Brown Group Regulatory News (BWNG)

9 May 2007 07:02

Brown (N.) Group PLC09 May 2007 09 May 2007 N Brown Group plc PRELIMINARY RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 24 FEBRUARY 2007 N Brown Group plc, the Manchester based direct home shopping company, todayannounces its Preliminary results for the 52 weeks to 24 February 2007. Highlights: •Group turnover rose 13.9% to £533.8m •Group operating profit from continuing operations increased by 26.5% to £76.4m •Group profits before tax up 20.9% to £65.4m* •Earnings per share up 21.2% from continuing operations to 15.89p •Online sales grew by 51% to £112m representing 22% of total sales (2006: 16%) •Proposed dividend increase of 20% to 5.34p, making a total for the year of 7.53p also up 20% •Current trading for Group shows sales growth of 17.9% for the first 10 weeks to 5 May 2007, including online sales up 47% representing 26% of the total. * After provision for costs of £0.9m from the £80m return of value, and £2.4madverse fair value adjustment on foreign exchange contracts Lord Alliance CBE, Chairman, said: "The board has been successful in focusing on its core home shopping business, resulting in record levels of turnover and operating profit and a strong balancesheet. This enabled us to make the one-off £80m return of value to shareholdersin March." "Following an encouraging start, I am confident the group will make further progress this year, despite challenging market conditions." Alan White, Chief Executive, added: "This was another excellent year for the group and we are pleased with thestrong performance across the business. We have focused on improving the qualityand scope of our catalogue and product ranges, providing better customerservices and the continued development of all our channels to market. Theinternet has become an increasingly important part of our strategy and as wellas providing a core sales channel, now serves as an excellent platform for thelaunch of new catalogue brands and concepts. With the strategy we have in place,I am confident that we will deliver further growth this year." -Ends- For further information please contact: N Brown Group plcAlan White, Chief Executive On the day: 0207 554 1400Dean Moore, Finance Director Thereafter: 0161 238 2202Website : www.nbrown.co.uk Gavin Anderson & CompanyFergus Wylie / Clotilde Gros Tel: 020 7554 1400 CHAIRMAN'S STATEMENT 2007 The group results for the 52 weeks ended 24th February 2007 show continuedprogress in our specialist home shopping business, resulting in record levels inboth sales and profits. To reflect this the directors are proposing a 20%increase in the final dividend on top of the 27p per share return of value paidto shareholders in March 2007. The group has also announced its commitment toclearing the current pension fund deficit of £27m by 2010. Group Group revenue from continuing operations is up by 13.9% to £533.8m and operatingprofit is up by 26.5% to £76.4m. Profit before taxation is up by 20.9% to £65.4mafter providing for costs of £0.9m arising from the £80m return of value toshareholders, and a £2.4m adverse fair value adjustment on foreign exchangecontracts (2006: £1.7m gain). Excluding these items, the group profit beforetaxation is up by 31.1%. Earnings per share from continuing operations are15.89p, an increase of 21.2%. The directors are proposing a 20.0% increase inthe final dividend to 5.34p, making a total for the year of 7.53p (up 20.0%),covered 2.1 times. Net debt at the year-end was £104.0m, up £11.1m on last year principally due tothe acquisition of Gray & Osbourn and an increase in home shopping debtors as aconsequence of buoyant trading. Net interest payable on borrowings was £7.1m,covered 10.7 times. Gearing at the year end was 51% (2006: 38%) before thereturn of £80m to shareholders in March 2007. Home Shopping Turnover in our home shopping division was £523.8m, an increase of 14.0%.Operating profit rose 22.3% to £76.3m. These results have been driven by stronglevels of growth in all key customer groups and product categories, supported byimprovements in customer service and efficiencies in our operating costs. Sales to mid-life customers, aged 45 to 65, rose by 14% to £363m and there isfurther excellent growth potential in this core market. These sales include £12mfrom Gray & Osbourn, an upmarket ladieswear catalogue which we acquired in June2006 for £9.4m. Revenue from the younger titles, serving those customers aged 30to 45, increased by 16% to £136m. Our catalogue brands for the 65 plus marketcontributed sales of £25m, up by 4%. The number of active established customers on our database rose by 3% andimprovements to our product ranges and catalogue offers combined to increase theaverage spend per customer by 7%. Sales from newly recruited customers rose by9%. This demonstrates the success of our continued focus on targeting thosecustomers who will purchase from us over the