RNS Number:9802I
Preston North End PLC
20 March 2003
CHAIRMAN'S STATEMENT
The last six months has been a period of significant change at the Club in terms
of management, on and off the field, and within the playing squad.
Financially, the demise of ITV Digital has fundamentally changed the income
structure of the Club; the loss of this contract represents an income shortfall
in excess of #2 million per annum. In the first half year, like-for-like TV
income was #1 million lower than in the comparable period last year.
As a result of this income shortfall, the Club commenced three major
initiatives:
1. A reduction in general overhead. In September 2002 the Club undertook a cost
cutting programme, removing a number of operational positions. In the first
half, reorganisation costs of #228,000 have been charged to the profit and
loss account, which should generate annual savings of #300,000 per annum.
The Board continues to review the cost base.
2. Reduction in the playing staff wage bill. The players' wage bill represents
the largest cost to the Club (last year #4.1million). Prior to the collapse
of ITV Digital, the Board had worked hard to secure the value of the squad
with long term contracts. This time last year, the average contract length
was 28 months. This contractual position means that the Club continues to
carry contractual commitments greater than would be offered in the current
environment.
3. Generation of additional income streams. The Board is currently
investigating opportunities to improve the Club's revenue streams in a
number of areas.
Football
On the playing side, this season must be seen as a transitional year, with the
appointment of Craig Brown as Manager and changes in the squad. Since Craig's
appointment, eight new players have been added to the squad, with three leaving.
The Board and football management recognise that the squad is now too large
and we are actively seeking to reduce numbers.
The first team is currently placed 14th in Division 1 with 47 points and we were
knocked out of the FA Cup in Round 3. This represents a disappointing return on
the season to date. However, the squad has been improved with the acquisition
of eight new players, including five with experience at full international
level. In addition, the youth team won the North West Youth Alliance and is
currently in two semi-finals.
Financial Highlights
For the six months under review, from the corresponding period last year,
turnover fell by 25% from #4.57 million to #3.42 million, primarily as a result
of the failure of ITV Digital. The operating loss (before amortisation and
depreciation) for the period of #658,000 compared to a profit of #602,000 for
the same period last year.
We continue to adopt a prudent policy of amortising player costs over the
initial contract life down to nil. Any gain or loss that arises on player sales
is reflected in the year in which the event occurs. The total operating loss is
#1,450,000 (2001: #149,000) after depreciation and amortisation of #792,000
(2001: #747,000).
The sale of players registrations has generated a profit of #1,333,000 (2001:
#75,000) resulting in a net loss before tax of #163,000 (2001: #142,000 loss).
On 9 October 2002, Hugh Nash resigned as Non Executive Director. On 31 October
2002, Tony Scholes resigned from the post of Chief Executive. Tony made a
considerable contribution to Preston North End for which the Company is
grateful.
The Board has continued to invest in the Club's infrastructure, announcing the
acquisition of the Springfields training ground and recently moving into a new
office facility in the former "Legends" snooker club. This is the first time
the Club has been able to have all its administrative and commercial functions
under one roof, which should greatly enhance efficiency and productivity.
On 18 March 2003, the Club agreed to grant a 60 year lease to the National
Football Museum for a gross premium of #1,975,000 receivable immediately.
Outlook
The first half results (which incorporate 13 of the 23 home league games)
clearly demonstrate the impact of the ITV Digital collapse on the Club and
football in general. The Board continues to work towards a stable financial
position and to improve our prospects within Division 1.
Derek Shaw
Chairman
Preston North End plc
Consolidated profit and loss account
6 Months ended 31 December 12 Months ended 30 June
2002 2001 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
Turnover 3,416 4,567 9,889
Staff costs - normal (2,933) (2,983) (5,962)
Staff costs - reorganisation (228) - -
Other operating charges (913) (982) (2,069)
Operating (loss)/profit before depreciation (658) 602 1,858
and amortisation of player registrations
Depreciation and amortisation of player (792) (747) (1,586)
registrations
Group operating (loss)/profit (1,450) (145) 272
Share of operating loss in joint venture - (4) (4)
Total operating (loss)/profit (1,450) (149) 268
Profit on sale of fixed assets 1,333 75 4,274
Interest receivable and similar income - 18 41
Interest payable and similar charges (46) (86) (178)
(Loss)/profit on ordinary activities before (163) (142) 4,405
taxation
Tax on (loss)/profit on ordinary activities - - (40)
Retained (loss)/profit for the period (163) (142) 4,365
Earnings per share (basic and diluted) (4.9p) (4.3p) 132.4p
Preston North End plc
Consolidated cash flow statement
6 Months ended December 12 Months
ended 30 June
2002 2001 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
Reconciliation of operating (loss)/profit to operating cash flows
Operating (loss)/profit (1,450) (145) 272
Depreciation 206 205 362
Amortisation of player registrations 586 542 1,224
Release of grants (17) (16) (40)
Decrease in stocks 11 20 2
(Increase)/decrease in debtors (402) 329 737
(Decrease)/increase in creditors (947) 1,008 (132)
(2,013) 1,943 2,425
Net cash flow from operating activities (2,013) 1,943 2,425
Return on investment and servicing of finance (46) (68) (137)
Capital expenditure 465 (2,209) (697)
Acquisitions - (2) (2)
Cash (outflow)/inflow before financing (1,594) (336) 1,589
Financing (269) 523 85
(Decrease)/increase in cash in period (1,863) 187 1,674
Reconciliation of net cashflow to movement in net debt
(Decrease)/increase in cash in period (1,863) 187 1,674
Cash outflow/(inflow) from change in debt 269 (523) 372
New Hire purchase agreements - - (457)
Movement in net debt in period (1,594) (336) 1,589
Net debt at beginning of period (715) (2,304) (2,304)
Net debt at end of period (2,309) (2,640) (715)
Preston North End
Consolidated balance sheet
31 December 31 December 30 June
2002 2001 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
Fixed assets
Intangible assets 2,986 3,166 2,927
Tangible assets 11,961 11,836 12,094
Investments 14 14 14
14,961 15,016 15,035
Current assets
Stocks 27 20 38
Debtors 2,746 1,064 2,870
Cash at bank and in hand 416 792 2,279
3,189 1,876 5,187
Creditors:
Amounts falling due within one year (1,813) (4,513) (3,699)
Net current assets/(liabilities) 1,376 (2,637) (1,488)
Total assets less current liabilities 16,337 12,379 16,523
Creditors: Amounts falling due after (4,700) (5,126) (4,723)
more than one year
Provisions for liabilities & charges (1,057) - (1,057)
Net assets 10,580 7,253 10,743
Capital and Reserves
Called up share capital 3,296 3,296 3,296
Share premium account 7,051 7,051 7,051
Revaluation reserve 998 1,020 998
Capital reserve - - -
Profit and loss account (765) (4,114) (602)
Equity shareholders' funds 10,580 7,253 10,743
Notes
1 The interim financial statements for the six month period
ended 31 December 2002 have been prepared in accordance with the accounting
policies detailed in the financial statements for the year ended 30 June 2002
and were approved by the directors on 19 March 2003.
2 The results for the year ended 30 June 2002 do not constitute
statutory accounts and are extracted from the financial statements for that
period on which the auditors gave an unqualified opinion. A copy of those
statements has been filed with the Registrar of Companies.
3 There were no recognised gains or losses other than the result for
the period.
4 The loss per share of 4.9p, (2001: 4.3p) has been calculated by
dividing the loss for the period of #163,000, (2001: #142,000) by 3,295,679
(2001: 3,295,679), being the weighted average number of ordinary shares in issue
for the period.
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