EXHIBIT 99.3
APPENDIX I
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATION INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE, 2000
NOTES SIX MONTHS SIX MONTHS CONSTANT YEAR ENDED
ENDED 30 JUNE ENDED 30 JUNE CURRENCY 31 DECEMBER
2000 1999 +/(-) +/(-) 1999
(POUND)m (POUND)m % % (POUND)m
(note 3)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TURNOVER (GROSS BILLINGS) 5,655.9 4,445.1 +27.2% +26.2% 9,345.9
-----------------------------------------------------------------------------------------------------------------------------------
REVENUE 4 1,209.1 1,017.3 +18.9% +17.9% 2,172.6
-----------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 1,071.1 861.2 +24.4% +23.5% 1,855.3
Operating costs (924.6) (740.6) -24.8% -23.8% (1,591.8)
-----------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT 146.5 120.6 +21.5% +21.8% 263.5
Income from associates 14.2 8.3 +71.1% +76.7% 27.3
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 160.7 128.9 +24.7% +25.3% 290.8
Net interest payable and similar charges (23.0) (16.3) -41.1% -39.0% (35.4)
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 137.7 112.6 +22.3% +23.2% 255.4
Tax on profit on ordinary activities 5 (41.3) (34.9) -18.3% -19.2% (76.6)
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 96.4 77.7 +24.1% +25.0% 178.8
Minority interests (3.3) (2.4) -37.5% -37.5% (6.0)
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO ORDINARY SHARE OWNERS 93.1 75.3 +23.6% +24.6% 172.8
Ordinary dividends 6 (9.3) (7.8) +19.2% +21.3% (24.0)
-----------------------------------------------------------------------------------------------------------------------------------
RETAINED PROFIT FOR THE PERIOD 83.8 67.5 +24.1% +25.0% 148.8
===================================================================================================================================
PBIT MARGIN* 13.3% 12.7% +0.6% +0.7% 13.4%
-----------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
Basic earnings per ordinary share 7 12.3p 10.0p +23.0% +23.8% 22.9p
Diluted earnings per ordinary share 7 12.0p 9.8p +22.4% +23.5% 22.5p
-----------------------------------------------------------------------------------------------------------------------------------
ORDINARY DIVIDEND PER SHARE - interim 6 1.2p 1.0p +20.0% +20.0% 1.0p
- final - - - - 2.1p
-----------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER ADR**
Basic earnings per ADR $0.97 $0.81 +19.8% +19.8% $ 1.85
Diluted earnings per ADR $0.94 $0.79 +19.0% +19.0% $ 1.82
-----------------------------------------------------------------------------------------------------------------------------------
ORDINARY DIVIDEND PER ADR**
Interim 9.4(cent) 8.1(cent) +16.0% +16.0% 8.1(cent)
Final - - - - 17.0(cent)
===================================================================================================================================
<FN>
* PBIT: Profit on ordinary activities before interest and taxation.
** These figures have been translated for convenience purposes only,
using the profit and loss exchange rate shown in note 3. The
comparative figures have been restated following a change in the ratio
of ordinary shares per ADR from 10 ordinary shares per ADR to 5
ordinary shares per ADR.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WPP GROUP PLC
UNAUDITED SUMMARY INTERIM CONSOLIDATED CASH FLOW
STATEMENT FOR THE PERIOD ENDED 30 JUNE, 2000
-----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED
30 JUNE 2000 30 JUNE 1999 31 DECEMBER 1999
(POUND)m (POUND)m (POUND)m
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RECONCILIATION OF OPERATING PROFIT TO
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES:
Operating profit 146.5 120.6 263.5
Depreciation charge 24.8 19.7 42.2
Movements in working capital and provisions (309.0) (202.9) 42.8
--------------------------------------------------------------------------------------------------------------------------------
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (137.7) (62.6) 348.5
DIVIDENDS RECEIVED FROM ASSOCIATES 3.2 1.8 4.3
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (23.9) (13.9) (37.1)
UNITED KINGDOM AND OVERSEAS TAX PAID (31.5) (31.6) (58.4)
Purchase of tangible fixed assets (29.9) (22.1) (64.6)
Purchase of own shares by ESOP Trust (46.2) (4.1) (17.9)
Other movements 3.2 1.6 2.0
---------------------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (72.9) (24.6) (80.5)
Cash consideration for acquisitions (97.8) (57.3) (242.2)
Less cash acquired 2.0 3.3 51.8
Net purchase of other investments (20.3) - (11.8)
TOTAL ACQUISITIONS (116.1) (54.0) (202.2)
---------------------------------------------------------------------------------------------------------------------------------
EQUITY DIVIDENDS PAID - - (21.1)
---------------------------------------------------------------------------------------------------------------------------------
NET CASH OUTFLOW BEFORE FINANCING (378.9) (184.9) (46.5)
Increase in drawings on bank loans 100.3 42.3 258.0
Proceeds from issue of shares 8.2 4.0 12.0
---------------------------------------------------------------------------------------------------------------------------------
NET CASH INFLOW FROM FINANCING 108.5 46.3 270.0
---------------------------------------------------------------------------------------------------------------------------------
(DECREASE)/INCREASE IN CASH AND OVERDRAFTS FOR THE PERIOD (270.4) (138.6) 223.5
Translation difference 8.0 6.8 (0.6)
