Interim Statement 2009/10

(1)

DSG international plc Maylands Avenue Hemel Hempstead Hertfordshire HP2 7TG Tel 0844 800 2030

www.dsgiplc.com

Interim Statement 2009/10

(2)

Highlights

FINANCIAL

G

Underlying Group sales down 1% to £3.33 billion (2008/09 £3.37 billion).

(1) (2)

G

Total sales, including closed businesses, £3.33 billion (2008/09 £3.42 billion).

G

Group like for like sales

(3)

_{down 4%, up 1% in the last eight weeks of the half.}

G

Underlying Group gross margins up 0.4%.

G

Strong performance maintained in the Nordics with like for like sales up 11% across the

half.

G

Improving trends in UK & Ireland Electricals, Italy and on-line.

G

UK Computing sales seeing a significant improvement following the launch of Windows 7

since the period end.

G

Underlying Retail profit

(4)

_{of £10.0 million (2008/09 loss of £6.3 million).}

G

Underlying pre-tax loss of £17.6 million (2008/09 loss of £17.7 million).

G

Total loss before tax after deducting non-underlying charges of £5.5 million was

£23.1 million (2008/09 loss of £55.6 million).

G

Underlying diluted loss per share 0.1 pence (2008/09 loss per share of 0.3 pence). Basic

loss per share for continuing operations 0.3 pence (2008/09 loss per share of 1.6 pence).

(6)

G

Net debt reduced to £177.7 million from £477.5 million at year end.

Notes

(1) Underlying Group sales exclude sales from closed businesses and discontinued operations. Sales for the 24 weeks ended 18 October 2008 have been re-presented to reflect this exclusion. Closed businesses comprise the operations of PC City in Sweden and Markantalo in Finland. Discontinued operations comprise Poland and Hungary.

(2) Throughout this statement, references are made to ‘underlying’ performance measures. Underlying results are defined as excluding the trading results of closed businesses, amortisation of acquired intangibles, net restructuring and business impairment charges and other one-off, non-recurring items, profit on sale of investments, fair value remeasurements of financial instruments and, where applicable, discontinued operations. Such excluded items are described as ‘non-underlying’. The financial effect of these items is shown in the analyses on the face of the income statement and in note 3 to the financial information.

(3) Like for like sales are calculated based on stores that have been open for a full financial year both at the commencement and end of the financial period, and are calculated using constant exchange rates. Customer support agreement sales are excluded from all UK like for like calculations. Operations that are subject to closure have sales excluded as of the announcement date. Stores subject to a refurbishment are excluded during the period of refurbishment.

(4) Underlying Retail profit is underlying profit before tax, net finance charges and net property losses.

(5) Unless otherwise noted, throughout this statement figures relate to continuing operations, excluding the results of closed businesses. Total revenue including discontinued operations and closed businesses was £3,345.7 million (2008/09 £3,468.0 million).

(6) The weighted average number of shares used in the calculation of loss per share for 2008/09 and the weighted average relating to the relevant weeks of 2009/10 prior to the rights issue have been multiplied by an adjustment factor to reflect the bonus element of the shares issued under the terms of the rights issue (as described in note 6 to the financial information in this announcement). The adjustment factor used was 1.2138.

(7) Free Cash Flow relates to continuing operations and comprises net cash flow from operating activities before special pension contributions, plus net finance income, less income tax paid and net capital expenditure.

(8) Certain statements made in this announcement are forward looking. 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 events or results referred to in these forward looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.

(4)

RENEWAL AND TRANSFORMATION

G

Renewal and Transformation plan is on track and starting to deliver benefits.

G

Rapid progress on the store transformation programme with, as at 14 November

2009:-–

162 stores reformatted in the UK and Nordics in time for Peak;

–

nine new format stores, incorporating Currys Megastores and combined 2-in-1 PC World

and Currys stores, delivering average gross profit uplifts of 57%;

–

two further Megastores opened on 26 November 2009, including the UK’s largest

specialist electrical store at 68,000 ft

2

_{in Thurrock, Essex;}

–

53 Currys Superstores, 55 PC World Superstores and 15 CurrysDigital stores now

reformatted with average gross profit uplifts of 16% to 21%;

–

stores representing one third of the sales volume in the UK have now been reformatted

in time for Peak trading;

–

successful new Megastore format in the Nordics being rolled out with a total of ten now

open; and

–

a further 54 stores due to be refurbished in the UK and Nordics before the end of the

financial year.

G

New services launched in the UK well received by

customers:-–

improved choices in after sales support, connectivity, installation and repair for

customers under The TechGuys and

Whateverhappens brands; and

–

market leading next day timed delivery slots and free recycling.

G

Turnaround plan in Italy continues to show progress with improving sales and margin

trends. First Megastore opened in Rome and 35 combined 2-in-1 UniEuro and PC City

stores now open.

G

Programme to extend reformatting of stores to Czech Republic, Greece, Ireland, Italy and

Spain now underway.

G

Portfolio review now complete with the disposal of operations in Poland.

G

Better stock

control:-–

stock turn increased by 8% across the Group;

–

availability at its highest for several years; and

–

on track to reduce stock by £80 million to £130 million over the medium term.

G

On target for £50 million cost reduction in current year as part of the programme to

remove £200 million of costs over four years.

(5)

Chief Executive’s Review

FINANCIAL SUMMARY

Underlying sales and profit / (loss) analysis

Underlying sales Underlying profit / (loss)

24 weeks 24 weeks 24 weeks 24 weeks

ended ended ended ended

17 October 18 October Like for 17 October 18 October 2009 2008 Total sales like 2009 2008 Note £million £million % change % change £million £million

UK & Ireland Electricals 1 1,044.9 1,138.1 (8)% (9)% (23.2) (22.3)

UK Computing 2 580.8 696.0 (17)% (15)% 7.2 11.7 UK & Ireland 1,625.7 1,834.1 (11)% (11)% (16.0) (10.6) Nordics 3 797.8 652.2 +22% +11% 39.1 33.3 Other International 4 586.0 603.7 (3)% (5)% (7.7) (16.7) e-commerce 5 324.4 275.6 +18% +9% 2.7 1.0 Central Costs - - (8.1) (13.3)

Total Group Retail 3,333.9 3,365.6 (1)% (4)% 10.0 (6.3)

Underlying net finance charges (23.2) (6.1)

Property losses (4.4) (5.3)

Group underlying loss before tax (17.6) (17.7)

Notes

(1) UK & Ireland Electricals comprises Currys, CurrysDigital and Dixons Travel as well as the operations in Ireland. (2) UK Computing comprises PC World, DSGi Business and The TechGuys. Like for like sales are for PC World only.

(3) Nordics comprises the Elkjøp Group, and no longer includes the results of the PC City Sweden and Markantalo stores which are now classified as closed businesses within non-underlying items.

(4) Other International comprises Greece (Kotsovolos and Electro World), Italy (UniEuro), Spain (PC City Spain), Turkey (Electro World), Electro World operations in the Czech Republic and Slovakia and no longer includes the results of the discontinued operations of Electro World Hungary and Poland.

