Financial Statements

Notes to the parent company financial statements

for the year ended 31 March 2006

1. Summary of significant accounting policies

Basis of accounting

The separate financial statements of the Company are presented as required by the Companies Act 1985, and were approved by the Board on 23 May 2006. They have been prepared on a going concern basis and under the historical cost convention, and in accordance with the Companies Act 1985 and applicable UK Generally Accepted Accounting Principles (UK GAAP).

The Company’s financial statements are included in the GUS plc consolidated financial statements for the year ended 31 March 2006. As permitted by section 230 of the Companies Act 1985, the Company has not presented its own profit and loss account. The Company has also taken advantage of the exemption from preparing a cash flow statement under the terms of FRS 1 (Revised 1996) ‘Cash Flow Statements’. The Company is also exempt under the terms of FRS 8 ‘Related Party Disclosures’ from disclosing transactions with other members of the GUS Group.

The GUS plc consolidated financial statements for the year ended 31 March 2006 contain financial instrument disclosures which comply with FRS 25 ‘Financial Instrument: Disclosure and Presentation’. Consequently, the Company has taken advantage of the exemption in FRS 25 not to present separate financial instrument disclosures for the Company.

The principal accounting policies, which have been applied on a consistent basis with previous years, unless otherwise stated, are noted below.

New standards and prior year adjustments

The Company has applied the following standards for the first time for the year ended 31 March 2006:

a) FRS 17 ‘Retirement Benefits’;
b) FRS 20 ‘Share-based Payment’;
c) FRS 21 ‘Events after the Balance Sheet Date’;
d) FRS 23 ‘The Effects of Changes in Foreign Exchange Rates’;
e) FRS 25 ‘Financial Instruments: Disclosure and Presentation’;
f) FRS 26 ‘Financial instruments: Measurements’;
g) FRS 28 ‘Corresponding Amounts’.

The adoption of these standards represents changes in several accounting policies and the comparative amounts have been restated accordingly, except where the exemption to restate comparatives has been taken. The adoption of FRS 17, FRS 20 and FRS 21 has resulted in a prior year adjustment with comparative figures restated (see below). FRS 23, FRS 25, FRS 26 and FRS 28 do not affect comparatives and only apply to the current year and a cumulative adjustment of £7m for the implementation of FRS 26 has been recognised in the opening profit and loss account reserve at 1 April 2005.

The Company has now adopted the full requirement of FRS 17 that requires the full actuarial valuation of the surplus or deficit on pension schemes to be included on the balance sheet. This has resulted in an increase in shareholders’ funds of £2m at 31 March 2005 and an increase in shareholders’ funds of £7m at 31 March 2006 due to the recognition of actuarial gains and losses on the Company’s pension obligations, net of deferred taxation. There is no material effect on reported profit for either year.

FRS 20 requires that the fair value of all share-based payments be charged to profit and loss account over the vesting period. This has resulted in a reduction of £2m in the reported profit for the year ended 31 March 2005 and an increase of £2m in the reported profit for the year ended 31 March 2006 as a result of increased staff costs. In addition, under FRS 20, the issuance by the Company of share incentives to employees of its subsidiaries is now treated as additional capital contributions. Accordingly, the Company’s investment in group undertakings has been increased by £63m at 31 March 2005 and £86m at 31 March 2006 with a corresponding increase in shareholders’ funds.

FRS 21 requires that dividends proposed, but not yet authorised, are not recognised in the financial statements. This has given rise to (i) an increase of £100m in reported profit for the year ended 31 March 2005 and an increase in reported profit of £2m for the year ended 31 March 2006 as dividend income from subsidiary undertakings is now only recognised when such dividends have been approved and (ii) an increase in shareholders’ funds at 31 March 2005 of £200m due to the additional write back of the dividend to the Company’s shareholders proposed at 31 March 2005.

