RNS Number:2624J
West Bromwich Albion PLC
27 March 2003
Date: 27 March 2003
Contact: Jeremy Peace, Executive Chairman
West Bromwich Albion PLC 0121 524 3453
David Bick
Holborn 020 7929 5599
West Bromwich Albion PLC
Interim Results
Highlights
* First season in top flight for 16 years
* Operating loss results from commitment to investment in the future
success of the club
* Significant steps taken to implement long term strategic plan
Jeremy Peace, Chairman, commented:
"Our first season in the Premier League has been an experience savoured by every
stakeholder in the club. It has also reinforced our determination to become a
continuing member of the football elite and our plans for the football club and
the business will increasingly reflect this resolve."
West Bromwich Albion PLC
Interim results for the six months ended 31 December 2002.
Financial Highlights
Unaudited Unaudited Audited
half year ended half year ended year ended
31 Dec 2002 31 Dec 2001 30 Jun 2002
Turnover #14.8m #6.1m #14.3m
(Loss)/profit before tax (#0.3m) #3.9m #2.6m
(Loss)/earnings per share (175p) 2130p 1179p
Dividend per share - 160p 160p
Average attendances 26,500 20,100 20,900
Season ticket holders 20,000 13,300 14,300
Chairman's Statement
For the first time in 16 years we are competing at the highest level in English
football, which is a credit to the hard work and considerable effort made by our
Manager, Gary Megson and the whole of the playing and coaching staff.
Support this season has been magnificent with average home gates exceeding
26,500 which is not far short of capacity and our third highest since 1959/60.
This betters attendances at a number of other Premiership clubs and illustrates
the depth of our support. In the long term we will have to increase our stadium
capacity nearer to 40,000 to satisfy demand and to compete at the top level on a
sustainable basis.
In August we set up a new scouting system comprising seven UK based scouts
reporting to our chief scout Bobby Hope. Furthermore in September we appointed
our first foreign scout in Denmark and have also expanded our network of
contacts in Europe. We shall continue to strengthen this, enabling us to recruit
players who have been comprehensively researched by the Club.
Part of the challenge faced by the Club in the Premiership has been the
introduction of transfer "windows". During January the Club acquired the
registration of Ifeanyi Udeze initially for six months, a move that continues
our long-term policy of strengthening the playing squad. At 22 he is an
established Nigerian international and is of the requisite quality for the
Premiership.
The January "window" proved frustrating for the Club. Other targets were more
elusive due to a combination of factors which served to make it extremely
difficult to recruit players in a limited timeframe. This has led us to conclude
that, henceforth, the majority of squad strengthening should take place during
the longer summer transfer "window".
We confirm that there is no necessity to sell any players at the end of the
season. If, however, for footballing reasons sales do occur, any proceeds will
be reinvested in the playing squad by way of transfer fees and salaries.
During the six months ended 31st December 2002, the Club recorded a pre-tax loss
of #0.3m on turnover of #14.8m. This compares to a pre-tax profit of #3.9m for
the same period last year, although this included #4.5m profit on the sale of
players. No profit or loss on the sale of players was recorded during this
period. Given the state of the transfer market the Club has carried out an
impairment review of the residual value of player registration costs. This has
given rise to a #4.2m charge which is included in the pre-tax loss and a similar
reduction in the carrying value in the balance sheet. There was no similar
charge last year.
Income in the last six months increased significantly following promotion to the
Premiership. Additional income was generated largely through media-related
sources and it is the Club's aim to reduce its dependence upon this primary
source by growing other income streams. We are committed to strengthening
ticketing, commercial and merchandising revenues, as well as expanding affinity
relationships with other business partners in order to reinvest recurring income
in improving the quality of the playing squad.
We shall continue to maximise income opportunities whilst maintaining a flexible
cost base which allows us to vary expenditure in accordance with revenue. The
major area of cost, besides transfer fees, is that of player wages. The Club's
salary structure has been constructed so that it will adjust depending upon
league status.
