Full Year Results

Thursday 19 June 2014

Statement of Results for the twelve months ended 30 April 2014

- A Year of Delivery -

Financial summary for the 12 months ended 30 April 20141

· Group revenue of €3,579.4 million (2013: €3,558.9 million) - on a like-for-like basis up 1.7 per cent and up 2.8 per cent in France.

· Group retail profit2 up 11.2 per cent to €73.4 million (2013: €66.0 million).

· EBITDA3 of €119.7 million, adjusted4 Group profit before tax of €60.0 million and adjusted earnings per share of 6.4 cents.

· Exceptional charges of €29.4 million related principally to the French social plan.

· Reported profit after tax of €9.5 million (2013: €0.3 million) for the continuing Group. Basic continuing earnings per share of 2.4 cents (2013: 0.7 cents).

· Net cash outflow including discontinued operations of €39.5 million (2013: €20.6 million) including €60.4 million cash outflow related to discontinued operations. Net debt at the end of the period of €185.2 million (2013: €150.6 million).

· The Board is recommending a final dividend of 2.625 cents per share (2013: 2.625 cents) bringing the total dividend for the year to 3.5 cents per share (2013: 3.5 cents).

Very good progress in delivering our strategic plan -"Nouvelle Confiance"

· Good results from the '4Ds' plan:

o Positive like-for-like sales and significant market share gains in France and Belgium;

o Continued growth of web-generated sales, up nearly 10 per cent to over 13 per cent of total product sales; and

o €50 million cost reduction programme substantially completed with benefits to be delivered in full by the end of 2014/15.

· Steps taken to build market share and profitability over the next three years by:

o expanding the Darty portfolio into smaller catchment areas with a new franchise model. The first four stores opened in H2;

o increasing our web penetration and extending the "low price/pay-as-you-go services" offer through the acquisition of leading French website Mistergooddeal.com; and

o doubling the number of stores with the kitchen offer.

· Eliminating losses in our non-core markets with the managed closure of Spain and the sale of our business in Turkey.

Alan Parker, Chairman, commented:

"Over the past 12 months we have made very good progress with our "Nouvelle Confiance"plan to improve shareholder value.

"After eliminating significant losses in our non-core market of Italy towards the end of the last financial year, we made further progress this year with the managed closure of Spain and the sale of our business in Turkey and we expect to resolve the future of our shareholding in Datart in the near future. We also have clear plans for medium term growth in our core businesses.

"Nouvelle Confiance is creating a business that is better for our shareholders, employees, customers and suppliers and we are confident that our plans will deliver an improvement in earnings over the medium term."

Chief Executive Régis Schultz added:

"I am pleased to report on the good progress we have made over the past financial year, particularly in starting to improve profitability in our core markets. Through the implementation of our '4Ds' programme, to Drive trading, Digitalise Darty, Develop the brand and Deliver cost efficiencies, we have seen overall market share gains, delivered positive like-for-like sales growth and improved our profit performance for the first time in three years.

 "I am also encouraged by the early results of our initiatives for future growth - the launch of our franchise business, building on the acquisition of Mistergooddeal.com and expanding our successful kitchen offer.

"For the coming financial year, market conditions are expected to remain challenging, but we are well placed to deliver our growth ambitions for the Group. Our aim over the medium term is to build our market share in France and increase retail profitability."

1 Constant exchange rate of 1 Euro = Czech Kr 26.5792, Turkish Lira 2.7506

 2 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, exceptional items and profit on disposal of business operations.

3 Retail profit before depreciation and amortisation and profit/(loss) on disposal of property, plant and equipment and intangible assets including write-offs.

4 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, exceptional items, profit on disposal of business operations and net interest on pension schemes.

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 11 September 2014 for the first quarter trading period of 1 May 2014 to 31 July 2014.

