Final Results
Arsenal Holdings plc Results for the year ended 31 May 2012
RESULTS CONFIRM ARSENAL STRONGLY PLACED TO MEET UEFA'S NEW FINANCIAL RULES
* Group turnover was £243.0 million (2011 - £255.7 million). Reduction was
due to the expected lower level of property sales activity.
* Revenues from football increased to £235.3 million (2011 - £225.4 million)
with Commercial activities contributing £5.6 million of this growth.
* Operating profit (before exceptional costs, depreciation and player
trading) in the football business was £32.3 million (2011 - £45.8 million)
with revenue gains outweighed by increased wage costs.
* Profit from player trading of £26.0 million (2011 - loss of £14.6 million)
with gains from a number of significant player sales, including Cesc
Fabregas and Samir Nasri, partially offset by higher amortisation charges.
* Low key year for property business with an operating profit of £2.2 million
(2011 - £12.6 million) as Highbury Square project draws to a satisfactory
close.
* Group profit before tax was £36.6 million (2011 - £14.8 million).
* Cash and bank balances amounted to £153.6 million (2011 - £160.2 million)
at the balance sheet date and as a result the overall level of Group net
debt was stable at £98.9 million (2011 - £97.8 million).
Commenting on the results for the year, Peter Hill-Wood, non-executive
Chairman, said:
"We have invested in the team and in the Club's infrastructure as a whole and
this will continue. UEFA's new financial regulations have added a further
emphasis to the need for a sound financial model. That is why our activities to
increase revenue are important. Increased revenues allow us to continue to be
competitive and to keep pace with the ever present cost pressures in the game."
Ivan Gazidis, Chief Executive, said:
"Clubs, fans and other stakeholders in the game are demanding a more rational
financial approach and this reinforces our conviction that our Club is strongly
placed to succeed over the long term. We have qualified for the Champions
League for the 15th season in a row whilst off the pitch we have a business
strategy and infrastructure that is helping us to grow our revenues. This
revenue growth will provide sustainable funds for future investment in the team
whilst keeping within the UEFA Financial Fair Play requirements. We can and
will forge our own path to success."
Arsenal Holdings plc
Chairman's Statement
I am pleased to open my report to shareholders by confirming that the Group has
delivered another healthy set of full year results. As I have said before, this
is important as it maintains the platform from which the Club can continue to
build and succeed on the pitch.
Everyone on the Board is firmly committed to our self-financing approach and it
is one we will continue to pursue. We remain convinced it is in the best
interests of Arsenal Football Club in both the short and long-term and that has
to be our primary concern. UEFA's new financial regulations have added a
further emphasis to the need for a sound financial model. We have great unity
and solidity around the Board table and this resolve and team spirit is present
throughout the Club and has contributed to delivering fifteen consecutive
seasons of Champions League football; a rare achievement and one of which we
should all be very proud.
As you will read elsewhere in this report, despite a tough economic back-drop,
we have grown our football revenues. This is pleasing because growth is an
essential target for the Group if we are to continue to compete at the top of
the game here in England and in Europe.
Turning to the past season, which marked our 125th anniversary, the team
produced a terrific run of form from the autumn onwards to achieve third place
in the Premier League and secure Champions League football for the 2012/13
season. The arrival of some experienced players brought additional resolve to
the side and helped offset the disappointing loss of Jack Wilshere who missed
the entire season through injury. Robin van Persie led the side superbly,
scoring 30 Premier League goals, and while we made the difficult decision to
transfer him, we wish him well in the future.
We saw Wojciech Szczesny establish himself as our first-choice goalkeeper and
were excited by the youthful exuberance of Alex Oxlade-Chamberlain. In keeping
with our long tradition of encouraging young talent, we also saw Aaron Ramsey
return successfully after injury and welcomed Carl Jenkinson, Francis Coquelin
and Emmanuel Frimpong into the first team squad.
Whilst youth was very much to the fore we were delighted to welcome back an old
friend in the shape of Thierry Henry. It was great to see him back in the
Arsenal colours, delighting us all with that goal against Leeds United in the
FA Cup. It was a special moment.
