Annual Report and Accounts 2010 Overview Overview Operating and Financial Highlights

NE W LOO K A NNU A

L Annual Report R EPO

R and Accounts 2010 T & A CCO UNTS 20 10

New Look Retail Group Limited New Look House, Mercery Road, Weymouth, Dorset, DT3 5HJ, UK. Tel: +44 1305 765000

www.newlook.com New Look is a leading, branded NEW LOOK clothing and accessories retailer, ONLINE offering a unique and irresistible combination of fashion excitement, value and newness.

New Look in ’10 An online, interactive version of our report can be found at Overview www.newlookgroup.com/AR2010 Operating and financial highlights 1 This includes an interview with our Chief Executive, At a glance 2 Carl McPhail, along with the option to download key Timeline 4 elements of the report. Chairman’s statement 8 Business review Chief Executive’s review 10 Our markets 13 Our brand 15 Our customers 18 Our operating model 19 Our strategy 21 > UK retail space expansion 22 > Develop and broaden product range 26 > Multi-channel development 30 > International expansion 34 You can also find additional information on our business, Our colleagues 38 our brand and our ethics at www.newlookgroup.com Our suppliers 40 Corporate responsibility 42 Principal risks and uncertainties 45 Financial review 47 Governance Board of Directors 50 Statement of Directors’ responsibilities 52 Other matters 53 Financial statements Financial statements – contents 54 Independent auditors’ report – Group accounts 55 Consolidated income statement 56 Consolidated statement of comprehensive income 57 You can see all our fashion at www.newlook.com Consolidated balance sheet 58 This report is printed on Elemental Chlorine Free paper Consolidated statements of changes in equity 60 certified by the ForestryS tewardship Council, produced at mills certified to SOI 14001 and registered to EMAS. Consolidated statement of cash flows 61 Notes to the Group financial statements 62 Designed and produced by Merchant www.merchant.co.uk Independent auditors’ report – Company accounts 100 Company balance sheet 101 Printed by Park Communications Notes to the Company financial statements 102 Contacts 107 new look in ’10 10 facts about new look in 2010 New Look in ’10 We’ve transformed our business in recent years and continue to lead the way in fast fashion, giving our customers what they want, where they want it, how they want it. Here are 10 key facts about New Look in 2010. 1 Market LEADEr We are the number 2 Retailer in the UK Women’s Clothing and Accessories Market with 5.2% value (revenue) share at the year end, up from 4.2% two years ago. We are the Number 1 retailer in dresses in both volume and value and the Number 1 retailer in value in the women’s under 35 market*. 38%** of the female population shopped in New Look in the last years – over 9 million customers. * Source: Kantar Worldpanel 24 w/e 28 March 2010, filtered on females aged 12+. ** Source: Kantar Worldpanel 52 w/e 28 March 2010. New Look in ’10 Spoilt for 2Choice WE HAd over 1,000 stores BY YEAR End, with 602 New Look stores in the UK, and over 400 internationally (including Mim and franchise operations). This represents total trading space of 5.5 million sq ft (3.8 million sq ft in the UK), or 72 football pitches.

going 3global We served 24 countries worldwide (including the UK) by year end, through our website. Our international business for FY10 contributed over 20% of our total revenue, compared to just over 10% five years ago.T his year we entered four new markets: the Netherlands, Egypt, Singapore 4 and Poland. fast fashion We can translate a celebrity or high- street trend into a product in-store in as little as five weeks, thanks to strong supplier relationships and a dedicated in-house design team. Today, we design over two thirds of our products in-house, compared to almost nothing five years ago.O n average, we aim to have 10% of product new in-store every week. New Look in ’10 NEW LOOK ONLINE 5Our AWARD-WINNING transactional website www.newlook.com was the Number 3 UK clothing retail site, with 4.4% market share and almost two million hits per week*. Our recently launched second generation site offers a fresher, cleaner, more modern design, improved navigation and quicker check-out. Our online presence together with more efficient store systems is paving the way for our multi-channel ambitions.

* Source: Hitwise Most Popular Websites in Shopping and Classifieds –A pparel and Accessories ranked by Visits – w/e 10 April 2010. New Look in ’10 London Calling! 6MOVE TO NEW LONDON OFFICE In 2009, we successfully relocated our core functions of buying, merchandising, design and marketing to new offices in the heart ofL ondon, one of the world’s fashion capitals. This has brought a greater degree of collaboration and access to an international talent pool.

BOYS TO MEN OUR MENSWEAR RANGE traded in 200 New Look stores and 29 franchise stores by the end of April 2010, while our new Oxford Circus flagship is our biggest menswear store to date. This year we launched two menswear collaborations with designer Giles Deacon that were available in 40 shops and sold 1.8 million t-shirts (enough fabric 7to circle the globe four times). New Look in ’10

People power We created over 1,700 jobs last year 8and currently employ over 22,000 people globally. We recognise that the continued success of New Look depends upon our ability to attract, motivate and retain people of the highest calibre. New Look in ’10 best foot first 9we are THE UK’S NUMBER 1 volume retailer in women’s footwear*, selling 16 million pairs of shoes this year; that’s one pair every two seconds of every day. The third floor of our new flagshipO xford Circus store houses over 6,000 pairs of shoes alone. * Source: Kantar Worldpanel 24 w/e 28 March 2010.

10 FOR ALL AGES Did you know the average age of our female customer is 33 years old? We are also the first choice amongst teenagers, where our Generation range (9-15 years old) has a market leading 9.5% value share.* February 2010 half-term was the most successful in Generation’s history, while this financial year has seen record performance of our 915 drop pocket cardigan, selling 250,000 units alone. * Source: Kantar Worldpanel 24 w/e 28 March 2010.

New Look in ’10

A Good Total Revenue Year £1,463.6m Our continued growth has 52 weeks 2010: £1,463.6m delivered strong trading results. 52 weeks 2009: £1,322.6m Here are some of the highlights from 2009/10 financial year. Space (’000) sq ft* 5,473 52 weeks 2010: 5,473 52 weeks 2009: 4,825

Total Stores 1,018 52 weeks 2010: 1,018 52 weeks 2009: 957

Adjusted EBITDA £249.4m 52 weeks 2010: £249.4m 52 weeks 2009: £217.6m New Look Annual Report and Accounts 2010 Overview Overview operating and financial highlights

New Look delivered impressive > 17.7% growth in underlying

growth in underlying operating operating profit Business review profit despite a challenging trading > Group total revenue growth of environment. This is the result of our +10.7% strategy of opening profitable new > record adjusted EBITDA growth space, whilst always delivering of 14.6% to £249.4m ‘must have’ fashion and great value.

> 61 new stores opened to reach Governance 1,018 globally > 602 UK stores (up from 586 a year ago) Financial statements Adjusted EBITDA Total Revenue £m £m 2010 249.4 2010 1,463.6 £249.4m 2009 217.6 £1,463.6m 2009 1,322.6 +14.6% 2008 200.1 +10.7% 2008 1,169.1 2007 172.0 2007 1,022.8

Underlying Operating Profit Group LFL Sales Growth £m % 2010 162.7 2010 +1.2 £162.7m 2009 138.2 +1.2% -0.6 2009 +17.7% 2008 138.6 –2.8 2008 2007 121.2 2007 +0.7

Space (’000) Cash Generated Sq ft* £m 2010 5,473 2010 224.3 5,473 2009 4,825 £224.3m 2009 217.9 +13.4% 2008 4,085 +2.9% 2008 206.0 2007 3,340 2007 174.9

Total Stores ROCE** % 2010 1,018 2010 21.1 1,018 2009 957 +21.1% 2009 17.9 +6.4% 2008 885 2008 18.3 2007 823 2007 16.6

* includes franchise trading space and is as at the financial period end. ** ROCE is our Return on Capital Employed, it is a non-IFRS measure which is calculated as underlying operating profit divided by average capital employed (Net liabilities less financial liabilities and cash & cash equivalents).

All other metrics are defined on pages 47 and 48. All metrics on this page represent the Group’s KeyP erformance Indicators. 1 New Look Annual Report and Accounts 2010 Overview At a glance

New Look’s store‑based presence extended to 13 countries, of which four United Kingdom March 09 Mvt* March 10 were new markets entered Stores 586 16 602 during the 2009/10 financial Space 3,485 315 3,800 year (the Netherlands, Egypt, Singapore and Poland). Netherlands March 09 Mvt* March 10 Our most significant international markets are Stores - 1 1 France, Belgium, the Netherlands and Ireland. Space - 11 11 Including our e-commerce capabilites, we now serve 35 markets, with plans to roll out to new territories.

Group totals (including franchises) March 09 Mvt* March 10 Stores 957 61 1,018 Space 4,825 648 5,473 > See pages 22-25 and 34-37 for more information.

Republic of Ireland March 09 Mvt* March 10 Stores 26 2 28 Space 186 29 215 France March 09 Mvt* March 10 Stores 16 5 21 Space 164 56 220

Mim France March 09 Mvt* March 10 Stores 290 9 299 Space 617 26 643

New Look stores Mim stores Franchise stores *Mvt is the net movement in the period after store disposals.

2 New Look Annual Report and Accounts 2010 Overview

E-commerce Business review Russia March 09 Mvt* March 10 Stores 1 8 9 Space 5 52 57 Governance

We are always looking for ways to reach more customers. As at 28 May 2010 we serve 35 countries globally (including the UK) from our UK website. Australia Finland Jersey Portugal Poland Austria France Lithuania Slovakia March 09 Mvt* March 10 Belgium Germany Latvia Slovenia

Stores - 2 2 Bulgaria Gibraltar Luxembourg South Africa Financial statements Cyprus Greece Malta Spain Space - 11 11 Czech Guernsey Netherlands Sweden Republic Hungary New Zealand Switzerland Denmark Ireland Norway UK Belgium Estonia Italy Poland United States March 09 Mvt* March 10 > See pages 30 to 33 for more information Stores 7 3 10 Space 71 32 103 The Middle East Mim Belgium March 09 Mvt* March 10 Stores 7 1 8 Space 18 3 21

Total Middle East Locations March 09 Mvt* March 10 Bahrain 2 Egypt 2 Stores** 24 11 35 Kuwait 2 Space** 279 89 368 Saudi Arabia 18 ** Including clearance store UAE 11 Singapore Singapore March 09 Mvt* March 10 Stores - 3 3 Space - 24 24

3 New Look Annual Report and Accounts 2010 Overview TIMELINE

1969 1988 1994 1996 1998

First store opens First New Look 200th New Look Teen brand New Look floats in Taunton store opens in store opens launches on stock market France

2000 2003

New Look launches First New Look its Inspire range Menswear store (size 18 to 26) opens in Ireland Mim joins the 500th store opens: New Look Group 15,000 sq ft in Oxford Street

4 New Look Annual Report and Accounts 2010 Overview

We celebrated our 40th anniversary

this year. Here we look back at some Business review of the key events since 1969 – from 1969 - our first store in Taunton to our 2008 celebrity partnership with Lily Allen. Governance 2008 2007 Financial statements 2006 New ‘Look and Feel’ store at Westfield, London Designer ranges launched in conjunction with Giles Deacon and Lily Allen New Look opens in Belgium New Look becomes Number 1 in 2004 Opened third-party Launch of Kidswear volume for women’s distribution centres footwear Launch of Kelly in Singapore and Brook swimwear Istanbul & lingerie

Maternity wear launched Business goes private

5 New Look Annual Report and Accounts 2010 Overview ... and now 2009-2010 2009

April May June

August Launch Autumn/ Winter 2009 New Look opens in Egypt September

New Look opens in Jersey

New London October head office Kimberley Walsh is the face of GMTV High Street Autumn 2009 Fashion Award Best Shoes July New ‘Yes Yes’ denim range hits New Look opens the stores in the Netherlands New Look opens in Internal staff Singapore magazine launches Opens standalone Launches Giles Opens 1,000th Shoe and store in Bath Deacon menswear Accessories store Launches Fashion Rewards – customer reward scheme

40th anniversary New Look TV available on YouTube

Idol launches

6 New Look Annual Report and Accounts 2010 Overview

2009/10 has been quite a year.

New Look opened its doors in the Business review Netherlands, Egypt, Singapore and Poland. We also celebrated our 1,000th store in Bath and Kimberley Walsh opened our new flagship 2010 store at Oxford Circus. Governance

February Financial statements

New Oxford Circus flagship store opens

March

January

December Taylor Momsen is November the face of Spring/ Summer 2010

Luke Worrall is the New Look opens in face of Menswear New Look Poland Foundation launches New brand flagship store in Cardiff

7 New Look Annual Report and Accounts 2010 Overview chairman’s statement

I was appointed to New Look’s Board as Non-Executive Chairman on 11 January 2010 and am delighted with the success New Look has had over the last 12 months. The year to March 2010 has been an outstanding year for New Look, with growth in adjusted EBITDA of 14.6% to a new record for the Group of £249.4 million. Our success further underlines our differentiated operating performance in an increasingly competitive market-place. This remarkable performance has been achieved in the face of unprecedented market conditions. At the beginning of the year we faced an unstable economy, deteriorating customer confidence andS terling weakness against the US Dollar, John Gildersleeve our main purchasing currency. In the event, our customers Chairman demonstrated remarkable resilience, and the efforts of our buying teams and the support of our suppliers helped us maintain our value credentials to become the Number 2 player in the market today. Our cash generation has remained robust, driven by strong profit growth, even through the downturn. This has financed substantial investment in the business, to put in place a solid platform for future growth. new look, Phil Wrigley stepped down as Non-Executive Chairman in January 2010 and I would like to thank him for his contribution over the last ten years. During his time at New Look, Phil played an important role in the significant new faces transformation of the business and we wish him well in his future endeavours. We have also made further appointments to the Board this year and are delighted to welcome Stella I am excited to be part of New Look, David, Carolyn McCall and Henry Staunton as Non-Executive Directors. Their experience will be invaluable as the Group a vibrant and leading international continues to implement its strategy for growth and explores fashion retailer with great brand further opportunities. recognition and an impressive track record.

8 New Look Annual Report and Accounts 2010 Overview

The year to March 2010 has been an outstanding year for New Look, with growth in adjusted EBITDA of 14.6% Business review to a new record for the Group of £249.4 million.

The Group’s continued success this year is testament to the commitment and hard work of all our colleagues and the ongoing support of our customers and suppliers. I would like to thank them all for the contribution they have made. Governance Finally, I am excited to be part of New Look, a vibrant and leading international fashion value retailer with great brand recognition and an impressive track record. The Group has been transformed under private ownership and has exciting growth potential, both in the UK and abroad. I look forward to working closely with Chief Executive Carl McPhail and his team to help achieve this and to make further progress in uncertain times. Financial statements

John Gildersleeve Chairman

9 New Look Annual Report and Accounts 2010 Business review Chief Executive’s review

Against a challenging market backdrop, New Look has delivered outstanding results in its 40th year, increasing market share in the UK and cementing its position as a leading international fashion value retailer. This could not have been achieved without the hard work, dedication and drive demonstrated by all our colleagues. Group performance and the marketplace The past year has witnessed several milestones, including the 40th anniversary of New Look, the opening of our 1,000th store and the launch of our second generation e-commerce site, www.newlook.com. We continue to win market share despite challenging trading conditions and hold the Number 2 position in the overall category of Womenswear and Accessories Carl McPhail Chief Executive Officer in the UK*. We opened a total of 61 stores (16 in the UK) during the financial year, including our new flagship store inL ondon’s Oxford Street. In our existing stores, we successfully trialled and launched our ‘Look and Feel’ upgrade and refurbishment programme, improving the experience for our store customers and contributing to an increase in LFL** sales growth of +1.2% for the year. Simultaneously, we have maintained margins, grown adjusted EBITDA by £31.8 million to £249.4 million a great and generated strong positive cash flow. Following the decision to postpone our intended listing on the London Stock Exchange earlier this year, we remain confident place to be in the value of our business and our future growth prospects. New Look is continuing to perform in line with our expectations and we remain focused on driving the business both at home New Look has delivered outstanding and abroad. Economy results in its 40th year, increasing Our performance over the past 12 months is even more market share in the UK and impressive in the context of a difficult market backdrop, reflecting a prolonged economic downturn and uncertain cementing its position as a leading outlook for the UK customer. The retail industry has also had to contend with upward cost pressure attributable to international fashion value retailer. the continued weakness of Sterling and the rise of VAT from 15.0% to 17.5% in January 2010. However, while we have seen limited growth in the UK clothing market over the last 12 months, we continue to witness substantial shifts in market share towards value retailing. This segment’s growth rate continues to outstrip that of the overall market and has been exaggerated by the current recession as customers have gravitated towards value. We believe this shift to value is structural and a trend that is very much here to stay, irrespective of economic conditions. Furthermore, it is not just lower prices that customers are seeking, rather a combination of value and fashion and it is this unique mix that has set us apart from our competitors. The strength of our management has enabled us to contain costs, improve our products and ensure we deliver great fashion, in-store and online at the right time, at a great price.

10 New Look Annual Report and Accounts 2010 O verview

We strive to delight the customer with At the end of October 2009, we successfully signed 30,000 members within the first two weeks of our Fashion Reward every interaction they have with us. loyalty card trial launched in 40 stores in Manchester, Chester and North Wales. We recently extended the trial to a further Bu We talk daily to our customers via myLook, siness review 200,000 customers in the Manchester area in 2010. We are our exclusive social networking site. encouraged by the success of the trial to date and the impact the programme is having on our customers’ multi-channel World-class benchmarks shopping patterns. To achieve our goal, the way in which we operate needs to be We launched our new e-commerce site in March 2010, which at a world-class level, and this requires world-class will take our online offer to new heights and be a key part processes, tools and systems, which is what we are working to of delivering a seamless multi-channel offer to our customers. deliver across the business. As part of our Future Operating We are also in the process of installing new tills in store which Model programme launched last year, we are working on will allow online ordering in store for home delivery, offering Governance significantly enhancing how we support ourC ustomer, our our customers what they want, when they want it and where Brand and our Product functions to elevate them to they want it. world‑class status. In April 2009, we commenced implementation of this programme to be delivered over three years. Our first few milestones were about setting the foundations, on which we have now started to layer in the systems and tools that will support many of our planning processes. For example, by grouping our stores in clusters we are able to best deliver our Financial statements brand proposition to our customers in each market, driving higher sales and customer loyalty from improving our understanding of the relationship between customer, product and stores. Obsessive customer focus We strive to delight the customer with every interaction they have with us. We talk daily to our customers via myLook, our exclusive social networking site, and recently launched our very own NewLook TV channel on YouTube, hosted and produced by our customers. These innovative approaches to customer interaction appeal to our customer base and, in addition to building loyalty, generate useful feedback that we are able to use to inform decisions about all aspects of our business.

* Kantar Worldpanel 24 w/e 28 March 2010. ** lFL stores are defined on page 47. 11 New Look Annual Report and Accounts 2010 Business review Chief Executive’s review Continued

Best people Outlook for FY11 As part of our global ambitions, we took the decision to The outlook for the economy in the year ahead is hard to relocate our buying, merchandising, design and marketing predict. While UK consumption is expected to remain weak, functions to London in September 2009, strengthening core our customers have demonstrated unexpected resilience functions of our business and providing access to a global in the recession. However, the sector remains vulnerable talent pool in the heart of one of the world’s fashion capitals. to rising interest rate expectations, inflationary pressures and continued Sterling weakness. UK customer confidence is still We hosted our inaugural series of internal road-shows, fragile and we remain cautious over unemployment, inflation which took senior management across geographies to and a VAT increase dampening recovery. share our long-term goals and strategic objectives with all colleagues. This was a series of high profile, highly engaging However, despite the fragile economic outlook, we remain and motivational events which have served as a symbolic confident in the strength of our business model and future reference point for the whole year. We have also recently growth prospects. New Look has had an impressive year and launched our intranet site, iLook, which will change the way is firmly positioned to face the challenges of the coming year. our colleagues communicate and work with each other. The magic in our business is keeping the products in-store It is an essential tool in keeping us all connected as we and online fresh, fashionable and exciting, while delivering grow internationally. great value. This is our aim and what we believe continues to set us apart. Finally, we launched The New Look Foundation, coinciding with our 40th year of trading. We wanted our ever-growing international presence to be reflected in our charitable activities too.

Carl McPhail Chief Executive Officer

12 New Look Annual Report and Accounts 2010 Business review Overview our markets

Estimated UK clothing and footwear market by value £bn 32.2 well 30.9 31.3 31.3 31.1 Business review 30.0 29.2 29.0 27.8 positioned 26.3 26.1 New Look is a market leader in the fast growing value segment of the UK clothing and accessories market. Governance We offer fashion excitement, value and newness to a core target audience of fashion-conscious 16 to 45 year old women, as well as to men and children. The Group’s product ranges comprise Womenswear, Accessories and Footwear, plus expanding ranges in Menswear and Childrenswear. 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Womenswear (including Footwear and Accessories) accounted Source: Kantar Worldpanel Total Market (calendar years ended). for 87.9% of the Group’s revenue. The Generation range, which F is categorised as part of New Look’s Womenswear product inancial statements range but is targeted at the 9-15 year old age group, accounted for 4.5% of the Group’s revenue in the 2009/10 financial year. Menswear and Childrenswear accounted for 3.3% and 0.5% (excluding Generation), respectively, of the Group’s revenue in the 2009/10 financial year.

13 New Look Annual Report and Accounts 2010 Business review OUR MARKETS Continued

The UK market The general increased customer focus on value, experienced The UK clothing market was worth £31.1 billion in 2009, with in recent years in the UK market, has been accentuated by women’s clothing and accessories accounting for 47.5% of the continued downward pressure on retail prices. We expect market. New Look operates in the growing value segment of customer focus on value to continue and that the value the UK clothing market, which has been the most dynamic segment of the UK apparel market will continue to outperform segment in recent years, growing from 11.8% in 1999 to 22.2% the overall UK apparel market in the medium term, increasing of the market in 2009. The pace of New Look’s own UK retail its recent share of the overall market. revenue growth has exceeded this in recent years. A third-party survey of UK customers found that approximately half of those customers that had shifted their preference to Estimated UK value clothing market share value apparel products during the recent recession do not % intend to change their consumption and spending patterns 22.2 (in respect of apparel products) when general economic 20.6 19.6 20.2 18.5 conditions recover. 17.2 18.0 15.1 15.8 13.4 New Look recently became the second largest retailer by value 11.8 (revenue) in the UK women’s clothing and accessories market, with a 5.2% market share as at 28 March 2010. This has grown significantly in recent years from 4.2% as at 29 March 2009. In the under 35 years of age segment of the women’s clothing and accessories market, New Look is the largest retailer in 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 the UK by value. We also have leading market shares in several UK womenswear categories, including women’s tops Source: Kantar Worldpanel value including New Look (calendar years ended). and dresses. As at 28 March 2010, New Look was the largest retailer in UK women’s footwear by volume. As at the same date, New Look was the largest retailer for UK teenwear by value (revenue), with a 9.5% market share. Our international markets Our intention is to continue to focus on Western Europe for the development of New Look’s owned store network. We have already identified Russia,P oland and Singapore as attractive franchise opportunities, based on the relatively large market size and estimated long-term potential of the Russian and Polish markets and the strategic location of Singapore to access other Southern Asian markets. As at 27 March 2010, New Look’s store-based international presence extended to 13 countries (including own and franchise stores), of which four were new markets entered during the 2009/10 financial year (the Netherlands,E gypt, Singapore and Poland). Our most significant international markets are France, Belgium, the Netherlands and Ireland. Including our e-commerce capabilities, we now serve 35 countries, with plans to roll out to new territories. The performance of the clothing markets in France and Ireland, in particular, over the last financial year, has been adversely impacted by the well documented wider economic conditions in those markets (see Financial Review section on page 47).

14 New Look Annual Report and Accounts 2010 Business review Overview our brand

Our brand values New Look is one of the most If our brand pillars describe what we do, our brand values shape how we behave as a business.

well‑recognised fashion brands Business review in the UK, with high spontaneous we are impatient. We love the fashion business so we always keep things new and fresh, giving customers plenty of brand awareness. reasons to keep coming back.

Our brand pillars we are confident. We try new things, and we are not afraid The New Look brand is uniquely defined by the following to take risks – otherwise our business wouldn’t have grown three pillars: so fast with so many best sellers. We’re also confident in our customers, we listen to them all the time and trust > Fashion excitement – the best wearable interpretation what they tell us.

of a latest trend Governance > Value – genuinely surprising prices relative to the New Look is fun. Customers love the excitement and competition possibility of fashion which is why we are lively, friendly, optimistic with an unfailingly positive attitude to life. > Newness – always a new experience Our ability to deliver this distinct combination of fashion excitement, value and newness sets New Look apart from its peers. These brand pillars drive everything we do – our marketing, F our product, our stores and our people. We translate the inancial statements latest trends from the catwalk, celebrities and the high street, providing our customers with new fashion every week at genuinely surprising prices and great value.

The best wearable Genuinely surprising prices interpretation of a latest trend relative to the competition

FASHION EXCITEMENT VALUE

NEWNESS

Always a new experience

15 New Look Annual Report and Accounts 2010 Business review OUR BRAND Continued

Multi-channel marketing The power of celebrity We work hard to keep connected with our customers and We understand the power of celebrity and fashion. This year’s to build our brand through a multi-layered marketing partners include Kimberley Walsh, Taylor Momsen and Luke programme involving traditional advertising, but increasingly Worrall; they follow in the footsteps of Lily Allen, Agyness Deyn more innovative methods such as social media. For example, and Alexa Chung. we communicate with customers through our TV channel The type of celebrity we use has evolved over time reflecting New Look TV on YouTube and social networks such as Twitter our customers’ feedback. The selection of Kimberley Walsh and Facebook. was influenced by our customers’ desire to see real women In 2009, New Look conducted three advertising campaigns in our campaigns. Taylor Momsen (best known as Gossip across a variety of channels, including press, outdoor, Girl) was enlisted to help promote our 2010 Spring/Summer television and digital, to reach UK national and local markets. collection; her fashionable, rock chick style is a perfect fit The campaigns sought to promote the accessibility and value for the New Look brand. of the ranges on offer. Exciting and differentiated product ranges Dedicated in-house PR New Look offers own brand products that are available in our We employ a dedicated in-house public relations team focused stores and on our website. As we move into larger stores and on keeping New Look in the news. The PR team seeks to expand our online network (see section on Growth Drivers), maximise the editorial placement of New Look products in we are increasingly able to showcase our expanding product print and other publications that appeal to our target customers. range and offer our customers more of what they want. This media exposure is achieved free of charge, yet accounts for significant advertising value equivalent column inches. In FY10, coverage generated from our Idol, Giles, Kimberley Walsh and Taylor Momsen campaigns alone represented a PR value of circa £10 million. International press teams also generate significant exposure for the New Look brand.

16 New Look Annual Report and Accounts 2010 Overview

In addition to our core Womenswear wardrobe essentials The following pie chart presents the percentage of New Look’s (such as tops, dresses and casualwear), we also offer sales (being the gross transactional value) derived from each speciality sub-brands that target specific customer segments of our product ranges for the 2009/10 financial year. e.g. Generation (targeted at the 9-15 year old age group), Business review Inspire (sizes 18 to 26), Maternity and Yes Yes (denim products). FY10 product sales participation G We also offer exclusive designer and celebrity collaborations, (for UK and e-commerce, excluding F such as Giles by Giles Deacon and Idol, designed to stretch Franchise and International) New Look’s price architecture by introducing differentiated, A Womenswear 55.9% aspirational products at new, higher price points as well as B Menswear 3.3% offer increased fashion excitement and generate publicity. C Kidswear 0.5% A D Generation 4.5% E In addition, we offer a small selection of niche fashion brands. E Footwear 16.6% F Other accessories 15.4% G Concessions 3.8% Governance Total 100.0% D New Look C B Womenswear own brands Core womanswear brands Our footwear offering today is a market-leading force and our recently opened new flagship on Oxford Circus houses an entire floor dedicated to a shoe heaven! Our growing New Look Menswear range includes formal wear, casual wear and other products such as shoes and accessories, while our developing kidswear range includes product categories for both boys and Speciality sub-brands

girls in the pre-teen sector of the clothing market. F inancial statements The Mim product ranges include similar product categories to New Look, across Womenswear, Footwear and Accessories. Mim’s product ranges are, however, tailored for a different customer, and this is reflected in the more youthful orientation Designer of Mim’s product ranges as well as a more boutique store environment.

