Iq-ai Ltd Regulatory News (IQAI)

27 Jul 2007 07:01

Flying Brands Limited27 July 2007 Flying Brands Limited Interim Results for the 26 weeks ended 29 June 2007 27 July 2007, Jersey. Flying Brands Limited (LSE: FBDU), the home shoppingcompany, today announces interim results for the 26 weeks ended 29 June 2007. Successful Implementation of Group Strategy Highlights • Sales increased by 20% to £25.2m (H1 2006: £20.9m) • Internet sales increased by 26% to £3.4m (2006: £2.7m) • Profit before tax was £3.1m (2006: £3.1m) • Earnings before interest, tax and amortisation increased by 11% to £3.4m (2006: £3.1m) • Profit after tax increased by 7% to £2.6m (2006: £2.4m) • Earnings per share grew by 7% to 10.3p (2006: 9.6p) • Interim dividend per share increased by 10% to 3.3p • Kelvedon Park call centre sold for £4.5m cash (to be completed in October) Commenting on today's announcement, Mark Dugdale, Chief Executive, said: "The Group delivered a satisfactory performance in the first half of 2007, aperiod of consolidation in which our strategy continued to be implementedsuccessfully. We are focusing on expanding our range of goods and services forthe over 50's market (in which the majority of our current customers aredemographically defined), which should both continue to drive up the value andfrequency of purchases as well as attract new customers, the majority of whom weexpect to recruit from the internet in the future. Linked to this is ourcontinuing search for appropriate businesses (acquisitions and partnerships)that will add scale and synergy to our existing operations, and we will use thecash raised from the sale of Kelvedon Park for this purpose. We are on target tomeet our expectations for the full year." Outlook In an unpredictable trading period for retailers, the Group has successfullyimplemented its strategy. We have been able to absorb significant cost increaseswithout a major impact on margins and have demonstrated that we can findappropriate value enhancing acquisitions, and then integrate successfully thesebusinesses, maximising efficiencies and finding synergies with our existingbrands. This strategy will continue, building a larger database of customers(both online and offline) to whom we can offer a wider range of goods andservices. 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 KielyAnne Howalt Notes to editorsJersey 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; Greetings Direct, the UK's only continuity greeting cards business) • 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; Sarah Raven's Kitchen & Garden, high quality plants and general hardware that are hard to find elsewhere) • Entertainment (Listen2, the leading mail order audio books, nostalgic music, DVD and video publisher and distributor; Benham, the first day cover stamps and coins collectables specialist) More information can be found at: www.flyingbrands.com INTERIM REPORT FOR THE 26 WEEKS ENDED 29 JUNE 2007 CHAIRMAN'S STATEMENT "Success In Implementing Our Strategy" In the first half of 2007, Flying Brands returned a profit before tax of £3.1m,level with the restated numbers for the same period in 2006. Earnings beforeinterest, tax and amortisation grew by 11% to £3.4m (2006: £3.1m), and profitafter tax improved by 7% to £2.6m, both good results. Sales were £25.2m, 20%ahead of the first half of 2006, although like-for-like sales were 7% below lastyear. Our strategy remains focused on extracting maximum value and cash from ourongoing brands and using that cash to grow the business through appropriateacquisitions and partnerships. The acquisition of Greetings Direct and thelicensing of Sarah Raven's Kitchen and Garden are two recent examples of thisstrategy in action. The Group's rapid transition from being purely a catalogue operator to becominga truly dual channel home shopping retailer continues. It is very pleasing,therefore, to see our internet sales grow by 26% in the first half of 2007 to£3.4m, up from £2.7m in the same period in 2006. Our email customer databaseincreased by 30% to 0.3m, and our overall database grew by 26% to 5.05m(including Greetings Direct and Sarah Raven's Kitchen and Garden), although wecontinue to find the recruitment of new customers challenging. Overall, these results represent a satisfactory performance for the Group,particularly given the additional distribution costs we have had to absorb onall brands since the beginning of the year. Earnings per share increased by 7% to 10.3p, and the interim dividend isincreased by 10% to 3.3p per share, which will be paid on 7 September 2007 toshareholders on the