Analysis of Prior Year Adjustments

	FRS 17	FRS 20	FRS 21	Total
	£m	£m	£m	£m
Adjustments to opening shareholders’ funds at 1 April 2004	(9)	44	88	123
Adjustments to profit and loss account for the year ended 31 March 2005	–	(2)	112	110
Amounts recognised in the profit and loss account reserve in the year ended 31 March 2005	11	21	–	32
Adjustments to opening shareholders’ funds at 1 April 2005	2	63	200	265

Tangible fixed assets

Land is not depreciated. Freehold properties are depreciated over 50 years by equal annual instalments. Leasehold premises with unexpired lease terms of 50 years or less are depreciated by equal annual instalments over the remaining period of the lease. Plant, vehicles and equipment are depreciated by equal annual instalments over two to ten years according to the estimated life of the asset.

Leases

Gross rental income receivable and payable in respect of operating leases is recognised on a straight line basis over the periods of the leases.

Investments in Group undertakings

Investments in Group undertakings are stated at cost less provision considered necessary for any impairment.

Impairment of fixed assets

Where there is an indication of impairment, fixed assets are subject to review for impairment in accordance with FRS 11 ‘Impairment of Fixed Assets and Goodwill’. Any impairment is recognised in the year in which it occurs.

Cash

Cash includes cash in hand, deposits held at call with banks and other short-term highly liquid investments.

Financial Instruments

Borrowings and borrowing costs

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost unless they are part of a fair value hedge accounting relationship. Initial differences between proceeds and the redemption values are recognised in the profit and loss account over the period of the borrowings using the effective interest rate method. Borrowings that are subject to a fair value hedge accounting relationship are measured at amortised cost plus or minus the fair value attributable to the risk being hedged.

Interest accrued on borrowings is included in accruals, under creditors.

Incremental borrowing costs which are directly attributable to the issue of debt are capitalised and amortised over the expected life of the borrowing using the effective interest rate method. All other borrowing costs are expensed in the year in which they are incurred.

Derivative financial instruments

The Company uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange rates, interest rates and social security obligations in respect of share-based payments. Derivative instruments utilised by the Company include interest rate swaps, currency swaps, forward currency contracts and equity swaps.

Up to 31 March 2005
Amounts payable or receivable in respect of interest rate swaps are recognised as adjustments to net interest over the period of the contract. Forward currency contracts are accounted for as hedges, with the instrument’s impact on profit deferred until the underlying transaction is recognised in the income statement. Financial instruments hedging the risk on foreign currency assets are revalued at the balance sheet date and the resulting gain or loss is offset against that arising from the translation of the underlying assets into sterling and taken to reserves.

From 1 April 2005
Derivatives are initially accounted and measured at fair value on the date a derivative contract is entered into and subsequently measured at fair value. The accounting treatment of derivatives classified as hedges depends on their designation, which occurs on the date that the derivative contract is committed to. The Company designates derivatives as a hedge of the fair value of an asset or liability (‘fair value hedge’).

For an effective hedge of an exposure to changes in the fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged with the corresponding entry in the income statement. Gains or losses from re-measuring the corresponding hedging instrument are recognised in the profit and loss account.

Changes in the fair value derivatives or other hedging instruments transacted as hedges of financial items, but for which hedge accounting has not been applied, are recognised in the profit and loss account as they arise.

In order to qualify for hedge accounting, the Company documents in advance the relationship between the item being hedged and the hedging instrument. The Company also documents and demonstrates an assessment of the relationship between the hedged item and the hedging instrument, which shows that the hedge will be highly effective on an ongoing basis. The effectiveness testing is reperformed at each period and to ensure that the hedge remains highly effective.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts, and the host contracts are not carried at fair value with unrealised gains or losses reported in the profit and loss account.

Deferred taxation

Deferred taxation is provided in respect of timing differences that have originated but not reversed at the balance sheet date and is determined using the tax rates that are expected to apply when the timing differences reverse. Deferred tax assets are recognised only to the extent that they are expected to be recoverable.

ESOP Trust and Treasury shares

The GUS plc Employee Share Ownership Plan Trust (‘the Trust’) is a separately administered trust. Liabilities of the Trust are guaranteed by the Company and the assets of the Trust mainly comprise shares in the Company. The assets, liabilities and expenses of the Trust are included in the Company’s financial statements as if they were the Company’s own.

Own shares held by the Trust, together with treasury shares repurchased by the Company, are shown as a deduction from shareholders’ funds at cost.

