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DJ Arsenal Holdings PLC Final Results

 
TIDMAFC 
 
Arsenal Holdings plc                Results for the year ended 31 May 2016 
 
ARSENAL ANNOUNCE FULL YEAR RESULTS 
 
  * Group profit before tax was GBP2.9 million (2015 - GBP18.2 million). 
 
  * Turnover from football increased to GBP350.6 million (2015 - GBP329.3 
    million) with strong growth in broadcasting supported by commercial 
    activity. 
 
  * Additional GBP15.8 million from broadcasting driven by UEFA Champions 
    League, record level of Premier League live coverage and second place prize 
    money. 
 
  * Commercial growth led by an additional GBP5.0 million from secondary 
    partnerships showing 40% year on year growth. 
 
  * Continued significant investment in the squad is reflected in higher 
    amortisation charges and higher wage costs. 
 
  * Wage costs rose to GBP195.4 million (2015 - GBP192.3 million) and 
    represented 55.7% (2015 - 58.4%) of football revenues. Year on year 
    comparison is distorted by double charge for Champions league qualification 
    bonuses in the prior year. 
 
  * Amortisation charge on player registrations rose to GBP59.3 million (2015 - 
    GBP54.4 million). 
 
  * Profit on sale of player registrations amounted to GBP2.0 million which was 
    significantly lower than the prior period comparative (2015 - GBP28.9 
    million). 
 
  * Quiet year for the Group's property business with a contribution to pre-tax 
    profits of GBP2.0 million (2015 - GBP13.4 million). 
 
  * The Group has no short-term debt and its cash balances, excluding the 
    accounts designated as debt service reserves, amounted to GBP191.1 million 
    (2015 - GBP193.1 million). 
 
  * The liabilities for player acquisitions are in part payable in instalments 
    and net transfer creditors amounted to GBP42.5 million (2015 - GBP65.6 
    million). Since the financial year end the Club has invested in the 
    acquisition of new players at a total transfer in cost of more than GBP90 
    million. 
 
  * Increased Premier League broadcasting revenues will apply from the start of 
    the new season 2016/17. 
 
  * First full year of reporting under FRS 102 and comparative figures have 
    been restated. 
 
Commenting on the results for the year, the Club's Chairman, Sir Chips Keswick, 
said: 
 
"We enjoyed a season of progress both on and off the pitch. Looking ahead, the 
new broadcast revenue has provided a further competitive stimulus to the 
Premier League, which was already the best and most closely contested league in 
world football. We know that the competition will be even tougher this season. 
Accordingly, we have made further significant investment into what was already 
a very competitive squad. As a result, we can and do look forward to the 2016/ 
17 season with optimism and confidence." 
 
The Club's Chief Executive Officer, Ivan Gazidis, said: 
 
"We are in a strong position to continue moving forward at every level of the 
club. On the pitch we have an outstanding squad. Off the pitch we have 
developed our infrastructure across all aspects of our operations to ensure we 
have the right assets and skills to progress. 
 
I am confident this progress, coupled with strong underlying values, will bring 
the success we all seek. Our ultimate ambition is clear: to win major trophies 
and make Arsenal fans at home and around the world proud of this great club. 
Proud of our values, proud of the way we act and proud of our team." 
 
Arsenal Holdings plc 
Chairman's Statement 
 
We enjoyed a season of progress both on and off the pitch. A second place 
finish in the Premier League clinched a 19th successive season in the UEFA 
Champions League and we are now all focussed on making a sustained challenge to 
go one step further in 2016/17. 
 
The new broadcast revenue has provided a further competitive stimulus to the 
Premier League, which was already the best and most closely contested league in 
world football. We know that the competition will be even tougher this season. 
Accordingly, we have made further significant investment into what was already 
a very competitive squad. As a result, we can and do look forward to the 2016/ 
17 season with optimism and confidence. 
 
Midfielder Mohamed Elneny joined us in January, with Granit Xhaka, Lucas Perez 
and Shkodran   Mustafi joining us during the summer, along with Rob Holding, 
Takuma Asano and Kelechi Nwakali who are all talented young players for the 
future. 
 
This is in line with our philosophy of investing significantly when appropriate 
players, who can improve the squad, are available, whilst continuing to 
identify and nurture players for the future. As Arsène has said many times, we 
are not afraid to spend substantial sums, but it is important that when we do, 
the money is used wisely. 
 
The arrival of the new players provides extra depth to our squad and this has 
also been boosted by the emergence of two young players: Alex Iwobi, who has 
grown up through our own Academy, and Jeff Reine-Adelaide. 
 
Following these additions to our squad, Jack Wilshere and Calum Chambers have 
joined Bournemouth and Middlesbrough respectively on season-long loans, while 
Serge Gnabry has joined Werder Bremen on a permanent transfer. We wish all 
three the best of luck at their new clubs during 2016/17. 
 
Looking back to the 2015/16 season, although the men's first team couldn't make 
it three in a row, we did still make another memorable trip to Wembley in May, 
courtesy of Arsenal Ladies. They produced a wonderful performance to beat 
Chelsea and win the Women's FA Cup for the 14th time. The team also lifted the 
FA Continental Cup and they continue to progress under manager Pedro Losa as 
the women's game grows in popularity. 
 
