Statement of Results - Part 2

KESA Electricals plc

Group income statement

for the financial period ended 30 April 2008

15 months ended 30 April 2008

Year ended 31 January 2007

15 months ended 30 April 2008

Continuing operations

Note

£m

£m

€m (1)

Revenue

2

5,356.6

3,905.2

7,587.6

Group operating profit

2

134.1

138.3

190.0

Share of post tax profit in joint venture and associates 

2

6.9

5.6

9.7

Total operating profit

141.0

143.9

199.7

Analysed as:

Retail profit (2)

3

143.2

144.7

202.8

Share of joint venture and associates interest and taxation

3

(0.6)

(0.3)

(0.8)

Valuation losses

3

(0.6)

 - 

(0.8)

Amortisation and impairment of acquisition related intangible assets

3

(1.0)

-

(1.5)

Demerger award plan charge 

3

 - 

(0.5)

 - 

Total operating profit 

141.0

143.9

199.7

Finance costs

4

(23.5)

(17.5)

(33.3)

Finance income

5

10.4

6.6

14.7

Profit before income tax

127.9

133.0

181.1

UK taxation

0.6

(5.8)

0.8

Overseas taxation

(45.6)

(37.4)

(64.4)

Total Taxation

6

(45.0)

(43.2)

(63.6)

Profit for the financial period from continuing operations 

82.9

89.8

117.5

Profit for the financial period from discontinued operations 

9

36.7

19.6

51.9

Profit for the financial period 

119.6

109.4

169.4

Profit attributable to:

- Equity shareholders

120.2

109.4

170.2

- Minority interests

(0.6)

 - 

(0.8)

119.6

109.4

169.4

Earnings per share - basic and diluted (pence) 

Profit from continuing operations 

15.8

17.0

22.4

Profit from discontinued operations 

6.9

3.7

9.8

Total earnings per share

8

22.7

20.7

32.2

Notes:

1) Income statement information in euros is provided for illustrative purposes only and is translated at the average exchange rate of € 1.4165 for £1.

2) Retail profit represents total operating profit before the share of joint venture and associates' interest and taxation, the Demerger Award Plan charge, valuation losses and amortisation and impairment of acquisition related intangible assets. The comparative amounts have been restated to include any gains or losses arising on the disposal of property, plant and equipment.

3) The notes on pages 6 to 24 form part of these financial statements.

4) For details of equity dividends paid and proposed, see note 7 of the financial statements.

Group statement of recognised income and expense 

for the financial period ended 30 April 2008 

15 months ended 30 April 2008

Year ended 31 January 2007

15 months ended 30 April 2008

Note

£m

£m

€m

Exchange differences 

10

49.0

(5.7)

69.4

Foreign exchange recycled to income statement on disposal of foreign operations

10

(59.4)

 - 

 (84.1) 

Actuarial gains on retirement benefit obligations 

6.1

28.3

8.6

Tax on actuarial gains on retirement benefit obligations

(3.1)

(8.7)

(4.4)

Available for sale assets - fair value (losses)/gains net of tax 

10

(5.2)

1.6

(7.4)

Cash flow hedges - fair value gains net of tax 

-

2.7

-

- recycled and reported in net profit

 10

0.2

0.6

0.3

Impact of put options exercised during the period 

10

 - 

10.9

 - 

Tax on employee share schemes 

10

 - 

(1.2)

 - 

Net (loss)/profit recognised directly in equity 

(12.4)

28.5

(17.6)

Profit for the period

3

119.6

109.4

169.4

Total recognised income for the year 

107.2

137.9

151.8

Attributable to:

- Equity shareholders

107.8

137.9

152.6

- Minority interests

(0.6)

 - 

(0.8)

Total recognised income for the year 

107.2

137.9

151.8

Notes

1) Statement of recognised income and expense information in euros is provided for illustrative purposes only and is translated at the average exchange rate of €1.4165 for £1.

2) The notes on pages 6 to 24 form part of these financial statements.

