Interim Results - Part 2

GUS PLC 20 November 2003 GUS plc Group profit and loss account for the six months ended 30 September 2003 --------------------------- -------- -------- -------- --- -------- --- ------- Six months Six months Six months Six months Year to 30.9.03 to 30.9.03 to 30.9.03 to 30.9.02 to 31.3.03 Before Exceptional Total Exceptional Items Items (Note 3) Â£m Â£m Â£m Â£m Â£m --------------------------- -------- -------- -------- --- -------- --- ------- Turnover 3,771 - 3,771 3,038 7,146 --------------------------- -------- -------- -------- --- -------- --- ------- Continuing operations 3,502 - 3,502 2,247 5,473 Discontinued operations 269 - 269 791 1,673 --------------------------- -------- -------- -------- --- -------- --- ------- Cost of sales (2,137) - (2,137) (1,718) (4,130) --------------------------- -------- -------- -------- --- -------- --- ------- Gross profit 1,634 - 1,634 1,320 3,016 -------- -------- -------- -------- ------- Net operating expenses before goodwill charge (1,285) - (1,285) (1,105) (2,408) Goodwill charge (91) - (91) (56) (162) -------- -------- -------- -------- ------- Net operating expenses (1,376) - (1,376) (1,161) (2,570) --------------------------- -------- -------- -------- --- -------- --- ------- Operating profit 258 - 258 159 446 --------------------------- -------- -------- -------- --- -------- --- ------- Continuing operations 258 - 258 145 430 Discontinued operations - - - 14 16 --------------------------- -------- -------- -------- --- -------- --- ------- Share of operating profit of BL Universal PLC (joint venture) 15 - 15 13 26 Share of operating profit of associated undertakings 26 - 26 19 44 --------------------------- -------- -------- -------- --- -------- --- ------- Trading profit 299 - 299 191 516 Profit on Initial Public Offering of Burberry - continuing operations - - - 161 161 -------- -------- -------- -------- ------- Disposal of Home Shopping and Reality businesses - discontinued operations: - - - - (210) Provision for loss on disposal -------- -------- -------- -------- ------- Realised loss on disposal - (226) (226) - - Less: utilisation of provision - 210 210 - - -------- -------- -------- -------- ------- - (16) (16) - - Loss on sale of other businesses - continuing operations - - - (1) - --------------------------- -------- -------- -------- --- -------- --- ------- Profit on ordinary activities before interest 299 (16) 283 351 467 Net interest (36) - (36) (22) (58) --------------------------- -------- -------- -------- --- -------- --- ------- Profit on ordinary activities before taxation 263 (16) 247 329 409 -------- -------- Tax on profit on ordinary activities -------- -------- ------- - UK (62) (36) (95) - Overseas (23) (18) (46) -------- -------- ------- (85) (54) (141) --------------------------- -------- -------- -------- --- -------- --- ------- Profit on ordinary activities after taxation 162 275 268 Equity minority interests (10) (7) (17) --------------------------- -------- -------- -------- --- -------- --- ------- Profit for the period 152 268 251 Dividends (80) (68) (232) --------------------------- -------- -------- -------- --- -------- --- ------- Retained profit for the period 72 200 19 --------------------------- -------- -------- -------- --- -------- --- ------- Profit before amortisation of goodwill, 354 247 642 exceptional items and taxation - Â£m -------- --- -------- --- ------- Earnings per share - Basic 15.3p 26.9p 25.1p - Diluted 15.2p 26.7p 25.0p Earnings per share before amortisation of goodwill and exceptional items - Basic 26.0p 18.0p 47.8p - Diluted 25.7p 17.8p 47.5p Dividend per share 8.0p 6.9p 23.3p -------------------------- -------- -------- -------- --- -------- --- ------- GUS plc Statement of total recognised gains and losses for the six months ended 30 September 2003 -------------------------------- ----------- ---------- --------- Six months Six months Year to 30.9.03 to 30.9.02 to 31.3.03 Â£m Â£m Â£m -------------------------------- ----------- ---------- --------- Profit for the period 152 268 251 Revaluation of properties 3 7 15 Currency translation differences 46 31 71 -------------------------------- ----------- ---------- --------- Total recognised gains and losses for the period 201 306 337 -------------------------------- ----------- ---------- --------- Reconciliation of movement in shareholders' funds for the six months ended 30 September 2003 -------------------------------- ----------- ----------- --------- Six months Six months Year to 30.9.03 to 30.9.02 to 31.3.03 Â£m Â£m Â£m -------------------------------- ----------- ----------- --------- Profit for the period 152 268 251 Dividends - Interim (80) (68) (68) - Final - - (164) -------------------------------- ----------- ----------- --------- 72 200 19 Goodwill on disposals 11 3 19 Shares issued under option schemes 20 - 3 Shares cancelled on purchase - - (1) Revaluation of properties 3 7 15 Currency translation differences 46 31 71 -------------------------------- ----------- ----------- --------- 152 241 126 Opening shareholders' funds 2,543 2,417 2,417 -------------------------------- ----------- ----------- --------- Closing shareholders' funds 2,695 2,658 2,543 -------------------------------- ----------- ----------- --------- Analysis of net borrowings at 30 September 2003 -------------------------------- ----------- ----------- --------- 30.9.03 30.9.02 31.3.03 Â£m Â£m Â£m -------------------------------- ----------- ----------- --------- Cash and other liquid resources 341 213 283 Debt due within one year (177) (569) (678) Finance leases (16) (9) (19) Debt due after more than one year (1,661) (828) (1,672) -------------------------------- ----------- ----------- --------- Net debt at end of period (1,513) (1,193) (2,086) Non-recourse borrowings - (83) - -------------------------------- ----------- ----------- --------- Net borrowings at end of period (1,513) (1,276) (2,086) -------------------------------- ----------- ----------- --------- GUS plc Group balance sheet at 30 September 2003 ------------------------------- -------- -------- -------- 30.9.03 30.9.02 31.3.03 Â£m Â£m Â£m ------------------------------- -------- -------- -------- Fixed assets Goodwill 2,388 1,530 2,436 Other intangible assets 174 181 178 Tangible assets 1,064 884 1,043 Investment in joint venture 192 205 210 Other investments 118 132 128 ------------------------------- -------- -------- -------- 3,936 2,932 3,995 ------------------------------- -------- -------- -------- Current assets Stocks 757 650 853 -------- -------- -------- Debtors - due within one year 1,083 1,777 1,803 - due after more than one year 450 212 265 -------- -------- -------- - total 1,533 1,989 2,068 -------- -------- -------- Securitised receivables - 145 - Less: non-recourse borrowings - (83) - -------- -------- -------- - 62 - Investments 126 62 109 Bank balances and cash 365 262 243 ------------------------------- -------- -------- -------- 2,781 3,025 3,273 ------------------------------- -------- -------- -------- Creditors (1,983) (2,180) (2,699) Amounts due within one year ------------------------------- -------- -------- -------- Net current assets 798 845 574 ------------------------------- -------- -------- -------- Total assets less current liabilities 4,734 3,777 4,569 Creditors - amounts due after more than one year (1,788) (908) (1,791) Provisions for liabilities and charges (147) (123) (138) ------------------------------- -------- -------- -------- Net assets 2,799 2,746 2,640 ------------------------------- -------- -------- -------- Capital and reserves Called up share capital 253 252 252 Share premium account 25 3 6 Revaluation reserve 115 126 131 Profit and loss account 2,302 2,277 2,154 ------------------------------- -------- -------- -------- Shareholders' funds 2,695 2,658 2,543 Minority interests 104 88 97 ------------------------------- -------- -------- -------- Capital employed 2,799 2,746 2,640 ------------------------------- -------- -------- -------- GUS plc Group cash flow statement for the six months ended 30 September 2003 ---------------------------------- ---------- ---------- -------- Six months Six months Year to 30.9.03 to 30.9.02 to 31.3.03 Â£m Â£m Â£m ---------------------------------- ---------- ---------- -------- Cash flow from operating activities Operating profit 258 159 446 Depreciation and amortisation charges 240 168 407 Change in working capital (53) (50) 7 ---------------------------------- ---------- ---------- -------- 445 277 860 Dividends received from