12th Sep 2006 07:00
French Connection Group PLC12 September 2006 12th September 2006 FRENCH CONNECTION GROUP PLC Interim Statement for the six months ended 31 July 2006 French Connection Group PLC today announces its interim results for the sixmonths ended 31st July 2006. • Turnover 11.2 million (2005: £117.9 million) • (Loss)/Profit before tax £(3.6) million (2005: £5.1 million) • Closing net funds £41.5 million (2005: £37.1 million) • (Loss)/Earnings per share (3.3)p (2005: 3.7p) • Interim dividend 1.7p (2005: 1.7p) Stephen Marks, Chairman, commented on the results: "The challenges we faced during the last financial year have continued to impacttrading in the new year. It has taken longer than we had hoped to translate thechanges we have made in our business into sales growth." "Our commitment to making great products for our customers in terms ofindividuality, quality and price remains the focus of our work. We recognisethat in the past we have not met our customers' expectations, however the stronginitial reaction to the new Winter collections indicates that our efforts arehaving an impact. We will keep on working to improve our ranges and alloperational aspects of our business. The indications are that we were beginningto achieve our goals, with sales in the early part of the new season encouragingly ahead of last year" Enquiries: Stephen Marks/Neil Williams/Roy Naismith French Connection +44(0)20 7036 7063Tom Buchanan/Lucie Anne Brailsford Brunswick +44(0)20 7404 5959 CHAIRMAN'S STATEMENT Dear shareholders, The challenges we faced during the last financial year have continued to impacttrading in the new year. It has taken longer than we had hoped to translate thechanges we have made in our business into sales growth. In the six months to 31 July 2006, Group revenue was £111.2 million, 6% lessthan the equivalent period last year. The Group gross margin decreased by 1.2%to 53.9% as a result of the need to clear excess inventory. Operating costsincreased by 5%, largely as a result of the additional retail selling spaceopened in the second half of the last financial year. The net result was a lossbefore taxation of £3.6 million (2005: profit of £5.1 million). We have made substantial changes to the focus and direction of our FrenchConnection products. Although we expected that these changes would have agradual impact, we were again disappointed by our retail performance early inthe Spring/Summer season. In the second half of the season sales improved alittle and we continue to believe that the changes we have made will providegradual growth in our retail stores with the wholesale business respondingsubsequently. In the meantime orders from our wholesale customers continue to besubdued although the indications are that the customer base and order levelshave settled. That said, although it is early in the new season we have seen better sales inour stores. In the three weeks since the beginning of the season we have seenlike-for-like sales growth of over 9% in our UK/Europe retail business. It isstill too early to assume that this level of growth will continue throughout,but we are pleased to see a positive reaction from our customers along with thecontinued support of the fashion press. Elsewhere, Nicole Farhi, Great Plains and, in particular, Toast have beenperforming well through their retail, wholesale and home shopping channels. Ourwholesale business in North America has shown some good growth and our retailjoint ventures in Asia continue to expand. Despite increases in income from ourshoe licensee and Asia joint ventures our total licensing income has declined asa result of increased competition affecting sales of our men's grooming productsand the termination of the worldwide fragrance licence. Our teams have been working extremely hard to get our business back on track.Our commitment to making great products for our customers in terms ofindividuality, quality and price remains the focus of our work. We recognisethat in the past we have not met our customers' expectations, however theinitial reaction to the new Winter collections is an indication that our effortsare having an impact. We will keep on working to improve our ranges and alloperational aspects of our business. We are focused on getting the product right and re-establishing the brand as afashion leader. We