Arsenal Holdings plc
Results for the year ended 31 May 2015
ARSENAL ANNOUNCE FULL YEAR RESULTS
- Group profit before tax was GBP24.7
million (2014 - GBP4.7
million).
- The Group’s total turnover amounted to GBP344.5 million (2014 - GBP301.9 million).
- Turnover from football increased to GBP329.3 million (2014 - GBP298.7 million) with strong growth in
Commercial activity driven by the new kit partnership with
PUMA.
- Revenues of GBP103.3 million
(2014 - GBP77.2 million) from
Commercial activities (including retail and licensing) exceeded
£100 million for the first time.
- Match-day revenue of GBP100.4
million (2014 - GBP100.2
million) is now ranked behind both Broadcasting and
Commercial as a source of revenue for the Club.
- Significant investment in the squad with a record level of
expenditure on player acquisitions (GBP114.0
million) which has in turn resulted in a higher amortisation
and higher wage costs in the profit and loss account.
- Wage costs rose to GBP192.2
million (2014 - GBP166.4
million) and represented 58.4% (2014 – 55.7%) of football
revenues.
- Profit on sale of player registrations amounted to GBP28.9 million which was significantly higher
than the prior period comparative (2014 - GBP6.9 million).
- Group’s property business made a contribution to pre-tax
profits of GBP13.4 million (2014 -
GBP0.9 million) having benefited from
a one-off profit share bonus in relation to a previously sold
development site.
- The Group has no short-term debt and its cash reserves,
excluding the balances designated as debt service reserves,
amounted to GBP193.1 million (2014 -
GBP173.3 million).
- The liabilities for player acquisitions are in part payable in
instalments and transfer creditors rose to GBP80.5 million (2014 - GBP38.3 million).
Commenting on the results for the year, the Club’s Chairman, Sir
Chips Keswick, said:
“The Club has had a successful year both on and off the pitch.
We are in a robust position across all the key areas of our
activities and we look forward with optimism and strong belief that
we are on a positive trajectory.”
The Club’s Chief Executive Officer, Ivan
Gazidis, said:
“Everyone at the Club is determined to build on the FA Cup
successes of the past two seasons. We continue to look to develop
every aspect of our operations while remaining true to our
principles around being self-funding, investing in youth, our style
of play and our commitment to our fans and to our place in the
community. We are focused on delivering more success.”
Arsenal Holdings plc
Chairman’s Statement
The Club has had a successful year on and off the pitch.
Returning to Wembley in May to defend the FA Cup was a significant
achievement and the manner and style of our performance to beat
Aston Villa in the final was a source of real pride.
This was our twelfth FA Cup win making us the most successful
club in the history of the world’s oldest cup competition. Our FA
Cup record is testimony to the efforts the Club has made through
the years and also to our manager Arsène Wenger, who has now won
the competition a record equalling six times.
Naturally our victory at Wembley prompted celebrations amongst
our fans around the world and we again enjoyed a rousing reception
from our supporters closer to home in Islington during the open top
bus parade the day after the game. It was another special day for
all and I would like to thank Islington Council for their
hospitality at the Town Hall and their support for the whole
event.
The FA Cup Final victory was a fitting end to an exciting season
which saw us recover from a slow start in the league to finish
third. In doing so we reached the UEFA Champions League for an
18th successive season and, thankfully, avoided the
challenge of a qualifying game. This is a remarkable record of
consistency unmatched by anyone else in England and huge credit must go to our manager
and the players in this regard.
It is also testimony to the Club’s philosophy, which we continue
to adhere to season to season. We remain committed to spending only
the money we earn, our style of play, investing in young talent and
our local community.
I am delighted that we have been able to invest strongly in the
team over the last year including, most recently, to bring in
promising defender Gabriel in January and the experienced
Petr Cech during the summer. We have
also retained the core of our team on new contracts which means we
can build on the unity and spirit which was so evident last
season. It has also been hugely encouraging to see Hector
Bellerin, Francis Coquelin and
Chuba Akpom emerge from our youth
programme.
We have also invested off the pitch to ensure that, looking to
our future requirements, our training facilities are of the
appropriate highest quality for all of our teams. We are close to
finishing a second phase of development works at our Hale End
Academy, with a third phase to come subject to planning consents.
In addition, we are just underway on a major two year project for
the first team site at London Colney, which will include a new
player performance centre. These infrastructure investments may not
attract the headlines in the same way as player transfers but they
will provide benefits over a longer term, which are just as
important to the Club.
You will read in the following pages that our revenues have
exceeded GBP344 million and that we
have reported a profit before tax of GBP24.7
million. The primary source of this revenue uplift was from
progress made on our commercial agenda. We also benefited from a
one-off profit share within our property income. Revenue from
commercial activities passed GBP100
million for the first time. We have brought a number of new
partners to the Club and our retail operation enjoyed a record
year. The latter was due in large part to a successful first year
of our new PUMA partnership.
As a Club we remain committed to making a difference to
communities at home and abroad. The Arsenal Foundation goes from
strength to strength, thanks to significant financial contributions
from our players and fans. At the same time, our much respected
Arsenal in the Community team marked 30 years of hard work
delivering programmes in and around Islington. The anniversary was
marked by the opening of the new Arsenal Hub in Queensland Road. It
was particularly gratifying to see Alan
Sefton, who has led the community team for many years,
receive personal recognition in the form of an M.B.E. in the
Queen’s New Year’s Honours List.
