DSGi 2009/10 Preliminary Results

Jun 25, 2010, 02:58 ET from DSG international plc

LONDON, June 25, 2010 /PRNewswire-FirstCall/ --

- Full Year Profits at top end of Expectations, up 61%

- Strong Second Half Performance

DSG international plc, one of Europe's largest specialist electrical retailers, today announces preliminary audited results for the 52 weeks ended 1 May 2010:

Financial Highlights

- Total Underlying Group sales(1) (2) up 4% to GBP8,531.6 million

(2008/09 GBP8,180.2 million).

- Total Group sales, including those from closed businesses, up 3% to

GBP8,532.5 million (2008/09 GBP8,317.8 million).

- Group like for like sales(3) up 2% in the full year and up 6% in the

second half.

- Underlying Group gross margins flat across the full year.

- Underlying EBIT(4) up 60% at GBP133.2 million (2008/09 GBP83.0

million).

- Significant profit improvements across the Group, including UK &

Ireland up 21% and Nordics up 28%.

- Underlying pre-tax profit(2) up 61% at GBP90.5 million (2008/09

GBP56.1 million).

- Underlying diluted earnings per share(2) up 50% at 1.5 pence

(2008/09(5) 1.0 pence). Basic earnings per share for continuing

operations of 1.7 pence (2008/09 loss per share of (10.2) pence).

- Total profit before tax after net non-underlying items was GBP112.7

million (2008/09 loss GBP(123.6) million).

- Free Cash Flow(6) of GBP28.1 million before restructuring and

impairment charges (2008/09 outflow of GBP(340.0) million).

- As at 1 May 2010 the Group had net debt of GBP(220.6) million (2008/09

GBP(477.5) million).

- New GBP360 million revolving credit facility signed with syndicate of

banks, providing the Group with flexibility.

John Browett, Chief Executive, commented:

"Focus on our customers drives everything we do and I am delighted with the excellent progress we have made over the past twelve months as we continue to transform the Group, despite the recessionary environment across Europe. We have made significant improvements throughout the business, transforming the shopping experience for customers with better choice, value and service both in stores and online. We are now two years into the Renewal and Transformation plan and are encouraged by the improved profitability and competitiveness it continues to deliver."

    Operational Highlights

    - Group name of Dixons Retail plc to be ratified by shareholders at the
      AGM.

    - Renewal & Transformation plan improving the offer for customers.

    - Store transformation programme on track:

        - Over 200 stores reformatted across the Group by the year end;

        - Additional 80 reformatted stores to be opened by Peak in the UK,
          including 21 Megastores;

        - Two thirds of store portfolio by sales will be transformed in the
          UK by October 2010;

        - Nordic store reformatting continues, with 16 Megastores now open;

        - Portfolio review completed with over 160 stores exited over the
          last 2 years.

    - Reformatted stores continue to perform strongly:

        - Average gross profit uplifts of 20% versus the rest of the chains;

        - Average gross profit uplifts of 50% achieved in the Megastores and
          2-in-1s;

        - Second year trading for reformatted stores remains strong.

    - Significant improvements to services for customers:-

        - Further compelling services for customers launched including free
          delivery slots, next day timed delivery slots and 'follow-me-home'
          services from Megastores;

        - Better availability of stock in store with stock turn up 12% year
          on year;

        - Satisfaction measures rising, due to focus on service,
          connectivity, delivery, installation and repair.

    - Good progress with online operations:-

        - Pure internet sales of GBP1.4 billion, representing 16% of total
          Group sales;

        - Successful roll-out of 'e-merchant' operating platform to UK
          internet sites.

    - International plans making progress:-

        - Turnaround plans in Italy ahead of schedule with positive like for
          like sales and margin improvements;

        - Greece and Spain weathering economic challenges well and gaining
          market share.

    - GBP200 million 4 year cost saving programme on track, delivering GBP50
      million reduction in the year.

    - UK defined benefit pension scheme closed to future accruals thereby
      reducing risk for the Group.

    - On track for medium term target of a 3%-4% EBIT return on sales.

Outlook

The economic backdrop across Europe has remained challenging throughout the year. The Group expects these conditions to continue in the coming year in many of its markets where consumer spending is likely to come under pressure from fiscal tightening. The Group is well prepared for this environment and continues to focus on improving the offer for customers while managing costs, margins, stock turn and cash flow. Consequently, given the Renewal and Transformation plan, Group profitability will continue to improve.

About Currys:

    Currys is the UK's biggest electrical retailer with a network of over 500
stores nation-wide, including out of town stores, high street Currys.digital
stores and a Currys Megastore in the Midlands. It also stocks a wide range of
fridge freezers (http://www.currys.co.uk/), laptop bags
(http://www.pcworld.co.uk/gbuk/laptops-netbooks/laptops-703-c.html) and
desktop pcs (
http://www.dixons.co.uk/gbuk/computers/desktop-pc-monitor-packages-122-c.html
.)
    UNDERLYING SALES AND PROFIT ANALYSIS

                              Underlying sales            Underlying profit
                                                               /(loss)
                          52 weeks   52 weeks    Like                52 weeks
                             ended      ended     for     52 weeks      ended
                                              like(2)      ended 1
                        1 May 2010 2 May 2009             May 2010 2 May 2009
                                                    %
                        GBPmillion GBPmillion  change   GBPmillion GBPmillion

    UK & Ireland           2,650.6    2,657.8    (1)%         32.0       17.7
    Electricals
    UK Computing           1,362.9    1,570.8    (9)%         39.1       41.0
    UK & Ireland           4,013.5    4,228.6    (3)%         71.1       58.7

    Nordics                2,093.7    1,625.2     13%         97.4       76.1

    Other                  1,503.2    1,519.0    flat        (8.3)     (23.7)
    International

    e-commerce               921.2      807.4     11%         11.3       15.0

    Central Costs                -          -               (19.5)     (25.0)

    Total Group            8,531.6    8,180.2      2%        152.0      101.1
    Retail

    Property losses                                         (18.8)     (18.1)

    EBIT                                                     133.2       83.0

    Underlying net finance costs                            (42.7)     (26.9)

    Group underlying profit before tax                        90.5       56.1

NOTES

(1) UK & Ireland Electricals comprises Currys, CurrysDigital and Dixons Travel in the UK 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 Elkj0p group (Elkj0p, El Giganten, Gigantti and Lefdal).

(4) Other International comprises Greece (Kotsovolos and Electro World), Cyprus (Kotsovolos), Italy (UniEuro, PC City Italy and Dixons Travel Italy), Spain (PC City Spain), Turkey (Electro World), Czech Republic (Electro World) and Slovakia (Electro World).

(5) e-commerce division comprises PIXmania and Dixons.co.uk.

BUSINESS PERFORMANCE

Underlying Group sales (excluding discontinued operations and closed businesses) were up 4% to GBP8,531.6 million (2008/09 GBP8,180.2 million) and up 2% on a like for like basis. Underlying Group sales were up 2% at constant exchange rates. Total Group sales (including closed businesses) were up 3% to GBP8,532.5 million (2008/09 GBP8,317.8 million). Group gross margins were flat across the year.

Group underlying EBIT (underlying profit before interest and tax) increased by 60% to GBP133.2 million (2008/09 GBP83.0 million). Group underlying profit before tax was up 61% at GBP90.5 million (2008/09 GBP56.1 million). Total profit before tax, after adding back non-underlying items of GBP22.2 million, was GBP112.7 million (2008/09 loss before tax of GBP(123.6) million).

UK & IRELAND

Total sales in the UK & Ireland were down 5% to GBP4,013.5 million (2008/09 GBP4,228.6 million) and like for like sales were down 3% across the year. Like for like sales in the second half were up 3% as the Renewal and Transformation plan began to deliver benefits. Underlying operating profit for the full year was up 21% at GBP71.1 million (2008/09 GBP58.7 million).

The economic environment in the UK & Ireland remained challenging across the year. During the first half the Group was focused on cash margins while much of the Renewal and Transformation and store reformatting was taking place. The business then experienced a strong Christmas Peak as the benefits of the plan started to improve the business performance and deliver market share gains in all major categories.

UK & Ireland Electricals includes Currys, CurrysDigital and Dixons Travel in the UK and Currys and PC World in Ireland. Total sales were flat year on year at GBP2,650.6 million (2008/09 GBP2,657.8 million) with like for like sales down 1%, across the year, but up 6% in the second half. Underlying operating profit improved by 81% to GBP32.0 million (2008/09 GBP17.7 million).

UK Computing includes PC World, DSGi Business and TechGuys. Total sales were down 13% at GBP1,362.9 million (2008/09 GBP1,570.8 million) with like for like sales down 9%. The decline in sales was predominantly driven by lower sales in the DSGi Business operations as small businesses reduced capital expenditure during the credit crunch. Despite the weak sales environment, underlying operating profit was relatively stable at GBP39.1 million (2008/09 GBP41.0 million).

UK & Ireland has historically been reported separately as UK & Ireland Electricals and UK Computing. A key objective of the Renewal and Transformation plan is to remove complexity, simplify processes, make operations easier for colleagues and reduce costs in the Group. As a result the back office functions supporting the PC World, Currys, CurrysDigital and Dixons Travel operations have been brought together with the combined 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. In addition, with an increasing number of combined 2-in-1 Currys and PC World stores, the Electricals and Computing operations in the UK & Ireland will no longer report figures separately and will consequently be reported as one operation going forward.

The main focus of the Renewal and Transformation plan has, to date, primarily benefitted the UK & Ireland operations. The stores are benefitting from improved ranges and selling service. All colleagues have now undergone FIVES training, our bespoke training programme focusing on understanding and meeting a customer's needs as well as improving product knowledge. Stock management processes have been improved significantly, improving availability and ranges while controlling costs and working capital utilised in the business.

