Annual Report & Accounts 2017

Contents

Review Page 6

• Chairman Page 8 • Chief Executive Officer Page 12

2016/17 Season Page 14

Accounts Page 42

• Directors and Advisors Page 44 • Strategic Report Page 45 • Directors’ Report Page 47 • Independent Auditor’s Report Page 48 • Consolidated Profit and Loss Account Page 49 • Consolidated Balance Sheet Page 50 • Company Balance Sheet Page 51 • Consolidated and Company Statement of Changes in Equity Page 52 • Consolidated Cash Flow Statement Page 53 • Notes to the Accounts Page 54

Note The Review (pages 6-13) and 2016/17 Season (pages 14-41) section do not form part of the statutory financial statements.

4 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 5 Review Chairman

There’s no getting away from it – we’ve But while we had strong performances - in the future with Sandro Ramirez, had a really tough start to the campaign. and picked up points - at the champions Nikola Vlasic and Henry Onyekuru. So let me say a few words about that and against both clubs, our before I give you the current view of away record clearly needs improvement. And, of course, Wayne re-signed. the season these accounts relate to. At the time of writing, it’s 11 months since I have never seen such enthusiasm Introducing so many new players into we won on the road in the league and from a player to sign for us. Wayne our squad, an early start to our Europa that’s far from good enough. was desperate to come back and as League campaign and just about the hungry to achieve success with the Club most challenging fixture Losing in the early rounds of both cup he loves as he was when I first met him list we could have faced in the early competitions – especially at home - was all those years ago. How special it was weeks were all factors in what proved to also disappointing as, believe me, I know to see him score on his second Everton be a very disappointing opening. And, how much all Evertonians are longing league debut and for him to score his while our start was made difficult for all for silverware. first ever hat-trick for us, including one of his best goals. these reasons, myself, Farhad and all of Of course, the season was blighted by the Directors felt we had to take action. the serious injuries to Seamus, Yannick Losing Romelu was clearly a big blow for This was a really difficult decision for and Ramiro. As I’m sure they will know us. I can assure you we did everything us to make. We were all disappointed from hearing the fans singing their we possibly could to keep him. And, when to be in a position where we ultimately names while they’ve been out, we’re we couldn’t, we worked to find the best had to part with our manager after just all right behind them as they work hard possible replacement for him. This is no 16 months. We’re used to – and we like to recover. easy task, but one we’re fully committed - stability with our managers, so having to and will revisit in the 2018 transfer to part company with Ronald, Erwin, Busy windows windows. Jan and Patrick so soon after such a Bringing in Morgan and Ademola in the Gareth Barry, Darron Gibson, promising first season was difficult. January transfer window immediately But we made the decision – like every Tom Cleverley, Gerard Deulofeu, improved us, as did the emergence of Arouna Kone, Leandro Rodriguez, decision we ever make – in the best a number of players from our interests of the Club. Of course, I’d like Aiden McGeady and Bryan Oviedo all left Under-23s who are now regulars in us over the past 12 months. I would like to thank Ronald and his team for guiding our first-team squad. us to seventh position last season and a to thank each of them for the service place back in Europe. We wish them all We knew the summer was going to be a they gave to our Club in their time here. the very best for their futures. very important transfer window for us. Ladies and Under-23s success Farhad and I worked hard to secure the I’d also like to express gratitude on players Steve and Ronald had identified - Congratulations to Everton Ladies in behalf of myself, Farhad, the Directors and to bring them in as early as returning to WSL1. I wish you every and all Evertonians to David Unsworth possible. As well as equaling or success back in the league where for stepping in to take the team at such a breaking our transfer record three you belong. challenging time. David’s talent, ambition times in securing the impressive and Evertonian spirit is simply first-class talents of , Michael And what can I say about our Under-23s? and the commitment and dedication he Keane and Gylfi Sigurdsson, we Our champions on and off the field … showed when accepting the challenge added experience in Davy Klaassen Our kids are more than alright! speaks volumes. David is now back and Cuco Martina, while also investing with his Under-23 squad – and we have 2016/17 was a simply magnificent season welcomed as our new for our Under-23s. Becoming Premier Manager. We wish him the very best League 2 Champions is an achievement of success in his efforts to take our “We knew the summer that shouldn’t be underestimated. I Club forward. was going to be a very watch that league and it is fiercely competitive. The job was also made 2016/17 important transfer more difficult by the number of players Looking back to the 2016/17 season, progressing through to our first-team Goodison became our fortress again, window for us. Farhad or gaining valuable experience out on with only two home league defeats. loan. I know thousands of you got behind It was great to see the loyalty of our fans and I worked hard to ‘our boys’ throughout the season and rewarded with results and performances secure the players I was delighted to see so many of you at Goodison we could all be proud of. The make the trip to Aldershot on a Friday courage and determination we showed Steve and Ronald had night for a match against Chelsea as in beating Arsenal was undoubtedly a we approached the finishing line of a turning point in the season, while the identified - and to thrilling season. Although we didn’t exuberance that led to our demolition of quite finish the job in Hampshire that high-flying Manchester City was without bring them in as early night, it was apt that we ultimately lifted question our best performance on as possible” the trophy at Goodison – and an added home soil. bonus that it was in front of ‘the other lot’! Congratulations to every player

8 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 9 who played their part in the success and a new European Betting Partner in colleagues at the City Council - are all Forever Golden and, of course, huge respect to ‘Unsie’ William Hill, while the introduction of working hard to deliver. In formally In February 2017, we lost one of our and ‘Ebbo’ for the talent, dedication our first Sleeve Partner in Angry Birds securing land in November this year, greatest ever players - Alex Young. and incredible passion they have shown and a new Main Partner, SportPesa, we removed one of the significant “To be supporting As I said at the time, from my position in driving the team to glory. Over the will contribute to further growth in the hurdles and move another step closer to in the Boys’ Pen to my position in more than summer, we’ve also been investing in coming years. achieving our dream… the Directors’ Box, I have never seen our Under-23 squad, bringing in 15,000 people each Of course, the chance to grow further, anybody like him – and I never will. Lewis Gibson, Josh Bowler, Dennis As well as welcoming our new partners, is made more possible by Farhad’s Alex Young had a unique class about Adeniran, Boris Mathis and Nathangelo I would also express my sincere year through investment and the improved financial him, on and off the field. While it is Markelo, as well as Anton Donkor for a gratitude to Chang for continuing position he has put us in. The personal incredibly sad that he’s no longer with second loan spell. We wish them all the their relationship with us through their 44 programmes - investment he has made means that us, I was delighted he came back to best of luck in defending our PL2 crown. community partnership. Chang was a fantastic Main Partner for 13 years, the the Club is now debt free, with all our Goodison last November to meet the while also supporting Any Everton player scoring any goal fills longest main partnership in the history previous loans now repaid. We have fans who idolised him one last time. 2,000 other charities us with pride. But the winning goal in a of the Premier League, and we will been able to invest in our playing squad, They told him what he meant to World Cup final? Well done to Dominic remain frends forever. renovate USM Finch Farm and revamp Evertonians and I know that will have - is truly humbling” for that – and to Jonjoe, Ademola, Kieran parts of Goodison Park. I have a great meant the world to Alex. and Callum for the part they played in friendship with Farhad, our Major Tom Gardner – who, until November making a nation - and every Evertonian - Shareholder, and, as you know, I am sure 2016, was our oldest living player will proud. The joy radiating from their faces “I have a great he is the right person to take our great also be fondly remembered. And I would The commitment shown year-in and as they celebrated with an Everton flag Club forward. His ambition matches friendship with Farhad, like to pay tribute to supporter year-out at Goodison and by the put a smile on my face for weeks and that of every Evertonian and both the Derek Acker, who sadly passed away travelling Toffees – not least those is the latest framed picture on my our Major Shareholder, financial investment and time he has at Goodison Park last August, who ventured to Dar-Es-Salaam – is office wall! put into the Club demonstrates that incredible. Awesome. and, as you know, I am commitment. Father Brian Crane, the indefatigable All of these achievements - including Lord ‘Charlie’ Lyell and to Zoe Tynan, I felt completely humbled to see you reaching 1,000 consecutive first-team sure he is the right The People’s Club – every day one of our former Ladies players, who getting behind Unsie at Stamford Bridge games with at least one Academy tragically left us far too soon. Last, but Nothing embodies our People’s Club even continuing to sing as the boys left graduate in the squad - demonstrates person to take our definitely not least, Jim Greenwood, spirit more than the work we do in our the field after a defeat. Class. Everton the immense coaching talent we have my good friend, who served us with great Club forward. His community. Under the inspirational class. And to see you at away games had at USM Finch Farm, Bellefield and such distinction as Club Secretary and leadership of ‘Dynamite Denise’ we are – where I know your early morning Netherton over the years. I thank all Chief Executive from 1975 to 1994. ambition matches that changing and saving more lives in and journeys have begun before the birds our fantastic Academy staff for the beyond L4 than ever before. It is work One Bradley Lowery! have started singing. role they have played in developing our of every Evertonian that is regularly recognised as the very young stars as players - and as people. And it’s not just the support given to the best in practice, not only in the world of Whenever I think of Bradley, I smile! He And on that subject, what other club and both the financial first-team. Our Under-23s, our Ladies, football but across all sports. was a magical liltle ‘imp’ who created would produce players who would not investment and time his own legend. While, of course, there and our champion boxers – well done only make their mark in their respective The opening of the People’s Hub - and is a profound sadness - for the pain he Bomber, we’re all thrilled for you – all leagues but also in their community? he has put into the Cruyff Court - on Spellow Lane, the had to live through and for the loss and benefit from the steadfast passion of our I am so proud of the way our Under-23s properties on Goodison Road that suffering his loving parents, Gemma and own champ Evertonians. represent us away from the field of Club demonstrates are now the base for all our youth Carl, and his devoted brother, Kieran, To all the fans who’ve got behind us this play. For a group of young professional that commitment.” engagement programmes and the have had to endure - I also feel incredibly year – whether it’s at Goodison week- footballers to sleep out in their stadium soon-to-be-completed refurbishment thankful. Thankful for having had the in-week-out, travelling thousands of and to give up their Christmas Day of the St Francis de Sales social privilege of becoming friends with miles to away games, creating banners to raise funds to buy a house for the club building on Salop Street are Bradley and his family. Grateful to show your fantastic support for homeless is beyond humbling and But it is not just in terms of pounds and physical examples of the progress that his dazzling smile warmed my heart, Aaron and Seamus, cycling from Sligo says so much about this group. They pence that we are growing. Our average and difference being made by as I know it did for all Evertonians. to Goodison, turning out to support ‘are Everton’ … and that is the biggest attendance for 2016/17 was the highest Everton in the Community. His remarkable spirit and love for life - Bradley’s fundraiser, or supporting any compliment anyone could ever give! we’ve had in the modern era, with every and football - was so, so special. To be supporting more than of the extraordinary Speedo Mick’s To each and every one of them, I say, seat taken for every league game. We The football family embraced him - endeavours - I applaud and thank you. ‘Thank you,’ not only for the trophies but have also experienced a 12% increase 15,000 people each year through 44 just as the Everton family did - and it for everything they have done. in the number of Season Ticket holders. programmes - while also supporting means so much to know that such a And to those in our Everton family, Indeed, demand has outstripped supply, 2,000 other charities - is truly humbling truly inspirational little boy chose us I promise, it will never be taken for Off-the-field growth resulting in a significant waiting list. and goes way beyond the vision I had to be his second club, after his beloved granted. You are the Club. for the charity when setting it up back While our biggest financial growth has We also have more official members and Sunderland. in 1988. In 2018, its 30th year, we will COYB! come from broadcast revenues, our more affiliated Supporters’ Clubs than be celebrating our achievements and The best fans commercial income has also increased we’ve ever had, including more than Bill K continuing to grow even more… and we’ll significantly, rising by 65% across 100 school Supporters’ Clubs. be looking for support from the Everton I know I mention this every year. sponsorship and advertising. I would This growth cements the case for us family. I encourage all Evertonians to get But I write it once again. Because it is like to congratulate Robert and his team to move into a new home at Bramley involved, perhaps through volunteering so true… Everton fans are the best. in securing the deals that underpin the Moore Dock, something that we – and on a programme or by embarking on The best there is … not just in this league growth shown in this report, including that includes Mayor Anderson and his some fundraising activity. but anywhere. our first training ground partner, USM,

