RNS Number:6471G
Loftus Road PLC
3 March 2000
LOFTUS ROAD plc ("Loftus Road")
Announcement of unaudited preliminary results
for the six months to 30 November 1999
Loftus Road plc, the holding company for Queens Park
Rangers FC and Wasps RFC, announces preliminary results
for the six months to 30 November 1999.
- Turnover increased by 21% to #3.4 million (1998-
#2.8 million)
- 26% decrease in the operating loss to #4.3 million
(1998 - #5.8 million)
- Profit on disposal of players' registrations #0.04
million (1998 - #2.22 million)
- Loss before tax #4.6 million (1998 - #3.9 million)
- Improved loss per share at 7.7 pence (1998 - 9.7
pence)
- No interim dividend proposed (1998 - #nil)
- Sale of Wasps training ground at Sudbury for #8.9m
completed in January
Commenting on the announcement, Loftus Road's Chairman,
Chris Wright said:
"Overall I am pleased with the Group's performance to
date and look forward to further improvement in the
second half of the year. We have achieved our stated
objective of increasing revenues whilst reducing costs,
but we are still making substantial operating losses.
Your Board is working tirelessly to ensure that financial
stability can be achieved in the long-term whilst
providing the successful teams that shareholders and fans
want. I consider that the results show that we have taken
our first steps on this long road."
_________________________________________________________
PRESS ENQUIRIES
Loftus Road plc
0208 740 2523
Simon Crane, Group Chief Executive
Buchanan Communications
0207 466 5000
Mark Edwards
Chairman's Statement
Results and Dividend
The Group recorded an operating loss of #4,332,000 (1998
- loss of #5,833,000) before accounting for profit on
disposal of players' registrations of #41,000 (1998 -
profit of #2,216,000). Turnover for the period was
#3,381,000 (1998 - #2,805,000).
The loss per share amounts to 7.7 pence (1998 - loss of
9.7 pence). The Directors do not propose the payment of
an interim dividend (1998 - #nil).
Net assets as at 30 November 1999 amounted to #10,280,000
(1998 - #16,621,000) representing net assets per Ordinary
share of 17.1 pence (1998 - 41.6 pence as previously
reported; 31.5 pence (adjusted for the effects of the
open offer). In accordance with Financial Reporting
Standard 10, no amount is included in the balance sheet
to reflect the value of home grown players or any market
valuation of the playing squad.
Operational Review
(a) Football activities
In the six months to November 1999 we have managed to
maintain the direct costs of our football activities at
the same levels as the comparable period in 1998. This
should be viewed in the light of inbuilt increases in
players' contracts which run far ahead of inflation. In
terms of the effects of player trading, amortisation for
the period has decreased from #941,000 to #674,000 but we
have generated profit on disposal of players'
registrations of only #41,000 compared to #2,216,000 in
the six months to 30 November 1998.
The issue of player sales is one that your Board is
constantly reviewing. In the post Bosman era it has
become increasingly difficult to sell players with
purchasing Clubs recognising the value of picking up
players at the end of their contract for no transfer fee
and players being quite prepared to not resign contracts
in the hope that their future rewards may be greater
because of this. Indeed the last player sold by QPR was
Mike Sheron in February 1999. For Clubs like ourselves
who have historically relied on balancing the books by
player sales, trading conditions in this regard have
become much more difficult.
I am sure that all shareholders would join me in thanking
Gerry Francis for his hard work in turning around QPR's
fortunes from that of relegation prospects last season to
possible play-off prospects this season. The playing
performances of Stuart Wardley and Jermaine Darlington
indicate to me that good players do not need to cost the
earth if they are managed and trained in the right way
(and are indeed assets whose value can grow in the
future). In addition, the purchases of Robert Steiner and
Samuel Koejoe have significantly strengthened our
attacking options. Regrettably injuries have affected our
ability to put out a settled side, but I see a nucleus of
a young stable squad forming which should allow the team
to develop further in future years.
We are now reaching a critical phase of the season where
a run of good results can project teams into play-off
positions. Your Board remains committed to providing
Gerry with every assistance in strengthening the squad,
but we must remain mindful that the Group is still making
a sizeable operating loss. We will continue in our
efforts to decrease the costs of our footballing
activities balanced by increases in revenues in other
areas, yet remaining conscious that decisions on player
purchases must be balanced within the overall financial
framework.
(b) Rugby activities
As with QPR we have been able to maintain the direct
costs of our rugby activities at 1998 levels. Decreases
in players wages resulting from the impact of the salary
cap (at #1,800,000 for the 1999/00 season) have been
offset by increased investment in our youth structure. In
terms of the effects of player trading amortisation has
decreased from #16,000 to #14,000.
