Half Year Results

Wednesday 18 December 2013

Statement of Results for the six months ended 31 October 2013

Continuing to deliver our Strategic Plan - 'Nouvelle Confiance'

· Positive like-for-like sales and significant market share gains in our core markets of France and Belgium; held market share in the Netherlands.

· Continued double digit growth of web generated sales, up 12 per cent to over 13 per cent of total product sales.

· Positive customer response to the new commercial initiatives in France (the '4Ds').

· Cost reduction plans on track, to be delivered in full by the end of FY 2014/15.

· Medium term target to build market share and profitability over the next three years by:

o building on our successful, service based multi-channel core business while continuing to deliver cost efficiencies;

o double the number of stores with the kitchen offer;

o extending the 'low price/pay-as-you-go services' offer through the proposed acquisition of leading French web site Mistergooddeal.com; and

o expanding the Darty portfolio into smaller catchment areas with a new franchise model.

· Good progress in eliminating losses in our non-core markets with the managed closure of Spain and agreement to sell our business in Turkey announced today.

Financial Summary for the six months ended 31 October 20131,2

· Group revenue of €1,721.4 million (2013: €1,736.8 million), up 1.8 per cent on a like-for-like basis, and up 2.7 per cent in France.

· Group retail profit3 up 25.6 per cent to €15.2 million (2013: retail profit €12.1 million).

· Adjusted4 Group profit before tax of €9.4 million (2013: €6.6 million).

· Exceptional charges of €25 million related principally to the French social programme.

· Reported loss before tax of €16.3 million (2013: profit €5.3 million). Basic continuing losses per share of 2.7 cents (2013: continuing earnings per share 0.9 cents).

· Net cash outflow including discontinued operations of €101.7 million (2013: outflow €59.6 million) with net debt at the end of the period of €253.4 million (2013: net debt €187.8 million).

· The Board has declared an unchanged interim dividend of 0.875 cents, to be paid on 2 April 2014.

Alan Parker, Chairman, commented:

"We have continued to make progress with our Nouvelle Confiance plans to restore shareholder value. During the period we eliminated further losses in our non-core businesses with the completion of the managed closure of Darty Spain and today we announced a deal to sell our business in Turkey.

"The actions we are taking are strengthening and growing our leadership position in our core markets. We are on target with our plans to drive greater efficiency at reduced cost across the Group and we now have clear plans for growth over the medium term.

"Market conditions remain challenging but with the momentum we are building in the Group we are confident we will deliver an improvement in earnings over the medium term. In the light of this, the Board has declared an interim dividend of 0.875 cents, unchanged on last year."

Chief Executive Régis Schultz added:

"We have made good progress with our new '4Ds' programme - sustained market share gains and positive like-for-like growth in the second quarter demonstrate the customer appeal, and our improved first half performance demonstrates the financial benefits.

"We have developed a strong set of commercial plans for this key peak season. Markets however remain difficult and promotional and this, together with changes to our product mix, continues to put pressure on our margins. We are responding to this through cost saving programmes which are progressing well and will start to deliver further benefits in the second half of this year.

"I am excited by the opportunities we have in front of us - expanding our successful kitchen offer, the acquisition of Mistergooddeal and the launch of a franchise business. Adding these to our successful service based multi-channel offer positions us very well to build market share and to return to a robust economic model."

1 Excluding results of discontinued operations except where stated otherwise

2 Restated following the sale of the Italian operations and closure of the Spanish operations now classified as discontinued operations, the completion adjustments following the Darty Telecom disposal and the adoption of IAS 19R on retirement benefits ..

3 Retail profit/(loss) represents total operating profit/(loss) before the share of joint venture and associates' interest and taxation, the movement in options and related charges over non-controlling interests, impairment of available for sale financial assets, exceptional items , profit on disposal of business operations and amortisation and impairment of acquisition related intangible assets.