Ironically Thierry had been with us just a few weeks earlier when we unveiled
tribute statues to him, Tony Adams and Herbert Chapman as part of our 125th
anniversary celebrations.
Our Champions League run ended in the Round of 16 in a dramatic match against
AC Milan. 4-0 down from the first leg, the team almost pulled off a remarkable
comeback in a thrilling night at the Emirates Stadium, eventually losing out
4-3 on aggregate. We went out of the FA Cup in the fifth round away at
Sunderland and at the quarter final stage of the Carling Cup, when a young team
lost narrowly at home to Manchester City.
Everything remained very tense in the Premier League with important victories
at home to Tottenham and Newcastle which remain vivid in the memory. Ultimately
third place was secured with victory at West Bromwich Albion on the final day
of the season.
That final day victory also marked the retirement of Pat Rice after 44 years'
service to the Club as a player and coach. His contribution over those years
has been immense and he will always be part of the fabric of this Club. We wish
him a relaxing and happy retirement.
Away from the football you will read in the following pages that we have
reported a profit before tax of £36.6 million (2011 - £14.8 million).
We have invested further in the team and in the Club's infrastructure as a
whole and this will continue. That is why our activities to increase revenue
are important. Increased revenues allow us to continue to be competitive and to
keep pace with the ever present cost pressures in the game.
I am pleased at the progress being made on our commercial agenda. New partners
have joined the Arsenal family and I am confident we will see further
commercial growth over the next few years. Arsenal has a name and fan-base
which extends around the world and which represents an attractive proposition
to both our existing and potential new business partners.
Another important feature of the year was the launch of the Arsenal Foundation.
This is a fundraising and grant-making organisation which will help to grow the
reach and impact of the many and varied community and charitable programmes
which the Club supports. In addition, we enjoyed a successful first year of our
global partnership with Save the Children.
Finally and most importantly, I would like to thank our loyal fans. Your
strength of support grew through the season and was an important factor in
securing our position in the Champions League. I know the vast majority of you
are proud about how we run the Club and how we play under Arsène Wenger's
guidance. I thank you for your continued support.
I also thank my fellow directors, our management team and entire staff for all
their hard work and dedication over the last year. We stuck together as a team
on and off the pitch and were stronger for it. I also fully recognise the
support and contribution from our commercial partners.
I look forward to welcoming you all again to Emirates Stadium over the course
of the new season.
P D Hill-Wood
Chairman
27 September 2012
Arsenal Holdings plc
Chief Executive's Report
Overview
Throughout its history Arsenal Football Club has set and operated to the
highest standards, both on and off the pitch. That has often meant refusing to
follow the crowd and sticking to our principles. It is an approach which has
served us well over the past 125 years and it is an approach which I believe is
even more important today as we see clubs struggling to keep pace with the
financial demands of the modern game.
We have faced criticism for sticking to our philosophy of living sustainably
within our financial means rather than reaching out for a quick fix injection
of money to solve all our supposed problems. But how much is enough to outspend
others who have seemingly limitless means? We can and will forge our own path
to success and avoid the many examples of clubs across Europe struggling for
their very survival after chasing the dream and spending beyond their means.
Football is moving powerfully in our direction. This season is the first in
which UEFA's Financial Fair Play ("FFP") regulations come into effect. These
regulations have support from all the leading clubs in Europe and UEFA have
assured clubs that the rules will be implemented rigorously. I believe there is
already evidence of changing behaviour from many clubs and this is good for
football.
In addition there are continuing discussions at the Premier League towards the
introduction of similar measures domestically, designed to ensure that all
Premier League clubs operate within their means.
Clubs, fans and other stakeholders in the game are demanding a more rational
financial approach and this reinforces our conviction that our Club is strongly
placed to succeed over the long term. We have qualified for the Champions
League for the 15th season in a row whilst off the pitch we have a business
strategy and infrastructure that is helping us to grow our revenues. This
revenue growth will provide sustainable funds for future investment in the team
whilst keeping within the FFP requirements.
I want to be clear that the money we generate is available to our manager,
Arsène Wenger, and that he quite rightly makes the decisions regarding how to
invest those funds based on his extensive football knowledge, experience and
judgement. Over the years, his decisions and his management have propelled us
to the top of the game in Europe (currently ranked 6th by UEFA) while playing
some of the most attractive football in the world.
