27th Sep 2006 07:02
Kesa Electricals plc27 September 2006 27 September 2006 Interim Results for the Six Months ended 31 July 2006 Financial Highlights • Group revenue increased by 10.9% to £1,925.9 million during the period (10.5% in constant currency1). • Group retail profit(2) increased by 28.9% from £37.7 million to £48.6 million. • Profit before tax increased by 61.7% from £24.3 million to £39.3 million. • Strong cashflow from operations of £56.4 million. • Net capital expenditure increased to £57.0 million from £49.8 million. • Basic adjusted earnings per share3 increased 51.4% to 5.3 pence per share. Basic and diluted earnings per share increased by 62.5%, from 3.2 pence to 5.2 pence per share. • Interim dividend increased by 10% to 3.25 pence per share. 1 Constant exchange rate of £1 = Euro 1.4546 2 Retail profit equates to the total operating profit before the effects of the Demerger Award Plan charge, profits and losses on disposal of property, plant and equipment and the share of joint venture and associates interest and taxation. Retail Profit also includes net premiums on exit from leased premises of £6.1 million (2005 :£1.8 million). 3 Before the effects of the Demerger Award Plan charge and the profits and losses on disposal of property, plant and equipment Jean-Noel Labroue, Chief Executive, commented: "Overall the Group delivered a very satisfactory performance in the first half,led by strong market conditions for flat screen televisions. Revenue growth andproductivity gains more than offset the negative margin mix evolution and wemade good progress in retail profit. "Sales will continue to be led by lower margin new technology products and wewill therefore remain focused on product and margin mix management and costcontrol. "Cash generation will also remain a key objective in order to sustain our longterm organic growth in our existing and new markets, while reinforcing ourspecialist service based business model and accelerate our internet sales. "Positive trading conditions have continued since the end of July, with aparticularly good August, due to the underlying strength of the TV replacementmarket and increased demand for multimedia products in the back to schoolperiod. The white goods market has returned to positive growth, but we willcontinue to see pressure on the margin mix. The outlook for the full year will,as always, depend on our key peak trading period. "The particular strength of demand factors in the current year, the adverseeffect on margin of new technologies, together with our investment plans, willimpact profit progression next year. These investment plans will benefit profitsin coming years." David Newlands, Chairman, commented: "These results represent a pleasing performance in a first half which benefitedfrom the impact of the World Cup. "We continued to demonstrate the strong cash generative nature of the groupwhich allows us to invest in our existing businesses and in new developments tosecure our future growth. This has also allowed us to increase the interimdividend by 10 per cent, to 3.25 pence per share." ENDS Enquiries Press:Kesa Electricals plcAnnabel Donaldson +44 (0) 20 7269 1400Guy Lavaud +33 (0) 1 43 18 52 00 FinsburyAbigail Irving-Bell +44 (0) 20 7251 3801Euro RSCGLaurent Dondey +33 (0) 1 58 47 95 17 Analysts:Kesa Electricals plcSimon Herrick +44 (0) 20 7269 1400Simon Ward +44 (0) 20 7269 1400 There will be a presentation today to analysts and institutions at 09.30am atMerrill Lynch, King Edwards Hall, 2 King Edward Street, London, EC1A 1HQ. This announcement is available on the KESA Electricals website:www.kesaelectricals.com. A live webcast of the presentation to analysts andinstitutions will also be available on the site at 09.30am, and recorded foraccess later in the day. Certain statements made in this announcement are forward looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual results to differ materiallyfrom any expected future results in forward looking statements KESA Electricals is a specialist electrical retailer. It employs more than28,000 people and trades in nine countries and has an annual turnover ofapproximately £4 billion. KESA Electricals is a member of the FTSE 250. Itsordinary shares are listed with the UK Listing Authority and trade on the marketfor listed securities on the London Stock Exchange under the symbol KESA.L. Itis also listed on the Premier Marche of the Paris Stock Exchange. For furtherinformation, please visit the company's website, as above. GROUP OVERVIEW Results as reported in sterling +--------+----------+----------+--------+--+-------------+-------------+--------+| | Revenue |Revenue | Change | | Retail | Retail | Change || | for 6 | for 6 | | | profit(1) | profit(1) | || | months | months | | | for |for 6 months | || | ended | ended | | | 6 months | ended | || | 31 July |31 July | | | ended | 31 July | || | 2006 | 2005 | | | 31 July | 2005 | || | | | | | 2006 | | || | £m | £m | | | £m | £m | |+--------+----------+----------+--------+--+-------------+----------- -+--------+|Darty | 765.6 | 689.6 | 11.0% | | 41.7 | 35.6 | 17.1% |+--------+----------+----------+--------+--+-------------+-------------+--------+|Comet | 683.5 | 623.7 | 9.6% | | 4.7 | (1.7)| |+--------+----------+----------+--------+--+-------------+-------------+--------+|BUT | 266.6 | 259.8 | 2.6% | | 14.7 | 16.1 | (8.7)% |+--------+----------+----------+--------+--+-------------+-------------+--------+|Other* | 210.2 | 163.3 | 28.7% | | (6.3) | (5.9)| (6.8)% |+--------+----------+----------+--------+--+-------------+-------------+--------+|Central | - | - | - | | (6.2) | (6.4)| 3.1% |+--------+----------+----------+--------+--+-------------+-------------+--------+|Total | 1925.9 | 1736.4 | 10.9% | | 48.6 | 37.7 | 28.9% |+--------+----------+----------+--------+--+-------------+-------------+--------+ Results as reported in local currency +--------+----------+----------+--------+--+--------------+--------------+--------+| | Revenue | Revenue| Change | | Retail |Retail profit | Change || | for 6 | for| | | profit(1) | (1) | || | months | 6 months| | |for 6 months | for 6 months | || | ended | ended| | | ended | ended | || | 31 July | 31 July| | | 31 July | 31 July | || | 2006 | 2005| | | 2006 | 2006 | || | | | | | | | || | m | m | | | m | m | |+--------+----------+----------+--------+--+--------------+--------------+--------+|Darty | €1113.6 | €1008.1 | 10.5% | | €60.7 | €52.0 | 16.7% |+--------+----------+----------+--------+--+--------------+--------------+--------+|Comet | £683.5 | £623.7 | 9.6% | | £4.7 | £(1.7)| |+--------+----------+----------+--------+--+--------------+--------------+--------+|BUT | €387.8 | €379.8 | 2.1% | | €21.4 | €23.5 | (8.9)% |+--------+----------+----------+--------+--+--------------+--------------+--------+|Other* | €305.8 | €238.7 | 28.1% | | •(9.2) | •(8.6)| (7.0)% |+--------+----------+----------+--------+--+--------------+--------------+--------+ *Includes BCC,New Vanden Borre, Datart, Darty Italy and Darty Switzerland. Financial Highlights Group revenue was £1,925.9 million, up 10.9 per cent on last year (10.5 per centin constant currency), up 7.5 per cent on a like for like basis. Group retail profit was £48.6 million, up 28.9 per cent on last year. Total operating profit on ordinary activities before interest and taxation was£46.3 million, up 35.0 per cent on last year. The net interest charge was £7.0 million (£10.0 million for the same period lastyear). Profit before tax and after interest was £39.3 million, £24.3 millionlast year. The effective tax rate including the share of joint venture and associates' taxwas 34.9 per cent. Operating cash flow at £56.4 million reflected strong working capitalmanagement. Net capital expenditure increased to £57.0 million from £49.8 million. Wecontinued our investment in store modernization, supply chain rationalization,new developments and acquiring minority interests. In line with the seasonal profile, net debt was £240.9 million compared to£166.3 million at the year-end and reduced by £45.5 million from £286.4 millionat the end of July 2005. Net assets have increased from £253.6 million at 31July 2005 to £316.1 million at 31 July 2006. Basic adjusted earnings per share, before the demerger award plan charge andlosses on disposal of property, plant and equipment, increased 51.4 per cent to5.3 pence per share. Basic and diluted earnings per share were 5.2 pence, upfrom 3.2 pence. The Board has declared an interim dividend of 3.25 pence, an increase of 10 percent. Trading Highlights Revenue at all the Group's electrical businesses benefited from the very strongdemand for flat screen televisions in the lead up to the World Cup. Sales of thehigher margin white goods saw small positive growth. The combined effect on theproduct mix has had a positive impact on average selling price but a negativeimpact on percentage gross margin. Revenue growth at Darty was up 10.5 per cent, up 8.8 per cent on a like for likebasis. The adverse margin impact caused by the very strong sales in newtechnologies was more than mitigated by the operational productivity gainsgenerated from the existing cost base. As a result, Darty delivered a retailprofit increase of 16.7 per cent on the previous year. Comet's revenue increased by 9.6 percent, up 8.4 per cent on a like for likebasis. Retail profit was £4.7 million compared to a loss of £1.7 million lastyear, including premiums received on exit from leased premises, principally £3.5million relating to Fosse Park in Leicester. Initiatives put in place last year to restore BUT's profitability progressed.The small to mid sized relayed stores continued to deliver strong growth and therepositioning of the product offer was further developed. Total revenue at the other businesses, BCC, Vanden Borre, Datart, Darty Italyand Darty Switzerland, grew by 28.1 per cent in local currency, up 10.4 per centon a like for like basis. Retail profit was £0.3 million before start up lossesof £6.6 million for our new developments in Italy, Switzerland and Turkey. Outlook Sales will continue to be led by lower margin new technology products and wewill therefore remain focused on product and margin mix management and costcontrol. Cash generation will also remain a key objective in order to sustain our longterm organic growth in our existing and new markets while reinforcing ourspecialist service based business model and accelerate our internet sales. Positive trading conditions have continued since the end of July, with aparticularly good August, due to the underlying strength of the TV replacementmarket and increased demand for multimedia products in the back to schoolperiod. The white goods market has returned to positive growth, but we willcontinue to see pressure on the margin mix. The outlook for the full year will,as always, depend on our key peak trading period. The particular strength of demand factors in the current year, the adverseeffect on margin of new technologies, together with our investment plans, willimpact profit progression next year. These investment plans will benefit profitsin coming