Interim Results

RNS Number : 8853D

Sports Direct International Plc

10 December 2009

 



10th December 2009 

Sports Direct International plc 

("Sports Direct", "the Group" or "the Company")

Interim Results

For the 26 weeks to 25 October 2009

Group highlights

·    Group revenue up 10.1% to £756.9m (2009 H1: £687.7m):

-        UK retail up 14.9% to £586.0m (2009 H1: £510.1m)

-        International retail up 22.8% to £63.6m (2009 H1: £51.8m)

-        Brands division down 19.3% to £95.1m (2009 H1: £117.9m)

·    Underlying EBITDA up 10.4% to £99.1m (2009 H1: £89.8m) ⁽¹⁾

·    Underlying profit before tax up 38.8% to £71.9m (2009 H1: £51.8m) ^{(1) (2)}

^·     Reported profit before tax down 40.8% to £57.8m (2009 H1: £97.7m) due to impact of foreign exchange movements ⁽³⁾

·    Group gross margin decreased by 270 basis points to 40.7% (2009 H1: 43.4%):

 -        UK retail gross margin down to 41.6% (2009 H1: 45.4%) due to ongoing foreign exchange pressures

^·    Underlying earnings per share up 48.0% to 8.52p (2009 H1: 5.76p) ^{(1) (2)}

·    Maintained our UK market leading position, continued international expansion and continued our long-term focus on developing our licensing business within the brands division

·    Reduced net debt to £362.0m (at 26 April 2009 net debt was £431.3m):

 -         Below target of £400m for 2010 FY

 -         Debt targeted to be at similar level at year end

·    No interim dividend

Dave Forsey, Chief Executive said:

"We are pleased with our performance in the first half of this year, when conditions remained challenging.  We achieved this result through offering our customers the best products at the best prices, controlling costs and reducing debt.

"Although the operating environment is likely to remain difficult; we have motivated colleagues, a fantastic unrivalled range of products for our customers, and the World Cup to look forward to. On that basis, and assuming stable exchange rates, we are confident in the full year outlook for the Group and expect to achieve underlying EBITDA, of at least £155 million this financial year."

(1)	Underlying EBITDA, underlying profit before taxation and underlying EPS excludes realised foreign exchange gains/losses in selling and administration costs, exceptional costs and the profit/loss on sale and derecognition of strategic investments
(2)	Underlying profit before taxation and underlying EPS also exclude profits/losses relating to the IAS 39 fair value adjustment on forward currency contracts in financing income/costs
(3)	Reported profit before tax includes the impact of foreign exchange, profit/loss on sale and derecognition of strategic investments and exceptional costs.

Sports Direct International plc Dave Forsey, Chief Executive Bob Mellors, Group Finance Director	T: 0870 333 9410
Financial Dynamics Jonathon Brill  Caroline Stewart Alex Beagley	T: 0207 831 3113

  Chairman's Statement

I was delighted to join the Board of Sports Direct as Chairman in November, and I am very pleased to be introducing this half year report.

These are a strong set of results, which reflect the strength and efficiency of the business, the resilience of our flexible business model, and the hard work of all our people. In a difficult economic environment, we have successfully controlled our costs and working capital, while still offering our customers unrivalled ranges and value both in the UK and internationally. Our brands division continues successfully to focus on growing its licensing business.

The Board has determined not to pay an interim dividend; it will keep the payment of dividends under review, but the reduction of debt remains the priority for the Board.

Keith Hellawell

Non-Executive Chairman

10 December 2009

Chief Executive's Review

Overview of Financial Performance 

In the 26 weeks ended 25 October 2009 ("2010 H1"), Group revenues were up 10.1% at £756.9m compared with revenues of £687.7m for the 26 weeks ended 26 October 2008 ("2009 H1"). 

UK retail revenues were up 14.9% to £586.0m (2009 H1: £510.1m). International retail revenues increased 22.8% to £63.6m (2009 H1: £51.8m), which in local currency represented an increase of 10.8%. The brands division revenues were down 19.3% to £95.1m (2009 H1: £117.9m) including licensing, where revenues were down 6.5% to £11.5m.

Gross margin for the Group decreased 270 basis points to 40.7% (2009 H1: 43.4%). The retail division margin decreased 350 basis points to 41.2% (2009 H1: 44.7%). UK retail margin was 41.6% (2009 H1: 45.4%) and the international retail gross margin decreased 20 basis points to 43.4% (2009 H1: 43.6%). While revenues were lower, gross margin in the brands division increased 20 basis points to 37.3% (2009 H1: 37.1%) predominantly due to a greater proportion of licensing revenue in the period.

Underlying EBITDA for the period increased 10.4% to £99.1m (2009 H1: £89.8m), after a charge of £4.7m relating to the bonus share scheme. This charge has been taken centrally and, except in note 2 to the accounts, is not reflected in divisional (Retail and Brands) numbers in this report. Within this underlying EBITDA, UK retail increased 17.1% to £85.6m (2009 H1: £73.1m), international retail increased 20.0% to £9.0m (2009 H1: £7.5m) and the brands division was the same as last year at £9.2m (2009 H1: £9.2m). Underlying profit before tax increased 38.8% to £71.9m (2009 H1: £51.8m).

The foreign exchange loss for the half year was £15.4m (2009 H1: £45.4m gain). This is net of a £43.9m realised exchange loss included in administration costs (2009 H1: £43.1m loss). The revaluation of forward exchange contracts required under IFRS is included in finance income and this unrealised profit amounted to £28.5m (2009 H1: £88.5m profit). These amounts are excluded from the definition of underlying profit used in the business and as reported here. No exceptional items were incurred in 2010 H1. 

Reconciliation of reported to underlying results

	EBITDA		PBT
	2010	2009	2010	2009
	£m	£m	£m	£m
Operating profit	31.4	20.5
Depreciation	20.9	22.6
Amortisation	1.4	1.5
Share of profit of associated undertakings	1.5	2.1
Reported	55.2	46.7	57.8	97.7
Realised FX loss	43.9	43.1	43.9	43.1
IAS 39 FX fair value adjustment on forward currency contracts	-	-	(28.5)	(88.5)
Profit on disposal of listed investments	-	-	(1.3)	(0.5)
Underlying	99.1	89.8	71.9	51.8

     Review by Business Segment

	26 weeks ended 25 October 2009  (£'m)	26 weeks ended 26 October 2008  (£'m)		Change %
Retail
Revenue:
UK retail	586.0	510.1		14.9
UK wholesale and other	12.2	7.9		54.4
International retail	63.6	51.8		22.8
Total retail revenue	661.8	569.8		16.1
Cost of sales	(389.1)	(314.9)		23.6
Gross margin	272.7	254.9		7.0
Gross margin percentage	41.2	%	44.7	%

Brands
Revenue:
Wholesale	83.6	105.6		-20.8
Licensing	11.5	12.3		-6.5
Total brands revenue	95.1	117.9		-19.3
Cost of sales	(59.6)	(74.2)		-19.7
Gross margin	35.5	43.7		-18.8
Gross margin percentage	37.3	%	37.1	%

Business Review

In spite of a difficult trading environment, our strategy to focus on our core strengths, increasing efficiencies and controlling costs, delivered another strong performance.

Retail division

UK retail revenues growth was mainly driven by our retail and logistic skills - providing the best products at the best price with universal availability - albeit the comparison also reflects a weaker sales performance in 2009 H1.

The decline in UK retail gross margin to 41.6% (2009 H1: 45.4%) largely reflects ongoing foreign exchange pressures. On a currency neutral basis, UK retail gross margin would have been 44.5%.

We will continue to report the like-for-like percentage change in store contribution for UK retail on an annual basis.

Online revenue continues to grow strongly and we will look at opportunities to develop this revenue stream. Order fulfilment and information technology solutions are fully in-house developed and supported from our Shirebrook national distribution centre. There has also been a strong pick up in the usage of the website due to increased recognition of the online brand. Over 90% of the core store fascias are SPORTSDIRECT.com.

Our ongoing commitment to maintaining control on labour costs and all operating expenses - and no increase in onerous lease provisions - meant we maintained UK retail's actual operating costs flat on 2009 H1. As a result, we grew UK retail underlying EBITDA by 17.1%. 

