Group Results 

In the year to 31 March 1999, Group turnover rose by £2,104m to £5,467m. This growth reflects the acquisitions of Metromail and Argos in March and April 1998 respectively, as well as the underlying sales growth of our existing businesses.

In a year in which the Group experienced a difficult retailing environment, underlying profit before exceptional items, goodwill amortisation and tax reduced from £555.1m to £513.6m.

Key features of the year in each of our divisions were as follows:

Home Shopping. Trading profit fell by £20.9m due to a second half slowdown in retail sales, higher bad debts and investments in new direct catalogues and in new warehouse systems.

Argos. Profit in Argos’ first eleven months in the Group amounted to £116m. The weakness of the UK retail market affected the result but this was partly offset by cost savings. Before allowing for the closure costs of its Dutch operation, the profit earned by Argos exceeded the funding costs of the acquisition by £3m.

Experian. Benefiting from underlying profit growth of 13% from our existing business and from acquisitions which also contributed strongly, Experian’s profit amounted to £192m. Profit grew in each region and in each major activity within the business.

Finance Division. The results of this business in this statement are now shown net of an appropriate allocation of the Group’s interest funding costs. On a comparable basis, profit was £2.6m down in the year, largely because of bad debt provisioning in General Guarantee and the impact of lower prices in the second hand car market on Highway Vehicle Management.

Burberry. As indicated twelve months ago, this year’s profit was seriously affected by the Asian economic downturn. Our investment in repositioning the business also impacted profit but significant progress has been made in creating a stronger platform for future growth.

South Africa. In Rand terms, our South African business had another good year, with profit up by 9% in local currency in tough market conditions. However, the 19% fall in the value of the Rand against Sterling adversely affected Group profit by £9.9m.

Property Division (BL Universal). Profit in the year to 31 March 1999 met expectations. The previous year’s result was assisted by the sale of a major property investment which did not recur this year.

Once again, Group profit benefited from exceptional items. We have recognised a profit of £23.7m relating to the refund of previously overpaid VAT in our Home Shopping division. Offsetting this is a charge of £14.3m associated with the closure of Argos’ business in the Netherlands.

When we acquired Argos in April 1998, we capitalised goodwill of £1,555m on the Group’s balance sheet. It is now clear that a large majority of UK public companies is choosing to amortise goodwill over an economic life of up to twenty years. We have therefore decided to amortise Argos’ goodwill over twenty years and this results in an amortisation charge of £72m in this year’s accounts. Earnings per share are shown in the financial statements both before and after amortisation. We have carried out an accounting test which shows there has not been any impairment of value since acquisition.

The Group's effective rate of taxation on profits before goodwill amortisation has reduced this year from 30.2% to 24.4%. This follows a corporate reorganisation which has enabled the Group to adopt a more efficient financial structure for both its recent acquisitions and existing subsidiaries.

Earnings per share before exceptional items and goodwill amortisation amounted to 38.8p, compared to last year’s 38.9p. It is proposed that a final dividend of 14.4p per ordinary share is paid on 15 September 1999, giving a total dividend for the year of 20.6p compared with 20.0p last year. The dividend is covered 1.88 times by earnings before exceptionals and goodwill amortisation (1998: 1.94 times)