Interim Results - Part 1

GUS PLC 21 November 2002 21 November 2002 GUS PLC INTERIM RESULTS FOR SIX MONTHS ENDED 30 SEPTEMBER 2002 Highlights - 20% increase in profit before amortisation of goodwill, exceptional items and taxation to £247m (2001: £206m) - 16% increase in earnings per share before amortisation of goodwill and exceptional items to 18.0p (2001: 15.5p) - 6% increase in the interim dividend to 6.9p (2001: 6.5p) - Experian: sales up 6%, profit up 10% - Argos Retail Group: sales up 7%; profit up 14% - Burberry: sales up by 16%; profit up 31% - £139m exceptional profit on partial IPO of Burberry - Homebase: agreed offer for about £900m Sir Victor Blank, Chairman of GUS, commented: 'We have established clear momentum at GUS and once again made good strategic and financial progress in the first half. The partial IPO of Burberry and today's agreed offer for Homebase are further steps in refocusing GUS for growth.' John Peace, Chief Executive of GUS, commented: 'GUS has had another successful six months with all our major businesses growing profits by over 10%. We continue to view the outlook for the second half with confidence, while remaining mindful of the potential impact of economic and political uncertainty.' Enquiries GUS John Peace Chief Executive 020 7495 0070 David Tyler Finance Director Fay Dodds Director of Investor Relations Finsbury Rupert Younger 020 7251 3801 Rollo Head There will be a presentation today to analysts and institutions at 10.00am at the Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ and a press conference at 12 noon at the same location. GUS and Burberry announcements are available on the GUS website: www.gusplc.com. The GUS slide pack and presentation to analysts and institutions will also be available there later in the day. There will also be a conference call to discuss the results at 3.00pm today. A replay will be available later on the GUS website. Photography is available from: www.newscast.co.uk. GUS will issue its Third Quarter Trading Update on 14 January 2003. Its preliminary results for the year to March 2003 will be announced on 28 May 2003. This announcement does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any GUS plc or Burberry Group plc shares. Past performance is no guide to future performance and persons needing advice should consult an independent financial advisor. Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future results in forward looking statements. CHIEF EXECUTIVE'S REVIEW GUS has continued to make good financial and strategic progress in the first half of the current financial year, building on the momentum of the previous two years. Strong financial progress Despite difficult trading conditions in some of its markets, sales increased by 6% in the six months to September 2002. Profit before amortisation of goodwill, exceptional items and taxation grew by 20% in the period. Argos, Experian and Burberry all reported a further set of record first half profits, while the interest charge was much reduced. This is the fourth consecutive half year where profit before tax has increased by more than 10% over the comparative period. Continued portfolio rationalisation GUS has continued to reposition its portfolio of businesses. The successful partial flotation of Burberry in July raised £239m for GUS as well as establishing an independent market value for Burberry. Outstanding balances were reduced by £121m in the Finance division while the property joint venture with British Land raised £49m from disposals. Focus on growth opportunities Capital released from these disposals has been reinvested in growth opportunities. Some of these are organic, such as development of the Argos store card, which now has over 500,000 active cardholders. Group capital expenditure in the current financial year is expected to be about £350m, with the major projects being additional warehouses for Argos and flagship stores for Burberry. A working capital investment in ARG Financial Services of up to £75m is expected in the year to March 2003. Acquisitions to deliver growth in our main businesses have been made. ConsumerInfo.com, which was acquired by Experian North America in April 2002, has given us clear market leadership in the rapidly growing direct-to-consumer market for credit reports, scores and related products. Today's separate announcement of an agreed offer for Homebase, subject to regulatory clearance, is a major development for ARG. GROUP RESULTS In the six months to 30 September 2002, sales grew by 6% to £3,038m. Group profit before amortisation of goodwill, exceptional items and taxation increased to £247m, compared to £206m in the same period