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DJ Arsenal Holdings PLC Half-yearly Report

 
TIDMAFC 
 
Arsenal Holdings plc 
 
Results for the six months ended 30 November 2015 
 
ARSENAL ANNOUNCE HALF YEAR RESULTS 
 
  * Turnover from football increased to GBP158.0 million (2014 - GBP148.5 million) 
    with growth in UEFA Champions League broadcasting distributions and 
    commercial activity led mainly by partnerships. 
  * Stability in the playing squad meant profits on sale of player 
    registrations amounted to only GBP0.3 million which was significantly lower 
    than the prior period comparative (2014 - GBP26.7 million). 
  * Amortisation charge on player registrations further increased to GBP29.2 
    million (2014 - GBP25.6 million). 
  * The Group's property business recognised the final instalment of the 
    Queensland Road sales overage but otherwise activity was minimal with 
    profits amounting to GBP1.8 million (2014 - GBP0.4 million). 
  * The Group recorded an overall loss after tax of GBP3.4 million (2014 - profit 
    of GBP6.2 million). 
  * First period of reporting under FRS 102 and comparative figures restated. 
    Minimal impact on the profit reported for this half year. 
  * The Group has no short-term debt and its cash reserves, excluding the 
    balances designated as debt service reserves, amounted to GBP135.9 million 
    (2014 - GBP138.8 million). 
  * Overall result for the year expected to be fully compliant with all of the 
    requirements of both the Premier League and UEFA financial regulatory 
    regimes. 
  * Significant uplift of Premier League broadcasting revenues with effect from 
    the start of next financial year. 
 
Commenting on the results for the six months, the Club's Chairman, Sir Chips 
Keswick, said: 
 
"This has been an unpredictable Premier League season thus far. What is 
important is that we are in contention and I am sure we have the resources and 
ability within the squad to sustain a strong challenge. The end of season 
run-in is going to be an exciting one and I am confident we will be very much 
at the centre of the action. 
 
We continue to see robust growth around our commercial revenues and build our 
support globally through our marketing and media channels. 
 
The result for the period has been impacted by a reduction in transfer profits 
but this reflects the overall stability we have within the squad which, in my 
view, is a positive factor for the Club." 
 
CHAIRMAN'S STATEMENT 
 
The end of season run-in is going to be an exciting one and I am confident we 
will be very much at the centre of the action over the coming months. 
 
As we all know, this has been an unpredictable Premier League season thus far. 
What is important is that we are in contention and I am sure we have the 
resources and ability within the squad to sustain a strong challenge.  In 
addition, we continue our unbeaten run in the FA Cup, which now stretches back 
to February 2013, and, at the time of writing, are in the middle of a Champions 
League encounter with Barcelona. 
 
Turning to our interim financial results, you will see the Group reported an 
overall loss of GBP3.4 million for the half year (2014 - profit of GBP6.2 million). 
This is considered in more detail in the financial section of this report but 
in summary this figure is primarily driven by a drop of GBP26.4 million in 
profits from player sales, partially offset by increased broadcasting and 
commercial revenues. The reduction in transfer profits reflects the overall 
stability we have within the squad which, in my view, is a positive factor for 
the Club and under-rated in the modern game. 
 
We continue to see robust growth in our commercial revenues, with our number of 
partners around the world now numbering 33. Recent partnerships have been 
announced in Africa, China, Australia, the US and Europe, including companies 
such as DraftKings, Dashen Breweries, SportPesa and Destination New South 
Wales. We remain an attractive partner for brands to align with and we 
can expect further growth in this area as we move forwards. Strong progress is 
also being made within our retail business, where demand for merchandise 
continues to be very strong. We continue to maximise our efforts to build our 
support globally through our marketing and media channels; and in addition to 
this we have confirmed summer tours which will take the team to California and 
Australia over the next 18 months. 
 
Turning back to the football, we know we will have to find greater consistency 
to maintain our challenge. The recent acquisition of Mohamed Elneny from Basel 
added to our strength in depth and we are seeing a number of potentially 
important players returning from injury. This bodes well for the final months 
of the season. 
 
Substantial redevelopment works continue at our London Colney training centre 
and our Youth Academy at Hale End.  This involves significant investment which 
we view as central to supporting the Club's long term success. We need to 
ensure our first team squad have the best possible environment in which to 
develop whilst the Academy remains a critical part of our strategy to identify, 
recruit and develop the best young players for the future. With this in mind, 
it has been very rewarding to see Alex Iwobi emerge into the first team squad 
from the Academy this season. This follows last year's breakthroughs by Francis 
Coquelin and Hector Bellerin and is further evidence of the excellent work 
being done by all our Academy coaches and staff. As a result of the work at 
London Colney the Arsenal Ladies will also benefit from improvements in their 
training facilities. 
 