International retail revenue growth benefitted from both a strong underlying performance and the euro/sterling exchange rate movement in the period. This division utilises the same basic retail skills, adapted by local management for local market requirements. In addition, these local management teams are able to leverage the stock control benefits of our UK-developed proprietary IT and operating systems.

Reflecting our ongoing focus on efficiency, international retail's operating costs increased 15.0%, although on a local currency basis these costs only increased 6.5%. 

We grew international retail underlying EBITDA by 20%.

As we stated in our 2009 annual report, we made a provision last year against all costs relating to the strategic alliance with ITAT. Since 26 April 2009, it has become clear that the alliance will not be resurrected.  

Store portfolio

As of 25 October 2009, we operated 371 stores in the UK (excluding Northern Ireland), a total of circa 3.6m sq ft (2009 H1: circa 3.4m sq ft). These are divided between 297 core and 74 non-core stores. Through the Group's shareholding in the Heatons chain, it has products in nine stores in Northern Ireland and 23 stores in the Republic of Ireland.

We have a clear, focused strategy to enhance our varied store portfolio. We are still targeting a total of between 10 and 15 new core stores in the UK this year, taking a selective approach to the best opportunities.

Internationally, as at 25 October 2009 we operated through 44 stores in Belgium, 12 in Slovenia, four in Holland, two in Cyprus and one in Luxembourg. We continue with our strategy to identify partners in new territories while continuing to expand our operations in the countries where we currently trade. 

Brands division

The reduction in brands revenues was driven by the anticipated decline in wholesale revenues, as we seek to shift the focus of this division to higher-margin licensing. Indeed, in the first half, we have already signed 32 new contracts with contracted minimum royalties of $65m over the life terms of the contracts exceeding  the contracted minimum royalties on all new contracts signed in 2009. 

However, 2010 H1 brands revenues were negatively impacted by our decision to cancel one Everlast license, with the attendant costs, and a retail competitor's decision to cease selling our brands.

The slight improvement in brands gross margin reflects the higher proportion of licensing revenues partly offset by a lower gross margin in the wholesale business.  

Critically, the shift away from wholesale enables us to achieve significant operating cost savings. In 2010 H1, we achieved a £9m reduction in brands operating costs while maintaining investment behind our brands. As a result, even though revenues were down, we sustained this division's underlying EBITDA flat at £9.2m.

Net Debt

We have a strong relationship with our banks and have a committed working capital facility that is available until 30 April 2011. The Company continues to operate well within its bank covenants and the Board remains comfortable with the Company's available headroom.

In our preliminary results in July it was reported that we were targeting to reduce debt levels to below £400m by April 2010. We have made strong progress in respect of this in the half year and are ahead of schedule with net debt decreasing during the period to £362.0m (26 April 2009: £431.3m). We now expect net debt to be at a broadly similar level at the end of April 2010.

As we anticipated in July, the decrease in debt has been achieved by:

• Growing EBITDA - up by 10%
• Reducing working capital - down by £55m in the period
• Reducing the level of capital expenditure - down by 24% on the previous half year
• Reduction in financing costs - down by 62% on the previous half year
• Saving the cost of the final dividend

Capital expenditure amounted to £13.8m (2009 H1: £18.1m). No freehold property was acquired in the period (2009 H1: £3.9m). 

  Strategic Investments

The Group disposed of 11.9m shares in JJB (5%) during the period, and closed outstanding contracts for difference on another 33.7m (14%) shares. The value of the Group's investments has reduced from £5.5m to Nil during the period, due to the disposals detailed above.

For accounting purposes the group continues not to recognise the strategic investments held through Kaupthing Singer and Friedlander.  However, we do still believe that the shares belong to us and will continue to present our case as such in the current legal proceedings. 

Competition enquiries

On 7 August 2009 the acquisition of 31 stores from JJB Sports was referred to the Competition Commission (CC) for investigation. On 10 September 2009, representatives of the Office of Fair Trading (OFT) and the Serious Fraud Office (SFO) visited the Company's premises in Shirebrook. Sports Direct continues to comply with the ongoing investigations of the CC, OFT and SFO.

Bonus share scheme

The bonus share scheme that was announced at the time of the preliminary results was approved by shareholders, has been implemented, and a charge of £4.7m is included in these results as a central cost.

Principal risks and uncertainties for the remaining six months of the year

The Board believes that the principal risks and uncertainties for the remaining 6 months of the year are the possibility of a further deterioration of the economy both in the UK and worldwide and a further reduction in consumer confidence and retail spending, beyond that currently expected, which would impact on the performance of the business, and the financial risks identified on p12.

Outlook

We made strong progress in reducing our net debt level in the half year and expect net debt to be at a broadly similar level at the year end.

We delivered strong results in the first half of FY 2010 against a difficult operating environment. With the best product range and our highly motivated staff, our trading performance since the end of October has continued to be robust. As such, and subject to stable exchange rates, we are targeting full year underlying EBITDA after the cost of the bonus share scheme of at least £155m.

Dave Forsey

Chief Executive

10 December 2009

Financial Review

Basis of reporting

The financial statements for the Group for the 26 weeks ended 25 October 2009 are presented in accordance with International Financial Reporting Standards as adopted by the EU (IFRS).

Summary of results

	26 weeks ended 25 October 2009  (£'m)	26 weeks ended 26 October 2008  (£'m)	Change %
Revenue	756.9	687.7	+10.1
Underlying EBITDA	99.1	89.8	+10.4
Underlying Profit before Tax	71.9	51.8	+38.8
Reported Profit before Tax	57.8	97.7	(40.8)
	Pence per Share	Pence per Share
Basic EPS	6.85	11.57	(40.8)
Underlying EPS	8.52	5.76	+48.0
Weighted Average number of Shares (million)	568	568

Underlying EBITDA for the period was £99.1 million, compared to £89.8 million in the corresponding period last year. 

The Directors believe that underlying EBITDA, underlying profit before tax and underlying earnings per share provide the most useful information for shareholders on the underlying performance of the business, and are consistent with how business performance is measured internally. They are not recognised profit measures under IFRS and may not be directly comparable with "adjusted" profit measures used by other companies.

EBITDA is earnings before investment income, finance income and finance costs, tax, depreciation and amortisation and therefore includes the Group's share of profit of associated undertakings and joint ventures. Underlying EBITDA is calculated as EBITDA before exceptional items, profit/loss on sale and derecognition of strategic investments and realised profits/losses on foreign exchange.

Revenue and margin

Revenue	26 weeks ended 25 October 2009  (£'m)	26 weeks ended 26 October 2008  (£'m)	Change  %
Retail
UK retail	586.0	510.1	+14.9
UK wholesale and other	12.2	7.9	+54.4
International retail	63.6	51.8	+22.8
Total retail revenue	661.8	569.8	+16.1

Brands
Wholesale	83.6	105.6	(20.8)
Licensing	11.5	12.3	(6.5)
Total brands revenue	95.1	117.9	(19.3)

Total Group revenues increased 10.1%.

Retail revenues increased 16.1%. The UK accounted for 90.4% of total retail revenues with the balance in Continental European stores. 

Retail gross margin in the UK decreased from 45.4% to 41.6%.

Selling and distribution costs have always been closely monitored. Labour costs are geared to financial performance with flexible staffing schedules, and initiatives to drive costs from the business have been effective, including reductions in energy consumption.

Our representation in both parts of Ireland is covered by Heatons, in which we have an interest, the results of which are reported as an associate.

Brands revenues decreased 19.3%. Licensing income decreased 6.5%, with wholesale revenues down 20.8%. 

Brands gross margin increased from 37.1% to 37.3%.

Foreign exchange

The Group manages some of the impact of currency movements through the use of forward fixed rate currency purchase and sales contracts. The Group's policy is to hold or hedge some anticipated purchases in foreign currency.

The exchange loss of £43.9m included in administration costs has arisen from:

(a)	accepting dollars and euros at the contracted rate; and
(b)	the translation of dollars and dollar denominated assets and liabilities at the period end rate.

The exchange gain of £28.5m (2009 H1: £88.5m) included in finance income substantially represents the reversal of the provision made (under IFRS) for the forward contracts at 26 April 2009.

