Thorn-EMI 1995 Annual Report

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Financial review Other exceptional costs, amounting to €25.6m and reflecting the results ofour disposal activities have, as in previous years, been classified as non-operating exceptional items.The f,25.6m is calculated after charging €31.5m ofgoodwill that had previously been written off against shareholders' funds on acquisirion. Finance charges Net finance charges reduced by 17.0 per cent to f31.8m. The net beneficial impact ofacquisitions and disposals (f4.lm), strong underlying cashflow (f4.9m) and the full year beneflt oflast year's Redeemable Convertible Preference Shares (RCPS) conversion (!4.2m) were partially offset by the impact ofhigher interest rates (i5.4m) and the financing ofthe EBT (fl.7m). Interest cover has continued to improve and now stands at a very healthy 14.3 times (1994: 10.0 times). Taxation The tax charge offl57.6m includes f7.3m relating to exceptional items.Tax on underlying operations is ther-efore €150.3m at an underlying rate of 35.5 per cent (1994: 34.4 per cent). The increase in the underlying tax rate is due to the consolidation of TO<strong>EMI</strong>'s profits for the second halfofthe year, taxed at a higher rate inJapan. With most of the Group's profits coming from outside the UK, we continue to w te off significant amounts ofadvance corporation tax.The write-offin the yearwas f30.4m, bringing the cumulative total to f140.0m.This amount will be available for future use against the UK corporation tax charge. Earnings Adjusted fully diluted earnings per share increased by 179 per cent to 61.9p. Adjusted earnings exclude the impact ofboth operating and non-operating exceptional items and therefore provide a better understanding ofthe underlying trading performance ofthe Group on a normalised basis. A reconciliation ofthe basic and adjusted earnings is provided above.
Cash flow and borrowlngs It is not evident from the statutory consolidated cash flow statement on Page 41 as to why our borrowings have fallen by f58.3m from f421.5m to !363'3m.The reconciliation from the statement on page 41to the movement in borrowings is shown above. The main driver behind the reduction in borrowings was a 26.7 per cent increase in net cash inflow fiom operating activities to f938.8m, reflecting the strong growth in underlying operating profit as well as tight working capital management. This, togetherwith disposal proceeds of f80.4m and inflow ofi80.7m from the sale of tangible fixed assets, enabled us to finance both an increase in capital expenditure of€131.7rn(to [.652.2m) and expenditure on acquisitions of !l12.2m,while still showing an improvement in the GrouP's financial position. Treasury pollcles During the year the Board approved an updated set ofpolicies for, inter alia,the management of interest and exchange rate exPosure, counteryarty risk,liquidity and liability management and the use offinancial instruments, including derivatives.The purpose ofthe policies is to ensure both that the Group has adequat€ access to funds at all times and that tlansactions are only undertaken by Group Treasury when it is necessary to manage risks that arise from the Group's trading and investment activities. Treasury continues to operate as a cost centre and will not undertake any speculative activities. Controls and monitoring systems arc in place to ensure that allTreasury activities are undertaken within the parameters laid down by the Board. Slmon Duffy Group Finance Director
Page 1 and 2: accounts
Page 3 and 4: Operating profit
Page 5 and 6: ETHoRN EMt Annual General Meeting T
Page 7 and 8: It is the Remuneration Committee's
Page 9 and 10: (d) On exercise of options the Comp
Page 11: 7. Ordinary Resolution THAT the Dir
Page 14 and 15: Chairman's statement The year was o
Page 16 and 17: Chairman's statement economy and to
Page 18 and 19: Financial review Simon Duffy Group
Page 22 and 23: EMI a repeat performance Country su
Page 24 and 25: strong releases Steven Crlftls Chap
Page 26 and 27: increasing Pace of THORN achieved
Page 28 and 29: Reshaping business NewZealand was e
Page 30 and 31: HMV customer-driven performance An
Page 32 and 33: lnvestih$ in tomorrow's world...
Page 34 and 35: A ta rg eted programme of community
Page 36 and 37: Prog ress towa rds env:ronmental im
Page 38 and 39: controlling key impacts CO, emifted
Page 40 and 41: Board of Directors Sir Colin Southg
Page 42 and 43: Directors'Report for the year ended
Page 44 and 45: Directors' Report The internal cont
Page 46 and 47: Auditors'report Report of the Audit
Page 48 and 49: Accounting policies Depreciation of
Page 50 and 51: Consolidated profit and loss accoun
Page 52 and 53: Group Fixed arsetr Music publis
Page 54 and 55: Statement of total recognised galns
Page 56 and 57: Notes to the accountr 2. Analysis o
Page 58 and 59: Notes to the accounts 8. Exceptlona
Page 60 and 61: Noter to the accounts I l.Tanglble
Page 62 and 63: Notes to the accounts 12, Flxed ass
Page 64 and 65: Notes to the account3 15. lnvestmen
Page 66 and 67: Noter to the accounts 16. Borrowing
Page 68 and 69: Notes to the accounts of changer i
Page 70 and 71:
Notes to the a(counts 23.5hare capi
Page 72 and 73:
NoteJ to the accounts 26. tinancial
Page 74 and 75:
Notes to the accounts 29, Dispotal
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Notes to the a(counts 3O. Purchase
Page 78 and 79:
Notes to the accounts 32. Directors
Page 80 and 81:
Page 82 and 83:
Page 84 and 85:
Notes to the a
Page 86 and 87:
Notes to the a(counts 32, Directors
Page 88 and 89:
Five year summary for the years to
Page 90 and 91:
lnvestor information Financial cale
Page 92 and 93:
Tlte nz,er and bus;flut otnlaieu pa
Page 95 and 96:
"The British music scene is enioyin
Page 97 and 98:
From {\ "Alternative music is quick
Page 99:
iii0 . ,'.' H'] .I . ar
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develop a unique catalogue of recor
Page 105:
thc,rcore,rudielceorlttr,rctrl,rrge
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to ownership opportunity. The intro
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to idcntif,v and exploit synerg-r;
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Curtomer 5atisfa
Page 115:
Street, HMV's UK 1-lagship store re
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Thorn-EMI 1995 Annual Report

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