Half Yearly Report

PR 55/12

7.00 a.m., Thursday, 29 November 2012

DIXONS RETAIL PLC

Interim Results

Encouraging start to the year

Dixons Retail plc, one of Europe's leading specialist electrical retail and services companies, today announces Interim results for the 24 weeks to 13 October 2012.

Key Highlights

·; Encouraging start to the year with Group like for like sales(1) up 3% in the first half.

·; Good improvement in Group EBIT(7), up by £5.1million.

·; UK & Ireland returning to first half profitability, for the first time in five years.

·; Group multi-channel sales up 29% and up 38% in Currys & PC World.

·; On track to reduce costs by £90 million over two years.

·; Day to day control of PIXmania taken, with decisive actions to improve its poor performance already underway.

·; Strong cash generation and reduction in net debt.

·; Good early progress on our three strategic priorities.

Sebastian James, Group Chief Executive, commented:

"We have made good early progress on our three strategic priorities of driving a sustainable business in a multi-channel world, building on our leading market positions and have started to make some progress in sharing best practices across the Group. We have significantly reduced net debt, successfully undertaken a £150 million bond issue and delivered good underlying profit growth in the UK and Northern Europe. We have also improved our performance in Southern Europe and having now assumed full day to day control of PIXmania, we are taking actions to improve its poor performance.

I am particularly encouraged by our performance in the UK & Ireland and in Northern Europe and we were particularly busy during the sporting and cultural events during the summer. While August and September were, as expected, a bit quieter, we remain cautiously optimistic about the outlook. It is increasingly clear in each of our markets that our service-based, multi-channel business model is what customers want. We are outpacing our competitors, and have seen Comet enter administration in the UK and Expert exiting the market in Sweden.

The exciting pipeline of tablets, smart TVs and other technology means customers can look forward to a fantastic shopping trip with us this Christmas."

Financial Highlights

·; Total Underlying Group sales(2) (3) of £3.29 billion (2011/12 £3.29 billion), up 4% on a currency neutral basis.

- Total Group sales, including those from the closed business, were £3.29 billion (2011/12 £3.30 billion).

·; Underlying(2) Group gross margins down 0.5%.

·; Underlying pre-tax loss of £22.2 million (2011/12 loss of £25.3 million).

- Total loss before tax of £79.5 million (2011/12 profit of £2.4 million), after net non-underlying charges of £57.3 million, mainly comprising the write down of the goodwill value of PIXmania.

·; Underlying diluted loss per share of 0.6 pence (2011/12 loss per share of 0.7 pence). Basic loss per share of 2.5 pence (2011/12 earnings per share of 0.1 pence).

·; Strong cash generation and net debt reduced to £9.9 million from £143.2 million year on year.

·; £150 million 2017 Notes issued during the period enabling the Group to smooth its debt maturity profile and balance its financial resources better.

·; Remaining £144.4 million 2012 Bonds redeemed and £59.1 million associated currency hedging instruments settled by15 November 2012 from the Group's cash resources.

FINANCIAL SUMMARY

Notes

(1) Like for like sales are calculated based on stores that have been open for a full financial year both at the beginning 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 closed for refurbishment are excluded during the period of closure. All PIXmania store sales are included in like for like sales.

(2) Throughout this statement, references are made to 'underlying' performance measures. Underlying results are defined as excluding trading results from closed businesses, amortisation of acquired intangibles, net restructuring and business impairment charges and other one off non-recurring items, fair value remeasurements of financial instruments and, where applicable, discontinued operations. These 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) Closed business comprises the operations of PC City Spain.

(4) UK & Ireland comprises Currys, CurrysDigital, Dixons Travel, PC World, combined 2-in-1 Currys and PC World, Harrods concession, operations in Ireland, DSGi Business, Dixons.co.uk and Knowhow. Like for like sales exclude DSGi Business.

(5) Northern Europe comprises the Elkjøp Group, Dixons Travel Denmark and ElectroWorld in the Czech Republic and Slovakia.

(6) Southern Europe comprises Greece (Kotsovolos), Italy (Unieuro, combined 2-in-1 Unieuro and PC City stores and Dixons Travel Italy), and Turkey (ElectroWorld).