Off the pitch, we have continued to make significant investments in our London 
Colney training facilities and we are in the final phase of the redevelopment 
works at our Academy in Hale End. These are hugely important investments which, 
whilst not grabbing headlines, will help underpin our long-term future. 
 
In addition, we have constructed a completely new pitch at the Emirates Stadium 
which is a remarkable piece of work by our ground staff given the briefness of 
the close season period. 
 
Financials 
 
You will read in the following pages that our revenues for the year ending 31 
May 2016 rose to GBP353.5m. The main source of this increase was football revenue 
which was up GBP21 million year on year, GBP16 million of that was broadcast 
related and GBP3.7 million arose from  our commercial activities. The overall 
outcome being a  small profit before tax of GBP2.9 million. 
 
Our cash reserves at the end of the year stood at GBP226.5 million and this 
figure will doubtless attract the usual speculation from fans and other 
commentators. That being the case, it is my duty to point out that after 
excluding debt service reserves and amounts owed to other clubs on past 
transfers the balance reduces to GBP149 million. This figure is in 
itself inflated, due to the seasonality of our cash flows, by advance 
sponsorship and season ticket receipts for the new season. 
 
Against the underlying balance of available funds we have, as mentioned above , 
invested strongly in player acquisitions during the summer at a total transfer 
in cost of more than GBP90 million with additional significant commitments to 
player wages, agent's fees and performance related contingencies to book on top 
of that. 
 
Whilst we have spent strongly we have not over stretched. It would have been 
bad business practice not to have retained some small degree of flexibility to 
allow us to invest again in the right player and / or to maintain the current 
squad as and where we want to offer improved and extended contracts for key 
players. We make our investments on a prudent and reasoned basis which is 
something this Club does well and which is even more important in a 
competitively inflated marketplace. This approach has served us well and it 
will continue. 
 
Making a difference 
 
As a Club we recognise the power we have to transform people's lives at home 
and abroad. The Arsenal Foundation, working with partners here and around the 
world, continues to thrive and its influence is growing. This is due, in large 
part, to significant financial contributions from our players, staff and fans. 
We are very appreciative of every donation and committed to ensuring that every 
pound is used to make a difference. 
 
More recently the very entertaining Arsenal Legends v Milan Glorie match saw 
the Arsenal Foundation donate GBP1 million towards building pitches in Jordan, 
Somalia and here in North London. This was a first class achievement and we 
were delighted with the response from former players and all our fans who 
filled Emirates Stadium for a special day. 
 
Our Arsenal in the Community team continues to deliver an outstanding programme 
in Islington and other nearby boroughs. The work is linked directly to the 
local areas of need and I am proud that we continue to have significant focus 
on this important work. 
 
Thank you 
 
I would like to thank our fans for their outstanding support. Emirates Stadium 
was sold out for most games last season and the support for the team on its 
travels is exceptional. 
 
Finally, my thanks go to Stan Kroenke, for his continued support and guidance, 
and my fellow directors, our management team and entire staff for all their 
hard work and dedication. I would also like to recognise publicly 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. 
 
We look forward with confidence. The Club is progressing across every aspect of 
its activities and we are optimistic of our future prospects. 
 
 
Sir Chips Keswick 
Chairman 
30 September 2016 
 
Arsenal Holdings plc 
Chief Executive's Report 
 
This annual update gives me a chance to pause and reflect on the progress we 
have made on and off the pitch in recent times. 
 
When I arrived at this great club in 2009 we were in a transitionary position. 

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We had made the move from our old Highbury home to Emirates Stadium a few years 
earlier. Momentous though that was, it was clear that this was really only the 
first step in a change in scale as we aspired to establish ourselves fully as 
one of the leading clubs in Europe, competing both on and off the field with 
the biggest clubs in the world. 
 
At the same time the football landscape was developing dramatically, with 
unprecedented levels of transfer and salary spending from some of our closest 
rivals at the top of the Premier League and in Europe. The new stadium brought 
increased revenue and expectation; but also a continuing need to adhere to the 
principles of financial responsibility which had given us both the means and 
market credibility to make the move from Highbury possible in the first place. 
It was clear that resting on our laurels during this period would have seen us 
left behind and so we recommitted again to moving the club forward. 
 
During the subsequent years we have worked tirelessly to build and develop the 
Club both on and off the field, across every aspect of its operations. Our main 
focus will always be on having the best possible players for the Arsenal first 
team but it is also vital to have first class infrastructure and support 
functions around the team and across the wider Group to underpin that and to 
make it sustainable over the longer term. In some areas all that has been 
required is a fine tuning of our already high standards, in others we have had 
to build capability from scratch. We have made substantial investments across 
the Club in areas such as our commercial and support functions, analytics, 
scouting, academy, medical and fitness support, as well as in our training 
ground facilities. In elite sport, playing in the most competitive league in 
the world, the margins between winning and losing are measured by fractions and 
everything we do is focused on moving us closer to the success we all want for 
the Club. 
 
