Final Results

21st Jun 2006 07:02

DSG International PLC21 June 2006 PR 36/06Strictly embargoedFor release after 07.00 hours21 June 2006 DSG international plc PRELIMINARY AUDITED RESULTS FOR THE 52 WEEKS ENDED 29 APRIL 2006DSG international plc, Europe's leading specialist electrical retailer, todayannounces preliminary full year results for the 52 weeks ended 29 April 2006: 2005/06 2004/05 YonY change £m £mRevenue: - including operations to be 7,403.4 6,982.7 +6% discontinued- excluding operations to be 7,072.0 6,554.4 +8% discontinued (1) Profit before tax 302.9 332.5 (9)%Underlying profit before tax: - including operations to be 318.2 332.8 (4)% discontinued- excluding operations to be 317.6 295.3 +8% discontinued (1)Basic eps 11.7p 12.5p (6)%Adjusted diluted eps: - including operations to be 12.3p 12.1p +2% discontinued- excluding operations to be 12.4p 10.8p +15% discontinued (1) •We are in exclusive negotiations regarding the acquisition by O2 (UK) Limited of DSG international's 60% stake in The Link Stores Limited following commercial agreement reached in principle subject to agreement of legally binding documentation and other terms and conditions, for a cash sum of approximately £30 million. Underlying results are reported excluding The Link which is to be discontinued. (2) •Group gross margins flat year on year •Like for like sales (3) flat year on year, up 2% on an underlying basis (1) •International operations deliver 19% revenue growth and 20% increase in operating profit •Cost savings of £32 million achieved in the period, with £25 million targeted in 2006/07 •Strong Free Cash Flow (4) of £270.6 million (2004/05: £278.6 million) •Proposed final dividend of 6.53p, making total dividends for the period of 8.45p per share, an increase of 5% £€200 million share buy back programme completed during the year Operational highlights •Acquisition of majority stake in Fotovista agreed, extending e-commerce operations, with the Pixmania brand, to 25 European countries •Dixons brand re-launched as pure-play online retailer; High Street stores converted to Currys brand, creating 550-strong chain •Poland entry extends Group store operations to 14 countries •Market share gains in all markets •Introduction of team bonus structure at PC World to reward customer service and team performance, replacing personal sales commission scheme •Acquisition of Markantalo consolidates market leadership in Finland •DSG international plc receives Queen's Award for Enterprise for International Trade •Store expansion plans expected to create 3,000 new jobs across the Group in the next 12 months John Clare, Group Chief Executive commented: "The Group delivered a satisfactory trading performance over the year, despitedifficult retail environments in some of our major markets. I was particularlypleased with our trading performance in the second half, when good progress wasmade across all our operations. We gained share in all of our markets during theperiod. An exciting array of new technology, including flat panel televisions,MP3s, iPods, laptops and satellite navigation equipment, was in high demand inour stores throughout Europe. Our International businesses had a strong year, with operating profit growing20% year on year. We continue to leverage the benefits of our internationalscale through bigger and better buying initiatives and cross-border integrationof distribution and systems. Dixons.co.uk is making good progress as a pure online retailer and will sooncombine with Pixmania to form a new e-commerce division that offers ourcustomers new levels of convenience and supports our multi-brand, multi-channelstrategy throughout Europe. I am pleased to announce that we have reached commercial agreement in principleto sell our 60% stake in The Link Stores Limited to O2 (UK) Limited, subject tothe agreement of legally binding documentation and other terms and conditions,for a cash sum of approximately £30 million. The competitive landscape formobile phones, initially a retail market, has changed significantly and hasbecome a market in which the profit opportunities can best be leveraged by thenetworks and telecom services providers. The sale of The Link will enable us tofocus on our core multi-channel electrical and computing formats as we pursueour leadership ambitions across Europe. Despite the encouraging performance in the second half, in which the World Cupplayed a part, we remain cautious on the prospects for consumer confidence andexpenditure over the next 12 months. We are confident that we will make furthermarket share gains in our core product markets of vision, computing and majorwhite goods. We will continue our measured approach to international expansion, which webelieve will continue to be a significant engine of future growth, whilstretaining our focus on innovation, capital management, margin protection andfurther cost savings." For further information:David Lloyd-SeedGroup Director of Investor Relations01727 205065Hamish ThompsonDirector of Media Relations07702 684290Jonathon BrillFinancial Dynamics020 7269 7170 -------------- ------------------------------------------Information on DSG international plc is available at http://www.dsgiplc.com -------------- ------------------------------------------An audio webcast of the analyst presentation being held this morning will beavailable from 3.00pm today athttp://www.dsgiplc.com/webcast2006. -------------- ------------------------------------------NOTES 1. Throughout this statement, references are made to 'underlying' and 'adjusted' performance measures. Underlying results are defined as being before The Link operations to be discontinued, amortisation of acquired intangibles, net restructuring charges and other one off items, profit on sale of investments, profit on sale of subsidiary and net fair value remeasurement gains on financial instruments. The financial effect of these items is shown in the analyses on the face of the income statement on page 15 and in note 3. Adjusted earnings per share measures are based on underlying earnings. 2. Operations to be discontinued comprise The Link and have been excluded from underlying results owing to events occurring after the balance sheet date as described in note 13. As at 29 April 2006, these operations had not been discontinued and accordingly had not met the criteria stipulated by IFRS 5 to be described or accounted for as such. 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. Customer support agreement sales are excluded from all UK and like for like calculations to remove the distorting effect of the introduction during the prior year of pay-as-you-go agreements. 4. Free Cash Flow is defined as net cash generated from operations including The Link operations, plus net finance income and cash related to finance leases, less taxation, net capital expenditure and dividend payments to minority shareholders. 5. Throughout this statement, all figures for the comparative periods for the 52 weeks ended 30 April 2005 have been restated, where necessary to reflect IFRS. Further details of IFRS are given in notes 1, 11 and 12 to the financial information. -------------- ------------------------------------------ BUSINESS PERFORMANCE ELECTRICALS DIVISIONTotal sales in the Electricals division were up 9% to £4,938.4 million (2004/05:£4,514.5 million) with like for like sales up 4% across the full year with astronger performance in the second half driven by growth in sales of flat paneltelevisions and digital products. Underlying operating profit was £197.6 million(2004/05: £176.6 million), 12% higher than last year. UK & IRELANDTotal sales in the UK & Ireland operations were up 4% at £2,769.2 million (2004/05: £2,660.5 million) with like for like sales up 3%. Underlying operatingprofit was £79.8 million (2004/05: £75.6 million). The brown goods market grewby 3% in value with strong growth in digital products including flat paneltelevisions, digital cameras and internet audio products. The white goods marketdeclined by 5% in value across the year, but with signs of improvement in thesecond half of the year. CurrysCurrys total sales for the year were up 5% at £1,984.6 million (2004/05:£1,883.0 million), with like for like sales up 3%. A stronger performance in thesecond half of the year, when total sales were up 11%, led to a satisfactoryoutcome for the year. Effective advertising, combined with initiatives toimprove conversion rates, enabled Currys to gain market share. The new "whateverhappens" customer support proposition, introduced in early 2005with enhanced levels of service and a pay-as-you-go option, continues to receivea positive response from customers. Currys resited 4 stores, opened 4 superstores and closed 18 High Street storesin the period as it managed its portfolio to reduce exposure to rent increases.Retail space grew by 1% during the year. For the period Currys saw online sales increase by 39% to 3% of total salesdriven by improved site design, range enhancements and online special offers. DixonsDixons sales at £679.8 million were down 2% (2004/05: £692.0 million), with likefor like sales up 3% as overall space was reduced by 4% to exit uneconomicallease arrangements. Like for like sales growth of 8% in the second half of theyear reflected strong sales growth in satellite navigation, internet audio andflat panel televisions. On 5 April it was announced that the Dixons brand will focus exclusively one-commerce operations and Dixons stores would be rebranded "Currys.digital".The 190 rebranded stores will offer customers a wider range of products andservices, including major and small appliances, whilst retaining a strong focuson digital technology. The changes reflect the Group's commitment to be a leading specialist electricale-tailer. Through this change Currys and Dixons are able to more clearlydifferentiate their approach through two channels to market (retailing ande-tailing), delivering improved levels of convenience, choice and value forcustomers. The cost of this programme, expected to be approximately £6 million, has beenexcluded from underlying earnings and is being provided for in the period. Thechanges will deliver annual savings of around £3 million in central costs.The Dixons stores in Ireland and the Dixons Tax Free stores will continue totrade under the Dixons brand name as part of the UK and Ireland Electricalsdivision. Dixons.co.uk will operate in the New Businesses Division. Dixons Tax Free continued to trade strongly through its 21 stores, benefitingfrom good sales of internet audio, games and satellite navigation systems. Acampaign to drive price perception successfully increased average spend percustomer. IrelandSales in Ireland grew by 30% at constant exchange rates to £103.2 million (2004/05: £79.9 million) as the business continued to expand with 5 new stores addedduring the period, taking the total store base in Ireland to 21 at the end ofthe year. Like for like sales increased by 11% across the year and by 15% in thesecond half with strong sales in all product categories as the Group continuedto gain market share in Ireland. NORDICIn the Nordic region, Elkjop increased total sales by 14% at constant exchangerates