Bos Glb Hldgs Regulatory News (BOS)

5 May 2006 07:00

Body Shop International PLC05 May 2006 THE BODY SHOP INTERNATIONAL PLCPreliminary Results for the 52 weeks to 25 February 2006 Continued growth in retail sales; profit in line with expectations • Continued growth in global retail sales: total +7%, comparable +4%• Operating profit up 6%, in line with forecast• Further roll-out of new store format• Continuing growth in The Body Shop At Home and e-commerce channels• Net debt reduced to £12.7m• New market openings in Russia and Jordan• EPS marginally lower at 13.6 pence, after higher effective tax rate• Total dividend of 6.6 pence, up 16% "Our overall retail sales performance demonstrates the global strength of TheBody Shop brand. We achieved a 6% increase in operating profit, in line with theforecast we made in January. The roll out of our new store format has progressedduring the year and we have continued to grow The Body Shop At Home ande-commerce channels in line with our multi-channel strategy. We have alsoexpanded into new markets, with store openings taking place in both Russia andJordan during the year. The Body Shop is celebrating 30 years of trading this year, having grown overthat period into a substantial global branded retailer operating in 54countries. Over the last four years, operating profit and earnings per sharehave improved substantially and we continue to manage the business forsustainable long-term performance." Adrian Bellamy Peter SaundersExecutive Chairman Chief Executive Officer For media enquiries, please contact: The Body Shop International PLC Shelley Simmons, Tel: 01903 844040 Brunswick GroupWilliam Cullum, Tel: 020 7404 5959 For investor enquiries, please contact: Angela Bawtree, Tel: 01903 846333 Financial Highlights52 weeks to 25 February 2006 Change on 2005Operating profit £41.5m +6%Profit before tax £37.6m +5%Earnings per share 13.6p -1%Total dividend 6.6p +16%Net debt £12.7m -£7.1m Letter from the Executive Chairman and Chief Executive Officer OverviewOur overall retail sales performance demonstrates the global strength of TheBody Shop brand. We continued to achieve a robust sales performance in AsiaPacific and Europe, Middle East and Africa. As we reported in our ChristmasTrading Update, the US and UK regions did not achieve the targeted rate ofgrowth during the important Christmas period and this impacted the group'sprofit outcome for the year. We achieved a 6% increase in operating profit, inline with the forecast we made in January. The roll out of our new store format has progressed during the year and we havecontinued to grow The Body Shop At Home and e-commerce channels in line with ourmulti-channel strategy. Our investment programme in SAP is now largely complete.We have also expanded into new markets, with store openings taking place in bothRussia and Jordan during the year. Since the year end, a recommended cash offer has been made by L'Oreal to acquirethe entire issued share capital of The Body Shop for 300 pence per share. Webelieve that L'Oreal's significant strengths in the management and developmentof global brands, combined with our skills as a global retailer with strongvalues and commitments, will be a powerful combination in the cosmetics andpersonal care market place. The Body Shop is celebrating 30 years of trading this year, having grown overthat period into a substantial global branded retailer operating in 54countries. Over the last four years, operating profit and earnings per sharehave improved substantially and we continue to manage the business forsustainable long-term performance. Results Summary We achieved positive growth in both total retail sales and comparable storesales in three of our four regions and in most of our markets. Overall, totalretail sales were up 7% to £772.0 million and comparable store sales grew by 4%.Worldwide, a net 88 new stores were opened in the year, bringing the total to2,133. Sales through The Body Shop At Home were up 14%, whilst our e-commercechannel in the USA more than doubled sales. In the Americas region, total retail sales growth of 4% was enhanced by positivegrowth in The Body Shop At Home and e-commerce. Comparable store sales of -1%reflect a decline of 2% in the USA, together with an improvement to +1% inCanada from -3% in the previous year. As we reported in January, retail sales inthe Americas region underperformed expectations during the Christmas period.This was driven in part by lower traffic levels in the shopping malls,compounded by execution issues in our inventory supply chain that led