21st Sep 2006 07:03
Morrison(Wm.)Supermarkets PLC21 September 2006 Profit recovery under way at Morrisons Interim results for the 25 weeks ended 23 July 2006 Financial Summary • Turnover £5.85bn (2005 £5.85bn) • Profit before tax £134.2m (2005 loss of £82.1m) • Cash flow from operations £418.8m (2005 £326.6m) • Net debt reduced to £881m (2005 £1.1bn) • Interim dividend maintained at 0.625 pence per share • Like for like sales in the first 8 weeks of the second half 6.5% inc fuel (5.9% exc fuel) Optimisation Plan • Solid progress in the period • Majority of three year margin uplift target of 90bps to be delivered this year • On course to save 6m store labour hours this year • On course to save £30m in distribution this year • On course to save £30m in central costs this year Commenting on the results, Sir Ken Morrison said "We have more customers now than ever before in our history. Our business isgrowing again, and we are well on track with our targeted profit improvements.Marc Bolland joins a business moving firmly in the right direction, and I haveevery confidence that he will lead us to future success." For further information Media: Gillian Hall Public Relations Director 08456 115 359 Citigate Dewe Rogerson: 020 7638 9571Jonathan Clare/Simon Rigby/Sarah Gestetner Investor Relations:Niall Addison Investor Relations Director 07764 624701 Chairman's statement Overview This statement covers trading for the 25 weeks to 23 July 2006 and is presentedin accordance with International Financial Reporting Standards. In March, having completed the process of converting Safeway stores toMorrisons, and divesting substantially all of those stores that would not fitthe Morrisons trading model, we set out our plan for the next phase of ourdevelopment, which we call the Optimisation Plan. Progress towards ouroptimisation targets has been pleasing in the first half, giving us confidencethat they will be achieved ahead of our original timetable. The period saw little change in the size and shape of the stores estate, with afurther 6 ex-Safeway stores divested or closed and one new store opened inLeyland, to leave the Group with 373 trading stores at the half year. We expectto open 3 new build stores in the second half, at Swadlincote, Cardiff andCrowborough, and we announced in July that we are selling a further 6 smallstores to Waitrose along with one of the ex-Safeway distribution depots, atAylesford, that was closed earlier this year. Turnover for the 25 weeks was £5.85bn, in line with the prior period. Given that66 stores were sold in the intervening period this was a satisfactoryperformance. Strong growth was achieved in the stores converted from Safeway,whilst the original Morrisons stores, which started the period recordingnegative like for like sales, had, as anticipated, moved into positive territoryby the end of the period. Fuel sales were very strong, and the fact that likefor like volumes grew by 4.5% underscores Morrisons value credentials in thisprolonged period of high fuel prices. Overall, like for like sales increased by6.6% including fuel, and 4.6% excluding fuel, during a period which sawgenerally good growth across the sector. Profit before tax was £134.2m, compared with a loss in the prior period of£82.1m. Operating profit was £163.8m compared with £50.7m before exceptionalcosts in the prior period, reflecting progress in delivering the OptimisationPlan. There were no exceptional costs this time, compared with £118.8m in theprior period when the Group was in the midst of the stores conversion process. Cash flow was strong, with £418.8m generated from operations compared with£326.6m in the prior period, which was impacted by exceptional costs. This ledto a substantial reduction in net debt, to £881m compared with £1.1bn a yearpreviously and £1.6bn two years ago. Despite the reduction in debt, netfinancing costs were up slightly at £29.6m due to lower interest capitalised andthe effect of marking-to-market certain interest rate swaps that do not qualifyfor hedging treatment. Capital expenditure was significantly down after the intense activity of theprevious two years, with investment in the period of £115.3m and an expectationthat capital expenditure will approximately match depreciation this year. With the Group returning to