Bos Glb Hldgs Regulatory News (BOS)

13 Oct 2005 07:01

Body Shop International PLC13 October 2005 The Body Shop International PLC Interim Results for the 26 weeks ended 27 August 2005 Comparable store sales up 4% with operating profit in line with forecast • Strong global sales performance: total +7%, comparable +4% • Operating profit in line with forecast • Investment programme in stores and systems progressing well • Net debt reduced by £9.3m to £51.5m • New markets: Jordan and Russia • Interim dividend increased by 16% • Company on course to achieve forecasted full year operating profit growth of 17-22% Sales Performance26 weeks to 27 August 2005 Store Sales The Body Shop Total Retail Comparable At Home Sales Store SalesAmericas +4% +5% +4% 0%Asia Pacific +11% +24% +11% +6%Europe, MiddleEast & Africa +8% - +8% +6%UK & Republicof Ireland +2% +9% +3% +4%Total +7% +10% +7% +4% Financial Highlights26 weeks to 27 August 2005 Change on 2004Operating profit £8.9m -9%Profit before tax £7.1m -13%Tax charge £1.7m +6%Earnings per share 2.5p -21.9%Dividend 2.2p +16%Net debt £51.5m -£9.3m These results have been prepared under International Financial ReportingStandards ("IFRS") for both reported periods For media enquiries, please contact: The Body Shop International PLCBill Eyres, Head of Global Corporate PRTel: 01903 844040 Brunswick GroupWilliam CullumTel: 020 7404 4595 For investor enquiries, please contact: Angela BawtreeTel: 01903 846333 High resolution images are available for the media to view and download free ofcharge from www.vismedia.co.uk Chief Executive Officer's Review Overview We achieved a strong global sales performance for the first half of the fiscalyear. Sales trends have continued to improve, with positive growth in total andcomparable store sales achieved in most of our markets. This performancereflects 18 months of consecutive improvement in sales trends. Operating profit was 9% lower than in 2004 on an IFRS adjusted basis, in linewith our forecast. The recent acquisitions of previously franchised markets inCanada, Hong Kong and Benelux have resulted in an increased seasonal profit biastowards the second half of the year, as the income flows from these markets havemoved from wholesale sales in the first six months to retail sales in the secondhalf of the year. We have progressed well with our investment programme in new stores, storerefurbishments and information systems during the first half of the year. Wehave also furthered our plans for entry into new markets, with the initial storeopening in Jordan during the first half. We have recently announced that ourfirst store in Russia will open in December, with a further seven planned toopen during 2006. We are on course with the strategic direction we outlined inour last Annual Report and we continue to manage the business for sustainablelong-term performance. The Board has approved a 16% dividend increase, which brings the Company more inline with sector averages. Results Summary Total retail sales for the first half grew by 7%, with comparable store sales upby 4%. Retail sales through stores were up by 7%, whilst sales through The BodyShop At Home grew by 10%. We have continued to achieve positive comparable storesales growth in most countries. In the Americas, comparable store sales were flat. The USA achieved flatcomparable sales despite a more challenging retail environment. The trend inCanada improved to flat comparable sales from -4% in the same period last year,as the product, marketing and operational changes implemented since theacquisition began to take effect. Asia Pacific continued to achieve strong sales growth, with comparable storesales up by 6%. This reflects a particularly solid performance in South EastAsia (+15%) and Taiwan (+14%), whilst positive growth was also achieved in Japan(+4%), Hong Kong (+3%) and Australia (+2%). Korea continued to see an improvingtrend (-1%). In Europe, Middle East & Africa, comparable store sales growth improvedsignificantly to +6%. This performance included strong growth in the Middle East(+8%), the Nordic region (+13%), France (+11%), Spain (+9%) and Germany (+6%).The trend in Italy, a difficult market, continued to improve (-3%). The UK region achieved comparable store sales growth of 4%, in line with thegrowth recorded in the second half of last year. This performance reflects astrong focus on in-store execution and customer service. The retail environmenthas been challenging, compounded by the impact on central London of the tragicbombings in July. Worldwide, a net 40 new stores were opened in the first half, bringing the totalto 2,085 in 53 countries (2004: 2,039). Of the total, 778 are company-owned(2004: 706), with 24 stores acquired through the purchase of the head franchisebusiness in the Benelux region. For the full year, we are planning approximately120 new store