Interim Results
Kingfisher PLC
17 September 2003
Wednesday 17 September 2003
Interim results for the 26 weeks ended 2 August 2003
Kingfisher reports first half Home Improvement sales up 15%
with pre-tax profit ahead 24%
2003 2002 % change
£m £m
Continuing operations (1) (2)
Retail sales 3,944 3,422 15
Retail profit (before exceptionals and goodwill amortisation) 335 259 29
Profit before tax (before exceptionals and goodwill amortisation) 309 250 24
Profit before tax 231 245 (6)
Earnings (before exceptionals and goodwill amortisation) 211 100 111
Earnings 135 97 39
Adjusted basic earnings per share (3) (before exceptionals and goodwill 9.3p 6.8p 37
amortisation)
Basic earnings per share (3) 6.0p 6.6p (9)
Total Group (2)
Retail sales 5,255 5,086 3
Retail profit (before exceptionals and goodwill amortisation) 374 295 27
Profit before tax (before exceptionals and goodwill amortisation) 342 275 24
Profit before tax 128 266 (52)
Earnings (before exceptionals and goodwill amortisation) 232 119 95
Earnings (52) 113 n/a
Adjusted basic earnings per share (3) (before exceptionals and goodwill 10.3p 8.1p 27
amortisation)
Basic earnings per share (3) (2.3)p 7.7p n/a
Interim dividend per share (4) 3.5p 3.9p
(1) Excluding results for the demerged Kesa Electricals plc and disposed
ProMarkt business
(2) Exceptional items after tax relief charged to continuing operations
(£74 million) and total Group results (£280 million) are summarised below
(3) Restated to reflect the recent 7 for 8 share consolidation
(4) Restated to reflect the recent 7 for 8 share consolidation; 2002 included
dividend in respect of earnings from subsequently demerged Electricals
businesses
FIRST HALF TRADING SUMMARY - CONSTANT CURRENCY BASIS
The key highlights, on a constant currency basis, excluding the positive impact
of translating euro sales and profits into sterling, were:
• Home Improvement retail sales up 11.1% with Like for Like (LFL) sales up 5.5%
• Home Improvement retail profit ahead 25.6%, reflecting improved retail margin
• B&Q sales up by 11.2% (LFL 4.9%); retail profit ahead 14.8%
• Castorama France sales up by 2.7% (LFL 2.0%); retail profit ahead 18.9%
• Brico Depot France sales up 32.3% (LFL 14.1%); retail profit ahead by 63.1%
• International sales for ongoing businesses up 36.3% (LFL 11.1%); retail
profit up 67.4%
• Integration benefits of £15 million delivered during the first half; on track
to deliver full year target of £35 million
Kingfisher Chief Executive Officer Gerry Murphy said: 'It was a good six months
for Kingfisher, with a strong performance from our Home Improvement business. We
demerged Kesa Electricals and we have almost completed our programme of
withdrawal from non-core operations. Kingfisher is now very well placed for the
future with strong positions in big markets, particularly in the key European
economies and in China. We have an experienced management team focused on
growing market share and profitability, improving return on investment and
delivering real value for customers and shareholders.'
FIRST HALF REVIEW
Demerger of Kesa Electricals
Kingfisher completed its transformation to a single sector Home Improvement
business with the successful de-merger in early July of Kesa Electricals plc as
a separate public company listed on the London Stock Exchange. The interim
results for Kesa Electricals for the 26 weeks ended 2 August 2003, including the
22 weeks prior to demerger, are reviewed in a separate announcement issued by
Kesa Electricals plc today.
Home Improvement
Kingfisher's Home Improvement business had a strong first half with total
reported retail sales up 15.3% to £3.9 billion and reported retail profit up
29.7% to £335 million. The reported results benefited from the significant
strengthening of the Euro on translation of Euro denominated sales and profits
into Sterling. On a constant currency basis, sales were ahead 11.1% and retail
profit by 25.6%.
In the UK, B&Q and Screwfix delivered combined retail sales growth of 11.5% and
retail profit growth of 16.3%. In France, Castorama and Brico Depot delivered
combined growth in Euro sales of 10.7% and 31.1% in retail profit. The Group's
ongoing International businesses, which include Poland, Italy, China and Taiwan,
also continued to deliver strong growth, with overall consolidated retail sales
up 36.3% and retail profit up 67.4% in local currencies.
Sales growth and share gains in all major markets were driven by new store
openings and continuing strong like-for-like sales, up 5.5%, driven by
competitive pricing and range development across the Group. During the first six
months core home improvement store numbers increased by a net 13, increasing
worldwide selling space by 3.9%. Seasonal sales benefited from fine Spring
weather in Western Europe in the first quarter, although the record-breaking
heat wave in the latter weeks of the second quarter and start of the current
quarter was unhelpful.
Retail profit growth outpaced sales growth due to continuing progress in Cost
Price Reduction (now being extended Group-wide), and a focus on reducing
operating costs and overheads. The revitalisation of Castorama France continues
with integration benefits of £15 million delivered during the first half. The
process is on track to deliver previously announced full year target benefits of
£35 million.
Net interest costs for the continuing business doubled in the first half as
financing costs of the acquisition of Castorama were only partly offset by
strong operational cash flow, property disposals and the transfer of debt to
Kesa Electricals. Continuing pre tax profit, before exceptional items and
goodwill amortisation, was up £59 million, growth of 24%. The corporation tax
rate for the home improvement businesses, excluding exceptional tax charges,
reduced from 32.8% to 32.0%.
Following the buy-out of the Castorama minority and subsequent elimination of
minority interests, profit growth was reflected more directly in earnings and
continuing adjusted basic earnings per share increased by nearly 37%.
Exceptional charges of £76 million arose in the first half, primarily as a
consequence of the programme of withdrawal from non-core businesses. The sale of
Reno-Depot in Canada and the last remaining store in Belgium have been
completed. The sale of Dubois Materiaux in France and NOMI in Poland have been
agreed subject to final completion. Additionally, the loss-making Castorama
business in Germany has been closed. Total cash inflow from this programme is
expected to be around £250 million in the second half. The exit from these
non-core businesses generated mostly non-cash exceptional charges of £58 million
in the first half.