last year, despite an adverse currency translation effect of £9m, relating mainly to the dollar. In addition, there was an exceptional profit of £138m, predominantly from the partial Initial Public Offering of Burberry. The interest charge was £16.5m lower in the period. Of this, £11.5m resulted from lower interest rates and reduced levels of debt. The other £5.0m arose from a change in accounting relating to forward sales of foreign currencies undertaken to hedge the Group's overseas assets, which is likely to impact the second half of the financial year in a similar way. Earnings per share before amortisation of goodwill and exceptional items increased by 16% to 18.0p (2001: 15.5p). This has been reduced by the minority interest in Burberry. The Group's effective tax rate for the year (based on profit before amortisation of goodwill and before profits/losses on sale of businesses) is expected to be 23.9%, compared to 23.8% in the year to 31 March 2002. The Group generated £226m of free cash flow in the period before acquisitions, disposals and dividends (2001: £284m). Net debt excluding securitised loans was £1.19bn at 30 September 2002, a reduction of £91m from 31 March 2002. The Board has announced an interim dividend of 6.9p, representing a rise of 0.4p or 6% over last year. 6 months to 30 September Sales Profit before taxation 2002 2001 2002 2001 £m £m £m £m Experian 1 578 545 118.1 107.2 Argos Retail Group 2 2,130 1,997 76.2 66.7 Burberry 274 236 55.1 42.1 Other 56 79 19.8 29.1 Total 3,038 2,857 269.2 245.1 Net interest (22.4) (38.9) Profit before amortisation of goodwill, exceptional items and taxation 246.8 206.2 Amortisation of goodwill (56.0) (48.6) Exceptional items 138.0 (26.0) Profit before taxation 328.8 131.6 EPS before amortisation of goodwill and exceptional items 18.0p 15.5p Reported EPS 26.9p 8.6p 1 Experian 2001 figures restated to include £11m of sales from third party call centre and related activities transferred from Reality, and a £3.1m loss from CreditExpert previously reported in gusco.com 2 ARG 2001 figures restated to include £32m of external logistics sales and £2.2m of profit previously reported by Reality See Appendix One for details on restated sales and profits EXPERIAN 6 months to 30 September Sales Operating profit 2002 2001* 2002 2001* £m £m £m £m Experian North America 355 342 80.6 73.8 Experian International 223 203 37.5 33.4 Total 578 545 118.1 107.2 Operating margin 20.4% 19.7% * 2001 restated to reflect transfer of activities from gusco.com to Experian North America and transfer of third party call centre and related activities from Reality to Experian International For Experian as a whole, sales in the first half increased by 10% and operating profit by 14% at constant exchange rates, leading to an increase in the operating margin. Experian also generated strong cash flow in the first half. Additional segmental information on Experian is given in Appendix Two. Experian North America 6 months to 30 September 2002 2001 Change at constant FX £m £m rates Sales 355 342 10% Operating profit * 80.6 73.8 15% Of which: - Direct business * 65.5 59.6 16% - FARES 15.1 14.2 12% Operating margin 22.7% 21.6% * 2001 profit restated to include £3.1m loss previously reported in gusco.com In the first six months of the financial year, Experian North America delivered a strong performance and generated record sales and profits. In dollars, sales grew by 10% and operating profit by 15%. Assisted by a buoyant market and robust demand from clients in interest rate sensitive sectors, Credit Information and Credit Solutions together grew by 10%, excluding acquisitions. There was particularly strong growth in pre-screen, fraud and portfolio management solution suites, and also in business information. Direct-to-consumer sales amounted to $52m in the period, including a first-time contribution of $44m from ConsumerInfo.com, acquired in April 2002. Marketing Information and Marketing Solutions sales were 13% lower in dollar terms, reflecting the difficult conditions in the direct marketing industry. Overall, excluding ConsumerInfo.com, Experian North America's dollar sales were 1% ahead of the same period last year. Had the sales of ConsumerInfo.com been included for the comparative period last year, dollar sales would have grown by 4%. The FARES joint venture is Experian's chosen way of competing in the real estate information sector. It experienced a further six months of exceptional trading reflecting a continuing strong mortgage refinancing market. Operating profit at $22.8m was 12% ahead of the same period last year. Experian North America's total operating profit increased to $121.8m, up 