Newcastle United Plc

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13 April 2006
Newcastle United Plc
Restatement of financial information under Adopted International Financial Reporting Standards
Introduction
Newcastle United PLC (the Group) has, historically, prepared its consolidated financial statements under UK Generally
Accepted Accounting Practice (UK GAAP). Following the adoption by the European Parliament, in July 2002, of
Regulation No 1606/2002 the Group is, with effect from the year ending 31 July 2006, required to prepare its accounts in
accordance with International Financial Reporting Standards as adopted by the EU.
The Group’s first published information prepared on the basis of adopted IFRS will be in respect of its results for the six
months ended 31 January 2006. This document explains how the Group’s reported performance and financial
information are affected by the change from UK GAAP to Adopted IFRS. The contents are as follows:



Basis of preparation of transitional information under Adopted IFRS
Overview of the impact of IFRS adoption
Significant changes in accounting policies and impact on the financial statements
Appendix 1
Significant accounting policies
Appendix 2
Primary financial statements on an Adopted IFRS basis for the 6 months
ended 31 January 2005, the year ended 31 July 2005.
Appendix 3
Reconciliations of profit and equity for the year ended 31 July 2005
Appendix 4
Reconciliations of profit and equity for the six months ended 31 January 2005
Appendix 5
Reconciliation of equity at 1 August 2004
Appendix 6
Special purpose audit report of KPMG Audit Plc to Newcastle United PLC
Basis of preparation of transitional information under Adopted IFRS
The financial information has been prepared on the recognition and measurement basis of IFRS adopted by the EU and
in accordance with the accounting policies that the Group expects to apply in its first IFRS financial statements.
The accounting policies applied are set out in Appendix 1. These are preliminary accounting policies pending finalisation
at the year end.
The transition balance sheet as at 1 August 2004 and the financial information for the year ended 31 July 2005,
prepared under Adopted IFRS, have been audited by KPMG Audit Plc. Their special purpose audit report is attached as
Appendix 6. The financial information for the six months ended 31 January 2005 is unaudited. Subject to EU
endorsement of outstanding standards and no further changes from the IASB this information is expected to form the
basis for comparatives when reporting financial results for 2006, and for subsequent reporting periods.
IFRS 1 exemptions
IFRS 1 First Time Adoption of International Accounting Standards sets out the procedure that the Group must follow
when IFRS is adopted for the first time. It sets out a number of exemptions that are available to the Group to assist in
the transition from UK GAAP to Adopted IFRS.
No adjustments have been made for any changes in estimates that were made at the time of approval of the UK GAAP
financial statements on which the IFRS restatement information is based. The Group has applied the following key
exemptions:
(a)
Financial instruments: the Group has taken the exemption from applying IAS 32 Financial Instruments:
Disclosure and Presentation and IAS 39 Financial Instruments: Recognition and Measurement to the comparative
information to be presented in the first IFRS consolidated financial statements, and has adopted IAS 32 and IAS 39 with
effect from 1 August 2005. As such, information relating to financial instruments for the six months ended 31 January
2005 and year ended 31 July 2005 continues to be presented under UK GAAP. For the year ending 31 July 2006,
financial instruments will be presented in accordance with IAS 32 and IAS 39, with adjustments being made at 1 August
2005 to reflect the difference between UK GAAP and Adopted IFRS.
-1-
(b)
Fair value or revaluation as deemed cost: the Group has not taken the option to restate items of property, plant
and equipment to their fair value at 1 August 2004. Instead, the deemed cost under Adopted IFRS will be the cost or
revalued amount of each asset previously shown under UK GAAP.
(c)
The Group has not taken advantage of the transitional provisions contained in IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations, and has applied this standard with effect from 1 August 2004.
Overview of the impact of IFRS adoption
Adopted IFRS do not affect the underlying business performance of the Group. The analysis below sets out the most
significant adjustments made in arriving at the income statements and balance sheets under Adopted IFRS, the impact
of which can be seen in the reconciliations at Appendices 3 & 4.
There are no differences between the results under UK GAAP and IFRS for Newcastle United PLC, at a company only
level, for either the six months ended 31 January 2005 or the twelve months ended 31 July 2005.