openings, of which approximately half will be company-owned. Operating profit for the period was £8.9 million compared with £9.8 million inthe previous year, reflecting the increased seasonality of the business. Theacquisitions we have recently completed in Canada, Hong Kong and Benelux are allperforming in line with our expectations and contributing positively to earningsper share in their first year of ownership. After finance costs of £1.8 million(2004: £1.6 million), pre-tax profit was £7.1 million (2004: £8.2 million). The effective tax rate of 24% was higher than in the previous year (2004: 19%).This is in line with our previous forecasts. After the higher tax charge,earnings per share were 2.5 pence (2004: 3.2 pence). Operating cash outflow was £2.1 million. Net debt was £51.5 million at theperiod end compared with £60.8 million in 2004, after capital expenditure of£11.5 million and acquisition expenditure of £2.6 million. For the full year, wenow expect capital expenditure to total approximately £41 million, of which sometwo thirds will finance new stores, refurbishments and relocations. This yearrepresents the second year of our three year £100 million investment programmein new stores, store refurbishments and information systems. The Board regularly reviews the Company's total shareholder return, within thecontext of the outlook for growth in earnings per share. As dividends are animportant element in total shareholder return, we are seeking to enhance futurereturns by implementing a progressive dividend improvement policy with effectfrom the current year, targeting a dividend cover of around 2.4 times. In thelight of this, we are pleased to announce a 16% increase in the interim dividendto 2.2 pence per share (2004: 1.9 pence). We intend to maintain a similarrelationship between the interim and final dividends, with approximately onethird of the payout at the interim stage. Product and Marketing Development Our recent new product ranges have received positive responses from ourcustomers, whilst also underpinning our 'masstige' brand repositioning. Recent successes include: - Spa Wisdom, a luxurious and indulgent range of home-spa products, containing six natural ingredients sourced through our Community Trade programme including Brazilian babbasu nut oil and Zambian honey; - an exotic Passion Fruit Bath and Body range; - seasonal summer and autumn limited edition make-up collections; - three additional new lines in our heritage Vitamin E skincare range. The positive customer response to our product innovation is reflected in some ofthe recent awards we have gained, including: - CLEO Beauty Hall of Fame 2005 awards in Singapore acclaimed six of our products including Spa Wisdom Blissful Body Cleanser as Best Body Cleanser and Grapeseed Glossing Serum as Best Hair Shine Enhancer; - In the USA, Self Magazine selected our Brazil Nut Moisture Mask as Best Deep Conditioner; - In Norway, Det Nye Makeup & Har Best Products of the Year awards chose Liquid Eye Liner as Best Wet Eye-liner. This Christmas, we are offering customers an impressive selection of seasonalbath and body products and gifts from our limited edition Vanilla Spice,Cranberry and Candied Citrus ranges. Our holiday gift programme has beenrefocused and upgraded and we are confident of a good customer response. We havea strong pipeline of new product innovations coming through next year. Our Love Your Body loyalty programme continues to grow, with over 2 millioncards sold in 10 countries by the period end. The programme was launched in bothHong Kong and Holland during the first half. Store Development Following the successful trial of our new store design in eight locations aroundthe world, we are now in the process of rolling out the format across our fourregions. At the end of the first half, 21 new stores and 23 refurbished storesreflected the new design. A further 160 stores are expected to be in place bythe end of the financial year, of which almost half will be new stores. We arein the process of developing the concept further with a format for smallerstores, including kiosks and shop-in-shops. The new store design is delivering well against our objective to providecustomers with an improved shopping experience, with a strong focus on productmerchandising and customer service. We are also satisfied that the new format isproving successful in meeting our key objective to increase sales productivitywithin the stores. We have progressed with the roll-out of a new make-up merchandising fixture,that displays our colour cosmetic products more effectively. This fixture willbe in most stores by the end of the financial year, with the remainder to becompleted in the first few months of next year. Our entry into new markets has moved forward, with the first store in Jordanhaving opened during the first half. We have recently