BALANCE OF CASH AND OVERDRAFTS AT BEGINNING OF PERIOD 551.4 328.5 328.5
---------------------------------------------------------------------------------------------------------------------------------
BALANCE OF CASH AND OVERDRAFTS AT END OF PERIOD 289.0 196.7 551.4
---------------------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEBT)/FUNDS:
(Decrease)/increase in cash and overdrafts for the period (270.4) (138.6) 223.5
Cash inflow from debt financing (100.3) (42.3) (258.0)
Other movements (0.8) (0.7) (1.7)
Translation difference (12.4) (5.1) (6.2)
---------------------------------------------------------------------------------------------------------------------------------
Movement of net funds in the period (383.9) (186.7) (42.4)
Net funds at beginning of period 91.9 134.3 134.3
---------------------------------------------------------------------------------------------------------------------------------
Net (debt)/funds at end of period (Note 11) (292.0) (52.4) 91.9
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WPP GROUP PLC
Unaudited consolidated balance sheet as at 30 June, 2000
-----------------------------------------------------------------------------------------------------------------------------------
30 JUNE 30 JUNE 31 DECEMBER
NOTES 2000 1999 1999
(POUND)m (POUND)m (POUND)m
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets:
Corporate brands 350.0 350.0 350.0
Goodwill 8 511.0 204.1 410.3
Tangible assets 211.1 178.1 196.7
Investments 8 448.9 290.7 356.9
-----------------------------------------------------------------------------------------------------------------------------------
1,521.0 1,022.9 1,313.9
CURRENT ASSETS
Stocks and work in progress 198.1 140.2 113.5
Debtors 1,336.3 1,058.0 1,040.4
Debtors within working capital facility:
Gross debts 396.3 326.0 345.7
Non-returnable proceeds (228.1) (219.5) (214.1)
--------- --------- ---------
168.2 106.5 131.6
Cash at bank and in hand 395.9 302.7 607.0
-----------------------------------------------------------------------------------------------------------------------------------
2,098.5 1,607.4 1,892.5
CREDITORS: amounts falling due within one year 9 (2,404.2) (1,846.6) (2,148.0)
-----------------------------------------------------------------------------------------------------------------------------------
NET CURRENT LIABILITIES (305.7) (239.2) (255.5)
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,215.3 783.7 1,058.4
CREDITORS: amounts falling due after more than one year 10 (754.9) (468.6) (652.5)
PROVISIONS FOR LIABILITIES AND CHARGES (75.7) (80.0) (79.2)
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS 384.7 235.1 326.7
-----------------------------------------------------------------------------------------------------------------------------------
CAPITAL AND RESERVES
Share capital 77.9 77.0 77.5
Reserves 296.6 149.6 240.7
-----------------------------------------------------------------------------------------------------------------------------------
SHARE OWNERS' FUNDS 374.5 226.6 318.2
Minority interests 10.2 8.5 8.5
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL EMPLOYED 384.7 235.1 326.7
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WPP GROUP PLC
UNAUDITED RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHARE OWNERS' FUNDS FOR THE PERIOD ENDED 30 JUNE 2000
SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED
30 JUNE 2000 30 JUNE 1999 31 DECEMBER 1999
(POUND)m (POUND)m (POUND)m
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Profit for the period 93.1 75.3 172.8
Ordinary dividends payable (9.3) (7.8) (24.0)
-----------------------------------------------------------------------------------------------------------------------------------
83.8 67.5 148.8
Exchange adjustments on foreign currency net investments (36.1) (33.4) (31.2)
Other movements 8.6 4.8 12.9
-----------------------------------------------------------------------------------------------------------------------------------
NET ADDITIONS TO SHARE OWNERS' FUNDS 56.3 38.9 130.5
OPENING SHARE OWNERS' FUNDS 318.2 187.7 187.7
-----------------------------------------------------------------------------------------------------------------------------------
CLOSING SHARE OWNERS' FUNDS 374.5 226.6 318.2
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
UNAUDITED STATEMENT OF CONSOLIDATED RECOGNISED GAINS AND LOSSES FOR THE PERIOD ENDED 30 JUNE, 2000
-----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED
30 JUNE 2000 30 JUNE 1999 31 DECEMBER 1999
(POUND)m (POUND)m (POUND)m
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Profit for the period 93.1 75.3 172.8
Exchange adjustments on foreign currency
net investments (36.1) (33.4) (31.2)
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RECOGNISED GAINS 57.0 41.9 141.6
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
WPP GROUP PLC
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. BASIS OF ACCOUNTING
The consolidated interim financial statements are prepared under the
historical cost convention.
2. ACCOUNTING POLICIES
The consolidated interim financial statements comply with relevant
accounting standards and have been prepared using accounting policies set
out on pages 56 and 57 of the Group's 1999 Annual Report and Accounts.
The policies set out in the 1999 Annual Report and Accounts are in
accordance with accounting principles generally accepted in the United
Kingdom (UK GAAP).
