Interim Results

31 Mar 2005 07:00

Tottenham Hotspur PLC31 March 2005 Date: 31 March 2005 Enquiries: Daniel Levy, ChairmanMatthew Collecott, Finance Director Tel: 020 8365 5322Tottenham Hotspur plc www.spurs.co.uk John Bick/Trevor Phillips Tel: 020 7929 5599Holborn TOTTENHAM HOTSPUR PLCInterim Results for the Six Months Ended 31 December 2004 Summary of Results Six months Six months ended ended 31 December 2004 31 December 2003 £m £mTurnover 32.9 33.2Operating profit before amortisation, impairment and 5.0 3.3profit / (loss) on sale of player registrationsNet interest payable (0.4) (0.4)Profit / (loss) on sale of player registrations 2.2 (0.3)Amortisation and impairment of player registrations (5.9) (5.5)Profit / (loss) before tax 1.0 (3.0)Profit / (loss) per share 0.6p (2.9)p Daniel Levy, Chairman of Tottenham Hotspur plc, said: "The results show an improved operating profit, which reflects the Club'sability to generate cash. This, coupled with the new funds raised last year,enabled us to invest in the squad and work towards attaining the right mix ofplayers for the first team squad, the reserves and the academy. I believe thatwe have continued to make solid progress so far this year, improving theefficiency of the business and striving to improve what we do for our supportersboth on and off the pitch wherever possible." Chairman's Statement Financial Results The results for the first six months of the financial year show a slightdecrease in turnover from £33.2m to £32.9m compared to the same period lastyear. Operating profit before player trading was £5.0m compared to £3.3m in thesame period last year, an increase of more than 50%. With the addition of a£2.2m profit on disposal of players the club made a profit before tax of £1.0m,compared to a loss before tax of £3.0m in the corresponding period last year.These results are explained in more detail below. Total gate receipts were £0.7m lower than in the same period last year. The teamplayed only one home Carling Cup match in the run up to the quarter finals thisyear, compared to three home matches in the same period last year when it alsoreached the quarter finals of that competition. Premier league gate receiptswere 6.5% higher than in the prior year with the stadium running at almost fullcapacity for all games, and with the number of home games being consistent withthe comparative period. Media and broadcasting turnover has decreased by £0.5m against the prior year.This reflects the lower value of the first year of the new Premier League TVrights deal in place until 2007. Whilst the total value of the current TVrights deal is similar to the previous deal, it should be noted that thestructure of the previous three-year deal meant revenue available to Premiershipclubs increased with each year of the deal, whereas income from the current dealis spread evenly over the length of the deal. Merchandising turnover has increased by 21% with trading benefiting from anumber of factors including the launch of the new home kit in July 2004 and arevamped range of product in store and improved performance on the pitch. Inaddition, our retail operation saw a strong Christmas trading period andbenefited from the opening of a new store on Tottenham High Road. Operating expenses before amortisation fell by £2.0m in the period, to £27.9m.This was in part due to the reduced number of home cup games in the period andtheir associated running costs and does not reflect the full year salary costsrelating to the significant number of new signings. We continue to maintainclose control over our cost base and move variable costs to reflect performanceand results. It is essential that our business model has the flexibility torespond to the significant variables in the football industry. Amortisation for the six months increased by £0.4m to £5.9m reflecting theplayer acquisitions made during Summer 2004. The profit on disposal of playersof £2.2m compares favourably with a £0.3m loss on disposal in the same periodlast year and includes the sale, most notably, of Stephen Carr, who was aproduct of our youth academy. Looking at the balance sheet at 31 December 2004, the largest movement year onyear relates to intangible assets which reflects the continued investment in theplaying squad made during 2004 and does not reflect the further investment madeduring the January 2005 trading window. In addition, the net debt position ofthe club at 31 December 2004 was £9.3m against £17.1m at the same point in theprior year. The significant improvement resulting from the £15m raised by theClub's shareholders through the Convertible Redeemable Preference Share issue. The February 2005 Deloittes Football Money League of Europe's wealthiest clubssaw us move up from 16th place to 14th place. When statistics for the last fewyears are analysed the size of this achievement becomes apparent. We are theonly team in the top 20 not to have played some form of European football in thelast three seasons, and the only team in the top 15 not to have played in theChampions League either this season or last. Clearly it shows the potential forthe club, the brand and the business model when we achieve significant successon the pitch. On the pitch A positive start to the season was interrupted by the sudden