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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sheffield Utd | LSE:SUT | London | Ordinary Share | GB0002181484 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 6.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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RNS Number:3268G
Sheffield United PLC
25 October 2007
Under embargo until 0700, 25 October 2007
Sheffield United plc
("Sheffield United", "the Club" or "the Group")
Preliminary Results
All business units record strong performance and demonstrate potential for
growth
Sheffield United plc (AIM: SUT), the football, leisure services business,
announces preliminary results for the year ended 30 June 2007. Highlights of the
results include:
* Turnover increased 68% to #45.8million (2006: #27.2million)
* Operating profit* #6.3million (2006: loss of #5.4million)
* Retained profit #0.5million (2006: loss of #7.9million)
* Contribution from USE of #1.8 million in earnings before interest and tax
on turnover of #6.8 million
* Eleventh best supported team in Premier League 2006/7 season; average
attendance of 30,684
* Ticket office contribution up 43.3% to #7.6million (2006: 5.3 million)
* Sponsorship, royalties, merchandise and advertising sales up 46% to #7.3
million (2006: #5.0 million)
* Ex-Manchester United and England captain Bryan Robson appointed Team
Manager for current season
* Capacity up to 32,609 following completion of Westfield Health corner
stand in July 2006
* Strong season ticket sales for 2007/08, 19,000, despite relegation
(2006/07: 22,000)
* Significant membership growth at Thames Club in Staines and Impact Gym at
Shirecliffe
* 158-bedroom hotel to be completed late Autumn 2008
* Occupancy rates at Blades Enterprise Centre continues to be in excess of
95%
* Chengdu Blades achieved promotion to Chinese Super League
* Post period end, #10 million loan facility secured to finance and progress
key business initiatives
*Operating profit before player amortisation and impairment of player
registrations.
Commenting on the results, Sheffield United chairman, Kevin McCabe, said: "We
have succeeded in achieving many of our aims since the start of the millennium
but if sustained success is to be attained then Sheffield United cannot stand
still. Our off the field divisions must work towards gaining higher revenues and
profits. On the field promotion back to the Premier League is the key priority.
To realise these objectives requires the combination of additional capital and
management creativity".
Jason Rocket, Chief Executive added, "The Sheffield United business model is not
wholly predicated on Premier League Football and the financial rewards it offers
albeit it always remains our principle objective. In this context it is
important in the Championship that we sensibly grow the off field businesses in
order to maintain investment in the first team. The sound financial base of the
Group enables the continued development of our unique and diverse business as we
seek to create and exploit further opportunities for growth in order to bring
success on the pitch with all the associated benefits."
For further information:
Sheffield United plc: 0870 787 1960
Kevin McCabe, Chairman
Jason Rockett, Chief Executive
Simon Capper, Chief Financial Officer
Nick Maslen, KBC Peel Hunt Ltd 0121 633 8330
Tavistock Communications: 020 7920 3150
Jeremy Carey / Gemma Bradley
Chairman's Statement
Well, the events that occurred during the financial year encompassing football
season 2006/2007 have to say the least been traumatic.
It seems bizarre to introduce our Annual Report & Accounts by immediately
referring to the media named "Tevez affair" but the impact of the admitted
breaches of the "rules of football" committed by one of our competitors in the
Premier League have been and continue to be far reaching. I am sure all
shareholders and supporters are aware from the coverage in the national
newspapers, journals, tv and radio that West Ham United FC broke the FA Premier
League rules relating to third party ownership of players but for whatever
reason "got away with it" by only receiving a fine of some #5.5 million,
ironically indirectly reduced by the fee they received on the subsequent
complicated transfer of Carlos Tevez to Manchester United FC. I share the view
of almost everyone in the football industry that the only suitable punishment
was a deduction of points, both to maintain the integrity of the game and to
ensure that West Ham was unable to obtain any benefit as a result of its
wrongful behaviour.
It's stating the obvious that in league football, from August through to May
every week each team plays for one reward alone and that is points. At the end
of the season it is the number of points that dictate success or failure and
thus if one club breaches the rules which affect on the field performances, the
only possible punishment must be a deduction of points in order to restore the
competitive balance of competition between all of the other clubs. Surely to the
fair minded sports person (as one would hope those who govern the FA Premier
League are) a serious breach of the rules by which two Argentinean football
stars were able to play for West Ham (in the case of Carlos Tevez for virtually
the whole of season 2006/2007) gave that club a major unfair advantage and left
the others - who played within the rules - at a disadvantage. Here in the UK,
and in particular England, the home of football, we like to hold our heads high
and believe that governance of our sport - and in this instance the national
sport and most popular game and league in the world - is conducted to the
highest standards of fair play and integrity. Sadly one has to say that the
circumstances surrounding Sheffield United FC's relegation in May 2007
demonstrates that our national game at Premier League level only is poorly
governed.
Given we are now heading towards an FA lead Arbitration seeking redress from
West Ham United FC, I am not at liberty to make any further comments other than
to say if we gain a successful award - as I believe we should - a monetary sum
does not in any shape or form compensate for what by rights would have been
reinstatement to the top division of English football. I do thank all of those
who have assisted Sheffield United thus far in our Campaign for Fairness
conducted locally, nationally and internationally.
The format of reporting means that within the Chief Executive's Review there is
comprehensive commentary on all of the divisions that comprise the Sheffield
United group of companies. Our transformed business now encompassing Property,
Leisure and Services with Football at its hub operating within the UK and
internationally continues its growth both on and off the field of play.