register on 17 August 2007. Cash generated from operationswas £3.3m against £2.4m in 2006. Within the Gifts Division, Flying Flowers performed well in a competitive marketplace. Internet sales improved by 23% compared with the first half of 2006, withthis channel now representing 28% of total sales (23% in 2006). Greetings Directhas performed in line with our expectations and we are progressing theintegration of various back-end functions within our own infrastructure whichwill lead to efficiencies. Overall for the Division, profit before interest andamortisation was up 94% to £0.6m (2006: £0.3m) off sales of £10.6m (2006:£5.3m). The Garden Division delivered sales of £11.6m (2006: £11.8m), with profit beforeinterest and amortisation moving to £2.7m the same as in the same period lastyear. Given that it bore the heaviest burden in distribution cost increases,Gardening Direct's performance through the spring campaign was heartening, withgood response rates in February and March. Garden Bird Supplies made a slowstart to the year as a result of the continuing warm winter weather, but haspicked up significantly since April, mainly as a result of a high spring birthrate for birds. We licensed Sarah Raven's Kitchen and Garden in February and arecurrently bedding that business into our infrastructure. The Entertainment Division produced sales of £3.0m compared with £3.8m in 2006.The shortfall in sales resulted from the amalgamation of Listen2Books andSilverminds Direct into one new brand, Listen2, being delayed until February,but the recent performance has been encouraging as we develop the offer and thebrand. Profit before interest and amortisation was £0.1m (2006: £Nil). We welcomed John Henwood onto our Board following the Annual General Meeting inApril, at which point Paul Fraser stood down from the Board both as Chairman andas a Director. We thank him very much for his contribution to the Group. The Group has exchanged contracts to sell its offices and call centre atKelvedon Park to the Essex County Fire and Rescue Service for a consideration of£4.5m in cash. The functions currently at Kelvedon Park will move in Septemberto leased premises in Chelmsford. We believe that this move gives the companymuch greater flexibility and will improve communication, as well as freeing upan inefficient asset. The Group continues to implement its strategy successfully, with new businessescontributing positively as they are integrated. We are seeing an increasingnumber of new customers being recruited online and this is very positive forfuture growth. Our homogeneous database of predominantly over 50's customerspresents us with considerable opportunities both to offer a wider range of goodsand services to these customers and also to grow the size of the active tradingdatabase through consolidation as well as through increasing internet activity. There are many new opportunities available to us which, when overlaid on top ofour firm foundations of strong cash generation, large customer database,internet growth and our continuing successful acquisition strategy, as well asthe benefits we derive from being a Jersey business, means that the future is avery exciting one for us. Tim TrotterChairman27 July 2007 CHIEF EXECUTIVE'S REPORT "Clear Direction and Great Opportunities" Operating Results for the Period H1 2007 H1 2006 Restated Gifts Garden Entertainment Total Gifts Garden Entertainment Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Revenue 10,607 11,561 3,023 25,191 5,332 11,762 3,829 20,923Contribution* 1,505 3,697 962 6,164 1,174 3,894 995 6,063Operational Overheads (651) (817) (794) (2,262) (677) (985) (878) (2,540)Corporate Overheads (169) (220) (42) (431) (165) (200) (75) (440)Loss on associates (42) - - (42) - - - -Earnings before interest 643 2,660 126 3,429 332 2,709 42 3,083and amortisation Amortisation on acquisition (54) (59) (15) (128) - (83) (28) (111)intangiblesInterest (203) 39 (68) (232) 134 16 (21) 129Profit before taxation 386 2,640 43 3,069 466 2,642 (7) 3,101 * The directors manage each division at a contribution level and believe this is a more meaningful measurement than gross profit. Overview The Group delivered a satisfactory performance in the first half of 2007, aperiod of consolidation in which our strategy continued to be implementedsuccessfully. We are focusing on expanding our range of goods and services forthe over 50's market (in which the majority of our current customers aredemographically defined), which should both continue to drive up the value andfrequency of purchases as well as attract new customers, the