GUS plc January 2 0 0 6 Frankfurt/Paris Transforming GUS EBI T* - - PDF document

GUS plc

January 2 0 0 6

Frankfurt/Paris

1

Pro form a EBI T* £ 7 4 0 m

5 0 % 5 0 %

Transforming GUS

EBI T* £ 5 1 9 m

4 % 3 0 % 3 9 % 9 % 5 % 6% 7 % Experian ARG Burberry Lew is Finance Property

Experian ARG

* Before central activities; 2005 excludes £34.5m of ARG one-offs

Year to March 2 0 0 0 Year to Septem ber 2 0 0 5

Hom e shopping 2

Transforming GUS

• Shareholder value to be enhanced further by separation of

ARG, Experian and Burberry – at a time and in a manner that benefits our businesses and causes minimum disruption

• Sold remaining 50% stake in Lewis in May 2005
• Demerged Burberry in December 2005
• ARG and Experian

– At appropriate time, seek separation – At this stage, both businesses will continue to benefit from further investment and support as part of GUS

3

Q3 Trading Update

Argos

• total

9

• like-for-like

Homebase

• total

1

• like-for-like

(3) Experian*

• Global

20

• North America

31

• International

8

* Continuing activities only; at constant exchange rates

Q3 % sales growth year-on-year

Argos Retail Group

6

Argos Retail Group – overview

• Leading UK general

merchandise retailer

• Multi-brand, multi-channel
• Supported by central

infrastructure, where appropriate

Argos Hom ebase

Year to Septem ber 2 0 0 5 £ 3 7 1 m

Financial Services

EBI T*

* Excludes £34.5m of one-offs

77% 22%

7

ARG – difficult market background

• Weak UK retail demand
• Retailers facing higher cost

inflation

• ARG planning on assumption

that like-for-like sales in non-food, non-clothing market will decline for much of 2006

• ARG continuing to invest to

strengthen long-term competitive position

• 5

5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Market growth

LFLs falling in non-food, non-clothing m arket

Source: GUS estimates FY03 FY04 FY05

%

8

Argos

• More than two-thirds of UK households

collect a catalogue from store

• Currently 650 stores
• 98% of the UK population live within

10 miles of a store

• 6% of sales ordered via Internet*
• Further 13% via Check and Reserve*
• 17,200 products in catalogue (SS06)
• Market leader in many product

categories

• Low cost operator
• Value retailer

* Oct to Dec 2005

9

Argos – growth initiatives

Improve choice Improve value Improve convenience

• Launched Argos Extra in all stores
• Increase direct importing
• Drive cost productivity/ efficiencies
• Grow Argos Direct
• Open more stores, including Index refits
• Improve multi-channel services,

including Check and Reserve

10

Argos Extra

• First trial in January 2003
• Offers 17,200 lines with extended

ranges in leisure, home and electrical

• From July 2005, Argos Extra ranges

available in all stores – c. 180 stores stocked-in – Rest are order-in

• Expected to increase sales by 2-3%

in first full year

11

Argos – new stores

• 33 Index stores refitted and

reopened on plan

• Opening c. 35 new stores a year
• Plan for about 750 stores by

March 2009

• Return on capital on new stores

exceeds hurdle rate

12

Homebase

• Number two DIY brand in UK
• High brand awareness

– ABC1 customers – Female shoppers

• 297 stores, biased to South East
• Become the leading UK home

enhancement retailer

• Cautious short-term industry
• utlook

13

Homebase – growth initiatives

Improve customer offer Increase new space Leverage ARG scale

• Homebase Way
• Range reviews
• New ad campaign
• Improve service and standards
• Improve stock availability
• New stores
• Mezzanine roll-out
• Joint sourcing
• Furniture Extra and Appliances Extra
• Transactional website
• Financial Services

Experian

16

Experian - overview

• Sales of £1.5bn and EBIT of £369m in 12 months to September

2005; highly cash generative

• Largest global information solutions company
• No single competitor offers as many products and solutions
• No single competitor operates successfully in so many countries
• Experian has strong market positions and client relationships