profitability, the Board is pleased to confirm itsintention to pay an interim dividend of 0.625 pence per share, the same level aslast year. This will be paid on 13 November 2006 to shareholders on the registeron 13 October 2006. Optimisation Plan progress The last annual report set out the Board's plans for the next phase ofdevelopment, having completed the task of converting and integrating the Safewayestate. It confirmed that this next "optimisation" phase would continue forthree years, but that we were confident of delivering good improvements in likefor like sales and profitability in 2006/07. At this interim stage of the year,it is pleasing to see the improvements coming through solidly and sustainably. The objectives behind the plan are simple - to apply the Morrisons philosophy,which worked so well over many years, to the new, bigger business and adapt itwhere appropriate, to reflect things that have changed. Underpinning our actionsis a vision once again to be the Best Grocer in Town, and progress is being madeon all fronts. For the first time in two years, colleagues in the business havebeen able to concentrate, exclusively, on the day job, and this is bearingfruit. The quality of the existing team is amply demonstrated by the speedy wayin which challenges have been addressed. Further improvements in standards areshowing daily, in range selection, merchandising and supplier relationships. The lifeblood of the business is, of course, sales - our ability to encouragemore customers into our stores, and to buy more. In core Morrisons stores, weneed to rebuild sales lost in the previous two years through cannibalisation,the distractions of the conversion programme and competitor openings. In theconverted stores, we need to attract customers who are new to Morrisons. Goodprogress is being made in both areas. Customer numbers were up, on a like forlike basis, by 5.3% overall and a particularly strong performance was seen inthe converted stores as new customers tried us and liked what they found. With our store management teams able to focus, once again, on the basicdisciplines of shopkeeping, we have been able to ensure that customer service isdelivered well whilst also improving our efficiency. Our objective of saving 6mlabour hours this year, without detriment to service or the need for anyprogramme of redundancy, is well on course for achievement, with attendantsavings of £50m. Our operational focus has also resulted in improvements inwastage levels, contributing to our three year gross margin uplift target of0.9%, the majority of which we now expect to deliver this year. A strong contribution to this target has been through improved buying termsdelivered by our trading team. They, too, are now able to concentrate fully ontheir normal tasks of product innovation and delivering the unique combinationof everyday low prices and a comprehensive programme of promotions that havemade us consistently first for value. Our suppliers are now seeing growth againwith Morrisons, and they have responded in supportive fashion. Our abattoirs, fruit and vegetable pack-houses and meat and cheese processingfacility were all operating at capacity in the period, to serve the new biggerbusiness. This high level of operating efficiency has further helped the marginperformance in the period. Our distribution network has coped well after the inevitable disruptionassociated with three large depot closures early in the year. Stores havereceived good service, despite the fact that our distribution infrastructure isstill not optimally structured to serve our needs in the South. We are pleasedto have proved that we can maintain our industry leading levels of in-storeavailability, albeit the cost of achieving this is currently too high. We are ontrack to deliver the £30m of distribution cost savings previously announced,this year, and some further rationalisation of the network is currently thesubject of consultation with colleagues. As previously announced, we opened our new head office in Bradford in April, andthe relocation of 1,400 colleagues was achieved with minimal disruption. Theelimination of duplicate facilities will save £30m in the current year, apreviously announced target, but as important is the improvement in efficiencyand morale being seen