Financial Statements
Notes to the Group financial statements
for the year ended 31 March 2006
8. Exceptional and other adjustment items |
2006 £m |
2005 £m |
| Exceptional items | ||
| Continuing operations: | ||
| Costs incurred relating to the planned Group demerger | (4) | – |
| Loss on sale of businesses | – | (7) |
| (4) | (7) | |
| Discontinued operations (note 12): | ||
| Profit on disposal of Lewis Group | 36 | 24 |
| Loss on disposal of Wehkamp | (19) | – |
| Profit on disposal of shares in Burberry | 10 | 3 |
| Costs incurred relating to the demerger of Burberry | (5) | – |
| Loss on disposal of other discontinued operations | – | (24) |
| 22 | 3 | |
| Total exceptional items | 18 | (4) |
| Other adjustment items | 2006 £m |
2005 £m |
| Continuing operations: | ||
| Amortisation of acquisition intangibles | (37) | (11) |
| Store impairment charges | (13) | – |
| Financing fair value remeasurements (note 9) | (3) | – |
| Total other adjustment items | (53) | (11) |
| Total exceptional and other adjustment items | (35) | (15) |
Exceptional items
The profit on the disposal of Lewis Group relates to the placing of GUS' remaining 50% stake in May 2005. The profit in the prior year relates to the Initial Public Offering of Lewis Group in September 2004. The loss on disposal of Wehkamp relates to the sale of the business in January 2006.
The income in respect of Burberry shares in both years included that arising from the exercise or lapse of awards under executive share schemes, together with that arising on the sale of certain shares at the time of the demerger in December 2005. The costs incurred relating to the demerger of Burberry are treated as an exceptional item. The loss on sale of continuing businesses in the prior year was principally in respect of the sales by Experian of two small non-core operations.
Other exceptional items were costs in relation to the Group demerger of £4m. The prior year loss on disposal of other discontinued operations is explained in note 12.
Other adjustment itemsIFRS requires that, on acquisition, specific intangible assets are identified and recognised separately from goodwill and then amortised over their useful economic lives. These include items such as brand names and customer lists, to which value is first attributed at the time of acquisition. As permitted by IFRS, acquisitions prior to 1 April 2004 have not been restated. As it did with goodwill under UK GAAP, the Group has excluded amortisation of these acquisition intangibles from its definition of Benchmark PBT.
As a result of clearer IFRS interpretation on impairment reviews, Argos Retail Group now perform store impairment tests on a store by store basis and this has led to an impairment charge at Homebase of £13m in 2006 (2005: nil).
An element of the Group's derivatives is ineffective for hedge accounting under IFRS. Gains or losses on these derivatives arising from market movements are credited or charged to financing fair value remeasurements in the Group income statement.
