Exceptional Exceptional Exceptional

I/S Items 2008 2008 Items 2007 2007 Items 2006

Revenues 9,364.0 8,675.9
COGS (6,093.0) (5,623.7) (7.9)
Sales and distribution (35.0) (2,425.0) (2,207.3) (181.0)
Admin expenses (469.0) (433.7) (26.4)
Other income 44.0 66.0 49.5 73.2 18.9
Other expenses (5.0) (5.0) (19.0)
Share of post tax joint ventures and associates 19.0 16.9
Operating Profit 4.0 457.0 49.5 501.3 (215.4)

Finance Costs (95.0) (75.6)

Financa Income 33.0 24.8
Net Finance Costs (62.0) - (50.8) -

Pre-tax Profit 4.0 395.0 49.5 450.5 (215.4)

Income Tax Expense 2 -123 7.3 -112.1 68.8
Profit for the Year 272.0 56.8 338.4 (146.6)

Gross Mrgin 3,271.0 - 3,052.2 (7.9)

Gross Margin Ratio 0.349317 0.351802
 Exceptional Exceptional
Items Growth Growth Items Growth Growth
Common Common Common Size from 2007 to from 2007 from 2006 to from 2006
2006 Size 2008 Size 2007 2006 2008 to 2008 2007 to 2007
8,010.1 100.0% 100.0% 100.0% #DIV/0! 7.9% #DIV/0! 8.3%
(5,173.0) -65.1% -64.8% -64.6% #DIV/0! 8.3% -100.0% 8.7%
(2,186.0) -25.9% -25.4% -27.3% #DIV/0! 9.9% -100.0% 1.0%
(417.1) -5.0% -5.0% -5.2% #DIV/0! 8.1% -100.0% 4.0%
43.1 0.7% 0.8% 0.5% -11.1% -9.8% 161.9% 69.8%
(19.0) -0.1% 0.0% -0.2%
11.4 0.2% 0.2% 0.1% #DIV/0! 12.4% #DIV/0! 48.2%
269.5 4.9% 5.8% 3.4% -91.9% -8.8% -123.0% 86.0%
0.0% 0.0% 0.0%
(51.6) -1.0% -0.9% -0.6% #DIV/0! 25.7% #DIV/0! 46.5%
13.9 0.4% 0.3% 0.2% #DIV/0! 33.1% #DIV/0! 78.4%
(37.7) -0.7% -0.6% -0.5% #DIV/0! 22.0% #DIV/0! 34.7%
0.0% 0.0% 0.0%
231.8 4.2% 5.2% 2.9% -91.9% -12.3% -123.0% 94.3%
-92.8 -1.3% -1.3% -1.2% -72.6% 9.7% -89.4% 20.8%
139.0 2.9% 3.9% 1.7% -100.0% -19.6% -138.7% 143.5%

2,837.1
0.35419
 Common Common Common
Note Size Size Size
£ millions s 2007/08 2006/07 2005/6 2007/08 2006/07 2005/6
Non-current assets
Goodwill 12 2,532.0 2,552.0 2,558.8 26.9% 29.6% 30.6%
Other intangible assets 13 85.0 89.0 101.7 0.9% 1.0% 1.2%
Property, plant and equipment 14 3,698.0 3,211.0 3,265.0 39.3% 37.3% 39.1%
Investment property 15 29.0 29.0 15.3 0.3% 0.3% 0.2%
Investments in joint ventures 17 204.0 185.0 185.0 2.2% 2.1% 2.2%
Post employment benefits 27 110.0 1.2% 0.0% 0.0%
Deferred tax assets 26 25.0 30.0 0.3% 0.3% 0.0%
Derivative financial instrument 24 66.0 29.0 0.7% 0.3% 0.0%
Other receivables 19 13.0 18.0 51.7 0.1% 0.2% 0.6%
6,762.0 6,143.0 6,177.5 71.9% 71.3% 73.9%
Current assets
Inventories 18 1,873.0 1,531.0 1,355.3 19.9% 17.8% 16.2%
Trade and other receivables 19 533.0 495.0 570.6 5.7% 5.7% 6.8%
Current tax assets 1.0 15.0 20.7 0.0% 0.2% 0.2%
Other investments 20 11.0 28.0 0.1% 0.3% 0.0%
Derivative financial instrument 24 5.0 10.0 0.1% 0.1% 0.0%
Cash and cash equivalents 21 218.0 395.0 234.1 2.3% 4.6% 2.8%
2,641.0 2,474.0 2,180.7 28.1% 28.7% 26.1%
Total assets 4 9,403.0 8,617.0 8,358.2 100.0% 100.0% 100.0%

