Final Results
Tottenham Hotspur PLC
05 October 2004
Date: 5 October 2004
Enquiries: Matthew Collecott, Finance Director tel: 020 8365 5000
Tottenham Hotspur plc www.spurs.co.uk
John Bick/Trevor Phillips,
Holborn Public Relations Limited tel: 020 7929 5599
TOTTENHAM HOTSPUR PLC
Preliminary results for the year ended 30 June 2004
Summary of Results
Year ended Year ended
30 June 2004 30 June
£m 2003
£m
Turnover 66.3 66.5
Operating profit before amortisation, impairment and
profit on disposal of registrations 9.7 11.0
Amortisation and impairment of registrations (10.9) (18.6)
(Loss) / profit on disposal of registrations (0.4) 1.3
Net interest payable (0.9) (0.8)
Loss before tax (2.5) (7.1)
Retained loss for the financial year (2.7) (6.4)
Loss per share (2.6)p (6.3)p
Commenting, Daniel Levy, Chairman of Tottenham Hotspur plc, said:
'Following a process of change within the Club we now have in place a structure
that we hope will bring a steady return to the winning performance we all desire
for Tottenham Hotspur. We have continued to invest in the playing squad and
training staff during the summer and we continue to pursue our objectives on and
off the pitch.'
Chairman's Statement
Financial results
Turnover for the year was £66.3m which is similar to that of the previous year
and reflects mixed performances both on and off the pitch. The poor performance
on the pitch had a negative impact on the financial performance of a number of
areas of the business, but particularly on merchandising income and the TV
income dependent on our final league position. Turnover was £3.1m lower in these
two areas compared with the prior year. However, despite this, the key operating
profit figure was £9.7m against £11.0m in the prior year before player
amortisation and the profit or loss on the sale of players' registrations,
whilst this year's retained loss improved by £3.7m from £6.4m last year to
£2.7m. During the year £15m was raised by the Company through the issue of
60,000 convertible redeemable preference shares, at £250 per share. This was a
major factor in consolidated net assets closing at £42.3m, an increase on the
prior year of £11.1m. These results, which are discussed in more detail in the
Operating and Financial Review on page 4 demonstrate the resilience of the
business and reflect the potential for growth that accompanies improved
performances on the pitch.
Overview
The 2003/04 season did not see the Club move in the desired direction on the
pitch and it was clear that this was a situation that simply could not remain
unchecked. It was equally clear that in a market that is often driven by
short-term objectives, we would not run the risk of taking short-term actions as
a solution. Wholesale change was required. Our aim has been to rebuild the
infrastructure of the Club's system of football management, coaching and
development, a root and branch series of changes, which I believe will provide a
system which can develop on the basis of best practice rather than by default.
Frank Arnesen joined us as Sporting Director in July 2004 to add long-term
vision and a comprehensive team succession plan. He has ultimate responsibility
for overseeing the first team, and developing and implementing the youth,
scouting, medical and international policies for the Club that will raise our
performance in all areas. His knowledge of the international transfer market is
excellent, as evidenced in the most recent transfer window, and across all
levels, youth and senior. Frank has built an exceptionally promising team around
him with a refreshing new enthusiasm and discipline.
It is important that we see a flow of development in all positions through every
age group and that the Club is actively recruiting future potential stars at an
early age. Our philosophy is to have a mixture of youth and experience in the
team. We were delighted that during the 2003/04 season eight youngsters from the
Academy made their first team debuts. Frank Arnesen is assessing our scouting
and Academy arrangements and will make any necessary changes to ensure our
performance continues to improve.
Within the last six months we have completely restructured the training ground
and medical set up, environment and staff structure. Dr Charlotte Cowie joined
as our new Head of Medical Services in February 2004 from Fulham Football Club
where she was Director of Medical Services, having previously been Chief Medical
Officer for Team GB, working at the 2000 Olympics. As part of a total revamp of
this area Dr Cowie has sought and recruited some of the best sports medicine and
physiotherapist practitioners available. I am pleased to announce that Dean
Kenneally has recently joined us, as first team physiotherapist, from UK
Athletics where he worked as part of the 2004 Olympic medical team. Dean
previously worked for the Australian Institute of Sport.