Enquiries

Press:

UK - RLM Finsbury

Rollo Head / Jenny Davey +44 (0) 20 7251 3801

France - Le PublicSystème

Ségolène de Saint Martin +33 1 41 34 23 31 / +33 6 16 40 90 73

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.

STRATEGY - NOUVELLE CONFIANCE

In December 2012, following an in-depth internal review of our business, we launched our "Nouvelle Confiance" strategic plan, the principal components of which were to:

· identify and eliminate losses at our non-core businesses;

· refocus on core markets with new commercial initiatives;

· create value from our market leadership and efficiency savings;

· develop future growth opportunities.

Implementation of "Nouvelle Confiance" involved identifying our core businesses based on four key conditions for success; a fundamentally sound market with solid growth prospects, demand for a high service proposition that resonates with consumers, relevant local market shares and multi-channel capabilities, and a clear path to future profit growth opportunities. We concluded upon review of our then existing businesses, that our operations in Italy, Spain, Turkey, the Czech Republic and Slovakia were non-core businesses. Following the completion of the disposal of Darty Italy to DPS Group s.r.l. toward the end of the prior financial year, we completed a managed closure of Darty Spain in June 2013, and the asset sale of Darty Turkey to Bimeks, a specialist electricals retailer in Turkey in April 2014. We expect to resolve the future of our shareholding in Datart in the near future.

The '4Ds'

In order to create value from our leadership position in our core markets, drive greater efficiency and reduce costs, we developed a four-point plan ('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 2013, Darty held its first ever sale in the summer and we were pleased by our customers' response. We also introduced a "Darty Days" campaign where customers accumulated points through their expenditure to redeem discounts on future purchases. A number of VIP private shopping evenings were held in late November/early December. A further sale was held in January 2014, which, on the first day, generated a revenue increase of nearly one third, both in-store and online, compared to the same day last year, with Darty.com receiving nearly one million visits.

We have further built on our price promise by introducing a wider range of entry-price products, including a kitchen offer at €1,990 and "Les Immédiats", a selected range of large products available to take direct from the store. These initiatives have delivered a positive impact on price image and store traffic.

We have launched a number of product-specific initiatives through the year, such as a voucher campaign on white goods post-Christmas before the January sale, interest-free credit offers on large appliances and kitchens and, more recently, a "Green Selection", providing money-off vouchers on the trade-in of an old appliance against a new purchase.

Our price competitiveness remains strong and on a service-included basis we compare favourably against all store-based retailers and web pure players.

All these activities in France have arrested the footfall decline trend, up one per cent year on year, and improved the conversion ratio in stores by 20 basis points, helping to drive positive like for like sales of 2.8 per cent.

2. Digitalise Darty

We have a strong track record as a successful multi-channel retailer consistently growing profitable web-generated sales. Multi-channel customers are growing steadily; they visit our stores and website more often, spend more with us, and buy from more categories of products than single-channel customers.

We are exploiting this opportunity further with greater use of technology to connect our website, stores, sales staff, delivery and after-sales teams. We have introduced award-winning "click and collect" lockers, which are currently being trialled in seven high-traffic stores. Customers are able to order and pay online and are issued with a web-generated collection code that enables them to collect their purchases from lockers positioned at the front of a store. This helps to increase store traffic and enables faster order fulfilment at lower cost.

Free Wi-Fi was introduced to a number of stores and sales staff are being equipped with tablets that enable them to demonstrate extended ranges and services in real time to customers. It also allows the sales staff to show how our prices and services compare to our competitors. Fourteen stores were equipped by the end of the financial year and this will be rolled out to around half the store portfolio by the end of the new financial year.

During the year in France we saw an increase in visits to the web site of over eight per cent, improved conversion ratio by ten basis points and an increase in the number of web orders collected in-store. We also increased our market share of web sales by 20 basis points to 10.6 per cent.