Share-based payments

The Group has a number of equity-settled share-based compensation plans. The fair value of options and shares granted is recognised as an expense after taking into account the Group’s best estimate of the number of awards expected to vest. The Group revises the vesting estimate at each balance sheet date. Non market peformance conditions are included in the vesting estimates. Expenses are incurred over the vesting period. Fair value is measured at the date of grant using whichever of the Black-Scholes, Monte Carlo model and closing market price is most appropriate to the award. Market based performance conditions are included in the fair value measurement on grant date and are not revised for actual performance.

The issuance by the Company of share incentives to employees of its subsidiaries represents additional capital contributions. An addition to the Company’s investment in group undertakings is reported with a corresponding increase in shareholders’ funds.

Pension costs

The Company operates the GUS Defined Benefit Scheme, whose assets are held in an independently administered fund (details on assumptions regarding the scheme are set out in note 25 to the Group financial statements). The liability recognised in the balance sheet is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit method.

The Company also operates the GUS Defined Contribution Scheme, whose assets are also held in an independently administered fund. The cost of providing these benefits, comprises the amount of contributions payable to the scheme in respect of the year.

Dividend distribution

Dividend distributions are recognised in the Company’s financial statements in the year in which the dividends are approved in general meeting by the Company’s shareholders. Interim dividends are recognised when paid.

2. Profit and loss account disclosures

The Company profit on ordinary activities after taxation was £6m (2005: £130m).

The aggregate employee costs for the Company were as follows:	2006 £m	2005 £m
Wages and salaries	7	7
Social security costs	2	2
Share-based payments	7	10
Pension costs – defined benefit plans	4	2
Total	20	21

The Company employed an average of 65 (2005: 70) employees, including executive directors, during the year. Details of the remuneration of Directors are given in the auditable part of the Report on directors’ remuneration and related matters on pages 45 to 48.

The Company audit fee was £0.3m (2005: £0.3m). Non-audit services relating to tax advisory services and other advice amounted to £2.0m (2005: £1.2m) and £2.4m (2005: £0.1m) respectively.

During the year the Company paid £721m (2005: £281m) of equity dividends to shareholders, including £437m dividend in specie relating to the demerger of Burberry Group plc. The directors propose a final dividend of 21.9p per share (totalling £187m) for the year ended 31 March 2006. This dividend is not included as a liability in the current year financial statements as it has not been approved. For further details see note 13 in the GUS Group financial statements.

	Freehold	Short	Plant,	Total
	properties	leasehold	vehicles &
		properties	equipment
3. Tangible fixed assets	£m	£m	£m	£m
Cost
At 1 April 2005 and 31 March 2006	1	1	2	4

Depreciation
At 1 April 2005 and 31 March 2006	–	–	1	1
Net Book Value at 31 March 2005 and 31 March 2006	1	1	1	3

There is no material difference between the net book value of properties carried at valuation and their historical cost equivalents.

4. Investments in group undertakings	£m
Cost
At 1 April 2005 as previously reported	3,162
Prior year adjustment – FRS 20 (note 1)	63
At 1 April 2005 as restated	3,225
Additions	23
Transfer from subsidiary undertaking	440
Disposals	(440)
At 31 March 2006	3,248

Impairment charges
At 1 April 2005 and 31 March 2006	5

Net Book Value at 31 March 2005	3,220
Net Book Value at 31 March 2006	3,243

Additions in the year comprised the fair value of the share incentives issued to employees of subsidiary undertakings. During the year the whole of the Group’s holdings of ordinary and preference shares in Burberry Group plc was transferred to the Company from a subsidiary undertaking at the book value of £440m. Disposals comprise £437m in respect of the shares in Burberry Group plc distributed to the Company’s shareholders by way of dividend in specie and £3m in respect of Burberry shares sold externally after the demerger.

The Company’s principal subsidiary undertakings are listed in note 15.