Concessions AX Paris You Rise 6ixty 8ight Pussycat No Romeo Mela Apricot

17 New Look Annual Report and Accounts 2010 Business review our customers

Obsessive customer focus Did you know over the last year we: Customer feedback drives every aspect of our business. We > Launched our Customer Scorecard to track New Look have a dedicated in-house Customer Insight unit focused on performance across brand, market and channel to help sourcing customer information using traditional methods such educate and inform management actions as quantitative and qualitative market research, activity-based panels and focus groups. We also spend time listening to our > Extended international insight coverage to France and Ireland customers all over the world. We talk to them in the stores, in to improve our understanding of the customer in local markets groups and one-on-one. We have an online community of over 3,500 New Look shoppers (myLook) who give us feedback 24/7 > Undertook four seasonal price benchmarking studies and our very own customer run TV channel on YouTube. It is across the business, ensuring New Look maintains its this obsessive focus on our customers that means we can competitive price position keep delivering new ideas, new looks and new reasons to keep > Launched an ongoing programme of customer wearer coming back. trials to benchmark the quality and fit of New Look products Many people love New Look and with over 1,000 stores > Spoke to over 65,000 shoppers to track our customer experience; providing fashion for women, men, teens and children, it is initiatives arising from this included a service programme in difficult to describe one single New Look customer.H owever, stores that has now been rolled out across the portfolio our female and male customers can be categorised as follows: > Interviewed over 125,000 customers and conducted over Bags of fashion – our female customer 75 focus groups with high street shoppers to ensure we are Most of our women customers are keen and expert shoppers. continually learning how to improve our business and give They think fashion is great fun and part of their social life. our customers what they really want They love to bag a bargain and get a real thrill from finding that killer fashion item. They want clothes that are bang-on myLook trend but that also fit their style and life.T hey are interested in celebrity fashion but also take advice from their friends. Our award-winning online community (myLook) allows us to have a two-way dialogue with our shoppers in real time, enabling us to Look good, feel good – our male customer converse, collaborate and create with consumers in new and Our male customers like to shop and enjoy fashion but innovative ways. myLook is used extensively across the business. perhaps don’t need quite as many new clothes as our female Our Chief Executive has held a number of live web chats with customers. However, when they do buy, it’s very important for customers across the country where they have advised on them to get it right and to feel confident about their fashion. everything from new store design to recruitment. And of course, as keen New Look shoppers, price is really important – the more fashion they can afford the better. Buyers also consult with members during our seasonal planning to understand attitudes toward new and emerging trends. We Finally, you may be surprised to learn the average age of have collaborated with customers to generate guerrilla marketing New Look’s customers is estimated to be 33 years*. ideas, magazine covers and advertising creative. A number of * Source: Kantar Worldpanel 52 w/e 28 March 2010. community members have even gone on to star as models in our brand magazine ‘Most Wanted’ and have also featured in episodes of New Look TV – a digital production seeded within popular social networks such as Facebook. More recently members were responsible for the selection of Kimberley Walsh as the new celebrity face of New Look; one of our most successful collaborations to date generating over £4 million in PR value. We have recently extended membership to over 10,000 and increased functionality on the site.

18 New Look Annual Report and Accounts 2010 Business review Overview Our operating model

Our operating model Responding rapidly to changing fashion trends Business review ave Entre of a w prene rest uria e c l tr th ad at in n g > > > io c h ul s tu a r F e

ip O h b s s r e e s n s t i r v a e p c r u e FASHION s i l t VALUE o p m p EXCITEMENT Governance

u e

s r

c f

g c

s In-house design team

S New Look’s design team has grown from a team of seven

in-house designers as at 27 March 2004 to a team of over

o y

u r 30 designers as at 27 March 2010. The team’s mission is to

s e

NEWNESS d

e develop unique and exclusive fashion ranges, reducing

d i

n exposure to supplier-driven trends and ensuring that the

New Look brand represents a differentiated customer

a a

l u

y proposition to that of our competitors. The design team closely

r F

d ,

t inancial statements u

n co-ordinates its activities with the merchandising and buying c

d teams and remains in close contact with suppliers to seek to

F o r a p s

t ensure product quality and consistency are maintained throughout the production process. During the 2009/10 financial year, over two thirds of all New Look products Entrepreneurial trading culture sold were designed in-house. New Look’s fast fashion operating model is centred around the delivery of our core brand pillars, an obsessive customer Daily product ordering focus, an emphasis on in-house design, daily product ordering, New Look operates a technologically advanced and efficient fast product development, manufacture and delivery and 700,000 sq ft distribution facility in Lymedale (Newcastle- strategic long-term supplier partnerships. under-Lyme), UK which has been in operation since September 2005. This highly automated facility has, in recent years, Obsessive customer focus contributed to significant operational efficiencies allowing the We are committed to listening and responding to our business to fulfil product re-orders on a daily basis if required customers. This requires internal co-ordination and a single, and, with future planned investment, has the capacity to shared view of the customer. We therefore relocated our core support future growth of New Look’s operations in the UK buying, merchandising, design and marketing teams from and Europe. split sites to one office near Oxford Circus, London. As well as providing access to one of the world’s fashion capitals, this move has made it easier for almost 250 people to work together to deliver the fashion our customer wants.

19 New Look Annual Report and Accounts 2010 Business review Our operating model Continued

Fast product development, manufacture and delivery Fashion at the crest of a wave Our fast fashion model allows New Look to respond rapidly It is the strength of our operating model which allows New to changing fashion trends. If we spot a celebrity trend Look to capitalise on fashion trends. We try to avoid both a mid-season, we can quickly react, tailor it to our customers strongly fashion forward positioning (attempting to predict and get it into stores rapidly. fashion trends before they take hold) and that of a fashion follower (with the risk that momentum for a trend has passed Strategic supplier partnerships by the time the buying team has reacted). Instead, we seek to New Look has a well-established supplier base, with operate at the “crest of the fashion wave”. This means that our relationships developed during the course of the last 40 years, buying team will identify when fashion trends have gained including strategic partnerships with suppliers based in China, some momentum, and then react quickly through our flexible Taiwan and Turkey. This supplier base facilitates speed of supply chain in order to deliver significant volume of products product development, manufacture and delivery to stores, reflecting those trends to the market. whilst avoiding the risks associated with the ownership of factories. For example, New Look is able to take delivery in the UK of trend items from China within five to six weeks of Flexible fast fashion placing an order, or as quickly as two to three weeks from operating model countries such as Turkey and Romania. We also have the ability to produce and deliver to stores some of our simpler ‘Fashion forward’ ‘Crest of the wave’ ‘Fashion follower’ products (such as t-shirts with slogans printed on them) within a 24-hour period in order to capitalise on newsworthy events. However, it is not just about having everything produced as fast as possible; it’s about being proactive ahead of season with low commitment levels and having the flexibility in season to react rapidly to changing trends.

> Higher risk – > Lower risk – > Low excitement hits and misses trend taking hold > Risk that > Low volume > Quickly react to momentum momentum with has passed significant volume > Weak volume > Requires fast and demand flexible supply chain

Leading international fashion value Long term retailer goal

5 year business plan KPIs Financial objectives

Drive LFL sales Drive ROCE and and profit cash generation Key focus UK retail Develop Multi-channel International Growth space and broaden development expansion drivers expansion product range > page 22 > page 26 > page 30 > page 34

World-class Obsessive customer Best benchmarks focus people Core > page 11 > page 18 > page 38 principles

20 New Look Annual Report and Accounts 2010 Business review Overview Our strategy

> UK retail space expansion and refurbishment Driving Read more on pages 22-25 Business review fashion > Development and broadening Our long-term goal is to be of product range the leading international fashion Read more on pages 26-29

value retailer and our strategy Governance is summarised in the pyramid > Growth of e-commerce to below. At the top sits our long- drive multi-channel offering term goal, while the levels below Read more on pages 30-33 set out how we plan to achieve it, supported by our key principles. > international development

Read more on pages 34-37 F inancial statements

Leading international fashion value Long term retailer goal

5 year business plan KPIs Financial objectives

World-class Obsessive customer Best benchmarks focus people Core > page 11 > page 18 > page 38 principles

21 New Look Annual Report and Accounts 2010 Business review uk retail space expansion

New Look has a well-established record of rapid expansion in the UK, but it’s not just about growing the top line – space expansion has also been the biggest driver of adjusted EBITDA over the last few years. Our UK paybacks currently average 13 months for new stores and 23 months for relocated stores*.

* For relocations, the payback is longer because we only take the uplift in profit versus the old store and amortise this against the full cost of the new store.

SPACE TO GROW UK retail space expansion has historically been a strong driver of New Look’s revenue growth and will continue to be an important driver in the future.

22 Overview BusinessBusiness reviewreview Governance Financial statements 23 5,473 1,018 957 885 4,825 823 4,085 3,340 2010 2009 2008 2007 2010 2009 2008 2007 Space (’000) Space ft** Sq 5,473 +13.4% Stores Total 1,018 +6.4% arance store in Hull. in store arance cle

essful Look and Feel Feel and Look essful ificant scope for further further for scope ificant ctured portfolio strategy of of strategy portfolio ctured ay all our UK stores are are stores UK our all ay udes franchise trading space and is as at the financial period end. period financial the at as is and space trading franchise udes Annual Report and Accounts 2010 Accounts and Report Annual

UK space roll-out space UK cludes ucc ign tru ncl I Generated a profit after deducting store operating costs, costs, operating store deducting after profit a Generated ex * * ** refurbishment programme refurbishment expansion through new space space new through expansion relocation and right the for stores right-sizing markets S S S Track record of achievement achievement of record Track in Tod profitable*

> > > > > New Look New New Look Annual Report and Accounts 2010 Business review uk retail space expansion Continued

Significant scope for additional space expansion Four key market categories Our total trading space across the UK store portfolio increased As an example, we segment our UK markets into four key from 3.5 million sq ft and 586 stores as at 28 March 2009 to categories: 3.8 million sq ft and 602 stores as at 27 March 2010, representing an increase in space of 8.9%. During the year, the average size > Leading city centres and malls, e.g. Bluewater or the of our UK stores also increased from 6,000 sq ft to 6,300 sq ft. Westfield Centre inL ondon: these represent opportunities New store openings, relocations and store acquisitions all to showcase the full potential of the brand with store sizes contributed to the overall growth in space in 2009/10 ranging from 15,000 to 30,000 sq ft. financial year. > Greater London market: we are targeting a number of inner Structured store portfolio strategy and market analysis and suburban London markets with store sizes ranging from Our UK property strategy revolves around right-sizing stores for 5,000 to 20,000 sq ft. each market. As at 27 March 2010, our stores ranged in size > Regional destinations e.g. Portsmouth or Bolton: these from 551 sq ft to 29,768 sq ft, with the store sizes and customer comprise attractive high street and retail centres capable of proposition depending on the size of the city or town where the supporting stores ranging from 5,000 to 17,500 sq ft featuring store is located and the local competitive profile. Our goal is to an edited version of the full New Look offer. have optimally-sized stores in the most attractive locations available. We achieve this through a combination of new store > Local catchments: these include small towns such as openings, relocations to larger sites where existing stores are Newquay or Christchurch that more appropriately support restricted in their ability to trade our full product range and a selected version of the New Look offer. Store sizes range through managed store closures in those markets that are in from 3,000 to 9,000 sq ft. long-term decline.

24 Overview BusinessBusiness reviewreview Governance Financial statements 25 ook ook L les growth as as growth les sa L F L After les uplift compared to a control control a to compared uplift les sa L F L ths. ths. mon

ail space expansion space ail ret

nd Feel is a rolling programme over a number of years and is is and years of number a over programme rolling a is Feel nd ‘Look and Feel’ refurbishment programme refurbishment 2009. in Feel’ and programme ‘Look refurbishment a testing started We expected to be a useful contributor to total total a to contributor useful a be to satisfaction. expected customer of driver key a being are as well which stores 79 of total a refurbished we’ve year the During of payback average an anticipated an generating driving are and 7%, around of group 18 some Focused on improving the customer in-store experience. in-store customer the improving on Focused ‘Look and Feel’ store refurbishment programme refurbishment store Feel’ and ‘Look UK Before 5.0 3.8 New space/relocation New 2.3 1.9 Relocation Relocation New space New 1.1 1.1 1.0 0.7 0.5 0.2 under negotiation. under ft ft

Annual Report and Accounts 2010 Accounts and Report Annual

Today Medium-term plan Total Regional destinations catchments Local Leading city centres Leading city centres and malls London market Deliverable ongoing UK space expansion space UK ongoing Deliverable ft) sq (million space Retail Each opportunity is carefully evaluated and has to meet our our meet to has and evaluated carefully is opportunity Each hurdle. payback good in 24-month sites store secure to ability our approved in and confident negotiated are We identified, the currently for have We stores) closed locations. of (net space new of ft sq to 100,000 120,000 about further a have and year financial 2010/11 145,000 New Look New New Look Annual Report and Accounts 2010 Business review Develop and broaden Product range

The last 12 months have seen some exciting product developments at New Look, including the successful re-launch in August 2009 of our denim offering with our ‘Yes Yes’ campaign, the arrival of our Limited Edition and Idol collections, and the broadening of our Menswear collection to include, for the first time, a showing from Giles Deacon. choice & quality New Look consolidated its position as the Number 2 womenswear and accessories retailer by value in the UK in FY10, with a 5.2% share and today holds market-leading positions in five other categories. New Look is the Number 1 retailer by value in the women’s under 35 market in the UK.* * Source: Kantar Worldpanel 24 w/e 28 March 2010.

26 Overview BusinessBusiness reviewreview Governance Financial statements A 27 G B C F D E 3.3% 3.8% 0.5% 4.5% 55.9% 16.6% 15.4% 100.0% accessories

Menswear Menswear Concessions Womenswear Womenswear Kidswear Footwear Other ales are defined on page 47. page on defined are ales ote: Generation includes teenwear. includes Generation ote:

B C F G Total A D Generation E FY10 product sales* participation sales* product FY10 excluding e-commerce, and UK (for overseas) and Franchise N *S ber 1 women’s footwear footwear women’s 1 ber ificant opportunity to grow grow to opportunity ificant ding market shares in in shares market ding ebrity and designer designer and ebrity Annual Report and Accounts 2010 Accounts and Report Annual cessories retailer by value value by retailer cessories

ign menswear and childrenswear and menswear retailer by volume in the UK the in volume by retailer fashion- Cel most our for collections customers conscious S Num Number 2 womenswear and and womenswear 2 Number ac UK the in Lea womenswear UK several tops including categories, dresses and > > > > > New Look New New Look Annual Report and Accounts 2010 Business review Develop and broaden Product range Continued

In the 2009/10 financial year,N ew Look generated over 95% Footwear – a case study of revenue from Womenswear (including Generation, Footwear Footwear is an example of where we continuously strive and Accessories), over 3% from Menswear and less than 1% to improve our market-leading positions. For example, in from kidswear (2-10 year age group). This compares to the the last 12 months, we have had huge success in boots, partly broader UK apparel market across all competitors where attributable to a wider range of high leg and ankle boots this women’s clothing and accessories accounts for 47.5% of sales, winter and conviction in key fashion pieces (e.g. cowboy boots). mens clothing and accessories 23.7% and children’s clothing We introduced new lead-in prices on fashion sandals, while and accessories 11.9% of sales*. This highlights the scale of stretching our prices on high fashion styles. In casual footwear, the opportunity for growth for New Look in these we now offer almost 10% of product by volume as a wide-fit under‑penetrated categories. option, while in formal footwear, we strengthened our buying * Kantar Worldpanel (calendar year ended 2009). and design team and adopted a new pricing strategy for key pieces. All of these actions have seen our value market share Womenswear, Footwear and Accessories in women’s footwear grow from 6.0% to 6.4%* over the We have been delighted with our Womenswear success over last 12 months. the last 12 months. This year saw a phenomenal response to * Kantar Worldpanel – 52 w/e 28 March 2010. our jegging offering which exceeded all expectations. As at the year end, New Look was the Number 3 denim retailer by Exciting celebrity and designer collections value and Number 2 by volume. Other impressive performances New Look continues to build upon its successful relationship came from Tops and Dresses where New Look maintained with designer Giles Deacon; his first Collection forN ew Look the Number 2 position in value terms for the former and launched in December 2006 and is today showing its 10th the Number 1 in volume and value terms for the latter. Womenswear and 2nd Menswear season with Autumn/Winter Our Footwear collection continues to grow from strength to 2010. Together with our Limited Edition and Idol collections, strength and we remain the Number 1 women’s footwear we are seeking to appeal to New Look’s most fashion- retailer by volume. conscious customers. * Kantar Worldpanel – 24 w/e 28 March 2010.

28 Overview BusinessBusiness reviewreview Governance Financial statements 29 stores and and stores ook L also saw a record record a saw also 2009, building on on building 2009, ew ew N 10 10 in Y UK ls) range and the past year year past the and range ls) ’s Generation history with profits profits with history Generation ’s gir

ook lion* in the the in lion* franchise stores with our kidswear kidswear our with stores franchise L bil 28 28

ew ew N stores and stores 22%. eration collection traded in 398 398 in traded collection eration n sales densities grow by 4% and profit densities densities profit and 4% by grow densities sales n ook nchise stores as at March 2010, compared to 360 and 20 20 and 360 to compared 2010, March at as stores nchise by by has been a great year for our Generation teenwear teenwear Generation our for year great a been has L

Gen see

fra antar Worldpanel (calendar year ended 2009). ended year (calendar Worldpanel antar 10 10

ew ew K Y brand, in which we consolidated our position as market leader leader market as position our consolidated we which in brand, market. the of share value 9.5% with The holiday half-term school 2010 February The 2009. March at as in biggest the was F year. previous the on 19% increasing and boys age of years (2-10 has grow Childrenswear Childrenswear F 38 pocket drop Generation the with line single a of performance units. 250,000 selling cardigan retailer leading a become to is goal our term, longer the market, Over accessories and clothing children’s growing the in £3.7 worth 48 was in which today trade We offering. Generation our of strength the N * Menswear Menswear Worrall as as Worrall on’s Oxford Oxford on’s 10, uke Y ond L L n F n I also saw the launch launch the saw also 10 10 Y has a dedicated team of of team dedicated a has ook L ew ew N nswear market through range extension extension range through market nswear me UK aims to increase its existing value share in the the in share value existing its increase to aims Annual Report and Accounts 2010 Accounts and Report Annual ering.

Menswear delivered profit growth of 54.5% versus versus 54.5% of growth profit delivered Menswear off ook

new celebrity marketing campaign with with campaign marketing celebrity new lude a greater number of wardrobe essentials, formal formal essentials, wardrobe of number greater a lude with profit densities up 8.3%. F 8.3%. up densities profit with L 10, Y 09 09 inc our

ew ew Y n F n As with womenswear, womenswear, with As menswear our However, buyers. and designers This menswear availability. space by constrained often is new range of product opening the with future the in relevant less become will in flagship opened recently Our stores. more 40% larger offering date, to store men’s biggest our is Circus, accessories; and footprint. largest footwear previous our than clothing, product of units million 5.4 over sold years. two last the in units million 2.6 extra an is this N fragmented new a out rolling accessories, and products menswear our increasing and feel and look in-store menswear online Menswear I F that Deacon Giles of with collaborations menswear two as well nationwide. shops 40 in sold were to New Look New New Look Annual Report and Accounts 2010 Business review multi-channel development

The online UK clothing and footwear market has grown strongly over the last few years, representing circa 7% of the overall UK clothing and footwear market in 2008 compared with circa 2% in 2003. Verdict predicts a sales compound annual growth rate (CAGR) of just over 10% for the online UK clothing and footwear market between 2009 and 2013.

virtual fashion Our website provides a platform that allows New Look to experiment in new geographical markets without the capital investment and risk that would be associated with the opening of stores in these markets.

30 Overview BusinessBusiness reviewreview Governance Financial statements 31 Friday Friday night girls is night! e only only e tor customer S Multi- channel customer customer research, the average spend of of spend average the research, customer ook L ew ew stomer eb only only eb N W cu Based on on Based store-only our of that 2.5x around is user multi-channel our customer. web-only our of that 1.7x and customer The benefit of multi-channel: driving incremental sales growth sales incremental driving multi-channel: of benefit The ntries as at year end year at as ntries ing customers in in customers ing eloping multi-channel multi-channel eloping sonalised experience sonalised ving customer loyalty customer ving cou Annual Report and Accounts 2010 Accounts and Report Annual stination for women’s clothing clothing women’s for stination

d Classifieds w/e 10 April 2010. April 10 w/e Classifieds d erv Source: Hitwise Most Popular Websites in Shopping Shopping in Websites Popular Most Hitwise Source: an Dev capabilities 24 Dri Per Third most visited online online visited most Third de end* year at as UK the in S * * > > > > > New Look New Growth of e-commerce to drive multi-channel offering multi-channel drive to e-commerce of Growth New Look Annual Report and Accounts 2010 Business review multi-channel development Continued

New Look’s e-commerce website was launched in December Personalised customer experience 2007, at which time the Group traded using the www.newlook.co.uk Our recently launched second generation website offers domain name. Today, the Group trades under www.newlook.com customers additional features and enhanced functionality and as at 27 March 2010, served customers in 24 countries such as greater ease of purchase, personalised offers, guided (including the UK) and 35 countries by 28 May 2010. As at navigation, faster search options and checkout, and improved 10 April 2010, New Look was the third most visited online visual presentation, as well as providing increased capacity destination for women’s clothing in the UK with a market to support future growth. In due course, we also expect to share of 4.4%*. be able to offer our international customers the ability to buy * Source: Hitwise Most Popular Websites in Shopping and Classifieds products in languages other than English and currencies – Apparel and Accessories ranked by Visits – w/e 10 April 2010. other than Pounds Sterling. Opportunity to communicate with customers and drive loyalty We are also rolling-out EPOS till equipment and software to allow Our website provides a platform that allows New Look to staff to place orders in-store for delivery to the customers’ homes. experiment in new geographical markets without the capital investment and risk that would be associated with the Second generation website opening of stores in those markets. We are also able to use More modern look Easier navigation the website to trial products online before introducing them in stores. New Look customers based in the UK and Ireland are also able to return products purchased online to New Look stores in their country of purchase. As at 27 March 2010, the equivalent of 100% of New Look’s in-store full price product ranges were available on our website (excluding reduced items). The website also provides information on current fashion trends under ‘Look of the Week’, while the ‘Most Wanted’ section of the website Easier to find the right products Better visual merchandising promotes popular ranges currently on offer. The website also has exclusive offers that are not available in-store.

32 Overview BusinessBusiness reviewreview Governance Financial statements 33 ook.com had over 50 million visitors in 2009, which is is which 2009, in visitors million 50 over had ook.com top selling option in 2009 was the black drop pocket pocket drop black the was 2009 in option selling top h the launch of our second generation website, visitors visitors website, generation second our of launch the h ffic volumes for international have increased by 120% 120% by increased have international for volumes ffic ewl N 2008. from increase 92% a 2008. vs. 2009 in converted visitors more 26% Tra launch. from months nine than less in Wit more 27% viewing and online time more 22% spending are average. on products cardigan which sold over 6,000 units online. units 6,000 over sold which cardigan Our Key facts Key > > > > > products, in particular through jointly developing developing jointly through particular in products, Annual Report and Accounts 2010 Accounts and Report Annual

ook L ew ew N our store network and online capabilities and thereby avoiding avoiding thereby and capabilities online and network store our store-only a having with associated constraints the presence. website-only or Giving our customers what they want, want, they what customers our Giving want they how want, they when customers our all of access the improve to is goal Our to New Look New New Look Annual Report and Accounts 2010 Business review International EXpansion

New Look has a clear and rigorous route to market selection. We intend to capitalise on this experience to date by opening New Look owned stores and New Look franchise stores in selected international markets.

places to go New Look has gained significant experience in several markets outside the UK, particularly with regards to key aspects of trading internationally.

34 Overview BusinessBusiness reviewreview Governance Financial statements E % 35 6% 0% 6% 6% F 7.8 52. 22. 17. D

rnational rnational rnational rnational nte nte I I Franchises

ook ook ook L L L

tinental Europe tinental and C ew ew ew ew ew ew rel Mim N Con N N

C E D D

F i 6% 4% 4% 78. 21. B A

rnational nte I & E-commerce & al al UK Tot

FY10 revenue split revenue FY10 A B International revenue £313.9m revenue International brand recovery showing showing recovery brand nchise approach provides provides approach nchise ablished a solid platform platform solid a ablished Annual Report and Accounts 2010 Accounts and Report Annual presented 21.4% of Group Group of 21.4% presented

low-cost, low-risk route to new new to route low-risk low-cost, markets Mim improvement of signs Est growth future for Fra International revenue revenue International re FY10 in revenue > > > > International development International New Look New New Look Annual Report and Accounts 2010 Business review International EXpansion Continued

International development New Look franchise – a low risk and low cost The proportion of New Look’s revenue generated from way to enter new markets international operations has increased significantly in recent New Look’s first franchise store was opened in theU nited years from £87.3 million (12.5%) in FY04 to £313.9 million Arab Emirates in September 2006. Today, New Look has (21.4%) in FY10. 49 international franchise stores, with four franchise partners across the Middle East, Russia, Poland, Egypt and Singapore, New Look International – platform for growth with a total trading space of 460,000 sq ft and an average From just four stores in FY04, by the end of FY10 the Group trading space of 9,388 sq ft. During FY10, we opened 24 new had 60 European New Look stores, with a total trading space franchise stores in territories across the Middle East, Asia, of 549,000 sq ft and an average store trading space of Russia and Eastern Europe. 9,150 sq ft. Our European business now has stores located in both high-profile locations such as theL es Halles centre in New Look has a rigorous franchise partner selection process, Paris and in more provincial towns and centres. working only with those partners with proven track records who are able to provide access to talent, real estate and local market knowledge. Together with our franchise partners, we agree on which elements of the New Look product offering work best in each local market, tailoring the proposition to local market tastes and attributes. New Look also regularly provides information on product trends to our franchise partners and inspects stores regularly.

First store in Singapore First store in Warsaw

> In Ion Orchard. > In Złote Tarasy. > 6,361 sq ft (Core Ladies, Footwear, > 6,770 sq ft (Core Ladies, Footwear, Accessories, Generation) on two levels Accessories, Generation) on one level situated next door to Zara and Top Shop. situated next to New Yorker, Top Shop and Next. > Store opened on 1 August 2009. > Store opened on 12 February 2010. > Ion Orchard: an eight level retail development that opened in July 2009; > Złote Tarasy: development opened in 66,000 sq m of space at the centre of Feb 2007, more than 200 stores on Orchard Road, the premier shopping three levels; 63,500 sq m of space in prime destination in Singapore. site next to the central railway station, features a 10,000 sq m glass roof.

