Newcastle United PLC
28 October 2005
28 October 2005
PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 JULY 2005
FINANCIAL HIGHLIGHTS
• Group turnover of £87.0m, down from £90.2m in prior year.
• Operating expenses before player amortisation and trading rose from
£69.7m to £80.9m principally as a result of additional home games and increased
investment in the playing squad. Group operating profit before player trading
and amortisation fell to £6.0m (2004: £20.4m).
• Substantial increase in profit on disposal of players' registrations of
£13.5m (2004: profit of £0.3m).
• Profit before interest and taxation of £4.5m (2004: £8.8m).
• Match revenues up 4% from £33.9m to £35.3m due to three additional home
games.
• Sponsorship revenues up 1% from £9.3m to £9.4m.
• Revenues from catering up 28% from £5.3m to £6.8m.
OPERATIONAL HIGHLIGHTS
• Significant strengthening of the first team squad, with Scott Parker and
Emre Belozoglu being signed before the end of the financial year. Michael Owen,
Albert Luque and Nolberto Solano were also signed during the transfer window,
but after the financial year end.
• Reached semi-final of FA Cup and quarter final of UEFA Cup.
• Disappointing position of 14th in FA Premier League.
• Successful opening of Shearer's Sports Bar in December 2004.
• Newcastle United superstore, in conjunction with adidas, opened in April
2005.
• 100% ownership of media rights following acquisition by the Company of
Premium TV Limited's ('PTV') 50% stake in nufc.co.uk Limited during February
2005.
• Successfully staged two England international fixtures at St. James'
Park.
• Conclusion of filming of 'Goal', followed by international distribution
in September 2005.
Freddy Shepherd, Chairman of Newcastle United, commented:
'While the team progressed to the semi-final of the FA Cup and quarter finals of
the UEFA Cup competition, the Club's performance in the FA Premier League was
disappointing and below the level that we demand. Since the end of the season,
the Board of Directors has worked very hard to complete the signings of some
exceptional players, culminating in the signing of Michael Owen from Real
Madrid. This has been a period of major investment in the playing squad. The
Board of Directors has made available the funding to secure one of the most
exciting playing squads in the FA Premier League and hopes to bring the success
that our magnificent supporters desire.'
Enquiries:
Freddy Shepherd, Chairman Newcastle United Plc 0191 201 8400
Russell Cushing, Chief Operating
Officer
Ken Slater, Financial Controller
Jonathan Glass /Conor McClafferty/Leonora Pou Brunswick 020 7404 5959
CHAIRMAN'S STATEMENT
Introduction
While the team progressed to the FA Cup semi-final and UEFA Cup quarter final,
the Club's performance last season in the FA Premier League was disappointing.
Whenever a change of Team Manager takes place, it inevitably leads to some
disruption in the running of team affairs. While we were undoubtedly impacted by
the extent of injuries to the first team squad, the level of overall performance
achieved fell below the standards we set for ourselves.
Financial overview
Group turnover decreased 4% from £90.2m to £87.0m, reflecting the disappointing
performance in the FA Premier League.
• Match revenues increased by 4% to £35.3m (2004: £33.9m) due to three
additional home games;
• Television and broadcasting revenues decreased by 17% from £33.7m to
£27.9m reflecting the reduced amounts payable by Sky under the new television
contract and reduced merit payments following our 14th place FA Premier League
position;
• Sponsorship revenue was broadly neutral, up from £9.3m to £9.4m;
• Branded products revenue decreased by 5% from £8.0m to £7.6m, reflecting
the difficult conditions in the wider retail market and the latter stages of the
two-year home kit cycle; and
• The Club's catering operation continues to show extremely strong growth
with turnover increasing by 28% to £6.8m (2004: £5.3m), driven by improved
match-day revenues and the opening of Shearer's Sports Bar in December 2004.
Operating costs before player amortisation and trading increased by £11.2m from
£69.7m to £80.9m. The largest element of these costs, wages and salaries,
increased by 12% from £44.9m to £50.2m reflecting the increased cost of
investment in the playing squad and exceptional costs associated with the change
of team management. Due to the disappointing performance in the FA Premier
League, and consequent fall in revenues, the wage cost rose to 58% of turnover.
Amortisation of players' registrations decreased by 9% from £12.9m to £11.8m. In
addition, an exceptional impairment charge in respect of players' registrations
of £3.0m (2004: £nil) has been made. Profit on disposal of players'
registrations increased substantially to £13.5m (2004: £0.3m).
Net interest payable, which is predominantly the interest payable on our
securitised borrowings, remained at £4.5m.
