RNS Number:5609E
Charlton Athletic PLC
28 October 2004
CHARLTON ATHLETIC PLC ("Charlton Athletic" or the "Company")
CHAIRMAN'S STATEMENT
On behalf of the board of Charlton Athletic plc, I present the Annual Report for
the year ended 30th June 2004.
The team finished the season in 7th place in the FA Premier League, which is the
football club's highest position since becoming a member of the FA Premier
League and an improvement of five places from the previous season. At times the
season promised even more as the team occupied 4th place for three months of the
season and qualification for European competition seemed a genuine possibility.
Eventually the team finished with 53 points, only three points behind both
Newcastle United and Aston Villa. We can all be genuinely proud of this
performance and the achievements of Alan Curbishley, his support team and all of
the players.
FINANCIAL SUMMARY
I am pleased to report that the Company has increased its turnover to #42.6m and
records operating profit before amortisation and exceptional charges of #4.6m.
Before profit from player sales are accounted for the Company made a net loss of
#0.5m, but player sales of nearly #11.7m resulted in a net profit of #11.1m.
This profit has all been allocated to develop and improve further our first team
squad. During the 2004 summer transfer window, we have committed #7.6m to the
cost of acquiring new players, and there are contingent payments relating to
these transfers of an additional #2m during the terms of the players contracts.
A further #3m was spent in relation to the renegotiation of football employment
contracts.
Financial highlights
2004 2003
#m #m
Turnover 42.6 35.1
Operating profit before amortisation 4.6 2.8
Operating loss after amortisation and interest (0.5) (1.6)
Profit from player sales 11.7 1.1
Net profit/(loss) 11.1 (0.5)
Turnover rose this year by 21%, generated mainly by increases in the basic
distribution of television receipts from the collective broadcasting agreements
and the additional prize money from the team's finishing position of 7th. Income
from live BSkyB matches also rose as the football club was featured in five
matches, compared with four in the previous season. The television and broadcast
revenues received amounted to #26.2m, which represents nearly 62% of the total
turnover generated during the year, and highlights how fundamental this source
of revenue is to the Company's financial performance.
Match day operations generated #9.8m in revenue. Nearly all of our supporters
took advantage of our discounted early payment scheme for season 2003/04 and so
season ticket income was broadly static, but match day ticket income rose as we
implemented some price increases and the attendance figures were marginally
improved. The average attendance was 26,277, which is nearly 98% of the
available capacity, and this percentage would have been higher had the licensing
authority not imposed some restrictions on seats in the south stand for away
supporters, most particularly for the matches against Manchester United,
Birmingham City and Aston Villa. Overall our ticket income remains one of the
lowest in the Premier League.
Income from our sponsorship revenues increased by 36% principally due to the
extension of the sponsorship agreement with all:sports from shirt sponsor to
club sponsor. This period also was the first year of the current kit supply
sponsorship with Joma, who have brought us new and improved designs for the
playing kits, training wear and other clothing.
Retail revenues increased by 22% driven by new home and away playing strips
launched for the 2003/04 season. In addition, the introduction of new retail
outlets at The Valley on match days and the development of a retail website
service has extended the opportunities to purchase our retail products. The
conference and banqueting business saw more growth with revenues up by 12%, in
part as our customer base widens and as our repeat business strengthens.
Facilities were provided for the Public Inquiry into the extension for the
Docklands Light Railway, which earned significant income, and we are looking to
extend revenue from this type of activity. The Valley hosted a five-day event in
June in which the Republic of Ireland, Nigeria and Jamaica competed for the
Unity Cup, which has demonstrated our ability to co-ordinate and manage an
international football tournament. Our facilities in the north and west stands,
commitment to high levels of service and customer loyalty give us optimism for
future growth in this business.
The Company's overheads before amortisation increased significantly by more than
20% to #39m due mainly to increased costs of maintaining and developing the
playing squad. Total personnel costs have risen 27% to #29.9m representing 70%
of turnover. The total cost of operating the squad was #27.6m,a rise this period
of 29% largely because of increased wage commitments to existing players and an
increase in the number of senior players in the squad.