London Wasps was well prepared in terms of its playing
squad contracts to remain within the salary cap. We have
focussed on maintaining a young predominantly English
squad rather than contract high cost foreign stars, with
a view to achieving balance within the squad and to
prepare ourselves for the further decrease in the salary
cap in the 2000/01 season. Such is the quality of our
squad that recently 8 players were called up to the
England training party.
Playing performances have been somewhat mixed to date. We
have reached the quarter finals of the European Cup and
the semi finals of the Tetley's Bitter Cup, but have been
inconsistent in Allied Dunbar Premiership One. It is
vital that we finish as high as possible in the League to
secure European Cup rugby for the following season.
Currently I believe that 5th place may be good enough.
With terrestrial broadcast coverage of this competition
and the additional revenues it generates this is our
focus for the remainder of the season and I have been
encouraged by our recent performances against Newcastle
in the Cup and Saracens in the League.
The Rugby World Cup has resulted in only 4 matches being
played at home in the 6 months to 30 November 1999
compared to 7 matches in the comparable period. Currently
the Six Nations Championship will remove further weekend
playing opportunities and I welcome the current
initiatives by the Clubs and the Rugby Football Union to
finally achieve some stability in future playing seasons.
(c) Attendances
Across the two sports average paying attendances at
Loftus Road have increased by some 43% between the two
periods under review. Overall turnover arising from
matchday receipts (which also include programme income,
Cup shares and other match receipts) has increased by
24%. I am delighted with this improvement which reflects
the better marketing of our season tickets and matches
together with better performances on the field. The net
result is that over 165,000 people have attended events
at Loftus Road in the period to 30 November 1999.
For the record season ticket sale volumes have increased
by 9% for QPR and 21% for London Wasps.
(d) Commercial and retail activities
Commercial and retail revenues have shown an overall 3%
increase between the periods. Increases in QPR commercial
revenues and merchandise sales have been offset by a
decrease in London Wasps commercial revenues. Our
commercial department have found trading conditions on
the London Wasps side difficult due to the Rugby World
Cup, which has consumed corporate spend and has taken
away focus from the Club game. Also, as mentioned above,
there have only been 4 home matches in the period
(compared to 7 in the preceding period) and consequently
this has also had an adverse affect on revenues.
Merchandising sales have increased by 52% primarily as a
result of the launch of the QPR Millenium home shirt. I
am delighted that we have also managed to increase both
QPR and London Wasps leisurewear sales. Historically the
launch of a new home shirt has led to a corresponding
decrease in leisurewear sales as consumers focus their
spend on one or the other. The review of product ranges
and changes to the lay out of the shop have certainly
assisted in achieving this excellent result.
In order to continue improvement in our commercial and
retail activities we have outsourced these operations
(together with the box office) to a third party with
effect from 1 December 1999. The advantages to the Group
will be a fresh regime, highly motivated to introduce
superior selling and service techniques and being
remunerated on a performance basis (both financially and
in terms of service levels).
(e) Overhead base
As I mentioned in my last report we have been taking
steps to reduce our cost base. To this end I am very
pleased to note an overall 30% reduction in stadium,
matchday and other direct overhead costs. These savings
have been made across every area of the business and it
is a testament to the management and staff that they have
embraced the culture of looking for value in everything
that they do.
Review of the cost base remains an ongoing exercise. I
hope that you will agree that a giant stride has already
been made, but there remains further work to do.
Sudbury
As previously reported we completed on the sale of 7.4
acres of the London Wasps Training Ground at Sudbury on
25 January 2000. This will bring some #8,900,000 into the
Group, relieving the short term pressure on the Group's
borrowing position. However you should note that the
Group's borrowings at 30 November 1999 totalled some
#9,996,000. It is with this in mind that your Board
remains focussed on prudent cash management.
Outlook
For the first time in 2 years I feel relatively confident
that QPR will not be involved in a relegation fight. Our
performances to date are vastly improved on previous
years and we have only lost one League game at home all
season. In some ways our current position presents a
different set of problems. Being close to the play-off
positions breeds excitement and expectation for everyone
associated with the Club. However your Board needs to
balance what it can do to assist in meeting these
expectations within the bigger picture of the Group's
financial stability on a go forward basis. To this end I
have agreed parameters with Gerry and we continue to work
together to achieve the best possible League finish.
London Wasps have two crucial matches appoaching, a semi
final against Bristol in the Tetley's Bitter Cup and a
quarter final against Northampton in the European Cup.
Nigel Melville has continued his excellent work in
managing a young and committed squad and I believe that
we will see the best of London Wasps in the months to
come.
Regrettably there has been further press about the in-
fighting within Rugby Union. I applaud any initiatives
that will lead to the end of the stop-start economics in
rugby and we have been actively involved in discussions
with all relevant parties. I still remain convinced that
stability in the playing season is key to the success of
both the Club and International game, and I believe that
there is a will to produce a structured season which
makes sense both financially and in playing terms.