Following the demerger, the London corporate centre is being scaled back with a
reduction in staff numbers by one third, saving an expected £14 million per
annum from next year. An operating exceptional charge of £10 million has been
taken in the first half to reflect the associated reorganisation costs.
After including exceptional items and goodwill amortisation continuing basic
earnings per share declined by 9%.
During the first half, a major review identified a number of steps to improve
Kingfisher's future return on invested capital (ROIC). These include initiatives
to improve returns on existing stores and an acceleration of the programme to
leverage Kingfisher's total purchasing power. Future capital will be prioritised
towards investments with stronger returns with the overall objective of
delivering satisfactory returns to shareholders and long-term growth of the
business. The ROIC for the Home Improvement business in 2002/03, on a proforma
basis (as if the Castorama acquisition had taken place at the beginning of 2002/
03), was 7.3%, which is around 1% below the Group's average cost of capital.
However, this proforma return assumes a full year of goodwill included in
invested capital but none of the integration benefits that have now started to
accrue. Excluding goodwill, proforma Home Improvement ROIC in 2002/3 was 10.2%.
Total Group Reported Results
Total Group reported retail sales, including Kesa Electricals for 22 weeks prior
to demerger, grew 3.3% to £5.3 billion with retail profit ahead 27% to £374
million.
Total Group reported pre-tax profits, before exceptional items and goodwill
amortisation were ahead 24.5% to £342 million. Adjusted basic earnings per
share, before exceptional items and goodwill increased by more than 27%
reflecting the underlying growth in the business and the combined effect of the
acquisition of the Castorama minority and associated rights issue last year.
Net exceptional charges of £209 million, before tax relief of £28 million, were
incurred in the first half. These were primarily due to the demerger of Kesa
Electricals, the withdrawal from non-core home improvement businesses and the
corporate centre reorganisation outlined above. As previously announced,
exceptional demerger advisory, financing and related costs totalled £135 million
before tax relief. Taking these into account, pre-tax profit for the total Group
declined by nearly 52% to £128 million.
In addition, an exceptional tax charge of £99 million was incurred in respect of
a payment subsequently made to the French tax authorities following demerger,
although Kingfisher has been advised that there is a good prospect of eventual
recovery.
After taking account of the exceptional charges and goodwill the basic loss per
share was 2.3p.
Cash flow and net debt
Cash flow in the first six months was strong with operating activities
generating £570 million of cash, a further £788 million received on the disposal
of the retail park portfolio (announced last year) and a number of third party
occupied properties and debt of £423 million demerged with Kesa Electricals.
Over the period net debt fell to £883 million (1 February 2003: £1,926
million).
Dividend
An interim dividend of 3.5p will be payable to Kingfisher shareholders in
November 2003. In addition, Kesa Electricals is expected to declare an interim
dividend of 2.5p per Kesa Electricals share, equivalent to 0.57p per Kingfisher
share, payable to its shareholders in December 2003. The interim dividend paid
by Kingfisher on the earnings of the combined Group in 2002/03 was 3.94p (after
adjusting for Kingfisher's 7 for 8 share consolidation which took place on
demerger). The combined interim dividend from the now demerged companies in the
current year would be equivalent to 4.07p per Kingfisher share, representing
growth of 3.3%. However, Kesa Electricals' stated intention in its Demerger
Listing Particulars is to apportion interim and final dividends on a 25:75 basis
compared to Kingfisher's 36:64 apportionment in 2002/03. Adjusting for Kesa
Electricals' lower first half apportionment the underlying growth in dividends
payable to shareholders who retained their shares in both companies would be
9.7% combined.
Outlook
Kingfisher is now very well placed for the future with strong positions in big
markets, particularly in key European economies and in China. Management is
focused on growing market share and profitability, improving return on
investment and delivering real value for customers and shareholders.
Sales growth in the current quarter will reflect the recent weather related
slow-down, although effective management of stocks and operating costs has
largely mitigated any significant profit impact. The Board expects satisfactory
progress for the year as a whole.
A more detailed operating review appears on the following pages.
Enquiries
Ian Harding +44 (0) 20 7644 1029
Director of Communications
Loraine Woodhouse +44 (0) 20 7644 1032
Head of Investor Relations
Kingfisher website www.kingfisher.com
Kingfisher plc +44 (0) 20 7372 8008
Further copies of this announcement can be downloaded from the website
www.kingfisher.com or by application to:
The Company Secretary
Kingfisher plc
3 Sheldon Square
Paddington
London W2 6PX
Company profile
Kingfisher is Europe's leading home improvement retailer with leading market
positions in the UK, France, Poland, Italy, China and Taiwan. Sales for the
ongoing Home Improvement business (1) for the year ended 1 February 2003 were
£6.1 billion, of which £2.4 billion or 39% was generated outside the UK. Retail
profits for the year were £523 million, of which £170 million or 33% was earned
outside the UK.
Kingfisher operates nearly 550 stores in 7 countries in Europe and Asia and also
has a strategic alliance with Hornbach, Germany's leading DIY warehouse
retailer, which operates more than 100 stores across Germany, Austria,
Netherlands, Luxembourg and the Czech Republic.