Within the financial year ending 30th June 2007 pre-tax profits amounted to #0.4
million; (2006: Loss #7.9 million as restated), an improvement indicative of
returns being derived from our unique business model and the benefits of the
Premier League. This is demonstrated even more clearly by the increase in
operating profits before player trading, amortisation and promotion bonuses to
#6.3 million from a loss of #5.4 million in 2006. Turnover also rose
significantly to #45.8 million from #27.2 million in 2006 indicating the scale
of the increases in the business over the last year.
It remains our desire to keep levels of bank debt in sensible proportion to the
interests we have, much of which is of course underpinned by the value of the
Group's real estate holdings both in Sheffield and elsewhere. Subsequent to the
year end, SDG Caledonia Holdings Ltd (a company controlled by myself) committed
to provide a Loan to the value of #10.0 million to Sheffield United plc in order
to ensure that in spite of the loss of major revenue caused by our unjust
relegation from the Premier League many of the key business initiatives could
continue to be properly funded and progressed. The terms of this Loan also
includes the requirement for SDG Caledonia Holdings Limited to underwrite any
offer of Ordinary Shares at or prior to the 31st August 2008 if the independent
directors of Sheffield United plc so desire.
I am sure all supporters of the Blades will agree that the 'world's oldest major
football stadium' looks better than ever and match attendances of last season
and the current one give clear indications that with sustained on the field
success Bramall Lane's capacity will need to be increased. We have investigated
various phased initiatives to achieve this objective and subject to cooperation
from the officials at Sheffield City Council, an application to seek planning
consent to extend the stadium will shortly be lodged. This will involve building
new areas to the Kop Stand to increase overall seating to cater for 36,000
persons once completed.
Additionally, submissions for developing areas of the land surrounding Bramall
Lane are being master planned in a manner befitting the new hotel - where
construction work is now well advanced - and the Stadium.
Our Academy at Shirecliffe is to be further developed in 2008 for football and
ancillary uses. The Junior Development Centre at Crookes will soon have
synthetic surfaced football facilities and an extended pavilion open for use.
In China, our sister club - Chengdu Blades FC - deserve congratulations on
achieving promotion to their Super League. With the improved international
management structure overseen and lead by Executives from Bramall Lane we hope
to see benefits back at base both from the football and commercial divisions in
the coming years.
Back in 1857, some 150 years ago, football's roots were founded, not just in
Sheffield but within the immediate area of Bramall Lane. The 'world's oldest and
first football club' - Sheffield FC, celebrate their historic anniversary and
with it an ever closer association with the 'world's oldest United'. We are
assisting them during this commemorative year and also by working on joint
initiatives to benefit the two clubs. To all supporters take time out to trace
the background of the 'world's most popular game' and see how much Sheffield has
been involved. It seems strange that so little profile of this wonderful
heritage for the City is heralded either nationally or globally.
So, through peculiar circumstances, this season sees the Blades playing in the
Championship. The start has been somewhat frustrating and disappointing as our
first team squad is acknowledged by many as being amongst the strongest in the
League. However, I have little doubt that under the astute and experienced
leadership of Bryan Robson we will soon be climbing the table and seeking to
achieve our aim of re-promotion to the League that by rights we should still be
playing within.
As all members are aware, at the conclusion of last season, Neil Warnock, after
seven good years serving as manager of Sheffield United FC, departed. He left
with the accolade of having worked hard for our Club during an era in which the
old fashioned United had been transformed into a modern football organisation.
We wish him well for the future in the knowledge that he will always be a Blade.
Our Finance Director, Mark Fenoughty left the company in June and has joined DLA
as their Head of Finance. Mark also remains a genuine Sheffield United supporter
who is welcomed at Bramall Lane. Simon Capper replaced Mark as a Finance
Director in June and brings with him a wealth of corporate and financial
experience.
We have succeeded in achieving many of our aims since the start of the
millennium but if sustained success is to be attained then Sheffield United
cannot stand still. Our off the field divisions must work towards gaining higher
revenues and profits. On the field re-promotion back to the Premier League is
the key priority and thereafter consolidation as a top half of the table club.
To realise these objectives requires the combination of additional capital and
management creativity. Thus the desire of the Executive is to source further
investment to aid expansion, grow the business and bring regular success to all
divisions, none more so than football. The search is on!
My Statement provides the opening comments to what I hope you will enjoy reading
in detail within the Review from our Chief Executive, Jason Rockett.
These are busy times for Sheffield United, a Club that is different from the
rest.
Up the Blades!
Kevin McCabe
Chairman
24 October 2007
Chief Executive's Review
Overview
It has been a remarkable year both on and off the field. Whilst ending in great
disappointment on the last day of the season there were still many highs. As
indicated in the Chairman's Statement, the bitter taste of relegation was
exacerbated by the sense of injustice surrounding what is now widely known as
the 'Tevez affair'. Despite this set back the past year has seen us make
tremendous progress off the field, with the continued growth of the business.
It gives me great pleasure to report operating profits before player
amortisation and impairment of cost of player registrations of #6.3 million
(compared to a loss of #5.4 million in 2006) were achieved. After accounting for
player trading, interest and tax, retained profits for the year are #0.5 million
(2006: Loss #7.9 million).
Turnover for the year of #45.8 million (2006: #27.2 million), showed an increase
of 68%.