This season, the Club invested approximately #9m in payments for player
registrations. It is forecast that the aggregate of this cost together with
player wages in the current year will exceed 65 percent of annual turnover.
Although this is an unsustainably high level it illustrates the importance that
the Club attached to retaining Premier League status in the first season back in
top flight soccer.
At the 31st December net funds were #0.6m as shown in note 6 to the accounts, an
improvement since the year end of #2.8m. Due to the timing of receipts from the
Premier League however, it is expected that cash generation in the second half
of the year will be weaker than in the first six months. In light of this,
although the Club is in a stronger financial position than many of its
competitors, the Board has decided to recommend no payment of an interim
dividend to shareholders.
I am pleased to confirm that the claim by John Mowlem & Co Plc for variations
with regard to the contract for the building of the East Stand has now been
settled at a cost of #0.9m. This is significantly less than the Mowlem's
original #2.2m claim, bringing the total cost of the stand to #7.3m.
Improvements to the Training Ground continue to be made with the majority of the
area currently being fenced. The Pavilion will be extended in time for next
season and will incorporate appropriate facilities for a club of our status.
We are committed to developing our youth policy with a view to achieving Academy
status in due course. The Community Programme continues to prosper with over
60,000 participating children benefiting annually from a variety of initiatives
that include football development, educational and social programmes.
This season we have decided to partner four nominated charities. These are, The
Mayor of Sandwell's Charities, The Beacon Centre for the Blind, The Mary Stevens
Hospice and The Sandwell General Hospital Children's Ward. We shall continue to
select four preferred charities in future seasons, with local interests being
represented wherever possible.
There have been four new Senior Management appointments within the Club. Pauline
Cooke has joined the Club as Director of Operations and will focus upon
providing a better quality of service for our supporters. Trevor Field has
joined the Club as Director of Marketing and will target the improvement of our
non-media revenue streams. Our retailing team has been strengthened by the
appointment of Sarah Winning as Head of Department and we have also created a
Human Resources function for the first time within the organisation with the
recruitment of Neil Smart. These additions bring the overall administration and
support headcount to sixty.
We continue to strive to build a better football club. I remain confident of our
future, which is to become an established Premier League club within five years.
In order to fund infrastructure projects such as stadium improvement during the
next five years it is our present intention to raise additional finance within
the next 12 months. This may involve a mixture of project finance (taking
advantage of current low interest rates) and a more traditional fund raising
from shareholders if stock market conditions permit.
My thanks go to all members of our staff both playing and non-playing, who have
made such important contributions during the last six months.
Jeremy Peace
Chairman
27TH March 2002
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2002
Group Profit and Loss Account Unaudited Unaudited Audited
for the half year ended 31 December 2002 half year ended half year ended year ended
31 Dec 2002 31 Dec 2001 30 Jun 2002
# # #
Turnover 14,757,823 6,098,108 14,276,834
Operating Expenses 8,752,179 5,153,601 12,584,936
------------------ --------------- -----------------
Operating profit before write off of 6,005,644 944,507 1,691,898
players
contracts and profit on disposal of players contracts
Write off of players contracts (6,365,207) (1,537,195) (3,525,892)
Profit on disposal of players contracts - 4,519,501 4,519,501
------------------ --------------- -----------------
Operating (loss)/ (359,563) 3,926,813 2,685,507
profit
Interest 14,180 (32,056) (116,756)
------------------ --------------- -----------------
(Loss)/Profit on ordinary activities (345,383) (3,894,757) 2,568,751
before taxation
Taxation 100,000 (915,000) (919,607)
------------------ --------------- -----------------
(Loss)/Profit for the financial period (245,383) 2,979,757 1,649,144
Dividends - (223,840) (223,840)
------------------ --------------- -----------------
Transfer to reserves (245,383) 2,755,917 1,425,304
------------------ --------------- -----------------
(Loss)/Earnings Per Share (175p) 2,130p 1,179p
The profit and loss account reflects the continuing operations of the group. The
group made no material acquisitions and had no discontinued operations.
