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Newcastle United PLC (NCU)

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Friday 27 October, 2006

Newcastle United PLC

Final Results

Newcastle United PLC
27 October 2006



27 October 2006



                              NEWCASTLE UNITED PLC

            PRELIMINARY RESULTS FOR THE PERIOD ENDED 30TH JUNE 2006


Financial highlights


Note: the 2006 results comprise the eleven month period ended 30 June 2006. The
comparative (2005) results comprise the year ended 31 July 2005.


•  Revenue of £83.1m (2005: £87.0m) principally due to non-qualification
   for the UEFA Cup in season 2005/6.

•  Total operating expenses of £76.9m (2005: £81.0m).

•  Group operating profit before player amortisation and trading of £6.2m
   (2005: £6.0m).

•  Loss from operations £6.2m (2005: Profit £5.9m)

•  Retained loss for period £12.0m (2005: Profit £0.6m)

•  Commercial revenues £25.7m (2005: £23.8m) reflecting the benefits of
   the new adidas and Northern Rock sponsorship contracts.

•  Media revenues decreased to £26.5m (2005: £27.9m)

•  Increase in merit payments following the Club's seventh place (2005:
   14th place) finish in the FA Premier League, partly offsetting
   a £3.3m reduction in UEFA Cup TV revenue.


Operational highlights



•  Significant strengthening of the first team squad with the Club record
   signing of Michael Owen from Real Madrid, Albert Luque from Deportivo 
   La Coruna, and Nolberto Solano from Aston Villa, signed during the Summer 
   2005 transfer window.

•  Glenn Roeder appointed Team Manager on 1 July 2006, after a successful
   period at the helm following the departure of Graeme Souness in February 
   2006.

•  Damien Duff signed from Chelsea for £5m in July 2006 and Obafemi
   Martins signed from Inter Milan for €15m during August 2006.

•  Alan Shearer appointed as the Club's Sporting Ambassador following his
   retirement from professional football.

•  Improved team performances during the 2005/6 season, with seventh place in 
   FA Premier League, resulting in qualification for the Intertoto Cup and
   subsequent qualification for the UEFA Cup.

•  Reached the quarter-finals of the FA Cup.

•  Academy team reached the semi-final of the FA Youth Cup.

•  Improved Box Office facilities for supporters including online sales
   facility.

•  The Newcastle United Museum opened in January 2006.

•  International premiere of film 'Goal' in September 2005.

•  'The Match 3' was staged in October 2006 following the resounding
   success of the previous two Sky TV programmes.

•  Revival of pop concert venue status with a 16,000 plus crowd attending
   the Bryan Adams concert in June 2006 which generated a profit for the Club.



Chairman's statement

Freddy Shepherd, Chairman of Newcastle United, commented:

'This year has been a period of the transition for the Club. The team
performances in the first half of the season fell significantly below our level
of expectations. However, following the Board's decision to make changes at
management level, the first team had an excellent run in the second half of the
season, finishing a satisfactory seventh place in the Premiership and qualifying
for the UEFA Cup through the Intertoto Cup. Glenn was appointed full time Team
Manager in May of this year.

'In June, Alan Shearer's retirement marked the end of an era at Newcastle
United. Alan is and always will be remembered as a true great. He is one of the
finest Newcastle and England players to have ever graced the football pitch. I
am delighted that Alan has accepted the role of Sporting Ambassador for
Newcastle United. He has all the qualities to ably represent the Club around the
world.

'This season has not started as we would have liked, however, there are signs of
improvement including our recent qualification into the group stages of the UEFA
Cup. The Board believe that the investment it has made in all areas of the Club
will deliver long term benefits and will continue to take every step necessary
to maximise potential for success both on and off the pitch.'


International Financial Reporting Standards ('IFRSs')

EU law (IAS regulation EC 1606/2002) requires that the annual consolidated
financial statements of the Group, for the eleven month period ended 30 June
2006, be prepared in accordance with IFRSs adopted for use in the EU ('Adopted
IFRSs'). The comparative (2005) results comprise the year ended 31 July 2005.


Introduction

Group revenue for the period of £83.1m is lower than the £87.0m reported last
year, principally due to non-qualification for the UEFA Cup in season 2005/6,
which impacted on Matchday and Media revenues.

As shareholders will be aware, despite significant investment in the playing
squad, we had a very disappointing start to the 2005/6 playing season resulting
in the departure of Graeme Souness as Team Manager. Glenn Roeder, with support
from Alan Shearer, was appointed as his successor on a temporary basis.
Following the appointment of Glenn Roeder, performances on the pitch improved
significantly resulting in the Club finishing a respectable seventh in the FA
Premier League.


Financial overview

Group revenue for the eleven months was £83.1m versus £87.0m for the twelve
month prior period, principally due to non-qualification for the UEFA Cup in
season 2005/6.

•  Matchday revenues for the period were £30.9m (2005: £35.3m) due to
   playing nine fewer games at St. James' Park (six UEFA Cup, two Carling Cup 
   and one FA Cup).

•  Media revenues were £26.5m (2005: £27.9m) reflecting two fewer live
   televised FA Premier League games and the absence of UEFA Cup revenue. An
   increase in merit payments, following the Club's seventh place finish in the 
   FA Premier League, partly offset a £3.3m reduction in UEFA Cup television 
   revenue.

