22nd Nov 2005 12:30
Signet Group PLC22 November 2005 Signet Group plcUnaudited results for the 13 weeks and the 39 weeks to 29 October 2005 SIGNET REPORTS THIRD QUARTER RESULTS Signet Group plc (LSE: SIG and NYSE: SIG), the world's largest speciality retailjeweller, today announces its third quarter results for the 13 week and 39 weekperiod to 29 October 2005. These results are reported under InternationalFinancial Reporting Standards ('IFRS'), see Note 10 for details. Group In the 13 week period to 29 October 2005, total sales rose to £310.5 million (13weeks to 30 October 2004: £293.7 million), an increase of 5.7%. Like for likesales were up by 1.8%. Group profit before tax was £3.0 million (13 weeks to 30October 2004: £7.0 million). The third quarter is traditionally a period of lowprofitability, therefore the decline in results should have relatively littleimpact on the year as a whole. Operating profit was £5.5 million (13 weeks to 30October 2004: £9.9 million). Exchange rate movements had little effect on theresults (See Note 8). In the 39 week period, total sales increased to £1,033.4 million (39 weeks to 30October 2004: £978.0 million), a rise of 6.5% at constant exchange rates; atactual exchange rates there was an increase of 5.7%. Like for like sales were upby 2.9%. Group profit before tax was £55.1 million (39 weeks to 30 October 2004:£57.0 million) and operating profit was £61.0 million (39 weeks to 30 October2004: £64.6 million). The average exchange rate for the period was £1/$1.84 (39weeks to 30 October 2004: £1/$1.82). Earnings per share were 2.1p (39 weeks to30 October 2004: 2.1p). United States (circa 70% of Group annual sales) In the 13 week period to 29 October 2005, US operating profit rose by 20.3% to£9.5 million (13 weeks to 30 October 2004: £7.9 million). Like for like saleswere up by 6.6%; performance during the latter two months of the period,although less strong, remained solid. Total sales increased by 12.1% to £220.0million (13 weeks to 30 October 2004: £196.3 million). The operating marginincreased to 4.3% (13 weeks to 30 October 2004: 4.0%). The gross margin was downdue to changes in the sales mix and commodity cost increases which were partlyoffset by supply chain initiatives and selective price increases. The impact onthe fourth quarter is expected to be similar. While store closures due tohurricanes had little effect on the third quarter, potential uninsured lossesare expected to have some impact on the fourth quarter. In the 39 week period, US operating profit was up by 19.3% at constant exchangerates and by 18.1% on a reported basis to £70.6 million (39 weeks to 30 October2004: £59.8 million). Like for like sales rose by 7.6%. Total sales advanced by12.4% at constant exchange rates and by 11.2% on a reported basis to £759.6million (39 weeks to 30 October 2004: £683.3 million). The operating marginincreased to 9.3% (39 weeks to 30 October 2004: 8.8%). The bad debt charge was3.2% of total sales (39 weeks to 30 October 2004: 2.9%), comfortably in therange of recent years. Benefit continues to accrue from action to further enhance merchandise rangesincluding the expansion of the Leo Diamond assortment, development of the loosediamond and large solitaire ring selection, growth of fashion gold merchandiseand further extension of luxury watch ranges in Jared. The holiday season willagain see an increase in Kay national television advertising and Jared willenjoy local television advertising support in all stores for the first time. JBRobinson, the division's leading regional brand, will begin testing televisionadvertising in one local market. Annual spending on marketing as a proportion ofsales is planned to be slightly higher than last year due to the expansion ofJared. Net new space growth during 2005/06 is expected to be about 9%, of whichJared will account for some 60%. United Kingdom (circa 30% of Group annual sales) Against the background of continuing difficult trading conditions like for likesales decreased by 8.1% in the 13 weeks to 29 October 2005. Total sales weredown by 7.1% to £90.5 million (13 weeks to 30 October 2004: £97.4 million). Thisresulted in an operating loss of £2.5 million (13 weeks to 30 October 2004: £3.7million profit). In the 39 week period to 29 October 2005 like for like sales decreased by 7.9%and total sales by 7.1% to £273.8 million (39 weeks to 30 October 2004: £294.7million). This was reflected in an operating loss of £4.9 million (39 weeks to30 October 2004: £9.7 million profit including a £1.7 million restructuringcharge). Gross margin was ahead of last year. Tight control of costs, gross margin and inventory was maintained. Thedivision's average selling price increased further in the quarter, as diddiamond participation in the sales mix. This reflected the enhanced diamondjewellery selection and continued emphasis on staff training. 