NOTES TO THE FINANCIAL STATEMENTS CONTINUED |
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| 4. COST OF SALES AND NET OPERATING EXPENSES | 1999 | 1998 |
| £m | £m | |
| Cost of sales | 3,260.3 | 1,809.1 |
| Cost of sales is after an exceptional credit of £23.7m (1998 £70.3m) comprising the refund of previously overpaid VAT in the UK Home Shopping Division. | ||
| 1999 | 1998 | |
| (restated) (note 1) |
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| £m | £m | |
| Net operating expenses comprise: |
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| Distribution costs | 797.5 | 650.8 |
| Administrative expenses (including amortisation of goodwill £72.6m (1998 Nil)) | 870.8 | 349.8 |
| 1,668.3 | 1,000.6 | |
| Net operating expenses include £516.2m (1998 Nil) in respect of the Argos acquisition comprising distribution costs £262.6m and administrative expenses £253.6m, including amortisation of goodwill £72.0m. | ||
| 5. GROUP RESULTS FOR THE YEAR | 1999 | 1998 |
| £m | £m | |
| Profit before amortisation of goodwill, exceptional items and taxation | 513.6 | 555.1 |
| Amortisation of goodwill | (72.6) | |
| Net loss on termination of businesses | (14.3) | (1.7) |
| VAT refunds | 23.7 | 70.3 |
| Profit before taxation | 450.4 | 623.7 |
| Profit before taxation for the year to 31 March 1999 includes an exceptional
charge of £14.3m in respect of the closure of Argos Holland. In addition, there was an exceptional
credit within cost of sales of £23.7m relating to VAT refunds in the UK Home Shopping Division.
The exceptional cost of £1.7m in the year to 31 March 1998 relates to the Canadian businesses, comprising a gain of £17.1m on the sale of Superior Acceptance Corporation and a loss of £18.8m on the closure of the Group's Canadian retail company. In addition, there was an exceptional credit within cost of sale of £70.3m realting to VAT refunds in the UK Home Shopping Division. |
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| 6. NET INTEREST (EXPENSE)/INCOME | 1999 | 1998 |
| £m | £m | |
| Interest income: | ||
| Listed investments | 0.1 | |
| Bank deposits and other | 39.2 | 69.9 |
| Group share of interest income of associated undertakings | 0.5 | |
| 39.7 | 70.0 | |
| Interest expense: | ||
| Bank loans and overdrafts | (143.1) | (30.9) |
| Finance leases | (4.0) | (30.9) |
| Group share of interest expense of joint venture | (19.5) | (6.7) |
| Group share of interest expense of associated undertakings | (0.4) | |
| (167.0) | (43.5) | |
| Net interest (expense)/income | (127.3) | 26.5 |