•  Commercial revenues were £25.7m (2005: £23.8m) reflecting the benefits
   of the new adidas and Northern Rock sponsorship contracts.

Operating expenses were £76.9m (2005: £81.0m) and the profit from operations
before player amortisation and trading was £6.2m (2005: £6.0m).

Wages and salaries for the period were £52.2m (2005: £50.2m). Other operating
expenses decreased to £24.7m (2005: £30.8m). In total, operating expenses were
£76.9m (2005: £81.0m).

Reflecting the significant investment in the playing squad, amortisation of
players' registrations was £16.2m (2005: £9.8m). This, together with a reduction
in net profit on disposal of players' registrations and a decrease in impairment
costs of players' registrations, contributed to a loss from operations of £6.2m
(2005: profit £5.9m).

Finance expenses were £6.3m (2005: £5.6m) reflecting an increased level of
borrowings together with the effect of notional interest on deferred transfer
fee instalments.

The retained loss for the period was £12.0m (2005: profit £0.6m).


Football management and playing squad

Newcastle United invested heavily in the playing squad in the period. Team
performances in the first half of the season fell significantly below the level
that we, and our supporters, have come to expect. Consequently, the Board
decided that it was necessary to make changes in the management of team affairs.
This resulted in the departure of Graeme Souness and his backroom team in
February 2006 and the appointment of Glenn Roeder as Acting Team Manager,
supported by Alan Shearer. Performances on the pitch improved significantly
resulting in the Club finishing a respectable seventh in the FA Premier League,
qualifying for the Intertoto Cup and subsequently qualifying for the UEFA Cup.

We achieved another good run in the FA Cup, reaching the quarter-finals, losing
1-0 to Chelsea at Stamford Bridge in a well contested game. However, we were
disappointed to lose in the fourth round of the Carling Cup against Wigan.

In August 2005 we were delighted to sign Michael Owen from Real Madrid. However,
since his signing, Michael's appearances for the Club have been limited due to
injury. Michael had scored seven goals in ten appearances before suffering an
unfortunate metatarsal break on New Year's Eve at Tottenham Hotspur. After
returning to full fitness just in time for the World Cup, he sustained a serious
knee injury against Sweden in the group stages and has had to undergo surgery on
two occasions.

Additional players who joined the Club during the first half of the season
included Albert Luque from Deportivo La Coruna and Nolberto Solano from Aston
Villa. Kieron Dyer and Steven Taylor signed improved contracts during the period
which will keep them both at St. James' Park until 2009.

Since the end of the 2005/6 season new contracts have also been awarded to Shay
Given, Charles N'Zogbia and Steve Harper.

After the period end we signed Republic of Ireland international Damien Duff
from Chelsea, Nigerian international striker Obafemi Martins from Inter Milan
and Antoine Sibierski from Manchester City. Olivier Bernard returned to the Club
on a free transfer and Giuseppe Rossi joined on loan from Manchester United
until 31 December 2006.

Players who left the Club during the period included Jermaine Jenas to Tottenham
Hotspur, Michael Chopra to Cardiff City and Hugo Viana to Valencia. Robbie
Elliott, Tony Caig and Lee Bowyer were released on free transfers while Lee
Clark retired and joined our coaching staff. Subsequent to the period end the
Club sold Jean-Alain Boumsong to Juventus and Amady Faye to Charlton Athletic.

The Club's young talent will benefit from the appointment of new Academy Manager
Joe Joyce. Joe has been the PFA's Head of Coaching for the last eight years and
officially started his new role in September 2006.


Alan Shearer

May 2006 saw Alan Shearer's wonderful ten-year playing career with Newcastle
United come to an end with the unforgettable scenes at his testimonial night
against Glasgow Celtic in front of a sell-out crowd at St. James' Park, an event
that raised more than £1m for children's charities.

Earlier in the year Alan set a new goal scoring record for the Club, passing
another Geordie hero, Jackie Milburn, in achieving a new all-time best tally of
206 goals.

Alan was an inspirational captain for both Club and Country, and the perfect
role model to every budding young footballer. Everyone is delighted that Alan's
close links with his home town Club will continue as he travels worldwide 
promoting the name of Newcastle United as our Sporting Ambassador.

Following Alan's retirement Scott Parker was appointed as Club Captain and he is
enjoying his new role.


The stadium

Following extensive investment in the stadium over the years, it is now complete
and fully operational as a venue not only for football, but also for
conferences, banquets, wedding ceremonies and receptions. In June 2006 St.
James' Park was used as a pop concert venue for the first time in ten years,
when Bryan Adams took to the stage. He is the latest in a long line of rock
stars to have played at St. James' following in the footsteps of Bob Dylan, The
Rolling Stones, Bruce Springsteen and Queen. The concert generated a profit for
the Group and we will be seeking further opportunities of this nature going
forward.

The Board continues to search for opportunities to promote the Club's future
development and improve the facilities for visitors to the stadium.

In September 2005 we launched stadium tours to allow visitors to look behind the
scenes. In January of this year the new museum was opened to the public.
Situated at the south-west corner of the stadium the museum completes the
redevelopment of the Gallowgate End, which now includes our new Box Office; the
Newcastle United Superstore (in conjunction with adidas); Museum; Cafe @ St.
James and, of course, the ever popular Shearer's Bar.

