Untitled - David Kronemyer

Tirrnover lrom continuing operations 

Depreciation 

Profi1 belbre finance charges 

Finance charges 

Profit befbre taxation 

Prolit alier taxation 

Capital expenditure - property, plant, ct(j 

- rental equipment 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F)arnings per Ordinary Share 

Dividends per Ordinary Share 

 

 

 

 

 

 

urnover by Seclor (Contnuing Busrnesses) 

I Renla ancl Belai 38qo 

lTechno ogy 26% 

a Mrs c22ED 

I Cons!mer a.d Commercait4%

Last year's results are a reflcction o{ the cnvironment lbr 

success created bY our nc$ oPerating sqle. ln particular" 

our perforrnance is a measure oI the growing stature and 

qualitl of the managcment in our hrrsiness. And it is a 

commentary on the commitment and supgrrt given b1 

our employees at all levels in all the countries lhere the 

(iroup operates. My Board colleagues joirr me in paving 

tribute to thcir continuing efforts.

THORN EMI is a rad :ally duutgerl business. Last 

yeot mrnked, afind,amental shift au;ay frorn the 

past.Three yea.rs of tough restructuing harse mndc 

our compargr leon, strong and itemational in 

outlnok. We htu;e inrreased. profi,ts - and more 

importo,nt profitahility - and, will continue to dn so. 

THORN EMI is intent onfurther grozoth. 

Our results show t}tat our strategy is working; we 

are sharpening our focus, concentrating our 

resources, competing globally. The detailed 

performance of our rnajor businesses - Rental and 

Retail. Music. Lighting and our tluee main 

Technology activities, Software, Security and 

Elechonics - is reviewed in the pages that follow. 

Each set ambitious targets for t}le year; each met 

or exceeded thern. Through organic grovth 

acquisition or alliance, each strengthened its 

international position. 

THORN EMI has becorne the world's leading 

renter/retailer. We achieved our position of global 

strength with the carefi ly targeted acquisition of 

the US market leader Rent-A-Center; the 

opportunity to acquire six more European rental 

operations; and by expansion in record retailing as 

far afield as New Zealand and Canada. 

Music is another o{ our truly global businesses. 

EMI Music is one of the world's 'Big Five' music 

companies. The breadth of its international 

presence is formidable - operations in 35 

countries and a worldwide distribution network - 

and for the third consecutive year, the company 

successfully increased volume and profit, 

generating high levels of cash with excellent 

returns on capital ernployed, As part of our bid to 

move frrther towards world leadership, Jirn Fifield 

was appointed President and Chief Operating 

OfEcer o{ EMI Music Worldwide, reporting to 

Bhaskar Menon. 

Our Lighting business is well on the way to 

joining the front rank of truly multinational 

companies. This year it further increased the 

proportion of its sales outside the UK to 

Colin Southgate (pictured leli)

54 per ccnt. S'e have unique strengths among 

PBIT/Turnove(%) 

world manufacturers in sut:cessfully targeting both 

the fittings and light sources markets. Acquisition 

of the littings rnanufacturer Jdmkonst, in Sweden, 

reinlbrces our position in the important Nordic 

markets and strengthens our international product 

range. Our bid to acquire the French group 

Holophane and its subsidiary Europhane is one 

example of our determination to build on THORN 

Lighting"s international position and further 

strengthen our move toward thc single market in 

Uurope in lQo2. 

The improving lrend in 

THORN EMI'S reiurn on sa es 

rellecls lhe success ol our 

resirucluring programrne, 

whrch was based on a core 

stralegy execlied under slr ct 

iinancia dlsciplines,a!med 

firmlyal improv ng prolilab ly 

as distincl lrom pure y groMh 

rn lurnover achieved al lhe 

expense ol adequale marg ns. 

The activities of Thorn Ericsson have been 

restricted to the llK telecommunications market. 

This does not fit with our international gronth 

strategy and we have reached agreement with our 

partners, Ericsson o{ Sweden, to sell them our 5l 

per cent interest. \le believe that this will also he to 

the long-term benefit of Thom Ericsson, which is 

dependent on Ericsson's technology in this lield. 

Our principal tchnology businesses, already at 

the forefront of their markets in the UK. are now 

winning major overseas contracts against strong 

competition. S'ith these succcsses they have 

PBIT perEmployee (t) 

established important international niche positions 

and helped boost the overall profit of Technology 

by 34 per cent last year. 

\ measure of THOR\ E\'ll's grouing 

international status is the increasing proportion of 

our employees uorking outside the UK. One-third 

of our 64,000 cmployccs nor lork in Noth and 

South America, continental Europe and the 

countries of the Pacific Basin. Our commitment to 

the UK continues, houever, as shovn in the 

Ths rnpo anl measlre 

ol ernployee producl vily 

shows slrong and conl nlous 

progress s nce 1985/6. 

Alhough lhe loial n!mber ol 

ernployees lras decreased by 

busrnesses we lrave ncreased 

mPodanllylhe r prodlclvrly 

investment of over 940 million in worldcornpetitive 

manulacturing lacilities in Britain for 

our Lighting, Music and Technology businesses. 

Thcse are being integrated into our international 

manufacturing networh in line with our global 

strategy. 

This pattern of global behaviour shapes our 

buying policies as well. Our Rental and Retail 

operations make us one of the world's biggest

single purchasers of consumer electronics 

products, spend;ng a commanding !500 million a 

year. 

Restructuring has enabled us to promote or 

recruit new managers throughout our company, 

who are infusing each business with a {resh sense 

o1 competitive urgency and drive. One of our 

highest priorities is to keep all our rrranagers 

adaptive and contemporary by providing 

. onlinuous opporlunitl lor innurative 

development and training. New prograrlrnes, 

designed in conjunction with INSEAD in France, 

the University of Hong Kong and the Australian 

Graduate School of Management, are heiping us 

develop the pace-setting leaders our business 

needs. 

THORN EMI is increasingly decentralised in its 

management style. Responsibility and'ownership' 

of the business are being pushed down the line, 

giving each operation the agility to respond laster 

and more decisively to market opportunities. 

The corporate centre's job is to provide the 

businesses with clear strategic direction, with 

accurate, relevant and sophisticated inlbrmation 

resources and with financial strength. A team of 

senior corporate and operations managers enEures 

that corporale strateg;r and business objectives are 

based in competitive reality. Key performance 

indicators for each business and its competitors are 

monitored constantly and precisely at Group 

Headquafiers using new interactive management 

information systems. 

(Jur results are reflecting a vitality at THORN 

lnteresl Cover (x) 

r98t6 198d.7 1987/8 

Th slesl used by bankersto 

asess lhe salely margin for 

interesl on oans not only 

reliecls Ilre comb nation of 

improvinq absolule leve s oi 

profil coupied with decreasing 

leve s ol borowings, bulatso 

demonstrates thal TH oBN Et\,11 

ex ts lhe I98718 linancial lear 

rn a slrong postion lrom wh ch 

to plrsle tlreexpansron of ts 

organ cally and byacqulsition 

EMI lew would have thought possible just a short 

time ago. The momentum unleashed by our 

restructuring shows we can maintain high retums 

while growing, not just while pruning. During 1987 

THORN EMI disposed of businesses with a 

combined tumover of over 5500 million - a total 

more than offset by the growth achieved by our 

core businesses at constant exchange rates. 

Even more significant was the 4l per cent 

increase in Group profit before tax. In facl as can

e seen, all key measures of performance 

improved significantly last year. 

We are proud of the gains we have achieved 

but by no means satisfied; we are aware of the 

scale of our task. Last October's turrnoil in world 

Enancial markets affected con$dence in many 

intemationally operating businesses. Ve know that 

currency fluchrations will continue to impact on 

future earnings and the cost o{ future acquisitions. 

There is no shelter however in depending heavily 

on a single geographic rnarket or economy' 

THORN EMI's operational style and structure 

are now fiily geared to intemational opportunities. 

Our pordolio of companies today provides us with 

a remarkable set of businesses. Their diversity 

greatly reduces our exposure to any significant 

downtum. We intend not only to increase our 

worldwide earnings but to improve the balance in 

our earnings mix, which will cushion still further 

the adverse impact o{ economic uncertainty. We 

will do this by continuing controlled expansion of 

our activities in world markets, by both acquisition 

and organic growth 

Reassuringly, the year's upheavals demonstrated 

the resilience of our main international operations, 

notably Music, Lighting, and International Rentals. 

The profits of Rent-A-Center in the US, for 

example, stayed on target. 

Enthusiasm and optimism are growing at 

THORN EMI. We have profoundly changed the 

Group's culture. Ve have reinvested in our core 

businesses, strengthened their competitiveness 

and improved their world market positions. And 

we have streamlined our organisation and 

strengthened line management. People throughout 

THORN EMI are operating with less bureaucracy 

and more openness. 

The results are encouraging for everyone 

concemed with THORN EMI - for customers, 

employees and above all shareholders. They 

reaffrrm our confidence in the growth strategy we 

are pursuing. Today, at THORN EMI, our plans are 

amlitious - and realistic. We have our sights set 

firmly on an even more prosperous future. 

 

Bob Nellist (pictured right)

e seen, all key measures of performance 

improved significantly last year. 

We are proud of the gains we have achieved 

but by no means satisfied; we are aware of the 

scale of our task. Last October's turrnoil in world 

Enancial markets affected con$dence in many 

intemationally operating businesses. Ve know that 

currency fluchrations will continue to impact on 

future earnings and the cost o{ future acquisitions. 

There is no shelter however in depending heavily 

on a single geographic rnarket or economy' 

THORN EMI's operational style and structure 

are now fiily geared to intemational opportunities. 

Our pordolio of companies today provides us with 

a remarkable set of businesses. Their diversity 

greatly reduces our exposure to any significant 

downtum. We intend not only to increase our 

worldwide earnings but to improve the balance in 

our earnings mix, which will cushion still further 

the adverse impact o{ economic uncertainty. We 

will do this by continuing controlled expansion of 

our activities in world markets, by both acquisition 

and organic growth 

Reassuringly, the year's upheavals demonstrated 

the resilience of our main international operations, 

notably Music, Lighting, and International Rentals. 

The profits of Rent-A-Center in the US, for 

example, stayed on target. 

Enthusiasm and optimism are growing at 

THORN EMI. We have profoundly changed the 

Group's culture. Ve have reinvested in our core 

businesses, strengthened their competitiveness 

and improved their world market positions. And 

we have streamlined our organisation and 

strengthened line management. People throughout 

THORN EMI are operating with less bureaucracy 

and more openness. 

The results are encouraging for everyone 

concemed with THORN EMI - for customers, 

employees and above all shareholders. They 

reaffrrm our confidence in the growth strategy we 

are pursuing. Today, at THORN EMI, our plans are 

amlitious - and realistic. We have our sights set 

firmly on an even more prosperous future. 

 

Bob Nellist (pictured right)

INNOVATIVf, MARKETING GIVING GLOBAL CAPABILITY 

in the rentaVretail o{ consumer electronics and 

consumer durables, and the retailing of recorded 

music. 

'Exponsion continues in all our businesses: we ore 

consta.ntly looking for grcwth or arquisition 

opportunities utorldu:ide.In the nnxt fne years wv 

are aimingfor at least half our eamings to comn 

from outsid.e the UK. Already, uith neorly 3,000 

stores a,round. the world,we a.rc the world\ Leoninq 

renter/retailer. Rentol operatiorc now extentJ to 

17 counties. Acquiing Rent-A-C,enter brought the 

soug!.ttfter brealtthrough in Ameica and. its 

strong performanrc will hclp w to meet our growth 

objectioes. 

'We uirnally doublcil profx sirce 1984 $, 

applying professional marketing te dtniEtes 

th.roughnut our businesses, b1, explniting oul 

world.wide purdusi;ng pu:er, and lry rigid cost 

controls.These measures, together with our 

simplif.ed, mntagement structures and, d.ecentralised. 

field 

oper atinrc responding imagirntiuely 

to laca.l. market uaiation,Iune ennbled us n mnke 

th* mnst of our world strength and bing about 1 

big improuem.ens in our proftability.' I 

::Hil::'JilLi'",0,,o"*wasmadein J u^ .[*"*** 

 

the UK market. All the UK rental companies again 

reported increases in market share and 

significandy improved levels of customer retentiono 

so that the UK rental assets showed marginal 

grorth {or the first time in recent years. A major 

decentralisation programme to improve the 

operating companies' responses to the marketplace 

and customer requirements has eliminated 

duplication o{ functions, shortened lines o{ 

communication and given staff at local level 

greater job satisfaction through greater 

responsibility. High levels of investment in new 

rental assets and shops continued with over 

9180 million invested in 1987/8. 

"

Fadio Benla s a.d the DER, 

MultiBroadcasl and Foc!s 

chains give THOBN EMI prc 

eminen.e in lhe ( lK renlels 

markel. Togelher wilh the 

THOFN hlernalional Fenlals 

companles, ihey lom the 

wond s mosl exlensive 

and successlul business in 

The h ghly ellective HMV 

concepls n €cord relarling 

are be ng appried w h 

considerab e slccess in a 

growing nLrmber oi olher 

markels around lhe world 

as lar alield as Canada and 

UK RETAIL! The Rumbelows refurbishment 

programme extended the stylish 'grey look' to 

almost all oudets. Without exception this increased 

sales dramatically, in some cases by more than 

30 per cent. In very competitive market conditions, 

Rumbelows 

increased 

overall 

market share. 

Yorkshirebased 

Vallances, acquired for t10 million, was 

successfully integrated into the Rumbelows system. 

Trinity House Finance continued to groq with 

outstanding balances increasing by 32 per cent. 

Major investment in new management, personnel 

and systems ensures that future grovth can be 

handled successfully. A SI00 million multi-option 

facility and a S50 million commercial 

paper funding operation were arranged. 

THORN INTERNATIONAI RENTALS (TIR): This business 

had an extremely sur-r-essful year. overr"oming 

adverse trading conditions in Denmark and New 

Zealand. Units on rent increased by 6 per cent 

before allowing for the acquisitions in continental 

Europe and lreland. These will make a major 

contribution to achier ing the strategic expansion 

of this business, bringing its units on rent to over 

l.l million and adding substantially to profitability. 

The near\ completed integration in Denmark, 

France and Spain is already producing substantial 

economies of scale and organic grov{h: Italy and 

Switzerland take TIR into two new markets, 

bringing to 15 the total number of countries 

served. In lreland, Murphy Telerent purchased 

from the Jefferson Smurfit group added 20,000 

customers and has been integrated successfully 

into the existing operation, giving clear market 

leadership. FONA in Denmark performed well in a 

diffr cult economic environment. 

Sork continued on lhe neu TliRllS management 

information system. Already used in almost 

half ofTIR's markets, by the end o{ this fiscal year 

it will be in full use, providing a powerful 

marketing and management tool.

HMv INTERNATIONAI, The worldwide expansion 

programme continued, adding EMI retailing 

operations in Canada and New Zealand and 

making substantial progress in both countries. A 

new superstore is scheduled to open in 'loronto in 

September 1988. A 4,000 sq ft superstore was 

successfully opened in Christchurch and the Music 

Studio chain in the Auckland area was acquired. 

There are active plans to develop the HMV concept 

lurther internationally. HMV UK had another 

successful year; turnover increased by 33 per cent 

with trading profit and market share at record 

levels. The new Ox{ord Circus store made 

outstanding progress. 

RENT-A-CENTER (RAC), The most significant development 

in the rental business was the purchase 

in August of Rent-A-Center. US rental 

market leader, RAC operates in 46 states. 

Since acquisition its narket 

share has grown from l0 per 

cent 10 over 12 per cent. 

Its highly professional senior 

management team, excellent control systems 

and its rent-to-own marketing concept are 

ideally suited to the US market. The total rent-toown 

market - estimated at 92.5 to $3-0 billion a 

year - has been growing at 20 per cent annually. 

RAC has been smoothly integrated into THORN 

EMI's Rental and Retail operations: 106 stores, of 

which about 40 per cent were franchised, have 

been added into its system, bringing the total to 

575 at lear end compared to 4oQ at ar"quisirion. 

Aggressive expansion will be sustained, with over 

I75 store openings planned system-wide in l9B8/9 

and more than 1,100 operating units targeted by 

I99ll2. This makes major new staff training 

and management development programrrres 

critically important: computer-based distance 

learning programmes are now in use. The 

company has enjoyed local support from a strong 

and pro{essional body of fianchisees. New 

fianchise opportunities are being actively sought 

outside the USA, with negotiations completed 

The acquistion of RentA 

Cenler,lhe eader n the 

rapidly g rowing 'renl-to 

n THOBN EMls renta 

business asl year RAC 

is ma nlain ng an aggress ve 

growlh prosramme, includ ng 

expansion nlo markets

successfully in the Ottawa and Toronto areas as 

well as westem Canada. Opportunities are being 

explored in South America, the Pacific Basin and 

Japan. Early studies show the intemational appeal 

and potential of the RAC concePt. 

Overall, there was substantial progress towards 

achieving the business goals and objectives. Today 

the Rental and Retail activities cover 18 countries 

and employ 25,000 people. They are the first truly 

global player - no other consumer electronics 

distributor in the world has the same spread o{ 

markets. The challenge ahead is to create from this 

base an even more robust business offering 

outstanding levels of service to all its customers 

worldwide. 

^ 

'I gtess I am a pretty competitiae gty,'says Bob 

Murphy, uoted Store Manoger of the Year at Rent-A- 

C,enter.Th.e title bings a sportyTians-Am car and a 

tip to see THORN EMls IJK store operations. He 

won it for adricuing h@h prorttability aloryide 

sucress in dmeloping the people working for him - 

lour houe gone on to become store manngers in 

their own right.This kind oJ performance ako 

brought him promotion to Zonn Mano6er 

responsible for eight stores in Neu; Jersey. Bob,28, 

says Rent-A-Center thittes on competition, and 

peoptn titte him thiue within il' RAC's phenomennl 

grtnuth mmes from malting artomer sentice the 

absolute toudxtone.'We get dl th'e bark-up ue 

needfor razor-keen fficienty,ThntJrees us up to 

conxerltrale on ensuing customcr sQtisfa'ctinn out 

Jront.' He recalls hottt RAC people feh, learning th'ey 

had. been bought by THORN EMI.As the best in our 

felil,'he 

V7/r^*4- 

says, ufiat diil we nced' with onother 

company?'Now diuing a.round his new territory, 

h.e reJleas on the benefits.'There's eaen greater 

emphnsis on training and' people deuelopment,' 

./ savs Bob.'qnd thp buying poner of thr 

,iud" l*g", g,rup k very good news" 

/ 7/ 

Ho^" 1o, Bob. his wife Susan Qnd two sons is 

in Skkleruill.e, NJ. where he rela-res ... by competing 

at golf, and. rat:i.ng his 110 mph four whceler dirt4ike.















worldwide. 

^ 



















felil,'he 

V7/r^*4- 







/ 7/ 


















worldwide. 

^ 



















felil,'he 

V7/r^*4- 







/ 7/ 




TARGETING INTERNATIONAI OPPORTUNITIES IN 

Electronics, Software, and Security, through 

operations with in-depth technological shen$hs. 

'Our Te chnologt businesses-pincipally comprising 

SeuiSt Electronics, and, Sofnaare-had. a good. 

year and. are utell positioned. to do euen better.We 

are intent on expa.nsion lry both intemal growth 

and. ocquisition.We belieue that from its strong UK 

position Secuity hos the potential to be o truIy 

ir*ruetional businzss: its capabilities attil prod.utts 

haue worl&nid.e applicatiorc. Some of our Software 

businesses hnae simikr potential: our Finanrial 

'Iiading Systems,for example, suit markets ds 

far 

apolt os Smnilind,aia and Japan. 

'In a world defenre market that is at best sto;tic, 

our Electronics business has irnreased prof,tability. 

Thk results [rom ou stratcgt of inucsting in piuat? 

x)enture projects: our Hand HelilThermal Imaging 

equipm.ent - already sold. to nine counties - is ct 

case in point.The Electronics ordcr book is close lo 

the f 1/z billion mark and ute intend ta contirute 

deueloping inremntiornl nidn ma*et$' __-- 

\su^-- \r.q*.oC-. 

REVIEV OF ACTMTIES 

The Gchnology Group continued its progress 

during the year, with tumover increasing by 

15 per cent and an improvement in profitability 

of 34 per cent. The lbrmulation of plans for 

expanding the intemational activities of the group, 

in electronics, software and security also advanced 

substantially. 

Among the important developments affecting 

the Security business have been the acquisition of 

JEL Energy Conservation Services in October, 1987 

and of Kidde Automated Systems Inc in the USA in 

June, 1988. The Elechonics business has made 

further moves to strengthen its hand internationally 

in its specialised market sectors. Fufiher steps were 

taken by the Software business to establish 

activities in key markets outside the UK. 

.o. r"u", S 

pictuled in Loodon

THoRN EMI ELECTRONICS, With divisions based in 

the UK and the USA, this company had a most 

successlul year, gaining key contracts which 

reinlbrced its position in exacting international 

markets and contribuled lo a q pcr cent in, rea"e in 

its forward order book. Its Defence Systems 

Division won a major programme - the FITOIT/ 

(Further Improved Tube-launched Opticallyrracked 

Wire-guided) system - to update the 

British Army's existing TOW anti-tank missile 

systems. Among the sub-conhactors on this project 

are Royal Ordnance, Hughes Aircraft of the US 

and Westland Helicopters. The 500,000 

'fOWs in service in over 30 countnes 

provide promising export prospects 

in the 1990s. 

