Interim Results

Tottenham Hotspur PLC 31 March 2006 EMBARGOED UNTIL 07:00 Date: 31 March 2006 Enquiries: Daniel Levy, Chairman Matthew Collecott, Finance Director Tel: 020 8365 5322 Tottenham Hotspur plc www.tottenhamhotspur.com John Bick Tel: 07802 211374 TOTTENHAM HOTSPUR PLC Interim Results for the Six Months Ended 31 December 2005 Financial Highlights Six months Six months ended ended 31 December 2005 31 December 2004 £m £m • Turnover 36.3 32.9 • Amortisation of intangible fixed assets (6.7) (5.8) • Profit on sale of intangible fixed assets 8.3 2.2 • Profit before tax 4.4 1.0 • Retained profit for the financial period 2.5 0.6 • Earnings per share - basic 2.6p 0.6p • Earnings per share - diluted 1.9p 0.3p Daniel Levy, Chairman of Tottenham Hotspur plc, said: 'We have had an encouraging season to date, progress in the Premier League being tempered by the disappointments in the Cup competitions. We remain realistic - the FA Premier League is a highly competitive league with little separating the top clubs. We shall look to consolidate the areas that have seen change and to continue to improve performance in all departments within the Club. Much has been achieved and there is still much to do.' Chairman's Statement Financial Results The results for the first six months of the financial year show turnover has increased by 10% to £36.3m from £32.9m in the same period last year, with the Club generating an operating profit of £4.2m before interest, tax and football trading. Whilst there has been a significant increase in the amortisation of intangible fixed assets, as a result of the sustained investment in the playing squad, an £8.3m profit on disposal of intangible fixed assets has contributed to an increase in profit before tax of £4.4m, a 350% increase on the same period last year. Premier League gate receipts were £1.4m higher than in the same period last year, with average attendances up and having played one more home game than in the same period last year. However, Cup competitions have been a disappointment this season. The defeat in round two of the Carling Cup led to Cup competition gate receipts being £1.0m down on the same period last year when the Club reached the quarter finals. Our defeat in round three of the FA Cup in January 2006, as opposed to reaching the quarter finals last season, will have an ongoing impact on the Company's turnover for the current financial year when compared to prior years, where gate receipts from Cup competitions were £4.2m and £3.4m in the years ending June 2005 and June 2004 respectively. Media and broadcasting revenues in the period fell by £1.1m from £10.3m to £9.2m, largely due to three fewer live television appearances compared to the same period last year. Given the current position of the Club in the league, this situation will reverse by the end of the season. Both the Corporate Hospitality and the Merchandise Divisions have performed strongly against the same period last year, up a combined £1.5m. Both areas have benefited from the investment the Board has made in improving the offering in these areas, and it is pleasing to see such positive results. As with all revenue streams we will continue to explore ways to extend the quality, choice and differentiation of our products in an effort to continually improve standards. The £2.1m increase in other income on the same period last year is primarily due to the team winning the Peace Cup in South Korea, a competition we were proud to compete in and win. Operating expenses before amortisation, as a percentage of turnover, remain stable. The significant increase in fixed operating expenses has come from increased business rates and the fact that certain departmental costs have risen as a result of the continued drive to raise standards throughout the Club. Amortisation of intangible fixed assets for the six months was £0.9m more than last year at £6.7m, a reflection of the Club's continued investment in the playing squad. The profit on the disposal of intangible assets of £8.3m is £6.1m higher than the same period last year, and includes the player sales of Freddie Kanoute, Erik Edman and Timothee Atouba. After interest and taxation charges have been deducted, there is a retained profit for the period of £2.5m, up £1.9m from £0.6m last year. The compulsory adoption of FRS 25 in this financial year has affected the accounting treatment of the convertible redeemable preference share ('CRPS') fundraising we undertook in January 2004. It has been necessary to reclassify a large part of the £15million equity raised as a liability on the Group's balance sheet. As a result of this reclassification, net assets have been reduced by £13.1m. The Board continue to believe that the business model currently in place at the Club is the right one. Net debt continues to fall and, excluding the changes made under FRS 25, was below £1.0m at 31 December 2005 (December 2004: £9.3m), which highlights the Club's ability to generate cash. The February 2006 Deloittes Football Money League of Europe's Wealthiest Clubs saw the Club continue to move up the league table, where we are now recognised as the thirteenth richest club in Europe. With significant talent within the Club, potential within the brand and being the only club in the top tier of the Money League never to have benefited from Champions League revenues, it is clear that the Club has a great platform to achieve progress in the future. On the pitch The season began well with regard to league performance. We ended the calendar year in fourth position in the FA Premier League, having never dropped out of the top half of the table and having only lost three games in 20 Premier League outings. This is a positive reflection on the hard work and enthusiasm of the whole team at the Club. Having been through a period of upheaval across all areas of the Club over the past couple of years, we are looking to consolidate the team's position and ensure we retain the appropriate mix of talent to further the team's progress and to encourage players to come through the system and push for first team places. In an effort to achieve greater consistency, the number of changes made to the squad during the recent January transfer window was limited. Furthermore, we are delighted to have extended the contracts of Robbie Keane, Michael Dawson, Aaron Lennon and Radek Cerny all excellent players we hope will play a significant role in any future success the Club may enjoy. The players that have left since we last reported to shareholders in our 2005 annual report are Sean Davis, Michael Brown, Noe Pamarot and Pedro Mendes. We thank them for their efforts and wish them all well. In the same period we welcomed Danny Murphy and Hossam El Sayed Ghali to the Club. We will continue to look for excellent young talent in a bid to ensure the Club is in the best possible position to prosper now and in the future. A lot of investment continues to be focused on academy recruits, with scouting taking place throughout the world looking for, and competing for, stars of the future. Off the pitch We have now redesigned the proposed academy and first team training facility to meet the various environmental, social and local requirements that arose from an exhaustive public consultation. We will focus on moving this ambitious project forward to the planning committee. In January we launched the Club's new logo. This has been well received by fans and the wider community alike. It was a major undertaking, which involved taking a historic piece of the Club's identity and reworking it so that the Club retains absolute control over its registered marks but at the same time remains true to its heritage. The roll out of the new logo will be phased over a number of months given the significant amount of inventory it affects throughout the Club. We have also launched a completely new website, which is still work in progress at this stage, but which we believe will ultimately encompass the best in web technology and design, and will be far easier to access and navigate than previously. It was a great pleasure to introduce our new technical sponsor 'Puma' this February, a record deal, financially, for the Club. Puma are one of the world's leading sports brands and represent the style and quality that we associate with this Club. Our club sponsor, Thomson, step down at the end of the season. We thank them for their support during the last four years and hope that our positive relationship can continue at some level going forward. We hope to announce details of our new club sponsor in the near future. Earlier this month the Club were delighted to receive the 'Best Corporate Social Responsibility' award from Haringey Council at their City Growth Business Awards ceremony. The award was given following recognition of the Club's longstanding, and ever increasing, commitment