15%. The key drivers were the strong sales growth reported in Credit Information and Credit Solutions, the first time positive contribution from its direct-to-consumer activities and the benefit from ongoing cost reduction programmes, partly offset by higher employee costs and insurance premiums. Restructuring costs of $4.5m were similar to those in the first half last year ($4.8m). As previously announced, a change in the data amortisation period for its consumer credit data from five to seven years benefited profits by $4m in the first half. Experian North America's strategy is focused on growth opportunities through: - building on its core businesses. Experian North America believes that it continues to win share with many clients in the financial services, insurance and retail markets as a result of more co-ordinated and focused sales efforts. It has also made progress in buying in its affiliated credit bureaux, having purchased three of its 38 bureaux by the end of the first half, and two more in October. These include AQM, one of its five largest affiliates. These acquisitions will drive growth by enabling Experian to take control of the distribution of its credit products and give it a greater share of the value chain in consumer credit by growing sales, profit and cash flow. - successfully selling new products. Major new contracts have been signed in the first half covering many of Experian North America's key growth areas, such as: • customer data integration and database hosting, for five major US financial institutions; • Credit Solutions, via a partnership agreement with TSYS, a global leader in payments processing. This will incorporate Experian's customer strategy management software into TSYS systems. TSYS processes payments for 230 million accounts in 19 countries; and • direct-to-consumer, where Experian North America has formed a multi-year strategic partnership with Trilegiant which provides paper-based credit monitoring services to more than five million members through relationships with leading financial institutions and retailers. Experian will now provide online credit-related products to these members. - growing by targeted acquisitions. The acquisition of ConsumerInfo.com has moved Experian into a market leading position in the direct-to-consumer industry. Since its acquisition, ConsumerInfo.com has continued to grow strongly, with sales up 75% over the same period last year. Total membership reached one million in September, in addition to 140,000 members of other Experian-developed brands. Experian International 6 months to 30 September 2002 2001 Change at £m £m constant FX rates Sales UK * 139 125 11% Rest of World 84 78 7% Total 223 203 10% Operating profit 37.5 33.4 12% Operating margin 16.8% 16.4% * 2001 sales restated to include £11m of third party call centre and related activities transferred from Reality Experian International again generated double-digit growth in sales and profits, with an increase in sales of 10% and operating profit up 12% at constant exchange rates. Acquisitions, net of disposals, contributed 1% to sales growth. Credit Information and Credit Solutions sales together grew at double-digit rates on an underlying basis. Credit Information benefited from a strong performance in business information and growth from the Spanish credit bureau launched earlier in the year. Despite slippage of some Rest of World contracts into the second half, Credit Solutions saw strong growth in account processing, fraud, scoring and risk management. Marketing Information and Marketing Solutions grew strongly by 8% on an underlying basis, benefiting from continuing growth in the automotive and insurance sectors. Outsourcing accounted for 32% of sales in the first half, following the transfer of the third party activities from Reality. Its strategy continues to be sustaining sales and profit growth by: - building on its core businesses. Experian International successfully won three major contracts in the first half in Credit Solutions and Outsourcing. Together, these contracts will generate £15m of new business in a full year, with the total value of the contracts over their lifetime being in excess of £55m. Experian UK also signed three new contracts in the government sector. - It has also recently expanded its consumer credit bureaux network with the launch of a bureau in Ireland. Building on the successful start-up of the Spanish bureau, Experian International now provides consumer bureaux services in nine countries. - successfully selling new products. New versions of Experian's award winning e-series products have been launched in the first half and about 50% of its UK clients are now connecting to Experian via the web. In September, a significant new phase of the UK Motor Insurance Database went live, which extends the coverage to include fleet vehicles. 