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Umbro PLC (UMB)

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Thursday 06 September, 2007

Umbro PLC

Interim Results

Umbro PLC
06 September 2007


                         

Thursday, 6th September 2007

        Umbro plc Interim Results for the half-year ended 1st July 2007


Financial Highlights

Results not directly comparable with last when the World Cup resulted in a
significant volume of sales occurring earlier than in a non tournament year

   • Total Wholesale Equivalent Sales* of £174.8m, down 29.9% versus 2006
   • Double digit growth in Eastern Europe, USA, Latin American and China
   • Margins on buy/sell sales remained steady at 54%
   • Profit before tax and exceptional items was £10.1m versus £17.7m in 2006
   • Dividend increase of 10% to 1.94p per share, in line with progressive
     growth policy
   • Investment progress continues with an additional 15% stake in Umbro's
     China licensee and a 49% stake in Umbro's French licensee being taken
     during the period

* Total Wholesale Equivalent (TWE) sales are the sum of Umbro's buy/sell
  turnover and the wholesale value of its licensees' sales upon which Umbro
  receives royalties.

Strategic & Operational Highlights

Leveraging Umbro's authenticity:

   • Umbro is sponsoring six clubs in this year's Premier League - more than
     any other brand - as well as all match day officials
   • Olympique Lyonnais contract extended to 2013. AC Siena and Cagliari,
     both teams in Italy's Serie A, added to Umbro's portfolio for 2007/8 season.
     Hernan Crespo (Inter Milan and Argentina) recently signed new sponsorship
     deal

Enhancing the brand's image:

   • Umbro continues to introduce new and innovative ranges as part of the
     brand's global product offering
   • Exciting new media-based brand campaign developed for 2008
   • The International expansion of Umbro's retail presence means Umbro now
     has 1,820 shop in shops and stand alone stores world wide - an increase of
     360 from December 2006
   • Improving Umbro's retail experience includes a specific focus on the UK
     with Umbro Football Areas being installed in 180 Sports Direct stores by
     the year end

Maximising global reach:

   • Seven priority markets identified and actively targeted with marketing
     investment and management resources
   • Progress on licensee Joint Ventures, with further discussions ongoing
   • Umbro Asia Sourcing established

Appointment of CFO

The Board is pleased to announce the appointment of Gary Brown as CFO. Gary is
currently Finance Director at Instore plc and has previous commercial and retail
experience from Matalan and Sainsburys.

Commenting on the results, Steve Makin, Chief Executive of Umbro said:

"The first half of 2007 has been in line with our expectations. We have seen
continued strong growth from our business in Eastern Europe, USA, Latin American
and China. As anticipated, UK and Western European comparatives have been
affected by last year's World Cup.

Looking forward, management believe branded sales growth and performance of
international markets will be in line with expectations.

Sell-through of England replica jerseys during the critical summer trading
period has been disappointing. However, the current order book and contractual
agreements lead management to believe full year licensed apparel sales will be
in line with expectations. Looking further ahead, we believe replica jersey
sales during 2008 will be below targeted levels and this will impact earnings in
2008"


Contacts:

Umbro                                                0161 492 2115

Steve Makin, Chief Executive Officer
Paul Masters, Director of Group Finance & Investor Relations


Brunswick Group LLP                                  020 7404 5959

Simon Sporborg / Dominic McMullan



Financial highlights



                                       6 months to  % change over    6 months to
                                            1 July    6 months to         2 July
                                            2007      2 July 2006         2006
                                     (unaudited)                   (unaudited)
                                            £000                          £000
-----------------------------            --------       --------       --------
-----------------------------            --------       --------       --------
Total wholesale equivalent of
sales                                    174,788          (29.9%)      249,322
-----------------------------            --------       --------       --------

Turnover                                  55,770          (48.7%)      108,712

Profit before tax and exceptionals        10,108          (42.8%)       17,673

Profit before tax                          9,801          (44.5%)       17,673

Basic earnings per share                     5.0p         (41.1%)          8.5p
Adjusted earnings per share                  5.2p         (38.8%)          8.5p

Interim dividend declared                   1.94p          10.2%          1.76p



Total wholesale equivalent sales (TWE) is the sum of the Group's buy/sell
turnover and the equivalent wholesale sales value of the royalty income received
from its licensees. TWE provides a clear measure of overall sales regardless of
whether the sales are derived from buy/sell operations of the Group or by its
licensees.


Business Review


Overview

Profit before tax for the six months to 1 July was £9.8m on Total Wholesale
Equivalent Sales of £174.8m. The results are not directly comparable with those
of the first half of last year, when the World Cup resulted in a significant
volume of sales occurring earlier than in a non-tournament year.

Total Wholesale Equivalent sales (TWE) reduced by 29.9% on the first half of
2006. The primary driver of this reduction was a decrease of 58.4% in licensed
(football club) apparel sales following the World Cup. TWE sales of branded
products (sales other than licensed apparel i.e. branded apparel, footwear and
equipment), increased by 1.8% over H1 2006 (excluding the World Cup ball
promotion sales) and by 6.9% at constant exchange rates. On a geographical
basis, double digit growth was achieved in Eastern Europe, USA, Latin America
and China.

Further investment in the licensee network occurred, with an increase in the
equity stake in the Chinese business to 40% and the acquisition of 49% of the
French licensee. These investments secure a share of the profits in two of the
Group's largest markets with strong growth prospects.

The interim dividend declared has been maintained in line with the progressive
growth policy at 10% above that in 2006 and will be paid at a rate of 1.94p per
share on 23 November 2007 to shareholders on the register on 2 November 2007.