The increase in turnover was predominantly a result of enhanced income
associated with the Premier League in particular broadcasting revenue but this
should not mask the continued growth of the Group's off field activities.
United Scarborough Estates Group Limited (USE) our joint venture property
vehicle generated a turnover of #6.8 million producing a profit of #1.8 million
before interest and taxation. Since USE's inception in March 2005 Sheffield
United has achieved a return of #4.4 million before interest and taxation.
Sheffield United were the 11th best supported team in the Premier League
attracting an average crowd of 30,684, which saw ticket office contributions
rise to #7.6 million compared to #5.3 million in 2006, a 43.4% increase. The
atmosphere and vocal intensity of our home fans gained many plaudits from
visiting teams and the media.
Turnover from sponsorship, royalties, merchandising and advertising increased by
45% to #7.3 million per annum from #5.0 million.
To provide Sheffield United with a squad capable of retaining Premier League
status, the Club made significant investment into the playing squad during the
financial year, in terms of both the purchase of players of enhanced calibre and
the agreement of new contracts for many of the players retained from the
promotion squad. This safeguarded squad value and has also allowed disposals to
be made subsequent to relegation in order to maintain the overall cost of
players wages and benefits within sensible limits.
The first team
The nucleus of the first team squad was similar to the one that gained promotion
but was improved with the acquisition of 12 players during the course of the
season at a cost of #11.4 million.
In addition, it was pleasing to see the advance of youth development graduates
Stephen Quinn and Nicky Law who made their Premier League debuts during the
course of the season.
First team player acquisitions during the year included amongst others Rob
Hulse, Matthew Kilgallon, Luton Shelton and Jon Stead.
Player wages and associated costs for the year were #16.2 million, an increase
of 74% on the previous year.
Having competed well throughout the season, the disappointment felt by all
connected with the Club following relegation by a single goal on the last day of
the season cannot be adequately described. There were however many highlights
throughout the season including memorable victories against Middlesbrough,
Arsenal and Tottenham to name but a few. As a club we adapted well to the
Premier League both on and off the field and contributed significantly to an
exciting season in the top flight.
The end of the season saw the departure of Neil Warnock following over 7 years
as manager. On behalf of the Board, I would like to thank Neil for his efforts
over the recent years culminating in promotion to and unfortunately subsequent
relegation from the Premier League. As mentioned in the Chairman's Statement,
Neil deserves significant credit for being an integral part of the Club, as it
progressed on and off the playing field.
In the summer, the Board appointed former Manchester United and England captain
Bryan Robson, as team manager. Bryan Robson, along with assistant manager Brian
Kidd and their back room staff, are tasked with guiding the Blades back to the
Premier League for the long term.
In the summer, the football management team have been busy adapting the squad
for the forthcoming season. The management team have shown their skills in
maximising returns through player sales coupled with the acquisition of new
players including Gary Naysmith, James Beattie, Lee Hendrie and Billy Sharp.
As a Club we continue to build on the foundations laid in previous years,
strengthening where possible, by improving the quality of, and adding to, the
squad. The current squad features 9 full internationals and 8 U21
internationals, with an average age of 26 years.
The Academy
The Academy is in its 5th year and continues to be an integral part of Sheffield
United Football Club.
We are now seeing the benefits of the investment over the last few years and the
commitment of dedicated and skilled staff.
Academy players and graduates gaining international recognition in the last year
include Lee Askham (England U17), Martin Donnelly (Northern Ireland U19), Jamie
Annerson (England U19), Adam Chapman (Northern Ireland U19), Jacob Mellis
(England U16) and Stephen Quinn (Republic of Ireland U21).
Additionally, eight development squad players were loaned to a variety of League
clubs during the season with a further two Academy graduates making their
Premier League debuts. In the current season the loans of Jordan Robertson and
Evan Horwood who are playing on loan in the Scottish Premier League for Dundee
United and Gretna respectively, are most notable.
In times when academies have attracted much criticism, Sheffield United's
Academy is gaining many accolades throughout the game and is held in high regard
by our competitors. At the end of last season we saw Jacob Mellis transferred to
Chelsea for an initial #0.4 million, which on appearances could rise to #1.3
million. Other products of our youth system sold on include Kevan Hurst and
Jonathan Forte to Scunthorpe United and Phil Jagielka to Everton.
Since its establishment in 2002, seven Academy graduates have made first team
appearances and seventeen have played for their country. (To date the youth
system has produced an estimated #12 million value of players.)
The Academy competed well at all age groups from U9s to U16s during the year. A
number of teams competed in prestigious overseas tournaments, most notably the
U14s lost in the final of the Totana Cup to Valencia, having beaten Real Madrid
and Villarreal on the way to the final but won the Foyle Cup in Northern Ireland
beating Hearts in the final.
The U18s had a very successful season reaching the FA Youth Cup quarter finals
before losing to eventual winners Liverpool. They also won the U20s competition
in La Manga and the BT Trophy at the Milk Cup in Northern Ireland.
The Academy is a long term financial investment in the Club's future. We are one
of the few Clubs whose academy is almost self funding. Additional revenue is
secured from a variety of sources including sponsorship, hiring of facilities,
office rental and onsite leisure facilities such as the Impact gym.
Football Operations
The newly completed Westfield Health corner stand has seen Bramall Lane's
capacity rise to 32,609. Coupled with increased executive seating and improved
facilities for fans, this has transformed the stadium.