to the local community through our football programmes that saw over 300,000 young people participate in a diverse and exciting range of coaching courses last year. Outlook We have had an encouraging season to date, progress in the Premier League being tempered by the disappointments in the Cup competitions. We remain realistic - the FA Premier League is a highly competitive league with little separating the top clubs. We shall look to consolidate the areas that have seen change and to continue to improve performance in all departments within the Club. Much has been achieved and there is still much to do. It goes without saying that I would like to thank our supporters, shareholders and employees for their continued support as we strive for greater things. D P Levy 30 March 2006 Consolidated Profit and Loss Account For the six months ended 31 December 2005 Six months ended 31 December 2005 Six months ended 31 Operations December 2004 Year ended excluding 30 June 2005 football Football trading* trading* (Note 2) Total Note £'000 £'000 £'000 £'000 £'000 Turnover: Gate receipts - premier league 10,288 10,288 8,862 16,861 Gate receipts - cup competitions 36 36 998 4,225 Sponsorship and corporate 8,499 8,499 7,101 14,249 hospitality Media and broadcasting 9,213 9,213 10,289 25,488 Merchandising 3,688 3,688 3,271 4,997 Other 4,526 4,526 2,428 4,730 36,250 36,250 32,949 70,550 Operating expenses (32,085) (6,652) (38,737) (33,779) (70,479) Operating profit/(loss) 4,165 (6,652) (2,487) (830) 71 Profit on disposal of intangible 2 - 8,284 8,284 2,155 5,632 fixed assets Profit before interest and taxation 4,165 1,632 5,797 1,325 5,703 Net interest expense (1,414) (370) (793) Profit on ordinary activities 4,383 955 4,910 before taxation Tax charge on profit on ordinary 3 (1,921) (344) (707) activities Profit on ordinary activities after 2,462 611 4,203 taxation Other finance costs in respect of - (49) (99) non-equity shares Retained profit for the period 2,462 562 4,104 Earnings per share - basic 5 2.6p 0.6p 4.2p Earnings per share - diluted 5 1.9p 0.3p 2.2p *Football trading represents the amortisation, impairment, and the profit/(loss) on disposal of intangible fixed assets. The results for the above and prior period all derive from continuing operations. There were no gains or losses in either period other than the profit for the period and accordingly no statement of total recognised gains and losses is presented. Consolidated Balance Sheet as at 31 December 2005 31 December 31 December 30 June 2005 2005 2004 Note £'000 £'000 £'000 Fixed assets Intangible assets 37,533 30,983 31,348 Tangible assets 48,811 47,908 49,105 86,344 78,891 80,453 Current assets Stocks 1,067 949 395 Debtors 14,850 10,279 11,875 Cash at bank 10,127 2,086 9,976 26,044 13,314 22,246 Creditors: amounts falling due within one year (47,718) (34,794) (37,648) Net current liabilities (21,674) (21,480) (15,402) Total assets less current liabilities 64,670 57,411 65,051 Creditors: amounts falling due after more than one year (26,098) (13,350) (15,315) 38,572 44,061 49,736 Provisions for liabilities and charges Deferred taxation (1,902) (1,229) (1,902) Contingent transfer fees payable (2,415) - (2.021) (4,317) (1,229) (3,923) Net assets 34,255 42,832 45,813 Capital and reserves Called up share capital 4,672 9,616 9,520 Share premium account 11,556 21,389 21,439 Equity component of convertible redeemable preference shares 3,838 - - Revaluation reserve 2,408 2,456 2,432 Capital redemption reserve 524 172 268 Profit and Loss Account 11,257 9,199 12,154 Shareholders' funds 34,255 42,832 45,813 Shareholders' funds analysed as: Equity interests - 28,115 31,046 Non-equity interests 6 - 14,717 14,767 - 42,832 45,813 Consolidated Cash Flow Statement For the six months ended 31 December 2005 6 months ended 6 months ended 31 December 31 December Year ended 2005 2004 30 June Note 2005 £'000 £'000 £'000 Net cash inflow from operating activities 7 6,525 3,930 21,146 Returns on investments and servicing of finance Interest received 181 82 143 Interest paid (744) (805) (919) Net cash outflow from returns on investments and (563) (723) (776) servicing of finance Taxation UK corporation tax paid - (57) (62) Overseas withholding tax paid (257) - - Capital expenditure and financial investment Payments to acquire intangible fixed assets (13,534) (14,895) (23,325) Receipts from sales of intangible fixed assets 11,049 3,220 6,029 Payments