10 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 11 Chief Executive Robert Elstone

A Club focused on the future parents able to see a pathway into first-team football so rare across the Young fans Premier League. “The combination of One thing I’d like any future custodian We will continue to make USM Finch pricing, accessibility, of the Club to feel the need to do would Farm our focal point and a group of key be to thank the management team of personnel have begun a project to drive engagement and 2017 for doing such an impressive job future development at our Academy building the loyalty and commitment and training ground, ensuring it remains community has seen of young Evertonians. The combination ‘best in class’ and able to attract the of pricing, accessibility, engagement best players, of any age, from around significant increases and community has seen significant the world. increases in the number of young fans in the number of attending Goodison Park with numbers Young people young fans attending envied by our rivals. Our reputation for work in the Goodison Park with Football is short-term, ‘here and now’ community transcends sport, ‘the and it is so easy for clubs to lose sight corridors of power’ and the global numbers envied by of the next generation. Everton hasn’t football family. We should be immensely fallen into that trap. More than one in proud of the way we have led the way in our rivals” four of our 31,300 Season Ticket holders reshaping the way football is positioned are young fans, under the age of 22. and viewed. And core to the esteem in Those fans have responded to our which Everton in the Community is held and the people of Tanzania were long-standing commitment to is its diversity and willingness to take wonderful hosts. affordability and our pledge to listen on any issue. When people need help, Our record-breaking main partnership to their challenges and opinions. we step in. Inevitably, however, much was quickly followed by our first Sleeve Highlighted by the BBC’s Price of of our work gravitates to young people. Partner and a further endorsement of Football survey where the cost of The Everton Free School continues to a Club rooted in future generations. football for 18 to 24-year-olds was send exceptional young people into our The Club was widely complimented on very clearly, for many, an almost community, equipped for the challenges landing a deal with ‘Angry Birds’ and insurmountable barrier, our latest and opportunities ahead. Our ‘Home excited by the platform such a global contribution to affordability is a £20 per Is Where the Heart is’ campaign raised youth-facing brand presents to us. game Season Ticket for supporters aged more than £250,000 to help young between 22 and 24. people at risk of homelessness. Our Our new partners will help us articulate apprenticeship scheme has grown from a young, energetic and dynamic Club We’re delighted more than 2,500 young strength to strength. Over the past two across the world. fans, in their first jobs, trying to pay years, 16 young people have secured for their first house, maybe with young permanent employment at the Club. And a new home families, took up that offer and are And all young people working at the Club A major priority of the past year has able to come to Goodison throughout benefit from an enhanced hourly rate the season. been the new stadium and considerable as a result of our commitment to the progress has been made securing Young players Living Wage. the site and closing in on a funding solution. We continue with confidence I know current and future fans will Early next year, we will celebrate with and optimism on a project that will appreciate our continued, substantial vigour, excitement and pride 30 years underpin our Club’s future and transform investment in young talent. The of exceptional work in the Everton our City. Our investment in the project USM Finch Farm Academy remains a Community. Young people will always has been substantial and the financial priority and we continue to review and get a helping hand from Everton. support provided by Farhad Moshiri has strengthen all the ingredients of the Young partners been critical. Mr Moshiri’s support has development pathway. Over the past been felt across the entire Club with year, we have invested heavily in new A major attraction for our new Main, investment in players, facilities and the facilities, new pitches and talented, Partner, SportPesa, was our focus on elimination of long-term debt. new personnel. Most recently, we have young people. Of course, SportPesa made significant investments in some appreciated the reach and power of Allied to the record-breaking funds of the most promising young players in the ‘Everton jersey’ but they are also provided by our broadcast partners and the country; young players excited and committed to changing lives in East our main sponsor, the Club’s financial enticed by the opportunities afforded Africa. We are proud to help them work outlook is healthy. to Tom Davies, Beni Baningime, with local charities and support their , Dominic Calvert-Lewin, desire and efforts to build leagues, Future prospects, for a Club focusing on Ademola Lookman and . clubs and junior football across Kenya the future, are bright. These young role models have become and Tanzania. Our relationship allowed our most powerful recruiters with us to become the first Premier League club to play a game in East Africa

12 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 13 2016/17 YOUNG AT HEART One in four of our 31,300 Season Ticket holders are now under the age of 22

16 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 17 A MAGICAL AFTERNOON AT GOODISON Everton’s Young Guns come to the fore as Tom Davies’ memorable goal seals a big win over Man City in January 2017

18 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 19 EMBRACING OUR COMMUNITY Making Evertonians proud to be Blue wherever we go

20 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 21 WELCOME TO THE PEOPLE’S HUB World-leading community scheme gets a new home in the shadow of Goodison Park

22 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 23 GOODISON ROARS AGAIN Everton kick-start the season with a rousing win over Arsenal under the lights in December 2016. Ross celebrates before he scores against Bournemouth!

24 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 25 REST IN PEACE, THE GOLDEN VISION The Club mourns the passing of Alex Young, as well as Jim Greenwood and Tom Gardner

26 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 27 SUCCESS ON THE ROAD Memorable victories at Leicester and Palace, and both Manchester clubs are held

28 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 29 THERE’S ONLY ONE BRADLEY LOWERY Football unites for a very special boy

30 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 31 ESTABLISHED TALENT THE BRIGHTEST PROSPECTS Player recruitment sees some of Europe’s best players and most-talented youngsters join the Blues

32 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 33 ONCE A BLUE… The world’s eyes are on Everton as Wayne Rooney makes a fairytale return to Goodison Park

34 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 35 FRIENDS FOREVER Chang becomes a Community Partner after 13-year shirt sponsorship deal ends

36 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 37 THE COUNTRY’S BEST YOUNG PLAYERS Everton Under-23s win the Premier League 2 title under the guidance of David Unsworth and his staff

38 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 39 YOUNG BLUES RULE THE WORLD Five Everton youngsters star as England win the Under-20 World Cup

40 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 41 Accounts Directors and Advisors Strategic Report

