THORN EMI - David Kronemyer

Results in brief 

Board of directors 

Chairmans statemcnr 

Managing direcror s review including 

 

 

 

 

 

 

 

Five vear summar)' 

Management 

NoricE of Meeting 

 

 

Review of activities : 

Report ol the directors 

Accounting policies 

Consolidated profit and loss account 

Balance sheets 

Source and applicarion of funds 

Notes to the accounts 

Report of the auditors 

Shareholders i, 

Financial calendar

Turnover 

 

Profit after taxation 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per Ordinary Share 

Number of employees at year end

Sir Graham Wilkins 

Cbairman and Cbief Executiue 

AppointedJulr' 1985. A non-executive Director since 

l97fl, he became non-executive Deput)' Chairman 

1984. Chairman and ChiefExecutive Beecham 

Grr 

19i15. Prer.iously Depr,rtV Finance Director The 

Plessev Companr; Director of Accounting Rolls 

Rovce l9:--r9. Group Finance Director, Hestair 

19-l-l-. 

Ivor Owen 

Cbairman, Appliances and Ligbting 

Joined companr' l9ill as Chief Executive of the 

Gcneral Engineering Division. Appointed to Board 

in 1985. Previnsh'\Ianaging Director RHP and held 

senior positions n'ith ICL. Ilember of The Design 

Council and Chairman t>f its Industrial Advisorr, 

Group. 

SirJohn Read 

Non-executizte 

Appointed Deputv Chairman l9r9 follon'ing merger 

$'ith EIUI s'here he g'as Chairman. Became 

non-executive Director l9Ul on appointment as 

Chairman Trustee Savings Banks (lentral Board, and 

nor.TSB Group plc. Deputt'Chairman Thames 

Television. Director Vbnders'orld plc and nlember 

of CBI Council. Gt>r-ernr>r Henler' \tanagemcnt 

College. 

Sir Ian Trethowan 

Non-executiue 

Appointed Direc()r l9U6 and joined Tharres 

Television Board. Director-General BtsC 19---f i2. 

Currenth'. Chairman Horse race Betting Le\-\' Iloardi 

Director Barclavs Bank and Times Ne$'spaper 

Holdings: Trustec. British Museunl xnd 

Glvndebourne Opera: \lenrbe r of l]oard of the 

Ilritish Council. 

Left to right, 

Seated: 

Jim llaxntin, 

Bob Nellist. 

Colin Southgate, 

Sir Grabam Wilkins, 

Harold Mourgue, 

Iror Ou'en. 

Standing: 

SirJobn Read, 

Sir \Yilliam Barlou', 

Sir TreL'or Holdsu'ortb, 

Sir lan Tiethou,an.

Board of Directors 

Sir Graham Vilkins 


H G Mourgue rce 

Vice Cbairrnan 

C G Southgate 

Managing Director 

SirVilliam Barlow' 

Sir Tlevor Holdsworth* 

HJ Maxmin nl, PhD 

R H H Nellist MA (oxon), FCA,J Dip MA 

I H Owen 

SirJohn Read' 

Sir Ian Thethowan* 

*non-executive 

Associate Dlrectors 

T MayeT CBE, BSc ENG, FIEE, FRTS, CBIM, FIM 

V B Menon MA(oxon) 

Secretary 

R Charlton MA(oxon), Barrister 

Registered Office 

THORN EMI plc 

THORN EMI House 

Upper Saint Martin's Lane 

tondonWC2H 9ED

The vear 198516 was one of considerable 

changc in your Company which is now 

structured into four main business sectors. 

I am pleased to report that the prospect for 

improved profitability in each of these 

sectors is now much brighter. As evidence 

of this trading profit in the second half of 

the year showed an increase of S10m ovcr 

the corresponding period in the previous 

year, despite our problems with INMOS. 

Because of changes made in the business, 

the underlying trading performance is in 

reality ^t 

a rather higher rate. 

Turnover for the year to 31 March 

1986 amounted to 53,316.5m compared 

with 5J.204 .4m for the previous year. 

Profit before finance charges and 

exceptional items amounted to Sl54.0m 

(1985 Sl7l.7m). Finance charges amounted 

ro 549.3m (1985 550.4m) and profit before 

taxation was Sl04.7m (1985 5108.3m after 

exceptional items of Sl3.0m). Earnings per 

share were 26.5p 11985 29.9p). 

Extraordinarf items of 56l.0m nct of 

tax were charged (1985 527.4m): these 

included a net provision of 545.0m for the 

restructuring of INMOS. 

An interim dividend of 5.0p per 

share was paid in March 1986. The Board is 

recommending a final dividend of 12.5p 

per share, making a total of 17.5p (1985 

17.5p) for the full year. The ordinary 

dividend for the year is covered 1.5 times. 

Investment in fixed assets during the 

year amounted to s314.lm (1985 5314.0m) 

comprising rental equipment S19l.4m 

(1985 5186.2m) and other fixed assets 

&122.7m (1985 Sl2 7.8m). 

Net borrowings after deducting 

liquid funds at 31 March 1986 amounted tcr 

5337.3m (1985 5356.6m). Had the balance 

of the THORN EMI Screen Entertainment 

(TESE) disposal proceeds been received 

prior to 31 March 1986, these borrowings 

would have been 5219.0m, representing a 

net gearing ratio of 37. r- per cent (1985 57.2 

per cent). 

Disposals 

One of our prime aims has been to reduce 

borrwings through a more efficient use of 

resources. This has been achieved mainly 

by disposals. The principal disposals 

during last year were Heating, further 

companies in the Metal Industries 

Division, and the Cable TV interests. Since 

the year end the main disposals have been 

the remainder of Me tal Industries, a 

proportion of our shareholding in Thames 

TV, and TESE; taken together these 

disposals realised in excess of 5200m. In 

view of the importance of the TESE 

disposal and the publicity it and its 

subsequent resale attracted, I intend to 

explain the background to the transaction. 

Our strategy is to concentrate on 

those businesses from which aclequate 

profits can be made and where the Group 

has, or can obtain a competitive advantage. 

As TESE did not meet these criteria we 

decided to dispose of it. 

Discussions were carried out with a 

number of interested parties including 

Cannon. The offer in December 1985 from 

Screen Entertainment Limited, a company 

promoted by the management of TESE 

- 

supported by the Bond Corporation 

- 

vt'as the highest received and no better 

offer was forthcoming. Significantly 

Cannon was not prepared at that time to 

make a more attractive offer than the one 

we accepted. 

Nearly four months later, Screen 

Entertainment informed us it could not 

complete the acquisition. As previously 

undertaken bv the Bond Corporation, 

in the event of Screen Entertainment 

failing to complete, it purchased TESE 

outright. 

Your Board reiterates its conviction 

that on all the evidence, we obtained the 

best price possible at the time. Your 

Companv is also much strong€r for having 

disposed of this high risk and inadequately 

profitable activity. 'We have received 

Sl28m in cash from Bond Corporation, 

n'hich also assumed responsibilitv for the 

refinancing ol58.5m of borrowings. In 

addition, the sale has also relieved us of 

commitments of more than 5100m. 

4

The sale has strengthened our 

balance sheet and it will also enable us to 

invest in the future of our four sectors. 

INMOS 

Now let me put INMOS into context. In the 

months following acquisition it made a 

small profit but since the beginning of 

1985, it suffered from the worldwide 

slump experienced by the semiconductor 

industry. 

Our recently introduced transputer 

family of products remains ahead of the 

world in technical specification and 

performance. The orders from Floating 

Point Systems of the USA among others are 

an important beginning, but its adoption 

by other leading manufacturers is vital. 

\7ith the launch of the transputer 

INMOS is now a substantially different 

company, with its emphasis on high value, 

low volume products. Some restructuring 

was undertaken a year ago to meet 

changing market requirements and 

substantial reductions were achieved in 

operating costs. However, we maintained 

the fabrication facilities at Colorado 

Springs, USA, and Newport, South Wales, 

in the hope that market conditions would 

improve. 

'W'e 

budgeted for INMOS to breakeven 

for the current year but the 

improvement has not been realised and 

the rate of the losses reported by the 

company has continued. It is now clear 

that with the amount of industry capacity 

in the world and a very slow sales growth, 

we shall not require our full present 

production facilities. Wafer fabrication of 

the bulk of the product range is to be 

concentrated at Newport, leaving 

Colorado Springs as primarily an R&D 

activity with pilot plant operations. 

This decision involves a further 

contraction in the workforce at Colorado 

Springs as well as substantial write-offs in 

equipment and facilities there, plus the 

cost of reorganising the Newport facilities. 

Hence the provision to meet these and the 

excess operating costs while the cut-back 

is taking place. 

\7ith these measures to reduce 

INMOS' ongoing costs of operations, its 

management and the Board of THORN 

EMI have again demonstrated their 

determination to take whatever actions are 

necessary to return INMOS to profitability. 

Also, during the next few months we 

should start to see the build-up in sales 

from the new memory and transputer 

products launched recently. Thken 

together this should give INMOS the 

opportunity to break-even on a month-bymonth 

basis. 

Other Developments 

Of the other problem areas referred to a 

year ago,I am pleased to report that 

Ferguson has now been restored to 

profitable trading following a restructuring 

and cost reduction programme. Recovery 

of the Music business is taking somewhat 

longer than expected, The satisfactory 

profits being earned in the rest of the 

world continue to be offset by poor results 

in North America. Howeveq there are signs 

of a progressive recovery which should be 

reflected in improving results in 198617. 

Much is being done to improve 

returns from all our businesses, but our 

Rental operations, HMV Shops and 

THORN EMI Electronics can be singled out 

for their excellent performance. UK Rental 

reported record profits and the 

International Rental businesses had 

another excellent year. HMV Shops also 

reported another excellent year, expanding 

its business in the UK and Denmark. In 

tougher business conditions, Electronics 

performed particularly well and 

maintained a strong order book. 

Reorganisation and investment in 

Appliances and Lighting will enable them 

to focus on higher-margin products and 

make further progress. 

Last yeat I said we would strengthen 

the company's management systems and 

organisation, improve cash controls and 

cash management in addition to investing 

in new products to meet the demands of 

the market. Much of this is already being 

achieved. Under Colin Southgate's 

direction the operating management team 

has a firm sense of purpose and realism. 

His Managing Director's Review and the 

Review of Activities of our main business 

areas describe in more detail how we are 

developing strategies for the core 

businesses. 

My Board colleagues join with me in 

expressing their sincere appreciation of the 

very high level of commitment and effort 

shown by all employees during another 

difficult year. lt is already apparent with 

the reorganisation in place that the 

Company will achieve the results for 

which we are all striving. 

In welcoming Sir Ian Trethowan to 

the Board, I should like to take the 

opportunity to record our thanks for the 

contribution to the Company over the 

years made by Lord Brabourne, John 

Sibley, Peter Bennett and Richard Norman, 

all of whom retired from the Board during 

the year. 

 

Sir Graham \filkins " 


l0 July 1986 

Sir Grahanr \X/ilkins 

Cltairntart anrl Cbief 

Ilxecutit'e

Our aim over the past year has been to 

maintain pressure on reducing costs and 

cash outflow, while concentrating on the 

development of core businesses, with 

profit rather than turnover as the main 

criterion. This was aided by completing 

disposals of businesses not central to our 

mainstream operations. 

Although the second half shows 

improvement on the same period last yeaq 

achieving the higher levels of profitability 

possible from our portfolio remains our 

constant goal. 

Managlng Change 

The Group is responding to the tough 

action taken to improve performance. In 

this, we are determined not to sacrifice for 

short-term expedienry long-term 

investment crucial to adapting to the 

increasing pace of change in the intensely 

competitive, global marketplace. 

The task of our management team 

has been to reverse our earlier decline 

while seizing opportunities across our 

businesses to foster progress. I am 

convinced that even with our short-term 

problems we can actively and successfully 

manage change. 

'!7e are now well placed in terms of 

innovative management skills, 

technological, engineering and product 

design resources, modern production and 

international marketing expertise, to 

achieve results justifying the continued 

confidence of shareholders and 

employees. 

