Notes to the Parent Company Financial Statements

For the short period 30 June 2006 to 3 March 2007

1. GENERAL INFORMATION

The Company was incorporated and registered in England and Wales on 30 June 2006 under the Companies Act as a public limited Company by shares with the name Hackplimco (no. 116) plc and with registered number 586353. The Company changed its name to ARG Holdings (UK) plc pursuant to a special resolution passed on 13 July 2006 and then changed its name to Home Retail Group plc pursuant to a special resolution on 11 September 2006. The registered office of the Company is Avebury, 489 – 499 Avebury Boulevard, Milton Keynes, MK9 2NW.

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Basis of accounting

These separate financial statements of Home Retail Group (“the Company”) are presented as required by the Companies Act 1985 (“the Act”), and were approved by the Board on 2 May 2007. They have been prepared on a going concern basis and under the historical cost convention, and in accordance with the Companies Act 1985 and applicable UK Generally Accepted Accounting Principles (UK GAAP).

The Company is the ultimate parent entity of Home Retail Group (“the Group”). The Company’s Financial Statements are included in Home Retail Group plc’s Consolidated Financial Statements for the short-period ended 3 March 2007. As permitted by section 230 of the Act, the Company has not presented its own profit and loss account. The Company has also taken advantage of the exemption from preparing a cash flow statement under the terms of FRS 1 (Revised 1996) ‘Cash Flow Statements’. The Company is also exempt under the terms of FRS 8 ‘Related Party Disclosures’ from disclosing transactions with other members of the Home Retail Group.

The Company has applied the provisions for merger relief under section 131 of the Act, as a consequence no share premium was recorded in respect of the shares issued. The investment in Home Retail Group (UK) Ltd has also been recorded at the nominal value of shares issued under the provision of section 133 of the Act (provision supplementing section 131 of the Act).

Changes in accounting standards
At the balance sheet date FRS 28 ‘Corresponding Amounts’ and FRS 29 ‘Financial Instruments: Disclosures’ were in issue but not yet effective. These standards will be fully considered in due course.

Financial instruments
The Company classifies its financial instruments in the following categories: financial assets at fair value through profit or loss, loans and receivables. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at initial recognition and re-evaluates this position at every reporting date. The Company uses interest rate swaps to manage its interest rate exposure against borrowings from subsidiary undertakings.

Financial assets and liabilities at fair value through profit or loss
Financial assets and liabilities at fair value through profit or loss are so designated by management on initial recognition. Derivatives are so designated unless they are designated as hedges. Items in this category are classified as current assets or current liabilities if they are expected to be realised within 12 months of the balance sheet date.

Investments
Investments are included in the balance sheet at their cost of acquisition.Where appropriate, a provision is made for any impairment in their value.

Deferred tax
Deferred taxation has been recognised as a liability or asset if transactions have occurred at the balance sheet date that give rise to an obligation to pay more tax in the future, or a right to pay less tax in the future.

An asset is not recognised to the extent that the transfer of economic benefits in the future is uncertain.

Deferred taxation assets and liabilities have not been discounted.

Dividend distribution
Final dividends proposed by the Board of Directors and unpaid at the year end are not recognised in the financial statements, until they have been approved by the shareholders at the Annual General Meeting. Interim dividends are recognised when paid.

3. PROFIT AND LOSS ACCOUNT DISCLOSURES

The Company’s profit on ordinary activities was £1.7m.

Details of the remuneration of Directors are given in the auditable part of the Directors’ Remuneration Report and related matters, and were paid by another Group Company.

There were no non-audit services.

4. DIVIDENDS

The proposed final dividend was approved by the Board of Directors on 24 April 2007 and is subject to approval of the shareholders at the Annual General Meeting. The proposed dividend has not been included as a liability at 3 March 2007 in accordance with FRS 21 ‘Events after the balance sheet date’. It will be paid on 25 July 2007 to shareholders who are on the register of members on 23 May 2007.

5. INVESTMENTS IN GROUP SUBSIDIARIES

Under section 425 of the Companies Act 1985 scheme of arrangements (the demerger of Home Retail Group and Experian Group from GUS plc) the Company issued shares to the public shareholders of Experian Group Ltd in return for the receipt of the shares in Home Retail Group (UK) Ltd.