Operational review

TWE sales of licensed apparel in the first half were 58.4% below those in H1
2006 due to last year's World Cup pulling forward sales of national team kits
into the first half.

TWE sales of branded products, excluding the World Cup ball promotion sales,
increased by 1.8% over H1 2006. At constant exchange rates, the underlying
growth in branded sales over H1 2006 is greater at 6.9%. Growth in branded
apparel was restricted to 0.4% because a new buy/sell agreement with Sports
Direct in the UK did not commence until May 2007 subsequent to the previous
license agreement. Footwear growth on H1 2006 was 9.3% and indicates good
progress is being made in the ranges and their take-up by customers. Equipment
sales excluding the World Cup ball promotion were disappointing reducing by 9.7%
compared to 2006, however, this reduction was due to the performance of non core
products sub-licensed to third parties.

TWE sales growth by geographical region was likewise affected by the World Cup.
In the UK TWE was down 55.4% on H1 2006, as discussed above. TWE in the rest of
Europe was down 3.7% on H1 2006 (excluding promotional footballs). The reduction
was attributable to Western European countries affected by the World Cup, which
offset the growth of 30% in Eastern European countries. In Asia Pacific, TWE was
down 8.9% on H1 2006 due to the temporary cessation of the Korean license. China
is trading in line with expectations, with first half growth of 21% expected to
accelerate in the second half. The Americas was up 14.9% on H1 2006 with strong
growth coming from Latin America. In the USA TWE increased by 155% over H1 2006,
the soccer speciality business having increased by over 50% and the distribution
agreement with Dick's Sporting Goods Inc, one of the largest sporting goods
retailers in the USA, progressing well.

Margins on the buy/sell sales have been steady at 54% in both 2007 and 2006.
Royalty income was £12.4m in H1 2007, down 10.7% on 2006. The reduction over
last year is driven by the UK where World Cup related 3 Lions sales are lower
this year and a new buy/sell agreement with Sports Direct replaced the previous
royalty-based license in May. Selling and distribution expenses were £3.3m lower
than in 2006 as a result of less World Cup marketing expenditure. Administration
costs were £0.5m higher than H1 2006, driven largely by £0.3m of exceptional
legal expenses associated with the on-going dispute with the Benelux and German
licensee. Costs remain tightly controlled.

Other operating income was £1.1m higher than in 2006 as improvements in sourcing
of products have enabled higher commission income to be earned from licensees.
Finance costs were also reduced by £0.8m due to the lower borrowings and
improved interest margins.

Profits from the Group's investments in the Chinese and French licensees were
£0.6m, up £0.2m on 2006. The Group holds from March 2007 a 40% investment in the
Chinese licensee and from May 2007 a 49% interest in its French licensee. Both
businesses are strong and profitable and offer significant potential for future
growth.

In June 2007, the Group's Chief Executive Officer, Peter McGuigan, announced his
intention to resign at the end of July after eight years service. Steve Makin,
who joined the Group as Chief Financial Officer, was appointed CEO in June. On 6
September it was announced that Gary Brown will take up the position of Chief
Financial Officer. The Board is confident that Steve and the strong management
team will deliver on the growth strategy and maximise shareholder value.


Strategy and development of the brand

The Group's principal objectives are:

- To be at least the number 3 football brand in each market in which the Group
  operates

- To grow the Branded business by at least 10% p.a.

- To generate 80% of Group TWE sales from international markets


The Group's strategy is encapsulated within three strategic growth pillars:

1) Leverage Authenticity

International icons - The brand's authenticity is underpinned by the sponsorship
of over 140 teams world-wide. Teams such as England and Olympique Lyonnais -
recently extended through to 2013 - have global appeal. Two teams from Italy's
Serie A league have been added to the portfolio from the 2007 season onwards.
These are complemented by a portfolio of iconic players including John Terry (
Chelsea and England captain), Michael Owen (Newcastle United and England) and
Deco (Barcelona and Portugal). Umbro's most exciting new player signing this
year is that of Hernan Crespo (Inter-Milan and Argentina).

English Premier League focus - The 2007/8 season will see Umbro represented by
six clubs in the English Premier League. Along with the sponsorship of the match
officials at all games, the brand will have its greatest exposure ever in what
is the world's most watched domestic league.

Number one in grass roots - It is Umbro's intention to be the number one brand
in grass roots football across the 11-a-side and the small sided game. Umbro
sponsors 12 of the largest global 11-a-side amateur tournaments and the brand's
commitment to the ever-expanding small sided game is demonstrated by the
inauguration of the FA Umbro Fives tournament in partnership with the FA. The
tournament involved over 12,000 players in local heats, leading to over 200
regional finals and ultimately the finals at Wembley in July. Umbro is committed
to, and expects to benefit from, five-a-side football and Futsal as more and
more people participate, finding it a more accessible game to play than
11-a-side.

2) Enhance Image

Performance innovation - The Group's performance product is spearheaded by the
new SX range. This highly technical and innovative product range spanning the
apparel, footwear and equipment categories has been well received by retail and
is increasingly being taken up by licensees as part of a global product
offering.

Connecting with consumers - Improvement in communication with Umbro's target
audience continues with innovative and exciting sales and marketing campaigns.
The current development of the 2008 brand campaign is focussed for the first
time on non traditional media. It is important that the Group continues to focus
on its marketing activity to fuel the future growth of the brand.

