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ARSENAL HOLDINGS PLC - Final Results

Results for the year endedArsenal Holdings plc
31 May 2017

ARSENAL ANNOUNCE FULL YEAR RESULTS

The liabilities for player acquisitions are, in part, payable in instalments and the outstanding net amount due to vendor clubs was  £42.7 million (2016 – £42.5 million).

Commenting on the results for the year, the Club’s Chairman, Sir Chips Keswick, said:

“The Club’s thirteenth FA Cup win was some compensation for the disappointment of dropping out of the Premier League’s top four for the first time in 20 years. This summer we have again moved to strengthen the squad and we are optimistic about the season ahead.”

The Club’s Chief Executive Officer, , said:Ivan Gazidis

“Our ambition is clear - to win major trophies. In order to compete at the top, we need to strive to be better than our competitors in everything we do.  That is why during the past season we have continued to make substantial investments to drive the club forward. At the top of the pyramid, we have scaled up our investment in our First Team squad significantly in recent years, spending a net £203 million in transfer fees in the last three seasons. We have transformed our training ground and completed a total rebuild of our Academy. We are focused on ensuring that the structures, in terms of people, expertise and facilities, in place around the Manager and the players are the best that they can be. By getting that environment right, down to fine tuning the detail, we optimise our chances of achieving the results we want on the pitch.”

Arsenal Holdings plc

Chairman’s report

Overview

The triumph at Wembley in the Emirates FA Cup Final against Chelsea made for an upbeat conclusion to what had otherwise been a somewhat frustrating and disappointing season. The Wembley finale was another memorable day for us all as we lifted the trophy for the third time in four years and for a record thirteenth time in our illustrious history. I thought our support on the day was outstanding and helped us to a deserved win.Premier League

This was some compensation for the disappointment of dropping out of the Premier League’s top four for the first time in 20 years, so bringing to an end 19 consecutive seasons playing in the UEFA Champions’ League. This will always remain a remarkable run of consistency which we recognise will be increasingly difficult to replicate in this era of increased competition.

Following the season’s end we announced the reappointment of our manager for a further two years and this summer we have again moved to strengthen the squad. and have arrived from and and both have already made some good contributions. In addition, the emergence of young players such as and has provided further encouragement of progression from Academy to First Team squad. We are optimistic about the season ahead.Arsène WengerAlexandre LacazetteSead KolasinacReiss NelsonJoe WillockFranceGermany

As well as strengthening, one of our key objectives over the summer was to reduce the size of what had become a very large First Team squad. As a result a number of players have left us for new opportunities and in particular our best wishes go to , , and Gabriel. All of whom made important contributions to the Club during their time with us.Alex Oxlade-ChamberlainKieran GibbsWojciech Szczesny

Off the pitch, we have completed the latest phase of the transformation of our London Colney training facilities and our fully revamped Academy at Hale End was officially opened last spring.

This is also an important year for the Arsenal Women’s team. They enter their 30 year this season and continue to be at the forefront of the women’s game, the profile of which continues to rise.Super Leagueth

Financials

You will read in the following pages that our total revenues for the year ending were £424 million. This is the first time we have passed the £400 million mark. The main increases were £58 million more from television in the first year of the new broadcast deal supported by revenue from UEFA Champions’ League participation. There was an increase in Commercial revenues of £10.3 million, driven primarily by secondary partnerships. Overall pre-tax profit for the year was £44.6 million.30 May 2017Premier League

During this accounting period expenditure on transfers was at a record level for the Club of £114 million in terms of contractual cost and £102 million in terms of net cash outflow. This primarily relates to the 2016 summer signings of , Shkodran Mustafi and . At the same time our total wage cost reached a level very close to £200 million.Granit XhakaLucas Perez

 Transforming lives

Through and our Arsenal in the Community team we continue to make a significant impact on thousands of people’s lives at home and abroad. Last year we raised £1 million for through the Arsenal Legends’ match against and the money has been put to good effect providing pitches and facilities for young people in , , and .The Arsenal FoundationThe Arsenal FoundationMilan GlorieNorth LondonJordanIndonesiaSomalia

This is due in large part to significant financial contributions from our players, staff and fans for which we are hugely grateful.