Sheffield United was the 11th best supported club in the Premier League with
average crowds of 30,684 including some 22,000 season ticket holders. Season
ticket sales are approximately 19,000 for 2007/08 compared to 14,000 in the
Championship in 2005/06 season.
Ticket office contributions rose to #7.6 million in 2007/08 compared to #5.3
million in 2006, a 43% increase.
The Club continues to ensure football is accessible to all. Our ticket prices
last season were amongst the cheapest in the Premier League and it is our
intention to continue with a variety of initiatives aimed at increasing the
Club's supporter base as well as attracting more young supporters to Bramall
Lane.
A new proximity card entry system has been implemented for the current season
and been well received. The benefits from the replacement of paper tickets are
numerous and will enable us to address a number of customer service issues on
match days including lost or misplaced match and season tickets and a reduction
in ticket collection queuing times.
Turnover from sponsorship, royalties, merchandising and advertising increased by
46% to #7.3 million per annum from #5.0 million.
Retail turnover increased by 26% to #1.8 million. This increase reflects the
benefits of an expanded Superstore coupled with a higher foot fall on match
days. The introduction of internet shopping for Blades branded goods and the
recent launch of an upgraded website is focused on increasing retail sales.
The commercial department was strengthened in order to capitalise on increased
sponsorship, advertising and corporate hospitality associated with the Premier
League, whilst at the same time improving the sales service to our traditional
and loyal sponsors. Turnover rose from #2.3 million in year ending 2006 to #3.2
million in 2007.
The partnership with Capital One since their acquisition of HFS loans has
developed into a close working relationship, maximising the benefits derived
from the association.
The current season has seen great success in sponsorship and advertising around
the ground. The continuation of deals with main stand sponsors Westfield Health
and Halliwells has been supplemented by new stand sponsorship deals with VALAD
Property Group, Frasers Property Group and Evolution Power Tools.
As always I would like to thank all our sponsors and commercial partners who
have provided support to the Club over the last financial year. They make a
major contribution to the success of the Club and we hope we can work together
for the foreseeable future.
Leisure Division
This important division has performed extremely well over the past few years
expanding our conference and events and health club businesses plus the
commercial use of other leisure facilities.
The last year has seen an emphasis on marketing non match day catering and
events resulting in the catering department's turnover increasing by 15.5% and
non match day revenue by 11.2% for 2007. Christmas 2006 saw some 10,000 covers
served eclipsing the previous year's high of 6,100. Our first class executive
restaurant, 1889, achieved 2 accolades in the past year. It was firstly awarded
2 Michelin Knives & Forks, a level only achieved by 2 other restaurants in
Sheffield. On matchdays, it was also runner up in the prestigious Football
Hospitality Awards, Premiership Directors' Choice Catering Award.
The Conference & Banqueting facilities were added to with the refurbishment of
The Tunnel Bar and the upgrade of existing facilities. Bramall Lane now caters
for a wide variety of functions and is undoubtedly one of the city's premier
conference facilities.
Concourse catering was brought in house at the beginning of 2007/08 season with
the objective to improve the supporters' experience by providing better
standards of service and higher quality food and drink.
Both Thames Club in Staines and Impact Gym at Shirecliffe have made strong
progress over the year significantly increasing membership. The Thames Club
membership has now increased to over 2,600 from 2,300 last year generating an
increase in turnover from #0.4 million (for the four months of ownership) to
#1.6 million for the current year.
A further two Impact gyms are currently under consideration, one at our Junior
Community Development Centre at Crookes and the other in the new Hotel at
Bramall Lane.
The staff at the Academy have also worked tirelessly to increase income through
sponsorship and the hiring of the facilities to other groups and clubs.
Hotel
Work on the 158-bedroom Hotel to be operated by Millennium Copthorne is underway
and is due to be completed in Autumn 2008.
The hotel will provide Sheffield with much needed high quality 4 star
accommodation and is expected to enhance Bramall Lane's reputation as a premier
conference venue. The Copthorne Hotel Sheffield will provide new and dynamic
input into the regeneration of Sheffield, as well as adding a further
diversified element to the non match day income streams generated at Bramall
Lane.
We are particularly keen to ensure that the local communities benefit from the
development of the Hotel. A number of workshops have been set up to ensure that
there is an opportunity for local people to obtain skills suitable for
employment at the Hotel and within our ever expanding conference and banqueting
department.
Property
BRAMALL LANE
The Westfield Health Stand and the upgrade of the Halliwells stand were
completed, in addition to other work including the refurbishment of the Tunnel
Bar; the relocation of the police control room to the Enterprise Centre; the
upgrade of press box facilities and television gantry to Premier League
standards and the provision of a new LCD scoreboard. Executive seating areas
were increased, the John Street reception and banqueting suites were revamped
and supporters' facilities around the ground were generally improved. Finally
during the season the 'Legends of the Lane' refurbishment was completed. Over
the past few years Bramall Lane has become a first class stadium and arguably
the best in Yorkshire.
In conjunction with concourse catering coming in house, kiosk provisions behind
the Frasers Kop have been upgraded and increased.
We continue to assist the local Sharrow Community Forum (Distinctive Sharrow) in
a master planning exercise of the area, which includes better links with the
City centre, an improved transport infrastructure and development framework for
future regeneration of Sharrow. The area is set to radically change in the
coming years with new planning applications being submitted and permissions
granted for a variety of predominantly mixed use schemes. As a major land owner
and employer, Sheffield United has an integral part to play in the area's
rejuvenation .
