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Umbro PLC (UMB)

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Wednesday 08 September, 2004

Umbro PLC

Interim Results

Umbro PLC
08 September 2004



Wednesday, 8th September 2004

                                    Umbro plc
             Interim Results For The Half-Year Ended 4th July 2004

Financial Highlights

   • Record sales and profit
   • Total Wholesale Equivalent sales increased by 18.5% to £195.1m (2003:
     £164.6m)
   • Turnover increased 36.4% to £94.1m (2003: £68.9m)
   • EBITA increased by 51% to £16.55m (2003: £6.88m)
   • Adjusted earnings per share increased by 40% to 7.3p (2003: 5.2p)

Strategic and operational highlights

   • Record sales of licensed apparel and associated product
   • Agreement with Footlocker in the US to put Umbro product in over 1,000
     stores by Q4 2004
   • New Evolution X product range launched to capitalise on worldwide growth
     in branded apparel
   • Michael Owen recently re-signed for 15 years with his move to Real
     Madrid providing excellent marketing opportunities

Commenting on the results, Peter McGuigan, Chief Executive of Umbro, said:

"We have made good progress in the first half producing record results driven by
strong sales growth.

The popularity of football across the world continues to increase and we believe
Umbro's unique positioning as a specialist football brand will allow us to take
full advantage of the anticipated growth in this segment. We have a clear
strategy in place to expand our core business as well as to exploit new
identified areas of expansion both in the UK and Internationally."


For more information contact:

Umbro
Peter McGuigan                                    020 7404 5959 (on the day)
Geoff Haslehurst                                  0161 492 2114 (thereafter)

Brunswick

Susan Gilchrist / Simon Sporborg / Emily Kerr     020 7404 5959



FINANCIAL SUMMARY

                                      6 months to       % change   6 months to
                                           4 July         over 6       29 June
                                             2004   months to 29          2003
                                      (unaudited)      June 2003   (unaudited)

                                             £000                         £000
-----------------------------            --------       --------      --------
Total wholesale equivalent                195,100          +18.5%      164,610
-----------------------------            --------       --------      --------

Turnover                                   94,114          +36.4%       68,983

Profit before interest, amortisation
of goodwill, tax and exceptionals          16,546          +47.1%       11,246

Profit before tax                          10,394          +51.1%        6,878

Basic earnings per share                      3.9p         +30.0%          3.0p

Adjusted earnings per share                   7.3p         +40.4%          5.2p





CHAIRMAN AND CHIEF EXECUTIVE STATEMENT

Overview

I am pleased to announce record interim results in our first set of accounts
issued since flotation of the Company on 3 June 2004.

The Group has benefited from sales growth both in direct sales in the UK and
USA, and internationally through its network of 47 licensees. Profits have
increased, with improved gross margins driving higher operating margins and
shareholder returns.

I am pleased to welcome independent non-executive directors, Dick Barfield and
Mark McCafferty to the plc Board and also to welcome our new shareholders.

Group Results and Dividend

The Total Wholesale Equivalent sales (which is the Group's direct buy/sell sales
plus the wholesale equivalent value of sales by the Group's licensees) was
£195.1m in the first half year compared to £164.6m in the same period last year.
This growth of 18.5% was driven by a 39.1% increase in the Group's buy/sell
turnover plus a 6.7% rise (11.9% at constant exchange rates) in the wholesale
equivalent sales of royalty income from Umbro licensees worldwide.

Headline gross profit of £27.6m increased 43% over last year. Expressed as a
percentage of Total Wholesale Equivalent sales, this is 14.2%, an increase of
2.5 percentage points.

Earnings before Interest, Tax, Amortisation and Exceptionals of £16.5m increased
47.1% over last year delivering an adjusted EPS increase (before amortisation
and exceptionals) of 40.4% to 7.3p per share.

The exceptional items of £2.1m relate to fees in connection with the IPO. Those
IPO fees which relate specifically to the issue of new shares of £4.4m have been
charged to share premium.

In the period, cash of £10.2m has been generated, resulting in Net Debt reducing
to £13.0m.