majority of whom weexpect to recruit from the internet in the future. Linked to this is ourcontinuing search for appropriate businesses (acquisitions and partnerships)that will add scale and synergy to our existing operations, and we will use thecash raised from the sale of Kelvedon Park for this purpose. The acquisition of Greetings Direct has given us access to a slightly youngercustomer, as has our licensing of Sarah Raven's Kitchen and Garden. Crossselling between Flying Flowers and Greetings Direct has already provedsuccessful and we will capitalise on this in the second half of the year. Although new customer recruitment from traditional home shopping channels(advertising in national press and magazines, as well as promotions to rentedmail order lists of potential customers) has continued to decline as mediacirculations shrink and the market gets saturated, there are encouraging signsthat internet recruitment is increasing - it represented 40% of total newcustomer starts in the first half of 2007. However, our active trading databasedeclined overall, and growing this again is the biggest challenge we face. In order to accelerate the Group's internet activity, we will replace ourcurrent website platforms in the first half of 2008 with a flexible, state ofthe art operating system called Demandware. We are confident that this newarchitecture, combined with a focused marketing plan, will improve substantiallythe footfall to our sites through search engine optimisation and then subsequentconversion to paid customers. The need for a 250 seat call centre as more orders switch online is becomingincreasingly unnecessary as we look into the future. We have therefore sold ourpremises at Kelvedon Park (releasing a substantial cash injection into thebusiness) and will move to the middle of Chelmsford later this year, wherepublic transport accessibility and links to London are much better. The benefits that we enjoy as a Jersey based company remain intact. Corporateincome tax has been reduced to 10% in 2007 from 20% in prior years, which willbenefit our earnings and earnings per share. This tax rate will remain at 10% in2008 and then become zero from 2009 onwards. These benefits are, however,countered by a continuing increase in distribution costs. Gifts Flying Flowers Although retail competition at the key events of Valentine's and Mother's Daysremains intense, existing customers remained loyal to us and so Flying Flowersperformed well, with the non flower ranges bolstering the many bouquets we arenow offering. "Upselling" (persuading customers to upgrade their flowers or takeadditional products) has worked very well and has driven average order values up6% from £18.87 in the first half of 2006 to £20.01 in 2007. Overall, FlyingFlowers is a successful, predictable business that we believe can continue to beexpanded to improve customer spend as well as attract new customers. To that end, internet sales increased by 23% to £1.5m over 2006, with 49% of newcustomers coming from online promotions; our email database now stands at 152k,growth of 17% over last year. Sales from the internet now stand at 28% of thetotal (2006: 23%), and we believe that the move to the Demandware platform willaccelerate this substantially. We expect that at least 50% of our overall salesfor Flying Flowers will come from the internet within the next three years. Greetings Direct We are currently integrating the back end functions of this business that weacquired in the second half of 2006. Despatch was put under the control of ourJersey operation from June and both systems and card fulfilment will besimilarly absorbed by the end of this year. Although the February recruitment mailing came in slightly below forecast, salesfrom special, one off promotions have offset the lower sales from starters. Wehave been pleased with the success of our cross selling initiatives between thecustomers of Greetings Direct and Flying Flowers. In addition, the number oflapsed customers we have been able to reintroduce to the card programme has beenpleasing. We are launching test promotions in Australia later in the summer and, if theseare successful, we will trial North America in the first half of 2008. Garden Gardening Direct Given that a 22% distribution cost increase was imposed on this business at thebeginning of the year, forcing us to increase product retail prices andintroduce a postage and packing charge for the first time, we were pleased withthe outcome of the spring campaign, with profit before interest and amortisationup by 5% over last year. Customer spend improved by 