3:55pm Tuesday 18th November 2008
On behalf of the Board of Directors I am pleased to present the Final Results of Watford Leisure PLC for the year ended 30 June 2008.
Much was expected of the team last season as it competed once again in the Championship. As explained in last year’s annual report, we had decided in the summer of 2007 following relegation from the Premiership, to maintain the level of expenditure on football from the previous season in an effort to give the manager and his team the best possible chance of being re-promoted. For much of the season it looked like the strategy was going to work but following a series of disappointing results in the last quarter of the season, we finished in 6th position and lost in the semi-final of the play-offs. It is worth mentioning that 6th in the Championship represents one of the best ever finishes of Watford Football Club (“the Club”). However, given the early season promise, it is fair to say that not achieving one of the two automatic promotion spots was a big disappointment.
Financial Results
This financial year recorded a fall in revenue of £7.5m to £22.4 million due principally to the reduction in the Premier League distributions following relegation, lower matchday revenues and a reduction in cup revenues when compared to the previous year. The operating loss before interest, player trading and the premium received on the grant of a long lease of £5.1m (2007: profit of £3.1m) reflects not only the fall in revenue but also the fact that expenses, excluding amortisation, were running slightly higher than last year - £28.1m against £27.3m in 2007. The profit on ordinary activities was £0.4 million (2007: £8.0 million).
Football Team
The 2007/08 season was one of high expectations for the Club, players and supporters alike. Last season might be summed up as a “game of two halves”. The departure of Hameur Bouazza was made good by the arrival of Nathan Ellington towards the end of August 2007. The team started the season in sparkling form with both Marlon King and Darius Henderson scoring freely and led the Championship for the best part of five months. In January 2008 Marlon King moved on to Wigan. To many observers this may have seemed to be a strange decision given Marlon’s undoubted scoring and all-round football abilities. Nevertheless, Marlon had decided that the time was right for him to move to another club and we decided, with regret, not to stand in his way. The transfer cash received enabled us to strengthen our squad with the purchase of John Eustace, Leigh Bromby and Mat Sadler, all of whom quickly settled into the 1st team. However, from February onwards the goals were hard to come by and following a string of seven consecutive draws, the team’s form and results dipped towards the end of the season. However, the good foundation laid in the first half of the season meant that the team were still able to cling on to 6th place and claim a play-off semi-final with Hull City.
Strategic Review
Following the defeat by Hull City in the play-off semi-final, the Board immediately embarked on a strategic review of the Club’s operations, both football and commercial. In anticipation of the cessation of parachute payments at the end of the 2008/09 season, it was clear that the cost base had to be reduced significantly in order for the Club to achieve cash neutrality within a 24 month timeframe. To this end we have seen a number of player departures - Darius Henderson to Sheffield Utd, Danny Shittu to Bolton Wanderers, Nathan Ellington on a season-long loan to Derby County, Jordan Stewart (contract expiry) and Matt Jackson, Douglas Rinaldi and Santiago Aloi (contract terminations). The effect of the player departures has been offset in part by the arrival of John Harley to strengthen the left side of defence and midfield and Grzegorz Rasiak (on loan from Southampton) to strengthen the attack and also by the promising early season form shown by younger members of the squad. However the results have continued to be disappointing and currently we are in 22nd position in the Championship, and in the relegation zone. Indeed we have only won twelve of the last 48 league games since November last year. Following the Blackpool match on 1 November 2008 I sat down with Aidy Boothroyd and we agreed that the time was right for a new manager to take the Club forward. This was a mutual decision and one which I feel was in the best interests of both the Club and Aidy himself. Aidy has been a great manager for the Hornets having guided us into the Premiership in April 2006 and an FA Cup semi-final last year and he leaves with best wishes from everyone at Watford Football Club.
Malky Mackay, the reserve team coach, has been appointed caretaker manager. He will be assisted by Martin Hunter, the current first team coach, Sean Dyche the former Hornets defender and Alec Chamberlain as goalkeeping coach.
Whilst Mark and I will continue to manage the Club through this difficult transition period, as part of the wider strategic review the Board is committed to try and find investors who can help take the Club forward and provide a cash injection. However we cannot “budget” for new investment and must remain focused on defining and executing a stable trading and financial plan for the Club. We will endeavour to achieve the financial objectives without compromising the values of the Club and in particular its strong community links and investment in its academy and in the youth of Watford and surrounding areas generally.
Vision 2010+
The management and staff continue to work towards the Club’s Vision for 2010 and beyond which is designed to enhance the Club’s reputation in the community and provide further sustainability for the business. We are very proud to have been awarded Football League Community Club of the Year 2007/08. It is very pleasing that the work undertaken week in, week out, by the Club’s dedicated staff in running many and varied projects in Watford and surrounding districts is officially recognised by our peer group. Youth development is an integral part of the Vision and we are very excited by the promise shown by the current Academy teams at all age groups.
The collaboration with The Harefield Academy provides a unique opportunity for the Club to develop not only its youngsters’ footballing skills but also their educational and life skills. We believe that the arrangement is a ground-breaking one at least as far as the UK is concerned and look forward to the current crop of students becoming professional footballers with Watford. We are very proud of the work being undertaken in the Academy and I would like to take this opportunity to thank David Dodds (who left the Club in August 2008) for his contribution and for the on-going work of Mark Warburton and Nick Cox and all their staff for their sterling efforts.
Stadium Redevelopment
Work continued throughout the season to redevelop Vicarage Road Stadium and we were pleased to see the progress being made to both the south face of the Rookery Stand and the south-west corner of the stadium. A notoriously difficult site to manage and develop, work on the key-worker housing to the south of the stadium has been subject to several challenges during this period, which has meant for some delays to the original schedule. Whilst the key-worker housing itself will not be completed until March 2010 the foundation to the south-west corner should be completed by the end of January 2009.
The Club has been granted planning permission for a new East Stand on the basis of 5,000 seats and the provision of 3,500 square metres of concourse, lobby and usable non-matchday office space. However given the current financial constraints, we are reviewing the options for the East Stand and considering an alternative structure which would be cheaper to build.
Options are also currently being assessed for the ongoing use of the Red Lion public house, which was vacated by its previous tenants at the end of April 2008.
People
The Club is going through a difficult transitional period and I must thank the fans and all those involved in the running of the Club for their continuing support. Following another testing and rigorous season in 2007/08 I am pleased to report that all of the Club’s staff again contributed greatly to the many successes we enjoyed during this period - both on and off the pitch. Much work is undertaken behind the scenes and for this we are indebted to Mark Ashton, Chief Executive and his team.
And finally, I would like to thank sponsors, customers and supporters without whom we would not have a football club.
Graham Simpson
Chairman
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