THOFN EM Elecko 

ncs n lhe UKand the llSA 

make im porlanl contnbu 

llons lo lhe armed serv ces 

ot many nal ons. The company 

is also a key s!ppl€r to 

industrial, screnl rc, aerospace 

and comrnunicalions markels 

imaging products. 

Significant contracts lrom a 

number of countries, including 

Denmark and the Netherlands, were 

gained by Electro Optics 

Division. Its thermal 

imaging equipment is being 

evaluated by the US Marines 

and other agencies in the 

USA. To date 15 organisations in 

nine countries have adopted the 

division's advanced thermal 

Securing the high value contract to develop and 

manufacture the Air Defence Alerting Device 

"ysrem (+D+D) againsl tough competition r.ras a 

substantial achievement. Ordered in quantity for 

the British Army, AIIAD represents a novel solution 

to warning ground lbrces of approaching aircraft. It 

is considerably ahead of similar developments in 

Europe and the USA. 

Radar Division, the only European supplier of 

operational Airbome Early Warning (AEW) radar 

systems, reported successful completion of the 

initial llight trials of Skymaster. This innovative 

AEW radar - the result of private venture 

investment by THORN EMI - has proved its 

capabilities in detecting low llying aircrall over 

land and sea. Its,'onvinr"ing perlbrmanr-e is

expected to stimulate major overseas sales during 

the current year. 

The division also won the UK Minist{, o{ 

Delence (NIoD) competition to supply both of the 

Airborne Stand-Ofl Radar (ASTOR) demonstrators. 

The primary purposc o[ lhi. programme is to 

prove the ability of airborne radars to detect 

moving vehicles, giving battlefi eld commanders 

early warning of attack. One demonstrator will be a 

modified Shl.rnaster aboard a PBN De{ender 

aircraft; the other will be a synthetic apefiure radar 

installed in an Moll Canberra aircralt. 

California-based Systron l)onner, a noted 

supplier o{ components and sub-systems for 

delence and aerospace projects, maintained its 

dominance of the intemational market for aircralt 

engine fire/overheat detection. A key contract was 

to supply the total fire protection system - both 

detection and extinguishing - for the new V22 

Osprey Tilt Rotor aircraft. This safeguards not only 

the main engines but also the auxiliary power unit 

and wing dry bay areas. The development of a 

unique lire suppression system will serve to 

expand Systron Donner's position in the aerospace 

and industrial marketplace. 

'Ihe Computer Systems Division, with a range of 

activitics in .pe,.ialised r.omputing. r.ommunir.arion 

and revenue control systems, won an important 

contract lrom British Rail to supply over 2,000 

upgraded versions of the extremely successful 

PORTIS (PORtable Ticket Issuing System) 

developed by THORN ENll. It is used on pay trains, 

to read and store data from magnetically encoded 

travel tickets and credit cards, as well as to issue 

tickets and capture related revenue 

data. Deliveries of the new 

SPORTIS version will 

extend over the next 

two years, while 

BR's existing 

1,750 machines 

will he retrolitted 

to the 

same standard. 

Malor p.otecls lo meel lhe 

needs ol lhe Br tish Army 

aso have valuable potentia 

These rnciude lhe rnnova|ve 

At Defence Ae ng Device 

(ADAD), lo warn groLrnd forces 

ol approaclring ancraft, and 

the rn provernenls to the 

exislrnq TOW ant rank 

Success in specialised iieds 

conr nues. As wellas ds 

ach evemenls w th Searchwater 

Radars lor a rbome 

eary warning and marit me 

aenal reconnaissance lhe 

comPanY recenl y won the 

UK \4oD competilon lo 

supplyboln A 6orne Sland- 

Ofi Radar (ASTOR) dernonslralors 

to prove eifectiveness 

vehicles. rn Electro Optics 

com pany's the.mal rmagers 

rncludethe US lvlar ne Corps.

Before the year-end, THORN EMI Electronics 

announced the formation of Electronic Systems 

Division to harness the capabilities of all its 

husiness units in the UK and the USA and to lead 

major programmes for integrated systems. It will 

act as prime contractor on multi-divisional project 

opportunities arising around the world' 

Naval Systems Division, THORN EMI Varian 

and THORN EMI Elechon Tirbes also made 

considerable headway. particularly in overseas 

markets. Satisfactory first year results were 

produced by Babcock Thom, the company's joint 

venture with FKI Babcock, which is responsible for 

the managernent of the Royal Roryth Dockyard. 

You coul.d sin1le out CliueTrapmore as'Dod'to 

ADAD, an Air Deferce Alerting Deuice uhidt wams 

ground forces of approodring aircraft. His 60*trong 

team of physirists, electronics and software 

angineers recently gaue birth to this remnrkable 

new passiue infra-red canrept, considrerably aheod 

of ileuelopmenx in Europe or the USA, ADAD won 

the UK Min;shy of Defew contrart for seueral 

hundreil sets of equipment for the Bitish Army, 

uith exporl orders in thc offing. 

'Crodting the problem was madc eosinr by our 

being nanber one in thermal imaging,'Clive 

commcnts El,ectro Optia supplies this tednnlctgr' 

a uial part oJ the ADAD system - to arm.edforces 

arund. the worlil. Cliue,46, h,as pimcered infra-red 

surueillanre deuelopments for ten of his 2B years 

with THORN EMl. He liues just south of LoruJan, 

uith his photo-journalist wife Alison and two 

drildren.'h's tnt only tedmologr that has &tmged 

the ilnfence electronia businnss ouer the years,'hn 

says:'In the days of'cost-plus'contracts you worked' 

your utay towatds a solution.'Ioilay's much tougher 

comtnercial realities mean you just haue to get it 

rightfrxst timp.'






































rightfrxst timp.'






































rightfrxst timp.'

THORN SOFIVARE: This major computing services 

business had an excellent year, reporting revenue 

grolr'th o{ around 20 per cent and a record year 

end order book. 

Software Sciences' 40 per cent revenue grou,th 

reflected a good all round performance, 

highlighted by its Commercial and Financial 

Division and its Retail activities in Electronic 

Point-O{-Sale (EPOS) systems. 

Key UK contracts included the SI5 million pilot 

phase in tJre national plan to automate Post Office 

counter operations, and two substantial further 

orders for the Automobile Association's vehicle 

breakdown seruice r:entres- 

Retail sector development was demonstrated by 

completion o{ signilicant conhacts for Marks and 

Spencer and the Burton Group for a variety of 

computer systems. Demand for the Continuous 

On-Line Tiading system, COLI - by Salomon 

Brothers in London and by overseas customers - 

led to operations being established in Denmark 

and Japan. In the fast expanding EFTPOS 

Bob Bnnen hus taken another upheaaal in his 

stride. Norlr bosed. in Tokyo - uhere he mwed Jrom 

Copenha6en - Bob,42, is putsuing opportu;nities in 

Japan and Hong Kongfor thc COLT (Continuous 

On-Line Trad.in6) integratnd deal entry system. Bob 

belieues it ideal for the mnrqt Japonese banks 

planning to inuest in tedtrnlogt portiatlarly to 

supporT their copitol markets operatiorc. Alreody in 

Japan, ouer 500 ma nngers haae seen it 

d.emomtrate d. A compuling systems pr ofessiona) 

uith 25 years' erpeience, Bob says,'COIII operates 

at the uery heart of a counny's banking and, 

fnaneial infrostructure- lou (an't expect to u in 

anstomnrs for this sort of product unless you ere on 

the spot - especial\r in Japan . You haue to be 

prepared. to go uhere the business is.'While Bob 

seeks that flrst or.l,er that could, he belieues, start o;n 

avalanche, his uife, Maureen, is learning lapanese. 

Although, *^ith the internotional potential of COLT, 

learnhg yet rnother langunge may be on the utrds 

before no long.

to seclrily syslems and 

spe. a sed compLrtrrg 

rfslallal ons cornpan es 

(Elcctronic liunds Trans{cr at Point-Ol: 

Sale) systems market. So{tware Sciences 

Nederland won lbur orders. Another. 

from Shcll International, is to control its garage 

lbrcururt rctailing actirities torldride. 

Thc Datasolvc group extended its leading 

position in thc UK rith 

outstanding rcvenue and profit 

perlbrmance and thc acquisition 

of two hardwarc maintenancc 

companies and LA Computer 

Senices - an IBM mainlrame 

processing operation. 

Contracts rith Hertz, Bird's Eye Shlls and 

'I hanre. Ti'l"visitrn exemplified the er.iting 

THORN EM Technoogy 

Gro!p are seMnq many oi 

the wor d's eading names 

n bankng and I nance 

r€larlrfg and other areas ol 

Producls ano setu ces lrom 

THOFN Sorlware setuing 

firany aspecls ot the rela 

seclor nc lde advanced 

EPOS (Eeclron c Po nl 01 

Sa e)l€,m nas lsed by 

malor organ salro.s ke 

possibilities in the'lacilities management' market. 

Signilicant processing sen'ices contracts were 

signed with companies including Britric Corona; 

major trrntracts with the Daily Telegraph and tslCC 

marked further high grovth in partoll and 

personnel services. 

The microcomputer equipment maintenance 

operation Computeraid Services doubled its size, 

expanding its network throughout the UI{. It 

undertook maintenance responsibility lbr thc 

entire British Rail inventory o{ ticket-issuing 

machines supplied bv THOR\ E\II Eler:tronics. 

Thc international position o{ TI{ORN E\II 

Conrput.r S,,ltuare {TLt.S) in d,'cision "upport 

packages was rcinforced by an exclusive European 

diitributi,'n agrecmcnl lor PlLuT. an .'\rculi\e 

inlbrmation systcm. 

PILOT joins the FCS 

product liamily 

which has achievcd 

40 per cent 

penetration of 

the European 

market lbr 

these 

products.

THORN SECURITY: 'Ihis company last year 

consolidated its UK market leadership and 

reorganised to target new opportunities in UK 

and international markets. lls preeminent 

place in fire detection in the 

UK was coupled with substantial 

grorth in lire extinguishing, while 

its intruder detection and related 

operations also flourished- Revenue 

growth of 14 per cent reflected a 

positive improvement with the 

forward order book at record levels. 

The acquisition ofJEL Energy 

Conservation Services in October combined 

that company's capabilities with those of THORN 

Security to create the largest UK company 

pioneering developments in systems integrating 

fire protection, security, environmental control and 

energy management technologies - a lundamental 

trend in the design of services for commercial and 

industrial properties. 

A typical project for such multi-capability 

supporl is Glasgow's huge St Enoch Square glazed, 

city centre shopping precinct development. The 

internal environment control scheme - a 91.3 

million package of services including an advanced 

communications systern - will play a crucial role. 

Other key technical developments in THORN 

Security's accelerating market drive ircluded the 

launch of an innovative analogue addressable fire 

detection system incorporating cost-saving false 

alarm reduction features. A new domestic early 

waming fire detection product met enthusiastic 

response in a new sector for the company: other 

ventures targeting new market areas are planned. 

The acquisition of the I S ser"uritl compan; 

Kidde Automated Systems Inc, in June 1988, has 

given the company a valuable lbothold in 

complementary areas of the US market. 

In the tiS, THORN EMI Malco the market leader 

in plastic transaction cards and verilication 

sy6tems, had an excellent year with significant 

productivity improvements and revenue 

TheCistinctive 

cover on ils alarm 

sounders s an ambassador 

and lncreasingly inlernationa, 

acllvilies of THOBN Secufity 

rn fire prolecl on, security, 

env ronmenlal conlro and 

energy managernenl and n 

systerns integraling all these

increase of I per cent. 

THORN EMI Gchnology also has continuing 

activities in semiconductors and flow measurement. 

INMOS has manufactured all its semiconductor 

products in Newport" South Wales, for over a year 

and all technology development has now fiansfer 

red there fiom the US. Due to growing worldwide 

interest, transputer products now account {or half 

total revenues and significandy aided last year's 

overall 35 per cent reyenue grou,lh' Its US 

marketing cenhe has been relocated following the 

recent sale of the Colorado Springs facility. 

THORN EMI Flow Measurement had an excellent 

year, supplying record volumes of gas meters to 

British Gas. Demand outlook is buoyant. The 

Poll.mer Components activity also performed well, 

increasing its output of synthetic meter diaphragns. 

An agreement to sell THORN EMI's 5I per cent 

interest in the UK telecommunications company' 

Thom Ericsson, to its partner in the joint 

venture, Ericsson of Sweden, was announced on 

9 June 1988. 

 

 

 

 

 

Hong 

 

Kong to Beijing to sell THORN Secuity\ fwe 

proltfii.bn systems and serurily equipmcnl Lo rhc 

People's Republic of Chirn - potentiolly the world's 

largest market. Alfred. is 31, recently mnnicd. and 

speal* both Mand.ain anl, Contonese, as weII as 

the Chnnzhou d,ial.ect of the coastal region. ulhke a 

recent project like the nan Xinhua Neus Agen'q, 

hzad. ofi.ce,'Alfteil says.'It's importurt to talk 

tedmical.ities in th,e atstomcr's lnnguage. We 

alread,y haae af,ne reputation in Chirut,'he adds. 

'Our auxessful tedmologt-transfer otrangemnnt for 

the proifu.ction offire detection equipm.ent in 

Beijing olso hclps.'Alfed hos the tort, 

persuasiveness and, Jlexibility e ssential for 

tronsaainns in China- But euen h.e gets the odd. 

surprise. Like being obliged to ilrinh a near-lethal 

mia of beer, white uine m.d Mqa Thi - afi.ery spirit 

- before closing a recent deal.'I still ltrvw exa.ctly 

whnre to sign,' he says,proudly.

increase of I per cent. 

THORN EMI Gchnology also has continuing 

activities in semiconductors and flow measurement. 

INMOS has manufactured all its semiconductor 

products in Newport" South Wales, for over a year 

and all technology development has now fiansfer 

red there fiom the US. Due to growing worldwide 

interest, transputer products now account {or half 

total revenues and significandy aided last year's 

overall 35 per cent reyenue grou,lh' Its US 

marketing cenhe has been relocated following the 

recent sale of the Colorado Springs facility. 

THORN EMI Flow Measurement had an excellent 

year, supplying record volumes of gas meters to 

British Gas. Demand outlook is buoyant. The 

Poll.mer Components activity also performed well, 

increasing its output of synthetic meter diaphragns. 

An agreement to sell THORN EMI's 5I per cent 

interest in the UK telecommunications company' 

Thom Ericsson, to its partner in the joint 

venture, Ericsson of Sweden, was announced on 

9 June 1988. 

 

 

 

 

 

Hong 

 

Kong to Beijing to sell THORN Secuity\ fwe 

proltfii.bn systems and serurily equipmcnl Lo rhc 

People's Republic of Chirn - potentiolly the world's 

largest market. Alfred. is 31, recently mnnicd. and 

speal* both Mand.ain anl, Contonese, as weII as 

the Chnnzhou d,ial.ect of the coastal region. ulhke a 

recent project like the nan Xinhua Neus Agen'q, 

hzad. ofi.ce,'Alfteil says.'It's importurt to talk 

tedmical.ities in th,e atstomcr's lnnguage. We 

alread,y haae af,ne reputation in Chirut,'he adds. 

'Our auxessful tedmologt-transfer otrangemnnt for 

the proifu.ction offire detection equipm.ent in 

Beijing olso hclps.'Alfed hos the tort, 

persuasiveness and, Jlexibility e ssential for 

tronsaainns in China- But euen h.e gets the odd. 

surprise. Like being obliged to ilrinh a near-lethal 

mia of beer, white uine m.d Mqa Thi - afi.ery spirit 

- before closing a recent deal.'I still ltrvw exa.ctly 

whnre to sign,' he says,proudly.

ARTISTS, STUDIOS. RECORD MANUFACTUR[. 

distribution and marheting music publishing and 

music videos: worldwide operations serving the 

whole world of recorded mrrsic- 

'We aim to increase our share of world marltet sales 

unsiderably. In this, the truly global nature of the 

music business is a particular asset 

for us. Duing 

90 years of pioneeing e"-ery uspect of record,ed, 

music, EMI Mustc has buih up a powerlil 

w orldutir)e or gonis ation. Our international 

presenre. with rompanips in 35 countrivs. $ues us u 

Jormid,oble position. h protid.es our neu: 

international manogement structure uith an extra 

Itqr resource.for athiexing global impact for our 

aflists. addin{ to the beneft of our major 

inuestmenl in neut and superstar talent oround the 

w orld, in stre amlining w orldwid,e manufactuing 

and d.istibution, and. in the latest te

process of extensive top management changes. 

EMI[/usics rosler ol mator 

nlernal ona arl sls who have 

achiev€d successaround lhe 

wor d inc ldesthe PetShoP 

Boys, Paul Mccartney, Hean, 

Dav d Aowe,TinaTurnei C It 

R chard, Bob Seger, Pink Floyd 

uNITED KINGDOM: EMI Records (UK) reported 

improved sales and profits. The signing of major 

talent such as Robert Palmer (in partnership with 

EMI-Manhattan) underlined its commitment to 

attraot superstars as well as discover and develop 

neu artists with international appeal. The 

highly successful "Now" series of 'fVpromoted 

hit compilations 

continues to dominate 

its segment of the 

market. IIK-based 

music video 

producer, Picture 

Music 

International, 

maintained its 

market lead. 

NORTH AMERICA: Pop 

talent acquisition and 

marketing nas lbcused more 

competitively on the Siest Coast liagship 

Capitol label and the strengthened New 

York-based EMI-Manhattan label 

following the closure of the EMl-America 

label. The commitment to Black Music. 

Country Jazz and Classical recordings was 

maintained. Trading results improved but 

continued to reflect repertoire 

investment to support EMI Music's 

strategic grorth plans in North 

America. 

em€rg ng lal€nl rncludes 

C m e Fshe( Crowded House 

Richard [.4arx, Grear White and 

EURopta: Operations in continental 

Europe had an outstanding year, 

producing re, urd levels of sales and 

prolits. A1l territories showed healthy 

improvements in perlbrmance, notably Germany, 

France, Italy and Spain. Outstanding success with 

Anglo-American repeftoire and improved CD 

supplies added to the drive to exploit national 

artists like Herbert Griinemeyer, Jeanne Mas, EAV, 

Juan Pardo, Alicia, Roxette and Guesch Patti 

across Europe.

INTERNATIoNAL, EMI Australia's substantial 

improvement in profitability was a highlight. 

Several South East Asian countries registered 

rapid improvement in profitabiliry with the 

introduction o{ more effective copp'iglit 

legislation. Latin America's worsening economic 

environment and currency devaluations depressed 

sterling profits from the region. However, steady 

progress was made in the exploitation of Hispanic 

repertoire from both Latin America and Spain. A 

new Venezuelan company was established in 

collaboration with a prominent local entertainment 

group. 

JAPAN: After the US this is the world's second 

largest market for pre-recorded music. The 

Toshiba-EMl joint venture again posted impressive 

increases in sales and profits, successfully 

exploiting American, British, European and 

classical recordings and substantially increasing i1s 

share of the vital Japanese repertoire 6egment. Its 

Tokyo recording studios were relocated and now 

have state-of-the-art recording equipment. 

EMI Music's contin ! ng 

nveshenl in three Compact 

Disc planls ,esulled in 

rncreased capacily permtlrng 

t!rther exploilalion ol ils 

enormous repedoire base lt 

aided lhe launch on CD ol 

EL4l's classical and pop music 

cala oqu€s - the ater 

spearh$ded by lhe Beatles. 

cLAssIcAL, EMI's International Classical Division 

guided several major recordings, featuring such 

distinguished musicians as Riccardo Muti, Itzhak 

Perlman, Kathleen Batde and Placido Domingo, as 

well as exciting new international performers like 

Simon Ratde, Nigel Kennedy and Roger 

Norrington. Considerable success was achieved 

with ocrossover' recordings of classical artists 

performing popular music. 

opERATIoNs: New investment in CD plant in the 

UII USA, and Japan increased capacity and 

facilitated the major launch on CD of EMI Music's 

classical and pop catalogues, the latter 

spearheaded by the Beatles. Considerable progress 

was made towards central coordination o{ the main 

manu{acturing and distribution resources in the 

UK and continental Europe. 

PUBLISHING: The appointment of a worldwide 

President of EMI Music Publishing heralded a new 

intemational structure for its operations in 24

countries. This important business again achieved 

impressive levels of income and profits. 

RESTRUCTURTNG: capitol Magnetic Products 

Division and a UK sulsidiary, mainly magnetic 

base tape suppliers for audio duplicators, were 

closed. This allowed consolidation of all Capitol's 

music cassette duplicating activities into the 

complex in Jacksonville, Illinois. Distribution 

of third party videos in North America was also 

discontinued. Adverse conditions in New Zealand 

led to the disposal o{ the Record Clu} operations, 

withdrawal from manufacturing and the relocation 

of marketing and distribution activities. In 

Mexico, in-house manufacture and dishibution 

was replaced by collaboration with a major 

Mexican entertainment company. 

In its 90th year EMI Music now operates direcdy 

in 35 countries and serves a firrther 60 countries 

tlrough licensees and exclusive distributors. It is 

continually exploring new opportunities for 

expansion in the worldwide music market. 