36 Overview BusinessBusiness reviewreview Governance Financial statements 37 ough ough thr

cess. cess. pro

res. res. sto

expects further further expects ook L ew ew N ring of operational best practice (for example, improved improved example, (for practice best operational of ring balanced the product offering to appeal to traditional traditional to appeal to offering product the balanced re- sha

Over the medium term, term, medium the Over assurance quality the of review thorough more a Management changes made during the course of 2009 are are 2009 of course the during made changes team Management new The issues. these address successfully to helping taken has and backlog inventory the cleared customers, target Mim in presentation visual the improve to steps improved and messages marketing stronger layout, store loss-making of number small a exiting management), inventory and operation e-commerce Mim’s enhancing stores, improvements to be made to Mim’s performance through through performance Mim’s to made be to improvements the brand. Whilst also operating in in operating also Whilst brand. ook L ew ew N ch 2010, there were 307 Mim stores across France France across stores Mim 307 were there 2010, ch tomer. brand proposition to their customer that is distinct distinct is that customer their to proposition brand took over full ownership of the Mim brand and and brand Mim the of ownership full over took Annual Report and Accounts 2010 Accounts and Report Annual

Mar

cus ment of value fashion, Mim’s offer is designed for for designed is offer Mim’s fashion, value of ment

ook and

L seg

ew ew Mim – showing signs of improvement of signs showing – Mim a younger (under 30 years old) and more value-conscious value-conscious more and old) years 30 (under younger a female an and space trading total of ft sq 664,000 with Belgium an and has also Mim ft. sq 2,163 of space trading store average in launched was that www.mim.fr at website e-commerce 2009. September 2003. in acquisition its since profitably operated has Mim suffered has business the years, two last the over in However, change a market, apparel French the in decline the from result a as arose which backlog inventory an management, seasonal poor and ranges product unpopular introducing of 2008. of Spring/Summer the in transitioning product As at 27 at As N operations in June 2003. The Mim stores offer a product product a offer stores Mim The 2003. June in operations range the from that of the the of that from New Look New New Look Annual Report and Accounts 2010 Business review Our colleagues

Our commitment to our people is in Being able to give our people the opportunity to acquire a recognised qualification is important to us and we work supporting them to deliver their part closely with Protocol Skills to offer comprehensive Retail NVQ and SVQ qualifications – we have over 750 of our people in our growth and enable them to working towards these at any one time. build their skills and career with us. The performance of everyone in New Look is measured regularly against the results they deliver and how well they demonstrate the desired behaviours which underpin Attracting talent our culture. New Look is an attractive employer with competitive remuneration practices and so we have little problem in Developing leaders attracting talented people to work with us. Our leaders and managers are encouraged to identify, nurture and develop talented individuals and as a result We recruit natural ‘New Lookers’ – people, who are our internal promotion rate regularly exceeds 60%. customer champions, have a passion for fashion, who are curious, go getting and self starting. We support their This year’s highlights: development as they progress their career with us through > Leadership Development Programme a mixture of theory based and practical learning. Our top 60 leaders embarked upon an extensive Tailored training development programme designed to enhance leadership Our commitment to their development starts on day one and strategy development skills. with our Company induction – a practical tailored programme of activities designed to help new joiners > Management Development Programme understand our organisation, our customers and how we work together to deliver results. Over 60 of our managers identified as having high potential embarked upon a development programme Development support for our people continues as they designed to enhance and build their capability to hold progress their careers with us both in the form of technical future roles. skills development programmes designed to build expertise in a particular function such as Buying or Merchandising > Springboard Programme and in the form of management and leadership Over 50 of our people took this first step into programmes. management roles enabled by our Springboard stepping into management programme. employing the best We recognise that the continued success of the Group depends upon its ability to attract, motivate and retain people of the highest calibre.

38 New Look Annual Report and Accounts 2010 Overview

Equal opportunities Health and safety We recognise that the continued success of the Group depends The Group is committed to the health, safety and wellbeing of upon its ability to attract, motivate and retain people of the its colleagues, customers and anyone engaged in business highest calibre. We ensure that no job applicant or colleague is with us. Business review discriminated against, either directly or indirectly, on the grounds Each area of the business has measurable objectives set at the of disability, gender, nationality, ethnic or racial origins, marital beginning of the year and we report on progress throughout the status, religious belief, political opinion, age or sexual orientation. year. We also maintain a risk register which is updated as It is the policy of the Group to give equal opportunity of employment circumstances change. We consult with all colleagues on a to disabled and able persons according to their suitability to regular basis with regard to any changes in circumstances. perform the work required. The services of existing colleagues We are currently working with our international colleagues to who become disabled are retained whenever practicable. ensure that legal standards are achieved across the Group but

we also seek to identify and share best practice across the G

Communication ove business.

We are committed to open and honest, two-way communication rnance with our people providing regular updates on trading and Accident rates in the Group remain below the national average financial performance.C olleagues are actively encouraged to for a retail business and we received a 5 Star rating from the develop their understanding of the financial and economic British Safety Council following an audit of our Distribution factors that affect the performance of the Group. Centre during FY10. Our staff forums are comprised of elected representatives from various areas of the business who are consulted with and informed about key business issues in advance of the public or media. Additionally, the staff forums are actively involved in Financial statements initiatives such as energy saving, charitable activities, canteen facilities and staff parties. Communication is also achieved via key management meetings and through staff magazines, iLook – our intranet, social media websites, tele-conferencing, video updates, email, direct briefings and annual communication roadshows.

Reward management New Look aims to attract, motivate, retain and develop high calibre staff by rewarding them with competitive salary and benefit packages which are linked both to individual and business performance as well as the external employment market. The Group operates Employee Share Ownership Plan Trusts (‘ESOP’) that have been established for the issue of shares to certain Group colleagues, engaging managers in the ownership and financial success of the organisation. Incentives also include a 50% product discount in our stores and a range of other benefits including a contributory pension scheme.

39 New Look Annual Report and Accounts 2010 Business review OUR SUPPLIERS

Strong partnerships are critical to Our sourcing strategy is focused on four main sourcing regions: the UK/Europe, China, South East Asia and the Indian sub- our business model and continued continent. growth, which is why we work with Products sourced by intake value by region in FY10 D A suppliers who are exceptionally A UK/Europe 18% B China 54% responsive and reliable. This allows C South East Asia 10% us to take delivery of some on- D Indian sub-continent 18% C trend items in the UK within two or three weeks of placing an order. B

New Look has long recognised the importance of having a As at 27 March 2010, we had 331 suppliers using 1,016 factories well-established supplier base to speed product development, across 32 countries. manufacture and delivery of fashion items, while avoiding the New Look’s suppliers can be broadly categorised into three risk of owning factories. We work closely to ensure we develop groups. First, there are a number of suppliers who are fully long-term relationships that are mutually beneficial. dedicated to manufacturing New Look’s products and who are One of our core values is to treat people with respect which we mainly responsible for manufacturing our in-house designs. build into the way we work with others. We work to ensure that, These suppliers provide a fast and competitive source of product so far as is practicable, suppliers adopt and apply the principles and are located in China, Turkey and Bangladesh. The second set out in our Code of Conduct and that equally, all colleagues of category comprises those suppliers where New Look works those organisations are respected and treated fairly and with directly with the factory in the country of origin, sometimes dignity in all aspects of employment. supported by local agents, such as in Eastern Europe. The third category comprises those suppliers where New Look works with Establishing relationships the supplier’s design team to develop products to complement its After 40 years of trading, we have a well-established supplier own in-house designs. A key feature of this third category is that base, with some 20 year old relationships, including strategic the supplier sources all fabrics and trims. partnerships with suppliers based in China, Taiwan, Bangladesh, Turkey and Moldova. On average, we have been working with these strategic partners for over 10 years.

40 New Look Annual Report and Accounts 2010 Overview

Ability to switch production We believe the key advantages of the New Look supply chain are: Due to the long-term and flexible nature of our supplier > Dependability of supply: driven by length and depth of relationships, if demand for an item is higher than expected, relationships with key suppliers. Business review we have the ability to switch production from suppliers based in countries such as China to suppliers based in the UK or > Strong commercials: driven by trust and open book elsewhere in Europe in order to achieve quicker delivery relationship between partners, including our ability to drive times and so increase our revenue opportunity. production efficiency without owning assets. During FY10, over half of New Look’s products with lead times > Flexibility of supply: strong sourcing relationships but lack of of over five weeks were sourced fromC hina and we are tied assets gives ability for supply to be moved appropriately. currently investigating new sourcing opportunities in Cambodia, > Freshness in supply: driven by significant role of third-party the Philippines and Indonesia for products with similar lead and new suppliers providing challenge and innovation. times. Products with lead times of less than five weeks are G predominantly sourced from the UK, Turkey, Moldova and > Excellence of execution: a honed process with time and cost ove

Romania, but we have recently increased the share of products taken out of supply chain at every opportunity. rnance sourced from North Africa and expect to be able to further increase this share in the future. Ethical assurance monitoring In 2009 we carried out 16 audits working with Impactt, Our consolidation hubs (small distribution facilities) in backed up by 184 standard audits to improve our Singapore and Turkey, which opened in 2008, have subsequently understanding of the rapidly changing issues in our supply allowed us to reduce, by as much as 22 days (from 47 days in base. Like other retailers, we sometimes find issues. July 2008 to 25 days in December 2009), the lead time for Our ethical trading programme is designed to tackle the delivery of products from our supply sources to our Middle East root causes of each of these issues. franchise stores. Financial statements We have monitoring and measuring mechanisms to evaluate the performance of both New Look and our suppliers. This is backed up by a bi-annual formal review mechanism for our top 20 suppliers. During 2010 we plan to roll out a supplier survey where they will be encouraged to give anonymous feedback on what it is like to work with New Look. The feedback will enable us to develop even stronger working relationships.

supply and demand We have an ongoing commitment to our partners and we work to develop long-term relationships that are mutually beneficial.

41 New Look Annual Report and Accounts 2010 Business review Corporate responsibilIty

Our ethical initiatives Our Ethical Code of Conduct helps We have made strenuous efforts to try and ensure that we to ensure that we act responsibly trade in a fair, ethical and responsible way. Suppliers are asked to sign up to our Ethical Code of Conduct and we work towards the people who make our closely with Non-Governmental Organisations (NGOs), trade unions and ethical experts to ensure our overseas workers products by supporting our suppliers are fairly treated. in providing good quality jobs for We are a proud member of the Ethical Trading Initiative (ETI), their workers. a ground-breaking alliance of companies, trade unions and voluntary organisations, who work in partnership to improve the working lives of people across the globe. In 2009, ETI described New Look’s performance as “particularly good compared to some long-standing members”. We also increased the number of factories with which we are actively working on making ethical trade improvements from 313 to 484 in 2009, an increase of 54%. Our ethical objectives We try to make a difference in an authentic, practical and honest way by engaging our people, partners and customers to make small changes that together lead to big differences. The Group shares objectives to: > Be fair and ethical in the way we trade: to our customers, suppliers and the people who make our products. > Look after our people: to teach, enrich and stretch our people to be the best. leaving > Be a good neighbour to the world by reducing the impact a legacy we make on the planet. A new look at our ethics

42 New Look Annual Report and Accounts 2010 Overview

> Continuously improve: we want to improve everything we Getting children back to school are able to in our supply chain. We accept that we cannot We are opposed to child labour and our Ethical Code of solve all of the problems we come across overnight: Conduct stipulates that all workers in factories producing for us must be over the local minimum working age. We Business review > Where big changes are practical we want to make those have adopted the Child Labour Operational Procedures which changes. sets out that commitment and forms part of our “supplier > Where changes aren’t practical we work to make smaller manual” that all our suppliers sign up to as part of our changes that will lead to an overall difference. terms and conditions. > Ensure that our objectives are central to how we operate. Boosting productivity We work with suppliers to improve productivity and workers’ For more information on Corporate Responsibility visit lives whilst reducing inefficient working practices. For www.newlookgroup.com example, poor labour standards and lack of job security G

How we work is common among Indian factories resulting in high ove absenteeism, poor efficiency, quality and low productivity We work with 100% of our supply chain to improve working rnance conditions for the people who make our products. As well as which all make production planning very difficult. One factory signing up to our Ethical Code of Conduct, we require all our set up a trial line to test new ways of working with a stabilised suppliers to: workforce. We are awaiting the results of the roll-out expected during 2010, but initial indications are that workers’ take home > Take ownership of any issues. pay could increase by 18%. > Work with us to tackle these issues. Animal welfare > Be open and honest with us. This year we launched our Animal Welfare policy. We believe that it is never acceptable to harm animals in the manufacture Financial statements We pilot individual country projects that allow us to listen to or testing of our products and for this reason we developed an the people in our supply chain, helping us to understand what appropriate policy to cover all products that we sell. is good about the way we work and what can be improved. This policy covers any animal derived materials used in our Why we do it products as well as the use of animal testing for cosmetics. We believe in giving everyone involved in our supply chain We believe animal testing for cosmetic purposes is not the chance to live a decent life. We want our customers and acceptable and have committed to not use any real fur in our staff to feel good about our products and how they are our products. Our policy also covers the use of materials from sourced. This also helps to raise the profile of what fashion endangered species, leather/skin products, feathers and wool. retailers are doing in ethical trade. Tackling difficult issues We understand that simply finding issues through auditing is not enough. We work to tackle the root causes of poor working conditions by working with others. We use experience from the business world, from trade unions and local experts to find lasting solutions. This is on-going work in progress. We hope that by sharing our programme we will encourage our customers, stakeholders and others to respond and make further suggestions.

43 New Look Annual Report and Accounts 2010 Business review Corporate responsibility Continued

New Look Foundation Environment The New Look Foundation was launched in November 2009 The first half of the year had a greater focus on increasing with the mission “to educate, inspire and empower people to our ability to recycle our packaging waste. It was apparent that feel good about themselves; to live life to the full and make our largest waste stream by volume was transit packaging. smart choices for themselves and those close to them.” The previous year we had rolled out cardboard recycling to all of our stores within the UK, serviced by our national waste Our Foundation works with an independent charity partner, contractor. This did not prove sufficient enough to capture all the Charities Aid Foundation (CAF) and operates under CAF’s of our transit packaging so we moved to a ‘dry mixed recycling’ registered charity number 268369. CAF manages all of the service. Dry mixed recycling bins were rolled out to the majority administration. of our stores within the UK (serviced by our national waste Our Foundation is funded mostly through the proceeds from contractor) during July 2009. This now allows all our paper, the sale of specially designed charity products sold in-store cardboard and plastic packaging to be collected for recycling. and online, as well as payroll giving and our sample sales. During the early part of 2009 we conducted a trial which We currently support three Foundation partners in the UK involved backhauling our cardboard and plastic packaging (beat, Macmillan and Whizz-Kidz) and over a three year to our Distribution Centre. As a result backhauling currently period, will select charity partners in all of the other markets supports our mixed recycling collections so our stores now in which we operate, as well as a global partner. We also have the provisions to effectively recycle their packaging support Children’s Hope through our in-house Fashion waste. Peddlars annual bike ride. Since September 2009 we have been reviewing the From 1 April 2009 to March 2010 we raised £236,055 for development and implementation of New Look’s policies charity which includes over £29,000 raised for the Haiti relating to the environment. An initial environmental review Disaster Relief Fund. of the Group has been conducted to identify the activities within our Group Retail Operations which create greenhouse Employee volunteering gases and we have commissioned Two Tomorrows to help In March 2010 we started piloting our Employee Volunteering us develop the Group’s first carbon footprint policy. Programme which launched in April 2010. This programme encourages staff to help their communities by giving them two days paid leave from work to undertake a volunteering activity of their choice. Like the Foundation, this will be rolled out over a period of time to include all staff, both in the UK and abroad.

44 New Look Annual Report and Accounts 2010 Business review Overview Principal risks and uncertainties

Responsibility New Look considers good risk The Board has ultimate responsibility for the Group’s risk management process and will review its effectiveness at least

management fundamental to Business review annually. However, on a day-to-day basis, senior management achieving its business objectives is responsible for providing visible leadership as to the management of risk and ensuring that it is integrated into and adding value. everything that we do and all important decisions that we take. Risk management It is not the Board’s intention to create additional functions To support operational management, the Board has created a or separate committees to administer the risk management practical framework, which is set out in its Risk Management process. The assessment and management of risk is already Policy, to provide a consistent method for managing risk across part of our planning and review procedures and senior the Group and so ensure that significant risks are understood management is required to ensure that this review of risk G

and visible to senior management, as well as to the Board. is carried out in an effective and timely manner. ove

The following tables identify the most significant risks rnance identified by the Board.

Risk factors Risk type Description of risk Risk mitigation Financial statements Adverse economic Mixed views on whether the > The latest independent market information is reflected in climate recession is over and on the speed of our internal plans and forecasts. economic recovery. Uncertainty over > Capitalising on the customers’ ‘flight to value’ through international economic climate. focused marketing and a clear and flexible pricing strategy (including monitoring of the competition). > Detailed contingency plans are in place should the economic climate deteriorate below expectations.

Business strategy Increasing complexity as the Group > The business strategy is continually reviewed to ensure expands makes implementation more that it remains appropriate to meet the Group’s objectives. difficult. > Monthly measures are in place to measure performance against the key attributes of the business strategy: UK retail space expansion, the development and broadening of product ranges, the growth of e-commerce to drive the multi-channel offering and international development.

UK retail space Limitation on appropriate future store > Three year pipeline plan for potential new and relocated expansion pipeline in the current economic stores. climate. Inability to secure the > Rigorous market and financial analysis of individual appropriate space. opportunities. > Strict criteria are used to determine whether to invest in new stores or in a refurbishment.

International Tough international economic climate. > Strong relationships developed with the key expansion Failure to grow the international stakeholders. business successfully through > Clear focus on best option for country and cultural fit franchise operations, wholly owned with the New Look brand. businesses and e-commerce. > Product ranges selected and developed which are relevant to the different markets.

Product selection Fast fashion and being on trend is > Trend analysis is constantly being carried out, and design essential to the success of the Group. supplemented by catwalk reviews and trend presentations It is important to quickly respond to to senior management. changing customer preferences and > Range reviews are carried out ahead of each season by trends. senior management and are then regularly updated. > Weekly order signings ensures that all product is constantly being monitored.

45 New Look Annual Report and Accounts 2010 Principal risks and uncertainties continued

Risk factors continued Risk type Description of risk Risk mitigation

Key supplier Tough economic climate for some > Key supplier agreements in place. dependancies key suppliers could put product supply > Regular monthly reviews in place to measure at risk. performance against core KPIs. > Ongoing reviews to determine contingency plans in the event of a supplier failure.

Management team As the Group expands, its success is > The Remuneration Committee ensures that appropriate dependent on the continued service of incentive plans are in place. its senior managment. > There are regular benchmarking reviews of packages The Buying, Merchandising and Design compared to the market rate. teams, plus other core areas have > There are effective performance review and talent recently relocated to London. management processes in place to ensure succession planning. The retail sector is very competitive and New Look staff could be targeted.

Warehousing and Inability to maintain the infrastructure > Enhancement of the purpose built site at Lymedale distribution to support a rapidly growing fast to cope with the growth of the business. fashion business plus the ability to > Business continuity plans developed for all locations recover from a major incident. in the Group. > Establishment of consolidation centres throughout the world to improve the speed to international markets.

IT systems and Inability of systems to process core > Investment in ongoing and new IT systems is part of business continuity transactional data and to provide key the business strategy. decision making reporting given speed > Back up procedures in place to deal with any short-term of expansion. or specific loss of data. > Business continuity plan in place to deal with any serious incident or loss of systems capability.

Exchange rates Exposure to currency fluctuations for > Treasury policy in place which aims to hedge economic US Dollars. cash flows over the medium term. > Market data and trends are reviewed at the monthly Treasury Committee meetings. > The sourcing of product across many territories looks to diversify FX exposure.

Indebtedness and The Group’s level of indebtedness > Regular review of the Group’s current debt position interest rates and exposure to interest rate volatility and potential interest rate exposure. could constrain the business and its > Weekly cash flow forecasting and quarterly covenant ability to grow. reporting. > Treasury policy in place which aims to hedge interest rates over the medium term. > Detailed covenant modelling is in place.

46 New Look Annual Report and Accounts 2010 Business review Overview Financial review

Total Revenue £m

2010 1,463.6 Business review £1,463.6m 2009 1,322.6 +10.7% 2008 1,169.1 2007 1,022.8

Group LFL Sales Growth** % 2010 +1.2 +1.2% -0.6 2009 G

Alastair Miller –2.8 2008 ove

Chief Financial Officer 2007 +0.7 rnance

UK Retail LFL Sales Growth** % In the midst of unprecedented levels 2010 5.0 +5.0% 20091.9 of uncertainty and challenging -3.8 2008 economic environments, we have -1.0 2007 Financial statements nevertheless performed well against Space (’000) our financial KPIs this year. Sq ft* 2010 5,473 Revenue 5,473 2009 4,825 Against the backdrop of some very challenging economic 2008 4,085 conditions a 10.7% growth in Group revenue was a very +13.4% 2007 3,340 pleasing result. Group LFL’s were up 1.2% and the remaining revenue growth came from space openings, both in the year and the full year impact of prior year openings. The UK was Total Stores the strongest contributor to this overall revenue growth, driven by strong LFL sales together with the additional revenue 2010 1,018 generated by a growth in trading space from 3.5 million sq ft 1,018 2009 957 to 3.8 million sq ft. +6.4% 2008 885 Space 2007 823 In total, Group space grew from 4.8 million sq ft to 5.5 million * Includes franchise trading space and is as at the financial period end. sq ft. In the UK, we continue to pursue a strategy of relocating undersized stores in thriving markets to larger stores which **The Group computes its LFL store sales (excluding VAT or local equivalent) in local currencies. The total Group LFL store sales have are able to offer a larger product selection compatible with the been calculated on a constant currency basis. LFL stores are defined as local market demand. In addition, there are still opportunities own stores that have traded for more than 52 weeks, excluding existing to open stores in new markets in which New Look is not stores where a new Group store has opened within one mile (for the first 52 weeks of the new store’s commencement of trading) or where the represented. During the year we added 16 UK stores and store has undergone a significant increase or decrease in trading space relocated a further 9 stores equating to 315,000 sq ft of during the period. Sales are defined as gross transactional value; see incremental trading space. Part of this growth in space has note 5 of the Group financial statements. been fulfilled by acquiring stores from other retailers, most notably three ex Woolworth’s stores and five stores which had previously been Borders, including our new flagship store at Oxford Circus. In addition we refurbished 79 stores as part of our ‘Look & Feel’ refurbishment programme and these stores have been generating average sales uplifts of over 7%.

47 New Look Annual Report and Accounts 2010 Business review Financial review Continued

In the Euro zone (Republic of Ireland, France, Belgium and Adjusted EBITDA** Netherlands) we have opened a further 11 New Look stores £m and 10 Mim stores, adding 157,000 sq ft of net trading space. 2010 249.4 New major sites include our first stores in Brussels andC ork £249.4m 2009 217.6 and this year we entered the new market of the Netherlands 2008 200.1 with our first store in Rotterdam. The rate of expansion has +14.6% 2007 172.0 slowed this year however, in response to the difficult market conditions. Underlying Operating Profit*** We continue to develop our franchise network opening a net £m total of 24 stores in the year including continued expansion in the Middle East and Russia, together with our first stores in 2010 162.7 the new markets of Egypt, Singapore and Poland: these latter £162.7m 2009 138.2 two territories were with new franchise partners. +17.7% 2008 138.6 2007 121.2 LFL sales growth Faced with the backdrop of generally poor customer confidence and a number of challenging markets, we are ** Adjusted EBITDA, a non-IFRS measure, is calculated as the Group’s underlying operating profit before depreciation of tangible fixed assets, pleased with the positive LFL sales growth achieved by amortisation of intangible assets and the income statement charge in the Group. relation to the Group’s onerous lease provision. The UK remains our main market, representing 78.6% of *** Underlying operating profit is a non-IFRS measure, and is calculated on Group revenue. Despite the difficult market, and the highly page 56 of the consolidated financial statements. promotional stance of much of the High Street, we achieved 5.0% LFL reflecting the strength of our product offering Cash Generation* throughout the year, both in stores and online. £m The economic environments in France and the Republic of 2010 224.3 Ireland, already challenging in the prior year, continued to £224.3m 2009 217.9 deteriorate, impacting the performance of both our Mim and +2.9% 2008 206.0 New Look International brands. In Mim, a difficult year saw 2007 174.9 management changes and a re-balancing of our product offer to improve appeal to traditional Mim target customers. *Cash generation is a non-IFRS measure which is calculated as the Excess inventory was cleared and steps taken to improve Group’s net cash from operating activities before cash outflow related to the share based payment in respect of an internal reorganisation of the the visual presentation in store. The Directors believe that Group in the FY07. The Directors believe that cash generation assists in these initiatives have had a positive effect, with Mim now understanding the trading performance of the Group as it represents the beginning to show year on year growth. amount of cash generated after tax by the Group’s trading activities. Multi-channel development Our online business continues to grow, attracting over We continued to maintain stringent cost control across the 1.5 million visitors per week by the end of the period, and with Group. Total costs increased as a result of the expansion of sales of £37.0 million in the year, an increase of 182%. Growth our store portfolio, and growth in e-commerce trading, has been driven by visitor numbers, improved conversion rates together with further brand investment and the recruitment and an increase in average order value. A key development of world-class personnel to provide capability for future during the year has been the growth in international despatch, growth. However, we also achieved efficiency savings in our reaching 24 countries at year end (35 countries as at 28 May cost base, particularly in areas such as payroll, our supply 2010) and representing 6% of online sales. In addition, our full chain and utilities spend. in store range is now represented online. Underlying operating profit Adjusted EBITDA Group charges for depreciation and amortisation increased Strong revenue growth was complemented by an increase in from £68.3 million to £76.8 million reflecting the investment gross profit and gross margin, together with continued strong we have made in new stores and the refurbishment of our cost control, resulting in a 14.6% increase in adjusted EBITDA current portfolio, together with continued development of our from £217.6 million to £249.4 million. support systems. This represents a 12.4% increase against A strengthening of the US Dollar against Sterling posed the prior year, a lower growth rate than adjusted EBITDA. significant challenges to the whole retail sector during the In addition, charges for onerous lease payments were year. Our response was to protect our gross margin through £1.2 million less than in the prior year. Consequently, a number of initiatives including moving more suppliers to underlying operating profit grew by 17.7% from £138.2 million Free on Board delivery terms to reduce handling costs, to £162.7 million. re‑negotiation of freight charges, further efficiency savings from our automated distribution facility at Lymedale, and securing reductions in product costs – particularly with our Chinese suppliers. These actions, together with the benefits from our foreign exchange hedging policy, resulted in an increase in our gross margins over the previous year.

48 New Look Annual Report and Accounts 2010 Overview

Pre-tax profit Net debt Finance expenses decreased from £134.3 million to Group net debt decreased in the period from £1,063.0 million £101.8 million due to the fall in the average LIBOR rate at the at the end of 2009 to £1,033.3 million. Of this debt, end of the previous period, and also repayments of Tranche £591.4 million (2009: £537.7 million) is Payment-in-Kind (PIK) Business review A debt of £39.8 million over the year. notes with no annual cash interest charge to be paid by the Group. Accrued interest is instead rolled into the outstanding Exceptional charges in the year of £22.5 million mainly value of the loan. comprised costs relating to the relocation of our buying, merchandising, design and marketing departments to our new The Group continues to generate significant cash inflows after London office, and also costs associated with the postponed servicing its scheduled debt repayment and there are no Public Listing of the Group on the London Stock Exchange. material debt maturities before 2013. We continue to maintain our natural hedge of foreign exchange No dividend has been paid or proposed (2009: £nil).

between our Euro cash and Euro loan accounts. G

Current year trading ove

The results for the Group for the financial period show a We have enjoyed a satisfactory Easter trading period delivering rnance pre-tax profit of £36.0 million (2009: £2.6 million). year on year growth and we have seen improvements on recent trading in our International business. Mim’s performance, in Cash generation particular, is encouraging. Franchise expansion continues with The growth in our operating profit combined with the the opening of two new stores in Russia, one store in Poland and continued focus on maintaining tight working capital one new store in Malta since the year end. However, we remain management has allowed us to increase our cash generation cautious over the uncertain economic outlook across the by £6.4 million to £224.3 million. markets in which we operate.

Inventories were lower at the year end compared to the prior Financial statements year as a result of further tightening of our stock model together with our initiatives to counter the effect of the strengthening US Dollar against Sterling on product costs. Our actions to improve performance at Mim also saw lower year end inventory in this business. Alastair Miller The Group invested £97.2 million (2009: £87.7 million) in Chief Financial Officer capital expenditure during the period, principally in new 28 May 2010 trading space and store refurbishment, and also in IT, logistics and the move to our new office inL ondon. Scheduled debt repayments relating to Tranche A senior debt were £39.8 million during the year (2009: £36.1 million). The Group closed the period with an increase in cash, cash equivalents and bank overdrafts for the period of £47.8 million (2009: £36.0 million), and non-cash movements of £(2.6) million (2009: £10.0 million), resulting in a cash balance of £206.3 million (2009: £161.1 million).

49 New Look Annual Report and Accounts 2010 Board of directors

Our Board of Directors reflect a 2 1 4 6 8 9 10 7 wealth of knowledge and relevant 3 11 5 industry experience. The Directors who served during the period and to date are shown opposite.

