31st Aug 2005 12:30
Signet Group PLC31 August 2005 Signet Group plc(LSE: SIG and NYSE: SIG) Embargoed until 12.30 pm (BST)Unaudited Interim Results for 26 weeks ended 30 July 2005 31 August 2005 Signet Reports Further Advance Reported At Constant Exchange Rates(1) BasisGroup profit before tax: £52.1m up 4% up 6%Group like for like sales: up 3.3%Group sales: £722.9m up 6% up 7%Earnings per share: 2.0p up 11%Interim dividend per share: 0.4125p up 10%(1) See note 8 for reconciliation. Operational Highlights: • US: Significant outperformance of main competition Excellent progress by Jared Operating margin increased • UK: Results reflect very difficult trading conditions Diamond participation and average selling price continue to increase 2005/06 Store Investment: • Group: Capital expenditure to increase to c.£85m (2004/05: £70m) • US: 9% space increase planned for year • UK: 82 store remodels and resites planned Terry Burman, Group Chief Executive, commented: "We are pleased with the furtheradvance in Group profits. A strong performance by our US division, whichaccounts for 70% of Group sales, compensated for the decline in UK results. TheUS division gained further market share and again outperformed its maincompetition. In common with other retailers, the UK business experienced verydifficult trading conditions throughout the period. The outcome for the full year will, as usual, be influenced by the externaltrading environment on both sides of the Atlantic during the important Christmasperiod. Our businesses will continue to execute their proven strategy and arewell placed to compete." Enquiries: Terry Burman, Group Chief Executive +44 (0) 20 7399 9520 Walker Boyd, Group Finance Director +44 (0) 20 7399 9520 Mike Smith, Brunswick +44 (0) 20 7404 5959 Pamela Small, Brunswick +44 (0) 20 7404 5959 Signet operated 1,781 speciality retail jewellery stores at 30 July 2005; theseincluded 1,183 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 598 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. Interim Results Statement GROUP In the 26 weeks to 30 July 2005 Group profit before tax rose by 5.7% at constantexchange rates, the increase on a reported basis being 4.2% to £52.1 million (H12004/05: £50.0 million). Like for like sales advanced by 3.3%. Total sales roseby 6.9% at constant exchange rates and by 5.6% on a reported basis to £722.9million (H1 2004/05: £684.3 million). These results have been prepared inaccordance with International Financial Reporting Standards ("IFRS"), see Note10 for further details. Operating profit rose by 3.0% at constant exchange rates and by 1.5% on areported basis to £55.5 million (H1 2004/05: £54.7 million). Operating marginwas slightly down at 7.7% (H1 2004/05: 8.0%). Earnings per share advanced by11.1% to 2.0p (H1 2004/05: 1.8p), the tax rate being 34.5% (H1 2004/05: 36.4%).The Board has approved an increase of 10.0% in the interim dividend to 0.4125pper ordinary share (H1 2004/05: 0.375p). The outcome for the full year will, as usual, be influenced by the externaltrading environment on both sides of the Atlantic during the important Christmasperiod. The businesses will continue to execute their proven strategy and arewell placed to compete. OPERATING REVIEW US Division (circa 70% of Group sales) The US division had an excellent first half year with like for like sales up7.9%. Although it faced demanding prior year comparatives, the business againsignificantly outperformed its main competition and gained further market share.Total sales rose by 12.6% at constant exchange rates to £539.6 million (H1 2004/05: £487.0 million) and by 10.8% on a reported basis. Operating profit rose by19.6% at constant exchange rates; on a reported basis the increase was 17.7% to£61.1 million (H1 2004/05: £51.9 million). The average unit selling price roseby 12.6% following selective price increases and actions taken to attractcustomers to higher price points. Such initiatives included the continueddevelopment of the Leo Diamond range, three stone diamond jewellery category andthe larger diamond selection. Gross margin rate was slightly down on that of last year due to changes in salesmix. Supply chain and price initiatives offset higher commodity costs. Operatingmargin rose to 11.3% (H1 2004/05: 10.7%) having benefited from like for