Final Results - Turnover Up 36.5%

TOTTENHAM HOTSPUR PLC 27 October 1999 TOTTENHAM HOTSPUR PLC Notes to the preliminary announcement for the year ended 31st July 1999. 1. The financial information set out on the attached pages does not constitute statutory accounts for the years ended 31st July 1999 or 31st July 1998 but is derived from those accounts. Statutory accounts for the year ended 31st July 1998 have been delivered to the Registrar of Companies and those for the year ended 31st July 1999 will be delivered following conclusion of the Company's forthcoming Annual General Meeting. The auditors have reported on these accounts and their reports are unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. The Financial Statements have been prepared on the basis of the accounting policies in the previous year's financial statements. Copies of the Report and Accounts will be mailed to shareholders on 1Oth November 1999. 2. No dividend payment. 3. Turnover Turnover, which is all derived from the Group's principal activity, is analysed as follows: Year Year ended ended July 1999 July 1998 £'000 £'000 Gate receipts - Premier League 15,907 12,112* Gate receipts - Cup Competitions 6,411 2,177* Television 9,002 6,442 Sponsorship 6,067 5,555 Merchandising 3,758 3,584 Other 1,440 1,319 ------ ------ 42,585 31,189 ====== ====== Turnover all derives from activities in the United Kingdom. * 1998 - restricted capacity due to rebuilding of North Stand. For release 28 October 1999 TOTTENHAM HOTSPUR PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31st JULY 1999 1999 1998 £m £m Turnover 42.6 31.2 Operating profit before amortisation 8.9 6.2 Profit/(loss) before tax 1.3 (1.0) Basic EPS 0.8p (3.1)p Dividend - 0.58p HIGHLIGHTS Worthington Cup Winners Qualification into European Competition FA Cup Semi-Finalists Premier League - mid table Turnover £42.6m - an increase of 37% Operating profit before amortisation of registrations up 44% to £8.9m Profit before tax £1.3m 4. Earnings per share Earnings per share have been calculated using the weighted average number of shares in issue in each year. Year Year ended ended July 1999 July 1998 £'000 £'000 Profit/(Loss) after taxation 846 (3,162) --- ------- Weighted average number of shares in issue 100,951,384 100,725,780 Effect of dilutive potential ordinary shares Options 445,717 1,076,365 ------- 101,397,101 101,802,145 ============ =========== Basic EPS Earnings/(Loss) per share 0.8p (3.1)p Diluted EPS Earnings/(Loss) per share 0.8p (3.1)p 5. Operating Loss This is stated after charging/(crediting) the following: Year Year ended ended July 1999 July 1998 £'000 £'000 Depreciation of tangible fixed assets: - owned 1,134 868 -leased 276 126 Amortisation of registrations 9,087 7,893 Release of grants - deferred credit (50) (48) Auditors' remuneration and expenses: - audit fee 38 34 - other services 43 33 Operating lease rentals: - land and buildings 150 134 - other 108 1 ----- ----- 6. Reconciliation of operating loss to net cash inflow from operating activities Year Year ended ended July 1999 July 1998 £'000 £'000 Operating loss (170) (1,711) Depreciation charge 1,410 1,153 Amortisation of registrations 9,087 7,893 Loss on disposal of tangible fixed assets 237 2 (Increase)/decrease in stocks (106) 95 Increase in debtors (1,482) (522) Increase in creditors 4,555 3,061 ------ ----- Net cash inflow from operating activities 13,531 9,971 ------ ----- 7. Reconciliation of net cash flow movement in net (debt)/funds Year ended Year ended July 1999 July 1998 £'000 £'000 Decrease in cash in the year (3,601) (388) Cash outflow from decrease in debt and lease financing 1,618 1,427 Cash inflow from decrease in liquid resources (399) (8,276) ------- ------- Change in net funds resulting from cash flows (2,382) (7,237) New finance leases - (1,469) ------- ------- Movement in net funds in the year (2,382) (8,706) Net (debt)/funds at 1st August (3,020) 5,686 ------- ------- Net (debt) at 31st July (5,402) (3,020) ------- ------- Consolidated Profit and Loss Account for the year ended 31st July 1999 1999 1998 Note £'000 £'000 Turnover 3 42,585 31,189 Cost of sales (28,616) (21,132) -------- -------- Gross profit 13,969 10,057 Administrative expenses (5,052) (3,875) -------- -------- Operating Profit before Amortisation of Registrations 8,917 6,182 Amortisation of registrations (9,087) (7,893) -------- -------- Operating Loss 5 (170) (1,711) Profit on disposal of registrations 1,889 780 -------- -------- Profit/(Loss) before Interest and Taxation 1,719 (931) Net interest payable (426) (39) -------- -------- Profit/(Loss) on