Interim Results

31 Mar 2006 07:02

Tottenham Hotspur PLC31 March 2006 EMBARGOED UNTIL 07:00 Date: 31 March 2006 Enquiries: Daniel Levy, ChairmanMatthew Collecott, Finance Director Tel: 020 8365 5322Tottenham Hotspur plc www.tottenhamhotspur.com John Bick Tel: 07802 211374 TOTTENHAM HOTSPUR PLC Interim Results for the Six Months Ended 31 December 2005 Financial Highlights Six months Six months ended ended 31 December 2005 31 December 2004 £m £m • Turnover 36.3 32.9 • Amortisation of intangible fixed assets (6.7) (5.8) • Profit on sale of intangible fixed assets 8.3 2.2 • Profit before tax 4.4 1.0 • Retained profit for the financial period 2.5 0.6 • Earnings per share - basic 2.6p 0.6p • Earnings per share - diluted 1.9p 0.3p Daniel Levy, Chairman of Tottenham Hotspur plc, said: "We have had an encouraging season to date, progress in the Premier League beingtempered by the disappointments in the Cup competitions. We remain realistic -the FA Premier League is a highly competitive league with little separating thetop clubs. We shall look to consolidate the areas that have seen change and tocontinue to improve performance in all departments within the Club. Much hasbeen achieved and there is still much to do." Chairman's Statement Financial Results The results for the first six months of the financial year show turnover hasincreased by 10% to £36.3m from £32.9m in the same period last year, with theClub generating an operating profit of £4.2m before interest, tax and footballtrading. Whilst there has been a significant increase in the amortisation ofintangible fixed assets, as a result of the sustained investment in the playingsquad, an £8.3m profit on disposal of intangible fixed assets has contributed toan increase in profit before tax of £4.4m, a 350% increase on the same periodlast year. Premier League gate receipts were £1.4m higher than in the same period lastyear, with average attendances up and having played one more home game than inthe same period last year. However, Cup competitions have been a disappointmentthis season. The defeat in round two of the Carling Cup led to Cup competitiongate receipts being £1.0m down on the same period last year when the Clubreached the quarter finals. Our defeat in round three of the FA Cup in January2006, as opposed to reaching the quarter finals last season, will have anongoing impact on the Company's turnover for the current financial year whencompared to prior years, where gate receipts from Cup competitions were £4.2mand £3.4m in the years ending June 2005 and June 2004 respectively. Media and broadcasting revenues in the period fell by £1.1m from £10.3m to£9.2m, largely due to three fewer live television appearances compared to thesame period last year. Given the current position of the Club in the league,this situation will reverse by the end of the season. Both the Corporate Hospitality and the Merchandise Divisions have performedstrongly against the same period last year, up a combined £1.5m. Both areas havebenefited from the investment the Board has made in improving the offering inthese areas, and it is pleasing to see such positive results. As with allrevenue streams we will continue to explore ways to extend the quality, choiceand differentiation of our products in an effort to continually improvestandards. The £2.1m increase in other income on the same period last year is primarily dueto the team winning the Peace Cup in South Korea, a competition we were proud tocompete in and win. Operating expenses before amortisation, as a percentage of turnover, remainstable. The significant increase in fixed operating expenses has come fromincreased business rates and the fact that certain departmental costs have risenas a result of the continued drive to raise standards throughout the Club. Amortisation of intangible fixed assets for the six months was £0.9m more thanlast year at £6.7m, a reflection of the Club's continued investment in theplaying squad. The profit on the disposal of intangible assets of £8.3m is £6.1mhigher than the same period last year, and includes the player sales of FreddieKanoute, Erik Edman and Timothee Atouba. After interest and taxation chargeshave been deducted, there is a retained profit for the period of £2.5m, up £1.9mfrom £0.6m last year. The compulsory adoption of FRS 25 in this financial year has affected theaccounting treatment of the convertible redeemable preference share ("CRPS")fundraising we undertook in January 2004. It has been necessary to