Last checked at 17 Nov 2005 07:02
GUS PLC17 November 2005 17 November 2005 GUS plc Interim Results for the Six Months Ended 30 September 2005 under IFRS Highlights • Benchmark PBT1 of £376m (2004: £407m) - Record profit at Experian, up £52m - Profit at ARG down by £59m, affected by £20m of one-off and IFRS-related charges - Disposal of Lewis reduces profit by £12m • Profit before tax £348m (2004: £365m) • Benchmark earnings per share2 25.5p (2004: 28.0p) • Basic earnings per share 28.0p (2004: 29.7p) • Interim dividend 9.6p per new consolidated GUS share (2004: 9.0p per existing share) • ARG: sales up 2%; gaining share in a very challenging retail market; gross margin maintained at Argos and slightly ahead at Homebase • Experian: sales up 29% and profit up 36% for continuing activities at constant exchange rates; seventh half year of double-digit sales and profit growth • Burberry: sales up 3% underlying and profit down 2% at constant exchange rates; period of transition for business • Burberry demerger confirmed for 13 December 2005, subject to shareholder approval Sir Victor Blank, Chairman of GUS, commented:"We have made very significant strategic and operational progress in the firsthalf. The sale of the remaining stake in Lewis, the agreement to sell Wehkampand today's timetable for the full demerger of Burberry means we are now focusedsolely on ARG and Experian. Operationally, we are investing in our people andour infrastructure and this will continue to position each business well in itschosen markets." John Peace, Chief Executive of GUS, commented:"I am delighted with the performance of Experian which earned £200m profit forthe first time in a half year. Experian has delivered its seventh consecutivesix-month period of double-digit sales and profit growth, reflecting its uniqueglobal reach and broad product offer. Although profit at ARG has been impacted,as expected, by the tough UK retail environment, we have gained share andmaintained or improved gross margin in the first half. We continue to invest inboth Argos and Homebase ensuring that they will be among the long-term winnersin UK retailing." These results have been prepared in accordance with the basis of preparation setout in note 1 to the interim financial statements. The reconciliation of resultsfor the year to 31 March 2005 under UK GAAP to International Financial ReportingStandards (IFRS) was released on 14 June 2005 and is available on the GUSwebsite. This includes the restatement of the results for the six months to 30September 2004, which are used as the comparatives throughout this announcement. The financial information in this announcement is unaudited. It is also subjectto possible change as the definition and interpretation of IFRS continues toevolve and be amended by the relevant authorities. 1 Benchmark PBT is defined as profit before amortisation of acquisitionintangibles, exceptional items (i.e. gains or losses on disposal or closure ofbusinesses and goodwill impairment charges), financing fair value remeasurementsand taxation. It includes the Group's share of associates' pre-tax profit andthe profits or losses of discontinued operations up to the date of disposal orclosure. 2 Benchmark EPS takes Benchmark PBT less taxation (attributable to BenchmarkPBT) and minority interests, divided by the weighted average number of shares inissue (excluding own shares held in Treasury and in the ESOP Trust). Enquiries GUSJohn Peace Group Chief Executive 020 7495 0070David Tyler Group Finance DirectorFay Dodds Director of Investor Relations FinsburyRupert Younger 020 7251 3801Rollo Head There will be a presentation today at 9.30am to analysts and investors at theMerrill Lynch Financial Centre, 2 King Edward Street, London EC1A 1HQ. Thepresentation can be viewed live on the GUS website at www.gusplc.com and canalso be accessed live via a dial-in facility on 44 (0)208 322 2180. Thesupporting slides and an indexed replay will also be available on the websitelater in the day. There will be a conference call to discuss the results at 3.00pm today with arecording available later on the website. All relevant GUS and Burberryannouncements are also available on www.gusplc.com. GUS will issue its Third Quarter Trading Update on 12 January 2006. ItsPreliminary Results for the year to 31 March 2006 will be announced on 24 May2006. Certain statements made in this announcement are forward looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual events or results to differmaterially from any expected future events or results referred to in theseforward looking statements. Burberry Ordinary Shares are listed on the Official List and traded on theLondon Stock Exchange. The Burberry Ordinary Shares have not been and will notbe registered under the US Securities Act of 1933, as amended (the "SecuritiesAct"), and may not be offered or sold unless pursuant to a transaction that isregistered under the Securities Act, or not required to be registeredthereunder, or pursuant to an exemption from the registration requirementsthereof. The Burberry Ordinary Shares referred to in this announcement have not beenapproved or disapproved by the US Securities and Exchange Commission, any statesecurities commission in the United States or any other US regulatory authority,nor have such authorities passed upon or determined the adequacy or accuracy ofthis announcement. Any representation to the contrary is a criminal offence inthe United States. GROUP STRATEGY GUS has continued to deliver strong strategic and operational progress since thestart of the financial year. We have continued the transformation of the Group, by focusing on feweractivities. In May 2005, we sold our remaining 50% stake in Lewis, raising£140m; in October 2005, we agreed to dispose of Wehkamp, our Dutch home shoppingbusiness, for £265m. We are today providing the details of the Burberry demerger. As outlined in aseparate announcement, subject to shareholder approval, we intend to demerge theremaining 65% stake in Burberry to GUS shareholders by way of a dividend inspecie on 13 December 2005. This will be accompanied by a consolidation of GUSshares which is designed to keep the GUS share price at approximately the samelevel, subject to normal market movements, before and after the demerger. For every 1,000 existing GUS shares held at 0700 on 13 December 2005 (the recordtime), GUS shareholders will receive 305 Burberry shares and approximately 859new GUS shares. The latter is for illustrative purposes only and is based onshare prices at the close of business on 15 November 2005. The exactconsolidation ratio will be based on the average closing prices for the fourdays up to and including 17 November 2005. The Board of GUS remains committed to the separation of ARG and Experian, at theright time, as it believes that this is likely to enhance shareholder valuefurther. We continue to review the timing and method of separation and willupdate shareholders when any further decisions are made. In the meantime, we continue to focus on driving sustainable growth in ARG andExperian, as we have in recent years: • in the first half, Experian delivered exceptional sales and profit growth, driven by the strength of its growing portfolio of products and services which are sold in over 60 countries around the world; • Argos and Homebase both continued to take share in their markets in a very difficult UK retail environment. Supply chain gains from joint sourcing, a key strategic initiative, enabled Argos to maintain and Homebase to increase slightly gross margin in the first half; • there was considerable operational progress across all our businesses. This included the roll-out of Argos Extra, the co-location of about 500 Homebase roles alongside Argos and the launch of numerous new products and solutions in Experian; • we continued to invest in our businesses. Capital expenditure was £208m (2004: £161m), with major projects including new stores and warehouses at ARG and new facilities and database platforms at Experian; and • we also spent about £400m on acquisitions in the first half, predominantly in Experian to complement existing activities. The integration of these companies is on track, with nearly 700 people joining ARG from Index and about 500 people joining Experian through acquisitions. GROUP FINANCIAL HIGHLIGHTS Total sales up 4% to £3.9bn (up 6% from continuing operations). Benchmark PBT down 7% to £376m (2004: £407m), reflecting record profit atExperian (up £52m), offset by a decline in profits at ARG (down £59m). The netimpact of the disposal of Lewis was to reduce Benchmark PBT by £12m or 3%. An effective tax rate of 27.7%, based on Benchmark PBT, compared to 26.5% in thelast financial year. This reflects our latest estimate for the effective taxrate for the 12 months to 31 March 2006. Benchmark EPS of 25.5p (2004: 28.0p). Net debt increased to £1.77bn at 30 September 2005, up from £1.43bn six monthsago, largely reflecting spending on acquisitions. Interim dividend of 9.6p per new GUS share announced. Combined with the Burberrydividend that GUS shareholders will be entitled to receive after the demerger(2.5p per Burberry share), this is equivalent to 9.0p per existing GUS share(2004: 9.0p). 6 months to 30 September Sales Profit --------------------- ---------------------- 2005 2004 2005 2004 £m £m £m £m --------- --------- --------- ---------Argos Retail Group 2,618 2,568 108.9 167.5Experian 808 645 200.4 148.8Burberry 355 348 75.8 77.6Central activities (6) (5) (13.2) (13.5) --------- --------- --------- ---------Continuing operations 3,775 3,556 371.9 380.4Discontinued operations1 131 193 18.0 37.2 --------- --------- --------- ---------Total 3,906 3,749 389.9 417.6 --------- --------- --------- ---------Net interest (13.5) (10.7) --------- ---------Benchmark PBT 376.4 406.9Amortisation of acquisition intangibles (9.4) (0.1)Exceptional items 35.7 21.1Fair value remeasurements (1.2) - --------- --------- 401.5 427.9Taxation (104.0) (112.4)Equity minority interests (21.0) (18.6) --------- ---------Profit attributable to equity shareholders 276.5 296.9----------------------------------- --------- ---------Benchmark EPS 25.5p 28.0pBasic EPS 28.0p 29.7pWeighted average number of Ordinary shares 986.5m 1001.1m----------------------------------- --------- ---------The profit figure shown against each business above and used throughout thisannouncement is earnings before interest and taxation (EBIT), defined as profitbefore interest, amortisation of acquisition intangibles, exceptional items(i.e. gains or losses on disposal or closure of businesses and goodwillimpairment charges), financing fair value remeasurements and taxation. It alsoincludes the Group's share of associates' pre-tax profit. The same definition ofEBIT is used in each table in this announcement1 Discontinued operations are Wehkamp and Lewis ARGOS RETAIL GROUP (ARG) • Sales up 2% to £2.6bn • EBIT of £109m reflecting continued investment and a challenging UK retail environment • Both Argos and Homebase outperformed their markets • Gross margin maintained at Argos and slightly ahead at Homebase • Significant operational progress throughout ARG in first half • Cautious outlook for retail market demand over next 12 months 6 months to 30 September Sales EBIT--------------------- ----------------------- ------------------- 2005 2004 2005 2004 £m £m £m £m--------------------- --------- --------- --------- ---------Argos1 1,609 1,552 57.3 91.7Homebase2 966 981 48.1 75.4Financial Services 43 35 3.5 0.4--------------------- --------- --------- --------- ---------Total 2,618 2,568 108.9 167.5--------------------- --------- --------- --------- ---------EBIT margin 4.2% 6.5%--------------------- --------- --------- --------- ---------1 2005 EBIT after £20m of charges relating to transitional costs for the Indexstores, restructuring costs associated with changing staffing arrangementsin-store and higher IFRS catalogue and payroll-related costs2 Homebase sales and EBIT for 7 months to 30 September Following the recent agreement to dispose of Wehkamp, ARG is now focused onselling general merchandise in the UK and Ireland. It has a multi-brand,multi-channel offer, supported where appropriate by a central