I would again pay tribute to our loyal fans. Throughout the
season your support was outstanding. Emirates Stadium was sold out
for most games with a better than ever atmosphere. The support
given to the team both home and away is first class and really
makes a difference.
Finally my thanks go to Stan
Kroenke for his continued support and guidance, my fellow
directors, our management team and entire staff for all their hard
work and dedication over the last year. I would also like to
publicly recognise the support from our commercial partners who
make such important contributions both financially and in terms of
helping build the Club’s name around the world.
In closing, we look forward with optimism and strong belief that
we are on a positive trajectory. We are in a robust position across
all the key areas of our activities and, financially, we stand
ready to support the manager with such further investment as he
deems appropriate.
I look forward to welcoming you to Emirates Stadium and to a
successful season.
Sir Chips Keswick
Chairman
18 September 2015
Arsenal Holdings plc
Chief Executive’s Report
Overview
Winning the FA Cup for a second successive season was a
wonderful achievement and continued the progress the Club is
making.
I cannot recall a team playing so well and with such style on a
day which is renowned for being tense and difficult. The
display against Aston Villa epitomised much of what we are trying
to achieve together.
Our Club will always have a philosophy of investing in and
supporting the development of young players. We also have the
financial ability to invest in world class, experienced players.
The Cup Final demonstrated what a potent force the right blend of
youth and experience can be. The sight of young players such as
Hector Bellerin and Francis
Coquelin, alongside established stars such as Alexis Sanchez and Mesut Özil, rising to the
occasion with a performance of style and substance was hugely
gratifying.
A trophy in consecutive seasons only serves to increase our
desire for more success and sets us up well for what should be an
exciting period for the Club both on and off the pitch.
Football
We have put a lot of work into building and investing in this
group of players over the past three years. Over that period they
have developed a strong bond and belief. Arsène is, I know, very
happy with the balance we have in the squad in terms of age
profile, depth in all positions and, importantly, length of
contracts.
Our improved financial position allows us to support the manager
as and when he identifies players capable of adding genuine quality
to our squad. With this in mind, we were delighted to sign defender
Gabriel in January and Petr Cech
from Chelsea during the summer. Gabriel has settled in well and is
an important part of the squad. Petr’s experience is already
proving invaluable on and off the pitch and he will make a strong
contribution.
Equally importantly we have again done a lot of work this year
agreeing contract extensions with key players. Chuba Akpom, Mikel
Arteta, Hector Bellerin, Santi
Cazorla, Francis Coquelin,
Olivier Giroud, Alex Iwobi, Carl
Jenkinson, Jon Toral and
Theo Walcott have all signed
extensions to their existing contracts. This ensures we will
maintain continuity in the squad and puts us in a strong position
for the future.
We have also recruited a number of exciting players in the
Under-17 and Under-18 age groups. These are players we have
identified and targeted through our international scouting network
and who join a group of talented scholars and young professionals
already at the Club. I look forward to seeing them develop their
careers and hopefully a number will progress into the first team
squad in due course.
Staying with youth development, I am glad to report that work at
our Hale End Academy is going well. The new buildings are complete
and the final phase of development will start when we get the go
ahead from local planners to re-lay all the pitches. We have
continued investing in new staff and the use of the very latest
techniques in sports science and physical development. We also
continue to strengthen our scouting networks to ensure we find the
very best young global talent.
As indicated last year, work is also underway on a multi-million
pound programme at our London Colney training centre. This two year
project will transform our training, fitness and preparation
facilities.
The Arsenal Ladies
Arsenal Ladies have enjoyed a year of progress, in what has been
a changing time for the women’s game.
Under the stewardship of Pedro Martinez
Losa, who joined the club in August
2014, the team has been adjusting well to the demands of the
increasingly competitive Women’s Super League. Last season, a
fourth place finish in the table and a place in the FA Continental
Cup final represented a good recovery after a difficult start.
We have since been bolstered by the arrival of some excellent
new players and are once again in a position to challenge for
honours.
Away from domestic football, we have been extremely proud of our
international players, who helped to take the popularity of the
women’s game to new heights at the World Cup in Canada. In
particular, Jordan Nobbs,
Alex Scott and Casey Stoney excelled for England, helping the Three Lions to third
place in the competition.
Their efforts have translated to the domestic game and the team
has enjoyed excellent attendances since. Arsenal’s first game back
following the World Cup attracted a crowd of 2,061 – a league
record for the Gunners at Meadow Park.
With improvements planned to the Ladies’ training facilities as
part of the Colney redevelopment, there is every reason to be
positive about the year ahead for Arsenal Ladies.
Business update
The financial results for the year, which are covered in more
detail in the Financial Review section, show our turnover moved to
in excess of GBP340 million. This was
driven by our commercial operations delivering more than
GBP100 million in revenue for the
first time, together with an uplift in Premier League broadcasting
revenues and a one-off revenue bonus in our property business.