(7) Earnings Before Interest and Tax (EBIT) equates to underlying operating profit and is defined as underlying earnings from retail operations, after property losses, before deduction of net finance costs and tax.

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

(9) Currency neutral change percentage reflects the year on year growth or decline in Underlying sales, calculated excluding the effect of currency movements.

(10) 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.

STRATEGIC PRIORITIES

We continue to make good early progress on the three strategic priorities set out at the full year results announcement on 21 June 2012:

1) Deliver a sustainable business model in a multi-channel world

Our customers tell us they want advice on technology and to experience products to ensure they choose the right one. The internet empowers customers with lots of information and customers benefit most from those retailers who, like us, provide a seamless multi-channel offer. We continue to increase our focus on activities and sources of revenue that we believe are available through our multi-channel service based model:

i) Working with suppliers to harness the benefits available to our business model: We continue to work right across Europe with suppliers to ensure that our customers experience their brands and latest products, including securing exclusive products such as washing machines, digital cameras, laptops and large screen TV's. To help customers choose the right product for their needs we have put customer journeys in place for vision, imaging and laundry in the UK & Ireland, we ensure our colleagues are fully trained to explain the features and benefits of the products we sell and we have also implemented our successful 'our experts love' model from ElkjØp into the UK . These actions together, not only improve customer satisfaction, but have also improved average prices. By doing this work we unlock more value in the economic system for us and our suppliers.

ii) Focus on complete solutions for customers: The tens of millions of conversations we have with our customers means that we can ensure that they not only buy the best product for their needs, but that they also have any necessary accessories or services to ensure they get the most out of their new technology. We have made further improvements to our Knowhow brand in the UK which offers customers end to end services. These include rolling out white goods repair and further improvements to our services metrics. We have also rolled out the Knowhow model in Italy (under the 'No Problem' brand) and plan to also do so in Denmark and Greece over the next twelve months. For example on average we now attach two units of either accessories or services to each laptop purchase and to each large screen television.

iii) Drive our service proposition: We need to ensure that customers recognise Dixons Retail for great service and that they can come to our stores and receive knowledgeable advice to buy the right product. They need to be confident that we will solve their problem for them quickly and efficiently. If we get this right we believe that customers will be prepared to pay us for this service. For example in the UK & Ireland 94% of customers are now likely or very likely to recommend us to friends and family.

iv) Reduce costs: Over the last five financial years the Group has removed a total of £285 million of costs and we are on target for a further £90 million of costs to be removed over this year and next. Careful cost management is important and we have a continuous programme to reduce costs every year.

2) Be a leader in each of the markets in which the Group operates

Our market positions in the UK & Ireland, Northern Europe and Greece continue to go from strength to strength and we have seen further consolidation in each of these markets with Comet entering administration in the UK and Expert exiting the market in Sweden. We see further opportunities to improve the already strong positions of these businesses as we implement our strategic initiatives. In Italy substantial cost reductions have been achieved delivering a significant improvement in the bottom line and we continue to explore opportunities that will put the business in a strategically stronger and profitable position.

3) Align the Group to genuinely leverage pan-European scale and knowhow

We are now more aggressively exploring how we can share the many best practices we have across the Group. For example we are rolling out the Knowhow model into other business units, starting with Italy, Denmark and Greece; as mentioned above the successful 'our experts love' offer is being embedded more widely across the Group; we have made further progress on buying deals across the UK and Northern and Southern Europe divisions through our International Buying Team with deals in laptops, cameras and vision. With colleagues swapping roles across the divisions we are increasingly in a better position to share best practices across the Group.

Delivering on these priorities will enable the Group to improve its EBIT margin going forward as well as continue to generate cash. With the UK & Ireland and Northern European divisions improving first half profitability we remain on track for a 3-4% EBIT return for these businesses. In Southern Europe good progress on improving bottom line performance has been achieved, while with PIXmania we have started to take necessary actions.

We continue to manage cash carefully. The reduction in net debt reflects this approach and we are particularly pleased that the Group has repaid the 2012 Bonds and associated currency hedges from the Group's cash resources.