Directors FINANCE REVIEW for the year present a record post-tax profit of £30.7m (2016: loss of £24.3m). REVIEW OF BUSINESS AND KEY PERFORMANCE INDICATORS SHAREHOLDER INVESTMENT 2017 2016 W Kenwright CBE J V Woods R Elstone The Club’s major shareholder has provided an interest-free loan of £105m Chairman Deputy Chairman Chief Executive League Position 7th 11th (subsequently increased to £150m post Average League Attendance 39,310 38,132 year-end). The shareholder loan is to be repaid at a date to be agreed by Revenue £171.3 £121.5 Everton and Bluesky Capital Limited, a company controlled by Mr Moshiri. Wages/Turnover Ratio 61% 69% D Barrett-Baxendale In accordance with FRS 102, the loan MBE K Harris Operating Profit / (Loss) Before Player Trading £25.0m (£6.0m) has therefore been classified as equity. A Ryazantsev Deputy Director Loan arrangement fees of £525,000 Profit / (Loss) After Tax £30.6m (£24.3m) Director Chief Executive (Appointed 14 October have been deducted from equity. This (Appointed 13 July 2016) Net Assets / (Liabilities) £91.7m (£43.4m) funding has been used during the year 2016) to, amongst other things, eliminate the Net Debt nil (£54.8m) Club’s long-term debt by repaying the entire other loans balance and paying exceptional items. TRADING PERFORMANCE The record turnover facilitated continued investment in the playing squad, with In addition, this funding has also Chief Executive Auditor The first year of the new £5bn TV rights the additions of Bolasie, Schneiderlin, allowed continued investment into deal increased the Club’s turnover by Williams, Gueye, Lookman, Calvert-Lewin the playing squad and also capital R Elstone Deloitte LLP almost £50m in 2017. The Club was and Stekelenberg, together with the Club expenditure projects. selected for live UK broadcast on Deputy Chief Executive securing new contract extensions with Statutory Auditor 18 occasions and the seventh-placed Coleman, Baines, Davies and Mirallas. BALANCE SHEET AND D Barrett-Baxendale MBE finish earned the Club an additional Horton House, Exchange Flags, This investment led to staff costs rising FUNDING £14.8m compared to the previous year. by 25% to £104.7m (2016: £84.0m). Company Secretary Liverpool, L2 3PG In 2016/17, Everton secured the seventh Due to the large revenue increases As a result of the above trading, as C Anderson Bankers highest Premier League broadcasting mentioned above, the Club’s wages as well as an interest-free loan of £105m (Appointed 14 October 2016) distribution (tenth in 2015/16). a percentage of turnover have fallen to provided by Bluesky Capital Limited, Barclays Bank PLC the balance sheet shows a net asset The Club’s gate receipts income 61%, although when comparing to G Ingles other clubs outsourced revenues should position of £91.7m (2016: net liabilities (Resigned 14 October 2016) Liverpool North Group, decreased by £3.6m due to early exits of £43.4m). The balance sheet contains 337/339 Stanley Road, Bootle, from both domestic cup competitions be added back (retail and catering). The Club’s wages as a percentage of £13.4m of deferred income in relation Registered Office Liverpool, L20 3EB and further Season Ticket price to advance Season Ticket and Lounge reductions. In the previous season the turnover including outsourced catering Goodison Park, Liverpool, L4 4EL Registrars and retail was 59%. Membership sales which will be released Club benefitted from additional gate to the profit and loss account as games receipts from reaching the semi-finals Company Registration Number Capita IRG The Club incurred £7.0m exceptional are played during the 2017/18 season, of both the League and FA Cup. interest payable in 2017, not present in hence will not require repayment. The Registry, Northern House, 36624 The Club built on the excellent average 2016, which related to settlement fees The intangible assets value of £121.2m Woodsome Park, Fenay Bridge, payable due to lenders for the early represents the value paid to acquire Huddersfield, West Yorkshire, HD8 0GA league attendance of 38,132 in 2015/16, to achieve an average league attendance repayment of long term-debts. players’ registrations less annual amortisation amounts; this does not of 39,310 this year (99% occupancy and As a result of the key factors outlined reflect the true value of the playing despite almost 4,000 seats being sold above, the Club recorded an operating squad and attributes little value in as restricted views). These sustained profit for the year before player trading respect of home-grown players such high attendances are underpinned by of £25.0m (2016: loss of £6.0m). as Ross Barkley and Tom Davies. another year of strong Season Ticket The inclusion of the amortisation of and hospitality sales. The Club secured a players’ registrations of £37.3m (2016: Cash inflow from operating activities was record 30,770 Season Ticket holders, £22.4m), and profit on disposal of player £22.7m (2016: £7.4m). After net interest a 12% increase on 2015/16. registrations of £51.9m primarily made payments of £10.8m, net payments The Club’s first training ground naming up of the sale of John Stones (2016: on player transfers of £39.7m and rights partnership with USM Holdings £7.8m), gives a profit before interest and £5.7m of capital expenditure and net contributed to the Club’s sponsorship taxation of £39.7m compared to a loss of cash inflows from financing of £35.1m, and advertising revenue rising by £20.6m in 2016. With the incorporation the increase in cash for the year was almost two-thirds from £9.3m in 2016 to of the net interest charge of £10.8m £12.4m (2016: decrease of £8.6m). £15.4m in 2017. The Club also secured (2016: £5.1m), principally arising The Club’s net debt position decreased new partnerships with, amongst others, from the exceptional settlement fees by £54.8m from £54.8m to £9.6m of William Hill and Sure, and retained the payable to lenders, the servicing of the net cash in 2017. continued long-term support of key securitised debt and the bank overdraft, partners Umbro and Fanatics. as well as interest receivable, the results

44 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 45 Strategic Report Directors’ Report

This strategic report has been GOING CONCERN competitions, Financial Fair Play, the The Directors present their Annual EMPLOYEE CONSULTATION • prepare the financial statements prepared for Everton Football Club division of broadcasting income, the Report on the affairs of the Group, on the going concern basis unless Company Limited and its subsidiaries In ensuring that the Group has sufficient eligibility of players and the operation of together with the financial statements The Group places considerable value it is inappropriate to presume that the (“the Group”) and therefore gives liquid resources to meet its liabilities the transfer market. The Group monitors and auditor’s report, for the year ended on the involvement of its employees Company will continue in business. greater emphasis to those matters which as they fall due the Directors have its compliance with all applicable rules 31 May 2017. and has continued to keep them are significant to the parent company reviewed in detail the business’ cash flow and regulations on a continuous basis informed on matters affecting them as The Directors are responsible for and its subsidiary undertakings when projections. As disclosed in note 1, during and also monitors and considers the PRINCIPAL ACTIVITY employees and on the various factors keeping adequate accounting records viewed as a whole. the 2016/17 season the Group met its impact of any potential changes. affecting the performance of the Group that are sufficient to show and explain day-to-day working capital requirements The principal activity of the Group and the Company. This is achieved the Company’s transactions and disclose PRINCIPAL RISKS AND through its cash reserves, bank loan and FUTURE DEVELOPMENTS continues to be that of a professional through formal and informal meetings with reasonable accuracy at any time the football club. The Group has continued UNCERTAINTIES overdraft. As disclosed in note 16 the and the Company intranet. Employee financial position of the Company and overdraft facility has been renewed post The Directors expect the general level to develop the Everton brand and representatives from the Staff Forum enable them to ensure that the financial The Group’s activities expose it to a year end. of activity to remain consistent with associated media rights. are consulted regularly on a wide range statements comply with the Companies number of financial risks including credit 2017 in the forthcoming year. Details Act 2006. They are also responsible for RESULT FOR THE YEAR of matters affecting their current and risk, cash flow risk and liquidity risk: Additionally, because of the predictable of significant events since the balance future interests. The employee Staff safeguarding the assets of the Company nature of football club revenue streams, sheet date are contained in note 21 to The profit for the year amounted to Forum is open to all employees. and hence for taking reasonable steps Cash flow risk the Group has obtained further RCF the financial statements. £30.6m (2016 loss: £24.3m), which has for the prevention and detection of fraud funding post year end through the The Group’s activities expose it primarily been transferred to (2016: withdrawn DIRECTORS and other irregularities. securitisation of future guaranteed C Anderson to the financial risks of changes in from) reserves. The Directors are not revenues, as is common industry Company Secretary The Directors in office during The Directors are responsible for foreign currency exchange rates and able to recommend the payment of a practice, and as it has done in the past. the year are disclosed on page 44 the maintenance and integrity of the interest rates. The Group uses foreign dividend (2016: same). This facility is available for 3 years. (Directors and Advisers section). corporate and financial information exchange forward contracts to help FUTURE DEVELOPMENTS included on the Company’s website. mitigate changes in exchange rates. The Group’s trading projections show Directors’ Responsibilities Statement Legislation in the United Kingdom Interest bearing assets and liabilities that it has a reasonable expectation of AND EVENTS AFTER THE The Directors are responsible for governing the preparation and are held at fixed rate to ensure certainty staying within its currently available, BALANCE SHEET DATE preparing the Annual Report and the dissemination of financial statements of cash flows. and future anticipated, finance facilities financial statements in accordance may differ from legislation in other for at least 12 months from the date of Details of future developments and Credit risk with applicable law and regulations. jurisdictions. signing of these accounts. In preparing events that have occurred after the The Group’s principal financial assets these trading projections, a number balance sheet date can be found in the Company law requires the Directors AUDITOR are bank balances and cash, trade and of additional inherent uncertainties Strategic Report and form part of this to prepare financial statements for Each of the persons who is a Director other receivables, and investments. have been identified; notably on-field report by cross-reference. each financial year. Under that law the at the date of approval of this report The Group’s credit risk is primarily performance and the resultant reduction Directors have elected to prepare the confirms that: attributable to its trade receivables. in the Premier League domestic GOING CONCERN financial statements in accordance with The amounts presented in the balance broadcasting merit award payment The Directors have a reasonable United Kingdom Generally Accepted · so far as the Director is aware, there sheet are net of allowances for and the level of player trading. expectation that the Company and Accounting Practice (United Kingdom is no relevant audit information of doubtful receivables. An allowance for Accounting Standards and applicable The Directors have considered the the Group have adequate resources which the Company’s auditor is impairment is made where there is an law) including FRS 102 “The Financial uncertainty surrounding other inherent to continue in operational existence unaware; and identified loss event which, based on Reporting Standard applicable in the uncertainties and, in the event that they for the foreseeable future. Thus they previous experience, is evidence of a United Kingdom and Republic of Ireland”. · the Director has taken all the steps would be required, have identified a continue to adopt the going concern reduction in the recoverability of the Under company law the Directors must that he/she ought to have taken as a number of potential mitigating actions to basis in preparing the annual financial cash flows. The credit risk on liquid funds not approve the financial statements director in order to make himself/ manage any resulting forecast shortfall statements. and derivative financial instruments unless they are satisfied that they give a herself aware of any relevant audit against current facilities including the is limited because the counterparties Further details regarding the adoption true and fair view of the state of affairs information and to establish that ability within the industry to securitise are banks with high credit-ratings of the going concern basis can be found of the Group and parent company and the Company’s auditor is aware of additional future guaranteed revenues assigned by international credit-rating in the Strategic Report and note 1 to the of the profit or loss of the Group for that information. and flexibility around player trading. financial statements. that period. agencies. The Group has no significant This confirmation is given and concentration of credit risk, with Based on the mitigating actions DISABLED EMPLOYEES In preparing these financial statements, should be interpreted in accordance exposure spread over a large number of referred to above, the Directors have the Directors are required to: with the provisions of s418 of the counterparties and customers. a reasonable expectation that the Applications for employment by disabled Companies Act 2006. Group will have adequate resources to • select suitable accounting policies Liquidity risk persons are always fully considered, continue in operational existence for bearing in mind the abilities of the and then apply them consistently; Deloitte LLP have expressed their In order to maintain liquidity to ensure the foreseeable future. Accordingly applicant concerned. In the event of willingness to continue in office as • make judgements and accounting that sufficient funds are available they adopt the going concern basis in members of staff becoming disabled, auditor and appropriate arrangements estimates that are reasonable and for ongoing operations and future preparing the Annual Report every effort is made to ensure that have been put in place for them to be prudent; developments, the company uses a and Accounts. their employment with the Group deemed reappointed as auditor in the mixture of long-term and short-term continues and that appropriate training absence of an Annual General Meeting. The Club is regulated by the rules of the • state whether applicable UK debt finance. is arranged. It is the policy of the FA, Premier League, UEFA and FIFA. Any Accounting Standards have been C Anderson Group and the Company that the followed, subject to any material Further details regarding liquidity change to FA, Premier League, UEFA and Company Secretary training, career development and departures disclosed and explained in risk can be found in the Statement FIFA regulations in future could have an promotion of disabled persons should, the financial statements; and of accounting policies in the impact on the Group as the regulations as far as possible, be identical to that of financial statements. cover areas such as: the format of other employees.