12% from £41.65 in 2006 to£46.58 this year. The February and March promotions were particularly strongafter a soft January, with bedding plants remaining the core of our overalloffer. Recruitment of new customers remains challenging, although we increased ourinternet sales by 19% over 2006 to represent 11% of total sales (2006: 9%), and23% of all new customers were recruited online. Email addresses improved by 24%to 83k. The Gardening Direct website remains simply a replication of our printedcatalogues on line, and the move onto the Demandware platform will enable us tobuild a much more extensive gardening offer encompassing several brands and manydifferent product areas that will appeal to a wider audience. We are focused onmaking the brand an authority and a focal destination point for anyoneinterested in gardening. Garden Bird Supplies We have now been trading this brand since September 2005 and it has been fullyintegrated within our operations. Garden Bird Supplies is a very solid businesswith a loyal core of customers, where sales appear to be stimulated as much asby the behaviour of the birds themselves as by any aggressive promotionalactivity. In the mild winter and early spring months, sales were soft because ofthe abundance of natural food available that had not been killed off by thefrost; however, this mild weather resulted in a higher rate of fledglingsurvival and hence a large pick up in sales since early April. Garden Bird Supplies is a premium brand, bought by customers who know andunderstand about their garden birds. Customers spend more than their GardeningDirect counterparts and their internet usage is higher at 21% of sales (up from17% last year) with 30k email addresses (2006: 23k). We see the productspromoted by this brand as an integral part of our overall gardening offer. Sarah Raven's Kitchen and Garden We licensed this brand (a virtual start up) from the eponymous writer andpresenter in February on a nine month trial, with an option to extend to a threeyear contract if it is successful. Currently, the brand is trading slightlybelow breakeven, but we expect to generate profits from 2008. Internetpenetration is very high, representing 39% of total sales to date. Entertainment Listen2 Listen2 is the amalgamation of Listen2Books (an audio book business that wedeveloped ourselves) and Silverminds Direct (a music business that we acquiredin 2005). It was our intention to add music to our audio collection, and thefact that each group of customers bought into both product offers convinced usthat a single brand was the best way to move forward. Listen2 was launched inFebruary and has performed well since then, with the last few monthsoutperforming the same period last year. Encouragingly, internet sales have grown by 25% over last year, delivering 12%of total revenue (2006: 6%). The key to success for this brand will be costeffective recruitment of new customers, and we have many tests in place for thesecond half to establish the best way forward. Benham Benham performed well in first half of the year, thanks in part to healthy tradesales. Further production processes will be moved to Jersey during the secondhalf, continuing to improve efficiencies. Kelvedon and Jersey Overheads Operational overheads decreased by £0.3m to £2.3m as a result of efficiencysavings. Corporate Overheads Corporate overheads have been held at £0.4m. Outlook Our strategy of profitable growth through brand extension (to encourage greatercustomer spend) and acquisition (to bring in new customers, goods and services)is working well and is being accelerated. Our database is at the centre of ourstrategy, which should ensure that the differences between our brands becomeless pronounced, and that they are seen by our customers as more a continuationof the same service. The internet will greatly facilitate this process andshould enable the Group to grow much more quickly. It is also therefore very important to increase the size of the active tradingdatabase, whether through consolidation (acquisition or partnership), newcustomer recruitment, the reactivation of lapsed customers or most likely acombination of all three. Starting with the Gifts, Garden and Entertainmentareas, we will also look beyond these if an appropriate opportunity arises, beit acquisition or partnership. Our very strong cash generation, Jersey status, database management skills andour move onto a leading edge internet platform, will enable us to deliver ourstrategy and will continue to significantly improve value for all ourshareholders. In an unpredictable trading period for