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Six month summary and chairman's statement

Posted on 16 March 2001  - 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).

<STRONG>Tottenham Hotspur plc</STRONG> <P class=MsoNormal>Preliminary Results for the six months ended 31 January 2001 <P class=MsoNormal><STRONG>Summary of Results<BR></STRONG>Six Months<SPAN style="mso-spacerun: yes">&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59; </SPAN>Six Months<BR>Ended<SPAN style="mso-spacerun: yes">&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59; </SPAN>Ended<BR>31st January 2001<SPAN style="mso-spacerun: yes">&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59; </SPAN>31st January 2000<P class=MsoNormal><STRONG>Turnover</STRONG><BR>&pound&#59;27.8m<SPAN style="mso-spacerun: yes">&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59; &pound&#59;</SPAN>29.8m <P class=MsoNormal><STRONG>Operating profit before player trading<BR></STRONG>&pound&#59;7.1m<SPAN style="mso-spacerun: yes">&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59; &pound&#59;</SPAN>8.6m <P class=MsoNormal><STRONG>Profit before tax<BR></STRONG>&pound&#59;0.9<SPAN style="mso-spacerun: yes">&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59; &pound&#59;</SPAN>2.0m <P class=MsoNormal><STRONG>EPS</STRONG><BR>0.6p<SPAN style="mso-spacerun: yes">&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59;&nbsp&#59; </SPAN>1.4p <P class=MsoNormal>* ENIC plc take shareholding to 29.9%. Sir Alan Sugar reduces shareholding to 13% and resigns from Board. <P class=MsoNormal>* Daniel Levy appointed Non-Executive Chairman. David Buchler appointed Executive Vice-Chairman with a brief to undertake an exhaustive review of the Company over six months. <P class=MsoNormal>* Revenue and profits lower against previous period as a result of no European competition. <P class=MsoNormal>* Spurs through to Semi-Final of FA Cup. <P class=MsoNormal>Commenting, Daniel Levy, Non-Executive Chairman of Tottenham Hotspur plc, said: "On completion of our strategic review later in the year, I will be in a much better position to communicate our view of the future. In the long term we are committed to enhancing shareholder value by returning Tottenham Hotspur to the higher echelons of the football world. <P class=MsoNormal>"We are delighted to have reached the Semi-Final of the FA Cup to be played next month. A place in the Final would give us an outstanding chance of European football next season."<P class=MsoNormal><STRONG>CHAIRMAN'S STATEMENT</STRONG> <P class=MsoNormal><STRONG>Introduction</STRONG> <P class=MsoNormal>ENIC plc concluded its purchase of 27.4m Tottenham Hotspur plc ordinary shares from Sir Alan Sugar on 28 February 2001. This takes ENIC's shareholding in Tottenham Hotspur plc to 29.9%. Following the completion of this transaction, I have been appointed non-executive Chairman and David Buchler has been appointed executive Vice-Chairman. <P class=MsoNormal>The Board's intention is to conduct a thorough and exhaustive review of the Club and business over the next six months. David Buchler is heading up that review and will report to the Board in stages, culminating with his conclusions and recommendations later in the year. <P class=MsoNormal>Sir Alan Sugar has resigned his position as Chairman and Director. I would like to thank Sir Alan for his hard work and considerable achievements at the Club over the past ten years. In addition, Sam Chisholm and Claude Littner have also stepped down as non-executive directors and I thank them for their contributions also. <P class=MsoNormal>Since my tenure here has been only a matter of days so far, I will restrict my comments to a factual review of the period in question. <P class=MsoNormal><STRONG>Results</STRONG> <P class=MsoNormal>The reporting period is the six months ended 31 January 2001. <P class=MsoNormal>Turnover at &pound&#59;27.8m (2000 - &pound&#59;29.8m) is 7% down on the same period last year. The major factor influencing this and profits was the absence of European football which is a high margin income stream. <P class=MsoNormal>Operating profit fell by &pound&#59;1.7m to &pound&#59;1.3m (2000 - &pound&#59;3.0m) and profit before tax fell to &pound&#59;0.9m compared to &pound&#59;2.0m for the same period last year. <P class=MsoNormal>Premier League gate receipts increased 14% to &pound&#59;11.8m (2000 - &pound&#59;10.4m) principally due to the Club having played one more home match (12) compared to the same stage last year (11), attendances on the whole being restricted by capacity. Gate receipts from all cup competitions fell by &pound&#59;2.0m to &pound&#59;1.6m (2000 - &pound&#59;3.6m). Our involvement in the UEFA Cup in 1999 gave us two additional home cup games in the comparable period last year which accounts for &pound&#59;1.8m. The FA Cup reverted back to its traditional timetable this year, which led to only one tie falling into this reporting period. <P class=MsoNormal>Television and radio income has fallen by 4% to &pound&#59;7.5m (2000 - &pound&#59;7.8m). In the comparable period last year we received a significant amount in television fees associated with our UEFA Cup involvement. This shortfall for the current reporting period has been mostly compensated for by increased income from the domestic TV contract. <P class=MsoNormal>Sponsorship income has fallen by 11% to &pound&#59;3.3m (2000 - &pound&#59;3.7m). Part of this reflects the second year of our sponsorship agreement with adidas and the launch of only one new kit compared to two last year. Matchday sponsorship and hospitality has fallen to &pound&#59;0.8m (2000 - &pound&#59;1.1m). The introduction of our new Spurs web site has generated an additional &pound&#59;0.2m during this six months. <P class=MsoNormal>The Merchandise Division has underperformed compared to last year with turnover falling by 25% to &pound&#59;2.6m (2000 - &pound&#59;3.5m). Last year's turnover was unusually high due to a number of factors: new sponsors - adidas and Holsten&#59; launch of two new kits&#59; opening of the new Megastore at White Hart Lane&#59; and Spurs' competing in European football. There was a significant downturn in sales following the team's poor second half of the season last year and this has continued into the six months to 31st January 2001. Whilst there is room for improvement in our merchandise offer, sales are driven primarily by success on the pitch and we must ensure that we are positioned to take full advantage of this. <P class=MsoNormal>Cost of sales before amortisation of players' contracts shows a 4% saving at &pound&#59;17.1m (2000 - &pound&#59;17.9m) due mainly to savings in costs associated with the UEFA Cup games (1999) and the reduction in line with turnover of cost of sales in merchandising. The costs of the Playing Department remain largely unchanged. <P class=MsoNormal>Amortisation of players' contracts has increased by 5% to &pound&#59;5.8m (2000 - &pound&#59;5.5m). New additions to the squad during 1999/2000 account for additional amortisation of &pound&#59;1.8m whilst players leaving the Club during 1999/2000 have removed &pound&#59;1.6m from the charge compared to the same period last year. Three players were transferred out of the Club during the reporting period for a total value approximating to their net book values, leaving no significant profit or loss. <P class=MsoNormal>The interest charge has risen to &pound&#59;442,000 (2000 - &pound&#59;165,000). Corporation tax has been provided at an effective rate of 31%, &pound&#59;278,000 (2000 - &pound&#59;623,000). <P class=MsoNormal>Our balance sheet remains healthy, showing net assets of &pound&#59;41.9m. <P class=MsoNormal><STRONG>Dividend and Corporate Governance</STRONG> <P class=MsoNormal>The Board of Directors is carrying out a review of the effectiveness of internal controls, both financial and non-financial and a detailed assessment of the risks that the Company faces. It will also review the construction of the Board itself with a view to complying with the best practice of Corporate Governance. The Board has not proposed an interim dividend (2000 - nil). The dividend policy will form part of the review. <P class=MsoNormal><STRONG>Football</STRONG> <P class=MsoNormal>Results on the pitch have not been satisfactory for many years. A Club of this size and stature needs and deserves to be consistently challenging for major honours, domestically and abroad. Your Board of Directors is committed to developing a strategy to this end. It will take us some time to assess the current situation regarding the first team squad and it would be wrong to opt for short term fixes. The implications of changes to the transfer system need to be assessed and the situation is still by no means clear. <P class=MsoNormal>Ruel Fox, Ramon Vega and Jose Dominguez left us at the start of this season and we wish them well with their new clubs. <P class=MsoNormal>Sol Campbell, Darren Anderton and Les Ferdinand are three of our senior players whose contracts expire at the end of the season. The Board is committed to keeping the best of our talented players as well as enhancing the first team squad. We will continue to develop our youth policy through the Premier League Academy scheme, which has served the Club well. The scouting system both here and abroad will be reviewed. <P class=MsoNormal><STRONG>Outlook</STRONG> <P class=MsoNormal>On completion of our strategic review later in the year, I will be in a much better position to communicate our view of the future. In the long term we are committed to enhancing shareholder value by returning Tottenham Hotspur to the higher echelons of the football world. <P class=MsoNormal>We are delighted to have reached the Semi-Final of the FA Cup to be played next month. A place in the Final would give us an outstanding chance of European football next season. <P class=MsoNormal>Daniel Levy<BR>Chairman<BR>16 March 2001<BR><BR>To read the preliminary six month report in full, click <A href="http://www.uk-wire.com/cgi-bin/articles/200103160700325747A.html" target=_new A <>here"</A>