RNS Number:0699R
Preston North End PLC
28 March 2008
Preston North End plc
("Preston North End" or the "Company")
Interim Results
for the six months ended 31 December 2007
Chairman's Statement
On behalf of the Board of Directors of Preston North End plc, I am pleased to
present the Group's interim results for the six months ended 31 December 2007.
The unaudited interim financial information represents the first published
financial information prepared on the basis of the recognition and measurement
requirements of International Financial Reporting Standards ("IFRS") adopted by
the EU ("Adopted IFRS").
IFRS
EU law (IAS regulation EC 1606/2002) requires that the next annual consolidated
financial statements of the Group, for the year ending 30 June 2008, be prepared
in accordance with Adopted IFRS.
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of Adopted IFRS as at 31 December 2007
that are effective (or available for early adoption) at 30 June 2008, the
Group's first annual reporting date at which it is required to use Adopted IFRS.
Based on these Adopted IFRS, the Directors have applied the accounting
policies, as set out in the restatement document referred to in note 1 of this
interim financial information, which they expect to apply when the first annual
IFRS financial statements are prepared for the year ending 30 June 2008.
Introduction
The first half of the financial year has been very challenging. We have been at
the lower end of the Championship League Table for the majority of the season
and the Board took the decision to replace Paul Simpson as manager in November
2007. Such decisions are never easy, nor are they taken lightly. I would like
to place on record my thanks to Paul for his efforts during his time at the Club
and to wish him all the best for his future career.
The Board acted quickly to appoint a new manager and I was delighted to secure
the services of Alan Irvine who had been working under David Moyes as Assistant
Manager at Everton Football Club. Alan was keen to progress and become a first
team manager himself and we are pleased to give him this opportunity at Preston
North End.
At the time of preparing this report our league position has improved and we are
now more confident about retaining our League status as a Championship Club for
the 2008/09 season.
Ironically, despite the challenging situation on the pitch, we have recorded our
best financial results in recent years- returning a profit of £1.82m (six months
to December 2006: loss of £1.34m). This is mainly due to the profit on sale of
players' registrations of £4.83m- which principally related to the transfer of
David Nugent to Portsmouth.
Turnover was also up 7% in the six months to December 2007 when compared to the
same period last year. This is due to an increase in amounts receivable from
the Football League following the Football League's negotiations to secure
additional funding for its member clubs from the Premier League.
Operating expenses were up 12% to £6.27m (2006: £5.58m) which is mainly due to
increased player wages and the costs associated with terminating Paul Simpson's
contract.
Despite the generation of profit in respect of player sales, the business needs
a significant supply of external finance to meet its ongoing obligations and we
are grateful for the further support of our major shareholders.
Football
The Board have been pleased with the impact made by Alan Irvine since his
arrival at the Club- most importantly the recovery of our League position.
Our run of fixtures and results in the FA Cup was also encouraging as we reached
a sixth round tie with Portsmouth FC at Deepdale. The financial benefit of the
FA Cup games is important to the Club, although this financial benefit will be
accounted for in the second half of this year and is not included in these
results.
As I mentioned above, the major financial highlight in the period was the profit
generated on the sale of David Nugent to Portsmouth FC for £6 million. The
actual profit generated from this transaction was £4.5m after the deduction of
amounts due to third parties. I believe the time was right for David to further
his football career in the Premiership and for Preston North End to maximise its
financial return. As a club, we have to continue to generate profits on player
sales to offset the trading losses we generate on our operations.
Other players who have left the Club in the period are Kelvin Wilson who
transferred to Nottingham Forrest, Danny Pugh who transferred to Stoke City and
Adam Nowland whose contract was terminated by mutual consent.
I would like to thank these players for their contribution during their time at
the Club. I would also like to specifically thank Graham Alexander for his
fantastic service to Preston North End. Graham made 400 appearances for the
Club in eight years during which time he was a model professional footballer.
He transferred to Burnley FC at the start of the season and I wish him well for
the remainder of his career.
At the start of the current 2007/08 season, a number of new players joined the
squad, namely Kevin Nicholls from Leeds United, Darren Carter from West Bromwich
Albion, Billy Jones from Crewe Alexandra and Karl Hawley whose contract had
ended at Carlisle United. Subsequently, following Alan Irvine's appointment, we
signed five further players in the January transfer window, namely Michael Hart
from Aberdeen, Neal Trotman from Oldham Athletic, Chris Brown from Norwich,
Richard Chaplow from West Bromwich Albion, and Grzegorz Szamotulski whose
contract had ended at Dundee United. I would like to welcome these players and
wish them well for their time at the Club.
The Youth Development and Community departments have continued to flourish under
Dean Ramsdale, Director of Youth. Our coaching sessions with young people in
the area now cover an extensive network of local schools which is good for the
local community but also ensures that any young players in our area will be
identified and nurtured from an early age.
