Iq-ai Ltd Regulatory News (IQAI)

28 Jul 2006 07:01

Flying Brands Limited28 July 2006 Flying Brands Limited Interim results for the 26 weeks ended 30 June 2006 28 July 2006, Jersey. Flying Brands Limited (LSE: FBDU), the home shoppingcompany, today announces interim results for the 26 weeks ended 30 June 2006. Implementation of strategy is bearing fruit Highlights • Sales increased by 15% to £20.92m (H1 2005: £18.18m); like for like sales are flat • Internet sales increased by 37%, representing 13% of total sales • Profit before tax increased by 13% to £3.21m (H1 2005: £2.86m) • Like for like profit before interest and tax improved by 5% • Interim dividend increased by 5% to 3.00p • Earnings per share increased by 17% to 9.99p • Cash generated from operations increased by 18% to £2.4m (H1 2005: £2.0m) • Total customer database grew 7% to 4.1m; email database up 38% to 0.24m • Integration of new brands bedding completed Commenting on today's announcement, Paul Fraser, Chairman, said: "The first half performance clearly demonstrates how our strategy is working,with our new brands giving us the ability to continue to perform well inuncertain trading conditions. We continue to diversify the product ranges of allour brands to appeal to a wider profile of customers, ensuring that we deliverthe important transition from being purely a catalogue home shopping company tobecoming a strong, dual channel retailer with a growing online business. Our substantial cash generation and progressive dividend policy underpin ourconfidence going forward." Mark Dugdale, Chief Executive, said: "Our strategy, which is to extract greater value out of our database of 4million customers, is progressing well and initiatives that are underwayinclude: • Diversifying the product range to increase spend per customer • Refining the online offer to drive website traffic • Converting website visitors into active trading customers We also have clear objectives to grow the number of active trading customers foreach of our brands, both in terms of driving more activity from the internet andin reactivating lapsed customers. Our newly acquired businesses have both been fully integrated within ourinfrastructure and are making a significant contribution to sales, profits andcash generation. With the consolidation of all our brands within the threedivisions of Gifts, Garden and Entertainment, I believe that the strongfundamentals of our business can be clearly appreciated. Outlook Trading remains in line with our expectations and we remain confident of meetingour objectives for the full year." For further information, please contact: Flying Brands Limited 01376 575 010 / 07785 346 935Mark Dugdale, Chief ExecutiveGraham Norton, Finance Director Smithfield Consultants 020 7360 4900John KielyGeorge Hudson Notes to editors Jersey based Flying Brands Limited (LSE: FBDU) is a multi brand home shoppingspecialist. Founded in 1981, it was admitted to the Official List of the LondonStock Exchange in 1993. The Group operates the following divisions: • Gifts (Flying Flowers, the UK's largest flowers by post brand, despatching nearly one million bouquets a year) • Garden (Gardening Direct, one of the UK's largest mail order bedding plants and gardening products operations; Garden Bird Supplies, a leading provider of food and accessories for birds and other wildlife) • Entertainment (Listen2Books, the leading mail order audio books, DVD and video publisher and distributor; Benham, the first day cover stamps and coins collectables specialist; Silverminds Direct, the nostalgic music business) More information can be found at: www.flyingbrands.com Chairman's Statement In the first half of 2006 to 30 June, Flying Brands returned a profit before taxof £3.21m, a 13% increase over the same period in 2005 (£2.86m), on sales of£20.92m, 15% ahead of 2005 (£18.18m). In a soft retail market, we havedemonstrated the effectiveness of our strategy of diversification andacquisition, with growth being driven mainly from our two new brands,Silverminds Direct and Garden Bird Supplies. Like for like sales were flat on2005, with profits before interest and tax up 5%. Internet sales were £2.62m, up37% from the same time last year, with our e-mail database of customers growingby 38% to 0.24m. The overall database of customers increased by 7% to 4.1m.Earnings per share increased by 17% to 9.99p. Overall, this is an excellent result given the pressure on the retail market asa whole and the fact that we have had to absorb another 10% price increase inour distribution costs. Cash generation is one of our great strengths, and at the half year the Companygenerated £2.40m from operations, a growth of 18% on prior year, and ending theperiod with a cash balance of £3.86m. The interim dividend is increased by 5% to 3.00p per share, and this will bepaid on 8 September 2006 to shareholders on the register on 11 August 2006. The Gift Division performed well in the first quarter, with a strong New Yearand Valentine's