During the year significant improvements have been made to the services infrastructure. This enables Currys and PC World to offer customers flexible options to suit their needs even better, from the market leading next day delivery in 3 hour timed slots to free delivery. Delivery times continue to improve with 'right first time' achieving 97% with 'right second time' even higher. Utilising our logistics infrastructure we are able to offer free recycling without materially impacting costs or carbon emissions.

The repair and support operations have been restructured improving processes and reducing costs. A new state of the art repair facility for TVs and laptops has been opened in Newark. These changes have enabled the Group to considerably improve repair times, for example, halving the average repair time for televisions to 6 days, with further improvements under way. The contact centre was successfully brought back in house enabling us to improve the quality of service and support offered to our customers.

Dixons Travel continues to perform well. The new format stores are being rolled out to existing locations bringing improved ranges, play tables and store layouts to the airport stores. Dixons Travel initiated its overseas expansion opening stores in Rome airport. Since the year end Dixons Travel has opened a store in Dublin airport. Further international locations are expected to be added over time.

The TechGuys continues to be a valued differentiator providing service and expertise to customers. The TechGuys service desk is now operational in PC World and combined 2-in-1 stores and has been incorporated in the Currys Megastores. In August the TechGuys launched a range of over 60 enhanced services for customers as well as introducing "Club" and "Premier Club" options for the "Whateverhappens" customer support agreements. Under the "Premier Club", support 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.

In Ireland, the economic environment has been particularly tough. The business there took early actions to manage costs resulting in an improving performance in the second half with sales and profits up year on year.

DSGi Business experienced an extremely challenging trading environment as smaller businesses reduced capital expenditure during the credit crunch. The new management team is focused on managing costs and cash. The B2B operations are well placed to benefit when small businesses restart investment as the economic environment improves.

As at 18 June 2010 the Group had transformed 164 stores in total in the UK, of which 12 were Megastores and 20 were combined 2-in-1 Currys and PC World Superstores. The transformed stores continue to deliver gross profit uplifts of 20%, with uplifts of 50% in the Megastores and combined 2-in-1 Currys and PC World stores. Management estimate that the transformed stores benefitted the like for like sales in the UK by approximately 3% across the year. While there are a limited number of reformatted stores over a year old, performance in the second year remains strong.

Having traded the new format stores through the important Peak period the Group has determined the appropriate portfolio and transformation programme going forward, and announced its intention to reduce the number of stores in the UK to approximately 500 (excluding stores under the Dixons Travel brand) over time. The Megastore and 2-in-1 combined stores are proving to be particularly popular with customers. 70 locations for the Megastore format have been identified with 60 being developed using existing stores in the portfolio and the remainder resulting from the relocation of existing stores. In addition the Group expects to have approximately 330 out of town superstores, predominantly of the combined 2-in-1 Currys and PC World format which can be similarly created from within the existing portfolio. With limited overlap between the PC World and Currys customer demographic the combined 2-in-1 stores provide access to the PC World brand in existing Currys markets. The Group also expects to continue to operate up to 100 High Street locations.

In the UK & Ireland the Group expects to refurbish approximately 100 stores during the 2010/11 financial year, with the majority to be completed before Christmas 2010, as follows:-

    - 21 new Megastores, taking the total in the UK to 33 Megastores;

    - 44 combined 2-in-1 Currys and PC World stores;

    - 12 Currys and PC World standalone superstores; and

    - 3 CurrysDigital High Street stores.

The Group has also been implementing those parts of the store transformation programme to existing stores across the portfolio that improve the shopping trip for customers but require little or no additional expenditure. As a result these stores have already benefitted from the improved ranges, colleague training, and enhanced after sales help and support.

NORDICS

In the Nordic region, Elkj0p delivered a very strong performance with sales increasing by 22% in local currency and 29% in sterling to GBP2,093.7 million (2008/09 GBP1,625.2 million). Like for like sales were up 16% in the second half and up 13% across the year. Underlying operating profits increased by 28% to GBP97.4 million (2008/09 GBP76.1 million). Nordic region results are stated excluding the businesses of PC City in Sweden and Markantalo in Finland closed at the beginning of the financial year.

Elkj0p performed very strongly in all of its markets and product categories. It has performed particularly strongly in Sweden and Denmark despite the more challenging economic environments experienced in these markets across the year. With excellent in store service and customer engagement, the Nordic business is the preferred operating model for the Group and practices are being increasingly shared across all of the Group's divisions. Management continue to simplify the business, taking out costs and reducing complexity. The efficient central operating structure, customer focused business model and strong market positions have enabled Elkj0p to gain market share from other competitors.

Elkj0p has now opened 16 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.

Elkj0p's multi-channel offering continued to grow in all markets doubling its sales through the internet during the year. Its Reserve and Collect service continues to be well received by customers.

OTHER INTERNATIONAL

This division comprises operations in Italy, Greece, Spain, the Czech Republic, Slovakia and Turkey. Total sales were down 5% at constant exchange rates and by 1% in sterling to GBP1,503.2 million (2008/09 GBP1,519.0 million). A better performance in the second half with like for like sales up 4% resulted in a flat like for like performance across the year. Underlying operating losses were reduced significantly to GBP(8.3) million (2008/09 loss of GBP(23.7) million).

Italy

This comprises UniEuro, PC City implants in UniEuro stores and Dixons Travel Italy operating in the airport in Rome. The turnaround plan in Italy continues to make good progress. Management actions have resulted in an improving trend in sales with positive like for like sales, particularly in the second half of the year despite a continued challenging economic environment. Gross margins improved further year on year. Stock control has also been improved, with stock turn up 10%, while availability has increased by approximately 20%. UniEuro has experienced good growth in vision, computing, communications, built-in appliances and accessories.

At the beginning of the year UniEuro successfully completed its store rationalisation plan ahead of schedule, closing 51 underperforming stores and now operates from 97, largely out of town, stores. It has added 35 PC City implants into the portfolio, all of which are performing well. During the year UniEuro opened its first Megastore in Muratella in Rome. This is a 40,000 sq ft store refurbished along the same principles as those in the UK and Nordics and has experienced strong gross profit uplift. Management have also developed a new format for their smaller stores and have completed the first 3 refits which were successfully launched in May 2010 with strong gross profit uplifts. The range improvements and cost efficiencies identified as part of the turnaround plan continue to make good progress.

The economic outlook in Italy remains challenging, but the turnaround plan puts UniEuro in a strong competitive position. The improving performance gives management further confidence in the prospects for UniEuro.

Greece

Kotsovolos is the market leading specialist electrical retailer in Greece. The difficult economic environment currently being experienced in Greece is well documented. The business has seen total sales impacted, particularly against tough comparables in the prior year. However, management have continued to focus on the customer, maintained margins, reduced costs and improved cash flow by increasing stock turn. They have also continued to invest in the store renewal programme to limit the effects of the weakening environment on bottom line performance.

During the period, Kotsovolos refurbished 9 stores into the Renewal and Transformation plan format, which are showing encouraging uplifts and excellent feedback from customers. The focus has also been on building new channels of business and in one year Kotsovolos has become a significant player online, increased the franchise network to 30 stores and commenced operations of business to business sales, all of which have helped to offset the negative trends in the market.

The operations in Greece are in a strong position with a market leading offer and a strong focus on delivering for customers. As such it will benefit when the economy recovers. These strengths will enable Kotsovolos to capitalise on the tough environment for competitors and to grow market share.

Spain

While the consumer environment has been very tough in Spain over the last 2 years, PC City remains the leading computer specialist in the market. Costs have been reduced while continuing to focus on the customer offer. 11 stores have been closed and PC City now operates from 32 stores. Using some of the principles of the UK transformation plan, management introduced a light refit plan which adds incremental sales while keeping the cash payback period to a minimum. These actions have started to deliver improved gross margins, enabling the business to deliver significantly reduced losses year on year. They have also enabled PC City to maintain its overall market share with 11 fewer stores while positioning the business better for when the Spanish economy recovers. Encouragingly the business delivered positive like for like sales during the second half, despite the continued weak consumer environment. This performance gives management further confidence in the prospects for the business.

Czech Republic and Slovakia

On 19 May 2009 and 1 September 2009 the Group sold the operations of Electro World in Hungary and Poland, respectively, in each case for a consideration of EUR1. Following these disposals the central operations in Prague and logistics infrastructure in Brno have been refocused on its core operations of the Czech Republic and Slovakia, significantly reducing costs and complexity.

Operations in the Czech Republic have performed well in their markets, despite the weak consumer environment. During the year Electro World reformatted its first store in Prague, utilising the Renewal and Transformation plan format which has reported encouraging results with a great response from customers. The Group now operates 16 stores and a multi-channel internet operation in the Czech Republic and 3 stores in Slovakia which are trading in line with expectations. Management recently announced plans to open 3 new stores in time for the Christmas peak.

Turkey

The Group now operates 12 stores in Turkey under the Electro World brand with its local joint venture partner. These new stores are based on the Group's new large space format, providing a greater product range and exciting retail environment for customers. The business continues to deliver good sales growth as customers recognise the benefits of large store formats in delivering value, choice and service. With a solid store base now established, it was announced in April 2010 the intention to roll out a franchise operation in Turkey. The first franchise store opened very successfully in Sakarya and further franchise stores will be opened over the next two years.

E-COMMERCE DIVISION

This comprises PIXmania and Dixons.co.uk. Total sales were up 14% at GBP921.2 million (2008/09 GBP807.4 million). Underlying operating profit was GBP11.3 million (2008/09 GBP15.0 million).

PIXmania continues to trade strongly across all its markets. It has experienced very strong sales growth in its core European markets (France, Italy and Spain) driven by increased customer acquisition through increased online and offline communication. PIXmania has made good progress in all key categories, including growth outside its traditional consumer electronics categories. In addition it has been investing in growth outside of its main markets especially emerging markets (e.g. Central and Eastern Europe).

PIXmania's newest channel, its reseller marketplace platform, PIXplace, has grown its sales three-fold since launch with expansion in new countries, the introduction of new categories as well as an increase in new merchants transacting through this platform.