17

Experian – what we do

Outsourcing

e.g. cheque processing

Solutions

Credit Marketing

e.g. database management e.g. credit scoring

I nform ation

Credit Marketing

e.g. marketing databases e.g. consumer credit databases

I nteractive

e.g. online lead generation

18

Credit 4 9 % Marketing 2 4 %

Outsourcing 8 %

North Am erica 5 8 % I nternational 4 2 %

Experian – balanced portfolio

I nform ation 4 2 % Solutions 3 1 %

Outsourcing 8 %

Sales – six months to September 2005 Continuing activities

I nteractive 1 9 % I nteractive 1 9 %

19 Financial services 53% Direct-to- consumer 12% Telecom/ utilities/ insurance 8% Other 6% Government 3% Automotive 3%

Experian – broad offering

• Over 50,000 clients in more than

60 countries

• Top 10 clients account for about

25% of sales

• At least 85% of top 50 clients

dealt with Experian for over five years

Year to March 2 0 0 5

% of sales by vertical m arket

Clients include:

• AOL Time Warner
• BNP Paribas
• Barclays
• Citigroup
• Ford
• HBOS
• MBNA
• McDonald’s
• Microsoft
• Morgan Stanley
• Orange
• Société Générale

Retail/ home shopping 13% Publishing/ media 2% 20

EBI T* £ m

2000 2001 2002 2003 2004 2005 H1 06

Experian – building shareholder value

2005 onwards under IFRS * Growth rates at constant currency and from 2004 for continuing activities only

Sales* £ m

2000 2001 2002 2003 2004 2005 H1 06

Year to March Year to March

9 4 9 1 ,0 1 8 1 ,1 1 5 1 ,2 0 1 1 ,2 8 6 2 0 1 2 1 7 2 2 4 2 5 6 2 8 2 + 2 % + 5 % + 1 2 % + 1 4 % + 3 % + 3 % + 2 0 % + 2 0 % + 1 8 % 1 ,3 6 2 + 1 6 % 3 1 7 8 0 8 2 0 0 + 2 9 % + 3 6 %

21

Experian - key growth drivers

• Growth in direct-to-consumer market and online advertising
• Increase in consumer credit and card usage
• Move to multi-channel marketing
• Growth in fraud prevention
• Growth in demand for information in new sectors, e.g. automotive,

insurance, business-to-business, government

• Growth in emerging markets

22

Experian Interactive

Credit reports and monitoring services Online lead generation

23

Experian Interactive

• High growth markets
• Strong market position
• Scale gives strong advertising

presence on Internet

• Synergies across Interactive and

Experian

• Internationally scaleable

5 10 15 20 25 00 01 02 03 04 05e 06e 07e 08e 09e

1 8 % CAGR ‘0 4 to ‘0 9

Online advertising spend to grow rapidly

Source: eMarketer

$bn Year

24

Experian – emerging markets

• Establishing country management teams
• Developing credit bureaux in Russia, Bulgaria and Romania
• Growing decision solutions in Korea

– Six of top seven banks are clients – About 70% of all consumer credit decisions made via Experian solutions – Selling value-added products through leading credit bureau

• First major win in Japan
• In Russia, now working with six of top 15 banks following

credit bureau launch in April 2005

25

Experian – acquisition strategy

• Organic growth accelerated in last

four years

• Acquisitions are key part of growth

strategy

• Often small; always complementary;

bringing – Data – New products – Geographical expansion – Vertical market expansion – Consolidation

• Must generate double-digit post-tax

returns over time

26

GUS - summary

• Further strategic and operational progress
• Focusing on fewer activities
• Board committed to separation of ARG and Experian
• Continue to drive sustainable growth in ARG and Experian

Appendix

28

Sales by division

Argos Retail Group 5,313 4,927

• Experian

1,362 1,286 (69) Central activities

• 6
• Inter-divisional sales

(12) (11)

• Total continuing operations

6 ,6 6 3 6 ,2 0 8 ( 6 9 ) Burberry 715 676 (24) Discontinued operations* 409 664 6 Total sales 7 ,7 8 7 7 ,5 4 8 ( 8 7 ) 12 months to 31 March I m pact of 2 0 0 5 2 0 0 4 exchange £ m £ m rate £ m

* Consists of Lewis (2005: £187m, 2004: £160m), Wehkamp (2005: £222m, 2004: £235m) and Home shopping and Reality (2005: nil, 2004: £269m)