Day campaign. Customer response at Mother's Day was good,although strong competition depressed new customer recruitment and Easterrepeated last year's success. The remainder of April and May, however, wasslightly disappointing. For the whole period, profit before interest andamortisation was up 21% to £0.45m (2005: £0.37m) off sales of £5.33m (2005:£5.47m). The addition of Garden Bird Supplies into the Garden Division helped salesincrease to £11.76m (2005: £9.31m), with profit before interest and amortisationmoving to £2.68m from £2.18m. Gardening Direct, although ahead of 2005, had aslow start to the year with sales then picking up from February and enjoying asuccessful April. Garden Bird Supplies performed well and has now been fullyintegrated into our infrastructure following its acquisition in September 2005. The Entertainment Division delivered sales of £3.83m compared to £3.41m in 2005,with profits before interest and amortisation of £0.07m (2005: £0.14m). We were pleased to welcome Stewart Newton onto our board following the AnnualGeneral Meeting in April. Len Sanderson announced his resignation as a nonexecutive director in May and we thank him for his contribution over the lastsix years. We observed a year ago that adding new brands to our portfolio would provide uswith more options in difficult trading conditions. The results from the firsthalf of 2006 certainly bear this out and demonstrate how our strategy isworking. In addition to this, we are diversifying the product ranges of all ourbrands to appeal to a much wider profile of customers, ensuring that we continuethe vital transition from being purely a catalogue home shopping company tobecoming a very strong, growing on line business. With its flexible cost base, lack of bricks and mortar, strong brands, adatabase of 4m customers, internet growth, cash generation and its Jerseyheritage, the group is maturing into a well established business with strongfundamentals and we face the future with confidence. Paul FraserChairman 28 July 2006 Chief Executive's Report Operating Results For The Period ------------------------------------------------------------------------------------------------- 2006 2005 Gifts Garden Entertainment Total Gifts Garden Entertainment Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000-------------------------------------------------------------------------------------------------Sales 5,332 11,762 3,829 20,923 5,466 9,306 3,411 18,183Contribution 1,291 3,862 1,022 6,175 1,215 3,093 1,000 5,308Operationaloverheads (677) (985) (878) (2,540) (683) (737) (807) (2,227)Corporateoverheads (165) (200) (75) (440) (161) (177) (54) (392)-------------------------------------------------------------------------------------------------Profit beforeinterest and amortisation 449 2,677 69 3,195 371 2,179 139 2,689Interest 134 16 (21) 129 94 94 (22) 166Amortisationon acquisitionsintangibles - (83) (28) (111) - - - --------------------------------------------------------------------------------------------------Profit before taxation 583 2,610 20 3,213 465 2,273 117 2,855------------------------------------------------------------------------------------------------- It is pleasing to see the way our strategy has worked in ensuring that a morerounded offer smoothes out much of our previous business risk. It has takenfairly depressed retail trading conditions to bear this out, but the first halfresults demonstrate that we are no longer dependent upon strong bedding plantdemand within Gardening Direct to deliver our results; we now have otheroptions, some of which are within Gardening Direct itself in terms ofopportunities for profitable expansion. Our strategy, which is simply to extract greater value out of our database of 4million customers, is progressing well and there are an increasing number ofinitiatives being implemented that will come on stream over the next twelvemonths. Our biggest short term challenge is finding new customers cost effectively.Declining circulations of national newspapers and magazines, traditionally a keychannel for driving growth for home shopping businesses, has meant that thereach of our offers are diminishing and the scope is hitting saturation point.Fortunately, we have seen a significant increase in the number of new customerscoming from the internet, and we are managing this transition as quickly aspossible. We also believe that the structural change we made at the beginning of this yearto the group, from being six brands into becoming three divisions (Gifts, Gardenand Entertainment), gives the business more transparency and greater internalfocus. Operationally, recent actions by both the UK Treasury and the States of Jerseyhave left our business model intact, and we intend to continue exploiting thebenefits we enjoy going forward. GIFTS Flying Flowers has experienced a mixed first half in the face of significantexternal competition, although we were able to improve contribution: in themain, the database of active