Annual Report and Accounts

RNS Number:1808U
Charlton Athletic PLC
16 November 2005


16 NOVEMBER 2005

CHARLTON ATHLETIC PLC (the "Company")

ANNUAL REPORT 2005

CHAIRMAN'S STATEMENT

On behalf of the board of Charlton Athletic plc, I present the Annual Report for
the year ended 30thJune 2005.

The 2004/5 season was the football club's centenary season and we celebrated it
with the team competing at the top of English football. On the football field it
was very much a season of highs and lows. At no time during the season was the
club's Premiership status under any threat but for the second consecutive year
the form of the team dipped in the last third of the season at a time when, once
again, qualification for European competition seemed a realistic possibility.
The team eventually finished in 11th position with 46 points.

Despite the disappointing end to the season, we can again be pleased with the
team's overall performance and the achievements of Alan Curbishley and his
staff. Since gaining promotion to the FA Premier League in 2000, the club has
not finished lower than 14th position and is now widely recognised as an
established Premiership club.

FINANCIAL SUMMARY

In this financial year the Company recorded a turnover of #40.7m that produced
an operating profit of #0.2m after interest but excluding income from player
sales.  Profit from the sale of players contributed #1.1m giving a net profit
for the period of #1.3m. This turnover was lower than that achieved in the
previous financial year due mainly to lower broadcast revenues received. During
this financial period the Company invested #10.6m in the cost of acquiring
players and a further #1m on capital expenditure on developments at The Valley
and other infrastructure improvements.

Financial highlights
                                                      2005                  2004
                                                        #m                    #m
Turnover                                              40.7                  42.6
Operating profit before amortisation of player
registrations                                          4.7                   4.6
Operating profit/(loss) after amortisation and
interest                                               0.2                 (0.5)
Profit from player sales                               1.1                  11.6
Net Profit                                             1.3                  11.1

This financial year was the first in the new three year contract with BSkyB for
the sale of the broadcast rights in the United Kingdom. The value of these
rights has fallen in real terms compensated, to some extent, by an increase in
the revenues received from the sale of the overseas rights. This reduction when
combined with a lower finishing position in the League than achieved last year
contributed to a fall in overall broadcast income of 10% to #23.5m. The club
featured in eleven live matches compared with five in season 2003/4, however the
new method of allocating revenues to these matches resulted in these revenues
being broadly the same. Broadcast income now accounts for 58% of the Company's
total turnover, which demonstrates how important this source of revenue is to
the Company's ongoing financial performance.

Match day revenues increased by 12% to #11m as a result of an increase in season
ticket prices and higher attendance figures supplemented by income from three FA
Cup home fixtures.   I am pleased to report that our other match day commercial
activities continued to improve and develop, in particular the performance of
our stadium bars and food outlets and sales of our match programme. The overall
increase is particularly pleasing as our ticketing revenues remain one of the
lowest in the FA Premier League. The average attendance for home matches at The
Valley was 26,378 which represents 97% of the available capacity and a small
improvement on the previous season.

The club launched a centenary shirt designed by our kit sponsors, Joma, and this
shirt was worn at our home match against Newcastle United in October 2004. We
achieved record sales for this shirt during the year and it has become very
popular with our supporters. The home and away shirts for the season were
launched in the 2003/4 financial year and so these additional sales were welcome
and helped to maintain our retail revenues at similar levels to the previous
year.

Our conference and banqueting non-match day business consolidated its revenues
this year through the hire of our facilities in the north and west stands at The
Valley for conferences, weddings and parties. Our reputation for high levels of
service and customer care is generating significant levels of repeat business
and we once again hosted a public enquiry, this time related to the proposed
Thames Gateway Bridge linking Beckton to Thamesmead. I am confident we will see
growth in this area of our business in the coming year.

Our reported overhead costs excluding player amortisation were #38.7m and did
not materially change this year, however when the effect of one-off costs in
2003/4 is adjusted for there was an overall increase in overheads of 8%.

