RNS Number:2481R
Southampton Leisure Holdings PLC
01 April 2008
SOUTHAMPTON LEISURE HOLDINGS PLC
INTERIM REPORT 2007
CHAIRMAN'S STATEMENT
INTERIM REPORT 2007
I have pleasure in presenting the Interim Report to shareholders for the six
months ended 31 December 2007. The financial information presented in this
report has been prepared in accordance with the principles of first time
adoption of IFRS using the accounting policies that are expected to be
applicable for the year ended 30 June 2008.
FINANCIAL REVIEW
The accounts reflect the Club's third consecutive year in the Championship and
show a substantial drop in revenue from �12.8m to �7.1m, but a reduced loss
after taxation of �0.7m (2006:�2.6m), largely attributable to a profit on
disposal of players of �9.1m (2006:�0.9m).
REVENUE �7.1M (2006:�12.8M)
Matchday income reduced from �5.8m to �3.9m. The revenue reduction arises from
fewer games played, lower attendances and reduced season ticket prices. For the
six months to 31 December 2007 12 home league games were played at average
attendances of 20,900; this compares with 13 league games for the six months to
31 December 2006 at an average attendance of 22,852. Whilst we are delighted
that the number of season tickets sold increased for the 2007/08 season from
11,900 to 13,300, this was achieved at reduced prices of approx. 20%. Clearly
matchday sales and attendances have been affected by the disappointing team
performances.
Broadcasting income reduced from �4.0m to �1.4m. In its third year in the
Championship the Club no longer benefits from the parachute payment from the
Premier League, which was worth approx. �6.7m. The Club does however now receive
a solidarity payment from the Premier League of �1.3m for the 2007/08 season
based on finishing sixth in the league in the 2006/07 season; �0.65m of this has
been accounted for in the first half of the year.
Commercial income reduced from �2.9m to �1.9m. Most areas of commercial income
are down on the comparable period. In particular retail income was down �0.5m as
the 2007/08 season is the second year of the home kit. The comparable period
results include revenue from the charity Saints in the Community which is no
longer consolidated into the Group accounts.
OPERATING EXPENSES �14.4M (2006:�14.4M)
Cost of sales increased from �11.1m to �11.7m. Whilst savings were made in
matchday and other operational costs the increase in cost of sales was due to
increased payments to players and coaches. Player and coaches' wages increased
from �4.9m to �6.1m. With the loss of the Premier League parachute payment
several key players were sold in the summer to generate much needed cash. The
Board backed its manager, George Burley, with the maximum available resources to
strengthen the squad with a view to making a further challenge for promotion.
Experienced players were added such as Saganowski, Safri, Thomas, John, and
Euell, as well as loan signings such as Dailly, Hammill and Bennett.
Regrettably, despite having what is regarded as one of the strongest squads in
the Championship, the challenge for promotion hasn't materialised, and at the
time of writing the club finds itself fighting for survival in the Championship.
Administrative Expenses reduced from �3.3m to �2.7m across most areas of the
business. Included in administrative expenses are the termination payments made
to the former Plc Chairman, Chief Executive and Commercial Director.
PLAYER TRADING �7.5M PROFIT (2006: �0.4M LOSS)
Five new players were added to the squad at a cost of �2.7m, this compares with
six new players at a cost of �6.6m in the prior period. The amortization of
players' registrations increased from �1.3m to �1.6m.
The significant profit on player disposals of �9.1m arises from the sale of
Baird to Fulham, Best to Coventry, Jones to Sunderland and Pele to West Brom.
Since the period end an additional �2.5m has been received from contingent
transfer fees.
CASH FLOW
The net cash outflow for the period was �10.6m (2006: �3.1m), and cash and cash
equivalents at 31 December was overdrawn by �5.8m (2006: �0.3m overdrawn).
Transfer fees receivable and still outstanding for players sold as at 31
December 2007 was �6.4m; all this cash will be received by August 2008.
The Board confirms that it is working closely with and has the support of its
bankers, but would draw your attention to the Going Concern note on page 8 of
this Interim Report.
FOOTBALL UPDATE
In January 2008, the first team Manager, George Burley accepted the position of
managing the national team of Scotland. We thank George for his contributions to
the Club and wish him every success in his endeavours with Scotland. The team
was led for a short period by Jason Dodd and John Gorman whilst the Board
considered the most appropriate course of action to address the vacant first
team manager's position. The Board is also grateful to Jason and John for their
help during this period.
