FULL YEAR RESULTS 24 June 2010 - PR 60/10 Strictly embargoed For release at 07.00 hours DSG international plc Full year profits at top end of expectations, up 61% Strong second half performance DSG international plc, one of Europe‟s largest specialist electrical retailers, today announces preliminary audited results for the 52 weeks ended 1 May 2010: Financial Highlights Total Underlying Group sales(1) (2) up 4% to £8,531.6 million (2008/09 £8,180.2 million). Total Group sales, including those from closed businesses, up 3% to £8,532.5 million (2008/09 £8,317.8 million). Group like for like sales(3) up 2% in the full year and up 6% in the second half. Underlying Group gross margins flat across the full year. Underlying EBIT(4) up 60% at £133.2 million (2008/09 £83.0 million). Significant profit improvements across the Group, including UK & Ireland up 21% and Nordics up 28%. Underlying pre-tax profit(2) up 61% at £90.5 million (2008/09 £56.1 million). Underlying diluted earnings per share(2) up 50% at 1.5 pence (2008/09(5) 1.0 pence). Basic earnings per share for continuing operations of 1.7 pence (2008/09 loss per share of (10.2) pence). Total profit before tax after net non-underlying items was £112.7 million (2008/09 loss £(123.6) million). Free Cash Flow(6) of £28.1 million before restructuring and impairment charges (2008/09 outflow of £(340.0) million). As at 1 May 2010 the Group had net debt of £(220.6) million (2008/09 £(477.5) million). New £360 million revolving credit facility signed with syndicate of banks, providing the Group with flexibility. John Browett, Chief Executive, commented: “Focus on our customers drives everything we do and I am delighted with the excellent progress we have made over the past twelve months as we continue to transform the Group, despite the recessionary environment across Europe. We have made significant improvements throughout the business, transforming the shopping experience for customers with better choice, value and service both in stores and online. We are now two years into the Renewal and Transformation plan and are encouraged by the improved profitability and competitiveness it continues to deliver.” 1 of 36 Operational Highlights Group name of Dixons Retail plc to be ratified by shareholders at the AGM. Renewal & Transformation plan improving the offer for customers. Store transformation programme on track: Over 200 stores reformatted across the Group by the year end; Additional 80 reformatted stores to be opened by Peak in the UK, including 21 Megastores; Two thirds of store portfolio by sales will be transformed in the UK by October 2010; Nordic store reformatting continues, with 16 Megastores now open; Portfolio review completed with over 160 stores exited over the last 2 years. Reformatted stores continue to perform strongly: Average gross profit uplifts of 20% versus the rest of the chains; Average gross profit uplifts of 50% achieved in the Megastores and 2-in-1s; Second year trading for reformatted stores remains strong. Significant improvements to services for customers:- Further compelling services for customers launched including free delivery slots, next day timed delivery slots and 'follow-me-home' services from Megastores; Better availability of stock in store with stock turn up 12% year on year; Satisfaction measures rising, due to focus on service, connectivity, delivery, installation and repair. Good progress with online operations:- Pure internet sales of £1.4 billion, representing 16% of total Group sales; Successful roll-out of 'e-merchant' operating platform to UK internet sites. International plans making progress:- Turnaround plans in Italy ahead of schedule with positive like for like sales and margin improvements; Greece and Spain weathering economic challenges well and gaining market share. £200 million 4 year cost saving programme on track, delivering £50 million reduction in the year. UK defined benefit pension scheme closed to future accruals thereby reducing risk for the Group. On track for medium term target of a 3%-4% EBIT return on sales. Outlook The economic backdrop across Europe has remained challenging throughout the year. The Group expects these conditions to continue in the coming year in many of its markets where consumer spending is likely to come under pressure from fiscal tightening. The Group is well prepared for this environment and continues to focus on improving the offer for customers while managing costs, 2 of 36 margins, stock turn and cash flow. Consequently, given the Renewal and Transformation plan, Group profitability will continue to improve. For further information Investor Relations: David Lloyd-Seed Group Communications Director, DSGi 01727 