to £1,155.1 million (2004/05: £1,003.2 million) with like for like salesup 7%. Underlying operating profits grew by 23% to £83.4 million (2004/05: £67.8million). Elkjop delivered good performances in all its markets. During the yearElkjop acquired the out of town retail operations of FDB, the co-operativeretail and wholesale society of Denmark adding 3 new stores to the Group. InFebruary the acquisition of Markantalo in Finland was completed, consolidatingElkjop's position as the number one electrical retailer in that market. The Group estimates that the aggregate product markets in the Nordic region grewduring the year and Elkjop increased its share. Franchise operations, whichprovide further growth opportunities in smaller catchment areas, continue to bedeveloped. With the addition of 10 own stores and 15 franchise stores, Elkjopnow operates a total of 221 stores across the region of which 152 are directlyowned. SOUTHERN EUROPESales in the Group's Southern European operations grew in total by 21% atconstant exchange rates to £895.4 million (2004/05: £745.1 million), with likefor like sales up 4%. Underlying operating profit was £44.3 million (2004/05:£40.4 million). UniEuroIn Italy, sales at UniEuro increased by 8% at constant exchange rates to £632.7million (2004/05: £585.2 million), with like for like sales up 3% in the fullyear. Total sales growth of 7% in aggregate and 2% like for like in the secondhalf of the year were impacted by the weaker consumer environment particularlyaround the elections. During the year UniEuro made good progress inrestructuring its distribution platform, rationalising it from seven locationsto two. UniEuro is continuing with its store refurbishment programme. It opened9 new stores and closed 1 during the year. KotsovolosIn Greece, Kotsovolos has continued to perform well in its first full year inthe Group since the controlling stake was acquired in September 2004 with likefor like sales increasing by 7% across the year and total sales of £262.7million. Management believes that during a subdued consumer electrical marketover the Christmas period, Kotsovolos performed relatively strongly gainingmarket share. During the second half, sales grew by 8% in aggregate and 3% likefor like reflecting the timing of store refurbishments and the opening of newlarger space out of town stores. During the year 30 stores underwentrefurbishment, 3 large stores were opened and 3 smaller stores were closed. CENTRAL EUROPEElectro World continued its expansion in the Czech Republic, Poland and Hungarydelivering total sales growth at constant exchange rates of 11% in the full yearto £118.7 million (2004/05: £105.7 million). Underlying investment losses were£9.9 million (2004/05: £7.2 million). During the year Electro World opened 2stores in Czech, 2 stores in Poland and 1 in Hungary. The increased lossesreflected new start up costs in Poland. COMPUTING DIVISIONTotal sales in the Computing division were up 6% to £2,039.8 million (2004/05:£1,925.8 million) with like for like sales down 3%. Underlying operating profitwas £107.2 million (2004/05: £108.0 million). PC WorldPC World sales (including PC World Business) were up 3% at £1,745.7 million(2004/05: £1,699.2 million) with like for like sales 4% lower. PC World hasexperienced continued price deflation in hardware throughout the year. Howeverimproved deals for customers and new initiatives such as collect@store helped tocounteract this, resulting in total sales up 7% and flat like for like salesduring the second half. PC World removed all individual sales based commissionschemes during the year. A team commission based on total sales and customerservice measures was introduced and contributed to improved conversion andcustomer satisfaction. The overall UK computing market grew by 5% in value. PC World gained share inhardware in the second half with strong sales of laptops and newer high valuemedia centre PCs. Excluding B2B, internet sales more than doubled over theprevious period and now represent 5% of PC World's total sales. Six new PC World stores were opened during the period and 5 stores were resited.PC World Business sales grew by 14% to £376.5 million (2004/05: £329.4 million),including a contribution from Equanet , a business to business IT reselleracquired in August. PC CityPC City total sales were up 33% at constant exchange rates to £287.5 million(2004/05: £218.3 million). The product trends across mainland Europe weresimilar to those in the UK, with laptops selling well. Underlying investmentlosses were £22.2 million (2004/05: £19.5 million). The increase in investmentlosses was driven by a worse than expected result in France. In the period, PCCity Spain reached profit for the first time. The business traded well withpositive like for like sales of 3% and total sales growth of 28% while improvingmargins in line with expectations. The operations of PC City France will be reorganised to reduce costs and improvethe customer offering. Central and support functions will be performed in theUK. Pricing and trading will continue to be managed locally in France. Thereorganisation has resulted in a charge in the period of £4.8 million.PC City opened 4 new stores in France, 4 new stores in Spain, 1 new store inItaly and 6 new stores in Sweden. COMMUNICATIONS DIVISIONSales in the Link Communications Group which comprises The Link retail storesand the Genesis business to business operation were down 21% to £419.0 million(2004/05: £530.9 million). We are in exclusive negotiations regarding the acquisition by O2 (UK) Limited ofthe Group's 60% stake in The Link Stores Limited following commercial agreementreached in principle subject to agreement of legally binding documentation andother terms and conditions, for a cash sum of approximately £30 million.Genesis Communications sales were £87.6 million (2004/05: £102.6 million). Theaverage billing subscriber base was down 7%. FINANCIAL POSITIONThe Group's financial position remains strong with profit before tax of £302.9million (2004/05: £332.5 million), including property profits of £7.4 million(2004/05: £7.4 million). Underlying profit before tax was £317.6 million, up 8%(2004/05: £295.3 million). Adjusted diluted EPS increased 15% to 12.4p. Free Cash FlowIn the period Free Cash Flow generated was £270.6 million, compared with £278.6million in the previous year. 52 weeks ended 52 weeks ended Change 29 April 2006 30 April 2005 Year on Year £million £million £million --------------------------- ----------- ----------- ---------Underlying profit before tax 317.6 295.3 22.3Depreciation 139.9 136.8 3.1Working capital * 84.7 79.8 4.9 Working capital impact of pay-as-you-go customer support agreements (93.1) (38.4) (54.7)Taxation (91.7) (90.9) (0.8)Capital expenditure + (158.6) (169.1) 10.5Sale of freehold property 33.6 49.1 (15.5)Net proceeds from sale and leaseback of distribution assets + 37.0 - 37.0Other 1.2 16.0 (14.8)--------------------------- ----------- ----------- ---------Free Cash Flow 270.6 278.6 (8.0)--------------------------- ----------- ----------- ---------* Working capital includes dividend payments to minority shareholders of £8.2million in the period (2004/05: £7.2 million). + Capital expenditure excludes £44.0 million related to the properties includedwithin the sale and leaseback of distribution assets. Underlying working capital improvements in the period were £84.7 million (2004/05: £79.8 million), driven by higher stock turns and creditor days. Workingcapital was negatively impacted by the introduction of the monthly pay-as-you-gocustomer support agreements proposition, reducing cash flow by £93.1 million inthe period (2004/05: £38.4 million). Capital expenditure was down 6% to £158.6 million (2004/05: £169.1 million).Cash generated from the sale of freehold property was £33.6 million (2004/05:£49.1 million). In addition, in the period, £37.0 million cash was generatedfrom the sale and leaseback of properties relating to the restructure of the UKdistribution network. Available net fundsAt 29 April 2006 the Group had available net funds (which exclude funds heldunder trust for customer support agreement liabilities) of £246.1 million,compared with £183.5 million in the previous year. 52 weeks ended 52 weeks ended 29 April 2006 30 April 2005 £million £million ----------- -----------Opening net funds 495.8 644.8Adjustments in respect of IFRS 28.1 (34.5)------------------- ----------- -----------Opening net funds (restated) 523.9 610.3Free Cash Flow 270.6 278.6Dividends (149.9) (144.2)Share buy back programme (107.6) (92.6)Acquisitions (59.5) (184.3)Other items (37.9) 28.0 ----------- -----------Other movements in net funds (354.9) (393.1)------------------- ----------- -----------Closing net funds 439.6 495.8Less: Funds held under trust (193.5) (312.3)------------------- ----------- -----------Available net funds 246.1 183.5------------------- ----------- -----------Other movements in net funds in the period included £149.9 million dividendpayment, £107.6 million for the completion of the share buy back programme and£59.5 million related to acquisitions. Other items include additions toobligations under finance leases of £(45.1) million (2004/05: £(21.0) million)and movements in borrowings of £1.4 million (2004/05: £43.8 million). DividendsThe directors have proposed a final dividend of 6.53 pence per share (2004/05:6.22 pence), an increase of 5%. Subject to shareholder approval at the AGM on 6September, it will be paid on 29 September 2006 to shareholders registered on 25August 2006. This gives total dividends for the year of 8.45 pence (2004/05:8.05 pence) an increase of 5%. The Group's dividend policy is to increasedividends in line with earnings over time however in the short term this will bebalanced against rebuilding dividend cover. ADJUSTMENTS TO UNDERLYING RESULTS 52 weeks ended 52 weeks ended Change 29 April 2006 30 April 2005 Year on Year £million £million % -------------------------- ----------- ----------- ---------Underlyingprofit beforetax 317.6 295.3 8%Charges: Amortisation of acquired (2.0) (1.2) intangibles Distribution Network (4.6) (5.3) Information Systems (7.0) (10.1) outsourcing Electricals division (6.0) - operations and brand portfolio PC City operating model (4.8) - Other one off charges (4.1) - -------------------------- ----------- ----------- --------- (28.5) (16.6)Gains: Profit on sale of 2.9 12.5 investments Profit on sale of - 3.8 subsidiary Net fair value 10.3 - remeasurement gains ------------------------- ----------- ----------- --------- 13.2 16.3 ------------------------- ----------- ----------- ---------Net charges (15.3) (0.3) Profits ofoperations tobediscontinued 0.6 37.5 -------------------------- ----------- ----------- ---------Profit beforetax 302.9 332.5 (9%)-------------------------- ----------- ----------- ---------Underlying profit before tax is reported after adjusting for one off costs of£28.5 million, one off gains of £13.2 million and the profits of operations tobe discontinued. This year the Group has invested £22 million in the developmentof the business towards an integrated multi-channel electrical retailer. Thesecosts are one time in nature and do not relate to