reclassify alarge part of the £15million equity raised as a liability on the Group's balancesheet. As a result of this reclassification, net assets have been reduced by£13.1m. The Board continue to believe that the business model currently in place at theClub is the right one. Net debt continues to fall and, excluding the changesmade under FRS 25, was below £1.0m at 31 December 2005 (December 2004: £9.3m),which highlights the Club's ability to generate cash. The February 2006Deloittes Football Money League of Europe's Wealthiest Clubs saw the Clubcontinue to move up the league table, where we are now recognised as thethirteenth richest club in Europe. With significant talent within the Club,potential within the brand and being the only club in the top tier of the MoneyLeague never to have benefited from Champions League revenues, it is clear thatthe Club has a great platform to achieve progress in the future. On the pitch The season began well with regard to league performance. We ended the calendaryear in fourth position in the FA Premier League, having never dropped out ofthe top half of the table and having only lost three games in 20 Premier Leagueoutings. This is a positive reflection on the hard work and enthusiasm of thewhole team at the Club. Having been through a period of upheaval across all areas of the Club over thepast couple of years, we are looking to consolidate the team's position andensure we retain the appropriate mix of talent to further the team's progressand to encourage players to come through the system and push for first teamplaces. In an effort to achieve greater consistency, the number of changes madeto the squad during the recent January transfer window was limited. Furthermore,we are delighted to have extended the contracts of Robbie Keane, Michael Dawson,Aaron Lennon and Radek Cerny all excellent players we hope will play asignificant role in any future success the Club may enjoy. The players that haveleft since we last reported to shareholders in our 2005 annual report are SeanDavis, Michael Brown, Noe Pamarot and Pedro Mendes. We thank them for theirefforts and wish them all well. In the same period we welcomed Danny Murphy andHossam El Sayed Ghali to the Club. We will continue to look for excellent young talent in a bid to ensure the Clubis in the best possible position to prosper now and in the future. A lot ofinvestment continues to be focused on academy recruits, with scouting takingplace throughout the world looking for, and competing for, stars of the future. Off the pitch We have now redesigned the proposed academy and first team training facility tomeet the various environmental, social and local requirements that arose from anexhaustive public consultation. We will focus on moving this ambitious projectforward to the planning committee. In January we launched the Club's new logo. This has been well received by fansand the wider community alike. It was a major undertaking, which involved takinga historic piece of the Club's identity and reworking it so that the Clubretains absolute control over its registered marks but at the same time remainstrue to its heritage. The roll out of the new logo will be phased over a numberof months given the significant amount of inventory it affects throughout theClub. We have also launched a completely new website, which is still work inprogress at this stage, but which we believe will ultimately encompass the bestin web technology and design, and will be far easier to access and navigate thanpreviously. It was a great pleasure to introduce our new technical sponsor 'Puma' thisFebruary, a record deal, financially, for the Club. Puma are one of the world'sleading sports brands and represent the style and quality that we associate withthis Club. Our club sponsor, Thomson, step down at the end of the season. Wethank them for their support during the last four years and hope that ourpositive relationship can continue at some level going forward. We hope toannounce details of our new club sponsor in the near future. Earlier this month the Club were delighted to receive the "Best Corporate SocialResponsibility" award from Haringey Council at their City Growth Business Awardsceremony. The award was given following recognition of the Club's longstanding,and ever increasing, commitment to the local community through our footballprogrammes that saw over 300,000 young people participate in a diverse andexciting range of coaching courses last year. Outlook We have had an