believe the signs are encouraging that we are achieving ourgoals. Stephen MarksChairman and Chief Executive11 September 2006 OPERATING REVIEW United Kingdom and EuropeAs reported at the Annual General Meeting in May, we did not see the growth inour UK/Europe retail business we had been hoping for during the Spring andSummer seasons but there are signs of improvement. Compared with the same periodlast year, on a like-for-like basis, our retail sales in the first half werebroadly flat, but performance improved in the latter part of the period.Further, the new French Connection ranges for the Winter season are having apositive impact. We remain confident that the ranges are improving and our processes areproviding more flexibility during the season. This is supported by the reactionwe have had from the fashion press and from our regular customers. However it isclear that in a difficult retail environment, returning French Connection to thefront of our customers' minds will take time. While we believe that theconsistent delivery of attractive ranges should be the focus of our efforts, wehave also recently refocused our marketing to highlight the changes in ourproduct ranges. Average trading space in UK/Europe during the period was 5% larger than theequivalent period last year with most of the increase in space arising from thefour franchise stores which were brought in-house during last year. The onlyaddition to the store portfolio during the period was one further franchisebought from its operator while two poorly performing stores were closed. Total retail revenues increased 3% to £52.4 million, but gross margin fell from67.1% to 64.3% mainly as a result of the extended Winter sale at the beginningof the period. As ever the business was managed closely and operating costs, allowing for theincrease in space and the continued inflation in property costs, were kepttightly under control. The Toast business continues to develop strongly and now operates threestand-alone stores and four concessions as well as its very successful homeshopping catalogue and web site. Further store locations are currently beingevaluated. Sales to our wholesale customers during the period were 25% lower than last yearat £29.8 million, continuing the trend seen throughout last year and reflectingthe reductions in the Summer and Winter forward orders reported previously. Gross margins in the wholesale business were impacted because the volume ofproduct sold at a discount represented a higher proportion of the total,although the absolute volume was no more than last year. This resulted in adecrease in the margin to 34.2% (2005: 38.5%). North AmericaThe North America retail business continued to face challenges and new retailmanagement has been recruited to deal with the issues. Retail sales declined by10% on a like-for-like basis but changes in the local operational organisationhave helped to contain the decline. We are now seeing an improved salesperformance in the stores. Two new stores were opened in Canada in the period and, along with the additionsin the second half of the previous year, average retail space increased by 10%.Total retail sales increased by 2% to $30.2 million (2005: $29.6 million). Grossmargin was affected by higher levels of discounting to clear excess inventoryand was 2.0% lower at 60.5%. The wholesale business has continued to grow as we work closely with ourdepartment store customers. Revenue in Dollar terms increased by 12% and, with astronger gross margin, the operating contribution showed a further improvementto 13.3%. Rest of the WorldBusiness generated though our Hong Kong office from sales of product to our Asiacustomers was stable, generating the same turnover as the comparative period of£4.0 million. The retail joint ventures in Hong Kong, Japan and China continueto develop and we now have 37 locations across these three territories. TheGroup's share of the losses of these businesses amounted to £0.4 million in theperiod, including an increased investment in marketing in Japan. This was offsetby licence income and trading margin generated by those businesses whichamounted to £0.5 million. LicensingNet licensing income to the Group during the period amounted to £1.5 million(2005: £2.1 million) reflecting a decrease in income from the UK toiletrieslicence due to significantly