25,000 police enquiries per day are now being made on the new system. - growing by targeted acquisitions. Acquisitions made during the period, adding new skills, products and markets, include Business Strategies, a leading economic consultancy business in the UK, and ITEM, a Spanish marketing services company. The total cost of these acquisitions was less than £5m. ARGOS RETAIL GROUP 6 months to 30 September Sales Operating profit 2002 2001 2002 2001 £m £m £m £m Argos 1,284 1,165 52.1 44.2 Home Shopping UK & Ireland * 704 715 9.5 13.0 Financial Services 14 3 2.2 (0.9) Home Shopping Continental Europe 128 114 12.4 10.4 Total 2,130 1,997 76.2 66.7 Operating margin 3.6% 3.3% * 2001 Home Shopping UK & Ireland restated to include £32m sales and £2.2m profit previously reported by Reality Argos Retail Group (ARG) increased sales by 7% and profit by 14%, further reinforcing its position as the leading UK multi-channel retailer. Argos 6 months to 30 September 2002 2001 Change £m £m Sales* 1,284 1,165 10% Operating profit* 52.1 44.2 18% Operating margin 4.1% 3.8% * includes Argos Additions and jungle.com Through its strategy of improving choice, value and convenience for its customers, Argos continued to outperform its market in the first half of the year, a period during which the growth in consumer spending moderated. Argos increased sales by 10% and profit by 18%, generating a further improvement in the operating margin. Excluding Argos Additions and jungle.com, Argos' sales increased by 12%, being 7% on a like-for-like basis with a 5% contribution from new stores. Sales growth accelerated following the launch of the Autumn/Winter catalogue at the end of July. Strong performances continued to be seen in furniture, homewares and electricals. Gross margin at Argos was firm compared to the same period last year, driven by mix and better buying. Despite further investment in the supply chain and store refurbishment programmes, operating margin increased again by 0.3% to 4.1%. Argos has five key growth initiatives, against which good progress has been made in the first half: - open about 35 new stores per annum. Argos opened 12 additional stores in the period, bringing the total at 30 September to 502. The majority of these openings were second or third stores in larger towns and cities. Sales from store openings have exceeded expectations, contributing 5% to growth in the first half; - refurbish all remaining small stores by March 2004. An additional 60 stores were refurbished in the first half, bringing the total to 235, more than half way through the programme. To improve convenience further for customers, QuickPay kiosks are being introduced into 190 stores ahead of the peak Christmas trading period. Customers can order and pay by credit or debit card at a touch screen kiosk instead of a till, thereby reducing the total time spent in store purchasing goods; - expand the range. Part of Argos' stated strategy for growth has been to increase the choice available to customers. The Autumn/Winter 2002 catalogue contains 11,400 lines. This is an increase of 55% on three years ago and 28% on one year ago. This increase in lines over last year is predominantly in areas such as homewares and furniture. Of the 2,500 increase in lines, about 1,600 are stocked in store, with the balance being available for home delivery only; - invest £120m in its supply chain. The four-year programme initiated last year is on track, making improvements to IT, software systems and product sourcing as well as building new warehouse capacity. The full programme is expected to yield benefits when complete of about £50m per annum to support competitive pricing, margins and other growth and value propositions. Pricing in the current Autumn/Winter 2002 catalogue on re-included lines was 3% below last year; and - growth in capacity and customer service improvements at Argos Direct. Sales via Argos Direct increased 38% and now account for 20% of Argos' sales - up from 16% last year. A second Argos Direct warehouse is being built in Marsh Leys, Bedfordshire and will help to service this growth from mid 2003. Improvements in IT systems and the range of delivery options available to customers have been made. Sales at Argos Additions in the first half were £66m, up 4% compared to the same period last year. In the Autumn/Winter 2002 catalogue, refinements were made to the credit offer, to pricing and to merchandise (more unique product, wider range, presentation), which