the trading period. Theprincipal elements of these investments are:- £€4.6 million in connection with the reorganisation of distribution operations in UK and Italy £€7.0 million cost of outsourcing information systems support £€6.0 million relating to the rebranding of Dixons stores in the UK to "Currys.digital" and £€4.8 million charge in respect of the reorganisation of the PC City operating model as described above Other one off costs and gains comprise:- •One off charges of £4.1 million comprises £2.8 million in relation to remedial work associated with damage caused to the Group's head office premises by the Buncefield oil depot explosion in December 2005 (which is the subject of an insurance claim against the operators of the depot) together with £1.3 million relating to the impairment of a small minority investment. •A gain of £2.9 million relates to profit arising from the sale of a minority shareholding in Monstermob Group PLC. •The gain of £10.3 million relates to the net fair value remeasurement gains and losses on revaluation of financial instruments as required by International Accounting Standards 32 and 39. TAXThe Group's tax rate on underlying profit was 28.8% (2004/05: 27.1%). Theincrease in the tax rate reflects the reduced impact of lower overseas taxrates. SHARE BUYBACKThe Group completed its programme of repurchasing £200 million of its sharesannounced in June 2004, purchasing a total of 69.50 million shares during theyear for cancellation, for a total consideration of £107.6 million. As a resultof the total share buyback programme the Group repurchased a total of 127.15million shares at an average price of 156.35 pence, representing 6.52% of theissued share capital at the start of the programme. COST SAVINGSIn the period, the Group delivered £32 million of cost savings. In addition,further savings of £25 million are being targeted for 2006/07. PENSIONSAs part of the adoption of International Financial Reporting Standards (IFRS)during the period, the Group has applied IAS 19 "Employee benefits". IAS 19 issimilar to the equivalent UK accounting standard FRS 17 and accordingly, thefigures shown for the comparative period 30 April 2005 are the same as thosedisclosed under UK GAAP last year. The principal pension scheme is the UKdefined benefit scheme and under IAS 19, the net deficit is brought onto thebalance sheet. At 29 April 2006, excluding deferred tax benefits, this deficitamounted to £141.7 million (30 April 2005 £186.5 million). Including deferredtax benefits the deficit amounted to £99.8 million (2004/05: £130.5 million).The charge to operating profit for this scheme was £18.3 million (2004/05: £21.4million) and represents the cost of additional benefits accruing to employees inthe period together with the cost of any benefits relating to past service. Alsoincluded in the income statement is a net financing cost of £0.6m (2004/05:income of £2.1 million) which represents the expected return on assets of thescheme, based on market conditions prevailing at the start of the financialperiod, offset by the unwinding of the discount applied to the liabilities ofthe scheme. The Group has been implementing a programme of changes to pension arrangementsin order to address the deficit over the longer term and these have included thegradual increase in the Company contribution rate which is currently 11.9 percent, and is set to rise to 12.9 percent in August 2006. The final salarysection of the UK pension scheme was closed to new members on 1 September 2002. OUTLOOKDespite a more encouraging performance in the second half, in which the WorldCup played a part, we remain cautious on the prospects for consumer confidenceand expenditure over the next 12 months. The Group is confident that it willmake further market share gains in its core product markets of vision, computingand major white goods across its European businesses. The Group will continue its measured approach to international expansion, whichit believes will continue to be a significant engine of future growth, whilstretaining focus on innovation, capital management, margin protection and furthercost savings. - ENDS - Maylands Avenue John ClareHemel Hempstead Group Chief ExecutiveHertfordshire HP2 7TG 21 June 2006------------------------- ------------------------------- Report and Accounts publication date 4 August 2006Ex dividend date for final dividend 23 August 2006Record date for final dividend 25 August 2006Annual General Meeting 6 September 2006 Proposed final dividend payment date 29 September 2006 Copies of the Report and Accounts will be available from the CompanySecretary at the above address and on the Group's website at http://www.dsgiplc.com----------------------- --------------------------------- CONSOLIDATED INCOME STATEMENT Note 52 weeks ended 52 weeks ended 29 April 2006 30 April 2005 £million £million---------------------------- ---- --------- -------- RevenueUnderlying operations 7,072.0 6,554.4Operations to be discontinued * 331.4 428.3---------------------------- ---- --------- -------- 2,3 7,403.4 6,982.7---------------------------- ---- --------- -------- Profit from operations before associates 261.6 286.1Share of post tax results of associates 0.3 1.0---------------------------- ---- --------- -------- Operating profit 2,3 261.9 287.1 Profit on sale of investments 3 2.9 12.5Profit on sale of subsidiary 3 - 3.8Finance income 4 108.1 87.9Finance costs 4 (70.0) (58.8)---------------------------- ---- --------- --------Net finance income 41.0 45.4---------------------------- ---- --------- -------- Profit before tax 302.9 332.5Analysed as:---------------------------- ---- --------- --------Underlying profit before tax 3 317.6 295.3Operations to be discontinued * 0.6 37.5Acquired intangible amortisation (2.0) (1.2)Restructuring costs (22.4) (15.4)Other one off charges (4.1) -Profit on sale of investments 2.9 12.5Profit on sale of subsidiary - 3.8Net fair value remeasurementgains on financial instruments 10.3 - ---------------------------- ---- --------- -------- Income tax expense 5 (91.2) (86.5)---------------------------- ---- --------- -------- Profit for the period 211.7 246.0---------------------------- ---- --------- -------- Attributable to: Equity shareholders of the parent company 215.9 240.4Minority interests (4.2) 5.6---------------------------- ---- --------- -------- 211.7 246.0---------------------------- ---- --------- -------- Earnings per share (pence) 7---------------------------- ---- --------- --------Basic 11.7p 12.5pDiluted 11.6p 12.4p---------------------------- ---- --------- -------- * Operations to be discontinued comprise The Link and have been excluded from underlying results owing to events occurring after the balance sheet dates as described in note 13. As at 29 April 2006, these operations had not beendiscontinued and accordingly had not met the criteria stipulated by IFRS 5 tobe described or accounted for as such. Non-GAAP measures:--------------------------------------------------------------------------------Adjusted earnings per share 1,9 Basic 12.5p 10.9pDiluted 12.4p 10.8p-------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE ------------------------------ ---------- --------- -------- Note 52 weeks ended 52 weeks ended 29 April 2006 30 April 2005 £million £million ------------------------------ ---------- --------- -------- Profit for the period 211.7 246.0 Actuarial gains / (losses) on defined benefit pension scheme 47.1 (59.3) Fair value remeasurementlosses arising on financial instruments (22.9) - Tax on (income) / expense taken directly to equity (7.2) 20.8 Currency translation movements 27.1 2.6 ------------------------------ ---------- --------- -------- Net income/(expense)recognised directly in equity 44.1 (35.9) ------------------------------ ---------- --------- -------- Total recognised income and expense for the period 255.8 210.1 ------------------------------ ---------- --------- -------- Transition adjustment on adoption of IAS 32 and IAS 39 (31.7) ------------------------------ ---------- --------- Total recognised income and expense since 1 May 2005 224.1 ------------------------------ ---------- --------- Attributable to: Equity shareholders of the parent company 228.1 204.5 Minority interests (4.0) 5.6 ------------------------------ ---------- --------- -------- 224.1 210.1 ------------------------------ ---------- --------- -------- CONSOLIDATED BALANCE SHEET ------------------------------ ---------- --------- -------- Note 29 April 2006 30 April 2005 £million £million ------------------------------ ---------- --------- -------- Non current assets Goodwill 1,087.6 1,004.2 Intangible assets 109.7 107.8 Property, plant and equipment 641.4 600.4 Investments 2.2 3.2 Trade and other receivables 50.4 29.6 Deferred tax assets 134.4 161.3 ------------------------------ ---------- --------- -------- 2,025.7 1,906.5 ------------------------------ ---------- --------- -------- Current assets Inventories 8 873.4 811.3 Trade and other receivables 370.4 367.5 Income tax receivable - 7.7 Short term investments 10 232.6 306.5 Cash and cash equivalents 10 617.5 704.5 ------------------------------ ---------- --------- -------- 2,093.9 2,197.5 ------------------------------ ---------- --------- -------- Total assets 4,119.6 4,104.0 ------------------------------ ---------- --------- -------- Current liabilities Bank overdrafts 10 - (107.1) Borrowings 10 (8.8) (34.7) Obligations under finance 10 (0.5) (0.4) leases Trade and other payables (1,644.2) (1,370.6) Income tax payable (67.9) (110.7) Provisions (27.7) (7.0) ------------------------------ ---------- --------- -------- (1,749.1) (1,630.5) ------------------------------ ---------- --------- -------- Net current assets 344.8 567.0 ------------------------------ ---------- --------- -------- Non current liabilities Borrowings 10 (301.1) (317.9) Obligations under finance leases 10 (100.1) (55.1) Retirement benefit obligations (141.7) (186.5) Other payables (387.0) (455.3) Deferred tax liabilities (6.1) - Provisions (10.8) (7.7) ------------------------------ ---------- --------- -------- (946.8) (1,022.5) ------------------------------ ---------- --------- -------- Total liabilities (2,695.9) (2,653.0) ------------------------------ ---------- --------- -------- Net assets 1,423.7 1,451.0 ------------------------------ ---------- --------- -------- Capital and reserves 9 Called up share capital 45.6 47.3 Share premium account 145.9 142.1 Other reserves 26.1 68.2 Retained earnings 1,196.8 1,151.1 ------------------------------ ---------- --------- -------- Equity attributable to equity holders 1,414.4 1,408.7 of the parent company Equity minority interests 9.3 42.3 ------------------------------ ---------- --------- -------- Total equity 1,423.7 1,451.0 ------------------------------ ---------- --------- -------- The financial statements were approved by the directors on 21 June 2006 and signed on their behalf by: John Clare Kevin O'Byrne Group Chief Executive Group Finance Director CONSOLIDATED CASH FLOW STATEMENT ------------------------------------ ---- -------- -------- Note 52 weeks 52 weeks ended ended 29 April 2006 30 April 2005 £million £million ------------------------------------ ---- -------- -------- Operating activities Cash generated from operations 10 428.4 466.3 Income tax paid (91.7) (90.9) ------------------------------------ ---- -------- -------- Net cash flows from operating 336.7 375.4 activities ------------------------------------ ---- -------- -------- Investing activities Purchase of property, plant and equipment and other intangibles (202.3) (168.8) Purchase of subsidiaries (56.8) (106.6) Purchase of non-current investments (3.9) - Interest received 55.0 55.9 Decrease in short term investments 74.7 79.0 Proceeds from disposals of property, plant and equipment and other intangibles 69.2 28.4 Proceeds from disposals of non-current investments 8.2 1.9 Proceeds from sale of subsidiaries - 3.8 ------------------------------------ ---- -------- -------- Net cash flows from investing activities (55.9) (106.4) ------------------------------------ ---- -------- -------- Financing activities Issue of ordinary share capital 2.5 1.7 Purchase of own shares (109.9) (92.6) Capital element of finance lease payments (0.3) (0.3) Interest element of finance lease payments (4.4) (2.7) Decrease in borrowings due within one year (11.8) (36.2) Decrease in borrowings due after more than one year (3.3) (2.2) Cash received on inception of finance leases 45.4 20.7 Interest paid (20.5) (22.8) Equity dividends paid (149.9) (144.2) Dividends paid to minority interests (8.2) (7.2) ------------------------------------ ---- -------- -------- Net cash flows from financing activitie (260.4) (285.8) ------------------------------------ ---- -------- -------- Increase/(decrease) in cash and cash equivalents 20.4 (16.8) ------------------------------------ ---- -------- -------- Cash and cash equivalents at beginning of period 10 597.4 614.6 Currency translation differences (0.3) (0.4) ------------------------------------ ---- -------- -------- Cash and cash equivalents at end of 10 period 617.5 597.4 ------------------------------------ ---- -------- -------- For the purposes of this cash flow statement, cash and cash equivalents comprise those items disclosed as "cash and cash equivalents" 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 10. NOTES TO THE FINANCIAL STATEMENTS 1 Basis of preparation --------------------------------------------------- The financial information, which comprises the consolidated income statement, consolidated statement of recognised income and expense, consolidated balance sheet, consolidated cash flow statement, and extracts from the notes to the accounts for 29 April 2006 and 30 April 2005, has been prepared in accordance with the accounting policies set out in the full financial statements. The financial information set out in this announcement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 and is an abridged version of the Group's financial statements for the 52 weeks ended 29 April 2006 which were approved by the directors on 21 June 2006. Statutory accounts for the 52 weeks ended 30 April 2005 have been delivered to the Registrar of Companies and those for the period ended 29 April 2006 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts, their reports were unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. DSG international plc has historically prepared its financial statements in accordance with UK Generally Accepted Accounting Practices (UK GAAP). A European Union (EU) Regulation issued in 2002, requires the Group to report its 2005/06 results in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Commission (EC). The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and IFRS issued by the International Accounting Standards Board (IASB) and those parts of the Companies Act 1985 applicable to those companies reporting under IFRS. Since the Company is not affected by the provisions regarding portfolio hedging that are not required by the EU endorsed version of IAS 39: "Financial instruments: Recognition and Measurement", the consolidated financial statements comply with both IFRS as adopted by the EU and IFRS as issued by the IASB. The transition date to IFRS for the Group was 2 May 2004 (the Transition Date), being the start of the period of comparative information. The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings for the 52 weeks ended 29 April 2006. Comparative figures are for the 52 weeks ended 30 April 2005. The Directors believe that the 'underlying' profit and 'adjusted' earnings per share measures provide additional useful information for shareholders on underlying performance of the business, and are consistent with how business performance is measured internally. It is not a recognised profit measure under IFRS and may not be directly comparable with 'adjusted' profit measures used by other companies. IFRS 1 exemptions and elections IFRS 1, "First time adoption of International Financial Reporting Standards", permits those companies adopting IFRS for the first time to apply some exemptions from the full requirements of IFRS and certain elections in the transition period. The Group has taken the following exemptions and elections: •Share based payments: IFRS 2 "Share based payment" has been applied to all equity settled transactions, such as share options, granted but not fully vested as at the Transition Date. Although IFRS 2 requires that only share based payments granted since 7 November 2002 be included, the Group considers that retrospective application provides a better indication of how past and future results are affected by IFRS 2, particularly when compared with the level of grants year on year. Fair values for pre 7 November 2002 share based payments were set out in an announcement dated 11 May 2005 which is available on the Group's corporate website; •Employee benefits: Under IAS 19 "Employee Benefits" all cumulative pension actuarial gains and losses have been recognised in reserves at the Transition Date. The amended version of IAS 19 issued in December 2004 allows companies to recognise actuarial gains and losses immediately in the statement of recognised income and expense (reserves) or alternatively to be held in the balance sheet and released to the income statement over a period of time. Commencing on the Transition Date, the Group has elected to recognise actuarial gains and losses in full in the period in which they occur in the consolidated statement of recognised income and expense; •Business combinations: The Group elected to apply IFRS 3 "Business Combinations" prospectively from the Transition Date. The effect of this is that goodwill arising from business combinations prior to the Transition Date remains at the net book value as stated under UK GAAP as at the Transition Date; •Financial instruments: The Group has elected to defer the implementation of IAS 32 "Financial instruments: Disclosure and Presentation" and IAS 39: "Financial instruments: Recognition and Measurement". IAS 32 and IAS 39 have been adopted from 1 May 2005. Commencing on this date, the Group has applied hedge accounting where the requirements of IAS 39 are met. Accordingly, the comparative period to the 2005/06 Annual Report (being the 52 weeks ended 30 April 2005) reflects accounting under the existing UK GAAP basis. The Group has elected to early adopt the IAS 39 (Amendment) "Cash Flow Hedge Accounting for Forecast Intragroup Transactions" with effect from 1 May 2005 which stipulates further circumstances where hedge accounting may be applied; and •Cumulative translation differences: The cumulative translation differences for all foreign subsidaries are deemed to be zero at the Transition Date. Accordingly, upon disposal of a foreign subsidiary, any gain or loss arising will include only those foreign exchange gains or losses attributable to periods after the Transition Date. 2 Segmental analysis The Group is managed according to three operating divisions : Computing, Communications and Electricals. These divisions are the basis on which the Group reports its primary segment information. The revenues and operating profit shown for each primary segment are all generated from sales to external customers with no inter-segment activity. The principal activities of each division are as follows: The Computing division is engaged in the retail and business to business sales of computer hardware and software, associated peripherals and services and related financial and after sales services. The division operates in the UK and Southern Europe (which also includes the small Nordic operations). The Communications division is engaged in the retail and business to business sales of telecommunications products, associated peripherals and services and related financial and after sales services. The division operates in the UK. On 21 June 2006, the Group reached a commercial agreement in principle with O2 (UK) Limited to sell its 60 per cent stake in The Link Stores Limited. As a result, these operations have been classified as "Operations to be discontinued". Further details are given in note 13. The Electricals division is engaged in the retail sale of high technology consumer electronics, domestic appliances, photographic equipment and related financial and after sales services. The division operates in the UK, Ireland, the Nordic region, Southern Europe and Central Europe. The Group's secondary geographical reporting segments comprise four territories, the UK & Ireland, the Nordic region, Southern Europe and Central Europe. There were no material exports from the locations in which the Group operates. Corporate centre and shared services assets and liabilities mainly comprise freehold land and buildings, investments, cash and cash equivalents, borrowings, net retirement benefit obligations, inter segment eliminations and related tax assets and liabilities. Primary Segments - Business 52 weeks ended 29 April 2006 52 weeks ended 30 April 2005 ---------------------------- --------------------------------- ------- ------- ------- ------- ------- ------- ------- -------- -------- ------- Corporate Corporate centre & centre & Communi- shared Communi- shared Computing cations Electricals services Total Computing cations Electricals services Total £m £m £m £m £m £m £m £m £m £m ------------------ ------- ------- ------- ------- ------- -------- -------- -------- -------- -------- Income statement RevenueUnderlying operations 2,039.8 87.6 4,938.4 6.2 7,072.0 1,925.8 102.6 4,514.5 11.5 6,554.4Operations to be discontinued - 331.4 - - 331.4 - 428.3 - - 428.3------------------ ------- ------- ------- ------- ------- -------- -------- -------- -------- -------- 2,039.8 419.0 4,938.4 6.2 7,403.4 1,925.8 530.9 4,514.5 11.5 6,982.7------------------ ------- ------- ------- ------- ------- -------- -------- -------- -------- --------Underlying operatingprofit before associates 107.2 6.6 197.3 (19.9) 291.2 108.0 5.4 175.6 (22.1) 266.9Share of posttax result of associates - - 0.3 - 0.3 - - 1.0 - 1.0------------------ ------- ------- ------- ------- ------- ------- -------- -------- -------- --------Underlying operating profit/(loss) 107.2 6.6 197.6 (19.9) 291.5 108.0 5.4 176.6 (22.1) 267.9Operations to be discontinued - (1.1) - - (1.1) - 35.8 - - 