inspire & excite the world of football
Post on 02-Jun-2015
409 Views
Preview:
TRANSCRIPT
1
Umbro plcInspire & Excite the World of Football
Preliminary results for the year ended 31 December 2006
2
Highlights
• Delivering against growth objectives…– PBT (before exceptional items) up 16%
– Adjusted EPS up 26%
• Strong International development…– China investment
– Dick’s Sporting Goods relationship (USA)
• Brand transitioning…– Performance technology
– Lifestyle
• Operational developments…– Priority markets– Sourcing
• Current trading in line with management expectations…– Large increase in dividend a sign of Board confidence
3
Financial Review
Steve MakinCFO
4
A year of record profits…2006 2005 2004 % c hange
£'m £'m £'m v 2005
TW E 409.4 351.9 356.3 16.3%
P rofit before tax and exceptionals 26.6 23.0 21.8 15.7%
P rofit before tax 26.6 31.4 (7.1) (15.2% )
pence pence pence
B as ic earnings per share 13.7 15.2 13.6 (9.9% )
A djus ted earnings per share 13.7 10.9 11.9 25.7%
P roposed final dividend 3.74 3.20 2.90 16.9%
5
Profit and loss account2006 2005 2004 M o ve m e nt
non-except'l non-except'l v 2005
£'m £'m £'m %
TW E 409.4 351.9 356.3 16.3%
B uy /sell turnover 119.7 99.1 118.0 20.8%
Gross P rofit on buy /sell 60.3 53.9 57.0 11.8%
% 50.4% 54.4% 48.3%
Royalty incom e turnover 29.8 23.9 22.4 24.9%
Operating E xpenses (67.9) (59.1) (59.9) 15.0%
Other operating incom e 5.3 5.8 4.7 (9.6% )
Ope ra ting profit 27.4 24.5 24.2 11.7%
Net finance cos ts (1.7) (1.8) (2.4) (8.2% )
S hare of assoc iate's profit 0.8 0.3 0.0P rofit Be fore Ta x 26.6 23.0 21.8 15.7%
Taxation (6.8) (7.2) (4.7) (4.6% )effec tive rate 25.7% 31.2% 21.5%
P rofit Afte r Ta x 19.8 15.8 17.1 24.9%
6
Broad based growth: across product categories…
• Licensed apparel boosted by tournament year;• Branded product growth >10% cer;• Footwear remains an opportunity.
2006 2005 2004 Growth v 2005£'m £'m £'m Cer %
Licensed Apparel 137.5 103.8 115.5 32.8%
Branded Products 271.9 248.1 240.7 10.2%
409.4 351.9 356.3 16.8%
Branded Products:Apparel 146.5 134.2 121.2 9.8%
Footwear 81.8 85.6 74.3 (3.7%)
Equipment 43.6 28.3 45.2 54.2%
7
Broad based growth: across geographies…
• Solid European progress;• Rapid growth in Asia;• Americas – strong growth in Latin America impacted by USA performance;• 64% of revenues generated outside the UK.
2006 2005 2004 Growth v 2005£'m £'m £'m Cer %
UK 148.0 121.3 138.8 22.0%
CER 150.9 127.7 143.4 18.6%
Asia 61.6 55.2 49.2 15.3%
Americas 48.9 47.7 24.9 0.9%
International Total 261.4 230.6 217.4 14.1%
Global Total 409.4 351.9 356.3 16.8%
8
TWE growth 2006 v 2004…
• Branded products account for 60% of TWE growth;
• International markets account for 80% of TWE growth.
0.0
10.0
20.0
30.0
40.0
50.0
60.0
B y P roduc t B y Region
£'m
Branded
Licensed
UK
International
9
Buy/sell gross margin reduction…2006 2005 2004
£'m £'m £'m
Buy/Sell turnover 119.7 99.1 118.0
Gross margin * 60.3 53.9 57.0
Buy/Sell margin % 50.4% 54.4% 48.3%
* After adding back Sports Marketing, D&D and exceptional costs
• Expected dilution due to product mix;• Consolidation / pricing – additional dilution;• Sourcing – good progress.
10
Other P&L items…
• Strong royalty growth;– International growth– ‘Badge’ royalty mix– New business
• Operating expenses;– Targeted investment
• Brand Marketing• Sports Marketing• Design and Development
– Good underlying cost control
• Share of Associates Profits;– Full year of 25% equity on PAT of $6.5m (2005 $5.2m)
• Tax rebate;– £1.5m - prior year overprovision– Underlying rate unchanged at 30%
11
Balance sheet strengthening…31 Dec 31 Dec 31 Dec
2006 2005 2004£'m £'m £'m
Fixed Assets 2.5 2.7 2.3Goodwill 73.1 72.9 70.4Intangiable assets & Investments 5.9 5.8 1.4Stock 11.9 7.3 6.7Debtors 31.8 62.3 27.5Creditors excluding net debt (48.0) (61.4) (44.6)Net Cash/(Debt) 4.7 (16.1) (7.1)Net Assets 82.0 73.3 56.6
Share Capital and Share Premium 90.7 90.7 90.7Reserves (8.7) (17.6) (34.2)Minority Interest 0.0 0.2 0.1Total Equity 82.0 73.3 56.6
• Debtor reduction versus 2005 – Chelsea cash paid mid year;• Creditor reduction versus 2005 – rolling 2yr payment to The FA;• Earlier 2007 England home kit launch – stock build.