The Company made a very significant investment in the playing squad in order to
develop a first team squad capable of competing successfully in the Premiership.
We secured the services of Stephan Andersen, Talal El Karkouri, Bryan Hughes,
Francis Jeffers, Danny Murphy and Dennis Rommedahl. The total reported in the
financial statements of #10.6m also includes the costs of acquiring Darren Bent
from Ipswich in June 2005 just before the end of this financial year. The
profits recorded for the sale of players was earned mainly from the sale of
Claus Jensen to Fulham and also income related to appearances under earlier
player transfer agreements.

Our club sponsors, all:sports, completed their third year of sponsorship in this
financial period, but unfortunately having entered this the final year of the
agreement they went into administration in September 2005. We continue to work
with the administrators who have now announced that the majority of the business
will be sold to JD Sports, a competitor of all:sports.  There are a number of
options open to us which we continue to review.

I must thank Joma who, in addition to producing the popular centenary shirt,
have now produced two excellent new playing strips for this season, as well as
incorporating further design and fabric improvements to the training kit
following discussion with the team management and the players. Greenwich Council
is not only a sponsor of the club but also an active partner, co-operating with
us in a number of other areas, including our community activities. I must stress
how important this relationship is to the continuing development of the football
club both in terms of our capital developments at The Valley and the training
ground and through our community, health and education initiatives.

I will also thank Axis Europe plc, Gallions Housing Association, Greenwich
Community College, Greenwich Leisure Limited, Ladbrokes, London Leisure College,
Paddy Power and T Mobile, all of whom provide their support financially and
through a range of community based projects. We continue to receive support from
many other companies and individuals too numerous to mention individually
through sponsorship, advertising and patronage of the various hospitality suites
on a match day and they too are deserving of our thanks. Our sponsors and all of
our commercial partners remain important contributors to this football club.

FOOTBALL REPORT

I will again highlight the creditable finishing position of the team in 11th
place, a real achievement in comparison to other clubs with superior resources
who finished below us in the Premiership last season. The team recorded a total
of 12 wins, 10 draws and 16 defeats. This achievement demonstrated once again
the tactical and motivational abilities of Alan Curbishley and we continue to
enjoy a working relationship that is the envy of many other Premiership
chairmen. I would also like to acknowledge the valuable contribution and support
given to Alan by Mervyn Day, Keith Peacock and Glynn Snodin, his coaching staff,
and in addition Wayne Diesel and his medical team. We should not forget the
backroom staff at the training ground and at The Valley who provide support for
all aspects of our football activity.

As I have reported, during the summer of 2004 there were significant additions
to the first team squad with the signings of Stephan Andersen, Talal El
Karkouri, Bryan Hughes, Francis Jeffers, Danny Murphy and Dennis Rommedahl and
it undoubtedly took some time for these new players to settle into the football
club.

In every football season there are matches that remain in the memory. For me,
our home and away victories over Tottenham Hotspur stand out, particularly the
dramatic 3-2 win at White Hart Lane. Equally outstanding were two victories
against Everton, a team that eventually qualified for the Champions League and
was enjoying their most successful season for many years. There is no doubt in
my mind that our most dramatic match was left to the final day of the season.
Any of the four teams facing relegation to the Championship had the opportunity
to avoid this fate on this last day. Our late equaliser in a 2-2 draw against
local rivals Crystal Palace in front of a capacity crowd at The Valley meant
that they were relegated with Southampton and Norwich City to the Championship
and West Bromwich Albion survived.

Our reserve team won the FA Premier Reserve League South for the fourth time in
eight seasons and for the second consecutive year. The team then participated in
the first play-off final implemented that season between the southern and
northern league champions and a crowd of 7,102 saw a strong Manchester United
team win 4-2 at The Valley to collect the inaugural trophy.