announced that our firstThe Body Shop store in Russia will open in Moscow in December, with a furtherseven stores due to open in major cities during the 2006 calendar year. Thismarket offers us an exciting development opportunity, as Russia is one of theworld's fastest growing cosmetics markets. The Body Shop in Russia will beoperated by the Alshaya Group, the head franchisee in seven of our existingmarkets including five countries in the Middle East.We are also in active discussions with regard to opening our first stores inIndia. Developing a Multi-Channel Organisation We continue to believe that The Body Shop At Home will be a significant driverof our total growth over the next few years. We expect the rate of sales growthto increase in the second half of the year, as the benefits of cross-channelmarketing and recent recruitment drives begin to feed through. We areprogressing plans for opening The Body Shop At Home in other markets, includingGermany in the next financial year. Our e-commerce site in the USA (www.thebodyshop.com), which was launched inSeptember 2004, continues to perform well. This business is on target to producea small profit in its first full year of operation. We are planning to launche-commerce in the UK next year. Systems Development The roll-out of our new SAP platform is progressing well, with the first threephases implemented successfully, on budget and on time. The platform is now being extended into our other company-owned markets, withthe implementation of Singapore completed in September and France and Germanyscheduled for implementation next month. The project will reach completion withthe upgrade of the US business, which has been operating on an earlier versionof SAP for well over five years. The US upgrade will now take place in mid 2007. We are confident of achieving the expected benefits from the implementation ofSAP including sales and profit growth, reduced operating costs and improvedstock turn. Our Values - Making a Difference The Body Shop has continued to campaign to Stop Violence in the Home. Thecampaign is now running in 26 countries, having raised over £2 million since itslaunch in Canada over a decade ago. Across the four regions, funds continue tobe raised for domestic violence charities through a wide range of fundraisingactivities in stores. In the USA, for example, our customers have donated over114,000 phones this year, with the net proceeds benefiting the NationalCoalition Against Domestic Violence (NCADV) and the Wireless Foundation. In theUK, customers have donated over 47,000 mobile phones for our "fonesforsafety"initiative. In Europe, the campaign has spearheaded various initiativesincluding the creation of an 'Alliance of Austrian Business Against DomesticViolence'. In Asia Pacific, The Body Shop Singapore launched the campaign withsix high profile public buses carrying the Stop Violence in the Home branding. Our UK stores have also supported the Make Poverty History campaign through thesale of over 200,000 white wristbands, raising in excess of £100,000 for thecampaign. Following the dreadful devastation caused by Hurricane Katrina, The Body Shoplaunched a Hurricane Relief Fund to support the needs of employees and The BodyShop At Home consultants. We have donated an initial $50,000 to the fund andhave additionally pledged to match all donations made by employees, franchiseesand The Body Shop At Home consultants. We have recently published our 2005 Values Report on our web site. This is anintegrated report that has been externally assured, containing interactiveelements as well as a feedback form. Current Trading and Outlook For the 32-week period to 8 October 2005, total retail sales were up 7% withcomparable store sales up 4%, in line with the first half performance. Many consumer markets around the world continue to be challenging, particularlythe UK and the USA. However, The Body Shop is a well-balanced global businessand our plans for the full year outcome remain unchanged. We expect a 17-22%growth in operating profit for the full year, with a somewhat slower growth inearnings due to the higher effective tax rate. Peter SaundersChief Executive Officer 13 October 2005 Operating Review Retail Sales In the 26 weeks ended 27 August 2005, total retail sales across all channelsincreased by 7% to £327.4 million (2004: £306.2 million), with comparable storesales up by 4% on the same period last year. Retail sales through The Body ShopAt Home increased by 10% to £22.6 million (2004: £20.5 million). Salesperformance by region is shown below: Sales Performance Store Sales The Body Shop Total Retail Comparable At Home Sales Store Sales----------------- ----------- ------------- ------------ -----------Americas +4% +5% +4% 0%Asia Pacific +11% +24% +11% +6%Europe, MiddleEast & Africa +8% - +8% +6%UK & Republicof Ireland +2% +9% +3% +4%----------------- ----------- ------------- ------------ -----------Total +7% +10% +7% +4%----------------- ----------- ------------- ------------ ----------- After 40 net store openings in the first half, the number of stores worldwidetotalled 2,085 at the period end, of which 778 (2004: 706) were company-ownedand the remainder franchised. Approximately 80 net store openings areanticipated during the second six months. Operating Performance Group turnover grew by 16% to £206.5 million (2004: £178.7 million) in the 26weeks to 27 August 2005, with 71% representing retail sales throughcompany-owned stores, The Body Shop At Home in company-owned markets and theinternet (2004: 64%). The balance of group turnover principally representswholesale sales to franchisees. Gross profit increased by 19% to £136.9 million (2004: £114.9 million), withgross margins of 66.3% compared with 64.3% in the same period last year. Afterdeducting the direct costs associated with operating company-owned stores, TheBody Shop At Home in company-owned markets and sales via the internet, theprofit contribution rose 15% to £56.8 million (2004: £49.3 million). Other operating expenses were £47.9 million (2004: £39.5 million). Operatingmargins were 4.3% compared with 5.5% in the same period last year, withoperating profit of £8.9 million (2004: £9.8 million). Profit before tax was £7.1 million (2004: £8.2 million). Geographical Analysis Americas August 2005 August 2004 Stores at period end 433 421Store openings (net) during period 4 5Company-owned stores 360 339 £m £m ChangeStore sales 58.6 56.4 +4%The Body Shop At Home 9.8 9.3 +5% --------- ---------Total retail sales 68.4 65.7 +4% Turnover 62.7 55.5 +13%Operating profit 4.2 6.3 -33% The four net store openings in the region were all in the USA. Total retail sales growth of 4% was achieved through an increase in the numberof stores compared with the same period last year, together with growth of 5% insales through The Body Shop At Home. Comparable store sales were flat in boththe USA and Canada, despite a more challenging retail environment in the USA.The flat trend in Canada improved from -3% in the last full year, reflecting thebenefits of product, marketing and operational changes implemented since theacquisition of the head franchise business last year. The e-commerce site launched in September 2004 continued to perform well in thefirst half. This business is on target to more than double sales and to producea small profit in its first full year of operation. Operating profit for the first half reflects the seasonal impact of the Canadianacquisition completed in July 2004, as the profit previously achieved throughwholesale sales in the first six months has moved to retail sales in the secondhalf of the year. Asia Pacific August 2005 August 2004 Stores at period end 583 538Store openings (net) during period 29 14Company-owned stores 66 62 £m £m ChangeStore sales 86.4 78.0 +11%The Body Shop At Home 4.6 3.7 +24% --------- ---------Total retail sales 91.0 81.7 +11% Turnover 39.5 30.4 +30%Operating profit 12.4 9.9 +25% The 29 net store openings were well spread across the region, including fiveeach in Hong Kong and Korea and four each in Indonesia and the Philippines. Total retail sales growth of 11% was achieved as a result of these storeopenings, together with 6% growth in comparable store sales growth. Thisconsistently strong growth reflects strong brand positioning together with acontinuing focus on in-store execution, customer service and marketing events.Particularly strong comparable store sales growth was achieved in South EastAsia (+15%) and Taiwan (+14%), whilst positive growth was also achieved in Japan(+4%), Hong Kong (+3%) and Australia (+2%). Korea continued to see an improvingtrend at -1% compared with -8% in the last full year. The Love Your Body loyalty card performed well in Singapore and was alsolaunched in Hong Kong during the first half. The Body Shop At Home, operated by the head franchisees in Australia and NewZealand, continued to show a strong performance with sales growth of 24%. The movement in operating profit reflects the positive and consistent retailsales growth, together with strong growth in wholesale sales. Europe, Middle East & Africa August 2005 August 2004 Stores at period end 765 758Store openings (net) during period 7 4Company-owned stores 117 85 ChangeStore sales 97.5 90.5 +8%The Body Shop At Home - - --------- ---------Total retail sales 97.5 90.5 +8% Turnover 42.8 33.7 +27%Operating profit 6.6 7.0 -6% Store openings in the region were concentrated in the Middle East, where therewere 16 new stores. The net movement in store numbers reflects a limited numberof closures in countries such as Switzerland, Germany and Italy. Total retail sales growth of 8% was underpinned by a continuing improvement incomparable store sales growth