Released: 30/03/1999

(US) Preliminary Results Year Ended 30 January 1999

HIGHLIGHTS

Dividend restored

Group pre tax profit £89.2m (1997/8: £68.7m)	+ 30%
Group sales £991.2m (1997/8: £927.9m), like for like increase	+ 6%
Operating profit £102.3m (1997/8: £90.8m)	+ 13%
Proposed final dividend for year	1.0p per share
Earnings per share 3.9p (1997/8: 3.0p adjusted)	+ 30%
Year end net debt £111.5m (1998: £157.9m)	down 29%

Commenting, James McAdam, Chairman, said:

"We are delighted to announce Signet's return to the dividend list following another year of strong earnings growth and a significant reduction in net debt. The Group is well placed to take advantage of further growth opportunities and we remain confident about future prospects."

Enquiries:

Enquiries:	James McAdam, Executive Chairman	0171 404 5959 until 5:00pm
	Walker Boyd, Finance Director	0171 495 2643 thereafter
	Susan Gilchrist, Brunswick	0171 404 5959
	Caroline Roberts-West, Brunswick

Chairman's Statement

Results
I am pleased to report a further strong performance by the Group in the year to 30 January 1999, building on the track record of consistent growth in profitability during recent years.

In the financial year to 30 January 1999, Group profit before tax increased by 30% to £89.2 million (1997/98: £68.7 million). Sales were £991.2 million (1997/98: £927.9 million). The like for like increase was 5.9%.

Operating profit in the period rose to £102.3 million (1997/98: £90.8 million) an increase of 13%, the resultant Group operating margin being 10.3% (1997/98: 9.8%). The US business, which accounts for two thirds of Group sales, maintained its strong performance and again outperformed its main competitors. The UK business demonstrated commendable resilience in a very difficult market place, particularly over the important Christmas period.

Net debt was further reduced during the period by £46.4 million and stood at £111.5 million at the year end (31 January 1998: £157.9 million); interest cover rose to 7.8 times for the period compared to 4.1 times for the previous year. Earnings per share were 3.9p (1997/98 adjusted: 3.0p), a 30% increase.

Dividends
At the interim stage I stated that recommencement of dividend payments would be reconsidered once the full year results were known and on-going progress could be assessed. Consequently, against the background of the substantial increase in earnings and a further reduction in net debt, the Board is pleased to mark the return of the Company to the dividend list by recommending a final dividend payment of 1.0p in respect of the year 1998/99.

In future, the intention will be to declare an interim dividend as well as a final dividend each year but, given the earnings pattern of the Group, the split between the interim and final payments will be heavily weighted in favour of the latter.

Prospects
Overall the Group again benefited from the geographic spread of its activities, the very strong performance in the US more than compensating for the effect of the difficult trading conditions in the UK. Pre-tax profit showed a significant advance for the fourth year in succession and net debt has been reduced by 67% during the same period. The trading strategies in place on both sides of the Atlantic should generate further growth for the Group and the Board remains confident about future prospects.

The Group intends to move to quarterly reporting of results with effect from the first quarter of the current year. The first quarter's sales figures will be announced in early May and the quarterly results which will be first issued in early June.

The Group has made an encouraging start in the first eight weeks of this year. Following a very strong Valentine's Day period in the US the pattern of trading has been broadly similar to that experienced in the second half of last year.

Operating reviews

United States

Trading
The Group's US business again performed very strongly in an intensely competitive market place. Operating profit for the 1998/99 rose by 22.8% to £77.5 million; operating profit as a percentage of sales increased to 12.2% (1997/98: 11.0%). The ROCE was 20.4% (1997/98 16.6%).

Sales totalled £637.2 million, an increase of 10.7% from £575.5 million in 1997/98. The like for like increase was 10.2%. In the important "holiday period" - 2 November 1998 to 24 December 1998 - the like for like increase was 10.6%. The business outperformed its main competitors both during that period and for the year as a whole. Gross margins were maintained at close to last year's level. Sales per store increased to an average of over $1.3 million (1997/98: $1.2 million). The ratio of bad debts to sales remained unchanged at 3.2%.

Developments
In the year 18 Kay stores, 5 regional stores and 8 Jared stores were opened. At 30 January 1999 total selling space was 7% higher than a year earlier, with 524 Kay stores, 249 regional stores and 15 Jared stores. As a result of the increased development of Jared the real estate and merchandise support functions were strengthened. Updated store designs were developed for all formats. Training and merchandise programmes were improved.

