Post by Macmoish on Oct 8, 2010 9:33:41 GMT
Near the end of the Chris Wright Era
QPR Official Site - October 2000
LOFTUS ROAD plc PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS FOR YEAR ENDED 31 MAY 2000
Chairman's Statement
Results and Dividends
The Group recorded a loss before interest and taxation of £4,735,000 (1999 - loss of £8,379,000) after accounting for profit on disposal of players' registrations of £31,000 (1999 - profit of £1,145,000) and profit on disposal of land and buildings of £3,139,000 (1999 - £nil).
Turnover for the year was £8,051,000 (1999 - £7,070,000). The loss per Ordinary share amounted to 8.9 pence (1999 - loss of 20.2 pence). The directors do not propose the payment of a dividend for the year under review (1999 - £nil).
Net Assets Net assets as at 31 May 2000 amounted to £9,563,000 (1999 - £14,896,000) representing net assets per Ordinary share of 16.0 pence (1999 - 24.8 pence). In accordance with Financial Reporting Standard 10 no amount is included in the balance sheet to reflect the value of home grown players or any market valuation of the playing squad.
Operational Review
a)Football Activities
In the year our costs of football activities increased by some 9% to £6,992,000. These costs reflect player, management and coaching staff wages, Academy costs, training costs and costs of attending matches. In terms of the effects of player trading, amortisation for the year has decreased from £1,766,000 to £1,402,000 but we have generated profit on disposal of players' registrations of only £31,000 compared to £1,145,000 in the previous year.
It is a particularly difficult task to manage the costs of football activities, particularly in the light of fans' expectations and the diminishment in the transfer market. There are many upward pressures including inbuilt increases in players' contracts and the desire to invest in the Club's youth policy to ensure further good young players come through the ranks. Players are paid whether fit or injured, and your Board's desire to provide Gerry Francis with every assistance in building the best possible squad means that costs saved from players released from contract are often immediately replaced by squad additions.
As I have previously reported the transfer market remains difficult, with relatively few players leaving First Division Clubs for significant sums compared to previous years. Indeed Premier League Clubs are often going abroad to seek new players, and other First Division Clubs find themselves under similar financial constraints as ourselves. We can only ask Gerry Francis to continue to improve our playing squad and consider any offers for our players on their merits as and when they might arise. In this post Bosman era we cannot rely on player sales to balance the books.
In terms of playing performance QPR had their best League finish for three years, losing only two games at home and finishing 10 points away from a play off position. Indeed only the promoted three clubs lost fewer games last season. In the current season QPR have made a modest start but still remain unbeaten at home in the League. Unfortunately I have to report that QPR were eliminated at the first round stage of the Worthington Cup.
Overall I am satisfied with the financial performance in this area but I recognise that much effort is required to continue to manage these costs within our financial constraints.
b) Rugby Activities
In the year our costs of rugby activities decreased by some 10%, these costs reflecting similar categories as described above under football activities. Amortisation for the year decreased from £31,000 to £28,000.
Unlike football, it has been much easier to manage the overall costs of rugby activities with the advent of the salary cap (at £1,800,000 for the 1999/00 season). Management effort has been concentrated on the mix of the playing squad within the salary cap, and ensuring that any increases in contracts allow us to put out an equally competitive squad for the coming season (where the cap has now been frozen at £1,800,000).
Our focus remains to build a framework to generate interest in London Wasps from an early age and channel potential players through the system to the First Team. To this end we have instituted a Mini section, satellite Academies around London and a central Academy which can form the basis of generating players for our Under 21 teams as a stepping stone to the First Team squad.
On the playing front I am delighted to report that London Wasps retained the Tetley's Bitter Cup in May, ensuring European Cup rugby for the coming season. We also reached the quarter-finals of the European Cup, losing a tight game to the eventual winners. Our League form was mixed however with an eventual seventh place finish. For the record, after a slow start London Wasps recorded four consecutive League victories (including an away win at Saracens) and currently lie fourth in the Zurich Premiership.
I have been delighted with the performances of the team and am cautiously optimistic for the coming season. We remain convinced that our strategy of maintaining a young, predominantly English squad is the right one and that the framework set up will support this.
c) Attendances
Across the two sports, average paying attendances at Loftus Road have increased by 11%. Season ticket volumes in 1999/00 increased by 12% for QPR and 23% for London Wasps. Overall turnover arising from matchday receipts (which also includes programme income, Cup shares and other match receipts) has also increased by 7%. These increases are very pleasing as I believe they reflect the perceived value for money of the match tickets combined with the excellent product offered on and off the pitch.