Ordinary Activities before Taxation 1,293 (970) Tax charge on profit/(loss) on ordinary activities (447) (2,192) -------- -------- Profit/(Loss) on Ordinary Activities after Taxation 846 (3,162) Equity dividends - (584) -------- -------- Retained Profit/(Loss) for the Year 846 (3,746) ======== ======== Earnings/(Loss) per Share - basic 4 0.8p (3.1)p Earnings/(Loss) per Share - diluted 4 0.8p (3.1)p Balance Sheets as at 31st July 1999 Group Company 1999 1998 1999 1998 £'000 £'000 £'000 £'000 Fixed assets: Intangible assets 27,627 20,633 - - Tangible assets 46,842 45,833 46,771 45,759 Investments - - 1,345 1,345 -------- -------- -------- -------- 74,469 66,466 48,116 47,104 -------- -------- -------- -------- Current assets: Stocks 450 344 450 344 Debtors 5,799 3,541 4,376 723 Cash at bank and in hand - 414 - - -------- -------- -------- -------- 6,249 4,299 4,826 1,067 -------- -------- -------- -------- Creditors: Amounts falling due within one year (32,003) (22,101) (13,544) (10,585) -------- -------- -------- -------- Net current liabilities (25,754) (17,802) (8,718) (9,518) -------- -------- -------- -------- Total assets less current liabilities 48,715 48,664 39,398 37,586 Creditors: Amounts falling due after more than one year (3,617) (4,384) (3,570) (4,365) -------- -------- -------- -------- 45,098 44,280 35,828 33,221 Provisions for liabilities and charges (3,950) (4,152) - - -------- -------- -------- -------- Net assets 41,148 40,128 35,828 33,221 ======== ======== ======== ======== Capital and reserves: Called up share capital 5,075 5,037 5,075 5,037 Share premium account 11,259 11,123 11,259 11,123 Revaluation reserve 2,716 2,764 2,376 2,424 Profit and loss account 22,098 21,204 17,118 14,637 -------- -------- -------- -------- Equity shareholders' funds 41,148 40,128 35,828 33,221 ======== ======== ======== ======== Consolidated Cash Flow Statement for the year ended 31st July 1999 1999 1998 Note £'000 £'000 £'000 £'000 Net cash inflow from operating activities 6 13,531 9,971 Returns on investments and servicing of finance: Interest received 48 446 Interest paid (278) (262) Interest element of hire purchase and finance lease payments (196) (136) ----- ----- Net cash (outflow)/inflow for returns on investments and servicing of finance (426) 48 UK corporation tax (including advance corporation tax) (287) (251) Capital expenditure and financial investment: Payments to acquire intangible fixed assets (13,902) (9,614) Receipts from sales of intangible fixed assets 1,436 2,436 Payments to acquire tangible fixed assets (2,661) (8,836) Receipts from sales of tangible fixed assets 5 10 -------- -------- Net cash outflow for capital expenditure and financial investment: (15,122) (16,004) Equity dividend paid: (252) (1,007) -------- -------- Cash flow before use of liquid resources and financing: (2,556) (7,243) Management of liquid resources: Cash taken off short-term deposit 399 8,276 Financing: Net decrease in obligations under hire purchase and lease contracts (618) (402) Issue of ordinary share capital 174 6 Bank loan repayments (1,000) (1,000) Other loans repaid - (25) ------- ------- Net cash outflow from financing (1,444) (1,421) Decrease in cash (3,601) (388) ======= ======= CHAIRMAN'S STATEMENT Results for the Year Ended 31st July 1999 ----------------------------------------- Overview -------- I am pleased to report an improvement in performance both on and off the field. The Club won its first major trophy for eight years qualifying for European competition in the process and putting us back on course towards our objective of consistently challenging for major honours. On the financial side, turnover increased 37% to £42.6m (1998 - £31.2m) with operating profits of £8.9m before amortisation of registrations (1998 - £6.2m) and profit before tax increased to £1.3m (1998 - £1.0m loss). Income ------ League match receipts increased by 31% reflecting the increase in stadium capacity to just over 36,000 compared to a restricted capacity last year due to the development of the North Stand. The average Premier League attendance was 34,149 (1998 - 29,145). In addition, our achievements in reaching the final of the Worthington Cup and the Semi-Final of the FA Cup resulted in Cup match income being trebled. The total attendance at White Hart Lane throughout the season was 836,000 (1998 - 650,000). Further to this, away matches screened on the Jumbotron attracted increased interest amongst our supporters. Television income in total was 40% up on last year. Most of this increase resulted from the BskyB Premier League contract together