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Alexon Group PLC (AXN)

  Print      Mail a friend       Annual reports

Monday 27 March, 2006

Alexon Group PLC

Final Results - Replacement

Alexon Group PLC
27 March 2006

The following replaces the Final Results announcement released on Monday 27
March 2006 at 0700 under RNS number 4063A

Please be advised that the Board are recommending a final ordinary dividend of
6.00p per ordinary share be paid on 30 June 2006 to shareholders on the register
on 2 June 2006 (not 3 June 2006), making a total of 9.00p for the year, an
increase of 5.9%

All other details remain unchanged and the full amended text appears below.


For Immediate Release                                              27 March 2006


                                ALEXON GROUP PLC

          Preliminary Results for the 52 weeks ended 28 January, 2006


Alexon Group plc, the leading retailer of ladieswear, menswear and shoes,
announces Preliminary Results for the 52 weeks ended 28 January 2006, which have
been prepared in accordance with International Financial Reporting Standards.


Key Points

  • Turnover amounted to £413.6m (2005: £424.4m);
  • Gross margins broadly in line with the prior year; l-f-l sales down 1.4%;
  • Operating profit of £19.7m (2005: £29.4m), in line with market
    expectations;
  • Basic earnings per share amounted to 25.73p (2005: 36.35p);
  • Final dividend proposed of 6.0p, making a total of 9.0p for the year
    (2005: 8.5p), up 5.9%;
  • Strong cash position during the year enabled a repurchase of 1.1 million
    shares during the year under review and a further 1.2 million shares in the
    current financial year;


John Osborn, Chief Executive, commented:

"As we are anticipating another tough year, our emphasis will continue to be on
product innovation and cost control. We are confident that the steps already
taken in Dolcis and Menswear will improve the performance of both Divisions and
that Bay Trading and Alexon Brands can make further progress."

For further information:

Alexon Group                                       020 7597 5000 (today) &
John Osborn, Chief Executive                       01582 723131 (thereafter)
Robin Piggott, Finance Director

Buchanan Communications                            020 7466 5000
Richard Darby/Nicola Cronk


Chief Executive's Report

Results

Operating profit for the 52 weeks ended 28 January 2006 was £19.7 million as
against £29.4 million for the prior year, and is in line with market
expectations.

Group sales for the year were 1.4% down on a like-for-like basis with gross
margins broadly in line with the prior year.   All four divisions were affected
by the consumer downturn, with Dolcis and Menswear being the weakest performers;
Alexon Brands generally held its own with its competitors; whilst Bay Trading
put in a much better performance than in the previous year.

The other factors which contributed to the profit shortfall were significant
increases in costs, particularly host store commissions and shop overheads; the
loss of the Group's profitable business with the former Allders Group; and the
launch of Mandolin, our new High Street brand, which has got off to a much
slower start than expected.

Alexon Brands

Operating profit for the division was £20.9 million against £25.1 million last
year.   Whilst like for like sales were level with last year, gross margins were
lower reflecting an increase in markdown activity necessary to keep stocks under
control.

The strongest performing brands were Eastex and Alex & Co, closely followed by
Minuet and Dash.  Kaliko was flat against the prior year whilst Ann Harvey was
disappointing.

The division was hit particularly hard by increased host store commission rates
and the closure of its Allders business, which led to a reduction of some 77
outlets.

In October we launched a new middle market brand, called Mandolin, in 17 high
street shops that were underperforming outlets transferred from elsewhere within
the Group.   The brand has significantly underperformed our plans, leading to a
radical review of the product offer, the benefits of which will not be seen
until autumn 2006 onwards.

Dolcis

Dolcis had a disappointing year with an operating loss of £0.7 million, against
£3.6 million profit in the previous year.   Of this loss, £0.4 million was due
to impairment of fixed assets.   Like for like sales were 6% down, on gross
margins lower than the prior year.

In common with other footwear retailers, Dolcis was particularly affected by a
poor boot season and most of the margin erosion was caused by the need to clear
boot stocks.   As indicated in our Interim Report, we have strengthened our
buying team, with the aim of increasing the fashionability and appeal of the
product ranges, and we expect this to impact from Easter 2006 onwards.

Style Menswear

Menswear recorded an operating loss of £2.6 million (including £0.7 million
impairment provision) compared to a profit of £2.2 million in the prior year.
Like for like sales were 9% down, although gross margins were slightly higher.