4 Excludes the share of joint venture and associates' interest and taxation, the movement in options and related charges over non-controlling interests, profit on disposal of business operations, impairment of available for sale financial assets, exceptional items, amortisation and impairment of acquisition related intangible assets and net interest on pension schemes.

There will be a presentation to analysts and institutions at 08.30 today at UBS, 1 Finsbury Avenue, London, EC2M 2PP. A live video and audio 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 6 February 2014 for the third quarter trading period of 1 November 2013 to 31 January 2014.

Enquiries

France

Le Public Système

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.

NOUVELLE CONFIANCE

We have made further progress in restoring profitability and establishing the foundations for long-term success and rebuilding shareholder value.

Launched one year ago, 'Nouvelle Confiance' is capitalising on these strengths in France and our other core markets in three stages: 

· Refocus on core markets with new commercial initiatives;

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

· Develop future growth opportunities.

Further losses have been eliminated at our non-core businesses with the managed closure of Darty Spain, with all stores closing by the end of June 2013. We have reached agreement to sell our business in Turkey and continue to keep under review our options for Datart in the Czech Republic and Slovakia and still expect to resolve the future of this business within the Group by the end of the current financial year. In terms of our core businesses we continue to make progress. Vanden Borre in Belgium is out-performing the market and BCC in the Netherlands is holding share in a highly promotional and difficult market.

Darty France is the key driver of our future profitability. Here, we are the leader in the consumer electricals market with scope to grow, have huge brand equity and awareness, have a large and growing share of the online market and have the clear market leading service proposition in the market with national reach and infrastructure.

The '4Ds'

Since his arrival in April 2013, Régis Schultz has developed these areas as the '4Ds', focussing on our principal business in France:

1. Drive trading;

2. Digitalise Darty;

3. Develop our brand; and

4. Deliver cost efficiency.

1. Drive trading

As part of our plan to drive trading, Darty held its first ever sale in the Summer and we were pleased by the customer response and traffic generated. We also introduced a "Darty Days" campaign during May where customers accumulated points through their level of expenditure and specifically promoted products to redeem discounts on purchases during September.

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.

To support our confidence in our price competitiveness, price monitoring of our competitors is performed weekly. On a 'service included' basis we compare very favourably against all store based retailers and almost all web pure players.

2. Digitalise Darty

We have a strong track record as a successful multi-channel retailer consistently growing our web generated sales at a double digit rate. This has ensured we deliver a positive net contribution ahead of the stores. Multi-channel customers are growing steadily, visit our stores and web site 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 web site, stores, sales staff, delivery and after-sales teams. Improved integration between the store and web channels has come from greater promotion of store product availability on the web site and mobile app and will further improve from the roll-out of award-winning "click and collect" lockers which are currently being trialled in seven stores. Customers are able to order and pay on line 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, reduces the cost of logistics and enables faster order fulfilment.

In-store trials are ongoing to equip sales staff with tablets which enable them to demonstrate extended ranges and services in real time to customers. Large terminals are also being trialled in a number of the bigger stores that enable customers to browse the full product range, compare potential purchases and request sales team assistance.

All the latest developments in merchandising and digitalisation were introduced in our new flag ship store at Beaugrenelle, Paris in October. Early response from customers and staff has been very positive.

3. Develop our brand

We have been defending margin through better sourcing and growing our service revenues. 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.

We launched initiatives during the period to better integrate our market leading services. Towards the end of the period a voucher scheme was 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 two stores further strengthening Darty's service image and helping to drive footfall. Initial customer response has been very favourable with more immediate problem resolution. The service also provides the opportunity to offer additional services and accessories.

Finally, a new marketing campaign was launched at the end of the period. It remains true to the "Contrat de confiance" but with a more contemporary look and feel and highlighting individual elements of the Darty offer.

