Half Yearly Results

8 December 2010

Statement of Results for the six months ended 31 October 2010

Kesa Electricals continued to improve its performance and took significant steps to deliver future profitable growth:

Operational Highlights

·; 23% increase in web generated sales as we grow our profitable cross channel sales, with strong growth at Darty France and the other established businesses and launch of a new platform at Comet.

·; Continued push for market differentiation through rolling out the Darty concept, with improved performance in France and Belgium, initial actions in the UK and Netherlands and the roll out of the Darty name in Spain.

·; Accelerated store expansion in Italy as we continue to build our European network.

Financial Highlights

·; 4.1% increase in Group revenue to €2,777.7 million (2010: €2,669.2 million), an increase of 2.5% in constant currency¹ and 0.1% on a like for like basis.

·; 19.6% increase in Group retail profit² to €32.4 million (2010: €27.1 million), an increase of 22.5% in constant currency¹

·; 52.4% increase in adjusted3 Group profit before tax to €25.0 million (2010: €16.4 million).

·; 78.9% increase in adjusted EPS to 3.4 cents (2010: 1.9 cents).

·; Free cash flow4 of €57.2 million with net cash at the end of the period of €109.5 million (2010: €59.2 million).

·; The Board has declared an interim dividend of 2.25 cents (2010: 1.95 cents), an increase of 15% to be paid on 1 April 2011.

Financial Summary

Thierry Falque-Pierrotin, Chief Executive, commented:

"During the first half we continued to deliver an improved operating performance whilst taking actions to implement the Darty concept in all our markets. We increased profitability at Darty France, continued to successfully grow our web sales, accelerated the growth of Darty Italy and took a number of actions in the UK, Spain and the Netherlands to build longer term performance.

"We have prepared all our businesses for what we expect to be a competitive peak trading period and will continue to implement self help measures in order to face an increasingly uncertain market environment."

David Newlands, Chairman, commented:

"The Group continues to trade robustly in challenging market conditions and I am pleased that our earnings growth and continued cash generation have enabled us to declare an increase in the interim dividend of 15 per cent to 2.25 cents per share."

1 Constant exchange rate of 1 Euro = £0.8436

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 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 non-controlling interests, profit 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.

ENDS

There will be a presentation to analysts and institutions at 08.30 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 will issue an Interim Management Statement on 16 February 2011 for the third quarter trading period of 1st November 2010 to 31 January 2011.

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

* Includes BCC, Vanden Borre and Datart

** Includes Darty Switzerland, Darty Italy, Darty Turkey and Darty Spain. Darty Switzerland was sold on 6th July 2009 for which revenue and retail loss of €5.8 million and €1.5 million respectively are included in the 6 months to 31 October 2009.

Financial review

Group revenue was €2,777.7 million, an increase of 4.1 per cent on a reported basis and 2.5 per cent in constant currency, compared with the same period last year. On a like for like basis revenue increased by 0.1 per cent. This performance reflects a strong first quarter with the successful delivery of our World Cup campaigns followed by a toughening trading environment particularly in the latter part of the second quarter. Overall, gross margin fell by 0.2 percentage points reflecting in the first quarter the sales of TVs ahead of the World Cup and the one-off multimedia initiative at Comet. In the second quarter the gross margin was up 0.1 percentage points offsetting in part the 0.5 percentage points fall seen in the first quarter. Web generated sales increased by 23 per cent and now represent 10.3 per cent of total product sales, which had a slight pressure on gross margin.

Group retail profit increased by 19.6 per cent to €32.4 million from €27.1 million last year, an increase of 22.5 per cent in constant currency, representing a 0.2 percentage point improvement in retail profit margin to 1.2 per cent. This improvement was primarily due to increased profits at Darty France and further reduction in the losses at the Developing businesses off setting an increase in the loss at Comet.

The net interest cost was €7.4 million (2010: €10.7 million) comprising net interest on financing of €5.5 million (2010: €7.4 million) plus IAS 19 notional pension interest of €1.9 million (2010: €3.3 million). Exceptional net finance income of €2.8 million represents movements in the fair value, and realised profits on disposal, of investments held in cash and cash equivalents as part of the UK extended warranty scheme, in accordance with IAS 39.

Adjusted profit before tax was €25.0 million (2010: €16.4 million) and reported profit before tax and after interest was €27.2 million (2010: €7.1 million).

The effective tax rate on profit before exceptional items and prior year adjustments, including the share of joint venture and associates' tax was 35.0 per cent (2010: 37.0 per cent). This represents the current estimate of the full year effective tax rate.