Our Arsenal in the Community team continues to deliver an outstanding programme in Islington and other nearby boroughs. The work is linked directly to local areas of need and I am proud that we continue to maintain a significant focus on this important work.

Thank you

I would like to recognise the support from our commercial partners who make such important contributions both financially and in terms of helping build the Club’s name around the world.

In addition, my thanks go to for his support and guidance, and my fellow directors, our management team and entire staff for all their hard work and dedicationStan Kroenke

Finally, I would like to thank all of our fans for your continued support. We understand and acknowledge your passion and your desire for further success. We share with you high ambitions for the Club and our aim is very clear, to deliver that success.

Sir Chips Keswick Chairman

28 September 2017

Chief Executive’s ReportArsenal Holdings plc

Our journey as football fans will always feature a mix of strong emotions – that emotional connection is what makes our sport so compelling. 

Last season we felt the disappointment of dropping out of the top four in the first time in 20 seasons yet we added to our club’s great history by winning the Emirates FA Cup for the third time in four years. That run of league consistency in an era of fierce competition was unprecedented and the joy of lifting the FA Cup for a record 13 time (and the manner in which we won it) is undimmed and should bring us great pride.Premier League for theth

But we are Arsenal and expectations quite rightly run very high. Our overarching aim is to compete for and win trophies and, in particular, to win the . It is that goal which informs all the decisions we make across the Club, on and off the pitch.Premier League

In order to compete at the top, we need to strive to be better than our competitors in everything we do.  That is why during the past season we have continued to make substantial investments to drive the club forward in areas such as analytics, scouting, psychology and medical and fitness support as well as broad investments in our people capabilities throughout our Academy. In addition we have transformed our training ground at London Colney, completed a total rebuild of our youth facilities at our Academy at Hale End and invested in a new grass pitch for our youth and women’s teams at Boreham Wood. All our facilities are now state of the art.  In total we will have spent £40 million on these building projects over the last three years, all with the aim of creating the optimal environment for us to develop and grow our players.Desso

The development of our own players through our academy remains a priority for our football club.  and have progressed into the first team dressing room this season, joining the likes of , Hector Bellerin and who have recently made the same journey to become important members of our First Team squad. We have high hopes for other young players such as , and , all of whom impressed on the pre-season tour to , and .Ainsley Maitland-NilesJeff Reine-AdelaideAlex IwobiFrancis CoquelinReiss NelsonJoe WillockEddie NketiahSydneyShanghaiBeijing

At the top of the pyramid, we have also scaled up our investment in our First Team squad significantly in recent years, spending a net £203 million in transfer fees in the last three seasons (including a record £103 million last summer alone).  This is coupled with an increase in our wage bill from £166 million to £199 million in the same period. With few notable outward transfers during this period, our squad size had grown and we therefore had two major objectives for the summer transfer window.  To add to the squad only where we could improve the quality of the players available to our manager – quality over quantity – and to reduce our overall squad size. 

To that end, we secured and , our two primary targets for this transfer window. We also transferred or loaned a number of squad players to enhance the efficiency of our spending, to generate transfer revenue for reinvestment into the team and in some cases (for example, as in the case of ) to aid their development.  At the same time, we retained and Mesut Özil and promoted new young talent from our Academy pipeline into the first team.  These decisions, taken as a whole, have again strengthened our squad for this season’s competitions. We will continue this long term approach of progressively reinvesting all our available revenue in our playing resources as we look forward.Sead KolasinacAlexandre LacazetteEmi MartinezAlexis Sanchez

ArsenalWomen’s Football

This season, we are celebrating the 30 season of our women’s team and the launch of the FA Women’s . We are proud of our history and our leadership position in women’s football.  To mark the milestone and in keeping with our constant progression we have dropped the use of the term “Arsenal Ladies” which we felt was an outdated descriptor in the modern day. The women’s game continues to go from strength to strength and Arsenal remains at the forefront of that progress. thSuper League

Business update

The financial results for the year, which are covered in more detail in the Financial Review section, show our turnover finished in excess of £400 million for the first time. This was driven by a £58 million increase in television revenues as a result of the first year of the new broadcast deal. Commercial revenues also rose by £10 million primarily as a result of commercial partnerships.Premier League

Commercial Partnerships/Retail

We continue to be an attractive proposition for partners around the world. They are keen to engage directly with our huge global following and recognise the power the Arsenal name has to reach people.