After considering a number of highly respected candidates for the position, your
board was delighted to announce the appointment of Nigel Pearson as Manager. An
exciting young English Manager, Nigel brings considerable organisational and
motivational experience and has introduced a structured, analytical and
scientific approach to the game which will eventually put the Club in good
stead. As with George, we will try to back Nigel as much as we can by providing
as much resource into the football element of the business as is feasible under
difficult fiscal circumstances.
On the playing side, Grzegorz Rasiak went on loan to Premier side Bolton and
Rudi Skacel elected to go on loan to Bundesliga side Hertha Berlin. Both players
are on loan until the end of the season at which time they will return to the
Club. We were very pleased to convert the loan of Andrew Davies from
Middlesbrough into a permanent signing and look forward to his continuing
presence as an anchor in defence.
At the time of writing, after 40 games our team sits 19th position in the League
table having accrued 46 points. This is obviously very disappointing compared to
last year when at the same point in the season our team had accumulated 63
points and were sitting 7th in the table. It is however very comparable to our
first year in the Championship when we experienced a management change in the
middle of the season at which time we sat 20th in the table having accumulated
only 43 points after 40 games. We have finished strongly the past two years and
your Board feels it has brought in the right Manager to work with the squad with
a view to consolidating our position in the Championship this year and pushing
on next year.
BOARD CHANGES
On 18 December 2007, following the failure of the SISU proposal (see below), Ken
Dulieu resigned as Chairman of Southampton Leisure Holding Plc, Jim Hone
resigned as Chief Executive of Southampton Leisure Holdings Plc and Southampton
Football Club Ltd and Andy Oldknow resigned as Commercial Director.
I am pleased to report that Lee Hoos, formerly Operations Director, and acting
Chief Executive since 18 December 2007, has been formally appointed Chief
Executive of the Company.
FUNDING
The Board announced on 22 October 2007 that it had agreed in principle to
proceed with a formal indicative offer of investment from SISU Capital Limited
('SISU'). The proposal wasn't however acceptable to the major shareholders in
its current form and SISU gave no indication that they were willing to make any
substantive changes to their indicative offer. On 14 December 2007 Coventry City
announced that the terms of an offer they had received from SISU had been
accepted, at which time SISU withdrew its interest in Southampton.
The Board remains very focused on achieving new funding or investment for the
Company and is working hard with its financial advisers Seymour Pierce to
attract new investment.
On 4 February 2008 in an announcement to the London Stock Exchange the Board
confirmed that it was in discussions with certain third parties in relation to
an investment in or possible offer for the Company. There is no certainty that
any such offer or investment will be made and discussions remain at an early
stage. Further announcements will be made in due course as and when necessary.
SUMMARY & OUTLOOK
The relegation of Southampton Football Club from the Premier League in 2005 and
the subsequent failure to win back promotion to that level during the two year
period while parachute payments were still being received have shaped and
continued to exert an overwhelming influence on the state of the Company's
finances. The interim accounts speak for themselves in that respect. Significant
strengthening of the team on the field can only come with appropriate investment
in the Company.