The sterling exchange rate with the US dollar at 26 April 2009 was $1.471 and $1.631 at 25 October 2009.

The sterling exchange rate with the Euro at 26 April 2009 was €1.107 and €1.088 at 25 October 2009.

Finance income

	26 weeks ended 25 October 2009	26 weeks ended 26 October 2008
	(£'m)	(£'m)
Bank interest receivable	0.4	0.5
Expected return on pension plan assets	0.8	1.0
Fair value adjustment to forward foreign exchange contracts	28.5	88.5
	29.7	90.0

The profit on the fair valuing of forward foreign exchange contracts arises under IFRS as a result of marking to market at the period end those contracts held to hedge the Group's currency risk, and reversal of the provision made in the previous period.

Finance costs

		26 weeks ended 25 October 2009		26 weeks ended 26 October 2008
		(£'m)		(£'m)
Interest on bank loans and overdrafts		(4.5)		(13.7)
Interest on other loans		(0.4)		(0.8)
Interest on retirement benefit obligations		(1.2)		(1.3)
		(6.1)		(15.8)

Loan and overdraft costs are directly linked to the base rate. As such, currently, we are benefitting from the current low base rate.

Taxation

The effective tax rate on profit before tax for 2010 H1 was 32.5% (2009 H1: 32.5%). This rate reflects the reduction in the value of the deferred tax asset, depreciation on non-qualifying assets and the non-relievable losses in certain overseas subsidiaries.

Earnings

	26 weeks ended  25 October 2009  Pence per share	26 weeks ended 26 October 2008  Pence per share	Change %
Basic EPS	6.85	11.57	-40.8
Underlying EPS	8.52	5.76	+48.0
Weighted Average number of shares	568,452,369	568,452,369

Basic earnings per share (EPS) is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the actual financial period.

The underlying EPS reflects the underlying performance of the business compared with the prior period and is calculated using the weighted average number of shares. It is not a recognised profit measure under IFRS and may not be directly comparable with "adjusted" profit measures used by other companies. 

The items adjusted for arriving at the underlying profit are as follows:

	26 weeks ended 25 October 2009  (£'m)	26 weeks ended 26 October 2008   (£'m)
Profit after tax:	38.9	65.7
Post tax effect of
Realised loss on forward foreign exchange contracts	29.7	31.0
Fair value adjustment to forward foreign exchange contracts	(19.2)	(63.7)
Profit on disposal of listed investments	(0.9)	(0.3)
Underlying profit after tax	48.5	32.7

Dividends

An interim dividend of 1.22p per share (totalling £6.94m) in respect of the year ended 26 April 2009, was paid on 30 April 2009 to shareholders on the register at 3 April 2009. 

Capital expenditure

Expenditure, including the acquisition of property, plant and equipment, amounted to £13.8m (2009 H1: £18.1m). No freehold properties were acquired in the period (2009 H1: £3.9m).

Strategic investments

Changes in the value of these investments are recognised directly in equity in accordance with IFRS.

	25 October 2009  (£'m)
Total available-for-sale investments at 26 April 2009	5.5
Disposals	(6.7)
Recycling adjustment for past fair value movements	1.2
Total available-for-sale investments at 25 October 2009	Nil

As reported in the 2009 annual report, we are not recognising our strategic stakes held by Kaupthing Singer & Friedlander (KSF) as we may not "control" the shares for accounting purposes. 

We are in discussions with the administrators of KSF but recognise that ownership of the strategic stakes may have to be decided by the courts. We maintain that KSF will be required to deliver to us those shares that they hold.

The respective shareholdings at 25 October 2009 (not reflecting the derecognition for accounting purposes) were as follows: 

	At 25 October 2009
	Shares 'm	Holding
Blacks Leisure Group	12.728	29.89%
Amer Sports Corporation	1.066	1.48%
John David Group	6.475	13.42%

Cash flow and net debt

Net debt decreased from £431.3m at 26 April 2009 to £362.0m at 25 October 2009. 

The analysis of debt at 25 October 2009 and at 26 April 2009 was as follows: 

	At 25 October 2009	At 26 April 2009
Cash and cash equivalents	26.5	32.4
Borrowings	(388.5)	(463.7)
Net debt	(362.0)	(431.3)

Cash Flow

	26 weeks ended  25 October 2009 (£'m)	26 weeks ended  26 April 2009 (£'m)	26 weeks ended  26 October 2008 (£'m)
Underlying EBITDA	99.1	47.0	89.8
Realised profit/loss on forward foreign exchange contracts	(43.9)	57.3	(43.1)
Taxes paid	(22.6)	(3.6)	(21.7)
Free cash flow	32.6	100.7	25.0
Invested In:-
Working capital - inventory	37.1	(49.7)	6.2
Working capital - debtors, creditors & other	17.9	23.5	(8.5)
Acquisitions (including debt)	-	(5.7)	(0.9)
Net proceeds from/ (investment in) investments	8.1	(1.7)	10.6
Derecognition of shares held by KSF	-	20.3	-
Capital expenditure	(13.8)	(19.1)	(18.7)
Equity dividend paid	(6.9)	(13.9)	(11.7)
Finance costs and other financing activities	(5.7)	(7.4)	(15.1)
Net decrease / (increase) in net debt	69.3	47.0	(13.1)

Reconciliation of movement in equity

Total equity movement is as follows:

	26 weeks ended 25 October 2009 (£'m)
Total equity at 26 April 2009	153.7
Profit after tax for the 26 weeks ended 25 October 2009	38.9
Items taken directly to equity:
Actuarial loss on pension fund	(9.3)
Fair value adjustment in respect of available-for-sale financial assets	1.2
Tax on items taken directly to equity	(0.3)
	(8.4)
Exchange differences on translation of foreign operations	(20.7)
Total equity at 25 October 2009	163.5

Pensions

The Group operates a number of closed defined benefit schemes in the Dunlop Slazenger Group of companies. The net deficit in these schemes increased from £12.3m at 26 April 2009 to £21.1m at 25 October 2009.

Financial risks, systems and controls

The principal financial risks the Group faces are:

•	Movement in interest rates on borrowings. The Group has not historically hedged this risk.
•	Movement in currency exchange rates. A significant amount of the Group's purchases are in US dollars. The Group hedges some of the risks of such movements by using forward purchases of foreign currency. Certain of the Group's assets are held overseas in local currency and UK assets and liabilities are revalued in accordance with currency movements. This currency risk is not hedged.
•	The possibility of a further deterioration of the economy both in the UK and worldwide and a further reduction in consumer confidence and retail spending, beyond that currently expected, which would impact on the performance of the business.

Funding and liquidity for the Group's operations are provided through bank loans and overdraft facilities and shareholders' funds. The objective is to maintain sufficient funding and liquidity for the Group's requirements.

The Group maintains a system of controls to manage the business and to protect its assets. We continue to invest in people, systems and in IT to manage the Group's operations and its finance effectively and efficiently.

Bob Mellors

Finance Director

10 December 2009

  Directors' Responsibility Statement

We confirm that to the best of our knowledge:

•	The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU;
•	The interim management report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events during the first 26 weeks of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining 26 weeks of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first 26 weeks of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Amounts due to and from related parties are disclosed in note 19.

The directors of Sports Direct International plc, other than Keith Hellawell, are listed in the Group's 2009 Annual Report and Financial Statements.

On 24th November 2009 Sports Direct International plc appointed Keith Hellawell a non-executive director and Chairman of the Board.

