Full Year Results

22 June 2011

Statement of Results for the 12 months ended 30 April 2011

·; The Group made further progress against its strategic agenda in challenging market conditions:

o Overall gained market share whilst gross margin remained stable

o Significant increase in web generated sales in line with our cross channel strategy

o Improved profitability at Darty France and Vanden Borre reflecting the strength of the Darty concept

o Strong turnaround plans commenced at Comet, in parallel examining other strategic alternatives

o Strong focus on cost to serve across the Group with specific restructuring actions at Comet, BCC and Darty Spain

Financial Highlights

·; Group revenue increased 2.2% to €5,917.3 million (2010: €5,789.1 million), an increase of 0.7% in constant currency¹ and a decrease of 1.8% on a like-for-like basis

·; Group retail profit² declined 2.7% to €107.0 million (2010: €110.0 million), a decline of 2.9% in constant currency¹

·; Adjusted3 Group profit before tax increased 2.3% to €93.2 million (2010: €91.1 million)

·; Adjusted EPS increased 2.8% to 10.9 cents (2010: 10.6 cents)

·; Free cash flow4 of €112.3 million (2010: €165.4 million) with net cash at the year end of €121.0 million (2010: €91.1 million)

·; The Board is recommending a final dividend of 4.75 cents per share, bringing the total dividend to 7.0 cents per share, an increase of 6.1% on last year's 6.6 cents per share

Financial Summary

Thierry Falque-Pierrotin, Chief Executive, commented:

"We have made progress against our strategic agenda despite the challenging market conditions. Overall we remained ahead of our markets, successfully grew our profitable web sales, improved the results of Darty France and have taken actions to improve performance at the other businesses.

"We anticipate all our markets will be challenging for the current financial year, particularly in the first half against the World Cup comparatives of last year. However from improved market positions in most of our markets, further cost measures in all countries with specific restructuring at Comet, BCC and Darty Spain and the strength of our cash generation and balance sheet, we are well prepared for these conditions. We remain focused on delivering our strategic plan - further rolling out our specialist business model and improving profitability across the Group. "

David Newlands, Chairman, commented:

"Overall the Group continued to demonstrate its resilience to difficult market conditions and I am pleased that our earnings position and continued strong cash generation have enabled us to recommend an increase in the total dividend for the year of 6.1 per cent to 7.0 cents per share.

"We have a strong turnaround plan for Comet to restore its profitability in the medium term and in parallel we are examining strategic alternatives to ensure the best overall value for shareholders."

1 Constant exchange rate of 1Euro = £0.8503 (2010: 0.8839)

2 Retail profit represents total operating profit before the share of joint venture and associates' interest and taxation, valuation gains and losses on options to acquire non-controlling interests, exceptional restructuring costs, profit on disposal of business operations and amortisation and impairment of acquisition related intangible assets.

3 Excludes the share of joint venture and associates' interest and taxation, the effects of valuation gains and losses on options to acquire minority interests, profit on disposal of business operations, exceptional restructuring costs, amortisation and impairment of acquisition related intangible assets, exceptional finance costs and the tax effect of exceptional items.

4Free cash flow defined as cash generated from operations less net capital expenditure and investments.

ENDS

There will be a presentation to analysts and institutions at 09.00 today at The Conference Centre, Ground floor, Bank of America Merrill Lynch, 2 King Edward Street, London, EC1A 1HQ.

A live audio webcast of the event will be available via our website www.kesaelectricals.com, and recorded for access later in the day.

Kesa Electricals expects to issue an Interim Management Statement on 15 September 2011 for the first quarter trading period.

Enquiries

Press:

Kesa Electricals plc

Simon Ward UK +44 (0) 20 7269 1400

Vinciane Beurlet France +33 (0) 1 43 18 52 00

Charles Watenphul UK +44 (0) 20 7251 3801

Simon Ward +44 (0) 20 7269 1400

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, Kesa Electricals 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.

