Contents

Forewords Chairman 8 Chief Executive Officer 10

Year Review 14-39

Accounts Directors and Advisors 42 Strategic Report 45 Directors’ Report 46 Independent Auditor’s Report 47 Consolidated Profit and Loss Account 49 Consolidated Balance Sheet 50 Company Balance Sheet 51  Consolidated and Company Statement of Changes in Equity 52 Consolidated Cash Flow Statement 53 Notes to the Accounts 54

Note The Foreword section (Pages 8-11) and the Year Review section (Pages 14-39) do not form part of the statutory financial statements. Forewords Chairman Bill Kenwright

I’m going to start this report by stating His Republic of Ireland teammate, the obvious. Liverpool 4 has always James McCarthy, is now back training quite rightly been a massively important with the squad and we look forward destination in the lives of Evertonians. to him playing an important role So, in the midst of a consultation process after too long on the sidelines. to support our aspirations to develop a new stadium at Bramley-Moore Dock, Alongside Richarlison and Bernard, we are working simultaneously on we have welcomed into the Everton leaving a lasting legacy at Goodison family Yerry Mina, Lucas Digne, Andre Park which will help provide a catalyst Gomes, Cenk Tosun, Theo Walcott, Kurt for regeneration in north Liverpool. It Zouma and Joao Virginia. We have also is also right and proper that I continue bid a fond farewell to Wayne Rooney with something just as obvious; a to whom we wish the very best on his salute to our fans! Your patience and (already hugely successful) American enduring support is the bedrock of our adventure with DC United in MLS. Club, and has been a big inspiration to Sadly, we mourned the passing of Ray everyone here as we pursue ambitious Wilson, England’s finest ever left-back, plans aimed to take us back to our an FA Cup winner for Everton and a rightful position among football’s elite. World Cup winner for England in the Hard decisions had to be made both space of a magical few weeks in 1966. during and at the end of the 2017-18 And to the families of all departed season and, as always, you stayed Blues over the past year, we steadfast behind your beloved Blues. extend our condolences. We acknowledge and thank Sam Allardyce for the job he and his To the players we have loaned to other backroom team performed in the clubs, Nikola Vlasic, Yannick Bolasie, Mo course of a challenging campaign, Besic, Sandro Ramirez, Cuco Martina, and we share in the optimism inspired Henry Onyekuru, Ashley Williams, Kevin by the purposeful determination Mirallas, Matthew Pennington, Luke and energy of our new Director of Garbutt, Antonee Robinson, Callum Football, Marcel Brands, and our new Connolly and Joe Williams, we send our manager, Marco Silva, who collectively, best wishes for the season, and to Davy we believe, embrace those special Klaassen, Joel Robles and Ramiro Funes qualities all Evertonians seek. Mori on new chapters in their careers. We have witnessed some tantalising Everton in the Community and its glimpses already with Brazilian brilliance magnificent work in changing and saving from Bernard and Richarlison and a lives continues to inspire. Through the fantastic goal by Gylfi Sigurdsson that People’s Hub, the Blue Base, Everton will be among the highlights at the Free School and our plans for the end of the season (although amazingly People’s Place, we have already started to all of us at Leicester, it didn’t win to build what we know will be a suitable Match of the Day’s Goal of the Month!!!). legacy in and around Goodsion Park. Tom Davies’s nomination for the 2018 Denise’s delight at the move to the Royal Golden Boy award underlines his talent Liver Building is something we all share and Jordan Pickford, who collected and we could not have a better CEO to a hat-trick of awards at the end-of- drive the Club forward in this critical season Dixies, has continued to build period. We also thank Robert Elstone on his heroic performances during the for all his work when he was with us and World Cup when he came so close to wish him the best at Super League. reaching the final with England. We were delighted to complete negotiations With Farhad continuing his outstanding on his new six-year contract, as we commitment, Marcel and Marco were when a new five-year deal was driving our first-team forward, Unsie agreed with Idrissa Gana Gueye. continuing to develop some of the best young talent, and a fanbase that We were also heartened last season continues to inspire our ambition, we by the emotional return of Seamus look forward to the next 12 months Coleman following the broken leg he with purpose and anticipation. suffered so cruelly on international duty. COYB! Bill K

8 EVERTON FOOTBALL CLUB 9 Chief Executive I am truly honoured to be writing Since being entrusted with this The first year of our agreement with I was delighted, too, that we followed the first ‘virtual mascot’ in the my first statement in an Everton responsibility, I have worked closely SportPesa, as the Club’s principal up our achievement in being named Premier League; David Unsworth Officer Annual Report as the Club’s Chief with our Director of Football, partner and our first commercial in The Sunday Times 100 Best and Everton’s Under-23s visiting the Executive. It is a responsibility I Marcel Brands, and our Manager, relationship with an African company, Companies, an annual ranking and ‘Home Is Where The Heart Is’ house, take very seriously and I am entirely Marco Silva, and I can assure saw Everton become the first Premier survey of Britain’s finest employers which their fundraising efforts paid Denise committed to making it a success. you that their forward-thinking, League team to play a game in East and widely acknowledged to be one for in order to support our city’s hardworking, dynamic approach is Barrett-Baxendale I am grateful to the Chairman and the Africa. We value our developing of the most extensive studies into homeless youth; a school representing reflective of the Everton way and relationship with SportPesa, who have employee engagement in the country, Everton winning the Premier Board and Mr Moshiri for promoting their desire and commitment to me to this position and to them and all demonstrated a strong alignment with the added distinction of being League Primary Stars Football achieve success is entirely consistent with our values, and look forward to included in The Sunday Times Top Tournament, and Everton becoming Evertonians for the support given to with the aspirations of our fans. me in my first few months in the role. a long and productive relationship Track 250. These accomplishments the first football club in England Off the pitch, too, Marcel and Marco with them. Our innovative partnership demonstrate our commitment to register as a breastfeeding- My ‘to-do list’ was extensive are strong supporters of the work with Angry Birds has enabled us to to Nil Satis Nisi Optimum. friendly organisation being just a when I took up the post and no we do in our community. Our plans reach a new audience worldwide, few moments that stand out for me, item was more important than to providing us with further exposure There were many other moments personally, from the last 12 months. for the People’s Place and our Blue of great pride, both on and off start making material progress Base, which Marco officially opened in key international markets. The in our ambition to move to a new introduction of three personalised the field. Moments that made But it is to the future that we must in September, represent the latest us all ‘Proud to be Blue’… continue to focus, while remaining stadium at Bramley-Moore Dock. projects in our continued investment football-based playable characters into an Angry Birds game – Gylfi true to our values, our ideals and As you will be aware, we embarked into facilities and services in our Seamus’ return in January; Jordan Sigurdsson, Theo Walcott and Cenk our traditions. Bramley-Moore recently upon a major public neighbourhood around Goodison, filling the nation with hope, pride Tosun - represented a first for Rovio Dock and the Goodison Legacy, consultation process, reaching which also include the state-of-the art and excitement in Russia; 14-year- Entertainment and I was delighted regeneration, respect and renewal. out to all areas of our city and Everton Free School and People’s Hub. old Jack McLinden, who lives with that our two forward-thinking Passion, purpose and pride in what surrounding region, to underpin Clear, physical statements that, while multiple health conditions and has organisations combined to create it means to be an Evertonian. the planning application for our we plan to move where we play our severely reduced mobility, joining this small piece of history together. new home at Bramley-Moore football, Everton will never leave L4. his heroes on the pitch as he became NSNO Dock and to deliver a community- I hope our move to The Royal Liver led legacy at Goodison Park. Building, situated as it is on the banks This is a significant step, not only of the Royal Blue Mersey, along the towards achieving a new home waterfront from Bramley-Moore for Everton on the waterfront but Dock, also represents a powerful to regenerating north Liverpool, symbol of our intent and ambition. an enterprise that will boost Housing our staff under one roof the local economy by £1bn. allows us to work at our optimum level of effectiveness and efficiency, Our pride in being a catalyst benefits we are already experiencing. for investment in new homes, new infrastructure and new Changes at Boardroom level opportunities is matched by our and the establishment of an commitment to the Goodison Everton Leadership Team, who Legacy project, strengthening those are responsible for the day-to-day strong community foundations operations at Goodison Park and the Club has cultivated over many USM Finch Farm, will also help decades. Goodison will always be us to move forward and grow. sacred to Evertonians but to be For the second consecutive year the a modern, progressive football Club generated record revenues, club we understand that we which reached £189m, a 10% increase need the resources and facilities on the prior year. Combined gate to take us to the next level. receipts, sponsorship and other My role, as Chief Executive, is to commercial income increased provide leadership, direction and significantly by 45% and the strategy. Making sure we are clear continued and quite magnificent on who we are, where we are going support of our fans meant that and what resources we need to Season Tickets reached the cap with achieve sustainable success as a more than 10,000 on a waiting list. football club are my priorities.