to someout-of-stock positions. A special task force was put in place last autumn toresolve these execution issues. Good progress has now been made and we expectthe situation to be fully resolved over the next three months. Asia Pacific continued to achieve strong sales growth during the year, withtotal retail sales up 11% and comparable store sales up 6%. The benefits ofstrong brand positioning and in-store execution were helped by generallyimproving economies in the region. Countries achieving particularly strongcomparable store sales growth included Malaysia (+17%), Indonesia (+17%), Taiwan(+11%), Singapore (+9%), Japan (+7%) and Hong Kong (+6%). Korea showed animprovement to +2% from -8% in the previous year. In Australia, comparable storesales were flat but strong growth continued to be achieved in The Body Shop AtHome. Europe, Middle East & Africa performed well with both total retail sales andcomparable store sales growing by 7%. Highlights included continuing strongcomparable store sales growth in the Middle East (+11%) and the Nordic region(+12%). In Western and Southern Europe, good positive growth was achieved inFrance (+11%), Spain (+6%), Holland (+6%) and Germany (+3%), whilst the trendcontinued to improve in Italy (-2%). Our store base in Eastern Europe, althoughsmall, is performing well. Stores were opened in two new franchised markets inthe region during the year: Jordan and Russia. We now have six stores in majorRussian cities, with another 11 openings planned for the current year. Thismarket offers The Body Shop an exciting development opportunity as one of theworld's fastest growing cosmetics markets. In the UK and Republic of Ireland, total retail sales grew by 3%, withcomparable store sales up 2%. The comparable store sales performance reflectsgrowth of 3% in the UK, with a decline of 1% in the Republic of Ireland. Thegrowth in the UK was achieved despite a challenging trading environment duringthe Christmas period. The Body Shop At Home performed well, with growth of 15%year on year. Gross margins improved on the same period last year, although operating marginswere somewhat lower, principally due to non-recurring costs of over £4 million.These non-recurring items comprised reorganisation and other costs that havebeen incurred to improve performance and reduce future operating costs.Operating profit rose 6% to £41.5 million, in line with the forecast we made inJanuary. We achieved operating cash flow of £71.2 million, after a reduction of £8.5million in working capital. This includes a 12% reduction in inventory year onyear, reflecting efficiencies gained from our investment in information systems.We are continuing our ongoing capital investment programme in new stores, storerefurbishments and information systems, with £32.0 million having been investedduring the year. This represented the second year of our 3-year £100 millioninvestment programme announced two years ago. We ended the year with net debt of£12.7 million. After a higher effective tax rate, earnings per share were marginally lower thanin the previous year at 13.6 pence, in line with our forecast. Following the recent recommended cash offer by L'Oreal to acquire the entireissued share capital of The Body Shop, the Board has resolved to pay a secondinterim dividend of 4.4 pence per share in lieu of a final dividend. Togetherwith the first interim dividend of 2.2 pence, this makes a total of 6.6 pence,16% higher than in the previous year. Brand Position and Image Over the last year, we have made further progress with our strategy todifferentiate The Body Shop by developing a 'masstige' positioning for thebrand. We seek to provide customers with a shopping experience that combinesexcellent service with a comprehensive range of naturally-inspired personal careproducts offering high performance benefits and competitive pricing. In order to deliver this 'masstige' experience for our customers, we havecontinued to focus on product innovation, the roll out of our new store designand the development of improved customer service programmes for our salesassociates and The Body Shop At Home consultants. Our strategy in product development is to innovate across our various productranges and categories to encourage multiple purchases and higher transactionvalues. New product activity during the year included a range of introductionsincluding: - Spa Wisdom, a range of luxurious home-spa products containing six natural ingredients sourced through our Community Trade programme; - a Passion Fruit Bath and Body range; - strong seasonal