infrastructure inareas such as sourcing and supplier management, multi-channel ordering, homedelivery and financial services. Against a background of continued weak retail spending, ARG made significantoperational progress during the first half. Sales in the non-food, non-clothingmarket in the UK declined in the period on a like-for-like basis. However, bothArgos and Homebase outperformed their markets, while Argos maintained andHomebase slightly improved gross margin. UK retailers are currently facing higher cost inflation which is adverselyaffecting Argos and, to a greater extent, Homebase, where operating costs are ahigher proportion of sales. Underlying cost inflation across ARG is around 4%and ARG is managing its cost base carefully to help offset this. However, ARG believes that the most appropriate strategy, despite the currentweak economic environment, is for both retail businesses to continue to investto strengthen their long-term competitive position. This was evidenced by theextent of operational progress in the first half throughout ARG: Argos • successfully launched Argos Extra offering 17,700 lines in all stores; • refitted and reopened 30 of the 33 acquired Index stores; • opened a further 14 new stores; • added about 20% to its warehousing space to support Argos Direct, Argos Extra and direct importing; and • introduced a number of changes to staffing within stores to serve customers more effectively. Homebase • moved around 500 roles in buying, merchandising and other functions to Milton Keynes to enable them to operate more efficiently alongside Argos; • opened six new stores; • added 19 mezzanine floors to existing stores; and • commenced the roll-out of Furniture Extra into all stores. ARG is planning on the assumption that like-for-like sales will remain indecline for the non-food, non-clothing market as a whole for the next 12 months.However, it believes that the initiatives outlined above will enable ARG toemerge from this downturn in a stronger competitive position. Argos 6 months to 30 September 2005 2004 Change £m £m------------------------- ------- ------- -------Sales 1,609 1,552 4%Total change 4% 13%Like-for-like change (3%) 7% EBIT1 57.3 91.7 (38%) EBIT margin 3.6% 5.9%------------------------- ------- ------- -------At 30 SeptemberNumber of stores 636 570Of which: Argos Extra stocked-in 167 87------------------------- ------- ------- -------1 2005 EBIT after £20m of charges relating to transitional costs for the Indexstores, restructuring costs associated with changing staffing arrangementsin-store and higher IFRS catalogue and payroll-related costs In an increasingly competitive general merchandise market, Argos continues togrow share by winning a higher proportion of customers' spend by offering themthe most compelling combination of choice, value and convenience. Operational review Argos Extra was successfully launched in all stores in July 2005, offering allArgos customers more choice (17,700 lines - up from 13,200 a year ago). Thisnecessitated a great deal of operational change in store stockroom layouts andsystems, as well as investment in staff training and new transport anddistribution processes. At 30 September 2005, 167 stores stocked in theadditional lines, with all remaining stores offering the order-in facility,where purchases can be collected in-store within three to four days or deliveredto home. The performance of Argos Extra is in line with expectations and itsnational roll-out is expected to add 2-3% to sales in its first full year asconsumers become more aware of the extended ranges. Argos continues to invest in lower prices for its customers. Prices onre-included lines in the Autumn/Winter catalogue are about 5% lower than lastyear. The proportion of directly imported goods in the current catalogue is 27%,up from 21% a year ago. Argos continues to reinforce its commitment to reduceprices during the life of the catalogue under its 'non stop price drop'campaign. Argos refitted and reopened 30 of the 33 stores purchased from Index in thefirst half, with the balance open by the end of October. Argos acquired thesestores and the Index brand for £44m in July 2005. The transitional costsrelating to the acquired stores were about £7m in the first half, covering stafftraining, launch costs and store costs incurred prior to commencing trading.Argos expects these stores to add 2-3% to total Argos sales in their first fullyear of operation. At 30 September 2005, Argos operated 636 stores, having opened a net 14 newstores in the period in addition to the Index stores. It plans to open over 20stores in the second half. The return on capital on new stores continues toexceed the investment hurdle rate. Argos' customers continued to increase their use of its unique multi-channelcapabilities. These allow customers to order or reserve goods in-store, by phoneor on the Internet, for delivery to store or to home. In the first half, ArgosDirect, the delivery to home operation, grew its sales by 6% and accounted for25% of Argos' revenue. Sales via the Internet increased by 30%, representing 7%of total revenue. A further 7% of total sales were made via "Check and Reserve",up 26% year-on-year. Quick pay kiosks are now in 320 stores and processed over8% of sales in those stores in the first half. Argos increased its distribution space by around 20%, successfully opening twowarehouses in the first half. In May, a 500,000 square foot warehouse was openedin Corby to support Argos Extra and increased direct importing. In July, a730,000 square foot warehouse was opened in Faverdale, near Darlington, beingthe third site to service the home delivery of large products for Argos Direct.Although, as expected when first opened, these warehouses are currently runningbelow capacity, this investment will support future growth in Argos. Financial review In the first half, Argos increased its sales by 4% in total. Of this, new storescontributed nearly 7%. Like-for-like sales declined by 3%, a better performancethan the non-food, non-clothing market. Compared to the same period last year,there were good performances from consumer electronics, white goods, leisure andtoys. Jewellery and housewares remained difficult. Despite an adverse productand promotional mix, gross margin was in line with last year, driven by furthersupply chain gains and the weaker dollar. As previously announced, first half profit at Argos has been affected by thetransitional costs for the Index stores (£7m), the restructuring costsassociated with changing staffing arrangements in-store (£4m) and an increase inshare-based payment and pensions costs year-on-year under IFRS (£4m). Inaddition, under IFRS, the phasing of catalogue costs reduced first half profitsby £5m, although this largely reverses in the second half. These factorscontributed to EBIT at Argos in the first half being £57.3m (2004: £91.7m). Thisperformance also reflects underlying cost inflation and continued investment ingrowth initiatives including Argos Extra, new space and distribution capacity. Homebase 7 months to 30 September 2005 2004 Change £m £m------------------------- ------- ------- -------Sales 966 981 (2%)Total change1 (1%) 6%Like-for-like change1 ( 4%) 4% EBIT 48.1 75.4 (36%) EBIT margin 5.0% 7.7%------------------------- ------- ------- -------At 30 SeptemberNumber of stores 293 283Of which: number with mezzanine floor 134 88------------------------- ------- ------- -------1 Total and like-for-like change for 2004 and 2005 excludes 29 February 2004 The strategy for Homebase remains unchanged despite an increasingly competitiveand promotional DIY market. It aims to differentiate itself from other playersby becoming the UK's leading home enhancement retailer through: • improving the existing core DIY business; • enhancing and extending its home furnishings offer; and • delivering synergies by leveraging the scale and expertise of ARG. Operational review Homebase increased share in a difficult DIY market in the first half, driven byeffective execution of its strategic initiatives. Homebase continued to improvethe shopping experience for its customers by raising in-store standards andoffering better customer service. Homebase also introduced several new ranges inthe first half including lighting, bathroom accessories and laminate flooring.This is part of a programme which has seen Homebase review and change the vastmajority of its major product groups since it was acquired in December 2002.Homebase is on schedule with relocating certain functions, including buying andmerchandising, to Milton Keynes which will enable them to operate moreefficiently alongside Argos. As announced, the move affected about 500 roles.Nearly 40% of employees have chosen to relocate with the business and themajority of vacancies have also been filled. Costs of £18.3m were charged toHomebase's profit in the second half of the last financial year. Homebase continued to add new space, extending its reach into new catchments byopening stores and improving its offer in existing stores by adding mezzanines.In the first half, Homebase opened six new stores, bringing the total at 30September 2005 to 293. A further seven openings are planned for the second half.Mezzanine floors were added to 19 existing stores in the period, with anotherfour expected in the remainder of the year. The sales uplift for the latestmezzanines continues to track ahead of target. Homebase continued to differentiate itself from other players by emphasisinghome enhancement. This is being achieved by a combination of measures includingthe mezzanine roll-out, introducing new ranges and better use of ARG expertise.Furniture Extra, a catalogue offering 710 lines, is now available in all stores,with product displays in 126 stores. Appliances Extra, offering 400 linessourced via Argos, was rolled out nationally in late October. Both of theseinitiatives have been accelerated by the existing supply chain capabilities ofArgos. Financial reviewSales at Homebase fell by 1% in total for the seven months to 30 September 2005.New stores contributed 3% growth while like-for-like sales declined by 4%,reflecting lower footfall but a further increase in average basket size,supported by growth in big ticket items. There were strong performances fromhorticulture (new ranges and merchandising) and from big ticket items,especially in kitchens and Furniture Extra, which benefited from new ranges andadditional mezzanine space. Tools, building and seasonal gardening lines wereweaker. Gross margin at Homebase in the first half was slightly ahead of lastyear driven by supply chain gains and the weaker dollar. EBIT in the first half was £48.1m (2004: £75.4m). This largely reflects theimpact of a 1% decline in total sales, exacerbated by underlying cost inflationin the first half of around 4% on a business where operating costs account for arelatively high proportion of sales. Additional investment in new stores andmezzanines was only partly funded by cost savings and productivity improvements. As previously highlighted, Homebase is cautious about the immediate outlook forthe DIY market which deteriorated over the course of the first half, especiallyin big ticket items. Looking forward, Homebase also expects increasedpromotional activity in the market. Although these factors will continue toaffect sales and profit in the short term, Homebase remains confident that itsstrategy will ensure share gains over the longer term. ARG Financial Services (ARG FS) 6 months to 30 September 2005 2004 £m £m---------------------------------------------- ------- -------Sales 43 35 Earnings before funding costs 12.5 9.0Funding costs (9.0) (8.6) ------- ------- 3.5 0.4---------------------------------------------- ------- -------At 30 September Gross loan book 434 431Number of active store card holders (000s) 914 839---------------------------------------------- ------- -------ARG FS works in conjunction with Argos and Homebase to provide their customerswith the most appropriate credit offers to drive product sales, while retainingthe maximum possible profit from the transaction within ARG. It offers storecards (providing both revolving and promotional credit) and a range of insuranceproducts. At 30 