have stimulated higher sales growth since the new catalogue launch. Sales from jungle.com in the first half were significantly lower than last year. As previously announced, ARG intends to integrate jungle.com further into Argos. Preliminary estimates of the one-off cost of this move are in the region of £10m, of which less than half will be cash. This will be charged against operating profit in the second half of the year. Home Shopping UK and Ireland 6 months to 30 September 2002 2001* Change £m £m Sales Home Shopping 670 683 (2%) Reality logistics 34 32 6% Total 704 715 (2%) Operating profit 9.5 13.0 (27%) Operating margin 1.3% 1.8% * 2001 Home Shopping UK & Ireland restated to include £32m sales from external logistics activities and £2.2m profit previously reported by Reality UK Home Shopping continues to realign itself as a smaller, but profitable agency business, while pursuing opportunities in the growing direct market. In the first half of the financial year, agency sales at UK Home Shopping declined by 5%. This reflects a difficult clothing market in the period and a decision to restrict the use of 'buy now, pay later' credit offers. Active customer numbers continued to contract but average spend increased slightly. Direct catalogues, mainly Marshall Ward and Abound, grew sales by over 30% and now account for 14% of total Home Shopping sales, compared to 11% last year. There was increased marketing and recruitment spend behind Abound in particular. Its third catalogue was launched in August, offering more exclusive fashion lines. Operating profit fell by £3.5m in the first half compared to the same period last year, reflecting the 2% decline in sales. Gross margins were in line with last year, with buying benefits being offset by higher markdowns. Stocks at the end of the period were 10% below last year. The cost reduction programme continued, but this was re-invested in marketing support for the direct catalogues and investment in the relocated head office. With the focus on stabilising agency profits, a further 75 redundancies have recently been announced. The cost of about £2m will be charged against operating profit in the second half of the year. External logistics sales grew by 6% in the first half compared to the same period last year. Family Hampers was sold in July 2002 for £5.5m. Its sales, which fall predominantly in the second half of the financial year, were £47m in the year to March 2002. Financial Services 6 months to 30 September 2002 2001 £m £m Sales* 14 3 Operating profit/(loss) 2.2 (0.9) * Sales mainly represent interest income, fees and commissions relating to the Argos store card Financial Services generated an operating profit of £2.2m in the first half. Profits from selling insurance and personal loans to Home Shopping customers increased slightly. Operating losses in the Argos store card were also lower than last year. At 30 September 2002, there were 540,000 active Argos store card accounts (up from 460,000 at March 2002) with a loan book of nearly £130m. Over 7% of Argos' sales were funded through the card. Following its first time inclusion in the Argos Autumn/Winter 2002 catalogue, the personal loan product has generated nearly 3,000 loan accounts. For the full year to March 2003, revenue investment spend is expected to be about £15m with an increase of up to £75m in the store card and personal loan books. Home Shopping Continental Europe 6 months to 30 September 2002 2001 Change at constant £m £m FX rates Sales 128 114 10% Operating profit 12.4 10.4 16% Operating margin 9.7% 9.1% At constant exchange rates, sales from European Home Shopping increased by 10% and profit by 16%. This was driven by Wehkamp, the leading home shopping brand in Holland, which accounts for over 80% of sales. It benefited from promotional activity surrounding the celebration of its 50th anniversary, improved service levels and a successful initiative to grow branded clothing sales. Sales and profit at Halens, the Scandinavian operation, were both up 5% in local currency. e-commerce Across ARG, e-commerce sales continued to grow strongly to £104m, compared to £65m in the prior period. The number of visits to the Argos website nearly doubled in the first half and almost 4% of Argos' sales were over the Internet. 6% of UK Home Shopping's sales and 14% of Wehkamp's sales were ordered through their websites. BURBERRY Following the partial IPO of Burberry Group plc, GUS retains a 77% stake in Burberry. The following is an abridged version of the latter's Interim Results announcement released on 19 November 2002. 