Other commentary

Accounting standards and use of non-GAAP measures

The Group has prepared its consolidated financial statements under International Financial Reporting Standards for the 26 weeks ended 1 September 2007. Accounting policies are outlined in Note 1 to the Financial Information on page 26.

Home Retail Group has identified certain measures that it believes provide additional useful information on the underlying performance of the Group. These measures are applied consistently but as they are not defined under GAAP they may not be directly comparable with other companies’ adjusted measures. The non-GAAP measures are outlined in Note 2 to the Financial Information on page 27.

Principal risks and uncertainties

The Group has set out in its annual report a number of risks and uncertainties which could impact the performance of the Group. The Group operates a structured risk management process which identifies, evaluates and prioritises risks and uncertainties and reviews mitigation activity.

On a short-term forward-looking basis over the remainder of the financial year, the main area of potential risk and uncertainty centres on the impact on sales growth and thereby profitability in relation to economic conditions and overall consumer demand. Other potential risks and uncertainties around sales and/or profit growth include product supply and liability, business interruption, infrastructure development, people, the regulatory environment and currency. These risks, together with examples of mitigating activity, are set out in more detail in the annual report.

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