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).
|Year ended 30 June 2004 £m||Year ended 30 June 2003 £m|
|Operating profit before amortisation, impairment and profit on disposal of registrations||9.7||11.0|
|Amortisation and impairment of registrations||(10.9)||(18.6)|
|(Loss) / profit on disposal of registrations||(0.4)||1.3|
|Net interest payable||(0.9)||(0.8)|
|Loss before tax||(2.5)||(7.1)|
|Retained loss for the financial year||(2.7)||(6.4)|
|Loss per share||(2.6)p||(6.3)p|
Commenting, Daniel Levy, Chairman of Tottenham Hotspur plc, said:
“Following a process of change within the Club we now have in place a structure that we hope will bring a steady return to the winning performance we all desire for Tottenham Hotspur. We have continued to invest in the playing squad and training staff during the summer and we continue to pursue our objectives on and off the pitch.”
Chairman’s StatementFinancial results
Turnover for the year was £66.3m which is similar to that of the previous year and reflects mixed performances both on and off the pitch. The poor performance on the pitch had a negative impact on the financial performance of a number of areas of the business, but particularly on merchandising income and the TV income dependent on our final league position. Turnover was £3.1m lower in these two areas compared with the prior year. However, despite this, the key operating profit figure was £9.7m against £11.0m in the prior year before player amortisation and the profit or loss on the sale of players’ registrations, whilst this year’s retained loss improved by £3.7m from £6.4m last year to £2.7m. During the year £15m was raised by the Company through the issue of 60,000 convertible redeemable preference shares, at £250 per share. This was a major factor in consolidated net assets closing at £42.3m, an increase on the prior year of £11.1m. These results, which are discussed in more detail in the Operating and Financial Review on page 4 demonstrate the resilience of the business and reflect the potential for growth that accompanies improved performances on the pitch.
The 2003/04 season did not see the Club move in the desired direction on the pitch and it was clear that this was a situation that simply could not remain unchecked. It was equally clear that in a market that is often driven by short-term objectives, we would not run the risk of taking short-term actions as a solution. Wholesale change was required. Our aim has been to rebuild the infrastructure of the Club’s system of football management, coaching and development, a root and branch series of changes, which I believe will provide a system which can develop on the basis of best practice rather than by default.
Frank Arnesen joined us as Sporting Director in July 2004 to add long-term vision and a comprehensive team succession plan. He has ultimate responsibility for overseeing the first team, and developing and implementing the youth, scouting, medical and international policies for the Club that will raise our performance in all areas. His knowledge of the international transfer market is excellent, as evidenced in the most recent transfer window, and across all levels, youth and senior. Frank has built an exceptionally promising team around him with a refreshing new enthusiasm and discipline.
It is important that we see a flow of development in all positions through every age group and that the Club is actively recruiting future potential stars at an early age. Our philosophy is to have a mixture of youth and experience in the team. We were delighted that during the 2003/04 season eight youngsters from the Academy made their first team debuts. Frank Arnesen is assessing our scouting and Academy arrangements and will make any necessary changes to ensure our performance continues to improve.
Within the last six months we have completely restructured the training ground and medical set up, environment and staff structure. Dr Charlotte Cowie joined as our new Head of Medical Services in February 2004 from Fulham Football Club where she was Director of Medical Services, having previously been Chief Medical Officer for Team GB, working at the 2000 Olympics. As part of a total revamp of this area Dr Cowie has sought and recruited some of the best sports medicine and physiotherapist practitioners available. I am pleased to announce that Dean Kenneally has recently joined us, as first team physiotherapist, from UK Athletics where he worked as part of the 2004 Olympic medical team. Dean previously worked for the Australian Institute of Sport.
Jacques Santini joined us as Head Coach in July 2004. His appointment came at the end of a long process in which we were fortunate to be able to assess the abilities of a significant number of first class managers and coaches from clubs in the UK and across Europe. We needed to ensure that we had the right candidate to work within the training ground’s new structure and this required a coach who had operated at the highest level.