Commercial Partnerships
We continue to be focused on growing our family of commercial
partners around the world. Since our last annual report we have
agreed new partnerships with Markets.com, Capital Bank, Betfair,
Duchamp, DJI Holdings and Indosat.
All these businesses have two things in common; a desire to
engage with our fans wherever they are in the world and the
recognition that Arsenal can help them achieve their business
objectives in a powerful and meaningful way.
We now have 27 partnerships around the world. This is due
to a lot of hard work by many people across the Club which has seen
us transform our sales capability, including the opening of our
first international office in Singapore, and the development of what is
regarded as industry leading management of partnership
relationships.
We are confident in our ability and capacity to make further
progress in this area which remains a key priority for us.
Retail
Our new partnership with PUMA and a major re-fit of our flagship
Armoury store have helped deliver record retail and licensing
revenues this financial year. PUMA have put significant
effort into promoting our partnership globally through innovative
and effective marketing campaigns and prominent presentation of
Arsenal products in their stores all around the world, resulting in
record levels of replica kit sales. We have also recently
entered into agreements to build our e-commerce and retail presence
internationally. Our stadium tours continue to attract increasing
numbers of visitors. More than 197,000 toured the stadium last
year.
Arsenal Media Group
Our media group continues to drive strong reach and engagement
with supporters around the world through digital and social media
channels. Arsenal.com continues to be the central hub for all
news from around the Club. We have grown our Facebook following
from 26 million to 33 million, we are the most followed English
team on Twitter with 6 million followers and our YouTube,
Instagram, Sound Cloud, Google+ and Sina Weibo channels continue to
thrive.
We also this year released our first in-house produced
documentary - ‘Invincibles’ - to positive reviews. The film has
been screened on both Sky Sports in the UK and NBC in the
USA.
Ticketing
Demand in our General Admission and Premium / Hospitality levels
continues to be extremely strong and subscriptions to our various
membership schemes are also growing.
We continue to make investments in the facilities and
infrastructure at Emirates Stadium, including new LED floodlights
and perimeter boards alongside a major renovation of the 'Royal
Oak’ area on Club Level this close season. Additionally, we have
improved the functionality of Ticket Exchange and Ticket Transfer,
making it easier for season ticket holders unable to attend matches
to sell or transfer their seats to other Arsenal supporters.
In March we hosted a high profile Brazil v Chile international friendly in front of a
sell-out crowd.
Looking ahead, ticket prices at the Emirates Stadium were held
flat for the 2015/16 season and for a seventh time in ten seasons.
Whilst our match day revenue is now ranked behind both broadcasting
and commercial as a source of income, it remains vitally important
to the Club and is a key differentiator to competitor clubs with
smaller, less modern venues.
Pre-season 2015/16
We made a highly successful visit to Singapore to take part in the Barclays Asia
Trophy. Two competitive games against a Singapore XI and Everton
saw us emerge as the tournament winners and we received a fantastic
reception from fans from across Asia and Australia during our stay. It was great to see
young players like Chuba Akpom,
Dan Crowley, Alex Iwobi, Jon
Toral and Gideon Zelalem
involved at a first team level. Off the pitch, players took part in
a number of events including a well received launch of our away
kit, a soccer school with Emirates and a fan party attended by 700
passionate supporters.
The following week we hosted another highly popular Emirates
Cup. Firmly established as one of the best pre-season tournaments
on the calendar we again sold out across the weekend, with 120,000
fans visiting the Emirates Stadium. It was great to see us lift the
trophy after some exciting games involving Lyon, Wolfsburg and Villarreal.
The pre-season preparations concluded a week later when we
returned to Wembley for the FA Community Shield match against
Chelsea. Another impressive display saw us retain the Shield and
enter the season on a winning run.
Arsenal Foundation and Arsenal in the
Community
Our commitment to our local and wider community remains a
central part of what we stand for as a football club. The Arsenal
Foundation continued to provide invaluable support for projects
here in Islington and further afield. In the past three years the
Foundation has raised GBP1 million
for Save the Children to support emergency appeals. This year some
of the money will go towards developing artificial football pitches
in a refugee camp in Iraq. This is
a perfect example of using the power of football and Arsenal to
change people’s lives and I look forward to seeing the project
develop.
Closer to home, our Arsenal in the Community team celebrated its
30th anniversary of delivering programmes in Islington
and surrounding boroughs. They have done a remarkable job, now
reaching more than 5,000 people through 350 sessions every week. As
the Chairman has noted, it was fitting that Alan Sefton, who leads our local community work,
was recognised in the Queen’s New Year honours with an M.B.E.
Looking ahead
We know the Premier League will be more competitive than ever
this season as clubs invest more money in top players from around
the world. Teams across the league are raising their level, which
means each and every game will be a significant challenge. The
promise of the increased value of Premier League broadcasting
revenues from 2016/17 may already be having an impact.
The new Premier League TV revenues are good news for Arsenal and
for the other member clubs. The increased revenue may see the
league becoming even more competitive and it raises a number of
strategic questions and opportunities that will need to be
discussed in the forthcoming months. For now it is too early to say
what the impact of the Premier League’s changing financial
landscape will be, either domestically or in a wider context across
Europe
We look forward to another exciting campaign in the UEFA
Champions League with the new format throwing up a challenging
series of group stage games against Bayern Munich, Olympiacos and
GNK Dinamo Zagreb.