A continuing programme of 

organisation development has 

fundamentally strengthened the senior 

management of each major business, and 

hence their ability to improve performance 

and competitiveness. Of 44key business 

units, 32 new appointments at managing 

director level have been made, 20 by 

internal promotion, the remainder by 

external appointments. 

The overall profile of the Company's 

senior management has also changed 

materially: the average age is now 

markedly lower, the academic and 

business education levels much greatet 

prior experience wider, and the 

international business background 

considerably broader. 

Our goals are ambitious but there is a 

climate of change in the Company 

reflecting greater realism, openness and 

speed of response which is already 

beginning to have the desired effect. 

Short Term Actions 

The Review of Activities describes the 

performance of our core businesses in 

more detail, but I would like to set these in 

perspective. Our first priority has been to 

tidy up the balance sheet and reduce 

borrowings. 

Disposals. The main disposal, Screen 

Entertainment, to which the Chairman 

referred, led logically to the divestment of 

cable television (apart from a small residual 

interest in The Children's Channel). Others 

included Dynatel, Brimaq Gothic Crellon, 

some microsoftware activities of THORN 

EMI Computer Software and certain South 

African operations. 

The disposal of the domestic central 

heating business has given us a 22 per cent 

interest in a stronger operation which 

should produce worthwhile returns. 

Ve continued the planned 

withdrawal from business areas not 

relevant to our core business strategy, or 

unlikely to be viable in the overall context: 

the phased disposal of the Metal Industries 

division (in 1983 comprising 45 companies 

engaged in distribution, general 

engineering and component manufacture) 

has been completed since the end of the 

financial year. 

During last year and since, these 

disposals have realised in excess of S200m, 

almost all in cash, and relieved the Group 

of onerous commitments. 

Apart from the positive impact on 

our balance sheet and profit and loss 

account, this allows us to concentrate on 

improving profitability throughout the 

portfolio by optimising the use of our 

technical, marketing, financial and human 

resources to international competitive 

advantage. 

Restructuring. Our dominant remaining 

problem area, INMOS, has been dealt with 

in detail in the Chairman's Statement. Our 

desire to take partners should not be seen 

as alzck of vision or confidence in the 

company. If the opportunities are to be 

fully exploited we need to share the 

ongoing high investment costs. Hopefully 

partners would also be a source of 

additional business. 

Ferguson's restructuring and cost 

reduction programme has now been 

completed. As stated at the half yeaq 

Ferguson is restored to profitable trading. 

It is demonstrating improved marketresponsiveness 

and competitiveness with 

exciting new products. The manufacturing 

agreement with JVC, including technology 

co-operarion, will be a further boost to its 

progress. 

Music in North America is showing 

gradual signs ofrecovery, despite subdued 

market conditions. 'We are beginning to see 

results from our increased investment in 

tapping new strearns of Pop talent through 

three labels Capitol, EMI America and 

Manhattan 

- 

as part of our successful 

market segmentation 

- policy. Howeveq the 

measures taken have required a revenue 

investment of $25m. Similar continuing 

support costs will be necessary to secure 

our objectives. 

6

A radicd reassessment of the 

management resource required by EMI 

Music for the future has led to the 

promotion to a restructured worldwide 

operating team of a number of younger 

line executives with proven capabilities. 

EMI Music's North American 

operations will be consolidated under a 

new President to be appointed shortly. 

The new Compact Disc facilities in 

Swindon, UK, and atJacksonville, USA, 

will also help our competitive position. 

Progress Elsewhere 

Rental operations were a highlight with the 

UK businesses reporting record profits and 

gains in market share, The International 

Rental business also experienced strong 

growth in market share, reflected in 

increased sales and profits. 

In Retail, HMV Shops also enjoyed 

another excellent year. The acquisition of 

Revolver Records, a UK chain, is important 

in both geographic and customer-profile 

terms. Our successful concept of music 

retailing is being actively developed 

internationally. The Rumbelows chain in 

the UK has been completely restructured, 

concentrating exclusively on retail 

operations with recent marked success. In 

Denmark, FONA had another excellent 

year. W'e plan substantial expansion of the 

financing of consumer credit through our 

retail outlets and, accordingly, we have 

established a separate retail credit 

company, Rumbelows Finance Limited. 

Because the nature of its business is 

fundamentally different from that of the 

rest of the Group, we have decided to 

show the assets and liabilities of that 

subsidiary as a net investment in the Group 

Balance Sheet. This enables a more 

meaningful view to be taken of the Group's 

financial position as 

^t3l 

March 1986. 

The formation of a unified 

Technology Group from I April this year 

concentrates our first-class capabilities on 

specialised high-technology market 

sectors, while focusing on a limited 

number of new product areas. The 

Electronics grouping performed 

particularly well in a tougher UK defence 

electronics market and continues to have a 

strong order book. Thorn Ericsson's 

success with orders from British Telecom 

for the AXE l0 digital exchanges means 

expansion of its Scunthorpe plant. 

Despite a weaker overall computer 

market, in the Information Systems and 

Services sectors, Software Sciences and 

Datasolve both performed very 

satisfactorily. Considerable costs were 

involved in setting up a US Software 

Product unit for our computer software 

paclage business and continuous 

improvement is essential for this to begin 

contributing. In line with the computer 

peripherals sector worldwide, Datatech, 

which also used to manufacture for 

Sinclair, had a very difficult yeaq 

necessitating substantid reductions in staff 

levels and facilities. Our Security business 

progressed, but the Measurement activities 

encountered more difficult trading 

circumstances. 

Lighting continues to be well served 

by its high-technology innovations but still 

needs to become stronger internationally. 

Its performance was close to target and 

recent organisational changes should 

enhance future results. 

The Domestic Appliances activities 

have been akey area for reorganisation and 

reinvestment, although the results have yet 

to show through. Management, facilities 

and products have been strengthened, 

particularly in the Major Domestic 

Appliances sector. Despite avery weak UK 

market for small appliances, Kenwood 

managed to trade profitably woddwide, 

albeit at a lower level. 

A primary focus has been product 

design, quality and competitiveness to 

benefit market share and profitability. Our 

new Spennymoor cooker plant is the most 

modern in Europe, setting standards for 

efficiency and working environment 

which we are determined to apply 

generally. The Commercial Appliances 

businesses in the UK and France all 

performed well. 

Australia 

The performance of THORN EMI Australia 

was subdued apart from its Rental, Lighting 

and Electronics sectors. Its future direction 

is currently being reviewed to permit firmer 

concentration on a core business strategy. 

Thames lblevision 

During last autumn a provisional 

agreement was reached with Cadton 

Communications to sell our, then,46per 

cent shareholding in Thames. However the 

sale was blocked by the IBA. Our decision 

at that time has to be seen in relation to our 

undertaking to the IBA to reduce our 

shareholding, Thames' prevailing 

management problems and its poor results 

inI984l5 and the first half of 198516. 

Thames today presents a re-vitalised 

picture. Important management changes 

have been made and results in the second 

half of 198515 and the early months of 

198517 show considerable improvement. 

The recent flotation has been an 

outstanding success, realising for THORN 

EMI 517.1m gross and leaving us with a 

holding of 29 per cent (BET have an equal 

holding). 

Our concern for the continued wellbeing 

and success of Thames is 

undiminished and the flotation should 

help to safeguard its IBA franchise. It is our 

wish to retain a substantial shareholding in 

Thames. 

Oolin Sor.rthgate 

.l fu t ) t (tgi t t g D irec k ) r

Revicw of activitics: 

RENTAL AND RETAIL 

Jim Nlaxmin 

Chairman and Cbief 

Executit)e THORN EMI 

Home Electronics. 

During the yeaq our Rental and Retail 

operations were reorganised in order to 

differentiate between the UK and overseas 

interests. This was intended to increase the 

focus of our business development 

programmes, while exploiting the 

common services and gaining the 

economies of scale inherent in the UK 

operations. In the UK, THORN EMI High 

Street Electronics was created, with 

responsibility for Rumbelows, Radio 

Rentals, THORN EMI TV and Video 

Centres, DER and High Street Operations. 

The overseas operations include THORN 

EMI International Rentals (which operates 

in 13 countries), FONA, and HMV Shops. 

Already represented in Denmark, HMV 

Shops is actively planning overseas 

expansion based on its unique and 

successful UK formula. 

The THORN EMI High Street 

Electronics grouping of UK companies 

now contains over 1,500 retail outlets, 

servicing an established household base 

exceeding 3 million. This makes it one of 

the largest UK high street property 

portfolios and one of the world's largest 

purchasers of brown goods. 

Each company is being developed to 

exploit different consumer segments and 

to offer a differentiated product/service 

mix: 

Radio Rentals 

n SPECIALIST RENTAL 

is the UK market leader and 

- premier 

specialist rental chain. DER is also a 

specialist renter, and is being positioned to 

cover a wider consumer segment. 

N MIXED RENTAL/RETAIL 

- THORN 

EMI TV and Video Centres trades under 

the Focus and Multi-broadcast brands, 

both regionally focused, mixed rental/ 

retail operations appealing to a younger 

market. 

! RETAIL Rumbelows is now 

exclusively - concerned with retailing and is 

targeted at the youngeq service-sensitive 

consumer, seeking high quality consumer 

durables. 

High Street Operations is the 

service company within THORN EMI High 

Street Electronics providing comprehensive, 

cost-effective central services to the 

operating companies. Specialist rental and 

retail services to the business sector are 

provided through THORN EMI Business 

Communicatlons, incorporating Radio 

Rentals Contracts, REW and THORN EMI 

Dataphone. 

The UK rental interests enjoyed a 

record year in terms of profit. Profitability 

was substantially increased by significant 

reduction in capital employed. Each 

Rumbelou,s'sbop at 

Soutbend in tbe neu' 

lit,ert'. 

Turnover contribution 

to Group 

Proportion of total 

Group employees

DER is a specialist 

rental cbain. 

FONA, tbe leading 

Danisb electrical 

retailer uitb ouer 70 

outlets, recently 

celebrated its 60tb 

anniuersary. 

Radio Rentals is 

THORN EMI's premier 

specialist rental cbain 

and []K market leader 

Multi-broadcast is one 

of tuo n',ixed rental/ 

retail cbains operated 

by THORN EMI TV and 

Video Centres.

company also increased its market share. 

This performance reflected both 

innovative marketing programmes 

designed to improve customer retention 

and firm management action to reduce the 

cost base and improve asset management. 

During the year, over 375,000 rental 

accounts were transferred from 

Rumbelows to the "traditional" rental 

companies in a programme to gain further 

economies of scale within the specialist 

rental organisation, while allowing 

Rumbelows to focus single-mindedly on 

retail. All the indications are that both 

objectives are being achieved. 

After a relatively disappointing first 

half, Rumbelows finished the year strongly 

with a high level of sales and market share 

growth. Its new management has 

implemented a wide range of market 

initiatives which should ensure continuing 

sales and profit success. An advanced 

electronic point of sale system for all 

Rumbelows' outlets will streamline 

inventory management. 

Our International Rentals 

business had another excellent year. All of 

its operations in 13 overseas countries 

(the South African business was sold) 

experienced strong growth in terms of 

new business, reduced terminations and 

increased profitability. Overall the 

businesses added substantially to their 

rental bases while remaining cash neutral. 

New marketing programmes based on 

innovative rental concepts were widely 

introduced and met with considerable 

success. Strong management action has 

also resulted in lower operating costs, 

better asset management and more 

effective marketing expenditure. New data 

systems should help improve customer 

retention rates and target marketing. Plans 

are in place to add 10 new shops and to 

further upgrade the quality of the premises 

and rental fleet. 

HMV Shops, our music retailing 

stores operation, reported another 

excellent year in the UK with sales some 

23 per cent above the previous year's level, 

despite increased competition and a 

relatively sluggish market over the last six 

months. Another four shops were opened, 

increasing the retail space to over 100,000 

square feet and adding substantially to our 

market dominance in the central London 

area.The opening of another five shops is 

planned, so that a total of 180,000 square 

feet of retail space should be operational 

by March, 1987 Plans are well advanced to 

create "The World s Largest Record Store", 

with over 50,000 square feet, on a 

prestigious site at the eastern end of 

London's Oxford Street. 