29

Argos Retail Group* 401.6 394.1

• Experian

318.3 282.2 (17.4) Central activities (24.1) (19.9)

• Total continuing operations

6 9 5 .8 6 5 6 .4 ( 1 7 .4 ) Burberry 165.7 141.2 (4.9) Discontinued operations# 75.3 82.9 2.4 Operating profit 9 3 6 .8 8 8 0 .5 ( 1 9 .9 ) Interest expense (26.4) (53.9) 2.1 Profit before goodw ill, exceptionals and tax 9 1 0 .4 8 2 6 .6 ( 1 7 .8 )

Profit by division (UK GAAP)

12 months to 31 March I m pact of 2 0 0 5 2 0 0 4 exchange £ m £ m rate £ m

* After £35m of one-off charges # Consists of Lewis (2005: £55.4m, 2004: £43.5m), Wehkamp (2005: £19.9m, 2004: £21.4m) and Property (2005: nil, 2004: £18.0m) 30 * Argos and Homebase are shown after one-off charges of £16m and £18m respectively # Consists of Lewis (2005: £59m, 2004: £47m), Wehkamp (2005: £24m, 2004: £25m), Home shopping and Reality (2005: nil, 2004: £4m) and Property (2005: nil, 2004: £20m)

EBITDA by division (UK GAAP)

Argos* 381 361 Homebase* 145 150 Financial Services 4 (4) Experian North America 255 258 Experian International 167 143 Central activities (15) (17) Continuing operations 9 3 7 8 9 1 Burberry 190 170 Discontinued operations# 83 96 Depreciation and amortisation (274) (276) Net interest (26) (54) Profit before am ortisation of goodw ill, exceptionals and tax 9 1 0 8 2 7 2 0 0 5 2 0 0 4 £ m £ m 12 months to 31 March

31

Pro forma results (IFRS)

Continuing operations 8 5 2 ( 1 61 )

• 6 9 1

Discontinued operations 78

• (23)

(55)

• Net interest

(24) (5)

• 1

(28) Pro forma interest on disposal proceeds

• 8

14 22 Benchm ark PBT 9 0 6 ( 1 66 ) ( 1 5) ( 4 0) 6 8 5 Amortisation of acquisition intangibles (4)

• (4)

Exceptional items (4) (3)

• (24)

(31) Fair value remeasurements

• 8 9 8

( 1 69 ) ( 1 5) ( 6 4) 6 5 0 Tax (250) 53 4 16 (177) Tax on pro forma interest

• n disposal proceeds
• (2)

(4) (6) Equity m inority interests (49) 39

• 10
• Profit attributable to

equity shareholders 5 9 9 ( 7 7) ( 1 3) ( 4 2) 4 6 7 Benchm ark EPS 6 1 .5 p 6 0 .2 p W eighted average num ber

• f ordinary shares ( m )

1 ,00 0 8 4 9 Net debt at 3 0 Septem ber ( 1 ,76 8) ( 8 5) 2 5 5

• ( 1 ,59 8)

Net assets at 3 0 Septem ber 3 ,37 6 ( 4 62 ) ( 2 22 )

• 2 ,69 2

As Exclude: reported Burberry W ehkam p Lew is Pro form a 12 months to 31 March 2005 £m

32

Burberry demerger

Number of existing GUS shares in issue/ issuable* 1004.9m Number of Burberry shares held by GUS 306.7m For every 1,000 existing GUS shares, receive Burberry shares of 305

* Excludes own shares held in Treasury and includes 3.5m to cover potential share option exercises up to record date

Calculation of num ber of Burberry shares received

33

= £8,630 = £1,202 £7,428 = £7,422 860 Therefore, to keep the GUS share price at approximately the same level, for every 1,000 existing GUS shares, shareholders will receive new GUS shares of Value of 1,000 existing GUS shares at 863p

• Receive 305 Burberry shares at 394p
• New GUS shares must be worth in total
• Equivalent to 860 new GUS shares at 863p

each

Calculation of num ber of new GUS shares received

GUS share consolidation

34

Dividend payout

– 2.5p X 305 Burberry shares – 9.6p X 860 new GUS shares This is approximately equivalent to 2004 interim dividend of 9.0p per share For every 1,000 existing GUS shares, shareholders receive interim dividend of = £7.63 = £82.56 = £90.19 = £90.00