Based on the accounting policies detailed in the subsequent section, the effect of the transition on key reported results is
as follows:
6 months to 31
January 2005
UK GAAP
£’000
IFRS
£’000
12 months to 31
July 2005
UK GAAP
£’000
IFRS
£’000
Profit/(loss) from operations *
2,891
12,042
(8,966)
5,854
Profit/(loss) for the period
6,380
7,252
(104)
620
5.0p
5.6p
(0.1)p
0.5p
37,391
38,372
28,282
30,415
Basic Earnings/(Loss) per share
Net assets
* Under Adopted IFRS, profit or loss on disposal of players’ registrations is now included within Profit or Loss from
operations
The main areas where Adopted IFRS have impacted upon the results are as follows:



Equity dividends are not recorded as a liability until approved by the shareholders
Player acquisitions on deferred terms give rise to a notional interest charge over the period of deferral which is
only partially offset by a reduced amortisation charge
Player registrations regarded as held for sale are reclassified as current assets and amortisation is suspended at
the time of reclassification
Each of these is discussed in further detail in the following section, and full reconciliations of the UK GAAP to Adopted
IFRS figures are shown in Appendices 3 & 4.
Significant changes in accounting policies and impact on the financial statements
Recognition of Dividends
Under IAS 10 Events After the Balance Sheet date dividends are recognised as an appropriation of equity in the period
in which they are approved (in the case of a final dividend) or paid (in the case of an interim dividend). Amounts
previously accrued in the balance sheet are now removed, resulting in reduced liabilities at the half year ended 31
January 2005 of £1.325m and £2.625m at the year ended 31 July 2005.
Intangible assets
(i) Acquisition of player registrations
Under IAS 38 Intangible assets, players acquired on deferred terms are recorded at the fair value at the date of
acquisition. The related creditor is then increased to the settlement value on an effective interest rate basis over the
period of deferral, with this value being charged as notional interest within ‘Finance Costs’ in the Income Statement. The
-2-
net effect is a reduction in the creditor of £0.348m at the half year ended 31 January 2005 and £0.896m at the year
ended 31 July 2005.
The increased interest is charged to finance costs over the deferral period and amounts to £0.297m for the half year
ended 31 January 2005 and £0.594m for the year ended 31 July 2005.
The corresponding player registration value is also reduced by the notional interest; the lower intangible asset value
results in a reduced charge to operating profit as the intangible asset is amortised over the length of the player’s
contract. The net effect on intangible assets is a reduction of £1.491m at 31 January 2005 and £2.439m at 31 July 2005.
Operating profit is increased by £0.37m and £0.267m respectively.
The differing rate at which the finance costs and amortisation are recognised in the income statement produces a
deferred tax credit shown in income tax expense.
(ii) Other intangible assets
Under IAS 38 Intangible assets, goodwill of £0.642m is reclassified as other intangible assets.
Non-current assets held for resale
Under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations if, at any time, it is considered that the
carrying amount of an asset (including a player’s registration) will be recovered principally through sale rather than
through continuing use then the value of that asset is required to be reclassified as a ‘Non-current asset held for resale’
and disclosed as such on the balance sheet within current assets. At the time of reclassification the measurement of
the asset is the lower of (a) fair value (less costs to sell) and (b) carrying value. Amortisation of the asset is suspended
at the time of reclassification, although impairment charges still need to be made if applicable. The net effect is a
reclassification from non-current assets to current assets of £6.624m at 31 January 2005 and £3.031m at 31 July 2005.
There is a net increase in operating profit of £0.651m for the half year ended 31 January 2005 and £0.908m for the year
ended 31 July 2005. These adjustments relate to the cessation of amortisation from the point of reclassification of
assets held for sale and also an adjustment to the carrying value of relevant assets in order to measure them at the
lower of carrying value and fair value less costs to sell.
IAS 32 and 39 Financial instruments
The Group has taken advantage of the IFRS 1 exemption from applying IAS 32 and IAS 39 to its comparative results,
and the figures for the six months ended 31 January 2005 and year ended 31 July 2005 continue to be presented under
UK GAAP. These standards are adopted from 1 August 2005, and the balance sheet at that date has been restated to
show their impact.
There are two main areas of impact:
(i) Interest bearing borrowings
Under UK GAAP loans and other interest bearing borrowings were recognised at fair value (which would usually
approximate to nominal value) and thereafter, at amortised cost. Under Adopted IFRS the amortised cost is calculated
using the effective interest method from the initial issuance of the debt.