Group balance sheet

As at 30 April 2008

30 April 2008

31 Jan 2007

30 April 2008

Note

£m

£m

€m

Assets

Non-current assets

Intangible assets

205.3

217.9

261.2

Property, plant and equipment

460.7

513.9

586.1

Available for sale financial assets

17.3

20.0

22.1

Investments in joint venture and associates

16.8

43.7

21.4

Other receivables

11.7

10.9

14.9

Derivative financial instruments

 - 

5.0

 - 

Deferred income tax assets

43.6

26.3

55.5

Total non-current assets

755.4

837.7

961.2

Current assets

Inventories

660.6

614.3

840.3

Trade and other receivables

270.1

280.5

343.7

Income tax

8.2

12.1

10.4

Other investments

45.1

72.3

57.4

Derivative financial instruments

0.1 

0.2

0.1 

Cash and cash equivalents

64.1

163.3

81.5

Total current assets

1,048.2

1,142.7

1,333.4

Total assets

1,803.6

1,980.4

2,294.6

Liabilities

Current liabilities

Borrowings

(4.5)

(105.9)

(5.7)

Income tax liabilities

(10.7)

(21.2)

(13.6)

Trade and other payables

(904.8)

(896.8)

(1,151.0)

Derivative financial instruments

(0.3)

(0.1)

(0.4)

Provisions

(1.7)

(1.2)

(2.2)

Total current liabilities

(922.0)

(1,025.2)

(1,172.9)

Non-current liabilities

Borrowings

(54.4)

(202.4)

(69.2)

Other payables

(308.5)

(259.3)

(392.6)

Deferred income tax liabilities

(41.7)

(35.1)

(53.1)

Retirement benefits

14

(75.9)

(87.0)

(96.5)

Provisions

(1.4)

(0.7)

(1.8)

Total non-current liabilities

(481.9)

(584.5)

(613.2)

Total liabilities

(1,403.9)

(1,609.7)

(1,786.1)

Net assets

399.7

370.7

508.5

 Group balance sheet (continued)

30 April 2008

31 Jan 2007

30 April 2008

Note

£m

£m

€m

Equity

Share capital

132.4

132.4

168.4

Other reserves

724.4

736.9

921.5

Retained earnings

(456.6)

(503.1)

(580.8)

Total equity shareholders' funds

10

400.2

366.2

509.1

Minority interests

(0.5)

4.5

(0.6)

Total equity

399.7

370.7

508.5

Notes

1) Balance sheet information in euros is provided for illustrative purposes only and is translated at the closing exchange rate of €1.2721 for £1.

2) The notes on pages 6 to 24 form part of these financial statements.

Approved by the Board of Directors on 24 June 2008 and signed on its behalf by:

Jean-Noel Labroue Simon Herrick

Director Director

Group cash flow statement 

for the financial period ended 30 April 2008

15 months ended 30 April 2008

Year ended 31 January 2007

15 months ended 30 April 2008

Note

£m

£m

€m

Cash flows from operating activities

Cash generated from operations 

11

186.4

307.9

264.0

Interest paid

(31.6)

(15.6)

(44.8)

Tax paid

(55.7)

(37.8)

(78.9)

Net cash flows from operating activities 

99.1

254.5

140.3

Cash flows from investing activities

Acquisition of subsidiaries (net of cash acquired) 

(114.2)

(13.1)

(161.8)

Proceeds from sale of subsidiary, net of cash disposed

385.7

-

546.3

Purchase of property, plant and equipment 

(122.3)

(80.0)

(173.2)

Proceeds from sale of property, plant and equipment 

13.7

1.0

19.4

Purchase of available for sale investments 

(0.6)

-

(0.8)

Purchase of intangible assets 

(34.1)

(19.5)

(48.3)

Cash inflow from other current investments 

27.3

6.9

38.7

Interest received

11.1

6.7

15.7

Dividends received from joint venture 

8.6

4.4

12.2

Net cash from/(used in) in investing activities 

175.2

(93.6)

248.2

Cash flows from financing activities 

Finance lease principal payments 

(4.8)

-

(6.8)

Net repayments of borrowings 

(161.7)

(138.1)

(229.0)

Dividends paid to shareholders 

(71.7)

(65.7)

(101.6)

Dividends paid to minority interests 

(0.5)

(0.9)

(0.7)