Last year Br n Harris, his Managing Direaor 

Daoid Sncll ond their colleagrcs at EIVII Australin 

twned, a $A1 millinn loss into o profit of $A2 

million.'This year,' predias Brinn,'that profit uill 

be tuire os bi6.'Brinn gradualed in Econnmics, 

went to toork for Australin's lorgest biscuit malrcr 

onil only lnter johwd EMl. He then left n nm his 

own business. Lured, bo.dt by Daai.d Sncll in 1986 

he immciliately got to grips uith e.rcessiue 

overheads and rationalising lhe artists roster. 

Another key prinrity -'I'm a marketing gty.I 

belieue I am onllt as strong as the peopb uho work 

uith mc. So I set about buil.ding a winning team'. 

'Ioday,Atutralia's number onn band. Crowded 

Howe is an inlernntional success for EMI. Bian 

enjoys being uith his tu;o sons aboard their 28-foot 

monr ouiser. But his leisure thne is spdrse.'You 

coul.d say mtcit is a business like arry other,but it 

can become a way of life.'Th.en he le[t for his next 

appointm.ent - presenting a plntinum d,isc to Cliff 

Ridnril marking 70,000 albuns sol.d furi.ng Cffis 

four monlh Australian tour.

A MAJOR INTERNATIONAL FORCE PROVIDING TOTAL 

lighting solutions through exceptional skills in 

marketing, design, engineering, R&D, and 

production of light sources and fittings. 

'The d.etermination arul commitment b1r all in 

THORN Lighting shuts in our strong performance, 

and profitability impro..-ement of 51 per cent.We 

are expanding our international business.from a 

Europeo n pl a t 

for m. Th e st ra tegi r o rqu i si ti on 

programme, begun u;ith Jibnkonst in Sueden,is a 

continuing priori$r. 

'Neu proclucts hare been introduced. at a higher 

rotp than prcr bphre. Our S, qndinorion omenitl 

anrl decoratit e lighting, Cerman commercial 

lighting anrl Italianfittings are being sold. 

rorldrrirJe.We hare reduced. orcrall costs rhile 

enhancing customer seruice . Quality in both product 

and, seruice is our conlinuingfocw. A neu' 

m qnegpmen I I ce m. ex tensit'c t ra in ing to increase 

proJessionalism at all leuek, plus substantial 

inuestment in rlistilution, u,arehousing and 

systems support ore key elem.ents oJ our 

programme .The spirit of enthusiosm, enterprise 

 

 

REVIEW OF ACTIVITIES 

THORN Lighting has unique strengths in design, 

manufacture and marketing. lts capabilities centre 

on two distinct, but closely related, product areas - 

lamps and littings. Currently THORN Lighting has 

subsidiaries in 17 countries. in l0 ofwhich it has 

manufacturing facilities. Its activities serve 140 

markets worldwide. 

piclLrred n Soest, near THORN 

PERFoRUA\CE: The lear sau signilir-ant 

improvement in perfornance r,ith sales up by 12 

per cent and profit increased by over 50 per cent 

rellecting thc more lbcused business strategy, 

accelerated introduction of new products and the 

continuing restructuring programme. Thc S15.9 

million acquisition of Jdrnkonst last year

Theacqu silior oi Jarnkonsl 

was asign ficanl step lasi year 

It slrenglhened THORN 

L ghling's Europ€an posil on 

and ils rapd nlegralion gave 

leadership in the impo anl 

Nord c rcglon Overa ,lhere 

was a signil cant ncrease in 

lhe proporrion of THOFN 

Lighting s sales outs delhe UK 

contributed to the strong advance in the results. 

Encouraging progress was made throughout 

Westem Europe, notably in Austria, Italy and West 

Germany. 

 

Des gn, serv ce and lnnovation 

halharks ol THORN Lqhling 

- arc conlibuling a qrowing 

range oi producb wnh a malor 

mpaclon lhe way lighlls used. 

Low-vollage Lghrsrream's 

compacr size and qoaliry ol 

Lghl are providing excting new 

solulions lo lradilional ighling 

problerns. As w€ I as allowing 

cr$live lighling scheme 

des€ns, bringing brqhhess lo 

displays in boul ques and slores, 

ts skilluluse ol modern coaling 

lechnoloqy d ramalicaily reduces 

rhe amounr ol hear hirherro 

Improved robustness showed in the proportion 

of sales outside the UK. This increased to 54 per 

cenl despile dilliculties in Canada, New Zealand 

and Ausralia and inlcnse competition in many 

markets for light sources and off-the-sheH littings. 

INTERNATIONAT cRowTH, The Jernkonst acquisition 

is a signilicant step in strengthening the company's 

European position. Jdrnkonst's important products 

and design skills have already been led through 

into other territories, while Jdrnkonst has 

benelited from access to a much wider range of 

fittings and high technology light sources. The bid 

for the French group Holophane, and its 

subsidiary Europhane, is relerred to in the Chief 

Executive's Statement. 

CUSTOMER SUPPORT: Customer support and product 

availability are continuing priorities. This year, {or 

example, service to UK customers will be 

streamlined by means of an Sll million investment 

in two strategically located depots using modern 

on-line ordering systems and rapid radial delivery 

seruices. More advanced computer aided design 

and manufacture (CAII/CAM) processes, and Just 

In Time produr-tion terhniqucs. are improving 

competitiveness through improved delivery 

timescales, speed of response and more tlexible 

manufacturing. 

INSTALLATIONS: Prestigious lighting schemes 

around the world again showed the company's 

ability to offer customers total lighting solutions. 

Most notable were the lloodlighting of Sydney 

 

Opera House, lighting 

ice-skating arenas lbr 

the Winter Olympic 

Games at Calgary and 

the new North 

Terminal complex at 

Gatwick Jnternalional 

Airport in the UK.

PRoDUCTS: A threefold increase in 

the launch of new products, exploiting 

the company's intemational design skills, 

significandy improved the established product 

strength, fucstream, a l50W metal halide lamp for 

commercial interiors and exterior lloodlighting is 

stimulating a new generation of stylish fittings. 

Other key light source developments include new 

35mm diameter low voltage tungsten halogen 

display lamps, H.tlocltN HEAT lamps for spaceheating, 

and larger compact fluorescents - 2D 

38W and 2L 40W - for offices and stores. The 

comprehensive'Cityscape' exterior amenity and 

security fittings meet increasing requirements for 

improved urban lighting programmes. 

Appreciation of the worldwide commercial 

lighting market inspired Modulight and Quattro - 

high performance fluorescent luminaires witJr 

sophisticated optical attachments - together with 

tJre new Legato range o{ uplights. 

The innovali\,€ design oi the 

Thorn 2-D lamp has opened 

up new avenues for desiqners 

imaginalive use ol lighr 10 

environmenls by means of 

uplighlerq downliqhterc, wall 

iightsand bulkheads. 

Advanced lechnologies 

in control ge€i and sources 

and olher energy eliiciency 

improvemenls make cost 

elfecliveness an imporlant 

t€lure oi new lighiing 

solLnions based on THORN 

Lighting's expedise and 

DESIGN: Growing demand for well des{ned, energy 

efficient, high technology products continues to 

stimulate research and product development. 

In lighting, leadership in interreF 

ating design, technological and 

engineering skills is increasingly 

important in tackling intemational market 

opportunities. Advances in electronics, as well as 

in lamps and fittings, are a major spur to progress. 

THOR\ Lighting's expertise in rhis area is 

illustrated by its high frequency control gear for 

fluorescent tubes and by electronic transformers 

for low voltage display lighting. 

QUALITTY: The new management team has had a 

fundamental influence on quality standards 

throughout the company - vital to the policy of 

improving the commitment to customers, 

Continuous progress in the grolth of the 

business is anticipated. Good intemational 

prospects, clear objectives and continuing focus on 

 

 

Kenwood - a hous€hold name 

in smallappliances in markets 

around lhe world - is alsd 

rcPorted under li'e Consumer 

and Commercia| heading in

market, product and operational developments 

reinforce the company's confidence in its future 

per{orman ce. 

Kf,NS OOD 

Kenwood had a year of mixed lbfunes. UK 

markets for several food preparation products 

contracted. Operations in New Zealand were 

rationalised in line uith husiness opponunities. 

Good progress for the luture of the hrrsiness 

included launching several ne'w products including 

the innovative System K rechargeable appliances, 

and substantial investment in research and 

development. Signilicant additions to the product 

range over the next two years and new 

manufacturing plant will further improve 

productivity. New Kenwood businesses were 

established in Australia and the USA. 

aa fl-,tt1 ffi"##".-:i:!;ffi:*, 

lighting, u'as absolute . Incorporating the latest 

p,oducl Deve opmeni and 

i;ilffi::.YHT:,,",", y:;:;:":"_3;'::,,ytr:"y,;""i:::;#: 

others to follut.It 

uos odopted enthusiastically by 

THORN Lighting companies around the u;orld', arul 

by customers, ar

The Directors submit their annual report and statement of accounts for eonsideration at 

the Annual Ceneral Meeting on B September 1988. 

ACCOUNTS AND DIVIDENDS 

Ti.rrnover 1br the year to 3I March 1988 amounted to S3,054.0m compared with 

S3,203.2m lbr the previous year. Prolit belbre finance charges amounted to S243.7m (last 

year 9l9l.Brn) and profit before taxation was 9225.3m (S159.5m). Eamings per share were 

53.Ip (43.9p). 

Flxtraordinary items o{sl4.2m (924.7m) net of tax vere charged, mainly for the 

restructuring o{ the Music business in Nodh America. 

An inte m dividend of 6.0p per share (5.0p) was paid in March 1988. The Board is 

recommending a linal dividend o{ t6.0p per share (13.5p), payable on 7 October 1988 to 

Ordinary Shareholders on the register as at 14 July 19B8, making a total of 22.0p (18.5p) 

for the full year. 

Investment in tangible fixed assets during the year amounted to S39B.6m (S326.8m) 

comprising rental equipment 5272.2m (S208.9m) and other lixed assets $P6.4m 

(slr7.9m). 

PRINCIPAL ACTIVITIES 

The principal activities are Rental and Retail, Technology, Music and Lighting. 

A review of these activities and indications ol likely future developmerts is set out on 

pages ll to 38. A li6t of operating subsidiaries is available, on application, {iom the 

Company. 

DISPOSALS AND ACQUISITIONS 

During the year under review disposals included the completion of the sale ol the Major 

Domestic and Commercial Appliance division for an aggregate consideration of 943.8m. 

This sale was accounted for in the year to 3l March 1987. The sale of the Ferguson 

Division was also completed lbr an aggregate consideration of s90m. 

The Company made several acquisitions during the year uhich included the entire 

issued share capital of Rent-A-Center, Inc. in the United States lbr a consideration of 

$594m (S37lm). The consideration was satisfied by the issue ol53.4m Ordinary Shares 

which in the lirst instance were made available to existing shareholders by way o{ an 

Open Olier. 

'lhis and other acquisitions are referred to in the review of the principal activities. 

POST BALANCE SHEET EVENTS 

Since 3l March 1988, the Company, with the consent of shareholders in general meeting 

has made application to the High Court lbr the Companfs share premium account to be 

reduced by the sum of S2B2m. In the event that the Court sanctions the application, the 

amount by which the share premium account is reduced will be transfened to another 

resewe account against which goodwill arising on acquisitions may be written oIT. 

In June 1988 the Company announced that agreement had been reached in principle 

for Ericsson to purchase the Company's 5l per cent interest in Thorn Ericsson 

Telecommunications (Holdings) Ltd, the joint venture created by the two companies in 

1973. 

DIRECTORS 

The Directors ol the Company are listed on pages 68 and 69. 

Mr I H Owen resigned liom the Board on 6 April 198?. Mr H C Mourgue resigned on 

30 September 1987 on the occasion of his retirement. Mr M R Angus and Mr V B Menon 

were appointed on I January 1988 and ll March 1988, respectively.

The Directors due to retire at the Annual General Xleeting on B September 1988 are as 

follows: 

a) Sir William Barlow and Sir Ian Trethowan retire by rotation pursuant to Article 92 and, 

being eligible, each ollers himseH for re-election; 

b) Mr M R Angus and Mr V B Menon retire pursuant to Article 98 and, being eligible, 

each offers himseH for re-election; 

Mr Menon has Agreements of Employment with tvo subsidiaries both of which expire on 

30 June 1990. 

SHARE CAPITAI 

Details of shares issued during the year under review are given in Note 19 on pages 6l and 

62. This year the Board is again seeking renewal of authorities liom Shareholders to allot 

shares, in certain circumstances, up to an amount equal to the authorised share capital of 

the Conpany, then unissued, and to issue, within certain prescribed limits, lurther 

Ordinary Shares lbr cash. FLrrther details and the tcxt o{ the Resolutions are set out in the 

separate letter tom the Chairman containing the Notices of Meetings. 

The Directors are also seekin€ an authority for the Company under certain conditions 

to make market purchases of its own sharcs, as permitted by Articte 1l(b) of the Articles of 

Association of the Company. At the same time authority will be sought lbr a reduction of 

share capital by the purchase and cancellation of the l|.50/o Prelerence Shares. Class 

consents will also be required to these authorities. Full details and t-he text oi the 

Resolutions are set out in the separate letter lrom the Chairman containing the Notices 

of Meetings. 

SCRIP DIVIDEND SCHEME 

The Scrip Dividend Scheme introduced in 1986 to enable Ordinary Shareholders to elect 

to receive new Ordinary Shares in lieu of a cash dividend has continued to be of interest 

to certain Ordinary Shareholders. 

F'ull details of the renewal of authority requested from Shareholders and the nccessary 

Resolution to allow the Directors to offer a scrip dividend option to Ordinary Shareholders 

in respect of dividends declared in respect of the year to 3l March 1989 are set out in the 

Chairman's letter containing the Notices ol Meetings. Details of the scheme and notice of 

election in respect ol this year's final dividend are enclosed scparately for Ordinary 

Shareholders, 

SHARE OPTION SCHEMES 

Details of share options gmnted during the year are given in Note 19 on page 62. 

To enable the Savings-Related and Executive Sharc Option Schemes to continue to 

operate effectively Shareholders will be asked to approve amendments to the existing 

Schemes as lbllows:- 

l'irst to increase the overall limits on the number of sharcs over which options may be 

granted under both Schemes to reflect the increase in the Company's issued Ordinary 

Shares since 1984 when the limits were last amended. Secondly to allow replacement 

options to be granted under the Executive Scheme in line with the most recent guidelines 

ol The lnvestment Committee of the Association oI British lnsurers, 

l'ull details ol the changes are set out in the Chairman's letter containing the Notices ol 

Meetings.

FIXEI] ASSETS 

The Directors are of the opinion that the present market value of the land and buildings 

of the Company and its subsidiaries is in excess of net book values. 

RESEAITCH AND DEVELOPMENT 

The management of each of the Company's principal aetivities is responsible for research 

and development in their particular area. These activities are supported corporately by the 

Central Research Laboratories, 

986.8m was spent on research and development during the year ol which customers 

lirnded S52-3m. 

EMPLOYEE INVOLVEMENT 

During the year the Company extended its policy of emplovee communication and 

involvement through a vide variety of bodies and media. Features of the year have been 

the improvement of Company newspapers and other media; extension of self-managed 

work groups, brieling groups and employee opinion surveys. 

l'he operation of the Savings-Rclated Share Option Scheme which gives a wide range 

of employees the opportunity to participate in the luture of the Company. continued to 

promote considerable interest. 

The Joint Pension Fund Committee has extensive rcpresentation of employees and 

management. Regular reports uere made on their activities. V'ithin the constituent 

companies there are joint committees on Health * Safety and other subjeds related to 

employces and their representatives, 

TRAININC AND DEVELOPMENT 

The Company recognises that its perlbrmance is signilicantly improved by strong 

investment in taining and Development. ln 1987 the Company invested in a wide range 

of developmental programmes uhich have been shaped to meet the requirements ol the 

very dilfcrent needs of the individual businesses, both in the UK and ovemeas. 

THORN El\fl continues to be attractive to graduates and the Company is committcd to 

maintaining a high level of graduate intake. 

Overall TIIORN EMI's approach to training and development is to increase investment 

in appropriatelv designed activities geared to the improvement oI business perlbrmance 

and to building to the lull th{) capabilities of staff at all levels. 

EQUAL OPPORTT]NITIES 

It is the policy of TIIORN EMt and its subsidiaries that there shall be equal opponunities 

in the area of employment without discrimination on the grounds ol colour, ethnic or 

racial or{in, nationality, sex or marital status in accordance uith the relevant legislation. 

This policy applies to recruitment, training, promotion, and terms and conditions o{ 

employment. 

Employees at all levels have a responsibility to observe this policy in addition to their 

legal obligations. 

EII4PLO}MENT OI DIS4BLED PERSO\S 

It is Company policy to encourage good employment practices with regard to the disabled 

in accordance rith the Government recommended guidelines. 

SUBSTANTIAL INTERESTS 

At the datc of this repoft the only substantial interest in thc issued share capital of the 

Company which has been notified is a holding by the Pmdential Group o{ Companies ol 

14,839,798 Ordinary Shares representing 5.40/o of Ordinary Shares in issue on 14 June 

I9BB.

FIXEI] ASSETS 

The Directors are of the opinion that the present market value of the land and buildings 

of the Company and its subsidiaries is in excess of net book values. 

RESEAITCH AND DEVELOPMENT 

The management of each of the Company's principal aetivities is responsible for research 

and development in their particular area. These activities are supported corporately by the 

Central Research Laboratories, 

986.8m was spent on research and development during the year ol which customers 

lirnded S52-3m. 

EMPLOYEE INVOLVEMENT 

During the year the Company extended its policy of emplovee communication and 

involvement through a vide variety of bodies and media. Features of the year have been 

the improvement of Company newspapers and other media; extension of self-managed 

work groups, brieling groups and employee opinion surveys. 

l'he operation of the Savings-Rclated Share Option Scheme which gives a wide range 

of employees the opportunity to participate in the luture of the Company. continued to 

promote considerable interest. 

The Joint Pension Fund Committee has extensive rcpresentation of employees and 

management. Regular reports uere made on their activities. V'ithin the constituent 

companies there are joint committees on Health * Safety and other subjeds related to 

employces and their representatives, 

TRAININC AND DEVELOPMENT 

The Company recognises that its perlbrmance is signilicantly improved by strong 

investment in taining and Development. ln 1987 the Company invested in a wide range 

of developmental programmes uhich have been shaped to meet the requirements ol the 

very dilfcrent needs of the individual businesses, both in the UK and ovemeas. 

THORN El\fl continues to be attractive to graduates and the Company is committcd to 

maintaining a high level of graduate intake. 

Overall TIIORN EMI's approach to training and development is to increase investment 

in appropriatelv designed activities geared to the improvement oI business perlbrmance 

and to building to the lull th{) capabilities of staff at all levels. 

EQUAL OPPORTT]NITIES 

It is the policy of TIIORN EMt and its subsidiaries that there shall be equal opponunities 

in the area of employment without discrimination on the grounds ol colour, ethnic or 

racial or{in, nationality, sex or marital status in accordance uith the relevant legislation. 

This policy applies to recruitment, training, promotion, and terms and conditions o{ 

employment. 

Employees at all levels have a responsibility to observe this policy in addition to their 

legal obligations. 

EII4PLO}MENT OI DIS4BLED PERSO\S 

It is Company policy to encourage good employment practices with regard to the disabled 

in accordance rith the Government recommended guidelines. 

SUBSTANTIAL INTERESTS 

At the datc of this repoft the only substantial interest in thc issued share capital of the 

Company which has been notified is a holding by the Pmdential Group o{ Companies ol 

14,839,798 Ordinary Shares representing 5.40/o of Ordinary Shares in issue on 14 June 

I9BB.

REPORT OF THE AUDTTORS TO THE MEMBERS We have audited the accounts oI THORN 

EMI plc set out on page6 45 to 65 in accordance with approved auditing standards. The 

accounts have been prepared under the historical cost convention. 

In our opinion the accounts give a true and lair view of the state of affairs of the 

Company and ol the Group at 3l March l9BB and o{ the prolit and source and application 

of funds of the Group lor the year then ended and comply with the Companies Act 1985. 

Ernst & Whinney 

Chartered Accountants 

London 

29 June l9BB 

ACCOUNTING POLICIES 

BASIS OF CONSOLIDATION The consolidated accounts comprise the accounts of the 

holding company, its subsidiaries and its related companies, prepared under the historical 

cost convention. The results oI subsidiaries and related companies sold or acquired during 

the year are included up to, or from, the respective dates of sale or acquisition. 

Because ol the different nature of the business of the retail financing subsidiary Tiinity 

House l-inance plc, its assets and liabilities are shown as a net investment in the Group 

balance sheet and are analysed separately in note ll on page 57. Its prolit before taxation 

is included within operating profit in the Group profit and loss account. 

RELATED C0MPANIES are those, other thao subsidiaries, in which the Croup has a 

benelicial interest of 200lo or rnore in the equ\ share capital and is in a position to 

exercise significant inlluence. The Group includes its share of prolits and losses of all 

related cornpanies. 

The investment in related companies is stated at the Group's share o{ the underlying 

net asset values; their accounts are made up to 31 March, based on unaudited accounts 

wherc necessary. 

cooDwllI. being the excess of the consideration paid over the fair values attributed to 

net tangible assets acquired, is charged against Group reserves in the year ol acquisition. 

