Gx Cloudcomp Regulatory News (CLO)

16 Nov 2005 07:00

Charlton Athletic PLC16 November 2005 16 NOVEMBER 2005 CHARLTON ATHLETIC PLC (the "Company") ANNUAL REPORT 2005 CHAIRMAN'S STATEMENT On behalf of the board of Charlton Athletic plc, I present the Annual Report forthe year ended 30thJune 2005. The 2004/5 season was the football club's centenary season and we celebrated itwith the team competing at the top of English football. On the football field itwas very much a season of highs and lows. At no time during the season was theclub's Premiership status under any threat but for the second consecutive yearthe form of the team dipped in the last third of the season at a time when, onceagain, qualification for European competition seemed a realistic possibility.The team eventually finished in 11th position with 46 points. Despite the disappointing end to the season, we can again be pleased with theteam's overall performance and the achievements of Alan Curbishley and hisstaff. Since gaining promotion to the FA Premier League in 2000, the club hasnot finished lower than 14th position and is now widely recognised as anestablished Premiership club. FINANCIAL SUMMARY In this financial year the Company recorded a turnover of £40.7m that producedan operating profit of £0.2m after interest but excluding income from playersales. Profit from the sale of players contributed £1.1m giving a net profitfor the period of £1.3m. This turnover was lower than that achieved in theprevious financial year due mainly to lower broadcast revenues received. Duringthis financial period the Company invested £10.6m in the cost of acquiringplayers and a further £1m on capital expenditure on developments at The Valleyand other infrastructure improvements. Financial highlights 2005 2004 £m £mTurnover 40.7 42.6Operating profit before amortisation of playerregistrations 4.7 4.6Operating profit/(loss) after amortisation andinterest 0.2 (0.5)Profit from player sales 1.1 11.6Net Profit 1.3 11.1 This financial year was the first in the new three year contract with BSkyB forthe sale of the broadcast rights in the United Kingdom. The value of theserights has fallen in real terms compensated, to some extent, by an increase inthe revenues received from the sale of the overseas rights. This reduction whencombined with a lower finishing position in the League than achieved last yearcontributed to a fall in overall broadcast income of 10% to £23.5m. The clubfeatured in eleven live matches compared with five in season 2003/4, however thenew method of allocating revenues to these matches resulted in these revenuesbeing broadly the same. Broadcast income now accounts for 58% of the Company'stotal turnover, which demonstrates how important this source of revenue is tothe Company's ongoing financial performance. Match day revenues increased by 12% to £11m as a result of an increase in seasonticket prices and higher attendance figures supplemented by income from three FACup home fixtures. I am pleased to report that our other match day commercialactivities continued to improve and develop, in particular the performance ofour stadium bars and food outlets and sales of our match programme. The overallincrease is particularly pleasing as our ticketing revenues remain one of thelowest in the FA Premier League. The average attendance for home matches at TheValley was 26,378 which represents 97% of the available capacity and a smallimprovement on the previous season. The club launched a centenary shirt designed by our kit sponsors, Joma, and thisshirt was worn at our home match against Newcastle United in October 2004. Weachieved record sales for this shirt during the year and it has become verypopular with our supporters. The home and away shirts for the season werelaunched in the 2003/4 financial year and so these additional sales were welcomeand helped to maintain our retail revenues at similar levels to the previousyear. Our conference and banqueting non-match day business consolidated its revenuesthis year through the hire of our facilities in the north and west stands at TheValley for conferences, weddings and parties. Our reputation for high levels ofservice and customer care is generating significant levels of repeat businessand we once again hosted a public enquiry, this time related to the proposedThames Gateway Bridge linking Beckton to Thamesmead. I am confident we will seegrowth in this area of our business in the coming year. Our reported overhead costs excluding player amortisation were £38.7m and didnot materially change this year, however when the effect of one-off costs in2003/4 is adjusted for there was an overall increase in overheads of 8%. The Company made a very significant investment in the playing squad in order todevelop a first team squad capable of competing successfully in the Premiership.We secured the services of Stephan Andersen, Talal El Karkouri, Bryan Hughes,Francis Jeffers, Danny Murphy and Dennis Rommedahl. The total reported in thefinancial statements of £10.6m also includes the costs of acquiring Darren Bentfrom Ipswich in June 2005 just before the end of this financial year. Theprofits recorded for the sale of players was earned mainly from the sale ofClaus Jensen to