Loss per share was 0.1p (2004: earnings per share 3.2p). Adjusted earnings per
share were 0.1p (2004: 8.5p per share).The closing cash position at the end of
the period was £17.6m (2004: £26.2m).
Football management and playing squad
Graeme Souness was appointed as Team Manager from 13 September 2004, following
the departure of Sir Bobby Robson. At 52 years of age Graeme has vast playing
and managerial experience at a number of notable clubs and during his career has
won 27 honours as both player and manager.
The year has been a period of significant investment in the playing squad. For
the 2004/5 season we signed Stephen Carr from Tottenham Hotspur, Charles
N'Zogbia from Le Havre, Jean-Alain Boumsong from Rangers, Amady Faye from
Portsmouth and Celestine Babayaro from Chelsea. In the period since the 2004/5
season ended, we signed Scott Parker from Chelsea and Emre Belozoglu from Inter
Milan. Craig Moore, Tim Krul and Lee Clark also joined the Club. In the period
subsequent to our financial year end, but prior to the closing of the transfer
window, we were delighted to complete the signings of Michael Owen from Real
Madrid, Albert Luque from Deportivo La Coruna and to have re-signed Nolberto
Solano from Aston Villa. We also awarded new contracts to Steven Taylor, Kieron
Dyer, Peter Ramage, Alan Shearer, Michael Chopra and Robbie Elliott.
I am particularly pleased to note that many players who joined the Club are
recognised internationals. Extensive changes in the playing squad were made
following the change in the Team Manager and to build a strong squad for the
long-term.
Football management and playing squad (continued)
Players who left the Club during the period included Jonathan Woodgate to Real
Madrid, Olivier Bernard to Southampton, Aaron Hughes to Aston Villa, Andy
O'Brien to Portsmouth, Craig Bellamy to Blackburn Rovers and Darren Ambrose to
Charlton Athletic. Patrick Kluivert and Jamie McClen were released on free
transfers and Laurent Robert, Nicky Butt and Hugo Viana have been loaned for the
duration of the 2005/6 season to Portsmouth, Birmingam City and Valencia
respectively. During August we sold Jermaine Jenas to Tottenham Hotspur.
We enjoyed an extended run in the UEFA Cup, reaching the quarter finals for the
second successive year. The Club also progressed to the semi-final stage of the
FA Cup.
Our Academy under 18 team won the FA Premier League Group D by a margin of eight
points. We were pleased to see the emergence of some very good young players,
such as Paul Huntington who represented England at under 18 level and David
Edgar who played for Canada under 19s. On the coaching staff we are delighted to
have again welcomed Glenn Roeder to the Club as Academy Manager.
Media and brand development
Joint venture with Premium TV Limited ('PTV')
On 14 February 2005 the Company regained 100% ownership of its internet and
media rights following the termination of the joint venture and management
agreements with PTV, under which it had previously operated. The Company
purchased the remaining 50% holding in nufc.co.uk Limited from PTV for a
consideration of £1.35m, of which £0.675m was payable on completion and £0.675m
on 14 February 2006. In addition, nufc.co.uk Limited paid PTV a severance fee in
relation to the terminated management agreement and at the same time entered
into a new five-year hosting agreement with PTV, now the only business link
between the companies. The Group is now ideally placed to exploit new media
developments as they arise.
Joint venture with MGM MIRAGE
Newcastle United PLC has a joint venture with MGM MIRAGE to develop the area
above St. James' metro station, subject to certain matters: Newcastle upon Tyne
must be designated as the appropriate place for a regional casino; the joint
venture project must be selected as the appropriate site, and all applicable
planning and licensing consents must be obtained. The proposed project would
comprise a major mixed-use development, including the regional casino.
Other media developments
Filming of the movie 'Goal', the first of a trilogy of football movies, with the
first instalment set at Newcastle United, was completed and the movie
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. We hope it will enhance the image and awareness of
Newcastle United and the North East region on the World stage.
Newcastle United joined up with Soccastars Limited to launch a major football
reality TV series in the Middle East from which the winner could find himself
training at the Newcastle United Academy for a whole season. The show was
broadcast in 13 Middle East countries.
The stadium
We are continuing with our strategy to maximise the use of the stadium as a
match-day and non match-day venue and we were delighted St. James' Park was
selected by the Football Association to stage two international fixtures, which
is an endorsement of the quality of our facilities and our match-day expertise.
The first game last season, a friendly match against Ukraine, was played on 18
August 2004. The second game, a FIFA World Cup qualifying match versus
Azerbaijan took place on 30 March 2005. Old Trafford was the only other ground
chosen to host England qualifying games for the 2006 World Cup.