35.8Amortisation of acquired intangibles (1.2) (0.2) (0.6) - (2.0) (0.7) (0.1) (0.4) - (1.2)Restructuring charge including impairment (8.6) (1.1) (12.7) - (22.4) (2.5) (0.5) (10.1) (2.3) (15.4)Other one off charges - - - (4.1) (4.1) - - - - ------------------- ------- ------- ------- ------- ------- -------- -------- -------- -------- --------Total operating profit/(loss) 97.4 4.2 184.3 (24.0) 261.9 104.8 40.6 166.1 (24.4) 287.1------------------ ------- ------- ------- ------- ------- -------- -------- -------- -------- -------- Underlying operating profit is stated after recognising net property profits of £7.4 million (2004/05 £7.4 million) in Corporate centre and shared services. Secondary segments - Geographic 52 weeks ended 29 April 2006-------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Southern Central UK & Ireland Nordic Europe Europe-------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Corporate centre & Communi- Electr- Sub- Electr- Electr- Sub- Electr- shared Computing cations icals total icals Computing icals total icals services Total £m £m £m £m £m £m £m £m £m £m £m -------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Income Statement RevenueUnderlying operations 1,752.3 87.6 2,769.2 4,609.1 1,155.1 287.5 895.4 1,182.9 118.7 6.2 7,072.0Operations to be discontinued - 331.4 - 331.4 - - - - - - 331.4-------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- 1,752.3 419.0 2,769.2 4,940.5 1,155.1 287.5 895.4 1,182.9 118.7 6.2 7,403.4-------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Underlying operating profit before associates 129.4 6.6 79.8 215.8 83.1 (22.2) 44.3 22.1 (9.9) (19.9) 291.2Share of post tax result of associates - - - - 0.3 - - - - - 0.3-------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Underlying operating profit/(loss) 129.4 6.6 79.8 215.8 83.4 (22.2) 44.3 22.1 (9.9) (19.9) 291.5Operations tobe discontinued - (1.1) - (1.1) - - - - - - (1.1)Amortisation of acquired intangibles (1.2) (0.2) - (1.4) (0.1) - (0.5) (0.5) - - (2.0)Restructuringcharge including impairment (3.8) (1.1) (11.6) (16.5) - (4.8) (1.1) (5.9) - - (22.4)Other one off charges - - - - - - - - - (4.1) (4.1)--------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Total operating profit/(loss) 124.4 4.2 68.2 196.8 83.3 (27.0) 42.7 15.7 (9.9) (24.0) 261.9--------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- 52 weeks ended 30 April 2005-------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------ Southern Central UK & Ireland Nordic Europe Europe-------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Corporate centre & Communi- Electr- Sub- Electr- Electr- Sub- Electr- shared Computing cations icals total icals Computing icals total icals services Total £m £m £m £m £m £m £m £m £m £m £m -------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ---------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Income statement RevenueUnderlying operations 1,707.5 102.6 2,660.5 4,470.6 1,003.2 218.3 745.1 963.4 105.7 11.5 6,554.4Operations to be discontinued - 428.3 - 428.3 - - - - - - 428.3--------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- 1,707.5 530.9 2,660.5 4,898.9 1,003.2 218.3 745.1 963.4 105.7 11.5 6,982.7--------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Underlying operating profit before associates 127.5 5.4 75.6 208.5 67.5 (19.5) 39.7 20.2 (7.2) (22.1) 266.9Share of post tax result of associates - - - - 0.3 - 0.7 0.7 - - 1.0--------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Underlying operating profit/(loss) 127.5 5.4 75.6 208.5 67.8 (19.5) 40.4 20.9 (7.2) (22.1) 267.9Operations to be discontinued - 35.8 - 35.8 - - - - - - 35.8Amortisation of acquired intangibles (0.7) (0.1) - (0.8) - - (0.4) (0.4) - - (1.2)Restructuring charge including impairment (2.1) (0.5) (10.1) (12.7) - (0.4) - (0.4) - (2.3) (15.4)--------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Total operating profit/(loss) 124.7 40.6 65.5 230.8 67.8 (19.9) 40.0 20.1 (7.2) (24.4) 287.1--------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- 3 Reconciliation of underlying profit before tax Note 52 weeks ended 52 weeks ended 29 April 2006 30 April 2005 £million £million ---------------------------- ------ ------ ---------- --------- Underlying profit before tax 317.6 295.3 Included in operating profit: Operations to be discontinued (i) (1.1) 35.8 Amortisation of acquired intangibles (2.0) (1.2) Net restructuring charges (ii) (22.4) (15.4) Other one off charges (iii) (4.1) - ---------------------------- ------ ------ ---------- --------- (29.6) 19.2 Included in net finance income: Bank and other interest receivable - operations (i) 1.7 1.7 to be discontinued Profit on sale of (iv) 2.9 12.5 investments Profit on sale of (v) - 3.8 subsidiary Net fair value (vi) 10.3 - remeasurement gains on financial instruments ---------------------------- ------ ------ ---------- -------- 14.9 18.0 ---------------------------- ------ ------ ---------- --------- Profit before tax 302.9 332.5 ---------------------------- ------ ------ ---------- --------- i. Operations to be discontinued comprise the Link and have been excluded from underlying earnings owing to events occurring after the balance sheet date as further described in note 13. ii.Net restructuring charges: 52 weeks 52 weeks ended ended 29 April 2006 30 April 2005 ----------------------- -------- -------- -------- -------- -------- Net property Asset Other charges Total Asset profit/(loss) impairment impairment £million £million £million £million £million ----------------------- -------- -------- -------- -------- -------- Distribution network 10.4 (3.6) (11.4) (4.6) (3.4) Information systems - - (7.0) (7.0) (12.0) Electricals division operations and brand portfolio (1.4) (2.0) (2.6) (6.0) - PC City France operating model - (3.5) (1.3) (4.8) - ----------------------- -------- -------- -------- -------- -------- 9.0 (9.1) (22.3) (22.4) (15.4) ----------------------- -------- -------- -------- -------- -------- Net property profits include gains and losses on sale of properties associated directly with the reorganisation plans net of onerous lease costs. Asset impairments relate to intangible assets, items of property, plant and equipment which are to be eliminated from the business over a shorter period than their current useful expected lives and inventories. Other charges are predominantly employee severance and incremental transition costs. iii.Other one-off charges: Such charges are defined as those costs deriving from events outside the ordinary course of business together with asset impairments. For 2005/06, £2.8 million relates to remedial work associated with damage caused to the Group's head office premises by the Buncefield oil depot explosion in December 2005, which is the subject of an insurance claim, together with £1.3 million relating to the impairment of a small minority investment. iv. Profit on sale of investments: Relates to profit arising from the sale of a minority shareholding in Monstermob Group PLC. (2004/05 related mainly to a £12.2 million profit arising from exchanges into shares in France Telecom S.A. by holders of 1% Exchangeable Bonds 2004 and the sale of remaining France Telecom S.A. shares in July 2004). v. Profit on sale of subsidiary: 2004/05 related to the sale of a subsidiary company held within Corporate centre and shared services. vi. Net fair value remeasurement gains and losses on revaluation of financial instruments: As described in note 1, the Group has applied the exemption available under IFRS 1 which allows the deferral of the accounting and disclosure requirements of IAS 32 and IAS 39. As such, the effective date of transition to IFRS in relation to these standards was 1 May 2005. Accordingly, no amounts are shown for the 52 weeks ended 30 April 2005. Items excluded from underlying finance income and expense represent the gains and losses arising from the revaluation of derivative financial instruments under methodologies stipulated by IAS 39 compared with those on an accruals basis. 4 Net finance income ------------------------------ --- ------- ---------- --------- 52 weeks ended 52 weeks ended 29 April 2006 30 April 2005 £million £million ------------------------------ --- ------- ---------- --------- Profit on sale of investments * 2.9 12.5 Profit on sale of subsidiary * - 3.8 ------------------------------ --- ------- ---------- --------- Bank and other interest receivable - underlying 57.0 52.2 Bank and other interest receivable - operations to be discontinued * 1.7 1.7 Expected return on pension scheme assets 34.4 34.0 Fair value remeasurement gains on financial instruments * 15.0 - ------------------------------ --- ------- ---------- --------- Finance income 108.1 87.9 ------------------------------ --- ------- ---------- --------- Interest payable Bank loans and overdrafts (7.3) (5.0) Other loans (18.6) (18.6) Finance leases (4.4) (3.3) Interest on pension scheme liabilities (35.0) (31.9) Fair value remeasurement losses on financial instruments * (4.7) - ------------------------------ --- ------- ---------- --------- Finance costs (70.0) (58.8) ------------------------------ --- ------- ---------- --------- ------------------------------ --- ------- ---------- --------- Total net finance income 41.0 45.4 ------------------------------ --- ------- ---------- --------- ------------------------------ --- ------- ---------- --------- Underlying total net finance income (i) 26.1 27.4 ------------------------------ --- ------- ---------- --------- (i) Underlying total net finance income excludes items marked *. See note 3 for a description of such items. 5. Taxation -------------------------- ---------- --------- Income tax expense 52 weeks ended 52 weeks ended 29 April 2006 30 April 2005 £million £million -------------------------- ---------- --------- Current tax: UK corporation tax at 30% 59.3 77.9 Double tax relief (22.8) (15.7) -------------------------- ---------- --------- 36.5 62.2 Overseas taxation 21.9 18.2 Adjustment in respect of earlier periods: - UK corporation tax (1.9) (1.3) - Overseas taxation 0.6 1.9 -------------------------- ---------- --------- 57.1 81.0 -------------------------- ---------- --------- Deferred tax: Current period 44.9 12.0 Credit in respect of restructuring and other one off charges (3.5) (4.5) Adjustment in respect of earlier periods: - UK corporation tax (7.3) (2.0) -------------------------- ---------- --------- 34.1 5.5 -------------------------- ---------- --------- -------------------------- ---------- --------- Total income tax expense 91.2 86.5 -------------------------- ---------- --------- Analysed as: -------------------------- ---------- --------- Underlying tax charge 91.4 79.8 Tax on operations to be discontinued 0.9 11.6 Tax on amortisation of acquired intangibles (0.6) (0.4) Tax on restructuring and other one off charges (3.5) (4.5) Tax on net fair value remeasurement gains on financial instruments 3.0 - -------------------------- ---------- --------- 6. Dividends paid and proposed -------------------------- ---------- --------- per share 52 weeks ended 52 weeks ended 29 April 2006 30 April 2005 £million £millionAmounts recognised as distributions to equity shareholders in the period - on ordinary shares of 2.5p eachFinal dividend for 2003/04 5.66p - 109.3Interim dividend for 2004/05 1.83p - 35.1Final dividend for 2004/05 6.22p 115.2 -Interim dividend for 2005/06 1.92p 35.0 ------------------------- --------- --------- --------- 150.2 144.4------------------------ --------- --------- --------- Proposed final dividend for 2005/06 6.53p 119.2 ------------------------- --------- --------- --------- As at 29 April 2006, the proposed final dividend for 2005/06 is subject to approval by shareholders at the annual general meeting and, accordingly, has not been recognised as a liability in these financial statements. 