Thanks to huge efforts by everyone across the Club we have pushed the club 
forward but there is more to do. Finishing the Premier League in the top four 
19 years in a row is a sign of remarkable consistency but that is not enough 
for us. We all want to win major trophies and that is what the hard work is 
about. 
 
We now have the strongest squad we have had for many seasons. This has taken 
time and effort to construct and considerable investment. In the five seasons 
since Stan Kroenke became our majority shareholder we have invested some GBP350 
million in transfer fees. This is coupled with an increase in our wage bill 
from GBP124 million to GBP195 million in the same period. 
 
Our transfer policy has a simple and clear focus - to sign players who can add 
quality to our squad either immediately or in the medium term. I believe the 
players we have added this summer will deliver against that objective and help 
us move closer to our ambition of winning the Premier League. This summer we 
are delighted to have added Granit Xhaka, Shkodran Mustafi, Rob Holding and 
Lucas Perez to our first team squad. 
 
Equally importantly we have continued to make significant investments to ensure 
we continue to sign talented young prospects and to bring young players through 
to the first team. 
 
Last season saw Alex Iwobi, a young man who has been with our Academy since the 
age of eight, break into our first team squad and make an immediate impact. The 
sight of him playing and shining against Barcelona in the Nou Camp will remain 
one of my highlights of the season. To see a home grown talent performing at 
the elite level is testimony to all the hours of hard work by Alex, his family 
and the coaches and staff at Hale End. It is also testimony to our policy of 
investing in young talent and the confidence our manager has to give our young 
players the chance to succeed at the highest levels. 
 
With continuing market escalation in transfer fees, it is vitally important 
that we continue to find and develop talent. In recent seasons, Alex, Hector 
Bellerin and Francis Coquelin have all broken into the first team and I am 
confident we will have more players coming through at our Academy. This remains 
a key part of our philosophy moving forwards and to that end we have further 
extended our scouting network and opened more development centres around 
London. We have also continued to invest significantly in acquiring top young 
talent and this summer we added Takuma Asano and Kelechi Nwakali both of whom 
we believe have potential for the future. 
 
Work continues on the transformation of our Hale End Academy. This has involved 
a complete redevelopment of the site to create a state of the art environment 
for our players of the future. We are also redeveloping our training centre at 
London Colney.  These investments are substantial and will create an 
outstanding environment for our players to train and develop. 
 
That investment in world-class facilities has been coupled with the recruitment 
of expert staff. Within our football operation we have welcomed 27 new coaches, 
analysts, fitness experts and support staff in the last year. This is all part 
of our relentless growth and transformation across the club and continuing 
ambition to keep us at the top of the game and make our fans proud. 
 
The Arsenal Ladies 
 
The Arsenal Ladies are an important part of our club. We were pioneers in the 
women's game, setting up the team in 1987, and we have had unparalleled success 
in the intervening years. We are delighted that the women's game has developed 
significantly in recent years with the birth of the Women's Super League and 
increased investment from a number of competitor clubs. We are determined to 
respond to the increased competition.  This season has seen the Arsenal Ladies 
go full-time and move into bespoke new facilities at our London Colney training 
centre. 
 
Last season was capped by a thrilling victory over Chelsea in the Women's FA 
Cup Final. More than 30,000 fans were at Wembley as we won the trophy for a 
14th time. It was a fantastic day for our club and one of the highlights of the 
season. 
 
I have no doubt that women's football will continue to grow in popularity and 
Arsenal Ladies will remain a leading force at the top of the game. 
 
Business update 
 
The financial results for the year, which are covered in more detail in the 
Financial Review section, show our turnover moved in excess of GBP350 million, 
driven by our football revenue increasing by some GBP21 million. This was as a 
result of having more games shown on television plus an increased share of 
prize money by virtue of our runners-up finish in the League and the start of 
the new Champions League broadcasting cycle. Our revenue from Commercial 
operations grew by a further GBP3.7 million with the key area of secondary 
commercial partnerships growing by some 40%. 
 
Commercial Partnerships 
 
We now have commercial partnerships in North America, South America, Europe, 
Africa, Asia and Australasia.  This demonstrates the worldwide interest from 
organisations to partner with Arsenal, as well as the global capability of our 
commercial operation to source and secure these partnership deals. 
 
Over the course of this year new partnerships have been agreed with iRENA, 
Santa Rita, Star Lager (Nigerian Breweries), 12Bet and Tempobet and we have 
renewed our deals with Betfair and Markets.com.  This means that we currently 
have 30 partnerships. We continue to have a strong pipeline of potential 
partnerships to further enhance our commercial revenues. 
 
Retail 
 
Our partnership with PUMA continues to develop and this summer saw us launch 
new away and third kits at a star-studded event in Los Angeles attended by 
Arsenal fans. We continue to build our e-commerce and retail presence 
internationally to make it easier for supporters to buy merchandise from us 
wherever they live. Closer to home, our Finsbury Park store has undergone a 
refit while our Emirates Stadium tours attracted more than 220,000 visitors 
last year from all around the world. Many of them are now also visiting the 
Arsenal Museum which has undergone a modern facelift. 
 