Net cash used in financing activities 

(238.7)

(204.7)

(338.1)

Net cash inflow/(outflow) from cash, cash equivalents and bank overdrafts 

12

35.6

(43.8)

50.4

Effects of exchange rate changes 

12

(35.8)

(2.2)

(50.7)

Net increase/(decrease) in cash, cash equivalents and bank overdrafts 

(0.2)

(46.0)

(0.3)

Cash, cash equivalents and bank overdrafts at start of period 

12

59.8

105.8

84.7

Cash, cash equivalents and bank overdrafts at end of period 

12

59.6

59.8

84.4

Notes

1) Cash flow information in euros is provided for illustrative purposes only and is translated at the average exchange rate of €1.4165 for £1.

2) The notes on pages 6 to 24 form part of these financial statements.

1 Basis of preparation

Comparative information has been prepared for the year ended 31 January 2007. Therefore the two periods presented will not be entirely comparable for the purpose of the income statement, statement of changes in equity, cash flow statements and related notes.

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations as adopted by the European Union (EU) and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial instruments. 

2 Continuing Group operating profit

15 months ended 30 April 2008

Year ended 31 January 2007

£m

£m

Revenue

5,356.6

3,905.2

Cost of sales

(3,857.0)

(2,797.4)

Gross profit

1,499.6

1,107.8

Distribution costs

(230.2)

(172.8)

Selling expenses

(934.0)

(714.5)

Administrative expenses

(214.3)

(92.5)

Other income

13.0

10.3

Group operating profit

134.1

138.3

Share of post tax profit in joint venture and associates

6.9

5.6

Total operating profit

141.0

143.9

The Demerger award plan charge is included within administrative expenses.

Continuing Group operating profit includes net premiums on exit from leased premises in the fifteen months to 30 April 2008 of £5.6m (year ended 31 January 2007: £6.4m). 

Property, plant and equipment disposal gains were £4.1m for the fifteen months ended 30 April 2008 (twelve months ended 31 January 2007: £0.1m).

Continuing Group total revenue includes revenue from services in the fifteen months to 30 April 2008 of £298.8m (year to 31 January 2007: £205.4m). Such revenues predominantly comprise those relating to customer support agreements, delivery and installation, product repairs and product support.

3 Segmental analysis

At 30 April 2008 and 31 January 2007, the Continuing Group was organised into three business segments, as follows:

 - Darty

 - Comet

 - Other (includes BCC, NVB, Datart, Darty Italy, Darty Switzerland, Darty Turkey and Menaje del Hogar)

BUT was classified as a discontinued operation on 30 January 2008, following the announcement of the Group entering into a sale and purchase agreement.

Segment revenues by origin are not materially different to segment revenues by destination.

Segment assets include available for sale and equity accounted investments, property, plant and equipment, goodwill, intangible assets, stocks, debtors, other current assets and cash that is not held centrally. Unallocated assets include centrally held cash and other liquid assets and financial assets, as well as interest and tax related prepaid expenses and accrued income.

Segment liabilities include operating liabilities such as accounts payable, overdrafts that are not held centrally, prepaid income, accrued expenses and provisions, excluding those relating to interest and taxes.

Unallocated liabilities include loan and finance lease liabilities as well as interest and tax related prepaid income, accrued expenses and provisions.

Capital expenditure includes additions to property, plant and equipment and intangible fixed assets, including additions resulting from acquisitions through business combinations.

15 months ended 30 April 2008 

France

UK

Central

Continuing

Discont'd

Darty

Comet

Other

Costs

Group

operations

Group

£m

£m

£m

£m

£m

£m

£m

Revenue 

2,371.0

2,086.7

898.9

-

5,356.6 

782.8

6,139.4

Retail profit/(loss) 

121.9

40.4

(4.3)

(14.8)

143.2

56.7

199.9

Share of joint venture and associates interest and taxation 

(0.6)

 - 

 - 

 - 

(0.6)

(3.7)

(4.3)

Fair value losses on options over shares in group undertakings

 - 

 - 

 - 

(0.6)

(0.6)

 - 

(0.6)

Amortisation and impairment of acquisition related intangible assets

 - 

 - 

(0.9)