The Directors intend to adopt a progressive dividend policy and to pay a final
dividend in May 2005. In line with the Directors' intention set out in the
Listing Particulars of May 2004, there will be no interim dividend payable to
ordinary shareholders for 2004, though it is anticipated that an interim
dividend will be paid in future years. Dividends on preference shares for the
period prior to the IPO charged in 2004, amount to £3.1m.

Operational Review

The increasing popularity of football was once again demonstrated by Euro 2004,
with television audiences, increasing by 26% compared to 2000, according to
UEFA. This, together with the popularity of licensed kit of Umbro's sponsored
teams, helped fuel a 48.1% rise in licensed apparel wholesale equivalent sales,
whilst global branded apparel grew at a rate of 7.1%, despite a degree of
substitution by licensed products in the UK.

The launch of the new England away kit and associated product in March was a
tremendous success. Sales of these products were made in the first half of 2004
prior to Euro 2004. This is in contrast to 2003 when sales were made more evenly
throughout the year.
In response to the increasingly competitive environment for branded apparel,
Umbro launched a new product range in May 2004 called Evolution X. This is a
premium level co-ordinated cross category concept, offering branded apparel,
footwear and equipment. The concept has been embraced by our network of
international licensees and UK sports trade alike with indicative orders for Q1
2005 double that of Q4 2004.

Total Wholesale Equivalent sales of footwear and equipment, though ahead of last
year on a like for like basis, have been disappointing, particularly in the UK
where the market has seen heavy discounting by competitors to drive market
share. To increase our focus on the footwear category, earlier in the year we
established a separate product team for leisure footwear supported by a new
Design Director. We also plan to align new performance product launches more
closely with player endorsements at high profile matches.

The Umbro brand continues to perform strongly overseas, driven largely by Umbro
branded products, which account for 90% of sales. Wholesale equivalent sales
increased to £111.5m, a growth of 6.7% or 11.9% at constant exchange rates.
Royalty income increased to £10.5m, a growth of 18.3% reflecting the drive to
increase licensee royalty rates.

We recently announced the formalisation of our relationship with Foot Locker
Inc. in the USA with the signing of a trading and distribution agreement. We
have moved from a test environment earlier in the year to an expected presence
in both apparel and footwear in over 1,000 doors across five fascias by Q4 2004.
The relationship, still in its infancy, represents a significant opportunity to
develop further as the width and depth of the product offering increases.

Gross margin on buy/sell turnover (before sports marketing, design and
development costs) in the first half increased from 44.4% in 2003 to 51.5% in
2004, an improvement of 7.1 percentage points. Of this increase, 3.6 percentage
points relates to improved exchange rates particularly the weaker $ with Umbro
buying most of its product in US$. The balance of 3.5 percentage points was
achieved through a combination of improved sourcing and the product mix, with
the sale of a greater proportion of higher margin licensed product.

Developing the Brand

Investment in marketing has increased reflecting the determination of the Board
to continue the strengthening of the Umbro brand. In May 2004 we announced the
re-signing of Michael Owen for a 15 year period. Michael's recent move to Real
Madrid presents Umbro with additional opportunities to capitalise on his
increased profile from playing at one of the biggest clubs in the world.

The focus on the 16 to 18 year age group led us to sponsor The Urban Music
Festival earlier this year reaching a live audience of 45,000 and estimated
radio and TV audiences of 14.5 million. Our associations with designers Kim
Jones and Dirk Bikkembergs in developing ranges of football inspired apparel for
a wider non-sports trade distribution has attracted significant media attention
with extensive coverage in fashion magazines. Our Autumn 2004 ranges can be
found in Selfridges, Collettes in Paris and Odin in New York.

Umbro is committed to promoting ethical work practices throughout its supply
base and we are in the process of applying for membership of the Fair Labour
Association. Umbro has worked closely with organisations such as Labour Behind
the Label who were responsible for the Play Fair at the Olympics campaign.

IPO

The IPO raised £50m and the funds were applied in the repayment of existing
preference shares and accrued dividend of £44.7m. The balance of £5.3m was used
to pay the IPO fees and share warrants held by the Group's previous bankers
which were cancelled. The total fees and warrants amounted to £6.4m. Thus £1.1m
of the IPO costs was paid out of the Group's existing cash resources. The
distributable reserves of the holding company were £25.3m at the balance sheet
date.