10 11 Year Review 14 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 15 Marcel Brands and Marco Silva arrive and embrace Club ethos

16 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 17 An increased shareholding for the Club's owner, a new CEO at the helm, an iconic new HQ and a prestigious company accolade point to a bright future

18 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 19 20 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 21 22 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 23 ANNUAL REPORT & ACCOUNTS 2018 25 26 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 27 28 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 29 Wilson proudly carries the World Cup trophy

We say farewell to an Everton Giant and ’66 World Cup Winner

Former Blues striker also passes away at the age of 75

ANNUAL REPORT & ACCOUNTS 2018 31 32 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 33 34 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 35 36 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 37 38 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 39 Accounts Directors Finance and and Advisors Commercial Review

The Club has a number of KPI’s across turnover, costs and profitability which are outlined and discussed below: Club’s Turnover The Club recorded a second consecutive 2018 (£m) 2017 (£m) year of record revenues, which reached £189m, a 10% increase on the prior year. Broadcast 130.0 130.5 While the Club’s broadcasting revenues fell slightly, the combined gate receipts, Gate Receipts 16.3 14.1 sponsorship and other commercial Sponsorship, Advertising and Merchandising 20.7 15.4 income increased by 45%. This revenue growth was primarily driven by the Club’s Other Commercial Activities 22.2 11.3 participation in the UEFA Europa League Total 189.2 171.3 (with the majority of revenue reported in other commercial activities) and strong growth in sponsorship income of The Club became the first team The Club continued to invest in £5.3m (34% increase from last year). to have its players (Theo Walcott, Goodison Park with improvements to Cenk Tosun and Gylfi Sigurdsson) lounge areas, concourses and toilet Broadcasting Revenue have their animated alter egos facilities. A significant investment The Club was selected for live UK included within the game. was made in an Accessible Stadia broadcast on 19 occasions which project, with the addition of Rovio’s other partnerships in the earned the Club £22.5m in facility lifts and platforms for improved business of sport have included the fees (2017: £21.5m), with the eighth- disabled access at the Park End. NBA, the NFL and the NHL. Everton place finish earning the Club £25.1m is the first sports team to partner Because of these works, Goodison in merit payment (2017: £27.2m). Total with them directly and, following capacity reduced to 39,221. broadcasting revenue stood at £130m, their successful first season with the a small decline from £130.5m in 2017. Club, Angry Birds has now gone on Costs and Profitability In 2017-18, Everton secured the eighth to partner with the Chicago Bulls. highest Premier League broadcasting The continued investment in first- team squad was the main driver for distribution (seventh in 2016-17). In 2018, the Club continued the long- the rising operating costs and player term partnership with Umbro and Total broadcasting revenue makes up amortisation and impairment. As a Fanatics, which saw a record year 69% of the Club’s total revenue which result of this investment, the Club’s for retail sales, underpinned by the is a reduction from 76% in 2017. This total wage to turnover ratio has gone R Elstone highest number of replica shirts reduction is mainly due to the increase up from 61% in 2017 to 77% in 2018. (Resigned 1 June 2018) the Club has sold in a season. in commercial revenues in 2018. The Club outsources the majority C Anderson The Club’s other official partners of its retail and catering operations, (Resigned 30 October 2017) Commercial Operations include USM, Carling, Blackwell therefore the above comparison 2018 was the initial year of our Global, Davanti Tyres, Sure deodorant, is not like for like with those clubs engagement with SportPesa as the Sport Media, Thomas Cook Sport, which run these operations in- Club’s first African main partner. The Stagecoach, StubHub and the recently house. When these outsourced Club made the first ever visit by a announced Fratelli Beretta. operations are taken into account, Premier League team to East Africa, Overall, the Club’s sponsorship, the Club’s wages as a percentage with our exhibition game against Gor advertising and merchandising of turnover for 2018 was 73%. Mahia of Kenya played in front of a revenue reached a record £20.7m, packed 60,000-seater stadium in Dar In addition to the first team’s wage bill, a 34% increase on 2017. es Salaam. Gor Mahia paid us a return the Club’s other operating costs, such visit at Goodison on 6 November 2018. Matchday Revenue as the Academy and first-team support Registered Office Bankers Company Registration We value our developing relationship increased. The Club also incurred costs with SportPesa, who have demonstrated Yet again, the Club’s fans showed from competing in the Europa League Goodison Park, Metro Bank Number a strong alignment with our values, unwavering support to the Club and £11.4m cost of the design and other Liverpool, One Southampton Row, 36624 and we hope to develop our brand by taking up every seat for every work relating to the new stadium, which L4 4EL London, WC1B 5HA and commercial operations with other Premier League match in 2018, with cannot be capitalised until planning African partners in the future. an average attendance of 38,797. permission has been granted. Statutory Auditor Registrars These sustained high attendances In September 2017 the Club welcomed are underpinned by another year of As a result, the Club made an operating Deloitte LLP Capita IRG the first ever sleeve partner, Rovio, strong Season Ticket and hospitality loss of £22.9m compared with an Horton House, Exchange Flags, The Registry, Northern House, an exciting and dynamic global sales, with the Club securing a record operating profit of £25m in 2017 Liverpool, L2 3PG Woodsome Park, Fenay Bridge, entertainment company. As part of 31,282 Season Ticket holders. Gate (both excluding player trading). Huddersfield, West Yorkshire, HD8 0GA the Club’s engagement with Rovio receipts increased by £2.2m (16% and its iconic game, Angry Birds, a on prior year) because of the Club’s 10-episode YouTube series was created participation in the UEFA Europa League. and filmed at USM Finch Farm.

42 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 43 Finance and Strategic Commercial Review Report

