Preliminary Results Part 2
Great Universal Stores PLC
5 June 2001
PART 2
SOUTH AFRICAN RETAILING
12 months to 31 March 2001 2000 underlying
change *
Sales £m 150 170 -4%
Operating profit £m 30.7 46.0 -26%
Operating margin 20.5% 27.1%
* at constant exchange rates
Our South African Retailing business, consisting mainly of 464 Lewis furniture
and electrical stores, continues to operate in a difficult and competitive
market.
Sales in the first half of the year were down 16% in rand, largely as a result
of the deflection of consumer spending towards mobile phones, the state
lottery and wide scale no-deposit financing schemes from its competitors.
However, sales in the second half grew by 6%, driven by Lewis' own no-deposit
offers to selected customers with good credit records and strong promotional
offers on exclusive product lines. Profits for the year were down 26% in rand.
The weakness of the rand reduced reported sales by £13m and profits by £2.8m
in the year.
Looking forward, management will:
* continue the rollout of Best Electric, its small store format for high
traffic areas. There are currently 37 stores, with some 20 openings
planned for the current year;
* expand the range of financial services offered to top credit-rated Lewis
customers, with, for example, the launch of small unsecured loans; and
* better target marketing spend, especially on brochures, as a result of
recent investment in data warehousing and data mining capabilities.
Reported profits next year will be rephased between the first and second
halves, reflecting more appropriate provisioning policies. Had these been
adopted in the twelve months to March 2001, first half profits in South Africa
and for the Group would have been £5.8m higher, with a corresponding fall in
the second half. Full year profits are unaffected.
FINANCE
12 months to 31 March 2001 2000
Operating profit £m* 20.2 25.1
* before exceptional costs of £13.1m in 2001, and net of funding costs
As previously indicated, as part of our strategy to focus the Group on fewer
activities, we are withdrawing from vehicle financing.
In August 2000, GUS sold its vehicle contract hire business, Highway Vehicle
Management, to First National Group for approximately £170m in cash. This
business contributed £0.7m to profits during the year. In March 2001, K.C
Finance, the Channel Islands subsidiary of General Guarantee Finance, was sold
for £54m. This business contributed £3.8m to profits this year.
The Group is also winding down the rest of General Guarantee Finance (GGF), by
making no new advances and collecting in the debtor book. During the year, the
size of the GGF debtor book was reduced by £457m; £296m of this was used to
repay securitised debt, with the balance reducing other Group borrowings. At
31 March 2001, GGF's outstanding book, net of provisions, was £681m. We
anticipate collecting in practically all of GGF's outstanding advances by
March 2003.
During the year, 436 employees out of a total of 610 were made redundant and
41 of the 45 offices closed. The costs were covered by an exceptional charge
of £13.1m.
PROPERTY
12 months to 31 March 2001 2000
Operating profit £m 29.6 33.9
Our property joint venture with The British Land Company PLC continues to
dispose of properties and use the funds realised to repay debt and to return
cash to the two shareholders.
During the year, a further 53 properties were sold raising £80m. GUS' 50%
share of operating profit declined by £4.3m, reflecting the fall in rental
income as properties were sold. However, the Group's interest expense was
reduced by a similar amount. The joint venture owned 253 properties with a
value of £997m at 31 March 2001.
The joint venture has agreed to sell a portfolio of 81 high street properties
for a minimum of £113m, with the proceeds due later this year. Further
disposals during the year are likely.
gusco.com
12 months to 31 March 2001 2000
Operating loss £m (12.6) -
Revenue spend during the year totalled £12.6m on projects including MyPoints
Europe, a web-based loyalty scheme, breathe.com and two US ventures in credit
management and on-line services for catalogue companies. As previously
indicated, revenue spend is expected to be up to £10m in the current year.
A profit of £4.6m (2000: £11.1m) was earned from the sale of listed e-commerce
investments. This is not included in the spend of £12.6m above, but is
included within exceptional items.
EXCEPTIONAL ITEMS
During the year, the Group incurred exceptional charges of £84.7m (2000: £
11.1m credit), relating primarily to the restructuring of Argos Retail Group
and Reality and the asset write-downs associated with closure or disposal of
non-core businesses. About £30m of this amount was cash, relating mostly to
the ARG/Reality restructuring. As previously indicated, we expect a further
restructuring charge of approximately £35m in the current financial year,
before disposals.