from having the vast majority of our central colleagues inone location for the first time since the Safeway acquisition. We are, naturally, cooperating fully with the inquiry into grocery retailingbeing undertaken by the Competition Commission, which we believe is exploringthe correct issues. We have responded to their detailed and extensive requestsfor information, and have endeavoured to provide this in a timely and costeffective way through our in-house team. The Optimisation Plan is still in its early stages, but the Board is encouragedby progress to date and delighted that the efforts of colleagues throughout thebusiness are bearing fruit, both for customers and our shareholders. Morale isgood, and we thank all our colleagues for their dedication and professionalism.We are delighted, on their behalf, to have been recognised as best for serviceby both The Grocer and Checkout magazine in their annual awards Board Marc Bolland joined us as Chief Executive on 1 September, replacing Bob Stottwho retires on 30 September. He has made an enthusiastic and energetic start,seeking to understand the heartbeat of the business and getting well acquaintedwith colleagues in all areas. In addition to taking over Bob's operationalresponsibilities Marc chairs the Executive Board, has responsibility for Groupstrategy and will be a member of the Nominations Committee. During the first half of the year we confirmed Paul Manduca as our SeniorIndependent Director. Paul is leading the process of selecting and appointing anew Deputy Chairman, in succession to David Jones, who retired on 30 June.Executive search firm Egon Zehnder has been engaged to assist with this. We arealso seeking an additional independent non executive Director with recent andrelevant financial experience to support the workings of the Audit Committee. Trading update and outlook In the 8 weeks since 23 July 2006 the Group has continued to see good tradingmomentum, with like for like sales up 6.5% including fuel and 5.9% excludingfuel. Converted store sales growth remains strong, despite 199 of the total 226converted stores now being in their second full year post conversion andtherefore having annualised the initial conversion uplifts. The Group's sales levels are slightly stronger than we had anticipated at thetime of preparing the Optimisation Plan, and give us confidence for the secondhalf despite an expectation of a tougher trading environment. At this early stage in our optimisation programme, we are encouraged by theprogress being made. We are very clear that there remains much to do in order toestablish the levels of profitability expected by our shareholders, and in thatregard will lay out our plans for the next phase of profit recovery when wepresent our full year results in March 2007. 21 September 2006 Consolidated income statement25 weeks ended 23 July 2006 25 weeks 25 weeks ended 24 July 2005 Year ended 29 January 2006 ended 23 July 2006 Total Before Exceptional Total Before Exceptional Total exceptional costs exceptional costs costs costs Note £m £m £m £m £m £m £mTurnover 1 5,850.7 5,847.5 - 5,847.5 12,114.8 - 12,114.8Other operating income 8.7 10.0 - 10.0 18.5 - 18.5Raw materials and consumables (4,359.5) (4,426.7) - (4,426.7) (9,155.5) - (9,155.5)Gross profit 1,499.9 1,430.8 - 1,430.8 2,977.8 - 2,977.8 Staff costs (746.1) (784.2) (15.3) (799.5) (1,630.8) (86.1) (1,716.9)Depreciation and other asset (126.6) (139.3) (17.7) (157.0) (256.9) (21.0) (277.9)write offsIntangible write offs - - - - - (103.2) (103.2)Profit/(loss) on sale of 6.0 (1.3) - (1.3) 7.5 (16.7) (9.2)property, plant and equipmentOther operating (469.4) (455.3) (85.8) (541.1) (986.1) (147.4) (1,133.5)expensesOperating profit/ 2 163.8 50.7 (118.8) (68.1) 111.5 (374.4) (262.9)(loss) Finance costs 3 (33.7) (26.7) - (26.7) (73.2) - (73.2)Finance income 3 4.1 10.5 - 10.5 21.0 - 21.0Share of post-tax profits from - 2.2 - 2.2 2.2 - 2.2BP joint ventureProfit/(loss) before taxation 134.2 36.7 (118.8) (82.1) 61.5 (374.4) (312.9)Taxation (40.8) (9.9) 24.8 14.9 (15.6) 78.2 62.6Profit/(loss) 93.4 26.8 (94.0) (67.2) 45.9 (296.2) (250.3)for financialperiod Earnings/(loss) per share(pence): Basic 3.52 1.01 (2.54) 1.73 (9.46) Diluted 3.50 1.01 (2.54) 1.73 (9.46) Ordinary dividends (pence pershare)Interim - proposed 4 