(0.1)

(1.0)

 - 

(1.0)

Operating profit/(loss) 

121.3

40.4

(5.2)

(15.5)

141.0

53.0

194.0

Finance costs 

(23.5)

(2.8)

(26.3)

Finance income 

10.4

1.0

11.4

Finance costs - net 

(13.1)

(1.8)

(14.9)

Profit before income tax 

127.9

51.2

179.1

Income tax expense 

(45.0)

(17.4)

(62.4)

Taxation credit arising on the sale of discontinued operations

-

1.8

1.8

Pre-tax profit on disposal

-

1.1

1.1

Profit for the period 

82.9

36.7

119.6

The share of operating profits of the joint venture and associates included within the retail profit for Darty and discontinued operations are £7.5m and £10.6m respectively. The share of post tax profits of the joint venture and associates included within the operating profit for Darty and discontinued operations are £6.9m and £6.9m respectively.

France

UK

Continuing

Discont'd

Darty

Comet

Other

Unallocated

Group

Operations

Group

£m

£m

£m

£m

£m

£m

£m

Segmental assets

806.9

384.1

438.7

173.9

1,803.6

-

1, 803.6

Segmental liabilities 

(634.5)

(373.2)

(193.8)

(202.4)

(1,403.9)

 - 

(1,403.9)

Investments in equity accounted joint ventures and associates of £16.9m are included within the segment assets of Darty. 

Other segment items 

Capital expenditure

Property, plant and equipment 

44.8

44.6

35.2

 - 

124.6

26.8

151.4

Intangible assets 

27.4

 - 

111.4

0.1 

138.9

18.9

157.8

Depreciation

(34.0)

(31.1)

(14.3)

(2.0)

(81.4)

(21.3)

(102.7)

Amortisation of intangible assets 

(7.4)

 - 

(2.0)

(0.2) 

(9.6)

(0.5)

(10.1)

Impairment losses - plant, property and equipment and intangible fixed assets 

 - 

-

(1.0)

 - 

(1.0)

(0.7)

(1.7)

Year ended 31 January 2007 

France 

Darty

£m

UK

Comet

£m

Other

£m

Central

Costs

£m

Continuing Group

£m

Discontinued Operations

£m

Group

£m

Revenue 

1,733.9

1,676.5

494.8

-

3,905.2

595.7

4,500.9

Retail profit/(loss) 

114.1

46.1

(2.4)

(13.1)

144.7

36.3

181.0

Share of joint venture and associates interest and taxation 

(0.3)

 - 

 - 

 - 

(0.3)

(2.4)

(2.7)

Demerger award plan charge

(0.1)

(0.1)

(0.1)

(0.2)

(0.5)

 - 

(0.5)

Operating profit/(loss)

113.7

46.0

(2.5)

(13.3)

143.9

33.9

177.8

Finance costs

(17.5)

(1.8)

(19.3)

Finance income

6.6

0.3

6.9

Finance costs - net

(10.9)

(1.5)

(12.4)

Profit before income tax

133.0

32.4

165.4

Income tax expense

(43.2)

(12.8)

(56.0)

Profit for the year

89.8

19.6

109.4

The share of operating profits of the joint venture and associates included within the retail profit for Darty and discontinued operations are £5.9m and £7.1m respectively. The share of post tax profits of the joint venture and associates included within the operating profit for Darty and discontinued operations are £5.6m and £4.7m respectively.

France 

France 

UK

Darty

BUT

Comet

Other

Unallocated

Group

£m

£m

£m

£m

£m

£m

Segmental assets 

631.2

537.6

400.2

189.3

222.1

1,980.4

Segmental liabilities 

(556.0)

(156.9)

(499.0)

(125.8)

(272.0)

(1,609.7)

Investment in equity accounted joint venture and associates of £12.7m and £31.0m are included within the segment assets of Darty and discontinued operations respectively.