long-term, even though the initialrecruitment costs are much higher. The sales growth has been fairly evenly spread amongst our four product groupswith ladieswear up 15%, footwear up 11%, menswear up 9% and home and leisure up14% on the previous year. In the clothing and footwear categories we haveexpanded the number of lines and size options even further to reinforce ourmarket-leading position as the best provider of a wide choice of fittings in theUK. The ranges are now more fashionable reflecting the younger outlook of ourexisting customers. This has also proved attractive to new customers who find ithard to match the choice of styles and sizes we offer when they are on the highstreet. The format and frequency of our mailing program has continued to evolve,complemented by expanded email and telemarketing campaigns. We have implementeda significant increase in the number of pages contained in our mid-seasonmailings facilitated by the Royal Mail's new pricing structure introduced inAugust 2006. This reduces costs in the short-term and gives downstream benefitsto ourselves, Royal Mail and our customers. The increased pagination hasbenefited our home and leisure ranges in particular as this increased exposure,together with a successful Christmas catalogue, accounts for the substantialsales uplift we have experienced. We have focussed more of our resources on developing online sales and theinternet remains our fastest growing channel to market. Online orders have nowovertaken those received by mail, rising by 51% to £112m, and accounting for 22%of total home shopping sales compared with 16% last year . The internet is moreconvenient for our customers and continues to deliver incremental sales, attractcustomers and reduce our operating costs. There are good reasons behind the fall in gross margin on home shopping salesfrom 56.8% to 55.6%. Our new credit scoring systems have enabled us to targetincreases in customers' credit limits thereby generating profitable incrementalsales. However as expected this has also led to some additional bad debt andthere has been a reduction in the VAT recoverable on bad debt. We have been moreaggressive with our in-season mark down activity both in the discount leafletsand our online clearance sites, which has contributed to the gross marginreduction. The benefit of this action is that, excluding the stock we acquiredwith Gray & Osbourn, there has been no increase in our stock levels. Operating costs have only increased by 8.0% with substantial efficienciesachieved in carriage, marketing and payroll costs. The net result of theseoffsetting factors is a 1.0% increase in the operating margin rate to 14.6%. Current Trading The favourable sales trends have continued into the new financial year. Salesfor the ten weeks to 5th May 2007 have increased by 17.9%, or by 14.0% excludingthe sales of Gray & Osbourn. Again we are seeing good growth rates across allour major product categories and customer groups. Online sales continue toflourish with an increase of 47%, representing 26% of the total. Two new launches have taken place this season. Simply Be Home, a catalogue ofhome and leisure goods suitable for our younger customers, was launched inFebruary 2007. In addition, we launched Simply Yours in March 2007 to capture anincreased share of the lingerie market, particularly in the larger sizes. Bothof these catalogue brands have delivered to our expectations and will bedeveloped further during the year. Outlook We believe we have a clear understanding of the needs and requirements of ourcustomers and will continue to expand the range of catalogues and products tomeet their demands. The internet provides a very good forum for low-cost testingof new products and concepts and we plan to take full advantage of our expertisein this field. During the last year we have invested over £12m in our customercontact centres and distribution centres to ensure we can improve the service toour customers as well as driving additional efficiencies in our operations. As a result of the stronger than expected trading since the beginning of 2007the board is confident that the management and our excellent workforce have theskills and expertise to deliver further progress this year. Lord Alliance of Manchester, CBE9 May 2007 CHIEF EXECUTIVE'S REVIEW 2007 The results for the 52 weeks to 24th February 2007 demonstrate clearly that ourhome shopping strategy to focus on niche customers and products has beenexecuted successfully with record results from every part of the business. Groupsales were £533.8m, up by 13.9% on last year, and operating profit fromcontinuing businesses increased by 26.5% to £76.4m. Home Shopping Home shopping sales rose by 14.0% to £523.8m. We anticipated a decline in therate of sales growth in the second half as the year on year comparatives becamemore demanding but the momentum built up from the first half in factstrengthened in