Arsenal Media Group 
 
Our media group creates the platforms for us to drive strong reach and 
engagement with supporters around the world through digital and social media 
channels.  We have one of the biggest social media followings in sport.  By the 
year end we had 36.3 million Facebook followers and 7.5 million on Twitter, and 
these figures are growing daily. Our YouTube, Instagram, and Sina Weibo (China) 
channels also continue to thrive. We launched on Snapchat earlier in the year 
and this is working well in terms of reaching hundreds of thousands of younger 
fans. 
 
Ticketing 
 
We announced earlier in the year we will be keeping general admission ticket 
prices flat for both  2016/17 and 2017/18 seasons. This means that general 
admission season ticket prices will have been held for 9 of the 12 seasons at 
Emirates Stadium, with inflation-only increases in the three non-static years. 
Thanks to the categorisation of matches, we also offer 43,000 tickets across 
the season at GBP26 to watch top Premier League football in our world class 
London stadium. In addition, some 14,000 GBP10 tickets are available per season 
to 12-16 year olds within the Young Guns Enclosure and there are 26,000 tickets 
priced as low as GBP10 for each potential home League Cup fixture. 
 
Our away support is fantastic and we have been strong supporters of the 
initiative to reduce the cost of away games. We went further than the GBP30 cap 
agreed by the Premier League, ensuring our fans will not have to pay more than 
GBP26 to attend our away Premier League matches. We also continue to provide 
subsidised travel to games when public transport is difficult due to match 
schedules. 
 
Ticket Exchange and Ticket Transfer have been further enhanced, making it 
easier for season ticket holders unable to attend matches to sell or transfer 
their seats to other Arsenal supporters. Last season more than 85,000 tickets 

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DJ Arsenal Holdings PLC Final Results -3-

were processed through these platforms. For the 2016/17 season we have 
introduced a new cash back service, making it quicker for fans to get their 
money back after selling tickets through the Exchange. 
 
Pre-season 2016/17 
 
Our pre-season schedule started with a short trip to Lens in France. This was 
followed by a highly successful visit to the United States to play in the MLS 
All-Star match in San Jose. We then travelled to Los Angeles for a game against 
the Mexican side Chivas Guadalajara. We received a fantastic reception from our 
US fans. On a personal note it was great to meet up with many of my old 
colleagues from Major League Soccer. The value of the US broadcast rights sold 
by the Premier League increased significantly for the new cycle and this 
reflects ever growing support for our game in the States.  I am sure it will 
not be long before we play there again. 
 
Due to player availability issues, driven by the European Championships, and 
our own major pitch renovation at Emirates Stadium, we were unable to hold our 
annual Emirates Cup competition and so the week before the season began we 
headed to Scandinavia for games in Norway and Sweden. This was a great 
opportunity for our passionate Scandinavian fans to see us in action and we 
came back following victories over Viking FK and Manchester City.  We look 
forward to welcoming back the Emirates Cup to our pre-season schedule next 
year. 
 
Arsenal Foundation and Arsenal in the Community 
 
We recognise that Arsenal can make a genuine difference to people's lives and 
our commitment to the local and wider community remains a central part of what 
we stand for as a football club. 
 
Earlier this year the Arsenal Foundation and Save the Children combined to 
build football pitches in camps for internally displaced people in Iraq, giving 
boys and girls fleeing war a safe place to play and the chance to be children 
again. Arsenal Ladies captain Alex Scott visited the camp in March and found it 
a moving and inspirational experience. I am delighted that, thanks to the 
recent Legends match here at Emirates Stadium, The Arsenal Foundation is 
dedicating GBP1 million to support similar football projects in Jordan and 
Somalia, as well as nearer to home in North London.  We have also given our 
support to a range of local charitable causes during the year. 
 
Arsenal in the Community's 'Arsenal Hub' has been open for more than a year 
now, and is getting busier all the time. We now welcome around 1,000 
individuals to the centre every week for sports and education activities.  As 
ever, our community team is working hard across the local area to provide 
support and guidance to young people who need it most. 
 
Thanks to the generous donations from our supporters, players, manager and 
partners, I am proud to say the Arsenal Foundation continues to go from 
strength to strength. 
 
Looking ahead 
 
We are in a strong position to continue moving forward at every level of the 
club. On the pitch we have an outstanding squad. Off the pitch we have 
developed our infrastructure across all aspects of our operations to ensure we 
have the right assets and skills to progress. 
 
I am confident this progress, coupled with strong underlying values, will bring 
the success we all seek. Our ultimate ambition is clear: to win major trophies 
and make Arsenal fans at home and around the world proud of this great club. 
Proud of our values, proud of the way we act and proud of our team. 
 
Thank you for your support. 
 
 
I E Gazidis 
Chief Executive Officer 
30 September 2016 
 
Arsenal Holdings plc 
Financial Review 
 
The Group recorded a profit before tax for the 2015/16 year of GBP2.9 million as 
compared to a profit of GBP18.2 million (as restated) in the prior year. 
 