The other impact of a significant The Club signed its first ever Revolving This strategic report has been Going Concern The Club is regulated by the rules of the investment in the first-team squad Credit Facility (“RCF”) with the Industrial prepared for the Group as a whole and FA, Premier League, UEFA and FIFA. Any In ensuring that the Group has sufficient has been the sharp increase in the and Commercial Bank of China, the therefore gives greater emphasis to change to FA, Premier League, UEFA and liquid resources to meet its liabilities amortisation and impairment of largest bank in the world by assets. those matters which are significant FIFA regulations in future could have an as they fall due, the Directors have players’ registrations from £37.3m in This was an important step in securing to the Group and its subsidiary impact on the Group as the regulations reviewed in detail the business’ cash 2017 to £66.9m in 2018. At the same working capital facilities at attractive undertakings when viewed as a whole. cover areas such as: the format of flow projections. As disclosed in note time, the Club made a record profit interest rates. The total amount competitions, financial fair play, the 1, during the 2017-18 season the Group on disposal of player registrations available for drawdown under the terms Principal Risks and division of broadcasting income, the met its day-to-day working capital of £87.8m arising from the sale of of the RCF is £60m and its original term eligibility of players and the operation of Uncertainties requirements through its cash reserves, Romelu Lukaku, Ross Barkley, Tom is 36 months. The Club switched its day- the transfer market. The Group monitors The Group’s activities expose it to a shareholder support, revolving credit Cleverley and Gerard Deulofeu. to-day banking facilities to Metro Bank its compliance with all applicable rules number of financial risks including credit facility and through the securitisation and has also welcomed another new and regulations on a continuous basis risk, cash flow risk and liquidity risk: of future guaranteed receivables. The Club incurred £34.0m exceptional funding partner into its banking group, and also monitors and considers the costs in 2018, not present in 2017, of Santander, with whom we arranged Cash flow risk Additionally, because of the predictable impact of any potential changes. which £14.4m related to settlement financing against player receivables. The Group’s activities expose it primarily nature of football club revenue costs for the termination of former to the financial risks of changes in streams, the Group is able to obtain Future Developments employees and other costs in relation The Club continues to proactively foreign currency exchange rates and further funding if required through the The Directors expect the general to the change in coaching staff in the develop our long-term relationships interest rates. Where possible, the securitisation of future guaranteed level of activity to remain consistent year. Exceptional costs of £11.4m were with international financing institutions Group uses foreign exchange forward revenues, as is common industry with 2017-18 in the forthcoming year. incurred on the new stadium project, for strategic financing transactions. contracts to help mitigate changes practice, and as it has done in the past. Details of significant events since the with an £8.2m impairment charge on the in exchange rates. Interest bearing The RCF is a three-year facility which balance sheet date are contained in carrying value of player registrations. A Ryazantsev Chief Financial and Commercial assets and liabilities are held at fixed reduces over the term to July 2020. note 21 to the financial statements. Net Interest payable decreased rate to ensure certainty of cash flows. Officer The Group’s trading projections show Approved by the board and from £10.8m to £5.9m due to the Credit risk that it has a reasonable expectation of signed on its behalf by: Club incurring exceptional interest staying within its currently available, expenses in 2017, not present in 2018, The Group’s principal financial assets A Ryazantsev and future anticipated, finance facilities which related to settlement fees due are bank balances and cash, trade and Director for at least 12 months from the date of to lenders for the early repayment other receivables, and investments. signing of these accounts. In preparing of long-term loan facilities. The Group’s credit risk is primarily attributable to its trade receivables. these trading projections, a number After the above items, the Club The amounts presented in the balance of additional inherent uncertainties generated a net loss of £13.1m sheet are net of allowances for have been identified; notably on- (2017: net profit £30.6m) doubtful receivables. An allowance for field performance and the resultant impairment is made where there is an reduction in the Premier League Balance Sheet and Funding identified loss event which, based on domestic broadcasting merit award The Club’s significant investment in previous experience, is evidence of a payment and the level of player trading. the playing squad led to the doubling reduction in the recoverability of the The Directors have considered the net of intangible assets to £240m in 2018 cash flows. The credit risk on liquid funds current liability and other inherent from £121m in 2017, which included is limited because the counterparties uncertainties and, in the event that they the additions of Michael Keane, Gylfi are banks with high credit-ratings would be required, have identified a Sigurdsson, Cenk Tosun, Theo Walcott assigned by international credit-rating number of potential mitigating actions to and Jordan Pickford. The Club’s net agencies. The Group has no significant manage any resulting forecast shortfall asset position in 2018 was £123m. concentration of credit risk, with against current facilities including the exposure spread over a large number ability within the industry to securitise This investment, as well as the operating of counterparties and customers. performance described above, was additional future guaranteed revenues funded by a combination of shareholder Liquidity risk and flexibility around player trading. injections via an interest-free loan, In order to maintain liquidity to Based on the mitigating actions which reached £150m in 2018, and new ensure that sufficient funds are referred to above and the comfort borrowings. In accordance with FRS available for ongoing operations obtained from current funding partners, 102, the shareholder loan from Bluesky and future developments, the as well as the continued financial Capital Limited has been accounted for company uses a mixture of long- support of Bluesky Capital Limited, as equity. Bluesky Limited continued term and short-term debt finance. a company controlled by Mr Moshiri, to support the Club post-year end Further details regarding the Directors have a reasonable with an additional shareholder loan expectation that the Group will have of £100m received post year end. liquidity risk can be found in the statement of accounting policies adequate resources to continue in The Club’s net debt position increased in the financial statements. operational existence for the foreseeable to £66m in 2018, up from a net future. Accordingly, they adopt the cash position of £9.6m in 2017. going concern basis in preparing the Annual Report and Accounts.

44 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 45 Directors’ Independent Auditor’s Report to the members Report of Everton Football Club Company Limited

The Directors present their Employee Consultation The Directors are responsible for Report on the audit of the (the ‘FRC’s’) Ethical Standard, and we conclude that there is a material annual report on the affairs of the keeping adequate accounting records financial statements we have fulfilled our other ethical misstatement of this other information, Group, together with the financial The Group places considerable value that are sufficient to show and explain responsibilities in accordance we are required to report that fact. statements and auditor’s report, on the involvement of its employees the Company’s transactions and disclose Opinion with these requirements. for the year ended 31 May 2018. and has continued to keep them with reasonable accuracy at any time the We have nothing to report in informed on matters affecting them as financial position of the Company and In our opinion the financial statements We believe that the audit evidence respect of these matters. of Everton Football Club Company we have obtained is sufficient Principal Activity employees and on the various factors enable them to ensure that the financial Responsibilities of Directors affecting the performance of the Group Limited (the ‘parent company’) and its and appropriate to provide The principal activity of the Group statements comply with the Companies As explained more fully in the Directors’ and the Company. This is achieved subsidiaries (the ‘Group’): a basis for our opinion. continues to be that of a professional Act 2006. They are also responsible for responsibilities statement, the Directors through formal and informal meetings • give a true and fair view of the football club. The Group has safeguarding the assets of the Company are responsible for the preparation and the Company intranet. Employee state of the Group’s and of the Conclusions relating to going continued to develop the Everton and hence for taking reasonable steps of the financial statements and for representatives from the Staff Forum parent company’s affairs as at concern brand and associated media rights. for the prevention and detection of being satisfied that they give a true are consulted regularly on a wide range 31 May 2018 and of the group’s fraud and other irregularities. We are required by ISAs (UK) to report in and fair view, and for such internal Result for the Year of matters affecting their current and loss for the year then ended; respect of the following matters where: The Directors are responsible for control as the Directors determine is future interests. The employee Staff • have been properly prepared The loss for the year amounted to the maintenance and integrity • the Directors’ use of the going necessary to enable the preparation Forum is open to all employees. in accordance with United £13.1m (2017 profit: £30.6m), which of the corporate and financial concern basis of accounting of financial statements that are Kingdom Generally Accepted has been withdrawn from (2017: information included on the in preparation of the financial free from material misstatement, Directors Accounting Practice, including transferred to) reserves. The Directors Company’s website. Legislation in statements is not appropriate; or whether due to fraud or error. The Directors in office during Financial Reporting Standard are not able to recommend the the United Kingdom governing the the year and to the date of this 102 “The Financial Reporting • the Directors have not disclosed In preparing the financial statements, payment of a dividend (2017: same). preparation and dissemination of report are disclosed on page 42 Standard applicable in the UK in the financial statements any the Directors are responsible for financial statements may differ from Future Developments and (Directors and Advisors section). and Republic of Ireland”; and identified material uncertainties that assessing the group’s and the parent legislation in other jurisdictions. company’s ability to continue as Events after the Balance Directors’ Responsibilities Statement • have been prepared in accordance may cast significant doubt about with the requirements of the the group’s or the parent company’s a going concern, disclosing, as Sheet Date The Directors are responsible for Directors’ Indemnities Companies Act 2006. ability to continue to adopt the applicable, matters related to going preparing the Annual Report and the The Company has made qualifying Details of future developments and going concern basis of accounting concern and using the going concern financial statements in accordance third-party indemnity provisions for events that have occurred after the We have audited the financial for a period of at least 12 months basis of accounting unless the with applicable law and regulations. the benefit of its Directors which were balance sheet date can be found in statements which comprise: from the date when the financial Directors either intend to liquidate made during the year and remain in the Strategic Report and form part Company law requires the Directors • the consolidated profit statements are authorised for issue. the group or the parent company force at the date of this report. of this report by cross-reference. to prepare financial statements for and loss account; or to cease operations, or have no We have nothing to report in each financial year. Under that law the • the consolidated and parent realistic alternative but to do so. Going Concern Auditor respect of these matters. Directors have elected to prepare the company balance sheets; Each of the persons who is a Auditor’s responsibilities for the audit The Directors have a reasonable financial statements in accordance with • the consolidated and parent company Director at the date of approval Other information of the financial statements expectation that the Company and United Kingdom Generally Accepted statements of changes in equity; the Group have adequate resources of this report confirms that: The Directors are responsible for the Our objectives are to obtain reasonable Accounting Practice (United Kingdom • the consolidated cash flow statement assurance about whether the financial to continue in operational existence • so far as the Director is aware, other information. The other information Accounting Standards and applicable • the related notes 1 to 25. statements as a whole are free from for the foreseeable future. Thus there is no relevant audit comprises the information included law) including FRS 102 “The Financial material misstatement, whether due they continue to adopt the going information of which the Company’s in the annual report, other than the Reporting Standard applicable in The financial reporting framework that to fraud or error, and to issue an concern basis in preparing the the United Kingdom and Republic auditor is unaware; and has been applied in their preparation financial statements and our auditor’s report thereon. Our opinion on the auditor’s report that includes our annual financial statements. of Ireland”. Under company law the • the Director has taken all the is applicable law and United Kingdom financial statements does not cover opinion. Reasonable assurance is a Directors must not approve the financial steps that he/she ought to have Accounting Standards, including Further details regarding the adoption the other information and, except to high level of assurance, but is not a statements unless they are satisfied taken as a Director in order to Financial Reporting Standard 102, of the going concern basis can be the extent otherwise explicitly stated guarantee that an audit conducted in that they give a true and fair view of make himself/herself aware of any “The Financial Reporting Standard found in the Strategic Report and in our report, we do not express any accordance with ISAs (UK) will always the state of affairs of the group and relevant audit information and to applicable in the UK and Republic of note 1 to the financial statements. form of assurance conclusion thereon. detect a material misstatement when parent company and of the profit or establish that the company’s auditor Ireland” (United Kingdom Generally it exists. Misstatements can arise from Disabled Employees loss of the group for that period. is aware of that information Accepted Accounting Practice). In connection with our audit of the fraud or error and are considered financial statements, our responsibility Applications for employment by In preparing these financial statements, This confirmation is given and Basis for opinion material if, individually or in the is to read the other information and, in disabled persons are always fully the Directors are required to: should be interpreted in accordance We conducted our audit in accordance aggregate, they could reasonably be with International Standards on doing so, consider whether the other expected to influence the economic considered, bearing in mind the • select suitable accounting policies with the provisions of s418 of Auditing (UK) (ISAs UK) and applicable information is materially inconsistent decisions of users taken on the basis abilities of the applicant concerned. and then apply them consistently; the Companies Act 2006. In the event of members of staff law. Our responsibilities under those with the financial statements or our of these financial statements. • make judgements and becoming disabled, every effort is Deloitte LLP have expressed their standards are further described knowledge obtained in the audit or accounting estimates that are A further description of our made to ensure that their employment willingness to continue in office as in the auditor’s responsibilities otherwise appears to be materially reasonable and prudent; responsibilities for the audit of the with the Group continues and that auditor and appropriate arrangements for the audit of the financial misstated. If we identify such material financial statements is located on appropriate training is arranged. It • state whether applicable UK have been put in place for them to be statements section of our report. inconsistencies or apparent material the FRC’s website at: www.frc.org.uk/ is the policy of the Group and the Accounting Standards have been deemed reappointed as auditor in the misstatements, we are required We are independent of the group and auditorsresponsibilities. This description Company that the training, career followed, subject to any material absence of an Annual General Meeting. to determine whether there is a the parent company in accordance forms part of our auditor’s report. development and promotion of disabled departures disclosed and explained material misstatement in the financial Approved by the board and with the ethical requirements that are persons should, as far as possible, be in the financial statements; and statements or a material misstatement signed on its behalf by: relevant to our audit of the financial identical to that of other employees. • prepare the financial statements on of the other information. If, based the going concern basis unless it is A Ryazantsev statements in the UK, including the on the work we have performed, Financial Reporting Council’s inappropriate to presume that the Director Company will continue in business.