Executive Directors: Balance of Board Directors Carl McPhail % Alastair Miller A The Board believes Independent Non-Executive Directors: it has an appropriate John Gildersleeve (Chairman) balance of Executive Stella David to Non-Executive Carolyn McCall Henry Staunton Directors. Major investor Non-Executive Directors: A Executive 18% Matthew Brockman B B Non Executive 82% Leanne Buckham Martin Clarke Tripp Lane Tom Singh 50 New Look Annual Report and Accounts 2010 Overview

1. John Gildersleeve 7. Carolyn McCall Chairman Non-Executive Director John Gildersleeve was appointed as Non-Executive Chairman of the Carolyn McCall was appointed to the Board* in March 2010 as Non-

Group in January 2010. He is currently Non-Executive Chairman at Executive Director. She is currently Chief Executive Officer of the Business review Carphone Warehouse and on the Board of British Land plc. In 2004, Guardian Media Group, a role she has held since July 2006, having he joined the Board of EMI as deputy chairman and senior independent served on the Board since 1995. She recently announced that she Non-Executive Director, becoming Non-Executive Chairman in 2007. will be leaving GMG to join low-cost airline easyJet as its next Chief He was formerly Non-Executive Director and chairman of Gallaher Executive. She has also previously served on the Boards of Tesco, Lloyds (1997-2007), Non-Executive Director of Lloyds TSB Bank (1994-1997) Banking Group and also served on the Board of New Look until the and non-executive director of Vodafone (1998-1999). He joined Tesco business was taken private in 2004. She is a board member of Business in 1965, was appointed to the Board in 1984 and was commercial and in the Community and was chair of Opportunity Now, the UK’s leading trading Director until 2004. membership organisation for gender equality and diversity at work, between 2005 and 2009. In 2008 she was awarded an OBE for services 2. Matthew Brockman to women in business. Non-Executive Director Governance Appointed to the Board* in June 2006 as Non-Executive Director, 8. Carl McPhail Matthew Brockman, holds a MBA from Harvard Business School. Chief Executive Officer He is a Partner at Apax Partners Worldwide LLP in London. He joined Carl McPhail was appointed to the Board* in June 2001 and became Apax in 2000 and has worked on deals including Hit Entertainment, Chief Executive Officer in April 2008 having previously been Managing New Look, CBR, Focus Wickes, Healthcare at Home and Merlin Director with responsibility for Marketing, Operations and International Entertainments. and President of Mim SAS from June 2003. Prior to joining, he worked at Selfridges as the Retail Operations Director and in senior positions 3. Leanne Buckham at Arcadia, Burton Group and River Island. Non-Executive Director Appointed to the Board* in April 2004 as Non-Executive Director, 9. Alastair Miller Leanne Buckham, is a chartered accountant. She is a Principal at Chief Financial Officer Permira Advisors LLP in their Consumer Sector. She has worked on Alastair Miller was appointed to the Board* in January 2000. He joined Financial statements a number of transactions including Gala Coral Group, New Look and the Group as Group Finance Director, becoming Chief Financial Officer Principal Hayley Group. Prior to joining Permira in 2003, she was a in April 2008 responsible for Finance, IT, Property, Strategic Planning, Director at PricewaterhouseCoopers LLP in London having spent Internal Audit, Investor Relations and Company Secretariat. Prior to the last five years in their TransactionS ervices business. joining the Group, he was the Group Finance Director at RAC and a Finance Director within the BTR group. He qualified as a chartered 4. Martin Clarke accountant at Price Waterhouse where he was also a management Non-Executive Director consultant. Appointed to the Board* in April 2004 as Non-Executive Director, Martin Clarke, holds an MA and PhD in history from Cambridge 10. Tom Singh University. He is a Partner at Permira Advisers LLP (Permira), heading Non-Executive Director up its Consumer Sector. He has worked on a number of transactions Tom Singh, founded the New Look business in 1969 and had overall including Gala Coral Group, New Look, Principal Hayley Group and responsibility for New Look’s Buying and Merchandising until he Galaxy Entertainment Group Limited. He has over 20 years’ experience became a Non-Executive Director and consultant in May 2001. Following in private equity and prior to joining Permira was a director of PPMV, the public to private re-organisation in April 2004, he was appointed the private equity arm of Prudential plc. His early career was spent Managing Director, Commercial until June 2006 when he again became at Cinven. a Non-Executive Director.

5. Stella David 11. Henry Staunton Non-Executive Director Non-Executive Director Stella David was appointed to the Board* in March 2010 as Non- Henry Staunton was appointed to the Board* in March 2010 as Non- Executive Director. She is Chief Executive Officer of WilliamG rant Executive Director. He is a Non-Executive Director of Ladbrokes, Legal & Sons, a role she took up in August 2009. She is also a Non- & General, The Merchants Trust and Standard Bank. He was formerly Executive Director of the Nationwide Building Society and chair of its Finance Director of ITV and Granada Group, and served as Chairman of remuneration committee. Prior to this, she held several senior roles Ashtead Group from 2001 to 2004. He has also served as Non-Executive at Bacardi, including vice-president of global operations, managing Director of Emap, BSkyB, ITN and Ashtead Group. director for the Asia-Pacific region and chief executive of the drink group’s British and Dutch businesses, culminating in her role as Group Marketing Director from 2005 to 2009.

6. Tripp Lane Non-Executive Director Appointed to the Board* in March 2010 as Non-Executive Director, Tripp Lane, holds an MBA from The Wharton School and an MA from Johns Hopkins University. He is a Principal at Apax Partners Worldwide LLP in London. He joined Apax in 2006 and has worked on deals including Cengage Learning, New Look, EMAP, and Hit Entertainment.

* Board is defined here as the ultimate holding company at the date mentioned. Due to various Group re-organisations, New Look Retail Group Limited has only been the ultimate holding company since 7 June 2006.

New Look Retail Group Limited is the ultimate holding company of the New Look Group and is controlled by Apax Funds and Permira Funds who each own 27.7% of the total issued share capital. 51 New Look Annual Report and Accounts 2010 STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing the annual report The Directors are responsible for: and the financial statements in accordance with applicable law > Safeguarding the assets of the Company and the Group and and regulations. hence for taking reasonable steps for the prevention and Company law requires the Directors to prepare financial detection of fraud and other irregularities. statements for each financial year. Under that law the > The maintenance and integrity of the Company’s website Directors have elected to prepare the Group financial and legislation in the United Kingdom governing the statements in accordance with International Financial preparation and dissemination of financial statements may Reporting Standards (IFRSs) as adopted by the European differ from legislation in other jurisdictions. Union, and the parent Company financial statements in accordance with United Kingdom Generally Accepted By order of the Board Accounting Practice (United Kingdom Accounting Standards and applicable law). Under Company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the parent Company and of the profit or loss of the Group for that period. Alastair Miller In preparing those financial statements, the Directors are Company Secretary required to: 28 May 2010 > Select suitable accounting policies and then apply them consistently; > Make judgements and estimates that are reasonable and prudent; > State whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and > prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors confirm that they have complied with the above requirements in preparing the financial statements. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006.

52 New Look Annual Report and Accounts 2010 OTHER MATTERS Overview

Company name Directors’ statement as to the disclosure of information to On 12 March 2010 the Company changed its name from auditors Markerpost Limited to New Look Retail Group Limited. In respect of each Director who was a Director at the time when the report was approved: Business review Directors The Directors whose details are set out on pages 50 and 51 are > So far as the Director is aware, there is no information the current Directors of the Company. During the financial which would be needed by the Company’s auditors in year, the following persons were also Directors of the connection with the preparation of their audit report of Company: which the auditors are not aware; and > Phil Wrigley became Chief Executive Officer in 2004, > Each Director has taken all steps that he/she ought to have Executive Chairman in 2008 and was the Non-Executive taken as a Director in order to make himself/herself aware Chairman from 7 April 2009 until his resignation from the of any audit information, and to establish that the auditors

Board on 10 January 2010; and are aware of that information. Governance > Alexander Fortescue, a partner of Apax Partners Worldwide Auditors LLP, who was appointed to the Board as a Non-Executive PricewaterhouseCoopers LLP have expressed their Director in April 2004 and resigned on 20 October 2009. willingness to continue in office as auditors. Payment of suppliers By order of the Board The Group’s creditor days as at 27 March 2010 are 59 days. Payment is made in accordance with contractual or other legal obligations. The parent Company has no trade creditors.

Political donations Financial statements The Group made no political donations in the period (2009: £nil). Alastair Miller Chief Financial Officer Indemnity Insurance 28 May 2010 The Company maintains liability insurance for its Directors and officers. Walker Report On 20 November 2007, David Walker published his ‘Guidelines for Disclosure and Transparency in Private Equity’ (the Walker Report). Since then the Private Equity Monitoring Group on Transparency and Disclosure has produced two reports the second of which was issued in December 2009. This report has been prepared in the context of those recommendations.

53 New Look Annual Report and Accounts 2010 Financial statements – contents

Consolidated financial statements Notes to the Group financial statements 55 Independent auditors’ report 62 Authorisation of financial statements and statement 56 Consolidated income statement of compliance with IFRSs 1 57 Consolidated statement of comprehensive income 62 Summary of significant accounting policies 2 58 Consolidated balance sheet 68 Treasury and financial risk management 3 60 Consolidated statement of changes in equity 61 Consolidated statement of cash flows 70 Critical accounting estimates, judgements and 62 Notes to the Group financial statements assumptions 4 71 Segment information 5 74 Revenue 6 Parent Company financial statements 100 Independent auditors’ report 74 Operating profit 7 101 Company balance sheet 74 Staff costs 8a 102 Notes to the Company financial statements 75 Directors’ remuneration 8b 76 Finance income and expense 9 76 Exceptional items 10 77 Taxation 11 79 Dividends 12 79 Property, plant and equipment 13 80 Intangible assets 14 81 Investment in joint venture 15 82 Investments 16 82 Inventories 17 82 Trade and other receivables 18 83 Derivative financial instrument assets 19 84 Cash and cash equivalents 20 84 Trade and other payables 21 84 Financial liabilities 22 85 Derivative financial instrument liabilities 23 85 Financial instruments 24 88 Hedging activities 25 89 Analysis of net debt 26 90 Interest rate risk and liquidity risk 27 91 Provisions 28 92 Operating lease commitments 29 92 Share based payments 30 95 Share capital 31 96 Reconciliation of movements in equity 32 96 Shares held by ESOPs 33 97 Retirement benefit schemes 34 97 Related party transactions 35 99 Investment in subsidiaries 36 99 Ultimate controlling party 37

54 New Look Annual Report and Accounts 2010 INDEPENDENT AUDITORS’ REPORT Overview TO THE MEMBERS OF NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED)

We have audited the Group financial statements of New Look Matters on which we are required to report by exception Retail Group Limited for the period ended 27 March 2010 We have nothing to report in respect of the following matters which comprise the consolidated income statement, where the Companies Act 2006 requires us to report to you if, consolidated statement of comprehensive income, in our opinion: Business review consolidated balance sheet, consolidated statement of > Certain disclosures of Directors’ remuneration specified by changes in equity, consolidated statement of cash flows and law are not made; or the related notes. The financial reporting framework that has been applied in their preparation is applicable law and > We have not received all the information and explanations International Financial Reporting Standards (IFRSs) as we require for our audit. adopted by the European Union. Other matter Respective responsibilities of Directors and auditors We have reported separately on the parent Company financial As explained more fully in the Statement of Directors’ statements of New Look Retail Group Limited for the period Responsibilities on page 52, the Directors are responsible for ended 27 March 2010. Governance the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. Alan Kinnear (Senior Statutory Auditor) This report, including the opinions, has been prepared for and for and on behalf of PricewaterhouseCoopers LLP only for the Company’s members as a body in accordance with Chartered Accountants and Statutory Auditors Chapter 3 of Part 16 of the Companies Act 2006 and for no Southampton Financial statements other purpose. We do not, in giving these opinions, accept or 28 May 2010 assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it Notes: may come save where expressly agreed by our prior consent > The maintenance and integrity of the New Look Retail Group Limited in writing. website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, Scope of the audit of the financial statements accordingly, the auditors accept no responsibility for any changes that An audit involves obtaining evidence about the amounts and may have occurred to the financial statements since they were initially presented on the website. disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free > Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in from material misstatement, whether caused by fraud or other jurisdictions. error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. Opinion on financial statements In our opinion the Group financial statements: > Give a true and fair view of the state of the Group’s affairs as at 27 March 2010 and of its profit and cash flows for the period then ended; > Have been properly prepared in accordance with IFRSs as adopted by the European Union; and > Have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ report for the financial period for which the Group financial statements are prepared is consistent with the Group financial statements.

55 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) CONSOLIDATED INCOME STATEMENT

For the financial period ended 27 March 2010

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 Notes £m £m Revenue 5,6 1,463.6 1,322.6 Cost of sales (634.2) (601.8) Gross profit 829.4 720.8 Administrative expenses (695.4) (598.5) Operating profit 7 134.0 122.3 Finance income 9 3.4 15.0 Finance expense 9 (101.8) (134.3) Share of post tax profit/(loss) from joint venture 15 0.4 (0.4) Profit before taxation 36.0 2.6 Taxation 11 (16.3) (6.7) Profit/(loss) attributable to equity holders of New Look Retail Group Limited 32 19.7 (4.1)

Underlying operating profit is calculated as follows:

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 Notes £m £m Operating profit 134.0 122.3 Add back/(deduct): Exceptional items 10 22.5 6.8 Share based payment expense 30 10.1 4.5 Fair value movement of financial instruments 25 (3.9) 4.6 Underlying operating profit 5 162.7 138.2

The notes on pages 62 to 99 are an integral part of these consolidated financial statements.

56 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED Overview (FORMERLY MARKERPOST LIMITED) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the financial period ended 27 March 2010

52 weeks 52 weeks

ended ended Business review 27 March 28 March 2010 2009 Notes £m £m Profit/(loss) for the period 19.7 (4.1) Other comprehensive income Cash flow hedges 25 0.2 (2.0)

Exchange differences on translation of foreign operations 32 (4.7) 16.7 Governance Tax credit/(charge) on items recognised directly in equity 11 0.3 (0.7)

Other comprehensive (loss)/income for the period, net of tax (4.2) 14.0

Total comprehensive income for the period 15.5 9.9

The income tax relating to each component of other comprehensive income is disclosed in note 11. The notes on pages 62 to 99 are an integral part of these consolidated financial statements. Financial statements

57 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) CONSOLIDATED BALANCE SHEET

As at 27 March 2010

27 March 28 March 2010 2009 Notes £m £m Non-current assets Property, plant and equipment 13 268.7 257.6 Intangible assets 14 729.2 726.0 Investment in joint venture 15 1.6 1.2 Financial assets – Available for sale investments 16 0.3 0.2 Other receivables 18 51.8 51.8 Deferred income tax assets 11 21.8 14.0 1,073.4 1,050.8

Current assets Inventories 17 126.3 140.6 Income tax assets 0.5 4.5 Trade and other receivables 18 72.2 53.2 Derivative financial instruments 19 16.4 20.4 Cash and cash equivalents (excluding bank overdrafts) 20 206.3 161.1 421.7 379.8 Total assets 1,495.1 1,430.6

Current liabilities Trade and other payables 21 287.5 260.8 Financial liabilities 22 39.8 39.8 Derivative financial instruments 23 11.3 14.2 Provisions 28 10.5 10.2 Income tax liabilities 13.9 8.6 363.0 333.6

Non-current liabilities Trade and other payables 21 85.3 78.0 Financial liabilities 22 1,199.8 1,184.3 Derivative financial instruments 23 8.5 13.7 Provisions 28 13.4 12.0 Deferred income tax liabilities 11 94.1 94.8 1,401.1 1,382.8 Total liabilities 1,764.1 1,716.4 Net liabilities (269.0) (285.8)

58 New Look Annual Report and Accounts 2010 Overview

As at 27 March 2010

27 March 28 March

2010 2009 Business review Notes £m £m Deficit attributable to equity holders of New Look Retail Group Limited Share capital 31 10.4 10.3 Share premium 31 0.6 – Treasury shares 31 (14.0) (10.2) Other reserves 32 25.9 30.7 Reverse acquisition reserve 32 (285.3) (285.3) Retained earnings 32 (6.6) (31.3)

Total deficit (269.0) (285.8) Governance

The notes on pages 62 to 99 are an integral part of these consolidated financial statements. The financial statements on pages 56 to 61 were authorised for issue by the Board of Directors on 28 May 2010 and were signed on its behalf by: Financial statements Alastair Miller Chief Financial Officer

New Look Retail Group Limited (formerly Markerpost Limited) Registration no. 05810406

59 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the financial period ended 27 March 2010

Attributable to the shareholders of New Look Retail Group Limited

Share Share Treasury Other Retained capital premium shares reserves earnings Total Notes £m £m £m £m £m £m Balance at 29 March 2008 10.3 – (8.1) (267.9) (29.2) (294.9) Comprehensive income Loss for the period 32 – – – – (4.1) (4.1) Other comprehensive income Exchange differences on translation of foreign companies 32 – – – 16.7 – 16.7 Movements in hedged financial instruments 25, 32 – – – (2.0) – (2.0) Tax on items recognised directly in equity 11 – – – (0.7) – (0.7) Total other comprehensive income – – – 14.0 – 14.0 Total comprehensive income – – – 14.0 (4.1) 9.9 Transactions with owners: Employee share option scheme – value of employee services 30, 32 – – – – 2.8 2.8 Tax credit relating to share option scheme 11 – – – – (0.3) (0.3) ESOPs shares unallocated 30, 32 – – – (1.2) – (1.2) Transfer of exercised shares 30, 32 – – – 0.5 (0.5) – Purchase of treasury shares 31 – – (2.1) – – (2.1) Total transactions with owners – – (2.1) (0.7) 2.0 (0.8) Balance at 28 March 2009 10.3 – (10.2) (254.6) (31.3) (285.8) Comprehensive income Profit for the period 32 – – – – 19.7 19.7 Other comprehensive income Exchange differences on translation of foreign companies 32 – – – (4.7) – (4.7) Movements in hedged financial instruments 32 – – – 0.2 – 0.2 Tax on items recognised directly in equity 11 – – – 0.3 – 0.3 Total other comprehensive income – – – (4.2) – (4.2) Total comprehensive income – – – (4.2) 19.7 15.5 Transactions with owners: Employee share option scheme – value of employee services 32 – – – – 5.1 5.1 ESOPs shares unallocated 30, 32 – – – (0.7) – (0.7) Proceeds from share issue 31 0.1 0.6 – – – 0.7 Transfer of exercised shares 30, 32 – – – 0.1 (0.1) – Purchase of treasury shares 31 – – (3.8) – – (3.8) Total transactions with owners 0.1 0.6 (3.8) (0.6) 5.0 1.3 Balance at 27 March 2010 10.4 0.6 (14.0) (259.4) (6.6) (269.0)

The notes on pages 62 to 99 are an integral part of these consolidated financial statements.

60 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED Overview (FORMERLY MARKERPOST LIMITED) CONSOLIDATED STATEMENT OF cash flows

For the financial period ended 27 March 2010

52 weeks 52 weeks

ended ended Business review 27 March 28 March 2010 2009 Notes £m £m Cash flows from operating activities Operating profit 134.0 122.3 Depreciation of property, plant and equipment 73.4 64.1 Impairment of property, plant and equipment 1.1 – Amortisation of intangible assets 3.4 3.1 Loss on disposal of property, plant and equipment 1.5 1.5

Share based payment expense 10.1 4.5 Governance Fair value (gains)/losses in financial instruments (3.9) 6.3 Foreign exchange gains on operating activities (1.0) – Amortisation of lease inducements (5.9) (2.5) Decrease/(increase) in inventories 22.3 (32.6) Increase in trade and other receivables (20.9) (5.5) Increase in trade and other payables 28.1 66.9 Movement in provisions 1.7 7.0 Income taxes paid (15.2) (14.4)

ESOPs shares unallocated (0.6) (0.7) Financial statements Purchase of treasury shares (3.8) (2.1) Net cash flow from operating activities 224.3 217.9

Cash flows from investing activities Purchase of property, plant and equipment (87.5) (84.4) Purchase of intangibles (9.7) (3.3) Net cash from investing activities (97.2) (87.7)

Cash flows from financing activities Interest paid (41.4) (66.3) Interest received 1.2 5.2 Proceeds from issuance of ordinary A shares 0.7 – Repayment of borrowings (39.8) (36.1) Repayment of loan notes – (2.6) Movement in blocked cash held to satisfy loans – 2.6 Transfer of blocked cash – 3.0 Net cash from financing activities (79.3) (94.2)

Net increase in cash, cash equivalents and bank overdrafts 26 47.8 36.0 Opening cash, cash equivalents and bank overdrafts 26 161.1 115.1 Exchange (losses)/gains on cash, cash equivalents and bank overdrafts 26 (2.6) 10.0 Closing cash, cash equivalents and bank overdrafts 26 206.3 161.1

The notes on pages 62 to 99 are an integral part of these consolidated financial statements.

61 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

1. Authorisation of financial statements and statement of from aggregate emoluments, where it was grouped for compliance with IFRSs presentation purposes last year. The consolidated financial statements of the Group for the 52 weeks ended 27 March 2010 were authorised for issue by Note 21: A reclassification of the gift card creditor resulted in the Board of Directors (“the Board”) on 28 May 2010 and the other payables being restated downward by £6.3 million to balance sheet was signed on the Board’s behalf by Alastair £10.2 million and deferred income restated upward by the Miller. New Look Retail Group Limited (formerly Markerpost same amount to £16.5 million. This reclassification is also Limited which changed its name on 12 March 2010) is a private reflected in note 24, where trade and other payables were limited company incorporated and domiciled in England & restated down to £245.5 million in the statement of liabilities Wales whose registered office is New Look House, Mercery and to £244.3 million in the maturity analysis. A reclassification Road, Weymouth, Dorset, DT3 5HJ. The registered number of of the goods received not invoiced resulted in trade payables the Company is 05810406. being restated downward by £9.1 million to £119.0 million and accruals restated upward by the same amount to £89.2 million.

2. Summary of significant accounting policies (a) Standards, amendments and interpretations effective for The principal accounting policies applied in the preparation of periods beginning on or after 1 January 2009 adopted by the these Group financial statements are set out below. These Group in preparing the financial statements except where policies have been applied consistently to all the periods stated. No other standards effective in the period were presented, unless otherwise stated. relevant to the Group’s operations. IFRS 2 (amendment) ‘Share based payment’. The amendment 2.1 Basis of Preparation deals with vesting conditions and cancellations. It clarifies the The Group financial statements have been prepared on a going classification of a vesting condition and non-vesting condition. concern basis in accordance with International Financing This clarification may result in the reclassification of existing Reporting Standards as adopted for use in the European Union conditions which would impact the valuation of the options at (IFRSs), International Financial Reporting Interpretations grant date. All cancellations, whether by the entity or by other Committee (IFRIC) interpretations and those parts of the parties, should receive the same accounting treatment. Companies Act 2006 applicable to companies reporting under The Group has adopted IFRS 2 (amendment), although the IFRS. The consolidated financial statements are presented in amendment does not have a material impact on the Group’s Pound Sterling and all values are rounded to the nearest financial statements. million (£m) except where otherwise indicated. IFRS 7 ‘Financial instruments – Disclosures’ (amendment) – There are no material differences between the results shown effective for accounting periods beginning on or after in the consolidated income statement and the results 1 January 2009 and applied for the 52 weeks ended 27 March prepared under the historical cost convention, as modified by 2010. The amendment requires enhanced disclosures about the revaluation of financial assets and financial liabilities fair value measurement and liquidity risk. In particular, the (including derivatives) at fair value through the profit and loss. amendment requires disclosure of fair value measurements by level of fair value measurement hierarchy. Results of the Certain adjustments and restatements have been made to amendment are disclosed in note 24. There has also been an comparative data in the notes to the financial statements. improvement to the standard effective from the same date, None of the adjustments and restatements made to the which removes the reference to ‘total interest income’ as a disclosure notes have any impact on the primary statements. component of finance costs. The amendment and The notes to the financial statements affected are: improvement only result in additional disclosures and there is Note 7: Adjustments were made to inventory and lease no other material impact on the Group’s financial statements. payments to correct errors in the comparative data. IFRS 8 (standard) ‘Operating segments’. IFRS 8 replaced Minimum lease payments decreased by £11.8 million to IAS 14 Segment Reporting upon its effective date. IFRS 8 £146.1 million, as service and rates had been included in error. (amendment) ‘Operating segments’ has been adopted early by The cost of inventories recognised as an expense increased by the Group and means that only the Group’s segmental assets £15.3 million to £523.2 million, and the charge reflecting the as reported to the chief operating decision maker are write-down of inventory to net realisable value was increased disclosed as set out in note 5 to the financial statements, by £1.1 million to £13.3 million. including related comparative information. Note 8a: Short term employee benefits for key management IAS 1 (revised) ‘Presentation of financial statements’. personnel were adjusted from £0.3 million to £3.9 million, The revised standard prohibits the presentation of items of while pension costs were adjusted by £0.4 million to income and expense (that is, ‘non-owner changes in equity’) £0.5 million for the period ended 28 March 2009. The restated in the statement of changes in equity, requiring ‘non-owner balances reflect the redesignation of key management from changes in equity’ to be presented separately from owner April 2008 to reflect all management now included on the changes in equity in a statement of comprehensive income. ‘Executive Team’. An additional adjustment arising from this As a result, the Group presents in the consolidated statement redesignation is reflected in note 35, where there is an upward of changes in equity all owner changes in equity, whereas all restatement of the investment in the PIK by key management non-owner changes in equity are presented in the personnel by £3.0 million to £20.6 million. consolidated statement of comprehensive income. Note 8b: Aggregate Directors’ emoluments in respect of Comparative information has been re-presented so that it is qualifying services were adjusted upwards by £1.0 million to also in conformity with the revised standard. The change in £2.8 million to include accrued bonuses previously disclosed accounting policy only impacts presentation and there are no on a cash basis. Contributions to pensions were segregated other material impacts on the Group’s financial statements.