46 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 47 Independent Auditor’s Report Consolidated Profit and Loss Account for the year ended 31 May 2017

INDEPENDENT AUDITOR’S SCOPE OF THE AUDIT OF THE OPINION ON OTHER MATTERS 2017 2016 REPORT TO THE MEMBERS OF FINANCIAL STATEMENTS PRESCRIBED BY THE EVERTON FOOTBALL CLUB An audit involves obtaining evidence COMPANIES ACT 2006 Notes Operations Player Total Operations Player Total COMPANY LIMITED about the amounts and disclosures in In our opinion, based on the work excluding trading excluding trading the financial statements sufficient to player player We have audited the financial statements undertaken in the course of the audit: give reasonable assurance that the trading trading of Everton Football Club Company financial statements are free from • the information given in the Strategic Limited for the year ended 31 May 2017 material misstatement, whether caused Report and Directors’ Report for the which comprise the consolidated profit by fraud or error. This includes an financial year for which the financial £’000 £’000 £’000 £’000 £’000 £’000 and loss account, the consolidated assessment of: whether the accounting statements are prepared is consistent statement of comprehensive income, policies are appropriate to the Group’s with the financial statements; and the consolidated and company balance Turnover 1,2 171,330 - 171,330 121,541 - 121,541 and parent company’s circumstances sheets, the consolidated and company • the Strategic Report and Directors’ and have been consistently applied statements of changes in equity, the Report has been prepared in and adequately disclosed; the Operating expenses 3 (146,334) (37,298) (183,632) (116,255) (22,398) (138,653) consolidated cash flow statement and accordance with applicable legal reasonableness of significant accounting the related notes 1 to 25. The financial requirements. estimates made by the Directors; Operating expenses - reporting framework that has been 3 - - - (11,335) - (11,335) and the overall presentation of the In light of the knowledge and exceptional costs applied in their preparation is applicable financial statements. In addition, we understanding of the company and its law and United Kingdom Accounting read all the financial and non-financial environment obtained in the course of (146,334) (37,298) (183,632) (127,590) (22,398) (149,988) Standards (United Kingdom Generally information in the annual report to the audit, we have not identified any Accepted Accounting Practice), including identify material inconsistencies with material misstatements in the FRS 102, The Financial Reporting Operating profit / (loss) 4 24,996 (37,298) (12,302) (6,049) (22,398) (28,447) the audited financial statements and Strategic Report and Directors’ Report. Standard applicable in the UK and to identify any information that is Republic of Ireland. apparently materially incorrect based MATTERS ON WHICH WE ARE Profit on player trading - 51,945 51,945 - 7,815 7,815 This report is made solely to the on, or materially inconsistent with, REQUIRED TO REPORT BY the knowledge acquired by us in the Company’s members, as a body, in EXCEPTION Profit on disposal of tangible fixed course of performing the audit. If we 7 - 7 - - - accordance with Chapter 3 of Part 16 assets of the Companies Act 2006. Our audit become aware of any apparent material We have nothing to report in respect work has been undertaken so that we misstatements or inconsistencies we of the following matters where the Profit / (loss) before interest might state to the Company’s members consider the implications for our report. Companies Act 2006 requires us to 25,003 14,647 39,650 (6,049) (14,583) (20,632) those matters we are required to state report to you if, in our opinion: and taxation to them in an auditor’s report and for OPINION ON FINANCIAL • adequate accounting records have no other purpose. To the fullest extent Interest receivable and STATEMENTS not been kept, or returns adequate 5 1,801 1,354 permitted by law, we do not accept or similar income for our audit have not been received assume responsibility to anyone other In our opinion the financial statements: from branches not visited by us; or than the Company and the Company’s • give a true and fair view of the state Interest payable and 6 (3,818) (5,055) members as a body, for our audit work, of the Group’s and parent company’s • the financial statements are not in similar charges for this report, or for the opinions we affairs as at 31 May 2017 and of the agreement with the accounting Interest payable and have formed. Group’s profit for the year then records and returns; or 6 (6,966) - ended; similar charges - exceptional RESPECTIVE • certain disclosures of Directors’ RESPONSIBILITIES OF • have been properly prepared in remuneration specified by law are not (10,784) (5,055) accordance with United Kingdom made; or DIRECTORS AND AUDITOR Generally Accepted Accounting • we have not received all the Profit / (loss) on ordinary Practice; and 30,667 (24,333) As explained more fully in the information and explanations we activities before taxation Directors’ Responsibilities Statement, • have been prepared in accordance require for our audit. the Directors are responsible for the with the requirements of the Tax on profit/(loss) from preparation of the financial statements Anthony J Farnworth BA (Hons) ACA 8 (50) - Companies Act 2006. ordinary activities and for being satisfied that they give Senior Statutory Auditor a true and fair view. Our responsibility For and on behalf of Deloitte LLP is to audit and express an opinion on Statutory Auditor Profit / (loss) after taxation the financial statements in accordance Liverpool for the year transferred to / 30,617 (24,333) with applicable law and International United Kingdom (withdrawn from) reserves Standards on Auditing (UK and Ireland). 12 October 2017 Those standards require us to comply with the Auditing Practices Board’s All the above amounts derive from continuing operations. Ethical Standards for Auditors. There are no recognised gains and losses for the year ended 31 May 2017 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 2017 ANNUAL REPORT & ACCOUNTS 49 Consolidated Balance Sheet Company Balance Sheet at 31 May 2017 at 31 May 2017

2017 2016 2017 2016

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

Fixed assets Fixed assets

Intangible assets 10 121,151 69,125 Intangible assets 10 121,151 69,125

Tangible assets 11 11,838 8,596 Tangible assets 11 7,778 4,290

132,989 77,721 128,929 73,415

Current assets Current assets

Debtors Debtors

- Due within one year 14 36,735 16,734 - Due within one year 14 35,438 14,488

- Due after one year 14 18,728 1,928 - Due after one year 14 18,729 1,928

Investments 12 - 2,767 Investments 12 - -

Cash at bank and in hand 9,635 - Cash at bank and in hand 9,512 -

65,098 21,429 63,679 16,416

Creditors - amounts falling due within one year 15 (80,578) (113,182) Creditors - amounts falling due within one year 15 (75,893) (123,265)