226 stores,predominantly H.Samuel, are now trading under the more open, customer friendlystore format. Television advertising spend will be similar to last year duringthe Christmas season for both H.Samuel and Ernest Jones and will cover the sameregions. Group Central Costs, Financing Costs, Taxation and Net Debt In the 13 week period, Group central costs were £1.6 million (13 weeks to 30October 2004: £1.7 million); in the 39 weeks they were £4.7 million (39 weeks to30 October 2004: £4.9 million). Financing costs for the 13 weeks were £2.5million (13 weeks to 30 October 2004: £2.9 million) and for 39 weeks were £5.9million (39 weeks to 30 October 2004: £7.6 million). The tax rate for the 39weeks to 29 October 2005 was as anticipated 34.5% (39 weeks to 30 October 2004:37.0%). Net debt at 29 October 2005 was £217.9 million (30 October 2004: £192.6million). The seasonal increase in net debt resulting from cash flows in the 39weeks to 29 October 2005 was £121.2 million before translation differences (39weeks to 30 October 2004: £113.8 million). The increase reflected changes intiming of merchandise deliveries together with higher tax and dividend paymentsoffset by the sale of the freehold of the UK division's head office. Comment Terry Burman, Group Chief Executive, commented: "Group profit before tax in thenine months to date was only slightly below that of last year. Our US divisionperformed extremely well whilst the UK business experienced difficult tradingconditions throughout the period. Our businesses are in good shape and are well placed to compete. As always,results for the year as a whole will be dependent on the outcome during the allimportant fourth quarter, which represents some 40% of annual sales." Enquiries: Terry Burman, Group Chief Executive +44 (0) 20 7399 9520Walker Boyd, Group Finance Director +44 (0) 20 7399 9520 Mike Smith, Brunswick +44 (0) 20 7404 5959Pamela Small, Brunswick +44 (0) 20 7404 5959 Signet operated 1,803 speciality retail jewellery stores at 29 October 2005;these included 1,202 stores in the US, where the Group trades as "Kay Jewelers","Jared The Galleria Of Jewelry" and under a number of regional names. At thatdate Signet operated 601 stores in the UK, where the Group trades as "H.Samuel","Ernest Jones" and "Leslie Davis". Further information on Signet is available atwww.signetgroupplc.com. This release includes statements which are forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995. Thesestatements, based upon management's beliefs as well as on assumptions made byand data currently available to management, appear in a number of placesthroughout this release and include statements regarding, among other things,our results of operation, financial condition, liquidity, prospects, growth,strategies and the industry in which the Company operates. Our use of the words"expects," "intends," "anticipates," "estimates," "may," "forecast,""objective," "plan" or "target," and other similar expressions are intended toidentify forward-looking statements. These forward-looking statements are notguarantees of future performance and are subject to a number of risks anduncertainties, including but not limited to general economic conditions, themerchandising, pricing and inventory policies followed by the Group, thereputation of the Group, the level of competition in the jewellery sector, theprice and availability of diamonds, gold and other precious metals, seasonalityof the Group's business and financial market risk. For a discussion of these and other risks and uncertainties which could causeactual results to differ materially, see the "Risk and Other Factors" section ofthe Company's 2004/05 Annual Report on Form 20-F filed with the U.S. Securitiesand Exchange Commission on May 3, 2005 and other filings made by the Companywith the Commission. Actual results may differ materially from those anticipatedin such forward-looking statements even if experience or future changes make itclear that any projected results expressed or implied therein may not berealised. The Company undertakes no obligation to update or revise anyforward-looking statements to reflect subsequent events or circumstances. Investor Relations Programme Details There will be a conference call for all interested parties today at 2.00 p.m.GMT (9.00 a.m. EST and 6.00 a.m. Pacific Time) and a simultaneous audiocast atwww.signetgroupplc.com. To help ensure the