The market-leading e-merchant platform was rolled out into the Group's UK internet operations (dixons.co.uk, currys.co.uk, pcworld.co.uk) in February 2010 and has improved navigation, product display and information as well as the ability to show attachments to customers.

With 276 million unique visitors during the year, PIXmania websites reached the 4th rank of the most visited consumer electronics e-tailers in the world according to Alexa.com.

Dixons.co.uk has been operating as a pure play internet operation for over 3 years. Following strong growth during this period, a number of changes have been made to the operating model to make the business even more relevant for customers. While Dixons.co.uk performed well over the important Christmas Peak, these changes impacted sales performance during the rest of the year.

OPERATIONAL IMPROVEMENTS

The Group is focused on re-engineering and simplifying 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.

There remains significant opportunity for productivity improvements within the Group and management are targeting these improvements to deliver some GBP200 million in cost savings over a four year period. In the first year of this programme the Group has delivered GBP50 million of cost savings through efficiency initiatives in head office administration and in-store processes. Process improvement initiatives have already contributed to reductions in levels of stock held by the Group as well as improving stock turn by approximately 12% during the year.

The Group continues to implement the step change programme that makes the business even better for customers, easier for colleagues and cheaper to operate.

Management remains confident that it can achieve a 3% - 4% EBIT return on sales, through the Renewal and Transformation plan, over the medium term.

GROUP NAME

Subject to shareholder approval, the Group's registered name will be amended to Dixons Retail plc in order to harness the strength of the Dixons name and to reflect the resurgence of the company. The Dixons name resonates strongly with suppliers, the market, and colleagues in a way that DSG international has not been able to without significant investment in the brand.

FINANCIAL POSITION

The Group's financial priorities in 2009/10 included improving profitability and strengthening the balance sheet. To this end:

    - Underlying EBIT increased by 60% to GBP133.2 million
      (2008/09 GBP83.0 million);

    - Underlying profit before tax increased by 61% to GBP90.5
      million (2008/09 GBP56.1 million);

    - Underlying diluted earnings per share increased by 50% to
      1.5 pence (2008/09 1.0 pence, after adjusting for the rights issue);

    - Loss making businesses in Hungary and Poland were disposed
      of successfully;

    - Net proceeds of GBP291.3 million were received following the
      Equity Placing and Rights Issue;

    - Significant headroom was maintained on the revolving credit
      facility throughout the year and a new revolving credit facility of
      GBP360 million was signed in May 2010;

    - The UK defined benefit scheme was closed to future accruals
      reducing the deficit by GBP33.4 million;

    - Positive free cash flow, before restructuring items, of
      GBP28.1 million was generated;

    - The Group's working capital position was improved, through a
      reduction in debtors, and stock turn improved by 12%.

    FREE CASH FLOW
    Free cash flow before restructuring items was GBP28.1 million (2008/09
outflow GBP(340.0) million) and total free cash outflow was GBP(17.6) million
(2008/09 GBP(404.2) million).

                                              52 weeks ended   52 weeks ended

                                              1 May 2010       2 May 2009

                                              GBPmillion       GBPmillion
    Underlying profit before tax                           90.5          56.1
    Closed businesses loss before tax                     (0.2)        (14.1)
    Depreciation and amortisation                         128.6         134.7
    Working capital                                        39.7       (285.4)
    Taxation                                             (31.9)        (35.7)
    Capital expenditure                                 (165.3)       (140.7)
    Sale of freehold property (i)                           0.7          10.8
    Other cash items                                     (34.0)        (65.7)
    Free Cash Flow before restructuring items              28.1       (340.0)
    Net restructuring and impairment costs               (45.7)        (64.2)
    (i)
    Free Cash Flow                                       (17.6)       (404.2)

(i) Sale of freehold property excludes GBP9.0 million of sale proceeds relating to the sale of the Group's former warehouse in Stevenage (2008/09 GBP18.0 million). These sale proceeds are shown within net restructuring and impairment costs.

Free Cash Flow before restructuring showed a significant improvement over the prior year, driven by improved profitability, improved working capital management and reduced hedge losses, partly offset by increased capital expenditure relating to the Renewal and Transformation plan.

The improved working capital movement was primarily due to improved stock management including GBP43.9 million reduction in stock aged over 6 months, and improved control of debtors. This was partly offset by the continued unwinding of the historically higher proportion of term versus pay-as-you-go Customer Support Agreement deferred income. The prior year was, as previously announced, impacted by the unwinding of deferrals of supplier payments made at the end of the 2007/08 financial year which have not recurred.

Capital expenditure was GBP165.3 million (2008/09 GBP140.7 million), up GBP24.6 million reflecting the increased investment associated with the Renewal and Transformation plan, particularly in the UK. There were no significant disposals during the year, with cash generated from the sale of property of GBP0.7 million (2008/09 GBP10.8 million).

As previously disclosed, the Group has in place certain historical hedging agreements. The principal outstanding agreements relate primarily to foreign exchange and interest hedges. The majority of these were put in place at the time the Group issued its Bonds in 2002, and in relation to overseas investments. A number of these hedges matured during the financial year and resulted in a cash outflow of GBP62.2 million (2008/09 GBP83.3 million). The remaining hedges at year end rates would imply a net cash outflow of approximately GBP50 million, primarily payable in 2012.

Other cash items of GBP(34.0) million (2008/09 GBP(65.7) million) improved by GBP31.7 million mainly due to increased add back of non cash costs included in profit, such as pension interest and fee amortisation, and the reduced hedge outflows mentioned above.

Net restructuring and impairment reflects the cash outflows relating to the strategic reorganisation activities and business impairment, predominantly provided for in 2008/09. These mainly comprise lease and other property related payments and employee severance costs, less the final tranche of disposal proceeds from the sale of a former warehouse in the UK.

FUNDING

Net funds/debt

At 1 May 2010 the Group had net debt of GBP(220.6) million, compared with net debt of GBP(477.5) million at the end of the previous year. The Group's net debt includes restricted funds of GBP78.9 million (2008/09 GBP67.6 million) which predominantly comprise funds held under trust for potential Customer Support Agreement liabilities.

                                          52 weeks ended   52 weeks ended

                                          1 May 2010       2 May 2009

                                          GBPmillion       GBPmillion
    Opening net (debt) / funds                     (477.5)             50.1
    Free Cash Flow                                  (17.6)          (404.2)
    Dividend                                    -            (60.3)
    Equity Placing and Rights issue         291.3                 -
    Acquisitions and disposals              (7.0)            (27.6)
    Discontinued operations                 (8.6)            (21.6)
    Special pension contribution           (12.0)            (12.0)
    Other items                              10.8             (1.9)
    Other movements in net funds / (debt)            274.5          (123.4)
    Closing net debt                                (220.6)         (477.5)

Movements in net debt include net proceeds of GBP291.3 million received from the Equity Placing and Rights issue in the first half of the financial year, GBP7.0 million acquisition costs primarily representing an associated undertaking in Norway being acquired following the exercise of a put option, and GBP8.6 million representing the net cash utilisation of the discontinued operations in Hungary and Poland. The GBP12.0 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 the accounting revaluation of the 2012 Bonds, and of net funds held in foreign currencies, as well as capital contributions made by the joint venture partner in Turkey.

On 12 May 2010 the Group signed a new revolving credit facility agreement (the New Facility) for GBP360 million. The New Facility will come into effect by 15 August 2010 at which time it will replace the Group's existing GBP400 million Facility. The terms and covenants attaching to the New Facility are substantially the same as that for the GBP400 million Facility except that the guarantee structure comprises UK and Irish companies only, thereby aligning it more closely to the Group's 2012 Bond.

At the earliest, the New Facility will mature on 15 August 2012 and would be extended to 15 August 2013 in the event that the Group raises additional finance of a minimum of GBP100 million by November 2011. It is the Group's intention that the proceeds from any such financing would principally be used to refinance the Group's 2012 Bond.

This new agreement gives the Group the appropriate level of committed financing for its working capital needs. It also provides the Group with the flexibility of either a longer term on the New Facility or to enter into a new or revised revolving credit facility at a later date.

UNDERLYING NET FINANCE COSTS

Underlying net finance costs were GBP(42.7) million (2008/09 (GBP26.9) million). The movement year on year was driven by the following key areas:

    - Increased borrowing costs subsequent to the refinancing of the Group's
      revolving credit facility;

    - Higher net pension interest set at the beginning of the financial year
      largely as a result of a higher discount rate applied to liabilities,
      which is a non-cash item;

    - Partly offset by interest earned on overpayments of tax in prior
      periods.

    ADJUSTMENTS TO UNDERLYING RESULTS
    Underlying profit before tax is reported before net non-underlying
credits of GBP22.2 million. A further explanation of these items is shown
below:

                                                     52 weeks      52 weeks
                                                        ended         ended

                                                   1 May 2010    2 May 2009

                                                   GBPmillion    GBPmillion
    Profit / (loss) before tax                          112.7       (123.6)
    Add back non underlying items:
    Trading results from Closed businesses                0.2          14.1

    Other non-underlying items:
    Amortisation of acquired intangibles           4.6           4.9
    Net restructuring charges:
            Strategic reorganisation               5.6          59.1
    Business impairments                             -          96.1
    Change in pension benefits                  (33.4)             -
    Other items - Buncefield release                 -         (1.9)
    Financing items:
            Net fair value remeasurements          0.8           7.4
    Other non-underlying items - total                 (22.4)         165.6
    Total net non-underlying charges to add            (22.2)         179.7
    back
    Underlying profit before tax                         90.5          56.1


    - In May the Group closed the standalone stores of PC City in
      Sweden and Markantalo in Finland. Trading results comprises the pre-tax
      losses from these operations.

    - Amortisation of acquired intangibles of GBP4.6 million
      predominantly comprises brand names with the year on year change being
      affected by currency movements.

    - Strategic re-organisation costs of GBP5.6 million relate to the
      UK business transformation and primarily comprises accelerated
      Depreciation charges associated with the reformat of the UK & Ireland
      store portfolio and onerous lease obligations following re-organisation
      of the service infrastructure.