the second half. Underlying sales growth of 11.4% for the yearwas complemented by the acquisition of Gray & Osbourn in June 2006 which sawsales of £12m during the period. The most pleasing aspect of the results was the increase in sales from allcustomer and product groups together with improved levels of customer serviceand real reductions in major operating costs. Customer Groups We have seventeen different catalogue brands to which we recruit customers, eachof them focusing on a particular type of customer or product. For simplicity wegroup them by age into younger, midlife and older. The younger customer group comprises Fashion World, Classic Confidence andSimply Be and, in aggregate, sales rose last year by 16% to £136m, the fastestgrowth of all the groups, representing 26% of group sales. The highest sales inthis group are from Fashion World which serves value conscious customers intheir forties and saw double-digit sales growth. Simply Be remains the starperformer, with sales exceeding £50m for the first time, an increase of over30%. Simply Be's success can be attributed to the provision of fashionableclothing in all sizes through to size 34 (and occasionally up to size 38) forthe woman in her thirties who finds it hard to find clothes on the high streetto fit her. These are our highest spending customers and during the year weincreased the catalogue by 20 pages to accommodate larger ranges of lingerie andfootwear, all of which have been well received. The largest and longest established group comprises our midlife brands which aretargeted at customers aged between 45 - 65 and account for £351m, or 67%, ofgroup sales. Despite the fact these brands are already well-established we sawencouraging sales growth of 10%, with particularly strong performances fromAmbrose Wilson, Oxendales, Fifty Plus and Shapely Figures. These customers loveto shop from the comfort of their own home from our catalogues which provide afull range of stylish, yet comfortable, clothing and footwear which is availablein a wide assortment of sizes and fittings, as well as a targeted range of homeand leisure merchandise. The latest addition to the midlife group is Gray & Osbourn, an upmarketladieswear catalogue mainly selling high quality German brands. The business wasacquired in June 2006 for a consideration of £9.4m and has since performed toour expectations contributing sales of £12m. The upmarket fifty plus customersegment is the fastest growing part of home shopping and Gray & Osbourncomplements our acquisition in 2004 of House of Bath, which specialises in hardto find items for the home and garden. The third group of catalogue brands is our older group, targeting customers over65, which contributed sales of £25m, up by 4%, principally through HeatherValley and Special Collection, representing 5% of total sales. The vast majority of the sales growth has come from our established database ofcustomers recruited in previous financial years. We have a database of over fivemillion customers who have placed an order in the last two years and during 2006/7 the number of active customers rose by 3% and the average spend per customerrose by 7%. The remainder of the sales growth was from newly recruited customerswho respond to product advertisements or mini-catalogues in womens magazines orthe national press, or are attracted by our television advertisements. Inaddition we have recruited encouraging levels of new customers through theinternet search engines. The sales from all newly recruited customers rose by9%. Product Groups Ladieswear sales, excluding Gray & Osbourn, increased by 10% to £270m,accounting for 52% of total sales. Our customers want to dress more fashionablybut still comfortably and our buying team have managed this balance particularlywell this year. We are subject to the same fashion trends as the market as awhole so we saw a strong performance from casual clothing in the first half withthe smarter, more tailored styles prevalent in the second half. Younger fashiondid well on the back of Simply Be's strength and knitwear performed stronglythroughout the year. We specialise in offering our clothing in a wide range of sizes such that overhalf our ladieswear sales are in size 20 or above, sizes which are difficult forhigh street chains to manage effectively and profitably. We also have an enormous range of options for corsetry and lingerie. Forexample, we sell bras from size 32A right through to 54K in a selection ofstyles and colours which is not matched by any other retailer. We have expandedthe styles suitable for our younger customers which has generated incrementalsales growth. Wide-fitting footwear sales have seen a further 11% growth. One of the keydrivers of this growth was introducing a footwear range more suitable for ouryounger customers, and the encouraging results mean this range will be expandedin future seasons. We have specifically focused some