Half Yearly Report

26th Nov 2009 07:00



INTERIM RESULTS 

26 November 2009 - PR 78/09

Strictly embargoed

For release at 07.00 hours

DSG international plc

Retail profits ahead of expectations

Renewal & Transformation plan delivering benefits

DSG international plc, one of Europe's largest specialist electrical retailers, today announces interim results for the 24 weeks ended 17 October 2009:

 

John Browett, Chief Executive commented: 

"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."

Outlook

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 on-line.  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.

For further information 

Investor Relations: David Lloyd-Seed	Group Communications Director, DSGi	01727 205065
Press and Media: Mark Webb	Head of Media Relations, DSGi	01727 205019
Laura Cummings Jayne Rosefield	Brunswick Group	020 7404 5959
Information on DSG international plc is available at http://www.dsgiplc.com
An audio webcast of the analyst presentation being held this morning will be available from 3.00pm today at http://www.dsgiplc.com (click "financial information", then "presentations").

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.

  

UNDERLYING SALES AND PROFIT / (LOSS) ANALYSIS

				Underlying sales					Underlying profit /(loss)
Note			24 weeks ended 17 October 09 £million		24 weeks ended 18  October 08 £million	Total sales % change	Like for like %  change		24 weeks ended 17 October 09 £million	24 weeks ended 18 October 08 £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.
(5)	e-commerce division comprises PIXmania and Dixons.co.uk.

  

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 have 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 3 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 6 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 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 8 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 today 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 shares.

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 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 positive like for like 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 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.

NORDIC

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 10 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 6 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 strong support from suppliers.

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 ft2 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 3 superstores as well as 3 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 3 stores in Slovakia which are trading in line with expectations.

 

On 19 May 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.

Turkey

Total sales in Turkey were £30.2 million (2008/09 £17.6 million). The Group now operates 10 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 4th 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 3 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 4 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.

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 17 October 2009 £million		24 weeks ended 18 October 2008 £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)

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.

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

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.

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.

FREE CASH FLOW

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

	24 weeks ended  17 October 2009 £million	24 weeks ended  18 October 2008 £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:

Improved trading performance in the last 8 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;

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

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 £(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. 

FUNDING

Net funds / (debt)

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.

	24 weeks ended 17 October 2009 £million		24 weeks ended 18 October 2008 £million
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)		(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:

Interest cost increases driven by higher borrowings prior to the refinancing, and by higher bank fees and margins subsequent to the refinancing;

Amortisation of the fees incurred on the refinancing;

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

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

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.

- ENDS -

Maylands Avenue	John Browett
Hemel Hempstead	Chief Executive
Hertfordshire HP2 7TG	26 November 2009
Interim report publication date	29 December 2009

CONSOLIDATED INCOME STATEMENT
								24 weeks ended 17 October 2009
								Non-underlying*
						Note	Under- lying* £million	Closed businesses **  £million	Other £million	Total £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)p
Diluted	- total									(0.5)p
Basic	- continuing operations									(0.3)p
Diluted	- continuing operations									(0.3)p
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.

				24 weeks ended 18 October 2008 Re-presented †				52 weeks ended 2 May 2009
				Non-underlying*				Non-underlying*
		Note	Under- lying* £million	Closed businesses **  £million	Other £million	Total £million	Under-lying* £million	Closed businesses **  £million	Other £million	Total £million
Continuing operations
Revenue		2	3,365.6	58.4	-	3,424.0	8,180.2	137.6	-	8,317.8
Profit / (loss) from operations before associates			(12.3)	(5.9)	(29.8)	(48.0)	79.4	(12.2)	(158.2)	(91.0)
Share of post tax results of associates			0.7	-	-	0.7	3.6	-	-	3.6
Operating profit / (loss)		2,3	(11.6)	(5.9)	(29.8)	(47.3)	83.0	(12.2)	(158.2)	(87.4)
Finance income			36.3	-	10.8	47.1	69.6	-	32.2	101.8
Finance costs			(42.4)	(0.8)	(12.2)	(55.4)	(96.5)	(1.9)	(39.6)	(138.0)
Net finance costs		4	(6.1)	(0.8)	(1.4)	(8.3)	(26.9)	(1.9)	(7.4)	(36.2)
(Loss) / profit before tax			(17.7)	(6.7)	(31.2)	(55.6)	56.1	(14.1)	(165.6)	(123.6)
Income tax credit / (expense)		5	9.6	1.8	8.6	20.0	(34.3)	2.7	(25.2)	(56.8)
(Loss) / profit after tax  - continuing operations			(8.1)	(4.9)	(22.6)	(35.6)	21.8	(11.4)	(190.8)	(180.4)
Loss after tax  - discontinued operations		9	-	-	(5.4)	(5.4)	-	-	(38.9)	(38.9)
(Loss) / profit for the period			(8.1)	(4.9)	(28.0)	(41.0)	21.8	(11.4)	(229.7)	(219.3)
Attributable to:
Equity shareholders of the parent company			(7.4)	(4.9)	(28.0)	(40.3)	21.7	(11.4)	(229.7)	(219.4)
Minority interests			(0.7)	-	-	(0.7)	0.1	-	-	0.1
			(8.1)	(4.9)	(28.0)	(41.0)	21.8	(11.4)	(229.7)	(219.3)
Loss per share (pence)		6
Basic	- total					(1.9)p				(10.2)p
Diluted	- total					(1.9)p				(10.2)p
Basic	- continuing operations					(1.6)p				(8.4)p
Diluted	- continuing operations					(1.6)p				(8.4)p
Underlying (loss) / earnings per share (pence)		1,6
Basic	- continuing operations		(0.3)p				1.0p
Diluted	- continuing operations		(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.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE

 

		24 weeks ended 17 October 2009 Unaudited £million	24 weeks ended  18 October 2008 Unaudited £million	52 weeks ended 2 May 2009 Audited £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
		(69.3)	(90.0)	(233.4)

CONSOLIDATED BALANCE SHEET 

	Note	17 October 2009 Unaudited £million	18 October 2008 Unaudited £million	2 May 2009 Audited £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
Total equity		811.2	708.2	584.9

CONSOLIDATED CASH FLOW STATEMENT 

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

STATEMENT OF CHANGES IN EQUITY 

		Share capital £million	Share premium account £million	Other reserves £million	Retained earnings £million	Sub- total £million	Minority interests £million	Total equity £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 capital £million	Share premium account £million	Other reserves £million	Retained earnings £million	Sub- total £million	Minority  interests £million	Total equity £million
At 4 May 2008		44.3	169.4	(502.9)	1,115.9	826.7	26.8	853.5
Total recognised income and expense 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 2 May 2009		44.3	169.4	(485.9)	950.8	678.6	29.6	708.2

		Share capital £million	Share premium account £million	Other reserves £million	Retained earnings £million	Sub- total £million	Minority interests £million	Total equity £million
At 4 May 2008		44.3	169.4	(502.9)	1,115.9	826.7	26.8	853.5
Total recognised income and expense 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 5 new shares for each 7 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.

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". Instead of presenting one statement of comprehensive income 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 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:

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. 

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. 

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. 

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 & cash equivalents, borrowings, net retirement benefit obligations, derivative financial instruments and tax assets and liabilities. 

(a) Income Statement

24 weeks ended 17 October 2009
	External revenue £million	Intersegmental revenue £million	Revenue £million	Underlying profit / (loss) £million	Total profit / (loss) £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
		Underlying profit / (loss) £million			Closed businesses £million	Amortisation of acquired intangibles £million	Restructur- ing and other £million	Net fair  value remeas- urements £million	Total  profit / (loss) £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)

Share of post tax result of associates relates to the Nordics.

  

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

External revenue for the Nordics includes £58.4 million relating to closed businesses. 

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

		24 weeks ended 18 October 2008 Re-presented
				Underlying  profit / (loss) £million	Closed businesses £million	Amortisation of acquired intangibles  £million	Restruc- turing and other £million	Net fair  value remeas-urements £million	Total (loss) / profit £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)

Share of post tax result of associates relates to the Nordics.

  

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

External revenue for the Nordics includes £137.6 million relating to closed businesses. 

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

			52 weeks ended 2 May 2009
		Under-lying profit / (loss) £million		Closed businesses £million	Amortisation of acquired intangibles  £million	Restructur-ing and other £million	Business impairment charges £million	Net fair value remeas-urements £million	Total (loss) / profit £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)

Share of post tax result of associates relates to the Nordics.

  (b) Balance sheet 

24 weeks ended 17 October 2009
	Segment  assets £million	Investment in associates  £million	Total segment assets £million	Segment liabilities £million	Net assets £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  assets £million	Investment in associates  £million	Total segment assets £million	Segment liabilities £million	Net assets £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  assets £million	Investment in associates  £million	Total segment assets £million	Segment liabilities £million	Net assets £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.

