Interim Results - Part 2
GUS PLC
21 November 2002
GUS plc
Group profit and loss account
for the six months ended 30 September 2002
Six months Six months Six months Six months Year
to 30.9.02 to 30.9.02 to 30.9.02 to 30.9.01 to 31.3.02
Before Exceptional Total
Exceptional Items
Items (Note 3)
£m £m £m £m £m
Turnover - continuing operations 3,037.8 - 3,037.8 2,856.9 6,457.3
Cost of sales (1,718.1) - (1,718.1) (1,691.3) (3,868.9)
Gross profit 1,319.7 - 1,319.7 1,165.6 2,588.4
Net operating expenses before goodwill (1,082.1) (22.2) (1,104.3) (966.3) (2,064.7)
charge
Goodwill charge (56.0) - (56.0) (48.6) (126.9)
Net operating expenses (1,138.1) (22.2) (1,160.3) (1,014.9) (2,191.6)
Operating profit - continuing operations 181.6 (22.2) 159.4 150.7 396.8
Share of operating profit of
BL Universal PLC (joint venture) 12.6 - 12.6 12.8 24.8
Share of operating profit of associated
undertakings 19.0 - 19.0 16.7 33.7
Loss on sale of fixed asset investments - - - (2.1) (2.1)
Trading profit 213.2 (22.2) 191.0 178.1 453.2
Profit on Initial Public Offering of - 161.5 161.5 - -
Burberry
Loss on sale of businesses - (1.3) (1.3) (7.6) (6.6)
Profit on ordinary activities before 213.2 138.0 351.2 170.5 446.6
interest
Net interest (22.4) - (22.4) (38.9) (66.5)
Profit on ordinary activities before 190.8 138.0 328.8 131.6 380.1
taxation
Tax on profit on ordinary activities
- UK (35.9) (27.8) (75.3)
- Overseas (17.8) (17.7) (46.8)
(53.7) (45.5) (122.1)
Profit on ordinary activities after 275.1 86.1 258.0
taxation
Equity minority interests (7.4) - (1.4)
Profit for the period 267.7 86.1 256.6
Dividends (68.2) (64.5) (216.4)
Retained profit for the period 199.5 21.6 40.2
Profit before amortisation of goodwill,
exceptional items and taxation 246.8 206.2 552.1
Earnings per share
- Basic 26.9p 8.6p 25.7p
- Diluted 26.7p 8.5p 25.5p
Earnings per share before amortisation of goodwill
and exceptional items
- Basic 18.0p 15.5p 41.7p
- Diluted 17.8p 15.4p 41.4p
Dividend per share 6.9p 6.5p 21.7p
GUS plc
Statement of total recognised gains and losses
for the six months ended 30 September 2002
Six months Six months Year
to 30.9.02 to 30.9.01 to 31.3.02
£m £m £m
Profit for the period 267.7 86.1 256.6
Revaluation of properties 6.9 (9.5) (9.7)
Currency translation differences 31.7 (13.3) (41.9)
Total recognised gains and losses for the period 306.3 63.3 205.0
Reconciliation of movement in shareholders' funds
for the six months ended 30 September 2002
Six months Six months Year
to 30.9.02 to 30.9.01 to 31.3.02
£m £m £m
Profit for the period 267.7 86.1 256.6
Dividends - Interim (68.2) (64.5) (64.5)
- Final - - (151.9)
199.5 21.6 40.2
Goodwill on disposals 2.7 4.0 4.0
Shares issued under option schemes 0.3 0.6 1.7
Revaluation of properties 6.9 (9.5) (9.7)
Currency translation differences 31.7 (13.3) (41.9)
241.1 3.4 (5.7)
Opening shareholders' funds 2,417.2 2,422.9 2,422.9
Closing shareholders' funds 2,658.3 2,426.3 2,417.2
Analysis of net borrowings
at 30 September 2002
30.9.02 30.9.01 31.3.02
£m £m £m
Cash and other liquid resources 213.4 179.2 171.9
Debt due within one year (569.8) (732.5) (646.2)
Finance leases (9.1) (10.7) (10.5)
Debt due after more than one year (828.2) (663.5) (799.6)
Net debt at end of period (1,193.7) (1,227.5) (1,284.4)
Non-recourse borrowings (82.5) (357.9) (201.0)
Net borrowings at end of period (1,276.2) (1,585.4) (1,485.4)
GUS plc
Group balance sheet
at 30 September 2002
30.9.02 30.9.01 31.3.02
(Restated)
(Note 1)
£m £m £m
Fixed assets
Goodwill 1,530.3 1,482.7 1,421.5
Other intangible assets 180.4 175.4 191.7
Tangible assets 883.9 777.0 847.1
Investment in joint venture 205.3 200.1 195.3
Other investments 132.4 120.3 115.4
2,932.3 2,755.5 2,771.0
Current assets
Stocks 650.2 666.3 590.4
Debtors - due within one year 1,777.0 1,584.9 1,705.5
- due after more than one year 211.8 205.2 200.0
Securitised receivables 145.1 422.0 263.4
Less: non-recourse borrowings (82.5) (357.9) (201.0)
62.6 64.1 62.4
Investments 61.7 52.7 53.1
Bank balances and cash 261.9 273.5 202.6