Over the course of this year new partnerships have been agreed with Octopus Energy, MTN, and Cavallaro Napoli and we have renewed our deals with BNN Technology, MBNA and . The partnership with Octopus Energy assisted our transition to using 100 per cent renewably supplied electricity at .Universal PicturesGatoradeEmirates Stadium

Our retail operations are performing strongly and generated record sales of some £26 million. We have made significant investment in our online retail operations and this is coming through strongly in terms of financial performance and improved customer service. Visitor numbers for stadium tours continued to rise with 230,000 visitors from all round the world.

Our partnership with PUMA continues to thrive.  The new season’s kits have been particularly well received and the launch of the third kit with as the backdrop was one of our iconic images of the summer.Sydney Harbour Bridge

Arsenal Media Group

The development of our media platforms underpins the growth of our partnership and retail businesses. Our combined digital following of 60 million gives us one of the biggest followings in sport and we continue to drive reach and engagement across all channels. We now have 38 million Facebook followers, 11 million on Twitter and approaching 10 million on Instagram. Our YouTube, and () channels are also growing at pace.SnapchatSina WeiboChina

Ticketing

General admission prices have been held flat for the second successive year and we have announced significant reductions in prices for our home matches in the . We continue to offer 43,000 tickets across the season at £26 and up to 14,000 £10 tickets are available per season to 14-16 year olds within the Young Guns Enclosure. A further 26,000 tickets priced as low as £10 are available for each potential home fixture.UEFA Europa LeagueLeague Cup

Our support for away fans continues with the provision of subsidised travel when appropriate plus a cap of £26 on away match tickets, £4 below the £30 level mandated by the .Premier League

We continue to develop Ticket Exchange and Ticket Transfer. Last season more than 105,000 tickets were processed.

Demand on Club Level continues to be very strong, with our sell out for the 2017/18 season being completed in record time.

Theand Arsenal in the CommunityArsenal Foundation

We fully appreciate the impact we can have on people’s lives at home and around the world and the work of and Arsenal in the Community is a core part of our club.The Arsenal Foundation

Earlier this year the and Save the Children combined to open a football pitch in . Work is underway on similar football projects in and , as well as nearer to home in North London.  An important area of focus is with refugees and displaced people - a growing issue globally. Our projects bring some sense of normality to people whose lives have been turned upside down.Arsenal FoundationIndonesiaJordanSomalia

All this work is funded through the generosity of our players, manager, staff and supporters. 

As always, we have also given our support to a large number of local charitable causes during the year while Arsenal in the Community’s ‘Arsenal Hub’ continues to be a hive of activity, delivering programmes for more than 1,000 local participants every week.

Looking ahead

We are well placed to compete at the highest levels on and off the pitch, both in the short and the longer term. We have an outstanding squad with a good balance of experience and young home grown players. Off the pitch we continue to build our infrastructure and capabilities across all aspects of our operations. In particular we are focused on ensuring that the structures, in terms of people, expertise and facilities, in place around the Manager and the players are the best that they can be. By getting that environment right, down to fine tuning the detail, we optimise our chances of achieving the results we want on the pitch.

Our ambition is clear: to win major trophies and make Arsenal fans around the world proud of this great club. 

Thank you for your support.

I E Gazidis Chief Executive Officer

28 September 2017

Financial ReviewArsenal Holdings plc

Increased revenues in the first year of a new broadcast cycle have meant the Group’s turnover exceeded £400 million for the first time with a profit before tax of £44.6 million for the 2016/17 year, as compared to a profit of £2.9 million in the prior year.Premier League

The principal factors influencing this result were:

An increase of £58.0 million in broadcasting revenue as a consequence of the increased value of the contracts and higher distributions;Premier LeagueChampions League

An increase of £10.3 million in commercial and retail revenues mainly as a result of new secondary partnerships:

Further investment into our playing resources leading to a combined increase of £21.9 million in our wage bill and player amortisation costs;

Marginally improved profits from the sale of player registrations at £6.8 million (2016 - £2.0 million);

Low activity in the Group’s property development business, contributing only £0.2 million of pre-tax profits as against £2.0 million in the prior year; and

A small increase in net finance charges of £1.3 million as a result of adverse movements in the market value of our interest rate swap and lower interest rates on deposits.