FOREIGN cURRENCIIs The trading results of overseas subsidiaries and related companies 

are translated into sterlin€ at year end rates. 

Assets and liabilities denominated in foreign currencies are translated into sterling 

either at year end rates or, where there are related lbrward lbreign exchange conftacts, at 

conhact mte6. 

Exchange differences arising from the retranslation of the opening net investments in 

overseas subsidiaries and related companies and {rom foreign currency borrowings. in so 

Iar as they matched, are dealt with in Croup reserves.

DEPRECIATION oF TANGIBLE FIXED ASSETS Depreciation of property, plant" equipment 

and vehicles is calculatcd on cost at rates estimated to write off the cost oI the relevant 

assets by equal annual amounts over their expeaed uselul lives; eflect is given, where 

necessary" to commercial and technical obsolescence. 

Rental equipment is depreciated to a nil residual value, by the application ol basic 

depreciation rates, on a graduated basis, liom the month of installation, so that a relatively 

high charge is borne in the early years. 

The annual rates used are: 

Freehold buildings and long leasehold prope*y, 20lo 

Short leasehold property, over period of lease, 

Plant, equipment and vehicles, at rates ranging liom 100/o tr-r 33%0/0. 

Rental equipment; the periods used are: 

Colour sets, 6 years (overseas, other than Australia and New Zealand, 5 years), 

Video equipment, 4 years, 

Monochrome sets, I year. 

LEASING Tangible fixed assets acquired under finance leases are not capitalised. Rentals 

payable under both linance and operating leases are written off as incurred. 

REoRcANISATION CosTS The costs of business reorganisation are provided when a 

reorganisation decision has been made in principle. Costs relating to the reorganisation of 

continuing businesses are chargcd against profit before taxation and those relating to 

withdrawal lrom businesses, or their lundamental restructure, are charged as 

extraordinary items. 

STOCKS and work in progress are stated at the lower of cost and net realisable value, less 

progress payments on uncompleted contracts and provisions lbr expected losses. Cost 

includes manulacturing overheads where appropriate. A consewatively estimated profit 

elcmcnt is taLen during the course of long-term conbacts. 

The inclusion of attributable prolit in long-term conhact work in progress is in 

accordance u,ith Statement of Standard Accounting Practice No. 9.'l'his constitutes a 

departure liom the statutory valuation rules, but is required by S22B(2) ol the Companies 

Act 1985 to enable the accounts to give a true and lair view. As progre66 pa)'ments cannot 

meaninglully be allocated between cost and prolit, it is impracticable to deterrnine the 

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

the balance sheet. 

TAXATION lhe Company has undertaken to discharge the liability to corporation tax of 

the majority of wholly-owned UK subsidiaries. Their IJK tax liabilities are, therefore, dealt 

*it-h in th" a,. ounto ol the Companl. 

Delerred taxation is calculated using the liability method in respect of timing 

dillerences arising primarily lrom the dillerent accounting and tax treatment of 

depreciation. Provision is made, or recovery anticipated, where timing dillerences are 

cxpected to reverse in the lbreseeable luture. 

WARR{NTY PROVISIONS Many products carry formal guarantees of satislactory 

performance lbr varying periods fbllowing purchase by customers, Provision is made lbr 

the estimated cost of honouring unexpired warranties. 

RESEARCH AND DEVELOPMENT erpenditure is wdtten oll as incur:red.

Tirrnover 

Coet of sales 

Gross prolit 

Distribution costs 

Administrative expenses 

 

 

 

Other operating income 2 &7 63.6 

Operating profit 

Share of profits less losses of related companies 

Profit before fiaance charges 

Finance charges 

Profit on ordinary activities before taxation 

Taxation on profit on ordinary activities 

Profit on ordinary activities after taxation 

Minority interests 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit be{ore extraordinary items 

Exhaordinary items less taxation 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transfer to reserves 

Earnings per Ordinary Share - basic 

- fully tliluted 

Earnings per Ordinary Share (basic) is based on profit before extraordinary items less 

preference dividends, of sl33.0ur (1987 995.1m) and on the weighted average number o{ 

Oldinary Shares in issue of 250.6m (1987 216.4m)- The fully diluted earnings per share is 

based on adjusted eaErings of 9145.0m (1987 9102.9m) and adjusted weighted average 

number of Ordinary Shares in issue oI 289 Am (1987 244.2m) . 

In accordance witJr the exemption pennitted by 5228(7) of the Companies Act 1985 the 

profit and loss account of the Company is not separately presented, The profit attributable 

to members of the holding company, dealt wit}t in the accounts of the Company. is 

slI9.1m (1987 946.Im).

Group 

Company 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS 

Stocks 

Debtors 

Investments 

Cash at bank and in hand 

CREDITORS: amounts falling due 

within one year 

Borrowings 

Other creditors 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS LESS CURRENT LIABILITIES 

CREDITORS: amounts falling due after 

more lhan one year 

Borrowings 


 

 

 

 

 

 

 

 

 

CAPITAL AND RESERVES 

Called-up share capital 

Share premiuh account 

Other reserves 

Profit and loss account 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Graham Wilkins 

Colin Southgate 

Directors 

29 June l9BB

Total frrnds from operatione 

 

 

 

 

 

Total fimds from other sources 

 

APPI,ICATION OF FUNDS 

Purchase of tangible fixed assets 

Purchase of fixed asset investments 

Acquisition of subsidiaries 

lncrease in net assels ofretail financing subsidiary 

Corporate taxation 

Provisions utilised 

Dividends 

Extraordinary items 

Expenses ol share issue 

Minority interest6 

(lncrease)/decrease in working capital: 

Stocks 

Debtors 

Creditors 

Total application of funds 

Ne,t inflow of frrnds 

(Decrease)/increase in net borrowings: 

Liquid funds 

Borrowings 

Currency retranslation 

NET EFFECT OF ACQUISITIONS AND DISPOSIIS OF SUBSIDIARIES: 

Fixed assets and investmente 

Stocks 

Debtors 

Net liquid funds 

Creditors and provisions 


Consideration: 

Cash 

Other 

Goodwill on acquisitions 

(Profit)/Loss on disposals

The contributions by class of business 

to Group turnover and profit before 

finance charges are summarised below: 

Rental and Retail 

Gchnolog"y (including INMOS) 

Music (including Thames) 

Consumer and Commercial 

Continuing operations 

Discontinued operations 

Exceptional property and 

investment qedits 

Turnover 

9m 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Analysis between UK and overseas companies: 

United Kingdom (including expo*s) 

Overseas 

Geographical analysis of turnover: 

United Kingdom 

Other UC 

Rest of Europe 

The Americas 

Australasia 

Asia 

AIiica 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exceptional profits on the sale ofTHORN EMI House 

and shares in Myson Group plc 

Other income net

Operating profit is stated after charging: 

Depreciation on tangible fixed assets 

Finance lease rentals: plant, equipment and vehicles 

Operatiug lease rentals: plant, equipment and vehides 

Arrdit fees 

ProPerty 

 

 

 

 

 

 

 

 

Interest payable: 

on bank overdrafts and loans repayable within 5 years 

on other loan6 

Bank and other interest receivable 

 

 

 

 

 

 

 

The atrove table excludes interest receivable of S24.5m (1987 Sl8.2m) and interest 

payable of98.7rn (1987 S6.lm) in reepect of the Group's retail financing subsidiary. These 

amounts are included in turnover and cost of sales respectively. 

 

 

 

5. TAXATION 

 

Thxation on profit on ordinary activitres 

United Kingdom: 

corporation tax at 350/o (1987 350/o\ 

double taxation relief 

Overseas taxation 

Deferred taxation: 


overseas 

Prior year adjustments 

Thx on share ol profits lese losses of related companies: 


ovetaea6 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The charge for taxation has been reduced by !,2.7m (1987 nil) being UK taxation likely to 

be deferred for the foreseeable future in respect of timing differences.

Disposals and cloeures of busiuesses 

Profit on flotation of Thamee Television plc 

Net extraordinary loss before taxation 

United Kingdom taxation: 

cutrent 

deferred 

Overseas taxation: 

current 

deferred 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary dividends: 

interim 

proposed final 

Adjustment arising from the 

exercise of scrip dividend options 

Preference dividends 

 

Per share Per share 

 

 

 

 

 

 

 

 

 

 

 

 

Average numler of employees by class of business: 

Rental and Retail 

Technology 

Mueic 

Consumer and Commercial 

Corporate 

Discontinued

Employee costs, including Directors' emoluments: 

Wages and salaries 

Social security costs 

Other pension coste (see note 24) 

 

 

 

 

 

 

 

 

 

 

 

 

Directore' emolumentr : 

Fees as Directors 

Management remuneratiou including pension contributions 

Contract termination palment to a {ormer Director 

 

 

 

 

 

 

 

 

 

The table sets out the numbers of UK-based Directors, other tlan the Chairman and the 

highest paid Director, whose emolumentr fell within the stated bands and, on the same 

basis, t.}te numler€ of UK employees whose €moluments exceeded 930,000. Peneion 

contributions are not included. 

Directors UK employees

PIant 

equipment 

Freetrold Leasehold and 

propprt) propen) l.!I4!!jqrlp-Il 

Rental 

Cost at 3l March l9B7 

 

Curency retranslation 

 

Acquisition ol businesses 

 

Disposal of businesses 

 

Additious 

 

Disposals 

 

 

 

 

 

Depreciation at 31 March 1987 


Charge for year 

Acquisition of businesses 


 

 

 

 

 

 

 

 

Disposals 

Depreciation at 3l March l98B 

 

 

 

 

 

 

 

 

 

 

Payments on account and assets in course of construction included above at 31 March 

1988 arnounted to S4.8m (1987, sl4.0m). The net book value of leasehold properties 

comprised 510.2m (1987 S6.6m) in respect o{ long-term leases and 916.6m (1987 SI6.lm) 

in respect of short-term leases. 

Company 

Plant 

equipment 

and 

Freehold Lcasehold 

propert) property vehieles 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation at 3l March 1987 

Charge for year 

Net translers to Group companies 

Disposals 

Depreciation at 3l March 1988

Investments comP 6e: 

Subsidiary companies 

Related companies 

Other investments 

Listed investments 

Ilnlisted investments 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company 

 

 

 

 

 

 

Net book 

value 

 

 

 

 

 

 

 

 

 

 

PRINCIPAL SUBSIDIARIES 

The companies set out belorar are those which, in the opinion of the Directors, principally 

a{lected the Group results and net assets during the year. Except where otherwise stated, 

the country ol incorporation is England, the operations are $'ithin the United Kingdom, 

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

tr denotes that shares are held through a subsidiary. 

RENTAL & RETA]L 

THORN Home Electronics 

International Ltd 

Radio Rentals Division 

DER Division 

Rumbelows Retail Division 

HMV Division 

Trinity House Finance plc 

I Focus TV and Video Centres Ltd 

tr FONA A,/S (Denmark) 

n Radio Rentals Pty Ltd 

(Australia) 

! THOR\ ElVll HirT\ AB (Su"d.n) 

tr Rent-A-Center, Inc. (USA) 

TECHNOLOGY 

THORN EMI Gchnology Ltd 

Datatech Division 

Datasolve Division 

THORN Se curity Division 

Software Sciences Division 

n THORN EMI Fllectronics Ltd 

tr Systron Donner Corp (USA) 

Thom Ericsson Telecommunications 

(Holdings) Ltd (5lo/o) 

INMOS International plc 

MUSIC 

n EMI Records Ltd 

D Capitol Industries-EMI lnc (USA) 

n Pathe Marconi EMI SA (France) 

n EMI Italiana SpA (ltaly) 

I EMI Electrola GmbH (Germany) 

I EMI Music Australia 

CONSUMER & COMMERCIAL 

Lighting: 

THORN Lighting Ltd 

tr Sivi Illuminazione SpA (Italy) (510/o) 

tr THORN Licht GmbH (Germany) 

n Jiirnkonst AB (Sweden) 

Kenr,vood: 

Kenwood Ltd 

I Kenwood SA (l'rance)

9m 

 

 

 

 

 

 

 

 

 

 

 

 

 

and releaees 

 

 

 

 

 

 

 

 

 

9m 

Loane Provieions 

 

 

 

 

 

 

 

 

Dividende received and receivable fiom liated related companies amounted to gl.8m 

(1987 sl.6m) and from unlisted related companies !0.5rn (198? s4.6m). 

PNINCIPII RBLAIED COMPANIES 

The principal iavestrnenta of the Group in the equity share capital of related companiee 

arc shown below: 

Thames Television plc 

Toshiba-EMt Ltd 

Babcock Thom Ltd 

OTIIER INVESTMENTS 

Group 

 

 

 

 

 

 

 

 

 

Principal 

. 

country ot 

rncorporatron 

 

 

 

 

 

 

 

 

 

Provisione: 

At 3l March 1987 

Currency r€translation 

Provided 

Beleased

Tiade debtors: 

Due urithin one year 

Due after more than one year 

Unsecured bank borrowing, repayable within one year 

Creditors: amounts due within one year 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Croup 

 

 

Raw materials and comPonents 

Work in progress 

Finished goods 

Other 

 

 

 

 

 

 

 

 

 

 

Long-term contracts: 

Work in progress 

Payment8 on account 

 

 

 

 

Group 

 

Company 

 

Due witlfn oue year 

Tiade debtors 

Amounts owed by subsidiary companies 

Amounts owed by related companies 2.1 

Amounts due from disposale of businesses 

Corporate taxation recoverable 

Other debtors 

 

 

 

 

 

 

 

 

Due after more than one year 

Tiade debtors 

Other debtors

Sterling loans 

Unsecured loan stocks: 

7t/zo/o 

Stho/o 

5o/o 

73/"0/o 

 

7%o/o Bonds with warrants 

Commercial Paper 

(Xher loans 

US dollar loans 

9%o/o notes 

9olo notes 

7olo convertible bonds 

Others 

Loans in other currencies 

Bank loans (at variable rates) 

Others 

Total loans 

Less repayable within one year 

 

Short-lerm borrowings 

Bank overdrafts - sterling 

- other curencies 

Short-tenn element of lo.1g1!9!n l91ns 

Total short-term 

Total borrowings 

 

Net borrowings 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank loans and overdrafts totalling gl93.4m (1987 S90.?m) and equivalent amounts of 

liquid lunds are not reflected above, as the banks concerned have rights ol set - oll in 

respect ofthese balances. Of the total Croup borrowings, S6.gm (l9B? S0.irn) is secured - 

the increase being due to acquisitions. 

Commercial paper borrowings are supported by a long-term loan faciliry Accordingly, 

such borrowings have been classified as long-term. 

Certain of the loan stocks can be redeemed at a premiurn before the final dates quoted. 

A S200m Committed Multi-Option Facility, syndicated on 5 March 1986, was terminated 

on 2B May l9B8 and replaced with a l0 year S450m Committed Facility commencing 2g 

April 1988.

Between one and two years 

Between two and five years 

Alter five years - by instalments 

- other 

 

 

 

 

 

 

 

 

 

 

 

 

r5. OTHER cREDfToRs: amounts falling due within one year 

 

 

 

 

 

Trade creditors 

Customer deposits and rentals in advance 

Royalties and fees payable 

Amounts oved to subsidiary companies 

Amounts oved to related companies 

Corporation tax - United Kingdom 

- overseas 

Other taxes including VAI and social security costs 

Dividends 


Accruals and deferred incorne 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16. OTHER CREDITORS: amounts falling due alter more than one year 

 

 

Amounts owed to subsidiary companies 

Corporation tax - United Kingdom 

- ove$eas 

Accruals and deferred income 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excess of accumulated taxation allowances 

over corresponding depreciation provided 

against tangible fixed assets 

Other timing differences 

Advance corporation tax

Movements during the year: 

At 31 March 1987 


Arieing during the year 

Other movements 

 

 

 

 

 

 

 

 

 

Deferred taxation which has not been provided comprises the following: 

Excess of accumulated taxation allowances 

over corresponding depreciation provided 

against tangible fixed assets 

 

 

 

 

 

 

 

 

 

No provision has been made for further taxes which could arise if subsidiary or related 

companies are dieposed of at or above their present net asset value or if overseas 

companies werr to rcmit reserves to the UK in excess of that anticipated in these 

accounts: it is considered impracticable to e6limate the amount of such taxes. 

r8. OTUER PROVISIONS FOR LIABILITIES AXD CTIARGES 

Major 

reorganisa- Vananly 

Pensions tio"n costs and other 

Total 

Group 



Acquisition of busineeses 


Reclassifications 

Provisions utilised 

Charged against: 

profit before taration 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company 


Acquisition of businesses 

Reclassifications 

Provisione utilised 

Releaeed against: 

profit belbre taxation 

extraordinary items 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

covered by the Croup's lunded schemes. 

(ii) The warranty provisione include the estimated cost of guaranteed allersales service,

Authorised 

Ordinary Shares of 25p each 

7olo Convertible Redeemable 

Second Crrmrrlative Prelerence 

Shares 1992/99 ofSI each 

3.50/o Curnulative Prelerence 

Shares o{ SI each 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nominal 

Number Value 

Premium 

Ordinary Shares in issue: 

At 3l March l9B7 

Shares issued in the year: 

On acquisition oli 

Vallances 

Rent-A-Center 

JEL 

On conversion of: 

7olo Convertible Bonds 

70lo Redeemable Prelerence Shares 

On elections under Scrip Dividend Scheme 

On exercise of Options: 

Executive Scheme 

Savings Related Scheme 

Share issue expenses 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7% CONVERTIBLE REDEtrMABLE SECOND CUMULATIVE PREFERENCE SHARES T992l99 

In October of each of the years 1988 to 1992 inclusive, holders of the 70lo Convertible 

Prelerence Shares have the right to convert all or any of such Shares into fully-paid 

Ordinary Shares of 25p each at the rate of 1.002 Ordinary Shares lbr every fbur 70lo 

Convertible Preference Shares (subject to adjustment in respect of Shares issued under 

the Scrip Dividend Scheme). The Company is entitled to redeem the ?0/o Convertible 

Preference Shares at par alter 1992 and must so redeem on 3l December 1999 any such 

shares remaining in issue. On redemption, the 70lo Conve*ible Prelerence Shares are 

converted and reclassilied and form part of the Ordinary Sha re Capital. 142,443 7o/o 

Convertible Prelerence Shares were converted on application of holders with elfect liom 

3l October 1987. The conversion was dealt with try means of redemption out of the 

aggregate proceeds o{ an issue of 35,682 Ordinary Shares for 9142,443 in cash. 

7% CONVERTIBLE GUANANTEED BONDS 1988 

US$63,000 Bonds, convertible into Ordinary Shares at a price (after adjusting lbr rights 

issue) of 348p per share and a lixed exchange rate of US$1.B8525, were outstanding at 

31 March 1988. The Bonds are convertible at any time up to ll July 1988 and any Bonds 

not converted lall due lbr redemption on 15 July 1988.

fParallel Options were granted in October 1984 under the terms of the 1984 Option 

Scheme at 4l8p per share; such options can only be exercised as an altemative to 

options previously granted, 

*Adjusted for rights issue. 

#Nurnber of Ordinary Shares over which optiono were granted during the year.

fuising on acquisition of 

Rent-A-Center, Inc. 

Goodwill written off 

Retained profit for year 

 

Prolit 

and loss 

Croup 

 

 

 

Profit 

Company 

Other and loss Other 

reserves account reEerves 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group resewes include 930.4m (1987 S24.lm) in respect of related companies. 

On 3l August 1987 53,452,619 shares were issued for a consideration of!371.5m. In 

accordance with SlSl ofthe Companies Act 1985, the premium arising on the issue was 

taken to a newly-created merger reserve against which goodwill on acquisitions has been 

written ofl. 

 

2I. MINONITY INTERESTS 



Minority interest in profits 

Auction preferred stock 

Dividends 

 

 

9m 

 

 

 

 

 

 

 

 

 

In June 1987 THORN EMI America Finance Inc, a new, wholly owned subsidiary was 

registered in Delarvare, USA. The company has in issue 200 preference shares of US$l 

million each. The preference dividend rate varies (predominandy with prevailing interest 

rates) and is set every 7 veeks at an "auction" at vhich the shares are also traded. 

The preference share capital ofTHORN EMI America Finance Inc. is included in 

minority interests as shown above, Preference dividends paid are charged to minority 

interests in the profit and loss account. 

Funds raised from the issue of this Auction Preferred Stock have been loaned to other 

Group subsidiaries. Repayment of the loans is guaranteed by the Company.

Group 

 

 

Capital expenditure 

Contracted but not provided for in the accounts 

Authorised by the Directors, but not contracted 

35.8 

42A 

 

34.5 

13.9 

As part of the sale of the Ferguson division, a long-term Supply Agreement was entered 

into by the UK rental businesses in respect of some of their colour television and video 

recorder requirements over periods of up to five years from 3l March 1987. 