customers performed in line with last year, butrecruitment from external printed media has disappointed. Fortunately, newcustomers coming from the internet have grown steadily, and this now accountsfor more than 30% of the total supply of new customers. Overall internet saleswere 20% up on last year at £1.24m, with participation improving from 19% to 23%of total sales. We also now have 130K e-mail addresses on the database. We continue to introduce new low cost gift ideas into our catalogues and theseare now delivering 7% of total sales (our courier bouquet service also takes 14%of sales). New bouquets are also being introduced and we successfully "upsell"customers either to buy more stems or gifts (e.g. a teddy bear or chocolates) toadd to their bouquet. Flying Flowers has achieved the highest internet participation rate of all ourbrands and we firmly believe that we will see this trend continue. To that end,we are relaunching the website in the second half of the year to make it moredynamic, more easily navigable and optimised to improve our search enginerankings. Although the active database size has fallen slightly on the year, this has beenoffset by growing internet activity and increased spend per customer up from£9.37 to £9.78. Our objective is to continue to add new low cost gift solutions to our existingproduct range, whilst not losing sight of Flying Flowers' core heritage in goodquality, great value bouquets. GARDEN Gardening Direct delivered a marginally better Spring campaign than in 2005, butdemand for young bedding plants - the core of its offer - remained soft and hasconfirmed our view that we are seeing a longer term trend rather than justvolatile market conditions. Several factors impact this: a move away from flowerbeds to patios and decking, greater demand for "instant gardening" that provideresults without the work, and concerns about the use of water in a drought.Spring sales were 2% ahead of 2005, with profit before interest and amortisationimproving by 7%. We continue to chart trends of later ordering in the season(response from activity promoted from February through to May was significantlyahead of last year), indicating a growing customer preference for larger, moremature, plants. We have responded to this by expanding Gardening Direct from being a purveyorsimply of "First Class Bedding Plants" into a more general garden supplier, thepurpose of which is to help improve all aspects of the customer's garden. As aresult the new strapline on all catalogues and the website going forward will be"Transforming Your Garden". We successfully tested a range of larger plants, climbing flowers, hedging andsmall trees during the Spring campaign and this is now being rolled out to allcustomers through the Autumn. We are also ramping up our hardware andaccessories offer and moving into garden bird food. Through a series ofmarketing partnerships, we will be introducing a further range of gardenproducts and giftware so that Gardening Direct will move towards becoming adirect garden centre. Bedding plants will still feature strongly as ourcustomers are still buying them in large quantities and they continue to provideboth cash and profits. The website has been updated resulting in internet sales increasing by 14% inthe first half over 2005 and e-mail addresses improving to 67K. 14% of newGardening Direct customers are now recruited on line. Garden Bird Supplies continues its progress since it was acquired in September2005, with sales improving 12% over the same period last year (prior to ouracquisition). We have successfully completed the integration of all functions,with call centre and order processing moving to Kelvedon Park, and control ofproduct despatch moving to Jersey. Smaller lines are now physically beingdespatched from Jersey, although the larger, bulkier items are sent out from athird party operation in the UK. IT, marketing and finance are also now directlyintegrated within our infrastructure. Internet sales are £0.4m, 17% of thetotal, and we have 23K e-mail addresses. Cross selling products between the brands in the Garden Division has started andwill be rolled out in the second half of the year. ENTERTAINMENT Listen2Books' customers remain loyal and enthusiastic purchasers of the largerange of new and exclusive products that we promote to them, but we are findingthe cost effective recruitment of new customers increasingly challenging.Because of this, sales for the half year (£1.41m) were actually 7% below thesame period in 2005 (£1.52m). We have several initiatives in place to arrest this decline. We relaunched thewebsite towards the end of the first half, featuring more contemporary titles aswell as a download facility (providing access to more than 5,000 additionaltitles). Our objective here is to capture a wider demographic and introduce newcustomers to try using audio books. We are also increasing the number of producttypes in the catalogue and we are planning a series of reader offers withselected media