trend make-up collections; - three additional new lines in our heritage Vitamin E skin care range; - four additions to the core home fragrance range with Mango, Coconut, Papaya and Almond, together with four new seasonal oils; - an improved holiday gift programme for Christmas, incorporating a selection of seasonal bath and body products from our limited edition Vanilla Spice, Cranberry and Candied Citrus ranges; - a Strawberry Bath and Body range; - six additions to our Almond Bath and Body range; - a new Cassis Rose fragrance range. For the current year, we are excited about the strong pipeline of new productscoming through, including a major new-look make-up collection and a skin carerange using Aloe Vera sourced through our Community Trade programme. Our Love Your Body loyalty programme continues to grow, with more than 2.1million cards sold in 16 countries by the year end. The programme is provinghighly successful in raising average transaction values in store and we are nowstarting to promote the use of the card through our e- commerce channel in theUSA. The programme will be extended to a further 13 markets in the current year. Store Development Our new store design, developed to provide customers with an improved shoppingexperience, continues to be rolled out across our four regions. At the year end,there were 154 stores reflecting the new design, of which approximately halfwere new and half were refurbished stores. A key element of the new store design is a new make-up merchandising fixture,which is now installed in almost all stores around the world. This new fixturewill support the launch of our new make-up collection, which is beingaccompanied by an intensive staff development programme. We are continuing with our expansion of The Body Shop brand into new markets,with stores having opened in Russia and Jordan last year. We have alsoprogressed with our plans to open in India, with the first store due to openthere this summer. Store openings in Pakistan and Poland are also planned forthe current year. Developing a Multi-Channel Organisation Central to our strategy is the development of a multi-channel organisation thatallows us to service our customers in dedicated stores, in our customers' homesthrough The Body Shop At Home and via the internet. The Body Shop At Home continues to show positive growth in the three markets inwhich it currently operates: the USA, the UK and Australia. We believe thisdirect sales channel offers significant growth opportunities for The Body Shopin both existing and new markets. Plans are progressing for the launch of TheBody Shop At Home in Germany during the current financial year. Our e-commerce site in the USA (www.thebodyshop.com) has outperformedexpectations since its launch in September 2004, more than doubling sales andmaking a contribution to profit in its first full year of operation. We are ontarget to launch an e-commerce site in the UK during the autumn, in time for thekey Christmas trading period. Systems Development Our investment programme in information systems is designed to gain maximumefficiencies by leveraging one back office system across our three saleschannels. The most significant element of this investment programme is the globalimplementation of SAP. The implementation is now largely complete, having beensuccessfully rolled out on budget and on time to a number of our company-ownedmarkets. It is now in the process of being extended to the remainingcompany-owned markets, including the USA where an earlier version of SAP hasbeen in place for the last six years and will be upgraded to the current versionin mid 2007. We have already started to realise productivity gains from ourinvestment programme in SAP and are confident of achieving the targeted returnon investment. Franchising and AcquisitionsFranchising continues to play an important role in the growth and development ofThe Body Shop, with sales through franchised stores representing 54% of totalretail sales. We value the contribution that our franchisees bring to our globalorganisation through their significant market experience, energy and expertise. Over the past two years, as a small number of our franchisees have wanted topursue other interests or to retire, we have had the opportunity to makestrategic acquisitions in some key markets. Following the purchase of the headfranchise businesses in Hong Kong and Canada in the 2005 financial year, weacquired the companies operating The Body Shop in the Netherlands, Belgium andLuxembourg in March 2005. All three of these acquisitions