Overall the Group had an encouraging start to the year, outperforming in most of its markets and gaining share with underlying Group sales of £3,285.5 million (2011/12 £3,291.7 million), up 3% on a like for like basis. Group gross margins were down 0.5% across the half. Underlying losses before interest and tax were significantly reduced year on year to £0.6 million (2011/12 loss of £5.7 million). Underlying loss before tax was £22.2 million (2011/12 loss of £25.3 million).

Total sales in the UK & Ireland division were £1,592.6 million (2011/12 £1,566.1 million) with like for like sales up 3% in the half. Gross margins were flat. We are very pleased to have returned to first half profitability with underlying operating profit for the first half improving by £11.6 million to £5.6 million (2011/12 loss of £6.0 million).

The series of celebratory and sporting events across the summer helped the UK & Ireland business get off to a strong start to the year and strengthened its position versus competitors. While August and September were quieter, as expected, trading has recovered somewhat post the period end. Computing continues to be driven by tablets and with a wider choice available for customers we expect this category to continue to grow sharply. We also saw good growth of white goods during the period as we implemented a customer journey in laundry, further improved our prices, our ranges and our service proposition. Televisions showed modest growth especially in large screen TVs as we continued to improve our mix into higher-end products through implementation of customer journeys.

We are pleased to have maintained gross margins flat during the period while also making further improvements to our price position for customers. This underpins our belief in the delivery of a sustainable multi-channel proposition that meets the needs of both customers and suppliers.

While 92% of customer purchases are completed in store, around 80% of our customers' shopping trips involve the internet in some form. We continue to innovate in multi-channel retailing and have made a number of further improvements to our websites to assist customers in their shopping trip. These improvements include: better online search; crediting stores with online sales; and the introduction of 'pay&collect' giving customers the widest possible range in their local store. Currys and PC World are also one of the first retailers in the UK to use new technology to optimise their websites in a fully dynamic way for use on either PCs, tablets or other mobile devices, which both makes the site easier for customers and reduces complexity in how the website is managed.

Knowhow, our end to end services offer for customers, continues to go from strength to strength with added value services sales growing by 64% to £15.8 million in the first half. This includes over 600,000 deliveries and installations and 22,000 'fault and fix' laptop repairs. Knowhow is on target to achieve over 1 million Knowhow Cloud customers by Christmas.

In the UK & Ireland business we continue to see improved advocacy ratings from customers with 94% of customers likely or very likely to recommend us to friends and family.

The store transformation programme remains on track with 42 stores closed since the beginning of the financial year, bringing the total in the UK (excluding Ireland and Dixons Travel stores) to 498 as we make good progress towards our target of 400 to 420 stores. We now have three quarters of our sales through new format stores in time for the important Christmas period.

Currys and PC World continue to lead the way in evolving and delivering a service led multi-channel offer for customers. As we improve our offer we have seen further consolidation in the UK & Ireland market, most notably with Comet entering administration since the end of our first half. While there may be some disruption while Comet completes the 'fire-sale' of its stock in the short term, Currys and PC World will benefit from the consolidation and we look forward to re-investing further gains into the offer for customers.

The Northern Europe division comprises the Elkjøp Group in the Nordics together with the ElectroWorld operations in the Czech Republic and Slovakia. Northern Europe continues to perform well with sales growing by 13% at constant exchange rates, while in sterling, underlying sales grew by 6% to £1,099.8 million (2011/12 £1,038.8 million). Like for like sales were up 11% as the Elkjøp Group continued to gain share across its markets. Underlying operating profits were £40.4 million (2011/12 £38.0 million).

Elkjøp continues to be a well loved brand and is the leading specialist multi-channel retailer in its market while maintaining a low cost operational structure. The operation in Norway remains a robust leader and is positioning itself to compete with incumbent operators in an increasingly competitive market. In Sweden further consolidation has taken place during the period with Expert exiting the market. El Giganten in Denmark again saw very strong sales growth as it gained further market share. Gigantti in Finland also saw encouraging sales growth. The operations in Czech Republic and Slovakia saw good sales growth as well as improvements in the bottom line as it benefits from integration into the Nordics operating model with local retail management and a warehouse in Brno, Czech Republic.