Our efforts to increase the supporter base continue, and to this end I am happy to report that season ticket volumes have increased again in the 2000/01 season by some 13% for QPR and 12% for Wasps.
d) Commercial Activities
Commercial and retail revenues have shown an overall increase of 3%. As I have previously reported, the Rugby World Cup significantly affected London Wasps commercial revenues, although these were balanced by improved performances in QPR commercial revenues and merchandise sales.
Merchandise sales increased by 24% in the year, which I consider to be a satisfactory performance. There still remains some considerable work to do in this area, most notably expansion of the mail order and internet side of the business. I am however pleased to note that we have managed to rationalise our product range and reduce our stock holdings.
I would nevertheless hope for a better performance in this area in the coming year.
e) Marketing
Some improvement has been made in marketing over the past year, in particular how we communicate to our customers. The increase in season ticket sales is partly due to our improvements in this area. We have also received very useful information via our feedback hotlines.
There are several new initiatives in the coming season which include:
# the appointment of a dedicated press officer
# resources to work in conjunction with the press officer to improve the clubs' websites and other communications
# market research and focus groups to identify customer needs and to aid future product development and planning
# a local branding campaign to increase the visible presence of the clubs in the immediate vicinity of the Loftus Road Stadium
# relaunch of the Loyalty Scheme to more accurately meet consumer's expectations and requirements.
Your Board recognises the importance of investment in marketing in a customer led environment. It is vital that we communicate clearly with our supporters and the world at large, delivering the right messages and ensuring that we adhere to the highest service standards. I hope that shareholders will agree that our proposed initiatives go some way to addressing this.
f) Overhead Base
We have continued our attack on the cost base and have achieved a reduction of 25% in stadium, matchday and other direct overhead costs (ignoring depreciation, which has increased this year due to an accounting requirement to depreciate our freehold buildings). This is an excellent performance in one year although I would anticipate that similar decreases are unlikely in the short term, particularly in the light of certain essential stadium costs such as the replacement roof for the South Africa Road stand and the refurbishment of the Twyford Avenue Training Ground buildings which were undertaken in the close season. I am however happy that, in terms of underlying overheads, the Group is better equipped to keep these under control with line managers understanding the need to strive for value for money at even the lowest level of cost.
Training Grounds
Following the sale of 7.4 acres at Sudbury, your Board is reviewing the future requirements of the London Wasps training facilities. Various options are being considered and I will report on this in future. In the interim London Wasps shall remain at Sudbury in the Clubhouse and on the leasehold land which was retained by the Group.
Board Structure and Staff
Since my last report, Simon Crane has left the Board to take up a new position. I wish him every success in his new job and thank him for his hard work over the last two years.
I am delighted to welcome David Davies to the Board as Group Chief Executive. David's skills in the operation of multi-purpose sports and leisure facilities will be a valuable addition to the Board and will assist him to develop and enhance the Loftus Road experience.
I take this opportunity to thank all the staff for their considerable efforts over the past year.
Outlook
As shareholders will be aware the new TV and internet deals are in the process of being finalised for Nationwide League Division One Clubs. The full effect of these deals will not be realised until the season commencing 2001/02 but they represent a significant uplift to the monies currently received. I believe that they represent a better estimate of the value of the Nationwide League Division One Clubs' broadcast rights, but do not come close to the sums received by Premier League Clubs, even under the previous TV deal. The increased revenues makes maintaining First Division status of paramount importance, and the prizes of Premier League status all the richer.
Your Board is focussed on protecting shareholder value in the long term, and to this end we are reviewing all of the terms and conditions of the TV and internet deals to ensure that valuable future broadcast rights are not given away. We live in an increasingly technological world, and I foresee that in the years to come clubs may start to exploit their rights individually as opposed to collectively, opening up worldwide opportunities. It is vitally important that QPR are in a position to react to this.
I have talked primarily about the effects on transfers and wages of the Bosman ruling. The Group Finance Director's report refers to an effective 1% increase in player and management wages which, in the light of existing contractual increases and increased "player power" as far as contract negotiations are concerned, reflects the progress we have made in following a disciplined salary structure. We also no longer pay signing-on fees in any new contracts signed, thus assisting cash flow. I believe that the full effects of our salary policy will come to fruition in the next few years.