3,025.2 2,846.7 2,814.0
Creditors
Amounts due within one year (2,180.4) (2,334.2) (2,171.3)
Net current assets 844.8 512.5 642.7
Total assets less current liabilities 3,777.1 3,268.0 3,413.7
Creditors - amounts due after more than one year (908.1) (716.1) (864.6)
Provisions for liabilities and charges (123.4) (123.0) (126.5)
Net assets 2,745.6 2,428.9 2,422.6
Capital and reserves
Called up share capital 251.7 251.6 251.7
Share premium account 3.7 2.4 3.4
Revaluation reserve 126.0 127.8 120.9
Profit and loss account 2,276.9 2,044.5 2,041.2
Shareholders' funds 2,658.3 2,426.3 2,417.2
Minority interests 87.3 2.6 5.4
Capital employed 2,745.6 2,428.9 2,422.6
GUS plc
Group cash flow statement
for the six months ended 30 September 2002
Six months Six months Year
to 30.9.02 to 30.9.01 to 31.3.02
£m £m £m
Cash flow from operating activities
Operating profit 159.4 150.7 396.8
Depreciation and amortisation charges 168.3 149.6 338.7
Change in working capital (50.6) (49.2) (195.0)
277.1 251.1 540.5
Dividends received from associated undertakings 12.4 13.2 22.8
Returns on investments and servicing of finance 18.8 (28.9) (43.0)
Taxation (56.8) (21.7) (82.0)
Capital expenditure (165.2) (144.3) (321.8)
Financial investment (24.7) (33.0) (15.5)
Acquisition of subsidiaries (149.8) (15.6) (34.3)
Disposal of subsidiaries 242.8 - 6.3
Dividends paid (151.5) (147.9) (212.8)
Cash inflow/(outflow) before management of liquid resources and
financing 3.1 (127.1) (139.8)
Management of liquid resources (27.4) (7.5) (18.0)
Financing - issue of shares 0.3 0.6 1.7
- change in debt and lease financing 38.6 65.8 74.6
Increase/(decrease) in cash 14.6 (68.2) (81.5)
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash 14.6 (68.2) (81.5)
Cash inflow from movement in debt and lease financing (38.6) (65.8) (74.6)
Cash outflow from movement in liquid resources 27.4 7.5 18.0
Movement in net debt resulting from cash flows 3.4 (126.5) (138.1)
Loans and finance leases acquired with subsidiary - - (7.2)
New finance leases (1.5) (0.2) (4.9)
Exchange movements 88.8 29.6 (3.8)
Movement in net debt 90.7 (97.1) (154.0)
Net debt at beginning of period (1,284.4) (1,130.4) (1,130.4)
Net debt at end of period (1,193.7) (1,227.5) (1,284.4)
GUS plc
Divisional analysis
for the six months ended 30 September 2002
Turnover Profit before taxation
Six months to Year to Six months to Year to
30.9.02 30.9.01 31.3.02 30.9.02 30.9.01 31.3.02
(Restated) (Restated) (Restated) (Restated)
(Note 2) (Note 2) (Note 2) (Note 2)
£m £m £m £m £m £m
Experian
Experian North America 355.1 341.9 688.2 80.6 73.8 154.6
Experian International 223.3 203.3 427.1 37.5 33.4 69.6
578.4 545.2 1,115.3 118.1 107.2 224.2
Argos Retail Group
Argos 1,284.1 1,165.5 2,846.9 52.1 44.2 204.0
Home Shopping UK & Ireland 703.5 714.9 1,606.7 9.5 13.0 33.6
Financial Services 13.9 2.5 10.7 2.2 (0.9) (4.8)
Home Shopping Continental Europe 128.3 113.5 237.9 12.4 10.4 22.4
2,129.8 1,996.4 4,702.2 76.2 66.7 255.2
Burberry 273.7 236.1 499.2 55.1 42.1 90.3
South African Retailing 53.6 65.1 122.7 13.8 15.8 30.9
Finance Division 8.7 18.6 29.6 4.0 9.4 15.1
Property - - - 12.6 12.8 24.8
gusco.com 0.5 0.6 1.3 (1.4) (2.2) (4.8)
Inter-divisional turnover (principally (6.9) (5.1) (13.0)
Experian)
3,037.8 2,856.9 6,457.3 278.4 251.8 635.7
Central costs (9.2) (6.7) (17.1)
269.2 245.1 618.6
Net interest (22.4) (38.9) (66.5)
Profit before amortisation of goodwill, exceptional items 246.8 206.2 552.1
and taxation
Amortisation of goodwill (56.0) (48.6) (99.4)
(principally Argos)
Exceptional items (Note 3) 138.0 (26.0) (72.6)
Profit before taxation 328.8 131.6 380.1
Geographical analysis
for the six months ended 30 September 2002
Turnover Divisional profit
Six months to Year to Six months to Year to
30.9.02 30.9.01 31.3.02 30.9.02 30.9.01 31.3.02
£m £m £m £m £m £m
United Kingdom & Ireland 2,245.9 2,146.5 4,976.7 135.9 125.2 367.9
Continental Europe 285.9 255.2 533.2 25.2 23.9 46.6
North America 411.2 384.2 793.7 83.6 76.6 161.2
Rest of World 94.8 71.0 153.7 24.5 19.4 42.9