September 2005, the gross loan book was in line with that of a year ago.The store card loan book increased by about 20% year-on-year although growth wasmuch slower in the first six months of this financial year, driven by thedownturn in retail spending. Growth in the store card loan book was offset bythe withdrawal of ARG FS from the very competitive market in new personal loans.Combined, these factors are now expected to lead to little change in the totalloan book by the end of the financial year. Profit after funding costs increasedto £3.5m, largely reflecting increasing maturity in the store card loan book. EXPERIAN • Sales up 29% and profit up 36% for continuing activities at constant exchange rates • Seventh consecutive six-month period of double-digit sales and profit growth • Good growth across many core businesses, helped by strong market demand • Experian Interactive now one-third of US sales - enhancing the growth profile • Acquisitions delivering returns ahead of hurdle rates 6 months to 30 September Sales EBIT--------------------- ---------------------- ---------------------- 2005 2004 2005 2004 £m £m £m £m --------- ---------- --------- ---------Experian North America 465 341 127.7 89.5Experian International 341 283 72.6 58.1 --------- ---------- --------- ---------Total continuing activities 806 624 200.3 147.6% growth at constant FX 29% 15% 36% 13% Discontinued activities 2 21 0.1 1.2 --------- ---------- --------- ---------Total reported 808 645 200.4 148.8--------------------- --------- ---------- --------- ---------EBIT margin - excluding FARES 22.3% 20.8%- including FARES 24.9% 23.7%----------------------------------- --------- ---------Notes (relevant to all Experian tables):Additional information on Experian is given in Appendix 1EBIT margin is for continuing activities only. For FARES, the 20%-owned realestate information associate, Experian reports its share of profits but notsales. FARES is an integral part of Experian's business. Experian is a global leader in providing information solutions to organisationsand consumers. It helps organisations find, develop and manage profitablecustomer relationships by providing information, decision-making solutions andprocessing services. It has over 50,000 clients in more than 60 countries. Experian is uniquely positioned to benefit from the key drivers of long-termgrowth, including expansion in: • the direct-to-consumer market and online advertising; • consumer credit and card usage; • multi-channel marketing; • fraud prevention; • vertical markets such as automotive and government; and • emerging markets such as Eastern Europe and Asia Pacific. Experian has a clear strategy to capitalise on these opportunities by buildingon its core businesses, selling value-added solutions and growing by targetedacquisitions. Experian has achieved an exceptional increase in sales and profit in the firsthalf, through a combination of organic growth and acquisition. Excludingacquisitions, sales in the first half increased by 12% at constant exchangerates, with strong performances in most of the core businesses. Experiancontinues to improve sales execution, invest in new products, take share innon-traditional verticals and win contracts in many sectors. This has beensupported by continuing investment in the infrastructure, such as developing newdatabase platforms and improving information security. Through Interactive, Experian is well positioned to capitalise on the rapidgrowth in Internet usage by consumers and in spend on online advertising. Notonly does Experian Interactive have strong positions in their markets, but theyare now starting to benefit from sharing Experian's existing data, analyticalskills and access to large clients. The skills in Experian Interactive have beensuccessfully transferred to the UK where there is high growth in the emergingCreditExpert business. Building on a small but fast growing business, Experian continues to develop itspresence in the new markets of Asia Pacific and Eastern Europe, where stronggrowth in consumer spending, consumer credit and Internet adoption is creatingdemand for Experian's products and solutions. Experian recently signed its firstcontract in Japan to sell decision solutions to JCB, the largest card issuer inJapan. During the first half, local management teams have been strengthened inall regions, especially Asia Pacific. In the first half, Experian acquired ten companies costing about £340m in total.These acquisitions complement existing activities and include LowerMyBills.com(online lead generation in the US mortgage sector), the Florida-based creditbureau affiliate, ClassesUSA and Affiliate Fuel (online lead generation in USeducation), Baker Hill (strengthening the business-to-business operation) andVente (strengthening the online market research expertise), as well as FutureFoundation and Prediction Analytics (to complement Experian BusinessStrategies). Acquisitions are a key part of Experian's strategy for growth. All acquisitionsare sponsored and led by the operational management teams who haveresponsibility for integrating and running them once they become part ofExperian. This process often enables Experian to accelerate the rate of growthof acquired companies by sharing expertise across the business. Acquisitionsmade in the last three full financial years are together generating double-digitpost-tax returns, satisfying the Group's required investment hurdle rate. Experian North America 6 months to 30 September 2005 2004 Growth at £m £m constant FX-------------------------------- ------- ------- -------Sales - Continuing activities 465 341 37% - Discontinued activities 1 7 na - Total reported 466 348 35%-------------------------------- ------- ------- -------EBIT- Direct business 107.4 71.4 51%- FARES 20.3 18.1 13% ------- ------- -------- Continuing activities 127.7 89.5 43%- Discontinued activities 0.2 (0.2) na- Total reported 127.9 89.3 44%-------------------------------- ------- ------- -------EBIT margin- excluding FARES 23.1% 20.9%- including FARES 27.5% 26.2%-------------------------------- ------- ------- -------Discontinued activities in 2005 include the two small businesses (NuEdge andReal Estate Solutions) that were sold during the second half of last year,together with a small part of the Florida affiliate that was sold in October2005 Experian North America delivered an excellent performance in the period withstrength across many business units. Although the first half was boosted bycertain factors, Experian North America is executing well on the growthopportunities available to it. Operational reviewSales from continuing activities increased by 37% in dollars in the first half.Corporate acquisitions contributed 19% to sales growth, with the largest beingLowerMyBills.com which was purchased in May 2005. A similar contribution fromacquisitions is currently expected in the second half of the financial year.Excluding corporate acquisitions, sales grew by an exceptional 18% in the firsthalf. Experian North America faces much stronger comparatives in the second half(organic sales growth in H1 2004/5: +7%; H2 2004/5: +14%). Credit Information and Solutions together grew dollar sales by 18% excludingcorporate acquisitions. Of this, 5% came from the FACT Act cost recovery chargewhich annualises from October 2005. Sales benefited from strong demand in the market, especially as credit cardissuers acquired new customers more aggressively, driving strong prescreensales. Experian also continued to win contracts for its value-added solutionssuch as event triggers, with accelerated adoption in the mortgage and banksectors. Fraud and decision solutions also showed strong growth. Experian has now purchased 34 of its affiliate bureaux, the great majority ofthose available, for a total cost of about $300m. The integration of thesebureaux, which continues to go well, initially improves Experian's coststructure, but more importantly enhances its ability to sell value-addedproducts directly to clients in the regions previously controlled by theaffiliates. Marketing Information and Solutions together increased dollar sales by 8%excluding acquisitions, as the benefits of the repositioning of the businesscame through. Experian saw good growth in database management, businessmarketing and in the automotive sector in the first half, although sales to thetraditional catalogue sector remained weak. Email delivery via CheetahMail grewby more than 50% in the first half, reflecting the growth in email as anadvertising and retention tool, the technical strength of the platform acquiredwith this business in March 2004 and the assistance given by Experian's otherbusinesses in selling Cheetahmail's services. About two-thirds of the growth inCheetahMail in the first six months of the year came from existing clients withthe remainder from new clients, many of whom were introduced by other parts ofExperian. Experian Interactive accounted for about one-third of Experian North America'ssales in the first half, reflecting a first time contribution from recentacquisitions, which are all trading to plan, as well as growth of nearly 40% inbusinesses owned for more than a year (Consumer Direct and MetaReward). ConsumerDirect growth was driven by product innovation (Triple Advantage), by newmembers and by strengthened relationships with partners. MetaReward saw stronggrowth in the first half, although this is anticipated to slow significantly inthe second half as it anniversaries some large one-off campaigns last year. Financial reviewIn dollars, sales from continuing activities were $847m, up 37% compared to thesame period last year. EBIT from direct businesses was $196m (2004: $130m),giving an EBIT margin of 23.1%. The margin advanced due to recovery ofFACTA-related set-up costs incurred last year, a favourable mix and operationalleverage from the underlying sales growth. There is, however, continuedinvestment in new products, new platforms and information security. Recentlegislation, such as the FACT Act, has introduced permanent changes toExperian's cost structure which will continue to be recovered throughsurcharges. FARES, the 20%-owned real estate information associate, increased profityear-on-year in dollars ($37m versus $33m) as it reduced costs and benefitedfrom a better mortgage market. Experian International 6 months to 30 September 2005 2004 Growth at £m £m constant FX----------------------------- ------- ------- -------Sales - Continuing activities 341 283 19% - Discontinued activities 1 14 na ------- ------- ------- - Total reported 342 297 15% EBIT- Continuing activities 72.6 58.1 24%- Discontinued activities (0.1) 1.4 na ------- ------- ------- - Total reported 72.5 59.5 22%----------------------------- ------- ------- -------EBIT margin 21.3% 20.5%----------------------------- ------- ------- -------Experian International, which accounts for over 40% of Experian's worldwiderevenue, had another strong half year, continuing its long record ofdouble-digit sales and profit growth. Operational reviewAt constant exchange rates, sales from continuing activities grew by 19% in thefirst half. Of this, 14% came from acquisitions, mainly QAS, a leading supplierof address management software. This business, which was acquired in October2004, is trading ahead of plan, with much success in the public sector inparticular. The contribution to sales from acquisitions in the second half iscurrently expected to be minimal. Excluding acquisitions, sales grew by 5%. Credit Information and Solutions together increased sales by 5% at constantexchange rates excluding acquisitions. The rate of growth in gross lending inthe UK slowed in the first half, resulting in clients shifting their spendingfrom customer acquisition to cross-selling to existing customers and to riskmanagement. Despite this, Experian delivered growth in the UK, driven byvalue-added products and new wins in the telecommunication and public sectors.Underlying double-digit growth continued in the credit operations in Spain,Italy and Eastern Europe. Experian-Scorex, the credit solutions operation, sawcontinuing double-digit underlying growth and is investing in its consultancyservices to help sell more complex solutions to clients. Marketing Information and Solutions together grew sales by 7% at constantexchange rates excluding acquisitions. Although there was some slowdown inmarketing spend by UK financial services clients, this was more than compensatedfor by strong performances from the automotive and insurance verticals and byBusiness Strategies. From a small presence in the UK before acquisition,CheetahMail now manages email marketing campaigns on behalf of more than 100major clients in the UK, especially in the financial services, retail and travelsectors. In euros, sales in Outsourcing grew by 4% excluding acquisitions. Strong growthin business process outsourcing is being driven by increased activity and newcontract wins predominantly in the banking, utilities and telecommunicationssectors. Cheque processing remains a mature market but Experian has won somesignificant contract extensions in this area as well as continuing to driveoperational efficiency. Financial reviewExcluding discontinued activities, sales at Experian International increased by19% at constant exchange rates. EBIT increased by 24%, delivering an 80 basispoint improvement in the EBIT margin. This reflects a favourable mix, tight costcontrol and gaining critical mass in certain European markets. The level ofrevenue investment in building the operating teams in emerging markets willincrease in the second half. BURBERRYGUS has a 65% stake in Burberry Group plc. The following summarises the latter'sinterim announcement released on 15 November 2005. 