The Club did not incur significant capital expenditure in 2006. All facilities
are currently at a very high standard and so the Board has no plans to extend
St. James' Park at this time, although further expansion is possible, subject to
planning. However new changing rooms have been constructed this year by our
in-house engineering team.


Media and brand development

The new sponsorship contracts with adidas and Northern Rock, which commenced
during the summer of 2005, are driving improved sponsorship revenue. Both
contracts run for a period of five years and expire at the end of the 2009/10
season.


MGM MIRAGE joint venture

On 5 September 2006, Newcastle City Council presented its case before the Casino
Advisory Panel for the right to host a regional casino in the City. We welcome
this move and are hopeful that the strength of this bid will lead to the City of
Newcastle being selected by the Casino Advisory Panel as the right location in
the United Kingdom for a regional casino. In that event, we are confident that
the benefits to the City represented by our joint venture with MGM MIRAGE will
lead to our proposal prevailing in any competitive bid conducted by Newcastle
City Council.


Other media developments

Other media developments are progressing well and are part of the overall
programme to continue to promote the Club's brand in the United Kingdom and
abroad.

The movie 'Goal', the first of a trilogy of football movies, with the first
instalment set at Newcastle United, successfully premiered on 15 September 2005
in London and regionally in Newcastle on 18 September 2005. This has been an
exciting project for everyone involved at the Club.

Following the success of Sky One's 'The Match 2' staged during October 2005,
'The Match 3' took place on 8 October 2006 and, as on previous occasions, it was
a thoroughly enjoyable game watched by another sell-out crowd.


Hospitality

The Club is delighted that its conference and banqueting division won the
Directors' Choice in the Premiership award, one of the top awards in the 2006
Official Football Hospitality Awards. It was also nominated for the top prizes
in three other categories: Conference and Event Marketing, Media Choice and the
Chef's Team of the Year. In addition, Newcastle United chef, John Connell, won
silver in the North East Chef of the Year awards.


Supporters

Our occupancy rate for home FA Premier League games was again over 99%, the Club
benefiting from a continued high level of season ticket renewals. Playing in a
stadium filled to capacity provides a tremendous boost to the team and our home
record helped greatly in achieving seventh place in the FA Premier League. Our
supporters must be congratulated on their ongoing support.

In terms of supporter services the Club successfully launched a new online
ticket sales service in October 2005. This service, which is available on our
website, www.nufc.co.uk, is proving popular with supporters, making it more
convenient to obtain tickets and dispensing with the need to stand in long
queues waiting to be served. It is quite simple to log onto our website and make
a purchase. Also in the pipeline is a new smart card membership, loyalty and
admission system which we are targeting to go live in August 2007, there is also
likely to be a test period in the latter part of the current season where we
will be asking for fans' co-operation in trialling the system.


Community activities

As part of Newcastle United's continuing involvement at the heart of the
community, the Football in the Community Programme has introduced many new
initiatives. These included an open day at which more than 10,000 fans - many of
them youngsters on their school holidays - poured into St. James' Park in the
summer to watch a first team training session. This was an enjoyable session for
the players and fans alike.

In addition, a Football Aid Day was held at Newcastle United on 13 August 2005.
Football Aid, a charity founded in 2000 to find a cure for diabetes, offered
fans the chance of a lifetime - an exclusive insight into a day in the life of
the likes of Scott Parker and Shay Given.

As part of the Club's charitable initiatives Newcastle United's Football Academy
participated in Sport Relief. This involved 85 of the Club's youngsters putting
on their running shoes and taking part in the Sport Relief Mile around
Newcastle's Quayside. It was an excellent event for the Club to be involved in
and for a very worthwhile cause.

A Soccer 7s tournament at Bullocksteads, organised by the Football in the
Community department for juniors, turned out to be a huge success, with more
than 5,000 people attending the two-day event. A total of 140 teams took part in
the tournament which was held during June 2006.

Our coaching initiatives continue to grow with Newcastle United's Football in
the Community Department now offering residential courses over three, five or
seven days, which are proving extremely popular with youngsters from home and
abroad. As part of the first phase a group of children from the All-India Youth
Football Academy in Pune, near Mumbai, enjoyed a seven-day residential course in
Newcastle.

In addition the Club has signed up to the Racial Equality Standard for
professional Clubs. Developed by Kick It Out, with the support of the FA Premier
League, the Standard helps to support us in our aim to achieve racial equality,
and can also provide the framework to help strengthen existing relationships
within the local community.


Dividend

The Board is not proposing a dividend at this time. The Board will review this
policy for future reporting periods.


Outlook

The Board believes that the investment it has made in all areas of the Club will
deliver long-term benefits and will continue to take every step necessary to
maximise potential for success both on and off the pitch.


Statement regarding press speculation

On 21 August 2006, the Belgravia Group ('Belgravia') announced that it was
examining the potential opportunity of acquiring Newcastle United plc and that
this may or may not lead to an offer for the Company being made by Belgravia.
Further to this, on 25 October 2006, the Board announced that, whilst
discussions are ongoing between the two parties, it had not received a formal
proposal from Belgravia or any other party. This remains the case. Therefore, 
there can be no certainty that an offer will be made, nor as to the terms on 
which any offer would be made.

A further announcement concerning this matter will be made in due course.



