Interim Results - Part 2
General Electric Company PLC
25 November 1999
Part 2
Summarised Consolidated Profit and Loss Account
6 months to Year to
30 September 31 March
1999 1998 1999
£ million £ million £ million
Restated
Group Turnover
Continuing operations 3,270 2,944 6,590
Acquisitions 557 - -
______________________________
3,827 2,944 6,590
Share of joint ventures 543 408 1,035
______________________________
4,370 3,352 7,625
______________________________
Operating Profit
Group operating profit before goodwill
amortisation
Continuing operations 305 304 763
Acquisitions 60 - -
Goodwill amortisation (181) (81) (189)
______________________________
184 223 574
Share of joint ventures
Before goodwill amortisation 20 28 81
Goodwill amortisation (3) (3) (8)
______________________________
201 248 647
_____________________________________________________________________________
Group and joint venture operating profit
before exceptional items and goodwill
amortisation 460 358 940
_____________________________________________________________________________
Associates 5 50 59
______________________________
Operating profit 206 298 706
Separation costs - - (50)
Exceptional items, gains less losses on
disposals of subsidiaries and other fixed
assets - 965 775
Income from loans, deposits and investments,
less interest payable
______________________________
Group (49) 44 54
Share of joint ventures and associates - 11 19
______________________________
(49) 55 73
______________________________
Profit on ordinary activities before taxation 157 1,318 1,504
Taxation (106) (273) (433)
______________________________
Profit on ordinary activities after taxation 51 1,045 1,071
Minority interests (4) (12) (17)
______________________________
Profit on ordinary activities attributable to
the shareholders 47 1,033 1,054
Dividends (48) (112) (348)
______________________________
Retained (loss)/profit for the financial (1) 921 706
period
______________________________
_____________________________________________________________________________
Earnings per share 1.8p 37.6p 38.9p
Earnings per share before exceptional items
and goodwill amortisation 10.7p 11.4p 27.1p
_________
Proforma earnings per share before
exceptional items and goodwill amortisation 7.4p 6.4p
___________________
Summarised Group Balance Sheet
30 September 31 March
1999 1998 1999
£ million £ million £ million
Restated
Fixed Assets
Goodwill 6,737 3,130 3,281
Tangible assets 1,132 957 982
Investments 1,459 731 1,471
______________________________
9,328 4,818 5,734
______________________________
Current Assets
Stocks and contracts in progress 1,206 1,211 1,052
Debtors 2,005 1,603 1,953
Investments and cash 1,361 1,889 1,359
______________________________
4,572 4,703 4,364
Creditors: due within one year (7,013) (2,936) (3,216)
______________________________
Net current (liabilities)/assets (2,441) 1,767 1,148
______________________________
Total assets less current liabilities 6,887 6,585 6,882
Creditors: due after more than one year (293) (223) (266)
Provisions for liabilities and charges (543) (655) (535)
______________________________
6,051 5,707 6,081
Minority interests (94) (87) (92)
______________________________
Equity shareholders' funds 5,957 5,620 5,989
______________________________
Cash Flow Statement
6 months to Year to
30 September 31 March
1999 1998 1999
£ million £ million £ million
Restated
Operating profit 206 298 706
Less: share of profit before interest of
joint ventures and associates (22) (75) (132)
______________________________
Operating profit excluding joint ventures and
associates 184 223 574
Dividends and management fees received from
joint ventures and associates 53 406 438
Depreciation and amortisation 302 182 396
Change in working capital (58) (102) (195)
Returns on investments and servicing of
finance 15 4 25
Tax received/(paid) 91 (149) (358)
Capital expenditure and financial investment (131) (126) (286)
Acquisitions and disposals (4,112) (396) (636)
Equity dividends paid to shareholders (348) - (218)
______________________________
Cash (outflow)/inflow before use of liquid
resources and financing (4,004) 42 (260)
Net cash flow from management of liquid
resources 199 (496) 138
Net cash flow from financing
Purchases of ordinary shares - - (310)
Other 3,801 411 516
______________________________
(Decrease)/increase in cash and net bank
balances repayable on demand (4) (43) 84
______________________________
Reconciliation of Net Cash Flow to Movement in Net Debt
6 months to Year to
30 September 31 March
1999 1998 1999
£ million £ million £ million
Restated
(Decrease)/increase in cash (4) (43) 84
Cash flow from management of liquid resources (199) 496 (138)
Cash flow from changes in debt and lease