Several important steps have been made in stablising professional Rugby Union, most notably the salary cap. However I remain exasperated that no agreement has yet been reached to ensure financial stability over the coming years in terms of TV monies, and competition and season structure. Indeed the current season started earlier than ever, and, with internationals and tours, provides very little respite for top players, particularly when the pace and rigours of the professional game have increased by so much in recent years. We shall continue to talk to the relevant parties and to provide impetus to get the right deal done, and I hope to be able to update you with good news in this regard in my next report.
In terms of the playing squads, I remain committed to providing every possible assistance to Gerry Francis and Nigel Melville. Both squads are stronger now than they have been over the past few years, although there are always requirements to add players. I expect both the Nationwide League Division One and the Zurich Premiership to get stronger over the next years and competition fiercer. There are teams within both Leagues that have considerably stronger financial resources than our own, but I doubt whether they have better team managers. We will continue to field the best teams that we can but must ensure that the development of the respective clubs is for the long term.
The Group's losses have improved considerably over the last year, and future increase in TV and internet revenues should assist in reducing these further. The sale proceeds from Sudbury provided much needed cash to reduce Group borrowings, but, in today's transfer market it is less likely that we can rely on player sales to provide further cash injections in future. Given the nature of our business and our desire to remain competitive, I therefore anticipate that, despite the Sudbury disposal, I will personally be required to provide substantial working capital to the Group in the short to medium term. Needless to say, I am fully behind the development of the Group and look forward to happier times to come, both on and off the pitch.
Chris Wright,
Chairman,
12 October 2000.
Financial Review
Trading Review
Turnover for the year was £8,051,000, an increase from the previous year of £981,000. A significant contributor to the increased turnover arose from money arising from European Cup participation in the year under review. Analysed below is a breakdown of how the television and media revenue has arisen:
Domestic award - football £734,000 (2000) £620,000 (1999)
Facility fees - football £90,000 (2000) £60,000 (1999)
Domestic award - rugby £566,000 (2000) £420,000 (2000)
European Cup award - rugby £298,000 (2000) N/A (1999)
Facility fees - rugby 8,000 (2000) N/A (1999)
Other 50,000 (2000)
89,000 (1999)
Total :1,745000 (2000) 1,190000 (1999)
The increase in match receipts of 3% masks a much better performance in terms of ticket sales. Match receipts can vary as a result of the clubs' success in Cup competitions between the years under review. In addition in 1999/2000 programme income reflected a guaranteed royalty with the Group bearing no costs in relation to production and distribution; in the prior year, the Group retained all income from sales but bore the costs under matchday and stadium costs. The analysis below shows an increase of 14% in our League match receipts and season ticket revenues between the years.
League match receipts and season tickets £3,047000 (2000) £2,664000 (1999)
Cup match receipts £306,000 (2000) £249,000
Other match receipts £63,000 (2000) £92,000 (1999)
Programmes, membership and other match income £182,000 (2000) £357,000 (1999)
Total: £3,598000 (2000) £3,362000 (1999)
In common with most sporting organisations our principal cost is wages and salaries. These figures include certain costs which may not be reasonably expected to be repeated in future years, which include payments made relating to players' contractual entitlements upon transfer ("non basic costs"). The total wages costs can be reanalysed as follows: Player and management wages: £8,421000 (2000) £8,336000 (1999)
Administrative and directors' wages: £1,005000 (2000) £1,356000 (1999)
Non basic costs £126,000 (2000) £854,000 (1999)
Total: £9,552000 (2000) £10,546000(1999)
The reanalysis shows a 1% increase in player and management wages and a 26% decrease in administrative and directors' wages. This should be viewed in light of the 2% increase in Employers National Insurance contributions effective throughout the year and in line with inbuilt player contract increases.