Movements in reserves are set out in note 5.
Group Statement of Total Recognised Unaudited half Unaudited half Audited
Gains and Losses year ended year ended year ended
31 Dec 2002 31 Dec 2002 30 Jun 2002
# # #
(Loss)/Profit for the financial period (245,383) 2,979,757 1,649,144
Transfer from property development (13,541) (13,542) (27,084)
reserve
------------------ --------------- -----------------
Total recognised gains and losses for (258,924) 2,966,215 1,622,060
the financial period
Note of Historical Cost Profit and
Losses
Reported (loss)/profit on ordinary (345,383) 3,894,757 2,568,751
activities before taxation
Difference between historical cost 45,895 45,619 91,238
depreciation charge and the actual
depreciation charge for the year
calculated on the revalued amount
------------------ --------------- -----------------
Historical cost (loss)/profit on (299,488) 3,940,376 2,659,989
ordinary activities before taxation
Group Balance Sheet Unaudited Unaudited Audited
31 December 2002 31 Dec 2002 31 Dec 2001 30 Jun 2002
# # #
Fixed Assets
Intangible assets 5,694,068 5,184,612 3,795,157
Tangible Assets 21,787,047 19,464,638 22,733,032
------------------ --------------- -----------------
27,481,115 24,649,250 26,528,189
Current assets
Stock 245,689 159,209 108,349
Debtors 3,536,265 3,612,495 3,307,685
Cash at bank 5,442,343 3,883,274 3,024,718
------------------ --------------- -----------------
9,224,297 7,654,978 6,440,752
Creditors
Amounts falling due within one year 13,148,668 5,944,099 8,108,278
------------------ --------------- -----------------
Net current (liabilities)/assets (3,924,371) 1,710,879 (1,667,526)
Total assets less current liabilities 23,556,744 26,360,129 24,860,663
Creditors
Amounts falling due after more than one 6,117,181 8,550,663 6,758,296
year
Provision for liabilities and charges - 1,408,176 175,000 1,812,056
Deferred Tax
Total assets less liabilities 16,031,387 17,634,466 16,290,311
Capital and Reserves
Called up share 1,399,000 1,399,000 1,399,000
capital
Share Premium account 7,613,960 7,613,960 7,613,960
Property Revaluation reserve 5,239,404 5,330,918 5,285,299
Property development reserve 519,161 546,244 532,702
Profit and Loss account 1,259,862 2,744,344 1,459,350
------------------ --------------- -----------------
16,031,387 17,634,466 16,290,311
Movement in Shareholders Funds
(Loss)/profit for the financial period (245,383) 2,979,757 1,649,144
Dividends - (223,840) (223,840)
Release of property development reserve (13,541) (13,542) (27,084)
Movement in shareholder's funds (258,924) 2,742,375 1,398,220
Opening Shareholder's funds 16,290,311 14,892,091 14,892,091
------------------ --------------- -----------------
Closing shareholders funds 16,031,387 17,634,466 16,290,311
------------------ --------------- -----------------
Group Cash Flow Statement Unaudited Unaudited Audited
for the half year ended 31 December 2002 half year ended half year ended year ended
31 Dec 2002 31 Dec 2001 30 Jun 2002
# # #
Net cash inflow/(outflow) from operating activities
Operating (loss)/ (359,563) 3,926,813 2,685,507
profit
Write-off of players contracts 6,365,207 1,537,195 3,525,892
Profit on disposal of players contracts - (4,519,501) (4,519,501)
Depreciation Charge 387,807 261,793 494,012
Amortization of Goodwill 23,750 - -
(Increase)/Decrease in stock (137,340) 15,377 66,237
(Increase)/Decrease in debtors (1,656,647) (1,650,939) 1,650,757
Increase in 4,081,836 2,010,542 1,967,733
creditors
Release of Grant (40,648) (26,599) (54,689)
Transfer from other reserves (13,541) (13,542) (27,084)
------------------ --------------- -----------------
Net cash inflow from operating 8,650,861 1,541,139 5,788,864
activities
Returns on investments and servicing of finance
Interest received 92,051 94,162 180,186
Bank Interest paid (149,807) (234,175) (389,819)
Finance lease interest paid (135) (2,998) (5,074)