3. Develop our brand

We have been defending margins through better sourcing and growing our service revenues. Following actions taken during the year, we now have one sourcing team for France that is building better partnerships with suppliers and greater frequency of co-branding with leading manufacturers. We continue to develop exclusive, own-label and licensed products where the margin can be significantly higher. As market leader we have increasing success and support from leading manufacturers in gaining access to exclusive products, with particular emphasis on being "first to market" for new products, as demonstrated by our leading position in the new vision technologies, OLED and Ultra HD.

We launched initiatives during the year to better integrate our market-leading services offer, including a new extended warranties pricing structure. For example, these included a voucher scheme offered on selected product purchases to be redeemed against one of our service offers, such as TV installation.

We have introduced the first dedicated service desks for in-store repair and assistance of all multimedia products, "Atelier Darty", into 15 stores further strengthening Darty's service image and helping to drive footfall. Initial customer response has been very favourable, with more immediate problem resolution for the majority of cases, so avoiding the need to send the product to a central service centre. The service also provides the opportunity to offer additional services and accessories.

A new marketing campaign was launched in October with a new look and feel and highlighting individual elements of the Darty offer. Results show that our customers have responded well to the campaign and that it gives Darty a more contemporary image. It has also increased the purchasing intention rate.

Building on our service image, we are now trialling a new initiative, "Le Bouton". This provides customers with priority access to Darty's market leading service support, 24 hours a day, seven days a week, via a 'button' which contacts Darty's service department. A service assistant then immediately contacts the customer to discuss the problem, and assistance is provided via phone or home visit if necessary. The service is available for all electrical products. For those not originally bought from Darty, or out of warranty, there will be a charge for any repairs required. The service will be available for a small monthly subscription when launched nationally in October 2014.

The quality of our service offer was again confirmed with the recent award from IREF for overall customer satisfaction.

4. Deliver cost efficiency

Throughout the Group, we had targeted annualised gross cost savings of €50 million by 2015/16, from delivering a more efficient operating model, continuing to adapt our cost structure and leveraging synergies between our operating companies. Building on progress made in 2012/13, when the first €20 million cost savings were achieved, the majority of cost actions this financial year were to rationalise the Group and Darty France head office functions, including sourcing, and the merger of regions from five to three in France to deliver an expected €30 million of savings. To accelerate the cost savings, a social plan was implemented in France in the first half of this year and is on track to be completed as planned. As a consequence, cost savings of €10 million were delivered in the second half of the year, and the remaining €20 million will be realised in 2014/15, totalling the €50 million one year ahead of schedule.

Our freehold property underpins the operating and credit strength of the Group, supporting good relationships with our suppliers and finance providers. It also provides flexibility to adapt our store portfolio as the business evolves, but it requires active management to ensure maximum value to the Group. Following over €15 million of proceeds in 2012/13 we realised further proceeds of €29 million this year. During the period we also sold our small shareholding in French sports retailer, Go Sport, for €2.7 million.

Future growth opportunities

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

· expanding the Darty portfolio into smaller catchment areas with a new franchise model;

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

· a programme to double 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 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 have established a franchise operation.

Following refurbishment investment by the franchisee, the first store opened in early March 2014 in Challans, a 700 sqm store in a town of c.20,000 inhabitants. A further three stores were opened before the year end at Lannion, Bergerac and Montceau. Initial trading is very encouraging. At the end of May we had opened a further four stores and we expect to have a total of 30 stores open by the end of this new financial year.

The potential over a four-year period is around 100 to 150 stores with an average store revenue of at least €3 million and retail contribution in line with the core business.

Mistergooddeal.com

Given its full service offer, Darty France has been less successful in taking market share and trading profitably in the entry price end of the market. Its market share in the first price quartile is lower than its overall market share for a particular product category.