Lease commitments 

There were net obligations under lilance leases 

as follows: 

Payable in first year 

Payable in the second to lifth years inclusive 

 

There were annual commitrnents under operating 

leases as lbllows: 

Land and buildings 

Expiring in the first year 

Expiring in the second to fifth years inclusive 

 

Plant, equipment and vehicles 

Expiring in the first year 

Expiring in the second to {ifth years inclusive 

Expiring after the fr{th year 

5t.7 

35.0 

3.9 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99.7 

10.0 

18.0 

5 t.l 

79.t 

 

 

 

l5.l 

23. CONTINGENT LIABILITIES 

There were the lbllowing contingent liabilities at 3l March, 1988; 

(i) A claim has been made against a former subsidiary in respect of a purported 

anangement to produce a lihn some years ago. If the claim, which is being vigorously 

defended, were to be successful, a conesponding amount of the consideration received 

on sale of the subsidiary would become refundable, Based on consultation with legal 

counsel, other claims arisirg {rom [tigation are not considered likely to result in any 

liability significandy in excess of provisions in the accounts. 

(ii) Guarantees, bills discounted and other contingent liabilities totalling 935.8m 

lbr the Group. 

(iii)Guarantees by the Company totalling gl44.3m in respect of subsidiaries' liabfities 

included in the Group accounts. 

Pursuant to the provisions of the Irish Companies (Amendment) Act 1986, the Company 

has guaranteed t}te liabfities oI certain of its Irish subsidiaries which exempt those 

companies liorn the rcquirement to file their annual accounts in Eire.

24. PENSION ARNANGEMf,NTS 

A significant number of employees in the UK belong to the'IHORN I.lMl Pension Fund 

which is seH-administered and extemally funded. Employees overseas belong to pension 

schernes administered and financed in accordance with local practice and legislation; 

some of these are internally {unded and the amounts set aside are shown as prorisions 

(note lB). 

Contributions in all cases are made in accordance rith actuarial recommendations in 

order that benelits can be met as and r,vhen they fall due. 

An actuarial valuation of the UK Pension Fund was made at 5 April 1985. This 

disclosed a surplus which has been appropriated in part by improvements in benelits and 

in part by a reduaion in the funding rates, 

For the period I April ]986 to 31 March 1989 contributions to the lund by the Company 

were set at 2.50/o o{ contributory pay. 

25. DIRECTORS' INTERESTS 

The beneficial interests of the I)irectors in the share capital of the Company were as 

rollows: 

",T.T,l"l:it 

 

Options 

Options 

Sir Graham Wilkins 

C G Southgate 

M R An€us 

Sir William Barlow 

J D F Barnes 

H J Maxmin 

T Mayer 

V B Menon 

R H H Nellist 

Sir Ian Trethowan 

Ordinary 

Shares 

Over 

Over 

Ordinary Ordinary Ordinary 

Shares Sharcs Shares 

 

 

 

 

 

 

 

 

 

 

 

fincludes 

Ordinary Shares under the Savings Related Share Option Scheme. 

In addition to the holdings shown above, throughout the year to 3l March 1988, 

Sir Graham Wilkins, Dr H J Maxmin and Mr R H H Nellist were interested in respectively 

406; 100; and 100 70lo Convertible Redeemable Second Curnulative Preference Shares 

1992/99. 

No hansactions subsequent to 3l Mareh 19BB have been notilied. 

Iixcept as stated above, or in respect of a contract ol service, neither the l)irectors nor 

any members of their {amilies have during the year ended 3l March 1988 or in the period 

since that date, had any material interest in any contract with the Company or a 

subsidiary.

RESUIIS 

Tirmover 

Depreciation - property, plant" etc 

- reotal equipment 

Profit be{ore finance charges 

Finance chalges 

Profit before taxation 

Thxation 

Profit before extraordinary items 

Eamings per Ordinary Share 

Dividends per Ordinary Share 

 

 

 

 

 

 

 

 

 

 

 

*After adjustment for tJre bonus element of the 1984 rfthts issue. 

EIIPLOYMENT OF CAPITAL 

Property, plant, equipment 

and vehicles 

 

Rental equipment 

 

Fixed aseet investments 

 

Net assets of fiaancing su-bsidiary 

Stocks and debtors 

 

Creditors and provisions, excluding 

 

 

 

 

CAPITAI, EMPI,OYND 

Share capital 

Share premium 

Reserves 


Net borror,vings 

Deferred taxation

Erecutive Committe€ 

uK Fentrr and Retait 

M ke Penery Cornpuler 

lan GraJl [,,lanag ng D rector 

R!mbeows, Cha rman UK 

John Taylor Delence Systems 

David Slockley [,4anagrng 

Don Ty2ack, THQRN EMI 

Bob Ne sl 

John Bamsql DEB 

Brlan Coe, Rad o Rentas 

Gordon Co rns, Fesdenl 

Music Publbhins $brldwide 

Rob n Charllon, Company 

Secretary and Log slrcs 

G.aham Floughton Brown,ry 

Telecommunicrtio.s 

ltu n Robinson, Pres dent 

Lighting 

lan Chrstians, Slralegic 

Slraron Clrley, nlernalona 

Fetrilins 

Sluan [,lcA sler, Managing Directoi 

rl\4VGroup 

N,lanaging Dneclor 

THORN Lighling 

Harn slr Bryce Manag ng 

Bev Hesop Prann n9 and 

Bnan McLaugh n, HMV 

lvanag ng D reclor 

Bus ness Developmenl 

Peler Hayman, Corporale 

lnternatioh6l RentalE 

DepulyFnanceDreclor 

Don Young, Personne and 

Orqan sal on Development 

Ron Campbell, Manaqtng D reclor 

Holser Blarnl, Fona, Denmark 

Manag ns D reclor 

Joe [4a ey Dslibuton and 

Waller E Gales, Pres denl and 

Chier Execul ve Oliicer 

E l ilusic librldwide 

Frnanc a Ana ysls and Conlrol 

Ahaskar Menon, Cha rman 

Dav d Sm lh, nlernalona 

Tom Mayer, Chiel ExecLrhve 

John Bnghl, Eng neer n9 

.llm F leld, Presidentand Ch et 

Mike Sm rh, 

Barry Bu ord, Purchasinq 

Jim Huqhes Personne and 

ncandescent Lighl ng 

BobSreele nrernarionar 

Juggy Pandil, Frnance and 

Co I Hodgson, Finance 

Mrck Slr nger, Frnance 

B chard FLrrst, Lega and 

Gly Ma(ioll Bus ness Afla rs 

Trm Parke! [,lanaging D rector 

Tessa Pr chard, Assslanl 

Coiin Woodley Corporale 

P.rsonn€land Employee 

Bob Elrer, Malco 

Peler lvlounl, F re App ances 

Ken Sm h, Bu d ng 

lvlanagernent systems 

lnternational Cla$ic€l 

ilarloting 

lntern6tional Ofiiceg 

THOBN EMI Australia 

Sn John Mason, Cha rman 

John Siater, Managing Dtreclor 

J rn Parker, Finance and 

NLrgh Hacket, Fire and 

Don Zimmermann, Pres denl 

TTIOBN E I 

Manasernenl Development 

Slephen Hall, Busrness 

Ope.ations, E & I 

Tony Cripps, Aeslona Manager 

Gareth Boberrs FRS, D recror 

Ken Gray Execulive Chatrman, 

THORN Solh{ar€ and Soflware 

Bichard B!rket, Manag ng 

Joe Sm h, Presidentand Ch el 

T80Rt{ E t 

Hong Kong Oftice 

Peler Robrnson, Acling 

THOBN Home E eclronrcs 

Chr s \^/ood, Dalasolve Group 

and THORN EMlCompuler 

UK.nd lreland 

THORN EI'I 

Jim Mdm n, Cha rrnan and 

R!pe.l Peny, Managing 

Marsha Young Busrness 

Phr ppa Lllrnoden, Personn€l 

John Hakes, Managrng 

Dav d Arnold, Eleclro Optics 

John Grililhs, Electron Tubes 

Edgar Ha , Electron c Syslems 

Georfrey Hou9h, Nava 

AlexE Rote ,lvlanag ng 

Colin Martrn, Manaq n9 

THOFI EMI No.th Ameri€ 

Holdings lnc 

Jrm Maxrnin Presrdenl 

THOBN EUI 

Peler Paraskos, Syslron 

Ron Teh, Genera Manager 

TTIORN EIII

Jam$ Msxmin EA, PhD 

Cha rman and Chrel Elecll!e, Home 

Appo nled 10 Board rn 198,1 Aso appo nted 

Presrdenl TllOBN EMI Nortl' Amer ca Ho d ngs, 

Apr 1988 Jo ned 1983 as Ch ei Exec!1ve oilhe 

Te elLson Renlals and Reta Group Chel 

Execulvevovo Concess onares 1978 83. 

Marketrlr! D reclor 1973-78 Prevro!s1y 

Market ng,'Pann ng D reclor Lex Hole s and 

wlh Lex Servce Gro!p and Urileler 

Appo nled Cha rr.an and Ch elErecllrve n 

July 1985,lre r€ nq! shed the Ch el Execulve 

roe n.lLr y 1987 A no. execllv€ D rector s nce 

1978. he became non exec!1!e Deplly 

Cha rman 1984 Cha rman and Ch ei Erec!1!e 

Beecham Gro!p 1975 84 now Honoral 

Presdenl Non execltve DeputyCharnra. 

Rowntree itayl988 Presdentol llre Adverls ng 

Assocaton olGreal Br la n and Clratrrna. ol 

CC Lln led K ngdom Cha rman oi Co!i. ol lhe 

Schoo olPh€rmacy olLondo. Un versty 

fom Mayer CBE, F,Eng 

Ch el Exec!lve Techna ogy GroLrp 

Appornted 10 Board n Febrlaryl987 Jorned 

1981 as Cha rman and Manag ng D reclor 

THORN ENllEeclron cs Appo nled AssocLale 

D reclor THORN EM n 1985 and Ch er 

Elecltve THOBN Ef,l Technoog!on ls 

lormaran n Apr 1986. Pres denl ol Soc el, oi 

B,lsr Aerospa.e Compan es MeFrber ol 

N.l... Fre.lr.n.sCo!n. Pasl Pres de.l.l 

ELectron. Eng neer ng Assocalroi and Un ted 

K nq.lom nduslra Space Comm lle€ 

A.po nled to BoarC i984. Mana! ng D recto' 

Apr 1985 and acd I ona !, Ch el Execll!eJ! y 

1987 Formed Sorlware Sc efces i 1970 on,ls 

sae i 1979 to BOC, ne beceme Ch elExecLrlLve 

ot BOC Compller Ser!ces D vson Jo ned 

THOFN EM .1983lo ow ng tsacqu slon ol 

Soilware Sc,en.es and Dalasolve Becanre a 

non'ere.!1!e D rector ol L!.as ndLrslr es n 

June r987 

Bha3kar Mson MA(Oron) 

Cha rman andChrelExe.llve EM M!s. 

Fe appo nled ro llre Board n March 1988 F rst 

appo nled a D reclor n Decernberl9T9 lre 

resqned from llre Board n Janua'y1982 al h s 

own reqresl becom ng Asso. ale D re.lor 

Jo ned EM n 1956 Appo nled D rector EM Lld 

1973 Cha rman and Ch'elExec!lve EIV Musr.

Non'execllve D reclor s ncel984 when 

appo nled 1o presefl pos I on oi chatrman. 

B CC. Or g na y appolnled to Board,. 1980 

hewas Cha rman ol the THOFN EM 

Eng neenng Gro!p Prev ousyChatrman 011he 

PostOil ce and Cha{man oi RHP Gover.or ol 

London Bus ness Schoo iCha rman 

Robert Nellist MA(Oxon), FCA, JDipMA 

Appo n1€d Frrance D reclorl9S5 Jo ned 1984. 

Prev ous y DeF!1y F nance D reclot The Pesse! 

Company, D reclor olAccounting Fo s noyce 

r977 79. Gio!p F nance D rector, Hesla r 

197111 

David Brrnes CaE 

Appo nted lo Eoard Febrlary r987. Executrve 

D reclor ot C A so D reclor oi C nslran.e 

Hod ngs, Cha rmar oi Pharnraceutcas 

E.onom'c Deve oomentComm ltee olthe 

N.lona Econom c DeveoDmenl Ofice and a 

V ce-Presdenl oi lre Thames Va ley Hosp ce. 

MichaelAnsus BSc 

Appo nred lo Board Janlarylgaa Cha rr.an ol 

Un ever Non erecllve D reclor 01Y/hnbread & 

Cornpan! PLC;Tr!s1ee ol the Conierence Board 

n New York:Jo nl Cha rnran, Nelherands- 

Br I slr Chamber oi Commerce 

Appo nled 1o Board 1986 Chatrman ofThames 

Telev s on and Cha rman llorserace Ben ng 

Lely Board D r€clor ol T mes Newspaper 

Hod nqsiTruslee, A,l,sh MuseLrm and 

G yndebo!rne Opera. D reclor Genera BBC 

19TT a2

Holdings 

 

 

 

 

 

Shareholders Ordinarv Shares held 

 

 

 

 

 

 

 

 

 

 

 

Analysis of shareholders 

Shares held Ordinary Shares o/o 

Individuals 

Banks and nominees 

Insurance companies 

Pension funds 

Other corporate bodies 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL CAIENDAIT 

Interirn results - announced December 

l\nal results - announced June 

DIVIDEND PAYMENTS 

On Ordinary Shares: 

Interim paid - 4 March, 1988 

Final to be paid - 7 October, l9B8 

On 3.50/o Preference Shares: 

3l March and 30 September 

On 70lo Convertible Preference Shares: 

30 June and 31 December 

Report and Accounts published July 

Annual Ceneral Meeting held September 

INTEREST PAYMENTS 

On Loan Stocks: 

7%0/o Unsecured loan Stock ]989/92 

8%0/o Unsecured Loan Stock 1989/94 

5 o/o Unsecured T,oan Stock 2004/09 

7%0/o Unsecured loan Stock 2004/09 

7 May and 7 November

THORN EMI plc 

Annual General Meeting l98B 

4THORN EMr 

This d,ocument is important and requires your immed,iate attention. 

If you are in any dnubt about uhat action to take, you should, 

consuh your stockbroker, banlt manager, solicitor, accountant or 

other professional ad,uiser immediately. If you haae sold all your 

holding of 3.5 per cent. Cumulatiue Preference Shares and,lor 

7 per cent. Conuertible Red,eemable Second Cumulatiae preference 

Shares 1992199 andlor Ord,inary Shares in THORN EMI plc please 

send this d,ocument with the accompanying form(s) of proxy to the 

stockbroker or other agent through uhom the sale uas fficted, for 

trarumission to the purchaser. 

t Cho,irman's Letter: pages 2-5 

t Appendix: pages 6-9 

t Notice of Meeting of the holders of the 3 .5 per cent. 

Cumulatiue Preference Shares: page 10 

t Notice of Meeting of the holders of the 7 per cent. 

Conaertible Redeemable Second Cumulatiue 

Preference Shares 1992199: page 11 

t Notice of Annuctl General Meeting: pages 12-15

THORN EMlPlc 

(Regisrered in England No 229231) 

To the holders ofthe 3.5 per cent. Cumulative Pre{erence 

Shares, of the 7 per cent. Conve(ible Redeemable Second 

Cumulative Preference Shares I992/99 and ofthe Ordinary 

Shares and, for information only, the holders ofthe 

Unsecured l-oan Stocks. 

Registered Office: 

4 Tenterden Street 

london Wl A 2AY. 

l8 July, 1988 

Dear Shareholder. 

ANNUAL GENERAL MEETING 1988 AND SEPARATE CLASS MEETINCS 

The Annual General Meeting is to be held on 8 September, 1988 and the Notice of Meeting 

is set out at the end of this letter rather than in the Annual Report as in past years' 

A further departure {rom past practice is that the items of special business set out in 

the Notice are to be considered at the Annual General Meeting and not, as in recent years, at 

an Extraordinary General Meeting held either beiore or after the Annual ceneral Meeting. 

The items of special business, summarised in paragraphs l-5 (inclusive) below, are 

described in detail in the Appendix to this letter (set out on pages 6 to 9 inclusive)' 

r. SIIARE CAPITAL 

There are two resolutions which fall to be considered under this heading. 

The first provides for the renewal ofthe authority of the Directors to issue further 

shares in the capital of the Company, in certain circumstances, up to an amount equal to the 

unissued pat of the authorised share capital (Resolution 5 on page l2). 

The second relates to the renewal oI the authority of Directors to issue, within certain 

prescribed limits, further shares for cash (Resolution 6 on page 12 and 13). 

2. PURCIIASE OF OWN SHARES 

Your Directors are of the opinion that it is in the interests of shareholders in a quoted 

company for that company to have power to purchase its own shares. Accordingly, they are 

recommending that this power be made available for use by the Company in buying its own 

Ordinary Shares in certain circumstances and up to a maximum prescribed limit. 

This power requires the approval of holders of the 3.5 per cent. Cumulative Preference 

Shares of f I each (the "3. 5 per cent. Preference Shares") and of the 7 per cent. Convertible 

Redeemable Second Cumulative Preference Shares lV)2199 of Sl each (the "7 per cent' 

Convertible Shares") and of the Company in General Meeting. (See Notices of Class 

Meetings on pages l0 and I I and Resolution 7 on page l3). 

In addition, the approval of the holders of the Warrants to subscribe for Ordinary 

Shares in the Company (rhe "Warrant holders"), which formed part of the issue of the 

77e per cent. Bonds due 1992, is required. 

Although your Directors would not wish at the present time to exercise the power to 

purchase any of the Ordinary Shares' they consider that it is desirable to have the flexibility 

to do so at the appropriate time.

3. REDUCTION OF SHARE CAPITAL 

The 460,000 3.5 per cent. Preference Shares were created during the period 1936 to 1948 

and are something ofan anomaly today in view of the total capitalisation of the Company. 

Your Directors consider that action should be taken with the approval of the High Cout in 

accordance with the Companies Act 1985 to cancel the 3.5 per cent. Preference Shares in 

exchange for the payment by the Company of 78p per Share plus accrued dividends. 

This action, in addition to requiring the approval of the Company in General Meeting, 

requires the separate approvals of holders ofthe 3.5 per cenl- Preference Shares and of the 7 

per cent. Convertible Shares. (See Notices of Class Meetings on pages l0 and I I and 

Resolulion 8 on pages l3 and 141. 

4. SCRIP DIVIDENI] SCHEME 

It is proposed that the authority ofthe Directors to offer a scrip dividend alternative to 

Ordinary Shareholders be renewed in respect ofthe accounting reference period ending on 

3l March, 1989. (Resolution 9 on page l4). 

5. EMPLOYEE SIIARE OPTION SCHEMES 

The two share option schemes operated by the Company have, in the opinion of the 

Directorc, achieved their objectives by giving employees a greater interest in the future 

prosperity ofthe Company and encouraging an identity of purpose with shareholders. 

To enable the schemes to continue to operate effectively, it is proposed to bring the 

overall limits on the number ofshares over which options can be granted into line with the 

cunent issued Ordinary Share capital of the Company. In addition, it is proposed to remove 

the limits imposed on the schemes following the introduction of the INMOS Share Option 

Schemes in 1984, since the l,rtter are now effectively inoperative, and to provide for the 

grant of replacement options under the 1984 Executive Share Option Scheme. (Resolurion 

l0 on pages l4 and l5). 

MEETINGS OF SIIAREHOI,DERS 

The approval of shareholders to the items of general and special business is required to be 

given by the passing, as applicable, of Extraordinary Resolutions at separate Class Meetings 

ofthe holders ofthe 3.5 per cent, Preference Shares and ofthe 7 per cent. Convertible 

Shares and by the passing of the relevant Resolutions by the Company in General Meeting. 

As refened to above, separate Class Meetings of the holders of the 3.5 per cent. 

Preference Shares and of the 7 per cent. Convertible Shares wilt be held on Wednesday, 

3l August, 1988 commencing at 3pm and 3.45pm respectively at The Dorchester, Park 

Lane, [,ondon Wl. 

At each of the separate Class Meetings lhe following Extraordinary Resolutions will be 

put: 

Extraordinary Resolution Numbered I will seek class approval for the 

purchase and cancellation by the Company of up to 20,?48,202 Ordinary 

Shares; and 

Extraordinary Resolution Numbered 2 will seek class approval for the 

reduction by the Company of its share capital by the cancellation ofall the 

3.5 per cent, Preference Shares.

'Lhe Annual General Meeting for 1988 will be held on Thursday, 8 September, 1988 at 

the London Marriott Horel, l0 Grosvenor Square, London Wl at I l.30am. At this Meeting 

all Members, including the holders of the 3.5 per cent. Preference Shares, will be entitled to 

attend and vote. 

Amongst the Resolutions to be put to the Annual Ceneral Meeting will be: 

- 

- 

Resolution 7 (a Special Resolution) which will seek approval of Members for the 

purchase and cancellation by the Company ofup to 20,748,202 Ordinary Shares; 

and 

Resolution 8 (a Special Resolution) which will seek approval of Members for the 

reduction by the Company of its share capital by the cancellation of all the 3.5 

per cent. Preference Shares. 

Shareholders (and in particular the holders ofthe 3.5 per cent. Preference Shares 

and of the 7 per cent. Convertible Shares) should note that Resolution B (Reduction 

of Share Capital) set out in the notice of the Annual General Meeting is conditional 

upon the passing of: 

(i) Extraordinary Resolution Numbered I to he put to each Class Meeting; 

(ii)Extraordinary Resolution Numbered 2 to be put to each Class Meeting; and 

(iii) Resolution 7 (Purchase of Own Shares) to be put to the Annual Ceneral Meeting. 