increased competition in the men's grooming sectorand the termination of the worldwide fragrance licence. In other licences we sawfurther growth in the shoe business and increased income from territorylicences. Current trading and outlookThe new season has started well in our UK/Europe retail business and in thethree weeks completed so far we have seen an increase in sales of over 9% on alike-for-like basis. While this is an encouraging performance it is very earlyin the season and we are currently planning for a 3% increase in like-for-likesales over the second half of the year. We are also expecting to improve thegross margin above the depressed levels seen in the second half of last yearthrough reduced mark-downs during the Winter sale period. Wholesale forward orders for Winter 2006 are 15% below the levels at this timelast year and orders for Summer 2007 are broadly flat compared to this time lastyear. Performance of the retail stores in North America is also improving as areaction both to the new season product and the operational changes. However,the rate of increase in wholesale orders has now flattened. As ever, the major variable in relation to the result for the full year will bethe like-for-like retail sales growth achieved, allied with our stance ondiscounts during the sale period. Relatively small changes in the sales achievedthrough this channel can have a significant influence on the trading results ofthe Group. However, at the relatively small level of retail growth we aretargeting for the second half of the year, we believe that the full year resultswill meet our expectations. Neil WilliamsOperations Director11 September 2006 FINANCIAL REVIEW Group tradingGroup revenue fell by 6% to £111.2 million (2005: £117.9 million) in the period.Retail sales in both UK/Europe and North America showed small increases andNorth America wholesale continued to grow. However, there was a 25% decline insales to wholesale customers in UK/Europe more than offsetting the increases. In UK/Europe the increase of 3% in retail revenue reflects a combination of flatlike-for-like sales including good growth in the home shopping channel and 5%additional average space traded. In North America the 4% increase in retailsales in Sterling terms includes 2% due to the weakening of the Dollar, a 10%increase in average trading space, and a decline of 10% on a like-for-likebasis. Wholesale revenue in UK/Europe was significantly lower than last year reflectinga lower level of both Summer 2006 business and forward orders for the Winter2006 season. In North America, however, wholesale revenue showed a 12% increasein Dollar terms building on momentum with the department stores. Compared to theequivalent period last year the Dollar strengthened by 2% resulting in areported 14% increase in Sterling terms. Gross marginsThe Group gross margin decreased by 1.2% to 53.9%. This net decrease included abenefit of 1.5% from a higher proportion of sales being through the retailchannel. Excluding this mix benefit, the decrease of 2.7% in margin was drivenmainly by margins in UK/Europe. In the UK/Europe wholesale business margins fell from 38.5% to 34.2%. During theperiod full-price margins remained similar to previous periods, however due tothe decrease in full price sales, the proportion of discounted sales increased.Consequently there was a negative impact on the reported gross margin. Retailmargins in UK/Europe fell 2.8% to 64.3% due to the increased mark-downs duringsale periods. Core margins in the retail channel remained similar to previousperiods. In North America retail margins were 2% lower at 60.5% due to increaseddiscounting. Conversely, wholesale margins took another 0.5% step forward to36.1% with a higher proportion of full-price sales. The margin in the Rest of the World at 20% was consistent with previous periods.The margin reflects the lower pricing of sales to licensees in Asia andAustralia who also pay a licence royalty on their turnover. OverheadsTrading overheads, representing the direct costs of the divisional operations,increased by 6% in the period driven mainly by the costs associated with theincrease in traded space and on-going rental increases in the retail businesses.Common overheads, comprising costs shared between the divisions withingeographic locations and mainly representing advertising