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Preliminary financial results

Posted on 28 October 2003  - 12:00

Tottenham Hotspur (Spurs) Football Club is located in North London. The club is also known as Spurs. Tottenham's home ground is White Hart Lane. The club motto is Audere est Facere (To dare is to do).

Preliminary announcement of the financial results for year ended 30 June 2003 along with statement from Chairman Daniel Levy.


Year ended 30th June 2003 (Unaudited) £mYear ended 30th June 2002 £m
Turnover66.565.0
Operating profit before amortisation, impairment and profit on sale of player registrations11.09.2
Net interest payable(0.8)(0.7)
Profit on sale of player registrations1.36.3
Amortisation and impairment of player registrations(18.7)(13.9)
(Loss)/profit before tax(7.1)0.9
(Loss)/earnings per share(6.3)p0.5p


Commenting, Daniel Levy, Chairman of Tottenham Hotspur plc, said:

"We have invested heavily in the team once again this year and continue to pursue our long-term capital projects, albeit progress has been at a slower pace than we had originally planned.

"Last season the team's performances were well below the level we hoped for and this has also resulted in a challenging close season for our business managers and indeed all our employees. In overall terms, current trading across all operations for the first three months of the new financial year is lower on a like-for-like basis against the same period last year. Inevitably, trading will be influenced by the performance and success of the team over the remainder of the current season.

"Our ambitions for Tottenham Hotspur remain steadfastly on achieving playing success and we know this can only be achieved by continuing to invest prudently in both the playing and non-playing side of Tottenham Hotspur."

Chairman's Statement

Results
Turnover for the year was £66.5m, an increase of £1.5m over the prior year. Operating profit before player trading was £11.0m, £1.8m above last year. After amortisation and impairment of player registrations, profit on player sales and interest payable, the year resulted in a loss before tax of £7.1m (2002 - profit before tax £0.9m). The Balance Sheet showed net assets as at 30th June 2003 of £31.2m (2002 - £37.7m). Net debt at the year end was £3.6m higher at £10.6m (2002 - £7.0m).

Overview
We are very aware of the positive start to the season made last year only to face the disappointment of early exits from domestic cup competitions and finishing the Premier League season in tenth place. Despite our difficulties, particularly in the second half of the season, the Club continued to receive magnificent support from the fans and I would like to pay particular tribute to our loyal supporters.

We entered the summer break with even greater determination to revitalise the squad particularly with younger players. Consequently, during the close season, a number of changes were made to the playing staff, albeit against a backdrop of one of the most difficult player-trading environments in domestic and European football for some years. I am pleased to say that we were able to attract a number of new young players to the Club, substantially bolstering the First Team's resources for the new season. At the same time we released or sold a number of players, however, as a result of the prevailing market conditions the income from player sales was negligible compared to our overall spend on player purchases. However, these additions to the squad were essential to sustain a competitive team in the Premiership. Notwithstanding our ambitions to succeed, the spending pattern this summer is not one that is sustainable over the longer term.

We have continued to invest and take difficult decisions that will benefit Tottenham Hotspur in the long run, even against the uncertainty surrounding television and media revenues, our single largest source of income. We were pleased to see the new FAPL agreement with broadcasters, albeit at a lower level of income than the existing agreement that finishes at the end of the 2003/04 season. However, the new arrangement provides little degree of comfort to Premiership clubs until it becomes clearer whether the European Competition Commission will permit the new agreement to become effective. Until this issue is resolved we remain very cautious with regard to the visibility of earnings from television for the Club beyond the current financial year. Furthermore this uncertainty is likely to have negative implications for the liquidity of the transfer market.

Football
I would like to say a few words on the recent changes that have taken place at the Club with the departure of Glenn Hoddle, First Team Manager, and his assistant John Gorman. This was one of the most difficult decisions we have been faced with in recent times and one not taken in haste by your Board. Whilst it is not ideal having to change manager during the season, we are extremely fortunate to have someone of David Pleat's ability to step in and seamlessly take over as Caretaker Manager, supported by Chris Hughton as First Team Coach. We now have the task of determining the long-term football managerial direction for the Club, clearly a key issue and one which commands our fullest consideration. We have already determined that we will not be rushed into a decision and must look at every possible scenario to find the best management arrangement for the successful development of the Club.

To reinforce our ambitions on the pitch we have been one of the biggest spenders in this summer's transfer market and as a result we welcome our three new strikers Frederick Kanoute, Bobby Zamora and Helder Postiga. We welcome also Mbulelo Mabizela, a defender, Stephane Dalmat, a midfielder on loan from Inter Milan, and left back Paul Konchesky on loan from Charlton Athletic. These additions to the playing squad have been achieved within a player transfer market that has clearly undergone radical change, making it more difficult to both sell and buy players. With few obvious exceptions amongst our Premier League peers, there has been very little activity compared to last summer, although in overall terms we have seen a return to more reasonable levels of player remuneration. We believe this trend will continue as evidenced by the number of transfer fees structured as non cash deals in the form of player exchanges.

During the season, several younger players enjoyed successful loan spells and will have advanced through this experience. These include, Dean Marney, Lars Hirschfeld, Stephen Kelly, John Jackson and Robert Burch. I am delighted to see a number of these players progressing into the first team squad this season in addition to Rohan Ricketts.

At the same time we have also released or sold players and we thank Teddy Sheringham, Steffen Freund, Ben Thatcher, Les Ferdinand, Tim Sherwood, Sergei Rebrov, Stephen Clemence, Alton Thelwell, Matthew Etherington, Steffen Iversen, and Neil Sullivan for their services and wish them well in the future. In addition, Chris Perry is currently on short term loan to Charlton Athletic.