The business model in Northern Europe is well developed, this enables the business to focus on categories and markets that are in growth and thereby drive cash profitability. This invariably means that gross margins can be volatile from one period to the next, as demonstrated by the 80 basis points decline in the first half. Northern Europe delivered a 4.3% return on sales in the last financial year and will continue to focus on cash profitability this year.

In January 2013 we will welcome Jaan Ivar Semlitsh as Managing Director of Northern Europe. He is a highly experienced retailer with a particularly strong track record in the Nordic region, having most recently held the position of CEO of REMA Industrier AS, which is part of one of Scandinavia's largest supermarket chains. His focus will primarily be on further strengthening and developing our businesses across Northern Europe and supporting the Group in the sharing of best practice between regions. We look forward to the positive impact he will make to the division as well as its overall contribution to the Group.

This division comprises operations in Italy, Greece and Turkey. Total underlying sales were £394.8 million (2011/12 £452.4 million). Like for like sales were down 9%, and gross margins were also down, largely as a result of the weak economic environments being experienced in these markets. Underlying operating loss improved by £2.6 million to £13.0 million (2011/12 loss of £15.6 million).

The economic environment in Greece continues to be very challenging, but a hot summer driving air conditioning sales, digital switch-over in Athens, improving B2B sales and market share gains enabled Kotsovolos to deliver a small positive like for like performance in the first half. Kotsovolos remains the market leader and is able to leverage its market position and strong supplier relationships to improve stability in the difficult trading environment. Further action on costs has limited the impact of the weak sales environment on the business' financial performance. This is a testament to the strong management team in Greece who continue to drive the business forward in a very challenging environment.

Management has made significant progress on reducing costs and has substantially improved bottom line performance in the first half and further opportunities to put the business in a strategically stronger and profitable position continue to be explored. The Italian market remained weak through the period with low consumer confidence as well as aggressive promotional activity from competitors.

The Group, with its joint venture partner, now operates 15 stores in Turkey, as well as 17 franchise stores. While the high growth trends have slowed, ElectroWorld was anniversarying very strong trading in the prior year. The market in Turkey remains very crowded and we anticipate consolidation taking place.

Total sales were £198.3 million (2011/12 £234.4 million) with like for like sales down 7%. Underlying operating loss was £17.1 million (2011/12 loss of £5.3 million).

PIXmania has experienced an extremely tough trading environment, particularly in France and as customers continue to favour service led multi-channel retailers. Sales and profit performance has been poor, with the added impact of the loss of the Bouygues Telecom e-merchant licensing agreement at the beginning of the year. Against this we continue to see encouraging growth from the Carrefour agreement.

It is clear that PIXmania requires significant attention to improve its financial position. To this end, on 10 August 2012 we took day to day control of the business, purchasing the 22% of PIXmania owned by the Rosenblum family. We have quickly initiated steps to significantly reduce the complexity and costs of the business and to enable PIXmania to focus on core activities. The actions being undertaken, in compliance with local laws, will take time. We believe these steps are necessary to improve the financial position of PIXmania going forward. Reflecting the challenges facing PIXmania we have fully impaired the Group's carrying value of goodwill with a charge of £45.2 million.

FINANCIAL POSITION

The Group has delivered an encouraging start to the year against the financial priorities of improving profitability and strengthening the balance sheet:

·; Positive Free Cash Flow of £106.8 million generated, up £34.2 million compared to the prior year and up £92.3 million excluding the benefit of the sale and leaseback of the Jönköping warehouse in the prior year;

·; Consequently, net debt reduced to £9.9 million compared to £104.0 million at the end of the 2011/12 financial year and £143.2 million at 15 October 2011;

·; On target to reduce costs by £90 million over the current and following financial year;

·; Rephased debt profile following the issue of new 2017 Notes and part repurchase of 2015 Notes and 2012 Bonds;

·; Extended the Group's Revolving Credit Facility (RCF) to 30 June 2015, which following the issue of the 2017 Notes is currently a £225 million facility;

·; Remaining £144.4 million 2012 Bonds redeemed on 15 November 2012. Settlements of £59.1 million have also been made in respect of associated currency hedging instruments, with a final settlement of £3.5 million due in December 2012;

·; The RCF has been undrawn since October 2011 and remains undrawn up to the date of this announcement; and

·; The reduction of net debt, and refinancing of debt facilities accomplished this year, ensures that the Group has appropriate liquidity and maturity profile on its debt facilities.

