THE ALL ENGLAND LAWN TENNIS GROUND PLC ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2012 013.07.003-14 Ground accounts.indd 1 19/12/2012 14:02 CONTENTS Officers and Professional Advisers . 1 Report of the Directors . 4 Statement of Directors’ Responsibilities . 7 Independent Auditor’s Report . 8 Consolidated Profit and Loss Account . 9 Consolidated Balance Sheet . 10 Company Balance Sheet . 11 Consolidated Cash Flow Statement . 12 Notes to the Financial Statements . 13 013.07.003-14 Ground accounts.indd 2 19/12/2012 14:02 Officers and Professional ADVisers Directors P G H BROOK FIA (ChaiRMAN) P W BRETHERTON J S DUNNINghaM OBE Miss V F GOOdiNG CBE R M GRadON S G SMITH OBE FRICS Secretary R G ATKINSON FCMA Auditor DELOITTE LLP Chartered Accountants 2 New Street Square London EC4A 3BZ Solicitors CMS CAMERON McKENNA Mitre House 160 Aldersgate Street London EC1A 4DD BANKers HSBC BANK PLC West End Corporate Banking Centre 70 Pall Mall London SW1Y 5EZ Registrars and Transfer Office ThE ALL ENGLAND LawN TENNis GROUND PLC Church Road Wimbledon London SW19 5AE Registered Office ThE ALL ENGLAND LawN TENNis GROUND PLC Church Road Wimbledon London SW19 5AE THE ALL ENGLAND LaWN TENNIS GROUND PLC AND SUBSIDIARY UNDERtaKINGS 1 013.07.003-14 Ground accounts.indd 1 19/12/2012 14:02 013.07.003-14 Ground accounts.indd 2 19/12/2012 14:02 013.07.003-14 Ground accounts.indd 3 19/12/2012 14:02 Report of the Directors The directors submit their annual report on the affairs of the Cancellation of project group together with the financial statements and auditors’ During the financial year ended 31 July 2011, the group report for the year ended 31 July 2012 . approved and commenced a project to redevelop part of the Millennium Building as a final incremental element to the 1. PRINCIPAL ACTIVITIES Long Term Plan. However, during the financial year ended The group’s principal activities are the ownership and 31 July 2012, it cancelled this project at a relatively early stage development of grounds and buildings in Wimbledon, in line with long term considerations about how it would fit London SW19, which are made available for playing lawn with the wider Wimbledon 2020 master plan. As a result, the tennis and croquet generally and for staging the Wimbledon group wrote off costs amounting to £3,087,000 that had Championships (‘The Championships’) specifically. There been incurred on this project. It is, however, possible that have not been any significant changes in the group’s some of the work represented by these costs will be used on principal activities in the year under review. The directors future redevelopment work within the Millennium Building. are not aware, at the date of this report, of any likely major Depreciation and facility fee changes in the group’s activities in the next year. As shown The depreciation charge of £11,760,000 (2011: £11,835,000) in the analysis of turnover on page 13, the majority of the primarily reflects depreciation on Long Term Plan capital group’s income is derived from the facility fee associated expenditure. The facility fee of £14,989,000 (2011: £14,581,000) with staging The Championships. increased in line with RPI and will also increase in line with RPI in the next financial year. 2. BUSINESS REVIEW Balance sheet Long Term Plan Historically, the group had been able to fund the development The group has now completed its original Long Term Plan of its grounds from cash inflows generated through its facility which was designed to develop the grounds in such a way fee and the issue of debentures. However, due to the magnitude as to provide The Championships with world class facilities of expenditure on redeveloping Centre Court, the group for players, spectators, media and staff. Over the last 15 arranged a £75,000,000 secured term loan with HSBC on years, the group has invested substantially in the Long Term 31 August 2007 which was drawn down in full during the year Plan. It built the new No.1 Court, the Broadcast Centre, the ended 31 July 2009. As at 31 July 2012, the outstanding balance Millennium Building, the Museum Building, and new Courts 2, on this loan stood at £40,000,000 (2011: £50,000,000) 3 and 4. It also carried out a variety of ancillary construction with repayments having been made in accordance with the projects including new balconies providing extended repayment schedule agreed with HSBC. facilities for No.1 Court debenture holders and buildings to meet the needs of the grounds and the building maintenance As at 31 July 2012, the net book value of the group’s tangible staff. In addition, in its biggest single project, the group fixed assets stood at £319,924,000 (2011: £332,917,000), cash also comprehensively redeveloped Centre Court including