RNS Number:9734P
Preston North End PLC
19 September 2003
PRESTON NORTH END FOOTBALL CLUB
CHAIRMANS STATEMENT
On behalf of the Board of Directors of Preston North End plc, I am pleased to
present our annual report and accounts for 2002-03. For numerous reasons this
was a year of consolidation both on and off the pitch. We finished the season in
mid-table and had mixed fortunes in cup competitions, doing reasonably well in
the Worthington Cup but exiting the FA Cup at an early stage.
On the financial front, we are still experiencing the major after effects of the
collapse of ITV Digital. There can be no doubt that this has changed the face of
league football and we can take heart from the fact that due to the actions
taken by the Board, we have survived in a stable financial position whilst many
other clubs are in administration or very close to it.
Largely as a result of this situation, turnover for the year is 42% lower than
last year and the Company generated an operating loss (before depreciation and
amortisation) of #2.59 million (2002: #1.86 million profit) and a loss before
taxation of #1.99 million (2002: #4.4 million profit). These figures were
adversely affected by the fact that the ITV Digital collapse required us to
restructure and reduce our cost base which had a negative impact of #0.6
million. On the positive side, our dealings in the transfer market and the
agreement with the National Football Museum (which granted a sixty year rent
free lease in return for net proceeds of #1.7million), helped to keep us in a
stable situation. The balance sheet remains strong with net assets of #9.0
million and net debt of #0.6 million.
Accounting Standards require us to depreciate the value of our players over the
length of their contracts and consequently our playing squad is currently valued
at #2.5 million. In the current economic environment it is difficult to assess
the true value of the squad, however the Board and Football Management believe
it to be significantly in excess of #2.5million.
Whilst our fortunes on the field may have been mixed, we have continued to make
excellent progress on a number of fronts during the year. The former snooker
club which previously blighted the Sir Tom Finney stand has been converted into
modern offices enabling us to locate all our staff in a good working
environment. Additionally, we recently opened the Club's new retail megastore
which is probably one of the best Club shop facilities in the Football League.
We are currently completing a 99 year lease on our Springfields training ground
and our investment there will give us excellent training facilities. We have
also recently commenced work on developing new first class changing and medical
facilities under the Alan Kelly Town End. In summary, we have continued to
invest heavily in all aspects of the Club and its infrastructure despite the
difficult economic environment of the last 12 months.
Football
The economic environment surrounding football has changed significantly during
the year. The number and value of transfers have reduced significantly and there
are now real signs that the level of player wages are reducing to more
manageable levels.
In the 2002/3 season the Club's wage bill was 74% of turnover (2002: 42%)
although in absolute terms, it remained at similar levels to last year. The
Board acknowledges the need to reduce wage costs significantly, whilst at the
same time honouring its contractual obligations. Prior to the collapse of ITV
Digital, the Board sought to protect the Club's playing assets by negotiating
new contracts. As a result only one player was out of contract this summer.
Eleven players' contracts are due for renewal next summer, with a similar number
the year after.
We continue to invest in the squad to achieve success in the Football League.
During the year we spent #1.3 million recruiting Ricardo Fuller, Tyrone Mears,
Marlon Broomes, Eddie Lewis, George Koumantarakis, Brian O'Neil, Jonathan Gould
and Simon Lynch.
Prior to the year end we agreed settlements for the outstanding balance of the
contracts of Mark Rankine, Tepi Moilenan and Iain Anderson and have released
Colin Murdock.
Following the recent signings of Lee Briscoe and Claude Davis we now have a 25
man squad capable of challenging for promotion to the Premiership.
In June 2003 the role of Assistant Manager, previously performed by Kelham
O'Hanlon, was made redundant as part of the Club's cost reduction programme. The
Board would like to place on record its appreciation of Kelham's efforts during
the many years he served the Club.
Average attendances slipped back to 13,888 (2002: 14,929) as a result of the
reduced levels of away support combined with the team's failure to mount a
challenge for the play-offs.
Youth Development
Once again, the Youth teams produced some excellent performances, winning the
North West Youth Alliance League and the Lancashire Youth Cup, and culminating
in reaching the final of this year's prestigious Northern Ireland Milk Cup in
which they were narrowly beaten in extra time by Manchester United. En route to
the final, the team beat Dynamo Kiev, Leeds United and Catolica of Chile.