have performed ahead of our expectations andhave enhanced earnings per share in the first year of ownership. We expect togain further benefits from these acquisitions as we continue to develop thebrand in these markets and achieve the additional synergies to be gained throughintegration with our existing regional structure. Our Values - Making a Difference The Group donated £1.0 million to charitable organisations last year, of which£0.7 million was donated to The Body Shop Foundation and the remaining £0.3million to other organisations. We have continued to actively promote our values and to improve our social andenvironmental performance over the past year. This includes strengthening ourin-store customer communications, telling customers the stories behind ourvalues with a particular focus on our Community Trade programme. Global campaigns continue to raise awareness and funds to support social issuesthat are important to customers. The 'Stop Violence in the Home' campaign hasnow been launched in 40 countries and has raised over £500,000 for domesticviolence charities in the past year. In the Americas, US customers donated over100,000 old mobile phones to raise funds for the National Coalition AgainstDomestic Violence (NCADV). In Canada, the campaign raised funds to support thelong-standing partnership with the Canadian Women's Foundation. In Asia Pacific,The Body Shop in Singapore launched the campaign with six high profile publicbuses carrying the 'Stop Violence in the Home' branding. Throughout Europe, aspecial edition lip care stick became a best seller and customers donatedthousands of products and gifts which The Body Shop staff distributed to localwomen's shelters. In the UK, customers donated over 60,000 mobile phones, whichhave been transformed into personal safety alarms for vulnerable women orrecycled to raise funds for the pioneering "FonesForSafety" initiative. 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. We have significantly strengthened our stakeholder engagement during the pastyear in areas such as violence against children, chemicals in products, fairtrade, ethical trade, sustainable ingredients and Against Animal Testing. Wehave also published an independently verified Values Report, which containsclear targets for improvement in the areas identified as strategic priorities. Recommended Cash Offer by L'OrealOn 17 March 2006, the boards of The Body Shop and L'Oreal reached agreement onthe terms of a recommended cash offer by L'Oreal to acquire the entire issuedshare capital of The Body Shop for 300 pence per share. The offer values TheBody Shop at approximately £652 million. Further information is set out in theoffer document, which was sent to shareholders on 12 April 2006. On 4 May 2006 L'Oreal announced that, as at 1.00 pm on 3 May 2006, being thefirst closing date of the offer, valid acceptances had been received in respectof 79.4% of the existing issued ordinary share capital of The Body Shop.Together with the 22.8 million shares in The Body Shop already held by L'Oreal, L'Oreal had therefore acquired or received valid acceptances of the offer inrespect of 89.9% of the existing issued share capital at this time. L'Orealalso announced that the offer would remain open for acceptance until 1.00 pm on31 May 2006. We believe that L'Oreal's significant strengths in the management anddevelopment of global brands, combined with our skills as a global retailer withstrong values and commitments, will be a powerful combination in the cosmeticsand personal care market place. It is intended that The Body Shop will retainits existing identity and values and operate independently within the L'Orealgroup, led by the current management team. Current Trading and Outlook In the first eight weeks of the current year, sales trends are slightly ahead ofthose reported for the last full year, with total retail sales up 8% andcomparable store sales up 5%. Over the last four years, our operating profit and earnings per share haveimproved substantially and we continue to manage the business for sustainablelong-term performance. We look forward to continuing to work together with ouremployees, franchisees and The Body Shop consultants to fulfil The Body Shop'spotential as a global retail brand. Adrian Bellamy Peter SaundersExecutive Chairman Chief Executive Officer 5 May 2006 Operating Review In this review, all comparisons between the 2006 and 2005 financial years relateto the 52 week period to 25 February 2006 and the 52 week period to 26 February2005. Retail Sales In the 52 weeks ended 