Interim Results - Part 2

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

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