6 months to 30 September 2002 2001 Change at constant £m £m FX rates Sales 274 236 17% Operating profit 55.1 42.1 32% Operating margin 20.1% 17.8% Burberry acquired the operations of its primary distributors in Asia outside of Japan in January 2002 and July 2002 (the 'Asia acquisitions'). Total sales in the first half advanced to £274m from £236m in the comparative period, representing an increase of 17% at constant exchange rates. This is 9% on an underlying basis (ie at constant exchange rates and excluding the impact of the Asia acquisitions). At constant exchange rates, operating profit increased by 32% to £55.1 million. Underpinning this growth was operating margin expansion from 17.8% to 20.1%. This gain was driven primarily by the integration of the Asia acquisitions, reduced markdown costs and favourable product and channel shifts. Burberry continued to make solid progress in executing its key growth initiatives by product, region and channel of distribution during the first half. By product Accessories penetration increased to 28% of sales versus 25% in the prior period. Womenswear continued to be a critical component in the modernisation of the brand, delivering 17% growth and constituting one-third of sales for the period. Menswear experienced improved results responding to new product and merchandising initiatives implemented over the past year. By region Burberry's focus on the US resulted in 27% sales growth in this market versus the prior year, driven by strong improvement in both the retail and wholesale channels. In Asia, the acquisition of the Korean distributor in July completed an important step in the strategy of bringing the majority of Burberry's non-Japan Asia business under direct operating control. Europe experienced moderate growth during the period. By distribution channel Total retail sales increased by 32% in the first half, boosted by the contribution from the Asia acquisitions. On an underlying basis, retail sales increased by 17%, driven by gains at existing stores and by sales from newly opened stores. During the first half, Burberry opened five stores, including a flagship store in Barcelona, three other stores (in Heathrow Airport, Hong Kong and Florida), as well as one outlet store. Burberry's 24,000 square foot New York flagship store on East 57th Street, which presents the most comprehensive expression of the brand to date, is now open, as is the Knightsbridge flagship store. At 30 September 2002, Burberry operated 124 retail locations, consisting of 45 Burberry stores, 59 concessions and 20 outlet stores. Total wholesale sales advanced 8% during the first half. On the basis of orders received to date, Burberry anticipates that the aggregate Spring/Summer 2003 wholesale order book will show single digit growth over the prior year. Licensing revenues in the first half increased by 14% (21% at constant exchange rates), driven by strong growth in Japanese royalties reflecting double digit volume gains and increases in certain royalty rates. In licensing, performance in Japan was excellent, aided by Burberry's efforts in co-ordinating and enhancing brand consistency in that market. SOUTH AFRICAN RETAILING 6 months to 30 September 2002 2001 Change at constant £m £m FX rates Sales 54 65 10% Operating profit 13.8 15.8 17% Operating margin 25.6% 24.3% Despite a tough economic environment, the rate of sales growth in South African Retailing accelerated in the first half. Sales grew by 10% in Rand, outperforming other furniture retailers. Growth was driven by more effective marketing and merchandise strategies. Operating profit in Rand grew by 17%, leading to a further improvement in the operating margin. This was due to cost savings across the business and lower repossession losses as a result of stringent credit approval and collection polices, developed in conjunction with Experian. The Rand weakened further in the first half of the year from an average rate of £1=R11.8 in 2001 to R15.8 in 2002. This reduced reported sales by £18m and operating profit by £4.6m in the first half of year. The closing rate at 30 September 2002 was R16.5 (2001: R13.3). FINANCE 6 months to 30 September 2002 2001 £m £m Operating profit 4.0 9.4 General Guarantee Finance continued to wind down its loan book during the period, showing a reduction of £121m from the balance of £254m at 31 March 2002. At 30 September 2002, GGF's outstanding advances, net of provisions, were £133m, of which £83m were funded by securitised debt. GGF's outstanding advances are expected to reduce to about £60m by the end of the financial year. PROPERTY 6 months to 30 September 2002 2001 £m £m Operating profit 12.6 12.8 The joint venture with British Land sold a further 22 properties in the first half of the