Keith St John Wiseman
Acting Chairman
28 March 2008
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2007
6 months 6 months Year
ended ended ended
31 31 30 June
december December
2007 2006 2007
Unaudited Unaudited Unaudited
Note �'000 �'000 �'000
Revenue 3 7,139 12,823 23,269
Operating expenses (excluding player (14,433) (14,422) (27,193)
amortisation)
Loss from operations before player (7,294) (1,599) (3,924)
amortization and trading
Amortisation of players' registrations (1,550) (1,289) (2,566)
Profit on disposal of players' 9,096 921 7,554
registrations
Profit/(Loss) From Operations 252 (1,967) 1,064
Financial income 212 77 150
Financial expenses (1,084) (1,064) (2,154)
Loss before taxation (620) (2348,954) (940)
Taxation expense (75) 217
Loss for the Period attributble to (695) (2,606) (723)
equity shareholders of the Parent
Loss Per share - Basic and Diluted 5 (2.47p) (9.28p) (2.57p)
Consolidated statement of changes in equity
for the six months ended 31 December 2007
FOR THE SIX MONTHS ENDED 31 DECEMBER 2007:
Share Share Other Retained
capital premium reserves earnings Total
�'000 �'000 �'000 �'000 �'000
Balance at 1 July 2007 1,405 3,340 1,050 1,494 7,289
Loss for the period - - - (695) (695)
Balance at 31 December 2007 1,405 3,340 1,050 799 6,594
For the six months ended 31 December 2006:
Capital
Share Share redemption Retained
capital premium reserve earnings Total
�'000 �'000 �'000 �'000 �'000
Balance at 1 July 2006 1,405 3,340 1,050 2,217 8,012
Loss for the period - - - (2,606) (2,606)
Balance at 31 December 2006 1,405 3,340 1,050 (389) 5,406
For the Year ended 30 June 2007:
Capital
Share Share redemption Retained
capital premium reserve earnings Total
�'000 �'000 �'000 �'000 �'000
Balance at 1 July 2006 1,405 3,340 1,050 2,217 8,012
Loss for the period - - - (723) (723)
Balance at 30 June 2007 1,405 3,340 1,050 1,494 7,289
Consolidated Balance sheet
as at 31 December 2007
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Unaudited
�'000 �'000 �'000
Assets
Non-Current assets
Property, plant and equipment 32,963 34,147 33,845
Investment property 1,100 790 1,100
Intangible assets 5,960 7,297 5,402
40,023 42,234 40,347
Current assets
Inventories 443 481 383
Trade and other receivables 8,398 4,108 2,466
Cash and cash equivalents 299 2,009 4,796
9,140 6,598 7,645
Total assets 49,163 48,832 47,992
Liabilities
Non-Current Liabilities
Financial liabilities 22,379 22,964 23,104
Trade and other payables - - 230
Deferred grant income 3,977 4,070 4,023
Provisions 139 906 500
Deferred tax 1,857 1,651 1,782
28,352 29,591 29,639
Current Liabilities
Bank overdraft 6,134 2,301 -
Trade and other payables 7,061 10,714 10,088
Deferred grant income 92 92 92
Financial liabilities 930 728 884
14,217 13,835 11,064
TotaL Liabilities 42,569 43,426 40,703
Net assets 6,594 5,406 7,289
Equity
Issued share capital 1,405 1,405 1,405
Share premium 3,340 3,340 3,340
Capital redemption reserve 390 390 390
Merger reserve 660 660 660
Retained earnings 799 (389) 1,494
Total equity attributable to the 6,594 5,406 7,289
equity holders of the Parent
Consolidated statement of Cash flows
For the six months ended 31 December 2007
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Unaudited
�'000 �'000 �'000
Cash flow From operating activities
Loss for the period before taxation (620) (2,954) (940)
Adjustments for:
Finance expenses 1,084 1,064 2,154
Finance income (212) (77) (150)
Amortisation of intangible non-current 1,550 1,341 2,669
assets
Impairment of intangible non-current - 234 684
assets
Profit on disposal of players' (9,096) (921) (7,554)
registrations
Profit on sale of subsidiaries (30) - -
Depreciation of property, plant and 895 1,097 1,573
equipment
Capital grants release (46) (46) (93)
(Increase)/decrease in trade and other (731) 207 1,031
receivables
Decrease/(increase) in inventories (61) (77) 21
(Decrease)/increase in trade and other (2,137) 1,685 1,071
payables
Cash flow from Operations (9,404) 1,553 466
Interest paid (2,019) (2,027) (2,154)
Interest received 38 77 150
Net Cash flow from Operating (11,385) (397) (1,538)
Activities
Cash flows from investing activities
Acquisitions of property, plant and (61) (169) (184)
equipment
Proceeds from sale of subsidiaries 128 - -
undertakings
Acquisitions of players' registrations (3,169) (5,517) (6,672)
Proceeds from sale of players' 4,569 3,595 11,167
registrations
Net Cash flow From investing 1,467 (2,091) 4,311
Activities
Cash FLOWs FrOm FinanCinG aCtiVities
Repayments of borrowings (713) (592) (765)
net Cash FLOW FrOm FinanCinG (713) (592) (765)
aCtiVities
Net decrease in cash and cash (10,631) (3,080) 2,008
equivalents
Cash and cash equivalents at start of 4,796 2,788 2,788
period
Cash and Cash equivalents at end of (5,835) (292) 4,796
Period
Analysed as:
Cash and cash equivalents 299 2,009 4,796
Bank overdraft (6,134) (2,301) -
(5,835) (292) 4,796
NOTES TO THE ACCOUNTS
For the six months ended 31 December 2007
1. ACCOUNTING POLICIES
The financial statements are prepared using International Accounting Standards
(IAS) and International Financial Reporting Standards (IFRS), endorsed by the
European Union, for the first time.