35

Group balance sheet (IFRS)

Fixed assets 1,542 1,382 Investments 131 118 Working capital 355 701 Net assets held for sale* 222

• Trading assets

2 ,2 5 0 2 ,2 0 1 Goodwill 2,822 2,477 Taxation 35 35 Transaction consideration 37 98 Net debt (1,768) (1,427) Capital em ployed 3 ,3 7 6 3 ,3 8 4 3 0 Sept 3 1 March As at 2 0 0 5 2 0 0 5 £ m £ m

* Represents Wehkamp. Under IFRS, the balance sheet at 31 March 2005 is not restated for Wehkamp

• r Lewis

36

Operating profit 937 880 Depreciation 274 276 Capital expenditure (390) (306) Change in working capital (167) (272) Operating cash flow 6 5 4 5 7 8 Interest (42) (48) Corporation tax (238) (176) Free cash flow 3 7 4 3 5 4

Strong cash flow

2 0 0 5 2 0 0 4 * £ m £ m 12 months to 31 March

* Restated for UITF Abstract 38

37

Return on capital (UK GAAP)

Return on capital pre-tax

2000 2001 2002 2003 2004 2005

Return on capital post-tax

2000 2001 2002 2003 2004 2005

Year to March Year to March

8 .5 % 8 .8 % 9 .9 % 1 0 .8 % 1 3 .3 % 6 .5 % 6 .8 % 7 .5 % 8 .4 % 1 0 .2 % + 0 .3 % + 1 .1 % + 0 .9 % + 2 .5 % + 0 .3 % + 0 .7 % + 0 .9 % + 1 .8 % 1 3 .6 % + 0 .3 % 1 0 .3 % * + 0 .1 % * Excluding £35m one-off charges in ARG, 2005 return on capital post-tax is 10.6% Restated for UITF Abstract 38 38

Add capitalised operating leases (8x) # 2,408 Add pension deficit (pre-tax)* 102 Net pension adjusted debt 4 ,1 0 8 Operating leases# 301 EBI TDAR 1 ,2 3 3 Net pension adjusted debt/ EBI TDAR 3 .3 x Balance sheet net debt* 1,598 EBITDA# 932 Balance sheet net debt/ EBITDA 1.7x £ m

Illustrative credit rating agency analysis

* As at 30 September 2005. Net debt adjusted for Burberry net cash of £85m and Wehkamp net proceeds due of £255m

#

Year to 31 March 2005. Operating lease expense adjusted for Burberry, Wehkamp and Lewis of £39m, £1m and £6m respectively. IFRS EBITDA adjusted for Burberry, Wehkamp and Lewis of £185m, £27m and £59m respectively

39

UK households – ratio of debt to post-tax household income

0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05F 06F 07F Source: Experian Business Strategies x

Year

40

UK households - capital and interest repayments as % of post-tax income

%

13.5 14.3 14.9 16.2 17.6 18.3 18.2 13.6 12.8 12.9 2 4 6 8 10 12 14 16 18 20 98 99 00 01 02 03 04 05F 06F 07F

Tot al Capit al repayment s I nt erest

Source: Experian Business Strategies

Year

41

One-off and IFRS-related costs 5% Underlying inflation 4% Investments/ productivity improvements 4%

• Argos Extra
• New space
• Distribution

Total cost increase 1 3 %

Argos – cost increase

H1 2 0 0 5

42

Homebase – cost increase

Underlying cost inflation 4% Investments/ productivity improvements 3%

• New space/ mezzanines
• Furniture Extra

Total cost increase 7 %

• Greater impact on EBIT from inflation as operating costs are

higher proportion of sales than at Argos

• Cautious short-term industry outlook

H1 2 0 0 5

43

ARG strategic sourcing – potential benefits

5 10 15 20 25 30 35 40 45 50

Savings potential %

1 0 -1 5 % 5 -1 0 % 1 0 -1 5 % 3 0 -5 0 %

Import vs domestic One agent vs multiple Direct sourcing Cumulative potential e-procurement