------------------ --------------- -----------------
(57,891) (143,011) (214,707)
Capital expenditure and financial
investment
Purchase of players (5,147,988) (2,405,000) (2,754,242)
Sale of players - 4,519,501 1,935,301
Purchase of tangible assets (571,742) (2,640,975) (4,272,702)
Purchase of Goodwill (95,000) - -
------------------ --------------- -----------------
(5,814,730) (526,474) (5,091,643)
Equity dividends - - (223,840)
paid
------------------ --------------- -----------------
Net cash inflow/(outflow) before 2,778,240 871,654 258,674
financing
------------------ --------------- -----------------
Financing
Grants received - - 138,785
Loan - 1,500,000 1,500,000
received
Loan repayments (350,568) (196,471) (547,039)
Finance lease repayments (10,047) (22,883) (56,676)
------------------ --------------- -----------------
(360,615) 1,280,646 1,035,070
------------------ --------------- -----------------
Increase in Cash 2,417,625 2,152,300 1,293,744
------------------ --------------- -----------------
Reconciliation of net cash flow to
movement
in net funds/(debts)
Increase in cash 2,417,625 2,152,300 1,293,744
Cashflow from movement in loans and 360,615 (1,280,646) (896,285)
finance leases
------------------ --------------- -----------------
Movement in net funds/(debt) 2,778,240 871,654 397,459
Net debt at start of period (2,135,785) (2,533,244) (2,533,244)
------------------ --------------- -----------------
Net funds/(debts) at end of period 642,455 (1,661,590) (2,135,785)
Notes to the Interim Report
1 Basis of preparation
The interim results to 31 December 2002, which are unaudited, have been
prepared in accordance with the accounting policies adopted in the accounts
for the year ended 30 June 2002.
2 Financial information
The financial information set out in the interim report does not constitute
annual or group accounts within the meanings of Sections 226 and 227 of the
Companies Act 1985. The results for the year ended 30 June 2002 are an
abridged version of the full accounts for that year which were audited and
reported upon without qualification and have been delivered to the Register
of Companies.
3 Earnings per share
Earnings per share is calculated by dividing the loss after taxation of
#245,383 (December 2001 profit after taxation #2,979,757, June 2002 profit
after taxation #1,649,144) by 139,900 (December 2001 139,900 June 2002
139,900) being the weighted number of shares in issue during the period.
4 Dividends
The Company has not declared a dividend this year (2002- 160p per share)
5 Reserves Profit and Property Share Property
loss account revaluation premium development
reserve account reserve
Group
Balances at 1 July 2002 1,459,350 5,285,299 7,613,960 532,702
Loss for the (245,383)
period
Depreciation on revalued portion of 45,895 (45,895)
property
Transfer to Profit for the Period (13,541)
------------------ --------------- ----------------- --------------
1,259,862 5,239,404 7,613,960 519,161
------------------ --------------- ----------------- --------------
6 Analysis of net funds/(debt) Cash in hand Finance Total
and at bank leases and
loans
At 1 July 2001 1,730,974 (4,264,218) (2,533,244)
Cash flow in the six months to 31 2,152,300 (1,280,646) 871,654
December 2001
------------------ --------------- -----------------
At 31 December 2001 3,883,274 (5,544,864) (1,661,590)
Cash flow in the six months to (858,556) 384,361 (474,195)
30June 2002
------------------ --------------- -----------------
At 30 June 2002 3,024,718 (5,160,503) (2,135,785)
Cash flow in the six months to 31 2,417,625 360,615 2,778,240
December 2002
------------------ --------------- ----------------
At 31 December 2002 5,442,343 (4,799,888) 642,455
------------------ --------------- -----------------
This information is provided by RNS
The company news service from the London Stock Exchange
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