Current liabilities
Trade and other payables 23 (2,238.0) (1,953.0) (1,750.8) -23.8% -22.7% -20.9%
Current tax liabilities (89.0) (87.0) (77.0) -0.9% -1.0% -0.9%
Derivative financial instrument 24 (10.0) (5.0) -0.1% -0.1% 0.0%
Borrowings 22 (191.0) (242.0) (346.8) -2.0% -2.8% -4.1%
Provisions 28 (47.0) (56.0) (46.6) -0.5% -0.6% -0.6%
(2,575.0) (2,343.0) (2,221.2) -27.4% -27.2% -26.6%
Non-current liabilities
Other payables 23 (32.0) (4.0) (5.7) -0.3% 0.0% -0.1%
Deferred tax liabilities 26 (318.0) (263.0) (204.4) -3.4% -3.1% -2.4%
Derivative financial instrument 24 (52.0) (46.0) -0.6% -0.5% 0.0%
Borrowings 22 (1,620.0) (1,432.0) (1,255.5) -17.2% -16.6% -15.0%
Provisions 28 (49.0) (53.0) (111.4) -0.5% -0.6% -1.3%
Post employment benefits 27 (33.0) (55.0) (239.6) -0.4% -0.6% -2.9%
(2,104.0) (1,853.0) (1,816.6) -22.4% -21.5% -21.7%
Total liabilities 4 (4,679.0) (4,196.0) (4,037.8) -49.8% -48.7% -48.3%

Net assets 4,724.0 4,421.0 4,320.4 50.2% 51.3% 51.7%

Equity
Share capital 29 371.0 371.0 369.8 3.9% 4.3% 4.4%
Share premium 29 2,188.0 2,185.0 2,175.3 23.3% 25.4% 26.0%
Own shares held 29 (66.0) (81.0) (95.1) -0.7% -0.9% -1.1%
Reserves 30 2,220.0 1,939.0 1,861.0 23.6% 22.5% 22.3%
Minority interests 11.0 7.0 9.4 0.1% 0.1% 0.1%
Total equity 4,724.0 4,421.0 4,320.4 50.2% 51.3% 51.7%

Sales/Revenues 9,364.0 8,675.9 8,010.1

Year to Year to
year year
change change
2007/08 2006/07

-0.8% -0.3%
-4.5% -12.5%
15.2% -1.7%
0.0% 89.5%
10.3% 0.0%
#DIV/0! #DIV/0!
-16.7% #DIV/0!
127.6% #DIV/0!
-27.8% -65.2%
10.1% -0.6%

22.3% 13.0%
7.7% -13.2%
-93.3% -27.5%
-60.7% #DIV/0!
-50.0% #DIV/0!
-44.8% 68.7%
6.8% 13.4%
9.1% 3.1%

14.6% 11.5%
2.3% 13.0%
100.0% #DIV/0!
-21.1% -30.2%
-16.1% 20.2%
9.9% 5.5%

700.0% -29.8%
20.9% 28.7%
13.0% #DIV/0!
13.1% 14.1%
-7.5% -52.4%
-40.0% -77.0%
13.5% 2.0%
11.5% 3.9%

6.9% 2.3%

0.0% 0.3%
0.1% 0.4%
-18.5% -14.8%
14.5% 4.2%
57.1% -25.5%
6.9% 2.3%
 2008 2007 2006
Revenues 9,364.0 8,675.9 8,010.1
COGS (6,093.0) (5,623.7) (5,173.0)
Sales and distribution (2,425.0) (2,207.3) (2,186.0)
Admin expenses (469.0) (433.7) (417.1)
Other income 66.0 73.2 43.1
Other expenses (5.0) - (19.0)
Share of post tax joint ventures and associates 19.0 16.9 11.4
Operating Profit 457.0 501.3 269.5
Finance Costs (95.0) (75.6) (51.6)
Financa Income 33.0 24.8 13.9
Net Finance Costs (62.0) (50.8) (37.7)
Pre-tax Profit 395.0 450.5 231.8
Income Tax Expense (123.0) (112.1) (92.8)
Profit for the Year 272.0 338.4 139.0