In addition to hosting the Newcastle Gateshead Cup in August 2004, we also
staged 'The Match', an Endemol production for Sky TV, and we are delighted to
have staged the second series in October 2005.
During the financial year our Catering division hosted 2,152 non match-day
functions attracting over 130,000 delegates and guests, a significant increase
on the prior year.
The Club, along with all other FA Premier League member clubs, is delighted that
London has been chosen to host the 2012 Olympic Games. St. James' Park and all
its facilities is on the list of approved venues. If selected this will be a
first for the City and the region.
While the stadium has been completed for some five seasons, we have continued to
seek opportunities to improve the facilities for our supporters and visitors
alike. In particular, we have developed the area underneath the South Stand at
St. James' Park with the opening, in December 2004, of Shearer's Sports Bar. The
adjacent Newcastle United official store, in conjunction with adidas, opened
during April 2005 and is proving to be a success.
A new Box Office, Club Museum and the relocation of Cafe @ St. James' follow on
from the recently completed shop and bar projects which have taken place during
the year. The area previously occupied by the official Club shop has been
redeveloped to provide excellent new Box Office facilities, a Club Museum which
will add further interest to the Newcastle United Stadium Tour, and a cafe/
takeaway ideally placed next to Shearer's Sports Bar and the official Club shop,
to complete the development of this increasingly important aspect of the
stadium.
Customers can now take their time choosing merchandise, having lunch or a drink
in Shearer's Sports Bar, or coffee and snacks in the cafe, brush up on the
Club's history and then buy tickets for a future game. In the summer,
utilisation of the paved area outside Shearer's created cafe style surroundings
adding to the ambience by day and night.
Shareholders
Dividend
The Board of Directors is recommending an unchanged final dividend of 2.04p per
ordinary share for the year ended 31 July 2005 giving a total dividend for the
year of 3.07p per ordinary share (2004:3.07p) which, subject to approval at the
Annual General Meeting, will be paid on 23 December 2005 to all shareholders on
the register at the close of business on 11 November 2005. Subject to approval
at the Annual General Meeting a scrip dividend alternative will be offered.
Supporters
A number of Premiership Clubs are reporting reduced attendances during the
current season. We are immensely grateful for the continued support of our fans.
While we still have some capacity left for season tickets, we were very pleased
that four of our first five home FA Premier League games were sell-outs.
We launched a new catering electronic point of sales system throughout the
stadium during the season which has improved service to supporters and improved
internal controls.
The Club continues to develop ways to consult with its supporters on a regular
basis - by means of forums, questionnaires and focus groups. The Club also
participates in the FA Premier League Annual Fans Survey and holds regular
Supporter Panel Meetings.
Employees
Last season was a challenging one for all of our staff in many respects as we
staged 34 games at St. James' Park, the Board of Directors records its
appreciation of the commitment shown by all employees during this demanding
period.
Community activities
Once again we congratulate the 'Football in the Community' management staff on
making our community programme the success it is. Football in the Community
continues to offer soccer coaching to the region's schools while a womens
coaching course supplements the already established evening coaching clinics.
Our Learning Centre has just undergone a complete upgrade with the latest
technology being installed. This will further enhance the provision on offer to
our fan base, which includes young people and adults. Our Cyber Cafe has now
been transformed into a centre of excellence offering learning opportunities to
schools in the East of Newcastle and North Tyneside.
Recently our Learning Centre staff were asked to represent the FA Premier League
at the Power of Football Conference at Tottenham Hotspur FC. While on a visit to
the centre from Her Majesty's Chief Inspector for Schools, David Bell offered
his congratulations to the Club on the excellent learning opportunities and
facilities available to pupils who attend the Learning Centre at St. James'
Park.
Outlook
While the team progressed to the semi-final of the FA Cup and quarter finals of
the UEFA Cup competition, the Club's performance in the FA Premier League was
disappointing and below the level that we demand. Since the end of the season,
the Board of Directors has worked very hard to complete the signings of some
exceptional players, culminating in the signing of Michael Owen from Real
Madrid. This has been a period of major investment in the playing squad. The
Board of Directors has made available the funding to secure one of the most
exciting playing squads in the FA Premier League and hopes to bring the success
that our magnificent supporters desire.