The associated interest expense is recognised on an accruals basis using the effective interest method.
Transaction costs meeting the criteria under IAS 39 are capitalised by debiting the loan balance. The capitalised
transaction costs are amortised to the income statement over the life of the transaction using the effective interest
method.
There is a £0.271m reduction in equity at 1 August 2005 resulting predominantly from the fact that under FRS 4 Capital
Instruments amortisation costs were allocated to periods over the term of the debt at a constant rate on the carrying
amount and not on an effective interest basis.
(ii) Trade receivables
Under IAS 32/39, trade receivables on deferred terms, in particular the proceeds from sales of players’ registrations are
recorded at their fair value at the date of sale. As a consequence of these fair value provisions, reserves are reduced at
1 August 2005 by £0.527m.
-3-
Appendix 1 Significant Accounting Policies
The IFRS restatement information (the financial information) has been prepared in accordance with the recognition and
measurement requirements of International Financial Reporting Standards (IFRS) as adopted by the European Union.
A summary of the significant accounting policies adopted and, except where otherwise stated, consistently applied, in
the preparation of the financial information is shown below:
(a)
Measurement convention
The financial statements are prepared on the historical cost basis except that the following assets and liabilities are
stated at their fair value: derivative financial instruments. Non current assets and disposal groups held for sale are
stated at the lower of previous carrying amount and fair value less costs to sell.
(b)
Basis of consolidation
The consolidated financial statements of the Group include the financial statements of the company and its subsidiaries.
Subsidiaries are entities that are controlled, either directly or indirectly, by the Company. Control exists where the
Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its
activities.
Jointly controlled entities are those entities over which the Group has joint control, established by contractual agreement.
The consolidated financial statements include the Group’s share of the total recognised gains and losses of jointly
controlled entities on an equity accounted basis, from the date that joint control commences until the date that joint
control ceases.
(c)
Revenue
Revenue represents income arising from sales to third parties, and excludes transfer fees receivable and value added
tax.
(i) Season ticket and corporate hospitality revenue is recognised over the period of the football season as home matches
are played.
(ii) Fixed elements of FA Premier League central broadcasting contracts are recognised over the period of the football
season as league matches (home and away) are played. Appearance fees are accounted for as earned. The merit
based payment is recognised at the end of the league season, when the final league position is known.
(iii) Sponsorship contracts are recognised over the duration of the contract.
(iv) Branded Products and catering revenues are recognised on an earned basis.
(d)
Intangible assets
(i) Acquired players’ registrations
The costs associated with the acquisition of players’ registrations are initially recorded at their fair value at the date of
acquisition as intangible fixed assets. These costs are fully amortised, on a straight line basis, over the period of the
respective players’ contracts.
Players’ registrations are written down for impairment when the carrying amount exceeds the amount recoverable
through use or sale.
Acquired players’ registrations are classified as ‘Assets held for sale’ on the balance sheet if, at any time, it is considered
that the carrying amount of a registration will be recovered principally through a sale transaction rather than through
continuing use the value of that registration. At the time of reclassification the measurement of the registration is the
lower of (a) fair value (less costs to sell) and (b) carrying value. Amortisation of the asset is suspended at the time of
reclassification, although impairment charges still need to be made if applicable.
(ii) Other intangible assets
Intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (see below) and
impairment losses (see accounting policy n).
-4-
(iii) Amortisation
Amortisation is charged to profit or loss on a straight line basis over the estimated useful lives of intangible assets unless
such lives are indefinite. Intangible assets with an indefinite life are systematically tested for impairment at each balance
sheet date.
(e)
Property, plant and equipment
(i) Owned assets
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (see accounting
policy n).
(ii) Leased assets
Finance leases are those which transfer substantially all of the risks and rewards of ownership to the lessee. Assets
held under finance leases are capitalised as property, plant and equipment and are depreciated over the shorter of the
lease term or their useful economic life. The capital elements of future lease obligations are included within borrowings,
while the interest elements are charged to the income statement over the period of the lease to produce a constant rate
of charge on the balance of capital repayments outstanding.
All other leases are operating leases, the rentals on which are charged to the income statement on a straight line basis
over the lease term.