25 February 2006, total retail sales across all channelsincreased by 7% to £772.0 million (2005: £724.0 million), with comparable storesales up 4%. Retail sales through The Body Shop At Home increased by 14% to£53.4 million (2005: £46.9 million). Sales performance by region is shown below: Sales Performance52 weeks to 25 February 2006 Store Sales The Body Shop Total Retail Comparable At Home Sales Store Sales Americas +3% +9% +4% -1%Asia Pacific +10% +24% +11% +6%Europe, MiddleEast & Africa +7% - +7% +7%UK & Republicof Ireland +2% +15% +3% +2%Total +6% +14% +7% +4% After 88 net store openings during the year, the number of stores worldwidetotalled 2,133 (2005: 2,045) at the year end, of which 815 (2005: 733) werecompany-owned and the remainder franchised. Operating Performance Group turnover increased by 16% to £485.8 million (2005: £419.0 million), with69% (2005: 69%) representing retail sales through company-owned stores, The BodyShop At Home in company-owned markets and the internet. The balance of groupturnover principally represents wholesale sales to franchisees. Gross profit increased by 17% to £318.5 million (2005: £272.7 million), withgross margins increasing to 65.6% (2005: 65.1%). After deducting the directcosts associated with operating company-owned stores, The Body Shop At Home incompany-owned markets and sales via the internet, the profit contribution rose12% to £155.9 million (2005: £139.7 million). Other operating expenses were £114.4 million (2005: £100.5 million). Operatingexpenses for the year include in excess of £4.0 million in non-recurring costs,primarily comprising: reorganisation and redundancies; costs relating to therecently acquired franchise businesses in Canada and Benelux; and exceptionalinventory write-offs principally relating to the US supply chain issues.Operating margins were 8.5% compared with 9.4% in the previous year, withoperating profit increasing to £41.5 million (2005: £39.2 million). Profit before tax increased by 5% to £37.6 million (2005: £35.7 million). Geographical Analysis Americas 2006 2005 Stores at year end 444 429Store openings (net) 15 13Company-owned stores 373 351 £m £m Change Store sales 152.4 147.9 +3%The Body Shop At Home 23.4 21.5 +9% --------- -------- Total retail sales 175.9 169.4 +4% Turnover 161.0 142.3 +13%Operating profit 17.4 21.9 -20% Total retail sales growth of 4% was enhanced by positive growth in The Body ShopAt Home and e-commerce. Comparable store sales of -1% reflect a decline of 2% inthe USA, together with an improvement to +1% in Canada from -3% in the previousyear. The four stores in Mexico performed strongly. Retail sales in the USA underperformed expectations during the Christmas tradingperiod. This was driven in part by lower traffic levels in the shopping malls,compounded by execution issues in the inventory supply chain that lead to someout-of-stock positions. In order to resolve these issues, a special task forcewas put in place last autumn and good progress has now been made in rectifyingthe situation. The e-commerce site in the USA (www.thebodyshop.com) has outperformedexpectations since its launch in September 2004, more than doubling sales andmaking a contribution to profit in its first full year of operation. The movement in operating profit reflects the additional costs incurred as aresult of the supply chain execution issues experienced in the second half oflast year, including provision of resources from the global centre andadditional costs relating to air freight and expediting goods to stores. Asia Pacific 2006 2005 Stores at year end 605 554Store openings (net) 51 30Company-owned stores 68 60 £m £m Change Store sales 201.3 182.3 +10%The Body Shop At Home 10.4 8.4 +24% --------- -------- Total retail sales 211.7 190.7 +11% Turnover 86.1 64.4 +34%Operating profit 27.2 20.1 +35% The Asia Pacific region continued to achieve strong sales growth, with totalretail sales up 11% and comparable store sales up 6%. The benefits of strongbrand positioning and in-store execution were helped by generally improvingeconomies in the region. Countries achieving particularly strong comparablestore sales growth included Malaysia (+17%), Indonesia (+17%), Taiwan (+11%),Singapore (+9%), Japan (+7%) and Hong Kong (+6%). Korea showed an improvement to+2% from -8% in the previous year. In Australia, comparable store sales wereflat but strong growth continued to be achieved in The Body Shop At Home (+24%). The growth in regional turnover and operating profit reflects the continuingpositive trend in retail sales, together with