4. Deliver cost efficiency

Throughout the Group, we had targeted annual gross cost savings of €50 million per annum by 2014/15, 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 €20 million cost savings were achieved, the majority of savings are now being realised by rationalising the Group and Darty France head office functions, including sourcing and the merger of regions in France, with no impact on the leading service offer Darty provides to its customers. To accelerate the achievement of savings from the original target of 2015/16, a social plan was implemented in France in the first half of this year and has proceeded as planned. As a consequence cost savings from this plan for 2013/14 of €10 million will be weighted to the second half of the year, with the full run rate benefit of €20 million in 2014/15.

There is also scope to improve our balance sheet efficiency. 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 expect further proceeds of around €20 million this year. During the period we sold our small shareholding in Go Sport for €2.7 million.

Future growth opportunities

Organic

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 51 stores, has already taken around seven per cent of the installed kitchen market and helps increase additional sales of high end white goods. Actions have been taken to better integrate the kitchen operation within the business, reducing the implementation cost and cost to serve and launching more focused marketing campaigns. The introduction of the offer across the portfolio will be accelerated to around twenty stores per year from 2014/15, from within existing investment plans, and will support our expansion of white goods market share.

Entry price market

Darty France has struggled historically to take market share and trade profitably in the entry price end of the market given its full service offer. Its market share in the first 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, today we announced that we have entered into exclusive negotiations to acquire Mistergooddeal.com, a leading French web site for products in this end of the market. We will retain the brand name and extend the offer. Darty's existing service infrastructure will be used to offer Mistergooddeal.com customers additional services on a pay-as-you-go basis. This, together with Darty's superior buying terms, is expected to create a profitable channel by year two of ownership. Further details of the acquisition are provided on page 14.

Franchises

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 not economic to open a typical Darty store. To address this market we plan to establish a franchise operation for these areas.

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 profitability in line with the core business. We have already received strong expressions of interest from a number of potential franchisees and expect to open the first store next spring.

Outlook

We have made a good start to the year, with continued market share gains in our core markets, but as ever the peak season is key to our full year performance. The economic backdrop remains difficult and we are seeing increased promotional activity which, together with changes to our product mix, continue to put pressure on margins. We are mitigating this through our cost saving programmes, which are progressing well and are starting to deliver in the second half of the year, and our initiatives in the '4Ds' programme.

In the medium term, we are well placed to deliver our growth ambitions for Darty to build our market share and profitability over the next three years. Key to achieving this is:

· to build on our successful service based multi-channel core business while continuing to deliver cost efficiencies;

· to double the number of stores with the kitchen offer;

· extending the low price/pay-as-you-go services offer through the proposed acquisition of leading French web site Mistergooddeal.com; and

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

These plans will enable us to return to a sustainable economic model with a sustainable profit margin.

GROUP OVERVIEW

Results

* Total revenue includes Darty Telecom revenue

**Datart and Darty Turkey.

Financial review

Revenue and retail profit

Group revenue at €1,721.4 million, was down 0.9 per cent on a reported basis and 0.4 per cent in constant currency. Excluding the impact of the sale of Darty Telecom in the first quarter comparative, total revenue was up 0.5 per cent. On a like-for-like basis Group revenue was up 1.8 per cent, with an improvement in the second quarter (quarterly revenue performance is provided as an appendix to this statement). We saw significant growth in smart phones and tablets, small domestic appliances saw some growth and large white goods were stable. Vision volumes remained very weak especially against the European football championship comparative in the first quarter, but we saw an improving trend thereafter. We continued to grow web-generated sales successfully with further double digit growth of 12 per cent, now representing over 13 per cent of total product sales.

Gross margin declined by 80 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 costs were down nearly €19 million, over three per cent, reflecting in part the benefit of CICE in France, 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.

EBITDA5  was €42.2 million (2013: €44.5 million) and group retail profit increased to €15.2 million compared to €12.1 million for the same period last year. On a segmental basis retail profit at Darty France was stable, Belgium and the Netherlands saw a small absolute decline due to ongoing difficult market conditions in the Netherlands, and the Other businesses saw a small reduction in losses. Head office costs reduced from €7.1 million to €5.4 million.

