Final Results

Tottenham Hotspur PLC 05 October 2005 5 October 2005 TOTTENHAM HOTSPUR PLC Preliminary results for the year ended 30 June 2005 Summary of Results Year ended Year ended 30 June 2005 30 June 2004 £m £m Turnover 70.6 66.3 Operating profit before football trading and depreciation 14.6 11.5 Operating profit before football trading 12.8 9.7 Amortisation and impairment of registrations (12.7) (10.9) Profit / (loss) on disposal of registrations 5.6 (0.4) Net interest payable (0.8) (0.9) Profit / (loss) before tax 4.9 (2.5) Retained profit / (loss) for the financial year 4.1 (2.7) Earnings / (loss) per share - basic 4.2p (2.6)p • Turnover up +6.5% • Operating profit before football trading and depreciation up +27% • Net assets up +8.4% to £45.8m • Nominal net debt of £1.4m • Retained profit of £4.1m Commenting, Daniel Levy, Chairman of Tottenham Hotspur plc, said: These are record results producing the Club's highest ever turnover and operating profits. In addition we retain an enviable net debt position despite investing heavily in the squad over the past couple of years. All these factors underline the robustness of the business we now have but also highlight its potential to grow if we can get all elements of the club right both on and off the pitch. Enquiries: Matthew Collecott, Finance Director tel: 020 8365 5000 Tottenham Hotspur plc www.tottenhamhotspur.com John Bick tel: 07802 211 374 (AIM: TTNM) Chairman's Statement Financial Results The results for the financial year show turnover exceeding £70m for the first time, up from £66.3m in the prior year. Notable contributions came as a result of the Club's progress in cup competitions, finishing ninth in the league against fourteenth in the prior year, and improved merchandising revenues. There was a substantial increase in operating profit before football trading and depreciation to £14.6m compared to £11.5m in the prior year, the key indicator in determining cash generated from the business. Operating profit before football trading was £12.8m compared to £9.7m last year. Profits of £5.6m on the disposal of player registrations during the year led to the club making a profit before tax of almost £5m, compared to a loss before tax of £2.5m in the prior year. As a result the net asset position has increased, strengthening our balance sheet, whilst retaining a net debt position of only £1.4m. These results are discussed in more detail in the operating and financial review. Overview The final league position was considerably better than the previous year and having completed the restructuring of so many departments during the year it was gratifying to see these changes bring positive results - not just in terms of our playing performances but also in terms of the team spirit throughout the club and a renewed optimism from an influx of some of the best senior management in the business. It was clearly disappointing when Frank Arnesen left the club in September this year. However, after an extensive interview and search process we have found someone who we believe has the ability to meet the wide demands of the sporting director's role. Damien Comolli takes up the position with a remit covering scouting, medical, academy and club secretarial and the objective of ensuring we apply best practice to all these areas of the club in order to achieve long term success. Other considerable changes in our restructuring programme have been the complete overhaul of the Academy which is now headed up by John McDermott who joins us from the F.A. John has brought renewed processes, enthusiasm and experience to this key area of the club. We will continue to foster the team approach to everything we do. The key to the Club's success is the continued commitment and enthusiasm of our people, every employee and we are pleased that Maarten Jol has signed a three year commitment to the Club. These latest changes are aligned with the operating and commercial changes, the medical department changes, the coaching staff changes and the number of player changes that have taken place over the past two seasons. We will continue to build on each department as a centre of excellence within the club. On the pitch Again this year there have been significant changes in the make up of the first team squad of players. The players that have left since we last reported to shareholders in our interim report are Simon Davies, Timothee Atouba, Freddie Kanoute, Nicky Eyre, Michael Malcolm, Paul O'Donoghue, Rohan Ricketts and Erik Edman with a number of young players going out on loan to further their experience. We wish them all well. In the same period we welcomed Teemu Tainio, Tom Huddlestone, Jermaine Jenas, Grzegorz Rasiak, Lee Young-Pyo, Edgar Davids, Aaron