particularly strong growth inwholesale sales and favourable product mix. Europe, Middle East & Africa 2006 2005 Stores at year end 779 758Store openings (net) 21 4Company-owned stores 132 94 £m £m Change Store sales 218.4 203.3 +7%The Body Shop At Home - - --------- -------- Total retail sales 218.4 203.3 +7% Turnover 94.2 74.4 +27%Operating profit 19.1 16.0 +19% Both total retail sales and comparable store sales grew by 7%. Highlightsincluded continuing strong growth in the Middle East (+11%) and the Nordicregion (+12%). In Western and Southern Europe, good positive growth was achievedin France (+11%), Spain (+6%), Holland (+6%) and Germany (+3%), whilst the trendcontinued to improve in Italy (-2%). The store base in Eastern Europe, althoughsmall, is performing well. Stores were opened in two new franchised marketsduring the year, Jordan and Russia. In Russia, there were six stores in place bythe year end, with another 11 openings planned for the current year. The increase in regional turnover and operating profit has been achieved as aresult of positive underlying sales trends, strong growth in wholesale sales andthe acquisition of the Benelux head franchise businesses in March 2005. UK & Republic of Ireland 2006 2005 Stores at year end * 305 304Store openings (net) 1 -9Company-owned stores 242 228 £m £m Change Store sales 146.4 143.6 +2%The Body Shop At Home 19.6 17.0 +15% --------- -------- Total retail sales 166.0 160.6 +3% Turnover 144.5 137.9 +5%Operating profit 13.2 13.3 -1% * These store numbers exclude 138 (2005: 101) concessions in pharmacies. Total retail sales grew by 3%, with comparable store sales up by 2%. Thecomparable store sales performance reflects growth of 3% in the UK, with adecline of 1% in the Republic of Ireland. The growth in the UK was achieveddespite a challenging trading environment during the Christmas period. The Body Shop At Home progressed well, with growth of 15% during the year.Opportunities for cross-channel marketing between the stores and The Body ShopAt Home continue to be developed. The movement in regional turnover reflects the growth in retail sales, withoperating profit broadly level year on year. Interest and Exchange Rates The net interest charge of £3.9 million relates to average net debt of £26.3million over the year (2005: £42.2 million). The balance sheet showed net debtof £12.7 million at the period end, compared with net debt of £19.8 million atthe end of the previous year. The currencies to which the Group is principally exposed are the US dollar andthe Euro. In addition, there is exposure to the currencies of Singapore, HongKong and Canada. The results of overseas subsidiaries have been translated at an average sterling/dollar rate of $1.80 (2005: $1.84) and an average sterling/euro rate of €1.47(2005: €1.47). 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 year is £8.4 million, giving an effective rate of 22.3%(2005: 19.3%). The effective tax rate reflects continued benefit from theutilisation and recognition of brought forward operating losses and temporarydifferences in the US business. In line with IAS 12, these losses and temporarydifferences are recognised as a deferred tax asset in the period under review,which has the effect of reducing the effective tax rate. Earnings per share were 13.6 pence (2005: 13.8 pence) on a weighted averagenumber of shares of 210.5 million (2005: 206.6 million), which excludes theshares held by The Body Shop International Employee Share Trust. As previously announced, the Board has resolved to pay a second interim dividendof 4.4 pence per share in lieu of a final dividend (2005: final dividend of 3.8pence per share). This second interim dividend will be paid on 3 July 2006 toshareholders who were on the register at 24 March 2006. Together with the firstinterim dividend of 2.2 pence, the total for the year is 6.6 pence (2005: 5.7pence) per share. Cash FlowThe Group generated net cash inflow from operating activities of £71.2 million(2005: £68.7 million). Movement in working capital was helped by a £7.3 millionreduction in inventory to £54.8 million (2005: £62.1 million), reflectingefficiencies gained through the investment in supply chain management systems. Capital expenditure (excluding acquisitions) amounted to £32.0 million (2005:£20.9 million), with approximately two thirds invested in new stores and storerefurbishments and the majority of the balance in information systems. Acquisition expenditure of £4.4 million includes the purchase of the Beneluxhead franchise businesses in March 2005. 