Everyone at the Club is in optimistic mood and determined to
build on the FA Cup successes of the past two seasons. We continue
to look to develop every aspect of our operations while remaining
true to our principles around being self-funding, investing in
youth, our style of play and our commitment to our fans and to our
place in the community.
We are focused on delivering more success. This remains the
shared ambition of our majority shareholder Stan Kroenke, the board and everyone connected
with the Club.
We look forward to the rest of the season with excitement and
your continued support.
I E Gazidis
Chief Executive Officer
18 September 2015
Arsenal Holdings plc
Financial Review
The Group recorded a profit before tax for the 2014/15 year of
GBP24.7 million (2014 - GBP4.7 million).
The principal factors influencing this result were:
- Increased revenues from commercial activities and sponsorship
of GBP26 million, taking the Group’s
commercial revenues above GBP100
million for the first time and ensuring overall revenues
from football activities alone were comfortably in excess of
GBP£300 million.
- Increased profits from player transfers of GBP28.9 million (2014 - GBP6.9 million).
- Profits in the property development business of GBP13.3 million (2014 - GBP0.9 million).
- Significant investment in the playing squad resulting in higher
amortisation charges on player registrations of GBP55.3 million (2014 - GBP40.0 million) and driving an overall increase
of GBP25.8 million in our wage
bill.
|
2015
GBPm |
2014
GBPm |
Group turnover |
344.5 |
301.9 |
Operating profit before
amortisation, depreciation and player trading |
77.3 |
62.4 |
Player trading (see table
below) |
(25.6) |
(32.6) |
Amortisation of goodwill and
depreciation |
(15.0) |
(12.8) |
Joint venture |
0.8 |
0.7 |
Net finance charges |
(12.8) |
(13.0) |
Profit before tax |
24.7 |
4.7 |
The main reason for increased turnover from football was our new
kit partnership with PUMA from July
2014 which has had a strong, positive impact across our
sponsorship, retail and licensing revenue lines. We have also again
increased our revenues from secondary partnerships.
The property business recorded an operating profit of
GBP13.0 million (2014 - GBP0.4 million) which included a profit share /
overage bonus in respect of one of the development land sites sold
by the Group in a prior year. The overage receivable represents a
share of the revenues achieved by the developer on its successful
sale of completed residential units on the finished site.
The wage bill for the year of GBP192.2
million (2014 - GBP166.4
million) was increased primarily as a consequence of the
players added to the squad in the year and the contract extensions
agreed with existing players. There is also an impact from
Champions League qualification bonuses, which are a feature of many
of our First Team player contracts. By virtue of reaching the Group
Stage of the 2014/15 competition, via the play-off round, and the
Group Stage of the 2015/16 edition, via third place in the Premier
League, there have been two bonus trigger events during the 2014/15
financial year.
Increased depreciation charges of GBP14.6
million (2014 - GBP12.4
million) reflect a fairly high level of fixed asset
additions for the year at GBP12.8
million. There have been major projects developing the
facilities and a new building at our Hale End Academy training
ground and fitting out the Arsenal Hub community building on
Queensland Road. Capital expenditure is expected to remain at an
elevated level over the short term as the Club is committed to a
major development project at its first team training ground at
London Colney, a further phase of works at Hale End and a programme
of upgrades at Emirates Stadium, which commenced with the new LED
floodlights and perimeter boards installed this summer and the
refit of the Royal Oak area in Club Tier.
Player trading consists of the profit from the sale of player
registrations, the amortisation charge, including any impairment,
on the cost of player registrations and fees charged for player
loans.
|
2015
GBPm |
2014
GBPm |
Profit on disposal of player
registrations |
28.9 |
6.9 |
Amortisation of player
registrations |
(54.4) |
(40.0) |
Impairment of player
registrations |
(0.9) |
- |
Loan fees |
0.8 |
0.5 |
Total Player Trading |
(25.6) |
(32.6) |
The profit on sale of players for the year amounted to
GBP28.9 million (2014 - GBP6.9 million) which includes the transfer of
Thomas Vermaelen and the proceeds of
an agreement to cancel the Club’s option to reacquire the
registration of former player Carlos
Vela.
The increased amortisation charge is a direct result of the fact
that we have invested strongly in the playing squad. Additions of
GBP114 million have been booked in
relation to the acquisition of new player registrations, including
Alexis Sanchez, Calum Chambers, Danny
Welbeck and Gabriel and, to a lesser extent, the extension
of contract terms for certain existing players.
In cash terms the impact of these acquisitions was partially
offset by the collection of receivables on player sales (both
current and previous) and by the credit terms agreed with the
vendor clubs; nonetheless GBP46.2
million of net cash paid out in the year for player
registrations still represents a record high level for the
Club.