(6)

BUSINESS PERFORMANCE

Underlying Group sales (excluding discontinued operations and closed businesses) were down 1%

to £3,333.9 million (2008/09 £3,365.6 million) and down 4% like for like. Underlying Group

sales were down 4% at constant exchange rates. Actions under the Group’s Renewal and

Transformation plan including the disposal or closure of underperforming businesses and a better

trading position delivered Group underlying retail profit (before property losses, interest and tax)

of £10.0 million in the first half compared to a previously reported loss of £17.4 million in the

first half of 2008/09. Group gross margins were up 0.4% across the half.

UK & IRELAND

Total sales in the UK & Ireland division were down 11% to £1,625.7 million (2008/09

£1,834.1 million) and like for like sales were down 11%. Underlying operating loss was

£16.0 million (2008/09 loss of £10.6 million).

The Renewal and Transformation plan is delivering improvements in the operations of the UK

business. The back office functions supporting the PC World, Currys and CurrysDigital operations

have been brought together with commercial, merchandising and buying teams supporting all

brands. The logistics infrastructure has also been consolidated with the main warehouse in

Newark providing one fulfilment centre for stores and customers. These actions have reduced

complexity, simplified processes, made it easier for our colleagues and reduced operational costs

while delivering significant benefits for customers. Stock management processes have been

improved significantly which will enable the business to ensure the right product is in the right

place at the right time for customers while controlling costs and working capital utilised in the

business.

The services infrastructure has also seen significant change. During the year the operations were

simplified enabling the business to improve the level of services to customers such as next day

delivery in three hour timed delivery slots – a market leading service which has been received

very well by our customers. The repair and support operations have been restructured improving

processes and reducing costs, for example halving the repair time for laptops to six days on

average. During the year the contact centre was brought successfully back in house enabling us

to improve the quality of service and support offered to our customers.

In August The TechGuys launched a range of 62 enhanced services for customers as well as

introducing “Club” and “Premier Club” options for the

Whateverhappens customer support

agreements. Under the “Premier Club” agreement customers experience enhanced levels of

service such as faster response times and the loan of a product if theirs has to be taken away for

repair.

UK & Ireland Electricals

This comprises Currys, CurrysDigital and Dixons Travel in the UK and Currys and PC World in Ireland.

Total sales were down 8% at £1,044.9 million (2008/09 £1,138.1 million) with like for like sales

down 9%. First half underlying operating loss was £23.2 million (2008/09 loss of £22.3 million).

Currys and CurrysDigital experienced mixed trading patterns in the first half while focused on,

and delivering, a strong margin performance. During the first quarter, the business anniversaried

the price reductions introduced in the vision category to bring store prices more into line with

(7)

web pricing which impacted sales growth comparators. In addition, the significant level of

transformation mentioned above caused some disruption during the first quarter. Performance

improved during the last eight weeks of the period as these effects normalised. Margin

improvements were helped by a focus on delivering FIVES, the colleague training programme to

improve customer engagement and product knowledge in collaboration with suppliers which

together ensure customers buy the products and services that best suit their needs.

Currys introduced a new advertising campaign based around

We Can Help emphasising delivery,

installation and recycling which helped drive home delivery alongside an improving white goods

performance.

The computing category benefitted from improved ranging while vision is beginning to see

benefits from newer technology such as LED televisions.

Currys has refurbished 53 Superstores which have delivered average gross profit uplifts of 20% in

the 28 week period to 14 November 2009.

Following the two openings on 26 November 2009, there are now 11 new format stores in the

Megastore and combined 2-in-1 Currys and PC World formats open. These new formats have

delivered average gross profit uplifts of 57% in the 28 week period to 14 November 2009. The

new combined 2-in-1 Currys and PC World stores have been in locations where PC World has

been introduced into an existing Currys store in a catchment in which it was not directly present.

In addition there are a number of locations where Currys and PC World operate stores side by

side and by combining them into one store the space can be utilised more efficiently, delivering a

better shopping experience for customers.

A total of 15 CurrysDigital stores have now been refurbished and have delivered average gross

profit uplifts of 21% over the 28 week period to 14 November 2009. As CurrysDigital continues

its plan to focus on 100 high street locations it has closed a total of 37 stores over the last

18 months as leases have expired.

Dixons Travel continues to trade well. It has now converted 14 stores to the new format and

rolled out the successful ADD+ store concept to Manchester and Stansted. During the period

Dixons Travel opened its first international store in the airport in Rome. Other airports across

Europe, particularly in other markets where the Group operates, provide further growth

opportunities for Dixons Travel.

The economic environment remains very challenging in Ireland, and the business has taken all the

right actions and will emerge as the leading specialist electrical retailer in that market. In recent

weeks a more aggressive trading position has improved sales and enabled it to gain further

market share.

UK Computing

UK Computing comprises PC World, DSGi Business and The TechGuys. Total sales were down

17% at £580.8 million (2008/09 £696.0 million) with like for like sales down 15%. Underlying

operating profit was £7.2 million (2008/09 £11.7 million).

PC World’s sales have been impacted by very weak B2B sales in DSGi Business both direct and

in-store. PC World retail sales were down 12%. In addition, customers were delaying purchases

of hardware in the lead up to the launch of Windows 7 on 22 October 2009 affecting the first

(8)

half sales performance. Gross margins in PC World were up strongly year on year. Since the

launch of Windows 7, PC World has experienced a significant improvement in sales performance.

PC World’s ‘Get Connected’ programme, the market-beating mobile broadband proposition,

offering customers the biggest range of subsidised or free laptops and netbooks in the UK tailored

to suit customers’ needs, continues to drive sales.

The PC World store refurbishment programme has progressed well, with a total of 55 stores now

refurbished. During the year the format was revised further with 14 stores now opened in this

newer format which have delivered average gross profit uplifts of 16% in the 28 week period to

14 November 2009.

DSGi Business sales were down 32% at £103.2 million (2008/09 £150.8 million) as the

recessionary economic environment has resulted in business customers delaying purchases of IT.

NORDICS

In the Nordic region, Elkjøp saw sales grow by 16% at constant exchange rates, while in sterling,

sales grew by 22% to £797.8 million (2008/09 £652.2 million). Like for like sales were up 11%.

Underlying operating profits were £39.1 million (2008/09 £33.3 million).

Elkjøp has performed very strongly in all its markets and all its product categories. It has

performed particularly strongly in Sweden and Denmark despite weak economic environments.

The Nordic business is the preferred operating model for the Group. Management continue to

simplify the business, taking out costs and reducing complexity. The efficient central operating

structure and strong market shares have enabled Elkjøp to leverage margin and exploit its strong

market positions and gain market share from distressed competitors. As a result gross margins

were down slightly, but operating profits improved.

Elkjøp has now opened ten Megastores which have performed particularly well. It has also

started a programme to refurbish existing superstores using the same principles employed in the

UK businesses with six completed so far.

OTHER INTERNATIONAL

This division comprises operations in Italy, Greece, Spain, Turkey, Czech Republic and Slovakia.

Total sales declined by 11% at constant exchange rates and by 3% in sterling to £586.0 million

(2008/09 £603.7 million), with like for like sales down 5%. Underlying operating loss was

£7.7 million (2008/09 loss of £16.7 million).

Italy

Following the closure of 51 stores, representing approximately a quarter of the store portfolio,

total sales for UniEuro in Italy were down 16% at constant exchange rates and down 7% in

sterling to £268.0 million (2008/09 £289.6 million).