departure ofJacques Santini and however unfortunate, I am pleased that as a result of manyof the changes made throughout the club's infrastructure during the 2004 closedseason, we were able to deal promptly with the situation at the time. It is thecontinuity, teamwork and depth of planning that ensure we now have the abilityto deal with the most challenging of situations. We were delighted to appointMartin Jol as First Team Coach in November 2004. Aligned with the changes in the way we operate at the training ground we havecontinued to pursue our commitment to ensure the club moves towards attainingthe correct mix of players from the first team squad through to the reserves andthe academy. The players that have left since we last reported to shareholdersin our Annual report 2004 are; Mauricio Taricco, Mbulelo Mabizela, Kasey Keller,Edson Silva Sousa, and our former club captain Jamie Redknapp. In addition, theclub were sad to announce the enforced retirement from football, on medicalgrounds, of Dean Richards. We thank all of these players for their service, andwish them well for the future. In the same period we have welcomed Emil Hallfredsson, Mounir el Hamdaoui, AndyReid and Michael Dawson on permanent transfers, as well as Radek Cerny andHossam Ahmed Mido on 18 month loan deals and David Limbersky who joins us onloan for six months. In addition we have concluded deals to bring Teemu Tainioand Tom Huddlestone to the club in the Summer, and look forward to welcomingthem then. In October last year we reported a total player spend of £37.5m since 1 July2003. This has now increased to £46.5m for the period from 1 July 2003 to date,with £10m being receivable from player sales in the same period. Thisadditional commitment has been possible because of the stable financial positionof the club and has enabled a significant investment in young talent as westrive for continuity and to continually improve the club at all levels now andfor the future. Off the pitch The Club's reputation for offering excellent corporate hospitality at thestadium received official status after being awarded the title of Best OverallCorporate Hospitality in both the Premiership and the Football League in 2004.This award, judged by the National Association of Caterers saw the Club beatstrong opposition from Manchester United, Newcastle United, Norwich City andSouthampton in the final. Non-match day events continue to be a focus and included the return of theproduction team for 'Footballers Wives' who hire the stadium for filming thepopular television drama series and extend our events horizons. The Club hasalso launched a series of regular sell-out dinners at which former players ofthe Club are inducted into the newly created Hall of Fame. We continue to offerbusiness's and fans more events to ensure we fully utilise the extensivefacilities and award winning hospitality. The Club continues to expand its community activity, having run courses in 27new venues since September 2004. A key priority for the next six months isstrengthening relationships with our public partners such as the London Boroughsof Haringey and Enfield and the Lee Valley Regional Park Authority. TottenhamHotspur Community announced a title sponsorship with Thomson during the period,which will provide them with branding and promotional rights through all theClub's Community activity. In addition Thomson have doubled the number ofEuropean resorts in which Tottenham Hotspur Community Coaching will be availableduring summer 2005. Internationally, the Club continues to explore ways of raising its profile andexpanding its supporter base. We were pleased to announce details of twooverseas tours that will take place during the close season - to Mauritius inMay, and to South Korea in July. There is currently nothing new to report on the various options we areconsidering relating to the development of a new Academy and First Team trainingfacility, and the possible redevelopment of the White Hart Lane stadium. TheClub's website will be the first to break any news of these two projects. Our Fans We are now working to ensure the remainder of this season is a success both onand off the pitch and also, at this stage in the year, we begin to focus onplanning for next season as well. We constantly look for ways to improve all ourofferings to our fans and have been pleased with the response to our improvedseason ticket package this year. We continue our extensive dialogue with fans,supporter groups and most noticeably Tottenham Hotspur Supporters Trust. The Club has also continued to invest in its primary communication channels andthe popularity of the official Club website has grown year on year and nowreceives in the region of 500,000 unique visitors per month. We are committed toproviding fans with timely and comprehensive Club news. Most of all, we thank our fans for their continued support, without which, wewould not have the ability to put this club in a position where it can meet itspotential. Finally, I am pleased to note that our pre-season fixture schedulehas been enhanced by the news that the reigning European champions FC Porto willbe visiting White Hart Lane on 6 August. Outlook We have invested extensively in the playing squad and now have a group of