Lennon, Paul Stalteri and Wayne Routledge. They join Emil Hallfredsson, Mounir el Hamdaoui, Andy Reid, Michael Dawson, Radek Cerny and Mido who joined us part way through the season. Having noted in the prior year's Chairman's statement that the ongoing level of investment was not sustainable, the financial stability and improvement in operations have enabled further investment during the year and since the year end. We now have some unrivalled talent and a young, but clearly large, squad. We will look to strengthen areas where we see weaknesses but ultimately we have to ensure we do not overstep the balance between players being motivated to fight for places and players not being able to reach their potential through lack of opportunity. Off the pitch The club's hospitality team, having been awarded the title of best overall provider of corporate hospitality in both the Premier League and Football League last year, continue to improve their offers. A major investment in the East stand boxes resulted in the box seating being moved outside and all boxes being upgraded to include the latest technology together with a complete refurbishment. Our supporters have, as always, been tremendously loyal and the stadium was 99% full for the 2004/2005 season. The start to the new season shows this level of support continuing strongly in direct contrast to reports of lower attendances at other grounds. The ever-increasing support for the club has resulted in the number of memberships and season ticket holders reaching levels unseen previously at the club. We cannot thank our fans enough for their loyalty and support which underpins this business. However, it remains a challenge for us to ensure that members and a new generation of fans are able to experience the club and we have therefore taken the decision to cap season tickets at a level that enables a guaranteed float of individual match tickets to supporters. We decided to re-engineer the club's website, which has fast become a key communications tool and we have looked to set the standard rather than copy the formula that is so often seen. We have consulted extensively with fans and website developers to bring what we hope will be an ever improving service and this will be launched by the end of 2005. The Club has undertaken the preparatory research and design work for the rebranding of club marks that will take place in phases between now and the end of the current season. The domain name has been changed to reflect the growing international recognition of the brand and is now tottenhamhotspur.com Internationally the club had a successful post-season tour of Mauritius, which was enjoyed by the players and set the scene for the summer break. On the players' return to training the club competed in the South Korean Peace Cup at the start of their pre-season training and won it convincingly, which created confidence in the squad and tested a young team against recent League Champions in their own territories such as PSV Eindhoven and Olympique Lyonnais. We also undertook various community projects to coach children, develop relationships and leave a footprint in South Korea to extend our profile and support in the region. At the end of the season Paul Barber joined the football club as Executive Director to oversee all commercial areas and move them to the next level. Paul joined us from the board of Ogilvy and Mather and has previously worked with the F.A. and brings a mix of football and commercial experience to the club. Tottenham Hotspur Community have furthered their work locally with the Barclays and Football Foundation grant funded refurbishment of Haringey's New River Sports Centre. This will be rebranded as White Hart Lane Community Sports Centre and will be another key centre for our community programmes. With regard to the club's two principal capital projects we continue to prioritise the Academy and new First Team facilities and submitted our planning application at the end of September. There is still a long way to go with respect to the planning and consultation process but it is a very exciting project for the future of the club. The stadium remains the more difficult of the projects and progress remains very slow as we continue to galvanise an approach that works for the local community and the club alike, something that is unlikely to be solved in the short term as the London Development Authority and central government focus on the 2012 Olympics. Outlook Our early exit from the Carling Cup clearly has to temper our overall expectations regarding cup revenues in the current season. In respect of television revenues we believe that a collective centralised deal is in the best interests of the club and its supporters and we