As filed with the Securities and Exchange Commission on May 9, 2008
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

(Mark One)	 	 	
 	 	 	
	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934	
 	 	 	
OR	
 	 	 	
	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
 	 	 	
For the fiscal year ended: February 2, 2008	
 	 	 	
OR	
 	 	 	
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934	
 	 	 	
OR	
 	 	 	
	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
 	 	
Date of event requiring this shell company report _____________	
For the transition period from _____________ to ____________	

Commission file number 001-32349
SIGNET GROUP plc
(Exact Name of Registrant as Specified in Its Charter)
England
 (Jurisdiction of Incorporation or Organization)
15 Golden Square, London W1F 9JG
(Address of Principal Executive Offices)
Mark Jenkins, Group Company Secretary – Tel: 44 207 317 9706, Fax: 44 207 734 9376, email: Mark.Jenkins@signet.co.uk,
15 Golden Square, London W1F 9JG England
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	 	Name of each exchange on which Registered	
 	 	 	
American Depositary Shares, each representing 10 Ordinary Shares of 0.9c each	 	The New York Stock Exchange	
 	 	 	
Ordinary Shares of 0.9c each	 	The New York Stock Exchange*	
 	 	
* Not for trading, but only in connection with the registration of American Depositary Shares representing such Ordinary Shares pursuant to the requirements of the Securities and Exchange Commission.	

Securities registered or to be registered pursuant to Section 12(g) of the Act:
 None	
 	
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None	
	
(Title of Class)	
 	
The number of issued shares of each class of stock of Signet Group plc as of February 2, 2008 was:	
 	 	
Ordinary Shares of 0.9c each: 1,705,510,466	
 	 	
Deferred Shares of £1 each: 50,000	
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

Yes    	 	No     	
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes    	 	No     	
Note — checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    	 	No     	
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accredited filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    	 	Accelerated filer    	 	Non-accelerated filer     	
Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17     	 	Item 18     	
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

	U.S. GAAP	
 	 	
	International Financial Reporting Standards as issued by the International Accounting Standards Board	
 	 	
	Other	
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes    	 	No     	

	

 Table of Contents	
 	 	
PART I	
		
ITEM 1	- IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	
ITEM 2	- OFFER STATISTICS AND EXPECTED TIMETABLE	
ITEM 3	- KEY INFORMATION	
ITEM 4	- INFORMATION ON THE COMPANY	
ITEM 5	- OPERATING AND FINANCIAL REVIEW AND PROSPECTS	
ITEM 6	- DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	
ITEM 7	- MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	
ITEM 8	- FINANCIAL INFORMATION	
ITEM 9	- THE OFFER AND LISTING	
ITEM 10 	- ADDITIONAL INFORMATION	
ITEM 11	- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	
ITEM 12	- DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	
 	 	
PART II	
		
ITEM 13	- DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	
ITEM 14	- MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	
ITEM 15	- CONTROLS AND PROCEDURES	
ITEM 16	- [RESERVED]	
 	 	
PART III 	
		
ITEM 17	- FINANCIAL STATEMENTS	
ITEM 18	- FINANCIAL STATEMENTS	
ITEM 19	- EXHIBITS	
 	
SIGNATURE	

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      Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended, the information for the 2008 Form 20-F of Signet Group plc (the “Company”) set out below is being incorporated by reference from the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated and submitted on May 1, 2008.
      References below to major headings include all information under such major headings, including subheadings, unless such reference is part of a reference to a subheading, in which case such reference includes only the information contained under such subheading. Graphs and tabular data are not included unless specifically identified below.
      The information set forth under headings “Cautionary statement regarding forward-looking statements”, “Description of property & Group employees – Trademarks and trade names” and “Competitive strengths” in the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
PART I
 ITEM 1 – IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
      Not applicable.
 ITEM 2 – OFFER STATISTICS AND EXPECTED TIMETABLE
      Not applicable.
 ITEM 3 – KEY INFORMATION
A. Selected financial data
      The information (including tabular data) set forth under the heading “Risk and other factors – financial market risks” on page 49, “Risk and other factors – exchange rates between the pound sterling and the US dollar” on page 50, “Note 30: Summary of differences between IFRS and US GAAP” on pages 116 to 122, and “Selected financial data” on pages 137 and 138 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
B. Capitalization and indebtedness
      Not applicable.
C. Reasons for the offer and use of proceeds
      Not applicable.
D. Risk factors
      The information (including tabular data) set forth under the heading “Risk and other factors” on pages 44 to 50 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
 ITEM 4 – INFORMATION ON THE COMPANY
A. History and development of the company
      The information set forth under the heading “Shareholder information – history” on page 129 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference. 
B. Business overview
      The information (including tabular data) set forth under the headings “Chairman’s statement” on page 2, “Group Chief Executive’s review” on pages 3 to 6, “US operating review” on pages 12 to 21, “UK operating review” on pages 24 to 29, US “Regulation” on page 21, UK “Regulation” on page 29, “Group financial review” on pages 35 to 43, “Risk and other factors – Suppliers” on page 47, “Risk and other factors – Raw materials and the supply chain” on page 47, “Risk and other factors – Seasonality” on page 48, “Description of properties & Group employees – Trademarks and trade names” on page 30, and “Note 2: Segmental information” on page 91 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
C. Organizational structure
      The information (including tabular data) set forth under the heading “Note 28: Principal subsidiary undertakings” on page 115 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference. 
D. Property, plants and equipment
      The information set forth under the heading “Description of properties & Group employees” on page 30 and “Note 24: Commitments: Operating lease commitments – minimum lease payments” on page 111 to 112 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.

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 ITEM 5 – OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A. Operating results
      The information (including tabular data) set forth under the headings “US operating review” on pages 12 to 21, “UK operating review” on pages 24 to 29, and “Group Financial review” on pages 35 to 43 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
B. Liquidity and capital resources
      The information (including tabular data) set forth under the headings “Group Financial review – Liquidity and capital resources” on pages 38 to 40 and “Note 18: Financial liabilities – borrowings” on pages 101 to 103 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
C. Research and development, patents and licenses, etc
      Not applicable.
D. Trend information
      The information (including tabular data) set forth under the headings “US operating review” on pages 12 to 21, “UK operating review” on pages 24 to 29, “Group Financial review” on pages 35 to 43, and “Risk and other factors” on pages 44 to 50 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
E. Off-balance sheet arrangements
      Not applicable.
F. Tabular disclosure of contractual arrangements
      The information (including tabular data) set forth under the heading “Group Financial review – Contractual obligations as at 2 February 2008” on pages 39 and 40 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
G. Safe harbor
      The information set forth under the headings “Cautionary statement regarding forward-looking statements ” on the inside front cover and “Risk and other factors – Forward-looking statements” on page 44 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
 ITEM 6 – DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 
A. Directors and senior management
      The information set forth under the heading “Directors, officers and advisers” on pages 51 to 52 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference. 
B. Compensation
      The information (including tabular data) set forth under the heading “Directors’ remuneration report” on pages 67 to 79 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference. 
C. Board practices
      The information set forth under the heading “Corporate governance statement” on pages 56 to 60, “Directors’ remuneration report – Service contracts” on page 74 and “Directors, officers and advisers – Committees” on page 51 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference. 
D. Employees
      The information (including tabular data) set forth under the headings “Description of properties & Group employees – Group employees” on page 30 and “Note 7: Directors and employees” on pages 93 and 94 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference. 
E. Share ownership
      The information (including tabular data) set forth under the headings “Note 27: Share options” on pages 113 to 115 and “Directors’ remuneration report – Directors’ interests in shares” on pages 76 to 79 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.

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 ITEM 7 – MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 
A. Major shareholders
      The information (including tabular data) set forth under the headings “Shareholder information – Nature of trading market” on page 130, “Shareholder information – Substantial shareholdings and control of the Company” on pages 131 and 132, and “Shareholder information – Substantial shareholdings notified to the Company up to 8 April 2008” on page 132 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
B. Related party transactions
      The information set forth under the heading “Note 29: Related party transactions” on page 115 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
C. Interests of experts and counsel
      Not applicable.
 ITEM 8 – FINANCIAL INFORMATION
A. Consolidated statement and other financial information
      The information (including tabular data) set forth on pages 82 to 122 (including the information set forth under the subheading “Notes to the accounts”) of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference. The information set forth in Exhibit 15.1 hereto “Report of Independent Registered Public Accounting Firm” is incorporated in this section by reference.
B. Significant changes
      Not applicable.
 ITEM 9 – THE OFFER AND LISTING
A. Offer and listing details
      The information (including tabular data) set forth under the heading “Shareholder information – Nature of trading market” on page 130 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
B. Plan of distribution
      Not applicable.
C. Markets
      The information set forth under the heading “Shareholder information – Nature of trading market” on page 130 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
D. Selling shareholders
      Not applicable.
E. Dilution
      Not applicable.
F. Expenses of the issue
      Not applicable.

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 ITEM 10 – ADDITIONAL INFORMATION
A. Share capital
      Not applicable.
B. Memorandum and articles of association
      The information set forth under the headings “Shareholder information – History” on page 129, “Directors’ remuneration report” on pages 67 to 79, “Note 22: Share capital” on pages 108 and 109, and “Shareholder information: substantial shareholdings and control of the Company” on pages 131 and 132 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
C. Material contracts
      Not applicable.
D. Exchange controls
      The information set forth under the heading “Shareholder information – Exchange controls and other limitations affecting security holders” on page 132 and “Shareholder information – Dividends” on page 131 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference. 
E. Taxation
      The information set forth under the headings “Shareholder information – Taxation, “Shareholder information – Taxation of capital gains”, “Shareholder information – US information reporting and US backup withholding”, “Shareholder information – Inheritance tax”, and “Shareholder information – UK stamp duty and stamp duty reserve tax” on pages 134 to 136 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
F. Dividends and paying agents
      Not applicable.
G. Statement by experts
      Not applicable.
H. Documents on display
      The information set forth under the heading “Shareholder contacts – Documents on display” on page 143 of the “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
      In addition, we file reports and other information with the United States Securities and Exchange Commission (the “SEC”). You can read and copy these reports and other information at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC also maintains a website at www.sec.gov which contains in electronic form each of the reports and other information that we have filed electronically with the SEC.
I. Subsidiary information
      Not applicable.
 ITEM 11 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      The information (including tabular data) set forth under the headings “Group Financial review” on pages 35 to 43, “Risk and other factors – Financial market risks” on page 49, “Risk and other factors – Fair value changes arising from:” on page 50, and “Note 26: Financial instruments” on pages 112 and 113 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
 ITEM 12 – DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
      Not applicable.

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PART II
 ITEM 13 – DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
      None.
 ITEM 14 – MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
      Not applicable.
 ITEM 15 – CONTROLS AND PROCEDURES
      The information set forth under the headings “Corporate governance statement – Internal controls” on pages 59 and 60 and “Corporate governance statement – Management’s annual report on internal control over financial reporting” on page 60 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of Signet Group plc:
We have audited Signet Group plc’s internal control over financial reporting as of February 2, 2008, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) . Signet Group plc's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s annual report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Signet Group plc maintained, in all material respects, effective internal control over financial reporting as of February 2, 2008, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission .
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Signet Group plc and subsidiaries as of February 2, 2008 and February 3, 2007, and the related consolidated income statements, consolidated statements of recognised income and expense and consolidated statements of cash flows for the 52 weeks ended February 2, 2008, the 53 weeks ended February 3, 2007 and the 52 weeks ended January 28, 2006, and our report dated April 9, 2008 expressed an unqualified opinion on those consolidated financial statements .
/s/ KPMG Audit Plc
London, United Kingdom
 April 9, 2008
 ITEM 16 – RESERVED
A – Audit Committee Financial Expert
      The information set forth under the heading “Corporate governance statement – The Audit Committee” on page 57 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
B – Code of Ethics
      The information set forth under the heading “Corporate governance statement – Business conduct and ethics” on page 58 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
C – Principal Accountant Fees and Services
      The information (including tabular data) set forth under the headings “Corporate governance statement – The Audit Committee” on page 57, and “Note 3: Operating profit” on page 92 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.
D – Exemptions from the Listing Standards for Audit Committees
      Not applicable.
E – Purchases of Equity Securities by the Issuer and Affiliated Purchases
      The information (including tabular data) set forth under the heading “Shareholder information – Information on share buyback programme” on page 131 of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference.

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PART IIII
 ITEM 17 – FINANCIAL STATEMENTS
      The information set forth in Exhibit 15.1 hereto “Report of Independent Registered Public Accounting Firm” is incorporated in this section by reference.
      The information (including tabular data) set forth on pages 82 to 122 (including the information set forth under the subheading “Notes to the accounts”) of the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008 is incorporated herein by reference. The financial information referenced above does not constitute the Company's statutory accounts for the 52 week period ended 2 February 2008 or 53 week period ended 3 February 2007. Statutory accounts for 53 week period ended 3 February 2007, which were prepared under International Financial Reporting Standards as adopted by the European Union, have been delivered to the registrar of companies, and those for the 52 week period ended 2 February 2008, prepared under International Financial Reporting Standards as issued by the International Accounting Standards Board, will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 237(2) or (3) of the Companies Act 1985.
 ITEM 18 – FINANCIAL STATEMENTS
      The Company has responded to Item 17 in lieu of this item.
 ITEM 19 – EXHIBITS

Number 	Description of Exhibits	
 	 	
1.1	Articles of Association of Signet Group plc, adopted on June 13, 2002, amended on June 10, 2005 and June 8, 2007.	
 	 	
4.1	Transfer and Servicing Agreement, dated as of November 2, 2001, between Sterling Receivables Corp., Sterling Jewelers Inc., and Sterling Jewelers Receivables Master Note Trust (incorporated herein by reference to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on April 22, 2004 (File No. 033-22663)).	
 	 	
4.2	Executive Service Agreement, dated as of June 14, 1995, between the Company and Walker Boyd, as amended May 15, 2000 (incorporated herein by reference to Exhibit 4.8 to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on May 31, 2001 (File No. 033-22663)).	
 	 	
4.3	Amended and Restated Employment Agreement, dated as of December 20, 2000, between Sterling Jewelers Inc. and Terry Burman (incorporated herein by reference to Exhibit 4.10 to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on May 31, 2001 (File No. 033-22663)).	
 	 	
4.4	Signet Group plc 2000 Long-Term Incentive Plan (incorporated herein by reference to the Company’s Registration Statement on Form S-8, as filed with the Securities and Exchange Commission on July 24, 2000 (File No. 333-12304)).	
 	 	
4.5	Signet Group plc Employee Stock Savings Plan (incorporated herein by reference to the Company’s Registration Statement on Form S-8, as filed with the Securities and Exchange Commission on November 19, 1998 (File No. 333-09634)).	
 	 	
4.6	Signet Group plc 1993 Executive Share Option Scheme (incorporated herein by reference to the Company’s Registration Statement on Form S-8, as filed with the Securities and Exchange Commission on June 22, 1998 (File No. 333-08764)).	
 	 	
4.7	$390 million Multicurrency Revolving Facilities Agreement, dated September 28, 2004, among Signet Group plc, Barclay Capital, HSBC Bank plc, The Royal Bank of Scotland plc and Wachovia Bank, N.A. (incorporated herein by reference to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on May 3, 2005 (File No. 001-32349)).	
 	 	
4.8	Employment Agreement between Signet Trading Limited and Robert Anderson dated March 1, 2003 (incorporated herein by reference to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on May 3, 2005 (File No. 001-32349)).	
 	 	
4.9	Note Purchase Agreement dated as of March 30, 2006, among Signet Group plc and the several Purchasers who are party thereto (incorporated herein by reference to Exhibit 4.12 to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on May 4, 2006 (File No. 001-32349)).	
 	 	
4.10	Amendment No.1 to Amended and Restated Employment Agreement, dated as of January 12, 2006, by and among Sterling Jewelers Inc. and Terry Burman (incorporated herein by reference to Exhibit 4.13 to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on May 4, 2006 (File No. 001-32349)).	
 	 	
4.11	Amended and Restated Employment Agreement, dated as of August 6, 2004, between Sterling Jewelers Inc. and Mark S. Light (incorporated herein by reference to Exhibit 4.14 to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on May 4, 2006 (File No. 001-32349)).	
 	 	
4.12	Amendment No.1 to Amended and Restated Employment Agreement, dated as of January 12, 2006, by and among Sterling Jewelers Inc. and Mark S. Light (incorporated herein by reference to Exhibit 4.15 to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on May 4, 2006 (File No. 001-32349)).	
 	 	
4.13	Signet Group plc 2005 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 4.16 to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on May 4, 2006 (File No. 001-32349)).	
 	 	
8.1	List of Significant Subsidiaries of Signet Group plc (incorporated herein by reference to the Company’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on April 22, 2004 (File No. 033-22663)).	
 	 	
12.1	Section 302 Certification of Walker Boyd.	
 	 	
12.2	Section 302 Certification of Terry Burman.	
 	 	
13.1	Certification of Walker Boyd pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.	
 	 	
13.2	Certification of Terry Burman pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.	
 	 	
15.1	Report of Independent Registered Public Accounting Firm.	
 	 	
15.2	Consent of KPMG Audit Plc.	
 	 	
15.3	Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended, the information incorporated into this Form 20-F by reference to the Company’s “Annual Report & Accounts Year ended 2 February 2008” furnished as an exhibit to its Report on Form 6-K dated May 1, 2008, is attached as an exhibit hereto.	

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 SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	Signet Group plc	

	By:	/s/ Walker Boyd	
 	 	 	
		Name: Walker Boyd	
		Title: Group Finance Director	
London, England
 May 9, 2008

 

 

 

 

Exhibit 1.1

Company number: 477692

PUBLIC COMPANY LIMITED BY SHARES
 
ARTICLES OF ASSOCIATION
 
of
 
SIGNET GROUP plc
 
(Adopted by Special Resolution on 8 June 2007)
1

 SIGNET GROUP PLC
Articles of Association
INDEX

PRELIMINARY	1	
 	 	 	
1.	Definitions	1	
2.	Exclusion of Table A	3	
 	 	
CAPITAL	4	
 	 	 	
3.	Capital	4	
4.	Allotment	4	
5.	Share warrants to bearer	5	
6.	Commissions and brokerage	6	
7.	Trusts not recognised	6	
8.	Purchase of own shares	6	
 	 	
VARIATION OF CLASS RIGHTS	6	
 	 	 	
9.	Sanction	6	
10.	Class meetings	6	
 	 	
ALTERATION OF SHARE CAPITAL	7	
 	 	 	
11.	Increase, consolidation, sub-division and cancellation	7	
12.	Fractions	7	
13.	Reduction of share capital	8	
 	 	
CERTIFICATED SHARES	8	
 	 	 	
14.	Right to certificates	8	
15.	Replacement certificates	9	
 	 	
UNCERTIFICATED SHARES	9	
 	 	 	
16.	Uncertificated shares	9	
17.	Company’s lien on shares not fully paid	10	
18.	Enforcement of lien by sale	10	
19.	Application of sale proceeds	11	
 	 	 	
CALLS	 	11	
 	 	 	
20.	Calls	11	
21.	Liability of joint holders	11	
22.	Interest	11	
23.	Differentiation	11	
24.	Payment in advance of calls	11	
25.	Restrictions if calls unpaid	12	
26.	Sums due on allotment treated as calls	12	
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FORFEITURE	12	
 	 	 	
27.	Forfeiture after notice of unpaid call	12	
28.	Notice after forfeiture	12	
29.	Consequences of forfeiture	12	
30.	Disposal of forfeited share	13	
31.	Proof of forfeiture	13	
 	 	
UNTRACED MEMBERS	13	
 	 	 	
32.	Sale of shares	13	
33.	Application of sale proceeds	14	
 	 	
TRANSFER OF SHARES	15	
 	 	 	
34.	Form of transfer	15	
35.	Registration of a certificated share transfer	15	
36.	Registration of an uncertificated share transfer	16	
37.	Renunciation of allotments	16	
38.	No fee on registration	16	
39.	Closing of Register of Members	16	
 	 	
TRANSMISSION OF SHARES	16	
 	 	 	
40.	On death	16	
41.	Election of person entitled by transmission	16	
42.	Rights on transmission	17	
 	 	
GENERAL MEETINGS	17	
 	 	 	
43.	Annual and extraordinary general meetings	17	
44.	Convening of extraordinary general meetings	17	
45.	Notice of general meetings	17	
46.	Quorum for general meeting	18	
47.	Procedure if quorum not present	18	
48.	Chairman of general meeting	18	
49.	Rights of Directors and others to attend meetings	19	
50.	Accommodation of members at meeting	19	
51.	Security	19	
52.	Power to adjourn	19	
53.	Notice of adjourned meeting	20	
54.	Business of adjourned meeting	20	
 	 	
VOTING	20	
 	 	 	
55.	Voting at a general meeting	20	
56.	Poll procedure	20	
57.	Votes of members	21	
58.	Chairman’s casting vote	21	
59.	Voting restrictions on an outstanding call	21	
60.	Proxy appointment	21	
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61.	Termination of proxy or corporate authority	23	
62.	Corporate representatives	23	
63.	Amendment to resolutions	24	
64.	Objection to error in voting	24	
 	 	
FAILURE TO DISCLOSE INTERESTS IN SHARES	24	
 	 	 	
65.	Failure to disclose interests in shares	24	
 	 	
APPOINTMENT, RETIREMENT AND REMOVAL OF DIRECTORS	26	
 	 	 	
66.	Number of Directors	26	
67.	Share qualification	26	
68.	Company’s power to appoint Directors	26	
69.	Board’s power to appoint Directors	26	
70.	Appointment of executive Directors	26	
71.	Eligibility of new Directors	27	
72.	President and Vice President	27	
73.	Rotational retirement at annual general meeting	27	
74.	Position of retiring Director	27	
75.	Article deleted	27	
76.	Removal by ordinary resolution	27	
77.	Vacation of Director’s office	28	
 	 	
ALTERNATE DIRECTORS	28	
 	 	 	
78.	Appointment	28	
79.	Responsibility	29	
80.	Participation at Board meetings	29	
81.	Interests	29	
82.	Termination of appointment	29	
 	 	
BOARD POWERS	30	
 	 	 	
83.	Board powers	30	
84.	Directors below the minimum number	30	
85.	Delegation to executive Directors	30	
86.	Delegation to committees	30	
87.	Registered office	30	
88.	Local management	31	
89.	Delegation to agents	31	
90.	Exercise of voting power	31	
91.	Provision for employees	31	
92.	Overseas registers	31	
93.	Associate directors	31	
94.	Borrowing powers	32	
 	 	
DIRECTORS’ REMUNERATION, EXPENSES AND BENEFITS	34	
 	 	 	
95.	Fees	34	
96.	Expenses	35	
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97.	Remuneration of executive Directors	35	
98.	Special remuneration	35	
99.	Pensions and other benefits	35	
 	 	
DIRECTORS’ PROCEEDINGS	36	
 	 	 	
100.	Board meetings	36	
101.	Notice of Board Meetings	36	
102.	Quorum	36	
103.	Board chairman	36	
104.	Voting	36	
105.	Telephone participation	36	
106.	Written resolutions	37	
107.	Committee proceedings	37	
108.	Minutes	37	
109.	Validity of proceedings	37	
 	 	
INTERESTS OF DIRECTORS	38	
 	 	 	
110.	Permitted interests	38	
111.	Disclosure of interests to Board	38	
112.	Interested Director not to vote or count for quorum	38	
113.	Director’s interest in own appointment	39	
114.	Conclusive rulings on Directors’ interests	39	
115.	Connected persons	40	
116.	Suspension or relaxation of provisions concerning Directors’ interests	40	
 	 	
SECRETARY	40	
 	 	 	
117.	Secretary	40	
 	 	
SEALS AND DOCUMENT AUTHENTICATION	40	
 	 	 	
118.	Application of Seal	40	
119.	Official seal for use abroad	41	
120.	Directors or Secretary to authenticate or certify	41	
 	 	
DIVIDENDS AND OTHER PAYMENTS	41	
 	 	 	
121.	Declaration of dividends	41	
122.	Board may pay interim and fixed dividends	41	
123.	Entitlement to dividends	41	
124.	Payment methods	42	
125.	Deductions	43	
126.	Interest	43	
127.	Unclaimed dividends	43	
128.	Uncashed dividends	43	
129.	Dividends in kind	43	
130.	Scrip dividends	43	
131.	Reserves	45	
132.	Capitalisation of profits and reserves	45	
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RECORD DATES	46	
 	 	 	
133.	Board to fix date	46	
 	 	
ACCOUNTS	46	
 	 	 	
134.	Access to accounting records	46	
135.	Distribution of annual accounts	46	
 	 	
NOTICES ETC	47	
 	 	 	
136.	Form of notices	47	
137.	Service on members	47	
138.	Notices by advertisement	48	
139.	Evidence of giving notice	49	
140.	Notice binding on transferees	49	
141.	Notice to persons entitled by transmission	49	
 	 	
DOCUMENT DESTRUCTION	 	
 	 	 	
142.	Document destruction	50	
 	 	
WINDING UP	50	
 	 	 	
143.	Division of assets	50	
 	 	
INDEMNITY	51	
 	 	 	
144.	Right to indemnity	51	
145.	Power to insure	51	
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Company number: 477692
 
PUBLIC COMPANY LIMITED BY SHARES
 
ARTICLES OF ASSOCIATION
of
SIGNET GROUP plc
(Adopted by Special Resolution passed on 8 June 2007)
 
 PRELIMINARY

 1.	 	Definitions	 	
(A)	 	In these Articles (unless the context requires otherwise) the following words have the following meanings:	 	
	 	 	 	
the 1985 Act	The Companies Act 1985 to the extent in force from time to time;	
 	 	
the 2006 Act	The Companies Act 2006 to the extent in force from time to time;	
 	 	
the Acts	The 1985 Act and the 2006 Act;	
 	 	
Articles	These articles of association including any changes made to them;	
 	 	
Auditors	The auditors of the Company;	
 	 	
Board	The board of Directors or the Directors present or deemed to be present at a duly convened meeting at which a quorum is present;	
 	 	
certificated	In relation to a share, a share which is recorded in the Register of Members as being held in certificated form;	
 	 	
clear days	In relation to the period of a notice, that period excluding the day when the notice is given or deemed given and the day for which it is given or on which it is to take effect;	
 	 	
Company	Signet Group plc, registered in England with number 477692;	
 	 	
director	A director of the Company;	
 	 	
electronic address	Any number or address used for the purposes of sending or receiving notices, documents or information by electronic means;	
 	 	
electronic form	Has the meaning given in the 2006 Act;	
 	 	
electronic means	Has the meaning given in the 2006 Act;	
 	 	
Group	The group comprising the Company and its subsidiary undertakings (not including any parent undertaking of the Company);	
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Group Undertaking	Any undertaking in the Group, including the Company;	
 	 	
holder	In relation to a share, the member whose name is entered in the Register of Members as the holder of that share;	
 	 	
Issuer-Instruction	An issuer-instruction, as defined in the Uncertificated Securities Regulations;	
 	 	
Listing Rules	The listing rules of the UKLA made pursuant to Part VI of the Financial Services and Markets Act 2000;	
 	 	
London Stock Exchange	London Stock Exchange plc;	
 	 	
member	A member of the Company or, if the context so requires, a member of the Board or of any committee;	
 	 	
Official List	The Official List of the UKLA;	
 	 	
Operator	The Operator (as defined in the Uncertificated Securities Regulations) of the Uncertificated System;	
 	 	
Ordinary Shares	Ordinary shares of nine tenths of a US cent each in the Company;	
 	 	
paid or paid up	Paid up or credited as paid up;	
 	 	
Participating Security	A share or class of shares or a renounceable right of allotment of a share, title to which is permitted to be transferred by means of an Uncertificated System in accordance with the Uncertificated Securities Regulations;	
 	 	
Registered Office	The registered office of the Company;	
 	 	
Register of Members	(i) the register of members kept pursuant to the Acts; or (ii) at any time whilst the Company has Participating Securities, the Company’s issuer register of members (as defined in the Uncertificated Securities Regulations) or, in relation to any uncertificated shares, the Company’s Operator register of members (as defined in the Uncertificated Securities Regulations), both such registers being kept pursuant to the Uncertificated Securities Regulations; or (iii) as the case may be, any overseas branch register kept pursuant to these Articles and in accordance with the Acts and the Uncertificated Securities Regulations;	
 	 	
Seal	The common seal of the Company or any official or securities seal that the Company has or may have as permitted by the Acts;	
 	 	
Secretary	The secretary of the Company or any other person appointed to perform any of the duties of the secretary of the Company including a joint, temporary, assistant or deputy secretary;	
 	
share	A share in the capital of the Company;	
 	 	
System-Participant	A system-participant, as defined in the Uncertificated Securities Regulations;	
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UKLA	The Financial Services Authority in its capacity as the United Kingdom Listing Authority;	
 	 	
uncertificated	In relation to a share, a share to which title is recorded in the Register of Members as being held in uncertificated form and title to which may be transferred by means of an Uncertificated System in accordance with the Uncertificated Securities Regulations;	
 	 	
Uncertificated Securities
Regulations	The Uncertificated Securities Regulations 2001; and	
 	 	
Uncertificated System	The CREST system or any other applicable system which is a "relevant system " for the purpose of the Uncertificated Securities Regulations.	
 	 	
US$, US dollars,
United States dollars	Lawful currency for the time being of the United States of America.	
 	 	
(B)	In these Articles:	
 	(i)	words or expressions which are not defined in paragraph (A) of this Article have the same meanings (where applicable) as in the Acts;	
 	 	 	
 	(ii)	a reference to any statute or any statutory instrument or any provision of a statute or of a statutory instrument includes a reference to any modification or re-enactment of it for the time being in force and any order, regulation, instrument or other subordinate legislation made under such statute or statutory provision or under the statute under which such statutory instrument was made;	
 	 	 	
 	(iii)	words in the singular include the plural and vice versa, words importing any gender include all genders and a reference to a " person " includes any individual, firm, partnership, unincorporated association, company, corporation or other body corporate;	
 	 	 	
 	(iv)	references to " writing " or " written " include printing, typewriting, lithography, photography and any other modes of representing or reproducing words in a legible and non-transitory form and documents and information sent or supplied in electronic form or made available on a website are "in writing" for the purposes of these Articles;	
 	 	 	
 	(v)	a reference to an Uncertificated System is a reference to the Uncertificated System in respect of which the particular share or class of shares or renounceable right of allotment of a share is a Participating Security;	
 	 	 	
 	(vi)	where an ordinary resolution is expressed to be required for any purpose, a special or extraordinary resolution is also effective for such purpose and where an extraordinary resolution is required for any purpose, a special resolution is also effective for such purpose; and	
 	 	 	
 	(vii)	headings do not affect the interpretation of any Article.	
 	 	
 2.	Exclusion of Table A	
 	
 	The regulations contained in Table A as prescribed under the 1985 Act, or in any equivalent table prescribed under any former enactment, do not apply to the Company.	
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 CAPITAL

 3.	Capital	
	 	
	The share capital of the Company is US$53,368,866.171 divided into 5,929,874,019 ordinary shares of US$0.009 each ("Ordinary Shares") and £50,000 divided into 50,000 deferred shares of £1 each ("Deferred Shares").	
 	 	
3 A.	Deferred Shares	
 	 	
(A)	Income	
	 	
	The holder of a Deferred Share shall not be entitled to participate in the profits of the Company.	
 	 	
(B)	Capital	
	 	
	The holder of a Deferred Share shall not have any right to participate in any distribution of the Company's assets on a winding up or other distribution except that after the return of the nominal amount paid up on each share in the capital of the Company of any class other than the Deferred Shares and the distribution of a further US$1,000 in respect of each share there shall be distributed to a holder of a Deferred Share (for each Deferred Share held by him) an amount equal to the nominal value of the Deferred Share.	
 	 	
(C)	Voting and General Meetings	
	 	
	A holder of a Deferred Share shall not be entitled in respect of such holding to receive notice of any general meeting nor to attend, speak or vote at any general meeting.	
 	 	
(D)	Class Rights	
	 	
	The Company may from time to time create, allot and issue further shares, whether ranking pari passu with, in priority to or deferred to, or having more favourable rights in terms of income, capital, voting or otherwise, to the Deferred Shares, and such creation, allotment or issue shall be deemed not to involve a variation of the rights attaching to the Deferred Shares for any purpose. A reduction in or repayment of the share capital (whether or not issued or fully or partly paid up) of the Company or the other capital reserves of the Company shall not involve a variation of the rights attaching to the Deferred Shares, and the Company shall be entitled at any time to reduce or repay the whole or any part of its share capital (whether or not issued or fully or partly paid up) or its other capital reserves in accordance with the Acts without obtaining the consent of the holders of the Deferred Shares.	
 	 	
 4.	Allotment	
 	 	
(A)	Subject to the Acts and these Articles, any unissued shares shall be at the disposal of the Board, who may offer, allot, grant options over or otherwise dispose of them to such persons and on such terms as it may decide (including, without limitation, terms relating to the renunciation of any allotment).	
 	 	
(B)	Subject to the Acts and without prejudice to any rights attached to any shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine (or, if the Company has not so determined, as the Board may determine).	
 	 	
(C)	Subject to the Acts, any share may be issued which is, or is to be liable, to be redeemed at the option of one or both of the Company or the holder, on such terms and in such manner as may be provided by these Articles.	
 	 	
(D)	The Company shall not be bound to register more than four persons as the joint holders of any share or shares.	
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 5.	Share warrants to bearer	
 	 	
(A)	Subject to the Acts, the Company may, with respect to any shares which are fully paid (as to the nominal value and any premium), issue a warrant (a " share warrant " ) stating that the bearer of the warrant is entitled to the shares specified in it. The Company may provide (by coupons or otherwise) for the payment of future dividends or other moneys on or in respect of the shares included in a share warrant. The shares specified in the share warrant may be transferred by the delivery of the share warrant. The provisions of these Articles as to transfer and transmission of shares shall not apply to share warrants.	
 	 	
(B)	The powers referred to in paragraph (A) of this Article may be exercised by the Board, which may determine and vary the terms on which a share warrant is to be issued, including (without limitation) terms on which:	
	 	 	
	(i)	a new share warrant or coupon may be issued in the place of one damaged, defaced, worn out or lost (provided that no new share warrant shall be issued to replace one that has been lost unless the Board is satisfied beyond reasonable doubt that the original has been destroyed);	

			
	 	 	
	(ii)	the bearer of the share warrant may be entitled to receive notice of and to attend, vote and demand a poll at general meetings and adjourned meetings;	

	(iii)	dividends may be paid; and	
	 	 	
	(iv)	any share warrant may be surrendered and the name of the holder entered in the Register of Members in respect of the shares specified in it.	

(C)	The bearer of a share warrant shall be subject to the terms in force and applicable to such share warrant, whether made before or after its issue. Subject to any conditions for the time being in force relating to share warrants and as otherwise expressly provided in these Articles, the bearer of a share warrant may at any time deposit the share warrant at the Registered Office (or at such other place as the Board may from time to time appoint) and so long as the share warrant remains so deposited, the depositor shall have the same right of signing a requisition for calling a meeting of the Company, of giving notice of intention to submit a resolution to a meeting and of attending and voting, appointing a proxy and exercising the other privileges of a member at any meeting held after the expiration of forty-eight hours from the time of deposit and be entitled to be given any notices by the Company which are to be given, after the expiration of forty-eight hours from the time of such deposit, to holders of shares of that class, as if his name were inserted in the Register of Members as the holder of the shares included in the deposited share warrant, provided that in the case of a share warrant deposited elsewhere than at the Registered Office (or such other place as aforesaid), the depositor shall have obtained from the person with whom the same is deposited a certificate of such deposit in such form as the Board may require specifying (inter alia) the share warrant and the number of shares included therein, and shall have lodged the same at the Registered Office (or such other place as aforesaid) not less than forty-eight hours before the time appointed for the holding of the meeting at which the depositor desires to attend or to be represented. Not more than one person shall be recognised as a depositor of any share warrant. Every share warrant which shall have been so deposited as aforesaid shall remain so deposited until after the closing of the meeting at which the depositor desires to attend or to be represented.	
 	 	
(D)	Subject as otherwise expressly provided in these Articles or by the terms of issue of any shares or in any conditions for the time being in force relating to share warrants, no person shall, as bearer of a share warrant, be entitled to sign a requisition for calling a meeting of the Company or give notice of intention to submit a resolution to a meeting or attend or vote or give a proxy or exercise any other privilege of a member at a meeting of the Company, or be entitled to receive any notices from the Company, but the bearer of a share warrant shall be entitled in all other respects to the same privileges and advantages as if he were named in the Register of Members as the holder of the shares included in the share warrant, and he shall be deemed to be a member of the Company.	
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 6.	Commissions and brokerage	
 	
 	The Company may exercise all powers conferred by the Acts of paying commissions in relation to a subscription for shares or other allotment. Subject to the Acts, such commissions may be satisfied in cash or by the allotment of fully or partly paid shares or partly in one way and partly in the other. The Company may also pay such brokerage in relation to a subscription for shares as may be lawful.	
 	
 7.	Trusts not recognised	
 	
 	Except as required by law, no person shall be recognised by the Company as holding any share on any trust and (except as otherwise provided by these Articles or by law) the Company shall not be bound by or recognise any interest in any share except an absolute right of the holder to share in its entirety (even if the Company has notice of such interest).	
 	
 8.	Purchase of own shares	
 	
 	Subject to the Acts and to any rights attached to any shares, the Company may purchase, or enter into a contract under which it will or may purchase, any of its own shares of any class (including any redeemable shares) in any way. Any shares to be so purchased may be selected for purchase on any basis and in any manner whatsoever.	
 	
 VARIATION OF CLASS RIGHTS	
 	
 9.	Sanction	
 	
 	If the share capital of the Company is divided into shares of different classes, any of the rights attached to any class of shares (notwithstanding that the Company may be or be about to be in liquidation) may (unless the rights attached to the shares of the class otherwise provide) be varied or abrogated in any manner with the consent in writing of the holders of not less than three-quarters in nominal value of the issued shares of the class or with the sanction of an extraordinary resolution passed at a separate meeting of the holders of shares of the class duly convened and held in accordance with these Articles.	
 	
(B)	Subject to the terms of issue of or rights attached to any shares, the rights or privileges attached to any class of shares shall be deemed not to be varied or abrogated by:	
	 	 	
	(i)	the creation or issue of any new shares ranking pari passu in all respects (save as to the date from which such new shares shall rank for dividend) with or subsequent to those already issued;	

	 	 	
	(ii)	the reduction of the capital paid up on such shares or by the purchase or redemption by the Company of any of its own shares in accordance with the Acts and these Articles; or	

	 	 	
	(iii)	the Board resolving that a class of shares is to become or is to cease to be, or the Operator permitting such class of shares to become or to cease to be, a Participating Security.	

 	 	
 10.	Class meetings	
 	 	
(A)	The Board may call a separate general meeting of the holders of the shares of any class at any time and for any purpose as it thinks fit, regardless of whether section 125(6) of the 1985 Act applies to such meeting. Section 125(6) of the 1985 Act shall be deemed to apply (so far as applicable) to each such meeting for the purpose of these Articles. The provisions of these Articles as to general meetings shall also apply (so far as applicable) to each such meeting.	
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(B)	A separate meeting for the holders of a class of shares shall be convened and conducted as nearly as possible in the same way as an extraordinary general meeting, except that:	
 	
 	(i)	no member, other than a Director, shall be entitled to notice of it or to attend it unless he is a holder of shares of that class;	
 	
 	(ii)	no vote may be given except in respect of a share of that class;	
 	
 	(iii)	the quorum at the meeting other than an adjourned meeting shall be two persons holding or representing by proxy at least one-third in nominal value of the issued shares of that class and at an adjourned meeting the quorum shall be one person holding shares of that class or his proxy; and	
 	
 	(iv)	a poll may be demanded by any member present in person or by proxy and entitled to vote at the meeting and on a poll each member shall have one vote for every share of that class of which he is the holder.	
 	
(C)	For the purpose of these Articles, a general meeting at which no holder of a share other than an ordinary share may, in his capacity as a member, attend or vote shall also constitute a separate general meeting of the holders of the ordinary shares.	
 	
 ALTERATION OF SHARE CAPITAL	
 	
 11.	Increase, consolidation, sub-division and cancellation	
 	
 	The Company may by ordinary resolution:	
 	
 	(i)	increase its share capital by a sum to be divided into shares of amounts prescribed by the resolution;	
 	
 	(ii)	consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares;	
 	
 	(iii)	subject to the Acts, sub-divide all or any of its shares into shares of a smaller amount; and	
 	
 	(iv)	cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by a person and diminish the amount of its share capital by the amount of the shares so cancelled,	
 	
 	and may by the resolution decide that one or more of the shares resulting from any such division or sub-division may have any preference or other advantage as compared with the others or may be made subject to any restriction as compared with the others.	
 	
 12.	Fractions	
 	
(A)	If, as the result of a consolidation and division or a sub-division of shares, fractions of shares become attributable to members, the Board may on behalf of the members deal with the fractions as it thinks fit, including (without limitation) in either of the ways prescribed in this Article below.	
 	
(B)	The Board may sell shares representing the fractions to any person (including, subject to the Acts, the Company) for the best price reasonably obtainable and distribute the net proceeds of sale in due proportion amongst the persons to whom such fractions are attributable (except that if the amount due to a person is less than $5.00, or such other sum as the Board may decide, the Company may retain such sum for its own benefit). To give effect to such sale the Board may:	
 	
 	(i)	in the case of certificated shares, authorise a person to execute an instrument of transfer of shares to the purchaser or as the purchaser may direct; and	
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	(ii)	in the case of uncertificated shares, exercise any power conferred on it by Article 16(I) ( uncertificated shares ) to effect a transfer of the shares.	

(C)	The purchaser will not be bound to see to the application of the purchase monies in respect of any such sale. The title of the transferee to the shares will not be affected by any irregularity in or invalidity of the proceedings connected with the sale or transfer. Any instrument or exercise referred to at paragraph (B) of this Article shall be effective as if it had been executed or exercised by the holder of the shares to which it relates.	
 	 	
(D)	In relation to the fractions the Board may issue, subject to the Acts, to a member credited as fully paid by way of capitalisation the minimum number of shares required to round up his holding of shares to a number which, following a consolidation and division or a sub-division, leaves a whole number of shares (such issue being deemed to have been effected immediately before the consolidation or the sub-division, as the case may be). The amount required to pay up those shares may be capitalised as the Board thinks fit out of amounts standing to the credit of any reserve or fund of the Company (including any share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution, and applied in paying up in full the appropriate number of shares. A resolution of the Board capitalising part of any such reserve or fund will have the same effect as if the capitalisation had been made with the sanction of an ordinary resolution of the Company pursuant to Article 132 ( capitalisation of profits and reserves ). In relation to the capitalisation the Board may, without the sanction of an ordinary resolution of the Company, exercise all the powers conferred on it by Article 132.	
 	 	
 13.	Reduction of share capital	
	 	
	Subject to the Acts and to any rights attached to any shares, the Company may by special resolution reduce its share capital or any capital redemption reserve, share premium account or other undistributable reserve in any way.	
 	
 CERTIFICATED SHARES	
 	 	
 14.	Right to certificates	
 	 	
(A)	Subject to the Acts and these Articles and, if applicable, the requirements of the Listing Rules and the London Stock Exchange, every person (except any person in respect of whom the Company is not required by the Acts to complete and have ready for delivery a share certificate), upon becoming the holder of a certificated share is entitled, without charge, to one certificate for all the certificated shares of a class registered in his name or, in the case of certificated shares of more than one class being registered in his name, to a separate certificate for each class of shares, unless the terms of issue of the shares provide otherwise.	
 	
(B)	Where a member (other than a person in respect of whom the Company is not required by the Acts to complete and have ready for delivery a share certificate) transfers part of his shares comprised in a certificate he shall be entitled, without charge, to one certificate for the balance of certificated shares retained by him.	
 	
(C)	The Company is not bound to issue more than one certificate for certificated shares held jointly by two or more persons. Delivery of a certificate to one joint holder shall be sufficient delivery to all joint holders.	
 	
(D)	Any certificate to which a person is entitled shall be delivered (i) in the case of issue within one month after allotment (or such longer period as the terms of issue shall provide) or (ii) in the case of a transfer of shares which are fully paid (as to nominal value and any premium) within five business days, or, where applicable, such other period as is from time to time permitted by the Listing Rules or the rules of the London Stock Exchange, after the lodgement with the Company of the relevant instrument of transfer of the shares, and (iii) in the case of a transfer of partly paid shares, within two months after the lodgement with the Company of the relevant instrument of transfer.	
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(E)	A certificate shall specify the number and class and the distinguishing numbers (if any) of the shares in respect of which it is issued and the amount paid up on the shares. It shall be issued under the Seal, which may be affixed to or printed on it, or in such other manner as the Board may approve, having regard to the terms of issue and, where applicable, the requirements of the Listing Rules and the rules of the London Stock Exchange.	
 	
 15.	Replacement certificates	
	 	
	If any certificate is worn-out, defaced, lost or destroyed, the Company may cancel it and issue a replacement certificate, subject to such terms as the Board may decide as to evidence and indemnity (with or without security) and to payment of any exceptional out-of-pocket expenses of the Company in investigating such evidence and preparing such indemnity or such security, but otherwise free of charge, and (if the certificate is worn-out or defaced) on delivery up of the old certificate.	
 	
 UNCERTIFICATED SHARES	
 	 	
 16.	Uncertificated shares	
 	 	
(A)	The Board may resolve that a class of shares is to become, or is to cease to be, a Participating Security.	
 	 	
(B)	Shares of a class shall not be treated as forming a separate class from other shares of the same class as a consequence of such shares being held in certificated or uncertificated form or of any provision in these Articles or the Uncertificated Securities Regulations applying only to certificated shares or to uncertificated shares.	
 	 	
(C)	Any share of a class which is a Participating Security may be changed from an uncertificated share to a certificated share and from a certificated share to an uncertificated share in accordance with the Uncertificated Securities Regulations.	
 	 	
(D)	These Articles apply to uncertificated shares of a class which is a Participating Security only to the extent that these Articles are consistent with the holding of such shares in uncertificated form, with the transfer of title to such shares by means of the Uncertificated System and with the Uncertificated Securities Regulations.	
 	 	
(E)	Any instruction given by means of an Uncertificated System as referred to in these Articles shall be a dematerialised instruction given in accordance with the Uncertificated Securities Regulations, the facilities and requirements of the Uncertificated System and the Operator’s rules and practices.	
 	 	
(F)	For any purpose under these Articles, the Company may treat a member’s holding of uncertificated shares and of certificated shares of the same class as if they were separate holdings, unless the Board otherwise decides.	
 	 	
(G)	Where the Company is entitled under the Acts, the Operator’s rules and practices, these Articles or otherwise to dispose of, forfeit, enforce a lien over or sell or otherwise procure the sale of any shares of a class which is a Participating Security which are held in uncertificated form, the Board may take such steps (subject to the Uncertificated Securities Regulations and to such rules and practices) as may be required or appropriate, by instruction by means of the Uncertificated System or otherwise, to effect such disposal, forfeiture, enforcement or sale including by (without limitation):	
	 	 	
	(i)	requesting or requiring the deletion of any computer-based entries in the Uncertificated System relating to the holding of such shares in uncertificated form;	

	 	 	
	(ii)	altering such computer-based entries so as to divest the holder of such shares of the power to transfer such shares other than to a person selected or approved by the Company for the purpose of such transfer;	

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 	(iii)	requiring any holder of such shares, by notice in writing to him, to change his holding of such uncertificated shares into certificated form within any specified period;	
 	
 	(iv)	requiring any holder of such shares to take such steps as may be necessary to sell or transfer such shares as directed by the Company;	
 	
 	(v)	otherwise rectify or change the Register of Members in respect of any such shares in such manner as the Board considers appropriate (including, without limitation, by entering the name of a transferee into the Register of Members as the next holder of such shares); and/or	
 	
 	(vi)	appointing any person to take any steps in the name of any holder of such shares as may be required to change such shares from uncertificated form to certificated form and/or to effect the transfer of such shares (and such steps shall be effective as if they had been taken by such holder).	
 	
LIEN ON SHARES	
 	
 17.	Company’s lien on shares not fully paid	
 	
(A)	The Company has a first and paramount lien on each issued share (not being a share which is fully paid up as to nominal value and any premium) for all amounts payable to the Company (whether actually or contingently and whether presently payable or not) in respect of such share.	
 	
(B)	The lien applies to all dividends on any such share and to all amounts payable by the Company in respect of such share. It also applies notwithstanding that:	
 	
 	(i)	the Company may have notice of any equitable or other interest of any person in any such share; or	
 	
 	(ii)	any such amounts payable may be the joint debts and liabilities of both the holder of the share and one or more other persons.	
 	
(C)	The Board may resolve that any share be exempt wholly or in part from this Article.	
 	
 18.	Enforcement of lien by sale	
 	 	
(A)	For the purpose of enforcing the Company’s lien on any shares, the Board may sell them in such manner as it decides if an amount in respect of which the lien exists is presently payable and is not paid within fourteen clear days following the giving of a notice to the holder (or any person entitled by transmission to the shares) demanding payment of the amount due within such fourteen clear day period and stating that if the notice is not complied with the shares may be sold.	
 	 	
(B)	To give effect to such sale the Board may:	
	 	 	
	(i)	in the case of certificated shares, authorise a person to execute an instrument of transfer of shares in the name and on behalf of the holder of, or the person entitled by transmission to, them to the purchaser or as the purchaser may direct; and	

			
	 	 	
	(ii)	in the case of uncertificated shares, exercise any power conferred on it by Article 16(I) ( uncertificated shares ) to effect a transfer of the shares.	

(C)	The purchaser will not be bound to see to the application of the purchase monies in respect of any such sale. The title of the transferee to the shares will not be affected by any irregularity in or invalidity of the proceedings connected with the sale or transfer. Any instrument or exercise referred to at paragraph (B) of this Article shall be effective as if it had been executed or exercised by the holder of, or the person entitled by transmission to, the shares to which it relates.	
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 19.	Application of sale proceeds	
	 	
	The net proceeds of any sale of shares subject to the Company’s lien under these Articles (after payment of the costs and expenses of sale) shall be applied in or towards satisfaction of the amount then due to the Company in respect of the shares. Any balance shall be paid to the original holder of, or the person entitled (but for such sale) by transmission to, the shares on (in the case of certificated shares) surrender to the Company for cancellation of the certificate for such shares and (in all cases) subject to the Company having a lien on such balance on the same basis as applied to such shares for any amount not presently payable as existed on such shares before the sale.	
 	
 CALLS	
 	 	
 20.	Calls	
 	 	
(A)	Subject to the terms on which shares are allotted, the Board may make calls on the members (and any persons entitled by transmission) in respect of any amounts unpaid on their shares (whether in respect of nominal value or premium) and not payable on a date fixed by or in accordance with the allotment terms. Each such member or other person shall pay to the Company the amount called, subject to receiving at least fourteen clear days’ notice specifying when and where the payment is to be made, as required by such notice.	
 	 	
(B)	A call may be made payable by instalments. A call shall be deemed to have been made when the resolution of the Board authorising it is passed. A call may, before the Company’s receipt of any amount due under it, be revoked or postponed in whole or in part as the Board may decide. A person upon whom a call is made will remain liable for calls made on him notwithstanding the subsequent transfer of the shares in respect of which the call was made.	
 	 	
 21.	Liability of joint holders	
 	
 	The joint holders of a share shall be jointly and severally liable to pay all calls in respect of it.	
 	
 22.	Interest	
 	
 	If the whole of the sum payable in respect of any call is not paid by the day it becomes due and payable, the person from whom it is due shall pay all costs, charges and expenses that the Company may have incurred by reason of such non-payment, together with interest on the unpaid amount, from the day it became due and payable until it is paid, at the rate fixed by the terms of the allotment of the share or in the notice of the call or, if no rate is fixed, at such rate, not exceeding ten per cent. per annum (compounded on a six monthly basis), as the Board shall determine. The Board may waive payment of such costs, charges, expenses or interest in whole or in part.	
 	
 23.	Differentiation	
 	
 	Subject to the allotment terms, the Board may make arrangements on or before the issue of shares to differentiate between the holders of shares in the amounts and times of payment of calls on their shares.	
 	
 24.	Payment in advance of calls	
 	 	
(A)	The Board may receive from any member (or any person entitled by transmission) all or any part of the amount uncalled and unpaid (whether as to nominal value or any premium) on the shares held by him (or to which he is entitled). The liability of each such member or other person on the shares to which such payment relates shall be reduced by such amount. The Company may pay interest on such amount from the time of receipt until the time when such amount would, but for such advance, have become due and payable at such rate not exceeding ten per cent. per annum (compounded on a six monthly basis) as the Board may decide.	
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(B)	No sum paid up on a share in advance of a call shall entitle the holder to any portion of a dividend subsequently declared or paid in respect of any period prior to the date on which such sum would, but for such payment, become due and payable.	
 	 	
25.	Restrictions if calls unpaid	
 	
 	Unless the Board decides otherwise, no member shall be entitled to receive any dividend or to be present or vote at any meeting, or adjourned meeting, or to exercise any right or privilege as a member until he has paid all calls due and payable on every share held by him, whether alone or jointly with any other person, together with interest and expenses (if any) to the Company.	
 	
 26.	Sums due on allotment treated as calls	
 	
 	Any sum payable in respect of a share on allotment or at any fixed date, whether in respect of the nominal value of the share or by way of premium or as an instalment of a call, shall be deemed to be a call. If such sum is not paid, these Articles shall apply as if it had become due and payable by virtue of a call.	
 	
 FORFEITURE	
 27 .	Forfeiture after notice of unpaid call	
 	 	
(A)	If a call or an instalment of a call remains unpaid after it has become due and payable, the Board may give to the person from whom it is due not less than fourteen clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any costs, charges and expenses that the Company may have incurred by reason of such non-payment. The notice shall state the place where payment is to be made and that, if the notice is not complied with, the shares in respect of which the call was made will be liable to be forfeited. If the notice is not complied with, any shares in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Board. The forfeiture will include all dividends and other amounts payable in respect of the forfeited shares which have not been paid before the forfeiture.	
 	 	
(B)	The Board may accept the surrender of a share which is liable to be forfeited in accordance with these Articles. All provisions in these Articles which apply to the forfeiture of a share also apply to the surrender of a share.	
 	 	
 28.	Notice after forfeiture	
 	 	
 	When a share has been forfeited, the Company shall give notice of the forfeiture to the person who was before forfeiture the holder of the share or the person entitled by transmission to the share. An entry that such notice has been given and of the fact and date of forfeiture shall be made in the Register of Members. No forfeiture will be invalidated by any omission to give such notice or make such entry.	
 	 	
 29.	Consequences of forfeiture	
 	 	
(A)	A share shall, on its forfeiture, become the property of the Company.	
 	 	
(B)	All interest in and all claims and demands against the Company in respect of a share and all other rights and liabilities incidental to the share as between its holder and the Company shall, on its forfeiture, be extinguished and terminate except as otherwise stated in these Articles or, in the case of past members, as provided by the Acts.	
 	 	
(C)	The holder of a share (or the person entitled to it by transmission) which is forfeited shall:	
 	 	
 	(i)	on its forfeiture cease to be a member (or a person entitled) in respect of it;	
 	
 	(ii)	if the share was a certificated share, surrender to the Company for cancellation the certificate for the share;	
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 	(iii)	remain liable to pay to the Company all monies payable in respect of the share at the time of forfeiture, with interest from such time of forfeiture until the time of payment, in the same manner in all respects as if the share had not been forfeited; and	
 	
 	(iv)	remain liable to satisfy all (if any) claims and demands which the Company might have enforced in respect of the share at the time of forfeiture without any deduction or allowance for the value of the share at the time of forfeiture or for any consideration received on its disposal.	
 	 	 	
 30.	Disposal of forfeited share	
 	 	 	
(A)	Subject to the Acts, a forfeited share may, within the period of three years from the forfeiture, be sold, re-allotted or otherwise disposed of, on such terms and in such manner as the Board may decide, either to the person who was before the forfeiture the holder or to any other person. If within such period of three years the share has not been sold, re-allotted or otherwise disposed of, the Board shall at the end of such period of three years cancel the share and shall diminish the amount of the authorised and issued share capital of the share so cancelled. Where for the purpose of its disposal a forfeited share is to be transferred to any transferee, the Board may:	
 	 	 	
 	(i)	in the case of certificated shares, authorise a person to execute an instrument of transfer of shares in the name and on behalf of their holder to the purchaser or as the purchaser may direct; and	
 	 	 	
 	(ii)	in the case of uncertificated shares, exercise any power conferred on it by Article 16(I) ( uncertificated shares ) to effect a transfer of the shares.	
 	 	 	
(B)	The purchaser will not be bound to see to the application of the purchase monies in respect of any such sale. The title of the transferee to the shares will not be affected by any irregularity in or invalidity of the proceedings connected with the sale or transfer. Any instrument or exercise referred to at paragraph (A) of this Article shall be effective as if it had been executed or exercised by the holder of, or the person entitled by transmission to, the shares to which it relates.	
 	 	 	
 31 .	Proof of forfeiture	
 	 	 	
 	A statutory declaration by a Director or the Secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it against all persons claiming to be entitled to the share. The declaration shall (subject to the execution of any necessary instrument of transfer) constitute good title to the share. The person to whom the share is disposed of shall not be bound to see to the application of the consideration (if any) given for it on such disposal. His title to the share will not be affected by any irregularity in, or invalidity of, the proceedings connected with the forfeiture or disposal.	
 	 	 	
 UNTRACED MEMBERS	
 	 	 	
 32.	Sale of shares	
 	 	 	
(A)	The Company may sell at the best price reasonably obtainable any share of a member, or any share to which a person is entitled by transmission, if:	
 	 	 	
 	(i)	during the period of twelve years prior to the date of the publication of the advertisements referred to in this paragraph (A) (or, if published on different dates, the earlier or earliest of them):	
 	 	 	
 	 	(a)	no cheque, warrant or money order in respect of such share sent by or on behalf of the Company through the post in a pre-paid envelope addressed to the member or to the person entitled by transmission to the share, at his address in the Register of Members or other address last known to the Company, has been cashed; and	
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 	 	(b)	no cash dividend payable on the shares has been satisfied by the transfer of funds to a bank account of the member (or person entitled by transmission to the share) or by transfer of funds by means of the Uncertificated System,	
 	
 	 	and the Company has received no communication (whether in writing or otherwise) in respect of such share from such member or person, provided that during such twelve year period the Company has paid at least three cash dividends (whether interim or final) in respect of shares of the class in question and no such dividend has been claimed by the person entitled to such share;	
 	
 	(ii)	on or after the expiry of such twelve year period the Company has given notice of its intention to sell such share by advertisements in a national newspaper published in England and in a newspaper circulating in the area in which the address in the Register of Members or other last known address of the member or the person entitled by transmission to the share or the address for the service of notices on such member or person notified to the Company in accordance with these Articles is located;	
 	
 	(iii)	such advertisements, if not published on the same day, are published within thirty days of each other;	
 	
 	(iv)	during a further period of three months following the date of publication of such advertisements (or, if published on different dates, the date on which the requirements of this paragraph (A) concerning the publication of newspaper advertisements are met) and prior to the sale the Company has not received any communication (whether in writing or otherwise) in respect of such share from the member or person entitled by transmission; and	
 	
 	(v)	the Company has informed the UKLA of its intention to make such sale, if shares of the class concerned are listed on the Official List of the UKLA.	
 	 	 	 	
(B)	If during such twelve year period, or during any subsequent period ending on the date when all the requirements of paragraph (A) of this Article have been met in respect of any shares, any additional shares have been issued in respect of those held at the beginning of, or previously so issued during, any such subsequent period and all the requirements of paragraph (A) of this Article have been satisfied with regard to such additional shares, the Company may also sell the additional shares.	
 	 	 	 	
(C)	To give effect to a sale pursuant to paragraph (A) or paragraph (B) of this Article, the Board may:	
 	 	 	 	
 	(i)	in the case of certificated shares, authorise a person to execute an instrument of transfer of shares in the name and on behalf of the holder of, or the person entitled by transmission to, them to the purchaser or as the purchaser may direct; and	
 	 	 	 	
 	(ii)	in the case of uncertificated shares, exercise any power conferred on it by Article 16(I) ( uncertificated shares ) to effect a transfer of the shares.	
 	 	 	 	
(D)	The purchaser will not be bound to see to the application of the purchase monies in respect of any such sale. The title of the transferee to the shares will not be affected by any irregularity in or invalidity of the proceedings connected with the sale or transfer. Any instrument or exercise referred to at paragraph (C) of this Article shall be effective as if it had been executed or exercised by the holder of, or the person entitled by transmission to, the shares to which it relates.	
 	 	 	 	
 33.	Application of sale proceeds	
 	 	 	 	
 	The Company shall account to the member or other person entitled to such share for the net proceeds of such sale by carrying all monies in respect of the sale to a separate account. The Company shall be deemed to be a debtor to, and not a trustee for, such member or other person in respect of such monies. Monies carried to such separate account may either be employed in the business of the Company or invested as the Board may think fit. No interest shall be payable to such member or other person in respect of such monies and the Company shall not be required to account for any money earned on them.	
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 TRANSFER OF SHARES	
 	 	
 34.	Form of transfer	
 	 	
(A)	Subject to these Articles, a member may transfer all or any of his shares:	
	 	 	
	(i)	in the case of certificated shares, by an instrument of transfer in writing in any usual form or in another form approved by the Board, which must be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid) by or on behalf of the transferee; or	

			
	 	 	
	(ii)	in the case of uncertificated shares, in accordance with the Uncertificated Securities Regulations . ; or	

	(iii)	in the case of an instrument of transfer expressed to be a transfer of shares denominated in sterling and bearing a date which is on or before 5 February 2007, such transfer shall be a transfer of the same number of Ordinary Shares as is specified in such transfer.	

			
 	 	
(B)	The transferor shall remain the holder of the share transferred until the name of the transferee is entered in the Register of Members in respect of it.	
 	 	
 35 .	Registration of a certificated share transfer	
 	 	
(A)	Subject to these Articles, the Board may, in its absolute discretion and without giving a reason, refuse to register the transfer of a certificated share or the renunciation of a renounceable letter of allotment unless it is:	
 	 	
 	(i)	in respect of a share which is fully paid up as to the nominal value and any premium;	
 	 	
 	(ii)	in respect of a share on which the Company has no lien;	
 	 	 	
 	(iii)	in respect of only one class of shares;	
 	 	 	
 	(iv)	in favour of a single transferee or renouncee or not more than four joint transferees or renouncees;	
 	 	 	
 	(v)	duly stamped (if required); and	
 	 	 	
 	(vi)	delivered for registration to the Registered Office or such other place as the Board may decide, accompanied by the certificate for the shares to which it relates (except in the case of a transfer of a share, for which a certificate has not been issued, by a person in respect of whom the Company is not required by the Acts to complete and have ready for delivery a share certificate, and except in the case of a renunciation) and any other evidence as the Board may reasonably require to prove the title to such share of the transferor or person renouncing and the due execution by him of the transfer or renunciation or, if the transfer or renunciation is executed by some other person on his behalf, the authority of such person to do so,	
 	 	
 	provided that the Board shall not refuse to register any transfer or renunciation of any certificated shares listed on the Official List of the UKLA on the ground that they are partly paid in circumstances where such refusal would prevent dealings in such shares from taking place on an open and proper basis.	
 	 	
(B)	If the Board refuses to register a transfer or renunciation pursuant to this Article, it shall, within two months after the date on which the transfer or renunciation was delivered to the Company, send notice of the refusal to the transferee or renouncee. An instrument of transfer or renunciation which the Board refuses to register shall (except in the case of suspected fraud) be returned to the person delivering it. All instruments of transfer which are registered may be retained by the Company.	
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 36.	Registration of an uncertificated share transfer	
 	 	 	 	
(A)	The transfer of title to any uncertificated share or the renunciation or transfer of any renounceable right of allotment of a share which is a Participating Security held in uncertificated form shall only be registered in accordance with the Uncertificated Securities Regulations. No such transfer or renunciation which is in favour of more than four persons jointly shall be registered unless the Board otherwise resolves.	
 	 	 	 	
(B)	If any such transfer or renunciation is not registered pursuant to the Uncertificated Securities Regulations or these Articles the Company shall, within two months after the date on which the instruction relating to such transfer or renunciation was received by the Company, send notice of the refusal to the transferee or renouncee.	
	 	 	 	
 37.	Renunciation of allotments	
	 	 	 	
	The Board may, at its discretion, recognise and give effect to a renunciation of the allotment of any share by the allottee in favour of some other person.	
	 	 	 	
 38.	No fee on registration	
	 	 	 	
	No fee shall be charged for the registration of a transfer of a share or the renunciation of a renounceable letter of allotment or other document relating to or affecting the title to any share.	
	 	 	 	
 39.	Closing of Register of Members	
	 	 	 	
	The registration of transfers of shares or of any class of shares may be suspended at such times and for such periods, not exceeding thirty days in any year, as the Board may decide (subject to the Uncertificated Securities Regulations in the case of any shares of a class which is a Participating Security).	
	 	 	 	
 TRANSMISSION OF SHARES	
	 	 	 	
 40.	On death	
	 	 	 	
	If a member dies, the survivors or survivor where he was a joint holder, or his personal representatives where he was the sole or only surviving holder, shall be the only persons recognised by the Company as having any title to his shares. Nothing in these Articles shall release the estate of a deceased holder from any liability in respect of a share which has been held by him solely or jointly.	
	 	 	 	
 41.	Election of person entitled by transmission	
	 	 	 	
(A)	A person becoming entitled to a share in consequence of the death or bankruptcy of a member, or of any other event giving rise to a transmission of such entitlement by operation of law, may, on such evidence as to his title being produced as the Board may require, elect either to become registered as the holder of such share or to have some person nominated by him so registered. If he elects to be registered himself, he shall give notice to the Company to that effect. If he elects to have some other person registered, he shall:	
	 	 	 	
	(i)	in the case of a certificated share, execute an instrument of transfer of such share to such person; and	
	 	 	 	
	(ii)	in the case of an uncertificated share, either:	
	 	 	 	
	 	(a)	procure that all appropriate instructions are given by means of the Uncertificated System to effect the transfer of such share to such person; or	
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 	 	(b)	change the uncertificated share to certificated form and then execute an instrument of transfer of such share to such person.	
 	 	 	 	
(B)	All the provisions of these Articles relating to the transfer of shares shall apply to the notice or instrument of transfer or instructions (as the case may be) referred to at paragraph (A) of this Article as if the notice were an instrument of transfer and as if the instrument of transfer were executed, or the instructions were given, by the member and the event giving rise to the transmission had not occurred.	
 	 	 	 	
(C)	The Board may give notice requiring a person to make the election referred to in paragraph (A) of this Article. If such notice is not complied with within sixty days, the Board may withhold payment of all dividends and other amounts payable in respect of the share until the election has been made.	
 	 	 	 	
 42.	Rights on transmission	
 	 	 	 	
 	A person becoming entitled by transmission to a share shall have the rights to which he would be entitled if he were the holder of the share, except that he shall not, before being registered as its holder, be entitled in respect of it to receive notice of, or to attend or vote at, any general meeting, any separate meeting of the holders of any class of shares or any adjourned meeting.	
 	 	 	 	
 GENERAL MEETINGS	
 	 	 	 	
 43.	Annual and extraordinary general meetings	
 	 	 	 	
(A)	The Company shall hold annual general meetings, which shall be convened by the Board, in accordance with the Acts.	
 	 	 	 	
(B)	All general meetings other than annual general meetings shall be called extraordinary general meetings.	
 	 	 	 	
 44.	Convening of extraordinary general meetings	
 	 	 	 	
 	The Board may convene an extraordinary general meeting whenever it thinks fit. An extraordinary general meeting shall also be convened on such requisition, or in default may be convened by such requisitionists, as provided by the Acts and no business shall be transacted at such meeting except that stated by the requisition or proposed by the Board. If there are not within the United Kingdom sufficient Directors to convene a general meeting, any Director may convene a general meeting.	
 	 	 	 	
 45.	Notice of general meetings	
 	 	 	 	
(A)	An annual general meeting, and an extraordinary general meeting convened for the passing of a special resolution, shall be convened by not less than twenty one clear days’ notice. All other extraordinary general meetings shall be convened by not less than fourteen clear days’ notice.	
 	 	 	 	
(B)	Subject to the Acts and notwithstanding that it is convened by shorter notice than that specified in paragraph (A) of this Article, a general meeting shall be deemed to have been duly convened if it is so agreed:	
 	 	 	 	
 	(i)	in the case of an annual general meeting, by all the members entitled to attend and vote at the meeting; and	
 	 	 	 	
 	(ii)	in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than 95 per cent. in nominal value of the shares giving that right.	
 	 	 	 	
(C)	The notice of meeting shall specify:	
 	 	 	 	
 	(i)	whether the meeting is an annual general meeting or an extraordinary general meeting;	
 	 	 	 	
 	(ii)	the place, the day and the time of the meeting;	
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 	(iii)	subject to the requirements (where applicable) of the Listing Rules and the rules of the London Stock Exchange, the general nature of the business to be transacted;	
 	
 	(iv)	if the meeting is convened to consider a special or extraordinary resolution, the intention to propose the resolution as such; and	
 	
 	(v)	with reasonable prominence, that a member entitled to attend and vote is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him and that a proxy need not also be a member.	
 	
(D)	Where the Company has given an electronic address in any notice of meeting, any document or information relating to proceedings at the meeting may be sent by electronic means to that address, subject to any conditions or limitations specified in the relevant notice of meeting.	
 	
(E)	The notice of meeting:	
 	
 	(i)	shall be given to the members (other than a member who, under these Articles or any restrictions imposed on any shares, is not entitled to receive notice from the Company), to the Directors and to the Auditors; and	
 	
 	(ii)	may specify a time by which a person must be entered on the Register of Members in order for such person to have the right to attend or vote at the meeting (subject to the Uncertificated Securities Regulations, if the Company is then a participating issuer for the purpose of the Uncertificated Securities Regulations).	
 	
(F)	The accidental omission to send or give a notice of meeting to or the failure to give notice due to circumstances beyond the Company's control to, or the non-receipt of notice of a meeting by, any person entitled to receive such notice shall not invalidate the proceedings at that meeting.	
 	 	
 46.	Quorum for general meeting	
 	 	 	
 	No business shall be transacted at a general meeting unless a quorum is present. Two persons entitled to vote on the business to be transacted, each being a member or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum. The absence of a quorum will not prevent the appointment of a chairman of the meeting. Such appointment shall not be treated as being part of the business of the meeting.	
 	 	
 47.	Procedure if quorum not present	
 	 	
(A)	If within five minutes (or such longer time not exceeding one hour as the chairman of the meeting may decide to wait) after the time appointed for the holding of the meeting a quorum is not present, or if during the meeting a quorum ceases to be present, the meeting:	
 	 	
 	(i)	if convened on the requisition of members, shall be dissolved; and	
 	 	 	
 	(ii)	in any other case shall stand adjourned to the same day in the next week or to such other day and at such other time and place as the chairman (or, in default, the Board) may decide.	
 	 	 	
(B)	If at such adjourned meeting a quorum is not present within five minutes after the time appointed for holding it one person entitled to vote on the business to be transacted, being a member or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum.	
 	 	 	
 48.	Chairman of general meeting	
 	 	 	
 	The chairman (if any) of the Board or, in his absence, the deputy chairman (if any) shall preside as chairman at a general meeting. If there is no chairman or deputy chairman, or if at a meeting neither is present within five minutes after the time appointed for the start of the meeting, or neither is willing to act, the Directors present shall select one of their number to be chairman of the meeting. If only one Director is present and willing to act, he shall be chairman of the meeting. In default, the members present in person and entitled to vote shall choose one of their number to be chairman of the meeting.	
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 49.	Rights of Directors and others to attend meetings	
 	
 	A Director (and any other person invited by the chairman of the meeting to do so) shall be entitled to attend and speak at a general meeting, at a separate meeting of the holders of any class of shares and at an adjourned meeting, whether or not he is a member.	
 	
 50.	Accommodation of members at meeting	
 	
 	If it appears to the chairman of the meeting that the meeting place specified in the notice convening the meeting, or appointed for the holding of an adjourned meeting, is inadequate to accommodate all members, proxies and representatives of corporations which are members who are entitled and wish to attend, the meeting will be duly constituted and its proceedings valid if the chairman is satisfied that adequate facilities are available to ensure that all such persons who are unable to be accommodated are able (whether at the meeting place or elsewhere):	
 	
 	(i)	to participate in the business for which the meeting has been convened;	
 	 	 	
 	(ii)	to hear and see all persons present who speak (whether by the use of microphones, loud-speakers, audio-visual communications equipment or otherwise); and	
 	 	 	
 	(iii)	to be heard and seen by all other persons present in the same way.	
 	
 51.	Security	
 	
 	In addition to any measures which the Board may be required to take due to the location or venue of the meeting, or adjourned meeting, the Board may make any arrangement and impose any restriction it considers appropriate and reasonable in the circumstances to ensure the security of a meeting including, without limitation, the searching of any person attending the meeting and the imposing of restrictions on the items of personal property that may be taken into the meeting place. The Board may refuse entry to, or eject from, a meeting a person who refuses to comply with any such arrangements or restrictions.	
 	
 52.	Power to adjourn	
 	 	 	
(A)	The chairman of the meeting may, with the consent of any meeting at which a quorum is present, and shall, if so directed by the meeting, adjourn the meeting from time to time (or indefinitely) and from place to place.	
 	 	 	
(B)	Without prejudice to any other power of adjournment which the chairman of the meeting may have under these Articles, at common law or otherwise, the chairman may, without the consent of the meeting, adjourn the meeting from time to time (or indefinitely) and from place to place if he decides that it is necessary or appropriate to do so in order to:	
 	 	 	
 	(i)	secure the proper and orderly conduct of the meeting; or	
 	 	 	
 	(ii)	give all persons entitled to do so an opportunity of attending the meeting; or	
 	 	 	
 	(iii)	give all persons entitled to do so a reasonable opportunity of speaking and voting at the meeting; or	
 	 	 	
 	(iv)	ensure that the business of the meeting is properly concluded or disposed of, including (without limitation) for the purpose of determining the result of a poll.	
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 53.	Notice of adjourned meeting	
 	
 	Whenever a meeting is adjourned for thirty days or more or indefinitely, at least seven clear days’ notice, specifying the place, the day and time of the adjourned meeting and the general nature of the business to be transacted, shall be given in the same manner as in the case of an original meeting. Except in these circumstances, no member shall be entitled to any notice of an adjournment or of the business to be transacted at any adjourned meeting.	
 	
 54.	Business of adjourned meeting	
 	
 	No business shall be transacted at any adjourned meeting other than the business which might properly have been transacted at the meeting from which the adjournment took place.	
 	
 VOTING	
 	
 55.	Voting at a general meeting	
 	
(A)	At a general meeting, or an adjourned meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands a poll is demanded by:	
 	
 	(i)	the chairman of the meeting; or	
 	
 	(ii)	at least three members having the right to vote at the meeting; or	
 	
 	(iii)	a member or members representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or	
 	
 	(iv)	a member or members holding shares conferring a right to vote on the resolution, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.	
 	
(B)	Unless a poll is so demanded and the demand is not withdrawn, a declaration by the chairman of the meeting that a resolution has been carried, or carried unanimously, or by a particular majority, or lost, or not carried by a particular majority, and an entry to that effect in the minutes of the meeting, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.	
 	
(C)	A demand for a poll may be withdrawn before the poll is taken, but only with the consent of the chairman of the meeting. A demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. If a poll is demanded before the declaration of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made.	
 	 	
 56.	Poll procedure	
 	 	
(A)	No poll shall be demanded on the election of a chairman of a meeting or (except by, or with the consent of, the chairman of the meeting) on any question of adjournment. A poll duly demanded on a question of adjournment shall be taken forthwith and a poll on any other matter shall be taken either forthwith or at such time and place, not being more than thirty days from the date of the meeting or adjourned meeting at which the poll was demanded, as the chairman shall direct. The chairman may direct the manner in which a poll shall be taken and may appoint scrutineers, who need not be members. No notice need be given of a poll not taken immediately if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least seven clear days’ notice shall be given specifying the time and place at which the poll is to be taken. The result of the poll shall be deemed to be the resolution of the meeting, or adjourned meeting, at which the poll was demanded.	
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(B)	The demand for a poll, except on a question of adjournment, shall not prevent the continuance of the meeting, or adjourned meeting, for the transaction of any business other than the question on which a poll has been demanded.	
 	
(C)	On a poll votes may be given in person or by proxy. A member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.	
 	
 57.	Votes of members	
 	 	
(A)	Subject to any rights or restrictions attaching to any shares:	
	 	 	
	(i)	on a show of hands every member who is entitled to vote on the relevant matter and who (being an individual) is present by proxy or in person or (being a corporation) is present by proxy or by a duly authorised representative who is not himself a member entitled to vote shall have one vote; and	

			
	 	 	
	(ii)	on a poll every member who is entitled to vote on the relevant matter shall have one vote for every share of which he is the holder.	

(B)	On a show of hands, where a person is entitled to vote in more than one capacity, that person is entitled only to one vote.	
 	 	
(C)	In the case of joint holders, the vote of the senior who tenders a vote shall be accepted to the exclusion of the votes of the other joint holders. Seniority shall be determined by the order in which the names of the holders stand in the Register of Members in respect of the joint holding.	
 	 	
(D)	In the case of a member in respect of whom an order has been made by any court or official having jurisdiction (whether in the United Kingdom or elsewhere) in matters concerning mental disorder or incapacity votes may be cast, on a show of hands or on a poll, by his guardian or other person duly authorised to act on his behalf and who may vote on a poll by proxy. Evidence to the satisfaction of the Board of the authority of the person claiming the right to vote shall be deposited at the Registered Office, or at such other place as is specified in accordance with these Articles for the deposit of instruments of proxy, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which the right to vote is to be exercised, and in default the right to vote shall not be exercisable.	
	 	
 58.	Chairman’s casting vote	
 	
 	In the case of an equality of votes, either on a show of hands or on a poll, the chairman of the meeting shall be entitled to a further or casting vote in addition to any other vote he may have or be entitled to exercise.	
 	
 59.	Voting restrictions on an outstanding call	
 	
 	Unless the Board decides otherwise, no member shall be entitled to be present or vote at any meeting either personally or by proxy until he has paid all calls due and payable on every share held by him whether alone or jointly with any other person, together with interest and expenses (if any) to the Company.	
 	
 60.	Proxy appointment	
 	 	
(A)	Subject to Article 60(B) below, the appointment of a proxy shall be in writing and in any usual form or in any other form which the Board may approve and shall be executed by or on behalf of the appointor which in the case of a corporation may be either under its common seal (or in any other manner permitted by law and having the same effect as if executed under seal) or under the hand of a duly authorised officer, attorney or other person. A member may appoint more than one proxy to attend on the same occasion, but only one proxy may be appointed in respect of any one share. The appointment of a proxy shall not preclude a member from attending and voting at the meeting or at any adjournment of it. A form of proxy shall, unless it provides to the contrary, be valid for any adjournment of the meeting to which it relates.	
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(B)	The directors may allow the appointment of a proxy to be sent or supplied in electronic form subject to any conditions or limitations as the directors may specify, and where the Company has given an electronic address in any instrument of proxy or invitation to appoint a proxy, any document or information relating to proxies for the meeting (including any document necessary to show the validity of, or otherwise relating to, the appointment of a proxy, or notice of the termination of the authority of a proxy) may be sent by electronic means to that address, subject to any conditions or limitations specified in the relevant notice of meeting.	
 	
(C)	The appointment of a proxy and any authority under which the instrument is executed or a copy of the authority certified notarially or in some other way approved by the Board) may:	
 	
 	(i)	in the case of an instrument in hard copy form be deposited at the Registered Office or at such other place in the United Kingdom as is specified in the notice convening the meeting, or in any instrument of proxy or any invitation to appoint a proxy sent out or made available by the Company in relation to the meeting, not less than 48 hours before the time appointed for holding the meeting, or adjourned meeting, at which the person named in the appointment of proxy proposes to vote;	
 	
 	(ii)	in the case of an appointment of proxy in electronic form (subject further to Articles 60(G) below), be received at the address specified in the notice convening the meeting or in any instrument of proxy or any invitation to appoint a proxy sent out or made available by the Company in relation to the meeting, not less than 48 hours before the time appointed for holding the meeting, or adjourned meeting, at which the person named in the appointment of proxy proposes to vote;	
 	
 	(iii)	in the case of a poll taken more than 48 hours after it was demanded, be deposited or received as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for taking the poll;	
 	
 	(iv)	where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded, be delivered at the meeting, or adjourned meeting, to the chairman of the meeting, the Secretary or any Director, prior to the commencement of the poll,	
 	
 	and an appointment of proxy which is not deposited, delivered or received in a manner so permitted shall be invalid (unless the Board, in its absolute discretion in relation to any such appointment, waives any such requirement and decides to treat such appointment as valid). The appointment of a proxy will not be valid after twelve months from its date or the date of its execution, except at an adjourned meeting or on a poll demanded at a meeting or at an adjourned meeting in cases where the meeting was originally held within twelve months from such date.	
 	 	
(D)	When two or more valid but differing appointments of proxy are delivered or received in respect of the same share for use at the same meeting and in respect of the same matter, the one which is last validly delivered or received (regardless of its date or of the date of its execution) shall be treated as replacing and revoking the other or others as regards that share. If the Company is unable to determine which appointment was last validly delivered or received, none of them shall be treated as valid in respect of that share.	
 	
(E)	An appointment of a proxy shall be deemed (unless the contrary is stated in it) to confer authority to demand or join in demanding a poll and to vote on a resolution or a motion or an amendment of a resolution put to, or other business which may properly come before, the meeting or meetings for which it is given or any adjournment of any such meeting, as the proxy thinks fit. Such appointment shall not confer any further right to speak at the meeting, or adjourned meeting, except with the permission of the chairman of the meeting.	
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(F)	The Board may at the expense of the Company send or make available instruments of proxy or invitations to appoint a proxy to the members by post, by electronic means or otherwise (with or without provision for their return by pre-paid post) for use at any general meeting, at any separate meeting of the holders of any class of shares, at any adjourned meeting or on any poll, either in blank or nominating as proxy any one or more of the Directors or any other person. If for the purpose of any meeting instruments of proxy or invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the Company’s expense, they shall be issued to all (and not to some only) of the members entitled to be sent notice of such meeting and to vote at it. The accidental omission, or the failure due to circumstances beyond the Company's control, to send or make available such an instrument of proxy or give such an invitation to, or the non-receipt thereof by, any member entitled to attend and vote at a meeting, or adjourned meeting, shall not invalidate the proceedings at that meeting.	
 	
(G)	Any instrument appointing a proxy may be delivered by facsimile transmitted to an electronic address (if any) specified by the Company pursuant to paragraph (C)(ii) of this Article, provided that:	
 	
 	(i)	the chairman of the meeting or the Secretary or any other person authorised by the Board determines in his sole discretion (such determination to be conclusive) that such facsimile has been transmitted in an acceptable manner (including that the copy of the original instrument of proxy contained in the facsimile is complete and is legible); and	
 	
 	(ii)	(in the event that the Board so resolves) the original instrument of proxy (of which the facsimile is a copy) is delivered to the place (but not electronic address) or person identified in paragraphs (C) (i), (iii) or (iv) (as applicable) of this Article by not later than one hour before the time appointed for the holding of the meeting or adjourned meeting or for the taking of the poll (as applicable).	
 	
 61.	Termination of proxy or corporate authority	
 	
 	A vote given or poll demanded by proxy or by the duly authorised representative of a corporation shall be valid notwithstanding the previous termination of the authority of the person voting or demanding a poll, unless notice of the termination was received by the Company at the Registered Office, or at such other place at which the instrument of proxy was duly deposited, or, where the appointment of proxy in electronic form may be duly received at least one hour before the time appointed for the holding of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of a poll not taken on the same day as the meeting or adjourned meeting) at least one hour before the time appointed for taking the poll.	
 	
 62.	Corporate representatives	
 	
 	A corporation which is a member may, by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any general meeting of the Company or at any separate meeting of the holders of any class of shares or at any adjourned meeting. Any person so authorised shall be entitled to exercise the same powers on behalf of the corporation (in respect of that part of the corporation’s holdings to which the authority relates) as the corporation could exercise if it were an individual member. The corporation shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorised is present at it. All references in these Articles to attendance and voting in person shall be construed accordingly. A Director, the Secretary or some other person authorised for the purpose by the Secretary may require the representative to produce a certified copy of the resolution so authorising him or such other evidence of his authority reasonably satisfactory to such person before permitting him to exercise his powers.	
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 63.	Amendment to resolutions	
 	 	
(A)	If an amendment shall be proposed to any resolution but shall in good faith be ruled out of order by the chairman of the meeting, any error in such ruling shall not invalidate the proceedings on the substantive resolution.	
 	 	
(B)	In the case of a resolution duly proposed as a special or extraordinary resolution, no amendment to it (other than a mere clerical amendment to correct a manifest error in the notice relating to it) may be considered or voted on. In the case of a resolution duly proposed as an ordinary resolution, no amendment to it (other than such a mere clerical amendment) may be considered or voted on unless, either at least 48 hours prior to the time appointed for holding the meeting or adjourned meeting at which such ordinary resolution is to be proposed, notice in writing of the terms of the amendment and intention to move it has been lodged at the Registered Office or the amendment has been recommended by the Board.	
 	 	
 64.	Objection to error in voting	
	 	
	No objection shall be raised to the qualification of any voter or to the counting of, or failure to count, any vote, except at the meeting or adjourned meeting at which the vote objected to is given or tendered or at which the error occurs. Any such objection or error shall be referred to the chairman of the meeting, who shall not be obliged to take it into account unless he considers it to be of sufficient magnitude to affect the decision of the meeting. The chairman’s decision on such matters shall be final and binding on all concerned.	
 	
 FAILURE TO DISCLOSE INTERESTS IN SHARES	
 	 	
 65.	Failure to disclose interests in shares	
 	 	
(A)	For the purpose of this Article:	
 	
 	(i)	" Exempt Transfer " means, in relation to shares held by a member:	
 	
 	 	(a)	a transfer pursuant to acceptance of a takeover bid (within the meaning of Part 28 of the 2006 Act) for the Company or in relation to any of its shares;	
 	
 	 	(b)	a transfer in consequence of a sale made through the London Stock Exchange or any stock exchange selected by the Company outside the United Kingdom on which any shares are normally traded; or	
 	
 	 	(c)	a transfer which is shown to the satisfaction of the Board to be made in consequence of a sale in good faith of the whole of the beneficial interest in the shares to a person who is unconnected with the member and with any other person appearing to be interested in the shares;	
 	
 	(ii)	" interested " is construed as it is for the purpose of section 793 of the 2006 Act;	
 	
 	(iii)	a person, other than the member holding a share, shall be treated as appearing to be interested in such share if the member has informed the Company that the person is or may be so interested, or if the Company (after taking account of information obtained from the member or, pursuant to a section 793 notice, from anyone else) knows or has reasonable cause to believe that the person is or may be so interested;	
 	
 	(iv)	reference to a person having failed to give to the Company information required by a section 793 notice, or being in default of supplying such information, includes references to his having:	
 	
 	 	(a)	failed or refused to give all or any part of such information; and	
 	
 	 	(b)	given information which he knows to be false in a material particular or recklessly given information which is false in a material particular; and	
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 	(v)	" transfer " means a transfer of a share or (where applicable) a renunciation of a renounceable letter of allotment or other renounceable document of title relating to a share.	
 	
(B)	Where notice is given by the Company under section 793 of the 2006 Act (a " section 793 notice " ) to a member, or another person appearing to be interested in shares held by such member, and the member or other person has failed in relation to any shares (" Default Shares ", which expression applies also to any shares issued after the date of the section 793 notice in respect of those shares and to any other shares registered in the name of such member at any time whilst the default subsists) to give the Company the information required within fourteen days after the date of service of the section 793 notice (and whether or not the section 793 notice specified a different period), unless the Board in its absolute discretion otherwise decides:	
 	
 	(i)	the member is not entitled in respect of the Default Shares to be present or to vote (either in person or by proxy) at a general meeting or at a separate meeting of the holders of a class of shares or at an adjourned meeting or on a poll, or to exercise other rights conferred by membership in relation to any such meeting or poll; and	
 	 	 	 	 	
 	(ii)	where the Default Shares represent at least 0.25 per cent. in nominal value of the issued shares of their class:	
 	 	 	 	 	
 	 	(a)	a dividend (or any part of a dividend) payable in respect of the Default Shares (except on a winding up of the Company) may be withheld by the Company, which shall have no obligation to pay interest on such dividend;	
 	 	 	 	 	
 	 	(b)	the member shall not be entitled to elect, pursuant to Article 130 ( scrip dividends ) or otherwise, to receive shares instead of a dividend; and	
 	 	 	 	 	
 	 	(c)	the Board may, in its absolute discretion, refuse to register the transfer of any Default Shares (subject, in the case of any uncertificated shares, to the Uncertificated Securities Regulations) unless:	
 	 	 	 	 	
 	 	 	(1)	the transfer is an Exempt Transfer; or	
 	 	 	 	 	
 	 	 	(2)	the member is not himself in default in supplying the information required and proves to the satisfaction of the Board that no person in default of supplying the information required is interested in any of the shares which are the subject of the transfer.	
 	
(C)	The sanctions under paragraph (B) of this Article shall cease to apply seven days after the earlier of:	
 	
 	(i)	receipt by the Company of notice of an Exempt Transfer, but only in relation to the shares transferred; and	
 	 	 	
 	(ii)	receipt by the Company, in a form satisfactory to the Board, of all the information required by the section 793 notice.	
 	
(D)	The Board may:	
 	
 	(i)	give notice in writing to any member holding Default Shares in uncertificated form requiring the member:	
 	
 	 	(a)	to change his holding of such shares from uncertificated form into certificated form within a specified period; and	
 	 	 	 	
 	 	(b)	then to hold such Default Shares in certificated form for so long as the default subsists; and	
 	 	 	 	
 	(ii)	appoint any person to take any steps, by instruction, by means of the Uncertificated System or otherwise, in the name of any holder of Default Shares as may be required to change such shares from uncertificated form into certificated form (and such steps shall be effective as if they had been taken by such holder).	
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(E)	Any notice referred to in this Article may be served by the Company upon the addressee either personally or by sending it through the post in a pre-paid letter addressed to the addressee at his usual or last known address.	
 	
(F)	Nothing herein contained shall prejudice or affect the right of the Company to apply to the court for an order under Section 793 of the 2006 Act notwithstanding that any section 793 notice on which such application is based required information on shorter notice than may be prescribed for any purpose by this Article.	
 	
(G)	The provisions of this Article are in addition and without prejudice to the provisions of the Acts and the Uncertificated Securities Regulations.	
 	
 APPOINTMENT, RETIREMENT AND REMOVAL OF DIRECTORS	
 	
 66.	Number of Directors	
 	
 	Unless and until otherwise determined by the Company by ordinary resolution, the number of Directors shall be not less than three and there shall be no maximum number.	
 	
 67.	Share qualification	
 	
 	The shareholding qualification for Directors may be fixed by the Company in general meeting, and unless and until so fixed no qualification shall be required. A Director may act before obtaining his qualification, but if not already qualified he shall obtain his qualification within two months from the date of his appointment.	
 	
 68.	Company’s power to appoint Directors	
 	
(A)	Subject to these Articles, the Company may by ordinary resolution appoint a person who is willing to act to be a Director, either to fill a vacancy or as an addition to the existing Directors, subject to the total number of Directors not exceeding any maximum number fixed in accordance with these Articles.	
 	 	
(B)	A resolution for the appointment of two or more persons as Directors by a single resolution at a general meeting, or adjourned meeting, shall be void unless a resolution that the resolution for appointment be proposed in such way has first been agreed to by the meeting without any vote being given against it.	
 	 	