to +6%. These sales trends reflect the benefits ofimproved retail execution. A particularly strong performance was seen in theMiddle East (+8%), the Nordic region (+13%), France (+11%), Spain (+9%) andGermany (+6%). The performance in Italy continued to improve in a challengingretail environment (-3%). The Love Your Body loyalty card performed well in Germany, France, Denmark andAustria and was also launched in Holland towards the end of the first half. The movement in operating profit reflects the seasonal effect of the Beneluxacquisition that was completed earlier this year, with profit previouslyachieved through wholesale sales now occurring through retail sales in thesecond half of the year. UK & Republic of Ireland August 2005 August 2004 Stores at period end * 304 322Store openings (net) during period - 9Company-owned stores 235 220 ChangeStore sales 62.3 60.8 +2%The Body Shop At Home 8.2 7.5 +9% --------- ---------Total retail sales 70.5 68.3 +3% Turnover 61.5 59.1 +4%Operating profit 2.4 1.9 +26% * These store numbers exclude 126 (2004: 101) concessions in pharmacies. There were five store openings in the Republic of Ireland during the first half,offset by five net closures in the UK. Total retail sales growth of 3% reflects a lower number of stores compared withthe same period last year, together with 4% comparable store sales growth and 9%growth in sales through The Body Shop At Home. The comparable store sales growth of 4% was in line with the growth recorded inthe second half of last year. This performance reflects a significantimprovement on the same period last year, when comparable store sales declinedby 5%. The improved trend has been achieved through a strong focus on in-storeexecution and customer service, despite a more challenging retail environment. The Love Your Body loyalty programme continues to provide good opportunities forcross channel marketing between the stores and The Body Shop At Home. The increase in operating profit reflects the improved performance in comparablestore sales and the growth in The Body Shop At Home. Interest and Exchange Rates The net interest charge of £1.8 million relates to average net debt of £28.4million in the first half compared with £40.9 million in the same period lastyear. At the period end, the balance sheet showed net debt of £51.5 million(2004: £60.8 million). The currencies to which the Group is principally exposed are the US dollar andthe Euro. In addition, there is exposure to the Singapore, Hong Kong andCanadian currencies. The exposure arises from export sales from the UK andretail royalties payable to the UK, as well as from purchases and interestpayments. The Group's policy is to hedge this transaction exposure throughforward exchange contracts covering, on average, nine months. Currency exposure also arises from the translation of the trading results andnet assets of overseas subsidiaries. The Group's policy is to limit the exposureto fluctuations in the value of net assets by borrowing in those currencies inwhich it has significant non-sterling assets. The Group did not meet thecriteria under IAS 39 to apply hedge accounting until January 2005. As a result,a charge of £1.0 million is included in the six month period to 28 August 2004in respect of the hedging of transactions. The results of overseas subsidiaries have been translated at an average sterling/dollar rate of $1.84 (2004: $1.81) and an average sterling/Euro rate of €1.46(2004: €1.50). The movement in exchange rates year on year has had a minimalimpact on profit before tax. Taxation, Earnings per Share and Dividends The tax charge for the period is £1.7 million, based on an estimated effectiveannual tax rate of 24% (2004: 19%). The effective tax rate reflects continuedbenefit from the utilisation of brought forward operating losses in the USbusiness, the majority of which will have been fully utilised in the currentfinancial year. In line with IAS 12, these losses are recognised as a deferredtax asset in the period under review, which has the effect of reducing theeffective tax rate. We now anticipate that the effective tax rate for the nextfinancial year will be broadly consistent with the current year, with anincrease in subsequent years towards more normalised effective rates ofcorporation tax in the UK and the USA. Earnings per share were 2.5 pence (2004: 3.2 pence) on a weighted average numberof shares of 209.5 million (which excludes the shares held by The Body ShopInternational Employee Share Trust). The Directors have proposed the implementation of a progressive dividend policywith effect from the current year, which seeks to maintain a dividend cover ofaround 2.4 times. The interim dividend has been increased by 16% to 2.2 penceper share (2004: 1.9 pence) and will be paid on 3 January 2006 to shareholderson the register at 9 December 2005. Balance Sheet