The Arsenal Foundation continues to play an important role raising funds and 
making grants to organisations here in Islington and further afield. Once again 
players, staff and supporters showed their generosity through our dedicated 
match-day in December, raising some GBP250,250. We are hugely grateful for 
everyone's contribution. It allows us to make a difference to many people's 
lives in special ways and remains an important part of where we stand as a 
football club at the heart of our community. 
 
Financial Review 
 
The financial results for the six months ended 30 November 2015 show further 
growth in the Group's football revenues. 
 
The total turnover from football was GBP158.1 million compared with GBP148.5 
million for the same period last year.  The increase was mainly attributable to 
higher Champions League distributions in the first year of a new three year 
UEFA revenue cycle and commercial growth, mainly from our partnerships 
portfolio. 
 
There were two less home games compared to the prior year (one Champions League 
and one Capital One Cup) and this meant match day revenue was lower at GBP41.2 
million (2014 - GBP42.9 million).  Match day revenue remains weighted to the 
second half of the financial year and at 30 November we had played 9 (2014 - 
11) of the 26 home fixtures we are so far certain of playing for the full 
season. 
 
Our football operating costs were slightly decreased at GBP123.9 million as 
compared to GBP125.8 million this time last year.  As mentioned in the last 
Annual Report, the players' bonus relating to qualification for this season's 
Champions League group stage was earned as a result of last season's third 
place finish and accordingly accounted for in the 2014/15 results. 
Consequently, there is no qualification bonus in the wage costs for the first 
half of 2015/16.  This has been offset by increases in the underlying wage bill 
arising from certain contract extensions within the squad. 
 
The impact of these changes is that operating profits from football have 
increased by some GBP10.6 million to GBP33.0 million (2014 - GBP22.4 million). 
 
There was limited activity in the Group's property business, with the only 
transaction of note being recognition of the final instalment of the Queensland 
Road overage payment consequent to the developer's sale of the remaining 
units.  The operating profit from property was GBP1.6 million (2014 - GBP0.1 
million). 
 
                                    2015                      2014 
                                                          (as restated) 
 
                                     GBPm                        GBPm 
 
Turnover 
 
Football                            158.1                     148.5 
 
Property development                 2.1                       0.3 
 
Total turnover                      160.2                     148.8 
 
Operating profits* 
 
Football*                           33.0                      22.4 
 
Property development                 1.6                       0.1 
 
Total operating profit*             34.6                      22.5 
 
Player trading                     (27.5)                      1.4 
 
Depreciation and                    (7.2)                     (6.5) 
amortisation of goodwill 
 
Joint venture                        0.5                       0.5 
 
Net finance charges                 (6.6)                    (11.7) 
 
(Loss)/profit before tax            (6.2)                      6.2 
 
 
*= operating profits before depreciation and player trading costs 
 
The most significant year to year change is in the figures for player trading 
(the profits on sale or loan of players less the amortisation charge on the 
cost of player registrations held).  The significant investment in the squad in 
recent years means that the amortisation component of player trading has 
further increased to GBP29.2 million (2014 - GBP25.6 million).  However, profits on 
sale of players were significantly reduced at just GBP0.3 million in contrast to 
GBP26.7 million for the comparative period.  There were no major sales in the 
period as the Club retained all of its key players going into the current 
campaign. 
 
This is the first reporting period where our results have been compiled under 
the newly introduced Financial Reporting Standard 102 (FRS 102).  The impact on 
the current period is relatively minor - pre-tax losses would have been some GBP 
0.2 million higher under the previous UK accounting rules. 
 

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The most significant change on adoption of FRS 102 is that the interest rate 
swap, used to fix the interest rate on our floating rate stadium finance bonds, 
has to be included on the balance sheet at fair value (market value) with 
changes in fair value reported in the profit and loss of each period.  As is 
normal on adoption of a new set of accounting rules, the comparative numbers 
have been restated in order to maintain comparability. 
 
For the swap there was a significant increase in negative fair value last year 
as the financial markets anticipated that UK interest rates would remain lower 
and for longer than previously expected.  As a consequence, net finance costs 
appear reduced against the restated comparative period at GBP6.6 million (2014 - 
GBP11.7 million).  The volatility introduced by fair value accounting for the 
swap is not particularly helpful in understanding our results.  The fair value 
represents, in our case, the potential cost at the balance sheet date of 
settling the swap, however, in reality, we continue to pay and account for the 
underlying stadium bonds at the same fixed interest rate as last year.  If the 
stadium debt runs to its full maturity, this will continue to be the case.  The 
value of the swap will vary with market rates; however, at maturity, its fair 
value will be zero such that all the negative fair value of GBP24.0 million 
accounted for at this half year end will have reversed with no cash flow 
impact. 
 
