Best Buy (BBY)

(x)           Exceptional items

Exceptional items of £57 million arose in the year ended 31 March 2009. Following the Best Buy Europe Joint Venture Transaction, the Best Buy Europe Group commenced the disposal of approximately 100 stores, primarily in the UK and France. Costs of £19 million were recognised in relation to the disposal programme, comprising fixed asset write downs of £7 million and provision for disposal costs of £12 million. Also as a result of the transaction, the Best Buy Europe Group accelerated a shift in its range of retail stock away from mobile phones towards laptops and other non-mobile products, resulting in an exceptional clearance exercise. Losses of £8 million were incurred in disposing of the products that were removed from the sales range. The Best Buy Europe Group also conducted reorganisations of its central support structures to achieve greater divisional autonomy and efficiency. These reorganisations resulted in redundancy and other restructuring costs of £30 million.

Tax credits of £11 million were recognised in respect of these exceptional items.

There were no exceptional items in the financial year ended 29 March 2008.

Exceptional costs of £4m have arisen from TalkTalk Group integration programme, principally comprising redundancy and consultancy costs. Further one-off integration costs may arise in the second half of this financial year, rather than the following year, if the integration process continues at its current rate of development. Exceptional costs, principally professional fees, are expected to arise in relation to the demerger.

Exceptional items

The disposal of 50% of the Group’s retail and distribution business gave rise to a net gain after tax of £608m, which is reflected in the results of discontinued operations. Indirect costs of £6m after tax also arose as a result of the transaction. Further to the new partnership, Best Buy Europe commenced the disposal of approximately 100 stores, and accelerated a shift in its range of retail stock away from mobile phones towards laptops and other products, resulting in an exceptional charge. Exceptional costs associated with these programmes are reflected in a post-tax charge of £11m through the results of joint ventures.

Prior to the transaction with Best Buy, the Group conducted a review of its central support structures, particularly in relation to its retail and distribution business, to achieve greater divisional autonomy and efficiency. This review resulted in a reorganisation programme that is expected to yield savings of £7m per annum. Redundancy and other restructuring costs that have arisen as a result of the programme are reflected in a post-tax charge of £9m in discontinued operations.

Further to the divisionalisation process, both TalkTalk Group and Best Buy Europe have undertaken comprehensive reorganisation programmes in the second half of the year. The TalkTalk Group programme is expected to generate annualised savings of approximately £10m per annum, and has resulted in redundancy and other restructuring costs of £10m, which are reflected in exceptional operating expenses. The Best Buy Europe reorganisation is expected to yield annualised savings for the joint venture of up to £50m per annum, and has resulted in a post-tax charge through the results of joint ventures of £7m. TalkTalk Group also completed the transfer of its AOL network operations, hosting, billing and customer management from a transitional platform provided by AOL Time Warner onto the Group’s own systems, at a cost of £16m, shown within exceptional operating expenses.

Additionally, an exceptional foreign exchange loss of £85m has arisen in the year following a change in the functional currency of the Group’s brand company from Swiss Francs to Sterling. The transaction with Best Buy necessitated a change in the operations of the brand company, which in turn made Sterling the appropriate functional currency. As a result of the change, movements on the brand company’s Swiss

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Exceptional items

In addition to the Group’s exceptional profits of approximately £600m in the first half, both TalkTalk Group and Best Buy Europe have undertaken comprehensive reviews of their organisational

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The disposal of 50% of the Retail and Distribution business gave rise to a net gain after tax and indirect costs of £613m. Further to the transaction, Best Buy Europe has commenced the disposal of approximately 100 stores, and has accelerated a shift in its range of retail stock away from mobile phones towards laptops and other products, resulting in an exceptional clearance exercise. Exceptional costs associated with these programmes are reflected in a £10m charge through the results of joint ventures.

Prior to the transaction with Best Buy, the Group conducted a review of its central support structures to achieve greater divisional autonomy and efficiency. This review resulted in a reorganisation programme that is expected to yield savings of £7m per annum. Redundancy and other reorganisation costs of £9m have arisen as a result of the programme.