On behalf of the Board

Dave Forsey

Chief Executive

Bob Mellors

Finance Director

10 December 2009

INDEPENDENT REVIEW REPORT TO SPORTS DIRECT INTERNATIONAL PLC

FOR THE 26 WEEKS ENDED 25 OCTOBER 2009

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 25 October 2009 which comprises the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Consolidated cash flow statement, the Consolidated statement of changes in equity and the related notes. We have read the other information (the Chief Executive's Review, the Financial Review and the Group highlights) contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity''. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusion we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ''Interim Financial Reporting,'' as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 25 October 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Grant Thornton UK LLP

Chartered Accountants 

London

10 December 2009

UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE 26 WEEKS ENDED 25 OCTOBER 2009

		26 weeks ended 25 October 2009	26 weeks ended 26 October 2008	52 weeks ended 26 April 2009
	Notes	£'000	£'000	£'000
Continuing operations:
Revenue	2	756,898	687,745	1,367,321
Cost of sales		(448,557)	(389,160)	(809,685)
Gross profit		308,341	298,585	557,636
Selling, distribution and administrative expenses		(234,187)	(238,167)	(477,538)
(Loss)/profit on forward foreign exchange contracts		(43,936)	(43,065)	14,241
Other operating income		1,196	3,175	4,004
Exceptional items		-	-	(30,514)
Operating profit	2	31,414	20,528	67,829
Profit on disposal of available-for-sale financial assets	3	1,355	449	1,035
Reclassification of historic losses on available-for-sale financial assets	3	-	-	(53,156)
Dividend income from investments	3	-	363	172
Finance income	4	29,683	90,036	15,927
Finance costs	5	(6,077)	(15,758)	(23,633)
Share of profit of associated undertakings and joint ventures		1,434	2,049	2,482
Profit before taxation		57,809	97,667	10,656
Taxation	6	(18,789)	(31,789)	(26,164)
Profit/(loss) for the period	2	39,020	65,878	(15,508)
Attributable to:
Equity holders of the Group		38,930	65,748	(15,838)
Minority interests		90	130	330
Profit for the period	2	39,020	65,878	(15,508)

Earnings per share from total and continuing operations attributable to the equity shareholders

		Pence per  share	Pence per share	Pence per share
Basic earnings per share	7	6.85	11.57	(2.79)
Diluted earnings per share	7	6.46	11.57	(2.79)

The accompanying notes form an integral part of this financial report.

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 26 WEEKS ENDED 25 OCTOBER 2009

		26 weeks ended 25 October 2009	26 weeks ended 26 October 2008	52 weeks ended 26 April 2009
	Notes	£'000	£'000	£'000
Profit/(loss) for the period	2	39,020	65,878	(15,508)
Other comprehensive income
Exchange differences on translation of foreign operations		(20,704)	25,038	44,654
Actuarial (losses)/gains on defined benefit pension schemes	16	(9,300)	1,789	(449)
Fair value adjustment in respect of available-for-sale financial assets	11	1,224	(27,331)	(28,586)
Reclassification of historic losses on available-for-sale financial assets		-	-	53,156
Taxation on items taken directly to equity		(348)	7,677	(6,849)
Total comprehensive income for the period		9,892	73,051	46,418
Attributable to:
Equity holders of the Parent		9,802	72,921	46,088
Minority interests		90	130	330
		9,892	73,051	46,418

The accompanying notes form an integral part of this financial report.

  UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 25 OCTOBER 2009

		25 October 2009	26 October 2008	26 April 2009
	Notes	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment	9	289,408	319,475	295,795
Intangible assets	10	209,732	218,309	221,958
Investments in associated undertakings and joint ventures venturesventures		31,420	30,386	32,379
Available-for-sale financial assets	11	-	30,498	5,467
Deferred tax assets		6,098	4,978	15,468
		536,658	603,646	571,067
Current assets
Inventories		225,211	212,609	262,263
Trade and other receivables		107,570	119,784	111,932
Derivative financial assets	17	-	40,818	-
Cash and cash equivalents		26,514	43,331	32,358
		359,295	416,542	406,553
TOTAL ASSETS		895,953	1,020,188	977,620
EQUITY AND LIABILITIES
Share capital	12	64,045	64,045	64,045
Share premium	13	874,300	874,300	874,300
Treasury shares		(85,088)	(85,088)	(85,083)
Permanent contribution to capital	13	50	50	50
Capital redemption reserve	13	8,005	8,005	8,005
Foreign currency translation reserve		27,876	28,964	48,580
Reverse combination reserve	13	(987,312)	(987,312)	(987,312)
Own share reserve		(6,094)	(6,094)	(6,094)
Retained earnings		264,470	301,218	233,964
		160,252	198,088	150,450
Minority interests	14	3,222	2,804	3,232
Total equity		163,474	200,892	153,682
Non-current liabilities
Other payables		2,196	3,528	2,656
Borrowings	15	4,093	15,214	4,173
Retirement benefit obligations	16	21,115	10,015	12,324
Deferred tax liabilities		32,229	29,673	33,490
Provisions		37,896	27,967	36,419
		97,529	86,397	89,602
Current liabilities
Derivative financial liabilities	17	6,522	--	34,993
Trade and other payables		227,815	207,643	209,739
Borrowings	15	384,448	506,385	458,899
Current tax liabilities		16,165	18,871	30,705
		634,950	732,899	734,336
Total liabilities		732,479	819,296	823,938
TOTAL EQUITY AND LIABILITIES		895,953	1,020,188	977,620

The accompanying notes form an integral part of this financial report.

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 25 OCTOBER 2009

		26 weeks ended 25 October 2009	26 weeks ended 26 October 2008	52 weeks ended 26 April 2009
	Notes			£'000
Cash inflow from operating activities	18	108,865	44,000	117,470
Income taxes paid		(22,558)	(21,687)	(25,305)
Net cash inflow from operating activities		86,307	22,313	92,165
Cash flow from investing activities
Proceeds on disposal of property, plant and equipment		25	2,312	3,002
Proceeds on disposal of listed investments		8,041	13,221	13,807
Derecognition of listed investments		-	-	20,298
Purchase of subsidiaries, net of cash acquired		-	(927)	(6,608)
Purchase of intangible assets		(3,283)	(650)	(3,958)
Purchase of property, plant and equipment		(10,501)	(18,082)	(33,872)
Purchase of listed investments		-	(4,887)	(4,887)
Investment income received		1,250	613	2,088
Net cash outflow from investing activities		(4,468)	(8,400)	(10,130)
Cash flow from financing activities
Finance income received		400	524	1,161
Finance costs paid		(6,077)	(15,758)	(23,633)
Net (repayments of)/increase in borrowings		(7,321)	182	1,745
Equity dividend paid	8	(6,935)	(11,710)	(25,580)
Net cash outflow from financing activities		(19,933)	(26,762)	(46,307)
Net increase/(decrease) in cash and cash equivalents including  overdrafts		61,906	(12,849)	35,728
Cash and cash equivalents including overdrafts at beginning of period		(410,325)	(446,053)	(446,053)
Cash and cash equivalents including overdrafts at the period end		(348,419)	(458,902)	(410,325)

The accompanying notes form an integral part of this financial report.

  UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 26 WEEKS ENDED 25 OCTOBER 2009

	Treasury  shares	Foreign  currency translation	Own  share reserve	Retained earnings	Other reserves	Sub- total	Minority interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 27 April 2008	(201,483)	3,926	-	363,636	(40,912)	125,167	3,242	128,409
Treasury shares cancelled	105,759	-	-	(105,759)	-	-	-	-
Market value of shares transferred to EBT	6,094	-	(6,094)	-	-	-	-	-
Difference between original cost and market value of shares transferred to EBT	4,542	-	-	(4,542)	-	-	-	-
Transactions with owners	116,395		(6,094)	(110,301)	-	-	-	-
Profit for the financial period	-	-	-	65,748	-	65,748	-	65,748
Other comprehensive income
Income recognised directly in equity	-	-	-	(17,865)	-	(17,865)	-	(17,865)
Translation differences - group	-	24,903	-	-	-	24,903	-	24,903
Translation differences - associates	-	135	-	-	-	135	-	135
Share of profit for the period	-	-	-	-	-	-	130	130
Acquisitions	-	-	-	-	-	-	(568)	(568)
Total comprehensive income for the period	-	25,038	-	47,883	-	72,921	(438)	72,483
At 26 October 2008	(85,088)	28,964	(6,094)	301,218	(40,912)	198,088	2,804	200,892
Dividends	-	-	-	(20,805)	-	(20,805)	-	(20,805)
Transactions with owners	-	-	-	(20,805)	-	(20,805)	-	(20,805)
Loss for the financial period	-	-	-	(81,586)	-	(81,586)	-	(81,586)
Other comprehensive income
Income recognised directly in equity	-	-	-	35,137	-	35,137	-	35,137
Translation differences - group	-	16,390	-	-	-	16,390	-	16,390
Translation differences - associates	-	3,226	-	-	-	3,226	-	3,226
Share of profit for the period	-	-	-	-	-	-	200	200
Acquisitions	-	-	-	-	-	-	228	228
Total comprehensive income for the period	-	19,616	-	(46,449)	-	(26,833)	428	(26,405)
At 26 April 2009	(85,088)	48,580	(6,094)	233,964	(40,912)	150,450	3,232	153,682
Profit for the financial period	-	-	-	38,930	-	38,930	-	38,930
Other comprehensive income
Income recognised directly in equity	-	-	-	(8,424)	-	(8,424)	-	(8,424)
Translation differences - group	-	(19,561)	-	-	-	(19,561)	-	(19,561)
Translation differences - associates	-	(1,143)	-	-	-	(1,143)	-	(1,143)
Share of loss for the period	-	-	-	-	-	-	(10)	(10)
Total comprehensive income for the period	-	(20,704)	-	30,506	-	9,802	(10)	9,792
At 25 October 2009	(85,088)	27,876	(6,094)	264,470	(40,912)	160,252	3,222	163,474