To increase our share of the growing market for an entry price offer, we acquired Mistergooddeal.com on 31 March 2014. Mistergooddeal.com is a leading French electricals website, generating around €120 million revenue per annum, predominantly in white goods at the price entry end of the market, with no service included. We have retained the brand name and will extend the product offer. Darty's existing service infrastructure is being used to offer Mistergooddeal.com customers additional services on a pay-as-you-go basis, typically home delivery and extended warranties, and we will roll out the use of selected Darty stores as collection points. We expect that this, together with Darty's superior buying terms, direct sourcing and own-brand capabilities, will create a profitable channel by year two of ownership. We have already made a start on the integration with collection of Mistergooddeal orders already possible in some Darty stores.

Kitchens

Our kitchens business at Darty France is an example of our ability to develop the brand further, to move into a new product area, build a relevant market position and drive profitability. The kitchen offer is now in 55 stores, generating over €80 million of revenue and has already taken around five per cent of the installed kitchen market in France and helps generate additional sales of high-end white goods. As a result of densifying merchandising in other product categories, we are now able to install the kitchen offer in smaller stores in the portfolio. We have reduced the implementation cost, and cost to serve, and launched more focused marketing campaigns including an entry price and interest-free credit offer. The introduction of the offer will be in a further 11 stores by the end of the current financial year. The medium term target is for the offer to be in around 120 stores.

Conclusion

We have made good progress over the past financial year, particularly in arresting the recent decline in the Group's profitability in our core markets. Through the implementation of our '4Ds' programme we have made overall market share gains, delivered positive like-for-like growth and improved our profit performance.

Early results of our initiatives for future growth, the launch of our franchise business, building on the acquisition of Mistergooddeal.com and expanding our successful kitchen offer, are encouraging and we will continue to build momentum.

Outlook

For the coming financial year, market conditions are expected to remain challenging, but our plans position us well to deliver our growth ambitions for the Group and build our market share in France and increase retail profitability over the medium term.

GROUP OVERVIEW

Results

* Datart.

** Continuing Group, excluding Darty Spain and Darty Turkey.

Financial review

Revenue and retail profit

Group revenue at €3,579.4 million, was up 0.5 per cent on a reported basis and 0.8 per cent in constant currency. On a like-for-like basis Group revenue was up 1.7 per cent, with a strong improvement in the second and third quarter trading periods. We saw significant growth in smartphones and tablets, small domestic appliances saw some growth and large white goods were stable. Vision volumes initially remained weak, but saw an improving trend throughout the year until the final quarter, where we saw some weakness ahead of the expected World Cup driven demand in the first quarter of the new financial year. We continued to grow web-generated sales successfully with growth of 9.6 per cent, now representing 13.6 per cent of total product sales.

Gross margin declined by 60 basis points for the period, in line with our expectations. This reflected ongoing product category margin pressure in challenging and promotional market conditions and strong performance of lower margin multimedia and communications products in the sales mix.

Total operating costs were down €25 million, over two per cent, reflecting in part asset impairments across the Group in the prior year and reduced depreciation as a result of the new Darty Telecom agreement. Underlying costs were down around one per cent before these benefits with our cost savings programme in France more than off-setting inflation and increased volume.

Group retail profit increased to €73.4 million compared to €66.0 million for the same period last year, with an improvement in all reported segments. Head office costs reduced from €12.0 million to €11.0 million.

Net finance costs

The net finance costs were €13.4 million (2013: €9.5 million) excluding IAS 19 pension interest of €4.0 million (2013: €4.6 million). The increase reflects the costs under our new financing arrangement, which is expected to increase net finance costs to around €21 million for 2014/15.

Adjusted profit before tax

The adjusted profit before tax was €60.0 million (2013: €56.5 million).

Exceptional items

During the period a social plan was launched in France to accelerate the delivery of our €50 million cost saving programme. Exceptional costs of €26.0 million were incurred to rationalise the head office and sourcing functions plus the reduction in the number of regions from five to three. The costs relate to redundancies (€16.5 million) onerous lease costs (€3.2 million) and other costs and asset write offs (€6.3 million).