and promotion costsdecreased marginally while Group management overheads were successfully targetedfor savings. Overall, operating expenses increased by 5% and the vast majorityof the increase was associated with the 7% increase in average store spacetraded in the period. Licence incomeOther income reported in the geographic analysis includes royalty payments paidintra-group for the use of the brands. The intra-group element is eliminated onconsolidation and the net Other Income represents brand and territory licenceroyalties from our third-party licensees. Total net income in the period was£1.5 million compared with £2.1 million in the comparative period as a result ofa reduction in income from toiletries and the worldwide fragrance licence whichwas terminated last year. Operating resultThe business has traditionally been significantly more profitable in the secondhalf of the year than the first due to the higher average price of wintergarments and the natural seasonality of the retail business. Typically only 46%of sales are generated in the first half while 50% of the fixed costs areallocated to the same period. This seasonality coupled with the decline in salesand gross margin in the UK/Europe wholesale business and the high level ofoperational gearing has resulted in a Group operating loss for the period of£3.9 million (2005: profit of £4.7 million). The Group's share of the losses of the Asia Joint Ventures was £0.4 million(2005: £0.3 million). Interest income amounted to £0.7 million (2005: £0.7million). The loss before taxation was £3.6 million compared with last year'sprofit of £5.1 million. Profit after taxationThe taxation credit of £0.5 million is based on the expected Group full-yeareffective rates in each of the Group's tax jurisdictions. The rate is adverselyimpacted by the inability of the Group at present to utilise tax lossesgenerated in the United States. Due to the difference in the mix of taxable income between the UK and the US forthe first and second halves of the financial year and the inability to utilisetax losses in the US it is expected that the effective tax rate for the fullyear will be significantly higher at approximately 70%. After accounting for taxation and minority interests in our Canada business andToast, loss per share is 3.3 pence per share (2005: earnings of 3.7 pence pershare). Cash flow and net fundsThe Group's total net funds position at 31 July 2006 was £41.5 million (2005:£37.1 million) and in the six month period the business utilised £15.2 millionof cash (2005: £14.9 million.) Compared to the equivalent period last year trading operations generated £4.9million less cash reflecting the lower trading profit offset by a smallerincrease in working capital than last year. It is normal for the working capitalin the business to increase over the first six months of the year due to theimpact of the Winter season inventory at the end of July. Inventory at 31 July2006 amounted to £56.2 million, 6% higher than at the interim stage last yearreflecting both the 7% increase in average trading space and the growth of theToast business. During the period cash was also used to pay £2.9 million of taxation, £3.2million of dividends and £3.7 million of capital expenditure, largely inrelation to the new warehouse and head office. DividendGiven our substantial cash reserves and our expectations for the future theBoard has decided to hold the interim dividend at 1.7 pence per share, the samelevel as last year. The dividend is payable on 17 October 2006 to shareholderson the register at 22 September 2006 (ex-dividend date 20 September 2006). Roy NaismithFinance Director11 September 2006 French Connection Group PLCRegistered Number: 1410568, England GROUP INCOME STATEMENT------------------- ---- ------ ------- ------- ------ ------- ------ Six Six Year months months ended 31 July 31 July 31 Jan 2006 2005 2006 Note £m £m £m £m £m £m------------------- ---- ------ ------- ------- ------ ------- ------ Revenue 1 111.2 117.9 246.3 Cost of sales (51.3) (52.9) (114.8)------------------- ---- ------ ------- ------- ------ ------- ------ Gross profit 1 59.9 65.0 131.5 Net operating expenses (65.3) (62.4) (125.0)Other operating income 1.5 2.1 4.7------------------- ---- ------ ------- ------- ------ ------- ------ Operating (loss)/profit 1 (3.9) 4.7 