Player Trading

Player trading consists of the profit from the sale of player registrations, the amortisation charge, including any impairment, on the cost of player registrations and fees charged for player loans.

The sale of Serge Gnabry was the main component of player disposal profits whilst the loans of , , and helped us to generate loan fees (being premiums over and above the recovery of contracted wages) of £6.9 million.Jack WilshereCallum ChambersWojciech SzczesnyJoel Campbell

The increased amortisation charge is a direct result of a record level of investment into the Club’s playing resources. Led by the acquisitions of , Shkodran Mustafi and the Club invested £113.9 million in acquiring new players and to a lesser extent extending the contracts of certain existing players, for example Hector Bellerin.Granit XhakaLucas Perez

The amortisation charge, being the mechanism by which the cost of player acquisitions is expensed to profit and loss over the term of a player’s contract, provides a direct indication of the level of the underlying investment in transfers. This is indicative of our own spending but also reflects the upward movement in market prices for player talent which has been driven both by revenues and the activities of certain cash rich clubs.Premier League

In cash terms the impact of this year’s acquisitions, together with instalments due on those prior year acquisitions payable on deferred terms, was partially offset by the collection of receivables on player sales (both current and previous) and by the credit terms agreed with the vendor clubs. For the third year running the net cash outflow on transfers established a new record level for the Club of £102.5 million (2016 - £54.2 million). This meant that our net cash payments on player transfers over the last three years have exceeded £200 million.

Cash position

The investment in transfers has resulted in a reduction in the Group’s total cash and bank balances which amounted to £180.1 million at the balance sheet date (2016 - £226.5million). These balances are inclusive of debt service reserve deposits of £35.9 million (2016 - £35.4 million). With a lower cash position, the Group’s overall net debt rose to £47.4 million (2016 - £6.1 million).

Proper consideration of the Group’s cash balance must include allowance for the payments for the aforementioned transfers, as follows:

Our year end bank balance includes advance receipts, of primary sponsorship and season ticket sales, which represent working capital for the 2017/18 season. These advance receipts amounted to £85.1 million (2016 - £100.6 million).

Football Segment

There were 26 home fixtures (19 , four , one FA Cup and two EFL Cup), one fewer than the prior year, with an average tickets sold per game of 59,885 (2016 – 59,834).  The mix of games (two EFL instead of three FA Cup) was unfavourable but this was balanced by shares of away round FA Cup gate money and involvement in the FA Cup semi-finals. Gate and match day revenue overall amounted to £100.0 million (2016 - £99.9 million).Barclays Premier LeagueUEFA Champions League

Broadcasting revenues increased to £198.6 million (2016 - £140.6 million) for the reasons referred to at the start of this commentary. Of the increase some £39 million was attributable to the increased contracts. Aside from the underlying contract increases we attracted 25 live game facility fees (2016 – 27) and the merit payment associated with fifth place. broadcasting revenues were also ahead as a result of our increased share of (30% share as runners up 2015/16) and a favourable weaker sterling exchange rate in converting the distributions which are made in Euro. Broadcasting contributed 47% (2016 – 40%) of our Football revenues for the period.Premier LeaguePremier LeagueChampions LeaguePremier LeagueUEFAMarket Pool

Combined commercial and retail revenues rose to £117.2 million (2015 – £106.9 million). We achieved strong growth in our secondary partnerships, in a competitive marketplace, rising by 34.5% (2016 - 39.6%) to £23.0 million (2016 - £17.1 million). Our retail business continued to perform strongly, with a new and enhanced website driving on-line sales, with revenues rising by £1.7 million or 7%. Finally, we include prize money from the Emirates FA Cup campaign in this category.