Basis of Preparation
The Group had previously prepared its financial statements under generally
accepted accounting principles in the United Kingdom ('UK GAAP'). With effect
for periods commencing on or after 1 January 2007, the Group is required to
prepare its financial statements in accordance with International Financial
Reporting Standards ('IFRS'), as endorsed for use in the European Union.
The financial information presented in this report has been prepared in
accordance with the principles of first time adoption of IFRS using the
accounting policies that are expected to be applicable for the year ended 30
June 2008.
Going concern
The Group made a further loss for the period, had net current liabilities at the
period end, and currently manages its working capital requirement through a bank
overdraft facility which is repayable on demand. The current facility is due to
be renewed in June 2008. The Directors believe the facility will be renewed at
that time.
The Directors have prepared cash flow forecasts for the 12 months to March 2009,
which include the sale of various assets and cost reductions and rely on the
continued support of the bank and the loan note holders. On this basis the
Directors consider it appropriate to prepare the accounts on the going concern
basis.
In the event that the Group's bankers do not renew the facility, alternative
financing would need to be found for the Group to continue as a going concern,
and the Directors continue to explore opportunities for finance from both
external and internal sources. The above matters indicate the existence of a
material uncertainty which may cast doubt about the Group's ability to continue
as a going concern.
The accounts do not include any adjustments that would result if the Group is
unable to continue as a going concern.
Basis of Consolidation
The consolidated accounts report the results of the Company and its subsidiaries
at 31 December 2007 for the purpose of these interims. Where subsidiaries are
acquired or disposed of during the year, the consolidated income statement
includes only the results for the part of the year for which they are
subsidiaries.
Goodwill
Goodwill represents the excess of the cost of a business combination over the
interest in the fair value of identifiable assets, liabilities and contingent
liabilities acquired. Cost comprises the fair value of assets given, liabilities
assumed and equity instruments issued, plus any direct costs of acquisition.
Goodwill is capitalised as an intangible asset with any impairment in carrying
value being charged to the consolidated income statement. Where the fair value
of identifiable assets, liabilities and contingent liabilities exceed the fair
value of consideration paid, the excess is credited in full to the consolidated
income statement on the acquisition date.
Revenue
Revenue represents the fair value of the consideration receivable from the
principal activities of the Group, excluding transfer fees receivable, and is
stated net of value added tax. Revenue is split into three main categories, as
follows:
Matchday
Includes match tickets from league and cup games, matchday corporate hospitality
and catering and programme sales. Matchday income is recognised when related
matches are played; income from advance season ticket sales is deferred
accordingly.
Broadcasting
Includes distributions from the Football League and the Premier League
broadcasting agreements, together with local radio broadcasting rights.
Broadcasting income is recognised over the financial period to which it relates.
Commercial
Includes revenue from sponsorship, merchandising, conference and banqueting and
all other revenue sources. Sponsorship income is recognised over the duration of
the contract. Other commercial income is recognised at the point of sale.
Intangible Assets
The element of each player's transfer fee which relates to his registration is
capitalised at fair value as an intangible asset and amortised over the period
of his contract including any agreed extensions, subject to any provision for
impairment. Contingent fees payable, which are dependent upon the number of
first team appearances and international debuts made, are capitalised in the
period when it is considered probable that the conditions of the contract will
be satisfied.
The profit or loss arising out of the disposal of players' registrations
represent the difference between the consideration receivable, net of any
transaction costs, and the unamortised cost of the intangible asset.
Contingent transfer fees receivable are recognised once the contingent
conditions have been met.
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, the measurement of
the registration is the lower of (a) fair value (less costs to sell) and (b)
carrying value. Amortisation of the asset is suspended at the time of
reclassification, although impairment charges still need to be made if
applicable.