retailers, the Group has successfullyimplemented its strategy. We have been able to absorb significant cost increaseswithout a major impact on margins and have demonstrated that we can findappropriate value enhancing acquisitions, and then integrate successfully thesebusinesses, maximising efficiencies and finding synergies with our existingbrands. This strategy will continue, building a larger database of customers(both online and offline) to whom we can offer a wider range of goods andservices. We are on target to meet our expectations for the full year. Mark DugdaleChief Executive27 July 2007 consolidated interim income statement for the 26 weeks ended 29 June 2007 Restated 26 weeks to 26 weeks to 52 weeks to 29 June 30 June 29 December 2007 2006 2006 (unaudited) (unaudited) (audited) notes £'000 £'000 £'000Revenue 3 25,191 20,923 42,368Cost of sales (18,297) (14,722) (30,466) Gross profit 6,894 6,201 11,902Operating expenses (3,551) (3,229) (6,605)Loss from associates (42) - (68) Operating profit 3,301 2,972 5,229Finance expense (287) - (135)Finance income 55 129 175 Profit before tax 3 3,069 3,101 5,269Taxation 2 (516) (704) (1,256) Profit for the period 2,553 2,397 4,013 Earnings per share in pence per share 5Basic 10.27p 9.64p 16.16pDiluted 10.11p 9.52p 15.88p Footnotes: i) The income statement relates to continuing operations.ii) The interim results to 30 June 2006 have been restated (see note 7). consolidated interim balance sheet for the 26 weeks ended 29 June 2007 Restated 29 June 30 June 29 December 2007 2006 2006 (unaudited) (unaudited) (audited) notes £'000 £'000 £'000AssetsNon-current assetsGoodwill 15,968 3,866 15,968Intangible assets 889 1,056 1,017Property, plant and equipment 6,104 10,755 10,347Interests in associates 90 - 132Loans to associates 5 - 33Deferred tax 185 113 137 23,241 15,790 27,634Current assetsInventories 3,645 3,126 3,703Loans to associates 100 - 67Trade and other receivables 3,563 811 2,593Cash and cash equivalents 871 3,856 1,984 8,179 7,793 8,347Non current assets held for sale 6 4,221 - - 12,400 7,793 8,347LiabilitiesCurrent liabilitiesCurrent income tax liabilities (1,071) (786) (854)Bank loans and overdraft (1,900) - (1,900)Trade and other payables (6,929) (4,434) (6,727)Net current assets/(liabilities) 2,500 2,573 (1,134)Non-current liabilitiesBank loans (6,175) - (7,125)Income tax liabilities (214) (706) (1,018) (6,389) (706) (8,143)Net assets 19,352 17,657 18,357Shareholders' equityOrdinary shares 254 255 254Share premium 16,178 16,047 16,138Capital reserve (17) (17) (17)Capital redemption reserve 22 20 22Retained earnings 2,915 1,352 1,960Total equity 19,352 17,657 18,357 consolidated statement of changes in shareholders' equity for the 26 weeks ended 29 June 2007 Reserves CapitalReconciliation Share Share Revaluation Capital redemption Retained Total capital premium reserve reserve reserve earnings equity notes £'000 £'000 £'000 £'000 £'000 £'000 £'000Balance at 30December 2005 255 16,021 450 (17) 20 (95) 16,634Restatement ofrevaluationreserve 7 - - (450) - - 450 -Profit for theperiod restated 7 - - - - - 2,397 2,397Employee shareoption scheme - - - - - 34 34Dividend - - - - - (1,491) (1,491)Sale of ownshares in ESOP - - - - - 57 57Issue of sharecapital - 26 - - - - 26Balance at 30June 2006 255 16,047 - (17) 20 1,352 17,657Profit for theperiod - - - - - 1,616 1,616Employee shareoption scheme - - - - - 44 44Dividend - - - - - (748) (748)Sale of ownshares in ESOP - - - - - 43 43Issue of shares 1 91 - - - - 92Cancellationof shares (2) - - - 2 (347) (347)Balance at 29December 2006 254 16,138 - (17) 22 1,960 18,357Profit for theperiod - - - - - 2,553 2,553Employee shareoption scheme - - - - - (31) (31)Dividend - - - - - (1,567) (1,567)Issue of sharecapital - 40 - - - - 40Balance at 29June 2007 254 16,178 - (17) 22 2,915 19,352 consolidated interim cash flow statements for the 26 weeks ended 29 June 2007 Restated 26 weeks to 26 weeks to 52 weeks to 29 June 30 June 29 December 2007 2006 2006 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000Cash flow from operating activitiesProfit before taxation 3,069 3,101 5,269Add back non-operating itemsProfit less losses on sale of property,plant and equipment (2) (8) (1)Adjustment forDepreciation 551 786 1,400Amortisation 128 111 391Decrease/(increase) in inventories 58 28 (412)(Increase)/decrease in receivables (970) 20 319Increase/(Decrease) in payables 183 (1,548) (2,499)Net finance expenditure/(income) 232 (129) (40)Share based payments (31) 34 78Loss for associates 42 - 68Cash generated from operations 3,260 2,395 4,573Interest received 55 