The overall net financial position, down by over €6 million at the quarter end, amounted to €64.1 million compared to €70.3 million at the end of December 2005. The reduction is the result of generation of cashflow during the quarter and a drop in net working capital, as well as collection of a first payment totaling $3 million from the sale of rights regarding the Kappa and Robe di Kappa brands in China and Macao.
In fact, in March 2006, BasicNet Group signed a binding agreement with Diamond King International Ltd. (DongXiang Sports Development Co Ltd), to sell ownership rights for the Kappa and Robe di Kappa brands in China, without prejudice to Basic Group's rights to access the production and supply of its products in the area, which is particularly strategic for these needs.
The transaction was entered into on the basis of a sales value of $35 million. The agreement is of strategic importance for the two groups, both in terms of consolidation of a partnership set up in 2002 and mutual improvement of the brands' international exposure.
In fact, mutual agreements have been entered into for the use of key investments which the BasicNet and DongXiang groups are currently making to support the brands' reputation throughout the world. Specifically, DongXiang, which is present in China through its own distributors with approximately 500 Kappa shops, has planned a major communications campaign to coincide with the Peking Olympic Games in 2008 and the Asian Games in 2010.
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