(iii) Depreciation
Depreciation is charged to the income statement, to write off the cost of property, plant and equipment less estimated
residual value, on a straight line basis, over their estimated useful lives as follows:
Long leasehold property
over the shorter of the unexpired term of the lease and 50 years
Plant and equipment
3 – 15 years
Motor vehicles
4 years
No depreciation is provided on freehold land or assets in the course of construction. The residual value is reassessed
annually.
Interest incurred on borrowings to finance assets in the course of construction is capitalised. Once construction has
been completed, interest is charged to the income statement.
(f)
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is based on the estimated selling
price in the ordinary course of business. Provision is made for obsolete, slow-moving or defective items where
appropriate.
(g)
Signing on fees
Signing on fees are charged, on a straight line basis, to the income statement over the period of the player’s contract.
Where a player’s registration is transferred, any signing on fees payable in respect of future periods are charged against
the profit/(loss) on disposal of players’ registrations in the period in which the disposal is recognised.
(h)
Deferred income
Deferred income comprises amounts received from capital grants, sponsorship, bond and season ticket income. Capital
grants are released to the income statement on a straight line basis over the estimated useful lives of the assets to
which they relate. Other deferred income is released to the income statement on a straight line basis over the period to
which it relates.
(i)
Income tax
-5-
Income tax on the result for each period comprises both current and deferred tax. Income tax is recognised in the
income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable on the taxable income for the year, and any adjustment to tax payable in respect
of previous years.
Deferred tax is provided using the balance sheet liability method, on any temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to
investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of assets
and liabilities.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available to
utilise the temporary difference.
(j)
Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction.
Foreign currency monetary assets and liabilities at the balance sheet date are translated at the foreign exchange rate
ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Nonmonetary assets and liabilities measured at historical cost in a foreign currency are translated into sterling into sterling at
the rate of exchange on the date of the transaction.
(ii) Derivative financial instruments
The Group uses derivative financial instruments to hedge its exposure to foreign exchange risks arising from operational,
financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative
financial instruments for trading purposes.
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is
recognised immediately in profit or loss.
When a derivative financial instrument is used as an economic hedge of the foreign exchange exposure of a recognised
monetary asset or liability, hedge accounting is not applied and any gain or loss on the hedging instrument is recognised
in profit or loss.
(k)
Interest bearing borrowings
Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption
being recognised in profit or loss over the period of the borrowings on an effective interest basis.
(l)
Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contributions pension plans are recognised as an expense in the income
statement as incurred.
(m)
Dividends
Dividends are recognised as a liability in the period in which they are declared.
(n)
Impairment
The carrying value of the Group’s assets other than inventories and deferred tax assets, are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated.
-6-
For goodwill, assets that have an indefinite life and intangible assets that are not yet available for use, the recoverable
amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any
goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the unit on a
pro-rata basis. A cash generating unit is the smallest identifiable group of assets that generates cash inflows that are
largely independently of the cash inflows from other assets or groups of assets.
(o)
Trade and other payables and receivables
Trade and other payables and receivables on normal terms are stated at their nominal value.
Other payables on deferred terms, in particular the purchase of players’ registrations, are recorded at their fair value on
the date of the transaction and subsequently at amortised cost.
Other receivables on deferred terms, in particular the proceeds from sales of players’ registrations are recorded at their
fair value at the date of sale and subsequently at amortised cost less allowances for impairment.
(p)
Financing costs
Finance costs comprise interest payable on borrowings, calculated using the effective interest rate method, interest
receivable on funds invested and foreign exchange gains and losses.
The discounting of the deferred payments for the purchase of player registrations produces a notional interest payable
amount and this is charged to finance costs.
The discounting of the deferred receipts for sales of player registrations produces a notional interest receivable amount
and this is credited to finance income.
(q)
Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing products or services
(business segment) or in providing products or services within a particular economic environment (geographical
segment) which is subject to risks and rewards that are different from those of the other segments.
(r)
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result
of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.