Wage costs for the year rose to £199.4 million (2016 - £195.4 million), which was mainly attributable to increases in the cost of our football playing and team support staff. The year to year upward change is depressed by the fact that there was no qualification trigger event in 2016/17 whereas the prior year included a qualification bonus for applicable First Team players. Champions LeagueChampions League

A number of players joined or received contract increases part way through 2016/17 and the reported wage cost is therefore not reflective of the full annualised cost of these players. As such there is an increasing trend to our underlying wage costs. In addition, it is usual at the start of a new broadcasting cycle that the wage bill takes a little time to be fully recalibrated against prevailing market rates which are informed by the increased broadcasting revenues available to clubs.Premier League

The Club was fully compliant with the Premier League’s wage cap / short term cost control regulations.

The ratio of total wage bill to football revenues was reduced to 47.2% (2016 – 55.7%). We disclose this ratio as a benchmark which is widely used in the analysis of football finance although our own monitoring in this area is based on total player spend, a combination of wages plus transfer expenditure and related costs, on a rolling three year basis against projections for the available funds generated over that period by the Group’s business activities.

Other operating costs, which include all the direct and indirect costs and overheads associated with the Club’s football operations and revenues, rose to £79.4 million (2016 -£70.2 million) and represented 18.8% of football revenues (2016 – 20.0%). Increases included costs associated with our commercial activities including the logistics for the tour matches, enhanced match security, the donation of profits from the Legends game to charity and a one-off charge of £1 million associated with the planned withdrawal from a former operational property site.California

Property Segment

There was minimal activity in the Group’s property business, with the only transaction of note being the sale of one apartment from our small portfolio of in-fill properties and rental income from two commercial lets. A new build house in the in-fill portfolio will shortly go on sale but the two remaining apartments are not yet available for sale.Highbury Square

Of the two remaining main development sites, we are at an advanced stage of negotiations for the sale of the site adjacent to tube station and completion of this sale should be included in our interim accounts for the first half of 2017/18. We continue to consider options for the final remaining site on .Holloway RoadHornsey Road

Profit after Tax

Overall there is a tax charge of £9.3 million (2016 – £1.2 million) on the pre-tax result for the period. This meant that the retained profit for the year was £35.3 million (2016 - £1.6 million).

The tax deductibility of the amortisation charge on player registrations is partially restricted as a result of previous roll-over reliefs claimed on player sales. This means that our taxable profit is higher than our accounts pre-tax profit and this resulted in a corporation tax charge for the year of £13.6 million (2016 - £5.6 million). During the year the Group paid corporation tax of £7.7 million being the balance of the 2015/16 charge and due instalments on account of the 2016/17 liability.UK

The corporation tax charge has been partially offset by a deferred tax credit of £4.3 million (2016 - credit of £4.4 million). This credit reflects the downward revaluation of the Group’s deferred tax liabilities in light of the lower future rates of corporation tax expected to apply when the underlying tax deferrals unwind.

Outlook

The adverse impact of competing in the , as compared to the , is forecast to be in the order of £20 million of which one component is the fact there is no players’ qualification bonus accounted for in the 2016/17 results. The full financial impact will depend on a number of factors including the actual progress made in the competition, as this impacts both performance and market pool distributions from . The Club has previously fully self-insured against a season’s participation in the within its cash reserves.UEFA Europa LeagueUEFA Champions LeagueChampions LeagueUEFAUEFA Europa League

The changes to the playing squad over the summer’s transfer window have been referred to elsewhere in the Annual Report and certain of the player sales give rise to profits which will be accounted for in our 2017/18 results. In addition, we expect to account for the profits on sale of the property site.Holloway Road

The external inflationary pressures on wage and transfer costs represent a concern to clubs, such as Arsenal, who are operating a self-funding model. However, it remains to be seen whether the levels of certain recent transactions are rational and indicative of a sustainable permanent upward shift in pricing.

Efficiency of spend will always be a key factor for us but the levels of cash outlay on transfers and the wage costs which we have achieved are strong evidence of our ability to compete financially in the top tier of clubs. The Club remains in a robust financial position at the start of the new season.

Chief Financial OfficerStuart Wisely

28 September 2017

Consolidated profit and loss account For the year endedArsenal Holdings plc

31 May 2017

Player trading consists primarily of loan fees receivable, the amortisation of the costs of acquiring player registrations, any impairment charges and profit on disposal of player registrations.  All trading resulted from continuing operations.