The current year has shown very little transfer sales activity. The Group has continued to purchase players and has resulted in an overall net transfers payable position. This is analysed below:
Purchase costs of players' registrations (£828,000) - 2000 (£654,000)- 1999
Contingent transfer fees payable (£36,000) - 2000 (£245,000) - 1999
Football League transfer levy (£34,000) - 2000 (£8,000) -1999
Total (898,000) - 2000 (£907,000) - 1999
Net sale proceeds from sale of players' registrations - (2000) £2,749,000 -(1999)
Contingent transfer fees receivable £285,000 (2000) £746,000 (1999)
Net transfer fees (payable)/receivable (£613,000) - 2000 £2,588000 (1999)
Cash Flow and Funding
During the year there was a net cash inflow before financing to the Group as a result of Sudbury sale proceeds which has resulted in a decrease in the Group's borrowings. Analysed below are the effects of this:
Cash outflow before financing, player trading and Sudbury proceeds (£7,050000) - 2000 (£9,236000) - 1999
Net cash (outflow)/inflow from player trading (£230,000)- 2000 £3,273000 (1999)
Cash inflow from Sudbury proceeds £9,258000 (2000) - (1999)
Cash inflow/(outflow) before financing £1,97800 (1999) (£5,963000) 1999
This cash inflow/(outflow) was applied/funded as follows:
Net loans from Chris Wright (600,000) - 2000 (£1,400000) - 1999
Other new loan (£1,348000) - 2000 - (1999)
Bank loan to purchase Twyford Avenue - (2000) (£750,000)- 1999 (1999)
Proceeds from open offer (net of expenses) - (2000) (£2,249000)
New financing (1,948000) - 2000 (£4,399000)
Repayment of existing loans £103,000 (2000) £56,000 (1999)
Net financing inflow (£1,845000) (2000) (£4,343000) - 1999
Repayment/(utilisation) of bank facilities £3,823000 - (2000) (£1,620000) -1999
Cash inflow/(outflow) before financing £1,978000 (2000) (£5,963000)
The Group was therefore able to repay operational bank borrowings and reduce these to £2,064,000 at 31 May 2000.
Financial instruments The Group currently finances its operations through bank borrowings, shareholder loans, other loans, player sales and working capital balances such as trade debtors and trade creditors. 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 and liquidity risk. The Board reviews and agrees policies for managing such risks as outlined below. These policies have remained unchanged since June 1998.
It is the Group's policy to constantly review its financing options; historically it has taken out floating rate debt in the short term. The Group currently has a bank borrowing facility of £2m and a £4m loan from the Chairman to fund its operations.
b Taxation There is no tax charge on the loss in the year. The tax losses arising in the year will be carried forward as available for relief against future profit.
Paul Hart
Group Finance Director
12 October 2000.
QPR Official Site - October 2000
LOFTUS ROAD plc PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS FOR YEAR ENDED 31 MAY 2000
Chairman's Statement
Results and Dividends
The Group recorded a loss before interest and taxation of £4,735,000 (1999 - loss of £8,379,000) after accounting for profit on disposal of players' registrations of £31,000 (1999 - profit of £1,145,000) and profit on disposal of land and buildings of £3,139,000 (1999 - £nil).
Turnover for the year was £8,051,000 (1999 - £7,070,000). The loss per Ordinary share amounted to 8.9 pence (1999 - loss of 20.2 pence). The directors do not propose the payment of a dividend for the year under review (1999 - £nil).
Net Assets Net assets as at 31 May 2000 amounted to £9,563,000 (1999 - £14,896,000) representing net assets per Ordinary share of 16.0 pence (1999 - 24.8 pence). In accordance with Financial Reporting Standard 10 no amount is included in the balance sheet to reflect the value of home grown players or any market valuation of the playing squad.
Operational Review
a)Football Activities
In the year our costs of football activities increased by some 9% to £6,992,000. These costs reflect player, management and coaching staff wages, Academy costs, training costs and costs of attending matches. In terms of the effects of player trading, amortisation for the year has decreased from £1,766,000 to £1,402,000 but we have generated profit on disposal of players' registrations of only £31,000 compared to £1,145,000 in the previous year.
It is a particularly difficult task to manage the costs of football activities, particularly in the light of fans' expectations and the diminishment in the transfer market. There are many upward pressures including inbuilt increases in players' contracts and the desire to invest in the Club's youth policy to ensure further good young players come through the ranks. Players are paid whether fit or injured, and your Board's desire to provide Gerry Francis with every assistance in building the best possible squad means that costs saved from players released from contract are often immediately replaced by squad additions.
As I have previously reported the transfer market remains difficult, with relatively few players leaving First Division Clubs for significant sums compared to previous years. Indeed Premier League Clubs are often going abroad to seek new players, and other First Division Clubs find themselves under similar financial constraints as ourselves. We can only ask Gerry Francis to continue to improve our playing squad and consider any offers for our players on their merits as and when they might arise. In this post Bosman era we cannot rely on player sales to balance the books.