3,037.8 2,856.9 6,457.3 269.2 245.1 618.6
GUS plc
Notes to the interim financial statements
1. Basis of preparation
The interim report comprises the unaudited results for the six months ended 30
September 2002 and 30 September 2001 and the audited results for the twelve
months ended 31 March 2002. The financial information for the twelve months
ended 31 March 2002 has been extracted from the Group's statutory financial
statements for that year. The interim financial statements are unaudited and do
not constitute statutory accounts but have been formally reviewed by the
auditors and their report is set out on the final page.
In the financial statements for the year ended 31 March 2002, the Group
implemented Financial Reporting Standard 19 'Deferred Tax' with no material
effect on reported profits. The prior year adjustment included in the 2001
interim report was therefore not required and the balance sheet at 30 September
2001 has been restated with provisions for liabilities and charges increased by
£16.0m and revenue reserves reduced by £16.0m.
The Group has for several years hedged its investments in subsidiaries outside
the UK by a combination of foreign currency borrowings and forward sales of
relevant foreign currencies. The forward premium/discount to spot exchange rates
incorporated in these forward sales contracts reflects the differential between
sterling interest rates and the interest rate of the currency concerned. Until
now this interest rate differential has been taken directly to reserves, along
with the changes in value during the year of the currency borrowings, the
forward currency sales and the assets being hedged. For GUS, the most
significant overseas assets are in the United States. In recent months, US short
term interest rates have been well below sterling interest rates. As a result of
this, and the growth in the Group's forward sales of US dollars, the interest
element of these forward dollar sales, whose effect is to reduce interest costs,
has become more significant. Similar issues arise in connection with the Group's
hedging of its Euro and South African Rand assets, with Euro interest rates
slightly below sterling rates and South African interest rates significantly
higher than sterling rates.
With effect from 1 April 2002, the Group is accounting for the forward premium/
discount arising on forward currency sales as interest. The effect of this
change has been to reduce interest expense (and hence increase profit before
tax) in the six months ended 30 September 2002 by £5.0m; this consists of a
£6.0m gain from Dollar and Euro hedging less a £1.0m cost of South African
hedging. There would have been no material effect if this approach had been
applied in the year ended 31 March 2002.
2. Divisional analysis
From 1 April 2002, Reality's external logistics sales and results are reported
within Home Shopping UK & Ireland with sales from third party call centre and
related activities reported as part of Experian International. Comparative
figures have been restated. For the six months ended 30 September 2001 and for
the year ended 31 March 2002 respectively, £32.0m and £73.4m of external
logistics sales are shown within Home Shopping UK & Ireland with £11.0m and
£23.2m of sales from third party call centre and related activities included
within Experian International. The profits of £2.2m for the six months ended 30
September 2001, and £0.5m for the year ended 31 March 2002, have been included
within Home Shopping UK & Ireland.
CreditExpert.com, a US consumer credit management business, is now managed by
and reported within Experian North America. Comparative figures have been
restated to reduce the losses of gusco.com and to reduce the reported profit of
Experian North America by £3.1m for the six months ended 30 September 2001. For
the year ended 31 March 2002, the restatement amounts to £4.9m. There is no
material impact on turnover for either the six months ended 30 September 2001 or
the year ended 31 March 2002.