Whilst the concession business that sells the in-house brands, Tom Wolfe and
Parkes, continued to perform well, Envy, the high street chain, had a
disappointing year.   The UK menswear market was difficult during 2005, made
worse by a sharp increase in the amount of competition, and this was exacerbated
by costly strategic errors with the Envy product offer.   The decision to
increase the participation of own brands at the expense of third party brands,
although benefiting margins, had an adverse affect on the sales line,
particularly during the key Christmas trading period.  This has led to a
fundamental rethink of product strategy, involving a greater emphasis on key
third party brands and a strengthening of the buying team.

Bay Trading

It is pleasing to report that Bay Trading had a much better year, achieving an
operating profit of £2.5 million against a loss of £0.8 million in the previous
year.   Like for like sales were 5% higher on much improved gross margins.

The division benefited from increasing the design content and appeal of the
product ranges resulting in higher average prices and lower levels of markdown.
We now intend to capitalise on this improvement by resuming the new store
opening programme, particularly in secondary locations.

Current Trading and Prospects

The emphasis during February has been to clear residual stocks in all divisions
and we are pleased with the progress made.   Like-for-like sales for the first
seven weeks of the current financial year are 2.0% down, on lower gross margins
than last year.

We are anticipating another tough year, and our emphasis will continue to be on
product innovation and cost control.   We are confident that the steps already
taken in Dolcis and Menswear will improve the performance of both Divisions and
that Bay Trading and Alexon Brands can make further progress.

Returns to Shareholders

Despite a challenging year for retail, the Group's strong cash position allowed
us to repurchase 1.1 million shares during the year, and a further 1.2 million
shares in the first few weeks of the current financial year.

The Board are recommending a final ordinary dividend of 6.00p per ordinary share
be paid on 30 June 2006 to shareholders on the register on 2 June 2006, making a
total of 9.00p for the year, an increase of 5.9%

Outlets

A breakdown of outlets as at 28 January 2006 is as follows:

                                         UK                  UK            European
                                      Shops         Concessions         Concessions           Total

Alexon Brands                            89                 804                 139           1,032
Dolcis                                   67                 147                   6             220
Bay Trading                             148                  46                  18             212
Style Menswear                           58                  65                   2             125
Total                                   362               1,062                 165           1,589



John Osborn
Chief Executive
27 March 2006



ALEXON GROUP PLC

Consolidated Income Statement
For the 52 weeks to 28 January 2006

                                                                          2006         2005
                                                          Note            £000         £000

Revenue                                                     2          413,630      424,383

Cost of sales                                                        (365,311)    (367,927)

Gross profit                                                            48,319       56,456

Administrative expenses                                               (11,523)     (10,802)
Distribution costs                                                    (17,136)     (16,304)

Operating profit                                            2           19,660       29,350

Finance income                                                             625          459
Finance expense                                                          (299)        (375)

Profit before taxation                                                  19,986       29,434

Income tax expense                                                     (5,269)      (8,069)

Profit for the financial period attributable to
equity holders of the Company                                           14,717       21,365

Earnings per share
Basic                                                       3          25.73 p      36.35 p
Diluted                                                     3          25.71 p      35.91 p





Consolidated Statement of Recognised Income and Expense
For the 52 weeks to 28 January 2006

                                                                         2006          2005
                                                                         £000          £000

Actuarial loss arising in defined benefit pension scheme              (1,702)         (588)
Tax on items taken directly to equity                                     492         1,639
Gains on cash flow hedges                                                 195             -

Net (expense)/income recognised directly in equity                    (1,015)         1,051

Profit for the financial period                                        14,717        21,365

Total recognised income for the financial period
attributable to equity holders of the Company                          13,702        22,416




ALEXON GROUP PLC

Consolidated Balance Sheet
As at 28 January 2006

                                                               2006                     2005
                                        Note       £000        £000         £000        £000

Non-current assets
Goodwill                                         37,174                   37,174
Property, plant and equipment                    17,930                   20,866
Deferred tax                                      4,214                    3,455
Pension assets                                       72                        -
                                                             59,390                   61,495
Current assets
Inventory                                        58,629                   55,307
Trade and other receivables                      24,994                   24,972
Cash and cash equivalents                        12,327                   10,686
                                                             95,950                   90,965

