax liabilities. The impacts on the income statement and net liabilities since the change are summarised in the table below:

Impact of the change in CVAE charge accounting policy

 6. Dividends

An interim dividend of 0.875 cents was paid to the ordinary shareholders of the Company on 1 April 2015. In addition the Board will also recommend, at the forthcoming Annual General Meeting, the payment of a final dividend of 2.625 cents, payable on 13 November 2015 in relation to the year ending 30 April 2015.

The final dividend, once approved, will be paid to those persons on the Register of Members at the close of business on 22 October 2015.

7. Earnings/(losses) per share

Basic earnings/(losses) per share is calculated by dividing the profits/(losses) attributable to shareholders by 527.5m shares (30 April 2014, 527.5m),being the weightedaverage number of ordinaryshares in issue.

There is no differencebetween diluted and basic losses per share because all incentive schemes are share awards and there are no dilutiveshare options. Supplementary adjusted earnings per share figures are presented.These exclude the effects of discontinued operations, movement in options and related charges over non-controlling interests,gain on disposal of availablefor sale investments, legacy UK retirement benefit scheme expenses, exceptional items, amortisation and impairment of acquisition related intangible assets, net interest on pension schemes and tax effects of exceptional and other non-retail profit items.