Dominion kleuision 

Rentdls in Neu 

Zealancl, one of lJ 

countries sert'ed b! tbe 

I n te rn at i ( )na I Re ntal s 

business.

This HMV Sbop in 

Peterborougb is one of 

.four neu UK outlets. 

I.'our more opened in 

Denmark bat'e alread)) 

obtained an impressiue 

-sbare of tbe market. 

Revolver Records, a chain of 14 shops 

mainly based in the Midlands, was 

acquired. Revolver appeals to a slightly 

older customer profile than HMV Shops 

and will provide an important strategic 

addition to our high street record retailing 

portfolio. 

HMV Shops is one of the key 

businesses targeted for overseas 

expansion. It is already successfully 

established in Denmark and negotiations 

and feasibility studies are now under way 

in several overseas countries. 

FONA Denmarks leading 

electrical retailer - 

celebrated its 60th 

anniversary during - the year. Despite 

extremely fierce competition, it increased 

sales by 14 per cent and improved overall 

profitability. 

In April 1985, FONA opened its first 

HMV Shops record store in Copenhagen to 

enthusiastic market response: three more 

outlets have since opened. 

Strong management and good 

financial controls coupled with well-sited 

and merchandised shops should ensure 

FONAs continued success. 

Skala Tbleuision in 

Belgium, part of 

THORN EMI\ 

International Rental 

operatiOns.

Review of activities: 

TECHNOLOGY 

Tom Mayer 

Cbief Executiue 

THORN EMI 

Tbcbnologlt. 

On I April this year, our activities in several 

technologicalareas were reorganised into a 

unified Technology Group, comprising 

seven substantial operations addressing 

specialised sectors of the high technology 

market. 

The largest of the groupings, 

THORN EMI Electronics, reported 

another successful year with sales and 

profit showing considerable improvement 

on previous years. The company is now 

organised into eight major divisions 

covering specific business areas. 

The Computer Systems Division 

completed an important ndar integration 

project in Denmark and handed over the 

first sophisticated mission support system 

to the RAF. Deliveries of British Rail 

advanced ticket issuing systems are 

proceeding well and purpose-designed 

passenger information displays have been 

widely installed on the London 

Underground. 

Defence Systems Division secured 

new contracts to produce fuzes for the 

ALARM and ASRAAM airlaunched missiles. 

The complex warhead-activating fuzes for 

the RAF airfield denial weapons and the 

new generation of artillery shells are now 

in full production. Work continues on the 

multi-national MLRS III multiple-launch 

rocket system project. 

Electro Optics Division has won 

every major British Army contract for 

man-portable thermal imagers. 

Completion of a new factory this year will 

aid expansion of this important business area. 

With the award to Naval Systems 

Division of the contract to supply data 

distribution systems for the Royal Navy's 

new single-role mine-hunter, these systems 

will now be supplied for all other classes 

of vessel on order for the Royal Navy. 

Degaussing ranges were installed in two 

NATO countries and in Australia and a 

further contract obtained for the British 

Army NAIAD nerve gas detector. 

During the year Radar Division 

delivered its 300th Cymbeline mortar 

locating ndar and completed Royal Navy 

sea trials for its advanced Guardian 

electronic countermeasures system, 

Company-funded development of the 

Skymaster aircraft early warnin g radar 

continues. 

California-based Systron Donner 

maintained its leading position in aircraft 

engine fire detection systems with further 

orders from Boeing, Airbus Industrie and 

other leading manufacturers. Eleven 

inertial flight control packages are being 

supplied for the United States Air Force 

81-B bomber. 

Ti:rnover contribution 

to Group 


Group employees 

THORN EMI 

Electronics is the UK 

national prime 

contractor on tbe 

Phase III terminallyguided 

warbeadfor tbe 

multinational MLRS 

(Multiple La.uncb 

Rocket System) pryiect.

Tbe INMOS 32 bit 

tfansputer, a comPuter 

on a chip that can 

execute 10 million 

instructions per 

second 

 

 

 

 

 

 

 

 

 

Assembling a linear 

acceleromeler at 

Systron Donnerfor use 

in tbe Landsat salellite. 

Tbe Electro Optics 

Dittision of THORN 

E,\,II EIeclronics has 

u,on a !5m corilrdct 

from lbe UK ,\,linistrt' 

of Defence for the 

derelopme,tl of lbe Air 

Defence Alerliil!1 

Derice (ADAD) usi,tg 

tlrermal imallittg 

tecbnologl'. 

Both THORN EMI Varian, with a 

contract to supply a new klystron tube for 

the European Space Agency earth resource 

satellite, and THORN EMI Electron Tubes, 

with contracts for space applications for 

low light level sensing devices, maintained 

good progress. 

In Sensors and Security Systems 

the merging of AFA-Minerva and THORN 

EMI Fire Appliances created a major fire 

and security protection enterprise with 

sales well ahead of the previous year's 

combined results. A major fire protection 

scheme for the headquarters of the 

Hongkong and Shanghai Bank was 

completed, and a product and technology 

transfer agreement was signed with the 

People's Republic of China. An important 

Ministry of Defence contract was won, to 

develop the Tiident submarine fire 

protection syst€m. 

THORN EMI Datatech experienced a 

difficult year and a major reorganisation 

programme has been instituted to improve 

profitability. 

Nuclear Enterprises had another 

successful year with substantial orders 

from the US nuclear power industry. 

Exports now account for 60 per cent of 

sales, withJapan an especially valuable 

market for precision dosimetry 

equipment. 

THORN EMI Datatecb 

triple densit! 

streaming lape clriue.


TECHNOLOGY 

continued 

In the USA, THORN EMI Malco 

reported a successful year in its traditional 

plastic card business, achieving 

coast-to-coast market coverage through a 

West Coast acquisition. Malco's magnetic 

tape plant came on stream successfully. 

Information Systems' principal 

operating company, Software Sciences, 

completed a number of major information 

technology systems contracts for the UK 

Ministry of Defence. The recently formed 

Finance Group successfully exploited 

opportunities resulting from deregulation 

in the UK securities market. The 

company's subsidiary in Holland also had 

an excellent year. 

THORN EMI Micrologic obtained 

major orders for electronic point-of-sale 

terminals from several prestigious high 

street names including Marks and Spencer 

and Victoria \fline, giving a strong year-end 

order book. 

In Information Servlces, 

Datasolve increased business throughout 

its divisions and moved into new areas. 

Noteworthy was the contract won by the 

Bureau Division to process the UK Data 

Protection Register and transfer it to 

microfiche. Substantial contracts were also 

signed with Vestern Tiust and Savings and 

Tamar Bureau, while Datashield 

substantially extended the penetration of 

its disaster recovery service. Data 

Information Services Division added the 

Soviet News Agency TASS to its World 

Reporter service. Among other contracts 

was a "Gateway" deal with British Telecom 

for its electronic mail service. The 

Education Division launched a new 

interactive video-box training method, 

'Actioncode". 

THORN EMI Computer Software, 

Europe's largest independent software 

product company, is within the top 15 

worldwide. It withdrew from certain 

microcomputer software activities in order 

to sharpen its focus on its specialisation in 

decision support and management 

information products, which include FCS, 

FQS, Tempus Link and Host. Its Shadow II 

recently won a Design Council Award. 

Computeraid Services Division 

extended both the range of its third-party 

computer maintenance services and its 

customer base. 

In lblecommunications Thorn 

Ericsson's activities are entering a phase of 

considerable growth with substantial 

orders from British Telecom for AXE 10 

digital public telephone exchanges. This 

has led to a major expansion at its 

Scunthorpe factory where the number of 

employees should double. There are also 

150 engineers and programmers at PCE, 

the company's associate software house in 

Brighton. 

The company serves both the public 

and private sectors with products 

including high capacity optical fibre data 

package switches and computer controlled 

business telephone systems. It has 

introduced new versions of the MDll0 

private automatic branch exchange. 

Our Measurement business 

performance was below the previous year's 

record level, reflecting the depressed state 

of the general instrument market. A 

number of competitive new products were 

successfully introduced, however. 

In the USA, Biddle continued to 

perform well, while Modutec maintained 

its share of a subdued and competitive 

marketplace. 

In Semiconductors the sharp 

decline in the market impacted 

significantly on the results of INMOS. 

However, a highlight of the year was the 

successful launch of the transputer in 

Octobeq with a substantial number of 

recent additions to the range. Transputer 

products sold throughout Europe, the 

United States andJapan, are currently 

being designed into a wide range of 

applications including robotics, computer 

graphics, artificial intelligence, and digital 

signal processing. 

INMOS maintained its position as a 

world leader in high performance static 

and dynamic RAMs (Random Access 

Memories) by the introduction of 64X 

static RAMS and the world s fastest 

production 256K dy namic RAMs. 

Softuare Sciences' 

CHAMPS computer 

system prouides afull 

botel ..ccounting, 

management, 

processing and. 

reseruations seruice.

T he operater's position 

in the airborne earl! 

u,arning tersion of 

THORN EITI 

Electronics' higbly 

s uc c e s sf u I S e arc b uta te r 

rctdar nou' being 

delitered b tbe 

Spanisb Nat'I'. 

TTIORN E.III 

,l I i c rr.t I r.tgi c e I ec t ro n i c 

poi,tt-of saIe te rmi naIs 

pro r i de fas t, ctcc u rate 

sk)re data etutbling 

retailers b operdte 

t'JJ i c ie nt 1.1'.'.\hctp I i n k " 

prot'ides tlJe 

c( ) I I tt ect ijt t bet u een 

E['( )S terntiilctls aild 

tl.te host contpuler 

Thorn Ericsson 

deueloPed and 

supplied tbe netu'ork 

su'itching equiPment 

for the Racal 

lbdaphone cellular 

rad.io swtem.

Bhaskar Menon 

Cbairman and Chief 

Executiue EMI Music. 

EMI Music's performance for the year 

reflected both the volatility and 

opportunities for growth in the worldwide 

market for pre-recorded music. 

In order to progress and prepare the 

music business for future growth a 

reassessment of management needs has 

led to the formation of a restructured 

worldwide operating team of younger line 

executives. 

In North America results were 

depressed by the continuing high level of 

support required to maintain the 

aggressive initiatives taken during the last 

two years to strengthen our position in 

Pop, Classical,Jazz, Country and in Black 

music where "Capitol Records" emerged 

last year as America's leading label for 

Black music. Together with creating the 

New York-based "Manhattan Records ", 

focused on East Coast talent, and 

sustaining the recovery of the "EMI 

America" label, these actions entailed 

significant additional investment and costs. 

However there are encouraging signs of 

volume improvement during the first half 

of the current year, substantiating the 

pursuit of the US growth strategy. 

The Europe and International 

operations achieved results in line with the 

previous year despite problems in Australia 

and South Africa. Noteworthy were the 

contributions of the UK, Germany and 

Italy, significant recovery in South East 

Asia and Spain, and major profit 

improvements in Latin America and 

Scandinavia. 

The international roster of artists 

includes Paul McCartney and David Bowie 

both of whom have recently signed 

- new long term recording agreements; 

Heart, with multi-platinum sales 

worldwide last year; Tina Turner, whose 

sensational "Private Dancer" album will be 

followed by a new album this autumn; 

Freddie Jackson, America's newest Black 

music star; Queen, who have maintained 

their position as one of the world's leading 

recording groups; Pet Shop Boys, the latest 

UK act to achieve number-one hits 

throughout the world; and GraceJones, 

one of Pop music's unique performers. In 

addition, artists such as Kate Bush, Duran 

Duran, Iron Maiden, Katrina & The'Waves, 

Marillion, Stevie Nicks, Diana Ross, Bob 

Seger, Sigue Sigue Sputnik, Thlking Heads 

and Thlk Thlk continued to emphasise the 

importance of the UK and US as prime 

sources of popular repertoire. 

Local artists also featured 

prominently in the activities of EMI Music's 

companies worldwide, providing the 

essential national and international talent 

mix in each region. 