GROUP OVERVIEW

Results

* BCC, Vanden Borre and Datart

** Darty Italy, Darty Turkey and Darty Spain. Darty Switzerland was sold on 6 July 2009 for which revenue and retail loss of €5.8 million and €1.5 million respectively are included in the 12 months to 30 April 2010.

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Financial review

Group revenue was €5,917.3 million, an increase of 2.2 per cent on a reported basis and 0.7 per cent in constant currency, compared with the same period last year. On a like-for-like basis revenue decreased by 1.8 per cent. This performance reflects a strong first quarter with successful delivery of our World Cup campaigns followed by a toughening trading environment thereafter, particularly in the UK and Spain. As a result of our strategy to enhance our online presence, web generated sales increased by 17 per cent to represent 10.7 per cent of total product sales.

Overall gross margin was stable, with stable or improved positions at Darty France, Other established and Developing businesses off-set by a decline at Comet in a challenging UK market.

Group retail profit fell by 2.7 per cent to €107.0 million from €110.0 million last year, a decline of 2.9 per cent in constant currency, representing a 0.1 percentage point decline in retail profit margin to 1.8 per cent. This performance reflected increased profits at Darty France and reduced losses at the Developing businesses off-set by the losses at Comet.

Reported operating profit of €75.1 million included exceptional costs of €30.9 million relating to restructuring programmes at Comet, BCC in the Netherlands and Darty Spain for which the related cash outflow during the year was €4.3 million. A further €2 million cost and €17 million cash outflow is expected in 2011/12.

The net interest cost before exceptional was €13.8 million (2010: €18.9 million), comprising net interest on financing of €10.1 million (2010: €12.2 million) plus IAS 19 notional pension interest of €3.7 million (2010: €6.7 million). In December 2010 the Group signed a committed €455 million five year revolving credit facility, replacing the existing €500 million facility. The new facility reduced the interest charge by around €0.5 million in the financial year and will reduce it by around €3 million in subsequent years assuming a constant Euribor rate.

Exceptional net finance costs were €0.6 million (2010: income €3.2 million). This comprised €4.2 million from movements in the fair value, and profits on disposal of other investments as part of the UK extended warranty scheme, in accordance with IAS 39, less €4.8 million write-off of fees from the previous revolving credit facility.

Adjusted profit before tax was €93.2 million (2010: €91.1million) and reported profit before tax was €60.7 million (2010: €77.8 million).

The adjusted effective tax rate on profit before exceptional items, including the share of joint venture and associates' tax was 38.8 per cent (2010: 36.3 per cent). The rate is expected to remain broadly unchanged for 2011/12. The increase in tax rate was due to the change in geographic mix of profits. The overall tax rate was 50.0 per cent (2010: 42.8 per cent).

Adjusted earnings per share were 10.9 cents (2010: 10.6 cents) and basic diluted earnings per share were lower at 6.0 cents (2010: 8.4 cents) due to the exceptional charges.

Cash generated from operations was €242.5 million (2010: €253.0 million) and net capital expenditure and investments was €130.2 million (2010: €87.6 million) generating free cash flow of €112.3 million (2010: €165.4 million). Capital expenditure increased primarily as a result of the core store refurbishment programme at Comet and accelerated store opening programme at Darty Italy. Capital expenditure for 2011/12 is expected to be approximately €120 million.

Closing net cash was €121.0 million compared to €91.1 million on 30 April 2010, including €72.7 million of pledged funds for the UK extended warranty scheme. Peak borrowing under the revolving credit facility was €230 million. As at 30 April 2011, €60 million of the facility was drawn down, with an average drawing through the financial year of €120 million.

The IAS19 net pension liability fell from €85.0 million to €71.9 million. The liability is split €45.9 million (£40.7 million) for the UK (2010: €58.0 million) and €26.0 million for France (2010: €27.0 million). The UK defined benefit scheme which has 5,300 members was closed to new accruals in September 2007. During the past year an Enhanced Transfer Value programme was completed as well as an exercise to buy out the remaining salary link. These exercises together reduced liabilities by £21.4 million for a cash payment of £7.3 million and transfer of assets of £13.6 million.