Retail experience - Umbro's retail presence continues to expand internationally
with 1,820 shop in shop and stand alone stores, an increase of 360 since
December 2006. Much focus has been given to improving retail displays and in the
UK a programme of Umbro Football Area store fit-outs in Sports Direct has
commenced. By the year end, over 200 UK stores should be completed.

3) Maximise Global Reach

Priority Markets - Umbro has identified seven Priority Markets which are
expected to account for approximately 70% of the global football market.
Management resource and product development effort will be centred around these
markets. The first half of 2007 has seen the acquisition of a further 15% in
Umbro's Chinese licensee, Team and Sports Ltd, bringing the total equity stake
to 40%, and the acquisition of 49% of Noel Soccer, Umbro's licensee in France.

Global sourcing - In January, Umbro established a central sourcing operation in
Hong Kong. The Group sees the development of global, centralised sourcing
initiatives pivotal to the growth and enhanced control of the brand. Initial
volumes through Umbro Asia Sourcing have been ahead of expectations and the
operation continues to develop its sourcing capabilities.

Over the medium term the Board believes that the current strategy will continue
to deliver solid growth. Following his appointment as CEO, Steve Makin is
reviewing options to maximise the business' core competencies of product design
and development, global sourcing and international distribution. This review
includes examining possible acquisition opportunities, within the sporting goods
and lifestyle arena, to complement the existing business.


Finance

Net debt was £25.1m at 1 July 2007 compared to net cash of £4.7m at the start of
the year. Payments of £17.9m were made in respect of the investments in
associates, working capital increased by £11.1m and dividends of £5.4m were
paid. The working capital increase is primarily driven by an inventory build-up
prior to higher sales expected in the second half, payment for England inventory
in transit at the 2006 year end in advance of the home kit launch in February
and exchange controls delaying royalty payments from China.

The pension deficit under IAS19 has reduced to £3.4m from £7.2m, largely as a
result of reduced projected liabilities. Additional payments of £0.4m per annum
are being paid into the scheme over 10 years to eliminate the deficit.


Outlook

In respect of the outlook for the year, growth is expected from the
international licensee network, the USA and in the UK from branded product
categories.

Against a difficult retail background, trading in licensed apparel during the
critical summer period has been disappointing. However, given the forward order
book and contractual agreements in place, management believe that licensed
apparel sales will be in line with expectations for the full year. Looking
further ahead, management believe that the excess inventory at retail of England
home jerseys will negatively affect the targeted sales of the new England away
jersey due to be launched in the first quarter of 2008 and this will impact
earnings in 2008.

The Group continues to make progress against the new strategy communicated
earlier this year with principal objectives of being at least the number three
football brand in every market in which the Group operates, to grow branded
business by at least 10% per annum and to generate 80% of Group TWE sales from
international markets. The performance of the licensed business this year
further reinforces the requirement to accelerate the growth of the branded
business.


Nigel Doughty 
Chairman 

Steve Makin
Chief Executive Officer



Income Statement

for the six months to 1 July 2007

                                                           
                                                       6 months to    6 months to     12 months to
                                                       1 July 2007    2 July 2006 31 December 2006
                                                       (unaudited)   (unaudited)
                           Non-exceptional Exceptional      Total
                                                Items
                                             ( note 5)
                   Note                                    £'000          £'000           £'000
----------------   -----          --------    --------     --------       --------        --------
Total wholesale
equivalent           2          174,788           -      174,788        249,322         409,366
----------------   -----         --------    --------     --------       --------        --------

Turnover             2           55,770           -       55,770        108,712         149,527
Cost of sales                   (35,056)          -      (35,056)       (75,242)        (95,924)
----------------   -----         --------    --------     --------       --------        --------
Gross profit                     20,714           -       20,714         33,470          53,603

Selling and
distribution costs               (9,238)          -       (9,238)       (12,520)        (20,774)
Administration costs             (5,197)       (307)      (5,504)        (5,018)        (10,662)

Other operating
income                            3,692           -        3,692          2,628           5,259
----------------   -----         --------    --------     --------       --------        --------
Operating profit                  9,971        (307)       9,664         18,560          27,426

Finance costs                      (561)          -         (561)        (1,350)         (1,762)
Finance income                       56           -           56             12             101
Share of post
tax profits of
associates                          642           -          642            451             849
----------------   -----         --------    --------     --------       --------        --------
Profit before tax    3           10,108        (307)       9,801         17,673          26,614

Taxation             4           (2,588)         92       (2,496)        (5,302)         (6,846)
----------------   -----         --------    --------     --------       --------        --------
Profit for the
period                            7,520        (215)       7,305         12,371          19,768
----------------   -----         --------    --------     --------       --------        --------

Attributable to:
Equity holders
of the company                    7,507        (215)       7,292         12,345          19,743
Minority interests                   13           -           13             26              25
----------------   -----         --------    --------     --------       --------        --------
                                  7,520        (215)       7,305         12,371          19,768
 ----------------  -----         --------    --------     --------       --------        --------

Basic earnings
per share            7                                       5.0p           8.5p           13.7p
Diluted earnings
per share                                                    4.9p           8.4p           13.3p
Dividends paid       6                                      5,409          4,625           7,169
Dividends paid
per share            6                                      3.74p           3.2p           4.96p
Dividends
declared per share                                          1.94p          1.76p           3.74p
                                 

The results above are in respect of continuing activities.