The principal factors influencing this result were: 
 
  * An increase of GBP15.8 million in revenue from broadcasting as a consequence 
    of higher Champions League distributions (in the first year of a new three 
    year UEFA revenue cycle), a record level of domestic live coverage for 
    Premier League matches involving the Club and the merit award associated 
    with our second place Premier League finish; 
  * Further investment into our playing resources leading to a combined 
    increase of GBP7.9 million in our wage bill and player amortisation costs; 
  * Significantly lower profits from the sale of player registrations at GBP2.0 
    million (2015 - GBP28.9 million); 
  * Reduced activity in the Group's property development business, contributing 
    only GBP2.0 million of pre-tax profits as against GBP13.4 million in the prior 
    year; and 
  * Less volatility in the market value of the Group's interest rate swaps 
    (which are now accounted for under the rules of FRS 102 - see below) with a 
    consequent reduction in net finance charges (as restated) of GBP5.8 million. 
 
                                                2016           2015 
                                                         (restated) 
                                                  GBPm             GBPm 
 
Group turnover                                 353.5          344.5 
 
Operating profit before amortisation,           84.0           77.2 
depreciation and player trading 
 
Player trading (see table below)              (54.0)         (25.6) 
 
Amortisation of goodwill and                  (14.7)         (15.0) 
depreciation 
 
Joint venture                                    1.0            0.8 
 
Net  finance charges                          (13.4)         (19.2) 
 
Profit before tax                                2.9           18.2 
 
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. 
 
                                                 2016        2015 
                                                   GBPm          GBPm 
 
Profit on disposal of player                      2.0        28.9 
registrations 
 
Amortisation of player registrations           (59.2)      (54.4) 
 
Impairment of player registrations                  -       (0.9) 
 
Loan fees                                         3.2         0.8 
 
Total Player Trading                           (54.0)      (25.6) 
 
There were no major sales in the period as the Club retained all of its key 
players going into the 2015/16 campaign.  A sell on percentage from former 
youth player, Benik Afobe's transfer to Bournemouth was the main element of 
transfer profits of GBP2.0 million. Improved player retention is a direct 
consequence of the Club's improved financial position over the last five years 
with a clear trend away from transfer profits as an essential component of the 
profit and loss account. 
 
The increased amortisation charge is a direct result of continued investment 
into the Club's playing resources at all levels. The acquisitions of Petr Cech, 
Mohamed Elneny and the extension of contract terms for certain existing players 
were the main components within GBP35.4 million of additions to the cost of 
player registrations. 
 
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 underlying investment in 
transfers and again the trend over the last five years is progressive. 
 
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 second 
year running the net cash outflow on transfers established a new record level 
for the Club of GBP54.2 million (2015 - GBP46.2 million). With the level of 
transfer activity undertaken during this summer it is virtually certain that 
these figures will be eclipsed in the 2016/17 accounts. 
 
Cash position 
 
At the balance sheet date, the Group's total cash and bank balances amounted to 
GBP226.5 million (2015 - GBP228.2 million), inclusive of debt service reserve 
balances of GBP35.4 million (2015 - GBP35.0 million). The Group's overall net debt 
stood at GBP6.1 million (2015 - GBP10.5 million (as restated)). 
 
Proper consideration of the Group's cash balance must include allowance for the 
payments for the aforementioned transfers, as follows: 
 
                                                 2016        2015 
                                                   GBPm          GBPm 
 
Bank balance excluding debt service             191.1       193.1 
 
Net balance payable on transfers               (42.5)      (65.6) 
 
                                                148.6       127.5 
 
In addition, our year end bank balance includes advance receipts, of primary 
sponsorship and season ticket sales, which represent working capital for the 
2016/17 season. These advance receipts amounted to GBP100.6 million (2015 - GBP 
102.4 million). 
 
Football Segment 
 
                                               2016          2015 
                                                       (restated) 
                                                 GBPm            GBPm 
 
Turnover                                      350.6         329.3 
 
Operating profit before depreciation           82.2          64.4 
and player trading 
 
Player trading                               (54.0)        (25.6) 
 
Profit before tax                               0.9           4.8 
 
There were 27 home fixtures (19 Barclays Premier League, four UEFA Champions 
League and four FA Cup), the same number as in the prior year, with an average 
tickets sold per game of 59,834 (2015 - 59,930).  The mix of games (one 
Champions League game less) and no involvement in the FA Cup semi-finals meant 
that gate and match day revenue fell slightly to GBP99.9 million (2015 - GBP100.4 
million). 
 

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Broadcasting revenues increased to GBP140.6 million (2015 - GBP124.8 million) for 
the reasons referred to at the start of this commentary. Our League form meant 
we attracted 27 live Premier League game facility fees (2015 - 25). Looking 
ahead the Premier League broadcasting revenues will be at a significant uplift 
for the three seasons commencing 2016/17 and Champions League revenues for 2016 
/17 will be boosted by our 30% share of the first market pool (following 
Premier League second place) and by a stronger Euro exchange rate. 
 
Combined commercial and retail revenues for the year rose to GBP106.9 million 
(2015 - GBP103.3 million). This is a lower level of growth than that reported in 
the two previous years but this is not unexpected, given that both the primary 
partnership deals, with Emirates and Puma, are effectively mid-term. 
Encouragingly secondary partnership revenues rose, in a competitive 
marketplace, by 39.6% to GBP17.1 million. 
 