Other segment items 

Capital expenditure 

Property, plant and equipment 

35.1

12.0

20.6

12.0

0.2

79.9

Intangible assets

15.8

8.5

 - 

2.1

0.2

26.6

Depreciation

(26.8)

(17.0)

(22.1)

(8.9)

(2.4)

(77.2)

Amortisation of intangible assets

(1.7)

(0.5)

 - 

(0.7)

(0.1)

(3.0)

Impairment losses - plant, property and equipment and intangible fixed assets

 - 

 - 

(0.8)

(0.7)

 - 

(1.5)

Reversal of impairment losses - plant, property and equipment and intangible fixed assets 

 - 

 - 

0.2

0.2

 - 

0.4

4 Continuing Group finance costs 

15 months ended 30 April 2008

 Year ended 31 January 2007

£m

£m

Interest payable on bank borrowings 

18.8

13.9

Interest payable on finance leases 

0.3

0.2

Net interest on pension schemes 

1.9

3.3

Foreign exchange losses 

2.5

0.1

Total finance costs 

23.5

17.5

The foreign exchange losses arise on the retranslation of short term deposits denominated in a currency other than the operation's functional currency.

Finance costs relating to discontinued operations for the period were £2.8m (Year ended 31 January 2007: £1.8m). 

5 Continuing Group finance income 

15 months ended 30 April 2008

 Year ended 31 January 2007

£m

£m

Bank and other interest receivable 

10.4

6.6

Finance income relating to discontinued operations for the period was £1.0m (Year ended 31 January 2007: £0.3m).

6 Income tax expense 

 15 months ended 30 April 2008

 Year ended 31 January 2007

£m

£m

Analysis of charge in period 

UK corporation tax 

Current tax on profits for the period 

10.1

6.3

Adjustment in respect of prior years 

(2.8)

0.1

7.3

6.4

Foreign tax 

Current tax on profits for the period 

 36.0 

27.4

Adjustment in respect of prior years 

 (5.7) 

 - 

 30.3 

27.4

Deferred tax

 7.4 

9.4

Total income tax expense

 45.0 

43.2

The tax charge relates entirely to continuing operations. 

Tax on items charged to equity: 

Current income tax charge on foreign exchange gains 

 - 

0.3

Current income tax charge on share schemes 

 - 

0.7

Deferred income tax charge on share schemes 

 - 

0.5

Deferred income tax charge on cash flow 

hedges in reserves 

 (1.4) 

1.4

Deferred income tax credit on available for sale

investments 

 (0.4) 

(0.9)

Deferred income tax charge on actuarial gains on

retirement benefit obligations 

 3.1 

8.6

Total tax on items charged to equity 

 1.3 

10.6

Factors affecting tax charge for the period 

The tax for the period is higher (2007: higher) than the standard rate of corporation tax

in the UK (28% by 30 April). The differences are explained below: 

Profit on ordinary activities before income tax 

 127.9 

133.0

Profit on ordinary activities multiplied by rate of corporation tax in the UK of 28% by 30 

April (2007: 30%) 

 38.4 

39.9

Effects of: 

Adjustments in respect of foreign tax rates 

 5.9 

5.0

Adjustments in respect of joint ventures and associates 

 (0.4) 

(0.2)

Expenses not deductible for tax purposes 

 1.1 

0.6

French tax group attributes due to discontinued operations

-

(2.7)

Impact of changes in foreign exchange rates

1.6

-

Losses not recognised as deferred tax asset 

 2.0 

-

Change in tax rate 

 0.8 

0.2

Adjustments to tax in respect of prior years 

 (4.4) 

0.4

Total income tax charge

 45.0 

43.2

6 Income tax expense (continued)

Income tax charge per Group income statement 

 45.0 

43.2

Share of joint venture and associate taxation 

 0.6 

0.3

Adjusted income tax charge 

 45.6 

43.5

Profit before tax per group income statement 

 127.9 

133.0

Share of joint venture and associate taxation 

 0.6 

0.3

Adjusted profit before tax 

 128.5 

133.3

Effective tax rate 

 35.5% 

32.6%

7 Dividends

 15 months ended 30 April 2008

 Year ended 31 January 2007

£m

£m

Final paid 2007: 10.05p (2006: 9.15p) per share

53.2

48.5

Interim paid 

18.5

17.2

71.7

65.7

The retained profit for the 15 months to 30 April 2008 amounts to £120.2 million (2007: £109.4 million). An interim dividend of 3.5 pence was paid to the ordinary shareholders of the Company on 7 December 2007. A second interim dividend of 10.8 pence is due to be paid on 11 July 2008. This, when combined with the first interim dividend of 3.5 pence, represented an increase of 7.5 per cent on the dividends paid for the 12 month period ended 31 January 2007. In addition the Board will also recommend at the forthcoming Annual General Meeting, the payment of a final dividend of 3.6 pence, payable on 10 October 2008 in relation to the three month period ending 30 April 2008.