Finance

The new five year banking facilities entered into in April 2004 comprise an £18m
term loan, and a £47m package of revolving credit and asset-based financing
facilities. These facilities extend to 31 December 2008, and are sufficient for
the foreseeable future. At the half year no drawings had been made against the
£47m facility.

Cash generated in the first half was £10.2m resulting in a net debt reduction
from £23.2m to £13.0m. In the second half of 2004, we anticipate payments to
football clubs of £12m in respect of sales of licensed kit in previous periods.
In addition, the OFT fine of £6.6m remains in accruals unpaid, as the appeal
process continues.

Outlook

Football continues to stir the passions of millions of people worldwide, and
Umbro is committed to playing its part "to inspire and excite the world of
football" through its product offering and participation in the game. The
popularity of football in general continues to increase and we believe Umbro's
unique positioning as a specialist football brand will allow us to take full
advantage of the anticipated growth in this segment.

As expected, performance in the first half of 2004 in sales and profits has been
exceptionally strong. This was boosted by sales of licensed apparel in advance
of Euro 2004. Against this background the Board is confident of the outcome for
the full year to December 2004 and of delivering increased shareholder value.

Nigel Doughty                              Peter McGuigan
Chairman                                   Chief Executive Officer





CONSOLIDATED PROFIT AND LOSS
ACCOUNT FOR
THE SIX MONTHS TO 4 JULY
2004
                               Note    6 months to   6 months to   12 months to
                                            4 July       29 June    31 December
                                              2004          2003           2003
                                       (unaudited)   (unaudited)      (audited)
                                              £000          £000           £000
----------------------------- --------    --------      --------       --------
Total wholesale equivalent         2       195,100       164,610        310,157
----------------------------- --------    --------      --------       --------

Turnover                           2        94,114        68,983        127,392
Cost of sales                              (66,477)      (49,688)       (90,959)
                                          --------      --------       --------
Gross profit                                27,637        19,295         36,433

Selling and distribution costs              (9,185)       (6,716)       (13,141)
----------------------------- --------    --------      --------       --------
Goodwill amortisation                       (2,310)       (2,310)        (4,621)
Exceptional items                  4        (2,134)            -         (6,641)
Other administration expenses               (4,206)       (3,815)        (7,930)
----------------------------- --------    --------      --------       --------
Total administration costs                  (8,650)       (6,125)       (19,192)

Other operating income                       2,300         2,482          4,845
                                          --------      --------       --------
Operating profit before interest            12,102         8,936          8,945

Net interest payable                        (1,708)       (2,058)        (4,167)
                                          --------      --------       --------

Profit on ordinary
activities before tax              3        10,394         6,878          4,778

Taxation                                    (4,279)       (1,634)        (2,797)
                                           --------      --------       --------

Profit on ordinary
activities after tax                         6,115         5,244          1,981

Minority interests                             (50)          (27)           (24)
                                           --------      --------       --------

Profit after tax and
minority interests                           6,065         5,217          1,957

Dividends on preference shares              (3,153)       (3,397)        (6,794)
                                          --------      --------       --------
Profit / (loss) set aside to 
reserves                                     2,912         1,820         (4,837)
                                          --------      --------       --------

Basic and diluted earnings
per share                                      3.9p          3.0p          (7.9)p
Adjusted earnings per share
(before goodwill
amortisation and exceptional
items)                             7           7.3p          5.2p           9.1p
The results above are in
respect of continuing
activities.