Our payroll was the largest and most important area of cost. Wage costs for the 
year rose to GBP195.4 million (2015 - GBP192.3 million (as restated)), which was 
mainly attributable to increases in the cost of our football playing and 
support staff. As previously reported the wage cost for 2014/15 was inflated by 
two trigger events for Champions League qualification bonuses. There was a 
single trigger event in 2015/16. 
 
The ratio of total wage bill to football revenues was reduced to 55.7% (2015 - 
58.4%). 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. 
 
The Club was fully compliant with the Premier League's wage cap / short term 
cost control regulations. In light of the strong correlation which exists 
between player wage expenditure and on-field success, a progressive wage bill, 
where growth is rational and responsible, should be regarded as a positive 
outcome. 
 
Other operating costs, which include all the direct and indirect costs and 
overheads associated with the Club's football operations and revenues, fell to 
GBP70.2 million (2015 -GBP72.1 million) and represented 20.0% of football revenues 
(2015 - 21.9%). 
 
Property Segment 
 
                                                 2016        2015 
                                                   GBPm          GBPm 
 
Turnover                                          2.9        15.2 
 
Operating profit                                  1.7        13.0 
 
Profit before tax                                 2.0        13.3 
 
There was limited activity in the Group's property business, with the only 
transactions of note being recognition of the final instalment of the 
Queensland Road overage payment, consequent to the developer's sale of the 
remaining units, and the sale of our last flat at Highbury Square following the 
expiry of a tenancy on the unit.  The operating profit from property was GBP1.7 
million (2015 - GBP13.0 million). 
 
Of the two remaining development sites, we have carried out some preliminary 
construction works at Holloway Road whilst progressing the various complex 
negotiations and agreements which need to be concluded before a sale can be 
finalised. Unlocking the future sale value of the other development site, at 
Hornsey Road, requires viable planning consent and our discussions with the 
local authority continue. 
 
Profit after Tax 
 
Overall there is a tax charge of GBP1.2 million (2015 - GBP3.4 million (as 
restated)) on the pre-tax result for the period. This meant that the retained 
profit for the year was GBP1.6 million (2015 - GBP14.8 million (as restated)). 
 
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 GBP 
5.6 million (2015 - GBP6.3 million). During the year the Group paid UK 
corporation tax of GBP8.3 million being the balance of the 2014/15 charge and due 
instalments on account of the 2015/16 liability. 
 
The corporation tax charge has been partially offset by a deferred tax credit 
of GBP4.4 million (2015 - credit of GBP2.9 million (as restated)). This credit 
reflects the downward revaluation of the Group's deferred tax liabilities in 
light of the lower future rates of corporation tax enacted by the government 
and expected to apply when the underlying tax deferrals unwind. 
 
FRS 102 
 
Throughout this commentary and the financial statements you will see various 
references to the figures for the prior year being restated. This is because 
2015/16 is the first reporting period where our results have been compiled 
under the newly introduced Financial Reporting Standard 102 (FRS 102).  As is 
normal on adoption of a new set of accounting rules, the comparative numbers 
have been restated in order to maintain comparability.  The impact on the 
current period is relatively minor - pre-tax profits would have been some GBP1.0 
million higher under the previous UK accounting rules. 
 
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.  For the 
swap there was a significant increase in negative 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 GBP13.4 million (2015 - GBP19.2 
million).  The volatility introduced by fair value accounting for the swap is 
not particularly helpful in understanding our results - in reality, we continue 
to pay and account for the underlying stadium bonds (our "mortgage" on the 
stadium) 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 GBP24.4 million accounted for in 
this year's balance sheet will have reversed with no cash flow impact. 
 
Outlook 
 
The Club has made significant investments since the year end both in terms of 
transfers and wage growth. These investments were determined purely on the 
basis of our football requirements but backed by a rational assessment of the 
financial impacts. This has always been the way we operate and is the reason 
that Arsenal remains in a strong financial position at the start of a new 
season 
 
Stuart Wisely 
Chief Financial Officer 
30 September 2016 
 
Arsenal Holdings plc 
Consolidated profit and loss account 
For the year ended 31 May 2016 
 
                                             2016                          2015 
                                                                        (restated) 
 
                                 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 the group              353,318    3,230   356,548    346,498      805   347,303 
including its share of 
joint ventures 
 
Share of turnover of joint          (3,009)       -    (3,009)    (2,779)       -    (2,779) 
venture 
 
                                   -------- --------  --------   -------- --------  -------- 
 
Group turnover                3     350,309   3,230    353,539   343,719      805   344,524 
 
Operating expenses                (281,093) (59,257) (340,350)  (281,446) (55,365) (336,811) 
 
                                   -------- --------  --------   -------- --------  -------- 
 
Operating profit/(loss)              69,216 (56,027)    13,189    62,273  (54,560)     7,713 
 
Share of joint venture                1,004       -     1,004        762        -       762 
operating result 
 
Profit on disposal of                     -    2,047    2,047          -   28,944    28,944 
player registrations 
 
                                   -------- --------  --------   -------- --------  -------- 
 
Profit/(loss) on ordinary            70,220 (53,980)   16,240     63,035  (25,616)   37,419 
activities before net 
finance charges 
 