In addition, €3.1 million exceptional costs were incurred in the Netherlands, principally redundancy costs as we restructure the business and onerous lease provisions as a result of warehouse consolidation.

Cash costs of these exceptional items and the cash costs for exceptional restructuring items booked last year totalled €23.4 million, with a further €7 million cash cost expected in 2014/15. The total cash costs for our restructuring plans under Nouvelle Confiance were €36 million at the end of 2013/14.

Profit before tax

As a result of the exceptional charges of €29.4 million detailed above (2013: €64.3 million), the reported profit before tax from continuing operations was €25.3 million (2013: €4.0 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 45.2 per cent (2013: 31.0 per cent). This rate, which is sensitive to changes in geographical mix of profits and losses takes in to account changes to French corporation tax legislation made during the year. Based on a total charge of €15.8 million (2013: €3.7 million) the total tax rate is 62.4 per cent (2013: 92.5 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 fall to around the mid 30s per cent in 2014/15.

Profit for the period

The profit for the period from continuing operations was €9.5 million (2013: €0.3 million).

Earnings per share

Continuing basic earnings per share was 2.4 cents (2013: 0.7 cents). Total losses per share was 0.7 cents (2013: 19.8 cents). Adjusted earnings per share, excluding the IAS 19 net interest on pension schemes, was 6.4 cents (2013: 7.2 cents).

Cash flow

Net cash outflow was €39.5 million (2013: €20.6 million), with a cash inflow of €20.9 million (€2013: €23.6 million) related to continuing operations offset by a cash outflow of €60.4 million (2013: €44.2 million) related to the discontinued businesses, which have principally been impacted by the closure of Darty Spain and the pre-disposal losses and impact of the Darty Turkey disposal this year.

The net cash inflow from continuing operations of €20.9 million reflects cash flow from the continuing business of €50.1 million, less cash interest of €22.8 million including €13.6 million of fees related to the refinancing, a cash tax inflow of €1.6 million resulting from payment phasing in France, dividends to shareholders of €18.0 million and other items, mainly related to disposals and acquisitions, which show an inflow of €10.0 million. Free cash flow from continuing operations of €50.1 million reflects free cash flow5 of €85.4 million (2013: €43.6 million) less €23.4 million (2013: €18.1 million) of exceptional cash costs related principally to the reorganisation in France and €11.9 million of payments related to the UK pension recovery plan. The free cash-flow of €85.4 million includes dividends received from joint ventures of €11.0 million (2013: €2.5 million) and net capital expenditure of €30.5 million (2013: €47.9 million) after proceeds from disposal of property, plant and equipment of €29.7million (2013: €15.7 million).

Net debt

The Group successfully completed its refinancing on 28 February 2014, comprising €250 million Senior Notes due 2021 and a new revolving five-year committed multi-currency revolving credit facility of €225 million, replacing the €455 million credit facility due to mature in December 2015.

Closing net debt was €185.2 million compared to €150.6 million on 30 April 2013. In addition to the €250 million Senior Notes, as at 30 April 2014, €20 million of the Group's €225 million revolving credit facility was drawn down (30 April 2013: €220 million drawn down on the previous €455 million revolving credit facility).

Retirement benefit obligations

The IAS 19 (revised) net pension liability increased from €84.8 million to €104.6 million, split €60.1 million (30 April 2013: €40.4 million) in the UK and €44.5 million (30 April 2013: €44.4 million) in France. The increase in the UK was largely due to updated mortality rates as part of the triennial valuation which was completed in the year. In order to make good the £73 million funding deficit, a schedule of contribution has been agreed with the trustees as part of the recent triennial valuation to continue to pay £10 million per annum until 2019.

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 2014 net liabilities totalled €316.2 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 €112 million, compared with a market valuation of approximately €380 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 10 September 2014, the record date will be 12 September 2014 and the payment date will be 3 October 2014.