W F Shepherd
Chairman
27 October 2006



Operating and performance review


International Financial Reporting Standards ('IFRSs')

This report represents the first annual results prepared under IFRSs. The
comparative figures for the year ended 31 July 2005 have been restated. The
transition to IFRSs has not had a material impact on reported operating results
before player amortisation and trading; the Group's operating profit before
player amortisation and trading of £6.049m reported in 2005 has been restated to
£6.017m under IFRSs. The main change arises from the impact of IFRSs on the way
the Group accounts for player acquisitions and disposals, where all or part of
the transfer fee payable or receivable is deferred. This change impacts on
amortisation and financial income and expenses. Revised accounting policies
under IFRSs for the Group, and the disclosures concerning the Group's transition
from UK GAAP to IFRSs, were available from 13 April 2006 on the Group's website
at www.nufc.co.uk.


Operating performance review

The aims of Newcastle United, namely success on the playing field, whether in
the FA Premier League or domestic and European cup competitions are relatively
easy to measure. Final League position and success, or otherwise, in knockout
competition gives the Club an instant measure of performance against its
competitors. The strategy of the Group remains that of securing its position
among the top teams in England, and competing in Europe on a consistent basis.
Success on the pitch brings financial reward in terms of enhanced gate receipts
and increased broadcasting revenues and other associated revenue streams.

In 2005/6 the Club finished in seventh place in the FA Premier League (2004/5:
fourteenth place), and reached rounds six and four (2004/5: semi-final and round
four) in the FA and Carling Cup respectively.

The average attendance for home FA Premier League games was 52,032 resulting in
an occupancy rate of 99.4% (2005: average 51,844 and occupancy rate 99.1%). The
average attendance for all home FA Premier League and Cup games was 49,148
resulting in an occupancy rate of 94.0% (2005: average 46,566 and occupancy rate
89.0%).


Financial review

In June 2006 we announced a change in the Group's accounting reference date from
July to June. This brings the Group in line with the majority of FA Premier
League Clubs and means that our accounting reference date also ties in with the
expiry date of players' contracts. As a consequence we are reporting on the
eleven months ended 30 June 2006 compared to the year ended 31 July 2005. The
comparative figures and percentages, particularly in relation to operating
costs, are therefore not always directly comparable.

Revenue for the eleven months ended 30 June 2006 was £83.1m (2005: £87.0m). The
reduction in turnover of £3.9m was principally due to the absence of UEFA Club
football following the Club's fourteenth place FA Premier League finish in 2005.
After deducting operating expenses of £76.9m (2005: £81.0m), Group profit from
operations before player amortisation and trading increased slightly to £6.2m
(2005: £6.0m).

Amortisation of players' registrations increased by 65% to £16.2m (2005: £9.8m)
following the significant level of investment in the playing squad during the
close season and early part of the 2005/6 season, which included the
acquisitions of Michael Owen and Albert Luque. The net profit on disposal of
players' registrations, the most significant of which was the sale of Jermaine
Jenas in August 2005, was £5.2m (2005: £13.4m). The £8.2m reduction is due
principally to the profit in respect of the sale of Jonathan Woodgate to Real
Madrid in August 2004. Impairment of individual players' registrations resulted
in a charge of £1.4m (2005: £3.8m) which relates to assets held for sale. The
net cash outlay in respect of player trading during the period amounted
to £25.2m (2005: inflow £0.5m).

The increase in amortisation and fall in profit on disposal of players'
registrations contributed to a loss from operations of £6.2m (2005: profit
£5.9m).

A Value Added Tax and Duties Tribunal decision, released on 21 August 2006,
ruled that the Club was not entitled to reclaim VAT on payments made to agents
on 21 deals between 2001 and 2003. Following the Tribunal's decision the Club
lodged an appeal to the Chancery Division of the High Court to recover £0.5m of
the VAT paid to HM Revenue and Customs ('HMRC') in 2004. The Directors believe
that adequate provision has been made for any further amounts that may be due to
HMRC at the period end.


Financial review continued

Additional borrowings taken out during the period, to finance player
acquisitions, contributed to an increase in finance expenses which were up from
£5.6m to £6.3m. IAS 38 requires a notional interest charge to be recognised
where player acquisitions are paid for in instalments. For the period ended 30
June 2006 finance expenses include notional interest of £1.2m (2005: £0.6m).

A share alternative was offered in respect of the 2005 final dividend of 2.04p
per ordinary share. The alternative comprised the issue of new ordinary shares
with a market value of 44.9p per ordinary share. Holders of 76% of ordinary
shares elected for the share alternative, resulting in the issue of 4,439,429
shares with a nominal value of £221,971. The Board does not recommend the
payment of a dividend for the period under review. (2005: 3.07p per ordinary
share).

No dividend is proposed, and the retained loss for the period is £12.0m (2005:
profit £0.6m).

All of the major building projects are now complete and as a result capital
expenditure on acquiring tangible fixed assets was limited to £0.8m (2005:
£2.6m).


Taxation

No tax charge arose in the period (2005: £nil), and the Group has corporation
tax losses of approximately £18.6m available to carry forward against future
trading profits.


Goodwill

Following the acquisition of nufc.co.uk Limited in 2005, the Board is pleased to
report that the profit before tax of this company for the period was £201,000.
In accordance with IAS 38 the Directors have carried out an impairment review of
the carrying value of the goodwill relating to the acquisition of this company
and have concluded that no impairment is required.


Equity

Net assets of the Group at 30 June 2006 were £16.8m (2005: £30.4m).
Reconciliations of the movement during the period are shown in the Consolidated
statement of changes in equity.