6 months to 30 September 2005 2004 Change at £m £m constant FX---------------------------- ------- ------- ------- Sales 355 348 3%1 EBIT 75.8 77.6 (2%) EBIT margin 21.4% 22.3%---------------------------- ------- ------- ------- At 30 SeptemberNumber of retail locations 177 151---------------------------- ------- ------- ------- 1 Underlying change also excludes the financial effect of the acquisition ofBurberry's Taiwan-related business In the context of a period marked by strategic investment and transition,Burberry delivered a solid performance in the first half. Sales increased by 3%on an underlying basis and EBIT increased by 2%, before the costs of ProjectAtlas, its infrastructure redesign initiative, which is progressing as planned. Burberry continued to execute on its core retail, wholesale and licensingstrategies. Retail sales increased by 9% on an underlying basis, driven bycontributions from new and refurbished stores. During the half, Burberry openedfour stores, six concessions and completed seven store refurbishments, adding 8%new space on average in the first half. Underlying wholesale revenues declined by 1%, reflecting weak demand in someregions and the ongoing adjustment of the brand's wholesale/retail balance inthe United States. Continental Europe, Asia and emerging markets achieved stronggains. On the basis of Spring/Summer 2006 merchandise orders received to date,Burberry anticipates a moderate underlying decline in wholesale revenues for thesecond half of the year. Licensing revenue in the first half increased by 3% on an underlying basis, or6% excluding the effect of licenses cancelled in Japan as part of the programmeto restrict selectively the distribution of certain products. Fragrance-relatedroyalty growth slowed reflecting strong comparatives resulting from the BurberryBrit for men launch in the previous year. Excluding £3m of costs associated with Project Atlas, EBIT was £78.8m, slightlyup on last year. Gross profit margin was 57.8% against 58.6% in the comparableperiod last year, largely resulting from increased levels of seasonal clearanceactivity. OTHER Discontinued operations 6 months to 30 September Sales EBIT----------------------- -------------------- ------------------- 2005 2004 2005 2004 £m £m £m £m --------- --------- --------- --------------------------------Lewis 20 86 5.2 24.8Wehkamp 111 107 12.8 12.4 --------- --------- --------- ---------Total 131 193 18.0 37.2----------------------- --------- --------- --------- --------- A placing of GUS' remaining 50% stake in Lewis took place successfully in May2005. As announced in October 2005, Wehkamp will be sold for about €390m (£265m)to Industri Kapital, a private equity firm, with completion expected inDecember, subject to European Union regulatory approval. As a result, Lewis andWehkamp have both been treated as discontinued operations in the first half. Net interestAt £14m, net interest costs were £3m higher than last year. This principallyreflects higher net debt which arose largely as a result of acquisition spend,together with higher US dollar borrowing costs. This was partially offset by anincreased net pension scheme credit due mainly to the effect of the £76m specialpension contributions made in March 2005. Interest expense in the second half is expected to be ahead of the first half,mainly because of a full six-month impact of increased interest rates and theremoval of the Burberry interest income, offset to some extent by the interestbenefit arising on the proceeds of the sales of Lewis and Wehkamp. Amortisation of acquisition intangiblesIFRS requires that, on acquisition, specific intangible assets are identifiedand recognised and then amortised over their useful economic lives. Theseinclude items such as brand names and customer lists, to which value is firstattributed at the time of acquisition. In the first half of the year, thisamortisation amounted to £9m which relates to Experian acquisitions undertakensince the Transition Date to IFRS of 1 April 2004. Exceptional items 6 months to 30 September 2005 2004 £m £m---------------------------------------- ------- -------Profit on disposal of Lewis shares 36 24Profit on disposal of Burberry shares - 1Loss on sale of other businesses - (4) ------- -------Total 36 21---------------------------------------- ------- -------The only costs treated as exceptional items are those associated with thedisposal or closure of businesses. All other restructuring costs have beencharged against EBIT in the divisions in which they were incurred. Theexceptional item in the first half was a profit of £36m recorded on the placingof GUS' remaining 50% stake in Lewis in May 2005. A profit of £24m was recordedin the first half of last year on the sale of shares in Lewis via the InitialPublic Offering. GUS expects to realise a gain, after costs, on the disposal of Wehkamp of about£25m on the transaction which will be taken in the second half of the currentfinancial year. Fair value remeasurementsA small proportion of the Group's derivatives do not qualify for hedgeaccounting under IFRS. Gains or losses on these arising from market movementsare now charged or credited to the income statement. In the six months to 30September 2005, this amounted to a charge of £1m (with no comparable credit orcharge as the Group had previously elected to defer implementation of IAS 39). APPENDIX1. Additional unaudited information on Experian Reported sales for Experian North America6 months to 30 September 2005 2004 Underlying $m $m growth1-------------------------------- -------- ------- -------Credit- Information 308 262 18%- Solutions 76 62 15% ------- ------- -------Total 384 324 18% Marketing- Information 83 76 7%- Solutions 107 88 9% ------- ------- -------Total 190 164 8% Interactive 273 130 39% ------- ------- -------Continuing activities 847 618 18%Discontinued activities 2 13 ------- ------- -------Total reported sales 849 631-------------------------------- -------- ------- -------1 Excluding corporate acquisitions Reported sales for Experian International 6 months to 30 September 2005 2004 Underlying £m £m growth1------------------------------- ------- ------- -------Credit- Information 83 75 7%- Solutions 100 95 4% ------- ------- -------Total 183 170 5% Marketing- Information 40 33 5%- Solutions 52 17 10% ------- ------- -------Total 92 50 7% Outsourcing 68 65 4%Eliminations (2) (2) ------- ------- -------Continuing activities 341 283 5%Discontinued activities 1 14 ------- ------- -------Total reported sales 342 297------------------------------- ------- ------- -------1 Excluding acquisitions and at constant exchange rates 2. Unaudited reconciliation of Benchmark PBT to interim income statement Six months to 30 September 2005 2004 £m £m------------------------------------------------- ------- -------Benchmark PBT 376.4 406.9 Include: amortisation of acquisition intangibles (9.4) (0.1)Include: exceptional items relating to continuing activities: - Net profit on disposal of shares in Burberry - 1.4 - Loss on sale of other businesses - (5.7) ------ ------ - (4.3) Include: financing fair value remeasurements (1.2) - Include: tax expense on share of profits of associates - (0.8) Exclude: EBIT of discontinued operations (18.0) (37.2)Exclude: interest expense of discontinued operations 0.1 (0.2) ------- -------Reported profit before tax1 347.9 364.3 Group tax expense1 (98.6) (102.2) ------- -------Profit after tax1 249.3 262.1 Include: profit for the period from discontinuedoperations: - EBIT of discontinued operations 18.0 37.2 - Interest expense of discontinued operations (0.1) 0.2 - Exceptional items relating to discontinuedoperations: - Net profit on disposal of shares in Lewis 35.7 23.6 - Loss on sale of other businesses - 1.8 - Tax expense on discontinued operations (5.4) (9.4) ------ ------ 48.2 53.4 ------- -------Profit for the financial period 297.5 315.5Equity minority interests (21.0) (18.6) ------- -------Profit attributable to equity shareholders 276.5 296.9------------------------------------------------ ------- -------1 As per Group income statement, for continuing operations only 3. Unaudited interim results IFRS restatement as released on 14 June 2005 Adjustments to Benchmark PBT by business for H1 2004/5 Six months to UK GAAP Share-based Pensions Other IFRS30 Sept 2004 payments adjustments1£m -------------- ------- ------- ------- ------- -------Argos 85.7 (1.0) - 7.0 91.7Homebase 76.3 (0.7) - (0.2) 75.4ARG FS 0.4 - - - 0.4 ------- ------- ------- ------- ------- Total ARG 162.4 (1.7) - 6.8 167.5Experian 90.7 (1.4) - - 89.3North AmericaInternational 62.0 (1.9) (1.0) 0.4 59.5 ------- ------- ------- ------- -------Total Experian 152.7 (3.3) (1.0) 0.4 148.8Burberry 78.8 (1.3) (0.1) 0.2 77.6Central activities (10.8) (2.7) 0.3 (0.3) (13.5) ------- ------- ------- ------- -------Continuingoperations 383.1 (9.0) (0.8) 7.1 380.4 DiscontinuedoperationsWehkamp 10.3 - 0.9 1.2 12.4Lewis 24.8 - - - 24.8 ------- ------- ------- ------- -------Total 418.2 (9.0) 0.1 8.3 417.6 Net interest (12.4) - 1.0 0.7 (10.7) ------- ------- ------- ------- -------Benchmark PBT 405.8 (9.0) 1.1 9.0 406.9-------------- ------- ------- ------- ------- -------1 These include catalogue costs, lease incentives and other adjustments that arenot individually significant 4. Unaudited GUS pro forma results adjusting for Burberry, Wehkamp and Lewis Six months to 30 September 2005 £m As reported Exclude: Pro forma --------- --------- -------- Burberry Wehkamp Lewis-------------------- ------- ------- ------- ------- -------Continuing operations 371.9 (75.8) - - 296.1Discontinued operations 18.0 - (12.8) (5.2) -Net interest (13.5) (2.1) -1 0.21 (15.4) Pro forma interest on disposal proceeds - - 3.8 4.1 7.9 ------- ------- ------- ------- -------Benchmark PBT 376.4 (77.9) (9.0) (0.9) 288.6Amortisation ofacquisition intangibles (9.4) - - - (9.4)Exceptional items 35.7 - - (35.7) -Fair value remeasurements (1.2) (0.2) - - (1.4) ------- ------- ------- ------- ------- 401.5 (78.1) (9.0) (36.6) 277.8 Taxation (104.0) 25.0 3.9 1.4 (73.7)Tax on pro formainterest on disposal proceeds - - (1.2) (1.2) (2.4)Equity minority (21.0) 18.9 - 1.7 (0.4)interests ------- ------- ------- ------- -------Profit attributableto equity shareholders 276.5 (34.2) (6.3) (34.7) 201.3 Benchmark EPS 25.5p 25.0p Reported basic EPS 28.0p 23.7p Weighted averagenumber of Ordinary 986.5 8483shares (m) Net debt (1,768) (85) 2552 - (1,598)Net assets 3,376 (462) (222) - 2,692-------------------- ------- ------- ------- ------- ------- 12 months to 31 March 2005 £m As reported Exclude: Pro forma --------- --------- -------- Burberry Wehkamp Lewis-------------------- ------- ------- ------- ------- -------Continuing