Discontinued operations

Darty Spain has been reclassified as a discontinued operation following the managed closure of the business with all stores closing by the end of June 2013. Darty Turkey has been reclassified as a discontinued operation following the asset sale agreement signed on 22 January 2014. Losses for the year from discontinued operations were €16.4 million. The prior year comparatives have been restated accordingly.

5 Free cash flow defined as cash generated from continuing operations less net capex plus dividends received from joint ventures.

BUSINESS REVIEW

Darty France

At Darty France total revenue was up 1.1 per cent, 2.8 per cent on a like-for-like basis, ahead of a market estimated to have declined by two per cent. At a product category level, growth was seen in white goods, which benefited from weather-related purchases of refrigeration and air conditioning products in July; multimedia from continued, but slowing growth in tablets; and, in particular, communications from very strong sales of smartphones. Vision volumes initially remained weak, but saw an improving trend throughout the year, aided by strong sales of new Ultra HD/4K and OLED screens demonstrating the quality of our offer and our sales colleagues, until the final quarter where we saw some weakness ahead of the expected World Cup driven demand in the first quarter of the new financial year.

Our plans to drive trading had a positive impact on footfall during the period. We launched our "Darty Days" campaign where customers could accumulate points through their level of expenditure and specifically promoted products to redeem discounts on purchases during the second quarter. Darty also held its first ever sales in July and January and we were pleased by the customer response and traffic generated. Additional targeted campaigns were run throughout the year on specific product categories.

Web-generated sales continued to outperform the market, growing 8.9 per cent to 14.1 per cent of total product sales. Darty.com is consistently one of the top 15 most visited websites in France. During the period, it won a FEVAD award for best technical product website and was recently ranked the second fastest for users (JDN / Fasterize).

Gross margin was down 90 basis points for the period, in line with expectations, resulting from the impact of strong growth of lower margin smartphones and tablets in the mix and ongoing price pressure in challenging and promotional markets.

Total costs reduced by €19 million, over two per cent, reflecting in part reduced depreciation following the new Darty Telecom agreement. Underlying costs were down around one per cent, more than offsetting inflation and increased volumes.

Retail profit was €76.1 million compared to €74.2 million in the prior year.

During the period three new stores were opened, two were extended and eight stores were closed, including the three loss-making stores in Luxembourg that were sold to a local trade buyer. Four stores were relocated, including a store at Beaugrenelle, Paris where all the latest merchandising, digitalisation and service initiatives were introduced in October 2013. A further three stores were refurbished. The first four franchise stores were opened towards the end of the financial year with around 30 to be expected to be open by the end of 2014/15.

For 2014/15 the store portfolio is expected to remain broadly unchanged with five new stores, four closures, five relocations, three refurbishments and three rightsizings.

For more detail on the initiatives implemented at Darty France, please refer to the '4Ds' on pages 4 to 6 of this document.

At Vanden Borre in Belgium and BCC in the Netherlands, total revenue fell by 0.3 per cent and by 1.2 per cent on a like-for-like basis. Vanden Borre, with its strong service position, delivered another good performance, taking significant share across nearly all product categories in a market estimated to be down by over three per cent. BCC lost some market share against a strong performance last year in what remains a highly promotional market, estimated to be down by two per cent. Overall, web-generated sales continued to grow strongly, up over 24 per cent to over 11 per cent of total product sales.

Strong growth of lower margin communications products in the sales mix had a negative impact on gross margin in both markets which was overall down 30 basis points. In the Netherlands, BCC saw an improving trend on annualising the move to free delivery with gross margin slightly up for the full financial year.

Total costs were down over two per cent, reflecting a small increase at Vanden Borre as the business continues to grow, more than offset by a reduced depreciation charge at BCC following asset impairments in the prior year. Actions were taken in the period to reduce costs at BCC, with initial benefits seen from reducing headcount and combining warehouses. These actions are estimated to have a €6 million annualised benefit in 2014/15.