At the balance sheet date, the Group’s total cash and bank
balances amounted to GBP228.2 million
(2014 - GBP207.9 million), inclusive
of debt service reserve balances of GBP35.0
million (2014 - GBP34.6
million). This is considered to be a robust position with
the Group’s overall net debt standing at GBP5.7 million (2014 - GBP32.6 million). However, proper consideration
of the Group’s cash balance must include allowance for the payments
for the aforementioned transfers, as follows:
|
2015
GBPm |
2014
GBPm |
Bank balance excluding debt
service |
193.1 |
173.3 |
Net balance payable on
transfers |
(65.6) |
(28.8) |
|
127.5 |
144.5 |
In addition, it is important to understand that our year end
bank balance includes advance receipts, of sponsorship and season
ticket sales, which represent working capital for season
2015/16.
Football Segment
|
2015
GBPm |
2014
GBPm |
Turnover |
329.3 |
298.7 |
Operating profit before depreciation
and player trading |
64.4 |
62.1 |
Player trading |
(25.6) |
(32.6) |
Profit before tax |
11.4 |
3.8 |
There were two fewer home fixtures than in the prior year, with
two rounds in our successful defence of the FA Cup being drawn as
away fixtures. Our 27 home fixtures (19 Barclays Premier League,
five UEFA Champions League, two FA Cup and one Capital One Cup)
achieved an average tickets sold per game of 59,930 (2014 –
59,790).
When the Club first moved to the Emirates for season 2006/07 our
match-day revenues of GBP90 million
represented the Group’s main source of income. Despite achieving a
highest ever level of GBP100.4
million for the 2014/15 season (2014 - GBP100.2 million) match-day has now been
overtaken, by both Broadcasting and Commercial, in terms of its
ranking as a source of revenue.
Broadcasting revenues this year were only slightly increased at
GBP124.8 million (2014 - GBP120.8 million) as was to be expected given
this was the second season of three for the current Premier League
broadcasting contracts and the final year of a UEFA contract cycle.
Our League form meant we once again attracted 25 live Premier
League game facility fees (2014 – 25).
Looking to the next cycle of broadcasting revenues UEFA’s
successful marketing of Champions League broadcast and commercial
rights (including BT’s purchase of exclusive UK rights) will drive
further growth in values for the participating English clubs for
the 2015/16 season and beyond. The underlying revenue growth may be
slightly offset by a weaker Euro. The Premier League has confirmed
a significant uplift in the value achieved for the UK TV rights for
the three seasons commencing 2016/17. The process for tendering the
international broadcasting rights for these three seasons is
ongoing. We note that an investigation into the sale of live
broadcast rights in the UK is currently being undertaken by OFCOM
the outcome of which cannot be predicted at this stage.
Combined commercial and retail revenues for the year rose by
some 34% to GBP103.3 million (2014 –
24% growth to GBP77.1 million).
The main driver for this growth was the new kit partnership
contract with PUMA which started in July
2014 and has had an excellent first 11 months. In addition,
we benefited from a major re-fit of our flagship Armoury store
which was completed to coincide with the launch of the first PUMA
kits. The PUMA contract signals the end of a period where our
commercial revenues lagged behind a number of our competitors as a
consequence of the long-term deals that were in place as part of
the funding of the Emirates move.
We also made strong progress with secondary partnerships adding
brands such as Cooper Tires, Vitality and Europcar to our roster
and bringing the Club’s total number of partnerships to 24 at the
end of the 2014/15 year. During the year we opened our first
commercial office outside the UK, in Singapore, and have already secured a number
of new contracts from this location.
We have a healthy pipeline of potential partner deals and
commercial opportunities; as such we expect that our commercial
revenues will continue to grow. However, inevitably, the growth
rate will now slow as we have our key partnerships with Emirates
and PUMA in place for the medium term.
As ever payroll was the largest and most important area of cost.
Wage costs for the year rose by 15.5% (2014 – 7.7%) to GBP192.2 million (2014 - GBP166.4 million), which was mainly attributable
to increases in the cost of our football playing and support staff.
As mentioned above, the Club’s on field performance meant there
were two trigger events in the year in respect of certain elements
of remuneration linked to Champions League qualification.
The ratio of total wage bill to football revenues was slightly
increased to 58.4% (2014 – 55.7%). We disclose this ratio as a
benchmark which is widely used in the analysis of football finance
although our own monitoring in this area is based on total player
spend, a combination of wages plus transfer expenditure and related
costs, on a rolling three year basis against projections for the
available funds generated over that period by the Group’s business
activities.
The Club was fully compliant with the Premier League’s wage cap
/ short term cost control regulations. In light of the strong
correlation which exists between player wage expenditure and
on-field success we should be clear that having the resources to
grow our wage bill in a rational and responsible manner continues
to represent a positive outcome.
Other operating costs, which include all the direct and indirect
costs and overheads associated with the Club’s football operations
and revenues, rose 3.3% to GBP72.1
million (2014 - GBP69.8
million) and represented 21.9% of football revenues (2014 –
23.3%).
Property Segment
|
2015
GBPm |
2014
GBPm |
Turnover |
15.2 |
3.2 |
Operating profit |
12.9 |
0.4 |
Profit before tax |
13.3 |
0.9 |
In general, activity in the Group’s property business was at a
very low level with revenues limited to the rental of certain
retained commercial units, such as the gym at Highbury Square, and
sale of remaining car park spaces at Highbury Square.