Intangible assets increased by £12.6m to £48.2m, reflecting the playing squad
acquisitions, most significantly Michael Owen and Albert Luque.


Key performance indicators

The Group monitors a range of key performance indicators including:


                                                                   2006    2005
                                                            (11 months)   (Year)
________________________________________________________________________________

Revenue                                                          £83.1m   £87.0m
Profit from operations before player amortisation and trading     £6.2m    £6.0m
Wages to revenue ratio                                              63%      58%
FA Premier League position                                          7th     14th
Average FA Premier League attendance                             52,032   51,844
Participation in UEFA Competitions                                  n/a     UEFA
                                                                          Cup QF
Number of live televised FA Premier League games                     12       14
Cash generated from operating activities                          £7.0m    £6.6m
________________________________________________________________________________

Further comment on a number of the above key performance
indicators can be found in this Operating and performance
review.



Revenue

Revenue has been reanalysed into three categories in these accounts. Details can
be found in note 2.


Matchday 37% of total revenue (2005: 41%)

Revenue from the 19 home FA Premier League games played during the 2005/6 season
was unchanged from the prior year, however the absence of UEFA Cup fixtures
(2004/5 season: six home fixtures) and only two home fixtures in the domestic
Cup competitions (2004/5: five home fixtures) resulted in an overall decline in
matchday revenue to £30.9m (2005: £35.3m).


Media 32% of total revenue (2005: 32%)

Media revenues of £26.5m (2005: £27.9m) were significantly impacted by the lack
of UEFA Cup football in the 2005/6 season. However, domestic TV revenues
increased by 12% as a result of an improved merit award receipt following our
seventh place finish in the FA Premier League (2005: fourteenth place).

On the domestic front we were chosen for six FA Premier League live packages 1&2
(2005: nine) and six live packages 3&4 (2005: five). In addition, five of our
six domestic Cup games were selected for live transmission by Sky and BBC (2005:
four out of six).


Commercial 31% of total revenue (2005: 27%)

Commercial revenues totalled £25.7m (2005: £23.8m) enhanced by the impact of
improved deals with the Club's two main sponsors, adidas and Northern Rock.
Revenue from the sale of branded goods performed well during the period, with
internet sales continuing to make an increased contribution to overall revenue.

Despite playing fewer home games, revenue generated by the conference and
banqueting division was broadly flat at £6.7m for the eleven months (2005:
£6.8m).


Operating expenses

The impact of the eleven month reporting period is more marked here, as a
significant element of operating costs accrue evenly throughout the year,
whereas revenue is weighted more towards the playing season.

Total operating expenses excluding amortisation of players' registrations were
£76.9m (2005: £81.0m), a reduction of £4.1m.

Operating expenses included £0.8m relating to the write off of the carrying
value of the cost of acquiring Graeme Souness, following his departure in
February 2006.

Agreement was also reached with Sir Bobby Robson during the period, although the
final settlement amount was fully provided in 2004. Therefore this has no impact
on the current period's results.

Wages and salaries continue to be the most significant cost incurred by the
Group at £52.2m for the eleven months (2005: Year £50.2m) The increase of £2.0m
relates mainly to changes in the playing squad. The wages to turnover ratio, at
63% (2005: 58%), remains higher than the Group's desired ratio of 50% and
reducing this remains our aim for the medium- term.

Other operating expenses were £24.7m (2005: £30.8m), a fall of £6.1m.
In addition to the impact of a shorter accounting period, non-participation in
the UEFA Cup and fewer home ties in the FA and Carling Cups contributed to the
reduction in costs.


Cash flow

The Group's cash position at the period end decreased by £13.8m to £3.8m (2005:
£17.6m).

Cash flows generated from operating activities remained relatively stable at
£7.0m (2005: £6.6m). The most significant movements were the net outflow from
investing activities (including player acquisitions) which increased to £26.5m
(2005: £2.7m) and incoming finance of £5.7m (2005: net outflow of £12.5m).

During the period an amount of £8.0m was received which relates to advanced
sponsorship monies for future years. This is included in deferred income.


Financial income and expenses

Financial expenses amounted to £6.3m (2005: £5.6m). The increase during the
period was a result of financing arrangements on new player acquisitions.

Financial income for the period amounted to £0.4m (2005: £0.5m).


Future outlook

The Board is now required to comment on future prospects and does so in good
faith, based on the information available to it at the time of approval of this
report.

On the playing front the team successfully progressed through the Intertoto Cup
and the UEFA Cup qualifying rounds and is now competing in the Group stage of
the UEFA Cup.

The FA Premier League recently announced new broadcasting agreements, commencing
in the 2007/8 season, in which overall income levels will be significantly
higher than the current contract. To fully benefit from these additional
revenues the Club must seek to compete in the upper regions of the FA Premier
League.


Risks and uncertainties

The Board acknowledges that there are risks which affect the Group and takes
such action as it regards necessary to minimise those risks.

Detailed risk catalogues have been maintained by the Group for a number of
years. These catalogues are regularly updated to better enable the embedding of
the risk management process with the Group. A Risk Management Group has been in
place for over five years. Each identified risk is rated based on an assessment
of the likelihood of a particular event occurring, and the magnitude of the
impact of such an event. Strategies and actions are developed and implemented to
manage each risk at an acceptable level.