12
Cash flow boosted by exceptional receipt…
• Strong Operating Cash Flow;• Working Capital requirement boosted by 2007 launch timing and sales phasing;• Investments in 2007 plus Working Capital increases 2007 cash requirement.
2006 2005 2004£'m £'m £'m
Operating P rofit 27.4 24.5 24.2Deprec iation & A m ortisation 2.4 1.8 1.3
29.9 26.4 25.5
W ork ing Capital (15.1) (9.1) (2.0)
Capital E xpenditure (0.8) (1.5) (1.2)Ope ra ting Ca sh Flow 13.9 15.8 22.3
E xceptionals received/(paid) 24.5 (7.8) (2.1)Interes t (1.5) (1.6) (2.1)Tax (7.0) (6.2) (1.7)Dividends paid (7.2) (6.5) (30.1)Inves tm ent in China (2.1) (2.8) 0.0
Ne t Ca sh (Outflow )/Inflow 20.8 (9.0) (13.7)
13
CFO Summary
2006: Strong progress…• Broad based growth in line with objectives;• Increasing International exposure;• Margin pressure from consolidation and pricing; • Targeted investment – strong underlying cost control;• Final dividend increase reflects Balance Sheet strength and
management confidence.
Current trading…• In line with management forecasts;• Non-tournament year – Euro qualification sensitivity;• Business transitioning - buy / sell share, sourcing;• Cash requirement – Working Capital, China, NFC;• Opportunities for further investment.
14
Peter McGuiganCEO
15
Defining the field of play…
• Football is THE Global game;– High participation rate– TV coverage – World Cup, English Premier League.
• Popularity is growing;– The Football Performance market is $5bn in a Sporting
Goods market of $100bn– Growth of 5 – 6% p.a.
• Umbro is dedicated to football.– Globally, 77% of people interested in football recognise the
Umbro brand.
16
Group Strategy
LEVERAGE AUTHENTICITY
ENHANCEIMAGE
MAXIMISEREACH
• Global presence
• More clubs
• Tournaments
• Performance technology
• Lifestyle
• In Store
• Priority markets
• Control
• Share of profits
17
Leverage authenticity - Sponsorships at every level…
• Global presence– Selective investment in trophy names.– International reach (OL, Santos, Independiente…)– English Premier League focus– Investment in grass roots.
• More Clubs;– West Ham United, Wigan Athletic, West Bromwich
Albion, Sunderland.
• Tournaments.– Umbro sponsor 12 of the top 20 global 11 a side
amateur tournaments.– FA Umbro 5’s– China 5v5
Santos
Independiente
18
Enhance image – Performance technology…
• Evolution X growth continues – 21% versus 2005, all markets;
• Trilogy fabric development.– Cotton / Polyester mix, invented by Umbro.
– Used in all 2007 kits plus SX.
• Share of football boot market declined;
• Technical collaborations / strong design.
Apparel
Footwear
19
Enhance image - Lifestyle…
• First season for u by Umbro;• New distribution includes:
– JD– Sweden– FL Europe
• 60 ‘top-end’ doors, limited to key markets and retailers;
• Kim Jones continues to develop – focus on Footwear
20
Enhance image - Share of space in store…
• Brands competing for share of voice;
• International Licensee focus;
– Shop in Shop / StandAlone Stores
• China – 1050• Rest of World - 600
• Investment in UK;– Football areas– Leverage England– JJB and Sportsworld
football areas
21
Maximise reach – distribution strategy…
• Top 10 markets are 80% of the global market;
• Umbro are represented in all of the top 10;– UK / USA – subsidiaries– China – JV– Remainder – 7 Licensees
• Umbro’s Top 10 Licensees account for >70% of global TWE;
• Selective investment and consolidation;– Simplify group structure;
– Brand control;
– Likely to lead to selective investment
Share of Global L icensee TW E
R emaining 31 L icensees Top 10 L icensees
22
Maximise reach - Greater China…
• 48.2% cer growth in 2006 over 2005 - $54m;
• Distribution ahead of plan with in excess of 1000 Umbro SAS/SIS outlets, target of a further 300 by year end;
• Product focus – In-market design;
• Increased equity stake from 25% to 40%.
23
Maximise reach - USA…
• 2006 Turnover reduced by 63% cer versus 2005;• Over reliance on Footlocker in 2005;• 40% growth in non Footlocker business in 2006,
driven through ‘Soccer Accounts’;
• Significant new Dick’s Sporting Goods agreement;• Leveraging ownership of United Soccer Leagues;• Building brand authenticity;• Broadening distribution.
24
Maximise reach - UK…
• Impressive headline growth of 22%;• World Cup brand exposure;• Solid growth in branded business;• Margins under pressure from consolidation;• Footwear sales disappointing;
• New Sportsworld agreement – shift to buy/sell;• In store football area investment;• Footwear back to growth;• Margin initiatives under way.
25
UK- investment in in-store merchandising…
26
Maximise reach - Umbro Asia Sourcing (UAS)…
• Global brand control;
• Social compliance;
• Support for future growth;
• Margin opportunity – share of global profits;
• Fully operational January 1st 2007;
• Licensees required to source all Umbro apparel through UAS by 2010 – target value $150m.
27
Maximise reach – Share of profits…
• Umbro Asia Sourcing;
• Joint Ventures;
• Royalty rate improvement.
28
LEVERAGE AUTHENTICITY
ENHANCEIMAGE
MAXIMISEREACH
• Global presence
• More clubs
• Tournaments
• Performance technology
• Lifestyle
• In Store
• Priority markets
• Control
• Share of profits
Inspire and excite the world of football…
top related