Statement of Recognised Income and Expense

for the six months to 1 July 2007

                               6 months to           6 months    12 months to 31
                                   1 July             2 July       December 2006
                                     2007             2006
                              (unaudited)        (unaudited)
                                   £'000              £'000               £'000
 ---------------------------    ---------          ---------           ---------
Exchange difference on
retranslation of net assets in
subsidiary undertakings               2                  3                  11
Cash flow hedges:
  - net fair value gain / (loss)    723             (3,630)             (5,292)
Actuarial gain in respect of
pension scheme                    3,595                  -                 471
Movement in deferred tax on
pension liability                (1,206)                 -                (142)
Amortisation of share
incentive schemes credited
to reserves                          77                450                 876
Deferred tax on market value
difference of share incentive
schemes                            (279)                 -                 353
---------------------------     ---------          ---------           ---------
Net income / (loss) recognised
directly in equity                2,912             (3,177)             (3,723)
Profit for the period             7,305             12,371              19,768
---------------------------     ---------          ---------           ---------
Total gains recognised since
last financial statements        10,217              9,194              16,045
---------------------------     ---------          ---------           ---------

---------------------------     ---------          ---------           ---------
Attributable to:
Minority interests                   13                 26                  25
Equity shareholders              10,204              9,168              16,020
---------------------------      ---------         ---------           ---------


Balance Sheet

as at 1 July 2007

                                Note            As at         As at       As at
                                               1 July        2 July          31 
                                                2007           2006    December
                                          (unaudited)    (unaudited)      2006
                                               £000           £000        £000
----------------------------   -------       --------       --------   ---------
Non-current assets
Property, plant and equipment                 3,353          2,570       2,517
Goodwill                                     78,242         73,147      73,147
Intangible assets                            14,113          5,137       4,732
Investment in associates
accounted for using equity                    5,751            720       1,118
method
Deferred tax asset                            1,606          3,143       3,192
----------------------------   -------       --------       --------   ---------
                                            103,065         84,717      84,706
Current assets
Inventories                                  14,577          8,091      11,931
Trade and other receivables        8         31,258         65,064      28,587
Cash and cash equivalents                       726         21,795       4,732
----------------------------   -------       --------       --------   ---------
                                             46,561         94,950      45,250
Current liabilities
Trade and other payables           9         25,874         64,603      31,443
Financial liabilities             10         28,125         17,158       3,051
Current tax liabilities                       2,379          5,474       4,357
----------------------------   -------       --------       --------   ---------
                                             56,378         87,235      38,851

Net current (liabilities) /                  (9,817)         7,715       6,399
assets

Non-current liabilities
Financial liabilities             10             14          4,918          27
Other non-current liabilities     11          3,047          2,049       1,910
Retirement benefit liability                  3,406          7,808       7,202
----------------------------   -------       --------       --------   ---------
                                              6,467         14,775       9,139
 ----------------------------  -------       --------       --------   ---------
Net assets                                   86,781         77,657      81,966
============================   =======       ========       ========   =========

Shareholders' equity
Equity share capital                          1,456          1,445       1,445
Share premium account                        89,242         89,220      89,225
Other reserves                               (3,935)       (13,037)     (8,730)
----------------------------   -------       --------       --------   ---------
                                             86,763         77,628      81,940
Minority interests in equity                     18             29          26
----------------------------   -------       --------       --------   ---------
Total equity                                 86,781         77,657      81,966
============================   =======       ========       ========   =========


Statement of Cash Flows

for the six months to 1 July 2007



                                Note       6 months to    6 months to 12 months to 31
                                              1 July         2 July    December 2006
                                                2007           2006
                                         (unaudited)    (unaudited)
                                                £000           £000            £000
 ----------------------------  --------       --------       --------        --------
Cash flows from operating
activities
Cash (outflow)/ inflow from
operations                         13           (421)        28,226          39,809
Interest and finance costs
paid                                            (557)        (1,241)         (1,561)
Interest received                                 56             12             101
Tax paid                                      (4,373)        (4,377)         (6,955)
----------------------------   --------       --------       --------        --------
Net cash from operating
activities                                    (5,295)        22,620          31,394

Cash flows from investing
activities
Acquisition ofinterest in
subsidiary                                       (25)          (458)           (459)
Payments to acquire
interests in associate
undertakings                                 (17,912)             -          (1,609)
Purchase of property,
plant and equipment                           (1,243)          (353)           (701)
Purchase of intangible
assets                                            (9)           (24)            (45)
Proceeds from sale of
property, plant and
equipment                                         14             51              59
----------------------------   --------       --------       --------        --------
Net cash used in investing
activities                                   (19,175)          (784)         (2,755)

Cash flows from financing
activities
Issue of ordinary shares                          28              4               9
Repayments of borrowings                           -         (1,256)         (9,323)
Capital element of finance lease
rental payments                                  (22)           (56)           (160)
Ordinary dividends paid                       (5,409)        (4,625)         (7,169)
----------------------------   --------       --------       --------        --------
Net cash used in finance
activities                                    (5,403)        (5,933)        (16,643)
Effects of exchange rate
change                                             6             11              28
----------------------------   --------       --------       --------        --------
Net (decrease)/increase in cash
and cash equivalents                          (29,867)        15,914          12,024

Cash and cash equivalents at
beginning of the period                         4,732         (7,292)         (7,292)
----------------------------   --------       --------       --------        --------
Cash and cash equivalents at
end of the period                             (25,135)         8,622           4,732
============================   ========       ========       ========        ========


Notes to the accounts


1.  Statement of significant accounting policies


Basis of preparation


This financial information comprises the consolidated interim balance sheets as
of 1 July 2007 and 2 July 2006 and related consolidated interim statements of
income and cash flows for the six months then ended of Umbro plc (hereinafter
referred to as 'financial information'). The interim consolidated financial
statements of the Umbro plc group for the half year ended 1 July 2007 are
unaudited and do not comprise statutory accounts within the meaning of Section
240 of the Companies Act 1985.