3 Non-underlying items 

		24 weeks ended 17 October 2009				24 weeks ended 18 October 2008 Re-presented
			Closed businesses £million	Other £million	Total £million	Closed businesses £million	Other £million	Total £million
Included in operating profit:
	Closed businesses	(i)	(0.2)	-	(0.2)	(5.9)	-	(5.9)
	Amortisation of acquired intangibles		-	(1.9)	(1.9)	-	(2.0)	(2.0)
	Net restructuring charges	(ii)	-	(2.8)	(2.8)	-	(27.8)	(27.8)
			(0.2)	(4.7)	(4.9)	(5.9)	(29.8)	(35.7)
Included in net finance charges:
	Closed businesses		-	-	-	(0.8)	-	(0.8)
	Net fair value remeasurements of financial instruments	(v)	-	(0.6)	(0.6)	-	(1.4)	(1.4)
			-	(0.6)	(0.6)	(0.8)	(1.4)	(2.2)
Total impact on loss before tax			(0.2)	(5.3)	(5.5)	(6.7)	(31.2)	(37.9)
Included in income tax expense:
	Closed businesses		0.1	-	0.1	1.8	-	1.8
	Other non-underlying items		-	1.2	1.2	-	8.6	8.6
			0.1	1.2	1.3	1.8	8.6	10.4
Total impact on loss after tax			(0.1)	(4.1)	(4.2)	(4.9)	(22.6)	(27.5)
						52 weeks ended 2 May 2009
						Closed businesses £million	Other £million	Total £million
Included in operating profit:
	Closed businesses	(i)				(12.2)	-	(12.2)
	Amortisation of acquired intangibles					-	(4.9)	(4.9)
	Net restructuring charges	(ii)				-	(59.1)	(59.1)
	Business impairment charges	(iii)				-	(96.1)	(96.1)
	Other items	(iv)				-	1.9	1.9
						(12.2)	(158.2)	(170.4)
Included in net finance charges:
	Closed businesses					(1.9)	-	(1.9)
	Net fair value remeasurements of financial instruments	(v)				-	(7.4)	(7.4)
						(1.9)	(7.4)	(9.3)
Total impact on loss before tax						(14.1)	(165.6)	(179.7)
Included in income tax expense:
	Closed businesses					2.7	-	2.7
	HMRC settlement	(vi)				-	(52.7)	(52.7)
	Other non-underlying items					-	27.5	27.5
						2.7	(25.2)	(22.5)
Total impact on loss after tax						(11.4)	(190.8)	(202.2)

(i)	Closed businesses: Comprises the operating activities of PC City Sweden and Markantalo which were closed on 10 May 2009 and 20 May 2009, respectively. In the 52 weeks ended 2 May 2009 these were presented as 'businesses to be closed'.
(ii)	Net restructuring charges:

			Property  charges  £million	Asset  impairments £million	Other charges £million	Total £million
24 weeks ended 17 October 2009
Strategic reorganisation			(1.4)	(1.4)	-	(2.8)
24 weeks ended 18 October 2008
Strategic reorganisation			(1.0)	(7.5)	(19.3)	(27.8)
52 weeks ended 2 May 2009
Strategic reorganisation			(3.9)	(13.6)	(41.6)	(59.1)

	Net restructuring charges relate predominantly to the renewal and transformation of the UK business which has been focused mainly on the reformatting of the UK store portfolio and the reorganisation of the service offering.
	Property charges comprise onerous lease costs and charges related to vacating properties. Asset impairments relate to intangible assets and items of property, plant & equipment which are to be eliminated from the business over a shorter period than their current useful expected lives and inventories and arise from restructuring initiatives which commenced in 2007/08. Impairments relating to intangible assets and property, plant & equipment comprise a combination of asset write offs and incremental accelerated depreciation charges associated with the economic useful life of these assets being shortened. Other charges predominantly comprise employee severance and contract termination costs.
(iii)	Net business impairment charges:

		Goodwill impairment £million	Other asset impairments £million	Property credits / (charges) £million	Other credits / (charges) £million	Total £million
52 weeks ended 2 May 2009
Italian business		-	-	12.4	6.4	18.8
Other businesses		(10.2)	(45.2)	(50.5)	(9.0)	(114.9)
		(10.2)	(45.2)	(38.1)	(2.6)	(96.1)