Looking to the current campaign we are pleased with the strength in depth we
have across the squad. We have added some top quality players in the shape of
Santi Cazorla, Lukas Podolski and Olivier Giroud and they will be supplemented
by the returns from injury of Abou Diaby and Jack Wilshere and the continued
emergence of young talent in line with our ongoing philosophy.
We are confident in our ability to have a successful season. Everyone at
Arsenal, Board members and staff alike, want the Club to be successful and to
make our supporters proud. That is our focus every day. That is why we are
here.
On the pitch
The Club's 125th anniversary season had us all on the edge of our seats as it
went right to the final kick of the final game. The fact the team finished
third and qualified for the Champions League for the 15th season running was a
tremendous feat given our challenging start to the Premier League season.
Qualifying for the Champions League almost seems to be taken for granted at
Arsenal but we should never under-estimate the achievement, particularly in the
increasingly competitive landscape within the Premier League.
In many ways one of our biggest games of the season came way back in early
August when we travelled to Udinese for the Champions League qualifier second
leg. A hard-fought victory, over a team which went on to compete for the
Italian title, was crucial and gave us the platform for another exciting
campaign of Champions League football which ultimately ended in dramatic
fashion against AC Milan in the Round of 16.
In the Barclays Premier League a magnificent run of form from October to
February pulled us into the Champions League qualification race. Over that
spell our results and form were as good as any team in the League. Central to
that achievement was Robin van Persie's remarkable run of goal-scoring and none
of us should forget the memorable return by Thierry Henry who gave everyone a
huge lift with his presence.
We went out of the FA Cup at the hands of Sunderland in the 5th Round and our
Carling Cup run finished in the quarter finals when a young side ran Manchester
City extremely close.
As the Chairman rightly notes, we said farewell to our Assistant Manager Pat
Rice after 44 years' loyal service as a player and coach. Pat's contribution to
Arsenal has been immense and he will be sorely missed but we wish him a happy
and much deserved retirement.
Steve Bould has been promoted, from running the Under-18s, to become Arsène's
assistant and he has been joined as a first team coach by Neil Banfield. They
are both already adding a lot to the first team setup.
Arsenal Ladies
Arsenal Ladies have enjoyed yet another stand-out year. They reached the
semi-finals stage of the UEFA Women's Champions League for a second season
running and a strong start to the new Women's Super League campaign leaves them
well placed to defend their domestic crown in 2012. They also stand a chance of
claiming the Continental Cup for a second consecutive year, with a place in
October's final already secured.
Many of the team have also excelled on the international stage this year. We
were exceptionally proud to see Rachel Yankey equal the record for all-time
England appearances back in June and were delighted to see six Arsenal Ladies
players help Team GB to the quarter finals of the Olympic Football Tournament.
For club and country, the team have once again been fantastic ambassadors for
Arsenal.
Youth development
Youth development is the lifeblood of the Club and we have welcomed Terry
Burton to the Club to work as our Reserve Team and Head Development Coach. He
will be working closely with Liam Brady as the Premier League's new Elite
Player Performance Plan comes into being. EPPP is aimed at raising player
development standards across English football and will provide a new level of
competition for players at the under-21 level. The NextGen competition which
brings together youth teams from some of the top clubs in Europe is another
interesting development which will also provide an excellent test of our
younger players' abilities this season.
Business update
The financial results for the year, which are covered in more detail in the
Financial Review section, are solid. I always reinforce the point that our goal
is to increase revenue for re-investment in the team and the Club and in this
regard we continue to be in excellent shape financially.
Our business plan anticipates significant growth in the Commercial areas of our
operation and we are making good progress against the targets that have been
set.
Commercial Partnerships
We continue to be successful in attracting top brands to sign on as Commercial
partners largely because the proposition we offer is strong. Brands are
primarily attracted by our heritage, our global reach and our values. Our
proposition has been appreciably enhanced by our tour strategy, which helps to
engage and grow our already significant fan-base around the world.