 69.	Board’s power to appoint Directors	
 	 	
(A)	Without prejudice to the Company’s power to appoint a person to be a Director pursuant to these Articles, the Board shall have power at any time to appoint any person who is willing to act to be a Director, either to fill a vacancy or as an addition to the existing Board, subject to the total number of Directors not exceeding any maximum number fixed in accordance with these Articles.	
 	 	
(B)	Any Director so appointed shall, if still a Director, retire at the next annual general meeting after his appointment and shall, subject to Articles 75 and 77 if applicable, be eligible to stand for election as a Director at such meeting.	
 	 	
 70.	Appointment of executive Directors	
	 	
	Subject to the Acts, the Board may appoint one or more of its members to an executive office or other position of employment with the Company for such term (subject to the Acts) and on any other conditions the Board thinks fit. The Board may revoke, terminate or vary the terms of any such appointment, without prejudice to a claim for damages for breach of contract between the Director and the Company.	
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 71.	Eligibility of new Directors	
 	
 	No person, other than a Director retiring (by rotation or otherwise), shall be appointed or re-appointed a Director at any general meeting, or adjourned meeting, unless:	
 	
 	(i)	he is recommended for appointment by the Board; or	
 	
 	(ii)	not less than six nor more than forty-two days (inclusive, in each case, of the date on which the notice is given) before the date appointed for the meeting, or adjourned meeting, a notice executed by a member (other than the person to be proposed) qualified to vote at such meeting has been given to the Company at the Registered Office of the intention to propose such person for appointment or re-appointment, accompanied by a notice executed by that person of his willingness to be appointed or re-appointed and stating the information which would, if he were so appointed or re-appointed, be required to be included in the Company’s register of directors and, if applicable, be required under the Listing Rules to be notified to the Company Announcements Office (or such other place or person as the Listing Rules may specify) and/or that there is no, or no other, such information.	
 	
 72.	President and Vice President	
 	
 	The Board shall have power from time to time to appoint and remove any person as President or Vice President of the Company and may determine his duties and the period for which he is to hold office and may pay to such a person such remuneration as the Board may determine. A President or Vice President may if the Board so resolves attend and speak at meetings of the Directors but shall not be entitled to vote unless the person so appointed is also a Director of the Company.	
 	
 73.	Rotational retirement at annual general meeting	
 	 	
(A)	Each Director is subject to retirement by rotation in accordance with these Articles.	
 	 	
(B)	At each annual general meeting, any Director who was elected or last re-elected a Director at or before the annual general meeting held in the third calendar year before the current year shall retire by rotation and shall, subject to Article 77, be eligible to stand for re-election as a Director at such meeting.	
 	 	
 74.	Position of retiring Director	
 	 	
(A)	A Director who retires at an annual general meeting (whether by rotation or otherwise) and is not re-appointed or deemed to have been re-appointed, shall retain office until the end of the meeting or, if earlier, when a resolution is passed at the meeting not to fill the vacancy or to appoint another person in his place or a resolution to re-appoint him is put to the meeting and lost.	
 	 	
(B)	At any general meeting, or adjourned meeting, at which a Director retires in accordance with these Articles the Company may fill the vacancy and, if it does not do so, the retiring Director shall, if willing, be deemed to have been re-appointed unless it is expressly resolved not to fill the vacancy or a resolution for the re-appointment of the Director is put to the meeting and lost or such Director has attained any retiring age applicable to him as Director pursuant to these Articles.	
 	 	
 75.	Article deleted	
 	 	
 76.	Removal by ordinary resolution	
 	 	
 	The Company may, subject to the provisions of the Acts, by ordinary resolution:	
 	 	
 	(i)	remove any Director from office notwithstanding any provision of these Articles or of any contract between the Company and such Director (but without prejudice to any claim he may have for damages for breach of any such contract); and	
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	(ii)	appoint another person who is willing to act to be a Director in his place (subject to these Articles).	

 77.	Vacation of Director’s office	
 	 	
(A)	Without prejudice to the provisions in these Articles for retirement (by rotation or otherwise) the office of a Director shall be vacated if:	
	 	 	
	(i)	he resigns by notice in writing under his hand delivered to the Registered Office or tendered at a Board meeting but so that this shall not apply in the case of a Director who holds executive office under contractual terms which provide for the giving of notice by him and which are not complied with by the notice;	

			

	(ii)	he tenders his resignation at a Board meeting and the other Directors resolve to accept the same;	

	(iii)	he only held office as a Director for a fixed term and such term expires without his office being renewed;	

	(iv)	he ceases to be a Director by virtue of any provision of the Acts, is removed from office pursuant to these Articles or the Acts or becomes prohibited by law from being a Director;	

	 	 	
	(v)	he becomes bankrupt, has an interim receiving order made against him, makes any arrangement or compounds with his creditors generally (including by way of an arrangement under Part VIII of the Insolvency Act 1986) or applies to the court for an interim order in connection with a voluntary arrangement under any legislation relating to insolvency;	

			

	(vi)	an order is made by any court of competent jurisdiction on the ground (however formulated) of mental disorder for his detention or for the appointment of a guardian or receiver or other person to exercise powers with respect to his property or affairs or he is admitted to hospital in pursuance of an application for admission for treatment under any legislation relating to mental health and the Board resolves that his office be vacated;	

			

	 	 	
	(vii)	he is absent, without permission of the Board, from Board meetings for six consecutive months (whether or not an alternate Director attends in his place) and the Board resolves that his office be vacated;	

	 	 	
	(viii)	he is removed from office by notice in writing addressed to him at his address as shown in the Company’s register of directors and signed by all the other Directors (but so that such removal shall be without prejudice to any claim for damages which he may have for breach of contract against the Company);	

			
	 	 	
	(ix)	in the case of a Director who holds executive office, his appointment to such office is terminated or expires and the Board resolves that his office be vacated; or	

	 	 	
	(x)	in the case of a Director who is an employee of the Company, he ceases to be employed by the Company for any reason, other than in circumstances where the Board resolves that a Director who holds executive office continue in office as a director of the Company in a non-executive capacity.	

			
 	 	
(B)	A resolution of the Board declaring a Director to have vacated office pursuant to this Article shall be conclusive as to the fact and grounds of vacation stated in the resolution.	
 	
 ALTERNATE DIRECTORS	
 	 	
 78.	Appointment	
 	 	
(A)	A Director (other than an alternate Director) may appoint any other Director or any person approved for that purpose by the Board and willing to act, to be his alternate. Any such appointment shall be made by notice in hard-copy form delivered to the Secretary at the Registered Office or, if the Board has approved that form of communication for such purpose, given by electronic means from an electronic address given to the Company in writing by a Director for such purpose, or in any other manner approved by the Board.	
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(B)	The appointment of an alternate Director who is not already a Director shall:	
 	
 	(i)	require the approval of a majority of the Directors consisting of not less than two-thirds of all the Directors; and	
 	
 	(ii)	not be effective until his consent to act as an alternate Director in such form as the Board decides has been received at the Registered Office.	
 	
(C)	An alternate Director need not hold a share qualification and shall not be counted in reckoning any maximum or minimum number of Directors allowed by these Articles.	
 	
 79.	Responsibility	
 	
 	Every person acting as an alternate Director shall be an officer of the Company, shall alone be responsible to the Company for his own acts and defaults and shall not be deemed to be the agent of the Director appointing him.	
 	
 80.	Participation at Board meetings	
 	
 	An alternate Director shall (subject to his giving to the Company an address within the United Kingdom at which notices may be served on him) be entitled to receive notice of all meetings of the Board and all committees of the Board of which his appointor is a member and, in the absence from such meetings of his appointor, to attend and voteat such meetings and to exercise all the powers, rights, duties and authorities of his appointor (other than the power to appoint an alternate Director). A Director acting as alternate Director shall have a separate vote at Board meetings for each Director for whom he acts as alternate Director, but he shall count as only one for the purpose of determining whether a quorum is present.	
 	
 81.	Interests	
 	
 	An alternate Director shall be entitled to contract and be interested in and benefit from contracts or arrangements with the Company and to be repaid expenses and to be indemnified in the same way and to the same extent as a Director. However, he shall not be entitled to receive from the Company any fees for his services as alternate, except only such part (if any) of the fee payable to his appointor as such appointor may by notice in writing to the Company direct. Subject to this Article, the Company shall pay to an alternate Director such expenses as might properly have been paid to him if he had been a Director.	
 	
 82.	Termination of appointment	
 	
 	An alternate Director shall cease to be an alternate Director:	
 	
 	(i)	if his appointor revokes his appointment by notice in hard-copy form delivered to the Secretary at the Registered Office or in any other manner approved by the Board; or	
 	 	 	
 	(ii)	if his appointor ceases for any reason to be a Director, provided that if any Director retires but is re-appointed or deemed to be re-appointed at the same meeting, any valid appointment of the alternate Director which was in force immediately before his retirement shall remain in force; or	
 	 	 	
 	(iii)	if any event happens in relation to him which, if he were a Director, would cause his office as Director to be vacated.	
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 BOARD POWERS	
 	
 83.	Board powers	
 	
 	Subject to the Acts, the Company’s memorandum of association and these Articles and to any directions given by special resolution of the Company, the business of the Company shall be managed by the Board, which may exercise all the powers of the Company whether relating to the management of the business or not. No alteration of the memorandum of association or of these Articles nor any such direction shall invalidate any prior act of the Board which would have been valid if such alteration had not been made or such direction had not been given. The provisions in these Articles giving specific powers to the Board shall not limit the general powers given by this Article.	
 	
 84.	Directors below the minimum number	
 	
 	If the number of Directors is less than the minimum prescribed in accordance with these Articles, the remaining Director or Directors shall act only for the purposes of appointing an additional Director or Directors to make up such minimum or of convening a general meeting of the Company for the purpose of making such appointment. If there are no Director or Directors able or willing to act, any two members may summon a general meeting for the purpose of appointing Directors. Any additional Director so appointed shall hold office (subject to these Articles) only until the dissolution of the annual general meeting next following such appointment unless he is re-elected during such meeting.	
 	
 85.	Delegation to executive Directors	
 	
 	The Board may delegate to a Director holding executive office any of its powers, authorities and discretions for such time and on such terms and conditions as it shall think fit. The Board may grant to a Director the power to sub-delegate, and may retain or exclude the right of the Board to exercise the delegated powers, authorities or discretions collaterally with the Director. The Board may at any time revoke the delegation or alter its terms and conditions.	
 	
 86.	Delegation to committees	
 	
(A)	The Board may delegate any of its powers, authorities and discretions, for such time and on such terms and conditions as it shall think fit, to a committee consisting of one or more Directors and (if thought fit) one or more other persons. The Board may grant to the committee the power to sub-delegate, and may retain or exclude the right of the Board to exercise the delegated powers, authorities or discretions collaterally with the committee. The Board may at any time revoke the delegation or alter its terms and conditions or discharge the committee in whole or in part. Where a provision of the Articles refers to the exercise of a power, authority or discretion by the Board and that power, authority or discretion has been delegated by the Board to a committee, the provision shall be construed as permitting the exercise of the power, authority or discretion by the committee.	
 	 	
(B)	The Board’s power under these Articles to delegate to a committee:	
	 	 	
	(i)	includes (without limitation) the power to delegate the determination of any fee, remuneration or other benefit to be paid or provided to any Director; and	

	(ii)	is not limited by the fact that in some Articles but not others express reference is made to particular powers being exercised by the Board or by a committee.	

 87.	Registered office	
	 	
	The Registered Office shall be at such place in England as the Board shall from time to time appoint.	
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 88.	Local management	
 	
 	The Board may establish local or divisional boards, agencies or branch offices for managing the affairs of the Company in a specified locality, either in the United Kingdom or elsewhere, and may appoint persons to be members of a local or divisional board, agency or branch office and may fix their remuneration. The Board may delegate to a local or divisional board, agency or branch office any of its powers, authorities and discretions for such time and on such terms and conditions as it thinks fit. The Board may grant to such local or divisional board, agency or branch office the power to sub-delegate, may retain or exclude the right of the Board to exercise the delegated powers, authorities or discretions collaterally with the local or divisional board, agency or branch office and may authorise the members of a local or divisional board, agency or branch (or any of them) to fill a vacancy or to act despite a vacancy. The Board may at any time revoke or alter the terms and conditions of the appointment or delegation. Subject to the terms and conditions imposed by the Board, the proceedings of a local or divisional board, agency or branch office with two or more members are governed by those Articles that regulate the proceedings of the Board, so far as applicable.	
 	
 89.	Delegation to agents	
 	
 	The Board may, by power of attorney or otherwise, appoint a person to be the agent of the Company and may delegate to such person any of its powers, authorities and discretions for such purposes, for such time and on such terms and conditions (including as to remuneration) as it thinks fit. The Board may grant the power to sub-delegate and may retain or exclude the right of the Board to exercise the delegated powers, authorities or discretions collaterally with the agent. The Board may at any time revoke or alter the terms and conditions of the appointment or delegation.	
 	
 90.	Exercise of voting power	
 	
 	The Board may exercise or cause to be exercised the voting power conferred by shares in any other body corporate held or owned by the Company and any power of appointment able to be exercised by the Company, in any manner it thinks fit (including, without limitation, the exercise of the voting power or power of appointment in favour of the appointment of any Director as a director or other officer or employee of such company or in favour of the payment of remuneration to the directors, officers or employees of such company).	
 	
 91.	Provision for employees	
 	
 	The Directors are authorised to exercise (by resolution of the Directors) the power conferred upon the Company by subsection (1) of Section 719 of the 1985 Act to make provision out of the profits of the Company available for dividend, for the benefit of any persons employed or formerly employed by the Company or any of its subsidiaries, being provision in connection with the cessation or transfer to any person of the whole or part of the undertaking of the Company or that subsidiary.	
 	
 92.	Overseas registers	
 	
 	Subject to the Acts and the Uncertificated Securities Regulations, the Board may exercise the powers conferred on the Company with regard to the keeping of an overseas branch, local or other register in relation to members and may make and vary such regulations as it thinks fit concerning the keeping of any such register.	
 	
 93.	Associate directors	
 	
 	The Board may appoint any person (not being a Director) to any office or employment having a designation or title including the word "director " or attach to any existing office or employment with the Company such designation or title and may terminate any such appointment or the use of such designation or title. The inclusion of the word "director " in the designation or title of any such office or employment shall not imply that such person is, or is deemed to be, or is empowered in any respect to act as, a Director for any of the purposes of the Acts or these Articles.	
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 94.	Borrowing powers	
 	 	
(A)	The Board may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of its undertaking, property and uncalled capital and, subject to these Articles, to issue debentures and other securities. The Board shall restrict the borrowings of the Company and exercise all voting and other rights or powers of control exercisable by the Company in relation to its subsidiaries so as to secure (as regards subsidiaries so far as by such exercise they can secure) that, save with the previous sanction of an ordinary resolution, no money shall be borrowed if the aggregate principal amount outstanding of all Monies Borrowed by the Group (excluding intra-Group borrowings) then exceeds or would as a result of such borrowing exceed an amount equal to twice the aggregate of the Adjusted Share Capital and Consolidated Reserves.	
 	 	
(B)	For the purposes of this Article the Group means the Company and its subsidiaries for the time being.	
 	 	
(C)	In this Article, " Adjusted Share Capital and Consolidated Reserves " means the aggregate as certified by the Auditors of:	
	 	 	
	(i)	the amount paid up on the issued share capital of the Company; and	
	 	 	
	(ii)	the amount standing to the credit of the reserves of the Company and its subsidiaries including, without limitation, share premium account and capital redemption reserve and plus or minus (as the case may be) the credit or debit balance on profit and loss account	

			
	 	
	all as shown by the latest audited and consolidated balance sheet of the Company and its subsidiaries but after:	

	(iii)	adjusting for any variation in such paid up share capital and reserves and any variation in interest in subsidiaries since the date of the latest relevant audited balance sheet (for which purpose an issue or proposed issue of share capital for cash which has been underwritten shall be deemed paid up (as to nominal value and any premium) to the extent that the underwriters are liable therefor and that such capital will be paid up within six months from the date on which such underwriting becomes unconditional);	

			

			
	 	 	
	(iv)	deducting any amount distributed or proposed to be distributed out of the profits included therein except to the extent that such distribution is attributable to the Company or any of its subsidiaries or has been provided for in such consolidation;	

			
	 	 	
	(v)	excluding amounts attributable to minority interests in subsidiaries and amounts provided for deferred taxation and amounts attributable to goodwill and any other intangible asset;	

	 	 	
	(vi)	adding back an amount equal to the amount in respect of goodwill arising on consolidation that would have remained on such balance sheet if all goodwill arising on acquisitions by the Company or any of its subsidiaries at any time had (ignoring the fact, if applicable, that it had, in whole or in part, been written off against reserves or amortised) been carried on the balance sheet as an asset and had been amortised on a straight line basis over 20 years (or such longer period, as determined by the Board, as may be in accordance with generally accepted accounting practice in the United Kingdom); and	

			

			

	(vii)	making such other adjustments (if any) as the Auditors consider appropriate.	

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(D)	In this Article, " Monies Borrowed " when used in relation to the Company and its subsidiaries shall include any fixed or minimum premium payable on final redemption or repayment but shall not include any amounts for the time being owing by any such companies to any other of them and (subject to the foregoing) shall include the following except to the extent otherwise taken into account:	
 	 	 	
 	(i)	the principal amount of any debentures (as defined by the Acts) notwithstanding that the same may be or have been issued in whole or part for a consideration other than cash;	
 	 	 	
 	(ii)	the outstanding amount of acceptances (not being acceptances for the purchase or sale of goods in the ordinary course of trading) by any bank or accepting house under any acceptance credit granted to the Company or any of its subsidiaries;	
 	 	 	
 	(iii)	the nominal value of any issued share capital and the principal amount of any monies borrowed the redemption or repayment of which is wholly or partly guaranteed or secured or the subject of an indemnity given by the Company or any of its subsidiaries except in so far as the benefit of any such guarantee, security or indemnity is held by the Company or any of its subsidiaries and so that for this purpose the expression "guarantee" shall mean any undertaking whether as principal or secondary debtor to answer for the debt or default of another person;	
 	 	 	
 	but shall not include:	
 	 	 	
 	(iv)	amounts borrowed for the purposes of redeeming or repaying within six months of first being borrowed other monies borrowed by the Company or any subsidiary (otherwise than from the Company or any other subsidiary) pending their application for that purpose within such period; or	
 	 	 	
 	(v)	the proportion of the excess outside borrowings of a partly-owned subsidiary which corresponds to the proportion of its equity share capital held otherwise than by the Company or any other subsidiary and so that for this purpose the expression "excess outside borrowings" shall mean so much of the borrowings of such partly-owned subsidiary otherwise than from the Company and its other subsidiaries as exceeds the amounts if any borrowed from it by the Company and its other subsidiaries; or	
 	 	 	
 	(vi)	amounts borrowed by the Company or any subsidiary for the purpose of financing any contract to the extent that the price receivable under any such contract is guaranteed by the Export Credits Guarantee Department of the Department of Trade and Industry or other institution carrying on a similar business; or	
 	 	 	
 	(vii)	monies borrowed by a company becoming a subsidiary after the date of adoption of this Article and outstanding on the date it becomes a subsidiary but so that such non-inclusion shall only apply for a period of six months from the date of such company becoming a subsidiary; or	
 	 	 	
 	(viii)	amounts due in respect of any assets leased by the Company or any subsidiary including amounts due under finance leases; or	
 	 	 	
 	(ix)	monies borrowed by a subsidiary undertaking in its capacity as a trustee of any pension fund of any Group Undertaking.	
 	 	 	
 	and, in calculating Monies Borrowed, there shall be deducted:	
 	 	 	
 	(x)	an amount equal to the aggregate of:	
 	 	 	
 	 	(a)	all cash in hand and cash deposits repayable after three months or less with any bank or financial institution (not itself a Group Undertaking); and	
 	 	 	 	
 	 	(b)	investments which are readily convertible into known amounts of cash with notice of 48 hours or less, in each case beneficially owned, directly or indirectly, by a Group Undertaking and whether denominated in sterling or in a currency other than sterling; and	
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(E)	To calculate the amount of Monies Borrowed on a particular day, monies denominated or repayable in a currency other than sterling shall be converted for the purpose of calculating the sterling equivalent either:	
 	 	 	 	
 	(i)	at the rate of exchange specified in a forward purchase contract, currency option, back-to-back loan, swap or other arrangements taken out or entered into in order to reduce the risk associated with fluctuations in rates of exchange in respect of repayment of those monies (a " hedging agreement "); or	
 	 	 	 	
 	(ii)	if those monies were borrowed on or before the date of the consolidated balance sheet and repayment of those monies has not been covered by a hedging agreement, at the more favourable to the Company of:	
 	 	 	 	
 	 	(a)	the rate of exchange used for the conversion of that currency in the consolidated balance sheet; or	
 	 	 	 	
 	 	(b)	the middle-market rate of exchange quoted by a clearing bank specified by the Board at the close of business in London on the business day immediately preceding the day on which the calculation is made; or	
 	 	 	 	
 	(iii)	if those monies were borrowed after the date of the consolidated balance sheet and repayment of those monies has not been covered by a hedging   agreement, at the more favourable to the Company of:	
 	 	 	 	
 	 	(a)	the middle-market rate of exchange quoted by a clearing bank specified by the Board at the close of business in London on the date of the consolidated balance sheet; or	
 	 	 	 	
 	 	(b)	the middle-market rate of exchange quoted by a clearing bank specified by the Board at the close of business in London on the business day immediately preceding the day on which the calculation is made.	
 	 	 	 	
(F)	The Auditors’ written confirmation for the purpose of this Article as to the amount of the Adjusted Share Capital and Consolidated Reserves or the aggregate amount of Monies Borrowed shall be conclusive and binding on all concerned. The Board may act in reliance on a bona fide estimate of the amount of the Adjusted Share Capital and Consolidated Reserves or the aggregate amount of Monies Borrowed without having requested or obtained such written confirmation from the Auditors. If in consequence the limit on Monies Borrowed set out in this Article is inadvertently exceeded, the amount of Monies Borrowed equal to the excess may be disregarded for ninety days after the date on which by reason of a determination of the Auditors or otherwise the Board became aware that this situation has or may have arisen.	
 	 	 	 	
(G)	No lender or other person dealing with the Company shall be concerned to see or enquire whether the limit imposed by this Article is observed, and no debt or liability incurred in excess of such limit shall be invalid and no security given for the same shall be invalid or ineffectual except in the case of express notice to the lender or recipient of the security or person to whom the liability is incurred, at the time when the debt or liability was incurred or the security given, that the limit hereby imposed has been or was thereby exceeded.	
 	 	 	 	
 DIRECTORS’ REMUNERATION, EXPENSES AND BENEFITS	
 	 	 	 	
 95.	Fees	 	 	
 	 	 	 	
 	The Company shall pay to the Directors (but not alternate Directors) for their services as Directors such aggregate amount of fees as the Board decides (not exceeding £600,000 per annum or such larger amount as the Company may by ordinary resolution decide). The aggregate fees shall be divided among the Directors in such proportions as the Board decides or, if no decision is made, equally. A fee payable to a Director pursuant to this Article shall be distinct from any salary, remuneration or other amount payable to, or benefit provided for, him pursuant to other provisions of these Articles and shall accrue from day to day.	
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 96.	Expenses	
 	
 	A Director may also be paid all travelling, hotel and other expenses properly incurred by him in connection with his attendance at meetings of the Board or of committees of the Board or general meetings or separate meetings of the holders of any class of shares or adjourned meetings or otherwise in connection with the discharge of his duties as a Director, including (without limitation) any professional fees incurred by him (with the approval of the Board or in accordance with any procedures stipulated by the Board) in taking independent professional advice in connection with the discharge of such duties.	
 	
 97.	Remuneration of executive Directors	
 	
 	The salary or remuneration of a Director appointed to hold employment or executive office in accordance with the Articles shall be decided by the Board (including, for the avoidance of doubt, by the Board acting through a duly authorised Board committee) and may be of any description and, without limitation of the foregoing may be a fixed sum of money, or wholly or in part related to his performance and/or that of the Group or any part of it, may include admission to or continuation of membership of or participation in any scheme or fund instituted or established or financed or contributed to by the Company or any other Group Undertaking for the provision of pensions, life assurance or other benefits for employees and their dependants, or the payment of a pension or other benefits to him or his dependants on or after retirement or death, apart from membership of any such scheme or fund or as otherwise so decided, and may be in addition to, or instead of, a fee payable to him for his services as Director pursuant to these Articles.	
 	
 98.	Special remuneration	
 	
 	A Director who, at the request of the Board, goes or resides abroad, makes a special journey or performs a special service on behalf of or for the Company (including, without limitation, services as a chairman or deputy chairman of the Board, services as a member of any Board committee and services which the Board (including, for the avoidance of doubt, the Board acting through a duly authorised Board committee) decides is outside the scope of the ordinary duties of a Director) may be paid such reasonable additional remuneration (whether by way of salary, bonus, commission, percentage of profits or otherwise) and expenses as is decided by the Board or such a committee.	
 	
 99.	Pensions and other benefits	
 	
 	The Board may exercise all the powers of the Company to provide pensions or other retirement or superannuation benefits and to provide death or disability benefits or other allowances or gratuities (by insurance or otherwise) for a person who is or has at any time been a director or officer or employee of a company which is or was a Group Undertaking, a company which is or was allied to or associated with the Company or with a Group Undertaking or a predecessor in business of the Company or of a Group Undertaking (and for any member of his family, including a spouse or former spouse, or a person who is or was dependent on him) and also to establish and subsidise or subscribe to any institutions, associations, clubs or funds calculated to be for the benefit of, or to advance the interests and well-being of, any Group Undertaking or of any such person as aforesaid. For this purpose the Board may establish, maintain, subscribe and contribute to any scheme, trust or fund and pay premiums. The Board may arrange for this to be done by the Company alone or in conjunction with another person. A Director or former Director is entitled to receive and retain for his own benefit any pension or other benefit provided in accordance with this Article and is not obliged to account for it to the Company.	
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 DIRECTORS’ PROCEEDINGS	
 	
 100.	Board meetings	
 	
 	Subject to these Articles, the Board may regulate its proceedings as it thinks fit.	
 	
 101.	Notice of Board Meetings	
 	
 	A Director may, and the Secretary at the request of a Director shall, call a meeting of the Board. Notice of a Board meeting shall be deemed to be duly given to a Director if it is given to him personally or by word of mouth or sent in hard-copy form to his last known address within the United Kingdom or any other address within the United Kingdom given to the Company by him for such purpose or given in electronic form to an electronic address notified to the Company by the Director. It shall not be necessary to give notice of a Board meeting to a Director who is absent from the United Kingdom unless the Director has notified the Company in writing of an address in the United Kingdom or an electronic address at which notice of such meetings is to be given to him when he is absent from the United Kingdom. A Director may waive the requirement that notice of any Board meeting be given to him, either prospectively or retrospectively.	
 	
 102.	Quorum	
 	
 	Save as provided in Article 84, no business shall be transacted at any meeting of the Board unless a quorum is present. The quorum may be fixed by the Board and unless so fixed at any other number shall be two. An alternate Director who is not himself a Director shall, if his appointor is not present, be counted in the quorum. No Director or other person who is present at a meeting of the Board as an alternate Director shall be counted as two or more for quorum purposes unless at least one other Director or person duly appointed as an alternate Director is also present. A duly convened Board meeting at which a quorum is present shall be competent to exercise any and all of the authorities, discretions and powers vested in or exercisable by the Board.	
 	
 103.	Board chairman	
 	
 	The Board may appoint any Director to be, and may remove, a chairman and a deputy chairman of the Board. The chairman or, in his absence, the deputy chairman, shall preside at all Board meetings. If there is no chairman or deputy chairman, or if at a Board meeting neither the chairman nor the deputy chairman is present within five minutes after the time appointed for the meeting, or if neither of them is willing to act as chairman, the Directors present may choose any Director present to be chairman of the meeting.	
 	
 104.	Voting	
 	
 	Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a second or casting vote.	
 	
 105.	Telephone participation	
 	
 	A Director or his alternate Director may participate in a meeting of the Board or a committee of the Board through the medium of conference telephone, video conferencing or any other form of communication equipment if all persons participating in the meeting are able to hear and speak to each other throughout the meeting. A person participating in this way shall be deemed to be present in person at the meeting and shall be counted in a quorum and entitled to vote. Subject to the Acts, all business transacted in this way by the Board or a committee of the Board shall be deemed for the purposes of the Articles to be validly and effectively transacted at a meeting of the Board or a committee of the Board even if one Director only is physically present at any one place. The meeting shall be deemed to take place where the largest group of those participating is assembled or, if there is no such group, where the chairman of the meeting then is.	
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 106.	Written resolutions	
 	 	
(A)	A resolution in writing signed or approved by all the Directors for the time being entitled to receive notice of a Board meeting and in number not being less than a quorum shall be as valid and effective for all purposes as a resolution duly passed at a meeting of the Board.	
	 	
(B)	A resolution in writing signed or approved by all the members of a committee of the Board for the time being entitled to receive notice of the meetings of such committee and in number not being less than a quorum of such committee shall be as valid and effective for all purposes as a resolution duly passed at a meeting of the committee.	
 	 	
(C)	Such a resolution:	
 	 	
	(i)	may be signed or approved by facsimile transmission or telephone or electronic means from an electronic address given to the Company in writing for such purpose by the person signing or approving and subsequently confirmed by facsimile transmission or letter;	

			
	 	 	
	(ii)	may consist of several documents in the same form each executed by one or more of the Directors or members of the relevant committee;	
 	
	(iii)	need not be signed or approved by an alternate Director if it is signed or approved (in the manner specified in paragraph (i) above) by his appointor;	

	(iv)	if signed or approved by an alternate Director, need not also be signed or approved by his appointor; and	
	 	 	
	(v)	to be effective, need not be signed or approved by a Director who is prohibited by these Articles from voting on it, or by his alternate.	

 107.	Committee proceedings	
 	
 	Proceedings of committees of the Board shall be conducted in accordance with regulations prescribed by the Board (if any). Subject to those regulations, such proceedings shall be conducted in accordance with applicable provisions of these Articles regulating the proceedings of the Board. Where the Board resolves to delegate any of its powers, authorities and discretions to a committee and such resolution states that the committee shall consist of any one or more unnamed Directors, it shall not be necessary to give notice of a meeting of such committee to any Directors other than the Director or Directors who form the committee.	
 	
 108.	Minutes	
 	
(A)	The Board shall cause minutes to be made of:	
 	 	
	(i)	all appointments of officers and committees made by the Board and of any such officer’s remuneration; and	

	(ii)	the names of Directors present at every meeting of the Board, a committee of the Board, the Company or the holders of any class of shares or debentures, and all orders, resolutions and proceedings of such meetings.	

 	 	
(B)	Any such minutes, if purporting to be signed by the chairman of the meeting at which the proceedings were held or by the chairman of the next succeeding meeting or the Secretary, shall be prima facie evidence of the matters stated in them.	
 	 	
 109.	Validity of proceedings	
	 	
	All acts done in good faith by a meeting of the Board, or of a committee of the Board, or by a person acting as a Director, an alternate Director or a committee member shall, notwithstanding that it may be discovered afterwards that there was a defect in the appointment of any person so acting or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director, alternate Director or committee member and entitled to vote.	
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 INTERESTS OF DIRECTORS	
 110.	Permitted interests	
 	
 	Subject to the Acts and compliance with the next Article, a Director, notwithstanding his office:	
 	
 	(i)	may enter into or otherwise be interested in any contract, arrangement, transaction or proposal with the Company or in which the Company is otherwise interested, either in connection with his tenure of any office or place of profit or as vendor, purchaser or otherwise;	
 	
 	(ii)	may hold any other office or place of profit under the Company (except that of auditor) in conjunction with the office of Director and may act by himself or through his firm in a professional capacity for the Company, and in any such case on such terms as to remuneration and otherwise as the Board may arrange, either in addition to or in lieu of any remuneration provided for by any other Article;	
 	
 	(iii)	may be a director or other officer of, or employed by, or a party to any contract, arrangement, transaction or proposal with or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested or as regards which the Company has any powers of appointment; and	
 	
 	(iv)	shall not be liable to account to the Company for any profit, remuneration or other benefit realised by any such office, employment, contract, arrangement, transaction or proposal,	
 	
 	and no such contract, arrangement, transaction or proposal shall be avoided on the grounds of any such interest or benefit.	
 	
 111.	Disclosure of interests to Board	
 	
 	A Director who is in any way (directly or indirectly) interested in any contract or arrangement or any other proposal with the Company shall declare the nature of his interest at the meeting of the Board at which the question of entering into the contract, arrangement or proposal is first considered, if he knows his interest then exists or, in any other case, at the first meeting of the Board after he knows that he is or has become so interested. For the purposes of this Article a general notice given to the Board by a Director that he is to be regarded as having an interest (of the nature and extent specified in the notice) in any contract, arrangement or proposal in which a specified person or class of persons is interested shall be deemed to be a sufficient disclosure under this Article in relation to such contract, arrangement or proposal of the nature and extent so specified.	
 	
 112.	Interested Director not to vote or count for quorum	
 	
 	A Director shall not vote on, or be counted in the quorum in relation to, any resolution of the Board or of a committee of the Board concerning any contract or arrangement or any other proposal to which the Company is or is to be a party and in which he has an interest which is to his knowledge a material interest (otherwise than by virtue of his interests in shares or debentures or other securities of, or otherwise in or through, the Company), other than a resolution:	
 	
 	(viii)	relating to the giving of any security, guarantee or indemnity to him in respect of money lent or obligations incurred by him or by any other person at the request of or for the benefit of a Group Undertaking;	
 	
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 	(ix)	relating to the giving of any security, guarantee or indemnity in respect of a debt or obligation of a Group Undertaking for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security;	
 	
 	(x)	relating to, or in the context of, an offer of securities by a Group Undertaking in which he is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting or placing of which he is to participate;	
 	
 	(xi)	relating to a transaction or arrangement with any other company in which he is interested, directly or indirectly, provided that he is not the holder of or beneficially interested in one per cent or more of any class of the equity share capital of that company (or of any other company through which his interest is derived) and not entitled to exercise one per cent or more of the voting rights available to members of the relevant company (and for the purpose of calculating the said percentage there shall be disregarded any shares held by the director as a bare or custodian trustee and in which he has no beneficial interest, and any shares comprised in any authorised unit trust scheme in which the director is interested only as a unit holder);	
 	
 	(xii)	relating to an arrangement for the benefit of employees of any Group Undertaking which does not award him any privilege or benefit not generally awarded to the employees to whom such arrangement relates; or	
 	
 	(xiii)	concerning insurance which the Company proposes to maintain or purchase for the benefit of Directors or for the benefit of persons including Directors.	
 	
 113.	Director’s interest in own appointment	
 	
 	A Director shall not vote or be counted in the quorum on any resolution of the Board or committee of the Board concerning his own appointment (including fixing or varying or recommending the terms of his appointment or its termination) as a holder of any office or place of profit with the Company or any body corporate in which the Company is interested. Where proposals are under consideration concerning the appointment (including fixing or varying or recommending the terms of appointment or the termination thereof) of two or more Directors to offices or places of profits with the Company or any body corporate in which the Company is interested, such proposals may be divided and a separate resolution considered in relation to each Director. In such case each of the Directors concerned (if not otherwise debarred from voting under these Articles) shall be entitled to vote (and be counted in the quorum) in respect of each resolution except that concerning his own appointment.	
 	
 114.	Conclusive rulings on Directors’ interests	
 	
(A)	If any question arises at any meeting as to the materiality of the interest of a Director (other than the chairman of the meeting) or as to the entitlement of any Director (other than the chairman) to vote or be counted in the quorum and such question is not resolved by his voluntarily agreeing to abstain from voting or being counted in the quorum, such question shall be referred to the chairman of the meeting. The chairman’s ruling in relation to such Director shall be conclusive and binding on all concerned (except in a case where the nature or extent of the interest of such Director, as known to him, has not been adequately disclosed to the meeting).	
 	
(B)	If any question arises at any meeting as to the materiality of the interest of the chairman of the meeting or as to his entitlement to vote or be counted in the quorum and such question is not resolved by his voluntarily agreeing to abstain from voting or being counted in the quorum, such question shall be decided by a resolution of the Directors or committee members present at the meeting (excluding the chairman), whose majority vote shall be conclusive and binding on all concerned (except in a case where the nature or extent of the interest of such chairman, as known to him, has not been adequately disclosed to the meeting).	
 	
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 115.	Connected persons	
 	
 	For the purposes of the provisions of these Articles concerning a Director’s interests in relation to the Company, the interest of a person who is for the purposes of the 1985 Act connected (within the meaning of section 346 of the 1985 Act) with a Director shall be (if known by the Director to be an interest of any such connected person) treated as the interest of the Director and, in relation to an alternate Director, the interest of his appointor shall be treated as the interest of the alternate Director in addition to an interest which the alternate Director otherwise has. This Article applies to an alternate Director as if he were a Director.	
 	
 116.	Suspension or relaxation of provisions concerning Directors’ interests	
 	
 	Subject to the Acts and, where applicable, to any relevant requirements of the Listing Rules and the London Stock Exchange, the Company may by ordinary resolution suspend, vary or relax any provision in these Articles concerning a Director’s interests in relation to the Company, either generally or in respect of any particular matter, or ratify any contract, arrangement or other proposal not authorised by reason of a contravention of any such provision.	
 	
 SECRETARY	
 117.	Secretary	
 	 	
(A)	Subject to the Acts, the Board shall appoint a Secretary and may appoint one or more persons to be a joint, deputy or assistant Secretary on such terms and conditions as it thinks fit. The Board may remove a person appointed pursuant to this Article from office and appoint another or others in his place.	
 	 	
(B)	Any provision of the Acts or of these Articles requiring or authorising a thing to be done by or to a Director and the Secretary shall not be satisfied by its being done by or to the same person acting both as a Director and as, or in the place of, the Secretary, but subject to this, anything required or authorised by the Acts or these Articles to be done by or to the Secretary may, if the office is vacant or there is for any other reason no Secretary capable of acting, be done by or to any assistant or deputy Secretary or, if there is no assistant or deputy Secretary capable of acting, by or to an officer of the Company authorised generally or specially for that purpose by the Board.	
 	
 SEALS AND DOCUMENT AUTHENTICATION	
 	 	
 118.	Application of Seal	
 	 	
(A)	Any Seal may be used only by the authority of the Board or of a committee of the Board. The Board may decide who is to sign an instrument to which the Seal is to be affixed either generally or in relation to a particular instrument or type of instrument. The Board may decide, either generally or in a particular case, that a signature may be dispensed with or affixed by mechanical means. Unless otherwise decided by the Board:	
 	
 	(i)	share certificates and certificates issued in respect of debentures or other securities to which the Seal is affixed (subject to the provisions of the relevant instrument) need not be signed or, if signed, a signature may be applied by mechanical or other means or may be printed; and	
 	
 	(ii)	every other instrument to which the Seal is affixed shall be signed by one Director and by the Secretary or a second Director.	
 	
(B)	Every share certificate, share warrant or certificate issued in respect of debentures or other securities shall be issued either under the Seal (which may be affixed to it or printed on by mechanical or other means) or in such other manner as the Board, having regard to the terms of issue, the Acts and, where applicable, the Listing Rules and the rules of the London Stock Exchange, may authorise. All references in these Articles to the Seal shall be construed in relation to share certificates and share warrants accordingly.	
 	
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 119.	Official seal for use abroad	
 	
 	The Company may exercise the powers conferred by the Acts with regard to having an official seal for use abroad, and those powers shall be vested in the Board.	
 	
 120.	Directors or Secretary to authenticate or certify	
 	
 	A Director or the Secretary or any person appointed by the Board for the purpose may authenticate any documents affecting the constitution of the Company (including the memorandum of association and these Articles) and any resolutions passed by the Company or holders of a class of shares or the Board or any committee of the Board and any books, records, documents and accounts relating to the business of the Company, and may certify copies of or extracts from any such items as true copies or extracts.	
 	
 DIVIDENDS AND OTHER PAYMENTS	
 	
 121.	Declaration of dividends	
 	
 	Subject to the provisions of the Acts:	
 	
 	( i )	the Company may by ordinary resolution declare dividends in accordance with the respective rights of the members, but no dividends shall exceed the amount recommended by the Board; and	
 	 	 	
 	( ii )	the Directors may also from time to time declare and pay dividends on shares of any class of such amounts and on such dates and in respect of such periods as they think fit.	
 	
 122.	Board may pay interim and fixed dividends	
 	
 	Subject to the provisions of the Acts, the Board may declare and pay interim dividends if it appears to the Board that they are justified by the profits of the Company available for distribution. If the share capital is divided into different classes of shares, the Board may declare and pay interim dividends on shares which confer deferred or non-preferred rights with regard to dividend as well as on shares which confer preferential rights with regard to dividend, but no interim dividend shall be paid on shares carrying deferred or non-preferred rights if, at the time of payment, any preferential dividend is in arrears. The Board may also declare and pay at intervals settled by it any dividend payable at a fixed rate if it appears to it that the profits available for distribution justify the payment. Provided the Board acts in good faith the Directors shall not incur any liability to the holders of shares conferring preferred rights for any loss that they may suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred rights. Interim dividends and dividends payable at a fixed rate may be paid in any currency.	
 	
 123.	Entitlement to dividends	
 	
(A)	Except as otherwise provided by these Articles or the rights attached to shares:	
 	
 	(i)	a dividend shall be declared and paid according to the amounts paid up (otherwise than in advance of calls) on the nominal value of the shares on which the dividend is paid; and	
 	
 	(ii)	dividends shall be apportioned and paid proportionately to the amounts paid up on the nominal value of the shares during any portion or portions of the period in respect of which the dividend is paid, but if any share is issued on terms that it shall rank for dividend as from a particular date, it shall rank for dividend accordingly.	
 	
(B)	Except as otherwise provided by these Articles or the rights attached to shares:	
 	
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	(i)	a dividend may be paid in any currency or currencies decided by the Board; and	
	 	 	
	(ii)	the Company may agree with a member that any dividend declared or which may become due in one currency will be paid to the member in another currency,	

	 	
	for which purpose the Board may use any relevant exchange rate current at any time as the Board may select for the purpose of calculating the amount of any member’s entitlement to the dividend.	

 	 	
 124.	Payment methods	
 	 	
(A)	The Company may pay a dividend, interest or other amount payable in respect of a share in cash or by cheque, warrant or money order or by a bank or other funds transfer system or (in respect of any uncertificated share) through the Uncertificated System in accordance with any authority given to the Company to do so (whether in writing, through the Uncertificated System or otherwise) by or on behalf of the member in a form or in a manner satisfactory to the Board. Any joint holder or other person jointly entitled to a share may give an effective receipt for a dividend, interest or other amount paid in respect of such share.	
 	 	
(B)	The Company may send a cheque, warrant or money order by post:	
	 	 	
	(i)	in the case of a sole holder, to his registered address;	
	 	 	
	(ii)	in the case of joint holders, to the registered address of the person whose name stands first in the Register of Members in respect of the relevant share;	

	(iii)	in the case of a person or persons entitled by transmission to a share, as if it were a notice given in accordance with Article 141 ( notice to persons entitled by transmission ); or	

	 	 	
	(iv)	in any case, to a person and address that the person or persons entitled to the payment may in writing direct.	

(C)	Every cheque, warrant or money order shall be sent at the risk of the person or persons entitled to the payment and shall be made payable to the order of the person or persons entitled or to such other person or persons as the person or persons entitled may in writing direct. The payment of the cheque, warrant or money order shall be a good discharge to the Company. If payment is made by a bank or other funds transfer or through the Uncertificated System, the Company shall not be responsible for amounts lost or delayed in the course of transfer. If payment is made by or on behalf of the Company through the Uncertificated System:	
	 	 	
	(i)	the Company shall not be responsible for any default in accounting for such payment to the member or other person entitled to such payment by a bank or other financial intermediary of which the member or other person is a customer for settlement purposes in connection with the Uncertificated System; and	

			

	(ii)	the making of such payment in accordance with any relevant authority referred to in paragraph (A) above shall be a good discharge to the Company.	

(D)	The Board may:	
	 	 	
	(i)	lay down procedures for making any payments in respect of uncertificated shares through the Uncertificated System;	

	(ii)	allow any holder of uncertificated shares to elect to receive or not to receive any such payment through the Uncertificated System; and	
	 	 	
	(iii)	lay down procedures to enable any such holder to make, vary or revoke any such election.	

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(E)	The Board may withhold payment of a dividend (or part of a dividend) payable to a person entitled by transmission to a share until he has provided any evidence of his entitlement that the Board may reasonably require.	
 	
 125.	Deductions	
 	
 	The Board may deduct from any dividend or other amounts payable to any person in respect of a share all such sums as may be due from him to the Company on account of calls or otherwise in relation to any shares.	
 	
 126.	Interest	
 	
 	No dividend or other money payable in respect of a share shall bear interest against the Company, unless otherwise provided by the rights attached to the share.	
 	
 127.	Unclaimed dividends	
 	
 	All unclaimed dividends or other monies payable by the Company in respect of a share may be invested or otherwise made use of by the Board for the benefit of the Company until claimed. The payment of any unclaimed dividend or other amount payable by the Company in respect of a share into a separate account shall not constitute the Company a trustee in respect of it. Any dividend unclaimed after a period of twelve years from the date the dividend became due for payment shall be forfeited and shall revert to the Company.	
 	
 128.	Uncashed dividends	
 	
 	If, in respect of a dividend payable in respect of a share:	
 	
 	(i)	a cheque, warrant or money order is returned undelivered or left uncashed; or	
 	
 	(ii)	a transfer made by or through a bank transfer system and/or other funds transfer system(s) (including, without limitation, the Uncertificated System in relation to any uncertificated shares) fails or is not accepted,	
 	
 	on two consecutive occasions, or one occasion and reasonable enquiries have failed to establish another address or account of the person entitled to the payment, the Company shall not be obliged to send or transfer a dividend in respect of such share to such person until he notifies the Company of an address or account to be used for such purpose.	
 	
 129.	Dividends in kind	
 	
 	A general meeting, or adjourned meeting, declaring a dividend may, upon the recommendation of the Board, direct that it shall be satisfied wholly or partly by the distribution of assets (including, without limitation, paid up shares or securities of any other body corporate). Where any difficulty arises concerning such distribution, the Board may settle it as it thinks fit. In particular (without limitation), the Board may:	
 	
 	(i)	issue fractional certificates or ignore fractions;	
 	
 	(ii)	fix the value for distribution of any assets, and may determine that cash shall be paid to any member on the footing of the value so fixed in order to adjust the rights of members; and	
 	
 	(iii)	vest any assets in trustees on trust for the persons entitled to the dividend.	
 	
 130.	Scrip dividends	
 	
(A)	The Board may, with the prior authority of an ordinary resolution and subject to such terms and conditions as the Board may determine, offer any holders of Ordinary Shares the right to elect to receive Ordinary Shares, credited as fully paid, instead of cash in respect of the whole (or some part, to be determined by the Board) of any dividend specified by the ordinary resolution, subject to the Acts and to the provisions of this Article.	
 	
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(B)	An ordinary resolution under paragraph (A) of this Article may specify a particular dividend (whether or not declared), or may specify all or any dividends declared within a specified period, but such period may not end later than the beginning of the fifth annual general meeting next following the date of the meeting, or adjourned meeting, at which the ordinary resolution is passed.	
 	
(C)	The entitlement of each holder of Ordinary Shares to new Ordinary Shares shall be such that the relevant value of the entitlement shall be the cash amount, disregarding any tax credit, (or as near to such cash amount as the Board considers appropriate) that such holder would have received by way of dividend. For this purpose, " relevant value " shall be calculated by reference to the average of the middle market quotations for the Ordinary Shares on the London Stock Exchange as derived from the London Stock Exchange Daily Official List for the day on which the Ordinary Shares are first quoted "ex " the relevant dividend and the four subsequent dealing days, or in such other manner as may be determined by or in accordance with the ordinary resolution. A written confirmation or report by the Auditors as to the amount of the relevant value in respect of any dividend shall be conclusive evidence of that amount.	
 	
(D)	The Board may make any provision it considers appropriate in relation to an allotment made or to be made pursuant to this Article (whether before or after the passing or the ordinary resolution referred to in paragraph (A) of this Article), including (without limitation):	
 	
 	(i)	the giving of notice to holders of the right of election offered to them;	
 	 	 	
 	(ii)	the provision of forms of election and/or a facility and a procedure for making elections through the Uncertificated System (whether in respect of a particular dividend or dividends generally);	
 	 	 	
 	(iii)	determination of the procedure for making and revoking elections;	
 	 	 	
 	(iv)	the place at which, and the latest time by which, forms of election and other relevant documents must be lodged in order to be effective;	
 	 	 	
 	(v)	the disregarding or rounding up or down or carrying forward of fractional entitlements, in whole or in part, or the accrual of the benefit of fractional entitlements to the Company (rather than to the holders concerned); and	
 	 	 	
 	(vi)	the exclusion from any offer of any holders of Ordinary Shares where the Board considers that the making of the offer to them would or might involve the contravention of the laws of any territory or that for any other reason the offer should not be made to them.	
 	 	 	
(E)	The dividend (or that part of the dividend in respect of which a right of election has been offered) shall not be payable on Ordinary Shares in respect of which a valid election has been made ( the " elected Ordinary Shares "). Instead additional Ordinary Shares shall be allotted to the holders of the elected Ordinary Shares on the basis of allotment determined under this Article. For such purpose, the Board may capitalise out of any amount for the time being standing to the credit of any reserve or fund of the Company (including, without limitation, any share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution, a sum equal to the aggregate nominal value of the additional Ordinary Shares to be allotted on that basis and apply it in paying up in full the appropriate number of unissued Ordinary Shares for allotment and distribution to the holders of the elected Ordinary Shares on that basis.	
 	
(F)	The additional Ordinary Shares when allotted shall rank pari passu in all respects with the fully paid Ordinary Shares in issue on the record date for the dividend in respect of which the right of election has been offered, except that they will not rank for any dividend or other entitlement which has been declared, paid or made by reference to such record date.	
 	
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(G)	The Board may:	
 	
 	(i)	do all acts and things which it considers necessary or expedient to give effect to any such capitalisation, and may authorise any person to enter on behalf of all the members interested into an agreement with the Company providing for such capitalisation and incidental matters and any agreement so made shall be binding on all concerned;	
 	
 	(ii)	establish and vary a procedure for election mandates in respect of future rights of election and determine that every duly effected election in respect of any Ordinary Shares shall be binding on every successor in title to the holder of such shares; and	
 	
 	(iii)	terminate, suspend or amend any offer of the right to elect to receive Ordinary Shares in lieu of any cash dividend at any time and generally implement any scheme in relation to any such offer on such terms and conditions as the Board may from time to time determine and take such other action as the Board may deem necessary or desirable from time to time in respect of any such scheme.	
 	
 131.	Reserves	
 	
 	The Board may set aside out of the profits of the Company and carry to reserve such sums as it thinks fit. Such sums standing to reserve may be applied, at the Board’s discretion, for any purpose to which the profits of the Company may properly be applied and, pending such application, may either be employed in the business of the Company or be invested in such investments as the Board thinks fit. The Board may divide the reserve into such special funds as it thinks fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided as it thinks fit. The Board may also carry forward any profits without placing them to reserve.	
 	
 132.	Capitalisation of profits and reserves	
 	
 	The Board may, with the authority of an ordinary resolution:	
 	
 	(i)	subject to this Article, resolve to capitalise any undivided profits of the Company not required for paying any preferential dividend (whether or not available for distribution) or any sum standing to the credit of any reserve or fund of the Company (including, without limitation, any share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution;	
 	
 	(ii)	appropriate the sum resolved to be capitalised to the holders of Ordinary Shares in proportion to the nominal values of the shares (whether or not fully paid) held by them respectively which would entitle them to participate in a distribution of that sum if the shares were fully paid and the sum were then distributable and were distributed by way of dividend and apply such sum on their behalf either in or towards paying up the amounts, if any, unpaid on any shares held by them respectively, or in paying up in full unissued shares or debentures of the Company of a nominal value equal to that sum, and allot the shares or debentures credited as fully paid to those holders of Ordinary Shares or as the Board may direct, in those proportions, or partly in one way and partly in the other, but so that the share premium account, the capital redemption reserve and any profits or reserves which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued shares to be allotted to members credited as fully paid;	
 	
 	(iii)	resolve that any shares so allotted to any member in respect of a holding by him of any partly paid shares shall, so long as such shares remain partly paid, rank for dividend only to the extent that such partly paid shares rank for dividend;	
 	
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 	(iv)	make such provision by the issue of fractional certificates (or by ignoring fractions or by accruing the benefit of fractions to the Company rather than to the holders concerned) or by payment in cash or otherwise as the Board may determine in the case of shares or debentures becoming distributable in fractions;	
 	
 	(v)	authorise any person to enter on behalf of all the members concerned into an agreement with the Company providing for either:	
 	
 	 	(a)	the allotment to them respectively, credited as fully paid, of any further shares or debentures to which they are entitled upon such capitalisation; or	
 	
 	 	(b)	the payment up by the Company on behalf of such members, by the application thereto of their respective proportions of the reserves or profits resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares,	
 	
 	 	and so that any such agreement shall be binding on all such members; and	
 	
 	(vi)	generally do all acts and things required to give effect to such resolution.	
 	
 RECORD DATES	
 	
 133.	Board to fix date	
 	
 	Notwithstanding any other provision of these Articles but without prejudice to the rights attached to any shares and subject to the Acts and Article 137(D) ( 21 day record date period ) the Company or the Board may fix any date ( the  " record date ") as the date at the close of business (or such other time as the Board may decide) on which persons registered as the holders of shares or other securities shall be entitled to receipt of any dividend, distribution, interest, allotment, issue, notice, information, document or circular. A record date may be on or at any time before any date on which such item is paid, made, given or served or (in the case of any dividend, distribution, interest, allotment or issue) on or at any time before or after any date on which such item is recommended, resolved, declared or announced.	
 	
 ACCOUNTS	
 	
 134.	Access to accounting records	
 	
 	No member (other than an officer of the Company) shall have any right of inspecting any accounting record or book or other document of the Company unless he is authorised to do so by statute, by order of the court, by the Board or by an ordinary resolution. The Board shall from time to time determine whether and to what extent (if any) and at what times and places and under what conditions or regulations the accounting records and books of the Company or any of them, shall be open to the inspection of members.	
 	
 135.	Distribution of annual accounts	
 	
(A)	In respect of each financial year, a copy of the Company’s annual accounts, Directors’ report and Auditors’ report on those accounts shall be sent or supplied in accordance with Articles 137 to 141 to every member, every holder of debentures, and every other person who is entitled to receive notices of general meetings, in each case not less than twenty one clear days before the date of the meeting at which copies of those documents are to be laid in accordance with the Acts. This Article does not require copies of such documents to be sent to any share or to any person who is not entitled to receive notices of general meetings or of whose address the Company is unaware or to more than one of the joint holders of a share or debenture or of persons by transmission becoming jointly entitled to a share or debenture.	
 	
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(B)	Where permitted in accordance with the Acts, the Company may send a summary financial statement to any member in the same manner as described in Paragraph (A) of this Article, instead of or in addition to the documents referred to in paragraph (A) of this Article.	
 	
 NOTICES ETC	
 	
 136.	Form of notices	
 	
 	Any notice to be given to or by any person pursuant to these Articles (other than a notice calling a meeting of the Directors, in relation to which Article 101 shall apply) shall be given in writing.	
 	
 137.	Service on members	
 	
(A)	Any notice, document or information may (without prejudice to Article 138) be given, sent or supplied by the Company to any member either :	
 	
 	(i)	personally; or	
 	
 	(ii)	by sending it by post in a prepaid envelope addressed to the member at his registered address or postal address given pursuant to article 137(D), or by leaving it at that address, and any such notice or document to be given to or served on a member registered on an overseas branch register may be posted either from the United Kingdom or in the territory in which such branch register is maintained ; or	
 	
 	(iii)	by sending it in electronic form to a person who has agreed (generally or specifically) that the notice, document or information may be sent or supplied in that form (and has not revoked that agreement); or	
 	
 	(iv)	by any other means authorised in writing by the member concerned or (in the case of a notice to a member holding uncertificated shares) by transmitting the notice through the Uncertificated System (if permitted by, and subject to, the facilities and requirements of the Uncertificated System and subject to compliance with any relevant requirements of the Listing Rules and the London Stock Exchange: or	
 	
 	(v)	subject to the provisions of the Acts, by making it available on a website, provided that the requirements in article 137(B) are satisfied.	
 	
(B)	The requirements referred to in article 134(A)(v) are that:	
 	
 	(i)	the member has agreed (generally or specifically) that the notice, document or information may be sent or supplied to him by being made available on a website (and has not revoked that agreement), or the member has been asked by the Company to agree that the Company may send or supply notices, documents and information generally, or the notice, document or information in question, to him by making it available on a website and the Company has not received a response within the period of 28 days beginning on the date on which the Company's request was sent and the member is therefore taken to have so agreed (and has not revoked that agreement);	
 	
 	(ii)	the member is sent a notification of the presence of the notice, document or information on a website, the address of that website, the place on that website where it may be accessed, and how it may be accessed ("notification of availability");	
 	
 	(iii)	in the case of a notice of meeting, the notification of availability states that it concerns a notice of a company meeting, specifies the place, time and date of the meeting, and states whether it will be an annual general meeting; and	
 	
 	(iv)	the notice, document or information continues to be published on that website, in the case of a notice of meeting, throughout the period beginning with the date of the notification of availability and ending with the conclusion of the meeting and in all other cases throughout the period specified by any applicable provision of the Acts, or, if no such period is specified, throughout the period of 28 days beginning with the date on which the notification of availability is sent to the member, save that if the notice, document or information is made available for part only of that period then failure to make it available throughout that period shall be disregarded where such failure is wholly attributable to circumstances which it would not be reasonable to have expected the Company to prevent or avoid.	
 	
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(C)	In the case of joint holders of a share , :	
	 	 	
	(i)	it shall be sufficient for all notices, documents and other information to be given, sent or supplied to the j oint holder whose name stands first in the Register of Members in respect of the joint holding (the "first named holder") only; and	

	 	 	
	(ii)	the agreement of the first named holder that notices, documents and information may be given, sent or supplied in electronic form or by being made available on a website shall be binding on all the joint holders.	

(D)	If a member (or, in the case of joint holders, the first named holder) has a registered address outside the United Kingdom but has given to the Company an address in the United Kingdom at which notices may be sent to him or has an address which is registered on an overseas branch register or has an electronic address to which notices may be sent, he shall be entitled to have notices or documents sent to him at that address or (subject to paragraph (A) of this Article) that electronic address. Otherwise no such member (including any such joint holder) shall be entitled to receive any notice , document or information from the Company.	
 	 	
(E)	Any notice, document or information to be given to a member may be given by reference to the Register of Members as it stands at any time within the period of twenty-one days before the day that the notice or the document is despatched or (where and as applicable) within any other period permitted by, or in accordance with the requirements of, the Listing Rules, the London Stock Exchange, the Acts and the Uncertificated Securities Regulations. No change in the Register of Members after that time shall invalidate the giving or service of such notice or document or require the Company to give such item to or serve it on any other person.	
 	 	
(F)	If on three consecutive occasions notices , documents or information sent or supplied to a member have been returned undelivered, the member shall not be entitled to receive any subsequent notice, document or information until he has supplied to the Company (or its agent) a new registered address, or a postal address within the United Kingdom or (without prejudice to Article 134(4)) shall have informed the Company, in such manner as may be specified by the Company, of an electronic address. For the purposes of this Article, references to notices, documents or information include references to a cheque or other instrument of payment; but nothing in this article shall entitle the Company to cease sending any cheque or other instrument of payment for any dividend in respect of which the provisions of Article 128 shall apply.	
 	 	
(G)	For the avoidance of doubt, the provisions of this article 137 are subject to Article 45(F)	

(H)	The Company may at any time and at its sole discretion choose to give, send or supply notices, documents and information only in hard copy form to some or all members.	
 	 	
 138.	Notices by advertisement	
 	 	
(A)	Subject to the Acts, where, by reason of the suspension or curtailment of postal services in the United Kingdom the Company is unable effectively to give notice of a general meeting, such meeting may be convened by notice advertised in two national daily newspapers published in the United Kingdom. The Company shall send a copy of the notice to members in the same manner as it sends notices under Article 137 if at least seven clear days before such meeting the posting of notices to addresses throughout the United Kingdom again becomes practicable.	
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(B)	Subject to the Acts, any notice document or information given, sent or supplied by the Company to the members or any of them, not being a notice to which Article 138(A) applies, shall be sufficiently given, sent or supplied if given by advertisement in at least one national daily newspaper published in the United Kingdom.	
 	
 139.	Evidence of giving notice	
 	
(A)	Any notice, document or information given, sent or supplied by the Company to the members or any of them:	
 	 	 	
 	(i)	by post, shall be deemed to have been received 24 hours after the time at which the envelope containing the notice was posted unless it was sent by second class post or there is only one class of post in which case it shall be deemed to have been received 48 hours after it was posted. Proof that the envelope was properly addressed, prepaid and posted shall be conclusive evidence that the notice, document or information was sent;	
 	 	 	
 	(ii)	by advertisement, shall be deemed to have been received on the day on which the advertisement appears;	
 	
 	(iii)	by electronic means, shall be deemed to have been received 24 hours after it was sent. Proof that a notice, document or information in electronic form was sent in accordance with the Institute of Chartered Secretaries and Administrators' Guidance (in issue at the time the relevant notice, document or information was sent) shall be conclusive evidence that the notice, document or information was sent;	
 	
 	(iv)	by making it available on a website, shall be deemed to have been received on the date on which notification of availability on the website is deemed to have been received in accordance with this article or, if later, the date on which it is first made available on the website.	
 	
(B)	A notice or document not sent by post or given by electronic means but:	
 	
 	(i)	left at a registered address or address for giving notice in the United Kingdom shall be deemed to be given or served on the day it is left; and	
 	
 	(ii)	given through the Uncertificated System shall be deemed to be given or served when the Company or any System-Participant or other relevant person acting on the Company’s behalf sends the relevant Issuer-Instruction or other relevant message in respect of such notice or document.	
 	
(C)	A member present either in person or by proxy, or in the case of a corporate member by a duly authorised representative, at any meeting of the Company or of the holders of any class of shares shall be deemed to have received due notice of such meeting and, where required, of the purposes for which it was called.	
 	
 140.	Notice binding on transferees	
 	
 	A person who becomes entitled to a share by transfer, transmission or otherwise shall be bound by any notice in respect of that share (other than a notice given by the Company under section 793 of the 2006 Act) which, before his name is entered in the Register of Members, has been given to the person from whom he derives his title.	
 	
 141.	Notice to persons entitled by transmission	
 	
 	A notice, document or information may be given by the Company to, or served by it on, a person entitled by transmission to a share in consequence of the death or bankruptcy of a member or otherwise by sending or delivering it in any manner authorised by these Articles for the giving of notice to a member, addressed to that person by name, or by the title of representative of the deceased or trustee of the bankrupt or by any similar or equivalent description, at the address, if any, in the United Kingdom or to the electronic address supplied for that purpose by the person claiming to be so entitled. Until such an address or electronic address has been supplied, a notice or other document may be given or served in any manner in which it might have been given or served if the event giving rise to the transmission had not occurred. The giving of notice in accordance with this Article shall be sufficient notice to all other persons interested in the share.	
 	
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 DOCUMENT DESTRUCTION	
 	 	
 142.	Document destruction	
 	 	
(A)	The Company may destroy:	
	 	 	
	(i)	any share certificate or other evidence of title to shares which has been cancelled; at any time after one year from the date of such cancellation;	

	(ii)	any mandate for the payment of dividends or other amounts or any variation or cancellation of such mandate or any other instruction concerning the payment of monies or any notification of change of name or address; at any time after two years from the date such mandate, variation, cancellation or notification was recorded by the Company;	

			

	(iii)	any instrument or other evidence of transfer of shares or renunciation of an allotment of shares which has been registered; at any time after six years from the date of registration; and	

	 	 	
	(iv)	any other document on the basis of which an entry in the Register of Members is made; at any time after six years from the date an entry in the Register of Members was first made in respect of it,	

	 	
	and the Company may destroy any such document earlier than the relevant date, provided that a permanent record of the document is made (on microfilm, computer disc or otherwise) which is not destroyed before that date.	

 	 	
(B)	It shall be conclusively presumed in favour of the Company that every entry in the Register of Members purporting to have been made on the basis of a document destroyed in accordance with this Article was duly and properly made, that every instrument of transfer so destroyed was duly registered, that every share certificate so destroyed was valid and was duly cancelled and that every other document so destroyed was valid and effective in accordance with the recorded particulars in the records of the Company.	
 	 	
(C)	This Article shall apply only to the destruction of a document in good faith and without express notice of any claim (regardless of the parties to it) to which the document might be relevant.	
 	 	
(D)	Nothing in this Article imposes on the Company any liability in respect of the destruction of any such document otherwise than as provided for in this Article which would not attach to the Company in the absence of this Article.	
 	 	
(E)	References in this Article to the destruction of any document include references to the disposal of it in any manner.	

 WINDING UP	
 	 	
 143.	Division of assets	
 	 	
(A)	On a winding up of the Company, the Company’s assets available for distribution shall be divided among the members in proportion to the nominal amounts of capital paid up or credited as paid up on the shares held by them, subject to the terms of issue of or rights attached to any shares.	

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(B)	On a winding up of the Company (whether voluntary, under supervision or by the Court) the liquidator may, on obtaining any sanction required by law, divide among the members in kind the whole or any part of the assets of the Company, whether or not the assets consist of property of one kind or of different kinds. For this purpose the liquidator may set the value he deems fair on a class or classes of property, and may determine on the basis of such valuation and in accordance with the then existing rights of members how the division is to be carried out between members or classes of members. The liquidator may not, however, distribute to a member without his consent an asset to which there is attached a liability or potential liability for the owner.	
 	
(C)	Any return of capital to a holder in respect of the nominal amount paid up on an Ordinary Share on a winding up of the Company shall be paid in US dollars.	
 	
 INDEMNITY	
 	
 144.	Right to indemnity	
 	
 	Subject to the provisions of the Acts, the Company may indemnify any person who is or was a director, directly or indirectly (including by funding any expenditure incurred or to be incurred by him), against any loss or liability incurred by him in the actual or purported execution or discharge of his duties or exercise of his powers or otherwise in relation to or connection with the Company or any associated company. For the purposes of this article, “associated company” has the same meaning as in Section 309A of the 1985 Act.	
 	
 145.	Power to insure	
 	
 	Subject to the Acts, the Board may purchase and maintain insurance at the expense of the Company for or for the benefit of any person who is or was at any time a director or other officer (excluding the Auditors, unless and to the extent that the Board determines otherwise) or employee of the Company or any other body corporate which is or was a Group Undertaking or the holding company of the Company or in which the Company or any such holding company has or had an interest, whether direct or indirect, or which is or was in any way allied to or associated with the Company or who is or was at any time a trustee of any pension fund or employee benefits trust in which any employee of any such body corporate is or has been interested, indemnifying such person against any liability which may attach to or have attached to or may be or have been incurred and any loss or expenditure which has been or may be incurred by such person in respect of any act or omission or alleged act or omission in the actual or purported execution and/or discharge of his duties and/or in the exercise or purported exercise of his powers and/or otherwise in relation to his duties, powers or offices in relation to the Company or any such other body corporate, pension fund or employee benefits trust.	
 	
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Exhibit 4.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, ( “Agreement” ) is entered into as of February 19, 2008, by and among STERLING JEWELERS INC., a Delaware corporation (the “Company” ), SIGNET GROUP, plc ( “Signet” ) and TERRY BURMAN (the “Executive” ).
W I T N E S S E T H
WHEREAS , the Company is engaged in the business of operating a chain of retail jewelry stores in the United States (the “Business” ); and
WHEREAS , the Company is a wholly-owned subsidiary of Signet (Signet together with its subsidiaries, the "Signet Group” ); and
WHEREAS , the Company and the Executive entered into an Amended and Restated Employment Agreement, dated as of December 20, 2000, and as amended, with the Company (as amended to the date hereof, the “Prior Agreement” ); and
WHEREAS , the parties hereby desire to make certain additional amendments to the Prior Agreement and, in connection, therewith, to amend and restate the Prior Agreement;
NOW, THEREFORE , in consideration of the foregoing and of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows:
1.    Employment and Term. The Company hereby employs the Executive, and the Executive hereby accepts employment by the Company, in the capacities and on the terms and subject to the conditions set forth herein, which employment hereunder shall continue as hereinafter provided until terminated by either party by giving not less than one (1) year's notice in writing, such notice to include the day on which it was given (the “Term of Employment” ).
2.    Duties.
(a)     During the Term of Employment, the Executive shall serve as Chief Executive Officer of Signet (the “Group Chief Executive” ) and Chairman of the Board of Directors of the Company. As Group Chief Executive, the Executive shall be the most senior officer of Signet, with all supervisory authority and power over the other senior officers of Signet and any of its affiliates and with such other powers, duties and responsibilities with respect to the business of Signet as are customary to his offices and positions or as the Board of Directors of Signet (the “Board of Signet” ) may request consistent therewith, including, but not limited to, the development and presentation to the Board of Signet of strategy, medium term plans and budgets, compliance with legal and corporate governance requirements, recommendations on the appointment and remuneration of senior executives and management development. The Executive shall devote such time as may be necessary to perform the role of Group Chief Executive to the satisfaction of the Board of Signet.
(b)     For the purposes of Section 2(a) above, the Executive shall report through the Chairman of the Board of Signet to the Board of Signet.
(c)     In addition, while it is understood that the right to elect directors of Signet and the Company is by law vested in the shareholders of Signet and the Company, respectively, it is nevertheless contemplated, subject to such right, that the Executive shall, at all times during the Term of Employment, be a Director of Signet and Chairman of the Board

of Directors of the Company. The Executive shall serve as a Director of Signet and Chairman of the Board of the Company without any additional compensation other than as specified in this Agreement,
(d)     The Executive shall serve Signet and the Company faithfully and to the best of his ability in such capacities, devoting substantially all of his business time, attention, knowledge, energy and skills to such employment.
(e)     If so requested and elected, the Executive also shall serve during any part of the Term of Employment as any other officer or director of Signet's or the Company's subsidiaries without any additional compensation other than as specified in this Agreement.
(f)     The Executive shall be based at the Company's offices in Akron, Ohio and shall reside in the Akron, Ohio area, but the Executive shall travel as reasonably required in connection with the performance of his duties hereunder.
3.    Compensation and Benefits. As full and complete compensation to the Executive for his execution and delivery of this Agreement and performance of the services required hereunder, the Company shall pay, grant or provide the Executive during the Term of Employment, and the Executive agrees to accept, the following salary and other compensation and benefits (all such amounts to be calculated in United States dollars):
(a)      a base salary, payable in accordance with the Company's standard payroll practices for senior executive officers, of at Ieast $1,575,000 per annum, to be reviewed annually starting April 1, for a possible salary increase in accordance with Signet's practices for reviewing executive compensation ( “Base Salary” );
(b)     an annual short-term bonus, payable in accordance with certain performance goals relating to Signet Group plc and its subsidiaries (the “Group” ) to be established by the Remuneration Committee of the Board of Signet (the “Performance Goals” ), in an amount from 0% to 200% of Base Salary (the “Short Term Bonus” ). The Short-Term Bonus will be paid on the 30th of April following the end of Signet's applicable fiscal year;
(c)     a long-term bonus payable in accordance with the Signet Group plc 2000 Long-Tern Incentive Plan (the “LTIP” ) in an amount from 0% to 160% of Base Salary based on certain Performance Goals relating to the Group, it being understood that not less than 50% of the grants will be paid in cash and the remainder in ordinary shares (or American Depositary Shares representing ordinary shares) of Signet;
(d)     subject to the availability of options and the rules of the related share option plan, options to acquire ordinary shares (or American Depositary Shares representing ordinary shares) of Signet ( “Stock Options” ) with a market value for such shares at the time of grant aggregating up to a maximum of four times Base Salary granted at such time, in such tranches and on such other terms (including, without limitation, exercise price, vesting schedule and performance conditions) as determined by the Remuneration Committee of the Board of Directors of Signet and consistent with options granted to other executive directors of Signet at that time;

(e)     an annual contribution in an amount equal to 20% of Base Salary under the Company's Deferred Compensation Plan (the “Deferred Compensation Plan” ) shall be made;
(f)     medical and dental insurance for the Executive and his spouse in accordance with the benefit plans adopted by the Company for its senior executive officers, life insurance providing for a death benefit of an amount equal to the Executive's annual Base Salary and long-term disability insurance providing for a long-term disability benefit of $15,000 per month and otherwise on the terms and conditions in effect from time to time for the benefit of the Company's senior executive officers;
(g)     the use of an automobile, including automobile telephone, maintenance, repairs, insurance and all costs reasonably incident thereto, annual dues for the World Presidents' Organization and all of the costs incident to a full resident membership in one country club of the Executive's choice in the Akron, Ohio area, all of the foregoing in accordance with the policies and procedures of the Company as in effect from time to time for senior executive officers;
(h)     reimbursement for all reasonable business-related expenses incurred by the Executive, including first class travel for the Executive as required, it being understood that the Executive's spouse may accompany the Executive in first class travel for up to four business trips annually (one of which may be to a destination other than the United Kingdom), all in accordance with the policies and procedures of the Company as in effect from time to time for senior executive officers. If the Executive's spouse should otherwise accompany the Executive on a business trip in which both the Executive and spouse travel in business class, the Company will reimburse the Executive for the cost of a first class ticket for such trip, all other expenses relating to his spouse to be borne by the Executive;
(i)     reimbursement for all reasonably incurred out-of-pocket Iiving expenses in respect of the Executive's business trips to the United Kingdom for the purpose of performing his duties as Group Chief Executive of Signet;
(j)     five (5) weeks per calendar year of paid vacation in accordance with the policies and procedures of the Company as in effect from time to time for senior executive officers; and
(k)     such other perquisites and benefits as may be made available generally from time to time by the Company or Signet to its senior executive officers.
No payments or benefits provided under this Section 3 in respect of one taxable year shall affect the amounts payable in any other taxable year. No benefit or payment due to the Executive under this Section 3 shall be subject to liquidation or exchange for another benefit. Any reimbursements made to the Executive pursuant to this Agreement or otherwise shall be paid no later than the earlier of (i) the time period specified in the Company's established reimbursement policies and procedures, or (ii) the last day of the year following the year in which the expense was incurred,
4.    Termination
(a)      Permanent Disability. In the event of the permanent disability (as hereinafter defined) of the Executive during the Term of Employment, the Company shall have the right, upon written notice to the Executive, to terminate the Executive's employment

hereunder, effective upon the giving of such notice (or such later date as shall be specified in such notice). Upon such termination, the Company shall have no further obligations hereunder, except to pay the Executive his Base Salary and Short-Term Bonus (whether or not vested), prorated to the effective date of termination or provide the Executive any benefits to which the Executive may otherwise have been entitled but for the Executive's permanent disability prorated to the effective date of termination, and the Executive shall continue to have the obligations provided for in Sections 6 and 7 hereof. The Short-Term Bonus will be paid on the 30th of April following the end of Signet's applicable fiscal year. For purposes of this paragraph, “permanent disability” means any physical or mental disability or incapacity which renders the Executive incapable of performing the services required of him in accordance with his obligations under Section 2 for a period of three consecutive months or for shorter periods aggregating three months during any twelve-month period.
(b)      Death. In the event of the death of the Executive during the Term of Employment, this Agreement shall automatically terminate and the Company shall have no further obligations hereunder, except to pay the Executive's beneficiary or legal representative the Base Salary and Short-Term Bonus (whether or not vested) to which the Executive may otherwise have been entitled, prorated to the date of death. The Short-Term bonus will be paid on the 30 th of April following the end of Signet's applicable fiscal year.
(c)      Cause. The Company shall have the right, upon written notice to the Executive, to terminate the Executive's employment under this Agreement for Cause (as hereinafter defined), effective upon the giving of such notice (or such later date as shall be specified in such notice), and the Company shall have no further obligations hereunder, except to pay the Executive any amounts or provide the Executive any benefits to which the Executive may otherwise have been entitled prorated to the effective date of termination, and the Executive shall continue to have the obligations provided for in Sections 6 and 7 hereof.
For purposes of this Agreement, “Cause” means:
                         (i)      fraud, embezzlement or gross insubordination on the part of the Executive or material breach by the Executive of his obligations under Section 6 or 7 hereof;
                         (ii)     conviction of or the entry of a plea of nolo contendere by the Executive for any felony;
                         (iii)    a material breach of, or the willful failure or refusal by the Executive to perform and discharge, his duties, responsibilities or obligations under this Agreement (other than under Sections 6 and 7 hereof, which shall be governed by clause (i) above, and other than by reason of permanent disability or death) that is not corrected within 30 days following written notice thereof to the Executive by the Company, such notice to state with specificity the nature of the breach, failure or refusal; provided that if such breach or failure cannot reasonably be corrected within 30 days of written notice thereof, correction shall be commenced by the Executive within such period and may be corrected within a reasonable period thereafter; or
                         (iv)     any act of moral turpitude or misconduct by the Executive which, (a) is intended to result in substantial personal enrichment of the Executive at the expense of the Company, any member of the Signet Group, or their affiliates, or (b) has a material adverse impact on the business or reputation of the Company, any member of the Signet Group or their affiliates (such determination to be made by the Board of Directors in its reasonable judgment),

 
(d)      Without Cause. The Company shall have the right to terminate the Executive's employment under this Agreement without Cause and upon written notice, in which case the Executive's employment under this Agreement shall terminate on the date specified in such notice (except that the Executive shall continue to have the obligations provided for in Sections 6 and 7) and the Company shall have no further obligations hereunder, except (i) to pay the Executive his Short-Term Bonus (whether or not vested) for the fiscal year in which Executive's employment under his Agreement is terminated, prorated to the effective date of termination, to be paid on the 30th of April following the end of Signet's applicable fiscal year (the “Termination Year Short-Term Bonus” ) and (ii) to pay the Executive a lump sum on the effective date of termination equal to the following: (A) an amount equal to his annual Base Salary at the effective date of termination (the “Termination Base Salary” ), (B) an amount equal to the product of his Termination Base Salary and the current maximum percentage of Short-Term Bonus reduced by the average percentage, if any, that Short-Term Bonus has fallen below the maximum Short-Term Bonus percentage during the period of his employment with the Company, (C) an amount equal to 20% of his Termination Base Salary in lieu of the Company's obligation to contribute that amount under the Deferred Compensation Plan and (D) an amount equal to 5% of his Termination Base Salary in lieu of all other benefits for the notice period (items (ii)(A) to (ii)(D) collectively, the “Termination Payment” ), In such event, subject to the requirements of the relevant share option plan, the other terms of the specific grant of Stock Options and the discretion of the Remuneration Committee of Signet, the Executive shall be entitled to exercise such Stock Options outstanding at the date of termination.
(e)      Constructive Termination; Change of Control. If there is a Constructive Termination (as hereinafter defined) of the Executive, the Executive shall have the right by written notice to Signet within 14 days of such Constructive Termination to terminate his employment hereunder, in which event the Executive shall have no further obligations under this Agreement other than the obligations provided for in Sections 6 and 7 hereof, and the Company shall have no further obligations hereunder, except to pay the Executive his Termination Year Short-Term Bonus as provided in Section 4(d) above and a lump sum at the effective date of termination equal to the Termination Payment. In the event of a Constructive Termination by the Executive other than that contemplated by (iii)(d) of the succeeding paragraph and subject to the requirements of the relevant share option plan, the other terms of the specific grant of Stock Options and the discretion of the Remuneration Committee of Signet, the Executive shall be entitled to exercise such Stock Options outstanding at the date of termination. It is understood and agreed that, upon an event constituting a Constructive Termination, the Executive shall cooperate fully with the Company and Signet to effect the orderly transfer of the Executive's duties to another person or persons.
For purposes of this Agreement, a “Constructive Termination” means either (i) the removal of the Executive from the Board of Directors of the Company and the Board of Directors of Signet if the Executive is not reelected to the Board of Directors of the Company or the Board of Directors of Signet within seven days following the date of such removal, (ii) the removal of the Executive as Group Chief Executive of Signet or Chairman of the Company or (iii) the occurrence of any one of the following events upon a “Change of Control”: (a) the termination of the Executive without cause by a third party purchaser of

Signet or the Company, (b) the voluntary resignation by the Executive if the title or duties of the Executive are substantially diminished or changed without the Executive's consent within two years following the Change of Control, (c) the voluntary resignation by the Executive if the location of the Executive's employment is changed more than 50 miles without his consent, or (d) the Executive elects to leave the Company within six (6) months following the date of the Change of Control.
For purposes of this Agreement, a “Change of Control” means the occurrence of any one of the following events: (a) the sale of all or substantially all of the assets or capital stock of Signet or the Company to any unrelated third party; (b) the consummation of any merger or consolidation of Signet or the Company with an unrelated third party (it being understood that a capital reconstruction of Signet approved by the Board of Directors of Signet would not constitute such a transaction); or (c) a change in the Board of Directors of Signet so that during any period of two (2) consecutive years, the individuals who at the beginning of such period constitute the Board of Directors or any individuals who would be "Continuing Directors" (as hereinafter defined) cease for any reason to constitute at Ieast a majority thereof,
For purposes of this Agreement, “Continuing Directors” shall mean the directors of Signet in office on the date hereof and any successor to any such director and any additional director who, after the date hereof (i) was nominated or selected by a majority of the Continuing Directors in office at the time of his nomination or selection and (ii) is not an “affiliate” or “associate” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) at the time of his nomination or selection of, any person who is the beneficial owner, directly or indirectly, of securities representing ten percent (10%) or more of the combined voting power of Signet's outstanding securities then entitled ordinarily to vote for the election of directors.
(f)      LTIP. In connection with any termination of the Executive's employment under any provision of this Agreement, any payments due to the Executive under the LTIP will be governed by the applicable rules of the LTIP.
(g)      No Duty to Mitigate. In connection with any termination pursuant to Sections 4(d) or 4(e) above, the Executive shall not be obligated to seek alternative employment to reduce or offset the amounts payable thereunder and such amounts will not be reduced by an amounts received in connection with any alternative employment obtained by the Executive.
(h)      Termination Pursuant to Section 20. If Signet and/or the Company reduces, pursuant to the provisions of Section 20(a), or eliminates its directors and officers liability insurance that covers the Executive (during his employment by the Company or Signet or during his service as a member of the Board of the Company or the Board of Signet) such that the Executive does not have coverage which meets at least the £100 million aggregate coverage limits and £50 million Side A aggregate dedicated coverage limits as specified in Section 20(a), Executive shall be permitted, upon ninety (90) days' written notice to Signet and the Company, to terminate his employment hereunder. In the event of such termination, the Company shall have no further obligations hereunder, except (1) under Sections 4(f) 9(b), 20 and 21 and (2) to pay the Executive his Base Salary prorated to the effective date of his termination and his Termination Year Short-Term Bonus and to provide any benefits to which the Executive may otherwise have been entitled prorated to the effective date of his termination. In such event, Executive shall continue to have the obligations provided for in Section 6 hereof but shall not have the obligations provided for in Section 7. Any of the Executive's Stock Options outstanding as of the effective date of his

termination shall be treated under the terms of the relevant share option plan, and the Executive's entitlement to payment under the LTIP will be governed by the applicable Rules of the LTIP. For the avoidance of doubt, such termination shall not be considered a Constructive Termination and shall not entitle the Executive to any payments and benefits under any other subsection of this Section 4.
5.    Resignation Upon Termination . Upon the termination of the Executive's employment hereunder for any reason, the Executive agrees that he shall immediately resign from all offices and directorships held by him in Signet, the Company or any of their respective subsidiaries and agrees to execute any and all documents reasonably necessary to effect such resignations as requested by Signet, the Company or any of their respective subsidiaries.
6.    Confidentiality; Ownership of Developments .
(a)     From the date hereof, during the Term of Employment and for any time thereafter, the Executive shall keep secret and retain in strictest confidence and not divulge, disclose, discuss, copy or otherwise use or suffer to be used in any manner, except in connection with the Business of the Company and the businesses of Signet and of any of the subsidiaries or affiliates of Signet or the Company, any Protected Information in any Unauthorized manner or for any Unauthorized purpose (as such terms are hereinafter defined).
                (i)      “Protected Information” means trade secrets, confidential or proprietary information and all other knowledge, know-how, information, documents or materials owned, developed or possessed by Signet, the Company or any of the subsidiaries or affiliates of Signet or the Company, whether in tangible or intangible form, pertaining to the Business of the Company or the businesses of Signet and any of the subsidiaries or affiliates of Signet or the Company, including, but not limited to, research and development operations, systems, data bases, computer programs and software, designs, models, operating procedures, knowledge of the organization, products (including prices, costs, sales or content), processes, techniques, machinery, contracts, financial information or measures, business methods, business plans, details of consultant contracts, new personnel acquisition plans, business acquisition plans, customer lists, business relationships and other information owned, developed or possessed by Signet, the Company or the subsidiaries or affiliates of Signet or the Company, except as required in the course of performing duties hereunder; provided that Protected Information shall not include information that becomes generally known to the public or the trade without violation of this Section 6.
                (ii)      “Unauthorized ”  means: (A) in contravention of the policies or procedures of Signet, the Company or any of the subsidiaries or affiliates of Signet or the Company; (B) otherwise inconsistent with the measures taken by Signet, the Company or any of the subsidiaries or affiliates of Signet or the Company to protect their interests in any Protected Information; (C) in contravention of any lawful instruction or directive, either written or oral, of an employee of Signet, the Company or any of the subsidiaries or affiliates of Signet or the Company empowered to issue such instruction or directive; or (D) in contravention of any duty existing under law or contract. Notwithstanding anything to the contrary contained in this Section 6, the Executive may disclose any Protected Information to the extent required by count order or decree or by the rules and regulations of a governmental agency or as

otherwise required by law; provided that the Executive shall provide the Company with prompt notice of such required disclosure in advance thereof so that the Company may seek an appropriate protective order in respect of such required disclosure.
(b)     The Executive acknowledges that all developments, including, without limitation, inventions (patentable or otherwise), discoveries, improvements, patents, trade secrets, designs, reports, computer software, flow charts and diagrams, procedures, data, documentation, ideas and writings and applications thereof relating to the Business or planned business of Signet, the Company or any of the subsidiaries or affiliates of Signet or the Company that, alone or jointly with others, the Executive may conceive, create, make, develop, reduce to practice or acquire during the Term of Employment (collectively, the “ Developments ” ) are works made for hire and shall remain the sole and exclusive property of Signet, the Company or any of their subsidiaries or affiliates and the Executive hereby assigns to the Company or Signet, or any of their subsidiaries or affiliates, as applicable, all of his right, title and interest in and to all such Developments. The Executive shall promptly and fully disclose all future material Developments to the Board of Directors of the Company and, at any time upon request and at the expense of the Company, shall execute, acknowledge and deliver to the Company all instruments that the Company shall prepare, give evidence and take all other actions that are necessary or desirable in the reasonable opinion of the Company to enable the Company to file and prosecute applications for and to acquire, maintain and enforce all letters, patent and trademark registrations or copyrights covering the Developments in all countries in which the same are deemed necessary by the Company. All memoranda, notes, lists, drawings, records, files, computer tapes, programs, software, source and programming narratives and other documentation (and all copies thereof) made or compiled by the Executive or made available to the Executive concerning the Developments or otherwise concerning the Business or planned business of Signet, the Company or any of the subsidiaries or affiliates of Signet or the Company shall be the property of Signet, the Company or such subsidiaries or affiliates and shall be delivered to Signet, the Company or such subsidiaries or affiliates promptly upon the expiration or termination of the Term of Employment.
(c)     The provisions of this Section 6 shall, without any limitation as to time, survive the expiration or termination of the Executive's employment hereunder, irrespective of the reason for any termination.
7.    Covenants Not to Compete . The Executive agrees that, provided the Company has complied with its obligations under this Agreement, during the Term of Employment and for a period of two years (the “ Non-Competition Period ” ) commencing upon the expiration or termination of the Executive's employment hereunder, the Executive shall not, directly or indirectly, without the prior written consent of Signet:
(a)     solicit, entice, persuade or induce any employee, consultant, agent or independent contractor of Signet, the Company or of any of the subsidiaries or affiliates of Signet or the Company to terminate his or her employment or engagement with Signet, the Company or such subsidiary or affiliate, to become employed by any person, firm or corporation other than Signet, the Company or such subsidiary or affiliate or approach any such employee, consultant, agent or independent contractor for any of the foregoing purposes, or authorize or assist in the taking of any such actions by any third party (for purposes of this Section 7(a), the terms “employee,” “consultant,” “agent” and “independent

contractor” shall include any persons with such status at any time during the six months preceding any solicitation in question); or
(b)     directly or indirectly own, manage, control, invest or participate in any way in, consult with or render services for any person or entity (other than Signet, the Company or any of the subsidiaries or affiliates of Signet or the Company) engaged in the retail jewelry business or in any business similar to the businesses presently conducted or contemplated to be conducted by Signet, the Company or any of the subsidiaries or affiliates of Signet or the Company; provided, however, that the restrictions of this Section 7(b) shall not extend to the ownership, management or control of a retail jewelry business by the Executive following the termination of his employment with the Company provided that such activity is no less than sixty (60) miles distant from (1) any retail jewelry store of the Company at the time of such termination of employment or (2) any location as to which the Company is in the process of negotiating a lease and as to which a lease is executed by the Company within six (6) months following such termination; provided that notwithstanding the foregoing, the Executive shall be entitled to own up to 4% of any class of outstanding securities of any company whose common stock is listed on a national securities exchange or included for trading on the NASDAQ Stock Market.
Notwithstanding the foregoing, in the event that the Executive is terminated without Cause or there is a Constructive Termination, the Non-Competition Period shall be the longer of (i) the one-year period commencing upon the expiration or termination of the Executive's employment hereunder or (ii) any period of time following the expiration or termination of the Executive's employment hereunder that the Executive is receiving payments from the Company in accordance with Sections 4(d) or 4(e) of this Agreement; provided that in no event shall the Non-Competition Period be longer than the two-year period commencing upon the expiration or termination of the Executive's employment hereunder; and provided further, that the six month payment delay provision of Section 21, if the Executive is a “specified employee," shall be disregarded for purposes of (ii) above in the computation of the Non-Competition Period.
8.    Specific Performance . The Executive acknowledges that the services to be rendered by the Executive are of a special, unique and extraordinary character and, in connection with such services, the Executive will have access to confidential information vital to the businesses of Signet and the Company and the subsidiaries and affiliates of Signet and the Company. By reason of this, the Executive consents and agrees that if the Executive violates any of the provisions of Section 6 or 7 hereof, Signet, the Company and the subsidiaries and affiliates of Signet and the Company would sustain irreparable injury and that monetary damages will not provide adequate remedy to any such entity and that the Company shall be entitled to have Section 6 or 7 specifically enforced by any court having equity jurisdiction. Nothing contained herein shall be construed as prohibiting Signet, the Company or any of the subsidiaries or affiliates of Signet or the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages from the Executive.
9.    Deductions and Withholding; No Additional Tax Liability .
(a)     The Executive agrees that the Company, or the subsidiaries or affiliates of the Company, as applicable, shall withhold from any and all compensation paid to and required to be paid to the Executive pursuant to this Agreement, all Federal, state, local and/or other taxes which the Company determines are required to be withheld in accordance with applicable statutes or regulations from time to time in effect and all amounts required to

be deducted in respect of the Executive's coverage under applicable employee benefit plans. For purposes of this Agreement and calculations hereunder, all such deductions and withholdings shall be deemed to have been paid to and received by the Executive.
(b)     It is intended that the Executive will not be liable for additional income tax liability by reason of the Executive's continuing to serve as Group Chief Executive and as Chairman of the Company than the Executive would have been liable for had Executive also continued as Chief Executive Officer of the Company. If Executive does incur any additional income tax liability as a result thereof, the Company will reimburse the Executive for the difference grossed up at the applicable rate of income tax. Any gross-up payment shall be timely made in accordance with the Company's established policies and procedures but in no event later than the Iast day of the year following the year in which the Executive remits the related taxes.
10.    Entire Agreement. This Agreement embodies the entire agreement of the parties with respect to the Executive's employment and supersedes any other prior oral or written agreements, arrangements or understandings between the Executive and the Company, including the Prior Agreement. This Agreement may not be changed or terminated orally but only by an agreement in writing signed by the parties hereto. The Company and the Executive agree that this Agreement supersedes in all respects the Prior Agreement and the Prior Agreement is hereby terminated.
11.    Waiver. The waiver by the Company of a breach of any provision of this Agreement by the Executive shall not operate or be construed as a waiver of any subsequent breach by him. The waiver by the Executive of a breach of any provision of this Agreement by the Company shall not operate or be construed as a waiver of any subsequent breach by the Company.
12.    Governing Law; Jurisdiction.
(a)     This Agreement shall be subject to, and governed by, the laws of the State of Ohio applicable to contracts made and to be performed therein.
(b)     Any action to enforce any of the provisions of this Agreement shall be brought in a court of the State of Ohio located in Summit County or in a Federal court located in Cleveland, Ohio. The parties consent to the jurisdiction of such courts and to the service of process in any manner provided by Ohio law, Each party irrevocably waives any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such court and any claim that such suit, action or proceeding brought in such court has been brought in an inconvenient forum and agrees that service of process in accordance with the foregoing sentences shall be deemed in every respect effective and valid personal service of process upon such party.
(c)     The prevailing party in any action to enforce any of the provisions of this Agreement shall be entitled to reimbursement from the other party for its or his costs and expenses (including attorneys' fees and expenses) incurred in connection with such action.
13.    Assignability. The obligations of the Executive may not be delegated and, except with respect to the designation of beneficiaries in connection with any of the benefits payable to the Executive hereunder, the Executive may not, without the Company's written consent thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise dispose

of this Agreement or any interest herein. Any such attempted delegation or disposition shall be null and void and without effect. The Company and the Executive agree that this Agreement and all of the Company's rights and obligations hereunder may be assigned or transferred by the Company to and shall be assumed by and be binding upon any successor to the Company, The term “successor” means, with respect to the Company or any of its subsidiaries, any corporation or other business entity which, by merger, consolidation, purchase of the assets or otherwise, including after a Change of Control, acquires all or a material part of the assets of the Company.
14.    Severability. If any provision of this Agreement or any part thereof, including, without limitation, Sections 6 and 7, as applied to either party or to any circumstances shall be adjudged by a court of competent jurisdiction to be void or unenforceable, the same shall in no way affect any other provision of this Agreement or remaining part thereof, which shall be given full effect without regard to the invalid or unenforceable part thereof, or the validity or enforceability of this Agreement.