	52 weeks ended 2 May 2009: The Italian business impairment credit related to the reversal of charges incurred in prior periods whereby either liabilities have settled at lower amounts than those originally provided or in respect of properties which the Group has been able to exit earlier than previously expected. Other business impairments comprised businesses in the Nordics and Spain as well as stores in underperforming locations in the UK High Street. Goodwill impairment related to the full write off of Markantalo in Finland arising from the closure of its stores. Other asset impairments comprised the brand name associated with Markantalo, other intangible assets, property, plant & equipment and inventory.
	Other asset impairments relate to assets in individual under performing businesses whereby either the whole business is to be closed or which result from impairment reviews of certain businesses whereby either individual stores have been deemed impaired or are to be closed. Property charges comprise onerous lease costs and charges related to vacating properties. Property credits relate to onerous provisions set up in prior periods where such provisions have been determined to be no longer required. Other charges relate predominantly to employee severance.
(iv)	52 weeks ended 2 May 2009: Other items related to releases of unutilised provisions and settlement income received for claims for damages incurred following the Buncefield explosion in December 2005 and for which exceptional charges were incurred in the 2005/06 financial year.
(v)	Net fair value remeasurement gains and losses on revaluation of financial instruments: 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 (the basis upon which all other items in the financial statements is prepared). Also included within this amount are remeasurement losses relating to put options predominantly held by minority shareholders. Such a treatment is a form of revaluation gain or loss created by an assumption that the derivatives will be settled before their maturity.
	Such gains and losses are unrealised and in the directors' view also conflict with both the commercial reasons for entering into such arrangements as well as Group Treasury policy whereby early settlement in the majority of cases would amount to speculative use of derivatives.
(vi)	52 weeks ended 2 May 2009: As announced on 27 February 2009, the Group had been in dispute with HMRC regarding settlement of certain intra-group trading arrangements in the years 1997 to 2005 as well as certain other matters. The Group reached an agreement in principle with HMRC regarding the settlement which was subsequently confirmed on 4 June 2009. The settlement amount exceeded the provision already held in the balance sheet and as a result a non-underlying income tax charge of £52.7 million was recorded. The key elements of the agreement are such that a small proportion of the liability was not currently payable and the remainder has been offset against the income tax receivable which the Group held on its balance sheet such that no cash payment was made in respect of this offset. The amount was treated as non-underlying owing to its one-off non-recurring nature.

4 Net finance costs

			24 weeks ended 17 October 2009 £million			24 weeks ended 18 October 2008 £million	52 weeks ended 2 May 2009 £million
Bank and other interest receivable			7.2			14.2	21.8
Expected return on pension scheme assets			17.3			22.1	47.8
Fair value measurement gains on financial instruments		*	1.9			10.8	32.2
Finance income			26.4			47.1	101.8
6.125% Guaranteed Bonds 2012 interest and related charges					(8.4)	(8.5)	(18.3)
Bank loans, overdrafts and other interest payable
	Underlying		(15.0)			(9.0)	(24.1)
	Closed businesses	*	-			(0.8)	(1.9)
Finance lease interest payable			(3.3)			(3.1)	(6.9)
Interest on pension scheme liabilities			(21.0)			(21.8)	(47.2)
Fair value remeasurement losses on financial instruments		*	(2.5)			(12.2)	(39.6)
Finance costs			(50.2)			(55.4)	(138.0)
Total net finance costs - continuing operations				(23.8)		(8.3)	(36.2)
Underlying total net finance costs - continuing operations					(23.2)	(6.1)	(26.9)

Underlying total net finance costs excludes items marked *. See note 3 for a description of such items. 

Bank and other interest receivable includes £0.7 million of exchange gains (24 weeks ended 18 October 2008 £8.5 million and 52 weeks ended 2 May 2009 £12.2 million). Underlying bank loans, overdrafts and other interest payable includes £0.9 million relating to exchange losses (24 weeks ended 18 October 2008 £0.9 million and 52 weeks ended 2 May 2009 £0.9 million).

  5 Tax

						24 weeks ended 17 October 2009 £million		24 weeks ended 18 October 2008 £million	52 weeks ended 2 May 2009 £million
Current tax
UK corporation tax at 28%						0.3		-	0.2
Double tax relief						(0.3)		-	(0.2)
						-		-	-
Overseas taxation	- underlying					11.6		8.6	24.2
	- closed businesses			*		-		(1.8)	(1.1)
Credit in respect of other non-underlying items				*		-		-	(3.1)
Adjustment in respect of earlier periods:
UK corporation tax	- underlying				-			(4.2)	6.8
	- other non-underlying		*			-		-	52.7
Overseas taxation						-		0.5	(5.3)
						11.6		3.1	74.2
Deferred tax
Current period	- underlying					(23.0)		(18.2)	9.6
	- closed businesses			*		(0.1)		-	(2.5)
Credit in respect of other non-underlying items				*		(1.2)		(8.6)	(24.4)
Adjustment in respect of earlier periods:
UK corporation tax	- underlying					-		3.2	1.6
Overseas taxation	- underlying					0.1		0.5	(2.6)
	- closed businesses		*			-		-	0.9
						(24.2)		(23.1)	(17.4)
Income tax (credit) / expense  - continuing operations						(12.6)		(20.0)	56.8
Underlying income tax (credit) / expense - continuing operations							(11.3)	(9.6)	34.3

Underlying income tax (credit) / expense excludes those items marked *. See note 3 for a description of such items. 