Despite the increased revenues and operating profit from football, the change 
in the player trading result and, in particular, the lack of transfer profits 
means that the overall outcome for this half year is a loss before tax of GBP6.2 
million (2014 - profit of GBP6.2 million). 
 
There is a tax credit against this loss.  This is mainly as a result of the 
UK's lower future rates of corporation tax which mean that the Group's deferred 
tax balances have been revalued to the lower tax rates expected to apply when 
the underlying liabilities fall due to be taxed. 
 
The Group has maintained a strong cash position with balances as at 30 November 
2015 of GBP159.4 million (2014 - GBP161.5 million), inclusive of debt service 
reserves, which are not available for football purposes, of GBP23.5 million (2014 
- GBP22.8 million). The cash balance is some GBP68.7 million lower than the 31 May 
2015 figure. This reflects net cash outflows for the period on player 
transfers, of GBP39.4 million, and capital expenditure, of GBP10.5 million. 
 
We also paid corporation tax of GBP4.8 million being the balance of the tax bill 
on our 2014/15 profits. The contribution that football makes to the economy as 
a whole is sometimes overlooked and it is worth noting that during the first 
half of the financial year the Group paid across to the Exchequer GBP77.6 million 
of taxation being corporation tax, PAYE, national insurance and VAT. 
 
The cash outflow on transfers reflects mainly the settlement of instalments due 
on past transfers and means that the net outstanding liability on transfers has 
reduced from GBP65.6 million at 31 May 2015 to GBP45.4 million at 30 November 2015. 
The capital expenditure for the period is comparatively high and reflects the 
important development projects underway at the London Colney and Hale End 
training grounds, as well as enhancements at the Emirates, such as the new LED 
floodlights. 
 
The Group enters into a number of transactions, relating mainly to its 
participation in European competition (UEFA Champions League distributions are 
paid in EUR) and player transfers, which create exposure to movements or 
volatility in foreign exchange, including EUR. The Group monitors this foreign 
exchange exposure on a continuous basis and will usually hedge any significant 
exposure in its currency receivables and payables. 
 
Summary 
 
The after tax result for the period is a loss of GBP3.4 million (2014 - profit of 
GBP6.2 million). 
 
As always, the actual outcome for the second half will be strongly influenced 
by the extent of progress in the knock-out competitions and final Premier 
League position. We fully expect the overall result for the year to be 
compliant with all of the requirements of both the Premier League and UEFA 
financial regulatory regimes. 
 
Looking ahead to next season we have already confirmed that there will be no 
general increase in ticket prices. Significantly 2016/17 will be the first year 
of the new Premier League broadcasting deals but the increased revenues will 
also very likely bring with them inflationary pressure in terms of both the 
wage bill and the transfer market. 
 
In closing I should thank everyone for their support so far this season. The 
support at every game, home and away, has been top class. The closing chapters 
of the season will surely be exciting - let's keep backing the team and enjoy 
them! 
 
Sir Chips Keswick 
 
Chairman 
 
26 February 2016 
 
 
 
Arsenal Holdings Plc 
 
Consolidated profit and loss account 
 
For the six months ended 30 November 2015 
 
                                                                          Six months 
 
                                                                               to 30   Year ended 
 
                                                                            November       31 May 
 
                                      Six months to 30 November 2015            2014         2015 
                                                                          (restated)   (restated) 
 
                                                 Unaudited                 Unaudited      Audited 
 
                                      Operations 
 
                                       excluding 
 
                                          player    Player 
 
                                         trading   trading       Total       Total        Total 
 
                                Notes      GBP'000     GBP'000       GBP'000       GBP'000        GBP'000 
 
Turnover of the Group including          160,175     1,452     161,627     150,217      347,303 
its share of joint ventures 
 
Share of turnover of joint               (1,454)         -     (1,454)     (1,449)      (2,779) 
ventures 
 
                                        ________  ________     _______    ________     ________ 
 
Group turnover                     5     158,721     1,452     160,173     148,768      344,524 
 
Operating expenses 
 
- other                                (131,300)         -   (131,300)   (132,474)    (281,446) 
 
 - amortisation of player                      -  (29,231)    (29,231)    (25,560)     (55,365) 
registrations 
 
Total operating expenses               (131,300)  (29,231)   (160,531)   (158,034)    (336,811) 
 