In the past year, we have acquired a number of strategic properties around the
ground which provide us with long term flexibility and potential development
opportunities whilst providing short term income.
Following the Government's well documented decision on regional casinos, we have
now refocused our effort on the development of Bramall Lane. The proposals are
at an early stage but the objective is to increase the stadium capacity
initially to 36,000 rising ultimately to 40,000 with the provision of further
off-field revenue earning facilities. The development will entail the extension
of the Frasers Kop, a new business centre in the corner of the Frasers Kop and
VALAD stand, new boxes at the top of the Evolution Corner Stand, mixed use
development on the Cherry Street/Shoreham Street and John Street/Shoreham Street
corners incorporating a range of residential accommodation and ground floor
retail and leisure uses.
Ultimately there is also an opportunity to add a second tier on the VALAD Stand,
and to develop the adjoining car park.
ENTERPRISE CENTRE
The Blades Enterprise Centre turnover for the year ending 2007 was #0.9 million
with profits of #0.3 million. Occupancy of the Centre continues to be in excess
of 95% and our executive boxes are utilised on non match days as meeting rooms
to accommodate demand.
The Blades Enterprise Centre team is focused on out sourcing their expertise and
are currently in discussions with a number of third parties with a view to
managing other business centres.
UNITED SCARBOROUGH ESTATES
United Scarborough Estates Limited (USE), a 50% joint venture with Scarborough
Property Company Limited, was established in March 2005. Its original aim was to
follow a risk adverse investment strategy and generate long term profits through
property acquisitions, proactive asset management and ultimate disposal at an
enhanced value.
The Club's share of profits from USE was #1.8 million before interest and
taxation in the year ending June 2007. To date, USE has traded an investment
portfolio of approximately #130 million of commercial, retail and industrial
properties. The total profit attributable to Sheffield United since its
inception is #4.4 million before interest and taxation.
The success of USE is testimony to the Board's decision to diversify the
business. The profits from the same have underpinned investment in the first
team initially to secure promotion to the Premier League in 2006 and continue to
support a business strategy not solely dependent on Premier League status.
Due to various economic factors, the property trading market has now slowed
down. Fortunately, we have an excellent portfolio, which is currently being
proactively managed by an experienced team with a view to adding value for
future sales.
A community club
Sheffield United's commitment to local communities is demonstrated by the long
established associations and relationships it has formed with local residents,
underlying its dedication to aiding the continual social, physical and economic
regeneration of the area in which it is located. Through an in house project
called 'The United Initiative' the Club continues to increase its work across
the City.
Community and national initiatives include: the Duke of Edinburgh Award Scheme,
Football in the Community, Vocational Skills Programme, Fit for School
programme, KICKZ football programme initiative, Football Unites Racism Divides
and the Junior Community Development Centre at Crookes, plus many more.
The proposed Junior Community Development Centre at Crookes gained planning
permission in March 2007 following comprehensive consultation with the local
community and relevant statutory bodies. It will comprise a recently completed
pavilion, a new Impact Gym, an all weather junior pitch, Kwick cricket
facilities, a multi use games area and a running/walking track. Work is due to
start on site in October 2007 and should be completed in early 2008. The Centre
will provide a first class facility for the local community, as well as an
opportunity for us to expand our community initiatives.
The Legends of the Lane not only provides a unique conference and events venue
but also forms an integral part of our community projects, in particular the Fit
for Schools programme.
I must accordingly offer my thanks to the patrons of Legends of the Lane, whose
assistance and funding has enabled this important Club facility not only to
provide community interaction but also further investment in the memorabilia,
which forms an important part of the Blades heritage. Legends of the Lane
patrons are Chris Steer (Pyramid Carpets), David Green (Green Piling), Suzie
MacCagnan, Angela Moore (Westfield Health), Andrew Arrand (Terra Firma Tiles),
Jim Stewart (Ram Tubulars Scotland) and the Co-op.
We are also delighted to have been selected to host a National Skills Academy
(NSA) at Shirecliffe. The NSA will revolutionise the sport and active leisure
industry by providing one single, coherent approach to all skills training in
the sector. Opening in 2008, it will be the best place to go to find out about,
and access, the qualifications and training required to most effectively do a
job within the sports and active leisure industry.
International
I am pleased to report that Chengdu Blades have achieved their main objective
for this season, promotion to the Chinese Super League. This is an exceptional
turn around in the two years the Club has been owned by Sheffield United. Off
the field the management team has introduced business practices which are common
place in the UK and Europe to the running of Chengdu Blades in order to increase
commercial revenue. The Chinese Super League will provide further commercial
opportunities as well as enhancing the brand and profile of both Clubs.
The Chengdu Blades Academy has also had a successful season winning a number of
tournaments at U17 and U19 levels. In addition, three Academy players were
selected to represent the Chinese U18 national team.
We continue to seek opportunities to widen our international network. In the
past year the Club have forged strategic links in the Ivory Coast, the
Caribbean, and Belgium.
Currently four young players from the Ivory Coast play in China, two of whom
have been a major part of the Chengdu Blades promotion winning side. There are
also a further five Caribbean players with Royal White Star FC, a Belgian 3rd
division club.
Following the success of these initiatives, further partnerships are being
progressed in Brazil, Spain, Eastern Europe and the United Kingdom.