years. DARTY +----------+----------+-----------+-------+--+---------+-----------+--------+| | Results | Results |Change | | Results | Results | Change || | for | for | | | for | for | || |6 months |6 months | | |6 months |6 months | || | ended | ended | | | ended | ended | || | 31 July | 31 July | | | 2006 | 2005 | || | 2006 | 2005 | | | | | || | | | | | | | || | £m | £m | | | •m | •m | |+----------+----------+-----------+-------+--+---------+-----------+--------+|Revenue | 765.6 | 689.6 | 11.0% | | 1,113.6 | 1008.1 | 10.5% |+----------+----------+-----------+-------+--+---------+-----------+--------+|Retail | 41.7 | 35.6 | 17.1% | | 60.7 | 52.0 | 16.7% ||profit | | | | | | | |+----------+----------+-----------+-------+--+---------+-----------+--------+| | | | | | | | || | | | | | | | || | | | | | | | |+----------+----------+-----------+-------+--+---------+-----------+--------+|No of | 207 | 205 | | | | | ||stores | | | | | | | |+----------+----------+-----------+-------+--+---------+-----------+--------+|Sales | 272.0 | 265.3 | 2.5% | | | | ||space | | | | | | | || | | | | | | | ||(000s sq | | | | | | | ||m) | | | | | | | |+----------+----------+-----------+-------+--+---------+-----------+--------+ Darty's total revenue rose by 10.5 per cent in local currency compared to thesame period last year, up 8.8 per cent on a like for like basis. Sales weredriven by strong growth in new technologies and particularly the very highdemand for flat screen televisions. The consequent pressure on margin was more than mitigated as Darty continued tobenefit from productivity gains in the warehouse and from the after salesservice rationalisation completed last year. Retail profit was €60.7 million, anincrease of 16.7 per cent on the previous year. Darty continued to develop revenues from new services. Four installationservices, for PC, media centre, broadband and wifi network, and five trainingservices, for PC, media centre, internet, digital images and digital music weretrialled last year and launched nationwide in June. The performance to date isshowing encouraging levels of consumer interest. Darty Box, Darty's own triple play proposition, will be launched at the end ofOctober. Training has been completed for 5,300 employees across the stores, callcentres and after sales service and full user testing is currently underway. Aspreviously stated, the start up losses for Darty Box will be approximately €10million for the full year with €0.9 million having been incurred in the firsthalf. We anticipate equivalent start up losses for next year (2007/08) withbreak-even in the third year, as previously stated. The investment in the ongoing store modernisation programme continued. In thefirst half, Darty completed two new store openings, seven extensions/refurbishments and one relocation. For the second half, three extensions/refurbishments and two relocations are planned, which will bring the total ofDarty stores in the new format to 58 at the year end. The Darty web site delivered very strong growth with a sales uplift of 76 percent. COMET +--------------+--------------+--------------+-----------+| | Results for| Results for| Change || |6 months ended|6 months ended| || | 31 July 2006| 31 July 2005| || | | | || | £m | £m | |+--------------+--------------+--------------+-----------+|Revenue | 683.5 | 623.7 | 9.6% |+--------------+--------------+--------------+-----------+|Retail profit | 4.7 | (1.7)| |+--------------+--------------+--------------+-----------+|+--------------+--------------+--------------+-----------+|No of stores | 246 | 250 | |+--------------+--------------+--------------+-----------+|Sales space | 255.7 | 258.0| (0.9)% || | | | ||(000s sq m) | | | |+--------------+--------------+--------------+-----------+ Comet delivered total revenue of £683.5 million, up 9.6 per cent on the previousyear, and up 8.4 per cent on a like for like basis, reflecting a strongperformance in the second quarter. Sales were driven by the strong demand forflat screen televisions and laptops while sales of white goods improvedslightly. Comet increased its retail profit to £4.7 million, from a loss of £1.7 millionfor the same period last year, including premiums received on exit from leasedpremises, principally £3.5 million relating to Fosse Park in Leicester. Thisimprovement was achieved through increased average selling prices and tight costcontrol, despite lower product margins.. Comet's re-positioning programme further developed. 45,000 e-learning moduleswere undertaken by store colleagues. Further integration of the home deliveryand after sales service centres was completed and customer service training forhome delivery staff is being reinforced. The property portfolio management continued with the completion of three tradingmezzanine floor extensions, following on from the excellent results from theearlier mezzanine conversions. There were also two refurbishments/extensions,one rightsizing and three closures. Against very strong comparables, Comet's web site delivered a sales uplift of 16per cent and remains the UK's most visited electrical appliances web site. BUT +-----------+----------+----------+--------+--+-----------+----------+--------+| | Results | Results | Change | | Results | Results | Change || | for | for | | | for | for | || | 6 months | 6 months | | | 6 months |6 months | || | ended | ended | | | ended | ended | || | 31 July | 31 July | | | 31 July | 31 July | || | 2006 | 2005 | | | 2006 | 2005 | || | | | | | | | || | £m | £m | | | •m | •m | |+-----------+----------+----------+--------+--+-----------+----------+--------+|Revenue | 266.6 | 259.8 | 2.6% | | 387.8 | 379.8 | 2.1% |+-----------+----------+----------+--------+--+-----------+----------+--------+|Retail | 14.7 | 16.1 | (8.7)% | | 21.4 | 23.5 | (8.9)% ||profit | | | | | | | |+-----------+----------+----------+--------+--+-----------+----------+--------+| | | | | | | | |+-----------+----------+----------+--------+--+-----------+----------+--------+|No of | 106 | 105 | | | | | ||stores | | | | | | | |+-----------+----------+----------+--------+--+-----------+----------+--------+|Sales space| 346.3 | 338.3 | 2.4% | | | | || | | | | | | | ||(000s sq m)| | | | | | | |+-----------+----------+----------+--------+--+-----------+----------+--------+ BUT grew its total revenue by 2.1 per cent in local currency, with its in-housewholesale business growing by 7.9 per cent and store turnover growing by 1.0 percent, (down 2.4 per cent on a like for like basis). Retail profit fell to €21.4million from €23.5 million last year. The initiatives put in place last year to restore BUT's sales and profit growthare progressing. The five small to mid sized stores relayed in the second halfof last year continue to deliver double digit sales growth. A further eight suchstores were relayed in the first half of the year and five more are planned forthe second half. These small to mid sized stores represent 85 per cent of BUT'sproperty portfolio and the relay programme for all these stores will becompleted over the next three years. The final stage of the repositioning of the furniture offer is now underway.Kitchen ranges represent an important growth part of the furniture market andBUT is ideally placed to provide customers with both kitchen furniture andassociated electrical appliances. The ranges and related services have beenre-designed to meet current customer demand and will be on offer in 30 stores bythe year end and in all stores over the next three years. The medium term targetis to increase kitchen sales from 10 per cent of total furniture sales to 20 percent. OTHER BUSINESSES +-----------+----------+----------+--------+---+----------+----------+--------+| | Results | Results | Change | | Results | Results | Change || | for | for | | | for | for | || | 6 months |6 months | | |6 months |6 months | || | ended | ended | | | ended | ended | || | 31 July | 31 July | | | 31 July | 31 July | || | 2006 | 2005 | | | 2006 | 2005 | || | | | | | | | || | £m | £m | | | •m | •m | |+-----------+----------+----------+--------+---+----------+----------+--------+|Revenue | 210.2 | 163.3 | 28.7% | | 305.8 | 238.7 | 28.1% |+-----------+----------+----------+--------+---+----------+----------+--------+|Retail | (6.3) | (5.9) | | | (9.2) | (8.6) | (7.0)% ||profit | | | | | | | |+-----------+----------+----------+--------+---+----------+----------+--------+| | | | | | | | |+-----------+----------+----------+--------+---+----------+----------+--------+|No of | 135 | 118 | | | | | ||stores | | | | | | | |+-----------+----------+----------+--------+---+----------+----------+--------+|Sales space| 155.0 | 133.9 | 15.8% | | | | || | | | | | | | ||(000s sq m)| | | | | | | |+-----------+----------+----------+--------+---+----------+----------+--------+ Total revenue for BCC, Vanden Borre, Datart, Darty Italy and Darty Switzerlandgrew by 28.1 per cent in local currency, up 10.4 per cent on a like for likebasis, primarily due to strong sales performances at Vanden Borre and BCC. Retail profit for our established businesses, BCC, Datart and Vanden Borre, roseto €0.4 million from a loss of €2.2 million last year. Start up losses for DartyItaly, Darty Switzerland and Darty Turkey totalled €9.6 million, €6.4 millionlast year. All the existing businesses, BCC, Vanden Borre and Datart, significantlyincreased market share and in total opened six new stores, completed threerelocations and two refurbishments in the period. The Group's new developments progressed well and on schedule. In Italy, one newstore was opened in Milan with a further three planned for the second half. The stores in Switzerland continue to receive positive customer reaction,achieving a high conversion rate and average selling price. One new store willopen during the fourth quarter of the year. In Turkey, the first three locations have been secured in Istanbul and will openin early 2007. DIVIDEND The Board has declared an interim dividend of 3.25 pence, an increase of 10 percent. The ex dividend date will be 8 November 2006, the record date 10 November2006 and payment date 8 December 2006. Kesa Electricals plc Interim Report 2006Group income statement (unaudited)Six months ended 31 July 2006 Six months Six months Year ended Six months ended 31 ended 31 31 January ended 31 July 2006 July 2005 2006 July 2006 (restated) Note £m £m £m •m (1) Revenue 2 1,925.9 1,736.4 4,100.0 2,801.4 Group operating profit 41.1 30.5 151.8 59.7Share of post tax profit in joint venture and associates 5.2 3.8 8.1 7.6 Total operating profit 2 46.3 34.3 159.9 67.3 Analysed as: Retail profit (2) 2 48.6 37.7 164.9 70.7Share of joint venture and associates interest and taxation 2 (1.1) (1.1) (2.2) (1.6)Demerger award plan charge 2 (0.6) (1.8) (1.8) (0.9)Loss on disposal of property, plant and equipment 2 (0.6) (0.5) (1.0) (0.9) Total operating profit 46.3 34.3 159.9 67.3 Interest payable and similar charges (9.8) (14.8) (24.4) (14.3)Interest receivable 2.8 4.8 7.8 4.1 Profit before tax 39.3 24.3 143.3 57.1 UK taxation 7.7 7.4 (3.7) 11.2Overseas taxation (20.7) (15.4) (44.9) (30.1) Total Taxation (13.0) (8.0) (48.6) (18.9) Profit for the financial period from continuing operations 26.3 16.3 94.7 38.2 Profit attributable to: - Equity shareholders 27.3 17.2 94.2 39.7- Minority interests (1.0) (0.9) 0.5 (1.5) 26.3 16.3 94.7 38.2 Earnings per share - basic and diluted (pence) 4 5.2 3.2 17.8 7.6 Notes 1) Income statement information in Euros is provided for illustrative purposesonly and is translated at the average exchange rate of €1.4546 for £1. 