Half Year Results

7 December 2011

Statement of Results for the six months ended 31 October 2011

Financial Highlights

·; Group revenue of €2,567.5 million (2011: €2,777.7 million), a decline of 6.2% in constant currency¹ and 7.9% on a like-for-like basis.

·; Group retail loss² of €9.2 million (2011: retail profit €32.4 million).

·; Adjusted3 Group loss before tax of €13.6 million (2011: profit €25.0 million).

·; Adjusted loss per share of 4.0 cents (2011: earnings per share 3.4 cents).

·; Free cash out flow4 of €17.6 million with net cash at the end of the period of €38.6 million (2011: €109.5 million).

·; Exceptional charges of €133.6 million in the period, largely in respect of impairment of assets at Comet (€109.9 million).

·; The Board has declared an unchanged interim dividend of 2.25 cents, to be paid on 2 April 2012.

Operational Highlights

·; Market share gains at Darty France, Other established and Developing businesses in difficult markets.

·; Profitable cross channel web sales, with double-digit growth at Darty France, the Other established and Developing businesses. Partnership agreements with eBay and Photobox.

·; Overall improvement in gross margin.

·; Continued strong performance in Belgium. Improving trend in Turkey, the Netherlands and Spain as we roll out the Darty concept.

·; Disposal of Comet in the UK agreed.

Financial Summary

Thierry Falque-Pierrotin, Chief Executive, commented:

"We have experienced weakening market conditions in the first half of the year. This however has not prevented us continuing with the implementation of our strategic actions, which helped deliver overall market share gains particularly at Darty France, an improvement in gross margin and further growth in cross channel web sales. We again delivered a strong performance in Belgium and as we implement the Darty concept we have seen an improving trend in Turkey, the Netherlands and Spain.

"We are well prepared for peak season and in the face of the ongoing tough market conditions are adjusting our cost to serve. We will continue to focus on delivering market leading cross channel solutions to our customers, supported by our strong financial position."

David Newlands, Chairman, commented:

"Market conditions are becoming more challenging across all our markets. I am pleased therefore that we have reached agreement for the disposal of Comet, subject to shareholder approval. The disposal is expected to improve significantly the Group's financial strength and enables us to maintain an interim dividend of 2.25 cents per share."

1 Constant exchange rate of 1 Euro = £0.8776.

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

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

There will be a presentation to analysts and institutions at 08.30 today at UBS, 1 Finsbury Avenue, London, EC2M 2PP.

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 will issue an Interim Management Statement on 19 January 2012 for the trading period of 1 November 2011 to 8 January 2012.

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, 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.

Financial review

Group revenue at €2,567.5 million, was 7.6 per cent on a reported basis and 6.2 per cent in constant currency, below the same period last year. On a like-for-like basis revenue fell by 7.9 per cent. This performance reflected a difficult first quarter against the strong World Cup comparatives in the prior year, together with increasingly challenging underlying market conditions. Overall, gross margin increased by 10 basis points reflecting a more favourable sales mix, with improvements at Comet and the Other established businesses, off-set by market related pressure impacting the Developing businesses. Web-generated sales continued to be developed successfully with double digit growth at Darty France, Other established and Developing businesses and now represent 12 per cent of total product sales. The overall increase of 6 per cent compared to the prior year reflected the impact of an updated web strategy at Comet.

Group retail loss for the period was €9.2 million compared to a retail profit of €32.4 million last year. This reduction was primarily due to significant revenue reduction at Comet that was not fully off-set by gross margin improvements and cost savings; a weakening French market that saw pressure on Darty France's revenue despite share gains; and a deteriorating market in Italy.

The net interest cost was €4.4 million (2011: €7.4 million) comprising interest on financing of €4.6 million, €1.6 million other financing income plus IAS 19 notional pension interest of €1.4 million.

The adjusted loss before tax was €13.6 million (2011: profit €25.0 million).

In the light of the competitive sales process we have undertaken, we have reviewed the carrying value of assets at Comet, and have booked an exceptional income statement charge of €109.9 million in respect of the impairment of intangible assets and property plant and equipment and a further €42.5 million exceptional charge in respect of deferred tax assets. In addition to this, we have booked €12.9 million of exceptional charges at Comet relating to the completion of the previously announced warehouse and service centre rationalisation programme, onerous lease provisions, and costs incurred in respect of the Comet disposal.

