T6701-AELTC-G.Acc Cover 10 Yellow:T4624-AELTC-G.Acc Cover 17/11/10 11:13 Page 2 THEALLENGLANDLAWNTENNIS GROUNDPLC Annual Report & Financial Statements for the year ended 31st July 2010 T6701-AELTC-G.Acc 10 Yellow:T4624-AELTC-G.Acc 18/11/10 13:22 Page 1 The All England Lawn Tennis Ground plc and subsidiary undertakings Contents Officers and Professional Advisers Officers and Professional Advisers ................1 Directors .......................................................... Report of the Directors ...........................3 - 6 J A H Curry CBE FCA (Chairman) Statement of Directors’ Responsibilities ........6 P W Bretherton Independent Auditors’ Report ......................7 J S Dunningham OBE D P Howorth FCA Consolidated Profit and Loss Account ..........8 T D Phillips CBE Consolidated Balance Sheet .........................9 S G Smith OBE FRICS Company Balance Sheet.............................10 Secretary .......................................................... Consolidated Cash Flow Statement............11 R G Atkinson FCMA Notes to the Financial Statements.......12 - 20 Auditors ........................................................... Deloitte LLP Chartered Accountants Hill House 1 Little New Street London EC4A 3TR Solicitors .......................................................... CMS Cameron McKenna Mitre House 160 Aldersgate Street London EC1A 4DD Bankers ............................................................ HSBC Bank plc West End Corporate Banking Centre 70 Pall Mall London SW1Y 5EZ Registrars and Transfer Office .. ..................... The All England Lawn Tennis Ground plc Church Road Wimbledon London SW19 5AE Registered Office ............................................ Deloitte LLP Hill House 1 Little New Street London EC4A 3TR 1 T6701-AELTC-G.Acc 10 Yellow:T4624-AELTC-G.Acc 18/11/10 13:22 Page 2 The Champions 2010 RAFAEL NADAL & SERENA WILLIAMS Bob Martin / AELTC T6701-AELTC-G.Acc 10 Yellow:T4624-AELTC-G.Acc 18/11/10 13:22 Page 3 The All England Lawn Tennis Ground plc and subsidiary undertakings Report of the Directors The directors submit their annual report Court and new Court 2 with effect from 1 on the affairs of the group together with August 2008. The facility fee of £13,425,000 the financial statements and auditors’ (2009 - £9,415,000) increased to provide a report for the year ended 31 July 2010. 2% return on capital expenditure on Centre Court and new Court 2 and on other capital expenditure since 1 August 2004. The facility fee 1. Principal Activities will increase in each of the next three financial years in line with inflation although, for the year ended 31 July 2011 only, it would be reduced if The group’s principal activities are the ownership The Championships were to suffer a fall in and development of grounds in Wimbledon, profitability. London SW19, which are made available for the playing of lawn tennis and croquet generally and Historically, the group has been able to fund the for the staging of the Wimbledon Championships development of its grounds from cash inflows (‘The Championships’) specifically. There have generated through its facility fee and the issue not been any significant changes in the group's of debentures. However, due to the magnitude principal activities in the year under review. of expenditure on redeveloping Centre Court, the The directors are not aware, at the date of this group arranged a £75,000,000 secured term loan report, of any likely major changes in the group’s with HSBC on 31 August 2007 which was drawn activities in the next year. As shown in the down in full during the year ended 31 July 2009. analysis of turnover on page 12, the majority As at 31 July 2010, the outstanding balance of the group's income is from the facility fee on this loan stood at £65,000,000 (2009: associated with holding the annual Wimbledon £75,000,000) with the first repayment having Championships. been made in accordance with the repayment schedule agreed with HSBC. 2. Business Review In May 2009, the group announced the successful The group continues its Long Term Plan to issue of 2,500 Centre Court debentures relating to develop the grounds in order to ensure that The the 2011-15 Championships. Proceeds amounting Championships are provided with high quality to £22,500,000 (net of VAT) were received in the facilities for players, spectators, media and staff. year ended 31 July 2010 (2009: £15,000,000) as Over the last 15 years, the group has invested a result of which the balance on the Debenture substantially in the Long Term Plan constructing Premium Reserve increased to £218,602,000 a new No.1 Court, the Broadcast Centre, the (2009: £196,102,000). Proceeds totalling a Millennium Building, the Museum Building and further £22,500,000 are due to be received by a new Court 2 and also comprehensively 31 January 2011. The proceeds will be used to redeveloping Centre Court including installing help repay the £75,000,000 loan in accordance a retractable roof in order to allow play to take with a repayment schedule running through to place in wet weather. 