The Company holds 64,000,000 ordinary shares in Treasury.

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries and associates.

  NOTES TO THE FINANCIAL INFORMATION FOR THE 26 WEEKS ENDED 25 OCTOBER 2009

1. General information and basis of preparation

The results for the first half of the financial year have not been audited and are prepared on the basis of the accounting policies set out in the Group's 2009 Annual Report and Financial Statements. The financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority (DTR) and with International Accounting Standard (IAS) 34 - "Interim Financial Reporting" as endorsed by the European Union. The principal accounting policies have remained unchanged from the prior financial information for the 52 weeks ended April 2009, except for the adoption of IAS1 (revised 2007) and IFRS 8. The adoption of IAS 1 (revised 2007) does not affect the financial position or profits of the Group but does give rise to additional disclosures. The measurement and recognition of the Group's income and expenditure is unchanged. IFRS 8 has been adopted and segments are identified based on the internal management reports used by the Board. This consolidated financial information for the period does not constitute statutory financial statements within the meaning of s434 of the Companies Act 2006.

The summary of results for the 52 weeks ended 26 April 2009 is an extract from the published Annual Report and Financial Statements which have been reported on by the Group's auditors and delivered to the Registrar of Companies. The audit report was unqualified and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

Principal risks and uncertainties

The principal risks and uncertainties which could impact the Group's long-term performance remain those identified on page 40 of the Group's 2009 Annual Report and Financial Statements. The Chief Executive and Finance Director's Review in this half-yearly financial report includes a commentary of the principal risks and uncertainties affecting the Group for the remaining six months of the year.

2. Segmental analysis 

Operating  segments 

For management purposes the Group is organised into, and reports its performance between, two operating segments; Retail and Brands. The Retail business segment comprises the retail network of stores and the Brands business segment comprises the identification, acquisition, development and trading of a portfolio of internationally recognised sports and leisure brands. 

Segment information about the operating segments is presented below: 

Segmental information for the 26 weeks ended 25 October 2009: 

	Retail					Brands			Eliminations	Total
	UK retail	UK wholesale & other	UK total	International retail	Total	Wholesale	Licensing	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Sales to external customers	585,925	12,246	598,171	63,584	661,755	83,609	11,534	95,143	-	756,898
Sales to other segments	-	2,274	2,274	104	2,378	8,381	-	8,381	(10,759)	-
Revenue	585,925	14,520	600,445	63,688	664,133	91,990	11,534	103,524	(10,759)	756,898
Gross profit			245,026	27,605	272,631			35,710	-	308,341
Operating profit before foreign exchange and exceptional items			64,281	4,100	68,381			6,969	-	75,350
Operating profit										31,414
Investment income										1,355
Finance income										29,683
Finance costs										(6,077)
Share of profits of associated undertakings and joint ventures										1,434
Profit before taxation										57,809
Taxation										(18,789)
Profit for the period										39,020

 Sales to other segments are priced at cost plus a 10% mark-up.

UK Retail costs includes a £4.7m charge for the Bonus Share Scheme.

  Other segment items included in the income statement for the 26 weeks ended 25 October 2009:

	Retail	Brands	Total
	£'000	£'000	£'000
Depreciation	19,754	1,094	20,848
Amortisation	192	1,241	1,433

Information regarding segment assets and liabilities as at 25 October 2009 and capital expenditure for the 26 weeks then ended: 

	Retail	Brands	Eliminations	Total
	£'000	£'000	£'000	£'000
Investments in associated undertakings and joint ventures	24,122	7,298	-	31,420
Other assets	724,642	253,684	(113,793)	864,533
Total assets	748,764	260,982	(113,793)	895,953
Total liabilities	(603,725)	(242,547)	113,793	(732,479)
Tangible asset additions	10,393	108	-	10,501
Intangible asset additions	832	2,451	-	3,283
Total capital expenditure	11,225	2,559	-	13,784

Segmental information for the 26 weeks ended 26 October 2008: 

	Retail					Brands			Eliminations	Total
	UK retail	UK wholesale & other	UK total	International retail	Total	Wholesale	Licensing	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Sales to external customers	510,153	7,852	518,005	51,827	569,832	105,620	12,293	117,913	-	687,745
Sales to other segments	-	2,274	2,274	-	2,274	4,611	-	4,611	(6,885)	-
Revenue	510,153	10,126	520,279	51,827	572,106	110,231	12,293	122,524	(6,885)	687,745
Gross profit			232,287	22,587	254,874			43,711	-	298,585
Operating profit before foreign exchange and exceptional items			54,010	2,879	56,889			6,704	-	63,593
Operating profit										20,528
Investment income										812
Finance income										90,036
Finance costs										(15,758)
Share of profits of associated undertakings and joint ventures										2,049
Profit before taxation										97,667
Taxation										(31,789)
Profit for the period										65,878

 Sales to other segments are priced at cost plus a 10% mark-up.

  Other segment items included in the income statement for the 26 weeks ended 26 October 2008:

	Retail	Brands	Total
	£'000	£'000	£'000
Depreciation	21,541	1,053	22,594
Amortisation	195	1,355	1,550

Information regarding segment assets and liabilities as at 26 October 2008 and capital expenditure for the 26 weeks then ended: 

	Retail	Brands	Eliminations	Total
	£'000	£'000	£'000	£'000
Investments in associated undertakings and joint ventures	23,188	7,198	-	30,386
Other assets	851,134	448,671	(310,003)	989,802
Total assets	874,322	455,869	(310,003)	1,020,188
Total liabilities	(719,139)	(410,160)	310,003	(819,296)
Tangible asset additions	17,714	368	-	18,082
Intangible asset additions	294	356	-	650
Total capital expenditure	18,008	724	-	18,732

Segmental information for the 52 weeks ended 26 April 2009: 

	Retail					Brands			Eliminations	Total
	UK retail	UK wholesale & other	UK total	International retail	Total	Wholesale	Licensing	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Sales to external customers	1,006,462	28,019	1,034,481	102,329	1,136,810	203,566	26,945	230,511	-	1,367,321
Sales to other segments	-	2,274	2,274	361	2,635	18,248	-	18,248	(20,883)	-
Revenue	1,006,462	30,293	1,036,755	102,690	1,139,445	221,814	26,945	248,759	(20,883)	1,367,321
Gross profit			424,677	44,625	469,302			88,334	-	557,636
Operating profit before foreign exchange and exceptional items			69,810	2,098	71,908			12,194	-	84,102
Operating profit			58,186	2,521	60,707			7,122	-	67,829
Profit on disposal of available-for sale financial assets										1,035
Transfer of historic losses on available-for-sale financial assets										(53,156)
Investment income										172
Finance income										15,927
Finance costs										(23,633)
Share of profits of associated undertakings and joint ventures										2,482
Profit before taxation										10,656
Taxation										(26,164)
Loss for the period										(15,508)

Sales to other segments are priced at cost plus a 10% mark-up.