                                        ________  ________     _______    ________     ________ 
 
Operating profit/(loss)                   27,421  (27,779)       (358)     (9,266)        7,713 
 
Share of operating profit of                 451         -         451         470          762 
joint venture 
 
Profit on disposal of player                   -       309         309      26,740       28,944 
registrations 
 
                                        ________  ________     _______    ________     ________ 
 
Profit/(loss) on ordinary                 27,872  (27,470)         402      17,944       37,419 
activities before net finance 
charges 
 
                                        ________  ________ 
 
Net finance charges                                            (6,565)    (11,725)     (19,227) 
 
                                                              ________    ________     ________ 
 
(Loss)/profit on ordinary 
activities 
 
before taxation                                                (6,163)       6,219       18,192 
 
Taxation                                                         2,770         (7)      (3,376) 
 
                                                              ________    ________     ________ 
 
(Loss)/profit after taxation 
retained for 
 
the financial period                                           (3,393)       6,212       14,816 
 
                                                              ________    ________     ________ 
 
Earnings per share                 6                          (GBP54.53)      GBP99.84      GBP238.13 
 
                                                             ________    ________     ________ 
 
 
All trading resulted from continuing operations. 
 
The accompanying notes are an integral part of these statements. 
 
Arsenal Holdings PLC 
 
Consolidated Statement of Comprehensive Income 
 
For the six months ended 30 November 2015 
 
                                                  Six months to 30 November Year ended 
                                                                                 31 May 
 
                                                          2015         2014        2015 
 
                                                     Unaudited    Unaudited     Audited 
                                                                 (restated)  (restated) 
 
                                                         GBP'000        GBP'000       GBP'000 
 
(Loss)/profit for the period                           (3,393)        6,212      14,816 
 
Gains / (losses) on cash flow hedges                       612        (384)     (1,000) 
 
Exchange differences                                         2            6           7 
 
                                                       _______      _______     _______ 
 
                                                       (2,779)        5,834      13,823 
 
                                                       _______      _______     _______ 
 
Arsenal Holdings Plc 
 
Consolidated balance sheet 
 
At 30 November 2015 
 
                                          Notes               30 November      31 May 
 
                                                         2015        2014        2015 
 
                                                    Unaudited   Unaudited     Audited 

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                                                               (restated)  (restated) 
 
                                                        GBP'000       GBP'000       GBP'000 
 
Fixed assets 
 
Goodwill                                                  874       1,285       1,082 
 
Tangible assets                                       421,808     419,931     419,180 
 
Intangible assets                            7        160,792     181,269     171,658 
 
Investment in joint venture                             4,535       3,943       4,174 
 
                                                     ________    ________    ________ 
 
                                                      588,009     606,428     596,094 
 
                                                     ________    ________    ________ 
 
Current assets 
 
Stock - Development properties                         11,003       9,843       9,741 
 
Stock - Retail merchandise                              4,206       4,169       4,530 
 
Debtors - Due within one year                          52,509      52,922      74,175 
 
Debtors - Due after one year                            5,657      10,624       6,658 
 
Cash and short-term deposits                 8        159,431     161,546     228,167 
 
                                                     ________    ________    ________ 
 
                                                      232,806     239,104     323,271 
 
Creditors:  Amounts falling due within              (205,917)   (198,622)   (275,332) 
one year 
 
                                                     ________    ________    ________ 
 
Net current assets                                     26,889      40,482      47,939 
 
                                                     ________    ________    ________ 
 
Total assets less current liabilities                 614,898     646,910     644,033 
 
Creditors:  Amounts falling due after               (248,456)   (278,069)   (269,174) 
more than one year 
 
Provisions for liabilities                           (43,910)    (51,519)    (49,548) 
 
                                                     ________    ________    ________ 
 
Net assets                                            322,532     317,322     325,311 
 
                                                     ________    ________    ________ 
 
Capital and reserves 
 
Called up share capital                                    62          62          62 
 
Share premium                                          29,997      29,997      29,997 
 
Merger reserve                                         26,699      26,699      26,699 
 
Hedging reserve                                         (481)       (476)     (1,092) 
 
Profit and loss account                               266,255     261,040     269,645 
 
                                                     ________    ________    ________ 
 
Shareholders' funds                                   322,532     317,322     325,311 
 
                                                    ________    ________    ________ 
 
 
The accompanying notes are an integral part of this consolidated balance sheet. 
 