The Company now operates three main sites and invested #785,000 in capital
projects, the more significant of which were at The Valley: the purchase of the
giant electronic screen, the completion of the pitch side electronic advertising
boards and the fit-out of the new Study Support Centre located in the north
stand. This last project was also funded through Greenwich Education grants,
reflecting their position as a key partner in our educational programmes.
The investment in the playing squad related mainly to the acquisition of Chris
Perry in December from Tottenham Hotspur after completing a successful loan
period, besides which there were other contingent costs that related to previous
player purchases. It is worth noting that the transfer costs of Matt Holland and
Hermann Hreidarsson fell in the previous financial period although they were
purchased in anticipation of the 2003/04 campaign.
Transfer income of #11.7m is a very significant figure in these results. Nearly
all of this income came from the reluctant sale of Scott Parker to Chelsea in
January 2004, with the majority of these proceeds being received during the
financial period. There was additional income coming from Matt Svensson's sale
to Norwich and further income related to Jermain Defoe following his sale to
Tottenham Hotspur by West Ham.
The Company made further significant scheduled repayments of its commercial
mortgages originally taken out to develop the west and east stands at The Valley
and for the acquisition and development of other assets to support our football
operations. These payments reduced indebtedness by #2m to approximately #11m at
June 2004. There was little impact from interest rate increases during the
period as this was mitigated by the cash received from player sales.
Our sponsors and commercial partners remain important contributors to the
success of the football club and I would in particular like to thank our club
sponsor, all:sports, for their continuing support. I would also like to thank
Joma, our kit suppliers, who produced two excellent new playing strips for the
season. Greenwich Council is not only a sponsor at The Valley but also acts with
us in a number of other areas, most particularly our community activities, and I
must stress how important this relationship is to the development of the
football club. I include Greenwich Community College, Greenwich Leisure Limited
and London Leisure College who provide their support in a number of areas. Other
important commercial partners include Axis Europe Plc and national trade union
GMB, which provide support to our community programmes. We receive further
support from many other companies and individuals through sponsorship,
advertising and patronage of the various hospitality suites on a match day.
FOOTBALL REPORT
I would like, once again, to highlight the excellent finishing position of the
team in 7th place, our best achievement in the FA Premier League. In this, the
team recorded a magnificent total of 7 away wins in our overall record of 14
wins and 11 draws. This fantastic achievement demonstrated once again the
tactical and motivational abilities of Alan Curbishley and we enjoy a working
relationship that is the envy of many other Premiership chairmen.
It seems that hardly a week goes by without another manager losing his job and
there is no doubt that managers work under the most intense scrutiny from all
sections of the media and supporters at large. I believe that stability is a
major key to success in football and I am delighted that Alan Curbishley has now
committed himself to the club until June 2007, despite interest from other clubs
in securing his services. I would also like to acknowledge the valuable
contribution and support given to Alan by Mervyn Day, Keith Peacock, Glynn
Snodin, Wayne Diesel and all the backroom staff at the training ground. The
media scrutiny of Premiership football and players has also never been greater
and I remain proud of the exemplary manner in which our players conduct
themselves. At a time when players generally receive much negative publicity, I
can report to you that our players spend a significant amount of their personal
time supporting a number of community initiatives and organisations. One example
is 'Deano's Demelza Challenge' instigated by Dean Kiely, following his visit to
the Demelza House hospice for terminally ill children. Through his visits he
provides moral support for the staff and the children and is the focus for
fundraising, which is supported by a number of the other players and is related
in part to the performance of the team. This initiative has also captured the
imagination of the club's supporters.
To continue to have in excess of 26,000 supporters regularly attending The
Valley for our home matches is an endorsement of what we are trying to achieve
at the club. Our supporters remain a key element of our current success and
remain among the best behaved in English football.