If any court construes any of the provisions of Section 6 or 7, or any part thereof, to be unreasonable because of the duration of such provision or the geographic scope thereof, such court may reduce the duration or restrict or redefine the geographic scope of such provision and enforce such provision as so reduced, restricted or redefined.
15. Notices. All notices to the Company or the Executive permitted or required hereunder shall be in writing and shall be delivered personally, by telecopier or by courier service providing for next-day delivery or sent by registered or certified mail, return receipt requested, to the following addresses:

 	The Company:	
 	 	 	
 	 	Sterling Jewelers Inc.
375 Ghent Road
 Akron, Ohio 44313
Fax: (330) 668-5191
 Attn: Chief Financial Officer	
 	 	 	
 	with a copy to:	 	
 	 	 	
 	 	Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10167
Fax; (212) 310-8007
Attn: Jeffrey Weinberg, Esq.	
 	 	 	 	
 	The Executive:	 	
 	 	Terry Burman
4086 Darwood Dr
 Akron, Ohio 44333	
 	 	 	 	
 	with a copy to:	 	
 	 	 	
 	 	Squire, Sanders & Dempsey L.L.P.
4900 Key Tower, 127 Public Square	

 	 	Cleveland, Ohio 44114-1304
Fax: (216) 479-8788
Attn: Carl A. Draucker, Esq.	
 	 	 	 	
 	Signet:	 	
 	 	 	
 	 	Signet Group plc
15 Golden Square,
London W1F 9JG
Fax: 44(207) 734-9376
Attn: Mark A. Jenkins	
Either party may change the address to which notices shall be sent by sending written notice of such change of address to the other party. Any such notice shall be deemed given, if delivered personally, upon receipt; if telecopied, when telecopied; if sent by courier service providing for next-day delivery, the next business day following deposit with such courier service; and if sent by certified or registered mail, 3 days after deposit (postage prepaid) with the U.S. mail service.
16.    Physical Examinations. The Executive agrees, upon the request of the Company, to submit to reasonable medical examinations from time to time to the extent requested in order to obtain insurance on the life of the Executive for the benefit of the Company. The Executive hereby represents and warrants to the Company that, to the best of his knowledge, he does not have any preexisting condition that would affect the Company's ability to obtain for him the insurance coverage contemplated by Section 3(f) of this Agreement at the standard rates paid by the Company for insurance of the type indicated.
17. Effective Date. This Agreement shall be effective as of the date first written above.
18. Paragraph Headings, The paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument.
20.    Indemnification.
(a)     Signet shall, or shall cause the Company to, maintain directors and officers' liability insurance to protect the Executive from claims as long as the Executive continues to be employed by the Company or Signet or a member of the Board of the Company or the Board of Signet. Such insurance shall (i) provide aggregate coverage limits in an amount equal to £100 million or, in the event the premium cost for such coverage exceeds three (3) times the 2006 premium cost for such coverage, such other amount that the Board may determine, acting reasonably and prudently, reflecting prevailing market conditions and reflecting coverage limits of English publicly traded companies that have significant business operations in the United States or a listing on a US stock exchange; (ii) include a Side A coverage with aggregate dedicated coverage limits of £50 million or, in the event the premium cost for such coverage exceeds three (3) times the 2006 premium cost for such coverage, such other amount that the Board may determine, acting reasonably and prudently, reflecting prevailing market conditions and reflecting coverage limits of English

publicly traded companies that have significant business operations in the United States or a listing on a US stock exchange; and (iii) provide the Executive post-employmnent coverage (with aggregate coverage limits in an amount equal to £100 million or such other amount that the Board may determine, acting reasonably and prudently, reflecting prevailing market conditions and reflecting coverage limits of English publicly traded companies that have significant business operations in the United States or a listing on a US stock exchange and having side A coverage with aggregate coverage limits of £50 million or such other amount that the Board may determine, acting reasonably and prudently, reflecting prevailing market conditions and reflecting coverage limits of English publicly traded companies that have significant business operations in the United States or a listing on a US stock exchange) relating to the Executive's service with Signet and the Company, including the purchase of run-off coverage with respect to the term of the Executive's service with Signet and the Company, until all applicable statutes of limitations for claims against the Executive in all jurisdictions have expired.
(b)      Signet shall, or shall cause the Company to, indemnify, and keep indemnified, the Executive (to the full extent permitted by applicable law) in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, by reason of the fact that the Executive is or was a director, officer or employee of Signet or the Company, or, while a director, officer or employee of Signet or the Company, is or was serving at the request of Signet or the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such indemnity shall not be greater than and shall be restricted to the level of indemnification pursuant to the Fourth Amended and Restated Certificate of Incorporation of the Company, as may be amended from time to time, (the “Company Certificate” ), as in effect on the date of this Agreement, as may be limited by and amended as set forth in the next two sentences of this clause. Notwithstanding the foregoing, the Executive shall be entitled to the indemnification as set forth under the Company Certificate, the Articles of Association of Signet, and the Deed of Indemnity dated June 10, 2005, by Signet Group plc in favor of the indemnified parties set forth therein, except, in the case of the Company Certificate, as such indemnification may be limited by, and amended to conform to, applicable laws of England and the Rules of the United Kingdom Listing Authority.
21.    Section 409A Compliance. The parties intend that any severance or other compensation under this Agreement (or under any plan or program maintained by Signet or the Company in which the Executive participates, including, without limitation, the Deferred Compensation Plan, LTIP, Short-Term Bonus, and Stock Options) be paid in compliance with Section 409A of the Internal Revenue Code of 1986, as amended, and all regulations, guidance, and other interpretative authority thereunder ( “Section 409A” ) such that there are no adverse tax consequences, interest, or penalties as a result of the payments. To the extent permitted by law, the parties agree to modify this Agreement to the extent necessary to comply with Section 409A of the Code. Notwithstanding any provision of the Agreement to the contrary, (i) if at the time of the Executive's termination of employment with the Company the Executive is a “specified employee” as defined in Section 409A of the Code and related United States Department of Treasury guidance and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax

under Section 409A of the Code, then any member of the Signet Group shall defer the commencement of any such payments or benefits (without any reduction in such payments or benefits ultimately paid or provided to the Executive) until the first business day following expiration of the 6 month period following the Executive's “separation from service” (within the meaning of Section 409A of the Code) with the Company (or the earliest date as is permitted under Section 409A of the Code). For avoidance of doubt, in the event of such a six month delay due to the Executive's status as a “specified employee,” the payment due on the day following expiration of the 6 month period following the Executive's “separation from service” shall contain all payments that otherwise would have been payable to the Executive during the six month delay as well as, to the extent applicable, the next regularly scheduled payment.
(a)      Anything in this Agreement to the contrary notwithstanding and except as set forth in this Section 21, if in connection with any payment or distribution by Signet or the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment” ), the Executive is subject to, or is notified by the Internal Revenue Service that he is or will be subject to, penalty taxes imposed by Section 409A or if any interest or penalties are incurred by the Executive with respect to such penalty taxes (such penalty taxes together with any such interest and penalties, are hereinafter collectively referred to as the “Section 409A Tax” ), then the Executive shall be entitled to receive an additional payment (a “Section 409A Gross-Up Payment” ) in an amount such that after payment by the Executive of all Section 409A Tax and all income taxes (and any interest and penalties imposed with respect thereto) imposed upon the Section 409A Gross-Up Payment, the Executive retains an amount of the 409A Gross-Up Payment equal to the Section 409A Tax imposed upon the Payment; provided, however, that the Company and Signet shall only be responsible to make a Section 409A Gross-Up Payment with respect to the Section 409A Tax if the Section 409A Tax relates to or results from (i) the Company's or Signet's failure to operate a “nonqualified deferred compensation plan” (as such term is defined in Section 409A) (a “NQDC” ) in compliance with Section 409A on and after January 1, 2005; or (ii) the lack of compliance of any Signet or Company NQDC document or documentation with Section 409A; or (iii) the payment or distribution by Signet or the Company (or by any Signet or Company NQDC) of any NQDC amount if such payment or distribution is not in compliance with Section 409A. For the avoidance of doubt, neither the Company nor Signet shall be responsible to make any Section 409A Gross-Up Payment if, (1) after a timely notice or request by the Company or Signet to the Executive, the Executive refuses or fails to make a timely election to alter the timing of payment or distribution or (2) the Executive in his capacity as Group Chief Executive of the Company, causes the Company to take any action, or causes the Company to fail to take any action, which causes the Executive to be subject to a Section 409A Tax.
(b)      Determinations required to be made under this Section 21 regarding the amount of the Section 409A Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by (i) a certified public accounting firm selected by the Executive and reasonably acceptable by the Company, or (ii) if the parties shall not have agreed upon an accounting firm within five (5) business days of receipt of notice from the Executive, by Ernst & Young (in either case, such firm selected being referred to as the “Accounting Firm” ) which shall provide detailed supporting calculations both to the Company and the Executive within thirty (30) business days of the receipt of notice from the Executive that he is subject to a Section 409A Tax, or such earlier time as is reasonably requested by the Company. All fees and expenses of the Accounting Firm shall be borne

solely by the Company. Any Section 409A Gross-Up Payment, as determined pursuant to this Section 21, shall be paid by the Company to the Executive within thirty (30) days of the receipt of the Accounting Firm’s determination, but in no event later than the last day of the year following the year in which the Executive remits the related taxes. Any determination by the Accounting Firm shall be binding upon the Company and the Executive,
***

     IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed as of the date first above written.

 	STERLING JEWELERS INC.	
 	 	 	
 	By:		
 	 		
 	 	Name: Walker G. Boyd	
 	 	Title: Director	
 	 	 	
 	 	Date: 29 FEBRUARY 2008	

 	
Signet agrees to the covenants and undertakings set forth in this Agreement:	
 	 	
 	SIGNET GROUP, plc	
 	 	 	
 	By:		
 	 		
 	 	Name: Sir Malcolm Williamson	
 	 	Title: Chairman	
 	 	 	
 	 	Date: 19 FEBRUARY 2008	

 	By:		
 	 		
 	 	Name: Mark A. Jenkins	
 	 	Title: Group Company Secretary	
 	 	 	
 	 	Date: 7 MARCH 2008	

 	TERRY BURMAN	
 	 	
 	Date: MARCH 28, 2008	

Exhibit 4.11

AMENDMENT NO. 3 TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
      This AMENDMENT (this “Amendment” ) is entered into as of February 19, 2008 by and among Sterling Jewelers Inc., a Delaware corporation (the "Company" ) and Mark S. Light (the “Executive” ). Any capitalized term used but not defined herein shall have the meaning ascribed thereto in the Employment Agreement (as hereinafter defined), except as otherwise provided.
      WHEREAS, the Company and the Executive entered into an Amended and Restated Employment Agreement, dated as of August 6, 2004, and amended on January 12, 2006 (as amended to the date hereof, the “Employment Agreement” ); and
      WHEREAS, the parties hereby desire to make certain additional amendments to the Employment Agreement to reflect the issuance of final regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code” );
      NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:

Amendments Designating Separation Payments as “Separate Payments”	
 	 	
1.	Section 1(b)(v) of the Employment Agreement is hereby amended to add the phrase “with each such payment hereby designated a separate payment” as the last phrase thereof.	
 	
2.	Section 1(c)(i) of the Employment Agreement is hereby amended to add the phrase “with each such payment hereby designated a separate payment” immediately prior to Section 1(c)(ii).	
 	 	
Amendment Fixing the Period for Remitting Gross Up Payments	
 	
3.	The last paragraph of Section 3 of the Employment Agreement is hereby amended to add the phrase “and shall be paid no later than the end of the Executive’s taxable year next following the Executive’s taxable year in which he remits the related taxes” as the last clause of the sentence.	
 	 	
Amendment Adding Fringe Benefit Anti-Abuse Boilerplate Language	
 	
4.	Section 3 of the Employment Agreement is hereby amended to add a new last paragraph as follows:	
 	
 	No payments or benefits provided under this Section 3 in respect of one taxable year shall affect the amounts payable in any other taxable year. No benefit or payment due to the Executive under this Section 3 shall be subject to liquidation or exchange for another benefit. Any reimbursements made to the Executive pursuant to this Agreement or otherwise shall be paid no later than the last day of the year following the year in which the expense was incurred.	

Amendment Regarding 409A Compliance

5.	Section 17 of the Employment Agreement is hereby deleted in its entirety and replaced with the following:	
 	
 	Compliance with Code Section 409A . To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Execution Date. To the extent permitted by law, the parties agree to modify this Agreement to the extent necessary to comply with Section 409A of the Code. Notwithstanding any provision of the Agreement to the contrary, (i) if at the time of the Executive’s termination of employment with the Company the Executive is a “specified employee” as defined in Section 409A Code and related Department of Treasury guidance and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company may defer the commencement of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Executive) until the date that is six months following the Executive’s termination of employment with the Company (or the earliest date as is permitted under Section 409A of the Code) and (ii) if any other payments of money or other benefits due to the Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, the Company may (a) adopt such amendments to the Agreement, including amendments with retroactive effect, that the Company determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Agreement and/or (b) take such other actions as the Company determines necessary or appropriate to comply with the requirements of Section 409A of the Code and related Department of Treasury guidance. The Company shall consult with the Executive in good faith regarding the implementation of this Section 14; provided that neither the Company nor any of its employees or representatives shall have any liability to the Executive with respect thereto.	
Miscellaneous

6.	Entire Agreement . The Employment Agreement, as amended by this Amendment, constitutes the complete and exclusive understanding of the parties with respect to the Executive’s employment and supersedes any other prior oral or written agreements, arrangements or understandings between the Executive and the Company.	
 	
7.	Full Force . Except as set forth in this Amendment, the Employment Agreement remains in full force and effect.	
 	
8.	Counterparts . This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument.	

       IN WITNESS WHEREOF the parties hereto have caused this Amendment to be executed as of the date first above written.

 	STERLING JEWELERS INC.	
 	 	 	
 	By:		
 	 		
 	 	Name: Walker G. Boyd	
 	 	Title: Director	

 	 		
 	 	MARK S. LIGHT	
 	 	Title: Chief Executive Officer	

Exhibit 12.1

CERTIFICATION
I, Walker Boyd, certify that:

 	1. I have reviewed this annual report on Form 20-F of Signet Group plc;	
 	 	
 	2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 	 	
 	3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;	
 	 	
 	4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:	
 	 	 	
 	 	(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	 	 	
 	 	(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	 	 	
 	 	(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	 	 	
 	 	(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and	
 	 	
 	5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):	
 	 	 	
 	 	(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and	
 	 	 	
 	 	(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.	
Date: 9 May, 2008

 	 	 	 	 	 	 	By: /s/Walker Boyd	
 	 	 	 	 	 	 	Name:    Walker Boyd,	
 	 	 	 	 	 	 	Title:      Group Finance Director	

Exhibit 12.2

CERTIFICATION
I, Terry Burman, certify that:

 	1. I have reviewed this annual report on Form 20-F of Signet Group plc;	
 	 	
 	2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 	 	
 	3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;	
 	 	
 	4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:	
 	 	 	
 	 	(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	 	 	
 	 	(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	 	 	
 	 	(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	 	 	
 	 	(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and	
 	 	
 	5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):	
 	 	 	
 	 	(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and	
 	 	 	
 	 	(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.	
Date: 9 May, 2008

 	 	 	 	 	 	 	By: /s/ Terry Burman	
 	 	 	 	 	 	 	Name:    Terry Burman	
 	 	 	 	 	 	 	Title:      Chief Executive Officer	

Exhibit 13.1

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Walker Boyd, as Group Finance Director of Signet Group plc (the “Company”), hereby certify, pursuant to 18 U.S.C. § 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)      the accompanying Annual Report on Form 20-F for the period ending February 2, 2008, as filed with the U.S. Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)      the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: 9 May, 2008

 	 	 	 	 	 	 	By: /s/ Walker Boyd	
 	 	 	 	 	 	 	Name:    Walker Boyd,	
 	 	 	 	 	 	 	Title:      Group Finance Director	

Exhibit 13.2

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Terry Burman, as Chief Executive Officer of Signet Group plc (the “Company”), hereby certify, pursuant to 18 U.S.C. § 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)      the accompanying Annual Report on Form 20-F for the period ending February 2, 2008, as filed with the U.S. Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)      the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: 9 May, 2008                               

 	 	 	 	 	 	 	By: /s/ Terry Burman	
 	 	 	 	 	 	 	Name:    Terry Burman	
 	 	 	 	 	 	 	Title:      Chief Executive Officer	

Exhibit 15.1

Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
 Signet Group plc:
We have audited the accompanying consolidated balance sheets of Signet Group plc and subsidiaries as of February 2, 2008 and February 3, 2007, and the related consolidated income statements, consolidated statements of recognised income and expense and consolidated statements of cash flows for the 52 weeks ended February 2, 2008, the 53 weeks ended February 3, 2007 and the 52 weeks ended January 28, 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Signet Group plc and subsidiaries as of February 2, 2008 and February 3, 2007, and the results of their operations and their cash flows for the 52 weeks ended February 2, 2008, the 53 weeks ended February 3, 2007 and the 52 weeks ended January 28, 2006, in conformity with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and IFRS as adopted by the European Union.
IFRS vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in the note 30 to the consolidated financial statements.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Signet Group plc’s internal control over financial reporting as of February 2, 2008, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated April 9, 2008 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting . 
/s/ KPMG Audit Plc
London, United Kingdom
 April 9, 2008

Exhibit 15.2

Consent of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
 Signet Group plc:
We consent to the incorporation by reference in the registration statements (No. 333-134192, 333-12304, 333-09634, and 333-08764) on Form S-8 of Signet Group plc of our reports dated 9 April 2008, with respect to the consolidated balance sheets of Signet Group plc and subsidiaries as of 2 February 2008 and 3 February 2007, and the related consolidated income statements, consolidated cash flow statements and consolidated statement of recognised income and expense for the 52 week period ended 2 February 2008, the 53 week period ended 3 February 2007 and the 52 week period ended 28 January 2006, and the effectiveness of internal control over financial reporting as of 2 February 2008, which reports appear in the Annual Report on Form 20-F of Signet Group plc for the 52 weeks ended 2 February 2008.
/s/ KPMG Audit Plc
London, United Kingdom
 May 9, 2008

Exhibit 15.3

	 	 	

	 	 	
	 	Signet Group plc	
	 	Annual Report & Accounts
Year ended 2 February 2008	

	 	 	

 	 		

Building long term	 		
value through	 		
customer focus	 		

 	 		

 	 		

 	 		

 
The world’s largest speciality retail jeweller

The world’s largest
speciality retail jeweller

 	Group strategies	 	Operating philosophies	
 	 	 	 	
 	  Continue to achieve sector	 	  Excellence in execution	
 	  leading performance standards	 		
 	  on both sides of the Atlantic	 	  Test before we invest	
 		 		
 	  Increase store productivity	 	  Continuous improvement	
 		 		
 	  Grow new store space in the US	 	  Disciplined investment	
 		 		
 	  Maintain a strong balance sheet	 	 	

						
  	2007/08 Group performance		 	 	 	 	
						
 	 		 	 	 	Change on	
 	 		 	Change on	 	52 week basis	
 	 	Reported	 	reported	 	at constant	
 	 	52 weeks	 	53 weeks	 	exchange rates	
 	 		 	 	 	 	 	
 	Like for like sales:		 	 	 	down 0.7 %	 	
						
 	Sales:	$3,665.3m	 	up 3.0%	 	up 3.2% (1)	
						
 	Operating profit:	$351.3m	 	down 15.6%	 	down 15.9% (1)	
						
 	Profit before tax:	$333.5m	 	down 16.8%	 	down 17.4% (1)	
						
 	Basic earnings per share (2) :	12.6 c	 	down 18.2%	 	down 18.7% (1)	
						
 	Proposed dividend per share (3) :	7.277 c	 	up 1.6%	 	 	
						
 	Return on capital employed (“ROCE”) (2) :	16.8 %	 	down from 22.8%	 		
						
 	Gearing (2) :	20.7 %	 	up from 13.4%	 	 	 		
 	 	 	 	 	 	 	 		
 	(1)	See page 37 for reconciliation to IFRS numbers.	
 	(2)	Earnings per share, return on capital employed and gearing are defined on pages 140 and 141.	
 	(3)	2006/07 interim dividend declared in pounds sterling and translated using US$/£ exchange rate as at 3 November 2006.	

Cautionary statement regarding forward-looking statements
 The Company desires to take advantage of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 with respect to the forward-looking statements about its financial performance and objectives in this Annual Report. Readers are referred to “Risk and other factors” on pages 44 to 50. The Provision of Section 463 of the Companies Act 2006 applies to the Report of the directors and the Directors’ remuneration report (and any summary financial statement so far as derived from them) such that the directors shall be liable only to the Company for anything omitted from these statements or anything in them found to be untrue or misleading.
Move to dollar reporting
 These results are presented in US dollars following the change in the functional currency of the Company which took effect from 5 February 2007, and the move to reporting in US dollars, see page 35.

Back to Contents
 
Building long term value
through customer focus

		
 	Excellence in customer service	

 	•	Continuous training in customer service & product knowledge	
 	 	 	
 	•	Highly motivated staff	
 	 	 	
 	•	Sales-facilitating credit programmes	

 	 	 	
		
 	Superior merchandise selection	

 	•	Demand-driven merchandising systems	
 	 	 	
 	•	Value adding supply chain capabilities	
 	 	 	
 	•	Increasingly exclusive product ranges	

 	 	 	
		
 	Leading brands	

 	•	Sales growth driving marketing leverage	
 	 	 	
 	•	Largest marketing budgets in speciality jewellery sector	
 	 	 	
 	•	Building brand values	
 	 	 	
 	•	Repair service building trust & customer visits	

 	 	 	
		
 	High quality real estate	

 	•	Prime store locations	
 	 	 	
 	•	Service oriented design	
 	 	 	
 	•	Improved customer experience through consistent store investment	
 	 	 	
 Contents

 	Overview	

2	 	Chairman’s statement	
 	 		
3	 	Group Chief Executive’s review	
 	 		
3	 	  US performance review 2007/08	
 	 		
5	 	  UK performance review 2007/08	
 	 		
7	 	Five year financial summary	
 	 		
8	 	Brand review	

 	Business review	

10	 	US competitive strengths	
 	 		
12	 	US marketplace	
 	 		
13	 	US operating review	
 	 		
22	 	UK competitive strengths	
 	 		
24	 	UK marketplace	
 	 		
24	 	UK operating review	
 	 		
30	 	Description of properties & Group employees	
 	 		
31	 	Key performance indicators	
 	 		
35	 	Group financial review	
 	 		
44	 	Risk and other factors	

 	Corporate governance	

51	 	Directors, officers and advisers	
 	 		
53	 	Report of the directors	
 	 		
55	 	Directors’ responsibility statement	
 	 		
56	 	Corporate governance statement	
 	 		
61	 	Social, ethical & environmental matters	
 	 		
67	 	Directors’ remuneration report	
 	 		
80	 	Statement of directors’ responsibilities	
 	 		
81	 	Independent auditor’s report to the members of Signet Group plc	

 	Financial statements	

82	 	Consolidated income statement	
 	 		
83	 	Consolidated balance sheet	
 	 		
84	 	Consolidated cash flow statement	
 	 		
85	 	Consolidated statement of recognised income and expense	
 	 		
86	 	Notes to the accounts	
 	 		
116	 	  Summary of differences between IFRS and US GAAP	
 	 		
123	 	Company information	

 	Shareholder information	

129	 	Shareholder information	
 	 		
137	 	Selected financial data	
 	 		
139	 	Quarterly results (unaudited)	
 	 		
140	 	Definitions	
 	 		
142	 	Glossary of terms	
 	 		
143	 	Shareholder contacts	
 	 		
144		Index	
 	 		
145		Cross reference to Form 20-F	

 

Signet Group plc Annual Report & Accounts year ended 2 February 2008	01	

Back to Contents

 	 	Overview	

 	 	Chairman’s statement	
 
Group performance 
 The Group continued to make progress in implementing its proven growth strategy despite the difficult economic environment. While the Group saw a decline in profits, it still achieved a superior operating performance for the jewellery sector including a healthy operating margin and Return on Capital Employed (“ROCE”). Key financial results of the year included:

•	Sales up by 3.0% to $3,665.3 million;	
•	Profit before tax down by 16.8% to $333.5 million;	
•	Basic earnings per share down by 18.2% to 12.6 cents, and	
•	ROCE of 16.8%.	
The Board is pleased to recommend a final dividend of 6.317 cents per share (2006/07: 6.317 cents) for the year ended 2 February 2008. This represents a total dividend for the year of 7.277 cents, up by 1.6% (see page 96). During the year the Group made share repurchases of $29.0 million, completing the programme announced in July 2006. In total, $152.9 million was distributed to shareholders during 2007/08. Given the substantial increase in economic and financial sector uncertainties, the Board will continue to evaluate dividend policy in the light of the needs of the business taking into consideration the significant competitive advantages of a strong balance sheet and financial flexibility. Account will also be taken of the primary stock market listing of the Company.
Group strategy 
 The Group aims to build long term value through focusing on the customer by providing a superior merchandise selection in high quality real estate locations. Effective advertising draws consumers into our stores, where they are provided with outstanding service. The operating philosophies that help the Group achieve these aims are:

•	excellence in execution;	
•	test before we invest;	
•	continuous improvement; and	
•	disciplined investment.	
The Group’s strategy to deliver shareholder value is to:

•	continue to achieve sector leading performance standards on both sides of the Atlantic;	
•	increase store productivity in the US and the UK;	
•	grow new store space in the US; and	
•	maintain a strong balance sheet.	
While progress was made in most of these areas, store productivity in the US declined in 2007/08 as a result of the sales performance in the fourth quarter. A more detailed consideration of these strategies is provided in the Chief Executive’s, US and UK performance reviews.
Group domicile and primary listing
 As set out in the trading statement dated 10 January 2008, the Board has undertaken a review of the most appropriate domicile and stock market listing for the Company. This review has confirmed that there is a clear rationale for the primary listing of the Group to be in the US as a significant and growing majority of its business and assets are in that country. From consultation with the Company’s major investors, the Board believes that Signet’s shareholders would, on balance, support a recommendation from the Board regarding a potential redomicile of the Company to Bermuda and a move of the primary listing of Signet’s shares to the US. Accordingly the Board continues to take steps that would facilitate such a change. However, in light of
market conditions, the determination and timing of any such proposal remains uncertain and will continue to be kept under review by the Board.
Corporate responsibility 
 During the year further progress was made in developing industry wide initiatives to achieve improvements in the supply chain, and with regard to social, ethical and environmental issues. In keeping with the Group’s approach of working with other industry representatives to maintain and improve consumer confidence in our industry we worked with organisations such as the Council for Responsible Jewellery Practices (“CRJP”), the World Diamond Council, Jewelers of America and Jewelers Vigilance Committee to develop programmes to improve the supply chain. Major accomplishments include:

•	implementation of a requirement that jewellery supplied to the Group should not contain rubies or jade from Burma. Jewelers of America also introduced the same requirement and advocated that the US government ban such imports;	
•	the development of a Code of Practices by the CRJP which includes future third party monitoring. It is anticipated that during 2008/09 the Code will be introduced; and	
•	a better understanding of the Group’s impact on the environment and on identifying ways in which it can improve its performance.	
Signet remains a member of the FTSE4Good Index and also contributed in the US, to the industry charity, Jewelers for Children, St. Judes Children’s Research Hospital and in the UK, to the Princess Royal Trust for Carers.
Current trading 
 Since the start of 2008/09, the Group has experienced a low single digit decline in like for like sales, with the US down about 4%, having had some benefit from better weather over Valentine’s Day.
 Early results have been encouraging from the price increases in the US implemented after Valentine’s Day. UK like for like sales were up mid single digits. However, the outlook remains very challenging on both sides of the Atlantic.
People 
 I would like to thank our staff and management for their hard work and dedication in a year when the external environment has placed increased pressures on the business. I would also like to thank Brook Land, who retires as a director at the 2008 annual general meeting, for his significant contribution. He has served on the Board for nearly 13 years, including six as senior independent director. Following his retirement Russell Walls will assume this role.
In addition, I would like to welcome Lesley Knox, who was appointed as a non-executive director in January 2008. I am confident that her broad experience of business and corporate finance will enable her to make a valuable contribution to the Group.

Sir Malcolm Williamson
 Chairman
9 April 2008

02	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

Back to Contents

 	Overview	

Group Chief Executive’s review	 	
 
Results for 2007/08

 	 	 	 	 	 	 	Change at	 	Like	 	
 	 	 	 	 	 	 	constant	 	for like	 	
 	 	 	 	 	 	 	exchange	 	change	 	
 	 	 	 	 	 	 	rates on a	 	on a	 	
 	2007/08	 	2006/07	 	Change	 	52 week	 	52 week	 	
 	52 weeks	 	53 weeks	 	reported	 	basis (1)	 	basis	 	
 	$m	 	$m	 	%	 	%	 	%	 	
											
Sales	3,665.3	 	3,559.2	 	3.0	 	3.2	 	(0.7	)	
											
Operating profit	351.3	 	416.2	 	(15.6	)	(15.9	)		 	
											
Profit before tax	333.5	 	400.8	 	(16.8	)	(17.4	)		 	
											
Basic earnings per		 		 		 		 		 	
share	12.6	c	15.4c	 	(18.2	)	(18.7	)		 	
											
Operating margin	9.6	%	11.7%	 		 		 		 	
											
ROCE	16.8	%	22.8%	 		 		 		 	
											
(1)	See page 37 for reconciliation of impact of exchange rates and adjustment for 53rd week in 2006/07.	
 	
2007/08 was a very demanding year for the Group, with a particularly difficult fourth quarter. Although execution within the business continued to improve, the economic environment deteriorated. The speed and extent of the change in trading conditions during the fourth quarter was unprecedented. As a result there was very limited time to align the business to reflect the change in market conditions and therefore the impact on results could not be meaningfully mitigated.
In the year to 2 February 2008 total sales rose by 3.2% at constant exchange rates on a 52 week basis (see page 37); the reported increase was 3.0% to $3,665.3 million (2006/07: $3,559.2 million). Like for like sales declined by 0.7%, the first annual decrease since 1992/93. The average exchange rate for 2007/08 was £1/$2.00 (2006/07: £1/$1.88) .
Operating profit fell by 15.9% at constant exchange rates on a 52 week basis (see page 37); the reported decrease was 15.6% to $351.3 million (2006/07: $416.2 million). Operating margin was 9.6% (2006/07: 11.7%) . Profit before tax was down by 17.4% at constant exchange rates on a 52 week basis (see page 37 ) and by 16.8% on a reported basis to $333.5 million (2006/07: $400.8 million). The tax rate was 35.5% (2006/07: 33.6%) . Basic earnings per share were 12.6 cents (2006/07: 15.4 cents, the 53rd week contributing 0.1 cents in 2006/07). ROCE was 16.8% (2006/07: 22.8%) .
Net debt at 2 February 2008 was $374.6 million (3 February 2007: $233.2 million). Gearing (net debt to total equity) was 20.7% (3 February 2007: 13.4%) . Given that nearly all stores are leased, a further important measure of gearing is fixed charge cover, which was 1.8 times in 2007/08 (2006/07: 2.0 times). The increase in net debt before exchange adjustments was $143.6 million (2006/07: $86.4 million), reflecting the lower level of profitability, investment in new store space of $178.9 million (2006/07: $176.7 million) and distribution to shareholders of $152.9 million (2006/07: $172.1 million).
It is critical to build the long term competitive position of the business while managing short term pressure on profitability and the balance sheet during challenging economic periods. A very thorough review of
the businesses on both sides of the Atlantic has been carried out following the difficult 2007 Christmas period. In consideration of the uncertain economic environment a more cautious approach to the execution of the Group’s growth strategy has been adopted. Reflecting this, management focus is more on implementation and responding rapidly to changes in the marketplace, with less attention on developing longer term operational initiatives. As part of this process, actions have been identified to drive sales, protect gross margin, control costs tightly and, where appropriate, to realign the Group’s cost base and inventory levels to the changed market conditions.
The Board firmly believes that a strong balance sheet, and financial flexibility, are competitive advantages. Therefore it has carefully considered the appropriate working capital levels, investment required to maintain the quality of the Group’s assets and rate of space growth, as well as its distribution policy to shareholders. A strong balance sheet enables the Group to continue to invest in the business throughout the economic cycle enhancing further its strong competitive position within the marketplace.
Investment to reinforce the Group’s strategic advantages remain in place, such as the expansion of Kay and Jared, the development of the rough diamond supply chain initiative, as well as the Ernest Jones refurbishment programme. Demanding investment hurdle rates continue to be applied, and as a result US net store space growth is expected to be about 5% in 2008/09 and 2009/10, which is below the 8% to 10% per annum long term target range. However, an increased level of UK store refurbishment in 2008/09 is expected to result in a broadly unchanged level of Group capital expenditure, of approximately $140 million. The anticipated reduction in working capital investment, lower tax payments and the absence of share repurchases are expected to result in a significant reduction in cash outflow during 2008/09.
 US performance review
(74% of Group sales)

 	 	 	 	 	 	 	 	 	Like	 	
 	 	 	 	 	 	 	 	 	for like	 	
 	 	 	 	 	 	 	 	 	change	 	
 	 	 	 	 	 	 	Change on	 	on a	 	
 	2007/08	 	2006/07	 	Change	 	52 week	 	52 week	 	
 	52 weeks	 	53 weeks	 	reported	 	basis (1)	 	basis	 	
 	$m	 	$m	 	%	 	%	 	%	 	
											
Sales (2)	2,705.7	 	2,652.1	 	2.0	 	4.1	 	(1.7	)	
											
Operating profit	262.2	 	326.7	 	(19.7	)	(19.6	)		 	
											
Operating margin (2)	9.7	%	12.3%	 		 		 		 	
											
ROCE	14.9	%	21.5%	 		 		 		 	
											
(1)	See page 37 for reconciliation of impact of 53rd week in 2006/07.	
(2)	See Group financial review for tables analysing total sales growth and movement in operating margin.	
 	
In a much more demanding trading environment the consistency of the US division’s management, strategy and execution, as well as the Group’s strong balance sheet were significant competitive advantages. While the US business saw an unprecedented weakening in sales in the fourth quarter and faced the impact of commodity cost increases, it continued to be a leader in setting industry operating standards. A further increase in net new space of 10% was achieved, at the top end of the target range.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	03	

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 	 	Overview	

 	 	Group Chief Executive’s review (continued)	
 
Like for like sales growth slowed in the first nine months of 2007/08 to 2.7%, with the gift giving events of Valentine’s Day and Mother’s Day being disappointing. The very important fourth quarter was particularly difficult with like for like sales declining by 8.6%, resulting in a full year decline of 1.7% . Total sales increased by 4.1% on a 52 week basis (see page 37) and by 2.0% as reported. Operating profit was down by 19.6% on a 52 week basis (see page 37) and by 19.7% as reported, to $262.2 million (2006/07: $326.7 million). The operating margin of 9.7% (2006/07: 12.3%; 12.5% on a 52 week basis) reflected expense deleverage of 190 basis points as a result of the decline in like for like sales, and the adverse impacts of additional new space (60 basis points) and change in gross margin (30 basis points). The movement in gross margin percentage was due to the significantly higher cost of gold and a greater proportion of sales from Jared, partly offset by supply chain initiatives and some limited price increases. The bad debt charge of 3.4% of total sales (2006/07: 2.8%), was at the high end of the range of the last ten years, but was largely offset by higher income associated with the receivables due to a lower monthly collection rate. The proportion of sales through the in-house credit card was 52.6% (2006/07: 51.7%) .
ROCE was 14.9% (2006/07: 21.5%), reflecting the lower operating profit and investment in a 10% increase in space. The proportion of stores under six years old continued to increase and was 38% in 2007/08 compared to 32% in 2006/07. The higher proportion of immature stores constrains ROCE in the short term, but increases operating profit and drives future growth.
The division continued to implement its proven strategy and the performance of the business against these criteria is set out below:
Strategy: To achieve sector leading performance standards
 In 2007/08 the division increased total sales by 4.1% (52 week basis, see page 37), and, despite the comparative weakness of the middle mass market, performed broadly in line with the total US jewellery market which grew by 4.0% to $64.7 billion in calendar 2007 (2006: $62.2 billion; source: US Department of Commerce). The Group’s share of the speciality jewellery market remained at 8.8% . In 1997/98, the division accounted for 4.8% of speciality jewellery sales and 7.0% in 2002/03.
Over the five year period ended on 2 February 2008 the division’s operating margin averaged 12.0% and Earnings Before Interest and Tax (“EBIT”) / Year End Total Assets ratio was 14.9% . Jewelers of America reported that the typical speciality retail jeweller was achieving an average operating margin of 5.4% and a 7.7% EBIT / Year End Total Assets ratio over the five years to 31 December 2006, being the last year for which figures have been published. While 2007/08 was difficult, over the last five years the Group’s total sales have increased by 56.4% and operating profit by 25.8% .
Strategy: To improve store productivity
 The key driver of the division’s comparatively high operating margins and return on assets is store productivity, which is well above that of the industry as a whole. While the Group’s strategy is to increase store productivity, there was a decline in 2007/08, reflecting the fall in like for like sales and an increase in the proportion of immature stores under six years old. Over the last five years the sales per store for Kay and Jared have increased to $1.71 million from $1.53 million and to $5.34 million from $4.57 million respectively. The regional brands achieved sales per store of $1.34 million in 2007/08 with the difference in performance between Kay and the regional brands continuing to reflect the benefit of national television advertising.
Strategy: To grow new store space
 The Group has strict criteria for investment which have been consistently applied. Over the last five years net new store space of 10% per annum has required a total investment of some $700 million in fixed and working capital. Appraisal reviews show that, in aggregate, investment returns continue to exceed the Group’s targeted 20% internal rate of return over five years. In 2007/08, net new store space grew by 10% (2006/07: 11%). Over 80% of the growth was outside traditional malls in 2007/08 and at 2 February 2008 about 40% of store space was off-mall. The table below sets out the store numbers, net new openings and the potential number of stores by chain and format:

 	 	 	 	 	 	 	Expected	 	 	 	
 	 	 	Net	 	 	 	net	 	Long	 	
 	3 February	 	openings	 	2 February	 	openings	 	term	 	
Store numbers	2007	 	2007/08	 	2008	 	2008/09	 	potential	 	
											
Kay	 	 	 	 	 	 		 		 	
   Mall	772	 	17	 	789	 	6	 	850+	 	
   Off-mall	52	 	40	 	92	 	19	 	500+	 	
   Outlet	5	 	5	 	10	 	8	 	50-100	 	
   Metropolitan	3	 	nil	 	3	 	nil	 	c.30	 	
											
 	832	 	62	 	894	 	33	 	1,430+	 	
Regionals	341	 	10	 	351	 	(14	)	c.700	 	
Jared	135	 	19	 	154	 	17	 	c.300	 	
											
Total	1,308	 	91	 	1,399	 	36	 	2,430+	 	
											
Real estate investment
 In 2007/08, fixed capital investment was $111.1 million (2006/07: $101.1 million), including some $60.1 million (2006/07: $57.3 million) related to new store space. In 2008/09, revisions to sales projections reflecting the challenging trading conditions, will result in fewer opportunities that meet the Group’s investment criteria. Therefore, in 2008/09, space growth is expected to be about 5%, net of about 30 store closures (2007/08: 17). Over the longer term the US division continues to have the potential to almost double its size. This can be achieved through organic expansion within the existing formats for Kay and Jared. For the regional brands to achieve this potential would require one or more acquisitions, and such activity is not expected to occur imminently. Recent and planned investment in the store portfolio, both fixed and working capital, is set out below:

 	Planned	 	 	 	 	 	 	 	
 	2008/09	 	2007/08	 	2006/07	 	2005/06	 	
 	$m	 	$m	 	$m	 	$m	 	
									
Total new stores	 	 	 	 	 	 	 	 	
   Fixed capital investment	45	 	60	 	57	 	45	 	
   Working capital investment	90	 	119	 	119	 	96	 	
									
Total investment	135	 	179	 	176	 	141	 	
Other store fixed capital	 	 	 	 	 	 	 	 	
   investment	24	 	28	 	30	 	28	 	
									
Total store investment	159	 	207	 	206	 	169	 	

 

04	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Overview	

 	 	
 
Fixed capital expenditure in 2008/09 is planned to decrease to about $90 million, including circa $45 million related to new stores. The investment in working capital, that is inventory and receivables, associated with gross space growth amounted to some $119 million in 2007/08 and is expected to be significantly lower at about $90 million in 2008/09. 62 stores were refurbished or relocated (2006/07: 59), with some 51 planned for 2008/09.
Operating initiatives in 2008/09 
 In the current challenging environment the US business has taken action to control costs tightly. Store staff hours and advertising expenditure have been realigned, where possible, to reflect current sales expectations. Staff training and development continues to be a priority, as does investment to enhance in-store procedures to improve customer service and productivity. Staffing levels elsewhere have been frozen, despite the growth in store numbers, and a range of other costs have been cut.
Consumers’ financial positions continue to deteriorate which may lead to a further increase in the bad debt charge, although this is expected to be somewhat offset by increased income from the credit portfolio. Consequently credit authorisation criteria continue to be reviewed and outstanding balances are very closely monitored with prompt action being taken in response to changes in performance. In addition, further investment in collection systems is taking place.
The development of exclusive ranges, such as the Leo Diamond, the Peerless Diamond and the Hearts Desire collection and the expansion of the Le Vian selection, continue to help differentiate the division in the marketplace and to increase average transaction value. The 2007/08 year end inventory was above plan by about $20 million due to the difficult fourth quarter and future purchases are being strictly controlled. Actions to realign inventory to current sales levels have been taken and it is anticipated that this will be achieved by June 2008.
In 2006/07 and 2007/08 substantial increases in gold and platinum costs had an impact on the entire US jewellery sector, and were largely not passed on to consumers. After careful consideration and planning it was decided to increase prices covering a broad merchandise range, including both basic and fashion products, following Valentine’s Day 2008. The Group’s pricing strategy is to be competitive over the long term; however the price changes have resulted in a departure from this position in the short term, although an increasing number of speciality jewellers are also increasing prices. While the impact of the price increases will only be fully apparent in the second quarter of 2008/09, the early results are encouraging.
Advertising expenditure as a percentage of sales is being realigned to nearer historic levels, in addition the cadence of promotional activity is being increased and made more responsive to market conditions. The Kay website will be further developed and an e-commerce facility on the Jared website is planned to be introduced in the second half of 2008/09.
 UK performance review
(26% of Group sales)

 	 	 	 	 	 	 	Change at	 	Like	 	
 	 	 	 	 	 	 	constant	 	for like	 	
 	 	 	 	 	 	 	exchange	 	change	 	
 	 	 	 	 	 	 	rates on a	 	on a	 	
 	2007/08	 	2006/07	 	Change	 	52 week	 	52 week	 	
 	52 weeks	 	53 weeks	 	reported	 	basis	(1 )  	basis	 	
 	$m	 	$m	 	%	 	%	 	%	 	
											
Sales: H.Samuel	513.4	 	490.3	 	4.7	 	(0.1	)	1.3	 	
           Ernest Jones	438.8	 	409.1	 	7.3	 	2.3	 	2.9	 	
            Other	7.4	 	7.7	 	(3.9	)	(7.5	)	 	 	
											
Total (2)  	959.6	 	907.1	 	5.8	 	0.9	 	2.0	 	
											
Operating profit	105.1	 	103.4	 	1.6	 	(1.3	)	 	 	
											
Operating margin (2)  	11.0%	 	11.4%	 		 		 	 	 	
											
ROCE	29.9%	 	32.7%	 		 		 	 	 	
											
(1)	See page 37 for reconciliation of impact of exchange rates and adjustment for impact of 53rd week in 2006/07.	
(2)	See Group financial review for tables analysing total sales growth and movement in operating margin.	
In a tough UK retail marketplace like for like sales were ahead of last year and operating margins, cash flow and ROCE remained strong. The business achieved further improvements in the key areas of execution, particularly customer service.
Like for like sales growth was 2.0%, an encouraging performance in an increasingly challenging marketplace. Growth in the first nine months of 2007/08 was stronger than last year at 4.7%, but became more difficult in the fourth quarter with like for like sales declining by 1.7% . Total sales increased by 0.9% at constant exchange rates on a 52 week basis (see page 37) and by 5.8% on a reported basis to $959.6 million (2006/07: $907.1 million).
Operating profit was little changed at constant exchange rates on a 52 week basis (see page 37); the reported increase was 1.6% to $105.1 million (2006/07: $103.4 million). Operating margin was down 40 basis points on the prior year reflecting expense leverage of 40 basis points from the small increase in like for like sales combined with tight control of costs, an adverse movement in gross margin percentage of 60 basis points and the benefit to 2006/07 of the 53rd week (adverse 20 basis points). The movement in gross margin was primarily caused by changes in mix due to the strong performance of the watch category, some impact from commodity costs and an increased proportion of sales from Ernest Jones. ROCE was 29.9% (2006/07: 32.7%), primarily reflecting the impact of the 53rd week in 2006/07 and a slight increase in capital employed.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	05	

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 	 	Overview	

 	 	Group Chief Executive’s review (continued)	
 
Further progress was made in implementing the division’s successful strategy and its performance against those criteria are set out below:
Strategy: To achieve sector leading performance standards
 The total UK jewellery market was unchanged at £4.5 billion in calendar 2007 including VAT (source: Office of National Statistics); and the division’s market share was similar to last year at 12.1% . In 2007/08, the division’s operating margin was 11.0% and its EBIT / Year End Total Assets ratio was 21.2% . In the year to 31 March 2007, the last year for which figures are available, the next five largest speciality retail jewellers had an average operating margin of 5.7% and a 6.4% EBIT / Year End Total Assets ratio.
Strategy: To improve store productivity
 Store productivity increased in both H.Samuel and Ernest Jones in 2007/08 to £0.72 million from £0.70 million and to £1.11 million from £1.08 million respectively. This reflected divisional like for like sales growth of 2.0% and, in H.Samuel, a continuing reduction of the store base to focus on stores in larger centres that provide an opportunity to achieve a greater ROCE. With average selling space of about 870 square feet per store, Ernest Jones achieved the highest sales density of any Signet brand.
Real estate and investment 
 During 2007/08, 27 stores were refurbished or relocated. At the year end, 282 locations, mostly H.Samuel, traded in the customer oriented format, accounting for some 50% of the UK division’s sales. At 2 February 2008, there were 359 H.Samuel and 204 Ernest Jones branches (3 February 2007: 375 and 206 respectively).

 	2007/08	 	2006/07	 	2005/06	 	
							
H.Samuel stores		 		 		 	
  Openings	1	 	–	 	3	 	
  Closures	(17	)	(11	)	(15	)	
  Year end	359	 	375	 	386	 	
							
Ernest Jones stores		 		 		 	
  Openings	–	 	1	 	5	 	
  Closures	(2	)	(2	)	(2	)	
  Year end	204	 	206	 	207	 	
							
Total stores at year end	563	 	581	 	593	 	
							
The level of store capital expenditure during 2007/08 was £9 million (2006/07: £8 million) reflecting the phasing of the refurbishment cycle. In 2008/09 it is planned to roll out up to 49 sites, including new locations, in the enhanced Ernest Jones store design, which produced very encouraging results when tested in the second half of 2007/08. In addition, up to a further 25 H.Samuel locations are expected to begin trading in the more customer oriented format by Christmas 2008. As a result store capital expenditure is expected to increase to some £25 million in 2008/09. Recent and planned investment in the portfolio is set out below:

 	Planned	 	 	 	 	 	 	 	
 	2008/09	 	2007/08	 	2006/07	 	2005/06	 	
									
Store refurbishments and relocations	69	 	27	 	28	 	78	 	
New H.Samuel stores	2	 	1	 	–	 	3	 	
New Ernest Jones stores	3	 	–	 	1	 	5	 	
Store fixed capital investment	£25m	 	£9m	 	£8m	 	£22m	 	
									
Operating initiatives for 2008/09 
 In the current uncertain environment, the UK business will continue to manage costs, inventory and gross margin very closely. While the impact of commodity cost increases has been less than in the US due to the weakness of the dollar, price increases have been implemented. The successful initiative to drive footfall by taking advantage of the scale of the business, while maintaining gross margin, through key volume lines will continue to be developed. The diamond selection, particularly in exclusive and value ranges, is being enhanced. Mixed metal ranges are being expanded and new merchandise is being tested more efficiently. In the watch category, relationships with the leading agencies continue to be a priority.
Additional initiatives continue to be introduced to raise customer service standards even further, including extension of the customer satisfaction index to all sites and enhancements to training materials on product knowledge and selling skills. New store communication and executional tools are being tested.
Advertising expenditure will be adjusted to reflect the return on investment being achieved. The “H.Samuel helps you say it better” and “Only at Ernest Jones” marketing propositions are planned to be developed further and the e-commerce websites for both brands are expected to be improved.

Terry Burman
Group Chief Executive
9 April 2008

06	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Overview	

Five year financial summary	 	

											
 	2007/08	 	2006/07	(1)  	2005/06	 	2004/05	 	2003/04	(2)  	
 	$m	 	$m	 	$m	 	$m	 	$m	 	
											
Income statement:		 		 		 		 		 	
Sales	3,665.3	 	3,559.2	 	3,154.1	 	3,004.8	 	2,697.2	 	
Cost of sales	(3,264.8	)	(3,092.4	)	(2,729.4	)	(2,551.5	)	(2,306.1	)	
											
Gross profit	400.5	 	466.8	 	424.7	 	453.3	 	391.1	 	
Administrative expenses	(158.0	)	(142.1	)	(133.3	)	(129.8	)	(113.1	)	
Other operating income	108.8	 	91.5	 	83.3	 	71.8	 	63.2	 	
											
Operating profit	351.3	 	416.2	 	374.7	 	395.3	 	341.2	 	
Financing costs (net)	(17.8	)	(15.4	)	(14.0	)	(16.0	)	(17.5	)	
											
Profit before tax	333.5	 	400.8	 	360.7	 	379.3	 	323.7	 	
Taxation	(118.3	)	(134.8	)	(125.3	)	(128.6	)	(116.6	)	
											
Profit for the period	215.2	 	266.0	 	235.4	 	250.7	 	207.1	 	
											
Earnings per share (3)  	12.6	c	15.4c	 	13.6c	 	14.5c	 	12.1c	 	
Dividends per share	7.28	c	7.16c	 	5.94c	 	5.58c	 	4.20c	 	
											
Balance sheet:		 		 		 		 		 	
Working capital	1,816.1	 	1,749.7	 	1,228.0	 	1,372.1	 	1,204.9	 	
Total assets	3,024.2	 	2,965.0	 	2,603.6	 	2,476.5	 	2,303.3	 	
Cash and cash equivalents	41.7	 	152.3	 	92.9	 	193.5	 	233.0	 	
Short term debt	(36.3	)	(5.5	)	(267.4	)	(100.4	)	(112.3	)	
Long term debt	(380.0	)	(380.0	)	–	 	(251.0	)	(266.0	)	
Total equity	1,806.1	 	1,746.0	 	1,555.6	 	1,458.5	 	1,274.6	 	
Ordinary shares in issue (million)	1,705.5	 	1,713.6	 	1,738.8	 	1,735.6	 	1,726.2	 	
											
Cash flow:		 		 		 		 		 	
Capital expenditure	(140.4	)	(124.4	)	(136.6	)	(131.1	)	(85.5	)	
Investment in working capital	(170.7	)	(173.5	)	(128.1	)	(160.2	)	(70.3	)	
Depreciation and amortisation	114.1	 	98.4	 	83.2	 	77.6	 	67.8	 	
Net debt (3)  	(374.6	)	(233.2	)	(174.5	)	(157.9	)	(145.3	)	
											
Ratios:		 		 		 		 		 	
Gearing (3)  	20.7%	 	13.4%	 	11.2%	 	10.8%	 	11.4%	 	
ROCE (3)  	16.8%	 	22.8%	 	22.4%	 	26.3%	 	25.7%	 	
Fixed charge cover (3)  	1.8x	 	2.0x	 	2.0x	 	2.2x	 	2.1x	 	
											
Store data:		 		 		 		 		 	
Stores numbers (at end of period)		 		 		 		 		 	
  US	1,399	 	1,308	 	1,221	 	1,156	 	1,103	 	
  UK	563	 	581	 	593	 	602	 	604	 	
Percentage (decrease)/increase in like for like sales:		 		 		 		 		 	
  US	(1.7)%	 	6.2%	 	7.1%	 	5.9%	 	4.6%	 	
  UK	2.0%	 	1.2%	 	(8.2)%	 	3.0%	 	5.5%	 	
  Group	(0.7)%	 	4.8%	 	2.4%	 	5.0%	 	4.9%	 	
Number of employees (full-time equivalents)	17,243	 	16,836	 	15,652	 	15,145	 	14,502	 	
											
(1)	53 week year.	
(2)	Based on Historic UK GAAP, restated for IFRS (see definition on page 140), and are therefore unaudited.	
(3)	Earnings per share, net debt, gearing, ROCE and fixed charge cover are defined on pages 140 and 141.	
 
The financial data included in the Five year financial summary above has been derived, in part, from the consolidated accounts for such periods included elsewhere in this Annual Report. The financial data should be read in conjunction with the accounts, including the notes thereto, and the Group financial review included on pages 35 to 43.
See page 86 for notes on the conversion of pound sterling figures to US dollars following the change in functional currency of the Company as of 5 February 2007 and the move to reporting in US dollars.
Further selected financial data is shown on pages 137 and 138. The accounts of the Group for 2007/08, 2006/07, 2005/06 and 2004/05 have been prepared in accordance with IFRS, which differs in certain respects from US GAAP. The Group took the exemption not to restate comparatives for IAS 32 ‘Financial instruments: disclosure and presentation’ and IAS 39 ‘Financial instruments: recognition and measurement’ in 2005/06. See pages 116 to 122 for information on the material differences between IFRS and US GAAP that affect the Group’s profit and shareholders’ equity.

 

Signet Group plc Annual Report & Accounts year ended 2 February 2008	07	

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 	 	Overview	

 	 	 	
 	 	
US division Largest speciality retail jeweller with 4.2% (1) total market share	 	

	

 	No.1 speciality
retail jeweller in US	 	
 	 	 	 	 	 	 	 	
 	 	07/08	 	06/07	 	02/03	 	
 							 	
 	Sales	$1,489.6m	 	$1,486.7m	 	$1,011.1m	 	
 							 	
 	Stores	894	 	832	 	676	 	
 							 	
 	Average sales per store (2)	$1.710m	 	$1.815m	 	$1.470m	 	

	

  	Total sales: 5 year c.a.g.r.	 	8.1 %	 	
 				 	
 	Customers typical household income	$ 35k-100k	 	
 				 	
 	Average selling price	 	$ 327	 	
 				 	
 	Share of US jewellery sector (1)	 	2.3 %	 	
 				 	
 	Average store selling space (mall)	 	1,270 sq ft	 	

 	Long term potential to add
over 500 stores	 	

 	

 	
 	No.1 US off-mall
destination jeweller	 	
 	 	 	 	 	 	 	 	
 	 	07/08	 	06/07	 	02/03	 	
 							 	
 	Sales	$756.4m	 	$664.4m	 	$258.7m	 	
 							 	
 	Stores	154	 	135	 	67	 	
 							 	
 	Average sales per store (2)  	$5.341m	 	$5.676m	 	$4.277m	 	

	

  	Total sales: 5 year c.a.g.r.	 	23.9 %	 	
 							 	
 	Customers typical household income	 	$ 50k-150k	 	
 							 	
 	Average selling price	 	$ 747	 	
 							 	
 	Share of US jewellery sector (1)	 	1.2 %	 	
 							 	
 	Average store selling space	 	4,900 sq ft	 	

 	Signet’s
 fastest growing brand	 	

 	 	 	 	 	 	 	
 	Group Sales	 	US
$2,705.7m 74%	Kay
$1,489.6m 41%	 	 	
  							
 	Operating Profit (3)	 	US
$262.2m 71%	 	 	 	
 	 	 	 	 	 	 	
(1) Market share. See pages 12 and 24.	
(2) Includes only stores operated for the full financial period.	
(3) Excluding Group central costs of $16.0m.	
 	
08	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Overview	

 	 	
 	 	
 	UK division Largest speciality retail jeweller with 12.1% (1) total market share	

 	

 	
 	No.1 UK speciality
jewellery brand	 	
 	 	 	 	 	 	 	 	
  	 	07/08	 	06/07	 	02/03	 	
 							 	
 	Sales	£256.7m	 	£260.8m	 	£275.0m	 	
 							 	
 	Stores	359	 	375	 	418	 	
 							 	
 	Average sales per store (2)  	£0.722m	 	£0.695m	 	£0.677m	 	

	

 	Total sales: 5 year c.a.g.r.	 	(1.4 )%	 	
 							 	
 	Customers typical household income	 	£15-40k	 	
 							 	
 	Average selling price	 	£44	 	
 							 	
 	Share of UK jewellery sector (1)	 	6.5 %	 	
 							 	
 	Average store selling space	 	1,100 sq ft	 	

 	Nearly 150 years
of jewellery heritage	 	

 	

 	
 	No.1 UK upper
middle market jeweller	 	
 	 	 	 	 	 	 	 	
  	 	07/08	 	06/07	 	02/03	 	
 							 	
 	Sales	£219.4m	 	£217.6m	 	£186.0m	 	
 							 	
 	Stores	204	 	206	 	192	 	
 							 	
 	Average sales per store (2)  	£1.105m	 	£1.079m	 	£1.030m	 	

	

 	Total sales: 5 year c.a.g.r.	 	3.4 %	 	
 							 	
 	Customers typical household income	 	 	£30-50k	 	
 							 	
 	Average selling price	 	 	£180	 	
 							 	
 	Share of UK jewellery sector (1)	 	 	5.6 %	 	
 							 	
 	Average store selling space	 	 	870 sq ft	 	

 	Highest sales density per
square foot of any Signet brand	 	

 

Regional	 	Jared	 	 	UK (4)	 	H.Samuel	 	Ernest Jones	 	
$459.7m 12%	 	$756.4m 21%	 	 	$959.6m 26%	 	$513.4m 14%	 	$438.8m 12%	 	
											
 	 	UK	
 	 	$105.1m 29%	
 	(4) Includes other sales of $7.4 m.	
Signet Group plc Annual Report & Accounts year ended 2 February 2008	09	

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 	 	Business review	

 	 	 	
 	 	US competitive strengths	

 

 	 	 	Competitive strengths	

Store operations and
 human resources	 	 	The ability of the sales associate to explain the value proposition
 is essential to most jewellery purchases.	
 	 	 	•	Centrally prepared training schedules and materials used by all stores	
 	 	 	•	All store managers are trained diamontologists	
 	 	 	•	About 5,300 trained diamontologists in total	
 	 	 	•	Clear, measurable daily store standards	
 	 	 	•	Each store receives a monthly customer experience report	

Merchandising	 	 	Consumer offered superior value and selection	
 	 	 	•	Leading supply chain capability among middle market speciality jewelers	
 	 	 	•	Each store merchandised on an individual basis	
 	 	 	•	Highly responsive demand-driven merchandise systems	
 	 	 	•	24 hour resupply capability	

Marketing	 	 	Leading brands in middle market sector	
 	 	 	•	Largest speciality jewellery retailing marketing budget in US	
 	 	 	•	Ability to achieve leverage through national television advertising	
 	 	 	•	Marketing database of over 25 million names	

Real estate	 	 	Well designed stores located in primary locations with high visibility and traffic flows	
 	 	 	•	Strict real estate criteria consistently applied over time	
 	 	 	•	Well tested formats and locations	
 	 	 	•	Attractive tenant for landlords due to high store productivity	

Credit operations	 	 	Ability to facilitate customer transactions	
 	 	 	•	About 50% of sales utilise in-house credit	
 	 	 	•	Dedicated, proprietory scoring cards	
 	 	 	•	Manage credit in context of our business	

10	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	

 	 	 	 	 	 	 	
 	Initiatives during 2007/08	 	 	Initiatives planned for 2008/09	

 	 	 	 	 	 	 	
 	•	Completed roll-out of enhanced training procedures	 	 	•	Development of a new training programme for the Leo Diamond	
 	•	Improvements to repair service	 	 	•	Improvements to off-site store staff training programmes and training	
 	•	Further enhancements to store staff recruitment processes	 	 	 	programmes for future district managers	
 	•	Continued improvement of in-store execution	 	 	•	Enhancements to in-store procedures	

 	 	 	 	 	 	 	
 	•	Continued to develop sourcing from rough diamond initiative	 	 	•	Realign prices to reflect commodity cost increases	
 	•	Evolution of ‘Journey’ assortment	 	 	•	Significantly increased proportion of merchandise sourced through rough	
 	•	Further enhancements to store staff recruitment processes	 	 	 	diamond initiative	
 	•	Development of Peerless Diamond range in Jared	 	 	•	Further development of exclusive brands	
 	•	Launch of Hearts Desire assortment in Jared	 	 	•	Introduction of additional Le Vian ranges	
 	•	Expansion of Le Vian range to all mall brands	 	 	•	Increase distribution capacity	

 	 	 	 	 	 	 	
 	•	Further growth in Kay television impressions	 	 	•	Continue support of Kay brand	
 	•	Jared advertising on national network television	 	 	•	Increase in Jared TV impressions	
 	•	Enhancement of the Kay website	 	 	•	Commencement of national radio advertising for Jared	
 	•	Increased support for branded merchandise	 	 	•	Further development of Kay e-commerce capabilities	
 	 	 	 	 	•	Enable Jared website for e-commerce	
 	 	 	 	 	•	Raise level of promotional activity	

 	•	Net space increase of 10%	 	 	•	Net new store space growth of about 5% planned	
 	•	40 Kay off-mall openings	 	 	•	100th off-mall Kay to be opened	
 	•	Continued testing of Kay in outlet centres	 	 	•	17 Jared openings expected	
 	•	19 Jared openings	 	 	•	All planned net new space in off-mall locations	
 	•	About 80% of new space in off-mall locations	 	 	 	 	

 	 	 	 	 	 	 	
 	•	Additional resources invested in collection procedures	 	 	•	Improved information technology and systems support for credit collection	

 

Signet Group plc Annual Report & Accounts year ended 2 February 2008	11	

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 	 	Business review	

 	 	US marketplace	
 
Introduction
Total US jewellery sales, including watches and fashion jewellery, are provisionally estimated by the US Department of Commerce to have been $64.7 billion in calendar 2007. The US jewellery market has grown at a compound annual growth rate of 5.9% over the last 25 years. The US jewellery market accounts for just under 50% of global jewellery consumption (source: Jewelry Industry Research Institute). Management believes that the jewellery category competes with other sectors, such as electronics, clothing and furniture, as well as travel and restaurants for consumers’ discretionary spending.
A jewellery sale normally requires interaction between the customer and the sales associate, during which the items are removed from the display cases, with their respective qualities explained to the customer. Consumer surveys conducted by Signet indicate that a key factor in the purchase of jewellery is the customer’s confidence in the sales associate. Other important competitive points of differentiation are merchandise selection and the reputation of the retail brand name. In the speciality sector, while price is important to the customer, management believes these other three factors are of a higher priority.
Market structure
While the US retail jewellery industry is highly fragmented, the share taken by specialty jewellers has been steady at about 48% of total jewellery sales. General retailers, such as department stores, discount outlets, television home shopping, general merchandisers, apparel retailers and accessory stores, had a 44.9% market share in calendar 2007. Internet jewellery sales, including both speciality and general retail websites accounted for 7.4% in calendar 2007. The largest jewellery retailer was Wal-Mart Stores, Inc. (“Wal-Mart”), whose merchandise mix is believed by management to be markedly different to that of Signet’s US division. In calendar 2006, the latest year for which data are available, Wal-Mart had an estimated market share of 4.5% (source: National Jeweler). Signet is the second largest jewellery retailer with a market share of 4.2% in calendar 2007. See table below for details.

 	  Calendar	 	  Calendar	 	  Calendar	 	Calendar	 	
 	2007	 	2006	 	2002	 	1997	 	
									
Total US jewellery sales (1)  	$64.7bn	 	$62.2bn	 	$51.2bn	 	$40.9bn	 	
Speciality share (2)  	47.7%	 	48.4%	 	48.4%	 	48.3%	 	
General retailers’ share	44.9%	 	45.2%	 	48.2%	 	49.4%	 	
Internet share (1)  	7.4%	 	6.4%	 	3.4%	 	2.3%	 	
Signet share	4.2%	 	4.3%	 	3.4%	 	2.3%	 	
									
(1)	Source: US Department of Commerce	
(2)	Source: US Census Bureau	
(3)	Source: National Jeweler	
2007/08
In calendar 2007 the US jewellery market grew by a provisional 4.0%, primarily reflecting the slower growth of discretionary disposable income and was below the 25 year average of 5.9% . The first quarter was weak, reflecting poor weather that adversely affected the important Valentine’s Day period. The second and third quarters, when the jewellery market is primarily driven by bridal related purchases, was a little more buoyant, but the key fourth quarter was disappointing. The slowdown in the fourth quarter reflected the general retail marketplace, with jewellery sales being particularly affected. The speciality jewellery sector grew by 2.6% in calendar 2007, below the 25 year average of 5.1% . The middle market is
believed to have been weaker than the total speciality market, reflecting the greater pressure on discretionary expenditure experienced by median income households than those with income in the top quartile.
Long term performance
Jewellery sales have, over the longer term, grown broadly in line with personal consumption expenditure. Jewellery sales are seasonal as the primary reasons to purchase jewellery and watches are for bridal related occasions and gift giving events such as Christmas, birthdays, Valentine’s Day and Mother’s Day. Jewellery is also purchased for self reward and as a fashion accessory. The rate of growth accelerates and slows broadly in line with major non-food retail categories as the majority of jewellery sales are made in the middle mass market. Jewellery sales outperformed other comparable sectors in the more buoyant late 1990’s, underperformed in 2001, performed in line with selected other non-food retail categories during 2002 to 2007. Over the last ten years, Signet’s total US dollar sales rose (including the acquisition of Marks & Morgan) at a compound annual growth rate of 11.1% compared to 4.7% for the jewellery sector as a whole.
Management believes that the long term outlook for jewellery sales is encouraging given the expected growth in disposable income and the increasing number of women in the work force. However, jewellery sales are subject to fluctuations in the general level of retail sales.
Speciality jewellery sector
Signet’s US division had an 8.8% market share of the speciality sector in 2007/08 (2006/07: 8.8%). Its largest direct competitor had a speciality market share of 6.4% (2006/07: 7.3%). Kay and Jared were two of the top four brands in the speciality sector. Only these four brands had a level of sales that enabled the cost effective use of national television advertising, the most efficient form of marketing in the US. Of the two other brands, only one targeted the middle market segment, which is the primary customer of Signet’s US division. In calendar 2006 only three other speciality retail jewelers had sales of more than $500 million, according to National Jeweler. Independent retail jewellery stores (including medium and smaller regional chains with sales of less than $500 million) together accounted for over 70% of the speciality market.
In calendar 2007, the Jewelers Board of Trade estimated that there were some 23,449 speciality jewellery firms in the US, compared to 27,580 in 1997 and 25,043 in 2002, which is a compound annual decrease of 1.6% since 1997. In calendar 2007 the number of speciality firms declined by some 349, a fall of 1.5% . Since 1997 the number of stores operated by the five largest speciality jewellery retailers increased by about 950, of which some 66% is accounted for by Signet’s growth. This reflects the continuing consolidation taking place in the sector, which provides a significant growth opportunity for those businesses with competitive advantages in the sector.
Diamond jewellery sales
Diamond jewellery accounts for some 55% of total jewellery sales in the US market (source: Diamond Information Centre). About 50% of worldwide diamond jewellery sales are made in the US according to the Jewelry Industry Research Institute. During the last ten years US diamond jewellery sales have risen by 6.1% per annum compared to 4.7% for the total jewellery market. Diamond jewellery accounted for 75% of the US division’s merchandise sales in 2007/08, compared to 63% in 1997/98 and 72% in 2002/03.

12	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

US operating review	 	

Brand reviews	

Kay Jewelers	
 	
Introduction	
Kay operated 894 stores in 50 states at 2 February 2008 (3 February 2007: 832 stores) and the expansion of Kay as a nationwide chain is an important element of the US division’s growth strategy. Management believes that there is a long term potential for over 1,400 Kay stores in the US. Since 2004/05 Kay has been the largest speciality retail jewellery brand in the US, based on sales, and has subsequently increased its leadership position. Kay targets households with an income of between $35,000 and $100,000; such households account for about 40% of US jewellery expenditure.	

Kay 5 year sales, $m	

2007/08
Kay sales were $1,489.6 million (2006/07: $1,486.7 million). The average retail price of merchandise sold in Kay in 2007/08 was $327 (2006/07: $317). During the year a further net 62 stores were opened, bringing the total to 894. The roll-out of Kay stores in open-air retail centres accelerated with 40 opened in 2007/08 (2006/07: 21 opened). The test of Kay stores in outlet centres entered its second year with five additional sites (2006/07: four additional sites) with encouraging initial results. In September 2006 an e-commerce facility was successfully launched on the Kay website and this was enhanced during 2007/08. E-commerce sales have increased significantly but remain small in the context of the division.
Customer service
Critical to Kay’s success are well trained staff with the appropriate product knowledge and selling skills to communicate the competitive value of merchandise. During 2007/08 the roll-out of the US division’s enhanced training programme and new store communications system was completed.
Merchandising
Each store has a core inventory package that includes those items promoted by Kay’s marketing. This core inventory is supplemented on a store by store basis by items selected by the division’s central merchandising function based on the sales pattern of each individual store.
Marketing
The romance-and-appreciation-based theme of Kay’s television advertising programme continues to utilise the tag line “Every kiss begins with Kay”, which has been used to improve name recognition of the chain since 2000. Management believes that use of national television advertising, which is considered to be the most efficient and cost-effective form of paid for marketing, enhances brand name recognition nationwide, provides increased marketing leverage and improves access to prime store real estate sites.
Television advertising is supplemented with national print advertising in USA Today and national network radio advertising. In 2007/08 the US division produced 11 Kay catalogues that featured a wide selection of merchandise and were prominently displayed in stores and mailed directly to targeted customers. Telephone marketing is also used. The Kay website is the third most visited speciality retail jewellery website (source: Hitwise).
Real estate
Kay stores have historically been located in covered regional malls and it is believed that in the longer term there is potential for some 850 stores in this format.
Since 2002/03 new formats have been developed for locations not in traditional malls because management believes these alternative locations present an opportunity to reach new customers who are aware of the brand but have no convenient access to a store, or for customers who prefer not to shop in a mall. Such stores further leverage the strong Kay brand, marketing support and the central overhead.
Mall stores
The average mall store contains approximately 1,270 square feet of selling space and 1,500 square feet of total space. The design and appearance of stores is standardised. The typical capital and working capital investment in the first year of trading is about $1.1 million. To maximise customer footfall, these stores are normally only opened in centre court locations, corner locations by the main entrance to a mall or in corner locations by the food court; around 60% of the stores have centre court sites. In 2007/08 a net 17 new mall stores were opened, bringing the total to 789. A further net six mall stores are planned to be opened in 2008/09.
Off-mall locations
Kay stores in off-mall centres provide an expansion opportunity to take advantage of these fast growing retail venues. These include powerstrips and lifestyle centres. A ‘power strip’ centre is a suburban open air shopping complex but the retail mix is predominantly ‘category killer’ superstores with some smaller speciality units. ‘Lifestyle’ refers to suburban open air shopping centres where the retail mix is biased toward fashion stores and is also likely to have a large number of restaurants and other leisure facilities such as a movie theatre.
Kay stores in off-mall locations were successfully tested for three years from 2003/04 with 31 stores having been opened. The roll-out of Kay stores in these open air centres began in 2006/07 and at 2 February 2008 there were 92 trading; it is planned to open a net 19 in 2008/09. A long term potential for over 500 suitable locations has been identified in these centres, and will account for the majority of new Kay stores. Such stores are expected to have a lower capital expenditure, lower

Signet Group plc Annual Report & Accounts year ended 2 February 2008	13	

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 	 	Business review	

 	 	US operating review (continued)	

rents and lower sales per store at maturity than that of the Kay chain average, and are anticipated to satisfy the normal return on investment hurdle set by the Group.	
 	
Outlet locations	
A test of Kay in outlet malls began in 2006/07 when four stores were opened. These stores provide penetration into the value conscious sector of the market and are located in two types of centres: “Factory outlets”, in which 50% or more tenants are manufacturers’ outlets; and ‘Mixed use’ centres, typically with one million square feet of manufacturers’ outlet units, traditional mall stores and large space retailers. The core merchandise is the same as in all other Kay stores, as is the pricing structure, but the range of such outlet locations is supplemented by clearance merchandise rather than fashion product. At 2 February 2008 there were ten (3 February 2007: five) Kay stores in outlet locations and a further eight are planned to be opened in 2008/09. Management believes there is a long term potential for between 50 and 100 Kay stores in outlet malls. The capital expenditure to open an outlet store is similar to that of a traditional mall store.	
 	
Metropolitan locations	
Kay metropolitan stores allow penetration into high population downtown areas under-served by the division’s typical mall and off-mall stores. These metropolitan markets have a high density of retail, business, entertainment and government establishments with good public transit services and high pedestrian footfall. While the performance of the three stores opened in 2005/06 has been satisfactory, no additional metropolitan stores have been opened due to a lack of real estate that satisfies both operational and financial investment criteria. Management believes that there is a long term potential for about 30 metropolitan Kay stores.	
 	
These Kay stores have a higher capital expenditure, higher rents and higher sales per store at maturity than that of the Kay chain average. The development of these stores draws on the division’s experience gained from both mall stores and Jared.	
 	
Recent openings, current composition, planned openings in 2008/09 and long term potential for each Kay format is shown below:	
Jared The Galleria Of Jewelry	
 	
Introduction	
Jared is the leading off-mall destination speciality retail jewellery chain in its sector of the market with 154 stores as at 2 February 2008 (3 February 2007: 135), equivalent in space terms to over 600 mall stores. Management believes there is potential for about 300 Jared stores in the US. Since the first Jared store was opened in 1993, it has grown to be the fourth largest US speciality retail jewellery brand by sales. Each Jared is equivalent in size to about four of the division’s mall stores. Its main competitors are independent operators, with the next largest chain operating some 25 stores.	
 	
Jared targets an under-served sector at the upper end of the middle market. This customer is more mature and has a higher income than that of Signet’s US mall store customer. An important distinction of a destination store is that the potential customer visits the store with a greater intention of making a jewellery purchase, whereas in a mall there is a possibility that the potential shopper is undecided about the product category in which they will ultimately make a purchase.	
 	
The average retail price of merchandise sold in Jared stores during 2007/08 was $747 (2006/07: $719), which was more than double that of a Signet US mall store. Jared targets households with an income of between $50,000 and $150,000; these households account for about 50% of US jewellery expenditure.	
 	
2007/08	
Jared sales were up by 13.8% to $756.4 million (2006/07: $664.4 million); the portfolio of 154 stores increased by 19 during the year. In 2007/08 Jared entered the New York and Philadelphia markets and it is planned to expand further in both during 2008/09. For Christmas 2007 Jared utilised both national cable and network television advertising for the first time.	
 	
Customer service	
A key point of differentiation, compared to a typical mall store, is Jared’s superior customer service as due to its larger size, more specialist staff are available. For example there are dedicated	

	
Test before we invest – new Kay formats	
																			
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Expected	 	 	 	
 	 	 	Net openings	 	 	 	 	 	 	 	Stores	 	net	 	Long	 	
 	2002/03	 	2003/04	 	2004/05	 	2005/06	 	2006/07	 	2007/08	 	at 2 Feb	 	openings	 	term	 	
Stores	 	 	 	 	 	 	 	 	 	 	 	 	2008	 	2008/09	 	potential	 	
																			
Mall	9	 	31	 	15	 	25	 	26	 	17	 	789	 	6	 	850+	 	
Off-mall	–	 	10	 	10	 	11	 	21	 	40	 	92	 	19	 	500+	 	
Outlet	–	 	–	 	–	 	–	 	4	 	5	 	10	 	8	 	50-100	 	
Metro	–	 	–	 	–	 	3	 	–	 	–	 	3	 	nil	 	c.30	 	
																			
Total	9	 	41	 	25	 	39	 	51	 	62	 	894	 	33	 	1,430+	 	

	
Jared 5 year sales, $m	

 

14	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	
personnel for the diamond, timepieces, and gold and other jewellery departments, as well as for the design and repair workshop. In addition every sales associate in the diamond department is required to be a certified diamontologist. As a result, more in-depth selling methodologies may be used, such as the ‘white glove’ presentation of timepieces.
Every Jared has an on-site design and repair centre where most repairs are completed within one hour. The centre also mounts loose diamonds in settings and provides a custom design service when required. Each store also has at least one diamond viewing room, a children’s play area and complimentary refreshments.
Investment model
 In the first year of trading a typical Jared store requires an investment of about $3.9 million, of which about 75% is working capital. First year sales are projected to be some $3.25 million and to make a contribution on a ‘four wall basis’. In the first five years of trading a Jared store is forecast to have a faster rate of like for like sales growth than that of a mall store over the same period. At the end of this period the planned sales level is $5 million to $6 million and the expected operating margin is comparable to that of a mall store at maturity, with a greater return on capital employed.
The chain is immature with only 44% of stores having traded for five or more years. In their fifth year of trading the average sales of a Jared store was some $5.6 million which is above the target level set at the time of the original investment. The average sales per store for those Jared locations that have been open for six years or more was $6.4 million in 2007/08 (2006/07: $6.8 million). The average sales per Jared store open for the whole of 2007/08 was $5.3 million (2006/07: $5.7million) reflecting an increased rate of new store openings in recent years and the impact of the 53rd week in 2006/07.
Since the concept was first tested in 1993 it has been continually evaluated, developed and refined. Management believes that compared to its competitors, Jared benefits from leveraging the division’s established infrastructure, access to a pool of experienced store managers, and availability of capital required to develop and grow the brand.
Merchandising 
 Jared’s merchandise range is about five times the value of one of the US division’s mall stores and includes larger and better quality diamonds, such as the Leo Artisan, the Peerless Diamond and the Hearts Desire ranges. The diamond selection also includes an extensive choice of loose stones in sizes from 1/5 carat to three carats. There is a wide selection of settings into which the chosen stone can be set on-site. In addition each Jared has a virtual diamond vault, linked exclusively to a vendor’s inventory, allowing an item selected by the customer to be delivered to a Jared store, usually within 24 hours.
In 2007/08 watches accounted for about double the merchandise mix in Jared to that of the division as a whole. The range, which continues to be expanded, includes Baume & Mercier, Cartier, Montblanc, Movado, Omega, Rado, Raymond Weil, Rolex, Tag Heuer and Tissot. Each store also has a comprehensive range of gold and coloured stone jewellery.
Marketing 
 Jared advertises on local radio for most of the year and complements this during key trading periods by advertising on television. The move by Jared to national rather than local television advertising, which began in
2006/07, gives the potential to improve advertising leverage in 2008/09 and beyond. Jared has a higher advertising to sales ratio than the division’s mall stores because it is a destination store and is still at an early stage of development. In 2008/09 national radio advertising will be used for the first time. The advertising is designed to build name recognition and visit intent through an emphasis on selection and service and utilises the tag line “He went to Jared”. A special catalogue featuring luxury watches was produced for Jared. There is also a marketing website for Jared.
Real estate 
 The typical Jared store has about 4,900 square feet of selling space and 6,100 square feet of total space. Jared locations are typically free-standing sites in shopping developments with high visibility and traffic flow, and positioned close to major roads. The retail centres in which Jared stores operate normally contain strong retail co-tenants, including other category killer destination stores such as Borders Books, Best Buy, Home Depot and Bed, Bath & Beyond, as well as some smaller speciality units. It is planned to open 17 Jared stores in 2008/09 and this format continues to account for the majority of the division’s space growth.
Regional brands
Introduction 
 Signet also operates mall stores under a variety of established regional trade names (see Description of properties, page 30). The leading brands include JB Robinson Jewelers, Marks & Morgan Jewelers and Belden Jewelers. Nearly all of these stores are located in malls where there is also a Kay store. Management believes there is long term potential for about 700 stores in malls trading under the regional brand names. These stores target a similar customer to those that shop at Kay.
2007/08 
 At 2 February 2008, 351 regional brand stores operated in 37 states (3 February 2007: 341 stores in 33 states) and sales for 2007/08 were $459.7 million (2006/07: $501.0 million). The average retail price of merchandise sold in a regional store during 2007/08 was $343 (2006/07: $332).
Real estate 
 The location of regional brand stores within a mall is similar to that of a Kay store. New regional chain stores are opened if real estate satisfying the division’s investment criteria becomes available in their respective trading areas where marketing support can be cost effective. Consideration is given to changing the logo of a regional brand store to Kay where the overall return on capital employed, including any resulting impact on other stores operated by the division, may be increased. Management believes that it may be possible to develop a second mall-based brand of sufficient size to take advantage of national television advertising. This would require the acquisition of a number of small regional chains, or a large regional chain. Such acquisitions would have to meet the Group’s strict operational and financial criteria before being considered and are not expected to occur imminently. It is planned to reduce the number of regional brand stores by about 14 in 2008/09.
Customer service and merchandising
 The same field operations, training and merchandising teams are responsible for the regional brands as manage the Kay stores.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	15	

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 	 	Business review	

 	 	US operating review (continued)	

	
Locations of Kay, Jared and Regional stores by state at 2 February 2008	

 

 	2007/2008	 	2006/07	(1)  	2005/06	 	
							
Total opened during the year (2)  	108	 	104	 	81	 	
Kay	68	 	58	 	43	 	
Jared	19	 	25	 	18	 	
Regional chains	21	 	21	 	20	 	
							
Total closed during the year	(17	)	(17	)	(16	)	
Kay	(6	)	(7	)	(4	)	
Jared	–	 	–	 	(1	)	
Regional chains	(11	)	(10	)	(11	)	
							
Total open at the end of the year	1,399	 	1,308	 	1,221	 	
Kay	894	 	832	 	781	 	
Jared	154	 	135	 	110	 	
Regional chains	351	 	341	 	330	 	
							
Average sales per store in thousands (3)  	$1,996	 	$2,089	 	$1,930	 	
Kay	$1,710	 	$1,815	 	$1,665	 	
Jared	$5,341	 	$5,676	 	$5,453	 	
Regional chains	$1,344	 	$1,517	 	$1,514	 	
							
Increase in net new store space	10%	 	11%	 	9%	 	
							
Percentage (decrease)/increase in like for like sales	(1.7)%	 	6.2%	 	7.1%	 	
							
(1)	53 week year.	
(2)	Figures for stores opened during the year are adjusted for the impact of conversions of format between Kay and regional chains.	
(3)	Based only upon stores operated for the full financial year.	

16	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	

	
Regional brands 5 year sales, $m	
	
Marketing 
 The primary form of marketing for the regional brands is radio. Direct mail and telephone marketing are also used to encourage repeat purchases by current customers. A similar number of catalogue editions were produced for each regional brand as for Kay. There are also marketing websites for some of the brands. A test of local television advertising began during Christmas 2005 and this has now ended as a satisfactory uplift in sales was not being achieved. The appropriate level of marketing support for the regional brands is determined by the incremental sales productivity of such activities compared to the marginal cost of the promotional expenditure.

Functional reviews	
	
Operating structure 
 While the US division operates under twelve different brands, many functions are integrated to gain economies of scale and have commonality of systems where a fully integrated approach is inappropriate. For example in store operations there is a separate dedicated field management team for the mall brands, Jared and the in-store repair function, while there is a combined diamond sourcing function.
Customer service and human
resources
Introduction 
 Customer service and human resources are central to the division’s success and are a key constraint on the rate of growth achieved. A major priority of the division is continually to improve the quality of customer experiences in its existing stores while providing sufficient staff that are well trained and with suitable experience to run the new stores being opened.
2007/08 
 During 2007/08 the implementation of an enhanced training system for store staff, to develop customer service skills and product knowledge further, was completed. Training to implement a new store communications system was also carried out; the system has increased productivity by improving in-store execution, compliance monitoring, store feedback and has enhanced the ability to identify store and divisional level opportunities to improve execution further. Training and systems enhancements to improve the repair service, an important driver of footfall and customer trust, were also implemented.
Customer satisfaction 
 A customer satisfaction index covering 12 criteria was introduced to all stores during 2006/07. Based on customer feedback, each store is benchmarked against others in its district, region and across the division. The scores are reported on a monthly basis, highlighting areas of good performance and those for improvement, and are one of the key performance indicators used to manage each store.
Training 
 Providing knowledgeable and responsive customer service is a priority, and is regarded by management as a key point of differentiation. It is believed that highly trained sales associates, with the necessary product knowledge to communicate the quality, attributes and competitive value of merchandise, are critical to the success of the business. Store staff also receive training on supply chain issues such as conflict diamonds and the environmental impact of gold mining.
Retail sales personnel are encouraged to become certified diamontologists by graduating from a comprehensive correspondence course provided by the Diamond Council of America. Over 50% of the division’s full time sales staff who have completed their probationary period are certified diamontologists or are training to become certified. All store managers are required to be so qualified. The number of certified diamontologists employed by the US division increased by 16% in 2007/08 to some 5,300. Employees often continue their professional development through completion of further courses on gemstones and timepieces.
The US division’s substantial training and incentive programmes, for all levels of store staff, are designed to play an important role in recruiting, educating and retaining qualified store staff. The preferred practice is to promote managers at all levels from within the business in order to maintain continuity and familiarity with the division’s procedures.
Goals and incentives 
 All store employees are set daily performance standards and commit to goals. Sales commission based on individual and store performance is paid. Sales contests and incentive programmes also reward the achievement of specific targets with travel or additional cash awards. Apart from sales-based incentives, bonuses are paid to store managers depending on store contribution and to district managers for the achievement of key performance objectives. In 2007/08 approximately 19% (2006/07: 23%) of store personnel remuneration was commission and incentive-based.
US head office bonuses are based on the performance of the division against predetermined annual profit targets. Promotion and salary decisions for principally non-management head office personnel are based on performance against service level and productivity goals; for managers they are based on annual objectives and performance against individual job requirements.
Store managers 
 Each store is led by a store manager who is responsible for various store level operations including overall sales and branch level variable costs; certain personnel matters such as recruitment and training; and customer service. Administrative matters, including purchasing, merchandising, payroll, preparation of training materials, credit operations and divisional operating procedures are consolidated at divisional level. This allows the store manager to focus on those tasks that can be best executed at a store level, while enabling the business to benefit from economies of scale in administration and to help ensure consistency of execution across all the stores.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	17	

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 	 	Business review	

 	 	US operating review (continued)	
 
Recruitment, retention and promotion 
 Although staff recruitment is primarily the responsibility of store and district managers, field recruiters are supplied by a central recruitment function. Methods such as internet recruitment are used to provide stores with a larger number of better-qualified candidates from which to select new staff.
Management believes that the recruitment and retention of highly-qualified and well-trained staff in the US head office is essential to supporting the stores. A comprehensive in-house curriculum, including leadership development, supplements specific job training and emphasises the importance of the working partnership between stores and the head office.
A key motivator for all staff, and in particular for store based employees, is the division’s practice of internal promotion. It is a requirement that District Managers and Vice Presidents of Regional Operations have been a store manager within the division.
Merchandising and purchasing
Introduction 
 It is believed that selection, availability, and value for money of merchandise are factors that are critical to success as a speciality retail jeweller. In the US business, the range of merchandise offered and the high level of stock availability are supported centrally by extensive and continuous research and testing. Best-selling products are identified and their rapid replenishment ensured through analysis of sales by stock keeping unit. This approach enables the division to deliver a focused assortment of merchandise to maximise sales, minimise the need for discounting and accelerate inventory turn. The US division is better able to offer superior value and consistency of merchandise than its competitors, due to its supply chain advantages.
Signet does not hold any material patents, licenses, franchises or concessions, but has a range of trading agreements with suppliers, the most important being in regards to the Leo Diamond and luxury watches. The established trademarks and trade names of the division are essential to maintaining its competitive position in the retail jewellery sector.