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. Consolidated Income Statement For the 52 weeks ended 25 February 2006 Total Total 2006 2005 £m £m ----------- ----------- Revenue 485.8 419.0Cost of sales (167.3) (146.3) ----------- ----------- Gross profit 318.5 272.7Operating expenses (277.0) (233.5) ----------- ----------- Operating profit 41.5 39.2Finance income 1.3 1.3Finance costs (5.2) (4.8) ----------- ----------- Profit on ordinary activities before taxation 37.6 35.7Taxation (8.4) (6.9) ----------- ----------- Profit for the financial period 29.2 28.8 =========== =========== Attributable to:Equity holders of the parent 28.6 28.5Minority interest 0.6 0.3 ----------- ----------- 29.2 28.8 =========== =========== Earnings per share (Note 2)- Basic earnings per ordinary share 13.6p 13.8p- Diluted earnings per ordinary share 13.2p 13.3p Group Balance Sheet At 25 February 2006 25 Feb 2006 26 Feb 2005 Restated £m £mAssetsNon-current assetsProperty, plant and equipment 90.3 73.1Intangible assets 9.4 9.8Goodwill 53.5 47.8Deferred tax assets 10.9 8.6Non-current receivables 4.6 4.7 ---------- ----------Total non-current assets 168.7 144.0 Current assets Inventories 54.8 62.1Trade and other receivables 40.3 32.4Derivatives 0.1 0.2Cash and cash equivalents 53.8 41.6 ---------- ----------Total current assets 149.0 136.3 ---------- ----------Total assets 317.7 280.3 ---------- ---------- LiabilitiesCurrent liabilitiesTrade and other payables (57.1) (49.7)Interest-bearing loans and borrowings (51.1) (45.6)Obligations under finance leases (2.3) (2.4)Tax payable (6.9) (8.0)Provisions (0.8) (0.8) ---------- ----------Total current liabilities (118.2) (106.5) ---------- ---------- Non-current liabilities Interest-bearing loans and borrowings (0.2) (0.3)Obligations under finance leases (12.9) (13.1)Provisions (0.6) (1.4) ---------- ----------Total non-current liabilities (13.7) (14.8) ---------- ----------Total liabilities (131.9) (121.3) ---------- ---------- ---------- ----------Net assets 185.8 159.0 ========== ========== Equity Called up share capital 10.9 10.7Share premium account 65.9 62.3Reserve for own shares (6.1) (6.1)Translation reserve 2.3 -Other reserves 5.5 1.2Retained earnings 105.8 89.8 ---------- ---------- Equity attributable to equity holders of theparent 184.3 157.9 Minority interests 1.5 1.1 ---------- ----------Total equity 185.8 159.0 ========== ========== These financial statements were approved by the Board on 5 May 2006. Group Cash Flow 52 weeks to 52 weeks to 25 Feb 2006 26 Feb 2005 Restated £m £m Cash flows from operating activitiesOperating profit 41.5 39.2 Adjustments:Depreciation 15.0 14.0Loss on disposal of property, plantand equipment 1.5 0.8Loss on disposal of intangible assets - 0.1Amortisation 2.4 2.1Impairment of assets 0.2 -Share option charge 1.4 1.4 Exchange movement 0.7 1.0 Changes in working capital (excluding the effectsof acquisitions):(Increase)/decrease in inventories 11.7 (0.3)(Increase)/decrease in trade and otherreceivables (5.7) 5.9Increase in trade and other payables 3.3 4.7(Decrease) in provisions (0.8) (0.1) --------- ---------Cash generated from operations 71.2 68.8 Interest received 1.3 1.3Interest paid (5.2) (4.8)Income tax paid (9.5) (6.5) --------- ---------Net cash from operating activities 57.8 58.8 --------- --------- Cash flows from investing activities Acquisition of subsidiaries, net ofcash acquired (4.4) (19.3)Purchase of property, plant andequipment (32.0) (20.9) Purchase of intangible assets (2.0) (4.6) --------- ---------Net cash used in investing activities (38.4) (44.8) --------- --------- Cash flows from financing activitiesProceeds from the issue of ordinaryshare capital 3.8 2.4Proceeds from borrowings 1.9 19.9Capital element of finance leaserental payments (0.3) (0.5) Dividends paid to Company's equityholders (12.6) (11.7) --------- ---------Net cash used in financing activities (7.2) 10.1 --------- --------- --------- ---------Net increase in cash and cashequivalents 12.2 24.1 Cash and cash equivalents at thebeginning of the period 41.6 17.5 --------- ---------Cash and cash equivalents at the endof the period 53.8 41.6 --------- --------- Consolidated Statement of Changes in Equity Attributable to equity holders of the parent --------------------------------------------------------------------- Share capital Share premium Other reserves Translation Retained Minority Total equity reserve earnings interest £m £m £m £m £m £m £m Balance at29 February 2004 10.4 54.7 (3.6) - 73.0 - 134.5 ------ ------ ------ ------- ------- ------ ------ Changes in