62 New Look Annual Report and Accounts 2010 Overview

2. Summary of significant accounting policies continued IAS 38 (amendment) ‘Intangible Assets’. The amendment There has also been an improvement to the standard which requires that expenditure on advertising and promotional relates to current/non-current classification of assets and activities are recognised as an expense when the Group either liabilities classified as held for trading. While the Group does has the right to access the goods or has received the services. Business review hold assets available for sale as non-current, the improvement The Group’s previous policy was to expense such costs as they does not impact the classification of the financial asset and so were incurred and so the adoption of this standard has not the improvement is not expected to have a material impact on resulted in any material impact on the Group’s financial the Group’s financial statements. statements. IAS 10 (improvement) ‘Events after the reporting period’. This IAS 39 (amendment) ‘Financial instruments: recognition and improvement clarifies that dividends declared after the end of measurement’. The amendments to the standard address the the reporting period are not obligations. The Group does not recognition and measurement of embedded derivatives, the consider there to be any material impact on the Group’s measurement of debt instruments which cease to be fair value financial statements. hedges, and the designation of options as hedging instruments Governance as one-sided risks. The amendments are not considered to IAS 16 (amendment) ‘Property, Plant & Equipment’. The have a material impact on the Group’s financial statements. amendment replaces the term ‘net selling price’ with ‘fair value less costs to sell’. This change is not considered by the IFRIC 13 ‘Customer Loyalty Programmes’ – effective 1 July Group to have any material impact on the Group’s financial 2008. The interpretation requires loyalty award credits granted statements. to customers in connection with a sales transaction to be accounted for as a separate component of the sales IAS 18 (improvement) ‘Revenue’. The improvement replaces transaction. The Group implemented a customer loyalty the term ‘direct costs’ with ‘transaction costs’ as defined in programme on 27 October 2009 and has applied the

IAS 39. This change is not considered to have a material impact Financial statements interpretation from that date. on the Group’s financial statements. (b) Standards, amendments and interpretations to existing IAS 23 (amendment) ‘Borrowing Costs’. The amendment standards that are not yet effective and have not been adopted requires capitalisation of borrowing costs that are directly early by the Group. The Group is still considering the impact of attributable to the acquisition, construction or production of a these changes, but any impact is not expected to be material to qualifying asset. The Group’s previous policy was to expense the Group’s financial statements, unless stated otherwise borrowing costs as they were incurred. In accordance with the below. No other existing standards that are not yet effective are transitional provisions of the amended IAS 23, the Group has relevant to the Group’s operations. adopted the standard on a prospective basis. The adoption of IFRS 2 ‘Share based payment’ – effective for periods beginning this standard has not resulted in any material impact on the on or after 1 January 2010. This amendment relates to Group Group’s financial statements. cash-settled share based payment arrangements and the IAS 27 (amendment) ‘Consolidated and separate financial treatment required by subsidiaries in statutory accounts. This statements – cost of an investment in a subsidiary, jointly will be adopted by the Group from the effective date and applied controlled entity or associate’. The amendments address retrospectively. matters related to the preparation of separate entity financial IFRS 3 (revised) ‘Business combinations’ – effective for periods statements and therefore adoption has not resulted in any beginning on or after 1 July 2009. The revised standard results material impact on the Group’s financial statements. in some significant changes to the acquisition method and the IAS 31 (amendment) ‘Interests in joint ventures’. The Group will apply it prospectively to all business combinations amendment relates to a change in the disclosure requirements for periods commencing after the effective date. for jointly controlled entities that are accounted for at fair value IFRS 5 (amendment) ‘Non-current assets held for sale and through the income statement. The Group does not consider discontinued operations’ – effective for periods beginning on this amendment to have any material impact on the financial or after 1 January 2010. The amendment clarifies that the statements as the equity method is currently applied in disclosures required in respect of non-current assets, disposal accounting for the jointly controlled entity. groups classified as held for sale, or discontinued operations IAS 32 (amendment) ‘Financial instruments: presentation’ and are only those set out in IFRS 5. IAS 1 ‘Presentation of financial statements, puttable financial IAS 1 (amendment) ‘Presentation of financial statements’ – instruments and obligations arising on liquidation’. The effective for periods beginning on or after 1 January 2010. amendment requires certain puttable financial instruments to The amendment relates to the current and non-current be classified as equity instead of financial liabilities. The Group classification of convertible instruments. has concluded that none of the financial instruments meet or have met in the past the criteria required for reclassification IAS 27 (revised) ‘Consolidated and separate financial and so the Group does not consider the amendment to have a statements’ – effective for periods beginning on or after material impact on the Group’s financial statements. 1 July 2009. The revised standard addresses transactions with non-controlling interests and the accounting for when control IAS 36 (amendment) ‘Impairment of assets’. The amendment is lost. The Group will apply the revised standard prospectively requires additional disclosures when discounted cash flows are for periods commencing on or after the effective date. used to estimate ‘fair value less costs to sell’. The disclosures required are consistent with those required when discounted cash flows are used to estimate ‘value in use’. As the amendment only impacts presentational aspects there is no impact on the Group’s financial statements.

63 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

2. Summary of significant accounting policies continued 2.4 Revenue IAS 38 (amendment) ‘Intangible Assets’ – effective for periods Revenue is measured at the fair value of the consideration beginning on or after 1 July 2009. The amendment clarifies received or receivable and represents amounts receivable for guidance in measuring the fair value of an intangible asset goods and services provided to customers outside the Group, acquired in a business combination and it permits the grouping stated net of returns, staff discounts, and value added and of intangible assets as a single asset if each asset has a similar other sales taxes. useful economic life. The Group recognises revenue when the amount of revenue IFRIC 17 ‘Distribution of non-cash assets to owners’ – effective can be measured reliably, it is probable that future economic for periods beginning on or after 1 July 2009. The interpretation benefits will flow to the entity and when specific criteria have provides guidance on accounting for arrangements whereby an been met for each of the Group’s activities as described below. entity distributes non-cash assets to shareholders either as a The Group bases its estimates on historical results, taking into distribution of reserves or as dividends. IFRS 5 has also been consideration the type of customer, the type of transaction and amended to require that assets are classified as held for the specifics of each arrangement. For example, it is the distribution only when they are available for distribution in Group’s policy to sell its products to the end customer with a their present condition and distribution is highly probable. right of return. Accumulated experience is used to estimate and provide for such returns. 2.2 Basis of consolidation The Group financial statements incorporate the financial Sales of goods and concession income are recognised when statements of the Company, its subsidiary undertakings and goods are delivered and title passed. Income from rendering of joint venture. Joint ventures are accounted for using the services is recognised when the services have been performed. equity method. Internet sales are recognised when the goods are despatched to the customer. Store card arrangement fees are recognised Subsidiaries are all entities over which the Group has the over the life of the agreement with the store card provider. power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the Revenue from concessions is shown on a net basis, being the voting rights. The existence and effect of potential voting rights concession received rather than the gross value achieved by that are currently exercisable or convertible are considered the concessionaire on the sale. when assessing whether the Group controls another entity. Rental income in respect of sub-leased stores is recognised on Subsidiaries are consolidated from the date on which control is a straight-line basis over the period of the sub-lease. transferred to the Group. They are de-consolidated from the date that control ceases. Franchise income is received in connection with the franchise of the Group’s brand name overseas. Franchise royalty income Acquisitions of subsidiaries by the Group have been included in (note 6) represents the release of the initial fee to grant the Group financial statements using the purchase method of exclusivity that has been spread over the term of the accounting that measures the assets and liabilities given, agreement. Monthly franchise fee income is recognised in incurred or assumed at their fair value at the acquisition date, accordance with the related underlying trading performance of plus costs directly attributable to the acquisition. the franchisee. Monthly income covering the supply of goods to Acquisitions which result from a newly created company the franchisee is included in the sale of goods. issuing shares to achieve a business combination are treated 2.5 Cost of sales as a Group reorganisation. When the acquiree has not been Cost of sales consists of expenses incurred in getting products combined with any other business and continues to meet the to a saleable position and condition. Such costs principally definition of a business then reverse acquisition accounting has include purchasing of products from suppliers, packaging, been applied. freight and distribution costs. All intra-group transactions, balances, income and expenses 2.6 Interest income are eliminated on consolidation. Accounting policies of Interest income is accounted for on the accruals basis, by subsidiaries have been changed where necessary to ensure reference to the principal outstanding and the applicable consistency with the policies adopted by the Group. effective interest rate, which is the rate that exactly discounts 2.3 Interest in joint ventures the estimated future cash payments or receipts through the The Group has an investment in a joint venture which is expected life of the financial instrument or a shorter period, controlled through a separate entity in which each party has an where appropriate, to the net carrying amount of the financial interest. The Group recognises its interest using the equity asset or liability. method of accounting. The investment was initially recorded at cost and adjusted thereafter for the post acquisition changes in the Group’s share of net assets less distributions received less any impairment in value. The Group’s share of the entity’s profit or loss after taxation is included in the consolidated income statement with the Group’s share of any income and expense outside profit and loss recognised in the consolidated statement of comprehensive income.

64 New Look Annual Report and Accounts 2010 Overview

2. Summary of significant accounting policies continued The assets’ residual values and useful lives are reviewed, 2.7 Exceptional items and adjusted if appropriate, at each balance sheet date. Significant non-recurring items of income and expense are From 28 March 2010 the useful life of freehold buildings has disclosed in the underlying profit reconciliation as exceptional been revised to 2.5 years, see note 13. Business review items. The separate reporting of exceptional items helps An asset’s net carrying amount is written down immediately to provide an indication of the Group’s underlying business its recoverable amount if the asset’s net carrying amount is performance. greater than its estimated recoverable amounts. Costs which may be classified as exceptional include costs Gains and losses on disposals are determined by comparing of restructuring and reorganisation of the business (such as the proceeds with the net carrying amount. directly related legal and professional costs, redundancies, relocation costs and duplicate facility costs), writing down 2.10 Intangible assets inventories by material amounts to net realisable value, (a) Goodwill impairments or reversal of impairments of intangible assets, Goodwill represents the excess of the cost of an acquisition Governance property, plant and equipment, litigation settlements and over the fair value of the Group’s share of the net identifiable abortive costs incurred in preparation for flotation. assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisition of subsidiaries is included in 2.8 Foreign currencies ‘intangible assets’. Goodwill is tested annually for impairment Items included in the financial statements of each of the and carried at cost less accumulated impairment losses. Group’s entities are measured using the currency of the Impairment losses on goodwill are not reversed. Gains and primary economic environment in which the entity operates losses on the disposal of an entity include the carrying amount (“the functional currency”). The consolidated financial of goodwill relating to the entity sold. statements are presented in Sterling, which is the Group’s presentational currency. Goodwill is allocated to cash-generating units for the purpose Financial statements of impairment testing. The allocation is made to those Transactions in foreign currencies, which are those other than cash-generating units or groups of cash-generating units the functional currency of an entity, are recorded at the rate of (CGU) that are expected to benefit from the business exchange ruling at the date of the transaction. Monetary combination in which the goodwill arose. assets and liabilities denominated in foreign currency are translated at the rates ruling at the balance sheet date. (b) Other intangible assets Resulting exchange gains or losses are recognised in the Intangible assets acquired separately are capitalised at cost income statement for the period. and those acquired as part of a business acquisition are capitalised at fair value as at the date of acquisition. Following Upon consolidation, assets and liabilities of the Group’s initial recognition, intangible assets are carried at cost less any overseas subsidiary undertakings are translated into Sterling accumulated amortisation and any accumulated impairment at the rate of exchange ruling at the balance sheet date and losses. income statements are translated at the average exchange rate during the period. Differences on translation are Internally generated intangible assets are capitalised when recognised in a separate reserve. On disposal of an overseas certain criteria are met in accordance with IAS 38, otherwise subsidiary, the cumulative exchange differences for that this expenditure is charged against income in the year in which subsidiary are recognised in the income statement as part it is incurred. of the profit or loss on disposal. The useful lives of these intangible assets are assessed to 2.9 Property, plant and equipment be either finite or indefinite. Intangible assets with an Property, plant and equipment is stated at cost less indefinite life are not amortised but are subject to an accumulated depreciation and any provision for impairment impairment test as described in note 2.11. Where amortisation in value. is charged on assets with finite lives, this expense is taken to the consolidated income statement, on a straight line basis, Depreciation is provided to write down the cost of fixed assets through administrative expenses, based on the useful life to their estimated residual values, based on current prices at shown below: the balance sheet date, over their remaining useful lives on a straight line basis. Category Useful life (years)

Asset Category Useful life (years) Brand Indefinite Freehold buildings 50 Software licences 1 to 5 Leasehold land and buildings Period to end of lease Domain names 5 to 10 Fixtures and equipment 3 to 15 Recoverable leasehold property premiums Period to end of lease Refurbishments are included in the asset’s carrying amount Intangible assets with finite lives are assessed for impairment only when it is probable that future economic benefits in accordance with note 2.11. associated with the items will flow to the Group and the cost of the item can be measured reliably and are depreciated over the asset’s remaining useful economic life. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

65 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

2. Summary of significant accounting policies continued Changes in the fair value of derivatives that are designated and 2.11 Impairment of non-financial assets effective as hedges of future cash flows are recognised directly Assets that have an indefinite useful life, for example goodwill, in equity and any ineffective portion is recognised immediately are not subject to amortisation and are tested annually for in the income statement. When the hedged item is recognised impairment. Assets that are subject to amortisation are in the balance sheet, the associated gain or loss on the reviewed for impairment whenever events or changes in hedging instrument previously recognised in equity is included circumstances indicate that the net carrying amount may not in the carrying amount of the hedged asset or liability. Gains or be recoverable. An impairment loss is recognised for the losses realised on cash flow hedges are then recognised in the amount by which the asset’s carrying amount exceeds its income statement in the same period as the hedged item. recoverable amount. The recoverable amount is the higher of Hedge accounting is discontinued when the hedging an asset’s fair value less costs to sell and value in use. For the instrument expires or is sold, terminated or exercised, or purposes of assessing impairment, assets are grouped at the no longer qualifies for hedge accounting. At that time, any lowest level for which there are separately identifiable cash cumulative gain or loss on the hedging instrument previously flows (called cash-generating units, ‘CGUs’) and impairment is recognised in equity is transferred to the income statement. tested for groups of CGUs not larger than operating segments The net cumulative gain or loss recognised in equity is also which are country sub-groups of each of the Group’s brands, transferred to the income statement if the hedged transaction in line with internal management reporting. is no longer expected to occur. For non-financial assets other than goodwill, impairment Changes in the fair value of derivatives which do not qualify for losses are reviewed for possible reversal at each reporting hedge accounting are recognised in the income statement as date. A previously recognised impairment loss is reversed only they arise. if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last Derivatives embedded in other financial instruments or other impairment was recognised. The reversal is limited so that the host contracts are treated as separate derivatives when their carrying amount of the asset does not exceed its recoverable risks and characteristics are not closely related to those of the amount, nor exceed the carrying amount that would have been host contracts. The unrealised gains and losses on embedded determined, net of depreciation, had no impairment loss been derivatives are taken directly to the income statement. recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried (c) Non-derivative financial instruments at a revalued amount. All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs 2.12 Financial instruments associated with the borrowing. All deposits are initially (a) Derivative financial instruments recognised at cost. Derivative financial instruments (’derivatives’) are used to manage risks arising from changes in foreign currency After initial recognition, interest-bearing loans and borrowings exchange rates relating to the purchase of overseas sourced are subsequently measured at amortised cost using the products, and changes in interest rates relating to the Group’s effective interest method. Amortised cost is calculated by debt. In accordance with its treasury policy, the Group does not taking into account any issue costs, and any discount or enter into derivatives for speculative purposes. premium on settlement. Derivatives falling under the classifications laid out in IAS 39 Interest costs are expensed in the income statement so as to are stated at fair value in the balance sheet. achieve a constant finance cost as a proportion of the related outstanding borrowings. The fair value of derivative contracts is their market value at the balance sheet date. Market values are calculated using Trade receivables are initially recognised at fair value and mathematical models and are based on the duration of the subsequently measured at amortised cost less any provision derivative instrument together with quoted market data for impairment. including interest rates, foreign exchange rates and market A provision for impairment of trade receivables is established volatility at the balance sheet date. The fair value of interest when there is objective evidence that the Group will not be rate contracts is the estimated amount that the Group would able to collect all amounts due according to the original terms receive or pay to terminate them at the balance sheet date, of the receivables. Significant financial difficulties of the taking into account prevailing interest rates. debtor, probability that the debtor will enter bankruptcy or (b) Hedge accounting financial reorganisation, and default or delinquency in For the purpose of hedge accounting, hedges are classified payments (more than 60 days overdue) are considered as either fair value hedges where they hedge the exposure to indicators that the trade receivable is impaired. The amount of changes in the fair value of a recognised asset or liability; or the provision is the difference between the asset’s net carrying cash flow hedges where they hedge exposure to variability in amount and the present value of the estimated future cash cash flows that is either attributable to a particular risk flows, discounted at the original effective interest rate. associated with a recognised asset or liability or a forecast Trade payables are initially recognised at fair value and transaction. subsequently measured at amortised cost.

66 New Look Annual Report and Accounts 2010 Overview

2. Summary of significant accounting policies continued Taxation is charged or credited directly to equity if it relates to (c) Non-derivative financial instruments continued items that are credited or charged to equity. Otherwise, The Group’s unlisted investments are classified as available income tax is recognised in the income statement. for sale and are stated at their fair value which is calculated Business review 2.16 Employee benefit costs as historic cost less any impairment. They are included in (a) Pension obligations non-current assets since management does not intend to The Group accounts for pensions and other post-retirement dispose of the investments within 12 months of the balance benefits under IAS 19. sheet date. The Group only operates defined contribution pension 2.13 Inventories schemes in the UK and Eire. The Group has no further Inventories are valued at the lower of cost and net realisable payment obligations once the contributions have been paid. value, using the weighted average cost basis. Payments to defined contribution plans are recognised as an

Costs include the direct costs, measured at actual cost, and expense when the contributions fall due. Prepaid contributions Governance an attributable proportion of distribution overheads incurred in are recognised as an asset to the extent that a cash refund or bringing inventories to their current location and condition. a reduction in the future payments is available. Net realisable value is based on estimated selling price, less The French subsidiaries are subject to a statutory scheme further costs to be incurred to disposal. which consists of a single payment at the date of retirement which is classified as a defined benefit plan under IFRS. 2.14 Cash and cash equivalents In respect of this plan, obligations are measured at the In the consolidated statement of cash flows, cash and cash discounted present value by a qualified actuary. equivalents includes cash in hand, deposits held at call with banks, short-term deposits with an original maturity of three (b) Termination benefits months or less, and bank overdrafts. In the consolidated Termination benefits are payable when employment is Financial statements balance sheet, bank overdrafts are shown within current terminated by the Group before the normal retirement date, financial liabilities. or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises 2.15 Taxation termination benefits when it is demonstrably committed to Current tax assets and liabilities are measured at the amount either: terminating the employment of current employees expected to be recovered from or paid to the taxation according to a detailed formal plan without possibility of authorities. The tax rates and tax laws used to compute the withdrawal; or providing termination benefits as a result of amount are those that are enacted or substantively enacted at an offer made to encourage voluntary redundancy. Benefits the balance sheet date. falling due more than 12 months after the balance sheet date Deferred tax is recognised on all temporary differences arising are discounted to their present value. between the tax bases of assets and liabilities and their 2.17 Share based payments carrying amounts in the Group financial statements, with the The Group operates a number of share based payment following exceptions: schemes: the Senior Management Scheme, the 2004 Share – Where the temporary difference arises from the initial Scheme, the 2006 Option Plan and the 2008 Share Plan. Each recognition of goodwill or a non business combination asset scheme features both equity and cash settled components. or liability; The cost of the equity settled transactions with employees is – In respect of taxable temporary differences associated with measured by reference to the fair value at the date at which investments in subsidiaries and joint ventures, where the they are granted and is recognised as an expense over the timing of the reversal of the temporary differences can be vesting period, which ends on the date on which the relevant controlled and it is probable that the temporary differences employees become fully entitled to the award. Fair value is will not reverse in the foreseeable future; and determined using an IFRS 2 compliant pricing model. – Deferred tax assets are recognised only to the extent that it The Group provides for the expected cost of ‘Good Leavers’ is probable that taxable profits will be available against which are settled in cash by estimating at each balance sheet which the deductible temporary differences, carried forward date the likely amount of ‘Good Leavers’ until the date when tax credits or tax losses can be utilised. vesting conditions are met. A provision is created on the balance sheet and a corresponding charge is made to the Deferred tax assets and liabilities are measured on an income statement. ‘Good Leavers’ could arise from undiscounted basis at the tax rates that are expected to apply redundancy, disability, injury or death. The actual cost of when the related asset is realised or liability settled, based on ‘Good Leavers’ in the period is charged against the provision tax rates and laws enacted or substantively enacted at the brought forward. balance sheet date. Deferred tax assets and liabilities are offset against each other when there is a legally enforceable right to offset current tax assets against current tax liabilities, when the deferred income taxes relate to income taxes levied by the same tax jurisdiction and when the Group intends to settle its current tax assets and liabilities on a net basis.

67 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

2. Summary of significant accounting policies continued 2.22 Segment reporting (b) Termination benefits continued Operating segments by brand and geography are determined Under the 2006 Option Plan and the 2008 Share Plan the in a manner consistent with the internal reporting provided to number of shares that would vest under the ‘Good Leaver’ the chief operating decision-maker. The chief operating provision would be pro-rated to take into account the length decision-maker, who is responsible for allocating resources of the holding period since the date of the grant and this and assessing performance of the operating segments, has pro-rated amount of shares would then be cash settled. Under been identified as the Board. the Senior Management Scheme and the 2004 Share Scheme 2.23 Underlying operating profit the change in equity value from the date of the grant or issue In addition to the information required by IFRS and to assist of the shares using an appropriate valuation model is payable with the understanding of earnings trends, the Group has to the ‘Good Leavers’ in cash. included within its financial statements a non-GAAP measure Other Leavers under the 2004 Share Scheme and the 2008 referred to as underlying operating profit. Management Share Plan are entitled to a cash payment. Provision is made consider that underlying operating profit reflects the trading for the cash to which Bad Leavers are entitled. performance of the Group which excludes the impacts of exceptional items, share based payments and the marking to 2.18 Shares held by the ESOPs market of financial instruments not realised in the period. The Employee Share Option Plan Trusts (ESOPs) were set up to allow the issue of shares to Group employees and are 3. Treasury and financial risk management consolidated. The shares acquired by the ESOPs are included The Group’s activities expose it to a variety of financial risks: as treasury shares within capital and reserves at cost. Gains liquidity risk, market risk (including currency and cash flow made by the ESOPs on purchasing and selling New Look interest rate risk) and credit risk. The Group’s overall risk Retail Group Limited shares are recorded within a separate management programme focuses on the unpredictability of ESOP reserve. financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. 2.19 Provisions A provision is recognised when: the Group has a present legal The Group operates a centralised treasury function which is or constructive obligation as a result of a past event; it is responsible for managing the liquidity, interest and currency probable that an outflow of resources will be required to settle risks associated with the Group’s activities. As part of its the obligation; and the amount has been reliably estimated. strategy for the management of those risks, the Group uses Provisions are not recognised for future operating losses. derivative financial instruments. In accordance with the Group’s treasury policy, derivative instruments are not entered Provisions are measured at the present value of the into for speculative purposes. expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments The Group’s principal financial instruments, other than of the time value of money and the risks specific to the derivatives, are cash and short-term deposits, bank overdrafts obligation. The increase in the provision due to the passage and loans. The main purpose of these financial instruments is of time is recognised as interest expense. to raise finance for the Group’s operations. In addition, the Group has various other financial assets and liabilities such as Provisions for restructuring costs are recognised when the trade receivables and trade payables arising directly from its Group has a detailed formal plan for the restructuring that has operations. been communicated to affected parties. Liquidity risk 2.20 Leases Prudent liquidity risk management implies maintaining Leases are classified as finance leases where the terms of the sufficient cash and marketable securities, the availability of lease transfer substantially all the risks and rewards of funding through an adequate amount of committed credit ownership to the Group. All other leases are classified as facilities and the ability to close out market positions. Due to operating leases. the dynamic nature of the underlying businesses, Group Where an arrangement is dependent on the use of a specified treasury maintains flexibility in funding by maintaining asset or assets, or conveys the right to use an asset, it is availability under committed credit lines. determined to contain a lease although this may not be its Management monitors rolling forecasts of the Group’s liquidity legal form. The lease element of the arrangement is position which comprise an undrawn revolving credit facility of accounted for under IAS 17. £50.0 million (2009: £50.0 million) and an overdraft limit of Rentals payable under operating leases are charged to income £5.0 million (2009: £5.0 million) and cash and short-term on a straight line basis over the period of the lease. Premiums deposits (note 20) on the basis of expected cash flow. payable, rent free periods and lease inducements receivable The Group monitors compliance against all its financial on entering an operating lease are released to income on a obligations and it is Group policy to manage the performance straight line basis over the lease term. Capital contributions and position of the Group so as to operate within covenanted from landlords are reflected as lease incentives. restrictions at all times. 2.21 Share capital Ordinary share capital is classified as equity. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. 68 New Look Annual Report and Accounts 2010 Overview

3. Treasury and financial risk management continued Interest rate risk Currency risk The Group uses interest rate derivatives to manage the cost of The Group operates internationally and is exposed to foreign its floating rate debt by entering into fixed rate derivatives, so exchange risk arising from various currency exposures, as to reduce exposure to changes in interest rates. Business review primarily with respect to the Euro and US dollar. Foreign The Group analyses its interest rate exposure on a exchange risk arises from future commercial transactions, dynamic basis. Various forecasting is simulated taking into recognised assets and liabilities and net investments in foreign consideration refinancing, alternative financing and hedging. operations. Based on these forecasts, the Group calculates the impact on Foreign currency risk is the risk that the fair value of a profit and loss of a defined interest rate shift. For each forecast, financial commitment, recognised financial assets or financial the same interest rate shift is used across all currencies. The liabilities will fluctuate due to changes in foreign currency scenarios are only run for liabilities that represent the major rates. interest-bearing positions. The forecasting is done on a regular basis to verify that the maximum loss potential is within the Governance The Group’s principal foreign currency exposures arise from limit given by management. the purchase of overseas sourced products. Group policy is to hedge a proportion of these exposures for up to 15 months Borrowings issued at variable rates expose the Group to cash ahead in order to limit the volatility in the ultimate sterling flow interest rate risk. Group policy is to hedge approximately cost. This hedging activity involves the use of spot, forward and 50-75% of floating rate exposure. option contracts. To the extent that the translation of overseas During all periods, debt Tranches B2 and C2 were denominated assets is not offset by the effect of translating overseas in Euros and all other borrowings were in Sterling. liabilities, the effects are not currently hedged and are recognised within consolidated reserves. The Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. This has the economic Financial statements To manage the foreign exchange risk arising from future effect of converting borrowings from floating rates to fixed commercial transactions and recognised financial assets and rates. financial liabilities, forward contracts, managed by Group treasury, are used. Interest rate risks are presented by way of sensitivity analyses in accordance with IFRS 7. These show the effects of changes The periodic effects are determined by relating the in market interest rates on interest payments, interest income hypothetical changes in the risk variables to the balance of and expense and other income components. financial instruments at the reporting date. It is assumed that the balance at the reporting date is representative for the The interest rate sensitivity analyses are based on the period as a whole. following assumptions: At 27 March 2010, if Sterling had weakened by 5.0% against In the case of fair value hedges designed for hedging interest the Euro with all other variables held constant post-tax profit rate risk, the changes in the fair value of the hedged item and (2009: loss) for the period would have been £0.2 million lower the hedging instrument attributable to interest rate (2009: £0.1 million higher), mainly as a result of the movements balance out almost completely in the income revaluation of Euro denominated borrowings. statement in the same period. As a consequence, these financial instruments are not exposed to interest rate risk. At 27 March 2010, if Sterling had weakened by 5.0% against the US Dollar with all other variables held constant, post-tax Certain financial instruments are designated as hedging profit (2009: loss) for the period would have been £1.2 million instruments in a cash flow hedge to hedge payment lower (2009: £1.5 million higher), mainly as a result of a loss fluctuations resulting from interest rate movements. Changes on the revaluation of overseas creditors; post-tax movement in in the market interest rate affect the hedging reserve in equity would have been £0.6 million (2009: £0.7 million) lower shareholders’ equity and are therefore taken into as a result of the movement in forward currency contracts. consideration in the equity-related sensitivity calculations. The Group has decided to hold cash in a Euro denominated Changes in the market interest rate of interest rate derivatives bank account as a natural hedge for the effect of the affect other financial income or expense and are therefore revaluation of the Group’s Euro denominated bank borrowing. taken into consideration in the income-related sensitivity At 27 March 2010 the amount of Euros held as a natural calculations. hedge was €75.4 million (2009: €75.4 million) against the total Euro denominated bank borrowings of €75.4 million Currency derivatives are not exposed to interest rate risks and (2009: €75.4 million). are therefore not included in the interest rate sensitivity calculations. At 27 March 2010, if interest rates had been 100 basis points higher (2009: 100bp) with all other variables held constant, post-tax profit for the period would have been £12.4 million (2009: £12.2 million) lower, mainly as a result of a higher interest expense on floating rate borrowings; post-tax movement in equity would be £2.8 million lower (2009: £3.2 million lower) as a result of movement in cash flow hedges.