Net finance costs

The net finance costs were €7.9 million (2013: €8.2 million) including IAS 19 pension interest of €2.1 million (2013: €2.7 million).

Adjusted profit before tax

The adjusted profit before tax was €9.4 million (2013: €6.6 million).

Exceptional items

During the period a social plan was launched in France to accelerate the cost savings programme. Exceptional costs of €21.4 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 mainly relate to redundancies (€15.1 million) plus onerous lease costs (€3.0 million) and other costs and asset write offs (€3.3 million).

In addition, €2.4 million exceptional costs were incurred in the Netherlands, principally redundancy costs and onerous lease provisions as we restructure the business and €1.1 million at head office as part of the strategic review.

Cash costs of these exceptional items were €1.7 million with a further €18.7 million expected to be incurred in the second half of the year. Including the cash costs for exceptional restructuring items booked last year, the total cash costs this financial year are expected to be €30 million.

The total cash costs for our restructuring plans under Nouvellle Confiance will be €42 million by the end of 2013/14.

Profit before tax

As a result of the exceptional charges of €24.9 million detailed above, the reported loss before tax from continuing operations was €16.3 million (2013: profit €5.3 million).

Taxation

As required by IAS 34, the tax charge of €0.4 million for the first half reflects the phasing of profits and losses within the year. The effective tax rate on adjusted profit before exceptional items for the Continuing Group for 2013/14 is now anticipated to be higher at around mid 50s per cent taking into account expected changes to French corporation tax. After planned internal restructuring this is expected to fall to mid 40s per cent in 2014/15.

Profit for the period

The loss for the period from continuing operations was €16.7 million (2013: profit €2.1 million). Loss for the period from discontinued operations was €3.1 million (2013: loss €14.0 million). Total loss for the period was €19.8 million (2013: loss €11.9 million).

Earnings per share

Adjusted earnings per share, excluding the IAS 19 net interest on pension schemes, was 0.8 cents (2013: 1.1 cents). Continuing basic diluted loss per share was 2.7 cents (2013: continuing earnings per share 0.9 cents).

Cash flow

Free cash outflow6 including €44.8 million relating to discontinued businesses was €95.2 million. This compares with an outflow of €56.5 million in the prior year which benefitted from €39.1 million received for the new Darty Telecom agreement. Cash generated from operations was an outflow of €81.3 million (2013: €65.8 million). Net capital expenditure was €19.8 million (2013: €29.8 million). Cash tax received was €11.8 million (2013: €8.7 million) due to the unwinding of payment phasing in France. Higher dividend payments to shareholders of €13.4 million (2013: €6.6 million) were made following the increase in final payment from 1.25 cents to 2.625 cents per share. Net cash outflow was €101.7 million (2013: €59.6 million).

Excluding the total exceptional cash costs largely relating to the reorganisation in France of €6.8 million and the cash flow and exceptional cash costs relating to the sale of the operations of Darty Italy and the managed closure of Darty Spain totalling €44.6 million, there was a cash outflow of €50.3 million, reflecting working capital seasonality in the first half.

Net debt

Closing net debt was €253.4 million (31 October 2012: €187.8 million) compared to €150.6 million on 30 April 2013. As at 31 October 2013 €300 million of the Group's €455 million revolving credit facility was drawn down (31 October 2012: €260 million).

Retirement benefit obligations

The IAS 19 net pension liability increased from €84.8 million at the year end to €100.3 million (31 October 2012: €90.6 million), split €54.3 million (31 October 2012: €50.7 million) in the UK and €46.0 million (31 October 2012: €39.9 million) in France. The increase in the UK was due to lower asset returns and a fall in corporate bond yields. The increase in France reflects a reduction in scheme assets resulting from a refund from the asset managers of the Darty Retirement Indemnity Plan relating to prior year contributions for former employees.

Dividends

The Board has declared an unchanged dividend of 0.875 cents per share. The ex dividend date will be 5 March 2014, the record date will be 7 March 2014 and the payment date will be 2 April 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. The prior year comparatives have been restated accordingly.