3. CURRENCY CONVERSION
The 2000 unaudited interim consolidated profit and loss account is prepared
using, among other currencies, an average exchange rate of US$ 1.5700 to
the pound (period ended 30 June, 1999: US$1.6197; year ended 31 December,
1999 US$1.6178). The balance sheet as at 30 June, 2000 has been prepared
using the exchange rate on that day of US$ 1.5166 to the pound (30 June,
1999: US$1.5763; 31 December, 1999: US$1.6182).
The constant currency percentage changes shown on the face of the profit
and loss account have been calculated by applying 2000 exchange rates to
the results for 1999 and 2000.
The unaudited preliminary consolidated profit and loss account and balance
sheet are presented in Euros in Appendix II for illustrative purposes. The
unaudited interim consolidated profit and loss account is prepared using an
average exchange rate of (Euro) 1.6347 to the pound (period ended 30 June,
1999: (Euro) $1.5372; year ended 31 December 1999: (Euro) 1.5202). The
balance sheet as at 30 June, 2000 has been prepared using the exchange rate
on the day of (Euro) 1.5870 to the pound (30 June, 1999: (Euro) 1.5285; 31
December, 1999: (Euro) 1.6056).
<PAGE>
<TABLE>
<CAPTION>
WPP GROUP PLC
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (CONTINUED)
4. SEGMENTAL ANALYSIS
Reported contributions by geographical area were as follows:
------------------------------------------------------------------------------------------------------------
30 JUNE 30 JUNE 31 DECEMBER
2000 1999 1999
(POUND)M (POUND)M (POUND)M
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
United Kingdom 234.9 212.0 434.7
United States 531.6 432.4 915.2
Continental Europe 218.7 199.1 426.2
Canada, Asia Pacific, Latin America, Africa
& Middle East 223.9 173.8 396.5
------------------------------------------------------------------------------------------------------------
1,209.1 1,017.3 2,172.6
============================================================================================================
PBIT[FN]1
United Kingdom 28.1 25.2 51.5
United States 86.3 68.0 139.0
Continental Europe 28.1 25.0 55.8
Canada, Asia Pacific, Latin America, Africa
& Middle East 18.2 10.7 44.5
------------------------------------------------------------------------------------------------------------
160.7 128.9 290.8
============================================================================================================
Reported contributions by operating sector were as follows:
------------------------------------------------------------------------------------------------------------
<CAPTION>
30 JUNE 30 JUNE 31 DECEMBER
2000 1999 1999
(POUND)M (POUND)M (POUND)M
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
Advertising, media investment management 556.6 477.2 1,013.1
Information and consultancy 239.5 191.9 419.7
Public relations and public affairs 121.7 82.8 178.9
Branding and identity, healthcare and specialist
communications 291.3 265.4 560.9
------------------------------------------------------------------------------------------------------------
1,209.1 1,017.3 2,172.6
============================================================================================================
PBIT[FN]1
Advertising, media investment management 84.5 69.2 155.9
Information and consultancy 22.5 18.0 42.1
Public relations and public affairs 18.7 11.6 23.9
Branding and identity, healthcare and
specialist communications 35.0 30.1 68.9
------------------------------------------------------------------------------------------------------------
160.7 128.9 290.8
============================================================================================================
<FN>
1 PBIT: Profit on ordinary activities before interest and taxation.
</FN>
</TABLE>
<PAGE>
5. TAXATION
The Group tax rate on profit on ordinary activities before taxation is 30%
(30 June, 1999: 31%; year ended 31 December, 1999: 30%). The tax charge
relates mainly to overseas operations, except for (POUND)5.8 million in
respect of UK corporation tax and (POUND)3.1 million in respect of
associated companies.
6. INTERIM DIVIDEND
An interim dividend of 1.2p (1999: 1.0p) per ordinary share has been
declared by the Board. This is expected to be paid on 20 November 2000 to
share owners on the register at 15 September 2000.
7. EARNINGS PER SHARE
(a) Basic earnings per share have been calculated using earnings
of(POUND)93.1 million (30 June, 1999:(POUND)75.3 million; year ended
31 December, 1999:(POUND)172.8 million) and weighted average shares in
issue during the six months to 30 June, 2000 of 757,499,254 shares (30
June, 1999: 752,798,633 shares; year ended 31 December, 1999:
753,324,054 shares).
(b) Diluted earnings per share have been calculated using earnings
of(POUND)93.1 million (30 June, 1999:(POUND)75.3 million; year ended
31 December, 1999:(POUND)172.8 million) on a weighted average of
775,155,818 shares (30 June, 1999: 768,181,423 shares; year ended 31
December, 1999: 768,691,993 shares). This takes into account the
exercise of employee share options where these are expected to dilute
earnings.
(c) At 30 June, 2000 there were 778,921,600 ordinary shares in issue.
<PAGE>
8. GOODWILL
Total goodwill of (POUND)117.4 million arising during the period includes
(POUND)100.7 million in respect of acquisitions of subsidiary undertakings.
In addition, investments include (POUND)16.7 million of goodwill in respect
of associate undertakings acquired during the period.