69 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

3. Treasury and financial risk management continued adjustment to the carrying amounts of assets and liabilities Interest rate risk continued within the next financial period are discussed below: At 27 March 2010, if interest rates on Euro denominated (a) Estimated impairment of intangible assets with borrowings at the balance sheet date had been 100 basis indefinite lives points higher (2009: 100bp.) with all other variables held The Group tests whether intangible assets with indefinite lives constant, post-tax profit for the period would have been have suffered any impairment in accordance with the £0.7 million (2009: £0.7 million) lower due to the higher accounting policy stated. The recoverable amounts of cash- interest expense on Euro denominated borrowings. generating units have been determined based on the higher of Credit risk value in use or fair value less cost to sell. These calculations Credit risk is managed on a Group basis. Credit risk arises require the use of estimates as detailed in note 14. from cash and cash equivalents, derivative financial (b) Income taxes instruments and deposits with banks and financial institutions, The Group is subject to income taxes in numerous as well as credit exposures to wholesale and retail customers, jurisdictions. At each financial period end, judgement is including outstanding receivables and committed transactions. required in determining the Group provision for income taxes. If wholesale customers are independently rated, these ratings There are some transactions and calculations for which the are used. Otherwise, if there is no independent rating, risk ultimate tax determination is uncertain. The Group recognises control assesses the credit quality of the customer, taking into liabilities for anticipated tax issues based on the best account its financial position, past experience and other estimates of whether additional taxes will be due at the factors. Individual risk limits are set based on internal or balance sheet date. Where the final tax outcome of these external ratings in accordance with limits set by the Board. The matters is different from the amounts that were initially utilisation of credit limits is regularly monitored. Sales to retail recorded, such differences will impact the current and customers are settled in cash or using major credit cards. deferred tax assets and liabilities in the period in which such The credit ratings of banks with which the Group has determination is made. investments of cash surpluses, borrowings or derivative (c) Share based payments financial instruments are reviewed regularly by management. The share based payment expense is recognised in each Each bank is assessed individually with reference to the credit period as it is incurred, based on a fair value model, and it holds and deposit limits are set, which are approved by the estimates of the likely future cash payments to good leavers. Board and reconsidered if the Fitch credit rating falls below an The key assumptions of this model are presented in note 30. “A” rating. Each bank is assessed individually with the reference to the credit it holds and a deposit limit is set (d) Estimated useful life of intangibles, property, accordingly and approved by the Board. plant and equipment The Group estimates the useful life and residual values of Receivable balances are monitored on an ongoing basis and intangible assets, property, plant and equipment and reviews provision is made for estimated irrecoverable amounts. these estimates at each financial period end. The Group also Capital risk management tests for impairment when a trigger event occurs, or annually The Group’s principal objective when managing capital is to as appropriate. safeguard the Group’s ability to continue as a going concern in (e) Vacant properties order to provide returns to shareholders and benefits for When a property ceases to be used for the purposes of the stakeholders. business, a provision is made to the extent that the The Group has debt covenants imposed by its lenders which it recoverable amount of the interest in the property is expected must achieve in order to maintain its current level of to be insufficient to cover the future obligations relating to the borrowings. Covenant tests are carried out quarterly and at lease. Where possible, the property is subleased at the the end of each financial period. There have been no breaches prevailing rent. of the covenants throughout the period (2009: none). (f) Impairment of financial assets The Group must ensure sufficient capital resources are The Group follows the guidance of IAS 39 to determine when available for working capital requirements and meeting a financial asset is impaired. This determination requires principal and interest payment obligations as they fall due. significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to As at 27 March 2010, net debt was £1,033.3 million which the fair value of an investment is less than its cost, and (2009: £1,063.0 million), see note 26. the financial health of and near-term business outlook for the investee, including factors such as industry and sector 4. Critical accounting estimates, judgements and performance, changes in technology and operational and assumptions financing cash flow. Estimates and judgements are continually evaluated and are (g) Inventory provisions based on historical experience and other factors, including The Group estimates a slow moving inventory provision based expectations of future events that are believed to be on prior movements and current market conditions. reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material

70 New Look Annual Report and Accounts 2010 Overview

5. Segment information Management has determined the operating segments based on the reports reviewed by the Board that are used to make strategic decisions. Business review The Board consider the business from both a brand (see definition in note 2.10) and geographic perspective. Geographically, management considers the performance of the UK (UK Retail and e-commerce) and International (all other streams). The reportable segments derive their revenue primarily from the sale of retail goods and gross concession sales. New Look brand & UK segments include rental income and store card income. The Board assesses the performance of the operating segments based on revenue grossed up to include the sales of store concessions (‘segmental gross transactional value’) and on a measure of underlying operating profit (see definition in note 2.23). This measurement basis excludes the effects of exceptional items, share-based payments and unrealised gains/losses on financial instruments. Interest income and expenditure are not allocated to segments, as this type of activity is driven by the central treasury function, which manages the cash position of the Group. Transfer prices between operating segments are on Governance an arm’s length basis in a manner similar to transactions with third parties. The segment information provided to the Board for the reportable segments by brand, as well as by geographic segment, are as follows: For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Financial statements External revenue New Look brand – UK Retail 1,145.0 1,025.7 – International 127.3 119.0

Owned stores 1,272.3 1,144.7 E-commerce 37.0 13.1 Franchise 24.6 22.8 Total New Look brand 1,333.9 1,180.6

Mim brand – Owned stores 165.2 153.7 Total Mim brand 165.2 153.7

Segmental gross transactional value 1,499.1 1,334.3 Adjustment to state concession income on a net basis for statutory reporting purposes (35.5) (11.7) Total Group external revenue 1,463.6 1,322.6

For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m External revenue UK 1,182.0 1,038.8 International 317.1 295.5 Segmental gross transactional value 1,499.1 1,334.3 Adjustment to state concession income on a net basis for statutory reporting purposes (35.5) (11.7) Total Group external revenue 1,463.6 1,322.6

The revenue from external parties reported to the Board is measured in a manner consistent with that in the income statement except for the gross up of store concessions sales.

71 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

5. Segment information continued For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Underlying operating profit New Look brand – UK Retail 146.5 111.3 – International 3.4 10.3 Owned stores 149.9 121.6 E-commerce 6.3 1.7 Franchise 4.2 3.6 Total New Look brand 160.4 126.9

Mim brand – Owned stores 2.3 11.3 Total Mim brand 2.3 11.3 Total Group underlying operating profit 162.7 138.2

For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Underlying operating profit UK 152.8 113.0 International 9.9 25.2 Total Group underlying operating profit 162.7 138.2

Underlying operating profit is defined in note 2.23 and is reconciled to operating profit on page 56.

As at

27 Mar 2010 28 Mar 2009 £m £m Capital expenditure New Look brand – UK Retail 62.0 48.0 – International 16.3 20.4 Owned stores 78.3 68.4 E-commerce 5.6 1.9 Franchise – – Total New Look brand 83.9 70.3

Mim brand – Owned stores 4.7 11.7 Total Mim brand 4.7 11.7 Total Group capital expenditure 88.6 82.0

72 New Look Annual Report and Accounts 2010 Overview

5. Segment information continued As at 27 Mar 2010 28 Mar 2009 Business review £m £m Capital expenditure UK 67.6 49.9 International 21.0 32.1 Total Group capital expenditure 88.6 82.0

For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March Governance 2010 2009 £m £m Depreciation and amortisation New Look brand – UK Retail 58.9 52.0 – International 10.7 8.9 Owned stores 69.6 60.9 E-commerce ––

Franchise – – Financial statements Total New Look brand 69.6 60.9

Mim brand – Owned stores 7.2 7.4 Total Mim brand 7.2 7.4 Total Group depreciation and amortisation 76.8 68.3

For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Depreciation and amortisation UK 58.9 52.0 International 17.9 16.3 Total Group depreciation and amortisation 76.8 68.3

Analyses of the Group’s external revenues (by customer location) and non-current assets (excluding investments, deferred tax assets and other financial assets) by geographical location are detailed below:

External revenue Non-current assets

52 weeks 52 weeks ended ended 27 March 28 March 27 March 28 March 2010 2009 2010 2009 £m £m £m £m United Kingdom 1,147.8 1,027.4 879.2 859.5 France 208.0 187.9 145.6 153.2 Rest of Europe 83.7 84.5 24.9 22.7 Middle East 16.2 22.5 – – Rest of World 7.9 0.3 – – 1,463.6 1,322.6 1,049.7 1,035.4

73 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

6. Revenue For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Sale of goods 1,444.7 1,313.2 Rental income 1.8 1.5 Store card arrangement fee 2.2 2.1 Franchise royalty income 1.3 1.7 Concession income (net) 13.6 4.1 Revenue 1,463.6 1,322.6

7. Operating profit For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 restated (note 2.1) £m £m Group operating profit is stated after charging/(crediting): Staff costs (note 8a) 248.7 211.6 Depreciation on owned assets 73.4 65.2 Impairment of owned assets (note 10) 1.1 – Amortisation/impairment of intangibles 3.4 3.1 Amortisation of lease incentives (4.1) (2.9) Amortisation of lease premiums 1.3 1.2 Loss on disposal of property, plant and equipment 1.5 1.5 Operating lease charges Minimum lease payments 166.3 146.1 Other rentals payable 0.2 0.1 Net foreign exchange differences (5.3) (18.5) Cost of inventories recognised as an expense 550.0 523.2 Write down of inventories to net realisable value 16.6 13.3 Auditors’ remuneration: Fees payable to the Company’s auditor for the audit of the Group and parent Company 0.2 0.2 Fees payable to the Company’s auditor and its associates for other services: – The audit of the Company’s subsidiaries pursuant to legislation 0.2 0.2 – Other services relating to taxation 0.4 0.4 – Transaction support 2.3 – – All other services 0.3 –

Included in auditors’ remuneration are out of pocket expenses paid to Group auditors.

8a. Staff costs For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Wages and salaries 210.6 185.0 Social security costs 26.7 20.9 Pension costs (note 34) 1.3 1.2 238.6 207.1 Share based payment expense (note 30) 10.1 4.5 248.7 211.6

In addition to the above, costs relating to temporary and contract staff total £4.7 million (2009: £3.3 million).

74 New Look Annual Report and Accounts 2010 Overview

8a. Staff costs continued The average monthly number of employees of the Group (including Directors) during the period is: For the financial period ended Business review 52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 Administration and distribution 1,964 1,684 Retailing 20,215 18,747 22,179 20,431

If the number of part-time hours were converted on the basis of a full working week, the equivalent average number of full-time employees would be 11,800 (2009: 11,056). Governance Compensation for key management personnel The compensation for key management personnel, including the Directors, was as follows: For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 restated (note 2.1)

£m £m Financial statements Short term employee benefits 5.7 3.9 Compensation for loss of office 0.5 – Post employment benefits 0.3 0.5 Aggregate gains made by Directors on the sale of shares 2.6 – 9.1 4.4

Retirement benefits are accruing to five members of key management (restated (note 2.1) 2009: five) at the end of the period. Directors’ remuneration is detailed in note 8b below.

8b. Directors’ remuneration (a) Historical aggregate emoluments The Directors’ emoluments table below includes aggregate emoluments of all executive and Non-Executive Directors of New Look Retail Group Limited who provided qualifying services during the financial periods ended 27 March 2010 and 28 March 2009. For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 restated (note 2.1) £m £m Aggregate emoluments in respect of qualifying services 3.0 2.8 Compensation for loss of office 0.5 – Company contributions paid in respect of pension schemes 0.2 0.3 Aggregate gains made by Directors on the sale of shares 2.6 –

There have been no waivers of emoluments by any of the Directors in the reporting period. One (2009: nil) director exercised share options and two (2009: nil) Directors were granted shares in the period. (b) Directors’ details Directors M Brockman, L Buckham, M Clarke, T Lane, S David, J Gildersleeve, C McCall, C McPhail, A Miller, T Singh and H Staunton were Directors as at 27 March 2010. A Fortescue resigned on 20 October 2009 and P Wrigley resigned on 10 January 2010. In the financial period ended 27 March 2010, each of the following were executive Directors: C McPhail and A Miller (2009: P Wrigley, C McPhail and A Miller). As representatives of Permira, M Clarke and L Buckham each have an indirect economic interest in the shares of the Company held by the Permira Funds. As representatives of Apax, A Fortescue (resigned 20 October 2009), M Brockman and T Lane (appointed 23 March 2010) have an indirect economic interest in the shares of the Company held by the Apax Funds. During the period, a monitoring fee of £150,000 (2009: £150,000) was payable to each of Apax and Permira. For details of transactions with the Directors, including lease payments and payment-in-kind (PIK) interest, see note 35.

75 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

8b. Directors’ remuneration continued Highest paid Director For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 restated (note 2.1) £m £m Aggregate emoluments in respect of qualifying services 1.5 1.1 Company contributions paid in respect of pension schemes 0.1 0.1

The highest paid director acquired a beneficial interest in shares in respect of qualifying services under a long-term incentive scheme during the period.

9. Finance income and expense For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Finance income Interest on bank deposits 0.8 5.0 Interest on other loans 0.4 – Exchange rate gain on revaluation of Euro loans 2.2 – Exchange rate gain on revaluation of Euro cash – 10.0 Total finance income 3.4 15.0

Finance expense Interest on bank loans and overdrafts 99.7 124.3 Exchange rate loss on revaluation of Euro loans – 10.0 Exchange rate gain on revaluation of Euro cash 1.6 – Finance charge 0.5 – Total finance expense 101.8 134.3

Included within finance expense is an amount of £nil (2009: £1.4 million) in respect of finance income earned on interest rate derivatives put in place to hedge the effect of changes in LIBOR on the Group’s floating rate debt.

10. Exceptional items For the financial period ended 52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Review of business financing 9.9 – Change programme 8.8 4.5 Onerous lease (1.0) 2.3 Exceptional incentive scheme 3.7 – Impairment loss 1.1 – 22.5 6.8

Review of business financing During the period ended 27 March 2010, the Group undertook a number of investigative and preparatory steps in connection with a potential listing of shares and debt refinancing.

76 New Look Annual Report and Accounts 2010 Overview

10. Exceptional items continued Change programme During the period ended 28 March 2009 the Group incurred £4.5 million relating to a change programme. £2.5 million of the costs incurred were primarily on professional advice, in developing a delivery plan that was approved by the Board in March 2009. Business review The actual delivery of the programme, which is not being treated as exceptional, forms part of the Group’s 2.5 year future operating model to deliver system, process and structure changes where needed, and to ensure New Look employees are customer and brand aligned in order to achieve the Group’s strategy. The other £2.0 million of the Change Programme in the period ended 28 March 2009 was the relocation of commercial functions to London, ensuring New Look’s Buying, Merchandising and Design functions are at the heart of London’s fashion district. Of this £2.0 million, a significant proportion relates to the relocation. The cost of £8.8 million incurred in the period to 27 March 2010 relates entirely to the relocation. Onerous lease Governance As a result of the relocation of the London head office an onerous lease provision of £2.3 million for the future lease costs of the vacant Portman House property in London was established in the financial period ended 28 March 2009. In the financial period ended 27 March 2010 a termination fee was agreed, leading to a reversal of the unutilised provision. Exceptional incentive scheme At the beginning of the financial period ended 27 March 2010 an additional one-off incentive scheme was agreed for a small number of senior managers, including the Executive Directors. The purpose of this scheme was to recognise the exceptional challenge facing management in preparing for a potential exit against the backdrop of extremely difficult economic times. These senior managers’ normal bonus pays out on a sliding scale beginning when the Group’s budgeted EBITDA is achieved. The additional bonus for the financial period ended 27 March 2010, which is not intended to be repeated, will become payable on a sliding scale only when EBITDA exceeds the level at which full payout under the normal bonus scheme is achieved. Financial statements Impairment loss An impairment loss in respect of the freehold building in Weymouth (note 13) has been recognised as at 27 March 2010. The impairment loss has arisen as a result of strategic opportunities for the use of the freehold land prior to the Olympics in 2012, following the decision to relocate certain functions to London and the former distribution centre in Weymouth becoming idle.

11. Taxation For the financial period ended 52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Current tax: UK corporation tax on profits of the period 23.4 17.3 Double tax relief – (1.6) UK prior year adjustment – (1.0) Overseas tax 1.1 1.9 Total current tax 24.5 16.6

Deferred tax: Origination and reversal of temporary differences (6.6) (10.4) Adjustment in respect of prior period (1.6) 0.5 Total deferred tax (8.2) (9.9) Income tax expense 16.3 6.7

77 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

11. Taxation continued The tax on the Group’s profits before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows: For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Profit before taxation 36.0 2.6

Tax charge on profit at standard rate of 28% (2009: 28%) 10.1 0.7 Reasons affecting charge for the period: Depreciation on non-qualifying assets 2.9 2.3 Expenses not deductible for tax purposes 5.0 2.8 Foreign tax charged at a different rate than UK standard rate (0.5) 0.9 Overseas tax loss not relieved in current year 0.4 0.5 Adjustment to current tax charge in respect of prior periods – (1.0) Adjustment to deferred tax charge in respect of prior periods (1.6) 0.5 16.3 6.7

In addition to the amount charged to the consolidated income statement, tax movements recognised directly in equity as shown in the consolidated statements of comprehensive income and of changes in equity were as follows: For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Deferred tax: Foreign exchange movements taken to translation reserve 0.5 (1.3) Temporary difference arising on share option scheme – (0.3) Other temporary differences (0.2) 0.6 Tax credit/(charge) on items recognised directly in equity 0.3 (1.0)

Deferred income tax Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same tax authority. As at 27 March 28 March 2010 2009 £m £m Deferred tax asset to be recovered within 12 months 21.8 14.0 21.8 14.0 Deferred tax liability falling due within 12 months – (1.0) Deferred tax liability falling due after more than 12 months (94.1) (93.8) (94.1) (94.8) (72.3) (80.8)

The movement in the period is as follows:

Accelerated Other capital temporary allowances Brand differences Total £m £m £m £m At 29 March 2008 7.7 91.0 (9.0) 89.7 Credited to income statement (2.7) 1.9 (9.1) (9.9) Recognised directly in equity – – 1.0 1.0 At 28 March 2009 5.0 92.9 (17.1) 80.8 Charged/(credited) to income statement 1.0 – (9.2) (8.2) Recognised directly in equity – (0.5) 0.2 (0.3) At 27 March 2010 6.0 92.4 (26.1) 72.3

78 New Look Annual Report and Accounts 2010 Overview

11. Taxation continued There is a deferred tax asset in respect of capital losses of £1.4 million (2009: £1.2 million) that has not been recognised due to uncertainty as to whether there will be sufficient taxable profits in the future against which the asset could be utilised. Business review Deferred tax assets of £4.3 million (2009: £3.4 million) relating to losses in New Look Belgium, New Look Holland and New Look France have not been recognised at a Group level as there is no certainty when these losses will be relieved. No liability has been recognised in respect of temporary differences associated with investments in subsidiaries, branches and interests in joint ventures, where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future. The aggregate amount of temporary differences associated with these investments, for which a deferred tax liability has not been recognised, is £864.7 million (2009: £701.9 million).

12. Dividends Governance No dividends have been proposed, declared or paid during the periods ended 27 March 2010 or 28 March 2009.

13. Property, plant and equipment

Freehold Fixtures land and and buildings equipment Total £m £m £m Cost At 29 March 2008 12.4 365.2 377.6 Financial statements Exchange movement – 17.4 17.4 Additions – 82.0 82.0 Reclassification(1) (3.1) 3.1 – Disposals – (6.9) (6.9) At 28 March 2009 9.3 460.8 470.1 Exchange movement – (5.7) (5.7) Additions 1.6 87.0 88.6 Disposals (0.1) (4.7) (4.8) At 27 March 2010 10.8 537.4 548.2

Depreciation At 29 March 2008 (1.1) (144.3) (145.4) Exchange movement – (7.3) (7.3) Depreciation charge (0.3) (64.9) (65.2) Reclassification(1) 0.3 (0.3) – Disposals – 5.4 5.4 At 28 March 2009 (1.1) (211.4) (212.5) Exchange movement – 4.2 4.2 Depreciation charge (0.1) (73.3) (73.4) Impairment loss (1.1) – (1.1) Disposals – 3.3 3.3 At 27 March 2010 (2.3) (277.2) (279.5)

Net book value 27 March 2010 8.5 260.2 268.7 28 March 2009 8.2 249.4 257.6

(1) In the prior period there was a reclassification of additions and depreciation between freehold land and buildings and fixtures and equipment. Freehold land of £5.6 million (2009: £5.6 million) is not depreciated. At 27 March 2010, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to £25.6 million (2009: £33.2 million).

79 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

13. Property, plant and equipment continued An impairment loss has been recognised on the freehold building, excluding the freehold land, as at 27 March 2010. The recoverable amount has been determined based on the value in use of the building, fixtures and equipment, applying an estimated market rent had the building not been owned; the Directors’ best estimate of the useful economic life of the freehold building at 27 March 2010; that no residual value is anticipated; and a pre tax discount rate of 12.7%. The impairment loss has been recognised as an exceptional charge in the consolidated income statement, see note 10.

14. Intangible assets Recoverable leasehold property Software Goodwill Brands premiums licences Total £m £m £m £m £m Cost At 29 March 2008 365.3 316.1 24.7 19.6 725.7 Exchange movement – 6.0 3.8 – 9.8 Additions at cost – – 0.2 4.0 4.2 Reclassification(1) – – 1.2 – 1.2 At 28 March 2009 365.3 322.1 29.9 23.6 740.9 Exchange movement – (1.3) (1.0) – (2.3) Additions at cost – – – 8.8 8.8 Disposals at cost – – – (3.1) (3.1) At 27 March 2010 365.3 320.8 28.9 29.3 744.3

Amortisation and impairment At 29 March 2008 – – (0.7) (9.9) (10.6) Amortisation during the period – – – (3.1) (3.1) Reclassification – – (1.2) – (1.2) At 28 March 2009 – – (1.9) (13.0) (14.9) Exchange movement – – 0.1 – 0.1 Amortisation during the period – – (0.4) (3.0) (3.4) Disposals during the period – – – 3.1 3.1 At 27 March 2010 – – (2.2) (12.9) (15.1)

Net book value At 27 March 2010 365.3 320.8 26.7 16.4 729.2 At 28 March 2009 365.3 322.1 28.0 10.6 726.0

(1) In the prior period there was a reclassification of additions and depreciation of recoverable leasehold property premiums. The Group had entered into contractual commitments for the acquisition of software amounting to £0.9 million (2009: £nil). The lowest CGUs within the Group are individual stores, however for the purpose of intangible impairment review, the lowest group of CGUs are the country sub-groups of the Group’s brands, which is in line with internal management reporting. Brands, lease premiums and software licences have been allocated between these groups. Goodwill arising from business combinations is all allocated to the UK. Brands include the New Look and Mim brands acquired through business combinations. Fair value was established by independent valuers and was based on the relief from royalty method. The Group is committed to the continuing development of these brands and has concluded that they have indefinite useful lives. Certain premiums paid on acquisition of short leasehold property in France are expected to be recoverable from subsequent tenants. Recoverable leasehold property premiums are pledged as security for the related lease rental liabilities. The value in use of relevant groups of CGUs for impairment testing purposes have been determined based on calculations using cash flow projections from the financial plans approved by the Board covering a five year period from the balance sheet date. The calculation of value in use is most sensitive to the following assumptions: – The forecast operating cash flows for the next five years are based on approved budgets and plans. These budgets and plans are based on past performance and expectations for the market development of the relevant groups of CGUs; – An estimate of the long-term effective tax rate for the CGU; and

80 New Look Annual Report and Accounts 2010 Overview

14. Intangible assets continued – The rate of growth used to extrapolate cash flows beyond the five year plan period is 2.0% per annum (2009: 2.0%). This growth rate is based on published estimates of the long-term growth in Gross Domestic Product in the respective CGUs and inflation. Business review For the New Look brand, the resulting cash flows were discounted using a pre tax discount rate of 12.7% (2009: 14.2%). For the Mim brand, the resulting cash flows were discounted using a pre tax discount rate of 12.2% (2009: 14.2%). These rates reflect management’s estimate of the cost of capital for the business. Management does not believe that any reasonable change in any of the above key assumptions would cause the carrying value of goodwill or the New Look brand to exceed their recoverable amounts. Sensitivity to changes in assumptions With regard to the assessment of the value in use of the Mim brand, management does not believe that any reasonable change in any of the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount. The recoverable amount exceeds the carrying amount by £17.2 million. The implications of sensitivity on the key assumptions, Governance assuming no other mitigating actions are taken by management, would affect the recoverable amount as detailed below: – Pre tax discount rate – Sensitivity has determined that the discount rate of 12.2% is an influential assumption on the outcome of the recoverable amount calculation. The pre tax discount rate would need to increase by 1.8% for the carrying value to be impaired; and – Cash flow projections – Cash flows can be impacted by changes to sales projections, sales prices and direct costs. In order for the carrying value of the Mim brand to be impaired, the expected discounted free cash flows for every year commencing March 2011 would need to reduce by 15.6%. Financial statements 15. Investment in joint venture The Group has a 50% interest in NLT Tekstil Sanayi Ve Ticaret Limited Şirketi, a jointly controlled entity incorporated in Turkey, which sources product on behalf of the Group. The Group’s share of the assets, liabilities, revenue and expenses of the jointly controlled entity are as follows: As at 27 March 28 March 2010 2009 Share of the joint venture’s balance sheet £m £m Non-current assets –– Current assets 3.2 2.5 Current liabilities (2.3) (2.1) Non-current liabilities (0.1) – Share of net assets 0.8 0.4 Loan to joint venture 0.8 0.8 Total investment in joint venture 1.6 1.2

For the financial period ended 52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 Share of the joint venture’s result £m £m Revenue 9.6 12.4 Cost of sales (8.1) (12.1) Administrative expenses (1.1) (0.8) Profit/(loss) before taxation 0.4 (0.5) Taxation – 0.1 Profit/(loss) for the period 0.4 (0.4)

The share capital of the joint venture is 3,040,000 Turkish Lira (YTLs), (being equivalent of £1,272,020 at a conversion rate of 2.39 YTLs to each Pound Sterling) divided into 121,600 shares of 25 YTLs each. New Look Retailers Limited and Global Tekstil Danismanlik Sanayi Ve Ticaret Limited Şirketi each own 60,800 shares in the Company. There is no recourse to Group Companies in respect of the borrowings of the joint venture and there are no commitments or contingent liabilities at the year end.

81 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

16. Investments As at 27 March 28 March 2010 2009 £m £m Unlisted investments available for sale 0.3 0.2

The investments included above are investments in unlisted equity securities which are carried at cost being fair value at inception. The investment continues to be carried at cost since they do not have a quoted price in an active market nor a fair value which can be reasonably measured. The investments have no maturity or coupon rate and are denominated in Euros. There were no disposals or impairment provisions on available for sale financial assets in any of the periods.

17. Inventories As at 27 March 28 March 2010 2009 £m £m Raw materials and work in progress 1.7 1.6 Finished goods 124.6 139.0 126.3 140.6

Inventories with a value of £1.7 million (restated 2009: £0.9 million) are carried at fair value less costs to sell, this being lower than cost. Cost of inventories recognised as an expense and any write downs of inventory are disclosed in note 7.

18. Trade and other receivables

As at 27 March 28 March 2010 2009 £m £m Current Trade receivables 9.3 7.8 Other receivables 18.0 3.1 Prepayments and accrued income 44.9 42.3 72.2 53.2

Non-current Other receivables 51.8 51.8

The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies: As at 27 March 28 March 2010 2009 restated £m £m Sterling(1) 90.8 74.4 Euro 32.8 30.3 US Dollar(1) 0.4 0.3 124.0 105.0

(1) Restated to separate the US Dollar balance at period end. Included within the trade and other receivables balance is a bad debt provision for £1.2 million (2009: £0.5 million). There was a bad debt charge in the income statement of £1.1 million (Restated 2009: £nil). As at 27 March 2010, trade and other receivables of £20.2 million (Restated 2009: £9.0 million) were fully performing. As at 27 March 2010, trade and other receivables of £7.6 million (2009: £1.9 million) were past due but not classed as impaired.

82 New Look Annual Report and Accounts 2010 Overview

18. Trade and other receivables continued The ageing analysis of these is as follows:

As at Business review 27 March 28 March 2010 2009 £m £m Up to 2 months 4.7 1.3 2 to 6 months 2.9 0.6 7.6 1.9

As of 27 March 2010, trade and other receivables of £1.7 million (2009: £0.5 million) were impaired and £1.2 million

(2009: £0.5 million) were provided for. The ageing of these receivables is as follows: Governance As at 27 March 28 March 2010 2009 £m £m Up to 2 months 0.1 – 2 to 6 months 1.1 0.5 1.2 0.5

Movements on the Group provision for impairment of trade receivables are as follows: Financial statements As at 27 March 28 March 2010 2009 £m £m At start of period 0.5 0.7 Provisions for receivables impairment 1.1 – Receivables written off during the period (0.4) (0.2) 1.2 0.5

The creation and release of the provision for impaired receivables has been included in administrative expenses. Amounts charged to the bad debt provision are generally written off when there is no expectation of recovering additional cash. Subsequent recoveries of amounts previously written off are credited against administrative expenses. The other classes within trade and other receivables do not contain impaired assets. The Group maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above.