CONSOLIDATED BALANCE SHEET AS
AT 4 JULY 2004

                                Note         As at         As at         As at
                                       4 July 2004       29 June   31 December
                                       (unaudited)          2003          2003
                                                     (unaudited)     (audited)
                                              £000          £000          £000

Intangible fixed assets                     68,137        73,049        70,431

Tangible fixed assets                        3,662         3,206         3,416
                                          --------      --------      --------
                                            71,799        76,255        73,847

Current assets

Stocks                                      10,863        10,765         8,605
Debtors                            8        48,233        38,837        33,749
Cash at bank and in hand                     4,593           343         1,512
                                          --------      --------      --------
                                            63,689        49,945        43,866

Creditors: amounts falling due
within one year                   9       (64,197)      (69,369)      (65,812)
                                          --------      --------      --------

Net current liabilities                       (508)      (19,424)      (21,946)
                                            --------      --------      --------

Total assets less current                   
liabilities                                 71,291        56,831        51,901

Creditors: amounts falling due
after more than one year         10        (20,792)      (13,317)      (11,682)
                                          --------      --------      --------

Net assets                                  50,499        43,514        40,219
                                          --------      --------      --------

Capital and reserves

Equity share capital              12         1,445             1             1
Non-equity share capital          12             -        47,750        47,750
Share premium account             13        89,216        11,874        11,874
Reserves                          13       (39,804)      (15,720)      (19,011)
                                          --------      --------      --------

Shareholders' funds (equity and
non-equity)                                 50,857        43,905        40,614
Equity minority interests                     (358)         (391)         (395)
                                          --------      --------      --------
Capital employed                            50,499        43,514        40,219
                                          --------      --------      --------


GROUP STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS TO 4 JULY
2004
                               Note   6 months to   6 months to   12 months to
                                           4 July       29 June    31 December
                                             2004          2003           2003
                                      (unaudited)   (unaudited)      (audited)
                                             £000          £000           £000

Profit for the financial
year                                        6,065         5,217          1,957

Exchange difference on
retranslation of net assets
of subsidiary undertakings                    (15)          (11)           (42)
                                         --------      --------       --------

Total recognised profits for
the year                                    6,050         5,206          1,915

Prior year adjustment             6                                     (9,619)
                                                                        --------

Total losses recognised
since last accounts                                                     (7,704)
                                                                        --------



GROUP STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS TO 4 JULY 2004

                               Note   6 months to   6 months to   12 months to
                                           4 July       29 June    31 December
                                             2004          2003           2003
                                      (unaudited)   (unaudited)      (audited)

                                             £000          £000           £000
Net cash inflow from
operating activities            5a         12,917         3,903         21,663
Returns on investments and
servicing of finance            5b        (31,624)         (543)        (2,980)
Taxation                        5b           (455)        1,430            589
Capital expenditure and
financial investment            5b           (643)         (583)          (892)
                                         --------      --------       --------
Net cash (outflow)/inflow
before financing                          (19,805)        4,207         18,380
Acquisition of minority
interest in subsidiary                        (29)            -              -
Financing                       5b         22,992        (6,889)       (13,666)
                                         --------      --------       --------
Increase/(decrease) in cash                 3,158        (2,682)         4,714
                                         --------      --------       --------



Reconciliation of net cash
flow to movement in net debt

Increase/(decrease) in net
cash                                        3,158        (2,682)         4,714

Cash inflow from decrease in
debt and lease financing                    8,044         6,889         13,666
                                         --------      --------       --------
Change in net debt resulting
from cash flows                            11,202         4,207         18,380
Capitalised interest and
amortisation of issue costs                  (891)         (575)        (1,157)
New finance leases and hire
purchase contracts                           (102)         (366)          (379)
                                         --------      --------       --------
Movement in net debt                       10,209         3,266         16,844

Net debt at beginning of period           (23,192)      (40,036)       (40,036)
                                         --------      --------       --------
Net debt at end of period                 (12,983)      (36,770)       (23,192)
                                         --------      --------       --------



NOTES TO THE ACCOUNTS

1.       ACCOUNTING POLICIES

The principal accounting policies of the group are set out in the group's 2003
annual report and accounts, and remain unchanged.

The tax charge is estimated on the basis of the full year rate applied to the
profits at the half year.

The half year results are unaudited. The results shown for the year ended 31
December 2003 have been extracted from the full statutory accounts which
received an unqualified auditors' report.