Free Cash Flow was £106.8 million (2011/12 £72.6 million). This year on year improvement arose primarily from better working capital, one-off costs associated with the closure of Spain in the prior year, and lower levels of capital expenditure and was in spite of the receipt of £58.1 million from the sale of the Jönköping warehouse in the prior year.

Working capital inflow since the start of the year was £116.2 million. Whilst this predominantly reflects payment timings associated at this point in the year, the Group continues to benefit from further significant improvements that have been made to stock management. All regions are showing improved stock turn, up 8% on average. As previously announced, the prior year working capital cash flow was reduced by the reversal of a £30 million timing benefit experienced at the end of 2010/11, relating to the exit from Spain and the additional UK bank holiday at that time.

The year on year reduction in other items was mainly attributable to costs associated with refinancing of the RCF, partial redemption of the 2015 Notes and 2012 Bonds, and issuance of the 2017 Notes.

Net restructuring mainly reflects the cash outflows relating to strategic reorganisation activities from previous years (in the prior year notably including costs associated with the closure of Spain). This half year these cash outflows also include costs relating to PIXmania.

At 13 October 2012 the Group had net debt of £9.9 million, compared with net debt of £143.2 million at 15 October 2011 and £104.0 million at the end of the 2011/12 financial year.

Net debt is stated inclusive of restricted funds of £116.0 million (2011/12 £111.5 million), which predominantly comprise funds held under trust for potential customer support agreement liabilities.

The improvement in net debt was due to the Free Cash Flow generated, partly offset by £8.3 million paid to the UK Defined Benefit Pension Scheme under the terms of the deficit reduction plan and acquisition costs of £8.5 million. The acquisition cost primarily relates to the purchase of the additional 22% interest in PIXmania previously held by the founders of that business.

As a result of the improved funding position, the Group's RCF was unutilised throughout the period under review. On 15 November 2012, the Group repaid the remaining portion of the 2012 Bonds, and the associated currency hedging instruments which fell due on that date. The Group was able to make these payments from cash resources without utilising its RCF, which remains undrawn as at the date of this announcement.

Underlying loss before tax is reported before net non-underlying charges before tax of £57.3 million. A further explanation of these items is shown below:

·; Amortisation of acquired intangibles of £1.6 million predominantly comprises brand names, with the year on year change being affected by currency movements.

·; Net restructuring charges relate mainly to PIXmania property related reorganisation activities, primarily in relation to the relocation of the head office.

·; Given the longer term outlook for PIXmania and the markets in which it operates, it is considered prudent to take a more conservative stance regarding the prospects for this business by fully impairing the PIXmania acquisition goodwill by £45.2 million.

·; Other items of £5.4 million also relate to PIXmania where retrospective changes in the authorities' interpretations of legislation have resulted in uncertainty regarding funding previously agreed and/or received in prior years.

·; The financing charge predominantly comprises the following elements:

- £4.3 million of charges associated with the redemption of the 2015 Notes and 2012 Bonds which occurred in September 2012; and

- £1.7 million of net fair value remeasurement losses on the revaluation of financial instruments as required by IAS 32 and 39.

Underlying net finance costs were £21.6 million (2011/12 £19.6 million). The increase in costs was primarily due to:

·; The net effect of issuance of the 2017 Notes and partial redemption of the 2015 Notes and 2012 Bonds;

·; Increased net foreign exchange losses; and

·; Higher net pension interest costs, largely arising from reduced expectations for the rate of return on assets set at the beginning of the financial year.

The Group's underlying tax charge is based on current expectations of the tax charge to be incurred on full year earnings which equates to an effective rate of 55% (2011/12 full year 51%). The increase in the full year tax rate has, in particular, been affected by the non-recognition of benefit for current year losses in PIXmania owing to prudence taken in the longer term outlook for future trading in this business. Excluding the effects of this non-recognition, the effective rate of taxation on full year earnings would have been expected to be 42%. This adjusted rate is an improvement year on year due to reduced losses where no tax benefit has been recognised and the decreased proportion of non-deductible items. Despite the loss, a charge arises in the first half owing to the mix of profits and losses in the different jurisdictions in which the Group operates compared with the equivalent mix for the full year.

