Everton Football Club Company Limited Annual Report and Accounts 2011 Annual Report and Accounts 2011 Contents DIRECTORS AND ADVISORS 3 CHAIRMAN’S STATEMENT 4 FINANCIAL REVIEW 5 NIL SATIS NISI OPTIMUM 6 COMMERCIAL REVIEW 7 EVERTON IN THE COMMUNITY 8 DIRECTORS’ REPORT 9 INDEPENDENT AUDITOR’S REPORT 11 CONSOLIDATED PROFIT AND LOSS ACCOUNT 12 GROUP BALANCE SHEET 13 COMPANY BALANCE SHEET 14 CONSOLIDATED CASH FLOW STATEMENT 15 NOTES TO THE ACCOUNTS 16 FIRST TEAM RESULTS 2010/11 29 FINAL LEAGUE PLACINGS 2010/11 30 FIXTURES 2011/12 30 HONOURS LIST 32 2 Annual Report and Accounts 2011 Directors and Advisors Directors W Kenwright CBE Chairman J V Woods Deputy Chairman R I Earl Sir P D Carter CBE Chief Executive R Elstone Company Secretary M J Evans Registered Office Goodison Park Liverpool L4 4EL Auditor Deloitte LLP Chartered Accountants & Statutory Auditor Horton House Exchange Flags Liverpool L2 3PG Bankers Barclays Bank plc Liverpool North Group 337/339 Stanley Road Bootle Liverpool L20 3EB Registrars Capita IRG The Registry Northern House Woodsome Park Fenay Bridge Huddersfield West Yorkshire HD8 0GA Company Registration Number 36624 Directors and Advisors 3 Annual Report and Accounts 2011 Chairman’s Statement Probably like most of you I spent the summer wondering what might have been….if only we had gathered together those early points, and had the success that we had in the second half of the season. If only we had done better in the two Cups….when in particular the FA Cup was looking good! If only I had been able to help more…. “If only’s” are nearly always around in football…. Once again, try as I might, I was unable to accomplish the task which has dominated my life for these past few years – finding the man, or the institution, with the finances to move us forward. Hopefully the day will come soon when I will happily – even enthusiastically – hand over control of our beloved Club to a substantially wealthy individual or well-funded investment group. Until that day, it goes without saying that, as ever, we will do everything within our power to fully support the ambition and vision of David Moyes, a man with few peers in football. David is fully aware of precisely where we are in terms of available funds. He is appreciative of the fact that every penny we can find moves to his transfer kitty, and whilst he would obviously like more, he has a sound sense of business and accepts the parameters within which we must operate. Of course, we all wish to see those parameters pushed outwards and made less constrictive by way of a substantial injection of funds but, until then, we continually appraise all options open to us, though we cannot and will not do anything which might cause short or long term damage to our Club. That is both our way, and, many would argue, our greatest strength. As ever, the playing staff was subject to change last season. We welcomed to Merseyside Jermaine Beckford, Magaye Gueye and Apostolos Vellios and continued our policy of tying up long-term contracts for our I know I don’t have to tell most of you how proud I am to be Chairman of established first-teamers by agreeing new deals with Phil Jagielka, what I shall always consider to be the greatest Football Club in the World. Leon Osman, Tony Hibbert, Victor Anichebe, Jack Rodwell and Our Club. It isn’t always easy to be the man in my position. I have no magic Seamus Coleman. wand – but, until the day comes when I leave my seat in the directors box I will continue to work tirelessly for Everton, and its fans. I remain grateful to many people for their continued support – my fellow Board members, and in particular our CEO, Robert Elstone, his Executive This Football Club deserves nothing less. team and the Club’s staff – all of whom have brought professionalism and dedication to the invariably complex task of running a Premier League Bill Kenwright club on a daily basis. May I also place on record my thanks to the Club’s bankers, Barclays Bank plc, and to our various sponsors and partners – particularly Chang and Kitbag, both of whom proved themselves to be reliable and trustworthy friends during the course of what was another demanding year. Finally, I must pay two deserving tributes. Firstly to Everton in the Community, a charity which has been close to my heart for many years and which is now beginning to garner both the awards and the recognition that its work richly deserves. Under the stewardship of Dr Denise Barrett-Baxendale, our community team continues to make a meaningful contribution to the lives of many people across the north-west of England. They are simply the best at what they do, and I salute them. Secondly it was