associated undertakings 31 12 24 Returns on investments and servicing of finance (17) 19 (11) Taxation (60) (57) (141) Capital expenditure (158) (165) (329) Financial investment 13 (25) (13) Acquisition of subsidiaries (49) (150) (1,241) Disposal of subsidiaries 445 243 239 Dividends paid (164) (151) (220) ---------------------------------- ---------- ---------- -------- Cash inflow/(outflow) before management of 486 3 (832) liquid resources and financing Management of liquid resources 54 (27) (134) Financing - issue of shares 20 - 3 - purchase of own shares for cancellation - - (1) - change in debt and lease financing (449) 39 934 ---------------------------------- ---------- ---------- -------- Increase/(decrease) in cash 111 15 (30) ---------------------------------- ---------- ---------- -------- Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash 111 15 (30) Cash outflow/(inflow) from movement in debt and lease financing 449 (39) (934) Cash (inflow)/outflow from movement in liquid resources (54) 27 134 ---------------------------------- ---------- ---------- -------- Movement in net debt resulting from cash flows 506 3 (830) Loans and finance leases acquired with subsidiary - - (2) New finance leases (3) (1) (7) Exchange movements 70 89 37 ---------------------------------- ---------- ---------- -------- Movement in net debt 573 91 (802) Net debt at beginning of period (2,086) (1,284) (1,284) ---------------------------------- ---------- ---------- -------- Net debt at end of period (1,513) (1,193) (2,086) ---------------------------------- ---------- ---------- -------- GUS plc Divisional analysis for the six months ended 30 September 2003 Turnover Profit before taxation ------------------- -------------------------- Six months to Year to Six months to Year to -------------------- --------- -------------------- --------- 30.9.03 30.9.02 31.3.03 30.9.03 30.9.02 31.3.03 Â£m (Restated) (Restated) Â£m (Restated) (Restated) (Note 2) (Note 2) (Note 2) (Note 2) Â£m Â£m Â£m Â£m ---------------------- ------- -------- -------- -------- -------- -------- Argos Retail Group Continuing operations: Argos 1,390 1,218 3,048 73.9 58.0 240.8 Homebase* 938 - 251 71.5 - 2.2 Financial Services 25 14 34 (3.3) (6.2) (13.1) Wehkamp 117 107 228 10.9 10.7 19.9 ------- -------- -------- -------- -------- ------- 2,470 1,339 3,561 153.0 62.5 249.8 Discontinued operations 269 791 1,673 - 13.7 35.3 ---------------------- ------- -------- -------- -------- -------- ------- 2,739 2,130 5,234 153.0 76.2 285.1 Experian Experian North America 365 355 718 93.9 80.6 171.5 Experian International 273 223 483 51.8 37.5 84.9 ---------------------- ------- -------- -------- -------- -------- ------- 638 578 1,201 145.7 118.1 256.4 Burberry 321 274 594 66.9 55.1 116.7 South African Retailing 73 54 114 19.8 13.8 31.8 Property - - - 15.0 12.6 25.9 Central activities 5 9 18 (9.8) (6.6) (15.4) Inter-divisional turnover (principally Experian) (5) (7) (15) ---------------------- ------- -------- -------- -------- -------- ------- 3,771 3,038 7,146 390.6 269.2 700.5 ---------------------- ------- -------- -------- Net interest (36.2) (22.4) (58.1) --------------------- -------- -------- -------- -------- -------- ------- Profit before amortisation of goodwill, exceptional items and taxation 354.4 246.8 642.4 Amortisation of goodwill (Note 2) (91.4) (56.0) (142.9) Exceptional items (Note 3) (15.6) 138.0 (90.1) --------------------- -------- -------- -------- -------- -------- ------- Profit before taxation 247.4 328.8 409.4 --------------------- -------- -------- -------- -------- -------- ------- * The results of Homebase for the current period are in respect of the seven months to 30 September 2003. Geographical analysis for the six months ended 30 September 2003 Turnover Divisional profit ------------------- ------------------ Six months to Year to Six months to Year to ------------------- --------- ------------------ --------- 30.9.03 30.9.02 31.3.03 30.9.03 30.9.02 31.3.03 Â£m Â£m Â£m Â£m Â£m Â£m --------------------- -------- -------- ------- --- ------- -------- -------- United Kingdom & Ireland 2,876 2,246 5,338 229.4 135.9 416.8 Continental Europe 337 286 669 32.4 25.2 47.1 North America 434 411 860 98.5 83.6 185.8 Rest of World 124 95 279 30.3 24.5 50.8 --------------------- -------- -------- ------- --- ------- -------- -------- 3,771 3,038 7,146 390.6 269.2 700.5 --------------------- -------- -------- ------- --- ------- -------- -------- GUS plc Notes to the interim financial statements for the six months ended 30 September 2003 1. Basis of preparation The interim report comprises the unaudited results for the six months ended 30 September 2003 and 30 September 2002 and the audited results for the twelve months ended 31 March 2003. The financial information for the twelve months ended 31 March 2003 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 page 29. 