Average retail price of merchandise sold ($)	 	 	 	 	 	 	 	 	 	 	 	
												
 	 	2007/08	 	2006/07	 	2005/06	 	2004/05	 	2003/04	 	
												
Kay	 	327	 	317	 	305	 	282	 	257	 	
Regionals	 	343	 	332	 	324	 	304	 	281	 	
Jared	 	747	 	719	 	697	 	644	 	586	 	
												
2007/08 
 The average unit selling prices in mall stores and Jared increased by 3.4% and 3.8% respectively. The division continued to develop the sales of exclusive merchandise such as the Leo Diamond the Peerless Diamond, and the Hearts Desire range, as well as branded ranges such as Le Vian and Russell Simmons. In generic merchandise the Journey range again performed well, as did white gold jewellery. Sourcing via the rough diamond initiative entered the early stages of roll-out in 2007/08, after a successful two year trial.
Inventory management 
 Sophisticated inventory management systems for merchandise testing, assortment planning, allocation and replenishment have been developed and implemented. The majority of merchandise is common to all US division mall stores, with the remainder allocated to reflect demand in individual stores. It is believed that the merchandising and inventory management systems, as well as improvements in the productivity of the centralised distribution centre, have allowed the division to achieve inventory turns at least comparable to those of competitors, even though it has a significantly less mature store base and undertakes more direct sourcing of merchandise.
Merchandise mix 
 In 2007/08, the bridal category accounted for about 45% of merchandise sold and its participation in the sales mix has grown steadily over the past five years. The table below sets out Signet’s US merchandise sales mix as a percentage of sales:

Merchandise mix
(excluding repairs, warranty and other
miscellaneous sales)	 	 	 	 	 	 	 	
								
 	 	2007/08	 	2006/07	 	2005/06	 	
Percentage of sales	 	%	 	%	 	%	 	
								
Diamonds and diamond jewellery	 	75	 	75	 	74	 	
Gold jewellery	 	7	 	7	 	7	 	
Other jewellery	 	11	 	11	 	12	 	
Watches	 	7	 	7	 	7	 	
								
Programmes have been developed in conjunction with certain vendors for the provision of branded jewellery merchandise. For example, the Leo Diamond range is sold exclusively by Signet in the US and the UK; the Peerless Diamond, an Ideal Cut diamond with a superior, measured return of light, is only available in Jared; and Le Vian, a prestigious fashion jewellery brand with a 500 year history, is now sold in all mall and Jared stores. Management believes that the US division’s merchandising process, market share and relationship with suppliers, position the business as an ideal partner to develop branded initiatives.
Other sales 
 While the design and repair service is less than 10% of sales, it accounts for approximately 30% of transactions and has been identified as an important opportunity to build trust in the division. All Jared stores have a highly visible jewellery workshop, which is open the same hours as the store. As well as meeting the repair requirements of the store in which they are located the workshops also carry out work for the division’s mall brand stores. As a result nearly all customer repairs are carried out by the division’s own staff rather than through sub-contractors, unlike most chain jewellers. The design and repair service has its own field management and training structure.

18	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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For over ten years the division has sold a lifetime repair warranty for jewellery. The warranty covers services such as ring sizing, refinishing and polishing, rhodium plating white gold, earring repair, chain soldering and the resetting of diamond and gemstones that arise due to the normal usage of the merchandise. This work is carried out by the division. Warranty sales account for less than 10% of turnover.
Direct sourcing of polished diamonds 
 It is believed that the US division has a competitive cost and quality advantage as about 45% of diamond merchandise sold is sourced through contract manufacturing; Signet purchases loose polished diamonds on the world markets and outsources the casting, assembly and finishing operations to third parties. By using this approach the cost of merchandise is reduced and the resulting advantage is largely used to provide superior value to the consumer which helps to increase market share. Contract manufacturing is generally utilised on basic items with proven non-volatile historical sales patterns that represent a lower risk of over or under-purchasing.
The contract manufacturing strategy also allows the buyers to gain a detailed understanding of the manufacturing cost structure and improves the prospects of negotiating better prices for the supply of finished products.
Rough diamond initiative 
 In 2005/06 a multi-year trial, involving the purchase and contract manufacture of rough diamonds, was commenced by the Group. It was successfully expanded in 2006/07. This initiative moved to the initial roll-out stage in late 2007/08. Once these rough stones have been cut and polished, they enter the US division’s supply chain in a similar way to other polished loose diamonds. Stones not suited to the Group’s merchandise selection are sold to third parties.

The objectives of this supply chain initiative are to:	
•	secure additional reliable and consistent supplies of diamonds to support the growth of Signet’s business;	
•	offer customers superior value and consistency of merchandise quality;	
•	improve understanding of the polished diamond market; and	
•	reduce costs.	
In 2008/09 it is planned to increase substantially the volume of rough diamonds purchased. The proportion of diamonds sold by the division that are purchased uncut is currently relatively small and the division continues to develop and expand its relationships with its current suppliers of polished diamonds and diamond jewellery.
Sourcing of complete merchandise 
 Certain merchandise is purchased complete as a finished product where the complexity of the product is great or the merchandise is considered likely to have a less predictable sales pattern. This strategy provides the opportunity to reserve stock held by vendors and to make supplier returns or exchanges, thereby reducing the risk of over or under-purchasing.
Merchandise held on consignment 
 Merchandise held on consignment is used to enhance product selection and test new designs. This minimises exposure to changes in fashion trends and obsolescence and provides the flexibility to return non-performing merchandise. At 2 February 2008 the US division held approximately $221 million (3 February 2007: $205 million) of merchandise on consignment (see note 13 on page 99).
Suppliers 
 In 2007/08 the five largest suppliers collectively accounted for approximately 20% (2006/07: 20%) of the US division’s total purchases, with the largest supplier accounting for approximately 7% (2006/07: 9%). The division’s supply chain has become increasingly integrated on a worldwide basis, with diamond cutting and jewellery manufacturing being predominantly carried out in Asia, with little of the division’s merchandise now manufactured in the US.
Marketing and advertising
Introduction 
 As the products sold by the division are predominantly unbranded, management believes that store brand name recognition by consumers is an important factor in jewellery retailing. Signet continues to strengthen and promote its US brands and build name recognition through integrated marketing campaigns. The marketing channels used include television, radio, print, catalogues, direct mail, telephone marketing, point of sale signage, in-store displays and the internet.

US division 5 year record of advertising spend, $m	

 

Signet Group plc Annual Report & Accounts year ended 2 February 2008	19	

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 	 	Business review	

 	 	US operating review (continued)	
 
Advertising activities are concentrated during periods when customers are expected to be most receptive to the marketing message. The proportion of television advertising expenditure to sales continues to grow, and the cost of national television advertising is leveraged as the number of stores increases.
Statistical and technology-based systems are employed to support a direct marketing programme that uses a proprietary database of over 25 million names to strengthen the relationship with customers. The programme targets current customers with special savings and merchandise offers during key trading periods. In addition, invitations to special in-store promotional events are extended throughout the year.
2007/08 
 Annual gross marketing spend amounted to 7.5% of sales (2006/07: 7.0%), which was higher than planned due to the disappointing sales performance in the fourth quarter. It is intended to realign spending as a percentage of sales to nearer historic levels in 2008/09. Dollar marketing expenditure increased by 10.5% to $204.0 million over the 52 weeks to 2 February 2008 (53 weeks to 3 February 2007: $184.5 million). This reflected the expected growth in total sales and the higher proportion of sales being generated by Jared. Over the last five years, advertising and marketing expenditure has increased by some 70%.
Real estate
Management believes that the US division’s prime real estate portfolio is a competitive advantage that helps build store traffic. The quality of the portfolio is based on the consistent application over time of strict real estate criteria and demanding required projected investment returns for both new space and the renewal of leases. The division has a target for new space growth of 8% to 10% per annum, but growth may be outside this range depending on the availability of sites that satisfy the investment criteria and the general economic environment. In 2008/09 and 2009/10 it is anticipated that net new store space will increase by about 5%. When a new store is opened the majority of the investment is in working capital, that is inventory and receivables, as nearly all stores are leased. Stores are normally refurbished on a ten year cycle, which for mall brands coincides with the typical length of a lease. Increased like for like sales growth is normally achieved for a number of years following a refurbishment due to factors such as improved lighting and better presentation of merchandise. Opportunities to relocate stores to better locations within malls, such as a centre court corner site are continually sought. Nearly all of Signet’s US stores are located in suburban areas, with about 58% of space being in traditional covered malls (2002/03: about 79%). In 2007/08 about 80% of net space growth was in off-mall locations.
Investment criteria
 Both the operational and financial criteria for investment in real estate remain stringent and have been consistently applied for more than ten years. The financial criteria being a positive net present value over a five year period on a pre tax basis using a 20% discount rate and assuming working capital is released after five years.
Credit operations
Introduction
 In the US jewellery market it is necessary for speciality retailers to offer credit facilities to the consumer. Management regards the provision of an in-house credit programme, rather than one provided by a third party, as a competitive advantage for a number of reasons:

•	the credit policies are decided by the division’s management taking into account the overall impact on the business rather than by a third party whose priorities may conflict with those of the division;	
•	authorisation and collection models are based on the behaviour of the division’s consumers;	
•	it allows management to establish and implement customer service standards appropriate for the business;	
•	it provides a database of regular customers and their spending patterns;	
•	investment in systems and management of credit offerings appropriate for the business can be facilitated; and	
•	superior cost effectiveness by utilising in-house capability.	
Furthermore the various credit programmes help to establish long term relationships with customers and complement the marketing strategy by enabling additional purchases, higher units per transaction and greater value sales.
In addition to interest bearing accounts, a number of programmes offer interest-free financing for one year or less, subject to certain conditions, and these account for a significant proportion of credit sales. In most US states customers are offered optional third party credit insurance. The average outstanding balance at the year end was $997 (2006/07: $957).
Since credit authorisation and collection systems were centralised in 1994 the credit terms and performance have been relatively consistent over the economic cycle.
2007/08
 In-house credit sales represented 52.6% of total US sales in 2007/08 (2006/07: 51.7%) and the monthly collection rate was 13.9% (2006/07: 14.6%), a credit portfolio turn of approximately seven months. While the credit participation was little changed, the approval rate for credit applications was lower. The bad debt charge for the year, at 6.5% (2006/07: 5.3%) of credit sales was at the high end of the tight range of the last ten years (see graph on page 21) reflecting the deterioration of the US economy. The increase in bad debts was largely offset by additional income on the portfolio as a result of the lower monthly collection rate. The 5.3% net bad debt charge in 2006/07 was at the low end of the range of the last ten years and reflected the impact of a revision in the US bankruptcy laws implemented in late 2005 which temporarily increased bankruptcy levels in late 2005/06 and reduced them in early 2006/07. The table over the page presents data related to the in-house credit business for the past three years.

20	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Full year receivables performance	
	
The division continued to apply its established credit standards in 2007/08, while monitoring the performance of the receivables very closely. During 2007/08, a number of metrics deteriorated a little reflecting the downturn in the wider economy, although performance has remained within the range of the last ten years. In response to the increased credit risk among US consumers, the staffing levels in relation to the outstanding balances within the credit collection function were increased. Consumers’ financial position continues to deteriorate which may lead to a further increase in the bad debt charge, although this is expected to be somewhat offset by increased income from the credit portfolio. Consequently credit authorisation criteria continue to be reviewed and outstanding balances are very closely monitored with prompt action being taken in response to changes in performance. In addition, further investment in collection systems is taking place.
At the year end the gross US receivables stood at $900.6 million (2006/07: $828.8 million). There was an impairment provision of $60.4 million (2006/07: $50.0 million). The average level of gross receivables during 2007/08 was $795.4 million (2006/07: $698.4 million).
Credit administration
 Authorisations and collections are solely performed centrally at the US head office, rather than by store staff. The majority of credit applications are processed and approved automatically after being initiated via in-store terminals, through a toll-free phone number or on-line through the division’s websites. All applications are evaluated by the scoring of credit data and using data obtained through third party credit bureaux.
Investment in staff, training and systems to maintain or improve the quality of the credit portfolio continued in 2007/08. Collection strategies and efforts continued to include emphasis on risk-based calling and first call resolution.
In addition to in-house credit sales, the US stores accept major credit cards. Third party credit sales are treated as cash sales and accounted for approximately 39% (2006/07: 39%) of total US sales during the year.

Credit portfolio statistics	 	 	 	 	 	 	
							
 	2007/08	 	2006/07	 	2005/06	 	
							
Credit sales ($m)	1,422.4	 	1,372.1	 	1,191.2	 	
Credit sales as % of total sales	52.6%	 	51.7%	 	51.6%	 	
							
Number of active credit accounts at year end	940,069	 	896,289	 	883,873	 	
							
Average outstanding account balance ( $)	997	 	957	 	841	 	
Average monthly collection rates	13.9%	 	14.6%	 	14.5%	 	
							
Bad debt as % of total sales	3.4%	 	2.8%	 	3.0%	 	
Bad debt as % of credit sales	6.5%	 	5.3%	 	5.8%	 	
							
Management tools and communications
The US division’s highly integrated and comprehensive information systems provide detailed, timely information to monitor and evaluate virtually every aspect of the business. They are designed to decrease the time sales staff spend on administrative tasks and increase time spent on sales activities. They also support merchandise testing, loss prevention and inventory control.
All stores are supported by the internally developed Store Information System, which includes electronic point of sale (“EPOS”) processing, in-house credit authorisation and support, a district manager information system and constant connectivity for all retail locations for data communications including e-mail. The EPOS system updates sales, in-house credit and perpetual inventory replenishment systems throughout the day for each store. The store communications system was upgraded to broadband during 2007/08. The implementation of broadband store communication will allow further improvements to the division’s systems to be made.
Regulation
Signet US is required to comply with numerous US federal and state laws and regulations covering areas such as consumer protection, consumer privacy, consumer credit, consumer credit insurance, truth in advertising and employment legislation. Management endeavours to monitor changes in these laws to ensure that its practices comply with applicable requirements.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	21	

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 	 	Business review	

 	 	UK competitive strengths	

 	 	 	 	
 	 	 	Competitive strengths	

 	 	 	 	
Store operations and	 	 	The ability of the sales associate to explain the value proposition	
human resources	 	 	is essential to most jewellery purchases.	
 	 	 	 	 	 	
 	 	 	•	 	Industry-leading training with third party accreditation	
 	 	 	•	 	78% of store management have passed the Jewellery Education and Training Course 1 accredited by the National Association of Goldsmiths	
 	 	 	•	 	Management trained to support enhanced sales associate development programmes and build general management skills	
 	 	 	•	 	Commission based remuneration programme developed to improve recruitment and retention of top quality staff	

 	 	 	 	
Merchandising	 	 	Consumer offered superior value and selection	
 	 	 	 	 	 	
 	 	 	•	 	Leading supply chain capability in the UK jewellery sector	
 	 	 	•	 	Highly responsive demand-driven merchandise systems	
 	 	 	•	 	Scale to offer exclusive products	
 	 	 	•	 	24 hour re-supply capability	

	 	 	 	 	 	
 	 	 	 	
Marketing	 	 	Leading brands in middle market sector	
 	 	 	 	 	 	
 	 	 	•	 	Ability to leverage brand perception through scale of marketing spend	
 	 	 	•	 	Leading integrated e-commerce and retail store service within the speciality jewellery sector	
 	 	 	•	 	Marketing database of over 13 million names	

	 	 	 	 	 	
 	 	 	 	
Real estate	 	 	Well designed stores located in primary locations	
 	 	 	with high visibility and traffic flows	
 	 	 	 	 	 	
 	 	 	•	 	Strict real estate criteria consistently applied over time	
 	 	 	•	 	Revised store format, more suited to selling diamonds and fine jewellery	
 	 	 	•	 	Attractive tenant to landlords	

 

22	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	

 	 	 	
  Initiatives during 2007/08	 	  Initiatives planned for 2008/09	

•	Enhancements to training programme	 	•	Expand customer satisfaction index to all stores	
•	Successfully tested index of customer satisfaction	 	•	Further improvements to training in head office	
•	Own label store card launched	 	•	Increase focused training of store staff outside of store environment	
•	Development of training workshops with British Horological Institute	 	•	Test new store communications and execution tool	
•	Improved coordination between marketing and training timetables    	 	•	Enhance Forever Diamond training materials	
•	Further developed employee reward packages	 	 	 	

 	 	 	 	 	
•	Increased brand differentiation through collections and exclusive merchandise	 	•	Improve the diamond selection, particularly in exclusive and value ranges	
•	Enhanced the Leo Diamond selling methodology	 	•	New merchandise tested more quickly	
•	Made shopping easier by improving displays and rationalising ranges	 	•	Development of more mixed metal ranges	
•	Developed key volume items    	 	•	Expansion of key volume items	
•	Improved sharing of inventory information with a more focused supplier base	 	•	Continued enhancement of the watch category	

 	 	 	 	 	
•	Further development of “H.Samuel helps you say it better” marketing theme	 	•	Continue to build H.Samuel brand image by better execution of marketing and promotions	
•	Development of new marketing proposition for Ernest Jones  	 	•	Further develop the reputation of Ernest Jones for exclusive merchandise	
•	Enhancement to websites	 	•	Enhance e-commerce capability	

 	 	 	 	 	
 	 	 	 	 	
•	16 H.Samuel store refurbishments	 	•	Start of major multi-year store refurbishment programme in Ernest Jones, with up to 40 scheduled in 2008/09	
•	Tested design enhancements in Ernest Jones	 			
•	Improved focus of H.Samuel store portfolio	 	•	About 20 H. Samuel refurbishments and resites planned	
 	 	 	•	Continue rationalisation of H.Samuel store portfolio	

 

Signet Group plc Annual Report & Accounts year ended 2 February 2008	23	

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 	 	Business review	

 	 	UK operating review	

Brand reviews	
	
H.Samuel
Introduction 
 H.Samuel accounted for 14% of Group sales in 2007/08 (2006/07: 14%), and is the largest speciality retail jewellery brand in the UK with a 6.5% share of the total jewellery market. It serves the core middle market and its customers typically have a household income of between £15,000 and £40,000. The brand has nearly 150 years of jewellery heritage. It sells a broad range of gold and silver jewellery, an increasing proportion of diamond merchandise and a wide selection of watches, including Accurist, Citizen, DKNY, Fossil, Rotary, Seiko and Sekonda. It also sells an increasingly focused range of gifts and collectables such as Nao and Swarovski.
H.Samuel had 359 stores at 2 February 2008 (3 February 2007: 375) and is represented in nearly all large and most medium sized shopping centres with the focus increasingly being on larger centres. An e-commerce capability was added to hsamuel.co.uk in September 2005 and it is the most visited UK speciality jewellery website (source: Hitwise).
2007/08 
 H.Samuel sales were £256.7 million (2006/07: £260.8 million). The average retail price of merchandise sold in H.Samuel during 2007/08 was £44 (2006/07: £42) and the average retail price of items sold has increased at a compound annual growth rate of 6.2% over the last five years. The sales per store increased to £722,000 (2006/07: £695,000 on a 53 week basis) and have increased at a compound annual growth rate of 1.3% over the last five years.

H.Samuel 5 year sales, £m	

H.Samuel store data

 	2007/08	 	 	2006/07	 	2002/03	 	
								
Number of stores:		 	 		 		 	
   Opened during year	1	 	 	–	 	4	 	
   Closed during year	(17	)	 	(11	)	(8	)	
   Open at end of year	359	 	 	375	 	418	 	
Percentage increase in		 	 		 		 	
   like for like sales	1.3%	 	 	0.7%	 	2.6%	 	
Average sales per store		 	 		 		 	
   in thousands (exc. VAT) (1)  	£722	 	 	£695	(2)  	£677	 	
								
(1)	Including only stores operated for the full financial year.	
(2)	53 week year.	

 UK marketplace	 	 	
 	 	 	
In calendar 2007 the size of the total UK market for fine jewellery, costume jewellery and watches was estimated by the Office for National Statistics (“ONS”) to have been £4.5 billion ($9.0 billion) (including VAT of 17.5%), (2006: £4.5 billion). The ONS figure for market size replaces previous figures for market size which were based on management estimates and market research carried out by Key Note. While the ONS figure has been adopted, its reliability is uncertain. The jewellery market grew at an estimated compound rate of 4.7% per annum from 1997 to 2004. It declined by 4.0% in 2005, when the retail sector as a whole experienced the sharpest deterioration in trading conditions since 1991, with the jewellery sector being particularly affected. In 2006 the UK jewellery market returned to growth while 2007 was unchanged. Per capita spend on jewellery in the UK remains at approximately half of the level of the US. The market includes speciality retail jewellers and non-speciality jewellery retailers, such as mail order catalogues, catalogue showrooms and jewellery departments in department stores.
The UK retail jewellery market is very fragmented and competitive, with a substantial number of independent speciality jewellery retailers. Management believes there are just over 7,000 speciality retail jewellery stores in the UK.	 	Based on surveys, management believes that customers are attracted to H.Samuel because of its strong brand appeal as a speciality jeweller, that is differentiated by its customer service standards and staff knowledge. Ernest Jones attracts customers as a result of its diamond and watch expertise, exclusive and up to date merchandise and knowledgeable staff.
Market structure
In the middle market H.Samuel competes with a large number of independent jewellers, with only one having more than 100 stores. Some competition at the lower end of the H.Samuel product range also comes from a catalogue showroom operator, and discount jewellery retailers and supermarkets.
In the upper middle market Ernest Jones competes with independent speciality retailers and a limited number of other upper middle market jewellery brands, the largest three of which had 187, 62 and 31 stores respectively at 2 February 2008.	

24	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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During 2007/08, television advertising, using the theme “H.Samuel helps you say it better”, was successfully developed. An H.Samuel store credit card was tested and launched. Staff training remained a priority and about 40% of H.Samuel staff have an externally recognised jewellery industry qualification.
Customer service 
 Customer service is an increasingly key point of differentiation for H.Samuel. Historically the brand’s customers self selected merchandise from window displays and primarily required a ‘cash and wrap’ service. Sales associates in H.Samuel now need an increased level of product knowledge and selling skills as a growing proportion of sales are of products, such as diamond jewellery that require much higher levels of customer service. Therefore a priority in recent years has been to improve the training process within the UK division (see page 23).
Merchandising 
 In 2007/08 diamond jewellery accounted for 22% of H.Samuel’s merchandise mix, up from 16% in 2002/03. This helped increase the average unit selling price to £44 from £33 over that period. Within the diamond category the average selling price increased to £201 (2002/03: £179). Since 2002/03, sales of gift and other items have declined to 12% of the total from 19% (see table below).
Merchandising initiatives to further increase the differentiation of H.Samuel stores and to reinforce the brand perception as a speciality jeweller continued, for example the launch of the Julien Macdonald range and the development of exclusive merchandise such as the Forever Diamond range. Key volume items were again used to drive footfall. These items take advantage of H.Samuel’s buying scale and offer consumers an attractive price while achieving a satisfactory gross margin and are promoted in marketing and point of sales material. As in 2006/07 a more targeted approach to promotional activity was beneficial during 2007/08.

H.Samuel merchandise mix
 (excluding repairs, warranty and other miscellaneous sales)	
								
 	2007/08	 	 	2006/07	 	2002/03	 	
								
Gold jewellery	31	%		31	%	32	%	
Watches	25	%		24	%	24	%	
Diamond jewellery	22	%		21	%	16	%	
Other jewellery	10	%		10	%	9	%	
Gifts and other	12	%		14	%	19	%	
								
Average selling price	£44	 	 	£42	 	£33	 	
								
Marketing 
 Over Christmas H.Samuel used the “H.Samuel helps you say it better” television advertising supplemented by advertising in national newspapers and catalogue distributions. For the remainder of the year a series of themed catalogues displayed in stores, mailed directly to targeted customers and distributed in newspapers were the primary form of marketing. During 2007/08 co-ordination of the
different forms of marketing and promotion was improved. The H.Samuel website has been transactional since 2005 and its performance has been encouraging, although its sales are relatively small in the context of the division as a whole.
Store design
 The H.Samuel store portfolio is nearing the end of a radical refit that started seven years ago. Previous to that, stores were designed for a shopper who made a choice from a window display. The changed format is designed to facilitate the sale of merchandise with a higher average selling price, particularly diamonds, and therefore allows an increased focus on customer service and greater convenience in presenting merchandise to customers. The clear internal layout by department enhances the ability to provide appropriately trained specialist staff in each area.
The format uses low level displays, which act as service counters for jewellery, particularly diamond ranges; wall display cases are used predominantly for watches, gifts and lower value jewellery items. The refitted stores are also much more open and inviting. While the design was based on the Group’s US experience, it was adapted to H.Samuel’s merchandising and customer requirements. Further evolutionary changes to the design have been made during the refit programme. These include improved presentation of jewellery, particularly in wall showcases; more clearly displayed branded merchandise such as watches; and more effective use of in-store signage.
Real estate
 H.Samuel has a seven year store refurbishment cycle. In 2007/08 16 refits or resites were completed (2006/07: 28 including two in the traditional format). At 2 February 2008 234 stores, accounting for just over 70% of sales, traded in the more customer oriented store design.
Some 23 refits and resites are planned in 2008/09. The conversion programme to a more customer oriented format for H.Samuel is anticipated to be completed in 2009/10. Thereafter, the cost of store refurbishment is expected to reduce significantly as structural work, such as the move away from window based displays, will be much lower.
H.Samuel is increasingly focused on bigger stores, in larger shopping destinations, where it is better able to offer more specialist customer service, a wider range of jewellery and benefit from the more customer oriented format. This reflects the changing shopping patterns of customers. The number of H.Samuel stores in smaller markets is therefore likely to decline as leases expire or suitable real estate transactions become available. Over the last five years there has been a reduction of 59 stores.
Ernest Jones
Introduction
Ernest Jones accounted for 12% of Group sales in 2007/08 (2006/07: 11%), and is the second largest speciality retail jewellery brand in the UK with a market share of 5.6% of the total jewellery market. It serves the upper middle market and its customers typically

Signet Group plc Annual Report & Accounts year ended 2 February 2008	25	

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 	 	UK operating review (continued)	
 
have a household income of between £30,000 and £50,000. It sells a broad range of diamond and gold jewellery as well as prestige watches such as Breitling, Cartier, Longines, Omega, Rado, Raymond Weil, Rolex and Tag Heuer. It also sells contemporary fashion watches such as Burberry, DKNY, Emporio Armani, Gucci, Hugo Boss and a range of traditional watches including Accurist, Rotary, Seiko and Tissot.
Ernest Jones had 204 stores at 2 February 2008 (3 February 2007: 206) and is represented in nearly all large shopping centres. An e-commerce capability was added to ernestjones.co.uk in September 2006 and it is the second most visited UK speciality jewellery website (source: Hitwise).
Where local market size and merchandise considerations allow, a two-site strategy is followed using the Leslie Davis trading name. While having a similar customer profile to Ernest Jones, Leslie Davis is differentiated by a greater emphasis on fashion brands and the store design. There were 16 Leslie Davis stores at 2 February 2008 (3 February 2007: 16).
2007/08 
 Ernest Jones sales were £219.4 million (2006/07: £217.6 million), with watches showing good growth but the diamond jewellery performance was disappointing. Sales per store improved in 2007/08

Ernest Jones 5 year sales, £m	

Ernest Jones store data (1)	 	 	 	 	 	 	 	
								
 	 	2007/08	 	2006/07	 	2002/03	 	
								
Number of stores:	 		 		 		 	
   Opened during year	 	–	 	1	 	8	 	
   Closed during year	 	(2	)	(2	)	–	 	
   Open at end of year	 	204	 	206	 	192	 	
Percentage increase in like for like sales	 	2.9	%	1.7	%	9.4	%	
Average sales per store in thousands (exc. VAT) (2)  	 	£1,105	 	£1,079	(3)  	£1,030	 	
								
(1)	Including Leslie Davis stores.	
(2)	Including only stores operated for the full financial year.	
(3)	53 week year.	
to £1,105,000 (2006/07: £1,079,000 on a 53 week basis) and have increased at a compound annual growth rate of 1.4% over the last five years.
During 2007/08 an enhanced store design was successfully tested, a new marketing theme for the brand was developed and a store branded credit card was launched. The quality of staff training was further improved, with over 45% of Ernest Jones staff having gained an externally recognised jewellery industry qualification. A specially designed diamond ring for Christmas was a notable success.
Customer service 
 As over two thirds of Ernest Jones sales mix consists of diamonds and watches, store staff provide a high level of customer service and have detailed product knowledge. An increasing proportion of staff have undertaken training provided by the division in conjunction with the International Gemological Institute (“IGI”) or the British Horological Institute (“BHI”). The enhanced store design that was tested in 2007/08 provided a more appropriate sales environment for diamond jewellery, in particular rings, and watches.
Merchandising 
 In 2007/08 diamond jewellery accounted for 34% of Ernest Jones’ merchandise mix similar to the level in 2002/03. The average retail price of merchandise sold in Ernest Jones in 2007/08 was £180 (2006/07: £163) and has increased at a compound annual growth rate of 6.7% over the last five years. In 2007/08 within the diamond category the average selling price increased to £440 (2006/07: £413). The Leo Diamond range, exclusive to Ernest Jones in the UK, was further developed in 2007/08. Watch participation in the merchandise mix increased to 33% and Ernest Jones continues to develop its relationships with the leading watch distributors.

Ernest Jones merchandise mix
(excluding repairs, warranty and other
miscellaneous sales)	 	 	 	 	 	 	 	
								
 	 	2007/08	 	2006/07	 	2002/03	 	
								
Gold jewellery	 	25	%	25	%	25	%	
Watches	 	33	%	31	%	33	%	
Diamond jewellery	 	34	%	35	%	33	%	
Other jewellery	 	6	%	6	%	5	%	
Gifts and other	 	2	%	3	%	4	%	
								
Average selling price	 	£180	 	£163	 	£130	 	
								
Marketing 
 During 2007/08 a new marketing proposition “Only at Ernest Jones” was developed and tested. This is intended to help differentiate the brand in the marketplace and emphasises the exclusive merchandise that is available, such as the Leo Diamond, the Christmas products and certain watch designs. It is intended to develop this positioning further in 2008/09.

26	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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For most of the year the primary marketing and advertising medium employed by Ernest Jones is a series of catalogues distributed by mail and as inserts in newspapers and magazines. They are also available in all stores. In 2007/08 the quality of catalogues continued to be improved and their distribution better targeted. Increasing use is also being made of customer relationship marketing and it is planned that this will be developed further in 2008/09. There is also an Ernest Jones website, which was made transactional in September 2006. Its performance is encouraging, but its sales remain relatively small within a divisional context.
In recent years Ernest Jones has tested the effectiveness of television advertising. During Christmas 2007 a new television commercial broadcast in areas covering about 60% of the store base. The results of the trial continue to be analysed.
Store design 
 A more open, customer oriented store design has also been implemented for Ernest Jones. Ahead of a major refurbishment programme, an enhanced more contemporary design was developed and tested in late 2007/08. The design increased the differentiation of the brand by giving greater prominence to the Ernest Jones brand and the watch agencies, as well as providing an improved environment for selling diamond jewellery. The early results of this design have been encouraging.
Real estate 
 Ernest Jones’ normal refurbishment cycle is ten years and the majority of its stores are due for refit in the period 2008/09 to 2011/12 in the enhanced design. During 2007/08, 11 refits and resites were completed, including three Leslie Davis stores. At 2 February 2008 48 stores, accounting for a little over 20% of sales, traded in the more customer oriented format (3 February 2007: 38). 46 refits and resites are planned for 2008/09.
The number of Ernest Jones stores has been broadly stable over the last five years and additional sites will be added depending on the availability of suitable sites and prestige watch agencies.

Functional reviews	
	
Customer service and human resources 

Introduction 
 Management regards customer service as an essential element in the success of its business, and the division’s scale enables it to invest in industry-leading training. The Signet Jewellery Academy, a multi-year programme and framework for training and developing standards of capability, is operated for all store staff. It utilises a training system developed by the division called the “Amazing Customer Experience”, also known as “ACE”.
2007/08 
 The division further developed its ACE training programme and a complementary programme for the division’s head office has been
implemented. In addition, the training programme was more closely co-ordinated with merchandising initiatives and marketing events. An ACE Index customer feedback survey, which gives a more accurate reflection of customers’ experiences, has been trialled and is being implemented.
Training 
 The ACE training programme was introduced in 2006/07 and was further developed during 2007/08. ACE is a flexible programme consisting of six elements that better enable store staff to meet the needs of customers. In addition to the normal training programme one day ACE workshops were introduced in 2007/08. This programme will be expanded in 2008/09. All store personnel have daily performance targets. They are given training and weekly feedback on their performance from store and field management to help them achieve these targets. Training in management skills is provided to all tiers of store operations management to support the store associate training programme and to build general management skills.
The division’s continuing programme to improve the training of its staff is reflected in the number of staff that have now passed the Jewellery Education & Training (“JET”) Level 1 qualification accredited by the National Association of Goldsmiths (“NAG”). In total 1,299 sales associates and 1,331 store managers and assistant store managers (representing 83% of store management) have achieved this qualification and the pass rate in 2007/08 was 91%. Signet now employs nearly half of all JET Level 1 qualified people that work in the UK retail jewellery industry.
In addition the division has established award winning workshops run in partnership with the IGI to increase product knowledge in the diamond category. In addition, during 2007/08 a partnership was developed with the BHI to deliver workshops that increase service levels in store and help drive the sales performance of the watch category. These courses form part of the training programme for staff hoping to achieve a JET Level 2 qualification from NAG. This qualification is particularly relevant for Ernest Jones staff.
Recruitment and retention 
 The division has achieved a further fall in staff turnover and at store management level it is at its lowest level for many years. This contributes to improved customer service, employee engagement and store performance levels. Management believes that improved recruitment procedures, better training programmes, the continuing development of the commission scheme, career prospects and its response to the annual staff opinion survey, have contributed to this.
Recruitment procedures, including online facilities, continue to improve the suitability of new store personnel, helping to ensure that they meet key basic requirements and are motivated to work within a jewellery store environment. Field and human resources management are responsible for the recruitment, review, training and development of sales staff, thereby ensuring consistency in operating standards and procedures throughout the business. All new store staff receive a structured induction programme that covers store operations, product knowledge and customer service. A financial reward is received upon completion.

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 	 	UK operating review (continued)	
 
A commission-based remuneration programme first implemented in 2005/06 was developed further during 2007/08. The level of commission paid is dependent on a combination of store and individual performance.
Promotion 
 The division’s preferred policy is to promote store management from within the business and aim for 80% of appointments to be internal applicants. Each chain always has a number of sales staff who are qualified to advance to store management level, thus assuring the availability of newly trained managers familiar with the division’s operating standards and procedures.
Store support 
 In order to increase staff selling time and to improve efficiency, operating procedures are routinely reviewed to identify opportunities to enhance customer service and reduce in-store administrative tasks. The Signet intranet, which was upgraded during the year, provides a computer-based platform for improved communication between stores and head office, with sales floor and back office administrative functions being simplified and standardised through this medium. A two year programme to replace and upgrade store EPOS equipment was begun during the year. Part of the upgrade included access to the internet to allow online credit authorisations for the new branded credit card.
Head office 
 Management believes that successful recruitment, training and retention of divisional head office staff is important. Accordingly, structured recruitment, training and performance management systems are in place. Internal career advancement is supported by succession planning. Teamwork and service to the stores are encouraged through a performance bonus plan for head office staff, which is based on the division’s results. The implementation of a programme to drive continuous improvement, cross functional alignment and customer-focused decision making was introduced in 2007/08 and will continue through 2008/09. The programme includes back-to-the-shop-floor exercises, development workshops and e-learning.
Merchandising and purchasing
Introduction 
 Management believes that the division’s leading position in the UK jewellery sector is an advantage when sourcing merchandise, enabling delivery of better value to the customer. An example of this is its capacity to contract with jewellery manufacturers to assemble products, utilising directly sourced gold and diamonds. In addition, the division has the scale to utilise sophisticated merchandising systems to test, track, forecast and respond to consumer preferences.
The division retails an extensive range of merchandise including gold and silver jewellery, watches, diamond and gemstone set jewellery and gifts. As with other UK speciality retail jewellers, most gold jewellery sold is 9 carat, although sales of 18 carat gold jewellery and platinum have been increasing.
2007/08 
 The divisiion continued an initiative to increase the differentiation of H.Samuel and Ernest Jones in their respective marketplaces by increasing the range of exclusive merchandise stocked and by the greater use of collections. In addition the presentation of merchandise was improved by the development of new displays and the reduction in product densities through the rationalisation of merchandise ranges. In 2007/08 diamond jewellery accounted for 28% of total Signet UK merchandise mix versus 23% in 2002/03.
Other sales 
 Repair services account for nearly all the other sales made by the UK division and account for less than 10% of the division’s sales. Third party warranties are also sold with only the commission earned being recognised in sales.

UK division merchandise mix
(excluding repairs, warranty and other
miscellaneous sales)	 	 	 	 	 	 	 	
								
 	 	2007/08	 	2006/07	 	2002/03	 	
								
Gold jewellery	 	28	%	28	%	29	%	
Watches	 	29	%	28	%	28	%	
Diamond jewellery	 	28	%	28	%	23	%	
Other jewellery	 	8	%	8	%	7	%	
Gifts	 	7	%	8	%	13	%	
								
Average selling price	 	£68	 	£63	 	£48	 	
								
Suppliers 
 Merchandise is purchased from a range of suppliers and manufacturers and economies of scale and buying power continued to be achieved by combining the purchases of H.Samuel and Ernest Jones. In 2007/08 the five largest of these, (four watch and one jewellery supplier), together accounted for approximately 26% of total UK division purchases, with the largest accounting for approximately 7%. Only a small percentage of merchandise is purchased on consignment (see note 13 on page 99).
Direct sourcing 
 The UK division also employs contract manufacturers for approximately 27% of the diamond merchandise sold, thereby achieving cost savings. Some 20% of the UK business’ gold jewellery is manufactured on a contract basis through a buying office in Vicenza, Italy.
Merchandising 
 Both H.Samuel and Ernest Jones employ experienced buyers who concentrate on product development, sourcing and supplier management appropriate to their particular needs. Merchandising teams work in conjunction with the buyers and focus on assortment planning, branch grading, repeat orders, inventory levels and margin management. Product category reviews are regularly carried out with a focus on increasing potential gross margin return on investment. Rigorous test marketing procedures are used to trial products, and their subsequent distribution is made strictly against rates of sale.
Each store is assigned a range of merchandise that reflects local buying patterns. Display equipment and layouts are constantly reviewed and updated, and new display formats and units that draw upon the US division’s experience have been implemented.

28	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	
 
Marketing and advertising
The UK division has strong and well established brands and leverages them with advertising (television, print and online), catalogues and the development of customer relationship marketing techniques. Few of its competitors have sufficient scale to utilise all these marketing methods successfully. Marketing campaigns are designed to reinforce and develop further the distinct brand identities. Both campaigns aim to expand the overall customer base and improve customer loyalty. Gross expenditure on marketing and advertising was £14.6 million (2006/07: £14.6 million) and amounted to 3.1% of sales in 2007/08 (2006/07: 3.1%) .
Real estate
Strict criteria are followed when evaluating real estate investment and management believes that the quality of its store portfolio is superior to that of many of its competitors. Nearly all the division’s stores are leased and the strength of the Group’s balance sheet and the division’s trading record makes it an attractive tenant.
The level of store capital expenditure was £9 million (2006/07: £8 million), the increase reflecting the phasing of the normal store refurbishment cycle and investment in information technology. The level of store refit is planned to be at a significantly higher level in 2008/09 due to the Ernest Jones store refurbishment cycle, and store capital expenditure is expected to increase to up to £25 million (2007/08: £9 million). The typical cost of a store refit for H.Samuel is between £200,000 and £250,000 and for Ernest Jones £250,000 to £350,000.
Recent and planned investment in the store portfolio is set out below:

Store investment	 	 	 	 	 	 	
							
 	2008/09	 	2007/08	 	2006/07	 	
 	planned	 	 	 	 	 	
							
Store refurbishments and relocations	69	 	27	 	28	 	
New H.Samuel stores	2	 	1	 	–	 	
New Ernest Jones stores	3	 	–	 	1	 	
Store fixed capital investment	£25m	 	£9m	 	£8m	 	
							
Insurance loss replacement business
While nearly all the UK division’s sales are made directly to the consumer, management believes that Signet is the leading UK jewellery retailer in the insurance loss replacement business. This involves the settlement of insurance claims by product replacement through jewellery stores rather than by cash settlements from the insurance company. A lower gross margin is earned on these transactions than on sales to individual customers. However, the division benefits from the resulting higher level of sales, greater customer traffic in the
stores and the opportunity to create and build relationships with new customers. Given its nationwide store portfolio, breadth of product range and ability to invest in systems to support the business, the division has benefited from insurance companies settling claims in this manner. In 2007/08 the proportion of sales generated from the insurance loss replacement business again increased.
Credit operations
Following a successful test in early 2007/08, the division rolled out a third party own-label credit card programme in time for the Christmas trading season. The roll out was supported by staff training. Drawing on the experience of the US division, the card offers customers a number of different credit options depending on transaction value and customer preference. The card is administered and funded by, and default risk resides with, a third party. The division pays a fee for this facility based on a percentage of the transaction value which varies dependent on which credit option is taken by the customer.
Before the launch of this initiative customers were offered an interest-free credit programme for purchases above a particular price. This offer was administered and funded by the same third party on the same basis as the new own label card. In 2007/08 approximately 3% of the division’s sales value was through one or other of these credit programmes (2006/07: 2%).
Bank credit card sales are treated as cash transactions and accounted for approximately 30% of sales during 2007/08 (2006/07: 29%).
Management tools and communications
EPOS equipment, retail management systems, purchase order management systems and merchandise planning processes are in place to support financial management, inventory planning and control, purchasing, merchandising, replenishment and distribution and can ensure replacement within 24 hours of any merchandise sold. The fourth phase of an electronic “Business To Business” communications project, developed to improve the efficiency and effectiveness of dealing with suppliers, was implemented in 2007/08.
A perpetual inventory process allows store managers to check stock by product category. These systems are designed to assist control of shrinkage, fraud prevention, financial analysis of retail operations, merchandising and inventory control.
Regulation
Various laws and regulations affect Signet’s UK operations. These cover areas such as consumer protection, consumer credit, data protection, health and safety, waste disposal, employment legislation and planning and development standards. Management monitors changes in these laws with a view to ensuring that its practices comply with legal requirements.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	29	

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 	 	Business review	

 	 	Description of properties & Group employees	

Description of properties	
	
Signet attributes great importance to the location and appearance of its stores. Accordingly, in both Signet’s US and UK operations, investment decisions on selecting sites and refurbishing stores are made centrally, and strict real estate criteria are applied.
US 
 Substantially all of Signet’s US stores are leased. In addition to a minimum annual rental, a significant number of stores also pay turnover related rent based on sales above a specified base level. Under the terms of a typical lease, the US business is required to conform and maintain its usage to agreed standards, including meeting required advertising expenditure as a percentage of sales, and is responsible for its proportionate share of expenses associated with common area maintenance, utilities and taxes of the mall. The initial term of a mall store lease is generally ten years. At 2 February 2008 the average unexpired lease term of US leased premises was six years and some 48% of leases had terms expiring within five years. The Jared stores are normally on 20 year leases with options to extend the lease and their rents are not turnover related.
The US division leases 15% of its store locations from Simon Property Group and 14% from General Growth Management, Inc. The division has no other relationship with any lessor relating to 10% or more of its store locations.
During the past five financial years the US business generally has been successful in renewing its store leases as they expire and has not experienced difficulty in securing suitable locations for its stores. No store lease is individually material to the Group’s US operations.
A 340,000 square foot head office and distribution facility is leased in Akron, Ohio. On 2 February 2007 a new 25 year lease was entered into for this facility. On 1 January 2007 a 25 year lease was entered into for a 86,000 square foot office building next door to the head office. Over time this building will be used to accommodate the expected future growth of the head office facilities. Space surplus to the Group’s requirements in this building is currently sublet. A 19,000 square foot repair centre was opened during 2005/06 and is owned by the Group.
UK 
 At 2 February 2008 Signet UK traded from seven freehold premises, five premises where the lease had a remaining term in excess of 25 years and 551 other leasehold premises. The division’s stores are generally leased under full repairing and insuring leases (equivalent to triple net leases in the US). Wherever possible Signet is shortening the length of new leases that it enters into, or including break clauses in order to improve the flexibility of its lease commitments. At 2 February 2008 the average unexpired lease term of UK premises with lease terms of less than 25 years, was seven years and a majority of leases had either break clauses or terms expiring within five years. Rents are usually subject to upward review every five years if market conditions so warran t. An increasing proportion of rents are related to sales of the store, subject to a minimum annual value. For details of assigned leases and sublet premises see page 40.
At the end of the lease period, subject to certain limited exceptions, UK leaseholders generally have statutory rights to enter into a new lease of the premises on negotiated terms. As current leases expire, Signet believes that it will be able to renew leases, if desired, for present store locations or to obtain leases in equivalent or improved locations in the same general area. Signet has not experienced difficulty in securing leases for suitable locations for its UK stores. It is not believed that any of the store leases are individually material to the Group’s UK operations.
Signet owns a 255,000 square foot warehouse and distribution centre in Birmingham, where certain of the UK division’s central administration functions are based. The remainder are situated in Borehamwood, Hertfordshire where the facility is held on a 15 year lease entered into in 2005 and consists of 36,200 square foot of office space. The holding company functions are located in a 7,200 square foot office in central London, on a ten year lease which was entered into in 2005.
Distribution capacity
 The US division has sufficient distribution capacity to meet its current requirements. It is planned to increase the capacity of the distribution centre in 2008/09. As a result, it is anticipated that there will be sufficient capacity to support medium term sales growth. The UK distribution centre has sufficient capacity for the anticipated future requirements of the businesses.
Trademarks and trade names
 Signet is not dependent on any material patents or licenses in either the US or the UK; however, it does have several well-established trademarks and trade names which are significant in maintaining its reputation and competitive position in the jewellery retailing industry. These registered trademarks and trade names include the following in Signet’s US operations: Kay Jewelers; Jared The Galleria Of Jewelry; JB Robinson Jewelers; Marks & Morgan Jewelers; Belden Jewelers; Weisfield Jewelers; Osterman Jewelers; Shaw’s Jewelers; Rogers Jewelers; LeRoy’s Jewelers; Goodman Jewelers; Friedlander’s Jewelers; Every kiss begins with Kay; Peerless Diamond, Hearts Desire; and Perfect Partner. Trademarks and trade names include the following in Signet’s UK operations: H.Samuel; Ernest Jones; Leslie Davis; Forever Diamonds; and Perfect Partner.
The value of the Group’s trademarks and trade names are material but are not reflected on the Group’s balance sheet. Their value is maintained and increased by the Group’s expenditure on staff training, marketing and store investment.

Group employees	
	
In 2007/08 the average number of full-time equivalent persons employed (including directors) was 17,243 (UK: 3,847; US: 13,396). The Company usually employs a limited number of temporary employees during each Christmas season.
None of Signet’s employees in the UK and less than 1% of Signet’s employees in the US are covered by collective bargaining agreements. Signet considers its relationship with its employees to be excellent.

30	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

Key performance indicators	 	
 
Choice of key performance indicators
 The key performance indicators, set out on the following pages are judged by the Board to be those performance measures that are most useful in measuring the delivery of the Group’s strategy and the effective management of the business. They measure the increase in sales from the current store base, net change in new store space, total sales and operating profit growth, efficiency of the Group in its use of capital to generate operating profit and movement in net debt. The Board believes it is important to have a balance of key performance indicators which measure both operating and capital aspects of performance.
Total sales growth and operating profit growth are calculated using constant exchange rates to reflect the performance of the business rather than movements in the US dollar to pound sterling exchange rate. See table on page 37 for reconciliation to IFRS numbers. Similarly, the movement in net debt excludes exchange adjustments.
Performance targets
 As the Board has as its prime objective the sustainable enhancement of business performance and shareholder value, it believes it is important to consider the Group’s achievements in the context of the economic cycle, not just on an annual basis. Therefore the targets for five of the key performance indicators (like for like sales growth, net new store space growth, total sales growth, operating profit growth and ROCE) are set over the economic cycle. This longer term horizon is also appropriate as the Group uses a five year time horizon when making store investment decisions.
Trading conditions in 2007/08 were challenging, particularly in the fourth quarter, and as a result four of the key performance targets were not achieved. However as the targets for five of the key performance indicators are set over the economic cycle it was judged inappropriate to alter the targets to reflect shorter term economic conditions. In addition, the other key performance indicator (movement in net debt) is greatly influenced by the economic environment and is set on an annual basis as part of the budgeting process. Therefore while a challenging trading environment continues it is anticipated that the annual performance will be below that targeted over a complete economic cycle.
The management structure of the Group consists of a small corporate function and significant delegation to the US and UK divisional executive committees that are responsible for matters such as retail operations, merchandising, marketing, real estate and human resource management. The Board measures the divisional performance using the same key performance indicators as for the Group.
Group targets largely reflect the goals and market position of each division rather than being driven by corporate-wide priorities. For example the performance target for new store space reflects the individual targets for the US and UK divisions.
Performance record
 A five year record for each key performance indicator is given as the performance targets are set over an economic cycle and to provide a context in which to evaluate the most recent results. Whilst it is recognised that five years is unlikely to represent a full economic cycle, that period of time normally reflects a variety of macro-economic conditions.
Other performance data
 While performance data is collected by management for many purposes, including training, customer service, employment, environmental monitoring, and supply chain performance, none were selected as a key performance indicator as they are reflected in the overall operating results. These and other statistical indicators are widely used in this document, in the management of the business, and in the performance appraisal of individuals.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	31	

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 	 	Business review	

 	 	Key performance indicators (continued)	

 	 	
 	Like for like	
 	sales growth	
 	 	
 	Like for like sales growth is key in determining store profitability. Over time, above industry like for like sales growth drives superior sales per store, central to achieving above average operating margins. Like for like sales growth is driven by factors external to the Group such as the:	
 	 	 	
 	•	level of consumer confidence, which is significantly influenced by changes in the employment market;	
 	•	size and growth of the jewellery market;	
 	•	competition within the sector;	
 	 	
 	and the execution of the basic retail disciplines of:	
 	•	store operations, in particular customer service;	
 	•	merchandising and supply chain management;	
 	•	marketing;	
 	•	real estate management; and	
 	•	in the US, provision of credit.	

 	 	
 	Target: Like for like per annum sales growth of mid-single digits over the economic cycle. While the current challenging trading conditions persist the like for like sales performance is likely to be below the target level.	
 	 	
 	Definition: Annual percentage increase in sales from stores that have been opened for more than 12 months.	

 	5 year compound annual growth 3.3%	

 	Performance: The five year compound growth in like for like sales of 3.3% was just below target as a result of the performance in 2007/08 which reflected challenging trading conditions, particularly in the fourth quarter.	

 	 	
 	Net new store	
 	space growth	
 	 	
 	The growth in new store space provides the potential for future profit growth and is a driver of the Group’s investment in fixed and working capital.	
 	 	 	
 	In the US, there is the long term potential to nearly double store space in existing formats. The constraint on growth is the availability of staff trained to the Group’s standards and the ability to secure real estate leases that satisfy the Group’s criteria. It is anticipated that about half of new store space over the next five years will consist of Jared locations.	
 	 	 	
 	In the UK, it is anticipated that the number of H.Samuel stores will decrease while those of Ernest Jones may increase.	
 	 	 	
 	While the expansion in store space is expected to increase shareholder value in the long term, it has an adverse impact on operating profit margin and return on capital employed in the short term.	

 	 	
 	Target: Increase in Group store selling space to average between 5% and 7% per annum over the economic cycle. In the current challenging trading environment the future rate of expansion in the US is anticipated to be less than in recent years, and the Group increase in space is expected to be 2%-5% in 2008/09 and 2009/10.	
 	 	
 	Definition: Percentage increase in store selling space over the prior year as at the year end.	
 	 	 	
 	5 year compound annual growth 6.5%	

 	Performance: The annual new store space increase of 6.5% over the five years was in the target range. In 2007/08 US net new space growth was 10% and in the UK there was a 2% reduction.	

 	 	
 	Total sales growth	
 	at constant exchange rates	
 	 	
 	Total sales growth gives the Group the ability to leverage central overhead expenditures. In addition, it brings the opportunities to achieve supply chain and marketing efficiencies. Total sales growth is also an important factor in the level of working capital utilised as it is a key influence on the level of inventory and US customer receivables held by the Group.	
 	 	 	
 	Total sales growth is dependent on the level of like for like sales growth and the sales generated by net new store space opened.	
 	 	 	
 	The proportion of sales derived from the US is anticipated to rise due to the level of new store space growth in the US division. The geographic mix of sales is also influenced by exchange rate movements.	

 	 	

		
 	 	
 	Target: 7% to 10% per annum growth in Group total sales at constant exchange rates over the economic cycle. In the current economic environment total sales growth is likely to be below the target range.	
 	 	
 	Definition: Annual percentage increase in total sales at constant exchange rates (see page 34).	

 	 	
 	5 year compound annual growth 6.6%	

 	Performance: The 6.6% annual growth in total sales over the last five years was slightly below target. The performance in 2007/08 was significantly below the target range and reflected the performance of the jewellery market as a whole.	

*53 week year

32	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	

 	 	 	
 	Operating profit growth	
 	at constant exchange rates	
 	 	 	
 	Operating profit measures the surplus that the Group makes from selling jewellery, watches and other products and services. It depends on the cost of goods sold, the level of operating costs and other operating income. The most significant operating cost categories are staff, property operating lease rentals and marketing.	
 	 	 	 	
 	As many of the Group’s costs are comparatively fixed, sales per store is important in determining operating profit. To at least maintain its operating profit, the Group needs total sales growth sufficient to offset any adverse movement in gross margin and increases in operating expenses from both existing operations and new store selling space. The impact of changes in sales (either adverse or favourable) on operating profit is less in the US division than in the UK business, as certain expenses, such as staff costs and property rentals are more related to sales in the US.	

 	 	
 	Target: 7% to 9% per annum growth in Group operating profit at constant exchange rates over the economic cycle. As sales performance is a key driver of operating profit growth, the five year performance is expected to be below target until sales growth returns to its target range.	
 	 	
 	Definition: Group sales less cost of goods sold and administrative expenses; plus other operating income all at constant exchange rates (see page 34).	

 	5 year compound annual growth 1.8%	

 	Performance: The 1.8% compound growth in operating profit was below target, due to the 16.5% decline in 2007/08 which reflected minimal sales growth.	

 	 	 	
 	Return on	
 	capital employed	
 	 	 	
 	ROCE measures the efficiency of the Group in using capital to generate operating profit. Variation in operating profit and assets employed are the drivers of ROCE.	
 	 	 	
 	As the Group operates mainly leasehold stores, inventories, US customer receivables and shop fixtures are the largest elements in the Group’s capital employed.	
 	 	 	
 	In the US, ROCE is adversely impacted by new store space, which in the first year of trading requires investment in inventory and receivables but normally makes only a small contribution to operating profit. In the UK, the strategy to improve store productivity should increase ROCE as little additional inventory is required.	

 	 	

 	Target: A Group ROCE of over 20% assuming the current target for new store space growth over the economic cycle. While trading conditions continue to be challenging, the five year average ROCE is anticipated to decline.	
 	 	
 	Definition: Annual Group operating profit divided by the average monthly Group capital employed for that year, expressed as a percentage.	

 	 	
 	5 year average 22.8%	

 	Performance: The five year average ROCE of 22.8% was above target. While ROCE at 16.8% in 2007/08 was below the five year average, primarily due to the operating profit performance, it remained comfortably above the Group’s cost of capital.	

 	Movement in net debt	
 	excluding exchange adjustments
 and net changes in equity	

 	The movement in the net debt position reflects the cash generated by operations, investment activities, payments to governments, interest and dividends. It depends on the:	
 	 	 	
 	•	operating performance of the business;	
 	•	level of inventory investment;	
 	•	proportion of sales made on the in-house credit card and the average monthly collection rate of the credit balances;	
 	•	timing of payments to creditors;	
 	•	rate of space expansion;	
 	•	level of store refurbishment and relocations, and the purchases or disposals of other assets;	
 	•	level of tax payments made;	
 	•	interest paid; and	
 	•	dividends paid.	

 	 	
 	Target: In 2007/08, for movement in net debt to increase by $70 million to $110 million. For 2008/09, net debt is anticipated to increase between $40 million and $80 million, subject to the general economic uncertainties. The expected reduced cash outflow reflects the planned slower rate of US space growth and lower tax payments.	
 	 	
 	Definition: Movement in net debt excluding exchange adjustments and changes in equity.	

 	5 year average $(23.4) million	

 	Performance: The cash outflow in 2007/08 of $120.6 million was above target due to the sales performance in the fourth quarter.	

*53 week year

Signet Group plc Annual Report & Accounts year ended 2 February 2008	33	

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 	 	Business review	

 	 	Key performance indicators (continued)	
 
Below are the definitions of the key performance indicators:
Like for like sales growth 
 Like for like sales growth is determined by comparison of sales in stores that were open in both the current and the prior year. Sales from stores that have been open for less than 12 months are excluded from the comparison until their 12 month anniversary. Sales from the 12 month anniversary onwards are compared against the equivalent prior period sales within the like for like sales comparison. Stores closed in the current financial period are included up to the date of closure and the comparative period is correspondingly adjusted. Stores that have been relocated or expanded, but remain within the same local geographic market, are included within the comparison with no adjustment to either the current or comparative period. Stores that have been refurbished are also included within the comparison except for the period when the refurbishment is taking place, when those stores are excluded from the comparison both for the current year and for the comparative period. Comparisons at divisional level are made in local currency and consolidated Group comparisons are made at constant exchange rates and exclude the effect of exchange rate movements by recalculating the prior period results as if they had been generated at the weighted average exchange rate for the current period.
Net new store space growth
 Net new store space growth is the percentage increase in store selling space over the prior year measured as at the year end. Store selling space is the area that is open to the consumer and excludes staff rest areas, storage areas and unused space. All stores open on the last day of the financial year are included in the calculation.
Total sales growth
 Total sales growth is the annual percentage increase in sales at constant exchange rates. See Principal accounting policies (d) Revenue
recognition on page 86 for a definition of sales. The Group comparison is made at constant exchange rates and excludes the effect of exchange rate movements by recalculating the prior period results as if they had been generated at the weighted average exchange rate for the current period. See below for a reconciliation between the reported amounts and the growth at constant exchange rates.
Operating profit growth 
 Operating profit growth is the annual percentage increase in operating profit at constant exchange rates. Operating profit is the total Group sales less cost of sales and administrative expenses; plus other operating income, all at constant exchange rates. Cost of sales and administrative expenses are defined on page 87. See below for a reconciliation between the reported amounts and the growth at constant exchange rates.
Return on capital employed
 ROCE is calculated by dividing the annual operating profit by the average monthly capital employed for that year, expressed as a percentage. The monthly values are extracted from the monthly management accounts. See above for a definition of operating profit. Capital employed includes intangible assets, property, plant and equipment, other non-current receivables, inventories, trade and other receivables; less trade and other payables, deferred income and retirement benefit obligations.
Movement in net debt 
 Movement in net debt is defined as the difference between net debt at the end of the period and that at the beginning of the period excluding exchange adjustments, and the net movement in equity capital (proceeds from issue of shares less purchase of own shares).

											
Impact of constant exchange rates	 	 	 	 	 	 	 	 	 	 	
											
 	 	 	 	 	 	 	 	 	Growth at	 	
 	At	 	At 2007/08	 	Growth at	 	Impact of	 	constant	 	
 	reported	 	exchange rates	 	reported	 	exchange rate	 	exchange rates	 	
 	exchange rates	 	(non-GAAP)	 	exchange rates	 	movement	 	(non-GAAP)	 	
 	$m	 	$m	 	%	 	%	 	%	 	
											
Sales:	 	 	 	 		 		 		 	
2003/04	2,697.2	 	2,856.6	 	10.6	 	(3.2	)	7.4	 	
2004/05	3,004.8	 	3,075.9	 	11.4	 	(3.7	)	7.7	 	
2005/06	3,154.1	 	3,248.1	 	5.0	 	0.6	 	5.6	 	
2006/07*	3,559.2	 	3,617.1	 	12.8	 	(1.4	)	11.4	 	
2007/08	3,665.3	 	3,665.3	 	3.0	 	(1.7	)	1.3	 	
											
5 year compound annual growth	 	 	 	 	8.4	 		 	6.6	 	
											
Operating profit:	 	 	 	 		 		 		 	
2003/04	341.2	 	361.6	 	15.0	 	(2.5	)	12.5	 	
2004/05	395.3	 	405.1	 	15.8	 	(3.8	)	12.0	 	
2005/06	374.7	 	383.0	 	(5.2	)	(0.5	)	(5.5	)	
2006/07*	416.2	 	421.9	 	11.1	 	(0.9	)	10.2	 	
2007/08	351.3	 	351.3	 	(15.6	)	(1.1	)	(16.7	)	
											
5 year compound annual growth	 	 	 	 	3.4	 		 	1.8	 	
											
* 53 week year.

34	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

Group financial review	 	
for the 52 weeks ended 2 February 2008	 	

														
 	2007/08	 	 	2007/08	 	2006/07	*	2006/07	 	2005/06	 	2005/06	 	
 	$m	 	 	%	 	$m	 	%	 	$m	 	%	 	
														
Sales		 			 		 		 		 		 	
US	2,705.7	 	 	73.8	 	2,652.1	 	74.5	 	2,308.8	 	73.2	 	
UK	959.6	 	 	26.2	 	907.1	 	25.5	 	845.3	 	26.8	 	
														
Total	3,665.3	 	 	100.0	 	3,559.2	 	100.0	 	3,154.1	 	100.0	 	
														
Operating profit		 			 		 		 		 		 	
US	262.2	 	 	78.6	 	326.7	 	81.5	 	300.7	 	83.4	 	
UK	105.1	 	 	31.5	 	103.4	 	25.8	 	88.4	 	24.5	 	
Group function	(16.0	)	 	(4.8	)	(13.9	)	(3.5	)	(14.4	)	(4.0	)	
														
 	351.3	 	 	105.3	 	416.2	 	103.8	 	374.7	 	103.9	 	
Net finance charge	(17.8	)	 	(5.3	)	(15.4	)	(3.8	)	(14.0	)	(3.9	)	
														
Profit before tax	333.5	 	 	100.0	 	400.8	 	100.0	 	360.7	 	100.0	 	
														
* 53 week year.	 	 	 	 	 	 	 	 	 	 	 	 	 	
 
Reporting currency 
 Over 70% of the Group’s sales, operating profit and net assets, including predominantly all of its borrowings, are denominated in US dollars. Therefore from the start of its fiscal year on 4 February 2007 the Group commenced reporting in US dollars (including comparatives and the five year record), to better reflect its underlying performance. The functional currency of the Company changed to US dollars on 5 February 2007.
Introduction 
 The Group’s sales are seasonal with the first and second quarter both normally slightly more than 20% of annual sales, the third quarter a little under 20% and the fourth quarter accounting for about 40% of sales, with December being by far the most important month of the year. Due to operating leverage the operating profit of the Group is even more seasonal, with nearly all the UK division’s, and a little over 50% of the US division’s, operating profit occurring in the fourth quarter. Group costs occur broadly evenly during the year, while net financing costs are higher in the second half of the year reflecting the peak in working capital requirements ahead of the key Christmas trading period.
The key drivers of operating profitability are the:

•	rate of sales growth;	
•	balance between like for like sales growth and sales from new store space;	
•	achieved gross margin;	
•	level of cost increases experienced by the Group; and	
•	movements in the US dollar to pound sterling exchange rate, as the minority of the Group’s profits are generated in the UK and the Group has reported its results in US dollars.	
The gross margin percentage in retail jewellery is above the average for speciality retailers, reflecting the slow inventory turn. The trend in gross margin depends on Signet’s pricing policy, movements in the cost of goods sold, changes in sales mix and the direct cost of providing services such as repairs.
In general, the gross margin percentage on gold jewellery is above that of diamond jewellery, whilst that of watches and gift products is
normally below that of diamond jewellery. Within the diamond jewellery category the gross margin percentage varies depending on the proportion of the merchandise cost accounted for by the value of the diamonds; the greater the proportion, the lower the gross margin percentage. In addition, the gross margin percentage of a Jared is slightly below the mall brands, although at maturity the store contribution percentage of a Jared site is similar to that of a mall store. A change in merchandise mix will therefore have an impact on the Group’s UK and US division’s gross margin percentage and a change in the proportion of sales from Jared will have an impact on the gross margin percentage of both the US division and Group. In the US division the growth of Jared and the increase in sales of higher value diamonds, both of which are helping to drive like for like sales growth, means that the US gross margin percentage is expected to show a small decline in most years.
The cost of goods sold used to arrive at gross profit takes into account all costs incurred in the purchase, processing and distribution of the merchandise and all costs directly incurred in the operation and support of the retail outlets. The classification of distribution and selling costs under IFRS varies from company to company and therefore the gross profit percentage may not be comparable from one company to another.
To maintain the operating profit margin, the Group needs to achieve like for like sales growth sufficient to offset any adverse movement in gross margin, the increase in operating costs (including the net bad debt charge) and the impact of immature selling space. Like for like sales growth above the level required to offset the factors outlined above, allows the Group to achieve leverage of its fixed cost base and improve operating margin; slower sales growth results in reduced operating margin. There are not any known trends or uncertainties in future rent or amortisation expenses that could materially affect operating results or cash flows.
Signet’s target of 8% – 10% net new store space growth in the US, with a slight decline in space in the UK, means lower like for like sales growth is required in the UK than in the US to maintain operating margin. As the planned new space growth of about 5% in the US in

Signet Group plc Annual Report & Accounts year ended 2 February 2008	35	

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 	 	Business review	

 	 	Group financial review (continued)	
 
2008/09 is below that achieved in 2006/07 and 2007/08, a lower rate of like for like sales growth would be required to maintain the US operating margin than has recently been the case.
The impact on operating profit of sales variances (either adverse or favourable) is less in the US division than the UK, as certain variable expenses such as turnover-related rent and staff incentives account for a higher proportion of costs in the US business than in the UK division. The impact on operating profit of a sharp increase or decrease in like for like sales performance is marked. This is particularly the case if the change in sales growth is unexpected and occurs in the fourth quarter.
A key factor in driving operating margin is the level of average sales per store, with higher productivity allowing leverage of expenses both in store and in central functions.
Movements in the US dollar to pound sterling exchange rate have an impact on the reported results of the Group as the UK division’s results are translated into US dollars. A one cent movement in the exchange rate impacts profit before tax by some $0.4 million. The Board believes it is inappropriate to hedge this exposure as the UK division’s sales and costs are denominated in pounds sterling.
52 weeks ended 2 February 2008
2007/08 was a 52 week year and the comparable period was the 53 weeks to 3 February 2007. To demonstrate better the underlying trends within the business, percentage changes of sales at constant exchange rates and like for like sales, use the 52 weeks to 3 February 2007 as the comparable period. Total Group sales rose to $3,665.3 million (2006/07: $3,559.2 million), up by 3.0% on a reported basis and 3.2% on a 52 week constant exchange rate basis (see page 37). Group like for like sales were down by 0.7% and net new store space contributed 3.9% .
Group operating margin decreased to 9.6% (2006/07: 11.7%), reflecting a decline in the US division and an increased operating margin in the UK division after adjusting for the impact of the 53rd week in 2006/07, (see table opposite). Group operating profit fell to $351.3 million (2006/07: $416.2 million), down by 15.6% on a reported basis and by 15.9% on a 52 week constant exchange rate basis (see page 37).
Net financing costs amounted to $17.8 million (2006/07: $15.4 million), the increase being primarily due to incremental borrowing as a result of the share buyback programme commenced in 2006/07 and which was completed in the first quarter of 2008/09.
Group profit before tax decreased to $333.5 million (2006/07: $400.8 million), down by 16.8% on a reported basis and by 17.4% on a 52 week constant exchange rate basis (see page 37). The 53rd week contributed some $3.2 million to profit before tax in 2006/07. Profit for the financial period fell by 19.1% to $215.2 million (2006/07: $266.0 million), a decrease of 19.7% on a 52 week constant exchange rate basis (see page 37). Basic earnings per share was 12.6 cents (2006/07: 15.4 cents), down by 18.2% on a reported basis and by 18.7% on a constant exchange rate basis (see page 37).

Sales	 	 	 	 	 	 	
							
Components of 2007/08 sales growth	 	 	 	 	 	 	
 	US %	 	UK %	 	Group %	 	
							
Like for like on a 52 week basis	(1.7	)	2.0	 	(0.7	)	
Change in net new store space	5.8	 	(1.1	)	3.9	 	
Exchange translation	–	 	6.5	 	1.7	 	
							
Total sales growth on a 52 week basis	4.1	 	7.4	 	4.9	 	
Impact of 53rd week in 2006/07	(2.1	)	(1.6	)	(1.9	)	
							
Total sales growth as reported	2.0	 	5.8	 	3.0	 	
							
US 
 Like for like sales growth slowed in the first nine months of 2007/08 to 2.7%, with the gift giving events of Valentine’s Day and Mother’s Day being disappointing. The very important fourth quarter was particularly difficult with like for like sales declining by 8.6%, resulting in a full year decline of 1.7% . The contribution from new store space was 5.8% and the 53rd week in 2006/07 was adverse by 2.1% . Total sales as reported rose by 2.0% (see table above).
UK 
 Like for like sales growth was 2.0%, an encouraging performance in an increasingly challenging marketplace. As in the US, performance in the first nine months of 2007/08 was stronger at 4.7%, but became more difficult in the fourth quarter with like for like sales declining by 1.7% . The impact of changes in net new store space was a decrease of 1.1%, foreign exchange movements increased reported sales by 6.5% and the 53rd week in 2006/07 was adverse by 1.6% (see table above). Total sales as reported increased by 5.8% .

Operating profit	 	 	 	 	 	 	
							
Operating margin movement	 	 	 	 	 	 	
 	US %	 	UK %	 	Group %	 	
							
2006/07 margin	12.3	 	11.4	 	11.7	 	
Impact of 53rd week	0.2	 	(0.2	)	0.1	 	
							
 	12.5	 	11.2	 	11.8	 	
Gross margin	(0.3	)	(0.6	)	(0.4	)	
Expenses	(1.9	)	0.4	 	(1.4	)	
New store space	(0.6	)	–	 	(0.4	)	
							
2007/08 margin	9.7	 	11.0	 	9.6	 	
							
US 
 The operating margin in the US division was 9.7% (2006/07: 12.3%) . This reflected deleverage of 190 basis points due to the like for like sales decline, the impact of additional immature space of 60 basis points, an adverse movement in gross margin percentage of 30 basis points and the impact in 2006/07 of the 53rd week of 20 basis points (see table above). Administrative expenses (see definition page 87) increased reflecting the resources required to support the growth of the division. The ratio of net bad debt to sales deteriorated to 3.4% (2006/07: 2.8%) but was largely offset by additional income on the receivables portfolio due to the lower monthly collection rate. Operating profit was $262.2 million (2006/07: $326.7 million), down by 19.6% on a 52 week basis (see page 37) and 19.7% as reported.

36	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	
 
UK 
 The operating margin in the UK division was 11% (2006/07: 11.4%) . The division’s gross margin was down by 60 basis points, primarily caused by changes in mix due to the strong performance of the watch category, some impact from commodity costs and an increasing proportion of sales from Ernest Jones. A tight control of costs was maintained and resulted in a 40 basis point benefit to operating margin but the benefit to 2006/07 of the 53rd week had an adverse impact of 20 basis points (see table on page 36). Operating profit increased 1.6% to $105.1 million (2006/07: $103.4 million). The benefit of the 53rd week on operating profit was about $3.3 million and on a 52 week constant exchange rate basis operating profit was little changed. Administrative costs in the UK increased on a reported basis due to the movement in the US$/pound sterling exchange rate but were little changed as a percentage of sales.
Group costs
Group central costs amounted to $16.0 million (2006/07: $13.9 million) reflecting the impact of exchange translation movements and higher professional fees.
Taxation 
 The charge of $118.3 million (2006/07: $134.8 million) represents an effective tax rate of 35.5% (2006/07: 33.6%) . The rate is lower than indicated in the third quarter results due to the change in the mix of profit between the US and UK businesses and a more favourable
resolution of certain prior year tax positions. It is anticipated that, subject to the outcome of various uncertain tax positions, the Group’s effective tax rate in 2008/09 will be at a similar level to the reported rate in 2007/08.
Return on capital employed 
 The Group’s ROCE was 16.8% (2006/07: 22.8%) . In the US the ROCE was 14.9% (2006/07: 21.5%) reflecting lower operating profits and the additional investment in a 10% increase in net new store space. US capital employed included in-house credit card debtors of $840.2 million at 2 February 2008 ($778.9 million at 3 February 2007). In the UK there was a decrease to 29.9% (2006/07: 32.7%) .
Depreciation, amortisation and capital expenditure 
 Depreciation and amortisation charges were $114.1 million (2006/07: $98.4 million), representing $72.1 million (2006/07: $61.3 million) in the US and $42.0 million (2006/07: $37.1 million) in the UK. Capital expenditure in the US was $111.1 million (2006/07: $101.1 million) and in the UK was $29.3 million (2006/07: $23.3 million). Capital expenditure in the US is primarily due to the rate of new store space growth while that of the UK reflected the number of stores refurbished and the phased replacement of the EPOS System. Capital expenditure in 2008/09 is expected to be about $140 million as a result of an anticipated decrease in the rate of space growth in the US and a planned increase in refurbishments in the UK.

	
Impact of constant exchange rates and 53rd week 
 The Group has historically used constant exchange rates to compare period to period changes in certain financial data. This is referred to as “at constant exchange rates” throughout this Annual Report & Accounts. The Group considers this to be a useful measure for analysing and explaining changes and trends in the Group’s results. The impact of the recalculation of sales, operating profit, profit before tax, profit for the financial period and earnings per share at constant exchange rates and the impact of the 53rd week in 2006/07, including a reconciliation to the Group’s GAAP results, is analysed below.	

 	 	 	 	 	 	 	 	 	 	 	2007/08	 	 	 	 	 	2007/08	 	
 	 	 	 	 	 	 	 	 	2006/07on	 	52 week	 	 	 	2006/07on	 	52 week	 	
 	 	 	 	 	Growth	 	 	 	52 week basis	 	growth	 	 	 	52 week basis	 	growth	 	
 	 	 	 	 	at actual	 	 	 	at actual	 	at actual	 	Impact of	 	at constant	 	at constant	 	
 	 	 	 	 	exchange	 	Impact of	 	exchange rates	 	exchange rates	 	exchange rate	 	exchange rates	 	exchange rates	 	
 	2007/08	 	2006/07	 	rates	 	53rd week	 	(non-GAAP)	 	(non-GAAP)	 	movement	 	(non-GAAP)	 	(non-GAAP)	 	
 	$m	 	$m	 	%	 	$m	 	$m	 	%	 	$m	 	$m	 	%	 	
																			
Sales by origin and		 		 		 		 		 		 		 		 		 	
destination:		 		 		 		 		 		 		 		 		 	
UK	959.6	 	907.1	 	5.8	 	(13.2	)	893.9	 	7.4	 	57.0	 	950.9	 	0.9	 	
US	2,705.7	 	2,652.1	 	2.0	 	(52.2	)	2,599.9	 	4.1	 	–	 	2,599.9	 	4.1	 	
																			
 	3,665.3	 	3,559.2	 	3.0	 	(65.4	)	3,493.8	 	4.9	 	57.0	 	3,550.8	 	3.2	 	
																			
Operating profit:		 		 		 		 		 		 		 		 		 	
UK  – Trading	105.1	 	103.4	 	1.6	 	(3.3	)	100.1	 	5.0	 	6.4	 	106.5	 	(1.3	)	
        – Group function	(16.0	)	(13.9	)	n/a	 	–	 	(13.9	)	n/a	 	(0.9	)	(14.8	)	n/a	 	
																			
 	89.1	 	89.5	 	(0.4	)	(3.3	)	86.2	 	3.4	 	5.5	 	91.7	 	(2.8	)	
US	262.2	 	326.7	 	(19.7	)	(0.5	)	326.2	 	(19.6	)	–	 	326.2	 	(19.6	)	
																			
 	351.3	 	416.2	 	(15.6	)	(3.8	)	412.4	 	(14.8	)	5.5	 	417.9	 	(15.9	)	
																			
Profit before tax	333.5	 	400.8	 	(16.8	)	(3.2	)	397.6	 	(16.1	)	6.1	 	403.7	 	(17.4	)	
																			
Profit for the financial period	215.2	 	266.0	 	(19.1	)	(2.1	)	263.9	 	(18.4	)	4.3	 	268.2	 	(19.7	)	
																			
Earnings per share	12.6c	 	15.4c	 	(18.2	)	(0.1)c	 	15.3c	 	(17.5	)	0.2c	 	15.5c	 	(18.7	)	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	37	

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 	 	Business review	

 	 	Group financial review (continued)	
 
Dividends 
 In November 2007 an interim dividend of 0.96 cents per share was paid (2006/07: 0.4434p) . The Board is recommending to shareholders a final dividend of 6.317 cents (2006/07: 6.317 cents) per share for 2007/08, which, subject to shareholder approval, is to be paid on 3 July 2008 to those shareholders on the register of members at close of business on 23 May 2008. This represents an increase in the total dividend for the year of 1.6% converting the interim dividend paid in 2006 at the US dollar pound sterling rate from Reuters at 4.00 p.m. on 3 November 2006. The US dollar to pound sterling rate used to convert the 6.317 cents dividend per share for payment to shareholders who elect to receive a pound sterling dividend, will be the rate as derived from Reuters at 4.00 p.m. on the record date of 23 May 2008.
Given the substantial increase in economic and financial sector uncertainties, the Board will continue to evaluate the dividend policy in the light of the needs of the business, taking into consideration the significant competitive advantages of a strong balance sheet and financial flexibility. Account will also be taken of the primary stock market listing of the Company.
Under English law, dividends can only be paid out of profits available for distribution (generally defined as accumulated realised profits less accumulated realised losses, less unrealised losses) and not out of share capital or share premiums (generally equivalent in US terms to paid-in surplus). At 2 February 2008, after taking into account the subsequently recommended final dividend of 6.317 cents per share (2006/07: 6.317 cents per share), the holding company had distributable reserves of $283.2 million (3 February 2007: $199.0 million).
In order to make further distributions in excess of this figure, the holding company would first need to receive dividends from its subsidiaries. In addition to restrictions imposed at the time of the 1997 capital reduction on the distribution of dividends received from subsidiaries, the payments of dividends from other tax jurisdictions may not be tax efficient. Furthermore, there may be other reasons why dividends may not be paid by subsidiaries to the holding company.
Liquidity and capital resources
It is the objective of the Group to maintain a strong balance sheet, after implementing its 8% – 10% new store space growth strategy in the US, the continuing programme of store refurbishments and relocations on both sides of the Atlantic, payment of dividends, and any repurchase of shares. Factors which could affect this objective would be the acquisition of a business or a change in the Group’s distribution policy to shareholders or if there was a variation in the operating performance of the Group.
The cash flow performance of the Group depends on a number of factors, such as the:

•	operating performance of the business;	
•	rate of space expansion, which influences both fixed and working capital investment;	
•	level of store refurbishment and relocations;	
•	level of inventory investment; and	
•	proportion of US sales made on the in-house credit card and the average monthly collection rate of the credit balances.	
Investment in new space requires significant investment in working capital, as well as fixed capital investment, due to the slow inventory turn, and the additional investment required to fund sales in the US utilising the in-house credit card.
In years when the rate of new store space expansion in the US is below the planned 8% – 10% range, the Group will have reduced levels of investment in fixed and working capital. The level of store refurbishment and relocation varies from year to year and fixed capital investment will reflect these changes. In 2007/08 the decline in profits meant that there was a cash outflow of $120.6 million (2006/07: $30.7 million) before exchange adjustments and the repurchase of shares amounting to $29.0 million (2006/07: $63.4 million) and proceeds from the issue of shares of $6.0 million (2006/07: $7.7 million).
The Group’s working capital requirements fluctuate during the year as a result of the seasonal nature of its business. As inventory is purchased for the Christmas season there is a working capital outflow which reaches its highest levels in late autumn. This position then reverses over the key selling period of November and December. The working capital needs of the business are then relatively stable from January to August. The rough diamond sourcing initiative will require the Group to hold an element of its inventory for approximately an additional 60 days. The timing of the payment of the final dividend, normally in July, is also material to working capital requirements during the year.
The Board considers that the capital resources currently available are sufficient for both its present and near term requirements. A description of the main credit facilities of the Group are given in the next section, “Net debt”.
In 2007/08 cash generated from operations amounted to $294.7 million (2006/07: $346.4 million) after funding a working capital increase of $171.0 million (2006/07: $173.5 million), principally as a result of the growth of space in the US division and slightly higher than planned inventory at the year end. It is anticipated that in 2008/09 there will be a further increase in the level of working capital due to planned US store openings however, this is expected to be significantly less than in 2007/08. Interest of $29.8 million (2006/07: $31.4 million) and tax of $128.5 million (2006/07: $130.1 million) were paid. Net cash flows from operating activities was $136.4 million (2006/07: $184.9 million).
Group capital expenditure was $140.4 million (2006/07: $124.4 million). The level of capital expenditure was some 1.2 times the depreciation and amortisation charge of $114.1 million (2007/08: $98.4 million). Equity dividends of $123.9 million (2006/07: $108.7 million) were paid, and $29.0 million (2006/07: $63.4 million) was utilised to repurchase shares. $6.0 million (2006/07: $7.7 million) was received from the proceeds of issuing shares. The increase in net debt before exchange adjustment was $143.6 million (2006/07: $86.4 million). In 2008/09, subject to the general economic uncertainty, the increase in net debt is expected to be between $40 million and $80 million before exchange adjustments and movements in equity, reflecting a similar level of capital expenditure, lower investment in working capital and an anticipated decrease in tax payments.

38	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	
 
Net debt 
 Net debt at 2 February 2008 was $374.6 million (3 February 2007: $233.2 million). Group gearing at the year end was 20.7% (3 February 2007: 13.4%) .
In October 2007 the Group entered into a 364 day $200m Series 2007 asset backed variable funding note conduit securitisation facility for general corporate purposes. Under this securitisation, interests in the US receivables portfolio are sold to Bryant Park, a conduit administered by HSBC Securities (USA) Inc. This facility has not been utilised.
On 30 March 2006 Signet entered into a US Private Placement Note Term Series Purchase Agreement (“Note Purchase Agreement”) which was funded largely from US insurance sector institutional investors in the form of fixed rate investor certificate notes (“Notes”). These Notes represent 7, 10 or 12 year maturities, with Series (A) $100 million 5.95% due 2013; Series (B) $150 million 6.11% due 2016 and Series (C) $130 million 6.26% due 2018. The aggregate issuance was $380 million and the funding date was 23 May 2006. The proceeds from this debt issuance were used to refinance the maturing securitisation programme of $251.0 million which ended in November 2006 and for general corporate purposes. The Notes rank pari passu with the Group’s other senior unsecured debt. The principal financial covenants on this Note Purchase Agreement are identical to the Group’s $390 million multi-currency revolving credit facility which are as follows:

1.	the ratio of Consolidated Net Debt to Consolidated EBITDA (Earning Before Interest, Tax, Depreciation and Amortisation) shall not exceed 3:1;	
 	 	
2.	Consolidated Net Worth (total net assets) shall not fall below £400 million; and	
 	 	
3.	the ratio of EBITARR (Earnings Before Interest, Tax, Amortisation, Rents, Rates and Operating Lease Expenditure) to Consolidated Net Interest Expenditure plus Rents, Rates and Operating Lease Expenditure shall be equal to or greater than 1.4:1.	
On 28 September 2004 Signet entered into a $390 million unsecured multi-currency five year revolving credit facility agreement (the “Facility Agreement”). Under the Facility Agreement, a syndicate of banks made facilities available to the Group in the form of multi-currency
cash advances and sterling acceptance credits on, inter alia, the following terms:

•	the Facility Agreement bears a maximum margin of 0.55% above LIBOR, though the margin may be lower dependent upon the performance of the Group. Since the commencement of the facility the margin has been 0.40% above LIBOR; and	
 	 	
•	the Facility Agreement is guaranteed by the Group’s principal holding and operating subsidiaries.	
The continued availability of the Facility Agreement is conditional upon the Group achieving certain financial performance criteria (see above). It also has certain provisions which are customary for this type of agreement, including standard “negative pledge” and “pari passu” clauses. At 2 February 2008 and 9 April 2008 the amount outstanding under the Facility Agreement was $nil.
It is the policy of the Group to enter into interest rate protection agreements in respect of at least 75% of its forecast US dollar borrowings. At 2 February 2008 the interest rate of 72% of forecast US dollar borrowings for 2008/09 was capped effectively at 6.1% .
Pensions 
 The Group has one defined benefit plan (the “Group Scheme”) for UK based staff, which was closed to new members in 2004. All other pension arrangements consist of defined contribution plans. The IAS 19 present value of obligations of the Group Scheme decreased by $4.2 million (2006/07: increase of $6.9 million) the largest movement being an actuarial gain of $15.1 million (2006/07: actuarial gain of $32.5 million). The market value of the Group Scheme’s assets decreased by $13.5 million (2006/07: increased by $38.0 million). As a result there was a retirement benefit deficit on the balance sheet of $5.6 million (3 February 2007: $3.7 million asset) before a related deferred tax asset of $1.6 million (3 February 2007: $1.2 million liability). The triennial actuarial valuation was carried out as at 5 April 2006. There was a surplus and as a result no additional contributions were required as part of a recovery plan to eliminate a deficit.
The cash contribution to the Group Scheme in 2007/08 was $7.2 million (2006/07: $6.8 million), and the Group expects to contribute some $7.4 million in 2008/09.

												
Contractual obligations as at 2 February 2008	 	 	 	 	 	 	 	 	 	 	 	
												
 	 	Less than	 	Between one	 	Between three	 	More than	 	Total	 	
 	 	one year	 	and three years	 	and five years	 	five years	 	$m	 	
												
Long term debt obligations	 	–	 	–	 	–	 	380.0	 	380.0	 	
Operating lease obligations	 	299.0	 	541.2	 	460.4	 	1,227.8	 	2,528.4	 	
Purchase obligations	 	56.7	 	–	 	–	 	–	 	56.7	 	
Fixed interest and commitment fee payments	 	23.9	 	47.0	 	46.5	 	459.8	 	577.2	 	
Creditors falling due after one year	 	–	 	–	 	–	 	38.1	 	38.1	 	
Current tax	 	79.5	 	–	 	–	 	–	 	79.5	 	
												
Total	 	459.1	 	588.2	 	506.9	 	2,105.7	 	3,659.9	 	
												
(1)	As at 2 February 2008 the Group had no significant outstanding floating rate indebtedness.	
(2)	The expected Group pension contribution to the Group Scheme has been excluded from the table as have obligations for subsequent years. The Group expects to contribute some $7.4 million in 2008/09.	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	39	

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 	 	Business review	

 	 	Group financial review (continued)	
 
Contingent property liabilities 
 Approximately 130 UK property leases had been assigned by the Group up to 2 February 2008 (and remained unexpired and occupied by assignees at that date) and approximately 26 additional properties were sub-let at that date. Should the assignees or sub-tenants fail to fulfil any obligations in respect of those leases or any other leases which have at any other time been assigned or sub-let, the Group or one of its UK subsidiaries may be liable for those defaults. The number of such claims arising to date has been small, and the liability, which is charged to the income statement as it arises, has not been material.
Contractual obligations 
 Long term debt obligations comprise borrowings with an original maturity of greater than one year. Purchase obligations comprise contracts entered into for the forward purchase of gold and US dollars with an original maturity of greater than one year. These contracts are taken out to manage market risks. It is expected that operating commitments will be funded from future operating cash flows and no additional facilities will be required to meet these obligations.
Prior year review 53 weeks ended
3 February 2007
The prior year review for the 53 weeks ended 3 February 2007 has been restated into US dollars, having been originally published in pounds sterling.
Total Group sales rose to $3,559.2 million (2005/06: $3,154.1million), up by 12.8% on a reported basis and 11.5% at constant exchange rates (see page 41). On a 52 week basis Group like for like sales were up by 5.4% and net new store space contributed 4.5% . The 53rd week contributed 1.6% to sales in 2006/07 (see table opposite).
Group operating margin decreased to 11.7% (2005/06: 11.9%), reflecting a decline in the operating margin of the US division and an increase in that of the UK division (see table opposite). The 53rd week contributed some $3.4 million to operating profit in 2006/07. Group operating profit increased to $416.2 million (2005/06: $374.7 million), up by 11.1% on a reported basis and 10.1% at constant exchange rates (see page 41), as total sales growth more than compensated for the decline in operating margin.
Net financing costs amounted to $15.4 million (2005/06: $14.0 million), the increase being primarily due to the transition from a securitised borrowing facility to the new private placement note facility and incremental borrowing as a result of the share buyback programme offset by the movement in the US dollar/pound sterling exchange rate.
Group profit before tax increased to $400.8 million (2005/06: $360.7 million), up by 11.1% on a reported basis and 10.1% at constant exchange rates (see page 41). The 53rd week contributed some $3.4 million to profit before tax in 2006/07. Profit for the financial period increased by 13.0% to $266.0 million (2005/06: $235.4 million), an increase of 11.9% at constant exchange rates (see page 41). Basic earnings per share was 15.4 cents (2005/06: 13.6 cents), up by 13.2% on a reported basis and 12.4% at constant exchange rates (see page 41).

Sales	 	 	 	 	 	 	 	
								
Components of 2006/07 sales growth	 	 	 	 	 	 	 	
 	 	US %	 	UK %	 	Group %	 	
								
Like for like on a 52 week basis	 	7.0	 	1.1	 	5.4	 	
Change in net new store space	 	6.2	 	0.1	 	4.5	 	
Exchange translation	 	–	 	4.6	 	1.3	 	
Impact of 53rd week	 	1.7	 	1.5	 	1.6	 	
								
Total sales growth	 	14.9	 	7.3	 	12.8	 	
								
US 
 Like for like sales for the US division increased by 7.0% on a 52 week basis, and total US dollar sales by 14.9% . The US division had a consistent performance throughout the year. The contribution from new store space was 6.2% and the impact of the 53rd week was 1.7% (see table above). Total reported sales grew by 14.9% .
UK 
 The UK business saw sales stabilise in 2006/07 after a sharp deterioration in 2005/06. The strategy of increasing diamond participation continued to drive improvements in performance indicators such as average selling price, with the volume of transactions reduced. On a 52 week basis like for like sales increased by 1.1%, the impact of changes in net new store space was 0.1%, the impact of exchange rate movements was 4.6% and the 53rd week 1.5% (see table above). Total sales increased by 7.3% .

Operating profit	 		 	 	 		 	
								
Operating margin movement	 	 	 	 	 	 	 	
 	 	US %	 	UK %	 	Group %	 	
								
2005/06 margin	 	13.0	 	10.5	 	11.9	 	
Gross margin	 	(0.7	)	0.3	 	(0.5	)	
Expenses	 	0.7	 	0.4	 	0.7	 	
New store space	 	(0.5	)	–	 	(0.3	)	
Impact of 53rd week	 	(0.2	)	0.2	 	(0.1	)	
								
2006/07 margin	 	12.3	 	11.4	 	11.7	 	
								
US 
 The operating margin in the US division was 12.3% (2005/06: 13.0%) . Leverage of 70 basis points from like for like sales growth partly offset the impact of additional immature space of 50 basis points as well as the adverse movement in gross margin percentage of 70 basis points and the impact of the 53rd week of 20 basis points (see table above). Administrative expenses (see definition page 87) increased reflecting the resources required to support the growth of the division. The ratio of net bad debt to sales improved a little to 2.8% (2005/06: 3.0%) . Operating profit was $326.7 million (2005/06: $300.7 million), up by 8.6% . The commencement of television advertising for Valentine’s Day 2007 in the last week of 2006/07, with the related sales benefit occurring in 2007/08, meant that the 53rd week did not contribute to operating profit.
UK 
 The division’s gross margin increased by 30 basis points, the benefit from advantageous hedging positions and selective price increases more than offsetting higher commodity costs. The actions taken to reduce costs in 2005/06 benefited the business throughout 2006/07

40	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	
 
and resulted in a 40 basis point improvement in operating margin (see table on previous page). Administrative costs in the UK were little changed due to cost savings implemented at the start of the year. The operating margin at 11.4% was up on last year (2005/06: 10.5%) . Operating profit rose by 17.0% to $103.4 million (2005/06: $88.4 million) on a reported basis and 12.0% at constant exchange rates. The impact of the 53rd week on operating profit was about $3.4 million.
Group costs 
 Group central costs amounted to $13.9 million (2005/06: $14.4 million, including a property provision of $1.3 million).
Taxation 
 The charge of $134.8 million (2005/06: $125.3 million) represents an effective tax rate of 33.6% (2005/06: 34.7%) . The rate is lower than previously indicated due to the tax treatment of share options and the favourable resolution of certain prior year tax positions during the year. It is anticipated that, subject to the outcome of various uncertain tax positions, the Group’s effective tax rate in 2007/08 may increase to a level of up to 37%, this being an approximation to the underlying effective tax rate for the Group.
Return on capital employed 
 The Group’s ROCE was 22.8% (2005/06: 22.4%) . In the US the ROCE was 21.5% (2005/06: 22.4%) reflecting the additional investment in an 11% increase in net new store space. In the UK there was an increase to 32.7% reflecting high leverage of capital employed (2005/06: 26.6%) . US capital employed included in-house credit card debtors of $779.3 million at 3 February 2007 ($677.4 million at 28 January 2006).
Depreciation, amortisation and capital expenditure 
 Depreciation and amortisation charges were $98.4 million (2005/06: $83.2 million), $61.3 million (2005/06: $51.3 million) in the US and $37.1 million (2005/06: $31.9 million) in the UK. Capital expenditure in the US was $101.1 million (2005/06: $88.4 million) and in the UK was $23.3 million (2005/06: $48.2 million). The additional capital expenditure in the US is primarily due to the increase in the rate of new store space growth. The decrease in the UK reflected a lower level of expenditure in line with the fluctuations in the number of stores due to be refurbished. Capital expenditure in 2007/08 is expected to be in the range of $167.5 million to $187.2 million reflecting a further increase in the number of new stores opened in the US and a planned increase in relocations and new store openings in the UK.

