Chairman's statement
GUS has made real progress again this year, both operationally and strategically. Experian has delivered a fourth successive year of double-digit growth and Argos Retail Group (ARG), in a very challenging retail environment, has again improved its market position, under both the Argos and Homebase brands.
During the course of the year, we continued to invest in these businesses. We also successfully completed the sale of our remaining interest in Lewis Group; demerged our 65% shareholding in Burberry by distributing our shares to you, the shareholders; and sold the Wehkamp home shopping business in the Netherlands.
In March, we announced plans for the demerger of our two remaining businesses, Argos Retail Group and Experian. These plans are now well advanced and the demerger should be completed in October, subject to shareholder approval. This is the final step in our strategy of building successful businesses and enabling shareholders to invest directly in them.
I hope you will agree that we have developed, over the past six years, some very fine businesses out of the GUS stable. Experian is today a global leader in providing information solutions to organisations and consumers; ARG is the UK's leading general merchandise retailer; Burberry is a major international luxury brand; and Lewis Group is one of the leading furniture and appliance retailers in South Africa.
Our strategy over the course of the last few years has been to invest in and develop businesses with above average growth potential and, in this way, to create value for you. I believe that we have done that and that the value of your shares in GUS has grown very significantly since early 2000. In total, during this time, we have created over £8bn of shareholder value.
Despite immense corporate activity during this period, we have also given close attention to our broader corporate responsibilities. The Group continues to be listed in all the major corporate responsibility indices, including FTSE4Good and the Dow Jones Global Sustainability Index. We have improved the energy efficiency in our buildings and increased the amount of waste we recycle; our ethical audits have gone deeper and wider into our supply chain, and we have been closely involved with social topics such as financial awareness and money management.
The GUS Charitable Trust has also supported important projects that will leave a permanent legacy in the charitable sector. For example, the Trust brought together over 20 prostate cancer organisations to improve health policy in this area. It also facilitated a winning bid by the Citizens Advice Bureau to receive £33 million from the Government's Financial Inclusion Fund to provide more face-to-face debt advice.
As we finalise our plans for demerger, I would like to pay a real tribute to the talent, energy and commitment of everyone at GUS in bringing us to such a successful position, and most particularly to the leadership of John Peace, so ably assisted by David Tyler, Terry Duddy and Don Robert. I hope that shareholders will endorse my vote of thanks to the team who have worked so successfully for us. At the same time, I would like to thank all my nonexecutive colleagues on the GUS Board, both past and present, for their considerable input of time and expertise.
We are very fortunate that the management that has served us so well over recent years will continue as the senior team in Experian and ARG. Don Robert will be the Chief Executive of Experian and Paul Brooks the Chief Financial Officer; Terry Duddy will be the Chief Executive of ARG and Richard Ashton the Group Finance Director.
I am delighted, too, that other members of the GUS Board will be joining the two businesses to provide further continuity. Oliver Stocken and John Peace will become the chairmen of ARG and Experian respectively, and will be joined as non-executive directors by John Coombe and Andy Hornby at ARG and by Sir Alan Rudge and David Tyler at Experian.
They and their colleagues are all looking forward to continuing to develop these businesses and creating further value as they focus on their particular market places.
So, in what is probably my last statement as Chairman of GUS, I reiterate my thanks to colleagues and to you, the shareholders, who have been so supportive of our efforts over the course of the last few years. It is the people who work in our businesses who make the difference between moderate performance and excellent performance. As shareholders, I know that you will be well served by the ongoing teams in Experian and ARG and I thank them for their endeavours and wish them all good fortune and all success for the future.
Financial summary |
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| Sales | Profit | |||
| 12 months to 31 March | 2006 £m |
2005 £m |
2006 £m |
2005 £m |
| Argos Retail Group | 5,548 | 5,313 | 348.9 | 399.5 |
| Experian | 1,725 | 1,362 | 416.7 | 317.0 |
| Central activities | (11) | (12) | (20.2) | (21.8) |
| Continuing operations | 7,262 | 6,663 | 745.4 | 694.7 |
| Discontinued operations1 | 653 | 1,124 | 119.4 | 239.0 |
| Total | 7,915 | 7,787 | 864.8 | 933.7 |
| Net interest | (36.3) | (23.7) | ||
| Benchmark PBT | 828.5 | 910.0 | ||
| Amortisation of acquisition intangibles | (37.0) | (11.6) | ||
| Store impairment charges2 | (12.8) | – | ||
| Exceptional items | 17.5 | (3.5) | ||
| Fair value remeasurements | (2.8) | – | ||
| 793.4 | (894.9) | |||
| Taxation | (198.2) | (249.7) | ||
| Equity minority interests | (25.6) | (49.4) | ||
| Profit attributable to equity shareholders | 569.6 | 595.8 | ||
| Benchmark EPS | 62.3p | 62.0p | ||
| Basic EPS | 60.2p | 59.6p | ||
| Weighted average number of ordinary shares | 946.7m | 1,000.1m | ||
| The profit figure shown against each business above is earnings before interest and taxation (EBIT), defined as profit before interest, amortisation of acquisition intangibles, store impairment charges, exceptional items (i.e. gains or losses on disposal, demerger or closure of businesses and goodwill impairment charges), financing fair value remeasurements and taxation. It also includes the Group’s share of associates’ pre-tax profit. 2005 profit has been restated to reflect clearer IFRS interpretation on certain issues. 1 Discontinued operations include
Lewis, Burberry and Wehkamp with profit in 2006 up until the date
of disposal |
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Sir Victor Blank
Chairman
23 May 2006