In every football season there are matches that stand out from the rest, some
because of the results, others because of the team's performance and those with
particular incidents. I personally feel that pride of place must go to our 3-2
home win over Liverpool, which was marked by an excellent hat-trick from Kevin
Lisbie, and the 4-2 defeat of Chelsea at The Valley on Boxing Day. I cannot
remember the last time a Charlton player chipped in a penalty in the way Paolo
Di Canio did in the 1-1 home draw with champions Arsenal. Nor can I remember the
last time a goalkeeper scored at The Valley, a feat achieved by goalkeeper Brad
Friedel in our home match with Blackburn Rovers, although Claus Jensen captured
the headlines with a dramatic winner in our 3-2 victory
Our youth academy is continuing to provide a stream of talented players, with
some players having already progressed to the first and reserve teams. Our Under
19 team finished runners up in the FA Premier Academy League and the reserve
team finished champions of the FA Premier Reserve League, which was a
particularly commendable achievement bearing in mind the high percentage of
young players in the team. Many of our young players played regularly in the
reserve team contributing to this success and I am hopeful some of these players
will progress into the first team.
Mick Browne left the club during the summer to take up a senior role with the
Qatar Football Association and I would like to take this opportunity to thank
him for his efforts during his time at the club. He joined us as Academy
Director at its inception and then played an important role in its development.
I welcome back to the club our former player and joint manager, Steve Gritt, who
takes over the reins as our new Academy Director. He inherited a solid coaching,
scouting and administrative infrastructure and a dedicated and committed group
of staff.
The women's team had quite a memorable season, finishing 2nd in the League,
runners-up in the FA Cup and winners of the Premier League Cup. Consequently,
Keith Boanas was voted Women's Football Manager of the Year. The women have also
got off to a flying start this season and I know support for the team is
growing.
It was disappointing that once again we failed to make progress in either of the
domestic cup competitions, exiting both the FA Cup and Worthington Cup
competitions in the third round. The team lost to Everton at Goodison Park and
Gillingham at the Priestfield Stadium in the League and FA Cups respectively.
When you consider the level of resources available to the clubs at the top of
the Premiership, the cup competitions continue to offer us the most realistic
opportunity for silverware.
There is no doubt that the loss of Scott Parker to Chelsea during the January
2004 transfer window and the manner in which he left us was hugely disruptive
and a major disappointment to everyone connected with the club. This is
particularly so as he had signed a new five-year contract in the summer of 2003.
In the circumstances, I believe the agreement negotiated with Chelsea was a fair
one. Fulham experienced a similar situation with Louis Saha and these situations
demonstrate to me the power exerted by those clubs able to offer Champions
League football. The ability of the large clubs to take the best players of
clubs competing for a European place further enforces the gap at the top of the
Premiership.
During the season a number of players left The Valley. In December Mathias
Svensson joined Norwich City following an earlier loan spell with Derby County
and Chris Bart-Williams signed for Ipswich following a loan spell there. Also
leaving the club were Adrian Deane, Mark DeBolla, Stephen Hughes, Sergio Leite
and Stephen Tucker, none of whom made a first team appearance. During this
summer, Claus Jensen and Paolo Di Canio left the club and Carlton Cole decided
to move to Aston Villa, despite our agreement with Chelsea that he would be
loaned to us again for season 2004/05. It was a double blow to lose two players
of the calibre of Richard Rufus and Gary Rowett, who both retired through
serious injury. I take this opportunity to wish all of these players well in
their future careers but I would like particularly to pay tribute to Richard
Rufus, who performed at the highest level for the club for many years with great
distinction. I believe he is the best outfield player ever to play for the club
who was not capped by his country. Six players recently joined the club and I
welcome Stephan Andersen, Talal El Karkouri, Bryan Hughes, Francis Jeffers,
Danny Murphy and Dennis Rommedahl and hope they all contribute to future success
at our club.
INDUSTRY PROSPECTS
I have written often of the need for a redistribution of finances in football
and I remain concerned that the outcome of the Premier League Championship
remains somewhat predictable. Clubs are increasingly financially reliant upon
success in the league and the cup competitions to develop and it is essential
that relegation from the Premier League should not threaten the very existence
of clubs. Perhaps the reality is that there are two Premier Leagues within one.
Arsenal, Chelsea and Manchester United in one and the remainder of the
Premiership clubs in a second league, where the consequences of failure outweigh
the benefits of success.