The turnaround plan in Italy continues to make good progress with some encouraging signs in an

economic environment that remains challenging. Management actions have resulted in an

improving trend in sales with positive like for like sales through much of the period. Gross

margins continue to improve year on year. In more recent weeks UniEuro has benefitted from

the digital switchover occurring in the regions of Piemonte and Lazio. UniEuro has experienced

good growth in vision, computing, communications, built-in and accessories with particularly

(9)

The business now operates 35 PC City implants in UniEuro stores which continue to add

incremental sales and profits attracting a younger customer base. During the period UniEuro

opened its first Megastore in Muratella in Rome. This is a 40,000 ft

2

_{store refurbished along the}

same principles as those in the UK and Nordics and while it has been open only a few weeks it

has seen a 50% increase in sales following the initial opening promotions.

While it is still early days in the turnaround and the economic outlook in Italy remains

challenging the improving performance to date gives management confidence in the long term

prospects for UniEuro.

Greece

Total sales in Greece were down 8% at constant exchange rates and up 2% in sterling at

£169.9 million (2008/09 £167.2 million).

During the first half Kotsovolos and Electro World were trading against tough comparables in the

prior year which, together with a weak consumer environment, has held back total sales.

However, as Greece’s leading specialist electrical retailer, Kotsovolos and Electro World are

growing market share and careful management of costs, cash and stock have, in line with

expectations, limited the effects of the weakening environment on bottom line performance.

During the period, Kotsovolos closed five smaller high street stores and opened three superstores

as well as three further franchise stores.

Spain

PC City sales in Spain were down 19% at constant exchange rates and 10% in sterling at

£81.6 million (2008/09 £90.5 million). PC City has successfully implemented its rationalisation

plan closing 11 stores ahead of schedule and reducing costs to enable the business to weather

the significant consumer slowdown there. In addition management have introduced a light refit

plan which is adding incremental sales while keeping the cash payback down to less than one

year. These actions have started to deliver improved gross margins and will reduce losses year on

year as well as position the business better when the Spanish economy recovers.

Czech Republic & Slovakia

Total sales in Czech Republic & Slovakia declined by 9% at constant exchange rates and by 6% in

sterling to £35.6 million (2008/09 £37.9 million). Underlying operating losses were £4.8 million

(2008/09 losses of £3.2 million).

Operations in the Czech Republic continue to perform in line with expectations, despite the weak

consumer environment. During the first half Electro World reformatted two stores utilising the

‘Renewal and Transformation’ principles which have reported encouraging results with a great

response from customers. The Group now operates three stores in Slovakia which are trading in

line with expectations.

On 19 May 2009 and 1 September 2009 the Group sold the operations of Electro World in

Hungary and Poland, respectively, in each case for a consideration of €1. The disposals involved

the transfer of all stores, operations and employees to the purchasers. Underlying sales and profit

numbers therefore exclude both of these operations.

(10)

Turkey

Total sales in Turkey were £30.2 million (2008/09 £17.6 million). The Group now operates ten

stores in Turkey under the Electro World brand with its local joint venture partner. These stores

are based on the Group’s new large space format, providing a greater product range and exciting

retail environment for customers. Initial results from these stores have been positive with further

stores planned.

E-COMMERCE DIVISION

This division comprises PIXmania and Dixons.co.uk. Total sales for the e-commerce division were

£324.4 million (2008/09 £275.6 million). Underlying operating profit was £2.7 million

(2008/09 £1.0 million).

PIXmania continues to trade well in its core Euro markets reflecting its unique pan-european

operating model which enables it to focus on profitable markets. PIXmania has made good

progress in all categories and is now the fourth most visited consumer electronics e-tailer in the

world with 25 million unique visitors. The market leading PIXmania e-merchant platform will

provide the base for the Group’s e-tail operations.

Dixons.co.uk has been operating as a pure play internet operation for just over three years now.

In that time it has grown its share significantly, more than doubling its sales and exceeding

expectations. Following this strong growth a number of changes have been made to the

operating model to make the business more relevant for customers. These changes impacted

sales performance at the beginning of the half year, but sales have recovered strongly since.

COSTS AND WORKING CAPITAL

The Group is focused on re-engineering the operational processes within the Group in order to

reduce costs for the Company, improve the service provided to customers, and assist colleagues in

operating the business effectively.

The Group is on target to reduce costs by approximately £50 million this financial year as part of

the four year programme to reduce costs by £200 million. The Group is implementing efficiency

initiatives in logistics, services, head office administration and in-store processes, such as ensuring

that the Group gets deliveries and repairs right first time. Process improvement initiatives have

already contributed benefits with stock turn across the Group increasing by 8%.

Management remains on track to reduce stock by between £80 million and £130 million over the

medium term through actions including: improved forecasting and ordering accuracy; range

improvements; better allocation of store stock; in store fulfilment processing for faster delivery to

shelf; and a new clearance policy incorporating dynamic pricing.

The Group continues to implement the step change programme that makes the business better

for customers, easier for colleagues and cheaper to operate.

Management remains confident that it can achieve a 3% - 4% return on sales, through the

Renewal and Transformation plan, over the medium term.

(11)

FINANCIAL POSITION

The Group underlying loss before tax was £17.6 million (2008/09 loss of £17.7 million).

Underlying diluted loss per share was 0.1 pence (2008/09 loss per share of 0.3 pence, after

adjusting for the Placing and Rights issue).

ADJUSTMENTS TO UNDERLYING RESULTS

Underlying loss before tax is reported before non-underlying charges of £5.5 million. Total Group

loss before tax, after including non-underlying items, was £23.1 million (2008/09 loss of

£55.6 million).

A further explanation of the non-underlying charges is shown below.

24 weeks ended 24 weeks ended

17 October 2009 18 October 2008

£million £million

Loss before tax

(23.1)

(55.6)

Add back non-underlying items:

Trading results from closed businesses

0.2

6.7 Amortisation of acquired intangibles

1.9

2.0 Net restructuring charges

2.8

27.8 Financing items: Net fair value remeasurements

0.6

1.4 Total non-underlying charges to add back

5.5

37.9 Underlying loss before tax

(17.6)

(17.7)

G

In May the Group completed the closure of standalone stores of PC City in Sweden and

Markantalo in Finland. Trading results of closed businesses comprise the pre-tax losses from

these operations.

G

Amortisation of acquired intangibles of £1.9 million predominantly comprises brand names.

G

Net restructuring charges of £2.8 million relate to the UK business transformation programme

and comprise accelerated depreciation charges associated with the UK reformat programme,

and a reassessment of the charge for onerous leases on the CurrysDigital portfolio. The prior

year net restructuring charges also related to the UK business transformation with the main

constituents comprising staff related costs associated with the reorganisation of the Service

function and the retail support function in Hemel Hempstead together with accelerated

depreciation charges associated with the UK store reformat programme.

G

The financing charge of £0.6 million relates to net fair value remeasurement losses on

revaluation of financial instruments as required by IAS 32 and 39.

(12)

FREE CASH FLOW

Free cash flow was £24.2 million (2008/09 free cash outflow of £114.4 million).