(1) Ongoing Home Improvement business excludes Reno Depot, Dubois Materiaux,
Castorama Germany, Castorama Brazil, NOMI and Castorama Belgium
RETAIL BUSINESSES
First Half
Retail Sales £m Total (4) LFL Retail profit £m Total (4)
H1 2003 H1 2002 change % Change % H1 2003 H1 2002 Change %
B&Q 2,057.1 1,850.7 11.2 4.9 186.6 162.5 14.8
Screwfix 107.1 89.6 19.5 19.5 10.0 6.6 51.5
Total UK (1) 2,164.2 1,940.3 11.5 5.6 196.6 169.1 16.3
Castorama 793.6 697.4 13.8 2.0 63.0 47.8 31.8
Brico Depot 380.2 259.4 46.6 14.1 32.9 18.2 80.8
Total France (1) 1,173.8 956.8 22.7 5.3 95.9 66.0 45.3
Poland 133.9 109.3 22.5 9.1 17.4 12.8 35.9
Italy 83.6 60.3 38.6 13.6 6.1 4.3 41.9
China 49.7 28.5 74.4 12.6 (2.6) (3.2) 18.8
Taiwan n/a n/a n/a n/a 2.3 2.4 (4.2)
Other Int'l (2) n/a n/a n/a n/a 1.8 (1.7) n/a
Total International 267.2 198.1 34.9 11.1 25.0 14.6 71.2
Ongoing Home
Improvement 3,605.2 3,095.2 16.5 5.9 317.5 249.7 27.2
Businesses to be exited (3) 338.8 326.7 3.7 1.3 17.8 8.9 100.0
Total 3,944.0 3,421.9 15.3 5.5 335.3 258.6 29.7
(1) The comparative retail profit has been restated for the reallocation of
the e-commerce sector and in the case of France the costs of the Lille
Corporate Office
(2) Including Hornbach, Turkey, B&Q Korea and Spain
(3) Including Reno Depot, Dubois Materiaux, NOMI, Castorama Germany, Castorama
Brazil and Castorama Belgium
(4) H1 2003 £1 = Euro 1.443, H1 2002 £1 = Euro 1.600
Market commentary
Kingfisher's Home Improvement markets in Europe and Asia continued to grow in
the first half of the year. In the UK, the Repair, Maintenance and Improvement
(RMI) market grew by an estimated 4.0%, whilst in France the DIY market (RMI
data not available) grew by 4.8%, according to the Banque de France, for the six
months to the end of June.
Trading conditions were favourable during most of the first half although
Western European markets were adversely impacted by the extremely hot weather
towards the end of the second quarter, causing consumers to defer both internal
and external projects. The negative impact on sales continued into the current
quarter as temperatures reached record levels.
Although Asian operations were impacted by the SARS outbreak - with consumers
avoiding shopping where possible and severe operational restrictions placed on
stores and staff - China and Taiwan were formally declared virus-free in June
and July respectively, and the trading environment in both regions has begun to
recover.
UK
Retail Sales £m Total LFL Retail profit £m Total
H1 2003 H1 2002 Change % Change % H1 2003 H1 2002 Change %
B&Q (1) 2,057.1 1,850.7 11.2 4.9 186.6 162.5 14.8
Screwfix Direct 107.1 89.6 19.5 19.5 10.0 6.6 51.5
Total UK 2,164.2 1,940.3 11.5 5.6 196.6 169.1 16.3
(1) Includes e-commerce profits/(losses) in both years - H1 2003 £0.2 million
(H1 2002: £(4.0) million)
B&Q grew sales by 11.2%, up 4.9% on a like for like basis. Its share of the
Repair, Maintenance and Improvement market grew from 13.6% at the beginning of
the year to 14.4%, driven by ongoing space expansion, lower pricing and range
innovation.
During the first six months of the year, B&Q opened a net six new Warehouse
stores and two new mini-Warehouses. Including the closure of several older,
smaller stores, total space grew by 101,000 square metres, an increase of 5.1%.
The two new mini-Warehouses take the total number trading to 10. In the second
half of the year, B&Q plans to open three Warehouses, two mini-Warehouses and
convert a further 16 existing Supercentres to mini-Warehouses, following the
success of the first four conversions which were completed in January 2003. B&Q
now expects the mini-Warehouse format to account for an increasingly significant
proportion of its future investment in Warehouse type stores due to its
attractive economics and less restrictive planning limitations.
A record level of range review activity in the first half saw new ranges
introduced in most categories. New ranges in bathrooms, cooling products,
own-brand power tools, and garden products performed particularly strongly.
Consistent with B&Q's aim of driving additional service revenues, the
installation business performed well with annualised growth of 38%. This
business is supported by the two B&Q credit cards, 'Homeplan' for larger
improvement projects and 'You Can Do It' which continued to prove popular. More
than 200,000 accounts have been opened since the launch.
B&Q's operating margin increased by 0.3% points during the first half
principally driven by benefits from the ongoing Cost Price Reduction (CPR)
programme, now in its fourth year, and reduced shrinkage across the business. B
&Q continued to invest in lowering prices for customers, range reviews, and
improved in-store service. A number of efficiency initiatives, such as
e-procurement and SAP Replenishment were successfully trialled during the first
half and are now being rolled out across the business.
B&Q Direct, which includes, diy.com, had a buoyant first half with sales
increasing by 147% to £17.5 million and the business moving into profitability
for the first time.
Screwfix Direct had another successful trading period, with increased internet
business, now 23% of total sales, helping to drive overall strong growth of
19.5%. Cost price reductions in a number of categories combined to improve
operating margin and drive growth of 51.5% in retail profit. To support the
rapid growth of Screwfix Direct, a new 30,000 square metre automated fulfilment
centre in Stoke on Trent is currently under construction and due to become
operational during the first half of next year.
FRANCE
Retail sales £m H1 2003 H1 2002 % Change % Change % LFL
(Reported) (Constant) change
Castorama 793.6 697.4 13.8 2.7 2.0
Brico Depot 380.2 259.4 46.6 32.3 14.1
Total France(2) 1,173.8 956.8 22.7 10.7 5.3
Retail profit £m H1 2003 H1 2002 % Change % Change
(Reported) (Constant)
Castorama(1) 63.0 47.8 31.8 18.9
Brico Depot 32.9 18.2 80.8 63.1
Total France(2) 95.9 66.0 45.3 31.1
(1) Costs of the French corporate head office in Lille have been reallocated
to Other operating costs in both years - H1 2003 £3.5 million (H1 2002:
£7.3 million). Also restated to include e-commerce costs in both years.
(2) Excludes Dubois Materiaux
(3) H1 2003 £1 = Euro 1.443, H1 2002 £1 = Euro 1.600
Castorama France increased local currency sales by 2.7%, up 2.0% LFL, and retail
profit by 18.9%. Strong sales were seen in gardening, building products, and
bathrooms, supported by range review activity and, within the building category,
by a new competitive pricing policy. Decorative ranges performed less strongly
ahead of major review. The short-term merchandising initiatives introduced at
the end of last year, principally promotional product at the end of aisles and
near the tills, are estimated to have added over 1% to sales during the first
half.
Gross margin contracted slightly during the half, driven by a deliberate drive
to sharpen the pricing proposition and also by the stronger performance of lower
margin gardening and building products. The pricing and mix effect was partially
offset by Cost Price Reduction benefits of £8.4 million. Operating margin
improved by 1.1% points, with cost savings across many lines and improved store
staff productivity, the latter driven by a new store staff scheduling programme.