    - The change in pension benefits of GBP33.4 million arises from
      the curtailment of the defined benefit section of the UK pension scheme
      whereby this section was closed to future accrual on 30 April 2010. The
      amount represents the effect of active members' future salary
      increases, included in the valuation assumptions of the deficit, now
      being capped at inflation as they are now being treated as deferred
      members of the scheme.

    - The financing charge of GBP0.8 million relates to net fair
      value remeasurement losses on revaluation of financial instruments as
      required by IAS 32 and 39 and can be volatile, dependant on market
      conditions existing at the balance sheet date.

PROPERTY LOSSES

Property losses increased to GBP18.8 million (2008/09 GBP18.1 million loss), primarily due to provisions made relating to closure or refit of stores as part of the Renewal and Transformation plan.

DIVIDENDS

The Board believes that DSGi's existing financial resources should be used to invest in the Renewal and Transformation plan, which is showing encouraging signs of delivering changes in DSGi's performance.

The Revolving Credit Facility and Letter of Credit Facilities, prohibit payments of dividends to Shareholders in respect of the 2009/10 Financial Year. The same agreements however do allow the Company, subject to certain conditions, to pay a dividend in respect of the 2010/11 Financial Year and beyond.

Subject to an assessment of whether certain conditions have been met, and the progress of the Renewal and Transformation plan, the Board aims to resume dividend payments when appropriate, consistent with a sustained recovery in DSGi's operational and financial performance.

TAX

The Group's tax rate on underlying profit before tax was 45% (2008/09: 61%). The decrease in the tax rate reflects a reduced proportion of loss making businesses where tax benefits are not fully recognised.

PENSIONS

At 1 May 2010, the IAS 19 accounting deficit of the defined benefit section of the UK pension scheme amounted to GBP263.5 million (2 May 2009 GBP148.8 million). The assumptions used for determining the accounting valuation use a consistent basis to that adopted in prior periods. Although the assets of the scheme have recovered considerably year on year, the overall deficit has still increased substantially due to a significant increase in the liabilities. This is due to an increase in the assumption for long term inflation (which affects "final salary" on retirement) coupled with a significant decrease in the discount rate applied to the liabilities which reflects yields on corporate bonds.

Over recent years, the Group has implemented a number of changes to pension arrangements in order to address the deficit over the longer term. Since 1 September 2002, the defined benefit section of the UK pension scheme has been closed to new entrants and on 30 April 2010 was closed to future accrual with automatic entry into the defined contribution section being offered to those active members of the defined benefit section. The effect of this change is to remove the future volatility associated with adding further accrual for active employees as well as a more immediate benefit of GBP33.4 million to the valuation of the liabilities which has been treated as a non-underlying item as described further above.

The actuarial deficit of GBP61.0 million (measured as at 5 April 2007) is being addressed by special cash contributions of GBP12 million per annum which are payable in two equal tranches of GBP6 million by June and December each year until December 2012. A further actuarial valuation as at 5 April 2010 is currently underway, however, its results will not be known until early in the 2011/12 financial year.

    Maylands Avenue                                            John Browett
    Hemel Hempstead                                         Chief Executive
    Hertfordshire HP2 7TG                                      24 June 2010

    Report and Accounts publication date                       15 July 2010
    Annual General Meeting                                 8 September 2010



    Copies of the Report and Accounts will be available from the
    Company Secretary at the above address and on the Group's
    website at http://www.dsgiplc.com



                              52 weeks ended 1 May 2010
                                     Non-underlying*

                                    Under-     Closed **
                                    lying* businesses      Other      Total
                     Note       GBPmillion GBPmillion GBPmillion GBPmillion
    Continuing
    operations
    Revenue             2         8,531.60        0.9          -   8,532.50

    Profit /
    (loss) from
    operations
    before
    associates                       131.6       -0.2       23.2     154.6

    Share of
    post-tax
    results of
    associates                         1.6         -           -       1.6
    Operating
    profit /
    (loss)              2            133.2      -0.2        23.2     156.2

    Finance
    income                            58.2         -         1.1      59.3
    Finance costs                   -100.9         -        -1.9    -102.8
    Net finance
    costs               4            -42.7         -        -0.8     -43.5

    Profit /
    (loss) before
    tax                               90.5      -0.2        22.4     112.7

    Income tax
    (expense) /
    credit              5            -40.7       0.1       -6.1      -46.7

    Profit / (loss) after tax -
    continuing operations             49.8      -0.1       16.3         66

    Loss after tax -
    discontinued
    operations                           -         -       -8.7       -8.7

    Profit / (loss) for
    the period                        49.8      -0.1        7.6       57.3

    Attributable to:
    Equity shareholders of the
    parent company                    52.3      -0.1        7.6       59.8
    Minority interests                -2.5         -          -       -2.5
                                      49.8      -0.1        7.6       57.3

    Earnings / (loss)
    per share (pence)
                        6
    Basic   - total                                                   1.7p
    Diluted - total                                                   1.7p
    Basic   - continuing                                              2.0p
            operations
    Diluted - continuing                                              1.9p
            operations

    Underlying earnings
    per share (pence)
              6
    Basic   - continuing              1.5p
            operations
    Diluted - continuing              1.5p
            operations


    CONTINUED

                              52 weeks ended 2 May 2009
                                Non-underlying*

                     Under-lying*     Closed **
                       GBPmillion businesses      Other      Total
                                  GBPmillion GBPmillion GBPmillion
    Continuing
    operations
    Revenue                8,180.20      137.6 -          8,317.80

    Profit / (loss)
    from operations
    before associates
                    79.4      -12.2     -158.2        -91
    Share of post-tax
    results of
    associates                  3.6          -          -      3.6
    Operating profit /           83      -12.2     -158.2    -87.4
    (loss)

    Finance income          69.6             -       32.2    101.8
    Finance costs             -96.5       -1.9      -39.6     -138
    Net finance costs         -26.9       -1.9       -7.4    -36.2

    Profit / (loss)
    before tax                 56.1      -14.1     -165.6   -123.6

    Income tax
    (expense) / credit        -34.3        2.7      -25.2    -56.8
    Profit / (loss)
    after tax -
    continuing
    operations                 21.8      -11.4     -190.8   -180.4


    Loss after tax -
    discontinued
    operations                    -          -      -38.9    -38.9


    Profit / (loss) for        21.8      -11.4     -229.7   -219.3
    the period

    Attributable to:
    Equity shareholders
    of the parent
    company                    21.7      -11.4     -229.7   -219.4
    Minority interests          0.1          -          -      0.1
                               21.8      -11.4     -229.7   -219.3

    Earnings / (loss)
    per share (pence)

    Basic   - total                                        (10.2)p
    Diluted - total                                        (10.2)p
    Basic   - continuing                                    (8.4)p
            operations
    Diluted - continuing                                    (8.4)p
            operations

    Underlying earnings
    per share (pence)

    Basic   - continuing       1.0p
            operations
    Diluted - continuing       1.0p
            operations

* 'Underlying' profit and 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, 5 and 6.

** 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 do not meet the definition of discontinued operations as stipulated by IFRS 5 and accordingly the disclosures made above differ from those for discontinued operations.

                                                          52 weeks   52 weeks

                                                             ended      ended

                                                        1 May 2010 2 May 2009

                                                        GBPmillion GBPmillion
    Profit / (loss) for the period                            57.3    (219.3)

    Actuarial (losses) / gains on      - UK                (156.0)    (114.3)
    defined benefit pension schemes
                                       - Nordics               1.5      (2.1)
    Cash flow hedges
    Fair value remeasurement (losses) / gains               (18.4)       42.6
    Losses / (gains) transferred to carrying                  15.1     (27.4)
    amount of inventories
    Gains transferred to income statement                    (3.8)     (13.4)
    Net investment hedges
    Fair value remeasurement gains / (losses)                  2.7     (74.3)
    Investments
    Fair value remeasurement gains / (losses)                  0.8      (0.9)
    Tax on items taken directly to equity                     44.2       53.2
    Currency translation movements                            45.3      122.5
    Net expense recognised directly in equity               (68.6)     (14.1)

    Total comprehensive expense for the                     (11.3)    (233.4)
    period

    Attributable to:
    Equity shareholders of the parent company                (8.9)    (236.9)
    Minority interests                                       (2.4)        3.5
                                                            (11.3)    (233.4)



                                                        1 May 2010 2 May 2009

                                                        GBPmillion GBPmillion
    Non-current assets
    Goodwill                                               1,116.5    1,069.1
    Intangible assets                                        130.7      148.4
    Property, plant & equipment                              541.0      489.6
    Investments in associates                                 26.4       29.8
    Trade and other receivables                               58.0       68.5
    Deferred tax assets                                      169.4      150.3
                                                           2,042.0    1,955.7
    Current assets
    Inventories                                              972.6      971.9
    Trade and other receivables                              395.1      508.2
    Income tax receivable                                      1.9        8.3
    Short term investments                                     8.5        9.0
    Cash and cash equivalents                                295.7      192.6
                                                           1,673.8    1,690.0
    Assets held for sale                                         -       13.2
    Total assets                                           3,715.8    3,658.9

    Current liabilities
    Bank overdrafts                                          (4.9)      (4.8)
    Borrowings                                              (98.5)    (250.1)
    Obligations under finance leases                         (2.4)      (2.8)
    Trade and other payables                             (1,605.9)  (1,664.5)
    Income tax payable                                      (47.0)     (58.0)
    Provisions                                              (22.3)     (72.1)
                                                         (1,781.0)  (2,052.3)
    Net current liabilities                                (107.2)    (362.3)

    Non-current liabilities
    Borrowings                                             (321.4)    (322.5)
    Obligations under finance leases                        (97.6)     (98.9)
    Retirement benefit obligations                         (266.8)    (153.0)
    Other payables                                         (325.7)    (369.8)
    Deferred tax liabilities                                (18.7)     (22.7)
    Provisions                                              (29.5)     (40.4)
                                                         (1,059.7)  (1,007.3)
    Liabilities directly associated with                         -     (14.4)
    assets classified as held for sale
    Total liabilities                                    (2,840.7)  (3,074.0)
    Net assets                                               875.1      584.9