Arsenal Holdings PLC 
 
Consolidated Statement of Changes in Equity 
 
For the six months ended 30 November 2015 
 
                                Share     Share    Merger   Hedging   Profit 
 
                              Capital   Premium   Reserve   Reserve And Loss      Total 
 
                                GBP'000     GBP'000     GBP'000     GBP'000    GBP'000      GBP'000 
 
At 31 May 2014                     62    29,997    26,699         -  253,860    310,618 
 
                                    -         -         -      (92)      962        870 
Transition to FRS 102 (see 
note 9) 
 
                             ________  ________  ________   _______ ________   ________ 
 
At 1 June 2014 restated            62    29,997    26,699      (92)  254,822    311,488 
 
Total comprehensive income          -         -         -   (1,000)   14,823     13,823 
for year ended 31 May 2015 
restated 
 
                             ________  ________  ________   _______ ________   ________ 
 
At 31 May 2015 restated            62    29,997    26,699   (1,092)  269,645    325,311 
 
Total comprehensive income          -         -         -       611  (3,390)    (2,779) 
for the six months ended 30 
November 2015 
 
                              _______   _______   _______   _______ ________   ________ 
 
As at 30 November 2015             62    29,997    26,699     (481)  266,255    322,532 
 
                             ________  ________  ________  ________ ________   ________ 
 
Arsenal Holdings Plc 
 
Consolidated cash flow statement 
 
For the six months ended 30 November 2015 
 
                                                  Six months to 30 November Year ended 
                                                                                 31 May 
 
                                                          2015         2014        2015 
 
                                                     Unaudited    Unaudited     Audited 
                                                                 (restated)  (restated) 
 
                                                         GBP'000        GBP'000       GBP'000 
 
Net cash (outflow)/inflow from operating               (1,052)        5,490     102,395 
activities 
 
Taxation                                               (4,823)        (996)     (2,206) 
 
Cash flow from investing activities 
 
Interest received                                          401          540         863 
 
Proceeds from sale of fixed assets                         681           23          47 
 
Purchase of fixed assets                              (10,479)      (6,890)    (14,302) 
 
Player registrations (see note below)                 (39,401)     (30,667)    (46,241) 
 
                                                      ________     ________    ________ 
 
Net cash flow from investing activities               (48,798)     (36,994)    (59,633) 
 
                                                      ________     ________    ________ 
 
Cash flows from financing activities 
 
Interest paid                                          (6,395)      (6,558)    (12,993) 
 
Repayment of debt                                      (7,668)      (7,274)     (7,274) 
 
Management of cash equivalents                          35,414       42,689       7,770 
 
                                                      ________     ________    ________ 
 
Net cash flow from financing activities                 21,351       28,857    (12,497) 
 
                                                      ________     ________    ________ 
 
Net (decrease)/increase in cash                       (33,322)      (3,643)      28,059 
 
Change in cash equivalents                            (35,414)     (42,689)     (7,770) 
 
                                                      ________     ________    ________ 
 
(Decrease)/increase in cash and cash equivalents      (68,736)     (46,332)      20,289 
 
                                                      ________     ________    ________ 
 
Note:  Gross cash flows - player registrations 
 
Payments for purchase of players                      (47,287)     (48,568)    (71,704) 
 
Receipts from sale of players                            7,886       17,901      25,463 
 
                                                      ________     ________    ________ 
 
                                                      (39,401)     (30,667)    (46,241) 
 
                                                      ________     ________    ________ 
 
Arsenal Holdings Plc 
 
Notes to the cash flow statement 
 
                                                  Six months to 30 November Year ended 
                                                                                 31 May 
 
                                                          2015         2014        2015 
 
                                                     Unaudited    Unaudited     Audited 
                                                                 (restated)  (restated) 
 
                                                         GBP'000        GBP'000       GBP'000 
 
a)  Reconciliation of operating result to net 
cash (outflow)/inflow from operating activities 
 
Operating (loss)/profit                                  (358)      (9,266)       7,713 
 
(Profit)/loss on disposal of tangible fixed                (7)          297         273 
assets 
 
Amortisation of goodwill                                   208          213         416 
 
Depreciation (net of grant amortisation)                 7,032        6,554      14,618 
 
Amortisation of player registrations                    29,231       25,560      54,430 
 
Impairment of player registrations                           -            -         935 
 
                                                      ________     ________    ________ 
 
Operating cash flow before working capital              36,106       23,358      78,385 
 
(Increase)/decrease in stock                             (938)          772         513 
 
Decrease/(increase) in debtors                          16,915       17,574     (4,983) 
 
(Decrease) / increase in creditors                    (53,135)     (36,214)      28,480 
 
                                                      ________     ________    ________ 
 
Net cash (outflow)/inflow from operations              (1,052)        5,490     102,395 
 