46 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 47 Independent Auditor’s Report to the members Consolidated Profit and Loss Account of Everton Football Club Company Limited for the year ended 31 May 2018

Report on other legal and Use of our report 2018 2017 regulatory requirements This report is made solely to the company’s members, as a body, in Opinions on other matters prescribed accordance with Chapter 3 of Part 16 Notes Operations Player and Total Operations Player and Total by the Companies Act 2006 of the Companies Act 2006. Our audit excluding management excluding management player and trading player and trading In our opinion, based on the work work has been undertaken so that we management management undertaken in the course of the audit: might state to the company’s members trading trading • the information given in the those matters we are required to state Strategic Report and the Directors’ to them in an auditor’s report and Report for the financial year for for no other purpose. To the fullest £’000 £’000 £’000 £’000 £’000 £’000 which the financial statements extent permitted by law, we do not are prepared is consistent with accept or assume responsibility to Turnover 1,2 189,159 - 189,159 171,330 - 171,330 the financial statements; and anyone other than the company and the company’s members as a body, • the Strategic Report and the for our audit work, for this report, or Directors’ Report have been Operating expenses 3 (186,276) (66,933) (253,209) (146,334) (37,298) (183,632) for the opinions we have formed. prepared in accordance with Operating expenses - applicable legal requirements. Damian Sanders FCA (Senior 3 (25,787) (8,175) (33,962) - - - Statutory Auditor) for and exceptional costs In the light of the knowledge and on behalf of Deloitte LLP understanding of the group and of the Statutory Auditor (212,063) (75,108) (287,171) (146,334) (37,298) (183,632) parent company and their environment obtained in the course of the audit, Liverpool, we have not identified any material United Kingdom Operating (loss) / profit 4 (22,904) (75,108) (98,012) 24,996 (37,298) (12,302) misstatements in the Strategic Thursday 6 December 2018 Report or the Directors’ Report. Profit on player trading - 87,786 87,786 - 51,945 51,945 Matters on which we are required to report by exception Profit on disposal of - - - 7 - 7 Under the Companies Act 2006 we tangible fixed assets are required to report in respect of the following matters if, in our opinion: (Loss) / profit before interest and (22,904) 12,678 (10,226) 25,003 14,647 39,650 • adequate accounting records taxation have not been kept by the parent company, or returns adequate for Interest receivable and 5 3,094 1,801 our audit have not been received similar income from branches not visited by us; or • the parent company financial statements are not in Interest payable and similar charges 6 (5,938) (3,818) agreement with the accounting records and returns; or Interest payable and similar 6 - (6,966) • certain disclosures of Directors’ charges - exceptional remuneration specified by law are not made; or (5,938) (10,784) • we have not received all the information and explanations (Loss) / profit on ordinary (13,070) 30,667 we require for our audit. activities before taxation We have nothing to report in respect of these matters. Tax on (loss) / profit 8 (26) (50)

(Loss) / profit after taxation for the year (withdrawn from) / (13,096) 30,617 transferred to reserves

All the above amounts derive from continuing operations. There are no recognised gains and losses for the year ended 31 May 2018 and the prior year other than as stated in the consolidated profit and loss account, accordingly no separate consolidated statement of comprehensive income is given.

48 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 49 Consolidated Balance Sheet Company Balance Sheet at 31 May 2018 at 31 May 2018

2018 2017 2018 2017

Notes £’000 £’000 £’000 £’000 Notes £’000 £’000 £’000 £’000

Fixed assets Fixed assets

Intangible assets 10 239,909 121,151 Intangible assets 10 239,909 121,151

Tangible assets 11 15,790 11,838 Tangible assets 11 11,976 7,778

255,699 132,989 Investments 12 - -

Current assets 251,885 128,929

Debtors Current assets

- Due within one year 14 72,166 36,735 Debtors

- Due after one year 14 45,280 18,728 - Due within one year 14 77,166 35,438

Cash at bank and in hand 9,475 9,635 - Due after one year 14 45,280 18,729

126,921 65,098 Cash at bank and in hand 9,408 9,512

Creditors - amounts falling due within one year 15 (202,058) (80,578) 131,854 63,679

Net current liabilities (75,137) (15,480) Creditors - amounts falling due within one year 15 (192,501) (75,893)

Total assets less current liabilities 180,562 117,509 Net current liabilities (60,647) (12,214)

Creditors - amounts falling due after more than one year 16 (47,263) (20,227) Total assets less current liabilities 191,238 116,715

Provision for liabilities 17 (9,932) (5,594) Creditors - amounts falling due after more than one year 16 (46,520) (19,446)

Net assets 123,367 91,688 Provision for liabilities 17 (9,932) (5,594)

Capital and reserves Net assets 134,786 91,675

Called up share capital 18 35 35 Capital and reserves Share premium account 18 24,968 24,968 Called up share capital 18 35 35 Profit and loss account - deficit 18 (50,886) (37,790) Share premium account 18 24,968 24,968 Other reserves 18 149,250 104,475 Profit and loss account - deficit 18 (39,467) (37,803)

Shareholders' funds 123,367 91,688 Other reserves 18 149,250 104,475

Shareholders' funds 134,786 91,675

The financial statements of the Everton Football Club Company Limited, registered number 36624, The Company has taken advantage of Section 408 of the Companies Act 2006 and has not presented its own were approved by the Board on Thursday 6 December 2018 and signed on its behalf by profit and loss account. The Company’s loss for the year was £1,664,000 (2017: profit £30,617,000). The financial statements of the Everton Football Club Company Limited, registered number 36624, were approved by the Board on Thursday 6 December 2018 and signed on its behalf by

W Kenwright CBE Director

W Kenwright CBE Director

50 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 51 Consolidated and Company Statements of Changes Consolidated Cash Flow Statement in Equity for the year ended 31 May 2018 for the year ended 31 May 2018

Group

Called-up Share Profit Other Total 2018 2017 share premium and loss reserves capital account account Notes £'000 £'000