    Capital and reserves                                        90
    Called up share capital                                   90.2       44.3
    Share premium account                                    169.4      169.4
    Other reserves                                         (537.5)    (534.9)
    Retained earnings                                      1,124.4      880.1
    Equity attributable to equity                            846.5      558.9
    holders of the parent company
    Equity minority interests                                 28.6       26.0
    Total equity                                             875.1      584.9

The financial statements were approved by the directors on 24 June 2010 and signed on their behalf by:

    John Browett                    Nicholas Cadbury

    Chief Executive                 Group Finance Director


                                                          52 weeks   52 weeks
                                                             ended      ended

                                                        1 May 2010 2 May 2009

                                                        GBPmillion GBPmillion
                                                    Note
    Operating activities - continuing
    operations
    Cash generated from / (utilised by)           *    7     270.3    (143.8)
    operations
    Special contributions to defined benefit                (12.0)     (12.0)
    pension scheme
    Income tax paid                               *         (31.9)     (35.7)
    Net cash flows from operating activities                 226.4    (191.5)
    Investing activities - continuing
    operations
    Purchase of property, plant & equipment and   *        (165.3)    (140.7)
    other intangibles
    Purchase of subsidiaries                                 (7.0)     (27.6)
    Interest received                             *           25.5       20.9
    Decrease in short term investments                         1.3       73.3
    Disposals of property, plant & equipment      *            9.7       28.8
    and other intangibles
    Dividend received from associate                           4.0        4.9
    Proceeds from sale of discontinued                           -          -
    operations
    Net cash flows from investing activities               (131.8)     (40.4)
    Financing activities - continuing
    operations
    Issue of ordinary share capital                          291.3          -
    Additions to finance leases                                  -        2.4
    Capital element of finance lease payments                (1.7)      (1.7)
    Interest element of finance lease payments    *          (7.1)      (6.9)
    (Decrease) / increase in borrowings due                (151.6)      249.9
    within one year
    Increase / (decrease) in borrowings due                      -      (0.1)
    after more than one year
    Interest paid                                 *        (118.8)    (126.8)
    Investment from minority shareholder                       5.0        5.7
    Equity dividend paid                                         -     (60.3)
    Net cash flows from financing activities                  17.1       62.2

    Decrease in cash and cash equivalents       (i)
    Continuing operations                                    111.7    (169.7)
    Discontinued operations                                  (8.6)     (21.6)
                                                             103.1    (191.3)

    Cash and cash equivalents at beginning of   (i)    7     187.8      363.7
    period
    Currency translation differences                         (0.1)       15.4
    Cash and cash equivalents at end of period  (i)    7     290.8      187.8

    Free Cash Flow                           (ii)    (17.6) (404.2)

(i) For the purposes of this cash flow statement, cash and cash equivalents comprise those items disclosed as "cash and cash equivalents" on the face of the balance sheet, less overdrafts, which are classified within current liabilities on the face of the balance sheet. A reconciliation to the balance sheet amounts is shown in note 7.

(ii) Free Cash Flow comprises those items marked * and comprises cash generated from / (utilised by) continuing operations before special pension contributions, less net finance expense, less income tax paid and net capital expenditure. The directors consider that 'Free Cash Flow' provides additional useful information to shareholders in respect of cash generation and is consistent with how business performance is measured internally.

                                       Share      Share      Other   Retained
                                                          reserves   earnings
                                     capital    premium GBPmillion
                                                                   GBPmillion
                                  GBPmillion GBPmillion
    At 4 May 2008                       44.3      169.4    (502.9)    1,115.9

    Loss for the period                    -          -          -    (219.3)
    Other comprehensive income             -          -     (52.8)       35.2
    and expense recognised
    directly in equity
    Total comprehensive income             -          -     (52.8)    (184.1)
    and expense for the period

    Equity dividends paid                  -          -          -     (60.7)
    Minority         - increase in         -          -          -          -
    interests        capital
    Transfers                              -          -      (6.7)        6.7
    Put option exercised                   -          -       27.5          -
    Share-based payments                   -          -          -        2.1
    Tax on share-based payments            -          -          -        0.2
    At 2 May 2009                       44.3      169.4    (534.9)      880.1

    Profit for the period                  -          -          -       57.3
    Other comprehensive income             -          -      (2.6)     (63.6)
    and expense recognised
    directly in equity
    Total comprehensive income             -          -      (2.6)      (6.3)
    and expense for the period

    Minority         - increase in         -          -          -          -
    interests        capital
    Placing and Rights Issue            45.9          -      245.4          -
    Transfer                               -          -    (245.4)      245.4
    Share-based payments                   -          -          -        4.9
    Tax on share-based payments            -          -          -        0.3
    At 1 May 2010                       90.2      169.4    (537.5)    1,124.4


    CONTINUED

                                        Sub total   Minority      Total
                                                   interests     equity
                                       GBPmillion
                                                  GBPmillion GBPmillion
    At 4 May 2008                           826.7       26.8      853.5

    Loss for the period                   (219.3)          -    (219.3)
    Other comprehensive income and         (17.6)        3.5     (14.1)
    expense recognised directly in
    equity
    Total comprehensive income and        (236.9)        3.5    (233.4)
    expense for the period

    Equity dividends paid                  (60.7)          -     (60.7)
    Minority
    interests
    Transfers                                   -          -          -
    Put option exercised                     27.5     (10.0)       17.5
    Share-based payments                      2.1          -        2.1
    Tax on share-based payments               0.2          -        0.2
    At 2 May 2009                           558.9       26.0      584.9

    Profit for the period                    57.3          -       57.3
    Other comprehensive income and         (66.2)      (2.4)     (68.6)
    expense recognised directly in
    equity
    Total comprehensive income and          (8.9)      (2.4)     (11.3)
    expense for the period

    Minority
    interests
    Placing and Rights Issue                291.3          -      291.3
    Transfer                                    -          -          -
    Share-based payments                      4.9          -        4.9
    Tax on share-based payments               0.3          -        0.3
    At 1 May 2010                           846.5       28.6      875.1

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

    1 Basis of preparation
    The financial information, which comprises the consolidated income
    statement, consolidated statement of comprehensive income and expense,
    consolidated balance sheet, consolidated cash flow statement,
    consolidated statement of changes in equity and extracts from the notes
    to the accounts for 1 May 2010 and 2 May 2009, has been prepared in
    accordance with the accounting policies set out in the full financial
    statements.

    The financial information set out in this announcement does not
    constitute statutory accounts within the meaning of Sections 434 to 436
    of the Companies Act 2006 and is an abridged version of the Group's
    financial statements for the 52 weeks ended 1 May 2010 which were
    approved by the directors on 24 June 2010. Statutory accounts for the
    52 weeks ended 2 May 2009 have been delivered to the Registrar of
    Companies, the auditors have reported on those accounts, their report
    was unqualified and did not contain statements under Section 498(2) or
    (3) of the Companies Act 2006. Statutory accounts for the period ended
    1 May 2010 will be delivered following the Company's annual general
    meeting. The auditors have reported on those accounts, their reports
    were unqualified and did not contain statements under Section 498 of
    the Companies Act 2006.

    The consolidated financial statements have been prepared in accordance
    with International Financial Reporting Standards (IFRS) as adopted by
    the EU, IFRS issued by the International Accounting Standards Board and
    those parts of the Companies Act 2006 applicable to those companies
    reporting under IFRS.

    The consolidated financial statements incorporate the financial
    statements of the Company and its subsidiary undertakings for the 52
    weeks ended 1 May 2010. Comparative figures are for the 52 weeks ended
    2 May 2009.

    The directors consider that the 'underlying' performance measures,
    together with the associated Income Statement presentation, provide
    additional useful information for shareholders on underlying
    performance of the business, and are consistent with how business
    performance is measured internally. Such measures exclude the trading
    results of closed businesses, impact of 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. These measures may not be directly comparable
    with 'adjusted' 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 as described in note 1. 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.

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

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

    - Nordics comprises the Elkj0p Group which operates in Norway, Sweden,
      Finland, Denmark, Iceland, Greenland and the Faroe Islands. The Nordics
      division engages predominantly in retail sales.

    - Other International 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, Cyprus and Turkey. The Other International division engages
      predominantly in retail sales.

    - e-commerce 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.

    2 Segmental analysis continued
    (a) Income statement

                                                                      2009/10
                     External Intersegmental            Underlying      Total
                      revenue        revenue
                                                Revenue     profit     profit
                   GBPmillion     GBPmillion
                                             GBPmillion GBPmillion GBPmillion
    UK & Ireland      4,013.5          101.7    4,115.2       71.1       93.7
    Nordics           2,094.6            1.7    2,096.3       95.8       95.6
    Other             1,503.2            1.5    1,504.7      (8.3)      (9.0)
    International
    e-commerce          921.2            3.8      925.0       11.3        7.9
    Eliminations            -        (108.7)    (108.7)          -          -
                      8,532.5              -    8,532.5      169.9      188.2
    Share of post-tax result of associates                     1.6        1.6
    Operating profit before central costs and                171.5      189.8
    property losses
    Central costs                                           (19.5)     (14.8)
    Property losses                                         (18.8)     (18.8)
    Operating profit                                         133.2      156.2
    Finance income                                            58.2       59.3
    Finance costs                                          (100.9)    (102.8)
    Profit before tax for the period                          90.5      112.7

External revenue for the Nordics includes GBP0.9 million relating to closed businesses.