  Other segment items included in the income statement for the 52 weeks ended 26 April 2009

	Retail	Brands	Total
	£'000	£'000	£'000
Depreciation	43,230	2,312	45,542
Amortisation	388	2,556	2,944
Impairment	21,262	9,252	30,514

Information regarding segment assets and liabilities as at 26 April 2009 and capital expenditure for the 52 weeks then ended: 

	Retail	Brands	Eliminations	Total
	£'000	£'000	£'000	£'000
Investments in associated undertakings and joint ventures	24,970	7,409	-	32,379
Other assets	780,938	481,001	(316,698)	945,241
Total assets	805,908	488,410	(316,698)	977,620
Total liabilities	(734,906)	(405,730)	316,698	(823,938)
Tangible asset additions	33,343	529	-	33,872
Intangible asset additions	2,837	1,121	-	3,958
Total capital expenditure	36,180	1,650	-	37,830

Geographic segments 

The Group operates in two geographic segments; UK and Non-UK. These geographic segments are presented below: 

Segmental information for the 26 weeks ended 25 October 2009:
	UK	Non-UK	Unallocated	Eliminations	Total
	£'000	£'000	£'000	£'000	£'000
Segmental revenue from external customers	622,384	134,514	-	-	756,898
Total capital expenditure	11,231	2,553	-	-	13,784
Segmental assets	763,475	246,271	-	(113,793)	895,953
Segmental information for the 26 weeks ended 26 October 2008:
	UK	Non-UK	Unallocated	Eliminations	Total
	£'000	£'000	£'000	£'000	£'000
Segmental revenue from external customers	554,744	133,001	-	-	687,745
Total capital expenditure	14,109	4,623	-	-	18,732
Segmental assets	1,043,888	286,303	-	(310,003)	1,020,188
Segmental information for the 52 weeks ended 26 April 2009:
	UK	Non-UK	Unallocated	Eliminations	Total
	£'000	£'000	£'000	£'000	£'000
Segmental revenue from external customers	1,101,960	265,361	-	-	1,367,321
Total capital expenditure	29,263	8,567	-	-	37,830
Segmental assets	1,011,497	282,821	-	(316,698)	977,620

3. Investment income 

	26 weeks ended 25 October 2009	26 weeks ended 26 October 2008	52 weeks ended 26 April 2009
	£'000	£'000	£'000
Profit on disposal of available-for-sale financial assets (Note 11)	1,355	449	1,035
Transfer of historic losses on available-for-sale financial assets (Note 11)	-	-	(53,156)
Dividend income from investments	-	363	172

4. Finance income 

	26 weeks ended 25 October 2009	26 weeks ended 26 October 2008	52 weeks ended 26 April 2009
	£'000	£'000	£'000
Bank interest receivable	312	521	1,161
Other interest receivable	88	3	-
Expected return on pension plan assets (Note 16)	812	1,056	2,121
Fair value adjustment to forward foreign exchange contracts (Note 17) (1)	28,471	88,456	12,645
	29,683	90,036	15,927

(1)The fair value adjustment to forward foreign exchange contracts relates to favourable differences arising from the marking to market of forward foreign currency contracts at each period end.

5. Finance costs 

	26 weeks ended 25 October 2009	26 weeks ended 26 October 2008	52 weeks ended 26 April 2009
	£'000	£'000	£'000
Interest on bank loans and overdrafts	4,544	13,661	19,980
Interest on other loans and finance leases	388	843	1,147
Interest on retirement benefit obligations (Note 16)	1,145	1,254	2,506
	6,077	15,758	23,633

6. Taxation 

The tax charge on profit before tax (excluding the impact of exceptional items) has been calculated using an estimated effective annual rate of 32.5% (2009: 32.5%). This leaves an estimated tax charge of £18.8m for the 26 weeks ended 25 October 2009 (£31.8m for the 26 weeks ended 26 October 2008).

7. Earnings per share 

Basic and diluted earnings per share

	26 weeks ended 25 October 2009	26 weeks ended 25 October 2009	26 weeks ended 26 October 2008	26 weeks ended 26 October 2008	52 weeks ended 26 April 2009	52 weeks ended 26 April 2009
	Basic  £'000	Diluted  £'000	Basic  £'000	Diluted  £'000	Basic  £'000	Diluted  £'000
Profit for the period	38,930	38,930	65,748	65,748	(15,838)	(15,838)
	Number in thousands		Number in thousands		Number in thousands
Weighted average number of shares	568,452	603,098	568,452	568,452	568,452	568,452
	Pence per share		Pence per share		Pence per share
Earnings per share	6.85	6.46	11.57	11.57	(2.79)	(2.79)

Underlying earnings per share

The underlying earnings per share reflects the underlying performance of the business compared with the prior year and is calculated by dividing underlying earnings by the weighted average number of shares. Underlying earnings is used by management as a measure of profitability within the Group. Underlying earnings is defined as profit for the period attributable to equity holders of the parent for each financial period but excluding the post tax effect of realised foreign exchange in selling and administration costs, the IAS 39 fair value adjustment on forward currency contracts in finance income/costs, exceptional costs and the profit/loss on sale and derecognition of strategic investments.

The Directors believe that the underlying earnings before exceptional items and underlying earnings per share measures provide additional useful information for shareholders on the underlying performance of the business, and are consistent with how business performance is measured internally. Underlying earnings is not a recognised profit measure under IFRS and may not be directly comparable with "adjusted" profit measures used by other companies. 

	26 weeks ended 25 October 2009	26 weeks ended 25 October 2009		26 weeks ended 26 October 2008	26 weeks ended 26 October 2008	52 weeks ended 26 April 2009		52 weeks ended 26 April 2009
	Basic  £'000	Diluted  £'000		Basic  £'000	Diluted  £'000	Basic  £'000		Diluted  £'000
Profit for the period	38,930	38,930		65,748	65,748	(15,838)		(15,838)
Post tax adjustments to profit for the period for the following exceptional items:
Realised loss/(gain) on forward foreign exchange contracts	29,657	29,657		31,007	31,007	(9,556)		(9,556)
Fair value adjustment to forward foreign exchange contracts	(19,218)	(19,218)		(63,688)	(63,688)	(8,485)		(8,485)
Profit on disposal of listed investments net of interest	(915)	(915)		(323)	(323)	(1,035)		(1,035)
Derecognition of listed investments (Not tax deductible)	-	-		-	-	53,156		53,156
Impairment of freehold property (Not tax deductible)	-	-		-	-	15,682		15,682
Impairment of intangible assets	-	-		-	-	9,952		9,952
Fair value adjustments within associated undertakings	-	-		-	-	1,194		1,194
Underlying profit for the period	48,454	48,454		32,744	32,744	45,070		45,070
	Number in thousands			Number in thousands		Number in thousands
Weighted average number of shares	568,452	603,098		568,452	568,452	568,452		568,452
	Pence per share			Pence per share		Pence per share
Earnings per share	8.52	8.03		5.76	5.76	7.93		7.93

8. Dividends

An interim dividend of 1.22p per share, in respect of the year ended 26 April 2009, was paid on 30 April 2009 to shareholders on the register as at 3 April 2009. 

9. Property, plant and equipment 

	Freehold land and buildings	Long leasehold property	Short leasehold property	Plant and equipment	Total
	£'000	£'000	£'000	£'000	£'000
Cost
At 26 April 2009	123,597	11,060	108,221	292,223	535,101
Exchange differences	377	104	-	8,242	8,723
Additions	7	1	1,447	9,046	10,501
Eliminated on disposals	-	-	(79)	(458)	(537)
At 25 October 2009	123,981	11,165	109,589	309,053	553,788
Accumulated depreciation and impairment
At 26 April 2009	(26,711)	(3,950)	(40,375)	(168,270)	(239,306)
Exchange differences	(82)	14	3	(4,673)	(4,738)
Charge for the period	(1,300)	(173)	(4,078)	(15,297)	(20,848)
Eliminated on disposals	-	-	140	372	512
At 25 October 2009	(28,093)	(4,109)	(44,310)	(187,868)	(264,380)
Net book amount
At 25 October 2009	95,888	7,056	65,279	121,185	289,408
At 26 April 2009	96,886	7,110	67,846	123,953	295,795

  10. Intangible assets 

	Goodwill	Trade marks and licences	Brands	Total
	£'000	£'000	£'000	£'000
Cost
At 26 April 2009	128,217	23,470	87,946	239,633
Exchange differences	(6,472)	701	(7,349)	(13,120)
Other additions	-	3,283	-	3,283
Disposals	-	(754)	-	(754)
At 25 October 2009	121,745	26,700	80,597	229,042

	Goodwill	Trade marks and licences	Brands	Total
	£'000	£'000	£'000	£'000
Amortisation and impairment
At 26 April 2009	(9,917)	(5,458)	(2,300)	(17,675)
Amortisation charge	-	(1,433)	-	(1,433)
Disposals	-	576	-	576
Exchange differences	-	(778)	-	(778)
At 25 October 2009	(9,917)	(7,093)	(2,300)	(19,310)
Net book amount
At 25 October 2009	111,828	19,607	78,297	209,732
At 26 April 2009	118,300	18,012	85,646	221,958

Amortisation and impairments are both charged to selling, distribution and administrative expenses in the Consolidated Income Statement.