to acquire tangible fixed assets (650) (577) (3,593) Net cash outflow from capital expenditure and financial (3,135) (12,252) (20,889) investment Cash inflow / (outflow) before use of liquid resources 2,570 (9,102) (581) and financing Financing Redemption of ordinary shares (2,130) (43) (654) Bank loan repayments (10) (6) (26) Loan notes repayments (279) (260) (260) Net cash outflow from financing (2,419) (309) (940) Increase / (decrease) in cash 151 (9,411) (1,521) Notes to the Consolidated Interim Statements For the six months ended 31 December 2005 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 2005 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 2005, with the exception of the accounting policy in respect of financial instruments which has been amended to reflect the presentation requirements of FRS 25 'Financial instruments : Disclosure and Presentation'. As permitted, FRS 25 has been applied prospectively from 1 July 2005. Consequently the relevant comparative information for the year ended 30 June 2005 and the six month period ended 31 December 2004 does not reflect the impact of this standard. The Group's accounting policy under FRS 25 is provided below. The effect of the transitional adjustment as at 1 July 2005 is to reclassify a portion of the Group's preference share capital and related share premium as a liability. 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 30 March 2006 and are neither audited nor reviewed. These results were announced to the Stock Exchange on 31 March 2006 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 31 December 6 months ended Year ended 2005 31 December 2004 30 June 2005 £'000 £'000 £'000 Proceeds 13,747 7,499 11,201 Net book value of disposals (5,463) (5,344) (5,569) 8,284 2,155 5,632 The amortisation charges on registrations included in operating expenses for the comparative periods were £5,853,000 for the six months ended 31 December 2004 and £12,741,000 for the year ended 30 June 2005. 3. Taxation Withholding tax totalling £257,000, deducted at source, is included in the corporation tax charge for the period due to the uncertainty of a future double tax relief claim being successful. In addition, a corporation tax charge of £1,664,000 has been accrued as at 31 December 2005 on the profit before tax (adjusted for the interest charge in respect of the convertible redeemable preference shares) of £5,548,000 - an effective tax rate of 30%. 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 31 December 6 months ended 2005 31 December 2004 Year ended 30 June 2005 £'000 £'000 £'000 Basic earnings (Retained profit) 2,462 562 4,104 Interest charge in respect of CRPS 1,165 - - Finance costs in respect of CRPS - 49 99 Diluted earnings 3,627 611 4,203 Number Number Number Weighted average number of shares in issue 95,211,706 98,689,997 98,574,822 Effect of dilutive potential: Convertible redeemable preference shares 91,845,600 93,720,000 93,720,000 187,057,306 192,409,997 192,294,822 Basic earnings per share 2.6p 0.6p 4.2p Diluted earnings per share 1.9p 0.3p 2.2p 6. Non-equity interests Non-equity interests at 30 June 2005 and 31 December 2004 relate to the issue of 60,000 Convertible Redeemable Preference Shares, with a nominal value of £78.10, at £250 each in January 2004. 1,200 of these shares were bought back by the Company during the period. This disclosure has not been made in the period ended 31 December 2005 following adoption of FRS 25 as described above. 7. Reconciliation of operating (loss)/profit to net cash inflow from operating activities 6 months ended 6 months ended 31 December 31 December Year ended 2005 2004 30 June 2005 £'000 £'000 £'000 Operating (loss)/profit (2,487) (830) 71 Depreciation charge 944 887 1,807 Amortisation of registrations 6,652 5,853 12,741 Increase in stock (672) (594) (40) (Increase)/decrease in debtors (146) 162 (536) Increase/(decrease) in creditors 2,269 (1,561) 7,103 Currency translation differences (35) 13 - Net cash inflow from operating activities 6,525 3,930 21,146 Directors, Officers and Advisers Executive Chairman D P Levy Executive Directors M J Collecott P Z Kemsley Non-Executive Director E M Davies 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 The Registry 34 Beckenham Road Beckenham Kent BR3 4TU This information is provided by RNS The company news service from the London Stock Exchange SDFFUSSMSEED

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