Property, plant and equipment
Property, plant and equipment are stated at cost net of depreciation and any
provision for impairment.
Depreciation
Depreciation is provided on all property, plant and equipment, other than
freehold land, investment properties and assets under development. It is
provided at rates calculated to write off the cost or valuation, less estimated
residual value based on prices prevailing at the date of acquisition or
revaluation, of each asset evenly over its expected useful life, as follows:
Stadium 5 to 50 years
Freehold buildings 10 to 50 years
Leasehold improvements Terms of the lease
Motor vehicles 4 to 5 years
Fixtures, fittings and 4 to 10 years
equipment
The variable useful lives for the stadium reflect the different components which
comprise the stadium.
Investment Property
The Group's investment property is revalued annually at open market value, with
changes in the carrying value recognised in the consolidated income statement.
Signing On Fees
Signing on fees are charged, on a straight line basis, to the income statement
over the duration of the player's contract.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net
realisable value is based on estimated selling price. Provision is made for
obsolete, slow-moving or defective items where appropriate.
Leased assets
Finance leases are those which transfer substantially all of the risks and
rewards of ownership to the lessee. Assets held under finance leases are
capitalised as property, plant and equipment and are depreciated over the
shorter of the lease term or their useful economic life. The capital elements of
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.
All other leases are operating leases, the rentals on which are charged to the
income statement on a straight-line basis.
Pension Costs
For defined contribution schemes the amount charged to the consolidated income
statement in respect of pension costs is the contributions payable in the year.
Differences between contributions payable in the year and contributions actually
paid are shown as either accruals or prepayments in the balance sheet.
The Group makes payments to the Football League Limited Pension and Life
Assurance Scheme (FLLPLAS) which is a multi employee scheme. A reliable
identification of the assets and liabilities cannot be made. In accordance with
IAS 19 'Employee Benefits' the contributions to the scheme are accounted for as
though the scheme was a defined contribution scheme.
Cash and Cash Equivalents
Cash and cash equivalents comprises cash balances and short-term deposits.
Financial Instruments
Financial instruments are recognised when the Group becomes party to the
contractual provisions of the instrument. The Group holds the following
financial assets and liabilities.
Trade and Other Receivables
These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They arise principally through
the provision of goods and services to customers. They are initially recognised
at fair value plus transaction costs that are directly attributive to their
acquisition or issue, and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Trade and Other Payables
Trade payables on normal terms are not interest bearing and are stated at their
nominal value. Trade payables on extended terms, particularly in respect of the
costs of acquiring players' registrations, are recorded at their fair value at
the date of acquisition of the asset to which they relate. They are then
subsequently carried at amortised cost using the effective interest method.
FinanciaL Liabilities
Financial liabilities include loan notes, bank borrowings and leases. Interest
bearing loan notes, bank loans and overdrafts are initially recognised at fair
value net of any transaction costs directly attributable to the issue of the
instrument. Such interest bearing liabilities are subsequently measured at
amortised cost using the effective interest rate method, which ensures that any
interest expense over the period to repayment is at a constant rate on the
balance of the liability carried in the balance sheet. Interest expense in this
context includes initial transaction costs as well as any interest payable while
the liability is outstanding.
Deferred taxation
Deferred income tax is calculated using the balance sheet asset-liability method
of tax allocation for all temporary differences arising between the book value
of assets and liabilities and their tax bases, except for differences arising on
the initial recognition of goodwill.
A deferred income tax asset is recognised only to the extent that it is probable
that there will be future taxable profits on which this asset can be charged.
Deferred income tax assets are reduced to the extent that it is no longer likely
that a sufficient taxable benefit will arise.
Deferred taxation balances are calculated at rates either enacted or
substantively enacted at the balance sheet date and are shown on the balance
sheet separately from current tax assets and liabilities and categorised among
non-current items.
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to offset current tax assets and liabilities and the deferred
tax assets and liabilities relate to taxes levied by the same tax authority on
either the same taxable Group company or different Group entities which intend
to either settle current tax assets and liabilities on a net basis, or to
realise the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
Impairment of Non-financial Assets
(Excluding inventories, investment properties and deferred tax assets)
Impairment tests on goodwill and other intangible assets with indefinite useful
economic lives are undertaken annually at the financial year end. Intangibles
with definite useful economic lives are reviewed annually for signs of
impairment. Other non-financial assets are subject to impairment tests whenever
events or changes in circumstances indicate that their carrying amount may not
be recoverable. Where the carrying value of an asset exceeds its recoverable
amount (i.e. the higher of value in use and fair value less costs to sell), the
asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual
asset, the impairment test is carried out on the asset's cash-generating unit
(i.e. the lowest group of assets in which the asset belongs for which there are
separately identifiable cash flows).
