TTNM.L Regulatory News (TTNM)

28 Mar 2007 14:30

Tottenham Hotspur PLC28 March 2007 Date: 28th March 2007 TOTTENHAM HOTSPUR PLC Interim Results for the Six Months Ended 31 December 2006 Financial Highlights Six months Six months ended ended 31 December 2006 31 December 2005 £m £mTurnover 47.8 36.3Amortisation of intangible fixed assets (8.6) (6.7)Profit on sale of intangible fixed assets 15.2 8.3Profit before tax 20.0 4.4Retained profit for the financial period 13.8 2.5Earnings per share - basic 14.8p 2.6pEarnings per share - diluted 7.9p 1.9p Daniel Levy, Chairman of Tottenham Hotspur plc, said: "These results reflect a strong performance over the six months from all areasof the business, benefiting particularly from the uplift in our new keysponsorship deals, the significant profit on player trading during the first sixmonths and an increase in turnover across the Club as a result of our progressin Cup and European competition. The Club is continuing to perform strongly inthe second half in the domestic league and European competition." Enquiries: Daniel Levy, ChairmanMatthew Collecott, Finance Director Tel: 020 8365 5322Tottenham Hotspur plc www.tottenhamhotspur.com John Bick Tel: 07802 211374 Chairman's Statement Financial Results I am pleased to report record results for the first six months of the financialyear. Turnover from key operational areas was higher than in the correspondingperiod last year. In fact, turnover for this past six months is higher than theClub's annual turnover prior to the new management team coming into the businesssix years ago. The 32% increase in turnover comes primarily from the uplift inour key sponsorship deals and the progress in Cup and European competition. The Club generated an operating profit of £14.3m before amortisation ofintangible fixed assets. Beyond the operating line there was a profit ondisposal of £15.2m, which after all other football trading brings the profit onordinary activities before interest and taxation to £20.9m (2005: £5.8m). Premier League gate receipts were marginally higher than in the same period lastyear, representing the same number of league games with attendances consistentlyat or near capacity. The key difference for the period was the receipts from Cupcompetitions, which were £4.5m higher than in the corresponding period last yeardue to the five additional home games played in the period. This clarifies theimpact of progressing in all competitions and the potential impact of Europeansuccess, which must be sustained as we move forward. Sponsorship income of £7.0m for the period was £3.8m up against thecorresponding prior period. Our two new key sponsorship relationships startedthis season with MANSION and PUMA - both of which we are proud to take on tourwith us as we continue our journey in Europe. Our Corporate Hospitality also contributed a strong performance, producingincome of £5.9m (2005: £5.3m) boosted by the income from additional Cup games. Media and broadcasting revenues in the period rose by £1.7m, largely due toincreased live Sky television appearances compared to the same period last yearbut also from the sale of broadcasting rights for the Club's home UEFA Cupgames. As noted in the press and in our Annual Statement, this revenue streamwill continue to outperform prior years as the new media deals for domestic andoverseas rights from the 2007/2008 season are substantially higher. The Merchandising division once again performed strongly against the same periodlast year, with turnover up by £1.5m. A reflection of the increased number ofgames played over the period, and improved product offering aligned with our newtechnical sponsor, PUMA. Other income is marginally down as the comparative period includes the Club'stour of South Korea, where we won the Peace Cup. Operating expenses before amortisation were 4% higher at £33.5m, compared to£32.1m in the comparative period. The key increment being player salaries andthe additional cost of transporting the team around Europe. Amortisation of intangible fixed assets continues to increase, seeing a 30%rise, which reflects the continued investment in the squad. This is balanced bythe profit on disposal of players, which was £15.2m, primarily as a result ofthe sale of Michael Carrick to Manchester United in August 2006. During the period the Club drew down £20.0m of securitised funding which isrepayable over a 16 year period. This was set up to fund the Club's majorinvestment in the proposed new Academy and First Team Facility. These monieshave been ring fenced from the Club's operational requirements, together withadditional funds from the Club's own resources while the planning processcontinues. We have taken a prudent approach to the long-term funding of projectsand will continue to segregate further funds as we move forward to deal withboth this and the Stadium project. The overall position is a significant improvement