The sale of Sudbury requires us to relocate London Wasps
to new training facilities. We have submitted a planning
application to build a new facility at our Twyford Avenue
site and we are currently reviewing the costs of this
together with alternative options. I shall update you on
developments in future reports.
Overall I am pleased with the Group's performance to date
and look forward to further improvement in the second
half of the year. We have achieved our stated objective
of increasing revenues whilst reducing costs, but we are
still making substantial operating losses. Your Board is
working tirelessly to ensure that financial stability can
be achieved in the long-term whilst providing the
successful teams that shareholders and fans want. I
consider that the results show that we have taken our
first steps on this long road.
Chris Wright
Chairman
Consolidated Profit and Loss Account
6 months 6 months Year
to to to
30 November 30 November 31 May
1999 1998 1999
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
Turnover - continuing 2 3,381 2,805 7,070
operations
Playing staff and matchday (4,723) (4,873) (9,734)
costs (676) (811) (1,570)
Stadium and other direct (688) (957) (1,797)
operating costs
Amortisation of players'
registrations
Cost of sales (6,087) (6,641) (13,101)
Gross loss (2,706) (3,836) (6,031)
Administrative expenses (1,626) (1,997) (3,493)
Operating loss - continuing 2 (4,332) (5,833) (9,524)
operations
Profit on disposal of 41 2,216 1,145
players' registrations -
continuing operations
Loss on ordinary activities 2 (4,291) (3,617) (8,379)
before interest and
taxation
Other interest receivable 16 - 1
and similar income
Interest payable and (341) (252) (549)
similar charges
Loss on ordinary activities (4,616) (3,869) (8,927)
before taxation
Tax on loss on ordinary 3 - - -
activities
Retained loss for the (4,616) (3,869) (8,927)
financial period
Loss per share 4 (7.7p) (9.7p) (20.2p)
Diluted loss per share 4 (7.7p) (9.7p) (20.1p)
Consolidated Balance Sheet
As at As at As at
30 November 30 November 31 May
1999 1998 1999
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
Fixed assets
Intangible assets 2,158 5,145 2,275
Tangible assets 21,647 19,588 21,767
23,805 24,733 24,042
Current assets
Stocks 243 215 143
Debtors 948 2,039 1,690
1,182 2,254 1,833
Creditors: amounts falling 5 (14,048) (10,366) (10,304)
due within one year
Net current liabilities (12,866) (8,112) (8,471)
Total assets less current 10,939 16,621 15,571
liabilities
Creditors: amounts falling (659) - (675)
due after more than one year
Net assets 10,280 16,621 14,896
Capital & Reserves
Called up share capital 600 19,985 600
Share premium account 5,258 3,209 5,258
Revaluation reserve 1,084 - 1,084
Profit and loss account 3,338 (6,573) 7,954
Equity shareholders' funds 10,280 16,621 14,896
Consolidated Cash Flow Statement
6 months to 6 months to Year to
30 November 30 November 31 May
1999 1998 1999
(unaudited) (unaudited) (audited)
#'000 #'000 #'000 #'000 #'000 #'000
Net cash outflow from (2,868) (3,806) (7,127)
operating activities (note 6)
Returns on investments and
servicing of finance
Interest received 16 - 1
Interest paid (271) (218) (569)
Interest element of (2) (2) (7)
finance lease rental payments
Net cash outflow from returns (257) (220) (575)
on investment and servicing
of finance
Taxation
UK corporation tax repaid 359 - -
Tax repaid 359 - -
Capital expenditure
Payments to acquire (80) (268) (1,577)
tangible fixed assets -
Receipts from sales of (262) - 43
tangible fixed assets 525 (816) (1,102)
Payments to acquire players' 2,636 4,375
registrations
Receipts from the sale of
players' registrations
Net cash inflow from capital 183 1,552 1,739
expenditure
Cash outflow before financing (2,583) (2,474) (5,963)
Financing
Issue of ordinary share - - 2,598
capital
Share issue costs - - (349)
Debts due within one year:
New secured loans 2,150 - 1,475
Repayment of secured (61) (9) (15)
loans
Debt due beyond one year:
New secured loan repayable - - 675
between two and ten years
Capital element of (4) (18) (41)
finance lease rental
payments
2,085 (27) 4,343
Increase in borrowings in the (498) (2,501) (1,620)
period
Statement of Total Recognised Gains and Losses
6 months 6 months Year
to to to
30 November 30 November 31 May
1999 1999 1999
(unaudited) (unaudited)(audited)
Notes #'000 #'000 #'000
Retained loss for the (4,616) (3,869) (8,927)
financial period
Unrealised surplus on - - 1,084
revaluation of properties
Total recognised gains and (4,616) (3,869) (7,843)
losses in respect of the
financial period
Prior year adjustment - 5,515 5,515
Total (loss)/gain recognised (4,616) 1,646 (2,328)
since last financial
statements
Reconciliation of net cash flow movement to movement in
net debt
6 months 6 months Year
to to to
30 November 30 November 31 May
1999 1999 1999
(unaudited) (unaudited)(audited)
Notes #'000 #'000 #'000
Decrease in cash in the (498) (2,501) (1,620)
period
Cash (inflow)/outflow from (2,089) 9 (2,135)
(increase)/decrease in debt
financing
Cash outflow from decrease 4 18 41
in finance leases
Change in net debt resulting (2,583) (2,474) (3,714)
from cash flows
New finance leases - (32) (26)
Movement in net debt in the (2,583) (2,506) (3,740)
period
Opening net debt (8,099) (4,359) (4,359)
Closing net debt (10,682) (6,865) (8,099)
Notes to the Interim Report
Note 1: Basis of preparation
The interim report has been prepared on the basis of
accounting policies set out in the Group's 1999 Annual
Report and Accounts.