balances stood at £29,672,000 (2011: £21,186,000) and long installing a retractable roof in order to allow play to take term borrowings stood at £40,500,000 (2011: £45,500,000) place in wet weather, extending facilities for the public, for representing the outstanding long term balance on the loan Centre Court debenture holders and for entertaining guests facility of £35,000,000 and the refundable nominal values of and improving spectator seating. the 2011-15 Centre Court debenture issue and the 2012-2016 No. 1 Court debenture issue. As a result of the Long Term Plan being completed, the group’s fixed asset additions during the financial year amounted to the Debenture issues historically low figure of £1,854,000 (2011: £15,056,000). In May 2009, the group announced the successful issue of 2,500 Centre Court debentures relating to the 2011-15 Wimbledon 2020 Championships. Proceeds amounting to £60,000,000 (net of In late 2011, the group and other entities involved with VAT) were received prior to the year ended 31 July 2011. The Championships began a planning process for further development of the grounds over the next decade or so. In June 2011, the group announced the successful issue of 1,000 This process is designed to provide a master plan, known as No. 1 Court debentures relating to the 2012-16 Championships. ‘Wimbledon 2020’, which will ensure that the grounds and Proceeds amounting to £3,250,000 (net of VAT) were received buildings continue to provide The Championships with the during the year ended 31 July 2011. Proceeds totalling a further best possible facilities and environment and, therefore, help £8,250,000 were received during the year ended 31 July 2012. to ensure that The Championships continue to be widely As a result of collecting the proceeds from the No.1 Court regarded as being the world’s premier tennis tournament. debenture issue, the balance on the Debenture Premium The master plan will be designed to meet the expectations Reserve increased during the year ended 31 July 2012 to and needs of all constituencies including players, spectators, £252,102,000 (2011: £243,852,000). media, staff and contractors. The drawing up of the master plan is expected to be completed by the end of 2012 and The proceeds of these debenture issues have been, and is expected to provide a blueprint for construction and will continue to be, used to help repay the balance of the development work for many years to come. £75,000,000 secured term loan in accordance with a repayment schedule running through to 31 January 2015. 4 THE ALL ENGLAND LaWN TENNIS GROUND PLC AND SUBSIDIARY UNDERtaKINGS 013.07.003-14 Ground accounts.indd 4 19/12/2012 14:02 Related parties 3. GROUP RESULTS On 14 May 2009, an agreement was signed under which the The consolidated operating profit after exceptional items of company, the Lawn Tennis Association (‘the unincorporated £298,000 (2011: £2,241,000) was lower than the prior year due LTA’) and The All England Lawn Tennis & Croquet Club primarily to a write off of expenditure relating to the cancelled (‘the unincorporated Club’) agreed arrangements for project to redevelop part of the Millennium Building. The loss the continuation of their relationship in respect of The after taxation of £794,000 (2011 profit after taxation: £13,000) Championships for at least a further 40 years from 1 August was also due primarily the write off of expenditure relating 2013. Under these arrangements, the unincorporated Club was to the cancelled project. obliged to purchase all of the LTA’s shares in the company as The directors do not recommend the payment of a dividend at 1 August 2013 subject to certain conditions being satisfied (2011: £nil) and, after transfers of £6,259,000 (2011: and was permitted to instruct the company to buy back its £6,259,000) from the Championships Rebuilding Reserve, a own shares in order to meet some or all of the unincorporated retained profit of £5,465,000 (2011: £6,272,000) was realised. Club’s obligations to the unincorporated LTA. In addition, the company will receive a facility fee broadly protected against 4. PRINCIPAL OPERATIONAL RISKS AND UNCERTAINTIES inflation for 40 years based on the facility fee received for the The key operational risk faced by the group relates to year ending 31 July 2013. completion of construction work around the grounds. On 1 August 2011, the unincorporated Club’s assets, liabilities, This risk involves the cost of construction materials, the rights and obligations (including its shares in the company) use of sub-contract labour and the pressure to complete were transferred to a newly formed company The All England the construction work and clear the grounds in time for Lawn Tennis & Croquet Club Limited (“the Club”).