Based on our risk management assessments the principal risks are as follows:


•  The acquisition of players and their related payroll costs, are one of
   the most significant and high profile risks facing the Group. The approval of
   all player transfers is a matter specifically reserved for decision by the
   Board.

•  Injuries to key players. The well publicised injury to Michael Owen
   during the 2006 World Cup, and his subsequent unavailability for the Club, 
   being a case in point. Following this injury the Club incurred significant 
   capital expenditure to secure a replacement player. The Club has invested 
   substantial sums in sports medicine and science facilities to ensure that the 
   players return to fitness in the shortest possible time and the Board also 
   obtains insurance cover where appropriate.

•  Team performance affects all aspects of the Group's operations, and the Board 
   has continued to invest in the squad and academy to ensure that the Club can 
   compete at the highest levels in the FA Premier League and domestic and
   European competitions.

•  Risks are also reported on by the FA Premier League, at meetings of
   representatives of member clubs, and Group management regularly attend these
   meetings, which cover Club secretarial, financial, commercial, community and
   health and safety issues.

•  The Group's capital requirements depend on many factors and these are
   kept under constant review. The Group may require further financing if its
   capital requirements vary materially from its current plans.

•  Certain of the Group's borrowings are subject to a number of financial
   covenants and this risk is monitored regularly. Breach of these covenants 
   could result in an immediate demand for full repayment.

•  The Group buys from suppliers and sells to customers outside the
   United Kingdom and consequently, dealings with these customers and suppliers 
   may be in foreign currencies which will be subject to exchange rate 
   fluctuations. Where considered prudent the Group actively hedges its foreign 
   currency exposure, principally the Euro.


Social responsibility

The Group fully supports the initiatives raised by the FA Premier League,
including those focused on racial equality. The Club's 'Football in the
Community' programme continues to offer access to coaching throughout the
region.

More information on the Club's interaction with the community is included in the
Chairman's statement.


Environmental matters

The Group complies with all national and international standards known to it and
undertakes regular reviews and audits to ensure ongoing compliance with
statutory obligations. In addition we are committed to continual improvement of
standards of environmental controls.

The Group seeks to conserve non-renewable resources, such as energy, while
carrying out its operations and is in discussion with The Carbon Trust, an
independent Government funded organisation that aims to help the UK move to a
low carbon economy, to understand and improve our energy performance. Our
initial Carbon Management Report highlighted a number of opportunities which we
are in the process of introducing.

We are also attentive to the needs of the environment and local residents,
particularly with regard to noise emissions and collection of refuse from the
stadium area.

The academy is an environmentally sensitive site. During its construction we
created wetland and pasture areas, both important habitats for wildlife. Our
maintenance team manage and maintain these areas.


R Cushing

Group Chief Operating Officer
27 October 2006





Consolidated income statement
for the eleven months ended 30 June 2006
                                                        11 months     12 months
                                                    ended 30 June ended 31 July
                                                             2006          2005
                                             Note           £'000         £'000
________________________________________________________________________________

Revenue                                      2             83,086        86,982
Operating expenses                           3           (76,865)      (80,965)
________________________________________________________________________________

Profit from operations before player                        6,221         6,017
amortisationand trading

 ______________________________________________________________________________
|Analysed as:                                                                  |
|Profit from operations before player                                          |
|amortisation and trading and before costs of                                  |
|change of team management                                   9,413        8,386|
|Costs of change of team management           3            (3,192)      (2,369)|
|______________________________________________________________________________|
|                                                                              |
|Profit from operations before player                                          |
|amortisation and trading after costs of                                       |
|change of team management                                   6,221        6,017|
|______________________________________________________________________________|

Amortisation of players' registrations                   (16,185)       (9,790)
Impairment of players' registrations                      (1,422)       (3,754)
Profit on disposal of players' registrations                5,206        13,381
________________________________________________________________________________

(Loss)/profit from operations                             (6,180)         5,854
________________________________________________________________________________

Financial income                                              403           484
Financial expenses                                        (6,256)       (5,614)
Share of loss of joint venture                                  -         (104)
________________________________________________________________________________

(Loss)/profit on ordinary activities before          
taxation                                                 (12,033)           620
Taxation expense                             4                  -             -
________________________________________________________________________________

(Loss)/profit for the period attributable to        
equity shareholders of the parent                        (12,033)           620
________________________________________________________________________________

(Loss)/earnings per share                    6             (9.2)p          0.5p
________________________________________________________________________________

Interim dividend per ordinary share paid     5                  -         1.03p
________________________________________________________________________________

Final dividend per ordinary share paid       5              2.04p         2.04p
________________________________________________________________________________




Consolidated statement of changes in equity
for the eleven months ended 30 June 2006

                                                      Capital
                                   Share     Share redemption  Retained
                                 capital   premium    reserve  earnings    Total
                                   £'000     £'000      £'000     £'000    £'000
________________________________________________________________________________

Balance at 1 August 2005           6,433    69,377        831  (46,226)   30,415
Effect of adoption of IAS 32         
and 39                                 -         -          -     (785)    (785)
________________________________________________________________________________

Balance at 1 August 2005 as      
restated                           6,433    69,377        831  (47,011)   29,630
Loss for the period                    -         -          -  (12,033) (12,033)
Shares issued in lieu of         
dividends and amounts thereon        222     (433)          -     1,994    1,783
Final dividend relating to the      
year ended 31 July 2005                -         -          -   (2,625)  (2,625)
________________________________________________________________________________