Cash paid in respect of these acquisitions was (POUND)97.8 million (30 June
1999:(POUND)57.3 million and 31 December, 1999:(POUND)242.2 million).
Future anticipated payments to vendors totalled (POUND)179.5 million (30
June, 1999:(POUND)97.2 million; 31 December, 1999: (POUND)172.4 million),
based on the directors' best estimates of future obligations, which are
dependent on future performance of the interests acquired.
These acquisitions do not have a significant impact on the Group's results
for the six months to 30 June 2000.
9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
The following are included in creditors falling due within one year:
<TABLE>
<CAPTION>
30 JUNE 30 JUNE 31 DECEMBER
2000 1999 1999
---- ---- ----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
Bank loans and overdrafts 230.8 105.9 148.3
Trade creditors 1,416.7 1,160.5 1,315.0
Corporate income tax payable 37.8 58.7 34.6
Deferred income 137.5 103.6 125.8
Payments due to vendors (note 8) 52.6 6.1 41.2
Other creditors and accruals 528.8 411.8 483.1
------- ------- -------
2,404.2 1,846.6 2,148.0
======= ======= =======
Overdraft balances included within bank loans and overdrafts amount to
(POUND)106.9 million (30 June, 1999:(POUND)105.9 million; 31 December,
1999:(POUND)55.6 million).
</TABLE>
<PAGE>
10. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
The following are included in creditors falling due after more than one
year:
<TABLE>
<CAPTION>
30 JUNE 30 JUNE 31 DECEMBER
2000 1999 1999
---- ---- ----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
Corporate bond and bank loans 457.1 249.2 366.8
Corporate income taxes payable 125.9 99.2 122.9
Payments due to vendors (note 8) 126.9 91.1 131.2
Other creditors and accruals 45.0 29.1 31.6
----- ---- ------
754.9 468.6 652.5
===== ===== ======
The corporate bond, bank loans and overdrafts included within short and
long term creditors fall due for repayment as follows:
<CAPTION>
30 JUNE 30 JUNE 31 DECEMBER
2000 1999 1999
---- ---- ----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
Within one year 230.8 105.9 148.3
Between 1 and 2 years - - -
Between 2 and 5 years 261.0 60.8 183.1
Over 5 years 196.1 188.4 183.7
----- ----- -----
687.9 355.1 515.1
===== ===== =====
</TABLE>
11. NET (DEBT)/FUNDS
<TABLE>
<CAPTION>
30 JUNE 30 JUNE 31 DECEMBER
2000 1999 1999
---- ---- ----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
Cash at bank and in hand 395.9 302.7 607.0
Bank loans and overdrafts due within one year (230.8) (105.9) (148.3)
(note 9)
Corporate bond and loans due after one year (note 10) (457.1) (249.2) (366.8)
------- ------ -------
Net (debt)/funds (292.0) (52.4) 91.9
======= ======= =======
</TABLE>
12. POST BALANCE SHEET EVENT
Since 30 June 2000, the Group has entered into a further Revolving Credit
Facility for US$700 million. This facility has a 364 day maturity. Under
this agreement the Group has the ability to draw funds for a period of up
to 3 years from the date of the agreement. This facility is subject to
share owners' approval.
Borrowings under the Revolving Credit Facility are governed by certain
financial covenants based on the results and financial position of the
Group.
13. STATUTORY INFORMATION AND AUDIT REVIEW
The results for the six months to 30 June, 2000 and 1999 do not constitute
statutory accounts. The statutory accounts for the year ended 31 December,
1999 received an unqualified auditors' report and have been filed with the
Registrar of Companies. The interim financial statements are unaudited but
have been reviewed by the auditors and their report to the directors is set
out below.
<PAGE>
INDEPENDENT REVIEW REPORT TO WPP GROUP PLC
INTRODUCTION
We have been instructed by the company to review the financial information
set out on pages 11 to 20 and we have read the other information contained
in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
DIRECTORS' RESPONSIBILITIES
The interim report, including the financial information contained therein,
is the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the interim report in accordance
with the Listing Rules of the Financial Services Authority and applicable
United Kingdom accounting standards. The Listing Rules require that the
accounting policies and presentation applied to the interim figures should
be consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reason for them, are disclosed.
REVIEW WORK PERFORMED
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued in the United Kingdom by the Auditing Practices Board and
with our profession's ethical guidance. A review consists principally of
making enquiries of group management and applying analytical procedures to
the financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an
audit performed in accordance with Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not
express an audit opinion on the financial information.
REVIEW CONCLUSION
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 30 June 2000.