At 13 October 2012, the IAS 19 accounting deficit of the defined benefit section of the UK pension scheme amounted to £289.1 million compared to £261.9 million at 28 April 2012 and £219.2 million at 15 October 2011. The assumptions used for determining the accounting valuation use a consistent basis to that adopted at 28 April 2012 which build from the last triennial actuarial valuation as at 31 March 2010.

The overall increase arises mainly from a decrease in the discount rate applied to the liabilities (which increases the liabilities) offset in part by a lower expectation of long term inflation which decreases the liabilities and a small improvement in the asset valuation.

The last triennial actuarial valuation showed a shortfall of assets compared with liabilities of £239.0 million and for which a recovery plan was agreed with the trustee whereby £20 million is payable in 2012/13 and 2013/14 and rises gradually thereafter to £35 million by 31 March 2021. The next triennial valuation will be as at 31 March 2013 with the results expected in early 2014.

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED INCOME STATEMENT continued

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE

CONSOLIDATED BALANCE SHEET

CONSOLIDATED CASH FLOW STATEMENT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Non-controlling interests (minority interests) comprise shareholdings in Pixmania S.A.S. (PIXmania), Electroworld Iç ve Dis Ticaret AS (Electroworld Turkey) and Dixons South-East Europe A.E.V.E. (Kotsovolos).

On 10 August 2012 the Group announced that it had acquired a further 22% of PIXmania indirectly held by the founders of the business, Steve and Jean-Emile Rosenblum, for €10.4 million (£8.1 million) in cash, bringing its stake in PIXmania to 99.2%.

NOTES TO THE INTERIM FINANCIAL STATEMENTS

The interim financial information for the 24 weeks ended 13 October 2012 was approved by the directors on

29 November 2012. 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 has 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 28 April 2012.

New accounting standards, amendments to standards and IFRIC interpretations which became applicable during the period were either not relevant or 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 434 of the Companies Act 2006, but has been reviewed by the auditors. The financial information for the 52 weeks ended 28 April 2012 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. Closed businesses are those which do not meet the definition of discontinued operations as stipulated by IFRS 5. 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, however, there were no new exclusions in the 24 weeks ended 13 October 2012.

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.

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 PIXmania, 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 2011/12 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 (B2B) and online.

The Group's reportable segments have been identified as follows:

·; UK & Ireland comprises electrical and computing retail chains as well as B2B activities and Dixons.co.uk, a pure play online retailer. The division is engaged predominantly in multi-channel retail sales, associated peripherals and services and related financial and after sales services and also in B2B sales of computer hardware and software.

·; Northern Europe operates in Norway, Sweden, Finland, Denmark, the Czech Republic, Slovakia, Iceland, Greenland and the Faroe Islands. The division engages in multi-channel retail sales and provides related product support services to its customers. It also engages in B2B sales of computer hardware, software and services. Across the region, the division operates a successful franchise business, typically in smaller markets.

·; Southern Europe comprises operations in Italy, Greece, Turkey and the closed business in Spain which is excluded from underlying results. The division engages in retail sales (including multi-channel sales in some countries) and provides related product support services to its customers in all of its markets. It also engages in B2B sales of computer hardware, software and services in Italy and Greece and has franchise operations in Italy, Greece and Turkey.

·; PIXmania is an online retailer and operates across Europe.

Closed business relates to PC City Spain whereby these operations were closed in June 2011. Owing to closure rather than disposal, this operation does not meet the definition of discontinued operations as stipulated by IFRS 5.

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

External revenue for Southern Europe includes £1.4 million relating to the closed business.

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

Share of post tax result of associates relates to Northern Europe.

External revenue for Southern Europe includes £5.5 million relating to the closed business.

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

Share of post tax result of associates relates to Northern Europe.

External revenue for Southern Europe includes £6.5 million relating to the closed business.

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

Share of post tax result of associates relates to Northern Europe.

(b) Balance sheet