Interim Results

Tottenham Hotspur PLC 24 March 2004 Date: 24 March 2004 Enquiries: Daniel Levy, Chairman Matthew Collecott, Finance Director Tel: 020 8365 5322 Tottenham Hotspur plc www.spurs.co.uk John Bick, Holborn Tel: 020 7929 5599 TOTTENHAM HOTSPUR PLC Interim Results for the Six Months Ended 31 December 2003 Summary of Results Six months Six months ended ended 31 December 31 December 2003 2002 £m £m Turnover 33.2 32.8 Operating profit before amortisation, impairment and 3.3 2.7 (loss) / profit on sale of player registrations Net interest payable (0.4) (0.2) (Loss) / profit on sale of player registrations (0.3) 0.1 Amortisation and impairment of player registrations (5.5) (11.2) Loss before tax (3.0) (8.6) Loss per share (2.9)p (8.5)p Daniel Levy, Chairman of Tottenham Hotspur plc, said: 'We significantly strengthened the playing squad by investing in new talent during the summer and winter player trading windows. We remain committed to building success and with the intended changes to the management structure in the summer we are confident that we will lay the foundations for the stability required to meet our ambitions for the club. There still remains significant uncertainty within the industry which affects the liquidity of the player market, with notable exceptions, but your board remains committed to moving the club forward.' Chairman's Statement Financial Results The results for the six months show a 1.2% increase in turnover to £33.2m. Operating profit before player trading and amortisation was 22.2% higher at £3.3m. There was a retained loss before tax of £3.0m compared to a loss of £8.6m in the corresponding period last year. The increased turnover came as a result of mixed performances from the respective revenue generating areas of the business which are detailed below. Total gate receipts were £1.1m better than in the same period last year, a result of the team playing four Carling Cup matches in the period (three at home) compared to two in the same period last year (one at home). Premier league gate receipts, however, were lower than in 2002 with average attendances reflecting the poor start to the season (ten home league matches in each period). Media and broadcasting turnover has increased by £0.6m against the prior year which reflects the increased value in the final year of the current premier league TV rights deal. The number of live sky games in the first 6 months of the current financial year was the same as in the six months to 31 December 2002. Sponsorship and match day hospitality turnover has increased by 3.8%. Sponsorship includes our two lead sponsors, Thomson and Kappa. Kappa's agreement with the club runs to 2006 and Thomson has recently renewed its commitment to the club by extending its contract to 2006.In addition we have also extended our relationship with MBNA to 2008. We have continued to focus on key long term sponsorship relationships which give us greater flexibility to create new and improved offers to fans. The increase in Sponsorship revenues is in part offset by adverse results from match day hospitality which reflects the team's early season performance. Whilst overall Gate receipts, Media and Broadcasting and Sponsorship turnover has improved on the prior period we have seen a significant drop in Merchandise turnover against the prior period. Turnover is down by 30% on the same period last year. The Merchandise division suffered from a poor Christmas compounded by reduced attendances at games and reduced in store footfall, which resulted in a drop in match day sales. In addition last year saw the benefit of the new Kappa deal and the launch of the new strips. Cost of sales before amortisation have increased by 2% which reflects the increased number of games compared to the prior year. Administrative costs have been reduced by 9%. Amortisation for the period was £5.5m. Last year, amortisation in the six months to 31 December 2002 was increased by adjustments to the carrying value of certain players, who were subsequently sold. Without this adjustment, amortisation on a like for like basis to 31 December 2003 was £0.6m lower than in the prior period. Whilst a number of players with significant initial transfer fees have left the club there have been material replacements in the summer transfer window. This has enhanced the net book value of the playing squad from £17m at 30 June 2003 to £22.2m at 31 December 2003. In addition the flexibility afforded the club by the fund raising in January has enabled the club to complete deferred player transactions on enhanced terms in a difficult market. The club has remained in the top quartile of spending on players in both the summer and winter transfer windows. It is however acknowledged that this spending pattern is not sustainable over the longer term. On the pitch The poor start to the season has affected the commercial activities throughout the