The taxation (credit) / charge based on underlying results is based on the estimated effective rate of taxation of 64% on underlying earnings for the full financial period ending 1 May 2010. The equivalent effective rate of taxation for the 52 weeks ended 2 May 2009 was 61%. 

  6  (Loss) / earnings per share

	24 weeks ended 17 October 2009 £million	24 weeks ended 18 October 2008 £million	52 weeks ended  2 May 2009  £million
Basic and diluted (loss) / earnings
Total (continuing and discontinued operations)	(17.8)	(40.3)	(219.4)
Discontinued operations - loss after tax	8.7	5.4	38.9
Continuing operations	(9.1)	(34.9)	(180.5)
Non-underlying items
Closed businesses	0.2	6.7	14.1
Amortisation of acquired intangibles	1.9	2.0	4.9
Net restructuring charges	2.8	27.8	59.1
Business impairment charges	-	-	96.1
Other items	-	-	(1.9)
Net fair value remeasurements of financial instruments	0.6	1.4	7.4
	5.5	37.9	179.7
Tax on non-underlying items
Closed businesses	(0.1)	(1.8)	(2.7)
HMRC settlement	-	-	52.7
Other non-underlying items	(1.2)	(8.6)	(27.5)
	(1.3)	(10.4)	22.5
Total adjustments (net of taxation)	4.2	27.5	202.2
Underlying basic and diluted (loss) / earnings	(4.9)	(7.4)	21.7
Million		Million	Million
Basic weighted average number of shares	3,365.1	2,148.7	2,148.7
Employee share option and ownership schemes	25.4	6.8	3.1
Diluted weighted average number of shares	3,390.5	2,155.5	2,151.8
Pence		Pence	Pence
Basic (loss) / earnings per share
Total (continuing and discontinued operations)	(0.5)	(1.9)	(10.2)
Discontinued operations	0.2	0.3	1.8
Continuing operations	(0.3)	(1.6)	(8.4)
Adjustments (net of taxation)	0.2	1.3	9.4
Underlying basic (loss) / earnings per share	(0.1)	(0.3)	1.0
Diluted (loss) / earnings per share
Total (continuing and discontinued operations)	(0.5)	(1.9)	(10.2)
Discontinued operations	0.2	0.3	1.8
Continuing operations	(0.3)	(1.6)	(8.4)
Adjustments (net of taxation)	0.2	1.3	9.4
Underlying diluted (loss) / earnings per share	(0.1)	(0.3)	1.0

The weighted average number of shares used in the calculation of earnings per share information for the period prior to the rights issue, which completed on 9 June 2009, have been multiplied by an adjustment factor to reflect the bonus element in the shares issued under the terms of the rights issue. The adjustment factor used was 1.2138. 

Basic and diluted (loss) / earnings per share is based on the loss for the period attributable to equity shareholders. Underlying earnings per share are presented in order to show the underlying performance of the Group. Adjustments used to determine underlying earnings are described further in note 3.

  7  Dividend

	per share	24 weeks ended 17 October 2009 £million	24 weeks ended  18 October 2008 £million	52 weeks ended 2 May 2009 £million
Amounts recognised as distributions to equity shareholders  - on ordinary shares of 2.5p each
Final dividend for 2007/08	3.43p	-	60.7	60.7

8 Notes to the cash flow statement

(a)  Reconciliation of operating profit / (loss) to cash generated / (utilised by) from operating activities 

		24 weeks ended 17 October 2009 £million		24 weeks ended 18 October 2008 £million	52 weeks ended 2 May 2009 £million
Operating loss		(2.3)		(52.5)	(125.7)
Operating loss - discontinued operations		3.0		5.2	38.3
Operating profit / (loss) - continuing operations		0.7		(47.3)	(87.4)
Amortisation of acquired intangibles		1.9		2.0	4.9
Amortisation of other intangibles		12.6		10.7	23.3
Depreciation		42.2		51.1	111.4
Share based payment charge		1.9		2.4	1.8
Share of post tax results of associates		(0.4)		(0.7)	(3.6)
Loss on disposal of property, plant & equipment		4.5		5.3	19.9
Additions to non-underlying	- provisions	1.4		20.3	84.5
	- impairment and accelerated depreciation / amortisation		1.4	7.5	69.0
Utilisation of non-underlying provisions		(37.8)		(22.9)	(82.2)
Operating cash flows before movements in working capital		28.4		28.4	141.6
Movements in working capital:
(Increase) / decrease in inventories		(99.5)		(65.3)	166.7
Decrease / (increase) in trade and other receivables		31.0		(24.9)	(58.5)
Increase / (decrease) in trade and other payables		175.2		27.9	(393.6)
		106.7		(62.3)	(285.4)
Cash generated from / (utilised by) operations - continuing operations		135.1		(33.9)	(143.8)