During the year, Alan McCormack, David Elebert, Ciaran Lyng, Paul Carvill and
Andrew Lonergan have all achieved international recognition.
Commercial Activities
As I mentioned earlier, the collapse of ITV Digital has had an enormous impact
on the football industry's finances. When comparing turnover to last year, #3.1
million of the shortfall can be attributed to the reduced value of television
rights.
The Football League agreement with NTL to provide internet content has been
renegotiated during the year with the effect that revenue generation is
significantly below previous years.
Commercial activities continue to perform well with hospitality, advertising and
sponsorship all generating significant income. We continue to look for new
revenue streams.
In January 2003 the franchise operator of the Club shop, VI (UK) Limited
appointed liquidators due to financial problems. The Board took the view that
with a significant proportion of the season elapsed and the delivery times
associated with the products, the shop should remain closed until the summer. In
July we opened our new retail outlet, three times bigger than the previous shop.
The initial response has been very encouraging.
In May 2003, we concluded an agreement with Admiral to supply all the Club's
training and matchday kit. This is the first time for many years that the Club
has been able to attract a major brand as kit supplier.
Community
During the year Charles Clarke, the Minister for Education, officially opened
the Playing for Success project based in the community offices under the Town
End. The project is specifically targeted at children in Key Stages 2 and 3 with
the aim of improving literacy, numeracy and ICT skills.
Board Composition
On the 9th October 2002 Hugh Nash resigned his position as a non-executive
Director and on the 31st October 2002 Tony Scholes resigned from his position.
We thank them both for their contribution to the Company.
Future Prospects
In conclusion, we have established ourselves as one of the First Division's
leading clubs and whilst our league position was disappointing overall, we
nevertheless need to remember how far we have come in such a short time. We have
continued to invest in the playing squad and have continued to improve the Club
infrastructure by investing in our training ground, modern offices, Club shop
and changing and medical facilities. Preston North End plc is well positioned
both on and off the field to make continuing progress.
Finally, I would like to put on the record my thanks to our shareholders, our
employees, and of course our supporters for their backing in what has,
undoubtedly, been a difficult economic climate.
Derek Shaw
Chairman
Preston North End plc
Consolidated profit and loss account
for the year ended 30 June 2003
Note
2003 2002
#000 #000
(audited) (audited)
Turnover 5,733 9,889
Staff costs - normal (5,892) (5,962)
- exceptional (576) -
(6,468) (5,962)
Other operating charges (1,855) (2,069)
Group operating (loss)/profit before depreciation and
amortisation of player registrations (2,590) 1,858
Depreciation and amortisation of player registrations (1,876) (1,586)
Group operating (loss)/profit (4,466) 272
Share of operating loss in joint ventures - (4)
Total operating (loss)/profit (4,466) 268
Profit on sale of fixed assets 2,573 4,274
Other interest receivable and similar income 38 41
Interest payable and similar charges (136) (178)
(Loss)/profit on ordinary activities before taxation (1,991) 4,405
Tax on profit/(loss) on ordinary activities 201 (40)
Retained (loss)/profit for the year (1,790) 4,365
(Loss)/Earnings per share (basic and diluted) 2 (54.3)p 132.4p
Consolidated statement of total recognised gains and losses
for the year ended 30 June 2003
The consolidated profit and loss account includes the only gains and losses of
the Group for the current and prior year.