Under the leadership of our former player and joint manager, Steve Gritt, our
youth academy is continuing to develop talented players for the first team
squad. Lloyd Sam emerged as a regular member of the first team squad, joining
Kevin Lisbie, Jonathan Fortune, Osei Sankofa and Barry Fuller, who are all
products of our youth system. Lloyd Sam made his first team debut in that final
home match against Crystal Palace and Alan could not have chosen a more drama
filled occasion to introduce a young player into the Premiership. Our Under 18
team finished runners up in the FA Premier Academy League for the second
consecutive season and four players from that team have subsequently signed
professional contracts - Nathan Ashton, Rob Elliott, Darren Randolph and James
Walker. A number of academy scholars broke into the reserve team and established
themselves as key figures but perhaps the highlight of the Under 18 season was
their success in winning the prestigious Nerja Cup in southern Spain. This took
place in December 2004 and to indicate the quality of the tournament there were
teams from Barcelona and Real Madrid participating.

The women's section had another memorable season under the astute management of
Keith Boanas. The first team followed up their Community Shield success in
August 2004 by capturing perhaps the most prestigious piece of silverware in the
women's game - the FA Cup. Eniola Aluko's decisive strike against Everton at
Upton Park saw the club claim the trophy for the first time in the club's
history. The team were also beaten finalists in the Premier League Cup and
runners up in the Women's Premier League.

During the season, our annual disappointment in the two principal cup
competitions continued as we exited the Carling Cup in the third round, losing
2-1 at home to Crystal Palace. We did reach the fifth round of the FA Cup after
wins against Rochdale and Yeovil respectively but then in the major upset of
that round, Championship side Leicester City secured a 2-1 win at The Valley.
When you consider the priorities of the clubs at the top of the Premiership, the
domestic cup competitions continue to offer us the most realistic opportunity
for success.

At the end of the season Paul Konchesky and Simon Royce left the club and our
former player Graham Stuart, who contributed much to the club during his time
with us, retired from professional football. I would like to thank all three
players for their contribution to our club's success during their playing
careers here. Ten players joined the club in summer 2005 and I welcome Darren
Ambrose, Darren Bent, Jay Bothroyd, Goncalo Brandao, Thomas Mhyre, Alexei
Smertin, Gonzalo Sorondo, Jonathon Spector and Kelly Youga and hope that they
will all contribute to future success at our club. In addition we welcome back
Chris Powell who spent five years with the club before moving for a brief spell
to West Ham United.

The club benefits from a strong relationship with its supporters and to continue
to have more than 26,000 supporters regularly attending The Valley for our home
matches is an endorsement of what we are trying to achieve at the club. Our
supporters remain a key element of our current success and remain among the best
behaved in English football. The Valley Express initiative, launched during the
season, provides a dedicated coach service to home matches from across the south
east of England, opening up opportunities for both existing and new supporters
to attend matches easily at The Valley and for some matches in this current
season up to 2,000 people used the service. There is significant planned
investment in new housing and infrastructure improvements across the south east
of England and this will be a key element of our marketing strategy for the
continuing growth of our supporter base in the next few years.

INDUSTRY PROSPECTS

I can only see the Premiership continuing to be dominated by those clubs with
the largest financial resources and it may well be that with the apparent
resources at the disposal of Chelsea, they are likely to be the dominant force
in Premiership football for many years to come unless a similar level of
investment is made in other Premiership clubs. It is not in the interest of any
club in the top flight that the competition becomes predictable because that
will in time have an effect both on the level of supporter and corporate
interest in the League.

The lack of widespread competition for the Premiership title and the spread of
matches across three days with a variety of kick off times is something we must
debate now as this could have an adverse effect on future attendance figures.
The consequences may have a significant effect on future commercial development
at the majority of the Premier League clubs. At our club we have seen a
reduction of some 1,500 season ticket holders during the summer of 2005 and
similar situations exist at other clubs. No business can afford to ignore its
customers and that is something that football must heed if it is to avoid a
sharp wake up call. We have already seen a number of matches televised live this
season where there were large gaps around the stadia and if this pattern
continues there is a genuine risk that there will be an effect on the
broadcasting revenues that all clubs receive.