The interim financial statements were approved by a duly
appointed and authorised committee of the Board of
Directors on 3 March 2000 and are unaudited but have been
reviewed by the auditors.
Note 2: Turnover and Operating Loss
6 months 6 months Year
to to to
30 30 31
November November May
1999 1998 1999
(unaudited) (unaudited) (audited)
Turnover #'000 #'000 #'000
Matchday receipts 1,457 1,179 3,362
Television and media 782 530 1,190
Sponsorship, merchandising and 1,015 983 2,219
commercial income
Other 127 113 299
3,381 2,805 7,070
Analysed as:
QPR 2,150 1,754 4,463
Wasps 829 778 1,946
Retail and other 402 273 661
3,381 2,805 7,070
Operating loss
Turnover 3,381 2,805 7,070
Cost of football activites 3,534 3,507 6,435
Cost of rugby activities 1,170 1,194 2,770
Amortisation of players' 688 957 1,797
registrations
Stadium and matchday costs 764 1,070 2,096
Commercial, marketing & retail 476 331 704
costs
Other direct overheads 1,080 1,579 2,792
Total costs 7,713 8,638 16,594
Operating loss - continuing (4,332) (5,833) (9,524)
operations
Profit on disposal of players' 41 2,216 1,145
registrations - continuing
operations
Loss on ordinary activities (4,291) (3,617) (8,379)
before interest and taxation
QPR home games in period 12 11 26
London Wasps home games in 4 7 18
period
Note 3: Taxation
No provision has been made for taxation as it is
anticipated that the Group will have sufficient tax
losses to offset any potential liability.
Note 4: Loss per share
Losses per share are calculated on the retained loss for
the period of #4,616,000 (1998 - #3,869,000) and on a
weighted average number of Ordinary Shares in issue
during the period of 59,954,998 (1998 - 39,969,999).
Diluted losses per share are calculated with reference to
the number of Ordinary Shares under option that would
have been issued at nil value of 125,493 (1998 - nil),
giving a weighted average number of Ordinary Shares in
issue of 60,080,491 (1998 - 39,969,999).
Note 5: Creditors: amounts falling due within one year
Creditors: amounts falling due within one year includes
#6,446,000 (1998 - #6,767,000) in respect of bank loans and
overdrafts, and #3,550,000 (1998 - #nil) in respect of loans
from Christopher Wright.
Note 6: Reconciliation of operating loss to net cash outflow
from operating activities
6 months to 6 months to Year to
30 November 30 November 31 May
1999 1999 1999
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
Operating loss (4,332) (5,833) (9,524)
Amortisation charge 688 957 1,797
Depreciation charge net of 180 192 351
release of capital grants
Increase in stocks (91) (120) (48)
(Increase)/decrease in (101) 340 217
debtors
Increase in creditors 788 658 80
Net cash outflow from (2,868) (3,806) (7,127)
operating activities
Note 7: Post balance sheet events
On 25 January 2000 the Group completed on the sale of 7.4
acres of the freehold of the Wasps Training Ground, Repton
Avenue, Sudbury, Middlesex for net consideration of
#8,900,000. This sum is payable to the Group in
installments, the last of which is due in May 2000.
On 27 January 2000 the Group repaid loans from Christopher
Wright totalling #2,550,000.
There have been no player purchases or sales since the period
end.
Note 8: Availability of interim report
Copies of this document are being sent to shareholders and
are available, for collection only, from the Company's head
office (Loftus Road Stadium, South Africa Road, London W12
7PA) until 31 March 2000.
Note 9: Status of financial information
The comparative figures for the financial year ended 31 May
1999 are not the company's statutory accounts for that
financial year. Those accounts have been reported on by the
company's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified and
did not contain a statement under section 237 (2) or (3) of
the Companies Act 1985.
END
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