In addition the tri-ennial revaluation of the UK defined benefit scheme was completed. This resulted in a reduced deficit of £49 million. Annual funding will remain at £6.1 million per annum with a view to closing the deficit by 2018.

The Board is recommending a final dividend of 4.75 cents per share, bringing the total dividend to 7.0 cents per share, an increase of 6.1 per cent (2010: 6.6 cents). The ex-dividend date will be 14 September 2011, the record date 16 September 2011 and the payment date will be 7 October 2011.

Group Strategy

The Group's strategy is to push market differentiation by rolling out the Darty concept, build a true European network, grow profitable cross channel sales and operationally leverage the group size. Progress has been made in 2010/11 against this strategic agenda and further progress will be made in 2011/12.

The benefits of the Darty concept are clearly demonstrated by the improved market positions and profitability of Darty France and Vanden Borre in Belgium. The concept is being launched at BCC in the Netherlands with a new management team and support from Vanden Borre. Implementation of the processes that underpin the Darty concept will also play a key part of the turnaround plans we have for Comet.

The European network is being built out as we grow the store networks in Italy and Turkey which are substantial markets where we currently have less than one per cent market share. In addition the restructuring actions have largely been completed in Spain, and we are now building on a rebranded, differentiated proposition.

Cross channel sales continue to represent a significant, profitable revenue opportunity, consistent with our mid-sized stores and centralised infrastructure. The priority now is on developing extended ranges and services plus starting to grow web sales at the Developing businesses.

The group size is being leveraged in a number of aspects. In sourcing further progress has been made in product licensing and own brand products. Common IT platforms are being developed across the smaller businesses including the web. Group benchmarking exercises have also been introduced for the brands, store staffing levels and product profitability.

Trading Outlook

The Group anticipates all its markets will remain challenging for the current financial year. Trading since the year end has been tough and weaker than our expectations; however from improved market positions in most of its markets, further cost measures in all countries with specific restructuring at Comet, BCC and Darty Spain and the strength of its cash generation and balance sheet the Group is well prepared for these conditions. The Group remains focused on delivering its strategic plan - further rolling out its specialist business model and improving profitability across the Group.

Given the positive impact of the World Cup and the one off multimedia initiative in the UK in the first half of last year, the balance of sales, profit and cashflow between the first and second half will be more weighted than usual towards the second half.

BUSINESS REVIEW

Darty France

In France Darty had a strong start and end to the year in the World Cup and digital switch over periods. Overall Darty outperformed a market estimated to be slightly negative with market share gains particularly in vision. Total revenue grew by 4.6 per cent compared to the same period last year, and by 2.0 per cent on a like-for-like basis.

Gross margin was stable throughout the year, and with an improved cost to sales ratio, retail profit increased by 11.9 per cent to €149.2 million resulting in an improvement in retail profit margin from 4.8 per cent to 5.1 per cent. As expected Darty Box achieved break even and had 310,000 subscribers at the year end.

The Darty web site continued to be enhanced with downloadable e-books and a gaming centre and delivered excellent growth, increasing sales by 27.8 per cent to nearly 10 per cent of total product sales.

During the period the Darty concept was developed further with in store enhancements: a further eight stores having the successful kitchen offer, taking the total number of stores with the offer to 29; a cook ware range and Internet and 3D TV displays were rolled out to stores; and enhanced sales force training incorporating e-learning modules were introduced.

Subscription based services have started to be developed. These included a monthly multimedia support subscription, Pack Serenity and Darty Mobile, initially for existing Darty Box subscribers. A start has also been made in developing the opportunity presented by its 15 million customer database with targeted emailing campaign during the television digital switch over.