Current liabilities
Trade and other payables                        (36,646)                 (42,097)
Short term borrowings                            (4,462)                  (2,060)
Current tax payable                              (2,816)                  (3,403)
                                                            (43,924)                 (47,560)

Net current assets                                           52,026                   43,405

Non-current liabilities
Long term provisions                             (2,751)                  (2,383)
Accruals and deferred income                     (2,580)                  (2,941)
Pension liabilities                              (4,516)                  (5,090)

Total non-current liabilities                                (9,847)                  (10,414)

                                                            101,569                    94,486

Net assets
Equity attributable to equity holders of the
Company
Share capital                                     5,820                    5,929
Share premium                                    39,354                   37,896
Capital redemption reserve                        3,016                    2,906
Hedging reserve                                     195                        -
Retained earnings                                53,184                   47,755
Total equity                               5                101,569                    94,486




ALEXON GROUP PLC

Consolidated statement of cash flows
For the 52 weeks to 28 January 2006

                                                                        2006                     2005
                                            Note            £000        £000             £000    £000

Cash flows from operating activities

Cash generated from operations               4                        17,267                   36,078
Interest received                                                        289                      197
Interest paid                                                          (244)                    (411)
Tax paid                                                             (6,123)                  (6,712)

Net cash generated from operating activities                          11,189                   29,152

Investing activities
Purchase of property, plant and equipment                (4,524)                  (6,339)
Proceeds from disposal of property,
plant and equipment                                          167                       60

Net cash used in investing activities                                (4,357)                  (6,279)

Financing activities
Proceeds from the issue of shares                            334                      864
Purchase of own shares                                   (2,983)                 (11,195)
Repayment of loan notes                                        -                    (556)
Dividends paid                                           (4,944)                  (4,709)
Capital element of finance lease payments                      -                     (76)

Interest element of finance lease payments                     -                      (1)
Net cash used in financing activities                                (7,593)                 (15,673)

Net (decrease) / increase in cash and
cash equivalents                                                       (761)                    7,200

Cash and cash equivalents at the
beginning of the period                                                8,626                    1,426

Cash and cash equivalents at the
end of the period                                                      7,865                    8,626

Cash and cash equivalents                                             12,327                   10,686
Short term borrowings                                                (4,462)                  (2,060)

                                                                       7,865                    8,626



ALEXON GROUP PLC

Note to the Financial Accounts
52 weeks to 28 January 2006

1.        These financial statements do not constitute the full financial
statements within the meaning of Section 240 of the Companies Act 1985. They are
extracted from the draft unaudited financial statements for the 52 weeks ended
28 January 2006 which will be delivered to the Registrar of Companies in due
course.

The directors approved this announcement on 24th March 2006.


The Group adopted International Financial Reporting Standards (IFRS) on 1st
February 2004. The principal accounting policies adopted under IFRS and applied
in the preparation of these financial statements will be included in the 2006
Annual Report. Details of the amended policies applied to these financial
statements are given in note 7.

Reconciliations from UK GAAP to IFRS of the Group's net assets at 31st January
2004 and 29th January 2005, and the Group's result for the 52 weeks ended 29th
January 2005 are shown in note 6.

For the 52 weeks ended 28 January 2006 the Group is required to prepare its
annual financial statements in accordance with accounting standards adopted for
use in the European Union. As such those financial statements will take account
of the requirements and options in IFRS 1, "First-time adoption of International
Financial Report Standards" as they relate to the 2005 comparatives included
therein.

IFRS 1 sets out the requirements for companies preparing financial statements
under IFRS for the first time and requires the accounting policies to be applied
retrospectively. IFRS 1 allows companies certain exemptions to the requirement
for retrospective application and the Group has chosen to apply the following:

-     the provisions of IFRS2, share based payments, have been applied only to
those options granted after 7 November 2002;

-     the provisions of IFRS3, business combinations, have not been applied to
   acquisitions prior to 31 January 2004;

-     the provisions of IAS32 and IAS39 relating to financial instruments have
been  applied from 30 January 2005.

2.         Segment information

Primary reporting format - business segments

The Group manages its business activities via four main business segments,
Alexon Brands, Bay Trading, Dolcis and Style menswear. Each business segment has
it's own executive committee responsible for managing day to day operations
through it's trading outlets. All revenue is readily identifiable for each
segment, as are the majority of costs. Where certain central functions are
shared across all segments these costs have been allocated on a reasonable 
basis.