a personal high for me to see our Under 18 squad win the National Academy trophy at Fulham at the end of the season. A real testament to what everyone is trying to achieve at Finch Farm. My congratulations to all of our coaches and players. Chairman’s Statement 4 Annual Report and Accounts 2011 Financial Review Year Ended Year Ended 31st May 31st May 2011 2010 Turnover £82.0m £79.1m Wages as a percentage of turnover 71% 69% Wages as a percentage of turnover 67% 65% including outsourced catering and retail* Operating Loss £0.5m £0.5m (excluding player trading) Net Debt £44.9m £44.9m Net Cash Flow Spend £6.6m £3.5m on Player Transfers *The figures for wages as a percentage of turnover including outsourced catering and retail are calculated by including turnover and wage figures applicable to the club from the catering partner, Sodexo, and the retail When we incorporate the net annual interest charge of £4.1m partner, Kitbag. These figures have been provided to the club by Sodexo (2010: £4.5m), principally arising from the servicing of the securitised debt and Kitbag. They have not been audited as part of the audit of the Annual and the bank overdraft, as well as interest receivable, the accounts show a Report and Accounts of Everton Football Club Company Limited. pre tax loss of £5.4m (2010: £3.1m). Trading performance Balance Sheet and Funding The year ended 31st May 2011 has seen record turnover of £82.0m Net debt at year end, representing borrowings less cash on deposit, was (2010: £79.1m), representing an increase of 3.7% on the prior year unchanged at £44.9m (2010: £44.9m). However, £20.0m (2010: £21.1m) and reflecting the improved Premier League television rights deal and is not due for repayment for more than five years. Everton’s pre-season tour to Australia. As a result of the above trading including transfer activity, the balance Gate receipts totalled £17.5m. Premier League gate receipts increased sheet shows a net liability position of £35.2m (2010: £29.8m). However, it by £0.3m with an average attendance of 36,067 and domestic cup gate should be noted that the balance sheet contains £9.1m of deferred income receipts increased by £0.2m. The prior year gate receipts figure included in relation to advance season-ticket and lounge membership sales which £2.2m from participation in the UEFA Europa League. will be released to the profit and loss as games are played during the 2011/12 season hence will not require repayment. In addition, £20.0m of Turnover from broadcasting increased to £52.9m (2010: £50.2m) resulting borrowings are not repayable for more than five years. Furthermore it is from the first year of the new Premier League television rights deal, partly important to remember that the balance sheet attributes little value in offset by reduced UEFA Europa League broadcasting revenue. Domestic respect of home grown players such as Jack Rodwell, Ross Barkley, broadcast revenue reflects a seventh place finish in the Premier League Leon Osman, Tony Hibbert and Victor Anichebe. (2010: eighth place finish) and 13 live televised Premier League matches consistent with the prior year. In terms of cash flows, the cash inflow from operating activities was £1.9m (2010: £1.4m). After net payments for interest of £4.1m, net expenditure The increase in turnover has enabled continued investment in the playing on player transfers of £6.6m, net proceeds from the disposal and purchase squad and as highlighted in the Chairman’s Statement included new of tangible fixed assets of £8.8m, largely relating to the sale of Bellefield, contracts for Phil Jagielka, Leon Osman, Tony Hibbert, Victor Anichebe, and net cash outflows from financing of £3.9m, the decrease in cash for Jack Rodwell and Seamus Coleman in addition to the purchases of the year was £3.9m (2010: decrease of £1.2m). Jermaine Beckford, Apostolos Vellios and Magaye Gueye. The Board recognises there are risks which affect the Group and has The increased investment in the playing squad has also been reflected in sought to minimise those risks. Our cost-base, in common with other a 2% increase in wages as a percentage of turnover to 71% for 2011. football clubs, is relatively fixed in the short-term, hence unfavourable The Premier League average for wages as a percentage of turnover movements in revenue, including those arising from below budget on-pitch for the 2009/10 season was 68%. The club’s wages as a percentage of performance, can lead to significant variation in profits. It is the aim of the turnover including outsourced catering and retail was 67% for the Board to maximise the flexibility of the cost base to deal with unexpected 2010/11 season.