The European Commission continues to involve itself in the affairs of the FA
Premier League in a very public and high profile manner. The League tenders the
collective broadcasting rights of the twenty Premiership clubs in a fair and
transparent manner. The process has the consent and support of all clubs and no
broadcaster is precluded from tendering. It cannot be right that the Commission
should seek to challenge our right to enter into genuine commercial agreements
for the sale of our broadcast rights because they do not like the outcome. We
must use every means at our disposal to protect the game in this country from
such outside interference.

I have often written of the need for a redistribution of finances within
football on a more equal basis and my view on this remains unchanged. I am
encouraged by the fact the FA Premier League has established an Attendance
Working Group, on which Peter Varney has been invited to sit, which will
consider this and other issues which impact upon attendances.

CONCLUSION

Our Company is heavily reliant on broadcasting revenues to maintain its
commercial performance, as is the case for the majority of Premiership clubs.
Particularly relevant in this is the finishing position of the team and the
number of live televised matches we are featured in during the season. It
remains vital therefore that we continue to focus on being successful in the
Premiership and to develop and increase our match day revenues. Our football
club has one of the smaller stadium capacities when compared to our competitors.

Your board took the decision to increase season ticket prices for the 2005/6
season and at the same time maintain a discounted pricing structure for existing
season ticket holders. It was disappointing to see a 1,500 reduction in season
ticket holders for the current season but we have to date significantly
increased the number of tickets sold on a match to match basis which is
encouraging.

The regeneration of our local area and the south-east region provide us with a
unique opportunity to expand our support and commercial operations. There are
500,000 homes being built in the Thames Gateway region, plans are now in place
for the development of the Greenwich Peninsular and the Millennium Dome, and the
construction of a new bridge connecting the east and south of London has been
approved by central government and is now the subject of public consultation.

The plans for the expansion of The Valley stadium continue. We have now received
a planning consent from Greenwich Council to develop the east stand and south
east quadrant and to raise the capacity from 27,000 to 31,000. We have also made
it clear that it is our ultimate intention to develop the south stand and south
west quadrant to provide us with a completed modern stadium complex with a
capacity of 40,000.  The success of our Valley Express initiative and the
continued expansion of our community schemes throughout Kent and the surrounding
areas have given your board optimism that the expansion of the stadium will be
justified. However, we shall not proceed with the east stand development until
it is financially prudent to do so.

In July 2005 the Company raised #5.5m though the issue of 9.2m ordinary shares
to both existing shareholders and a new investor. Commitments to purchase these
were received before the year end at 60 pence per share. One of the most
significant investors, Derek Chappell, subsequently accepted an invitation to
become a member of both the Company and the football subsidiary boards. Derek is
a long standing supporter of Charlton Athletic football club and a season ticket
holder since the late 1960s. His business acumen and experience will make him a
valuable addition to the board. I will also place on record my sincere
appreciation for the ongoing financial support provided by Gideon Franklin, Sir
Maurice Hatter, John Humphreys, David Sumners, Steven Ward and Bob Whitehand.

Football businesses are not easy to manage and we are fortunate that we have
staff at all levels whose commitment and hard work is a tribute to them and
which is essential as we continue to develop the club. I would like to thank our
chief executive, Peter Varney, and the deputy chief executive, Nigel Capelin,
both directors of the football club, for their contribution, as well as all the
staff that operate at The Valley, the training-ground complex, the offices in
Bexleyheath and elsewhere.  Many other people give their time and effort to
support the operations of the club and the organisations associated with it and
to them we also extend our gratitude.  In this we must not forget those
individuals involved in running the many supporters branches, so important to
the football club, and in particular Sue Townsend, our Supporters'
Representative, who continues to represent the views of our supporters at board
level.