ACTION TO BE TAKEN BY SHAREHOI,I)!]RS 

Enclosed with this letter are Form(s) of Proxy for use at the Class Meetings referred to above 

and at the Annual General Meeting itself. Please complete, sign and return the appropriate 

Form(s) of Proxy as soon as possible in accordance with the instructions printed thereon, 

whether or not you intend to be present at the relevant MeetinS(s). 

The appropriate Forms of Proxy are as follows: 

Orange-lbr use by holders of i3.5 per cent. Preference Shares at the separate Meeting of 

such holders. 

Grey-for use by holders of 7 per cent. Convertible Sharcs at the separate Meeting of such 

holders. 

White-for use by holders of 3.5 per cent. Preference Shares, 7 per cent. Convertible 

Shares and Ordinary Shares at the Annual Ceneral Meeting ofthe Company. 

'fhe quorum required for the separate Meetings of the holders ofthe 3.5 per cent. 

Preference Shares and of the 7 per cent. Convertible Shares is Members holding or 

representing by proxy one-third in nominal amounl ofthe relevant classes of issued Shares. 

lf the necessary quorum is not present then the relevant Meeting will stand adjourned to the 

same day in the following week at the same time and place. [f at any adjourned Class 

Meeting such a quorum is not present, those holders of such class of shares who are present 

in person or by proxy shall be a quorum. 

Shareholders are strongly urged to complete th€ appropriate Form(s) of Proxy and 

return them to the Company's Registrar, National Westminster Bank PLC, 

Registrar's Department, Caxton House, Redcliffe Way, Bristol BS99 ?NH so as to 

arrive not later than 48 hours before the time fixed for the relevant Meeting.

The return of the appropriate Form of Proxy will not prevent a shareholder from 

attending the relevant Meeting and voting in person if he/she is entitled to do so and so 

wishes. 

DOCUMENTS FOR INSPECTION 

Copies ofthe following documents will be available for inspection at the offices of Rowe & 

Maw, 20 Black l'riars Lane, tondon EC4V 6HD at any time during usual business hours on 

any weekday (Saturdays and public holidays excepted) up to and including the day of the 

Annual General Meeting: 

(a) the Memorandum and Articles of Association of the Company; 

(b) the published accounts of the Company and its subsidiaries for the two years 

ended 3l March, 1988; 

(c) lnstrument by way of Deed Poll executed by Banque Indosuez, Luxembourg and 

dated l4 January, 1987 pursuant to which the Warrants to subscribe for Ordinary 

Shares forming part ofthe issue oftheT3/eper cent. Bonds due 1992 are 

constituted; 

(d) copies of the existing Rules of the Savings-Related Share Option Scheme and the 

1984 Executive Share Option Scheme and of the Rules of each such Scheme as 

proposed to be amended; and 

(e) letters ofconsent from Hambros Bank Limited and Rowe & Pitman Ltd. referred 

to in the Appendix in Section 3 on page 8. 

RECOMMENDATI0N 

Your Directors believe that the proposals described in this document are in the best 

interests of the Company and its shareholders. Accordingly, they unanirnously 

recommend you to vote in favour of the resolutions to be proposed at the Meetings as 

they intend to do in respect of their own shareholdings. 

Yours faithfully, 

 


Chairman

T. SHARE CAPITAI, 

The general authority given tr.r the Directors at the 1987 Annual Ceneral Meeting to allot 

shares, in cedain circumstances, up to an amount equal to the authorised share capital of 

the Company then unissued, expires on l0 December, l9B8 and it is proposed to renew this 

authority so as to expire at the conclusion ofthe Annual Ceneral Meeting ofthe Company to 

be held in 1989. 

An Ordinary Resolution is required for this purpose and the text is set out in 

Resolution 5 of the Notice of Annual General Meeting on page 12. 

The general authority referred to above does not of itself permit the Directors to issue 

shares for cash except in the case of a rights issue made available to all holders of Ordinary 

Shares (i.e. statutory pre-emption rights). Therefore, to overcome the problems associated 

with fractional entitlements and issues to overseas holders which are prohibited by relevant 

local laws and to permit the issue of shares for cash otherwise than to existing shareholders, 

it is necessary to seek approval to disapply the statutory pre-emption rights. 

At the l9tl7 Annual General Meeting, the Directors were authorised by Special 

Resolution to disapply the statutory pre-emption rights irr respect of {ractions and overseas 

holders and in accordance with the limits prescribed by The Stock Exchange and the 

lnvestment (lommittee of the Association of British lnsurers ("the ABI") to issue for cash 

Ordinary Shares equal to 2.57o ofthe issued Ordinary Share capital to percons other than 

existing shareholders. 

This year, in accordance with The Stock Exchange's most recent guidelines on 

Shareholders' Pre-emptive Rights, the Directors are seeking approval of shareholders to the 

disapplication of the statutory pre-emption rights in relation to the allotment of shares for 

cash to existing shareholders where shares cannot, for valid reasons, be offered to 

shareholders resident outside the United Kingdom, or where fractional entitlements arise. 

In addition, a disapplication is sought for issues for cash of up to an aggregate nominal value 

equal to 5% of the issued Ordinary Share capital to persons other than to exisl ing 

shareholders. 

A Special Resolution is required fbr this purpose and the text is set out in Resolution 6 

ol the Notice of Annual Ceneral Meeting on pages l2 and 13. 

2. PTJRCHASE OF OWN SHARES 

Background 

A company may, if authorised to do so by its Articles of Association, purchase its own shares 

provided that it has obtained the approval of shareholders in general rneeting. Article I I (b) 

of the Aticles of Association of the Company contains the necessary authority. 

The approval of Shareholders is required to be given by the passing of Extraordinary 

Resolutions Numbered I at separate Class Meetings o[the holders of the 3.5 per cent. 

Preference Shares and the 7 per cent. Convertible Shares and by the passing of Resolution 7 

(a Special Resolution) by the Company in ()eneral Meeting. (See Notices of separate Class 

Meetings set out on pages l0 and I I and of Annual Ceneral Meeting set out on pages 12 to 

l5 inclusive. ) 

The Board will not be able to exercise any authority to purchase its own Ordinary 

Shares granted to the Company by the Members in any general meeting or separate class 

meeting until such time as the consent of the Wanant holders has been obtained; this is in 

accordance with The Stock Exchange Regulations and pursuant to the Instrument by way of 

Deed Poll creating the same. Accordingly, the consent of the Wamant holders is being 

sought.

Taxation Consequences 

(i) Shareholders 

Purchases of Ordinary Shares by the Company will be made through The Stock 

Exchange. Accordingly, the rax position of shareholders will not be affected. A disposal 

by shareholders of Ordinary Shares will be subject to the usual tax liabilities. 

(i i) Company 

Except in respect of the part of the purchase price which represents a repayment of 

share capital, the sums which the company pays to purchase its ordinary Shares wi be 

treated as a distribution. To this extent, the company will have to account for advance 

corporation tax ("ACT"). ACT may, however, be offset against corporation tax 

(including deferred tax) on the profits ofthe Company. 

Proposal 

The authority which shareholders may confer upon the Company for purchasing its own 

shares must specify a maximum number of shares authorised to be acquired and determine a 

price range. 

It is proposed that the authority should be limited to a maximum of20,74g,202 

Ordinary Shares, representing not m ore than 7 Vz per cent. of the Company's issued 

Ordinary Share capital. 

The maximum price per Ordinary Share on any exercise o[ the authority would not be 

more than 5 per cent. above the average of the middle market quotations taken from The 

Stock Exchange Daily Official List tor the ten business days prior to making any purchase. 

The minimum price for any purchase is 25p being the nominal value of an Ordinary Share. 

The price in each case will be exclusive of any ACT payable by the Company and/or 

expenses. 

On 30 June, 1988 (the latest practicable date before the printing of this letter) the 

middle market quotation for an Ordinary Share derived from The Stock Exchange Daily 

Offlcial List was 657p. This compares with a high for the past twelve months of B06p per 

Ordinary Share as derived from The Srock Exchange Daily Official List up to ilO June, l9BB. 

Details of purchases will be notified to The Stock Exchange by l2 noon on the business 

day following dealing and to the Registrar of Companies within 28 days of purchase and will 

be disclosed in the Annual Report of the Company. All Ordinary Shares purchased will be 

cancelled. 

The authority will (if granted.) expire on 30 September, 1989. However it is the Board's 

present intention that the necessary resolutions to renew the authority will be proposed at the 

1989 Annual Ceneral Meeting and annually thereafter and at relevant Class Meetings. The 

authority of the Warrant holders will be sought and will be valid until redemption o{ the 

Bonds in 1992, subject to there not being any material issue of Ordinary Shares in the 

intervening period. 

'fhe Directors will only implement such purchases, which will of course reduce the 

issued share capital of the Company, after careful consideration and provided that the 

purchases would result in an increase in anticipated earnings per share. Furthermore, 

account will be taken ofappropriate gearing levels and the overall financial implications for 

the Company. 

Implementation of the proposed power to purchase the Ordinary Shares of the 

Company should not adversely affect the rights of conversion into Ordinary Shares of the 

holders of the 7 per cent. Convertible Shares or the rights of the Warrant holders to 

subscribe for Ordinary Shares. The Directors believe that any purchases of Ordinary Shares 

which were to be made under the authority would be beneficial to the holders of the Z per 

cent. Convertible Shares and to the Warrant holders by reason of the improvement in their 

conversion or subscription prospects respectively. If the proposed authority were to be 

exercised in full at the share price on 30 June, 1988, Shareholders' Funds would be reduced 

by f136,315,687. 

3. REDUCTION OF SHARI,] CAPITAL 

If approval is given to the Company to make market purchases of its own Ordinary Shares, 

your Directors will recommend that the 3.5 per cent. Prelerence Shares should be cancelled 

and 78p for each of the 3.5 per cent. Preference Shares be returned to their holders in 

respect of the paid-up capital on the 3.5 per cent. Preference Shares, together with accrued 

dividends to date of payment.

There are 460,000 3.5 per cent. Preference Shares in issue, all of which are fully 

paid. Their combined nominal value is J'160'000, compared with the 5132,534'718 

co-bined nominal value of the issued shares ol the two other classes- Cancelling the 3.5 per 

cent. Preference Shares would simplify the Company's capital structure, without 

significantly diminishing the Company's issued share capital. 

On 30 June, 1988 (the latest practicable date before the printing of this letter) the 

middle market quotation for a 3.5 per cent. Preference Share derived from The Stock 

Exchange Daily Official List was 50p. Within the previous twelve months the hiSh has been 

50p and the low has been 45p. 

In the circumstances your Directors propose that the repayment of capital, to be made 

on the cancellation ofeach 3.5 per cent. Preference Share should not be the full f,l of 

capital, but 78p plus accrued dividends to date of payment. The balance of the capital set 

free by the cancellation of the i3.5 per cent. Preference Shares will be relained by the 

Company. 

Hambros Bank Limited and Rowe & Pitman Ltd., advisers to the Company, consider 

the proposal to be fair and reasonable insofar as the holders of the 3.5 per cent. Preference 

Shares are concerned. Each ofHambros Bank Limited and Rowe & Pitman Ltd' have given 

and have not withdrawn their written consent to the issue of this document with the 

references to their respective names in the form and context in which they appear. 

To approve the proposal to reduce capital by cancelling the 3.5 per cent. Preference 

Shares and repaying a proportion of the paid-up capital, the Company's shareholders must 

pass Resolution 8 (as a Special Resolution) in the Notice of Annual General Meeting on 

pages 13 and 14. The separate class approval of the holders of the 3.5 per cent. Preference 

Shares and of the ? per cent. Conveflible Shares is also required, as in the case ol the 

proposal to grant authority to purchase Ordinary Shares. The Extraordinary Resolution to be 

passed at each of the separate Meetings of those holders is Resolution Numbered 2 in the 

relevant Notice o{ Meeting (on page l0 in the case of the holders of the 3.5 per cent. 

Preference Shares and on page I I in the case of the holders of the 7 per cent. Converlible 

Shares). 

'Lhe proposal to reduce share capital also requires conlirmation of the Court, In the 

event that the requisite approvals are obtained, your Directors will apply to the Court for an 

order confirming the reduction. The reduction, if confirmed, will take effect on the 

registration of the Order of the Court by the Registrar of Companies. This is expected to take 

plrce during th" {utumn ol l9BB. 

The reduction in share capital will constitute a disposal by shareholders of their 3.5 

per cent. Preference Shares for capital gains tax purposes. However, there will he no 

distribution for income tax purposes because the amount to be repaid by the Company to 

shareholders will be less than the amount paid up on the 3.5 per cent- Preference Shares. 

4. SCRIP DIVIDEND SCHE]\,TE 

The Scrip Dividend Scheme which enables Ordinary Shareholders to elect to receive new 

Ordinary Shares in lieu of a cash dividend has continued to be of interest tu eerlain 

shareholders. 

Accordingly, it is proposed that shareholders be requested to renew the authority of the 

Directors to offer a scrip dividend alternative to Ordinary Shareholders in respect of both the 

interim and linal dividends for the accounting reference period ending on 3l March, 1989. 

An Ordinary Resolution is required for this purpose and the text is set out in Resolution 9 of 

the Notice of Annual General Meeting on page 14. 

5. EMPI,OYEE SHARE OPIION SCHEMOS 

The two schemes operated by the Company under which employees may be granted options 

to subscribe for Ordinary Shares are the Savings-Related Share Option Scheme ("the SAYE 

Scheme") which makes share options available to most of the Group's UK employees and the 

1984 Executive Share Option Scheme ("the 1984 Scheme") which makes share options 

available to selected executive directors and senior executives, 

To enable the schemes to continue to operate effectively it is proposed to amend them 

in two respectsi-

(i) Overall Scheme Limits 

Ir is proposed to increase the limits on lhe total number of shares over which options may be 

granted under the schemes to reflect the increase in the company's share capital since these 

limits were last revised in 1984 and to make the limits of the two schemes more consistent 

with one another. Following the proposed changes it will continue to be the case that the 

number of shares that may be placed under option at any time, when aggregated with the 

number of shares issued on the exercise of options granted in the preceding ten years and 

any shares remaining subject to such options, may not exceed l07o o[ the Company's 

Ordinary Shares in issue at that time. Of these, only half may relate ro options under the 

1984 Scheme and under the previous executive share option scheme adopted in l9Z3 (under 

which there are still some subsisting options although it is not intended to grant further 

options under that scheme). There will also be a limit on the maxinum number of Onlinary 

Shares available for each scheme of, in each case, l09o of the Company's current issued 

0rdinary Shares. 

ln addition to the limits contained in the rules of the Company's schemes, there is 

currently a fur-ther constraint on the number of shares available for the grant of options. This 

is because in I984, when shareholders approved the introduction of two share option 

schemes by INMOS International plc, the Board undertook to treat the limits in the 

Company's schemes as if the l0% limir applicable to all irs schemes were reduced to 9% 

with a proportionate reduction in the limit applicable to its executive share option schemes. 

The schemes established by INMOS International plc related both to that company and 

to its subsidiary companies. 'fhe operations of the INMOS companies have however recently 

been restructured as a result of which all the subsidiary companies of INMOS International 

plc have been transferred elsewhere within the Group. INMOS International plc, the shares 

ofwhich were used for the INMOS schemes, is now a dormant company. No shares have 

been issued under its schemes, nor will any further options be granted. In these 

circumstances it is considered to be inappropriate for the grant of options under the 

Company's schemes to continue to be constrained by the INMOS schemes. Accordingly, if 

the proposals to amend the Company's schemes are approved by shareholders, it is intended 

to cease to apply the undetaking given in 1984. 

(ii) The 1984 Scheme 

The limits on the value of shares over which an individual can receive options under the 

1984 Scheme were last amended in 1986 to distinguish between the limit designed to 

eomply with the ABI's guidelines on employee share schemes (which applies to all options 

other than those granted under the SAYE Scheme) and that required by the Inland Revenue 

(which applies only to options intended to qualify for tax reliefl. 

It is now proposed to amend the first ofthese limits to reflecl the recently revised ABI 

guidelines. The limit currently places a restriction of four times the individual's salary on 

the value of shares over which options may be granted in a ten year period. The amenderl 

limit will allow an employee who reaches the four times salary limit and then exercises some 

of his/her options to have them replaced by further options up to the four times salary limit. 

Such options will only be granted if, after taking into account an individual employee's 

pedormance, the Executive Share Option Scheme Committee ol the Board is satisfied that 

there has been sufficient improvement in the Group's perlbrmance in at least the two 

preceding years to justify their grant. The grant ofoptions under the 1984 Scheme will 

continue to require the approval of the Executive Share Option Scheme Committee, all 

members of which are non-executive Directors. 

The Directors believe that this proposal, if implemented, will make it possible to 

ensure that the Company's most senior execulives, on whom the success of the Group vitally 

depends, will have a continued incentive to remain with the Group and to strive for its 

improved performance. It also believes that within the revised limirs on the grant ol options 

under the Company's share option schemes referred to above, the Company will have 

sufficient shares available to maintain a programme for the grant of options including the 

grant of such replacement options where appropriate. 

The Ordinary Resolution to give effect to these proposals is set out as Resolution l0 of 

the Notice ofAnnual Ceneral Meeting on pages 14 and 15.

NOTICE OF MEETINC OF THE HOLDERS OF THE 

3.5 PER CENT. CUMULATIVE PREFERENCE SHARES 

NOTICE IS HEREBY GIVEN thal a separate Meeting of the holders of the 13.5 per 

cent. Cumulative Preference Shares ofJI each in the capital o{ the Company will be held at 

The Dorchester, Park Lane, l,ondon Wl on Wednesday 3l August, 1988 at 3.00pm for rhe 

purpose of considering and, if thought fit, passing the following Resolutions which will be 

proposed as Ertraordinary Resolutions:- 

EXTRAORDINARY RESOLUTIONS 

l. THAT this separate Meeting of the holders of the i3.5 per cent' Cumulative Preference 

Shares of f,l each in the capital of the Company hereby approves on behal{ ol the holders 

of all the Shares of the said class the purchase and cancellation by the Company of up to 

a maximum of20,?48,2O2 Ordinary Shares of25p each in its capital pursuant to the 

authority contained in Resolution No. 7 set out in the Notice dated l8 July, 1988 

convening the Annual Ceneral Meeting of the Company and sanctions on behalf as 

aforesaid the passing of the said Resolution and each and every modification or 

abrogation ofthe special rights and privileges attached to the Shares of the said class as 

is, or rray be, involved in the grant of such authority or in any such purchase and 

cancellation. 

2. THAT this separate Meeting of the holders of the 3.5 per cent. Cumulative Preference 

Shares off,l each in the capital ofthe Company hereby approves on behalfoflhe holders 

ofall the Shares of the said class the reduction by the Company of its share capital 

(involving the cancellation of all the 3.5 per cent- Cumulative Preference Shares of Jl 

each in its capital and the return to the holders of such Shares the sum of 78p per Share, 

and no more, and any arrears and accruals of the fixed dividend thereon) pursuant to 

Resolution 8 set out in the Notice dated lB July, 1988 convening the Annual Ceneral 

Meeting of the Company and sanctions on behalf as aforesaid the passing of the said 

Resolution and each and every modification or abrogation of the special rights and 

privileges attached to the Shares of the said class as is, or may be, involved in any such 

reduction. 

BY ORDER OF THE BOARD 

Robin Charlton 

Secretary 

lB July, 1988 

Regislered Oliice 

4 Tenterden Slreet 

Reglslered in England No 229231 

NOTES: 

Any ho der oi 3.5 per cenl Cu mu alive Preie rence Shares ol e i each enlilled 1o atlend and vote at lhe [,4eeling convened by the 

above noUce s enlitled loappoinl a proxyor proxeslo attend and voie nstead oi him/herand aproxy need nol be a t\,4emberol 

the Companv. The approp ate compleled lorm ol proxy must be lodged at the add ress shown on lhe form nol ess than 48 hou rs 

priorlothe Meet ng Complelion olthe appropriale form ol proxydoes nol prevenl a Shareholder irom atlend ng and votrng in 

person il he/she is entitled lo do so and sow shes

NOTICE OI' MEETINC OF THE HOLDERS OF THI' 

7 PT]R CENT. CONVERTIBI,F] REDEE}I,{BLE SECOND CUMUI-ATIVE 

PREFT]REN CI] STIARI]S I992199 

NOTICII IS HEREBY CIVEN that a separate Meering of the holders of the 7 per cent. Converrible 

Redeemable Second Cumulative Preference Shares 1V)2lV) of f,l each in the capital of the 

Company will be held at The l)orchester, Park Lane, I-ondon Wl on Wednesday, 

.31 August, 1988 at 3.45pm (or as soon therealier as the Meeting ofthe holders of the j|.5 

per cent. Cumulative Preference Shares of the Company convened for the same day and 

place shall have concluded or been adjoumed) for the purpose of considering and, if thought 

fit, passing the f

NOTICE OF 

ANNUAL GENI]RAL MEETINC 

Notice is hereby given that the Annual General Meeting ofTHORN EMI plc will be held in 

the London Marriott Hotel, 10 Grosvenor Square, London Wl, on Thursday, 8 September, 

l9B8 at I1.30 am for the following purposes: 

l, To receive and consider the Report of the Directors and Statement of Accounts for the 

year ended 3l March, 1988. 

