Interim Results
Tottenham Hotspur PLC
28 March 2007
Date: 28th March 2007
TOTTENHAM HOTSPUR PLC
Interim Results for the Six Months Ended 31 December 2006
Financial Highlights
Six months Six months
ended ended
31 December 2006 31 December 2005
£m £m
Turnover 47.8 36.3
Amortisation of intangible fixed assets (8.6) (6.7)
Profit on sale of intangible fixed assets 15.2 8.3
Profit before tax 20.0 4.4
Retained profit for the financial period 13.8 2.5
Earnings per share - basic 14.8p 2.6p
Earnings per share - diluted 7.9p 1.9p
Daniel Levy, Chairman of Tottenham Hotspur plc, said:
'These results reflect a strong performance over the six months from all areas
of the business, benefiting particularly from the uplift in our new key
sponsorship deals, the significant profit on player trading during the first six
months and an increase in turnover across the Club as a result of our progress
in Cup and European competition. The Club is continuing to perform strongly in
the second half in the domestic league and European competition.'
Enquiries:
Daniel Levy, Chairman
Matthew Collecott, Finance Director Tel: 020 8365 5322
Tottenham Hotspur plc www.tottenhamhotspur.com
John Bick Tel: 07802 211374
Chairman's Statement
Financial Results
I am pleased to report record results for the first six months of the financial
year. Turnover from key operational areas was higher than in the corresponding
period last year. In fact, turnover for this past six months is higher than the
Club's annual turnover prior to the new management team coming into the business
six years ago. The 32% increase in turnover comes primarily from the uplift in
our key sponsorship deals and the progress in Cup and European competition.
The Club generated an operating profit of £14.3m before amortisation of
intangible fixed assets. Beyond the operating line there was a profit on
disposal of £15.2m, which after all other football trading brings the profit on
ordinary activities before interest and taxation to £20.9m (2005: £5.8m).
Premier League gate receipts were marginally higher than in the same period last
year, representing the same number of league games with attendances consistently
at or near capacity. The key difference for the period was the receipts from Cup
competitions, which were £4.5m higher than in the corresponding period last year
due to the five additional home games played in the period. This clarifies the
impact of progressing in all competitions and the potential impact of European
success, which must be sustained as we move forward.
Sponsorship income of £7.0m for the period was £3.8m up against the
corresponding prior period. Our two new key sponsorship relationships started
this season with MANSION and PUMA - both of which we are proud to take on tour
with us as we continue our journey in Europe.
Our Corporate Hospitality also contributed a strong performance, producing
income of £5.9m (2005: £5.3m) boosted by the income from additional Cup games.
Media and broadcasting revenues in the period rose by £1.7m, largely due to
increased live Sky television appearances compared to the same period last year
but also from the sale of broadcasting rights for the Club's home UEFA Cup
games. As noted in the press and in our Annual Statement, this revenue stream
will continue to outperform prior years as the new media deals for domestic and
overseas rights from the 2007/2008 season are substantially higher.
The Merchandising division once again performed strongly against the same period
last year, with turnover up by £1.5m. A reflection of the increased number of
games played over the period, and improved product offering aligned with our new
technical sponsor, PUMA.
Other income is marginally down as the comparative period includes the Club's
tour of South Korea, where we won the Peace Cup.
Operating expenses before amortisation were 4% higher at £33.5m, compared to
£32.1m in the comparative period. The key increment being player salaries and
the additional cost of transporting the team around Europe.
Amortisation of intangible fixed assets continues to increase, seeing a 30%
rise, which reflects the continued investment in the squad. This is balanced by
the profit on disposal of players, which was £15.2m, primarily as a result of
the sale of Michael Carrick to Manchester United in August 2006.
During the period the Club drew down £20.0m of securitised funding which is
repayable over a 16 year period. This was set up to fund the Club's major
investment in the proposed new Academy and First Team Facility. These monies
have been ring fenced from the Club's operational requirements, together with
additional funds from the Club's own resources while the planning process
continues. We have taken a prudent approach to the long-term funding of projects
and will continue to segregate further funds as we move forward to deal with
both this and the Stadium project.