These interim financial statements have been prepared in accordance with
International Financial Reporting Standards and IFRIC interpretations as adopted
by the EU and with those parts of the Companies Act 1985 applicable to companies
reporting under IFRS. The Group has chosen not to adopt IAS 34, 'Interim
financial statements', in preparing its interim statements. The financial
statements have been prepared under the historical cost convention as modified
by the revaluation of financial assets and liabilities held for trading. In
preparing this financial information management has used the principal
accounting policies as set out in the company/group's annual financial
statements for the year ended 31 December 2006.

The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Although these estimates are based on management's best knowledge of the
amount, event or actions, actual results ultimately may differ from those
estimates.

The comparative figures for the financial year ended 31 December 2006 are not
the Group's statutory accounts for the financial year, but have been extracted
from the statutory accounts, which were unqualified by the auditors and did not
contain statements under section 237(2) or (3) of the Companies Act 1985 and
have been delivered to the Registrar of Companies.


2.  Segment information


Primary reporting format- business      6 months to    6 months to  12 months to
segments                                   1 July         2 July     31 December
                                             2007           2006           2006
                                       (unaudited)    (unaudited)
                                             £000           £000          £000
-------------------------------           ---------      ---------     ---------
Turnover - Buy/sell operations
Licensed apparel                           30,046         85,246        93,761
Branded apparel                             6,031          4,464        14,672
-------------------------------           ---------      ---------     ---------
Total apparel                              36,077         89,710       108,433
Footwear                                    5,623          2,431         7,002
Equipment and other                         1,697          2,719         4,282
-------------------------------           ---------      ---------     ---------
                                           43,397         94,860       119,717
-------------------------------           ---------      ---------     ---------

Turnover - Licensee royalty income
Licensed apparel                            2,419          4,295         7,404
Branded apparel                             5,653          5,160        12,746
-------------------------------           ---------      ---------     ---------
Total apparel                               8,072          9,455        20,150
Footwear                                    3,056          2,791         6,776
Equipment and other                         1,245          1,606         2,884
-------------------------------           ---------      ---------     ---------
                                           12,373         13,852        29,810
-------------------------------           ---------      ---------     ---------
Group turnover
Licensed apparel                           32,465         89,541       101,165
Branded apparel                            11,684          9,624        27,418
-------------------------------           ---------      ---------     ---------
Total apparel                              44,149         99,165       128,583
Footwear                                    8,679          5,222        13,778
Equipment and other                         2,942          4,325         7,166
-------------------------------           ---------      ---------     ---------
Group turnover                             55,770        108,712       149,527
-------------------------------           ---------      ---------     ---------
Wholesale equivalent of licensee
royalty income
Licensed apparel                           15,623         24,519        43,751
Branded apparel                            65,098         66,399       131,781
-------------------------------           ---------      ---------     ---------
Total apparel                              80,721         90,918       175,532
Footwear                                   37,049         36,594        74,846
Equipment and other                        13,621         26,950        39,271
-------------------------------           ---------      ---------     ---------
                                          131,391        154,462       289,649
-------------------------------           ---------      ---------     ---------
Total wholesale equivalent
Licensed apparel                           45,669        109,765       137,512
Branded apparel                            71,129         70,863       146,453
-------------------------------           ---------      ---------     ---------
Total apparel                             116,798        180,628       283,965
Footwear                                   42,672         39,025        81,848
Equipment and other                        15,318         29,669        43,553
-------------------------------           ---------      ---------     ---------
Total wholesale equivalent                174,788        249,322       409,366
-------------------------------           ---------      ---------     ---------

Segment information
Primary reporting format- business segments

The segment results for the 6 months ended 1 July 2007


                                       Buy/sell  Licensee  Unallocated   Total
                                         £000      £000         £000      £000
----------------------------          ---------  --------     --------  --------
Turnover                               43,395    12,375            -    55,770
Operating profit                        2,161     8,138         (635)    9,664
Share of post tax profits of
associate                                   -         -          642       642
Finance costs                               -         -         (505)     (505)
----------------------------          ---------  --------     --------  --------
Profit before tax                       2,161     8,138         (498)    9,801
Tax                                         -         -       (2,496)   (2,496)
----------------------------          ---------  --------     --------  --------
Profit/(loss) for the period            2,161     8,138       (2,994)    7,305
----------------------------          ---------  --------     --------  --------

The segment results for the 6 months ended 2 July 2006


                                      Buy/sell  Licensee  Unallocated    Total
                                        £000      £000         £000       £000
----------------------------         ---------  --------     --------   --------
Turnover                              94,860    13,852            -    108,712
Operating profit                      11,423     7,302         (165)    18,560
Share of post tax profits of
associate                                  -         -          451        451
Finance costs                              -         -       (1,338)    (1,338)
----------------------------         ---------  --------     --------   --------
Profit before tax                     11,423     7,302       (1,052)    17,673
Tax                                        -         -       (5,302)    (5,302)
----------------------------         ---------  --------     --------   --------
Profit/(loss) for the period          11,423     7,302       (6,354)    12,371
----------------------------         ---------  --------     --------   --------