youngprofessionals who need time to work together under the new structure at thetraining ground so that we can compete at a higher level. Our resolve remainsto improve in every way both on and of the pitch and to meet our aspirationswhere ever possible. Finally, as always, I would like to thank our supporters, shareholders andemployees for their continued support and efforts. Daniel LevyChairman 30 March 2005 Consolidated Profit and Loss AccountFor the six months ended 31 December 2004 Six months ended 31 December 2004 Operations Player Total Six months Year ended excluding trading* ended 31 30 June 2004 player (Note 2) December trading* 2003 Note £'000 £'000 £'000 £'000 £'000Turnover:Gate receipts - premier league 8,862 8,862 8,325 16,307 - cup 998 998 2,218 3,446competitionsMedia and broadcasting 10,289 10,289 10,824 23,891Sponsorship and corporate 7,101 7,101 6,840 14,459hospitalityMerchandising 3,271 3,271 2,703 3,840Other 2,428 2,428 2,330 4,381 32,949 32,949 33,240 66,324 Operating expenses (27,926) (5,853) (33,779) (35,459) (67,513) Operating profit/(loss) 5,023 (5,853) (830) (2,219) (1,189) Profit/(loss) on disposal of - 2,155 2,155 (343) (381)registrations Profit/(loss) before interest and 5,023 (3,698) 1,325 (2,562) (1,570)taxation Net interest payable (370) (441) (894) Profit/(loss) on ordinary 955 (3,003) (2,464)activities before taxation Tax charge on profit/(loss) on 3 (344) - (178)ordinary activities Profit/(loss) on ordinary 611 (3,003) (2,642)activities after taxation Other finance costs in respect of (49) - (50)non equity shares Retained profit/(loss) for the 562 (3,003) (2,692)period Profit/(loss) per share - basic 5 0.6p (2.9)p (2.6)pProfit/(loss) per share - diluted 5 0.6p (2.9)p (2.6)p *Player trading represents the amortisation, impairment, and the profit or losson disposal, of registrations. The above results all derive from continuing operations. There were no gains or losses in either year other than the loss for the year,and accordingly no statement of total recognised gains and losses is presented. Consolidated Balance Sheetas at 31 December 2004 31 December 31 December 30 June 2004 2004 2003 Note £'000 £'000 £'000Fixed assetsIntangible 30,983 22,150 25,053Tangible 47,908 46,784 48,219 78,891 68,934 73,272Current assetsStocks 949 762 355Debtors 10,279 9,601 8,171Cash at bank 2,086 - 11,497 13,314 10,363 20,023 Creditors: amounts falling due within one year (34,794) (36,313) (32,753) Net current liabilities (21,480) (25,950) (12,730) Total assets less current liabilities 57,411 42,984 60,542 Creditors: amounts falling due after more than oneyear (13,350) (13,698) (17,049) 44,061 29,286 43,493Provisions for liabilities and chargesDeferred taxation (1,229) (1,051) (1,229) Net assets 42,832 28,235 42,264 Capital and reservesCalled-up share capital 9,616 5,102 9,624Share premium account 21,389 11,358 21,340Revaluation reserve 2,456 2,504 2,480Capital redemption reserve 172 - 164Profit and loss account 9,199 9,271 8,656Shareholders' funds 42,832 28,235 42,264 Shareholders' funds may be analysed as:Equity interests 28,115 28,235 27,596Non-equity interests 6 14,717 - 14,668 42,832 28,235 42,264 Consolidated Cash Flow StatementFor the six months ended 31 December 2004 6 months ended 6 months ended 31 December 31 December Year ended 2004 2003 30 June Note 2004 £'000 £'000 £'000 Net cash inflow from operating activities 7 3,930 4,460 14,892 Returns on investments and servicing of financeInterest received 82 43 67Interest paid (805) (699) (824)Non-equity share issue costs - - (382)Net cash outflow from returns on investments and (723) (656) (1,139)servicing of finance UK corporation tax paid (57) - - Capital expenditure and financial investmentPayments to acquire intangible fixed assets (14,895) (10,888) (16,696)Payments to acquire tangible fixed assets (577) (728) (2,197)Receipts from sales of intangible fixed assets 3,220 1,410 1,640Receipts from sales of tangible fixed assets - - 16 Net cash outflow from capital expenditure and financial (12,252) (10,206) (17,237)investment Cash outflow before use of liquid resources and financing (9,102) (6,402) (3,484) FinancingIssue of non-equity share capital - - 15,000Redemption of ordinary shares (43) - (950)Bank loan repayments (6) (588) (1,470)Repayment of loan notes (260) - - Net cash (outflow)/inflow from financing (309) (588) 12,580 (Decrease)/increase in cash (9,411) (6,990) 9,096 Notes to the Consolidated Interim StatementsFor the six months ended 31 December 2004 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 2004 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 June2004. Turnover All turnover derives from the Group's principal activity in the United Kingdomand is exclusive of VAT. In the 30 June 2004 accounts, certain types of income were analysed in adifferent category of turnover following an exercise to redefine each categoryto more accurately reflect the operations of the Group. Gate receipts have beenmore tightly defined, resulting in a reallocation of turnover from thesecategories to the corporate hospitality and other categories. The comparativefigures for 31 December 2003 have been restated accordingly. Income recognition Ticket income is recognised when the matches take place. Fixed elements ofbroadcasting contracts