	
Impact of constant exchange rates and 53rd week
 The Group has historically used constant exchange rates to compare period to period changes in certain financial data. This is referred to as “at constant exchange rates” throughout this Annual Report & Accounts. The Group considers this to be a useful measure for analysing and explaining changes and trends in the Group’s results. The impact of the recalculation of sales, operating profit, profit before tax, profit for the financial period and earnings per share at constant exchange rates and the impact of the 53rd week, including a reconciliation to the Group’s GAAP results, is analysed below.	
	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2006/07	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	52 weeks	 	52 week	 	
 	 	 	 	 	 	 	 	 	2005/06	 	Growth	 	 	 	basis	 	growth	 	
 	 	 	 	 	Growth	 	Impact of	 	at constant	 	at constant	 	 	 	at constant	 	at constant	 	
 	 	 	 	 	at actual	 	exchange	 	exchange	 	exchange	 	 	 	exchange	 	exchange	 	
 	 	 	 	 	exchange	 	rate	 	rates	 	rates	 	Impact of	 	rates	 	rates	 	
 	2006/07	 	2005/06	 	rates	 	movement	 	(non-GAAP)	 	(non-GAAP)	 	53rd week	 	(non-GAAP)	 	(non-GAAP)	 	
 	$m	 	$m	 	%	 	$m	 	$m	 	%	 	$m	 	$m	 	%	 	
																			
Sales by origin and destination:		 		 	 	 		 		 	 	 		 		 	 	 	
UK	907.1	 	845.3	 	7.3	 	37.6	 	882.9	 	2.7	 	(13.7	)	893.4	 	1.2	 	
US	2,652.1	 	2,308.8	 	14.9	 	–	 	2,308.8	 	14.9	 	(39.1	)	2,613.0	 	13.2	 	
																			
 	3,559.2	 	3,154.1	 	12.8	 	37.6	 	3,191.7	 	11.5	 	(52.8	)	3,506.4	 	9.9	 	
																			
Operating profit:		 		 	 	 		 		 	 	 		 		 	 	 	
UK – Trading	103.4	 	88.4	 	17.0	 	3.9	 	92.3	 	12.0	 	(3.4	)	100.0	 	8.3	 	
      – Group function	(13.9	)	(14.4	)	–	 	(0.6	)	(15.0	)	–	 	–	 	(13.9	)	n/a	 	
																			
 	89.5	 	74.0	 	20.9	 	3.3	 	77.3	 	15.8	 	(3.4	)	86.1	 	11.4	 	
US	326.7	 	300.7	 	8.6	 	–	 	300.7	 	8.6	 	–	 	326.7	 	8.6	 	
																			
 	416.2	 	374.7	 	11.1	 	3.3	 	378.0	 	10.1	 	(3.4	)	412.8	 	9.2	 	
																			
Profit before tax	400.8	 	360.7	 	11.1	 	3.5	 	364.2	 	10.1	 	(2.8	)	398.0	 	9.3	 	
																			
Profit for the financial period	266.0	 	235.4	 	13.0	 	2.2	 	237.6	 	11.9	 	(1.7	)	264.3	 	11.2	 	
																			
Earnings per share	15.4	c	13.6	c	13.2	 	0.1	c	13.7	c	12.4	 	(0.2	c)	15.2	c	10.9	 	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	41	

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 	 	Group financial review (continued)	
 
Dividends 
 In November 2006 an interim dividend of 0.4434p per share was paid (2005/06: 0.4125p) . The Board is recommending to shareholders a final dividend of 6.317 cents (2005/06: 2.8875p) per share for 2006/07, which, subject to shareholder approval, is to be paid on 6 July 2007 to those shareholders on the register of members at close of business on 1 June 2007. Based on the exchange rate on 17 April 2007, this represents an increase in the total dividend for the year of 9.1% . The US dollar to pound sterling rate used to convert the 6.317 cents dividend per share for payment to shareholders who elect to receive a pound sterling dividend will be the rate as derived from Reuters at 4.00 pm on the record date of 1 June 2007. A letter sent on 18 April 2007 to shareholders on the register asked whether they wished to receive this and future dividends in US dollars or pounds sterling.
Future distribution policy will continue to take account of earnings, cash flow, gearing, and the needs of the business.
Under English law, dividends can only be paid out of profits available for distribution (generally defined as accumulated realised profits less accumulated realised losses, less unrealised losses) and not out of share capital or share premiums (generally equivalent in US terms to paid-in surplus). At 3 February 2007, after taking into account the subsequently recommended final dividend of 6.317 cents per share (2005/06: 2.8875p per share), the holding company had distributable reserves of $199.0 million (28 January 2006: $152.3 million).
In order to make further distributions in excess of this figure, the holding company would first need to receive dividends from its subsidiaries. In addition to restrictions imposed at the time of the 1997 capital reduction on the distribution of dividends received from subsidiaries, the payments of dividends from other tax jurisdictions may not be tax efficient. Furthermore, there may be other reasons why dividends may not be paid by subsidiaries to the holding company.
Critical accounting policies
Critical accounting policies covering areas of greater complexity or those particularly subject to the exercise of judgement are listed below. There are no material off-balance sheet structures. The principal accounting policies are set out in note 1 on pages 86 to 90 in the Notes to the accounts.
These financial statements are presented in US dollars following a change in the Group’s presentational currency from UK pounds to US dollars with effect from 5 February 2007. As the majority of the Group’s assets and operations are in the US this change better reflects the underlying performance of the Group. On 5 February 2007 the Company redenominated its share capital into US dollars and will retain distributable reserves and declare dividends in US dolllars. The functional currency of the Company changed from UK pounds to US dollars. Financial information for prior periods has been restated from UK pounds to US dollars in accordance with IAS 21.
Implementation of IFRS
These accounts have been prepared on the basis of IFRS.
IFRS 1 ‘First-time adoption of international financial reporting standards’ grants certain exemptions from the full requirements of IFRSs in the transition period. The following exemptions have been taken in these financial statements:

•	Business combinations – Business combinations that took place prior to 1 February 2004 have not been restated;	
•	Fair value or revaluation to deemed cost – At the date of transition fair value has been used as deemed cost for properties previously measured at fair value; and	
 	 	
•	Financial instruments – The comparative information for the 52 weeks ended 29 January 2005 has not been restated on adoption of IAS 32 and IAS 39, ‘Financial instruments’.	
Revenue recognition
Where the contractual obligation is borne by the Group, revenue from the sale of extended service agreements is deferred and recognised, net of incremental costs arising from the initial sale in proportion to anticipated claims arising. This period is based on the historical claims experience of the business, which has been consistent since these products were launched. The Group reviews the pattern of claims at the end of each year to determine any significant trends that may require changes to revenue recognition rates. Only the commission element of UK warranty sales is recognised as revenue.
When promotional vouchers providing an incentive to enter into a future purchase are issued, the estimated fair value of these vouchers is deferred. The proportion of revenue deferred and the recognition of this revenue as these vouchers are redeemed or expire is based on prior years’ experience.
Provision is made for future returns expected within the stated return period, based on previous percentage return rates experienced.
Insurance income and the impact of voucher promotions are recognised in revenue.
Inventory valuation
Inventory is valued on an average cost basis and includes appropriate overheads. Overheads allocated to inventory cost are only those directly related to bringing inventory to its present location and condition. These include relevant warehousing, distribution and certain buying, security and data processing costs.
Where necessary, provision is made for obsolete, slow-moving and damaged stock. This provision represents the difference between the cost of the stock and its estimated market value, based upon stock turn rates, market conditions and trends in consumer demand. For further detail on the provisions for inventory and the amount of reserves recorded each year, refer to note 13 on page 99.
In the US, stock losses are recognised at the mid-year and fiscal year end based on complete physical inventories. In the UK, stock losses are recorded as identified on a perpetual inventory system and an estimate is made of losses for the period from the last stock count date to the end of the financial year on a store by store basis. These estimates are based on the overall divisional stock loss experience since the last stock count.
Foreign currency translation
The results of subsidiary undertakings with functional currencies other than US dollars are translated into US dollars at the weighted average rates of exchange during the period and their balance sheets and attributable goodwill at the rates at the balance sheet date. Exchange differences arising from the translation of the net assets of these subsidiary undertakings are charged or credited to reserves. Other exchange differences arising from foreign currency transactions are included in profit before taxation.
Hedge accounting
Changes in the fair value of financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity through the consolidated statement of recognised income and expense. Any ineffective portion of the gain or loss is recognised

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immediately in the income statement. For cash flow hedges that result in the recognition of a non-financial asset or liability, amounts previously deferred in equity are included in the measurement of the asset or liability. For cash flow hedges that result in the recognition of a financial asset or liability, amounts previously recognised in equity are recognised in the income statement in the same period in which the hedged item affects the Group’s net profit or loss.
Taxation 
 Accruals for tax contingencies require management to make judgements and estimates in relation to tax audit issues and exposures. Amounts accrued are based on management’s interpretation of country-specific tax law and the likelihood of settlement. Tax benefits are not recognised unless the tax positions are probable of being sustained. Once considered to be probable, management reviews each material tax benefit to assess whether a provision should be taken against full recognition of the benefit on the basis of potential settlement through negotiation and/or litigation. All such provisions are included in creditors due within one year, although there is uncertainty regarding the exact timing of the agreement and settlement of outstanding positions. Any recorded exposure to interest and penalties on tax liabilities is provided for in the tax charge.
Depreciation and impairment 
 Depreciation is provided on freehold and long leasehold premises over a useful life not exceeding 50 years. Freehold land is not depreciated. Depreciation is provided on other fixed assets at rates between 10% and 33 1 / 3 %. Shopfit depreciation rates have been set based on the refit cycle for each store fascia and the useful lives of each individual element of the shopfit. Tills and other IT equipment have separately determined depreciation rates.
In the UK there are circumstances where refurbishments are carried out close to the end of the lease term, such that the expected life of the newly installed leasehold improvements will exceed the lease term. Where the renewal of the lease is reasonably assured, such shopfronts, fixtures and fittings are depreciated over a period equal to the lesser of their economic useful life, or the remaining lease term plus the period of reasonably assured renewal. Reasonable assurance is gained through evaluation of the right to enter into a new lease, the performance of the store and potential availability of alternative sites.
Where appropriate, provision is made on assets that have a recoverable amount less than net book value. Additionally, potentially impaired assets are identified by reviewing the cash contribution of individual stores where trading since the initial opening of the store has reached a mature stage. Where such stores deliver a low or a negative cash contribution, the related store assets are considered for impairment by reference to the higher of net realisable value and value in use.
Lease costs and incentives 
 Where operating leases include clauses in respect of predetermined rent increases, those rents are charged to the income statement on a straight line basis over the lease term including any construction period or other rental holiday. Other operating lease costs are charged to the income statement as incurred. Amounts payable in respect of turnover leases are charged in the period to which the turnover relates. Premiums paid to acquire short leasehold properties and incentives received relating to leased properties are amortised over the lease term.
Where the Group has onerous lease obligations, provision is made for the discounted cash outflow that is expected to arise under the lease. Account is taken of any sublet income received or reasonably expected, incentives to be received or paid and the time to lease expiry or reversal of the net cash outflow, whichever is the later.
The Group policy is to recognise a provision for onerous leases when the leased property ceases to be used by the Group.
Receivables 
 Trade and other receivables are stated net of a provision for uncollectible balances. This provision is based on the Group’s past experience and the payment history of individual customers. The Group regularly reviews its individual receivable balances and when it assesses that a balance has become irrecoverable it is fully written off. The Group provides credit facilities to customers upon completing appropriate credit tests.
The bad debt experience of the US division has been relatively stable over the past ten years at between 2.8% and 3.4% of sales.
Interest receivable from the US in-house credit programme is classified as other operating income.
UK retirement benefits 
 The surplus or deficit on the Group Scheme that is credited or charged to shareholders’ equity through the Consolidated statement of recognised income and expense is subject to a number of assumptions and uncertainties. A qualified actuary is engaged to calculate the expected liabilities of the Group Scheme based primarily on assumptions regarding salary and pension increases, inflation rates, discount rates, projected life expectancy and the long term rate of return expected on the Group Scheme’s assets. A full actuarial valuation was completed as at 5 April 2006 and the Group Scheme valuation is updated at each year end based on actuarial assumptions as of the year end date. The assumptions set are based on the advice of the actuary and details of these assumptions are given in note 21 on page 105. The sensitivity of the Group Scheme assets, liabilities and funded position to the assumptions made is presented on page 105. The discount rate is based on the yield at the balance sheet date of AA rated corporate bonds of equivalent currency and term to the Group Scheme’s liabilities. The value of the assets of the Group Scheme is measured as at the balance sheet date, this being particularly dependent on the value of equity investments held by the Group Scheme at that date. The overall impact on the Group balance sheet is significantly mitigated as the members of the Group Scheme are only in the UK and account for about 11% of UK employees. The Group Scheme ceased to admit new employees from April 2004.
Share-based payments 
 The Group recognises a charge to income in respect of the fair values of outstanding employee share options and the Group’s estimate of the numbers of options that will eventually vest. The fair values are calculated at the grant date using the Black-Scholes option pricing model up to 29 January 2005 and for LTIP schemes thereafter and a binomial valuation model from 30 January 2005 and are charged to the income statement from the grant date over the relevant option vesting period. The key assumptions surrounding the valuation of employee share options include the risk free interest rate, expected life of options, expected volatility and dividend yield. The expected volatility is based on the five year average historical volatility. Full details of all assumptions are given in note 27 on page 115. The optional transitional arrangements, which allowed companies to apply IFRS 2 fully retrospectively to all options granted but not fully vested at the relevant reporting date, was used.

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 	 	Risk and other factors	
 
Forward-looking statements
 All statements in this document (including the financial statements and notes), other than statements of historical fact included in this document, are or may be deemed to be forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements, based upon management’s beliefs as well as on assumptions made by and data currently available to management, appear in a number of places throughout this document and include statements regarding, among other things, our results of operation, financial condition, liquidity, prospects, growth, strategies and the industry in which the Group operates. The use of the words “expects,” “intends,” “anticipates,” “estimates,” “may,” “forecast,” “objective,” “plan” or “target,” and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include:

•	adverse trends in the general economy which may impact negatively on discretionary consumer spending, including unemployment levels, the level of consumers’ disposable income, consumer confidence, business conditions, interest rates, consumer debt levels, availability of credit and levels of taxation;	
 	 	
•	the ability to recruit, train and retain staff, including senior management;	
 	 	
•	short term variations in consumers’ preferences for jewellery compared to other product categories, the Group’s ability to anticipate consumer preferences and the merchandising, inventory and pricing policies it follows, particularly if there are any significant changes such as those implemented by the US division in early 2008/09;	
 	 	
•	the reputation of the Group and its trading names, together with the success of the Group’s marketing and promotional programmes;	
 	 	
•	long term changes in consumer attitudes to diamonds, gold and other precious metals and gem stones;	
 	 	
•	changes to the locations in which consumers choose to shop, the extent and results of the Group’s net store expansion and refurbishment strategy together with the availability of suitable real estate;	
 	 	
•	the level of competition in the selling of jewellery and the development of new distribution channels in competition with the Group (such as online sales);	
 	 	
•	the level of dependence on particular suppliers of merchandise;	
 	 	
•	fluctuations in the supply, price and availability of diamonds, gold and other precious and semi-precious metals and stones, particularly if such movements are extreme and volatile as has increasingly been the case with precious metals;	
 	 	
•	the seasonality of the Group’s business, the risk of disruption during the Christmas trading period, and the availability of inventory during the three months leading up to the Christmas season;	
 	 	
•	social, ethical and environmental risks;	
•	the suitability and reliability of the Group’s internal control systems and procedures, including its accounting and information technology systems necessary for compliance with the Sarbanes- Oxley Act, as well as operational systems such as warehousing, distribution and e-commerce;	
 	 	
•	regulatory requirements, particularly with regard to the in-house credit operation in the US;	
 	 	
•	legal actions;	
 	 	
•	revisions to, and new interpretations of, GAAP, the accounting policies adopted by the Group and the tax assumptions made by the Group;	
 	 	
•	listing and domicile;	
 	 	
•	acquisitions;	
 	 	
•	pensions regulations, actuarial assumptions including longevity, pension valuation and investment returns;	
 	 	
•	the cost and availability of borrowings and equity capital which have changed markedly during the last 12 months; and	
 	 	
•	financial market risks, including fluctuations in exchange rates between the pound sterling and the US dollar which may affect reported revenues, costs, the value of the Group’s consolidated borrowings, and the cost of capital.	
All forward-looking statements should be read, in particular, in the context of the Risk and other factors described in this section. Shareholders are cautioned not to place undue weight on these forward-looking statements. Actual results may differ materially from those anticipated in such forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein may not be realised. The Group undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.
Impact of general economic conditions
 Jewellery purchases are discretionary and may be particularly affected by adverse trends in the general economy.
The success of the Group’s operations depends to a significant extent upon a number of factors relating to discretionary consumer spending. These include economic conditions and perceptions of such conditions by consumers, employment, the rate of change in employment, the level of consumers’ disposable income and income available for discretionary expenditure, business conditions, interest rates, consumer debt and asset values, availability of credit and levels of taxation for the economy as a whole and in regional and local markets where the Group operates. There can be no assurance that consumer spending on jewellery will not be adversely affected by changes in general economic conditions. However, due to the limited seasonality in the product mix, the risk of having to discount inventory in order to be correctly stocked for the next selling season is more limited than for some other retail sectors.

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While the level of consumer expenditure does vary, occasions when jewellery is purchased – engagements, weddings and events such as Christmas, wedding anniversaries, birthdays, Valentine’s Day and Mother’s Day – occur on a regular basis. Approximately 45% of sales in the US are in the bridal related category; which is thought to be less sensitive to changes in general economic conditions than other classifications of jewellery, while in the UK only 20% of sales are bridal related. Furthermore, a greater proportion of costs in the US business are proportional to sales than in the UK business so the impact on any change in sales, either positive or negative, has less of an impact on operating profit in the US than in the UK.
As a substantial proportion of the Group’s US sales are made on credit, any significant deterioration in general economic conditions or consumer debt levels may inhibit consumers’ use of credit and cause a material adverse effect on the Group’s revenues and profitability. Furthermore, any downturn in general or local economic conditions in the markets in which the Group operates may adversely affect its collection of outstanding credit accounts receivable and hence the net bad debt charge. Currently there are all-time high levels of consumer debt in the US and the level of net bad debt charge as a percentage of credit sales in the Group’s US division in 2007/08 was at the high end of the range of recent years. In 2008/09 the net bad debt charge may increase further, although this is expected to be somewhat offset by increased income from the credit portfolio.
Adverse general economic conditions may also constrain the Group’s ability to make distributions to shareholders as the Board believes it is an important competitive advantage to maintain a strong balance sheet and financial flexibility so as to be able to take advantage of the long term growth opportunities such as those provided by Kay, Jared and the rough diamond initiative.
Staff
 The Group’s operating experience suggests that the top three factors in determining where consumers buy jewellery are the level of service provided to the customer, the quality, together with the selection of merchandise offered, and the reputation of the retailer.
In speciality jewellery retailing, the level and quality of customer service is a key competitive factor as nearly every in-store transaction involves the sales associate taking a piece of jewellery or a watch out of a display case and presenting it to the potential customer. Therefore the ability of the Group to recruit, train and retain suitably qualified sales staff is important in determining sales and profitability. The support and systems provided to the Group’s store employees by staff at the divisional head offices and in the corporate functions will also influence the performance of the Group. Consequently the Group has in place comprehensive recruitment, training and incentive programmes and employee attitude surveys (see pages 17 and 27 for more details).
Short term variations in consumer preferences, merchandise selection, inventory and pricing
 The Group’s sales performance depends on consumer fashions, preferences for jewellery in general and the demand for particular products. The consumers’ preference for jewellery over other product categories varies over time and influences the total size of the jewellery market. For example, in 2000 jewellery was very popular with consumers, while in recent years electronic products was a strong category and jewellery comparatively weaker. Design trends in jewellery normally only change over relatively long periods and there
is little seasonality in the merchandise mix. The ability to predict accurately future changes in taste, respond to changes in consumer preferences, carry the inventory demanded by customers, deliver products of the appropriate quality and price correctly and implement effective purchasing procedures, all have an important influence in determining sales performance and achieved gross margin (see pages 18 and 28 for more details of the Group’s merchandising and purchasing procedures).
The price of jewellery compared to other products influences the proportion of consumer’s expenditure that is spent on jewellery. The comparative price, particularly of easily comparable pieces of jewellery, of the same quality, sold through similar stores impacts the Group’s share of jewellery sales. However the Group believes price, so long as it is broadly comparable to other speciality jewellery retailers, is not a primary factor in determining the jewellery retailer chosen by consumers. Other factors, such as customer service, are relevant in consumers’ decision and discounting may therefore increase sales, but not profit. If the factors influencing the consumers’ decision changed it would require the Group to adapt its business model. Therefore market research of consumer attitudes is carried out, merchandising trends are closely monitored and different pricing strategies are tested.
If any significant price changes are implemented across a wide range of merchandise, as occurred in the US division in early 2008/09, the impact on sales will depend on, among other factors, the pricing by competitors of similar products and the response by the consumer to higher prices. Such a price increase may result in disruption to sales and may have to be amended.
Reputation and marketing
 Primary factors in determining customer buying decisions in the jewellery sector include customer confidence in the retailer together with the level and quality of customer service. The Group carries out quality control and staff training procedures and provides customer service facilities to help protect its reputation. During 2005/06 a customer satisfaction index for each store, based on customer feedback, was introduced in the US division. A similar index was tested in the UK division in 2007/08 and is expected to be rolled out to all stores in 2008/09 (see page 27 for details of the processes by which the Group obtains an understanding of customer attitudes).
The ability to differentiate the Group’s stores from competitors by its branding, marketing and advertising programmes is a factor in attracting consumers. These programmes are therefore carefully tested and their success monitored by methods such as market research (see pages 19 to 20 and 29 for more details).
The Diamond Trading Company (“DTC”), a subsidiary of De Beers Consolidated Mines Limited, promotes diamonds and diamond jewellery in the US. The level of support provided by the DTC and the success of the promotions influence the size of the total jewellery market in that country. As the DTC’s market share has significantly reduced it may change its approach from generic marketing support of diamonds to one more closely associated with its own efforts to develop a brand such as the “Forevermark”.
Long term changes in consumer attitudes to jewellery
 Consumer attitudes to diamonds, gold and other precious metals and gemstones also influences the level of Group sales. Attitudes could be

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 	 	Risk and other factors (continued)	
 
affected by a variety of issues including concern over the source of raw materials; the impact of mining and refining of minerals on the environment, the local community and the political stability of the producing country; labour conditions in the supply chain; the availability and consumer attitudes to substitute products such as cubic zirconia, moisanite and of laboratory created diamonds. The Group, therefore, has a Supplier Code of Conduct which sets out the Group’s expectations of its suppliers.
An example of an issue that could affect consumer confidence is conflict diamonds, which is the term used for diamonds sold by rebel movements to raise funds for military campaigns. There have been a number of United Nations resolutions regarding conflict diamonds and an international agreement, known as the Kimberley Process, was signed in November 2002. This was designed to exclude such diamonds from the legitimate diamond trade. During 2003 legislation was passed in the European Union and the US, implementing the Kimberley Process. The agreement now extends to more than 70 countries and its effectiveness is regularly reviewed and steps to improve its implementation continue to be taken. The impact of the Kimberley Process and its associated legislation has not resulted in any disruption to the supply of rough diamonds to date and has helped to improve the integrity of the supply chain.
The Group reviews its procedures and documentation for compliance with the Kimberley Process as well as the World Diamond Council System of Warranties and makes appropriate amendments. In addition, staff are briefed and suppliers reminded about the procedures. The Group’s internal audit function and mystery shopper programmes enable detailed compliance monitoring throughout the business. Reviews by external third parties of the Group’s compliance with the Kimberley Process Certification System and System of Warranties were successfully carried out in the US in 2006/07 and as required in the UK in 2007/08. Based on these reviews the Audit Committee was satisfied that the Group was in compliance.
See page 61 for further information on the Supplier Code of Conduct, the Kimberley Process, the World Diamond Council System of Warranties the Council for Responsible Jewellery Practices and the Group’s policy on conflict diamonds.
In order to better address issues relating to social, ethical and environmental matters within the diamond and gold jewellery supply chain, the Group, together with other industry participants founded the Council for Responsible Jewellery Practices. This body was set up in May 2005 and Council Members are committed to promoting responsible business practices in a transparent and accountable manner throughout the industry from mine to retail.
Store portfolio
 The Group’s results are dependent on a number of factors relating to its stores. These include the availability of property, the demographic characteristics of the area around the store, the design and maintenance of the stores, the availability of attractive locations within the shopping centre, the terms of leases and the Group’s relationship with major landlords. In the US the Group leases 15% of its store locations from Simon Property Group and 14% from General Growth Management. The Group has no other relationship with any lessor relating to 10% or more of its store locations.
Given the length of property leases that the Group enters into, the Group is dependent upon the continued popularity of particular retail locations. In the US, the Group has historically been dependent on the continued success of enclosed malls as a shopping destination and the ability of enclosed malls, their tenants and other mall features to attract customers. However the continued growth of Jared and the development of Kay in off-mall locations is reducing the Group’s dependence on enclosed malls. Off-mall locations now account for about 40% of the Group’s US store space and in 2008/09 will account for all of its net space growth. In the UK, the Group has a more diverse range of store locations, and as a result it has some exposure to smaller retail centres which are losing share to major regional centres. Consequently the Group is gradually closing stores in such locations as leases expire or satisfactory property transactions can be executed.
As well as operational real estate criteria, the Group has established capital expenditure procedures with investment criteria set by the Board. These criteria are applied to both new store investment and to the renewal of leases. When appraising store investment proposals the Group normally requires a 20% internal rate of return over five years, assuming the release of the working capital associated with the store at the end of five years. The Board regularly reviews actual performance against the investment projections. The projections used for investment decisions are reviewed and adjusted based on experience and economic conditions. Reflecting trading in 2007/08, sales projections have been reduced and a slower rate of net space growth is therefore anticipated in 2008/09 and in 2009/10 than in 2007/08. Future sales growth is partly dependent on the extent and results of the Group’s net space expansion and refurbishment strategy. The majority of the investment in additional stores is in inventory and, in the US, the in-house credit receivables, rather than in capital expenditure related to fitting out the store, as the Group normally occupies leased space.
The rate of new store development is dependent on a number of factors including obtaining suitable real estate, the capital resources of the Group, the availability of appropriate staff and management and level of the financial return on investment required by the Group. In particular, the success of the Jared off-mall destination store concept, which accounts for the majority of the Group’s net increase in new store space, will influence the future performance of the Group. This concept has been tested and developed over a number of years. In the UK, the Group has a 12.1% share of the jewellery market and is expecting a decrease in store space over time and is therefore focused on improving sales per store to increase sales and profitability.
Competition 
 Competitive factors in the jewellery sector are discussed in the US and UK operating reviews (see pages 10 to 29). If the Group falls behind competitors with respect to one or more of these factors, the Group’s operating results or financial condition could be adversely affected.
In the US, the Group has an estimated 8.8% market share of the speciality jewellery sector with one major national competitor, that has a 6.4% share. While another major national brand could develop, the sector is highly fragmented. As a result of the growth of Jared and the development of Kay outside of its enclosed mall base, the Group is increasingly competing with independent speciality jewellery retailers

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rather than national or major regional chains. In the UK, only three other speciality jewellery chains have more than 100 stores and the Group’s main competition is from independent retailers.
The channels through which consumers buy jewellery continually evolve and a major non-speciality retailer could enter the wider jewellery market. The Group monitors the competitive environment and the development of possible new channels of distribution. In the US, for example, sales by discount retailers have increased, while those of the department stores have been in relative decline and catalogue retailers have withdrawn from the market. In the UK a number of fashion and general retailers have introduced jewellery into their ranges. The Group regularly “shops the competition” to monitor their merchandising, pricing and service standards.
In both the US and the UK, internet retailers of jewellery have gained market share.
H.Samuel added an e-commerce capability to its website in 2005/06 and both the Ernest Jones and Kay websites introduced e-commerce capabilities during 2006/07. The future success of these websites is uncertain, but their performance to date has been encouraging although their sales are not significant to the Group. While internet sales now account for 7.4% (calender 2006: 6.4%) of US jewellery sales (source: US Department of Commerce), their primary impact has been on pricing visibility, particularly for certified diamonds, solitaire diamond rings and diamond stud earrings. This can have an adverse impact on gross margins.
Suppliers
Although the Group believes that alternative sources of supply are available, the abrupt loss or disruption of any significant supplier during the three month period (August to October) leading up to the Christmas season could result in a material adverse effect on the Group’s business. The Group is therefore in regular dialogue with suppliers and uses its merchandising systems to monitor sales performance and predict its future inventory needs. The Group benefits from close commercial relationships with a number of suppliers (see pages 62 and 63) and landlords (see page 30). Damage to, or loss of, any of these relationships could have a detrimental effect on the Group’s results. The Group holds regular reviews with major suppliers and landlords. The Group’s most significant supplier accounts for 6% of merchandise.
The luxury and prestige watch manufacturers and distributors normally grant agencies to sell their ranges on a store by store basis. The watch brands that Ernest Jones and, to a lesser extent, Jared sell help attract customers and build sales in all categories. Therefore the ability to obtain watch agencies for a location can influence the performance of a particular store. In the case of Ernest Jones, it is an important factor in the opening of new stores.
Raw materials and the supply chain
The jewellery industry generally is affected by fluctuations in the price and supply of diamonds, gold and, to a lesser extent, other precious and semi-precious metals and stones.
The ability of the Group to increase retail prices to reflect higher commodity costs varies and an inability to increase retail prices could result in lower profitability. Historically jewellery retailers have been able, over time, to increase prices to reflect changes in commodity costs. However particularly sharp increases and volatility in commodity
costs usually result in a lag before increased commodity costs are fully reflected in retail prices. The US dollar price of gold has increased significantly in recent years. In early 2008/09 the US division implemented a wide range of price increases to reflect higher commodity costs. There is no certainty that such price increases will be sustainable so further downward pressure on gross margins may occur. Further increases in commodity costs would also adversely affect gross margin.
The Group also seeks to improve the efficiency of its supply chain to partly offset any increase in commodity costs. The Group undertakes some hedging of its requirement for gold through the use of options, forward contracts and outright commodity purchasing. It does not hedge against fluctuations in the cost of diamonds. The Group does hedge the exposure of the UK division to the US dollar with regard to diamond and other costs of goods sold. The cost of raw materials is only part of the costs involved in determining the retail selling price of jewellery with labour costs also being a significant factor.
Diamonds are the largest product category sold by the Group. The supply and price of diamonds in the principal world markets are significantly influenced by a single entity. The DTC’s share of the diamond supply chain has been decreasing over recent years and this may result in more volatility in rough diamond prices.
The availability of diamonds to the DTC and the Group’s suppliers is to some extent dependent on the political situation in diamond producing countries. Until alternative sources can be developed, any sustained interruption in the supply of diamonds from the significant producing countries could adversely affect the Group and the retail jewellery industry as a whole.
It is forecast that the demand for diamonds will increase faster than the growth in supply; therefore the cost of diamonds is anticipated to rise over time, although short term fluctuations in price will occur. In addition, if the Group continues to increase its market share it will require additional sources of diamonds of consistent quality; the consistency of merchandise being an important element in the Group’s selling system. Therefore the Group continually seeks to identify and implement improvements in its supply chain and its ability to obtain diamonds.
In 2005/06, the Group began an initiative to trial the development of a capability to source rough diamonds, and to then cut and polish the stones on a contract basis. This initiative is intended to improve the consistency of supply and quality of diamonds to the Group, as well as further improve the efficiency of the Group’s supply chain. The size of the trial was expanded in 2006/07. In 2007/08 it was decided to move from the trial stage to implementation. As a result, investments in management, systems and infrastructure have been made. While this initiative has been carefully planned, it may not be successful. In particular the Group is investing in new staff, skills, procedures and systems to develop this capability. In addition, some of the rough stones purchased and the polished stones produced may be of a higher or lower quality than the Group requires. The number of such stones and the terms on which they are sold will impact the success of the trial. The development of this initiative will require additional investment in inventory. The required investment and the associated financing costs have been included in the Group’s appraisal of this initiative.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	47	

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 	 	Business review	

 	 	Risk and other factors (continued)	
 
Seasonality
The Group’s business is highly seasonal, with a very significant proportion of its sales and operating profit generated during its fourth quarter, which includes the Christmas season. The Group expects to continue to experience a seasonal fluctuation in its sales and profit. Therefore the Group has limited ability to compensate for shortfalls in fourth quarter sales or earnings by changes in its operations and strategies in other quarters, or to recover from any extensive disruption, for example due to inclement weather conditions having an impact on a significant number of stores in the last few days immediately before Christmas Day or disruption to warehousing and store replenishment systems. A significant shortfall in results for the fourth quarter of any financial year would thus be expected to have a material adverse effect on the Group’s annual results of operations. However, due to the limited seasonality in the product mix, the risk of having to discount inventory in order to be correctly stocked for the next selling season is more limited than for some other retail sectors. Disruption at more minor peaks in sales at Valentine’s Day and Mother’s Day would impact the results of the Group to a lesser extent.
Social, ethical and environmental risks
Social, ethical and environmental (“SEE”) matters influence the Group’s reputation, demand for merchandise by consumers, the ability to recruit staff, relations with suppliers and standing in the financial markets. Signet, therefore, is committed to managing the SEE risks and responsibilities facing the Group. This commitment stems from the understanding that Signet’s success is dependent on the strength and effectiveness of its relationships with its various stakeholders: shareholders, customers, employees and suppliers.
In recent years stakeholder expectations of public companies have increased. Managing and responding as a business to these changing expectations, including with regard to SEE issues, is part of the normal responsibilities of corporate management.
The Group regularly carries out SEE risk reviews and benchmarking exercises with the assistance of an external adviser. Such reviews include an assessment of Group policies, procedures and controls in respect of SEE matters. Reports are regularly made to the Group’s Risk Management Committee and to the Board. The greatest SEE risks are judged to relate to the integrity of the merchandise and to the SEE standards in the Group’s supply chain (see page 62).
On 1 February 2007 the Association of British Insurers published updated guidelines on Socially Responsible Investment. In line with that guidance the Board confirms that it has identified and assessed the Group’s SEE risks and that these are being managed.
SEE matters are dealt with in more detail on pages 61 to 66 and in the Responsibilities section on www.signetgroupplc.com.
Internal controls and systems
The Group is dependent on the suitability, reliability and durability of its systems and procedures, including its accounting, information technology, warehousing and distribution systems. As a company registered with the SEC in the US the Group is subject to Section 404 of the Sarbanes-Oxley Act, which requires management to perform appropriate due diligence to test the design and operating effectiveness of key internal controls over financial reporting and the safeguarding of assets.
The Group carries out evaluation, planning and implementation analysis before updating or introducing new systems that have an
impact on a function critical to the Group. If support for a critical externally supplied software package ceased, the Group would have to implement an alternative software package or begin supporting the software internally. Disruption to parts of the business could result and increased costs could be incurred. The Group has emergency procedures, which are periodically tested, that are designed to help minimise the impact on the business of any disruption (see page 59).
Legal actions
In March 2008 a class lawsuit for an unspecified amount was filed against Sterling Jewelers Inc, a subsidiary of Signet Group plc, in the New York federal court. The lawsuit alleges that US store-level employment practices are discriminatory as to compensation and promotional activities. The Group denies these allegations and intends to defend them vigorously.
Regulatory requirements
Under the regulations, if 50% of the beneficial shareholders of the Group were US domiciled, Signet would become a domestic private issuer. At 2 February 2008 the level of US beneficial ownership was believed to be just under 50%, having risen significantly during the fourth quarter. If Signet became a domestic issuer for SEC purposes it would be subject to two primary regulatory authorities which would be likely to result in additional requirements to comply with relevant regulations. This would require the Group to invest in the necessary resources to meet such dual requirements.
Regulations govern various areas of business activity and changes in regulations can therefore influence the Group’s performance. For example, in the US approximately 50% of sales utilise the Group’s in-house credit programmes therefore any change in regulations or the application of regulations relating to the provision of credit and associated services could affect the Group’s results.
US GAAP and IFRS
The presentation of the Group’s accounts can also be affected by changes to generally accepted accounting policies, such as the adoption of International Accounting Standards in 2005/06. Both US GAAP and IFRS continue to be revised and subject to new interpretations. Such changes may influence the results reported and the valuation of the Group’s shares. For guidance independent external professional advice is available to management and the Audit Committee. The results of the Group are influenced by the application of US GAAP and IFRS in areas involving significant subjectivity and judgment, such as tax and pensions.
If the Group became a domestic issuer for SEC purposes, it would be required in due course to produce results using US GAAP as well as IFRS. This may result in confusion in interpreting the Group’s results.
Listing and domicile
Reflecting changes in the ownership of the Group’s shares, the Board regularly reviews the appropriate primary listing and domicile of the Company. If these were to change, certain shareholders may no longer be able to hold shares in the Company due to their investment mandate, while other holders may choose not to hold a non-UK listed or domiciled company. In addition, the Board may also take into account the primary stock market listing of the Company when evaluating the dividend policy. As a result the share price may be affected by such a change or by the possibility of such a change. Any change to the listing or domicile would require a 75% majority of those voting on such a resolution.

48	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Business review	

 	 	
 
Acquisitions
The Group may in the future make acquisitions or be involved in a business combination. Any difficulty integrating an acquisition or a business combination may result in expected returns and other projected benefits from such an exercise not being realised. A significant transaction could also disrupt the operation of the Group’s current activities. The Group’s growth strategy does not depend on an acquisition or business combination and a transaction would be intended to accelerate the implementation of that strategy.
Pensions
In the UK, the Group operates a defined benefit pension scheme, which ceased to admit new employees in 2004/05. The valuation of the Group Scheme’s assets and liabilities partly depends on assumptions based on the financial markets as well as longevity and staff retention rates. This valuation is particularly sensitive to material changes in the value of equity investments held by the Group Scheme, changes in the UK AA rated corporate bond yields which are used in the measurement of the liabilities, changes in market expectations for long term price inflation and new evidence on projected longevity rates. Funding requirements and the profit and loss items relating to this closed Group Scheme are also influenced by these factors. At 2 February 2008 there was a net pension liability of $5.6 million compared with a net pension asset of $3.7 million, at the prior year end (see pages 104 to 107 for more details).
A triennial valuation of the Group Scheme occurred as at 5 April 2006. As there was a surplus no additional contributions were required as part of a recovery plan to eliminate a deficit.
Under the Pensions Act 2004 the Pensions Regulator has powers to vary and impose funding arrangements which could be more onerous than may be agreed with or proposed to the trustees. In addition, the provisions of the Pensions Act 2004 may restrict the freedom of the Group to undertake certain re-organisation steps or to effect returns on capital or unusual dividends without the prior agreement of the Group Scheme trustees, in consultation with the Pensions Regulator.
In 2004 the closed Group Scheme was replaced with a defined contribution plan for new UK employees. The US division also operates defined contribution plans in the form of a 401(k) Retirement Savings Plan and an unqualified deferred compensation plan.
Equity and debt financing
The Group is dependent upon the availability of equity and debt financing to fund its operations and growth. Therefore it prepares annual budgets, medium term plans and headroom models which help to identify the future capital requirements so that appropriate facilities can be put in place on a timely basis. If these models are inaccurate adequate facilities may not be available.
The Group’s reputation in the financial markets and its corporate governance practices can influence the availability of capital, the cost of capital and its share price. The change in credit market conditions during the past year means that the Group’s ability to raise debt has decreased and any borrowings are likely to involve a greater spread over LIBOR. This could constrain the Group’s ability to make distributions to shareholders while taking advantage of the long term growth opportunities such as those provided by Kay, Jared and the rough diamond initiative. On the basis of current financial projections and facilities available, the directors have a reasonable expectation that the Group has adequate resources for the foreseeable future.
Financial market risks
The Company redenominated its share capital and its functional currency changed to US dollars with effect from 5 February 2007. The Group now publishes its consolidated annual accounts in US dollars. The Group held approximately 78% of its total assets in US dollars at 2 February 2008 and generated approximately 74% of its sales and 71% of its operating profit in US dollars for the financial year then ended. The remainder of the Group’s assets, sales and profit are in the UK, therefore in translating the results of its UK operations, the Group’s results are subject to fluctuations in the exchange rate between the pound sterling and the US dollar. With the change in reporting currency the impact of movements in the exchange rate on the reported results of the Group is opposite to that which it has been historically. Accordingly, any decrease in the weighted average value of the US dollar against the pound sterling could increase reported revenues and operating profit and any appreciation in the weighted average value of the US dollar against the pound sterling could decrease reported revenues and operating profit. The Board has chosen not to hedge the translation effect of exchange rate movements on the results of the Group given that there is little movement of cash between the Group’s two divisions. As part of its long term strategy, the Group may seek, where appropriate, to finance its UK net assets with borrowings denominated in pounds sterling, as a hedge against the impact of exchange rate fluctuations on its UK operating profit.
In cases where pounds sterling are used to fund cash flow requirements of the UK division or at a Corporate level, fluctuations in the exchange rate between the pound sterling and the US dollar will affect the amount of the Group’s consolidated borrowings.
In addition, the prices of materials and certain products bought on the international markets by the UK division are denominated in US dollars, and therefore the division has an exposure to exchange rates on the cost of goods sold. The Group does use hedging operations in respect of purchases of US dollars by its UK division, within treasury guidelines approved by the Group’s Board.
Cash dividends in respect of the Company’s ordinary shares are declared in US dollars. Fluctuations in the exchange rate between the pound sterling and the US dollar will affect the sterling amount received by shareholders who receive payment in pounds sterling.
Fluctuations in the exchange rate between the pound sterling and the US dollar will affect the US dollar equivalent of the pound sterling price of the shares on the London Stock Exchange and, as a result, are likely to affect the market price of the ADSs in the US.
The table on page 50 sets out, for the calendar years indicated, the average, high, low and period end exchange rates for the pound sterling expressed in US dollars per £1.
The Group’s policy is to manage financial risk resulting from exposure to currency and interest rate fluctuations. Interest rate exposure is managed through the use of swaps, caps and floors.
A committee of the Board is responsible for the implementation of treasury policies and guidelines which are considered to be appropriate by the Board for the management of financial risk. The Group’s funding, liquidity and exposure to interest rate and exchange rate risks are managed by the Group’s treasury department. The Group uses derivative instruments for risk management purposes only, and these are transacted by specialist treasury personnel.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	49	

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 	 	Business review	

 	 	Risk and other factors (continued)	

									
Exchange rates between the pound sterling and the US dollar (1)	 	 	 	 	 	 	 	 	
									
 	Average	 	High	 	Low	 	At period end	 	
									
Calendar year	 	 	 	 	 	 	 	 	
2002	1.51	 	1.61	 	1.41	 	1.61	 	
2003	1.62	 	1.79	 	1.55	 	1.77	 	
2004	1.79	 	1.96	 	1.75	 	1.92	 	
2005	1.90	 	1.93	 	1.85	 	1.88	 	
2006	1.82	 	1.99	 	1.72	 	1.96	 	
2007	1.97	 	2.12	 	1.92	 	1.99	 	
2008 (cumulative to 8 April 2008)	1.99	 	2.04	 	1.93	 	1.97	 	
 	 	 	 	 	 	 	 	 	
Month	 	 	 	 	 	 	 	 	
September 2007	2.01	 	2.05	 	1.99	 	2.05	 	
October 2007	2.04	 	2.08	 	2.02	 	2.08	 	
November 2007	2.07	 	2.12	 	2.04	 	2.06	 	
December 2007	2.03	 	2.07	 	1.97	 	1.98	 	
January 2008	1.97	 	2.00	 	1.93	 	1.99	 	
February 2008	1.97	 	2.00	 	1.94	 	1.99	 	
March 2008	1.99	 	2.04	 	1.97	 	1.98	 	
									
(1)	Based on unweighted data points sourced from Reuters.	
 	 	
For financial instruments held, the Group has used a sensitivity analysis technique that measures the change in the fair value of the Group’s financial instruments from hypothetical changes in market rates and this is shown in the table below.
The amounts generated from the sensitivity analysis are forward-looking estimates of market risk assuming certain adverse market conditions occur. Actual results in the future may differ materially from those projected due to changes in the portfolio of financial instruments held and actual developments in the global financial markets. These may cause fluctuations in interest and exchange rates to exceed the hypothetical amounts disclosed in the table below.
The example shown for changes in the fair values of borrowings and associated derivative financial instruments at 2 February 2008 is set out in the table below. The fair values of borrowings and derivative financial instruments are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at the period end.
The estimated changes in fair values for interest rate movements are based on an instantaneous decrease of 1% (100 basis points) in the specific rate of interest applicable to each class of financial instruments from the levels effective at 2 February 2008 with all other variables remaining constant.
The estimated changes in the fair value for foreign exchange rates are based on an instantaneous 10% weakening of the pound sterling against the US dollar from the levels applicable at 2 February 2008 with all other variables remaining constant.

									
Fair value changes arising from:	 	 		 	 	 	 	 	
									
 	Estimated	 	 	 	10% strengthening	 	Estimated	 	
 	fair value	 	1% decrease in	 	in $ against £	 	fair value at	 	
 	2 February	 	interest rates	 	(unfavourable)/	 	3 February	 	
 	2008	 	(unfavourable)	 	favourable	 	2007	 	
 	$m	 	$m	 	$m	 	$m	 	
									
Borrowings	(416.3	)	(11.5	)	–	 	(385.5	)	
Foreign currency receivable	34.7	 	–	 	(3.5	)	40.3	 	
Foreign exchange contracts	0.3	 	–	 	8.0	 	(0.6	)	
Commodity hedging contracts	9.6	 	–	 	–	 	8.1	 	
									
The analysis above should not be considered a projection of likely future events.

50	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Corporate governance	

Directors, officers and advisers	 	
 
Directors
Sir Malcol m Williamson* , 69, Chairman (since June 2006) appointed in 2005. He was President and Chief Executive Officer of Visa International between 1998 and 2004 before which he was Group Chief Executive of Standard Chartered PLC from 1993 to 1998. He is Chairman of National Australia Group Europe Limited (and a Principal Board member of National Australia Bank), CDC Group plc, Youth Business International Advisory Board and Deputy Chairman of Resolution PLC. He is also a non-executive director of JP Morgan Cazenove Holdings and G4S PLC, but he has indicated he will be retiring from this latter board at the end of May 2008, a member of the Board of Trustees for The Prince of Wales International Business Leaders Forum, and Chairman of the Cass Business School Strategy & Development Board.
Robert Anderson , 49, appointed in 2005. He became Chief Executive of the Group’s UK division in January 2003 having joined the Group as Chief Operating Officer of the UK division in August 2000. Prior to joining the Group Mr. Anderson had worked at Marks & Spencer Plc for 19 years, latterly as Business Unit Director.
Robert Blanchard* , 63, appointed in 2000. He was a Group Vice President of Procter & Gamble and President of its Global Skin Care and Cosmetics business until his retirement in 1999. He was a non-executive director of Bandag Inc. until he retired from that board in May 2006. He was also a non-executive director of Best Buy Co. Inc. until June 2005.
Walker Boyd , 55, appointed Group Finance Director in 1995. He is a member of the Institute of Chartered Accountants of Scotland. From 1992 he was Finance Director of the Group’s UK division.
Terry Burman , 62, appointed Group Chief Executive in 2000. He was, until January 2006, also Chief Executive Officer of the Group’s US division. Mr. Burman was appointed to the Board in 1996. Prior to joining the Group in 1995 he was Chief Executive Officer of Barrys Jewelers, Inc. Mr. Burman was appointed a non-executive director of Yankee Holding Corp. in October 2007.
Dale W. Hilpert* , 65, appointed in 2003. He was Chief Executive of Williams-Sonoma, Inc. from April 2001 until his retirement in January 2003. Prior to this he was Chairman and Chief Executive of Foot Locker, Inc. which he joined as President and Chief Operating Officer in 1995.
Lesley Knox* , 54, appointed in 2008. She is non-executive Chairman of Alliance Trust plc, a non-executive director of HMV plc and Hays plc. She is also a governor of the Museum of London. Ms Knox was, until January 2003, a founder director of British Linen Advisors Ltd, a specialist corporate finance advisor focusing on growth companies. Prior to that she was Corporate Finance Director, then Head of Institutional Asset Management at Kleinwort Benson Group.
Brook Land* , 59, appointed in 1995 and first elected to the Board in 1996. Until 1996 he was a senior partner of, and is now a consultant to, solicitors Nabarro. He is also non-executive Chairman of RPS Group plc. Mr. Land was nominated as the senior independent director of Signet in June 2002.
Mark Light , 47, appointed in January 2006. He became Chief Executive of the Group’s US division in January 2006 having been
President and Chief Operating Officer of the US division from 2002. He joined the Group in 1978.
Robert Walker* , 63, appointed in 2004. He is non-executive Chairman of WH Smith PLC and BCA Europe Holdings Limited and is a non-executive director of Tate & Lyle PLC and Williams Lea Holdings plc. He was Group Chief Executive of Severn Trent Plc, from August 2000 until his retirement in February 2005. Prior to this Mr. Walker had been a Division President of PepsiCo International and had previously worked for McKinsey and Company and Procter & Gamble.
Russell Walls* , 64, appointed in 2002. He was Group Finance Director of BAA plc until his retirement in August 2002 and was the senior independent director of Hilton Group plc until May 2003 and Stagecoach Group plc until August 2006. Mr. Walls is a non-executive director of Aviva plc, non-executive Chairman of Delphic Diagnostics Limited and Treasurer of the British Red Cross Society. He is a Fellow of the Association of Chartered Certified Accountants. Following Mr. Land’s retirement, Mr. Walls will assume the role of senior independent director.
Committees
Remuneration Committee: Robert Blanchard (Chairman), Dale Hilpert (with effect from 3 March 2008), Lesley Knox (with effect from 6 May 2008), Robert Walker, Russell Walls (until 3 March 2008) and Sir Malcolm Williamson.
Audit Committee: Russell Walls (Chairman), Dale Hilpert, Brook Land and Lesley Knox (with effect from 6 May 2008).
Nomination and Corporate Governance Committee: Brook Land (Chairman), Robert Blanchard, Dale Hilpert (with effect from 3 March 2008), Russell Walls (with effect from 3 March 2008) and Sir Malcolm Williamson.
In accordance with the NYSE Listing Standards, the Board has extended the responsibilities of the Nomination Committee to include the consideration and recommendation of changes to corporate governance guidelines as appropriate.
The Articles specify that every director is required to retire at the annual general meeting in the third calendar year after they were last elected or re-elected. Similarly the Combined Code requires non-executive directors who have served longer than nine years, if they are to continue to serve, to do so subject to annual re-election. Such directors may, in these circumstances, seek re-election. Messrs. Anderson, Burman, Land, Walker and Ms. Knox will retire from the Board at the forthcoming annual general meeting. Following consideration of the recommendations of the Nomination and Corporate Governance Committee, other than Mr. Land who has indicated his intention to retire at the next annual general meeting, they offer themselves for re-election with the endorsement of the Board. Ms Knox seeks election, it being the first annual general meeting since her appointment.

*	Non-executive directors, all of whom satisfied the definitions of independence in the revised UK Combined Code and are viewed as independent by the Board and have been affirmed by the Board as being ‘independent’ in accordance with NYSE Listing Standards. 	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	51	

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 	 	Corporate governance	

 	 	Directors, officers and advisers (continued)  	
 
Officers
Mark Jenkins , 50, Group Company Secretary, appointed in 2004. Previously he was a director and Company Secretary at COLT Telecom Group plc and Group Company Secretary at Peek plc. He is a barrister.
Liam O’Sullivan , 36, Group Treasurer, appointed in 2003. Previously he was Group Treasury Manager at Rank Group Plc. He is a member of the Institute of Chartered Accountants in England and Wales and a member of the Association of Corporate Treasurers.
No director or officer has any family relationship with any other director or officer.
Advisers
Auditor 
 KPMG Audit Plc,
 8 Salisbury Square, London EC4Y 8BB, United Kingdom.
Financial adviser
 Lazard Brothers & Co. Limited,
 50 Stratton Street, London W1J 8LL, United Kingdom.
Stockbrokers
 Deutsche Bank AG,
Winchester House,
 1 Great Winchester Street, London EC2N 2DB, United Kingdom.
JP Morgan Cazenove Ltd.,
 20 Moorgate, London EC2R 6DA, United Kingdom.
UK lawyer
 Herbert Smith LLP,
Exchange House,
 Primrose Street, London EC2A 2HS, United Kingdom.
US lawyer
 Weil, Gotshal & Manges,
 One South Place, London EC2M 2WG, United Kingdom.
Principal bankers
 Barclays Bank PLC,
 5 The North Colonnade, Canary Wharf, London E14 4BB,
United Kingdom.
HSBC Bank plc,
 8 Canada Square, Canary Wharf, London E14 5HQ, United Kingdom.
Royal Bank of Scotland plc,
 135 Bishopsgate, London EC2M 3UR, United Kingdom.
Wachovia Bank N.A.,
 1 Plantation Place, 30 Fenchurch Street, London EC3M 3BD, United Kingdom.
Registrar 
 Capita Registrars,
The Registry,
 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom.

52	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Corporate governance	

Report of the directors	 	
 
Principal activities
 The principal activity of the Group is the retailing of jewellery, watches and associated services with branches throughout the UK and the US. The subsidiaries principally affecting the profit or net assets of the Group are listed in note 28 on page 115.
Business review
 The Board has prepared the reviews and descriptions in this document for the purpose of assisting shareholders to assess the position and strategies of the Group and the potential for those strategies to succeed. Section 234ZZB of the Companies Act 1985 requires that the Group produces a business review. The information that has been prepared to fulfil the requirements of that business review can be found in the Group Chief Executive’s review, the US and UK operating reviews, the Key performance indicators, the Group financial review, the Social, ethical & environmental matters and the Risk and other factors (“the Reviews”) on pages 3 to 50 of this document, those pages being incorporated by reference into this Report of the directors. The Reviews report on the Group’s development and performance during the past year together with its strategy and prospects with particular reference to stated key performance indicators (KPIs) (pages 31 to 34).
A review of the Group’s performance during the year, with comments on the financial results, details of the KPIs that management use, the principal risks and uncertainties facing the Group and likely future developments, are set out on pages 31 to 50 and form part of this Report. The directors, in preparing this review, took into account the guidance set out in the Accounting Standards Board’s Reporting Statement: Operating and Financial Review.
The Group collects performance indicator data for many management purposes, including environmental, employment and social factors for review by the Board. Due to the nature of the business, this information is not considered to be necessary for an understanding of the development, performance or position of the business of the Group, and is therefore not made publicly available. Further information on environmental, employment and social factors is set out in the Social, ethical & environmental matters on pages 61 to 66.
Cautionary statement 
 The Reviews incorporated by reference in this Report of the directors contain forward-looking statements which are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries and markets in which the Group operates. It is believed that expectations reflected in these statements are reasonable but they may be affected by a wide range of factors which could cause actual results to differ materially from those currently anticipated.
Going concern 
 On the basis of current financial projections and facilities available, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and, accordingly, consider that it is appropriate to continue to adopt the going concern basis in preparing its annual accounts.
Results and dividends 
 The results of the Group for the year appear on page 82. The directors recommend the payment of a final dividend of 6.317 cents per share, to be paid on 3 July 2008 to shareholders on the register of members at close of business on 23 May 2008. Those persons with a UK address or who so elect, will receive their dividends in pounds sterling. Those shareholders with a US address or another address outside the UK will receive their dividends in US dollars. The equivalent pounds sterling rate will be calculated by reference to the mid-point exchange rate for pounds sterling with US dollars in London as derived from Reuters at 4.00 p.m. on 23 May 2008. An interim dividend of 0.96 cents per share was paid in November 2007. See note 10 on page 96 for waiver of dividends.
Directors 
 The directors who served during the period were, Robert Anderson, Robert Blanchard, Walker Boyd, Terry Burman, Dale Hilpert, Lesley Knox, Brook Land, Mark Light, Robert Walker, Russell Walls and Sir Malcolm Williamson (Chairman). Details of the current directors are shown on page 51.
The shareholder information section on pages 129 to 143 contains further information on the appointment and powers of the directors.
Independence of non-executive directors
 The Board has considered the independence of all of the non-executive directors in relation to the UK Combined Code and has concluded that each is independent, including Mr. Land, notwithstanding that he has served on the Board for longer than nine years. The non-executive directors and the Board as a whole have considered Mr. Land’s position and have concluded that he performs effectively and has demonstrated his objectivity and his commitment. The Board continues to value Mr. Land’s contribution. However Mr. Land has indicated his intention to retire from the Board at the conclusion of the annual general meeting to be held in 2008 and will therefore not be offering himself for re-election.
Directors’ remuneration, service contracts and share interests
 Details of directors’ remuneration, indemnities, service contracts (including compensation for loss of office) and the interests in the share capital of the Company of the directors and their immediate families at 2 February 2008 are given in the Directors’ remuneration report on pages 67 to 79.
Share capital
 Details of the structure of the Company’s share capital are in note 22 to the financial statements on page 108. The shareholder information section on pages 129 to 143 contains further information on voting and other rights in respect of the Company’s shares.
Substantial shareholdings and control of the Company
 Details of substantial shareholdings and control of the Company are as set out on pages 131 and 132
Allotment of equity securities
 Other than in relation to the redenomination of the share capital effective from 5 February 2007 (see note 22 for details) and the exercise of options as set out in note 27 on page 114, there were no equity securities allotted during the year.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	53	

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 	 	Corporate governance	

 	 	Report of the directors (continued)  	
 
Social, ethical and environmental matters
 Matters relating to these issues, including employees, payment of creditors and charitable and political donations, are set out on pages 61 to 66.
Payment policy
 In respect of supplier payment, Group policy is that the operating businesses are responsible for agreeing the terms and conditions under which business transactions with their suppliers are conducted, rather than following any particular code or standard on payment practice (see Company Information on page 126 regarding the number of days purchases outstanding). Accordingly suppliers are aware of the terms of payment and it is Group policy to ensure that payments to suppliers are made in accordance with these agreed terms.
Significant agreements – change of control
 The Companies Act 2006 requires the Group to disclose the following significant agreements that take effect, alter or terminate on a change of control of the Company:
Facilities Agreement 
 On 28 September 2004, the Company and certain of its subsidiaries (as guarantors) entered into a revolving facilities agreement (the “Facility Agreement”) with Barclays Capital, HSBC Bank plc, The Royal Bank of Scotland plc and Wachovia Bank N.A. (as mandated lead arrangers) and certain other financial institutions as lenders (the “Lenders”), pursuant to which the Lenders agreed to make available to the Company $390 million to refinance certain of its existing financial indebtedness and for its general corporate and working capital purposes (the “RCF”). Under the terms of the Facility Agreement, the Lenders can require all amounts outstanding under the RCF to be repaid if there is a change of control of the Company.
Note Purchase Agreement
 On 30 March 2006, the Company entered into a note purchase agreement (the “NPA”) with the purchasers defined therein (the “Purchasers”), pursuant to which the Company issued and sold an aggregate amount of US$380 million senior notes to the Purchasers (the “Notes”). Pursuant to the NPA, the Company is obliged to offer to prepay the Notes if there is a change of control of the Company and, on the date of that change of control, the Company does not have an investment grade rating itself, and does not have securities with an initial maturity of five years or more, which are rated by an internationally recognised credit rating agency.
Purchase of own shares
 At the annual general meeting of the Company held on 8 June 2007, the shareholders gave the Company authority to purchase, in the market, up to 170,345,896 shares of 0.9 cents of a US dollar each in the Company at a minimum price of 0.5 pence per share and a maximum price of 105% of the average of the market values derived from the London Stock Exchange Daily Official List for the preceding five business days.
During the financial year the Company purchased 12.2 million shares at a weighted average price of 121.2 pence. The authority expires at the forthcoming annual general meeting and a resolution to renew it will be proposed at that meeting.
Pension funds
 Information about the Group’s pension schemes is set out in the Financial review section on page 39, the Risk and other factors section on page 49 and in note 21 on page 104. Information about pension arrangements for executive directors is set out in the Directors’ remuneration report on pages 67 to 79.
Indemnities 
 Certain US subsidiaries of the Company had constitutions and by-laws that provided indemnities to directors which although conforming to local laws and practice, in some respects exceeded what would be permitted under English law if they were UK companies. To ensure compliance with the UK Listing Rules the Company, following discussion with the UKLA, amended the existing constitutions and by-laws of all relevant US subsidiaries to cap any such indemnity (to the extent that it exceeds what is permitted under English law) at the lower of (a) 4.99% of the market capitalisation of the Company; and (b) 24.99% of the average profits of the Company for the last three years, each as calculated in accordance with the UK Listing Rules.
The Company has entered into contractual arrangements with each of its directors to provide indemnities to the extent permitted under English law.
Auditor
 The auditor, KPMG Audit Plc, is willing to continue in office and a resolution for its re-appointment as auditor of the Company will be submitted to the annual general meeting.
Disclosure of information to the auditor
 Each of the directors at the date hereof confirms that:

 	(a)	so far as they are aware, there is no relevant audit information of which the Company’s auditor is unaware; and	
 	 	 	
 	(b)	they have taken all the steps that he or she ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.	
New York Stock Exchange (“NYSE”)
 The Company’s shares are listed on the NYSE in the form of an American Depositary Share (“ADS”). Each ADS represents ten ordinary shares.
Annual general meeting
 The annual general meeting is to be held at 11.00 a.m. on 6 June 2008 at The Café Royal, 68 Regent Street, London W1B 5EL.
A description of the business to be transacted at the annual general meeting is included with the notice of the meeting.
By order of the Board
 Mark Jenkins 
 Group Company Secretary
9 April 2008

54	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Corporate governance	

Responsibility statement of the directors in respect of the annual financial report	
We confirm that to the best of our knowledge:

–	the Group and parent company financial statements, prepared in accordance with the applicable United Kingdom law and in conformity with IFRS, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and	
 	 	
–	the Business Review includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.	
Signed on behalf of the Board by:
Terry Burman Group Chief Executive
Walker Boyd Group Finance Director
9 April 2008

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 	 	Corporate governance	

 	 	Corporate governance statement	
 
The Board
 The Board has as its prime objective the sustainable enhancement of business performance and shareholder value. It carries the responsibility for determining all major policies, for ensuring that effective strategies and management are in place, for assessing the performance of the Group and its senior management and for reviewing the system of internal controls, and setting policy relating to social, ethical and environmental matters (see pages 61 to 66). The Board also seeks to present to shareholders, potential investors and other interested parties a balanced and coherent assessment of the Company’s strategy, financial position and prospects. The Board retains responsibility for a range of specific matters including approval of the annual report and other documents circulated to shareholders by the Company; quarterly and annual results announcements; other trading statements; distribution policy; acquisitions, disposals, material agreements and capital expenditures outside predetermined limits set by the Board; risk management; budgets; long range plans; senior executive appointments; succession planning and corporate governance.
The Board monitors all developments in corporate governance, including the UK Combined Code, the NYSE Listing Standards, SEC requirements and the Sarbanes-Oxley Act. The Board reviews its performance and procedures in the light of changing expectations regarding best practice and makes amendments, where it believes appropriate, to take account of them.
The formal schedule of matters reserved for the Board is reviewed annually and the division of responsibilities between the Chairman and the Group Chief Executive is set out in writing and agreed by the Board. In summary, the Chairman is responsible for:

•	the effective running of the Board, including the evaluation of its performance and that of the individual directors, and the Board’s compliance with corporate governance;  	
•	the review, prior to their presentation to the Board by executive management, of strategy, medium term plans and annual budget;  	
•	reviewing, prior to their presentation to the Remuneration Committee, the recommendations of the Group Chief Executive regarding the remuneration of senior executives and for making a recommendation regarding that of the Group Chief Executive;  	
•	maintaining contact with major shareholders to understand directly their issues and concerns;  	
•	keeping the non-executive directors appropriately informed of developments within the business and shareholders’ attitude to the Group; and  	
•	the reputation of the Group, and representing it both internally and externally.  	
The Chairman is also a member of the Nomination and Corporate Governance, and Remuneration Committees.
In summary, the Group Chief Executive is responsible for:

•	the executive leadership of the Group;  	
•	the development, and presentation to the Board, of strategy, medium term plans and budgets;  	
•	within this framework, the performance of the business;  	
•	compliance with legal and corporate governance requirements, together with the social, ethical and environmental principles of the Group; and  	
•	making recommendations on the appointment and remuneration of senior executives and management development.  	
The Board met eight times in 2007/08, including five extended sessions of more than one day. All directors attended all meetings of the Board with the exception of Messrs. Light, Walker, and Walls each of whom was not present at one meeting and Mr. Anderson who was not present at three meetings.
The Board currently consists of eleven directors: the Chairman, four executive directors (the Group Chief Executive, the Group Finance Director and the Chief Executives of the UK and the US divisions) and six independent non-executive directors, one of whom is nominated as the senior independent director. Incumbents are identified on page 51. Directors are subject to election at the first annual general meeting after appointment and then to re-election by shareholders at no more than three yearly intervals. Whilst the Board is of the view that fixed terms of appointment are not as important as the particular contributions being made by the individual non-executive directors in deciding their terms of office, the Board has applied fixed three year terms to non-executive directors’ appointments. Notwithstanding this, the performance of each director is reviewed annually. Any non-executive director who has served on the Board for nine years since first being elected as a non-executive director must stand for annual re-election.
The mix of skills and business experience of the directors is considered to be appropriate for the proper and efficient functioning of the Board. The terms of reference of the Nomination and Corporate Governance Committee include the regular review of the composition and balance of the Board. No one individual has unfettered powers of decision and no individual or grouping is in a position to unduly influence the Board’s decision making. The non-executive directors meet regularly without the executive directors being present. They also meet, chaired by the senior independent director, occasionally without the Chairman being present.
On appointment new directors take part in an induction programme and are given an opportunity to familiarise themselves with the Group’s business, procedures and investor perceptions. In addition to meeting with management this process includes briefings from the Group’s external auditor, lawyers, financial advisers and stockbrokers. Directors are kept informed of the latest developments and best practice in corporate governance and attend relevant courses or receive appropriate training to equip them to carry out their duties. The non-executive directors are given regular opportunities to see the operations of the business and to meet management and staff.
All directors receive written reports in a timely manner prior to each meeting which enables them to make informed decisions on the issues under consideration. The performance of the Board, its Committees and individual members is rigorously monitored to ensure that each director continues to contribute effectively and demonstrates commitment to the role. The Board has a formal written procedure for the evaluation process which is conducted by the Chairman in conjunction with the senior independent director and the

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Group Company Secretary. It consists of a questionnaire, completed by the directors, followed by a structured discussion planned to explore the responses and any other matters raised during the process.The process is designed to help in assessing the future development needs of the Board and the directors. The performance evaluation of the Chairman is led by the senior independent director and takes into account the views of both the non-executive and executive directors.
The Group Company Secretary is responsible, through the Chairman, for advising the Board on all governance matters and ensuring that Board procedures are followed. All directors have access to his advice and service. There is also a procedure for directors to take independent advice in the course of their duties, if considered appropriate, at the Group’s expense.
Board committees
 Certain matters are delegated to Board committees, each with defined terms of reference, procedures, responsibilities and powers. The principal committees are the Audit, Nomination and Corporate Governance, and Remuneration Committees.
The Audit Committee
 The Audit Committee has written terms of reference which are reviewed annually and are available on request from the Group Company Secretary and on the Group’s website. The Audit Committee’s responsibilities include the review of the appropriateness and effectiveness of the Group’s accounting policies and financial procedures and oversight of the external auditor’s work, including the scope and result of the audit. The Audit Committee also reviews the effectiveness of the internal auditors, the Disclosure Control Committee and the Group’s whistleblowing procedures. An extensive review of the internal audit function was performed by an independent external party in 2007/08. The scope of this effectiveness review was agreed with senior management and the Audit Committee and was conducted in accordance with the guidelines set out by the Institute of Internal Auditors. The results were communicated to, and discussed with, all relevant parties upon completion of the fieldwork. The conclusion was that internal audit was providing an effective service to the Company. A number of recommendations to build on the divisional structure of Internal Audit, reinforcing the independence of the function through its reporting relationships with Group executives and non-executive directors, were also implemented.
The Audit Committee reviews the whistleblowing procedures twice a year, which includes receiving reports on all matters raised and on actions taken. The Audit Committee also reviews the effectiveness of the Group’s internal control and risk management procedures and reports to the Board on these matters. This review is based on a report submitted via the Risk Management Committee which includes the Group’s prioritised risk register, and annual written self-certification statements prepared by the operating divisions and head office departments, which confirm the extent of their compliance with all material internal financial operating and disclosure controls. These statements are prepared by the divisional finance directors on behalf of each operating division and are reviewed by senior divisional executives, Group management and the Audit Committee. In addition
to the management self-certification process, the Audit Committee receives regular updates on divisional and Group based internal audit activity throughout the year and reviews reports submitted to the Board by the Group’s external auditor. Quarterly Risk Management Committee reports are also provided to the Chairman of the Audit Committee and a member of that Committee is in attendance at each Risk Management Committee meeting. The Audit Committee reviews, discusses with management and approves for submission to the Board, all Group audited accounts, as well as selected trading statements and internal financial reports.
The external auditor’s objectivity and independence is monitored by the Audit Committee which also has the primary responsibility for making a recommendation on the appointment of the external auditor, the determination of its fees and making an annual assessment of its independence (including consideration of a written disclosure by the external auditor of all relationships that they have with the Group). The planned rotation of partners and staff of the external auditor, together with a cooling off period before anyone from the external auditor joins the Group, also assist in maintaining the independence of the external auditor. The Audit Committee has reviewed and approved a policy for the provision of audit and non-audit services by the external auditor which is compliant with the requirements of the Sarbanes-Oxley Act. The policy requires that the Audit Committee approves in advance all audit and non-audit work carried out by the external auditor (subject to a de minimis amount, this being then reported to the Audit Committee on a quarterly basis). The approval process requires disclosure of the objectives and scope of services to be performed in addition to the fee structure. The Audit Committee also reviews all approved services and fees at subsequent meetings. See page 92 for details of fees paid to the external auditor.
The Audit Committee has an established channel of direct communication with the external auditor who normally attends meetings except in relation to certain aspects of their own appointment, assessment of their independence and determination of their fees. The Chairman, the Group Chief Executive, the Group Finance Director and others attend the meeting by invitation. The Audit Committee meets at least once a year with both the external auditor and internal auditors without executive management being present. The Audit Committee also meets on two occasions during the year with divisional management to assess the risk and internal audit functions of both of the divisions and for the purpose of being briefed on business and technical developments. The Business Risk Assurance Manager also reports to the Committee on the processes in relation to the review of business risks.
All members of the Audit Committee are independent, as defined by the UK Combined Code, the SEC and the NYSE and the only remuneration members of the Audit Committee receive, from the Group, is as directors. Russell Walls is Chairman and an “audit committee financial expert” as defined by the applicable SEC regulations. During the year the Audit Committee consisted of Dale Hilpert, Brook Land and Russell Walls all of whom have significant financial experience either as a result of positions held in other companies or from advising on such matters. The Group Company Secretary acts as secretary to the Audit Committee. The Audit Committee met nine times in 2007/08, including a meeting entirely dedicated to the consideration of corporate governance matters and there was full attendance at all meetings.

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 	 	Corporate governance statement (continued)	
 
The Nomination and Corporate Governance Committee
 The Nomination and Corporate Governance Committee has written terms of reference which are reviewed annually and are available on request from the Group Company Secretary and on the Group’s website. The Nomination and Corporate Governance Committee has responsibility for reviewing the composition and balance of the Board and its committees, as well as Board and senior management succession. It also makes recommendations to the Board on all new Board appointments and nominations for re-election as directors. The Nomination and Corporate Governance Committee also assists the Board in the consideration and development of appropriate corporate governance guidelines.
Once the Nomination and Corporate Governance Committee has agreed a job specification, the services of external recruitment agencies are used to identify suitable candidates for senior executive posts and for all Board appointments. The Nomination and Corporate Governance Committee carries out interviews with such individuals in accordance with a formalised process, particularly with regard to the performance evaluation procedures for individual directors. The review of any non-executive director, who is serving beyond six years from first being elected to the Board, is considered with particular care. No director is involved in any decision about his own re-appointment. The procedure for the election of directors is laid out on page 51.
When the role of the Chairman or any matter relating to succession to that role is discussed, the Chairman may be consulted, but the responsibility for preparing a job specification and making any recommendation to the Board rests solely with the independent non-executive directors of the Nomination and Corporate Governance Committee. The Nomination and Corporate Governance Committee also reviews a number of other senior appointments within the Group, such as that of the Group Company Secretary. The senior independent director chairs the Nomination and Corporate Governance Committee. During the year the Nomination and Corporate Governance Committee consisted of Robert Blanchard, Brook Land and Sir Malcolm Williamson. The Group Company Secretary acts as secretary to the Nomination and Corporate Governance Committee, which met seven times in 2007/08 and there was full attendance at all meetings.
The Remuneration Committee
 The role of the Remuneration Committee is discussed in the Directors’ remuneration report on page 67.
Further details regarding the chairmen and members of these Committees are set out on page 51.
Executive management
 The Group comprises two separate operating divisions, one in the US and one in the UK, each with a separate executive committee which meets regularly. The Group Finance Director and the Chief Executives of the UK and US divisions report to the Group Chief Executive.
The executive management is responsible to the Board for the performance of the Group and its compliance with the internal policies and procedures set by the Board. As part of this responsibility the
executive management regularly reports to the Board on the performance of the Group, the competitive environment and its relations with stakeholders.
Business strategies; long range plans; budgets; acquisitions, disposals, material agreements and capital expenditures outside predetermined limits set by the Board; and internal policies and procedures are presented to the Board by executive management for consideration. Within this approved framework the executive management is responsible for the day to day running of the business including: merchandising; store operations; human resource management and planning; marketing; real estate; financial reporting; treasury management; risk management; tax management; social, ethical and environmental matters; and communications with investors.
Business conduct and ethics
 Signet strives to act in accordance with the laws and customs of each country in which it operates; to adopt proper standards of business practice and procedure; to operate with integrity; and to observe and respect the culture of each country in which it operates. To that end, the Group has adopted a Statement of social, ethical and environmental Principles described on pages 61 to 66 and supporting policies applicable to all officers and employees of the Group and complies with the requirements of the NYSE. In addition, it has a policy on business integrity, as well as more detailed guidance and regulations in the Group’s staff induction, training and operational procedures. These policies meet the UK corporate governance requirements and the requirements of the NYSE, and include a code of business conduct and ethics.
A code of ethics which meets the requirements of the Sarbanes-Oxley Act, covering the Chairman, the Group Chief Executive, the Group Finance Director and senior officers, is also in place. These codes are available on request from the Group Company Secretary and on the Group’s website – www.signetgroupplc.com.
Relations with shareholders
 The Board recognises the importance of relations with shareholders and communicates regularly with them about the Group’s strategy, financial performance and prospects. It does this through documents distributed to shareholders, stock exchange announcements and in meetings. Presentations on quarterly and annual results and the Christmas trading statement are open to all interested parties, including private shareholders, through the use of teleconferences and web casting. Other presentations are available on the Group website.
The Board recognises that the prime opportunity for private investors to question the Board is at a general meeting of shareholders. All of the directors are required to attend the annual general meeting and the chairmen of the Audit, Nomination and Corporate Governance and Remuneration Committees, in addition to the Chairman of the Board, are available to answer questions relating to the function of their respective Committees. All of the directors attended the 2007 annual general meeting.

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The Group Chief Executive, the Group Finance Director and the Investor Relations Director carry out an extensive programme of meetings with institutional investors. The Chairman and the senior independent director are also available to meet with investors from time to time. Major shareholders are offered an opportunity to meet new non-executive directors following the appointment of the individual.
Shareholders who wish to send communications to the Board of directors, the Chairman or any other individual director may do so in writing, addressed to Mark Jenkins, Group Company Secretary at 15   Golden Square, London W1F 9JG, UK.
The Board is kept informed of investment market attitudes to the Group by receiving regular reports on investor relations, copies of brokers’ research, press cuttings and third party surveys of investor perceptions.
Compliance statement and Combined Code
 The NYSE corporate governance requirements are not mandatory for foreign private issuer companies such as Signet. However, the Group has chosen in general to comply as a matter of best practice.
In a limited number of areas the Group, as permitted by the NYSE rules, has elected to defer to the UK corporate governance practices. This is permissible provided significant variations are explained. An explanation of those variations, which relate to the Chairman’s membership of Committees, can be found on the Group’s website.
The Board considers that it has complied throughout the year with the provisions of the UK Combined Code required to be observed by companies and complies with the NYSE rules, other than in those cases where the variations have been explained.
Internal controls
 The UK Combined Code requires that the directors review the effectiveness of the Group’s system of internal controls including the following areas:

•	Financial	
•	Operational	
•	Compliance	
•	Risk management	
The Board considers that it has complied with the Turnbull guidance (Internal Control: Guidance for Directors on the Combined Code (“the Turnbull guidance”) published in September 1999) throughout the year and up to the date of approval of this Annual Report & Accounts. In addition, during the year the Board continued to take steps to ensure continued compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. The Group Chief Executive and the Group Finance Director will, as they did in previous years, sign the applicable certifications required by the Sarbanes-Oxley Act when the Annual Report on Form 20-F is filed with the SEC.
The Board exercises ultimate responsibility for the Group’s system of internal controls and for monitoring its effectiveness. The internal controls system is designed to safeguard shareholders’ investments and the Group’s assets, both tangible and intangible, including the reputation of the Group with its various stakeholders. Procedures are in place to ensure the maintenance of proper accounting records, the reliability of the financial information used within the business or for publication and the determination of disclosure obligations and of materiality. These procedures also cover disclosure on a timely basis of information to the investment markets. However, such procedures are designed to manage rather than wholly eliminate the risk of failure to achieve business objectives and can provide only reasonable, not absolute, assurance against material misstatement or loss.
Signet’s disclosure control procedures are designed to help ensure that processes and procedures for information management are in place at all levels of the Group. The disclosure control procedures aim to provide reasonable assurance that any information disclosed by the Group is recorded, processed, verified, and summarised appropriately and on a consistent basis. The procedures are also designed to provide reasonable assurance that information is accumulated and communicated to management to allow timely decisions to be made regarding required disclosure. The Group’s Disclosure Control Committee, which has formalised terms of reference, consists of the Group Finance Director, the Group Company Secretary, the Investor Relations Director and the Group Financial Controller who consult with the Group’s external advisers and auditor, as necessary. These procedures are designed to enable Signet to make timely, appropriate and accurate public disclosures. The activities and findings of the Disclosure Control Committee are reported to the Audit Committee.
Key procedures designed to provide effective internal controls are:

•	Control environment – control is exercised through an organisational structure with clearly defined levels of responsibility and authority together with appropriate reporting procedures, particularly with respect to financial information, capital expenditure, investment, granting of guarantees and the use of treasury products (see page 49 for more detail) as well as health, safety, environmental and customer service issues.	
 	 	
•	Reporting and information systems – the Group has a comprehensive budgeting and strategic planning system with an annual budget and strategic plan approved by the Board. Reported monthly trading results and balance sheets include the corresponding figures for the budget or revised forecast and for the previous year. Any significant variances are examined by divisional operating management and discussed with Group management, with action being taken as appropriate. A forecast of the full year’s results is updated regularly, based on performance to date and any changes in outlook. The executive directors regularly report to the Board on the development of the business, the competitive environment and any material breaches of procedure. Through these mechanisms, the Group’s performance is continually monitored, risks identified in a timely manner and their implications assessed.	

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 	 	Corporate governance statement (continued)  	

 	The Group, as part of its continuous review of procedures, has taken steps to strengthen, as appropriate, resources committed to meeting the increasing demands of corporate governance, to comply with the Sarbanes-Oxley Act, to monitor and address evolving and more complex accounting standards, including changes in the application and interpretation of US GAAP. The Group further strengthened its Group Finance function during 2007/08 reflecting the increasing demands of IFRS accounting and US GAAP requirements.	
 	 	
 	The Group issues both sales and financial results on a quarterly basis. The external auditor reviews the quarterly and half year statements and Christmas trading statement and presents reports to the Audit Committee for consideration.	
 	 	
•	Risk management – the identification of major business risks is carried out in conjunction with operational management and appropriate steps are taken to monitor and mitigate risks. The Business Risk Assurance Manager co-ordinates risk management information and processes; the Business Risk Assurance Manager is responsible for assessing the day to day risk management processes and internal control structure for the Group, ensuring such processes satisfy the applicable standards in the UK and US. His findings are reported to the Audit Committee. The Risk Management Committee has written terms of reference approved by the Board and is chaired by the Business Risk Assurance Manager. Its members include the Group Finance Director, senior divisional executives, the divisional heads of internal audit with a member of the Audit Committee in attendance and it meets at least four times a year. Matters considered by the Risk Management Committee include reviews of the Group’s risk register, emerging issues, new regulations and the activity of the internal audit function. The external auditor and the Chairman of the Audit Committee receive copies of the papers submitted to the Committee. A report from each Risk Management Committee meeting highlighting any material non-compliance or emerging issue, is considered by the Board in a timely manner. In order to provide a formal forum for risk assessment, risk and control committees have been established at both divisional and corporate level. The divisional committees are chaired by the divisional Chief Executives and the corporate committee is chaired by the Group Finance Director. Each committee has formalised terms of reference and involves participation by the executive management teams and the Business Risk Assurance Manager to ensure a consistent approach and provide a level of independent challenge.	
 	 	
•	Control procedures – each operating division maintains documented financial and operating controls as well as procedures appropriate to its own business environment and in conformity with Group guidelines. During the year documented Group policies and procedures were enforced. Each of the operating divisions has an internal audit function which primarily reviews the processes in the store operations but also reviews central service functions. Internal audit reviews of Group functions are carried out by an external company. The work of internal audit is monitored by senior divisional executives, and/or Group management, the Risk Management Committee and the Audit Committee.	
 	 	
 	There have been no changes in the Group’s internal controls over financial reporting during the period covered by this Annual Report	
 	& Accounts that have materially affected, or are reasonably likely to materially affect, those controls.	
 	 	
•	Reviews of effectiveness – the Board, in addition to receiving summaries of the Risk Management Committee reports, annually reviews the effectiveness of the internal controls system on the basis of a report from, and the recommendation of, the Audit Committee. The Disclosure Control Committee reports to the Audit Committee on a quarterly basis as to the effectiveness of the disclosure control procedures.	
Based on their review of the Group’s disclosure controls and procedures, as of the end of the period covered by this Annual Report & Accounts, and in accordance with the requirements of Section 302 of the Sarbanes-Oxley Act, the Group Chief Executive and Group Finance Director have concluded that the Group’s current disclosure controls and procedures are effective to provide reasonable assurance that information regarding the Group is recorded, processed, summarised and reported and that the information is accumulated and communicated to management to allow timely decisions regarding required disclosure.
Management’s annual report on internal control over financial reporting 
As a foreign private issuer Signet is required to comply with applicable US regulations, including Section 404 of the Sarbanes-Oxley Act 2002.
In accordance with the requirements of Section 404 of theSarbanes-Oxley Act, management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the US Securities Exchange Act of 1934, as amended. The Group’s internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS, including the reconciliation required under US GAAP. As a result of its inherent limitations, Signet’s internal control over financial reporting is not intended to provide absolute assurance that a misstatement of the financial statements would be prevented or detected.
Signet’s management conducted an evaluation of its internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission. Based on this evaluation, management believe that Signet’s internal control over financial reporting was effective as of 2 February 2008.
KPMG Audit Plc, which has audited the consolidated financial statements of the Group for the fiscal year ended 2 February 2008, has also audited the effectiveness of internal control over financial reporting. An unqualified opinion has been issued thereon, the details of which are included within the Form 20-F.
Certifications by the Group Chief Executive and Group Finance Director as required by the Sarbanes-Oxley Act are submitted as exhibits to the Form 20-F.