	Due within	Due after	Due within	Due after
	one year	more than	one year	more than
		one year		one year
			(Restated) (Note 1)
5. Debtors	2006 £m	2006 £m	2005 £m	2005 £m
Amounts owed by subsidiary undertakings	6,111	–	6,663	–
Taxation recoverable	22	–	–	–
Deferred tax assets	–	7	–	16
VAT recoverable	1	–	1	–
Deferred consideration receivable	140	–	–	140
Prepayments and accrued income	4	–	11	–
Other financial assets (note 9)	4	76	–	–
	6,282	83	6,675	156

The deferred consideration of £140m in respect of the disposal of the home shopping and Reality businesses was received by the Company in April 2006 from March UK Limited.

	2006	2005
		(Restated)
		(Note 1)
6. Creditors – amounts due within one year	£m	£m
Loans and overdrafts (note 8)	218	35
Amounts owed to subsidiary undertakings	5,954	6,335
Taxation	–	20
Accruals	28	9
Other creditors	20	19
Other financial liabilities (note 9)	21	–
Total	6,241	6,418

	2006	2005
7. Creditors – amounts due after more than one year	£m	£m
Loans (note 8)	1,843	1,451
Other financial liabilities (note 9)	8	–
	1,851	1,451

	2006	2005
8. Loans and overdrafts	£m	£m
Repayable wholly within five years:
€568m 4.125% Eurobonds 2007	395	375
£350m 6.375% Eurobonds 2009	356	348
Bank loans	750	415
Overdrafts	218	–
	1,719	1,138
Repayable after more than five years:
£350m 5.625% Eurobonds 2013	342	348
	2,061	1,486

The amounts due to be repaid within five years are repayable as follows:
Within one year	218	35
Between one and two years	775	–
Between two and five years	726	1,103
	1,719	1,138

All borrowings of the Company are unsecured.

9. Other financial assets and liabilities

	Due within	Due after
	one year	more than
		one year
	2006	2006
a) Other financial assets	£m	£m
Derivative financial instruments:
Interest rate swaps	2	41
Currency swaps	-	27
Equity swaps	2	2
Available-for-sale assets
Listed investments	-	6
Total other financial assets	4	76

b) Other financial liabilities	£m	£m
Derivative financial instruments:
Interest rate swaps	2	8
Foreign exchange contracts	19	-
Total other financial liabilities	21	8

Disclosures in respect of the financial instruments of the Company are included within note 27 to the Group financial statements.

10. Share capital and share premium

	Number	Share	Share
	of shares	capital	premium
Year ended 31 March 2006	m	m	m
At 1 April 2005	1,017.2	254	69
Allotted under share option schemes	4.8	2	28
Share consolidation	(142.8)	–	–
Balance at 31 March 2006	879.2	256	97

Year ended 31 March 2005	Number of shares m	Share capital m	Share premium m
At 1 April 2004	1,014.0	254	35
Allotted under share option schemes	6.7	1	34
Share consolidation	(3.5)	(1)	–
Balance at 31 March 2005	1,017.2	254	69

Authorised share capital

At 31 March 2006 and 31 March 2005 the authorised share capital of the Company amounted to £313m. At 31 March 2006 this comprised 1,075,000,000 Ordinary shares of 29 3/43p (2005: 1,250,000,000 Ordinary shares of 25p). At 31 March 2006, 879,240,912 Ordinary shares of 29 3/43p each had been allotted, called up and fully paid. At 31 March 2005, 1,017,236,451 Ordinary shares of 25p each had been allotted, called up and fully paid. The change in the par value of the Company’s shares was in connection with a share consolidation.

Share consolidation

At an Extraordinary General Meeting on 13 December 2005, the shareholders of GUS plc approved a consolidation of GUS shares, replacing 1,023m Ordinary shares of 25p each with 880m Ordinary shares of 29 3/43p each. The share consolidation was designed to keep the GUS share price at approximately the same level, subject to normal market movements, before and after the demerger of the Group’s remaining interest in Burberry Group plc. For every 1,000 Ordinary shares of 25p each held immediately prior to the demerger, shareholders received 305 Ordinary shares of 0.05p each in Burberry Group plc and 860 Ordinary shares of 29 3/43p each in GUS plc.