However, one of the Group’s prior land sales included provision
for the receipt of a sales overage (effectively a profit share) in
the event that the purchasing developer’s final total revenues,
from sale of completed residential units, exceeded a pre-agreed
target level. That residential development has now reached a
sufficient stage of completion that an overage payment has been
calculated and agreed as due to us. Accordingly, the applicable
overage income and certain limited direct costs have been
recognised in the 2014/15 results of the Group‘s property
business.
Unlocking the future sale value of the two remaining major
property sites, on Hornsey Road and Holloway Road, is tied to the
resolution of the underlying planning consents which are proving to
be complex and long running. We remain confident that viable
schemes will be agreed and implemented in due course.
Profit after Tax
Overall there is a tax charge of GBP4.7
million (2014 – credit of GBP2.6
million) on the pre-tax result for the period. This meant
that the retained profit for the year has increased to GBP20.0 million (2014 - GBP7.3 million).
The tax deductibility of the amortisation charge on player
registrations is partially restricted as a result of previous
roll-over reliefs claimed on player sales. This means that our
taxable profit is higher than our accounts pre-tax profit and
resulted in corporation tax charge payable for the year of
GBP6.3 million (2014 GBP3.7 million). The corporation tax charge was
partially offset by a deferred tax credit of GBP1.6 million (2014 - credit of GBP6.3 million).
Financial Regulation
The Club continues to be fully compliant with the Financial Fair
Play regulations put in place by UEFA and the Premier League. The
impact of these regulations on the financial hierarchy of the game
remains unclear. The revenues from the new Premier League
broadcasting contracts from 2016/17 are also likely to have a
material impact on the future financial landscape.
Arsenal remains in a strong financial position. The Club has
made significant affordable investments, both in terms of transfers
and wage growth, but at the same time recorded another set of
profitable results and maintained the cash resources to allow
further investment toward on-field success.
Stuart Wisely
Chief Financial Officer
18 September 2015
Arsenal Holdings plc
Consolidated profit and loss account
For the year ended 31 May 2015
|
|
2015 |
2014 |
|
Note |
Operations excluding
player trading
GBP’000 |
Player trading
GBP’000 |
Total
GBP’000 |
Operations excluding
player trading
GBP’000 |
Player trading
GBP’000 |
Total
GBP’000 |
|
|
|
|
|
|
|
|
Turnover of the group including
its share of joint ventures |
|
346,498 |
805 |
347,303 |
303,754 |
513 |
304,267 |
Share of turnover of joint
venture |
|
(2,779) |
- |
(2,779) |
(2,395) |
- |
(2,395) |
|
|
–––––––– |
–––––––– |
–––––––– |
–––––––– |
–––––––– |
–––––––– |
Group turnover |
3 |
343,719 |
805 |
344,524 |
301,359 |
513 |
301,872 |
|
|
|
|
|
|
|
|
Operating expenses |
|
(281,400) |
(55,365) |
(336,765) |
(251,736) |
(40,072) |
(291,808) |
|
|
–––––––– |
–––––––– |
–––––––– |
–––––––– |
–––––––– |
–––––––– |
Operating profit/(loss) |
|
62,319 |
(54,560) |
7,759 |
49,623 |
(35,559) |
10,064 |
Share of joint venture operating result |
|
762 |
- |
762 |
710 |
- |
710 |
Profit on disposal of player
registrations |
|
- |
28,944 |
28,944 |
- |
6,912 |
6,912 |
|
|
–––––––– |
–––––––– |
–––––––– |
–––––––– |
–––––––– |
–––––––– |
Profit/(loss) on ordinary
activities before net finance charges |
|
63,081 |
(25,616) |
37,465 |
50,333 |
(32,647) |
17,686 |
|
|
–––––––– |
–––––––– |
|
–––––––– |
–––––––– |
|
Net finance charges |
|
|
|
(12,751) |
|
|
(13,018) |
|
|
|
|
–––––––– |
|
|
–––––––– |
Profit on ordinary activities
before taxation |
|
|
|
24,714 |
|
|
4,668 |
|
|
|
|
|
|
|
|
Taxation (charge)/credit |
|
|
|
(4,670) |
|
|
2,603 |
|
|
|
|
–––––––– |
|
|
–––––––– |
Profit after taxation retained
for the financial year |
|
|
|
20,044 |
|
|
7,271 |
|
|
|
|
–––––––– |
|
|
–––––––– |
Earnings per share |
|
|
|
|
|
|
|
Basic and diluted |
4 |
|
|
£322.16 |
|
|
£116.87 |
|
|
|
|
–––––––– |
|
|
–––––––– |
Player trading consists primarily of loan fees receivable, the
amortisation of the costs of acquiring player registrations, any
impairment charges and profit on disposal of player
registrations. All trading resulted from continuing
operations.
