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)
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