likesales growth leverage. Bad debt charges at 2.7% of total sales (H1 2004/05:2.5%) were in-line with the average of the previous five years. Bridal and diamond categories again performed well and the fashion goldselection continued to benefit from collaborative marketing with the World GoldCouncil. Jared loose diamond and luxury watch ranges performed particularlystrongly. There was a rise in the number of Kay television and print impressionsduring the Valentine's and Mother's Day periods. There will be a furtherincrease in advertising expenditure over the important Christmas period with theplanned annual marketing to sales ratio being maintained at a broadly similarlevel to that of last year. The capacities of the distribution and repaircentres have been increased and central support for staff training andrecruitment has also been expanded. The division's superior customer service,based on exceptionally well trained staff, remains a key competitive advantage. During the six month period there were 22 mall store openings, with a further 29planned in the second half. 15 mall stores are anticipated to be closed duringthe year. 26 mall stores were refurbished or relocated in the first half, with afurther 48 scheduled for the second half. The trial of Kay stores in off-mallcentres has been very encouraging and it is planned to instigate the initialroll-out of the concept in 2006; in the first half three of these stores wereopened and eight more are planned by the end of the year. The period also sawthe opening of two Kay stores in metropolitan locations, a new market sector forthe division, and it is expected that one further site will start trading laterthis year. Four Jared stores were opened in the first half, with a further 14scheduled for the second half. The total store complement at year end shouldrise to 1,222 consisting of 1,079 mall stores, 31 off-mall Kay stores, three Kaymetropolitan locations and 111 Jared stores. It is expected that approximately9% will have been added to total US store space during 2005/06 and considerationis being given to a further measured increase in the rate of store openings infuture years. UK Division (circa 30% of Group sales) In the UK external trading conditions were very difficult throughout the firsthalf. Against this background, and demanding prior year comparatives, like forlike sales declined by 7.8% (H.Samuel -8.4% and Ernest Jones -7.1%). Total salesfell by 7.1% to £183.3 million (H1 2004/05: £197.3 million). This resulted in anoperating loss of £2.4 million (H1 2004/05: profit of £6.0 million including a£1.7 million restructuring charge). Gross margin rate was a little above lastyear's level. Tight control of costs, gross margin and inventory was maintained. The strategyto increase diamond participation in the sales mix continued and was againreflected in a rise in the overall average selling price. The drive to furtherenhance customer service was sustained, with a strong emphasis on stafftraining. The results from the redesigned, more customer-friendly, stores continue to meetthe required sales differential. A further 49 redesigned stores commencedtrading in the first half (including three new store openings), bringing thetotal to 191 (31 July 2004: 105 stores). By Christmas, 229 stores, predominantlyH.Samuel, are expected to be trading in the revised format, accounting for about45% of the division's sales. A further two H.Samuel stores and two Ernest Jonesstores are planned to be opened by the end of the year, and it is anticipatedthat, net of a further six store closures, there will then be 388 H.Samuel and208 Ernest Jones stores. Group central costs, financing costs and taxation Group central costs were £3.2 million (H1 2004/05: £3.2 million). Financingcosts fell to £3.4 million (H1 2004/05: £4.7 million). The tax charge was £18.0million (H1 2004/05: £18.2 million). Net debt Net debt at 30 July 2005 was £140.3 million (31 July 2004: £131.1 million).Group gearing (that is the ratio of net debt to shareholders' funds) at 30 July2005 was 17.4% (31 July 2004: 19.0%). Reflecting normal seasonal factors netdebt has increased by £56.8 million (H1 2004/05: up £51.2 million) since thestart of the financial year. Fixed capital investment in the current year isexpected to be about £85 million (2004/05: £70.5 