The revitalisation programme gathered pace in the first half under the
leadership of Philippe Tible, who joined in February. The senior management team
has been strengthened, particularly in the key areas of buying and store
operations, with a number of senior external appointments.
This new team has been focusing on four key revitalisation drivers - price,
range, merchandising and cost reduction. Significant progress has been made on
cost reduction, with CPR now fully embedded in Castorama France. Whilst
improving the ranges will be a longer term process, first steps have been
successful with new ranges of bathroom accessories, showers and tiles
introduced. Substantially improved lighting and heating ranges are under trial.
Three new stores were opened in August and early September with significantly
improved pricing, ranging and merchandising. Results to date have been
encouraging with record opening sales.
Brico Depot continued to grow strongly building on the exceptional growth seen
in the first quarter. Total local currency sales grew by 32.3%, driven in
particular by strong sales of building materials, kitchens and wooden flooring.
During the first half, the CPR programme was successfully introduced at Brico
Depot. Overall operating margins increased by 1.6%, mostly driven by in store
productivity initiatives and scale efficiencies, helping to drive retail profit
ahead by 63.1%.
Two new stores opened during the half, an additional 10,355 square metres, and a
further three new store openings and one relocation are scheduled in the second
half.
INTERNATIONAL
Retail sales £m H1 2003 H1 2002 % Change % Change % LFL
(Reported) (Constant) Change
Poland 133.9 109.3 22.5 27.4 9.1
Italy 83.6 60.3 38.6 25.2 13.6
China 49.7 28.5 74.4 94.0 12.6
Taiwan (1) n/a n/a n/a n/a n/a
Other Int'l (2) n/a n/a n/a n/a n/a
Total International 267.2 198.1 34.9 36.3 11.1
Retail profit £m H1 2003 H1 2002 % Change % Change
(Reported) (Constant)
Poland 17.4 12.8 35.9 41.4
Italy 6.1 4.3 41.9 28.0
China (2.6) (3.2) 18.8 9.5
Taiwan (1) 2.3 2.4 (4.2) 6.8
Other Int'l (2) 1.8 (1.7) n/a n/a
Total International 25.0 14.6 71.2 67.4
(1) Joint venture
(2) Includes Hornbach, Koctas, B&Q Korea and Brico Depot Spain
Castorama Poland had a very strong first half with total local currency sales
growing by 27.4% (9.1% LFL) and retail profit by 41.4%. Following exceptionally
cold weather in the first quarter, the second quarter saw a complete recovery
with good weather encouraging the purchase of seasonal sales delayed from
earlier in the year. All categories performed well, particularly building and
power tools. Operating margins benefited from lower pre-opening costs and other
cost savings.
One new store opened during the first half and a further two new store openings
are scheduled in the second half.
Castorama Italy also performed strongly, with local currency sales ahead by
25.1% (13.5% LFL) and retail profit up by 28.0%. Consistent with the pattern
seen across Europe, garden and building materials did well during the period.
Castorama Italy also benefited from a '15th Anniversary' promotional period and
the introduction of new ranges, including an extension of the Group's own brand
Performance Power range.
Operating margins improved during the half, driven primarily by economies of
scale and improved in-store productivity. One new store opened during the first
half and a further three store openings are scheduled in the second half.
After an excellent start to the financial year, B&Q China experienced slower
sales during the second quarter, with trading impacted by the SARS outbreak
which dented consumer confidence and delayed major home improvement projects, a
key part of the Chinese business. Local currency sales were ahead 94.1% (LFL
12.7%) with losses falling by 9.5%.
Three new stores were opened during the half, an additional 36,900 square
metres. By the end of the year B&Q expects to have 15 stores trading in China.
The impact of SARS on B&Q Taiwan was much more acute with both staff and
customers forced to wear masks during the outbreak and customers' temperatures
taken on entry to the store.
Although sales suffered, local currency operating profit held up, benefiting
from the non-recurrence of pre-opening costs incurred last year.
The improvement in retail profit in Other International from a loss of £1.7
million to a profit of £1.8 million was principally due to a strong performance
from Hornbach in which Kingfisher now has a 21% economic interest. This was
partially offset by the initial start-up costs of Brico Depot in Spain and B&Q
in Korea, where the first stores will open in October 2003 and summer 2004
respectively.
PROPERTY
Property profit of £17.8 million on the Group's remaining UK out-of-town home
improvement properties is 38% down reflecting the sale for £695m of a portfolio
of UK retail parks at the end of last year. The Group now has freehold net
assets of £1.6 billion of which £0.6 billion is in the UK and £0.7 billion is in
France, with the balance across Poland, Italy and Asia.
OTHER OPERATING COSTS
Operating costs have been restated to include the costs of the Lille corporate
office, previously charged against France retail profits. Total costs fell
during the first half by 19.2% to £21.9 million reflecting £4 million savings
following completion of the integration of the London and Lille corporate teams.
Immediately following the demerger of Kesa Electricals plc a further
reorganisation of the corporate centre took place, reflecting the simplified
nature of the Group that is now a single sector business focusing primarily on
organic growth. As a result of this reorganisation, around one third of the
corporate centre team will leave at the end of September. Ongoing savings are
expected to be approximately £4 million for the second half with annual savings
of around £14 million expected for next year. An operating exceptional charge of
£10 million has been taken in the first half to reflect the associated
reorganisation costs.
DISCONTINUED OPERATIONS
The Group's results for the six months to 2 August 2003 include the operating
results of Kesa Electricals' businesses for the 22 weeks prior to their
demerger. In this period the businesses generated sales of £1.3 billion and
retail profits of £38.9 million.
The comparative results for the six months to 3 August 2002 also include the
results of ProMarkt, the Group's electrical business in Germany that was sold at
the end of last year.
The results for discontinued operations also include exceptional charges
relating to costs incurred as a result of the demerger, which are summarised
below.
EXCEPTIONAL CHARGES
The following exceptional charges arose in the 6 month period.
