Arsenal Holdings Plc Interim Accounts for the Six Months Ended November 30, 2017

ARSENAL HOLDINGS PLC Interim Accounts for the six months ended November 30, 2017 ARSENAL HOLDINGS PLC Contents 30 November 2017 3 Chairman’s Statement6 Consolidated Profit and Loss14 Account Consolidated Balance16 Sheet Consolidated Cash Flow Statement17 Notes to the Interim 19Accounts Independent Review30 Report ARSENAL HOLDINGS PLC Chairman’s Statement 6 30 November 2017 e have enjoyed a decent run in the Carabao fees, player wages and the fees demanded by agents Cup but in the final, against Manchester has become super-heated. We need to spend W City, the team was unable to find the effectively and be the best we can across the whole performance which would have continued our run of our football operations if we are to compete at the of cup successes at Wembley in recent years. Losing level our ambitions for the Club demand. a cup final is never easy and we share the acute Off the pitch we have recruited some outstanding disappointment of our fans. This has been an professionals to take our work forwards. Sven inconsistent season but as we enter its final stages Mislintat is Head of Recruitment, joining from let’s not forget we still have plenty to play for with the Borussia Dortmund; Raul Sanllehi has joined as UEFA Europa League and an outside chance of a top Head of Football Relations from Barcelona, while four finish in the Premier League. Darren Burgess has come in as Head of High We have continued to invest significantly in Performance from Port Adelaide. These are key our playing squad with our summer appointments and we look forward to acquisition of Alexandre Lacazette them making important and the more recent signings of contributions. Pierre Emerick Aubameyang and On the commercial front, we Henrikh Mkhitaryan. were delighted to announce In addition to these the renewal of our partnership transfers we have also with Emirates. It is the largest invested in the retention of key commercial deal we have ever players such as Mesut Özil and signed and represents one of an increase in player wages is, the longest standing once again, the single largest partnerships in world sport which contributory factor in the Club’s is testimony to the success enjoyed by increased operating costs. The identification both parties through the relationship. We and development of young players is also central to have also entered into a number of new commercial our strategy. Konstantinos Mavropanos, a 20-year- partnerships. World Remit, Cover-More, CashBet old centre back, has arrived from Pas Giannina in Coin, Hyde Park Developments, Universal, Konami Greece while Reiss Nelson, Eddie Nketiah, Joe and Cavallaro Napoli have become partners this Willock, Matt Macey, Ben Sheaf and Josh Dasilva season and we continue to work hard to bring new have also progressed from our Academy to partners to the club. Our online retail business experience first team action. continues to grow positively. Breaking our transfer record twice in one season Last summer we enjoyed our most successful and the player contracts we have signed shows our pre-season tour so far with a trip to Sydney, Shangai commitment to getting the Club back competing for and Beijing. This has played an important part in the Premier League. However, our strategy remains attracting new partners and extending the self-financing and we must accept all the challenges engagement with our fans around the world. that brings at a time when the inflation of transfer This summer we start work on adding ARSENAL HOLDINGS PLC Chairman’s Statement 30 November 2017 9 approximately 780 extra seats to Club Level to help bring our capacity back in line with our original figure 2017 2016 from 2006. The project will involve adding an extra £m £m row to the front of Club Level and will take our Turnover capacity to just over 60,600. The work will be Football 167.7 191.1 completed in two phases, over two close seasons, Property development 14.5 0.8 and will finish in the summer of 2019. Total turnover 182.2 191.9 Alongside this work, we plan to upgrade and Operating profits* refurbish additional areas of Club Level over the next Football* 15.6 54.2 two years. The first upgrade will be to Dial Square in Property development 5.1 0.2 the summer of 2018, which will see the area Total operating profit* 20.7 54.4 transformed to celebrate the club’s original name of Player trading 15.5 (27.6) Dial Square Football Club. Depreciation and amortisation (8.1) (7.5) We continue to make a strong contribution of goodwill through The Arsenal Foundation and our Arsenal in Joint venture 0.6 0.2 the Community team. Our annual charity matchday Net finance charges (3.6) (6.9) raised a record £309,000 in December and our Profit before tax 25.1 12.6 