Segment results for the 52 weeks to 28 January 2006 are as follows:

                              Alexon        Bay
                              Brands    Trading   Dolcis    Style     Total
                               £'000      £'000    £'000    £'000     £'000
                                                

Segment turnover             201,347     83,970   68,145   60,168   413,630

Segment result                20,930      2,458    (710)  (2,585)    20,093

Unallocated costs                                                     (433)

Operating profit                                                     19,660

Finance income                                                          625
Finance expense                                                       (299)

Profit before income tax                                             19,986

Income tax expense                                                  (5,269)

Profit for the period                                                14,717



Segment results for the 52 weeks to 29 January 2005 are as follows:

                              Alexon       Bay
                              Brands   Trading   Dolcis    Style     Total
                               £'000     £'000    £'000    £'000     £'000

Segment turnover             204,785    82,990   70,723   65,885   424,383

Segment result                25,077     (759)    3,594    2,175    30,087

Unallocated costs                                                    (737)

Operating profit                                                    29,350

Finance income                                                         459
Finance expense                                                      (375)

Profit before income tax                                            29,434

Income tax expense                                                 (8,069)

Profit for the period                                               21,365



Other segment items included in the Income Statement for the 52 weeks to 28
January 2006 are as follows:


                               Alexon        Bay
                               Brands    Trading    Dolcis    Style    Total
                                £'000      £'000     £'000    £'000    £'000

Depreciation                    1,507      1,015       983    2,001    5,506

Impairment of property,
plant and equipment               140        112       405      694    1,351




Other segment items included in the Income Statement for the 52 weeks to 29
January 2005 are as follows:


                               Alexon        Bay
                               Brands    Trading    Dolcis    Style    Total
                                £'000      £'000     £'000    £'000    £'000

Depreciation                    1,650      1,005       948    2,217    5,820



Secondary reporting format - geographical segments


The financial operation and assets of the Group are principally located in the
United Kingdom. Accordingly no segment analysis by geographical segments is
provided.


3.     The calculation of basic earnings per ordinary share is based on profits
of £14,717,000 (2005: £21,365,000) and on 57,197,319 ordinary shares (2005 :
58,780,504 ) being the weighted average number of ordinary shares in issue.

In calculating diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume the exercise of all dilutory
share options granted to directors and key employees.

Reconciliations of the earnings and weighted average number of shares are
set out below.

                                                     2006                                    2005
                                      Weighted                             Weighted
                                       average        Per     Earnings      average           Per
                         Earnings       number      share                    number         share
                           (£)       of shares      pence       (£)       of shares         pence

Basic earnings         14,717,000   57,197,319      25.73   21,365,000   58,780,504         36.35

Effect of dilutive securities :
  options                       -       48,201     (0.02)            -      712,420        (0.44)

Diluted earnings       14,717,000   57,245,520      25.71   21,365,000   59,492,924         35.91



4.      Notes to the statement of cash flows


                                                                              2006            2005
                                                                          52 weeks        52 weeks
                                                                              £000            £000
Cash generated from operations

Operating profit                                                            19,660          29,350
Adjustments for:
Depreciation                                                                 5,506           5,820
Impairment of property, plant and equipment                                  1,351               -
Share based payments                                                           114             442
Revaluation gains on financial instruments                                    (60)               -
Loss on disposal of property, plant and equipment                              436             165
Capital changes in working capital:
Increase in trade and other receivables                                       (36)         (2,722)
(Increase) / decrease in inventories                                       (3,322)           1,464
(Decrease) / increase in trade and other payables                          (4,342)           2,530
Increase / (decrease) in long term provisions, accruals and deferred
income                                                                           7           (795)
Movement in net retirement benefit obligations                             (2,047)           (176)

Cash generated from operations                                              17,267          36,078


5.          Statement of changes in equity

                                                                                2006          2005
                                                                            52 weeks      52 weeks
                                                                               £'000         £'000

Profit attributable to equity shareholders                                    14,717        21,365
Equity dividends                                                             (4,944)       (4,709)
Actuarial loss arising in defined benefit pension scheme                     (1,702)         (588)
Tax on items taken directly to equity                                            492         1,639
Gains on cash flow hedges                                                        195             -
Arising on share issues                                                        1,308           864
Arising on share purchases                                                   (2,983)      (11,073)

Increase in total equity                                                       7,083         7,498
Total equity at the beginning of the period                                   94,486        86,988
Total equity at the end of the period                                        101,569        94,486




6.          Adoption of IFRS

The following tables provide a summarised reconciliation of equity and profit
following the adoption of IFRS. Detailed reconciliations are available on the
Group's website at www.alexon.co.uk.