11.2beforefinancing costs Financial income 0.9 0.8 1.5Financial expenses (0.2) (0.1) (0.2)Net financing costs 0.7 0.7 1.3------------------- ---- ------ ------- ------- ------ ------- ------ Operating (loss)/profit (3.2) 5.4 12.5 Net gain on disposal ofproperty, - - 3.5plantand equipmentShare of loss of joint (0.4) (0.3) (0.3)ventures------------------- ---- ------ ------- ------- ------ ------- ------ (Loss)/profit before (3.6) 5.1 15.7taxation Income tax credit/ 0.7 (2.1) (5.9)(expense) - UKIncome tax (expense)/ (0.2) 0.6 0.2credit - overseasTotal income tax credit/ 0.5 (1.5) (5.7)(expense)------------------- ---- ------ ------- ------- ------ ------- ------ Attributable to:Equity holders of the 2 (3.2) 3.5 9.7parentMinority interest 0.1 0.1 0.3------------------- ---- ------ ------- ------- ------ ------- ------ (Loss)/profit for the (3.1) 3.6 10.0period------------------- ---- ------ ------- ------- ------ ------- ------ Basic (losses)/earnings 2 (3.3)p 3.7p 10.2pper share------------------- ---- ------ ------- ------- ------ ------- ------ Diluted (losses)/earnings 2 (3.3)p 3.6p 10.1pper share------------------- ---- ------ ------ -------- ------ ------- ------ GROUP BALANCE SHEET------------------- ------ ---------- ---------- ---------- Note 31 July 31 July 31 Jan 2006 2005 2006 £m £m £m-------------------- ------ ---------- ---------- ---------- AssetsNon-current assetsIntangible assets 13.0 12.2 13.0Property, plant and equipment 24.9 28.5 26.7Investments in joint ventures 2.8 3.1 3.2Deferred tax assets 6.2 4.5 6.5-------------------- ------ ---------- ---------- ---------- Total non-current assets 46.9 48.3 49.4-------------------- ------ ---------- ---------- ---------- Current assetsInventories 56.2 53.1 47.7Trade and other receivables 26.9 35.1 30.1Cash and cash equivalents 3 47.1 41.4 60.9-------------------- ------ ---------- ---------- ---------- Total current assets 130.2 129.6 138.7-------------------- ------ ---------- ---------- ---------- Total assets 177.1 177.9 188.1-------------------- ------ ---------- ---------- ---------- Non-current liabilitiesDeferred tax liabilities 1.4 - 1.4-------------------- ------ ---------- ---------- ---------- Total non-current liabilities 1.4 - 1.4-------------------- ------ ---------- ---------- ---------- Current liabilitiesBank loans and overdrafts 3 5.6 4.1 3.9Trade and other payables 49.2 48.6 51.7Current tax payable 1.3 4.1 4.7-------------------- ------ ---------- ---------- ---------- Total current liabilities 56.1 56.8 60.3-------------------- ------ ---------- ---------- ---------- Total liabilities 57.5 56.8 61.7-------------------- ------ ---------- ---------- ---------- Net assets 119.6 121.1 126.4-------------------- ------ ---------- ---------- ---------- EquityCalled-up share capital 1.0 1.0 1.0Share premium account 9.3 8.7 9.3Other reserves (0.4) - 0.2Retained earnings 109.1 111.1 115.4-------------------- ------ ---------- ---------- ---------- Total equity attributable to equityholders of the parent 119.0 120.8 125.9 Minority interests 0.6 0.3 0.5-------------------- ------ ---------- ---------- ---------- Total equity 119.6 121.1 126.4-------------------- ------ ---------- ---------- ---------- GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE----------------------- ----- ------ ------- ------ ------- ------ Six Six Year months months ended 31 July 31 July 31 Jan 2006 2005 2006 £m £m £m £m £m £m----------------------- ----- ------ ------- ------ ------- ------ (Loss)/profit attributableto equity (3.2) 3.5 9.7shareholders Minority interest 0.1 0.1 0.3Currency translationdifferences onforeign currency net (0.6) 0.8 0.7investmentsEffective portion of changesin fair - - 0.3value ofcash flow hedgesRecognised in equity (0.6) 0.8 1.0----------------------- ----- ------ ------- ------ ------- ------Total income and expense (3.7) 4.4 11.0recognised Impact of adoption of IAS 32 (0.3)/39----------------------- ----- ------ ------- ------ ------- ------ Total income and expense (3.7) 4.4 10.7recognised forthe period----------------------- ----- ------ ------- ------ ------- ------ GROUP STATEMENT OF CASH FLOWS--------------------- ------ --------- ---------- ---------- Note Six Six Year months months ended 31 July 31 July 31 Jan 2006 2005 2006 £m £m £m--------------------- ------ --------- ---------- ---------- Operating