                                                     ________     ________    ________ 
 
 
b)  Analysis of changes in net debt 
 
                                     At 1 June                         At 30 November 
 
                                          2015    Non cash  Cash flows           2015 
                                    (restated)     changes 
 
                                         GBP'000       GBP'000       GBP'000          GBP'000 
 

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DJ Arsenal Holdings PLC Half-yearly Report -4-

Cash at bank and in hand               108,614           -    (33,332)         75,292 
 
Cash equivalents                       119,553           -    (35,414)         84,139 
 
                                       _______     _______     _______        _______ 
 
                                       228,167           -    (68,736)        159,431 
 
Debt due within one year (bonds)       (7,119)     (8,095)       7,668        (7,546) 
 
Debt due after more than one year    (193,997)       7,818           -      (186,179) 
(bonds) 
 
Derivative financial instruments      (23,736)       (215)           -       (23,951) 
 
Debt due after more than one year 
 
(debenture subscriptions)             (13,808)       (194)           -       (14,002) 
 
                                       _______     _______     _______        _______ 
 
Net debt                              (10,493)       (686)    (61,068)       (71,247) 
 
                                       _______     _______     _______        _______ 
 
Non cash changes represent GBP277,000 in respect of the amortisation of costs of 
raising finance, GBP194,000 in respect of rolled up, unpaid debenture interest 
and GBP215,000 in respect of the change in fair value of the Group's interest 
rate swaps. 
 
Arsenal Holdings Plc 
 
Notes to the interim accounts 
 
30 November 2015 
 
1   Basis of preparation of Group financial statements 
 
The Group financial statements consolidate the assets, liabilities and results 
of the company and its subsidiary undertakings made up to 30 November 2015. The 
accounts are prepared under the historical cost convention, modified to include 
certain items at fair value in accordance with Financial Reporting Standard 102 
(FRS102) issued by the Financial Reporting Council, effective from 1 January 
2015. 
 
The prior period financial statements have been restated for material 
adjustments on adoption of FRS102 in the current period.  For more information 
see note 9. 
 
These interim financial statements do not include all of the notes and 
disclosures required to comply with FRS102, as they have been prepared in 
accordance with the ISDX Growth Market Rules for Issuers. 
 
The Group has two classes of business - the principal activity of operating a 
professional football club and property development. 
 
The interim financial statements do not constitute statutory financial 
statements within the meaning of Section 435 of the Companies Act 2006. 
 
2   Going concern 
 
The Board has undertaken a full and thorough review of the Group's forecasts 
and associated risks and sensitivities.  The extent of this review reflects the 
current economic climate as well as the specific financial circumstances of the 
Group.  The status of the Group's financing arrangements is summarised in the 
Chairman's Statement.  The directors have a reasonable expectation that the 
Group has adequate resources to continue in operational existence for the 
foreseeable future and the financial statements continue to be prepared on the 
going concern basis. 
 
3   Significant accounting policies 
 
Income recognition 
 
Gate and other match day revenue is recognised over the period of the football 
season as games are played and events are staged. Sponsorship and similar 
commercial income is recognised over the duration of the respective contracts. 
The fixed element of broadcasting revenues is recognised over the duration of 
the football season whilst facility fees for live coverage or highlights are 
taken when earned at the point of broadcast. Merit awards are accounted for 
only when known at the end of the financial period. UEFA pool distributions 
relating to participation in the Champions League are spread over the matches 
played in the competition whilst distributions relating to match performance 
are taken when earned; these distributions are classified as broadcasting 
revenues.  Fees receivable in respect of the loan of players are included in 
turnover over the period of the loan.  Income from the sale of development 
properties is recognised on legal completion of the relevant sale contract. 
 
Player registrations 
 
The costs associated with acquiring players' registrations or extending their 
contracts, including agents' fees, are capitalised and amortised, in equal 
instalments, over the period of the respective players' contracts.  Where a 
contract life is renegotiated the unamortised costs, together with the new 
costs relating to the contract extension, are amortised over the term of the 
new contract.  Where the acquisition of a player registration involves a 
non-cash consideration, such as an exchange for another player registration, 
the transaction is accounted for using an estimate of market value for the 
non-cash consideration. Under the conditions of certain transfer agreements or 
contract renegotiations, further fees will be payable in the event of the 
players concerned making a certain number of First Team appearances or on the 
occurrence of certain other specified future events.  Liabilities in respect of 
these additional fees are accounted for, as provisions, when it becomes 
probable that the number of appearances will be achieved or the specified 
future events will occur.  The additional costs are capitalised and amortised 
as set out above. 
 
