Interim Results

Tottenham Hotspur PLC 28 February 2002 28 February 2002 Enquiries: Daniel Levy/Paul Viner Tel: 020 8365 5000 Tottenham Hotspur plc John Bick/Trevor Phillips Tel: 020 7929 5599 Holborn TOTTENHAM HOTSPUR PLC Interim Results for the Six Months Ended 31 December 2001 Summary of Results Six months Six months ended ended 31 December 2001 31 January £m 2001 £m Turnover 29.4 27.8 Operating profit before profit on sale of player 2.9 7.1 registrations and amortisation Net interest payable (0.4) (0.4) Profit on sale of player registrations 5.8 - Amortisation of players (5.5) (5.8) Profit before tax 2.9 0.9 Earnings per share 1.9p 0.5p Commenting, Daniel Levy, Chairman of Tottenham Hotspur plc, said: 'Tottenham Hotspur has had a successful season so far both on and off the pitch reaching the final of the Worthington Cup and the quarter-final stage of the FA Cup which has yet to be played. The second half-year financial results should therefore reflect our successful cup runs. 'We have continued to make progress with the development of the Club's proposed new Academy and work in this area is ongoing to secure a new site and progress the design work for a new state-of-the-art facility. In addition, we are progressing a number of new initiatives aimed at improving the level of services available to our growing supporter base including the development of a new web- based ticketing service, video streaming of delayed game highlights and a new Customer Relationship Management system at the Club. I am also delighted to report to shareholders that demand for season tickets remains strong, clearly reflecting the renewed popularity and growing support for Tottenham Hotspur through the current season.' CHAIRMAN'S STATEMENT As we enter the final third of the season Tottenham Hotspur continues to perform competitively in the FA Premier League. The Club recently reached the final of the Worthington Cup and has still to compete in the quarter final stage of the FA Cup where the team is scheduled to play Chelsea on 10 March at White Hart Lane. Financial Results Shareholders will recall that last year we changed our year-end from July to June. As a result of this change, the figures presented represent the six-month period to 31 December 2001. The comparatives are for the six-month period to 31 January 2001. These two reporting periods are not directly comparable. The six months to 31 December 2001 contains one month (July 2001) of little trading income, July being outside of the ten-month football season, which runs from August to May. In contrast, the six-month results for the half-year to 31 January 2001 contain six trading months. The number of home first team competitive matches played for this reporting period is twelve games, ten in the FA Premier League and two Worthington Cup games. The six months to 31 January 2001 contained fourteen home games in total, twelve FA Premier League and two Worthington Cup games. All income from the games in this season's FA Cup and our Semi Final and Final of the Worthington Cup will fall in to the second half of this year's results. Turnover at £29.4m (31 January 2001 - £27.8m) shows a 6% increase on last year, despite the fact the period contains five trading months compared to six months last year. The main reasons for this are improved media and broadcasting deals and a better performance from our merchandise division. An operating loss of £2.6m was made for the period compared to a profit of £1.3m in the period to 31 January 2001 - mainly due to an increase in players' wages. A profit on the disposal of player registrations of £5.8m converted the operating loss into a profit before tax of £2.9m (31 January 2001 - £0.9m). League gate receipts at £10.7m, were £0.7m below last year, a decrease of 6%. The decrease expected from two fewer league games has been partially offset by a rise in average matchday income. Cup competition income is up on last year at £1.8m (31 January 2001 - £1.5m), an increase of 23%. There were two home and two away cup ties in each reporting period, the increase this year reflecting our matches against Premier League opposition in the Worthington Cup. Media and broadcasting income shows a 17% increase to £9.1m from £7.8m. This is largely as a result of the first year of the new TV deal and the figures include income received from two broadcasts on Sky's new pay per view service. We negotiated two new radio rights contracts with Talksport and