John Clare, Group Chief Executive, commented:

"This has been a year of significant change for the Group, and in that context I am pleased with the good performance we have delivered in the UK, Nordics, Greece and in our organic start up businesses in Central Europe and Spain. Our new e-commerce division has seen strong growth across the year.

Our sales performance in the final quarter of the year was affected by the unseasonal hot weather in April in the UK and Nordic. Underlying operating profit for the year will show good growth in most businesses, but has been adversely affected by a disappointing performance particularly in Italy.

As a result of the significant changes in the Group this year we will incur restructuring and impairment charges of between £180m and £200m in respect of the costs associated with a write down of the carrying value of our operations in Italy, the closure of PC City operations in France and the sale of Genesis Communications.

Overall we expect to deliver underlying operating profit for the Group in line with current market expectations for the year.

UK & Ireland Electricals. Total sales were up 2%, with like for like sales up 3%.

Currys delivered a strong performance this year and saw like for like sales in the superstores up 4%. Gross margins showed a good improvement versus last year, with Currys superstores increasing gross margins by 0.6%, as initial benefits from the Group’s new buying strategy were realised.

In Ireland our business continued to make significant market share gains in all main categories with like for like sales up 8% and total sales up by 29%.

Total sales in our tax free stores were down 8%, impacted by the security issues earlier in the year at UK airports, but it has managed its margins to limit the impact of the lower levels of sales.

Overall UK & Ireland electricals will show significant profit growth year on year.

UK Computing. PC World grew sales by 6% in total and 4% like for like as it gained share in computing hardware and brown goods categories. Sales of laptops grew by 58% in units and 31% in value across the year although the strong sales of laptop computers have had a negative mix effect on the gross margin. Sales of flat panel televisions were better than expectations during their first year in PC World.

PC World Business grew sales 8% year on year.

The multi-channel approach to customers in the UK in electricals and computing has been underpinned by very strong growth in internet sales of 75% year on year driven by the positive customer reaction to ‘reserve and collect’ at Currys and ‘collect@store’ at PC World.

Nordic. Total sales in the Elkjøp group were up 24% with like for like sales up 9%. Good growth in sales and market share were achieved across the Nordic region. Elkjøp’s gross margins were impacted by the consolidation of Markantalo into the business in Finland, and by a growing contribution from multi-channel internet operations in the mix together with strong sales growth in Sweden and Denmark.

Greece. In Kotsovolos total sales were up 17% with like for like sales up 7% driven by a strong performance in our successful Mega Kotsovolos store format and as we continue to gain share in this growing market. Gross margins in Kotsovolos were flat year on year.

Italy. Total sales in UniEuro were down 1% and like for like sales were down 8%. UniEuro has been impacted by significant operational issues as the business has been transitioned to a centralised operating model in line with the rest of the Group. The impact on the business of this significant change programme was exacerbated by the challenging market environment existing throughout the financial year. The electricals market in Italy became more promotional and UniEuro reduced prices to remain competitive, impacting gross margins. Under accounting rules we are required to review the carrying value of UniEuro on our balance sheet at the year end. Following the disappointing performance, we expect to reduce the carrying value by between £110 million and £130 million, with the resulting goodwill carrying value being between £310 million and £330 million.

Our plans for the year ahead in Italy include opening 20 new stores and refurbishing a further 25 existing stores, as well as key initiatives on margin improvement and cost reduction. We are determined to return UniEuro to profitability and remain confident in its long term prospects.

Investment businesses. In France we have taken the decision to close our loss making PC City retail operations, and to focus on growing our internet businesses through Pixmania which has greater potential to deliver growth in this market. We currently expect that the cost of this closure will be approximately £40 million, half of which is expected to be a cash cost.

Our other investment businesses performed well.

Excluding France, PC City grew total sales by 26%.

PC City Spain is expected to deliver its first full year of positive earnings, after good sales growth and improvements in gross margin.

PC City in Italy and Sweden continue to make good progress in line with expectations.

Our Electro World operations grew total sales by 36%. We expect the business in Czech Republic to deliver a small operating profit for the first time. In Hungary we continued to make progress, despite a difficult economic and political environment, and our new business in Poland also performed well.

E-Commerce Division. Comprising Dixons.co.uk and PIXmania.com, our e-commerce division traded well, with Dixons.co.uk sales up 182% year on year. Pixmania, acquired during the year, grew sales by 42% year on year. In March we announced that Pixmania’s operating profits this year would be impacted by fraud and control issues in its supply chain operations. We are confident that these issues have now been resolved and should not impact future years. During the second half we expanded the range of products offered through Pixmania to include Group ranges of computing and vision products, particularly in France. We will be introducing further ranges and categories in more countries during 2007. Pixmania is Europe’s leading specialist electrical e-tailer operating in 27 countries, and the acquisition has brought expertise into the Group that we are able to use in our other internet and multi-channel operations. We remain excited about the opportunities for this business as part of the Group.

Genesis Communications. Following the sale of The Link earlier in the year, and the continued shift towards direct distribution by the network operators, Genesis Communications became non core and we recently agreed its sale. This sale will result in a non cash write off of approximately £30 million."


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