At the close of the 2003/04 season there were a number of three to five year contracts that expired. The resultant future cost saving gave us the extended financial ability to further our investment in some of the best young talent both in the UK and abroad. Whilst it is important to note that an element of experience is retained, or has been bought-in where necessary, we believe that the continued investment that we have made during the Summer closed season will reinforce our longer term desire for success.
I would like to thank David Pleat for his contribution to the Club over the years. David has brought many young players to this Club who have gone on to establish themselves in the first team squad, and to represent their respective countries. We wish David and his family well.
On the pitch
Since the last year-end the Club has seen a very significant change in the make-up of the first team squad of players, with 17 players leaving and 21 new players joining us. An unprecedented degree of change for any club.
The players that have left since we last reported to shareholders in our interim report are Gary Doherty, Helder Postiga, Milenko Acimovic, Darren Anderton, Stephen Carr, Gus Poyet, Christian Ziege, and Lars Hirschfeld.We thank them for their service and wish them well in the future.
In the same period we have welcomed Pedro Mendes, Sean Davis, Paul Robinson, Marton Fulop, Timothee Atouba, Rodrigo Defendi, Erik Edman, Noureddine Naybet, Edson Silva Sousa, Michael Carrick, Noe Pamarot, Reto Ziegler, Calum Davenport, Leigh Mills and Spase Dilevski.
The result of the above changes is that the Club has spent a total of £37.5m on transfer fees for new players since 1 July 2003. This has been possible through the support of the Club’s key investors and the ongoing financial stability of the Club’s operations. This level of investment underlines the ambitions we have for the club, but is clearly not sustainable.
In the last six months there has been a series of very significant changes across all aspects of the football club. Our collective challenge remains to convert these changes into improved performance in both the Premiership and the Cup competitions.
Off the pitch
We continue to improve access, communications, offers and services to fans and to update the technology that facilitates this. Included within this year’s pack to shareholders is ‘Your Spurs’, a report that focuses on the many developments that took place during the year, across all areas of the club’s activities. There is a huge amount of work that goes into this club, some of which supporters may not be fully aware, and we would urge you to read it.
Key offers to fans were the re-designed and re-vamped Season Ticket and Membership packages which provided our supporters with significant improvements. Membership was included as a benefit of the Season Ticket Holder package and, following a successful pilot run last season the Members only website, Spurs Lodge, has been launched bringing the fans news direct from the training ground.
The Club communication channels have been optimised to deliver information to our supporters. Our website performed well and industry statistics consistently place it in the top five official Premiership Club websites. It is relied on for official, accurate news. Our UK television exposure figures also show us to be consistently in the top six. Clearly, if we can combine this with success on the pitch, going forward we will have the flexibility to significantly enhance revenues.
We have continued our policy of responding to every reasonable communication we receive from fans, and this year also saw the further development of a constructive and productive relationship with the Tottenham Hotspur Supporters Trust.
Our Football in the Community scheme continues to grow and worked with over 250,000 children during the year. Kathryn Robinson joins us from the Premier League, where she had responsibility for corporate and community affairs, as Director of Community Development to further extend our activities in this area.
Commercial deals concluded were with MBNA, our official credit card affinity partner, for a further 5 years, and Codemasters, with whom we have a 5-year deal for the production of the official Spurs computer game (PS2, Xbox and others), Incite and Ladbrokes. In addition, since the year end, we have concluded further official partner deals with Endsleigh Insurance and Carlsberg.
Internationally, this period saw us travel to South Africa in July 2003 as guests of the 2010 bid to stage the World Cup. The tour was successful in many ways, raising our profile and support in the region. The players coached children in two of the main townships and we were delighted when South Africa won the bid and wish them well for 2010.
In our last interim report we were pleased to announce that our key sponsor, Thomson, had extended its relationship with the club until 2006 and we have further developed this relationship to include community activities and in-resort coaching. Clearly it is in the best interest of the Club to maintain stable, mutually beneficial and financially rewarding relationships with our commercial partners that are also on a long-term basis and we are pleased that our two main sponsors, Thomson and Kappa, remain committed to the Club until 30 June 2006.