2. To declare a final dividend on the Ordinarry 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 lit, to pass the following Resolution which will be proposed as 

an Ordinary Resolution: 

ORDINARY RESOLUTION 

THAT: (i) the Directors be and they are hereby generally and unconditionally authorised for 

the purpose of Section 80 of the Companies Act 1985 (in lieu of the authority granted on 

l0 September, I987 which is hereby revoked) to allot relevant securities (as defined in that 

Act)up to a maximum nominal amount equal to the authorised share capital ofthe Company 

remaining unissued at the date of this Resolution to such persons and upon such terms and 

conditions as they may determine (subject to the Arlicles of Association ofthe Company) 

during the period expiring at the conclusion of the Annual General Meeting of the Company 

to be held in 1989 unless such power is renewed prior to such time; and 

(ii) the Company may at any time prior to the expiration of such authority make an offer 

or agreement which would or might require relevant securities to be allotted purcuant thereto 

after expiration of such authority. 

6. 'l'o consider and, ifthought fit, to pass lhe following Resolution, which will be proposed 

as a Special Resolution: 

SPECIAL RESOLUTION 

THAT, subject to the passing of Ordinary Resolution 5 above the Directors be and they are 

hereby empowered pursuant to Section 95 of the Companies Act I985 to allot equity 

securities (within the meaning of Section 94 of that Act) pursuant to the authority conferred 

by the said Resolution as if Section 89(1) of that Act did not apply to any such allotment, 

provided that this power shall be limited to: 

(i) the allotment of equity securities in connection with any rights issues in favour of 

Ordinary Shareholders on the register of members at such record dale or dates as the 

Directors may determine for the purpose ofthe issue, where the equity securities 

respectively attributable to the interests of all Ordinary Shareholders are proportionate 

(as nearly as may be) to the respective numbers of Ordinary Shares held by them at any such 

record date or dates so determined, provided that the Directors may make such 

arrangements in respect ofoverseas shareholders and in respect of fractional entitlements as 

they consider necessary or convenient; and

(ii) the allotment (otherwise than pursuant to sub-paragraph (i) above) of equity 

securities up to an aggregate nominal amount of f3,458,033; 

and shall expire at the conclusion of the Annual General Meeting of the Company to be held 

in 1989 unless such power is renewed prior to such time, save that the Company may before 

such expiry make an offer or agreement which would or might require equity securities to be 

allotted after such expiry and rhe Directors may allot equity securities in pursuance of such 

offer or agreement notwithstanding that this power has expired. 

?. To consider and, ifthought {it, to pass the following Resolution, which will be proposed 

as a Special Resolution: 

SPECIAI, RESOLUTION 

THAT, subject to and conditionally upon the passing of the lixtraordinary Resolutions 

Numbered I set out in the Notices dated l8 July, l9BB convening Meetings of, respectively, 

the holders ofthe ll.5 per cent- Cumulative Preference Shares ofSl each in the capital of 

the Company and the holders of the ? per cent. Convedible Redeemable Second Cumulative 

Preference Shares 19)219 of Sl each in its capital and subject to the requisitc consent 

being forthcoming from holders of the Warrants to subscribe for Ordinary Shares of25p each 

in its capital foming part of the issue of 774 per cent. Bc,nds due 1992 constituted by 

Instrument by way of Deed Poll dated l4 January, l9B7 and pursuant to and in exercise of the 

power contained in Article I I of the Aticles of Association o{ the Company, the C

divided into 7.3,790,4i36 7 per cent. Convenible [ledeemable Second Cumulative 

Preference Shares IV)2199 of !,1 each and 284,838,256 Ordinary Shares of 25p each, and 

that such reduction be effectetl by cancelling and extinguishing the 460,000 3.5 per cent. 

Curnulative Prelerence Shares ofJI each all ofwhich have been issued and are fully paid up 

and returning to the holders of such Shares a sum equal to 78p per Share (and no more.) of 

the capital paid up on such shares and any arrears and accmals of the fixed dividend 

thereon. 

9. To consider and, ifthought fir, to pass the following Resolution, which will be proposed 

as an Ordinary Resolution: 

ORDINARY RT]SOI,UTION 

THAT, the l)irectors be and they are hereby authorised to exercise the power contained in 

Article 137(B) ofthe Articles ofAssociation ofthe Company so that to the extent and in the 

manner determined by the Directors the holders of the Ordinary Shares of 25p each be 

permitted to elect to receive new Ordinary Shares of25p each in the capital ofthe Company, 

credited as fully paid, instead of any declared dividend of the Company in respect of the 

accountinpJ reference period ending on 3I March, 1989. 

10. To consider and, ifthought fit, to pass the following Resolution, which will be proposed 

as an Ordinary Resolution: 

ORDINARY RESOI,I]TION 

THA'l': (i) the Directors be and they are hereby authorised to amend the rules of the Savings- 

Related Share Option Scheme approved at the Extraordinary General Meeting held on l0 

September, 1982 (as subsequently amended) as follows, but subject to such alterations 

thereto as may be required bv the lnland Revenue so that the said Scheme, as amended, 

shall continue to be approved under Schedule 9 to the Income and Corporation Taxes Act 

1988: 

Rule 3 to be replaced by the lbllowing: 

"'fhe Directors shall determine how many Shares shall be made available in any year lor this 

Scheme but such number shall not exceed the following limits: 

(a) the number of Shares in respect of which Options to subscribe may be 

granted on any day, when aggregated with the number of Shares previously 

issued under this Scheme and remaining issuable under this Scheme 

inrmediately prior to that day, shall not exceed 27,600,000 provided that such 

figure may be adjusted as appropriate (subject to the Auditors conlirming in 

writing that in their opinion such adjustment is fair and reasonable) to take 

account of any capitalisation, rights issues, consolidation or sub-division 

affecting Shares or any reduction of the ordinary share capital ofthe Company; 

and 

(b) the number of Shares in respect of which Options to subscribe may be 

granted on any day, when aggregated with the number of Shares previously 

issued or remaining issuable under this Scheme or any other share option scheme 

operated by the Company as a result of rights to subscribe for Shares granted 

within the period of ten years immediately prior to that day, shall not exceed 

l0 per cent. of the number of the Company's ordinary shares in issue 

immediately prior to that day." 

(ii) the Directors be and they are hereby authorised to amend rhe rules ofthe 1984 

Executive Share Option Seheme approved at the Extraordinary General Meeting held on 

l4 September, 1984 (as subsequently amended) as follows, but subject to such alterations 

thereto as may be required by the Inland Revenue so that the said Scheme, as amended, 

shall continue to be approved under Schedule 9 to the Income and Corporation Taxes Act 

l9{313:

Clause 5(a) to be replaced by the following: 

"(a) Subject to the provisions of Clause 5(d) hereof, the number oI Ordinary 

Shares in respect of which Options to subscribe may be granted on any day, when 

aggregated with the number of Ordinary Shares previously issued under this 

Scheme or remaining issuable under this Scheme immediately prior to that day 

shall not exceed 27,6fi),0O0. 

(b) The number of Ordinary Shares in respect ofwhich Options to subscribe may 

be granted on any day, when aggregated with the number of Ordinary Shares 

previously issued or then remaining issuable under this Scheme or any other 

share option scheme operated by the Company as a result of rights to subscribe 

for Ordinary Shares granted within the period of ten years immediately prior to 

that day, shall not exceed l0 per cent. of the number of the Company's Ordinary 

Shares in issue immediately prior to that day. 

(c) The number of Ordinary Shares in respect of which Options to subscribe may 

be granted on any day, when aggregated with the number of any Ordinary Shares 

previously issued or then remaining issuable under this Scheme or any other 

share option scheme operated by the Company (other than a savings related share 

option scheme) as a result of rights to subscribe for Ordinary Shares p;ranted 

within the period of ten years immediately prior to that day, shall not exceed 

5 per cent, of the number of the Company's Ordinary Shares in issue 

immediately prior to that day." 

Clause 5(b) to be redesignated as Clause 5(d). 

In Clause 7(a), after the words "Schedule 9)," the following to be added: 

"but excluding any amount applied by him in the exercise of such options". 

BY ORDER OF THE BOARD 


Secretary 

lB July, l98B 

Fegistered Office: 


Registered in England No.229231 

NOTES 

(a) Any Memberoilhe Company entlled to attend and vole atlhe l\reeting may appointone or more proxlestoatlend and, on a 

poll, to vote on his/her behall A proxy need nol be a Member Forms oi proxy shou d be lodged with lhe Company s 

Beg slrar nol later lhan 48 hours belore lhetime forwh ch the l,{eeling is convened 

(b) The Repon and Accounls are circu aled toa lMembers olthe Companyandto hoiders olthe Unsecured Loan Slocks, bul 

on y Members holding 3 5 percent. Cumulative Preference Shares, 7 percenl Convert ble Redeemabe Second 

Cumulalive PreJerence Shares 1992/99 or Ordinary Shares are entil ed lo attend and vote at the Meeting 

(c) l,4embers are inlormed that a register oi ail lransact ons oi each Direclorand hislamily in each c ass ofshare capitaiotthe 

Company and its subsidiares and a copy of any Directoas Service Agreemenl are available lor inspection at the Registered 

Otlice ol the Com pany during norma business hours on any weekday (Satu rdays and public hol days excepled) and will be 

availableatthe Meeting and lorat leaslliileen minutes priortolhe commencement ol lhe Meel ng 

Printed by Balding & MansellCityLtd.

TI{IS DOCUMENT IS IMPORTANT AND REQUIRIS YOUR IMMEDIATE ATTENTTON. If you are in any 

doubt about whaa action to take, you should consult your stockbroker, bank manager, solicitor, accountant 

or other professional adviser immediately. lf you have sold all your holding of Ordinary Shares arrd/or 7 per 

cent. Conyertible Redeemable Second Cumulative Preference Shares 1992/99 in THORN EMI plc please 

send this document with the accompanying form(s) of proxy to the stockbroker or other agent through 

whom the sale was effected for transmission to the purchaser. 

THORN EMI plc 

(Registered io England No. 229231) 

Registered Omce: 

.l Tenterden Street 

Iondon w'IA 2AY 

 

To the holders of the Ordinary Shares and the 7 per cent. Convertible Redeemable S€cond Cumulative 

Preference Sharcs 199A99 and for iiformation only the holders of the 3-5 per cent. Cumulative Preference 

Shares and the holders of the Unsecured Loan Stocks. 

f)ear Sir or Madam, 

PROPOSED REDUCTION OF SIIARE PREMIUM ACCOL\IT 

The Board announced on 4 March 1988 that it proposed to seek such consents as af,e necessary to enable 

the Company to reduce its Share Premium Account. 

You will find set out on pages 4 and 5 of this document Notices convening a separate CL$s Meeting of the 

holders of the 7 per cent. Convertible Redeemable Second Cumulative Preference Shares 199299 of the 

Company ("the Convertible Preference Shares") and an Extraordinary General Meeting of the Company to 

be held on 23 and 3O March 1988 respectively to consider and I/ot€ on the implementation ofthe proposal. 

The purpose of this letter is to explain the reasons for the proposal with a view to seeking the necessary 

authority from the shareholders at the Meetings. 

Background 

The Group has achieved its present size and structure through a combination of organic grolt,th and 

acquisitions. The principal acquisitions in recent financia.l years have included EMI Limited in f980 (Sf 5 f 

million), INMOS International plc in 19a5, (I,f 25 million) and Rent-A-Center Inc. ("Rent-A-Center") this 

financial year (t372 million), at the historical costs shown in brackets. 

The total consideration payable on an acquisition will often include an element of goodwill which 

represents the excess of the consideration over the fair value of the net tangible assets on the date of the 

acquisition. Any goodwill arising is required to be dealt with in the manner set out below. 

Statement of Standard Accounting Practice No. 22 requires that such goodwill should be eliminated either 

by immediate write off against reserves or amortisation through the consolidated profit and loss account 

over a Period of time. In common with the maiority of U.K public companies your Directors have adopted 

the first approach as they consider that to amortise significant amounts of goodq.iu through the profit and 

loss account would be inappropriate. 

The Group's stated policy is controlled expansion by acquisition as well as organic groEth. Suitable 

opportunities continue to be investigated which may, in turn, give rise to acquisitions. The nature of the 

businesses in which the Group is interested is such that future acquisitions are likely to gi\/e rise to further 

goodwill and the principal purpose of the proposed reduction of the shate premium account is to create a 

reserve against which such goodwill can be written off. 

Share Premium Accoutrt 

where a company issues shares at a value which represents a premium over their nominal yalue, the 

premium must Senerally, under the Companies Act, be transferred to a share premium account. Under the 

Companies Act, the uses to v/hich the share premium account can be put are very restricted and the 

account cannot be used for writing off goodwill. 

If an acquisition is made wholly or partly for shares and certain specilic conditions are met, the Companies 

Act provides relief from the need to create a share premium account (known as "merger relief'). Under 

these provisions the premium is taken to a merger reserve against which any goodwill arising can be 

written off- Merger relief was available in connection with the acquisition of Rent-A-Center and the 

premium was taken to a merger feserve against which the goodwill has been applied.

In certain circumstances, where an acquisition qualifies for full merger accounting, no goodwill would 

arise. 

However, it is not always possible to structure acquisitions so as to take advantage of either merger relief or 

merger accoundng. By way of exarnple, this would be the case following a successful share for share offer, 

where a company acquires control of less than 90 per cent. of the target company. Furthermore, merger 

relief would not be available where an acquisition is funded out of a company's cash resources. 

Ihe Propoml 

Under the Companies Act, a company may reduce or cancel its shafe premium account provided that it 

obtains the approval of the shareholders in general meeting, separate approval of any class of shares whose 

special rights are affected and the confrmation of the High Court. The amount by which the share 

premium account is reduced then becomes a new and separate reserve against which goodwill can be 

written off. 

As a result of issues of shares at a premium oyer a number of years, the share premium account of the 

company as at 31 March 1987 had fjsen to t282,24O,492. lt is now proposed that the company's share 

premium account should be reduced by 9282 million, with the result that such sum would be credited to a 

new reserve in the books of the Company ("the New Reserve"). 

In respect of each of the years ended 31 March 1986 and 31 March l9a7 the goodwill which arose on 

consolidation as a result of acquisitions made during those years was written off against the profit and loss 

account reserve. The aggregate amount of goodwill written off in respect of those two years was 

approximately &29,OOO,OOO. It is now proposed that such goodwill be re-instated and written off against 

part of the New Reserve, with the result that the profit and loss account reserve will be increased by the 

amount which was formerly applied in writing off goodwill. 

As to the balance of the New Reserye of approximately 5253 miltion, it is proposed that this should be 

available for use in writing off goodwill which is likely to adse in the future. To put this figure in 

perspective, the goodwill which arose on the acquisition of Rent-A'Center alone amounted to 

approximately S3OO million. Your Diectors consider that a reserve of this arnount is necessary to assist the 

Company in the pursuit of its acquisition policy because without it the need to write off goodwill in 

relation to acquisitions where neither merger accounting nor merger relief is available could inhibit the 

Company in relation to the size, structure and timing of acquisitions. 

As mentioned abol/e, the reduction, to be effective, requires the sanction of the High Court. Having regard 

to the rights attached to both classes of preference shares and the interests of creditors, the Company will 

give an undeftaking to the High Court restricting the availability of the New Reserve to any use (apart from 

writing off goodwill) to which share premium account could be applied. 

It should be noted that the reduction of the share premium account will not result in any diminution in tfie 

net assets of the Company, nor affect the ability of the Company to pay dividends. 

To implement the proposal it is necessary for shareholders to pass a Special Resolution in General Meeting 

and, in view ofa prohibition against reduction ofthe share premium account contained in the Company's 

A-rticles of Association as part of the rights attaching to the Convertible Preference Shares, for the holders 

of the Convertible Preference Shares to pass an Extraordinary Resolution at a separate CL$s Meeting. Your 

Directors will then apply to the High Court for an Order confirming the reduction. 

The proposal, which is expected to become effective towards the end of May 1988, will not a.ffect the 

interests of creditors and it will not alter the authorised or issued share capital of the Company or the 

proportionate voting rights of shareholders.

Meetings 

You will 6nd attached ro this letter:- 

(a) a notice convening a separate Class Meeting of the holders of the Convertible preference Shares on 

23 March 1988; and 

(b) a notice convcning an Exraordinary General Meeting of the Company on 3O March lggg 

to consider Extraordinary and special Resolutions for the implementation of the proposal. To be efective 

the resolutions must be approved by three-quarters of the yotes qlst. 

Actlon 

Enclosed with this letter are form(s) ofprory for use at the Meetings. Please complete, sign and return the 

appropriate form(s) of Proxy ils soon as possible in accordance with the instructions printed thereon, 

whether or not you intend to be present at the rclevant Meeting(s). 

The appropriate forms of proxy are as follows:- 

BLUE for use by holders of convertible Preference shares at the separate Meeting of such holders 

VHITE for use by holders of Ordinary Shares and Convertible Preference Shares at the Exrraordinary 

General Meeting of the Company. 

shareholders are strongly urged to complete th€ appropriat€ form of prory and r€tum lt to th€ 

company's Registrar, National w€stmlnster Bank plc, R€gistrar's oepartrirent, caxton House, 

R€dcllffe Way, Bfistol BS99 7I\lU scl as to arriv€ not later than 48 hours before the time fixed for 

th€ rel€rrant Meeting. 

The retum of the appropriate form of proxy witl not prevent a shareholder from attending the meeting and 

voting in person if he is entitled to do so and so wishes. 

Copics ofthe following docum€nts will be available for inspection at the offrces of Rowe & Maw, 20 Black 

Friars r.ane, l,ondon Ec4v 6HD at any time during usual business hours on any weekday (saturdays and 

public holidays excepted) up to and including the day of the Meeting:- 

(a) the Memorandum and Articles of Association of the Company; 

(b) the audited accounts of the Company and its subsidiaries for the two years ended 3 r March 1987 

and the interim report for the six months ended 30 September 1987; 

(c) the Circular comprising listing particulars of the Rent-A-Centef acquisition. 

Recornfirendation 

Your Dir€ctors belleve that the proposal described in this document is in the best interests of th€ 

Company arrd its shareholders. Accordingly, they unaninously recommend you to vote in 

frvour of the Resolutions to be proposed at the Me€tings as they intend to do in resp€ct of th€ir 

own shareholdings. 



Chairrnan

Efl NAORDINARY RESOLUTION 

THAT this separate Meeting of the holdefs of the 7 per cent. convertitrlc Redeemabl€ second cumulative 

Preference Sirares r992l99 of s1 each in the capital of the company hereby approves on behalf of the 

holders of all the shares of the said cl?rss the re

By Ordff of the Board, 

Robin Cha{lton 

Secretary 

7 March 1988 

Registered Office: 


Irndon WIA 2AY 

Registered in England No. 229231 

NOTES: 

(l) Any holder of Ordinary Shares or 7 per c€nt. Convertibl€ Redeemable Second Cumulative Pr€ference Shares 1992199 entitled to 

attcnd and vote a! the Meeting convened by th€ above Notice is entitled to appoint a proxy or proxies to attend and vote instead 

ofhim and a proxy need not be a member of the company. The appropriate completed form of proxy must be lodged at th€ 

address shown on the form, not l€ss than 48 hours prior to the m€€ting. Completion of the appropriate fofm of prory does not 

pr€v€nt a shareholdcr from attending and voting in person if h€ is entitl€d to do so and he so wishes. 

(2) Or y th€ holders of Ordinary Shar€s and 7 per cent Conv€rtibl€ Redeemable S€cond Cumulative Preference Shares 199299 or 

their proxies are €ntitled to aatend and vote at thc Meeting.

THIS DocuMEN'I Is IMPORTANT AND RxeulRrs youR IMMEDIATE AT:IENTIoN. Ifyou are in any doubt 

about what action to take, you should consult your srockbroker, bank manager, solicitor, accountant or 

other professional advis€r immediatety. If you have sold all your holding of Ordinary Shares and /or 7 per 

cent. Convertible Redeemable Second Cumulative Preference Shares 1992/99 in THORN EMI plc please 

send this document with the accompanying lbrm(s) of proxy to the srockbroker or other agent through 

whom the sale was effected for transmission to the purchaser. 

THORN EMI plc 

(Registered ln Engla d No. 229231) 

Registered. Ofrce: 

4 T€nterden Street 

London W1A 2AY 

2o April r988 

To the holders of the ordinary shares and the 7 per cent. conveftible Redeemable second cumulative 

Preference Shares 1992/99 and for information only the holders of the 3.5 per cent. Cumulative preference 

Shares and the holders of the Unsecured Loan Srocks. 

Dear Sir or Madam, 

PROPOSED REDUCfiON OF SHARE PREMIUM ACCOUNT 

I write with r€ference to my letter of 7 March 1988 which contained Notices convening a separate Class 

Meeting of the holders of the 7 per cent. Conyeftible Redeemable Second Cumulative Prefer€nce Shares 

1992/99 ("t}re Convertible Preference Shares") and an Extraordinary General Meeting of the Company and 

to my letter of 25 March 1988 advising shareholdefs that the Extraordinary General Meering could not be 

held on the date originally proposed. The letter of 25 March also made ir clear that it would be necessary 

to reconvene the Extraordinary General Meeting and the separate Class Meeting. 

This unfoftunate situation arose from the failure of the mailing house used by rhe printers to comply q/ith 

the strict instructions, given in writing, as to the mailing of my 7 March letter on that date. As a result, rhe 

requisite notice periods for the two meetings w€re not given. I am, however, pleased to advise shareholders 

that the printers hal/€ agreed to compensate us for the consequence oftheir failure ro achiev€ the required 

posting date. 