Given the ongoing difficult market conditions in Spain and deterioration in Italy we are seeing sharply contrasting store performance. In the light of this we have impaired the weaker performing stores in the portfolio, with a resultant charge totalling €6.6 million. In addition, further exceptional costs of €4.2 million have been taken, principally relating to the costs of four stores we now plan to close in Italy.

As a result of the exceptional charges detailed above, the reported loss before tax and after interest was €147.7 million (2011: profit €27.2 million).

The expected effective tax rate on profit before exceptional items for the full year, including the share of joint venture and associates' tax and an estimate of recent changes to the corporate tax rate in France is 43.3 per cent. The best view of the full year effective tax rate for the continuing Group excluding Comet is 36.0 per cent. As required by accounting rules, the tax charge for the first half reflects the phasing of profits and losses within the year and the higher impact in the first half of not recognising the benefits of tax losses incurred at Comet and the Developing businesses.

Adjusted loss per share was 4.0 cents (2011: earnings per share 3.4 cents) and basic diluted loss per share was 37.4 cents (2011: earnings per share 3.7 cents).

Cash generated from operations was €35.1 million (2011: €120.8 million) and net capital expenditure and investments was €52.7 million (2011: €63.6 million). Free cash out flow was €17.6 million (2011: inflow of €57.2 million) reflecting the lower operating profit, phasing of working capital, and cash costs of €8.9m relating to the restructuring programmes announced last June. Tax paid was €39.2 million (2011: €10.2 million), higher than the prior year due to the phasing of payments on reorganising the French tax group and early payment of Belgian corporate tax in return for early payment discounts, which will unwind in the second half. Closing net cash was €38.6 million compared to €109.5 million on 31 October 2010 and €121.0 million on 30 April 2011. As at 31 October 2011 €160 million of the Group's €455 million revolving credit facility was drawn down (31 October 2010: €110 million).

The IAS19 net pension liability reduced from €71.9 million at the year end to €61.8 million (2011: €105.7 million) principally due to an improvement in the scheme's asset position, partially off-set by an increase in liabilities due to changes in discount and inflation rate assumptions.

The Board has declared an interim dividend of 2.25 cents per share. The ex dividend date will be 7 March 2012, the record date 9 March 2012 and the payment date will be 2 April 2012.

Outlook

We are well prepared for peak season and in the face of the ongoing tough market conditions are adjusting our cost to serve. We will continue to focus on delivering market leading cross channel solutions to our customers, supported by our strong financial position.

Our Strategy

Our strategy is based on four pillars:

·; driving market differentiation by rolling out the Darty concept;

·; building an integrated Continental European network;

·; growing our profitable cross channel sales; and

·; operationally leveraging the Group.

These four pillars ensure we are well placed to face successfully an unprecedented tough environment and benefit from growing cross channel customer buying patterns.

We will continue to capitalise on the proven strength of the Darty concept, as demonstrated in France and Belgium with our leading brands and differentiated position, growing market share and leading profitability. We have started to roll out this concept with success in our other countries and are building our profitable growth potential with a limited risk profile.

Based on our demonstrated profitable web-generated growth we will further expand our web sales whilst maintaining a selective store development programme. We are also implementing specific commercial plans to maintain store sales density.

BUSINESS REVIEW

Darty France

Darty France outperformed a weakening market estimated to be down over 5 per cent. Growth in multi-media and stable white goods sales were insufficient to off-set a significant decline in TV sales. Total revenue fell by 2.4 per cent compared to the same period last year, and by 3.7 per cent on a like-for-like basis.

The Darty web site continued to deliver strong growth, increasing by 18 per cent to account for 12 per cent of total product sales. Further enhancements have been made to the web site, including a dedicated photo section in partnership with Photobox. In addition to offering a wide range of cameras, Darty can now provide related services such as online printing, storage and sharing of photos.