Our emphasis on family entertainment worked well during the year with four fixtures designated as family games, providing specific seating areas to encourage increased family participation. Additionally, we have used our Football in the Community scheme to bring young people from local areas to our competitive games in addition to our pre-season friendly games.

Commercial Achievements
When I wrote to shareholders last year, we had just commenced our deals with Kappa and Thomson, our two key sponsorship partners. Internal resources in both marketing and communication have been enhanced to ensure that we are giving a service which strengthens the relationships with our key business partners. We have also expanded our partnership base to include telecoms (Incite/Orange), beer pouring rights (Carling) and betting (Ladbrokes). We are continuing to look at other selected affinity services that will benefit our supporter base and these are at various stages of development.

Our efforts continue to be focussed on customer satisfaction, customer knowledge and customer retention. Whilst we accept that on pitch success is the driver for business performance we are also determined that our supporters receive the quality of service they deserve. Our customer relationship management software is now integrated with all the operating divisions enabling us to better serve both our supporters and our commercial partners and we will continue to develop and enhance this system.

Externally, there have been a number of initiatives this summer, in particular the end of season visit to Washington DC and our highly successful tour of South Africa this close season. These tours have promoted the Tottenham name in important new markets where we have been able to promote the Club to a new base of potential supporters whilst giving the team a broader base of playing experience. In addition, I am delighted that we were able to sign a new young player, the South African captain and defender Mbulelo Mabizela, as a result of our summer tours, although it was frustrating to be thwarted in our attempts to sign another, the US international midfield player Bobby Convey, due to a failed work permit application.

We have made great efforts to make sure that our fans, shareholders, employees and commercial partners are kept as up to date with events as is possible, that is with both good and bad news. Certainly our web site is amongst the top most visited sites among Premiership Clubs and we will continue to provide as many avenues of communication to all our stakeholders as possible.

Financing
As shareholders will be aware, in July of this year we made an announcement in response to media speculation regarding a possible fund raising. Whilst we will continue to fund our working capital requirements via short-term funding, it would be prudent management to take some restorative action to the Company's available capital base given the decrease in net assets and increase in net debt as referred to above. Even without the market turmoil of recent years, it is not surprising that new equity issues in our sector would be unlikely to find favour amongst financial institutions. Therefore, at this stage we cannot be certain that a fund raising will proceed although we will continue to explore appropriate options. We will report to shareholders again when it is appropriate to do so.

Your Board continues to hold the view that currently dividends should not be paid on ordinary shares. We will therefore continue to reinvest any profits in the business.

Capital Projects
In my last Chairman's statement, I reported to you that we failed to secure planning permission for our Academy and first team training facility at our chosen site in Abridge, Essex. We have now taken a decision not to appeal the local authority decision and have focussed our attention on securing a new site. It is likely that any parcel of land available will be located within the greenbelt with all the associated problems relating to planning permission, similar to those we experienced with Abridge. It goes without saying that this will be a lengthy task but we remain committed to realising the project, which will provide the Club with a facility of the size and quality that will support our development for the future. As a result of the considerable time and effort that went into the Abridge project we now have an impressive development blueprint on which to base a new Academy once a suitable site can be identified.

In the interim, I am pleased to say that we have recently received planning permission for the erection of a temporary new all weather facility at our existing training ground at Spurs Lodge which is scheduled for completion during the early part of next year.

The Board continues to explore options for the development of the stadium and its immediate environment at White Hart Lane. The local Council and other Regional Government agencies are encouraging us to pursue this course and we have a desire to stay and play our part in the regeneration of the wider Tottenham High Road area. However, there are immense difficulties to overcome in an area that has been deprived of inward investment for so long, and developments of this nature lack certainty, require considerable patience and take time to realise. The public transport and road networks around the ground are inadequate and an increase in the stadium capacity would place further strain on this infrastructure unless significant improvements are made.

Whilst we are keen to stay at White Hart Lane we also need to be mindful of the future of the Club over the longer term. We therefore remain open minded to any feasible alternatives to our current stadium site. Whilst I can point to nothing imminently, we will keep shareholders and fans informed of developments on both the Academy and the Stadium as events will allow.

Board Changes
I am pleased to announce the appointment of Matthew Collecott as Finance Director and Company Secretary who joins the Board with immediate effect. Matthew Collecott was previously Finance Director of ENIC having joined the group in 1998. He has a wide range of expertise in both finance and the operational management of football clubs having overseen ENIC's investments in Slavia Prague, AEK Athens and Vicenza Calcio. He is a non-executive director of ENIC Group Limited.

Last week we announced that Paul Viner had resigned as Finance Director and Company Secretary of the Company and we wish him well and thank him for his contribution to Tottenham Hotspur.

In September we announced that Paul Kemsley had joined the Board as Executive Director. Paul joined our subsidiary Club Board two years ago and has been a very able ambassador for the Club. He has provided the Board with very sound counsel, most recently representing the Club and advising the Board on all its property-based development projects and I am sure he will continue to make a valuable contribution to the Board and the Club.

Outlook
We have invested heavily in the team once again this year and continue to pursue our long-term capital projects, albeit progress has been at a slower pace than we had originally planned.

Last season the team's performances were well below the level your Board hoped for and this has also resulted in a challenging close season for our business managers and indeed all our employees. In overall terms, current trading across all operations for the first three months of the new financial year is lower on a like-for-like basis against the same period last year. Inevitably, trading will be influenced by the performance and success of the team over the remainder of the current season.

Our ambitions for Tottenham Hotspur remain steadfastly on achieving playing success and we know this can only be achieved by continuing to invest prudently in both the playing and non-playing side of Tottenham Hotspur.

Daniel Levy
Chairman
27th October 2003