conference call begins in a timelymanner, could all participants please dial in 5 to 10 minutes prior to thescheduled start time. The call details are: UK dial-in: +44 (0) 20 7365 1850 US dial-in: +1 718 354 1172 UK 48 hr. replay: +44 (0) 20 7784 1024 Pass code: 8156410# US 48 hr. replay: +1 718 354 1112 Pass code: 8156410# The Christmas Trading Statement is expected to be released on Thursday 12January 2006. SIGNET GROUP plc Unaudited interim consolidated income statementfor the 39 weeks ended 29 October 2005 13 weeks 13 weeks 39 weeks 39 weeks 52 weeks ended ended ended ended ended 29 October 30 October 29 October 30 October 29 January 2005 2004 2005 2004 2005--------------------------------------------------------------------------------------------------------- Notes £m £m £m £m £m--------------------------------------------------------------------------------------------------------- Sales 2,8 310.5 293.7 1,033.4 978.0 1,615.5 Cost of sales (299.7) (276.7) (953.5) (888.2) (1,371.8)---------------------------------------------------------------------------------------------------------Gross profit 10.8 17.0 79.9 89.8 243.7Administrativeexpenses (15.9) (16.4) (52.4) (54.0) (69.8)Otheroperatingincome 10.6 9.3 33.5 28.8 38.6---------------------------------------------------------------------------------------------------------Operatingprofit 2,8 5.5 9.9 61.0 64.6 212.5Financingcosts 3 (2.5) (2.9) (5.9) (7.6) (8.6)---------------------------------------------------------------------------------------------------------Profit beforetax 8 3.0 7.0 55.1 57.0 203.9Taxation 4 (1.0) (2.9) (19.0) (21.1) (69.1)---------------------------------------------------------------------------------------------------------Profit for thefinancialperiod 2.0 4.1 36.1 35.9 134.8--------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------Earnings pershare - basic 6 0.1p 0.2p 2.1p 2.1p 7.8p - diluted 6 0.1p 0.2p 2.1p 2.1p 7.8p--------------------------------------------------------------------------------------------------------- All of the above relate to continuing activities. Unaudited consolidated balance sheetat 29 October 2005 29 October 30 October 29 January 2005 2004 2005-------------------------------------------------------------------------------- £m £m £m-------------------------------------------------------------------------------- AssetsNon-current assetsIntangible assets 21.3 18.2 17.4Property, plant and equipment 252.4 231.9 225.2Other receivables 13.9 11.3 11.6Retirement benefit asset - 1.7 -Deferred tax assets 13.1 35.1 12.4-------------------------------------------------------------------------------- 300.7 298.2 266.6--------------------------------------------------------------------------------Current assetsInventories 766.1 676.2 577.9Trade and other receivables 331.5 278.3 359.4Cash and cash equivalents 19.8 16.1 59.6-------------------------------------------------------------------------------- 1,117.4 970.6 996.9-------------------------------------------------------------------------------- Total assets 1,418.1 1,268.8 1,263.5-------------------------------------------------------------------------------- LiabilitiesCurrent liabilitiesShort-term borrowings (96.6) (71.5) (10.3)Trade and other payables (228.0) (215.8) (163.3)Deferred income (45.4) (39.4) (53.5)Current tax (7.5) (29.0) (43.8)-------------------------------------------------------------------------------- (377.5) (355.7) (270.9)--------------------------------------------------------------------------------Non-current liabilitiesBank loans (141.0) (137.2) (132.8)Trade and other payables (34.5) (25.2) (26.7)Deferred income (57.6) (51.6) (56.2)Provisions (5.5) (6.0) (5.8)Retirement benefit obligation (1.9) - (1.9)-------------------------------------------------------------------------------- (240.5) (220.0) (223.4)-------------------------------------------------------------------------------- Total liabilities (618.0) (575.7) (494.3)-------------------------------------------------------------------------------- --------------------------------------------------------------------------------Net assets 800.1 693.1 769.2-------------------------------------------------------------------------------- EquityCapital and reserves attributable toequity shareholdersCalled up share capital 8.7 8.7 8.7Share premium 68.8 64.2 68.0Other reserves 132.2 139.4 152.3Retained earnings 590.4 480.8 540.2--------------------------------------------------------------------------------Total equity 800.1 693.1 769.2-------------------------------------------------------------------------------- Unaudited consolidated statement