GUS plc
Notes to the interim financial statements (continued)
Six months to Year to
30.9.02 30.9.01 31.3.02
3. Exceptional items £m £m £m
Exceptional items comprise:
Profit on Initial Public Offering of Burberry 161.5 - -
Cost of employee share schemes in connection
with the Initial Public Offering of Burberry (22.2) - -
139.3 - -
Loss on sale of businesses (1.3) (7.6) (6.6)
Redundancy and other costs incurred in connection
with the combination of Argos and Home Shopping operations
and the formation of Reality - (16.3) (36.4)
Impairment of goodwill (principally Reality Solutions) - - (27.5)
Loss on sale of fixed asset investments - (2.1) (2.1)
Exceptional profit/(charge) 138.0 (26.0) (72.6)
The Initial Public Offering of 22.5% of the ordinary share capital of Burberry
Group plc took place on 12 July 2002. The associated exceptional items comprise
the excess of the flotation proceeds, less costs, over the related portion of
net assets at that date and the cost of share schemes designed to secure the
retention of employees.
4. Taxation
The effective rate of tax, before amortisation of goodwill, the profit on the
Initial Public Offering of Burberry and loss on sale of businesses, is based on
the estimated tax charge for the full year at a rate of 23.9% (2002: 23.8%).
Average Closing
Six months to Year to
5. Foreign currency 30.9.02 30.9.01 31.3.02 30.9.02 30.9.01 31.3.02
The principal exchange rates used were as follows:
US dollar 1.51 1.43 1.43 1.57 1.47 1.43
Euro 1.59 1.62 1.62 1.59 1.61 1.64
South African rand 15.76 11.80 13.52 16.52 13.26 16.15
Assets and liabilities of overseas undertakings are translated into sterling at
the rates of exchange ruling at the balance sheet date and the profit and loss
account is translated into sterling at average rates of exchange.
GUS plc
Notes to the interim financial statements (continued)
Six months to Year to
30.9.02 30.9.01 31.3.02
6. Basic and diluted earnings per share pence pence pence
Basic earnings per share before amortisation of goodwill and
exceptional items 18.0 15.5 41.7
Effect of amortisation of goodwill (5.6) (4.8) (9.9)
Effect of exceptional items 14.5 (2.1) (6.1)
Basic earnings per share 26.9 8.6 25.7
The calculation of basic earnings per share is based on profit for the period
divided by the weighted average number of Ordinary shares in issue during the
period. Basic earnings per share before amortisation of goodwill and
exceptional items is disclosed to indicate the underlying profitability of the
Group.
Six months to Year to
30.9.02 30.9.01 31.3.02
£m £m £m
Earnings before amortisation of goodwill and exceptional items 179.0 155.8 417.0
Effect of amortisation of goodwill (56.0) (48.6) (99.4)
Effect of exceptional items 144.7 (21.1) (61.0)
Profit for the period 267.7 86.1 256.6
The calculation of diluted earnings per share reflects the potential dilutive
effect of the exercise of employee share options.
30.9.02 30.9.01 31.3.02
m m m
Weighted average number of Ordinary shares in issue during the period* 995.7 1,002.3 999.8
Dilutive effect of options outstanding 8.3 7.5 7.4
Diluted weighted average number of Ordinary shares in issue during the 1,004.0 1,009.8 1,007.2
period
* Excluding those held by The GUS ESOP Trust, The GUS ESOP Trust No. 2 and The
GUS ESOP Trust No. 3 upon which dividends have been waived.
7. Dividend
The interim dividend will be paid on 7 February 2003 to shareholders on the
Register at the close of business on 10 January 2003.
8. Directors' responsibilities
The maintenance and integrity of the GUS plc website is the responsibility of
the directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no
responsibilities for any changes that may have occurred to the interim report
since it was initially presented on the website. Legislation in the United
Kingdom governing the preparation and dissemination of financial information may
differ from legislation in other jurisdictions.
Independent review report to GUS plc
Introduction
We have been instructed by the Company to review the financial information,
which comprises the Group profit and loss account, the statement of total
recognised gains and losses, the reconciliation of movement in shareholders'
funds, the analysis of net borrowings, the Group balance sheet, the Group cash
flow statement, the divisional analysis, the geographical analysis and the notes
to the interim financial statements. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of management and applying analytical
procedures to the financial information and underlying financial data and, based
thereon, assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2002.
PricewaterhouseCoopers
Chartered Accountants
Manchester
21 November 2002
This information is provided by RNS
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