Home Retail Group (UK) Ltd is a 100% owned subsidiary incorporated within the UK and is a Group holding company.

6. DEBTORS

The amounts owed by subsidiary undertakings are repayable on demand.

7. CREDITORS – AMOUNTS FALLING DUE IN ONE YEAR

The amounts owed to subsidiary undertakings represents an unsecured loan taken out on 10 October 2006 with Stanhope Finance Limited, a Group Company. The loan is due to be repaid in June 2007. Interest is fixed and charged at 4.91%.

The other financial liability represents the market value of an interest rate swap novated from GUS plc at nil consideration. The benefit of this swap will unwind between the date of novation and June 2007.

8. CALLED UP SHARE CAPITAL

On incorporation, the Company’s authorised share capital was £1,000,050,000 divided into 1,000,000,000 ordinary shares of £1 each and two redeemable preference shares of £25,000 each. Of such shares, two ordinary shares were taken by the subscribers to the memorandum of association, and were paid up in full in cash.

The preference shares were allotted for cash and were paid up as to 30% (by virtue of the holder giving an understanding to pay up each share to such amount pursuant to section 738(2) of the Act). On 26 February 2007 these shares were redeemed and pursuant to Article 8.2.5 of the Articles, the nominal amount of such redeemable preference shares comprised in the authorised share capital was sub-divided and converted into ordinary shares of 10p each.

On 11 September 2006 at an Extraordinary General Meeting, the existing ordinary shares of £1 each were subdivided into 100 ordinary shares of 1p each, subsequently a further 460 ordinary shares of 1p each were issued in aggregate and fully subscribed for equivalent in cash by the subscribers to the memorandum of association. The authorised share capital of the Company was increased to £6,600,050,000 by the creation of 560,000,000,000 ordinary shares of 1p each. Finally, all the issued and ordinary shares of 1p each were consolidated into ordinary shares of 330p each.

On 10 October 2006, the Company issued 877,444,999 ordinary shares of 330p to the public shareholders of Experian Group Ltd in return for the receipt of shares in Home Retail Group (UK) Ltd and to satisfy the obligations of Experian Group Ltd to it’s public shareholders pursuant to the reduction of capital of Experian Group Ltd, under the scheme of arrangement.

As Home Retail Group plc was not a subsidiary of Experian Group Ltd, section 131 of the Act applied to the transaction and no recognition of share premium was necessary.

On 12 October 2006, the nominal amount of the issued ordinary shares was reduced from 330p to 10p by way of a court approved capital reduction scheme in accordance with section 135 of the Act.

9. RESERVES

Net movement in own shares represents shares purchased for the purpose of satisfying obligations arising from Home Retail Group plc share-based compensation schemes. Shares in Home Retail Group are held in the following Trusts which have been established since demerger:

Home Retail Group Employee Share Ownership Trust (“ESOT”)

The ESOT provides for the issue of shares to Group employees under share option and share grant schemes (with the exception of the Share Incentive Plan).

At 3 March 2007, the ESOT held 7,449,855 shares with a market value of £31.3m. The shares in the Trust are held in the balance sheet of the Group at nil value. The shares were acquired as part of the demerger from GUS at no cost. Dividends on these shares are waived.

Home Retail Group Share Incentive Scheme Trust

The Home Retail Group Share Incentive Scheme Trust provides for the issue of shares to Group employees under the Share Incentive Plan. At 3 March 2007, the Trust held 1,477,105 shares with a market value of £6.2m. These shares were purchased during the year at a cost of £6.1m.

10. COMMITMENTS

On 12 July 2006, Argos Limited, a subsidiary of the Company, entered into a five-year multi-currency revolving loan facility of £700m with a syndicated group of banks. On 27 October 2006 the Company acceded to this facility as a borrower and a guarantor. As at the balance sheet date there were no drawings made under this facility.

As part of the demerger, all the rights, obligations and liabilities relating to Cliffrange plc were transferred into the Home Retail Group. The Company replaced GUS plc as guarantor of the loans between Stanhope Finance Limited and Homebase Group Limited (£150m) and Home Retail Group Card Services Limited (£100m). These companies are all members of the Home Retail Group.

There are no capital or operating lease commitments.

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