as we continue to push everyarea of the Club to perform at its best. The financial position remains strongand we remain in the elite group of Europe's wealthiest clubs, as defined by theDeloitte Football Money League. The key is to build on European progression andensure we attain greater consistency in The FA Premier League and in alldomestic Cup competitions. On the pitch The season's league performance started slower than in the corresponding periodlast year where we ended the calendar year in fourth position. Again we had newplayers to integrate into the squad and the addition of a significant number ofCup games. Since we last reported we have welcomed Ben Alnwick, England U21goalkeeper, who joins us from Sunderland, Ricardo Rocha who joined us fromBenfica and Adel Taarabt who joins us from Lens. Calum Davenport and MartonFulop left the Club during this period and Edgar Davids and Stuart Lewis werereleased from their contracts. We wish them well and thank them for theirservices to the Club. It is important to reiterate that we continue to look for excellent youngtalent, the investment over the last few years in some of Europe's best youngprospects often goes unnoticed, but the Club is currently investing atunprecedented levels at a time when competition for young players to join theAcademy and development squads is high. We welcome Alex Olsen and Dean Parrettto our Academy. Off the pitch We continue to further develop our main capital expenditure projects, namely theFirst Team and Academy Training Facility and our Stadium options. In respect ofthe former, as expected, and as with many similar applications, this process ofgaining planning permission has now gone to appeal. The Academy is at acommercially sensitive stage and we consequently cannot report in furtherdetail. Maximising the potential of the Stadium also remains high on our agenda, but weare determined that any proposal should not only meet the future objectives ofthe Club, but should do so in a manner which in no way undermines the Club'sfinancial stability and the ability to continue to invest in the team. It has,after all, been the investment in the team which has paid dividends throughoutthe whole of the Club and is reflected in the record performance across allparts of the business. During this period we have been busy working on the re-housing of the Club'sTicket Office. It has always been an issue that it was located by the away fan'sstand and this, coupled with the need for a systems upgrade to meet our desireto improve and integrate systems, provided the correct moment to move the officeto the Paxton Road family stand and merge with the Members department. When thisis fully operational we will be able to offer better, faster and more services. Outlook Logistically, the additional number of games so far this season has created itsown problems for staff and the team, but the infrastructure and organisation atthe Club have proved flexible and robust. We are aware of the pressure the Clubfeels when we are playing every three days or preparing for a European game andI am proud of the way everyone has responded. With further progress in Europe and having made the quarter finals in allcompetitions this year, no one is more eager than this Board to come away withsilverware, but we also recognise the need to secure further Europeancompetition next season and to continue to do so on a consistent basis. Acquiring and developing quality players in the First Team is integral toachieving success and we are committed to building a squad with world class,long-term contracted players. My final words must go to our fans who make White Hart Lane a difficult placefor visiting teams. Having travelled with fans to away games here and in Europe,it fills me with pride to see the strength of support we take with us. Againthank you all for your magnificent support of this great Club. D P Levy28 March 2007 Consolidated Profit and Loss Account For the six months ended 31 December 2006 Six months ended 31 December 2006 Operations excluding Six months football Football ended 31 Year ended trading* trading* December 2005 30 June (Note 2) Total 2006 Note £'000 £'000 £'000 £'000 £'000Turnover:Gate receipts - Premier League 10,443 10,443 10,288 17,428Gate receipts - Cup competitions 4,511 4,511 36 146Sponsorship and corporate 12,854 12,854 8,499 15,730hospitalityMedia and broadcasting 10,905 10,905 9,213 28,687Merchandising 5,199 5,199 3,688 5,182Other 3,858 3,858 4,526 6,968 47,770 47,770 36,250 74,141 Operating expenses (33,459) (8,621) (42,080) (38,737) (83,561) Operating profit/(loss) 14,311 (8,621) 5,690 (2,487) (9,420) Profit on disposal of intangible 2 - 15,180 15,180 8,284 12,299fixed assets Profit before interest and taxation 14,311 6,559 20,870 5,797 2,879 Net interest expense (852) (1,414) (2,261) Profit on ordinary activities 20,018 4,383 618before taxation Tax charge on profit on ordinary 