2) Retail profit represents total operating profit before the share of jointventure and associates interest and taxation, the Demerger award plan charge andlosses on disposal of property, plant and equipment. Retail profit includes netpremiums on exit from leased premises of £6.1m (2005: £1.8m). 3) The final dividend in respect of the financial year ended 31 January 2006 of9.15 pence per share (2005: 8.25 pence) was approved by shareholders at theAnnual General Meeting and absorbed £48.5m (2005: £43.7m) of shareholders'funds. The Directors declare an interim dividend of 3.25 pence per share (2005:2.95 pence per share), which will absorb an estimated £17.2m of shareholders'funds (2005: £15.6m). See note 3 for further information. Group statement of recognised income and expense (unaudited)Six months ended 31 July 2006 Six Six months Year ended Six months ended 31 31 January months ended 31 July 2005 2006 ended 31 July (restated) (restated) July 2006 2006 Note £m £m £m •m (1) Exchange differences 8 0.5 0.1 (2.2) 0.7Actuarial gains/(losses) on retirement benefit obligations 35.1 (8.1) (14.6) 51.1Tax on actuarial (gains)/losses on retirement benefit obligations (10.5) 2.5 4.4 (15.3)Available for sale assets - fair value gains net of tax 8 1.9 3.9 2.3 2.8 - recycled and reported in net profit 8 - (0.6) (0.3) -Cash flow hedges - fair value gains net of tax 8 1.8 (1.1) 2.8 2.6 - recycled and reported in net profit 8 0.6 0.4 - 0.9Impact of put options exercised/ (entered into) during the period 8 11.1 - (5.6) 16.1Net profit/(loss) recognised directly in equity 40.5 (2.9) (13.2) 58.9 Profit for the period 26.3 16.3 94.7 38.2 Total recognised income for the period 66.8 13.4 81.5 97.1 Adjustment for the first time adoption of IAS 32 & IAS 39 - (16.2) (16.2) - 66.8 (2.8) 65.3 97.1 Attributable to:- Equity shareholders 67.8 14.3 81.0 98.6- Minority interests (1.0) (0.9) 0.5 (1.5) Total recognised income for the period 66.8 13.4 81.5 97.1 The adjustment for the first time adoption of IAS39 is attributable to equity shareholders. Note 1) Statement of recognised income and expense information in Euros is providedfor illustrative purposes only and is translated at the average exchange rate of€1.4546 for £1. Group balance sheet (unaudited)As at 31 July 2006 31 July 31 July 31 January 31 July 2006 2005 2006 2006 (restated) (restated) Note £m £m £m •m (1) AssetsNon-current assetsIntangible assets 214.9 200.6 200.8 314.3Property, plant and equipment 528.8 531.2 530.8 773.5Available for sale investments 22.0 23.0 20.0 32.2Investments in joint venture and associates 42.8 37.8 39.1 62.6Other receivables 11.1 9.8 9.8 16.2Derivative financial instruments 3.7 - 1.0 5.4Deferred tax assets 26.5 38.6 38.0 38.8 Total non-current assets 849.8 841.0 839.5 1,243.0 Current assetsInventories 586.4 565.0 616.7 857.7Trade and other receivables 223.6 219.2 244.4 327.1Income tax 12.6 21.6 9.3 18.4Other investments 81.2 89.9 80.5 118.8Derivative financial instruments - 1.6 1.4 -Cash and cash equivalents 5 100.1 164.6 159.6 146.4 Total current assets 1,003.9 1,061.9 1,111.9 1,468.4 Total assets 1,853.7 1,902.9 1,951.4 2,711.4 Liabilities Current liabilities Borrowings (59.8) (53.8) (56.6) (87.5)Income tax liabilities (2.4) (3.5) (11.9) (3.5)Trade and other payables (747.3) (726.1) (836.6) (1,093.1)Derivative financial instruments (0.2) - (1.0) (0.3)Provisions (0.9) (0.3) (0.6) (1.3) Total current liabilities (810.6) (783.7) (906.7) (1,185.7) Non-current liabilities Borrowings (360.0) (482.5) (347.0) (526.6)Other payables (251.8) (233.8) (245.0) (368.3)Deferred tax liabilities (28.7) (26.9) (26.7) (41.9)Post-employment benefits (86.2) (115.6) (119.7) (126.1)Derivative financial instruments - (6.3) - -Provisions (0.3) (0.5) (0.5) (0.4) Total non-current liabilities (727.0) (865.6) (738.9) (1,063.3) Total liabilities (1,537.6) (1,649.3) (1,645.6) (2,249.0) Net assets 316.1 253.6 305.8 462.4 Group balance sheet (unaudited) contd.As at 31 July 2006 Equity Share capital 6 132.4 132.4 132.4 193.7Other reserves 8 742.0 731.8 726.1 1,085.3Retained earnings 7 (561.4) (620.7) (564.0) (821.2) Total equity shareholders' funds 9 313.0 243.5 294.5 457.8 Minority interests 3.1 10.1 11.3 4.6 Total equity 316.1 253.6 305.8 462.4 Note 1) Balance sheet information in Euros is provided for illustrative purposes onlyand is translated at the closing exchange rate of €1.4627 for £1 Approved by the Board of Directors on 27 September 2006 and signed on its behalf by: Jean-Noel Labroue Simon HerrickDirector Director Group cash flow statement (unaudited)Six months ended 31 July 2006 31 July 31 July 31 31 July 2006 2005 January 2006 (restated) 2006 Note £m £m £m •m (1) Cash flows from operating activities Cash generated from operations 10 56.4 58.3 259.7 82.0Interest received 2.8 4.6 7.9 4.1Interest paid (8.3) (9.9) (17.5) (12.1)Tax paid (20.9) (34.6) (54.1) (30.4) Net cash flows from operating activities 30.0 18.4 196.0 43.6 Cash flows from investing activities Acquisition of subsidiaries (net of cash acquired) (10.5) - (0.4) (15.3)Proceeds from sale of property, plant and equipment 0.5 3.0 5.2 0.7Purchase