thanks go to all the supporters, players and staff who contributed to raising this sum. *= operating profits before depreciation and player trading costs FINANCIAL REVIEW The financial results for the six months ended 30 November 2017 reflect the impact of competing in the exclusion of any UEFA qualification bonus for the UEFA Europa League, rather than the UEFA Champions players; League, alongside continuing investment in our • Profits on sale of players of £58.4 million compared player costs. Despite the consequent lower operating with £6.3 million in the comparative period last profits, the overall results are bolstered by the year; and inclusion of profits from player sales and property • Sale of the development site next to Holloway Road development such that the final pre-tax profit for the tube station leading to revenue from property period was £25.1 million (2016 - £12.6 million). activities of £14.5 million with a profit contribution of £5.1 million. In summary, the main features of the half year were: • A fall in revenues from Football of £23.4 million The Emirates Cup returned to our pre-season across broadcasting, ticketing and commercial schedule and this, along with match fees from our which reflects the changed UEFA competition four-match summer tour to Australia and China, was participation; a positive factor in gate and match day revenues. • An increase in our wage costs of £13.2 million However, there was one less home game compared which was principally player driven, despite the to the prior period (third group stage game in the ARSENAL HOLDINGS PLC Chairman’s Statement 10 30 November 2017 Champions League) which, combined with the main components of player trading. The investment reduced pricing in place for the Europa League, in the squad over the summer, mainly the acquisition meant that overall match day revenue was lower at of Lacazette, meant that the amortisation component £42.6 million (2016 - £45.8 million). Match day was increased to £43.6 million (2016 – £36.0 revenue remains weighted to the second half of the million). However, this was more than offset by a financial year and at 30 November we had played 11 higher profit on player transfers as the start of a of the 28 home fixtures we are so far certain of rationalisation of the squad delivered gains of £58.4 playing for the full season. million, mainly from the sales of Oxlade- Broadcasting contributed 41% (2016 – 45%) of our Chamberlain, Gibbs, Gabriel and Szczesny, against Football revenues for the period. The impact of lower only £6.3 million profit in the same period last year. UEFA distributions for the Europa League has During the period, we completed the sale of been partially offset by a favourable the property development site weaker sterling exchange rate in adjacent to Holloway Road tube converting those distributions station and this is the main from Euros and ten live element of revenues from broadcast Premier League property of £14.5 million. fixtures, two more than in The one remaining the prior period. development site on Upward pressure on Hornsey Road remains our player costs remains subject to a satisfactory strong. Our cash reserves planning consent. have meant that, despite Net finance costs for the the lower revenues referred period were £3.6 million to above, we have been able to (2016 - £6.9 million) with an continue to invest in new players underlying fall as we pay off our and contract extensions. An increase of fixed rate stadium finance bonds, wage costs of £13.2 million is the principal reason for supplemented by a positive change in the market our higher football operating costs value of the interest rate swap of £2.5 million (2016 – of £151.4 million (2016 - £135.1 million). We also negative £0.6 million). incurred increased logistical costs because The increased profits from player trading and of the scale of the summer tour, higher stadium property meant that the overall outcome for this half security charges and retail cost of year is a profit before tax of £25.1 million (2016 – loss goods sold rose in line with improved revenue. of £12.6 million). The tax charge for the period is £4.7 The overall impact of these changes is that half million and the rollover relief applicable to parts of year operating profits from football fell to £15.6 the player trading profits mean that £4.2 million of million (2016 - £54.2 million). This was in line with this charge is deferred. our expectation for a Europa League season. The Group has maintained a robust cash position There were significant changes in each of the two with balances as at 30 November 2017 of £160.7 ARSENAL HOLDINGS PLC Chairman’s Statement 30 November 2017 13 million (2016 - £123.7 million), inclusive of debt Coquelin, Giroud, Sanchez and Walcott.

Load more