On behalf of the board of directors of Preston North End Plc, I am pleased to present our Annual Report and Financial Statements for the year to 30th June 2009.

Once again, we knocked on the door of the Premier League, having secured a place in the Play-Offs following a dramatic end to the season. The results in the last few games were fantastic and the atmosphere at Deepdale for the final game against Queens Park Rangers as we secured a Play-Off place was something I will remember for many years.

Unfortunately, however, it was not to be our year yet again. Naturally we were all disappointed to have lost to Sheffield United in the semi-finals, but I believe we have moved on and started the new 2009/10 season with the same enthusiasm and determination as we finished the last.

Despite our playing success in the 2008/09 season, it was very challenging from a financial perspective. Players' wages were yet again higher than the previous year and we did not have a significant player sale in the financial year.

It is becoming increasingly difficult to continue to meet the expectations of fans who want the Club to be competing for promotion every year. Of course, we all want to see the Club as successful, however, the competition from the relegated Premier League sides and their financial resources makes this extremely difficult.

We have once again been heavily reliant on the assistance of our major shareholder, Guild Ventures Limited for continuing financial support. Without this we certainly could not continue to compete with the cost of the squad we have maintained which remains well in excess of our total football income. I am personally very grateful for this support, without which our season and current situation would be very different.

Financial Overview

Turnover was £8.51m which was broadly in line with the previous year (£8.45m). Although income from ticket sales was lower than it was in 2008 (£3.41m compared to £3.69m), rental income from stadium tenants was higher at £0.79m (2008: £0.34m) due to the income receivable from Central Lancashire Primary Trust for the rent on the Minerva Health Centre under the Invincibles Pavilion, which became operational in the year.

Despite this relatively static income, however, total staff costs have increased by some 25% to £11.24m (2008: £8.99m), which is almost all attributable to increases in players' wages.

The consequence of this is that we have incurred an operating loss of £5.94m, which is considerably higher than the previous year (£3.38m).

Profit on player disposals was only £312,000 in the year and principally related to the sale of Matt Hill to Wolverhampton Wanderers. The prior year profit was much higher at £5.74m due to the sale in that year of David Nugent to Portsmouth.

After accounting for depreciation and amortisation of our assets and playing squad (£2.71m), together with finance costs of £0.82m, our net pre-tax loss was £9.17m.

In the absence of significant profits from player sales, our losses have been funded by the loans from our major shareholder as referred to above.

This level of loss is totally unsustainable for any business and has only been possible with this loan funding. We have, therefore, tried to make progress towards removing players from the squad who had not been featuring regularly in the first team. Since the last year end we have cancelled the contracts of Kevin Nicholls, Lewis Neal, Joe Anyinsah, Brett Ormerod and Jason Jarrett with a view to reducing the overall cost of the squad wages.

New players have been purchased in the year (Stephen Elliott from Wolverhampton Wanderers, Jon Parkin from Stoke City, Eddie Nolan from Blackburn Rovers and Ross Wallace from Sunderland) and since the year end Paul Parry from Cardiff City and Veliche Shumulikoski from Ipswich Town. All have featured regularly in the first team and have made a positive contribution to our success.

Football

Despite losing out in the Play-Offs, I felt that the 2008/09 season was another year of progress for the Club.

We have continued our track record of sourcing young players who contribute to our success, develop their playing ability and attract the interest of clubs at a higher level. Whilst Sean St. Ledger's move to Middlesbrough will be reflected in next year's Financial Statements, the interest from a club like this is a reflection of Sean's hard work and determination to succeed since he joined Preston North End. Whilst we all want to see players of his ability remain in our squad, the income generated by such transactions helps us to fund our operating losses as we aim to compete at the top end of the Championship.

I would also like to pay special tribute to Paul McKenna, following his move this summer to Nottingham Forest. Having progressed through the youth system at Deepdale, he went on to play over 450 games for Preston. Whilst we would have liked to see Paul complete his career at Preston North End, we appreciate that Paul wanted to accept the longer contract that Nottingham Forest were offering and earn wages that are in excess of our budgets. The transfer fee will also fund some of the losses we expect to continue to incur in the 2009/10 season.

I feel that we currently have a squad which comprises a good mix of young maturing players alongside some more experienced team members. Our manager Alan Irvine is extremely good at maximising the potential of all our players, regardless of where they are in their playing careers.

Alan has achieved a great deal for the Club since he arrived which has inevitably attracted the interest of other clubs. However, I was delighted that he was still in charge at the start of the current season.

Our draw in the FA Cup against Liverpool was another memorable occasion at Deepdale, especially so as this was the first occasion that the stadium was full with all four sides of the ground developed. It would be fantastic if we could achieve similar crowds throughout the domestic season.

Our women's team also had a good season. The team reached the League Cup semi-final and were narrowly defeated by Premier League side Doncaster Belles. They also changed their manager with Chris Stammers taking over as first team boss. I wish Chris and the team well in the 2009/10 campaign.

Stadium And Commercial Activities

The current economic climate has presented a particularly difficult year to expand hospitality and advertising revenues. We understand and respect the difficulty that businesses and individuals face. However, we now have a broad range of hospitality options at various prices between the Sir Tom Finney and Invicibles Pavilion and we are grateful to those who have continued to support us in this way.

I am delighted to be able to confirm that Enterprise have confirmed a further year of sponsorship for the 2009/10 season. This is a key item within our commercial budgets and I am very grateful to Enterprise for their continued support.

In January 2009, the Primary Care Trust building was finally completed and the first medical services are now being operated from the premises. It was an honour for the Club that HRH Princess Anne was able to officially open the Minerva Health Centre.

We have formed some great partnerships with the Primary Care Trust with a programme of Healthy Lifestyles education being conducted by our staff in local schools and men's health screening on matchdays being just two examples.

Youth And Community

Our youth team had an excellent season in 2008/09. The team won the Lancashire Youth Cup with a 3-2 win over Burnley in the final. Five players made international appearances for Northern Ireland and Wales with Conor McLaughlin featuring in the Northern Ireland Milk Cup U20 Championship winning team.

It was also encouraging to see five players receive professional contracts for the 2009/10 season. Congratulations on this achievement go to Danny Mayor, Dominic Collins, Phillip Quirk, Tom Smyth and Adam Barton.

We have continued to expand our network of soccer coaching sessions for young people. In addition to the schedule of coaching sessions we run around the north west, we have delivered programmes in the Isle of Man and Ireland in the last year. These continue to promote the Club as well as supporting our ultimate goal of nurturing young talented players.

Every year I look at the Championship fixture list and contemplate the size of some of the clubs we will face. The new 2009/10 season is no exception with teams like Newcastle and Middlesbrough now in the Championship. With the financial resources we have available it is always going to be a challenge. However, I hope that we can continue our quest for promotion and that our organisation and determination to succeed can be some substitute for the comparatively lower resources we have available.

Finally, as ever, I would like to thank our fans, shareholders and staff for their continued support and dedication in our combined effort to move the Club forward.

Derek Shaw
Chairman

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