In terms of playing performance QPR had their best League finish for three years, losing only two games at home and finishing 10 points away from a play off position. Indeed only the promoted three clubs lost fewer games last season. In the current season QPR have made a modest start but still remain unbeaten at home in the League. Unfortunately I have to report that QPR were eliminated at the first round stage of the Worthington Cup.
Overall I am satisfied with the financial performance in this area but I recognise that much effort is required to continue to manage these costs within our financial constraints.
b) Rugby Activities
In the year our costs of rugby activities decreased by some 10%, these costs reflecting similar categories as described above under football activities. Amortisation for the year decreased from £31,000 to £28,000.
Unlike football, it has been much easier to manage the overall costs of rugby activities with the advent of the salary cap (at £1,800,000 for the 1999/00 season). Management effort has been concentrated on the mix of the playing squad within the salary cap, and ensuring that any increases in contracts allow us to put out an equally competitive squad for the coming season (where the cap has now been frozen at £1,800,000).
Our focus remains to build a framework to generate interest in London Wasps from an early age and channel potential players through the system to the First Team. To this end we have instituted a Mini section, satellite Academies around London and a central Academy which can form the basis of generating players for our Under 21 teams as a stepping stone to the First Team squad.
On the playing front I am delighted to report that London Wasps retained the Tetley's Bitter Cup in May, ensuring European Cup rugby for the coming season. We also reached the quarter-finals of the European Cup, losing a tight game to the eventual winners. Our League form was mixed however with an eventual seventh place finish. For the record, after a slow start London Wasps recorded four consecutive League victories (including an away win at Saracens) and currently lie fourth in the Zurich Premiership.
I have been delighted with the performances of the team and am cautiously optimistic for the coming season. We remain convinced that our strategy of maintaining a young, predominantly English squad is the right one and that the framework set up will support this.
c) Attendances
Across the two sports, average paying attendances at Loftus Road have increased by 11%. Season ticket volumes in 1999/00 increased by 12% for QPR and 23% for London Wasps. Overall turnover arising from matchday receipts (which also includes programme income, Cup shares and other match receipts) has also increased by 7%. These increases are very pleasing as I believe they reflect the perceived value for money of the match tickets combined with the excellent product offered on and off the pitch.
Our efforts to increase the supporter base continue, and to this end I am happy to report that season ticket volumes have increased again in the 2000/01 season by some 13% for QPR and 12% for Wasps.
d) Commercial Activities
Commercial and retail revenues have shown an overall increase of 3%. As I have previously reported, the Rugby World Cup significantly affected London Wasps commercial revenues, although these were balanced by improved performances in QPR commercial revenues and merchandise sales.
Merchandise sales increased by 24% in the year, which I consider to be a satisfactory performance. There still remains some considerable work to do in this area, most notably expansion of the mail order and internet side of the business. I am however pleased to note that we have managed to rationalise our product range and reduce our stock holdings.
I would nevertheless hope for a better performance in this area in the coming year.
e) Marketing
Some improvement has been made in marketing over the past year, in particular how we communicate to our customers. The increase in season ticket sales is partly due to our improvements in this area. We have also received very useful information via our feedback hotlines.
There are several new initiatives in the coming season which include:
# the appointment of a dedicated press officer
# resources to work in conjunction with the press officer to improve the clubs' websites and other communications
# market research and focus groups to identify customer needs and to aid future product development and planning
# a local branding campaign to increase the visible presence of the clubs in the immediate vicinity of the Loftus Road Stadium
# relaunch of the Loyalty Scheme to more accurately meet consumer's expectations and requirements.
Your Board recognises the importance of investment in marketing in a customer led environment. It is vital that we communicate clearly with our supporters and the world at large, delivering the right messages and ensuring that we adhere to the highest service standards. I hope that shareholders will agree that our proposed initiatives go some way to addressing this.
f) Overhead Base
We have continued our attack on the cost base and have achieved a reduction of 25% in stadium, matchday and other direct overhead costs (ignoring depreciation, which has increased this year due to an accounting requirement to depreciate our freehold buildings). This is an excellent performance in one year although I would anticipate that similar decreases are unlikely in the short term, particularly in the light of certain essential stadium costs such as the replacement roof for the South Africa Road stand and the refurbishment of the Twyford Avenue Training Ground buildings which were undertaken in the close season. I am however happy that, in terms of underlying overheads, the Group is better equipped to keep these under control with line managers understanding the need to strive for value for money at even the lowest level of cost.