To support the further enhancement of the Darty service a new marketing campaign was introduced at the start of 2011, "36,000 solutions".

The store portfolio was further developed during the period with one new store, four refurbishments and four relocations. The development programme will be accelerated in 2011/12 with four new stores, six relocations and seven refurbishments, including the rollout of a further 11 kitchen corners.

Comet

Comet saw a positive start to the year with a strong World Cup campaign and successful delivery of a one-off multi-media initiative. The record trading over the Christmas and New Year period failed to offset the earlier weakness in the market and tougher trading conditions in the final quarter, post the VAT increase. Overall Comet lost a small amount of market share in a market estimated to have been flat, particularly in large white goods against a very strong performance in the prior year. As a result total revenue was £1,537.9 million, a fall of 6.8 per cent in constant currency compared to the same period last year and a fall of 7.7 per cent on a like-for-like basis.

After a solid first half, web generated sales saw some disruption following the launch of a new software platform in the second half. As a result web generated sales grew 2.5 per cent for the period to represent 15 per cent of total product sales.

Gross margin remained under pressure through the year both from sales mix of TVs and multi-media at the start of the year, the highly promotional peak season and overall competitive environment. There was a continued strong focus on costs, with total costs down nearly 7 per cent, but this could not fully off-set the revenue and margin pressures, resulting in a loss for the year of £8.9 million.

In addition to the day to day cost management, Comet is consolidating its 14 regional service centres to two sites, reducing the warehouse network from three to two as part of a retender of logistic services and has reduced head office headcount. An exceptional charge of €19.9 million was incurred during the year, with annualised benefits expected to be €11 million.

The actions taken in the year to improve Comet's performance all delivered positively:

·; Dedicated accessories areas were introduced into 190 stores. Overall sales penetration for this high margin product category increased by 210 basis points.

·; Updated small kitchen appliances and health and beauty displays were introduced into 100 stores during the year. This contributed to overall small domestic appliances penetration increasing by 70 basis points.

·; Significant actions were taken across the store portfolio with 44 core store refits, delivering on average 14 per cent sales and 12 per cent gross margin uplifts against a control group of stores. The seven refits which have traded for more than a year are delivering a positive like-for-like sales performance. In addition three new stores were opened and five closed.

·; The Comet brand was refreshed and relaunched in September with new in store point of sale material and staff uniforms. This was supported by new, differentiated press and TV campaigns - "Come and Play" - which have been positively received.

These actions provide a platform to develop and accelerate plans to turn the Comet business around. Further actions in addition to the restructuring programme are now being taken to build on the Comet position of:

·; strong brand awareness;

·; significant market share, particularly in large white goods;

·; a consistent store network supporting a cross channel approach and new web platform; and

·; efficient back office infrastructure to support the services strategy.

These plans have been designed and their implementation has started with a new streamlined and strengthened management team.

Comet is now further developing its web front end and is in a position to leverage fully the new platform. Enhancements to be made include intelligent product recommendations, personalisation, bespoke product pages and quick check out facilities. Transactional capability will also be added to Comet's mobile app in addition to the "Click and Collect" functionality already available. Comet now aligns web and store prices on products common to both channels. An exclusive range of products is being introduced for web sales to allow Comet to price match pure play competitors profitably. This range depth and authority online is being supported by new dropship vending agreements and the number of products available will be more than four times the one available in stores with no stock risk to the business.

With its strong brand awareness, consistent store portfolio, leading back office and service infrastructure, Comet is well placed to carve a clear position in a growing cross-channel market providing all the benefits of the traditional local independent (good advice, edited ranges, and high level of service) but supported by the efficiency of national infrastructure and extensive web offering. This platform puts Comet in an excellent position as it continues to build its store and service offering to be the trusted electrical specialist.