operations 852.0 (161.3) - - 690.7Discontinued operations 77.7 - (22.5) (55.2) -Net interest (23.7) (4.9) -1 1.21 (27.4) Pro forma interest ondisposal proceeds - - 7.7 13.6 21.3 ------- ------- ------- ------- -------Benchmark PBT 906.0 (166.2) (14.8) (40.4) 684.6Amortisation of acquisitionintangibles (4.1) - - - (4.1)Exceptional items (3.5) (3.2) - (23.6) (30.3)Fair value remeasurements - - - - - ------- ------- ------- ------- ------- 898.4 (169.4) (14.8) (64.0) 650.2Taxation (250.2) 53.4 3.6 16.1 (177.1)Tax on pro forma intereston disposal proceeds - - (2.3) (4.1) (6.4)Equity minority interests (49.4) 38.8 - 10.1 (0.5) ------- ------- ------- ------- -------Profit attributable toequity shareholders 598.8 (77.2) (13.5) (41.9) 466.2 Benchmark EPS 61.5p 60.2pReported basic EPS 59.9p 55.0pWeighted average number ofOrdinary shares (m) 1000.1 8483-------------------- ------- ------- ------- ------- -------1 Before adjusting for interest income on disposal proceeds2 Represents expected proceeds net of costs3 Current shares in issue (excluding own shares held in Treasury and in theESOP Trust) multiplied by the illustrative consolidation ratio of 85.9% GUS plcUNAUDITED GROUP INCOME STATEMENTfor the six months ended 30 September 2005 Six months to Six months to Year to 30.9.05 30.9.04 31.3.05Continuing operations: Notes £m £m £m-------------------------- ------ ---------- --------- ------Sales 4 3,775 3,556 7,378 Cost of sales (2,053) (2,010) (4,169)-------------------------- ------ ---------- --------- ------Gross profit 1,722 1,546 3,209 Net operating expenses (1,381) (1,192) (2,407)-------------------------- ------ ---------- --------- ------Operating profit 341 354 802 ---------- --------- ------Interest income 16 19 35Interest expense (30) (30) (58)Financing fair valueremeasurements (1) - - ---------- --------- ------Net financing costs (15) (11) (23)Share of post tax profits of associates 22 22 41-------------------------- ------ ---------- --------- ------Profit before tax 4 348 365 820 Group tax expense ---------- --------- ------- UK (92) (88) (195)- Overseas (7) (14) (34) ---------- --------- ------ (99) (102) (229)-------------------------- ------ ---------- --------- ------Profit after tax 249 263 591 Profit for the period fromdiscontinued operations 6 49 53 57-------------------------- ------ ---------- --------- ------Profit for the financialperiod 298 316 648-------------------------- ------ ---------- --------- ------Attributable toEquity shareholders in the parent company 277 297 599Minority interests 21 19 49-------------------------- ------ ---------- --------- ------Profit for the financialperiod 298 316 648-------------------------- ------ ---------- --------- ------Dividend for the period 10 83 90 293-------------------------- ------ ---------- --------- ------Earnings per share 9Continuing operations- Basic 23.1p 24.4p 54.2p- Diluted 22.8p 24.1p 53.5p Continuing and discontinuedoperations- Basic 28.0p 29.7p 59.9p- Diluted 27.6p 29.3p 59.1p Dividend per share 10 9.6p 9.0p 29.5p-------------------------- ------ ---------- --------- ------ Non-GAAP measures Reconciliation of profit before tax to Benchmark PBT Profit before tax 4 348 365 820exclude: amortisation of acquisition intangibles 5 9 - 4exclude: exceptional items relating to continuing operations 5 - 4 4exclude: financing fair value remeasurements 5 1 - -exclude: tax expense on continuing operations' share of profit of associates 4 - 1 1include: EBIT of discontinued operations 6 18 37 78include: interest expense of discontinued operations 6 - - (1)-------------------------- ------ ---------- --------- ------Benchmark PBT 4 376 407 906-------------------------- ------ ---------- --------- ------ Benchmark earnings per share 9- Basic 25.5p 28.0p 61.5p- Diluted 25.1p 27.6p 60.7p-------------------------- ------ ---------- --------- ------ GUS plcUNAUDITED GROUP BALANCE SHEETat 30 September 2005 30.9.05 30.9.04 31.3.05 £m £m £m----------------------------------- --------- -------- --------ASSETS Non-current assetsGoodwill 2,822 2,367 2,477Other intangible assets 425 261 312Property, plant and equipment 1,117 989 1,070Investment in associates 127 109 110Other investments 4 12 8Deferred tax assets 278 284 279Trade and other receivables 86 488 454----------------------------------- --------- -------- -------- 4,859 4,510 4,710Current assetsInventories 1,015 950 1,017Trade and other receivables 1,130 1,229 1,138Other financial assets andinvestments 69 31 31Cash and cash equivalents 309 469 347----------------------------------- --------- -------- -------- 2,523 2,679 2,533Assets of discontinuedoperations classified as held for sale 281 - ------------------------------------ --------- -------- --------Total assets 7,663 7,189 7,243----------------------------------- --------- -------- --------LIABILITIES Non-current liabilitiesTrade and other payables (135) (118) (97)Loans and borrowings (1,653) (1,318) (1,676)Deferred tax liabilities (190) (157) (182)Retirement benefit obligations (102) (199) (112)----------------------------------- --------- -------- -------- (2,080) (1,792) (2,067)Current liabilitiesTrade and other payables (1,624) (1,606) (1,597)Loans and borrowings (455) (440) (129)Other financial liabilities (9) - -Current tax liabilities (60) (82) (66)----------------------------------- --------- -------- -------- (2,148) (2,128) (1,792)Liabilities of discontinuedoperations classified as held forsale (59) - ------------------------------------ --------- -------- --------Total liabilities (4,287) (3,920) (3,859)----------------------------------- --------- -------- --------Net assets 3,376 3,269 3,384----------------------------------- --------- -------- --------EQUITY Capital and reservesCalled up share capital 255 254 254Other reserves includingretained earnings 2,954 2,758 2,874----------------------------------- --------- -------- --------Total equity shareholders' funds 3,209 3,012 3,128Equity minority interests 167 257 256----------------------------------- --------- -------- --------Total equity 3,376 3,269 3,384----------------------------------- --------- -------- -------- GUS plcUNAUDITED GROUP CASH FLOW STATEMENTfor the six months ended 30 September 2005 Six months to Six months to Year to 30.9.05 30.9.04 31.3.05 £m £m £m-------------------------------------- --------- --------- ---------Continuing operationsCash flows from operating activitiesOperating profit 341 354 802Less: profit on disposal of shares inBurberry (Note 5) - (1) (3)Less: loss on sale of other businesses(Note 5) - 5 7Depreciation and amortisation 152 126 264Credit in respect of share incentiveschemes 12 19 47Change in working capital (60) 7 (189)Interest paid (22) (12) (61)Interest received 12 11 31Dividends received from associates 17 14 26Tax paid (54) (108) (219)-------------------------------------- --------- --------- ---------Net cash inflow from operatingactivities 398 415 705-------------------------------------- --------- --------- ---------Continuing operationsCash flows from investing activitiesPurchase of property, plant andequipment (164) (130) (300)Sale of property, plant andequipment 5 10 21Purchase of intangible assets (50) (41) (110)Sale of intangible assets 1 - 5Purchase of shares in Burberry - - (8)Buy-back of shares in Burberry (21) - (22)Sale of shares in Burberry 2 - 2Purchase of fixed asset investments (7) (14) (5)Acquisition of subsidiaries, net of cash acquired (388) (29) (176)Disposal of subsidiaries 127 5 106-------------------------------------- --------- --------- ---------Net cash flows used in investingactivities (495) (199) (487)-------------------------------------- --------- --------- ---------Continuing operationsCash flows from financing activitiesPurchase of own shares (33) (78) (222)Issue of Ordinary shares 16 28 35Sale of own shares - - 16New borrowings 226 - 473Repayment of borrowings - (33) (355)Capital element of finance leaserental payments (2) (3) (5)Equity dividends paid (202) (191) (281)Dividends paid to minority interests (7) (5) (8)-------------------------------------- --------- --------- ---------Net cash flows used in financingactivities (2) (282) (347)-------------------------------------- --------- --------- ---------Net decrease in cash and cashequivalents - continuing operations (99) (66) (129)Net increase/(decrease) in cashand cash equivalents - discontinuedoperations 11 (46) (41)-------------------------------------- --------- --------- ---------Net decrease in cash and cashequivalents (88) (112) (170)-------------------------------------- --------- --------- ---------Movement in cash and cashequivalents from continuingoperationsCash and cash equivalents at 1 April -continuing operations 254 383 383Net decrease in cash and cashequivalents (99) (66) (129)-------------------------------------- --------- --------- ---------Cash and cash equivalents at end of period - continuing operations 155 317 254-------------------------------------- --------- --------- ---------Reconciliation of net increase incash and cash equivalents tomovement in net debtNet debt at 1 April - as reported (1,427) (1,200) (1,200)Cash and cash equivalents at 1 April -discontinued operations (3) (44) (44)Other financial assets at 1 April -discontinued operations (31) (31) (31)-------------------------------------- --------- --------- ---------Net debt at 1 April - continuingoperations (1,461) (1,275) (1,275)Net decrease in cash and cashequivalents (99) (66) (129)(Increase)/decrease in debt (226) 33 (113)Exchange and other movements 2 19 56-------------------------------------- --------- --------- ---------Net debt at end of period - continuingoperations (1,784) (1,289) (1,461)-------------------------------------- --------- --------- --------- GUS plcUNAUDITED GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the six months ended 30 September 2005 Six months to Six months to Year to 30.9.05 30.9.04 31.3.05 £m £m £m-------------------------------------- --------- --------- ---------Net income/(expense) recogniseddirectly in equity:Cash flow hedges 4 - -Net investment hedge 5 - -Fair value (losses)/gains in the period (3) - 6Actuarial losses in respect of definedbenefit pension schemes (8) - (5)Currency translation differences 3 10 3-------------------------------------- --------- --------- ---------Net income recognised directly inequity for the period 1 10 4Cumulative adjustment for theimplementation of IAS 39 (Note 11) 11 - --------------------------------------- --------- --------- ---------Net income recognised directly in equity 12 10 4Profit for the financial period 298 316 648-------------------------------------- --------- --------- ---------Total recognised income for theperiod 310 326 652-------------------------------------- --------- --------- ---------Attributable to: Equity shareholdersin the parent company 289 303 603Minority interests 21 23 49-------------------------------------- --------- --------- ---------Total recognised income for theperiod 310 326 652-------------------------------------- --------- --------- --------- UNAUDITED GROUP RECONCILIATION OF MOVEMENTS IN EQUITYfor the six months ended 30 September 2005 Six months to Six months to Year to 30.9.05 30.9.04 31.3.05 £m £m £m-------------------------------------- --------- --------- ---------Total equity at 1 April 3,384 3,089 3,089Cumulative adjustment for theimplementation of IAS 39 (Note 11) 11 - --------------------------------------- --------- --------- ---------Total equity at 1 April, as restated for the adoption of IAS 39 3,395 3,089 3,089Profit for the financial period 298 316 648Net income recognised directly in equity for the period 1 10 4Employees share option scheme:- value of employee services 12 10 35- proceeds from shares issued 16 28 34(Decrease)/increase in minorityinterests arising due to corporatetransactions (108) 85 62Shares cancelled on purchase - (30) (30)Purchase of own shares (33) (48) (176)Equity dividends paid during theperiod (202) (191) (281)Dividends paid to minority shareholders (7) (5) (11)Recycled cumulative exchange lossin respect of divestment 3 3 3Tax credit in respect of items takendirectly to equity 1 2 7-------------------------------------- --------- --------- ---------Total