Jacques Santini joined us as Head Coach in July 2004. His appointment came at
the end of a long process in which we were fortunate to be able to assess the
abilities of a significant number of first class managers and coaches from clubs
in the UK and across Europe. We needed to ensure that we had the right candidate
to work within the training ground's new structure and this required a coach who
had operated at the highest level.
At the close of the 2003/04 season there were a number of three to five year
contracts that expired. The resultant future cost saving gave us the extended
financial ability to further our investment in some of the best young talent
both in the UK and abroad. Whilst it is important to note that an element of
experience is retained, or has been bought-in where necessary, we believe that
the continued investment that we have made during the Summer closed season will
reinforce our longer term desire for success.
I would like to thank David Pleat for his contribution to the Club over the
years. David has brought many young players to this Club who have gone on to
establish themselves in the first team squad, and to represent their respective
countries. We wish David and his family well.
On the pitch
Since the last year-end the Club has seen a very significant change in the
make-up of the first team squad of players, with 17 players leaving and 21 new
players joining us. An unprecedented degree of change for any club.
The players that have left since we last reported to shareholders in our interim
report are Gary Doherty, Helder Postiga, Milenko Acimovic, Darren Anderton,
Stephen Carr, Gus Poyet, Christian Ziege, and Lars Hirschfeld.We thank them for
their service and wish them well in the future.
In the same period we have welcomed Pedro Mendes, Sean Davis, Paul Robinson,
Marton Fulop, Timothee Atouba, Rodrigo Defendi, Erik Edman, Noureddine Naybet,
Edson Silva Sousa, Michael Carrick, Noe Pamarot, Reto Ziegler, Calum Davenport,
Leigh Mills and Spase Dilevski.
The result of the above changes is that the Club has spent a total of £37.5m on
transfer fees for new players since 1 July 2003. This has been possible through
the support of the Club's key investors and the ongoing financial stability of
the Club's operations. This level of investment underlines the ambitions we have
for the club, but is clearly not sustainable.
In the last six months there has been a series of very significant changes
across all aspects of the football club. Our collective challenge remains to
convert these changes into improved performance in both the Premiership and the
Cup competitions.
Off the pitch
We continue to improve access, communications, offers and services to fans and
to update the technology that facilitates this. Included within this year's pack
to shareholders is 'Your Spurs', a report that focuses on the many developments
that took place during the year, across all areas of the club's activities.
There is a huge amount of work that goes into this club, some of which
supporters may not be fully aware, and we would urge you to read it.
Key offers to fans were the re-designed and re-vamped Season Ticket and
Membership packages which provided our supporters with significant improvements.
Membership was included as a benefit of the Season Ticket Holder package and,
following a successful pilot run last season the Members only website, Spurs
Lodge, has been launched bringing the fans news direct from the training ground.
The Club communication channels have been optimised to deliver information to
our supporters. Our website performed well and industry statistics consistently
place it in the top five official Premiership Club websites. It is relied on for
official, accurate news. Our UK television exposure figures also show us to be
consistently in the top six. Clearly, if we can combine this with success on the
pitch, going forward we will have the flexibility to significantly enhance
revenues.
We have continued our policy of responding to every reasonable communication we
receive from fans, and this year also saw the further development of a
constructive and productive relationship with the Tottenham Hotspur Supporters
Trust.
Our Football in the Community scheme continues to grow and worked with over
250,000 children during the year. Kathryn Robinson joins us from the Premier
League, where she had responsibility for corporate and community affairs, as
Director of Community Development to further extend our activities in this area.
Commercial deals concluded were with MBNA, our official credit card affinity
partner, for a further 5 years, and Codemasters, with whom we have a 5-year deal
for the production of the official Spurs computer game (PS2, Xbox and others),
Incite and Ladbrokes. In addition, since the year end, we have concluded further
official partner deals with Endsleigh Insurance and Carlsberg.
Internationally, this period saw us travel to South Africa in July 2003 as
guests of the 2010 bid to stage the World Cup. The tour was successful in many
ways, raising our profile and support in the region. The players coached
children in two of the main townships and we were delighted when South Africa
won the bid and wish them well for 2010.
Outlook
In our last interim report we were pleased to announce that our key sponsor,
Thomson, had extended its relationship with the club until 2006 and we have
further developed this relationship to include community activities and
in-resort coaching. Clearly it is in the best interest of the Club to maintain
stable, mutually beneficial and financially rewarding relationships with our
commercial partners that are also on a long-term basis and we are pleased that
our two main sponsors, Thomson and Kappa, remain committed to the Club until 30
June 2006.