Fulham and also income related to appearances under earlierplayer transfer agreements. Our club sponsors, all:sports, completed their third year of sponsorship in thisfinancial period, but unfortunately having entered this the final year of theagreement they went into administration in September 2005. We continue to workwith the administrators who have now announced that the majority of the businesswill be sold to JD Sports, a competitor of all:sports. There are a number ofoptions open to us which we continue to review. I must thank Joma who, in addition to producing the popular centenary shirt,have now produced two excellent new playing strips for this season, as well asincorporating further design and fabric improvements to the training kitfollowing discussion with the team management and the players. Greenwich Councilis not only a sponsor of the club but also an active partner, co-operating withus in a number of other areas, including our community activities. I must stresshow important this relationship is to the continuing development of the footballclub both in terms of our capital developments at The Valley and the trainingground and through our community, health and education initiatives. I will also thank Axis Europe plc, Gallions Housing Association, GreenwichCommunity College, Greenwich Leisure Limited, Ladbrokes, London Leisure College,Paddy Power and T Mobile, all of whom provide their support financially andthrough a range of community based projects. We continue to receive support frommany other companies and individuals too numerous to mention individuallythrough sponsorship, advertising and patronage of the various hospitality suiteson a match day and they too are deserving of our thanks. Our sponsors and all ofour commercial partners remain important contributors to this football club. FOOTBALL REPORT I will again highlight the creditable finishing position of the team in 11thplace, a real achievement in comparison to other clubs with superior resourceswho finished below us in the Premiership last season. The team recorded a totalof 12 wins, 10 draws and 16 defeats. This achievement demonstrated once againthe tactical and motivational abilities of Alan Curbishley and we continue toenjoy a working relationship that is the envy of many other Premiershipchairmen. I would also like to acknowledge the valuable contribution and supportgiven to Alan by Mervyn Day, Keith Peacock and Glynn Snodin, his coaching staff,and in addition Wayne Diesel and his medical team. We should not forget thebackroom staff at the training ground and at The Valley who provide support forall aspects of our football activity. As I have reported, during the summer of 2004 there were significant additionsto the first team squad with the signings of Stephan Andersen, Talal ElKarkouri, Bryan Hughes, Francis Jeffers, Danny Murphy and Dennis Rommedahl andit undoubtedly took some time for these new players to settle into the footballclub. In every football season there are matches that remain in the memory. For me,our home and away victories over Tottenham Hotspur stand out, particularly thedramatic 3-2 win at White Hart Lane. Equally outstanding were two victoriesagainst Everton, a team that eventually qualified for the Champions League andwas enjoying their most successful season for many years. There is no doubt inmy mind that our most dramatic match was left to the final day of the season.Any of the four teams facing relegation to the Championship had the opportunityto avoid this fate on this last day. Our late equaliser in a 2-2 draw againstlocal rivals Crystal Palace in front of a capacity crowd at The Valley meantthat they were relegated with Southampton and Norwich City to the Championshipand West Bromwich Albion survived. Our reserve team won the FA Premier Reserve League South for the fourth time ineight seasons and for the second consecutive year. The team then participated inthe first play-off final implemented that season between the southern andnorthern league champions and a crowd of 7,102 saw a strong Manchester Unitedteam win 4-2 at The Valley to collect the inaugural trophy. Under the leadership of our former player and joint manager, Steve Gritt, ouryouth academy is continuing to develop talented players for the first teamsquad. Lloyd Sam emerged as a regular member of the first team squad, joiningKevin Lisbie, Jonathan Fortune, Osei Sankofa and Barry Fuller, who are allproducts of our youth system. Lloyd Sam made his first team debut in that finalhome match against Crystal Palace and Alan could not have chosen a more dramafilled occasion to introduce a young player into the Premiership. Our Under 18team finished runners up in the FA Premier Academy League for the secondconsecutive season and four players from that team have subsequently signedprofessional contracts - Nathan Ashton, Rob Elliott, Darren Randolph and JamesWalker. A number of academy scholars broke into the reserve team and establishedthemselves as key figures but perhaps the highlight of the Under 18 season wastheir success in winning the prestigious Nerja Cup in southern Spain. This tookplace in December 2004 and to indicate the quality of the tournament there wereteams from Barcelona