Other activities
I am delighted to be able to report that our main Club sponsor, Enterprise, have
agreed a two year extension to their existing three year deal which expires at
the end of the current 2007/08 season. I would like to thank the board of
directors of Enterprise for this support, which is very important to the Club's
income streams.
The main improvement to our infrastructure is the development of the '
Invincibles Pavilion' stand at Deepdale. Under a partnership with Central
Lancashire Primary Care Trust, the stand will include a long-term conditions
health centre. The football areas of the stand will include 3,700 stadium seats
and new hospitality areas, namely a 300-seater members' lounge and 21 executive
hospitality boxes. I am very excited about the prospect of completing the
Deepdale Stadium with the new stand expected to be open for the first home game
of the new 2008/09 season.
Finally, I would like to formally thank our staff and most importantly our
dedicated fans for their support through what has been a difficult season.
Derek Shaw
Chairman
Consolidated income statement
for the six months ended 31 December 2007
6 months to 6 months to 12 months to
31 December 31 December 30 June
2007 2006 2007
£000 £000 £000
Unaudited Unaudited Unaudited
Revenue 4,248 3,965 7,930
Staff costs (4,543) (3,893) (7,710)
Other operating expenses (1,494) (1,458) (2,921)
Loss from operations before player trading and
amortisation
(1,789) (1,386) (2,701)
Depreciation and amortisation of player registrations (968) (767) (1,634)
Profit on disposal of players' registrations 4,834 975 1,420
Loss from operations 2,077 (1,178) (2,915)
Finance income 75 - -
Finance expenses (337) (165) (353)
Loss on ordinary activities before taxation 1,815 (1,343) (3,268)
Income tax expense - - 82
Profit/(loss) for the period 1,815 (1,343) (3,186)
Earnings/(loss) per share (basic and diluted) 55.1p (40.8)p (9.7)p
Consolidated statement of changes in equity
for the six months ended 31 December 2007
Share Other Profit
premium Reserves and loss
account account
£000 £000 £000
At 1 July 2007 7,051 888 (9,950)
Profit for the period - - 1,815
At 31 December 2007 7,051 888 (8,135)
Consolidated balance sheet
as at 31 December 2007
31 December 31 December 30 June
2007 2006 2007
£000 £000 £000
Unaudited Unaudited Unaudited
Non-current assets
Intangible assets 2,494 1,696 1,314
Property, plant and equipment 12,490 11,487 11,511
Total non-current assets 14,984 13,183 12,825
Current assets
Inventories 364 349 332
Trade and other receivables 4,865 1,497 1,014
Total current assets 5,229 1,846 1,346
Total assets 20,213 15,029 14,171
Current liabilities
Interest bearing loans and borrowings (5,331) (3,048) (5,795)
Trade and other payables (3,032) (1,907) (2,032)
Deferred income (1,415) (1,603) (2,441)
Total current liabilities (9,778) (6,558) (10,268)
Non-current liabilities
Interest bearing loans and borrowings (3,914) (2,422) -
Trade and other payables (920) (133) (89)
Deferred income (2,042) (2,247) (2,070)
Deferred tax liabilities (459) (541) (459)
Total non-current liabilities (7,335) (5,343) (2,618)
Total liabilities (17,113) (11,901) (12,886)
Net assets 3,100 3,128 1,285
Equity
Share Capital 3,296 3,296 3,296
Share premium 7,051 7,051 7,051
Other reserves 888 910 888
Retained earnings (8,135) (8,129) (9,950)
Total equity 3,100 3,128 1,285
Consolidated Cash Flow Statement
for the six months ended 31 December 2007
6 months to 6 months to Year to
31 December 31 December 30 June
2007 2006 2007
£000 £000 £000
Unaudited Unaudited Unaudited
Cash flows from operating activities
Profit/(loss) for the period 1,815 (1,343) (3,186)
Adjustments for:
Depreciation 233 230 463
Amortisation of Intangible non-current assets 737 537 1,171
Finance expenses 337 165 353
Finance income (75) - -
Income tax expense - - (82)
Profit on disposal of players' registrations (4,834) (975) (1,420)
Capital grants release (29) (28) (56)
(Increase)/decrease in trade and other receivables (41) 499 260
(Increase)/decrease in inventories (31) (2) 15
Increase/(decrease) in trade and other payables 217 (476) (256)
Increase/(decrease) in deferred income (1,025) (840) (152)
Cash flow from operations (2,696) (2,233) (2,890)
Interest paid (200) (159) (345)
Net cash flow from operating activities (2,896) (2,392) (3,235)
Cash flows from investing activities
Acquisition of players' registrations (1,548) (710) (1,771)
Proceeds from sale of players' registrations 2,250 2,727 4,376
Acquisition of property, plant and equipment (1,212) (144) (165)
Net cash flow from investing activities (510) 1,873 2,440
Cash flows from financing activities
Proceeds from borrowings 3,914 - 500
Repayments of borrowings (544) (158) (129)
Net cash flows from financing activities 3,370 (158) 371
Net decrease in cash and cash equivalents (36) (677) (424)
Non cash movement in the period - - (2,500)
Cash and cash equivalents at start of period (5,295) (2,371) (2,371)
Cash and cash equivalents at end of period (5,331) (3,048) (5,295)
Analysed as:
Cash and cash equivalents - - -
Bank overdraft (5,331) (3,048) (5,295)
Closing cash and cash equivalents (5,331) (3,048) (5,295)
Notes to the accounts
For the six months ended 31 December 2007
1 Basis of preparation
EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidated
financial statements of the Group, for the year ending 30 June 2008, be prepared
in accordance with International Financial Reporting Standards ("IFRS") adopted
for use in the EU ("Adopted IFRS").