Continuing Operations Total Group
£m £m
Demerger of Kesa Electricals 2 234
Sale of Dubois Materiaux and NOMI 52 52
Corporate centre re-organisation 10 10
Withdrawal from Brazil and Belgium 6 6
Investment in World Wide Retail Exchange 6 6
Tax relief (2) (28)
Total 74 280
WITHDRAWAL FROM NON-CORE BUSINESSES
Since the start of the year, Kingfisher has progressed the disposal of the
following businesses:
• Reno Depot, completed 10 September 2003 for £170 million
• Dubois Materiaux, sale announced 11 July 2003 subject to final
completion, for £68 million
• NOMI, sale announced,15 September 2003 subject to regulatory approval,
for £7 million
The closure of the Castorama stores in Germany and the sale of the final store
in Belgium have been completed and steps are in place to withdraw from the three
stores in Brazil.
The operating results of these businesses for the 6 months to 2 August 2003 have
been included within the results for Continuing Operations as 'businesses to be
exited'. A charge for the expected net loss on disposal of all of these
non-core operations amounting to £58 million has been included within
non-operating exceptional items in the period (in addition to the £35 million
provision made last year for the closure of Castorama Germany).
KINGFISHER DATA BY COUNTRY AS AT 2 AUGUST 2003
Home Improvement Store nos. Selling space Employees
(000s sq.m.) (FTE)
B&Q 324 2,077 26,636
Screwfix Direct n/a n/a 1,538
Total UK 324 2,077 28,174
Castorama 105 961 13,944
Brico Depot 57 267 3,306
Total France 162 1,228 17,250
Poland 17 163 3,613
Italy 15 89 1,550
China 11 126 2,954
Taiwan 15 63 1,409
Other International 5 22 414
Total International 63 463 9,940
Core Home Improvement 549 3,768 55,364
Businesses to be exited 63 405 6,270
Total 612 4,173 61,634
SECOND QUARTER
Retail sales £m Total change % % Retail profit £m Total change %
Q2 2003 Q2 2002 LFL Q2 2003 Q2 2002
B&Q (1) 1,041.1 949.9 9.6 3.7 109.8 96.7 13.5
Screwfix Direct 52.1 44.8 16.3 16.3 4.6 3.7 24.3
Total UK 1,093.2 994.7 9.9 4.3 114.4 100.4 13.9
Castorama (2) 427.4 379.3 12.7 1.9 35.1 27.1 29.5
Brico Depot 197.6 143.6 37.6 11.1 18.3 11.0 66.4
Total France (3) 625.0 522.9 19.5 4.4 53.4 38.1 40.2
Poland 79.2 62.5 26.7 14.9 11.1 7.6 46.1
Italy 46.6 33.5 39.1 13.7 3.3 2.3 43.5
China 29.4 19.2 53.1 8.9 (0.5) (1.5) 66.7
Taiwan (4) n/a n/a n/a n/a 0.9 0.6 50.0
Other Int'l (5) n/a n/a n/a n/a 5.0 0.3 -
Total International 155.2 115.2 34.7 13.7 19.8 9.3 112.9
(1) Include e-commerce profits/(losses) in both years
(2) Costs of the French corporate head office in Lille have been reallocated to
Other operating costs in both years - Q2 2003 £1.4 million (Q2 2002: £3.3
million). Also restated to include e-commerce costs in both years.
(3) Excludes Dubois Materiaux
(4) Joint venture
(5) Includes Hornbach, Koctas, B&Q Korea and Brico Depot Spain
KINGFISHER PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)
For the half year ended 2 August 2003
Half year ended 2 August 2003 Half year ended 3 August 2002
Continuing Discontinued Total Continuing Discontinued Total
£ millions Notes operations operations operations operations
Turnover including share of joint 4,012.1 1,319.5 5,331.6 3,520.5 1,671.2 5,191.7
ventures
Less: share of joint ventures' (59.6) (8.2) (67.8) (62.9) (7.1) (70.0)
turnover
Group turnover 1 3,952.5 1,311.3 5,263.8 3,457.6 1,664.1 5,121.7
Group operating profit 306.1 28.7 334.8 247.8 29.0 276.8
Share of operating profit/(loss) in:
Joint ventures 3.8 2.3 6.1 (0.9) 2.7 1.8
Associates 7.4 2.2 9.6 2.9 2.3 5.2
Total operating profit including
share of joint ventures and
associates 317.3 33.2 350.5 249.8 34.0 283.8
Analysed as: *
Home Improvement 335.3 - 335.3 258.6 - 258.6
Electrical and Furniture - 38.9 38.9 - 36.2 36.2
Property 17.8 - 17.8 28.6 - 28.6
Other operating costs (21.9) - (21.9) (27.1) - (27.1)
Exceptional items - operating 2 (11.6) (3.5) (15.1) (7.2) - (7.2)
Acquisition goodwill amortisation (2.3) (2.2) (4.5) (3.1) (2.2) (5.3)
Total operating profit including
share of joint ventures and
associates 317.3 33.2 350.5 249.8 34.0 283.8
Exceptional items - non-operating: 2
Profit/(loss) on the disposal of
fixed assets 0.5 - 0.5 5.2 (1.1) 4.1
Demerger costs - (43.2) (43.2) - - -
Loss on the sale of operations (58.3) - (58.3) - - -
Exceptional amounts written off
fixed asset investments 2 (6.3) - (6.3) - - -
Profit/(loss) on ordinary
activities before interest 253.2 (10.0) 243.2 255.0 32.9 287.9
Net interest payable (21.8) (6.4) (28.2) (10.1) (11.5) (21.6)
Exceptional financing charges 2 - (86.9) (86.9) - - -
Profit/(loss) on ordinary
activities before tax 231.4 (103.3) 128.1 244.9 21.4 266.3
Taxation on ordinary activities (96.2) 14.8 (81.4) (80.0) (5.0) (85.0)
Exceptional tax 2 - (98.5) (98.5) - - -
Profit/(loss) on ordinary
activities after tax 135.2 (187.0) (51.8) 164.9 16.4 181.3
Equity minority interests (0.3) 0.5 0.2 (68.4) 0.5 (67.9)
Profit/(loss) attributable to the
members of Kingfisher plc 134.9 (186.5) (51.6) 96.5 16.9 113.4
Dividends
Ordinary dividends on equity shares 3 (81.1) (89.3)
Dividend in specie relating to the
demerger of Kesa Electricals plc 7 (1,592.9) -
Retained (loss)/profit for the
period (1,725.6) 24.1
Earnings/(loss) per share (pence) 4
Basic 6.0 (2.3) 6.6 7.7
Diluted 5.9 (2.3) 6.4 7.6
Adjusted basic (1) 9.3 10.3 6.8 8.1
Adjusted diluted (1) 9.2 10.2 6.6 7.9
* The comparative figures have been restated for the reallocation of
e-commerce sector and the costs of the Lille Head Office.