Net current liabilities (15,480) (91,753) Net current liabilities (12,214) (106,849)

Total assets less current liabilities 117,509 (14,032) Total assets less current liabilities 116,715 (33,434)

Creditors - amounts falling due after more than one year 16 (20,227) (28,604) Creditors - amounts falling due after more than one year 16 (19,446) (9,215)

Provision for liabilities 17 (5,594) (768) Provision for liabilities 17 (5,594) (768)

Net assets /(liabilities) 91,688 (43,404) Net assets /(liabilities) 91,675 (43,417)

Capital and reserves Capital and reserves

Called up share capital 18 35 35 Called up share capital 18 35 35

Share premium account 18 24,968 24,968 Share premium account 18 24,968 24,968

Profit and loss account - deficit 18 (37,790) (68,407) Profit and loss account - deficit 18 (37,803) (68,420)

Other reserves 18 104,475 - Other reserves 18 104,475 -

Shareholders' funds/(deficit) 91,688 (43,404) Shareholders' funds/(deficit) 91,675 (43,417)

The financial statements of the Everton Football Club Company Limited, registered number 36624, were approved by the Board on The Company has taken advantage of Section 408 of the Companies Act 2006 and has not presented its own profit and loss the 11 October 2017 and signed on its behalf by account. The Company’s profit for the year was £30,617,000 (2016 loss: £25,891,000). W Kenwright CBE The financial statements of the Everton Football Club Company Limited, registered number 36624, were approved by the Board on Director the 11 October 2017 and signed on its behalf by W Kenwright CBE Director

50 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 51 Consolidated and Company Statements of Changes in Equity Consolidated Cash Flow Statement for the year ended 31 May 2017 for the year ended 31 May 2017

Group 2017 2016

Called-up Share Profit Other Total Notes £'000 £'000 share premium and loss reserves capital account account Net cash flows from operating activities Notes £'000 £'000 £'000 £'000 £'000 Profit/(loss) for the year 30,617 (24,333) Adjustments for: At 1 June 2015 35 24,968 (44,074) - (19,071) Profit on player trading (51,945) (7,815) Profit on disposal of tangible fixed assets (7) - Loss for the year and total comprehensive - - (24,333) - (24,333) expense Depreciation of tangible fixed assets 2,495 1,842 Amortisation of grants (38) (38) At 1 June 2016 35 24,968 (68,407) - (43,404) Amortisation of football staff registrations 37,298 22,398

Profit for the year and total comprehensive Interest receivable and similar income (1,801) (1,354) - - 30,617 - 30,617 income Interest payable and similar charges 10,784 5,055 Loan from Shareholder classed as equity 18 - - - 104,475 104,475 Taxation 50 - Operating cash flows before movements in working capital 27,453 (4,245) At 31 May 2017 35 24,968 (37,790) 104,475 91,688 Increase in debtors (6,538) (772) Increase in creditors 1,921 12,535 Decrease in provisions (120) (121) Company Cash generated by operations 22,716 7,397 Called-up Share Profit Other Total share premium and loss reserves Cash flow from investing activities capital account account Proceeds from disposal of players’ registrations 30,823 7,687 Proceeds from sale of tangible fixed assets 7 - Notes £'000 £'000 £'000 £'000 £'000 Purchase of players’ registrations (70,554) (32,391) Purchase of tangible fixed assets (5,737) (1,510) At 1 June 2015 35 24,968 (42,529) - (17,526) Interest received 4 109 Loss for the year and total comprehensive - - (25,891) - (25,891) expense Net cash flows from investing activities (45,457) (26,105) Cash flows from financing activities At 1 June 2016 35 24,968 (68,420) - (43,417) Interest paid (11,807) (4,747) Profit for the year and total comprehensive Repayments of borrowings (57,520) (20,125) - - 30,617 - 30,617 income Repayments of obligations under finance lease (34) (66) Loan from Shareholder classed as equity 18 - - - 104,475 104,475 New loans - 35,000 Shareholder loans treated as equity 104,475 - At 31 May 2017 35 24,968 (37,803) 104,475 91,675 Net cash flows from financing activities 35,114 10,062

(Overdraft)/cash at bank and in hand at beginning of year (2,737) 5,909 Net increase / (decrease) in cash 12,372 (8,646)

Cash / (overdraft) at bank and in hand at end of year 9,635 (2,737)

52 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 53 Notes to the Accounts for the year ended 31 May 2017

1 ACCOUNTING POLICIES (c) Going concern be of appropriate comfort to them in element of broadcasting revenues is (h) Intangible Fixed Assets - charged to the profit and loss account the circumstances. In particular, the recognised over the duration of the Players’ Registrations over the period of the lease. Operating The principal accounting policies are The Group’s business activities, together Directors consider it to be common football season it relates to whilst facility lease rentals are charged to the profit summarised below. They have all been with the factors likely to affect its future practice for many Premier League fees for live coverage or highlights are The cost of players’ registrations, and loss account on a straight line basis applied consistently throughout the year development, performance and position football clubs for the exact level and taken when earned. Merit awards are including agents’ fees, is capitalised over the period of the lease even when and to the preceding year. are set out in the strategic report. The terms of facilities to be reviewed at accounted for only when known at the and amortised over the period of payments are not made on such a basis. Directors’ report further describes the the respective players’ contracts in (a) General information and basis the end of each football season. Based end of the football season. financial position of the Group; its cash on the ongoing dialogue with funding accordance with FRS 102 section 18 (l) Foreign Currency Transactions of accounting flows, liquidity position and borrowing (e) Tangible Fixed Assets and ‘Intangible assets other than goodwill’. partners, the Directors are confident Transactions denominated in foreign Everton Football Club Company Limited facilities; the Group’s objectives, policies that the current facilities will be Depreciation The transfer fee levy refund received and processes for managing its capital; during the year is credited against currencies are translated into sterling is a company incorporated in the United renewed at a similar level, or replaced Depreciation is not provided on freehold at the rates ruling at the dates of the Kingdom under the Companies Act. The its financial risk management objectives; by equivalent facilities, for the additions to intangible assets. details of its financial instruments and land. On properties it is provided to transactions. Monetary assets and address of the registered office is given 2018/19 Premier League season. write off the costs or revalued amounts When a playing contract is extended, liabilities denominated in foreign on page 44. The nature of the Group’s hedging activities; and its exposure to credit risk and liquidity risk. During the The Group’s trading projections show less estimated residual value (based any costs associated with securing the currencies are translated at the rates operations and its principal activities are on prices prevailing at the date of extensions are added to the unamortised of exchange ruling at the balance sheet set out in the strategic report on page 45. 2016/17 season the Group met its day that it has a reasonable expectation of to day working capital requirements staying within its currently available, acquisition or revaluation) in equal balance (at the date of the amendment) date. All exchange differences are through its cash reserves, bank loan and future anticipated, finance annual instalments over the estimated and the revised book value is amortised recognised in the profit and loss account. STATEMENT OF COMPLIANCE useful economic lives of the assets over the remaining revised contract and overdraft. As disclosed in note 16 facilities for at least 12 months from (m) Pensions The financial statements of Everton the overdraft facility has been renewed the date of signing of these accounts. which are considered to be between period. 10 and 40 years. Football Club Company Limited have post year end and all bank loans present In preparing these trading projections, (i) Contingent Appearance Fees Certain staff of the Group are members been prepared under the historical cost at 31 May 2016 have been repaid in the a number of additional inherent No depreciation is provided on assets in of either the Football League Limited convention, and in accordance with year, following investment from the uncertainties have been identified; the course of construction. Where the Directors consider the Players Retirement Income Scheme, United Kingdom Accounting Standards, major shareholder. Additionally, because notably on-field performance and the likelihood of a player meeting future a defined contribution scheme, or the including Financial Reporting Standard of the predictable nature of football resultant reduction in the Premier Depreciation is charged on a straight line appearance criteria specified in the Football League Limited Pension and Life FRS 102, “The Financial Reporting club revenue streams, the Group has League domestic broadcasting merit basis of three years for vehicles and five transfer agreement of the player to be Assurance Scheme (“FLLPLAS”; “the Standard applicable in the United obtained further funding post year end award payment and the level of player years for plant and equipment. probable, provision for this cost is made Scheme”), a defined benefit Scheme. Kingdom and Republic of Ireland” (see note 17). If the likelihood of meeting As one of a number of participating through the securitisation of future trading. The Directors have considered (f) Grants (“FRS 102”), and the Companies guaranteed revenues, as is common the net current liability position, the these criteria is merely possible not employers in the FLLPLAS, the Group Act 2006. industry practice, and as it has done in uncertainty surrounding the renewal Grants of a capital nature are credited probable, then no provision is made but is advised only of its share of the to deferred income and amortised to the the potential obligations are disclosed as Scheme’s deficit and recognises a The parent company is included in the the past. This RCF facility is a three-year of the facilities and other inherent profit and loss account on a systematic contingent liabilities (see note 19). liability in respect of this. As a result, the consolidated financial statements and facility which reduces over the term to uncertainties and, in the event that they basis over the useful economic life of contributions paid to the scheme reduce is considered to be a qualifying entity July 2020. would be required, have identified a (j) Signing-on Fees and the asset to which they relate. the provision. The Group is unable to under FRS 102 paragraphs 1.8 to 1.12. number of potential mitigating actions to Loyalty Bonuses The timing of the expiry of the overdraft manage any resulting forecast shortfall identify its share of the underlying The following exemptions available (g)(i) Current Taxation facility in June 2018 allows the Directors against current facilities, including the Signing-on fees and loyalty bonuses assets and liabilities of the Scheme under FRS 102 in respect of certain and current or alternative funding ability within the industry to securitise Current taxation, including UK represent a normal part of the on a consistent and reliable basis and disclosures for the parent company partners to agree appropriate facilities additional future guaranteed revenues corporation tax and foreign tax, is employment cost of the player and therefore accounts for the Scheme as if financial statements have been applied. for the following season based on and flexibility around player trading. provided at amounts expected to be paid as such are charged to the profit and it were a defined contribution scheme. performance in the 2017/18 Premier No separate parent company Cash Flow Based on the mitigating actions (or recovered) using tax rates and laws loss account in the period in which the League season and reflect activities, (n) Financial Instruments Statement with related notes is included. referred to above, the Directors have that have been enacted or substantively payment becomes due, except in the including the Group’s player trading a reasonable expectation that the enacted by the balance sheet date. circumstances of a player disposal. In Financial assets and financial liabilities The functional currency of Everton activity in the January 2018 transfer Group will have adequate resources to that case any remaining signing-on fees are recognised when the Group becomes Football Club Company Limited and its window and the start of the summer continue in operational existence for the (g)(ii) Deferred Taxation and loyalty bonuses due are allocated a party to the contractual provisions of subsidiaries is considered to be pounds 2018 transfer window. The Directors foreseeable future. Accordingly in full against profit or loss on disposal the instrument. sterling because that is the currency of Deferred taxation is provided in full believe that it is the current lender’s they adopt the going concern basis of players’ registrations in the year the primary economic environment in on timing differences that result in an Financial liabilities and equity intention to renew the facility agreement in preparing the Annual Report in which the player disposal is made. which the Company operates. obligation at the balance sheet date instruments are classified according or the Directors are confident and Accounts. Those instalments due in the future on The consolidated financial statements alternative sources of funding can be to pay more tax, or a right to pay less to the substance of the contractual tax, at a future date, at rates expected continued service are not provided for are also presented in pounds sterling. put in place for the following season, (d) Turnover but are noted as contingent liabilities arrangements entered into. An equity in each case subject to review at the to apply when they crystallise based instrument is any contract that (b) Basis of consolidation (see note 19). end of the current football season with Turnover is stated exclusive of value on current tax rates and law. Timing evidences a residual interest in the added tax, and match receipts are differences arise from the inclusion The Group financial statements the knowledge of the level of player (k) Lease Rentals assets of the Group after deducting all trading over the period and with the recognised net of payments owing to of items of income and expenditure of its liabilities. consolidate the financial statements Where the company enters into a lease amount and terms to be negotiated at visiting clubs, the Premier League, in taxation computations in periods of the Company and its subsidiary which entails substantially taking all the (i) Financial assets and liabilities the appropriate time. The Directors and the different from those in which they are undertakings drawn up to 31 May each risks and rewards of ownership of an acknowledge the need for further Football League. included in financial statements. year. Where necessary, adjustments asset the lease is treated as a finance All financial assets and liabilities are discussion and agreement with potential are made to the financial statements Gate and other matchday revenue Deferred tax assets are recognised lease. Assets acquired under finance initially measured at transaction price funding partners, thereby giving rise of subsidiaries to bring the accounting is recognised over the period of the to the extent that it is regarded as leases are capitalised and depreciated (including transaction costs), except to a degree of uncertainty on the final policies used into line with those used by football season as games are played. more likely than not that they will be over the shorter of their lease term or for those financial assets classified outcome regarding funding. However, the Group. All intra-group transactions, Sponsorship and similar commercial recovered. their estimated useful lives. The interest as at fair value through profit or loss, the Directors consider discussions balances, income and expenses are income is recognised over the duration element of the rental obligations is which are initially measured at fair eliminated on consolidation. with existing and potential funders to of the respective contracts. The fixed value (which is normally the transaction