60	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Corporate governance	

Social, ethical & environmental matters	 	
 
Introduction
 Signet recognises that many different stakeholders have an interest in its activities, and that the Group’s success is dependent on the strength and effectiveness of its relationship with them. Signet’s approach to the governance of social, ethical and environmental (“SEE”) matters, its framework of principles and policies, its relationship with key stakeholder groups and major initiatives that have occurred in 2007/08 are set out below.
Governance of SEE matters 
 The Group has a formal SEE governance framework with SEE principles and policies being included in the schedule of matters reserved for the Board. The Group Chief Executive has been designated as the director responsible for SEE matters including those relating specifically to climate change, and reports to the Board on a regular basis.
The Group SEE Committee (“SEE Committee”), chaired by the Group Company Secretary, and consisting of senior managers from the UK and US, has responsibility for the implementation of the various aspects of the SEE principles and policies, including climate change initiatives, through a programme approved by the Board. Both the US and UK have a divisional SEE committee, members of which make up the SEE Committee and are drawn from the merchandising and buying, human resource, corporate communication, finance and internal control functions. The SEE Committee meets at least four times a year. The Group Company Secretary reports to the Group Chief Executive regarding the Committee’s work.
Matters for which the SEE Committee has responsibility include:

•	identification of significant risks to the Company’s short and long term value arising from SEE matters;	
•	ensuring that the Board has adequate information to take account of material SEE matters;	
•	development of relevant SEE principles and policies for consideration and approval by the Board;	
•	implementation of the SEE programme agreed by the Board;	
•	reviewing systems for managing significant SEE risks;	
•	benchmarking the SEE performance and reporting of the Group against other general retail sector companies; and	
•	preparation, for review and approval by the Board, of public SEE disclosures and reporting.	
The procedures for SEE risk management are embedded within the management structure of the Group. SEE risks are discussed in ‘Risk and other factors’ on pages 44 to 50.
Signet has important relationships with a wide range of different stakeholders, including shareholders, customers, employees, suppliers and communities. The Group engages with these stakeholders in a number of ways, including consumer research, customer service facilities, employee attitude surveys, supplier relationship management systems, investor relations programmes and participation in civic and community activities. In addition, Jewelers of America (the US speciality jewellery retail trade association) engages with stakeholders in the industry, including non-governmental organisations, trade
unions, producers and manufacturers, governments and consumer groups, on major issues. Signet is the world’s largest speciality jeweller. However, its share of the worldwide jewellery and watch market is less than 3% of the total. Therefore, it is the Group’s belief that it can be most effective in influencing improvements in the supply chain by working with other industry representatives who together can, by concentration into a single industry voice, be representative of many aspects of the supply chain and use their combined influence in working to improve it as a whole. In support of this position, the Group Chief Executive is on the Board and is Chair Elect of Jewelers of America and chairs its Ethical Initiatives Committee. He is also a director of the Council for Responsible Jewellery Practices (“CRJP”) (as is the Group Company Secretary), and during 2007 chaired the World Diamond Council (“WDC”) Consumer Awareness Advisory Committee.
Principles and policies framework 
The Board has adopted a Statement of SEE Principles (“Principles”) outlining the Group’s policy to operate as a profitable and reputable speciality jewellery retailer, the Group’s responsibilities to various stakeholders and the SEE principles by which it operates. The Principles cover the following areas:

•	accountability to stakeholders;	
•	business integrity;	
•	human rights;	
•	labour standards;	
•	health and safety;	
•	the environment; and	
•	community.	
The Group has a Supplier Code of Conduct (“Supplier Code”) and policies on business integrity, health and safety, the environment and labour standards. The Principles, Supplier Code and other policies are now incorporated, as appropriate, into the Group staff induction process and operational procedures within the business. More detailed information is available on the Group’s website (www.signetgroupplc.com).
Signet’s principles and policies are intended to provide a framework with which the divisional policies and procedures conform. They do not replace detailed divisional policies and procedures.
Developments in 2007/08 
During the year the Group:

•	enhanced its internal controls to ensure credible internal monitoring and third party assessment of processes supporting implementation of the Kimberley Process Certification System (“KPCS”) and the WDC system of warranties which were designed to eliminate conflict diamonds from the legitimate diamond trade, details of which are set out on page 63;	
•	maintained its active involvement with the Council for Responsible Jewellery Practices to ensure consumer confidence in the diamond and gold jewellery supply chain;	

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 	 	Social, ethical & environmental matters (continued)	

•	continued the development and implementation of climate change initiatives across the Group;	
•	continued to expand the scope and enhance the methodology for the collection and validation of environmental data, including development of new KPIs and data collection processes for “indirect scope 2 greenhouse gas emissions”;  	
•	continued to increase its communication of SEE matters with stakeholders, including employees, industry participants, investors and non-governmental organisations; and  	
•	continued the development of the formalised community affairs programme.  	
Our stakeholders
 Signet’s commitments to various stakeholders are articulated in the Principles. These are summarised below:
Shareholders 
 Signet’s aim is to deliver an acceptable growth in value to shareholders which is sustainable, thereby protecting shareholders’ short and longer term interests. The Group’s responsibilities to shareholders are set out in more detail in the Corporate governance statement on page 58. The Group is committed to maintaining open dialogue with its shareholders on SEE and other matters. Signet has been a member of the FTSE4Good UK Index (the “index”) since its launch and endeavours to meet the changing criteria of the Index. The Index has recently enhanced its requirements for environmental management, as well as introducing criteria relating to climate change and bribery and corruption. Signet has successfully met all new and applicable Index criteria, thereby retaining its inclusion.
Customers 
 Signet’s mission is to meet, and where possible exceed, customer expectations through a high standard of customer service, high store standards, and by offering real choice and value. In doing so the Group endeavours to maintain product integrity by ensuring the quality of Signet’s products and by offering merchandise that is responsibly sourced, and is in compliance with its obligations under the KPCS and the WDC system of warranties.
The Group’s policy is that all customers should be treated with respect and warmth. Sales training programmes include modules on treating all customers with respect generally. The Group has customer service departments, complaint resolution processes, mystery shopper programmes and conducts market research to gain a better understanding of customer requirements. In the US division there is also a monthly customer satisfaction index for each store and a similar programme has been successfully tested in the UK.
Employees
 Employees are key to Signet’s ability to achieve its objectives and mission. Therefore teamwork, integrity, communication, and fair treatment of employees all play an important part in the way the Group operates. Furthermore, Signet’s ability to operate in accordance with its Principles is dependent on its employees’ understanding of them and the way in which the Principles have an impact on their respective roles and responsibilities.
Signet considers its relationship with its employees to be excellent and values honest, open and constructive two-way communication
throughout the organisation. This is achieved through store, area and regional management meetings in addition to staff opinion surveys, feedback reports and staff meetings. These procedures facilitate consultation during which the views of employees can be expressed and taken into account in decisions likely to affect their interests. Staff are kept informed of the Group’s performance and objectives through management contact supplemented by staff publications in both the UK and US. The involvement of employees in the Group’s results is encouraged through participation in performance-related incentive payment schemes and savings-related share option schemes which include all Group employees subject to minimum employment requirements. The Group does not restrict or discriminate against employees who wish to be covered by collective bargaining agreements.
The Group’s policy is not to tolerate any form of unlawful discrimination on any grounds or at any level. In respect of people with disabilities, full and fair consideration is given to employment, opportunities for training, career development and promotion according to their skills and capacity. There are well established dispute resolution procedures in both divisions. The services of any existing employees who become disabled are, where possible, retained and appropriate training is arranged for them wherever possible. The Group assigns responsibility for human resource matters, including health and safety, to divisional executive management committees. Both the UK and US operations have established systems which include the provision of training and development opportunities at all levels of the organisation. See pages 17 and 27 for further details.
Performance indicators relating to employee relations have been agreed and baseline data was collected in 2007/08 and will continue to be collected in 2008/09.
Supply chain 
 The Group recognises that stakeholders expect companies to exert influence, where possible, over vendors to ensure that SEE standards are upheld throughout the supply chain. The Supplier Code outlines Signet’s commitment to its vendors and the expectations it has of them. It includes requirements relating to legal compliance, health and safety and labour conditions, freedom of association, the environment, ethics and conflict diamonds. This Code is available at www.signetgroupplc.com. The Supplier Code applies to suppliers and agents with whom Signet deals directly and Signet regularly discusses its implementation with them. Those vendors and agents are encouraged to ensure that the Supplier Code is communicated throughout the supply chain. During 2007 Signet wrote to all priority sources of diamond and gold jewellery highlighting the importance it places on a responsibly managed supply chain and reminding them of the expectations it places on them as suppliers to Signet. The letter concluded that in the Group’s opinion the most efficient way of addressing supply chain issues is on an industry wide basis and that the best and most effective way of doing that is through the CRJP. Signet also actively encourages participants to join the CRJP at industry events.
Most of the raw and processed materials for the merchandise sold by Signet are traded on commodity exchanges or through multiple brokers and traders thereby making the original source difficult to trace. Signet believes that SEE risks at the mining, trading and secondary

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processing phases of the supply chain are more effectively managed through co-operation within the industry. Signet therefore actively participates in the CRJP and Jewelers of America in considering what action can be taken to set SEE standards and influence matters throughout the supply chain. Jewelers of America has adopted a Statement of Principles relating to SEE matters and a programme to communicate those principles to its members as well as having developed a supplier code for the industry reflecting those principles.
Signet is also working, where appropriate, with other trade bodies such as the WDC and the Jewelers Vigilance Committee to be better able to respond to SEE issues at an industry level.
Conflict diamonds 
 One of the specific issues facing the Group and the diamond sector is conflict diamonds. These are diamonds sold by rebel movements to fund military campaigns. The Group is a member of the WDC which, together with Jewelers of America and other industry members has worked with the United Nations, government bodies, commercial interests and civil society to introduce an effective system for the certification of the source of uncut diamonds. This system, known as the Kimberley Process Certification System was formally adopted in November 2002 and came into operation during 2003. Details regarding the KPCS are available at www.kimberleyprocess.com. The WDC also introduced a system of warranties for the trade in polished diamonds whereby the seller confirms that the diamonds comply with the KPCS. Details concerning the WDC are available at www.diamondfacts.org.
Following the adoption of the KPCS and the system of warranties, Signet wrote to all of its trade diamond and diamond jewellery suppliers requiring them to supply the Group only with merchandise that complies with the KPCS and the WDC system of warranties. Signet’s systems, procedures and documentation have been developed so that only diamonds that are certified in accordance with the KPCS requirements or the WDC system of warranties on invoices, annual agreements, or both are accepted from trade suppliers. As the Group develops its rough diamond sourcing and manufacturing capabilities, it has enhanced its KPCS processes in accordance with the requirements relating to rough diamond sourcing.
The Group has also trained its buying staff with regard to the KPCS and the WDC system of warranties requirements and briefed its sales associates on its operation. The audit of these procedures as required by KPCS, described below, is undertaken, and the audit results have confirmed the Group’s compliance.
An internal audit of the Group’s rough diamond trading is undertaken annually. A programme is developed each year before the audit commences and additionally includes the verification of the WDC system of warranty statements. After the field work is completed a formal audit report is produced in a similar way to any other internal audit and any actions are logged in a management actions register for follow up and consideration by the Group’s Risk Management Committee at its quarterly meetings. At the same time any points from the previous audit will automatically be followed up when the next annual audit is performed. Ultimately a summary report is submitted and reviewed by the Audit Committee.
As part of the programme internal audit teams visit every store at least once a year and through Signet’s compliance programme ask questions related to conflict diamonds which are formulated in a very specific manner aimed at seeking verification, or otherwise, of designated aspects of compliance including training of store staff. These questions are updated periodically to reflect new processes adopted by stores in response to current events. A monthly report is also submitted to the divisional executive committees on compliance levels of stores and responses to customer questions on conflict diamonds, so that any corrective action that may be required can be taken in a timely manner.
The internal audit results confirmed the Group’s compliance with KPCS and the system of warranties.
As a result of the rough diamond sourcing initiatives during 2006/07 the Group engaged a third party to review its systems for compliance with the requirements of the KPCS. Although Signet was not required to do so, the same third party was also engaged to review its compliance with the WDC system of warranties for polished stones and Signet’s internal training procedures and practices at both its US divisional office and stores.
To date a third party review of systems for compliance with the requirements of the KPCS has only been undertaken in the US division as that is where rough diamond sourcing has been carried out. In the UK, in addition to the implementation of management’s own processes, including internal audit assessments, an exercise to assist the UK division to evaluate its controls with regard to the WDC System of warranties applicable to polished diamonds in the UK, has been undertaken with a third party.
In February 2007, Amnesty International and Global Witness released the results of their International jewellery retail industry survey. The survey questioned 37 top retailers in the US and 42 in the UK. Signet was cited as an industry leader in terms of its processes for implementation of the WDC system of warranties due to its robust auditing processes.
The US division also keeps its systems for compliance with the US Patriot Act under regular review, updating its procedures where necessary.
As of November 2007, the Kimberley Process had 48 members, representing 74 countries, (with the European Community and its Member States counting as an individual participant) and accounted for approximately 99.8% of world diamond production. A further six countries affirmed their intention to join the Kimberley Process, while five more have all expressed their interest in future participation.
Since the formal adoption of the KPCS in November 2002, annual plenary meetings have been held to assess progress and consider additional steps to assist in enhanced implementation. At the fifth annual plenary in 2007 in Brussels, the Kimberley Process was further consolidated. The plenary noted that all 46 recommendations of the three year review that had been accepted in 2006 were either completed or well under way. These included the key issues of funding and resource requirements; further analysis; government oversight of industry; and the treatment of illegal shipments. Participants were asked to ensure stronger government oversight of rough diamond

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 	 	Social, ethical & environmental matters (continued)	
 
trading and manufacturing. The Brussels Declaration on internal controls of participants with rough diamond trading and manufacturing capabilities which gives guidance on controls for record keeping, spot checks of trading companies, physical inspections of imports and exports and maintenance of verifiable records of rough diamond inventories was endorsed. Greater transparency has also been brought to the KPCS through the publication of diamond production and trade statistics, the production of a compendium of KPCS rules and decisions and the upgrading of the KPCS website. During 2007, the KPCS Working Group on Monitoring, completed the first round of peer review visits. A second round of review visits has now been launched, with a visit to Zimbabwe. The KPCS publicly released global statistics for the first time in 2007 and posted them on the KPCS website. More detailed data will be released in 2008. The plenary also approved a field visit plan for artisanal/alluvial producers and to improve internal controls and enhance local community involvement.
Industry initiatives 
 As already stated above Signet believes it can be most effective in influencing improvements in the supply chain by working together with other industry representatives. One such industry initiative where Signet is playing a leading role is the CRJP.
The Council for Responsible Jewellery Practices
 The CRJP is an industry group representing the entire length of the diamond and gold jewellery industry supply chain from the mine to retail. More information is available on the CRJP website (www.responsiblejewellery.com).
In 2004 Signet was one of the signatories to a Statement of Intent that formed the basis of an agreement for further co-operation to promote increased consumer confidence and integrity in diamond and gold jewellery by promoting responsible business practices throughout the industry. As a result, during 2005, the CRJP was formed as a not for profit organisation whose members are participants in all aspects of the diamond and gold jewellery industry.
The CRJP for the first time seeks to bring together all participants of every aspect of the diamond and gold supply chain from mining to retail to promote responsible business practices. The CRJP aims to maintain consumer confidence in diamond and gold jewellery products and the trust of all interested stakeholders in their industry. The CRJP believes that a co-ordinated worldwide industry approach to improving business practices will provide increased clarity to the diamond and gold jewellery industry and be most effective in implementing the industry standards necessary to maintain consumer confidence and the integrity of the product.
The CRJP mission statement is to promote responsible practices relating to business ethics, social, human rights, and environmental performance throughout the diamond and gold jewellery supply chain, from mine to retail. In accordance with its mission the CRJP has developed a Responsible Practices Framework which consists of:

•	The Mission Statement: High Level Introduction to the purpose;  	
•	The Principles: Fundamental ethical, social, human rights and environmental standards;  	

•	Code of Practices: Detailed provisions under the Principles;  	
•	Guidance Documents: An overview of the content, processes and steps for implementing the Responsible Practices Framework; and an introduction and guidance on each of the issues to be monitored under the Code of Practices; and  	
•	Assessment Tools: mapping, centralisation and risk assessment, self assessment and monitoring workbook.  	
The CRJP will endeavour to implement its mission statement and, seek to reinforce confidence in the diamond and gold jewellery supply chain by:

•	the introduction of its Responsible Practices Framework, that will define the ethical, social and environmental standards according to which all members commit to conduct their business;  	
•	making it a condition of membership that members apply the Responsible Practices Framework through an implementation model the key feature of which will be independent third-party monitoring of member organisations from mine to retail;  	
•	working with industry participants to advise on business responsibility issues as they arise and by offering guidance on the use of the Responsible Practices Framework to implement responsible business practices;  	
•	promoting awareness and understanding of key ethical, social and environmental business responsibility issues by working with all stakeholders including, but not limited to, industry participants, trade organisations, governments, and civil society representatives;  	
•	acting as an advocate for business responsibility within the industry and developing initiatives to address ethical, social and environmental challenges through publicly and privately financed projects;  	
•	working with stakeholders and industry participants to continuously improve conformance with the standards and processes set out above and ensuring that they are relevant and achievable, while addressing key ethical, social and environmental challenges with due regard to the business objectives of the industry;  	
•	encouraging members to promote the adoption of the Responsible Practices Framework amongst their business partners; and  	
•	seeking to be inclusive and extending the opportunity for membership throughout the industry.  	
The CRJP remains dedicated to the objective of reinforcing consumer confidence in the diamond and gold supply chain. The Group believes it is in this forum that it can be most effective in considering environmental and supply chain issues and where, together with other industry constituents, it can more successfully promote responsible business practices in order to reinforce customer confidence and the integrity of the product. From an initial membership of fourteen companies there are now approximately eighty companies encompassing all aspects of the supply chain from the mining companies to retailers. A key membership requirement of the CRJP will be an independent assessment of compliance with the Code of Practices (in accordance with the Responsible Practices Framework) which was adopted after extensive consultation, in September 2006. The CRJP is currently developing the implementation system for the Responsible Practices Framework which is expected to be launched during the course of 2008/09. In anticipation of and in preparation for this assessment the Group in progressing its corporate responsibility

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agenda developed a self-assessment process against the Code of Practices during 2007, the results of which were favourable.
The Diamond Development Initiative 
 The Diamond Development Initiative aims to find sustainable methods to ensure that alluvial diamonds produced by artisinal methods are mined and distributed for the benefit of local communities and governments. Signet has contributed to a specific project of this initiative and continues to support it.
Madison Dialogue 
 The Madison Dialogue is a US based cross-sector initiative in which Signet participates. It promotes communication and collaboration within the jewellery sector among companies, both retail and miners; industry bodies such as Jewelers of America and CRJP; non-governmental groups and other interested parties. It seeks to encourage:

•	best practices;	
•	sustainable economic development; and	
•	verified sources of responsible gold, diamonds and other minerals.	
Initiative for Responsible Mining Assurance
The Initiative for Responsible Mining Assurance (“IRMA”) is working to develop and establish a voluntary system to independently verify compliance with environmental, human rights and social standards for mining operations. It seeks to build on existing research, tools, and initiatives including the Framework for Responsible Mining, the ICMM Sustainable Development Framework, the Global Reporting Initiative and research conducted by the International Institute for Environment and Development, the Extractive Industries Transparency Initiative, the World Bank and the Mining Certification Evaluation Project. IRMA participants include mining companies, jewellery retailers, non-governmental organisations and trade associations including the CRJP and Jewelers of America, both of which represent Signet. It is hoped that IRMA will provide standards and an independent verification framework for mining operations that will be complementary to the CRJP Code of Practice.
Environment
The direct environmental impact of Signet’s operations is considered to be relatively low compared to many business sectors and to other retailers. An environmental impact review confirmed that:

•	jewellery has a very long life and is highly recyclable. Recycling takes place in respect of trade-ins, obsolete inventory, used watch batteries and certain packaging;	
•	jewellery and watches have an extremely high value to weight ratio and value to volume ratio making transportation through the supply chain relatively low impact. The Group makes use of third party distributors and reusable containers for merchandise distribution;	
•	the Group occupies relatively little space compared to other retailers of a similar market capitalisation and its sales density is above the jewellery sector average and, therefore, the Group has a smaller physical impact on the environment; and	
•	Signet’s supply chain originates with the producers of the raw materials with whom the Group presently has little direct relationship but it is recognised that the extraction of minerals has an environmental impact that requires careful management by mining companies.	
Notwithstanding the above, Signet takes its environmental performance seriously and seeks opportunities to improve it.
Climate change
Signet recognises that there is now broad international scientific consensus that man-made emissions of greenhouse gases are contributing to climate change, and that the economic costs of inaction far outweigh the costs of action. Further, the Group recognises that to combat climate change effectively action is required from all levels of society. Consequently, Signet is committed to playing a role in the transition to a lower carbon economy.
The Group has therefore begun the process of mapping climate change risks and opportunities to the business. The Group in 2007/08 continued to collect baseline data for energy usage and has expanded the greenhouse gas inventory to include emissions from business travel. This process helped to enhance environmental management systems and validate the previous year’s results as a basis for setting credible future performance targets. The Group continues to identify and implement initiatives to reduce energy usage.
During 2008/09 the Group will continue to collect and assess baseline data for energy use and greenhouse gas emissions and increase the scope of that collection process and review the methodology of the collection processes. The Group is focused on improving data to establish a more accurate emissions baseline. It is intended that this information will then be used to further develop the Group’s carbon reduction management plan, which will include performance targets.
The Group has been implementing eco-efficiency initiatives to reduce energy use since 2003 and continues to assess further opportunities to minimise resource use. Energy use in Signet’s retail stores accounts for a large proportion of its climate impact. To address this the Group is testing different energy efficient technology options for the building fabrics, lighting, heating and cooling and energy management in its stores. Over the past year the Group has undertaken a review of energy efficiency opportunities in the new model UK store designs and also undertook energy audits in representative stores in the US.
To ensure that the Group follows best practice in the management of its climate change impacts, it is currently assessing its position in relation to the climate change criteria introduced by FTSE4Good in February 2007. Although this criteria are currently not applicable to Signet because the business is not categorised as high or medium impact, Signet recognises the Index as a measure of best practice and continues to assess its position in relation to compliance.
Climate change and employee engagement
As the subject of climate change rises up the corporate agenda, driven by the gravity of the issue, increasingly it becomes important to enlist employees in the undertaking. This is especially so as there is evidence that employees themselves are showing a growing appetite to both better understand this complex issue and learn what they can do to reduce their own carbon footprints. As Signet seeks to strengthen its own response to the climate change challenge, primarily by focusing initially on the reduction of carbon emissions, in due course it intends increasingly to engage employees more directly on the subject of climate change. Therefore the Group is working to develop an employee engagement action plan specifically related to the issue of climate change.

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Social, ethical & environmental matters (continued)  	
 
SEE key performance indicators
 Environmental data has been collated and trend data across environmental performance indicators is now available from 2002 to 2006 at Group and divisional level, both as absolute and ratio values.
Environmental impact monitoring
 In 2007/08 the Group continued to collect baseline data for energy usage, greenhouse gas emissions, water consumption and waste disposal. This continuous monitoring has allowed analysis of trends across environmental key performance indicators. Between 2004 and 2006 the data shows a reduction in Group energy use, greenhouse gas emissions and water across a range of business metrics including turnover, shop floor area and employee numbers.
Resource efficiency initiatives
Work is being undertaken in both of the UK and US business divisions to identify opportunities to further reduce our energy consumption. The UK division is working with the Carbon Trust to gain expert advice on potential carbon reduction opportunities specific to its business. The Carbon Trust was set up by the Government in 2001 to accelerate the move to a low carbon economy by working with organisations to reduce carbon emissions and develop commercial low carbon technologies.
The US division has engaged a consulting firm to identify energy saving opportunities. In the US a detailed lighting analysis has been conducted and as part of a store and real estate project, obsolete ballasts have been replaced with new energy efficiency ballasts. A light standard, based on industry standards, has been set for the US divisional office and a lighting replacement programme began at the end of December 2006 for three buildings at the US divisional office and was completed during 2007/08. A number of other initiatives have also commenced relating to in-store energy efficiency programmes concerning light fixtures, reflective roofing materials and store signage. Moisture sensors have been installed in the irrigation system to conserve water use. The US divisional office recycling programme was also expanded,
Jewellery sector initiative
Further, the Group continues to work within the CRJP, the Jewelers of America, the Jewelers Vigilance Committee, the WDC, the Madison Dialogue and the Initiative for Responsible Mining Assurance and with other jewellery retailers in exploring ways in which the jewellery industry can use its influence to improve environmental performance related to mining.
Community affairs
Signet’s prime benefit to society is through the contribution it makes to the success and efficiency of the economies in which it operates, through the employment it generates both within the business and throughout its supply chain, the taxes it pays and the value it creates for shareholders. However both divisions have an active local community relationship programme and during 2007/08 various employment sourcing relationships with a number of community organisations relating to people who are disabled, being rehabilitated or suffering from development difficulties were further advanced. The US division received an award for being one of the top employers in the community for individuals with disabilities. Both divisions were
involved in sponsorships with hospitals and quality of life community events for patients with terminal illnesses. In the UK various employee policies were introduced, allowing carers’ to apply for a career break of up to six months and for employees to volunteer up to two days paid leave to help a registered charity or cause. A diversity champion has also been appointed in both the US and the UK.
During 2008/09 community partnership initiatives will continue, aimed at strengthening employment opportunities for disadvantaged citizens. Community affairs activities will be maintained with the Group being committed to the support of charitable organisations.
Charitable support
Signet believes it is best to give support to a small number of specific charities rather than fragment its charitable giving. In the US, support is primarily given to The United Way, St. Jude Children’s Research Hospital and Jewelers for Children, the industry’s charity. In the UK, the Group primarily supports the Princess Royal Trust for Carers. During the period the Group made provision for total charitable giving of $4,516,000 (2006/07: $3,379,000). This included direct charitable contributions of $734,000 (2006/07: $766,000), of which $222,000 (2006/07: $242,000) was in the UK and $512,000 (2006/07: $524,000) was in the US, and marketing initiatives on both sides of the Atlantic resulting in additional charitable contributions of $3,782,000 (2006/07: $2,613,000). Support is given to the management of Carer Centres operated by the Princess Royal Trust for Carers. Assistance is also given to organisations that help the disadvantaged into employment in the vicinity of the Group’s US administrative and distribution centre in Northeast Ohio, such as United Disabilities Services, Mature Services and the Urban League.
No political donations were made in the US or the UK by the Group in the period (2006/07: $nil).
Human rights
Signet supports the Fundamental Conventions of the International Labour Organisation and the UN Declaration of Human Rights. The Group encourages support and respect for the protection of human rights within its sphere of influence. The Supplier Code sets out the Group’s expectation that suppliers should respect the Fundamental Conventions of the International Labour Organisation and the UN Declaration of Human Rights. Signet is working at a senior executive level to address human rights in the jewellery supply chain on an industry wide basis, through the CRJP described above.

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Directors’ remuneration report	 	
 
Information contained in sections and figures marked ß has been audited.
The role of the Remuneration Committee
 The Remuneration Committee’s role is to set the remuneration policy for executive directors and other senior executives and to ensure that they are fairly rewarded for their individual contributions to Group performance, having due regard for the interests of shareholders, the financial and commercial health of the Group and pay and conditions throughout the Group. It is also the role of the Committee to ensure that the Group’s remuneration policies remain competitive.
All members of the Committee are independent without any personal financial interest (other than as shareholders) in matters decided by the Committee, other than Sir Malcolm Williamson who takes no part in any discussion relating to his own remuneration. No executive director or senior manager is involved in determining their own remuneration.
The Remuneration Committee sets the remuneration of the Chairman of the Board and of the Group Chief Executive. The remuneration of the other executive directors and the Group Company Secretary is set based on recommendations made by the Group Chief Executive after consultation with the Chairman. The Committee also monitors the remuneration of certain other senior executives and sets performance targets. Where executive directors are involved in assisting the Remuneration Committee, care is taken to recognise and avoid possible conflicts of interest.
The Remuneration Committee regularly uses external professional advice and makes use of competitive market surveys conducted independently in both the US, where more than 70% of sales and profit are generated, as well as in the UK. The Committee has retained Towers Perrin as advisers and they are not retained by the Group in any other capacity. Advice on legal aspects of remuneration is provided by Herbert Smith LLP (in the UK) and Weil, Gotshal & Manges (in the US). These firms also provide general legal advice to Signet.
The remuneration of the non-executive directors is not within the remit of the Remuneration Committee. This is determined by the Chairman and the executive members of the Board after consideration of, among other factors, external comparisons, the time commitment and the responsibilities of the non-executive directors. The Remuneration Committee consists of Robert Blanchard (Chairman), Robert Walker, Russell Walls (until 3 March 2008), Dale Hilpert (with effect from 3 March 2008), Lesley Knox (with effect from 6 May 2008) and Sir Malcolm Williamson. The Committee met eight times during 2007/08 with full attendance at all meetings.
The Remuneration Committee’s terms of reference are available on request from the Group Company Secretary and on the Group’s website.
Remuneration principles
 The Remuneration Committee believes that to be effective, remuneration policy must be based on sound, clear principles which are well understood and recognise the long term interests of the Group, its shareholders and employees. The Remuneration Committee, after consultation with shareholders, formally adopted the following six principles which have been the basis for all remuneration decisions since 2002:

(i)	Signet’s primary business objective is to deliver results which should consistently outperform the average of the industry sector.	
 	 	
(ii)	It is recognised that to consistently deliver above industry average performance Signet will need to retain, and where necessary attract, executives of well above industry average ability and leadership potential.	
 	 	
(iii)	It is also recognised that to retain, or recruit, senior executives of this calibre, the Group will be required to provide above industry average remuneration.	
 	 	
(iv)	Therefore, Signet’s executive directors and other senior executives should be remunerated in a range beginning with the 51st and ending with the 75th percentiles of industry total remuneration, based on relevant surveys of relevant companies appropriate to the executive’s position and geographic location. The remuneration of each executive within this range will be based on performance (both of the Group and the individual), potential (i.e. the executive’s potential to grow in responsibility and performance), and scarcity (i.e. the availability of candidates to replace the executive should he/she leave the Group).	
 	 	
(v) 
 	Total remuneration for executive directors and other senior executives should be highly geared towards performance with the proportion of “at risk” pay increasing according to: a) the level of performance achieved, and b) the seniority of the executives and their ability to influence results. Excluding pension contributions, the provision of a company car and private health insurance, there should only be one element of guaranteed remuneration: base salary. The performance related portion of total remuneration should separately reward short term performance (through the annual bonus) and long term performance (through share options and Long Term Incentive Plan Awards).	
 	 	
(vi) 	Surveys will be undertaken on a regular basis to ensure that total remuneration packages remain in the percentile range described in (iv) above. Recognising that more than 70% of the Group’s sales and profits are generated in the US and that significant remuneration differences exist between the US and the UK markets, separate surveys are conducted in each country.	
The components of total remuneration are:
(a) Base salary and other benefits
The base salary of each senior executive reflects the size and scope of his/her responsibilities and is reviewed annually, based upon individual performance, experience, surveyed competitive data and trends and geographic location of each position as well as the movement of base pay in the Group.

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 	 	Directors’ remuneration report (continued)  	
 
(b) Annual bonus plan 
 Annual bonus targets are set by the Remuneration Committee each year after considering the Group’s current business plans. There is a maximum bonus level set each year on such awards, which is equal to twice the target level, and a threshold performance below which no payments are made.
(c) Share option plans 
 The Remuneration Committee believes that an executive share option plan is an appropriate and necessary element of remuneration in order to execute the remuneration principles set out on page 67, and is an effective tool to incentivise executives to deliver the long term performance needed to generate strong returns to shareholders.
The Company operates the following executive share option plans: the Signet Group plc 1993 Executive Share Option Scheme (the “1993 Scheme”) under which no further options may be granted but existing options are exercisable until the scheme expires in 2013. In 2003 new plans were introduced replacing the 1993 Scheme and consist of: the Signet Group plc UK Inland Revenue Approved Share Option Plan 2003; the Signet Group plc International Share Option Plan 2003; and the Signet Group plc US Share Option Plan 2003 (the “2003 Plans”). Further details of the plans and the applicable performance conditions are set out on page 71.
It is the policy of the Remuneration Committee that all employees, including directors, who satisfy certain qualifying conditions, should have the opportunity to participate in the equity of the Company. This is achieved through a savings-related share option plan, for which invitations are normally made annually. Under the relevant legislation the exercise of these share options is not subject to performance criteria.
(d) Long term incentive plan 
 The Remuneration Committee believes that in order to execute the principles discussed above and to encourage executive directors, and other senior executives, to achieve stretching long term financial objectives set by the Committee, it is appropriate to operate a long term incentive plan. The policy is to make annual awards expressed as a percentage of salary with vesting dependent on the achievement of challenging performance conditions set by the Committee at the time the awards are made. Further details of the long term incentive plan and the applicable performance conditions are set out on page 72.
(e) Performance criteria 
 The Remuneration Committee considers it to be part of its role to carefully review proposed measures and targets to ensure that they will effectively motivate management and drive the creation of shareholder value. Annual bonuses need to be reviewed regularly to ensure that they remain appropriate and clearly aligned with business strategy and objectives and that the targets are set at a level that is stretching but not out of reach.
During the course of the last year the Remuneration Committee has become increasingly aware that whilst financial performance should represent the majority of the target, it does not reflect a company’s performance in its entirety and therefore other measures which also support the business goals should be included.
The choice of performance measures should be made in the context of the Group’s business strategy and reflect the Group’s particular circumstances and be related to overall corporate performance.
The Remuneration Committee believes that where performance criteria are used they should be: easily understood; be directly linked to the performance of the Group or the relevant business unit; be directly influenced by management’s actions; be designed to incentivise profit growth significantly above the rate of inflation; incentivise the efficient use of capital; and, for long term awards be equity based. In assessing actual performance it is the Remuneration Committee’s policy to measure the results on the basis of constant exchange rates so that executives neither benefit from nor are penalised simply by exchange rate fluctuations over which they have no control. For 2005/06 and beyond performance has been calculated against previously reported results restated for IFRS.

(f)	Pension	
(i)	UK executive directors	
UK based executive directors (the Group Finance Director and the Chief Executive of the UK division) are members of the UK Group Scheme, which is a funded, HMRC registered, final salary, occupational pension scheme with a separate category of membership for directors. Pensionable salary is the member’s base salary, excluding all bonuses.	
The main features of the directors’ category are:

(i)	a normal pension age of 60;	
 	 	
(ii)	pension at normal pension age of two-thirds of final pensionable salary, subject to completion of 20 years’ service;	
 	 	
(iii)	life assurance cover of four times pensionable salary; and	
 	 	
(iv)	spouse’s pension on death.	
All UK Group Scheme benefits were, until 5 April 2006, subject to Inland Revenue limits. Where such limitation was due to the Inland Revenue earnings cap the Signet Group Funded Unapproved Retirement Benefit Scheme (the “FURBS”) was, until April 2006, used to supplement pension benefits. This was a defined contribution arrangement.
As a result of the changes to pension taxation in the UK from 6 April 2006 the Remuneration Committee agreed that pension provision through the UK Group Scheme should continue broadly as before. However members should not benefit from a windfall gain through the removal of existing limits, and therefore a scheme specific earnings cap was maintained equivalent to the previous earnings cap, increased by RPI annually. As the tax treatment of the FURBS and the other advantages of such a funding scheme have been eroded, the Group has ceased paying contributions to the FURBS. In substitution a supplement is paid to the member on the same basis as with other elements of remuneration: on an individual basis and in accordance with the remuneration principles. After review the Remuneration Committee agreed that it was necessary to increase the supplement paid to executive directors in order to achieve the appropriate

68	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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positioning within the percentile ranges forming part of the remuneration principles. The Remuneration Committee has therefore taken the first steps to redress that balance during 2007/08. The Group will not compensate members for any increase in taxation that they may face as a result of the changes and members will not be protected by the Group from the consequences of the changes in taxation, but will be provided with a cash supplement in lieu of pension accrual once members reach the Lifetime Allowance limit set by the new legislation if they choose to exercise this option. The UK Group Scheme does allow for the new range of flexibility in pension arrangements without additional cost or administrative burden and for example, the new flexibility on tax-free cash has been incorporated.
(ii) US executive directors
In the US there are two savings vehicles by which provision for pension payments is made: the Sterling Jewelers Inc. 401(k) Retirement Savings Plan (the “401(k) Plan”) and the Deferred Compensation Plan (the “DCP”). These are defined contribution arrangements.
In the US division the primary retirement vehicle is the US company sponsored 401(k) Plan which is a qualified plan under Federal guidelines. The company matches employee contributions to the 401(k) Plan at 25% of an employee’s contribution up to a maximum of 6% of an employee’s basic salary. Under Federal guidelines the 401(k) Plan contributions by senior management may be reduced based on the participation levels of lower paid employees. Consequently, in a similar way to other US companies, a supplemental plan, the DCP, has been established for senior management to assist with pre-tax retirement savings.
The DCP, which was established in 1996 as an unfunded non-qualified plan under Federal guidelines, is therefore considered to be an important savings vehicle in addition to the 401(k) Plan. The employer makes a matched contribution to the DCP equal to 50% of an employee’s contribution up to a maximum of 10% of the individual’s basic salary and bonus.
The Group Chief Executive has pension benefits provided via the 401(k) Plan and the DCP. The DCP rules allow for individual contractual matching arrangements without any effect to its tax beneficial status and at present the only contractual contribution matching arrangement is with the Group Chief Executive which provides for a contribution equal to 20% of basic salary without any deferral being required.
The Chief Executive of the US division is a member of the 401(k) Plan and the DCP. The DCP provides a contribution on a matched basis equal to 50% of the maximum of 10% of base salary and bonus.
(g) Other policy matters
 Apart from remuneration itself, there are several other policy matters which concern the Remuneration Committee.
These are:
(i) Companies used for comparison
 To faithfully execute the remuneration principles discussed on page 67, and to ensure that the executives are properly compensated relative to respective competitive environments, the Remuneration Committee considers comparative data from a range of companies from both within and outside the retail sector. These companies are chosen on the basis of their turnover, market capitalisation, profits, number of employees and the complexity and geographic spread of their operations.
(ii) Service contracts
 It is the Remuneration Committee’s policy that the contracts of executive directors should be on a rolling basis with the notice period to terminate by either party not exceeding one year. Should it be necessary to grant a longer period of notice in order to recruit externally, this will be reduced to a maximum of one year after an initial period. No executive director has a contract exceeding one year.
(iii) Early termination
 Although the circumstances of early termination will vary, only in very exceptional circumstances will explicit terms relating to compensation for early termination be included in contracts for directors. Where no explicit compensation terms are included, departing directors or senior managers are expected to mitigate their loss.
(iv) External appointments
 The Group recognises the benefits to the individual and to the Group when executive directors also act as non-executive directors of companies not associated with Signet. Subject to certain conditions, unless otherwise determined by the Board, executive directors may accept one appointment as a non-executive director of another company and may retain any fees paid for such service. Mr Burman was appointed a non-executive director of Yankee Holding Corp. in October 2007.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	69	

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 	 	Directors’ remuneration report (continued)	
 
Directors’ remuneration
Directors’ emoluments ß
 Details of directors’ emoluments for the year to 2 February 2008 were as follows:

 	Basic salary or fees	 	Benefits (1)	 	Short term bonuses	 	Total	 	
																	
 	2008	 	2007	 	2008	 	2007	 	2008	 	2007	 	2008	 	2007	 	
 	$000	 	$000	 	$000	 	$000	 	$000	 	$000	 	$000	 	$000	 	
																	
Chairman:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sir Malcolm Williamson (4)	427	 	271	(2)	–	 	–	 	–	 	–	 	427	 	271	 	
James McAdam (3)(4)	–	 	238	 	–	 	26	 	–	 	–	 	–	 	264	 	
																	
Executive:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Robert Anderson (4) UK Chief Executive	653	 	564	 	58	 	51	 	–	 	241	 	711	 	856	 	
Walker Boyd (4) Group Finance Director	840	 	729	 	45	 	39	 	–	 	356	 	885	 	1,124	 	
Terry Burman Group Chief Executive	1,559	 	1,545	 	109	 	94	 	–	 	1,418	 	1,668	 	3,057	 	
Mark Light US Chief Executive	785	 	724	 	38	 	36	 	–	 	354	 	823	 	1,114	 	
																	
Non-executive:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Robert Blanchard	109	 	96	 	–	 	–	 	–	 	–	 	109	 	96	 	
Dale Hilpert	92	 	87	 	–	 	–	 	–	 	–	 	92	 	87	 	
Lesley Knox (4)(5)	6	 	–	 	–	 	–	 	–	 	–	 	6	 	–	 	
Brook Land (4)	117	 	105	 	–	 	–	 	–	 	–	 	117	 	105	 	
Robert Walker (4)	92	 	87	 	–	 	–	 	–	 	–	 	92	 	87	 	
Russell Walls (4)	109	 	96	 	–	 	–	 	–	 	–	 	109	 	96	 	
																	
Total	4,789	 	4,542	 	250	 	246	 	–	 	2,369	 	5,039	 	7,157	 	
																	
(1)	Benefits incorporate all benefits, other than pension benefits, arising from employment by the Group, which in the main relate to the provision of a company car and private health insurance and in the case of Mr. Burman also includes spousal travel and life assurance.	
(2)	Sir Malcolm Williamson was appointed Chairman in June of fiscal year 2006/07.	
(3)	James McAdam retired as a director on 9 June 2006. Prior to his retirement, his basic salary was £350,000 per annum. On his retirement from the Company, Mr. McAdam remains a member of the Signet Health Care Scheme but he fully reimburses the Company for the premium paid on his behalf.	
(4)	Sir Malcolm Williamson, Messrs. Anderson, Boyd, Land, McAdam, Walker, Walls and Ms. Knox had their emoluments specified and paid in pounds sterling and an average exchange rate of US$2.00 was used (2006/07:US$1.88).	
(5)	From Ms. Knox’s appointment on 9 January 2008.	
 	
The figures above represent emoluments earned as directors during the relevant financial year. Such emoluments are paid in the same financial year with the exception of bonus payments, which are paid in the year following that in which they are earned.	
 	
(a) Salary and benefits
 The Group Chief Executive, the highest paid director, and the Chief Executive of the US division are US citizens residing in the US. Their remuneration packages are based on the execution of the Group’s remuneration principles in the context of the US market and are set and paid in US dollars. Similarly the remuneration packages of the Group Finance Director and the Chief Executive of the UK division are based on the execution of the Group’s remuneration principles in the context of the UK market and are set and paid in pounds sterling as they reside in the UK.
Details of the salaries received by executive directors are shown above.
The Remuneration Committee normally reviews the salary and benefits of executive directors annually. Although the Remuneration Committee’s normal review of percentile positioning would have resulted in much larger salary increases for all of the executive directors, the Remuneration Committee has agreed to their request that their base salary increases be capped this year. This reflects the difficult economic and trading conditions in both the US and UK, and
the resulting management decision to impose a salary cap on the organisation in order to better control costs. The Remuneration Committee respects this decision. However, as a result, the percentile positioning of all the executive directors will inevitably decline. This is of concern as the Group continued to achieve a superior operating performance for the jewellery sector. The Remuneration Committee will attempt to re-establish the appropriate percentile positioning for the executive directors as economic and trading conditions permit.
Following the 2008 annual reviews the Remuneration Committee increased the base salaries of the executive directors as follows: the Group Chief Executive from $1,575,000 to $1,622,250, the Group Finance Director from £425,000 to £437,750, the Chief Executive of the UK division from £330,000 to £349,800, the Chief Executive of the US division from $800,000 to $822,000. The Chairman of the Board receives a fee of £215,000 per annum which was increased from £200,000 upon the anniversary of his appointment as Chairman, in June 2007.

70	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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(b) Annual bonus plan
(i) Bonus plan 2007/08
As a result of the decline in Group pre-tax profit in 2007/08 no annual bonus was paid to the Group Chief Executive (target is 100% and potential maximum is capped at 200% of base salary) or to the Group Finance Director (target is 50% and potential maximum is capped at 100% of base salary).
As a result of the decline in divisional operating profit in 2007/08 no annual bonus was earned by the Chief Executive of the UK division (target is 50% and potential maximum is capped at 100% of base salary) or by the Chief Executive of the US division (target is 60% and potential maximum is capped at 120% of base salary).
(ii) Bonus plan 2008/09
 Annual bonus payment criteria for 2008/09 are based predominantly upon profit measures. However the Remuneration Committee believes it appropriate to also consider a broader approach linking bonus to measureable and quantifiable corporate goals of the executive directors using measures that are specific to their individual roles within the corporate strategy. After careful analysis to ensure that the measures are linked to the objectives of the individual directors, the executive directors have each been given specific goals upon which 25% of the total bonus capacity may be earned. These specific goals, which have been agreed for the Group Chief Executive, Group Finance Director and the Chief Executives of the UK and US divisions, include such quantifiable objectives as store openings and staff training. Other goals include the continuation as an industry leader in social environmental & ethical matters in areas concerning conflict diamonds and dirty gold. Succession planning is also included as one of the objectives of the Group Chief Executive.
The financial performance measure for the annual bonus plan for 2008/09 upon which 75% of the total annual bonus capacity may be earned will be based as in previous years on growth in profits. The specific targets for the US and UK divisions will be based upon 2007/08 divisional operating profit plus inflation, at which point 0% of maximum bonus is earned and then on a straight line basis up to 2007/08 divisional profit plus 12%, at which point 75% of maximum bonus is earned.
The bonuses for the Group will be calculated using the same formula as above but based on pre-tax profit. Pre-tax profit is calculated on a constant exchange rate basis and is earned on a straight line basis between pre-tax profit plus inflation, at which point 0% of maximum bonus is earned and pre-tax profit plus 12%, at which point 75% of maximum bonus is earned.
(c) Share option and long term incentive plans 
 Share option and long term incentive plan grants to directors are set out on pages 76 to 78.
(i) Executive share option plans
Shareholders gave approval in 2003 to the Signet Group plc
International Share Option Plan 2003, the Signet Group plc UK Inland Revenue Approved Share Option Plan 2003 and the Signet Group plc US Share Option Plan 2003 (the “2003 Plans”) which replaced the Signet Group plc 1993 Executive Share Option Scheme (the “1993
Scheme”) under which no further options may be granted (all together the “Executive Share Option Plans”).
Options granted under the Executive Share Option Plans that have passed the necessary performance conditions are normally only exercisable between three and ten years from the date of grant, after which the options lapse.
The conditions as they apply are set out below:
UK executive directors
 For UK executive directors the personal performance of participants will be assessed on each occasion that share option grants take place and will be reflected in the level of the individual awards. In addition, grants awarded to executive directors are subject to exercise conditions as follows:

Level of grant	Required annual rate of
compound growth in earnings
per share (1) above inflation (2)	 	
			
Up to 200% of base salary	+3%	 	
201% to 400% of base salary	+4%	 	
			
(1)	Normalised earnings per share as defined by the Institute of Investment Management and Research.	
(2)	Defined as the UK Retail Prices Index.	
US executive directors
 For US executive directors there is a pre-grant test based on both personal and corporate performance as described below. In addition grants awarded are subject to a post-grant exercise condition requiring that the annual compound growth in earnings per share be more than 3% above inflation.
UK and US executive directors
 For grants made to both UK and US executives performance will be measured initially over three years from the start of the financial year in which the award is made. For grants awarded up until 2005/06, performance may be retested in accordance with the retest provisions. For grants beginning with those awarded in 2006/07 all retesting in the measurement of performance target achievement has been eliminated.
All grants awarded below the main board from 2007/08 and beyond are not subject to performance based conditions for vesting.
Grants to executive directors
 Awards are based on principles 2(iv), 2(v), 2(vi) (set out on page 67), a comparative remuneration survey and a review of the performance of both the Group and the executive directors over the prior three years.
Before any share option grant is made to the US executive directors, the Remuneration Committee has to satisfy itself that the demanding pre-grant conditions have been achieved. This requires affirmation: (i) that the Group’s business performance has been superior to that of its industry sector; and (ii) that the US executive directors’ personal performances continue to be of the highest standard.
On the basis of continuing outperformance and acknowledged management achievements, the Remuneration Committee concluded that the Group Chief Executive and Group Finance Director continued

Signet Group plc Annual Report & Accounts year ended 2 February 2008	71	

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 	 	Directors’ remuneration report (continued)  	
 
to merit total remuneration towards the upper end of the range determined by the remuneration principles. Based on relevant surveys conducted, in both the US and the UK, this included a share option grant equivalent to four times base salary for the Group Chief Executive and a grant of options amounting to 120% of base salary for the Group Finance Director. Similarly, on the basis of survey data and performance the Chief Executives of the UK and the US divisions were awarded grants of options amounting to 80% and 160% of base salary respectively.
Scheme amendments to executive share option plans
 Certain provisions of the Executive Share Option Plans may be amended by the Board, although a number of basic provisions (and in particular most of the limitations on individual participation, the number of shares and the percentage of share capital that can be issued thereunder) cannot be altered to the advantage of the participants except with the approval of shareholders or in accordance with the adjustment provisions in the share option plans. In 2007 the Remuneration Committee approved an amendment to the Executive Share Option Plans to ensure compliance with Section 409A of the United States Internal Revenue Code of 1986, as amended, where appropriate.
As the pre-determined performance conditions relating to the options over shares that were granted in fiscal 2005/06 were not met none of the options vested in 2007/08. However they are subject to retest in 2008/09 and 2009/10. The retesting provisions were removed from all option grants with effect from those granted in fiscal 2006/07.
(ii) All employee share plans
 In 1998 the Group introduced an Inland Revenue approved savings related share option scheme for UK employees (the “Sharesave Scheme”), a US Section 423 Plan (the “Employee Stock Savings Plan”) and a savings related share option scheme for employees in the Republic of Ireland (the “Irish Sharesave Scheme”). These schemes give those employees with qualifying service the opportunity to participate in the equity of the Company, with the aim of aligning the interests of employees with those of shareholders. Shareholder approval will be sought to extend for an additional period of ten years the all employee share plans at the annual general meeting to be held in June 2008 as the existing plans would otherwise expire this year.
The options granted under the Sharesave Scheme and the Irish Sharesave Scheme are normally exercisable between 36 and 42 months from the date of the relevant savings contract. Options are granted under these schemes at a price approximately 20% below the middle market price of the shares on the London Stock Exchange on the dealing day prior to the date that employees are invited to participate in them.
The options granted under the Employee Stock Savings Plan are normally exercisable between 24 and 27 months from the date of grant. The options under this plan are granted at a price approximately 15% below the middle market price of the shares on the London Stock Exchange on the date of grant. The period of exercise and the discount allowed vary from the UK due to different legal regulations in the US.
(iii) Long term incentive plan
 Shareholders gave approval, in 2005, to the Signet Group plc 2005 Long Term Incentive Plan (“LTIP”) which was a replacement for the
Signet Group plc 2000 Long Term Incentive Plan, that expired in 2005 (together the “LTIPS”).
The LTIP provides for the Remuneration Committee to make long term incentive awards subject to performance targets. To the extent the performance targets are satisfied the participant will receive a combination of the grant of an option over shares in the Company and cash. The share options will normally be exercisable within ten years of the original award date.
In a similar way to the setting of performance targets for the annual bonus, and for the reasons already explained, the conditions have to be motivational, achievable and challenging in the context of the market conditions and therefore the targets for 2008/09 have been adjusted.
The performance conditions, which will be set by the Remuneration Committee at the beginning of each three-year performance period are based on:

•	the compound annual growth in profit before tax of the Group, or in operating profit of the relevant division as appropriate, above, a threshold inflation level; and  	
•	ROCE of the Group or relevant division as appropriate.  	
The LTIP does not allow retesting of the performance targets and allows only a pro-rated release of an award, where a participant leaves early for good reasons or there is a change of control. The performance targets must in any event be satisfied before any release is made in all cases.
In each case performance is measured over a fixed period of three successive financial years starting with the one in which the award is made. Nothing is payable under the award unless both minimum performance conditions are achieved. If the performance conditions are achieved the award will vest and its value will depend on the extent to which the minimum performance conditions are exceeded:

•	if Profit Growth exceeds the minimum threshold inflation level, the amount of the award will be calculated on a straight line basis from that level up to a specified inflection point, which for 2008/09 is 8%, at which point 37.5% of the award will vest, and then at an accelerated rate on a straight line basis up to the maximum level of award at 12%. This maximum is equal to a specified percentage of base salary at the time at which the award vests.  	
•	if the minimum threshold inflation level of Profit Growth is achieved but the maximum award has not been earned, then the award may be increased on the basis of the ROCE performance. In no event, however, can any such increase result in the applicable maximum award amount stated in the preceding paragraph being exceeded.  	
The table at the top of the next page shows the percentages and the inflection points which have been specified for the existing awards and indicates the relevant profits and ROCE to be used for measurement. The table in the middle of the next page shows the percentages of salary to be paid to the executive directors for exceeding the specified profit growth and the percentages of salary paid for every 0.5% ROCE exceeds the specified level.

72	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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LTIP performance criteria	 	 	 	 	 	 	 	 	
									
 	    2008/09 award	 	    2007/08 award	 	    2006/07 award	 	    2005/06 award	 	
 	Group	 	UK	 	US	 	Group	 	UK	 	US	 	Group	 	UK	 	US	 	Group	 	UK	 	US	 	
 	%	 	%	 	%	 	%	 	%	 	%	 	%	 	%	 	%	 	%	 	%	 	%	 	

Minimum performance for any vesting:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Profit measure	 	 	 	 	 	 	Profit growth in excess of threshold inflation level	 	 	 	 	 	 	 	
ROCE measure	15.4	 	26.4	 	14.2	 	19.8	 	31.4	 	18.7	 	20.1	 	28.2	 	19.3	 	23.2	 	42.2	 	19.4	 	
																									
Profit growth performance measure:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Profit growth rate inflection point	8.0	 	8.0	 	8.0	 	10.0	 	10.0	 	10.0	 	10.0	 	10.0	 	10.0	 	10.0	 	10.0	 	10.0	 	
Profit growth for maximum vesting	12.0	 	12.0	 	12.0	 	15.0	 	15.0	 	15.0	 	15.0	 	15.0	 	15.0	 	15.0	 	15.0	 	15.0	 	
																									
ROCE performance measure:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Specified ROCE required	16.4	 	27.4	 	15.2	 	20.8	 	32.4	 	19.7	 	21.1	 	29.2	 	20.3	 	24.2	 	43.3	 	20.4	 	

Executive directors performance criteria	 	
								
Profit growth	 	 	 	 	 	% Salary paid for profit growth	 	
	 																	
 	 	 	 	 	 	 	 	 	 	Robert	 	 	 	 	 	
 	 	Terry Burman	 	Walker Boyd	 	Anderson	 	Mark Light	 	
 	 																	
 	 	08/09	 	07/08	 	08/09	 	07/08	 	08/09	 	07/08	 	08/09	 	07/08	 	

Inflection point	 	59.25	 	59.25	 	28.9	 	28.9	 	25.5	 	25.5	 	37.5	 	37.5	 	
																		
Maximum vesting	158.0	 	158.0	 	77.0	 	77.0	 	68.0	 	68.0	 	100.0	 	100.0	 	

ROCE performance	 	% Salary for each 0.5% ROCE exceeds specified level	 	
	 																	
 	 	 	 	 	 	 	 	 	 	Robert    	 	 	 	 	 	
 	 	Terry Burman	 	Walker Boyd	 	Anderson    	 	Mark Light	 	
 	 																	
 	 	08/09	 	07/08	 	08/09	 	07/08	 	08/09	 	07/08	 	08/09	 	07/08	 	
																		
 	 	11.3	 	11.3	 	4.6	 	4.6	 	2.7	 	2.7	 	8.0	 	8.0	 	
																		
When the performance conditions have been satisfied, 50% of the amount which vests will be payable in cash and the other 50% will consist of the grant of an option to acquire shares in the Company, the number of shares in both cases being determined by using the middle market price on the day preceding the grant of the award. For the 2005/06, 2006/07 and 2007/08 awards, that share price was, 112.60p, 106.00p and 124.42p respectively. The participants can normally exercise their option at any time after vesting until the tenth anniversary of the grant of the award.
The share price for the awards was fixed following the announcement of the preliminary results.
As the pre-determined performance conditions relating to the LTIP awards made in fiscal 2005/06 were not met, none of the options vested in 2007/08 and none of the cash element was payable.

(d) Employee trusts
 The share option plans may be operated in conjunction with one or more Employee Share Ownership trusts (the Signet Group plc Employee Share Trust or the Signet Group plc 2004 Employee Share Trust (“together the ESOTs”)). The LTIPs operate in conjunction with the ESOTs which may be funded by the Group to acquire shares in the Company for the purposes of meeting the Company’s obligation to provide shares on the exercise of options.
The trustees of the ESOTs have waived their rights to any dividends declared on shares held in the trusts.
(e) Share scheme limits 
 The Executive Share Option Plans are subject to the following limits on the number of shares that may be issued:

(i)	the maximum number of shares that have been or may be issued pursuant to options granted under the executive share option plans and any other discretionary share option scheme adopted by the Company may not exceed 5% of the shares from time to time in issue in any ten year period;  	
 	 	
(ii)	the maximum number of shares that have been or may be issued pursuant to options granted under the executive share option plans and any other employees’ share scheme adopted by the Company may not exceed 10% of the shares from time to time in issue in any ten year period; and  	
 	 	
(iii)	the maximum of 171,376,839 shares (representing 10% of the issued share capital on 8 July 2003) may be issued pursuant to incentive options granted under the US Plan.	
In any ten year period not more than 10% of the issued share capital of the Company from time to time may in aggregate be issued or issuable pursuant to options granted under the All-employee Schemes or any other employees’ share schemes adopted by the Company.
The number of shares which may be issued or issuable pursuant to the LTIPs (including to the ESOTs), when aggregated with any shares issued or issuable by the Company in the preceding ten years under any

Signet Group plc Annual Report & Accounts year ended 2 February 2008	73	

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 	 	Corporate governance	

 	 	Directors’ remuneration report (continued)    	
 
employees’ share scheme, participation in which is at the discretion of the Board, is limited to 5% of the Company’s issued share capital from time to time. The number of shares which may be issued or issuable pursuant to the LTIPs (including to the ESOTs), when aggregated with all shares issued or issuable by the Company in the preceding ten years under any other employees’ share scheme, is limited to 10% of the Company’s issued share capital from time to time.
No more than 5% of the issued share capital of the Company may be held by the trustee of the ESOTs without prior approval of shareholders.
(f) Shareholding guidelines
Shareholding guidelines have been set for directors of the Group. The Group Chief Executive is expected to build a holding of shares equal to at least twice salary and the Group Finance Director and the Chief Executives of both the UK and US divisions to at least one times salary. Until these levels have been achieved, half of any post tax option gains under the 2003 Plans should be held in Signet shares. All non-executive directors are required to build a minimum holding of 10,000 shares within two years of appointment and maintain that holding whilst they remain a director of the Company.
The Group maintains an insider trading policy which among other things, prohibits the hedging of stock ownership positions by executive officers.
(g) Service contracts
The Group Chief Executive has a rolling service contract (dated 20 December 2000 and amended and restated in February 2008) with a US subsidiary with certain covenants given by Signet Group plc, which can be terminated on one year’s notice in writing by either party. The Group Finance Director has a rolling service contract (dated 14 June 1995 and amended on 15 May 2000) with the Company, which can be terminated on one year’s notice in writing by either party and which terminates on his 60th birthday.
The service contracts for the Group Chief Executive and the Group Finance Director provide for termination payments in the cases of early termination by the Group or in the event of certain changes of control. In order to facilitate recruitment, the Remuneration Committee determined at the time of recruitment that the particular provisions were necessary to secure the services of these executives. In these circumstances the amount of termination payments due to the Group Chief Executive would equal, in summary, the aggregate of (i) 100% of his base salary at the time of termination, (ii) 25% of his base salary in respect of pension and other benefits, (iii) his outstanding entitlement to a cash bonus under the annual bonus plan referred to on page 71 in respect of the proportion of the fiscal year prior to the effective date of termination, and (iv) a sum equal to a variable percentage (currently 68.6%) of the cash bonus to which he would have become entitled under the annual bonus plan during the notice period. If the Company reduces or eliminates the Directors’ and Officers’ liability insurance, although the Board has no intention of doing so, such that the Group Chief Executive does not have coverage which meets at least £100 million aggregate coverage limit and £50 million Side A aggregate dedicated coverage limits, then the Group Chief Executive may be permitted upon 90 days written notice to terminate his employment. In the event of such termination the Company will pay the Group Chief
Executive his base salary and short term bonus pro-rated to the date of termination. Entitlement to any share options or LTIP awards is governed by the rules of the relevant scheme.
The amount of termination payments due to the Group Finance Director in the case of early termination by the Group in the event of certain changes of control would equal, in summary, the aggregate of (i) his annual salary at the time of termination, (ii) the market value of the contractual benefits in kind (including any pension contribution) to which he would have become entitled during the following 12 months, and (iii) all payments to which he would have become entitled under the annual bonus plan during the same 12 month period.
The Chief Executive of the UK division has a rolling service contract (dated 1 March 2003) with a UK subsidiary which can be terminated on one year’s notice in writing by either party or terminates on his 65th birthday. In the case of early termination, the contract provides for salary to be paid in lieu of notice, or where notice has been given, for any balance of the notice period.
The Chief Executive of the US division has a rolling service contract (dated 26 April 2002 and amended and restated in August 2004, January 2006 and February 2008) with a US subsidiary. The Company may terminate the contract at any time by notice in writing. In the case of termination the Company is obligated to continue to pay salary for 12 months from the date of termination.
Entitlement to any share options or LTIP awards is governed by the rules of the relevant scheme, and these service contracts all contain confidentiality and non-competition clauses.
The Chairman has a letter of appointment (dated 19 June 2006), for a fixed term of three years. The appointment does not provide for compensation for loss of office. Each non-executive director has a letter of appointment from the Company.
The Board has adopted the best practice corporate governance approach of appointing non-executive directors on a staggered basis for a specific three year period albeit with the ability to renew such appointments for longer periods. Letters of appointment do not provide for compensation for loss of office.
The letters of appointment are dated as set out below:

Robert Blanchard	27 June 2007	
Dale Hilpert	27 June 2007	
Lesley Knox	9 January 2008	
Brook Land	27 June 2007	
Robert Walker	20 June 2006	
Russell Walls	20 June 2006	
The Chairman does not receive any pension provision. The Group Chief Executive and the Chief Executive of the US division are members of both the 401(k) Plan and the DCP. Contributions made by Signet’s US division in respect of the Group Chief Executive during the period totalled $3,375 ß (2006/07: $3,300 ß) and $310,100 ß (2006/07: $284,196 ß) respectively and those for the Chief Executive of the US division during the period totalled $3,375 ß (2006/07: $3,300 ß) and $74,090 ß (2006/07: $69,469 ß) respectively. Pension benefits in respect of the UK based directors are set out on the next page.

74	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Corporate governance	

 	 	
(h) Company pension
 Pension benefits for the UK based executive directors ß

 	Robert Anderson	 	Walker Boyd	 	
 	Chief Executive UK division	 	Group Finance Director	 	
											
 	2007/08	 	 	2006/07	 	2007/08	 	 	2006/07	 	
 	£	 	 	£	 	£	 	 	£	 	
											
Change in accrued benefits during the year (gross of inflation)	548	 	 	–	 	5,812	 	 	4,983	 	
Change in accrued benefits during the year (net of inflation)	(115	)	 	–	 	3,727	 	 	3,237	 	
Accrued benefits at the end of the year	17,548	 	 	17,005	 	59,286	 	 	53,474	 	
Transfer value of change in accrued pension (net of inflation)	n/a	 	 	n/a	 	56,227	 	 	41,892	 	
Transfer value of accrued benefits at the beginning of the year	189,799	 	 	201,054	 	698,295	 	 	662,639	 	
Transfer value of accrued benefits at the end of the year	237,833	 	 	189,799	 	894,794	 	 	698,295	 	
Change in transfer value of accrued benefits (1)	48,034	 	 	(11,255	)	196,499	 	 	35,656	 	
Group payments to the FURBS/supplement	44,300	 	 	38,380	 	94,900	 	 	55,880	 	
Life assurance contributions	686	 	 	521	 	1,418	 	 	539	 	
											
(1)	Calculated in accordance with the Actuarial Guidance Note GN 11.	
 
(i) Aggregate emoluments for the year to 2 February 2008
 The total emoluments for directors of the Company and officers of the Group (excluding amounts due under the LTIP), as listed on pages 51 to 52, for services in all capacities was $5,546,000 (2006/07: $7,641,000). The amounts due under the LTIP for directors of the Company and officers of the Group was $nil (2006/07: $727,000, restated to reflect the market value at vesting). Under the LTIP 50% of the amounts due are payable in cash and the other 50% consists of the grant of an option to acquire shares in the Company. Details of the directors’ emoluments are given on page 70.
Except as set out in tables (a), (b) and (c) on pages 76 to 79, or in the notes under these tables, no director nor any member of any director’s immediate family had an interest in, or was granted or exercised any right to subscribe for, shares or debentures of the Company or any subsidiary, nor did any such right to subscribe lapse during the financial year, nor, other than the interests of Sir Malcolm Williamson, was there any change between the end of the financial year and 8 April 2008 in the interests of any director of the Company disclosed to the Company under the provisions of Section 324 (duty of directors to disclose shareholdings in own company) as extended by Section 328 (extension of Section 324 to spouses and children) of the Companies Act 1985 and under the Disclosure and Transparency Rules nor in any right to subscribe for shares in, or debentures of, the Company.
At 3 February 2007, 2 February 2008 and 8 April 2008, according to the register kept by the Company under Section 325 of the Companies Act 1985 and under the Disclosure and Transparency Rules, the directors held interests in the shares of the Company as indicated in tables (a), (b) and (c) on pages 76 to 79. As explained on page 73 the value of the awards that vest under the LTIP depends upon the extent to which the performance conditions are met. The awards are also capped by reference to a percentage of the recipient’s base salary.
The Group currently operates the ESOT and the 2004 ESOT. Robert Anderson, Walker Boyd, Terry Burman, and Mark Light, at, 3 February 2007, 2 February 2008 and 8 April 2008, were, in common with all other employees of the Group, deemed to have an interest in the shares held by the ESOT. The ESOT held 2,633,908 shares on 3 February 2007, 1,719,951 shares on 2 February 2008 and 1,719,951 shares on 8 April 2008. The 2004 ESOT held nil shares on 3 February 2007, nil shares on 2 February 2008 and nil shares on 8 April 2008.
No director had been granted any specific interest in such shares. The Company’s register of directors’ interests, which is open to inspection at the registered office, contains full details of directors’ shareholdings and share options.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	75	

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 	 	Corporate governance	

 	 	Directors’ remuneration report (continued)  	
 
Directors’ interests in shares ß
 (a) Directors’ interests in share options ß

 	Number of shares under option	 	 	 	 	 	 	 	 	 	 	
 												 	 	 	 	 	 	 	
 	 	At	 	 	 	 	 	 	 	At	 	 	 	 	Date from	 	 	 	
 	 	3 February	 	 	 	 	 	 	 	2 February	 	 	Exercise	 	which	 	Expiry	 	
Director	 	2007	 	Granted	 	Forfeited	 	Exercised	 	2008	 	 	price  	 	exercisable (1)	 	date (1)	 	
																			
Robert Anderson (2)	(3)	232,558	 	–	 	–	 	–	 	232,558	 	 	75.25p	 	2.5.04	 	2.5.11	 	
 	(3)	160,416	 	–	 	–	 	–	 	160,416	 	 	120.00p	 	11.4.05	 	11.4.12	 	
 	(3)	322,188	 	–	 	–	 	–	 	322,188	 	 	82.25p	 	25.4.06	 	25.4.13	 	
 	(4)	251,685	 	–	 	–	 	–	 	251,685	 	 	111.25p	 	5.4.07	 	5.4.14	 	
 	(5)	35,452	 	–	 	–	 	–	 	35,452	 	 	£1 in total	 	15.4.04	 	4.5.11	 	
 	(6)	10,985	 	–	 	–	 	–	 	10,985	 	 	86.25p	 	1.1.08	 	30.6.08	 	
 	(4)	261,989	 	–	 	–	 	–	 	261,989	 	 	112.60p	 	12.4.08	 	12.4.15	 	
 	(5)	23,140	 	–	 	–	 	–	 	23,140	 	 	£1 in total	 	15.4.05	 	26.4.12	 	
 	(4)	221,586	 	–	 	–	 	–	 	221,586	 	 	111.92p	 	11.4.09	 	11.4.16	 	
 	(4)	–	 	212,184	 	–	 	–	 	212,184	 	 	124.42p	 	24.4.10	 	24.4.17	 	
 	(6)	–	 	12,765	 	–	 	–	 	12,765	 	 	75.20p	 	1.11.11	 	30.6.11	 	
														 	 	 	 	 	
Total	 	1,519,999	 	224,949	 	–	 	–	 	1,744,948	 	 	98.66p	(7)	 	 	 	 	
														 	 	 	 	 	
Walker Boyd (2)	(3)	611,842	 	–	 	–	 	–	 	611,842	 	 	57.00p	 	5.5.03	 	5.5.10	 	
 	(3)	179,401	 	–	 	–	 	–	 	179,401	 	 	75.25p	 	2.5.04	 	2.5.11	 	
 	(3)	225,000	 	–	 	–	 	–	 	225,000	 	 	120.00p	 	11.4.05	 	11.4.12	 	
 	(4)	397,435	 	–	 	–	 	–	 	397,435	 	 	97.50p	 	14.7.06	 	14.7.13	 	
 	(4)	444,943	 	–	 	–	 	–	 	444,943	 	 	111.25p	 	5.4.07	 	5.4.14	 	
 	(6)	10,985	 	–	 	–	 	–	 	10,985	 	 	86.25p	 	1.1.08	 	30.6.08	 	
 	(4)	466,252	 	–	 	–	 	–	 	466,252	 	 	112.60p	 	12.4.08	 	12.4.15	 	
 	(5)	68,182	 	–	 	–	 	(68,182)	(8)	–	 	 	£1 in total	 	–	 	–	 	
 	(4)	412,794	 	–	 	–	 	–	 	412,794	 	 	111.92	 	11.4.09	 	11.4.16	 	
 	(5)	61,407	 	–	 	–	 	(61,407)	(8)	–	 	 	£1 in total	 	–	 	–	 	
 	(5)	–	 	20,715	 	–	 	(20,715)	(8)	–	 	 	£1 in total	 	–	 	–	 	
 	(5)	–	 	409,901	 	–	 	–	 	409,901	 	 	124.42p	 	24.4.10	 	24.4.17	 	
 	(6)	–	 	12,765	 	–	 	–	 	12,765	 	 	75.2p	 	1.1.11	 	30.6.11	 	
														 	 	 	 	 	
Total	 	2,878,241	 	443,381	 	–	 	(150,304	)	3,171,318	 	 	97.03p	(7)	 	 	 	 	
														 	 	 	 	 	
Terry Burman (2)	(4)	3,807,426	 	–	 	–	 	–	 	3,807,426	 	 	$1.59	 	14.7.06	 	14.7.13	 	
 	(4)	3,129,267	 	–	 	–	 	–	 	3,129,267	 	 	$2.05	 	5.4.07	 	5.4.14	 	
 	(4)	3,193,395	 	–	 	–	 	–	 	3,193,395	 	 	$2.12	 	12.4.08	 	12.4.15	 	
 	(6)	5,170	 	–	 	–	 	–	 	5,170	 	 	$1.86	 	1.11.08	 	31.1.09	 	
 	(4)	2,936,060	 	–	 	–	 	–	 	2,936,060	 	 	$1.96	 	11.4.09	 	11.4.16	 	
 	(4)	–	 	2,530,119	 	–	 	–	 	2,530,119	 	 	$2.49	 	24.4.10	 	24.4.17	 	
 	(5)	–	 	62,354	 	–	 	(62,354)	(9)	–	 	 	$1 in total	 	–	 	–	 	
														 	 	 	 	 	
Total	 	13,071,318	 	2,592,473	 	–	 	(62,354	)	15,601,437	 	 	$2.20	(7)	 	 	 	 	

76	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Corporate governance	

 	 	

(a)	Directors’ interests in share options ß (continued)	
 	 	 	 	 	Number of shares under option	 	 	 	 	 	 	 	 	 	
 	 												 	 	 	 	 	 	
 	 	 	At	 	 	 	 	 	 	 	At	 	 	 	Date from	 	 		
 	 	 	3 February	 	 	 	 	 	 	 	2 February	 	Exercise	 	which	 	Expiry	 	
Director	 	 	2007	 	Granted	 	Forfeited	 	Exercised	 	2008	 	price	 	exercisable (1)	 	date (1)	 	

Mark Light (2)	(3)	 	290,191	 	–	 	–	 	–	 	290,191	 	$1.72	 	11.4.05	 	11.4.12	 	
 	(3)	 	472,476	 	–	 	–	 	(472,476)	(10)	–	 	$1.31	 	–	 	–	 	
 	(4)	 	329,267	 	–	 	–	 	–	 	329,267	 	$2.05	 	5.4.07	 	5.4.14	 	
 	(4)	 	339,032	 	–	 	–	 	–	 	339,032	 	$2.12	 	12.4.08	 	12.4.15	 	
 	(6)	 	5,170	 	 	 	–	 	–	 	5,170	 	$1.86	 	1.11.08	 	31.1.09	 	
 	(4)	 	572,889	 	 	 	–	 	–	 	572,889	 	$1.96	 	11.4.09	 	11.4.16	 	
 	(4)	 	–	 	514,055	 	–	 	–	 	514,055	 	$2.49	 	24.4.10	 	24.4.17	 	
 	(5)	 	–	 	77,737	 	–	 	(77,737)	(9)	–	 	$1 in total	 	–	 	–	 	
														 	 	 	 	 	
Total	 	 	2,009,025	 	591,792	 	–	 	(550,213	)	2,050,604	 	$2.15	(7)	 	 	 	 	
														 	 	 	 	 	
All options were granted to directors while they were directors apart from Messrs. Anderson and Light who were appointed as directors on 6 April 2005 and 12 January 2006 respectively. The performance conditions for grants made under the 2003 Plans are set out on page 71. The conditions set by the Remuneration Committee for the exercise of options granted under the 1993 Scheme were that for vesting to take place, a post inflation minimum growth in earnings per share of 10% over any consecutive three year period had to be achieved. Under the 2003 Plans, for vesting to take place, a post inflation minimum growth in earnings per share of 10% from a fixed base year applied over a three year period, or, only for the grants made in 2005, 12.55% over a four year period, or 15.92% over a five year period has to be achieved. The performance conditions were chosen as the Remuneration Committee believed them to be in line with market practice. These conditions have been met in respect of the options granted between October 1997 and April 2004; the performance criteria having been satisfied in each case over the first three year period following the grant of the options apart from the options granted in April and July 2003. The performance criteria for the options granted in April and July 2003 were satisfied in the fourth year of the grant. The performance criteria for the options granted in April 2005 have not been satisfied.The Black-Scholes option-pricing model fair value is given in note 27 on page 115 for options granted in the last three years.

(1)	The dates from which options are exercisable and the expiry dates are the dates that normally apply. Other dates apply in certain circumstances, such as an option holder ceasing to be employed. Options that have not already vested will only vest and become exercisable on the dates detailed subject to satisfaction of the specified performance criteria.	
(2)	See page 71 regarding awards made in 2008/09.	
(3),	(4), (5) and (6) The options marked (3) were granted under the 1993 Scheme, those marked (4) were granted under the 2003 Plans, those marked (5) were awarded under the Long Term Incentive Plan 2000 and those marked (6) were granted under the terms of the Sharesave Scheme or, in the case of Terry Burman and Mark Light, the Employee Stock Savings Plan.	
(7)	Weighted averages of the exercise prices per share for the options held at the year end.	
(8)	Exercised on 16 January 2008, when the market price was 60.75p.	
(9)	Exercised on 19 April 2007, when the market price was 124.25p.	
(10)	Excercised on 2 May 2007 when the market price was 125.24p.	
The aggregate amount of gains made by directors on the exercise of options during the year amounted to $1,096,865 (2006/07: $4,326,705).

Signet Group plc Annual Report & Accounts year ended 2 February 2008	77	

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 	 	Corporate governance	

 	 	Directors’ remuneration report (continued)  	

(b)	Directors’ interests in LTIPs ß	
 	 	
 	Awards subject to	 	Awards where the performance	 	 	 	 	 	 	 	
 	performance conditions	 	conditions have been satisfied (1)	 	 	 	 	 	 	 	
 						 						 	 	 	 	 	 	 	
 	 	 	Cash	 	 	 	Cash	 	 	 	Option	 	Cash and	 	Cash and	 	Expiry of		
 	 	 	portion	 	Option	 	portion	 	Option	 	portion	 	options total	 	options	 	award or	 	
 	Date of	 	(grant	 	portion	 	(grant	 	portion	 	(current	 	current	 	total	 	vested	 	
 	award	 	value)	(2)	(number)	(2)	value)	(3)	(number)	(3)	value)	(4)	value	(4)(5)	vested	(6)	option	 	
Director	 	 	$	 	 	 	$	 	 	 	$	 	$	 	$	 	 	 	
																			
Robert Anderson (7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2004/05 award (8)	5.4.04	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	
2005/06 award (8)	12.4.05	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	
2006/07 award (8)	28.4.06	 	207,638	 	94,174	 	–	 	–	 	–	 	361,254	 	–	 	–	(9)	
2007/08 award	24.4.07	 	221,034	 	90,178	 	–	 	–	 	–	 	347,167	 	–	 	–	(9)	
																	 	 	
Awards at end of year	 	 	428,672	 	180,352	 	–	 	–	 	–	 	708,421	 	–	 	 	 	
																	 	 	
Walker Boyd (7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2004/05 award (8)	5.4.04	 	–	 	–	 	–	 	–	 	–	 	–	 	95,361	 	–	 	
2005/06 award (8)	12.4.05	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	
2006/07 award (8)	28.4.06	 	299,588	 	135,878	 	–	 	–	 	–	 	526,828	 	–	 	–	(9)	
2007/08 award	24.4.07	 	322,341	 	131,510	 	–	 	–	 	–	 	506,285	 	–	 	–	(9)	
																	 	 	
Awards at end of year	 	 	621,929	 	267,388	 	–	 	–	 	–	 	1,033,113	 	95,361	 	 	 	
																	 	 	
Terry Burman (7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2004/05 award (8)	5.4.04	 	–	 	–	 	–	 	–	 	–	 	–	 	275,454	 	–	 	
2005/06 award (8)	12.4.05	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	
2006/07 award (8)	28.4.06	 	1,166,830	 	597,009	 	–	 	–	 	–	 	2,134,692	 	–	 	–	(9)	
2007/08 award	24.4.07	 	1,244,250	 	499,699	 	–	 	–	 	–	 	1,943,179	 	–	 	–	(9)	
																	 	 	
Awards at end of year	 	 	2,411,080	 	1,096,708	 	–	 	–	 	–	 	4,077,871	 	275,454	 	 	 	
																	 	 	
Mark Light (7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2004/05 award (8)	5.4.04	 	–	 	–	 	–	 	–	 	–	 	–	 	343,411	 	–	 	
2005/06 award (8)	12.4.05	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	
2006/07 award (8)	28.4.06	 	356,000	 	182,148	 	–	 	–	 	–	 	686,258	 	–	 	–	(9)	
2007/08 award	24.4.07	 	400,000	 	160,643	 	–	 	–	 	–	 	624,691	 	–	 	–	(9)	
																	 	 	
Awards at end of year	 	 	756,000	 	342,791	 	–	 	–	 	–	 	1,310,949	 	343,411	 	 	 	

All grants were made to directors while they were directors apart from Messrs. Anderson and Light who were appointed as directors on 6 April 2005 and 12 January 2006 respectively. The performance conditions relating to the awards are set out on page 73.	
(1)	In respect of the 2005/06 awards neither the Group nor the divisions achieved the required performance targets and therefore no awards vested for any of the participants.	
(2)	Assumes maximum performance conditions are satisfied and is calculated using their salary at 3 March 2008. For the cash portion an exchange rate of $1.97 has been used for Robert Anderson and Walker Boyd. Options are calculated using a share price at the time of grant in 2006 of 111.92p and 2007of 124.42p and in the case of Terry Burman and Mark Light exchange rates of $1.75 in 2006 and $2.00 in 2007.	
(3)	Calculated using a salary at 3 March 2008. Options are calulated using a share price and exchange rate at the time of grant in 2005 of 112.25p and $1.93 respectively. The LTIP payment is made in the year following the last year in respect of which the performance condition was set.	
(4)	Calculated using a share price as at 2 February 2008 of 71.00p.	
(5)	Cash portion plus option portion value at 2 February 2008. For awards where the level of performance is currently unknown, no payment, or a reduced payment may be made. In respect of awards where the performance is known the base salary may be different at the date of vesting.	
(6)	Vesting took place on 18 April 2007 and the cash portion was worth $46,540, $128,499 and $160,200 respectively, for Walker Boyd, Terry Burman and Mark Light. The option interest was over 20,715 shares for Walker Boyd, 62,354 shares for Terry Burman and 77,737 shares for Mark Light and are included in the table of directors’ interests in share options on pages 76 to 77. The share price on the day of vesting was 118.07p. For Walker Boyd an exchange rate of $1.997 was used. The Remuneration Committee confirmed that there was no entitlement earned under the LTIP by Robert Anderson.	
(7)	The Remuneration Committee approved grants of LTIP awards to Terry Burman (maximum of 158% of salary at vesting), Mark Light (maximum of 100% of salary at vesting), Walker Boyd (maximum of 77% of salary at vesting) and Robert Anderson (maximum of 68% of salary at vesting) on 7 April 2008.	
(8)	Awards at start of year.	
(9)	Expiry dates of awards will be known within 60 days after the announcement of the preliminary results for the last financial year in the performance period.	

78	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Corporate governance	

 	 	

(c)	Directors’ interests in shares ß	
 	 	 	 	 	 	 	
 	Number of shares		
							
 	At start	 	At end	 	At 8 April	 	
Director	of year	 	of year	 	2008	 	
							
Robert Anderson	20,185	 	20,907	 	20,907	 	
Robert Blanchard	10,010	 	10,010	 	10,010	 	
Walker Boyd	392,495	 	542,798	 	542,798	 	
Terry Burman	710,601	 	808,601	 	808,601	 	
Dale Hilpert	20,000	 	20,000	 	20,000	 	
Lesley Knox	–	 	30,870	 	30,870	 	
Brook Land	25,000	 	25,000	 	25,000	 	
Mark Light	–	 	76,454	 	76,454	 	
Robert Walker	19,308	 	19,308	 	19,308	 	
Russell Walls	10,000	 	30,000	 	30,000	 	
Sir Malcolm Williamson	28,605	 	173,999	 	187,375	 	

Share price 
The middle market price of a Signet share on the London Stock Exchange was 71.00p on 2 February 2008 and 122.25p on3 February 2007. During the 52 weeks ended 2 February 2008, the middle market prices on the London Stock Exchange ranged between a low of 54.25p and a high of 126.75p. On 8 April 2008 the closing middle market price was 61.50p.
Five-year historical TSR performance
Growth in the value of a hypothetical £100 holding over five years FTSE 350 Index (excluding Invest. Trusts) comparison based on 30 trading day average values

Total shareholder return (“TSR”)
 The graph below (left) shows the cumulative annual total return (share price movement and dividends) to shareholders of the Group since 2 February 2003 based on the 30 day average of value of the share price compared to the FTSE 350 index. This index was chosen as a suitable comparator as it is a major market index of which the Group is a member. Also shown on a similar basis on the graph below (right), is the Group’s performance compared to the FTSE general retail sector.
Five-year historical TSR performance
Growth in the value of a hypothetical £100 holding over five years FTSE general retailers index comparison based on 30 trading day average values

 
The Directors’ remuneration report was approved by the Board on 9 April 2008, and signed on its behalf by:
Robert Blanchard
 Chairman
Remuneration Committee

Signet Group plc Annual Report & Accounts year ended 2 February 2008	79	

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 	 	Corporate governance	

 	 	Statement of directors’ responsibilities in respect of the Annual Report & Accounts	
 
The directors are responsible for preparing the Annual Report & Accounts and the Group and parent company financial statements, in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent company financial statements for each financial year. Under that law the directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and applicable law and have elected to prepare the parent company financial statements in accordance with UK Accounting Standards and applicable law.
The Group financial statements are required by law and International Financial Reporting Standards as adopted by the European Union to present fairly the financial position and performance of the Group; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.
The parent company financial statements are required by law to give a true and fair view of the state of affairs of the parent company.
In preparing each of the Group and parent company financial statements, the directors are required to:

•	select suitable accounting policies and then apply them consistently;	
•	make judgments and estimates that are reasonable and prudent;	
•	for the Group financial statements, state whether they have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union;	
•	for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; and	
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business.	
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with relevant Companies legislation and regulations. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Report of the directors, Directors’ remuneration report and Corporate governance statement that comply with that law and those regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Duty of care and statutory safe harbour
The directors owe their duties to shareholders of Signet as a whole and undertake no duty of care to individual shareholders, other stakeholders or potential investors.
As a result of the “safe harbour” provisions introduced by section 463 of the Companies Act 2006, the directors shall not be subject to any liability to persons other than the Company resulting from reliance, by that person or another, on information contained in the Report of the directors’, the Directors’ remuneration report and any summary financial statements so far as derived from these reports.

80	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Corporate governance	

Corporate governance	 	
 	 	
Independent auditor’s report to the members of Signet Group plc	
 
We have audited the Group and parent company financial statements (the “financial statements”) of Signet Group plc for the 52 weeks ended 2 February 2008 which comprise the Group income statement, the Group and parent company balance sheets, the Group cash flow statement, the Group statement of recognised income and expense and the related notes. These financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Directors’ remuneration report that is described as having been audited.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
 The directors’ responsibilities for preparing the Annual Report & Accounts in accordance with applicable United Kingdom law and International Financial Reporting Standards as adopted by the European Union, and for preparing the parent company financial statements and the Directors’ remuneration report in accordance with applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice) are set out in the Statement of directors’ responsibilities on page 80. The directors have also presented additional information under US requirements.
Our responsibility is to audit the financial statements and the part of the Directors’ remuneration report to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Directors’ remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985 and, as regards the Group financial statements, Article 4 of the IAS Regulation. We also report to you whether in our opinion the information given in the Report of the Directors is consistent with the financial statements. The information given in the Report of the directors includes that specific information presented in the Annual Report & Accounts that is cross referred from the Business review section of the Report of the directors.
In addition, we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remumeration and other transactions is not disclosed.
We review whether the Corporate governance statement reflects the Company’s compliance with the nine provisions of the 2006 Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the Board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures.
We read the other information contained in the Annual Report & Accounts and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
 We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the Directors’ remuneration report to be audited. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the Directors’ remuneration report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Directors’ remuneration report to be audited.
Opinion
 In our opinion:

•	the Group financial statements give a true and fair view, in accordance with International Financial Reporting Standards as adopted by the European Union, of the state of the Group’s affairs as at 2 February 2008 and of its profit for the 52 week period then ended;	
•	the Group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation;	
•	the parent company financial statements give a true and fair view, in accordance with UK Generally Accepted Accounting Practice, of the state of the parent company’s affairs as at 2 February 2008;	
•	the parent company financial statements and the part of the Directors’ remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985; and	
•	the information given in the Report of the directors is consistent with the financial statements.	
KPMG Audit Plc
 Chartered Accountants, Registered Auditor
London, United Kingdom
 9   April 2008

Signet Group plc Annual Report & Accounts year ended 2 February 2008	81	

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 	 	Financial statements	

Consolidated income statement	
for the 52 weeks ended 2 February 2008	

									
 	52 weeks ended	 	53 weeks ended (1)	 	52 weeks ended (1)	 	 	 	
 	2 February 2008	 	3 February 2007	 	28 January 2006	 	 	 	
 	$m	 	$m	 	$m	 	Notes	 	
									
Sales	3,665.3	 	3,559.2	 	3,154.1	 	2	 	
Cost of sales	(3,264.8	)	(3,092.4	)	(2,729.4	)	 	 	
									
Gross profit	400.5	 	466.8	 	424.7	 	 	 	
Administrative expenses	(158.0	)	(142.1	)	(133.3	)	 	 	
Other operating income	108.8	 	91.5	 	83.3	 	4	 	
									
Operating profit	351.3	 	416.2	 	374.7	 	2,3	 	
Finance income	11.0	 	18.8	 	6.5	 	5	 	
Finance expense	(28.8	)	(34.2	)	(20.5	)	5	 	
									
Profit before tax	333.5	 	400.8	 	360.7	 	 	 	
Taxation – UK	(39.8	)	(27.9	)	(23.2	)	8	 	
             – US	(78.5	)	(106.9	)	(102.1	)	8	 	
									
Profit for the financial period	215.2	 	266.0	 	235.4	 	 	 	
									
Earnings per share – basic	12.6	c	15.4	c	13.6	c	9	 	
                            – diluted	12.6	c	15.3	c	13.5	c	9	 	
									
(1)	Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 5 February 2007. See Note 1(a) on page 86.	
All of the above relate to continuing activities attributable to equity holders of the Company.

82	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

 	 	
Consolidated balance sheet	 	
at 2 February 2008	 	

							
 	2 February 2008	 	3 February 2007	(1)	 	 	
 	$m	 	$m	 	Notes	 	
							
Assets:	 	 	 	 	 	 	
Non-current assets	 	 	 	 	 	 	
Intangible assets	52.6	 	46.3	 	11	 	
Property, plant and equipment	502.4	 	484.8	 	12	 	
Other receivables	34.8	 	29.2	 	14	 	
Retirement benefit asset	–	 	3.7	 	21	 	
Deferred tax assets	19.7	 	29.0	 	19	 	
							
 	609.5	 	593.0	 	 	 	
							
Current assets	 	 	 	 	 	 	
Inventories	1,445.5	 	1,350.6	 	13	 	
Trade and other receivables	927.5	 	869.1	 	14	 	
Cash and cash equivalents	41.7	 	152.3	 	15	 	
							
 	2,414.7	 	2,372.0	 	 	 	
							
Total assets	3,024.2	 	2,965.0	 	 	 	
							
Liabilities:	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	
Borrowings due in less than one year	(36.3	)	(5.5	)	18	 	
Trade and other payables	(357.5	)	(392.4	)	16	 	
Deferred income	(125.3	)	(122.7	)	17	 	
Current tax	(79.5	)	(101.7	)	 	 	
							
 	(598.6	)	(622.3	)	 	 	
							
Non-current liabilities	 	 	 	 	 	 	
Borrowings due in more than one year	(380.0	)	(380.0	)	18	 	
Other payables	(85.3	)	(74.7	)	16	 	
Deferred income	(139.0	)	(132.0	)	17	 	
Provisions	(9.6	)	(10.0	)	20	 	
Retirement benefit obligation	(5.6	)	–	 	21	 	
							
 	(619.5	)	(596.7	)	 	 	
							
Total liabilities	(1,218.1	)	(1,219.0	)	 	 	
							
Net assets	1,806.1	 	1,746.0	 	 	 	
							
Equity:	 	 	 	 	 	 	
Capital and reserves attributable to equity holders of the Company	 	 	 	 	 	 	
Share capital	15.4	 	14.0	 	22	 	
Share premium	140.2	 	134.7	 	23	 	
Other reserves	235.2	 	235.1	 	23	 	
Retained earnings	1,415.3	 	1,362.2	 	23	 	
							
Total equity	1,806.1	 	1,746.0	 	 	 	
							
(1)	Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 5 February 2007. See Note 1(a) on page 86.	
These accounts were approved by the Board of Directors on 9 April 2008, and were signed on its behalf by:
Terry Burman Director
Walker Boyd Director

Signet Group plc Annual Report & Accounts year ended 2 February 2008	83	

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 	 	Financial statements	

 	 	 	
 	 	Consolidated cash flow statement	
 	 	for the 52 weeks ended 2 February 2008	

									
 	52 weeks ended	 	53 weeks ended	(1)	52 weeks ended	(1)	 	 	
 	2 February 2008	 	3 February 2007	 	28 January 2006	 	 	 	
 	  $m	 	$m	 	$m	 	Notes	 	
									
Cash flows from operating activities:	 	 	 	 	 	 	 	 	
Profit before tax	333.5	 	400.8	 	360.7	 	 	 	
Adjustments for:	 	 	 	 	 	 	 	 	
    Finance income	(11.0	)	(18.8	)	(6.5	)	 	 	
    Finance expense	28.8	 	34.2	 	20.5	 	 	 	
    Depreciation of property, plant and equipment	109.4	 	96.0	 	81.0	 	 	 	
    Amortisation of intangible assets	4.7	 	2.4	 	2.2	 	 	 	
    Share-based payment expense	0.4	 	6.7	 	8.1	 	 	 	
    Other non-cash movements	(1.5	)	(2.2	)	0.7	 	 	 	
    Loss on disposal of property, plant and equipment	1.4	 	0.8	 	–	 	 	 	
									
Operating cash flows before movements in working capital	465.7	 	519.9	 	466.7	 	 	 	
Increase in inventories	(96.8	)	(118.1	)	(131.0	)	 	 	
Increase in receivables	(60.7	)	(101.5	)	(92.5	)	 	 	
(Decrease)/increase in payables	(13.5	)	46.1	 	95.4	 	 	 	
									
Cash generated from operations	294.7	 	346.4	 	338.6	 	 	 	
Interest paid	(29.8	)	(31.4	)	(20.5	)	 	 	
Taxation paid	(128.5	)	(130.1	)	(116.5	)	 	 	
									
Net cash flows from operating activities	136.4	 	184.9	 	201.6	 	 	 	
									
Investing activities:	 	 	 	 	 	 	 	 	
Interest received	6.3	 	16.9	 	4.3	 	 	 	
Purchase of property, plant and equipment	(129.1	)	(116.9	)	(126.7	)	 	 	
Purchase of intangible assets	(11.3	)	(7.5	)	(9.9	)	 	 	
Proceeds from sale of property, plant and equipment	1.0	 	0.6	 	13.5	 	 	 	
									
Net cash flows from investing activities	(133.1	)	(106.9	)	(118.8	)	 	 	
									
Financing activities:	 	 	 	 	 	 	 	 	
Dividends paid	(123.9	)	(108.7	)	(94.9	)	 	 	
Proceeds from issue of shares	6.0	 	7.7	 	7.0	 	 	 	
Purchase of own shares	(29.0	)	(63.4	)	(3.6	)	 	 	
Increase/(decrease) in short term borrowings	31.1	 	7.0	 	(83.9	)	18	 	
Repayment of long term borrowings	–	 	(251.0	)	–	 	 	 	
Receipt of long term borrowings	–	 	380.0	 	–	 	 	 	
									
Net cash flows from financing activities	(115.8	)	(28.4	)	(175.4	)	 	 	
									
Cash and cash equivalents at beginning of period	152.3	 	92.9	 	193.5	 	 	 	
(Decrease)/increase in cash and cash equivalents	(112.5	)	49.6	 	(92.6	)	 	 	
Exchange adjustments	1.9	 	9.8	 	(8.0	)	 	 	
									
Cash and cash equivalents at end of period	41.7	 	152.3	 	92.9	 	15	 	
									
(1)	Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 5 February 2007. See Note 1(a) on page 86.	

84	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

 	 	
Consolidated statement of recognised income and expense	
for the 52 weeks ended 2 February 2008	 	

							
 	52 weeks ended	 	53 weeks ended	(1)  	52 weeks ended	(1)	
 	2 February 2008	 	3 February 2007	 	28 January 2006	 	
 	$m	 	$m	 	$m	 	
							
Exchange differences on translation of foreign operations	(0.1	)	57.3	 	(41.6	)	
Effective portion of fair value movements on cash flow hedges	14.1	 	1.7	 	8.8	 	
Transfer to initial carrying value of inventory from cash flow hedges	(10.2	)	1.5	 	(5.2	)	
Actuarial (loss)/gain on retirement benefit obligation	(15.0	)	30.5	 	(29.3	)	
Deferred tax on items recognised in equity	3.7	 	(10.3	)	3.1	 	
							
Net (expense)/income recognised directly in equity	(7.5	)	80.7	 	(64.2	)	
Profit for the financial period	215.2	 	266.0	 	235.4	 	
							
Total recognised income and expense attributable to equity holders of the Company	207.7	 	346.7	 	171.2	 	
							
(1)	Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 5 February 2007.	
 	See Note 1(a) on page 86.	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	85	

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 	 	Financial statements	

 	 	Notes to the accounts	
 
1. Principal accounting policies
 The consolidated accounts of Signet Group plc (‘‘the Company’’) and its subsidiary companies (“the Group”) are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The consolidated accounts also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. These principles differ in certain significant respects from generally accepted accounting principles in the US (“US GAAP”). Application of US GAAP would have affected shareholders’ equity and results of operations at and for the 52 weeks ended 2 February 2008, the 53 weeks ended 3 February 2007 and the 52 weeks ended 28   January 2006 to the extent summarised on pages 116 to 122.
Judgements made by the directors in the application of these accounting policies, assumptions that may have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year, are discussed in Critical accounting policies in the Group financial review on pages 35 to 43 and in Risk and other factors on pages 44 to 50. Actual results will differ from these estimates.
The Company has elected to prepare its parent company financial statements in accordance with United Kingdom generally accepted accounting principles (“UK GAAP”). These are presented in Company information on pages 123 to 128.
In relation to the accounts of the Group, the following accounting policies have, unless otherwise stated, been applied consistently in dealing with items which are considered material:
(a) Basis of preparation
 The Group is a speciality jewellery retailer in both the UK and the US.
The consolidated accounts have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and applicable United Kingdom law. The consolidated accounts have been prepared under the historical cost basis except for the revaluation of derivative financial instruments assets and liabilities to their fair value.
These results are presented in US dollars following a change in the Group’s presentational currency from UK pounds to US dollars with effect from 5 February 2007. As the majority of the Group’s assets and operations are in the US this change better reflects the underlying performance of the Group. In addition, on 5 February 2007 the Company redenominated its share capital into US dollars and will retain distributable reserves and declare dividends in US dollars. As a result the functional currency of the Company has changed from UK pounds to US dollars. Financial information for prior periods has been restated from UK pounds to the new presentational currency, US dollars, in accordance with IAS 21.
(b) Consolidation
 The Group accounts include the accounts of the Company and its subsidiary undertakings made up for the 52 week period ended 2 February 2008 (the comparatives are for the 53 week period ended 3 February 2007 and the 52 week period ended 28 January 2006).
Subsidiary undertakings are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiary undertakings are included in the consolidated financial statements using the acquisition method of accounting. Under this method the results of subsidiary undertakings acquired or disposed of in the year are included from the date that control commences until the date that control ceases.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
(c) Currency translation
 The results of subsidiary undertakings with functional currencies other than US dollars are translated at rates approximating to the exchange rate ruling on the date of transaction by using the weighted average rate of exchange during the period and their balance sheets and attributable goodwill are translated at the rates ruling at the balance sheet date. Exchange differences arising from the translation of the net assets of those subsidiary undertakings and matched currency borrowings are charged or credited to reserves.
Monetary assets and liabilities denominated in currencies other than US dollars at the balance sheet date are translated at the exchange rate ruling at that date. Exchange differences arising from transactions in currencies other than US dollars are included in profit before tax.
(d) Revenue recognition
 Revenue is recognised only when all significant risks and rewards of ownership of goods have been transferred to the purchaser.
Repair revenues are recognised when the service is complete and the merchandise is delivered to the customer.
Where the contractual obligation is borne by the Group, revenue from the sale of extended service agreements is deferred and recognised, net of incremental costs arising from the initial sale, in proportion to anticipated claims arising. This period’s income is based on the historical claims experience of the business, which has been consistent since these products were launched. The Group reviews the pattern of claims at the end of each year to determine any significant trends that may require changes to revenue recognition rates.