Training Grounds
Following the sale of 7.4 acres at Sudbury, your Board is reviewing the future requirements of the London Wasps training facilities. Various options are being considered and I will report on this in future. In the interim London Wasps shall remain at Sudbury in the Clubhouse and on the leasehold land which was retained by the Group.
Board Structure and Staff
Since my last report, Simon Crane has left the Board to take up a new position. I wish him every success in his new job and thank him for his hard work over the last two years.
I am delighted to welcome David Davies to the Board as Group Chief Executive. David's skills in the operation of multi-purpose sports and leisure facilities will be a valuable addition to the Board and will assist him to develop and enhance the Loftus Road experience.
I take this opportunity to thank all the staff for their considerable efforts over the past year.
Outlook
As shareholders will be aware the new TV and internet deals are in the process of being finalised for Nationwide League Division One Clubs. The full effect of these deals will not be realised until the season commencing 2001/02 but they represent a significant uplift to the monies currently received. I believe that they represent a better estimate of the value of the Nationwide League Division One Clubs' broadcast rights, but do not come close to the sums received by Premier League Clubs, even under the previous TV deal. The increased revenues makes maintaining First Division status of paramount importance, and the prizes of Premier League status all the richer.
Your Board is focussed on protecting shareholder value in the long term, and to this end we are reviewing all of the terms and conditions of the TV and internet deals to ensure that valuable future broadcast rights are not given away. We live in an increasingly technological world, and I foresee that in the years to come clubs may start to exploit their rights individually as opposed to collectively, opening up worldwide opportunities. It is vitally important that QPR are in a position to react to this.
I have talked primarily about the effects on transfers and wages of the Bosman ruling. The Group Finance Director's report refers to an effective 1% increase in player and management wages which, in the light of existing contractual increases and increased "player power" as far as contract negotiations are concerned, reflects the progress we have made in following a disciplined salary structure. We also no longer pay signing-on fees in any new contracts signed, thus assisting cash flow. I believe that the full effects of our salary policy will come to fruition in the next few years.
Several important steps have been made in stablising professional Rugby Union, most notably the salary cap. However I remain exasperated that no agreement has yet been reached to ensure financial stability over the coming years in terms of TV monies, and competition and season structure. Indeed the current season started earlier than ever, and, with internationals and tours, provides very little respite for top players, particularly when the pace and rigours of the professional game have increased by so much in recent years. We shall continue to talk to the relevant parties and to provide impetus to get the right deal done, and I hope to be able to update you with good news in this regard in my next report.
In terms of the playing squads, I remain committed to providing every possible assistance to Gerry Francis and Nigel Melville. Both squads are stronger now than they have been over the past few years, although there are always requirements to add players. I expect both the Nationwide League Division One and the Zurich Premiership to get stronger over the next years and competition fiercer. There are teams within both Leagues that have considerably stronger financial resources than our own, but I doubt whether they have better team managers. We will continue to field the best teams that we can but must ensure that the development of the respective clubs is for the long term.
The Group's losses have improved considerably over the last year, and future increase in TV and internet revenues should assist in reducing these further. The sale proceeds from Sudbury provided much needed cash to reduce Group borrowings, but, in today's transfer market it is less likely that we can rely on player sales to provide further cash injections in future. Given the nature of our business and our desire to remain competitive, I therefore anticipate that, despite the Sudbury disposal, I will personally be required to provide substantial working capital to the Group in the short to medium term. Needless to say, I am fully behind the development of the Group and look forward to happier times to come, both on and off the pitch.
Chris Wright,
Chairman,
12 October 2000.
Financial Review
Trading Review
Turnover for the year was £8,051,000, an increase from the previous year of £981,000. A significant contributor to the increased turnover arose from money arising from European Cup participation in the year under review. Analysed below is a breakdown of how the television and media revenue has arisen:
Domestic award - football £734,000 (2000) £620,000 (1999)
Facility fees - football £90,000 (2000) £60,000 (1999)
Domestic award - rugby £566,000 (2000) £420,000 (2000)
European Cup award - rugby £298,000 (2000) N/A (1999)
Facility fees - rugby 8,000 (2000) N/A (1999)
Other 50,000 (2000)
89,000 (1999)
Total :1,745000 (2000) 1,190000 (1999)
The increase in match receipts of 3% masks a much better performance in terms of ticket sales. Match receipts can vary as a result of the clubs' success in Cup competitions between the years under review. In addition in 1999/2000 programme income reflected a guaranteed royalty with the Group bearing no costs in relation to production and distribution; in the prior year, the Group retained all income from sales but bore the costs under matchday and stadium costs. The analysis below shows an increase of 14% in our League match receipts and season ticket revenues between the years.