The Board wishes to proceed as soon as possible with the proposed reduction of the Share Premium 

Account. You will find set out on pages 4 and 5 ofthis document Notices convening a separate Class Meeting 

of the holders of the Convenible Preference Shares and an Exraordinary General Meeting of the Company 

to be held on 11 and l8 May 1988 respectively. The rest of this letter is in substantially the same form as 

my 7 March letter and explains once again the reasons for the proposal with a view to seeking the necessary 

authority from the shareholders at the Meetings. 

Background 

The Group has achieved its present size and structure through a combination of organic growth and 

acquisitions. The principal acquisitions in rec€nt financial years have included EMI Limited in l980 (515I 

million),INMOS International plc in 1985 (S125 million) and Rent-A-Center Inc. ("Rent-A-Center") in 

l9a7 (e372 million), at the historical costs shown in brackets. 

The total consideration payable on an acquisition will often include an element of goodv/ill which 

represents the excess of the consideration over the fair value of the net tangible assets on the date of the 

acquisition. Any goodwill arising is required to be dealt with in the manner set out below. 

Statement of Standard Accounting Practice No. 22 requires that such goodwill should be eliminated either 

by immediate write off against res€rves or amoftisation through rhe consolidated profrt and loss account 

over a period of time. In common with the maiority of U.K. public companies your Directors hav€ adopted 

rhe flrst approach as they consider that to amoftise significant amounts of goodwill through the profit and 

loss account would be inappropriate. 

Th€ Group's stated policy is controlled expansion by acquisition as well as organic grovth. Suitable 

opportuniries continue to be investigated which may, in turn, give rise ro acquisirions. The oature of the 

businesses in which the Group is interested is such that future acquisitions are likely to give rise to fufther 

goodwill and the principal purpose of the proposed reduction of the share premium account is to create 

a reserve against which such goodwill can be written off.

Share Premium Account 

where a company issues shafes ar a value which represents a pfemium over theif nominal value, the 

premium musi generally, under the Compani€s Act, be transferred to a share premium account. Under the 

tompanies Act,ihe uses to which the share pr€mium account can be put are very restricted and the account 

cannot be used for writing off Soodwill. 

If an acquisition is mad€ v/holly or partly for shares and certain specific conditions are met, the Companies 

Act proyides relief from the need to create a share premium account (known as 'merger relief). Under these 

provisions the premium may be tak€n to a merger reserve against which any goodwill arising may be written 

off. Merger relief was available in connection with the acquisition of Rent-A-Center and the premium was 

taken to a merger res€rve against which the goodwill has been applied. 

In cefiain circumstances, an acquisition may qualify to be accounted for as a merger under the provjsions 

of Statem€nt of Standard Accounring Practice No. 23 and were advantage to be taken of those Provjsions 

no goodwill would arise. 

However, it is not always possible to structure acquisitions so as to take advantage of either mer{aer relief 

or merg€t accounting. By way of example, this would be the case following a successful share for share 

offer, where a company acquires control of less than 90 per cent. of the target company- Furthermore, 

merger relief would not be available where an acquisition is funded out of a company's cash resources. 

The Proposal 

Under the Companies Act, a company may reduce or cancel its share premium account provided that it 

obtains rhe approval of the shareholders in general meeting, separate approval of any class of shares whose 

special rights are affected and the confirmation ofrhe High Court. The amount by which the share premium 

account is reduced then becomes a new and separate reserve against which goodwill can be written off. 

As a result of issues of shares at a premium over a number of years, the share premium account of the 

Company as at 31 March 1987 had risen to 5282,240 ,492. lt is now proposed that the Company's share 

premium account should be reduced byS282 million, with the result that such sum would be credited to 

a new reserye in the books ofthe Company ("the New Reserve"). 

In respect of each of the years ended 31 March 1986 and 31 March 1987 the goodwill which arose on 

consolidation as a result of acquisirions made during rhose years was written off against the profit and loss 

account reserve. The aggregate amount of goodwill written off in respect of those two years wa5 

approximately.L29,000,000. Ir is now proposed rhat such goodwill be re-instated and written off against 

part of the New Reserve, with the result that the profit and loss account reserve will be increased by the 

amount which was formerly applied in writing off goodwill. 

As to the balance of the New Reserve of approximately 52 53 million, it is proposed that this should be 

available for use in writing off goodwill which is likely to arise in the future. To put this ligure in 

pefspective, the goodwill which arose on the acquisition of Rent-A-Center alone amount€d to 

approximatelyS3OO million. Your Directors consider that a reserve of this amount is necessary to assist the 

Company in rhe pursuit of its acquisition policy because withour it the need to write offgoodwill in relation 

to acquisitions where neither merger accounting nor merger relief is available could inhibit the Company 

in relation to the size, structur€ and timing of acquisitions. 

As mention€d above, the reduction, to be effective, requires the sanction of the High Court. Having regard 

to the rights attached to both classes of preference shares and the interests of creditors, the Company will 

give an undertaking to the High Court restricting the availability of the New Reserve to any use (apaft from 

writing off goodwill) to which the share premium account could be applied. 

It should be noted rhat the reduction of the share premium account will not result in any diminurion in 

the net assets of the Company, nor affect the ability of the Company to pay dividends. 

To implement the proposal it is necessary for shareholders to pass a Special Resolution in General Meeting 

and, in view of a prohibition against reduction of the share premium account contained in the Company's 

Articles ofAssociation as part of the rights attaching to the Convertible Preference Shares, for the holders 

of the Convertible Preferenc€ Shares to pass an Extraordinary Resolution at a separate Class Meeting. Your 

Directors will then apply to the High Court for an Order confirming the reduction. 

The proposal, which is expected to become effective towards the middle ofJuly 19a8, will not affect the 

interests of creditors and it will not alter rhe authorised or issued share capital of rh€ Company or the 

propoftionate voting rights of shareholders.

M€€tings 

You will find attached to this letter:- 

(a) a notice convening a separate Class Meeting of the holders of the Convertible Preference Shares on 

11 May 1988; and 

(b) a notice convening an Extraordinary General Me€ting of the Company on 18 May 1988 

to consider Extraordinary and Special Resolutions for the implementation of th€ proposal. To be effectiv€ 

rhe resolutions must b€ approved by three-quarters of the votes cast. 

Action 

Enclosed with this letter are form(s) of proxy for use at the Me€tings. Please complete, sign and retum the 

appropriate form(s) of proxy as soon as possible in accordance with the instructions printed thereon, 

whether or not you intend to be present at the relevant Meeting(s). 

The appropriate forms of proxy are as follows:- 

GREEN for use by holders of Conveftible Preferenc€ Shares at the sepa{ate Meeting of such 

holders 

YELLOV for use by holders of Ordinary Shares and Conveftible Preference Shares at the 

Extraordinary General Meeting of th€ Company. 

Shareholders are strongly urged to complete th€ appropdate form of proxy and return lt to the 

Company's Reglstrar, Natlonal westmlnster Bank PLC, Reglstrar's l)epartment, Caxton House, 

Redcllffe way, Brtstol Bs99 7NH so as to afflYe not later than 48 hours before the tlme fixed for 

th€ rel€Yant Meeting. 

The return of the appropriate form of prorT will not prevent a shareholder from attending the meeting and 

voting in person if he is entitled to do so and so wishes- 

Copies of the following documents will be available for inspection at the offices of Rowe & Mav/, 20 Black 

Friars I-ane, London EC4v 6HD at any rime during usual business hours on any weekday (Saturda's and 

public hotidays excepted) up to and including the day of the Meeting:- 

(a) the M€morandum and A.rticles of Association of th€ Company; 

(b) the audit€d accounts of the Company and its subsidiaries for the two years ended 31 March 1987 

and the interim report for the six months ended 30 September 1987; 

(c) the Circular comprising listing pafticulars of the Rent-A-Center acquisition. 

Recommendatlon 

Your Directors b€lleye that the proposal described in thls document is ln the best iflterests of the 

Company and lts shareholders. Accordingly, they unanlmously recommend you to Yote ln favour 

of the Resolutlons to be proposed at the Meetlngs as they intend to do in respect of thelr own 

shareholdlngs- 


U\"llr-B 

sir Graham wilkins 

Chairman

THORN EMI plc 

NOIICE OF MEETING OF fiIE HOLDERS OF THE 7 PER CENT. CONWRTIBLE REDEEMABLE 

SECOND CUMULAITI'E PREFERENCE SHARES 1992199 

NOTICE IS HEREBY GMN that a separate Meeting of the holders of rhe 7 per cent. Converrible Redeemable 

Second Cumulative Preference Sharcs 1992/99 ofSl each in the capital of rhe Company will be held at 

the Grosvenor House Hotel, Park tane, London \F1 on 11 May 1988 ar 10.00 a.m. fbr the purpose of 

considering and, if thought fit, passing th€ following Resolution which will b€ proposed as an lxtraordinary 

Resolution. 

EXTRAORDINARY RESOLUTION 

TIIAT this separate Meeting of the holders of the 7 pertent. Conyeftible Redeemable Second Cumularive 

Pref€rence Sharcs 1992/99 ofl,l each in the capital of the Company hereby approves on behalf of the 

holders of all the shares of the said class the reduction by the Company of the Share Premium Account of 

the Company pursuant to the Resolution set out in Notice dared 20 April 1988 convening an Extraordinary 

General Meeting of the Company and sanctions on behalf as aforesaid each and every modincation or 

abrogation of the sPecial rights and privileg€s attached to the shares of the said class as is, or may be, 

inYolYed in any such reduction. 

By Order of the Board, 

20 April 1988 


SecretarJ,) 

Registered Ofrce: 


London WIA 2AY 


NOTES: 

Any holder of the 7 p€rcenr. Convenible Redeemable Second Cumularive preference Shares 1992199 ofsl each entjrlcd to attend and 

vot€ at th€ Meeting convened by the above notice is €ntitled to rppointa proxy or proxies to attend ind vote instead of him and a proxy 

n€ed not b€ a membcr of th€ Company. The appropriate completed form of p.or:), must b€ lodged ar the address shown on rhe form 

not less than 48 hours prior to the Meeting. Cornpletion of the appropriate form of prorl does not prevenr a shareholder from artending 

and votlng in p€rson if he is entitled to do so and he so wishes. 

4

THORN EMI plc 

NOTICE OF EXTRAORDINARY GENERAI, MEETING 

NOTICE IS HEREBY cMN that an IXTRAORDINARY GENIRAL MEETING of the Company will be he ld at 

th€ Grosvenor House Hotel, Park Lane, London ltrl on 18 May 1988 at 10.45 a.m. for the purpose of 

considering and, if thought tit, passing the following Resolution which will be proposed as a Special 

Resolution: 

SPECIAL RESOLUTION 

THAT the Share Premium Account of the Company be reduced by the sum ofs282,ooo,000 

By Order of the Board, 

Rohin Charlton 

Secretar! 

20 April 1988 

Registered. Ofrce: 


Loqdon wlA 2AY 


NOTES: 

(r) Any hold€r of Ordinary Shares or 7 per cent. Convenible Redeemable Second Cumulative Pr€ference Shares 1992199 €ntitled to 

att€nd and vote at rhe Meering convened by rhe above Notice is €nrirled ro appoint a prorT or p.oxies to attend and vote insterd 

of him and a proxy ne€d not be a member ofth€ Company. The appropriate compleEd form of prorT must be lodged at the add.css 

shown on rhe form, not l€ss than 48 hours prior ro the Meeting. Completion of the appropriate form of prory does not prevent 

a shar€holder from attending and voting in person if he is entitled to do so and he so wishes. 

(2) Only the holders of Ordinary shares and 7 p€r cenr. Convenible Redeemabl€ Second Cumulative Pr€ference SharcE 1992/99 or 

their proxies are entitled to attend and vote at the M€eting.

4 Tenterden Slreet, 

 

 

 

 

 

 

To the holders ofOrdinary Shares 

 

Dear Shareholder, 

SCRIPDIVIDEND SCHEME 

At the Annual General Meeting held on l0 September, 1987, a resolution was passed 

authorising the Directors, inter alia, to offer to Ordinary Shareholders the oppofiunity to elect 

to receive all or parl ofany dividend declared for the year ended 3l March, l9BB in the f

. TERMS 

Ordinary Shareholders who were on the register at the close ofbusiness on l4 July, l9B8 are 

entitled to elect to receive one new Ordinary Share credited as fully paid for every 40.05 

Ordinary Shares registered in their names on such date ("the fomula") instead ofthe final 

dividend of l6p per Share. 

['or the purpose of this election, the price ofeach new Ordinary Share has been taken as 

640.8p being the average of the middle market quotations for the Company's Ordinary Shares 

on The Stock Exchange for the five business days commencing 4 July' 1988 (the day on which 

the quotation became ex-dividend), as derived from the Daily Official List. 

New Ordinary Shares issued pursuant to the Scrip Dividend Scheme ("Scrip Shares") will 

be identical to and will rank as from issueparipossu in all respects with the existing Ordinary 

Shares in issue, 

Scrip Shares issued in lieu ofthe final dividend will not themselves rank for the final 

dividend recommended on 29 June, 1988. 

Shareholders with an existing holding ofless than 4l Ordinary Shares should not 

complete the Notice ofElection. 

The enclosed Notice ofElection will apply only to the final dividend recommended on 

29 June, 1988 and may be exercised by Shareholders in respect ofthe whole or any part of 

their holdings but such election may be exercised only in respect ofa whole number ofShares. 

Although in applying the formula, fractions ofScrip Shares will not be issued, it is open 

to any holder of Ordinary Shares to exercise the election in respect ofthat number of Ordinary 

Shares which produces the smallest possible fraction and to receive a cash dividend on the 

balance ofthe holding on which no election has been made. 

Exarnples of effect of election : 

Shareholder A has l6l Ordinary Shares and would be entitled to receive a total cash dividend 

of f25.76. He elects to receive Scrip Shares in respect ofthe whole ofhis holding ofOrdinary 

Shares. He will receive 4 Scrip Shares. 

Shareholder B has 500 Ordinary Shares. He elects to receive Scrip Shares in respect of 

ll2l out ofhis holding ofOrdinary Shares. He will receive 8 Scrip Shares and a dividend of 

f,28.64 in cash which comprises the dividend payable in respect ofthose Ordinary Shares for 

which he has made no election- 

No dividends will be payable in respect offractions ofOrdinary Shares. However, a 

dividend will be paid on any whole share or shares subject to a notice ofelection which do not 

qualify forthe issue ofa Scrip Share. 

2. TAXATION 

The Board has been advised that, under current United Kingdom legislation, the taxation 

consequences forcertain shareholders ofelectingto receive Scrip Shares instead ofa cash 

dividend will broadly be as outlined below. 

Individuals: 

Individuals electing to take Scrip Shares instead ofa cash dividend will be treated as having 

received gross payments ofan amount which, when reduced by income tax at the basic rate, 

(currently 25%), is equal to the "Cash Equivalent" ie. the cash dividend which would have 

been received had they not elected to take up Scrip Shares. Thus, ifan individual receives 

Scrip Shares worth f75 he will be treated as receiving gross income of5100 and as having paid 

income tax off25 on that gross amount. The Inland Revenue may substitute as the Cash 

Equivalent the market value ofthe Scrip Shares on the day of first dealing on The Stock 

Exchange ifthis is subsrantially different from the amount ofthe Cash Equivalent

computed as above. Individuals who (after taking account oftheir receipt ofdividend or 

Ordinary Shares calculated on the basis ofthe Cash Equivalent) pay only basic rate income 

ux, will have no further liability to tax on the receipt ofthe Scrip Shares. 

Individuals taking Scrip Shares who are liable to higher rate income tax will be liable to 

tax on the basis that they have received gross income calculated (as shown in the preceding 

paragraph) by reference to the Cash Equivalent. Thus, forexample, where a taxpayer's 

effective rate oftax on his dividend entitlement is 40olo he would be liable under the above 

example to pay additional tax ofJl5 on a dividend entitlement off75 taken as Scrip Shares of 

that value, 

. Where individuals receive a dividend in cash, and their income tax liability is less than 

the tax credit attached to the dividend, they are entitled to make a repayment claim in respect 

ofthe amount by which the ta-x credit exceeds their liability. No repayment claim can be 

made on Scrip Shares taken instead ofcash dividend and therefore individuals who do 

not pay income tax should consider carefully before deciding whether to elect to tak€ 

Shares. 

In all cases, ifan election to take Scrip Shares is made, the amount of the Cash 

Equivalent will be treated forcapital gains tax purposes as being additional consideration 

given for the Ordinary Shares (including the Scrip Shares). 

Discretionary and accumulation trusts: 

Where trustees who are liable to the additional rate of income tax elect to receive Scrip Shares, 

the same grossingup procedure as outlined above for individuals will apply. Thus, forthe 

purposes ofcharging the additional rate oftax, the trustees will be treated as having received 

gross income ofan amount which, when reduced by income tax at the basic rate, is equal to the 

Cash Equivalent. For capital gains tax purposes the amount ofthe Cash Equivalent will be 

treated as being additional consideration given for the Ordinary Shares (including the Scrip 

Shares). 

UK resident corporate shareholders: 

Fora Corporate Shareholder resident in the United Kingdom, Scrip Shares will not be treated 

as franked investment income for corporation tax purposes. Corporation tax will not be 

chargeable on Scrip Shares issued. For the purposes ofcorporation tax on chargeable gains no 

consideration will be treated as having been given for the Scrip Shares, unless the recipient is 

a close company. In such a case the amount ofthe Cash Equivalent will be treated as income of 

the close company in determining the amount to be apportioned amongst participators and 

taxed as their income. An equal amount will be treated as additional consideration given by 

the close company for the Ordinary Shares (includingthe Scrip Shares). 

Gross funds: 

As the allotment ofthe Scrip Shares will not be treated as a qualifying distribution, no tax 

credit will attach to the Scrip Shares and no repayment claim can be made in respect thereof. 

This summary ofthe taxation treatment is not exhaustive and, in particular, does not 

take account ofthe position of any non-UK resident shareholder. Ifyou are not sure 

how you will be affected, you should consult your professional adviser before deciding 

whether or not to make an election. 

3. HOW TO MAKE THI] ELECTION 

Ifyou wish to receive the cash dividend on the whole ofyour holding, do not complete and 

return the Notice ofElection. 

Ifyou hold 41 or more Ordinary Shares and you wish to receive Scrip Shares instead ofa 

cash dividend in respect ofall or any part ofyour holding, you should complete the enclosed 

Notice of Election and send it duly folded in the form ofa reply-paid envelope, to the 

Company's Registrar, National Westminster Bank PLC, Registrar's Department, Caxton 

House, Redcliffe Way, Bristol BS99 7NH, so as to reach them not later than 3.0Opm on 

2 September, 1988. Ifthe Notice of Election is not received by the close ofbusiness on that 

date a cash dividend will be paid in respect ofall the Ordinary Shares that you hold. No 

acknowledgemenl ofNotices ofElection will be given.

Il you do not specily in the Notice of Election the number of Ordinary Shares in respect 

ol which you are making your election, or if you make the election in respect of a greater 

number of Ordinary Shares than shown on the register, your election will be deemed to be in 

respect of all the Ordinary Shares registered in your name. 

'lhe Company's Shares have not been registered under the securities laws applicable in 

the United States of America or Canada and, accordingly, may not be offered in the United 

Stales of America or Canada or their respet lire t"rritories or possessions ("North America") 

or to or fbr the benefit of any Shareholder (or the estate of any Shareholder) who is a national 

or resident of the United Statcs of America or Canada or which is a padnership, corporation 

or other entity created or organised in or under the laws of any part of the United States of 

America or Canada. Therefore, no Notice of Election will be sent to or for the benefit of any 

such Shareholder whose registered address is in North America, nor will any Notice oI 

Election be accepted from or on behalf of any Shareholder who does not make the 

declaration relating to non-No h American benelicial ownership set out in the Nr-rtice of 

Election. 

4. IF YOU HAVE SOI,I) YOUR SHARES 

lf, prior to 4 July, l988 (the day on which the quotation became ex-dividend), you have sold 

all or some of your holding of Ordinary Shares, you should consult your stockbroker or agent 

without delay, who will then advise you how you should deal with the Notice of Election. 

;. IF YOU HAVE ALRtrADY PT]RCHASED ORDINARY SHARES 

In accordance with the Rules olThe Stock Exchange, buyers who have br-rught Ordinarl 

Shares before they are listed "ex-dividend", who are unable to register their holdings by 

l4 July, 1988 and who wish to elect to receive Scrip Shares in lieu ofcash in respect of the 

whole or part of the Ordinary Shares they have bought, must request the seller to give notice 

in writing; to the Company's Registrars not later than Iive business days before 2 September, 

1988. lf no notice has been given by that time, all claims fcrr tlividend will be settled in 

cash. 

6. DEI,IVI]RY ANI) I,IS'I'INC OF THE NEW ORDINARY SIIA.RES 

Application will be made to the Council ofThe Stock Exchange for admission ofthe relevant 

nurnber of Scrip Shares to rhe Oflicial List. 

Subject to admission to the Official List, definitive Share Certificates lor the Scrip 

Shares will be posted, at the risk ofthe persons entitled thereto, on Friday 7 Oct

Untitled - David Kronemyer

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