With regards to our two principal capital projects, the academy and stadium, we
continue to explore the various options open to us and will inform our
shareholders and fans of any developments, when we are in a position to do so.
Under the guidance of Frank Arnesen we now have in place a structure that we
hope will bring a steady return to the winning performance we all desire. There
is still a great deal of financial instability in the game. The new television
and radio broadcast rights contracts will generate less income than previously.
Despite this, we have invested heavily in the playing squad and training staff
during the summer and we continue to pursue our objectives on and off the pitch.
Our fans
This year has seen a significant increase in season ticket sales against the
number sold at the beginning of last season's campaign. There is no greater
indicator of our fans' loyalty. We have now put in place the appropriate
management, players and staff, both on and off the pitch, to demand improvement
in all areas.
I would like to thank our supporters, shareholders and employees for their
continued support.
D.P. Levy
Chairman
4 October 2004
Operating and Financial Review
Turnover
Turnover from all departments for the year was £66.3m against £66.5m in the
prior year. League gate receipts were in line with the prior year with the key
positive movements relating to better performances in the cup competitions,
which saw the team reach the quarter-finals of the Carling cup and the fourth
round of the FA cup, additionally sponsorship revenues improved. This was offset
by reduced media and broadcasting revenues, and lower merchandising sales.
Premier League gate receipts of £16.3m are in line with the prior year's
receipts of £16.4m. Season ticket income was down on the prior year's record
level by 9%. However, despite average attendances falling by 2%, the change in
sales mix from season tickets to match day tickets resulted in total league
receipts matching the prior year. Current season ticket sales for the 2004/05
campaign are already above the 2003/04 end of season position.
Cup competition gate receipts were £1.9m higher than the prior year. The
improved cup performance meant the team played seven cup matches this year, five
of which were at White Hart Lane (2002/03 - three games, one of which was at
home).
Revenue from sponsorship was £0.8m above 2002/03 revenues. This was due to new
commercial partnerships being established with MBNA, Incite, Codemasters and
Ladbrokes. We also received enhanced revenue from the central FA Premier League
partners. It is pleasing to note that Thomson extended their relationship with
the club during the year, thus providing a stable level of income for the future
from this important revenue stream. Hospitality turnover was in line with the
prior year with lower average matchday sales being compensated for by the four
extra home cup matches this year.
Media and broadcasting turnover was £0.9m down on the prior year at £23.9m
compared to £24.8m in 2003. This was the final year of the previous Premier
League / SKY television rights deal and the payment terms were the most
lucrative of the three year deal, however the lower merit fee received from
finishing 14th (2002/03 - 10th), and five fewer live televised appearances, had
an overriding negative impact.
Merchandising sales were £1.4m down on the prior year. This was a result of
lower Christmas footfall and the lower level of sales, as expected, from the
second year of the Kappa deal.
Operating expenses (excluding player trading)
Operating expenses excluding player trading increased by £1.1m during the year,
the four additional home games and costs relating to those games accounting for
much of this increment. Whilst there were savings on player salaries as some of
the long term player contracts came to an end, these were partially offset by
significant restructuring costs at the training ground in a year which saw a
change in the Sporting Director, the Manager, coaching staff and medical teams.
Operating profit before player trading
Operating profit before player trading defines the Group's ability to generate
cash from its operations. The Board continuously monitors this ability,
enabling it to establish the resources available to the Group to fund the
acquisitions of player registrations, meet its liabilities going forward, and
grow. Operating profit, before player trading was £9.7m against £11.0m in the
prior year. The Group's business model shows resilience in a season that did not
produce success on the pitch, where there was extensive internal restructuring,
and where significant performance related revenues were lost.
Player trading
The club made a loss on disposal of registrations of £0.4m. Whilst a combined
loss of £1.3m was made on the sale of Chris Perry, Bobby Zamora, and Milenko
Acimovic, this was offset by profits made on the sale of Matthew Etherington and
Jonathan Blondel of £0.6m, and further contingent performance related receipts
on players that had previously been sold.
Player amortisation is £7.8m less than in the prior year. The prior year figure
included an impairment charge of £7.2m relating to the disposals of Sergei
Rebrov and Ben Thatcher. No further impairments have been considered necessary
this year, with the charge of £10.9m reflecting only the amortisation of player
transfer fees over the period of their contracts.