of recognised income and expensefor the 39 weeks ended 29 October 2005 13 weeks 13 weeks 39 weeks 39 weeks 52 weeks ended ended ended ended ended 29 October 30 October 29 October 30 October 29 January 2005 2004 2005 2004 2005--------------------------------------------------------------------------------------------------- £m £m £m £m £m--------------------------------------------------------------------------------------------------- Profit for thefinancialperiod 2.0 4.1 36.1 35.9 134.8Translationdifferences (13.6) (4.8) 54.5 (4.8) (32.6)Gains on cashflow hedges - - 1.8 - -Actuarial losson retirementbenefit scheme - - - - (3.9)---------------------------------------------------------------------------------------------------Totalrecognised(expense)/income for theperiod (11.6) (0.7) 92.4 31.1 98.3--------------------------------------------------------------------------------------------------- Unaudited changes in total equityfor the 39 weeks ended 29 October 2005 Share Share Revaluation Special Reserve for Retained capital premium reserve reserves own shares earnings Total £m £m £m £m £m £m £m--------------------------------------------------------------------------------------------------------------- Balance at 29January 2005 8.7 68.0 4.3 155.9 (7.9) 540.2 769.2Recognised income andexpense:- Profit forthe financialperiod - - - - - 36.1 36.1- Gains oncash flowhedges - - - - - 1.8 1.8- Translationdifferences - - - (21.8) - 54.5 32.7Equity-settledtransactions - - - - - 3.3 3.3Dividends - - - - - (45.5) (45.5)Share optionsexercised - 0.8 - - 1.7 - 2.5---------------------------------------------------------------------------------------------------------------Balance at 29October 2005 8.7 68.8 4.3 134.1 (6.2) 590.4 800.1--------------------------------------------------------------------------------------------------------------- Unaudited changes in total equityfor the 39 weeks ended 30 October 2004 Share Share Revaluation Special Reserve for Retained capital premium reserve reserves own shares earnings Total £m £m £m £m £m £m £m--------------------------------------------------------------------------------------------------------------- Balance at 31January 2004 8.6 60.7 3.1 142.2 - 483.2 697.8Recognised income andexpense:- Profit forthe financialperiod - - - - - 35.9 35.9- Translationdifferences - - - 2.0 - (4.8) (2.8)Equity-settledtransactions - - - - - 3.8 3.8Dividends - - - - - (37.3) (37.3)Share optionsexercised 0.1 3.5 - - 1.6 - 5.2Purchase ofown shares byESOT(1) - - - - (9.5) - (9.5)---------------------------------------------------------------------------------------------------------------Balance at 30October 2004 8.7 64.2 3.1 144.2 (7.9) 480.8 693.1--------------------------------------------------------------------------------------------------------------- (1) Shares purchased to satisfy the exercise of share options granted toemployees of Signet Group plc and its subsidiaries. Unaudited consolidated cash flow statementfor the 39 weeks ended 29 October 2005 13 weeks 13 weeks 39 weeks 39 weeks 52 weeks ended ended ended ended ended 29 October 30 October 29 October 30 October 29 January 2005 2004 2005 2004 2005--------------------------------------------------------------------------------------------------- £m £m £m £m £m---------------------------------------------------------------------------------------------------Cash flows from operatingactivities: Profit beforetax 3.0 7.0 55.1 57.0 203.9Depreciationcharges 10.4 9.6 31.2 27.9 41.3Financingcosts 2.5 2.9 5.9 7.6 8.6Increase ininventories (147.4) (117.0) (157.2) (137.9) (52.3)Decrease/(increase) in tradeand otherreceivables 10.7 7.9 46.0 47.5 (44.5)Increase inpayables anddeferredincome 76.8 61.2 50.8 37.8 11.1Other non-cashmovements 1.0 0.9 3.0 2.5 4.5---------------------------------------------------------------------------------------------------Cash generatedfromoperations (43.0) (27.5) 34.8 42.4 172.6Interest paid (2.8) (3.4) (8.1) (9.7) (11.6)Taxation paid (13.2) (9.0) (54.9) (47.0) (56.5)---------------------------------------------------------------------------------------------------Net cash fromoperatingactivities (59.0) (39.9) (28.2) (14.3) 104.5--------------------------------------------------------------------------------------------------- Investing activities:Interestreceived 0.2 0.2 1.9 1.2 1.8Proceeds fromsale ofproperty,plant andequipment 7.5 - 7.5 - 0.2Purchase ofplant andequipment (24.2) (23.4) (59.4) (59.1) (70.5)---------------------------------------------------------------------------------------------------Cash flowsfrom investingactivities (16.5) (23.2) (50.0) (57.9) (68.5)--------------------------------------------------------------------------------------------------- Financing activities:Proceeds fromissue of sharecapital 0.6 0.5 2.5 5.2 7.3Purchase ofown shares byESOT - - - (9.5) (9.5)Increasein/(repaymentof) borrowings 67.7 62.5 82.3 52.7 (8.1)Dividends paid - - (45.5) (37.3) (43.8)---------------------------------------------------------------------------------------------------Cash flowsfrom financingactivities 68.3 63.0 39.3 11.1 (54.1)--------------------------------------------------------------------------------------------------- Reconciliation of movement in cash and cash equivalents:Net decrease in cash and cashequivalents (7.2) (0.1) (38.9) (61.1) (18.1)Opening cash and cash equivalents 28.4 15.9 59.6 76.9 76.9Translation difference (1.4) 0.3 (0.9) 0.3 0.8---------------------------------------------------------------------------------------------------Closing cash and cash equivalents 19.8 16.1 19.8 16.1 59.6--------------------------------------------------------------------------------------------------- Reconciliation of cash flows tomovement in net debt:(1)Change in net debt resultingfrom cash flows (74.9) (62.6) (121.2) (113.8) (10.0)Translation difference (2.7) 1.1 (13.2) 1.1 6.4---------------------------------------------------------------------------------------------------Movement in net debt in theperiod (77.6) (61.5) (134.4) (112.7) (3.6)Opening net debt (140.3) (131.1) (83.5) (79.9) (79.9)---------------------------------------------------------------------------------------------------Closing net debt (217.9) (192.6) (217.9) (192.6) (83.5)--------------------------------------------------------------------------------------------------- (1) Net debt represents cash and cash equivalents, short-term borrowings and bank loans. Notes to the unaudited interim financial resultsfor the 39 weeks ended 29 October 2005 1. Basis of preparation These interim financial statements have been prepared on the basis ofInternational Accounting Standards and International Financial ReportingStandards (collectively "IFRS") expected to be endorsed by the European Union("EU") and available for use by European companies for accounting periodsbeginning on or after 1 January 2005. IFRS is subject to review and possibleamendment or interpretive guidance and therefore subject to change. Details ofthe accounting policies applied are set out in the Group's Annual Report andAccounts for the year ended 29 January 2005, as amended for the adoption ofIFRS, details of which are given in Note 10 below. These policies assume thatthe amendments to IAS 19 'Employee Benefits', allowing actuarial gains andlosses to be recognised in full through reserves, will be endorsed by the EU. These interim financial statements are unaudited and do not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. Thecomparative figures for the 52 weeks ended 29 January 2005 are not the Company'sstatutory accounts for that period. Those accounts, which were prepared under UKGAAP, have been reported on by the Company's auditors and have been delivered tothe Registrar of Companies following the Company's Annual General Meeting. Thereport of the auditors was unqualified and did not contain a statement underSection 237(2) or Section 237(3) of the Companies Act 1985. 2. Segment information 13 weeks 13 weeks 39 weeks 39 weeks 52 weeks ended ended ended ended ended 29 October 30 October 29 October 30 October 29 January 2005 2004 2005 2004 2005----------------------------------------------------------------------------------------------- £m £m £m £m £m----------------------------------------------------------------------------------------------- Sales by origin anddestinationUK, ChannelIslands &Republic ofIreland 90.5 97.4 273.8 294.7 507.7US 220.0 196.3 759.6 683.3 1,107.8----------------------------------------------------------------------------------------------- 310.5 293.7 1,033.4 978.0 1,615.5----------------------------------------------------------------------------------------------- Operating (loss)/profitUK, Channel Islands &Republic of Ireland- Trading(1) (2.5) 3.7 (4.9) 9.7 76.9- Groupcentral costs (1.5) (1.7) (4.7) (4.9) (6.8)----------------------------------------------------------------------------------------------- (4.0) 2.0 (9.6) 4.8 70.1US 9.5 7.9 70.6 59.8 142.4----------------------------------------------------------------------------------------------- 5.5 9.9 61.0 64.6 212.5----------------------------------------------------------------------------------------------- The Group's results derive from one business segment - the retailing ofjewellery, watches and gifts. (1) UK trading profit for the 39 weeks ended 30 October 2004 and for the 52weeks ended 29 January 2005 includes a restructuring charge of £1.7 million. 