and Real Madrid participating. The women's section had another memorable season under the astute management ofKeith Boanas. The first team followed up their Community Shield success inAugust 2004 by capturing perhaps the most prestigious piece of silverware in thewomen's game - the FA Cup. Eniola Aluko's decisive strike against Everton atUpton Park saw the club claim the trophy for the first time in the club'shistory. The team were also beaten finalists in the Premier League Cup andrunners up in the Women's Premier League. During the season, our annual disappointment in the two principal cupcompetitions continued as we exited the Carling Cup in the third round, losing2-1 at home to Crystal Palace. We did reach the fifth round of the FA Cup afterwins against Rochdale and Yeovil respectively but then in the major upset ofthat round, Championship side Leicester City secured a 2-1 win at The Valley.When you consider the priorities of the clubs at the top of the Premiership, thedomestic cup competitions continue to offer us the most realistic opportunityfor success. At the end of the season Paul Konchesky and Simon Royce left the club and ourformer player Graham Stuart, who contributed much to the club during his timewith us, retired from professional football. I would like to thank all threeplayers for their contribution to our club's success during their playingcareers here. Ten players joined the club in summer 2005 and I welcome DarrenAmbrose, Darren Bent, Jay Bothroyd, Goncalo Brandao, Thomas Mhyre, AlexeiSmertin, Gonzalo Sorondo, Jonathon Spector and Kelly Youga and hope that theywill all contribute to future success at our club. In addition we welcome backChris Powell who spent five years with the club before moving for a brief spellto West Ham United. The club benefits from a strong relationship with its supporters and to continueto have more than 26,000 supporters regularly attending The Valley for our homematches is an endorsement of what we are trying to achieve at the club. Oursupporters remain a key element of our current success and remain among the bestbehaved in English football. The Valley Express initiative, launched during theseason, provides a dedicated coach service to home matches from across the southeast of England, opening up opportunities for both existing and new supportersto attend matches easily at The Valley and for some matches in this currentseason up to 2,000 people used the service. There is significant plannedinvestment in new housing and infrastructure improvements across the south eastof England and this will be a key element of our marketing strategy for thecontinuing growth of our supporter base in the next few years. INDUSTRY PROSPECTS I can only see the Premiership continuing to be dominated by those clubs withthe largest financial resources and it may well be that with the apparentresources at the disposal of Chelsea, they are likely to be the dominant forcein Premiership football for many years to come unless a similar level ofinvestment is made in other Premiership clubs. It is not in the interest of anyclub in the top flight that the competition becomes predictable because thatwill in time have an effect both on the level of supporter and corporateinterest in the League. The lack of widespread competition for the Premiership title and the spread ofmatches across three days with a variety of kick off times is something we mustdebate now as this could have an adverse effect on future attendance figures.The consequences may have a significant effect on future commercial developmentat the majority of the Premier League clubs. At our club we have seen areduction of some 1,500 season ticket holders during the summer of 2005 andsimilar situations exist at other clubs. No business can afford to ignore itscustomers and that is something that football must heed if it is to avoid asharp wake up call. We have already seen a number of matches televised live thisseason where there were large gaps around the stadia and if this patterncontinues there is a genuine risk that there will be an effect on thebroadcasting revenues that all clubs receive. The European Commission continues to involve itself in the affairs of the FAPremier League in a very public and high profile manner. The League tenders thecollective broadcasting rights of the twenty Premiership clubs in a fair andtransparent manner. The process has the consent and support of all clubs and nobroadcaster is precluded from tendering. It cannot be right that the Commissionshould seek to challenge our right to enter into genuine commercial agreementsfor the sale of our broadcast rights because they do not like the outcome. Wemust use every means at our disposal to protect the game in this country fromsuch outside interference. I have often written of the need for a redistribution of finances withinfootball on a more equal basis and my view on this remains unchanged. I amencouraged by the fact the FA Premier League has established an AttendanceWorking Group, on which Peter Varney has been invited to sit, which willconsider this and other issues which impact upon attendances. CONCLUSION Our Company is heavily reliant on broadcasting revenues to maintain itscommercial