marketing campaigns to encourage more of ourcustomers to buy from product areas where they have not previously done so. Fromour experience we know the more categories a customer purchases from the highertheir loyalty in the future and it is promising that these campaigns have beensuccessful. Currently only 11% of customers buy from all three of our clothing,lingerie and footwear ranges and there is a strong growth opportunity in thefuture to increase the level of cross-selling. Menswear has continued its upward sales trend with an increase of 9%. Thefastest growth came from our younger styles and sportswear which we havedeveloped to complement our Premier Man ranges. Sales of home and leisure products grew by 14% to £146m, well above ourexpectations, and now account for 28% of total sales. There were particularlystrong performances from household textiles, electrical, furniture, homewaresand gifts. The success was partially derived from more pages being allocated tohome and leisure in the expanded mid-season mailings as a result of the lowerpostage costs. In addition we had an extremely strong Christmas gift cataloguedue to increased pagination and improved presentation. One of the core features of our business is the high number of product optionsto provide our extensive choice of sizes and fittings. During the year weincreased the number of options by 22% to over 150,000. The management of such alarge option range within a multiplicity of catalogues, brochures and leaflets,balancing the need for a high level of service with low levels of dormancy isone of our key skills. An encouraging feature of the sales performance was a 4% increase in the averageselling price, after a number of years of falling prices. The increase was downto the mix of price points, as like for like selling prices were stable. Internet In order to maintain our position in the home shopping sector there have beensignificant changes in the ways we communicate with our customers in recentyears. The most fundamental change has been the emergence of the internet. Ouronline sales rose by a further 51% this year to £112m, representing 22% of totalsales, compared with 16% last year. This increase is due to a number of factors. The growth of broadband penetrationis giving more customers the facility to use the internet and whereas youngcustomers were the early adopters we are now seeing growth rates which aresimilar right across the age spectrum which plays very well for our targetmarkets. We continue to promote the internet to our customers through prominentdisplay of the website address on all catalogues and advertisements and offer anintroductory incentive for them to place their first order online. Once customers go online we continue to see an uplift of about 25% in theiraverage order value, as they are able to switch seamlessly between all of ourmany websites and access the entire group's product assortment and promotions.In addition we are then able to include them in our email marketing campaigns.During the year we ran over 200 email campaigns which generated furtherincremental demand at a very low promotional cost. Recruitment of new customers by sponsoring key words in the internet searchengine is now a core part of our recruitment campaigns and there is further workwe can do to optimise this activity. Mailings The mailing of catalogues remains the key stimulus to customers ordering whetherthey use the telephone, online or postal channels. We have further refined ourmailing programme this year. The main branded catalogues had additional pagesand increased sales by 7% but it was the mid-season mailings which saw thelargest increases from publications such as Classic Detail, Selections, New Now,Christmas Gifts and the seasonal Value catalogues. These mailings are mainly comprised of existing product lines, but byintroducing some new lines and changing catalogue formats and photography we cancreate a very different feel to the new offer. Overall sales from thesemid-season mailings rose by 16% to £195m. We added more pages into the mailingsas a direct consequence of the new Royal Mail pricing structure introduced inAugust 2006 which allows larger catalogues to be mailed cost effectively. Thesedrive a higher response level and keep our customers more active. Incremental sales are also generated by our telemarketing activities on bothinbound and outbound calls, and during the year sales from these activities roseby 20% to £41m. Service and Costs There has been a focus on improving the conversion of customer demand into netsales. We delivered a higher level of stock availability during the year and sawthe rate at which customers return goods reduce by 0.7%, due to improved productquality and fit. In addition the introduction of the new behavioural creditscoring systems has reduced the proportion of credit rejects. The benefit ofthese actions has been reflected in the lower level