4   Segmental analysis 
 
Class of business                                               Football 
 
                                                  Six months to 30 November  Year ended 
                                                                                  1 May 
 
                                                          2015         2014        2015 
 
                                                     Unaudited    Unaudited     Audited 
                                                                 (restated)  (restated) 
 
                                                         GBP'000        GBP'000       GBP'000 
 
Turnover                                               158,041      148,498     329,337 
 
                                                      _______      _______     _______ 
 
(Loss)/profit on ordinary activities before            (7,914)        5,853       4,838 
taxation 
 
                                                      _______      _______     _______ 
 
Segment net assets                                     269,510      278,787     273,823 
 
                                                      _______      _______     _______ 
 
 
 
Class of business                                         Property development 
 
                                                  Six months to 30 November  Year ended 
                                                                                 31 May 
 
                                                          2015         2014        2015 
 
                                                     Unaudited    Unaudited     Audited 
 
                                                         GBP'000        GBP'000       GBP'000 
 
Turnover                                                 2,132          270      15,187 
 
                                                      _______      _______     _______ 
 
Profit on ordinary activities before taxation            1,751          366      13,355 
 
                                                      _______      _______     _______ 
 
Segment net assets                                      53,022       38,535      51,488 
 
                                                      _______      _______     _______ 
 
 
 
Class of business                                                 Group 
 
                                                  Six months to 30 November  Year ended 
                                                                                 31 May 
 
                                                          2015         2014        2015 
 
                                                     Unaudited    Unaudited     Audited 
                                                                 (restated)  (restated) 
 
                                                         GBP'000        GBP'000       GBP'000 
 
Turnover                                               160,173      148,768     344,524 
 
                                                       _______      _______     _______ 
 
(Loss)/profit on ordinary activities before            (6,163)        6,219      18,192 
taxation 
 
                                                       _______      _______     _______ 
 
Net assets                                             322,532      317,322     325,311 
 
                                                      _______      _______     _______ 
 
5   Turnover 
 
                                                  Six months to 30 November  Year ended 
                                                                                 31 May 
 
                                                          2015         2014        2015 
 
                                                     Unaudited    Unaudited     Audited 
 
                                                         GBP'000        GBP'000       GBP'000 
 
Gate and other match day revenues                       41,207       42,939     100,401 
 
Player trading                                           1,452          258         805 
 
Broadcasting                                            60,293       52,992     124,844 
 
Retail and licensing income                             14,164       14,212      24,685 
 
Commercial                                              40,925       38,097      78,602 
 
Property development                                     2,132          270      15,187 
 
                                                       _______      _______     _______ 
 
                                                       160,173      148,768     344,524 
 
                                                      _______      _______     _______ 
 
6   Earnings per share 
 

(MORE TO FOLLOW) Dow Jones Newswires

February 26, 2016 09:00 ET (14:00 GMT)

DJ Arsenal Holdings PLC Half-yearly Report -5-

The calculation of earnings per share is based on the profit for the period 
divided by the weighted average number of ordinary shares in issue being 62,217 
(period to 30 November 2014 - 62,217 shares and year to 31 May 2015 - 62,217 
shares). 
 
7   Intangible fixed assets 
 
                                                                              GBP'000 
 
Cost of player registrations 
 
At 1 June 2015                                                              328,522 
 
Additions                                                                    20,173 
 
Disposals                                                                  (19,897) 
 
                                                                            _______ 
 
At 30 November 2015                                                         328,798 
 
                                                                            _______ 
 
Amortisation of player registrations 
 
At 1 June 2015                                                              156,864 
 
Charge for the period                                                        29,231 
 
Disposals                                                                  (18,089) 
 
                                                                            _______ 
 
At 30 November 2015                                                         168,006 
 
                                                                            _______ 
 
Net book amount 
 
At 30 November 2015                                                         160,792 
 
                                                                           _______ 
 
At 31 May 2015                                                              171,658 
 
                                                                           _______ 
 
 
8   Cash at bank and in hand 
 
                                                        30 November            31 May 
 
                                                         2015        2014        2015 
 
                                                    Unaudited   Unaudited     Audited 
 
                                                        GBP'000       GBP'000       GBP'000 
 
Debt service reserve accounts                          23,498      22,781      35,024 
 
Other accounts                                        135,933     138,765     193,143 
 
                                                      _______     _______     _______ 
 
                                                      159,431     161,546     228,167 
 
                                                     _______     _______     _______ 
 
 
The Group is required under the terms of its fixed and floating rate bonds to 
maintain specified amounts on bank deposit as security against future payments 
of interest and principal.  Accordingly the use of these debt service reserve 
accounts is restricted to that purpose. 
 