54 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 55 Notes to the Accounts for the year ended 31 May 2017 (Continued)

price excluding transaction costs), to protect the holder against the credit not hold or issue derivative financial of the amount that would be received unless the arrangement constitutes a deterioration of the issuer or a change instruments for speculative purposes. for the asset if it were to be sold at the financing transaction. If an arrangement in control of the issuer, or to protect the reporting date. constitutes a financing transaction, the holder or issuer against changes in levies Derivatives are initially recognised at fair financial asset or financial liability is applied by a central bank or arising from value at the date a derivative contract Where indicators exist for a decrease measured at the present value of the changes in relevant taxation or law. is entered into and are subsequently in impairment loss, and the decrease future payments discounted at a market remeasured to their fair value at each can be related objectively to an event rate of interest for a similar (f) Contractual provisions may permit reporting date. The resulting gain occurring after the impairment was debt instrument. the extension of the term of the debt or loss is recognised in profit or loss recognised, the prior impairment instrument, provided that the return to immediately. loss is tested to determine reversal. Financial assets and liabilities are the holder and any other contractual An impairment loss is reversed on an only offset in the balance sheet provisions applicable during the (v) Fair value measurement individual impaired financial asset to when, and only when there exists a extended term satisfy the conditions of The best evidence of fair value is a the extent that the revised recoverable legally enforceable right to set off the paragraphs (a) to (c). quoted price for an identical asset in value does not lead to a revised carrying recognised amounts and the Group an active market. When quoted prices amount higher than the carrying value intends either to settle on a net basis, Debt instruments that are classified as had no impairment been recognised. payable or receivable within one year are unavailable, the price of a recent or to realise the asset and settle the transaction for an identical asset liability simultaneously. on initial recognition and which meet (p) Critical accounting judgements and the above conditions are measured at provides evidence of fair value as long key sources of estimation uncertainty Debt instruments which meet the the undiscounted amount of the cash or as there has not been a significant following conditions are subsequently other consideration expected to be paid change in economic circumstances or In the application of the Group’s measured at amortised cost using the or received, net of impairment. a significant lapse of time since the accounting policies, which are described effective interest method: transaction took place. If the market is above, the Directors are required Other debt instruments not meeting not active and recent transactions of to make judgements, estimates and (a) The contractual return to the holder these conditions are measured at fair an identical asset on their own are not assumptions about the carrying amounts is (i) a fixed amount; (ii) a positive fixed value through profit or loss. a good estimate of fair value, the fair of assets and liabilities that are not rate or a positive variable rate; or (iii) a value is estimated by using a valuation readily apparent from other sources. combination of a positive or a negative Commitments to make and receive loans technique. The estimates and associated fixed rate and a positive variable rate. which meet the conditions mentioned assumptions are based on historical above are measured at cost (which may (o) Impairment of assets experience and other factors that are (b) The contract may provide for be nil) less impairment. Non-financial assets considered to be relevant. Actual results repayments of the principal or the may differ from these estimates. return to the holder (but not both) to be Financial assets are derecognised when and only when a) the contractual rights An asset is impaired where there is linked to a single relevant observable objective evidence that, as a result The estimates and underlying index of general price inflation of the to the cash flows from the financial assumptions are reviewed on an ongoing asset expire or are settled, b) the Group of one or more events that occurred currency in which the debt instrument is after initial recognition, the estimated basis. Revisions to accounting estimates denominated, provided such links are transfers to another party substantially are recognised in the period in which the all of the risks and rewards of ownership recoverable value of the asset has been not leveraged. reduced. The recoverable amount of an estimate is revised if the revision affects of the financial asset, or c) the Group, only that period, or in the period of the (c) The contract may provide for a despite having retained some, but not asset is the higher of its fair value less costs to sell and its value in use. revision and future periods if the revision determinable variation of the return all, significant risks and rewards of affects both current and future periods. to the holder during the life of the ownership, has transferred control of Where indicators exist for a decrease in instrument, provided that (i) the new the asset to another party. impairment loss, the prior impairment The Directors do not consider there to be rate satisfies condition (a) and the loss is tested to determine reversal. any key judgements or critical estimates variation is not contingent on future Financial liabilities are derecognised that must be applied. only when the obligation specified in An impairment loss is reversed on an events other than (1) a change of a individual impaired asset to the extent contractual variable rate; (2) to protect the contract is discharged, cancelled or expires. that the revised recoverable value does the holder against credit deterioration not lead to a revised carrying amount of the issuer; (3) changes in levies (ii) Investments higher than the carrying value had no applied by a central bank or arising impairment been recognised. from changes in relevant taxation or law; In the Company balance sheet, or (ii) the new rate is a market rate of investments in subsidiaries are Financial assets measured at cost less impairment. interest and satisfies condition (a). For financial assets carried at amortised (d) There is no contractual provision (iii) Equity instruments cost, the amount of an impairment is the difference between the asset’s carrying that could, by its terms, result in the Equity instruments issued by the holder losing the principal amount or amount and the present value of Company are recorded at the fair value estimated future cash flows, discounted any interest attributable to the current of cash or other resources received or period or prior periods. at the financial asset’s original effective receivable, net of direct issue costs. interest rate. (e) Contractual provisions that permit (iv) Derivative financial instruments the issuer to prepay a debt instrument For financial assets carried at cost or permit the holder to put it back The Group uses derivative financial less impairment, the impairment loss to the issuer before maturity are not instruments to reduce exposure to is the difference between the asset’s contingent on future events, other than foreign exchange risk. The Group does carrying amount and the best estimate