equity at end of period 3,376 3,269 3,384-------------------------------------- --------- --------- ---------Attributable to:Equity shareholders in the parentcompany 3,209 3,012 3,128Minority interests 167 257 256-------------------------------------- --------- --------- ---------Total equity at end of period 3,376 3,269 3,384-------------------------------------- --------- --------- --------- GUS plcUNAUDITED NOTES TO THE INTERIM FINANCIAL STATEMENTSfor the six months ended 30 September 2005 1. Basis of preparation For the year ending 31 March 2006, the Group will prepare its financialstatements under International Financial Reporting Standards ("IFRS") adoptedfor use in the European Union. These will be those Standards, subsequentamendments, future Standards and related interpretations issued and adopted bythe International Accounting Standards Board ("IASB") that have been endorsed bythe European Commission. This interim report has been prepared in accordance with the Listing Rules ofthe Financial Services Authority, and with IFRS compliant accounting policiesthat will be followed in preparing the Group's financial statements for the yearending 31 March 2006, which were published in full on 14 June 2005 and areavailable on the Group's website, at www.gusplc.com/gus/investors/ifrs. Indeveloping its accounting policies, the Group has anticipated that theamendments to IAS 19 "Employee Benefits - Actuarial Gains and Losses, GroupPlans and Disclosure" and IAS 39 "Financial Instruments: Recognition andMeasurement - The Fair Value Option" will be endorsed for use in the EU. Thisendorsement process is ongoing, such that applicable IFRS, the Group'saccounting policies and the presentation of its results are therefore subject tochange. As permitted by IFRS 1 "First-time Adoption of International Financial ReportingStandards", the Group elected to defer implementation of IAS 32 "FinancialInstruments: Disclosure and Presentation" and IAS 39 "Financial Instruments:Recognition and Measurement" until the year ending 31 March 2006. The adjustmentrequired as at 1 April 2005 is set out in note 11 below. The interim financial statements comprise the results for the six months ended30 September 2005 and 30 September 2004 and the year ended 31 March 2005. Theresults for the six months ended 30 September 2004 have been extracted from theGroup's interim report for that period, and the results for the year ended 31March 2005 have been extracted from the Group's statutory financial statementsfor that year, both having been adjusted for the effects of changes inaccounting policy on transition to IFRS. These adjustments, which are set out indetail on the Group's website, are summarised on pages 91 to 94 of the Group'sstatutory financial statements for the year ended 31 March 2005, and have beenadjusted to reflect the reclassification of Wehkamp as a discontinued operation. The financial information shown for the year ended 31 March 2005 does notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The Group's statutory financial statements prepared underUK GAAP for that period have been delivered to the Registrar of Companies. Thereport of the auditors on those financial statements was unqualified and did notcontain a statement under either section 237(2) or (3) of the Companies Act1985. The preparation of interim financial statements requires management to makeestimates and assumptions that affect the reported amount of revenues, expenses,assets and liabilities and the disclosure of contingent liabilities. If in thefuture such estimates and assumptions, which are based on management's bestjudgment at the date of the interim financial statements, deviate from actualcircumstances, the original estimates and assumptions will be modified asappropriate in the period in which the circumstances change. The interim financial statements are unaudited but have been reviewed by theauditors. Their report is set out on page 33. 2. Taxation The effective rate of tax of 27.7% (2005: 26.5%) is based on the estimated taxcharge for the full year on Benchmark PBT. Benchmark PBT is defined as profitbefore amortisation of acquisition intangibles, exceptional items, financingfair value remeasurements and taxation. It includes the Group's share ofassociates' pre-tax profit and the profits or losses of discontinued operationsup to the date of disposal or closure. 3. Foreign currency Average Closing --------------- --------------- Six months to Year to 30.9.05 30.9.04 31.3.05 30.9.05 30.9.04 31.3.05 ------- ------- ------- ------- ------- -------The principal exchange ratesused were as follows:US dollar 1.82 1.81 1.85 1.76 1.80 1.88Euro 1.47 1.49 1.47 1.47 1.46 1.45South African rand 11.80 11.72 11.47 n/a 11.59 11.76----------------------------- ------- ------- ------- ------- ------- ------- Assets and liabilities of overseas undertakings are translated into sterling atthe rates of exchange ruling at the balance sheet date and the income statementis translated into sterling at average rates of exchange. The average rate used in the current period for the South African rand is thatfor the period to 19 May 2005, the date on which the Group's remaining interestin Lewis Group was sold. GUS plcUNAUDITED NOTES TO THE INTERIM FINANCIAL STATEMENTS (CONTINUED)for the six months ended 30 September 2005 4. Segmental information (continued) Six months ended 30 September 2005 Continuing Operations ---------------------------- Financial ARG Discontinued Argos Homebase Services Total Experian Burberry Other Total Operations Total £m £m £m £m £m £m £m £m £m £m---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------SalesSales toexternalcustomers 1,609 966 43 2,618 802 355 - 3,775 131 3,906Inter-segmentsales - - - - 6 - (6) - - ----------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Total sales 1,609 966 43 2,618 808 355 (6) 3,775 131 3,906---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Profit EBIT* 57 48 4 109 200 76 (13) 372 18 390Net interest - - - - - - (14) (14) - (14)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Benchmark PBT** 57 48 4 109 200 76 (27) 358 18 376---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Exceptionalitems - - - - - - - - 36 36Amortisationof acquisitionintangibles - - - - (9) - - (9) - (9)Financing fairvalueremeasurements - - - - - - (1) (1) - (1)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Exceptionaland otheradjustmentitems (note 5) - - - - (9) - (1) (10) 36 26---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Tax expense on share of profit of associates - - - - - - - - - ----------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Profit beforetax 57 48 4 109 191 76 (28) 348 54 402---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Group taxexpense (99) (5) (104)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Profit for thefinancialperiod 249 49 298---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ ------- * EBIT is defined as profit before amortisation of acquisition intangibles,exceptional items, net financing costs and taxation and includes the Group'sshare of pre-tax profits of associates. ** The Group regards "Benchmark PBT" as the best measure of performance and assuch it is disclosed above as the segment result. Benchmark PBT is defined asprofit before amortisation of acquisition intangibles, exceptional items,financing fair value remeasurements and taxation. It includes the Group's shareof associates' pre-tax profit and the profits or losses of discontinuedoperations up to the date of disposal or closure. Six months ended 30 September 2004 Continuing Operations ---------------------------- Financial ARG Discontinued Argos Homebase Services Total Experian Burberry Other Total Operations Total £m £m £m £m £m £m £m £m £m £m---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------SalesSales toexternalcustomers 1,552 981 35 2,568 640 348 - 3,556 193 3,749Inter-segmentsales - - - - 5 - (5) - - ----------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Total sales 1,552 981 35 2,568 645 348 (5) 3,556 193 3,749---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Profit EBIT* 92 75 - 167 149 78 (13) 381 37 418Net interest - - - - - - (11) (11) - (11)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Benchmark PBT** 92 75 - 167 149 78 (24) 370 37 407---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Exceptionalitems - - - - (5) 1 - (4) 25 21Amortisation of acquisition intangibles - - - - - - - - - ----------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Exceptionaland otheradjustmentitems (note 5) - - - - (5) 1 - (4) 25 21---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Tax expense onshare ofprofit ofassociates - - - - (1) - - (1) - (1)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Profit beforetax 92 75 - 167 143 79 (24) 365 62 427---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Group taxexpense (102) (9) (111)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Profit for thefinancialperiod 263 53 316---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ ------- * EBIT is defined as profit before amortisation of acquisition intangibles,exceptional items, net financing costs and taxation and includes the Group'sshare of pre-tax profits of associates. ** The Group regards "Benchmark PBT" as the best measure of performance and assuch it is disclosed above as the segment result. Benchmark PBT is defined asprofit before amortisation of acquisition intangibles, exceptional items,financing fair value remeasurements and taxation. It includes the Group's shareof associates' pre-tax profit and the profits or losses of discontinuedoperations up to the date of disposal or closure. GUS plcUNAUDITED NOTES TO THE INTERIM FINANCIAL STATEMENTS (CONTINUED)for the six months ended 30 September 2005 4. Segmental information Year ended 31 March 2005 Continuing Operations ---------------------------- Financial ARG Discontinued Argos Homebase Services Total Experian Burberry Other Total Operations Total £m £m £m £m £m £m £m £m £m £m---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------SalesSales toexternalcustomers 3,652 1,580 81 5,313 1,350 715 - 7,378 409 7,787Inter-segmentsales - - - - 12 - (12) - - ----------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Total sales 3,652 1,580 81 5,313 1,362 715 (12) 7,378 409 7,787---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Profit EBIT* 305 90 - 395 317 161 (21) 852 78 930Net interest - - - - - - (23) (23) (1) (24)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Benchmark PBT** 305 90 - 395 317 161 (44) 829 77 906---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Exceptionalitems - - - - (7) 3 - (4) - (4)Amortisationof acquisitionintangibles - - - - (4) - - (4) - (4)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Exceptionaland otheradjustmentitems (note 5) - - - - (11) 3 - (8) - (8)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Tax expense onshare ofprofit ofassociates - - - - (1) - - (1) - (1)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Profit beforetax 305 90 - 395 305 164 (44) 820 77 897---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Group taxexpense (229) (20) (249)---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ -------Profit for thefinancialperiod 591 57 648---------------- ----- ------ ------ ----- ------ ------ ----- ----- ------ ------- * EBIT is defined as profit before amortisation of acquisition intangibles,exceptional items, net financing costs and taxation and includes the Group'sshare of pre-tax profits of associates. ** The Group regards "Benchmark PBT" as the best measure of performance and assuch it is disclosed above as the segment result. Benchmark PBT is defined asprofit before amortisation of acquisition intangibles, exceptional items,financing fair value remeasurements and taxation. It includes the Group's shareof associates' pre-tax profit and the profits or losses of discontinuedoperations up to the date of disposal or closure. 