7. Earnings per share ------------------------------------- --------- --------- 52 weeks ended 52 weeks ended 29 April 2006 30 April 2005 £million £million ------------------------------------- --------- --------- Basic and diluted earnings 215.9 240.4 Operations to be discontinued net of 0.3 (25.9) taxation Amortisation of acquired intangibles net of taxation 1.4 0.8 Restructuring charges net of taxation 18.9 10.9 Other one off charges net of taxation 4.1 - Net fair value remeasurement gains on financial instruments net of taxation (7.3) - Profit on sale of investments (2.9) (12.5) Profit on sale of subsidiary - (3.8) ------------------------------------- --------- --------- Adjusted basic and diluted earnings 230.4 209.9 ------------------------------------- --------- --------- Million Million ------------------------------------- --------- --------- Basic weighted average number of shares 1,844.7 1,922.1 Employee share option and ownership schemes 18.5 19.4 ------------------------------------- --------- --------- Diluted weighted average number of shares 1,863.2 1,941.5 Pence Pence --------------------------------------- --------- --------- Basic earnings per share 11.7 12.5 Operations to be discontinued net of - (1.4) taxation Amortisation of acquired intangibles net of taxation 0.1 0.1 Restructuring charges net of taxation 1.1 0.6 Other one off charges net of taxation 0.2 - Net fair value remeasurement gains on financial instruments net of taxation (0.4) - Profit on sale of investments (0.2) (0.7) Profit on sale of subsidiary - (0.2) ------------------------------------- --------- --------- Adjusted basic earnings per share 12.5 10.9 ------------------------------------- --------- --------- Diluted earnings per share 11.6 12.4 Operations to be discontinued net of - (1.3) taxation Amortisation of acquired intangibles net of taxation 0.1 - Restructuring charges net of taxation 1.1 0.6 Other one off charges net of taxation 0.2 - Net fair value remeasurement gains on financial instruments net of taxation (0.4) - Profit on sale of investments (0.2) (0.7) Profit on sale of subsidiary - (0.2) ------------------------------------- --------- --------- Adjusted diluted earnings per share 12.4 10.8 ------------------------------------- --------- --------- Basic and diluted earnings per share are based on profit for the period attributable to equity shareholders. Adjusted earnings per share are presented in order to show the underlying performance of the Group. Adjustments used to determine underlying earnings are further described in note 3. 8 Inventories ------------------------------------- --------- -------- 2006 2005 £million £million ------------------------------------- --------- -------- Finished goods and goods for resale 917.4 846.8 Provision for obsolete and slow moving goods (43.2) (42.1) Impairment arising from restructuring (1.7) - ------------------------------------- --------- -------- 872.5 804.7 Properties held for development or resale 0.9 6.6 ------------------------------------- --------- -------- 873.4 811.3 ------------------------------------- --------- -------- Properties held for development or resale include interest of - 0.9 ------------------------------------- --------- -------- 9 Reconciliation of movements in equity --------------------- ------ ------ ------ ------ ------ ------ ------ Share Share premium Other Retained Minority Total capital account reserves earnings Sub total interests equity £million £million £million £million £million £million £million --------------------- ------ ------ ------ ------ ------ ------ ------At 1 May 2005 47.3 142.1 40.8 1,178.5 1,408.7 42.3 1,451.0Transition adjustment on adoption of IAS 32 and IAS 39, net of tax - - 1.8 (12.7) (10.9) (20.8) (31.7)--------------------- ------ ------ ------ ------ ------ ------ ------At 1 May 2005- as restated 47.3 142.1 42.6 1,165.8 1,397.8 21.5 1,419.3 Profit for the period - - - 215.9 215.9 - 215.9Profits attributable to minority shareholders - - - - - (4.2) (4.2)Equity dividends - - - (150.2) (150.2) - (150.2)Dividends paid to minority shareholders - - - - - (8.2) (8.2)Actuarial gains - defined benefit pension scheme - - - 47.1 47.1 - 47.1Purchase and cancellation of own shares (1.8) - 1.8 (107.6) (107.6) - (107.6)Investment in own share - - (1.5) - (1.5) - (1.5)Vesting of own shares - - (0.8) - (0.8) - (0.8)Currency retranslation - - - 26.9 26.9 0.2 27.1Share based payments - - - 8.8 8.8 - 8.8Cash flow hedges - - (3.9) - (3.9) - (3.9)Net investment hedges - - (18.7) - (18.7) - (18.7)Available for sale investments - - (0.3) - (0.3) - (0.3)Tax on items taken directly to equity - - 6.9 (8.5) (1.6) - (1.6)Ordinary shares issued - employee options 0.1 2.4 - - 2.5 - 2.5 - employee trusts - 1.4 - (1.4) - - ---------------------- ------ ------ ------ ------ ------ ------ ------At 29 April 2006 45.6 145.9 26.1 1,196.8 1,414.4 9.3 1,423.7--------------------- ------ ------ ------ ------ ------ ------ ------ 10 Notes to the cash flow statement --------------------------------------------------- (a) Reconciliation of operating profit to net cash inflow from operating activities ------------------------------------- --------- --------- 52 weeks ended 52 weeks ended 29 April 2006 30 April 2005 £million £million ------------------------------------- --------- --------- Operating profit 261.9 287.1 Amortisation of acquired intangibles 2.0 1.2 Amortisation of other intangibles 24.8 20.7 Depreciation 113.1 114.9 Share based payment charge 9.5 8.7 Share of post tax results of associates (0.3) (1.0) Profit on disposal of property, plant and equipment (7.6) (7.4) Profit on disposal of property, plant and equipment arising from restructuring (9.0) - Net additions to / (utilisation of) restructuring and one off provisions and impairment 34.2 (6.5) ------------------------------------- --------- --------- Operating cash flows before movements in working capital 428.6 417.7 Movements in working capital: (Increase) / decrease in inventories (18.7) 25.7 (Increase) / decrease in trade and other receivables (28.5) 136.8 Increase / (decrease) in trade and other payables 47.0 (113.9) ------------------------------------- --------- --------- (0.2) 48.6 ------------------------------------- --------- --------- ------------------------------------- --------- --------- Cash generated from operations 428.4 466.3 ------------------------------------- --------- --------- (b) Analysis of net funds ---------------- --- ------ ------- ------ ------ ------ ------ ------- ------ Transition adjustment 1 May Acquis- Other non- 1 May on adoption 2005 Cash itions cash Exchange 29 April 2005 of IAS 39 (restated) flow (iii) movements movements 2006 £million £million £million £million £million £million £million £million---------------- --- ------ ------- ------ ------ ------ ------ ------- ------ Cash and cashequivalents (i) 704.5 - 704.5 (86.7) - - (0.3) 617.5Overdrafts (107.1) - (107.1) 107.1 - - - ----------------- --- ------ ------- ------ ------ ------ ------ ------- ------ 597.4 - 597.4 20.4 - - (0.3) 617.5---------------- --- ------ ------- ------ ------ ------ ------ ------- ------Short term investments 306.5 0.8 307.3 (74.7) - - - 232.6Borrowings due within one year (34.7) 14.1 (20.6) 11.8 - 0.1 (0.1) (8.8)Borrowings due after more than one year (317.9) 13.2 (304.7) 3.3 (2.7) 1.3 1.7 (301.1)Obligations under finance leases (55.5) - (55.5) (45.1) - - - (100.6)---------------- --- ------ ------- ------ ------ ------ ------ ------- ------ (408.1) 27.3 (380.8) (30.0) (2.7) 1.4 1.6 (410.5)---------------- --- ------ ------- ------ ------ ------ ------ ------- ---------------------- --- ------ ------- ------ ------ ------ ------ ------- ------Net funds (ii) 495.8 28.1 523.9 (84.3) (2.7) 1.4 1.3 439.6---------------- --- ------ ------- ------ ------ ------ ------ ------- ------ i. Cash and cash equivalents are represented as a single class of assets on the face of the consolidated balance sheet. For the purposes of the consolidated cash flow, cash and cash equivalents comprise those amounts represented on the consolidated balance sheet as cash and cash equivalents, less overdrafts (which form part of current borrowings on the consolidated balance sheet). ii. Funds held under trust to fund customer support agreements were £193.5 million (30 April 2005 £312.3 million). Net funds excluding amounts held under trust to fund customer support agreements totalled £246.1 million (30 April 2005 £183.5 million). iii.Excluding cash and cash equivalents and overdrafts. 11. Financial information under International Financial Reporting Standards The key differences between UK GAAP and IFRS affecting the Group's accounting policies are set out below. While this is not a comprehensive summary of all differences between UK GAAP and IFRS, other differences would have no effect or no significant effect on the consolidated net profit or shareholders' funds of the Group. A reconciliation of consolidated profit for the period and shareholders' funds as at 30 April 2005 are set out below. The following summarises the areas of reconciliation relevant to the Group between UK GAAP and IFRS. a. Share based payments Under UK GAAP for 2004/05, no cost was incurred for share options or SAYE schemes. In accordance with IFRS 2, which for 2005/06 has an equivalent accounting standard under UK GAAP, the Group recognises a charge to the income statement which represents the fair value of outstanding share based payments granted to employees. Share based payments comprise share options, SAYE schemes, the Deferred Equity Participation Plan (DEPP) and the Long Term Incentive Plan (LTIP). The fair value is determined by using option pricing models and the Group has predominantly used the binomial model in such valuations. The charge is recognised in the income statement over the vesting period, adjusted to reflect the expected and actual levels of vesting. The basis of calculation of deferred taxation is the difference between the market price at the balance sheet date and the exercise price of the share based payment. Accordingly, the tax effect does not correlate to the charge. b. Employee benefits Under UK GAAP for 2004/05, a prepayment or accrual was shown in the balance sheet representing timing differences between the pension charge to the income statement and the cash payments made to the pension scheme. Under IAS 19 "Employee benefits", which for 2005/06 has an equivalent accounting standard under UK GAAP, the income statement charge is split between