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

6 Free cash flow defined as cash generated from operations and net sale of business operations and subsidiary and net capital expenditure.

BUSINESS REVIEW

Darty France

\* Total revenue includes Darty Telecom revenue

* *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.

At Darty France total revenue was up by 2.7 per cent on a like-for-like basis. Excluding the impact of the sale of Darty Telecom on the first quarter comparative, total revenue was up 1.4 per cent, ahead of a market estimated to have declined by 2.8 per cent. After taking into account the sale of Darty Telecom, total revenue was down 0.5 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 growth in tablets and, in particular, Communications from very strong sales of smart phones. Vision volumes remained very weak especially against the European football championship comparative in the first quarter, with an improving trend thereafter.

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 sale in the period and we were pleased by the customer response and traffic generated.

Web-generated sales continued to outperform the market, growing 11 per cent to over 14 per cent of total product sales. At the end of the period, Darty won a FEVAD award for best technical product web site.

Gross margin was down 80 basis points for the period, in line with expectations, resulting from the impact of strong growth of lower margin smart phones and tablets in the mix and ongoing competitive market conditions and price pressure.

Total costs reduced by over €14 million, over three per cent, reflecting in part the benefit of CICE and reduced depreciation following the new Darty Telecom agreement. Underlying costs were down around one per cent, more than off-setting inflationary pressures.

Retail profit was €26.9 million compared to €26.4 million in the prior year. EBITDA was €48.8 million (2013: €48.8 million) reflecting the stable retail profit, reduced depreciation and amortisation following the new Darty Telecom agreement and lower profits on disposal of property, plant and equipment.

During the period one store was extended and the three loss making stores in Luxembourg were sold to a local trade buyer. In October Darty relocated a store at Beaugrenelle, Paris where all the latest merchandising, digitalisation and service initiatives have been introduced.

* 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.

At Vanden Borre in Belgium and BCC in the Netherlands, total revenue fell by 0.5 per cent and by 1.0 per cent on a like-for-like basis against a good performance last year. 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 four per cent. BCC held share in what remains a highly promotional and difficult market, estimated to be down by over five per cent. Overall, web-generated sales continued to grow strongly, up over 40 per cent to over ten per cent of total product sales.

Overall gross margin was down 60 basis points. Strong growth of lower margin Communications products in the sales mix had a negative impact on gross margin in both markets. In the Netherlands, BCC was also impacted by aggressive pricing in the market and the move to free delivery after the first half last year. Now that this impact has annualised the margin is seeing an improving trend.

Total costs were down over two per cent reflecting a small increase at Vanden Borre as the business continues to grow, more than off-set 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 primarily reducing headcount and combining warehouses. These actions are estimated to have a €5 million annualised benefit in 2014/15.

Retail profit fell to €1.1 million compared to €1.6 million in the prior year, despite continued strong profitability at Vanden Borre, and EBITDA fell to €3.8 million (2013: €7.7 million).

During the period two stores were refurbished and extended at Vanden Borre and one store opened and one store closed at BCC.

Other businesses - Datart and Darty Turkey

* 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.

At our Other businesses, Datart in the Czech Republic and Slovakia and Darty Turkey, revenue grew by 1.0 percent in constant currency and by 0.5 per cent on a like-for-like basis, with a better sales performance in the second quarter, particularly in the growing Turkish market.

Gross margin overall for the segment was down 50 basis points for the period, impacted by an adverse sales mix from very strong growth in lower margin Communication products in both markets. With total costs down 2.5 per cent, benefitting in part from asset impairments in the prior year. The overall retail loss for the segment fell from €8.8 million to €7.4 million and EBITDA was flat at €(5.8) million.

In Turkey we took actions to improve the performance of the business, reducing costs and improving the store portfolio. In the period we closed three underperforming stores, rightsized a further two and opened five new stores.

KEY EVENTS

Alain Grisay was appointed as an independent Non-Executive Director on 23 September 2013.