Arsenal Holdings plc
Consolidated balance sheet
At 31 May 2015
|
2015
GBP’000 |
|
2014
GBP’000 |
|
|
|
|
Fixed assets |
|
|
|
Goodwill |
1,082 |
|
1,498 |
Tangible fixed assets |
419,180 |
|
421,402 |
Intangible fixed assets |
171,658 |
|
114,986 |
Investments |
4,174 |
|
3,571 |
|
–––––––––– |
|
–––––––––– |
|
596,094 |
|
541,457 |
Current assets |
|
|
|
Stock - development properties |
9,741 |
|
9,849 |
Stock - retail merchandise |
4,530 |
|
4,935 |
Debtors - due within one
year |
74,175 |
|
65,642 |
- due after one year |
6,658 |
|
4,861 |
Cash and short-term deposits |
228,167 |
|
207,878 |
|
–––––––––– |
|
–––––––––– |
|
323,271 |
|
293,165 |
|
|
|
|
Creditors: amounts falling due
within one year |
(273,733) |
|
(203,032) |
|
–––––––––– |
|
–––––––––– |
Net current assets |
49,538 |
|
90,133 |
|
–––––––––– |
|
–––––––––– |
Total assets less current
liabilities |
645,632 |
|
631,590 |
|
|
|
|
Creditors: amounts falling due
after more than one year |
(264,362) |
|
(266,478) |
|
|
|
|
Provisions for liabilities and
charges |
(50,601) |
|
(54,494) |
|
–––––––––– |
|
–––––––––– |
Net assets |
330,669 |
|
310,618 |
|
–––––––––– |
|
–––––––––– |
Capital and reserves |
|
|
|
Called up share capital |
62 |
|
62 |
Share premium |
29,997 |
|
29,997 |
Merger reserve |
26,699 |
|
26,699 |
Profit and loss account |
273,911 |
|
253,860 |
|
–––––––––– |
|
–––––––––– |
Shareholders’ funds |
330,669 |
|
310,618 |
|
–––––––––– |
|
–––––––––– |
Arsenal Holdings plc
Consolidated cash flow statement
For the year ended 31 May 2015
|
2015
GBP’000 |
|
2014
GBP’000 |
|
|
|
|
Net cash inflow from operating
activities |
102,395 |
|
96,169 |
Player registrations |
(46,241) |
|
(11,121) |
Returns on investment and servicing
of finance |
(12,130) |
|
(12,409) |
Taxation |
(2,206) |
|
(2,445) |
Capital expenditure |
(14,255) |
|
(8,873) |
|
–––––––––– |
|
–––––––––– |
Net cash inflow before
financing |
27,563 |
|
61,321 |
Financing |
(7,274) |
|
(6,900) |
Management of liquid resources |
7,770 |
|
(39,781) |
|
–––––––––– |
|
–––––––––– |
Change in cash in the year |
28,059 |
|
14,640 |
Change in short-term deposits |
(7,770) |
|
39,781 |
|
–––––––––– |
|
–––––––––– |
Increase in cash and short-term
deposits |
20,289 |
|
54,421 |
|
–––––––––– |
|
–––––––––– |
Management of liquid resources represents the transfer of cash
to/(from) the Group’s bank accounts to short-term bank treasury
deposits.
Reconciliation of operating profit to net cash inflow from
operating activities |
2015 |
|
2014 |
GBP’000 |
GBP’000 |
|
|
|
|
Operating
profit |
7,759 |
|
10,064 |
|
|
|
|
Amortisation of player
registrations |
54,430 |
|
40,072 |
Impairment of player
registrations |
935 |
|
- |
Amortisation of
goodwill |
416 |
|
426 |
Loss/(profit) on
disposal of tangible fixed assets |
273 |
|
(140) |
Depreciation (net of
grant amortisation) |
14,618 |
|
12,418 |
Decrease/(increase) in
stock |
513 |
|
(2,472) |
(Increase)/decrease in
debtors |
(4,983) |
|
9,657 |
Increase in
creditors |
28,434 |
|
26,144 |
|
–––––––––– |
|
–––––––––– |
Net cash inflow
from operating activities |
102,395 |
|
96,169 |
|
–––––––––– |
|
–––––––––– |
Analysis of changes in net
debt |
At 1 June 2014
GBP’000 |
|
Non cash changes
GBP’000 |
|
Cash flows
GBP’000 |
|
At 31 May 2015
GBP’000 |
|
|
|
|
|
|
|
|
Cash at bank and in hand |
80,555 |
|
- |
|
28,059 |
|
108,614 |
Short-term deposits |
127,323 |
|
- |
|
(7,770) |
|
119,553 |
|
–––––––––– |
|
–––––––––– |
|
–––––––––– |
|
–––––––––– |
|
207,878 |
|
- |
|
20,289 |
|
228,167 |
Debt due within one year
(bonds) |
(6,704) |
|
(7,689) |
|
7,274 |
|
(7,119) |
Debt due after more than one year
(bonds) |
(205,921) |
|
7,399 |
|
- |
|
(198,522) |
Debt due after more than one year
(debentures) |
(27,830) |
|
(377) |
|
- |
|
(28,207) |
|
–––––––––– |
|
–––––––––– |
|
–––––––––– |
|
–––––––––– |
Net debt |
(32,577) |
|
(667) |
|
27,563 |
|
(5,681) |
|
–––––––––– |
|
–––––––––– |
|
–––––––––– |
|
–––––––––– |
Non cash changes represent GBP570,000 in respect of the amortisation of
costs of raising finance, GBP377,000
in respect of rolled up, unpaid debenture interest and GBP280,000 in respect of amortisation of the
premium on certain of the Group’s interest rate swaps.