equity for 2004/2005: Employee share - - 4.3 - - - 4.3option schemeShares issued:Cash 0.3 2.1 - - - - 2.4Other thancash - 5.5 - - - - 5.5Businesscombination - - - - - 0.8 0.8Dividends - - - - (11.7) - (11.7)Puttableminorityinterest - - (5.6) - - - (5.6) ------ ------ ------ ------- ------- ------ ------Net incomerecogniseddirectly inequity 0.3 7.6 (1.3) - (11.7) 0.8 (4.3) Profit forthe period - - - - 28.5 0.3 28.8 ------ ------ ------ ------- ------- ------ ------Totalrecognisedincome andexpense forthe period 0.3 7.6 (1.3) - 16.8 1.1 24.5 ------ ------ ------ ------- ------- ------ ------ ------ ------ ------ ------- ------- ------ ------Balance at26 February 10.7 62.3 (4.9) - 89.8 1.1 159.02005 ------ ------ ------ ------- ------- ------ ------Balance at27 February 10.7 62.3 (4.9) - 89.8 1.1 159.02005 ------ ------ ------ ------- ------- ------ ------Changes inequity for2005/2006: Employee share - - 4.3 - - - 4.3option schemeShares 0.2 3.6 - - - - 3.8issuedDividends - - - - (12.6) - (12.6)Currencytranslationdifferences - - - 2.3 - (0.2) 2.1 ------ ------ ------ ------- ------- ------ ------Net incomerecogniseddirectly inequity 0.2 3.6 4.3 2.3 (12.6) (0.2) (2.4) Profit forthe period - - - - 28.6 0.6 29.2 ------ ------ ------ ------- ------- ------ ------Totalrecognisedincome andexpense forthe period 0.2 3.6 4.3 2.3 16.0 0.4 26.8 ------ ------ ------ ------- ------- ------ ------ ------ ------ ------ ------- ------- ------ ------Balance at25 February 10.9 65.9 (0.6) 2.3 105.8 1.5 185.82006 ------ ------ ------ ------- ------- ------ ------ Segmental Analysis 2006 2005 Shop NumbersAmericas 444 429Asia Pacific 605 554Europe, Middle East & Africa 779 758UK & Republic of Ireland* 305 304 ------------- ------------ 2,133 2,045 ------------- ------------ Comparable Store SalesAmericas -1% 0%Asia Pacific +6% +5%Europe, Middle East & Africa +7% +2%UK & Republic of Ireland +2% 0% ------------- ------------ +4% +2% ------------- ------------ Restated £m £m Retail SalesAmericas 175.9 169.4Asia Pacific 211.7 190.7Europe, Middle East & Africa 218.4 203.3UK & Republic of Ireland 166.0 160.6 ------------- ------------ 772.0 724.0 ------------- ------------ TurnoverAmericas 161.0 142.3Asia Pacific 86.1 64.4Europe, Middle East & Africa 94.2 74.4UK & Republic of Ireland 144.5 137.9 ------------- ------------ 485.8 419.0 ------------- ------------ Operating ProfitAmericas 17.4 21.9Asia Pacific 27.2 20.1Europe, Middle East & Africa 19.1 16.0UK & Republic of Ireland 13.2 13.3Central services (35.4) (32.1) ------------- ------------Operating profit 41.5 39.2 ------------- ------------ \* These numbers exclude 138 (2005:101) concessions in pharmacies. Notes to the Accounts 1) Basis of preparationThese financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRSs and IFRIC interpretations) issued by theInternational Accounting Standards Board (IASB as adopted by the EU) and withthose parts of the Companies Act 1985 applicable to companies preparing theiraccounts under IFRS. This is the first time the Company has prepared itsfinancial statements in accordance with IFRSs, having previously prepared itsfinancial statements in accordance with UK accounting standards. The accounting policies followed in this preliminary 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. These financial statements do not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. The financial information forthe 52 weeks ended 25 February 2006 and 26 February 2005 is extracted from theGroup's financial statements to those dates. The financial statements for bothperiods have received unqualified auditors' reports, those for the 52 weeksended 26 February 2005 having been filed with the Registrar of Companies andthose for 25 February 2006 to be filed in due course. 2) Earnings per share 2006 2005 £m EPS £m EPS Profit attributable to equity holders of theCompany 28.6 13.6p 28.5 13.8p 2006 2005 Weighted average number of shares in issue(millions) 210.5 206.6Dilutive effect of share options (millions) 6.6 6.7 ------ ------ 217.1 213.3 ------ ------ Diluted earnings per share 13.2p 13.3p The weighted average excludes 4,573,645 (2005: 4,573,645) shares held by theEmployee Share Trust. 3) Annual General Meeting and Report and AccountsThe Annual General Meeting will be held at 11.00am on Thursday 27 July 2006 atThe Body Shop International PLC, Watersmead, Littlehampton BN17 6LS. The AnnualReport and Accounts will be sent to shareholders on, or close to, 8 June 2006. This information is provided by RNS The company news service from the London Stock Exchange