POST BALANCE SHEET EVENTS

Proposed acquisition of Mistergooddeal.com

Darty plc (the "Group") today announced that through its subsidiary Etablissements Darty et Fils ("Darty France") it has entered into exclusive negotiations with M6 Group for the possible acquisition of 100 per cent of the share capital of Mistergooddeal.com, one of France's leading web sites.

These negotiations include consultations with employees as well as obtaining regulatory approvals and are likely to be completed in the coming months. It is anticipated the deal would be cash neutral and profitable in year two on leveraging Darty's infrastructure. Further details will be announced in due course.

Mistergooddeal.com is a leading French web site, predominantly selling white goods plus multimedia, furniture and leisure products. Formed in 2000 it now employs around 170 people and attracts 2 to 4 million unique visitors per month, offering over 10,000 products from a 22,000 sqm warehouse. For its last full financial year to 31 December 2012 Mistergooddeal.com's revenue was €128.1 million and gross assets €32.4 million.

Proposed disposal of the operations of Darty Turkey

Darty plc (the "Group") announces that as part of its Nouvelle Confiance strategy to concentrate on its core businesses it has entered into binding heads of terms with Turkish specialist technology retailer Bimeks to sell the Group's Turkish operations ("Darty Turkey").

Under the heads of terms the Group will transfer its 28 stores and store staff for nominal consideration and transfer the stock of the business for an amount to be agreed following a valuation exercise. This amount will be finalised at completion.

The Group will retain responsibility for closure of the head office and non-store locations and the settlement of all remaining liabilities of the Turkish business. It is anticipated that the overall impact of the proposed transaction will be broadly cash neutral on the Group.

The transaction is subject to, inter alia, the approval of the Turkish competition authority. It is expected that a sale and purchase agreement will be finalised shortly and the transaction will complete by the end of the Group's current financial year.

For the year ending 30 April 2013, the assets being disposed of generated total sales of €120m and a loss before tax after €6m of impairment costs of €16m. The value of the gross assets subject to the transaction, as at 30 April 2013, was €33m.

NON- GAAP FINANCIAL MEASURES

The Group has prepared its consolidated financial statements under International Financial Reporting Standards for the 6 months ended 31 October 2013. The basis of preparation is outlined in Note 1 to the Financial Information on page 27. 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, and their definitions, are outlined in Note 1 to the Financial Information on page 27.

PRINCIPAL RISKS AND GOING CONCERN

The risks to achieving the objectives for the remainder of the financial year remain those more fully set out in the Directors' report on page 23 of the 2012/13 Annual report and as updated as an appendix to this statement.

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 Darty plc are listed in the Annual Report for 2012/13, with the exception that in the period Alain Grisay was appointed as an independent Non-Executive Director on 23 September 2013. A list of current directors is maintained on the Darty plc website: www.Dartygroup.com.

APPENDIX - QUARTERLY REVENUE PERFORMANCE

Revenue change as reported in Euros

Revenue change in local currency

Like-for-like

* Datart and Darty Turkey.

APPENDIX - PRINCIPAL RISKS 

The taking of risk is an inherent part of doing business and the skill in business is to manage risk effectively. The Board and senior management have invested time to identify and assess the key risks facing the business and actively manages those risks. Risk management is performed from both a top-down and a bottom-up perspective, ensuring that strategic and operational risks are appropriately addressed.

The principal risks and uncertainties are set out below together with an illustration of what actions are being taken to mitigate them.

INDEPENDENT REVIEW REPORT TO DARTY PLC  

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2013, which comprises the Group income statement, Group statement of comprehensive income, Group statement of changes in equity, Group balance sheet, Group statement of cash flows andrelated notes. We have read the other information contained in the half-yearly 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 half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct 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 half-yearly 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 half-yearly 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 half-yearly financial report for the six months ended 31 October 2013 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 Conduct Authority.

PricewaterhouseCoopers LLPChartered Accountants17 December 2013London

DARTY PLC