encouraging season to date, progress in the Premier League beingtempered by the disappointments in the Cup competitions. We remain realistic -the FA Premier League is a highly competitive league with little separating thetop clubs. We shall look to consolidate the areas that have seen change and tocontinue to improve performance in all departments within the Club. Much hasbeen achieved and there is still much to do. It goes without saying that I would like to thank our supporters, shareholdersand employees for their continued support as we strive for greater things. D P Levy 30 March 2006 Consolidated Profit and Loss Account For the six months ended 31 December 2005 Six months ended 31 December 2005 Six months ended 31 Operations December 2004 Year ended excluding 30 June 2005 football Football trading* trading* (Note 2) Total Note £'000 £'000 £'000 £'000 £'000Turnover:Gate receipts - premier league 10,288 10,288 8,862 16,861Gate receipts - cup competitions 36 36 998 4,225Sponsorship and corporate 8,499 8,499 7,101 14,249hospitalityMedia and broadcasting 9,213 9,213 10,289 25,488Merchandising 3,688 3,688 3,271 4,997Other 4,526 4,526 2,428 4,730 36,250 36,250 32,949 70,550 Operating expenses (32,085) (6,652) (38,737) (33,779) (70,479) Operating profit/(loss) 4,165 (6,652) (2,487) (830) 71 Profit on disposal of intangible 2 - 8,284 8,284 2,155 5,632fixed assets Profit before interest and taxation 4,165 1,632 5,797 1,325 5,703 Net interest expense (1,414) (370) (793) Profit on ordinary activities 4,383 955 4,910before taxation Tax charge on profit on ordinary 3 (1,921) (344) (707)activities Profit on ordinary activities after 2,462 611 4,203taxation Other finance costs in respect of - (49) (99)non-equity shares Retained profit for the period 2,462 562 4,104 Earnings per share - basic 5 2.6p 0.6p 4.2pEarnings per share - diluted 5 1.9p 0.3p 2.2p *Football trading represents the amortisation, impairment, and the profit/(loss)on disposal of intangible fixed assets. The results for the above and prior period all derive from continuingoperations. There were no gains or losses in either period other than the profit for theperiod and accordingly no statement of total recognised gains and losses ispresented. Consolidated Balance Sheet as at 31 December 2005 31 December 31 December 30 June 2005 2005 2004 Note £'000 £'000 £'000Fixed assetsIntangible assets 37,533 30,983 31,348Tangible assets 48,811 47,908 49,105 86,344 78,891 80,453Current assetsStocks 1,067 949 395Debtors 14,850 10,279 11,875Cash at bank 10,127 2,086 9,976 26,044 13,314 22,246 Creditors: amounts falling due within one year (47,718) (34,794) (37,648) Net current liabilities (21,674) (21,480) (15,402) Total assets less current liabilities 64,670 57,411 65,051 Creditors: amounts falling due after more than oneyear (26,098) (13,350) (15,315) 38,572 44,061 49,736Provisions for liabilities and chargesDeferred taxation (1,902) (1,229) (1,902)Contingent transfer fees payable (2,415) - (2.021) (4,317) (1,229) (3,923) Net assets 34,255 42,832 45,813 Capital and reservesCalled up share capital 4,672 9,616 9,520Share premium account 11,556 21,389 21,439Equity component of convertible redeemablepreference shares 3,838 - -Revaluation reserve 2,408 2,456 2,432Capital redemption reserve 524 172 268Profit and Loss Account 11,257 9,199 12,154Shareholders' funds 34,255 42,832 45,813 Shareholders' funds analysed as:Equity interests - 28,115 31,046Non-equity interests 6 - 14,717 14,767 - 42,832 45,813 Consolidated Cash Flow Statement For the six months ended 31 December 2005 6 months ended 6 months ended 31 December 31 December Year ended 2005 2004 30 June Note 2005 £'000 £'000 £'000 Net cash inflow from operating activities 7 6,525 3,930 21,146 Returns on investments and servicing of financeInterest received 181 82 143Interest paid (744) (805) (919)Net cash outflow from returns on investments and (563) (723) (776)servicing of finance Taxation UK corporation tax paid - (57) (62) Overseas withholding tax paid (257) - - Capital expenditure and financial investmentPayments to acquire intangible fixed assets (13,534) (14,895) (23,325)Receipts from sales of intangible fixed assets 11,049 3,220 6,029Payments to acquire tangible fixed assets (650) (577) (3,593) Net cash outflow from capital expenditure and financial (3,135) (12,252) (20,889)investment Cash inflow / (outflow) before use of liquid resources 2,570 (9,102) (581)and financing FinancingRedemption of ordinary shares (2,130) (43) (654)Bank loan