    Reconciliation of underlying profit to total profit


                             Under-                                     Net
                                               Amortisa-tion restruc-turing
                              lying     Closed   of acquired
                                                 intangibles        charges
                             profit businesses
                         GBPmillion GBPmillion    GBPmillion     GBPmillion
    UK & Ireland               71.1          -         (0.5)          (5.6)
    Nordics                    95.8      (0.2)             -              -
    Other International       (8.3)          -         (0.7)              -
    e-commerce                 11.3          -         (3.4)              -
                              169.9      (0.2)         (4.6)          (5.6)
    Share of post-tax           1.6          -             -              -
    result of associates
    Operating profit          171.5      (0.2)         (4.6)          (5.6)
    before central costs
    and property losses
    Central costs            (19.5)          -             -              -
    Property losses          (18.8)          -             -              -
    Operating profit          133.2      (0.2)         (4.6)          (5.6)
    Finance income             58.2          -             -              -
    Finance costs           (100.9)          -             -              -
    Profit before tax          90.5      (0.2)         (4.6)          (5.6)
    for the period

    CONTINUED

                                                  2009/10
                                      Net fair
                                         value
                          Change in  remeasure      Total
                            pension
                           benefits     -ments     profit

                         GBPmillion GBPmillion GBPmillion
    UK & Ireland               28.7          -       93.7
    Nordics                       -          -       95.6
    Other International           -          -      (9.0)
    e-commerce                    -          -        7.9
                               28.7          -      188.2
    Share of post-tax             -          -        1.6
    result of associates
    Operating profit           28.7          -      189.8
    before central costs
    and property losses
    Central costs               4.7          -     (14.8)
    Property losses               -          -     (18.8)
    Operating profit           33.4          -      156.2
    Finance income                -        1.1       59.3
    Finance costs                 -      (1.9)    (102.8)
    Profit before tax          33.4      (0.8)      112.7
    for the period

    Share of post-tax result of associates relates to the Nordics.
    2 Segmental analysis continued
    (a) Income statement

                                                                      2008/09
                     External Intersegmental            Underlying      Total

                      revenue        revenue    Revenue   profit /   profit /
                                                            (loss)     (loss)
                   GBPmillion     GBPmillion GBPmillion
                                                        GBPmillion GBPmillion
    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             1,519.0            2.3    1,521.3     (23.7)     (42.6)
    International
    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           126.1     (30.1)
    and property losses
    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 GBP137.6 million relating to closed businesses.

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


                             Under-

                              lying                                     Net
                           profit /     Closed Amortisa-tion restruc-turing
                                                 of acquired
                             (loss) businesses   intangibles        charges

                         GBPmillion GBPmillion    GBPmillion     GBPmillion
    UK & Ireland               58.7          -         (0.4)         (43.0)
    Nordics                    72.5     (12.2)         (0.5)              -
    Other International      (23.7)          -         (0.7)              -
    e-commerce                 15.0          -         (3.3)              -
                              122.5     (12.2)         (4.9)         (43.0)
    Share of post-tax           3.6          -             -              -
    result of associates
    Operating profit /        126.1     (12.2)         (4.9)         (43.0)
    (loss) before
    central costs and
    property losses
    Central costs            (25.0)          -             -         (14.2)
    Property losses          (18.1)          -             -              -
    Operating profit /         83.0     (12.2)         (4.9)         (57.2)
    (loss)
    Finance income             69.6          -             -              -
    Finance costs            (96.5)      (1.9)             -              -
    Profit / (loss)            56.1     (14.1)         (4.9)         (57.2)
    before tax for the
    period

    CONTINUED

                                                  2008/09
                                      Net fair

                           Business      value      Total

                         impairment  remeasure   profit /

                            charges     -ments     (loss)

                         GBPmillion GBPmillion GBPmillion
    UK & Ireland             (32.3)          -     (17.0)
    Nordics                  (45.6)          -       14.2
    Other International      (18.2)          -     (42.6)
    e-commerce                    -          -       11.7
                             (96.1)          -     (33.7)
    Share of post-tax             -          -        3.6
    result of associates
    Operating profit /       (96.1)          -     (30.1)
    (loss) before
    central costs and
    property losses
    Central costs                 -          -     (39.2)
    Property losses               -          -     (18.1)
    Operating profit /       (96.1)          -     (87.4)
    (loss)
    Finance income                -       32.2      101.8
    Finance costs                 -     (39.6)    (138.0)
    Profit / (loss)          (96.1)      (7.4)    (123.6)
    before tax for the
    period


    Share of post-tax result of associates relates to the Nordics.
    3 Non-underlying items

                                                                      2009/10
                                                 Closed

                                             businesses      Other      Total
                                                        GBPmillion
                                             GBPmillion            GBPmillion
    Included in operating profit / (loss):
             Closed businesses            (i)     (0.2)          -      (0.2)
             Amortisation of acquired                 -      (4.6)      (4.6)
             intangibles
             Net restructuring charges   (ii)         -      (5.6)      (5.6)
             Business impairment        (iii)         -          -          -
             charges
             Change in pension benefits  (iv)         -       33.4       33.4
             Other items                  (v)         -          -          -
                                                  (0.2)       23.2       23.0
    Included in net finance costs:
             Closed businesses                        -          -          -
             Net fair value                           -      (0.8)      (0.8)
             remeasurements of
             financial instruments       (vi)
                                                      -      (0.8)      (0.8)

    Total impact on profit / (loss)               (0.2)       22.4       22.2
    before tax

    Included in income tax expense:
             Closed businesses                      0.1          -        0.1
             HMRC settlement            (vii)         -          -          -
             Other non-underlying items               -      (6.1)      (6.1)
                                                    0.1      (6.1)      (6.0)

    Total impact on profit / (loss) after         (0.1)       16.3       16.2
    tax


    CONTINUED

                                                                    2008/09
                                       Closed
                                   businesses
                                                       Other          Total
                                   GBPmillion     GBPmillion
                                                                 GBPmillion
    Included in
    operating profit
    / (loss):
        Closed businesses              (12.2)              -         (12.2)
        Amortisation of                     -          (4.9)          (4.9)
        acquired intangibles
        Net restructuring                   -         (59.1)         (59.1)
        charges
        Business impairment                 -         (96.1)         (96.1)
        charges
        Change in pension                   -              -              -
        benefits
        Other items                         -            1.9            1.9
                                       (12.2)        (158.2)        (170.4)
    Included in net finance costs:
        Closed businesses               (1.9)              -          (1.9)
        Net fair value                      -          (7.4)          (7.4)
        remeasurements of
        financial instruments
                                        (1.9)          (7.4)          (9.3)

    Total impact on profit /           (14.1)        (165.6)        (179.7)
    (loss) before tax

    Included in income tax expense:
        Closed businesses                 2.7              -            2.7
        HMRC settlement                     -         (52.7)         (52.7)
        Other non-underlying                -           27.5           27.5
        items
                                          2.7         (25.2)         (22.5)

    Total                              (11.4)        (190.8)        (202.2)
    impact
    on
    profit /
    (loss)
    after
    tax




    (i) Closed businesses: Comprises the operating activities of Markantalo
        and PC
        City Sweden which were closed on 10 May 2009 and 20 May 2009,
        respectively.
    (ii) Net restructuring charges - strategic reorganisation


                          Property         Asset       Other            Total
                           charges   impairments     charges
                                                                   GBPmillion
                        GBPmillion    GBPmillion  GBPmillion

               2009/10       (2.3)         (3.3)           -            (5.6)

               2008/09       (3.9)        (13.6)      (41.6)           (59.1)




      Net restructuring charges relate 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, which are mainly in respect of
      the reformatting of the UK store portfolio, 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 in addition for 2008/09, inventories. Impairments of
      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 and for which incremental charges of GBP5.0
      million (2008/09 GBP5.0
      million) are expected to be incurred, spread over the next three
      financial periods. In 2008/09, other charges predominantly comprised
      employee severance and contract termination costs.


    3 Non-underlying items continued
    (iii) Net business impairment charges:

                                               Property      Other      Total
                                              credits /  credits /
                         Goodwill      Other  (charges)  (charges) GBPmillion
                       impairment     assets
                                  impairment GBPmillion GBPmillion
                       GBPmillion
                                  GBPmillion
          2008/09
          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)


          In 2009/10, no such charges were incurred.
          2008/09: The Italian business impairment credits related to the
          reversal of charges incurred in prior periods whereby
          liabilities were settled at lower amounts than those originally
          provided.
          2008/09: Other business impairments comprised businesses in
          Spain, closed businesses in the Nordics as well as stores in
          underperforming locations in the UK High Street. Goodwill
          impairment related to the full write off of Markantalo in
          Finland following the announcement of the closure of this
          business. Other asset impairments comprised the Markantalo
          brand name, other intangible assets, property, plant &
          equipment and inventory. Other charges related predominantly to
          employee severance.
    (iv)  The change in pension benefits arises from the closure to
          future accrual of the defined benefit section of the UK pension
          scheme which occurred on 30 April 2010.
    (v)   2008/09: 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.
    (vi)  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.
    (vii) 2008/09: On 4 June 2009, following an agreement in principle in
          April 2009, the Group agreed a settlement with HMRC in respect
          of a dispute concerning certain historical intra group trading
          arrangements in the years 1997 to 2005 as well as certain other
          matters. The settlement exceeded the provision already held in
          the balance sheet and accordingly a non-underlying income tax
          charge of GBP52.7 million was recorded in current tax. This
          charge was in addition to the tax effects applied to the net
          non-underlying charges before tax and was treated as
          non-underlying owing to its size and one-off non-recurring
          nature.

    4 Net finance costs

                                                           2009/10    2008/09

                                                        GBPmillion GBPmillion
    Bank and other interest receivable                        20.6       21.8
    Expected return on pension scheme assets                  37.6       47.8
    Fair value remeasurement gains on             *            1.1       32.2
    financial instruments
    Finance income                                            59.3      101.8

    6.125% Guaranteed Bonds 2012 interest and               (18.3)     (18.3)
    related charges
    Bank loans, overdrafts and other interest
    payable
    Underlying                                              (29.9)     (24.1)
    Closed businesses                             *              -      (1.9)
    Finance lease interest payable                           (7.1)      (6.9)
    Interest on pension scheme liabilities                  (45.6)     (47.2)
    Fair value remeasurement losses on            *          (1.9)     (39.6)
    financial instruments
    Finance costs                                          (102.8)    (138.0)

    Total net finance costs - continuing                    (43.5)     (36.2)
    operations

    Underlying total net finance costs -                    (42.7)     (26.9)
    continuing operations

Underlying total net finance income excludes items marked *. See note 3 for a description of such items. Net finance costs for closed businesses comprise interest on bank loans and overdrafts.