56 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 57 Notes to the Accounts for the year ended 31 May 2017 (Continued)

2 TURNOVER 4 OPERATING PROFIT/(LOSS)

Turnover, all of which originates in the United Kingdom, can be analysed as follows: 2017 2016

2017 2016 £'000 £'000 £'000 £'000 The operating profit/loss is stated after charging / (crediting): Broadcasting 130,535 82,500 Depreciation - property 262 263 Gate receipts 14,064 17,625 Depreciation - other 2,233 1,579 Sponsorship, advertising and merchandising 15,377 9,343 Amortisation of grants (38) (38) Other commercial activities 11,354 12,073

171,330 121,541 Operating lease rentals

Turnover comprises of the following: Motor vehicles 310 252

Broadcasting - distributions from the FA Premier League broadcasting agreements, cup competition broadcasting rights and radio Office equipment 192 127 broadcasting rights. Gate receipts - revenue generated from the sale of match tickets. Land and properties 1,031 1,004 Sponsorship, advertising and merchandising - revenue generated from sponsorship and partnership contracts and net revenue received from outsourced retail operations. The analysis of auditor's remuneration is as follows:

Other commercial activities - includes revenue received from hospitality, catering, events and all other revenue sources. Fees payable to the Company's auditor for the audit of the Company's annual accounts 57 55 The above turnover represents the net revenue received from outsourced retail and catering operations. Turnover would increase by £7.5m to £179m (2016: £129m) if these operations were not outsourced. Fees payable to the Company's auditor for the audit of the Company's subsidiaries 6 6

3 OPERATING EXPENSES Total audit fees 63 61

2017 2016 Other non-audit services

£'000 £'000 Tax services 82 93

Other services 63 64 Amortisation of players' registrations (note 10) 37,298 22,398

Staff costs (note 7) 104,655 83,985 Total non-audit fees 145 157

Depreciation (note 11) 2,495 1,842

Other operating costs 39,184 30,428

Other operating costs - exceptional costs - 11,335

Total operating expenses 183,632 149,988

The exceptional other operating costs of £11,335,000 in the year ended 31 May 2016 related to amounts payable to former employees and other costs in relation to the change in coaching staff in the prior year.

58 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 59 Notes to the Accounts for the year ended 31 May 2017 (Continued)

5 INTEREST RECEIVABLE AND SIMILAR INCOME 7 PARTICULARS OF EMPLOYEES

2017 2016 Group 2017 2016

Number Number £'000 £'000 The average weekly number of employees, including Executive Directors, during the year was as follows: Bank interest receivable 1 13 Playing, training and management 117 108 Other Interest receivable 1,800 96 Youth Academy 61 47 Change in fair value of derivatives - 1,245 Marketing and Media 53 41 1,801 1,354 Management and Administration 85 81

6 INTEREST PAYABLE AND SIMILAR CHARGES Maintenance, Security, Pitch and Ground Safety 41 38

2017 2016 357 315

£'000 £'000 In addition, the Group employed an average of 400 temporary staff on matchdays (2016: 445).

Bank overdrafts 88 332 Aggregate payroll costs for the above employees were as follows: 2017 2016

Finance leases and hire purchase agreements 4 6 £’000 £’000 Other loans 1,990 3,484

Other interest payable 1,736 1,233 Wages and salaries 92,144 73,914

3,818 5,055 Social security costs 12,041 9,538 Other pension costs 470 533

104,655 83,985 Interest Payable and similar charges - Exceptional 2017 2016

£'000 £'000

Exceptional loan charges 6,966 -

6,966 -

The exceptional loan charges of £6,966,000 relates to an early repayment penalty charge imposed on the Club as a result of the Club repaying a long term loan in full. The Club repaid the entire £19,959,000 of loan notes present at 31 May 2016.

60 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 61 Notes to the Accounts for the year ended 31 May 2017 (Continued)

8 TAX ON PROFIT/(LOSS) ON ORDINARY ACTIVITIES

2017 2016 Company 2017 2016

£’000 £’000 Number Number Current and total tax charge in the year 50 - The average weekly number of employees, including Executive Directors, during the year was as follows:

a) Factors affecting the tax charge for the current year Playing, training and management 83 81 The tax assessed for the year is lower (2016: higher) than that resulting from applying the effective standard rate of corporation Youth Academy 61 47 tax in the UK: 20% (2016: 20.83%). Marketing and Media 53 41 2017 2016 Management and Administration 85 81 £'000 £'000 Maintenance, Security, Pitch and Ground Safety 41 38

323 288 Profit/(loss) on ordinary activities before taxation 30,667 (24,333)

Tax on profit/(loss) on ordinary activities at the standard rate 6,082 (4,866)

Expenses not deductible for tax purposes 1,085 272 Aggregate payroll costs for the above employees were as follows: 2017 2016 Income not taxable for tax purposes (8) (8) £’000 £’000 (Utilisation)/creation of losses (320) 4,602

Wages and salaries 91,916 73,691 Depreciation on ineligible aseets 48 -

Social security costs 12,035 9,533 Deferred tax not provided (15) -

Other pension costs 470 533 Rollover relief claim (6,823) -

104,421 83,757 Current tax charge for the year 50 -

b) Factors that may affect the future tax charge Directors’ remuneration 2017 2016 Unrecognised deferred tax assets of the Group are £3.3m (2016: £11.3m). These assets will be utilised if sufficient taxable profits are generated by Group companies in future periods. £'000 £'000 This asset primarily consists of carried forward losses of £9.3m, less the NBV of players into which profits have been rolled over of £6.8m. Decelerated capital allowances and pension assets are also included. Emoluments 1,593 770

Company contributions to money purchase pension scheme 30 - 9 COMPANY PROFIT AND LOSS ACCOUNT

1,623 770 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 profit for the year was £30,617,000 (2016 loss: £25,891,000). Highest paid Director 578 400

Company contributions to money purchase pension scheme 10 -

588 400

62 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 63 Notes to the Accounts for the year ended 31 May 2017 (Continued)

10 INTANGIBLE FIXED ASSETS - GROUP AND COMPANY 11 TANGIBLE FIXED ASSETS

Total Group

£'000 Freehold Plant and Vehicles Total properties equipment Cost

At 1 June 2016 133,991 £’000 £’000 £’000 £’000

Additions in the year 92,080 Cost Disposals in the year (18,824) At 1 June 2016 11,408 16,550 207 28,165 At 31 May 2017 207,247 Additions in the year - 5,737 - 5,737

Amortisation Disposals in the year - - (51) (51)

At 1 June 2016 64,866 At 31 May 2017 11,408 22,287 156 33,851 Provided during the year 37,298 Depreciation Eliminated on disposals (16,068) At 1 June 2016 6,880 12,517 172 19,569 At 31 May 2017 86,096 Provided during the year 262 2,202 31 2,495 Net book value On disposals - - (51) (51) At 31 May 2017 121,151 At 31 May 2017 7,142 14,719 152 22,013 At 31 May 2016 69,125

Net book value The intangible fixed assets relate entirely to the cost of players’ registrations. The Directors review the carrying value of the players’ registrations for impairment. Where events or changes in circumstances At 31 May 2017 4,266 7,568 4 11,838 indicate that the carrying value of the asset may not be recoverable, to the extent that the carrying value exceeds the recoverable amount, the asset is impaired and the impairment loss is recognised in the profit and loss. At 31 May 2016 4,528 4,033 35 8,596

64 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 65 Notes to the Accounts for the year ended 31 May 2017 (Continued)

12 INVESTMENTS

FIXED ASSET INVESTMENTS Company Company Subsidiary Undertakings Freehold Plant and Vehicles Total properties equipment £

£’000 £’000 £’000 £’000 Cost and net book value As at 1 June 2016 and 31 May 2017 5 Cost

At 1 June 2016 308 16,550 207 17,065 Details of Company’s subsidiaries as at 31 May 2017, all registered in England and Wales at Goodison Park, Liverpool, L4 4EL, were as follows: Additions in the year - 5,737 - 5,737

Disposals in the year - - (51) (51) Name of Company % owned Nature of business

At 31 May 2017 308 22,287 156 22,751 Provision of football Goodison Park Stadium Limited 100 entertainment facilities Depreciation Everton Investments Limited 100 Issuer of loan notes At 1 June 2016 86 12,517 172 12,775 The Everton Ladies Football Club Limited 100 Professional football club Provided during the year 16 2,202 31 2,249 Everton Stadium Development Limited 100 Development company On disposals - - (51) (51) CURRENT ASSET INVESTMENTS At 31 May 2017 102 14,719 152 14,973 Group Current asset investments consist of four month treasury deposits of £nil (2016: £2,767,000). Net book value At 31 May 2017 206 7,568 4 7,778 13 LEASE COMMITMENTS

At 31 May 2016 222 4,033 35 4,290 Total future minimum lease payments under non-cancellable operating leases are as follows:

Land and Properties Other Total

2017 2016 2017 2016 2017 2016

£'000 £'000 £'000 £'000 £'000 £'000

Expiring within one year - - 124 9 124 9

Expiring between two and five years 298 441 245 748 543 1,189

Expiring in more than five years 60,690 61,614 - - 60,690 61,614

60,988 62,055 369 757 61,357 62,812

66 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 67 Notes to the Accounts for the year ended 31 May 2017 (Continued)