	Treasury	Profit	Total profit
	and ESOP	and loss	and loss
	shares	account	account
			reserve
11. Reserves	£m	£m	£m
At 1 April 2005 as previously stated	(248)	1,824	1,576
Prior year adjustment – FRS 17	–	2	2
Prior year adjustment – FRS 20	–	63	63
Prior year adjustment – FRS 21	–	200	200
At 1 April 2005 as restated	(248)	2,089	1,841
Cumulative adjustment for the implementation of FRS 26	–	7	7
Profit for the financial year	–	6	6
Equity dividends paid during the year	–	(284)	(284)
Dividend in specie relating to the demerger of Burberry Group plc	–	(437)	(437)
Actuarial gain in respect of defined benefit pension schemes	–	8	8
Credit in respect of share incentive schemes	–	28	28
Purchase of ESOP shares	(16)	–	(16)
Tax credit in respect of items taken to equity	–	1	1
At 31 March 2006	(264)	1,418	1,154

Treasury and ESOP shares represent the cost of shares in GUS plc purchased by the GUS plc ESOP Trust (‘the Trust’) to satisfy the Group’s obligations under its share incentive plans and shares purchased in share buy-backs. During the year the Trust purchased 4,082,187 (2005: 2,600,000) shares at a cost of £36m (2005: £22m). In the year ended 31 March 2005 a further 22,140,000 shares were purchased at a cost of £200m by way of share buy-backs. Of these 3,500,000 shares with a cost of £30m were cancelled.

12. Commitments

(a) Capital commitments
There are no significant capital commitments relating to the Company.

(b) Operating lease commitments
Annual commitments for land and buildings, where the commitment expires in more than five years, amounted to £1m (2005: £1m).

13. Share options and awards

The Company has not repeated the disclosures required by FRS 20 ‘Share-based Payment’, as these are already included in note 31 of the Group financial statements.

Details of the unexercised options are shown below and include those options granted to directors of the Company. Further details of options granted to directors of the Company are contained in the Report on directors’ remuneration and related matters on pages 46 and 47.

(i) Options and awards in respect of the Ordinary shares of the Company	2006 £m	2005 £m
The GUS plc Performance Share Plan	2.1	1.9
The GUS plc Co-Investment Plan	6.0	4.6
The 1998 Approved and Non-Approved Executive Share Option Schemes	13.7	13.5
The North America Stock Option Plan	5.4	5.4
The GUS plc Savings Related Share Option Scheme	9.1	8.8
Other share schemes	0.1	0.1
	36.4	34.3

(ii) Awards under the GUS plc Performance Share Plan
During the year ended 31 March 2006, awards were made under this plan in respect of 767,507 (2005: 752,358) Ordinary shares in the Company. At 31 March 2006 awards in respect of 2,111,640 (2005: 1,939,013) of Ordinary shares remained outstanding and, as indicated in note 11, shares have been purchased by the GUS plc ESOP Trust to meet obligations under this plan. These awards include those granted to directors, further details of which are contained in the Report on directors’ remuneration and related matters on page 47.

During the year ended 31 March 2006, 569,827 (2005: 427,726) Ordinary shares were transferred from the Trust to beneficiaries of the GUS plc Performance Share Plan.

(iii) Awards under the GUS plc Co-Investment Plan
During the year ended 31 March 2006, awards were made under this plan in respect of 1,654,305 (2005: 2,321,962) Ordinary shares in the Company. At 31 March 2006 awards in respect of 6,050,860 (2005: 4,556,040) Ordinary shares remained outstanding and, as indicated in note 11, shares have been purchased by the GUS plc ESOP Trust to meet obligations under this plan. These awards include those granted to directors, further details of which are contained in the Report on directors’ remuneration and related matters on page 48.

During the year ended 31 March 2006, 910,880 (2005: 297,821) Ordinary shares were transferred from the Trust to beneficiaries of the GUS plc Co-Investment Plan.