2.       TURNOVER
         Segmental analysis

         Business analysis
                                      6 months to   6 months to   12 months to
                                           4 July       29 June    31 December
                                             2004          2003           2003
                                      (unaudited)   (unaudited)      (audited)
                                             £000          £000           £000
                                        ---------     ---------      ---------
Turnover - Buy/sell operations
Licensed apparel                           72,120        44,598         76,328
Branded apparel                             5,369         7,480         14,595
                                        ---------     ---------      ---------
Total apparel                              77,489        52,078         90,923
Footwear                                    4,216         5,496         12,981
Equipment and other                         1,869         2,496          4,525
                                        ---------     ---------      ---------
                                           83,574        60,070        108,429
                                        ---------     ---------      ---------
Turnover - Royalty income
Licensed apparel                            1,906         1,895          4,037
Branded apparel                             5,235         4,049          8,179
                                        ---------     ---------      ---------
Total apparel                               7,141         5,944         12,216
Footwear                                    2,527         2,244          4,954
Equipment and other                           872           725          1,793
                                        ---------     ---------      ---------
                                           10,540         8,913         18,963
                                        ---------     ---------      ---------
Group turnover
Licensed apparel                           74,026        46,493         80,365
Branded apparel                            10,604        11,529         22,774
                                        ---------     ---------      ---------
Total apparel                              84,630        58,022        103,139
Footwear                                    6,743         7,740         17,935
Equipment and other                         2,741         3,221          6,318
                                        ---------     ---------      ---------
                                           94,114        68,983        127,392
Wholesale equivalent of royalty
income
Licensed apparel                           11,745        12,041         23,614
Branded apparel                            58,367        52,053        105,634
                                        ---------     ---------      ---------
Total apparel                              70,112        64,094        129,248
Footwear                                   31,109        31,070         52,639
Equipment and other                        10,305         9,376         19,841
                                        ---------     ---------      ---------
                                          111,526       104,540        201,728
Total wholesale equivalent
Licensed apparel                           83,865        56,639         99,942
Branded apparel                            63,736        59,533        120,229
                                        ---------     ---------      ---------
Total apparel                             147,601       116,172        220,171
Footwear                                   35,325        36,566         65,620
Equipment and other                        12,174        11,872         24,366
                                        ---------     ---------      ---------
                                          195,100       164,610        310,157
                                        ---------     ---------      ---------

TURNOVER
Segmental analysis
Geographical analysis
                                      6 months to   6 months to   12 months to
                                           4 July       29 June    31 December
                                             2004          2003           2003
                                      (unaudited)   (unaudited)      (audited)
                                             £000          £000           £000
                                        ---------     ---------      ---------
Turnover - Buy/sell operations
United Kingdom                             81,605        59,192        105,670
Rest of Europe                                688           417          1,033
Asia Pacific                                   57            44              -
North and South America                     1,224           417          1,726
                                        ---------     ---------      ---------
                                           83,574        60,070        108,429
                                        ---------     ---------      ---------

Turnover - Royalty income
United Kingdom                              1,693         1,789          3,526
Rest of Europe                              5,903         4,780         10,337
Asia Pacific                                1,874         1,799          3,628
North and South America                     1,070           545          1,472
                                        ---------     ---------      ---------
                                           10,540         8,913         18,963
                                        ---------     ---------      ---------
Group turnover
United Kingdom                             83,298        60,981        109,196
Rest of Europe                              6,591         5,197         11,370
Asia Pacific                                1,931         1,843          3,628
North and South America                     2,294           962          3,198
                                        ---------     ---------      ---------
                                           94,114        68,983        127,392
                                        ---------     ---------      ---------
Wholesale equivalent of royalty
income
United Kingdom                             11,121        11,370         22,897
Rest of Europe                             60,693        58,104        117,579
Asia Pacific                               23,870        24,730         48,311
North and South America                    15,842        10,336         12,941
                                        ---------     ---------      ---------
                                          111,526       104,540        201,728
                                        ---------     ---------      ---------
Total wholesale equivalent
United Kingdom                             92,726        70,562        128,567
Rest of Europe                             61,381        58,521        118,612
Asia Pacific                               23,927        24,774         48,311
North and South America                    17,066        10,753         14,667
                                        ---------     ---------      ---------
                                          195,100       164,610        310,157
                                        ---------     ---------      ---------