activities(Loss)/profit for the period (3.1) 3.6 10.0Adjustments for:Depreciation 4.8 5.1 10.7Interest income (0.9) (0.8) (1.5)Interest expense 0.2 0.1 0.2Share of loss of joint ventures 0.4 0.3 0.3Non-operating gain on property, plant - - (3.5)andequipmentOperating loss on property, plant and 0.3 - -equipmentIncome tax (credit)/expense (0.5) 1.5 5.7--------------------- ------ --------- ---------- ---------- Operating profit before changes inworkingcapital and provisions 1.2 9.8 21.9Increase in inventories (8.5) (9.7) (3.5)Decrease/(increase) in trade andother 3.2 (1.6) 2.4receivables(Decrease)/increase in trade andother (1.8) 0.5 3.6payables--------------------- ------ --------- ---------- ---------- Cash flows from operations (5.9) (1.0) 24.4 Interest paid (0.1) (0.1) (0.2)Taxes paid on income (2.9) (5.6) (8.7)--------------------- ------ --------- ---------- ---------- Cash flows from operating activities (8.9) (6.7) 15.5--------------------- ------ --------- ---------- ---------- Investing activitiesInterest received 0.8 0.8 1.5Acquisition of joint ventures and - (0.9) (1.0)subsidiariesAcquisition of franchises - - (2.1)Acquisition of property, plant and (3.7) (4.4) (9.6)equipmentProceeds from sale of property, plant - - 5.3andequipment--------------------- ------ --------- ---------- ---------- Cash flows from investing activities (2.9) (4.5) (5.9)--------------------- ------ --------- ---------- ---------- Financing activitiesProceeds from the issue of share - - 0.6capitalPayment of finance lease liabilities 3 (0.2) (0.1) (0.1)Dividends paid (3.2) (3.6) (5.2)--------------------- ------ --------- ---------- ---------- Cash flows from financing activities (3.4) (3.7) (4.7)--------------------- ------ --------- ---------- ---------- Net (decrease)/increase in cash andcashequivalents 3 (15.2) (14.9) 4.9Cash and cash equivalents at 1 57.0 52.5 52.5FebruaryExchange rate fluctuations on cash (0.3) (0.3) (0.4)--------------------- ------ --------- ---------- ---------- Cash and cash equivalents at period 3 41.5 37.3 57.0end--------------------- ------ --------- ---------- ---------- NOTES TO THE INTERIM STATEMENT 1. Segmental analysis --------------- --------------- ------- ------ ------Six months UK/Europe North America Rest of World Intra Group Total31 July 2006 --------------- --------------- Retail Whole- Total Retail Whole-sale Total Whole- sale sale £m £m £m £m £m £m £m £m £m ------ ------ ------ ------ ------ ------ ------- ------ ------ Revenue 52.4 29.8 82.2 16.7 8.3 25.0 4.0 111.2 ------ ------ ------ ------ ------ ------ ------- ------ ------ Gross profit 33.7 10.2 43.9 10.1 3.0 13.1 0.8 2.1 59.9 Gross margin 64.3% 34.2% 53.4% 60.5% 36.1% 52.4% 20.0% 53.9% Tradingoverheads (36.2) (6.1) (42.3) (12.0) (1.9) (13.9) (0.7) (56.9) ------ ------ ------ ------ ------ ------ ------- ------ ------ Operatingcontribution (2.5) 4.1 1.6 (1.9) 1.1 (0.8) 0.1 2.1 3.0 ------ ------ ------ ------ Commonoverhead (3.7) (1.9) (5.6)costs Other income 2.5 1.1 (2.1) 1.5 ------ ------ ------- ------ ------ Divisionaloperatingprofit/(loss) 0.4 (2.7) 1.2 - (1.1) ------ ------ ------- ------ ------ Groupmanagementoverheads (2.8) ------ Operating lossbeforefinancingcosts (3.9) ------ ------ ------ ------ ------ ------ ------ ------- ------ ------Six months UK/Europe North America Rest of World Intra Group Total31 July 2005 --------------- --------------- ------- ------ ------ Retail Whole- Total Retail Whole-sale Total Whole- ------ ------ ------ ------ ------ ------- ------ sale sale £m £m £m £m £m £m £m £m £m ------ ------ ------ ------ ------ ------ ------- ------ ------ Revenue 51.1 39.5 90.6 16.0 7.3 23.3 4.0 117.9 ------ ------ ------ ------ ------ ------ ------- ------ ------ Gross profit 34.3 15.2 49.5 10.0 2.6 12.6 0.8 2.1 65.0 Gross margin 67.1% 38.5% 54.6% 62.5% 35.6% 54.1% 20.0% 55.1% Tradingoverheads (34.4) (6.2) (40.6) (10.7) (1.8) (12.5) (0.6) (53.7) ------ ------ ------ ------ ------ ------ ------- ------ ------ Operatingcontribution (0.1) 9.0 8.9 (0.7) 0.8 0.1 0.2 2.1 11.3 ------ ------ ------ ------ Commonoverhead (4.1) (1.6) (5.7)costs Other income 3.1 1.1 (2.1) 2.1 ------ ------ ------- ------ ------ Divisionaloperatingprofit/(loss) 7.9 (1.5) 1.3 - 7.7 ------ ------ ------- ------ ------ ------ ------ Groupmanagementoverheads (3.0) ------ Operatingprofit beforefinancingcosts 