(a) Basis of accounting
The financial statements are drawn up on the historical cost basis of accounting modified by the revaluation of certain fixed assets, in accordance with applicable accounting standards in the United Kingdom which have been applied on a consistent basis with previous years except as noted below.

The results for the year include for the first time those of Metromail, acquired on 31 March 1998, and Argos, acquired on 27 April 1998. The results separately reported in the acquisition column of the profit and loss account relate solely to Argos, as the impact of other acquisitions in the current year is not material.

The Group's share of the operating profits of its associated undertakings is separately reported on the face of the profit and loss account with comparative figures restated as it now represents a more significant proportion of the Group's profit before taxation. Previously such profits were reported within operating profit. The share of such profits in the year to 31 March 1999 was £22.1m (1998 £4.6m).

Creditors due within one year include accruals and collection costs of £475.7m (1998 £384.1m) and creditors due after more than one year include accruals and collection costs of £70.4m (1998 £70.1m). In the parent company balance sheet, creditors due within one year include accruals of £2.9m (1998 £1.9m). Accruals and collection costs were previously disclosed on the face of the balance sheet and comparative figures have been restated. In the opinion of the directors, this change provides a more appropriate presentation of the Group's and the Company's net assets.

The acquisitions of Argos and Metromail were funded largely by borrowings and, as a consequence, the Group had a net interest expense during the year to 31 March 1999 and net debt at 31 March 1999. In recognition of this fundamental change in the nature of the financing of the Group's activities, cash flows relating to interest are now separately identified in the consolidated cash flow statement with comparative figures restated. The cash outflow in respect of returns on investments and servicing of finance is £109.0m; in the year to 31 March 1998 there was an inflow of £53.1m. These amounts were previously included within net cash flow from operating activities.

SSAP 19 'Accounting for Investment Properties' amends the requirements of the Companies Act 1985 relating to depreciation, an explanation of which is given in note (g) below.

(b) Basis of consolidation
The consolidated financial statements incorporate those of the parent company and its subsidiary undertakings. The results of subsidiary undertakings acquired or disposed of during a financial year are included in the consolidated financial statements using acquisition accounting from, or up to, the effective date of acquisition or disposal.

(c) Turnover
Turnover represents goods and services sold to customers outside the Group, less returns and sales taxes, and earned finance income.

(d) Joint ventures and associated undertakings
The Group's share of the profits of joint ventures and associated undertakings is included in the consolidated profit and loss account. Loans to joint ventures and associated undertakings and the Group's share of net assets are included in the consolidated balance sheet.

(e) Goodwill
Following the adoption of FRS 10, for acquisitions of subsidiary undertakings and investments in joint ventures and associated undertakings made on or after 1 April 1998, goodwill (being the excess of purchase consideration over the fair value of net assets) is capitalised as an intangible fixed asset. Fair values are attributed to the identifiable assets and liabilities that existed at the date of acquisition, reflecting their condition at that date. Adjustments are also made to bring the accounting policies of acquired businesses into alignment with those of the Group. Goodwill arising on acquisitions made on or after 1 April 1998 is amortised by equal annual instalments over 20 years being its estimated useful economic life. Goodwill on acquisitions prior to 1 April 1998 was written off to reserves in the year of acquisition as a matter of accounting policy. On the disposal of a business, any goodwill previously written off against reserves is charged in the calculation of the profit or loss on disposal.

(f) Other intangible fixed assets and depreciation
Intangible fixed assets other than goodwill comprise the data purchase and data capture costs of internally developed databases and are capitalised so that the costs thereof are recognised over the period of their commercial use. These costs are treated as development costs and capitalised under SSAP 13. Depreciation is provided by equal annual instalments on the cost of the assets at rates ranging from 20% to 33 1/3%.

(g) Tangible fixed assets and depreciation
In accordance with SSAP 19, (i) freehold and leasehold investment properties are revalued annually on the basis of their open market value and the aggregate surplus or deficit is transferred to a revaluation reserve, and (ii) depreciation is provided in respect of any leasehold investment properties with less than 20 years to run. The requirement of the Companies Act 1985 is to depreciate all properties. That requirement is amended by the generally accepted principle set ut in SSAP 19 which is considered to give a true and fair view. Had SSAP 19 not been followed the profit for the financial year would have been reduced by depreciation, the amount of which would be immaterial.

Freehold and leasehold trading properties with over 20 years to run are included at their professional valuation at 31 March 1996 less depreciation with the exception of certain Home Shopping specialist warehouses and all Argos properties which remain at depreciated historical cost. Leasehold trading properties with 20 years or less to run are included at depreciated historical cost.

Depreciation is provided by equal annual instalments on the cost or valuation of the assets at the following rates: Land and buildings - principally 50 years or over the remaining period of the lease.

Motor vehicles - 20% to 25%.	Plant & machinery - 12.5%.
Office equipment - 20%.	Fixtures & fittings - 10%.
Computer equipment - 20% to 40%.	Equipment on hire or lease - over the primary period of the lease.

(h) Stocks
Stocks and work in progress are valued at the lower of cost and net realisable value.

(i) Instalment and hire purchase debtors
The gross margin from sales on extended credit terms is recognised at the time of sale. The finance charges relating to such sales are brought into profit as and when instalments are received. The income in the Finance Division under instalment agreements is credited to profit in proportion to the reducing balances outstanding.

(j) Leasing
The outstanding book value of finance leases is included in debtors. Net income is brought into profit so as to achieve a constant rate of return on the net funds invested. Gross rental income and expenditure in respect of operating leases are recognised on a straight line basis over the periods of the leases. Assets acquired under finance leases are included in tangible fixed assets. The interest element of lease rentals is charged to the profit and loss account over the life of the lease in proportion to the outstanding lease commitment. All other leases are operating leases, and the annual rentals are charged against income as incurred.

(k) Foreign currency
Assets and liabilities of overseas undertakings in foreign currency are translated into Sterling at the rates of exchange ruling at the balance sheet date and the profits and losses are translated into Sterling at average rates of exchange. Differences arising on the retranslation of opening net assets and from the translation of profits and losses at average rates are dealt with through reserves. Differences on exchange arising in the normal course of business are recognised in the profit and loss account.

(l) Derivative financial instruments
The Group uses derivative financial instruments to manage its exposures to fluctuations in foreign currency exchange rates and interest rates. Derivative instruments utilised by the Group include interest rate swaps, currency swaps and forward currency contracts. Amounts payable or receivable in respect of interest rate swaps are recognised as adjustments to net interest expense over the period of the contract. Forward currency contracts are accounted for as hedges, with the instrument's impact on profit deferred until the underlying transaction is recognised in the profit and loss account.

(m) Deferred taxation
Deferred taxation is provided in respect of timing differences to the extent that it is probable that a liability will arise in the foreseeable future.

(n) Pension costs
The Group operates pension plans throughout the world. Following the acquisition of Argos, there are now two major defined benefit pension schemes both of which are in the United Kingdom with their assets held in independently administered funds. The cost of providing pension benefits is charged to the profit and loss account over the anticipated period of employment in accordance with recommendations made by independent qualified actuaries.

During the year the Group has introduced a defined contribution pension scheme in the United Kingdom, with assets held in an independently administered fund. The cost of providing pension benefits recognised in the profit and loss account comprises the amount of contributions payable to the pension scheme in respect of the accounting period.