Balance at 30 June 2006            6,655    68,944        831  (59,675)   16,755
________________________________________________________________________________



For the year ended 31 July 2005
                                                                                    Capital
                                                                Share      Share redemption   Retained
                                                              capital    premium    reserve   earnings     Total
                                                                £'000      £'000      £'000      £'000     £'000
________________________________________________________________________________________________________________

Balance at 1 August 2004                                        7,111     69,377        831   (43,574)    33,745
Profit for the year                                                 -          -          -        620       620
Cancellation of deferred shares                                  (678)         -          -        678         -
Final dividend relating to the year ended 31 July 2004              -          -          -    (2,625)   (2,625)
Interim dividend relating to the year ended 31 July 2005            -          -          -    (1,325)   (1,325)
________________________________________________________________________________________________________________

Balance at 31 July 2005                                         6,433     69,377        831   (46,226)    30,415
________________________________________________________________________________________________________________



Consolidated balance sheet
at 30 June 2006
                                                   30 June       31 July
                                                      2006          2005
                                                     £'000         £'000
________________________________________________________________________

Assets
Non-current assets
Property, plant and equipment                       90,227        93,102
Intangible assets                                   48,179        35,587
________________________________________________________________________

                                                   138,406       128,689
________________________________________________________________________

Current assets
Inventories                                          1,740         1,520
Trade and other receivables                         13,718        13,675
Cash and cash equivalents                            9,309        17,569
Assets classified as held for sale                     294         3,031
________________________________________________________________________

                                                    25,061        35,795
________________________________________________________________________

Total assets                                       163,467       164,484
________________________________________________________________________


Liabilities
Non-current liabilities
Interest bearing loans and borrowings             (53,823)      (49,957)
Trade and other payables                          (13,500)      (11,445)
Deferred income                                   (11,554)       (6,081)
Other financial liabilities                          (149)             -
________________________________________________________________________

                                                  (79,026)      (67,483)
________________________________________________________________________

Current liabilities
Bank overdraft                                     (5,528)             -
Interest bearing loans and borrowings             (10,867)       (5,123)
Trade and other payables                          (25,769)      (34,612)
Provisions                                           (844)         (542)
Deferred income                                   (24,648)      (26,309)
Other financial liabilities                           (30)             -
________________________________________________________________________

                                                  (67,686)      (66,586)
________________________________________________________________________

Total liabilities                                (146,712)     (134,069)
________________________________________________________________________

Net assets                                          16,755        30,415
________________________________________________________________________

Equity
Issued capital                                       6,655         6,433
Share premium                                       68,944        69,377
Capital redemption reserve                             831           831
Retained earnings                                 (59,675)      (46,226)
________________________________________________________________________

Total equity                                        16,755        30,415
________________________________________________________________________



Consolidated statement of cash flows
for the eleven months ended 30 June 2006
                                                11 months     12 months
                                            ended 30 June ended 31 July
                                                     2006          2005
                                                    £'000         £'000
________________________________________________________________________

Cash flows from operating activities
(Loss)/profit for the period/year                (12,033)           620
Adjustments for:
Financial expenses                                  6,256         5,614
Financial income                                    (403)         (484)
Share of loss of joint venture                          -           104
Amortisation of intangible non-current assets      17,300        10,325
Impairment of intangible non-current assets         1,422         3,754
Profit on disposal of players' registrations      (5,206)      (13,381)
Profit on sale of property, plant and equipment      (47)           (5)
Depreciation of property, plant and equipment       3,585         3,837
Capital grants release                               (75)          (96)
Increase in trade and other receivables           (2,248)         (869)
Increase in inventories                             (220)         (289)
Increase in trade and other payables                  202         2,235
Increase/(decrease) in deferred income              3,827         (367)
________________________________________________________________________

Cash flow from operations                          12,360        10,998
Interest paid                                     (5,635)       (4,896)
Interest received                                     284           502
_______________________________________________________________________

Net cash flow from operating activities             7,009         6,604
_______________________________________________________________________

Cash flows from investing activities
Acquisitions of property, plant and equipment       (769)       (2,629)
Capital grants received                                60             -
Proceeds from sale of property, plant and equipment    92            15
Acquisitions of players' registrations           (35,686)      (18,764)
Proceeds from sale of players' registrations       10,468        19,308
Acquisition of subsidiary undertaking               (671)         (679)
_______________________________________________________________________

Net cash flow from investing activities          (26,506)       (2,749)
_______________________________________________________________________

Cash flows from financing activities
Dividends paid                                      (631)       (3,950)
Payment of share issue expenses                     (211)             -
Proceeds from new borrowings                       11,417         2,800
Repayments of borrowings                          (4,866)      (11,328)
_______________________________________________________________________

Net cash flow from financing activities             5,709      (12,478)
_______________________________________________________________________

Net decrease in cash and cash equivalents        (13,788)       (8,623)
Cash and cash equivalents at start of period       17,569        26,192
_______________________________________________________________________

Cash and cash equivalents at end of period          3,781        17,569
_______________________________________________________________________



Notes to the accounts


1 Basis of preparation

The financial information given does not constitute the Group's statutory
accounts for the eleven months ended 30 June 2006 or year ended 31 July 2005 (as
restated for IFRSs) but are derived from those accounts. Statutory accounts for
2005, prepared under UK GAAP, have been delivered to the Registrar of Companies
and those for 2006, prepared under IFRSs, will be delivered following the Annual
General Meeting. The auditors have reported on these accounts; their reports
were unqualified and did not contain a statement under Section 237(2) or (3) of
the Companies Act 1985.