0.625 - paid 0.625 0.625Final - paid 3.075 Consolidated statement of recognised income and expense (SoRIE) 25 weeks 25 weeks ended Year ended ended 24 July 2005 29 January 23 July 2006 2006 £m £m £mProfit/(loss) for the financial 93.4 (67.2) (250.3)periodActuarial profit/(loss) arising in - 49.3 (28.2)the pension scheme (net oftaxation)Total recognised income and expense 93.4 (17.9) (278.5)for the financial periodPrior year impact on retained - 3.4 3.4earnings of first time adoption ofIAS 39Attributable to equity shareholders 93.4 (14.5) (275.1) Consolidated balance sheet23 July 2006 23 July 24 July 29 January 2006 2005 2006 Note £m £m £mAssetsNon-current assetsGoodwill and other intangibles - 103.2 -Property, plant and equipment 5 6,140.9 6,002.8 6,143.9Lease prepayments 221.0 231.4 217.8Investment property 227.2 219.1 225.3Financial assets 24.7 43.8 36.4 6,613.8 6,600.3 6,623.4Current assetsStocks 336.8 440.0 399.4Debtors 264.4 221.9 157.4Cash and cash equivalents 113.5 134.6 135.3 714.7 796.5 692.1Non-current assets classified as 6 81.2 387.2 128.6held for sale 795.9 1,183.7 820.7LiabilitiesCurrent liabilitiesCreditors (1,739.5) (1,705.3) (1,471.2)Other financial liabilities (2.5) (268.0) (296.6)Current tax liabilities (77.2) - (39.0) (1,819.2) (1,973.3) (1,806.8)Non-current liabilitiesOther financial liabilities (1,016.9) (1,011.4) (1,022.7)Deferred tax liabilities (423.3) (508.9) (422.6)Pension liabilities (401.4) (324.4) (416.2)Provisions (89.0) (55.2) (127.2) (1,930.6) (1,899.9) (1,988.7)Net assets 3,659.9 3,910.8 3,648.6 Shareholders' equityCalled up share capital 267.5 265.9 267.3Share premium 38.5 20.6 36.9Merger reserve 2,578.3 2,578.3 2,578.3Retained earnings 775.6 1,046.0 766.1Total equity 7 3,659.9 3,910.8 3,648.6 Consolidated cash flow statement25 weeks ended 23 July 2006 25 weeks 25 weeks Year ended ended ended 23 July 24 July 29 January 2006 2005 2006 Note £m £m £mCash flows from operationsCash generated from operations 8 418.8 326.6 311.0Interest paid (14.6) (20.0) (74.9)Taxation (paid)/received (1.9) (4.3) 33.3Net cash inflow from operating 402.3 302.3 269.4activitiesCash flows from investingactivitiesInterest received 4.1 8.7 23.2Proceeds from the sale of property, plant 50.9 109.8 324.1and equipmentPurchase of property, plant and (103.8) (338.2) (635.4)equipmentAcquisition of subsidiaries (net of cash - - (15.6)acquired)Proceeds on the sale of BP joint - - 87.0venture assetsProceeds from the sale of - 49.1 49.1subsidiariesNet cash outflow from investing (48.8) (170.6) (167.6)activitiesCash flows from financingactivitiesNet proceeds from the issue of 1.8 0.5 18.3ordinary sharesFinance lease principal repayments (1.2) (1.5) (2.6)New borrowings - 100.0 100.0Repayment of borrowings (250.0) (2.0) -Dividends paid to shareholders 4 (81.7) (81.2) (97.8)Net cash (outflow)/inflow from financing (331.1) 15.8 17.9activitiesNet increase in cash and cash 22.4 147.5 119.7equivalentsCash and cash equivalents at start 91.1 (28.6) (28.6)of the periodCash and cash equivalents at end of the 113.5 118.9 91.1period Reconciliation of net cashflow to movement in net debt 25 weeks 25 weeks Year ended ended ended 23 July 24 July 29 January 2006 2005 2006 Note £m £m £mNet increase in cash and cash 22.4 147.5 119.7equivalentsCash outflow from decrease in debt and lease 251.2 3.5 2.6financingCash inflow from increase in loans - (100.0) (100.0)Other non cash movements (7.2) 8.9 (9.0)Opening net debt (1,147.6) (1,160.9) (1,160.9)Closing net debt 9 (881.2) (1,101.0) (1,147.6) Notes to the interim report25 weeks ended 23 July 2006 25 weeks 25 weeks Year ended ended ended 23 July 24 July 29 January 2006 2005 2006 1 Turnover £m £m £m Sale of goods in 5,034.1 5,147.9 10,540.5 stores Fuel 1,283.6 1,158.4 2,515.7 Total sales 6,317.7 6,306.3 13,056.2 including VAT VAT (501.2) (488.9) (1,026.6) Other turnover 34.2 30.1 85.2 Total turnover 5,850.7 5,847.5 12,114.8 2 Exceptional costs The Group discloses separately within profit/(loss) for the financial period exceptional items which are material and unusual that derive from transactions or events that fall within the ordinary course of business. For the period ended 24 July 2005 and year ended 29 January 2006 exceptional costs were incurred that related to the integration and the conversion of the ex-Safeway stores to the Morrisons format. An analysis of the exceptional costs can be found in the annual report and financial statements 2006 and the interim report 2005/06. These reports can be viewed in the Investor information section of the Morrisons website at www.morrisons.co.uk . 