19. Derivative financial instrument assets As at 27 March 28 March 2010 2009 £m £m Current assets Foreign currency contracts 16.1 19.2 Interest rate swaps 0.3 – Embedded foreign exchange derivatives – 1.2 16.4 20.4

Foreign currency contracts comprise forward contracts and options which are used to hedge exchange risk arising from the Group’s overseas purchases. The instruments purchased are denominated in US Dollars. The interest rate swap agreements and foreign currency contracts are referred to within note 25. Embedded foreign exchange derivatives arise within outstanding purchase orders, which are in currencies other than the functional currencies of the contracting parties.

83 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

20. Cash and cash equivalents As at 27 March 28 March 2010 2009 £m £m Cash at bank and in hand 39.2 27.9 Short-term deposits 167.1 133.2 206.3 161.1

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods between one day and three months depending on the cash requirements of the Group, and earn interest at market short-term deposit rates.

21. Trade and other payables As at 27 March 28 March 2010 2009 restated (note 2.1) £m £m Current Trade payables 97.3 119.0 Other taxation and social security 24.0 23.8 Other payables 26.2 10.2 Interest accrual 2.1 0.8 Accruals 107.5 89.2 Deferred income 23.0 16.5 Liability for cash settled share based payments 7.4 1.3 287.5 260.8

Non-current Liability for cash settled share based payments 0.1 1.2 Deferred income 85.2 76.8 85.3 78.0

Trade payables, other payables and accruals are non interest-bearing. Trade payables are normally settled on either 60 or 75 day terms. Included in accruals is £36.9 million (2009: £32.8 million) relating to inventory.

22. Financial liabilities As at 27 March 28 March 2010 2009 £m £m Current Bank loans 39.8 39.8 39.8 39.8

Non-current Bank loans 608.4 646.6 PIK debt 591.4 537.7 1,199.8 1,184.3

Further disclosure in respect of loans is provided in note 27.

84 New Look Annual Report and Accounts 2010 Overview

23. Derivative financial instrument liabilities As at 27 March 28 March 2010 2009 Business review £m £m Current liabilities Foreign currency contracts – 0.5 Interest rate swaps 10.1 12.4 Embedded foreign exchange derivatives 1.2 1.3 11.3 14.2

Non-current liabilities Governance Interest rate swaps 8.5 13.7 8.5 13.7

24. Financial instruments Fair values The fair values of each category of the Group’s financial instruments and their carrying values in the Group’s balance sheet, excluding short-term receivables and payables, are as follows: As at 27 March 28 March 2010 2009 Carrying Carrying amount and amount and fair value fair value £m £m Financial assets Cash and short-term deposits 206.3 161.1 Foreign currency contracts 16.1 19.2 Interest rate swaps 0.3 – Available for sale investments 0.3 0.2 Embedded foreign exchange derivatives – 1.2

Financial liabilities Bank loans 648.2 686.4 PIK debt 591.4 537.7 Foreign currency contracts – 0.5 Interest rate swaps 18.6 26.1 Embedded foreign exchange derivatives 1.2 1.3

The fair values of derivatives and borrowings have been calculated by discounting the expected future cash flows at prevailing interest rates, and are based on market prices at the balance sheet date. The fair value of the £1,239.6 million (2009: £1,224.1 million) loan approximates to their carrying value as the interest rate on the floating rate loan is based on prevailing LIBOR rates. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The total notional amount of outstanding foreign currency and interest rate contracts to which the Group was committed at the balance sheet date is as follows: As at 27 March 28 March 2010 2009 £m £m Notional amount of outstanding foreign currency contracts 161.9 139.9 Notional amount of outstanding interest rate swaps and cap 525.0 505.0

85 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

24. Financial instruments continued The foreign currency contracts have expiry terms of between one and 11 months (2009: one to 14 months). The interest rate swap contracts have expiry terms of between one and 32 months (2009: one and 44 months). Category The accounting policies for financial instruments have been applied to the line items below:

Assets at fair value through Derivatives Loans and income used for Available receivables statement hedging for sale Total £m £m £m £m £m Assets per balance sheet At 27 March 2010 Financial assets: Available for sale investments – – – 0.3 0.3 Financial assets: Derivative financial instruments – – 16.4 – 16.4 Trade and other receivables 48.4 – – – 48.4 Cash and short-term deposits 206.3 – – – 206.3 254.7 – 16.4 0.3 271.4

Liabilities at fair value through Derivatives Other income used for financial statement hedging liabilities Total £m £m £m £m Liabilities per balance sheet At 27 March 2010 Borrowings – – 1,239.6 1,239.6 Derivative financial instruments – 19.8 – 19.8 Trade and other payables – – 264.6 264.6 – 19.8 1,504.2 1,524.0

Assets at fair value through Derivatives Loans and income used for Available receivables statement hedging for sale Total £m £m £m £m £m Assets per balance sheet At 28 March 2009 Financial assets: Available for sale investments – – – 0.2 0.2 Financial assets: Derivative financial instruments – – 20.4 – 20.4 Trade and other receivables 65.5 – – – 65.5 Cash and short-term deposits 161.1 – – – 161.1 226.6 – 20.4 0.2 247.2

Liabilities at fair value through Derivatives Other Total income used for financial restated statement hedging liabilities (Note 2.1) £m £m £m £m Liabilities per balance sheet At 28 March 2009 Borrowings – – 1,224.1 1,224.1 Derivative financial instruments – 27.9 – 27.9 Trade and other payables – – 245.5 245.5 – 27.9 1,469.6 1,497.5

86 New Look Annual Report and Accounts 2010 Overview

24. Financial instruments continued The following table presents the Group’s assets and liabilities that are measured at fair value at 27 March 2010.

Level 1 Level 2 Level 3 Total Business review £m £m £m £m Assets Cash and short-term deposits 206.3 – – 206.3 Foreign currency contracts – 16.1 – 16.1 Interest rate swaps – 0.3 – 0.3 Available for sale investments – – 0.3 0.3 Total assets 206.3 16.4 0.3 223.0

Liabilities Governance Interest rate swaps – 18.6 – 18.6 Embedded foreign exchange derivatives – 1.2 – 1.2 Total liabilities – 19.8 – 19.8

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. Financial statements The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves. The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value. Credit quality The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: As at 27 March 28 March 2010 2009 £m £m Trade receivables Counterparties without external credit rating Group 1 – 0.8 Group 2 – 0.1 Group 3 9.3 6.9 Total trade receivables 9.3 7.8

Group 1 – new customers (less than 6 months) Group 2 – existing customers (more than 6 months) with no defaults in the past Group 3 – existing customers (more than 6 months) with some defaults in the past The Group limits its exposure to financial institutions by setting credit limits based on their credit ratings and generally only with counterparties with a Fitch’s credit rating of at least ‘A’. Group treasury monitors counterparty credit ratings closely, adjusting limits and balances immediately following counterparty downgrades. At 27 March 2010, the Group had £206.3 million of cash and cash equivalents (2009: £161.1 million) held with institutions rated ‘A’ or above with a credit limit of £295.0 million (2009: £295.0 million). The Group limits its exposure with its counterparties to derivative financial instruments by engaging with counterparties with a Fitch credit rating of ‘A’ or above. At 27 March 2010, the Group had derivative financial assets of £16.4 million (2009: £20.4 million) with counterparties rated ‘A’ or above. Maturity The table below analyses the Group’s financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

87 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

24. Financial instruments continued

At 27 March 2010 ‹1 year 1-2 years 2-5 years 5+ years £m £m £m £m Borrowings 39.8 25.3 511.7 662.8 Derivative financial instruments 9.9 5.5 1.4 – Trade and other payables 264.5 0.1 – –

At 28 March 2009 ‹1 year 1-2 years 2-5 years 5+ years £m £m £m £m Borrowings 39.8 39.8 359.6 784.9 Derivative financial instruments 11.5 7.3 4.1 – Trade and other payables (note 2.1) 244.3 1.2 – –

The table below analyses the Group’s derivative financial instruments which will be settled on a gross basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

At 27 March 2010 ‹1 year 1-2 years 2-5 years 5+ years £m £m £m £m Forward foreign exchange contracts – cash flow hedges Outflow 161.9 – – – Inflow 178.4 – – –

At 28 March 2009 ‹1 year 1-2 years 2-5 years 5+ years £m £m £m £m Forward foreign exchange contracts – cash flow hedges Outflow 138.5 1.4 – – Inflow 157.7 1.4 – –

25. Hedging activities Foreign currency contracts The Group uses derivatives in order to manage foreign currency exchange risk arising on expected future purchases of overseas sourced products. These derivatives comprise forward currency contracts and currency options, the terms of which have been negotiated to match the terms of the expected purchases. The fair values of derivatives are as follows: As at 27 March 28 March 2010 2009 £m £m Fair value of hedging instruments, qualifying for hedge accounting 14.9 17.5 Fair value of hedging instruments, not qualifying for hedge accounting 1.2 1.2 16.1 18.7

Interest rate swaps At 27 March 2010, the Group had entered into interest rate swap and cap agreements of £525.0 million (2009: £505.0 million) as partial cash flow hedges of the interest rate risk associated with the drawn down bank loans of the Group of £1,239.6 million (2009: £1,224.1 million). The Group pays fixed rates on the swap agreements of between 0.77% to 5.51% (2009: 3.69% to 5.60%). The interest rate swap expiry dates are between October 2010 and November 2012. The fair values of the interest rate swaps are as follows: As at 27 March 28 March 2010 2009 £m £m Fair value of interest rate swaps, qualifying for hedge accounting (18.1) (20.9) Fair value of interest swaps, not qualifying for hedge accounting (0.2) (5.2) (18.3) (26.1)

88 New Look Annual Report and Accounts 2010 Overview

25. Hedging activities continued Embedded foreign exchange derivatives At 27 March 2010, the Group had embedded foreign exchange derivatives comprising outstanding purchase orders which are in currencies other than the functional currencies of the contracting parties. Exceptions to this are where a non-functional currency Business review is commonly used in the country of a contracting party. The fair values of the embedded foreign exchange derivatives under IAS 39 are as follows: As at 27 March 28 March 2010 2009 £m £m Fair value of embedded foreign exchange derivatives (1.2) (0.1)

Movement in fair values Governance Foreign Interest exchange rate Embedded contracts swaps derivatives Total £m £m £m £m Fair value at 29 March 2008 0.7 (2.0) 0.4 (0.9) Fair value gain/(loss) through income statement 1.5 (5.6) (0.5) (4.6) Fair value gain/(loss) to reserves 16.5 (18.5) – (2.0) Fair value at 28 March 2009 18.7 (26.1) (0.1) (7.5) Fair value gain/(loss) through income statement – 5.0 (1.1) 3.9 Financial statements Fair value (loss)/gain to reserves (2.6) 2.8 – 0.2 Fair value at 27 March 2010 16.1 (18.3) (1.2) (3.4)

The fair value gain to reserves comprises a £0.6 million loss (2009: £0.3 million loss) removed from equity and included in operating profit during the period, and a £0.4 million loss (2009: £2.3 million loss) recognised in equity during the period. The ineffective portion recognised in the income statement that arises from cash flow hedges amounts to a gain of £5.0 million (2009: loss £4.1 million).

26. Analysis of net debt 28 March Non-cash 27 March 2009 Cash flow changes 2010 £m £m £m £m Cash and cash equivalents 161.1 47.8 (2.6) 206.3 Bank loans (686.4) 39.8 (1.6) (648.2) PIK debt (537.7) – (53.7) (591.4) Total net debt (1,063.0) 87.6 (57.9) (1,033.3)

29 March Non-cash 28 March 2008 Cash flow changes 2009 £m £m £m £m Cash and cash equivalents 117.5 33.6 10.0 161.1 Blocked cash 5.6 (5.6) – – Bank overdraft (2.4) 2.4 – – Bank loans (708.6) 36.1 (13.9) (686.4) PIK debt (471.0) – (66.7) (537.7) Other loans (2.6) 2.6 – – Total net debt (1,061.5) 69.1 (70.6) (1,063.0)

Included in non-cash changes are £3.8 million (2009: £3.9 million) deferred interest rolled over to the carrying value of the Mezzanine debt, £53.7 million (2009: £66.7 million) deferred interest rolled over to the carrying value of the PIK loan, and £(2.2) million (2009: £10.0 million) Euro loan revaluation (gains)/losses.

89 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

27. Interest rate risk and liquidity risk The following table sets out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest rate risk: Period ended 27 March 2010 Floating rate More Within 1-2 2-3 3-4 4-5 than 5 1 year years years years years years Total £m £m £m £m £m £m £m Cash assets 206.3 – – – – – 206.3 Mezzanine debt – – – – – (71.4) (71.4) Senior term debt – Tranche A (32.3) (17.8) (8.9) – – – (59.0) Senior term debt – Tranche A2 (7.5) (7.5) (3.7) – – – (18.7) Senior term debt – Tranche B1 – – (82.1) (82.2) – – (164.3) Senior term debt – Tranche B2 – – (16.9) (17.0) – – (33.9) Senior term debt – Tranche B3 – – (11.4) (11.4) – – (22.8) Senior term debt – Tranche C1 – – – (82.1) (82.1) – (164.2) Senior term debt – Tranche C2 – – – (16.9) (17.0) – (33.9) Senior term debt – Tranche D – – – – (80.0) – (80.0) PIK debt – – – – – (591.4) (591.4) 166.5 (25.3) (123.0) (209.6) (179.1) (662.8) (1,033.3)

Period ended 28 March 2009 Floating rate More Within 1-2 2-3 3-4 4-5 than 5 1 year years years years years years Total £m £m £m £m £m £m £m Cash assets 161.1 – – – – – 161.1 Mezzanine debt – – – – – (67.6) (67.6) Senior term debt – Tranche A (32.3) (32.3) (17.8) (8.9) – – (91.3) Senior term debt – Tranche A2 (7.5) (7.5) (7.5) (3.7) – – (26.2) Senior term debt – Tranche B1 – – – (82.1) (82.2) – (164.3) Senior term debt – Tranche B2 – – – (17.5) (17.5) – (35.0) Senior term debt – Tranche B3 – – – (11.4) (11.4) – (22.8) Senior term debt – Tranche C1 – – – – (82.1) (82.1) (164.2) Senior term debt – Tranche C2 – – – – (17.5) (17.5) (35.0) Senior term debt – Tranche D – – – – – (80.0) (80.0) PIK debt – – – – – (537.7) (537.7) 121.3 (39.8) (25.3) (123.6) (210.7) (784.9) (1,063.0)

Interest on financial instruments classified as floating rate is re-priced at intervals of less than one year. Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument. Senior term debt tranches B2 and C2 are denominated in Euros and converted at the period end rate of 1.112 (2009: 1.077). Borrowing facilities The Group has the following undrawn committed facilities available: As at 27 March 28 March 2010 2009 £m £m Expiring within one year 5.0 5.0 Expiring in more than two years 50.0 50.0

The facilities expiring within one year are annual facilities subject to an annual review. All facilities incur commitment fees at market rates and would provide funding at floating rates. Of the facility expiring in more than two years, £50.0 million relates to a revolving credit facility which has a final maturity date of 31 July 2012. £nil of this facility was drawn at 27 March 2010 (2009: £nil). The Group’s subsidiaries are party to a cross guarantee on the revolving credit facility. In addition, the Group has arrangements in place with certain banks to provide standby letters of credit to the Group’s suppliers. Letters of credit of £35.7 million (2009: £27.8 million) were outstanding under these arrangements.

90 New Look Annual Report and Accounts 2010 Overview

27. Interest rate risk and liquidity risk continued Interest bearing loans and borrowings Mezzanine debt, senior term debt and other borrowings under the available ancillary facilities are secured on the assets of the Group and are subject to a Priority Agreement. Under this agreement, senior term debt and borrowings under the available Business review ancillary facilities rank pari passu. The mezzanine debt ranks subordinate to the senior term debt and to borrowings under the available ancillary facilities. The PIK loan is unsecured and has a final maturity date of 30 November 2015. Borrowings under the mezzanine debt, senior term debt and the available ancillary facilities are at prevailing floating rates of interest based upon short-term inter-bank rates (GBP LIBOR and EURIBOR for the interest period selected at the Group’s discretion). Commitment fees are payable in respect of the undrawn amount of committed facilities. The senior term debt, mezzanine debt and PIK loan are subject to quarterly covenant reporting. Margins over GBP LIBOR and EURIBOR, applying to the senior term debt on all B tranches and C tranches are fixed and range from 2.75% to 3.25% The margin applying to senior term debt tranche A and to available committed revolving facilities is subject to Governance a ratchet mechanism whereby it varies from 1.5% to 2.25% subject to the financial performance of the Group (margin applying at 27 March 2010 was 1.5% (2009: 1.5%)). The margin applying to the mezzanine debt is fixed at 10.0% of which 4.5% is settled in cash and 5.5% is capitalised at the end of each interest period. The margin applying to the PIK loan is 9.0% subject to a margin adjustment linked to the consolidated EBITDA of Trinitybrook Limited and its subsidiaries. On 31 October 2008, the balance payable of Trinitybrook plc Floating Rate Unsecured Loan Notes 2004/10, Trinitybrook plc Floating Rate Guaranteed Unsecured Loan Notes 2004/10 and Pedalgreen Limited Floating Rate Unsecured Loan Notes 2010 were 8.8%, 1.2% and 2.0% respectively, of the loan notes issued at inception. The threshold for redemption by issuing companies was 20.0% and therefore, in accordance with the terms of each of the loan notes, notice was given to the loan note holders and all loan notes payable at 31 October 2008 were redeemed and accrued interest settled. Financial statements On 29 January 2010, an amendment to the senior term agreement was agreed which enables the Group to repay the principal and accrued interest on the mezzanine, PIK and tranche D (second lien) ahead of the senior term debt, upon a listing. Should the Group exercise this option, the senior term debt margins would increase from between 0.75% and 1.25%. The Group’s management of interest rate risk, credit and market risk is explained in note 3.

28. Provisions Onerous Relocation lease provisions provisions Total £m £m £m At 29 March 2008 – 15.2 15.2 Arising during the period 1.6 14.8 16.4 Utilised – (8.0) (8.0) Reversal of unused amounts – (1.4) (1.4) At 28 March 2009 1.6 20.6 22.2 Arising during the period 1.5 13.1 14.6 Utilised (1.0) (7.6) (8.6) Reversal of unused amounts (0.1) (4.2) (4.3) At 27 March 2010 2.0 21.9 23.9

As at 27 March 28 March 2010 2009 £m £m Current 10.5 10.2 Non-current 13.4 12.0 23.9 22.2

Onerous lease provisions The provision mainly relates to future lease costs of vacant properties for the remaining period of the lease, net of expected sub-letting income, and is estimated to be used over one to 24 months. The remaining balance comprises dilapidations provisions. Relocation provisions The charge to the consolidated income statement for relocation costs is explained in note 10. The majority of the relocation provision related to redundancies and related costs, which are expected to be utilised over the period to 26 March 2011.

91 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

29. Operating lease commitments Future minimum rentals payable under non-cancellable operating leases where the Group is the lessee: As at 27 March 28 March 2010 2009 £m £m Not later than one year 176.8 162.7 Later than one year and not later than five years 674.3 636.1 Later than five years 923.8 908.1 1,774.9 1,706.9

The Group has entered into operating leases in respect of warehouses, offices and retail stores. Contingent rentals are payable on certain retail store leases based on store revenues. At the balance sheet date, total future payments expected to be received under non-cancellable sub-leases were £6.5 million (2009: £7.8 million).

30. Share based payments Senior Management Scheme In April 2004, the senior management of the Group were invited to invest in the shares of the three Guernsey companies which comprised the holding companies of Trinitybrook Limited, being NL Company No. 1 Limited, NL Company No. 2 Limited and NL Company No. 3 Limited. These shares were purchased at fair value. As part of the Group reorganisation and share for share exchange in June 2006, the shares held by employees in the three Guernsey companies, NL Company No. 1 Limited, NL Company No. 2 Limited, and NL Company No. 3 Limited and the ESOP1 holding in Trinitybrook Limited (the then ultimate UK holding company of the Group) were exchanged for shares in New Look Retail Group Limited. All of the shares held were originally issued at fair value determined by reference to the market value of a basket of comparator companies. Under the reorganisation a cash payment of £48.0 million was paid by Pedalgreen Limited (an immediate subsidiary company of New Look Retail Group Limited) to investors within the scope of IFRS 2, in consideration for the sale of a proportion of the shares in Guernsey 4 Limited (the holding company of the Group prior to the reorganisation in 2006) and the remaining shares were exchanged for shares in Pedalgreen Limited. Guernsey 4 Limited acquired its holding in the Group on 1 June 2006 by acquiring all the shares in NL Company No. 1 Limited, NL Company No. 2 Limited and NL Company No. 3 Limited. There was then a share for share exchange as part of which shares in Pedalgreen Limited were exchanged for shares in New Look Retail Group Limited. Accordingly the reorganisation was accounted for as a modification of an equity settled arrangement under IFRS 2. The £48.0 million was charged directly to the retained earnings reserve. As at 27 March 28 March 2010 2009 Number Number 000s 000s Shares in issue at the beginning of the period 84,500 104,500 Shares purchased by ESOP1 from senior management in the period (12,200) (20,000) Shares in issue at the end of the period 72,300 84,500

92 New Look Annual Report and Accounts 2010 Overview

30. Share based payments continued The 2004 Share Scheme and the 2008 Share Plan In May 2004 under a new arrangement, Trinitybrook Limited loaned funds to ESOP1. ESOP1 then subscribed to Trinitybrook Limited to acquire a fixed allocation of shares. Between May 2004 and February 2006, certain employees were invited to acquire Business review beneficial ownership of these shares at fair value determined by reference to the market value of a basket of comparator companies. As a result of the Group reorganisation in 2006, employees now hold the beneficial interest in shares in New Look Retail Group Limited. In April 2009 and in August 2009, certain employees were invited to acquire the beneficial interest in shares owned by ESOP1 at fair value determined by reference to the market value of a basket of comparator companies. These shares vest over a 4 year period. Under the first tranche, 20.0% vested on 30 April 2009, then 20.0% on 18 September 2009 and 20.0% on each anniversary of 18 September until the third anniversary. Under the second tranche, 20.0% vested on 21 August

2009 and 20.0% on each anniversary from the grant date until the fourth anniversary. Governance Vesting affects the price at which the employee may be required to sell any shares which have not vested upon ceasing to be employed within the Group. The employee is generally not free to sell the shares until either a change in control of the Group or (subject to the vesting conditions) a listing. The Group has issued shares to ESOP2 for the purposes of meeting the liabilities in respect of phantom options under the Phantom Plan granted to certain employees in France who, for French legal reasons, are unable to acquire shares in New Look Retail Group Limited. Under the 2008 Share Plan, shares have vested at various times throughout the year. The weighted average share price at vesting

for all grants throughout the period was 25.0p (nil exercised in prior periods). Financial statements Until June 2007, the 2004 Share Scheme operated as an equity settled arrangement under which employees could be required to sell their shares in the event of a sale or listing of the Group. In June 2007, an amendment was introduced such that, in the event of a sale, the employees would be required to sell their shares but, in the event of a listing of the Group, they would remain entitled to their shares. The 2008 Share Plan contains similar features. The 2008 Share Plan also protects the employee from a fall in the value of New Look Retail Group Limited’s shares. The 2008 Share Plan is therefore accounted for, in substance, as a share option arrangement. Details of the 2008 Share Plan share options outstanding during the period are as follows: March 2009 – March 2008 – March 2010 March 2009 Number of Number of share options share options 000s 000s Outstanding at the beginning of the period –– Granted in the period 51,983 – Exercised in the period –– Lapsed in the period –– Forfeited/expired in the period (2,762) – Outstanding at the end of the period 49,221 –

Exercisable at the end of the period –– Weighted average remaining contractual life (months) 19 months – Weighted average share price at the date of exercise (pence) –– Weighted average exercise price (pence) 25.0p – Market value at period end (pence) 38.0p – Highest market value (pence) 38.0p – Lowest market value (pence) 25.0p –

2006 Option Plan In June 2006 and other times subsequently, key personnel in the Group were offered the opportunity to participate in the 2006 Option Plan. Share options are awarded to employees at the discretion of the Board. Options will normally vest after two years if an employee remains in service. Options will only vest before the two years’ continuous service when there has been a flotation or change of control in New Look Retail Group Limited (or its holding company), or when the employee leaves the Group as a result of redundancy, injury/illness/disability, or death. Options may normally only be exercised during a period of eight years commencing on the second anniversary of the date of grant of the option, as long as the employee remains in service. At 27 March 2010, 12,909,188 (2009: 5,480,000) options were outstanding, with the earliest exercise date being 30 June 2008, assuming that the full vesting period is satisfied.

93 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

30. Share based payments continued Details of the 2006 Option Plan share options outstanding during the period are as follows: March 2009 – March 2008 – March 2010 March 2009 Number of Number of share options share options 000s 000s Outstanding at the beginning of the period 5,480 9,820 Granted in the period(1) 8,239 – Exercised in the period (735) (4,095) Forfeited/expired in the period (75) (245) Outstanding at the end of the period 12,909 5,480

Exercisable at the end of the period 4,670 5,480 Weighted average remaining contractual life (months) 37 months 90 months Weighted average share price at the date of exercise (pence) 26.9p 25.0p Weighted average exercise price (pence) 13.0p 13.0p Market value at period end (pence) 38.0p 25.0p Highest market value (pence) 38.0p 31.0p Lowest market value (pence) 25.0p 25.0p

(1) Of the options granted – under the 2006 Option Plan – in the period ended 27 March 2010, 7,269,738 options (granted on 21 January 2010) will lapse on 1 July 2010 if no listing has occurred. The remaining 969,450 (granted on 23 February 2010) have a 21 month vesting period and will not vest earlier in the event of a listing during the intervening period. Fair value of equity-settled share based payment schemes The cost of the equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted and the expense is spread to the estimated date of a change of control of the Group. As the employees acquired the beneficial interest in their shares at fair value under the Senior Management Scheme and the 2004 Share Scheme, there is no charge to the income statement for these equity settled transactions. The weighted average fair value of the share options granted under the 2006 Option Plan and the 2008 Share Plan was calculated at the date of grant using the Black-Scholes option pricing model. The following table lists the inputs to the model used for the two plans for the periods ended 27 March 2010 and 28 March 2009:

27 March 2010 27 March 2010 28 March 2009 28 March 2009 2006 2008 2006 2008 Option Plan Share Plan Option Plan Share Plan Weighted average fair value (pence) 11.27 9.04 12.64 – Weighted average share price (pence) 38.00 31.50 13.00 – Exercise price (pence) 38.00 25.00 13.00 – Expected volatility (%) 54.5 45.5 to 60.4 307.7 – Expected life of option (years) 1.75 to 2.00 1.00 to 4.00 1.25 – Dividend yield (%) 1.20 to 1.40 0.00 to 2.10 – – Risk-free interest rate (%) 3.25 3.75 to 5.25 5.50 –

Expected share price volatility was determined through the assessment of the historical volatility of a comparable group of companies over a period consistent with the expected life of the award. It is indicative of future trends, which may not necessarily be the actual outcome. The expected life of the options is based on management’s estimated date of a change of control of the Group and is not necessarily indicative of exercise patterns that may occur.

94 New Look Annual Report and Accounts 2010 Overview

30. Share based payments continued The table below reconciles the total number of unallocated shares controlled by the ESOPs for all share schemes operated by the Group for each period end. As at Business review

27 March 28 March 2010 2009 Number Number 000s 000s Shares controlled by the ESOPs at the beginning of the period 46,773 18,544 Shares allocated under 2006 Option Plan (8,239) – Shares allocated under 2008 Share Plan (51,983) – Share options exercised in 2006 Option Plan 735 4,095

Shares repurchased from 2006 Option Plan 75 245 Governance Shares purchased from Senior Management Scheme 12,200 20,000 New shares issued during the period (note 31) 2,617 – Shares purchased by the ESOPs in the period 5,191 3,889 Shares controlled by the ESOPs at the end of the period 7,369 46,773

Share based payments also include a cash settled element for ‘Good Leavers’. The income statement is charged with the change in fair value relating to the estimate at the balance sheet date of the number of ‘Good Leavers’ likely to arise before any change in control of the Group.