and Cash Flow Shareholders' funds totalled £167.1 million at the period end, after adjustingfor £2.6 million in currency translation differences on foreign currency netinvestments. Inventory levels at the period end were lower than at the same time last year at£69.3 million (2004: £76.0 million), reflecting the benefit of efficienciesgained through the investment programme in supply chain management systems. Cash flow for the six month period is summarised in the table below: August 2005 August 2004 £m £m £m £m Opening net debt (19.8) (24.9)Operating cash flow (2.1) 1.9Purchase of property, plant and equipment (11.4) (8.5)Purchase of intangible assets (0.1) (3.8)Acquisition of subsidiaries (2.6) (13.9)Dividends (7.9) (7.7)Taxation (5.5) (3.3)Net interest (1.8) (1.6)Other (0.3) 1.0 ------- ------- (31.7) (35.9) ------- -------Closing net debt (51.5) (60.8) ======= ======= Capital expenditure (excluding acquisitions) amounted to £11.5 million (2004:£12.3 million) in the first six months. For the full year, it is anticipatedthat capital expenditure will total approximately £41 million (2004: £25.5million), with approximately two thirds invested in new stores and storerefurbishments and the majority of the balance in information systems. Definitions: Total retail sales - Sales to consumers through all stores, The Body Shop AtHome and the internet. Retail sales figures are stated at comparable exchangerates, with prior year figures being restated where appropriate. Comparable store sales - Sales by all stores which have been trading for morethan one year, excluding sales through pharmacy concessions. Turnover - Group revenue derived from a combination of retail sales (excludingsales taxes) through company-owned stores, The Body Shop At Home incompany-owned markets and the internet, together with wholesale revenue androyalties from franchisees. Group Income Statement 26 weeks to 26 weeks to 52 weeks to 27 Aug 2005 28 Aug 2004 26 Feb 2005 Restated Restated -------- -------- -------- Unaudited Unaudited Audited -------- -------- -------- £m £m £m -------- -------- -------- Revenue 206.5 178.7 419.0Cost of sales (69.6) (63.8) (146.3) -------- -------- --------Gross profit 136.9 114.9 272.7Operating expenses (128.0) (105.1) (233.5) -------- -------- --------Operating profit 8.9 9.8 39.2Finance costs (1.8) (1.6) (3.5) -------- -------- --------Profit on ordinary activitiesbefore taxation 7.1 8.2 35.7Taxation (1.7) (1.6) (6.9) -------- -------- --------Profit for the period 5.4 6.6 28.8 ======== ======== ========Attributable to:Equity holders of the parent 5.2 6.5 28.5Minority interest 0.2 0.1 0.3 -------- -------- -------- 5.4 6.6 28.8 ======== ======== ========Earnings per share (Note 2)- Basic earnings per ordinary share 2.5p 3.2p 13.8p- Diluted earnings per ordinary share 2.4p 3.1p 13.3p Group Balance Sheet 27 Aug 2005 28 Aug 2004 26 Feb 2005 Restated Restated Unaudited Unaudited Audited £m £m £m Non-current assetsGoodwill 50.2 47.2 47.8Other intangible assets 6.3 11.7 7.2Property, plant and equipment 81.6 67.8 75.7Deferred tax 11.9 6.4 11.8Non-current receivables 5.5 6.3 4.7 -------- -------- -------- 155.5 139.4 147.2Current assetsInventories 69.3 76.0 62.1Trade and other receivables 51.5 46.1 32.4Derivatives - 0.1 0.2Cash and cash equivalents 27.9 18.0 41.6 -------- -------- -------- 148.7 140.2 136.3 -------- -------- --------Total assets 304.2 279.6 283.5 -------- -------- --------Current liabilitiesInterest-bearing loans andborrowings (64.1) (62.6) (45.6)Obligations under finance leases (2.4) (2.4) (2.4)Derivatives (0.1) (0.1) -Trade and other payables (49.0) (49.3) (44.1)Corporation tax liabilities (3.5) (4.1) (8.0) -------- -------- -------- (119.1) (118.5) (100.1) -------- -------- --------Net current assets 29.6 21.7 36.2 -------- -------- --------Non-current liabilitiesInterest-bearing loans andborrowings - (0.4) (0.3)Obligations under finance leases (12.9) (13.4) (13.1)Deferred tax (2.2) (2.4) (3.2)Provisions (1.6) (2.0) (2.2) -------- -------- -------- (16.7) (18.2) (18.8) -------- -------- --------Total liabilities (135.8) (136.7) (118.9) -------- -------- -------- -------- -------- --------Net assets 168.4 142.9 164.6 ======== ======== ======== EquityCalled up share capital 10.8 10.6 10.7Share premium account 63.9 61.2 62.3Reserve for own shares (6.1) (6.1) (6.1)Other reserve 11.4 4.6 6.8Retained earnings 87.1 71.7 89.8 -------- -------- --------Equity shareholders' funds 167.1 142.0 163.5Minority interests 1.3 0.9 1.1 -------- -------- --------Total equity 168.4 142.9 164.6 ======== ======== ======== Group Cash Flow 26 weeks to 26 weeks to 52 weeks to 27 Aug 2005 28 Aug 2004 26 Feb 2005 Restated Restated Unaudited Unaudited Audited £m £m £m Cash flows from operating activitiesOperating profit 8.9 9.8 39.2 Adjustments:Depreciation 7.3 6.3 14.7Loss on disposal of property,plant