The segment results for the 12 months ended 31 December 2006


                                      Buy/sell  Licensee  Unallocated    Total
                                        £000      £000         £000       £000
------------------------------         -------  --------     --------   --------
Turnover                             119,717    29,810            -    149,527
Operating profit                       9,862    18,025         (461)    27,426
Finance costs                              -         -       (1,661)    (1,661)
Share of post tax profits of
associate                                  -         -          849        849
------------------------------         -------  --------     --------   --------
Profit before tax                      9,862    18,025       (1,273)    26,614
Tax                                        -         -       (6,846)    (6,846)
------------------------------         -------  --------     --------   --------
Profit/(loss) for the period           9,862    18,025       (8,119)    19,768
------------------------------         -------  --------     --------   --------


Segment information 

Primary reporting format- business segments

Other non-cash segment items included in the income statement for
the 6 months ended 1 July 2007


                                       Buy/sell  Licensee  Unallocated   Total
                                         £000      £000         £000      £000
----------------------------          ---------  --------     --------  --------
Depreciation                              392         -            -       392
Amortisation of intangible assets         240         -          328       568
Impairment / (recovery) of trade
receivables                               (43)       60            -        17
Value of employee services - share
options                                    58        19            -        77


Other non-cash segment items included in the income statement for
the 6 months ended 2 July 2006


                                       Buy/sell  Licensee  Unallocated   Total
                                         £000      £000         £000      £000
----------------------------          ---------  --------     --------  --------
Depreciation                              421         -            -       421
Amortisation of intangible assets         259         -          165       424
Impairment of trade receivables           108        72            -       180
Value of employee services -share
options                                   338       113            -       451


Other non-cash segment items included in the income statement for
year ended 31 December 2006


                                       Buy/sell  Licensee  Unallocated   Total
                                        £'000     £'000        £'000     £'000
----------------------------          ---------  --------     --------  --------
Depreciation                              847         -            -       847
Amortisation of intangible assets         520         -          330       850
Impairment of trade receivables            38       390            -       428
Value of employee services - share
options                                   657       219            -       876


Segment assets and liabilities and capital expenditure for the 6
months ended 1 July 2007


                                      Buy/sell  Licensee  Unallocated    Total
                                        £000      £000         £000       £000
----------------------------         ---------  --------     --------   --------
Assets                                41,137     8,565       99,924    149,626
Liabilities                          (29,942)   (1,212)     (31,691)   (62,845)
Capital expenditure                    1,252         -            -      1,252
Acquisition of associated
undertakings                               -         -       18,955     18,955


Segment assets and liabilities and capital expenditure for the 6
months ended 2 July 2006


                                     Buy/sell  Licensee  Unallocated     Total
                                       £000      £000         £000        £000
----------------------------        ---------  --------     --------    --------
Assets                               68,362     8,348      102,957     179,667
Liabilities                         (64,670)   (3,233)     (34,107)   (102,010)
Capital expenditure                     377         -            -         377


Segment assets and liabilities and capital expenditure for year ended
31 December 2006


                                      Buy/sell  Licensee  Unallocated    Total
                                       £'000     £'000        £'000      £'000
----------------------------        ---------  --------     --------   --------
Assets                                36,603     7,177       86,176    129,956
Liabilities                          (35,040)   (1,323)     (11,627)   (47,990)
Capital expenditure                      788         -            -        788


The business at the date of these accounts comprises two segments: buy/sell and
licensee. Items that cannot be reasonably allocated to these segments are
classified as "unallocated".

The buy/sell business is that in which the Group sells product to customers as
principal. The licensee business is that in which the Group licenses third
parties to sell product containing the Group's trademarks in return for a
royalty.

Unallocated represents exceptional items, holding company costs, interest, share
of associates' net profit and tax in the income statement, and exceptional
items, investment in associates, loans and pension deficit in the balance sheet.


Segmental analysis

Geographical analysis
                                        6 months to    6 months to  12 months to
                                             1 July         2 July   31 December
                                               2007           2007          2006
                                         (unaudited)    (unaudited)
                                               £000           £000          £000
-------------------------------           ---------      ---------     ---------
Turnover - Buy/sell operations
United Kingdom                             40,495         91,554       113,855
Rest of Europe                              1,213          1,448         2,541
Asia Pacific                                   69              -             -
North and South America                     1,620          1,858         3,321
-------------------------------           ---------      ---------     ---------
                                           43,397         94,860       119,717
-------------------------------           ---------      ---------     ---------

Turnover - Licensee royalty income
United Kingdom                              1,191          2,975         7,635
Rest of Europe                              6,206          6,736        13,371
Asia Pacific                                2,973          2,565         5,787
North and South America                     2,002          1,576         3,017
-------------------------------           ---------      ---------     ---------
                                           12,372         13,852        29,810
-------------------------------           ---------      ---------     ---------
Group turnover
United Kingdom                             41,686         94,529       121,490
Rest of Europe                              7,419          8,184        15,912
Asia Pacific                                3,042          2,565         5,787
North and South America                     3,622          3,434         6,338
-------------------------------           ---------      ---------     ---------
Group turnover                             55,769        108,712       149,527
-------------------------------           ---------      ---------     ---------
Wholesale equivalent of licensee
royalty income
United Kingdom                              8,015         17,164        34,132
Rest of Europe                             66,765         81,838       148,320
Asia Pacific                               28,934         31,820        61,601
North and South America                    27,677         23,640        45,596
-------------------------------           ---------      ---------     ---------
                                          131,391        154,462       289,649
-------------------------------           ---------      ---------     ---------
Total wholesale equivalent
United Kingdom                             48,510        108,718       147,987
Rest of Europe                             67,978         83,286       150,861
Asia Pacific                               29,003         31,820        61,601
North and South America                    29,297         25,498        48,917
-------------------------------           ---------      ---------     ---------
Total wholesale equivalent                174,788        249,322       409,366
-------------------------------           ---------      ---------     ---------

Turnover and licensee royalty income is allocated based on where the customer is
located.