Underlying loss before tax

(17.6)

(17.7)

Closed businesses loss before tax

(0.2)

(6.7)

Depreciation & amortisation

54.8

61.8 Working capital

106.7 (62.3)

Taxation

(25.6)

(22.9)

Capital expenditure

(65.8)

(51.4)

Sale of freehold property

*

_-

_7.6

Other cash items

9.7 (8.9)

Free Cash Flow before restructuring items

62.0 (100.5)

Net restructuring and impairment

*

_(37.8)

_(13.9)

Free Cash Flow

24.2 (114.4)

*_{Sale of freehold property in the prior year excludes £9.0 million of sale proceeds relating to the sale of the Group’s former}

warehouse in Stevenage. These sale proceeds are shown within net restructuring and impairment costs.

The improved cash flow compared to the prior year was primarily due to the improved cash flow

from working capital, with a £106.7 million inflow in the current year compared to a £62.3 million

outflow in the prior year. The change in working capital performance was primarily due to:

G

Improved trading performance in the last eight weeks of the first half, resulting in an increased

intake to replenish stock which, under the Group’s normal trade terms, was largely scheduled to

be paid for after the period end;

G

Conversely, as a result of the credit crunch, the trading performance sharply deteriorated in the

same period in the prior year, with a consequent negative effect on working capital cash flow at

that time; and

G

The unwinding of deferrals of supplier payments made at the end of the 2007/08 financial year

which has not recurred.

Capital expenditure was £65.8 million (2008/09 £51.4 million), up £14.4 million reflecting the

increased investment associated with the Renewal and Transformation plan. No property sales

were undertaken in the current year.

The main reason for the improvement in other cash items to £9.7 million (2008/09 outflow of £8.9

million) was a cost of £9.8 million incurred in the prior year relating mainly to revaluation settlements

on currency hedges against certain overseas assets and intercompany balances. There was no

equivalent cost in the first half of this year. In addition, the net pension finance costs increased by

£4 million, but these are non cash in nature, and are accordingly added back in this analysis.

Net restructuring and impairment reflects the cash outflows relating to the strategic reorganisation

and business impairment activities. These predominantly comprise lease and other property

related payments, store closure and employee severance costs.

(13)

FUNDING

Net (debt) / funds

At 17 October 2009 the Group had net debt of £177.7 million, compared with net debt of

£149.5 million at the previous half year date and £477.5 million at the end of the 2008/09 financial

year. The Group’s net debt includes restricted funds of £81.5 million (2008/09 £57.5 million) which

predominantly comprise funds held under trust for potential customer support agreement liabilities.

Opening net (debt) / funds

(477.5)

50.1 Free Cash Flow

24.2 (114.4)

Dividends

-

(59.1)

Equity placing and rights issue

293.8 -Acquisitions

(10.6)

-Discontinued operations

(8.5)

(10.5)

Special pension contribution

(6.0)

Other items

(6.9)

(9.6)

Other movements in net funds

275.6 (85.2)

Closing net debt

(177.7)

(149.5)

Movements in net debt include net proceeds of £293.8 million received from the equity Placing

and Rights issue, £10.6 million acquisition costs representing an associated undertaking in

Norway being acquired following the exercise of a put option (as disclosed in the Report and

Accounts for the 2008/09 financial year), and £8.5 million representing the net cash utilisation of

the discontinued operations in Hungary and Poland. The £6.0 million special pension contribution

was made in accordance with the agreement with the trustee of the UK defined benefit pension

scheme to reduce the pension deficit. Other items include the impact on net debt of revaluing

the 2012 Bond, the revaluation of net funds held in foreign currencies and capital contributions

made by the joint venture partner in Turkey.

The restricted funds of £81.5 million (2008/09 £57.5 million) have increased in line with the

expectations previously announced, largely as a result of reduced and renegotiated letter of credit

facilities, which have necessitated additional funds being placed in trust.

PROPERTY LOSSES

Property losses were £4.4 million (2008/09 loss of £5.3 million), primarily driven by costs

associated with previously closed UK stores, as well as the five store closures in Greece.

UNDERLYING NET FINANCE COSTS

Underlying net finance costs were £23.2 million (2008/09 net costs of £6.1 million). The key

drivers of the increased costs were:

G

Interest cost increases driven by higher borrowings prior to the refinancing, and by higher bank

fees and margins subsequent to the refinancing;

G

Amortisation of the fees incurred on the refinancing;

G

Foreign exchange related gains in the prior year which were not repeated in the current year; and

G

Higher net pension interest, set at the beginning of the financial year, largely as a result of

(14)

The Group has in the past entered into certain hedging agreements. As previously disclosed in

the Group’s financial statements, the principal outstanding agreements relate primarily to foreign

exchange and interest hedges. These were put in place at the time of the Bond issue in 2002 and

in relation to overseas investments. A number of these hedges mature during the second half of

the current financial year and will result in a cash outflow of approximately £65 million. The

remaining hedges at current rates would imply a cash outflow of £57 million, primarily payable

in 2012.

TAX

The Group’s underlying tax rate, which is based on current expectations of full year earnings and

losses in different tax jurisdictions, was 64% (2008/09 full year 61%). The high effective tax rate

primarily reflects the continued impact of loss making businesses where tax benefits are not fully

recognised.

PENSIONS

At 17 October 2009, the IAS 19 accounting deficit of the UK defined benefit pension scheme

amounted to £291.7 million, compared to £148.8 million at 2 May 2009 and £59.1 million at

18 October 2008. The assumptions used for determining the accounting valuation use a

consistent basis to that adopted in prior periods. The increased deficit is largely due to a

significant reduction in the discount rate applied to liabilities seen across the market which, in

accordance with accounting standards, reflects market conditions at 17 October 2009. The effect

of this has been partly offset by an increase in the value of scheme assets by £90.8 million at

2 May 2009, which again reflects the current market conditions.

The actuarial deficit of £61.0 million (measured as at 5 April 2007) is being addressed by special

cash contributions of £12 million per annum which are payable in two equal tranches of

£6 million by June and December each year until December 2012. Over recent years, the Group

has implemented a number of changes to pension arrangements in order to address the deficit

over the longer term. The defined benefit section of the UK pension scheme was closed to new

entrants on 1 September 2002. The next triennial valuation of the scheme will be performed as

at 5 April 2010, although its results will not be known until mid 2011.

OUTLOOK

We continue to make rapid progress with our Renewal and Transformation plan to offer an

unbeatable combination of Value, Choice and Service for customers. Our turnaround is on track

and customers are responding well to the significant changes we are making. We have seen

improving trends in a number of our businesses, particularly in recent weeks. While we are

cautious about the outlook for 2010, we are well-positioned as we enter into Peak trading with

compelling offers for customers.

The Group is strongly placed to take advantage of any improved consumer sentiment over the

Peak period with great deals for customers in store and online. The economic backdrop for 2010

remains uncertain. However, the Group is well prepared with a focus on managing costs,

margins, stock turn and cash flow alongside the continued rapid progress of the Renewal and

Transformation plan.