the operating charge and finance income and charges. The regular service cost of providing retirement benefits to employees during the period, together with the cost of any benefits relating to past service is charged to operating profit in the period. The net finance income or charge relates to the expected return on the assets of the scheme, based on market conditions prevailing at the start of the financial period, offset by unwinding of the discount applied to the liabilities of the scheme. The difference between the market value of the assets and the present value of the accrued pension liabilities is recognised as an asset or liability in the balance sheet together with the related deferred tax effect. Differences between the actual and expected returns on assets during the period are recognised in equity (reserves) in the statement of recognised income and expense, together with differences arising from changes in actuarial assumptions. This accounting treatment is consistent with that previously disclosed under FRS 17. c. Leases Under UK GAAP, determination of property finance leases is made by reference to the lease as a whole. Under IAS 17 "Leases", the determination must be made by reference to the land and buildings elements of the leases separately. As a result, the buildings elements of a small number of leases previously recognised as operating leases have been reclassified as finance leases. The key reasons for such reclassification are where the Group has built and developed such properties and then subsequently sold and leased back. The circumstances and terms of the sale and lease back have determined the accounting as a finance lease. The main impact on the balance sheet is the inclusion of the above mentioned properties within fixed assets together with the related finance lease creditor. The movement in this creditor is shown within financing activities in the cash flow statement and accordingly, has the effect of reducing net funds. Cash flows are unaffected. The key impact on the income statement is that for these specific leases, the rentals under operating leases charged to operating profit under UK GAAP are replaced with a depreciation charge on the fixed asset and a finance charge is included within interest. The total amounts charged to the income statement over the life of the finance lease remain the same under both UK GAAP and IFRS, however, a higher charge is incurred in the early years of a lease reflecting higher interest charges. The net impact of this charge on the income statement is small. IAS 17 also requires that, where a lease contains fixed minimum rental uplifts at predetermined review dates, the fixed minimum lease payments are accounted for on a straight line basis over the entire fixed term irrespective of the time value of money and the actual cash payments. This has the effect that in the earlier years of such leases, the income statement charge is higher than the contractual payments. d. Lease incentives Under UK GAAP, the Group's policy on recognition of lease incentives was to spread the incentive over the period to the first market rent review. Under IFRS, SIC 15 "Operating leases - incentives" the requirement is for such incentives to be spread over the life of the lease. e. Dividends Under UK GAAP for 2004/05, dividends are provided for in the period in respect of which they are declared or proposed. IAS 10 "Events after the balance sheet date", which for 2005/06 has an equivalent accounting standard under UK GAAP, requires that dividends are recognised only in the period in which they are approved. f. Business combinations and intangible assets Under UK GAAP, goodwill on acquisitions made by the Group since 2 May 1999, has been capitalised on the balance sheet and amortised over its estimated life where such a life has been determined to be finite. Prior to 2 May 1999, goodwill arising on acquisitions was eliminated against reserves in the consolidated balance sheet in the year in which the acquisition was made. IFRS 3 prohibits the amortisation of goodwill and requires goodwill to be carried at cost with impairment reviews conducted annually and at other times if there are indications that the carrying amount may not be supportable. The Group has adopted the transitional provisions set out in IFRS 1, to apply IFRS 3 prospectively from the Transition Date whereby goodwill arising on acquisitions made prior to this is frozen as at the Transition Date and any goodwill amortisation occurring in the financial year 2004/05 is therefore reversed for IFRS reporting purposes. Only a small proportion of the Group's goodwill was determined to have a finite life under UK GAAP and, accordingly, the effect of ceasing to amortise is small. IAS 38 "Intangible Assets" requires other intangible assets to be separately identified and amortised over their useful economic lives. These lives are not typically indefinite and as a result, upon acquisition of a company, intangible assets such as brands and customer lists are now separately valued and then amortised over their useful economic lives. Additionally, UK GAAP requires that on subsequent disposal or closure of a previously acquired subsidiary, any goodwill previously taken directly to shareholders' funds is then charged to the income statement as part of profit or loss on disposal or closure. Under IFRS the appropriate balance to be written off on the disposal of the business is the remaining unamortised balance for goodwill. g. Taxation Under UK GAAP, deferred tax is provided for in full on all timing differences which have not reversed at the balance sheet date. Deferred tax assets are only recognised to the extent that they are regarded as more likely than not to be recoverable. Although some differences exist between IFRS and UK GAAP, IAS 12 "Income taxes" is similar to UK GAAP and has no effect on the Group's UK GAAP figures. IAS 12 has, however, been applied to the IFRS adjustments discussed above. h. Presentation of financial statements The primary financial statements are presented in accordance with IAS 1 "Presentation of Financial Statements". Although similar, such a presentation differs from the UK GAAP equivalent. Under UK GAAP 'exceptional items' was a defined term. Under IAS 1, there is no definition of 'exceptional items'. However, the standard provides examples of circumstances where, when such items of income and expense are material, the nature and amount should be disclosed separately. Included in these examples are many one off items which the Group has previously described as 'exceptional'. Accordingly, the Group will continue to identify such items separately. i. Reclassification changes The following reflects the key presentational changes to the income statement, balance sheet and cash flow statement. Such changes have no effect on either future net assets or profits: •Under UK GAAP, capitalised computer software is included within tangible fixed assets on the balance sheet. Under IFRS, only computer software that is integral to a related item of hardware is included as property, plant and equipment. All other computer software is included as an intangible asset. As a result, certain software previously shown as fixed assets has been reclassified as intangible assets; •Under UK GAAP, specific definitions exist for cash at bank and in hand and short term investments. Under IFRS, a new category described as 'cash and cash equivalents' replaces the UK GAAP equivalent of 'cash at bank and in hand'. The definition of cash and cash equivalents results in a reclassification of certain amounts from short term investments into cash and cash equivalents; •Under UK GAAP, provisions for liabilities and charges are not required to be split between current and non-current. IFRS requires this distinction to be made; •Under UK GAAP, deferred tax assets are split between amounts falling due within one year and amounts falling due after more than one year. IFRS requires all deferred tax asset balances to be shown as non-current; •Unlike UK GAAP, IFRS makes no distinction in the income statement between operating and non-operating items. Accordingly, all items previously classified as 'non-operating' will be reclassified as 'operating'. However, separate disclosure of such non-operating items will continue to be made as in the past; and •Under UK GAAP, cash flows excluded deposits with maturities exceeding 24 hours as such amounts were included within short term investments. Under IFRS, cash flows exclude only those amounts with maturities exceeding three months in order to reconcile to cash and cash equivalents which are further defined above. The UK GAAP presentation of the cash flow statement differs from the IFRS presentation in that IFRS requires classification between Operating, Investing and Financing, whereas UK GAAP stipulated additional separate categories. j. Derivative financial instruments The transitional effects of adopting IAS 32 and IAS 39 are described in note 12. Summary of differences between UK GAAP and IFRS on profit for the period attributable to equity shareholders ------------------------------------------ -------- 52 weeks ended 30 April 2005 £ million ------------------------------------------ --------Profit for the period in accordance with UK GAAP extantat 30 April 2005 243.1 IFRS adjustments:Share based payments (IFRS 2) (8.7)Employee benefits (IAS 19) 0.3Leases (IAS 17) - finance leases 1.5Leases (IAS 17) - fixed rentals (1.2)Lease incentives (SIC 15) (1.0)------------------------------------------ --------IFRS adjustments to underlying operating profit (9.1)Amortisation of intangibles acquired (IAS 38) (1.2)Goodwill amortisation reversal (IFRS 3) 7.2------------------------------------------ --------IFRS adjustments to total operating profit (3.1)------------------------------------------ --------Employee benefits (IAS 19) - net interest benefit 2.1Leases (IAS 17) - interest charge (3.3)------------------------------------------ --------IFRS adjustments to finance income (1.2)------------------------------------------ --------Share based payments (IFRS 2) - tax effect 0.7Employee benefits (IAS 19) - tax effect (0.7)Leases (IAS 17) - finance leases tax effect 0.5Leases (IAS 17) - fixed rentals tax effect 0.4Lease incentives (SIC 15) - tax effect 0.3Amortisation of intangibles acquired (IAS 38) - tax effect 0.4 --------------------------------------------------IFRS adjustments to taxation 1.6------------------------------------------ -------- Profit for the period attributable to equityshareholders of the parent company in accordance with IFRS 240.4------------------------------------------ Summary of differences between UK GAAP and IFRS on shareholders' funds ------------------------------------- --------- -------- Transition balance sheet Effects of differences between UK GAAP 30 April 2005 2 May 2004 and IFRS on shareholders' funds £million £million ------------------------------------- --------- -------- Equity shareholders' funds for the period in accordance with UK GAAP extant at 30 April 1,432.9 1,428.0 2005 IFRS adjustments: Share based payments (IFRS 2) - - Goodwill amortisation reversal (IFRS 3) 7.2 - Employee benefits (IAS 19) (186.2) (131.0) Leases (IAS 17) - finance leases (3.6) (1.8) Leases (IAS 17) - fixed rentals (2.1) (0.9) Lease incentives (SIC 15) (20.9) (19.9) Intangibles acquired (IAS 38) 4.6 - Dividends (IAS 10) 115.2 110.3 ------------------------------------- --------- -------- IFRS adjustments before taxation (85.8) (43.3) Deferred tax asset on notional share option charge (IFRS 2) 3.0 1.9 Deferred tax asset on pension liability 56.0 37.7 (IAS 19) Deferred tax asset on leases (IAS 17) - finance leases 1.1 0.5 Deferred tax asset on leases (IAS 17) - fixed rentals 0.6 0.2 Deferred tax asset on operating lease incentives (SIC 15) 6.3 6.0 Deferred tax liability on intangibles acquired (IAS 38) (5.4) - ------------------------------------- --------- -------- IFRS adjustments after taxation (24.2) 3.0 ------------------------------------- --------- -------- Equity shareholders' funds in accordance 1,408.7 1,431.0 with IFRS --------- -------- ------------------------------------- 12 Financial instruments - Transitional adjustment on adoption of IAS 32 and IAS 39 The Group adopted IAS 32 and IAS 39 as at 1 May 2005. The principal impacts of IAS 32 and IAS 39 on the Group's financial statements are to value all financial assets and liabilities at fair value on the balance sheet. One of the key effects relates to the recognition of derivative financial instruments at fair value. Financial assets and financial liabilities that arise on derivatives that do not qualify for hedge accounting are held on the balance sheet at fair value with the changes in value reflected through the income statement. The accounting treatment of derivatives that qualify for hedge accounting is dependent on how they are designated. The different designations are explained below: Fair value hedges The Group uses interest rate and cross currency swaps to hedge the exposure to interest rates and currency movements of its interest payments, interest receipts and translated values of foreign currency assets and liabilities. Under UK GAAP, derivative financial instruments held to hedge these exposures were accounted for using hedge accounting and were not recognised at fair value in the balance sheet. Under IAS 39, derivative financial instruments that meet the 'fair value' hedging requirements are recognised in the balance sheet at fair value with corresponding fair value movements recognised within 'Finance income' or 'Finance costs' in the income statement. For an effective fair value hedge, the hedged item is adjusted for changes in fair value attributable to the risk being hedged with the corresponding entry in the income statement. To the extent that the designated hedge relationship is fully effective, the amounts in the income statement offset each other. As a result, only the ineffective element of any designated hedging relationship impacts the income statement. Cash flow hedges The Group hedges the foreign currency exposure on inventory purchases. Under UK GAAP, foreign currency derivatives were held off balance sheet. Under IAS 39, derivative financial instruments that qualify for cash flow hedging are recognised on the balance sheet at fair value with the movement in fair value deferred in equity until the inventory is delivered. Net investment hedges The Group uses currency forward contracts and currency swaps to hedge its currency risk on the translation of net investments in foreign entities. Under IAS 39 the Group has designated the hedge as the spot to spot movement of these derivatives and provided the hedging requirements of IAS 39 are met and the hedging relationship is fully effective, gains and losses are recognised in equity. Accordingly this treatment does not differ from UK GAAP. On the adoption of IAS 32 and IAS 39, there is no material impact for the Group from other financial assets and liabilities that are not part of a designated hedge relationship. Adjustments to opening balance sheet as at 1 May 2005 arising from adoption of IAS 32 and IAS 39 -------------------------- --------- -------- --------- Opening balance Effect of IAS 32 Opening sheet under IFRS and IAS 39 balance sheet (as restated) £million £million £million -------------------------- --------- -------- ---------Non-current assetsInvestments 3.2 2.0 5.2Trade and other receivables 29.6 (13.9) 15.7Deferred tax assets 161.3 5.5 166.8 Current assetsTrade and other receivables 367.5 (7.3) 360.2Short term investments 306.5 0.8 307.3 Current liabilitiesBorrowings (34.7) 14.1 (20.6)Trade and other payables (1,370.6) (27.5) (1,398.1) Non-current liabilitiesBorrowings (317.9) 13.2 (304.7)Trade and other payables (455.3) (18.6) (473.9)-------------------------- --------- -------- ---------Impact on net assets (31.7)-------------------------- --------- -------- ---------EquityOther reserves 40.8 1.8 42.6Retained earnings 1,178.5 (12.7) 1,165.8-------------------------- --------- -------- ---------Impact on equityshareholders'funds (10.9)-------------------------- --------- -------- ---------Minority interests 42.3 (20.8) 21.5-------------------------- --------- -------- ---------Impact on total equity (31.7)-------------------------- --------- -------- --------- 13. Post balance sheet events -------------------------------------------------- On 21 June 2006, the Group reached a commercial agreement in principle to sell its 60% stake in The Link Stores Limited, to O2(UK) Limited subject to agreement of legally binding documentation and other terms and conditions for a cash sum of approximately £30 million. Details of the dividends proposed but awaiting approval and relating to the current financial period are shown in note 6. Additional information Sales and underlying operating profit analysis--------------------------------------------------------------------------------------------------------------- Sales Underlying operating profit /(loss) (1) ------- ------- ------ ------ -------- -------- 52 weeks 52 weeks 52 weeks 52 weeks ended 29 ended 30 Like for ended 29 April ended 30 April 2006 April 2005 Total(2) like 2006 April 2005 £ million £ million % change % change £ million £ million------------------ --- ------- ------- ------ ------ -------- -------- UK Computing 3 1,752.3 1,707.5 3% (4%) 129.4 127.5 InternationalComputing 4 287.5 218.3 33% - (22.2) (19.5)------------------ --- ------- ------- ------ ------ -------- --------Total Computing 2,039.8 1,925.8 6% (3%) 107.2 108.0------------------ --- ------- ------- ------ ------ -------- -------Communications 5 87.6 102.6 (15%) - 6.6 5.4------------------ --- ------- ------- ------ ------ -------- --------Total Communications 87.6 102.6 (15%) - 6.6 5.4------------------ --- ------- ------- ------ ------ -------- -------- UK & Ireland Electricals 2,769.2 2,660.5 4% 3% 79.8 75.6 Nordic 6 1,155.1 1,003.2 14% 7% 83.4 67.8Southern Europe 7 895.4 745.1 21% 4% 44.3 40.4Central Europe 8 118.7 105.7 11% - (9.9) (7.2)------------------ --- ------- ------- ------ ------ -------- -------- International Electricals 2,169.2 1,854.0 17% 5% 117.8 101.0------------------ --- ------- ------- ------ ------ -------- -------------------------- --- ------- ------- ------ ------ -------- --------Total Electricals 4,938.4 4,514.5 9% 4% 197.6 176.6------------------ --- ------- ------- ------ ------ ------- -------------------------- --- ------- ------- ------ ------ -------- --------Total Retail 7,065.8 6,542.9 8% 2% 311.4 290.0------------------ --- ------- ------- ------ ------ -------- -------- Corporate & Group Shared Services - - - - (26.8) (28.9)Property profits - - - - 7.4 7.4Codic 9 6.2 11.5 - - (0.5) (0.6)------------------ --- ------- ------- ------ ------ -------- -------- Corporate Centre 6.2 11.5 - - (19.9) (22.1)------------------ --- ------- ------- ------ ------ -------- -------------------------- --- ------- ------- ------ ------ -------- --------Total Group Underlying 7,072.0 6,554.4 8% 2% 291.5 267.9================== === ======= ======= ====== ====== ======== ======= 1. Underlying results are defined as being before The Link operations to be discontinued, amortisation of acquired intangibles, net restructuring charges, other one off charges, profits on sale of investments, profit on sale of subsidiaries and net fair value remeasurement gains on revaluation of financial instruments. 2. Total sales percentage change is reported in local currency for regional sales and in pounds sterling for divisional and Group totals. 3. UK Computing comprises PC World and PC World Business. 4. International Computing comprises the PC City operations in Spain, France, Sweden and Italy. 5. UK Communications is the Genesis operation. 6. Nordic comprises the Elkjop Group which operates in Norway, Sweden, Finland, Denmark, Iceland and the Faroe Islands. 7. Southern Europe comprises UniEuro in Italy and Kotsovolos in Greece. 8. Central Europe comprises Electro World which operates in Hungary, the Czech Republic and Poland. 9. Codic represents the residual property operations in Germany retained by the Group which are being discontinued following the sale of the remainder of the European Property division in 2003. Retail Store data ------------------------- ------------- --------------- Number of Selling space stores '000 sq ft 29 April 2006 30 April 2005 29 April 2006 30 April 2005------------------------- -------- -------- -------- -------- UK Computing 151 145 2,421 2,355 PC City Spain 25 22 424 370PC City France 11 7 190 127PC City Italy 7 6 125 110PC City Sweden 8 2 136 36------------------------ -------- -------- -------- --------International Computing 51 37 875 643------------------------- -------- -------- -------- --------Total Computing 202 182 3,296 2,998------------------------- -------- -------- -------- -------- UK Electricals 568 590 5,005 4,984Ireland 21 16 211 171------------------------- -------- -------- -------- --------UK & Ireland Electricals 589 606 5,216 5,155 Elkjop - Norway 96 95 1,087 996Elkjop - Sweden 51 40 941 762Elkjop - Denmark 26 22 447 348Elkjop - Finland 43 15 667 299Elkjop - Iceland 2 2 30 30Elkjop - Faroe Islands 3 - 9 -------------------------- -------- -------- -------- --------Nordic * 221 174 3,181 2,435 UniEuro 110 102 2,111 1,952Kotsovolos * 77 77 671 605------------------------- -------- -------- -------- --------Southern Europe 187 179 2,782 2,557 Electro World - Hungary 6 5 207 196Electro World - Czech Republic 8 6 280 241Electro World - Poland 2 - 91 -------------------------- -------- -------- -------- --------Central Europe 16 11 578 437 ------------------------- -------- -------- -------- --------International Electricals 424 364 6,541 5,429------------------------- -------- -------- -------- --------------------------------- -------- -------- -------- -------- Total Electricals 1,013 970 11,757 10,584------------------------- -------- -------- -------- --------------------------------- -------- -------- -------- --------Total Group Underlying 1,215 1,152 15,053 13,582========================= ======== ======== ======== ======== * includes franchise stores This information is provided by RNS The company news service from the London Stock Exchange

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