Arsenal Holdings plc
Notes to preliminary results
For the year ended 31 May 2015
1. The financial information set out above does not
constitute the company's statutory accounts for the years ended
31 May 2014 or 2015, but is derived
from those accounts. Statutory accounts for 2014 have been
delivered to the Registrar of Companies and those for 2015 will be
delivered following the company's annual general meeting. The
auditor has reported on those accounts; their reports were
unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain
statements under s498(2) or (3) Companies Act 2006.
The accounting policies applied by the Group are as set out in
detail in the Annual Report for the year ended 31 May 2015.
The company has complied with the Guidance note 69.1 of the ISDX
Growth Market – Rules for Issuers throughout the year ended
31 May 2015.
2. Segmental analysis
Class of business:- |
Football |
|
2015
GBP’000 |
|
2014
GBP’000 |
|
Turnover |
329,337 |
|
298,658 |
|
|
–––––––––– |
|
–––––––––– |
|
Segment operating
(loss)/profit |
(5,198) |
|
9,650 |
|
|
|
|
|
|
Share of operating profit of joint
venture |
762 |
|
710 |
|
Profit on disposal of player
registrations |
28,944 |
|
6,912 |
|
|
|
|
|
|
Net finance charges |
(13,149) |
|
(13,455) |
|
|
–––––––––– |
|
–––––––––– |
|
Profit on ordinary activities
before taxation |
11,359 |
|
3,817 |
|
|
–––––––––– |
|
–––––––––– |
|
Segment net assets |
279,181 |
|
272,449 |
|
|
–––––––––– |
|
–––––––––– |
|
Class of business:- |
Property
development |
|
2015
GBP’000 |
|
2014
GBP’000 |
Turnover |
15,187 |
|
3,214 |
|
–––––––––– |
|
–––––––––– |
Segment operating profit |
12,957 |
|
414 |
|
|
|
|
|
|
|
|
Net finance charges |
398 |
|
437 |
|
–––––––––– |
|
–––––––––– |
Profit on ordinary activities
before taxation |
13,355 |
|
851 |
|
–––––––––– |
|
–––––––––– |
Segment net assets |
51,488 |
|
38,169 |
|
–––––––––– |
|
–––––––––– |
Class of business:- |
Group |
|
2015
GBP’000 |
|
2014
GBP’000 |
|
Turnover |
344,524 |
|
301,872 |
|
|
–––––––––– |
|
–––––––––– |
|
Segment operating profit |
7,759 |
|
10,064 |
|
|
|
|
|
|
Share of operating profit of joint
venture |
762 |
|
710 |
|
Profit on disposal of player
registrations |
28,944 |
|
6,912 |
|
|
|
|
|
|
Net finance charges |
(12,751) |
|
(13,018) |
|
|
–––––––––– |
|
–––––––––– |
|
Profit on ordinary activities
before taxation |
24,714 |
|
4,668 |
|
|
–––––––––– |
|
–––––––––– |
|
Segment net assets |
330,669 |
|
310,618 |
|
|
–––––––––– |
|
–––––––––– |
|
Operating profit from football before amortisation, depreciation
and player trading amounted to GBP64.4
million (2014 – GBP62.1
million); being segment operating loss (as above) of
GBP5.2 million (2014 – profit of
GBP9.7 million), adding back
depreciation (net of grant amortisation) of GBP14.6 million (2014 - GBP12.4 million), amortisation of goodwill of
GBP0.4 million (2014 – GBP0.4 million) and operating loss from player
trading of GBP54.6 million (2014 –
GBP39.6 million).
3. Turnover
Turnover, all of which originates in
the UK, comprises the following: |
2015
GBP’000 |
|
2014
GBP’000 |
|
|
|
|
|
|
Gate and other match day
revenues |
100,401 |
|
100,229 |
|
Broadcasting |
124,844 |
|
120,762 |
|
Retail and licensing |
24,685 |
|
17,938 |
|
Commercial |
78,602 |
|
59,216 |
|
Property development |
15,187 |
|
3,214 |
|
Player trading |
805 |
|
513 |
|
|
–––––––––– |
|
–––––––––– |
|
|
344,524 |
|
301,872 |
|
|
–––––––––– |
|
–––––––––– |
|
4. Earnings per share
Earnings per share (basic and diluted) are based on the weighted
average number of ordinary shares of the Company in issue being
62,217 shares (2014 - 62,217 shares).
5. Reconciliation of movement in
shareholders' funds
|
2015
GBP’000 |
|
2014
GBP’000 |
|
|
|
|
Profit for the year |
20,044 |
|
7,271 |
Exchange difference |
7 |
|
(8) |
Opening shareholders’ funds |
310,618 |
|
303,355 |
|
–––––––––– |
|
–––––––––– |
Closing shareholders'
funds |
330,669 |
|
310,618 |
|
–––––––––– |
|
–––––––––– |
6. Annual General Meeting
The annual general meeting will be held at Emirates Stadium,
London, N7, on Thursday
15 October 2015 at 11.30 am. The full statement of accounts and
annual report will be posted to shareholders 23 September 2015.