ARTHUR ANDERSEN
Chartered Accountants
London
14 August 2000
<PAGE>
<TABLE>
<CAPTION>
WPP GROUP PLC
APPENDIX II
PRELIMINARY RESULTS FOR THE SIX MONTHS ENDED 30 JUNE, 2000
UNAUDITED PRELIMINARY CONSOLIDATED PROFIT & LOSS ACCOUNT FOR
THE SIX MONTHS ENDED 30 JUNE, 2000
PRESENTED IN EUROS FOR ILLUSTRATIVE PURPOSES ONLY
SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED
30 JUNE 2000 30 JUNE 1999 31 DECEMBER 1999
(EURO)M (EURO)M (EURO)M
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TURNOVER (GROSS BILLINGS) 9,245.7 6,833.0 14,207.6
-----------------------------------------------------------------------------------------------------------------------------------
REVENUE 1,976.5 1,563.8 3,302.8
-----------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 1,750.9 1,323.8 2,820.4
Operating costs (1,511.4) (1,138.4) (2,419.8)
-----------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT 239.5 185.4 400.6
Income from associates 23.2 12.7 41.5
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 262.7 198.1 442.1
Net interest payable and similar charges (37.6) (25.0) (53.8)
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 225.1 173.1 388.3
Tax on profit on ordinary activities (67.5) (53.6) (116.5)
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 157.6 119.5 271.8
-----------------------------------------------------------------------------------------------------------------------------------
Minority interests (5.4) (3.7) (9.1)
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO ORDINARY SHARE OWNERS 152.2 115.8 262.7
Ordinary dividends (15.2) (12.0) (36.5)
-----------------------------------------------------------------------------------------------------------------------------------
RETAINED PROFIT FOR THE PERIOD 137.0 103.8 226.2
===================================================================================================================================
EARNINGS PER SHARE (NET BASIS)
Basic earnings per ordinary share 20.1(cent) 15.4(cent) 34.8(cent)
-----------------------------------------------------------------------------------------------------------------------------------
ORDINARY DIVIDEND PER SHARE - interim 1.96(cent) 1.54(cent) 1.52(cent)
- final - - 3.19(cent)
===================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WPP GROUP PLC
UNAUDITED PRELIMINARY CONSOLIDATED BALANCE SHEET AS AT 30 JUNE, 2000
PRESENTED IN EUROS FOR ILLUSTRATIVE PURPOSES ONLY
-----------------------------------------------------------------------------------------------------------------------------------
30 JUNE 2000 30 JUNE 1999 31 DECEMBER 1999
(EURO)M (EURO)M (EURO)M
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED ASSETS
Intangible assets:
Corporate brands 555.5 535.0 561.9
Goodwill 811.0 312.0 658.8
Tangible assets 335.0 272.2 315.8
Investments 712.3 444.3 573.0
-----------------------------------------------------------------------------------------------------------------------------------
2,413.8 1,563.5 2,109.5
CURRENT ASSETS
Stocks and work in progress 314.4 214.3 182.2
Debtors 2,120.7 1,617.2 1,670.5
Debtors within working capital facility:
Gross debts 628.9 498.3 555.1
Non-returnable proceeds (362.0) (335.5) (343.8)
------- ------- -------
266.9 162.8 211.3
Cash at bank and in hand 628.3 462.7 974.6
-----------------------------------------------------------------------------------------------------------------------------------
3,330.3 2,457.0 3,038.6
CREDITORS: amounts falling due within one year (3,815.5) (2,822.5) (3,448.8)
-----------------------------------------------------------------------------------------------------------------------------------
NET CURRENT LIABILITIES (485.2) (365.5) (410.2)
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,928.6 1,198.0 1,699.3
CREDITORS: amounts falling due after more than one year (1,198.0) (716.3) (1,047.7)
PROVISIONS FOR LIABILITIES AND CHARGES (120.1) (122.3) (127.2)
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS 610.5 359.4 524.4
-----------------------------------------------------------------------------------------------------------------------------------
CAPITAL AND RESERVES
Share capital 123.6 117.7 124.4
Reserves 470.7 228.7 386.4
-----------------------------------------------------------------------------------------------------------------------------------
SHARE OWNERS' FUNDS 594.3 346.4 510.8
Minority interests 16.2 13.0 13.6
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL EMPLOYED 610.5 359.4 524.4
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPENDIX III
ILLUSTRATIVE UNAUDITED PRO FORMA WPP/Y&R CONSOLIDATED FINANCIAL INFORMATION
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
WPP Y&R Combined WPP Y&R Combined
UK GAAP UK GAAP UK GAAP UK GAAP
(POUND)m (POUND)m (POUND)m (POUND)m (POUND)m (POUND)m
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE 1,209.1 600.8 1,809.9 1,017.3 492.8 1,510.1
-----------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 1,071.1 600.8 1,671.9 861.2 492.8 1,354.0
Operating costs (924.6) (524.1) (1,448.7) (740.6) (436.1) (1,176.7)
-----------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT PRE EXCEPTIONAL CHARGE 146.5 76.7 223.2 120.6 56.7 177.3
Exceptional operating charge - (36.7) (36.7) - - -
-----------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT 146.5 40.0 186.5 120.6 56.7 177.3
Income from associates 14.2 2.4 16.6 8.3 2.3 10.6
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE 160.7 42.4 203.1 128.9 59.0 187.9
INTEREST AND TAXATION
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE 160.7 79.1 239.8 128.9 59.0 187.9
INTEREST, TAX AND EXCEPTIONAL CHARGE
-----------------------------------------------------------------------------------------------------------------------------------
Net interest payable and similar (23.0) (5.2) (28.2) (16.3) (2.7) (19.0)
charges
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE 137.7 37.2 174.9 112.6 56.3 168.9
TAXATION
Tax on profit on ordinary activities (41.3) (28.9) (70.2) (34.9) (21.1) (56.0)
Exceptional tax credit arising on - 18.1 18.1 - 12.8 12.8
exercised stock options
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES AFTER
TAXATION 96.4 26.4 122.8 77.7 48.0 125.7
Minority interests (3.3) (0.9) (4.2) (2.4) (0.2) (2.6)
-----------------------------------------------------------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO ORDINARY
SHARE OWNERS 93.1 25.5 118.6 75.3 47.8 123.1
Ordinary dividends (9.3) (2.3) (11.6) (7.8) (1.1) (8.9)
-----------------------------------------------------------------------------------------------------------------------------------
RETAINED PROFIT FOR THE PERIOD 83.8 23.2 107.0 67.5 46.7 114.2
===================================================================================================================================
PBIT* margin 13.3% 13.2% 13.2% 12.7% 12.0% 12.4%
-----------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
Diluted earnings per ordinary share 12.0p n/a 10.6p 9.8p n/a 11.1p
Diluted earnings per ordinary share pre
exceptional items 12.0p n/a 12.2p 9.8p n/a 9.9p
===================================================================================================================================
<FN>
* PBIT: Profit on ordinary activities before interest and taxation,
excluding exceptional operating charge.