club in one way or another but the New Year has brought better results on the pitch. Changes within the playing squad have been positive and it is gratifying to see that our young players are being chosen to represent their countries at international level. A number of players have left the club since we last reported. Namely Jonathan Blondel, Chris Perry, Bobby Zamora and Kazuyuki Toda who was on a years loan, we thank them for their service,. In the period from the year end to date we have welcomed Mbulelo Mabizela, Frederic Kanoute, Helder Postiga, Stephane Dalmat, who joined us on loan and Michael Brown and Jermain Defoe who joined the club in the new year, in addition we continue to see our academy players come through and gain experience and confidence in the first team. Clearly the squad has changed significantly and your Board is aware of the areas that still need strengthening, this includes the changes in the management structure before the start of next season. With an eye on the future the club continues to place emphasis on our Academy and the next generation of footballers whom we coach from the age of 8 to 19 years of age. The operation involves approximately 150 young players, looked after by 30 full-time and part-time staff. Off the pitch We have always focused on delivering the best possible service to our fans and customers. This has directed the creation of several new products and services. By way of example, the online ticketing service has rapidly grown in popularity as fans recognise the ease with which they can book tickets from the comfort of home or work; the cup guarantee scheme removed the necessity for season ticket holders to request tickets; the Spurs Lodge website for members only, bringing fans closer to the Training Ground, attracted visits from a third of all members in its pilot launch stage; Thomson continue to offer a 5% discount on holidays to members and this was extended to season ticket holders. The Club recognises its role in the community and it's corporate social responsibility. It is an active partner in the community, developing local, young players, working with children and undertaking supportive and charitable activities. These community activities continue to grow and the Club recently received the FA Charter Standard for top quality holiday courses. The scheme's main aims are to create unique opportunities for young people from all parts of the community. As well as raising football standards at grass roots level, the scheme strives to improve all round educational performance, to build confidence, leadership and teamwork in our young people, to combat social exclusion, reduce crime and build stronger communities. Each year through its varied activities the scheme delivers on average each week 150 hours of football coaching, engaging thousands of children in over 100 local schools. Last year the scheme was also able to give over ten thousand free match tickets to local children who otherwise may never have been able to attend a Premiership match. The Club's Study Support Centre runs after school 'Playing for Success' sessions which is a government initiative running in over 90 football and sporting venues; raising achievement by linking education and sport. These activities help to boost students' literacy, numeracy and technology skills using football as the motivating factor. Our nominated charities: The Haven House Foundation Children's Hospice, Cancer Research UK and Orbis have continued to benefit from their association with the Club through collections at matches, tailored fund raising events, auction items and profile building through our communication channels and we thank our supporters, staff and players for their support. Our Supporters We recognise that the Club would not exist without its supporters and this loyalty is never taken for granted. In order to maintain the high standard of service expected the Club seeks opinions from supporters with regard to key issues through regular meetings and dialogue with the Tottenham Hotspur Supporters Trust, questionnaires through our official communication channels and invariably through responses to the numerous letters we receive daily. We continue to invest in better communications and dialogue with our fans. An enhanced season ticket package for 2004/05, which will be announced in April, will be a prime example of the Club's response to fans. Outlook We go forward with secured funding following the successful completion of the share issue in January and I should like to thank those shareholders who supported this. Our primary objectives continue to be to put in place the appropriate management, players and staff both on and off the pitch to bring success to our club. Finally, I should like to thank our supporters, shareholders and employees for their continued support. Daniel Levy Chairman 23 March 2004 Consolidated Profit