BBC London Live and the income from these deals contributed to the overall increase in media revenues on last year. Our sponsorship and matchday hospitality income of £2.9m is below last year by £0.1m, largely as a result of the two fewer games. Merchandising income shows an increase of £0.3m (12%) to £3.1m. The team's performance, an improved product offer and availability across both our own brand and adidas ranges and increased Internet sales have contributed to this increase. Additionally, there were two friendly games at White Hart Lane before the start of the season, which had a positive impact on sales. Cost of sales before player amortisation but including players' wages, increased by £5.3m (31%) to £22.5m. The purchases of Sheringham, Richards, Ziege, Poyet, Keller and Bunjevcevic all served to substantially increase the wage bill. Additionally, July is a month when signing on fees are paid, this therefore also contributed to this period's disproportionate increase relative to the period to 31 January 2001. Despite the increase in players' wages, the measure of players' costs versus revenues saw just a small percentage increase on the prior period. Amortisation of player contracts fell to £5.5m for the period (31 January 2001 - £5.8m), a 5% decrease. The effect of the recent player purchases being outweighed by the effect of those who have either left during the last twelve months, or who have reached the end of their initial contracts and are now fully amortised. Ongoing administrative expenses saw a marginal increase on the prior period. However, an overall increase of £0.5m was mainly as a result of one-off costs incurred as part of the restructuring of the Group following the strategic review carried out towards the end of last year. Profit on the disposal of player registrations of £5.8m contains the sales of Luke Young to Charlton and Ian Walker to Leicester. The interest charge of £389,000 (31 January 2001 - £442,000) is 12% lower mainly due to the lower average interest rate for this six-month period. Corporation tax of £905,000 has been provided at an effective rate of 32% (31 January 2001 - £381,000). Our Balance Sheet shows net assets of £39.1m (31 January 2001 - £40.1m). The overdraft at the period end was £16.1m (31 January 2001 - £10.1m). Operating activities have generated cash of £2.2m (31 January 2001 - £2.9m). Substantial investment in the first team squad resulted in an overall net cash outflow of £5.4m (31 January 2001 - inflow of £2.3m). Your Board has decided that no interim dividend will be paid (31 January 2001 - £nil). Football We appointed Glenn Hoddle in April 2001. His appointment was made carefully, with the long term future of the Club in mind and I believe that all the hard work that the manager and his staff have made over these last eleven months are bearing fruit and have established a very solid framework for continued success. Particularly pleasing is the style of football being played. This has certainly been encapsulated by the excellent performances in reaching the Worthington Cup Final and also in the FA Cup where the team has reached the quarter final stages. We are nevertheless mindful that each competition is becoming ever more keenly fought. This has been evidenced in the FA Premier League, this season in particular, where relatively few points separate teams in the top half of the table. There is no doubt that a number of clubs are some way ahead of us in terms of the strengths of their squads. Nonetheless, it is your Board's intention for the team to remain competitive in order to qualify for European competition. Our ability to achieve this level of success on a regular basis means that we must continue to utilise the funds available to the Club in a prudent fashion, balancing the revenues generated by the business with a manageable level of costs. We continue to achieve this at a satisfactory level and as a result, the manager has built a first team squad that has a good mix of experience and youth. Youth and Academy We have examined a number of potential sites for our new Academy and negotiations are ongoing. We intend to fulfil our objective of making the Tottenham Hotspur Academy one of the highest quality football training facilities comparable with any in Europe. I hope to have more to report on this in due course. This season has seen the emergence of some young talent in to the first team squad. In particular Ledley King, Simon Davies, Gary