titles, which we believe will help drive new customer sign-ups. Silverminds Direct had a steady first half, with sales of £0.62m, which were inline with our expectations. We have been less successful in growing the customerdatabase, although we appreciate that the fourth quarter is always likely to bethe most productive time of year for this. Audio books have been successfullyintroduced into the catalogue, and we are starting to establish an on linepresence; more will be done to drive this forward in the second half. Benham achieved sales of £1.80m (2005: £1.75m) and highlights centered onproducts featuring the Queen's 80th Birthday, with football memorabilia alsostrong in the lead into the World Cup. The brand acquired the products, rightsand small database of The Bradbury Collection during the first half of the yearfor a consideration of £0.1m. Bradbury is a well known supplier of first daycovers and we have already started to promote these products successfully. We continue to consolidate the Benham operation and will be vacating somewarehouse premises in the second half of the year leading to further savings. KELVEDON AND JERSEY OVERHEADS Operational overheads increased by £0.31m to £2.54m, of which the majorityrelates to the operational costs of acquisitions not included in the priorperiod. CORPORATE OVERHEADS Corporate overheads have increased by £0.05m to £0.44m. This increase was a oneoff cost related to the board room changes reported earlier in the year. OUTLOOK We have a clear strategy to grow cost effectively the number of active tradingcustomers for each brand which includes a more aggressive reactivation of lapsedcustomers as well as continuing our rapid transition into becoming anestablished and credible on line retailer. The diversification of our product offering assists this process in making ourbrands appeal to a wider demographic as well as encouraging existing customersto spend more (also ordering more frequently) and motivates lapsed customers totry our service again, in addition overall to providing a more enticingfranchise for a digital market. Adding new brands and developing more strategic marketing partnerships enhancethis process, and also provides our business with more options and strongerdefences in an uncertain trading environment. When one considers, alongside our strategy, our impressive capacity forgenerating cash combined with the substantial benefits we derive from being aJersey based business, then I believe that our shareholders should look forwardto the future with optimism. Trading remains in line with our expectations and we remain confident of meetingour objectives for the full year. Mark DugdaleChief Executive 28 July 2006 Consolidated Income StatementFor the 26 weeks ended 30 June 2006 -------------------------------------------------------------------------------- 26 Weeks to 26 weeks to 52 weeks to 30 June 01 July 30 December 2006 2005 2005 (unaudited) (unaudited) (audited) notes £'000 £'000 £'000--------------------------------------------------------------------------------From continuing operations Revenue 2 20,923 18,183 36,258 Cost of sales (14,610) (12,648) (25,396)--------------------------------------------------------------------------------Gross profit 6,313 5,535 10,862Operating expenses (3,229) (2,846) (5,849)--------------------------------------------------------------------------------Operating profit beforedisposal of building 3,084 2,689 5,013Profit on disposal ofbuilding - - 282--------------------------------------------------------------------------------Operating profit 3,084 2,689 5,295Interest receivable 129 166 265--------------------------------------------------------------------------------Profit before tax 2 3,213 2,855 5,560Taxation (729) (657) (1,147)--------------------------------------------------------------------------------Profit for the year 2,484 2,198 4,413--------------------------------------------------------------------------------Earnings per Share expressedin pence per share 4Basic 9.99p 8.51p 17.14pDiluted 9.87p 8.19p 17.05p-------------------------------------------------------------------------------- Consolidated Balance SheetFor the 26 weeks ended 30 June 2006 -------------------------------------------------------------------------------- 30 June 01 July 30 December 2006 2005 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000--------------------------------------------------------------------------------AssetsNon-current assetsGoodwill 3,866 - 3,866Intangibles 1,056 648 1,157Property, plant and equipment 10,755 12,269 11,419Deferred tax 27 - 27-------------------------------------------------------------------------------- 15,704 12,917 16,469--------------------------------------------------------------------------------Current assetsInventories 3,126 2,745 3,154Trade and other receivables 1,209 1,359 1,117Cash and cash equivalents 3,856 5,337 4,196--------------------------------------------------------------------------------Liabilities 