-7-
Appendix 2
Consolidated Income Statement
6 months
ended
31 January
2005
£'000
(Unaudited)
31 July 2005
£'000
(Audited)
49,512
86,982
(40,964)
(80,965)
8,548
6,017
Amortisation of players' registrations
Impairment of players' registrations
Profit on disposal of players' registrations
(4,863)
8,357
(9,790)
(3,754)
13,381
Profit from operations
12,042
5,854
Revenue
Operating expenses
Profit from operations before player trading and amortisation
Finance income
12 months
ended
343
484
(2,662)
(5,614)
49
(104)
9,772
620
(2,520)
-
Profit for the period
7,252
620
Earnings per share
5.6p
0.5p
Finance expenses
Share of profit/(loss) of joint venture
Profit on ordinary activities before taxation
Income tax expense
-8-
Appendix 2
Consolidated Balance Sheet
Non-current assets
Property, plant & equipment
Intangible assets
Investments in joint ventures
Deferred tax assets
31 January 2005
£'000
(Unaudited)
31 July 2005
£'000
(Audited)
94,392
31,725
195
584
93,102
35,587
-
126,896
128,689
1,143
8,099
7,848
6,624
1,520
13,675
17,569
3,031
23,714
35,795
150,610
164,484
(49,360)
(5,479)
(6,261)
(234)
(3,104)
(49,957)
(10,892)
(6,081)
(553)
-
(64,438)
(67,483)
(7,029)
(16,495)
(16,923)
(7,353)
(5,123)
(25,722)
(26,309)
(9,432)
(47,800)
(66,586)
(112,238)
(134,069)
38,372
30,415
7,111
69,377
831
(38,947)
6,433
69,377
831
(46,226)
38,372
30,415
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
Total assets
Non-current liabilities
Interest bearing loans and borrowings
Other payables
Deferred income
Provisions
Deferred tax liabilities
Current liabilities
Interest bearing loans and borrowings
Trade and other payables
Deferred income
Provisions
Total liabilities
Net assets
EQUITY
Issued capital
Share premium
Capital redemption reserve
Retained earnings
Total equity
-9-
Appendix 2
Consolidated Cash Flow Statement
6 months
ended
31 January 2005
£'000
(Unaudited)
12 months
ended
31 July 2005
£'000
(Audited)
7,252
620
2,662
(343)
(49)
2,520
5,076
(8,357)
1,806
(46)
170
88
(3,324)
(10,297)
5,614
(484)
104
10,325
3,754
(13,381)
(5)
3,837
(96)
(869)
(289)
2,235
(367)
Cash flow from operations
(2,842)
10,998
Interest paid
Interest received
(4,337)
364
(4,896)
502
Net cash flow from operating activities
(6,815)
6,604
(2,189)
(15,143)
15,447
-
(2,629)
15
(18,764)
19,308
(681)
2
(1,885)
(2,749)
Dividends paid
Proceeds from borrowings
Repayments of borrowings
(2,625)
1,500
(8,519)
(3,950)
2,800
(11,328)
Net cash from financing activities
(9,644)
(12,478)
(18,344)
(8,623)
26,192
26,192
7,848
17,569
Cash flows from operating activities
Profit for the period
Adjustments for:
Finance expenses
Finance income
Share of (loss)/profit of joint venture
Income tax expense
Amortisation of intangible assets
Impairment of intangible assets
Profit on disposal of players’ registrations
Profit on sale of property, plant and equipment
Depreciation of property, plant and equipment
Capital grants release
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
(Decrease)/increase in trade and other payables
Decrease in deferred income
Cash flows from investing activities
Acquisitions of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of players’ registrations
Proceeds from sale of players’ registrations
Acquisition of subsidiary undertaking
Cash acquired with subsidiary
Net cash flow from investing activities
Financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
- 10 -
Appendix 2
Consolidated Statement of Changes in Equity
Attributable to equity holders of the Parent
(Unaudited)
Balance at 1 August 2004
Profit for the period
Dividends on equity shares relating to year ended 31 July 2004
Balance at 31 January 2005
Share
Capital
Share
Premium
Capital
Redemption
Reserve
Retained
Earnings
Total
£'000
£'000
£'000