million), the increasereflecting additional space growth in the US. ********************* There will be an analysts' meeting today at 2.00 p.m. (BST) and 9.00 a.m. (EDT).For all interested parties there will be a simultaneous audio and video webcastavailable on the Signet Group website (www.signetgroupplc.com) and a livetelephone conference call. The details for the conference call are: European dial-in: +44(0)20 7365 1850European 48 hr. replay: +44(0)20 7784 1024 Access code: 8633848 US dial-in: +1 718 354 1172US 48 hr. replay: +1 718 354 1112 Access code: 8633848 A video webcast of the presentation is expected to be available from close ofbusiness today at www.signetgroupplc.com and on the Thomson RAW broadbandnetwork. On Monday 12 September 2005, in New York, Signet will host an analyst andinstitutional investor seminar and store tour. For further information pleasecontact Yuhau Lin of Taylor Rafferty (+1 212 889 4350) or [email protected]. 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 Group 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. The interim report will be posted to shareholders on or around 16 September2005. Copies of the interim report may be obtained from the Company Secretary,Zenith House, The Hyde, London NW9 6EW or downloaded as a pdf file fromwww.signetgroupplc.com. The third quarter sales for the 13 weeks ending 29 October 2005 are expected tobe announced on Thursday 3 November 2005 at 12.30 p.m. (GMT). SIGNET GROUP plc Unaudited interim consolidated income statementfor the 26 weeks ended 30 July 2005 13 weeks ended 13 weeks ended 26 weeks 26 weeks 52 weeks 30 July 31 July ended ended ended 2005 2004 30 July 31 July 29 January 2005 2004 2005----------------------- ----- ------- ------- ------- ------- ------- Notes £m £m £m £m £m----------------------- ----- ------- ------- ------- ------- ------- Sales 2,8 353.7 332.7 722.9 684.3 1,615.5Cost of sales (320.8) (295.3) (653.8) (611.5) (1,371.8)----------------------- ----- ------- ------- ------- ------- -------Gross profit 32.9 37.4 69.1 72.8 243.7Administrative expenses (18.1) (20.3) (36.5) (37.6) (69.8)Other operating income 11.2 9.7 22.9 19.5 38.6----------------------- ----- ------- ------- ------- ------- -------Operating profit 2,8 26.0 26.8 55.5 54.7 212.5Financing costs 3 (1.8) (2.6) (3.4) (4.7) (8.6)----------------------- ----- ------- ------- ------- ------- -------Profit before tax 8 24.2 24.2 52.1 50.0 203.9Taxation 4 (8.4) (8.8) (18.0) (18.2) (69.1)----------------------- ----- ------- ------- ------- ------- -------Profit for thefinancial period 15.8 15.4 34.1 31.8 134.8----------------------- ----- ------- ------- ------- ------- ------------------------------ ----- ------- ------- ------- ------- -------Earnings pershare - basic 6 0.9p 0.9p 2.0p 1.8p 7.8p - diluted 6 0.9p 0.9p 2.0p 1.8p 7.8p----------------------- ----- ------- ------- ------- ------- ------- All of the above relate to continuing activities. Unaudited consolidated balance sheetat 30 July 2005 30 July 31 July 29 January 2005 2004 2005---------------------------------- ------- ------- ------- £m £m £m---------------------------------- ------- ------- -------AssetsNon-current assetsIntangible assets 21.1 18.2 17.4Property, plant and equipment 248.1 218.9 225.2Other receivables 13.9 11.3 11.6Retirement benefit asset - 2.3 -Deferred tax assets 13.2 34.7 12.4---------------------------------- ------- ------- ------- 296.3 285.4 266.6---------------------------------- ------- ------- -------Current assetsInventories 619.7 561.9 577.9Trade and other receivables 346.2 286.2 359.4Cash and cash equivalents 28.4 15.9 59.6---------------------------------- ------- ------- ------- 994.3 864.0 996.9---------------------------------- ------- ------- -------Total assets 1,290.6 1,149.4 1,263.5---------------------------------- ------- ------- -------LiabilitiesCurrent liabilitiesShort-term borrowings (26.1) (9.1) (10.3)Trade and other payables (147.9) (153.5) (163.3)Deferred income (46.9) (40.3) (53.5)Current tax (19.6) (34.6) (43.8)---------------------------------- ------- ------- ------- (240.5) (237.5) (270.9)---------------------------------- ------- ------- -------Non-current liabilitiesBank loans (142.6) (137.9) (132.8)Trade and other payables (32.0) (24.0) (26.7)Deferred income (62.3) (53.8) (56.2)Provisions (5.6) (6.2) (5.8)Retirement benefit obligation (1.9) - (1.9)---------------------------------- ------- ------- ------- (244.4) (221.9) (223.4)---------------------------------- ------- ------- -------Total liabilities (484.9) (459.4) (494.3)---------------------------------- ------- ------- -------Net assets 805.7 690.0 769.2---------------------------------- ------- ------- -------EquityCapital and reserves attributable to equity shareholdersCalled up share capital 8.7 8.7 8.7Share premium 68.6 63.9 68.0Other reserves 127.5 137.2 152.3Retained earnings 600.9 480.2 540.2---------------------------------- ------- ------- -------Total equity 805.7 690.0 769.2---------------------------------- ------- ------- ------- Unaudited consolidated statement of recognised income and expensefor the 26 weeks ended 30 July 2005 13 weeks ended 13 weeks ended 26 weeks 26 weeks 52 weeks 30 July 31 July ended ended ended 2005 2004 30 July 31 July 29 January 2005 2004 2005-------------------------- ------- ------- ------- ------- ------- £m £m £m £m £m-------------------------- ------- ------- ------- ------- -------Profit for the financialperiod 15.8 15.4 34.1 31.8 134.8Translation differences 76.9 (25.9) 68.1 - (32.6)Gains on cash flow hedges 3.5 - 1.8 - -Actuarial loss on retirement benefit scheme - - - - (3.9)-------------------------- ------- ------- ------- ------- -------Total recognised income and expense for the period 96.2 (10.5) 104.0 31.8 98.3-------------------------- ------- ------- ------- ------- ------- Unaudited changes in total equityfor the 26 weeks ended 30 July 2005 Share Share Revaluation Special Reserve for own Retained Total capital premium reserve reserves shares earnings ---------------------- ------ ------ ------ ------ ------ ------ ------ £m £m £m £m £m £m £m---------------------- ------ ------ ------ ------ ------ ------ ------Balance at 29 January 2005 8.7 68.0 4.3 155.9 (7.9) 540.2 769.2Recognised income andexpense:- Profit for the financial period - - - - - 34.1 34.1- Gains on cash flow hedges - - - - - 1.8 1.8- Translation differences - - - (26.1) - 68.1 42.0Equity-settledtransactions - net of tax - - - - - 2.2 2.2Dividends - - - - - (45.5) (45.5)Share options exercised - 0.6 - - 1.3 - 1.9---------------------- ------ ------ ------ ------ ------ ------ ------Balance at 30 July 2005 8.7 68.6 4.3 129.8 (6.6) 600.9 805.7---------------------- ------ ------ ------ ------ ------ ------ ------ Unaudited changes in total equityfor the 26 weeks ended 31 July 2004 Share Share Revaluation Special Reserve for own Retained Total capital premium reserve reserves shares earnings ---------------------- ------ ------ ------ ------ ------ ------ ------ £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 for the financial period - - - - - 31.8 31.8- Translation differences - - - - - - -Equity-settledtransactions - net of tax - - - - - 2.5 2.5Dividends - - - - - (37.3) (37.3)Share options exercised 0.1 3.2 - - 1.4 - 4.7Purchase of own shares by ESOT (1) - - - - (9.5) - (9.5)---------------------- ------ ------ ------ ------ ------ ------ ------Balance at 31 July 2004 8.7 63.9 3.1 142.2 (8.1) 480.2 690.0---------------------- ------ ------ ------ ------ ------ ------ ------ (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 26 weeks ended 30 July 2005 13 weeks ended 13 weeks ended 26 weeks 26 weeks 52 weeks 30 July 31 July ended ended ended 2005 2004 30 July 31 July 29 January 2005 2004 2005-------------------------- ------- ------- ------- ------- ------- £m £m £m £m £m-------------------------- ------- ------- ------- ------- -------Cash flows from operatingactivities: Profit before tax 24.2 24.2 52.1 50.0 203.9Depreciation charges 10.7 9.4 20.8 18.3 41.3Financing costs 1.8 2.6 3.4 4.7 8.6Decrease/(increase) ininventories 18.9 (0.1) (9.8) (20.9) (52.3)Decrease/(increase) in trade and otherreceivables 10.7 11.0 35.3 39.6 (44.5)(Decrease)/increase inpayables and deferredincome (32.7) (27.5) (26.0) (23.4) 11.1Other non-cashmovements 1.1 0.8 2.0 1.6 4.5-------------------------- ------- ------- ------- ------- -------Cash generated fromoperations 34.7 20.4 77.8 69.9 172.6Interest paid (2.7) (3.1) (5.3) (6.3) (11.6)Taxation paid (18.6) (21.3) (41.7) (38.0) (56.5)-------------------------- ------- ------- ------- ------- -------Net