Notes £'000 £'000 £'000 £'000 £'000 Net cash flows from operating activities (Loss)/profit for the year (13,096) 30,617 At 1 June 2016 35 24,968 (68,407) - (43,404) Adjustments for: Profit for the year and total Profit on disposal of football staff registrations (87,786) (51,945) - - 30,617 - 30,617 comprehensive income Profit on disposal of tangible fixed assets - (7) Loan from Shareholder classed as equity - - - 104,475 104,475 Depreciation of tangible fixed assets 3,968 2,495 Amortisation of grants (38) (38) At 1 June 2017 35 24,968 (37,790) 104,475 91,688 Amortisation of football staff registrations 66,933 37,298 Loss for the year and total Exceptional item in relation to change in coaching staff 10,341 - - - (13,096) - (13,096) comprehensive expense Impairment of football staff registrations 8,175 - Loan from Shareholder classed as equity 18 - - - 44,775 44,775 Interest receivable and similar income (3,094) (1,801) Interest payable and similar charges 5,938 10,784 At 31 May 2018 35 24,968 (50,886) 149,250 123,367 Taxation 26 50 Operating cash flows before movements in working capital (8,633) 27,453

Company Increase in debtors (3,397) (6,538) Increase in creditors 4,750 1,921 Called-up Share Profit Other Total share premium and loss reserves Decrease in provisions 459 (120) capital account account Cash (used in) / generated by operations (6,821) 22,716 Notes £'000 £'000 £'000 £'000 £'000 Cash flow from investing activities Proceeds from disposal of players’ registrations 52,576 30,823 At 1 June 2016 35 24,968 (68,420) - (43,417) Proceeds from sale of tangible fixed assets - 7 Purchase of players’ registrations (155,828) (70,554) Profit for the year and total - - 30,617 - 30,617 comprehensive income Purchase of tangible fixed assets (7,920) (5,737)

Loan from Shareholder classed as equity - - - 104,475 104,475 Interest received 16 4

Net cash flows from investing activities (111,156) (45,457) At 1 June 2017 35 24,968 (37,803) 104,475 91,675 Cash flows from financing activities Loss for the year and total - - (1,664) - (1,664) Interest paid (2,127) (11,807) comprehensive expense Repayments of borrowings - (57,520) Loan from Shareholder classed as equity 18 - - - 44,775 44,775 Repayments of obligations under finance lease (20) (34) At 31 May 2018 35 24,968 (39,467) 149,250 134,786 New loans 75,188 - Shareholder loans treated as equity 44,775 104,475

Net cash flows from financing activities 117,816 35,114

Cash / (overdraft) at bank and in hand at beginning of year 9,635 (2,737) Net (decrease) / increase in cash (160) 12,372

Cash at bank and in hand at end of year 9,475 9,635

52 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 53 Notes to the Accounts for the year ended 31 May 2018

1. Accounting Policies b) Basis of consolidation shortfall against current facilities (f) Grants (j) Signing-on Fees and Loyalty on a consistent and reliable basis and including the ability within the Bonuses therefore accounts for the Scheme as if The principal accounting policies are The Group financial statements Grants of a capital nature are credited industry to securitise additional future it were a defined contribution scheme. summarised below. They have all been consolidate the financial statements to deferred income and amortised to the Signing-on fees and loyalty bonuses guaranteed revenues and flexibility applied consistently throughout the of the Company and its subsidiary profit and loss account on a systematic represent a normal part of the around player trading. Based on the (n) Financial instruments year and to the preceding year. undertakings drawn up to 31 May each basis over the useful economic life employment cost of the player and year. Where necessary, adjustments mitigating actions referred to above, of the asset to which they relate. as such are charged to the profit and Financial assets and financial liabilities (a) General information and basis of are made to the financial statements as well as the continued financial loss account in the period in which the are recognised when the Group accounting of subsidiaries to bring the accounting support of Bluesky Capital Limited, (g) i) Current Taxation payment becomes due, except in the becomes a party to the contractual provisions of the instrument. Everton Football Club Company Limited policies used into line with those used by a company controlled by Mr Moshiri, Current taxation, including UK circumstances of a player disposal. corporation tax and foreign tax, is is a private company limited by shares the Group. All intra-group transactions, the Directors have a reasonable In that case any remaining signing- Financial liabilities and equity provided at amounts expected to be paid incorporated in the United Kingdom balances, income and expenses are expectation that the Group will have on fees and loyalty bonuses due are instruments are classified according (or recovered) using tax rates and laws under the Companies Act 2006 and is eliminated on consolidation. adequate resources to continue in allocated in full against profit or loss to the substance of the contractual that have been enacted or substantively registered in England. The address of operational existence for the foreseeable on disposal of players’ registrations in arrangements entered into. An (c) Going concern enacted by the balance sheet date. the registered office is given on page future. Accordingly, they adopt the the year in which the player disposal equity instrument is any contract The Group’s business activities, together going concern basis in preparing 42. The nature of the Group’s operations (g) ii) Deferred Taxation is made. Those instalments due in that evidences a residual interest with the factors likely to affect its future the Annual Report and Accounts. the future on continued service are and its principal activities are set out Deferred taxation is provided in full in the assets of the Group after development, performance and position not provided for but are noted as in the strategic report on page 45. (d) Turnover on timing differences that result in an deducting all of its liabilities. are set out in the strategic report. The contingent liabilities (see note 19). Statement of Compliance Directors’ Report further describes the Turnover is stated exclusive of obligation at the balance sheet date (i) Financial assets and liabilities value added tax, and match receipts to pay more tax, or a right to pay less (k) Lease Rentals financial position of the Group; its cash All financial assets and liabilities are The financial statements of Everton are recognised net of payments tax, at a future date, at rates expected flows, liquidity position and borrowing Where the company enters into a lease initially measured at transaction price Football Club Company Limited have owing to visiting clubs, the Premier to apply when they crystallise based facilities; the Group’s objectives, policies which entails substantially taking all the (including transaction costs), except been prepared under the historical League, the Football Association on current tax rates and law. Timing and processes for managing its capital; risks and rewards of ownership of an for those financial assets classified cost convention, modified to include and the Football League. differences arise from the inclusion its financial risk management objectives; asset the lease is treated as a finance as at fair value through profit or certain items at fair value, and in details of its financial instruments and of items of income and expenditure lease. Assets acquired under finance Gate and other matchday revenue loss, which are initially measured accordance with United Kingdom hedging activities; and its exposure in taxation computations in periods leases are capitalised and depreciated is recognised over the period of the at fair value (which is normally the Accounting Standards, including to credit risk and liquidity risk. During different from those in which they are over the shorter of their lease term or football season as games are played. transaction price excluding transaction Financial Reporting Standard FRS 102, the 2017-18 season the Group met its included in financial statements. their estimated useful lives. The interest Sponsorship and similar commercial costs), unless the arrangement “The Financial Reporting Standard day-to-day working capital requirements element of the rental obligations is income is recognised over the duration Deferred tax assets are recognised to the constitutes a financing transaction. If applicable in the United Kingdom through its cash reserves, shareholder charged to the profit and loss account of the respective contracts. The fixed extent that it is regarded as more likely an arrangement constitutes a financing and Republic of Ireland” (“FRS 102”), support, revolving credit facility and over the period of the lease. Operating element of broadcasting revenues is than not that they will be recovered. transaction, the financial asset or and the Companies Act 2006. through the securitisation of future lease rentals are charged to the profit recognised over the duration of the financial liability is measured at the guaranteed receivables. Because of (h) Intangible Fixed Assets - Players’ and loss account on a straight line basis The parent company is included in the football season it relates to whilst facility present value of the future payments the predictable nature of football Registrations over the period of the lease even when consolidated financial statements and fees for live coverage or highlights discounted at a market rate of interest club revenue streams, the Group payments are not made on such a basis. is considered to be a qualifying entity are taken when earned. Merit awards The cost of players’ registrations, for a similar debt instrument. is able to obtain further funding if under FRS 102 paragraphs 1.8 to 1.12. are accounted for only when known including agents’ fees, is capitalised and required through the securitisation (l) Foreign Currency Transactions Financial assets and liabilities are The following exemptions available at the end of the football season. amortised on a straight line basis over Transactions denominated in foreign only offset in the balance sheet under FRS 102 in respect of certain of future guaranteed revenues, as the period of the respective players’ currencies are translated into sterling when, and only when, there exists a disclosures for the parent company is common industry practice, and (e) Tangible Fixed Assets and contracts in accordance with FRS 102 as it has done in the past. This RCF Depreciation section 18 ‘Intangible assets other than at the rates ruling at the dates of the legally enforceable right to set off financial statements have been applied. transactions. Monetary assets and facility is a three-year facility which Tangible Fixed Assets are stated at goodwill’. The transfer fee levy refund the recognised amounts and the liabilities denominated in foreign - No separate parent company Cash Flow reduces over the term to July 2020. cost or valuation, net of depreciation received during the year is credited Group intends either to settle on a currencies are translated at the rates Statement with related notes is included. and any provision for impairment. against additions to intangible assets. net basis, or to realise the asset and The Group’s trading projections show of exchange ruling at the balance sheet Depreciation is not provided on freehold settle the liability simultaneously. The functional currency of Everton that it has a reasonable expectation of When a playing contract is extended, date. All exchange differences are land. On properties it is provided Football Club Company Limited and its staying within its currently available, any costs associated with securing recognised in the profit and loss account. Debt instruments which meet the to write off the costs or revalued subsidiaries is considered to be pounds and future anticipated, finance facilities the extensions are added to the following conditions are subsequently amounts less estimated residual value sterling because that is the currency for at least 12 months from the date of unamortised balance (at the date (m) Pensions measured at amortised cost using (based on prices prevailing at the of the primary economic environment signing of these accounts. In preparing of the amendment) and the revised Certain staff of the Group are members the effective interest method: date of acquisition or revaluation) in which the Company operates. The these trading projections, a number book value is amortised over the of either the Football League Limited in equal annual instalments over (a) The contractual return to the holder consolidated financial statements are of additional inherent uncertainties remaining revised contract period. Players Retirement Income Scheme, is (i) a fixed amount; (ii) a positive fixed also presented in pounds sterling. have been identified; notably on-field the estimated useful economic lives a defined contribution scheme, or the rate or a positive variable rate; or (iii) a performance and the resultant reduction of the assets which are considered (i) Contingent Appearance Fees Football League Limited Pension and Life The ultimate parent undertaking combination of a positive or a negative in the Premier League domestic to be between 10 and 40 years. Where the Directors consider the Assurance Scheme (“FLLPLAS”; “the and controlling party is Blue Horizon fixed rate and a positive variable rate. broadcasting merit award payment and likelihood of a player meeting future Scheme”), a defined benefit scheme. Investments Limited, which owns No depreciation is provided on assets the level of player trading. The Directors appearance criteria specified in the As one of a number of participating (b) The contract may provide for 68.6% of the share capital of the in the course of construction. have considered the net current transfer agreement of the player to be employers in the FLLPLAS, the Group repayments of the principal or the Company. Blue Horizon Investments liability position and other inherent Depreciation is charged on a straight probable, provision for this cost is made is advised only of its share of the return to the holder (but not both) Limited is incorporated in the Isle uncertainties and, in the event that they line basis of three years for vehicles and (see note 17). If the likelihood of meeting Scheme’s deficit and recognises a to be linked to a single relevant of Man and is wholly-owned and would be required, have identified a five years for plant and equipment. these criteria is merely possible not liability in respect of this. As a result, the observable index of general price controlled by Mr Moshiri. number of potential mitigating actions probable, then no provision is made but contributions paid to the scheme reduce inflation of the currency in which to manage any resulting forecast the potential obligations are disclosed the provision. The Group is unable to the debt instrument is denominated, as contingent liabilities (see note 19). identify its share of the underlying provided such links are not leveraged. assets and liabilities of the Scheme