and equipment 0.3 - 0.9Amortisation 1.2 0.8 1.5Share option charge 0.7 0.7 1.4Exchange movement 1.6 - 1.0Changes in working capital (excluding the effects of acquisitions):Inventories (4.3) (14.3) (0.3)Trade and other receivables (18.3) (7.0) 5.8Trade and other payables 0.5 5.6 4.5 -------- -------- --------Cash generated from operations (2.1) 1.9 68.7 Interest received 0.4 0.2 1.1Interest paid (2.2) (1.8) (4.6)Income tax paid (5.5) (3.3) (6.5)Dividends paid to Company's shareholders (7.9) (7.7) (11.7) -------- -------- --------Net cash from operating activities (17.3) (10.7) 47.0 -------- -------- --------Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired (2.6) (13.9) (19.3)Purchase of property, plant andequipment (11.4) (8.5) (25.5)Purchase of intangible assets (0.1) (3.8) - -------- -------- --------Net cash used in investing activities (14.1) (26.2) (44.8) -------- -------- -------- Cash flows from financing activitiesProceeds from issue of ordinary sharecapital 1.7 1.8 2.4Proceeds from borrowings 16.2 35.6 19.9Capital element of finance leaserental payments (0.2) (0.1) (0.5) -------- -------- --------Net cash used in financing activities 17.7 37.3 21.8 -------- -------- -------- -------- -------- --------Effects of exchange rate changes (0.7) 0.3 0.1 -------- -------- -------- -------- -------- --------Net increase/(decrease in cash and cash equivalents (14.4) 0.7 24.1 -------- -------- -------- Analysis of Changes in Net Debt At 26 Feb 2005 Cash flows Exchange At 27 Aug 2005 movement £m £m £m £m Cash at bankand in hand 41.6 (14.4) 0.7 27.9 --------- -------- -------- ----------Debt duewithin oneyear (45.6) (16.6) (1.9) (64.1)Debt due afterone year (0.3) 0.4 (0.1) -Finance leases (15.5) 0.2 - (15.3) --------- -------- -------- ---------- (61.4) (16.0) (2.0) (79.4) --------- -------- -------- ----------Total (19.8) (30.4) (1.3) (51.5) --------- -------- -------- ---------- Consolidated Statement of Changes in Equity Attributable to equity shareholders of the Company ------------------------------ Share capital Other reserves Retained Minority Total equity and capital earnings reserves £m £m £m £m £m Balance at 26February 2005 73.0 0.7 89.8 1.1 164.6 -------- ------- ------- ------- -------- Cash flow hedges, net of tax - - - - -Net investmenthedge - (1.9) - - (1.9)Currencytranslationdifferences - 4.5 - - 4.5Profit forthe period - - 5.2 0.2 5.4 -------- ------- ------- ------- --------Totalrecognisedincome forthe period - 2.6 5.2 0.2 8.0 Employeeshare option scheme - 2.0 - - 2.0Shares issued 1.7 - - - 1.7Dividendsrelating tothe year ended26 February 2005 - - (7.9) - (7.9) -------- ------- ------- ------- -------- 1.7 2.0 (7.9) - (4.2) -------- ------- ------- ------- --------Balance at 27August 2005 74.7 5.3 87.1 1.3 168.4 ======== ======= ======= ======= ======== Dividends paid in the period were £7.9 million (3.8 pence per share). Segmental Analysis 27 August 2005 28 August 2004 26 February 2005Shop NumbersAmericas 433 421 429Asia Pacific 583 538 554Europe, Middle East & Africa 765 758 758UK & Republic of Ireland* 304 322 304 ---------- --------- ---------- 2,085 2,039 2,045 ---------- --------- ----------Comparable Store SalesAmericas 0% 0% 0%Asia Pacific +6% +3% +5%Europe, Middle East & Africa +6% -1% +2%UK & Republic of Ireland +4% -5% 0% ---------- --------- ---------- +4% -1% +2% ---------- --------- ---------- 26 weeks to 26 weeks to 52 weeks to 27 Aug 2005 28 Aug 2004 26 Feb 2005 Restated Restated £m £m £m Retail SalesAmericas 68.4 65.7 167.6Asia Pacific 91.0 81.7 183.3Europe, Middle East & Africa 97.5 90.5 201.8UK & Republic of Ireland 70.5 68.3 166.3 ---------- --------- ---------- 327.4 306.2 719.0 ---------- --------- ----------TurnoverAmericas 62.7 55.5 142.3Asia Pacific 39.5 30.4 64.4Europe, Middle East & Africa 42.8 33.7 74.4UK & Republic of Ireland 61.5 59.1 137.9 ---------- --------- ---------- 206.5 178.7 419.0 ---------- --------- ----------Operating ProfitAmericas 4.2 6.3 21.9Asia Pacific 12.4 9.9 20.1Europe, Middle East & Africa 6.6 7.0 16.0UK & Republic of Ireland 2.4 1.9 13.3Central services (16.7) (15.3) (32.1) ---------- --------- ----------Operating profit 8.9 9.8 39.2 ---------- --------- ---------- \* These numbers exclude 126 (2004:101) concessions in pharmacies. Notes to the Accounts 1) Basis of preparation The Body Shop International PLC ("the Group") has previously prepared itsfinancial statements under UK Generally Accepted Accounting Principles ("UKGAAP"). From 27 February 2005 the Group is required to prepare consolidatedfinancial statements in accordance with International Financial ReportingStandards ("IFRS") as endorsed by the European Union ("EU"). Accordingly, this interim financial report has been prepared using accountingpolicies consistent with those which the management expect to apply in theGroup's first IFRS Annual Report and