(1) Adjusted EPS is stated before exceptional items and goodwill amortisation.
KINGFISHER PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 1 February 2003
Year ended 1 February 2003
Continuing Discontinued Total
£ millions Notes operations operations
Turnover including share of joint ventures 6,938.6 3,930.6 10,869.2
Less: share of joint ventures' turnover 1 (124.3) (19.1) (143.4)
Group turnover 6,814.3 3,911.5 10,725.8
Group operating profit 480.1 132.6 612.7
Share of operating profit in:
Joint ventures 4.0 5.7 9.7
Associates 8.0 4.4 12.4
Total operating profit including share of
joint ventures and associates 492.1 142.7 634.8
Analysed as: *
Home Improvement 539.2 - 539.2
Electrical and Furniture - 157.4 157.4
Property 58.5 - 58.5
Other operating costs (56.2) - (56.2)
Exceptional items - operating 2 (42.0) (9.6) (51.6)
Acquisition goodwill amortisation (7.4) (5.1) (12.5)
Total operating profit including share of
joint ventures and associates 492.1 142.7 634.8
Exceptional items - non-operating: 2
Profit/(loss) on the disposal of fixed assets 144.2 (1.2) 143.0
Demerger costs - (11.8) (11.8)
Loss on the sale of operations (34.8) (193.6) (228.4)
Profit/(loss) on ordinary activities before
interest 601.5 (63.9) 537.6
Net interest payable (20.9) (22.6) (43.5)
Profit/(loss) on ordinary activities before 580.6 (86.5) 494.1
tax
Taxation on ordinary activities (195.8) (27.5) (223.3)
Profit/(loss) on ordinary activities after 384.8 (114.0) 270.8
tax
Equity minority interests (99.3) (1.8) (101.1)
Profit/(loss) attributable to the members of
Kingfisher plc 285.5 (115.8) 169.7
Dividends
Ordinary dividends on equity shares (244.0)
Retained loss for the period (74.3)
Earnings per share (pence) 4
Basic 15.4 9.1
Diluted 15.1 8.9
Adjusted basic(1) 13.4 19.0
Adjusted diluted(1) 13.2 18.7
* The comparative figures have been restated for the reallocation of
e-commerce sector and the costs of the Lille Head Office.
(1) Adjusted EPS is stated before exceptional items and goodwill amortisation.
KINGFISHER PLC
CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at 2 August 2003
£ millions Notes 2 August 2003 3 August 2002 1 February 2003
Fixed assets
Goodwill 2,495.3 299.7 2,651.5
Tangible assets 2,524.1 3,505.5 3,040.9
Investments in joint ventures
- share of gross assets 59.9 169.7 190.1
- share of gross liabilities (39.5) 20.4 (139.8) 29.9 (158.1) 32.0
Investments in associates 122.2 91.4 131.1
Other investments 114.8 149.3 146.1
5,276.8 4,075.8 6,001.6
Current assets
Development work in progress - 50.6 5.1
Stocks 1,219.6 1,683.6 1,630.1
Debtors 447.4 692.4 1,431.4
Investments 32.3 74.7 145.7
Cash at bank and in hand 100.7 2,127.8 98.5
1,800.0 4,629.1 3,310.8
Creditors
Amounts falling due within one year (2,263.2) (2,929.0) (3,245.5)
Net current (liabilities)/assets (463.2) 1,700.1 65.3
Total assets less current liabilities 4,813.6 5,775.9 6,066.9
Creditors
Amounts falling due after more than one year (665.7) (621.5) (1,528.4)
Provisions for liabilities and charges (38.8) (49.1) (53.7)
4,109.1 5,105.3 4,484.8
Called up share capital 364.1 348.6 359.3
Reserves 8 3,742.1 4,027.2 4,103.2
Equity shareholders' funds 4,106.2 4,375.8 4,462.5
Equity minority interests 2.9 729.5 22.3
4,109.1 5,105.3 4,484.8
Approved by the Board
Helen Weir
Director
16 September 2003
KINGFISHER PLC
SUMMARY CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
For the half year ended 2 August 2003
Half year ended Half year ended Year ended
£ millions Notes 2 August 2003 3 August 2002 1 February 2003
Net cash inflow from operating activities 5 569.4 444.8 895.0
Dividends received from joint ventures 1.5 3.6 6.9
Returns on investment and servicing of finance
Net interest paid (39.9) (30.8) (47.6)
Exceptional financing charges (111.2) - -
Dividends paid by subsidiaries to minorities - (33.0) (33.3)
Net cash outflow from returns on investment and
servicing of finance (151.1) (63.8) (80.9)
Taxation
Tax paid (125.8) (73.0) (170.9)
Capital expenditure and financial investment
Net sale/(purchase) of fixed assets 593.4 (81.3) (253.0)
Net sale/(purchase) of investments 14.9 (16.1) (17.4)
Net cash inflow/(outflow) from capital
expenditure and financial investment 608.3 (97.4) (270.4)
Acquisitions and disposals
Purchase of subsidiary and business undertakings (57.8) (23.7) (3,152.3)
Sale of subsidiary and business undertakings (39.2) - (35.9)
Purchase of associated undertakings and joint
ventures (1.8) - (36.2)
Cash acquired on purchase of subsidiary - - 5.2
Non-operating exceptional demerger costs (33.6) - (11.8)
Issues of shares by Group companies to minority
shareholders - 6.7 19.3
Net cash outflow from acquisitions and disposals (132.4) (17.0) (3,211.7)
Equity dividends paid to shareholders (75.8) (97.0) (139.1)
Net cash inflow/(outflow) before use of liquid
resources and financing 694.1 100.2 (2,971.1)
Management of liquid resources
Net movement in short-term deposits 13.0 246.6 268.8
Net movement in short-term investments (52.9) 100.6 30.8
Net cash (outflow)/inflow from management of
liquid resources (39.9) 347.2 299.6
Financing
Issue of ordinary share capital 1.1 1,912.5 2,014.4
Rights issue costs - - (43.9)
Capital element of finance lease rental payments (6.5) (6.3) (13.5)
Net movement in loans (519.4) (297.4) 634.7
Net cash (outflow)/inflow from financing (524.8) 1,608.8 2,591.7
Increase/(decrease) in cash 6 129.4 2,056.2 (79.8)
KINGFISHER PLC
NOTES TO THE INTERIM FINANCIAL STATEMENTS (UNAUDITED)
1 (a) Turnover
Half year ended Half year ended Half year ended