performance, as is the case for the majority of Premiership clubs.Particularly relevant in this is the finishing position of the team and thenumber of live televised matches we are featured in during the season. Itremains vital therefore that we continue to focus on being successful in thePremiership and to develop and increase our match day revenues. Our footballclub has one of the smaller stadium capacities when compared to our competitors. Your board took the decision to increase season ticket prices for the 2005/6season and at the same time maintain a discounted pricing structure for existingseason ticket holders. It was disappointing to see a 1,500 reduction in seasonticket holders for the current season but we have to date significantlyincreased the number of tickets sold on a match to match basis which isencouraging. The regeneration of our local area and the south-east region provide us with aunique opportunity to expand our support and commercial operations. There are500,000 homes being built in the Thames Gateway region, plans are now in placefor the development of the Greenwich Peninsular and the Millennium Dome, and theconstruction of a new bridge connecting the east and south of London has beenapproved by central government and is now the subject of public consultation. The plans for the expansion of The Valley stadium continue. We have now receiveda planning consent from Greenwich Council to develop the east stand and southeast quadrant and to raise the capacity from 27,000 to 31,000. We have also madeit clear that it is our ultimate intention to develop the south stand and southwest quadrant to provide us with a completed modern stadium complex with acapacity of 40,000. The success of our Valley Express initiative and thecontinued expansion of our community schemes throughout Kent and the surroundingareas have given your board optimism that the expansion of the stadium will bejustified. However, we shall not proceed with the east stand development untilit is financially prudent to do so. In July 2005 the Company raised £5.5m though the issue of 9.2m ordinary sharesto both existing shareholders and a new investor. Commitments to purchase thesewere received before the year end at 60 pence per share. One of the mostsignificant investors, Derek Chappell, subsequently accepted an invitation tobecome a member of both the Company and the football subsidiary boards. Derek isa long standing supporter of Charlton Athletic football club and a season ticketholder since the late 1960s. His business acumen and experience will make him avaluable addition to the board. I will also place on record my sincereappreciation for the ongoing financial support provided by Gideon Franklin, SirMaurice Hatter, John Humphreys, David Sumners, Steven Ward and Bob Whitehand. Football businesses are not easy to manage and we are fortunate that we havestaff at all levels whose commitment and hard work is a tribute to them andwhich is essential as we continue to develop the club. I would like to thank ourchief executive, Peter Varney, and the deputy chief executive, Nigel Capelin,both directors of the football club, for their contribution, as well as all thestaff that operate at The Valley, the training-ground complex, the offices inBexleyheath and elsewhere. Many other people give their time and effort tosupport the operations of the club and the organisations associated with it andto them we also extend our gratitude. In this we must not forget thoseindividuals involved in running the many supporters branches, so important tothe football club, and in particular Sue Townsend, our Supporters'Representative, who continues to represent the views of our supporters at boardlevel. In our centenary year I think it is wholly appropriate that I pay tribute to thevalued support, advice and wise counsel of all the directors who serve on theCompany board, the football subsidiary board and the executive committee andwithout whom our club would not be enjoying the status that it currently does. Iparticularly thank Martin Simons, David Sumners and Robert Whitehand who serveon the executive committee and who give their expertise and time to themanagement of our business. In addition to those I have already mentioned Ithank Roger Alwen, Greg Bone, Richard Collins, Michael Grade, David Hughes,Michael Stevens, Derek Ufton and David White. Your board remains determined to maintain the excellent image we have earned inthe wider football and business community and whilst we want to bring continuedsuccess to the club we will not compromise on our basic principles and corevalues. We want to be a club that stands for those things that are good in ournational sport, and to serve and be a credit to those communities from which wedraw our support. Richard MurrayChairman CHARLTON ATHLETIC PLCCONSOLIDATED PROFIT AND LOSS ACCOUNT 12 months to 30th June 2005 Operations Excluding player Player 12 months to amortisation amortisation 30th June and trading and trading Total 2004 £'000 £'000 £'000 £'000 NotesTURNOVER 2 40,714 0 40,714 42,606 Operating expenses 3 (38,771) (4,135) (42,906) (42,605)Exceptional items 5 2,763 0 2,763 (40) Operating profit/(loss) 4,706 (4,135) 571 (39) Profit on disposal of