of property, plant and equipment (38.4) (51.5) (97.8) (55.9)Proceeds from sale of available for sale investments - 0.4 0.4 -Purchase of intangible assets (8.6) (1.8) (4.9) (12.5)Proceeds from sale of intangible assets - 0.1 0.1 -Cash (outflow)/inflow from other current investments (0.6) 5.7 14.1 (0.9)Dividends received from joint venture 1.5 1.0 3.4 2.2 Net cash used in investing activities (56.1) (43.1) (79.9) (81.7) Cash flows from financing activities Finance lease principal payments (0.4) (0.5) (1.7) (0.6)Proceeds from long-term borrowings 82.6 472.6 472.6 120.1Repayment of long-term borrowings (70.0) (471.4) (602.5) (101.8)Dividends paid to shareholders (48.5) (43.7) (59.3) (70.5)Dividends paid to minority interests (0.9) (0.9) (0.9) (1.3) Net cash used in financing activities (37.2) (43.9) (191.8) (54.1) Net cash outflow from cash and cash equivalents (63.3) (68.6) (75.7) (92.2) Effects of exchange rate changes 0.4 (2.5) (3.4) 0.6 Net decrease in cash and cash equivalents (62.9) (71.1) (79.1) (91.6) Cash and cash equivalents at start of period 105.8 184.9 184.9 153.9 Cash and cash equivalents at end of period 5 42.9 113.8 105.8 62.3 Note1) Cash flow information in Euros is provided for illustrative purposes only and istranslated at the average exchange rate of €1.4546 for £1. Notes to the interim reportSix months ended 31 July 2006 1 General informationBasis of preparation The financial information set out on pages XX to XX comprises the interimconsolidated financial statements of Kesa Electricals plc for the sixmonths ended 31 July 2006. It has been prepared in accordance with theaccounting policies set out in the 2005/6 Annual Report approved on 22March 2006, with the exception of the Group policy in respect ofaccounting for financial instruments (see below). The financialinformation comprises the consolidated interim balance sheets as of 31July 2006 and 31 July 2005, related consolidated interim statements ofincome, cash flows and recognised income and expense of Kesa Electricalsplc for the six months then ended and related notes. The interimconsolidated financial statements comprise the Company and its subsidiaryundertakings (together referred to as the "Group") and the Group'sinterests in associated undertakings and joint ventures. Kesa Electricals plc has taken note of the conclusions reached by theInternational Financial Reporting Interpretations Committee (IFRIC) in itsJuly 2006 meeting. As such, the Group has amended its accounting policyconcerning put options held by minorities and now recognises a liabilityfor these in its balance sheet. The liability represents the Group's bestestimate of the amount that would be paid for the minorities' shares inthe event that the put were exercised. The impact of this change inaccounting policy has been to reduce previously reported net assets at 31July 2005 and 31 January 2006 by £19.0m and £24.4m respectively.All other accounting policies set out in the 2005/6 Annual Report havebeen consistently applied to all periods presented. The implementation ofIFRS brings with it, however, an evolving interpretation of accountingstandards. Therefore certain additional adjustments have been incorporatedinto the 31 July 2005 comparative financial information that representfurther changes to the numbers presented in the 2005 Interim Reportapproved on 28 September 2005. The impact of the changes has been toincrease profit after tax for the comparative period by £0.8m and todecrease net assets for the comparative period by £2.3m. These changes ininterpretation of IFRS were already reflected in the figures presented inthe 2005/6 Annual Report. These interim consolidated financial statements have been prepared inaccordance with International Financial Reporting Standards (IFRS) andIFRIC interpretations as adopted by the European Union and with parts ofthe Companies Act 1985 applicable to companies reporting under IFRS andcomply with the requirements of the Listing Rules issued by the FinancialServices Authority. The interim consolidated financial statements havebeen prepared under the historical cost convention as modified by therevaluation of certain financial instruments. The Group has chosen not toadopt IAS 34 "Interim financial statements" in preparing the interimconsolidated financial statements. The interim report is unaudited, but has been reviewed by the auditorswhose report is set out on pages XX. It does not constitute statutoryfinancial statements within the meaning of Section 240 of the CompaniesAct 1985. The comparative figures for the year ended 31 January 2006 arederived from the statutory accounts filed with the Registrar of Companies.The audit report on the Annual Report 2005/6 was unqualified and did notcontain a statement under Section 237 (2) of the Companies Act 1985. Use of adjusted measures Kesa Electricals plc believes that retail profit (representing totaloperating profit before the Demerger Award Plan charge, losses on disposalof property, plant and equipment and the share of joint venture andassociates interest and taxation) and adjusted earnings per share providesadditional useful information on underlying trends and businessperformance to shareholders. These measures are used by the Group forinternal performance analysis and incentive compensation arrangements foremployees. The term retail profit is not defined by IFRS and may thereforenot be comparable with similarly titled profit measures reported by othercompanies. It is not intended to be a substitute for, or superior to, GAAPmeasurements of profit. Principal