</FN>
</TABLE>
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED WPP GROUP PLC
The following unaudited pro forma profit and loss account for the six
months 30 June 1999 and 2000 (the "Unaudited pro forma Financial
Information") for WPP Group plc have been prepared for illustrative
purposes only to show the effects of the combination with Y&R as if it had
occurred at 1 January 1999 for the six months ended 30 June 1999 and 1
January 2000 for the six months ended 30 June 2000. Because of its nature,
the Unaudited pro forma Financial Information may not give a true picture
of the financial position of WPP Group plc. It has been prepared in
accordance with the Listing Rules.
The financial information for Y&R for the six months ended 30 June 1999 and
2000 is based on the unaudited results extracted from Y&R's form 10-Q filed
with the SEC on 3 August 2000, prepared in accordance with US GAAP adjusted
to reflect WPP's accounting policies under UK GAAP
2. RECLASSIFICATIONS
Reclassifications have been made to Y&R's historical financial information
presented under US GAAP to conform to WPP's presentation and disclosed
accounting policies under UK GAAP. None of these reclassifications impact
net profit.
The reclassifications that impacts the profit and loss account is:
EQUITY ACCOUNTING
In accordance with UK GAAP, the investor's share of operating profit or
loss of associated undertakings and joint ventures is shown separately on
the face of the profit and loss account and the investor's share of the
taxation charge of associated undertakings and joint ventures is included
within the taxation charge shown in the profit and loss account. Under US
GAAP, net after-tax profits or losses are included in the income statement
as a single line item.
3. US TO UK GAAP ADJUSTMENTS
Accounting principles generally accepted in the UK differ in certain
material respects from those generally accepted in the US. The differences
which are material to restating the historical consolidated financial
information of Y&R to conform to WPP's disclosed accounting policies under
UK GAAP are set out below.
(A) GOODWILL
In accordance with UK GAAP and FRS 10 "Goodwill and Intangible Assets,"
goodwill resulting from acquisitions made by Y&R on or after 1 January 1998
has been capitalised as an intangible asset. Under WPP's disclosed
accounting policy this goodwill has an indefinite life and as a result no
amortisation has been provided. Under UK GAAP, goodwill assumed to have an
indefinite life is subject to an annual impairment review in accordance
with FRS 11 "Impairment of Fixed Assets and Goodwill".
Under US GAAP, goodwill resulting from a business combination accounted for
as a purchase is amortised over its estimated useful life, not to exceed 40
years. Additionally, Y&R's management evaluates the carrying value of Y&R's
tangible and intangible assets each year, or whenever events or
circumstances indicate that these assets may be impaired. Intangible assets
are determined to be impaired if the future anticipated undiscounted cash
flows arising from the use of the intangible assets are less than their
carrying value. If an impairment is deemed to have occurred, the asset is
written down to its fair value. The impact of this adjustment is to
increase operating profit by $10.9m ((POUND)6.9m).
(B) NON-OPERATING ITEMS
For the six months to 30 June 2000 in accordance with US GAAP, Y&R
recognised gains largely relating to the sale of certain assets and rights
known as Y&R TeamSpace in exchange for an ownership interest in eMotion
Inc. and other net gains on investing activities largely relating to
additional consideration received from Luminant. Under UK GAAP, these gains
would be included in the statement of total recognised gains and losses
which has not been separately presented. The impact of this adjustment is
to reduce profit on ordinary activities by $12.2m ((POUND)7.8m).
(C) DEFERRED TAXES
Under UK GAAP, deferred tax assets are accounted for only to the extent
that it is considered probable that a liability or asset will crystallise
in the foreseeable future. Under US GAAP, deferred taxes are accounted for
on all timing differences and a valuation allowance is established in
respect of those deferred tax assets where it is more likely than not that
some portion will remain unrealised. This reduces the tax charge in the
profit and loss account by $28.4m ((POUND)18.1m) under UK GAAP.