Balance sheet
During the second half of the year the Company raised £15m via the issue of
60,000 Convertible Redeemable Preference Shares (CRPS) at £250 each. The issue
strengthened the balance sheet and ensured the Board had the flexibility in the
recent transfer windows to take a long-term view and add depth to the playing
squad. Clearly the backing of key investors during the year has been extremely
positive, and ensures the club remains properly funded to meet its ongoing
commitments and ambitions.
The Group's net assets have increased by £11.1m to £42.3m. This figure gives no
value to home grown players and the future development of young players at the
club. The retained loss for the year has improved by £3.7m on the prior year,
the club remains cash generative at an operating level, and the business model
remains robust.
AIM Listing
During the year the club sought permission from shareholders to move from the
official list to AIM. The Board took the view, having reviewed the shareholder
base, the illiquidity of the Company's shares and the comparative size of the
Company, that there were no overriding benefits from retaining a full listing.
The club benefits from lower administration costs and the greater flexibility of
the AIM rules and shareholders benefit from the beneficial personal tax
consequences of an AIM listing. Whilst not obliged to, the Company will continue
to maintain best practice procedures, wherever practical, in relation to issues
such as corporate governance.
M.J. Collecott
Finance Director
4 October 2004
Consolidated Profit and Loss Account
Year ended 30 June 2004
Note Operations, Year ended
excluding 30 June
player Player 2003
trading * trading * Total Total
(note 2)
£'000 £'000 £'000 £'000
TURNOVER 3 66,324 - 66,324 66,506
Operating expenses (56,589) (10,924) (67,513) (74,170)
OPERATING PROFIT / (LOSS) 9,735 (10,924) (1,189) (7,664)
(Loss) / profit on disposal of intangible - (381) (381) 1,329
fixed assets
PROFIT / (LOSS) BEFORE INTEREST AND TAXATION 9,735 (11,305) (1,570) (6,335)
Net interest payable (894) (783)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,464) (7,118)
Tax (charge)/credit on loss on ordinary (178) 693
activities
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (2,642) (6,425)
Equity dividends - -
Other finance costs in respect of non equity
shares (50) -
RETAINED LOSS FOR THE FINANCIAL YEAR (2,692) (6,425)
Loss per share - basic 4 (2.6)p (6.3)p
Loss per share - diluted 4 (2.6)p (6.3)p
*Player trading represents the amortisation, impairment, and the profit or loss
on 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.
Balance Sheets Group
30 June 30 June
2004 2003
Note £'000 £'000
FIXED ASSETS
Intangible Assets 25,053 17,019
Tangible assets 48,219 46,845
Investments - -
73,272 63,864
CURRENT ASSETS
Stocks 355 652
Debtors 8,171 7,957
Cash at bank 11,497 2,401
20,023 11,010
CREDITORS: amounts falling due
within one year (32,753) (25,621)
NET CURRENT (LIABILITIES) / ASSETS (12,730) (14,611)
TOTAL ASSETS LESS CURRENT LIABILITIES 60,542 49,253
CREDITORS: amounts falling due after more than one year (17,049) (16,964)
43,493 32,289
PROVISION FOR LIABILITIES AND (1,229) (1,051)
CHARGES
NET ASSETS 42,264 31,238
CAPITAL AND RESERVES
Called up share capital 9,624 5,102
Share Premium 21,340 11,358
Revaluation Reserve 2,480 2,528
Capital Redemption Reserve 164 -
Profit and loss account 8,656 12,250
SHAREHOLDERS' FUNDS 42,264 31,238
SHAREHOLDERS' FUNDS MAY BE ANALYSED AS:
Equity interests 27,596 31,238
Non-equity interests 14,668 -
42,264 31,238
Consolidated Cash Flow Statement
Year ended 30 June 2004 Year ended 30 June 2003
Note £'000 £'000 £'000 £'000
Net cash inflow from operating activities 5 14,892 7,514
Returns on investments and servicing of finance
Interest received 67 43
Interest paid (824) (389)
Interest element of finance lease payments - (2)
Loan issue costs - (434)
Non-equity share issue costs (382) -
Net cash outflow from returns on investments (1,139) (782)
and servicing of finance
Taxation
UK Corporation tax paid - (734)
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (16,696) (10,912)
Receipts from sales of intangible fixed assets 1,640 4,085
Payments to acquire tangible fixed assets (2,197) (3,197)
Receipts from sales of tangible fixed assets 16 18
Net cash outflow from capital expenditure and
financial investment (17,237) (10,006)
Cash outflow before use of liquid resources and (3,484) (4,008)
financing
Financing
Issue of non-equity share capital 15,000 -
Redemption of ordinary shares (950) -
Bank loan repayments (1,470) (1,177)
Bank loan drawn down - 1,994
Loan notes issued - 10,000
Capital element of finance lease payments - (306)
Net cash inflow from financing 12,580 10,511
Increase in cash 9,096 6,503
Notes to the Accounts
For the year ended 30 June 2004
1. The financial information set out on the attached pages does not
constitute statutory accounts for the years ended 30 June 2004 or 30 June 2003
but is derived from those accounts. Statutory Accounts for the year ended 30
June 2003 have been delivered to the Registrar of Companies and those for the
year ended 30 June 2004 will be delivered following the Company's annual general
meeting. The auditors reported on those accounts; their reports were unqualified
and did not contain a statement under s237 (2) or (3) Companies Act 1985.