86	  Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

 	 	
 
Where the Group acts as an agent for warranty sales the commission element only is recognised as revenue.
Interest receivable from the US in-house credit programme is classified as other operating income.
When vouchers issued on a purchase give a discount against a future purchase, to the extent that these represent an incentive to enter into a future purchase, the estimated fair value of those vouchers to the customer is treated as deferred revenue. The proportion of revenue deferred and the recognition of income as these vouchers are redeemed over the period until their expiry is based on prior years’ experience.
Provision is made for future sales returns expected within the stated return period, based on previous return rates experienced.
(e) Cost of sales and administrative expenses
 Cost of sales includes all costs incurred in the purchase, processing and distribution of the merchandise and all costs directly incurred in the operation and support of the retail outlets including advertising and promotional costs. This includes inbound freight charges, purchasing and receiving costs, inspection and internal transfer costs. Administrative expenses include all costs not directly incurred in the purchase, processing and distribution of merchandise or support of the retail outlets. This includes administration, finance and management expenses.
(f) Advertising and promotional costs
 Advertising costs are expensed within cost of sales. Production costs are expensed at the first communication of the advertisements, whilst communication expenses are incurred each time the advertisement is communicated. For catalogues and circulars, costs are all expensed at the first date they can be viewed by the consumer. Point of sale promotional material is expensed when first displayed in the stores.
(g) Goodwill
 Goodwill represents the excess of the cost on acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill is stated at cost less any accumulated impairment losses.
In accordance with IFRS 3 ‘Business combinations’, on transition to IFRS, goodwill is held at deemed cost on 31 January 2004, subject to exchange movements, and impairment reviews are carried out annually or more frequently when there are indications that the carrying value may not be recoverable. Any impairment write downs identified are charged to the income statement. An impairment loss in respect of goodwill is not reversed.
For impairment testing, goodwill is allocated to the relevant cash generating units. The Group calculates its fair values through discounting future cash flow forecasts, derived from the most recent financial results and budgets approved by management. The key assumptions for the value in the calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimate discount rates using pre-tax rates that reflect assessments of the time value of money and the risks specific to the Group.
(h) Other intangible assets
 Computer software that is not an integral part of the related hardware is classified as an intangible asset and is stated at cost less accumulated amortisation. Amortisation is charged on a straight line basis over periods from three to five years.
(i) Property, plant and equipment
 Property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses. Certain items of property, which had been revalued to fair value on or prior to 31 January 2004, the date of transition to IFRS, are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation.
Maintenance and repair costs are expensed as incurred while major renewal and improvement costs are capitalised.
Depreciation is provided on freehold and long leasehold retail premises over an estimated useful life not exceeding 50 years. Long leaseholds relate to leases that have an original and unexpired lease term of greater than 25 years. Freehold land is not depreciated.
Depreciation on other fixed assets is provided on a straight line basis at the following annual rates:
Plant, machinery and vehicles – 10%, 20%, 33 1 / 3 %,
Shopfronts, fixtures and fittings – rates up to 33 1 / 3 %.
Short leasehold – over the life of the lease.
Where the renewal of a lease is reasonably assured, the depreciation period for shopfronts, fixtures and fittings may exceed the remaining lease term.
Where appropriate, provision is made on assets that have a recoverable amount less than book value. Potentially impaired assets are identified by reviewing the cash contribution of individual stores where trading since the initial opening of the store has reached a mature stage. Where

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	
 
such stores deliver a low or negative cash contribution, the related store assets are considered for impairment by reference to the higher of net realisable value and value in use. Additionally, provision is made against property, plant and equipment relating to stores planned for closure. Where quantifiable, the discounted cost of decommissioning assets installed in leasehold premises is included in the cost of the assets and appropriate decommissioning provisions are recognised.
(j) Inventories
 Inventories represent raw materials and goods held for resale and are valued at the lower of cost and net realisable value. Cost is determined using average cost and includes overheads directly related to bringing inventory to its present location and condition. These include relevant warehousing, distribution and certain buying, security and data processing costs. Net realisable value represents estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Provision is made for obsolete, slow moving or defective items.
(k) Vendor contributions
 Where vendor contributions are received in respect of identifiable promotional events, these are matched against the costs of these promotions. Vendor contributions which are received as general contributions and not against specific promotional events are allocated against inventories.
(l) Trade receivables
 Trade and other receivables are stated at their nominal amount less an allowance for potential losses, which equates to their fair value.
(m) Leases
 Assets held under finance leases are leases where substantially all the risks and rewards of the asset have passed to the Group. All other leases are defined as operating leases.
Where operating leases include clauses in respect of predetermined rent increases, those rents are charged to the income statement on a straight line basis over the lease term, including any construction period or other rental holiday. Other rentals paid under operating leases are charged to the income statement as incurred. Premiums paid to acquire short leasehold properties and inducements to enter into a lease are recognised over the lease term. Amounts payable in respect of contingent rents are recognised in the period to which the sales relate.
(n) Taxation
 Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case the related tax impact is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Accruals for tax contingencies are made based on judgements and estimates in relation to tax audit issues and exposures. Amounts accrued are based on management’s interpretation of country-specific tax law and the likelihood of settlement. Tax benefits are not recognised unless the tax positions are probable of being sustained. Once considered to be probable, each material tax benefit is reviewed to assess whether a provision should be taken against full recognition of the benefit on the basis of potential settlement through negotiation and/or litigation. All such provisions are included in creditors due within one year, although there is uncertainty regarding the exact timing of the agreement and settlement of outstanding positions. Any recorded exposure to interest and penalties on tax liabilities is provided for in the tax charge.
Deferred taxation is provided on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which temporary differences can be utilised. Tax rates enacted or substantively enacted at the balance sheet date are used to determine deferred tax.
No temporary differences are recognised in respect of:

(i)	deferred tax in respect of the initial recognition of goodwill;	
 	 	
(ii)	additional tax which would arise if profits of overseas subsidiaries were distributed to the extent that they would probably not reverse in the foreseeable future; and	
 	 	
(iii)	the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination.	
(o) Employee benefits
 The Group operates a defined contribution pension scheme in the UK and sponsors a defined contribution 401(k) retirement savings plan in the US. Contributions made by the Group to these pension arrangements are charged to the income statement as incurred.

88	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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The Group also operates a defined benefit pension scheme (the “Group Scheme”) in the UK which ceased to admit new employees from April 2004.
The Group Scheme, covering two of the executive directors and participating eligible employees in the UK, provides benefits based on members’ salaries at retirement. The Group Scheme’s assets are held by the trustees and are completely separate from those of the Group. The pension cost is assessed in accordance with the advice of independent qualified actuaries.
Actuarial gains or losses are accounted for in the statement of recognised income and expense in the period in which they arise.
The full service cost of pension provisions relating to the period is charged to administrative expenses in the income statement. The net of the expected return on the Group Scheme’s assets and the interest element of the increase in the present value of the Group Scheme’s liabilities is credited to finance income in the income statement.
The difference between the market value of the assets of the Group Scheme and the present value of accrued pension liabilities is shown as an asset or liability on the balance sheet. The difference between the expected return on assets and that actually achieved is recognised in the statement of recognised income and expense along with any differences that may arise from experience or assumption changes.
Where appropriate, supplementary pensions and life assurance benefits for UK directors and senior executives were until 5 April 2006 provided through the Signet Group Funded Unapproved Retirement Benefits Scheme (‘‘FURBS’’) and were charged to the income statement as incurred. No further contributions are paid into the FURBS and in substitution a supplement is paid directly to the members.
(p) Derivative financial instruments and hedge accounting 
 Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the income statement. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends upon the nature of the item being hedged.
Changes in the fair value of financial instruments that are designated and are effective as hedges of future cash flows are recognised directly in equity through the statement of recognised income and expense. Any ineffective portion of the gain or loss is recognised immediately in the income statement. For cash flow hedges that result in the recognition of a non-financial asset or liability, amounts previously deferred in equity are included in the measurement of the asset or liability. For cash flow hedges that result in the recognition of a financial asset or liability, amounts previously recognised in equity are recognised in the income statement in the same period in which the hedged item affects net profit or loss. The Group applies the hedge accounting provisions of IAS 39 as they relate to forward currency and commodity contracts in order to minimise future volatility.
(q) Policy on transition to IFRS 
 The Group took the exemption not to restate the 29 January 2005 closing position for IAS 32 ‘Financial instruments: disclosure and presentation’ and IAS 39 ‘Financial instruments: recognition and measurement’. As a result, the 29 January 2005 closing position is presented on the previously existing UK GAAP basis.
In that comparative period, other than the following exceptions, all financial assets and financial liabilities were carried at cost (amortised as appropriate) less, in the case of financial assets, provision for any permanent diminution in value. Gains and losses on forward foreign exchange contracts treated as hedging instruments were not recognised in the income statement. On recognition of the hedged transaction the unrecognised gains and losses arising on the instrument were recognised, either in the income statement or combined into the carrying value of the associated asset or liability.
In the 52 week period to 29 January 2005 closing position, hedging instruments were not recognised. From 30 January 2005 the hedging instruments are brought on to the balance sheet in accordance with the current period policy. In subsequent periods, hedging instruments are accounted for separately in the balance sheet. Gains and losses are included in profit for the period when the hedged transaction occurs having first recorded the hedging instrument in equity (to the extent effective). The cash flow statement is unaffected by this change in accounting policy.
The following adjustments were therefore made as at the beginning of the period ended 28 January 2006 with the net adjustment to net assets, after tax, taken through the statement of recognised income and expense:

 	$m	
		
Liabilities – Current liabilities	 	
Commodity contract classified within trade and other payables	1.1	
		
Equity – Capital and reserves attributable to equity shareholders	 	
Cash flow hedging reserve	1.1	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)  	
 
(r) Cash and cash equivalents
Cash and cash equivalents comprise money market deposits and amounts placed with external fund managers with an original maturity of three months or less, and are carried at cost which approximates to fair value.
(s) Borrowings
Borrowings comprise interest bearing bank loans, private placement loan notes, and bank overdrafts and are recorded at the proceeds received net of any transaction costs incurred. Interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.
(t) Share schemes
A charge to income is recognised in respect of the fair values of outstanding employee share options, measured at grant level. For the LTIP, options granted are valued using a Black-Scholes option pricing model. The fair values of all other options have been calculated using a Black-Scholes model up to 29 January 2005 and a binomial valuation model thereafter. These are charged to the income statement over the relevant option vesting periods, the expense recognised being adjusted to reflect the Group’s estimate of the number of shares that will eventually vest. The optional transitional arrangements, which allow companies to apply IFRS 2 fully retrospectively to all options granted but not fully vested at the relevant reporting date, have been used.
For equity-settled transactions, the charge to the income statement is credited back to total equity.
The cost of the cash and share award elements of the LTIP is charged to the income statement evenly over the period from the award date to vesting, based on the level of award that is expected to be achieved. A liability equal to the portion of goods or services received is recognised at the current fair value determined at each balance sheet date for cash settled schemes.
(u) Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Provision is made for future net lease obligations in respect of onerous leases of vacant, partially vacant or sublet properties.
(v) Share capital
When new shares are issued, they are recorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium reserve.
The cost of own shares purchased to satisfy the exercise of employee share options is deducted from total equity and the proceeds of their onward transfer are credited to total equity.
(w) Dividends
Dividends are provided for in the period in which they are formally approved.
(x) IFRS not yet effective
At the date of preparation of the financial statements, the following Standards and Interpretations, which have not been applied in the financial statements, were in issue but not yet effective:
IFRS 8 ‘Operating Segments’ was issued in November 2006. It requires the identification of operating segments based on internal reporting to the chief operating decision maker and extends the scope and disclosure requirements of IAS 14 ‘Segmental Reporting’. It is effective for annual periods beginning on or after 1 January 2009. The Group is currently reviewing the impact that the adoption of IFRS 8 would have on its financial statements.
A revised IAS 23 ‘Borrowing costs’ was issued in March 2007. It requires entities to capitalise any borrowing costs relating to assets that take a substantial period of time to prepare for use, rather than immediately recognising such costs as an expense. The revised Standard is effective for annual periods beginning on or after 1 January 2009 and will be applied prospectively from that date. The adoption of these amendments is not expected to have a significant effect upon the net results or net assets of the Group.
A revised IAS 1 ‘Presentation of Financial Statements’ was issued in September 2007. It revises the presentation of non-owner changes in equity and introduces a statement of comprehensive income. It is effective for annual periods beginning on or after 1 January 2009. The adoption of these amendments will not have a significant impact upon the net results, net assets or disclosures of the Group.
IFRS 8 ‘Operating Segments’ was endorsed by the EU during 2007. The revised IAS 23 ‘Borrowing Costs’ and IAS 1 ‘Presentation of Financial Statements’ have not yet been endorsed by the EU.
The following IFRIC interpretations have been issued but have not yet been adopted by the Group IFRIC 12 ‘Service Concession Arrangements’, IFRIC 13 ‘Customer Loyalty Programmes’ and IFRIC 14 ‘IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding requirements and their interaction. None of these interpretations have been endorsed by the EU and none are expected to have a significant impact upon adoption.

90	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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2. Segmental information 
 The Group’s results derive from one business segment – the retailing of jewellery, watches and associated services. The Group is managed as two geographical operating segments: the US and UK divisions. Both divisions are managed by executive committees, which report through the Group Chief Executive to the Group Board. Each divisional executive committee is responsible for operating decisions within guidelines set by the Group Board.

 	2008	 	2007	 	2006	 	
 	$m	 	$m	 	$m	 	
							
Sales by origin and destination:	 	 	 	 	 	 	
UK trading	959.6	 	907.1	 	845.3	 	
US trading	2,705.7	 	2,652.1	 	2,308.8	 	
							
 	3,665.3	 	3,559.2	 	3,154.1	 	
							
Operating profit:	 	 	 	 	 	 	
UK trading	105.1	 	103.4	 	88.4	 	
Group function (1)	(16.0	)	(13.9	)	(14.4	)	
							
UK	89.1	 	89.5	 	74.0	 	
US trading	262.2	 	326.7	 	300.7	 	
							
 	351.3	 	416.2	 	374.7	 	
							
Depreciation and amortisation:	 	 	 	 	 	 	
UK trading	42.0	 	37.1	 	31.9	 	
US trading	72.1	 	61.3	 	51.3	 	
							
 	114.1	 	98.4	 	83.2	 	
							
Capital additions:	 	 	 	 	 	 	
UK trading	28.6	 	23.3	 	48.2	 	
Group function	0.7	 	–	 	–	 	
							
UK	29.3	 	23.3	 	48.2	 	
US trading	111.1	 	101.1	 	88.4	 	
							
 	140.4	 	124.4	 	136.6	 	
							
Total assets:	 	 	 	 	 	 	
UK trading	496.3	 	521.2	 	492.4	 	
Group function	229.2	 	328.6	 	234.0	 	
							
UK	725.5	 	849.8	 	726.4	 	
US trading	2,298.7	 	2,115.2	 	1,877.2	 	
							
 	3,024.2	 	2,965.0	 	2,603.6	 	
							
Total liabilities:	 	 	 	 	 	 	
UK trading	(147.3	)	(147.2	)	(156.1	)	
Group function	(267.1	)	(201.7	)	(55.2	)	
							
UK	(414.4	)	(348.9	)	(211.3	)	
US trading	(803.7	)	(870.1	)	(836.7	)	
							
 	(1,218.1	)	(1,219.0	)	(1,048.0	)	
							
(1) Group function costs for 2006 included a net charge of $1.3 million relating to property provisions.  	 	 	 	 	 	 	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	
 
3. Operating profit

 	 	2008	 	2007	 	2006	 	
 	 	$m	 	$m	 	$m	 	
								
Operating profit is stated after charging:	 	 	 	 	 	 	
Staff costs	 	702.0	 	689.3	 	621.0	 	
Depreciation of property, plant and equipment	109.4	 	96.0	 	81.0	 	
Amortisation of intangible assets	 	4.7	 	2.4	 	2.2	 	
Fees payable to KPMG for the audit of the annual accounts	0.5	 	0.4	 	0.2	 	
Fees payable to KPMG and their associates for:	 	 	 	 	 	 	
   – audit of subsidiary accounts	 	0.9	 	0.9	 	0.5	 	
   – other services pursuant to legislation (1)	–	 	–	 	0.7	 	
   – other services (2)	 	0.2	 	0.2	 	0.2	 	
Advertising	 	209.4	 	190.7	 	158.5	 	
Operating lease minimum rentals	– plant, machinery and vehicles	3.3	 	3.0	 	3.8	 	
 	– property	305.7	 	273.6	 	264.9	 	
Operating lease contingent rentals	– property	10.1	 	14.6	 	12.0	 	
Rates	 	61.0	 	60.9	 	51.9	 	

(1)	For 2006, relates to Section 404 of the Sarbanes-Oxley Act and IFRS implementation. For 2007 and 2008, fees relating to Section 404 of the Sarbanes-Oxley Act are included within audit fees.	
(2)	Relates to quarterly reviews and Christmas Trading review.	
Other audit fees paid to KPMG in respect of the Signet Group plc pension scheme were $43,890 (2007: $43,240; 2006: $41,400).
4. Other operating income

 	2008	 	2007	 	2006	 	
 	$m	 	$m	 	$m	 	
							
Other operating income:	 	 	 	 	 	 	
    – interest receivable from US in-house credit programme	108.4	 	93.3	 	81.9	 	
    – foreign currency exchange gains/(losses)	0.4	 	(1.8	)	1.4	 	
							
 	108.8	 	91.5	 	83.3	 	

5. Finance income and expense	 	 	 	 	 	 	

 	2008	 	2007	 	2006	 	
 	$m	 	$m	 	$m	 	
							
Interest payable on loans and overdrafts	(4.1	)	(4.5	)	(3.6	)	
Interest expense of US securitisation facility	–	 	(10.1	)	(13.7	)	
Interest payable on loan notes	(23.3	)	(16.4	)	(0.5	)	
Facility fees and related costs	(1.4	)	(3.2	)	(2.7	)	
							
Finance expense	(28.8	)	(34.2	)	(20.5	)	
							
Interest income	6.2	 	16.7	 	4.3	 	
Defined benefit pension scheme:	 	 	 	 	 	 	
    – expected return on scheme assets	18.3	 	14.7	 	12.4	 	
    – interest on pension liabilities	(13.5	)	(12.6	)	(10.2	)	
							
Finance income	11.0	 	18.8	 	6.5	 	
							
Net finance charge	(17.8	)	(15.4	)	(14.0	)	

92	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

 	 	
6. Foreign currency translation
 The exchange rates used for translation of UK pound transactions and balances in these accounts are as follows:

 	2008	 	2007	 	2006	 	
							
Income statement (average rate)	2.00	 	1.88	 	1.80	 	
Balance sheet (period end rate)	1.97	 	1.97	 	1.77	 	
							
Impact of translation on:	 	 	 	 	 	 	
    – Cash and cash equivalents less borrowings	2.2	 	27.7	 	(7.9	)	
    – Foreign currency net assets	0.1	 	57.3	 	(41.6	)	
							
The exchange impact on foreign currency net assets has been taken to reserves in accordance with IAS 21 ‘The effects of changes in foreign exchange rates’.
7. Directors and employees

 	2008	 	2007	 	2006	 	
 	$m	 	$m	 	$m	 	
							
Directors’ emoluments	5.0	 	7.2	 	3.8	 	
Directors’ LTIP – cash	–	 	0.3	 	0.4	 	
Directors’ LTIP – share options (at fair value)	–	 	0.4	 	0.5	 	
Contributions to pension schemes in respect of directors	0.6	 	0.5	 	0.4	 	
							
Details of directors’ emoluments are shown in the Directors’ remuneration report on page 70.
The aggregate emoluments (excluding amounts due under the LTIP) of the highest paid director, Terry Burman, Group Chief Executive were $1,668,000 (2007: $3,057,000; 2006: $1,389,000). The amounts due to him under the LTIP were $nil (2007: $275,000; 2006: $752,000). 50% of the LTIP award is payable in cash. In the current year, this amounted to $nil (2007: $128,000; 2006: $304,000). The other 50% consists of the grant of an option to acquire shares in the Company. Additionally, pension contributions of $313,000 (2007: $288,000; 2006: $270,000) were made to money purchase schemes on his behalf. The gain made by him on the exercise of options in the Group was $155,000 (2007: $2,989,000; 2006: $nil).

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	

							
 	2008	 	2007	 	2006	 	
 	Number	 	Number	 	Number	 	
							
Retirement benefits are accruing to the following number of directors under:	 	 	 	 	 	 	
    – Money purchase schemes	2	 	2	 	2	 	
    – Defined benefit schemes	2	 	2	 	2	 	
							
The average number of full-time equivalent persons – employed (including directors) during the period, analysed by category and division	 	 	 	 	 	 	
Group:	 	 	 	 	 	 	
    – Management	262	 	250	 	238	 	
    – Administration	1,758	 	1,747	 	1,764	 	
    – Distribution and sales staff	15,223	 	14,839	 	13,650	 	
							
 	17,243	 	16,836	 	15,652	 	
							
UK:	 	 	 	 	 	 	
    – Management	76	 	78	 	85	 	
    – Administration	291	 	290	 	367	 	
    – Distribution and sales staff	3,480	 	3,796	 	3,834	 	
							
 	3,847	 	4,164	 	4,286	 	
							
US:	 	 	 	 	 	 	
    – Management	186	 	172	 	153	 	
    – Administration	1,467	 	1,457	 	1,354	 	
    – Distribution and sales staff	11,743	 	11,043	 	9,859	 	
							
 	13,396	 	12,672	 	11,366	 	

							
 	2008	 	2007	 	2006	 	
 	$m	 	$m	 	$m	 	
							
Aggregate Group staff costs were as follows:	 	 	 	 	 	 	
Wages and salaries	635.7	 	619.8	 	557.8	 	
Social security costs	54.5	 	51.9	 	45.7	 	
Pension costs	11.4	 	10.9	 	9.4	 	
Share-based payment expense	0.4	 	6.7	 	8.1	 	
							
 	702.0	 	689.3	 	621.0	 	

94	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

 	 	
8. Taxation

 	 	2008	 	2007	 	2006	 	
 	 	$m	 	$m	 	$m	 	

Profit before tax:	UK	132.8	 	119.4	 	92.0	 	
 	US	200.7	 	281.4	 	268.7	 	
								
 	 	333.5	 	400.8	 	360.7	 	
								
Current taxation:	UK	42.0	 	30.7	 	20.7	 	
 	US	67.5	 	105.8	 	108.0	 	
 	 	 	 	 	 	 	 	
Deferred taxation:	UK	(2.2	)	(2.8	)	2.5	 	
 	US	11.0	 	1.1	 	(5.9	)	
								
 	 	118.3	 	134.8	 	125.3	 	

The sources of deferred taxation are as follows:	 	 	 	 	 	 	
								
 	 	2008	 	2007	 	2006	 	
 	 	$m	 	$m	 	$m	 	

UK property, plant and equipment	(2.5	)	(0.8	)	2.3	 	
US property, plant and equipment	(2.6	)	(3.0	)	(1.8	)	
Inventory valuation	21.3	 	16.5	 	8.7	 	
Allowances for doubtful debts	(3.2	)	(2.3	)	(2.0	)	
Revenue deferral (extended service agreements)	(5.5	)	(4.1	)	(3.8	)	
Straight line lease payments	(2.2	)	(2.4	)	(2.0	)	
Deferred compensation	(1.7	)	(1.5	)	(1.6	)	
Retirement benefit obligations	(0.4	)	(1.5	)	–	 	
Other temporary differences	5.6	 	(2.6	)	(3.2	)	
								
 	 	8.8	 	(1.7	)	(3.4	)	
								
The differences between the standard rate of corporation tax in the UK and the current and effective tax rates for the Group are explained below:

 	2008	 	2007	 	2006	 	
 	%	 	%	 	%	 	

UK statutory tax rates	30.0	 	30.0	 	30.0	 	
Expenditure permanently disallowable for tax purposes, net of permanent undercharges	1.5	 	0.3	 	1.5	 	
Differences between UK and US (including state) standard tax rates	5.0	 	5.5	 	5.5	 	
Over provision in respect of previous periods	(1.0	)	(2.2	)	(2.3	)	
UK property, plant and equipment	0.7	 	0.2	 	(0.6	)	
US property, plant and equipment	0.8	 	0.7	 	0.5	 	
Inventory valuation	(6.4	)	(4.1	)	(2.4	)	
Allowances for doubtful debts	1.0	 	0.6	 	0.5	 	
Revenue deferral (extended service agreements)	1.6	 	1.0	 	1.0	 	
Straight line lease payments	0.7	 	0.6	 	0.5	 	
Deferred compensation	0.5	 	0.4	 	0.5	 	
Retirement benefit obligations	0.1	 	0.4	 	–	 	
Other temporary differences	(1.6	)	0.6	 	0.9	 	
							
Current tax rate	32.9	 	34.0	 	35.6	 	
Deferred tax rate	2.6	 	(0.4	)	(0.9	)	
							
 	35.5	 	33.6	 	34.7	 	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	95	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	
 
The Group’s effective tax rate is higher than the UK statutory tax rate because a significant proportion of the Group’s business is conducted in the US where the combined federal and state tax rate approaches 40%. The Group’s future effective tax rate is dependent on changes in the geographic mix of profits and the movement in foreign exchange translation rates. It is likely that there will be greater volatility in the Group’s effective tax rate going forward owing to changes in the tax environment in both the UK and the US. It is anticipated that, subject to the outcome of various uncertain tax positions, the Group’s effective tax rate in 2008/09 will be at a similar level to the reported effective tax rate in 2007/08.
9. Earnings per share

 	2008	 	2007	 	2006	 	

Earnings attributable to shareholders ($ million)	215.2	 	266.0	 	235.4	 	
							
Basic weighted average number of shares in issue (million)	1,703.8	 	1,727.6	 	1,736.6	 	
Dilutive effect of share options (million)	3.3	 	6.8	 	3.3	 	
							
Diluted weighted average number of shares in issue (million)	1,707.1	 	1,734.4	 	1,739.9	 	
							
Earnings per share – basic	12.6	c	15.4	c	13.6	c	
Earnings per share – diluted	12.6	c	15.3	c	13.5	c	
							
Earnings per ADS – basic	126.3	c	154.0	c	135.6	c	
Earnings per ADS – diluted	126.1	c	153.4	c	135.3	c	
							
The basic weighted average number of shares excludes shares held by the ESOT as these shares do not qualify for dividends. The effect of this is to reduce the average number of shares in the 52 week period ended 2 February 2008 by 2,146,735 (53 week period ended 3 February 2007: 3,253,096; 52 weeks ended 28 January 2006: 3,745,265).
10. Dividends
In accordance with IAS 10 ‘Events after the balance sheet date’ proposed dividends are not provided for until they are formally approved.

 	2008	 	2007	 	2006	 	
 	$m	 	$m	 	$m	 	

Final dividend paid of 6.317c per share (2007: 2.8875p; 2006: 2.625p)	107.6	 	94.2	 	81.9	 	
Interim dividend paid of 0.96c per share (2007: 0.4434p; 2006: 0.4125p)	16.3	 	14.5	 	13.0	 	
							
 	123.9	 	108.7	 	94.9	 	
							
During 2007/08, a dividend of 6.317 cents per share was paid on 6 July 2007 in respect of the final dividend declared for the 53 week period ended 3 February 2007. An interim dividend of 0.96 cents for the 52 week period ended 2 February 2008 was also paid on 9 November 2007. The 2006/07 interim dividend was translated at the exchange rate on 3 November 2006.
Subject to shareholder approval, a proposed final dividend of 6.317 cents per share will be paid on 3 July 2008 to those shareholders on the register of members at the close of business on 23 May 2008. The accounts for the 52 week period ended 2 February 2008 do not reflect this proposed dividend, which will be treated as an appropriation of retained earnings in the 52 week period ending 31 January 2009. For shareholders who wish to receive the proposed final dividend in pounds sterling, the actual amount will be calculated using the exchange rate as derived from Reuters at 4.00 p.m. on the record date of 23 May 2008.
Dividends received by individual US shareholders from qualified foreign corporations are subject to US federal income tax at a reduced rate of 15%. Dividends paid by the Group to individual US holders of shares or ADSs should qualify for this preferential dividend treatment. This US tax legislation only applies to individuals subject to US federal income taxes and therefore the tax position of UK shareholders is unaffected. Individual US holders of shares and ADSs are urged to consult their tax advisors regarding the application of this US tax legislation to their particular circumstances.

96	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

 	 	
11. Intangible assets

 	Computer	 	Purchased	 	 	 	
 	software	 	goodwill	 	Total	 	
 	$m	 	$m	 	$m	 	
							
Cost:	 	 	 	 	 	 	
At 28 January 2006	15.7	 	30.6	 	46.3	 	
Additions	7.5	 	–	 	7.5	 	
Disposals	(0.2	)	–	 	(0.2	)	
Transfers	0.6	 	–	 	0.6	 	
Translation differences	0.9	 	–	 	0.9	 	
							
At 3 February 2007	24.5	 	30.6	 	55.1	 	
							
At 3 February 2007	24.5	 	30.6	 	55.1	 	
Additions	11.3	 	–	 	11.3	 	
Transfers	(2.6	)	–	 	(2.6	)	
							
At 2 February 2008	33.2	 	30.6	 	63.8	 	
							
Amortisation:	 	 	 	 	 	 	
At 28 January 2006	5.8	 	–	 	5.8	 	
Charged in period	2.4	 	–	 	2.4	 	
Disposals	(0.2	)	–	 	(0.2	)	
Transfers	0.2	 	–	 	0.2	 	
Translation differences	0.6	 	–	 	0.6	 	
							
At 3 February 2007	8.8	 	–	 	8.8	 	
							
At 3 February 2007	8.8	 	–	 	8.8	 	
Charged in period	4.7	 	–	 	4.7	 	
Transfers	(2.2	)	–	 	(2.2	)	
Translation differences	(0.1	)	–	 	(0.1	)	
							
At 2 February 2008	11.2	 	–	 	11.2	 	
							
Net book value:	 	 	 	 	 	 	
							
At 2 February 2008	22.0	 	30.6	 	52.6	 	
							
At 3 February 2007	15.7	 	30.6	 	46.3	 	
							
At 28 January 2006	9.9	 	30.6	 	40.5	 	
							
The purchased goodwill above arose on the acquisition of Marks & Morgan on 31 July 2000. In accordance with IFRS, goodwill is carried at cost with impairment reviews carried out annually and when there are indications that the carrying value may not be recoverable. Under the transitional arrangements, Signet applied IFRS 3 ‘Business combinations’ from the transition date of 31 January 2004. Consequently, all prior purchased goodwill was frozen at $30.6 million at this date, subject to impairment testing. An impairment review was performed at 2 February 2008, concluding that the carrying value of $30.6 million does not require an impairment adjustment.
For the purpose of goodwill impairment testing, Marks & Morgan is regarded as a single cash generating unit. The recoverable amount is based on value in use calculations using cash flow projections from a three year business plan approved by management. Growth rates consistent with those in the plan have been used to extrapolate beyond the period covered by the plan. A discount rate of 8.8% has been applied to the projected cash flows.
Computer software that is not an integral part of the related hardware is classified as an intangible asset and is stated at cost less accumulated amortisation. Amortisation charges are recorded in administrative expenses in the income statement.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	97	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	

12. Property, plant and equipment	 	 	 	 	 	 	 	 	 	 	 	 	
													
 	Land and buildings	 	Plant	 	Shopfronts ,	 	 	 	
 		 	machinery	 	fixtures and	 	 	 	
 	Freehold	 	Long leasehold	 	Short leasehold	 	and vehicles	 	fittings	 	Total	 	
 	$m	 	$m	 	$m	 	$m	 	$m	 	$m	 	
													
Cost:	 	 	 	 	 	 	 	 	 	 	 	 	
At 28 January 2006	18.6	 	3.4	 	27.1	 	106.5	 	781.6	 	937.2	 	
Additions	–	 	–	 	4.9	 	8.1	 	103.9	 	116.9	 	
Disposals	(0.6	)	–	 	(0.6	)	(2.4	)	(26.9	)	(30.5	)	
Transfers	–	 	–	 	–	 	(1.5	)	0.9	 	(0.6	)	
Translation differences	1.9	 	0.2	 	1.5	 	2.3	 	21.5	 	27.4	 	
													
At 3 February 2007	19.9	 	3.6	 	32.9	 	113.0	 	881.0	 	1,050.4	 	
													
At 3 February 2007	19.9	 	3.6	 	32.9	 	113.0	 	881.0	 	1,050.4	 	
Additions	–	 	–	 	5.5	 	14.3	 	109.3	 	129.1	 	
Disposals	–	 	–	 	(0.5	)	(2.9	)	(37.7	)	(41.1	)	
Transfers	2.0	 	–	 	(2.1	)	4.7	 	(2.0	)	2.6	 	
Translation differences	–	 	–	 	–	 	(0.1	)	(0.4	)	(0.5	)	
													
At 2 February 2008	21.9	 	3.6	 	35.8	 	129.0	 	950.2	 	1,140.5	 	
													
Depreciation:	 	 	 	 	 	 	 	 	 	 	 	 	
At 28 January 2006	2.8	 	0.2	 	10.3	 	76.3	 	398.4	 	488.0	 	
Charged in period	0.4	 	–	 	2.2	 	14.3	 	79.1	 	96.0	 	
Disposals	(0.5	)	–	 	(0.4	)	(2.3	)	(25.9	)	(29.1	)	
Transfers	–	 	–	 	–	 	(1.1	)	0.9	 	(0.2	)	
Translation differences	0.3	 	–	 	0.9	 	1.1	 	8.6	 	10.9	 	
													
At 3 February 2007	3.0	 	0.2	 	13.0	 	88.3	 	461.1	 	565.6	 	
													
At 3 February 2007	3.0	 	0.2	 	13.0	 	88.3	 	461.1	 	565.6	 	
Charged in period	0.3	 	0.1	 	2.9	 	12.4	 	93.7	 	109.4	 	
Disposals	–	 	–	 	(0.4	)	(2.0	)	(36.3	)	(38.7	)	
Transfers	0.4	 	–	 	(0.4	)	2.9	 	(0.7	)	2.2	 	
Translation differences	–	 	–	 	–	 	(0.1	)	(0.3	)	(0.4	)	
													
At 2 February 2008	3.7	 	0.3	 	15.1	 	101.5	 	517.5	 	638.1	 	
													
Net book value:	 	 	 	 	 	 	 	 	 	 	 	 	
													
At 2 February 2008	18.2	 	3.3	 	20.7	 	27.5	 	432.7	 	502.4	 	
													
At 3 February 2007	16.9	 	3.5	 	19.9	 	24.7	 	419.9	 	484.8	 	
													
At 28 January 2006	15.8	 	3.2	 	16.8	 	30.2	 	383.2	 	449.2	 	
													
Property, plant and equipment are stated at cost with the exception of freehold and long leasehold properties which are stated at deemed cost on conversion to IFRS.
Freehold properties on the consolidated balance sheet include $10.7 million of depreciable assets (2007: $8.7 million).

98	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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13. Inventories	 	 	 	 	
					
 	2008	 	2007	 	
 	$m	 	$m	 	
					
Raw materials	16.7	 	9.4	 	
Finished goods	1,428.8	 	1,341.2	 	
					
 	1,445.5	 	1,350.6	 	
					
Subsidiary undertakings held $221.5 million of consignment inventory at 2 February 2008 (2007: $205.7 million) which is not recorded on the balance sheet. The principal terms of the consignment agreements, which can generally be terminated by either side, are such that the Group can return any or all of the stocks to the relevant suppliers without financial or commercial penalties.

Inventory provisions	 	 	 	 	 	 	 	 	
									
 	Balance at	 	Charged	 	 	 	Balance at	 	
 	beginning of period	 	to profit	 	Utilised (1)	 	end of period	 	
 	$m	 	$m	 	$m	 	$m	 	
									
52 weeks ended 28 January 2006	10.7	 	23.2	 	(23.3	)	10.6	 	
53 weeks ended 3 February 2007	10.6	 	28.0	 	(23.9	)	14.7	 	
52 weeks ended 2 February 2008	14.7	 	39.6	 	(36.8	)	17.5	 	
									
(1)	Including the impact of foreign exchange translation.	 	 	 	 	 	 	 	 	
Inventory provisions have been made for obsolete, slow-moving and damaged stock on a consistent basis.

14. Trade and other receivables	 	 	 	 	
					
 	2008	 	2007	 	
 	$m	 	$m	 	
					
Trade receivables by geographic location	 	 	 	 	
    – US	900.6	 	828.8	 	
    – UK	9.8	 	15.5	 	
					
 	910.4	 	844.3	 	
Less: Provision for impairment of receivables	(62.2	)	(52.2	)	
					
Trade receivables – net	848.2	 	792.1	 	
Corporation tax recoverable	0.1	 	0.2	 	
Other receivables and prepayments	79.2	 	76.8	 	
					
Trade and other receivables – current	927.5	 	869.1	 	
Other receivables – non-current	34.8	 	29.2	 	
					
 	962.3	 	898.3	 	
					
The directors consider that the carrying amount of trade and other receivables approximates to their fair value, which is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date. The carrying amount of financial assets represents the maximum credit exposure.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	99	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	

The ageing of trade receivables at the reporting date was:	 	 	 	 	 	 	 	 	
									
 	2008	 	2007	 	
 	Gross	 	Provision for	 	Gross	 	Provision for	 	
 	 	 	Impairment	 	 	 	Impairment	 	
 	$m	 	$m	 	$m	 	$m	 	
									
Not past due	710.7	 	(21.4	)	667.8	 	(20.1	)	
Past due 0-90 days	165.0	 	(6.3	)	150.6	 	(6.3	)	
More than 90 days	34.7	 	(34.5	)	25.9	 	(25.8	)	
									
 	910.4	 	(62.2	)	844.3	 	(52.2	)	

Provision for impairment of receivables	 	 	 	 	 	 	 	 	
									
 	Balance at	 	Charged	 	 	 	Balance at	 	
 	beginning of period	 	to profit	 	Utilised (1)	 	end of period	 	
 	$m	 	$m	 	$m	 	$m	 	
									
52 weeks ended 28 January 2006	40.8	 	81.2	 	(75.1	)	46.9	 	
53 weeks ended 3 February 2007	46.9	 	73.1	 	(67.8	)	52.2	 	
52 weeks ended 2 February 2008	52.2	 	93.6	 	(83.6	)	62.2	 	
									
(1)	Including the impact of foreign exchange translation.	 	 	 	 	 	 	 	 	
The provision for impairment charged to profit relates to receivables due from individual customers, and no individual balance is significant. If the Group believes that a specific balance is irrecoverable, it is written off.

15. Cash and cash equivalents	 	 	 	 	
					
 	2008	 	2007	 	
 	$m	 	$m	 	
					
Bank deposits	40.6	 	151.1	 	
Cash	1.1	 	1.2	 	
					
 	41.7	 	152.3	 	

16. Trade and other payables	 	 	 	 	
					
 	2008	 	2007	 	
Current:	$m	 	$m	 	
					
Trade payables	89.3	 	115.4	 	
Social security and PAYE	10.5	 	11.6	 	
Other taxes	33.7	 	42.6	 	
Other creditors	23.5	 	19.7	 	
Accruals	200.5	 	203.1	 	
					
 	357.5	 	392.4	 	

					
 	2008	 	2007	 	
Non-current:	$m	 	$m	 	
					
Other creditors	41.7	 	35.3	 	
Accruals	43.6	 	39.4	 	
					
 	85.3	 	74.7	 	

100	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

 	 	
17. Deferred income
Deferred income represents income under extended service agreements and voucher promotions.

18. Financial liabilities – borrowings	 	 	 	 	 	 	 	 	
									
 	Currency	 	Repayment	 	2008	 	2007	 	
Current:	 	 	date	 	$m	 	$m	 	
									
Borrowings due within one year or on demand:	 	 	 	 	 	 	 	 	
Bank overdrafts	US$	 	On demand	 	36.3	 	5.5	 	
									
Short term borrowings	 	 	 	 	36.3	 	5.5	 	
									
The weighted average interest rate on short term borrowings during the year was 5.3% (2007: 5.4%).	
									
 	Currency	 	Repayment	 	2008	 	2007	 	
Non-current:	 	 	date	 	$m	 	$m	 	
									
Borrowings due in more than one year:	 	 	 	 	 	 	 	 	
US Private Placement	US$	 	2013 to 2018	 	380.0	 	380.0	 	
									
 	 	 	 	 	380.0	 	380.0	 	
									
In September 2004, the Group entered into an unsecured $390 million multi-currency revolving credit facility with a syndicate of banks for a period of five years at a variable interest rate at a maximum margin of 0.55% above LIBOR. From commencement, the applicable margin has been 0.40% above LIBOR. At 2 February 2008 and at 3 February 2007 the amount outstanding under this facility was $nil.
Commitment fees are paid on the undrawn portion of this credit facility at a rate of 40.0% of the applicable margin. The principal financial covenants on this facility are as follows:

•	the ratio of Consolidated Net Debt to Consolidated EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation) shall not exceed 3:1;	
 	 	
•	consolidated Net Worth (total net assets) must not fall below £400 million; and	
 	 	
•	the ratio of Consolidated EBITARR (Earnings Before Interest, Tax, Amortisation, Rents, Rates and Operating Lease Expenditure) to Consolidated Net Interest Expenditure plus Rents, Rates and Operating Lease Expenditure shall be equal to or greater than 1.4:1.	
On 30 March 2006 Signet entered into a US Private Placement Note Term Series Purchase Agreement (“Note Purchase Agreement”) which was funded largely from US insurance institutional investors in the form of fixed rate investor certificate notes (“Notes”). These Notes represent 7, 10 or 12 year maturities, with Series (A) $100 million 5.95% due 2013; Series (B) $150 million 6.11% due 2016 and Series (C) $130 million 6.26% due 2018. The aggregate issuance was $380 million and the funding date was 23 May 2006. The proceeds from this debt issuance were used to refinance the maturing securitisation programme and for general corporate purposes. The Notes rank pari passu with the Group’s other senior unsecured debt. The principal financial covenants are in line with the syndicated bank credit facility described above.
On 26 October 2007 the Group entered into a 364 day $200 million Conduit Securitisation Facility (“Conduit”). Under this securitisation, interests in the US private label credit card receivables portfolio held by a trust would be sold to Bryant Park, a Conduit administered by HSBC Securities (USA) Inc., in the form of a secured revolving variable rate certificate. The Conduit bears interest at a margin of 0.22% above the cost of funds paid by Bryant Park and commitment fees are paid on the undrawn portion at a rate of 0.12% . At 2 February 2008 the amount outstanding under the Conduit was $nil.
In the US, in November 2001, the Company refinanced its private label credit card receivables programme through a privately placed receivables securitisation. Under this securitisation, interests in the US receivables portfolio held by a trust were sold principally to institutional investors in the form of fixed-rate Class A, Class B and Class C investor certificates. The certificates had a weighted average interest rate of 5.42% and interest was paid monthly in arrears from the finance charges collections generated by the receivables portfolio. The revolving period of the securitisation ended in March 2006, and the final principal payment was in November 2006.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	101	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	
Liquidity 
The following are the contractual maturities of all financial liabilities and derivative financial instruments, including interest payments and excluding the impact of netting agreements:

 	Carrying	 	Contractual	 	Less than	 	 	 	More than	 	
 	amount	 	cash flows	 	1 year	 	1-5 years	 	5 years	 	
2 February 2008	$m	 	$m	 	$m	 	$m	 	$m	 	
											
Non-derivative financial liabilities		 		 		 	 	 	 	 	
Trade and other payables	442.8	 	442.8	 	357.5	 	85.3	 	–	 	
Onerous lease provisions	9.6	 	14.9	 	1.4	 	5.7	 	7.8	 	
Bank overdraft	36.3	 	36.3	 	36.3	 	–	 	–	 	
US Private placement	380.0	 	576.1	 	23.3	 	93.0	 	459.8	 	
											
 	868.7	 	1,070.1	 	418.5	 	184.0	 	467.6	 	
											
Derivative financial instruments		 		 		 	 	 	 	 	
Forward contracts used for hedging		 		 		 	 	 	 	 	
    Liabilities	– outflow	1.9	 	2.3	 	2.3	 	–	 	–	 	
    Assets	– inflow	(2.2	)	(1.4	)	(1.4	)	–	 	–	 	
 	– outflow	(9.6	)	113.3	 	113.3	 	–	 	–	 	
											
 	(9.9	)	114.2	 	114.2	 	–	 	–	 	

											
 	Carrying	 	Contractual	 	Less than	 	 	 	More than	 	
 	amount	 	cash flows	 	1 year	 	1-5 years	 	5 years	 	
3 February 2007	$m	 	$m	 	$m	 	$m	 	$m	 	
											
Non-derivative financial liabilities	 	 	 	 	 	 	 	 	 	 	
Trade and other payables	467.1	 	467.1	 	392.4	 	74.7	 	–	 	
Onerous lease provisions	10.0	 	16.0	 	1.4	 	6.0	 	8.6	 	
Bank overdraft	5.5	 	5.5	 	5.5	 	–	 	–	 	
US Private placement	380.0	 	599.4	 	23.3	 	93.0	 	483.1	 	
											
 	862.6	 	1,088.0	 	422.6	 	173.7	 	491.7	 	
											
Derivative financial instruments	 	 	 	 	 	 	 	 	 	 	
Forward contracts used for hedging	 	 	 	 	 	 	 	 	 	 	
    L iabilities	– outflow	0.8	 	1.1	 	1.1	 	–	 	–	 	
    Assets	– outflow	(8.3	)	90.7	 	90.7	 	–	 	–	 	
											
 	(7.5	)	91.8	 	91.8	 	–	 	–	 	
											
The directors consider that the carrying amount of trade and other payables is approximate to their fair values.
Derivatives with contractual cash flows of $40.7 million and $73.5 million are expected to impact the income statement in 2008/09 and 2009/10 respectively (2007: 2007/08 $25.9 million and 2008/09 $65.9 million).
Interest rate risk
 The Group may enter into various interest rate protection agreements in order to limit the impact of movement in interest rates on its borrowings. The Group does not hold or issue derivative financial instruments for the purpose of trading those instruments.
Fair value sensitivity analysis for fixed rate instruments
 The Group’s fixed rate instruments consist solely of the private placement detailed above. The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss and the Group does not designate derivative instruments as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the reporting date would not impact the income statement.
A 1% decrease in interest rates would have increased borrowings, and hence decreased equity, by $11.5 million (2007: $13.1 million).
Cashflow sensitivity analysis for variable rate instruments
 The carrying value of variable rate financial instruments is $36.3 million (2007: $5.5 million). A 1% change in interest rates at the reporting date would have increased/(decreased) equity by $nil (2007: $nil) and profit by $nil (2007: $nil). This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2007.

102	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

 	 	

Analysis of net debt	 	 	 	 	 	 	 	 	
									
 	At 3 February	 	 	 	Exchange	 	At 2 February	 	
 	2007	 	Cash flow	 	movement	 	2008	 	
 	$m	 	$m	 	$m	 	$m	 	
									
Cash in hand	1.2	 	(0.1	)	–	 	1.1	 	
Short term bank deposits	151.1	 	(112.4	)	1.9	 	40.6	 	
									
Cash and cash equivalents	152.3	 	(112.5	)	1.9	 	41.7	 	
									
Borrowings falling due in more than one year	(380.0	)	–	 	–	 	(380.0	)	
Bank overdrafts	(5.5	)	(31.1	)	0.3	 	(36.3	)	
									
Borrowings	(385.5	)	(31.1	)	0.3	 	(416.3	)	
									
Total	(233.2	)	(143.6	)	2.2	 	(374.6	)	

Reconciliation of net cash flow to movement in net debt	 	 	 	 	 	 	
							
 	52 weeks ended	 	53 weeks ended	 	52 weeks ended	 	
 	2 February 2008	 	3 February 2007	 	28 January 2006	 	
 	$m	 	$m	 	$m	 	
							
Net debt at beginning of period	(233.2	)	(174.5	)	(157.9	)	
(Decrease)/increase in cash and cash equivalents	(112.5	)	49.6	 	(92.6	)	
(Increase)/decrease in borrowings	(31.1	)	(136.0	)	83.9	 	
Exchange adjustments	2.2	 	27.7	 	(7.9	)	
							
Net debt at end of period	(374.6	)	(233.2	)	(174.5	)	
							
19. Deferred taxation

 	 	 	2008	 	 	 	 	 	2007	 	 	 	
 	Assets	 	(Liabilities)	 	Total	 	Assets	 	(Liabilities)	 	Total	 	
 	$m	 	$m	 	$m	 	$m	 	$m	 	$m	 	
													
UK property, plant and equipment	2.3	 	–	 	2.3	 	–	 	(0.2	)	(0.2	)	
US property, plant and equipment	–	 	(15.8	)	(15.8	)	–	 	(18.3	)	(18.3	)	
Inventory valuation	–	 	(77.4	)	(77.4	)	–	 	(56.1	)	(56.1	)	
Allowances for doubtful debts	22.1	 	–	 	22.1	 	18.9	 	–	 	18.9	 	
Revenue deferral (extended service agreements)	46.2	 	–	 	46.2	 	40.6	 	–	 	40.6	 	
Straight line lease payments	17.3	 	–	 	17.3	 	15.2	 	–	 	15.2	 	
Deferred compensation	13.3	 	–	 	13.3	 	11.6	 	–	 	11.6	 	
Retirement benefit obligations	1.6	 	–	 	1.6	 	–	 	(1.2	)	(1.2	)	
Other temporary differences	11.0	 	(0.9	)	10.1	 	18.5	 	–	 	18.5	 	
UK property related, net	0.3	 	–	 	0.3	 	0.2	 	–	 	0.2	 	
Value of UK capital losses	27.7	 	–	 	27.7	 	29.4	 	–	 	29.4	 	
													
Total deferred tax assets/(liabilities)	141.8	 	(94.1	)	47.7	 	134.4	 	(75.8	)	58.6	 	
Valuation allowance	(28.0	)	–	 	(28.0	)	(29.6	)	–	 	(29.6	)	
													
Deferred tax assets/(liabilities)	113.8	 	(94.1	)	19.7	 	104.8	 	(75.8	)	29.0	 	
													
UK	 	 	 	 	3.0	 	 	 	 	 	0.2	 	
US	 	 	 	 	16.7	 	 	 	 	 	28.8	 	
													
Deferred tax assets	 	 	 	 	19.7	 	 	 	 	 	29.0	 	
													
The difference on translation in respect of deferred tax posted directly to equity in the period ended 2 February 2008 was $0.1 million charge (2007: $3.0 million charge).

Signet Group plc Annual Report & Accounts year ended 2 February 2008	103	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	

Movement in deferred tax assets:	 	 	
			
 	$m	 	
			
At 3 February 2007	29.0	 	
Amounts recognised in equity:	 	 	
   – Retirement benefit obligations	4.5	 	
   – Other temporary differences	(2.8	)	
Charge in the period to the income statement	(8.8	)	
Transfers to current tax	(2.1	)	
Difference on translation	(0.1	)	
			
At 2 February 2008	19.7	 	

20. Provisions – non-current	 	 	
			
 	$m	 	
			
At 3 February 2007	10.0	 	
Charge in the period to the income statement	0.7	 	
Utilisation (1)  	(1.1	)	
			
At 2 February 2008	9.6	 	
			
(1) Including the impact of foreign exchange translation.	
The provisions are for onerous leases and include the discounted cash flows of future net obligations in respect of vacant properties and the rental shortfall on properties which are sublet at below the rent paid by the Group. These are expected to be utilised over the period from 2009 to 2017.
21. Employee benefit costs - pension schemes
 The Group operates one defined benefit pension scheme in the UK (the “Group Scheme”), which ceased to admit new employees from April 2004. The assets of the Group Scheme, which is a funded scheme, are held in a separate trustee administered fund which is independently managed. The trustees of the Group Scheme during the year were Walker Boyd, John Gillum (retired 7 December 2007), Noel Lyons, Mark Jenkins (appointed 7 December 2007), Anne Riglar (member nominated, appointed 18 May 2007), Peter Gates (member nominated, appointed 18 May 2007) and The Law Debenture Pension Trust Corporation p.l.c. (independent trustee). Contributions to the Group Scheme were assessed as at 5 April 2006 in accordance with the advice of independent qualified actuaries using the attained age method of valuation. Where appropriate, supplementary pension and life assurance for UK directors and senior executives was provided until 5 April 2006 through the Signet Group Funded Unapproved Retirement Benefits Scheme (FURBS). No further contributions are paid into the FURBS and in substitution a supplement is now paid directly to the members.
An actuarial valuation of the Group Scheme was carried out as at 5 April 2006. Results of that valuation have been updated to 2 February 2008 by an independent qualified actuary. The next full actuarial valuation will be carried out as at 5 April 2009.
As the Group Scheme is closed to new entrants, the current service cost (calculated under the projected unit method, as required by IAS 19), will increase as a percentage of salaries as its members approach retirement.
In June 2004, the Group introduced a defined contribution plan which replaced the Group Scheme for new UK employees. The employer contributions to this scheme in the period were $0.2 million (2007: $0.2 million; 2006: $0.1 million).
In the US, the Group sponsors a defined contribution 401(k) retirement savings plan for all eligible employees who meet minimum age and service requirements. The assets of this plan are held in a separate trust managed by KeyBank under which the Group matches 25% of up to the first 6% of employee elective salary deferrals. The Group has also established, in the US, an unfunded, unqualified deferred compensation plan (“DCP”) which permits certain management employees to elect annually to defer all or a portion of their remuneration and earn interest on the deferred amounts. The plan also provides for a Group matching contribution based on each participant’s annual remuneration deferral. In connection with this plan, the Group has invested in trust-owned life insurance policies.

104	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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The main assumptions used by the actuary to calculate the Group Scheme liabilities were:	 	 	 	 	 	
						
 	2008	 	 	2007	 	
						
Rate of increase in salaries	5.0	%	 	4.6	%	
Rate of increase in deferred pensions during deferment	3.5	%	 	3.1	%	
Rate of increase in pensions in payment (1)  	3.5	%	 	3.1	%	
Discount rate	5.9	%	 	5.2	%	
Inflation assumptions	3.5	%	 	3.1	%	
Expected return on Group Scheme assets	6.9	%	 	6.9	%	
Longevity at age 65 for current pensioners:	 	 	 	 	 	
   – Male	22.0 years	 	 	21.8 years	 	
   – Female	24.8 years	 	 	24.7 years	 	
Longevity at age 65 for future pensioners:	 	 	 	 	 	
   – Male	23.3 years	 	 	23.2 years	 	
   – Female	26.0 years	 	 	26.0 years	 	
						
(1) For the majority of members.	
The mortality tables used to value the Group Scheme’s liabilities as at 2 February 2008 are PA92(year of birth)mc for current pensioners and future retirees. These tables give a life expectancy as set out in the table above. Based on the advice of an independent qualified actuary, the directors consider these mortality tables to make an appropriate allowance for future projected improvements in life expectancy.
The table below shows the sensitivity of the funded status of the Group Scheme to changes in the assumptions used in calculating the benefit obligations and scheme asset fair values:

 	 	 	Fair value	 	 	 	 	 	
 	Benefit	 	of Scheme	 	Funded	 	 	 	
 	obligation	 	assets	 	status	 	Sensitivity	 	
 	$m	 	$m	 	$m	 	$m	 	
									
Recognised as at 2 February 2008	(253.7	)	248.1	 	(5.6	)	 	 	
Discount rate +0.1%	(249.7	)	248.1	 	(1.6	)	+4.0	 	
Inflation –0.1%	(250.2	)	248.1	 	(2.1	)	+3.5	 	
Life expectancy + 1 year	(260.7	)	248.1	 	(12.6	)	-7.0	 	
									
The Group expects to contribute a minimum of $7.4 million to the Group Scheme in 2008/09 based on funding rates agreed in the 5 April 2006 actuarial valuation.	

 	2008	 	 	2007	 	
 	$m	 	 	$m	 	
						
The Group pension cost for the period comprises:	 	 	 	 	 	
Charge to operating profit:	 	 	 	 	 	
UK Group Scheme net service cost	(6.4	)	 	(6.6	)	
UK defined contribution plan	(0.2	)	 	(0.2	)	
US retirement savings plan	(4.8	)	 	(4.1	)	
						
 	(11.4	)	 	(10.9	)	
Net credit to financing costs:	 	 	 	 	 	
Expected return on Group Scheme assets	18.3	 	 	14.7	 	
Interest on Group Scheme liabilities	(13.5	)	 	(12.6	)	
						
 	(6.6	)	 	(8.8	)	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	105	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	
 
The assets in the Group Scheme and the expected rates of return (net of administration expenses) were:

 	2008	 	 	2007	 	
 	Long term rate	 	 	 	 	Long term rate	 	 	 	
 	of return	 	 	 	 	of return	 	 	 	
 	expected	 	Value	 	 	expected	 	Value	 	
 	%	 	$m	 	 	%	 	$m	 	
										
Equities and property	7.7	%	171.9	 	 	7.9	%	193.7	 	
Bonds	4.9	%	72.9	 	 	4.7	%	62.8	 	
Cash	 	 	3.3	 	 	 	 	5.1	 	
										
Total market value of assets	 	 	248.1	 	 	 	 	261.6	 	
Present value of Group Scheme liabilities	 	 	(253.7	)	 	 	 	(257.9	)	
										
(Deficit)/surplus in the Group Scheme	 	 	(5.6	)	 	 	 	3.7	 	
Related deferred tax asset/(liability)	 	 	1.6	 	 	 	 	(1.2	)	
										
Net pension (liability)/asset	 	 	(4.0	)	 	 	 	2.5	 	
										
The Trustee’s investment strategy is set out in their Statement of Investment Principles. To guide them in their strategic management of the assets and control of the various risks to which the Group Scheme is exposed, the Trustees have adopted the following objectives:

•	To make sure that obligations to the beneficiaries of the Group Scheme can be met;	
•	To acknowledge the Group’s interest in the size and incidence of its contribution payments.	
The Trustees continue to monitor this investment strategy, after taking professional advice.
To develop the long term rate of return on asset assumptions, the Trustees considered the historical return and future expected returns for each asset class, as well as the target asset allocation of the pension portfolio. The expected return is then reduced by 0.3% per annum as an allowance for Group Scheme expenses. This resulted in the selection of the 6.9% per annum long term rate of return on assets assumption from 3 February 2007, and 6.9% per annum from 2 February 2008.
There is no investment by the Group Scheme in the shares of Signet Group plc or in property occupied by or other assets used by the Group.

Analysis of amount recognised in the consolidated statement of recognised income and expense (“SORIE”)	 	 	 	 	 	
						
 	2008	 	 	2007	 	
 	$m	 	 	$m	 	
						
Actual return less expected return on Group Scheme assets	(30.1	)	 	(2.0	)	
Experience gain on liabilities including change in assumptions	15.1	 	 	32.5	 	
						
Actuarial (loss)/gain	(15.0	)	 	30.5	 	
Deferred tax	4.5	 	 	(9.4	)	
						
Recognised in SORIE	(10.5	)	 	21.1	 	
						
The accumulated benefit obligation (defined as the projected unit liability with no allowance for future salary growth) of the Group Scheme at 2 February 2008 was $240.4 million (2007: $246.9 million).

106	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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The movement in Group Scheme benefit obligation during the financial year was as follows:		 		 	
					
 	2008	 	2007	 	
 	$m	 	$m	 	
					
Benefit obligation at beginning of financial year	257.9	 	251.0	 	
Current service cost	6.4	 	6.4	 	
Past service cost	–	 	0.2	 	
Benefits paid	(9.9	)	(8.1	)	
Member contributions	0.9	 	0.9	 	
Interest cost	13.5	 	12.6	 	
Actuarial gain	(15.1	)	(32.5	)	
Exchange	–	 	27.4	 	
					
Benefit obligation at end of financial year	253.7	 	257.9	 	
					
The movement in Group Scheme assets during the financial year was as follows:

 	2008	 	2007	 	
 	$m	 	$m	 	
					
Fair value of Group Scheme assets at beginning of financial year	261.6	 	223.6	 	
Expected return on Group Scheme assets	18.3	 	14.7	 	
Benefits paid	(9.9	)	(8.1	)	
Member contributions	0.9	 	0.9	 	
Employer contributions	7.2	 	6.8	 	
Actuarial loss	(30.1	)	(2.0	)	
Exchange	0.1	 	25.7	 	
					
Fair value of Group Scheme assets at end of financial year	248.1	 	261.6	 	
					
The actual loss on Group Scheme assets was $11.8 million (2007: $12.7 million return).	 	 	 	 	
History of experience gains and losses

 	2008	 	2007	 	2006	 	2005	 	
									
Difference between expected and actual return on Group Scheme assets ($ million)	(30.1	)	(2.0	)	22.0	 	(0.5	)	
Percentage of Group Scheme assets	(12	)%	(1	)%	10	%	0	%	
Experience gain/(loss) on Group Scheme liabilities ($ million)	15.1	 	32.5	 	(51.3	)	(9.4	)	
Percentage of Group Scheme liabilities	6	%	13	%	(20	)%	(5	)%	
Total amount recognised in SORIE – gross ($ million)	15.0	 	30.5	 	(29.3	)	(9.9	)	
Percentage of Group Scheme liabilities	6	%	12	%	(11	)%	(5	)%	
									
The cumulative actuarial losses reported in the consolidated statement of recognised income and expense since the IFRS transition date are $6.3 million.
Projected benefits payments are as follows:

 	$m	(1)  	
			
2008/09	10.3	 	
2009/10	11.3	 	
2010/11	11.7	 	
2011/12	12.0	 	
2012/13	13.8	 	
2013 to 2017/18	72.8	 	
			
(1)	Translated at $2.00 = £1.00, the average exchange rate applied for the 52 weeks ended 2 February 2008.	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	107	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	

22.	Share capital	
							
 	2008	 	2007	 	2006	 	
 	$m	 	$m	 	$m	 	
							
Authorised:	 	 	 	 	 	 	
5,929,874,019 shares of 0.5p each	–	 	48.6	 	48.6	 	
5,929,874,019 shares of 0.9c each	53.4	 	–	 	–	 	
50,000 deferred shares of £1 each	0.1	 	–	 	–	 	
							
Allotted, called up and fully paid:	 	 	 	 	 	 	
Nil shares of 0.5p each (2007: 1,713,553,809; 2006: 1,738,843,382)	–	 	14.0	 	14.3	 	
1,705,510,466 shares of 0.9c each	15.3	 	–	 	–	 	
50,000 deferred shares of £1 each	0.1	 	–	 	–	 	
							
The allotted, called up and fully paid share capital as a percentage of the issued share capital at 2 February 2008 is 100% for 0.9c shares and 100% for £1 deferred shares.

 	Number of shares	 	$m	 	
					
Allotted, called up and fully paid:	 	 	 	 	
Shares of 0.5p each:	 	 	 	 	
At 29 January 2005	1,735,615,152	 	14.3	 	
Shares issued to QUEST	31,767	 	–	 	
Shares issued to 2004 ESOT	516,820	 	–	 	
Other share options exercised	2,679,643	 	–	 	
					
At 28 January 2006	1,738,843,382	 	14.3	 	
					
At 28 January 2006	1,738,843,382	 	14.3	 	
Shares issued to 2004 ESOT	3,356,399	 	–	 	
Share buyback	(30,271,522	)	(0.3	)	
Other share options exercised	1,625,550	 	–	 	
					
At 3 February 2007	1,713,553,809	 	14.0	 	
					
At 3 February 2007	1,713,553,809	 	14.0	 	
Exchange arising on redenomination of share capital	–	 	1.4	 	
Capital reduction on 5 February 2007	(1,713,553,809	)	(15.4	)	
					
 	nil	 	nil	 	
Ordinary shares of 0.9c each:	 	 	 	 	
Issued on 5 February 2007	1,713,553,809	 	15.4	 	
Share buyback	(12,205,000	)	(0.1	)	
Shares issued to 2004 ESOT	3,804,241	 	–	 	
Other share options exercised	357,416	 	–	 	
					
At 2 February 2008 total allotted, called up and fully paid ordinary share capital	1,705,510,466	 	15.3	 	
Deferred shares of £1 each on issue and at 2 February 2008	50,000	 	0.1	 	
					
Total share capital	1,705,560,466	 	15.4	 	
					
On 5 February 2007, the Company redenominated its share capital into US dollars by way of a reduction in capital and subsequent issue and allotment of new US dollar ordinary shares, which had been approved by shareholders on 12 December 2006 and received Court approval on 31 January 2007.

108	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

 	 	

The nominal value of each US dollar denominated ordinary share is 0.9 cent, and shareholders received one new US dollar denominated ordinary share for each sterling ordinary share held. The new shares have the same rights and restrictions as the previously issued ordinary shares and the existing share certificates remain valid.
Additionally, to comply with the Companies Act 1985, £50,000 of share capital is required to be held denominated in pounds sterling to which end 50,000 deferred shares of £1 each were allotted and issued and credited to the Group Company Secretary on 5 February 2007. These shares have limited and deferred rights.
The consideration received in respect of the 4,161,657 shares issued during the year for the exercise of share options was $6.0 million (2007: $6.4 million). During the year, 12,205,000 shares were purchased by the Company for a consideration of $29.0 million.
In the 52 weeks ended 2 February 2008 the trustee of the ESOT subscribed in cash for a total of 3,804,241 shares in order to provide shares to satisfy the exercise of executive share options granted to US employees. In aggregate the subscription monies amounted to $5.4 million at option prices between $0.545 and $2.05. The subscription prices were the market prices on the last business days before the dates on which the respective terms of issue were fixed, and varied between 82p and 126.75p per share.
On various dates during the 52 weeks ended 2 February 2008 a total of 357,416 shares were subscribed for in cash by holders of options. In aggregate the subscription monies amounted to $0.6 million at option prices between 79.6p and 94p per share. The subscription prices were the market prices at the various times at which the options were granted. The market prices on the dates of issue varied between 64.75p and 126.5p per share. Details of options in respect of shares are shown in note 27 on page 113.
The trustee of the ESOT, Halifax EES Trustees International Limited, held 2,633,908 shares at 3 February 2007. In the 52 weeks ended 2 February 2008 the trustee transferred 913,957 shares to the holders of executive share and LTIP options granted to UK employees. The trustee held 1,719,951 shares at 2 February 2008 and 1,719,951 shares at 8 April 2008 .

Signet Group plc Annual Report & Accounts year ended 2 February 2008	109	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	

23. Share premium and reserves	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
															
 	 	 	Other reserves	 	Retained earnings	 	 	 	
 	 	 			 							 			
 	Share	 	 	 	 	Purchase	 	 	 	 	 	 	 	 	
 	premium	 	Capital	Special	 	of own	 	Hedging	Translation	 	Retained	(1)	 	 	
 	account	 	redemption	reserves	 	shares	 	reserve	reserve	 	reserve	 	Total	 	
 	$m	 	$m	$m	 	$m	 	$m	$m	 	$m	 	$m	 	
															
At 29 January 2005	118.2	 	–	234.8	 	(14.7	)	–	(10.6	)	1,116.5	 	1,444.2	 	
Recognised income and expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   – profit for the financial period	–	 	–	–	 	–	 	–	–	 	235.4	 	235.4	 	
   – cash flow hedges (net)	–	 	–	–	 	–	 	2.8	–	 	–	 	2.8	 	
   – translation differences	–	 	–	–	 	–	 	–	(36.6	)	–	 	(36.6	)	
   – actuarial loss (net)	–	 	–	–	 	–	 	–	–	 	(20.4	)	(20.4	)	
Dividends	–	 	–	–	 	–	 	–	–	 	(94.9	)	(94.9	)	
Equity-settled transactions (net)	–	 	–	–	 	–	 	–	–	 	7.4	 	7.4	 	
Share options exercised	4.1	 	–	–	 	2.9	 	–	–	 	–	 	7.0	 	
Purchase of own shares by ESOT	–	 	–	–	 	(3.6	)	–	–	 	–	 	(3.6	)	
Shares issued to ESOTs	2.5	 	–	–	 	–	 	–	–	 	(2.5	)	–	 	
															
At 28 January 2006	124.8	 	–	234.8	 	(15.4	)	2.8	(47.2	)	1,241.5	 	1,541.3	 	
Recognised income and expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   – profit for the financial period	–	 	–	–	 	–	 	–	–	 	266.0	 	266.0	 	
   – cash flow hedges (net)	–	 	–	–	 	–	 	2.3	–	 	–	 	2.3	 	
   – translation differences	–	 	–	–	 	–	 	–	57.3	 	–	 	57.3	 	
   – actuarial gain (net)	–	 	–	–	 	–	 	–	–	 	21.1	 	21.1	 	
Dividends	–	 	–	–	 	–	 	–	–	 	(108.7	)	(108.7	)	
Equity-settled transactions (net)	–	 	–	–	 	–	 	–	–	 	8.1	 	8.1	 	
Share options exercised	8.6	 	–	–	 	2.1	 	–	–	 	(3.0	)	7.7	 	
Purchase of own shares	–	 	0.3	–	 	–	 	–	–	 	(63.4	)	(63.1	)	
Shares issued to ESOTs	1.3	 	–	–	 	–	 	–	–	 	(1.3	)	–	 	
															
At 3 February 2007	134.7	 	0.3	234.8	 	(13.3	)	5.1	10.1	 	1,360.3	 	1,732.0	 	
Exchange arising on redenomination of share capital	(1.4	)	–	–	 	–	 	–	–	 	–	 	(1.4	)	
															
 	133.3	 	0.3	234.8	 	(13.3	)	5.1	10.1	 	1,360.3	 	1,730.6	 	
Recognised income and expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   – profit for the financial period	–	 	–	–	 	–	 	–	–	 	215.2	 	215.2	 	
   – cash flow hedges (net)	–	 	–	–	 	–	 	3.1	–	 	–	 	3.1	 	
   – translation differences	–	 	–	–	 	–	 	–	(0.1	)	–	 	(0.1	)	
   – actuarial loss (net)	–	 	–	–	 	–	 	–	–	 	(10.5	)	(10.5	)	
Dividends	–	 	–	–	 	–	 	–	–	 	(123.9	)	(123.9	)	
Equity-settled transactions (net)	–	 	–	–	 	–	 	–	–	 	(0.3	)	(0.3	)	
Share options exercised	6.5	 	–	–	 	2.5	 	–	–	 	(3.5	)	5.5	 	
Purchase of own shares	–	 	0.1	–	 	–	 	–	–	 	(29.0	)	(28.9	)	
Shares issued to ESOTs	0.4	 	–	–	 	–	 	–	–	 	(0.4	)	–	 	
															
At 2 February 2008	140.2	 	0.4	234.8	 	(10.8	)	8.2	10.0	 	1,407.9	 	1,790.7	 	
															
(1)	The retained reserve includes the unrealised surplus arising from revaluing freehold and long leasehold properties of $8.5 million (2007: $8.5 million; 2006: $8.5 million).	

110	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Following the 1997 capital reduction, the holding company, Signet Group plc, is permitted to make distributions (including dividends, share buy-backs and other transactions classed as distributions) out of profit earned after 2 August 1997, the end of its 1997/98 half year.
The undertakings given to the High Court at the time of the capital reduction included the requirement that the Company transferred to a new special reserve any dividend paid by a subsidiary undertaking from profits relating to prior to that date. The special reserve is, for as long as the Company is a public company, treated as a non-distributable reserve for the purposes of section 264 of the Companies Act 1985.
In accordance with undertakings given by the Company to the High Court in connection with previous reductions of the share premium account, an earlier special reserve is available to write-off existing goodwill resulting from acquisitions and otherwise only for purposes permitted in the case of the share premium account. Under English law, dividends can only be paid out of profits available for distribution (generally defined as accumulated realised profits less accumulated realised losses less net unrealised losses) and not out of share capital or share premium (generally equivalent in US terms to paid-in surplus).
The own shares reserve represents the cost of shares in Signet Group plc purchased in the market and held by the ESOT to satisfy options under the Group’s share option schemes. The translation reserve represents exchange differences on translation of foreign operations. The hedging reserve comprises gains and losses in cash flow hedges net of related deferred taxation.
The capital redemption reserve has arisen on the cancellation of previously issued shares and represents the nominal value of those shares cancelled.
At 2 February 2008, after taking into account the recommended final dividend of 6.317 cents per share, the holding company had distributable reserves of $283.2 million (3 February 2007: $199.0 million). There are additional potentially distributable reserves held in subsidiary companies.
24. Commitments
 Operating lease commitments – minimum lease payments
 The Group occupies certain properties and holds plant, machinery and vehicles under operating leases. The property leases often include renewal options and escalation clauses and, in the US, generally provide for contingent rentals based on a percentage of lease defined revenues.
The minimum payments in respect of operating leases for the 52 weeks to 1 February 2009 to which the Group was committed as at 2 February 2008 were as follows:

 	Plant,	 	 	 	 	 	
 	machinery	 	Leasehold	 	 	 	
 	& vehicles	 	properties	 	Total	 	
 	$m	 	$m	 	$m	 	
							
Operating leases which expire:	 	 	 	 	 	 	
Within one year	0.9	 	14.6	 	15.5	 	
Between one and five years	1.9	 	84.9	 	86.8	 	
More than five years	–	 	196.7	 	196.7	 	
							
At 2 February 2008	2.8	 	296.2	 	299.0	 	
							
At 3 February 2007	3.4	 	276.9	 	280.3	 	
							
The future minimum payments for operating leases having initial or non-cancellable terms in excess of one year are as follows:	 	 	
			
 	$m	 	
			
For financial periods:	 	 	
2008/09	299.0	 	
2009/10	280.8	 	
2010/11	260.4	 	
2011/12	241.2	 	
2012/13	219.2	 	
Thereafter	1,227.8	 	
			
 	2,528.4	 	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	111	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	
 
Capital and other financial commitments
 Capital commitments at 2 February 2008 for which no provision has been made in these consolidated accounts were as follows:

 	2008	 	2007	 	
 	$m	 	$m	 	
					
Contracted	37.4	 	24.4	 	
					
25. Contingent liabilities
 The Group is not party to any legal proceedings considered to be material to profit, financial position or cash flow including any bankruptcy, receivership or similar proceedings involving the Group or any of its subsidiaries. No director, officer or affiliate of the Group or any associate of any such director has been a party adverse to the Group or any of its subsidiaries or has a material interest adverse to the Group or any of its subsidiaries.
A class lawsuit for an unspecified amount has been filed against Sterling Jewelers Inc, a subsidiary of Signet Group plc, in the New York federal court. The lawsuit alleges that US store-level employment practices are discriminatory as to compensation and promotional activities. The Group denies these allegations and intends to defend them vigorously.
The Group has assigned or sub-let UK property leases in the normal course of business. Should the assignees or sub-tenants fail to fulfil any obligation in respect of these leases, the Group may be liable for those defaults. The number of such claims arising to date has been small, and the liability, which is charged to the income statement as it arises, has not been material.
26. Financial instruments
Currency derivatives
 The Group operates in both the US and the UK and it is exposed to foreign exchange risk arising from various currency exposures. The Group enters into the forward purchase of foreign currencies, principally the US dollar, in order to limit the impact of movements in foreign exchange rates on its forecast foreign currency purchases.
The Group also enters into forward purchase contracts for commodities in order that values of assets should not be unnecessarily exposed to significant movements in the price of the underlying precious metal raw material.

 	Fair values as at	 	Fair values as at	 	
 	2 February 2008	 	3 February 2007	 	
 	Assets	 	Liabilities	 	Assets	 	Liabilities	 	
 	$m	 	$m	 	$m	 	$m	 	
									
Cash flow hedges:	 	 	 	 	 	 	 	 	
Forward foreign currency contracts	1.9	 	–	 	–	 	(0.8	)	
Forward commodity contracts	9.6	 	–	 	8.3	 	–	 	
									
 	11.5	 	–	 	8.3	 	(0.8	)	
									
Foreign currency exchange contracts not designated as cash flow hedges are used to hedge currency flows through the Signet Group plc bank accounts to ensure the Group is not exposed to foreign currency exchange risk in its cash and borrowings. As at 2 February 2008 the fair value of outstanding cross currency swaps was a liability of $1.6 million (2007: asset of $0.2 million).
The fair values of all financial instruments shown above are based on market value equivalents at the balance sheet date and are held as assets and liabilities within other receivables and other payables, and all contracts have a maturity of less than one year.
Gains of $10.2 million (2007: loss of $1.5 million) have been transferred to inventories in respect of contracts that matured during the period. Changes in the fair value of non-hedging foreign currency financial instruments amounting to $1.3 million (2007: $0.2 million) have been credited to the income statement during the period. The ineffective portion of hedging instruments taken to the income statement was $1.0 million (2007: $nil).

112	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Currency risk
The significant exchange rates applied during the year have been disclosed in note 6. The Group’s exposure to foreign currency risk based on notional amounts is detailed below together with an analysis of the effect of a 10% strengthening of the US dollar against the UK pound. This analysis assumes that all other variables, in particular interest rates, remain constant.

 	 	 	10%	 	 	 	10%	 	
 	Estimated fair	 	strengthening	 	Estimated fair	 	strengthening	 	
 	value	 	in $ against £	 	value	 	in $ against £	 	
 	2 February	 	(unfavourable)/	 	3 February	 	(unfavourable)/	 	
 	2008	 	favourable	 	2007	 	favourable	 	
 	$m	 	$m	 	$m	 	$m	 	
									
Borrowings	(416.3	)	–	 	(385.5	)	–	 	
Foreign currency receivable	34.7	 	(3.5	)	40.3	 	(4.0	)	
Foreign currency payables	(149.3	)	14.9	 	(153.4	)	15.3	 	
									
Foreign exchange contracts	0.3	 	8.0	 	(0.6	)	(6.1	)	
Commodity hedging contracts	9.6	 	–	 	8.1	 	–	 	
									
A 10% weakening of the US dollar would have had the equal but opposite effect, on the basis that all other variables remain constant.
27. Share options 
 The Group operates several share option schemes which can be categorised as “Saving Share Schemes”, “Executive Schemes”, and “Long Term Incentive Plans”.
Saving Share Schemes
 Three all-employee share option schemes comprising a savings related share option scheme for UK employees (the “Sharesave Scheme”), a US Section 423 Plan (the “Employee Stock Savings Plan”) and a savings related share option scheme for Republic of Ireland employees (the “Irish Sharesave Scheme”) are together referred to as “Saving Share Schemes”. Options granted under the Sharesave Scheme and the Irish Sharesave Scheme are generally only exercisable between 36 and 42 months from commencement of the related savings contract. Options granted under the Employee Stock Savings Plan are generally only exercisable between 24 and 27 months of the grant date.
Executive Schemes
 Executive Schemes are subject to performance conditions requiring compound annual growth in earnings per share above inflation. Under the 1993 Scheme, the performance condition is measured over a consecutive three year period. Under the 2003 Scheme the performance condition is measured over three years from the start of the financial period in which the award is made, and may then be measured from the last month of the year in which the award is made to the end of the fourth or fifth years, if not previously satisfied. For all grants beginning with those awarded in 2006/07, and all subsequent grants made to executive directors, the performance will only be measured over the three years from the start of the financial year in which the award is made. Additionally, for UK executives, the personal performance of participants will be assessed on each occasion that the share grant takes place, whilst for US executives there is a pre-grant test based on both personal and corporate performance. Grants beginning with those awarded in 2007/08 (other than for executive directors) are not subject to performance conditions.
Long Term Incentive Plans
 The Long Term Incentive Plan 2000, which was replaced by the Long Term Incentive Plan 2005, are together referred to as “Long Term Incentive Plans” (“LTIPs”). LTIPs are subject to performance conditions, requiring compound annual growth in profit before tax at constant exchange rates of the Group or, for divisional executives, growth in divisional operating profit, and in ROCE of the Group or related division as appropriate. The exercise price of the total share option grant under the Long Term Incentive Plan 2000 is a nominal amount of £1 or $1 as appropriate and under the Long Term Incentive Plan 2005 there is no exercise price.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	113	

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 	Notes to the accounts (continued)	

Option scheme status		 		 		 		 		 		 	
													
 	Saving share schemes	 	Executive schemes	 	LTIPs	 	
 	No. of share	 	WAEP (1)	 	No. of shares	 	WAEP (1)	 	No. of shares	 	WAEP (1)	 	
 				 				 					
 	millions	 	pence	 	millions	 	pence	 	millions	 	pence	 	
													
At 29 January 2005	7.1	 	78	 	35.5	 	85	 	3.3	 	–	 	
Movements in period	 	 	 	 	 	 	 	 	 	 	 	 	
   Granted	3.1	 	81	 	9.7	 	112	 	0.9	 	–	 	
   Exercised	(2.6	)	68	 	(3.3	)	61	 	(0.2	)	–	 	
   Lapsed	(0.9	)	82	 	(1.1	)	103	 	(0.2	)	–	 	
													
At 28 January 2006	6.7	 	84	 	40.8	 	97	 	3.8	 	–	 	
Movements in period	 	 	 	 	 	 	 	 	 	 	 	 	
   Granted	2.2	 	95	 	9.8	 	112	 	1.8	 	–	 	
   Exercised	(1.6	)	84	 	(4.3	)	88	 	(1.6	)	–	 	
   Lapsed	(1.0	)	84	 	(1.6	)	103	 	(0.4	)	–	 	
													
At 3 February 2007	6.3	 	86	 	44.7	 	103	 	3.6	 	–	 	
Movements in period	 	 	 	 	 	 	 	 	 	 	 	 	
   Granted	3.8	 	76	 	8.6	 	124	 	1.5	 	–	 	
   Exercised	(0.4	)	85	 	(5.4	)	86	 	(0.5	)	–	 	
   Lapsed	(2.0	)	84	 	(0.8	)	117	 	(0.4	)	–	 	
													
At 2 February 2008	7.7	 	82	 	47.1	 	109	 	4.2	 	–	 	
													
Options exercisable	1.0	 	86	 	20.3	 	99	 	0.1	 	–	 	
													
(1)	Weighted Average Exercise Price	
The weighted average share price at the date of exercise for share options exercised during the period was 119p.
The following tables summarise the information about share options outstanding at the close of business on 2 February 2008, and the inputs used in a binomial model for Saving Share and Executive option schemes, and in a Black-Scholes model for LTIP option schemes, for the calculation of the fair value of options granted in the 2005/06, 2006/07 and 2007/08 financial periods:

 	Saving share schemes	 	Executive schemes	 	LTIPs	 	
 						 						 							
 	Shares	 	WACL (2)	 	WAEP (1)	 	Shares	 	WACL (2)	 	WAEP (1)	 	Shares	 	WACL (2)	 	WAEP (1)	 	
Exercise price range	millions	 	years	 	pence	 	millions	 	years	 	pence	 	millions	 	years	 	pence	 	
																			
75p to 95p	7.7	 	1.2	 	82	 	–	 	–	 	–	 	–	 	–	 	–	 	
33p to 76p	–	 	–	 	–	 	2.8	 	2.5	 	64	 	–	 	–	 	–	 	
76p to 125p	–	 	–	 	–	 	44.3	 	7.1	 	112	 	–	 	–	 	–	 	
Nil	–	 	–	 	–	 	–	 	–	 	–	 	4.2	 	8.3	 	–	 	
																			
Nil to 125p	7.7	 	1.2	 	82	 	47.1	 	6.9	 	109	 	4.2	 	8.3	 	–	 	
																			
(1)	Weighted Average Exercise Price	
(2)	Weighted Average Remaining Contractual Life	

114	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Financial statements	

																			
 	Saving share schemes	 	Executive schemes	 	    LTIPs	 	
 						 						 							
 	2008	 	2007	 	2006	 	2008	 	2007	 	2006	 	2008	 	2007	 	2006	 	
																			
Share price at grant date (3)	90 p	 	120 p	 	99 p	 	122 p	 	110 p	 	112 p	 	122 p	 	110 p	 	114 p	 	
Exercise price (3)	76 p	 	95 p	 	81 p	 	124 p	 	112 p	 	112 p	 	nil	 	nil	 	nil	 	
Risk free interest rate	4.49 %	 	4.91 %	 	4.00 %	 	4.56 %	 	4.72 %	 	4.15 %	 	4.61 %	 	4.80 %	 	4.10 %	 	
Expected life of options	2.8 years	 	2.6 years	 	2.7 years	 	4.3 years	 	4.3 years	 	4.3 years	 	3.5 years	 	3.5 years	 	3.5 years	 	
Expected volatility	26 %	 	31 %	 	38%	 	28 %	 	34 %	 	38 %	 	28 %	 	34 %	 	38 %	 	
Dividend yield	3.3 %	 	3.2 %	 	2.2 %	 	2.9 %	 	2.8 %	 	2.3 %		2.9 %	 	2.8 %	 	2.3%	 	
Grant date fair value (3)	45 c	 	68 c	 	59 c	 	53 c	 	55 c	 	63 c	 	220 c	 	188 c	 	190 c	 	
																			
(3)	Weighted average	
The expected volatility is determined by calculating the historical volatility of the Group’s share price over the previous five years. The expected life used in the model is based on the historical exercise behaviour of the main categories of option recipients. The Group recognised total share-based payment expense of $0.4 million in the financial period ending 2 February 2008 (2007: $6.7 million; 2006: $8.1 million).
28. Principal subsidiary undertakings
 At 2 February 2008, the Company had the following subsidiary undertakings carrying on businesses which principally affected the profits and assets of the Group. They have the same year end date as the Company.
The country of incorporation is also their principal place of operation.

 	 	 	Country of	 	 	 	
 	 	 	incorporation	 	Percentage	 	
 	Principal activity	 	or registration	 	shareholdings	 	
							
Ernest Jones Limited	Retail jeweller	 	UK	 	100 %	 	
H.Samuel Limited	Retail jeweller	 	UK	 	100 %	 	
Leslie Davis Limited	Retail jeweller	 	UK	 	100 %	 	
Signet Trading Limited	Retail jeweller	 	UK	 	100 %	 	
Sterling Inc.	Retail jeweller	 	US	 	100 %	 	
Sterling Jewelers Inc.	Retail jeweller	 	US	 	100 %	 	
Sterling Jewelers LLC	Retail jeweller	 	US	 	100 %	 	
Signet Holdings Limited	Holding company	 	UK	 	100 %	 	
Signet US Holdings, Inc.	Holding company	 	US	 	100 %	 	
Checkbury Limited	Property holding company	 	UK	 	100 %	 	
Signet Sourcing Limited	Diamond Sourcing	 	UK	 	100 %	 	
							
29. Related party transactions
 The Company has entered into contractual arrangements with each of its directors to provide indemnities to the extent permitted under UK law.
Certain US subsidiaries of the Company have constitutions and by-laws which provide indemnities to directors which conform to local laws and practices. In some respects these indemnities exceeded what would be permitted under English law if they were UK companies.
In discussion with the UK Listing Authority, the Company has amended the subsidiary company constitutions and by-laws to cap any existing indemnity to the extent that it exceeds that which is permitted under English law. The individuals receiving such an indemnity are Terry Burman, Walker Boyd, Mark Light, Robert Trabucco and George Frankovitch.
Details of directors’ remuneration are set out on page 70.
The are no other related party transactions which require disclosure in these accounts.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	115	

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 	 	Notes to the accounts (continued)	
 
30. Summary of differences between IFRS and US GAAP 
 The Group’s consolidated accounts are prepared in accordance with IFRS, which differs in certain respects from US GAAP. Differences which have a significant effect on the consolidated net profit and shareholders’ funds of the Group are set out below. While this is not a comprehensive summary of all differences between IFRS and US GAAP, other differences would not have a significant effect on the consolidated net profit or funds attributable to equity holders of the Company.
The differences have been shown gross of tax with the related taxation shown separately.
(a) Goodwill
 Under IFRS, goodwill is carried at cost with impairment reviews carried out annually, or when a triggering event occurs, in lieu of amortisation. Previously, the Group applied UK GAAP Financial Reporting Standards 10 ‘Goodwill and intangible assets’ (“FRS 10”) in respect of acquisitions post 1 February 1998; that required the capitalisation and amortisation of goodwill. Prior to the adoption of FRS 10, the Group wrote off goodwill directly to reserves.
Under US GAAP, prior to the adoption of Statement of Financial Accounting Standards (“SFAS”) 142, ‘Goodwill and Other Intangible Assets’, goodwill was capitalised and amortised through the income statement over its estimated useful life (not to exceed 40 years). SFAS 142, effective for the Group from 3 February 2002, requires that goodwill be tested annually for impairment in lieu of amortisation.
(b) Sale and leaseback transactions
 Under IFRS, sale and leaseback transactions of freehold and long leasehold properties that result in an operating lease are established at fair value and accounted for by including in profit before taxation the full gain arising in the financial year in which the transaction took place. Under US GAAP, the gain arising is credited to the income statement in equal instalments over the life of the lease.
(c) Pensions
 As at 3 February 2007, the Group adopted SFAS 158 ‘Employers’ accounting for defined benefit and other post-retirement pension plans’, which requires the Group to fully recognise the Group Scheme’s funded status on the balance sheet. Changes in the funded status are recognised through other comprehensive income in the year they occur, other than the net periodic benefit cost pursuant to SFAS 87 ‘Employers accounting for pensions’, which is reported within the income statement. The Group Scheme asset or liability on the balance sheet is therefore the same under IFRS and US GAAP. However, the following differences remain between IFRS and US GAAP:

–	under US GAAP, actuarial gains and losses outside a 10% ‘corridor’ are recycled from other comprehensive income to operating profit over the average service lives of employees, in accordance with SFAS 87;	
 	 	
–	expected returns on pension assets and interest charges are reported in operating profit under US GAAP but included within finance income and expense under IFRS.	
Prior to the adoption of SFAS 158, the Group complied with SFAS 87, SFAS 88 ‘Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits’ and SFAS 106 ‘Employers Accounting for Postretirement Benefits other than Pensions, as amended by SFAS 132(R) ‘Employers’ disclosure about pensions and other post-retirement benefits’. The Group therefore recognised a pension liability in the financial statements when the accumulated benefit obligation exceeded the fair value of the plan assets to the extent this liability had not already been recognised. The Group Scheme had such a liability under US GAAP at 28 January 2006 but did not have such a liability at 3 February 2007. Consequently, the additional minimum liability above the intangible asset at 28 January 2006 was released through other comprehensive income during the 53 week period ended 3 February 2007.
The pension asset at 3 February 2007, prior to adoption of SFAS 158, was $51.0 million. Following adoption of SFAS 158, the Group recorded a pension asset as at 3 February 2007 of $3.7 million, being the funded status of the Group Scheme. To achieve this, SFAS 158 required a one-time adjustment at 3 February 2007 to accumulated other comprehensive income of $47.3 million (before tax effect).
(d) Share-based payment
 For the year ended 28 January 2006, the Group accounted for the recognition of share options expenses based on APB 25 ‘Accounting for stock issued to employees’ (“APB 25”) as amended by SFAS 148 ‘Accounting for stock-based compensation – transition and disclosure’ based on the intrinsic value of awards in the period. From 29 January 2006 the Group adopted SFAS 123(R) ‘Share-based payment’ using the ‘modified prospective application method’, recognising the fair value of option awards over the service period.