                                          As at             As at          As at
                                         1 July            2 July    31 December
                                           2007              2006           2006
                                    (unaudited)       (unaudited)
                                          £000              £000           £000
-------------------------------       ---------         ---------      ---------
Total assets
United Kingdom                        145,360           176,428        126,622
Asia Pacific                              705               512            571
North and South America                 3,561             2,727          2,763
-------------------------------       ---------         ---------      ---------
                                      149,626           179,667        129,956
-------------------------------       ---------         ---------      ---------

Total assets are allocated based on where the assets are located.


                                     6 months to     6 months to   12 months to
                                          1 July          2 July    31 December
                                            2007            2006           2006
                                     (unaudited)     (unaudited)
                                           £000            £000           £000
-------------------------------        ---------       ---------      ---------
Capital expenditure
United Kingdom                           1,045             362            688
Asia Pacific                               108               2             56
North and South America                     99              13             44
-------------------------------        ---------       ---------      ---------
                                         1,252             377            788
-------------------------------        ---------       ---------      ---------

Capital expenditure is allocated based on where the assets are located.


3. Profit before tax

                                        6 months to    6 months to  12 months to
                                             1 July         2 July   31 December
                                               2007          2006           2006
                                        (unaudited)    (unaudited)
                                              £000           £000          £000
-------------------------------           ---------      ---------     ---------
Profit before tax is stated after
charging/(crediting):
Cost of inventories                        19,973         43,291        59,726
Sports marketing costs (included in
cost of sales)                             12,393         29,131        30,664
Design & development costs
(included in cost of sales)                 2,690          2,820         5,534
Staff costs                                 6,602          6,701        13,792
Depreciation of owned property,
plant and equipment                           348            358           671
Depreciation of leased property,
plant and equipment                            44             63           176
Amortisation of intangible assets
(included in administration)                  240            259           520
Amortisation of intangible assets
of associated undertaking (included
in administration)                            328            165           330
Profit on disposal of fixed assets             (5)           (40)          (41)


4. Taxation


                                     6 months to     6 months to   12 months to
                                         1 July          2 July     31 December
                                           2007            2006           2006
                                    (unaudited)     (unaudited)
                                          £000            £000            £000
-------------------------------        ---------       ---------      ---------
The tax charge comprises:
UK tax                                   1,800           4,688          5,537
Foreign tax                                696             614          1,309
-------------------------------        ---------       ---------      ---------
                                         2,496           5,302          6,846
-------------------------------        ---------       ---------      ---------
Share of associates' tax                   328             232            451


5. Exceptional Items

                                        6 months to    6 months to  12 months to
                                            1 July         2 July    31 December
                                              2007           2006           2006
                                        (unaudited)    (unaudited)
                                             £000           £000          £000
-------------------------------          ---------      ---------     ---------

Exceptional items included under
administration costs are:                 ---------      ---------     ---------
-------------------------------
Legal costs associated with
termination of licensee contract              307              -             -
-------------------------------           ---------      ---------     ---------


6. Dividends


                                       6 months to    6 months to  12 months to
                                            1 July         2 July   31 December
                                              2007           2006          2006
                                       (unaudited)    (unaudited)
                                             £000            £000          £000
-----------------------                 ----------      ---------     ---------
Ordinary - Final 2005 paid: 3.2p
per share                                      -          4,625         4,625
Ordinary - Interim 2006 paid 1.76p
per share                                      -              -         2,544
Ordinary - Final 2006 paid: 3.74p
per share                                  5,409              -             -
-----------------------                 ----------      ---------     ---------
                                           5,409          4,625         7,169
-----------------------                 ----------      ---------     ---------


7. Earnings per share

Basic Earnings per Share has been calculated from the profit after tax divided
by the weighted average number of shares in issue in the period. Adjusted
Earnings per Share has been calculated from earnings adjusted to be profit after
tax and minority interests before dividends, adding back exceptional costs and
deducting exceptional income.

Diluted Earnings per Share take account of the potential number of shares that
may be issued under the SAYE and LTIP schemes, and the weighted average number
of such shares is added to the shares in issue.

-------------------------               ------------     ---------    ----------
                                        6 months to   6 months to  12 months to
                                            1 July         2 July   31 December
                                              2007           2006          2006
                                         (unaudited)   (unaudited)
-------------------------              ------------     ---------     ----------
Adjusted earnings per share (before
exceptional items)                            5.2p          8.5p         13.7p
Adjusted diluted earnings per share           5.0p          8.4p         13.3p


8. Current assets - Trade and other receivables

                                         As at              As at          As at
                                        1 July             2 July    31 December
                                          2007               2006           2006
                                   (unaudited)        (unaudited)
                                         £000               £000            £000
-------------------------         ------------          ---------     ----------
Trade receivables                     20,860             56,361         20,159
Other receivables                         38              3,508             39
Prepayments and accrued income        10,360              5,195          8,389
-------------------------         ------------          ---------     ----------
                                      31,258             65,064         28,587
-------------------------         ------------          ---------     ----------


The "other receivables" balance at 2 July 2006 included £3.5m in respect of the
Chelsea compensation (31 December 2006: £nil).