5 -1 0 %

Year 1 Year 2 Year 3 Year 4

44 2 0 % 1 8 % 1 6 % 1 2 % 2 2 % 2001 2002 2003 2004 2005

Argos – increasing choice and convenience

Argos catalogue Num ber of product lines Argos Direct Share of sales Year to March

1 7 ,2 0 0 1 3 ,3 0 0 1 3 ,0 0 0 1 1 ,6 0 0 9 ,3 0 0 1 7 ,5 0 0 1 7 ,0 0 0

SS02 SS03 SS04 SS05 SS06

Argos Argos Extra

45

Experian - geographical split

Sales EBI T Em ployees

International £620m 46% North America £724m 54% International 7,300 62% North America 4,516 38% International £127m 41% North America £189m 59% Year to March 2005 Continuing activities only 46

Experian – competitive strength

All figures are for last full year of actuals Number on top of bar represents prospective PE rating Exchange rate £1: $1.85

Global sales revenue $ m Experian D&B Equifax Acxiom Harte-Hanks Fair, Isaac

North America I nternational Source: Company accounts I/ B/ E/ S estimates

Mar 05 Dec 04 Dec 04 Mar 05 Sep 05 2 1 x 2 0 x 3 2 x 2 2 x $ 2 .5 bn

No single com petitor offers as m any products and solutions in as m any countries

Dec 04 2 0 x

47

Experian – accelerating organic growth

12% 9% 8% 6% 5% 15% 9% 6% 8% 2% 2002 2003 2004 2005 YTD 06

Year to March

Contribution from acquisitions Organic growth

• Organic growth accelerating
• Supplemented by targeted

acquisitions

• H2 estimated acquisition

contribution – c. 20% in North America – Minimal in International

Sales grow th* %

* At constant currency and for continuing activities only

7% 14% 14% 18% 27%

48

UK consumer credit growth slowing

Gross lending grow th slow ed, but som e offset as client spend shifts from acquiring custom ers to m anaging existing accounts

Source: Bank of England; Experian Business Strategies forecasts

• 5

5 10 15 20 25 Gross lending Net lending Annual % change

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2007F 2008F 2009F 2010F 2006F

49

Experian – success in Spain

1 9 9 4

Enter w ith scoring/ decisions

1 9 9 9

Establish credit bureau

2 0 0 1

Marketing Services acquisition

2 0 0 2

W in m ain credit bureau contract Start credit card processing for US client

2 0 0 3

Launch Mosaic consum er segm entation

2 0 0 5

Add fraud prevention/ anti-m oney laundering

Experian Spain now has the w idest end-to-end range of solutions

2 0 0 4

Credit bureau contract extended to 2 0 1 0

50

Experian Interactive - common business model

Customer acquisition channels

Broadcast Experian websites Search listings Partners Affiliates

Consum ers Advertisers

Lead generation Experian products Customer acquisition

Customer monetisation

Experian data assets Experian m odelling and analytics

51

Experian Interactive

Consumer Direct LowerMyBills MetaReward Classes USA / Affiliate Fuel

Experian I nteractive Pro form a sales in H1 2 0 0 5

PriceGrabber

52

US mortgage market

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06F 07F Purchase originations Refinance originations

Source: Mortgage Bankers Association – December 2005

US m ortgage originations Year to Decem ber

$bn

53

Financial calendar

12 April 2006

• Second Half Trading Update

24 May 2006

• Preliminary Results

19 July 2006

• AGM and First Quarter Trading Update

16 November 2006

• Interim Results

54

Contacts

GUS plc One Stanhope Gate London W 1 K 1 AF Tel: + 4 4 2 0 7 4 9 5 0 0 7 0 Fax: + 4 4 2 0 7 4 9 5 1 5 6 7 W ebsite: w w w .gusplc.com David Tyler Group Finance Director Tel: + 44 20 7 318 6204 Fax: + 44 20 7 318 6257 Email: david.tyler@gusplc.com Fay Dodds Director of I nvestor Relations Tel: + 44 20 7 318 6245 Fax: + 44 20 7 318 6253 Email: fay.dodds@gusplc.com Peter Blythe Director of Finance Tel: + 44 20 7 318 6230 Fax: + 44 20 7 318 6253 Email: peter.blythe@gusplc.com