116	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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The Group operates a number of employee share schemes, set out in note 27 on pages 113 to 115. All grants under the LTIP and grants under the Executive Scheme made prior to 2007/08 are subject to a condition that they may not vest unless the growth in related performance conditions exceeds the scheme target growth adjusted by movements in the relevant UK or US Retail Price Index over the same period. For Executive Scheme grants made in 2007/08 and thereafter, performance conditions only apply to executive directors.
Under IFRS 2 ‘Share-based payment’ these awards are treated as equity awards, and for the 52 weeks ended 28 January 2006 under APB 25 and SFAS 123 ‘Accounting for stock-based compensation’ were also treated as equity awards under US GAAP. These equity awards are measured at fair value at the date of grant and are not remeasured. On the application of SFAS 123(R), the condition above is not regarded as a performance condition as the performance target is set by reference to an index, rather than being fixed at the date of the award. As the condition is not a service or market condition, the options are accounted for as liabilities under US GAAP from 29 January 2006. The Group measures the share based payment for these awards at fair value, which is revalued at each reporting date until the criteria have been satisfied and the amounts are reclassified to equity. These movements in fair value result in the reconciling item between IFRS and US GAAP.
(e) Employers’ payroll taxes in respect of share-based payment
 Under IFRS the employers’ social security liability arising from share-based payment transactions is recognised over the same period or periods as the share-based payment charge. Under US GAAP, employers’ payroll taxes due on the exercise of share options are recognised as an expense when the liability arises, which is generally the option exercise date.
(f) Returns provision
 Under UK GAAP the Group did not record a reserve for sales returns as the financial statement impact was not material. The Group revised this policy on the adoption of IFRS, and now recognises such a provision. For the purposes of US GAAP reporting the impact on net assets of this change in policy was charged as an expense in the US GAAP income statement for 2005/06. The Group does not believe the impact of the change is material quantitatively or qualitatively to the financial statements.
(g) Asset retirement obligations
 Where quantifiable, the discounted cost of decommissioning assets installed in leasehold premises is included in the cost of the asset and appropriate decommissioning provisions are recognised. Prior to 2005/06 a provision for decommissioning assets was not material quantitatively or qualitatively to the financial statements. As of 29 January 2006, this is consistent under both IFRS and US GAAP.
(h) Revaluation of properties
 Under IFRS, properties may be restated on the basis of appraised values in consolidated accounts prepared in all other respects in accordance with the historical cost convention. Increases in value are credited directly to the revaluation reserve. When revalued properties are sold the gain or loss on sale is calculated based on revalued carrying amounts. Under US GAAP, properties are only revalued if an impairment is deemed to have occurred. Upward revaluations are not permitted.
(i) Depreciation of properties
 Prior to the adoption of FRS 15 ‘Tangible fixed assets’ (“FRS 15”) effective 29 January 2000, the buildings element of certain freehold and long leasehold properties was not depreciated under UK GAAP. Subsequent to that date, under UK GAAP and IFRS such property is depreciated, consistent with the requirements of US GAAP. The net difference arising between IFRS and US GAAP therefore represents the impact of depreciation charges applied under US GAAP prior to the adoption of FRS 15.
(j) Derivatives
 Under IFRS the fair value of a cash flow hedge on inventory purchases is recorded as a reduction to the inventory. Under US GAAP, the fair value of cash flow hedges is recorded in accumulated other comprehensive income and released to cost of sales when the associated inventory is sold. Prior to 2007/08 the impact of this adjustment was not material quantitatively or qualitatively to the financial statements.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	117	

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 	 	Financial statements	

 	 	Notes to the accounts (continued)	

Effect on profit for the financial period of differences between IFRS and US GAAP	 	
									
 	52 weeks ended	 	53 weeks ended	 	52 weeks ended	 	 	 	
 	2 February 2008	 	3 February 2007	 	28 January 2006	 	Note  	 	
 	$m	 	$m	 	$m	 	reference  	 	
									
Profit for the financial period in accordance with IFRS	215.2	 	266.0	 	235.4	 	 	 	
									
Sale and leaseback transactions	1.5	 	1.5	 	1.5	 	b	 	
Pensions	(2.8	)	(4.5	)	(3.2	)	c	 	
Share-based payment	3.8	 	(4.5	)	7.9	 	d	 	
Depreciation of revalued properties	0.2	 	–	 	–	 	i	 	
Returns provisions	–	 	–	 	(10.8	)	f	 	
Asset retirement obligations	–	 	–	 	(1.8	)	g	 	
Taxation on reconciling items	1.9	 	0.2	 	9.0	 	 	 	
									
US GAAP adjustments before change in accounting principle	4.6	 	(7.3	)	2.6	 	 	 	
Cumulative effect of change in accounting principle	–	 	(6.0	)	–	 	 	 	
									
Profit attributable to equity holders of the Company in accordance with US GAAP	219.8	 	252.7	 	238.0	 	 	 	
									
Basic earnings per share in accordance with US GAAP:	12.9c	 	14.6c	 	13.7c	 	 	 	
Diluted earnings per share in accordance with US GAAP:	12.8c	 	14.3c	 	13.7c	 	 	 	
Weighted average number of shares outstanding (million) – basic	1,703.8	 	1,727.6	 	1,736.6	 	 	 	
Weighted average number of shares outstanding (million) – diluted	1,721.4	 	1,765.1	 	1,739.9	 	 	 	

Effect on funds attributable to equity holders of the Company of differences between IFRS and US GAAP	 	
							
 	2 February 2008	 	3 February 2007	 	Note	 	
 	$m	 	$m	 	reference	 	
							
Funds attributable to equity holders of the Company in accordance with IFRS	1,806.1	 	1,746.0	 	 	 	
							
Goodwill in respect of acquisitions (gross)	876.1	 	876.1	 	a	 	
Accumulated goodwill amortisation	(350.7	)	(350.7	)	a	 	
Sale and leaseback transactions	(10.7	)	(12.2	)	b	 	
Pensions	–	 	–	 	c	 	
Depreciation of properties	(4.7	)	(4.9	)	h, i	 	
Revaluation of properties	(8.5	)	(8.5	)	h	 	
Share-based payment	(1.5	)	(21.3	)	d	 	
Derivatives	8.1	 	–	 	j	 	
Taxation on reconciling items	7.0	 	3.4	 	 	 	
							
US GAAP adjustments	515.1	 	481.9	 	 	 	
							
Funds attributable to equity holders of the Company in accordance with US GAAP	2,321.2	 	2,227.9	 	 	 	

Reconciliation of funds attributable to equity holders of the Company in accordance with US GAAP	 	
							
Funds attributable to equity holders of the Company at beginning of period	2,227.9	 	2,062.9	 	 	 	
Adoption of SFAS 123(R)	–	 	(5.3	)	 	 	
							
 	2,227.9	 	2,057.6	 	 	 	
Retained profit attributable to equity holders of the Company	219.8	 	252.7	 	 	 	
Purchase/issue of shares (net)	(23.5	)	(55.7	)	 	 	
Increase in additional paid-in capital	18.5	 	2.3	 	 	 	
Dividends paid	(123.9	)	(108.7	)	 	 	
Other comprehensive income	2.6	 	39.3	 	 	 	
Translation differences	(0.2	)	71.9	 	 	 	
							
 	2,321.2	 	2,259.4	 	 	 	
Adoption of SFAS 158	–	 	(31.5	)	 	 	
							
Funds attributable to equity holders of the Company at end of period	2,321.2	 	2,227.9	 	 	 	

118	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Supplemental discussion of presentational differences
Income statement
Cost of sales
Under IFRS, selling costs have been included in cost of sales. Under US GAAP, gross profit is determined before deducting selling costs, as they are not included in cost of sales. Selling costs which have been included under IFRS for the 52 weeks ended 2 February 2008 were $850.2 million (53 weeks ended 3 February 2007: $826.1 million; 52 weeks ended 28 January 2006: $750.1 million).
Pension accounting
 The IFRS defined benefit pension charge includes net finance credits of $4.8 million for the 52 weeks ended 2 February 2008 (53 weeks ended 3 February 2007: $2.1 million; 52 weeks ended 28 January 2006; $2.2 million) that would be recognised as a credit to operating profit under US GAAP.
Balance sheet
Deferred taxes
 Under IFRS, the Group must disclose the gross deferred tax assets and liabilities as non-current. Under US GAAP, deferred tax assets and liabilities are classified between current and non-current, depending on the items to which they relate, disclosed separately and presented on a net basis, by tax jurisdiction.
Goodwill
 US GAAP requires goodwill to be shown separately on the face of the balance sheet.
Trade and other receivables
 Trade and other receivables are shown separately on the face of the balance sheet under Article 5 of Regulation S-X of the Securities and Exchange Commission (“SEC”).
Trade and other payables
 Trade and other payables are shown separately on the face of the balance sheet under Article 5 of Regulation S-X of the SEC.
Securitised customer receivables
 At 28 January 2006, under IFRS, securitised US receivables of $251.0 million were included within trade debtors and bank loans, as the related financing was of a revolving nature and therefore not considered to be an outright sale of such accounts receivable.
Under US GAAP these amounts qualified for off-balance sheet treatment. This was because the receivables were first sold to a special purpose entity, Sterling Jewellers Receivables Corporation, which then sold on the receivables to a qualifying special purpose unconsolidated trust, Sterling Jewellers Receivables Master Note Trust. The trust was legally isolated from the Group; the majority of the interest in the US receivables portfolio held by the trust were principally sold on to institutional investors in the form of fixed-rate investor certificates; and the Group did not maintain control over the receivables portfolio transferred to the trust.
This securitisation of US customer receivables ended on 6 November 2006 and as at 2 February 2008 all US customer receivables are included within trade debtors under IFRS and US GAAP. The Group received servicing fees of $nil (2007; $4.9 million; 2006: $5.6 million) which offset its costs of fulfilling its servicing responsibilities to the trust.
Earnings per share
 For US GAAP purposes, the calculation of fully diluted EPS for the 52 weeks ended 2 February 2008 excludes options to purchase 33,793,507 shares (2007: 17,846,848 shares; 2006: 26,826,235 shares), on the basis that their effect on basic EPS was anti-dilutive.
Goodwill and other intangible assets, net
 At 2 February 2008 the Group has goodwill on its balance sheet under US GAAP of $408.0 million relating to the US and $148.0 million relating to the UK. The reporting units for the purpose of goodwill impairment testing are the US and UK operating segments. In 2007/08, 2006/07 and 2005/06, the Group performed the required impairment tests of goodwill and determined that there was no impairment.
Employee share schemes
 The following tables summarise the information used to calculate the fair value charge for share options accounted for as liability awards under SFAS 123(R) as at 2 February 2008 and 3 February 2007:

 	Executive schemes (1)	 	LTIPs (1)	 	
 				 					
 	As at	 	As at	 	As at	 	As at	 	
 	2 February	 	3 February	 	2 February	 	3 February	 	
 	2008	 	2007	 	2008	 	2007	 	
									
Share price	107 p	 	122 p	 	75 p	 	122 p	 	
Exercise price	95 p	 	106 p	 	nil	 	nil	 	
Risk free interest rate	3.97 %	 	5.07 %	 	3.41 %	 	4.88 %	 	
Expected life of options	2.9 years	 	2.1 years	 	2.0 years	 	2.1 years	 	
Expected volatility	28 %	 	28 %	 	28 %	 	28 %	 	
Dividend yield	3.4 %	 	3.0 %	 	3.6 %	 	3.0 %	 	
Fair value	40 c	 	69 c	 	143 c	 	229 c	 	
									
(1)	Weighted Average	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	119	

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 	 	Notes to the accounts (continued)	
 
Employee share schemes
 Upon adoption of FAS 123(R), the liabilities were recognised at fair value. This resulted in the recognition of a cumulative effect of change in accounting principle by $6.0 million at 29 January 2006. The Group recognised a total share-based payment credit of $3.4 million in the financial period ended 2 February 2008 (2007: $17.2 million charge; 2006: $0.2 million charge).

The following table shows the comparision of compensation expense recognised under APB 25 against fair value for the 52 weeks ended 28 January 2006:	
			
 	2006	 	
 	$m	 	
			
Net income in accordance with US GAAP:	 	 	
As reported	238.0	 	
Add: stock-based employee compensation expense	0.7	 	
Deduct: stock-based employee compensation expense determined under fair value method for all awards – net of tax	(4.5	)	
			
 	234.2	 	

Post employment benefits
 The following tables show information concerning the Group Scheme:	 	
					
 	2008	 	2007	 	
 	$m	 	$m	 	
					
Change in Scheme assets:	 	 	 	 	
   Fair value at beginning of the year	261.6	 	223.6	 	
   Actual return on Scheme assets	(11.8	)	12.7	 	
   Employer contributions	7.2	 	6.8	 	
   Members’ contributions	0.9	 	0.9	 	
   Benefits paid	(9.9	)	(8.1	)	
   Foreign currency changes	0.1	 	25.7	 	
					
Fair value of Scheme assets at end of year	248.1	 	261.6	 	
					
Change in benefit obligation:	 	 	 	 	
   Benefit obligation at beginning of the year	257.9	 	251.0	 	
   Service cost	8.0	 	7.5	 	
   Past service cost	–	 	0.2	 	
   Interest cost	13.4	 	12.5	 	
   Members’ contributions	0.9	 	0.9	 	
   Actuarial gain	(16.6	)	(33.4	)	
   Benefits paid	(9.9	)	(8.1	)	
   Foreign currency changes	–	 	27.3	 	
					
Benefit obligation at end of year	253.7	 	257.9	 	
					
Funded status – at end of year:	 	 	 	 	
Amounts recognised in the statement of financial position	 	 	 	 	
   Non current assets	–	 	3.7	 	
   Non current liabilities	(5.6	)	–	 	
					
Net amount recognised in the statement of financial position	(5.6	)	3.7	 	
					
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income	 	 	 	 	
   Prior service cost	8.2	 	9.4	 	
   Accumulated loss	51.2	 	37.9	 	
					
Accumulated other comprehensive loss	59.4	 	47.3	 	

120	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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The components of net periodic pension cost and other amounts recognised in other comprehensive income for the Group Scheme are as follows:	 	
							
 	2008	 	2007	 	2006	 	
 	$m	 	$m	 	$m	 	
							
Components of net periodic benefits cost:	 	 	 	 	 	 	
   Service cost	8.0	 	7.5	 	6.5	 	
   Interest cost	13.4	 	12.5	 	10.1	 	
   Expected return on Group Scheme assets	(19.1	)	(15.4	)	(13.1	)	
   Amortisation of unrecognised prior service cost	1.2	 	1.1	 	1.1	 	
   Amortisation of unrecognised actuarial loss	0.9	 	3.3	 	1.6	 	
							
Net periodic benefit cost	4.4	 	9.0	 	6.2	 	
Other changes in scheme assets and benefit obligations recognised in other comprehensive income	12.3	 	(53.0	)	50.8	 	
							
Total recognised in net periodic benefit cost and other comprehensive income	16.7	 	(44.0	)	57.0	 	

Amount recognised in the statement of financial position upon application of SFAS 158:	 	
							
 	2007 before	 	Incremental	 	2007 after	 	
 	adoption of	 	effect of	 	adoption of	 	
 	FAS 158	 	FAS 158	 	FAS 158	 	
 	$m	 	$m	 	$m	 	
							
Prepaid benefit cost	51.0	 	(51.0	)	–	 	
Pension asset - funded status	–	 	3.7	 	3.7	 	
							
 	51.0	 	(47.3	)	3.7	 	
Deferred income taxes	(15.3	)	14.2	 	(1.1	)	
							
 	35.7	 	(33.1	)	2.6	 	

 	 	 	 	 	
					
 	2008	 	2007	 	
					
Assumptions used to determine benefit obligations (at the end of the year):		 		 	
   Discount rate	5.90 %	 	5.20 %	 	
   Salary increases	5.00 %	 	4.60 %	 	

Assumptions used to determine net periodic pension costs (at the start of the year):	 	 	 	 	
					
   Discount rate	5.20 %	 	4.75 %	 	
   Expected return on scheme assets	7.20 %	 	6.50 %	 	
   Salary increases	4.60 %	 	4.30 %	 	

The composition of the assets in the Group Scheme was as follows:	 	 	 	 	
					
 	2008	 	2007	 	
					
Equities	65 %	 	74 %	 	
Bonds	29 %	 	24 %	 	
Property	5 %	 	–	 	
Cash	1 %	 	2 %	 	
					
Total	100 %	 	100 %	 	
					
The long term target allocation for the Group Scheme’s assets is equities 68%, bonds 27% and property 5%.
See note 21 for further information on the Group’s pension plans.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	121	

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 	 	Notes to the accounts (continued)	
 
New US accounting standards adopted
FIN 48 
 On 3 February 2007 the Group adopted FIN 48, ‘Accounting for uncertainty in income taxes – an interpretation of FASB statement no. 109’. The interpretation establishes a two-step approach for recognising and measuring tax benefits, with tax positions only being recognised when considered to be more likely than not sustained upon examination by the taxing authority. The provisions of FIN 48 have been applied to all tax positions on adoption of this interpretation. There was no cumulative effect adjustment to the opening balance of retained earnings arising as a result of the adoption of FIN 48 and no adjustments have been made to the other components of equity or net assets in the statement of financial position.
New accounting standards to be adopted in future periods
SFAS 157
 In September 2006 the FASB issued SFAS 157, ‘Fair Value Measurements’ (“SFAS 157”), which provides a single definition of fair value, establishes a framework for the measurement of fair value and expands disclosure about the use of fair value to measure assets and liabilities. SFAS 157 is effective for fiscal years beginning after 15 November 2007, and for interim periods within those fiscal years; SFAS 157 will therefore be applicable for the Group’s fiscal year commencing 3 February 2008. In November 2007, the FASB agreed to defer the effective date of Statement 157 for all non financial assets and liabilities by one year. The Group is currently reviewing the impact of the adoption of SFAS 157 on its financial statements.
SFAS 159
 On 15 February 2007 the FASB issued SFAS 159, ‘The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115’ (“SFAS 159”). This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. The unrealised gains and losses on items for which the fair value option has been elected will be reported in earnings at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments. SFAS 159 is effective for fiscal years beginning after 15 November 2007 and for interim periods within those fiscal years. The Group is currently reviewing the impact of the adoption of SFAS 159 on its financial statements.
SFAS 160
 In December 2007, the FASB issued SFAS 160, ‘Non controlling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51’ (‘‘SFAS 160’’). SFAS 160 establishes new accounting and reporting standards for the non controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a non controlling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the non controlling interest will be included in consolidated net income on the face of the income statement. SFAS 160 also includes expanded disclosure requirements regarding the interests of the parent and its non controlling interest. SFAS 160 is effective for fiscal years, and interim periods, beginning on or after 15 December 2008. The Group is currently reviewing the impact of the adoption of SFAS 160 on its financial statements.
SFAS 141(R)
 In December 2007, the FASB issued SFAS 141 (Revised 2007),’ Business Combinations’ (‘‘SFAS 141(R)’’). Under SFAS 141(R), an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value, with limited exceptions. It also amends the accounting treatment for certain specific items including acquisition costs and non controlling minority interests and includes new disclosure requirements. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after 15 December 2008. The Group is currently reviewing the impact of the adoption of SFAS 141(R) on its financial statements.
SFAS 161
 In March 2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities”, which amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities . The Statement requires companies with derivative instruments to disclose information that should enable financial statements users to understand how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under Statement 133 and how derivative instruments and related hedged items affect a company’s financial position, financial performance, and cash flows. The required disclosures include the fair value of derivative instruments and their gains or losses in tabular format, information about credit risk related contingent features in derivative agreements, counterparty credit risk and a company’s strategies and objectives for using derivative instruments. The Statement expands the current disclosure framework in Statement 133. Statement 161 is effective prospectively for periods beginning on or after November 15, 2008.

122	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Company information	 	

							
Signet Group plc balance sheet	2 February 2008	 	3 February 2007 (1)	 	 	 	
 	$m	 	$m	 	Notes	 	
 		 	(restated) (2)	 	 	 	
							
Fixed assets:	 	 	 	 	 	 	
Investments	1,534.9	 	1,535.1	 	(j)	 	
							
 	1,534.9	 	1,535.1	 	 	 	
							
Current assets	 	 	 	 	 	 	
Debtors	1,228.7	 	1,630.4	 	(c)	 	
Cash at bank and in hand	21.2	 	109.9	 	(d)	 	
							
 	1,249.9	 	1,740.3	 	 	 	
Creditors: amounts falling due within one year	(639.0	)	(1,229.7	)	(e)	 	
							
Net current assets	610.9	 	510.6	 	 	 	
							
Total assets less current liabilities	2,145.8	 	2,045.7	 	 	 	
Creditors: amounts falling due after more than one year	(383.2	)	(380.0	)	(f)	 	
							
Net assets	1,762.6	 	1,665.7	 	 	 	
							
Equity:	 	 	 	 	 	 	
Capital and reserves	 	 	 	 	 	 	
Share capital	15.4	 	14.0	 	22	 	
Share premium	140.2	 	134.7	 	(g)	 	
Capital redemption reserve	0.4	 	0.3	 	(g)	 	
Special reserve	926.8	 	926.8	 	(g)	 	
Retained earnings	679.8	 	589.9	 	(g)	 	
							
Shareholders’ funds	1,762.6	 	1,665.7	 	 	 	
							
(1)	Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 5 February 2007. See Note (a)(i) on page 124.	
 	 	
(2)	See Note (a) on page 124.	
These accounts were approved by the Board of Directors on 9 April 2008, and were signed on its behalf by:
Terry Burman Director
Walker Boyd Director

Signet Group plc Annual Report & Accounts year ended 2 February 2008	123	

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 	 	Financial statements	

 	 	Company information (continued)	

Notes to the Company accounts	
(a)	Principal accounting policies	
The Company accounts of Signet Group plc are prepared in accordance with generally accepted accounting principles in the UK (“UK GAAP”). The following accounting policies are applied consistently in dealing with items which are considered material in relation to the accounts of the Company.	
 	 	
The Company operates a number of share-based payment incentive schemes and has applied the requirements of UITF 41 for the first time in these financial statements. UITF 41 requires that where the Company’s shares, or options over the Company’s shares, are granted to Group employees, an increase should be recorded in the cost of investment in the subsidiary in which the employees are employed, with a corresponding increase in shareholders’ equity. This increase is measured at the fair value of the share or share option at the date of grant, and is recognised on a straight-line basis over the vesting period of the award. The Company adopted the transitional arrangements so that UITF 41 was applied retrospectively to all options granted but not fully vested at 29 January 2005. Any payments received from the Company’s subsidiaries in respect of share-based payments result in an adjustment to reduce the cost of investment. The adoption of UITF 41 necessitated a prior year adjustment, which increased shareholders’ funds at 3 February 2007 by $24.5 million. There was no impact on the Company’s profit and loss account for the period ended 2 February 2008.	
 	 	
(i)	Basis of preparation	
The Company accounts have been prepared in accordance with applicable UK law and accounting standards and under the historical cost convention except for derivative financial instruments which are stated at fair value.	
 	 	
In accordance with section 230 of the Companies Act 1985, the Company is exempt from the requirement to present its own profit and loss account.	
 	 	
These Company acounts are presented in US dollars following a change in the Company’s presentational currency from UK pounds to US dollars with effect from 5 February 2007. In addition, on 5 February 2007 the Company redenominated its share capital into US dollars and will retain distributable reserves and declare dividends in US dollars. As a result, the functional currency of the Company has changed from UK pounds to US dollars. Financial information for prior periods has been restated from UK pounds to the new presentational currency, US dollars.	
 	 	
(ii)	Foreign currency translation	
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the profit and loss account.	
 	 	
The Company has taken the exemptions granted by paragraph 3(c) of FRS 8 ‘related party disclosures’, not to disclose transactions with companies within the Group.	
 	 	
(iii)	Shares in subsidiary undertakings	
Shares in subsidiary undertakings are stated at cost, less amounts written off for any impairment in value.	
 	 	
(iv)	Taxation	
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity, in which case the related tax impact is recognised in equity.	
 	 	
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.	
 	 	
Deferred taxation is provided on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes, except as otherwise required by FRS 19 ‘Deferred tax’. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which temporary differences can be utilised. Tax rates enacted or substantively enacted at the balance sheet date are used to determine deferred tax.	
 	 	
(v)	Employee benefits	
The Company participates in a defined benefit pension scheme (“the Group Scheme”) in the UK which ceased to admit new employees from April 2004. The Group Scheme, covering two of the executive directors and participating eligible employees in the UK, provides benefits based on members’ salaries at retirement. The Group Scheme’s assets are held by the trustees and are completely separate from those of the Group.	
 	 	
The Company is unable to identify its share of underlying assets and liabilities of the Group Scheme on a consistent and reasonable basis and therefore, as required by FRS 17 ‘Retirement benefits’, accounts for these as if it were a defined contribution scheme. As a result,	

124	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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the amount charged to the profit and loss account represents the contributions payable to the Group Scheme in respect of the accounting period. For details of the Group Scheme see note 21 on page 104.
Where appropriate, supplementary pensions and life assurance benefits for UK directors and senior executives were, until 5 April 2006, provided through the Signet Group Funded Unapproved Retirement Benefits Scheme (“FURBS”) and were charged to the profit and loss account as incurred. The FURBS has now been closed and in substitution a supplement is now paid directly to the members.
The Company has issued shares to employees to satisfy the exercise of employee share options. Full details of shares issued to the ESOT and employees are disclosed in note 27 on page 113.
(vi) Financial instruments
 Changes in the fair value of financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity. Any ineffective portion of the gain or loss is recognised immediately in the profit and loss account. For cash flow hedges that result in the recognition of a non-financial asset or liability, amounts previously deferred in equity are included in the measurement of the asset or liability. For cash flow hedges that result in the recognition of a financial asset or liability, amounts previously recognised in equity are recognised in the profit and loss account in the same period in which the hedged item affects net profit or loss. The Company applies the hedge accounting provisions of FRS 26 ‘Financial instruments’ as they relate to forward currency and commodity contracts in order to minimise future volatility.
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the profit and loss account. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends upon the nature of the item being hedged.
Financial Reporting Standard 29 “Financial Instruments: Disclosures” (“FRS 29”) sets out the requirements for the presentation of, and disclosures relating to, financial instruments and replaces the requirements of FRS 25 “Financial Instruments: Disclosure and Presentation”. The Company is exempt from the requirements of FRS 29 as the financial statements for the Group include disclosures that comply with IFRS 7, the equivalent International Financial Reporting Standard.
(vii) Cash at bank and in hand
 Cash at bank and in hand includes money market deposits and amounts placed with external fund managers with an original maturity of three months or less, and is carried at cost which approximates to fair value. For the purpose of these financial statements, bank overdrafts are included in ‘Creditors: amounts falling due within one year’.
(viii) Borrowings
 Borrowings comprise interest bearing bank loans, private placement loan notes and bank overdrafts and are recorded at the proceeds received net of any transaction costs incurred. Interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the profit and loss account over the period of the borrowings on an effective interest basis.
(ix) Share capital
 When new shares are issued, they are recorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium reserve.
The cost of own shares purchased to satisfy the exercise of employee share options is charged to total equity and the proceeds of their reissue are credited to total equity.
(x) Dividends
 Dividends are only provided for in the period in which they are formally approved.
(b) Profit for the financial period
 The profit attributable to shareholders dealt with in the accounts of the Company is $240.5 million (2007: $207.0 million). The profit is stated after foreign exchange losses of $0.5 million (2007: $6.0 million).
Audit and non-audit fees are disclosed in note 3 on page 92. Walker Boyd has a contract of employment with Signet Group plc. Details of directors’ remuneration are given in the Directors’ remuneration report on pages 67 to 79.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	125	

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 	 	Financial statements	

 	 	Company information (continued)	
 
(c) Debtors

 	2008	 	2007	 	
 	$m	 	$m	 	
					
Debtors recoverable within one year – amounts owed by subsidiary undertakings	1,216.9	 	1,622.1	 	
Derivative fair values	11.8	 	8.3	 	
					
 	1,228.7	 	1,630.4	 	
					
Th e directors consider that the carrying value of receivables approximates to their fair value. The carrying value of trade and other receivables is the maximum exposure to credit risk.
(d) Cash at bank and in hand

 	2008	 	2007	 	
 	$m	 	$m	 	
					
Bank deposits	21.2	 	109.9	 	
					
(e) Creditors: amounts falling due within one year

 	2008	 	2007	 	
 	$m	 	$m	 	
					
Bank overdrafts	21.4	 	15.6	 	
Amounts owed to subsidiary undertakings	589.5	 	1,193.2	 	
Derivative fair values	1.9	 	0.8	 	
Corporation tax	10.3	 	13.0	 	
Accruals and deferred income	15.9	 	7.1	 	
					
 	639.0	 	1,229.7	 	
					
The number of days’ purchases outstanding at 2 February 2008 was nil. The directors consider that the carrying value of payables approximate to their fair value. Details of derivative assets and liabilities are given in note 26 on page 112.

126	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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(f) Creditors: amounts falling due after more than one year

 	2008	 	2007	 	
 	$m	 	$m	 	
					
US Private Placement	380.0	 	380.0	 	
Deferred taxation	3.2	 	–	 	
					
 	383.2	 	380.0	 	
					
Details of the Private Placement are given in note 18 on page 101.
(g) Share premium and reserves

 	 	 	 	 	 	 	Retained earnings	 	
 	 	 	 	 	 										
 	Share	 	Capital	 	 	 	 	 	 	 	 	 	 	 	
 	premium	 	redemption	 	Special	 	Purchase of	 	Hedging	 	Translation	 	Profit and	 	
 	account	 	reserve	 	reserve	 	own shares	 	reserve	 	reserve	 	loss account	 	
 	$m	 	$m	 	$m	 	$m	 	$m	 	$m	 	$m	 	
													
At 3 February 2007	134.7	 	0.3	 	926.8	 	(13.3	)	5.1	 	291.5	 	282.1	 	
Prior year adjustment – UITF 41	–	 	–	 	–	 	–	 	–	 	–	 	24.5	 	
													
At 3 February 2007 (restated)	134.7	 	0.3	 	926.8	 	(13.3	)	5.1	 	291.5	 	306.6	 	
Exchange on redenomination of share capital	(1.4	)	–	 	–	 	–	 	–	 	–	 	–	 	
Profit for the period attributable to equity		 	 	 	 	 		 	 	 	 	 		 	
shareholders	–	 	–	 	–	 	–	 	–	 	–	 	240.5	 	
Effective portion of changes in fair value of		 	 	 	 	 		 	 	 	 	 		 	
cash flow hedges net of recycling	–	 	–	 	–	 	–	 	3.1	 	–	 	–	 	
Translation differences	–	 	–	 	–	 	–	 	–	 	–	 	–	 	
Dividends	–	 	–	 	–	 	–	 	–	 	–	 	(123.9	)	
Equity settled transactions	–	 	–	 	–	 	–	 	–	 	–	 	(0.2	)	
Share options exercised	6.5	 	–	 	–	 	2.5	 	–	 	–	 	(3.1	)	
Purchase of own shares	–	 	0.1	 	–	 	–	 	–	 	–	 	(29.0	)	
Shares issued to ESOTs	0.4	 	–	 	–	 	–	 	–	 	–	 	–	 	
															
At 2 February 2008	140.2	 	0.4	 	926.8	 	(10.8	)	8.2	 	291.5	 	390.9	 	
															
Details of each of the reserves are given in note 23 on page 110.
(h) Commitments
 The Company does not occupy any property or hold any plant, machinery and vehicles under operating leases.
Capital commitments at 2 February 2008 for which no provision has been made in these accounts were as follows:

 	2008	 	2007	 	
 	$m	 	$m	 	
					
Contracted	–	 	–	 	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	127	

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 	 	Company information (continued)	
 
(i) Contingent liabilities 
 The Company is not party to any legal proceedings considered to be material to its profit, financial position or cash flow including any bankruptcy, receivership or similar proceedings involving the Company or any of its significant subsidiaries. No director, officer or affiliate of the Company or any associate of any such director, officer or affiliate has been a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.
The Company has assigned or sub-let UK property leases in the normal course of business. Should the assignees or sub-tenants fail to fulfil any obligations in respect of these leases, the Company may be liable for those defaults. The number of such claims arising to date has been small and the liability, which is charged to the profit and loss account as it arises, has not been material.
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee. The outstanding indebtedness on such accounts at 2 February 2008 was $2.5 million (3 February 2007: $0.1 million).

(j) Investments		 	
			
 	Total	 	
 	(restated) (1)	 	
 	$m	 	
			
At 3 February 2007	1,535.1	 	
Movement	(0.2	)	
			
At 2 February 2008	1,534.9	 	
			
(1)	See Note (a) on page 124.	
A list of the principal subsidiaries is given in note 28 on page 115.

128	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Shareholder information	

Shareholder information	 	

History	 	 	
Signet Group plc, an English public limited company, has operations in the US and the UK and in 2007/08 the geographic split of revenue and profit was approximately 75% and 25% respectively. The Company was incorporated in England and Wales on 27 January 1950 under the name Ratners (Jewellers) Limited. The name of the Company was changed on 10 December 1981 to Ratners (Jewellers) Public Limited Company, on 9 February 1987 to Ratners Group plc	 	and on 10 September 1993 to Signet Group plc and the Company is governed by the Companies Acts 1985 and 2006.
The Company’s Memorandum and Articles of Association, which were adopted on 8 June 2007, are available on the Group’s website. The Company’s registered number is 477692. The Company’s registered office is 15 Golden Square, London W1F 9JG.	

Significant events that have occurred in the last five years are detailed below:	
 	 	
9 Jan 2003	Robert Anderson was appointed as Chief Executive of the UK division.	
 	 	
1 Sept 2003	Dale Hilpert was appointed to the Board as a non-executive director.	
 	 	
8 Jan 2004	Lee Abraham retired from the Board as a non-executive director.	
 	 	
28 Sept 2004	The Group entered into a $390 million unsecured multi-currency five year revolving credit facility agreement. This replaced the $410 million facility that was due to expire in August 2006. The terms of this agreement were broadly similar to those of the facility being replaced.	
 	 	
8 Oct 2004	The Group announced a change in its American Depositary Share Ratio from 30:1 to 10:1 to become effective from 18 October 2004.	
 	 	
18 Oct 2004	The Group announced its intention to list its ADSs on the NYSE from 16 November 2004, under the ticker symbol SIG.
 It was confirmed that the ADS ratio change had become effective on 18 October and that Deutsche Bank had recently been appointed as the depositary bank for Signet’s ADSs.	
 	 	
1 Nov 2004	Robert Walker was appointed to the Board as a non-executive director.	
 	 	
6 April 2005	James McAdam announced his intention to retire from the Board no later than at the conclusion of the annual general meeting on 9 June 2006. Robert Anderson was appointed to the Board.	
 	 	
7 Sept 2005	H. Samuel launched online shopping at its website www.hsamuel.co.uk.	
 	 	
28 Nov 2005	Malcolm Williamson was appointed to the Board as a non-executive director.	
 	 	
12 Jan 2006	Mark Light was appointed Chief Executive of the US Division and to the Board.	
 	 	
30 March 2006	The Group entered into a $380 million US Private Placement Note Term Series Purchase Agreement, funding date 23 May 2006, to refinance the maturing securitisation programme and for general corporate purposes.	
 	 	
5 April 2006	The Group announced the appointment of Malcolm Williamson as Chairman with effect from the annual general meeting on 9 June 2006 subject to his election as a director at that annual general meeting.	
 	 	
9 June 2006	James McAdam retired from the Board and Malcolm Williamson was appointed as Chairman.	
 	 	
17 July 2006	The Group announced that it was commencing a buyback of up to £50 million of its ordinary shares. The shares would either be cancelled or held in treasury.	
 	 	
5 Sept 2006	Kay launched online shopping at its website www.kay.com	
 	 	
14 Sept 2006	Ernest Jones launched online shopping at its website www.ernestjones.co.uk	
 	 	
5 February 2007	The Group redenominated its share capital in US dollars. The nominal value of an ordinary share changed from 0.5 pence to 0.9 cents per share.	
 	 	
26 October 2007	The Group entered into a 364 day $200 million asset backed variable funding note conduit securitisation facility for general corporate purposes.	
 	 	
9 January 2008	Lesley Knox was appointed to the Board as a non-executive director.	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	129	

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 	 	Shareholder information (continued)	

Nature of trading market	 	 	
The shares of the Company are traded on the London Stock Exchange (symbol: SIG) and the American Depositary Shares (“ADSs”) representing the shares are quoted on the NYSE (symbol: SIG). Prior to 16 November 2004 the ADSs were traded on the Nasdaq (symbol: SIGY). The ADSs are evidenced by ADRs issued pursuant to an Amended and Restated Deposit Agreement, dated 23 September 2004, and made between the Company, Deutsche Bank Trust Company Americas, as depositary (the “Depositary”) and the holders from time to time of the ADRs.
Each ADS represents ten shares. Prior to 18 October 2004 the ratio of shares per ADS had been 30:1.
The table below sets out, for the calendar years and quarters indicated, (i) the reported high and low middle market quotations for	 	the shares of the Company based on the Daily Official List of the London Stock Exchange and (ii) the reported high and low closing sales prices of the ADSs on the Nasdaq or the NYSE, as applicable, as reported by Datastream.
At 8 April 2008, 41,057 shares and 8,167,764 ADSs (representing 81,677,640 shares) were held of record in the US. These shares collectively represented approximately 4.79% of the total numbers of shares outstanding. Since certain of the shares and ADSs are held by brokers or other nominees, the number of record holders in the US is not representative of the number of beneficial holders or of where the beneficial holders are resident.	

 	 	 	London Stock Exchange	 	Nasdaq/NYSE	 	
 	 	 	pence per share	 	US dollars per ADS	 	
											
 	 	 	             High	 	Low	 	High	 	Low	 	
											
Calendar 2002 (1)	 	 	132	1/4	65	 	19	1/4	10	1/4	
											
Calendar 2003 (1)	 	 	114	1/2	66	 	19	7/8	10	3/4	
											
Calendar 2004 (1)	 	 	119	3/4	93	 	22	1/4	17	1/4	
											
Calendar 2005	 	 	117	3/4	93	1/4	22	 	16	7/8	
											
Calendar 2006	 	 	 	 	 	 	 	 	 	 	
First quarter	 	 	110	1/4	99	3/4	20	 	17	1/2	
Second quarter	 	 	112	1/2	92	1/4	19	7/8	17	 	
Third quarter	 	 	116	3/4	94	1/4	22	1/4	17	1/4	
Fourth quarter	 	 	127	 	110	 	24	1/4	20	3/4	
											
Calendar 2007	 	 	 	 	 	 	 	 	 	 	
First quarter	 	 	125	1/2	114	1/2	25	 	22	 	
Second quarter	 	 	126	3/4	103	 	25	3/4	20	1/2	
Third quarter	– July	 	108	3/4	96	1/2	22	1/2	19	3/4	
 	– August	 	103	1/4	93	1/2	21	1/4	18	3/4	
 	– Sept	 	95	 	82	 	19	1/2	16	1/2	
Fourth quarter	– Oct	 	95	1/2	84	 	19	3/4	17	1/4	
 	– Nov	 	89	3/4	62	1/2	19	 	12	1/2	
 	– Dec	 	71	3/4	62	3/4	14	1/2	12	3/4	
											
Calendar 2008	 	 	 	 	 	 	 	 	 	 	
First quarter	– Jan	 	72	1/4	54	1/4	14	1/4	11	 	
 	– Feb	 	71	 	61	1/4	14	1/2	12	1/4	
 	– Mar	 	65	1/2	50	 	12	1/2	10	 	
 	– (up to 8 April)	 	64	1/4	61	1/2	12	1/3	12	 	
											
(1 )	Following the change in the ADS ratio from thirty ordinary shares per ADS to ten ordinary shares per ADS on 18 October 2004, prior figures have been restated.	

130	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Information on share buyback programme
Pursuant to approval given by shareholders at the annual general meeting held on 8 June 2007, as at 2 February 2008 the Company retains the authority to purchase a further 170,345,896 of its own shares up to the end of the annual general meeting to be held on 6 June 2008. On 19 July 2006, the Company announced its plans to buyback £50 million of its own shares, and this programme was substantially completed during the year.

 	 	 	 	 	Total cost of	 	
 	 	 	Average price	 	purchasing	 	
 	No of shares	 	paid per share	 	shares	 	
 	purchased	 	pence	 	$m	 	
							
February 2007	4,730,000	 	122.4	 	11.2	 	
March 2007	5,425,000	 	119.4	 	12.8	 	
April 2007	2,050,000	 	123.1	 	5.0	 	
							
Total	12,205,000	 	121.2	 	29.0	 	
							
Dividends
 Under English law, dividends can only be paid out of profits available for distribution (generally defined as accumulated realised profits less accumulated realised losses less unrealised losses) and not out of share capital or share premiums (generally equivalent in US terms to paid-in surplus). At 2 February 2008, after taking into account the subsequently recommended final dividend of 6.317 cents per share, the holding company had a distributable reserves balance of $283.2 million (3 February 2007: £199.0 million).
In order to make further distributions in excess of this figure, the holding company would first need to receive dividends from its subsidiaries. In addition to restrictions imposed at the time of the 1997 capital reduction on the distribution of dividends received from subsidiaries, the payments of dividends from other tax jurisdictions, such as the US, may not be tax efficient. Furthermore, there may be other reasons why dividends may not be paid by subsidiaries to the holding company.
If resolved by the Board (and, in the case of a final dividend, if declared in general meeting) dividends are paid to holders of shares as at record dates that are decided by the Board.
Substantial shareholdings and control of the Company
 So far as the Company is aware, it is neither directly nor indirectly owned by or controlled by one or more corporations or by any government.
As at 8 April 2008 the interests in the issued shares set out in the table on page 132 had been notified to the Company in accordance with sections 791 to 828 of the Companies Act 2006 (“2006 Act”) (including interests represented by the ADSs) and with the provisions of the Disclosure and Transparency Rules (“DTR 5”) that were brought into effect on 20 January 2007. Under the 2006 Act shareholders were obliged to notify the Company of their interests in such shares if they held 3.0% or more beneficially or 10.0% or more in the case of certain shareholders, such as investment managers. Under DTR 5 notification is based on direct or indirect control of voting rights attached to shares rather than the ‘interests in shares’ test set out in section 791. The disclosure threshold for a UK incorporated company remains the same at 3.0%, and then at each 1.0% change thereafter.
The Company’s major shareholders as listed in the table on page 132 do not have different voting rights per share than other holders of the Company’s shares.
The following shareholders had significant changes in their percentage ownership of the Company’s issued share capital since 31 January 2005. This is based on disclosure made in the accounts for each of the three years since 31 January 2005 and notification received by the Company.

•	The Capital Group Companies, Inc. had a beneficial holding of 12.97% on 6 April 2005, 11.98% on 5 April 2006 and 9.5% on 17 April 2007, and as stated in the table on page 132, 9.62% on 8  April 2008.	
 	
•	FMR Corp. and Fidelity International Limited had a non-beneficial holding of 5.98% on 6 April 2005 and fell below 3.0% on 12 January 2006.	
 	
•	Legal & General Investment Management Limited had a beneficial holding of 3.1% on 6 April 2005, 3.1% on 5 April 2006 and, 3.1% on 17 April 2007, and as stated in the table on page 132, 4.78% on 8 April 2008.	
 	
•	Harris Associates L.P. had a beneficial holding of 6.03% on 6 April 2005, 10.02% on 5 April 2006 and 12.0% on 17 April 2007, and as stated in the table on page 132, 17.83% on 8 April 2008.	
 	
•	Schroder Investment Management Limited had a non-beneficial holding of below 10.0% on 10 March 2005. On 17 April 2007 they had a non-beneficial holding of 6.4% and fell below 3% on 5  February 2008.	
 	
•	Aviva plc and Morley Fund Management Limited had a beneficial holding of 3.12% on 6 April 2005 and fell below 3.0% on 24  May 2005.	
 	
•	Lloyds TSB Group Plc had a beneficial holding of 3.11% on 6  April 2005, 3.94% on 5 April 2006 and fell below 3.0% on 24 October 2006.	
 	
•	Sprucegrove Investment Management Ltd had a non-beneficial holding of 3.1% on 5 December 2005, 3.1% on 5 April 2006 and 4.2% on 17 April 2007, and as stated in the table on page 132, 6.68% on 8 April 2008.	
 	
•	Baillie Gifford & Co had a beneficial holding of 5.9% on 17 April 2007 and fell below 3% on 28 November 2007.	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	131	

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 	 	Shareholder information (continued)	

Substantial shareholdings notified to the Company up to 8 April 2008	 	 	 	 	
					
 	 	 	Percentage of	 	
 	 	 	issued shares at	 	
 	Number of	 	date of	 	
 	shares	 	notification	 	
					
Harris Associates L.P.	304,120,059	 	17.83	 	
The Capital Group Companies, Inc. (1)  	164,074,935	 	9.62	 	
Sprucegrove Investment Management Ltd	113,896,205	 	6.68	 	
Artisan Partners Limited Partnership	90,107,086	 	5.28	 	
BriTel Fund Trustees Ltd	85,667,185	 	5.02	 	
Legal & General Investment Management Limited	81,535,937	 	4.78	 	
Sanderson Asset Management Ltd	71,694,426	 	4.20	 	
First Pacific Advisors LLC	70,896,000	 	4.16	 	
					
(1 )	Includes interest of Capital International Limited in 110,536,439 of such shares, notified on their behalf by the Capital Group Companies, Inc.	

•	BriTel Fund Trustees Ltd had a beneficial holding of 3.10% on 6 October 2006 3.7% on 17 April 2007, and as stated in the table above, 5.02% on 8 April 2008.	
 	
•	Artisan Partners Limited Partnership had a non-beneficial holding of 5.28% on 8 April 2008, as stated in the table above.	
 	
•	Sanderson Asset Management Limited had a non-beneficial holding of 4.20% on 8 April 2008, as stated in the table above.	
 	
•	First Pacific Advisors LLC had a beneficial holding of 4.16% on 8 April 2008, as stated in the table above.	
At 8 April 2008, the total amount of the Company’s voting securities owned by directors of the Company as a group was 1,771,323 all of which securities were shares.
The Company does not know of any arrangement the operation of which might result in a change of control of the Company.
Exchange controls and other limitations affecting security holders
 There are currently no UK laws, decrees or regulations restricting the import or export of capital or (save as to taxation) affecting the remittance of dividends or other payments to holders of shares or ADSs who are non residents of the UK, subject to a few limited exceptions. Such exceptions apply where there are sanctions or similar orders issued by the United Nations, the European Union or the UK Government.
Subject to those exceptions, under English law and the Company’s Memorandum and Articles of Association, persons who are neither residents nor nationals of the UK may freely hold, vote and transfer shares (or other securities) in the same manner as UK residents or nationals. The Articles of Association provide that a shareholder with a registered address outside the UK is not entitled to receive notice of any general meeting of the Company unless the shareholder has provided the Company with a UK address, or (in the case of any notice issued electronically) an appropriate electronic address, at which notices may be delivered.
Section 992 of the Companies Act 2006 requires the Company to include certain information on its share and control structures in the directors’ report.
The following information, referred to in the Director’s report summarises certain provisions of the Company’s Articles of Association and applicable English Law.
Voting rights
 At a general meeting a resolution put to the vote is decided on a show of hands unless a poll is demanded. Subject to any rights or restrictions attaching to their shares, every shareholder who is present in person or by proxy has one vote. On a poll vote every shareholder has one vote for every share he holds. A poll may be demanded by any of the following:

i)	the chairman of the meeting;	
 	
ii)	at least three shareholders having the right to vote at the meeting;	
 	
iii)	shareholder(s) representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting; or	
 	
iv)	shareholder(s) holding shares conferring a right to vote on the resolution, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.	
Dividend rights
 Shareholders (other than holders of the Company’s deferred shares) may, by ordinary resolution, declare dividends but may not declare dividends in excess of the amount recommended by the directors. The directors may also pay interim dividends on shares of any class of such amounts and on such dates and in respect of periods as they think fit.
Holders of the Company’s deferred shares are not entitled to participate in the profits of the Company, participate in any distribution of the Company’s assets on a winding up, or vote at any general meeting.

132	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Transfer of shares	
Shareholders may transfer all or any of their shares, subject to:	
 	 	
(i)	in the case of certificated shares, by an instrument of transfer in writing in any usual form or in another form approved by the Board which must be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid) by or on behalf of the transferee, or	
 	 	
(ii)	in the case of uncertificated shares, in accordance with the Uncertificated Securities Regulations 2001, or	
 	 	
(iii)	in the case of an instrument of transfer denominated in sterling and bearing a date on or before 5 February 2007, such transfer shall be a transfer of the same number of shares as specified in such transfer.	
The transferor shall remain as the holder of the shares transferred until the name of the transferee is entered into the Company’s register of shareholders in respect of it.
The Board may, in its absolute discretion and without giving a reason, refuse to register the transfer of a certificated share or the renunciation of a renounceable letter of allotment unless it is:

(i)	in respect of a share which is fully paid up as to the nominal value and any premium;	
 	
(ii)	in respect of a share on which the Company has no lien;	
 	
(iii)	in respect of only one class of shares;	
 	
(iv)	in favour of a single transferee or renounce or not more than four joint transferees or renouncees;	
 	
(v)	duly stamped (if required); and	
 	
(vi)	delivered for registration to the registered office of the Company.	
If the Board refuses to register a transfer or renunciation, it shall, within two months after the date on which the transfer or renunciation was delivered to the Company, send notice of the refusal to the transferee or renouncee. An instrument which the Board refuses to register shall be returned to the person delivering it. All instruments which are registered may be retained by the Company.
The transfer of title to any uncertificated share or the renunciation or transfer of any renounceable right of allotment of a share which is a participating security held in uncertificated form shall only be registered in accordance with the Uncertificated Securities Regulations 2001. No such transfer or renunciation which is in favour of more than four persons jointly shall be registered unless the Board otherwise resolves.
If any such transfer or renunciation is not registered pursuant to the Uncertificated Securities Regulations 2001 or the Company’s Articles, the Company shall, within two months after the date on which the instruction relating to such transfer or renunciation was received by the Company, send notice of the refusal to the transferee or renouncee.

Alteration of share capital	
The Company may by ordinary resolution:	
 	 	
(i)	increase its share capital by a sum to be divided into shares of amounts prescribed by the resolution;	
 	 	
(ii)	consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares;	
(iii)	subject to the Companies Act 2006, sub-divide all or any of its shares into shares of a smaller amount; and	
 	 	
(iv)	cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by a person and diminish the amount of its share capital by the amount of the shares so cancelled, and may by the resolution decide that one or more of the shares resulting from any such division or sub-division may have any preference or other advantage as compared with the others or may be made subject to any restriction as compared with the others.	
Subject to the Companies Act 2006 and to any rights attached to any shares, the Company may by special resolution reduce its share capital or any capital redemption reserve, share premium account or other undistributable reserve in any way.
Appointment and powers of the Directors
 The Company’s Articles of Association provide for a board of Directors, consisting (unless otherwise determined by an ordinary resolution of shareholders) of not fewer than three Directors. There shall be no maximum number. Directors may be elected by the shareholders in a general meeting or appointed by the Board of Directors. A Director appointed by the Directors shall retire at the next annual general meeting after his appointment.
At each annual general meeting, any Director who was elected or last re-elected a Director at or before the annual general meeting held in the third calendar year before the current year shall retire by rotation and shall be eligible to stand for re-election as a Director at such a meeting, if the Articles allow him to do so.
The Board may delegate to a Director holding executive office any of its powers, authorities and discretions for such time and on such terms and conditions as it shall think fit. The Board may delegate any of its powers, authorities or discretions, for such time and on such terms and conditions as it shall think fit, to a committee consisting of one or more Directors.
The Articles of Association prohibit a Director from voting, or being counted in the quorum in relation to, any resolution of the Board in which the Director has to his knowledge a material interest other than by virtue of his interests in shares in the Company. However, this restriction on voting does not apply to resolutions:

i)	relating to the giving of any security, guarantee or indemnity to him in respect of money lent or obligations incurred by him or by any other person at the request of or for the benefit of a Group undertaking.	
 	
ii)	relating to the giving of any security, guarantee or indemnity in respect of a debt or obligation of a Group undertaking for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security.	
 	
iii)	relating to, or in the context of, an offer of securities by a Group undertaking in which he is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting or placing of which he is to participate.	
 	
iv)	relating to a transaction or arrangement with any other company in which he is interested, directly or indirectly, provided that he is not the holder of or beneficially interested in one per cent or more of any class of the equity share capital of that compony (or of any	

 

Signet Group plc Annual Report & Accounts year ended 2 February 2008	133	

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 	 	Shareholder information	

 	 	Shareholder information (continued)	

 	other company through which his interest is derived) and not entitled to exercise one per cent or more of the voting rights available to shareholders of the relevant company (and for the purpose of calculating the said percentage there shall be disregarded any shares held by the Director as a bare or custodian trustee and in which he has no beneficial interest, and any shares comprised in any authorised unit trust scheme in which the Director is interested only as a unit holder.	
 	
v)	relating to an arrangement for the benefit of employees of any Group undertaking which does not award him any privilege or benefit not generally awarded to the employees to whom such arrangement relates, or	
 	
vi)	concerning the insurance which the Company proposes to maintain or purchase for the benefit of Directors or for the benefit of persons including Directors.	
The Board may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of its undertaking, property and uncalled capital, subject to the limitation that the aggregate amount of all net external borrowings of the group at any time shall not exceed an amount equal to twice the aggregate of the group’s adjusted capital and reserves calculated in the manner prescribed in the Articles of Association, unless sanctioned by an ordinary resolution of the Company’s shareholders.
Taxation
 Taxation for US residents
 The following summary sets out the principal US federal and UK tax consequences of the purchase, ownership and disposition of the Company’s shares or ADSs in respect of such shares by a “US holder” (as defined below) and is not intended to be a complete analysis or listing of all the possible tax consequences of such purchase, ownership or disposition.
As used herein, a US holder means a beneficial owner of the Company’s shares or ADSs that is: a citizen or resident of the US; a corporation (or other entity taxable as a corporation for US federal income tax purposes) created or organised in or under the laws of the US, or any state thereof; an estate whose income is includible in gross income for US federal income tax purposes regardless of its source; or a trust, if a court within the US is able to exercise primary supervision over the administration of the trust and one or more US persons have the authority to control all substantial decisions of the trust, or if the trust is subject to a valid election to be taxed as a US resident trust.
This summary deals only with shares and ADSs held as capital assets and does not address any special tax consequences that may be applicable to US holders who are subject to special treatment under the US Internal Revenue Code of 1986, as amended, such as dealers in securities or foreign currency, traders who elect mark-to-market accounting, financial institutions or financial services entities, insurance companies, persons subject to the alternative minimum tax, tax-exempt entities, persons that hold the shares or ADSs as part of a straddle, hedge, conversion or constructive sale transaction or other integrated financial transaction, persons whose functional currency is other than the US dollar, certain expatriates or former long term residents of the US, persons who alone, or together with one or more associated persons, control or controlled (directly, indirectly or
constructively) 10% or more of the voting shares of the Company or persons who acquire shares or ADSs as compensation for services.
Prospective investors are advised to consult their tax advisers with respect to the tax consequences of the purchase, ownership and disposition of shares or ADSs, including specifically the consequences under state and local tax laws. The statements regarding US and UK tax laws set out below are based on US federal and UK tax laws and UK HM Revenue & Customs practice in force on the date of this Annual Report and are subject to change. This summary does not address the tax consequences to partnerships, other pass-through entities or persons who hold shares or ADSs through a partnership or other pass-through entity.
US holders of ADSs will be treated as the owners of the underlying shares for purposes of the double taxation conventions relating to income and estate and gift taxes between the US and the UK and for the purposes of the US Internal Revenue Code of 1986, as amended.
In addition, the following summary assumes that US holders are residents of the US for purposes of the current convention relating to income taxes between the US and the UK (“the Convention”) and are entitled to the benefits of the Convention.
Taxation of dividends
 Any dividend paid by the Company will generally be included in the gross income of a US holder as dividend income for US federal income tax purposes to the extent made from the Company’s current or accumulated earnings and profits, as determined under US federal income tax principles. Distributions in excess of such current and accumulated earnings and profits will be applied against and will reduce the US holder’s tax basis in the shares or ADSs and to the extent in excess of such tax basis will be treated as a gain from the sale or exchange of the shares or ADSs.
Following the redenomination of the Company’s share capital on 5 February 2007, dividends are declared in US dollars. Shareholders can elect to receive dividends in US dollars or pounds sterling. The amount of any dividend that the shareholder elects to be paid in pounds sterling will equal the US dollar value of the pounds sterling received calculated by reference to the exchange rate in effect on the day that the dividend is received by the US holder, in the case of shares, or by the Depositary (or its Custodian), in the case of ADSs. This is regardless of whether the dividend payment is later converted into US dollars. Foreign currency exchange gain or loss, if any, realised on a subsequent sale or other disposition of pounds generally will be treated as US source ordinary income or loss to the US holder.
Dividends received on the shares or ADSs generally will be foreign source passive income for US foreign tax credit purposes and generally will not be eligible for the dividends received deduction allowed to US corporations under Section 243 of the US Internal Revenue Code.
A non-corporate US holder’s “qualified dividend income” is subject to tax at a reduced rate of tax of 15%. For this purpose, qualified dividend income includes dividends from foreign corporations received in tax years beginning before 1 January 2011 if (a) the shares of such corporation with respect to which such dividend is paid are readily tradeable on an established securities market in the US, or (b) such corporation is eligible for the benefits of a comprehensive tax treaty with the US that includes an information exchange programme and is determined to be satisfactory to the US Secretary of the Treasury.

134	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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The US Secretary of the Treasury has indicated that the Convention is satisfactory for this purpose, and the Company believes that it is entitled to the benefits of the Convention. Dividends will not however qualify for the reduced rate if such corporation is treated for the tax year in which dividends are paid (or in the prior year) as a “passive foreign investment company” for US federal income tax purposes. The Company does not believe it is a passive foreign investment company. Accordingly, dividend distributions with respect to the Company’s shares or ADSs should be treated as qualified dividend income and, subject to the US holder’s satisfaction of the requirements described below, should be eligible for the reduced 15% US federal income tax rate. A US holder will not be entitled to the reduced rate: (a) if the US holder has not held the shares or ADSs for at least 61 days of the 121-day period beginning on the date which is 60 days before the ex-dividend date; (b) to the extent the US holder is under an obligation to make related payments on substantially similar or related property; or (c) if the US holder elects to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the US Internal Revenue Code. Any days during which a US holder has diminished its risk of loss on the shares or ADSs are not counted towards meeting the 61-day holding period required by the statute.
The UK does not currently apply a withholding tax on dividends under its internal laws. If the UK were to impose a withholding tax, as permitted under the Convention, the rate of such withholding tax will not exceed 15% of the dividend paid to a US holder. In such circumstances, subject to applicable limitations, a US holder who was subject to any withholding should be entitled to claim a deduction for withheld tax or, subject to the holding period requirements mentioned below, a credit for such withholding tax, against the US holder’s federal income tax liability. The US foreign tax credit limitation may be reduced to the extent that dividends are eligible for the reduced rate described above. Special rules apply to foreign tax credits relating to qualified dividend income. US holders should consult their tax advisers as to the method of claiming such foreign tax credit or deduction and compliance with special tax return disclosure requirements that apply to US holders who claim the benefit of the foreign tax credit on such US holders’ US federal income tax returns.
A US holder will be denied a foreign tax credit (and instead allowed a deduction) for foreign taxes imposed on a dividend if the US holder has not held the shares or ADSs for at least 16 days in the 31-day holding period beginning 15 days before the ex-dividend date. Any days during which a US holder has substantially diminished its risk of loss on the shares or ADSs are not counted towards meeting the 16-day holding period required by statute. A US holder that is under an obligation to make related payments with respect to the shares or ADSs (or substantially similar or related property) also is not entitled to claim a foreign tax credit with respect to a foreign tax imposed on a dividend.
Taxation of capital gains
 Upon a sale, exchange or other disposition of shares or ADSs, a US holder will recognise a gain or loss for US federal income tax purposes in an amount equal to the difference between the US dollar value of the amount realised and the US holder’s tax basis (determined in US dollars) in such shares or ADSs. Generally, such gain or loss will be a capital gain or loss and will be a long-term capital gain or loss if the US holder’s holding period for such shares or ADSs exceeds one year. Any such gain or loss generally will be income or
loss from sources within the US for foreign tax credit limitation purposes. Long term capital gains of a non-corporate US holder are generally subject to a maximum tax rate of 15%. The deductibility of a capital loss recognised on the sale or exchange of shares or ADSs is subject to limitations.
If the shares or ADSs are publicly traded, a disposition of such shares or ADSs will be considered to occur on the ‘trade date’, regardless of the US holder’s method of accounting. A US holder that uses the cash method of accounting calculates the US dollar value of the proceeds received on the sale on the date that the sale settles. However, a US holder that uses the accrual method of accounting is required to calculate the value of the proceeds of the sale on the “trade date” and, therefore, may realise a foreign currency gain or loss, unless such US holder has elected to use the settlement date to determine its proceeds of sale for purposes of calculating such foreign currency gain or loss. In addition, a US holder that receives foreign currency upon the sale or exchange of the shares or ADSs and later converts the foreign currency into US dollars will recognise a foreign currency gain or loss on any appreciation or depreciation in the value of the foreign currency against the US dollar. A foreign currency gain or loss will generally be US source ordinary income or loss.
Generally a US holder who is neither resident nor ordinarily resident for tax purposes in the UK will not be liable for UK tax on capital gains realised on the sale or other disposal of shares or ADSs unless, in the year of assessment in which the gain accrues to such holder, that US holder has a permanent establishment, branch or agency in the UK and the shares or ADSs are or have been used by, held by, or acquired for use by, or for the purpose of, such permanent establishment, branch or agency. However, a US holder who has been resident in the UK during the last four years of assessment and held shares or ADSs at that time may, in certain circumstances, become liable to UK capital gains tax on his return to the UK following a disposal of such shares or ADSs. Any US holders whose circumstances are such that they may fall within such provisions are advised to consult their tax adviser.
Under the Convention, a US holder who is resident or ordinarily resident for tax purposes in the UK, a US corporation which is resident in the UK by reason of being managed and controlled in the UK, or a US holder who, or a US corporation which, has a permanent establishment, where shares or ADSs are or have been acquired, used or held for the purposes of such permanent establishment, may be liable for both UK tax and US federal income tax on a gain on the disposal of the shares or ADSs. Such US holders are advised to consult their tax adviser.
US information reporting and US backup withholding
 Under US Treasury regulations, dividends paid on shares or ADSs may be subject to US information reporting requirements and backup withholding of tax (currently 28%). In addition, under US Treasury regulations, the payment of the proceeds of a sale, exchange or redemption of shares or ADSs to a US holder or non-US holder in the US, or through US or US-related persons, may be subject to US information reporting requirements and backup withholding of tax (currently 28%).
US holders generally can avoid the imposition of backup withholding by reporting their taxpayer identification number to their broker or paying agent on US Internal Revenue Service Form W-9. Non-US

Signet Group plc Annual Report & Accounts year ended 2 February 2008	135	

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 	 	Shareholder information (continued)	
 
holders can avoid the imposition of backup withholding by providing a duly completed US Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY, as appropriate, to their broker or paying agent. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a holder will be allowed as a refund or a credit against such holder’s US federal income tax liability, provided that the required returns are filed with US Internal Revenue Service on a timely basis.
Inheritance tax
 Shares or ADSs held by an individual who is domiciled in the US for the purposes of the double taxation convention relating to estate and gift taxes between the US and the UK, and for the purposes of the convention is not a national of the UK, will not be subject to UK inheritance tax on the individual’s death or on a lifetime transfer of shares or ADSs, except in certain cases where the shares or ADSs are placed in trust (other than by a settlor domiciled in the US who is not a national of the UK) and where the shares or ADSs are part of the business property of a UK permanent establishment of an enterprise or pertains to a UK fixed base of an individual used for the performance of independent personal services.
The convention generally provides a credit for the amount of any tax paid in the UK against the US federal tax liability in a case where the shares or ADSs are subject both to UK inheritance tax and to US federal gift or estate tax. Further advice should be sought by any holder who is likely to need to rely upon the provisions of the convention.
UK stamp duty and stamp duty reserve tax
 Stamp duty is (subject to certain exceptions including for charities) currently payable on any instrument transferring shares to the Custodian of the Depositary at the rate of 1.5% on the value of such shares. In accordance with the terms of the Deposit Agreement relating to the shares, any tax or duty payable by the Depositary or the Custodian of the Depositary on future deposits of shares will be charged by the Depositary to the party to whom ADSs are delivered against such deposits.
No UK stamp duty will be payable on transfer of an ADS, provided that the ADS (and any separate instrument of transfer) is executed and retained at all times outside the UK. A transfer of an ADS in the US will not give rise to UK stamp duty provided the instrument of transfer is not brought into the UK. A transfer of an ADS in the UK may attract stamp duty at a rate of 0.5% (rounded up to the nearest multiple of £5) of the consideration. Any transfer (which will include a transfer from the Depositary to an ADS holder) of the shares, including shares underlying an ADS, may result in a stamp duty liability at the rate of 0.5% (rounded up to the nearest multiple of £5) of the consideration. There is no charge to ad valorem stamp duty on gifts. On a transfer of shares from a nominee to the beneficial owner (the nominee having at all times held the shares on behalf of the transferee) under which no beneficial interest passes and which is neither on sale, nor arises under or following a contract of sale, nor is in contemplation of sale, a fixed stamp duty of £5 will be payable.
Stamp duty reserve tax generally at a rate of 0.5% of the consideration is currently payable on any agreement to transfer shares or any interest therein unless: (i) an instrument transferring the shares is executed; (ii) stamp duty, generally at a rate of 0.5%, is paid; and (iii) generally the instrument is stamped on or before the accountable date for stamp duty reserve tax. The duty will, however, be refundable if within six years the agreement is completed by an instrument which has been duly stamped, generally at the rate of 0.5% . Stamp duty reserve tax will not be payable on any agreement to transfer ADSs which represent interests in depositary receipts.

136	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Selected financial data	 	

Amounts under IFRS		 		 		 		 	
									
 	2007/08	 	2006/07	(1)(4)	2005/06	(4)	2004/05	(4)	
 	$m	 	$m	 	$m	 	$m	 	
									
Income statement:	 	 	 	 	 	 	 	 	
Sales	3,665.3	 	3,559.2	 	3,154.1	 	3,004.8	 	
Cost of sales (2)	(3,264.8	)	(3,092.4	)	(2,729.4	)	(2,551.5	)	
									
Gross profit	400.5	 	466.8	 	424.7	 	453.3	 	
Administrative expenses	(158.0	)	(142.1	)	(133.3	)	(129.8	)	
Other operating income	108.8	 	91.5	 	83.3	 	71.8	 	
									
Operating profit	351.3	 	416.2	 	374.7	 	395.3	 	
Financing costs (net)	(17.8	)	(15.4	)	(14.0	)	(16.0	)	
									
Profit before tax	333.5	 	400.8	 	360.7	 	379.3	 	
Taxation	(118.3	)	(134.8	)	(125.3	)	(128.6	)	
									
Profit for the period	215.2	 	266.0	 	235.4	 	250.7	 	
									
Earnings per share – basic	12.6	c	15.4	c	13.6	c	14.5	c	
Earnings per share – diluted	12.6	c	15.3	c	13.5	c	14.4	c	
Earnings per ADS – basic	126.3	c	154.0	c	135.6	c	144.8	c	
Earnings per ADS – diluted	126.1	c	153.4	c	135.3	c	144.5	c	
									
Balance sheet (at period end):	 	 	 	 	 	 	 	 	
Working capital (3)	1,816.1	 	1,749.7	 	1,228.0	 	1,372.1	 	
Total assets	3,024.2	 	2,965.0	 	2,603.6	 	2,476.5	 	
Cash and cash equivalents	41.7	 	152.3	 	92.9	 	193.5	 	
Long term debt	(380.0	)	(380.0	)	–	 	(251.0	)	
Total debt	(416.3	)	(385.5	)	(267.4	)	(351.4	)	
Total equity	1,806.1	 	1,746.0	 	1,555.6	 	1,458.5	 	
									
The Group took the exemption not to restate comparatives for IAS 32 ‘Financial instruments: disclosure and presentation’ and IAS 39 ‘Financial instruments: recognition and measurement’ in 2005/06.

Amounts under US GAAP	 	 	 	 	 	 	 	 	 	 	
											
 	2007/08	 	2006/07	(1)(4)	2005/06	(4)	2004/05	(4)	2003/04	(4)	
 	$m	 	$m	 	$m	 	$m	 	$m	 	
											
Consolidated Statement of Income:	 	 	 	 	 	 	 	 	 	 	
Operating income	358.7	 	407.8	 	366.8	 	393.4	 	347.1	 	
Net income	219.8	 	252.7	 	238.0	 	255.8	 	214.0	 	
Income per share – basic	12.9 c	 	14.6 c	 	13.7 c	 	14.8 c	 	12.4 c	 	
Income per share – diluted	12.8 c	 	14.3 c	 	13.7 c	 	14.7 c	 	12.4 c	 	
Income per ADS – basic	129.0 c	 	146.3 c	 	137.0 c	 	147.7 c	 	124.5 c	 	
Income per ADS – diluted	127.7 c	 	143.1 c	 	136.8 c	 	147.1 c	 	123.6 c	 	
Dividends proposed per share	7.28 c	 	7.16 c	 	5.94 c	 	5.58 c	 	4.20 c	 	
											
Balance sheet data (at period end):	 	 	 	 	 	 	 	 	 	 	
Total assets	3,551.5	 	3,321.4	 	2,907.2	 	2,791.5	 	2,580.4	 	
Cash and cash equivalents	41.7	 	152.3	 	92.9	 	193.5	 	233.0	 	
Long term debt	(380.0	)	(380.0	)	–	 	–	 	(15.1	)	
Total debt	(416.3	)	(385.5	)	(267.4	)	(100.4	)	(127.4	)	
Shareholders’ equity	2,321.2	 	2,227.9	 	2,062.9	 	1,995.8	 	1,799.1	 	
											
(1)	53 week year.	
(2)	Cost of sales includes all costs incurred in the purchase, processing and distribution of merchandise and in the operation and support of retail outlets.	
(3)	Working capital represents current assets (excluding amounts recoverable after more than one year) less current liabilities.	
(4)	Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 5 February 2007. See Note 1(a) to the consolidated financial statements on page 86.	
The Group adopted FAS 158 ‘Employer accounting for defined benefit pension and other post-retirement plans’ on 3 February 2007 and FAS 123(R) ‘Share-based payment’ on 29 January 2006.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	137	

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The selected consolidated financial data set out on the preceding page for 2004/05, 2005/06, 2006/07 and 2007/08 has been derived, in part, from the audited consolidated accounts for such periods included elsewhere in this Annual Report & Accounts. The selected consolidated financial data should be read in conjunction with the accounts, including the notes thereto, and the Financial review included on pages 35 to 43 of this Annual Report & Accounts.
The accounts of the Group have been prepared in accordance with IFRS which differ in certain respects from US GAAP.
See pages 116 to 122 for information on the material differences between IFRS and US GAAP that affect the Group’s profit and funds attributable to equity holders of the Company.

Results of operations
 The following table sets out certain consolidated financial data as a percentage of reported sales:	 	 	 	 	 	 	
							
 	Percentage of sales	 	
 							
 	2007/08	 	2006/07	(1)	2005/06	 	
 	%	 	%	 	%	 	
							
Sales	100.0	 	100.0	 	100.0	 	
Cost of sales (2)	(89.1	)	(86.9	)	(86.5	)	
							
Gross profit	10.9	 	13.1	 	13.5	 	
Administrative expenses	(4.3	)	(4.0	)	(4.2	)	
Other operating income	3.0	 	2.6	 	2.6	 	
							
Operating profit	9.6	 	11.7	 	11.9	 	
Net financing costs	(0.5	)	(0.4	)	(0.4	)	
							
Profit before taxation	9.1	 	11.3	 	11.5	 	
Taxation	(3.2	)	(3.8	)	(4.0	)	
							
Profit for the period	5.9	 	7.5	 	7.5	 	
							
(1)	53 week year.	
(2)	Cost of sales includes all costs incurred in the purchase, processing and distribution of merchandise and in the operation and support of retail outlets.	

138	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Quarterly results (unaudited)	 	

for the 52 week period ended 2 February 2008		 		 		 		 		 	
											
 	13 weeks	 	13 weeks	 	13 weeks	 	13 weeks	 	52 weeks	 	
 	ended	 	ended	 	ended	 	ended	 	ended	 	
 	5 May	 	4 August	 	3 November	 	2 February	 	2 February	 	
 	2007	 	2007	 	2007	 	2008	 	2008	 	
 	$m	 	$m	 	$m	 	$m	 	$ m	 	
											
Sales	814.4	 	787.4	 	678.7	 	1,384.8	 	3,665.3	 	
										 	
Operating profit	54.0	 	62.9	 	7.5	 	226.9	 	351.3	 	
Net financing costs	(3.2	)	(4.7	)	(5.0	)	(4.9	)	(17.8	)	
											
Profit before taxation	50.8	 	58.2	 	2.5	 	222.0	 	333.5	 	
Taxation	(18.3	)	(21.5	)	(0.9	)	(77.6	)	(118.3	)	
											
Profit for the financial period	32.5	 	36.7	 	1.6	 	144.4	 	215.2	 	

for the 53 week period ended 3 February 2007		 		 		 		 		 	
											
 	13 weeks	 	13 weeks	 	13 weeks	 	14 weeks	 	53 weeks	 	
 	ended	 	ended	 	ended	 	ended	 	ended	 	
 	3 May	 	2 August	 	1 November	 	3 February	 	3 February	 	
 	2006	 	2006	 	2006	 	2007	 	2007	 	
 	$m	 	$m	 	$m	 	$m	 	$m	 	
											
Sales	734.3	 	732.9	 	616.8	 	1,475.2	 	3,559.2	 	
											
Operating profit	56.3	 	56.0	 	13.4	 	290.5	 	416.2	 	
Net financing cost	(2.6	)	(4.1	)	(5.4	)	(3.3	)	(15.4	)	
											
Profit before taxation	53.7	 	51.9	 	8.0	 	287.2	 	400.8	 	
Taxation	(19.3	)	(18.3	)	(2.8	)	(94.4	)	(134.8	)	
											
Profit for the financial period	34.4	 	33.6	 	5.2	 	192.8	 	266.0	 	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	139	

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 	 	Definitions	
In this document the following words and expressions shall, unless the context otherwise requires, have the following meanings:

Administrative expenses	Costs not directly incurred in the purchase, processing and distribution of merchandise or support of retail outlets	
ADR	American Depositary Receipt evidencing title to an ADS	
ADS	American Depositary Share representing ten Signet Group plc shares	
APB	Accounting Principles Bulletin (US)	
Annual Report	Annual Report and Accounts	
c.a.g.r.	Compound annual growth rate	
Company	Signet Group plc	
Depositary	Deutsche Bank Trust Company Americas, depositary under the amended and restated deposit agreement for the issue of ADRs	
Directors	The directors of the Company	
Earnings per share (EPS)	Profit attributable to shareholders divided by the weighted average number of shares in issue	
ESOT	Signet Group Employee Share Trust	
FAS	Statement of Financial Accounting Standards (US)	
Fixed charge cover	The ratio of earnings before interest, tax, amortisation, rent, rates and the non-contingent element of operating lease expenditure to net finance income and expense plus rents, rates and operating lease expenditure	
FRS	Financial Reporting Standard (UK)	
FURBS	Signet Group Funded Unapproved Retirement Benefit Scheme	
GAAP (UK or US)	Generally Accepted Accounting Principles	
Gearing	Net debt as a percentage of total equity	
Group	Signet Group plc and its subsidiary undertakings	
Historic UK GAAP	UK GAAP as at 29 January 2005	
HMRC	HM Revenue and Customs	
Holding company	Signet Group plc	
IAS	International Accounting Standard	
IASB	International Accounting Standards Board	
IFRS	International Financial Reporting Standards as issued by the International Accounting Standards	
 	Board and International Financial Reporting Standards as adopted by the European Union	
Independent (directors)	Considered to be independent under the Combined Code	
LIBOR	London Inter-Bank Offered Rate	
LTIP	Long Term Incentive Plan	
Market share	Sales of division or brand as a percentage of estimated market size based on US Department of Commerce and US Census Bureau in the US and the Office of National Statistics in the UK	
NASD	National Association of Securities Dealers	
Nasdaq	National Association of Securities Dealers Automated Quotations	
Net debt	Cash and cash equivalents, less borrowings falling due within one year and borrowings falling due in more than one year	
NYSE	New York Stock Exchange	

140	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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Definitions (continued)	 	

ONS	UK Office of National Statistics	
Pounds, £, pound sterling, pence or p	Units of UK currency	
Return on capital employed (ROCE)	Operating profit divided by monthly average capital employed	
RPI	Retail Price Index	
Sarbanes-Oxley Act	Sarbanes-Oxley Act of 2002	
SEC	Securities and Exchange Commission	
Shares	Ordinary shares of 0.9 cents each in Signet Group plc which were redenominated from ordinary shares of 0.5 pence each on 5 February 2007	
Signet	Signet Group plc and its subsidiary undertakings	
SORIE	Statement of Recognised Income and Expense	
Store productivity	Store sales divided by number of stores calculated on stores operated for the full financial period	
UK or United Kingdom	United Kingdom, Channel Islands, Isle of Man and the Republic of Ireland	
US or United States	United States of America	
US dollar, $, c or cents	Units of US currency	

Signet Group plc Annual Report & Accounts year ended 2 February 2008	141	

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 	 	Shareholder information	

 	 	Glossary of terms	

Terms used in Annual Report & Accounts	US equivalent or brief description	
 	 	
Accounts	Financial statements	
 	 	
Allotted	Issued	
 	 	
Bank loans/loan notes	Long term debt	
 	 	
Capital allowances	Tax term equivalent to US tax depreciation allowances	
 	 	
Cash at bank and in hand	Cash and cash equivalents	
 	 	
Contingent rent	Percentage rent	
 	 	
Creditors	Payables	
 	 	
Debtors	Receivables	
 	 	
Finance expense	Interest expense	
 	 	
Finance income	Interest income	
 	 	
Finance lease	Capital lease	
 	 	
Freehold	Ownership with absolute rights in perpetuity	
 	 	
Like for like sales	Same store sales at constant exchange rates	
 	 	
Profit	Income	
 	 	
Profit and loss account	Income statement	
 	 	
Profit and loss account reserve	Retained earnings	
 	 	
Profit attributable to shareholders	Net income	
 	 	
Property, plant and equipment	Property and equipment	
 	 	
Share capital	Capital stock or common stock	
 	 	
Share option	Stock option	
 	 	
Shareholders’ funds	Shareholders’ equity/net assets	
 	 	
Share premium account	Additional paid-up capital or paid-in surplus (not distributable)	
 	 	
Shares in issue	Shares outstanding	
 	 	
Stocks	Inventories	
 	 	
Tangible fixed assets	Property and equipment	
 	 	
Value Added Tax (VAT)	UK sales tax	

142	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Shareholder information	

Shareholder contacts	 	
 
UK shareholders
 Enquiries concerning the following matters should be addressed to:
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 0870 162 3100
 Telephone (overseas): +44 208 639 2157
e-mail: ssd@capitaregistrars.com
website: www.capitaregistrars.com

•	Dividend payments;	
 	 	
•	Dividend mandate instructions;	
 	 	
•	Dividend reinvestment plan;	
 	 	
•	Loss of share certificates;	
 	 	
•	Notification of change of address or name;	
 	 	
•	Transfer of shares to another person; and	
 	 	
•	Amalgamation of shareholdings: if you receive more than one copy of the full Annual Report & Accounts, you may wish to amalgamate your accounts on the share register.	
ADS information
 The ADS programme is administered on behalf of the Company by Deutsche Bank Trust Company Americas. Any enquiries, including those to do with change of address or dividend payments, should be addressed to:
Deutsche Bank Trust Company Americas
85 Challenger Road
Ridgefield Park
 New Jersey
NJ 07660
USA
 Telephone toll-free from US: +1 866 249 2593
website: www.adr.db.com
The Company is subject to the regulations of the SEC as they apply to foreign private issuers and files with the SEC its Annual Report on Form 20-F and other information as required.
Registered office
 15 Golden Square
 London W1F 9JG, United Kingdom
Telephone: +44(0)870 909 0301
Group Company Secretary
 Mark Jenkins
 Telephone: +44(0)870 909 0301
e-mail: mark.jenkins@signet.co.uk
Investor Relations Director
 Timothy Jackson
 Telephone: +44(0)870 909 0301
e-mail: tim.jackson@signet.co.uk
Corporate website
 Further information about the Group including the Annual and Half Year reports, public announcements and share price data are available in electronic format from the Group’s corporate website www.signetgroupplc.com.
Shareholder communication
 Shareholders who wish to send communications to the Board of Directors, the Chairman or any other individual director may do so in writing addressed to Mark Jenkins, Group Company Secretary, 15 Golden Square, London WIF 9JG, UK.
Unsolicited mail
 As the Company’s share register is, by law, open to public inspection, shareholders may receive unsolicited mail from organisations that use it as a mailing list. To limit the amount of unsolicited mail you receive, write to:
Mailing Preference Service
DMA House
70 Margaret Street
London W1W 8SS
or register online at
www.mpsonline.org.uk
Documents on display
 Documents referred to in this Annual Report are available for inspection at the registered office of the Company.

Signet Group plc Annual Report & Accounts year ended 2 February 2008	143	

Back to Contents

 	 	Shareholder information	

 	 	Index	

 	 	Page	
 	 	 	
Accounting policies	86-90	
Addresses for correspondence	143	
Advisers	52	
Annual general meeting	54	
Audit Committee	 	
–	constitution	57	
–	members of	51	
Auditor’s report to the members of Signet Group plc	81	
Balance sheet	 	
–	Company	123	
–	consolidated	83	
Board of directors	 	
–	changes in constitution	56	
–	names and biographical details	51	
Cash flow and funding	38	
Cash flow statement – consolidated	84	
Chairman’s statement	2	
Charitable and community support	66	
Commitments	 	
–	capital	112	
–	operating leases	111	
Competition	12, 24	
Contingent liabilities	112	
Corporate governance statement	56-60	
Deferred taxation	103	
Definitions	140	
Description of property	30	
Directors	 	
–	incentive plans	71	
–	interests in shares	79	
–	other information	51	
–	pensions	75	
–	remuneration	67-79	
–	remuneration principles	67	
–	share option plans	71-73	
Directors’ statements of responsibility in relation to the accounts	80	
Dividends	96	
Earnings per share	96	
Employees	 	
–	costs	94	
–	numbers	94	
Exchange rates	50, 93	
Financing costs	92	
Financial instruments	112	
Financial liabilities	101-103	
Financial review	35-43	
Financial summary	7	
Glossary of terms	142	
Group Chief Executive’s review	3	
 	 	Page	
 	 	 	
IFRS – implementation	42	
Income statement – consolidated	82	
Information systems	59	
Inventories	99	
Legal proceedings	112	
Marketing and advertising	19, 25	
Net debt	39, 103	
Nomination Committee	 	
–	constitution	58	
–	members of	51	
Non-current assets	 	
–	intangible	97	
–	property, plant and equipment	98	
Non-executive directors	51	
Notes to the accounts	86-122	
Officers	52	
Operating review	 	
–	US	12	
–	UK	24	
Pension schemes	104	
Provisions – non-current	104	
Quarterly results	139	
Regulation	21, 29	
Related party transactions	115	
Remuneration Committee	 	
–	constitution	67	
–	members of	51	
Report of the directors	53-55	
Reserves	110	
Risk and other factors	44-50	
ROCE	37	
Segment information	91	
Selected financial data	137	
Share capital	108	
Shareholder	 	
–	contacts	143	
–	information	129-136	
Share options	113	
Share premium account	110	
Share price	130	
Social, ethical & environmental matters	61-66	
Statement of recognised income and expense	85	
Subsidiary undertakings	115	
Substantial shareholdings	132	
Taxation	95	
Trade and other payables	100	
Trade and other receivables	99	
Treasury policies	38	
US accounting principles	 	
–	summary of differences between IFRS and US GAAP	116-122	

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144	Signet Group plc Annual Report & Accounts year ended 2 February 2008	

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 	Shareholder information	

Cross reference to Form 20-F	 	
 
The information in this document that is referenced on this page is included in Signet Group plc’s Form 20-F for the 52 weeks ended 2 February 2008 and is filed with the Securities and Exchange Commission (SEC).

Item  	 	Page	
 	 	 	 	 	
1	Identity of Directors	n/a	
					
2	Offer statistics and expected timetable	n/a	
					
3	Key Information	 	
					
A	Selected financial data	 	
 	–	Risk and other factors: financial market risks	49	
 	–	Risk and other factors: exchange rates between the pound sterling and the US dollar	50	
 	–	Selected financial data	 	137	
 	–	Note 30: Summary of differences between IFRS and US GAAP	116	
B	Capitalization and indebtedness	n/a	
C	Reasons for the offer and use of proceeds	n/a	
D	Risk factors	44	
4	Information on the Company	 	
					
A	History and Development of the Company	 	
 	–	Shareholder information	129	
B	Business Overview	 	
 	–	Chairman’s statement	2	
 	–	Group Chief Executive’s review	3	
 	–	US operating review	12	
 	–	UK operating review	24	
 	–	Regulation	21, 29	
 	–	Group financial review	35	
 	–	Risk and other factors: Suppliers	47	
 	–	Risk and other factors: Raw materials and the supply chain	47	
 	–	Risk and other factors: Seasonality	48	
 	–	Description of property & Group employees: Trademarks and trade names	30	
 	–	Note 2: Segment information	91	
C	Organisational Structure	 	
 	–	Note 28: Principal subsidiary undertakings	115	
D	Property, plants and Equipment	 	
 	–	Description of property and group employees	30	
 	–	Note 24: Commitments: Operating lease commitments – minimum lease payments	111	
5	Operating and Financial Review and Prospects	 	
					
A	Operating results	 	
 	–	US operating review	12	
 	–	UK operating review	24	
 	–	Financial review	35	
B	Liquidity and capital resources	 	
 	–	Financial review: Liquidity and capital resources	38	
 	–	Note 18: Financial Liabilities - borrowings	101	
C	Research and development, patents and licenses, etc	n/a	
D	Trend information	 	
 	–	US operating review	12	
 	–	UK operating review	24	
 	–	Financial review	35	
 	–	Risks and other factors	44	
E	Off-balance sheet arrangements	n/a	
F	Tabular disclosure of contractual arrangements	 	
 	–	Financial review: Contractual obligations as at 2 February 2008	40	
G	Safe Habor	 	 	
 	–	Cautionary statement regarding
forward-looking statements	inside front cover	
 	–	Risk and other factors: Forward-looking statements	44	
6	Directors, Senior Managers and Employees	 	
					
A	Directors and Senior Management	 	
 	–	Directors, officers and advisors	51	
B	Compensation	 	
 	–	Directors’ remuneration report	67	
C	Board Practices	 	
 	–	Corporate governance statement	56	
 	–	Directors’ remuneration report: Service contracts	74	
 	–	Directors, officers and advisors: Committees	51	
D	Employees	 	
 	–	Description of property & group employees: Group employees	30	
 	–	Note 7: Directors and employees	93	
E	Share Ownership	 	
 	–	Directors’ interest in shares	76	
 	–	Note 27 Share options	113	
7	Major Shareholders and Related Party Transactions	 	
					
A	Major Shareholders	 	
 	–	Shareholder information: Nature of trading market	130	
 	–	Shareholder information: Substantial shareholdings notified to the Company up to 8 April 2008	132	
 	–	Shareholder information: Substantial shareholdings and control of the Company	131	
Item	 	 	Page	
 	 	 	 	
B	Related party transactions	 	
 	–	Note 30: Related party transactions	115	
C	Interests of Experts and Counsel	n/a	
8	Financial Information	 	
			
A	Consolidated Statement and Other Financial Information	 	
 	–	Consolidated balance sheet	83	
 	–	Consolidated income statement	82	
 	–	Consolidated statement of recognised income and expenses	85	
 	–	Consolidated cash flow	84	
 	–	Notes to the accounts	86	
 	–	Selected financial data	137	
B	Significant Changes	n/a	
9	The Offer and Listing	 	
			
A	Offer and Listing Details	 	
 	–	Shareholder information: Nature of trading market	130	
B	Plan of distribution	n/a	
C	Markets	 	
 	–	Shareholder information: Nature of trading market	130	
D	Selling shareholders	n/a	
E	Dilution	n/a	
F	Expenses of the issue	n/a	
10	Additional Information	 	
			
A	Share capital	n/a	
B	Memorandum and Articles of Association	 	
 	–	Shareholder information: History	129	
 	–	Directors’ remuneration report	67	
 	–	Note 22: Share capital	108	
 	–	Shareholder information: Substantial shareholdings and control of the Company	131	
C	Material contracts	n/a	
D	Exchange Controls	 	
 	–	Shareholder information: Dividends	131	
 	–	Shareholder information: Exchange controls and other limitations affecting security holders	132	
E	Taxation	 	
 	–	Shareholder information: Taxation	134	
F	Dividends and paying agents	n/a	
G	Statement by experts	n/a	
H	Documents on Display	 	
 	–	Shareholder contacts: Documents on display	143	
I	Subsidiary information	n/a	
11	Quantitative and Qualitative Disclosure about Market Risk	 	
			
 	–	Financial review	35	
 	–	Risk and other factors: Financial market risk	49	
 	–	Risk and other factors: Fair value charges arising from	50	
 	–	Note 26: Financial instruments	112	
12	Description of Securities other than Equity Securities	n/a	
			
13	Defaults, Dividend Arrearages and Delinquencies	n/a	
			
14	Material modifications to the Rights of Security Holders and Use of Proceeds	n/a	
			
15	Controls and Procedures	 	
			
 	–	Corporate governance statement: Internal controls	59	
 	–	Corporate governance statement: Management’s annual report on internal control over financial reporting	60	
16	[Reserved]	 	
			
A	Audit committee financial expert	 	
 	–	Corporate governance statement: the audit committee	57	
B	Code of ethics	 	
 	–	Corporate governance statement: Business conduct and ethics	58	
C	Principal accountant fees and services	 	
 	–	Corporate governance statement: the audit committee	57	
 	–	Note 3: Operating profit	92	
D	Exemptions from the listing standard for audit committees	n/a	
E	Purchase of equity securities by the issuer and affiliated purchasers	 	
 	–	Information on share buy-back programme	131	
17	Financial Statements	 	
			
 	–	Report of independent registered public accounting firm	n/a	
 	–	Consolidated income statement	82	
 	–	Consolidated balance sheet	83	
 	–	Consolidated cash flow statement	84	
 	–	Consolidated statement of total recognised income and expenses	85	
 	–	Notes to the accounts including US GAAP reconciliation	86	
 	–	Selected financial data	137	
18	Financial Statements	n/a	

 

Signet Group plc Annual Report & Accounts year ended 2 February 2008	145	

 

 

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