Impairment charges are included in the administrative expenses line items in the
consolidated income statement, except to the extent they reverse gains
previously recognised in the consolidated statement of recognised income and
expense. An impairment loss recognised for goodwill is not reversed.
Borrowing Costs
Interest incurred on the loans used to fund the construction of the Stadium were
capitalised as part of its cost. The group does not incur any other interest
costs that qualify for capitalisation under IAS 23 'Borrowing costs'.
Football Trust Grants
Grants received from the Football Trust in respect of ground improvements are
treated as deferred income and amortised over the period of the related assets'
useful economic lives.
Dividends
Equity dividends are recognised when they become legally payable. Interim equity
dividends are recognised when paid. Final equity dividends are recognised when
approved by the shareholders at an Annual General Meeting.
Share-Based Payments
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to the income statement over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number of
equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period is based on
the number of options that eventually vest. Market vesting conditions are
factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and after
the modification, is also charged to the income statement over the remaining
vesting period.
2. STATUS OF FINANCIAL INFORMATION
The comparative figures included in this report for the six months ended 31
December 2006 and the full year ended 30 June 2007 are restated for IFRS and are
unaudited.
The comparatives for the full year ended 30 June 2007 are based on the latest
published audited accounts, but are subject to unaudited restatement to IFRS as
endorsed for use in the European Union. They are not the Company's full
statutory accounts for that year. A copy of the statutory accounts for that year
which are prepared in accordance with UK GAAP has been delivered to the
Registrar of Companies. The auditor's report on those accounts was unqualified,
but did include an emphasis of matter paragraph with regard to the going concern
position and did not contain a statement under section 237(2)-(3) of the
Companies Act 1985.
3. REVENUE
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Unaudited
�'000 �'000 �'000
Matchday 3,853 5,815 10,498
Broadcasting 1,390 3,992 8,105
Commercial 1,851 2,937 4,533
Property 45 79 133
7,139 12,823 23,269
4. DIVIDENDS
The Board is not declaring an interim dividend (2006: nil).
5. LOSS PER SHARE
The calculation of basic and diluted loss per share is based on the loss for the
period and on the weighted average number of ordinary shares in issue and
ranking for dividend in the period:
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Unaudited
Loss for the period (�'000) (695) (2,606) (723)
Weighted average number of ordinary 28,091 28,091 28,091
shares ('000)
Loss per share (2.47p) (9.28p) (2.57p)
As at 31 December 2007 the number of options which could potentially dilute
basic earnings per share is the future was 200,000 (2006: 200,000). These have
not been included is the calculation of diluted earnings per share because they
are anti-dilutive for the period presented.
6. CONTINGENT LIABILITIES AND ASSETS
Excluding items provided in the balance sheet, at 31 December 2007 Southampton
Football Club Limited had a liability to pay up to �1,182,000 (June 2007:
�1,589,000; December 2006: �2,170,000) to other clubs in respect of players
under contracts, dependent upon the number of first-team appearances and
international appearances made.
At 31 December 2007 Southampton Football Club Limited has contingent sums
receivable from other clubs amounting to �2.5 million (June 2007: �nil; December
2006: �1 million) in respect of players under contract, dependent upon the
number of first-team appearances and international appearances made. Due to the
uncertainty of receipt of contingent assets it is only practical to disclose at
the point the amount likely to be received.
7. INTERIM RESULTS
These results were approved by the Board of Directors on 28 March 2008 and
announced to the London Stock Exchange on 31 March 2008. Further copies are
available to the public at the Company's registered office, St Mary's Stadium,
Britannia Road, Southampton SO14 5FP.
8. TRANSITION TO IFRS
The consolidated financial information for the six months ended 31 December 2007
and the year ended 30 June 2007 and the opening balance sheet at 1 July 2006
have been prepared using International Financial Reporting Standards (IFRS) for
the first time.