(D) TREASURY STOCK
Under UK GAAP, if repurchased Treasury stock is used for the purpose of
satisfying the Company's obligation upon exercise of stock options issued
to employees, the Company should record as an operating cost, the excess of
the cost of repurchasing the treasury stock over the proceeds received from
employees on exercising stock options. Under US GAAP, this is recorded as a
reduction in equity. For the six months ended 30 June 2000, under UK GAAP,
this results in a charge of $57.6 ((POUND)36.7m) million which has been
reflected as an operating exceptional item within this restatement. For
prior years, the difference between the proceeds on exercise of employee
share options less the cost of satisfying these options is not material.
4. SEGMENTAL INFORMATION
The tables below present unaudited pro forma segment information, including
Y&R segments presented to conform with the segments as reported by WPP and
to UK GAAP. "PBIT" means profit on ordinary activities before interest and
taxation, excluding exceptional operating charge.
<TABLE>
<CAPTION>
INFORMATION BY DISCIPLINE
REVENUE BY DISCIPLINE - POUND STERLING INFORMATION
-----------------------------------------------------------------------------------
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
(POUND)M --------------------------------------- -------------------------------------
------------------------------- WPP Y&R COMBINED WPP Y&R COMBINED
UK GAAP UK GAAP UK GAAP UK GAAP
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Advertising & Media 556.6 274.3 830.9 477.2 232.7 709.9
Investment Management
Information & Consultancy 239.5 - 239.5 191.9 - 191.9
Public Relations & Public 121.7 125.4 247.1 82.8 95.3 178.1
Affairs
Branding & Identity, 291.3 201.1 492.4 265.4 164.8 430.2
Healthcare &
Specialist-Communications
-----------------------------------------------------------------------------------
1,209.1 600.8 1,809.9 1,017.3 492.8 1,510.1
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PBIT[FN*] BY DISCIPLINE - POUND STERLING INFORMATION
-----------------------------------------------------------------------------------
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
(POUND)M ------------------------------------------ ------------------------------------
------------------------------- WPP Y&R COMBINED WPP Y&R COMBINED
UK GAAP UK GAAP UK GAAP UK GAAP
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Advertising & Media 84.5 43.7 128.2 69.2 30.0 99.2
Investment Management
Information & Consultancy 22.5 - 22.5 18.0 - 18.0
Public Relations & Public 18.7 17.4 36.1 11.6 8.6 20.2
Affairs
Branding & Identity, 35.0 18.0 53.0 30.1 20.4 50.5
Healthcare &
Specialist-Communications
-----------------------------------------------------------------------------------
160.7 79.1 239.8 128.9 59.0 187.9
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
<FN>
* PBIT: Profit on ordinary activities before interest and taxation,
excluding exceptional operating charge.
</FN>
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REVENUE BY DISCIPLINE - U.S. DOLLAR INFORMATION
-----------------------------------------------------------------------------------
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
($)M ----------------------------------------- -----------------------------------
------------------------------- WPP Y&R COMBINED WPP Y&R COMBINED
UK GAAP UK GAAP UK GAAP UK GAAP
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Advertising & Media 873.8 430.7 1,304.5 773.0 377.0 1,150.0
Investment Management
Information & Consultancy 376.0 - 376.0 310.8 - 310.8
Public Relations & Public 191.1 196.9 388.0 134.1 154.3 288.4
Affairs
Branding & Identity, 457.3 315.7 773.0 429.8 266.9 696.7
Healthcare &
Specialist-Communications
-----------------------------------------------------------------------------------
1,898.2 943.3 2,841.5 1,647.7 798.2 2,445.9
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PBIT* BY DISCIPLINE U.S. DOLLAR INFORMATION
-----------------------------------------------------------------------------------
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
($)M -------------------------------------------- -----------------------------------
---------------------------- WPP Y&R COMBINED WPP Y&R COMBINED
UK GAAP UK GAAP UK GAAP UK GAAP
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Advertising & Media 132.8 68.7 201.5 112.1 48.6 160.7
Investment Management
Information & Consultancy 35.3 - 35.3 29.1 - 29.1
Public Relations & Public 29.3 27.4 56.7 18.7 14.0 32.7
Affairs
Branding & Identity, 54.9 28.2 83.1 48.9 33.0 81.9
Healthcare &
Specialist-Communications
-----------------------------------------------------------------------------------
252.3 124.3 376.6 208.8 95.6 304.4
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
<FN>
* PBIT: Profit on ordinary activities before interest and taxation,
excluding exceptional operating charge.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INFORMATION BY GEOGRAPHY
REVENUE BY GEOGRAPHY - POUND STERLING INFORMATION
-----------------------------------------------------------------------------------
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
(POUND)M ---------------------------------------- -----------------------------------
------------------------------ WPP Y&R COMBINED WPP Y&R COMBINED
UK GAAP UK GAAP UK GAAP UK GAAP