Turnover contribution 

to Group (including 

previous Entertainment 

activities) 


Group employees

International Classical Division 

fostered its immensely valuable catalogue 

of recordings spanning over 80 ,vears ancl 

including a prestigious contemporar,v 

roster of distinguished soloists and 

cor-rductors such as Dimitri Alexeev, Jose 

Carreras, Placiclo Domingo, Andrei 

Gavrilov, Kiri TL Kanawa, Herbert vn 

Karajan, Nigel Kennedy, Katia & Marielle 

Lcbeque, Ychudi Menuhin, Riccardo Muti, 

Anne-Sophie Muttet Jessve Norman, 

Itzhak Pcrlman, Andrc Previn, Simon 

Rattlc, Jeffrel, ?ate, Klaus Tennstedt and 

Frank-Peter Zimmermann. 

EMI Music Publishing operations 

in 22 countries continued to make an 

impressive contribution to profits and 

remain an important source of rcpertoire 

for our rccord companies. 

EMI Music's Capitol Magnetic 

Products Division maintained its position 

as a major supplier of duplicator maplnetic 

tape and acetate discs to the international 

 

 

 

record industrl', and Picture Music 

International, the video division, 

increased its release of titles for sale to 

consumers and to growing cable and 

broadcast television outlets worldwide. 

The traditional frrrms of record 

carrier continued to be influenced b_v 

radical technology' changes 

- a challenge 

being met b,v EMI Musics UK Compact 

Disc factor,v in Swindon, which was 

opcrational in March, and by a similar 

facilitv in the US being built at Jacksonville, 

Illinois, scheduled to be on stream in the 

late autumn of this vear. 

EMI Music'sfirst 

Compact Disc plarrt, 

at Swindon in the UK, 

is nou operational. 

A second planl in 

Jacksont,ille, USA u,ill 

also be opened in 1()8(t 

 

 

 

 

 

 

 

 

 

 

 

 

 

Riccardo,\Iuli 

music director irt 

Philadelpbia and La 

Scala,11ilan, signed 

e.rclusit;el! to Ef,4I 

,llttsic, 

Itzbak Perlman 

- 

i tile rna I i o na I t, i rt uo so 

u'itb an oulstanding 

catalogue of major 

recordings for E,\II 

Music.


CONSUMER AND COMMERCIAL 

Appliances and Lighting 

Ivor Owen 

Cbairman THORN EMI 

Appliances and 

Ligbting Group. 

The Appltances and Lighting Group 

serves international consumer and 

industrial markets through five divisions: 

Major Domestic Appliances (trading under 

the Tiicity, Bendix, Moffat, Parkinson 

Cowan and Main brands); Kenwood Small 

Appliances ; Commercial Appliances ; 

Metering; and Lighting. The exploitation of 

new technologies, design enhancement, 

investment in modern manufacturing 

facilities, and the highest quality, safety and 

reliability standards are shared 

characteristics. 

Maj or reorganisation programmes, 

notably within Major Domestic Appliances 

and Lighting and largely completed during 

the year, are bolstering increased flexibility 

and responsiveness to international market 

trends and competition in each key 

product sector. 

The sale of the Heating business, in 

March 1986, is allowing concentration on 

businesses with a more international, 

higher technology profile. 

The financial performance of Major 

Domestic Appliances was disappointing, 

with particularly poor results on Electric 

Cooking and Refrigeration although 

management, products and capital 

investment have now been strengthened. 

Design will have increasing 

importance in the international 

marketplace and the creation of high 

quality, innovative products with matching 

manufacturing facilities remains a priority. 

An Advanced Product Development 

Group in the new Mountjoy Research 

Centre adjacent to Durham University was 

recently announced. 

Highlights in our Electric Cooker 

business included the commissioning of 

an advanced new factory and extensive 

product redesign. Despite short-term 

production problems, UK market 

leadership was maintained and innovative 

new products, backed by exceptional 

automated production techniques, augur 

well for the future. 

The Microwave business performed 

satisfactorily, given slower market growth 

and a proliferation of competition. 

Investment in manufacturing facilities and 

in exciting new technology-based product 

ideas heralds improved performance in 

expanding international markets. 

Refrigeration's difficulties were due 

to the combine d effects on sales of the 

poor weather in the UK and an ageing 

product range. Full exploitation of 

technological advances in product 

concepts and manufacturing techniques 

underlies our plans for a fundamental 

reapproach to market needs. 

TUrnover contribution 

to Group 


Group emplovees 

 

 

 

Tbe best-sellingfood 

processor in Britain - 

the Kenwood Gourmel 

V.triomatic.

Tbe Bendix Home 

Ia.undry Centre de 

Luxe is a major step 

forward in uent-free 

condenser 

uasber/d.rier 

enSineering. 

THORN EMI Flott 

Measurement 

specialises in domestic 

and industrial gas 

fneters.



Appliances and Lighting 

continued 

Bendix brand home laundry products 

became established as a UK market leader. 

Enhanced reliability and a buoyant market 

contributed to improved results. 

Gas Cookers overcame the previous 

year's problems through increased 

productivity and successful extension of 

both product range and market share. 

'With new, "up-market" Sheerline and 

Program branded products, including a 

built-in microwave, the business is poised 

to take advantage of changes in the UK 

market arising from British Gas 

privatisation. 

Our Kenwood Small Appliances 

business is strong internationally. The 

overseas and direct export operations 

performed satisfactorily in the main, but 

the UK market was depressed, with a 

particularly disappointing Christmas 

period. Kenwood remained profitable, 

however, unlike many of its large, 

well-known competitors. Exploiting the 

powerful Kenwood name on an impressive 

spread of attractive, keenly-priced 

products is broadening the range and 

sharpening the Division's competitive 

edge. 

Overall the Commercial 

Appliances business performed well, 

improving substantially on the previous 

year. The Foodservice Equipment 

businesses are now well placed to expand. 

Against a much better yeaq Stott Benham 

aims to srengthen its UK leadership in 

commercial cooking equipment through 

product development incorporating new 

materials and microprocessor controls. 

Crypto Peerless reversed a previous 

decline by improving products and 

productivity. Dito Sama, the French 

company, continues to perform well in all 

its markets and is broadening its range. 

The Metering activity, centred on 

THORN EMI Flow Measurement (whose 

results are reported within the Technology 

Product Sector), had another good year, 

fighting off a determine dJapanese 

challenge to its supremacy in Hong Kong 

and benefiting from a sudden surge in UK 

demand for coin metering. Important 

export business was obtained in China. 

Our Lighting business serves 

worldwide markets. A leading 

international Iighting organisation, its 

comprehensive product range 

Computer aided design 

and computer aided 

manufacture are an 

important pafi or 

mod.ern ligbting 

prod.uction at 

Spennymoor 

encompasses industrial, commercial, 

scientific, medical, outdoor and domestic 

illumination. Sales increased by 9 per cent 

with particularly strong growth coming 

from the international activities which 

account for almost half the total business. 

Its business is characterised by keen 

pricing competition in the high volume 

domestic lighting products ateaat one end 

of the market, and by the need to offer 

new technically-innovative specialist 

products at the other. Demand for hightechnology, 

low-energy products 

continued to increase during the year and 

long-term development is closely linked 

with the success of these products. 

Supported by substantial investment in 

advanced production plant and by 

technical improvements, the business in 

2D 16\f and 28W compact fluorescent 

lamps expanded further. A larger 38\7 2D 

and a 39W 2L light source have been 

introduced for commercial markets. 

Backed by an attractive range of fittings, 

2D is spearheading the drive to increase 

market penetration in'Western Europe. 

Sales of high-pressure sodium (SON) 

lamps and fittings reflected increased 

demand. A notable application was 

lighting a stretch of the M4 motorway. 

Incandescent and fluorescent lamps 

expcrienced strong competitive pressure 

during the year with increasing price 

competition from the Eastern bloc. A S3m 

investment in the fittings operation at the 

Spennymoor factory, County Durham, 

included production equipment for 

electronic control gear and a computer 

aided design and manufacturing 

(CAD/CAM) system, giving improved speed 

and flexibility in fittings design, and 

reduced development time-scales for both 

general products and customer-tailored 

lighting designs. 

The Lightstream miniature lowvoltage 

tungsten halogen products 

launched during 1985 address the valuable 

display markets. The comprehensive range 

enables designers to produce more 

effective and efficient displays. Its success 

has won significant market share from 

long-established specialist suppliers. 

Our products featured prominently 

in the Energy Management in Lighting 

Awards Scheme (EMILAS) which 

recognises the efficient use of e lcctricity 

for lighting and encourages good energymanagemcnt 

practicc. 

Lou 0oltage tungsten 

balogen spotligbts in 

THORN EMI Litbtings 

Ligbtstream range.

A section of tbe M4 

motorway near 

Windsor lit uitb 25OW' 

SON latnps. 

Research, development and 

advanced engineering continue to occupy 

a key position in the business strategy. Our 

prestigious laboratories at Enfield and 

Leicester work at the leading edge of 

technology to contribute medium and 

long-term product innovations, as well as 

supporting day-to-day activities. Their preeminence 

was acknowledged by their 

third Design Council Award presented by 

HRH The Duke of Edinburgh, this time for 

developments in low-wattage tungsten 

halogen lamps. 

Early indications for the current 

financial year show a continuing demand 

for energy-saving and innovative products 

which will lead to further growth and 

progress during 1986. 

The Lighting business has now been 

reorganised into six business units to allow 

improved responsiveness to market 

requirements and enhanced customer 

service, reinforcing its leadership in lamp 

technology and lighting system design.



Ferguson 

Jim Maxmin 

Cbairman THORN EMI 

Ferguson. 

During the course of the year, our 

Ferguson business underwent a 

fundamental restructuring designed to 

reduce the cost base, improve efficiency 

and increase its responsiveness to rapidly 

changing market conditions. 

This programme entailed reducing 

the overhead costs burden as well as 

reconfiguring the factories to simplify the 

production procedures and to achieve 

greater flexibility and overall economies of 

scale. Carried out betweenJanuary and 

June 1986, to avoid the seasonal peak, this 

has involved concentraring all printed 

circuit board and sub-assembly work at 

Enfield, and all final assembly at Gosport, 

with plastics mouldings produced at the 

specialist High \Wycombe facility. 

In addition, the organisation of the 

business was restructured to ensure greater 

accountability and clear lines of 

responsibility, while eliminating 

unnecessary layers of management. 

Substantial progress was also made in 

accelerating the pace of new product 

introduction. During the year eight new 

TV models were introduced. These 

reflected the policy of improving the 

appearance-design and functional 

presentation of products, coupled with 

technological excellence. An additional l4 

models have since been introduced to 

Ferguson dealers to meet the demands of 

the 1987 season. 

The ne t effect of the programme has 

been to return rhe company to profitability 

while retaining its position as brand leader 

in the UK marker, 

Despite fierce price competirion, rhe 

Ferguson Videostar video recorders 

continued to perform well in the market. 

The video manufacturing joint-venture 

company, J2T Holdings, enjoyed a 

successful year with record levels of 

output and of European content in the 

products. 

During the yeat discussions withJVC 

(the Victor Company ofJapan), Ferguson's 

trading partner of long standing, resulted 

in a joint manufacturing agreement under 

whichJVC colour TV sets and other screen 

products will be manufactured in Ferguson 

factories for distribution roJVC sales 

outlets throughout Europe. 

This logical extension of our 

excellent relationship withJVC will add 

approximately 200,000 units annually to 

Ferguson's production loading. 

TUrnover contribution 

to Group 


Group employees 

h.erguson bds tbe L'K's 

widest range of colour 

portable teleuision 

receiuers, o[Jering 

Standard, Remote 

Control and kletext 

models in a uariety of 

cctlour-finisbes.

One of Ferguson\ 

Designer Range of 

telez)ision receiuers in 

roseuood cabinet 

finisbes, witb 

cont ras t in g s te e I - s i lu e r 

fascias, and utitb 

superior TX picture 

performance. 