In our centenary year I think it is wholly appropriate that I pay tribute to the
valued support, advice and wise counsel of all the directors who serve on the
Company board, the football subsidiary board and the executive committee and
without whom our club would not be enjoying the status that it currently does. I
particularly thank Martin Simons, David Sumners and Robert Whitehand who serve
on the executive committee and who give their expertise and time to the
management of our business. In addition to those I have already mentioned I
thank Roger Alwen, Greg Bone, Richard Collins, Michael Grade, David Hughes,
Michael Stevens, Derek Ufton and David White.

Your board remains determined to maintain the excellent image we have earned in
the wider football and business community and whilst we want to bring continued
success to the club we will not compromise on our basic principles and core
values. We want to be a club that stands for those things that are good in our
national sport, and to serve and be a credit to those communities from which we
draw our support.

Richard Murray
Chairman


CHARLTON ATHLETIC PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT

                                        12 months to 30th June 2005                            
                                       Operations                                                                 
                                 Excluding player            Player                                        12 months to
                                     amortisation      amortisation                                           30th June
                                      and trading       and trading                 Total                          2004
                                            #'000             #'000                 #'000                         #'000
                         Notes
TURNOVER                     2             40,714                 0                40,714                        42,606

Operating expenses           3           (38,771)           (4,135)              (42,906)                      (42,605)
Exceptional items            5              2,763                 0                 2,763                          (40)


Operating profit/(loss)                     4,706           (4,135)                   571                          (39)

Profit on disposal of players                   0             1,137                 1,137                        11,659

Profit/(loss) before interest
and taxation                                4,706           (2,998)                 1,708                        11,620

Net interest payable                                                                (348)                         (502)

Profit on ordinary activities                                                       1,360                        11,118
before taxation

Taxation charge                                                                         0                             0

Profit for the year                                                                 1,360                        11,118

Earnings per share           9                                                  2.5 pence                    20.2 pence


All amounts derive from continuing operations.




CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES
                                                                                     2005                          2004
                                                                                    #'000                         #'000

Profit for year                                                                     1,360                        11,118
Unrealised gains on revaluation of freehold                                         2,571                             0
property
Total recognised gains for the year                                                 3,931                        11,118





CHARLTON ATHLETIC PLC
CONSOLIDATED BALANCE SHEET

                                                           At 30th June        At 30th June
                                                                   2005                2004
                                                                  #'000               #'000
                                     Notes
Fixed Assets
Tangible fixed assets                    6                       37,545              35,309
Intangible assets                                                10,863               4,685
                                                                 48,408              39,994
Current Assets
Stocks                                                               98                 152
Debtors                                                           5,588               7,580
Cash at bank and in hand                                         13,253              10,488
                                                                 18,939              18,220
Current liabilities
Creditors falling due within one         7                     (23,324)            (15,655)
year and deferred income


Total assets less current liabilities                            44,023              42,559

Creditors falling due after one year                            (6,777)             (8,774)
Grants and deferred income                                      (5,470)             (5,940)

                                                                 31,776              27,845

                                                                  #'000               #'000
Capital and reserves
Called up share capital                                          27,485              27,485
Share premium account                                             2,019               2,019
Revaluation reserve                                               9,093               6,547
Profit and loss account                                         (6,821)             (8,206)

                                                                 31,776              27,845



CHARLTON ATHLETIC PLC
CONSOLIDATED CASH FLOW STATEMENT

                                                            12 months to             12 months to
                                                          30th June 2005           30th June 2004

                                                       #'000       #'000      #'000         #'000
Cash flow from operations
Operating profit/(loss)                                              571                     (39)
Depreciation                                                       1,306                    1,260
Amortisation of player registration costs                          4,135                    4,677
(Profit) on sale of fixed assets                                     (0)                      (8)
Release of deferred income                                         (468)                    (470)
Decrease/(increase) in stocks                                         54                     (62)
Decrease/(increase) in debtors                                     1,992                  (5,255)
Increase/(decrease) in creditors                                   2,268                    2,586

Net cash inflow from operations                                    9,858                    2,689

Returns on investment and servicing
of finance
Interest received                                        296                    173
Interest paid                                          (641)                  (733)
Interest element of finance lease payments               (3)                    (3)
Net cash outflow                                                   (348)                    (563)