129 175Interest paid (268) - (135)Tax paid (1,151) (1,332) (1,531)Net cash from operating activities 1,896 1,192 3,082Cash flow investing activitiesAcquisition of subsidiaries (net of cashacquired) - - (11,303)Acquisition of investment in associate - - (200)Purchase of intangible fixed assets - (10) (10)Purchase of property, plant and equipment (529) (131) (378)Proceeds from sales of tangible assets 2 17 40Loan to associates (5) - (100)Net cash used in investing activities (532) (124) (11,951)Cash flows from financing activitiesNet proceeds from issue of ordinary sharecapital 40 26 118New loans raised - - 9,500Repayment of borrowings (950) - (475)Purchase of own shares for cancellation - - (347)Exercise of treasury shares - 57 100Dividends paid to shareholders 4 (1,567) (1,491) (2,239)Net cash used in financing activities (2,477) (1,408) 6,657Net (decrease) In cash and cash equivalents (1,113) (340) (2,212)Cash and cash equivalents at 29 December2006 1,984 4,196 4,196Cash and cash equivalents at 29 June 2007 871 3,856 1,984 notes to the consolidated interim financial statements 1 accounting policies 1.1 Reporting entity These Financial Statements are the unaudited Consolidated Interim FinancialStatements (hereafter "the Interim Financial Statements") of Flying BrandsLimited a company registered in Jersey, and its subsidiaries (hereafter "theGroup") for the 26 weeks ended 29 June 2007 (hereafter "the interim period"). These Interim Financial Statements have been prepared under IFRS applying theaccounting policies published in the Group's IFRS Financial Statements for the52 weeks ended 29 December 2006, published on 16 March 2007. 1.2 Statement of compliance These Interim Financial Statements have been prepared on the basis of therecognition and measurement requirements of IRFS in issue that are eitherendorsed by the EU and effective (or available for early adoption) at 31December 2007. These Interim Financial Statements have been prepared inaccordance with IAS 34, Interim Financial Reporting. These Interim Financial Statements should be read in conjunction with theConsolidated Financial Statements for the year ended 29 December 2006 (hereafter"the Annual Financial Statements"), as they provide an update of previouslyreported information. They were approved for issue by the Board of Directors on16 March 2007. The comparative figures for the financial year ended 29 December 2006 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. 1.3 Significant accounting policies 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 Interim FinancialStatements requires management to make estimates and assumptions that affect thereported amounts of revenues, expenses, assets and liabilities at the date ofthe Interim Financial Statements. If in future such estimates and assumptions,which are based on management's best judgement at the date of the InterimFinancial Statements, deviate from the actual circumstances, the originalestimates and assumptions will be modified as appropriate in the period in whichthe circumstances change. The Group operates in a sector where significantseasonal or cyclical variations in total sales and profits are experiencedduring the financial year. 2 income tax expense The Group's consolidated effective tax rate for the period 29 June 2007 was16.8% (29 December 2006: 23.8%, 30 June 2006: 22.7%). This change was a resultof the States of Jersey changing the basis of assessing corporate income taxwhich will result in the group paying tax at an effective rate of 10% on tradingprofits generated in Jersey from 1 January 2007 until 31 December 2008.Thereafter the tax rate will be zero. 3 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. 3.1 Segmentation by primary divisions Period ended 29 June 2007 Gifts Garden Entertainment Total £'000 £'000 £'000 £'000Revenue 10,607 11,561 3,023 25,191Segment result 631 2,601 111 3,343Loss from associates (42)Interest payable (287)Interest receivable 55Profit before tax 3,069 Restated Period ended 30 June 2006 Gifts Garden Entertainment Total £'000 £'000 £'000 £'000Revenue 5,332 11,762 3,829 20,923Segment result 332 2,626 14 2,972Interest receivable 129Profit before tax 3,101 52 weeks ended 29 December 2006 Gifts Garden Entertainment Total £'000 £'000 £'000 £'000Revenue 16,395 17,913 8,060 42,368Segment result 2,708 2,366 223 5,297Loss from associates (68)Interest payable (135)Interest receivable 175Profit before tax 5,269 notes to the consolidated interim financial statements continued 3 segmental analysis continued 3.2 Segmentation by geographical area Revenue by geographical area 29 