and Loss Account For the six months ended 31 December 2003 Six months ended 31 December 2003 Operations Player Total Six months Year excluding trading* ended 31 ended 30 player (Note 2) December June 2003 trading* 2002 Note £'000 £'000 £'000 £'000 £'000 Turnover: Gate receipts - Premier League 11,216 11,216 12,031 23,686 - Cup competitions 2,975 2,975 1,061 1,834 Media and Broadcasting 10,824 10,824 10,197 24,796 Sponsorship and match day 3,504 3,504 3,377 6,895 hospitality Merchandising 2,703 2,703 3,875 5,262 Other 2,018 2,018 2,209 4,033 33,240 33,240 32,750 66,506 Cost of sales (24,600) (5,511) (30,111) (35,376) (64,353) Gross profit 8,640 (5,511) 3,129 (2,626) 2,153 Administrative expenses (5,348) (5,348) (5,875) (9,817) Operating profit/(loss) 3,292 (5,511) (2,219) (8,501) (7,664) (Loss)/Profit on disposal of (343) (343) 118 1,329 registrations Profit/(loss) before interest 3,292 (5,854) (2,562) (8,383) (6,335) and taxation Net interest payable (441) (245) (783) Loss on ordinary activities (3,003) (8,628) (7,118) before taxation Tax credit on loss on ordinary 3 - - 693 activities Loss on ordinary activities (3,003) (8,628) (6,425) after taxation Retained loss for the period (3,003) (8,628) (6,425) Loss per share - basic 5 (2.9)p (8.5)p (6.3)p Loss per share - diluted 5 (2.9)p (8.5)p (6.3)p *Player trading represents the amortisation and impairment of registrations and the profit or loss on disposal of registrations. There were no recognised gains or losses other than as stated in the Consolidated Profit and Loss Account above. The results for each period are all from continuing operations. Consolidated Balance Sheet as at 31 December 2003 31 December 31 December 30 June 2003 2002 2003 £'000 £'000 £'000 Fixed assets: Intangible 22,150 24,243 17,019 Tangible 46,784 46,777 46,845 68,934 71,020 63,864 Current assets: Stocks 762 969 652 Debtors 9,601 8,720 7,957 Cash at bank - - 2,401 10,363 9,689 11,010 Creditors - Amounts falling due within one year (36,313) (35,225) (26,044) Net current liabilities (25,950) (25,536) (15,034) Total assets less current liabilities 42,984 45,484 48,830 Creditors - Amounts falling due after more than one year (13,698) (14,705) (16,541) 29,286 30,779 32,289 Provisions for liabilities and charges: Deferred taxation (1,051) (1,744) (1,051) Net assets 28,235 29,035 31,238 Capital and reserves: Called-up share capital 5,102 5,102 5,102 Share premium account 11,358 11,358 11,358 Revaluation reserve 2,504 2,552 2,528 Profit and loss account 9,271 10,023 12,250 Equity shareholders' funds 28,235 29,035 31,328 Consolidated Cash Flow Statement For the six months ended 31 December 2003 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2003 2002 2003 £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities (note 6) 4,460 (683) 7,514 Returns on investments and servicing of finance: Interest received 43 12 43 Interest paid (699) (177) (389) Interest element of finance lease payments - (1) (2) Loan issue costs - - (434) Net cash outflow for returns on investments and servicing of (656) (166) (782) finance UK corporation tax paid - - (734) Capital expenditure and financial investment: Payments to acquire intangible fixed assets (10,888) (9,559) (10,912) Payments to acquire tangible fixed assets (728) (2,525) (3,197) Receipts from sales of intangible fixed assets 1,410 3,199 4,085 Receipts from sales of tangible fixed assets - - 18 Net cash outflow from capital expenditure and financial (10,206) (8,885) (10,006) investment Cash outflow before use of liquid resources and financing (6,402) (9,734) (4,008) Financing: Bank loan repayments (588) (588) (1,177) Bank loan drawn down - 1,375 1,994 Other loan drawn down - 10,000 10,000 Capital element of finance lease payment - (215) (306) Net cash (outflow)/inflow from financing (588) 10,572 10,511 (Decrease)/increase in cash (6,990) 838 6,503 Notes to the Consolidated Interim Statements For the six months ended 31 December 2003 1. Accounting policies The financial information given above does not constitute statutory accounts within the meaning of Section 240(5) of the Companies Act 1985. The figures for the year ended 30 June 2003 have been extracted from the statutory accounts which have been delivered to the Registrar of Companies. The audit report on these accounts was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. Basis of preparation The interim financial statements have been prepared on the basis of the accounting policies set out in the statutory accounts for the year ended 30 June 2003. Intangible fixed assets The costs associated with the acquisition of players' registrations and coaching staff are capitalised as intangible fixed assets. These costs are fully amortised over their useful economic lives, generally in equal annual instalments over the period of the respective contracts. Players' registrations are written down for impairment when the carrying