Preston North End plc
Consolidated balance sheet
at 30 June 2003
2003 2002
#000 #000 #000 #000
Fixed assets (audited) (audited) (audited) (audited)
Intangible assets 2,467 2,927
Tangible assets 11,536 12,094
Investment in joint venture - 14
14,003 15,035
Current assets
Stocks 52 38
Debtors 1,600 2,870
Cash at bank and in hand 1,843 2,279
3,495 5,187
Creditors: amounts falling due within one year (3,488) (3,699)
Net current assets 7 1,488
Total assets less current liabilities 14,010 16,523
Creditors: amounts falling due after more than
one year (4,201) (4,723)
Provisions for liabilities and charges (856) (1,057)
Net assets 8,953 10,743
Capital and reserves
Called up share capital 3,296 3,296
Share premium account 7,051 7,051
Revaluation reserve 976 998
Profit and loss account (2,370) (602)
Equity shareholders' funds 8,953 10,743
Preston North End plc
Consolidated cash flow statement
for the year ended 30 June 2003
Note 2003 2002
#000 #000
(audited) (audited)
Net cash (outflow)/inflow from operating activities 3 (2,201) 2,425
Return on investments and servicing of finance 4 (98) (137)
Capital expenditure 4 2,427 (697)
Acquisitions 4 - (2)
Cash inflow before financing 128 1,589
Financing 4 (564) 85
(Decrease)/Increase in cash in the year (436) 1,674
Reconciliation of net cash flow to movement in net debt
for the year ended 30 June 2003
2003 2002
#000 #000
(audited) (audited)
(Decrease)/Increase in cash in the year (436) 1,674
Cash outflow from change in debt 564 372
New hire purchase agreements - (457)
Movement in net debt in the year 128 1,589
Net debt at beginning of year (715) (2,304)
Net debt at end of year (587) (715)
Notes
1. Accounting policies
Accounting convention
The financial statements have been prepared under the historical cost
convention, modified by the revaluation of certain tangible fixed assets, and in
accordance with applicable accounting standards.
2. Earnings per share
The calculation of earnings per share is based on a loss of #1,790,000 (2002:
#4,365,000 profit ) and on ordinary shares of 3,295,679 (2002: 3,295,679) being
the weighted average number of shares in issue during the year.
3. Reconciliation of operating loss to net cash flow from operating activities
Group 2003 2002
#000 #000
(audited) (audited)
Operating (loss)/profit (4,466) 272
Depreciation 425 362
Amortisation of player registrations 1,451 1,224
Release of grants (41) (40)
(Increase)/Decrease in stocks (14) 2
(Increase)/Decrease in debtors (105) 737
Increase/(Decrease) in creditors 549 (132)
Net cash (outflow)/inflow from operating activities (2,201) 2,425
4. Analysis of cash flows for headings summarised in the cash flow statement
Group 2003 2002
#000 #000
(audited) (audited)
Returns on investments and servicing of finance
Interest received 38 41
Interest paid (100) (141)
Interest element of hire purchase payments (36) (37)
Net cash outflow from returns on investment and
servicing of finance (98) (137)
Capital expenditure
Payments to acquire tangible fixed assets (367) (1,891)
Payments to acquire intangible fixed assets (1,480) (2,609)
Receipts from sales of tangible fixed assets 1,788 3
Receipts from sales of intangible fixed assets 2,486 2,715
Capital grant received - 1,085
Net cash inflow/(outflow) from capital expenditure 2,427 (697)
Acquisitions
Investment in joint venture - (2)
2003 2002
#000 #000
(audited) (audited)
Financing
New loans - 300
New hire purchase agreement - 457
Repayment of loans (427) (563)
Capital element of hire purchase payments (137) (109)
Net cash (outflow)/inflow from financing (564) 85
5. Financial Information
The financial information set out above does not comprise full accounts within
the meaning of Section 240 of the Companies Act 1985. The financial information
contained in this announcement in respect of the years ended 30 June 2003 and 30
June 2002 has been extracted from the financial statements which have been
audited and reported upon without qualification by KPMG Audit Plc and did not
contain a statement under section 237 (2) or (3) of the Companies Act 1985. The
2002 accounts have been filed with the Registrar of Companies, and the 2003
accounts will be filed in due course.
6. Annual Report
The Annual Report and Accounts for the year ended 30 June 2003 will be posted to
shareholders on or about 19 September 2003.
7. Annual General Meeting
The Annual General Meeting will be held at The Great Room, Deepdale Stadium, Sir
Tom Finney Way, Preston PR1 6RU at 6.30pm on 20 October 2003.
8. Copies of Announcement
Copies of this announcement are available, free of charge, for a period of one
month at WH Ireland, 11 St James's Square, Manchester, M2 6WH.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GUUMPBUPWGCB