John Browett

(15)

Consolidated Income Statement

24 weeks ended 17 October 2009 Unaudited

Non-underlying* Under- Closed

lying* businesses** Other Total Note £million £million £million £million

Continuing operations

Revenue 2 3,333.9 0.9 - 3,334.8

Profit / (loss) from operations

before associates 5.2 (0.2) (4.7) 0.3

Share of post tax results of

associates 0.4 - - 0.4

Operating profit / (loss) 2,3 5.6 (0.2) (4.7) 0.7

Finance income 24.5 - 1.9 26.4

Finance costs (47.7) - (2.5) (50.2)

Net finance costs 4 (23.2) - (0.6) (23.8)

(Loss) / profit before tax (17.6) (0.2) (5.3) (23.1)

Income tax credit / (expense) 5 11.3 0.1 1.2 12.6

(Loss) / profit after tax – continuing operations (6.3) (0.1) (4.1) (10.5) Loss after tax – discontinued operations 9 - - (8.7) (8.7)

(Loss) / profit for the period (6.3) (0.1) (12.8) (19.2)

Attributable to:

Equity shareholders of the parent company (4.9) (0.1) (12.8) (17.8)

Minority interests (1.4) - - (1.4)

(6.3) (0.1) (12.8) (19.2)

Loss per share (pence) 6

Basic - total (0.5)

Diluted - total (0.5)

Basic - continuing operations (0.3)

Diluted - continuing operations (0.3)

Underlying (loss) / earnings per share (pence) 1,6

Basic - continuing operations (0.1)p

Diluted - continuing operations (0.1)p

* ‘Underlying’ profit / (loss) and (loss) / earnings per share measures exclude the trading results of closed businesses, amortisation of acquired intangibles, net restructuring and business impairment charges and other one-off, non-recurring items, profit on sale of investments, fair value remeasurements of financial instruments and, where applicable, discontinued operations. Such excluded items are described as ‘Non-underlying’. Further information on these items is shown in notes 1, 3, 4 and 5.

** Closed businesses comprise Markantalo and PC City Sweden whereby these store based businesses were closed on 10 May 2009 and 20 May 2009, respectively. These operations did not meet the definition of discontinued operations as stipulated by IFRS 5 and accordingly the disclosures made above differ from those for discontinued operations.

p p p p

(16)

t

24 weeks ended 18 October 2008 52 weeks ended 2 May 2009

Unaudited Audited

Re-presented †

Non-underlying* Non-underlying*

Under- Closed Under- Closed

lying* businesses** Other Total lying* businesses** Other Total £million £million £million £million £million £million £million £million

3,365.6 58.4 - 3,424.0 8,180.2 137.6 - 8,317.8 (12.3) (5.9) (29.8) (48.0) 79.4 (12.2) (158.2) (91.0) 0.7 - - 0.7 3.6 - - 3.6 (11.6) (5.9) (29.8) (47.3) 83.0 (12.2) (158.2) (87.4) 36.3 - 10.8 47.1 69.6 - 32.2 101.8 (42.4) (0.8) (12.2) (55.4) (96.5) (1.9) (39.6) (138.0) (6.1) (0.8) (1.4) (8.3) (26.9) (1.9) (7.4) (36.2) (17.7) (6.7) (31.2) (55.6) 56.1 (14.1) (165.6) (123.6) 9.6 1.8 8.6 20.0 (34.3) 2.7 (25.2) (56.8) (8.1) (4.9) (22.6) (35.6) 21.8 (11.4) (190.8) (180.4) - - (5.4) (5.4) - - (38.9) (38.9) (8.1) (4.9) (28.0) (41.0) 21.8 (11.4) (229.7) (219.3) (7.4) (4.9) (28.0) (40.3) 21.7 (11.4) (229.7) (219.4) (0.7) - - (0.7) 0.1 - - 0.1 (8.1) (4.9) (28.0) (41.0) 21.8 (11.4) (229.7) (219.3) (1.9)p (10.2) (1.9)p (10.2) (1.6)p (8.4) (1.6)p (8.4) (0.3)p 1.0p (0.3)p 1.0p

† Underlying figures for the 24 weeks ended 18 October 2008 have been re-presented to exclude the trading results of closed businesses.

p p p p

(17)

Consolidated Statement of Comprehensive Income and Expense

24 weeks ended 24 weeks ended 52 weeks ended 17 October 2009 18 October 2008 2 May 2009 Unaudited Unaudited Audited £million £million £million

Loss for the period (19.2) (41.0) (219.3)

Actuarial losses on defined benefit pension scheme (146.8) (16.0) (116.4) Cash flow hedges:

Fair value remeasurement (losses) / gains (8.7) 7.6 42.6

Losses / (gains) transferred to carrying amount of inventories 7.1 11.2 (27.4)

Gains transferred to income statement (0.4) (0.2) (13.4)

Net investment hedges:

Fair value remeasurement (losses) / gains (12.4) 3.6 (74.3)

Investments:

Fair value remeasurement gains / (losses) 0.1 (0.2) (0.9)

Currency translation movements 67.1 (53.2) 122.5

Tax on items taken directly to equity 43.9 (1.8) 53.2

Net expense recognised directly in equity (50.1) (49.0) (14.1)

Total recognised expense for the period (69.3) (90.0) (233.4)

Attributable to:

Equity shareholders of the parent company (68.5) (89.7) (236.9)

Minority interests (0.8) (0.3) 3.5

(18)

Consolidated Balance Sheet

17 October 2009 18 October 2008 2 May 2009 Unaudited Unaudited Audited Note £million £million £million

Non-current assets

Goodwill 1,126.5 920.1 1,069.1

Intangible assets 140.6 147.0 148.4

Property, plant and equipment 524.8 502.4 489.6

Investments in associates 28.8 27.2 29.8

Trade and other receivables 76.3 73.7 68.5

Deferred tax assets 219.8 93.5 150.3

2,116.8 1,763.9 1,955.7

Current assets

Inventories 1,095.3 1,131.5 971.9

Trade and other receivables 479.2 464.9 508.2

Income tax receivable 8.8 46.0 8.3

Short term investments 8 7.7 43.1 9.0

Cash and cash equivalents 8 286.5 335.7 192.6

1,877.5 2,021.2 1,690.0

Assets held for sale - - 13.2

Total assets 3,994.3 3,785.1 3,658.9

Current liabilities

Bank overdrafts 8 - - (4.8)

Borrowings 8 (50.0) (127.0) (250.1)

Obligations under finance leases (2.8) (1.5) (2.8)

Trade and other payables (1,914.8) (2,009.8) (1,664.5)

Income tax payable (46.1) (32.6) (58.0)

Provisions (40.9) (46.5) (72.1)

(2,054.6) (2,217.4) (2,052.3)

Net current liabilities (177.1) (196.2) (362.3)

Non-current liabilities

Borrowings 8 (320.7) (301.1) (322.5)

Obligations under finance leases (98.4) (98.7) (98.9)

Retirement benefit obligations 10 (296.5) (61.1) (153.0)

Other payables (359.8) (338.7) (369.8)

Deferred tax liabilities (22.8) (15.9) (22.7)

Provisions (30.3) (44.0) (40.4)

(1,128.5) (859.5) (1,007.3) Liabilities directly associated with assets classified as held for sale - - (14.4)

Total liabilities (3,183.1) (3,076.9) (3,074.0)

Net assets 811.2 708.2 584.9

Capital and reserves

Called up share capital 90.2 44.3 44.3

Share premium account 169.4 169.4 169.4

Other reserves (545.2) (485.9) (534.9)