Consolidated balance sheet AtArsenal Holdings plc

31 May 2017

Consolidated cash flow statement For the year endedArsenal Holdings plc

31 May 2017

   

   

Non cash changes represent in respect of the amortisation of costs of raising finance, in respect of rolled up, unpaid debenture interest, in respect of the change in fair value of the Group’s A and B debentures and in respect of the change in fair value of the Group’s interest rate swaps.GBP527,000GBP398,000GBP2,000GBP2,019,000

Notes to preliminary results For the year endedArsenal Holdings plc

31 May 2017

The financial information set out above does not constitute the company's statutory accounts for the years ended or 2017, but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the company's annual general meeting. The auditor has reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.1.31 May 2016

The accounting policies applied by the Group are as set out in detail in the Annual Report for the year ended .31 May 2017

2. Segmental analysis

   

   

Operating profit from football before amortisation, depreciation and player trading amounted to (2016 – ); being segment operating profit (as above) of GB51.9 million (2016 – ), adding back depreciation (net of grant amortisation) of (2016 - ), amortisation of goodwill of (2016 – ) and operating loss from player trading of (2016 – ).GBP137.5 millionGBP82.2 millionGBP11.5 millionGBP15.0 millionGBP14.3 millionGBP0.4 millionGBP0.4 millionGBP70.2 millionGBP56.0 million

3. Turnover

4. Earnings per share

Earnings per share (basic and diluted) are based on the weighted average number of ordinary shares of the Company in issue being 62,217 shares (2016 - 62,217 shares).

5. Annual General Meeting

The annual general meeting will be held at , , N7, on Thursday at . The full statement of accounts and annual report will be posted to shareholders on Tuesday .Emirates StadiumLondon26 October 201711.30 am3 October 2017

--  Turnover from football increased to £422.8 million (2016 – £350.6
        million) with strong growth in broadcasting supported by commercial
        activity. First time Club’s football revenues have exceeded £400
        million.
    --  Additional £58.0 million from broadcasting as a consequence of the
        increased value of  rights (first year of the latest three
        year cycle) and  distributions.
    --  Overall Commercial revenue growth for the year of 10% led by an
        additional £5.9 million from secondary partnerships.
    --  A third successive year of increased cash investment in the squad is
        reflected in higher amortisation charges and higher wage costs.
    --  Wage costs rose to £199.4 million (2016 – £195.4 million) and
        represented 47.2% (2016 – 55.7%) of football revenues. Year on year
        comparison is distorted by there being no players’ 
        qualification bonus in the 2016/17 figures.
    --  Amortisation charge on player registrations rose to £77.1 million (2016
        – £59.2 million).
    --  Limited transfers out activity - the profit on sale of player
        registrations amounted to £6.8 million (2016 – £2.0 million).
    --  Quiet year for the Group’s property business with a contribution to
        pre-tax profits of £0.2 million (2016 – £2.0 million).
    --  Group profit before tax was £44.6 million (2016 – £2.9 million).
    --  Tax charge for the year of £9.3 million (2016 - £1.2 million) reflecting
        a balance of higher taxable profits and lower rates of  corporation
        tax.
    --  The Group has no short-term debt and its cash balances, excluding the
        accounts designated as debt service reserves, amounted to £144.3 million
        (2016 - £191.1 million). The reduction follows a Club record net cash
        outflow on player transfers of £102.5 million (2016 - £54.2 million).Premier LeagueUEFA Champions LeagueChampions LeagueUK
2017   2016

                                                                  £m     £m

Group turnover                                                 424.0  353.5

Operating profit before amortisation, depreciation and player  137.5   84.0
trading

Player trading (see table below)                              (63.4) (54.0)

Amortisation of goodwill and depreciation                     (15.4) (14.7)

Joint venture                                                    0.6    1.0

Net finance charges                                           (14.7) (13.4)

Profit before tax                                               44.6    2.9
2017   2016
                                               £m     £m

Profit on disposal of player registrations    6.8    2.0

Amortisation of player registrations       (77.1) (59.2)