W F Shepherd
Chairman
28 October 2005
FINANCIAL REVIEW
The year ended 31 July 2005 saw the Group generate turnover from its various
operations of £87.0m (2004: £90.2m). The reduction in turnover of £3.2m was
principally due to a fall in Television and broadcasting revenue of £5.8m. This
was partly offset by increases in Catering and Match turnover of £1.5m and £1.4m
respectively. After deducting operating expenses of £80.9m (2004: £69.7m), Group
operating profit before player amortisation and trading was £6.0m (2004:
£20.4m). Group operating profit before player amortisation and trading and
exceptional expenses was £8.4m. Player sales, most significantly the sale of
Jonathan Woodgate in August 2004, contributed a net profit on disposal of
players' registrations of £13.5m (2004: £0.3m) and, with net interest remaining
at £4.5m, Group profit before tax for the year was £0.02m (2004: £4.22m).
Turnover
Match - 40% of total turnover (2004: 38%)
During the 2004/5 season 31 league and cup games were played at St. James' Park
compared to 28 in the previous year. Match turnover was £35.3m (2004: £33.9m),
an increase of 4%.
As in each of the previous 13 years, season tickets were sold out and income
from hospitality packages grew during the year. The average attendance for FA
Premier League, FA Cup and Carling Cup games was 50,264 compared to 51,715 last
season and 28,755 for UEFA competitions compared to 41,753. Although income from
the UEFA Cup reduced from the prior year, this was more than offset by increased
income from the FA Cup following the Club's progression to the semi-final.
Television and broadcasting - 32% of total turnover (2004: 37%)
Income derived from Television and broadcasting decreased by 17% to £27.9m
(2004: £33.7m). Domestic television revenues have fallen as a result of the new
FA Premier League deal, which is less than the old contract, and a fall in merit
award payment as a consequence of finishing 14th in the league (2004: 5th).
Increases in the distributions for overseas television, together with UEFA Cup
and FA Cup coverage, partly offset the deficit.
On the domestic front we were chosen for nine live (2004: nine) and five pay per
view (2004: six) FA Premier League games. In addition, five of our domestic Cup
games were selected for live transmission (2004: two).
Sponsorship - 11% of total turnover (2004: 10%)
Sponsorship revenue increased slightly to £9.4m (2004: £9.3m).
Two months of the new sponsorship agreement with adidas, which came into effect
on 1 June 2005, is reflected in these accounts. The impact of the new improved
Northern Rock contract, effective from 1 August 2005, will be included in next
year's accounts.
Branded products - 9% of total turnover (2004: 9%)
Branded products sales fell 5% to £7.6m (2004: £8.0m) reflecting the difficult
conditions in the wider retail market. The new official Club store, in
conjunction with adidas, opened at the end of April 2005 to coincide with the
launch of the new home kit in May 2005.
Catering - 8% of total turnover (2004: 6%)
Turnover generated by the Catering division grew by 28% to £6.8m (2004: £5.3m),
boosted by the opening, in December 2004, of Shearer's Sports Bar.
Our Catering division now represents a significant source of revenue for the
Group, and has enhanced its reputation further following the successful Tall
Ships event in July this year.
Operating expenses
Operating expenses including amortisation of players' registrations increased by
16% from £82.6m to £95.8m (£90.4m excluding Group exceptional operating
expenses).
Wages and salaries increased by 12% from £44.9m to £50.2m, due in part to the
exceptional operating expenses of £2.4m relating to changes in football
management staff. Excluding these amounts reduces the increase to 6%. The wages
to turnover ratio was 58% (2004: 50%). This reduces to 55% excluding exceptional
operating expenses.
Operating expenses (continued)
Other operating expenses before player amortisation, player impairment and
trading (excluding wages and salaries) increased by 23% from £24.9m to £30.7m as
a result of a number of factors, including an increase in the number of domestic
cup games, higher depreciation and increased cost of sales associated with
improved Catering turnover.
The cost of acquired players' registrations are capitalised and amortised over
the period of their respective contracts; amortisation of players' registrations
decreased by 9% from £12.9m to £11.8m. In addition, in 2005 an impairment charge
of £3.0m (2004:£nil) has been made.
Operating profit
Group operating profit before player amortisation and trading decreased from
£20.4m to £6.0m (£8.4m excluding exceptional charges). Total operating loss for
the year was £9.0m compared to a profit of £8.3m in the prior year.
Player trading
Player disposals during the period, principally Jonathan Woodgate, Craig
Bellamy, Aaron Hughes and Andy O'Brien resulted in a net profit of £13.5m (2004:
£0.3m).
Taxation
The small tax charge in the year is represented by a provision for deferred tax,
less a small tax credit arising from the Group's share of the tax adjustment
arising whilst nufc.co.uk Limited was a joint venture. At 31 July 2005 the Group
has tax losses of approximately £7.5m to carry forward for offset against future
trading profits.