                                   -------- --------             -------- -------- 
 
Net finance charges                                   (13,373)                      (19,227) 
 
                                                      --------                      -------- 
 
Profit on ordinary                                       2,867                       18,192 
activities before taxation 
 
Taxation charge                                        (1,218)                       (3,376) 
 
                                                      --------                      -------- 
 
Profit after taxation                                    1,649                       14,816 
retained for the financial 
year 
 
                                                      --------                      -------- 
 
Earnings per share 
 
Basic and diluted              4                        GBP26.50                      GBP238.13 
 
                                                      --------                      -------- 
 
Player trading consists primarily of loan fees receivable, the amortisation of 

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DJ Arsenal Holdings PLC Final Results -5-

the costs of acquiring player registrations, any impairment charges and profit 
on disposal of player registrations.  All trading resulted from continuing 
operations. 
 
Arsenal Holdings plc 
Consolidated balance sheet 
At 31 May 2016 
 
                                                               2016           2015 
                                                                        (restated) 
                                                           GBP'000         GBP'000 
 
Fixed assets 
 
Goodwill                                                       666         1,082 
 
Tangible fixed assets                                      421,059        419,180 
 
Intangible fixed assets                                    146,005        171,658 
 
Investments                                                  4,977          4,174 
 
                                                         ----------     ---------- 
 
                                                           572,707        596,094 
 
Current assets 
 
Stock - development properties                              11,148          9,741 
 
Stock - retail merchandise                                   4,834          4,530 
 
Debtors   - due within one year                             57,961         74,175 
 
                 - due after one year                        4,404          6,658 
 
Cash and short-term deposits                               226,459        228,167 
 
                                                         ----------     ---------- 
 
                                                           304,806        323,271 
 
Creditors: amounts falling due within one year            (239,945)      (275,332) 
 
                                                         ----------     ---------- 
 
Net current assets                                          64,861         47,939 
 
                                                         ----------     ---------- 
 
Total assets less current liabilities                       637,568       644,033 
 
Creditors: amounts falling due after more than one year   (265,460)      (269,174) 
 
Provisions for liabilities and charges                     (44,047)       (49,548) 
 
                                                         ----------     ---------- 
 
Net assets                                                  328,061       325,311 
 
                                                         ----------     ---------- 
 
Capital and reserves 
 
Called up share capital                                          62            62 
 
Share premium                                                29,997        29,997 
 
Merger reserve                                              26,699         26,699 
 
Hedging reserve                                                   -        (1,092) 
 
Profit and loss account                                    271,303        269,645 
 
                                                         ----------     ---------- 
 
Shareholders' funds                                        328,061        325,311 
 
                                                         ----------     ---------- 
 
Arsenal Holdings plc 
Consolidated cash flow statement 
For the year ended 31 May 2016 
 
                                                              2016           2015 
                                                            GBP'000        GBP'000 
 
Net cash inflow from operating activities                    93,841        102,395 
 
Taxation paid                                               (8,331)        (2,206) 
 
Cash flow from investing activities 
 
Interest received                                                              863 
                                                                746 
 
Proceeds from sale of fixed assets                              748             47 
 
Purchase of fixed assets                                   (14,232)       (14,302) 
 
Player registrations                                       (54,190)       (46,241) 
 
                                                         ----------     ---------- 
 
Net cash flow from investing activities                    (66,928)       (59,633) 
 
                                                         ----------     ---------- 
 
Cash flow from financing activities 
 
Interest paid                                              (12,622)       (12,993) 
 
Repayment of debt                                           (7,668)        (7,274) 
 
                                                         ----------     ---------- 
 
Net cash flow from financing activities                    (20,290)       (20,267) 
 
                                                         ----------     ---------- 
 
Net (decrease)/increase in cash and cash equivalents in     (1,708)         20,289 
the year 
 
Cash and cash equivalents at start of year                  228,167        207,878 
 
                                                         ----------     ---------- 
 
Cash and cash equivalents at end of year                    226,459        228,167 
 
                                                         ----------     ---------- 
 
 
 
Reconciliation of operating profit to net cash inflow         2016            2015 
from operating activities                                               (restated) 
 
 
                                                            GBP'000        GBP'000 
 
Operating profit                                             13,189          7,713 
 
Amortisation of player registrations                         59,257         54,430 
 
Impairment of player registrations                                -            935 
 
Amortisation of goodwill                                        416            416 
 
(Profit)/loss on disposal of tangible fixed assets             (72)            273 
 
Depreciation (net of grant amortisation)                     14,258         14,618 
 
                                                         ----------     ---------- 
 
Operating cash flow before working capital                   87,048         78,385 
 
Decrease/(increase) in stock                                (1,711)            513 
 
(Increase)/decrease in debtors                                9,707        (4,983) 
 
Increase in creditors                                       (1,203)         28,480 
 
                                                         ----------     ---------- 
 
Net cash inflow from operating activities                    93,841        102,395 
 
                                                         ----------     ---------- 
 
 
 
Analysis of changes in net debt         At 1 June                       Cash   At 31 May 
                                              2015    Non cash        flows         2016 
                                        (restated)     changes       GBP'000     GBP'000 
                                                       GBP'000 
                                          GBP'000 
 