54 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 55 Notes to the Accounts for the year ended 31 May 2018 (Continued)

(c) The contract may provide for a c) the Group, despite having retained Where indicators exist for a decrease in 2. Turnover determinable variation of the return some, but not all, significant risks and impairment loss, the prior impairment to the holder during the life of the rewards of ownership, has transferred loss is tested to determine reversal. Turnover, all of which originates in the United Kingdom, can be analysed as follows: instrument, provided that (i) the new control of the asset to another party. An impairment loss is reversed on an rate satisfies condition (a) and the individual impaired asset to the extent 2018 2017 variation is not contingent on future Financial liabilities are derecognised that the revised recoverable value only when the obligation specified events other than (1) a change of a does not lead to a revised carrying £’000 £’000 contractual variable rate; (2) to protect in the contract is discharged, amount higher than the carrying value the holder against credit deterioration cancelled or expires. had no impairment been recognised. of the issuer; (3) changes in levies (ii) Investments Broadcasting 130,000 130,535 applied by a central bank or arising Financial assets In the Company balance sheet, from changes in relevant taxation or For financial assets carried at amortised Gate receipts 16,316 14,064 investments in subsidiaries are law; or (ii) the new rate is a market rate cost, the amount of an impairment measured at cost less impairment. Sponsorship, advertising and merchandising 20,728 15,377 of interest and satisfies condition (a). is the difference between the asset’s (iii) Equity instruments carrying amount and the present Other commercial activities 22,115 11,354 (d) There is no contractual provision value of estimated future cash flows, Equity instruments issued by the that could, by its terms, result in the discounted at the financial asset’s Company are recorded at the fair value 189,159 171,330 holder losing the principal amount original effective interest rate. or any interest attributable to the of cash or other resources received or Turnover comprises of the following: current period or prior periods. receivable, net of direct issue costs. For financial assets carried at cost less impairment, the impairment Broadcasting – distributions from the FA Premier League broadcasting agreements, cup competition broadcasting rights and radio (iv) Derivative financial instruments (e) Contractual provisions that permit loss is the difference between the broadcasting rights. the issuer to prepay a debt instrument The Group uses derivative financial asset’s carrying amount and the best Gate receipts – revenue generated from the sale of match tickets. or permit the holder to put it back instruments to reduce exposure to estimate of the amount that would Sponsorship, advertising and merchandising - revenue generated from sponsorship and partnership contracts and net revenue to the issuer before maturity are not foreign exchange risk. The Group does be received for the asset if it were received from outsourced retail operations. contingent on future events, other than not hold or issue derivative financial to be sold at the reporting date. Other commercial activities - includes revenue received from hospitality, catering, events and all other revenue sources. The above to protect the holder against the credit instruments for speculative purposes. deterioration of the issuer or a change Where indicators exist for a decrease turnover represents the net revenue received from outsourced retail and catering operations. Turnover would increase by £9.1m to in control of the issuer, or to protect the Derivatives are initially recognised in impairment loss, and the decrease £198m (2017: £179m) if these operations were not outsourced. at fair value at the date a derivative holder or issuer against changes in levies can be related objectively to an event 3. Operating Expenses applied by a central bank or arising from contract is entered into and are occurring after the impairment was subsequently remeasured to their changes in relevant taxation or law. recognised, the prior impairment 2018 2017 fair value at each reporting date. The loss is tested to determine reversal. (f) Contractual provisions may permit resulting gain or loss is recognised An impairment loss is reversed on an £’000 £’000 the extension of the term of the in profit or loss immediately. individual impaired financial asset to debt instrument, provided that the (v) Fair value measurement the extent that the revised recoverable return to the holder and any other value does not lead to a revised carrying Amortisation of players' registrations (note 10) 66,933 37,298 contractual provisions applicable The best evidence of fair value is a amount higher than the carrying value during the extended term satisfy the quoted price for an identical asset had no impairment been recognised. Staff costs (note 7) 145,479 104,655 conditions of paragraphs (a) to (c). in an active market. When quoted prices are unavailable, the price of (p) Critical accounting judgements and Depreciation (note 11) 3,968 2,495 Debt instruments that are classified as a recent transaction for an identical key sources of estimation uncertainty payable or receivable within one year Other operating costs 36,829 39,184 asset provides evidence of fair See note 24. on initial recognition and which meet value as long as there has not been Other operating costs - exceptional costs 33,962 - the above conditions are measured at a significant change in economic the undiscounted amount of the cash circumstances or a significant lapse of Total operating expenses 287,171 183,632 or other consideration expected to be time since the transaction took place. paid or received, net of impairment. If the market is not active and recent The exceptional other operating costs of £33,962,000 in the year ended 31 May 2018 relates to expenditure incurred on the new transactions of an identical asset on Other debt instruments not meeting stadium project, amounts payable to former employees and other costs in relation to the change in coaching staff and an impairment their own are not a good estimate of these conditions are measured at of player registrations and are broken down as follows: fair value through profit or loss. fair value, the fair value is estimated by using a valuation technique. Commitments to make and receive 2018 2017 loans which meet the conditions (o) Impairment of assets mentioned above are measured at cost Non-financial assets £’000 £’000 (which may be nil) less impairment. An asset is impaired where there is objective evidence that, as a result Financial assets are derecognised Expenditure incurred on new stadium project 11,405 - when and only when a) the contractual of one or more events that occurred after initial recognition, the estimated Amounts payable to former employees in relation rights to the cash flows from the 14,382 - financial asset expire or are settled, recoverable value of the asset has been to the change in coaching staff reduced. The recoverable amount of b) the Group transfers to another party an asset is the higher of its fair value Impairment of player registrations 8,175 - substantially all of the risks and rewards less costs to sell and its value in use. of ownership of the financial asset, or 33,962 -

Amortisation and Impairment of player registrations are included within player trading operating expenses on the face of the profit and loss account. 56 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 57 Notes to the Accounts for the year ended 31 May 2018 (Continued)

4. Operating (Loss)/Profit 5. Interest Receivable and Similar Income

2018 2017 2018 2017

£'000 £'000 £'000 £'000 Bank interest receivable 16 1 The operating (loss)/profit is stated after charging / (crediting): Other Interest receivable 3,078 1,800 Depreciation - property 264 262 3,094 1,801 Depreciation - other 3,704 2,233 Other interest receivable relates to the unwinding of the discount for FRS102 purposes, on deferred receipts for sale of players’ Amortisation of grants (38) (38) registrations.