financing (3,784) (395) (489)
______________________________
Change in net monetary funds resulting from
cash flows (3,987) 58 (543)
Net funds/(debt) acquired with subsidiaries 101 (154) (172)
Effect of foreign exchange rate changes 99 19 15
______________________________
Movement in net monetary funds in the period (3,787) (77) (700)
Net monetary funds at 1 April 484 1,184 1,184
Net debt at end of period (3,303) 1,107 484
______________________________
Statement of Total Recognised Gains and Losses
6 months to Year to
30 September 31 March
1999 1998 1999
£ million £ million £ million
Restated
Profit on ordinary activities attributable to
the shareholders 47 1,033 1,054
Surplus on valuation of listed fixed asset
investments - - 847
Exchange differences on translation (48) (12) 24
______________________________
Total recognised gains and losses (1) 1,021 1,925
______________________________
Reconciliation of Movement in Shareholders' Funds
6 months to Year to
30 September 31 March
1999 1998 1999
£ million £ million £ million
Restated
Total recognised gains and losses (1) 1,021 1,925
Dividends (48) (112) (348)
Issues of ordinary shares for cash 17 16 27
Purchase of ordinary shares for cash - - (310)
______________________________
Total movement in the period (32) 925 1,294
Shareholders' funds at 1 April 5,989 4,695 4,695
______________________________
Shareholders' funds at end of period 5,957 5,620 5,989
______________________________
1 Principal Activities for 6 months to 30 September
Net assets at
Profit before tax Turnover 30 September
1999 1998 1999 1998 1999 1998
£ £ £ £ £ £
million million million million million million
Restated Restated
Communications 193 101 1,441 768 796 436
Systems 77 68 760 683 410 391
Capital 40 31 346 373 236 236
Other (11) (2) 21 30 18 (19)
Intra-trading (47) (57)
_____________________________________________________
299 198 2,521 1,797 1,460 1,044
Marconi Electronic
Systems 161 160 1,849 1,555 303 311
_____________________________________________________
460 358 4,370 3,352 1,763 1,355
Goodwill (184) (84) 6,990 3,228
Exceptional items (75) (26)
_____________________________________________________
201 248 4,370 3,352 8,753 4,583
_______________
Associates 5 50 40 364
_________________ _________________
206 298 8,793 4,947
Exceptional items,
gains less losses on
disposal of
subsidiaries and other
fixed assets - 965
Interest bearing
assets and liabilities (49) 55 (2,246) 1,277
Unallocated net
liabilities (496) (517)
_________________ _________________
157 1,318 6,051 5,707
_________________ _________________
Profit by Turnover by Turnover by
Territory of Territory of Territory of
origin origin Destination
1999 1998 1999 1998 1999 1998
£ £ £ £ £ £
million million million million million million
Restated
United Kingdom 216 183 1,810 1,703 1,238 1,129
Americas 200 109 1,817 1,037 1,741 1,055
Europe 22 38 522 448 878 720
Africa, Asia and
Australasia 22 28 221 164 513 448
_____________________________________________________
460 358 4,370 3,352 4,370 3,352
_____________________________________________________
2 Taxation
6 months to 30 September
1999 1998
£ million £ million
Restated
Subsidiaries
UK taxation 74 56
Overseas taxation 44 57
Joint ventures and associates 8 33
________________________
126 146
Exceptional items:
Continuing operations (20) (8)
Gains less losses on disposals - 135
________________________
106 273
________________________
3 Dividend
The Directors have declared an interim dividend on the ordinary shares of
1.8p (1998 4.2p) per share payable on 4 February 2000 to shareholders on
the register at the close of business on 10 December 1999. Accordingly,
the shares will go ex-dividend on 6 December. The cost of the interim
dividend is £48 million.
4 Earnings per share
6 months to 30 September
1999 1998
Earnings Earnings
Earnings per Earnings per
£ share £ share
million pence million pence
Restated Restated
Earnings and earnings per share 47 1.8 1,033 37.6
Exceptional items:
Continuing operations 75 2.8 26 0.9
Gains less losses on disposals of
subsidiaries and other fixed assets - - (965) (35.1)
Goodwill amortisation 184 6.8 91 3.4
Taxation arising on exceptional items (20) (0.7) 127 4.6
______________________________________
Earnings per share before exceptional
items and goodwill amortisation 286 10.7 312 11.4
Proforma adjustments:
Marconi Electronic Systems (88) (3.3) (89) (3.2)
Alstom - - (24) (0.9)
Other - - (23) (0.9)
______________________________________
Proforma earnings per share before
exceptional items and goodwill
amortisation 198 7.4 176 6.4
______________________________________
Following the separation of the Marconi Electronic Systems business and its
associated net debt there will be no earnings attributable to this business.