Retained earnings 1,068.7 950.8 880.1

Equity attributable to equity holders of the parent company 783.1 678.6 558.9

Equity minority interests 28.1 29.6 26.0

(19)

Consolidated Cash Flow Statement

24 weeks ended 24 weeks ended 52 weeks ended 17 October 2009 18 October 2008 2 May 2009 Unaudited Unaudited Audited Note £million £million £million

Operating activities - continuing operations

Cash generated from / (utilised by) operations * 8 135.1 (33.9) (143.8) Special contribution to defined benefit pension scheme (6.0) (6.0) (12.0)

Income tax paid * (25.6) (22.9) (35.7)

Net cash flows from operating activities 103.5 (62.8) (191.5)

Investing activities - continuing operations

Purchase of property, plant & equipment and other

intangibles * (65.8) (51.4) (140.7)

Purchase of subsidiaries (10.6) - (27.6)

Interest received * 1.1 16.6 20.9

Decrease in short term investments 1.4 38.9 73.3

Disposals of property, plant & equipment and other

intangibles * - 16.6 28.8

Dividend received from associate 0.1 - 4.9

Net cash flows from investing activities (73.8) 20.7 (40.4)

Financing activities - continuing operations

Issue of ordinary share capital 293.8 -

-Additions to finance leases - - 2.4

Capital element of finance lease payments (0.6) (0.5) (1.7)

Interest element of finance lease payments * (3.3) (3.1) (6.9)

(Decrease) / increase in borrowings due within one year (200.1) 126.8 249.9

Decrease in borrowings due after more than one year - - (0.1)

Interest paid * (17.3) (36.3) (126.8)

Investment from minority shareholder 2.8 3.1 5.7

Equity dividends paid - (59.1) (60.3)

Net cash flows from financing activities 75.3 30.9 62.2

Increase / (decrease) in cash and cash equivalents (i)

Continuing operations 105.0 (11.2) (169.7)

Discontinued operations 9 (8.5) (10.5) (21.6)

96.5 (21.7) (191.3)

Cash and cash equivalents at beginning of period (i) 8 187.8 363.7 363.7

Currency translation differences 2.2 (6.3) 15.4

Cash and cash equivalents at end of period (i) 8 286.5 335.7 187.8

Free Cash Flow (ii) 24.2 (114.4) (404.2)

(i) For the purposes of this cash flow statement, cash and cash equivalents comprise those items disclosed as ‘cash and cash equivalent’ on the face of the balance sheet, less overdrafts, which are classified within current liabilities on the face of the balance sheet. A reconciliation to the balance sheet amounts is shown in note 8.

(ii) Free Cash Flow comprises those items marked * and comprises cash generated from / (utilised by) continuing operations before special pension contributions, plus net finance expense, less income tax paid and net capital expenditure. The directors consider that ‘Free Cash Flow’ provides additional useful

information to shareholders in respect of cash generation and is consistent with how business performance is measured internally.

(20)

Statement of Changes in Equity

Share

Share premium Other Retained Minority Total capital account reserves earnings Subtotal interests equity £million £million £million £million £million £million £million

At 3 May 2009 44.3 169.4 (534.9) 880.1 558.9 26.0 584.9

Total recognised income and expense

for the period - - (10.3) (58.2) (68.5) (0.8) (69.3)

Placing and Rights issue 45.9 - 245.4 - 291.3 - 291.3

Transfer - - (245.4) 245.4 - -

-Minority interests - increase in capital - - - - - 2.9 2.9

Share based payments - - - 1.5 1.5 - 1.5

Tax on share based payments - - - (0.1) (0.1) - (0.1)

At 17 October 2009 90.2 169.4 (545.2) 1,068.7 783.1 28.1 811.2

Share

Share premium Other Retained Minority Total capital account reserves earnings Subtotal interests equity £million £million £million £million £million £million £million

At 4 May 2008 44.3 169.4 (502.9) 1,115.9 826.7 26.8 853.5

for the period - - 15.8 (105.5) (89.7) (0.3) (90.0)

Equity dividends paid - - - (60.7) (60.7) - (60.7)

Minority interests - increase in capital - - - 3.1 3.1

Transfers - - 1.2 (1.2) - -

-Share based payments - - - 2.4 2.4 - 2.4

Tax on share based payments - - - (0.1) (0.1) - (0.1)

At 18 October 2008 44.3 169.4 (485.9) 950.8 678.6 29.6 708.2

Share

Share premium Other Retained Minority Total capital account reserves earnings Subtotal interests equity £million £million £million £million £million £million £million

At 4 May 2008 44.3 169.4 (502.9) 1,115.9 826.7 26.8 853.5

for the period - - (52.8) (184.1) (236.9) 3.5 (233.4)

Equity dividends paid - - - (60.7) (60.7) - (60.7)

Minority interests - increase in capital - - - 5.7 5.7

Transfers - - (6.7) 6.7 - -

-Put option exercised - - 27.5 - 27.5 (10.0) 17.5

Share based payments - - - 2.1 2.1 - 2.1

Tax on share based payments - - - 0.2 0.2 - 0.2

At 2 May 2009 44.3 169.4 (534.9) 880.1 558.9 26.0 584.9

On 9 June 2009 the Group completed a Placing and Rights Issue which raised gross proceeds of £310.6 million, of which £100 million was raised by the Placing. The Placing comprised in aggregate 333,333,333 Placing Shares available for subscription at an issue price of 30 pence per Placing Share. The Rights Issue was made on the basis of five new shares for each seven eligible shares at 14 pence per new share. Aggregate issue costs of the Placing and Rights Issue were £19.3 million. The Placing and Rights Issue was effected through a structure which resulted in a merger reserve arising under section 612 of the Companies Act 2006. Following receipt of the cash proceeds through the structure, the excess of the net proceeds over the nominal value of the share capital issued was transferred from the merger reserve to retained earnings.

Minority interests comprise shareholdings in Pixmania S.A.S. (PIXmania), ElectroWorld Iç ve Dis Ticaret AS (ElectroWorld Turkey) and DSGi South-East Europe A.E.V.E. (Kotsovolos).

24 weeks ended 18 October 2008 and 52 weeks ended 2 May 2009: Transfers between retained earnings and other reserves relate to the fair value remeasurement of a put option held by a minority shareholder.

(21)

Notes to the Interim Financial Statements

1 Basis of preparation and accounting policies

The interim financial information for the 24 weeks ended 17 October 2009 was approved by the directors on 26 November 2009. The interim financial information, which is a condensed set of financial statements, has been prepared in accordance with the Listing Rules of the Financial Services Authority and International Accounting Standard 34 ‘Interim financial reporting’ (IAS 34) as adopted by the European Union and have been prepared on the going concern basis as described further in the section on principal risks and uncertainties. Other than as set out below, the accounting policies adopted are those set out in the Group’s Annual Report and Accounts for the 52 week period ended 2 May 2009.

Certain new accounting pronouncements have become applicable during the period. During the period the Group has adopted:

- IAS 1 Revised Presentation of Financial Statements. This introduces a ‘statement of comprehensive income and expense’. Instead of presenting one statement of comprehensive income and expense the Group has elected to present two statements: an ‘income statement’ and a ‘statement of comprehensive income and expense’. The Group has presented the consolidated statement of changes in equity, which was previously presented as a note, as a primary statement.