With regards to our two principal capital projects, the academy and stadium, we continue to explore the various options open to us and will inform our shareholders and fans of any developments, when we are in a position to do so.
Under the guidance of Frank Arnesen we now have in place a structure that we hope will bring a steady return to the winning performance we all desire. There is still a great deal of financial instability in the game. The new television and radio broadcast rights contracts will generate less income than previously. Despite this, we have invested heavily in the playing squad and training staff during the summer and we continue to pursue our objectives on and off the pitch.
This year has seen a significant increase in season ticket sales against the number sold at the beginning of last season’s campaign. There is no greater indicator of our fans’ loyalty. We have now put in place the appropriate management, players and staff, both on and off the pitch, to demand improvement in all areas.
I would like to thank our supporters, shareholders and employees for their continued support.
4 October 2004
Operating and Financial ReviewTurnover
Turnover from all departments for the year was £66.3m against £66.5m in the prior year. League gate receipts were in line with the prior year with the key positive movements relating to better performances in the cup competitions, which saw the team reach the quarter-finals of the Carling cup and the fourth round of the FA cup, additionally sponsorship revenues improved. This was offset by reduced media and broadcasting revenues, and lower merchandising sales.
Premier League gate receipts of £16.3m are in line with the prior year’s receipts of £16.4m. Season ticket income was down on the prior year’s record level by 9%. However, despite average attendances falling by 2%, the change in sales mix from season tickets to match day tickets resulted in total league receipts matching the prior year. Current season ticket sales for the 2004/05 campaign are already above the 2003/04 end of season position.
Cup competition gate receipts were £1.9m higher than the prior year. The improved cup performance meant the team played seven cup matches this year, five of which were at White Hart Lane (2002/03 — three games, one of which was at home).
Revenue from sponsorship was £0.8m above 2002/03 revenues. This was due to new commercial partnerships being established with MBNA, Incite, Codemasters and Ladbrokes. We also received enhanced revenue from the central FA Premier League partners. It is pleasing to note that Thomson extended their relationship with the club during the year, thus providing a stable level of income for the future from this important revenue stream. Hospitality turnover was in line with the prior year with lower average matchday sales being compensated for by the four extra home cup matches this year.
Media and broadcasting turnover was £0.9m down on the prior year at £23.9m compared to £24.8m in 2003. This was the final year of the previous Premier League / SKY television rights deal and the payment terms were the most lucrative of the three year deal, however the lower merit fee received from finishing 14<sup>th</sup> (2002/03 — 10<sup>th</sup>), and five fewer live televised appearances, had an overriding negative impact.
Merchandising sales were £1.4m down on the prior year. This was a result of lower Christmas footfall and the lower level of sales, as expected, from the second year of the Kappa deal.
Operating expenses (excluding player trading)
Operating expenses excluding player trading increased by £1.1m during the year, the four additional home games and costs relating to those games accounting for much of this increment. Whilst there were savings on player salaries as some of the long term player contracts came to an end, these were partially offset by significant restructuring costs at the training ground in a year which saw a change in the Sporting Director, the Manager, coaching staff and medical teams.
Operating profit before player trading
Operating profit before player trading defines the Group’s ability to generate cash from its operations. The Board continuously monitors this ability, enabling it to establish the resources available to the Group to fund the acquisitions of player registrations, meet its liabilities going forward, and grow. Operating profit, before player trading was £9.7m against £11.0m in the prior year. The Group’s business model shows resilience in a season that did not produce success on the pitch, where there was extensive internal restructuring, and where significant performance related revenues were lost.
The club made a loss on disposal of registrations of £0.4m. Whilst a combined loss of £1.3m was made on the sale of Chris Perry, Bobby Zamora, and Milenko Acimovic, this was offset by profits made on the sale of Matthew Etherington and Jonathan Blondel of £0.6m, and further contingent performance related receipts on players that had previously been sold.