players 0 1,137 1,137 11,659 Profit/(loss) before interestand taxation 4,706 (2,998) 1,708 11,620 Net interest payable (348) (502) Profit on ordinary activities 1,360 11,118before taxation Taxation charge 0 0 Profit for the year 1,360 11,118 Earnings per share 9 2.5 pence 20.2 pence All amounts derive from continuing operations. CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES 2005 2004 £'000 £'000 Profit for year 1,360 11,118Unrealised gains on revaluation of freehold 2,571 0propertyTotal recognised gains for the year 3,931 11,118 CHARLTON ATHLETIC PLCCONSOLIDATED BALANCE SHEET At 30th June At 30th June 2005 2004 £'000 £'000 NotesFixed AssetsTangible fixed assets 6 37,545 35,309Intangible assets 10,863 4,685 48,408 39,994Current AssetsStocks 98 152Debtors 5,588 7,580Cash at bank and in hand 13,253 10,488 18,939 18,220Current liabilitiesCreditors falling due within one 7 (23,324) (15,655)year and deferred income Total assets less current liabilities 44,023 42,559 Creditors falling due after one year (6,777) (8,774)Grants and deferred income (5,470) (5,940) 31,776 27,845 £'000 £'000Capital and reservesCalled up share capital 27,485 27,485Share premium account 2,019 2,019Revaluation reserve 9,093 6,547Profit and loss account (6,821) (8,206) 31,776 27,845 CHARLTON ATHLETIC PLCCONSOLIDATED CASH FLOW STATEMENT 12 months to 12 months to 30th June 2005 30th June 2004 £'000 £'000 £'000 £'000Cash flow from operationsOperating profit/(loss) 571 (39)Depreciation 1,306 1,260Amortisation of player registration costs 4,135 4,677(Profit) on sale of fixed assets (0) (8)Release of deferred income (468) (470)Decrease/(increase) in stocks 54 (62)Decrease/(increase) in debtors 1,992 (5,255)Increase/(decrease) in creditors 2,268 2,586 Net cash inflow from operations 9,858 2,689 Returns on investment and servicingof financeInterest received 296 173Interest paid (641) (733)Interest element of finance lease payments (3) (3)Net cash outflow (348) (563) Capital expenditure and financial investmentsPayments to acquire players' (10,632) (913)registrationsProceeds on sale of players' 1,456 11,718registrationsPayments to acquire tangible fixed (951) (755)assetsRefund of long term season tickets (2) 0Proceeds on sale of tangible fixed assets 0 8Net cash outflow (10,129) 10,058 Net cash (outflow)/inflow before (619) 12,184financing Financing activitiesCash received for future share issue 5,525 0Loan repayments (2,116) (2,024)Capital element of finance lease payments (25) (19)Net cash inflow/(outflow) from financing 3,384 (2,043)Increase in cash 2,765 10,141 NOTES 1. The financial information relating to the Company does not constitute statutory accounts within the meaning of Section 240 (5) of the Companies Act 1985 (as amended). Statutory accounts in respect of the year ended 30 June 2005, which received an unqualified audit opinion, will be filed with the Registrar of Companies in England and Wales. 2. Analysis of turnover: Year ended Year ended 30 June 2005 30 June 2004 £'000 £'000 Television and broadcast 23,481 26,204 Ticketing and match day activities 11,008 9,844 Marketing and sponsorship 3,944 4,267 Retail and other 1,227 1,183 Conference and banqueting 1,054 1,108 40,714 42,606 3. Analysis of operating expenses: £'000 £'000 Staff costs 28,888 29,913 Depreciation 1,306 1,260 Amortisation 4,135 3,637 Hire of plant and machinery 166 173 Other operating lease rentals 198 244 Grants released (109) (109) Auditors remuneration :audit 31 31 :non audit 24 17 Other operating charges 8,267 7,439 42,906 42,605 4. Analysis of staff costs: £'000 £'000 Wages and salaries 25,739 26,793 Social security costs 2,981 2,959 Other pension costs 168 161 28,888 29,913 5. Exceptional item: The exceptional item relates to gross amounts receivable from insurance claims for retired injured players. 6. Tangible fixed assets: Freehold properties were valued as at 30th June 2005 by Latham Yeomans, Chartered Surveyors, on the basis of existing use using the depreciated cost method of valuation in the case of The Valley stadium and existing use value in the case of other properties. This resulted in a revaluation surplus of £2,571,000. The original cost of freehold land and buildings amounts to £31,354,942. Freehold land of £6,138,186 has not been depreciated. 7. Other creditors: Other creditors includes £5,525,000 received in respect of irrevocable undertakings for the issue of ordinary shares completed on 8th July 2005 8. The board does not recommend the payment of a dividend. 9. Earnings per ordinary share have been calculated by dividing the profit for the year by the weighted number of ordinary shares in issue for the year. Year ended Year ended 30 June 2005 30 June 2004 £'000 £'000 Profit for the year 1,360 11,118 Weighted number of shares in issue 54,969,293 54,969,293 Earnings per share 2.5 pence 20.2 pence 10. The Annual Report and Accounts for the year ended 30 June 2005 will be sent to shareholders during December 2005. From that time further copies will be available from the company's Nominated Advisor and Broker, Teather & Greenwood Limited, Beaufort House, 15 St Botolph Street, London, EC3A 7QR. This information is provided by RNS The company news service from the London Stock Exchange