To find the right brands to associate with we work closely with companies to
understand their businesses, demonstrating how a tailored partnership with
Arsenal can help in achieving their strategic priorities. Through this
approach, we have recently brought on board two new regional partners in Bharti
Airtel (one of the world's leading mobile operators), and Malta Guinness (a
brand of the Diageo group). We have also signed tour partnerships with both
Nike and Emirates, separate to our existing deals with those two brands.
In addition to our work attracting new partners to Arsenal, we continue to work
successfully with our existing partners in supporting their priorities. Some
highlights from this year include:
* Nike: A far reaching 125th anniversary campaign including the production of
a bespoke playing kit and crest for the season, an exhibition in the
Saatchi Gallery, a documentary by Ridley Scott films and a social media
campaign generating fan content from 179 countries.
* Citroen: Working with the English National Ballet to launch Citroen's new
DS5 car, an advert seen over a million times on You Tube.
* Carlsberg: Launching the Carlsberg lounge at the Emirates Stadium and
hosting the final of the nationwide Carlsberg Pub Cup at the Emirates.
* Indesit: An integral part of a pan European `Football Talent' campaign to
find high quality players, allowing them to compete in a final competition
at the Emirates.
Looking forward to the next financial year, our key Commercial priorities are
to continue to grow our regional and official partner areas and to
significantly progress conversations on our shirt and kit partnerships. These
major partnerships are up for renewal at the end of season 2013/14 and are an
area where we plan to deliver a significant uplift in revenue.
Growing global support
A key part of our strategy to develop increased revenues centres on our ability
to build our name around the world and to reach and connect with more and more
fans. In the past two summers, the tours to Asia, where we have a huge
following, have helped significantly in this regard. For example, we now have
600,000 regular Arsenal supporting visitors to our Chinese website and a
growing number of supporters' groups.
We already have more than 11 million Facebook followers and up to seven million
unique monthly visitors to www.Arsenal.com, from all around the globe. This
clearly demonstrates the depth of our following and is something we will
continue to build.
Retail ambitions
Development of our retail business has been another area of significant
activity during the past year. We have transformed our on-line offering,
Arsenal Direct, by investing in technology that makes it easier to use and we
have dramatically improved our own-brand clothing range. Going forward we will
be looking to sharpen our focus on the international opportunities available to
us, many of which will be driven by our expanding on-line offering.
Concerts
The success of the three Coldplay concerts at the Emirates Stadium in early
June put us on the map as a concert venue. These sell-out shows attracted
almost 180,000 music fans and the way the Club managed the events has led to
further interest from concert promoters for future events. Indeed we already
have a booking for the American rock group Green Day to play at Emirates
Stadium on June 1st next year. This is exciting news and gives us a strong and
hopefully regular source of additional income from our stadium.
Community activities
Our contributions to local communities here in the UK and further afield are an
important part of our role as a football club. The Arsenal name allows us to
open doors for people, and young people in particular, to find help and
opportunities which may have otherwise passed them by.
As part of the Club's 125th anniversary, we launched The Arsenal Foundation to
help us engage and assist more young people than ever before. The Arsenal
Foundation is a fundraising and grant-making organisation. It will help grow
the reach and effect of the charitable and community programmes which the Club
supports.
In addition, we have enjoyed a successful first year with our first global
charity partner, Save the Children.
Prospects
Our supporters continue to show fantastic commitment to the Club. Once again we
have started the new season with general admission and Club Tier season tickets
fully subscribed. Bearing in mind the current economic climate that is
testimony to our fans' loyalty and we are delighted to have this continued
depth of following.
Even though the market is more challenging than it has been for many years, due
to the financial difficulties being experienced around the world, I am
confident about the momentum we are building on our Commercial agenda.
The Premier League has announced strong growth in the value of its domestic TV
rights from the start of next season. This will provide clubs with a
significant boost to their revenues. At Arsenal we will look to ensure that
these additional funds are spent responsibly to move the Club forward and we
hope that this is an approach which will be adopted by others.
On the pitch we have come into the season with a strong and talented squad. We
have made some exciting additions and some of our younger players who broke
through last season will build on that experience and make an even greater
contribution this time round. We have a good blend of youth and experience and
have already shown a defensive resilience which should stand us in good stead
as the campaign progresses.
