Notes to the interim financial statements

1 Basis of preparation
The interim financial statements for the 28 weeks ended 13 November 2004 were approved by the directors on 12 January 2005. They have been prepared in accordance with relevant accounting standards and on the basis of the accounting policies set out in the Group's Annual Report and Accounts 2003/04. They are unaudited and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985, but have been reviewed by the auditors. During 2003/04, the Group implemented "Amendment to FRS 5 'Reporting the substance of transactions': Revenue Recognition" (Application Note G) and adopted Urgent Issues Task Force Abstract 38 "Accounting for ESOP Trusts" (UITF 38), further details of which are discussed below. Figures for the 28 weeks ended 15 November 2003 have been restated accordingly.

• Application Note G: Requires the seller to recognise as revenue the fair value of the seller's right to consideration through performance of its contractual obligations. Accordingly, turnover in respect of extended warranty and service contracts is recognised over the life of the agreement on performance of the contractual obligations to the customer. Related costs are charged to the profit and loss account as incurred. Revenues earned from extended warranty and service contracts were previously included in turnover in the period in which they were sold with full provision for liabilities for repair costs which the Group had assumed under these contracts. This change has been accounted for as a prior period adjustment and previously reported figures have been restated accordingly.
  
  
• UITF 38: Supersedes UITF 13 and amends UITF 17 and requires own shares held through an employee share ownership plan trust to be deducted in arriving at shareholders' funds and amends the requirements of UITF 17 concerning the recognition of the cost of awards of shares to employees.

The change in accounting policy arising from Application Note G has resulted in comparative figures for the 28 weeks ended 15 November 2003 being restated as follows: Turnover increased by £8.7 million, profit on ordinary activities before taxation increased by £7.8 million and the tax charge increased by £2.3 million. The effect on the balance sheet has been that creditors have been restated to exclude the liability for extended warranty and service contracts relating to future performance and instead to include accruals and deferred income arising from extended warranty and service contracts. Provisions for deferred tax have been reduced resulting in the recognition of a net deferred tax asset.

The figures for the 52 week period ended 1 May 2004 do not constitute the Company's statutory accounts for that period but have been extracted from those accounts which have been filed with the Registrar of Companies. The auditors have reported on those accounts, their report was unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985.

2 Segmental analysis (continued)
The International Retail division operates in the Nordic region, Italy, Greece, Spain, Ireland, France, Hungary and the Czech Republic.

Codic International S.A., which comprised the majority of the European Property division and operates mainly in Belgium, Luxembourg and France, was sold on 8 December 2003. As a result, these operations have been classified as discontinued. Management responsibility for the residual property operations in Germany, which are to be discontinued and which currently remain in the Group, have been integrated into the International Retail division. Comparative figures have been restated to reflect this change in responsibility. There were no material exports from the locations in which the Group operates.

Associated undertakings comprise the investment in P. Kotsovolos S.A. held during the period and over which the Group was able to exercise significant influence prior to the acquisition of a controlling stake on 8 September 2004.

Net non-operating (liabilities)/assets predominantly comprise dividends payable and financial instruments (15 November 2003: dividends payable, deferred consideration, financial instruments and the Group's investment in Wanadoo S.A., 1 May 2004: dividends payable, deferred consideration, financial instruments and the Group's investment in France Telecom S.A.).

Net funds include amounts held under trust to fund extended warranty and service contract liabilities. Net funds excluding these amounts totalled £144.8 million (15 November 2003: net borrowings of £246.1 million, 1 May 2004: net funds of £342.2 million).