The overall position is a significant improvement as we continue to push every
area of the Club to perform at its best. The financial position remains strong
and we remain in the elite group of Europe's wealthiest clubs, as defined by the
Deloitte Football Money League. The key is to build on European progression and
ensure we attain greater consistency in The FA Premier League and in all
domestic Cup competitions.
On the pitch
The season's league performance started slower than in the corresponding period
last year where we ended the calendar year in fourth position. Again we had new
players to integrate into the squad and the addition of a significant number of
Cup games. Since we last reported we have welcomed Ben Alnwick, England U21
goalkeeper, who joins us from Sunderland, Ricardo Rocha who joined us from
Benfica and Adel Taarabt who joins us from Lens. Calum Davenport and Marton
Fulop left the Club during this period and Edgar Davids and Stuart Lewis were
released from their contracts. We wish them well and thank them for their
services to the Club.
It is important to reiterate that we continue to look for excellent young
talent, the investment over the last few years in some of Europe's best young
prospects often goes unnoticed, but the Club is currently investing at
unprecedented levels at a time when competition for young players to join the
Academy and development squads is high. We welcome Alex Olsen and Dean Parrett
to our Academy.
Off the pitch
We continue to further develop our main capital expenditure projects, namely the
First Team and Academy Training Facility and our Stadium options. In respect of
the former, as expected, and as with many similar applications, this process of
gaining planning permission has now gone to appeal. The Academy is at a
commercially sensitive stage and we consequently cannot report in further
detail.
Maximising the potential of the Stadium also remains high on our agenda, but we
are determined that any proposal should not only meet the future objectives of
the Club, but should do so in a manner which in no way undermines the Club's
financial stability and the ability to continue to invest in the team. It has,
after all, been the investment in the team which has paid dividends throughout
the whole of the Club and is reflected in the record performance across all
parts of the business.
During this period we have been busy working on the re-housing of the Club's
Ticket Office. It has always been an issue that it was located by the away fan's
stand and this, coupled with the need for a systems upgrade to meet our desire
to improve and integrate systems, provided the correct moment to move the office
to the Paxton Road family stand and merge with the Members department. When this
is fully operational we will be able to offer better, faster and more services.
Outlook
Logistically, the additional number of games so far this season has created its
own problems for staff and the team, but the infrastructure and organisation at
the Club have proved flexible and robust. We are aware of the pressure the Club
feels when we are playing every three days or preparing for a European game and
I am proud of the way everyone has responded.
With further progress in Europe and having made the quarter finals in all
competitions this year, no one is more eager than this Board to come away with
silverware, but we also recognise the need to secure further European
competition next season and to continue to do so on a consistent basis.
Acquiring and developing quality players in the First Team is integral to
achieving success and we are committed to building a squad with world class,
long-term contracted players.
My final words must go to our fans who make White Hart Lane a difficult place
for visiting teams. Having travelled with fans to away games here and in Europe,
it fills me with pride to see the strength of support we take with us. Again
thank you all for your magnificent support of this great Club.
D P Levy
28 March 2007
Consolidated Profit and Loss Account
For the six months ended 31 December 2006
Six months ended 31 December 2006
Operations
excluding Six months
football Football ended 31 Year ended
trading* trading* December 2005 30 June
(Note 2) Total 2006
Note £'000 £'000 £'000 £'000 £'000
Turnover:
Gate receipts - Premier League 10,443 10,443 10,288 17,428
Gate receipts - Cup competitions 4,511 4,511 36 146
Sponsorship and corporate 12,854 12,854 8,499 15,730
hospitality
Media and broadcasting 10,905 10,905 9,213 28,687
Merchandising 5,199 5,199 3,688 5,182
Other 3,858 3,858 4,526 6,968
47,770 47,770 36,250 74,141
Operating expenses (33,459) (8,621) (42,080) (38,737) (83,561)
Operating profit/(loss) 14,311 (8,621) 5,690 (2,487) (9,420)
Profit on disposal of intangible 2 - 15,180 15,180 8,284 12,299
fixed assets
Profit before interest and taxation 14,311 6,559 20,870 5,797 2,879
Net interest expense (852) (1,414) (2,261)
Profit on ordinary activities 20,018 4,383 618
before taxation
Tax charge on profit on ordinary 3 (6,254) (1,921) (2,193)
activities
Profit/(loss) on ordinary 13,764 2,462 (1,575)
activities after taxation and
retained profit for the period
Earnings per share - basic 5 14.8p 2.6p (1.7p)
Earnings per share - diluted 5 7.9p 1.9p (1.7p)
*Football trading represents the amortisation, impairment, and the profit/(loss)
on disposal of intangible fixed assets and other football trading related income
and expenditure.