repayments (10) (6) (26)Loan notes repayments (279) (260) (260) Net cash outflow from financing (2,419) (309) (940) Increase / (decrease) in cash 151 (9,411) (1,521) Notes to the Consolidated Interim Statements For the six months ended 31 December 2005 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 2005 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 June2005, with the exception of the accounting policy in respect of financialinstruments which has been amended to reflect the presentation requirements ofFRS 25 "Financial instruments : Disclosure and Presentation". As permitted, FRS25 has been applied prospectively from 1 July 2005. Consequently the relevantcomparative information for the year ended 30 June 2005 and the six month periodended 31 December 2004 does not reflect the impact of this standard. The Group'saccounting policy under FRS 25 is provided below. The effect of the transitional adjustment as at 1 July 2005 is to reclassify aportion of the Group's preference share capital and related share premium as aliability. 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 footballmanagement staff registrations are capitalised as intangible fixed assets. Thesecosts are fully amortised over their useful economic lives, in equal annualinstalments over the period of the respective contracts. Players' registrationsare written down for impairment when the carrying value exceeds the amountrecoverable through use or sale and the reduction in value is consideredpermanent. 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 30 March 2006 andare neither audited nor reviewed. These results were announced to the Stock Exchange on 31 March 2006 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 31 December 6 months ended Year ended 2005 31 December 2004 30 June 2005 £'000 £'000 £'000Proceeds 13,747 7,499 11,201Net book value of disposals (5,463) (5,344) (5,569) 8,284 2,155 5,632 The amortisation charges on registrations included in operating expenses for thecomparative periods were £5,853,000 for the six months ended 31 December 2004and £12,741,000 for the year ended 30 June 2005. 3. Taxation Withholding tax totalling £257,000, deducted at source, is included inthe corporation tax charge for the period due to the uncertainty of a futuredouble tax relief claim being successful. In addition, a corporation tax charge of £1,664,000 has been accrued asat 31 December 2005 on the profit before tax (adjusted for the interest chargein respect of the convertible redeemable preference shares) of £5,548,000 - aneffective tax rate of 30%. 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 31 December 6 months ended 2005 31 December 2004 Year ended 30 June 2005 £'000 £'000 £'000Basic earnings (Retained profit) 2,462 562 4,104 Interest charge in respect of CRPS 1,165 - - Finance costs in respect of CRPS - 49 99 Diluted earnings 3,627 611 4,203 Number Number NumberWeighted average number of shares in issue 95,211,706 98,689,997 98,574,822 Effect of dilutive potential: Convertible redeemable preference shares 91,845,600 93,720,000 93,720,000 187,057,306 192,409,997 192,294,822 Basic earnings per share 2.6p 0.6p 4.2p Diluted earnings per share 1.9p 0.3p 2.2p 6. Non-equity interests Non-equity interests at 30 June 2005 and 31 December 2004 relate to the issue of60,000 Convertible Redeemable Preference Shares, with a nominal value of £78.10,at £250 each in January 2004. 1,200 of these shares were bought back by theCompany during the period. This disclosure has not been made in the period ended 31 December 2005 followingadoption of FRS 25 as described above. 7. Reconciliation of operating (loss)/profit to net cash inflowfrom operating activities 6 months ended 6 months ended 31 December 31 December Year ended 2005 2004 30 June 2005 £'000 £'000 £'000Operating (loss)/profit (2,487) (830) 71Depreciation charge 944 887 1,807Amortisation of registrations 6,652 5,853 12,741Increase in stock (672) (594) (40)(Increase)/decrease in debtors (146) 162 (536)Increase/(decrease) in creditors 2,269 (1,561) 7,103Currency translation differences (35) 13 -Net cash inflow from operating activities 6,525 3,930 21,146 Directors, Officers and Advisers Executive ChairmanD P Levy Executive DirectorsM J CollecottP Z Kemsley Non-Executive DirectorE M Davies 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 RegistrarsThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU This information is provided by RNS The company news service from the London Stock Exchange