with the coverage of the Cup runs, and our improved League position of eleventh compared to fourteenth last year. In total we were shown live on television thirteen times compared to six the previous season. Sponsorship income grew 9%, largely the result of matchday sponsorships. Merchandise income shows an increase of only 5% but this understates the trend. The 1998/99 season was the last year of our sponsorship agreements with Pony and Hewlett Packard. Understandably, there was a reluctance on the part of supporters to purchase merchandise incorporating brands which were about to change. As a result merchandise sales for the first 50 weeks of the year were 12% down on the previous year. The new adidas/Holsten range was launched on 15 July 1999, coinciding with the opening of our new Megastore at White Hart Lane. During the last two weeks of the year sales represented 22% of the year's total - leaving overall sales up 5% for the year. The first two months of 1999/00 has seen sales more than double those of the same period of 1998/99. We have launched two new kits and have two new sponsors which have given sales a one-off boost compared to the same period last year. Clearly this level of increase is not sustainable but the figures undoubtedly show that we are bucking the negative trend reported by other clubs and sportswear retailers. Expenses -------- The main increase in costs emanates from the Playing and Coaching Department. Payroll costs in this area have risen by 31% to £20.2m (1998 - £15.4m), although as a ratio of turnover the proportion has fallen to 47% from 49% last year. Other cost increases have arisen from depreciation on the new North Stand and training ground developments as well as the share of Cup revenues paid over to visiting clubs. Other variable costs have increased in line with turnover. Operating Profit before Amortisation of Registrations ----------------------------------------------------- Operating profit before amortisation and profit on disposal of registrations stands at a healthy £8.9m - a 44% increase on last year (1998 - £6.2m). The most significant factor here is that for this year turnover has increased more than operating costs - a reversal of previous years' trends. This profit has been achieved without the benefit of European football and as such the underlying strength of the business compares well with other clubs. Player Trading -------------- We have spent £16.1m on strengthening our First Team squad and this has inevitably had a negative impact on amortisation, which for the year was £9.1m compared to £7.9m last year. We have released players on reaching the end of their contracts. We have also sold other players considered not up to the standard required of the first team. This has generated a profit of £1.9m. However, some highly paid players who are no longer part of the manager's plans are a drain on our payroll and amortisation charge. Efforts are being directed to address this situation. Profit Before Tax ----------------- A loss before tax of £1m last year has been converted into a profit before tax of £1.3m this year. Cashflow -------- The Group generated operating cashflow of £13.5m (1998 - £10.0m), £12.5m of this was taken up in net expenditure on player transfers and a further £2.7m was spent on stadium and training ground developments. Repayment of loans and hire purchase obligations together with interest charges accounted for £1.9m resulting in a net outflow of cash of £3.6m. Dividend -------- As indicated at the interim stage your Board of Directors is not proposing a dividend. It is their opinion that surplus cash can be better used by reinvesting in the business. Commercial ---------- The White Hart Lane stadium is now complete and meets my objective of several years ago. We now have a fantastic stadium which compares with the best in the country and is one which our supporters can be proud of. Sight lines are terrific from all but a very small number of seats and the atmosphere within the stadium on matchdays is superb. We have sold a record 19,000 season tickets for the current season and in addition we regularly cater for over 3,000 supporters enjoying hospitality packages. There is a potential for further development of the stadium by building above either the East or West Stands. This option is being investigated as a matter of prudence but for the moment I think we have it about right. I would like to take this opportunity to formally welcome adidas and Holsten as our new sponsorship partners both of whom have entered into three year contracts. These are two world class