                                                                                            2005
                                                                                        52 weeks
                                                                                            £000
Reconciliation of profit before taxation

Profit before tax previously reported under UK GAAP                                       26,887

IFRS adjustments:
Goodwill amortisation                                                                      2,400
Share based payments                                                                        (12)
Employee benefits       - holiday pay                                                        (2)
                        - pensions                                                         (187)

Lease incentives                                                                             348


Profit before tax in accordance with IFRS                                                 29,434

Taxation:
Taxation as previously reported under UK GAAP                                            (6,979)
Tax effect of IFRS adjustments                                                           (1,090)

                                                                                         (8,069)

Profit for the financial period in accordance with IFRS                                   21,365



Reconciliation of equity


                                                                    As at             As at
                                                          29 January 2005   31 January 2004
                                                                     £000              £000

Total equity previously reported under UK GAAP                     96,415            91,624

IFRS adjustments:
Share based payments                                                   14                26
Employee benefits    - holiday pay                                  (150)             (148)
                     - pensions                                   (4,940)           (4,735)

Reverse SSAP24 prepayment                                         (2,776)           (2,206)
Lease incentives                                                  (2,910)           (3,258)
Dividend recognition                                                3,269             3,070
Goodwill amortisation                                               2,400                 -
Deferred tax                                                        3,164             2,615

Total equity in accordance with IFRS                               94,486            86,988



7.      Revised accounting policies adopted as a result of the application of
IFRS are given below. All other accounting policies are consistent with those
disclosed in the Group's published Annual Report and Accounts for the 52 weeks
ended 29 January 2005.

Share based payments

The Group operates an equity-settled, share-based compensation plan. The fair
value of the employee services received in exchange for the grant of the options
is recognised as an expense. The total amount to be expensed over the vesting
period is determined by the fair value of the options granted, excluding the
impact of any non-market vesting conditions (for example, earnings per share
growth). Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable. At each balance sheet
date, the Group revises its estimates of the number of options that are expected
to become exercisable. It recognises the impact of the revision of original
estimates, if any, in the income statement.

Employee benefits

The costs of providing pensions under the Group's defined benefit scheme are
calculated using the projected unit credit method    and are charged to income
so as to spread costs evenly over the employees' working lives. Actuarial gains
and losses are recognised in the statement of recognised income and expense in
the period in which they arise. Contributions to funded unapproved retirement
benefit schemes and money purchase schemes are charged to income in the period
in which they arise.     The cost of accrued but unused holiday entitlement is
assessed at each period end and charged to income accordingly.

Goodwill

Goodwill, being the difference between the cost of acquisition and the
fair value of assets acquired, is tested for impairment annually, and at other
times when there are indications that the carrying value may not be recoverable.
Any impairment is recognised in the income statement in the period in which it
is identified. Goodwill was previously amortised over a period of twenty years
and the carrying value at the date of transition to IFRS, 1st February 2004, is
the cost less amounts amortised up to that date.

Lease incentives

All incentives granted at the inception of a new lease are amortised over the
lease term.

Dividends

Dividends are no longer to be accrued until formally approved.

Financial instruments

The Group has adopted IAS 32 and 39 with effect from 30 January 2005 and has
taken the exemption not to restate comparative information for previous periods.
The Group applies hedge accounting rules as they relate to forward foreign
currency contracts. In order to qualify for hedge accounting the Group is
required to document, from inception, the relationship between the hedging
instrument and the item being hedged. The Group must be able to demonstrate that
the relationship between the hedging instrument and the item being hedged is
highly effective on an ongoing basis. The gain or loss arising from the
remeasurement of hedging instruments is recognised directly in equity, and
subsequently charged or credited to the income statement in the period in which
the hedged transaction affects income.

Deferred taxation

Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax is provided using
rates of tax that have been enacted, or substantively enacted, at the balance
sheet date. Deferred tax liabilities and assets have not been discounted.


8.      The Company's AGM will be held on Thursday 25 May 2006 at 3 p.m.



                      This information is provided by RNS
            The company news service from the London Stock Exchange