Retail profit improved to €9.3 million compared to €7.5 million in the prior year, from continued strong profitability at Vanden Borre and a small loss reduction at BCC.

During the period five stores were refurbished and one closed at Vanden Borre. At BCC, two stores were opened, one store closed and one store was relocated. During 2014/15, one new store will be opened at Vanden Borre, plus two extensions and three refurbishments. One store will close at BCC.

Other businesses - Datart

At Datart in the Czech Republic and Slovakia, revenue grew by 0.5 per cent in constant currency and fell by 1.9 per cent on a like-for-like basis.

Gross margin was up 150 basis points for the period and, with total costs flat, the retail loss fell from €3.7 million to €1.0 million.

During the period four stores were refurbished.

BOARD CHANGES

Alain Grisay was an Independent Non-Executive Director from 23 September 2013 until his death in January 2014.

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, exceptional items and profit on disposal of business operations.

b) Restated following the sale of the Spain and Turkey operations, now classified as discontinued operations, and the

adoption of IAS19 revised on retirement benefits.

c) The notes on pages 21 to 35 form part of these financial statements.

a) Restated following the sale of the Spain and Turkey operations, now classified as discontinued operations, and the adoption of IAS19 revised on retirement benefits.

b) The notes on pages 21 to 35 form part of these financial statements.

a) Restated following the sale of the Spain and Turkey operations, now classified as discontinued operations, and the adoption of IAS19 revised on retirement benefits.

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 16 to 35 were approved by the Board of Directors on 18 June 2014 and signed on its behalf by

Regis Schultz Dominic Platt

Director Director

Notes to the financial statements

1. Accounting policies

The preliminary results for the year ended 30 April 2014 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 2013 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 2013, 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 2014 or year ended 30 April 2013 within the meaning of sections 434-436 of the Companies Act 2006. The financial information for the year ended 30 April 2014 is derived from the statutory accounts for that period. The report of the auditors on the statutory accounts for the year ended 30 April 2014 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 International Financial Reporting Standards ("IFRSs") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations as adopted by the European Union (EU) 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.

2. Continuing Group operating profit

Group total revenue includes revenue from services in the year ended 30 April 2014 of €246.2m (2013: €274.8m). Such revenues predominantly comprise those relating to customer support agreements, delivery and installation, product repairs, product support and subscription based services such as, in the prior year, Darty Telecom. This figure also includes royalties received totalling €9.7m (2013: €2.0m)

The new commercial agreement for Darty Telecom completed on 24 July 2012, from which date subscription based revenues were replaced with new revenues determined on a cost plus based customer service agreements and brand royalty income. All such revenues have been included within service revenue.

The gain on disposal of available for sale investments arose from the sale of Go Sport S.A.

Other income is from the sub-leasing of property.

3. Segmental analysis

The Group bases its internal reporting systems on certain reportable 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 primarily from the retail of electrical goods, are as follows:

- France (Darty and Mistergooddeal)

- Belgium & the Netherlands (Vanden Borre and BCC)

- Other businesses: Czech Republic and Slovakia (Datart)

On 1 March 2013 the sale of the Group's Italian operations was completed, with an effective date of 28 February 2013. In accordance with IFRS 5 the business was treated as a discontinued operation in the 30 April 2013 Annual report and the results of Darty Italy were excluded from the results of 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, an electrical retailer in Turkey. Its results have been excluded from the Continuing Group.

Unallocated costs comprise head office costs in the UK and France.

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

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 totalling €3.1m split by segment as follows: France €3.0m; Other Businesses €0.1m.

Investments in equity accounted joint venture and associates of €15.3m are 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 €4.5m. The share of post tax profits of the joint venture and associates included within the operating profit of France is €3.8m.

* EBITDA is defined as retail profit before depreciation and amortisation and profit/(loss) on disposal of property, plant and equipment.