 

  

(b) Analysis of net funds / (debt)

		3 May 2009 £million	Cash flow £million	Other non-cash movements £million	Currency translation £million	17 October 2009 £million
Cash and cash equivalents	*	192.6	91.4	-	2.5	286.5
Bank overdrafts		(4.8)	5.1	-	(0.3)	-
		187.8	96.5	-	2.2	286.5
Short term investments		9.0	(1.4)	0.1	-	7.7
Borrowings due within one year		(250.1)	200.1	-	-	(50.0)
Borrowings due after more than one year		(322.5)	-	1.8	-	(320.7)
Obligations under finance leases		(101.7)	0.6	-	(0.1)	(101.2)
		(674.3)	200.7	1.8	(0.1)	(471.9)
Net debt		(477.5)	295.8	1.9	2.1	(177.7)

		4 May  2008 £million	Cash flow £million	Other non- cash movements £million	Currency translation £million	18 October 2008 £million
Cash and cash equivalents	*	365.8	(23.8)	-	(6.3)	335.7
Bank overdrafts		(2.1)	2.1	-	-	-
		363.7	(21.7)	-	(6.3)	335.7
Short term investments		82.0	(38.9)	-	-	43.1
Borrowings due within one year		(0.2)	(126.8)	-	-	(127.0)
Borrowings due after more than one year		(294.6)	-	(6.5)	-	(301.1)
Obligations under finance leases		(100.8)	0.5	-	0.1	(100.2)
		(395.6)	(126.3)	(6.5)	0.1	(528.3)
Net funds / (debt)		50.1	(186.9)	(6.5)	(6.2)	(149.5)

		4 May 2008 £million	Cash flow £million	Other non- cash movements £million	Currency translation £million	2 May 2009 £million
Cash and cash equivalents	*	365.8	(188.8)	-	15.6	192.6
Bank overdrafts		(2.1)	(2.5)	-	(0.2)	(4.8)
		363.7	(191.3)	-	15.4	187.8
Short term investments		82.0	(73.3)	(0.9)	1.2	9.0
Borrowings due within one year		(0.2)	(249.9)	-	-	(250.1)
Borrowings due after more than one year		(294.6)	0.1	(28.0)	-	(322.5)
Obligations under finance leases		(100.8)	1.7	(2.4)	(0.2)	(101.7)
		(395.6)	(248.1)	(30.4)	(0.2)	(674.3)
Net funds / (debt)		50.1	(512.7)	(31.3)	16.4	(477.5)

*

Cash and cash equivalents are represented as a single class of assets on the face of the consolidated balance sheet. For the purpose of the consolidated cash flow, cash and cash equivalents comprise those amounts presented as such on the consolidated balance sheet as cash and cash equivalents, less bank overdrafts (which are disclosed separately on the consolidated balance sheet).

  

Restricted funds, which predominantly comprise funds held under trust to fund customer support agreements, were £81.5 million (24 weeks ended 18 October 2008: £57.5 million, 52 weeks ended 2 May 2009: £67.6 million). Net debt excluding restricted funds totalled £259.2 million (24 weeks ended 18 October 2008: £207.0 million, 52 weeks ended 2 May 2009: £545.1 million).

9 Discontinued operations  On 19 May 2009 the Group disposed of its operations in Hungary to EW Electro Retail Limited for consideration of €1. The assets and liabilities of ElectroWorld Hungary were classified as held for sale as at 2 May 2009 owing to the sale being highly probable under the definitions stipulated in IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'. On 1 September 2009 the Group disposed of its operations in Poland to IDMSA Brokerage House, working with Mix Electronics S.A., for consideration of €1. As a result of the sale, the business has been classified as discontinued and the prior periods have been re-presented on a consistent basis. Poland was previously shown within the Other International division.

Loss after tax and cash flows from discontinued operations related to Poland and Hungary (24 weeks ended 18 October 2008 and 52 weeks ended 2 May 2009: Poland and Hungary).