support the FAPL's position. We have continued to drive all possible revenue streams to give us the flexibility to meet our objectives and with careful management and cost control we have retained the ability to invest in the squad . Last year we reported that the club had spent £37.5m on players from 1 July 2003 to the end of the 2004 player trading window, since then a further £24.3m has been spent on players. A total commitment of some £61.8m since 1 July 2003 and it follows that we now need to deliver success on the pitch if we are to continue to invest at this level. The significant investment that has taken place in the squad to date means that the Club has the playing resources to improve performances on the pitch, however, with so many new team members time will be needed to forge a strong playing unit. It is encouraging that we have been able to generate cash at the operating level whilst both aligning good young talent for now and the future and ensuring the club's debt is manageable. All these factors underline the robustness of the business we now have but also highlight its potential to grow if we can get all elements of the club right both on and off the pitch. I would like to thank our supporters, shareholders and employees for their continued support. D.P. Levy Chairman 4 October 2005 Operating and Financial Review Turnover Turnover across the Group improved by £4.2m from £66.3m to £70.6m. The most notable increases were a 30% rise in merchandising sales, higher gate receipts from the Cup competitions where the team reached the quarter-finals of both domestic competitions, and a higher finishing position in the F.A. Premier League (FAPL) of ninth, against fourteenth in the prior year, which resulted in an improved merit award from the central FAPL television deal. FAPL gate receipts saw a £0.6m increase to £16.9m. The number of season tickets sold rose by 4% and average attendances by 3% with the club at 99% capacity. Season ticket sales for 2005/2006 have now reached record levels. Cup competition gate receipts were £0.8m higher than in the prior year. The improved F.A. Cup performance meant the team played ten cup matches this year (2003/2004 - seven matches). Sponsorship and corporate hospitality income was broadly in line with last year, falling by 2% from £14.5m to £14.2m. An increase in corporate matchday hospitality sales was offset by a fall in executive box revenue. Sponsorship income suffered as a result of lower income from central FAPL partners. Media and broadcasting revenue increased by £1.6m from £23.9m to £25.5m - this is despite the fact that 2003/2004 was the last, and most lucrative, year of the previous FAPL / Sky domestic television rights deal. The latest three year deal is similar in total value to the previous deal but because Sky are entitled to show more live matches each season, the facility fee received by clubs for each live televised appearance is lower. Total revenue available to the clubs from the current deal is to be spread evenly over each of the three years whereas previously it was stepped and increased year on year. The latter two facts led to a fall in income of £1.8m this year, however an improved FAPL overseas television rights deal (£1.4m), and the increased merit award noted above (£2.0m), more than offset this reduction. Although the current television deal does not expire until 2007, the European Commission has already placed pressure on the FAPL to change the way it sells these rights in order to avoid possible antitrust action for breaking EU competition law. It is possible that the rights will have to be sold to more than one broadcaster from 2007, with the resulting lack of exclusivity meaning that the overall value of the rights could be lower. The Board continuously strive to reduce the Group's dependence on any single revenue stream by developing other areas of the business, and we are confident that should the FAPL suffer a fall in income when the next domestic rights deal is negotiated any negative impact will be sufficiently compensated for by other areas of the business. The Merchandising division has undergone a year of change, with a new management team having been put in place during Summer 2004. Merchandising turnover increased by £1.2m to £5.0m. This is largely due to a new home kit being launched at the start of the season and to the team's improved performance on the pitch. The division has also benefited from a review of its product range and its operations. The Board expects the Merchandising division to continue its growth during 2005/2006. Operating expenses (excluding football trading) Operating expenses, excluding football trading, increased by £1.1m (2.0%) during the year from £56.6m to £57.7m. The largest cost to the business is player wage costs. Over the course of the last few years the Board has aimed to manage these costs more effectively by linking players' wages more closely to performance. This has had the effect of not only rewarding those players who contribute most to the success of the Club, but also results in sustainable player wage costs. Other cost increases in the year which contributed to the overall 2% rise in operating expenses included merchandising cost of sales, which rose as a result of the higher level of sales, buildings rates, and the cost of insuring a larger, younger squad. Operating profit before football trading and depreciation As stated in prior years, this figure is closely monitored by the Board as it influences the level of cash generation the business has achieved from its core operations. For the year ended 30 June 2005 operating profit before football trading and depreciation was a record £14.6m - an increase of £3.1m on the previous year. Operating profit before football trading was £12.8m compared to £9.7m last year. These results illustrate the strength of the Group's business model and provide a stable platform on which to build when striving for greater achievements, on and off the pitch, in the future. Football trading The Club made a profit on disposal of registrations of £5.6m during the year, compared to a loss of £0.4m last year. The sales of Simon Davies, Stephen Carr, Gary Doherty and Helder Postiga generated a combined profit of £5.2m. Performance related receipts on player registrations sold in prior years increased profits further. The profit made on the sale of these registrations provides evidence that the Club's policy of acquiring young players and combining them with the home grown players from the Club's academy provides a more sustainable football trading operation. Player amortisation rose by £1.8m from £10.9m in the prior year to £12.7m this year. The increase is a reflection of the significant level of investment in the playing squad, during the transfer windows since 1 July 2003. Football trading is deducted from the operating profit figure of £12.8m noted above, along with net interest payable, tax and other finance costs to produce a retained profit figure for the year of £4.1m, an improvement of £6.8m on the retained loss of £2.7m last year. Balance Sheet Football trading is responsible for the larger balance sheet movements in the year. Intangible assets have increased by £6.3m - additions of £24.6m being offset by disposals of £5.6m and amortisation of £12.7m. Football trading also explains the increase of £3.7m in debtors. Creditors falling due within one year increased by £4.9m largely due to football trading and an increase in deferred income such as season tickets and corporate hospitality. Group net assets have increased by £3.5m and the strength of the balance sheet is enhanced by the Group's low level of net debt - £1.4m at 30 June 2005. This is particularly pleasing considering the significant investment made in the playing squad during the year and has been achievable as a result of the operating profits generated from a strong business performance. M.J. Collecott Finance Director 4 October 2005 Consolidated Profit and Loss Account Year ended 30 June 2005 Note Operations, Year ended excluding 30 June football Football 2004 trading * trading * Total Total (note 2) £'000 £'000 £'000 £'000 TURNOVER 3 70,550 - 70,550 66,324 Operating expenses (57,738) (12,741) (70,479) (67,513) OPERATING PROFIT / (LOSS) 12,812 (12,741) 71 (1,189) Profit / (loss) on disposal of intangible fixed assets - 5,632 5,632 (381) PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 12,812 (7,109) 5,703 (1,570) Net interest payable (793) (894) PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 4,910 (2,464) Tax charge on profit / (loss) on ordinary activities (707) (178) PROFIT / (LOSS) ON ORDINARY ACTIVITIES AFTER TAXATION 4,203 (2,642) Other finance costs in respect of non equity (99) (50) shares RETAINED PROFIT / (LOSS) FOR THE FINANCIAL YEAR 4,104 (2,692) Earnings / (loss) per share - basic 4 4.2p (2.6)p Earnings / (loss) per share - diluted 4 2.2p (2.6)p *Football trading represents the amortisation, impairment, and the profit / (loss) on disposal, of intangible fixed assets. The above results for the above and prior year all derive from continuing operations. There were no gains or losses in either year other than the profit for the year, and accordingly no statement of total recognised gains and losses is presented. Balance Sheet Group 30 June 30 June 2005 2004 £'000 £'000 FIXED ASSETS Intangible Assets 31,348 25,053 Tangible assets 49,105 48,219 Investments - - 80,453 73,272 CURRENT ASSETS Stocks 395 355 