June 30 June 29 December 2007 2006 2006 Revenue by Revenue by Revenue by customer customer customer location location location £'000 £'000 £'000Jersey, Channel Islands 31 28 74United Kingdom 24,012 20,590 40,911Europe 937 119 821Outside Europe 211 186 562 25,191 20,923 42,368 Capital expenditure and assetsby Restatedgeographical 29 June 30 June 29 December 29 June 30 June 29 Decemberarea 2007 2006 2006 2007 2006 2006 Total Total Total Capital Capital Capital assets assets assets expenditure expenditure expenditure £'000 £'000 £'000 £'000 £'000 £'000Jersey,ChannelIslands 29,534 18,564 32,587 103 63 240United 6,107 5,019 3,394 426 68 138Kingdom 35,641 23,583 35,981 529 131 378 4 dividends 29 June 30 June 29 December 2007 2006 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Dividends on equity shares Interim dividend proposed at 3.30p per ordinary share in July and to be paid in September - - 749 Final dividend proposed in March, agreed at AGM in April at 6.00p (2006 5.65p) 1,567 1,491 1,490 The value of the interim dividend proposed and to be paid in September 2007 is £821,000. 1,567 1,491 2,239 5 earnings per ordinary share Basic Basic earnings per share is calculated by dividing the profit attributable to theequity holders of the Company by the weighted average number of ordinary sharesin issue during the period, excluding ordinary shares purchased by the Companyand held as treasury shares. Restated 29 June 30 June 29 December 2007 2006 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000Profit attributable to equity holdersof the Company 2,553 2,397 4,013Weighted average number of ordinaryshares in issues (thousands) 24,848 24,865 24,836Basic earnings per share (pence pershare) 10.27 9.64 16.16 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. Restated 29 June 30 June 29 December 2007 2006 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000Profit attributable to equity holdersof the Company 2,553 2,397 4,013Weighted average number of ordinaryshares in issue (thousands) 24,848 24,865 24,836Adjustment for share options (thousands) 418 301 431Weighted average number of ordinaryshares for diluted earnings per share(thousands) 25,266 25,166 25,267Diluted earnings per share (pence pershare) 10.11p 9.52 15.88 6 non-current assets held for sale On 14 June 2007 we exchanged contracts on the sale of Kelvedon Park in Essex andare due to complete the sale on 5 October 2007 for gross proceeds of £4.5m.After selling costs, a gain on the sale of the building of £200,000 is expected.Further one-off costs related to the relocation is expected to result in no netgain or loss in 2007. notes to the consolidated interim financial statements continued 7 prior year adjustment During the second half of 2006 the Directors have reconsidered the accountingpolicy applied in respect of expenditure on catalogues, brochures and campaignmaterial. The Group despatches its campaign marketing material for its productsthroughout the year and distributes its products after the receipt of an order.Under the policy applied in previous statements, the cost of producing thebrochures was included as a prepayment and recognised in the income statement tomatch the distribution of the products. The Directors have concluded that thispolicy does not properly reflect the advertising nature of the expense and alsodoes not reflect that once the material has been distributed to potentialcustomers that the Group no longer controls these assets. Under the new policy,printed material, such as brochures, catalogues and campaign materials held bythe Group are treated as a prepayment and an expense is recognised in the incomestatement when the materials are distributed. The effect of the revision to thispolicy is to reduce the prior interim profit before tax by £112,000. Thetaxation impact of the prior period is to reduce the deferred taxation charge by£25,000. Overall this reduced net assets by £87,000. Under UK GAAP the Group valued freehold property at valuation on transition toIFRS this valuation is deemed cost and consequently the revaluation reserveunder UK GAAP should have been reclassified to retained earnings. The effect ofthis correction of an error is £nil to reserves. The Directors believe the above changes more accurately reflect the requirementsof IFRS and have consequently amended their accounting policies used in the 2006Interim Financial Statements. Under IFRS these revisions are required to be acorrection of a prior period error, in accordance with IAS 8.41. This information is provided by RNS The company news service from the London Stock Exchange