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Good progress in difficult 2008/09

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Leicester Tigers this week announced annual accounts for the year ending 30 June 2009. A club statement said:

<b>Strong start to current year, £3m raised for further investment at Welford Road </b>

Leicester Tigers made great strides on and off the pitch in the financial year to 30 June 2009. The Club celebrated the end of the 2008/09 season as English champions for a record eighth time and European Cup finalists, while the first phase in the redevelopment of its Welford Road ground was substantially completed, increasing stadium capacity by 6,500 to 24,000.

These achievements were delivered against the background of a severe global recession and the near collapse of the international banking industry, which had inevitable financial consequences for the Club and for English rugby in general, leading to a higher than expected operating loss for the year. However, trading in the first quarter of the new financial year is ahead of budget.

<b>Financial results </b>
Although turnover rose by nine per cent to £17.0 million, the Club reported a loss on ordinary activities of £829,000 (last year loss £202,000), somewhat higher than anticipated. This was primarily due to an adverse movement for the year of £354,000 in Tigers Events Limited, the club’s hospitality business, resulting from poor sales for international games and packages for the British & Irish Lions tour to South Africa, coupled with the insolvency of a major travel partner which led to a significant debt write-off.

<b>Welford Road redevelopment </b>
Work commenced on the new Caterpillar Stand, a major redevelopment of Welford Road, in August 2008 and this was completed on time and on budget shortly after the year-end.

As construction of the new stand progressed, it became clear that there was sufficient demand for matchday corporate hospitality to justify immediate fit-out of the hospitality and bar areas for use in the 2009/10 season. This additional investment has enabled the Club to advance its plans for establishing Welford Road as one of the largest conference and events venues in the East Midlands, with a 1,000 capacity banqueting suite at its heart.

In tandem with the fit-out of the new hospitality areas, a new exclusive matchday executive club, 1880, was launched. Located in the new stand, 1880 is already sold out and nearly half its 400 members are new Tigers customers. The anticipated income from 1880 will be approximately £1 million a year.

<b>Coaching </b>
The 2008/09 season began with Heyneke Meyer as Leicester Tigers head coach, but family problems necessitated his return to South Africa and he was released from his contract on compassionate grounds in January 2009. He was succeeded by Richard Cockerill, previously the Club’s forwards coach, who steered the team to victory in the Guinness Premiership Final and a narrow defeat by Leinster in Europe’s Heineken Cup Final.

<b>Fundraising </b>
In September 2009 the Club successfully raised £3 million through the issue of unsecured convertible loan notes, which are listed on the Channel Islands Stock Exchange.

Leicester Tigers chairman Peter Tom CBE said: “It is a measure of the Club’s outstanding potential that the loan note issue completed earlier this month was fully subscribed, demonstrating the confidence of investors in our future. The listing of these loan notes on the Channel Islands Stock Exchange is an important stepping stone towards a full listing of the company’s shares on the London Stock Exchange in due course.

“At a time of continuing economic uncertainty, the Board considers it more important than ever to ensure that sufficient funds are in place to meet day-to-day business needs and development plans for continuing growth of the business. The new funds will accordingly be used to help meet the additional costs of upgrading and fitting out the new stand’s facilities, as well as to assist in general cash management.”

<b>Current trading and outlook </b>
Season ticket sales for the 2009/10 season are at a record high, and both ground and programme advertising is sold out at higher aggregate revenues than in the previous season. The first home game of the season attracted a capacity 24,000 crowd for the opening of the new stand. Coupled with the successful sale of all available 1880 memberships, this places the Club in a strong position and the Board expects a return to profit in the current year.

Peter Tom CBE, Leicester Tigers’ chairman, added: “This has been one of the most financially challenging years I can remember. Nonetheless, we performed strongly on the pitch and made huge progress in turning Welford Road into one of the UK’s premier sporting venues.

“We enter the year in good shape and look forward to a promising season in the Guinness Premiership, with substantial extra capacity available to our fans at Welford Road. We have tremendous supporters, many of whom are fellow shareholders, together with some great long-term relationships with our associate vice-presidents and sponsors. On behalf of the Board, I thank each and every one of them for their passionate and continuing support for Tigers.”