Merchandising capabilities were strengthened with the enhancement of the assortment planning system further improving the ability to review product ranges. New products were tested and introduced, the development of white gold and platinum jewellery being particularly successful.

There was a further switch to television and radio advertising and away from catalogues. Increased support from advertising at the peak selling periods proved to be beneficial. Sales benefited from a new advertising campaigns to support the mall stores. A marketing Internet web site continues to be updated and could be developed for selling jewellery if justified by market growth.

United Kingdom

Trading
In the UK the general retailing environment deteriorated markedly as from the second quarter. Against this background the Group's UK operation performed creditably with operating profit as a percentage of sales of 9.1% (1997/98: 10.2%) and a ROCE of 21.6% (1997/98 23.2%). UK Jewellery operating profit at £32.4 million (1997/98: £36.1 million), after charging costs of approximately £1.6 million associated with the H. Samuel modernisation programme (1997/98: £3.4 million) and £1.2 million related to Year 2000 information technology compliance (1997/98: £nil).

UK Jewellery sales totalled £354.0 million compared to £352.4 million in the 1997/98. On a like for like basis the decrease was 1.1%. However, as a result of tight control of discounting, gross margins showed a slight increase. Costs were also closely controlled.

Sales in H. Samuel were £237.9 million (1997/98: £241.1 million). The like for like decrease was 2.0% against a background of a generally weaker trend in consumer spending and heavy discounting in a number of other retail sectors. Sales in Ernest Jones were £109.4 million (1997/98: £104.5 million). The like for like increase was 0.9% and Ernest Jones performed well over the Christmas period compared to its competitors. At the year end, there were 426 H. Samuel stores and 180 Ernest Jones stores.

Developments
The priority in the UK is to raise the average transaction value, particularly in H. Samuel, and increasing customer footfall. The modernisation programmes for both H. Samuel and Ernest Jones continued. Expenditure on staff training and management development to improve customer service, product knowledge and selling skills was increased. Staff incentive schemes continue to be developed with an increased focus on performance in the key selling periods. During 1998/99 an upgraded Electronic Point of Sale system was implemented in all Ernest Jones stores and 20 H. Samuel stores and this should further improve customer service. It is planned that the upgraded system will be installed in the remaining H. Samuel stores during 1999/00.

Merchandising ranges were enhanced with the launch of new gift and fashion watch ranges. The merchandising systems allowed management to adjust intake quickly to reflect changes in consumer demand. Replenishment levels in the stores were improved.

The focus of marketing remained on improving point of sales material. New promotional programmes were introduced with the development of customer databases, direct mail trials and the launch of informational websites on the Internet. The Group continues to develop after sales services and products, and its corporate sales initiatives.

Financial review

Results
Group profit before tax for the year was £89.2 million (1997/98: £68.7 million). After a tax charge of 26.9% (1997/98: 26.0 %) earnings per share were 3.9p (1997/98: 3.0p based on profit after tax and the number of shares in issue following the capital restructuring), an increase of 30%.

Operating profit increased by 13% to £102.3 million (1997/98: £90.8 million). Earnings before interest, tax and depreciation (EBITDA) increased to £128.4 million (1997/98: £118.2 million). The US achieved EBITDA of £92.7 million (1997/98: £79.0 million), and the UK £35.6 million (1997/98: £39.2 million) after charging Group costs of £7.6 million (1997/98: £8.4 million). EBITDA to sales ratios increased to 14.6% in the US (1997/98: 13.7%) and declined to 12.7% in UK Jewellery (1997/98: 13.6%).

Return on capital employed
The Group's return on capital employed (ROCE) increased to 19.5% (1997/98: 17.1%) - US 20.4%
(1997/98: 16.6%); UK Jewellery 21.6% (1997/98: 23.2%). US capital employed includes the in-house credit card debtors amounting to £194.0 million at 30 January 1999 (31 January 1998: £180.0 million).

Depreciation and capital expenditure
Depreciation charges were £27.6 million (1997/98: £26.9 million) - £14.9 million in the US (1997/98: £15.1 million) and £12.7 million in the UK (1997/98: £11.8 million). Capital expenditure in the US was £16.5 million (1997/98: £14.5 million) and in the UK was £14.4 million (1997/98: £14.1 million)

Group costs
Group central costs of £7.6 million (1997/98: £8.4 million) have been charged against UK operating profit. After the charge UK operating profit was £24.8 million (1997/98: £27.6 million). The figure for the financial year 1998/99 includes a charge of £2.1 million as a result of an increase in property provisions. This was largely offset by a gain on disposal of properties of £1.9 million.