Dividend
The Board of Directors has recommended that the total dividend for the year
should be held at last year's level of 3.07p per ordinary share and therefore
proposes a final dividend of 2.04p (2004: 2.04p) per ordinary share. Subject to
approval at the Annual General Meeting the Board of Directors will offer a scrip
dividend alternative in respect of the final dividend.
If approved, the final dividend will be paid on 23 December 2005 to all
shareholders on the register at the close of business on 11 November 2005.
Group balance sheet
The fall in net assets from £32.3m to £28.3m reflects the retained loss for the
year of £4.0m (2004: retained profit £0.2m).
The net book value attributable to tangible fixed assets has reduced slightly to
£93.4m (2004: £93.9m). Additions during the year of £3.3m were offset by
depreciation of £3.8m.
The net book value of intangible assets (excluding goodwill) increased by £4.3m
from £34.9m to £39.2m. Following the change in team management early in the
season, there has been a significant level of player trading during the year
with acquisitions of £27.1m (2004: £7.4m) and disposals of £17.8m (2004:
£26.9m). The net book value of players sold or released was £8.5m (2004: £4.4m).
In accordance with Financial Reporting Standard 10 the net asset position
reflects only the unamortised cost of those players purchased by the Group and
does not include any market values of purchased or home grown players.
Group cash flow
The Group's cash position at the year end decreased by £8.6m to £17.6m (2004:
£26.2m).
Cash inflows from operating activities were £11.0m (2004: £25.0m) principally
because of the reduction in operating profit. Net cash outflows in respect of
capital expenditure amounted to £2.1m (2004: £10.1m).
Net debt at 31 July 2005 increased slightly to £37.5m (31 July 2004: £37.2m).
Financial instruments
The Group's financial instruments comprise borrowings, cash and liquid resources
and various items, such as trade debtors and trade creditors that arise directly
from its operations. The main purpose of these financial instruments is to raise
finance for the Group's operations.
The Group also enters into forward foreign currency contracts to manage the
currency risks arising from the purchase and sale of players.
It is, and has been throughout the period under review, the Group's policy that
no trading in financial instruments shall be undertaken.
The main risks arising from the Group's financial instruments are interest rate
risk, liquidity risk and foreign currency risk. The Board of Directors reviews
and agrees policies for managing each of these risks and they are summarised
below.
Interest rate risk
The Group manages its operations through a mixture of retained profits, bank
borrowings and fixed rate debt. The Group's main borrowings are in Sterling at
fixed and floating rates of interest.
Liquidity risk
Short-term flexibility is achieved by the use of overdraft facilities.
Foreign currency risks
The Group operates principally in the UK but occasionally enters into
transactions in foreign currencies, mainly to purchase and sell overseas
players. The Group's policy is to eliminate all currency exposures at the time
of transaction through forward foreign currency contracts.
International Financial Reporting Standards ('IFRS')
It is mandatory for companies listed on the London Stock Exchange to prepare
consolidated financial statements in compliance with IFRS for financial years
beginning on or after 1 January 2005. Accordingly, the Group's results for the
year ending 31 July 2006 will be presented in IFRS, starting with the Group's
interim results for the six months ending 31 January 2006. Preparation for the
conversion from UK GAAP to IFRS is under way. We will also be drawing on the
input of the FA Premier League which has taken a lead in providing information
to all Premiership clubs.