(iv) Options under the 1998 Approved and Non-Approved Executive Share Option Schemes
Unexercised options granted under these schemes in respect of Ordinary shares in the Company are as follows:

Number of shares 2006	Number of shares 2005	Exercise price	Period of exercise
182,625	315,029	375.7p	From 07.04.2003 to 06.04.2010
1,016,274	1,832,707	612.7p	From 11.06.2004 to 10.06.2011
130,707	179,961	635.0p	From 17.12.2004 to 16.12.2011
1,106,158	2,844,460	653.0p	From 06.06.2005 to 05.06.2012
181,226	747,744	554.0p	From 23.12.2005 to 22.12.2012
3,234,502	3,751,549	675.5p	From 19.06.2006 to 18.06.2013
72,481	88,333	757.0p	From 02.12.2006 to 01.12.2013
3,245,338	3,562,323	809.2p	From 01.06.2007 to 31.05.2014
146,506	173,610	867.0p	From 24.11.2007 to 23.11.2014
3,883,511	–	858.5p	From 31.05.2008 to 30.05.2015
526,756	–	881.0p	From 22.11.2008 to 21.11.2015
13,726,084	13,495,716

(v) Options under the North America Stock Option Plan
Unexercised options granted under the scheme in respect of Ordinary shares in the Company are as follows:

Number of shares 2006	Number of shares 2005	Exercise price	Period of exercise
27,057	200,407	381.3p	From 14.06.2001 to 13.06.2006
6,983	6,983	526.0p	From 06.12.2001 to 05.12.2006
421,964	650,813	612.7p	From 11.06.2002 to 10.06.2007
854,905	1,436,910	653.0p	From 06.06.2003 to 05.06.2008
42,206	57,244	554.0p	From 23.12.2003 to 22.12.2008
1,292,235	1,535,436	675.5p	From 19.06.2004 to 18.06.2009
28,054	28,054	757.0p	From 02.12.2004 to 01.12.2009
1,270,788	1,458,033	809.2p	From 01.06.2005 to 31.05.2010
23,689	23,689	867.0p	From 24.11.2005 to 23.11.2010
1,353,910	–	858.5p	From 31.05.2006 to 30.05.2011
39,835	–	881.0p	From 22.11.2006 to 21.11.2011
5,361,626	5,397,569

All such options are to be satisfied by the transfer of already issued Ordinary shares and shares have been purchased for this purpose by the GUS plc ESOP Trust. During the year ended 31 March 2006, 1,221,312 (2005: 1,637,297) Ordinary shares were transferred to beneficiaries following the exercise of such share options.

(vi) Options under savings related share option schemes Unexercised options granted under the scheme in respect of Ordinary shares in the Company are as follows:

Number of shares 2006	Number of shares 2005	Exercise price	Period of exercise
–	1,669	384.0p	From 01.05.2004 to 31.10.2004
2,119,222	2,299,567	384.0p	From 01.05.2006 to 31.10.2006
1,090	900,375	523.0p	From 01.09.2005 to 28.02.2006
617,146	715,718	523.0p	From 01.09.2007 to 29.02.2008
1,247,888	1,428,403	508.0p	From 01.09.2006 to 28.02.2007
746,151	842,061	508.0p	From 01.09.2008 to 28.02.2009
1,739,952	2,067,393	648.0p	From 01.09.2007 to 29.02.2008
520,873	593,254	648.0p	From 01.09.2009 to 28.02.2010
1,531,485	–	687.0p	From 01.09.2008 to 29.02.2009
588,648	–	687.0p	From 01.09.2010 to 28.02.2011
9,112,455	8,848,440

During the year ended 31 March 2006, 1,114,705 (2005: 2,602,142) Ordinary shares were issued following the exercise of such share options.

In addition 152,148 shares (2005: 100,356) were issued in connection with savings based share schemes in France and the United States. Savings of £710,000 (2005: £529,000) were held in these schemes giving a right to acquire 84,031 (2005: 71,113) Ordinary shares in the Company.

14. Pensions and other post-retirement benefits

The Company’s employees participate in the GUS Defined Benefit and the GUS Defined Contribution pension schemes. In addition the Company provides post-retirement healthcare insurance benefits to certain former employees. The net liability in respect of the defined benefit scheme and the provision of post-retirement healthcare insurance benefits is recognised in the Company’s balance sheet in accordance with the requirements of FRS 17. There are no material pension costs or contributions payable in respect of the Company’s participation in the GUS Defined Contribution scheme.