brands that complement our own image and brand. We are pleased with the progress made in our Merchandise Division. Performance to date is at the very top end of our expectations. We are shortly to open a new store in prime space in Harlow and are still searching for a number of other sites. However, the main growth in this area in the long term may come through internet and overseas sales and we will be investigating these areas extensively. A further recent development has been the launch of the White Hart Lane Conference Centre. This was a natural progression. We have invested heavily in corporate facilities over past years and yet only use the stadium about twenty-four times a year. Conference facilities are now available every non-match day and include thirteen lounges, over one hundred and twenty executive boxes and an indoor sports arena. Our long standing catering partner, Letheby & Christopher provides food and beverages. In short, we can offer anything you would expect from a first class conference facility with the added attraction of a view of the pitch and the history of a world famous football stadium. This development required some additional capital investment but we have already received future bookings which are very encouraging. Football -------- George Graham became first team manager on 1st October 1998. We achieved mid table status in the Premier League and won the Worthington Cup giving us a gateway into Europe. George Graham, his staff and team are to be congratulated on their success. The Club paid £3m to Leeds United for the transfer of George Graham's services. We have also invested in the squad bringing in Mauricio Taricco, Steffen Freund, Tim Sherwood, Chris Perry and Willem Korsten costing a total of £16.1m. Since the year end we have signed Oyvind Leonhardsen for a further £3.1m. These acquisitions will add £7.0m to our annual operational expense which are additional to the £22.2m capital spent since George Graham's appointment. The Board and Manager are aware that further squad strengthening is required and our efforts are being targeted in that direction. We continue to invest heavily in our Youth Academy and much emphasis is being placed in this area. Indeed, at the Derby County Premier League game this month it was refreshing to see six of the players in the squad developed from youth football at Tottenham. It will take two or three seasons to see the first successes from the current Academy set-up. Our under sixteen group at present contains some highly promising boys and we hope to see several advance to compete for first team places in three or four years time. Outlook ------- The two factors likely to have the most influence on the direction of football in the foreseeable future are television rights and players' remuneration. With the current BskyB/Premier League contract expiring at the end of next season there are some tough negotiations to be had. The introduction of digital television now gives clubs many more options collectively and individually. We will be able to boost our income significantly from this source. On the other side of the pitch however stands Bosman. It is difficult to see an abatement to the increasing wage demands of players. Some players who perform well may want improved contracts or threaten to leave. Others may honour contracts but may be back-up players or have become inactive through injury. This can lead to spiralling wages and it is unlikely that any collective caps on wages can ever be imposed. The Board and Manager agree to have sensible wage limits which would not preclude us attracting top players. Our key objective is to maximise shareholder value, however, we will only achieve that aim by becoming a recognised force in English and European football. To this end we must continue to maximise the potential of our commercial activities in order to invest in the football side of the business. With further strengthening of the squad I hope that we will build on our success of last year. I was pleased to recently announce the re-appointment of Sam Chisholm as a non- executive director. I made the same announcement in my statement last year but then Mr. Chisholm had to step down when he became an adviser to the Premier League. Mr. Chisholm brings a wealth of experience from the media industry. As usual our supporters turned out in numbers last season excelling themselves at White Hart Lane and on our travels and my personal thanks go to them and to our many sponsors and executive members. A. M. Sugar 27 October 1999

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