K Slater
Group Financial Controller
28 October 2005
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31 July 2005
Operations
excluding
player Player
amortisation amortisation
and trading and trading Total Total
2005 2005 2005 2004
Note £'000 £'000 £'000 £'000
---------------------- ----- -------- -------- -------- --------
Turnover of the Group
including its share of
joint venture 87,087 - 87,087 90,468
Less share of turnover
of joint venture (105) - (105) (307)
---------------------- ----- -------- -------- -------- --------
Group turnover 2 86,982 - 86,982 90,161
Operating expenses 3 (80,933) (14,880) (95,813) (82,629)
---------------------- ----- -------- -------- -------- --------
Group operating profit/ 6,049 (14,880) (8,831) 7,532
(loss)
Share of operating
(loss)/profit in joint (135) - (135) 744
venture
---------------------- ----- -------- -------- -------- --------
Total operating profit/
(loss):
Group and share of 5,914 (14,880) (8,966) 8,276
joint ventures
---------------------- ----- -------- -------- -------- --------
Analysed as:
Total operating profit/
(loss) before Group 8,283 (11,839) (3,556) 8,276
exceptional
operating expenses
Group exceptional
operating 3 (2,369) (3,041) (5,410) -
expenses
---------------------- ----- -------- -------- -------- --------
Total operating profit/
(loss):
Group and share of 5,914 (14,880) (8,966) 8,276
joint ventures
---------------------- ----- -------- -------- -------- --------
Net profit on disposal
of players' registrations - 13,505 13,505 340
Net profit on disposal
of tangible fixed assets 5 - 5 141
---------------------- ----- -------- -------- -------- --------
Profit/(loss) before
interest 5,919 (1,375) 4,544 8,757
and taxation
---------------------- ----- -------- -------- -------- --------
Interest receivable 492 446
Interest payable and
similar charges (5,020) (4,983)
---------------------- ----- -------- -------- -------- --------
Profit on ordinary
activities 16 4,220
before taxation
Tax on profit on
ordinary activities 4 (120) (55)
activities
---------------------- ----- -------- -------- -------- --------
(Loss)/profit for the
financial year (104) 4,165
Dividends 5 (3,950) (3,950)
---------------------- ----- -------- -------- -------- --------
Retained (loss)/profit
for the year 8 (4,054) 215
---------------------- ----- -------- -------- -------- --------
Basic and diluted
(loss)/earnings per 6 (0.1)p 3.2p
share
Adjusted earnings per 6 0.1p 8.5p
share
---------------------- ----- -------- -------- -------- --------
All results are derived from continuing operations. Results from acquired
operations in 2005 have not been separately disclosed as they are not considered
to be material.
There are no material differences between the result disclosed above and the
result as given on an unmodified historical cost basis.
There were no recognised gains and losses other than those included in the
profit and loss account.
Operating expenses in 2004 include £12,899,000 in respect of player
amortisation.
The accompanying notes are an integral part of this Group profit and loss
account.
GROUP BALANCE SHEET
at 31 July 2005
2005 2004
Note £'000 £'000
------------------------------- ----- -------- --------
Fixed assets
Intangible assets
Acquired player and other registrations 39,176 34,890
Goodwill 642 -
------------------------------- ----- -------- --------
39,818 34,890
Tangible assets 93,433 93,907
Investment in joint venture
------------------------------- ----- -------- --------
Share of gross assets - 314
Share of gross liabilities - (167)
------------------------------- ----- -------- --------
- 147
------------------------------- ----- -------- --------
133,251 128,944
------------------------------- ----- -------- --------
Current assets
Stocks 1,520 1,231
Debtors 13,675 9,945
Cash at bank and in hand 17,569 26,192
------------------------------- ----- -------- --------
32,764 37,368
Creditors: amounts falling due within one year 7 (43,082) (41,225)
------------------------------- ----- -------- --------
Net current liabilities (10,318) (3,857)
------------------------------- ----- -------- --------
Total assets less current liabilities 122,933 125,087
Creditors: amounts falling due after more than
one year 7 (62,118) (59,224)
Provisions for liabilities and charges (143) -
Deferred income (32,390) (33,527)
------------------------------- ----- -------- --------
Net assets 28,282 32,336
------------------------------- ----- -------- --------
Capital and reserves
Called-up share capital 6,433 7,111
Capital redemption reserve 831 831
Share premium account 69,377 69,377
Profit and loss account (48,359) (44,983)
------------------------------- ----- -------- ---------
Shareholders' funds 28,282 32,336
------------------------------- ----- -------- ---------
Shareholders' funds may be analysed as:
Equity interests 28,282 11,372
Non-equity interests - 20,964
------------------------------- ----- -------- ---------
28,282 32,336
------------------------------- ----- -------- --------
These accounts were approved by the Board of Directors on 28 October 2005 and
were signed on its behalf by:
W F Shepherd
Chairman
The accompanying notes are an integral part of this Group balance sheet.
GROUP CASH FLOW STATEMENT
for the year ended 31 July 2005
2005 2004
£'000 £'000
--------------------------------- -------- --------
Net cash inflow from operating activities 10,998 24,998
Returns on investments and servicing of finance (4,394) (4,682)
Capital expenditure (2,070) (10,053)
Acquisitions and disposals (679) 4,855
Equity dividends paid (3,950) (3,950)
--------------------------------- -------- --------
Cash (outflow)/inflow before financing (95) 11,168
Financing (8,528) (9,137)
--------------------------------- -------- --------
(Decrease)/increase in cash in the year (8,623) 2,031
--------------------------------- -------- --------
The accompanying notes are an integral part of this Group cash flow statement.