Player amortisation is £7.8m less than in the prior year. The prior year figure included an impairment charge of £7.2m relating to the disposals of Sergei Rebrov and Ben Thatcher. No further impairments have been considered necessary this year, with the charge of £10.9m reflecting only the amortisation of player transfer fees over the period of their contracts.
During the second half of the year the Company raised £15m via the issue of 60,000 Convertible Redeemable Preference Shares (CRPS) at £250 each. The issue strengthened the balance sheet and ensured the Board had the flexibility in the recent transfer windows to take a long-term view and add depth to the playing squad. Clearly the backing of key investors during the year has been extremely positive, and ensures the club remains properly funded to meet its ongoing commitments and ambitions.
The Group’s net assets have increased by £11.1m to £42.3m. This figure gives no value to home grown players and the future development of young players at the club. The retained loss for the year has improved by £3.7m on the prior year, the club remains cash generative at an operating level, and the business model remains robust.
During the year the club sought permission from shareholders to move from the official list to AIM. The Board took the view, having reviewed the shareholder base, the illiquidity of the Company’s shares and the comparative size of the Company, that there were no overriding benefits from retaining a full listing. The club benefits from lower administration costs and the greater flexibility of the AIM rules and shareholders benefit from the beneficial personal tax consequences of an AIM listing. Whilst not obliged to, the Company will continue to maintain best practice procedures, wherever practical, in relation to issues such as corporate governance.
4 October 2004
|Year ended 30 June 2004|
|Note||Operations, excluding player trading *||Player trading *||Total||Year ended 30 June 2003 Total|
|OPERATING PROFIT / (LOSS)||9,735||(10,924)||(1,189)||(7,664)|
|(Loss) / profit on disposal of intangible fixed assets||-||(381)||(381)||1,329|
|PROFIT / (LOSS) BEFORE INTEREST AND TAXATION||9,735||(11,305)||(1,570)||(6,335)|
|Net interest payable||(894)||(783)|
|LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION||(2,464)||(7,118)|
|Tax (charge)/credit on loss on ordinary activities||(178)||693|
|LOSS ON ORDINARY ACTIVITIES AFTER TAXATION||(2,642)||(6,425)|
|Other finance costs in respect of non equity shares||(50)||-|
|RETAINED LOSS FOR THE FINANCIAL YEAR||(2,692)||(6,425)|
|Loss per share — basic||4||(2.6)p||(6.3)p|
|Loss per share - diluted||4||(2.6)p||(6.3)p|
*Player trading represents the amortisation, impairment, and the profit or loss on disposal, of registrations.
The above results all derive from continuing operations.
There were no gains or losses in either year other than the loss for the year, and accordingly no statement of total recognised gains and losses is presented.