3. Financing costs 13 weeks 13 weeks 39 weeks 39 weeks 52 weeks ended ended ended ended ended 29 October 30 October 29 October 30 October 29 January 2005 2004 2005 2004 2005----------------------------------------------------------------------------------------------- £m £m £m £m £m-----------------------------------------------------------------------------------------------Interestpayable (2.8) (3.4) (8.1) (9.7) (11.6)Pensionsfinancingcredit 0.1 0.3 0.3 0.9 1.2Interestreceivable 0.2 0.2 1.9 1.2 1.8----------------------------------------------------------------------------------------------- (2.5) (2.9) (5.9) (7.6) (8.6)----------------------------------------------------------------------------------------------- Notes to the unaudited interim financial resultsfor the 39 weeks ended 29 October 2005 4. Taxation The net taxation charges in the profit and loss accounts for the 13 weeks and 39weeks ended 29 October 2005 have been based on the anticipated effectivetaxation rate for the 52 weeks ending 28 January 2006. 5. Translation differences The exchange rates used for the translation of US dollar transactions andbalances in these interim statements are as follows: 29 October 30 October 29 January 2005 2004 2005-------------------------------------------------------------------------------- Profit and loss account (averagerate) 1.84 1.82 1.86Balance sheet (closing rate) 1.78 1.83 1.89-------------------------------------------------------------------------------- The effect of restating the balance sheet at 30 October 2004 to the exchangerates ruling at 29 October 2005 would be to increase net debt by £5.6 million to£198.2 million. Restating the profit and loss account would decrease the pre-taxprofit for the 39 weeks ended 30 October 2004 by £0.5 million to £56.5 million. 6. Earnings per share 13 weeks 13 weeks 39 weeks 39 weeks 52 weeks ended ended ended ended ended 29 October 30 October 29 October 30 October 29 January 2005 2004 2005 2004 2005----------------------------------------------------------------------------------------------- £m £m £m £m £m----------------------------------------------------------------------------------------------- Profit attributable to shareholders 2.0 4.1 36.1 35.9 134.8----------------------------------------------------------------------------------------------- Weightedaverage numberof shares inissue(million) 1,736.6 1,732.9 1,736.3 1,730.8 1,731.6Dilutiveeffect ofshare options(million) 5.5 5.3 5.8 5.1 3.6-----------------------------------------------------------------------------------------------Dilutedweightedaverage numberof shares(million) 1,742.1 1,738.2 1,742.1 1,735.9 1,735.2-----------------------------------------------------------------------------------------------Earnings pershare - basic 0.1p 0.2p 2.1p 2.1p 7.8p- diluted 0.1p 0.2p 2.1p 2.1p 7.8p----------------------------------------------------------------------------------------------- The number of shares in issue at 29 October 2005 was 1,736,757,673 (30 October2004: 1,733,113,548 shares, 29 January 2005: 1,735,615,152 shares). 7. Dividend A dividend of 0.4125p per share was paid on 4 November 2005 to shareholders onthe register of members at the close of business on 7 October 2005. Notes to the unaudited interim financial resultsfor the 39 weeks ended 29 October 2005 8. Impact of constant exchange rates The Group has historically used constant exchange rates to compareperiod-to-period changes in certain financial data. This is referred to as 'atconstant exchange rates' throughout this release. The Group considers this auseful measure for analysing and explaining changes and trends in the Group'sresults. The impact of the re-calculation of sales, operating profit, profitbefore tax and net debt at constant exchange rates, including a reconciliationto the Group's GAAP results, is analysed below. 