RNS Number:5185X
Southampton Leisure Holdings PLC
27 January 2006
Southampton Leisure Holdings ("the Company")
Interim Results
27 January 2006
Chairman's Statement
For the six months ended 30 November 2005, your Company has recorded a loss
before taxation of #1.4m. This result directly reflects the very damaging
effects of relegation, although various timing differences always make
comparison with the previous half year far from straightforward.
The drop in our turnover from #18.9m to #11.4m has been offset by a fall in
operating costs and some profits on player trading. Promotion over the next
18 months remains our overriding aim, following a disappointing performance on
the pitch so far this season.
FINANCIAL REVIEW
Turnover #11.4m (2004: #18.9m)
The substantial drop in turnover is a direct result of the Club's relegation
from the Premier League at the end of the 2004/05 season. This has had an impact
on all the Group's revenue streams.
Matchday income has fallen from #6.2m to #4.6m. Nine Championship matches were
played in the period with an average attendance of 25,050, which compares to
eight Premiership matches in the preceding period with an average attendance
of 29,862. Season ticket holders reduced from 21,300 to 13,700.
Broadcasting income reduced from #8.8m to #4.0m. Following relegation from
the Premier League, the Club no longer fully benefits from the lucrative TV deal
with Sky. However, for a two year period, relegated clubs participate in
a 'parachute' payment from Sky based on 50% of the basic domestic TV monies,
overseas TV monies and title sponsor. The parachute payment for the season is
approximately #6.7m.
Commercial income reduced from #3.9m to #2.8m. Whilst there was a reduction
in income from retail, sponsorship and community coaching, the non-matchday
catering and hospitality remained buoyant and showed an increase on the
preceding period.
Operating costs #14.3m (2004: #20.1m)
Operating costs have been reduced considerably and in line with the reduced
turnover following relegation. In particular, players and coaches' wages have
been reduced from #10.6m to #6.2m. The majority of player contracts had clauses
reducing the basic pay by 50% in the event of relegation from the Premier
League. In addition, a thorough review of the Group's cost base has been
undertaken and savings have been made where possible.
Player trading #2.4m profit (2004: #2.6m loss)
During the period five new players have been added to the first team squad at
a nominal cost. Subsequently, the amortisation charge has reduced from #3.5m
to #2.2m. The profit on disposal of players is primarily due to the sale of
Peter Crouch to Liverpool for #6.0m.
Since the period end, Antti Niemi has been sold to Fulham for #1.0m and
Theo Walcott to Arsenal for an initial fee of #5m.
FINANCIAL REVIEW
Cash flow
Net cash inflow for the period was #1.3m (2004: #6.8m outflow) and net debt
at 30 November 2005 was #20.1m (2004: #22.7m).
Dividend
As last year, no interim dividend is proposed.
FOOTBALL UPDATE
Following the resignation of Harry Redknapp in December, the Board has moved
quickly to appoint George Burley as Head Coach and Clive Woodward as Director of
Football. George has been joined by Simon Hunt and Malcolm Webster. As a
coaching team they bring with them a proven track record of success in the
Premier League, The Championship and the Scottish Premier League. Success is
never instantaneous and it will take some time for George Burley to adapt the
squad to deliver the blend of commitment and attractive attacking football for
which he is renowned.
George's arrival has resulted in some staff departures as is always the case in
football. Dennis Rofe, David Coles, Dave Bassett, Kevin Bond and Dennis Wise
have all left the Club and, on behalf of the Board, I would like to thank them
all for their individual contributions.
On the playing side, Antti Niemi has left us to join Fulham and Neil McCann
has re-joined Hearts following the cancellation of his contract with us. I would
like to thank them both. Theo Walcott has also cancelled his scholarship
agreement and left us to join Arsenal in a deal which could total up to #12.0
million. This was a disappointment to everybody at the Club but Theo and his
advisers were intent upon joining Arsenal and the current structure of the
scholarship contract left us powerless to stop him. Under the circumstances, we
have done as good a deal as was possible and the money we have received will
make the job of strengthening the squad easier. Theo is an exceptional young
player and we wish him well in his future career having nurtured and developed
him from the age of twelve.
Our Academy continues to flourish under the guidance of Huw Jennings and his
team. There are some very promising young players at all levels with Dexter
Blackstock, Martin Cranie, Nathan Dyer and Andrew Surman all likely to make a
first team contribution in the second half of this financial year. Huw has been
offered a job at the Premier League heading up their Academy Operations and will
be leaving us between now and the end of the season. Over seven and a half years
he has done a splendid job for our Club and will be very difficult to replace.
He has agreed to work with us to ensure that we do not lose the momentum which
we have built up to date.
We continue to improve our training facilities at Marchwood and will soon
complete a project which will deliver a new academy block, a new gym and better
presentational facilities to allow for improved communication.
STADIUM
Despite the lower attendances and reduced corporate hospitality the Stadium
continues to operate in an effective and efficient manner on matchdays.