cash from operatingactivities 13.4 (4.0) 30.8 25.6 104.5-------------------------- ------- ------- ------- ------- -------Investing activities:Interest received 0.7 0.2 1.7 1.0 1.8Proceeds from sale of plantand equipment - - - - 0.2Purchase of plant andequipment (21.4) (22.7) (35.2) (35.7) (70.5)-------------------------- ------- ------- ------- ------- -------Cash flows from investingactivities (20.7) (22.5) (33.5) (34.7) (68.5)-------------------------- ------- ------- ------- ------- -------Financing activities:Proceeds from issue of share capital 0.9 2.9 1.9 4.7 7.3Purchase of own shares byESOT - (4.7) - (9.5) (9.5)Increase in/(repaymentof) borrowings 16.9 (9.0) 14.6 (9.8) (8.1)Dividends paid (45.5) (37.3) (45.5) (37.3) (43.8)-------------------------- ------- ------- ------- ------- -------Cash flows from financingactivities (27.7) (48.1) (29.0) (51.9) (54.1)-------------------------- ------- ------- ------- ------- ------- Reconciliation of movement in cash and cash equivalents:Net decrease in cash and cash equivalents (35.0) (74.6) (31.7) (61.0) (18.1)Opening cash and cash equivalents 63.3 92.2 59.6 76.9 76.9Translation difference 0.1 (1.7) 0.5 - 0.8-------------------------- ------- ------- ------- ------- -------Closing cash and cash equivalents 28.4 15.9 28.4 15.9 59.6-------------------------- ------- ------- ------- ------- -------Reconciliation of cash flows to movement in net debt:(1)Change in net debt resultingfrom cash flows (51.9) (65.6) (46.3) (51.2) (10.0)Translation difference (12.4) 2.7 (10.5) - 6.4-------------------------- ------- ------- ------- ------- -------Movement in net debt in theperiod (64.3) (62.9) (56.8) (51.2) (3.6)Opening net debt (76.0) (68.2) (83.5) (79.9) (79.9)-------------------------- ------- ------- ------- ------- -------Closing net debt (140.3) (131.1) (140.3) (131.1) (83.5)-------------------------- ------- ------- ------- ------- ------- (1) Net debt represents cash and cash equivalents, short-term borrowings andbank loans. Notes to the unaudited interim financial resultsfor the 26 weeks ended 30 July 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 ended 13 weeks ended 26 weeks ended 26 weeks ended 52 weeks 30 July 31 July 30 July 31 July ended 2005 2004 2005 2004 29 January 2005---------------------- ------- ------- ------- ------- -------- £m £m £m £m £m---------------------- ------- ------- ------- ------- -------Sales by origin anddestinationUK, Channel Islands &Republic of Ireland 92.0 101.2 183.3 197.3 507.7US 261.7 231.5 539.6 487.0 1,107.8---------------------- ------- ------- ------- ------- ------- 353.7 332.7 722.9 684.3 1,615.5---------------------- ------- ------- ------- ------- ------- Operating (loss)/profitUK, Channel Islands &Republic of Ireland- Trading(1) (2.0) 3.4 (2.4) 6.0 76.9- Group central costs (1.7) (1.7) (3.2) (3.2) (6.8)---------------------- ------- ------- ------- ------- ------- (3.7) 1.7 (5.6) 2.8 70.1US 29.7 25.1 61.1 51.9 142.4---------------------- ------- ------- ------- ------- ------- 26.0 26.8 55.5 54.7 212.5---------------------- ------- ------- ------- ------- ------- The Group's results derive from one business segment - the retailing ofjewellery, watches and gifts. (1) UK trading profit for the 13 weeks and 26 weeks ended 31 July 2004 and forthe 52 weeks ended 29 January 2005 includes a restructuring charge of £1.7million. 3. Financing costs 13 weeks ended 13 weeks ended 26 weeks ended 26 weeks ended 52 weeks 30 July 31 July 30 July 31 July ended 2005 2004 2005 2004 29 January 2005---------------------- ------- ------- ------- ------- ------- £m £m £m £m £m---------------------- ------- ------- ------- ------- -------Interest payable (2.7) (3.1) (5.3) (6.3) (11.6)Pensions financingcredit 0.2 0.3 0.2 0.6 1.2Interest receivable 0.7 0.2 1.7 1.0 1.8---------------------- ------- ------- ------- ------- ------- (1.8) (2.6) (3.4) (4.7) (8.6)---------------------- ------- ------- ------- ------- ------- 4. Taxation The net taxation charges in the profit and loss accounts for the 13 weeks and 26weeks ended 30 July 2005 has been based on the anticipated effective taxationrate 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: 30 July 31 July 29 January 2005 2004 2005--------------------------------- ------- ------- -------Profit and loss account (average rate) 1.86 1.83 1.86Balance sheet (closing rate) 1.76 1.82 1.89--------------------------------- ------- ------- ------- The effect of restating the balance sheet at 31 July 2004 to the exchange ratesruling at 30 July 2005 would be to increase net debt by £4.7 million to £135.8million. Restating the profit and loss account would decrease the pre-tax profitfor the 26 weeks ended 31 July 2004 by £0.7 million to £49.3 million. 