39 weeks ended 29 October 2005 Growth at 39 weeks 39 weeks Growth at Impact of At constant constant ended ended actual exchange exchange exchange 29 October 30 October exchange rate rates rates 2005 2004 rates movement (non-GAAP) (non-GAAP)------------------------------------------------------------------------------------------------------------- £m £m % £m £m %------------------------------------------------------------------------------------------------------------- Sales by origin anddestinationUK, ChannelIslands &Republic ofIreland 273.8 294.7 (7.1) - 294.7 (7.1)US 759.6 683.3 11.2 (7.4) 675.9 12.4------------------------------------------------------------------------------------------------------------- 1,033.4 978.0 5.7 (7.4) 970.6 6.5------------------------------------------------------------------------------------------------------------- Operating (loss)/profitUK, Channel Islands& Republic ofIreland- Trading (4.9) 9.7 n/a - 9.7 n/a- Groupcentral costs (4.7) (4.9) n/a - (4.9) n/a------------------------------------------------------------------------------------------------------------- (9.6) 4.8 n/a - 4.8 n/aUS 70.6 59.8 18.1 (0.6) 59.2 19.3------------------------------------------------------------------------------------------------------------- 61.0 64.6 (5.6) (0.6) 64.0 (4.7)------------------------------------------------------------------------------------------------------------- Profit beforetax 55.1 57.0 (3.3) (0.5) 56.5 (2.5)------------------------------------------------------------------------------------------------------------- Impact of At constantAt 29 October 2005 29 October 30 October exchange exchange rates 2005 2004 rate movement (non-GAAP)------------------------------------------------------------------------------ £m £m £m £m------------------------------------------------------------------------------ Net debt (217.9) (192.6) (5.6) (198.2)------------------------------------------------------------------------------ 9. Reconciliation of IFRS to US GAAP Whilst the Group is not required to prepare a US GAAP reconciliation on aquarterly basis, it has historically provided such a reconciliation for theconvenience of shareholders and potential investors. As part of the transitionto IFRS, the Group provides IFRS to UK GAAP reconciliations for interimreporting during 2005 but does not expect to provide an IFRS to US GAAPreconciliation. The Group will provide an IFRS to US GAAP reconciliation in itsfinancial statements for the year ended 28 January 2006 as part of its AnnualReport on Form 20-F. Notes to the unaudited interim financial resultsfor the 39 weeks ended 29 October 2005 10. Adoption of IFRS (i) Revised accounting policies adopted For financial years commencing on or after 1 January 2005 the Group is requiredto report in accordance with IFRS as adopted by the EU. The Group therefore nowprepares its results under IFRS. This announcement contains comparativeinformation for the 13 weeks and 39 weeks ended 30 October 2004 and for the 52weeks ended 29 January 2005 that has been prepared under IFRS. IFRS is subjectto review and possible amendment or interpretive guidance and therefore subjectto change. Revised accounting policies adopted as a result of the application ofIFRS are given below. All other accounting policies applied are consistent withthose disclosed in the Annual Report & Accounts for the 52 weeks ended 29January 2005. These changes have no impact on the Group's historical or future cash flows orthe timing of cash received and paid. The rules for the first time adoption of IFRS are set out in IFRS 1 'First-timeAdoption of International Reporting Standards'. In general, a company isrequired to determine its IFRS accounting policies and apply theseretrospectively to determine its opening balance sheet under IFRS. A number ofexceptions from retrospective application are allowed to assist companies asthey move to reporting under IFRS. Where the Group has taken advantage of theexemptions they are noted below. IFRS 2 Share-based PaymentsIn accordance with IFRS 2, the Group recognises a charge to income in respect ofthe fair value of outstanding employee share options. The fair value iscalculated using the binomial valuation model and charged to income over therelevant option vesting period. The optional transitional arrangements, whichallow companies to apply IFRS 2 fully retrospectively to all options granted butnot fully vested at the relevant reporting date, have been used. IFRS 3 Business CombinationsGoodwill is carried at cost with impairment reviews performed annually and whenthere are indications that the carrying value may not be recoverable. Under thetransitional arrangements the Group applies IFRS 3 prospectively from thetransition date. As a result, all prior business combination accounting isfrozen at the transition date of 31 January 2004 and the value of goodwill isalso frozen at that date. IAS 10 Proposed DividendDividends are not accrued for until approved. IAS 17 Leasing Where operating leases include clauses in respect of predetermined rentincreases, those rents are charged to the income statement on a straight linebasis over the lease term. Furthermore, any construction period or other rentalholidays are included in the determination