We look forward to the rest of the season with excitement and optimism and will
continue to work hard to take the Club forward and to make everyone proud to be
part of the Arsenal family.
I E Gazidis
Chief Executive Officer
27 September 2012
Arsenal Holdings plc
Financial Review
The Group has recorded an increased profit before tax for the year of £36.6
million (2011 - £14.8 million). Player trading in the summer 2011 transfer
window and investment in the player wage bill has significantly influenced this
result.
The 2011/12 year is the first to be included in the break even monitoring
arrangements which form the backbone of UEFA's Financial Fair Play regulations.
The result achieved is a robust demonstration of Arsenal's compliance with the
new regulatory regime.
2012 2011
£m £m
Group turnover 243.0 255.7
Operating profit before depreciation and 34.5 55.3
player trading
Player trading 26.1 (14.6)
Depreciation (11.4) (12.5)
Joint venture 0.9 0.8
Net finance charges (13.5) (14.2)
Profit before tax 36.6 14.8
As expected, with Highbury Square almost entirely sold, there was a much
reduced level of sales activity in our property business during the year, with
a turnover of £7.7 million as compared to £30.3 million for the prior year. On
the other hand revenues in our football business grew to £235.3 million from £
225.4 million. This represents a strong performance in the prevailing difficult
economic climate and, with our commercial activities delivering more than half
of this turnover growth, we are beginning to show a clear positive return
against recent years' and ongoing investment in the Group's commercial
capabilities.
In addition to the above, operating profit has been impacted by higher overall
staff costs of £143.4 million (2011 - £124.4 million). In the main, this
reflects a further step up in our investment in the player wage bill but there
has also been an increase in the wage costs of our football training and
support staff together with the need for an increased provision against our
share of the liabilities in the Football League Pension Scheme.
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. The profit on sale for the
year amounted to £65.5 million (2011 - £6.3 million) with the major
contributions to this figure coming from the transfers out of Cesc Fabregas,
Samir Nasri and Gael Clichy. During the period we invested £78.3 million in the
acquisition of new players and, to a lesser extent, the extension of contract
terms for certain existing players. The cost of this investment is being
charged against profit over the life of the underlying player contracts and, as
a consequence, the amortisation charge for the year was increased to £36.8
million (2011 - £21.7 million). In addition to the regular amortisation, an
impairment charge of £5.5 million (2011 - £Nil) has been booked against the
carrying value of certain player registrations. The charge relates to the
registrations of players who are deemed to be excluded from the Arsenal squad.
Net finance charges have been reduced to £13.5 million (2011 - £14.2 million).
This reflects the scheduled repayment of stadium finance bonds, leading to a
lower interest payable charge, and also an improved return earned on our cash
balances. At the balance sheet date, the Group's cash and bank balances
amounted to £153.6 million (2011 - £160.2 million) and the Group's overall net
debt was £98.9 million (2011 - £97.8 million).
Football Segment
2012 2011
£m £m
Turnover 235.3 225.4
Operating profit before depreciation, player 32.3 45.8
trading and exceptional items
Player trading 26.1 (14.6)
Profit before tax 34.1 2.2
Ticket prices for the 2011/12 season rose in line with inflation. There were 29
home fixtures (19 Barclays Premier League, five UEFA Champions League, two E.on
FA Cup and three Carling Cup). This was one more home fixture than in the prior
year and the mix of games was also more favourable, with an extra game played
in the Champions League, however, there was no repeat of the run to the 2011
Carling Cup final. As a result, match day revenue was overall slightly higher
at £95.2 million (2011 - £93.1 million). Excluding the Carling Cup fixture
against Shrewsbury (46,539) the average ticket sales per game was 59,772 (2011
- 59,849).
Broadcasting revenues were little changed overall at £84.7 million (2011 - £
85.2 million) with an additional Champions League round balanced by a worse £:€
exchange rate on converting these UEFA revenues and lower TV receipts from the
domestic cup campaigns.