Adjusted earnings per share were 3.4 cents (2010: 1.9 cents) and basic diluted earnings per share were 3.7 cents (2010: 0.4 cents).

Cash generated from operations was €120.8 million (2010: €128.7 million) and net capital expenditure and investments was €63.6 million (2010: €27.3 million) generating free cash flow of €57.2 million (2010: €101.4 million). The reduction from the prior year reflects the phasing of working capital and the planned increase in capital expenditure as we returned to more normal levels with an increase in investment in the first half ahead of the peak trading period. Closing net cash was €109.5 million compared to €59.2 million on 31 October 2009. Average drawings of the €500 million revolving credit facility were just under €100 million and as at 31 October 2010, €110 million of this facility was drawn down.

The IAS19 net pension liability increased from €101.8 million to €105.7 million largely reflecting the updating of membership data in the Comet scheme as a result of the ongoing 2010 triennial valuation.

The Board has declared an interim dividend of 2.25 cents per share. The amount for those that have elected to receive the dividend in sterling will be 1.90p1.The ex dividend date will be 2 March 2011, the record date 4 March 2011 and the payment date will be 1 April 2011.

Outlook

We have prepared all our businesses for what we expect to be a competitive peak trading period. We will continue to implement self help measures in order to face an increasingly uncertain market environment.

1 Translated as at 7 December 2010 at an exchange rate of 1 Euro = £0.8429

BUSINESS REVIEW

Darty France

In France, Darty saw strong growth in sales of large screen TVs for the World Cup and a strong performance in small domestic appliances. Overall, market share was held but more difficult trading conditions were seen towards the end of the period. Total revenue grew by 5.2 per cent compared to the same period last year, and by 2.2 per cent on a like for like basis.

The Darty web site continued to deliver excellent growth, increasing by 37.8 per cent to 9.7 per cent of total product sales.

While gross margin eased slightly for the period reflecting the growing weight of web sales, retail profit increased by 16.3 per cent to €59.8 million resulting in an improvement in retail profit margin to 4.4 per cent. Excluding Darty Box, Darty's retail profit margin improved to 4.8 per cent from 4.6 per cent last year reflecting an improved cost to serve ratio.

During the period Darty relocated three stores. A further new store, one relocation and four refurbishments are planned for the second half of the year. Darty has identified a number of new store opportunities to reach 245 stores by 2013/14 plus a further c.15 refurbishments/relocations per year. The successful kitchen offer was rolled out to a further five stores, bringing the total to 26, with a further two planned for the second half of the year.

Following the 'Back to School' trading campaign, Darty Box now has 300,000 subscribers. We remain in line with our financial plans to achieve break even this financial year.

Comet

Comet saw a positive start to the period with a strong World Cup campaign and successful delivery of a one-off initiative in multi-media, but saw more difficult trading conditions as the second quarter progressed. Overall market share was held with strong growth in multimedia. As a result total revenue was €864.1 million, a decline of 2.6 per cent in constant currency and a fall of 3.7 per cent on a like for like basis. Web generated sales increased by 8.0 per cent and now represent 14.6 per cent of total product sales.

After the sales mix pressure on gross margin in the first quarter, gross margin stabilised at last year's level in the second quarter and was down 80bp overall for the period. There was a continuing strong focus on costs but first half weighting of expenditure relating to the core store refits and the brand refresh together with the more difficult trading environment contributed to Comet's retail loss increasing to €6.4 million from €1.8 million last year.

Comet has started to take significant actions to improve its future performance. Firstly it has started to build penetration in the higher margin accessories and small domestic appliances product categories. 160 stores now have incorporated dedicated accessories areas with an encouraging improvement seen in sales penetration. For small domestic appliances, 59 stores have updated kitchen and health and beauty displays and a further nine have been completed in November. Secondly 30 further core stores were refitted during the first half and are confirming at least the same level of sales and margin uplift seen from the first seven stores completed last financial year. A further 16 are planned for the second half of which nine have been completed in November. Thirdly the Comet brand has been refreshed and relaunched in mid September with new in store point of sale materials, new staff uniforms and supported by new press and TV campaigns. Finally in November the web site was moved to a new platform to allow greater functionality, enhanced navigation and extended ranges.