rates of exchange Euro Czech KrAverage rate - six months to 31 July 2006 1.4546 41.4535Closing rate - 31 July 2006 1.4627 41.1645Average rate - six months to 31 July 2005 1.4618 43.8443Closing rate - 31 July 2005 1.4502 44.5831 Average rate - year ended 31 January 2006 1.4645 43.5553Closing rate - 31 January 2006 1.4638 42.3003Average rate - year ended 31 January 2005 1.4735 47.1433Closing rate - 31 January 2005 1.4420 43.0247 2 Segmental analysisSix months ended 31 July 2006 France France UK Central Darty BUT Comet Other Costs Group £m £m £m £m £m £m Revenue 765.6 266.6 683.5 210.2 - 1,925.9Retail profit / (loss) 41.7 14.7 4.7 (6.3) (6.2) 48.6 Share of joint venture and associates interest and taxation (0.1) (1.0) - - - (1.1)Demerger award plan charge (0.2) - (0.1) (0.1) (0.2) (0.6)(Loss) / profit on disposal of property, plant and equipment (0.8) 0.1 0.1 - - (0.6)Operating profit / (loss) 40.6 13.8 4.7 (6.4) (6.4) 46.3 Interest payable and similar charges (9.8)Interest receivable 2.8Net interest (7.0) Profit before tax 39.3Taxation (13.0)Profit for the financial period 26.3 The share of operating profits of the joint venture and associates included within theretail profit for Darty and BUT are £3.0m and £3.3m respectively. The share of post taxprofits of the joint venture and associates included within the operating profit for Dartyand BUT are £2.9m and £2.3m respectively. Six months ended 31 July 2005 (restated) France France UK Central Darty BUT Comet Other Costs Group £m £m £m £m £m £m Revenue 689.6 259.8 623.7 163.3 - 1,736.4Retail profit / (loss) 35.6 16.1 (1.7) (5.9) (6.4) 37.7 Share of joint venture and associates interest and taxation (0.2) (0.9) - - - (1.1)Demerger award plan charge (0.7) (0.1) (0.3) - (0.7) (1.8)(Loss) / profit on disposal of property, plant and equipment (0.1) (0.4) 0.1 (0.1) - (0.5) Operating profit / (loss) 34.6 14.7 (1.9) (6.0) (7.1) 34.3 Interest payable and similar charges (14.8)Interest receivable 4.8 Net interest (10.0) Profit before tax 24.3Taxation (8.0) Profit for the financial period 16.3 The share of operating profits of the joint venture and associates includedwithin the retail profit for Darty and BUT are £2.4m and 2.5m respectively.The share of post tax profits of the joint venture and associates includedwithin the operating profit for Darty and BUT are £2.2m and £1.6mrespectively. 2 Segmental analysis contd. Year ended 31 January 2006 France France UK Central Darty BUT Comet Other Costs Group £m £m £m £m £m £m Revenue 1,597.4 578.0 1,529.8 394.8 - 4,100.0Retail profit / (loss) 109.9 34.2 38.3 (5.4) (12.1) 164.9Share of joint venture and associates interest and taxation (0.4) (1.8) - - - (2.2)Demerger award plan charge (0.6) (0.2) (0.3) (0.2) (0.5) (1.8)Loss on disposal of property, plant and equipment (0.8) (0.1) (0.1) - - (1.0) Operating profit / (loss) 108.1 32.1 37.9 (5.6) (12.6) 159.9 Interest payable and similar charges (24.4)Interest receivable 7.8 Net interest (16.6) Profit before tax 143.3Taxation (48.6) Profit for the financial period 94.7 The share of operating profits of the joint venture and associates includedwithin the retail profit for Darty and BUT are £5.1m and £5.2m respectively.The share of post tax profits of the joint venture and associates includedwithin the operating profit for Darty and BUT are £4.7m and £3.4mrespectively. 3 Dividends Six Six Year months months ended ended ended 31 31 July 31 July January 2006 2005 2006 £m £m £m Final paid 2006: 9.15 pence per share (2005: 8.25 pence per share) 48.5 43.7 43.7 Interim paid: (2005: 2.95 pence per share) - - 15.6 48.5 43.7 59.3 The final dividend in respect of the financial year ended 31 January 2006 wasapproved by shareholders at the Annual General meeting. The Directors declarean interim dividend of 3.25 pence per share, which will absorb an estimated£17.2m of shareholders' funds. 4 Earnings per shareBasic earnings per share is calculated by dividing the earnings attributableto shareholders by 529.4m shares (2005: 529.5m ; year ended 31 January 2006:529.5m), being the weighted average number of ordinary shares in issue. There is no difference between diluted and basic earnings per share.Supplementary adjusted earnings per share figures are presented. Theseexclude the effects of the Demerger Award Plan charge and losses on disposalof property, plant and equipment. Kesa Electricals plc believes that adjusted earnings per share providesadditional useful information on underlying trends and business performanceto shareholders. This measure is used by the Group for internal performanceanalysis and incentive compensation arrangements for employees. Six months ended 31 Six months ended 31 Year ended 31 July 2006 July 2005 (restated) January 2006 Per share Per share Per share Earnings amount Earnings amount Earnings amount £m pence £m pence £m pence Basic earnings per share Earnings attributable to ordinary shareholders 27.3 5.2 17.2 3.2 94.2 17.8 Adjustments Demerger Award Plan charge 0.6 0.1 1.8 0.3 1.8 0.3Loss on disposal of plant, property and equipment 0.6 0.1 0.5 0.1 1.0 0.2Tax effect of adjustments (0.4) (0.1) (0.5) (0.1) (0.9) (0.2) Basic - adjusted earnings per share 28.1 5.3 19.0 3.5 96.1 18.1 5 Cash and cash equivalents 31 July 2006 31 July 2005 31 January 2006 £m £m £m Cash at bank and in hand 45.8 53.7 62.6Short term bank deposit and investments 54.3 110.9 97.0 Total 100.1 164.6 159.6 For the purpose of the consolidated cash flow statement, cash and cashequivalents comprise the following: 31 July 2006 31 July 2005 31 January 2006 £m £m £m Cash