Key Performance Indicators (KPIs)
As a diversified business, management monitor a broad range of both qualitative
and quantitative KPIs to review the performance of the business on a monthly,
weekly and in some cases daily basis. To focus on the key drivers of the
profitability of the Group, the Directors have identified the key indicators as
set out below:
Average Crowd: Ticket sales are the Football Club's largest income stream that
can be directly controlled. Average crowd attendance also has a direct influence
on catering, advertising, merchandising and sponsorship income.
League Position: The League position of the Football Club defines the success or
failure of the Club on the pitch and has an indirect impact on the income the
Club receives from its football related businesses.
Player wages as a percentage of turnover: The main cost in any football related
business is the level of player wages and it is standard industry practice to
compare the player wages to turnover as both a benchmark and a measure of
affordability. Turnover is defined in this measure as being the sales from
football related activities and contribution from the other activities such as
Leisure and Property.
Non-match day leisure revenue: As part of the diversification of the business
and to utilise the assets held, the level of revenue achieved by the Leisure and
Catering Department which is not related to match days indicates the success of
this segment of the business.
For property we have two main KPIs as follows:
Rental yields: rental income as expressed as a percentage of a property's
carrying value. This is then compared to the average cost of borrowing and
current market rates.
Development yields: where the ratio of estimated development profit is reviewed
over the development cost. This is used to assess the value and viability of a
development.
Financing
During the year the Group has invested funds in a series of areas of the
business. The main areas where significant investment has been undertaken are as
follows:
Playing Squad: SUFC invested #12 million into acquisitions to the worldwide
playing squad during the 2007 financial year.
Acquisition of USE (Sheffield) Limited, now John Street Developments Limited.
The Group acquired 100% of the share capital of the above company, which owns a
significant site on John Street, Sheffield in February 2007, and provided debt
funding to the company. The total debt and equity investment in this company was
#2.9 million including transaction costs.
The Group also invested #2.5 million in various projects around Bramall Lane
which are intended to enhance various aspects of the fans experience. These
included the completion of the Westfield Heath Stand and the upgrade of catering
facilities. The balance related to the commencement of the construction of the
hotel.
Funding for these activities in the main came from a blend of bank debt
financing and new equity from major shareholders. #10 million was raised during
the year in the form of convertible loan notes, which were converted in
accordance with their terms into ordinary share capital during April 2007.
Net debt increased during the year to #20.3 million from #14.8 million as at 30
June 2006. This increase related to two main new facilities, a facility of #10
million to fund player transfers to strengthen the squad for the Premier League
and a #3.15 million facility to acquire properties on John Street, Sheffield, of
which #2 million was drawn down as at 30 June 2007. Other facilities have been
steadily repaid over the year in accordance with their terms.
Since the year end the Group obtained a #10.0 million loan from SDG Caledonia
Holdings Limited mainly to sustain levels of investment.
I must express our thanks to HBOS plc for their ongoing support of our business
through both the provision of finance and sponsorship and the effort they have
invested in working with us to build our unique business model into a profitable
and successful business. A visionary and constructive business partner such as
HBOS is an integral part of any growing business such as ours.
I would also like to extend my thanks to the Scarborough Group of companies and
their related organisations for their continued support over the last year.
Their provision of assistance in the form of sponsorship and management support
to our property businesses has been an important facet of our continued success
in those areas.
International Financial Reporting Standards
Sheffield United is required by the rules of AIM to prepare its financial
statements in accordance with International Financial Reporting Standards
('IFRS') for the 2007/08 financial period. Accordingly the Group's transition
date is 1 July 2006 and its adoption date is 1 July 2007. The Group is in the
process of restating the figures disclosed within this report into IFRS
compliant format and will produce its December 2007 interim figures in
accordance with IFRS. The Directors anticipate that there will be no potential
material adjustment to the Group net assets arising from the adoption of IFRS.
Prospects
A return to the Premier League remains the most important objective for
Sheffield United Football Club. The Board has maintained investment in the first
team and provided an environment for success on the pitch.
Sheffield United plc has been building its business in many ways over the recent
past with increasing diversification of both its asset base and income streams
reducing the Club's reliance on football success. It is intended to continue
this robust business strategy.
The Club continues to invest in its Academy and develop a network of Academy
partnerships and Club links both nationally and internationally.
The promotion of Chengdu Blades to the Chinese Super League is a major boost to
our international aspirations.
In the Community our plans for the "United Initiative" are set out above, and
include the proposed development of a partially Government funded National
Skills Academy at our Shirecliffe site and a Junior Community Development Centre
at Crookes.
The new Copthorne Sheffield Hotel is expected to be trading for Christmas 2008.
An exciting master plan for Bramall Lane is currently being developed to
complement the Hotel and is intended to establish the stadium amongst the best
in the country. A planning application for the first phase is expected to be
lodged in the near future.
The Group will continue to maximise returns from USE by proactively managing and
trading the existing portfolio whilst recognising a change in the economic
climate.
Our Leisure division is expected to contribute strongly this year as the Thames
Club continues to grow its membership base and the catering department increases
its non match day business.
The off field management team has been strengthened at all levels to address the
increasing complexity and diversity of the Group and to support the expansion of
our activities in order to enhance returns.
The current season ticket sales are around 19,000 and with the average league
gate at 25,286 the Club is currently the best supported club in the
Championship. Sales from the retail stores, Lottery and programmes are
continuing to perform well.