£'000
£'000
7,111
69,377
831
(43,574)
33,745
-
-
-
7,252
7,252
-
-
(2,625)
(2,625)
7,111
69,377
831
(38,947)
38,372
Attributable to equity holders of the Parent
(Audited)
Share
Capital
Share
Premium
Capital
Redemption
Reserve
Retained
Earnings
Total
£'000
£'000
£'000
£'000
£'000
Balance at 1 August 2004
7,111
69,377
831
(43,574)
33,745
Profit for the period
Cancellation of deferred shares
Dividend on equity shares relating to year ended 31 July 2004
Interim Dividends on equity shares relating to the year ended 31 July
2005
(678)
-
-
-
620
678
(2,625)
620
(2,625)
-
-
-
(1,325)
(1,325)
Balance at 31 July 2005
6,433
69,377
831
(46,226)
30,415
- 11 -
Appendix 3
Consolidated Income Statement
Reconciliation of Profit (Audited)
UK GAAP to IFRS for the year ended 31 July 2005
Revenue
UK GAAP
IAS38
Intangible
assets
IFRS5
Non current
assets held
for sale
IFRS
£'000
£'000
£'000
£'000
86,982
Operating expenses
86,982
(80,928)
Profit from operations before player trading and amortisation
Amortisation of players' registrations
Impairment of players' registrations
Profit on disposal of players' registrations
Profit from operations
Finance income
Finance expenses
Share of loss of joint venture
(37)
(80,965)
6,054
-
(37)
6,017
(11,839)
(3,041)
13,505
391
1,658
(713)
(124)
(9,790)
(3,754)
13,381
4,679
267
908
5,854
484
(5,020)
(594)
484
(5,614)
(104)
Profit on ordinary activities before taxation
(104)
39
(327)
908
620
Income tax expense
(143)
415
(272)
-
(Loss)/profit for the period
(104)
88
636
620
- 12 -
Appendix 3
Consolidated Balance Sheet
Reconciliation of Equity (Audited)
UK GAAP to IFRS at 31 July 2005
UK GAAP
IAS 38
Intangible
assets
£'000
£'000
IFRS5
Non current
assets held
for resale
£'000
IAS10
Events after
the Balance
sheet date
£'000
IFRS
£'000
Non-current assets
Property, plant & equipment
93,433
(331)
93,102
Intangible assets - Goodwill
Intangible assets - Other
642
39,176
(642)
(1,797)
(1,792)
35,587
133,251
(2,439)
(2,123)
-
-
128,689
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
Total assets
1,520
13,675
17,569
1,520
13,675
17,569
-
3,031
3,031
32,764
-
3,031
-
35,795
166,015
(2,439)
908
-
164,484
Non-current liabilities
Interest bearing loans and borrowings
Other payables
Deferred income
Provisions
Deferred tax liabilities
(49,957)
(11,608)
(6,081)
(553)
(49,957)
(10,892)
(6,081)
(553)
716
(143)
415
(272)
(68,342)
1,131
(272)
-
(67,483)
Current liabilities
Interest bearing loans and borrowings
Trade and other payables
Deferred income
Provisions
Dividends
Total liabilities
Net assets
(5,123)
(25,902)
(26,309)
(9,432)
(5,123)
(25,722)
(26,309)
(9,432)
180
(2,625)
2,625
-
(69,391)
180
-
2,625
(66,586)
(137,733)
1,311
(272)
2,625
(134,069)
28,282
(1,128)
636
2,625
30,415
EQUITY
Issued capital
Share premium
Capital redemption reserve
Retained earnings
Total equity
6,433
69,377
831
(48,359)
(1,128)
636
2,625
6,433
69,377
831
(46,226)
28,282
(1,128)
636
2,625
30,415
- 13 -
Appendix 4
Consolidated Income Statement
Reconciliation of Profit (Unaudited)
UK GAAP to IFRS for the six months ended 31 January 2005
Revenue
Operating expenses
Profit from operations before player trading and amortisation
UK GAAP
IAS 38
Intangible
assets
£'000
£'000
IFRS5
Non current
assets held
for sale
£'000
IFRS
£'000
49,512
49,512
(40,964)
(40,964)
8,548
-
-
8,548
Amortisation of players' registrations
Profit on disposal of players' registrations
(5,706)
8,179
192
178
651
(4,863)
8,357
Profit from operations
11,021
370
651
12,042
Finance income
Finance expenses
343
(2,365)
(297)
Share of profit of joint venture
343
(2,662)
49
Profit on ordinary activities before taxation
Income tax expense
Profit for the period
- 14 -
49
9,048
73
651
9,772
(2,668)
343
(195)
(2,520)
6,380
416
456
7,252
Appendix 4
