Appendix 1 - Basis of Preparation for proforma restatement
Reporting periods
Home Retail Group previously reported as part of GUS plc on a calendar year-end
to 31 March, with the Interim Results reported as the six months to 30 September.
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 reported on
a statutory basis the financial period ended 3 March 2007. This included
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). The new financial reporting periods are the 26 week period
commencing 4 March 2007 and ending on 1 September 2007 (as announced today)
and the 52-week period ending on 1 March 2008 (to be announced on 30 April
2008).
For comparative purposes, H1 2006/07 on a pro forma basis is the 26-week
period commencing 5 March 2006 and ending on 2 September 2006; FY 2006/07
restated on a pro forma basis is the 52-week period commencing 5 March
2006 and ending on 3 March 2007. Reconciliations between pro forma and
statutory reported periods are shown at Appendix
2 on pages 18 and 19.
The timing of trading statements has also changed as a result of the
new year-end. At Appendix 3
on page 20, trading statement comparables on the new basis are provided.
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, costs related to demerger incentive schemes and financing fair value
remeasurements.
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