The dividend payout goes up from1p to 3p which will net Mr Sugar a payout of around pounds 250,000 from his 51% shareholding. Analysts said the dividend increase was the start of a progressive dividend policy intended to provide the company with a City following. This, they speculated, might pave the way for Mr Sugar to sell a part of his shareholding to institutional investors.
Mr Sugar, chairman and majority shareholder, said these latest financial results reflected the true potential of the company.
The previous period under his chairmanship had been one during which the company suffered "various extraordinary costs which distorted the true picture." He said he was particularly pleased that the improved results had been generated out of core activities and not from windfalls such as player transfers. The recent pounds 5m sale of Nick Barmby to Middlesbrough is not included in yesterday's figures which cover the year ending May 31.
Mr Sugar said it was paramount that the company strived for success on the field; "from that everything else flows."
He said the departure of three top class players during the summer - the club lost Jurgen Klinsmann, Gheorghe Popescu and Nick Barmby - had been "most vigorously opposed," contrary to the view expressed in some media reports.
He said that funds had been made availale to Gerry Francis, the manager, to strengthen the team and he said he was confident that "with his wealth of experience in this industry they will be very well spent." He said the start of the season had witnessed a dramatic increase in the cost of player transfers in the British transfer market "to such an extent that commercially it is impossible to compete if the fortunes of the club and the Company are to remain intact in the long term." He warned against overspending on players. "Irresponsible spending of money that we do not have will simply result in the all too familiar financial crisis that the club and its supporters have seen over the years.' Turnover was up from pounds 22.3m to pounds 25.08m, with operating profits from the merchandising and mail order activities up by 78%.
The results and the hike in the dividend helped boost the shares by 19p to 167p, just 2p short of the year's high
The company is non-committal about the effects of the Bosman ruling on player transfers. It simply states that the directors, being aware of the Advocate General's opinion, "will continue to monitor the progress of this case and assess potential implications for the group." Financial analysts, such as Gerry Boon, a football adviser at Touche Ross, expects the opinion to lead to a stalling of activity in the transfer market as people in the game try to work out the consequences of the likely change in law.Reuse content