are taken over the football season, with facility feestaken when earned. One unit of the merit award is taken over the course of theseason, with the remainder of the award recognised when known at the end of theseason. Operating expenses The Group has adopted format 2 of the Companies Act when preparing its Profitand Loss account. Expenses previously classified as cost of sales oradministrative expenses are now classified in one single category - operatingexpenses. This more accurately reflects the operations of the Group and enableseasier comparison of the costs of the business for the user of the financialstatements. Signing on fees Signing on fees are charged to operating expenses in the Profit and Loss Accountin the accounting period in which they are payable. Intangible fixed assets The costs associated with the acquisition of players' registrations and coachingstaff are capitalised as intangible fixed assets. These costs are fullyamortised over their useful economic lives, generally 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 sale of registrations represent the transfer feereceivable, net of any transaction costs, less the unamortised cost of theoriginal registration. These statements were approved by the Board of Directors on 30 March 2005 andare neither audited nor reviewed. These results were announced to the Stock Exchange on 31 March 2005 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. Notes to the Consolidated Interim StatementsFor the six months ended 31 December 2004 continued 2. Player Trading 6 months ended 6 months ended Year ended 31 December 31 December 2003 30 June 2004 2004 £'000 £'000 £'000 Proceeds 7,499 930 3,117Net book value of disposals (5,344) (1,273) (3,498)Profit/(loss) on disposal of registrations 2,155 (343) (381) The amortisation charges on registrations included in operatingexpenses for the comparative periods were £5,511,000 for the six months ended 31 December 2003 and £10,924,000 forthe year ended 30 June 2004. 3. Taxation A corporation tax charge of £57,000 (included in the total charge of £344,000)is a result of corporation tax paid relating to the year ended 30 June 2002. Thetax computations relating to this financial year are now closed. An additional £287,000 corporation tax charge has been accrued as at31December 2004 on the profit before tax of £955,000 - an effective tax rate of30%. 4. Dividends The Directors do not recommend an interim dividend. 5. Profit/(loss) per share The profit/(loss) per share has been calculated using the weighted averagenumber of shares in issue in each period. 6 months ended 6 months 31 December ended Year ended 2004 31 December 30 June 2003 2004 £'000 £'000 £'000 Profit/(loss) after taxation 562 (3,003) (2,692) Number Number NumberWeighted average number of shares in issue 98,689,997 102,041,520 101,909,150Effect of dilutive potential ordinary shares:Options - 9,870 - 98,689,997 102,051,390 101,909,150 Basic EPSLoss per share 0.6p (2.9)p (2.6)pDiluted EPSLoss per share 0.6p (2.9)p (2.6)p 6. Non-equity interests Non-equity interests of £14,717,000 relate to the issue of 60,000 ConvertibleRedeemable Preference Shares, with a nominal value of £78.10, at £250 each inJanuary 2004. £4,686,000 is included in total called-up share capital of £9,616,000, and£10,031,000 is included in the total share premium account balance of£21,389,000. Notes to the Consolidated Interim StatementsFor the six months ended 31 December 2004 continued 7. Reconciliation of operating loss to net cash inflow fromoperating activities 6 months ended 6 months ended 31 December 31 December Year ended 2004 2003 30 June 2004 £'000 £'000 £'000 Operating loss (830) (2,219) (1,189)Depreciation charge 887 789 1,718Amortisation of registrations 5,853 5,511 10,924Profit on disposal of tangible fixed assets - - (11)(Increase)/decrease in stock (594) (110) 297Decrease/(increase) in debtors 162 (2,125) (27)(Decrease)/increase in creditors (1,561) 2,614 3,180Currency translation differences 13 - -Net cash inflow from operating activities 3,930 4,460 14,892 8. Reconciliation of net cash flow to movement in net debt 6 months ended 6 months ended 31 December 31 December Year ended 2004 2003 30 June 2004 £'000 £'000 £'000 (Decrease)/increase in cash in the period (9,411) (6,990) 9,096Cash outflow from decrease in debt and lease financing 266 588 1,470Cash related (increase)/decrease in net debt in the period (9,145) (6,402) 10,566Non cash increase in net debt in the period (18) (11) (35)(Increase)/decrease in net debt in the period (9,163) (6,413) 10,531Opening net debt (110) (10,641) (10,641)Closing net debt (9,273) (17,054) (110) Officers and advisers Executive ChairmanD. P. Levy Executive DirectorsM. J. CollecottP. Z. Kemsley Non -Executive DirectorsD. J. Buchler (Vice Chairman)*E. 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 broker and adviserSeymour Pierce LimitedBucklersbury House3 Queen Victoria StreetLondon EC4N 8EL RegistrarsCapita RegistrarsThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU * Chairman of the Remuneration Committee and member of the Audit Committee ** Chairman of the Audit Committee and member of the Remuneration Committee This information is provided by RNS The company news service from the London Stock Exchange