RNS Number:4569S
Loftus Road PLC
13 October 2000
AUDITED RESULTS FOR
THE TWELVE MONTHS ENDED 31 MAY 2000 Loftus Road PLC, the AIM listed holding company for Queens
Park Rangers FC and Wasps RFC, announces audited results
for the twelve months ended 31 May 2000.
Key Points * Turnover up 14% to #8.05m (1999: #7.07m)
* Loss before interest and tax reduced by 43% to #4.74m
(1999: #8.38m)
* Loss per share reduced to 8.9p
(1999: 20.2p)
* Profit on disposal of players' registrations #0.03m
(1999: #1.14m)
* QPR had best league finish for 3 years
* Average paying attendances up by 11%, season ticket
volumes increased
by 12% for QPR and 23% for London Wasps. * Merchandise sales up by 24%
* 25% reduction in stadium, matchday and other direct
overheads
In his statement by shareholders, Chairman, Chris Wright
said: '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.'
For further information, contact: David Davies, Chief Executive on 020 8740 2523
Paul Hart, Financial Director on 020 8740 2523
Mark Edwards, Buchanan Communications on 020 74665000 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. The 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:
2000 1999
#'000 #'000
Domestic award - football 734 620
Facility fees - football 90 60
Domestic award - rugby 566 420
European Cup award - rugby 298 -
Facility fees - rugby 8 -
Other 50 89
1,745 1,190 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.
2000 1999
#'000 #'000
League match receipts and 3,047 2,664
season tickets
Cup match receipts 306 249
Other match receipts 63 92
Programmes, membership and 182 357
other match income
3,598 3,362 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: 2000 1999
#'000 #'000
Player and management wages 8,421 8,336
Administrative and directors' 1,005 1,356
wages
Non basic costs 126 854
9,552 10,546 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: 2000 1999
#'000 #'000
Purchase costs of players' (828) (654)
registrations
Contingent transfer fees payable (36) (245)
Football League transfer levy (34) (8)
(898) (907)
Net sale proceeds from sale of - 2,749
players' registrations
Contingent transfer fees receivable 285 746 Net transfer fees (613) 2,588
(payable)/receivable 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:
2000 1999
#'000 #'000
Cash outflow before financing, player (7,050) (9,236)
trading and Sudbury proceeds
Net cash (outflow)/inflow from player (230) 3,273
trading
Cash inflow from Sudbury proceeds 9,258 -
Cash inflow/(outflow) before financing 1,978 (5,963) This cash inflow/(outflow) was applied/funded as follows: 2000 1999
#'000 #'000
Net loans from Chris Wright (600) (1,400)
Other new loan (1,348) -
Bank loan to purchase Twyford Avenue - (750)
Proceeds from open offer (net of - (2,249)
expenses)
New financing (1,948) (4,399)
Repayment of existing loans 103 56
Net financing inflow (1,845) (4,343)
Repayment/(utilisation) of bank 3,823 (1,620)
facilities
Cash inflow/(outflow) before financing 1,978 (5,963) 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.
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
LOFTUS ROAD plc
PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS
Consolidated results for the year ended 31 May 2000 2000 1999
#'000 #'000
Turnover - continuing operations (Note 8,051 7,070
1) Playing staff and matchday costs (9,562) (9,734)
Stadium and other direct operating costs(1,649) (1,570)
Amortisation of players' registrations (1,431) (1,797) Cost of sales (12,642) (13,101)
Gross loss (4,591) (6,031)
Administrative expenses (3,314) (3,493)
Operating loss - continuing operations (7,905) (9,524)
Profit on disposal of players' 31 1,145
registrations
- continuing operations
Profit on disposal of land and buildings 3,139 -
- continuing operations
Loss on ordinary activities before (4,735) (8,379)
interest and taxation
Net interest payable (Note 2) (598) (548)
Loss on ordinary activities before (5,333) (8,927)
taxation
Tax on loss on ordinary activities (Note - -
3)
Loss on ordinary activities after (5,333) (8,927)
taxation
Dividends - -
Retained loss for the year (5,333) (8,927)
Loss per share (Note 4) (8.9p) (20.2p)
Diluted loss per share (Note 4) (8.9p) (20.1p)
LOFTUS ROAD plc
PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS
Consolidated balance sheet at 31 May 2000
2000 1999
#'000 #'000
Fixed assets
Intangible assets 1,488 2,275
Tangible assets 15,553 21,767
17,041 24,042
Current assets
Stocks 109 143
Debtors (Note 5) 930 1,690
1,039 1,833
Creditors: amounts falling due
within
one year (Note 6) (6,977) (10,304)
Net current liabilities (5,938) (8,471)
Total assets less current
liabilities 11,103 15,571
Creditors: amounts falling due
after
more than one year (Note 7) (1,540) (675)
Net assets 9,563 14,896
Capital and Reserves
Called up share capital 600 600
Share premium account (Note 8) 5,258 5,258
Revaluation reserve (Note 8) 1,084 1,084
Profit and loss account (Note 8) 2,621 7,954
Equity shareholders' funds 9,563 14,896
LOFTUS ROAD plc
PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS
Consolidated statement of cash flows for the year ended 31
May 2000 2000 1999
#'000 #'000
Net cash outflow from operating (6,280) (7,127)
activities (Note 9)
Returns on investments and servicing of
finance
Interest received 40 1
Interest paid (677) (569)
Interest element of finance lease (4) (7)
rental payments Net cash outflow from returns on (641) (575)
investment and servicing of finance
Taxation
UK corporation tax repaid 359 - Tax repaid