The Group uses short-term bank treasury deposits (cash equivalents) as a means 
of maximising the interest earned on its cash balances. 
 
                                                        30 November            31 May 
 
                                                         2015        2014        2015 
 
                                                    Unaudited   Unaudited     Audited 
 
                                                        GBP'000       GBP'000       GBP'000 
 
Cash at bank and in hand                               75,292      76,912     108,614 
 
Cash equivalents                                       84,139      84,634     119,553 
 
                                                      _______     _______     _______ 
 
                                                      159,431     161,546     228,167 
 
                                                     _______     _______     _______ 
 
 
9   Explanation of transition to FRS 102 
 
This is the first reporting period that the Group has presented its financial 
statements under Financial Reporting Standard 102 (FRS 102) issued by the 
Financial Reporting Council.  The following disclosures are required in the 
year of transition.  The last financial statements under previous UK GAAP were 
for the year ended 31 May 2015 and the date of transition to FRS 102 was 
therefore 1 June 2014.  As a consequence of adopting FRS 102, a number of 
accounting policies have changed to comply with that standard.  The key 
accounting policy changes are noted below, all other accounting policies are 
consistent with those set out in the last set of audited annual financial 
statements. 
 
Financial assets and liabilities 
 
Basic financial instruments (including the stadium finance bonds and the C and 
D debentures) are measured at amortised cost, using the effective interest 
method.  The effective interest rate is the rate which exactly discounts the 
estimated future payments of receipts over the life of the instrument to its 
carrying amount at initial recognition, re-estimated periodically to reflect 
changes in the market rate of interest. 
 
Non basic financial instruments (including the A and B debentures) are 
recognised at fair value, and measured at the present value of the future 
payments, discounted at a market rate of interest.  Any periodic changes in 
fair value are recognised in the profit and loss.  These debentures were 
previously accounted for at their undiscounted historic cost. 
 
Derivative financial instruments (including forward foreign exchange contracts 
and the Group's interest rate swap) are recognised at fair value. The swap was 
previously accounted for at historic cost less amortisation over the term of 
the swap. 
 
Deferred tax 
 
Deferred tax is recognised in respect of all timing differences that may result 
in an obligation at the reporting date to pay more tax, or a right to pay less 
tax, at a future date.  The transition to FRS 102 has resulted in a requirement 
to recognise certain additional deferred tax assets and liabilities, in 
particular where the taxation of opening FRS 102 adjustments is subject to a 
ten year transitional rule for tax purposes. 
 
Holiday pay 
 
An accrual is made for the holiday pay entitlement of the Group's employees 
which has not been taken as holiday at the financial period end.  Prior to the 
introduction of FRS 102 no provision was made. 
 
                                                     Group          Group       Group 
 
                                                 At 1 June At 30 November   At 31 May 
 
                                                      2014           2014        2015 
 
Reconciliation of Equity                             GBP'000          GBP'000       GBP'000 
 
Capital and Reserves (as previously                310,618        320,685     330,669 
reported) 
 
Revaluation of Debentures                           14,400         14,400      14,399 
 
Revaluation of Interest Rate Swap                 (12,736)       (18,123)    (19,211) 
 
Movement in value of Forward Exchange 
contracts 
 
                                                      (92)          (476)     (1,092) 
 
Holiday Pay                                          (461)              -       (507) 
 
Tax                                                  (241)            836       1,053 
 
                                                __________     __________  __________ 
 
Capital and Reserves (as restated under FRS        311,488        317,322     325,311 
102) 
 
                                               __________     __________  __________ 
 
 
 
 
                                                                  Group       Group 
 
                                                                 6 mths  Year ended 
                                                                  ended 
 
                                                                   2014 31 May 2015 
 
Reconciliation of Profit                                          GBP'000       GBP'000 
 
Profit for the financial period (as previously reported)         10,062      20,044 
 
Revaluation of Debentures                                           (1)         (1) 
 
Revaluation of Interest Rate Swap                               (5,387)     (6,475) 
 
Holiday Pay                                                         461        (46) 
 
Tax                                                               1,077       1,294 
 
                                                             __________  __________ 
 
Profit for the financial period (as restated under FRS 102)       6,212      14,816 
 
                                                            __________  __________ 
 
 
10   Additional information 
 
These interim results have been reviewed by the Group's auditors, Deloitte LLP, 
who have issued a review report on the results. 
 
 
 
END 
 

(END) Dow Jones Newswires

February 26, 2016 09:00 ET (14:00 GMT)