Growing the Group's commercial revenues is a key business target and I am
pleased to report that combined retail and commercial revenues were increased
to £52.5 million (2011 - £46.3 million). The main driver for this 13% growth
has come from commercial partnerships with the successful addition of new
categories, for example Indesit, and the renewal of a number of existing
categories, such as Citroën, on improved terms. The summer tour to Malaysia and
China made a significant contribution in supporting our international strategy
for growing partnership revenues. Our rebranded on-line store, Arsenal Direct,
led the way in terms of growth in retail sales and royalties from product
licensing was also improved.
In terms of costs, the main change has already been referred to above, namely
the increase in wage costs to £143.4 million (2011 - £124.4 million). The wage
bill represented 60.9% of our football revenues (2011 - 55.2%). Included in the
wage cost is a one-off charge of £2.2 million to top up the Group's provision
against its share of the deficit in the now closed final salary section of the
Football League pension scheme, following the latest triennial valuation of the
scheme.
Although further headcount was added to support and drive the Club's commercial
business objectives, the increased total wage cost was very largely
attributable to the player wage bill and, to a lesser extent, wage costs for
the training and support staff around the first team squad. The investment in
player wages, which represents not just a significant current cost but also a
high level of committed future cost, continues to be underwritten by the
Group's accumulated property profits and cash reserves.
Other operating costs, which include all the direct and indirect costs and
overheads associated with the Club's football operations and revenues, rose to
£56.7 million (2011 -£54.5 million). The main change being an increase in
football operations costs from £10.7 million to £12.5 million; there were a
number of underlying reasons including increased spend on player insurance
premiums, medical expenses, costs of team travel in Europe, scouting and
analysis costs.
Property Segment
2012 2011
£m £m
Turnover 7.7 30.3
Operating profit before exceptional items 2.2 4.7
Reversal of impairment provision - 7.9
Profit before tax 2.5 12.6
Turnover from property was derived from the final stages of the sale of flats
in the Highbury Square development. Sales progress has been slow but steady as
we have sought to optimise sales values achieved. 12 flats were sold during the
period, bringing the cumulative sales up to 651 of 655 market housing
apartments within the development. Since the year end we have completed the
sale of another three units and the remaining flat will be retained by the
Group.
The construction and refurbishment works on a small number of properties owned
by the Group in the roads immediately adjacent to Highbury Square continued
throughout the year and the first block of eight flats was released for sale at
Easter with all units reserved within a very short time. So far five of these
sales have progressed to completion since the year end. This project will also
deliver 10 houses for sale once building works have completed in the early
autumn.
The major construction works at Queensland Road being undertaken by Newlon
Housing Trust continue to progress. Newlon will shortly be joined on site by
Barratt who will be developing the area to the north east and adjacent to the
stadium podium to provide three towers of market residential accommodation. The
Group completed the sale of this plot to Barratt at the end of June and
accordingly the revenues and costs associated with this contract will be
recognised in the Group's profit and loss account for the 2012/13 financial
year; the proceeds of £26 million are receivable in instalments over a two year
period.
We continue to work with Islington Council's planning department to determine
the optimum development schemes for our two remaining property sites on Hornsey
Road and Holloway Road.
Profit after Tax
The tax charge for the year was £7.0 million (2011 - £2.1 million). The
effective rate of taxation of 19.1% benefits from the revaluation of the
Group's deferred tax liabilities to the 24% rate of corporation tax effective
from April 2012.
The retained profit for the year was £29.6 million (2011 - £12.6 million).
Capital Investment
Expenditure of £7.3 million on fixed assets included enhancements to Club Level
and further Arsenalisation projects at the stadium, completion of the new
medical block and new pitches at the London Colney training ground and the
first phase of a major project to provide the Club with a first class Customer
Relationship Management system.
Looking ahead, the Club is in the process of agreeing the necessary planning
consents for a major development of its youth development training facility at
Hale End.
Financial Regulation
As we move into the early stages of UEFA's Financial Fair Play regime the topic
of increased regulation in football is clearly high on the agenda. The Premier
League is considering a review of its own regulatory regime and some
enhancement of existing rules seems likely.