Total assets 9,403.0 8,617.0 8,358.2

Borrowings - Current (191.0) (242.0) (346.8)
Other payables - Non Current (32.0) (4.0) (5.7)
Borrowings - Non Current (1,620.0) (1,432.0) (1,255.5)
Total liabilities (4,679.0) (4,196.0) (4,037.8)
Net assets 4,724.0 4,421.0 4,320.4
Equity
Share capital 371.0 371.0 369.8
Share premium 2,188.0 2,185.0 2,175.3
Own shares held (66.0) (81.0) (95.1)
Reserves 2,220.0 1,939.0 1,861.0
Minority interests 11.0 7.0 9.4
Total equity 4,724.0 4,421.0 4,320.4

ROA
Given tax rate 35% 35.0% 35.0% 35.0%
After tax interst expense (Costs) (61.8) (49.1) (33.5)
1. NI + After Tax Interest (Costs) 333.8 387.5 172.5
Average Total Assets 9,010.0 8,487.6 8,358.2
ROA1 3.7% 4.6% 2.1%
Profit Margin (ROA1) 3.6% 4.5% 2.2%
Asset Turnover 1.04 1.02 0.96
ROA Verification (PMROA X Asset T/O) 3.7% 4.6% 2.1%
ROE
1.Average Equity 4,572.5 4,370.7 4,320.4
ROE1 5.9% 7.7% 3.2%
ROE2 6.0% 7.8% 3.2%
Leverage
Assets to Equity 1.97 1.94 1.93
1.Average Liabilities (4,437.5) (4,116.9) (4,037.8)
Assets to Liabilities 2.0 2.1 2.1
Liabilities to Assets 0.49 0.49 0.48
Liabilities to Equity 0.97 0.94 0.93
Average Total Debt 1,742.50 1,638.15 801.15
Total Debt to Equity 0.38 0.37 0.19
Asset Turnover 1.04 1.02 0.96
Profit Margin (ROE) 2.9% 3.9% 1.7%
REO Verification (PMROE X Asset T/O X Leverage) 5.9% 7.7% 3.2%

Gross Margins 3,271.00 3,052.20 2,837.10

Gross Margins Ratio 34.9% 35.2% 35.4%
Operating Profit margin 4.9% 5.8% 3.4%
Net Profit margin 2.9% 3.9% 1.7%

Other Turnover Ratios

Cash and cash equivalents 218.0 395.0 234.1
Inventories 1,873.0 1,531.0 1,355.3
Average Inventory 1,702.0 1,443.2 1,355.3
Trade and other receivables 533.0 495.0 570.6
Average Receivables 514.0 532.8 570.6
Trade and other payables (current) (2,238.0) (1,953.0) (1,750.8)
Average Payables (current portion) (2,095.5) (1,851.9) (1,750.8)
Borrowings (current) (191.0) (242.0) (346.8)
Provisions (current) (47.0) (56.0) (46.6)
Other payables (non current) (32.0) (4.0) (5.7)
Borrowings (non current) (1,620.0) (1,432.0) (1,255.5)
Provisions (non current) (49.0) (53.0) (111.4)
Total Current Assets 2,641.0 2,474.0 2,180.7
Total Current Liabilities (2,575.0) (2,343.0) (2,221.2)
Average Current Liablities (2,459.0) (2,282.1) (2,221.2)
Current Ratio (current assets to liabilites) 1.03 1.06 0.98
Quick Ratio (remove inventories) 0.30 0.40 0.37
Receivables Turnover 18.22 16.28 14.04
Days Receivables 20.04 22.42 26.00
Inventories turnover 3.58 3.90 3.82
Days Inventories 101.96 93.67 95.63
Purchases = Ending Inventory + COGS – Beginning Inventory
Purchases 6,435.00 5,799.40 5,173.00
Pyables Turnover 3.07 3.13 2.95
Days Payables 118.86 116.55 123.53
PPE 3,698.0 3,211.0 3,265.0
Average PPE 3,454.5 3,238.0 3265
PPE Turnover 2.71 2.68 2.45
Intangibles - Goodwill 2,532.0 2,552.0 2,558.8
Average Intangibles 2,542.0 2,555.4 2558.8
Intangibles Turnover 3.68 3.40 3.13
Average PPE + Intangibles (Long lived) 5,996.5 5,793.4 5823.8
Long lived assets Turnover 1.6 1.50 1.38