of the straight-line expense period.Inducements to enter into a lease are recognised over the lease term. IAS 18 Revenue Recognition Revenue is only recognised when all significant risks of ownership have beentransferred to the buyer. Provisions for returned goods are recognised in netassets with movements in these provisions recognised in the income statement. IAS 32 and 39 Financial Instruments The Group has taken the exemption not to restate comparatives for IAS 32'Financial Instruments: Disclosure and Presentation' and IAS 39 'FinancialInstruments: Recognition and Measurement'. As a result, the comparativeinformation in this announcement for the 13 weeks and 39 weeks ended 30 October2004 and for the 52 weeks ended 29 January 2005 is presented on the previouslyexisting UK GAAP basis. The Group applies the hedge accounting provisions of IAS39 as they relate to forward currency and commodity contracts to the extentpractically and economically appropriate in order to minimise future volatilityarising from its implementation. IAS 38 Intangible Assets Computer software that is not an integral part of the related hardware isclassified as an intangible asset and is stated at cost less accumulateddepreciation. Depreciation is charged on a straight line basis over periods fromthree to five years. Notes to the unaudited interim financial resultsfor the 39 weeks ended 29 October 2005 10. Adoption of IFRS (continued) (ii) Reconciliation of IFRS to UK GAAP Estimated effect on sales and profit before tax of differences between IFRS andUK GAAP 13 weeks ended 39 weeks ended 13 weeks ended 52 weeks ended 30 October 30 October 29 January 29 January 2004 2004 2005 2005------------------------------------------------------------------------------------------- £m £m £m £m------------------------------------------------------------------------------------------- Salespreviouslyreported underUK GAAP 292.1 963.8 650.6 1,614.4US extendedserviceagreementsrestated (0.4) (2.3) 2.3 - ---------------------------------------------------------------Sales restatedunder UK GAAP 291.7 961.5 652.9 1,614.4 IFRS adjustments:US insuranceincome 2.5 7.7 2.7 10.4Voucherpromotions - 9.7 (11.9) (2.2)Movement inreturnsprovision 0.8 3.0 (3.4) (0.4)UK warrantysales (1.3) (3.9) (2.8) (6.7)-------------------------------------------------------------------------------------------Sales inaccordancewith IFRS 293.7 978.0 637.5 1,615.5------------------------------------------------------------------------------------------- Profit beforetax previouslyreported underUK GAAP 8.4 62.3 148.0 210.3US extendedserviceagreementsrestated (0.4) (2.3) 2.3 - ---------------------------------------------------------------Profit beforetax restatedunder UK GAAP 8.0 60.0 150.3 210.3 IFRS adjustments:Share-basedpayments (1.0) (2.9) (1.0) (3.9)Goodwillamortisation 0.3 0.8 0.2 1.0Leases (0.9) (2.5) (1.0) (3.5)Movement inreturnsprovision 0.6 1.6 (1.6) --------------------------------------------------------------------------------------------Profit beforetax inaccordancewith IFRS 7.0 57.0 146.9 203.9------------------------------------------------------------------------------------------- Taxation:Taxation aspreviouslyreported underUK GAAP (2.9) (21.5) (47.6) (69.1)US extendedserviceagreementsrestated 0.1 0.9 (0.9) -Tax effect ofIFRSadjustments (0.1) (0.5) 0.5 -------------------------------------------------------------------------------------------- (2.9) (21.1) (48.0) (69.1)------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------Profit for thefinancialperiod inaccordancewith IFRS 4.1 35.9 98.9 134.8------------------------------------------------------------------------------------------- Estimated cumulative effect on total equity of differences between IFRS and UKGAAP 31 January 30 October 29 January 2004 2004 2005------------------------------------------------------------------------------- £m £m £m-------------------------------------------------------------------------------Total equity previously reportedunder UK GAAP 674.9 719.7 739.1US extended service agreementsrestated - (19.0) - ----------------------------------------------Total equity restated under UKGAAP 674.9 700.7 739.1 IFRS adjustments:Share-based payments - - -Goodwill amortisation - 0.8 1.0Leases (14.9) (16.4) (17.9)Revenue recognition (6.0) (5.0) (6.0)Deferred taxation 6.5 6.5 7.5Dividend recognition 37.3 6.5 45.5-------------------------------------------------------------------------------Total equity in accordance withIFRS 697.8 693.1 769.2------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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