Exceptional items comprise:
12 months to 31 March 2001 2000
£m £m
Restructuring costs in Argos Retail Group/Reality (30.5)
Profit on sale of e-commerce investments 4.6 11.1
VAT refunds in Home Shopping UK 4.6
Closure costs in General Guarantee Finance (13.1)
Loss on disposal of businesses:
Universal Versand (23.0)
Highway (13.0)
Other (14.3)
Total (charge)/credit (84.7) 11.1
APPENDIX
Additional information on Burberry
Reported sales by distribution channel
12 months to 31 March 2001 2000 Underlying
£m £m increase* %
Retail 144 99 35
Wholesale 277 126 53
Royalties 46 32 54
Less Burberry inter-group sales (42) (27) 28
Reported sales 425 230 47
Spain (9 month contribution) 118 -
Retail sales by product category
12 months to 31 March 2001 2000 Underlying
£m £m increase* %
Womenswear 54 37 35
Menswear 48 42 4
Accessories 38 18 101
Other 4 2 44
Retail sales 144 99 35
Reported sales by market (by destination)
12 months to 31 March 2001 2000 Underlying
£m £m increase* %
Europe 257 120 48
US 91 62 37
Asia 75 46 53
Rest of World 2 2 -
Reported sales 425 230 47
* At constant exchange rates, excluding Burberry Spain and discontinued
Wholesale activities
THE GREAT UNIVERSAL STORES P.L.C. GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR
ENDED 31 MARCH 2001
2001 2001 2001 2000
Before Exceptional Total
Exceptional Items
Items (Note 2)
£m £m £m £m
Turnover- continuing 6,040.6 - 6,040.6 5,658.4
operations
Cost of sales (3,625.4) 1.3 (3,624.1) (3,436.1)
Gross profit 2,415.2 1.3 2,416.5 2,222.3
Net operating expenses
(including amortisation
of goodwill £92.3m
(2000 £79.4m)) (1,973.7) (43.6) (2,017.3) (1,801.6)
Operating profit- 441.5 (42.3) 399.2 420.7
continuing operations
Share of operating 29.6 - 29.6 33.9
profit of BL Universal
PLC (joint venture)
Share of operating 11.6 - 11.6 11.3
profit of associated
undertakings
Profit on sale of fixed - 4.6 4.6 11.1
asset investments
Trading profit 482.7 (37.7) 445.0 477.0
Loss on sale of - (50.3) (50.3) -
businesses
Profit on ordinary 482.7 (88.0) 394.7 477.0
activities before
interest
Net interest (88.2) 3.3 (84.9) (97.4)
Profit on ordinary 394.5 (84.7) 309.8 379.6
activities before
taxation
Tax on profit on
ordinary activities
UK (60.6) (66.6)
Overseas (45.5) (37.9)
(106.1) (104.5)
Profit on ordinary 203.7 275.1
activities after
taxation
Dividends (209.9) (207.2)
(Loss)/profit for the (6.2) 67.9
year
PROFIT BEFORE
AMORTISATION OF
GOODWILL,
EXCEPTIONAL ITEMS AND 486.8 447.9
TAXATION
BASIC AND DILUTED 20.3p 27.4p
EARNINGS PER SHARE
BASIC AND DILUTED
EARNINGS PER SHARE
BEFORE
AMORTISATION OF GOODWILL 37.2p 34.5p
AND EXCEPTIONAL ITEMS
DIVIDENDS PER SHARE - 6.2p 6.2p
Interim
- Final 14.8p 14.4p
- Total 21.0p 20.6p
THE GREAT UNIVERSAL STORES P.L.C.
GROUP BALANCE SHEET
AT 31 MARCH 2001
2001 2001 2000 2000
£m £m £m £m
Fixed assets
Goodwill 1,516.2 1,437.6
Other intangible assets 178.9 139.1
Tangible assets 737.4 834.7
Investment in joint venture
Share of gross assets 525.0 535.0
Share of gross liabilities (409.8) (405.6)
115.2 129.4
Loans to joint venture 93.8 209.0 81.5 210.9
Other investments 87.9 53.4
2,729.4 2,675.7
Current assets
Stocks 570.8 528.6
Debtors - due within one year 1,561.3 1,525.7
- due after more than one year 221.9 311.0
Securitised receivables 646.7 909.7
Less: non-recourse borrowings (581.5) 65.2 (877.7) 32.0
Investments 53.3 33.7
Bank balances and cash 304.7 388.5
2,777.2 2,819.5
Creditors
Amounts due within one year (2,236.2) (1,683.8)
Net current assets 541.0 1,135.7
Total assets less current 3,270.4 3,811.4
liabilities
Creditors - amounts due after more (713.5) (1,207.2)
than one year
Provisions for liabilities and (134.0) (137.9)
charges
Net assets 2,422.9 2,466.3
Capital and reserves
Called up share capital 251.6 251.5
Share premium account 1.8 0.4
Revaluation reserve 136.6 280.9
Profit and loss account 2,032.9 1,933.5
Shareholders' funds 2,422.9 2,466.3
THE GREAT UNIVERSAL STORES P.L.C.