of marketing discounts andincentives needed to stimulate sales and higher levels of customer satisfactionreported by our internal surveys. The increased frequency of mailings allows the progressive mark down of excessstocks during the season. This resulted in higher in-season discounting butreduced terminal stocks, leaving total stock levels at only a similar level tolast year on a like for like basis. However the main reason for the 1.2% declinein the rate of gross margin is the higher bad debt charge resulting from the mixof customers and changes to our credit policies to increase profitable sales,together with reduced VAT relief on bad debts. We have seen significant efficiencies in our operating costs, especiallycarriage, marketing and payroll costs, and this has been the main contributor tothe 1.0% increase to 14.6% in the operating margin. Infrastructure We have made a number of significant improvements to our operatinginfrastructure. The £17m development of our second distribution centre atHadfield has seen one new warehouse completed before Christmas and two othersconstructed for commissioning in the first half of 2007, including a bespokehanging garments warehouse. Additional call centre capacity has been securedwith an outsourced facility in Scotland and our call centre in Manchester hashad upgrades applied to all of the major operating equipment. In August 2006 wetransferred the management of our self-employed courier network, who deliverabout two-thirds of all our customer orders, to TNT Post as part of a 10-yeardistribution agreement which should result in improved services at an attractiveprice. The new generation of websites with many enhanced features are currently underdevelopment and will start to be deployed throughout 2007. Zendor Zendor, which provides home shopping services to other retailers, increased itsrevenues by 9.9% to £10.0m and produced an operating profit of £0.1m, comparedwith a loss of a similar amount last year. We have invested in additionalwarehouse facilities, which will be further expanded during 2007, in readinessfor winning new business from a strong client prospect list. Current Trading and Prospects The growth trends established in 2006 have continued into 2007, with group salesfor the 10 weeks to 5th May 2007 up by 17.9%, or 14.0% on a like for like basis.This growth is spread across all the customer and products groups and thebusiness has continued to increase the volume and variety of cataloguesdistributed. We have a number of initiatives to widen the appeal of our catalogues whilstcontinuing to develop our core selling propositions. We recently launched SimplyLiving which is a more contemporary home and leisure offer for our youngercustomers. In March 2007 we commissioned a television advertising and mediacampaign to promote the launch of Simply Yours, with the strapline "the aboveaverage underwear company" targeting the younger, larger but more affluentcustomer for our corsetry and lingerie ranges. We are increasing the range of products available to our online customers,including our version of fast fashion which will see twenty new lines promotedexclusively on the internet in May 2007, although they may be included in thecatalogues later in the year. The internet model has changed dramatically fromthe days when we merely replicated our catalogues online, to one where it is thetesting ground for new concepts. The demographic trends for the customer population over 40 are very favourableand we believe we are well-placed to deliver the appropriate products to thedifferent segments of this group through a portfolio of existing and newcatalogues which will appeal to both the value conscious and the upmarketcustomer. We will endeavour to increase our market share through a wideassortment of recruitment techniques which should increase our active customerdatabase as well as driving higher sales per customer. I am confident that our strategy has the ability to deliver further growth inthe current financial year which will be for the 53 weeks to 1st March 2008. Alan White9 May 2007 CONSOLIDATED INCOME STATEMENT 52 weeks to 52 weeks to 24-Feb-07 25-Feb-06 Note £m £m Revenue - continuing operations 1 533.8 468.7 ----------------------------------Operating profitGroup operations 1 76.4 62.3 Share of joint venture operating loss - (1.9) ----------------------------------Operating profit - continuing operations 76.4 60.4 Investment income 2.7 2.8Finance costs (11.3) (10.8)Fair value adjustments to financialinstruments (2.4) 1.7 ----------------------------------Profit before taxation 65.4 54.1 Taxation (18.5) (15.5) ----------------------------------Profit for the year from continuing 46.9 38.6operations Loss for the year from discontinuedoperations 2 (1.2) (2.5) ----------------------------------- Profit attributable to equity 45.7 36.1holders of the parent ---------------------------------- Earnings per share