205065 Press and Media: Mark Webb Head of Media Relations, DSGi 01727 205019 Jayne Rosefield Brunswick Group 020 7404 5959 Information on DSG international plc is available at http://www.dsgiplc.com An audio webcast of the analyst presentation being held this morning will be available from 3.00pm today at http://www.dsgiplc.com (click "financial information", then "presentations"). (1) Underlying Group sales exclude sales from closed businesses and discontinued operations. Closed businesses comprise the operations of PC City in Sweden and Markantalo in Finland. Discontinued operations comprise Poland and Hungary. (2) Throughout this statement, references are made to „underlying‟ performance measures. Underlying results are defined as excluding trading results from closed businesses, the amortisation of acquired intangibles, net restructuring and business impairment charges and other one off non-recurring items, profit on sale of investments, net fair value remeasurements of financial instruments and, where applicable, discontinued operations. These excluded items are described as „non-underlying‟. The financial effect of these items is shown in the analyses on the face of the income statement and in note 3 to the financial information. (3) Like for like sales are calculated based on stores that have been open for a full financial year both at the beginning and end of the financial period and are calculated using constant exchange rates. Customer support agreement sales are excluded from all UK like for like calculations. Operations that are subject to closure have sales excluded as of the announcement date. Stores subject to a refurbishment are excluded during the period of refurbishment. (4) Earnings Before Interest and Tax (EBIT), or Operating Profit, are defined as underlying earnings from retail operations before deduction of net finance costs and tax. (5) The weighted average number of shares used in the calculation of earnings per share for the periods prior to the rights issue, which completed on 9 June 2009, has been multiplied by an adjustment factor to reflect the bonus element of the shares issued under the terms of the rights issue (as described in note 6 to the financial information). The adjustment factor used was 1.2138. (6) Free Cash Flow relates to continuing operations and comprises net cash flow from operating activities before special pension contributions, less net finance costs, less income tax paid and net capital expenditure. (7) Unless otherwise noted, throughout this statement figures relate to continuing operations, excluding the results of closed businesses. Total revenue including discontinued operations and closed businesses was £8,543.4 million (2008/09 £8,415.1 million). (8) Certain statements made in this announcement are forward looking. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results referred to in these forward looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise. 3 of 36 UNDERLYING SALES AND PROFIT ANALYSIS Underlying sales Underlying profit /(loss) 52 weeks ended 52 weeks ended Like for 52 weeks ended 52 weeks ended 1 May 2010 2 May 2009 like(2) 1 May 2010 2 May 2009 £million £million % change £million £million UK & Ireland Electricals 2,650.6 2,657.8 (1)% 32.0 17.7 UK Computing 1,362.9 1,570.8 (9)% 39.1 41.0 UK & Ireland 4,013.5 4,228.6 (3)% 71.1 58.7 Nordics 2,093.7 1,625.2 13% 97.4 76.1 Other International 1,503.2 1,519.0 flat (8.3) (23.7) e-commerce 921.2 807.4 11% 11.3 15.0 Central Costs - - (19.5) (25.0) Total Group Retail 8,531.6 8,180.2 2% 152.0 101.1 Property losses (18.8) (18.1) EBIT 133.2 83.0 Underlying net finance costs (42.7) (26.9) Group underlying profit before tax 90.5 56.1 NOTES (1) UK & Ireland Electricals comprises Currys, CurrysDigital and Dixons Travel in the UK as well as the operations in Ireland. (2) UK Computing comprises PC World, DSGi Business and The TechGuys. Like for like sales are for PC World only. (3) Nordics comprises the Elkjøp group (Elkjøp, El Giganten, Gigantti and Lefdal). (4) Other International comprises Greece (Kotsovolos and Electro World), Cyprus (Kotsovolos), Italy (UniEuro, PC City Italy and Dixons Travel Italy), Spain (PC City Spain), Turkey (Electro World), Czech Republic (Electro World) and Slovakia (Electro World). (5) e-commerce division comprises PIXmania and Dixons.co.uk. 4 of 36 BUSINESS PERFORMANCE Underlying Group sales (excluding discontinued operations and closed businesses) were up 4% to £8,531.6 million (2008/09 £8,180.2 million) and up 2% on a like for like basis. Underlying Group sales were up 2% at constant exchange rates. Total Group sales (including closed businesses) were up 3% to £8,532.5 million (2008/09 £8,317.8 million).