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
North America 553.6 331.2 884.8 452.1 276.5 728.6
UK 234.9 55.1 290.0 212.0 45.3 257.3
Continental Europe 218.7 134.9 353.6 199.1 125.3 324.4
Asia Pacific, Latin 201.9 79.6 281.5 154.1 45.7 199.8
America, Africa & Middle
East
-----------------------------------------------------------------------------------
1,209.1 600.8 1,809.9 1,017.3 492.8 1,510.1
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PBIT[FN*] BY GEOGRAPHY - POUND STERLING INFORMATION
-----------------------------------------------------------------------------------
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
(POUND)M ---------------------------------------- -----------------------------------
------------------------------ WPP Y&R COMBINED WPP Y&R COMBINED
UK GAAP UK GAAP UK GAAP UK GAAP
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
North America 88.1 55.6 143.7 70.3 47.2 117.5
UK 28.1 -0.2 27.9 25.2 1.0 26.2
Continental Europe 28.1 16.7 44.8 25.0 9.5 34.5
Asia Pacific, Latin 16.4 7.0 23.4 8.4 1.3 9.7
America, Africa & Middle
East
-----------------------------------------------------------------------------------
160.7 79.1 239.8 128.9 59.0 187.9
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
<FN>
* PBIT: Profit on ordinary activities before interest and taxation,
excluding exceptional operating charge.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REVENUE BY GEOGRAPHY - U.S. DOLLAR INFORMATION
-----------------------------------------------------------------------------------
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
($)M ---------------------------------------- -----------------------------------
------------------------------- WPP Y&R COMBINED WPP Y&R COMBINED
UK GAAP UK GAAP UK GAAP UK GAAP
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
North America 869.2 520.1 1,389.3 732.2 447.8 1,180.0
UK 368.7 86.5 455.2 343.4 73.4 416.8
Continental Europe 343.3 211.8 555.1 322.5 202.9 525.4
Asia Pacific, Latin 317.0 124.9 441.9 249.6 74.1 323.7
America, Africa & Middle
East
-----------------------------------------------------------------------------------
1,898.2 943.3 2,841.5 1,647.7 798.2 2,445.9
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PBIT[FN*] BY GEOGRAPHY - U.S. DOLLAR INFORMATION
-----------------------------------------------------------------------------------
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
($)M -------------------------------------------- ------------------------------------
------------------------------- WPP Y&R COMBINED WPP Y&R COMBINED
UK GAAP UK GAAP UK GAAP UK GAAP
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
North America 138.3 87.4 225.7 113.9 76.4 190.3
UK 44.2 -0.3 43.9 40.8 1.7 42.5
Continental Europe 44.1 26.2 70.3 40.5 15.4 55.9
Asia Pacific, Latin 25.7 11.0 36.7 13.6 2.1 15.7
America, Africa & Middle
East
-----------------------------------------------------------------------------------
252.3 124.3 376.6 208.8 95.6 304.4
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
<FN>
* PBIT: Profit on ordinary activities before interest and taxation, excluding exceptional operating charge.
</FN>
</TABLE>
5. TRANSLATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
Solely for convenience, the unaudited pro forma information is shown in
both pounds sterling and US dollars using the approximate average rate for
the periods for the profit and loss account (2000: $1.57 = (POUND)1, 1999:
$1.6197 = (POUND)1).
6. DILUTED EARNINGS
The number is shares used in the calculation of unaudited pro forma
earnings per share are based on the average weighted number of WPP shares
during the respective periods aggregated with the weighted average number
of Y&R shares during the respective period, multiplied by 4.175 to reflect
the exchange ratio.
Diluted earnings per share takes into account the exercise of WPP employee
share options where these are expected to be diluted, aggregated with the
number of Y&R options expected to dilute, multiplied by 4.175 to reflect
the exchange rate into WPP new shares. The 30 June 2000 calculation also
includes the dilutive impact of the Y&R convertible loan stock.
<PAGE>
<TABLE>
<CAPTION>
DILUTED NUMBER OF SHARES (MILLION)
---------------------------------------------------------------------------
SIX MONTHS ENDED 30 JUNE 2000 SIX MONTHS ENDED 30 JUNE 1999
-------------------------------- -------------------------------
WPP Y&R PRO FORMA WPP Y&R PRO FORMA
----------------------------------
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Weighted average 775.2 86.4 n/a 768.2 82.0 n/a
Multiplication factor n/a 4.175 n/a n/a 4.175 n/a
Weighted average, new WPP 775.2 360.7 1,135.9 768.2 342.4 1,110.6
shares
---------------------------------------------------------------------------------------------------------------
</TABLE>
Unaudited pro forma diluted earnings per share have been calculated using
unaudited pro forma earnings of (POUND)120.1m (1999: (POUND)123.1m) which
includes (POUND)1.5m in respect of the Y&R convertible loan stock in 2000
(1999: nil).
Unaudited pro forma diluted earnings per share pre exceptional items has
been calculated using earnings of (POUND)138.7m (1999: (POUND)110.3m) which
reflect the removal of the Y&R exceptional operating charge in respect of
Treasury Stock and the Y&R exceptional tax credits arising on the exercise
of stock options.