(a) Loss after tax - discontinued operations 

	24 weeks ended 17 October 2009 £million	24 weeks ended 18 October 2008 £million	52 weeks ended 2 May 2009 £million
Loss after tax from discontinued operations	(3.0)	(5.4)	(38.9)
Net loss on disposals	(5.7)	-	-
Loss after tax - discontinued operations	(8.7)	(5.4)	(38.9)

(b) Net loss on disposals

The total net assets disposed were as follows:

		Hungary	Poland	Total
		£million	£million	£million
Inventories		6.9	8.0	14.9
Cash and cash equivalents		5.0	1.2	6.2
Other assets		1.3	2.4	3.7
Current liabilities		(3.2)	(3.5)	(6.7)
Provisions		(11.2)	(6.1)	(17.3)
Net assets disposed		(1.2)	2.0	0.8
Loss on disposals		(1.0)	(4.7)	(5.7)
		(2.2)	(2.7)	(4.9)
Consideration		-	-	-
Disposal fees and exit costs		(1.2)	(1.9)	(3.1)
Cumulative foreign exchange differences transferred from equity		(1.0)	(0.8)	(1.8)
Consideration and costs		(2.2)	(2.7)	(4.9)

Disposal fees mainly comprised fees payable to advisors. Exit costs mainly comprised associated termination costs. 

  10 Retirement benefit obligations

The Group operates a number of defined contribution and defined benefit pension schemes. The Group's principal pension scheme operates in the UK and includes a funded defined benefit section whose assets are held in a separate trustee administered fund. The net obligation of this scheme, calculated in accordance with IAS 19, is analysed as follows:

	17 October 2009 £million	18 October 2008 £million	2 May 2009 £million
Present value of defined benefit obligations	(927.0)	(605.0)	(693.3)
Fair value of plan assets	635.3	545.9	544.5
Net obligation	(291.7)	(59.1)	(148.8)

The value of obligations is particularly sensitive to the discount rate applied to liabilities at the assessment date as well as mortality rates. The value of the plan assets is sensitive to market conditions, particularly equity values. The assumptions used in the valuation of obligations are listed below:

Rates per annum		17 October 2009		18 October 2008	2 May 2009
Discount rate		5.5%		7.2%	6.7%
Rate of increase in pensionable salaries	- up to April 2010		3.8%	3.7%	3.8%
	- thereafter	4.3%		4.7%	4.3%
Rate of increase in pensions in payment / deferred pensions	- pre April 2006 - post April 2006		3.3% 2.5%	3.2% 2.5%	3.3% 2.5%
Inflation			3.3%	3.2%	3.3%

Mortality rates are based on historical experience and standard actuarial tables and include an allowance for future improvements in longevity. 

11 Contingent liabilities
	17 October 2009 £million	18 October 2008 £million	2 May 2009 £million
Guarantees	54.5	122.6	75.0
Other	3.1	8.3	14.2
	57.6	130.9	89.2

Guarantees comprise potential obligations to financial institutions in respect of activities undertaken in the normal course of business and relate to amounts utilised under letter of credit facilities. In addition to the figures shown in the table above, contingent liabilities also exist in respect of lease covenants relating to premises assigned to third parties.

PRINCIPAL RISKS AND UNCERTAINTIES 

Risks to achieving the Group's objectives for the remainder of the financial year together with estimates, judgments and critical accounting policies remain those set out in the 2008/09 Annual Report and Accounts on pages 36 to 39 and in note 1.19 to the financial statements, respectively.

A summary of these risks is as follows: 

Macroeconomic factors such as economic environment, whereby consumer confidence, unemployment levels, interest rates, consumer debt levels, availability of credit and other factors influence customer spending decisions, meeting customers' needs, seasonality, competition, market margin pressure and price deflation; 

Store portfolio - in particular the quality and location;

Employees - including the development and retaining of appropriate calibre staff;

Supply of product and product life cycles, in particular the need to respond to changing technology or consumer preferences and to changes in the credit insurance market;

Entering new markets; 

Treasury risks and policies - comprising exchange rate, interest rate, liquidity, credit and capital management risks;

Pension risk and policies - specifically the valuation of the UK defined benefit scheme; 

Systems failure; 

Outsourcing / insourcing; 

Damage to property and consequential business interruption;

Legislative, reputational and regulatory risks; and

Customers' confidential information.

In addition, the outlook section of this interim statement provides a commentary by the Chief Executive concerning the remainder of the financial year.