6. Earnings per share 13 weeks ended 13 weeks ended 26 weeks ended 26 weeks ended 52 weeks ended 30 July 31 July 30 July 31 July 29 January 2005 2004 2005 2004 2005----------------------- ------- ------- ------- ------- ------- £m £m £m £m £m----------------------- ------- ------- ------- ------- -------Profit attributableto shareholders 15.8 15.4 34.1 31.8 134.8----------------------- ------- ------- ------- ------- -------Weighted average numberof shares in issue(million) 1,736.4 1,731.9 1,736.1 1,729.8 1,731.6Dilutive effect ofshare options (million) 5.0 5.5 5.4 4.9 3.6----------------------- ------- ------- ------- ------- -------Diluted weightedaverage numberof shares (million) 1,741.4 1,737.4 1,741.5 1,734.7 1,735.2----------------------- ------- ------- ------- ------- -------Earnings pershare - basic 0.9p 0.9p 2.0p 1.8p 7.8p - diluted 0.9p 0.9p 2.0p 1.8p 7.8p----------------------- ------- ------- ------- ------- ------- The number of shares in issue at 30 July 2005 was 1,736,502,948 (31 July 2004:1,732,741,069 shares, 29 January 2005: 1,735,615,152 shares). 7. Dividend A dividend of 0.4125p per share will be paid on 4 November 2005 to shareholderson the register of members at the close of business on 7 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. 26 weeks ended 30 26 weeks ended 26 weeks ended Growth at At constant Growth atJuly 2005 30 July 31 July actual Impact of exchange rates constant 2005 2004 exchange exchange rare (non-GAAP) exchange rates movement rates (non-GAAP)------------------- ------- ------- ------- ------- ------- ------- £m £m % £m £m %------------------- ------- ------- ------- ------- ------- -------Sales by origin anddestinationUK, Channel Islands & Republic ofIreland 183.3 197.3 -7.1% - 197.3 -7.1%US 539.6 487.0 10.8% (7.9) 479.1 12.6%------------------- ------- ------- ------- ------- ------- ------- 722.9 684.3 5.6% (7.9) 676.4 6.9%------------------- ------- ------- ------- ------- ------- -------Operating (loss)/profitUK, Channel Islands& Republic ofIreland- Trading (2.4) 6.0 n/a - 6.0 n/a- Group central costs (3.2) (3.2) - - (3.2) -------------------- ------- ------- ------- ------- ------- ------- (5.6) 2.8 n/a - 2.8 n/aUS 61.1 51.9 17.7% (0.8) 51.1 19.6%------------------- ------- ------- ------- ------- ------- ------- 55.5 54.7 1.5% (0.8) 53.9 3.0%------------------- ------- ------- ------- ------- ------- -------Profit beforetax 52.1 50.0 4.2% (0.7) 49.3 5.7%------------------- ------- ------- ------- ------- ------- ------- At 30 July 2005 30 July 31 July Impact of At constant 2005 2004 exchange exchange rates rate movement (non-GAAP)------------------- --------- --------- --------- --------- £m £m £m £m------------------- --------- --------- --------- --------- Net debt (140.3) (131.1) (4.7) (135.8)------------------- --------- --------- --------- --------- 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 will provide 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. 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 interim results under IFRS. This announcement contains comparativeinformation for the 13 weeks and 26 weeks ended 31 July 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 Payments In 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 Combinations Goodwill 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 Dividend Dividends 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 26 weeks ended 31 July2004 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. 