RECONCILIATION OF GROUP OPERATING (LOSS)/PROFIT TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
for the year ended 31 July 2005
2005 2004
£'000 £'000
------------------------------------ ------- -------
Group operating (loss)/profit (8,831) 7,532
Depreciation 3,800 3,506
Amortisation of intangible fixed assets 12,374 12,899
Impairment of intangible fixed assets 3,041 -
Capital grants release (96) (93)
Increase in stocks (289) (23)
Increase in debtors (869) (487)
Increase/(decrease) in creditors 2,235 (187)
(Decrease)/increase in deferred income (367) 1,851
------------------------------------ ------- -------
Net cash inflow from operating activities 10,998 24,998
------------------------------------ ------- -------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 31 July 2005
2005 2004
£'000 £'000
------------------------------------ ------- -------
(Decrease)/increase in cash in the year (8,623) 2,031
Cash outflow from decrease in debt and lease financing 8,528 4,614
------------------------------------ ------- -------
Change in net debt resulting from cash flows (95) 6,645
Non-cash changes (262) (883)
Net debt at beginning of year (37,154) (42,916)
------------------------------------ ------- -------
Net debt at end of year (37,511) (37,154)
------------------------------------ ------- -------
NOTES TO THE ACCOUNTS
1 Basis of preparation
This announcement has been prepared on the basis of the accounting policies set
out in the 31 July 2005 annual report.
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 July 2005 or 31 July 2004 but is
derived from those accounts. Statutory accounts for the year ended 31 July 2004
have been delivered to the Registrar of Companies, and those for the year ended
31 July 2005 will be delivered following the Company's Annual General Meeting.
The auditors have reported on those accounts; their reports were unqualified and
did not contain statements under Section 237(2) or (3) of the Companies Act
1985.
These results were approved by the Board of Directors and announced to the
London Stock Exchange on 28 October 2005.
2 Turnover
Turnover, all of which arises from the Group's principal activity, can be
analysed into its main components as follows:
2005 2004
£'000 £'000
------------------------------------ -------- --------
Match 35,302 33,889
Television and broadcasting 27,890 33,653
------------------------------------ -------- --------
Football turnover 63,192 67,542
------------------------------------ -------- --------
Sponsorship 9,399 9,308
Branded products 7,629 8,010
Catering 6,762 5,301
------------------------------------ -------- --------
Commercial turnover 23,790 22,619
------------------------------------ -------- --------
86,982 90,161
------------------------------------ -------- --------
The origin and destination of all turnover is the United Kingdom.
3 Analysis of operating expenses
2005 2004
£'000 £'000
------------------------------------ -------- -------
Change in stocks of goods for resale (289) (23)
Other operating income - release of capital grants (96) (93)
Staff costs (including exceptional operating expenses) 50,222 44,880
Depreciation and other amounts written off tangible fixed
assets:
Owned 3,173 2,900
Leased 627 606
Amortisation of intangible fixed assets - players'
registrations 11,839 12,899
Amortisation of intangible fixed assets - other 535 -
Exceptional impairment of intangible fixed assets 3,041 -
Other operating charges 26,761 21,460
------------------------------------ -------- -------
95,813 82,629
------------------------------------ -------- -------
Exceptional operating expenses (excluding player amortisation and trading) of
£2,369,000 (2004: £nil) represent the contractual amounts paid to former
employees in respect of the termination of their contracts. These are included
in staff costs above.
The Board of Directors has carried out a detailed review of the carrying value
of the Group's players' registrations. An exceptional charge of £3,041,000
(2004: £nil) has been made to reflect the impairment in carrying values of
certain players' registrations and to reduce the book value of those
registrations to their expected recoverable amounts.
4 Taxation
2005 2004
£'000 £'000
------------------------------------ -------- --------
UK corporation tax on profit for the year - -
Share of joint venture's tax (23) 55
------------------------------------ -------- --------
Total current tax (credit)/charge (23) 55
Deferred tax 143 -
Tax on profit on ordinary activities 120 55
------------------------------------ -------- --------
Factors affecting the tax (credit)/charge for the current period
The current tax credit is lower (2004: charge lower) than the standard rate of
corporation tax in the UK of 30% (2004: 30%).
The differences are explained below:
2005 2004
£'000 £'000
------------------------------------ -------- --------
Current tax reconciliation
Profit on ordinary activities before tax 16 4,220
------------------------------------ -------- --------
Current tax at 30% (2004: 30%) 5 1,266
Effects of:
Expenses not deductible for tax purposes 619 901
Depreciation for year less than capital allowances (110) (437)
Other timing differences 436 343
Utilisation of tax losses (973) (2,018)
------------------------------------ -------- --------
Total current tax (credit)/charge (23) 55
------------------------------------ -------- --------
The Group had unrelieved UK corporation tax losses of approximately £7.5m (2004:
£11.3m) at the end of the year.