at bank and in hand 45.8 53.7 62.6Bank overdrafts (57.2) (50.8) (53.8)Short term bank deposit and investments 54.3 110.9 97.0 Total cash and cash equivalents 42.9 113.8 105.8 6 Called up share capital At 31 July 2006, 31 January 2006 and 31 July 2005 Number of ordinary shares m £m AuthorisedOrdinary shares of 25 pence each 1,000 250.0 Issued and fully paidOrdinary shares of 25 pence each 529.6 132.4 7 Retained earnings Retained earnings £m At 1 February 2006 (restated) (564.0) Profit for the period 27.3Dividends (48.5)Employee share schemes (0.7)Investment in ESOP shares (0.1)Net actuarial gain on retirement benefit obligations 24.6 At 31 July 2006 (561.4) At 1 February 2005 (584.5) First-time adoption in respect of IAS 32 & IAS39 (restated) (4.0) Restated balance at 1 February 2005 (588.5) Profit for the period (restated) 17.2Dividends (43.7)Employee share schemes 0.2Investments in ESOP shares (0.3)Net actuarial loss on retirement benefit obligations (5.6) At 31 July 2005 (restated) (620.7) 8 Other reserves Available for sale invest- Total Other Demerger Translation ments Hedging other reserve reserve reserve reserve reserve reserves £m £m £m £m £m £m At 1 February 2006 (restated) (26.0) 741.8 (2.7) 13.7 (0.7) 726.1 Exchange differences - - 0.5 - - 0.5Available for sale assets - fair value gains net of tax - - - 1.9 - 1.9Cash flow hedges - fair value gains net of tax - - - - 1.8 1.8 - recycled and reported in net profit - - - - 0.6 0.6Impact of put and call options exercised/ entered into during the period 11.1 - - - - 11.1 At 31 July 2006 (14.9) 741.8 (2.2) 15.6 1.7 742.0 Available for sale invest- Total Other Demerger Translation ments Hedging other reserve reserve reserve reserve reserve reserves £m £m £m £m £m £m At 1 February 2005 - 741.8 (0.5) - - 741.3 First-time adoption in respect of IAS 32 & IAS39 (restated) (20.4) - - 11.7 (3.5) (12.2) Restated balance at 1 February 2005 (20.4) 741.8 (0.5) 11.7 (3.5) 729.1 Exchange differences - - 0.1 - - 0.1Available for sale assets - fair value gains net of tax - - - 3.9 - 3.9- recycled and reported in net profit - - - (0.6) - (0.6)Cash flow hedges - fair value gains net of tax - - - - (1.1) (1.1)- recycled and reported in net profit - - - - 0.4 0.4 At 31 July 2005 (restated) (20.4) 741.8 (0.4) 15.0 (4.2) 731.8 Amounts included within the other reserve represent the net movement in respectof put and call options entered into or exercised during the period. 9 Statement of changes in shareholders' equity Six Six months Year ended months ended 31 31 January ended 31 July 2005 2006 July (restated) (restated) 2006 £m £m £m Profit attributable to shareholders 27.3 17.2 94.2Dividends (48.5) (43.7) (59.3) (21.2) (26.5) 34.9 Exchange differences 0.5 0.1 (2.2)Employee share schemes (0.7) 0.2 0.3Available for sale assets - fair value gains net of tax 1.9 3.9 2.3 - recycled and reported in net profit - (0.6) (0.3)Cash flow hedges - fair value gains net of tax 1.8 (1.1) 2.8 - recycled and reported in net profit 0.6 0.4 -Investment in ESOP shares (0.1) (0.3) (0.5)Net actuarial gain/(loss) on retirement benefit obligations 24.6 (5.6) (10.2)Impact of put and call options exercised/ entered into during the period 11.1 - (5.6)Opening shareholders' equity before adjustment for IAS 32 & IAS 39 294.5 289.2 289.2 Adjustment for first time adoption of IAS 32 & IAS 39 - (16.2) (16.2) Closing shareholders' equity 313.0 243.5 294.5 10 Cash flow from operating activities Six Six months Year months ended 31 ended 31 ended 31 July January July 2005 2006 2006 (restated) £m £m £m Profit after tax 26.3 16.3 94.7Adjustments for:Tax 14.1 9.1 50.8Depreciation and amortisation 38.8 37.9 78.6Impairment of property, plant and equipment - - 1.3Reversal of impairment of property, plant and equipment - - (1.1)Loss on disposal of property, plant and equipment (including write offs) 2.5 0.5 2.0Interest income (2.8) (4.8) (7.8)Interest expense 9.8 14.8 24.4Share of results of joint venture before taxation (2.8) (2.4) (3.8)Share of results of associates before taxation (3.5) (2.5) (6.5)Changes in working capital:Decrease/(increase) in inventories 31.0 33.4 (20.6)Decrease/(increase) in trade and other receivables 16.5 23.4 (3.8)(Decrease)/increase in payables (73.5) (67.4) 51.5 Net cash inflow from operating activities 56.4 58.3 259.7 11 Reconciliation of net cash flow to movement in net debt At 31 Cash Exchange At 1 July 2006 flow difference February 2006 £m £m £m £m Cash at bank and in hand 45.8 (17.0) 0.2 62.6Overdrafts (57.2) (3.4) - (53.8)Short-term deposits and investments 54.3 (42.9) 0.2 97.0 42.9 (63.3) 0.4 105.8 Borrowings falling due within one year (2.6) 0.3 (0.1) (2.8)Borrowings falling due after one year (360.0) (12.9) (0.1) (347.0)Finance leases (2.4) 0.4 - (2.8) (365.0) (12.2) (0.2) (352.6) Other current investments 81.2 0.6 0.1 80.5 Total (240.9) (74.9) 0.3 (166.3) 12 Reconciliation of cash flow to movement in net debt Group At 31 At 31 At 31 July 2006 July 2005 January 2006 £m £m £mGroup Net cash outflow from cash and cash equivalents (63.3) (68.6) (75.7)Cash (inflow)/outflow from change in borrowings and lease financing (12.2) (0.7) 131.6Cash inflow/(outflow) from change in other current investments 0.6 (5.7) (14.1) Change in net debt resulting from cash flows (74.9) (75.0) 41.8 Translation differences 0.3 0.3 3.1New finance leases - (1.0) (0.5) Movement in net debt in the year (74.6) (75.7) 44.4 Net debt at start of period (166.3) (210.7) (210.7)Net debt at end of period (240.9) (286.4) (166.3) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
DRTY.L