Consolidated Balance Sheet
Reconciliation of Equity (Unaudited)
UK GAAP to IFRS at 31 January 2005
UK GAAP
IAS 38
Intangible
assets
£'000
£'000
IFRS5
Non current
assets held
for resale
£'000
(1,491)
(5,973)
(1,491)
(5,973)
IAS10
Events after
the Balance
sheet date
£'000
IFRS
£'000
Non-current assets
Property, plant & equipment
Intangible assets
Investments in joint ventures
Deferred tax assets
94,392
39,189
195
584
134,360
94,392
31,725
195
584
-
126,896
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
Total assets
1,143
8,099
7,848
1,143
8,099
7,848
6,624
6,624
17,090
-
6,624
-
23,714
151,450
(1,491)
651
-
150,610
Non-current liabilities
Interest bearing loans and borrowings
Other payables
Deferred income
Provisions
Deferred tax liabilities
(49,360)
(5,498)
(6,261)
(234)
(3,252)
343
(195)
(64,605)
362
(195)
(49,360)
(5,479)
(6,261)
(234)
(3,104)
19
-
(64,438)
1,325
(7,029)
(16,495)
(16,923)
(7,353)
-
Current liabilities
Interest bearing loans and borrowings
Trade and other payables
Deferred income
Provisions
Dividends
Total liabilities
Net assets
(7,029)
(16,824)
(16,923)
(7,353)
(1,325)
329
(49,454)
329
-
1,325
(47,800)
(114,059)
691
(195)
1,325
(112,238)
37,391
(800)
456
1,325
38,372
EQUITY
Issued capital
Share premium
Capital redemption reserve
Retained earnings
Total equity
7,111
69,377
831
(39,928)
(800)
456
1,325
7,111
69,377
831
(38,947)
37,391
(800)
456
1,325
38,372
- 15 -
Appendix 5
Consolidated Balance Sheet
Reconciliation of Equity (Audited)
UK GAAP to IFRS at 1 August 2004
UK GAAP
IAS 38
Intangible
assets
£'000
£'000
IFRS5
Non current
assets held
for resale
£'000
93,907
34,890
147
(1,458)
(4,643)
128,944
(1,458)
(4,643)
IAS10
Events after
the Balance
sheet date
£'000
IFRS
£'000
Non-current assets
Property, plant & equipment
Intangible assets
Investments in joint ventures
93,907
28,789
147
-
122,843
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
Total assets
1,231
9,945
26,192
1,231
9,945
26,192
4,643
4,643
37,368
-
4,643
-
42,011
166,312
(1,458)
-
-
164,854
Non-current liabilities
Interest bearing loans and borrowing
Other payables
Deferred income
Provisions
(52,672)
(6,335)
(27,080)
(216)
(52,672)
(6,175)
(27,080)
(216)
160
(86,303)
160
-
-
(86,143)
Current liabilities
Interest bearing loans and borrowing
Trade and other payables
Deferred income
Provisions
Dividends
Total liabilities
Net assets
(10,674)
(19,524)
(6,447)
(8,403)
(2,625)
(10,674)
(19,442)
(6,447)
(8,403)
82
2,625
(47,673)
82
-
2,625
(44,966)
(133,976)
242
-
2,625
(131,109)
32,336
(1,216)
-
2,625
33,745
2,625
7,111
69,377
831
(43,574)
2,625
33,745
EQUITY
Issued capital
Share premium
Capital redemption reserve
Retained earnings
Total equity
7,111
69,377
831
(44,983)
(1,216)
32,336
(1,216)
- 16 -
-
Appendix 6
Special Purpose Audit Report of KPMG Audit Plc to Newcastle United PLC (the Company) on its preliminary
International Financial Reporting Standards (IFRS) Financial Information for the year ended 31 July 2005 and on
its preliminary opening IFRS balance sheet as at 1 August 2004
In accordance with the terms of our engagement letter dated 21 November 2005 we have audited the accompanying
consolidated preliminary IFRS balance sheet of Newcastle United PLC as at 31 July 2005, and the related consolidated
statements of income, changes in equity and cash flows for the year then ended and the related accounting policy notes
(“the preliminary IFRS financial information”) set out on pages 4 to 13.
Also in accordance with the terms of our engagement letter dated 21 November 2005 we have audited the
accompanying preliminary opening consolidated IFRS balance sheet and related notes of Newcastle United Plc as at 1
August 2004 (“the opening IFRS balance sheet”) as set out on page 16.