year, raising £49m, which was used to repay borrowings. At 30 September 2002, the joint venture's portfolio of 126 properties was valued at £784m. gusco.com 6 months to 30 September 2002 2001* £m £m Operating loss (1.4) (2.2) * 2001 profit restated to exclude £3.1m loss from CreditExpert now reported in Experian North America Revenue spend of £1.4m in gusco.com in the first half largely comprised the funding of MyPoints Europe, a web-based loyalty scheme, which grew its registered customer base to over 300,000. INTEREST COSTS Interest costs were £16.5m lower than last year, mainly due to the impact of lower interest rates, the refinancing in November 2001 of the $800m 6.4% fixed rate bank loan and the receipt of £239m net proceeds from the partial IPO of Burberry. In addition, GUS has changed its accounting for interest, with effect from 1 April 2002. The change relates to forward sales of foreign currencies undertaken to hedge GUS' overseas assets. Previously, the interest rate differential arising on these forward currency sales has been taken directly to reserves in GUS' accounts as it has not been material. GUS will now account for this differential as interest through its profit and loss account. The effect of the change has been to reduce net interest costs in the six months to September 2002 by £5.0m. This consists of a £6.0m gain from dollar and euro hedging less the £1.0m cost of South African hedging. If interest rates continue at current levels, there is likely to be a similar impact in the six months to 31 March 2003. There would have been no material effect had this approach been applied in the year ended 31 March 2002. Note 1 to the financial statements includes a more detailed explanation. EXCEPTIONAL ITEMS 6 months to 30 September 2002 2001 £m £m Net profit on partial IPO of Burberry 139.3 - Loss on sale of businesses (1.3) (7.6) Restructuring costs in Argos Retail Group/Reality - (16.3) Loss on sale of e-commerce investments - (2.1) Total profit/(charge) 138.0 (26.0) During the first half, exceptional items related to the sale of 22.5% of Burberry via an Initial Public Offering, together with the disposals of Family Hampers and Fidelitas (Argentina), previously part of Experian. CASH FLOW AND NET DEBT The Group's free cash flow during the first half was £226m, compared to £284m in the same period last year. After the payment of dividends, the repayment of securitised loans and acquisitions and disposals, there was a net cash inflow of £91m for the first half, compared to an outflow of £97m in the same period last year. Net debt was £1,194m at 30 September 2002, excluding securitised loans of £83m. APPENDIX ONE - Restated sales and profit Restatement of sales 6 months to 30 September 2001 As reported Change As restated £m Experian International 192 11 203 Home Shopping UK 683 32 715 Reality (external sales) 43 (43) - Reality (internal sales) 183 (183) - Inter-divisional (188) 183 (5) Other 1,944 - 1,944 2,857 - 2,857 Restatement of operating profit 6 months to 30 September 2001 As reported Change As restated £m Experian North America 76.9 (3.1) 73.8 gusco.com (5.3) 3.1 (2.2) Home Shopping UK 10.8 2.2 13.0 Reality 2.2 (2.2) - Other 121.6 - 121.6 206.2 - 206.2 APPENDIX TWO - Additional information on Experian Reported sales for Experian North America 6 months to 30 September 2002 2001 Underlying $m $m change 1 Information - Credit 2 314 243 11% - Marketing 3 68 83 (18%) Total 382 326 3% Solutions - Credit 43 40 10% - Marketing 68 73 (8%) Total 111 113 (2%) Outsourcing 44 51 (13%) Reported sales 2 537 490 1% 1 Excluding acquisitions and disposals and at constant exchange rates 2 Had the sales of ConsumerInfo.com been included for the comparative period last year, total dollar sales would have grown by 4%. 3 A large short-term automotive marketing contract that accounted for 2% of total dollar sales in the first half last year was not repeated this year. Excluding this, the decline in Marketing Information sales would have been reduced to 4%. Reported sales for Experian International 6 months to 30 September 2002 2001 Underlying £m £m change 1 Information - Credit 45 41 14% - Marketing 25 22 9% Total 70 63 12% Solutions - Credit 69 62 8% - Marketing 14 13 8% Total 83 75 8% Outsourcing 2 71 65 7% Discontinued activities/eliminations (1) - Reported sales 2 223 203 9% 1 Excluding acquisitions and disposals and at constant exchange rates 2 2001 sales restated to include £11m of third party call centre and related activities sales transferred from Reality This information is provided by RNS The company news service from the London Stock Exchange

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