8,191 9,441 8,467Current liabilitiesCurrent income tax liabilities (788) (896) (1,171)Trade and other payables (4,434) (3,245) (5,982)--------------------------------------------------------------------------------Net Current assets/(liabilities) 2,969 5,300 1,314Non-current liabilitiesIncome tax liabilities (729) (657) (949)Deferred tax liabilities - (59) --------------------------------------------------------------------------------- (729) (716) (949)--------------------------------------------------------------------------------Net assets 17,944 17,501 16,834--------------------------------------------------------------------------------Shareholders' equityOrdinary shares 255 264 255Share premium 16,047 15,936 16,021Revaluation reserve 450 457 450Capital reserve (17) (17) (17)Capital redemption reserve 20 10 20Share based payments 105 58 71Treasury shares (883) (544) (940)Retained earnings 1,967 1,337 974--------------------------------------------------------------------------------Total equity 17,944 17,501 16,834-------------------------------------------------------------------------------- Consolidated Statement of Changes in Shareholders' EquityFor the 26 weeks ended 30 June 2006 ---------------------------------------------------------------------------------------------------------------- Capital Share Share Share Revaluation Capital redemption based Treasury Retained Total capital premium reserve reserve reserve payments shares earnings equity notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000----------------------------------------------------------------------------------------------------------------Balance at 01January 2005 265 15,936 457 (17) 10 22 (820) 636 16,489Profit for theperiod - - - - - - - 2,198 2,198Employee shareoption scheme - - - - - 36 - - 36Dividend 3 - - - - - - - (1,453) (1,453)Sale of ownshares in ESOP - - - - - - 276 - 276Issue/cancellation of sharecapital (1) - - - - - - (44) (45)----------------------------------------------------------------------------------------------------------------Balance at 01July 2005 264 15,936 457 (17) 10 58 (544) 1,337 17,501----------------------------------------------------------------------------------------------------------------Balance at 02July 2005 264 15,936 457 (17) 10 58 (544) 1,337 17,501Profit for theperiod - - - - - - - 2,215 2,215Employee shareoption scheme - - - - - 13 - - 13Dividend 3 - - - - - - - (742) (742)Sale of ownshares in ESOP - - - - - - 153 - 153Purchase ofown shares inESOP - - - - - - (549) - (549)Transferbetweenreserves - - (7) - - - - 7 0Issue/cancellation of sharecapital (9) 85 - - 10 - - (1,843) (1,757)----------------------------------------------------------------------------------------------------------------Balance at 30December 2005 255 16,021 450 (17) 20 71 (940) 974 16,834----------------------------------------------------------------------------------------------------------------Balance at 31December 2005 255 16,021 450 (17) 20 71 (940) 974 16,834Profit for theperiod - - - - - - - 2,484 2,484Employee shareoption scheme - - - - - 34 - - 34Dividend 3 - - - - - - - (1,491) (1,491)Sale of ownshares in ESOP - - - - - - 57 - 57Issue/cancellation of sharecapital - 26 - - - - - - 26----------------------------------------------------------------------------------------------------------------Balance at 30June 2006 255 16,047 450 (17) 20 105 (883) 1,967 17,944---------------------------------------------------------------------------------------------------------------- Consolidated Cash Flow StatementsFor the 26 weeks ended 30 June 2006 -------------------------------------------------------------------------------- 26 weeks to 26 weeks to 52 weeks to 30 June 01 July 30 December 2006 2005 2005 (unaudited) (unaudited) (audited) notes £'000 £'000 £'000--------------------------------------------------------------------------------Cash flow from operating activities 3,084 2,689 5,295Profit before taxationAdd back non-operating itemsProfits less losses on sale ofproperty, plant and equipment (8) - (276)Adjustment forDepreciation 786 874 1,715Amortisation 111 - 97Decrease/(increase) in inventories 28 (71) (252)(Increase)/decrease in receivables (92) (37) 221(Decrease)/increase in creditors (1,548) (1,455) 920Share based payments 34 36 49-------------------------------------------------------------------------------- --------------------------------------------------------------------------------Cash generated from operations 2,395 2,036 7,769Interest received 129 166 265Tax paid (1,332) (955) (1,155)-------------------------------------------------------------------------------- Net cash from operating activities 1,192 1,247 6,879 Cash flow investing activitiesAcquisition of subsidiaries (net ofcash acquired) - - (4,837)Purchase of intangible fixed assets (10) (648) -Purchase of property, plant andequipment (131) (89) (382)Proceeds from sales of tangible assets 17 27 