The exceptional operating expenses of £2,369,000, representing contractual
amounts paid to former employees, reduce the deferred tax charge for the year by
£0.7m. The exceptional impairment expense reduces the deferred tax charge for
the year by £0.9m.
5 Dividends
2005 2004
£'000 £'000
------------------------------------ -------- --------
Ordinary shares
Interim paid: 1.03p per share (2004: 1.03p) 1,325 1,325
Final proposed: 2.04p per share (2004: 2.04p) 2,625 2,625
------------------------------------ -------- --------
3,950 3,950
------------------------------------ -------- --------
The Board of Directors will offer, subject to the necessary approvals at the
Annual General Meeting, shareholders the option to receive new ordinary shares
instead of the final cash dividend payable. This gives shareholders the ability
to increase their shareholding without incurring dealing charges. Documentation
will be sent to shareholders prior to payment of the final dividend.
6 Earnings per share
The calculation of earnings per share is based on the (loss)/profit for the year
and on the weighted average number of ordinary shares in issue and ranking for
dividend in the year.
2005 2004
------------------------------------ -------- --------
(Loss)/profit for the year (£'000) (104) 4,165
Weighted average number of ordinary shares ('000) 128,668 129,031
------------------------------------ -------- --------
Adjusted earnings per share
The calculation of adjusted earnings per share is based on the (loss)/profit for
the year excluding player amortisation and trading and on the weighted average
number of ordinary shares in issue and ranking for dividend in the year. The
Board of Directors believes that this gives a better indication of underlying
commercial performance.
The reconciliation of the (loss)/profit for the year to the profit used in
calculating the adjusted earnings per share is set out in the table below:
2005 2004
2005 Pence 2004 Pence
Group £'000 per share £'000 per share
------------------------- -------- -------- -------- --------
(Loss)/profit for the year (104) (0.1) 4,165 3.2
Player trading - amortisation 11,839 9.2 12,899 10.0
Player trading - impairment 3,041 2.4 - -
Player trading - net profit on
disposal of players' registrations (13,505) (10.5) (340) (0.3)
Net tax effect of adjustments (1,151) (0.9) (5,782) (4.4)
------------------------- -------- -------- -------- --------
Profit for the year excluding
player amortisation and trading 120 0.1 10,942 8.5
------------------------- -------- -------- -------- --------
7 Analysis of creditors
Group
----------
2005 2004
Creditors: amounts falling due within one year £'000 £'000
------------------------- -------- ---------
Fixed interest senior loan notes 2,624 2,443
Term and other loans 1,873 7,149
Obligations under finance leases and hire purchase 626 1,082
contracts
Trade creditors 18,669 12,320
Taxation and social security 1,794 1,839
Other creditors 5,439 5,364
Proposed dividend 2,625 2,625
Accruals 9,432 8,403
------------------------- -------- ---------
43,082 41,225
------------------------- -------- ---------
Included in 2004 term and other loans for Group was a loan of £2.25m from Sir
John Hall. This loan was unsecured, interest free and was repaid in full on 8
August 2004.
Group
----------
2005 2004
Creditors: amounts falling due after more than one year £'000 £'000
------------------------- -------- ---------
Fixed interest senior loan notes 44,549 47,084
Term and other loans 4,959 4,711
Obligations under finance leases and hire purchase 449 877
contracts
Trade creditors 6,608 1,336
Other creditors 5,000 5,000
Accruals 553 216
------------------------- -------- ---------
62,118 59,224
------------------------- -------- ---------
Other creditors due after more than one year comprise receipts from MGM MIRAGE.
8 Reconciliations of movements in shareholders' funds
Group
----------
2005 2004
£'000 £'000
------------------------- -------- ---------
(Loss)/profit for the financial year (104) 4,165
Dividends paid and proposed on equity shares (3,950) (3,950)
Purchase of own shares - (4,523)
------------------------- -------- ---------
Net movement in shareholders' funds (4,054) (4,308)
Opening shareholders' funds 32,336 36,644
------------------------- -------- ---------
Closing shareholders' funds 28,282 32,336
------------------------- -------- ---------
9 Post balance sheet events
On 25 August 2005 Newcastle United Football Company Limited acquired the
registration of Albert Luque from Deportivo La Coruna for €14.7m.
On 31 August 2005 Newcastle United Football Company Limited acquired the
registrations of Michael Owen from Real Madrid and Nolberto Solano from Aston
Villa for £16m and £1m respectively. On the same date the Club transferred the
registration of Jermaine Jenas to Tottenham Hotspur for £7m.
This information is provided by RNS
The company news service from the London Stock Exchange