The Stadium's non-matchday activities continue to grow, making a substantial
contribution to the Football Club both financially and by developing the Club's
association with the business community throughout the region. Following the
huge success of the Elton John Concert held at the Stadium in May 2005 the Club
are delighted to be hosting a sell out Bon Jovi Concert on 9 June 2006. The
capacity audience of 35,000 will represent the largest number of people ever
at a Stadium event.
SUMMARY
The past year has not been easy for our Club. I do, however, sincerely believe
that the appointment of George Burley will change our fortunes and help us to
rediscover the art of winning, which is so important in any sport. The entire
management team is now working together to improve on all the areas
that make a successful team.
I look forward to updating you in more detail at the year end.
R J G Lowe
Chairman
26 January 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 30 November 2005
Unaudited
6 months ended 30 November 2005
Unaudited Audited
Operations 6 months Year
excluding ended ended
player trading Player 30 November 31 May
trading* Total 2004 2005
Note #'000 #'000 #'000 #'000 #'000
Turnover 2 11,433 - 11,433 18,920 44,828
Cost of sales (11,680) (2,204) (13,884) (20,560) (44,990)
Gross loss (247) (2,204) (2,451) (1,640) (162)
Administrative expenses (2,657) - (2,657) (3,127) (6,324)
Operating loss (2,904) (2,204) (5,108) (4,767) (6,486)
Profit on disposal of
players - 4,614 4,614 1,013 5,602
Profit on disposal of
tangible fixed assets - - - 3,094 3,094
(Loss)/profit before
interest and taxation 3 (2,904) 2,410 (494) (660) (2,210)
Net interest payable (944) (995) (1,978)
(Loss)/profit on ordinary activities
before taxation (1,438) (1,655) 232
Tax on (loss)/profit
on ordinary activities 123 358 (159)
(Loss)/profit on ordinary activities
after taxation (1,315) (1,297) 73
(Loss)/earnings 4
per share (4.68)p (4.57)p 0.26p
Diluted (loss)/ 4
earnings per share (4.68)p (4.56)p 0.26p
*Player trading represents the amortisation of registrations and the profit
or loss on disposal of registrations.
CONSOLIDATED BALANCE SHEET as at 30 November 2005 Restated
Unaudited Unaudited Audited
30 November 30 November 31 May
2005 2004 2005
#'000 #'000 #'000
Fixed assets
Intangible assets 7,109 15,007 13,255
Tangible assets 36,081 37,079 36,164
43,190 52,086 49,419
Current assets
Stocks 690 726 391
Debtors 4,615 6,215 6,239
Investments 2,000 - 2,480
Cash at bank and in hand 2,247 2,746 2,012
9,552 9,687 11,122
Creditors: amounts falling
due within one year (12,261) (21,119) (17,079)
Net current liabilities (2,709) (11,432) (5,957)
Total assets less current liabilities 40,481 40,654 43,462
Creditors: amounts falling
due after more than one year (27,922) (28,526) (28,947)
Provisions for liabilities and charges (2,778) (2,262) (3,279)
Net assets 9,781 9,866 11,236
Capital and reserves
Share capital 1,405 1,405 1,405
Share premium account 3,340 3,340 3,340
Other reserves 1,050 1,050 1,050
Profit and loss account 3,986 4,071 5,441
Equity shareholders' funds 9,781 9,866 11,236
GROUP CASH FLOW STATEMENT for the six months Unaudited Unaudited Audited
ended 30 November 2005
6 months ended 6 months ended Year ended
30 November 30 November 31 May
2005 2004 2005
#'000 #'000 #'000
Operating loss (5,108) (4,767) (6,486)
Amortisation of players 2,204 3,585 8,292
Amortisation on goodwill 51 103 102
Depreciation 1,033 1,051 2,111
Loss on sale of tangible fixed assets - 1 -
(Increase)/decrease in stock
and work in progress (299) (197) 138
Decrease/(increase) in loans
and debtors 1,733 (2,125) (624)
(Decrease)/increase in creditors (1,392) 917 (4,429)
Net cash outflow from
operating activities (1,778) (1,432) (896)
Returns on investments and
servicing of finance (1,954) (2,036) (2,002)
Corporation tax paid (303) - -
Payments to acquire
subsidiary undertaking - (233) (466)
Proceeds on disposal of tangible fixed assets - 3,099 3,101
Payments to acquire tangible
fixed assets (949) (388) (532)
Proceeds on disposal
of player registrations 8,485 688 3,834
Payments to acquire player registrations (2,264) (5,413) (7,210)
Equity dividends paid (140) (856) (856)
Cash inflow/(outflow) before
use of liquid resources and financing 1,097 (6,571) (5,027)
Management of liquid resources
Sale/(purchase) of current
asset investments 480 415 (2,065)
Financing
Purchase of own shares - (200) (200)
New loan 265 - -
Repayment of borrowings (510) (484) (534)
Net cash outflow from financing (245) (684) (734)
Increase/(decrease) in cash in the period 1,332 (6,840) (7,826)
GROUP CASH FLOW STATEMENT for the six months Unaudited Unaudited Audited
ended 30 November 2005
6 months ended 6 months ended Year ended
30 November 30 November 31 May
2005 2004 2005
#'000 #'000 #'000
Reconciliation of net cash flow
to movement in net debt
Increase/(decrease) in cash in the period 1,332 (6,840) (7,826)
Cash outflow from change in debt
and lease financing 245 484 534
Cash inflow/(outflow) from increase in liquid
resources (480) (415) 2,065
Change in net debt resulting from cash flows in the
period 1,097 (6,771) (5,227)
Amortisation of finance costs (36) (38) (38)
Movements in net debt in the period 1,061 (6,809) (5,265)
Opening net debt (21,115) (15,850) (15,850)
Closing net debt (20,054) (22,659) (21,115)
NOTES TO THE INTERIM RESULTS for the six months ended 30 November 2005
1. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
A statement of total recognised gains and losses has not been presented since
there are no gains and losses other than those stated in the consolidated profit
and loss account.