Over the course of 2008/09, the difficult consumer and retail environment placed significant pressure on the Group's revenue, profits, cash flows and overall liquidity. This uncertainty caused the Group to take steps to improve the capital structure of the Group to sustain the business through the current economic cycle whereby, as described in the Group's 2008/09 Annual Report and Accounts, the Group raised gross proceeds of £310.6 million through a Placing and Rights Issue. Its proceeds have significantly improved the Group's liquidity position since 2 May 2009. In addition to this, the Group also revised the terms of its £400 million revolving credit facility (the Facility), which matures in October 2011 and Letter of Credit facility agreements (the Letters of Credit). In respect of the Facility, interest margin was increased, additional guarantees are required to be given by certain subsidiaries within the Group, the financial covenants were amended, and a new capital expenditure covenant added. In addition, mandatory prepayment events, representations, other financial covenants, events of default and conditions on the payment of dividends were also included.  During the 24 weeks ended 17 October 2009 and up to the date of this report, the Group met all of its obligations and covenants prescribed under the Facility. Sensitivities for reasonably possible adverse trading have been applied to the Group's current financial projections which, in conjunction with applying the Group's policies in relation to liquidity risk, lead the directors to believe that the Group has significant covenant and liquidity headroom under these facilities for the foreseeable future.

The directors have prepared the interim financial information on a going concern basis. In considering the going concern basis, the directors have taken into account the above mentioned risk factors, especially in the context of the continuing difficult consumer and retail environment and how these might influence the Group's objectives and strategy which are set out in the Directors' Report and Business Review section of 2008/09 Annual Report and Accounts. After reviewing the performance of the business, the Group's expenditure requirements, current financial projections and expected future cash flows, together with the available cash resources and undrawn committed borrowing facilities, the directors have considered that adequate resources exist for the Group to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the financial information.

STATEMENT OF DIRECTORS' RESPONSIBILITIES 

The directors confirm that to the best of their knowledge:

The interim financial information has been prepared in accordance with IAS 34;

The financial highlights, review of business performance and interim financial information include a fair review of the information required by DTR 4.2.7R (indication of important events during the first 24 weeks and description of principal risks and uncertainties for the remaining 28 weeks of the year); and 

The financial highlights and review of business performance includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

At the date of this statement, the directors are those listed in the Group's 2008/09 Annual Report and Accounts with the exception of Sir John Collins who resigned as a director and Chairman of the Board on 2 September 2009, John Allan who was appointed as Chairman of the Board on the same date, Count Emmanuelle d'André who resigned from the Board on 2 September 2009 and Tim How who was appointed to the Board on 8 September 2009. 

By order of the Board

John Browett Chief Executive 26 November 2009

Nicholas Cadbury Group Finance Director 26 November 2009

INDEPENDENT REVIEW REPORT

To DSG international plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements for the 24 weeks ended 17 October 2009 which comprises the consolidated income statement, the consolidated statement of comprehensive income and expense, the consolidated balance sheet, the consolidated cash flow statement, statement of changes in equity and related notes 1 to 11. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities 

The interim report, including the condensed set of financial statements contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority.

The annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" (IAS 34) as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim report based on our review.

Scope of Review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the UK. A review of financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed set of financial statements for the 24 weeks ended 17 October 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and the Disclosure and Transparency Rules of the UK Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditors

London

26 November 2009

Retail Store data 

	Number of stores				Selling space '000 sq ft
	17 October 2009	18 October 2008	2 May 2009		17 October 2009	18 October 2008	2 May 2009
UK & Ireland
Currys *	503	533	519		5,009	5,054	4,988
Ireland **	31	31	32		327	314	329
UK & Ireland Electricals	534	564	551		5,336	5,368	5,317
PC World	163	161	161		2,561	2,543	2,545
UK Computing	163	161	161		2,561	2,543	2,545
Total UK & Ireland	697	725	712		7,897	7,911	7,862
Nordics
Norway	114	108	114		1,408	1,366	1,348
Sweden	68	64	66		1,196	1,122	1,148
Finland	38	35	34		584	539	544
Denmark	27	28	27		474	490	473
Iceland	3	3	3		32	32	32
Islands	9	9	9		127	122	130
Total Nordics **	259	247	253		3,821	3,671	3,675
Other International
Italy **	153	197	174		2,356	2,987	2,587
Greece **	101	94	102		1,126	1,015	1,133
Spain	32	39	41		408	593	603
Turkey	10	7	8		314	247	270
Southern Europe	296	337	325		4,204	4,842	4,593
Czech Republic	16	16	17		437	511	441
Slovakia	3	-	3		57	-	57
Central Europe	19	16	20		494	511	498
Total Other International	315	353	345		4,698	5,353	5,091
Continuing Retail	1,271	1,325	1,310		16,416	16,935	16,628
Hungary	-	9	9		-	299	299
Poland	-	7	9		-	229	257
Closed businesses	-	32	30		-	458	429

Total Retail

1,271

1,373

1,358

16,416

17,921

17,613

* Comprises Currys, CurrysDigital and Dixons Travel. Current period figures include 6 Currys/ PC World 2-in-1 format stores.  

**  Includes franchise stores.

ENDIR BABLTMMMTBBL

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