On the assumption that any new rules will be supportive of clubs who operate on
a financially responsible and sustainable basis, it seems unlikely that there
would be any adverse impact on Arsenal. The Club's strong financial position
means we are very well placed to comply with UEFA's requirements and to pass
any new tests that may be required in future; more importantly we have the
sound financial platform which is vital to securing the on-field success of any
football club for both the short and the long term.
Stuart Wisely
Chief Financial Officer
27 September 2012
Arsenal Holdings plc
Consolidated profit and loss account
For the year ended 31 May 2012
2012 2011
Note Operations Player Total Operations Player Total
excluding trading £'000 excluding trading £'000
player £'000 player £'000
trading trading
£'000 £'000
Turnover of the group 242,577 2,901 245,478 257,107 735 257,842
including its share of
joint ventures
Share of turnover of (2,465) - (2,465) (2,150) - (2,150)
joint venture
---------- ---------- ---------- ---------- ---------- ----------
Group turnover 3 240,112 2,901 243,013 254,957 735 255,692
Operating expenses (217,018) (42,319) (259,337) (212,128) (21,658) (233,786)
---------- ---------- ---------- ---------- ---------- ----------
Operating profit/(loss) 23,094 (39,418) (16,324) 42,829 (20,923) 21,906
Share of joint venture 952 - 952 822 - 822
operating result
Profit on disposal of - 65,456 65,456 - 6,256 6,256
player registrations
---------- ---------- ---------- ---------- ---------- ----------
Profit on ordinary 24,046 26,038 50,084 43,651 (14,667) 28,984
activities before net
finance charges
---------- ---------- ---------- ----------
Net finance charges (13,496) (14,208)
---------- ----------
Profit on ordinary 36,588 14,776
activities before
taxation
Taxation (6,995) (2,143)
---------- ----------
Profit after taxation 29,593 12,633
retained for the
financial year
---------- ----------
Earnings per share
Basic and diluted 4 £475.64 £203.05
---------- ----------
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.
There are no recognised gains or losses in the current or previous year other
than those recorded in the consolidated profit and loss account and,
accordingly, no statement of total recognised gains and losses is presented.
Arsenal Holdings plc
Consolidated balance sheet
At 31 May 2012
2012 2011
£'000 £'000
Fixed assets
Tangible fixed assets 427,157 431,428
Intangible fixed assets 85,708 55,717
Investments 2,326 1,648
---------- ----------
515,191 488,793
Current assets
Stock - development properties 37,595 33,460
Stock - retail merchandise 1,681 1,114
Debtors - due within one year 52,332 27,435
- due after one year 5,201 2,214
Cash and short-term deposits 153,625 160,229
---------- ----------
250,434 224,452
Creditors: amounts falling due within one year (145,159) (131,104)
---------- ----------
Net current assets 105,275 93,348
---------- ----------
Total assets less current liabilities 620,466 582,141
Creditors: amounts falling due after more than one (268,066) (275,912)
year
Provisions for liabilities and charges (54,852) (38,274)
---------- ----------
Net assets 297,548 267,955
---------- ----------
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 240,790 211,197
---------- ----------
Shareholders' funds 297,548 267,955
---------- ----------
Arsenal Holdings plc
Consolidated cash flow statement
For the year ended 31 May 2012
2012 2011
£'000 £'000
Net cash inflow from operating activities 27,694 53,142
Player registrations (1,785) (1,528)
Returns on investment and servicing of finance (13,071) (17,220)
Taxation (4,624) 13,664
Capital expenditure (8,610) (9,546)
---------- ----------
Net cash (outflow)/inflow before financing (396) 38,512
Financing (6,208) (5,890)
Management of liquid resources (79,633) 49,340
---------- ----------
Change in cash in the year (86,237) 81,962
Change in short-term deposits 79,633 (49,340)
---------- ----------
(Decrease)/increase in cash and short-term deposits (6,604) 32,622
---------- ----------
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 2012 2011
inflow from operating activities £'000 £'000
Operating (loss)/profit (16,324) 21,906
Amortisation of player registrations 36,802 21,658
Impairment of player registrations 5,517 -
Profit on disposal of tangible fixed assets (12) (35)
Depreciation (net of grant amortisation) 11,391 12,498