The final dividend, once approved, will be paid to those persons on the Register of Members at the close of business on 12 September 2008.

8 Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to shareholders by 529.3m shares (31 January 2007: 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. These exclude the effects of the Demerger Award Plan charge, option valuation losses and amortisation and impairment of acquisition related intangible assets.

15 months ended 30 April 2008

Year ended 31 January 2007

Per share 

Per share

Earnings

amount 

Earnings

Amount

£m

pence 

£m

Pence

Basic earnings per share 

Earnings attributable to ordinary shareholders 

120.2

22.7

109.4

20.7

Adjustments 

Option valuation losses 

0.6

0.1

 - 

 - 

Amortisation and impairment of acquisition related intangible assets

1.0

0.2

-

-

Demerger Award Plan charge 

 - 

 - 

0.5

0.1

Tax effect of adjustments 

- 

 - 

(0.1)

 - 

Basic - adjusted earnings per share 

121.8

23.0

109.8

20.8

Earnings per share 

Continuing operations 

83.6

15.8

89.8

17.0

Discontinued operations 

36.6

6.9

19.6

3.7

Total for the period 

120.2

22.7

109.4

20.7

9 Discontinued operations 

On 31 March 2008 the sale of the Group's French furniture and electrical retailing business BUT was completed. In accordance with IFRS 5 the business has been treated as a discontinued operation. The results of BUT have been excluded from the results of the continuing group. The BUT profit after tax of £33.8 million, together with the net gain on disposal of £1.1 million and disposal tax credit of £1.8 million, has been included in the accounts as profit from discontinued operations.

BUT was sold for a total enterprise value of £440.0 million (€550.0 million) adjusted for movements in working capital between the date of signing and completion, and the net cash in the business on closing. The agreement of the final net cash consideration is in the process of being concluded with the Purchasers in accordance with the terms of the Sale and Purchase Agreement.

£m

Cash consideration 

373.3

Foreign exchange gains recycled to the income statement on disposal

59.4

Transaction costs and other

(12.7)

Less: Net assets disposed

(418.9)

Pre-tax profit on disposal 

1.1 

The foreign exchange gains recycled to income represent the appreciation since the transition to IFRS, when reported in sterling, of the net assets of BUT which are held in Euros.

£m

Net cash inflow arising on disposal: 

Cash consideration 

373.3

Cash to settle intercompany debt 

43.2

Net cash inflow arising on disposal 

416.5

Results from discontinued operations  

The results from discontinued operations which have been included in the consolidated income statement are derived below. 

Period ended 30 April 2008

Year ended 31 January 2007

£m

£m

Revenue 

782.8

595.7

Cost of sales 

(484.9)

(391.4)

Gross profit 

297.9

204.3

Share of post tax profit in joint venture and associates 

6.9

4.7

Distribution costs 

(65.0)

(49.1)

Selling expenses 

(193.9)

(125.8)

Administrative expenses 

(28.1)

(12.4)

Other income 

35.2

12.2

Operating profit 

53.0

33.9

Finance costs

(2.8)

(1.8)

Finance income 

1.0

0.3

Profit before taxation 

51.2

32.4

Taxation relating to performance of business held for sale

(17.4)

(12.8)

Profit after taxation relating to performance of business 

33.8

19.6

Note 9 Discontinued operations (cont'd)

Pre-tax profit on disposal

1.1

 - 

Taxation credit arising on the sale of discontinued operations

1.8 

 - 

Profit recognised on remeasurement to fair value less costs to sell and on disposal after taxation

2.9

- 

Total profit for the period from discontinued operations

36.7

19.6 

Cash flows from discontinued operations