5. Exceptional and other adjustment items Six months to Year to -------------------- 30.9.05 30.9.04 31.3.05 £m £m £m---------------------------------- -------- ------- --------Exceptional itemsContinuing operations:Disposal of shares in Burberry - 1 3Loss on sale of other businesses - (5) (7)---------------------------------- -------- ------- -------- - (4) (4)---------------------------------- -------- ------- --------Discontinued operations (note 6):Profit on disposal of Lewis Group 36 24 24Profit/(loss) on disposal of other discontinued operations - 1 (24)---------------------------------- -------- ------- -------- 36 25 ----------------------------------- -------- ------- --------Total exceptional items 36 21 (4)---------------------------------- -------- ------- --------Other adjustment itemsContinuing operations:Amortisation of acquisition intangibles (9) - (4)Financing fair value remeasurements (1) - ----------------------------------- -------- ------- --------Total other adjustment items (10) - (4)---------------------------------- -------- ------- --------Total exceptional and other adjustment items 26 21 (8)---------------------------------- -------- ------- -------- The only costs treated as exceptional items are those associated with thedisposal or closure of businesses. All other restructuring costs are chargedagainst EBIT in the divisions in which they are incurred. The loss on sale of other businesses in the prior period was principally inrespect of the sales by Experian of two small non-core businesses. The income inrespect of Burberry shares in the prior period arose from the exercise or lapseof awards under executive share schemes. The profit on the disposal of Lewis Group relates to the placing of GUS'remaining 50% stake in May 2005. The profit in the prior period relates to theInitial Public Offering of Lewis Group in September 2004. IFRS requires that, on acquisition, specific intangible assets are identifiedand recognised separately from goodwill and then amortised over their usefuleconomic lives. These include items such as brand names and customer lists, towhich value is first attributed at the time of acquisition. As permitted byIFRS, acquisitions prior to 1 April 2004 have not been restated. As it did withgoodwill under UK GAAP, the Group has excluded amortisation of these acquisitionintangibles from its definition of Benchmark PBT because such a charge is basedon uncertain judgments about the value and economic life of such items. A small proportion of the Group's derivatives do not qualify for hedgeaccounting under IFRS. Gains or losses on these derivatives arising from marketmovements are credited or charged to the income statement. GUS plcUNAUDITED NOTES TO THE INTERIM FINANCIAL STATEMENTS (CONTINUED)for the six months ended 30 September 2005 6. Discontinued operations The results for discontinued operations were as follows: Six months to Year to ------------------ 30.9.05 30.9.04 31.3.05 £m £m £m---------------------------------- -------- ------- --------SalesLewis Group 20 86 187Wehkamp 111 107 222---------------------------------- -------- ------- -------- 131 193 409---------------------------------- -------- ------- --------EBITLewis Group 5 25 55Wehkamp 13 12 23---------------------------------- -------- ------- -------- 18 37 78Exceptional item - profit on Initial PublicOffering of Lewis Group - 24 24Net interest - - (1)---------------------------------- -------- ------- --------Pre-tax profit of discontinued operations 18 61 101Tax charge in respect of pre-tax profit (5) (9) (20)---------------------------------- -------- ------- --------Post-tax profit of discontinued operations 13 52 81---------------------------------- -------- ------- --------Profit/(loss) on disposal of discontinued operationsLewis Group 36 - -Home shopping and Reality businesses - 1 (24)---------------------------------- -------- ------- -------- 36 1 (24)Tax charge in respect of profit/(loss) on disposal - - - ---------------------------------- -------- ------- --------Post-tax profit/(loss) on disposal 36 1 (24)---------------------------------- -------- ------- --------Profit for the period from discontinued operations 49 53 57---------------------------------- -------- ------- -------- On 19 May 2005, the Group announced the sale of its remaining interest in LewisGroup Limited. On 28 October 2005, the Group announced an agreement to sellWehkamp, the leading home shopping brand in the Netherlands. As a result, theseoperations have been reclassified as discontinued. The disposal of the home shopping and Reality businesses took place in May 2003,and provision for the loss on disposal was made in the financial statements forthe year ended 31 March 2003, with a further charge relating to professionalfees and other costs associated with the transaction being made the followingyear. Following agreement of the completion statements and the settlement ofcertain warranty claims, a further charge was made in the year ended 31 March2005 reflecting full and final settlement of all claims that have arisen fromthe disposal of these businesses. The cash flows attributable to discontinued operations comprise: Six months to Year to ------------------ 30.9.05 30.9.04 31.3.05 £m £m £m---------------------------------- -------- ------- --------From operating activities 13 (42) (32)From investing activities (2) (4) (6)From financing activities - - (3)---------------------------------- -------- ------- --------Net increase in cash and cash equivalents in discontinued operations 11 (46) (41)---------------------------------- -------- ------- -------- GUS plcUNAUDITED NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued)for the six months ended 30 September 2005 7. Business combinations During the six months ended 30 September 2005, the Group has made severalacquisitions, none of which are considered individually material to the Group.Most of these were made by Experian in North America, includingLowerMyBills.com, the Florida-based affiliate credit bureau, ClassesUSA, BakerHill and Vente. In the UK, Argos acquired 33 former Index stores and the Indexbrand from Littlewoods Limited. In aggregate, it is estimated that these acquired businesses contributedrevenues of £64m and profit after tax of £12m to the Group for the periods fromtheir respective acquisition dates to 30 September 2005. Due to the acquiredentities using different accounting policies prior to acquisition and previouslyreporting to different period ends it has not been possible to estimate theimpact on Group turnover or results, as if those acquisitions had been completedon 1 April 2005. Details of the net assets acquired and the provisional goodwill are as follows: Book value Fair value £m £m-------------------------------------- -------- --------Intangible assets 1 96Tangible assets 4 4Deferred tax assets 1 1Inventories 1 1Trade and other receivables 20 20Current tax recoverable 16 16Cash and cash equivalents 6 6Trade and other payables (26) (26)-------------------------------------- -------- -------- 23 118 --------Goodwill 322-------------------------------------- -------- -------- 440-------------------------------------- -------- --------Satisfied by:Cash 388Acquisition expenses 6Deferred consideration 46-------------------------------------- -------- -------- 440-------------------------------------- -------- -------- The fair values set out above contain certain provisional amounts which will befinalised no later than one year after the date of acquisition. Goodwillrepresents the synergies, assembled workforce and future growth potential of thebusinesses acquired. 8. Analysis of Group net debt 30.9.05 30.9.04 31.3.05 £m £m £m------------------------------------- -------- -------- --------Cash and cash equivalents 171 317 259Current asset investments - 31 31Other financial assets 31 - -Debt due within one year (312) (284) (35)Finance leases (5) (9) (8)Debt due after more than one year (1,653) (1,313) (1,674)------------------------------------- -------- -------- --------Net debt at end of period (1,768) (1,258) (1,427)------------------------------------- -------- -------- --------Continuing operations (1,784) (1,289) (1,461)Discontinued operations 16 31 34------------------------------------- -------- -------- --------Net debt at end of period (1,768) (1,258) (1,427)------------------------------------- -------- -------- -------- Net debt at 30 September 2005 is stated after deducting £31m in respect of thefair value of the interest rate swaps related to the Group's borrowings. GUS plcUNAUDITED NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued)for the six months ended 30 September 2005 9. Basic and diluted earnings per share The calculation of basic earnings per share for continuing and discontinuedoperations is based on profit attributable to equity shareholders of the Companydivided by the weighted average number of Ordinary shares in issue during theperiod (excluding own shares held in Treasury and in the ESOP trust).Benchmark earnings per share represents Benchmark PBT (as defined in note 4above) less attributable taxation (calculated at the Group's effective taxrate), divided by the weighted average number of shares in issue, and isdisclosed to indicate the underlying profitability of the Group. The calculation of diluted earnings per share reflects the potential dilutiveeffect of employee share incentive schemes. Six months to Year to -------------- 30.9.05 30.9.04 31.3.05Basic earnings per share: pence pence pence---------------------------------------------- -------- -------- --------Continuing operations 23.1 24.4 54.2Discontinued operations 4.9 5.3 5.7---------------------------------------------- -------- -------- --------Continuing and discontinued operations 28.0 29.7 59.9Effect of exceptional and other adjustment items(note 5) (2.6) (2.1) 0.8Adjustment between effective and actual rates oftaxation 0.1 0.4 0.8---------------------------------------------- -------- -------- --------Benchmark 25.5 28.0 61.5---------------------------------------------- -------- -------- --------Diluted earnings per share:---------------------------------------------- -------- -------- --------Continuing operations 22.8 24.1 53.5Discontinued operations 4.8 5.2 5.6---------------------------------------------- -------- -------- --------Continuing and discontinued operations 27.6 29.3 59.1---------------------------------------------- -------- -------- --------Benchmark 25.1 27.6 60.7---------------------------------------------- -------- -------- -------- 30.9.05 30.9.04 31.3.05 £m £m £m---------------------------------------------- -------- -------- --------Earnings - continuing operations 228 244 542 Discontinued operations 49 53 57---------------------------------------------- -------- -------- --------Continuing and discontinued operations 277 297 599Effect of exceptional and other adjustment items(note 5) (26) (21) 8Adjustment between effective and actual rates oftaxation - 4 8---------------------------------------------- -------- -------- --------Benchmark earnings 251 280 615---------------------------------------------- -------- -------- -------- 30.9.05 30.9.04 31.3.05 m m m---------------------------------------------- -------- -------- --------Weighted average number of Ordinary shares inissue during the period* 986.5 1,001.1 1,000.1Dilutive effect of share incentive awards 15.1 12.9 12.6---------------------------------------------- -------- -------- --------Dilutive weighted average number of Ordinaryshares in issue during the period 1,001.6 1,014.0 1,012.7---------------------------------------------- -------- -------- -------- * Excluding own shares held in Treasury and in the ESOP trust 10. Dividend Six months to Year to -------------- 30.9.05 30.9.04 31.3.05 pence pence pence------------------------------- -------- -------- --------Interim 9.6 9.0 9.0Final - - 20.5------------------------------- -------- -------- -------- 9.6 9.0 29.5------------------------------- -------- -------- -------- The dividends paid in August 2005 and August 2004 were £203m (20.5p per share)and £191m (19.0p per share) respectively. An interim dividend of 9.6p per newGUS share (2004 9.0p per existing GUS share) has been proposed (but notprovided) and will be paid on 3 February 2006 to shareholders on the Register atthe close of business on 6 January 2006. The cost of this dividend (2004 £90m)will