(Increase)/decrease in stock (4,702) 13,068
(Increase)/decrease in debtors (11,894) 4,500
Increase/(decrease) in creditors 6,916 (20,453)
---------- ----------
Net cash inflow from operating activities 27,694 53,142
---------- ----------
Analysis of changes in net debt At 1 June Non cash Cash flows At 31 May
2011 changes 2012
£000 £000 £000 £000
Cash at bank and in hand 115,509 - (86,237) 29,272
Short-term deposits 44,720 - 79,633 124,353
---------- ---------- ---------- ----------
160,229 - (6,604) 153,625
Debt due within one year (bonds) (5,583) - (354) (5,937)
Debt due after more than one year (225,712) (346) 6,562 (219,496)
(bonds)
Debt due after more than one year (26,761) (349) - (27,110)
(debentures)
---------- ---------- ---------- ----------
Net debt (97,827) (695) (396) (98,918)
---------- ---------- ---------- ----------
Non cash changes represent £626,000 in respect of the amortisation of costs of
raising finance, £349,000 in respect of rolled up, unpaid debenture interest
and £280,000 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 2012
1. The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 May 2011 or 2012, but is derived from
those accounts. Statutory accounts for 2011 have been delivered to the
Registrar of Companies and those for 2012 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 2011.
2. Segmental analysis
Class of business:- Football
2012 2011
£'000 £'000
Turnover 235,329 225,410
---------- ----------
Segment operating (loss)/profit (18,526) 9,328
Share of operating profit of joint venture 952 822
Profit on disposal of player registrations 65,456 6,256
Net finance charges (13,793) (14,194)
---------- ----------
Profit on ordinary activities before taxation 34,089 2,212
---------- ----------
Segment net assets 265,280 237,053
---------- ----------
Class of business:- Property
development
2012 2011
£'000 £'000
Turnover 7,684 30,282
---------- ----------
Segment operating profit 2,202 12,578
Net finance charges 297 (14)
---------- ----------
Profit on ordinary activities before taxation 2,499 12,564
---------- ----------
Segment net assets 32,268 30,902
---------- ----------
Class of business:- Group
2012 2011
£'000 £'000
Turnover 243,013 255,692
---------- ----------
Segment operating (loss)/profit (16,324) 21,906
Share of operating profit of joint venture 952 822
Profit on disposal of player registrations 65,456 6,256
Net finance charges (13,496) (14,208)
---------- ----------
Profit on ordinary activities before taxation 36,588 14,776
---------- ----------
Segment net assets 297,548 267,955
---------- ----------
Operating profits are stated after charging/(crediting) exceptional items as
follows:
2012 2011
£'000 £'000
Football segment - costs of takeover transaction - 3,077
Property segment - write back of impairment - (7,860)
provision
---------- ----------
- (4,783)
---------- ----------
Operating profit from football before depreciation, player trading and
exceptional items amounted to £32.3
million (2011 - £45.8 million); being segment operating loss (as above) of £
18.5 million, adding back
depreciation of £11.4 million and operating loss from player trading of £39.4
million.
3. Turnover
Turnover, all of which originates in the UK, 2012 2012
comprises the following: £'000 £'000
Gate and other match day revenues 95,212 93,108
Broadcasting 84,701 85,244
Retail and licensing 18,303 17,702
Commercial 34,212 28,621
Property development 7,684 30,282
Player trading 2,901 735
---------- ----------
243,013 255,692
---------- ----------
Turnover from product licensing was previously reported within the commercial
revenue line. The comparative figures have been adjusted by £4.45 million to
reflect the inclusion of licensing turnover under the heading of retail and
licensing.
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 (2011 - 62,217
shares).
5. Reconciliation of movement in shareholders' funds
2012 2011
£'000 £'000
Profit for the year 29,593 12,633
Opening shareholders' funds 267,955 255,322
---------- ----------
Closing shareholders' funds 297,548 267,955
---------- ----------
6. Annual General Meeting
The annual general meeting will be held at Emirates Stadium, London, N7, on
Thursday 25 October 2012 at 11.30 am. The full statement of accounts and annual
report will be posted to shareholders on 1 October 2012.
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