value exceeds the amount recoverable through use or sale, and the reduction in value is considered permanent. Signing on fees Signing on fees are charged to player and match expenses in the Profit and Loss Account in the accounting period in which they are payable. Income recognition Ticket income is recognised when the matches take place. Fixed elements of broadcasting contracts are taken over the football season, with facility fees taken when earned. One unit of the merit award is taken over the course of the season, with the remainder of the award recognised when known at the end of the season. These statements were approved by the Board of Directors on 23 March 2004 and are neither audited nor reviewed. These results were announced to the Stock Exchange on 24 March 2004 and are being posted to all shareholders. Copies will be available to personal callers at the registered office, Bill Nicholson Way, 748 High Road, Tottenham, London, N17 0AP. 2. Player Trading 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2003 2002 2003 £'000 £'000 £'000 Proceeds 930 118 1,936 Net book value of disposals (1,273) - (607) (Loss)/profit on disposal of registrations (343) 118 1,329 The amortisation charges on registrations included in cost of sales for the comparative periods were £11,170,000 for the six months ended 31 December 2002 and £18,692,000 for the year ended 30 June 2003. 3. Taxation There is no current tax charge for the period as a result of estimated tax losses for the full year. No deferred tax asset has been recognised in respect of these losses. Other deferred taxation movements in the period are not considered to be material. 4. Dividends The Directors do not recommend an interim dividend. Notes to the Consolidated Interim Statements For the six months ended 31 December 2003 continued 5. Loss per share The loss per share has been calculated using the weighted average number of shares in issue in each period. 6 months ended 6 months Year ended 31 December ended 30 June 2003 31 December 2003 2002 £'000 £'000 £'000 Loss after taxation (3,003) (8,628) (6,425) Number Number Number Weighted average number of shares in issue 102,041,520 102,041,520 102,041,520 Effect of dilutive potential ordinary shares Options 9,870 11,981 8,481 102,051,390 102,053,501 102,050,001 Basic EPS Loss per share (2.9)p (8.5)p (6.3)p Diluted EPS Loss per share (2.9)p (8.5)p (6.3)p 6. Reconciliation of operating loss to net cash inflow/(outflow) from operating activities 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2003 2002 2003 £'000 £'000 £'000 Operating loss (2,219) (8,501) (7,664) Depreciation charge 789 2,054 2,658 Amortisation of registrations 5,511 11,170 18,692 Profit on disposal of tangible fixed assets - - (18) Increase in stock (110) (709) (392) Increase in debtors (2,125) (2,219) (525) Increase/(decrease) in creditors 2,614 (2,478) (5,237) Net cast inflow/(outflow) from operating activities 4,460 (683) 7,514 7. Reconciliation of net cash flow to movement in net debt 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2003 2002 2003 £'000 £'000 £'000 (Decrease)/increase in cash in the period (6,990) 838 6,503 Cash outflow/(inflow) from decrease/(increase) in debt and 588 (10,572) (10,511) lease financing Loans issue costs - - 434 Cash increase in net debt in the period (6,402) (9,734) (3,574) Non cash increase in net debt in the period (11) - (12) Net debt at start of period (10,641) (7,055) (7,055) Net debt at end of period (17,054) (16,789) (10,641) 8. Post balance sheet events On 21 January 2004 at the Extraordinary General Meeting of the company the shareholders approved the issue of 60,000 convertible redeemable preference shares ('preference shares') in the company raising £15m, before expenses, for the club. At the same time the company moved its listing to AIM and both ordinary and preference shares are now trading on AIM. On 2 February the club announced the agreement to acquire the registration of Jermain Defoe for five years for an initial consideration of £6m with a further £1m being payable based on specific performance criteria. Bobby Zamora joined West Ham as part of this transfer agreement. Officers and advisers Executive Chairman Daniel Levy Executive Directors Matthew Collecott Paul Kemsley David Pleat Non -Executive Director and Vice Chairman David Buchler Company Secretary Matthew Collecott Registered office Bill Nicholson Way 748 High Road Tottenham London N17 OAP Registered number 1706358 Auditors Deloitte & Touche LLP Chartered Accountants London Bankers HSBC Bank plc 70 Pall Mall London SW1Y 5EZ Nominated Adviser and Stockbrokers Seymour Pierce Limited Buckersbury House 3 Queen Victoria Street London EC4N 8EL Registrars Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU This information is provided by RNS The company news service from the London Stock Exchange

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