The carrying value of those goodwill and brands that are considered to have an indefinite life are allocated to cash-generating units as follows:

	Goodwill	Brands
	£'000	£'000
Retail	13,809	834
Brands	98,019	77,463
	111,828	78,297

The Group tests the carrying amount of goodwill and assets with an indefinite life annually for impairment or more frequently if there are indications that their carrying value might be impaired. The carrying amounts of other intangible assets are reviewed for impairment if there is an indication of impairment.

Impairment is calculated by comparing the carrying amounts to the value in use derived from discounted cash flow projections for the cash generating units to which the intangible assets are allocated. 

11. Available-for-sale financial assets

	25 October 2009	26 October 2008	26 April 2009
	£'000	£'000	£'000
Available-for-sale financial assets	-	30,498	5,467

The fair value of the listed available-for-sale investments is based on bid quoted market prices at the balance sheet date.

The following table shows the aggregate movement in the Group's financial assets during the period: 

	26 October 2009	26 October 2008	26 April 2009
	£'000	£'000	£'000
At beginning of period	5,467	65,714	65,714
Additions	-	4,887	4,887
Disposals	(6,691)	(12,772)	(12,772)
Derecognition of investments held with KSF	-	-	(26,219)
Revaluation through the income statement	1,224	-	2,443
Revaluation through equity	-	(27,331)	(28,586)
At end of period	-	30,498	5,467

We have previously reported that some of our strategic stakes were held by Kaupthing Singer & Friedlander (KSF) and partly financed by them. On 8 October 2008, KSF went into administration and we are in dispute with the administrators concerning the ownership of the shares they hold.  For accounting purposes the Group continues not to recognise the strategic investments held through Kaupthing Singer and Friedlander . However, we do still believe that the shares belong to us and will continue to present our case as such in the current legal proceedings. 

12. Share capital 

	25 October 2009
	£'000
Authorised
999,500,010 ordinary shares of 10p each	99,950
499,990 redeemable preference shares of 10p each	50
	100,000
Allotted, called up and fully paid
640,452,369 ordinary shares of 10p each	64,045

13. Other reserves 

	Share capital	Share premium	Permanent contribution to capital	Capital redemption reserve	Reverse combination reserve	Other reserves
	£'000	£'000	£'000	£'000	£'000	£'000
At 26 April 2009 and 25 October 2009	64,045	874,300	50	8,005	(987,312)	(40,912)

The share premium account is used to record the excess proceeds over nominal value on the issue of shares. 

14. Minority interests 

	£'000
At 26 April 2009	3,232
Share of loss for the period	(10)
At 25 October 2009	3,222

15. Borrowings 

	25 October 2009	26 October 2008	26 April 2009
	£'000	£'000	£'000
Non-current:
Bank and other loans	3,498	14,646	4,090
Obligations under finance leases	595	568	623
	4,093	15,214	4,713
Current:
Bank overdrafts	374,933	502,233	442,683
Bank and other loans	9,495	4,029	16,216
Obligations under finance leases	20	123	-
	384,448	506,385	458,899
Total borrowings:
Bank overdrafts	374,933	502,233	442,683
Bank and other loans	12,993	18,675	20,306
Obligations under finance leases	615	691	623
	388,541	521,599	463,612

The maturity of the Group's bank and other loan borrowings other than overdrafts is as follows: 

	25 October 2009	26 October 2008	26 April 2009
	£'000	£'000	£'000
Borrowings are repayable as follows:
Within one year	9,515	4,152	19,629
Between one and two years	3,609	14,733	354
Between two and five years	363	121	613
After five years	121	360	333
	13,608	19,366	20,929
Borrowings - Sterling	2,379	4,021	2,580
Borrowings - Other	11,229	15,345	18,349
	13,608	19,366	20,929

Loans are all on commercial variable rates of interest ranging between 0.6% and 2.5% over the base rate of the country within which the borrowing entity resides. 

On 26 February 2007, four members of the Group, SportsDirect.com Retail Limited, Lillywhites Limited, Dunlop Slazenger Group Limited and Smith & Brooks Holdings Limited (the "Borrowers") entered into a committed working capital facility agreement with The Governor and Company of the Bank of Scotland (the "Working Capital Facility").The Working Capital Facility is available to any of the Borrowers and may be drawn to an aggregate limit of £500.0 million. It is capable of being utilised by way of cash advances, letters of credit, guarantees, bonds and/or currency borrowings. The Working Capital Facility is available until 30 April 2011. Each Borrower is required to observe certain covenants, including undertakings relating to delivery of financial statements, and certain negative covenants, including in relation to creation of security and disposal of assets. The Working Capital Facility is secured by a debenture from each of the Borrowers and a composite guarantee from each of the non-dormant subsidiaries of SportsDirect.com Retail Limited.

We have previously reported that some of our strategic stakes were held by Kaupthing Singer & Friedlander (KSF) and partly financed by them. On 8 October 2008, KSF went into administration and we are in dispute with the administrators concerning the ownership of the shares they hold.  For accounting purposes the Group continues not to recognise the strategic investments held through Kaupthing Singer and Friedlander . However, we do still believe that the shares belong to us and will continue to present our case as such in the current legal proceedings. Doing so had no impact on net assets as the value of the shares (£26,219,000) was replaced by a derecognition of a liability (£20,298,000 owed to KSF) and the recognition of a £5,921,000 receivable. This derecognition had resulted in the transfer of historic losses, previously recognised in the statement of recognised income and expense, of £53,156,000 into the income statement.

16. Retirement benefit obligations

The Group's defined benefit pension obligations relate to Dunlop Slazenger Group Holdings Limited ("DSGHL"), which was acquired on 28 January 2004. DSGHL operates a number of plans worldwide, the largest of which is of the funded defined benefit type. The Scheme is closed to new members. 

The amounts for the current and previous four periods following the acquisition of DSGHL are as follows:

	25 October 2009	26 April 2009	27 April 2008	29 April 2007	30 April 2006
	£'000	£'000	£'000	£'000	£'000
Total fair value of plan assets	30,791	27,440	32,706	36,419	32,829
Present value of plan liabilities	(51,906)	(39,764)	(44,411)	(50,451)	(48,008)
Net plan obligations	(21,115)	(12,324)	(11,705)	(14,032)	(15,179)
Experience adjustments on plan liabilities	(12,017)	5,887	4,652	(1,620)	(1,354)
Experience adjustments on plan assets	2,717	(6,336)	(2,969)	1,164	257

The cumulative amount of actuarial gains and losses recognised in the statement of comprehensive income as at 25 October 2009 was an actuarial loss of £8,393,000 (26 April 2009: actuarial gain of £907,000). 

There were no unrecognised actuarial gains or losses or past service costs as at 25 October 2009 or 26 April 2009. 

Amounts recognised in the income statement are as follows: 

	26 weeks ended 25 October 2009	52 weeks ended 26 April 2009
	£'000	£'000
Current service cost	6	19
Interest on retirement benefit obligations	1,145	2,506
Expected return on plan assets	(812)	(2,121)
	339	404

The current service cost is included within cost of sales. The interest on retirement benefit obligations and the expected return on plan assets are included within finance costs and finance income respectively. 