631-------------------------------------------------------------------------------- Net cash used in investing activities (124) (710) (4,588) Cash flows from financing activitiesNet proceeds from issue of ordinaryshare capital 26 - 85Purchase of own shares forcancellation - (45) (1,887)Purchase of treasury shares - - (549)Exercise of treasury shares 57 276 429Dividends paid to shareholders 3 (1,491) (1,453) (2,195)-------------------------------------------------------------------------------- Net cash used in financing activities (1,408) (1,222) (4,117)-------------------------------------------------------------------------------- Net (decrease)/increase in cash andcash equivalents (340) (685) (1,826) Cash and cash equivalents at 31December 2005 4,196 6,022 6,022-------------------------------------------------------------------------------- Cash and cash equivalents at 30 June2006 3,856 5,337 4,196-------------------------------------------------------------------------------- Notes to the Financial Statements 1 Accounting Policies 1.1 Basis of preparation These financial statements are the unaudited interim consolidated financialstatements (hereafter "the Interim Financial Statements") of Flying BrandsLimited, a company registered in Jersey, and its subsidiaries (hereafter "theGroup") for the 26 weeks ended 30 June 2006 (hereafter "the interim period"). The attached interim financial statements are the first interim statementsfollowing the adoption of International Financial Reporting Standards ("IFRS").These Financial Statements have been prepared under IFRS applying the accountingpolicies published in the Group's IFRS Financial Statements for the 52 weeksended 30 December 2005, published on 10 March 2006. These Financial Statements have been prepared on the basis of the recognitionand measurement requirements of IFRS in issue that are either endorsed by the EUand effective (or available for early adoption) at 31 December 2006. Aspermitted, the Group has chosen not to adopt IAS 34 "Interim FinancialStatements" in preparing its 2006 Interim Statements. These Interim Financial Statements should be read in conjunction with theConsolidated Financial Statements for the year ended 30 December 2005 (hereafter"the Annual Financial Statements"), as they provide an update of previouslyreported information. They were approved for issue by the Board of Directors on28 July 2006. The accounting policies used are consistent with those used in the AnnualFinancial Statements, except where noted below. The presentation of the InterimFinancial Statements is consistent with the Annual Financial Statements, exceptwhere noted below. Where necessary, the comparatives have been reclassified orextended from previously reported Interim Financial Statements to take intoaccount any presentational changes made in the Annual Financial Statements or inthese Interim Financial Statements. The preparation of the Interim Financial Statements requires management to makeestimates and assumptions that affect the reported amounts of revenues,expenses, assets and liabilities at the date of the Interim FinancialStatements. If in future such estimates and assumptions, which are based onmanagement's best judgement at the date of the Interim Financial Statements,deviate from the actual circumstances, the original estimates and assumptionswill be modified as appropriate in the period in which the circumstances change. The comparative figures for the financial year ended 30 December 2005 are notthe Company's statutory accounts for the financial year. These accounts havebeen reported on by the Company's auditors and delivered to both the UKFinancial Services Authority and the Jersey Financial Services Commission. Thereport of the auditors was (i) unqualified, (ii) did not include a reference toany matters to which the auditors drew attention by way of emphasis withoutqualifying their report, and (iii) did not contain a statement under Section 237(2) or (3) of the UK Companies Act 1985. The Group operates in a sector where significant seasonal or cyclical variationsin total sales are experienced during the financial year. 1.2 Consolidation The Interim Financial Statements include the assets, liabilities and results ofthe Company and all its subsidiary undertakings. Subsidiaries are all entitiesover which the Group has the power to govern the financial and operatingpolicies generally accompanying a shareholding of more than one half of thevoting rights. The purchase method of accounting is used to account for theacquisition of subsidiaries by the Group. The cost of an acquisition is measuredas the fair value of the assets given, equity instruments issued and liabilitiesincurred or assumed at the date of exchange, plus costs directly attributable tothe acquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at theirfair value at the date of acquisition, irrespective of the extent of anyminority interest. The excess of the cost of acquisition over the fair value ofthe Group's share of the identifiable