| 6 months to 30th September | 2004 £m |
2005 £m |
Like for Like |
|
|---|---|---|---|---|
| Sales PPRS deflation reduces reported BTC sales growth by 1.3% |
2,171 | 2,196 | +1.1% | -1.3% |
| Gross margin movement | -180bp | -30bp | ||
| Operating costs | +12% | +6% | ||
| Trading profit | 202 | 164 | -18.6% |
Turning now to look at BTC performance in more detail.
Sales at £2,196m are up 1.1% in total, which is down 1.3% like for like. The contribution from new space is 2.4%. Within this result there is considerable regulatory price deflation under the Pharmaceutical Price Regulation Scheme or PPRS. This reduced reported sales growth in Dispensing by 4.7% which is equivalent to 1.3% off LFL sales growth at BTC level.
Gross margin percentage was down 30bps in the first half due to the annualisation of price reductions under our lower prices you'll love campaign in the first half last year. This performance is in line with our expectations for this point of the year and with our guidance of broadly stable margin for the year.
Operating costs were 6% higher in the first half. We have made good progress on our efficiency programmes and these have again contributed savings sufficient to offset underlying inflation. The increase in costs is thus entirely accounted for by the increases resulting from our planned investment programme.
Our guidance for the year of broadly stable gross margin and 6% operating cost growth is unchanged.
LINK: Turning now to look in more detail at the drivers of sales.