- Amendment to IFRS 2 Share Based Payments: Vesting conditions and cancellations. This restricts the definition of vesting conditions to include service and performance conditions only. All other features are not vesting conditions and must be reflected in the grant date fair value. It specifies that all cancellations should receive the same accounting treatment. This has impacted the accounting for Save As You Earn (SAYE) share plans. The adoption of this amendment has not had a significant impact on the Group’s net results or net assets. The Group previously adopted IFRS 8 Operating Segments, in advance of its effective date, with effect from 4 May 2008. Other new standards, amendments to standards and IFRIC interpretations are effective for the Group during the current financial period but are either not relevant or have had no impact on the Group’s net results or net assets.

The interim financial information is unaudited and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006, but has been reviewed by the auditors. The financial information for the 52 weeks ended 2 May 2009 does not constitute the Company’s statutory accounts for that period but has been extracted from those accounts which have been filed with the Registrar of Companies. The auditors have reported on those accounts, their report was unqualified, did not draw attention to any matters by way of emphasis, and did not contain statements under Sections 498 (2) or (3) of the Companies Act 2006.

The Group’s income statement and segmental analysis identify separately underlying performance measures and non-underlying items. Underlying performance measures reflect an adjustment to total performance measures to exclude the impact of closed businesses and other non-underlying items. Underlying performance measures comprise profits and losses incurred as part of the day-to-day ongoing retail activities of the Group and include profits and losses incurred on the disposal and closure of owned or leased properties that occur as part of the Group’s annual retail churn. The profits or losses incurred on disposal or closure of owned or leased properties as part of a one-off restructuring programme are excluded from underlying performance measures and are therefore included, among other items, within non-underlying items as described below. The directors consider ‘underlying’ performance measures to be a more accurate reflection of the ongoing trading performance of the Group and believe that these measures provide additional useful information for shareholders on the Group’s performance and are consistent with how business performance is measured internally.

Non-underlying items comprise trading results of closed businesses, amortisation of acquired intangibles, net restructuring and business impairment charges and other one-off, non-recurring items, profit on sale of investments, fair value remeasurements of financial instruments and, where applicable, discontinued operations. A reconciliation of underlying profit and losses to total profits and losses is shown in note 2. Items excluded from underlying results can evolve from one financial year to the next depending on the nature of

re-organisation or one-off type activities described above and for 2008/09, trading results from closed businesses (previously businesses to be closed) represented such an item. Prior year comparatives have been

(22)

s

re-presented to exclude them from underlying results. Closed businesses are those which do not meet the definition of discontinued operations as stipulated by IFRS 5.

Underlying performance measures and non-underlying performance measures may not be directly comparable with other similarly titled measures or “adjusted” revenue or profit measures used by other companies.

2 Segmental analysis

The Group’s operating segments have been determined based on the information reported to the Board. This information is predominantly based on geographical areas which are either managed separately or have similar trading characteristics such that they can be aggregated together into one segment and in the case of e-commerce, as a business area with geographical territories aggregated. Accounting policies for each operating segment are the same as those for the Group and are set out in the 2008/09 Annual Report and Accounts. The Group evaluates each operating segment based on underlying operating profits which excludes those items described in note 1.

All segments are involved in the multi-channel sale of high technology consumer electronics, personal computers, domestic appliances, photographic equipment, communication products and related financial and after-sales services. The principal categories of customer are retail, business to business and on-line. During the period the Group disposed of its operations in Hungary and Poland, both of which have been classified as discontinued operations and were previously shown in the Other International division. Further information is provided on these disposals in note 9.

The Group’s reportable segments have been identified as UK & Ireland, Nordics, Other International and e-commerce:

G The UK & Ireland division comprises UK & Ireland Electricals (which consists of Currys, CurrysDigital, Dixons Travel and the Irish business) and UK Computing (which consists of PC World and DSGi Business) both of which are engaged predominantly in retail sales with the latter also engaging in business to business sales of computer hardware and software, associated peripherals and services and related financial and after sales services.

G The Nordics division comprises the Elkjøp Group which operates in Norway, Sweden, Finland, Denmark, Iceland, Greenland and the Faroe Islands. The Nordics division engages predominantly in retail sales. G The Other International division comprises operations in Central and Southern Europe. Central Europe

comprises ElectroWorld operating in the Czech Republic and Slovakia whilst Southern Europe operates in Italy, Greece, Spain and Turkey. The Other International division engages predominantly in retail sales. G The e-commerce division, primarily comprising PIXmania and Dixons.co.uk, is engaged in on-line retail sales

and operates in all of the countries in which the other divisions operate and across Europe.

Closed businesses comprise Markantalo and PC City Sweden whereby these store operations were closed on 10 May 2009 and 20 May 2009, respectively. Owing to their closure rather than disposal, these operations do not meet the definition of discontinued operations as stipulated by IFRS 5. Their results have been shown as closed businesses and prior period comparatives have been re-presented on a consistent basis. Both businesses were previously shown within underlying results as part of the Nordics division.

Central assets and liabilities predominantly comprise intersegment balances, cash and cash equivalents, borrowings, net retirement benefit obligations, derivative financial instruments and tax assets and liabilities.

(23)

Notes to the Interim Financial Statements

(continued)

2 Segmental analysis (continued) (a) Income Statement

24 weeks ended 17 October 2009 External Intersegmental Underlying Total revenue revenue Revenue profit / (loss) profit / (loss) £million £million £million £million £million

UK & Ireland 1,625.7 38.1 1,663.8 (16.0) (18.9) Nordics 798.7 0.5 799.2 38.7 38.5 Other International 586.0 0.3 586.3 (7.7) (8.0) e-commerce 324.4 1.3 325.7 2.7 1.3 Eliminations - (40.2) (40.2) - -3,334.8 - 3,334.8 17.7 12.9

Share of post tax result of associates 0.4 0.4

Operating profit before central costs and property losses 18.1 13.3

Central costs (8.1) (8.2)

Property losses (4.4) (4.4)

Operating profit 5.6 0.7

Finance income 24.5 26.4

Finance costs (47.7) (50.2)

Loss before tax for the period (17.6) (23.1)

External revenue for the Nordics includes £0.9 million relating to closed businesses.

Reconciliation of underlying profit / (loss) to total profit / (loss)

24 weeks ended 17 October 2009 Amortisation Net fair value

Underlying Closed of acquired Restructuring remeasure- Total profit / (loss) businesses intangibles and other ments profit / (loss) £million £million £million £million £million £million

UK & Ireland (16.0) - (0.2) (2.7) - (18.9)

Nordics 38.7 (0.2) - - - 38.5

Other International (7.7) - (0.3) - - (8.0)

e-commerce 2.7 - (1.4) - - 1.3

17.7 (0.2) (1.9) (2.7) - 12.9

Share of post tax result of associates 0.4 - - - - 0.4

Operating profit before central costs

and property losses 18.1 (0.2) (1.9) (2.7) - 13.3

Central costs (8.1) - - (0.1) - (8.2)

Property losses (4.4) - - - - (4.4)

Operating profit 5.6 (0.2) (1.9) (2.8) - 0.7

Finance income 24.5 - - - 1.9 26.4

Finance costs (47.7) - - - (2.5) (50.2)

Loss before tax for the period (17.6) (0.2) (1.9) (2.8) (0.6) (23.1)