Other established businesses*

* BCC, Vanden Borre and Datart

Vanden Borre in Belgium continued to demonstrate the strength of the Darty concept with a strong out performance in a market estimated to be slightly positive, with market share gains in all product categories. BCC in the Netherlands and Datart in the Czech Republic were impacted by difficult trading conditions in the first half with improving trends thereafter at BCC and stable at Datart. As a result, total revenue increased by 3.7 per cent in constant currency and by 2.0 per cent on a like-for-like basis.

Web generated sales continued to grow very strongly, up over 45 per cent during the period and now represent 8.6 per cent of total product sales.

The segment delivered a very small decline in gross margin and stable cost to sales over the year, resulting in a fall in retail profit to €15.5 million, compared to €16.1 million for the same period last year. Retail profit margin reduced to 1.9 per cent compared with 2.1 per cent last year.

Selective investment was made in the store development programme with a total net three new stores and four refurbishments in the year. A total of five new stores and four refurbishments are planned for 2011/12.

For 2011/12 Vanden Borre will continue to enhance its differentiated position with the opening of a multi-media call centre and the launch of monthly subscription multi-media support packages. It will also refresh its communication to develop awareness of the "Contrat de Confiance".

The new management team at BCC, fully supported by Vanden Borre is implementing the Darty concept with an improved price, choice and enhanced service proposition supported by new marketing communication plan. Actions are also being taken on the cost base through a restructuring programme for which related exceptional charges were taken in the year of €2.8 million which are expected to deliver €4 million of annualised savings.

Developing businesses**

** Darty Italy, Darty Turkey and Darty Spain. Darty Switzerland was sold on 6 July 2009 for which revenue and retail loss of €5.8 million and €1.5 million respectively are included in the 12 months to 30 April 2010.

Total revenue for the Developing businesses, Darty Italy, Darty Turkey and Darty Spain, increased by 5.0 per cent to €377.0 million and by 3.8 per cent in constant currency, representing market share gains in Italy and Turkey plus more recent market out performance in Spain. On a like-for-like basis, sales fell by 7.9 per cent through a combination of ongoing difficult market conditions in Spain and the disruption during the rebranding to Darty, strong sales performance in Turkey last year aided by tax incentives and a more recent slowing of the market in Italy.

Overall web generated sales increased by over 80 per cent, but this represented less than 1 per cent of total product sales, and will now become a focus of the businesses in 2011/12.

Gross margin continued to improve and overall losses reduced from €33.1 million to €30.8 million.

Darty Italy accelerated its store expansion programme with the opening of eleven new stores during the period, taking the total to 28. A further four are planned for 2011/12, extending to the east of its Milan base. Darty Turkey continued to build scale with four new stores in the period, including outside of Istanbul, taking the total to 21, with a further four planned for 2011/12. As these two businesses evolve from start up operations, the senior management and commercial and store processes are being strengthened.

In Spain, the restructuring actions have been essentially completed. 40 stores have now been rebranded to Darty and a marketing campaign has now commenced around the "Contrat de Confiance" to establish the Darty brand and highlight its differentiated position in the market. Further work has been completed on reshaping the store portfolio with three new stores and four closures in the year. As we focus predominantly on the regional strength of the portfolio in Madrid and Galicia, one new store, six closures, four refurbishments and two relocations are planned for 2011/12. The six closures of stores not viable to rebrand to Darty predominantly took place at the start of the new financial year. For these closures and other cost saving measures related exceptional charges were taken in the year of €8.2 million which are expected to deliver €3 million of annualised savings.

KEY EVENTS

Alan Parker was appointed as a non-executive director on the 1 October 2010 and is a member of the Audit, Remuneration and Nomination committees.

CHANGE OF REPORTING CURRENCY

As previously announced for the 2010/11 financial year, the Group has changed its reporting currency from sterling to euros. This provides a better reflection of the underlying performance of the Group as nearly two thirds of total revenue and over 100 per cent of the retail profit is generated in euros. Dividends are offered in either sterling or euros with reference to euro earnings.

Notes to the financial statements