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 26 weeks ended 13 weeks ended 13 weeks ended 52 weeks ended 31 July 31 July 30 October 29 January 29 January 2004 2004 2004 2005 2005----------------------- ------- ------- ------- ------- ------- £m £m £m £m £m----------------------- ------- ------- ------- ------- -------Sales previouslyreported underUK GAAP 328.6 671.7 292.1 650.6 1,614.4US extended serviceagreements restated (0.9) (1.9) (0.4) 2.3 - ------- ------- ------- ------- -------Sales restatedunder UK GAAP 327.7 669.8 291.7 652.9 1,614.4 IFRS adjustments:US insurance income 2.6 5.2 2.5 2.7 10.4Voucher promotions 4.0 9.7 - (11.9) (2.2)Movement in returnsprovision (0.2) 2.2 0.8 (3.4) (0.4)UK warranty sales (1.4) (2.6) (1.3) (2.8) (6.7)----------------------- ------- ------- ------- ------- -------Sales in accordancewith IFRS 332.7 684.3 293.7 637.5 1,615.5----------------------- ------- ------- ------- ------- -------Profit before tax previously reported underUK GAAP 26.7 53.9 8.4 148.0 210.3US extended serviceagreements restated (0.9) (1.9) (0.4) 2.3 - ------- ------- ------- ------- -------Profit beforetax restatedunder UK GAAP 25.8 52.0 8.0 150.3 210.3 IFRS adjustments:Share-based payments (1.0) (1.9) (1.0) (1.0) (3.9)Goodwill amortisation 0.2 0.5 0.3 0.2 1.0Leases (0.7) (1.6) (0.9) (1.0) (3.5)Movement in returnsprovision (0.1) 1.0 0.6 (1.6) ------------------------ ------- ------- ------- ------- -------Profit before tax inaccordance with IFRS 24.2 50.0 7.0 146.9 203.9----------------------- ------- ------- ------- ------- -------Taxation:Taxation as previouslyreported underUK GAAP (9.2) (18.6) (2.9) (47.6) (69.1)US extended serviceagreements restated 0.4 0.8 0.1 (0.9) -Tax effect of IFRSadjustments - (0.4) (0.1) 0.5 ------------------------ ------- ------- ------- ------- ------- (8.8) (18.2) (2.9) (48.0) (69.1)----------------------- ------- ------- ------- ------- ------------------------------ ------- ------- ------- ------- -------Profit for thefinancial period inaccordancewith IFRS 15.4 31.8 4.1 98.9 134.8----------------------- ------- ------- ------- ------- ------- Estimated cumulative effect on total equity of differences between IFRS and UKGAAP 31 January 31 July 29 January 2004 2004 2005------------------------------- -------- -------- -------- £m £m £m ------------------------------ -------- -------- --------Total equity previouslyreported under UK GAAP 674.9 716.5 739.1US extended serviceagreements restated - (18.7) - -------- -------- --------Total equity restated underUK GAAP 674.9 697.8 739.1 IFRS adjustments:Share-based payments - - -Goodwill amortisation - 0.5 1.0Leases (14.9) (15.9) (17.9)Revenue recognition (6.0) (5.4) (6.0)Deferred taxation 6.5 6.5 7.5Dividend recognition 37.3 6.5 45.5------------------------------ -------- -------- --------Total equity in accordancewith IFRS 697.8 690.0 769.2------------------------------ -------- -------- -------- Independent review report by KPMG Audit Plc to Signet Group plc Introduction We have been engaged by the Company to review the financial information set outon pages 5 to 13 and 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 which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual accounts except where any changes, and the reasons for them,are to be disclosed. As disclosed in note 1 to the financial information, the next annual financialstatements of Signet Group plc will be prepared in accordance with IFRSs adoptedfor use in the European Union. The accounting policies that have been adopted inpreparing the financial information are consistent with those that the directorscurrently intend to use in the next annual financial statements. There is,however, a possibility that the directors may determine that some changes tothese policies are necessary when preparing the full annual financial statementsfor the first time in accordance with those IFRSs adopted for use by theEuropean Union. This is because, as disclosed in note 1, the directors haveanticipated that certain standards, which have yet to be formally adopted foruse in the European Union, will be adopted in time to be applicable to the nextannual financial statements. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of Signet Group plc management and applying analytical procedures tothe financial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review is substantially lessin scope than an audit performed in accordance with Auditing Standards 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 26 weeks ended30 July 2005. KPMG Audit PlcChartered AccountantsLondon 31 August 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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