Respective responsibilities of directors and KPMG Audit Plc
The directors of the Company have accepted responsibility for the preparation of the preliminary IFRS financial
information and the opening IFRS balance sheet, both of which have been prepared as part of the Company’s
conversion to IFRS. Our responsibilities, as independent auditor, are established in the United Kingdom by the Auditing
Practices Board, our profession’s ethical guidance and the terms of our engagement.
Under the terms of engagement we are required to report to you our opinion as to whether the preliminary IFRS financial
statements have been properly prepared, in all material respects, in accordance with the accounting policies note to the
preliminary IFRS financial statements. We report to you if, in our opinion, we have not received all the information and
explanations we required for our audit.
We read the other information accompanying both the preliminary IFRS financial information and the opening IFRS
balance sheet and consider whether it is consistent with the preliminary IFRS financial information and opening IFRS
balance sheet. We consider the implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the preliminary IFRS financial information and with the opening IFRS balance sheet.
Our report has been prepared for the Company solely in connection with the Company’s conversion to IFRS.
Our report was designed to meet the agreed requirements of the Company determined by the Company’s needs at the
time. Our report should not therefore be regarded as suitable to be used or relied on by any party wishing to acquire
rights against us other than the Company for any purpose or in any context. Any party other than the Company who
chooses to rely on our report (or any part of it) will do so at its own risk. To the fullest extent permitted by law, KPMG
Audit Plc will accept no responsibility or liability in respect of our report to any other party.
Basis of audit opinion
We conducted our audit having regard to Auditing Standards issued by the UK Auditing Practices Board. An audit
includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the preliminary IFRS
financial information and in the opening IFRS balance sheet. It also includes an assessment of the significant estimates
and judgements made by the directors in the preparation of the preliminary IFRS financial information and opening IFRS
balance sheet, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the preliminary financial and
opening IFRS balance sheet are free from material misstatement , whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the presentation of information in the preliminary IFRS
financial information and opening IFRS balance sheet.
Emphasis of matters
Without qualifying our opinion, we draw your attention to the following matters:

The basis of preparation to the preliminary IFRS financial information and opening IFRS balance sheet explains
why the accompanying preliminary IFRS financial information may require adjustment before their inclusion and
before its use as comparative information in the IFRS financial statements for the year ending 31 July 2006
when the Company prepares its first IFRS financial statements.
- 17 -

As described in the basis of preparation to the preliminary IFRS financial information, as part of its conversion to
IFRS, the Company has prepared the preliminary IFRS financial information for the year ended 31 July 2005 to
establish the financial position, results of operations and cash flows of the Company necessary to provide the
comparative financial information expected to be included in the Company’s first complete set of IFRS financial
statements for the year ending 31 July 2006. The preliminary IFRS financial information and the opening IFRS
balance sheet do not themselves include comparative financial information for the prior period.

In respect of the opening IFRS balance sheet, under IFRS only a complete set of consolidated financial
statements comprising a balance sheet, income statement, statement of changes in equity and cash flow
statement, together with comparative financial information and explanatory notes, can achieve a fair
presentation of the Company’s financial position, results of operations and cash flows in accordance with IFRS.

As explained in the basis of preparation, in accordance with IFRS 1 First-time Adoption of International Financial
Reporting Standards, no adjustments have been made for any changes in estimates made at the time of
approval of the UK Generally Accepted Accounting Practices financial statements on which the preliminary IFRS
financial information and the opening IFRS balance sheet are based.

As permitted by IFRS 1, IAS 32 Financial Instruments: Disclosure and Presentation and IAS 39 Financial
Instruments: Recognition and Measurement have not yet been applied and there has been no related
restatement of the opening IFRS balance sheet or the 31 July 2005 balance sheet. Any adjustments that arise
from the application of those standards will be shown as an equity movement on 1 August 2005.
Opinion
In our opinion, the accompanying preliminary IFRS financial information for the year ended 31 July 2005 and the
opening IFRS balance sheet as at 1 August 2004 have been prepared, in all material respects, in accordance with the
basis set out in the basis of preparation, which describes how IFRS have been applied under IFRS 1, including the
assumptions made by the directors of the Company about the standards and interpretations expected to be effective,
and the policies expected to be adopted, when they prepare the first complete set of consolidated IFRS financial
statements of the Company for the year ending 31 July 2006.
KPMG Audit Plc
Chartered Accountants
Quayside House
110 Quayside
Newcastle Upon Tyne
NE1 3DX
13 April 2006
- 18 -
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