depend on the number of shares in issue on 6 January 2006. If the proposalsto effect a demerger of the Group's interest in Burberry and a consolidation ofGUS shares are approved by shareholders at the EGM on 12 December 2005, the costis expected to be approximately £83m. Details of the share consolidation will beset out in the demerger circular, which the Group expects to post toshareholders on 19 November. GUS plcUNAUDITED NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued)for the six months ended 30 September 2005 11. Transitional adjustment on first time adoption of IAS 39 As permitted by IFRS 1 "First-time Adoption of International Financial ReportingStandards", the Group elected to defer implementation of IAS 39 "FinancialInstruments: Recognition and Measurement" until the year ending 31 March 2006.On adoption of IAS 39, the Group has taken the fair value option in respect ofits outstanding eurobonds, euronotes and perpetual securities. Gains or losseson these items resulting from changes in interest rates are taken to income,together with the gains or losses on the associated financial instruments. The effect of adopting IAS 39 on the balance sheet as at 1 April 2005 is asfollows: Transition 31.3.05 adjustment 1.4.05 £m £m £m------------------------------------------------ ------- ------ -----Current assetsOtherfinancial other investments 31 3 34assets - interest rate swaps - 13 13 currency swaps and forward currency contracts 2 10 12------------------------------------------------ ------- ------ ----- 33 26 59------------------------------------------------ ------- ------ -----Current liabilitiesTrade and other payables (1,597) (3) (1,600)Other financial liabilities - currency swapsand forward currency contracts - (3) (3)------------------------------------------------ ------- ------ ----- (1,597) (6) (1,603)------------------------------------------------ ------- ------ -----Non-current liabilitiesLoans and borrowings (1,676) (5) (1,681)Deferred tax liabilities (182) (4) (186)------------------------------------------------ ------- ------ ----- (1,858) (9) (1,867)------------------------------------------------ ------- ------ -----Other assets and liabilities 6,806 - 6,806------------------------------------------------ ------- ------ -----Total equity 3,384 11 3,395------------------------------------------------ ------- ------ ----- The most significant financial instruments for the Group are its forward salesof foreign currencies to hedge the value of investments in group businessesoutside the UK. The treatment of these is effectively the same under IFRS asunder UK GAAP, with the fair value being recognised in the balance sheet andmark-to-market re-measurements being taken through the Group statement ofrecognised income and expense ("SORIE") rather than the Group income statement. Many, but not all, of the Group's other derivatives also qualify for hedgeaccounting under IFRS. These gains or losses are taken through the SORIE, notthe income statement. Some of the Group's derivatives do not qualify for hedge accounting. Gains orlosses on these arising from market movements are credited or charged to theincome statement. These financing fair value remeasurements are excluded fromBenchmark PBT and Benchmark earnings per share. 12. Related parties There were no material transactions with related parties during the period. Inthe comparative periods, Experian companies made net sales and recharges toassociated undertakings of £5m in the six months ended 30 September 2004 and£10m in the year ended 31 March 2005. There were no other material transactionswith related parties in either comparative period. GUS plcUNAUDITED NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued)for the six months ended 30 September 2005 13. Summary of the impact of IFRS on the comparative periods Detailed disclosures in respect of the effect of IFRS on the reported positionand results for the six months ended 30 September 2004 and year ended 31 March2005 were issued on 14 June 2005, and are available on the Company website atwww.gusplc.com/gus/investors/ifrs. A summary of the impact of IFRS on certainkey reported figures is set out below. Since that date, Wehkamp has beenreclassified as a discontinued operation (note 6), and the effect of this changeon the IFRS financial statements is shown below. Group income statementReported sales are reduced due to the different presentation required under IFRSin respect of discontinued operations. This restatement is set out in thesegmental analysis at note 4 above. IFRS adjustments in respect of other keyitems within the Group income statement are as follows: Six months ended Year ended 30 September 2004 31 March 2005 ----------------- ----------------- Profit for the Operating Profit before financial Operating Profit before Profit for the profit tax period profit tax financial year Note £m £m £m £m £m £m------------------ ---- ------ ------- ------- ------- ------- -------As reportedunder UK GAAP 292 323 205 680 693 423IFRSreclassifications: ------- ------- ------- ------- ------- -------Lewis Group a (25) (46) - (55) (79) -Otherdiscontinuedoperations a - - - - 27 -Tax expense ofassociates - - - - (1) -Minorityinterests b - - 19 - - 49 ------- ------- ------- ------- ------- ------- (25) (46) 19 (55) (53) 49 IFRSremeasurements: ------- ------- ------- ------- ------- -------Share basedpayments c (9) (9) (9) (7) (7) (7)Cataloguecosts d 8 8 8 (1) (1) (1)Reversal ofgoodwillamortisation e 99 99 99 207 207 207Amortisationof acquisitionintangibles e - - - (4) (4) (4)Interestearned onpension schemeassets f - 1 1 - 2 2Deferred taxcharges g - - (13) - - (29)Other 1 1 6 3 6 8 ------- ------- ------- ------- ------- ------- 99 100 92 198 203 176----------------- ----- ------- ------- ------- ------- ------- -------As reportedunder IFRS on14 June 2005 366 377 316 823 843 648----------------- ----- ------- ------- ------- ------- ------- -------Reclassification of Wehkamp (12) (12) - (21) (23) -(note 6)----------------- ----- ------- ------- ------- ------- ------- -------As reportedunder IFRS, asrestated 354 365 316 802 820 648----------------- ----- ------- ------- ------- ------- ------- ------- 30.9.04 31.3.05Group balance sheet Note £m £m------------------------------------------- ------- ------- --------Capital employed as reported under UK GAAP 3,149 3,070 ------- -------Pension liabilities f (224) (226)Catalogue costs d (8) (15)Lease incentives h (34) (34)Amortisation of acquisition intangibles e - (4)Reversal of UK GAAP goodwill amortisation charge after transition e 98 207Goodwill impairment on transition e (3) (3)Deferred taxation g 202 186Dividends i 91 202Other (2) 1 ------- ------- 120 314-------------------------------------------- ------ ------- --------As reported under IFRS 3,269 3,384-------------------------------------------- ------ ------- -------- GUS plcUNAUDITED NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued)for the six months ended 30 September 2005 13. Summary of the impact of IFRS on the comparative periods (continued) Notes a. Under IFRS, the Group income statement down to profit after tax excludes theresults of discontinued operations. b. The concept of a group differs under IFRS and minority interests are regardedas equity holders of the Group. Thus rather than deducting a minority interestin arriving at profit for the financial period, the profit for the period isinstead attributed to the different types of equity holders. c. IFRS requires that the fair value of all share-based payments is charged tothe income statement over the vesting period. Depending on the type of schemeconcerned, the recognition, or timing, or both, of the charges to profit maydiffer compared with UK GAAP. d. Under UK GAAP, catalogue costs were expensed over the period in which thecatalogues generated revenue. These costs are expensed as incurred under IFRS. e. Goodwill amortisation charged under UK GAAP after the transition date, 1April 2004, is reversed in the IFRS financial statements. Goodwill will besubject to an annual impairment review. IFRS also requires that, on acquisition,specific intangible assets are identified and then amortised over their usefuleconomic lives. These include items such as brand names and customer lists, towhich value is first attributed at the time of acquisition. f. Under IFRS, the pension charge principally comprises a current service cost,charged to operating profit, and a financing item reported within net interest. Under IAS 19, the Group has adopted the option that requires the full actuarialvalue of the surplus or deficit of pension schemes and other post-retirementbenefits to be shown on the balance sheet. Any movements in the pension assetsand liabilities arising from actuarial gains and losses are recognisedimmediately in full through the SORIE. g. Under UK GAAP, tax relief on goodwill written off to reserves in respect ofpre-1998 US acquisitions was credited each year against the tax charge in theincome statement. Under IFRS, a deferred tax asset is set up for this futurerelief at the time of the acquisition; as the tax relief is received, it iscredited against this deferred tax asset. h. Under UK GAAP, property lease incentives were recognised over the period tothe first rent review. Under IFRS, these are recognised over the full term ofthe lease. i. Under IFRS, a dividend that is proposed but not yet authorised is not accruedin the financial statements. 14. Post balance sheet event On 28 October 2005, the Group announced an agreement to sell Wehkamp, its lastremaining home shopping business. Under the terms of this agreement, Wehkampwill be sold for approximately €390m (£265m) to Industri Kapital, a privateequity firm. Completion is expected in December, subject to European Unionregulatory approval. The cash proceeds on completion will be used to pay downdebt. 15. GUS plc website The maintenance and integrity of the GUS plc website, www.gusplc.com, is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the website. Legislation in the UnitedKingdom governing the preparation and dissemination of financial information maydiffer from legislation in other jurisdictions. GUS plcINDEPENDENT REVIEW REPORT TO GUS PLC IntroductionWe have been instructed by the Company to review the financial information forthe six months ended 30 September 2005, which comprises the Unaudited GroupIncome Statement for the six months ended 30 September 2005, the Unaudited GroupBalance Sheet as at 30 September 2005, the Unaudited Group Cash Flow Statementfor the six months ended 30 September 2005, the Unaudited Group Statement ofRecognised Income and Expense for the six months ended 30 September 2005, theUnaudited Group Reconciliation of Movements in Equity for the six months ended30 September 2005 and the related unaudited notes for the six months ended 30September 2005. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. As disclosed in note 1, the next annual financial statements of the Group willbe prepared in accordance with IFRS as adopted for use in the European Union.This interim report has been prepared in accordance with the basis ofpreparation set out in note 1. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. As explained in the 'Basis ofpreparation' note 1, there is however, a possibility that the directors maydetermine that some changes are necessary when preparing the full annualfinancial statements for the first time in accordance with accounting standardsadopted for use in the European Union. The IFRS standards and IFRICinterpretations that will be applicable and adopted for use in the EuropeanUnion at 31 March 2006 are not known with certainty at the time of preparingthis interim financial information. Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for theCompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or in whose hands it may come save where expressly agreed by our priorconsent in writing. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2005. PricewaterhouseCoopers LLPChartered AccountantsManchester 16 November 2005 This information is provided by RNS The company news service from the London Stock Exchange
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