2. Analysis of comparative Profit and Loss Account
Operations
excluding
player Player
trading trading Total
£'000 £'000 £'000
Turnover 66,506 - 66,506
Operating Expenses (55,478) (18,692) (74,170)
Operating profit/(loss) 11,028 (18,692) (7,664)
Profit on disposal of intangible fixed assets - 1,329 1,329
Profit/(loss) before interest and taxation 11,028 (17,363) (6,335)
3. Turnover
Turnover, which is all derived from the Group's principal activity, is analysed
as follows:
2004 2003
£'000 £'000
Turnover comprises:
Gate receipts - premier league 16,307 16,414
Gate receipts - cup competitions 3,446 1,490
Sponsorship & corporate hospitality 14,459 13,681
Media and broadcasting 23,891 24,755
Merchandising 3,840 5,262
Other 4,381 4,904
66,324 66,506
All turnover derives from the Group's principal activity in the United Kingdom
and is exclusive of VAT.
Certain types of income have been analysed in a different category of turnover
this year following an exercise to redefine each category to more accurately
reflect the operations of the Group. Gate receipts have been more tightly
defined, resulting in a reallocation of turnover from these categories to the
corporate hospitality and other categories. The comparative figures have been
restated accordingly. Gate receipts - premier league, and gate receipts - cup
competitions reduced by £7,272,000 and £344,000 respectively, whilst sponsorship
& corporate hospitality, and other, increased by £6,786,000 and £830,000
respectively, compared to the amounts shown in the financial statements for the
year ended 30 June 2003. There was also a reclassification of £41,000 from media
and broadcasting turnover to other.
4. Loss per share
Loss per share has been calculated using the weighted average number of shares
in issue in each year.
2004 2003
£'000 £'000
Loss after taxation (2,692) (6,425)
Number Number
Weighted average number of shares in issue 101,909,150 102,041,520
Effect of dilutive potential ordinary shares
Options - 8,481
101,909,150 102,050,001
Basic EPS
Loss per share (2.6)p (6.3)p
Diluted EPS
Loss per share (2.6)p (6.3)p
5. Reconciliation of operating loss to net cash inflow from operating
activities
2004 2003
£'000 £'000
Operating loss (1,189) (7,664)
Depreciation of tangible fixed assets 1,718 2,658
Amortisation and impairment of intangible fixed assets 10,924 18,692
Profit on disposal of fixed assets (11) (18)
Decrease/(increase) in stocks 297 (392)
Increase in debtors (27) (525)
Increase/(decrease) in creditors 3,180 (5,237)
Net cash inflow from operating activities 14,892 7,514
6. Reconciliation of net cash flow to movement in net debt
2004 2003
£'000 £'000
Increase in cash in the year 9,096 6,503
Cash outflow/(inflow) from decrease/(increase) in debt and lease financing 1,470 (10,511)
Loan issue costs - 434
Cash related decrease/(increase) in net debt in the year 10,566 (3,574)
Non cash related increase in net debt in the year (35) (12)
Decrease/(increase) in net debt in the year 10,531 (3,586)
Opening net debt (10,641) (7,055)
Closing net debt (110) (10,641)
This information is provided by RNS
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