The interim financial information has been prepared on the basis of the
recognition and measurement requirements of Adopted IFRS that are effective at
30 June 2008, the Group's first annual reporting date at which it is required to
use Adopted IFRS. Based on these Adopted IFRS, the Directors have applied the
accounting policies, as set out in the IFRS restatement document referred to
below, which they expect to apply when the first annual IFRS financial
statements are prepared for the year ending 30 June 2008.
The interim financial statements for the 6 months ended 31 December 2007 and 6
months ended 31 December 2006 has not been audited. In relation to the
financial statements for the year ended 30 June 2007, this has been extracted
from a restatement of the financial information taken from the Group's statutory
accounts for that financial year.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from those results.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The accounting policies set out in the IFRS Restatement Report have been applied
consistently to all periods presented in these consolidated financial statements
and in preparing an opening IFRS balance sheet at 1 July 2006
The changes in accounting policies did not result in any adjustments to the
profit/(loss) for the period, the net assets or the cashflows as previously
reported under UK GAAP.
IFRS 1- 'First Time Adoption of International Financial Reporting Standards'
mandates that most IFRS are applied fully retrospectively, meaning that the
opening balance sheet at 1 July 2006 is restated as if those accounting policies
had always been applied. IFRS 1 permits companies to apply certain exemptions
from the full requirements of IFRS during the transition.
2 Accounting policies
The accounting policies that the Group intends to apply for the year ending 30
June 2008 are set out in the IFRS restatement document referred to in note 1.
3 Status of financial information
The comparative figures for the year ended 30 June 2007 are not the Group's
statutory accounts for that financial year. Those accounts, which were prepared
under UK GAAP, have been reported on by the Group's auditors and delivered to
the registrar of companies. The report of the auditors was (i) unqualified,
(ii) did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report, and (iii) did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.
4 Taxation
There is no charge for the period. This is based on the anticipated effective
rate for the year ending 30 June 2008.
5 Earnings/(loss) per share
The earnings/(loss) per share of 55.1p (2006: loss of 40.8p) has been
calculated by dividing the profit for the period of £1,815,000 (2006: loss for
the period of £1,343,000) by 3,295,679 (2006: 3,295,679), being the weighted
average number of ordinary shares.
IFRS Restatement Report (unaudited)
Preston North End Plc transition to IFRS
From 1 July 2007 the Group is required to prepare its consolidated financial
statements under International Financial Reporting Standards (referred to as "
adopted IFRS" throughout this document) as adopted by the European Union ("EU")
having previously prepared its accounts under UK Generally Accepted Accounting
Principles ("UK GAAP"). The transition date for the Group is 1 July 2006 and
this IFRS restatement report covers the restatement of the opening consolidated
balance sheet as at 1 July 2006, the consolidated financial statements for the
year ended 30 June 2007 and the consolidated interim financial statements for
the six months ended 31 December 2006.
With the exception of reclassifications, there were no material differences
between profits, net assets or cashflows presented under IFRS compared to their
presentation under UK GAAP.
Transitional arrangements- Application of IFRS 1
The Group's financial statements for the year ended 30 June 2008 will be the
Group's first annual financial statements in compliance with adopted IFRS. The
Group's transition date is 1 July 2006 and the Group prepared its opening IFRS
balance sheet at that date.
On transition to adopted IFRS an entity is generally required to apply adopted
IFRS retrospectively, except where an exemption is available under IFRS 1 '
First-time Adoption of International Financial Reporting Standards'.
International Financial Reporting Standards- Changes in accounting policies
The interim results for the period ended 31 December 2007 have been prepared in
accordance with accounting policies under adopted IFRS. The Group's revised
accounting policies under adopted IFRS are included in note 1 to this
restatement report.