Tbe Specialist 

Coftlponents Diuision, 

one of the uK\ largest 

rnanufacturers of 

quality finisbed Plastic 

injection mouldings, 

uses robots for multicolour 

s?rayinS. 

A bigh qualiry plasticmoulded 

teleuision 

receiuer cabinet 

produced by Ferguson\ 

Specialist Conxponents 

Diuision.


RESEARCH AND 

Increased investment, company-wide in 

research, development and engineering 

recognises the crucial role of technological 

innovation in THORN EMI's future 

progress, to assist optimum responsiveness 

to new market opportunities. 

Support to the Company's operations 

is given by research into key "enabling" 

technologies at the Central Research 

laboratories in Hayes, a purpose-designed 

SSm complex where the size and scope of 

the research activities are being expanded. 

A venture operation based on its work in 

sensors was formed during the year. 

The Laboratories work closely with 

specialist teams within the operating 

businesses concerned with product 

innovation. Advanced Product 

Development Centres, focusing on 

generating products with high added-value 

features for introduction two vears or so 

ahead, have been established;t Bristol, 

Bradford and Durham during the past year. 

Company-funded research 

expenditure at 560/m represented 3.5 per 

cent ofthe turnover ofour "technology 

using" business operations. 

Investment in high-technology 

products continued throughout the world, 

ranging from the Compact Discs in the UK 

and USA, advanced electric and microwave 

cookers in Spennymooq UK, video 

recorders in West Berlin and surface 

mounted circuits in Philadelphia, USA. 

Advanced manufacturing techniques 

to improve production economies, 

profitability and market share are being 

widely developed and applied, extending 

from plastics moulding and printed circuit 

board assembly, to complete production 

processes for television sets and domestic 

appliances. 

Collaborative research and 

development through UK and 

international schemes such as the 

European EUREKA and ESPRIT 

programmes is a growing trend. These 

allow participation in large-scale projects 

on a limited-risk basis, crucial where 

success in a major new area depends on 

market standardisation. 

Aduanced millimetre 

waue seekerfor 

terrninally guided submunition, 

by THORN 

EMI Electronics. 

Deueloprnent work on 

aduanced 

manufacturing 

tecbniques.

MANAGING DIRECTOR'S REVIEW 

conclusion 

The Future 

'We are determined to exploit our 

innovative capabilities in new products 

and become an internationallv competitivc 

frrrce in carefull_v chosen markets, 

recognising that this requires setting 

standards in everv aspect of our activities 

at least equal to those of major 

international competitors. \We shall achievc 

value-added for our shareholders, 

customers and staff b,v concentrating 

resources on those selected core 

businesses that har.e a potential in size, 

technology, product marketing and growth 

that makcs them trulv competitive on a 

global or regional basis. Ultimatell' the kev 

to value-added is the qualitv of the people 

emplo.ved, the efficiency' of the internal 

information s).stems and competitive data 

supporting them. Much effort has been 

concentrated in these three areas. 

Despite facing certain short-term 

difficulties we are well on the road to 

influencing the climate of change for the 

future benefit of our businesses. 

G;f-,* 

Colin southgatc 0 

,\lanaging Director 

10 July 1986 

Silicon inl(graled 

circuilsfor larqe area 

d isplays. 

Design c4nd 

deL,elopment of 

magnetic recording 

heads. 

The digita I te let' ision 

receiuer is one of tbe 

projects at THORN E'\II 

]'brguson's recentlll 

eslablisbed Adt'anced 

I)roclucl DereloPment 

(:entre iil Rradforcl. 

THORI\ EMI 

,l[icrosensor\ 

deuelopment of blood 

analysis equiPment.

The directors submit for consideration at the 

Annual General Meeting on 11 September 1986 

their annual report and sratement of accounts. 

Accounts and Dividends 

Turnover for the year to 31 March 1986 

amounted to t3,316.5m compared with 

53,204Am for the previous year. Profit before 

finance charges and exceptional items 

amounted to S,154.0m (1985 Sl7l.7m). Finance 

charges amounted to S49.3m (1985 S,50.4m) 

and profit before taxation was Sl04.7m 

(1985 5108.3m after exceptional items of 

Sl3.0m). Earnings per share were 26.5p (1985 

29.9p) 

Ėxtraordinary items of 561.0m net ctf rax 

were charged (1985 5,27.4m): these included a 

net provision of 545.0m for the restructuring 

of INMOS. 

An interim dividend of 5.0p per share 

was paid in March 1986. The Board is 

recommending a final dividend of 12.5p per 

share, making a total of 175p (1985 17.5p) for 

the full year. The ordinar,v dividend for the 

vear is ct>vered 1.5 times. 

lnvestment in fixed assets during the 

)'ear amounted to S,314.1m (1985 5314.0m) 

comprising rental equipment 5191.4m 

(1985 5186.2m) and other fixed assers 5122.7m 

(1985 51278m). 

Net borrowings after deducting liquid 

funds at 31 March 1986 amounted to 533r.3m 

(1985 SJ56.6m). Had the balance of the 

THORN EMI Screen Entertainment (TESE) 

disposal proceeds been received prior t

connection s'ith any issue of further shares for 

cash where the shares cannot be offered 

proportionally to all shareholders because 

some of them live abroad and are not entitled 

to accept UK listed shares or where there are 

fractional entitlements. 

A Special Resolution is required to give 

the Board this limited freedom to issue further 

Ordinary Shares. The full text of the Resolution 

is set out in the Notice of Meeting on page 52 . 

Scrip Dividend Scheme 

It is proposed to introduce a scheme to enable 

those Ordinary Shareholders who wish to do 

so to elect to receive Ordinary Shares in lieu of 

a cash dividend. 

The introduction of such a scheme 

requires the prior approval of the holders of 

the 7 o/" Convertible Redeemable Second 

Cumulative Preference Shares 1992199 and of 

the Company in general meeting. Details of the 

scheme and the text of the necessary 

resolutions are set out in the enclosed letter to 

shareholders. 

Share Optlon Schemes 

During the year under review, the following 

options were granted under the terms of the 

Executive and Savings Related Share Option 

Schemes: 

Executive Share Option Scheme 

- in 

October 1985 66 Options were granted over 

1,091,500 Ordinary Shares at 355p per Share; 

and 

Savings Related Share Option Scheme 

- 

in November 1985 1,247 Options were granted 

over 592,809 Ordinary Shaies at 32lp pel Share. 

At the Extraordinary General Meering to 

be held immediately before the Annual 

General Meeting, shareholders will be asked to 

approve amendments ro the Savings Related 

and Executive Share Option Schemes. 

The main purpose of the amendmenrs is 

to bring the schemes into line with current 

practice and include the following: 

Savings Related Share Option Scheme 

To reduce or abolish the minimum eligibility 

period and widen the ability of former 

employees to exercise options on voluntary 

termination of employment or on disposal of a 

participating company. 

Executive Share Option Scheme 

To amend the periods during which options 

can be granted, to protect the rights of all 

participants on takeover or termination of 

service and to extend the grant of options to 

executives nearing retirement and to 

executives based outside the Unired Kingdom. 

Fuller details of the changes are set our 

in the letter to shareholders enclosed with this 

report. 

Articles of Assoclation 

The Articles of Association of the Company, 

although amended in certain respects over the 

years, were last up-dated in 1973.In view of 

the major changes in practice and company 

law since 1973 Special Resolutions proposing 

the adoption of revised Articles of Association 

are to be proposed for considerarion at the 

Extraordinary General Meeting on 

1l September 1986. 

Summaries of the proposed changes to 

the Articles of Association are set out in the letter 

to shareholders enclosed wirh this reporr. 

INMOS International plc 

In accordance with its undertaking, given on 

the purchase of the National Enterprise Board s 

approximate 76%" shareholding in INMOS 

International plc, the Company made Offers 

on I April 1985, to the minority shareholders 

of INMOS who, in the main, were employees 

or former employees of INMOS. As a result on 

1 July 1985 (being the last date for acceprance 

in respect of the 1985 Offers) the Company s 

holding represented 94.7%" of the issubd share 

capital of INMOS. 

The 1986 Offers to the minoritv shareholders 

of INMOS were made on 7 April 1986. 

On I July 1986, being the larest pracricable 

date prior to the prinring of this report, 

acceptances had been received in respect of a 

further 3,231,219 INMOS Ordinary Shares and 

the Company s holding at that date represented 

99.4%" of rhe issued share capital of INMOS. 

Substantial Interests 

At the date of this report the only substantial 

interest in the issued share capital of the 

Company which has been notified is a holding 

by the Prudential Group of Companies of 

ll.4 4 1,967 O rdi nary Shares repres enting 5 . 3 

yo 

of the Ordinary Shares in issue on l0 July 1986. 

Research and Development 

Each Product Sector is responsible for research 

and development in its particular are^ of 

activity. These activities are supported 

corporately by the Central Research 

Laboratories. 

The Group spent 560.4m on research 

and development during the year. an increase 

of S,l.4m over lasr year. In addition customers 

funded a further &72 .Om of research and 

development proiects, compared with 565.8m 

previously. 

During the past year, Advanced Product 

Development Centres have been established at 

Bristol, Bradford and Durham. 

Employee Involvement 

During the year the Company consolidated 

and, where practicable, extended its policy of 

employee involvement through consultati,on 

and communication on a wide variety of topics. 

The diverse nature of the Group meant 

that no single vehicle was suitable for all 

operations and management have devised and 

implemented sysrems appropriare to rheir 

business needs. 

Amongst these are information flows 

through the Company newspaper "Headline" 

with its special localised editions as well as 

employee reports covering the financial results 

of the Company and the annual report and 

accounts of the Pension Fund. 

Other communications media include 

operational newspapers afid m g^zines, telex, 

notice boards, briefing groups, video 

presentations and consultative and 

communication committees.

TheJoint Pension Fund Committee has 

extensive representation of employees and 

management. Regular reports were made on 

their deliberations. This body and the 

contribution by the employee trustees on the 

Trustee Board helped considerably during the 

year in general and in particular with 

suggestions for dealing with the actuarial 

surplus on the Fund. 

Vithin the operations there areJoint 

Committees on Health and Safety and other 

subjects pertinent to employees and their 

fepresentatives and the present and future 

prosperity of the Company. 

The operation of the Savings Related 

Share Option Scheme continued to promote 

considerable interest and a fourth tranche of 

options and savings accounts was allocated 

during the year, thus giving a still wider range 

of employees the opportunity to participate in 

the future of the Company. 

Employment of Disabled Persons 

Changes in the health of individual employees 

may raise questions about rehabilitation and 

resettlement, particularly following 

occupational disability. It is Company policy to 

encourage good employment practices with 

regard to the disabled in accordance with the 

Government recommended guidelines. 

Tfaining and Development 

THORN EMI as part of its business planning 

process continues to lay emphasis on the 

development and training of its people both 

now and for the future. 

Personnel and manpower resource 

management increased its emphasis on inhouse 

development and training programmes 

to ensure relevance and quality at all levels, 

In 1985 over 4,000 graduates applied to 

the Companv for employment and 220 were 

selected. The links with universities and 

schools were further extended to include 

investment in several neu'Advanced Product 

Development Centres, increased research 

funding and the establishment of a THORN 

EMI Laboratory in Oxford Universit-t'. 

The number of undergra

Basis of consolidatlon The consolidated 

accounts comprise the accounts of the holding 

company, its subsidiaries and related companies, 

prepared under the historical cost convention. 

The results of subsidiaries and related companies 

sold or acquired during the year are included 

up to, or from, the respective dates of sale or 

acquisition. 

During the year, a separate financing 

subsidiary was formed. Its assets and liabilities 

are shown as a net investment in the Group 

balance sheet and are analysed separately in 

note 15 on page 40. 

Related companles The Group includes its 

share of profits and losses of all related 

companies. Related companies are those, other 

than subsidiaries, in which the Group has a 

beneficial interest of 20% or more in the 

equity share capital and is in a position to 

exercise significant infl uence. 

The investment in related companies is 

stated at the Group's share of the underlying 

net asset values; their accounts are made up to 

31March, based on unaudited statements 

where necessary. 