    5 Taxation

                                                           2009/10    2008/09

                                                        GBPmillion GBPmillion
    Current tax
    UK corporation tax at 28%                                  0.4        0.2
    Double tax relief                                        (0.4)      (0.2)
                                                                 -          -
    Overseas     - underlying                                 25.0       24.2
    taxation
                 - non-underlying: closed              *         -      (1.1)
                 businesses
    Credit in respect of other                         *         -      (3.1)
    non-underlying items
    Adjustment in respect of
    earlier periods:
    UK           - underlying                                (1.8)        6.8
    corporation
    tax
                 - non-underlying                      *         -       52.7
    Overseas taxation                                          1.3      (5.3)
                                                              24.5       74.2
    Deferred tax
    Current      - underlying                                 18.0        9.6
    period
                 - non-underlying: closed              *     (0.1)      (2.5)
                 businesses
    Charge / (credit) in respect of                    *       6.1     (24.4)
    other non-underlying items
    Adjustment in respect of
    earlier periods:
    UK           - underlying                                (6.0)        1.6
    corporation
    tax
    Overseas     - underlying                                  4.2      (2.6)
    taxation
                 - non-underlying: closed              *         -        0.9
                 businesses
                                                              22.2     (17.4)

    Income tax expense - continuing operations                46.7       56.8

    Underlying income tax expense - continuing                40.7       34.3
    operations


Underlying income tax expense excludes those items marked *. The effective tax rate on underlying earnings of 45% (2008/09 61%) is expected to fall in future periods due mainly to unrecognised losses starting to form a lower proportion of net profits.

    6 Earnings / (loss) per share


                                                           2009/10    2008/09

                                                        GBPmillion GBPmillion
    Basic and diluted earnings / (loss)
    Total (continuing and discontinued operations)            59.8    (219.4)
    Discontinued         - loss after tax                      8.7       38.9
    operations
    Continuing operations                                     68.5    (180.5)

    Adjustments
    Closed businesses                                          0.2       14.1
    Amortisation of acquired intangibles                       4.6        4.9
    Net restructuring charges                                  5.6       59.1
    Business impairment charges                                  -       96.1
    Other items                                                  -      (1.9)
    Change in pension benefits                              (33.4)          -
    Net fair value remeasurements of financial                 0.8        7.4
    instruments
                                                            (22.2)      179.7
    Tax on adjustments
    Closed businesses                                        (0.1)      (2.7)
    HMRC settlement                                              -       52.7
    Other non-underlying items                                 6.1     (27.5)
                                                               6.0       22.5
    Total adjustments (net of taxation)                     (16.2)      202.2

    Underlying basic and diluted earnings                     52.3       21.7

                                                           Million    Million
    Basic weighted average number of shares                3,495.6    2,148.7
    Employee share option and ownership schemes               23.9        3.1
    Diluted weighted average number of shares              3,519.5    2,151.8

                                                             Pence      Pence
    Basic earnings / (loss) per share
    Total (continuing and discontinued operations)             1.7     (10.2)
    Discontinued operations                                    0.3        1.8
    Continuing operations                                      2.0      (8.4)
    Adjustments (net of taxation)                            (0.5)        9.4
    Underlying basic earnings per share                        1.5        1.0

    Diluted earnings / (loss) per share
    Total (continuing and discontinued operations)             1.7     (10.2)
    Discontinued operations                                    0.2        1.8
    Continuing operations                                      1.9      (8.4)
    Adjustments (net of taxation)                            (0.4)        9.4
    Underlying diluted earnings per share                      1.5        1.0


The weighted average number of shares used in the calculation for earnings per share information for the periods prior to the rights issue, which completed on 9 June 2009, has 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 earnings / (loss) per share are 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 Notes to the cash flow statement

    (a) Reconciliation of operating loss to net cash inflow / (outflow) from
operating activities

                                                           2009/10    2008/09

                                                        GBPmillion GBPmillion
    Operating profit / (loss)                                153.2    (125.7)
    Operating loss - discontinued operations                   3.0       38.3
    Operating profit / (loss) - continuing operations        156.2     (87.4)
    Amortisation of acquired intangibles                       4.6        4.9
    Amortisation of other intangibles                         25.8       23.3
    Depreciation                                             102.8      111.4
    Share-based payment charge                                 5.7        1.8
    Share of post-tax results of associates                  (1.6)      (3.6)
    Loss on disposal of property, plant & equipment           19.6       19.9
    Additions to        - provisions                           2.3       84.5
    non-underlying
                        - impairment and accelerated           3.3       69.0
                        depreciation / amortisation
                        - change in pension benefits        (33.4)          -
    Utilisation of non-underlying provisions                (54.7)     (82.2)
    Operating cash flows before movements in working         230.6      141.6
    capital

    Movements in working capital:
    Decrease in inventories                                   14.1      166.7
    Decrease / (increase) in trade and other                 117.6     (58.5)
    receivables
    Decrease in trade and other payables                    (92.0)    (393.6)
                                                              39.7    (285.4)

    Cash generated from / (utilised by) operations -         270.3    (143.8)
    continuing operations

    (b) Analysis of net funds / (debt)


                                                Other    Currency
                                 Cash flow   non-cash translation  1 May 2010
                     3 May 2009             movements
                     GBPmillion GBPmillion GBPmillion  GBPmillion  GBPmillion
    Cash and       *      192.6      102.8          -         0.3       295.7
    cash
    equivalents
    Bank                  (4.8)        0.3          -       (0.4)       (4.9)
    overdrafts
                          187.8      103.1          -       (0.1)       290.8

    Short term              9.0      (1.3)        0.8           -         8.5
    investments

    Borrowings          (250.1)      151.6          -           -      (98.5)
    due within
    one year
    Borrowings due      (322.5)          -        1.1           -     (321.4)
    after more than
    one year
    Obligations under   (101.7)        1.7          -           -     (100.0)
    finance leases
                        (674.3)      153.3        1.1           -     (519.9)

    Net debt            (477.5)      255.1        1.9       (0.1)     (220.6)


    7 Notes to the cash flow statement continued
    (b) Analysis of net funds / (debt) continued


                                                 Other    Currency
                      4 May 2008  Cash flow   non-cash translation 2 May 2009
                                              movements
                      GBPmillion GBPmillion GBPmillion  GBPmillion GBPmillion
    Cash and        *      365.8    (188.8)          -        15.6      192.6
    cash
    equivalents
    Bank                   (2.1)      (2.5)          -       (0.2)      (4.8)
    overdrafts
                           363.7    (191.3)          -        15.4      187.8

    Short term              82.0     (73.3)      (0.9)         1.2        9.0
    investments

    Borrowings             (0.2)    (249.9)          -           -    (250.1)
    due within
    one year
    Borrowings due       (294.6)        0.1     (28.0)           -    (322.5)
    after more than
    one year
    Obligations          (100.8)        1.7      (2.4)       (0.2)    (101.7)
    under
    finance
    leases
                         (395.6)    (248.1)     (30.4)       (0.2)    (674.3)

    Net funds /             50.1    (512.7)     (31.3)        16.4    (477.5)
    (debt)

Restricted funds, which predominantly comprise funds held under trust to fund customer support agreements were GBP78.9 million (2009 GBP67.6 million). Net debt excluding restricted funds totalled GBP299.5 million (2009 GBP545.1 million).

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

8 Related party transactions

Transactions between Group undertakings, which are related parties, have been eliminated on consolidation and accordingly are not disclosed.

Steve Rosenblum and Jean-Emile Rosenblum, members of the Executive Committee, together with close family members and companies controlled by them, own 22.0% of PIXmania, a company controlled by the Group. In connection with their management roles with respect to PIXmania, Steve Rosenblum and Jean-Emile Rosenblum received management fees of EUR258,000 (GBP228,000) (2008/09 EUR258,000 (GBP217,000)). Steve Rosenblum and Jean-Emile Rosenblum together hold call options over additional shares in PIXmania representing 16.8% of its share capital. The options can be exercised from 30 April 2011 and are subject to certain conditions including the achievement of targets related to earnings and certain capitalisation values of the PIXmania business. In addition to the call options, Steve Rosenblum and Jean-Emile Rosenblum have certain exit rights exercisable between July 2011 and July 2013 in relation to their holdings in PIXmania.

Steve Rosenblum and Jean-Emile Rosenblum own a building which is occupied and leased by PIXmania. During 2009/10 total rental payments of EUR645,000 (GBP570,000) (2008/09 EUR597,000 (GBP502,000)) were charged in relation to this property. 9 Post-balance sheet event

On 12 May 2010, the Group signed a new revolving credit facility agreement (the New Facility) for GBP360 million. The New Facility will come into effect by 15 August 2010 at which time it will replace the Group's existing GBP400 million Facility. The terms and covenants attaching to the New Facility are substantially the same as that for the GBP400 million Facility except that the guarantee structure comprises UK and Irish companies only, thereby aligning it more closely to the Bonds. At the earliest, the New Facility will mature on 15 August 2012 and the Group has the ability to extend the New Facility to 15 August 2013 in the event that it raises additional finance of a minimum of GBP100 million by November 2011.

The 2009/10 Annual Report and Accounts which will be issued on 15 July 2010, contains a responsibility statement in compliance with DTR 4.1.12 of the Listing Rules which states that as at the date of approval of the Annual Report and Accounts on 24 June 2010, the directors confirm to the best of their knowledge:

    - the Group and unconsolidated Company financial statements give a true
      and fair view of the assets, liabilities, financial position and profit
      / (loss) of the Group and Company, respectively; and

    - the business and financial review includes a fair review of the
      development and performance of the business and the position of the
      Group together with a description of the principal risks and
      uncertainties they face.