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2001
2001 2000
£m £m
Cash flow from operating activities
Operating profit 399.2 420.7
Depreciation and amortisation charges 308.3 299.4
Change in working capital
- proceeds of securitised borrowings - 477.7
- other (47.9) (50.2)
659.6 1,147.6
Dividends received from associated undertakings 6.9 6.7
Returns on investments and servicing of finance (68.5) (62.2)
Taxation (94.7) (80.8)
Capital expenditure (267.6) (263.8)
Financial investment (38.5) 61.4
Acquisition of subsidiaries (172.7) (6.1)
Disposal of subsidiaries 228.9 -
Dividends paid (206.4) (207.2)
Cash inflow before management of liquid resources and 47.0 595.6
financing
Management of liquid resources 118.9 (120.9)
Financing - issue of shares 1.5 0.5
- change in debt and lease financing (195.5) (411.8)
(Decrease)/increase in cash (28.1) 63.4
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash (28.1) 63.4
Cash outflow from movement in debt and lease financing 195.5 411.8
Cash (inflow)/outflow from movement in liquid resources (118.9) 120.9
Movement in net debt resulting from cash flows 48.5 596.1
Loans and finance leases acquired with subsidiary (3.1) -
New finance leases (3.4) (9.3)
Exchange movements (118.7) 29.3
Movement in net debt (76.7) 616.1
Net debt at beginning of year (1,053.7) (1,669.8)
Net debt at end of year (1,130.4) (1,053.7)
THE GREAT UNIVERSAL STORES P.L.C.
DIVISIONAL ANALYSIS
FOR THE YEAR ENDED 31 MARCH 2001
Turnover Profit before
taxation
2001 2000 2001 2000
(restated) (restated)
£m (Note 1) £m (Note 1)
£m £m
Experian 1,018.4 949.2 216.6 200.6
Argos Retail Group
Argos 2,387.0 2,057.0 160.8 137.4
Home Shopping - UK & Ireland 1,540.4 1,622.0 25.1 11.8
Financial Services - - 4.5 14.4
Home Shopping - Continental 322.2 336.5 21.7 25.1
Europe
4,249.6 4,015.5 212.1 188.7
Reality 476.0 444.2 5.1 2.8
Burberry 424.7 229.8 69.5 21.7
South African Retailing 150.2 169.7 30.7 46.0
Finance Division 113.8 225.3 34.1 58.5
Property - - 29.6 33.9
gusco.com 1.0 - (12.6) -
6,433.7 6,033.7 585.1 552.2
Inter-divisional turnover (393.1) (375.3)
6,040.6 5,658.4
Central costs (10.1) (6.9)
575.0 545.3
Net interest (88.2) (97.4)
Profit before amortisation of goodwill, exceptional 486.8 447.9
items and taxation
Amortisation of goodwill (92.3) (79.4)
(principally Argos)
Exceptional items (Note 2) (84.7) 11.1
Profit before taxation 309.8 379.6
THE GREAT UNIVERSAL STORES P.L.C.
GEOGRAPHICAL ANALYSIS
FOR THE YEAR ENDED 31 MARCH 2001
Turnover Profit before
taxation
2001 2000 2001 2000
£m £m £m £m
United Kingdom & Ireland 4,550.9 4,324.1 332.3 309.8
Continental Europe 582.4 478.7 50.2 35.6
North America 745.7 676.5 154.3 147.4
Rest of World 161.6 179.1 38.2 52.5
6,040.6 5,658.4 575.0 545.3
Net interest (88.2) (97.4)
Profit before amortisation of goodwill, exceptional 486.8 447.9
items and taxation
Amortisation of goodwill (92.3) (79.4)
(principally Argos)
Exceptional items (Note 2) (84.7) 11.1
Profit before taxation 309.8 379.6
THE GREAT UNIVERSAL STORES P.L.C.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 MARCH 2001
2001 2000
£m £m
Profit on ordinary activities after taxation 203.7 275.1
Revaluation of properties (17.1) 14.3
Currency translation differences (60.8) (19.9)
Total gains and losses recognised in the year 125.8 269.5
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 31 MARCH 2001
2001 2000
£m £m
Profit on ordinary activities after taxation 203.7 275.1
Dividends - Interim (62.1) (62.4)
- Final (147.8) (144.8)
(6.2) 67.9
Goodwill on disposals 40.4 -
Goodwill (charged)/credited to reserves* (1.2) 6.5
Shares issued under option schemes 1.5 0.5
Revaluation of properties (17.1) 14.3
Currency translation differences (60.8) (19.9)
(43.4) 69.3
Opening shareholders' funds 2,466.3 2,397.0
Closing shareholders' funds 2,422.9 2,466.3
* Deferred consideration in respect of acquisitions by Experian prior to the
adoption of FRS 10.