The fall in revenue, and small gross margin erosion in the period, led to a decline in retail profit to €43.5 million compared to €59.8 million in the prior year. Given the ongoing weak market conditions, actions have been, and continue to be, taken to adjust staff costs, at the same time as developing further initiatives to improve the efficiency of the back office.

During the period Darty opened five new stores, refurbished five and relocated one. A further four relocations, one refurbishment and one closure are planned for the second half of the year. The successful kitchen offer was rolled out to a further six stores in the period, bringing the total to 35, with an additional six planned for the second half of the financial year. The kitchen offer in store is now complemented by a dedicated area on the website. The website offers videos of over 30 different kitchen types, additional product information, end to end project planning as well as a new range of kitchen accessories.

Darty Box has 314,000 subscribers and the offer was enhanced in August with the full launch of a quadruple play offer (fixed and mobile telephony, internet and TV), enabling the addition of up to five mobile phone packages to offer the complete multi-media solution.

Comet

In challenging market conditions and against strong comparatives including the World Cup and a one-off multi-media initiative last year, Comet's total revenue fell to €683.0 million, a decline of 17.9 per cent in constant currency and a fall of 18.6 per cent on a like-for-like basis. Web generated sales were impacted by the implementation of fully aligned store and web prices in line with Group practice, with a consequent reduction in web "click and collect" transactions, together with the down scaling of two specialist web sites. This led to a fall of 12 per cent in web-generated sales which accounted for 16 per cent of total product sales.

The focus on arresting the reduction in gross margin together with the more favourable weighting of small domestic appliances and accessories in the sales mix contributed to an improvement in gross margin for the half of 70 basis points. During the period the planned service centre and logistics consolidation was completed, contributing to total costs being down over 7 per cent. The benefits of these actions are second half weighted and with the revenue decline, retail loss increased to €25.7 million from €6.4 million in the prior year.

Comet continued to improve the efficiency of its selling space with 30 store relays completed in the period. In addition four stores were closed and two right-sized.

* BCC, Vanden Borre and Datart.

At the Other established businesses, BCC, Vanden Borre and Datart, despite a challenging first quarter total revenue increased by 1.2 per cent to €387.9 million, an increase of 0.7 per cent in constant currency and a fall of 0.2 per cent on a like-for-like basis. Overall like-for-like sales were up 2.4 per cent in the second quarter and gross margin was up 40 basis points for the half year.

The benefits of the Darty concept continued to be demonstrated. Vanden Borre still delivered growth in revenue, profit and market share. BCC saw an improved sales and gross margin trend with a significant share gain in the core categories of white goods and TVs. Datart saw an improvement towards the end of the period.

Web-generated sales again grew strongly, increasing by 20 per cent during the period to account for 9 per cent of total product sales.

Whilst there was an improvement in the second quarter with retail profit ahead of last year, it was insufficient to off-set a weaker first quarter. As a result retail profit for the period fell to €3.7 million compared to €4.7 million in the prior year.

In the period two new stores were opened in the Netherlands and two refurbishments were completed in Belgium. Overall a further four new stores are planned for the second half of the year and one relocation.

Developing businesses**

** Darty Italy, Darty Turkey and Darty Spain.

Total revenue for the Developing businesses, Darty Italy, Darty Turkey and Darty Spain, increased by 5.2 per cent in constant currency and fell 0.6 per cent on a reported basis to €172.3 million. On a like-for-like basis sales fell by 8.0 per cent, predominantly due to the deteriorating market conditions experienced in Italy.

Darty Turkey delivered a strong sales performance, outperforming a positive market. Darty Spain strongly outperformed its market, despite having closed the five stores not viable for rebranding to Darty, and delivered a positive like-for-like sales performance in the second quarter. Darty Italy held share in an increasingly difficult market but saw sharply contrasting performances across its store portfolio.

Gross margin was impacted by the poor market conditions in Spain and Italy together with stock clearance by competitors in Spain ahead of the closure of their stores. As a result gross margin was down 200 basis points and the retail loss increased to €22.1 million from €16.3 million in the prior year, despite reduced losses in Turkey.

Web-generated sales increased very strongly by nearly 200 per cent from a small base as we increasingly focus on growing this channel; web-generated sales accounted for 2 per cent of total product sales.