Capital expenditure
Payments to acquire tangible fixed (488) (1,577)
assets 9,258 43
Receipts from sales of tangible fixed (989) (1,102)
assets 759 4,375
Payments to acquire players'
registrations
Receipts from the sale of players'
registrations
Net cash inflow from capital
expenditure 8,540 1,739
Cash inflow/(outflow) before financing 1,978 (5,963)
Financing
Issue of ordinary share capital - 2,598
Share issue costs - (349)
Debts due within one year:
New secured loans 3,150 1,475
Repayment of secured loans (2,639) (15)
New unsecured loan 449 -
Debt due beyond a year:
New secured loan - 675
New unsecured loan 899 -
Capital element of finance lease rental (14) (41)
payments 1,845 4,343
Decrease/(increase) in borrowings
in the year 3,823 (1,620)
LOFTUS ROAD plc
PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS
For the year ended 31 May 2000
Statement of Total Recognised Gains and Losses 2000 1999
#'000 #'000
Loss for the financial year (5,333) (8,927)
Unrealised surplus on revaluation of - 1,084
properties
Total recognised gains and losses in (5,333) (7,843)
respect of the financial year
Prior year adjustment - 5,515
Total loss recognised since last (5,333) (2,328)
financial statements Reconciliation of movements in shareholders' funds
2000 1999
#'000 #'000
Loss for the financial year (5,333) (8,927)
Dividends - -
(5,333) (8,927)
Other recognised gains and losses - 1,084
relating to the year
New share capital subscribed - 200
Share premium net of expenses on issue of - 2,049
shares
Net reduction to shareholders' funds (5,333) (5,594)
Opening shareholders' funds 14,896 20,490 Closing shareholders' funds 9,563 14,896 Note 1: Turnover and loss on ordinary activities before
interest and taxation Turnover comprises: 2000 1999
#'000 #'000
Turnover
Matchday receipts 3,598 3,362
Television and media 1,746 1,190
Sponsorship, merchandising and commercial2,282 2,219
income
Other 426 299
8,051 7,070
Analysed as:
QPR 5,063 4,463
Wasps 2,241 1,946
Retail and other 747 661
8,051 7,070
Loss on ordinary activities before
interest and taxation Turnover 8,051 7,070
Cost of football activities 6,992 6,435
Cost of rugby activities 2,490 2,770
Amortisation of players' registrations 1,431 1,797
Stadium and matchday costs 1,952 2,096
Commercial, marketing and retail costs 1,092 704
Other direct overheads 1,999 2,792
Total costs 15,956 16,594
Operating loss - continuing operations (7,905) (9,524)
Profit on disposal of players' 31 1,145
registrations
Profit on disposal of land and buildings 3,139 -
Loss on ordinary activities before (4,735) (8,379)
interest and taxation
Note 2: Net interest payable
2000 1999
#'000 #'000
Amounts payable on bank loans and
overdrafts (461) (520)
Amounts payable on all other loans (168) (17)
Finance charges payable in respect of
finance (4) (12)
leases and hire purchase contracts
Other interest payable (5) -
(638) (549)
Interest receivable 40 1
(598) (548) Note 3: Taxation No taxation charge arises on the results of the current
year and losses are available for relief against future
profits for taxation purposes. Note 4: Loss per share Losses per share are calculated with reference to the loss
after taxation of #5,333,000 (1999 -#8,927,000) and on a
weighted average number of Ordinary shares in issue of
59,954,998 (1999 - 44,240,766).
Diluted losses per share are calculated with reference to
a weighted average number of Ordinary Shares in issue of
59,959,415 (1999 - 44,373,683).
Note 5: Debtors 2000 1999
#'000 #'000
Trade debtors 352 367
Transfer debtors 2 488
Other debtors 8 370
Prepayments and accrued income 568 465
930 1,690
Note 6:Creditors: amounts falling due within one year 2000 1999
#'000 #'000
Bank loans and overdrafts 2,116 5,961
Shareholder's loan 2,000 1,400
Other loans 450 34
Obligations under finance leases
and hire purchase contracts 15 29
Payments received on account 162 237
Trade creditors 779 972
Transfer creditors 175 278
Taxation and social security 446 387
Other creditors 49 143
Accruals and deferred income 785 863
6,977 10,304
Note 7: Creditors: amounts falling due after
more than one year 2000 1999
#'000 #'000
Bank loans and overdrafts 641 675
Other loans 899 -
1,540 675 Note 8: Reserves
Share Reval- Profit
premium uation and loss
account Reserve account
#'000 #'000 #'000
At 1 June 1999 5,258 1,084 7,954
Retained loss for the
year - - (5,333)
At 31 May 2000 5,258 1,084 2,621
Note 9: Net cash outflow from operating activities 2000 1999
#'000 #'000
Operating loss (7,905) (9,524)
Amortisation charge 1,431 1,797
Depreciation charge net of
release of capital 531 351
grants
Decrease/(increase) in
stocks 34 (48)
(Increase)/decrease in
debtors (85) 217
(Decrease)/increase in
creditors (286) 80
Net cash outflow from
operating activities (6,280) (7,127) The financial information set out above does not
constitute the Group's statutory accounts for the years
ended 31 May 2000 or 1999. The financial information for
1999 is derived from the statutory accounts for 1999 which
have been delivered to the registrar of companies. The
auditors have reported on the 2000 accounts; their report
was unqualified and did not contain a statement under
section 237 (2) or (3) of the Companies Act 1985. The
statutory accounts for 2000 will be delivered to the
Registrar of Companies following the Company's Annual
General Meeting.
This announcement will be available from the Head Office
of the company at Loftus Road Stadium, South Africa Road,
London W12 7PA. |