Loan fees                                     6.9    3.2

Total Player Trading                       (63.4) (54.0)
2017   2016
                                        £m     £m

Bank balance excluding debt service  144.3  191.1

Net balance payable on transfers    (42.7) (42.5)

                                     101.6  148.6
2017   2016
                                                            £m     £m

Turnover                                                 422.8  350.6

Operating profit before depreciation and player trading  137.5   82.2

Player trading                                          (63.4) (54.0)

Profit before tax                                         44.4    0.9
2017 2016
                    £m   £m

Turnover           1.2  2.9

Operating profit   0.1  1.7

Profit before tax  0.2  2.0
2017                          2016

                   Operations                    Operations
                    excluding                     excluding
                       player   Player               player   Player
                      trading  trading     Total    trading  trading     Total
              Note    GBP’000  GBP’000   GBP’000    GBP’000  GBP’000   GBP’000

Turnover of           420,120    6,932   427,052    353,318    3,230   356,548
the Group
including its
share of
joint
ventures

Share of              (3,095)        -   (3,095)    (3,009)        -   (3,009)
turnover of
joint venture

                     -------- --------  --------   -------- --------  --------

Group            3    417,025    6,932   423,957    350,309    3,230   353,539
turnover

Operating           (294,845) (77,126) (371,971)  (281,093) (59,257) (340,350)
expenses

                     -------- --------  --------   -------- --------  --------

Operating             122,180 (70,194)    51,986     69,216 (56,027)    13,189
profit/(loss)

                          598        -       598      1,004        -     1,004
Share of
joint venture
operating
result

Profit on                   -    6,760     6,760          -    2,047     2,047
disposal of
player
registrations

                     -------- --------  --------   -------- --------  --------

Profit/(loss)         122,778 (63,434)    59,344     70,220 (53,980)    16,240
on ordinary
activities
before net
finance
charges

                     -------- --------             -------- --------

Net finance                             (14,737)                      (13,373)
charges

                                        --------                      --------

Profit before                           44,607                           2,867
taxation

Tax on profit                            (9,321)                       (1,218)

                                        --------                      --------

Profit for                                35,286                         1,649
the financial
year

                                        --------                      --------

Earnings per
share

Basic and        4                       £567.14                        £26.50
diluted

                                        --------                      --------
2017         2016
                                                           GBP’000     GBP’000

Fixed assets

Goodwill                                                       250         666

Tangible assets                                            430,973     421,059

Intangible assets                                          182,029     146,005

Investments                                                  5,444       4,977

                                                        ----------  ----------

                                                           618,696     572,707

Current assets

Stock - development properties                              12,300      11,148

Stock - retail merchandise                                   7,357       4,834

Debtors - due within one year                               63,696      57,961

- due after one year                                         2,175       4,404

Cash at bank and in hand                                   180,116     226,459

                                                        ----------  ----------

                                                           265,644     304,806

Creditors: amounts falling due within one year           (213,807)   (239,945)

                                                        ----------  ----------

Net current assets                                          51,837      64,861

                                                        ----------  ----------

Total assets less current liabilities                      670,533     637,568

Creditors: amounts falling due after more than one year  (264,162)   (265,460)

Provisions for liabilities                                (43,003)    (44,047)

                                                        ----------  ----------

Net assets                                                 363,368     328,061

                                                        ----------  ----------

Capital and reserves

Called up share capital                                         62          62

Share premium account                                     29,997        29,997

Merger reserve                                              26,699      26,699

Profit and loss account                                    306,610     271,303

                                                        ----------  ----------

Shareholders’ funds                                        363,368     328,061

                                                        ----------  ----------
2017        2016
                                                     GBP’000     GBP’000

Net cash inflow from operating activities            109,045      93,841

Taxation paid                                        (7,762)     (8,331)

Cash flow from investing activities

Interest received                                        475         746

Proceeds from sale of fixed assets                        24         748

Purchase of fixed assets                            (25,264)    (14,232)

Player registrations                               (102,524)    (54,190)

                                                  ----------  ----------

Net cash flow from investing activities            (127,289)    (66,928)