Doherty, Matthew Etherington and Anthony Gardner clearly demonstrate that investment in youth and home grown talent brings significant benefits to the Club as we continue to develop the first team squad. This period's results include the sales of Luke Young for £3.0m and Ian Walker for £2.5m. These two players were raised through our youth system and all the proceeds from these sales feed through to the bottom line. The progress of Tottenham Hotspur's youth teams within the Academy is also highly encouraging with the under-18 side having currently reached the quarter finals of the prestigious FA Youth Cup. Marketing and Customer Service Improving customer service is a primary objective for the Board. We have been made even more aware of the urgency to deal with this issue as the team has been so successful this season, with many home games coming one after another. We have taken four particularly important steps to address the issue of marketing, communication and customer satisfaction. First, we expect before the end of the season to launch our ticket sales service on our Internet site www.spurs.co.uk. This will be the first such scheme of any Premier League Club. The supporter will be offered a three dimensional view of all seats in the ground and can therefore make a precise seat selection. The transaction process can be completed in full on the Internet. This will alleviate some of the burden on our telephone system and, importantly, will allow our membership supporters from all over the world to purchase tickets 24 hours a day, every day of the year. Secondly, we have appointed a specialist agency to advise us on how we can improve the efficiency of our ticket office. Our goal is that our ticket office is customer-focused and the purchase of match tickets and season tickets is a straightforward and simple process. To this end we have invited supporters to e-mail their positive suggestions to us at ticket.suggestions@spurs.co.uk. Thirdly, supporters are being entertained through the Website by game highlights being shown 48 hours after all Premier League games. We are extremely aware that the Internet presents us with a unique opportunity to communicate with our supporters on a regular basis both domestically and overseas. Our Website has continued to receive critical acclaim and is being updated continually. The ongoing investment in this area should continue to work on a self-funding basis. Our fourth key initiative has been to take steps to introduce a Customer Relationship Management (CRM) system at the Club. The initial objective is to merge all our various databases and use the combined database in order to achieve a more effective service for our supporters and improved utilisation of the Club's resources and facilities. The longer-term objective is to improve our efficiency and maximise the revenue opportunities that this database will create. In addition, our Supporters Trust is now up and running and enjoys one of the largest memberships in the Premier League. The Board holds regular meetings with the Trust's elected committee and liaison also takes place between their dedicated representatives and the corresponding Tottenham executives in all areas of the Club. Through the Trust we have held a highly successful Fans Forum that was well attended and served to answer a number of the more pressing issues of the day. We look forward to a long and mutually beneficial relationship with the Supporters Trust. Transfer Market We are following developments in Brussels very closely in relation to the system on future transfers. As this issue is still ever changing, I intend to report your Board's views more comprehensively in the full year report. Stadium Investment I wrote to Shareholders in October confirming that conditional planning permission had been received on the East Stand. We are looking at all development opportunities on the stadium site. We are working closely with the local authority in this regard, to ensure that a master plan is developed alongside the Council's Redevelopment Programme. I hope to report more fully on this when we issue our full year results. Outlook Tottenham Hotspur has had a successful season so far both on and off the pitch reaching the final of the Worthington Cup and the quarter-final stages of the FA Cup which have yet to be played. The second half-year financial results should therefore reflect our successful cup runs. We have continued to make