Summary
As stated in my previous year's report, the Sheffield United business plan is
not reliant on Premier League Football. The sound financial base of the Group
allows the continued development of our unique and diverse business model as we
seek to create and exploit further opportunities. This is intended to provide
the foundations for the Club to succeed on the pitch with all the associated
benefits of that success.
I would like to close by thanking my fellow directors, colleagues, commercial
partners and the Club's supporters whose continuing support of the Blades forms
the most crucial part of the Club's long term success.
Jason Rockett
Chief Executive
24 October 2007
Consolidated profit and loss account
for the year ended 30 June 2007
2007 2006
Note #000 #000
(Restated)
Turnover
Group and share of joint venture 45,767 27,197
Less: Share of joint venture's turnover (6,835) (12,883)
---------- ----------
Group turnover 2 38,932 14,314
Cost of sales (26,105) (16,274)
---------- ----------
Gross profit/(loss) 12,827 (1,960)
Administrative expenses 2 (12,826) (8,092)
Other operating income 466 445
---------- ----------
(12,360) (7,647)
Continuing businesses:
Operating profit/(loss) before promotion
bonuses, amortisation and impairment of
cost of players' registrations and cost of
terminating players' contracts 6,269 (5,410)
Promotion bonuses - (2,327)
Amortisation and impairment
of player registrations (4,852) (1,341)
Cost of terminating players' contracts (950) (529)
---------- ----------
467 (9,607)
Operating profit/(loss) 467 (9,607)
Share of operating profit in joint venture 1,784 2,492
Profit on disposal of players registrations 691 929
Profit on disposal of tangible fixed assets 27 -
Profit/(loss) on ordinary activities
---------- ----------
before interest 2,969 (6,186)
Net interest payable (2,582) (1,731)
---------- ----------
Profit/(loss) on ordinary activities
before taxation 2 387 (7,917)
Taxation (9) -
---------- ----------
Profit/(loss) on ordinary activities
for the year after taxation 378 (7,917)
Minority interest 157 40
---------- ----------
Profit/(loss) for the financial year 535 (7,877)
---------- ----------
Basic and diluted profit/(loss) per share 0.02p (4.8p)
All the above activities are continuing.
The directors consider that the contribution to the results for the year from
the acquisitions during the year is not material, and therefore has not been
separately disclosed above.
There is no material difference between the historic cost profit/loss for the
financial years shown above.
The accompanying notes form an integral part of these financial statements.
Statement of total recognised gains and losses
for the year ended 30 June 2007
2007 2006
#000 #000
(Restated)
Profit/(loss) for the financial year 535 (7,877)
Exchange differences on translation of foreign operations (10) -
Prior year adjustment (note 3) (608) -
-------- --------
Total recognised gains and losses since last financial
year (83) (7,877)
======== ========
Consolidated balance sheet
at 30 June 2007
2007 2007 2006 2006
#000 #000 #000 #000
(Restated) (Restated)
Fixed assets
Intangible assets:
Goodwill 197 134
Other 11,254 6,164
---------- ----------
11,451 6,298
Tangible assets 37,013 31,264
Investment in joint
venture:
Share of gross assets 22,163 9,162
Share of gross liabilities (20,466) (7,515)
---------- ----------
1,697 1,647
---------- ----------
50,161 39,209
---------- ----------
Current assets
Stocks 358 326
Debtors - amounts falling
due within one year 4,112 2,541
Debtors - amounts falling
due after more than one 4,305 4,215
year
Cash at bank and in hand 3,610 600
---------- ----------
12,385 7,682
Creditors: amounts falling
due within one year (16,406) (11,623)
---------- ----------
Net current liabilities (4,021) (3,941)
---------- ----------
Total assets less current
liabilities 46,140 35,268
Creditors: amounts falling
due after more than one (15,777) (13,853)
year
Deferred Income (9,014) (10,317)
---------- ----------
Net assets 21,349 11,098
---------- ----------
Capital and reserves
Called up share capital 27,851 21,184
Share premium account 20,019 16,803
Merger reserve 3,018 3,018
Profit and loss account (29,378) (29,903)
---------- ----------
Shareholders funds 21,510 11,102
Minority Interest (161) (4)
---------- ----------
21,349 11,098
---------- ----------
Consolidated cash flow statement
for the year ended 30 June 2007
2007 2006
Note #000 #000
Net cash inflow/(outflow) from operating 5 2,048 (2,706)
activities
Returns on investments and servicing of finance
Interest paid (1,640) (703)
Interest element of finance lease payments (9) (8)
---------- ----------
(1,649) (711)
---------- ----------
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (3,861) (3,777)
Payments to acquire player registrations (14,254) (2,669)
Proceeds from disposal of player
registrations 2,194 1,030
Proceeds from disposal of tangible fixed assets 270 -
Loan made to joint venture - (1,571)
Net cash outflow from capital expenditure and ---------- ----------
financial investment (15,651) (6,987)
---------- ----------
Acquisitions
Purchase of subsidiary undertakings (84) (4,694)
Net cash from purchase of subsidiary
undertakings - 352
---------- ----------
Net cash flow from acquisitions (84) (4,342)
---------- ----------
Net cash outflow before financing (15,336) (14,746)
Financing
Issue of ordinary share capital 10,000 10,404
Costs of issuing share capital (117) (227)
Capital element of finance lease payments (31) (77)
Repayment of other financial liabilities - (109)
Repayment of bank borrowings (3,246) (1,127)
Receipts from bank borrowings 11,705 7,070
Receipts from grants 35 81
---------- ----------
Net cash inflow from financing 18,346 16,015
---------- ----------
Increase in cash 6 3,010 1,269
========== ==========
Notes:
1. Basis of preparation
The information above, which does not constitute full financial statements
within the meaning of S240 CA 1985, is extracted from the audited financial
statements of Sheffield United plc for the year ended 30 June 2007 which:
* were approved by the Directors on 24 October 2007
* carry an unqualified audit report which did not contain any statements
under S237 CA 1985.
