Business Review >

Financial Summary

Financial summary - pro forma reporting

The change in both the year-end and the Group’s capital structure on demerger result in statutory reported results that are non-comparable.

Reporting periods
Home Retail Group previously reported as part of GUS plc on a calendar year-end to 31 March. Within this, to avoid distortion in the financial results relating to the timing of Easter, Homebase was consolidated on a non-coterminous 12 months to 28 February basis. At the Interim Results, Homebase was therefore consolidated on a seven months to 30 September basis, with the second half of its financial year comprising only a five month period.

As a result of the change in year-end, Home Retail Group is this year reporting on a statutory basis the financial period ended 3 March 2007. This includes the results for Homebase from 1 March 2006 (approximately 12 months) and the results for the rest of the Group from 1 April 2006 (approximately 11 months).

For comparative purposes, 2006/07 restated on a pro forma basis is the 52-week period commencing 5 March 2006 and ending on 3 March 2007, and 2005/06 on a pro forma basis is the 52-week period commencing 6 March 2005 and ending on 4 March 2006.

Central Activities
Central Activities represents the cost of central corporate functions. As part of GUS, Home Retail Group was not recharged for these types of costs. However, for the purposes of preparing demerger financial information, an approximation was made of the amount of GUS corporate head office costs to apportion to Home Retail Group. These apportioned costs were not representative of either the historical costs Home Retail Group would have incurred or the costs it will incur going forward.

As part of the pro forma restatements, Home Retail Group has therefore approximated the additional costs of central corporate functions it would have incurred over and above that apportioned to it by GUS. This has been done on the basis it had operated as a standalone plc through the periods being restated.

Capital structure and net interest
As part of the demerger, Home Retail Group was allocated pro forma net debt as at 31 March 2006 of £200m. For the purposes of preparing pro forma results, net interest income has been calculated to illustrate the impact on the Group’s financial performance as if this capital structure had existed at 31 March 2006 and had been achieved based on the underlying cash flows prior to 31 March 2006. The additional net interest costs attributable to the actual GUS capital structure that was in place over the periods are shown separately.

Other income statement items
Other non-trading income statement items have not been restated as they are not impacted by the change of year-end. These are principally exceptional items and costs related to demerger incentive schemes.

Financial information has been prepared in accordance with the basis of preparation as set out in Note 2 to the Financial Statements. The basis of preparation for pro forma restatements is set out in the Financial Summary.

Top of page