*BCC, Vanden Borre and Datart

The strength of the Darty concept continues to be demonstrated at Vanden Borre in Belgium which strongly outperformed its market. BCC in the Netherlands and Datart in the Czech Republic were still impacted by difficult trading conditions, but overall started to see improving sales trends. Total revenue increased by 6.1 per cent to €383.2 million, an increase of 5.4 per cent in constant currency and 3.6 per cent on a like for like basis.

Web generated sales continued to grow strongly and increased by 40.2 per cent during the period and now represent 7.1 per cent of total product sales.

Overall, with a stable gross margin and cost to serve, retail profit of €4.7 million increased by 5.5 per cent in constant currency.

In the Netherlands at BCC we took the decision to change the management team and we are starting to implement the Darty concept. We expect these in-depth changes to deliver gradually.

The store development programme continued with the opening of four new stores in the Czech Republic and three refurbishments in Belgium. Overall a further two new stores are planned for the second half of the year.

Developing businesses**

**Includes Darty Switzerland, Darty Italy, Darty Turkey and Darty Spain. Darty Switzerland was sold on 6th July 2009 for which revenue and retail loss of €5.8 million and €1.5 million respectively are included for the 6 months to 31 October 2009.

Total revenue for the Developing businesses, Darty Italy, Darty Turkey and Darty Spain increased by 3.7 per cent to €173.3 million and by 1.1 per cent in constant currency. On a like for like basis sales fell by 3.8 per cent predominantly due to ongoing difficult market conditions in Spain and the disruption to trading of the rebranding activity as well as the strong sales performance in Turkey last year aided by tax incentives programmes. Gross margin improved significantly and overall losses reduced from €18.5 million to €16.3 million.

Darty Italy and Darty Turkey continued to build scale with six new stores in Italy and one in Turkey. The store opening programme in Italy is to be accelerated with a further eight stores planned to open in the second half of the year. A further four stores are planned in Turkey.

In Spain the rebranding programme was rolled out and 36 stores have now been rebranded to Darty with five planned for the second half of the year. This did cause some disruption during the period, but overall the rebranded stores are delivering a more consistent retail proposition in the market. An advertising campaign is being launched to establish the Darty brand now that a critical mass of stores have been rebranded. Further work is ongoing on the store portfolio with two closures and one opening completed in the period and two closures and one opening planned for the second half of the year. In addition the management team continues to develop the Darty service led concept with the opening of a customer call centre during the period and the migration on to the Group's business system.

KEY EVENTS

Alan Parker was appointed as a non-executive director on the 1st October 2010 and will sit on the Audit, Remuneration and Nomination committees.

NON- GAAP FINANCIAL MEASURES

The Group has prepared its consolidated financial statements under International Financial Reporting Standards for the 6 months ended 31 October 2010. The basis of preparation is outlined in Note 1 to the Financial Information on page 20. 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 20.

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 will provide a better reflection of the underlying performance of the Group as nearly two thirds of total revenue and over 90 per cent of the retail profit are generated in euros. Dividends will be offered in either sterling or euros with reference to euro earnings. Proforma financials were provided with the Q1 Interim Management Statement on 16 September 2010.

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 22 and 23 of the 2009/10 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 2009/10 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 these risks is as follows;-

Economic and market conditions

Product life cycles

Entry into new markets

Systems failure

Financial risk management

Legislative and regulatory risks

Reputational risks

Pension risks

Employees

Leased properties

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.

These risk factors influence the liquidity of the business. The Board has reviewed the Group's latest financial forecasts and is satisfied that the Group will continue to operate as a going concern.

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 Group are listed in the Kesa Electricals Group Annual Report for 2009/10, with the exception that in the period Mr Alan Parker was appointed as a director on 1 October 2010. A list of current directors is maintained on the Kesa Electricals Group website: www.kesaelectricals.com.

By order of the Board

Thierry Falque-Pierrotin

Chief Executive

8 December 2010

Dominic Platt

Finance Director

8 December 2010

INDEPENDENT REVIEW REPORT TO KESA ELECTRICALS PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the interim report for the six months ended 31 October 2010, which comprises the Group Income Statement, 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 report for the six months ended 31 October 2010 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

8 December 2010

KESA ELECTRICALS PLC

KESA ELECTRICALS PLC

The comparative information, which was originally published in sterling, has been represented in euros in line with the change of Group reporting currency from sterling to euros

KESA ELECTRICALS PLC

KESA ELECTRICALS PLC

KESA ELECTRICALS PLC

KESA ELECTRICALS PLC

Six months ended 31 October 2010

KESA ELECTRICALS PLC

KESA ELECTRICALS PLC