£ millions 2 August 2003 3 August 2002 1 February 2003
Retail sales from continuing operations 3,944.0 3,421.9 6,757.2
Third party rental income 6.4 18.8 34.4
Property development sales 2.1 16.9 22.7
Property turnover 8.5 35.7 57.1
Continuing operations turnover 3,952.5 3,457.6 6,814.3
Discontinued operations retail sales 1,311.3 1,664.1 3,911.5
Total turnover 5,263.8 5,121.7 10,725.8
2 (a) Operating exceptional items
Half year ended Half year ended Year ended
£ millions 2 August 2003 3 August 2002 1 February 2003
Continuing operations
Group restructuring (9.8) (3.3) (18.1)
Demerger costs (1.8) - -
Impairment of goodwill - (3.9) (23.9)
(11.6) (7.2) (42.0)
Discontinued operations
Demerger costs (3.5) - -
Darty anti-competitive fine - - (9.6)
(3.5) - (9.6)
Total (15.1) (7.2) (51.6)
Exceptional group restructuring costs of £9.8m include the costs of
restructuring the Kingfisher plc head office following the demerger of Kesa
Electricals plc and additional costs relating to the integration of the head
offices in London and Lille.
Demerger costs of £5.3m relate to incremental internal costs directly
attributable to the demerger.
Prior year group restructuring costs include costs of integrating the London and
Lille head offices following the buyout of the minority interests in Castorama
Dubois Investissement S.C.A; and the cost of closing the Group's property
management function.
Prior year impairment of goodwill included £3.9m in respect of investments in
joint ventures.
2 (b) Non operating exceptionals
Half year ended Half year ended Year ended
£ millions 2 August 2003 3 August 2002 1 February 2003
Continuing operations
Provisions for loss on the sale of (58.3) - (34.8)
operations
Profit on disposal of properties 0.5 5.2 144.2
(57.8) 5.2 109.4
Discontinued operations
Demerger costs (43.2) - (11.8)
Loss on the sale of ProMarkt - - (193.6)
Loss on disposal of properties - (1.1) (1.2)
(43.2) (1.1) (206.6)
Total (101.0) 4.1 (97.2)
Provisions for loss on the sale of operations amounting to £58.3m for the half
year ended 2 August 2003 relate to the disposals of non-core DIY businesses;
Reno Depot in Canada, NOMI in Poland, Dubois Materiaux in France, Castorama
Brazil and Castorama Belgium.
Demerger costs of £43.2m (2002: £11.8m) relate to external costs, principally
professional advisors' and commitment fees, directly attributable to the
demerger.
The prior year continuing operations provision for loss on sale of operations
relates to the closure of Castorama Germany.
The prior year continuing operations profit on disposal of properties includes
profit arising on the disposal of the Group's third party UK property portfolio
for proceeds of £695m.
2 (c) Other exceptional charges
Exceptional financing charges include costs of restructuring the Group's debt
arising directly as a result of the demerger less a gain arising on unwinding an
interest rate swap directly associated with the debt. They also include an
exceptional cost of £83.1m (before tax relief) relating to part of a forward
currency exchange contract that was no longer required once the separation of
Kesa Electricals by demerger was confirmed.
Exceptional tax charges of £98.5m relate to charges imposed by the French tax
authorities as a consequence of the demerger. The Group intends to pursue a
claim for the recovery of the tax paid and has been advised that its risk of
being ultimately liable for this amount is low.
Exceptional amounts written off fixed asset investments relate to the Group's
investment in the World Wide Retail Exchange, a company providing an independent
online e-marketplace for products and services.
3 Dividends
An interim dividend of 3.5p amounting to £81.1m will be paid on 14th November
2003 to shareholders on the Register at 26th September 2003. A scrip dividend
will be offered and forms of election will be sent to shareholders on 7th
October 2003.
The 2002 interim dividend of 3.94p (3.45p before adjustment for the
consolidation of shares - see Note 4) amounting to £89.3m was paid in respect of
earnings that included the now demerged Kesa Electricals businesses. Kesa
Electricals plc will be paying a dividend in respect of its earnings for the
current period.
4 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares in issue
during the period, excluding those held in the ESOP which are treated as
cancelled.
The weighted average number of shares has been adjusted for the share
consolidation which took place on 7 July 2003 when the ordinary shares of 13.75p
were consolidated on a 7 for 8 basis into ordinary shares of 15 5/7p.
The weighted average number of shares in issue during the period was 2,263.7m
(2002: 1,468.9m) and the diluted weighted average number of shares in issue
during the period was 2,274.4m (2002: 1,476.5m).
Supplementary earnings per share are presented. These exclude the effects of
operating and non operating exceptional items and acquisition goodwill
amortisation to allow comparison to the prior year.
a) Continuing operations
Earnings per share for continuing operations is presented in order to provide a
more meaningful comparison.
The calculation of basic earnings per share for continuing operations is based
on the profit on ordinary activities, after taxation and minority interests, of
£134.9m (2002: £96.5m). The diluted earnings per share for continuing operations
is based on the diluted profit on ordinary activities, after taxation and
minority interests, of £134.9m (2002: £94.7m).