Operating lease rentals 6. Interest Payable and Similar Charges

Motor vehicles 367 310 2018 2017

Office equipment 220 192 £’000 £'000

Land and properties 1,282 1,031 Bank overdrafts - 88

Finance leases and hire purchase agreements 3 4 Foreign exchange loss (12) (1,187) Other loans 2,622 1,990

Other interest payable 3,313 1,736

The analysis of auditor's remuneration is as follows: 5,938 3,818

Fees payable to the Company's auditor for the audit of the Company's annual accounts 44 42 Interest Payable and similar charges - Exceptional 2018 2017 Fees payable to the Company's auditor for the audit of the Company's subsidiaries 8 6 £’000 £’000 Total audit fees 52 48

Exceptional loan charges - 6,966 Other non-audit services - 6,966 Audit – related assurance services 17 15 The exceptional loan charges of £6,966,000 related to an early repayment penalty charge imposed on the Club as a result of the Tax services 65 82 Club repaying a long-term loan in full. Other services 118 63 Other interest receivable relates to the unwinding of the discount for FRS102 purposes, on deferred payments for players’ registrations. Total non-audit fees 200 160

58 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 59 Notes to the Accounts for the year ended 31 May 2018 (Continued)

7. Particular of Employees

Group 2018 2017 Company 2018 2017

Number Number Number Number

The average monthly number of employees, including Executive Directors, during the year was as follows: The average monthly number of employees, including Executive Directors, during the year was as follows:

Playing, training and management 172 151 Playing, training and management 134 117

Youth Academy 73 61 Youth Academy 73 61

Marketing and Media 55 53 Marketing and Media 55 53

Management and Administration 77 85 Management and Administration 77 85

Maintenance, Security, Pitch and Ground Safety 50 41 Maintenance, Security, Pitch and Ground Safety 50 41

427 391 389 357

In addition, the Group employed an average of 406 temporary staff on matchdays (2017: 400).

Aggregate payroll costs for the above employees were as follows: Aggregate payroll costs for the above employees were as follows: 2018 2017 2018 2017

£’000 £’000 £’000 £’000

Wages and salaries 127,827 92,144 Wages and salaries 127,377 91,916

Social security costs 17,110 12,041 Social security costs 17,095 12,035

Other pension costs 542 470 Other pension costs 536 470

145,479 104,655 145,008 104,421

Directors’ remuneration 2018 2017

£'000 £'000

Emoluments 2,455 1,593

Company contributions to money purchase pension scheme 31 30

2,486 1,623

Highest paid Director 917 578

Company contributions to money purchase pension scheme 10 10

927 588

Retirement Benefits are accruing for the following 2018 2017 number of Directors under:

Money purchase pension plans 3 3

The Directors are considered to be the key management personnel of the business.

60 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 61 Notes to the Accounts for the year ended 31 May 2018 (Continued)

8. Tax on Profit/(Loss) on Ordinary Activities 10. Intangible Fixed Assets – Group and Company

2018 2017 Total

£’000 £’000 £'000

Current and total tax charge in the year 26 50 Cost a) Factors affecting the tax charge for the current year At 1 June 2017 207,247 The tax assessed for the year is lower (2017: lower) than that resulting from applying the Additions in the year 214,608 effective standard rate of corporation tax in the UK: 19% (2017: 20%). Disposals in the year (59,854) 2018 2017 At 31 May 2018 362,001 £'000 £'000 Amortisation

(Loss)/profit on ordinary activities before taxation (13,070) 30,667 At 1 June 2017 86,096

Charge for the year 66,933 Tax on (loss)/profit on ordinary activities at the standard rate (2,483) 6,082 Impairment of player registrations 8,175 Expenses not deductible for tax purposes 2,547 1,085 Eliminated on disposals (39,112) Income not taxable for tax purposes (8) (8) At 31 May 2018 122,092 (Utilisation)/creation of losses - (320)

Depreciation on ineligible assets - 48 Net book value

Deferred tax not provided 3,034 (15) At 31 May 2018 239,909

Rollover relief claim (3,064) (6,823) At 31 May 2017 121,151

Current tax charge for the year 26 50 The intangible fixed assets relates to the cost of players’ and management registrations and agent fees. The Directors review the carrying value of the players’ registrations for impairment. Where events or changes in b) Factors that may affect the future tax charge circumstances indicate that the carrying value of the asset may not be recoverable, to the extent that the carrying value Unrecognised deferred tax assets of the Group are £6.9m (2017: £3.3m). These assets will be utilised exceeds the recoverable amount, the asset is impaired and the impairment loss is recognised in the profit and loss. if sufficient taxable profits are generated by Group companies in future periods. This asset primarily consists of carried forward losses of £8.4m, less the NBV of players into which profits have been rolled over of £2.0m. Decelerated capital allowances and pension assets are also included.

9. Company Profit and Loss Account The Company has taken advantage of Section 408 of the Companies Act 2006 and has not presented its own profit and loss account. The Company’s loss for the year was £1,664,000 (2017: profit of £30,617,000).

62 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 63 Notes to the Accounts for the year ended 31 May 2018 (Continued)

11. Tangible Fixed Assets

Group Company

Freehold Plant and Vehicles Total Freehold Plant and Vehicles Total properties equipment properties equipment

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Cost Cost

At 1 June 2017 11,408 22,287 156 33,851 At 1 June 2017 308 22,287 156 22,751

Additions in the year - 7,920 - 7,920 Additions in the year - 7,920 - 7,920

At 31 May 2018 11,408 30,207 156 41,771 At 31 May 2018 308 30,207 156 30,671

Depreciation Depreciation

At 1 June 2017 7,142 14,719 152 22,013 At 1 June 2017 102 14,719 152 14,973

Charge for the year 264 3,700 4 3,968 Charge for the year 18 3,700 4 3,722

At 31 May 2018 7,406 18,419 156 25,981 At 31 May 2018 120 18,419 156 18,695

Net book value Net book value

At 31 May 2018 4,002 11,788 - 15,790 At 31 May 2018 188 11,788 - 11,976

At 31 May 2017 4,266 7,568 4 11,838 At 31 May 2017 206 7,568 4 7,778

64 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 65 Notes to the Accounts for the year ended 31 May 2018 (Continued)

12. Investments 14. Debtors

FIXED ASSET INVESTMENTS Group Company Company Subsidiary Undertakings 2018 2017 2018 2017

£ £'000 £'000 £'000 £'000 Cost and net book value Amounts falling due within one year: As at 1 June 2017 and 31 May 2018 6 Trade debtors 64,301 35,927 63,659 35,438 Details of Company’s subsidiaries as at 31 May 2018, all registered in England and Wales at Goodison Park, Liverpool, L4 4EL, Amounts due from subsidiaries - - 5,667 - were as follows: Other Financial Assets 625 - 625 - Name of Company % owned Nature of business Prepayments and accrued income 7,240 808 7,215 -

Provision of football 72,166 36,735 77,166 35,438 Goodison Park Stadium Limited 100 entertainment facilities Amounts falling due after one year: Everton Investments Limited 100 Issuer of loan notes Trade debtors 45,280 18,728 45,280 18,729 The Everton Ladies Football Club Limited 100 Professional football club 45,280 18,728 45,280 18,729 Everton Stadium Development Limited 100 Development company Amounts owed by subsidiaries are unsecured, interest free and repayable on demand. The Company directly owns 100% of the ordinary share capital of the subsidiary companies.

13. Lease Commitment 15. Creditors – Amounts falling within one year Total future minimum lease payments under non-cancellable operating leases are as follows: Group Company Land and Properties Other Total 2018 2017 2018 2017

2018 2017 2018 2017 2018 2017 £'000 £'000 £'000 £'000

£'000 £'000 £'000 £'000 £'000 £'000 Other loans (note 16) 75,188 - 75,188 -

Expiring within one year - - 16 124 16 124 Obligations under finance lease and hire purchase agreements - 20 - 20

Expiring between two and five years 225 298 752 245 977 543 Trade creditors 55,217 32,547 54,970 32,537

Expiring in more than five years 83,354 60,690 - - 83,354 60,690 Accruals and deferred income 57,876 34,455 47,221 23,890

83,579 60,988 768 369 84,347 61,357 Amounts due to subsidiaries - - - 4,772 Social security and other taxes 13,777 13,556 15,122 14,674

202,058 80,578 192,501 75,893

Amounts owed to subsidiaries are unsecured, interest free and repayable on demand.