EBITDA is net of impairment charges totalling €4.1m all of which are included in the France segment.

Investments in equity accounted joint venture and associates of €23.9m are 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 the Spain and Turkey operations, now classified as discontinued operations, and the adoption of IAS19 revised on retirement benefits.

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.

Factors affecting tax charge for the year

The tax for the year is higher (2013: 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, Datart and UK Head office companies (2013: BCC, Datart 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 23% to 21% with effect from 1 April 2014. Although the effective tax rate is 22.8% the company's profits for this accounting period are taxed at 23% as the difference between rates is not considered material, at €0.1m difference to adjustments in respect of foreign tax rates. A further 1% decrease in the tax rate from 1 April 2015 to 20% is expected.

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.

6. Dividends

An interim dividend of 0.875 cents was paid to the ordinary shareholders of the Company on 2 April 2014. 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 3 October 2014 in relation to the year ending 30 April 2014.

The final dividend, once approved, will be paid to those persons on the Register of Members at the close of business on 10 September 2014.

7. Earnings/(losses) per share

Basic losses per share is calculated by dividing the losses attributable to shareholders by 527.5m shares (30 April 2013, 527.5m), being the weighted average number of ordinary shares in issue.

There is no difference between diluted and basic losses per share because all incentive schemes are share awards and there are no dilutive share 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 available for sale investments, exceptional items, profit on disposal of business operation, net interest on pension schemes and tax effects of exceptional items.

8. Discontinued operations

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, an electrical retailer in Turkey. Its results have been excluded from the Continuing Group.

Cash flows from Darty Spain

Darty Turkey was classified as a discontinued operation on 22 January 2014, following the signature of a sale and purchase agreement with Bimeks, an electrical retailer in Turkey.

Cash flows from Darty Turkey

Cash flows from investing activities relate to interest received and capital expenditure.

Results from Darty Italy, Darty Spain and Darty Turkey

The results from Darty Italy, Darty Spain and Darty Turkey, classified as discontinued operations in the consolidated income statement, are derived below.

Following the closure of the Spanish operations, the closure costs particularly for lease exit costs proved to be lower than accrued resulting in a €2.9m exceptional credit. As part of the closure of its head office, in the year to 30 April 2014 Darty Turkey has incurred and accrued reorganisation costs totalling €5.9m. These costs mainly relate to termination payments of which the majority will be paid in 2014/15.

8. Discontinued operations (continued)

Discontinued operations in the prior year - Darty Italy

On 1 March 2013 the sale of the Group's Italian operations was completed, with an effective date of 28 February 2013. In accordance with IFRS 5 the business was treated as a discontinued operation in the 30 April 2013 Annual report and the results of Darty Italy were excluded from the results of the Continuing Group.

Cash flows from Darty Italy

Exceptional costs primarily relate to the reorganisation underway in France to simplify regional and back office structures across France and the Group totalling €26.0m. The costs mainly relate to termination costs (€16.5m) arising as a result of the reorganisation as well as onerous lease costs (€3.2m) and sundry other costs and asset write offs (€6.3m).

In addition, there are €3.1m of reorganisation costs mainly arising in the Netherlands relating to termination costs (€2.1m), an onerous lease arising as a result of a logistics restructure (€0.8m) and other costs (€0.2m).

In addition €0.3m of exceptional costs related to the strategic review were incurred in the head office.

The total (pre-tax) exceptional costs (€29.4m) can be split as follows: Cost of sales (€nil), Distribution costs (€0.9m), Selling expenses (€0.9m) and Administrative expenses (€27.6m).

The cash outflow on exceptional items during the year (for the Continuing Group) was €23.4m (2013: €18.1m).

In the prior year, there were €19.2m of reorganisation costs associated with the programme to streamline costs across France and the Group (France €11.0m and Group - Unallocated €8.2m). In addition, France incurred exceptional intangible asset impairments of €19.3m.