(i) The movements during the year in the net liability recognised in the Company’s balance sheet were as follows:	2006 £m	2005 £m
At 1 April	21	60
Total amounts recognised in the Company’s profit and loss account – as disclosed below	1	(3)
Actuarial gain recognised in equity	(8)	(16)
Contributions paid	(2)	(20)
At 31 March	12	21
The retirement benefit liability is shown before deferred tax. The associated deferred tax asset of £4m (2005: £6m) is included within debtors (note 5).

(ii) The amounts recognised in the Company’s balance sheet are determined as follows:	2006 £m	2005 £m
Fair value of schemes’ assets	347	265
Present value of funded schemes’ liabilities	(332)	(267)
Surplus/(deficit) in the funded schemes	15	(2)
Present value of unfunded pension arrangements	(15)	(10)
Liability for post-retirement healthcare	(12)	(9)
Retirement benefit liability recognised in the Company balance sheet	(12)	(21)

(iii) The amounts recognised in the Company’s profit and loss account were as follows:	2006 £m	2005 £m
Current service cost	4	2
Interest on schemes’ liabilities	17	17
Expected return on schemes’ assets	(20)	(18)
Settlement gain in respect of unfunded liabilities of home shopping and Reality businesses	–	(4)
Total charge/(credit) to Company profit and loss account	1	(3)

(iv) The amount recognised in equity:	2006 £m	2005 £m
(Gain)/loss on assets	(41)	15
Experience loss/(gain) on liabilities	2	(51)
Loss on change of assumptions	31	20
Total gain recognised in equity	(8)	(16)

(v) The history of experience gains/(losses) on the Company’s defined benefit scheme is as follows:	2006 £m	2005 £m
Difference between the actual and expected return on schemes’ assets:
Amount (£m)	(41)	15
Percentage of schemes’ assets	11.8%	5.7%

Experience losses/(gains) on schemes’ liabilities:
Amount (£m)	2	(51)
Percentage of the present value of schemes’ liabilities	0.5%	17.8%

Total amount recognised in equity:
Amount (£m)	(8)	(16)
Percentage of the present value of schemes’ liabilities	2.2%	5.6%

(vi) Analysis of the movement in the deficit in the scheme during the year:	2006 £m	2005 £m
Deficit at beginning of year	(21)	(60)
Contributions paid by the Company	2	20
Current service cost	(4)	(2)
Gain from settlement	–	4
Other finance income	3	1
Actuarial gain	8	16
Deficit at end of year	(12)	(21)

(vii) The principal actuarial assumptions used are shown in note 25 to the Group financial statements.

15. Principal subsidiary and associate undertakings

The principal subsidiary and associate undertakings at 31 March 2006, all of which are included in the Group financial statements, are listed below.

Particulars of subsidiary undertakings and other significant holdings as required by the Companies Act 1985 will be annexed to the next Annual Return of GUS plc.



At 31 March 2006	Country of incorporation	Percentage of ordinary shares held
Argos Retail Group
Argos Limited	Great Britain	100%
Homebase Limited	Great Britain	100%
ARG Card Services Limited	Great Britain	100%
ARG Personal Loans Limited	Great Britain	100%
ARG Insurance Services Limited	Great Britain	100%
Argos Distributors (Ireland) Limited	Republic of Ireland	100%
Hampden Group Limited	Republic of Ireland	100%
Homebase House and Garden Centre Limited	Republic of Ireland	100%
Argos Retail Group (Hong Kong) Limited	Hong Kong	100%
ARG Procurement Consultancy (Shanghai) Limited	China	100%

Experian
Experian Limited	Great Britain	100%
ClarityBlue Limited	Great Britain	100%
QAS Limited	Great Britain	100%
Experian Holding A/S	Denmark	100%
Experian A/S	Denmark	100%
Experian Holding France S.A.	France	100%
CreditInform AS	Norway	100%
ConsumerInfo.com	USA	100%
PriceGrabber.com	USA	100%
LowerMyBills.com	USA	100%
Experian Information Solutions Inc.	USA	100%
Experian Services Corporation	USA	100%
Experian Marketing Solutions Inc.	USA	100%

Associate
First American Real Estate Solutions LLC	USA	20%

None of the above undertakings are directly held by GUS plc.

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Financial statements