(24)

N

24 weeks ended 18 October 2008 Re-presented External Intersegmental Underlying Total revenue revenue Revenue profit / (loss) (loss) / profit £million £million £million £million £million

UK & Ireland 1,834.1 44.4 1,878.5 (10.6) (29.7) Nordics 710.6 0.3 710.9 32.6 26.5 Other International 603.7 0.3 604.0 (16.7) (17.3) e-commerce 275.6 0.2 275.8 1.0 (0.3) Eliminations - (45.2) (45.2) - -3,424.0 - 3,424.0 6.3 (20.8)

Share of post tax result of associates 0.7 0.7

Operating profit / (loss) before central costs and property losses 7.0 (20.1)

Central costs (13.3) (21.9)

Property losses (5.3) (5.3)

Operating loss (11.6) (47.3)

Finance income 36.3 47.1

Finance costs (42.4) (55.4)

Loss before tax for the period (17.7) (55.6)

Reconciliation of underlying profit / (loss) to total (loss) / profit

24 weeks ended 18 October 2008 Re-presented Amortisation Net fair value

Underlying Closed of acquired Restructuring remeasure- Total profit / (loss) businesses intangibles and other ments (loss) / profit £million £million £million £million £million £million

UK & Ireland (10.6) - (0.2) (18.9) - (29.7)

Nordics 32.6 (5.9) (0.2) - - 26.5

Other International (16.7) - (0.3) (0.3) - (17.3)

e-commerce 1.0 - (1.3) - - (0.3)

6.3 (5.9) (2.0) (19.2) - (20.8)

Share of post tax result of associates 0.7 - - - - 0.7

Operating profit / (loss) before central costs

and property losses 7.0 (5.9) (2.0) (19.2) - (20.1)

Central costs (13.3) - - (8.6) - (21.9)

Property losses (5.3) - - - - (5.3)

Operating loss (11.6) (5.9) (2.0) (27.8) - (47.3)

Finance income 36.3 - - - 10.8 47.1

Finance costs (42.4) (0.8) - - (12.2) (55.4)

Loss before tax for the period (17.7) (6.7) (2.0) (27.8) (1.4) (55.6)

(25)

Notes to the Interim Financial Statements

(continued)

2 Segmental analysis (continued) (a) Income Statement (continued)

52 weeks ended 2 May 2009 External Intersegmental Underlying Total revenue revenue Revenue profit / (loss) (loss) / profit £million £million £million £million £million

UK & Ireland 4,228.6 84.2 4,312.8 58.7 (17.0) Nordics 1,762.8 1.1 1,763.9 72.5 14.2 Other International 1,519.0 2.3 1,521.3 (23.7) (42.6) e-commerce 807.4 0.4 807.8 15.0 11.7 Eliminations - (88.0) (88.0) - -8,317.8 - 8,317.8 122.5 (33.7)

Share of post tax result of associates 3.6 3.6

Operating profit / (loss) before central costs and property losses 126.1 (30.1)

Central costs (25.0) (39.2)

Property losses (18.1) (18.1)

Operating profit / (loss) 83.0 (87.4)

Finance income 69.6 101.8

Finance costs (96.5) (138.0)

Profit / (loss) before tax for the period 56.1 (123.6)

Reconciliation of underlying profit / (loss) to total (loss) / profit

52 weeks ended 2 May 2009 Net fair

Underlying Amortisation Business value

profit / Closed of acquired Restructuring impairment remeasure- Total (loss) businessess intangibles and other charges ments (loss) / profit £million £million £million £million £million £million £million

UK & Ireland 58.7 - (0.4) (43.0) (32.3) - (17.0)

Nordics 72.5 (12.2) (0.5) - (45.6) - 14.2

Other International (23.7) - (0.7) - (18.2) - (42.6)

e-commerce 15.0 - (3.3) - - - 11.7

122.5 (12.2) (4.9) (43.0) (96.1) - (33.7)

Share of post tax result

of associates 3.6 - - - 3.6

Operating profit / (loss) before central costs

and property losses 126.1 (12.2) (4.9) (43.0) (96.1) - (30.1)

Central costs (25.0) - - (14.2) - - (39.2)

Property losses (18.1) - - - (18.1)

Operating profit / (loss) 83.0 (12.2) (4.9) (57.2) (96.1) - (87.4)

Finance income 69.6 - - - - 32.2 101.8

Finance costs (96.5) (1.9) - - - (39.6) (138.0)

Profit / (loss) before tax

for the period 56.1 (14.1) (4.9) (57.2) (96.1) (7.4) (123.6)

(26)

(b) Balance sheet

24 weeks ended 17 October 2009 Segment Investment in Total segment Segment

assets associates assets liabilities Net assets £million £million £million £million £million

UK & Ireland 4,217.6 - 4,217.6 (3,818.8) 398.8 Nordics 1,220.1 28.8 1,248.9 (527.1) 721.8 Other International 799.6 - 799.6 (1,437.2) (637.6) e-commerce 382.0 - 382.0 (348.4) 33.6 Central 1,976.8 - 1,976.8 (1,681.1) 295.7 Eliminations (4,630.6) - (4,630.6) 4,630.6 -Continuing operations 3,965.5 28.8 3,994.3 (3,182.0) 812.3 Discontinued operations - - - (1.1) (1.1) 3,965.5 28.8 3,994.3 (3,183.1) 811.2

24 weeks ended 18 October 2008 Segment Investment in Total segment Segment

assets associates assets liabilities Net assets £million £million £million £million £million

UK & Ireland 3,179.0 - 3,179.0 (2,789.7) 389.3 Nordics 919.4 27.2 946.6 (573.4) 373.2 Other International 722.7 - 722.7 (1,431.7) (709.0) e-commerce 322.3 - 322.3 (312.3) 10.0 Central 2,930.9 - 2,930.9 (2,299.4) 631.5 Eliminations (4,347.3) - (4,347.3) 4,347.3 -Continuing operations 3,727.0 27.2 3,754.2 (3,059.2) 695.0 Discontinued operations 30.9 - 30.9 (17.7) 13.2 3,757.9 27.2 3,785.1 (3,076.9) 708.2

52 weeks ended 2 May 2009 Segment Investment in Total segment Segment

assets associates assets liabilities Net assets £million £million £million £million £million

UK & Ireland 3,386.7 - 3,386.7 (3,003.0) 383.7 Nordics 998.3 29.8 1,028.1 (515.1) 513.0 Other International 673.8 - 673.8 (1,378.2) (704.4) e-commerce 387.0 - 387.0 (346.3) 40.7 Central 3,038.5 - 3,038.5 (2,683.1) 355.4 Eliminations (4,879.3) - (4,879.3) 4,879.3 -Continuing operations 3,605.0 29.8 3,634.8 (3,046.4) 588.4 Discontinued operations 24.1 - 24.1 (27.6) (3.5) 3,629.1 29.8 3,658.9 (3,074.0) 584.9 (c) Seasonality

The Group’s business is highly seasonal, with a substantial proportion of its revenue and operating profit generated during its third quarter, which includes the Christmas and New Year season. In addition, in Southern Europe, hot summer periods encourage sales of air conditioning units and, accordingly, this forms a second peak of trading.

Interim Statement 2009/10