Amendments have been made to the scheme rules during the current year that clarify what will happen to all awards in the event of a Financial statements listing. One amendment introduced lock-in arrangements for senior management in the event of a listing. These lock-in arrangements lapse on 1 July 2010 if no listing has occurred. There is no change to the fair value of these awards as a result of the amendments. Effect on financial statements The effect of accounting for share based payments, in accordance with IFRS 2, on the Group’s profit before taxation for the periods is as follows and includes £5.8 million of deferred settlement of shares under the 2004 Share Scheme: For the financial period ended

52 weeks 52 weeks ended ended 27 March 28 March 2010 2009 £m £m Equity settled share based payment schemes 1.5 0.1 Cash settled share based payment schemes 8.6 4.4 Total share based payment expense 10.1 4.5

31. Share capital Share Ordinary Treasury premium shares shares Total £m £m £m £m At 29 March 2008 – 10.3 (8.1) 2.2 Shares purchased in the period – – (2.1) (2.1) At 28 March 2009 – 10.3 (10.2) 0.1 Shares issued/(purchased) in the period 0.6 0.1 (3.8) (3.1) At 27 March 2010 0.6 10.4 (14.0) (3.0)

The total number of authorised Ordinary A shares is 200.0m each period end and the total number of Ordinary B shares is 1,000.0m each period end. All shares have a par value of 1.0p. The total number of allotted, called up and fully paid Ordinary A shares at 27 March 2010 is 157.6 million (2009: 155.0 million) and the total number of allotted, called up and fully paid Ordinary B shares is 879.1 million at each period end. All shares have a par value of 1.0p. The consideration paid for the ordinary shares of 1p each in the Company held by the ESOPs has been shown as a deduction in capital and reserves as treasury shares. The A shares in the Company entitle holders to receive notice, attend and speak at general meetings but only confer a right to vote if no B shares are in issue. The shares also have a right to receive a dividend. The B shares in the Company entitle holders to receive notice, attend, speak and vote at general meetings. The shares also have a right to receive a dividend.

95 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

On 30 April 2009 2,148,568 ordinary A shares of 1p and on 21 August 2009 468,660 ordinary A shares of 1p were issued at 25.0p for the purposes of the 2008 Share Plan. 32. Reconciliation of movements in equity Reverse acquisition ESOPs Hedging Translation Retained reserve reserve reserve reserve earnings Total £m £m £m £m £m £m At 29 March 2008 (285.3) 3.0 (1.2) 15.6 (29.2) (297.1) Total recognised income and expense for the period – – (2.0) 16.7 (4.1) 10.6 Tax on total recognised income and expense for the period – – 0.6 (1.3) (0.3) (1.0) Share based payment charge – – – – 2.8 2.8 ESOPs shares unallocated in the period – (1.2) – – – (1.2) Reserve transfer for exercised shares in the period – 0.5 – – (0.5) – At 28 March 2009 (285.3) 2.3 (2.6) 31.0 (31.3) (285.9)

Total recognised income and expense for the period – – 0.2 (4.7) 19.7 15.2 Tax on total recognised income and expense for the period – – – 0.3 – 0.3 Share based payment charge – – – – 5.1 5.1 ESOPs shares unallocated in the period – (0.7) ––– (0.7) Reserve transfer for exercised shares in the period – 0.1 – – (0.1) – At 27 March 2010 (285.3) 1.7 (2.4) 26.6 (6.6) (266.0)

Reverse acquisition reserve The reverse acquisition reserve arose on the acquisition by New Look Retail Group Limited in 2006 of the former Trinitybrook Limited group, as permitted by IFRS 3 Business Combinations and represents the amount paid by New Look Retail Group Limited to acquire the existing shareholdings in Trinitybrook Limited. ESOPs reserve The ESOPs reserve represents the gain made by the trusts on the transfer of shares to employees at a higher price than purchased. Hedging reserve The hedging reserve reflects the changes in fair value of effective hedging instruments on forward exchange contracts which are carried forward to match the maturity of the future cash flows. Translation reserve The translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

33. Shares held by ESOPs The ESOPs have an independent professional trustee resident in Guernsey and provide for the allocation of shares to Group employees, at the discretion of the trustee. At 27 March 2010 the ESOPs held 85,317,228 (2009: 70,500,000) Ordinary A shares of 1p each in New Look Retail Group Limited and 323,408 (2009: 323,408) Ordinary B shares of 1p each in New Look Retail Group Limited. The initial consideration paid for ordinary shares in New Look Retail Group Limited held by the ESOPs has been shown as a deduction in capital and reserves as treasury shares. All other assets, liabilities, income and costs of the ESOPs have been incorporated into the accounts of the Group.

96 New Look Annual Report and Accounts 2010 Overview

34. Retirement benefit schemes The Group operates a defined contribution scheme in the UK. At 27 March 2010, £nil (2009: £nil) was outstanding in respect of contributions payable to personal pension schemes. The pension cost recognised in the income statement was £1.2 million (2009: £1.0 million). Business review In France the Group operates an unfunded defined benefit arrangement in accordance with French legal requirements which consists of a single payment at the date of retirement. The scheme is uninsured and has no assets. An actuarial assessment was carried out as at 31 March 2009 by an independent actuary, using the projected unit method. The major assumptions were:

As at 27 March 28 March 2010 2009 % %

Rate of increase in salaries 2.5 – 3 2.5 – 3 Governance Rate of employment growth 2 – 3 2 – 3 Discount rate 5.8 5.8 Price inflation 2 2

The liability at 27 March 2010 was £0.6 million (2009: £0.5 million), which is included in accruals. The pension cost recognised in the income statement was £0.1 million (2009: £0.2 million).

35. Related party transactions

ESOPs Financial statements At the end of the financial period, the ESOPs owed New Look Retail Group Limited £13.2 million (2009: £8.5 million). Lease agreement The Group paid rent of £0.2 million (2009: £0.2 million) to the Singh Property Partnership in which T Singh is a partner, under the terms of a lease for ancillary offices and warehouses. The lease, which expires on 21 March 2013, is subject to five yearly, upward only, rent reviews to market value. Franchise agreement On 1 February 2007, the Group entered into a five year franchise agreement with RNA Resources Group Limited (“RNA”), a subsidiary of the Landmark Group International (“Landmark”), in which Mukesh Wadhumal Jagtiani and his wife, Renuka Mukesh Jagtiani own shares. Mukesh Jagtiani also owns 29,737,833 Ordinary B shares (2009: 29,737,833) in the Company in the name of Quillian Investments Corporation. The agreement relates to the opening of new stores under the New Look brand in the Middle Eastern territories of UAE, Kuwait, Saudi Arabia, Qatar, Oman, Jordan and Bahrain. An amendment has been made to this agreement to exclude Oman and Jordan, replacing them with Egypt instead. In addition, payment terms were varied to 60 days from 30 days, the handling fee was removed from 1 January 2010 and the territory fee payment dates for UAE and Saudi Arabia were extended to the first renewal date in those territories rather than being due on 1 April 2009. The Group receives fees in return for granting exclusivity in the territories mentioned, in addition to a royalty and a handling charge for the supply of goods. An amount of £0.5 million was received from Landmark in the financial period (2009: £1.0 million). £1.3 million (2009: £1.7 million) has been recognised through the income statement being the amortisation of the fee over the term of the agreement. Transactions with franchisee For the financial period ended 27 March 28 March 2010 2009 £m £m Sale of goods and handling charges 14.9 20.2 Franchise royalty income 1.3 1.7 Cost of sales (11.6) (19.2)

As at 27 March 28 March 2010 2009 £m £m Balance due from franchise at the end of the financial period 3.2 2.6

Included within the balance due from franchise is a provision of £0.1 million (2009: £nil).

97 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE GROUP FINANCIAL STATEMENTS

35. Related party transactions continued Transactions with Directors and key management As at 27 March 2010 there were loans outstanding with two key managers (2009: none), totalling £1.9 million (2009: £nil) in connection with their purchase of the beneficial interest in shares under the 2008 Share Plan (note 30). Interest on the 2008 Share Plan loan is charged at the applicable HMRC rate and is repayable in full on exercise of shares and change in control of the business. In addition, C McPhail acquired beneficial ownership of shares under the terms of the 2008 Share Plan as at 30 April 2009 by way of a loan from ESOP1 of £1.8 million (2009: nil) which is repayable in full on sale of the shares and change of control of the business. Interest is charged on this loan at the applicable HMRC rate. The following transactions have occurred between the Group and Directors and key management: As at 27 March 28 March 2010 2009 restated (note 2.1) £m £m Investment in PIK loan 8.3 20.6

In June 2006 certain Directors and key management used funds received from the sale of part of their existing shareholdings to reinvest £12.7 million in the PIK loan. From April 2008, as a result of the redesignation of key management, there is additional PIK of £nil (2009: £1.8 million) being PIK purchased in June 2006 and the rolled up interest on that purchase to 29 March 2008. During the period £2.0 million (Restated 2009: £2.2 million) of interest was rolled up into the PIK, £0.4 million (Restated 2009: £3.9 million) of additional PIK loan was purchased and £14.7 million (Restated 2009: £2.7 million) disposed of by Directors and key management. Transactions with private equity investors A monitoring fee was paid to each private equity investor during the period, details of which can be found in note 8b.

As at 27 March 28 March 2010 2009 £m £m Investment in PIK loan 103.6 89.1

During the financial period £5.5 million (2009: £91.3 million) of PIK loans were purchased, £0.4 million (2009: £3.9 million) was disposed of by entities advised by a private equity investor and £9.4 million (2009: £1.7 million) of interest was rolled up into the PIK during the period. Transactions with joint venture For the financial period ended

27 March 28 March 2010 2009 £m £m Purchases from joint venture 19.2 24.6

Included within the trade payables is a balance of £nil (2009: £nil) owed to the joint venture. No other transactions that require disclosure under IAS 24 have occurred during the current financial period.

98 New Look Annual Report and Accounts 2010 Overview

36. Investment in subsidiaries The principal subsidiary companies in which New Look Retail Group Limited or its subsidiaries hold 100% of the ordinary shares and voting rights are listed below. These companies are consolidated into the financial results of the Group. Business review Subsidiary Country of incorporation and operation Main activity Pedalgreen Limited(1) England and Wales Intermediate holding company Trinitybrook Limited England and Wales Intermediate holding company Hamperwood Limited England and Wales Intermediate holding company New Look Group Limited England and Wales Intermediate holding company New Look Limited England and Wales Intermediate holding company New Look Retailers Limited England and Wales Fashion retail Geometry Properties Limited England and Wales Property trading and rental

Geometry Properties (Tonypandy) Limited England and Wales Property trading and rental Governance New Look Overseas Limited England and Wales Intermediate holding company New Look Treasury Limited England and Wales Dormant Vallsar (Trustees) England and Wales Trustee company New Look Card Services Limited England and Wales Non-trading New Look Retailers (CI) Limited Guernsey Fashion retail NL Company No.1 Limited Guernsey Intermediate holding company NL Company No. 2 Limited Guernsey Intermediate holding company NL Company No. 3 Limited Guernsey Intermediate holding company Guernsey 4 Limited Guernsey Intermediate holding company Financial statements New Look Holdings (France) SAS France Intermediate holding company Mim SAS France Fashion retail SCI Geometry Properties France France Property trading and rental New Look France SAS France Fashion retail New Look Belgium NV Belgium Fashion retail MIM Belgique Belgium Fashion retail New Look Holland BV Holland Fashion retail New Look (Singapore) PTE Limited Singapore Logistics and freight management New Look Retailers (Ireland) Limited Republic of Ireland Fashion retail

(1) Pedalgreen Limited shareholding held directly whilst all others held indirectly through wholly owned subsidiaries. In addition, the Group has a 50% stake in the ordinary share capital of NLT Tekstil Sanayi Ve Ticaret Limited Şirketi, a joint venture incorporated in Turkey, whose principal trading activity is retail manufacturing.

37. Ultimate controlling party New Look Retail Group Limited is the ultimate parent of the Group. The ultimate controlling parties are the Apax funds and the Permira funds.

99 New Look Annual Report and Accounts 2010 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED)

We have audited the parent Company financial statements of Matters on which we are required to report by exception New Look Retail Group Limited for the period ended 27 March We have nothing to report in respect of the following matters 2010 which comprise the balance sheet and the related notes. where the Companies Act 2006 requires us to report to you if, The financial reporting framework that has been applied in in our opinion: their preparation is applicable law and United Kingdom > Adequate accounting records have not been kept by the Accounting Standards (United Kingdom Generally Accepted parent Company, or returns adequate for our audit have not Accounting Practice). been received from branches not visited by us; or Respective responsibilities of Directors and auditors > The parent Company financial statements are not in As explained more fully in the Directors’ Responsibilities agreement with the accounting records and returns; or Statement on page 52 of the Group financial statements, the Directors are responsible for the preparation of the parent > Certain disclosures of Directors’ remuneration specified by Company financial statements and for being satisfied that they law are not made; or give a true and fair view. Our responsibility is to audit the parent > We have not received all the information and explanations Company financial statements in accordance with applicable we require for our audit. law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Other matter Practices Board’s Ethical Standards for Auditors. We have reported separately on the Group financial statements of New Look Retail Group Limited for the period ended 27 This report, including the opinions, has been prepared for March 2010. and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Alan Kinnear (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Scope of the audit of the financial statements Chartered Accountants and Statutory Auditors An audit involves obtaining evidence about the amounts and Southampton disclosures in the financial statements sufficient to give 28 May 2010 reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting Notes: policies are appropriate to the parent Company’s > The maintenance and integrity of the New Look Retail Group Limited website is the responsibility of the Directors; the work carried out circumstances and have been consistently applied and by the auditors does not involve consideration of these matters and, adequately disclosed; the reasonableness of significant accordingly, the auditors accept no responsibility for any changes that accounting estimates made by the Directors; and the overall may have occurred to the financial statements since they were initially presentation of the financial statements. presented on the website. > Legislation in the United Kingdom governing the preparation and Opinion on financial statements dissemination of financial statements may differ from legislation in In our opinion the parent Company financial statements: other jurisdictions. > Give a true and fair view of the state of the Company’s affairs as at 27 March 2010; > Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and > Have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ report for the financial period for which the parent Company financial statements are prepared is consistent with the parent Company financial statements.

100 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED Overview (FORMERLY MARKERPOST LIMITED) COMPANY BALANCE SHEET

As at 27 March 2010

27 March 28 March

2010 2009 Business review restated Notes £m £m Fixed assets Investments 5 32.5 22.4 Current liabilities Creditors: amounts falling due within one year 6 (23.8) (13.0) Net current liabilities (23.8) (13.0) Total assets less current liabilities 8.7 9.4

Creditors: amounts falling due after more than one year 7 (0.1) (1.2) Governance Net assets 8.6 8.2

Capital and reserves Called up share capital 9 10.4 10.3 Share premium 10 0.6 – Treasury shares 11 (14.0) (10.2) ESOP reserve 12 1.7 2.3 Profit and loss reserve 13 9.9 5.8

Equity shareholders’ funds 8.6 8.2 Financial statements

The financial statements on page 101 were approved by the Board of Directors on 28 May 2010 and were signed on its behalf by:

Alastair Miller Chief Financial Officer

New Look Retail Group Limited (formerly Markerpost Limited) Registration no. 05810406

101 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE company FINANCIAL STATEMENTS

1. Authorisation of financial statements Non-derivative financial assets and liabilities The financial statements of New Look Retail Group Limited Non-derivative financial assets and liabilities are recognised (formerly Markerpost Limited which changed its name on initially at fair value and subsequently at amortised cost using 12 March 2010) for the 52 weeks ended 27 March 2010 were the effective interest rate method. authorised for issue by the Board of Directors on 28 May 2010 Share based payments and the balance sheet was signed on the Board’s behalf by The grant by the Company of options over its equity Alastair Miller. instruments to the employees of a subsidiary undertaking in New Look Retail Group Limited, a private limited company, is the Group is treated as a capital contribution. The fair value of incorporated in England and Wales and is the ultimate parent employee services received, measured by reference to the Company of the New Look Group of companies. grant date fair value of the equity instrument, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. 2. Accounting policies A provision is booked for the liability arising on ‘cash settled’ The financial statements of the Company, for the financial share based payments on behalf of a subsidiary undertaking period ended 27 March 2010 have been prepared on the going at each balance sheet date. Full disclosure of share based concern basis, under the historical cost convention and in payments is given in note 30 of the Group financial statements. accordance with applicable UK Generally Accepted Accounting Principles (UK GAAP). The principal accounting policies which Shares held by ESOP have been applied consistently, are set out below. The ESOP provides for the issue of shares to Group employees and is consolidated. The shares acquired by the ESOP are Basis of preparation included as treasury shares within capital and reserves at The Company has taken advantage of the exemption under the cost. Gains made by the ESOP on purchasing and selling terms of FRS 1 (revised 1996) from the requirement to produce Company shares are recorded within a separate ESOP a cash flow statement. A consolidated cash flow statement is reserve. included in the Group’s financial statements. The Company has also taken advantage of the exemption contained in FRS 8 from the requirement to disclose related party transactions. 3. Loss of the Company The loss for the financial period dealt with in the financial Investments statements of the Company was £889,000 (restated 2009: Investments are stated at cost less provisions for impairment. £590,000. Restated to include interest charge of £580,000 that The need for any impairment write down is assessed by should have been charged on the inter company loans in comparison of the carrying value of the asset against the creditors from the Group to the ESOP for leavers in the prior higher of its net realisable value or its value in use. year). The Company has taken advantage of the legal Taxation dispensation contained in section 408 of the Companies Act Corporation tax payable is provided on taxable profits at the 2006 allowing it not to publish a separate profit and loss current rate. account and related notes. Deferred taxation The fees payable for the audit are £10,000 (2009: £10,000). Deferred tax is recognised in respect of all timing differences The aggregate remuneration paid to the auditors in relation to that have originated but not reversed at the balance sheet services received by the Group is disclosed in the consolidated date, where transactions or events that result in an obligation financial statements in note 7. to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. 4. Staff costs A net deferred tax asset is recognised as recoverable when, on New Look Retail Group Limited has no employees other than the basis of all available evidence, it can be regarded as more the non-executive directors of the Company. The average likely than not there will be suitable taxable profits from which number of non-executive directors during the period is 4 the future reversal of underlying timing differences can be (2009: nil). The aggregate emoluments in respect of qualifying deducted. services was £197,000 (2009: £nil). Details of Directors’ remuneration are shown in note 8 to the Group financial Deferred tax is measured at the tax rates that are expected to statements. apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax has not been discounted.

102 New Look Annual Report and Accounts 2010 Overview

5. Investments As at 27 March 28 March 2010 2009 Business review £m £m At start of period 22.4 17.4 Capital contribution in respect of share based payments 10.1 5.0 At end of period 32.5 22.4

Investments represent holdings in subsidiary undertakings. The principal subsidiary companies in which New Look Retail Group Limited or its subsidiaries hold 100% of the ordinary shares

and voting rights are listed below. These companies are consolidated into the financial results of the Group. Governance

Subsidiary Country of incorporation and operation Main activity Pedalgreen Limited(1) England and Wales Intermediate holding company Trinitybrook Limited England and Wales Intermediate holding company Hamperwood Limited England and Wales Intermediate holding company New Look Group Limited England and Wales Intermediate holding company New Look Limited England and Wales Intermediate holding company New Look Retailers Limited England and Wales Fashion retail Geometry Properties Limited England and Wales Property trading and rental

Geometry Properties (Tonypandy) Limited England and Wales Property trading and rental Financial statements New Look Overseas Limited England and Wales Intermediate holding company New Look Treasury Limited England and Wales Dormant Vallsar (Trustees) Limited England and Wales Trustee company New Look Card Services Limited England and Wales Non-trading New Look Retailers (CI) Limited Guernsey Fashion retail NL Company No.1 Limited Guernsey Intermediate holding company NL Company No. 2 Limited Guernsey Intermediate holding company NL Company No. 3 Limited Guernsey Intermediate holding company Guernsey 4 Limited Guernsey Intermediate holding company New Look Holdings (France) SAS France Intermediate holding company Mim SAS France Fashion retail SCI Geometry Properties France France Property trading and rental New Look France SAS France Fashion retail New Look Belgium NV Belgium Fashion retail MIM Belgique Belgium Fashion retail New Look Holland BV Holland Fashion retail New Look (Singapore) PTE Limited Singapore Logistics and freight management New Look Retailers (Ireland) Limited Republic of Ireland Fashion retail

(1) Pedalgreen Limited shareholding held directly whilst all others held indirectly through wholly owned subsidiaries. In addition, the Company has a 50% stake in the ordinary share capital of NLT Tekstil Sanayi Ve Ticaret Limited Şirketi, a joint venture incorporated in Turkey, whose principal trading activity is retail manufacturing.

6. Creditors: amounts falling due within one year As at 27 March 28 March 2010 2009 restated (note 3) £m £m Amounts owed to Group undertakings 16.4 11.7 Other taxation and social security 0.1 – Liability for cash settled share based payments 7.3 1.3 23.8 13.0

Amounts owed to Group undertakings bear interest at LIBOR plus 2.25%, are unsecured and repayable on demand.

103 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE Company FINANCIAL STATEMENTS

7. Creditors: amounts falling due after more than one year As at 27 March 28 March 2010 2009 £m £m Liability for cash settled share based payments 0.1 1.2

8. Financial commitments The Company had no capital commitments at 27 March 2010 (2009: none).

9. Share capital As at 27 March 28 March 2010 2009 £m £m Authorised: 200,000,000 Ordinary A shares of 1p each 2.0 2.0 1,000,000,000 Ordinary B shares of 1p each 10.0 10.0 12.0 12.0

Allotted, called up and fully paid: 157,617,228 (2009: 155,000,000) Ordinary A shares of 1p each 1.6 1.5 879,126,079 Ordinary B shares of 1p each 8.8 8.8 10.4 10.3

On 9 May 2006, New Look Retail Group Limited was incorporated with 1 Ordinary share of £1 issued to Instant Companies Limited. On 19 May 2006, New Look Retail Group Limited transferred the share to Permira Funds and issued 1 Ordinary share of £1 to Apax Funds so that it was jointly and equally held. On 1 June 2006 each £1 Ordinary share was converted into 100 Ordinary B shares of 1p. On 7 June 2006, to acquire shares of Pedalgreen Limited, a further 287,183,785 Ordinary B shares of 1p each were issued to Apax Funds and a further 287,183,786 Ordinary B shares of 1p each were issued to Permira Funds and a coinvestor. 155,000,000 Ordinary A shares of 1p each and the remaining 304,758,308 Ordinary B shares of 1p each, were issued to the remaining shareholders of Pedalgreen Limited. At that date the Company became the ultimate holding company of Trinitybrook Limited as part of the Group reorganisation pursuant to the share for share exchange arrangement, in which 100% of the voting shares of Pedalgreen Limited were acquired by New Look Retail Group Limited. In the 2007 financial statements New Look Retail Group Limited took advantage of section 131 Merger Relief under the Companies Act 1985 in preparing its financial statements. No share premium has been recognised on the issue of these shares. On 30 April 2009 2,148,568 ordinary A shares of 1p and on 21 August 2009 468,660 ordinary A shares of 1p were issued at 25.0p for the purposes of the 2008 Share Plan. The share premium arising from these issues is shown in note 10. The 2008 Share Plan is one of the Group’s share based payment arrangements shown in note 30 of the Group financial statements and is operated through an ESOP discussed in note 11.

10. Share premium As at 27 March 28 March 2010 2009 £m £m Opening share premium –– Shares issued in the period 0.6 – Closing share premium 0.6 –

104 New Look Annual Report and Accounts 2010 Overview

11. Treasury shares The initial consideration paid for ordinary shares in the Company held by the ESOP has been shown as a deduction in capital and reserves as treasury shares. All other assets, liabilities, income and costs of the ESOP have been incorporated into the financial statements of the Company. Business review The ESOP has an independent professional trustee resident in Guernsey and provides for the issue of shares to Group employees, at the discretion of the Trustee. At 27 March 2010 the ESOP held 85,317,228 (2009: 70,500,000) Ordinary A shares of 1p each in the Company and 323,408 (2009: 323,408) Ordinary B shares of 1p each in the Company. As at 27 March 28 March 2010 2009 £m £m Governance Opening treasury shares (10.2) (8.1) Shares purchased in the period (3.8) (2.1) Closing treasury shares (14.0) (10.2)

12. ESOP reserve As at 27 March 28 March 2010 2009 £m £m Financial statements Opening ESOP reserve 2.3 3.0 Shares unallocated in the period (0.7) (1.2) Reserve transfer for exercised shares in the period 0.1 0.5 Closing ESOP reserve 1.7 2.3

13. Profit and loss reserve As at 27 March 28 March 2010 2009 restated (note 3) £m £m Opening profit and loss reserve 5.8 4.1 Loss for the period (0.9) (0.6) Reserve transfer for exercised shares in the period (0.1) (0.5) Share based payment charge 5.1 2.8 Closing profit and loss reserve 9.9 5.8

105 New Look Annual Report and Accounts 2010 NEW LOOK RETAIL GROUP LIMITED (FORMERLY MARKERPOST LIMITED) NOTES TO THE Company FINANCIAL STATEMENTS

14. Reconciliation of movement in equity shareholders’ funds As at 27 March 28 March 2010 2009 £m £m Loss for the financial period (0.9) – Shares issued in the period (note 9, 10) 0.7 – Shares issued to ESOP from treasury shares (note 11) (3.8) (2.1) Shares purchased and unallocated in the period (note 12) (0.7) (1.2) Share based payment charge (note 13) 5.1 2.8 Net movement in shareholders’ funds 0.4 (0.5) Opening shareholders’ funds as previously stated 8.8 9.3 Prior year adjustment (note 3) (0.6) – Opening shareholders’ funds as restated 8.2 9.3 Closing shareholders’ funds 8.6 8.8

The Company had no recognised gains or losses in the period ended 27 March 2010 (2009: none) other than its loss for the period.

15. Contingent liability The Company is party to a cross guarantee on the UK borrowing facilities of the New Look Retail Group Limited Group, which amounts to a £50.0 million (2009: £50.0 million) undrawn committed revolving multi-currency facility as at 27 March 2010. This facility expires after more than one year.

16. Ultimate controlling party New Look Retail Group Limited is the ultimate parent of the Group. The ultimate controlling parties are the Apax funds and the Permira funds.

106 New Look Annual Report and Accounts 2010 contacts Overview

Registered office Auditors New Look House PricewaterhouseCoopers LLP Mercery Road Savannah House Weymouth 3 Ocean Way Business review Dorset Ocean Village England Southampton DT3 5HJ England SO14 3TJ Tel: +44(0) 1305 765000 Fax: +44(0) 1305 765001 Website: www.newlook.com Legal Slaughter and May LLP Registered Number in England: 05810406

One Bunhill Row Governance London England Investor relations EC1Y 8YY 45 Mortimer Street London England Financial public relations W1W 8HJ Tulchan Communications Group Tel: +44(0) 20 3219 7496 85 Fleet Street London England Financial statements Press office EC4Y 1AE 45 Mortimer Street Tel: +44(0) 20 7353 4200 London England W1W 8HJ Tel: +44(0) 20 3219 7281

Customer services New Look House Mercery Road Weymouth Dorset England DT3 5HJ Tel: +44(0) 500 454094

107 New Look Annual Report and Accounts 2010

Notes

108 New Look is a leading, branded NEW LOOK clothing and accessories retailer, ONLINE offering a unique and irresistible combination of fashion excitement, value and newness.

L Annual Report R EPO

R and Accounts 2010 T & A CCO UNTS 20 10

New Look Retail Group Limited New Look House, Mercery Road, Weymouth, Dorset, DT3 5HJ, UK. Tel: +44 1305 765000