14 DEBTORS 16 CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Group Company Group Company

2017 2016 2017 2016 2017 2016 2017 2016

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

Amounts falling due within one year: Other loans (see borrowings below) - 18,570 - -

Trade debtors 35,927 14,383 35,438 12,166 Obligations under finance lease and hire purchase agreements - 20 - 20

Other debtors - 1 - - Trade creditors 13,964 2,499 13,964 2,499

Prepayments and accrued income 808 2,350 - 2,322 Accruals and deferred income 6,263 7,515 5,482 6,696

36,735 16,734 35,438 14,488 20,227 28,604 19,446 9,215

Amounts falling due after one year: BORROWINGS Trade debtors 18,728 1,928 18,729 1,928 Group 18,728 1,928 18,729 1,928 Finance leases Bank Overdraft Other loans Total and hire purchase 15 CREDITORS - AMOUNTS FALLING WITHIN ONE YEAR 2017 2016 2017 2016 2017 2016 2017 2016

Group Company £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

2017 2016 2017 2016 Analysis of borrowings Payable by instalments: £'000 £'000 £'000 £'000 Within one year - 2,737 - 36,213 20 34 20 38,984

Bank overdraft (secured) - 2,737 - 4,793 Between one and two years - - - 1,307 - 20 - 1,327

Other loans (note 16) - 36,213 - 35,000 Between two and five years - - - 4,564 - - - 4,564

Obligations under finance lease and hire purchase agreements 20 34 20 34 After more than five years - - - 12,875 - - - 12,875

Trade creditors 32,547 15,228 32,537 15,206 Prepaid finance costs - - - (176) - - - (176)

Accruals and deferred income 34,455 49,907 23,890 38,216 - 2,737 - 54,783 20 54 20 57,574 Derivative financial instrument liability - 218 - 218 Finance leases Amounts due to subsidiaries - - 4,772 20,256 Company Bank Overdraft Other loans Total and hire purchase Social security and other taxes 13,556 8,845 14,674 9,542 2017 2016 2017 2016 2017 2016 2017 2016 80,578 113,182 75,893 123,265 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Analysis of borrowings Payable by instalments:

Within one year - 4,793 - 35,000 20 34 20 39,827

Between one and two years - - - - - 20 - 20

- 4,793 - 35,000 20 54 20 39,847

68 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 69 Notes to the Accounts for the year ended 31 May 2017 (Continued)

The bank overdraft is principally secured via a lightweight floating charge over all the assets and undertakings 19 CONTINGENT LIABILITIES 22 RELATED PARTY (excluding Goodison Park Stadium) of the Company. This overdraft facility has been renewed post year end. No provision is included in the accounts TRANSACTIONS In the prior year, other loans included £19,959,000 of loan notes which at inception of the loan, 30 September 2002, had a for transfer fees of £32,169,000 Everton In The Community is a repayable schedule of annual instalments over a 25-year period at a fixed interest rate of 7.79%. The first payment under (2016: £17,973,000) which are, as at registered Charity (Number 1099366) the agreement was made on 30 September 2002 amounting to £1,588,000 with subsequent annual payments of £2,767,000 31 May 2017, contingent upon future incorporated on 31 July 2003 and began (including interest) occurring each year since. These annual repayments had been made via a securitisation agreement serviced by appearances of certain players and trading on 1 June 2004. The Charity future Season Ticket sales. at the balance sheet date are not operates separately from the Group considered probable; or signing-on fees The original costs incurred when raising the original loan finance agreement, amounting to £710,000, had been offset at inception hence has not been consolidated in the and loyalty bonuses, as at 31 May 2017, against the original £30,000,000 loan, and are contained within prepaid finance costs and have been charged annually to the Group results, but as at 31 May 2016 of £18,410,000 (2016: £17,075,000) profit and loss in line with the annual repayments. Everton Football Club Company Limited which would become due to certain employees held two of the six Trustee This loan has been repaid in full during the year. players if they are still in the service of positions at the Charity. During the the Club on specific future dates. Also included in other loans at 31 May 2016 was a £35,000,000 loan which was secured by legal charges over the Company’s year Everton Football Club Company guaranteed Premier League broadcast revenues. This loan incurred interest at a rate of 5.2% and was fully repaid during the year. Limited incurred net operating costs of 20 PENSIONS £303,000 (2015: £121,000) on behalf of Certain staff of the Group are members the Charity. 17 PROVISION FOR LIABILITIES of either the Football League Limited During the year the Club’s major Players Retirement Income Scheme, shareholder has provided interest free a defined contribution scheme, or the Group and Company loans of £104,475,000, included in Football League Limited Pension and equity, with no agreed repayment date. Life Assurance Scheme (“FLLPLAS”; The balance outstanding at year end was Pensions Contingent Total “the Scheme”), a defined benefit £104,475,000. This funding has been scheme. As one of a number of (note 20) appearance used to reduce the Club’s long term fees participating employers in the FLLPLAS, debt by repaying the external loans the Group is advised only of its share of balance of £57,520,000 and to pay £’000 £’000 £’000 the Scheme’s deficit and recognises a exceptional items. liability in respect of this. During the year the Club received At 1 June 2016 371 397 768 As a result, the contributions paid to naming rights income in respect of the scheme reduce the provision. The Utilised in the year (120) (1,905) (2,025) Finch Farm training complex of Group is unable to identify its share £6,000,000 (2016: nil) from USM of the underlying assets and liabilities Provided in the year - 6,851 6,851 Services Limited. The Club’s major of the Scheme on a consistent and shareholder is a shareholder of reliable basis and therefore accounts USM Holdings, a parent company At 31 May 2017 251 5,343 5,594 for the Scheme as if it were a defined of USM Services Limited. contribution scheme. The contingent appearance fees and pension provision are expected to be utilised within 5 and 6 years respectively. Contributions are also paid into 23 CAPITAL COMMITMENTS individuals’ private pension schemes. There are no amounts provided for deferred tax at 31 May 2017 or 31 May 2016. There were no capital commitments at Total contributions across all schemes 31 May 2017 or 31 May 2016 in the during the year amounted to £470,000 company or Group. 18 SHARE CAPITAL AND RESERVES (2016: £533,000).

The Group and Company’s Share Capital 21 POST BALANCE SHEET EVENTS 2017 2016 Since 31 May 2017, the Club has entered into transfer agreements for confirmed £’000 £’000 contracted net transfer fees payable of £60,639,000. Allotted, issued and fully paid The Club has entered into a three year 35,000 ordinary shares of £1 each 35 35 RCF facility, and renewed a bank overdraft facility for a 12-month The Group’s other reserves are as follows: period. Share premium reserve, which contains the premium arising on issue of equity shares, net of issue expenses. Since 31 May 2017, the Club’s major shareholder has provided further Profit and loss reserve, which represents cumulative profits or losses, net of dividends paid and other adjustments. interest free loans of £45,000,000 Other reserves represents an interest free loan of £105,000,000 provided by Bluesky Capital Limited, a company controlled by with no agreed repayment date, Mr Moshiri. The loan is to be repaid at a date to be agreed by Bluesky Capital Limited and Everton Football Club Company Limited. which were treated as equity. In accordance with FRS 102.22 the loan has therefore been classified as equity. Loan arrangement fees of £525,000 have been deducted from equity in accordance with FRS 102.22.9.

70 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 71 Notes to the Accounts for the year ended 31 May 2017 (Continued)

24 FINANCIAL INSTRUMENTS

The carrying values of the Group’s and company’s financial assets and liabilities are summarised by category below: The Group’s income, expense, gains and losses in respect of financial instruments are summarised below.

Group Company Group

2017 2016 2017 2016 2017 2016

£'000 £'000 £'000 £'000 £'000 £'000

Financial assets Income and expense

Measured at amortised cost: Total interest income for financial assets at amortised cost 1,801 109

Trade debtors 18,728 1,928 18,729 1,928 Total interest expense for financial liabilities at amortised cost (3,818) (1,239)

Measured at undiscounted amounts receivable: Fair value gains and (losses)

Trade debtors and other debtors 36,735 16,734 35,438 14,488 On derivative financial instruments 218 1,245 55,463 18,662 54,167 16,416 25 DERIVATIVE FINANCIAL INSTRUMENTS

Group Company Group and Company

2017 2016 2017 2016 2017 2016

£'000 £'000 £'000 £'000 £'000 £'000

Financial liabilities Current liabilities

Measured at fair value: Forward foreign currency contracts - 218 Derivative financial instruments - 218 - 218 Forward foreign currency contracts are valued using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts. Measured at amortised cost

Trade creditors 13,964 2,499 13,964 2,499

Obligator under finance leases 20 54 20 54

Measured at undiscounted amount payable

Bank loans and overdrafts - 57,520 - 39,793

Trade and other creditors 86,821 81,495 76,583 69,660

Amounts owed to subsidiaries - - 4,772 20,256

100,805 141,786 95,339 132,480

72 EVERTON FOOTBALL CLUB 2017 ANNUAL REPORT & ACCOUNTS 73 Everton Football Club Limited | Goodison Park, Goodison Road, Liverpool, Merseyside, L4 4EL 0151 556 1878 | evertonfc.com