from continuingoperations 5 Basic 15.89p 13.11pDiluted 15.80p 13.06p Earnings per share from continuingand discontinued operations 5 Basic 15.48p 12.26pDiluted 15.40p 12.22p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE 52 weeks to 52 weeks to 24-Feb-07 25-Feb-06 £m £m Exchange differences on translation offoreign operations 0.4 (0.2) Actuarial gains/(losses) on defined benefitpension schemes 8.3 (4.9)Tax on items recognised directly in equity (0.5) 1.5 ----------------------------------Net income/(expense) recognised directly in 8.2 (3.6)equity Profit for the year 45.7 36.1 ----------------------------------Recognised income for the year attributableto equity holders of the parent 53.9 32.5 ---------------------------------- CONSOLIDATED BALANCE SHEET 24-Feb-07 25-Feb-06 £m £mNon-current assetsIntangible assets 30.9 22.0Property, plant & equipment 68.9 61.0Deferred tax assets 11.3 10.4 ---------------------------------- 111.1 93.4 ----------------------------------Current assetsInventories 54.9 52.5Trade and other receivables 359.2 326.0Derivative financial instruments - 0.7Cash and cash equivalents 40.0 51.1 ---------------------------------- 454.1 430.3 ---------------------------------- ----------------------------------Total assets 565.2 523.7 ---------------------------------- Current liabilitiesBank overdrafts (0.2) (0.2)Trade and other payables (83.7) (79.1)Derivative financial instruments (1.7) -Dividends declared (79.9) -Current tax liability (18.6) (14.9) ------------------------------------ (184.1) (94.2) ------------------------------------Net current assets 270.0 336.1 ------------------------------------ Non-current liabilitiesBank loans (143.8) (143.8)Retirement benefit obligation (27.7) (34.4)Deferred tax liabilities (7.1) (5.3) ------------------------------------ (178.6) (183.5) ------------------------------------- -------------------------------------Total liabilities (362.7) (277.7) ------------------------------------- -------------------------------------Net assets 202.5 246.0 ------------------------------------- EquityShare capital 29.6 29.5Share premium account 10.3 9.2Own shares - (0.8)Foreign currency translation reserve 0.4 -Retained earnings 162.2 208.1 ------------------------------------Total equity 202.5 246.0 ------------------------------------ CONSOLIDATED CASH FLOW STATEMENT 52 weeks to 52 weeks to 24-Feb-07 25-Feb-06 £m £m Net cash from operating activities 42.8 71.3 Investing activitiesPurchases of property, plant and equipment (12.9) (11.7)Proceeds on disposal of property, plant and equipment - 0.2 Purchases of intangible fixed assets (8.0) (8.1)Acquisition of subsidiary (7.3) -Disposal of subsidiary - 5.3Interest received 1.0 1.4 -------------------------------------Net cash used in investing activities (27.2) (12.9) --------------------------------------Financing activitiesInterest paid (8.0) (7.9)Dividends paid (19.6) (17.4)Repayment of bank loans - (26.2)Repayment of obligations under finance leases - (0.6)Proceeds on issue of share capital 0.5 -Proceeds on issue of shares held by ESOT 0.4 0.2Increase in bank overdrafts - 0.1 --------------------------------------Net cash used in financing activities (26.7) (51.8) -------------------------------------- Net (decrease)/increase in cash and cashequivalents (11.1) 6.6 Opening cash and cash equivalents 51.1 44.5 --------------------------------------Cash and cash equivalents at end of year 40.0 51.1 -------------------------------------- RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING ACTIVITIES 52 weeks to 52 weeks to 24-Feb-07 25-Feb-06 £m £m Operating profit from continuing operations 76.4 62.3Operating loss from discontinued operations (1.7) (2.2) Adjustments for:Depreciation of property, plant and equipment 5.1 4.2Loss on disposal of property, plant and equipment - 0.2Amortisation of intangible assets 7.0 5.8Share option charge 1.2 0.6 ----------------------------------- Operating cashflows before movements in workingcapital 88.0 70.9 Increase in inventories - (7.8)Increase in trade and other receivables (32.5) (2.2)Increase in trade and other payables 1.4 13.4Pension obligation adjustment 0.1 (0.2) ----------------------------------- Cash generated from operations 57.0 74.1 Taxation paid (14.2) (2.8) ----------------------------------- Net cash from operating activities 42.8 71.3 ----------------------------------- NOTES TO THE PRELIMINARY ANNOUNCEMENT 1. Analysis of revenue and operating profit 52 weeks to 52 weeks to 24-Feb-07 25-Feb-06 £m £m Analysis of revenue Continuing operationsHome shopping 523.8 459.6Fulfilment 10.0 9.1 ---------------------------------- 533.8 468.7 ----------------------------------Analysis of operating profit Continuing operationsHome shopping 76.3 62.4Fulfilment 0.1 (0.1) ----------------------------------- 76.4 62.3 ----------------------------------- 2. Discontinued operations 52 weeks to 52 weeks to 