League match receipts and season tickets £3,047000 (2000) £2,664000 (1999)
Cup match receipts £306,000 (2000) £249,000
Other match receipts £63,000 (2000) £92,000 (1999)
Programmes, membership and other match income £182,000 (2000) £357,000 (1999)
Total: £3,598000 (2000) £3,362000 (1999)
In common with most sporting organisations our principal cost is wages and salaries. These figures include certain costs which may not be reasonably expected to be repeated in future years, which include payments made relating to players' contractual entitlements upon transfer ("non basic costs"). The total wages costs can be reanalysed as follows: Player and management wages: £8,421000 (2000) £8,336000 (1999)
Administrative and directors' wages: £1,005000 (2000) £1,356000 (1999)
Non basic costs £126,000 (2000) £854,000 (1999)
Total: £9,552000 (2000) £10,546000(1999)
The reanalysis shows a 1% increase in player and management wages and a 26% decrease in administrative and directors' wages. This should be viewed in light of the 2% increase in Employers National Insurance contributions effective throughout the year and in line with inbuilt player contract increases.
The current year has shown very little transfer sales activity. The Group has continued to purchase players and has resulted in an overall net transfers payable position. This is analysed below:
Purchase costs of players' registrations (£828,000) - 2000 (£654,000)- 1999
Contingent transfer fees payable (£36,000) - 2000 (£245,000) - 1999
Football League transfer levy (£34,000) - 2000 (£8,000) -1999
Total (898,000) - 2000 (£907,000) - 1999
Net sale proceeds from sale of players' registrations - (2000) £2,749,000 -(1999)
Contingent transfer fees receivable £285,000 (2000) £746,000 (1999)
Net transfer fees (payable)/receivable (£613,000) - 2000 £2,588000 (1999)
Cash Flow and Funding
During the year there was a net cash inflow before financing to the Group as a result of Sudbury sale proceeds which has resulted in a decrease in the Group's borrowings. Analysed below are the effects of this:
Cash outflow before financing, player trading and Sudbury proceeds (£7,050000) - 2000 (£9,236000) - 1999
Net cash (outflow)/inflow from player trading (£230,000)- 2000 £3,273000 (1999)
Cash inflow from Sudbury proceeds £9,258000 (2000) - (1999)
Cash inflow/(outflow) before financing £1,97800 (1999) (£5,963000) 1999
This cash inflow/(outflow) was applied/funded as follows:
Net loans from Chris Wright (600,000) - 2000 (£1,400000) - 1999
Other new loan (£1,348000) - 2000 - (1999)
Bank loan to purchase Twyford Avenue - (2000) (£750,000)- 1999 (1999)
Proceeds from open offer (net of expenses) - (2000) (£2,249000)
New financing (1,948000) - 2000 (£4,399000)
Repayment of existing loans £103,000 (2000) £56,000 (1999)
Net financing inflow (£1,845000) (2000) (£4,343000) - 1999
Repayment/(utilisation) of bank facilities £3,823000 - (2000) (£1,620000) -1999
Cash inflow/(outflow) before financing £1,978000 (2000) (£5,963000)
The Group was therefore able to repay operational bank borrowings and reduce these to £2,064,000 at 31 May 2000.
Financial instruments The Group currently finances its operations through bank borrowings, shareholder loans, other loans, player sales and working capital balances such as trade debtors and trade creditors. 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 and liquidity risk. The Board reviews and agrees policies for managing such risks as outlined below. These policies have remained unchanged since June 1998.
It is the Group's policy to constantly review its financing options; historically it has taken out floating rate debt in the short term. The Group currently has a bank borrowing facility of £2m and a £4m loan from the Chairman to fund its operations.
b Taxation There is no tax charge on the loss in the year. The tax losses arising in the year will be carried forward as available for relief against future profit.
Paul Hart
Group Finance Director
12 October 2000.