25 weeks 25 weeks Year ended ended ended 23 July 24 July 29 January 2006 2005 2006 3 Finance costs and £m £m £m income Interest payable on short term (5.6) (5.1) (11.1) loans and bank overdrafts Interest payable on (27.6) (28.1) (58.1) bonds Interest 2.8 6.6 11.8 capitalised Total interest (30.4) (26.6) (57.4) payable Amortisation of (4.1) 5.6 (8.4) derivative instruments Pension liability (44.6) (41.3) (86.2) interest cost Expected return on 48.1 39.1 83.2 pension assets Net pension 3.5 (2.2) (3.0) liability interest Other finance costs (2.7) (3.5) (4.4) Finance costs (33.7) (26.7) (73.2) Bank interest 4.1 8.7 18.8 received Fair value income - 1.8 2.2 of derivative instruments Finance income 4.1 10.5 21.0 Net finance cost (29.6) (16.2) (52.2) 25 weeks 25 weeks Year ended ended ended 23 July 24 July 29 January 2006 2005 2006 4 Dividends £m £m £m Dividends paid in 81.7 81.2 97.8 the period The Directors are proposing an unchanged interim dividend of 0.625p per share, which will absorb an estimated £16.7m of shareholders' funds. This amount will be charged to retained earnings when paid. Notes to the interim report(continued) 25 weeks ended 23 July 2006 23 July 24 July 29 January 2006 2005 2006 5 Property, plant and £m £m £m equipment Net book value At beginning of the 6,143.9 5,708.1 5,708.1 period Additions at cost 115.3 365.3 655.0 Interest capitalised 2.8 6.6 11.8 Assets held for sale 3.5 11.2 26.9 transfer Acquired from joint - 67.7 67.7 venture Disposals (0.2) (1.3) (52.1) Depreciation charge (124.4) (154.8) (273.5) for the period and other asset write offs At end of the period 6,140.9 6,002.8 6,143.9 In addition to the depreciation charge above of £124.4m, £2.2m (24 July 2005 : £2.2m ; 29 January 2006 : £4.4m) is charged on Investment properties. Contracts placed for future capital expenditure not provided in the financial statements amount to £61.3m. 23 July 24 July 29 January 2006 2005 2006 6 Non-current assets £m £m £m classified as held for sale Property 81.2 329.7 128.6 Ex BP joint venture - 57.5 - assets 81.2 387.2 128.6 Non-current assets classified as held for sale represent stores and other administrative and distribution buildings marketed for sale. The amount that was reclassified from property, plant and equipment was all freehold and leasehold land and buildings including associated fixtures and fittings. The stock for those stores still trading is not reclassified as it will be immaterial at the time of sale. The results of any stores still trading continue to be included within the Group results. 23 July 24 July 29 January 2006 2005 2006 7 Statement of changes £m £m £m in shareholders' equity At beginning of the 3,648.6 4,005.9 4,005.9 period Total recognised 93.4 (17.9) (278.5) income and expense First time adoption - 3.4 3.4 of IAS 39 Share issues 1.8 0.6 18.3 Share option charge 1.1 - 0.6 Deferred tax on - - (3.3) options Cash flow hedging (3.3) - - reserve Dividends (81.7) (81.2) (97.8) At end of the period 3,659.9 3,910.8 3,648.6 Notes to the interim report25 weeks ended 23 July 2006 25 weeks 25 weeks Year ended ended ended 23 July 24 July 29 January 2006 2005 2006 8 Cash flow from £m £m £m operating activities Profit/(loss) for 93.4 (67.2) (250.3) the period Adjustments for: Taxation 40.8 (14.9) (62.6) Depreciation and 126.6 157.2 277.9 other asset write offs Intangible write - - 103.2 offs (Profit)/loss on (6.0) 1.3 9.2 disposal of property, plant and equipment Net finance cost 29.6 16.2 52.2 Other non-cash 1.1 1.0 0.7 changes Share of results of - (2.2) (2.2) joint ventures after taxation Excess of (11.3) (15.9) (35.2) contributions over pension service cost 274.2 75.5 92.9 Decrease/(increase) 62.6 (15.4) 25.2 in stocks (Increase)/decrease (110.3) 38.9 52.2 in debtors Increase in 231.1 229.9 73.5 creditors (Decrease)/increase (38.8) (2.3) 67.2 in provisions Net movements in 144.6 251.1 218.1 working capital Cash generated from 418.8 326.6 311.0 operations 23 July 24 July 29 January 2006 2005 2006 9 Analysis of net debt £m £m £m Cash and cash 113.5 134.6 135.3 equivalents Bank overdrafts - (15.7) (44.2) Cash and cash 113.5 118.9 91.1 equivalents per cash flow Interest and 24.7 43.8 36.4 cross-currency swaps Financial assets 24.7 43.8 36.4 Loans - (250.0) (250.0) Finance lease (2.5) (2.3) (2.4) obligations Current financial (2.5) (252.3) (252.4) liabilities Bonds (1,008.5) (1,000.3) (1,013.0) Other unsecured loans (4.0) (4.2) (4.0) Finance lease (4.4) (6.9) (5.7) obligations Non-current financial (1,016.9) (1,011.4) (1,022.7) liabilities Net debt (881.2) (1,101.0) (1,147.6) Accounting policies25 weeks ended 23 July 2006 Basis of preparation This interim report for the 25 weeks ended 23 July 2006 has been prepared on thebasis of the accounting policies set out in Wm Morrison Supermarkets PLC annualreport and financial statements 2006 and in accordance with the Listing Rules ofthe Financial Services Authority. The interim report was approved by the Board of Directors on 20 September 2006. The interim report does not constitute financial statements as defined insection 240 of the Companies Act 1985. It does not include all of the information and disclosures required for fullannual financial statements, and should be read in conjunction with the annualreport and financial statements for the 52 weeks ended 29 January 2006. The financial information contained in this interim report in respect of the 52weeks ended 29 January 2006 has been produced from the annual report andfinancial statements 2006 which have been filed with the Registrar of Companies.The auditors report on these financial statements was unqualified and did notcontain any statement under Section 237 of the Companies Act 1985. The interim results for the current and comparative periods are unaudited. The auditors have carried out a review of the interim report and their report isset out on the following page. Significant accounting policies Except for the new accounting policy below, the accounting polices applied bythe Group in these interim financial statements are the same as those applied bythe Group in the financial statements for the 52 weeks ended 29 January 2006. Financial instruments - hedge accounting The Group has a number of cross currency swaps which are used for non-tradingpurposes. These derivative financial instruments are used to match or eliminaterisk from potential movements in foreign exchange rates inherent in the cashflows of certain financial liabilities. Derivatives are reviewed regularly for effectiveness as hedges and correctiveaction taken, if appropriate. Derivatives are measured at fair value. Where a derivative financial instrument is designated as a hedge of thevariability in cash flows of a recognised asset or liability, or highly probableforecast transaction, the effective part of any gain or loss on the derivativefinancial instrument is recognised directly in equity. The gain or loss on anyineffective part of the hedge is immediately recognised in the income statement.If a hedge of a forecast transaction subsequently results in the recognition ofa financial asset or liability, the associated cumulative gains or losses thatwere recognised directly in equity are re-classified into the income statementin the same periods during which the interest income/expense is recognised. Independent review report to Wm Morrison Supermarkets PLC Introduction We have been instructed by the Company to review the financial information forthe 25 weeks ended 23 July 2006 which comprises the consolidated incomestatement, consolidated balance sheet, consolidated statement of recognisedincome and expense, consolidated cash flow statement and related notes to theinterim report. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the Company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the Company forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the UK. A review consistsprincipally of making enquiries of management and applying analytical proceduresto the financial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Statements on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the 25 weeks ended23 July 2006. KPMG Audit PlcChartered AccountantsLeeds20 September 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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