  Amounts recognised in the statement of comprehensive income are as follows:

	26 weeks ended 25 October 2009	52 weeks ended 26 April 2009
	£'000	£'000
Actual less expected return on assets	2,717	(6,336)
Actuarial gains relating to plan liabilities	(12,017)	5,887
	(9,300)	(449)

The actual return on plan assets for the 26 weeks ended 25 October 2009 was a profit of £3,529,000.

The movements in the fair value of plan assets are as follows: 

	26 weeks ended 25 October 2009	52 weeks ended 26 April 2009
	£'000	£'000
At the start of the period	27,440	32,706
Expected return	812	2,121
Actuarial gain/(loss)	2,717	(6,336)
Employer contributions	709	1,382
Employee contributions	8	118
Benefits paid out	(895)	(2,551)
At the end of the period	30,791	27,440

The Group expects to contribute £1,263,000 to its defined benefit pension plans for the 52 weeks ending 25 April 2010.

The principal assumptions underlying the actuarial assessments of the present value of the plan liabilities are: 

	25 October 2009	26 April 2009
	%	%
Inflation rate	3.4	2.9
Future salary increases	n/a	n/a
Future pension increases	3.4	2.8
Discount rate	5.5	6.9

The movements in the present value of the plan liabilities are as follows: 

	26 weeks ended 25 October 2009	52 weeks ended 26 April 2009
	£'000	£'000
At the start of the period	(39,764)	(44,411)
Current service cost	(6)	(19)
Interest cost	(1,145)	(2,506)
Actuarial (loss)/gain	(12,017)	5,887
Employee contributions	(8)	(118)
Benefits paid out	895	2,551
Exchange gain/(loss)	139	(1,148)
At the end of the period	(51,906)	(39,764)

The net movements in the net present value of the plan liabilities were as follows: 

	26 weeks ended 25 October 2009	26 weeks ended 26 October 2008
	£'000	£'000
Net liability at the start of the period	(12,324)	(11,705)
Movement in fair value of plan assets	3,351	(5,266)
Movements in the present value of the plan liabilities	(12,142)	4,647
Net liability at the end of the period	(21,115)	(12,324)

  17. Financial instruments 

(a) Derivatives: foreign currency forward purchase contracts 

The most significant exposure to foreign exchange fluctuations relates to purchases made in foreign currencies, principally the US dollar. The Group's policy is to reduce substantially the risk associated with purchases denominated in foreign currencies by using forward fixed rate currency purchase contracts, taking into account any foreign currency cash flows. The foreign exchange contracts do not meet the criteria for treatment as an effective hedge and accordingly any gain or loss is recognised immediately in the income statement. 

The carrying values of forward foreign currency purchase contracts were as follows: 

	25 October 2009	26 October 2008	26 April 2009
	£'000	£'000	£'000
Fair value of derivative financial instruments - (liabilities)/assets	(6,522)	40,818	(34,993)

The sterling principal amounts of forward foreign currency purchase contracts and contracted forward rates were as follows: 

	25 October 2009	26 October 2008	26 April 2009
	£'000	£'000	£'000
US dollar purchases	250,000	600,000	350,000
Contracted rates	1.51 - 1.66	1.86 - 1.89	1.46 - 1.88
US dollar sales	-	(397,000)	(250,000)
Contracted rates	-	1.92 - 1.94	1.92 - 1.94
Euro sales	(54,303)	(183,746)	(202,179)
Contracted rates	1.09 - 1.14	1.32 - 1.40	1.08 - 1.40
Euro purchases	-	-	223,662
Contracted rates	-	-	1.12-1.12

Forward foreign currency purchase and sale contracts generally have a maturity at inception of approximately 12 months. 

(b) Sensitivity analysis

Foreign currency sensitivity analysis

The Group's principal foreign currency exposures are to US dollars and the Euro. The table below illustrates the hypothetical sensitivity of the Group's reported profit and equity to a 5% increase and decrease in the US dollar/Sterling and Euro/Sterling exchange rates at the year end date, assuming all other variables remain unchanged. The figures have been calculated by comparing the fair values of outstanding foreign currency contracts at the current exchange rate to those if exchange rates moved as illustrated.

Positive figures represent an increase in profit or equity:

	Income statement					Equity
	25 October 2009	26 October 2008		26 April 2009		25 October 2009	26 October 2008		26 April 2009
	£'000	£'000		£'000		£'000	£'000		£'000
Sterling strengthens by 5%
US dollar	(19,004)	(9,667)		(11,044)		(19,004)	(9,667)		(11,044)
Euro	6,313	8,750		4,580		6,313	8,750		4,580
Sterling weakens by 5%
US dollar	19,954	10,150		11,596		19,954	10,150		11,596
Euro	(6,628)	(9,187)		(4,809)		(6,628)	(9,187)		(4,809)

18. Cash inflows from operating activities

	26 weeks ended 25 October 2009	26 weeks ended 26 October 2008	52 weeks ended 26 April 2009
	£'000	£'000	£'000
Profit before taxation	57,809	97,667	10,656
Net finance (income)/costs	(23,606)	(74,278)	7,706
Derecognition of available-for-sale financial assets	-	-	53,156
Profit on disposal of available-for sale assets	(1,355)	(449)	(1,035)
Investment income	-	(363)	(172)
Share of profit of associated undertakings and joint ventures	(1,434)	(2,049)	(2,482)
Operating profit	31,414	20,528	67,829
Depreciation	20,848	22,594	45,542
Amortisation charge	1,433	1,550	2,944
Impairment charge	-	-	30,514
Loss on disposal of intangibles	79	187	195
Loss on disposal of subsidiary undertakings	-	-	1
Defined benefit pension plan current service cost	121	206	395
Defined benefit pension plan employer contributions	(709)	(615)	(1,225)
Operating cash inflow before changes in working capital	53,186	44,450	146,195
Decrease/(increase) in receivables	4,362	(23,883)	(9,788)
Decrease/(increase) in inventories	37,052	6,154	(43,500)
Increase in payables	14,265	17,279	24,563
Cash inflows from operating activities	108,865	44,000	117,470

19. Related party transactions 

The Group has taken advantage of the exemptions contained within IAS 24 - "Related Party Disclosures" from the requirement to disclose transactions between Group companies as these have been eliminated on consolidation.

The Group entered into the following material transactions with related parties: 

26 weeks ended 25 October 2009 Related party	Relationship	Sales	Purchases	Trade and other receivables	Trade and other payables
		£'000	£'000	£'000	£'000
Heatons	Associate	12,324	-	4,063	-
No Fear International Limited	Joint venture	-	-	-	(1,970)
M J W Ashley	Director	-	-	-	(689)
PBF International Limited	Joint venture	-	-	550	-

No interest was charged by M J W Ashley's on his director's account with the Group.

M J W Ashley leases certain properties to various companies in the Group which are operated as retail and distribution premises. A commercial rent is charged in respect of these leases. 

Compensation paid to key management of the Group was £538,033, including pension contributions of £5,937.

26 weeks ended 26 October 2008 Related party	Relationship	Sales	Purchases	Trade and other receivables	Trade and other payables
		£'000	£'000	£'000	£'000
Heatons	Associate	5,984	-	2,026	-
No Fear International Limited	Joint venture	-	-	-	(1,698)
M J W Ashley	Director	-	-	-	(599)
PBF International Limited	Joint venture	-	-	795	-

No interest was charged by M J W Ashley's on his director's account with the Group.

M J W Ashley leases certain properties to various companies in the Group which are operated as retail and distribution premises. A commercial rent is charged in respect of these leases. 

Compensation paid to key management of the Group was £517,705, including pension contributions of £7,228.

  20. Contingent assets and liabilities 

As a matter of course the Group undertakes action in numerous parts of the world to protect its trade mark registrations and in connection with the Group's licensees. Such actions are usually resolved in the ordinary course of business. The Group is, however, party to a dispute and has provided for an amount representing the financial estimation of the potential loss if the outcome was not to be in its favour. The Group believes that to provide further information would be seriously prejudicial to the case.

21. Post balance sheet events 

No material post balance sheet events have occurred after 25 October 2009 to the date of this Interim Report.

 

END

 

 

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