|30 June 2004||30 June 2003|
|Cash at bank||11,497||2,401|
|CREDITORS: amounts falling due within one year||(32,753)||(25,621)|
|NET CURRENT (LIABILITIES) / ASSETS||(12,730)||(14,611)|
|TOTAL ASSETS LESS CURRENT LIABILITIES||60,542||49,253|
|CREDITORS: amounts falling due after more than one year||(17,049)||(16,964)|
|PROVISION FOR LIABILITIES AND CHARGES||(1,229)||(1,051)|
|CAPITAL AND RESERVES|
|Called up share capital||9,624||5,102|
|Capital Redemption Reserve||164||-|
|Profit and loss account||8,656||12,250|
|SHAREHOLDERS’ FUNDS MAY BE ANALYSED AS:|
|Year ended 30 June 2004||Year ended 30 June 2003|
|Net cash inflow from operating activities||5||14,892||7,514|
|Returns on investments and servicing of finance|
|Interest element of finance lease payments||-||(2)|
|Loan issue costs||-||(434)|
|Non-equity share issue costs||(382)||-|
|Net cash outflow from returns on investments and servicing of finance||(1,139)||(782)|
|UK Corporation tax paid||-||(734)|
|Capital expenditure and financial investment|
|Payments to acquire intangible fixed assets||(16,696)||(10,912)|
|Receipts from sales of intangible fixed assets||1,640||4,085|
|Payments to acquire tangible fixed assets||(2,197)||(3,197)|
|Receipts from sales of tangible fixed assets||16||18|
|Net cash outflow from capital expenditure and financial investment||(17,237)||(10,006)|
|Cash outflow before use of liquid resources and financing||(3,484)||(4,008)|
|Issue of non-equity share capital||15,000||-|
|Redemption of ordinary shares||(950)||-|
|Bank loan repayments||(1,470)||(1,177)|
|Bank loan drawn down||-||1,994|
|Loan notes issued||-||10,000|
|Capital element of finance lease payments||-||(306)|
|Net cash inflow from financing||12,580||10,511|
|Increase in cash||9,096||6,503|
Notes to the Accounts
For the year ended 30 June 2004
1. The financial information set out on the attached pages does not constitute statutory accounts for the years ended 30 June 2004 or 30 June 2003 but is derived from those accounts. Statutory Accounts for the year ended 30 June 2003 have been delivered to the Registrar of Companies and those for the year ended 30 June 2004 will be delivered following the Company’s annual general meeting. The auditors reported on those accounts; their reports were unqualified and did not contain a statement under s237 (2) or (3) Companies Act 1985.
|Operations excluding player trading £’000||Player trading £’000||Total £’000|
|Profit on disposal of intangible fixed assets||-||1,329||1,329|
|Profit/(loss) before interest and taxation||11,028||(17,363)||(6,335)|
|2004 £’000||2003 £’000|
|Gate receipts — premier league||16,307||16,414|
|Gate receipts — cup competitions||3,446||1,490|
|Sponsorship & corporate hospitality||14,459||13,681|
|Media and broadcasting||23,891||24,755|
All turnover derives from the Group’s principal activity in the United Kingdom and is exclusive of VAT.
Certain types of income have been analysed in a different category of turnover this year following an exercise to redefine each category to more accurately reflect the operations of the Group. Gate receipts have been more tightly defined, resulting in a reallocation of turnover from these categories to the corporate hospitality and other categories. The comparative figures have been restated accordingly. Gate receipts — premier league, and gate receipts — cup competitions reduced by £7,272,000 and £344,000 respectively, whilst sponsorship & corporate hospitality, and other, increased by £6,786,000 and £830,000 respectively, compared to the amounts shown in the financial statements for the year ended 30 June 2003. There was also a reclassification of £41,000 from media and broadcasting turnover to other.
4. Loss per share
|2004 £’000||2003 £’000|
|Loss after taxation||(2,692)||(6,425)|
|Weighted average number of shares in issue||101,909,150||102,041,520|
|Effect of dilutive potential ordinary shares|
|Loss per share||(2.6)p||(6.3)p|
|Loss per share||(2.6)p||(6.3)p|
|2004 £’000||2003 £’000|
|Depreciation of tangible fixed assets||1,718||2,658|
|Amortisation and impairment of intangible fixed assets||10,924||18,692|
|Profit on disposal of fixed assets||(11)||(18)|
|Decrease/(increase) in stocks||297||(392)|
|Increase in debtors||(27)||(525)|
|Increase/(decrease) in creditors||3,180||(5,237)|
|Net cash inflow from operating activities||14,892||7,514|
|2004 £’000||2003 £’000|
|Increase in cash in the year||9,096||6,503|
|Cash outflow/(inflow) from decrease/(increase) in debt and lease financing||1,470||(10,511)|
|Loan issue costs||-||434|
|Cash related decrease/(increase) in net debt in the year||10,566||(3,574)|
|Non cash related increase in net debt in the year||(35)||(12)|
|Decrease/(increase) in net debt in the year||10,531||(3,586)|
|Opening net debt||(10,641)||(7,055)|
|Closing net debt||(110)||(10,641)|