progress with the development of the Club's proposed new Academy and work in this area is ongoing to secure a new site and progress the design work for a new state-of-the-art facility. In addition, we are progressing a number of new initiatives aimed at improving the level of services available to our growing supporter base including the development of a new web - based ticketing service, video streaming of delayed game highlights and a new Customer Relationship Management system at the Club. I am also delighted to report to shareholders that demand for season tickets remains strong, clearly reflecting the renewed popularity and growing support for Tottenham Hotspur through the current season. On behalf of the Board I would like to thank all the staff at the Club who have embraced the changes that have taken place with great enthusiasm and diligence. We are confident that we will continue to achieve our goals for the future. Finally, I would like to thank the supporters. Their continued depth of support for the Club and the team continues to create a great atmosphere for every game at White Hart Lane. Daniel Levy Chairman 28 February 2002 Consolidated Profit and Loss Account For the six months ended 31 December 2001 Six months ended 31 December 2001 Restated Restated (Note 3) (Note 3) Operations Player Total Six months Eleven months excluding trading* ended 31 ended 30 June player (Note 2) January 2001 2001 trading* Note £'000 £'000 £'000 £'000 £'000 Turnover: Gate receipts - Premier League 10,737 10,737 11,458 18,272 - Cup competitions 1,841 1,841 1,493 3,207 Media and Broadcasting 9,137 9,137 7,793 14,765 Sponsorship and match day 2,914 2,914 3,037 5,631 hospitality Merchandising 3,124 3,124 2,777 4,135 Other 1,641 1,641 1,213 2,386 29,394 - 29,394 27,771 48,396 Cost of sales (22,497) (5,532) (28,029) (22,957) (43,733) Gross profit 6,897 (5,532) 1,365 4,814 4,663 Administrative expenses (3,963) - (3,963) (3,485) (6,350) Operating profit/(loss) 2,934 (5,532) (2,598) 1,329 (1,687) Profit/(loss) on disposal of - 5,844 5,844 9 (867) registrations Profit/(loss) before interest 2,934 312 3,246 1,338 (2,554) and taxation Net interest payable (389) (442) (917) Profit/(loss) on ordinary 2,857 896 (3,471) activities before taxation Tax (charge)/credit on profit/ 3 (905) (381) 976 (loss) on ordinary activities Profit/(loss) on ordinary 1,952 515 (2,495) activities after taxation Equity dividends - - - Retained profit/(loss) for the 1,952 515 (2,495) period Earnings/(loss) per share - 5 1.9p 0.5p (2.5)p basic Earnings/(loss) per share 5 1.9p 0.5p (2.5)p -diluted *Player trading represents the amortisation 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 2001 Restated Restated (Note 3) (Note 3) 31 December 31 January 30 June 2001 2001 2001 £'000 £'000 £'000 Fixed assets: Intangible 34,701 30,070 24,937 Tangible 46,569 46,998 46,611 81,270 77,068 71,548 Current assets: Stocks 409 944 912 Debtors 11,208 3,322 7,598 11,617 4,266 8,510 Creditors - Amounts falling due within one year (47,100) (31,675) (34,519) Net current liabilities (35,483) (27,409) (26,009) Total assets less current liabilities 45,787 49,659 45,539 Creditors - Amounts falling due after more than one year (4,696) (7,226) (6,444) 41,091 42,433 39,095 Provisions for liabilities and charges: Deferred taxation (1,943) (2,313) (1,987) Net assets 39,148 40,120 37,108 Capital and reserves: Called-up share capital 5,102 5,085 5,085 Share premium account 11,358 11,287 11,287 Revaluation reserve 2,600 2,644 2,624 Profit and loss account 20,088 21,104 18,112 Equity shareholders' funds 39,148 40,120 37,108 Consolidated Cash Flow Statement For the six months ended 31 December 2001 6 months ended 6 months 11 months ended ended 31 December 2001 31 January 30 June 2001 2001 £'000 £'000 £'000 Net cash inflow from operating activities (note 6) 2,248 2,928 8,340 Returns on investments and servicing of finance: Interest received 2 18 21 Interest paid (306) (423) (996) Interest element of finance lease payments (8) (21) (41) Net cash outflow for returns on investments and servicing of (312) (426) (1,016) finance Taxation UK corporation tax paid - (911) (1,497) Capital expenditure and financial investment: Payments to acquire intangible fixed assets (9,271) (5,723) (10,201) Receipts from sales of intangible fixed assets 3,424 7,555 8,084 Payments to acquire tangible fixed assets (798) (401) (570) Receipts from sales of tangible fixed assets Net cash (outflow)/inflow from capital expenditure and financial (6,645) 1,431 (2,687) investment Equity dividend paid - - - Cash (outflow)/inflow before use of liquid resources and (4,709) 3,022 3,140 financing Financing: Issue of ordinary share capital 88 - - Bank loan repayments (588) (588) (1,176) Capital element of finance lease payment (176) (159) (299) Net cash outflow from financing (676) (747) (1,475) (Decrease)/increase in cash (5,385) 2,275 1,665 Notes to the Consolidated Interim Statements For the six months ended 31 December 2001 1. 