24-Feb-07 25-Feb-06 £m £mRevenueDoor to door selling 4.6 16.1TV rental - 0.8Financial services - 0.9 --------------------------------- 4.6 17.8 --------------------------------- Operating (loss)/profitDoor to door selling (1.4) (2.3)TV rental - (0.1)Financial services - 0.2 ----------------------------------- (1.4) (2.2) Loss on disposal of discontinuedoperations (0.3) (1.2)Finance costs - (0.2)Taxation 0.5 1.1 ------------------------------------Loss from discontinued operations (1.2) (2.5) ------------------------------------ 3. Reconciliation of equity 52 weeks to 52 weeks to 24-Feb-07 25-Feb-06 £m £m Total recognised income for the period 53.9 32.5Ordinary dividends paid (19.6) (17.4)B Share dividend declared (79.9) -Issue of ordinary share capital 1.2 -Purchase of own shares by ESOT (0.7) -Issue of own shares by ESOT 0.4 0.2Share option charge 1.2 0.6 ----------------------------------- Total movement during the year (43.5) 15.9 Equity at the beginning of the year 246.0 230.1 -----------------------------------Equity at the end of the year 202.5 246.0 ----------------------------------- 4. Acquisition of subsidiary On 30 June 2006 the group acquired the entire share capital of Gray & Osbourn Limitedfor a total cash consideration of £9.4m. Its principal activity is direct home shoppingby catalogue.The book value and fair value of net assets acquired are as follows: £m Plant and equipment 0.1Inventories 2.4Cash and cash equivalents 2.1Trade and other receivables 0.4Trade and other payables (3.2)Current tax liability (0.3) ---------------------------------- Net assets acquired 1.5 Intangible brand asset arising on acquisition 7.9 Total consideration 9.4 ----------------------------------Satisfied by:Cash 9.1Directly attributable costs 0.3 ---------------------------------- 9.4Cash acquired with business (2.1) ----------------------------------Net cash outflow 7.3 ---------------------------------- 5. Earnings per share The calculation of earnings per share from continuing operations is based on theprofit for the year from continuing operations of £46.9m (2006, £38.6m) and theweighted average number of shares in issue during the period of 295,160,000(2006, 294,349,000). The calculation of earnings per share from continuing and discontinuedoperations is based on the profit attributable to equity holders of the parentof £45.7m (2006, £36.1m) and the weighted average number of shares in issueduring the year of 295,160,000 (2006, 294,349,000). For diluted earnings per share, the weighted average number of shares of296,836,000 (2006, 295,526,000) has been calculated after adjusting for thepotential dilutive effect of outstanding share options. 6. Return of Value At an extraordinary general meeting held on 21 February 2007 it was approved tomake a Return of Value of 27 pence per existing ordinary share, equivalent to£79,894,699, to shareholders. Under the terms of the Return of Value, shareholders received 19 new ordinaryshares for every 21 existing ordinary shares held together with 1 B share forevery 1 existing ordinary share held. Holders of the B shares were entitled toreceive a single dividend of 27 pence per B share payable on 12 March 2007. Immediately after payment of the single B share dividend, the B sharesautomatically converted into Deferred shares which were repurchased by thecompany for the total sum of one penny. 7. Dividends The final recommended dividend is proposed to be paid on 27 July 2007 toshareholders on the register at the close of business on 29 June 2007. 8. Basis of preparation The group's financial statements for the 52 weeks ended 24 February 2007 will beprepared in accordance with International Financial Reporting Standards (IFRS)as adopted for use in the EU. Whilst the financial information included in this preliminary announcement hasbeen computed in accordance with IFRS, this announcement does not itself containsufficient information to comply with IFRS. The company expects to publish fullfinancial statements that comply with IFRS by 8 June 2007. 9. Non-statutory financial statements The financial information set out above does not constitute the group'sstatutory financial statements for the 52 weeks ended 24 February 2007 or the 52weeks ended 25 February 2006, but is derived from those financial statements. The financial statements for the 52 weeks ended 25 February 2006 have beendelivered to the Register of Companies. The auditors have reported on thosefinancial statements; their report was unqualified and did not contain anystatement under Section 237(2) or (3) of the Companies Act 1985. The auditors have not reported on financial statements for the 52 weeks ended 24February 2007, nor have any such financial statements been delivered to theRegistrar of Companies. This report was approved by the Board of Directors on 9 May 2007. This information is provided by RNS The company news service from the London Stock Exchange