66 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 67 Notes to the Accounts for the year ended 31 May 2018 (Continued)

16. Creditors – Amounts falling due after more than one year

Finance leases Group Company Company Bank Overdraft Other loans Total and hire purchase

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Other loans (see borrowings below) - - - - Analysis of borrowings payable by instalments: Obligations under finance lease and hire purchase agreements - - - - Within one year - - 75,188 - - 20 75,188 20 Trade creditors 33,179 13,964 33,179 13,964 Between one and two years ------Accruals and deferred income 14,084 6,263 13,341 5,482 - - 75,188 - - 20 75,188 20 47,263 20,227 46,520 19,446

BORROWINGS Other loans at 31 May 2018 includes £43,000,000 (31 May 2017; £nil) secured by legal charges over the Company’s guaranteed Premier League broadcast revenues. This loan incurs interest Group at a rate of 3.5% above LIBOR and is a three-year revolving credit facility. Finance leases Also included in other loans is an amount of £32,188,000 (31 May 2017; £nil) which was secured against Bank Overdraft Other loans Total and hire purchase future guaranteed receivables. These loans incur interest at a rate of 3.5% per annum.

2018 2017 2018 2017 2018 2017 2018 2017

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Analysis of borrowings Payable by instalments:

Within one year - - 75,188 - - 20 75,188 20

Between one and two years ------

Between two and five years ------

After more than five years ------

Prepaid finance costs ------

- - 75,188 - - 20 75,188 20

68 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 69 Notes to the Accounts for the year ended 31 May 2018 (Continued)

17. Provision for liabilities 19. Contingent Liabilities 22. Related Party The estimates and underlying assumptions are reviewed on an ongoing No provision is included in the accounts Transactions basis. Revisions to accounting estimates for transfer fees of £41,403,000 Everton in the Community is a registered are recognised in the period in which the Group and Company (2017: £32,169,000) which are, as at Charity (Number 1099366) incorporated estimate is revised if the revision affects 31 May 2018, contingent upon future on 31 July 2003 and began trading only that period, or in the period of the appearances of certain players and Pensions Contingent Litigation Total on 1 June 2004. The Charity operates revision and future periods if the revision at the balance sheet date are not (note 20) appearance separately from the Group hence has not affects both current and future periods. fees considered probable; or signing-on fees been consolidated in the Group results, and loyalty bonuses, as at 31 May 2018, but as at 31 May 2018 Everton Football Critical Accounting Judgements of £31,231,000 (2017: £18,410,000) Club Company Limited employees held The directors do not consider there to £’000 £’000 £’000 £’000 which would become due to certain four of the six Trustee positions at the be any critical accounting judgements. players if they are still in the service Charity. During the year Everton Football Key Sources of estimation uncertainty At 1 June 2017 251 5,343 - 5,594 of the Club on specific future dates. Club Company Limited incurred net operating costs of £240,000 (2017: The key assumptions concerning Utilised in the year (121) (5,668) - (5,789) 20. Pensions £303,000) on behalf of the Charity. the future, and other key sources Certain staff of the Group are members of estimation uncertainty at the Provided in the year - 9,547 580 10,127 of either the Football League Limited During the year the Club’s majority balance sheet date, that have a Players Retirement Income Scheme, shareholder has provided interest- significant risk of causing a material At 31 May 2018 130 9,222 580 9,932 a defined contribution scheme, free loans of £44,775,000, included adjustment to the carrying amounts or the Football League Limited in equity, with no agreed repayment of assets and liabilities within the next Pension and Life Assurance Scheme date. The balance outstanding at financial year, are discussed below. The contingent appearance fees and pension provision are expected to be utilised within three and two (“FLLPLAS”; “the Scheme”), a defined year end was £149,250,000. Contingent Appearance Fees years respectively. The litigation provision relates to ongoing legal cases. Although uncertain, at time of benefit scheme. As one of a number During the year the Club received As per the terms of some transfer signing the accounts this represents management’s best estimation of likely future obligations. of participating employers in the naming rights income in respect agreements entered into there are fees FLLPLAS, the Group is advised only of There are no amounts provided for deferred tax at 31 May 2018 or 31 May 2017. of Finch Farm training complex of contingent on future appearances of its share of the Scheme’s deficit and £6,000,000 (2017: £6,000,000) certain players. At 31 May 2018 there recognises a liability in respect of this. 18. Share Capital and Reserves from USM Services Limited. The is £41,403,000 (2017: £32,169,000) As a result, the contributions paid Club’s majority shareholder is a of contingent fees which are not The Group and Company’s Share Capital to the scheme reduce the provision. shareholder of USM Holdings, a parent considered probable based on The Group is unable to identify its company of USM Services Limited. managements best estimates. 2018 2017 share of the underlying assets and During the year, the Club entered into a liabilities of the Scheme on a consistent 15-year agreement to lease office space £’000 £’000 and reliable basis and therefore in the Royal Liver Building. The Club’s accounts for the Scheme as if it were Allotted, issued and fully paid majority shareholder has an ownership a defined contribution scheme. interest in the Royal Liver Building. 35,000 ordinary shares of £1 each 35 35 Contributions are also paid into individuals’ private pension schemes. 23. Capital Commitments The group’s other reserves are as follows: Total contributions across all There were no capital commitments Share premium reserve, which contains the premium arising on issue of equity shares, net of issue expenses. schemes during the year amounted at 31 May 2018 or 31 May 2017 to £542,000 (2017: £470,000). in the company or group. Profit and loss reserve, which represents cumulative profits or losses, net of dividends paid and other adjustments. The amount outstanding at year 24. Critical Accounting Other reserves represents an interest free loan of £150,000,000 provided by Bluesky Capital Limited, a company end was £87,000 (2017: £63,00). controlled by Mr Moshiri. The loan is to be repaid at a date to be agreed by Bluesky Capital Limited and Everton Judgements and Key Sources Football Club Company Limited. In accordance with FRS 102.22 the loan has therefore been classified as equity. 21. Post Balance of Estimation Uncertainity Loan arrangement fees of £750,000 have been deducted from equity in accordance with FRS 102.22.9. Sheet Events In the application of the Group’s Since 31 May 2018, the Club has accounting policies, which are described entered into transfer agreements for above, the directors are required confirmed contracted net transfer to make judgements, estimates and fees payable of £82,717,000. assumptions about the carrying amounts of assets and liabilities that The Club has renewed the RCF are not readily apparent from other facility which has two years sources. The estimates and associated remaining. At 31 May 2018 the facility assumptions are based on historical was £60m with £43 drawn. experience and other factors that are Since 31 May 2018 the Club’s majority considered to be relevant. Actual results shareholder has provided further may differ from these estimates. interest-free loans of £100,000,000 with no agreed repayment date, which were treated as equity.

70 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 71 Notes to the Accounts for the year ended 31 May 2018 (Continued)

25. Financial Instruments The Group’s income, expense, gains and losses in respect of financial instruments are summarised below.

The carrying values of the Group’s and company’s financial assets and liabilities are summarised by category below: Group

Group Company 2018 2017

2018 2017 2018 2017 £'000 £'000

£'000 £'000 £'000 £'000 Income and expense

Financial assets - Total interest income for financial assets at amortised cost 3,072 1,797

Measured at amortised cost: Total interest expense for financial liabilities at amortised cost (3,313) (1,737)

Trade debtors 45,280 18,728 45,280 18,729

Measured at undiscounted amounts receivable:

Trade debtors and other debtors 64,926 35,927 64,284 35,438

Amounts due from subsidiaries - - 5,667 -

Cash at bank and in hand 9,475 9,635 9,408 9,512

119,681 64,290 124,639 63,679

Group Company

2018 2017 2018 2017

£'000 £'000 £'000 £'000

Financial liabilities

Measured at fair value:

Derivative financial instruments - - - -

Measured at amortised cost

Trade creditors 33,179 13,964 33,179 13,964

Obligator under finance leases - 20 - 20

Measured at undiscounted amount payable

Bank loans and overdrafts 75,188 - 75,188 -

Trade and other creditors 55,217 32,547 54,970 32,537

Amounts owed to subsidiaries - - - 4,772

163,584 46,531 163,337 51,293

72 EVERTON FOOTBALL CLUB ANNUAL REPORT & ACCOUNTS 2018 73