The results for the above and prior periods all derive from continuing
operations.
Consolidated Balance Sheet
as at 31 December 2006
31 December 31 December 30 June
2006 2005 2006
£'000 £'000 £'000
Fixed assets
Intangible assets 55,781 37,533 30,264
Tangible assets 49,935 48,811 49,762
105,716 86,344 80,026
Current assets
Stocks 629 1,067 775
Debtors 19,992 14,850 20,034
Cash at bank 26,285 10,127 34,581
46,906 26,044 55,390
Creditors: amounts falling due within one year (64,395) (47,718) (73,114)
Net current liabilities (17,489) (21,674) (17,724)
Total assets less current liabilities 88,227 64,670 62,302
Creditors: amounts falling due after more than one
year (41,686) (26,098) (28,026)
46,541 38,572 34,276
Provisions for liabilities and charges
Deferred taxation (2,036) (1,902) (2,036)
Contingent transfer fees payable (815) (2,415) (2,284)
(2,851) (4,317) (4,320)
Net assets 43,690 34,255 29,956
Capital and reserves
Called up share capital 4,643 4,672 4,646
Share premium account 11,556 11,556 11,556
Equity component of Convertible Redeemable
Preference Shares
3,838 3,838 3,838
Revaluation reserve 2,360 2,408 2,384
Capital redemption reserve 553 524 550
Profit and Loss Account 20,740 11,257 6,982
Shareholders' funds 43,690 34,255 29,956
Consolidated Cash Flow Statement
For the six months ended 31 December 2006
6 months ended 6 months ended Year ended
31 December 31 December 30 June
Note 2006 2005 2006
£'000 £'000 £'000
Net cash (outflow)/inflow from operating activities 6 (8,178) 6,525 33,650
Returns on investments and servicing of finance
Interest received 306 181 498
Interest paid (753) (744) (836)
Net cash outflow from returns on investments and (447) (563) (338)
servicing of finance
Taxation
UK corporation tax paid (1,840) - (100)
Overseas withholding tax paid - (257) (259)
UK corporation tax received - - 132
Capital expenditure and financial investment
Payments to acquire subsidiary undertaking - - (1,145)
Payments to acquire intangible fixed assets (35,016) (13,534) (18,761)
Receipts from sales of intangible fixed assets 19,005 11,049 15,615
Payments to acquire tangible fixed assets (1,470) (650) (1,477)
Net cash outflow from capital expenditure and financial (17,481) (3,135) (5,768)
investment
Cash (outflow)/inflow before use of liquid resources and (27,946) 2,570 27,317
financing
Financing
Redemption of ordinary shares (31) (2,130) (1,702)
Redemption of CRPS - - (690)
Bank loan repayments (20) (10) (278)
Loan notes issue 7 20,000 - -
Loan notes repayment (299) (279) (42)
Net cash inflow/(outflow) from financing 19,650 (2,419) (2,712)
(Decrease)/increase in cash (8,296) 151 24,605
Notes to the Consolidated Interim Statements
For the six months ended 31 December 2006
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 2006 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
2006.
Turnover
Turnover represents income receivable from football and related commercial
activities, exclusive of VAT.
Gate receipts and other matchday revenue is recognised as the games are played.
Sponsorship and similar commercial income is recognised over the duration of the
respective contracts. The fixed element of broadcasting revenues is recognised
over the duration of the football season whilst facility fees received for live
coverage or highlights are taken when earned. Merit awards are accounted for
only when known at the end of the football season.
Signing-on fees and loyalty payments
Signing-on fees are charged evenly, as part of operating expenses, to the profit
and loss account over the period of the player's contract.
Loyalty fees are accrued, as part of operating expenses, to the profit and loss
account over the period to which they relate.