3.       PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

                                      6 months to   6 months to   12 months to
                                           4 July       29 June    31 December
                                             2004          2003           2003
                                      (unaudited)   (unaudited)      (audited)
                                             £000          £000           £000
                                        ---------     ---------      ---------
Profit before tax is stated after
charging:
Sports marketing costs                     24,183        15,119         26,911
Design & development costs                  1,746         1,151          2,739


4.       EXCEPTIONAL ITEMS

                                      6 months to   6 months to   12 months to
                                           4 July       29 June    31 December
                                             2004          2003           2003
                                      (unaudited)   (unaudited)      (audited)
                                             £000          £000           £000
                                        ---------     ---------      ---------
Exceptional items included in
administration expenses are:
Office of Fair Trading fine ("OFT")             -             -          6,641
Expenses associated with Initial
Public Offering ("IPO")                     2,042             -              -
Refinancing costs                              92             -              -
                                        ---------     ---------      ---------
                                            2,134             -          6,641
                                        ---------     ---------      ---------


5.       NOTES TO THE STATEMENT OF CASH FLOW

5a Reconciliation of operating profit to net cash flow from operating activities

                                   6 months to     6 months to   12 months to
                                        4 July         29 June    31 December
                                          2004            2003           2003
                                   (unaudited)     (unaudited)      (audited)
                                          £000            £000           £000
                                     ---------       ---------      ---------
Operating profit                        12,102           8,936          8,945
Loss on disposal of fixed assets             -               3              2
Depreciation                               499             471            892
Amortisation of intangible fixed
assets                                   2,310           2,310          4,621
(Increase)/decrease in stock            (2,257)             55          2,214
Increase in debtors                    (16,228)         (9,803)        (4,809)
Increase in creditors                   16,491           1,931          9,798
                                     ---------       ---------      ---------
Net cash inflow from operating
activities                              12,917           3,903         21,663
                                     ---------       ---------      ---------


5b Analysis of cash flows for headings netted in the statement of cash flows

                                      6 months to   6 months to   12 months to
                                           4 July       29 June    31 December
                                             2004          2003           2003
                                      (unaudited)   (unaudited)      (audited)
                                             £000          £000           £000
                                        ---------     ---------      ---------
Returns on investment and servicing
of finance
Interest received                              79           342            343
Interest and finance costs paid            (1,540)         (856)        (3,270)
Interest element of finance lease
and hire purchase rentals                     (22)          (29)           (53)
Preference dividend paid                  (30,141)            -              -
                                        ---------     ---------      ---------
                                          (31,624)         (543)        (2,980)
Taxation
Corporation tax (paid)/received              (455)        1,430            589

Capital expenditure and financial
investment
Payment to acquire tangible fixed assets     (646)         (600)        (1,219)
Receipts from sales of tangible fixed assets    3            17             19
Receipt under tax warranty of acquisition 
agreement                                       -             -            308
                                        ---------     ---------      ---------
                                             (643)         (583)          (892)

Purchase of minority shareholding
in subsidiary                                 (29)            -              -

Financing
Issue of new shares                        50,000             -              -
Payment of fees charged to share premium   (4,375)            -              -
Repayment of preference shares            (14,589)            -              -
Repayment of capital element of finance 
leases and hire purchase contracts           (192)         (256)          (433)
Net movement in short term borrowing      (23,603)       (6,633)       (11,150)
Net movement in long term borrowing        15,751             -         (2,083)
                                        ---------     ---------      ---------
                                           22,992        (6,889)       (13,666)


5c Analysis of changes in net debt

                                        At                  Other          At
                                     1 Jan        Cash   non cash      4 July
                                      2004        flow    changes        2004
                                   -------     -------    -------     -------
                                      £000        £000       £000        £000

Cash at bank                         1,512       3,081          -       4,593
Bank overdraft                         (77)         77          -           -
                                   -------     -------    -------     -------

                                     1,435       3,158          -       4,593

Finance leases and hire purchase
contracts                             (629)        192       (102)       (539)
Current element of term loan       (23,998)     23,603       (891)     (1,286)
Long term loans                          -     (15,751)         -     (15,751)
                                   -------     -------    -------     -------