4.7 ------ NOTES TO THE INTERIM STATEMENT 2. Losses/earnings per share (Losses)/earnings per share of (3.3)p (2005: 3.7p) is based on 95,835,318 shares(2005: 95,432,595) being the weighted average number of ordinary shares in issuethroughout the period, and £(3.2) million (2005: £3.5 million) being the (loss)/profit attributable to shareholders. Diluted (losses)/earnings per share of(3.3)p (2005: 3.6p) is based on 96,134,768 shares (2005: 95,973,881) being theweighted average number of ordinary shares adjusted to assume the exercise ofdilutive options. The reconciliation to adjusted (losses)/earnings per share is as follows: Six months Pence Six months Pence Year ended Pence 31 July per 31 July per 31 January per 2006 share 2005 share 2006 share £m £m £m------------------- -------- ------ -------- ------ -------- ------ (Loss)/profitattributable toequity (3.2) (3.3)p 3.5 3.7p 9.7 10.2pshareholdersGain ondisposal ofproperty, - - - - (2.9) (3.1)pplant and equipmentpost tax------------------- -------- ------ -------- ------ -------- ------ Adjusted(losses)/earnings (3.2) (3.3)p 3.5 3.7p 6.8 7.1p------------------- -------- ------ -------- ------ -------- ------ 3. Analysis of net funds----------------------- -------- ------- -------- ------- -------- 31 January Cash Non cash 31 July 31 July 2006 flow changes 2006 2005 £m £m £m £m £m----------------------- -------- ------- -------- ------- -------- Cash and cash equivalentsin the balance sheet 60.9 (13.8) - 47.1 41.4Bank overdrafts (3.9) (1.4) (0.3) (5.6) (4.1)----------------------- -------- ------- -------- ------- -------- Cash and cash equivalentsin the cash flow 57.0 (15.2) (0.3) 41.5 37.3Finance lease obligations (0.2) 0.2 - - (0.2)----------------------- -------- ------- -------- ------- --------Net funds 56.8 (15.0) (0.3) 41.5 37.1----------------------- -------- ------- -------- ------- -------- NOTES TO THE INTERIM STATEMENT 4. Statutory accounts and basis of preparation The interim financial statements have been prepared in accordance withaccounting policies set out in the Group's audited 2006 financial statements.The condensed consolidated interim financial statements do not include all ofthe information required for full annual financial statements. The interim financial information has been prepared on the basis of therecognition and measurement requirements of IFRS applied in the financialstatements at 31 January 2006 and those standards that have been endorsed andwill be applied at 31 January 2007. The accounts for the period ended 31 July 2006 and 31 July 2005 are unaudited. The comparative figures for the financial year ended 31 January 2006 are derivedfrom the Group's statutory accounts for that financial year, which have beenreported on by the Group's auditors and delivered to the Registrar of Companies.The report of the auditors was unqualified and did not contain a statement undersection 237 (2) or (3) of the Companies Act 1985. A copy of this interim statement is being sent to all shareholders and will beavailable for inspection at the Company's registered office. 5. Retail locations Forecast 31 January 2006 31 July 2006 31 January 2007 Number '000 sq ft Number '000 sq ft Number '000 sq ft-------------------- ------ ------- -------- ------- ------- ------- OperatedUK/Europestores 85 258 84 255 85 258OperatedUK/Europeconcessions 29 24 30 24 30 24Operated NorthAmerica stores 38 160 40 166 40 166Operated NorthAmericaconcessions 1 0.3 - - - --------------------- ------ ------- -------- ------- ------- -------Total 153 442 154 445 155 448-------------------- ------ ------- -------- ------- ------- ------- FranchisedUK/Europestores 23 38 21 36 21 36FranchisedUK/Europeconcessions 3 3 3 3 3 3FranchisedNorth Americastores 1 2 1 2 1 2FranchisedMiddle Eaststores 9 16 9 16 9 16Licensed Restof Worldstores 61 106 67 115 74 121Licensed Restof Worldconcessions 34 30 40 35 39 34-------------------- ------ ------- -------- ------- ------- -------Total 131 195 141 207 147 212-------------------- ------ ------- -------- ------- ------- -------Total brandedlocations 284 637 295 652 302 660-------------------- ------ ------- -------- ------- ------- ------- The forecast for 31 January 2007 is based upon known locations only. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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