Coverage Ratios
Cash flow from operations 465.0 559.4 304.1
1. Financing Cost (95.0) (75.6) (51.6)
2. Financing Cost (net) (62.0) (50.8) (37.7)
Operating Profit 457.0 501.3 269.5

1. Interest Coverage (operating profit to financing cost 4.81 6.63 5.22

2. Interest Coverage (operating profit to net financing 7.37 9.87 7.15
Cash Flow from Operations to current liablities 0.19 0.25 0.14
Average Current Liabilities
Adjustment # 1:
The most obvious item to consider remvoing from the income statement is other income (44 million in 2008), that was classifie
accoring to footnote 5 it is comprised of mostly gains on disposal of prepoties and s amller portion of loan recoveries
The fact that in the previous year a similar amount (49) of gain on disposal was recorded, is probably not enough to convince t
A much more conservative measure would be to remove the entire 'other incom'
We can consider netting this gain with the 5m loss on disposal of a joint venture (not done in the calculation)
We can also onsider adding back the souch korea disposal and china restructuring (13 + 22) if we believe that this type of occ
Decreasing NI and Total Assets by after tax 44 miilon and
Exceptional other income 44 49.5 18.9
Other income effect (exceptional portion) 28.6 32.175 12.285
Adjusted ROA1 (remove from numerator and denomina 3.4% 4.2% 1.9%
Adjusted ROE1 5.4% 7.1% 2.9%

Adjustment # 2:
Receivables do not seem to be a prime candidate for adjustments
see balance sheet discussion notes for reference

Adjustment # 3 + #4:
Impairing inventory (reduce assets and reduce net income)
Impairing Good will
While there is no clear indication of such an event, the recent economic events and the decline of retailers stock price

Adjustment #5
Reversal of restructuring charge - (part of Provisions note 28) - reverse income statement expense and reverse liabil
see dicussion in balance sheet analysis

Adjustment #6
related party transaction are non-material (note35)

Adjustment #7
capitalization of operating lease commitments Land and buildi plant and eq Total
1 year 346 21 367

1 to 5 1352 40 1392
more than 5 3460 4 3464

* FINANCE LEASES IN NOTE 22 ARE ALREADY ON BALANCE SHEET AND SHOULD NOT BE ADDED AGAIN
Descount rate from note 22 on leases - 9.1%
Adjusted ROA1 (add asset and liablity) 2.8% 3.4% 1.6%
Adjusted Leverage Liabilites to Assets (add asset and l 61.1% 61.1% 61.1%
Adjustment #8
Add contingent liablities disclosed in note 37 to the balance sheet
50 + 50 + 34
On possibly treatment is to assign a probability (greater than zero) to each occurance like a drop in the credit rating below BBB
the corresonding entry would be an expense (i.e. reduction to net income)
* Inventories footnotes number 18 provides a lower (more exact) cost of the inventories portion of the COGS (ignored in the ca

assumed no change for visual reference

8,358.2

(4,037.8)

4,320.4
assumed no change for visual reference
234.1
1,355.3

570.6

(1,750.8)

(346.8)
(46.6)
(5.7)
(1,255.5)
(111.4)

(2,221.2)

* will be even lower if we remove more assets

* looking at current portion. Using total sales

3,265.0

2,558.8
*incliuding Inestments is another possible alternative
 *excluding other (more or less) items is a valid alternative

ent Liabilities

(44 million in 2008), that was classified by the company as exceptional

er portion of loan recoveries
d, is probably not enough to convince that this is sustainable.

ne in the calculation)
+ 22) if we believe that this type of occurrence is less informative for our purposes of analysis (not done in the calculation)

d the decline of retailers stock price, in anticipaito of a recession, may be grounds enough to consider a serious write-down to go

atement expense and reverse liability

PV Discount rate
367 $367.00 0.091
Assumed 5
equal payments
of 278.4 $1,080.08
 Assumed same
annual payment
above so
number of
payments
rounded 12 $1,309.58
$2,756.66 * Assumed same numbers for 2008 and 2007
LD NOT BE ADDED AGAIN

e a drop in the credit rating below BBB, and recognize the expected value of the liability
f the COGS (ignored in the calculations below)
r a serious write-down to good will based on expected future cash flows that have been substantially reduced, and to specific inve
ced, and to specific inventory account if net-realizeable-value/Recovarable amount has decreased.