31 January 2015. During the financial year ended 31 July 2010, As at 31 July 2010, the net book value of the group continued the implementation of the group’s tangible fixed assets stood at the Long Term Plan with a two year project to £329,696,000 (2009: £330,864,000), redevelop the southwest part of the grounds cash balances stood at £12,952,000 including the demolition of old Court 2 and (2009: £3,940,000) and long term borrowings the start of construction of new Courts 3 and stood at £55,425,000 (2009: £85,025,000) 4 and a number of other buildings which will representing the outstanding long term balance meet the needs of the groundstaff and the on the loan facility of £50,000,000 and the building maintenance teams. This two year nominal value of the two most recent debenture project is on track to be ready in time for issues including the issue relating to the the 2011 Championships. It accounted for 2011-15 Championships. substantially all of the group’s fixed asset additions of £11,921,000 during the financial On 14 May 2009 the group, the Lawn Tennis year (2009: £41,877,000). Association (‘the LTA’) and The All England Lawn Tennis and Croquet Club (‘the Club’) agreed The depreciation charge of £10,618,000 (2009: arrangements for the continuation of their £10,930,000) reflects the commencement of relationship in respect of The Championships for depreciation on capital expenditure on Centre at least a further 40 years from 1 August 2013. 3 T6701-AELTC-G.Acc 10 Yellow:T4624-AELTC-G.Acc 18/11/10 13:22 Page 4 The All England Lawn Tennis Ground plc and subsidary undertakings Report of the Directors Under these arrangements, the Club will In any event, the magnitude of these risks has purchase the LTA’s shares in the group as at reduced significantly following the completion of 1 August 2013 subject to certain conditions the redevelopment of Centre Court and the being satisfied. In addition, the group will receive successful deployment of the new retractable a facility fee broadly protected against inflation roof during the 2009 and 2010 Championships. for 40 years based on the facility fee received for the year ending 31 July 2013. 5. Post-balance sheet events. 3. Group Results Since 1 August 2010, the group has refunded substantially all of the £4,600,000 nominal value The consolidated operating profit of £3,194,000 of the Centre Court debentures relating to the (2009: loss £2,185,000) was significantly better 2006-10 Championships. Under the terms of than the prior year due primarily to an increase the debenture prospectus, the group was in the facility fee associated with staging The contractually committed to refund the nominal Championships and to the absence of write value of a debenture on 2 August 2010 provided downs on fixed assets. The profit after taxation that the holder of the debenture had returned of £1,320,000 (2009: loss £5,601,000) was the relevant debenture certificate. also significantly better than the prior year due to the increase in the facility fee, the absence In September 2010, the company and the of write downs and to interest payable on Club signed a “venue use agreement” with bank borrowings falling to £624,000 (2009: the London Organising Committee of the £2,702,000). Olympic Games and Paralympic Games Limited (“LOCOG”) which sets out the terms and The directors do not recommend the payment conditions under which the company’s grounds of a dividend (2009: £nil) and, after transfers will be used by LOCOG to stage the tennis of £6,259,000 (2009: £6,259,000) from the event at the 2012 London Olympics. Championships Rebuilding Reserve, a retained profit of £7,579,000 (2009: £658,000) has been 6. Financial risk management transferred to the profit and loss account. objectives and policies. 4. Principal operational risks and The board recognises the group’s activities expose uncertainties. it to a number of financial risks including price risk, credit risk, liquidity and cash flow risk and The key operational risk faced by the group interest rate risk. The board recognizes these relates to completion of construction work risks and the importance of managing them. around the grounds. This risk involves the cost Accordingly, the group uses a variety of tools to of construction materials, the use of sub-contract monitor and control these risks although it does labour and the pressure to complete the not currently use derivative financial instruments. construction work and clear the site in time for each year's Wimbledon Championships. Price risk The group is exposed to price risk in the The group manages these risks by only working construction industry in the context of its Long with long standing and approved contractors, Term Plan to develop the grounds.