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 eleven months ended 30 June 2001 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. The interim financial statements have been prepared on the basis of the accounting policies set out in the statutory accounts for the eleven months ended 30 June 2001, except that with effect from the current financial year, the Group has adopted Financial Reporting Standard 19 'Deferred Tax' (see note 3). Minor reclassifications have been made to prior period figures to achieve comparability with the current period. These statements were approved by the Board of Directors on 27 February 2002 and are neither audited nor reviewed. These results were announced to the Stock Exchange on 28 February 2002 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 11 months ended ended 31 December 2001 31 January 30 June 2001 2001 £'000 £'000 £'000 Proceeds 5,844 967 1,222 Net book value of disposals - (958) (2,089) Profit/(loss) on disposal of registrations 5,844 9 (867) The amortisation charges on registrations included in cost of sales for the comparative periods were £5,807,000 for the six months ended 31 January 2001 and £11,109,000 for the eleven months ended 30 June 2001. 3. The taxation charge for the six months ended 31 December 2001 is based on the estimated effective rate for the full year of 32%. Following the implementation of FRS 19, deferred taxation is discounted using the post tax yields to maturity that could be obtained at the balance sheet date on government bonds with maturity dates similar to those of the deferred taxation assets and liabilities. The adoption of FRS 19 has decreased the equity shareholders' funds at 30 June 2001 by £1,773,000 and at 31 January 2001 by £1,742,000, and the profit for the eleven months ended 30 June 2001 by £132,000 and the six months ended 31 January 2001 by £103,000. The prior period results have been restated accordingly. 4. The Directors do not recommend an interim dividend. Notes to the Consolidated Interim Statements For the six months ended 31 December 2001 cont.... 5. The calculation of earnings/(loss) per share is based on the basic and fully diluted earnings attributable to shareholders as follows: Restated Restated (Note 3) (Note 3) 6 months ended 6 months 11 months ended ended 31 December 2001 31 January 30 June 2001 2001 £'000 £'000 £'000 Profit/(loss) after taxation 1,952 515 (2,495) Basic weighted average number of ordinary shares in 101,726,543 101,694,480 101,694,480 issue Employee share options and incentive schemes 19,578 268,661 (563,811) Fully diluted weighted average number of shares 101,746,121 101,963,141 101,130,669 Earnings/(loss) per share - basic 1.9p 0.5p (2.5)p Earnings/(loss) per share - diluted 1.9p 0.5p (2.5)p 6. Reconciliation of operating profit/(loss) to net cash inflow from operating activities. 6 months ended 6 months 11 months ended ended 31 December 31 January 30 June 2001 2001 2001 £'000 £'000 £'000 Operating profit/(loss) (2,598) 1,329 (1,687) Depreciation charge 840 886 1,442 Amortisation of registrations 5,532 5,807 11,109 Profit on disposal of tangible fixed assets - - - Decrease in stock 503 107 139 (Increase)/decrease in debtors (1,190) 627 (4,130) (Decrease)/increase in creditors (839) (5,828) 1,467 Net cast inflow from operating activities 2,248 2,928 8,340 7. Reconciliation of net cash flow to movement in net debt 6 months ended 6 months 11 months ended ended 31 December 31 January 30 June 2001 2001 2001 £'000 £'000 £'000 (Decrease)/Increase in cash in the period (5,385) 2,275 1,665 Cash outflow from decrease in debt and lease financing 764 747 1,475 Movement in net debt in the period (4,621) 3,022 3,140 Net debt at start of period (15,186) (18,326) (18,326) Net debt at end of period (19,807) (15,304) (15,186) This information is provided by RNS The company news service from the London Stock Exchange

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