2. Divisional analysis On 27 May 2003 the Group announced the disposal of its Home Shopping and Reality businesses and, accordingly, the results of these operations are classified as discontinued. To give an indication of ongoing profitability, continuing and discontinued operations are now separately reported within the results of Argos Retail Group with comparative figures restated. As the completion statements in respect of the sold businesses are still subject to agreement, the profits and losses of the discontinued operations for the current period will be reported in the Group's statutory financial statements for the year to 31 March 2004. The results of the discontinued operations in the comparative periods are analysed below: Turnover Profit before taxation ---------------- ------------------ Six months to Year to Six months to Year to ------------------- ---------- -------- ---- ----------- --------- Discontinued operations 30.9.02 31.3.03 30.9.02 31.3.03 Â£m Â£m Â£m Â£m ------------------- ---------- -------- ---- ----------- --------- Argos 66 144 (5.9) (2.6) Home Shopping UK & Ireland 704 1,482 9.5 15.4 Financial Services - - 8.4 17.7 Home Shopping Continental Europe 21 47 1.7 4.8 ------------------- ---------- -------- ---- ----------- --------- 791 1,673 13.7 35.3 ------------------- ---------- -------- ---- ----------- --------- Comparative figures for Homebase for the year ended 31 March 2003 cover the post acquisition period from 20 December 2002. As previously announced, from 1 April 2003 the results for the Finance Division and gusco.com are reported within Central activities, which also includes Central costs. Comparative figures have been restated. For the six months ended 30 September 2002 and the year ended 31 March 2003 respectively, turnover of Â£9m and Â£18m and profits of Â£4.0m and Â£6.6m for the Finance Division, and losses of Â£1.4m and Â£2.7m in respect of gusco.com, are included within Central activities. Six months to Year to ----------------- --------- The amortisation of goodwill is analysed as follows: 30.9.03 30.9.02 31.3.03 Â£m Â£m Â£m ------------------------------ --------- -------- --------- Argos Retail Group 63 44 99 Experian 24 9 38 Burberry 4 3 6 ------------------------------ --------- -------- --------- 91 56 143 ------------------------------ --------- -------- --------- There was a further goodwill charge of Â£19m in the year ended 31 March 2003 which related to goodwill, previously written off to reserves, on the closure of Innovations. GUS plc Notes to the interim financial statements (continued) for the six months ended 30 September 2003 Six months to Year to ----------------- -------- 3. Exceptional items 30.9.03 30.9.02 31.3.03 Â£m Â£m Â£m ----------------------------------- -------- -------- -------- Exceptional items comprise: Continuing operations Profit on Initial Public Offering of Burberry - 161 161 Cost of employee share schemes in connection with the Initial Public Offering of Burberry - (22) (22) ----------------------------------- -------- -------- -------- - 139 139 Loss on sale of businesses - (1) - ----------------------------------- -------- -------- -------- - 138 139 ----------------------------------- -------- -------- -------- Discontinued operations Disposal of Home Shopping and Reality businesses: Provision for loss on disposal - - (210) -------- -------- -------- Realised loss on disposal (226) - - Less: utilisation of provision 210 - - -------- -------- -------- (16) - - -------- -------- -------- (16) - (210) Impairment of goodwill - - (19) ----------------------------------- -------- -------- -------- (16) - (229) ----------------------------------- -------- -------- -------- Exceptional (charge)/profit (16) 138 (90) ----------------------------------- -------- -------- -------- The disposal of Home Shopping and Reality businesses was announced on 27 May 2003. The provision for loss on disposal charged in the year ended 31 March 2003 represented the difference between the sale proceeds of Â£590m and the net assets sold of approximately Â£800m, subject to the agreement of the completion statements. The further charge in the six months ended 30 September 2003 relates to professional and other costs associated with the transaction, such as the resulting reorganisation of the Argos Retail Group shared services infrastructure, and the charge of Â£11m in respect of goodwill previously written off to reserves. The impairment of goodwill in the year ended 31 March 2003 related to goodwill, previously written off to reserves, on the closure of Innovations. 4. Taxation The effective rate of tax, before amortisation of goodwill, loss on sale of businesses and the profit, in the comparative period, on the Initial Public Offering of Burberry, is based on the estimated tax charge for the full year at a rate of 23.9% (2003: 22.7%). Average Closing ----------------- ---------------- Six months to Year to 5. Foreign currency 30.9.03 30.9.02 31.3.03 30.9.03 30.9.02 31.3.03 ------------------- ------- ------- ------- --- ------- ------- ------- The principal exchange rates used were as follows: US dollar 1.62 1.51 1.55 1.66 1.57 1.58 Euro 1.43 1.59 1.55 1.43 1.59 1.45 South African rand 12.16 15.76 14.89 11.59 16.52 12.48 ---------------------- ------- ------- ------- --- ------- ------- ------- 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) for the six months ended 30 September 2003 Six months to Year to 30.9.03 30.9.02 31.3.03 6. Basic and diluted earnings per share pence pence pence ----------------------------------- -------- -------- ------- Basic earnings per share before amortisation 26.0 18.0 47.8 of goodwill and exceptional items Effect of amortisation of goodwill (9.1) (5.6) (14.3) Effect of exceptional items (1.6) 14.5 (8.4) ----------------------------------- -------- -------- ------- Basic earnings per share 15.3 26.9 25.1 ----------------------------------- -------- -------- ------- 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 ---------------- ------- 30.9.03 30.9.02 31.3.03 Â£m Â£m Â£m ----------------------------------- -------- -------- ------- Earnings before amortisation of goodwill and exceptional items 259 179 476 Effect of amortisation of goodwill (91) (56) (142) Effect of exceptional items (16) 145 (83) ----------------------------------- -------- -------- ------- Profit for the period 152 268 251 ----------------------------------- -------- -------- ------- The calculation of diluted earnings per share reflects the potential dilutive effect of the exercise of employee share options. ----------------------------------- -------- -------- ------- 30.9.03 30.9.02 31.3.03 m m m ----------------------------------- -------- -------- ------- Weighted average number of Ordinary shares in issue during the period* 997.1 995.7 995.9 Dilutive effect of options outstanding 8.9 8.3 7.3 ----------------------------------- -------- -------- ------- Diluted weighted average number of Ordinary shares in issue during the period 1,006.0 1,004.0 1,003.2 ----------------------------------- -------- -------- ------- * Excluding those held by The GUS ESOP Trust, The GUS ESOP Trust No. 2 and The GUS ESOP Trust No. 3. 7. Dividend The interim dividend will be paid on 6 February 2004 to shareholders on the Register at the close of business on 9 January 2004. 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 GUS plc to review the financial information of GUS plc and its subsidiaries ('the Group'), 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. This report, including the conclusion, has been prepared for and only for GUS plc for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. 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 2003. PricewaterhouseCoopers LLP Chartered Accountants Manchester 20 November 2003 This information is provided by RNS The company news service from the London Stock Exchange

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