3 (6,254) (1,921) (2,193)activities Profit/(loss) on ordinary 13,764 2,462 (1,575)activities after taxation andretained profit for the period Earnings per share - basic 5 14.8p 2.6p (1.7p)Earnings per share - diluted 5 7.9p 1.9p (1.7p) *Football trading represents the amortisation, impairment, and the profit/(loss)on disposal of intangible fixed assets and other football trading related incomeand expenditure. The results for the above and prior periods all derive from continuingoperations. Consolidated Balance Sheetas at 31 December 2006 31 December 31 December 30 June 2006 2005 2006 £'000 £'000 £'000Fixed assetsIntangible assets 55,781 37,533 30,264Tangible assets 49,935 48,811 49,762 105,716 86,344 80,026Current assetsStocks 629 1,067 775Debtors 19,992 14,850 20,034Cash at bank 26,285 10,127 34,581 46,906 26,044 55,390 Creditors: amounts falling due within one year (64,395) (47,718) (73,114) Net current liabilities (17,489) (21,674) (17,724) Total assets less current liabilities 88,227 64,670 62,302 Creditors: amounts falling due after more than oneyear (41,686) (26,098) (28,026) 46,541 38,572 34,276Provisions for liabilities and chargesDeferred taxation (2,036) (1,902) (2,036)Contingent transfer fees payable (815) (2,415) (2,284) (2,851) (4,317) (4,320) Net assets 43,690 34,255 29,956 Capital and reservesCalled up share capital 4,643 4,672 4,646Share premium account 11,556 11,556 11,556Equity component of Convertible RedeemablePreference Shares 3,838 3,838 3,838Revaluation reserve 2,360 2,408 2,384Capital redemption reserve 553 524 550Profit and Loss Account 20,740 11,257 6,982Shareholders' funds 43,690 34,255 29,956 Consolidated Cash Flow StatementFor the six months ended 31 December 2006 6 months ended 6 months ended Year ended 31 December 31 December 30 June Note 2006 2005 2006 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities 6 (8,178) 6,525 33,650 Returns on investments and servicing of financeInterest received 306 181 498 Interest paid (753) (744) (836)Net cash outflow from returns on investments and (447) (563) (338)servicing of finance Taxation UK corporation tax paid (1,840) - (100) Overseas withholding tax paid - (257) (259) UK corporation tax received - - 132 Capital expenditure and financial investmentPayments to acquire subsidiary undertaking - - (1,145)Payments to acquire intangible fixed assets (35,016) (13,534) (18,761)Receipts from sales of intangible fixed assets 19,005 11,049 15,615Payments to acquire tangible fixed assets (1,470) (650) (1,477) Net cash outflow from capital expenditure and financial (17,481) (3,135) (5,768)investment Cash (outflow)/inflow before use of liquid resources and (27,946) 2,570 27,317financing FinancingRedemption of ordinary shares (31) (2,130) (1,702)Redemption of CRPS - - (690)Bank loan repayments (20) (10) (278)Loan notes issue 7 20,000 - -Loan notes repayment (299) (279) (42) Net cash inflow/(outflow) from financing 19,650 (2,419) (2,712) (Decrease)/increase in cash (8,296) 151 24,605 Notes to the Consolidated Interim StatementsFor the six months ended 31 December 2006 1. Accounting policies The financial information given above does not constitute statutoryaccounts within the meaning of Section 240(5) of the Companies Act 1985. Thefigures for the year ended 30 June 2006 have been extracted from the statutoryaccounts, which have been delivered to the Registrar of Companies. The auditreport on these accounts was unqualified and did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. Basis of preparation The interim financial statements have been prepared on the basis of theaccounting policies set out in the statutory accounts for the year ended 30 June2006. Turnover Turnover represents income receivable from football and related commercialactivities, exclusive of VAT. Gate receipts and other matchday revenue is recognised as the games are played.Sponsorship and similar commercial income is recognised over the duration of therespective contracts. The fixed element of broadcasting revenues is recognisedover the duration of the football season whilst facility fees received for livecoverage or highlights are taken when earned. Merit awards are accounted foronly when known at the end of the football season. Signing-on fees and loyalty payments Signing-on fees are charged evenly, as part of operating expenses, to the profitand loss account over the period of the player's contract. Loyalty fees are accrued, as part of operating expenses, to the profit and lossaccount over the period to which they relate. Intangible fixed assets The costs associated with the acquisition of players and key football managementstaff registrations are capitalised as intangible fixed assets. These costs arefully amortised over their useful economic lives, in equal annual instalmentsover the period of the respective contracts. Players' registrations are writtendown for impairment when the carrying value