2. TURNOVER
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 November 30 November 31 May
2005 2004 2005
#'000 #'000 #'000
Matchday 4,552 6,175 17,294
Broadcasting 3,956 8,773 20,110
Commercial 2,889 3,932 7,353
Property 36 40 71
11,433 18,920 44,828
3. COMPARATIVE PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 NOVEMBER 2004
Operations
excluding
player Player Total
trading trading 2004
#'000 #'000 #'000
Turnover 18,920 - 18,920
Cost of sales (16,975) (3,585) (20,560)
Gross profit 1,945 (3,585) (1,640)
Administrative expenses (3,127) - (3,127)
Operating loss (1,182) (3,585) (4,767)
Profit on disposal of players - 1,013 1,013
Profit on disposal of tangible fixed assets 3,094 - 3,094
Profit/(loss) before interest and taxation 1,912 (2,572) (660)
4. (LOSS)/EARNINGS PER SHARE
6 months 6 months Year
ended ended ended
30 November 30 November 31 May
2005 2004 2005
Basic (loss)/earnings per share
(Loss)/profit attributable (#000's) (1,315) (1,297) 73
Weighted average number of shares (000's) 28,091 28,391 28,241
Basic (loss)/earnings per share (4.68)p (4.57)p 0.26p
Diluted (loss)/earnings per share
(Loss)/profit attributable (#000's) (1,315) (1,297) 73
Weighted average number of shares (000's) 28,091 28,391 28,241
Effect of diluted potential ordinary - 26 -
shares - options (000's)
Adjusted weighted average number 28,091 28,417 28,241
of shares (000's)
Diluted (loss)/earnings per share (4.68)p (4.56)p 0.26p
5. ACCOUNTING POLICIES
The results and summary balance sheet incorporate the unaudited accounts of
Southampton Leisure Holdings Plc and all its subsidiaries covering the six month
period ended 30 November 2005, and have been prepared on a consistent basis with
the year ended 31 May 2005, subject to the implementation of FRS21 and FRS25
which will be applied for the year ending 31 May 2006. These have the effect of
allocating dividends to shareholders' funds on a payment basis. The interim
results and 31 May 2005 comparatives have been adjusted accordingly. This has
had the effect of increasing net assets at 31 May 2005 by #140k to #11,236k.
The unaudited interim accounts do not constitute statutory financial statements
within the meaning of Section 240 of the Companies Act 1985.
The interim financial statements were approved by the Board on 26 January 2006.
6. YEAR ENDED 31 MAY 2005
The results for the year to 31 May 2005 are extracted from the full annual
accounts of the Company which have been filed with the Registrar of Companies.
The Independent Auditors' Report on those accounts is unqualified and did not
contain a statement under Section 237(2) or (3) of the Companies Act 1985.
7. REGISTERED OFFICE
This Interim Report is available to the public at the Company's registered
office, The Friends Provident St. Mary's Stadium, Britannia Road, Southampton
SO14 5FP.
INDEPENDENT REVIEW REPORT to Southampton Leisure Holdings Plc
INTRODUCTION
We have been instructed by the Company to review the financial information
for the six months ended 30 November 2005 on pages 4 to 8. We have read the
other information contained in the Interim Report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
DIRECTORS' RESPONSIBILITIES
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Directors are
responsible for preparing the Interim Report in accordance with the rules of the
London Stock Exchange for companies trading securities on the Alternative
Investment Market which require that the half-yearly report be presented and
prepared in a form consistent with that which will be adopted in the company's
annual accounts having regard to the accounting standards applicable to such
annual accounts.
REVIEW WORK PERFORMED
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom
by auditors of fully listed companies. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed
in accordance with United Kingdom auditing standards and therefore provides a
lower level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
REVIEW CONCLUSION
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 November 2005.
BDO STOY HAYWARD LLP
Chartered Accountants, Southampton
26 January 2006
This information is provided by RNS
The company news service from the London Stock Exchange
END
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