ANALYSIS OF NET BORROWINGS
AT 31 MARCH 2001
2001 2000
£m £m
Cash and other liquid resources 243.3 392.1
Debt due within one year (696.3) (272.7)
Finance leases (14.9) (23.9)
Debt due after more than one year (662.5) (1,149.2)
Net debt at end of year (1,130.4) (1,053.7)
Non-recourse borrowings (581.5) (877.7)
Net borrowings at end of year (1,711.9) (1,931.4)
THE GREAT UNIVERSAL STORES P.L.C.
NOTES
1. Basis of preparation
The financial information set out in this announcement does not constitute the
Group's statutory financial statements for the year ended 31 March 2001 but is
taken from those financial statements which have received an unqualified report
by the auditors and will be delivered to the Registrar of Companies.
The results by division are presented in the new reporting structure,
separating out Reality and Argos Retail Group Financial Services, with
comparative figures restated. A significant portion of Reality's turnover
comprises sales within the Group and these are shown, together with Experian's
sales within the Group, as inter-divisional turnover.
2. Exceptional items
Exceptional items comprise:
2001 2000
£m £m
Restructuring costs:
Redundancy and other costs incurred in connection
with the combination of Argos and Home Shopping operations (30.5) -
and the formation of Reality
Redundancy and associated costs incurred in connection (13.1) -
with the closure of General Guarantee Finance to new business
(43.6) -
VAT refunds in UK Home Shopping (including interest of £3.3m) 4.6 -
Profit on sale of fixed asset investments 4.6 11.1
(34.4) 11.1
Loss on sale of businesses (50.3) -
Exceptional (charge)/credit (84.7) 11.1
It is anticipated that income to be earned by General Guarantee Finance will
at least match the further costs of closure during the remainder of the three
year wind down period.
The loss on sale of businesses comprises the disposals of Universal Versand (£
23.0m) and Highway Vehicle Management (£13.0m) and other smaller disposals
amounting to £14.3m. The loss is after charging goodwill previously written
off to reserves of £40.4m.
3. Taxation
The Group's effective rate of taxation on profit before amortisation of
goodwill and loss on sale of businesses is 23.5% (2000 22.8%).
THE GREAT UNIVERSAL STORES P.L.C.
4. Basic and diluted earnings per share 2001 2000
pence pence
Basic and diluted earnings per share before amortisation of 37.2 34.5
goodwill
and exceptional items
Effect of amortisation of goodwill (9.2) (7.8)
Effect of exceptional items (7.7) 0.7
Basic and diluted earnings per share 20.3 27.4
The calculation of basic earnings per share is based on profit after taxation
divided by the weighted average number of Ordinary shares in issue during the
year. Basic and diluted earnings per share before amortisation of goodwill and
exceptional items is disclosed to indicate the underlying profitability of the
Group and is based on profit of £373.4m (2000 £347.3m).
2001 2000
£m £m
Earnings before amortisation of goodwill and exceptional 373.4 347.3
items
Effect of amortisation of goodwill (92.3) (79.4)
Effect of exceptional items (77.4) 7.2
Profit after taxation 203.7 275.1
There is no difference between basic and diluted earnings per share.
5. Foreign currency
The principal exchange rates used
were as follows:
Average Closing
2001 2000 2001 2000
US dollar 1.48 1.61 1.43 1.59
South African rand 10.84 9.95 11.46 10.42
Euro 1.64 1.57 1.62 1.66
Assets and liabilities of overseas undertakings are translated into sterling
at the rates of exchange ruling at the balance sheet date and the results are
translated into sterling at average rates of exchange.
6. Dividend
The final dividend will be paid on 31 August 2001 to shareholders on the
Register at the close of business on 3 August 2001.
Wednesday, 15th May 2024
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