In the period Darty Italy and Darty Turkey opened one and five new stores, respectively, and Darty Spain relocated two stores in addition to the five closures. A further three new stores are planned in the second half, one in Spain and two in Turkey as well as a planned four closures in Italy.

KEY EVENTS

On 9 November 2011 the Group announced that it had entered into an agreement with Hailey Holdings Ltd and Hailey Acquisitions Limited (together, the "Purchasers"), entities advised by OpCapita LLP, to sell to them Comet Group plc, its subsidiaries and Triptych Insurance N.V. for an aggregate consideration of £2. In addition, there will be an investment by the Group of £50 million into Hailey 2 LP (the shareholder of the Purchasers). The Company will retain the liability for the Comet Defined Benefit Pension Scheme. A circular was sent to shareholders on 22 November 2011, with the disposal being subject to approval by the Group's ordinary shareholders at an EGM to be held on 15 December 2011. The disposal is expected to complete on 3 February 2012.

NON- GAAP FINANCIAL MEASURES

The Group has prepared its consolidated financial statements under International Financial Reporting Standards for the 6 months ended 31 October 2011. The basis of preparation is outlined in Note 1 to the Financial Information on page 21. The Group has identified certain measures that it believes provide additional useful information on the underlying performance of the Group. These measures are applied consistently but as they are not defined under GAAP they may not be directly comparable with other companies' adjusted measures. The non-GAAP measures are outlined in Note 1 to the Financial Information on page 21.

PRINCIPAL RISKS

The risks to achieving the objectives for the remainder of the financial year remain those more fully set out in the Directors' report on pages 26 and 27 of the 20010/11 Annual report.

The business, financial condition or results of operations of the Group could be adversely affected by any of the risks set out in the 2010/11 Annual Report. The Group's systems of control and protection are designed to help manage and control risks to an appropriate level rather than to eliminate them.

A summary of the areas that the risks relate to are as follows;-

Economic and market conditions

Product life cycles

Entry into new markets

Systems failure

Financial risk management

Legislative and regulatory

Reputational

Pension

Employees

Leased properties

In addition to the risks listed above, following the agreement to sell Comet, we have identified certain risks relating to the sale which are set out in more detail in the Circular to shareholders dated 22 November 2011.

The economic environment influences the level of consumer expenditure on electrical goods in a number of ways. The state of the housing market affects spending on white goods in particular, and the 'feel good' factor has a significant influence on discretionary spending on higher value electrical products. Many other economic factors influence customers' spending decisions, including macro economic uncertainty, unemployment, personal taxation, interest rates and levels of personal debt.

The Group's business is seasonal, with a high percentage of its annual sales and operating profit generated during the Christmas gift and New Year periods.

The Group meets its day-to-day working capital requirements through its bank facilities. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its condensed consolidated interim financial statements.

FORWARD LOOKING STATEMENTS

Certain statements in this half-yearly report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Company and Group undertakes no obligation to publicly update or revise any forward looking statements whether as a result of new information, future events or otherwise.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a true and fair review of the information required by DTR 4.2.7 and DTR 4.2.8.

The narrative of this half year report includes a fair review of the business and of any required related party disclosures.

The Directors of Kesa Electricals plc are listed in the Kesa Electricals plc Annual Report for 2010/11, with the exception that in the period Non-Executive Directors, Peter Wilson and Michel Brossard retired at the Annual General Meeting on 15 September 2011. A list of current directors is maintained on the Kesa Electricals plc website: www.kesaelectricals.com.

INDEPENDENT REVIEW REPORT TO KESA ELECTRICALS PLC

Introduction

We have been engaged by the Group to review the condensed set of financial statements in the interim financial report for the six months ended 31 October 2011, which comprises the Group Statement of Comprehensive Income, the Group Statement of Changes in Equity, the Group Balance Sheet, the Group Statement of Cash Flows and related notes. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the six months ended 31 October 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLPChartered AccountantsLondon

7 December 2011

KESA ELECTRICALS PLC

KESA ELECTRICALS PLC

KESA ELECTRICALS PLC

KESA ELECTRICALS PLC

KESA ELECTRICALS PLC

Six months ended 31 October 2011