The Group's transition date to IFRS is 1 July 2006. The rules for first-time
adoption of IFRS are set out in IFRS 1 'First time adoption of international
reporting standards.' In preparing the IFRS financial information, these
transition rules have been applied to the amounts reported previously under
generally accepted accounting principles in the United Kingdom ('UK GAAP'). IFRS
1 generally requires full retrospective application of the Standards and
Interpretations in force at the first reporting date.
Changes in Accounting Policies - First-time Adoption
In preparing these financial statements, the group has elected to apply the
following transitional arrangements permitted by IFRS 1:
* The carrying amount of capitalised goodwill at 30 June 2006 that arose
on business combinations accounted for using the acquisition method under UK
GAAP was frozen at this amount and tested for impairment at 1 July 2006.
* Goodwill written off directly to reserves on business combinations
effected before 1 January 1998 has not retrospectively been capitalised and
will not be transferred to the income statement on the disposal of a
subsidiary to which it relates.
The tables on the following pages show the reconciliations of the Consolidated
Income Statements for the six months ended 31 December 2006 and the year ended
30 June 2007, and the Consolidated Balance Sheets as at 31 December 2006, 30
June 2007 and 1 July 2006 (opening balances as at date of transition).
IFRS RESTATEMENT OF INCOME STATEMENT
For the six months ended 31 December 2006
UK GAAP Adjustment IFRS
�'000 �'000 �'000
Revenue 12,823 12,823
Operating expenses (14,422) (14,422)
Loss from operations before player (1,599) (1,599)
trading
Amortisation of players' registrations (1,289) (1,289)
Profit on disposal of players' 1,421 (500) 921
registrations
Profit/(Loss) From Operations (1,467) (500) (1,967)
Financial income 77 77
Financial expenses (1,064) (1,064)
Loss before taxation (2,454) (500) (2,954)
Taxation expense 331 17 348
Loss for the Period attributable to (2,123) (483) (2,606)
Equity Shareholder of the Parent
Loss Per share - Basic and Diluted (7.56p) (9.28p)
IFRS RESTATEMENT OF INCOME STATEMENT
For the Year ended 30 June 2007
UK GAAP Adjustment IFRS
�'000 �'000 �'000
Revenue 23,269 23,269
Operating expenses (27,193) (27,193)
Loss from operations before player (3,924) (3,924)
trading
Amortisation of players' registrations (2,566) (2,566)
Profit on disposal of players' 7,524 30 7,554
registrations
Profit/(Loss) From Operations 1,034 30 1,064
Financial income 150 150
Financial expenses (2,154) (2,154)
Loss before taxation (970) 30 (940)
Taxation expense 284 (67) 217
Loss for the Period attributable to (686) (37) (723)
Equity shareholder of the Parent
Loss Per share - Basic and Diluted (2.44p) (2.57p)
IFRS RESTATEMENT OF CONSOLIDATED BALANCE SHEET
As at 30 June 2006
UK GAAP Adjustment IFRS
�'000 �'000 �'000
Assets
Non-Current assets
Property, plant and equipment 35,076 35,076
Investment property 790 790
Intangible assets 3,757 3,757
39,623 39,623
Current assets
Inventories 404 404
Trade and other receivables 6,466 (500) 5,966
Cash and cash equivalents 4,700 4,700
11,570 (500) 11,070
TotaL assets 51,193 (500) 50,693
Liabilities
Non-Current Liabilities
Financial liabilities 23, 565 23,565
Trade and other payables 590 590
Deferred grant income 4,308 4,308
Provisions 833 833
Deferred tax 1,757 242 1,999
31,053 242 31,295
Current Liabilities
Bank overdraft 1,912 1,912
Trade and other payables 8,695 8,695
Deferred grant income 92 92
Financial liabilities 687 687
11,386 11,386
TotaL Liabilities 42,439 242 42,681
Net assets 8,754 (742) 8,012
Equity
Issued capital 1,405 1,405
Share premium 3,340 3,340
Capital redemption reserve 390 390
Merger reserve 660 660
Retained earnings 2,959 (742) 2,217
Total Equity Attributal to the Equity 8,754 (742) 8,012
holders of the Parent
IFRS RESTATEMENT OF CONSOLIDATED BALANCE SHEET
As at 31 December 2006
UK GAAP Adjustment IFRS
�'000 �'000 �'000
Assets
Non-Current assets
Property, plant and equipment 34,147 34,147
Investment property 790 790
Intangible assets 7,297 7,297
42,234 42,234
Current assets
Inventories 481 481
Trade and other receivables 5,108 (1,000) 4,108
Cash and cash equivalents 2,009 2,009
7,598 (1,000) 6,598
Total assets 49,832 (1,000) 48,832
Liabilities
Non-Current Liabilities