Capital expenditure and financial investments
Payments to acquire players'                        (10,632)                  (913)
registrations
Proceeds on sale of players'                           1,456                 11,718
registrations
Payments to acquire tangible fixed                     (951)                  (755)
assets
Refund of long term season tickets                       (2)                      0
Proceeds on sale of tangible fixed assets                  0                      8
Net cash outflow                                                (10,129)                   10,058

Net cash (outflow)/inflow before                                   (619)                   12,184
financing

Financing activities
Cash received for future share issue                   5,525                      0
Loan repayments                                      (2,116)                (2,024)
Capital element of finance lease payments               (25)                   (19)
Net cash inflow/(outflow) from financing                           3,384                  (2,043)
Increase in cash                                                   2,765                   10,141




NOTES
     
1.   The financial information relating to the Company does not constitute
     statutory accounts within the meaning of Section 240 (5) of the Companies 
     Act 1985 (as amended).  Statutory accounts in respect of the year ended 30 
     June 2005, which received an unqualified audit opinion, will be filed with 
     the Registrar of Companies in England and Wales.
          
2.   Analysis of turnover:
                                                                      Year ended                  Year ended
                                                                    30 June 2005                30 June 2004
                                                                           #'000                       #'000

     Television and broadcast                                             23,481                      26,204
     Ticketing and match day activities                                   11,008                       9,844
     Marketing and sponsorship                                             3,944                       4,267
     Retail and other                                                      1,227                       1,183
     Conference and banqueting                                             1,054                       1,108

                                                                          40,714                      42,606
     
3.   Analysis of operating expenses:
                                                                          #'000                       #'000

     Staff costs                                                         28,888                      29,913
     Depreciation                                                         1,306                       1,260
     Amortisation                                                         4,135                       3,637
     Hire of plant and machinery                                            166                         173
     Other operating lease rentals                                          198                         244
     Grants released                                                      (109)                       (109)
     Auditors remuneration
                     :audit                                                  31                          31
                     :non audit                                              24                          17
     Other operating charges                                              8,267                       7,439

                                                                         42,906                      42,605
     
4.   Analysis of staff costs:
                                                                          #'000                      #'000

     Wages and salaries                                                  25,739                     26,793
     Social security costs                                                2,981                      2,959
     Other pension costs                                                    168                        161

                                                                         28,888                     29,913
     
5.   Exceptional item:

     The exceptional item relates to gross amounts receivable from insurance 
     claims for retired injured players.

6.   Tangible fixed assets:

     Freehold properties were valued as at 30th June 2005 by Latham Yeomans,
     Chartered Surveyors, on the basis of existing use using the depreciated 
     cost method of valuation in the case of The Valley stadium and existing use 
     value in the case of other properties. This resulted in a revaluation 
     surplus of #2,571,000. The original cost of freehold land and buildings 
     amounts to #31,354,942. Freehold land of #6,138,186 has not been 
     depreciated.

7.   Other creditors:

     Other creditors includes #5,525,000 received in respect of irrevocable
     undertakings for the issue of ordinary shares completed on 8th July 2005

8.   The board does not recommend the payment of a dividend.

9.   Earnings per ordinary share have been calculated by dividing the profit
     for the year by the weighted number of ordinary shares in issue for the 
     year.
                                                                    Year ended                Year ended
                                                                  30 June 2005              30 June 2004
                                                                         #'000                     #'000

     Profit for the year                                                 1,360                    11,118

     Weighted number of shares in issue                             54,969,293                54,969,293

     Earnings per share                                              2.5 pence                20.2 pence
     
10.  The Annual Report and Accounts for the year ended 30 June 2005 will be
     sent to shareholders during December 2005.  From that time further copies 
     will be available from the company's Nominated Advisor and Broker, Teather 
     & Greenwood Limited, Beaufort House, 15 St Botolph Street, London, EC3A 
     7QR.


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