A lot of uncertainty has been removed as a result of the completion of the new
three-year U.K. broadcasting deal with BSkyB, contributing to season 2004/05
onwards. It is important to appreciate that overall revenues have fallen as
these new contracts have been constructed differently and the overall value of
the broadcasting rights has reduced. Whilst domestic revenue has fallen, there
has been an increase in the revenue from the sale of our matches overseas and it
is incumbent on all Premiership clubs to support the marketing of the Premier
League overseas. It is for this reason that the club embarked on a pre-season
tour of China in July of this year and we hope to develop the commercial and
general opportunities that exist following this tour. Once again, the contract
structure of the FA Premier League and negotiation process was scrutinised and
challenged by the European Commission. Its involvement remains unnecessary and
if it was to achieve its objectives great harm would be done to the professional
game in this country. It has already caused the number of matches shown on
television to increase and I remain concerned at the effect increased coverage
will have on match attendances, and in particular the future value of the
broadcasting rights.
The dangers associated with high levels of debt are very visible and the
situation which evolved at Leeds United, culminating in their relegation to the
First Division, illustrates quite graphically what can happen if a club is not
managed in the right way.
The image of the game continues to be something we should all be concerned about
and the events at the Football Association in recent months portrayed in the
media have done nothing to improve that image.
CONCLUSION
Improved commercial performance is increasingly reliant upon our broadcasting
revenues, in particular the finishing position of the team and the number of
live televised matches. Expansion of The Valley infrastructure will also
underpin future commercial growth. We have developed plans to expand the stadium
to an eventual 40,000 capacity with the initial phase redeveloping the East
Stand. This will give us just over 30,000 seats and further lounges and
facilities. We are confident that we have the support in our community to
justify this further expansion.
Your board took the decision to increase season ticket prices for season 2004/05
although a discounted pricing structure was maintained until 31st May 2004. I am
delighted that in excess of 20,500 season ticket holders have shown their
confidence in the club and I anticipate this number will grow through the issue
of half-year season tickets. We have introduced an additional tier of
membership, which provides a range of benefits to supporters and currently have
in excess of 12,000 members, which is integral to our strategy for building the
level of active support for the club. By retaining affordable pricing levels we
are reinforcing our commitment to maintaining the tremendous family atmosphere
at The Valley.
Football businesses are becoming ever more complex and we are fortunate that we
have a committed group that continue to work hard to develop the club. I would
like to thank our two executive directors, Peter Varney and Nigel Capelin, for
their contribution as well as all the staff that operate at The Valley, the
training-ground complex and the offices in Bexleyheath. Many other people give
their time and effort to support the operations of the club and the
organisations associated with it and to them we also extend our gratitude.
Especially worthy of mention are those individuals involved in running the many
supporters branches, so important to the future growth of the club, and in
particular Sue Townsend, who represents the views of supporters at board level
following her election as the Supporters' Representative Director.
Your board remains as passionate as ever about our football club and we want to
see it develop and grow, while at the same time maintaining all of our
traditional values. The club has a good reputation in the game and deservedly
so, in my opinion, as we work hard to retain our relevance within our community.
Football is our national sport and the Premier League attracts huge media
coverage and with this comes increased expectation levels from clubs and
supporters. Our challenge is to mix realism with our ambition to bring success
to our club. We will continue to do everything we can to bring continued success
to the club and we remain optimistic about our future prospects.
Richard Murray
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
12 months to 30th June 2004 12 months
to
30th June
Operations 2003
excluding player Player
amortisation amortisation
and and trading Total
trading
#'000 #'000 #'000 #'000
TURNOVER 42,606 0 42,606 35,141
Operating expenses (38,968) (3,637) (42,605) (36,041)
Exceptional item 1,000 (1,040) (40) 0
Operating profit/(loss) 4,638 (4,677) (39) (900)
Profit on disposal of players 0 11,659 11,659 1,137
Profit before interest and
taxation 4,638 6,982 11,620 237
Net interest payable (502) (701)
Profit/(loss) on ordinary 11,118 (464)
activities before taxation
Taxation charge 0 0
Profit/(loss) for the period 11,118 (464)
Earnings/(losses) per share/ 20.20 (0.80)
pence
All amounts derive from continuing operations.
STATEMENT OF RECOGNISED GAINS AND LOSSES
There were no recognised gains and losses other than stated above and therefore
no statement of recognised gains and losses has been published.