Accounts for the year ending 25 February2006. The accounting policies followed in this interim financial report are thesame as those published by the Group on 1 September 2005 within the 'Adoption ofInternational Financial Reporting Standards', which is available on the Group'sweb site (www.thebodyshopinternational.com). IFRS 1 "First-time Adoption ofInternational Financial Reporting Standards" has been applied with effect from29 February 2004 in preparing these financial statements. As a result, thecomparative information has been adjusted to conform to IFRS. IFRS currently in issue are subject to ongoing review and endorsement by the EUor possible amendment by the International Accounting Standards Board ("IASB")and are therefore subject to possible change. Further standards orinterpretations may also be issued that could be applicable for the full yearconsolidated financial statements. These potential changes could result in theneed to change the basis of accounting or presentation of certain financialinformation from that presented in this document. The figures for the 26 weeks to 27 August 2005 and for the 26 weeks to 28 August2004 are unaudited and do not constitute statutory accounts within the meaningof Section 240 of the Companies Act 1985. Comparative annual figures for theperiod ended 26 February 2005 set out within this report have been extractedfrom the 'Adoption of International Financial Reporting Standards', as publishedby the Group on 1 September 2005. The Annual Report and Accounts for the Groupfor the year ended 26 February 2005, prepared in accordance with UK GAAP, onwhich the auditors gave an unqualified opinion, have been filed with theRegistrar of Companies. 2) Earnings per share 27 Aug 2005 28 Aug 2004 26 Feb 2005 £m EPS £m EPS £m EPS Profit attributable to members 5.2 2.5p 6.5 3.2p 28.5 13.8pDiluted earnings per ordinary share 2.4p 3.1p 13.3p 27 Aug 2005 28 Aug 2004 26 Feb 2005 Average shares in issue (number inmillions) 209.5 204.6 206.6Dilutive effect of share options(number in millions) 7.6 4.9 6.7 ------ ------ ------ 217.1 209.5 213.3 ------ ------ ------ The weighted average excludes 4,573,645 (2004: 4,573,645) shares held by theEmployee Share Trust. 3) Taxation The tax charge for the period has been calculated using an estimated effectiveannual tax rate of 24% (2004: 19%). 4) Dividend The Directors propose an interim dividend of 2.2 pence (2004: 1.9 pence) pershare payable on 3 January 2006 to shareholders on the register at 9 December2005, which will amount to approximately £4.7 million. Independent Review Report to The Body Shop International PLC Introduction We have been instructed by the Company to review the financial information forthe 26 weeks ended 27 August 2005 which comprises the Group Income Statement,the Group Balance Sheet, the Group Cash Flow, the Consolidated Statement ofChanges in Equity and the related notes. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. Our report has been prepared in accordance with the terms of our engagement toassist the Company in meeting the requirements of the Listing Rules of theFinancial Services Authority and for no other purpose. No person is entitled torely on this report unless such a person is a person entitled to rely upon thisreport by virtue of and for the purpose of our terms of engagement or has beenexpressly authorised to do so by our prior written consent. Save as above, we donot accept responsibility for this report to any other person or for any otherpurpose and we hereby expressly disclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with Listing Rules ofthe Financial Services Authority which require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. As disclosed in Note 1, the next annual financial statements of the Company willbe prepared in accordance with International Financing Reporting Standards asadopted for use in the European Union. This interim report has been prepared inaccordance with the basis set out in Note 1. The accounting policies areconsistent with those that the directors intend to use in the next annualfinancial statements. As explained in Note 1, there is a possibility that thedirectors may determine that some changes to those policies are required whenpreparing the full annual financial statements for the first time in accordancewith IFRS, since the IFRS and IFRIC interpretations that will be applicable andadopted for use in the European Union at 25 February 2006 are not known withcertainty at the time of preparing this interim financial information. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly we do not expressan audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the 26 weeks ended27 August 2005. BDO Stoy Hayward LLPChartered AccountantsLondon13 October 2005 This information is provided by RNS The company news service from the London Stock Exchange