Debtors 11,875 8,171 Cash at bank 9,976 11,497 22,246 20,023 CREDITORS: amounts falling due within one year (37,648) (32,753) NET CURRENT LIABILITIES (15,402) (12,730) TOTAL ASSETS LESS CURRENT LIABILITIES 65,051 60,542 CREDITORS: amounts falling due after more than one year (15,315) (17,049) 49,736 43,493 PROVISION FOR LIABILITIES AND (3,923) (1,229) CHARGES NET ASSETS 45,813 42,264 CAPITAL AND RESERVES Called up share capital 9,520 9,624 Share Premium 21,439 21,340 Revaluation Reserve 2,432 2,480 Capital Redemption Reserve 268 164 Profit and loss account 12,154 8,656 SHAREHOLDERS' FUNDS 45,813 42,264 SHAREHOLDERS' FUNDS MAY BE ANALYSED AS: Equity interests 31,046 27,596 Non-equity interests 14,767 14,668 45,813 42,264 Consolidated Cash Flow Statement Year ended 30 June 2005 Year ended 30 June 2004 Note £'000 £'000 £'000 £'000 Net cash inflow from operating activities 5 21,146 14,892 Returns on investments and servicing of finance Interest received 143 67 Interest paid (919) (824) Non-equity share issue costs - (382) Net cash outflow from returns on investments (776) (1,139) and servicing of finance Taxation UK Corporation tax paid (62) - Capital expenditure and financial investment Payments to acquire intangible fixed assets (23,325) (16,696) Receipts from sales of intangible fixed assets 6,029 1,640 Payments to acquire tangible fixed assets (3,593) (2,197) Receipts from sales of tangible fixed assets - 16 Net cash outflow from capital expenditure and financial investment (20,889) (17,237) Cash outflow before use of liquid resources and (581) (3,484) financing Financing Issue of non-equity share capital - 15,000 Redemption of ordinary shares (654) (950) Bank loan repayments (26) (1,470) Loan notes repayments (260) - Net cash (outflow) / inflow from financing (940) 12,580 (Decrease) / Increase in cash (1,521) 9,096 Notes to the Accounts For the year ended 30 June 2005 1. The financial information set out on the attached pages does not constitute statutory accounts for the years ended 30 June 2005 or 30 June 2004 but is derived from those accounts. Statutory Accounts for the year ended 30 June 2004 have been delivered to the Registrar of Companies and those for the year ended 30 June 2005 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 Football trading trading Total £'000 £'000 £'000 Turnover 66,324 - 66,324 Operating Expenses (56,589) (10,924) (67,513) Operating profit/(loss) 9,735 (10,924) (1,189) Loss on disposal of intangible fixed assets - (381) (381) Profit/(loss) on ordinary activities before interest and taxation 9,735 (11,305) (1,570) 3. Turnover Turnover, which is all derived from the Group's principal activity, is analysed as follows: 2005 2004 £'000 £'000 Turnover comprises: Gate receipts - premier league 16,861 16,307 Gate receipts - cup competitions 4,225 3,446 Sponsorship and corporate hospitality 14,249 14,459 Media and broadcasting 25,488 23,891 Merchandising 4,997 3,840 Other 4,730 4,381 70,550 66,324 All turnover derives from the Group's principal activity in the United Kingdom and is exclusive of VAT. 4. Earnings / (loss) per share Earnings / (loss) per share has been calculated using the weighted average number of shares in issue in each year. 2005 2004 £'000 £'000 Retained profit / (loss) 4,104 (2,692) Finance costs in respect of non equity shares 99 50 Profit / (loss) after taxation 4,203 (2,642) Number Number Weighted average number of shares in issue 98,574,822 101,909,150 Effect of dilutive potential: Ordinary shares options - - Convertible redeemable preference shares 93,720,000 - 192,294,822 101,909,150 Basic EPS Earnings / (loss) per share 4.2p (2.6)p Diluted EPS Earnings / (loss) per share 2.2p (2.6)p 5. Reconciliation of operating profit / (loss) to net cash inflow from operating activities 2005 2004 £'000 £'000 Operating profit / (loss) 71 (1,189) Depreciation of tangible fixed assets 1,807 1,718 Amortisation and impairment of intangible fixed assets 12,741 10,924 Profit on disposal of fixed assets - (11) (Increase) / decrease in stocks (40) 297 Increase in debtors (536) (27) Increase in creditors 7,103 3,180 Net cash inflow from operating activities 21,146 14,892 6. Reconciliation of net cash flow to movement in net debt 2005 2004 £'000 £'000 (Decrease) / increase in cash in the (1,521) 9,096 year Cash outflow from decrease in debt 286 1,470 Cash related (increase) / decrease in net debt in the year (1,235) 10,566 Non cash related increase in net debt in the year (33) (35) (Increase) / decrease in net debt in the year (1,268) 10,531 Opening net debt (110) (10,641) Closing net debt (1,378) (110) This information is provided by RNS The company news service from the London Stock Exchange

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