The difference between the basic and diluted earnings per share and the basic
adjusted and diluted adjusted earnings per share is reconciled as follows:
Half year ended Half year ended Year ended
2 August 2003 3 August 2002 1 February 2003
Pence per share
Basic earnings per share 6.0 6.6 15.4
Earnings per share relating to exceptional items 3.2 - (2.4)
Earnings per share relating to acquisition goodwill
amortisation 0.1 0.2 0.4
Basic adjusted earnings per share 9.3 6.8 13.4
Diluted earnings per share 5.9 6.4 15.1
Earnings per share relating to exceptional items 3.2 - (2.3)
Earnings per share relating to acquisition goodwill
amortisation 0.1 0.2 0.4
Diluted adjusted earnings per share 9.2 6.6 13.2
b) Total Group
The calculation of basic earnings per share for the total Group is based on the
loss on ordinary activities, after taxation and minority interests, of £(51.6)m
(2002: profit £113.4m). The diluted earnings per share for the total Group is
based on the diluted loss on ordinary activities, after taxation and minority
interests, of £(51.6)m (2002: profit £111.6m).
The difference between the basic and diluted earnings per share and the basic
adjusted and diluted adjusted earnings per share is reconciled as follows:
Half year ended Half year ended Year ended
2 August 2003 3 August 2002 1 February 2003
Pence per share
Basic earnings per share (2.3) 7.7 9.1
Earnings per share relating to exceptional items 12.4 0.1 9.3
Earnings per share relating to acquisition goodwill
amortisation 0.2 0.3 0.6
Basic adjusted earnings per share 10.3 8.1 19.0
Diluted earnings per share (2.3) 7.6 8.9
Earnings per share relating to exceptional items 12.3 - 9.2
Earnings per share relating to acquisition goodwill
amortisation 0.2 0.3 0.6
Diluted adjusted earnings per share 10.2 7.9 18.7
5 Reconciliation of cashflow from operating activities
Half year ended Half year ended Year ended
2 August 2003 3 August 2002 1 February 2003
£ millions
Group operating profit 334.8 276.8 612.7
Impairment charge - - 20.0
Depreciation and amortisation 97.5 97.9 221.6
432.3 374.7 854.3
Decrease in development work in progress 5.1 10.9 56.4
Increase in stocks (87.2) (96.7) (100.1)
Decrease in debtors 86.9 118.2 58.2
Increase in creditors 123.4 30.1 20.9
Loss on disposal of fixed assets 8.9 7.6 5.3
Net cash inflow from operating activities 569.4 444.8 895.0
Depreciation and amortisation shown above includes £67.6m in respect of the
Group's continuing operations (2002: £62.6m; and £144.6m for the year 1 February
2003)
6 Reconciliation of net borrowings
Net (debt)/cash at the period end date is analysed as follows:
Half year ended Half year ended Year ended
2 August 2003 3 August 2002 1 February 2003
£ millions
Net debt at start of period (1,926.4) (1,044.2) (1,044.2)
Increase/(decrease) in cash 129.4 2,056.2 (79.8)
Debt in subsidiary becoming a joint venture - 172.3 72.3
Net movement in short-term deposits (13.0) (246.6) (268.8)
Net movement in investments 52.9 (100.6) (30.8)
Decrease in market value of investments - (0.1) -
Debt demerged with Kesa Electricals plc 423.0 - -
Amortisation of underwriting and issue costs (1.5) - (6.5)
Net movement in loans 525.9 303.7 (613.2)
Foreign exchange effects (73.1) (11.9) (55.4)
Net (debt)/cash at end of period (882.8) 1,128.8 (1,926.4)
Included in the Group's net debt balances at 2 August 2003 is cash of £nil
(2002: £81.7m) which is pledged to meet certain insurance liabilities.
7 Demerger of Kesa Electricals plc
The demerger of Kesa Electricals plc was completed on 7 July 2003. A financial
summary of the net assets of the demerged group at demerger date are as follows:
£ millions
Fixed assets 754.6
Investments 40.7
Stocks 561.2
Other current assets 236.6
Creditors (792.2)
Minority interests (15.3)
Net assets of Kesa Electricals at demerger 785.6
Goodwill resurrected on demerger 1,230.3
Debt transferred on demerger (423.0)
Dividend in specie 1,592.9
8 Reserves
The movement in the Group's consolidated reserves in the period to 2 August 2003
is summarised as follows:
Share Revaluation Non- Profit Total
Premium Reserve Distributable and loss
Account Reserve account
At 1 February 2003 2,155.2 165.8 159.0 1,623.2 4,103.2
Shares issued under option schemes 1.0 - - - 1.0
Scrip dividend alternative (4.8) - - 82.3 77.5
Loss for the financial period - - - (51.6) (51.6)
Ordinary dividends on equity shares - - - (81.1) (81.1)
Dividend in specie relating to demerger
of Kesa Electricals plc - - - (1,592.9) (1,592.9)
Goodwill resurrected on demerger of Kesa
Electricals plc - - - 1,230.3 1,230.3
Realised revaluation surplus - (9.3) - 9.3 -
Unrealised surplus on revaluation of
properties - 2.2 - - 2.2
Net foreign exchange adjustments - - - 26.4 26.4
Tax on exchange adjustments - - - 27.1 27.1
At 2 August 2003 2,151.4 158.7 159.0 1,273.0 3,742.1
9 Accounting policies
Accounting policies have been consistently applied on the basis set out in the
Group's financial statements for the year ended 1 February 2003.
10 Full year comparatives
The results for the year to 1 February 2003 are based on full audited accounts
which were filed with the Registrar of Companies and on which the auditors made
a report under section 235 of the Companies Act 1985 which does not contain a
statement under sections 237 (2) or (3) of the Companies Act 1985 and is
unqualified.
11 Shareholder information
Copies of the results will be sent to shareholders on 7th October 2003 and
additional copies will be available from Kingfisher plc, 3 Sheldon Square,
Paddington, London W2 6PX.
The results can also be accessed on line at www.kingfisher.com/shareholder as
well as other shareholder information.
Timetable of events
24th September 2003 Ex-dividend date
26th September 2003 Record date for interim dividend
7th October 2003 Posting of scrip dividend circular and forms of
election
29th October 2003 Final date for receipt of forms of election
13th November 2003 Date for posting of certificates for new shares
14th November 2003 Date for payment of interim dividend
Independent review report to Kingfisher plc
We have been instructed by the company to review the financial information which
comprises the profit and loss account, the balance sheet, the cash flow
statement and the related notes. 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 Group 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 the company 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 2 August 2003.
PricewaterhouseCoopers LLP
Chartered Accountants
London
16 September 2003
This information is provided by RNS
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