exceeds the amount recoverablethrough use or sale and the reduction in value is considered permanent. Profits or losses on the disposal of these registrations represent theconsideration receivable, net of any transaction costs, less the unamortisedcost of the original registration. Preference shares Convertible Redeemable Preference Shares ("CRPS") are regarded as compoundinstruments, consisting of a liability component and an equity component. At thedate of issue, the fair value of the liability component is estimated using theprevailing market interest rate for similar non-convertible debt. The differencebetween the proceeds of issue of the CRPS and the fair value assigned to theliability component, representing the embedded option to convert the liabilityinto equity of the Group, is included in equity. Issue costs are apportioned between the liability and equity components of theCRPS based on their relative carrying amounts at the date of issue. The portionrelating to the equity component is charged directly against equity. The interest expense on the liability component is calculated by applying theprevailing market interest rate for similar non-convertible debt to theliability component of the instrument. The difference between this amount andthe interest paid is added to the carrying amount of the liability component. These statements were approved by the Board of Directors on 28 March 2007 andare neither audited nor reviewed. These results were announced to the Stock Exchange on 28 March 2007 and arebeing posted to all shareholders. Copies will be available to personal callersat the registered office, Bill Nicholson Way, 748 High Road, Tottenham, London, N17 0AP. 2. Profit on disposal of intangible fixed assets 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2006 2005 2006 £'000 £'000 £'000 Proceeds 18,751 13,747 23,719Net book value of disposals (3,571) (5,463) (11,420) 15,180 8,284 12,299 The amortisation charges on intangible fixed assets included in operatingexpenses for the comparative periods were £6,652,000 for the six months ended 31December 2005 and £12,499,000 for the year ended 30 June 2006. 3. Taxation In addition, a corporation tax charge of £6,253,614 has been accrued asat 31 December 2006 on the profit before tax (adjusted for the interest chargein respect of the Convertible Redeemable Preference Shares) of £20,818,046 - aneffective tax rate of 30%, plus an £8,200 tax adjustment from the prior yearend. 4. Dividends The Directors do not recommend an interim dividend. 5. Earnings per share Earnings per share has been calculated using the weighted average number ofshares in issue in each period. 6 months ended 6 months ended Year ended 31 December 2006 31 December 2005 30 June 2006 £'000 £'000 £'000 Basic earnings (retained profit/(loss)) 13,764 2,462 (1,575) Interest charge in respect of CRPS 800 1,165 - Diluted earnings/(loss) 14,564 3,627 (1,575) Number Number NumberWeighted average number of shares in issue 92,895,538 95,211,706 94,262,771 Effect of dilutive potential: Convertible Redeemable Preference Shares 91,845,600 91,845,600 - 184,741,138 187,057,306 94,262,771 Basic earnings/(loss) per share 14.8p 2.6p (1.7p) Diluted earnings/(loss) per share 7.9p 1.9p (1.7p) 6. Reconciliation of operating profit/(loss) to net cash (outflow)/inflow from operating activities 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2006 2005 2006 £'000 £'000 £'000 Operating profit/(loss) 5,690 (2,487) (9,420)Depreciation charge 1,040 944 2,226Amortisation of intangible fixed assets 8,621 6,652 12,499Decrease/(Increase) in stock 146 (672) (380)Decrease/(Increase) in debtors 217 (146) 204(Decrease)/Increase in creditors (23,892) 2,269 28,488Currency translation differences - (35) 33Net cash (outflow)/inflow from operating activities (8,178) 6,525 33,650 7. Loan notes issue This relates to the issue, at par, of £20,000,000 7.29% secured loan notes.These loan notes are repayable in equal annual instalments over 16 years fromSeptember 2007. The loan notes are secured against the White Hart Lane Stadium,and future gate and Corporate Hospitality receipts generated at the Stadium.This amount plus additional Club funds have been set aside for the First Teamand Academy Training Facility project. Directors, Officers and Advisers Executive ChairmanD P Levy Executive DirectorM J Collecott Non-Executive DirectorsE M DaviesSir K E Mills Company SecretaryM J Collecott Registered officeBill Nicholson Way748 High RoadTottenhamLondon N17 OAP Registered number1706358 AuditorsDeloitte & Touche LLPChartered AccountantsLondon BankersHSBC Bank plc70 Pall MallLondon SW1Y 5EZ AIM nominated adviser and brokerSeymour Pierce Limited3 Queen Victoria StreetLondon EC4N 8EL RegistrarsCapita RegistrarsNorthern HouseWoodsome ParkFenay BridgeHuddersfieldWest Yorkshire HD8 0LA This information is provided by RNS The company news service from the London Stock Exchange