Accordingly, for proforma purposes, the earnings and interest impact
associated with this business have been adjusted in both the current and
comparative periods.
The proforma adjustment to earnings for Alstom excludes the impact of the cash
receipts following its flotation and its earnings for the six month period to
30 September 1998 when it was accounted for as an associate.
Other includes the proforma trading and interest impacts following the
acquisition of FORE Systems, Inc., and RELTEC Corporation for an equivalent
period of ownership in the six months to 30 September 1998.
The impact of other acquisitions was not material.
5 Analysis of Net Debt
Acquisitions/
disposals
(excluding
1 April Cash cash and Exchange 30 September
1999 Flow overdrafts) adjustment 1999 1998
£ £ £ £ £ £
million million million million million million
Cash 265 100 - 365 167
Overdrafts (40) (104) (1) (145) (55)
Liquid resources 1,094 (199) 106 (7) 994 1,722
Loans falling
due
within one
year (776) (3,795) (5) 104 (4,472) (691)
after more
than one year (59) 11 - 3 (45) (36)
___________________________________________________________
484 (3,987) 101 99 (3,303) 1,107
___________________________________________________________
Share of net
cash in joint
ventures 74 (4) 145
___________________________________________________________
6 Order Book
30 September 30 September
1999 1998
£ million £ million
Group and share of joint ventures 11,598 11,336
________________________________
7 Key rates of exchange for £1 sterling used for translation in respect of
overseas subsidiaries, joint ventures and associates:
Profit & Loss and
Cash Flow average Balance Sheet
rates to rates at
30 September 30 September
1999 1998 1999 1998
_____________________________________________________________________________
US Dollar 1.6085 1.6623 1.6469 1.6994
Euro 1.5171 1.4964 1.5464 1.4432
French Franc 9.9513 9.9113 10.1440 9.5248
Italian Lira 2,937 2,917 2,994 2,808
_____________________________________________________________________________
8 Financial information is presented on the basis of the accounting policies
of the GEC Group as set out in the Annual Report and Accounts for the year
ended 31 March 1999. Accordingly, goodwill arising on all acquisitions is
now capitalised and amortised over its estimated useful life, not exceeding
20 years. This new policy has been applied retrospectively and prior year
figures have been restated accordingly. This has given rise to a
restatement of the accumulated balance on retained profits of £2,088
million. Previously reported operating profit for the six months ended 30
September 1998 has been reduced by £75 million for the amortisation charge.
The half year results are unaudited but have been reviewed by the auditors.
The results for the year ended 31 March 1999 do not comprise statutory
accounts for the purposes of Section 240 of the Companies Act 1985 and have
been extracted from the Group's published accounts for that period which
have been filed with the Registrar of Companies. The audit report on those
accounts was unqualified and did not contain a statement under Section 237
(2) or (3) of the Companies Act 1985. Comparative figures have been
restated to reflect changes in presentation.
9 Copies of this report are being sent to shareholders and are available to
the public at the Company's Registered Office One Bruton Street, London W1X
8AQ.
Independent review report by Deloitte & Touche to The General Electric
Company, p.l.c.
Introduction
We have been instructed by the Company to review the financial information set
out on pages 8 to 15 and 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 Listing
Rules of the London Stock Exchange 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. 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 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 1999.
Deloitte & Touche
Chartered Accountants
Hill House
1 Little New Street
London EC4A 3TR
24 November 1999
Supplementary Information
This document updates certain information set out in the Listing Particulars
to reflect the announcement on 25 November 1999 of the interim results of GEC,
which is set out above.
Directors' responsibility
The Directors of Marconi plc, whose names appear below, accept responsibility
for the information contained in this document. To the best of the knowledge
and belief of the Directors (who have taken all reasonable care to ensure that
such is the case), the information contained in this document is in accordance
with the facts and does not omit anything likely to affect the import of such
information.
Directors
Sir Roger Hurn The Rt Hon The Baroness Dunn
Lord Simpson of Dunkeld Sir Christopher Harding
John Charles Mayo Dr Alan Walter Rudge
Robert Ian Meakin Hon Raymond George Hardenbergh Seitz
William Martin Castell Nigel John Stapleton
Significant change
Save as disclosed in this document, there has been no significant change and
no significant new matter has arisen in relation to the Group since 11 October
1999, being the date of publication of the Listing Particulars.
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