                                                  ----------  ----------

Cash flow from financing activities

Interest paid                                       (12,253)    (12,622)

Repayment of debt                                    (8,084)     (7,668)

                                                  ----------  ----------

Net cash flow from financing activities             (20,337)    (20,290)

                                                  ----------  ----------

Decrease in cash and cash equivalents in the year   (46,343)     (1,708)

Cash and cash equivalents at start of year           226,459     228,167

                                                  ----------  ----------

Cash and cash equivalents at end of year             180,116     226,459

                                                  ----------  ----------
Reconciliation of operating profit to net cash inflow       2017        2016
from operating activities
                                                         GBP’000     GBP’000

Operating profit                                          51,986      13,189

Amortisation of player registrations                      77,126      59,257

Impairment of player registrations                             -           -

Amortisation of goodwill                                     416         416

Profit on disposal of tangible fixed assets                 (16)        (72)

Depreciation (net of grant amortisation)                  14,972      14,258

                                                      ----------  ----------

Operating cash flow before working capital               144,484      87,048

Increase in stock                                        (3,675)     (1,711)

(Increase)/decrease in debtors                           (5,036)       9,707

Decrease in creditors                                   (26,728)     (1,203)

                                                      ----------  ----------

Net cash inflow from operating activities                109,045      93,841

                                                      ----------  ----------
At 1 June 2016  Non cash changes  Cash flows  At 31 May 2017
Analysis of changes        GBP’000
in net debt                                  GBP’000     GBP’000         GBP’000

Cash at bank and in        117,622                 -    (13,939)         103,683
hand

Cash equivalents           108,837                 -    (32,404)          76,433

                        ----------        ----------  ----------      ----------

                           226,459                 -    (46,343)         180,116

Debt due within one        (7,557)           (8,545)       8,084         (8,018)
year (bonds)

Debt due after more      (186,441)             8,018           -       (178,423)
than one year
(bonds)

Derivative                (24,411)           (2,019)           -        (26,430)
financial
instruments

Debt due after more       (14,197)             (400)           -        (14,597)
than one year
(debentures)

                        ----------        ----------  ----------      ----------

Net debt                   (6,147)           (2,946)    (38,259)        (47,352)

                        ----------        ----------  ----------      ----------
Class of business:-                               Football

                                                 2017        2016
                                              GBP’000     GBP’000

                                              422,799     350,623
Turnover

                                           ----------  ----------

Segment operating profit                       51,903      11,537

Share of operating profit of joint venture        598       1,004

Profit on disposal of player registrations      6,760       2,047

Net finance charges                          (14,859)    (13,705)

                                           ----------  ----------

Profit before taxation                         44,402         883

                                           ----------  ----------

Segment net assets                            309,674     274,572

                                           ----------  ----------
Class of business:-             Property
                              development

                              2017         2016
                            GBP’000     GBP’000

                              1,158       2,916
Turnover

                         ----------  ----------

Segment operating profit         83       1,652

Net finance charges             122         332

                         ----------  ----------

Profit before taxation          205       1,984

                         ----------  ----------

Segment net assets           53,694      53,489

                         ----------  ----------
Class of business:-                                Group

                                                 2017        2016
                                              GBP’000     GBP’000

                                              423,957     353,539
Turnover

                                           ----------  ----------

Segment operating profit                       51,986      13,189

Share of operating profit of joint venture        598       1,004

Profit on disposal of player registrations      6,760       2,047

Net finance charges                          (14,737)    (13,373)

                                           ----------  ----------

Profit before taxation                         44,607       2,867

                                           ----------  ----------

Segment net assets                            363,368     328,061

                                           ----------  ----------
Turnover, all of which originates in the UK, comprises       2017        2016
the following:                                            GBP’000     GBP’000

Gate and other match day revenues                          99,996      99,907

Broadcasting                                              198,637     140,579

Retail and licensing                                       26,352      24,626

Commercial                                                 90,882      82,281

Property development                                        1,158       2,916

Player trading                                              6,932       3,230

                                                       ----------  ----------

                                                          423,957     353,539

                                                       ----------  ----------

Quick facts: AFC Energy PLC

Price: -

Market: AIM
Market Cap: -
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