net assets acquired is recorded asgoodwill. The results of the subsidiary undertakings acquired or disposed ofduring the period are included in the consolidated Income Statement from thedate of acquisition or up to the date of disposal. Intra-group sales and profitsare eliminated on consolidation, and all sales and profit figures relate toexternal transactions only. 2 segmental analysis The Directors of Flying Brands Limited are of the opinion that, whilst the Groupmarkets a number of different brands, all the business of the Group is operatedwithin the mail order retail segment. Due to the different risks and rewards available on different lines of business,independent of territory operations, Flying Brands primary reporting segment isby business. The secondary reporting format comprises the geographical segment. Certain overhead costs, assets and liabilities are shared between segments.These costs, assets and liabilities have been apportioned based on the usage ofthese services and assets by the appropriate segment. 2.1 Segmentation by primary divisions --------------------------------------------------------------------------------Period ended 30 June 2006 Gifts Garden Entertainment Total £'000 £'000 £'000 £'000--------------------------------------------------------------------------------Revenue 5,332 11,762 3,829 20,923--------------------------------------------------------------------------------Segment result 449 2,594 41 3,084 Interestreceivable/(payable) 134 16 (21) 129--------------------------------------------------------------------------------Profit before tax 583 2,610 20 3,213--------------------------------------------------------------------------------Segment assets (includinggoodwill) 6,900 13,368 3,627 23,895 Segment assets(excludinggoodwill) 6,900 10,002 3,127 20,029--------------------------------------------------------------------------------Segment liabilities (2,387) (2,365) (1,199) (5,951)--------------------------------------------------------------------------------Depreciation 250 431 105 786Amortisation onintangible assets - 83 28 111Capital expenditureon property, plantand equipment 44 55 32 131-------------------------------------------------------------------------------- --------------------------------------------------------------------------------Period ended 1 July 2005 Gifts Garden Entertainment Total £'000 £'000 £'000 £'000--------------------------------------------------------------------------------Revenue 5,466 9,306 3,411 18,183--------------------------------------------------------------------------------Segment result 371 2,179 139 2,689 Interestreceivable/(payable) 94 94 (22) 166--------------------------------------------------------------------------------Profit before tax 465 2,273 117 2,855--------------------------------------------------------------------------------Segment assets 7,410 11,788 3,160 22,358--------------------------------------------------------------------------------Segment liabilities (2,035) (1,812) (1,010) (4,857)--------------------------------------------------------------------------------Depreciation 300 450 124 874Amortisation on intangible asset - - - -Capital expenditureon property, plantand equipment 30 40 19 89-------------------------------------------------------------------------------- No goodwill was carried in the balance sheet at 1 July 2005. --------------------------------------------------------------------------------52 weeks ended 30 December Gifts Garden Entertainment Total 2005 £'000 £'000 £'000 £'000 --------------------------------------------------------------------------------Revenue 12,822 15,324 8,112 36,258--------------------------------------------------------------------------------Operating profitbefore profit ondisposal ofbuilding 1,888 2,744 381 5,013Profit on disposalof building - - 282 282--------------------------------------------------------------------------------Segment result 1,888 2,744 663 5,295 Interestreceivable/(payable) 151 160 (46) 265--------------------------------------------------------------------------------Profit before tax 2,039 2,904 617 5,560--------------------------------------------------------------------------------Segment assets(includinggoodwill) 10,599 10,487 3,850 24,936 Segment assets(excludinggoodwill) 10,599 7,121 3,350 21,070--------------------------------------------------------------------------------Segment liabilities (4,018) (2,522) (1,562) (8,102)--------------------------------------------------------------------------------Depreciation 624 895 196 1,715Amortisation onintangible assets - 52 45 97Capital expenditureon property, plantand equipment 94 123 165 382-------------------------------------------------------------------------------- 2.2 Segmentation by geographical area --------------------------------------------------------------------------------Revenue and profit by 30 June 2006 01 July 2005 30 December 2005geographical area -------------------------------------------------------------------------------- Revenue by Profit Revenue by Profit Revenue by Profit customer before customer Before customer before location taxation location taxation location taxation £'000 £'000 £'000 £'000 £'000 £'000--------------------------------------------------------------------------------Jersey,ChannelIslands 28 2,360 30 2,259 71 4,350United Kingdom 20,590 853 17,851 596 35,321 1,210Europe 119 - 116 - 315 -Outside Europe 186 - 186 - 551 --------------------------------------------------------------------------------- 20,923 3,213 18,183 2,855 36,258 5,560-------------------------------------------------------------------------------- Capital 30 June 2006 01 July 2005 30 December 2005expenditure and assets bygeographicalarea-------------------------------------------------------------------------------- expenditure assets expenditure assets expenditure assets £'000 £'000 £'000 £'000 £'000 £'000--------------------------------------------------------------------------------Jersey,ChannelIslands 63 23,306 32 24,073 166 22,744 United Kingdom 68 (5,362) 57 (6,572) 216 (5,910)-------------------------------------------------------------------------------- 131 17,944 89 17,501 382 16,834-------------------------------------------------------------------------------- 3 dividends -------------------------------------------------------------------------------- 30 June 01 July 30 December 2006 2005 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000--------------------------------------------------------------------------------Dividends on equity sharesInterim dividend proposed at 2.85 perordinary share in July and paid inSeptember - - 742Final dividend proposed in March,agreed at AGM in April at 5.85p (20055.65p) 1,491 1,453 1,453-------------------------------------------------------------------------------- 1,491 1,453 2,195-------------------------------------------------------------------------------- 4 earnings per share Basic Basic earnings per share is calculated by dividing the profit attributable tothe equity holders of the Company by the weighted average number of ordinaryshares in issue during the period, excluding ordinary shares purchased by theCompany and held as treasury shares. -------------------------------------------------------------------------------- 30 June 01 July 30 December 2006 2005 2005 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000--------------------------------------------------------------------------------Profit attributableto equity holders ofthe Company 2,484 2,198 4,413--------------------------------------------------------------------------------Weighted averagenumber of ordinaryshares in issue(thousands) 24,865 25,829 25,752--------------------------------------------------------------------------------Basic earnings pershare (pence pershare) 9.99 8.51 17.14-------------------------------------------------------------------------------- Diluted Diluted earnings per share is calculated adjusting the weighted average numberof ordinary shares outstanding to assume conversion of all dilutive potentialordinary shares. The Company has one category of dilutive potential ordinaryshares: share options. The calculation is performed for the share options to determine the number ofordinary shares that could have been acquired at fair value (determined as theaverage market share price of the Company's shares) based on the monetary valueof the subscription rights attached to outstanding share options. The number ofshares calculated as above is compared with the number of shares that would havebeen issued assuming the exercise of the share options. -------------------------------------------------------------------------------- 30 June 01 July 30 December 2006 2005 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000--------------------------------------------------------------------------------Profit attributable to equityholders of the Company 2,484 2,198 4,413--------------------------------------------------------------------------------Weighted average number of ordinary shares in issue(thousands) 24,865 25,829 25,752 Adjustment for share options(thousands) 301 1,001 135--------------------------------------------------------------------------------Weighted average number of ordinary shares for dilutedearnings per share (thousands) 25,166 26,830 25,887--------------------------------------------------------------------------------Diluted earnings per share (penceper share) 9.87 8.19 17.05-------------------------------------------------------------------------------- 5 treasury shares Treasury shares represent those shares held in an ESOP trust and are all underoption to employees. None of the options are lower than the cost of the sharesand therefore no charge to the profit and loss account arises. All dividends arewaived whilst the shares are held in the ESOP trust. This information is provided by RNS The company news service from the London Stock Exchange