Goodwill, being the excess of the 

consideration paid over the values attributed 

to net tangible assets acquired, is charged 

against Group reserves in the year of 

acquisition. 

Foreign curencies All amounts 

denominated in foreign currencies have been 

translated into sterling at year-end rates. 

The adjustments to investments in 

overseas companies and related foreign 

currency borrowings arising from exchange 

movements during the year, in so far as they 

are matched, are dealt with through reserves. 

All other exchange adiustments are dealt 

with in determining the profit of the year. 

Depreciation of property, plant, 

equipment and vehlcles is calculated on 

cost at rates estimated to write off the relevant 

assets by equal annual amounts over their 

expected useful lives; effect is given, where 

necessary, to commercial and technical 

obsolescence. 

The annual rates used are: 

Freehold buildings and long 

leasehold property - 2Yo. 

Short leasehold property - over 

period of lease. 

Plant and equipment - at rates 

ranging from l0% to 33 Vt %. 

Motor vehicles - 25Y". 

Depreciation of rental equipment Rental 

equipment is depreciated to a nil residual 

value, by the application of basic depreciation 

rates, on a graduated basis, from the month of 

installation, so that a relatively high charge is 

borne in the early years. Depreciation periods 

used for the year ended 3l March 1986 are: 

colour sets - 6 years (overseas, other than 

Australia and New Zealand - 5 years), video 

equipment - 4years, monochromesets- I 

ye r. 

Governrnent grants in respect of capital 

expenditure are deducted from the cost of the 

assets to which they relate and depreciation is 

calculated by reference to net cost. Grants in 

respect of revenue expenditure are taken to 

profit when due. 

Leaslng 

Tangible fixed assets acquired under finance 

leases are not capitalised. Rentals payable 

under both finance and operating leases are 

written off as incurred. 

Stocks and work in progress are stated at the 

lower of cost and net realisable value, less 

progress payments on uncompleted contracts 

and provisions for expected losses. Cost 

includes manufacturing overheads where 

appropriate. A conservatively estimated profit 

element is taken during the course of long 

term contr2cts. 

Tbxation The Company has undertaken to 

discharge the liability to corporation tax of all 

wholly-owned UK subsidiaries. The total UK tax 

liability is, therefore, dealt with in the accounts 

of the Company as from I April 1985. 

Deferred taxation is calculated using the 

liability method in respect of timing differences 

arising primarily from the different accounting 

and tax treatment of depreciation. Provision is 

made, or recovery anticipated, where timing 

differences are expected to reverse in the 

foreseeable luture. 

Warranty provislons Many products carry 

formal guarante es of satisfactory performance 

for varying periods following purchase by 

customers. Provision is made at accounting 

dates for the estimated cost of honouring 

unexpired warranties. 

Thrnover represents the invoiced value of 

goods and services supplied, including rental 

income, but exclusive of value added tax and 

similar sales-related taxes. 

Patent lncome arises from licences granted to 

third parties. rVhere the licensee pays a lump 

sum, instead of a continuing royalty, for the 

use of a patent, that lump sum is apportioned 

on a straightJine basis over the estimated life 

of the patent. 

Research and developmerit €xpenditure, 

and the costs of establishing and protecting 

patent rights in respect ofinventions derived 

therefrom, are wholly written off as incurred. 

Recordlng and associated costs of adding 

to the permanent catalogue of recorded music, 

and administrative and technical expenses in 

maintaining and developing the copyright 

interests in music compositions, are written off 

as incurred. 

Reorganlsation costs The costs of business 

reorganisations are provided when a 

reorganisation decision has been made in 

principle. Costs relating to the reorganisation 

of continuing businesses are charged against 

profit before taxation and those relating to 

withdrawal from businesses, or their 

fundamental restructure, are charged as 

extraordinary items.

Tlrrnover 

 

Cost of sales 

 

Gross profit 

 

Distribution costs 

 

Administrative expenses 

 

Other operating income 

 

 

Share of profits less losses of related companies 

ProIIt before flnance charyes and exceptlonal items 1 

 

Proflt before exceptlonal ltems 

 

 

Exceptional items 

Proflt on ordlnary activities before taxation 

 

 

 

Thxation on profit on ordinary activities 5 

Prollt on ordinary activities after taxation 

Minority interests 

Proflt before extraordinary items 

 

 

 

 

 

 

 

 

 

Ihansfer from feserves 

 

 

 

 

Earniqgs per Ordlnary Share 

 

 

In accordance with the exemption permitted by 5228(7)of the Companies Act 1985, the profit 

and loss account of the Company is not separately preiented. The piofit attributable to niembers 

of the holding company, dealt with in the accounts of the Company, is S20.2m (1985 S50.lm).

Notes 

Group 

 

 

 

 

 

 

 

 

Tangible assetsl 

 

 

Rental equipment 

 

 

 

 

Investments 

 

 

 

 

Stocks 

Debtors 

Investments 

Cash at bank and in hand 

 

 

CREDITORS: amounts falling due 

withln one year 

Borrowings 

Other creditors 

 

 

 

 

 

 

 

 

 

Borrowings 

 


 

 

 

 

 

 

Deferred taxation 

Other provisions 

 

 

 

 

 

Called-up share capital 23 

Share premium account 

 

Reserves

Funds generated from operatlons 

Profit before exceptional items 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposal of related companies and other investments 

 

Disposal of tangible fixed assets 

 

Proceeds of share issues 

 

 

 

 

 

Capital expenditure 

Property, plant, equipment and vehicles 


Related companies and other investments 

Minoritv interests 

Acquisition of subsidiaries 

Expenditure charged to provisions 

Increase/(decrease) in working capital: 

Debtors 

Creditors 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxation paid 

 

Sundrv items 

Total application of funds 

Movement in net borrowlngs: 

Borrowings 

 

Net decrease/(increase) 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of acquisitions and disposals of businesses (note 7): 

Net assets at dates of acquisitions and disposals: 

Tangible fixed assets and investments 

Stocks 

Debtors 

Cash at bank 

Creditors and provisions 

Borrowings 

Consideration: cash 

: other 

Goodwill on acquisitions 

Profit on disposals

Turnover Profit Turnover Profit 

The contributions of the product 

sectors to Group turnover and profit 

before finance charges and 

exceptional items are summarised 

below: 

5m 

 

Rental and Retail 

Technology (including INMOS) 

 

 

 

 

 

Deduct: intra-group transactions 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geoeraphical analysis of turnover: 

 

Rest of Europe 

The Americas 

Australasia 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest payable: 

on bank overdrafts 

on loans repayable within 5 Years 

on other loans 

 

 

 

 

 

 

 

Interest receivable

Thxation on profit on ordinary activities 

 

 

double taxation relief 

Overseas taxation 

Deferred tax: 

United Kingdom 

 

Prior year adiustments 

Thx on share of profits less losses of related companies 

53.7m(1985 &2.4m) of the charge for related companies arises overseas. 

6 EXTRAORDINARYITEMS 

INMOS restructuring 

Costs of withdrawal from certain business activities 

Profits less losses on disposals of businesses 

Surplus on public flotation af 25o/" of equity of Australian group 

and dilution of equity in Electronics subsidiary in rhat couhrry- 

Net extraordinary loss before taxation 

United Kingdom taxation: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D..uring the year, the Group disposed of a number of businesses which, in the opinion of the 

directors, were not relevant to its core ope-rations. The principal disposals were THORN SMI 

Heating_Limited (completed in March 1986) and the various subsidiaiies comprising THORN EMI 

Screen Entertainment division (conracted before the year-end and completed in A-pril 1986). In 

addition, minor-disposals resulted in the Group's exit irom cable TV programmes and 

operations and from certain engineering and other businesses. 

The sale of THORN EMI Heating.Limited realised cash of 527.5m and an equity holding of 

22%o of tlre p"r_chase r, Yyson Group_ plc. Pre-tax profits for the period up to the 'date of disp6sal 

amounted to s2.8m and are included in the consolidated profit ind loss account. 

The THORN EMI Screen Entertainment division was sold for5128.3m, of which SlOm was 

received in December 1985, the balance being due on completion in April 1985. In order to show 

the effects of the disposal more clearly, this lalter sum has 6een shown as a debtor at 31 March 

1986 in lieu of consolidating the individual assets and liabilities of the division which, at that 

date, amounted to 5141.6m. Pre-tax profits for the year amounted to $1.0m and are included in 

the consolidated profit and loss account. 

The profits less losses realised on the disposals of businesses amounted to S7.8m. The 

related combined net assets are included in the figures shown ar the foor of the statement of 

source and application of funds on page 32.

Ordinary dividends: 

interim 

proposed final 

Tictal for the year 

Preference dividends 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share are calculated on profit attributable to Ordinary shareholders of 556.9m 

(1985 S6O.7m), being profit before extraordinary items, less preference dividends, and on 

214,502,160 (1985 2O2,751,101) Ordinary Shares, being the weighted 

^verage 

number in issue 

during the year. The fully diluted earnings per share are not materially different from the basic 

earnings per share. 

 

Average number of employees by product sector: 


Technoloev 

Entertainment 

Consumer and Commercial 

Corporate 

 

 

 

 

 

 

 

 

 

Emolovee costs, including directors' emoluments: 

 

 

'Wages and salaries 

Social security costs 

 

Other pension costs (see note 27) 

 

 

The numbers of UK employees (other than directors of the 

Company) whose emoluments, excluding pension contributions, 

exceeded 530,000 were as follows:

Fees as directors 

 

Manaqement remuneration. includinq pension contributions 

 

 

Contract termination payment to former director 

 

The emoluments, excluding pension contributions, of the chairmen during the year were: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group 

Plant, 

 

equipment 

 

and vehicles Total 

 

 

 

 

 

Currency retranslation 

 

Subsidiaries sold less acquired 

 

 

 

 

Disposals 

 

 

Depreciation at 3l March 1985 


Charge for year 

Subsidiaries sold less acquired 

Disposals 


Net book values: 31 March 1986 

 

 

 

 

 

 

 

 

 

3l March 1985 173.t 36.0 235.7 444.8 

Payments on account and assets in course of construction included above at 3l March 1986 

amounted to.S8.9m. 

The net book values of leasehold properties comprised 56.4m (1985 515.3m) in respect of 

long-term leases and 516 .2m (1985 S2O.7m) in respecr of short-term leases.

Company 

planr, 

Freehold Leasehold equipment 

property property and vehicles 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposals 


 

 

 

 

 

 

 

Net book values: 3l March 1986 

 

 

 

 

 

 

 

 

 

Currencv retranslation 

 

Disposals 

 

 



Charge for year 

Disposals 


Net book values: 31 March 1986

Group 

Related 

companies 

Other 

investments 

Total 

T,M 

 

 

Cost ofshares: 

 


Acquisitions 

 

Disposals 

 

 

Loans: 

 

Repayments and disposals during year 

 

Provisions: 

 

Provided 

Released 

 

Share of reserves: 

 

Cu rrency retranslation 

Increase in year 

Disposals 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The net book value of investments in listed related companies is nil (1985 nil). The net book value 

of other investments includes 516.4m (1985 S0.3m) in respect of listed investments (market value 

516/m - 

1985 $0.3m). Dividends received and receivable from unlisted related companies 

amounted to 52.6m (1985 52.5m). 

 

 

 

 

 

 

Net book values: 31 March 1986 

 

 

Comoanv 

Cost ofshares: 

 

Pre-acquisition dividends 

Acquisitions 

Disposals 

 

Loans 

 

Loans during year 

Repavments during year 

 

Provisions: 

 

Released 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book values: 31 March 1986 

 

 

Provisions against investments in subsidiaries includes 566.8m (1985 nil) to cover deficits in 

certain subsidiaries' reserves in excess of the Company's cost of investments in shares and loans. 

38

Princlpal subsidiaries 

The companies set out below are those which, in the opinion of the directors and in terms of 

assets and/or results, are the principal subsidiaries in each product sector. Except where 

otherwise indicated, the country of incorporation is England and operations aie within the 

United Kingdom, the shares are in equity capital and the companies are wholly-owned. 

n denotes that shares are held through a subsidiary. 