                                   (24,627)      8,044       (993)    (17,576)
                                   -------     -------    -------     -------
                                   (23,192)     11,202       (993)    (12,983)
                                   =======     =======    =======     =======


6.       PRIOR YEAR ADJUSTMENT

As at 31 December 2002                                                    £000

Deferred income in respect of licence revenue                          (13,742)
Deferred taxation                                                        4,123
                                                                      --------
                                                                        (9,619)
                                                                      ========

Following the guidance issued in 2003 under FRS 5 Application note G, the
directors have reviewed their revenue recognition and classification policies.
This review resulted in a prior year adjustment at 31 December 2002 of
£9,619,000 representing income previously reported in the financial statements
of the Group in the years ended 31 December 2000 and 2001 for the granting of a
licence to supply goods to a predetermined value. This income is now being
spread over a period corresponding to the underlying value of goods supplied
under the contract.

7.       EARNINGS PER SHARE

Adjusted Earnings per Share has been calculated on the number of shares as at
the IPO date, which was 144,535,722, in order to give comparable figures.
Earnings has been adjusted to be profit after tax and minority interests before
dividends, adding back amortisation of goodwill and exceptional costs.


8.       DEBTORS

                                               As at           As at         As at
                                              4 July         29 June   31 December
                                                2004            2003          2003
                                         (unaudited)     (unaudited)     (audited)
                                                £000            £000          £000
                                          ----------     -----------    ----------

Trade debtors                                 37,007          28,676        19,864
Other debtors                                    101              50           529
Prepayments and accrued income                 9,725           6,879        10,228
Deferred tax asset                             1,400           3,232         3,128
                                          ----------     -----------    ----------
                                              48,233          38,837        33,749
                                          ----------     -----------    ----------

9.       CREDITORS: Amounts falling due within one year

                                                 As at         As at         As at
                                                4 July       29 June   31 December
                                                  2004          2003          2003
                                           (unaudited)   (unaudited)     (audited)
                                                  £000          £000          £000
                                          ------------     ---------    ----------
Bank borrowings (secured):
Overdraft facility                                   -         6,304            77
Term loan - current element
(note 11)                                        3,036        13,257         6,767

Mezzanine loan                                       -        16,759        17,231
Trade creditors                                 11,025         7,269         9,629
Deferred Income                                  3,060         2,928         3,060
Obligations under finance                          362           347           347
leases
Corporation tax                                  2,750           436           652
Overseas corporation tax                             -             -             2
Other tax and social security                      321           186           193
Other creditors                                  2,138           829         1,044
Accruals                                        34,864        21,054        20,169
Accrual for Office of Fair
Trading fine                                     6,641             -         6,641
  
                                          ------------     ---------    ----------
                                                64,197        69,369        65,812
                                          ------------     ---------    ----------


10. CREDITORS: Amounts falling due after more than one year

                                           As at          As at          As at
                                          4 July        29 June    31 December
                                            2004           2003           2003
                                     (unaudited)    (unaudited)      (audited)
                                            £000           £000           £000
                                        ----------    -----------     ----------

Bank borrowings (secured): term
loan (note 11)                            14,001              -              -
Proposed dividend                              -          3,297          3,297
Deferred Income                            6,265          9,226          7,754
Obligations under finance leases             177            445            282
Other creditors                              349            349            349
                                        ----------    -----------     ----------
                                          20,792         13,317         11,682
                                       ----------    -----------     ----------

                                                                        
                                                                        11.
11.    LOANS
                                             As at         As at         As at
                                            4 July       29 June   31 December
                                              2004          2003          2003
                                       (unaudited)   (unaudited)     (audited)
                                              £000          £000          £000
                                        ----------    ----------     ---------
Term Loan
Amounts falling due:
In one year                                  3,250        13,367         6,767
Between one and two years                    3,500             -             -
Between two and five years                  11,250             -             -
                                        ----------    ----------     ---------
                                            18,000        13,367         6,767
Less: issue costs not yet amortised           (963)         (110)            -
                                        ----------    ----------     ---------
                                            17,037        13,257         6,767
                                        ----------    ----------     ---------