Net interest payable and similar charges
Net interest payable and similar charges amounted to £13.1 million (1997/98: £22.0 million), a 40.5% reduction. This reflected the lower level of net debt carried by the Group and a reduced level of banking fees.

Taxation
The tax charge of £24.0 million (1997/98: £17.9 million) reflects the benefit of US tax losses bought forward and used against US taxable profits. The 1997 capital reorganisation resulted in the utilisation of these losses being restricted. The losses are expected to be fully utilised during the financial year 1999/2000. Credit for such tax losses is not carried on the balance sheet.

FRS 12
The Group has adopted this year the Financial Reporting Standard on Provisions, Contingent Liabilities and Contingent Assets, "FRS 12". It was previously the Group's policy to provide for the estimated disposal costs of permanently vacated properties but no provisions were made in respect of future net lease obligations. The adoption of FRS 12 has led to a reclassification to provisions of amounts previously included within creditors and a prior year adjustment of £4.6 million charged directly to shareholders' funds. Charges during the year total £2.1 million.

Group funding and cash flow
The improved financial standing of the Group enabled the replacement in July 1998 of the then existing secured bank facilities by unsecured longer-term facilities on generally better terms. These new arrangements consist of a $250 million five year revolving credit facility and a $60 million seven year unsecured note issue bearing a 7.25% coupon.

Net debt at 30 January 1999 was £111.5 million, a reduction of £46.4 million in the year (31 January 1998: £157.9 million). Group gearing (that is the ratio of net debt to shareholders' funds) at the year-end was 29.0% (31 January 1998: 46.0%). Excluding the US securitisation facility of £116.8 million, the Group had net cash of £5.3 million at 30 January 1999 (31 January 1998: £41.1 million).

Operating activities generated £102.6 million (1997/98: £143.4 million) reflecting an increase in EBITDA offset by investment in working capital primarily due to the increase in the number of stores, particularly in the US. Cash flow before investing activities was £71.4 million (1997/98: £102.6 million).

Treasury
The Group's policy is to manage financial risk resulting from exposure to currency and interest rate fluctuations. Translation exposure relating to non-sterling denominated assets in the US is principally hedged by borrowing in US dollars. Interest rate exposure is managed through the use of fixed rate swaps and caps. The Group undertakes limited hedging of commodity requirements, such as gold, through the use of options, forward contracts and outright commodity purchasing.

The Board monitors treasury exposure each month and regularly reviews and approves policies that are considered to be appropriate.

Year 2000
The Group has undertaken a full review of all its systems to ensure that they are able to operate efficiently after 31 December 1999. Group expenditure in the period on information technology projects relating to Year 2000 which are charged to revenue amounted to £1.2 million (1997/98: £nil). It is estimated that the revenue cost of the programme will be some £2.3million in total. The Group believes that all of its operating systems will have been modified where necessary and that the problem does not pose a significant operational issue for the Group. Discussions with the Group's external suppliers continue to take place to ensure that, as far as possible, they are taking similar action towards Year 2000 compliance in respect of their products and systems.

This statement of preliminary results was approved by the Board of Directors on 30 March 1999.

All statements other than statements of historical fact included in this document, are or may be deemed to be, forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended. Important factors that could cause actual results to differ materially from those discussed in such forward looking statements include: adverse trends in the general economy which may impact negatively on discretionary consumer spending, including unemployment levels, wages and salaries, business conditions, interest rates, consumer debt levels and availability of credit and levels of taxation; the seasonality of the Group's business; fluctuations in the price and availability of gold, diamonds and other precious and semi-precious stones; fluctuations in exchange rates between the pound sterling and the US dollar which may affect reported revenues, costs and the amount of the Group's consolidated borrowings and the cost of such borrowings; timely "Year 2000" compliance by the Group and third party suppliers; the extent and results of the store expansion and modernisation strategy, the development of new distribution channels in competition to the Group. The availability of inventory during the three months leading up to the Christmas season; the success of the Group's marketing and promotional programmes; and any changes in general customer preferences for jewellery.