Intangible fixed assets
The costs associated with the acquisition of players and key football management
staff registrations are capitalised as intangible fixed assets. These costs are
fully amortised over their useful economic lives, 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.
Profits or losses on the disposal of these registrations represent the
consideration receivable, net of any transaction costs, less the unamortised
cost of the original registration.
Preference shares
Convertible Redeemable Preference Shares ('CRPS') are regarded as compound
instruments, consisting of a liability component and an equity component. At the
date of issue, the fair value of the liability component is estimated using the
prevailing market interest rate for similar non-convertible debt. The difference
between the proceeds of issue of the CRPS and the fair value assigned to the
liability component, representing the embedded option to convert the liability
into equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity components of the
CRPS based on their relative carrying amounts at the date of issue. The portion
relating to the equity component
is charged directly against equity.
The interest expense on the liability component is calculated by applying the
prevailing market interest rate for similar non-convertible debt to the
liability component of the instrument. The difference between this amount and
the interest paid is added to the carrying amount of the liability component.
These statements were approved by the Board of Directors on 28 March 2007 and
are neither audited nor reviewed.
These results were announced to the Stock Exchange on 28 March 2007 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. Profit on disposal of intangible fixed assets
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2006 2005 2006
£'000 £'000 £'000
Proceeds 18,751 13,747 23,719
Net book value of disposals (3,571) (5,463) (11,420)
15,180 8,284 12,299
The amortisation charges on intangible fixed assets included in operating
expenses for the comparative periods were £6,652,000 for the six months ended 31
December 2005 and £12,499,000 for the year ended 30 June 2006.
3. Taxation
In addition, a corporation tax charge of £6,253,614 has been accrued as
at 31 December 2006 on the profit before tax (adjusted for the interest charge
in respect of the Convertible Redeemable Preference Shares) of £20,818,046 - an
effective tax rate of 30%, plus an £8,200 tax adjustment from the prior year
end.
4. Dividends
The Directors do not recommend an interim dividend.
5. Earnings per share
Earnings per share has been calculated using the weighted average number of
shares in issue in each period.
6 months ended 6 months ended Year ended
31 December 2006 31 December 2005 30 June 2006
£'000 £'000 £'000
Basic earnings (retained profit/(loss)) 13,764 2,462 (1,575)
Interest charge in respect of CRPS 800 1,165 -
Diluted earnings/(loss) 14,564 3,627 (1,575)
Number Number Number
Weighted average number of shares in issue 92,895,538 95,211,706 94,262,771
Effect of dilutive potential:
Convertible Redeemable Preference Shares 91,845,600 91,845,600 -
184,741,138 187,057,306 94,262,771
Basic earnings/(loss) per share 14.8p 2.6p (1.7p)
Diluted earnings/(loss) per share 7.9p 1.9p (1.7p)
6. Reconciliation of operating profit/(loss) to net cash (outflow)/
inflow from operating activities
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2006 2005 2006
£'000 £'000 £'000
Operating profit/(loss) 5,690 (2,487) (9,420)
Depreciation charge 1,040 944 2,226
Amortisation of intangible fixed assets 8,621 6,652 12,499
Decrease/(Increase) in stock 146 (672) (380)
Decrease/(Increase) in debtors 217 (146) 204
(Decrease)/Increase in creditors (23,892) 2,269 28,488
Currency translation differences - (35) 33
Net cash (outflow)/inflow from operating activities (8,178) 6,525 33,650
7. Loan notes issue
This relates to the issue, at par, of £20,000,000 7.29% secured loan notes.
These loan notes are repayable in equal annual instalments over 16 years from
September 2007. The loan notes are secured against the White Hart Lane Stadium,
and future gate and Corporate Hospitality receipts generated at the Stadium.
This amount plus additional Club funds have been set aside for the First Team
and Academy Training Facility project.
Directors, Officers and Advisers
Executive Chairman
D P Levy
Executive Director
M J Collecott
Non-Executive Directors
E M Davies
Sir K E Mills
Company Secretary
M J 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
AIM nominated adviser and broker
Seymour Pierce Limited
3 Queen Victoria Street
London EC4N 8EL
Registrars
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0LA
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