9. Current liabilities - Trade and other payables

                                         As at              As at          As at
                                        1 July             2 July    31 December
                                          2007              2006            2006
                                   (unaudited)        (unaudited)
                                         £000               £000           £000
-------------------------         ------------          ---------     ----------
Trade payables                         9,523             11,630         13,183
Other tax and social security            962                291            294
Other payables                         1,340              5,966          1,850
Deferred income                            -              2,990              -
Accruals                              14,049             43,726         16,116
-------------------------         ------------          ---------     ----------
                                      25,874             64,603         31,443
-------------------------         ------------          ---------     ----------


10. Financial liabilities

                                                As at         As at        As at
                                               1 July        2 July  31 December
                                                 2007          2006         2006
                                          (unaudited)    (unaudited)
                                                 £000           £000        £000
------------------------                   ----------      ---------  ----------
Current borrowings:
Bank borrowings (secured):
Revolving credit facility and overdraft       25,861         13,173           -
Term loan - amounts payable within one
year                                              -          2,868           -
Less: issue costs not yet amortised               -           (218)          -
Obligations under finance leases                 32             84          41
------------------------                   ----------      ---------  ----------
                                             25,893         15,907          41
Financial Instruments (see note 12)           2,232          1,251       3,010
------------------------                   ----------      ---------  ----------
                                             28,125         17,158       3,051
------------------------                   ----------      ---------  ----------

Non-current borrowings:
Bank borrowings (secured):
Term loan - amounts payable in more
than on year                                      -          5,199           -
Less: issue costs not yet amortised               -           (327)          -
Obligations under finance leases                 14             46          27
------------------------                   ----------      ---------  ----------
                                                 14          4,918          27
------------------------                   ----------      ---------  ----------


11. Other non-current liabilities

                                                As at         As at        As at
                                               1 July        2 July  31 December
                                                 2007         2006          2006
                                          (unaudited)   (unaudited)
                                                £000          £000         £000
------------------------                   ----------      ---------  ----------
Deferred consideration on acquisition
of associates                                  3,047          2,049       1,910
------------------------                   ----------      ---------  ----------


12. Financial instruments

                                               As at        As at         As at
                                              1 July       2 July    31 December
                                                2007         2006          2006
                                          (unaudited)  (unaudited)
                                                £000         £000         £000
---------------------------               ----------      ---------  ----------
Forward foreign exchange contracts -
liability (see note 10)                      2,232          1,251       3,010
---------------------------               ----------      ---------  ----------


The Group enters into forward foreign currency contracts. The purpose of such
transactions is to manage cash flow currency risks associated with:


a.              Stock purchases denominated in foreign currency; and

b.              Royalty receipts denominated in foreign currency.


It is, and has been through the period under review, the Group's policy that no
trading in financial instruments shall be undertaken.


13. Cash generated from operations


Reconciliation of net profit to net cash flow from operations

                                        6 months to    6 months to  12 months to
                                             1 July         2 July   31 December
                                               2007          2006           2006
                                        (unaudited)    (unaudited)
                                              £000           £000          £000
--------------------------------          ---------      ---------     ---------
Net profit                                  7,305         12,371        19,768

Adjustments for:
Tax                                         2,496          5,302         6,846
Depreciation                                  392            421           847
Amortisation of intangible assets             568            424           850
Interest income                               (56)           (12)         (101)
Interest expense                              561          1,350         1,762
Write off unamortized bank fees
upon term loan repayment                        -              -           436
Amortisation of share incentive
schemes                                        77            451           876
Transfer from hedge reserve                   (55)           (33)           64
Profit on disposal of fixed assets             (5)           (40)          (41)
Share of associates' profit                  (642)          (451)         (849)

Changes in working capital (excluding the
effects of acquisition and exchange
differences on consolidation)
Increase in inventory                      (2,646)          (832)       (4,672)
(Increase)/decrease in receivables         (2,671)        (8,221)       28,256
(Decrease)/increase in payables            (5,745)        17,496       (14,233)
--------------------------------          ---------      ---------     ---------
Net cash (outflow)/inflow from
operations                                   (421)        28,226        39,809
--------------------------------          ---------      ---------     ---------


14. Consolidated statement of changes in equity



                           Share capital  Share premium Hedge reserve  Retained  Minority  Total equity
                                                         and exchange   profits  interest
                                                          differences
                                  £000           £000          £000      £000      £000          £000
 ------------------------         ------        -------      --------   -------    ------      --------
At 1 January 2007                1,445         89,225        (3,045)   (5,685)       26        81,966
Issue of new shares                 11             17             -         -         -            28
Net fair value gains                 -              -           723         -         -           723
Profit for financial period          -              -             -     7,292        13         7,305
Actuarial gains on pension fund      -              -             -     3,595         -         3,595
Deferred tax on pension
deficit movement                     -              -             -    (1,206)        -        (1,206)
Share options
- value of employee services         -              -             -        77         -            77
Deferred tax on excess of
market value over costs of
share incentives                     -              -             -      (279)        -          (279)
Other recognised gains / (losses)    -              -             2         -        (2)            -
Ordinary dividends                   -              -             -    (5,409)        -        (5,409)
Acquisition of minority interest     -              -             -         -       (19)          (19)
------------------------          ------        -------      --------   -------    ------      --------
At 1 July 2007                   1,456         89,242        (2,320)   (1,615)       18        86,781
------------------------          ------        -------      --------   -------    ------      --------


15. Contingent liabilities

The Group served a termination notice on its licensee, Teamsport, in July 2007.
The Board believes it has strong grounds for the termination action, but any
such action is open to legal challenge and the eventual outcome, including costs
or counter-claims, is not yet determinable. Legal costs in H1 2007 amount to
£307,000 and have been separated as exceptional items in the profit and loss
account.





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