CONSOLIDATED BALANCE SHEET
As at As at
30th June 30th June
2004 2003
# 000 # 000
Fixed Assets
Tangible fixed assets 35,309 35,784
Intangible assets 4,685 8,508
39,994 44,292
Current Assets
Stocks 152 90
Debtors 7,580 2,325
Cash at bank and in hand 10,488 347
Total assets 58,214 47,054
Creditors falling due within one year and (15,655) (13,054)
deferred income
Total assets less current liabilities 42,559 34,000
Creditors falling due after one year (8,774) (10,863)
Grants and deferred income (5,940) (6,410)
27,845 16,727
# 000 # 000
Capital and reserves
Called up share capital 27,485 27,485
Share premium account 2,019 2,019
Revaluation reserve 6,547 6,572
Profit and loss account (8,206) (19,349)
27,845 16,727
CONSOLIDATED CASH FLOW STATEMENT
As at As at
30th June 30th June
2004 2003
# 000 # 000
Cash flow from operations
Operating loss (39) (900)
Depreciation 1,260 1,195
Amortisation of player registration costs 4,677 3,731
Profit on sale of fixed assets (8) 0
Release of deferred income (470) (457)
(Increase)/decrease in stocks (62) 28
(Increase)/decrease in debtors (5,255) 828
Increase/(decrease) in creditors 2,586 (425)
Net cash inflow from operations 2,689 4,000
Returns on investment and servicing
of finance
Interest receivable 173 42
Interest payable (733) (701)
Interest element of finance lease payments (3) (1)
Net cash outflow (563) (660)
Capital expenditure and financial investments
Payments to acquire players' registrations (913) (2,369)
Proceeds on sale of players' registrations 11,718 1,183
Payments to acquire tangible fixed assets (755) (1,055)
Related grants and income from
long term season ticket schemes 0 244
Proceeds on sale of tangible fixed assets 8 0
Net cash inflow/(outflow) 10,058 (1,997)
Net cash inflow before financing 12,184 1,343
Financing activities
New bank loans 0 3,277
Loan repayments (2,024) (3,599)
Capital element of finance lease payments (19) (9)
(2,043) (331)
Increase in cash 10,141 1,012
NOTES
1. The financial information relating to the Company does not constitute
statutory accounts within the meaning of Section 240 (5) of the Companies Act
1985 (as amended). Statutory accounts in respect of the year ended 30 June
2004, which received an unqualified audit opinion, will be filed with the
Registrar of Companies in England and Wales.
2. Analysis of turnover:
Year ended Year ended
30 June 2004 30 June 2003
#'000 #'000
Television and broadcast 26,204 20,361
Match day activities 9,844 9,681
Marketing and sponsorship 4,267 2,935
Retail and other 1,183 1,179
Conference and banqueting 1,108 985
------ ------
42,606 35,141
====== ======
3. Analysis of operating expenses:
#'000 #'000
Staff costs 29,913 23,576
Depreciation 1,260 1,195
Amortisation 3,637 3,731
Hire of plant and machinery 173 145
Other operating lease rentals 244 217
Grants released (109) (114)
Auditors remuneration
:audit 31 31
:non audit 17 28
Other operating charges 7,439 7,232
------ ------
42,605 36,041
====== ======
4. Analysis of staff costs:
#'000 #'000
Wages and salaries 26,793 21,093
Social security costs 2,959 2,322
Other pension costs 161 161
------ ------
29,913 23,576
====== ======
5. The company has adopted the format of profit and loss account
recommended for the football industry and has presented the previous years
comparative figures in this format.
6. The board does not recommend the payment of a dividend.
7. Earnings per ordinary share have been calculated by dividing
the loss for the year by the weighted number of ordinary shares in issue for the
year.
Year ended Year ended
30 June 2004 30 June 2003
#'000 #'000
Profit/(loss) for the year 11,118 (464)
Weighted number of shares in issue 54,969,293 54,969,293
Earnings/(loss) per share 20.2 pence (0.8) pence
8. The Annual Report and Accounts for the year ended 30 June 2004 will be
sent to shareholders during November 2004. At that time further copies will be
available from the company's Nominated Advisor and Broker, Teather & Greenwood
Limited, Beaufort House, 15 St Botolph Street, London, EC3A 7QR.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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