* will be posted to shareholders and available to the public shortly
* will be filed with the Registrar of Companies following the Annual
General Meeting which will be held at 11:30 am on 23 November 2006 in the
Platinum Suite at Sheffield United Football Club, Bramall Lane.
The financial statements have been prepared under the historical cost convention
and in accordance with applicable United Kingdom accounting standards, and on
the basis of the accounting policies set out in the Annual Report for the year
ended 30 June 2006 other than the adoption of FRS 20 'Share-Based Payment
(IFRS 2)'. For the year ended 30 June 2007 the change in accounting policy has
not resulted in a charge to the profit and loss account and no effect on the balance
sheet as the award was granted on or around the year end date.
2 SEGMENTAL DISCLOSURE
Turnover and profit/(loss) on ordinary activities before taxation.
2007 2007 2007 2006
#000 #000 #000 #000
China UK Total Total
Gate receipts 26 7,597 7,623 5,278
Television Income 8 20,014 20,022 1,077
Sponsorship, royalties, merchandising
and advertising 528 6,740 7,268 4,997
Conference and banqueting - 1,437 1,437 1,321
--------------------- -------
562 35,788 36,350 12,673
Royalty, corporate hospitality and stewarding - 132 132 185
Business centre income - 853 853 870
Health club income - 1,550 1,550 586
Property management company - 47 47 -
--------------------- -------
562 38,370 38,932 14,314
--------------------- -------
2007 2006
#000 #000
Total Total
(Restated)
Profit/(Loss) before taxation
Football activities - non cup 1,905 (9,724)
Football activities - cup runs 137 101
-------- --------
2,042 (9,623)
Profit on disposal of players registrations 691 929
Profit on disposal of tangible fixed assets 27 -
-------- --------
2,760 (8,694)
Royalty , corporate hospitality and stewarding 360 241
Business Centre 298 318
Health Club 310 (32)
Property management company 35 -
Chinese Football Club (1,666) (396)
Parent Company (912) (115)
Joint Venture 1,784 2,492
-------- --------
2,969 (6,186)
Net interest (2,582) (1,731)
-------- --------
387 (7,917)
-------- --------
2007 2006
#000 #000
Total Total
Net assets/(liabilities)
Professional football activities 33,203 21,185
Royalty, corporate hospitality and stewarding 334 109
Business Centre (97) (91)
Health Club (59) (359)
Property management company 2,455 -
Chinese Football Club 7 (857)
Parent Company 4,060 4,259
Joint Venture 1,697 1,647
Non trading subsidiaries 1 1
-------- --------
41,601 25,894
Net debt (20,252) (14,796)
-------- --------
21,349 11,098
-------- --------
3 PRIOR YEAR ADJUSTMENT
The balance sheets and profit and loss accounts for the year ended 30 June 2006
have been restated to reflect an adjustment for additional bank interest payable
on a mezzanine bank loan facility drawn in May 2002. The effect of restating the
accounts is a reduction in the reserves at 30 June 2006 of #608,000, and a
reduction in the profit for the year ended 30 June 2006 of #152,000.
4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2007 2006
#000 #000
(Restated)
Proceeds from issue of shares 10,000 10,404
Costs of issuing shares (117) (227)
Exchange differences on translation (10) -
----------------------------------------------------------------------------------
Profit/(loss) for the year as previously stated 535 (7,725)
Prior year adjustment (note 3) - (152)
----------------------------------------------------------------------------------
Profit/(loss) for the year as restated 535 (7,877)
Total movement in Shareholders' funds 10,408 2,300
----------------------------------------------------------------------------------
Shareholders' funds at 1 July as previously stated 11,710 9,258
Prior year adjustment (note 3) (608) (456)
----------------------------------------------------------------------------------
Shareholders funds at 1 July as restated 11,102 8,802
-------- --------
Shareholders' funds at 30 June as restated 21,510 11,102
-------- --------
5 NET CASH INFLOW/OUTFLOW FROM OPERATING ACTIVITIES
2007 2006
#000 #000
Operating profit/(loss) 467 (9,607)
Depreciation 871 592
Amortisation of goodwill 21 (11)
Exchange difference on translation (10) -
Amortisation of players' registrations 4,852 1,341
Increase in stocks (32) (74)
Increase in debtors (97) (1,263)
(Decrease)/Increase in creditors (2,676) 2,981
(Decrease)/Increase in deferred income (1,201) 3,479
Release of grant income (147) (144)
-------- --------
Net cash inflow/(outflow) from operating activities 2,048 (2,706)
-------- --------
6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2007 2006
#000 #000
Increase in cash in the period 3,010 1,269
Cash outflow from change in debt and lease financing (8,429) (5,757)
Inception of finance leases (37) (225)
-------- --------
Changes in net debt resulting from cash flows and
movement in net debt in the period (5,456) (4,713)
Net debt at 1 July 2006 (14,796) (10,083)
-------- --------
Net debt at 30 June 2007 (20,252) (14,796)
-------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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