Cash at bank and in hand                   108,614            -       9,008       117,622 
 
Cash equivalents                           119,553            -    (10,716)       108,837 
 
                                        ----------   ----------   ----------   ---------- 
 
                                           228,167            -      (1,708)      226,459 
 
Debt due within one year (bonds)           (7,119)      (8,106)        7,668      (7,557) 
 
Debt due after more than one year        (193,997)        7,556            -    (186,441) 
(bonds) 
 
Derivative financial instruments          (23,736)        (675)            -     (24,411) 
 
Debt due after more than one year         (13,808)        (389)            -     (14,197) 
(debentures) 
 
                                        ----------   ----------   ----------   ---------- 
 
Net debt                                  (10,493)      (1,614)        5,960      (6,147) 
 
                                        ----------   ----------   ----------   ---------- 
 
Non cash changes represent GBP550,000 in respect of the amortisation of costs 
of raising finance, GBP389,000 in respect of rolled up, unpaid debenture 
interest and GBP675,000 in respect of the change in fair value of the Group's 
interest rate swaps. 
 
Arsenal Holdings plc 
Notes to preliminary results 
For the year ended 31 May 2016 
 
1. The financial information set out above does not constitute the company's 
statutory accounts for the years ended 31 May 2015 or 2016, but is derived from 
those accounts. Statutory accounts for 2015 have been delivered to the 
Registrar of Companies and those for 2016 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. 
 
The accounting policies applied by the Group are as set out in detail in the 
Annual Report for the year ended 31 May 2016. 
 
The company has complied with the Guidance note 69.1 of the ISDX Growth Market 
- Rules for Issuers throughout the year ended 31 May 2016. 
 
2. Segmental analysis 
 
Class of business:-                                             Football 
 
                                                             2016            2015 
                                                          GBP'000      (restated) 
                                                                          GBP'000 
 
Turnover                                                  350,623         329,337 
 
                                                       ----------      ---------- 
 
Segment operating profit/(loss)                            11,537         (5,244) 
 
Share of operating profit of joint venture                  1,004             762 
 
Profit on disposal of player registrations                  2,047          28,944 
 

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DJ Arsenal Holdings PLC Final Results -6-

Net finance charges                                      (13,705)        (19,625) 
 
                                                       ----------      ---------- 
 
Profit on ordinary activities before taxation                 883          4,837 
 
                                                       ----------      ---------- 
 
Segment net assets                                        274,572        273,823 
 
                                                       ----------      ---------- 
 
 
 
Class of business:-                                            Property 
                                                              development 
 
                                                            2016             2015 
                                                         GBP'000       (restated) 
                                                                          GBP'000 
 
Turnover                                                    2,916         15,187 
 
                                                       ----------      ---------- 
 
Segment operating profit                                   1,652          12,957 
 
Net finance charges                                           332             398 
 
                                                       ----------      ---------- 
 
Profit on ordinary activities before taxation               1,984          13,355 
 
                                                       ----------      ---------- 
 
Segment net assets                                        53,489          51,488 
 
                                                       ----------      ---------- 
 
 
 
Class of business:-                                              Group 
 
                                                             2016            2015 
                                                          GBP'000      (restated) 
                                                                          GBP'000 
 
Turnover                                                  353,539         344,524 
 
                                                       ----------      ---------- 
 
Segment operating profit                                   13,189           7,713 
 
Share of operating profit of joint venture                  1,004             762 
 
Profit on disposal of player registrations                  2,047          28,944 
 
Net finance charges                                      (13,373)        (19,227) 
 
                                                       ----------      ---------- 
 
Profit on ordinary activities before taxation               2,867          18,192 
 
                                                       ----------      ---------- 
 
Segment net assets                                        328,061         325,311 
 
                                                       ----------      ---------- 
 
Operating profit from football before amortisation, depreciation and player 
trading amounted to GBP82.2 million (2015 - GBP64.4 million); being segment 
operating profit (as above) of GB11.5 million (2015 - loss of GBP5.2 million), 
adding back depreciation (net of grant amortisation) of GBP14.3 million (2015 - 
GBP14.6 million), amortisation of goodwill of GBP0.4 million (2015 - GBP0.4 
million) and operating loss from player trading of GBP56.0 million (2015 - 
GBP54.6 million). 
 
3. Turnover 
 
Turnover, all of which originates in the UK,                 2016           2015 
comprises the following:                                  GBP'000        GBP'000 
 
Gate and other match day revenues                          99,907        100,401 
 
Broadcasting                                              140,579        124,844 
 
Retail and licensing                                       24,626         24,685 
 
Commercial                                                 82,281         78,602 
 
Property development                                        2,916         15,187 
 
Player trading                                              3,230            805 
 
                                                       ----------     ---------- 
 
                                                          353,539        344,524 
 
                                                       ----------     ---------- 
 
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 (2015 - 62,217 
shares). 
 
5. Annual General Meeting 
 
The annual general meeting will be held at Emirates Stadium, London, N7, on 
Monday 24 October 2016 at 11.30 am. The full statement of accounts and annual 
report will be posted to shareholders on 30 September 2016. 
 
 
 
END 
 

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