Arsenal Holdings Plc
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Interim Accounts for the six months ended November 30, 2013 arsenal holdings plc Contents arsenal holdings plc 3 6 Chairman’s Statement FINANCIAL STATEMENTS 14 Consolidated Profit and Loss Account 15 Consolidated Balance Sheet 16 Consolidated Cash Flow Statement 18 Notes to the Interim Accounts 30 Independent Review Report Chairman’s Statement 30 November 2013 6 arsenal holdings plc hen I was appointed Chairman last our training academy facilities at Hale End, where our summer, I was quite clear that our youngest players start their Arsenal journeys. collective aim was to be successful Whilst youth development continues to be an on the pitch whilst remaining true important focus, we fully recognise the importance Wto the principles which this great club has adhered of getting the balance right between youth and to over successive generations. experience. As you well know, we signed Mesut Özil There was good reason to believe that the hard for a Club record transfer fee in the summer and, in work which has been put in, by many people across addition, the signing of Mathieu Flamini has proved the Club, over recent years had created the momentum to be an astute acquisition. We have also continued for a successful season in every aspect of our activities. to invest in the squad by retaining some of our key Thus far that optimism has been well founded. players. We expect to be able to confirm, in the near We must continue to take each game as it comes as future, that a number of our senior players have there is clearly a long way to go in this exciting season signed extended contracts. This is important for the and I am sure there will be many unexpected twists in stability of the squad. the months ahead. If I have learned anything in all my We will continue to work hard to keep the players years as a fan of this Club, it has been to never get too Arsène believes can take us forwards. We will also excited when things are going well or too down when continue to support the manager in the transfer market things go against us. when he identifies players he believes can further The team has put in an excellent performance so strengthen the squad. far this season. Our manager Arsène Wenger has built We also have significant momentum off the field another supremely talented team with a blend of in terms of growing our revenues. The financial results young players and those with more experience from for the first half of the year, which are considered in around the world. Kieran Gibbs, Aaron Ramsey, more detail in the Financial Review section of this Wojciech Szczesny and Jack Wilshere are all report, show that the Club has recorded significantly flourishing. We are also seeing the emergence of Serge increased revenue across each of its key areas of Gnabry and Gedion Zelalem into the first team squad. activity – match day, broadcasting and commercial. This is testimony again to Arsène Wenger’s philosophy This is excellent news. of giving young talented players a chance. You will have seen last month’s announcement It is a philosophy we will continue to back both of our new partnership with PUMA. Whilst I am unable in terms of facilities and expertise. We have recently to state the figures publicly, it is fair to say this is the announced that Andries Jonker is to become Head biggest partnership agreement the Club has ever of the Youth Academy in the summer, succeeding completed. The financial impact, in terms of profits Liam Brady. Andries has tremendous experience from and cash-flow, will not begin to be realised until the Holland and Germany in leading exciting programmes start of the next financial year but it will clearly provide to identify and develop the best young players. I have a further significant boost to our income and further no doubt he will build successfully on the outstanding strengthen our financial position. work which has been done by Liam and his team over We are delighted to welcome PUMA to the Arsenal many years. In addition, plans are in place to improve family and we look forward to a successful partnership. Chairman’s Statement 30 November 2013 arsenal holdings plc 9 The fact that PUMA intend to use Arsenal as one of match day in December, raising a record total in excess their primary assets around the world will undoubtedly of £225,000. This money will enable us to continue help with our ambitions to grow the Club’s profile on a doing even more work that transforms young peoples’ global basis. We all look forward to seeing the new kits lives for the better. To find out more about The Arsenal when they are launched in July. Foundation or to make a donation, please visit In the meantime, it would be remiss of me not to www.arsenal.com/thearsenalfoundation. thank Nike for their enormous contribution to Arsenal. They have been an excellent partner and we are Financial Review grateful for their long-standing support which goes The financial results for the six months ended back 20 years. 30 November 2013 show strong growth in revenue In addition to PUMA, we have also welcomed across all of the Club’s principal areas of activity. Gatorade, Huawei, Cooper Tires Europe, Lanvin and This is partly a consequence of new contractual JEANRICHARD to the Club as global partners and arrangements coming on line and partly a reflection BT Sport as a regional partner. of the team’s on field performance. Overall our Earlier this season we were delighted to announce turnover from football was £135.9 million, which the appointment of Josh Kroenke as a director. Josh is 28% higher than the £106.1 million reported for has a wealth of commercial experience gained across the comparative period last year. a range of sports businesses and I am sure he will Broadcasting was the largest source of income make a significant contribution to the Board. for the period at £52.0 million (2012 - £40.1 million). This season has also seen us commemorate the This is the first of three years under the Premier 100 year anniversary of our historic move from League’s new broadcasting contracts with Sky and Woolwich to Islington, with a range of special activities BT which, as previously reported, are at a significantly to mark the centenary. As part of the celebrations and improved level. This heading also includes revenue to recognise our ongoing commitment to the local from sale of the TV rights to the Emirates Cup; due community, The Arsenal Foundation announced a to the London Olympics there was no Emirates Cup donation of £150,000 to local organisation Islington in the prior period. We include revenues from the Giving. This will help to engage more young people UEFA Champions League within the broadcasting line in the Borough through a range of sport and leisure and looking beyond the current year, the exclusive activities and is delivered with the help of our own acquisition of the UK rights by BT will likely drive community department. further growth in values for the participating English Our work through The Arsenal Foundation clubs, therefore further increasing the significance continues to make a meaningful difference to lives of a top four Premier League finish. both here in the UK and overseas. Since its launch Our match day revenues also benefited from the in 2012, the Foundation has committed more than return of the Emirates Cup to the pre-season schedule £1 million to projects that are directly helping more and from one additional game, the UEFA Champions than 100,000 young people. League qualifying round, compared to last season. Once again, players, staff and supporters showed These additional fixtures meant that match day revenue tremendous generosity towards our dedicated charity for the period was £45.0 million (2012 - £37.8 million). Chairman’s Statement 30 November 2013 10 arsenal holdings plc As ever, match day revenue is weighted to the second to £22.2 million, from £4.4 million for the comparative half of the financial year and at 30 November we had period. This clearly demonstrates the significant played 11 of the 28 home fixtures we are so far certain positive impact which is derived from the combination of playing for the full season. of the new broadcasting contracts and our own Commercial and Retail revenues for the period commercial growth. amounted to £38.4 million, which was 39% higher than the £27.7 million reported this time last year. The main driver for this increase being the Group’s renewed 2013 2012 partnership with Emirates, which only came into force £m £m for the second half of the last financial year. As Turnover mentioned elsewhere in this report we have also Football 135.9 106.1 added a number of new commercial partnerships Property development 2.0 32.3 and, in particular, PUMA as our kit partner from this Total turnover 137.9 138.4 summer. It should be noted that no revenue from the Operating profits* PUMA contract will be included in the results for the Football* 22.2 4.4 current financial year. Property development 0.7 1.9 Elsewhere our commercial activities have benefited Total operating profit* 22.9 6.3 from improved trading conditions and on field Player trading (12.6) 23.2 performance with good levels of growth from our retail Depreciation and amortisation (6.4) (5.6) business and in areas such as stadium tours and Joint venture 0.4 0.4 membership.