THORN EMI Home Electronics Ltd (excluding Ferguson division) 

Technology 

U THORN EMI Electronics Ltd 

THORN EMI Information Technology Ltd 

Thorn Ericsson Telecommunications (Holdings) Ltd (51%) 

INMOS International plc (94.7o/") 

Entertainment 

n Capitol Industries-EMl Inc (USA) 

fl EMI Records Ltd 

THORN EMI Screen Enrertainment Ltd (sold 24 April 1986) 


THORN EMI Appliances Ltd 

THORN EMI Lighting Ltd 

THORN EMI Home Electronics Ltd (Ferguson division) 

Internatlonal 

fl THORN EMI (Australia)Ltd(75%) and similar holding 

companies (mostly wholly owned) in other countries 

operate in most of the product secrors indicated above. 

Principal related companies 

The principal investments of the Group in the equity share capital of related companies are 

shown below: 

Entertalnment 

Thames Television PLC 

 


J2T Holdings BV 

Principal country 

of incorporation 

and operation 

England 

Japan 

 

 

 

 

 

Netherlands 

*The percentage shareholdings in Thames Television PLC are A ordinary (voting) 50% and 'B' 

grdinaly (non-voting) 47"/". The shares are held by a subsidiary in which the Conipany owns 

4O%" of the issued voting shares and 95o/" of the total issued oidinary shares, maki?rg the effective 

holding 46%. Since the year-end, the Group holding in Thames Television PLC hasbeen reduced 

to 28.75Y". 

Other investments 

The Company-oq/ns 22%" of the ordinarv share capital of Myson Group plc, acquired in March 

1986 as part of the consideration for the sale of THORN EMi Heating fjmiteO. Myson Group plc is 

not classified as a related company because the Group s influence over the affairs of that company 

is restricted.

Trade debtors: 

Due within one year 

Due after more than one year 

Unsecured bank borrowing. repavable in one year or less 

 

36.O 

f 0.6 

46.6 

(4O.O) 

6.6 

In March 1985, the business of financing the hire purchase operations of a subsidiary.was 

transferred to a new subsidiary whose external net assets are shown above. Trade debtors 

comprise amounts receivable under hire-purchase contracts and these are financed by a specific 

revolving short-term borrowing facility, guaranteed by the Company. 

 

Raw materials and comPonents 

Vork in Drogress 

Finished soods 

Films, television and video productions 

Other 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

'Work in Droqress 

 

 

 

 

 

 

 

 

SSAp9. This constitutes a depirture from ihe statutory valuation rules, but is required by 5228(2) 

of the Companies Act l9S5 to enable the accounts to give a true and fair.view. As orogress 

payments cinnot meaningfully be allocated between cost and profit, it is impracticable to . 

belermine the effect of rh6 departure on the value of long-term contract work in progress shown 

 

 

Group 

 

 

 

 

 

Trade debtors 

Royalty advances 

 

Amounts owed by subsidiarY 

companies 

Amounts owed by related 

companies 

Balance of amount due on sale ol 

Screen Entertainment division 

 

Other debtors 

 

 

Company 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade debtors 

 

Other debtors

Repayrnent 

dates 

 

 

 

Group 

 

Bank loans (at variable rates): 

 

 

Others 

 

Unsecured loan stocks: 

 

 

 

 

 

 

 

 

 

 

 

Variable rate 

 

Other loans 

Various 

 

Certain of the loan stocks can be 

redeemed at a premium before the 

final dates quoted. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9t/t%" notes 

Variable rate notes 

 

9"2 notes 

7%" convertible bonds 

 

Others 

Various 

 

 

 

 

Bank loans 

(at variable rates) Various 16.6 

Others 

 

 

 

 

Total loans 

 

Bank overdrafts 

- sterling 

 

other currencies 

- 

Others 

- sterling 

- other currencies Total short term borrowings 

 

 

 

 

 

 

Total borrowings 

 

 

 

 

 

 

 

 

Net borrowings 

 

 

Bank loans and overdrafts totalling 51ll.3m (1985 593/m) and equivalent amounts of liquid 

funds are not reflected above, as the banks concerned have rights of set-off in respect of these 

balances. Of the total group borrowings, 51.8m (1985 52.4m) is secured.

Borrowings comprise: 

Amounts falling due within one year: 

Overdrafts and other short-term 

borrowings 

Group 

 

 

 

 

Company 

 

 

 

 

 

 

Loans 

 

 

Amounts falling due after more than 

one year, which are repayable as 

follows: 

Between one and two years 

 

Between two and five years 

 

 

 

After five years 

- 

by instalments 

 

 

- other 

 

 

19 OTHER CREDITORS: amounts fafHng due within one_Ilq4r 

Group 

Company 

 

 

 

 

Rentals in advance 

 

Customer deposits 

 

Trade creditors 

Royalties and fees payable 

 

Amounts owed to subsidiary 

companies 

 

Amounts owed to related 

companies 

 

Corporation tax United Kingdom 

- 

- overseas 

 

Other taxes including VAT and 

social security costs 

 


Accruals and deferred income 

 

 

 

 

 

 

 

 

2O OTHER CREDITORS: amounts falltng due after more then one year 

Group 

Companv 

 

 

 

 

 

 

 

 

 

 

Amounts owed to subsidiary 

comDanies 

 

 

 

 

 

 

 

Accruals and deferred income

Excess of accumulated taxation 

allowances over corresponding 

depreciation provided: 

Property, plant, equipment and 

vehicles 


Other timing differences 

Advance corporation tax 

Movements durine the vear: 

 


Arisinq during the year 

Other movements 

 

Group 

 

 

 

 

 

ComDanv 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(i) If certain properties, which were revalued prior to acquisition, were to be sold at the net book 

values included in the consolidated balance sheet, a taxation liability of approximately S6m, not 

reflected above, would arise. 

(ii) No provision has been made for any taxation liabilities which might arise in the event of the 

sale of related companies at the amounts at which they are stated in the consolidated balance 

sheet (see note 14). 

 

 

Group 

 

Currencv retranslation 

Pensions ation costs 

 

 

'Warranty 

and other 

 

Sm 

 

o':pqgL9!!Ers$e' 

Expenditure during the year 

Charged against: 

profit before taxation 

extraordinary items 

 

 

 

 

 

 

 

 

 

 

 

 

 

(i) The pension provisions arise largely in overseas companies in respect of employees not 

covered by the Groups funded 

 

schemes. 

(ii) The warranty and other provisions include the estimated cosr 

service. 

of guaranteed after-sales 

 

 

Exoenditure during the year

Ordinary Shares of25p each 

77" Convertible Redeemable 

Second Cumulative Preference 

Shares 1992199 of Sl each 

3 .5 %" Cumulative Preference Shares 

of5l each 

Ordinary Shares in issue: 

 

On acquisition: 

of Shares in SMB Computers Ltd 

of Shares in INMOS International plc 

of Shares in Revolver Records Ltd 

of EPS Consultants 

On Conversionof 7%o Redeemable Preference 

Shares 

On exercise of Options: 

Executive Scheme 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number 

 

 

Nominal 

value 

 

 

 

 

 

Premium 

 

 

 

 

 

 

 

 

 

 

Savinqs Related Scheme 

 

7o/o Convettible Redeemable Second Cumulatlve Preference Shares 1992199 

In October of each of the years 1986 to 1992 inclusive, holders of theT%" Convertible Preference 

Shares have the right to convert all or any of such Shares into fully paid Ordinary Shares of 25p 

each at the rate of 1 Ordinary Share for every four 7% Convertible Preference Shares. The 

Company is entitled to redeem rheTYo Convertible Preference Shares at par after 1992 and must 

so redeem on 31 December 1999 any such shares remaining in issue. On redemption, theTo/o 

Convertible Preference Shares are converted and reclassified and form part of the authorised 

Ordinary Share Capital .57,124 7% Convertible Preference Shares were converted on application 

of holders with effect from 3l October 1985. The conversion was dealt with by means of 

redemptionoutof theproceedsof anissueforcash at4OOp perShare of 16,781 OrdinaryShares. 

7o/o Coo,vettlble Guaranteed Bonds 1988 

US$205,000 nominal of Bonds, convertible into Ordinary Shares at a price (after adjusting for 

rights issue) of 348p per share and a fixed exchange rate of US$1.88525, werc outstanding at 

3l March 1986. The Bonds are convertible at any time up to 1988.

Share Options 

At 3l March 1986, the following options were outsranding: 

Executive Scheme 

(a)f Options granted in October 1982 at a price of 378p* per share, normally exercisable 

between October 1985 and October 1992, remzined capable of being exercised in respect of 

885,000 Ordinary Shares. 

(b)f Options granted in September 1983 ar a price of 577p* per share, normally exercisable 

lgqween September- 1986 and September 1993 remained capable of being exercised in respect of 

662,ooo Ordinary Shares. 

(c) Options granted in October 1984 at a price of 418p per share, normally exercisable berween 

October 1987 and October 1994, rcmalned capable of being exercised in iespect of 947,250 

Ordinary Shares. 

(d) Options granted in February 1985 at a price of 45Op per share, normally exercisable berween 

February 1988 and February 1995, rcmained capable of being exercised in respecr of 31,000 


(e) Options granted in October 1985 at a price of 355p per share, normally exercisable berween 

October 1988 and October 1995, remained capable of being exercised in respect of l,O9l,5OO 


Savlngs Related Scheme 

(a) Options granted in October 1982 at a price of 325.97p* per share, normally exercisable 

between February andJuly 1988, remained capable of being exercised in resp-ct of 3,448,926 


(b) Options granted in October 1983 at a price of 509.54p. per share, normally exercisable 

betweenJanuary andJuly 1989, remained capable of being exercised in respecr of 529,3O3 


(c) Options granted in November 1984 at a price of 375.00p per share, normally exercisable 

between February andJuly 1990, remained capable of being exercised in respect of 1,447,484 


(d) Options granted in November 1985 at a price of 321,OOp per share, normally exercisable 

between February andJuly 1991, remained capable of being exercised in respect of 692,8o9 


f.Parallel Options granted in Octobe r 1984 under the terms of the 1984 Executive Option Scheme at 4t8p per 

share; such options can only be exercised as an alternative to oprions previously granted. 

.Adiusted for rights issue. 

 

Group Company 

 

 


Gains on foreign currency borrowings 

Goodwill on acquisitions in the year 

(18.9) 

25.8 

(14.0) 

Deficit for the vear (41.9) (22.1) 

 

(i) Groupreservesat3t 

tuodl-.r-1us5s86)i"-- 

respect of related companies. 

(ii) Provision continues to be made within deferred taxation for the additional liability which 

would arise on the foreseeable distribution of overseas companies' retained profits. 

24.2

NOTES TO THE ACCOUNTS 

continued 

 

 

Group 

Company 

 

Capltal exDenditure 

 

Contracted for, but not provided for 

in the accounts 

 

 

Authorised by the directors, but not 

yet contracted fof 

 

 

 

 

 

Lease commltments 

There were net obligations under 

finance leases at 31 March 1986 as 

follows: 

Payable in the first year 

Payable in the second to fifth 

years inclusive 

Payable after the fifth year 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There were the following contingent liabilities at 3l March 1986: 

(i) Claims arising from litigation whlch are being contested and, based on consultation with legal 

counsel, are not considered likely to result in any liability significantly in excess of provisions in 

the accounts. 

(ii) Guarantees, bills discounted and other contingent liabilities totalling 55 5.2m for the Group. 

(iii) Guarantees and commitments by the Company for film finance totalling 53 5 .5m, which 

reduced by $8.5m on completion of the sale of the Screen Entertainment division. The 

remaining S270m was the subiect of counter-indemnities from the purchaser. 

(iv) Guarlntees by the Company totallingSlT2.5m in respect of subsidiaries' liabilities included 

in the Group accounts.

A significant number of employees in the UK belong to the recently merged THORN EMI Pension 

Fund which is self-administered and externally funded. Employees overseas belong to pension 

schemes administered and financed in accordance with local practice and legislation: some of 

these are internally funded and the amounts set aside are shown as provisions (note 22). 