Financial liabilities 22,964 22,964
Trade and other payables - -
Deferred grant income 4,070 4,070
Provisions 906 906
Deferred tax 1,426 225 1,651
29,366 225 29,591
Current Liabilities
Bank overdraft 2,301 2,301
Trade and other payables 10,714 10,714
Deferred grant income 92 92
Financial liabilities 728 728
13,835 13,835
TotaL Liabilities 43,201 225 43,426
Net assets 6,631 (1,225) 5,406
Equity
Issued capital 1,405 1,405
Share premium 3,340 3,340
Capital redemption reserve 390 390
Merger reserve 660 660
Retained earnings 836 (1,225) (389)
Total equity attributable to the Equity 6,631 (1,225) 5,406
holders of the Parent
IFRS RESTATEMENT OF CONSOLIDATED BALANCE SHEET
As at 30 June 2007
UK GAAP Adjustment IFRS
�'000 �'000 �'000
Assets
Non-Current assets
Property, plant and equipment 33,845 33,845
Investment property 1,100 1,100
Intangible assets 5,402 5,402
40,347 40,347
Current assets
Inventories 383 383
Trade and other receivables 2,936 (470) 2,466
Cash and cash equivalents 4,796 4,796
8,115 (470) 7,645
TotaL assets 48,462 (470) 47,992
Liabilities
Non-Current Liabilities
Financial liabilities 23,104 23,104
Trade and other payables 230 230
Deferred grant income 4,023 4,023
Provisions 500 500
Deferred tax 1,473 309 1,782
29,330 309 29,639
Current Liabilities
Bank overdraft - -
Trade and other payables 10,088 10,088
Deferred grant income 92 92
Financial liabilities 884 884
11,064 11,064
TotaL Liabilities 40,394 309 40,703
Net assets 8,068 (779) 7,289
Equity
Issued capital 1,405 1,405
Share premium 3,340 3,340
Capital redemption reserve 390 390
Merger reserve 660 660
Retained earnings 2,273 (779) 1,494
Total equity attributable to the Equity 8,068 (779) 7,289
Holders of the Parent
1) Following a review of the group's accounting policy for the recognition of
income derived from the sale of players, in light of IFRS requirements and
developing practise in the industry, it is considered most appropriate to
recognise profit when all conditions, including contingent elements, have been
met.
The adoption of this approach has resulted in the deferral of certain sales of
players to the later accounting periods than those in which they were previously
recorded.
2) The deferred taxation adjustment relates to the recognition of temporary
differences on the group's freehold and the revaluation of investment properties
that were not considered timing differences under UK GAAP.
INDEPENDENT REVIEW REPORT
To Southampton Leisure Holdings plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
December 2007 which comprises the unaudited consolidated income statement, the
unaudited consolidated statement of changes in equity, the unaudited
consolidated balance sheet, the unaudited consolidated cash flow statement, and
the related notes.
We have read the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
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.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. 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 authorized 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.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity', issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 31 December 2007 is not prepared, in all
material respects, in accordance with the rules of the London Stock Exchange for
companies trading securities on the Alternative Investment Market.
Emphasis of Matter - Going Concern
In forming our review conclusion, which is not qualified, we have considered the
adequacy of disclosure made in note 1 to the interim financial information
concerning the Group's ability to continue as a going concern. The Group made a
further loss in the period, had net current liabilities at the period end and is
dependent on the continuing support of its bankers and loan note holders. These
conditions, together with the other matters explained in the note, indicate the
existence of a material uncertainty which may cast doubt about the Group's
ability to continue as a going concern. The interim financial information does
not include the adjustments that would result if the Group were unable to
continue as a going concern.
BDO STOY HAYWARD LLP
Chartered Accuntants and Registered Auditors, Southampton, 28 March 2008
This information is provided by RNS
The company news service from the London Stock Exchange
END
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