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 the following appointments and resignations:

    - Sir John Collins who resigned as a director and Chairman of the Board
      on 2 September 2009;

    - John Allan who was appointed to the Board on 23 June 2009 and was
      appointed Chairman on 2 September 2009;

    - Count Emmanuel d'Andre who retired as a director with effect from 2
      September 2009;

    - Tim How who was appointed to the Board on 8 September 2009;

    - Prof. Dr. Utho Creusen who was appointed to the Board on 1 February
      2010; and

    - John Whybrow who retired as a director with effect from 31 March 2010.

"In my view risk management is an integral part of business management and it's something we at DSGi take seriously. The Group's approach to risk management combines a top-down understanding with bottom-up activity to gain a holistic view of risk. For example, the Board undertakes a regular review of risks facing the business, which included a thorough risk assessment from first principles at the beginning of 2010. Below are some of the key risks facing the business, along with an illustration of what is being done to mitigate them." John Browett

    Key Risks

    Risk                            Examples of Mitigating Action
    Economic environment

    Risk that a prolonged economic  - Ongoing monitoring by Finance
    downturn, particularly in the   and the Executive Committee,
    UK, severely impacts our        including review of portfolio of
    business                        businesses

                                    - Renewal and Transformation plan
                                    to improve our business
                                    performance irrespective of macro
                                    economic factors

                                    - Strategy and business planning
                                    which takes into account varying
                                    economic scenarios
    Meeting customer needs

    Risk that our retail brands     - Understanding our customer and
    fail to meet the expectations   monitoring our level of service
    of our customers                through mystery shopping, customer
                                    exit surveys and analysis of
                                    purchase data

                                    - Renewal and Transformation plan
                                    improving our stores across the
                                    Group

                                    - 'FIVES' customer service
                                    training for all colleagues and
                                    product workshops to improve
                                    product knowledge

                                    - Implementation of the 'Customer
                                    Plan' in the UK to improve the
                                    customer journey - a clear and
                                    focused plan at the heart of the
                                    business

                                    - Innovations in service
                                    propositions and improved customer
                                    service levels across the Group

                                    - Clearer and easier navigation of
                                    our e-commerce websites
    Competition

    Risk that competitors reduce    - Renewal and Transformation plan
    the Group's market share and/or improving our stores and service
    drive down margins in specific  proposition
    markets
                                    - Continuing development of strong
                                    online brands, notably PIXmania
                                    and Dixons.co.uk

                                    - Ensuring our prices offer good
                                    value, including a customer price
                                    index
    Market margin pressure

    Risk that margins are reduced   - Continued focus on ensuring we
    due to falling consumer demand, have an excellent range across all
    manufacturer supply,            price points, including own label
    competitors, regulation and tax brands

                                    - Continuing to take money out of
                                    our cost base

                                    - Building ever stronger
                                    relationships with suppliers
    Changes in supplier credit

    Risk that credit insurance is   - Ongoing engagement with
    no longer available to          suppliers and credit insurers
    electrical/computing suppliers
    to protect their receivables    - Improvements in stock turn
    against the risk of bad debt
                                    - Innovations in and close
                                    scrutiny of working capital
                                    together with regular monitoring
                                    and review
    Employees

    Risk that we fail to attract,   - Group-wide standardised
    develop and retain the          performance management
    necessary talent for our
    business                        - Talent reviews across the
                                    business

                                    - Store structures which provide a
                                    clear career path for all
                                    employees

                                    - Improved quality of training
                                    courses and development programmes
                                    with specialist focus on service,
                                    product, commercial and technical

                                    - Bonus plans, which include a
                                    component relating to individual
                                    performance and business
                                    performance

                                    - Reward strategy aligned to
                                    retain best talent
    Changing technology/consumer
    preferences
                                    - Strong supplier relationships
    Risk that we fail to capitalise (e.g. exclusive UK launch of iPad)
    on new technology or emerging
    trends to maximise revenues     - Delivery of Customer Plan to
                                    respond to identified changes in
                                    technology

                                    - Store transformations to take
                                    into account emerging trends in
                                    store layouts

                                    - Exciting product launches to
                                    make our stores the destination
                                    for the latest technology (e.g. 3D
                                    TVs)
    Finance & Treasury

    Finance /Treasury/Exchange      - Detailed group hedging policies
    Rate/Interest Rate/ Liquidity/  reviewed through a separate Tax
    Credit Risk                     and Treasury Committee

                                    - Balance sheet management and
                                    reviews

                                    - Regular monitoring of
                                    receivables balances

                                    - Strong pre and post investment
                                    appraisal processes

                                    - Central control of treasury
                                    activity
    Pension risk & policies

    Risk that the pension funding   - Deficit reduction activities in
    policy fails to react to or     place
    address deficits, which may
    arise on the Group's pension    - Defined benefit section of UK
    schemes                         scheme closed to future accrual
    Systems failure

    Risk that a key system becomes  - Contingency plans developed that
    unavailable for a period of     are tested regularly
    time
                                    - Evaluation, planning and
                                    implementation analysis carried
                                    out before updating or introducing
                                    new systems that have an impact on
                                    critical functions

                                    - Ongoing systems implementation
                                    in key areas of the business
    Legislative, contractual,
    reputational and regulatory
    risks                           - In-house legal teams communicate
                                    on a regular and frequent basis
    Risk that we suffer             and legal reports are submitted to
    reputational and/or financial   the Board
    damage as a result of an
    exposure in our compliance      - Launch of Group Ethical Conduct
    activities (e.g. competition,   policy, supported by annual
    consumer rights, intellectual   declaration of compliance by
    property, contractual           colleagues
    obligations, health & safety or
    compromise of customer          - Monitoring changes in
    confidentiality data)           legislation / regulation

                                    - Corporate Responsibility
                                    Committee meets regularly to
                                    discuss reputational and
                                    regulatory risks

                                    - Quality checks and factory
                                    audits for own-branded product
                                    assembly

                                    - Compliance Committee approves
                                    activity that may impact the terms
                                    of Group credit facilities
    Project delivery

    Risk that a project delivering  - The portfolio plan is clearly
    an element of our Renewal and   defined and is managed and
    Transformation Plan does not    governed through regular processes
    deliver its anticipated         and meetings
    benefits.
                                    - Post-investment analysis and
                                    performance tracking put in place
                                    including financial and customer
                                    measures

                                    - Projects under the Customer Plan
                                    aligned to our UK budget

Other Risks Specific to a Specialist Electrical Retailer

In addition to the above, the Group is also subjected to a number of risks that are generic to a specialist electrical retailer. These include:

    Risk                            Examples of Mitigating Action /
                                    Factors
    Seasonality

    A substantial proportion of     - Financial planning takes into
    revenue and operating profit is account expected peaks and troughs
    generated during the third      during the year and the business
    financial quarter, which        is run accordingly
    includes the Christmas and New
    Year season. In addition, in    - The proportion of services
    Southern Europe a second peak   related business offers a regular
    exists in the summer period     stream of income over the course
    through sale of air             of the year
    conditioning units
    Price deflation

    Price deflation has been a      - Effective launches of new
    common feature across most      technology as it becomes available
    electrical goods categories for to the market
    a number of years, primarily
    driven by technological         - Growth of services related
    advances and improved           business to increase the number
    efficiencies in production      and value of non-product sales
    throughout the life cycle of a
    product                         - Improve gross profit uplifts in
                                    transformed stores
    Quality & location of store
    portfolio
                                    - The store portfolio is reviewed
    This is a key contributor to    on a regular basis with a view to
    the Group's performance and     optimising our retail estate
    growth strategy                 presence
    Damage to property &
    consequential business
    interruption

    The Group's ability to          - Disaster recovery plans are in
    distribute merchandise to its   place
    stores and to sell and
    distribute merchandise to its   - Insurance is purchased to
    customers is reliant on its     mitigate against business
    operational infrastructure,     interruption
    particularly the efficient
    functioning of its distribution - Preventative measures are
    centres and distribution        constantly being updated to reduce
    network                         the likelihood of an incident
    Change in government policy

    The Group is subject to a range - A number of committees exist to
    of legal and regulatory         help the Group manage its
    requirements originating from   regulatory risks. There is a
    the UK and European Union       Corporate Responsibility Committee
                                    and a Compliance Committee, both
                                    of which are supported by our
                                    Legal and Company Secretarial
                                    functions


                               Number of stores      Selling space '000 sq ft
                               1 May 2 May 2009      1 May 2010         2 May
                                2010                                     2009

    UK & Ireland
    UK                           654        680           7,582         7,533
    Ireland                       29         32             307           329
    Total UK & Ireland           683        712           7,889         7,862

    Nordics
    Norway                       121        114           1,506         1,348
    Sweden                        69         66           1,299         1,148
    Finland                       39         34             616           544
    Denmark                       28         27             481           473
    Iceland                        3          3              32            32
    Islands                        9          9             127           130
    Total Nordics *              269        253           4,061         3,675

    Other International
    Italy *                      158        174           2,314         2,587
    Greece *                     103        102           1,147         1,133
    Spain                         32         41             408           603
    Turkey                        11          8             367           270
    Southern Europe              304        325           4,236         4,593

    Czech Republic                16         17             426           441
    Slovakia                       3          3              57            57
    Central Europe                19         20             483           498

    Total Other                  323        345           4,719         5,091
    International

    Continuing Retail          1,275      1,310          16,669        16,628

    Hungary                        -          9               -           299
    Poland                         -          9               -           257
    Closed businesses              -         30               -           429

    Total Retail               1,275      1,358          16,669        17,613

    * Includes franchise stores.

    For further information

    Press and Media:
    Mark Webb
    +44-(0)1727-205019


SOURCE DSG international plc