Notes to the IFRS Restatement report
1. Accounting policies
The following accounting policies represent the Group's revised policies under
IFRS which will be adopted by the Group in its financial statements for the year
ended 30 June 2008.
Basis of consolidation
The Group financial statements comprise the financial statements of the Company
and its subsidiary undertaking made up to the financial year end. A subsidiary
is an entity controlled by the Group. Control exists when the Group has the
power, directly or indirectly, to govern the financial and operating policies of
an entity so as to obtain benefits from its activities.
The interim financial statements for the 6 months ended 31 December 2007 and 6
months ended 31 December 2006 has not been audited. In relation to the
financial statements for the year ended 30 June 2007, this has been extracted
from a restatement of the financial information taken from the Group's statutory
accounts for that financial year.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from those results.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Revenue
Revenue represents income arising from sales to third parties, and excludes
transfer fees receivable and value added tax.
Season ticket, sponsorship and corporate hospitality revenue is recognised over
the period of the football season as home matches are played.
Intangible assets- acquired players' registrations
Transfer fees and amounts paid to third parties for player registrations are
capitalised as intangible fixed assets and are amortised on a straight line
basis over the period of the respective player's initial contract. Any transfer
fees payable as a result of the occurrence of one or more uncertain future
events are capitalised when it is probable such an event will occur.
Player registrations are assessed on an annual basis and impairment losses
arising are charged to the income statement in the period in which they arise.
Any surpluses arising are not accounted for.
Player signing-on fees are expensed to the income statement as wages and
salaries as they are incurred. The profit/(loss) on the disposal of a player
registration is calculated after charging any signing-on fees which become
payable as a result of the disposal.
Acquired players' registrations are classified as 'Assets held for sale' on the
balance sheet if, at any time, it is considered that the carrying amount of a
registration will be recovered principally through a sale transaction rather
than through continuing use. At the time of reclassification the measurement of
the registration is the lower of (a) fair value (less selling costs) and (b)
carrying value. Amortisation of the asset is suspended at the time of
reclassification, although impairment charges are made if applicable.
Property, plant and equipment
Leased assets
Assets acquired under finance leases and similar hire purchase contracts are
capitalised and the outstanding future lease obligations are included within
borrowings, while the interest elements are charged to the income statement over
the period of the lease to produce a constant rate of charge on the balance of
capital repayments outstanding.
Operating lease rentals are charged to the income statement on a straight line
basis over the term of the lease.
Owned assets
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses.
Depreciation
Depreciation is charged to the income statement to write off the cost of
property, plant and equipment less estimated residual value, on a straight line
basis, over their estimated useful lives as follows;
Freehold buildings- 50 years
Leasehold land and buildings- 50 years
Plant and equipment- 4 to 40 years
No depreciation is provided on assets in the course of construction. The
residual value is assessed annually.
Inventories
Inventories, which comprise goods for resale, are stated at the lower of cost
and net realisable value. Cost is determined on a first-in-first-out basis.
Deferred income
Deferred income comprises amounts received from capital grants, sponsorship,
hospitality and season ticket income. Capital grants are transferred to the
income statement on a straight line basis over the estimated useful lives of the
assets to which they relate. Other deferred income is released to the income
statement on a straight line basis over the period to which it relates.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax
is recognised in the income statement except to the extent that it relates to
items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the balance
sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised.
Interest bearing borrowings
Interest bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest
bearing borrowings are stated at amortised cost with any difference between cost
and redemption being recognised in the income statement over the period of the
borrowings on an effective interest basis.
Employee benefits
Defined contribution plan
The Group operates a defined contribution pension scheme for employees. The
assets of the scheme are held separately from those of the Group. The annual
contributions payable are charged to the income statement.
Impairment
The carrying value of the Group's assets other than inventories and deferred tax
assets, are reviewed at each balance sheet date to determine whether there is
any indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
A cash-generating unit is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows from
other assets or groups of assets.
Trade and other payables and receivables
Trade and other payables and receivables on normal terms are stated at their
nominal value.
Other payables on deferred terms, in particular the purchase of players'
registrations, are recorded at their fair value on the date of the transaction
and subsequently at amortised cost.
Other receivables on deferred terms, in particular the proceeds from sales of
players' registrations are recorded at their fair value at the date of sale.
Financing costs/income
Finance costs comprise interest payable on borrowings, calculated using the
effective interest rate method, interest receivable on funds invested and
foreign exchange gains and losses.
The discounting of the deferred payments for the purchase of player
registrations produces a notional interest payable amount and this is charged to
finance costs.
The discounting of the deferred receipts for sales of player registrations
produces a notional interest receivable amount and this is credited to finance
income.
Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation.
For more information please contact:
Kevin Abbott, Preston North End: 0870 442 1964
David Youngman, WH Ireland Limited: 0161 832 2174
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FKFKBPBKDCNB
|