The preliminary announcement was agreed by the Board on 27 October 2006.


2 Segmental analysis

The Group has one main business segment, that of professional football
operations. As a result no additional business segment information is required
to be provided. The Group operates in one geographical segment, the United
Kingdom, and accordingly no additional geographical segment information is
required to be provided.


Notwithstanding this, a voluntary analysis of the revenue streams is given below
to assist with an understanding of the business:

                                                       11 months     12 months
                                                   ended 30 June ended 31 July
                                                            2006          2005
                                                           £'000         £'000
______________________________________________________________________________

Matchday                                                  30,883        35,302
Media                                                     26,506        27,890
Commercial                                                25,697        23,790
______________________________________________________________________________

                                                          83,086        86,982
______________________________________________________________________________


Revenue streams comprise:


Matchday - season and matchday tickets, corporate hospitality income and
matchday sponsorship.

Media - television and broadcasting income, including distributions from the FA
Premier League broadcasting agreements, cup competitions and local radio.

Commercial - sponsorship income, merchandising, conference and banqueting and
other sundry revenue.





3 Operating expenses before player amortisation and trading

                                                      11 months     12 months
                                                  ended 30 June ended 31 July
                                                           2006          2005
                                                          £'000         £'000
_____________________________________________________________________________

Change in stocks of goods for resale                      (220)         (289)
Other operating income - release of capital grants         (75)          (96)
Staff costs                                              52,183        50,222
Depreciation and other amounts written off
tangible fixed assets:
  Owned                                                   3,001         3,173
  Leased                                                    584           627
Amortisation of other intangible fixed assets               307           535
Impairment of other intangible fixed assets                 808             -
Impairment of assets classified as held for sale              -            37
Other operating charges                                  20,277        26,756
_____________________________________________________________________________

                                                         76,865        80,965
_____________________________________________________________________________


Costs relating to changes in team management of £3,192,000 have been charged in
the period (2005: £2,369,000). These comprise staff costs of £2,384,000 (2005:
£2,369,000) and impairment of other intangible fixed assets of £808,000 (2005:
£nil). These costs are included within the relevant headings in the above table.



4 Tax expense


Recognised in the income statement
                                                      11 months     12 months
                                                  ended 30 June ended 31 July
                                                           2006          2005
                                                          £'000         £'000
_____________________________________________________________________________

Current tax expense
Current period                                                -             -
Adjustment for prior years                                    -             -
                                                              -             -
_____________________________________________________________________________

Deferred tax expense
Origination and reversal of temporary differences             -             -
Adjustment for prior years                                    -             -
_____________________________________________________________________________

Total tax expense in the income statement                     -             -
_____________________________________________________________________________


Reconciliation of effective tax rate
                                                           2006          2005
                                                          £'000         £'000
_____________________________________________________________________________

(Loss)/profit before tax                               (12,033)           620
_____________________________________________________________________________

Tax using the UK Corporation tax rate of 30%            (3,610)           186
(2005: 30%)
Non-deductible expenses                                     166           148
Non-qualifying depreciation                                 449           471
Other                                                       138           326
Utilisation of tax losses                                  (75)       (1,131)
Tax losses carried forward                                2,932             -
_____________________________________________________________________________

Total tax expense in the income statement                     -             -
_____________________________________________________________________________


The Group had unrelieved UK Corporation tax losses of approximately £18.6m
(2005: £7.5m) at the end of the period.



5 Dividends
                                                            2006         2005
                                                           £'000        £'000
_____________________________________________________________________________

Ordinary shares
2004 final (2.04p per share)                                   -        2,625
2005 interim (1.03p per share)                                 -        1,325
2005 final ( 2.04p per share)                              2,625            -
_____________________________________________________________________________

                                                           2,625        3,950
______________________________________________________________________________


There was no 2006 interim dividend (2005: 1.03p per share). The Board do not
propose a 2006 final dividend (2005: 2.04p per share).


6 (Loss)/earnings per share

The calculation of basic (loss)/earnings per share for the eleven months ended
30 June 2006 was based on the loss attributable to ordinary shareholders of £
12,033,000 (2005: profit £620,000) and a weighted average number of ordinary
shares outstanding as follows:

                                                       11 months     12 months
                                                   ended 30 June ended 31 July
                                                            2006          2005
______________________________________________________________________________

(Loss)/profit for the period (£'000)                    (12,033)           620
Weighted average number of ordinary shares during    
the period/year ('000)                                   131,193       128,668
______________________________________________________________________________


7 Events after the balance sheet date


On 24 July 2006 Newcastle United Football Company Limited ('the Club') acquired
the registration of Damien Duff from Chelsea FC for £5m. On 24 August 2006 the
Club acquired the registration of Obefami Martins from Internazionale FC for
€15m.

On 9 August 2006 the Club sold the registration of Amady Faye to Charlton
Athletic FC for £2m including an amount of up to £0.5m contingent on player
appearances. On 22 August 2006 the Club sold the registration of Jean-Alain
Boumsong to Juventus for an initial fee of €4.8m.



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