Contributions in all cases are made in accordance with actuarial recommendations in order that 

benefits can be met as and when they fall due. 

Following the merger of the THORN EMI fund and the EMI scheme an actuarial valuation 

was made of the new fund at 5 April 1985. This disclosed a surplus which has been appropriated 

in part by an improvement in benefits and in part by a reduction in the funding rates. Ordinary 

contributions to the fund by members have been permanently reduced from 6"/" of contributory 

pay ro 5%" with effect from 1 April 1986. In the year to 31 March 1986 the contribution to the 

fundbyTHORNEMIwas setztT.zyo of contributorypayandfortheperiod l April 1986to 

3l March 1989ithasbeenset at2.5%o perannum. Asaresultof thesechangestheanticipated 

reduction in company contributions in the 1986/87 financial year compared with 1985/86 will be 

in the order of $9ml$lOm. 

After the foregoing appropriations a residual surplus of S25m was left which is being 

carried forward in the fund as a contingency reserve. 

28 DIRECTORS' INTERESTS 

The beneficial interests of the directors in the share capital of the Company were as follows: 

 

 

Options 

Options 

ovef 

over 

Ordinary Ordlnary Ordinary Ordinary 

Shares Shares Shares Shares 

 

 

H G Mourgue 

C G Southgate 

 

 

 

 

 

The Lord Brabourne 

Sir Trevor Holdsworth 

 

 

 

 

H I Maxmin 

 

 

 

 

I H Owen 

 

 

f includes Ordinary Shares under the Savings Related Share Option Scheme. 

In addition to the holdings shown above, at the beginning and at the end of the year under review 

SirGrahamlW.ilkins,DrHJMaxminandSirJohnReadwereinterestedin4O6, l00and3,O94 7% 

Convertible Redeemable Second Cumulative Preference Shares 1992199 respectively. Mr R H H 

Nellist acquired on 13 May 1985, and retained for the rest of the year, 100 7% Convertible 

Redeemable Second Cumulative Preference Sharcs 7992199. 

No transactions subsequent to 31 March 1986 have been notified. 

Except as stated above, or in respect of a contract of service, neither the directors nor any 

members of their families have, during the year ended 31 March 1986 or in the period since that 

date, had any material interest in any contract with the Company or a subsidiary.

Ve have examined the accounts of THORN 

EMI plc set out on pages 29 to 47. These have 

been prepared under the historical cost 

convention. Our audit has been carried out in 

accordance with approved auditing standards. 

In our opinion the accounts give a true and 

fair view of the state of affairs of the Company 

and of the Group, so far as concerns Members 

of the Company, at 31 March 1986 and of the 

profit, changes in reserves and source and 

application of funds of the Grqpp for the year 

then ended and comply with the Companies 

Act 1985. 

Ernst & Vhinney 

Chartered Accountants 

London l0July 1986

Results 

Tirrnover 

 

 

 

 

 

 

 

 

 

 

Profit before taxation 

?xation 

 

 

 

Profit before extraordinary items 

 

Earnings per Ordinary Share 

Dividends per Ordinary Share 

'After adjustment for the bonus element of the 1984 rights issue 

 

 

 

 

 

Employment of capltal 

Property, plant, equipment and 

vehicles 

Rental equiDment 

Fixed asset investments 

Net assets of financing subsidiary 

Stocks and debtors 

Creditors and provisions, excluding 

deferred tax and borrowings 

Capital employed 

Share capital 

Share premium 

Reserves 

Minority interests 

Net borrowings 

Deferred taxation 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

236.6

BOARD OF DIRECTORS 

Sir Graham rVilkins Cbairman and 

Cbief Executiue 

H G Mourgue Vice Cbairman 

C G Southgate Managing Director 

HJ Maxmin 

R H H Nellist 

I H Owen 

Non-executive 

Sir Villiam Barlow 

Sir Trevor Holdsworth 

SirJohn Read 

Sir Ian Tlethowan 

Associate Dlrectors 

T Mayer cnr 

V B Menon 

RENTAL AND RETAIL 

THORN EMI Home Electronlcs 

(UK)Limtted 

HJ Maxmin Chairman & Cbief Executiue 

S McAllister Personnel 

MEMetcalf Finance 

M D Young Eusiness Deuelopment 

Rental and Retail - 

UK 

MJ Barnes Higb Street Electronics 

J A Geers Higb Street Operations 

L E Govier TV & Video Centres 

I Gray Rumbelous 

R B Robertson Radio Rentals 

R F Spragge DER 

Internatlonal 

HBiarnt Fona 

R A L Campbell International Rentals 

lDuffell HMV Sbops 

Ferguson 

D P McNaughton 

CORPORATE 

R Charlton Company Secretary 

R F Eade International 

K Gray Researcb 

R P Hayes Corporate Communications 

R H H Nellist Finance Director 

J B Richards Personnel 

D Young M ana gem ent D eue I op m ent 

Financlal 

JJ S Brown Financial Analysis 

D A MacKechnie Control and Auclit 

D T Smith Tieasury and Thx 

T S Taylor Group Accounting 

Administration 

t] T Burford Purchasing 

G J Cant Estates 

K W Flack Insurance 

R A Hurst Patents 

P P Richbell Zegal 

DJ Webb Assistant Secretary 

J \(zinters Emplctyee Commun icLtt iotts 

C N E Voodley Public Affairs 

TECHNOLOGY 

T Mayer Cbief Executiue 

JASBright Engineering 

J Hughes Personnel and Organisation 

S A Pandit Finance and Planning 

Electronics 

T Mayer 

Sensors and Securlty Systems 

C M Power 

Informatlon Systems 

M L Shone 

Informatlon Services 

C J \food 

Telecommunications 

D MacDougall 

Semiconductors 

D Stevenson 

Measurement 

WJ Goldfinch

MUSIC 

EMI Music 

V B Menon Cbairman 6 Cbief Executiue 

P E Andry International Classical Diuision 

D Lawhon Tbcbnical Resources 

G Manufacturing 

B Southall Public Relations 

EMI Muslc North Amerlca &Japan 

V B Menon President 

E Cbief Operating Officer 

G CollinsJapan 

R E Cousino Tbcbnologlt Deuelopment 

J D Evans Capitol Canada 

C P Fitzgerald Finance 

A F M Harford Human Resources 

E CKhoury Magnetic Products & Retail 

B Lundvall Manbattan/Blue Note Records 

J Mazza EMI America Records 

R B O'Neill Zegal 

H Posnerlssistant to tbe President 

D R tVhite Records Group Seruices 

FJ \Willms Music Publisbing 

D E ZimmermAnn Capitol Records 

EMI Music Europe & International 

KA C East President 

& Cbief Operating Officer 

CJHodgson Finance 

R Kruize,46R and Marketing 

RJ Legg Human Resources 

G Marriott Business Affairs and Copyrigbt 

R Perry UK 6 Ireland 

A Rotelli Continental Europe 

D Stockley International 

H L Simpson,4.lanufacturing & Distribution 

R N \trhire Music Publisbing 

INTERNATIONAL 

THORN EMI Australia 

Sir John Mason Non- exec u t i t' e C b airman 

J P Slater Managinp4 Director 

D Snell Music 

BJeanes TbchnoloSSt 

DJordon Canberra TV Sert,ices 

L Palmer Radio Rentals 

J H Parker Finance 6 Admirxistration 

G H Raymond Electronics 

THORN EMIJapan 

$7 A Cripps 

THORN EMI Hong Kong 

KJ \ilard 

THORN EMI New Zealand 

Sir Laurence Stevens Non -executiue Cbairman 

C G Martin Managing Director 

THORN EMI South Africa 

Dr T F Muller Non-executiue Cbairman 

RLeComber Music 

G B Beadle Kenuood 

K S Schrader Zigbting 


Appllances and Lighting Group 

I H Owen Cbairman 

W B Heslop Planning 

M H Levett Personnel 

D E Midgley Financial 

AJ A Sutherland Engineering 

THORN EMI Maior Domestic Appliances 

J R Crathorne Chief Executiue 

P Buckle Managing Director Electrical Appliances 

D Cropper Managing Director - 

Gas Appliatzces 

- 

THORN EMI Kenwood Small Appliances 

T C Parker Managing Director 

THORN EMI Lighting 

I H Owen Cbairman 

R M Everett Vice Cbairman 

R D H Bryce trIanagingi Director 

Foodservice Equipment 

P Bos Dito Sama 

D Covenev Stott Benbam 

E Stevens Cr-ypto Peerless 

Flow Measufement 

R Hanson Cbief Executiue 

E T Vidler Pol.ymer Components

Notice is herebv given that the Annual General Mceting of THORN EMI plc u'ill be held in the 

Methven Room, Centre Point, 103 New Oxford Street, London \wClA 1DU on Thursdar', 

11 September 1986 at 11.45 am (or as soon thereafter as the Extraordinarv General Meeting of the 

Company convened for that day shall have been concluded or adiourned) for the following 

purposes: 

1. To receive and consider the Report of the Directors and Statement of Accounts for the vear 

ended 3l March 198(-r 

2. To declare a final dividend on the Orclinarv Shares 

3. To re-elect Directors 

4. To appoint auditors and to authorise the Directors to fix their remuneration 

5. To consider and, if thought fit, to pass the following Resolution which will be proposed as an 

Ordinarv Resolution: 

That: 

i) the Directors be and they are herebv generalll'and unconditionallv authorised for the 

purpose of Section 80 of the Companies Act 1985 to allot relevant securities (as definecl in 

that Act) up to a maximum nominal amount equal to the authorise d share capital of the 

Company remaining unissued at the date of this resolution to such persons at such times 

and upon such terms and conditions as the,v may determine (subject to the Articles of 

Association of the Company) during the period expiring at the end of fifteen months from 

the date of the passing of this resolution, and 

ii) the Company may at any time prior to the expiration of such authorit]' make an offer or 

agreement which would or might recluire relevant securities to be allotted pursuant thereto 

after expiration of such authority. 

6. To consider and, if thought fit, to pass the following Resolution u,'hich u'ill be propose d as a 

Special Resolution: 

That: 

i) Subject to the passing of Ordinary Resolution No. 5 above the Directors be empowered 

pursuant to Section 95 of the Companies Act 1985 to allot equit,v securities (as defined in 

Section 94(2) of the Companies Act 1985) as if Section 89(1) of that Act did not apply to the 

allotment; and references in this Resolution to the allotment of equity securities include 

references to the grant of a right to subscribe for or to convert an1' securities into relevant 

shares (as delined by the Section 94(5) of that Act) in the Company; provided that the 

power conferred by this Resolution shall be limited to the allotment of equity securities up 

roan^ggreg te nominal value of 53,560,478.00 (being 5% of the aggregate nominal value 

at the date of the passing of this Resolution of the issued and unissued equity share capital 

of the Company) or in connection with a rights issue in favour of holders of Ordinary 

Shares where rhe equiry securities attributable to each holder are proportionate (as nearly 

as may be practical) to the number of Ordinary Shares held by such holder but subject t

Shareholders 

 

 

 

 

 

 

 

 

 

10,001 and above 

 

 

 

Banks and nominees 

 

 

 

 

 

 

 

Pension funds 

Other corporate bodies 

 

 

 

 

Interim results announced December 

Final results announced July 

Dividend Payments 

On Ordinary Shares: 

tnterim paid 7 March 1986 

Final to be paid J October 1986 

An 35% Preference Sharesr 

3l March and 30 SePtember 

On 7 Y. Convertible Preference Shares: 

J0June and 31 December

Shareholders 

 

 

 

 

 

 

 

 

 

10,001 and above 

 

 

 

Banks and nominees 

 

 

 

 

 

 

 

Pension funds 

Other corporate bodies 

 

 

 

 

Interim results announced December 

Final results announced July 

Dividend Payments 

On Ordinary Shares: 

tnterim paid 7 March 1986 

Final to be paid J October 1986 

An 35% Preference Sharesr 

3l March and 30 SePtember 

On 7 Y. Convertible Preference Shares: 

J0June and 31 December

THORN EMI - David Kronemyer

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?