The term loan is analysed in the
accounts as follows:
Amounts falling due within one year          3,250        13,367         6,767
Less: issue costs not yet amortised           (214)         (110)            -
                                        ----------    ----------     ---------
                                             3,036        13,257         6,767
                                        ----------    ----------     ---------

Amounts falling due after more than
one year                                    14,750             -             -
Less: issue costs not yet amortised           (749)            -             -
                                        ----------    ----------     ---------
                                            14,001             -             -
                                        ----------    ----------     ---------

Mezzanine Loan
Amounts falling due:
In one year                                      -        15,000        15,000
Rolled up interest                               -         1,789         2,231
Less: issue costs not yet amortised              -           (30)            -
                                        ----------    ----------     ---------
                                                 -        16,759        17,231

The group renegotiated its bank facilities in April 2004. The new loan structure
comprises a £18m term loan repayable as follows: £1.5m on 31.12.04, £3.5m by
each of 31.12.05 and 31.12.06, £4.5m by 31.12.07 and £5m by 31.12.08. In
addition there is a £47m revolving credit and asset based facility with a
maturity date of 31.12.08.

The facilities are secured by fixed and floating charges over the assets of the
group.



12.    SHARE CAPITAL
                                             As at         As at         As at
                                            4 July       29 June   31 December
                                              2004          2003          2003
                                       (unaudited)   (unaudited)     (audited)
                                              '000          '000          '000
                                          --------      --------      --------
Allotted, called up and fully paid
(number):
Ordinary shares of 1p each                 144,536             -             -
"A" Ordinary shares of 0.01p each                -         1,225         1,225
"B" Ordinary shares of 0.01p each                -        11,025        11,025
Preference shares of £1 each                     -        47,750        47,750
                                          --------      --------      --------
                                           144,536        60,000        60,000
                                          --------      --------      --------

                                              £000          £000          £000
                                          --------      --------      --------
Allotted, called up and fully paid
(value):
Ordinary shares of 1p each                   1,445             -             -
"A" Ordinary shares of 0.01p each                -             -             -
"B" Ordinary shares of 0.01p each                -             1             1
Preference shares of £1 each                     -        47,750        47,750
                                          --------      --------      --------
                                             1,445        47,751        47,751
                                          --------      --------      --------

Immediately before flotation, there was a 499 for-one bonus issue to the "A" and
"B" ordinary shareholders, and subsequently a 1 for 100 consolidation into a
single class of ordinary shares of 1p each.
Upon flotation, 50,000,000 ordinary shares of 1p were issued for £1 each. The
proceeds were used to pay the preference dividends of £30,140,799, to redeem
£14,589,278 of the preference shares, and to pay IPO expenses.


13.    RESERVES

                                                           Share
                                                         Premium      Reserves
                                                         -------       -------
                                                            £000          £000

At 1 January 2004                                         11,874       (19,011)

Exchange differences                                           -           (14)
Bonus issue out of share premium                            (612)            -
Issue of 50m new shares                                   49,500             -
Preference dividends declared                                  -       (26,844)
Conversion of 33m preference shares to ordinaries         32,829             -
IPO fees written off to share premium                     (4,375)            -
Amount set aside to reserves                                   -         6,065
                                                         -------       -------
At 4 July 2004                                            89,216       (39,804)
                                                         =======       =======

14.    RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS

                                                 Equity   Non-Equity     Total
                                                -------     --------   -------
                                                   £000         £000      £000

Shareholders' funds at 1 January 2004           (34,124)      74,738    40,614
Issue of new shares                              50,000            -    50,000
Profit for financial period                       6,065            -     6,065
Preference dividend for the period               (3,153)           -    (3,153)
Declared accrued dividends                            -      (23,691)  (23,691)
Settlement of declared dividends from prior       3,297       (3,297)        -
year
Preference shares repaid                              -      (14,589)  (14,589)
Preference shares converted to ordinaries        33,161      (33,161)        -
IPO expenses charged to share premium            (4,375)           -    (4,375)
Other recognised losses                             (14)           -       (14)
                                                -------     --------   -------
Shareholders' funds at 4 July 2004               50,857            -    50,857
                                                =======     ========   =======





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