AFC ENERGY PLC

Earnings Release • Sep 19, 2014

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ARSENAL HOLDINGS PLC - Final Results

PR Newswire

London, September 19

Arsenal Holdings plc Results for the year ended 31 May 2014ARSENAL ANNOUNCE FULL YEAR PROFITS * Group profit before tax was GBP4.7 million (2013 - GBP6.7 million). * The group's total turnover amounted to GBP301.9 million (2013 - GBP280.4 million). * Turnover from football increased to GBP298.7 million (2013 - GBP242.8 million) driven mainly by Premier League broadcasting, the FA Cup run and commercial activity including a full year of the Club's extended partnership with Emirates. * Taking account of increased costs, principally wage costs, operating profits (before depreciation and player trading) from football increased to GBP62.1 million (2013 - GBP25.2 million). * Wage costs of GBP166.4 million (2013 - GBP154.5 million) represented 55.7% of football revenue (2013 - 63.6%). * Profit on sale of player registrations was reduced to GBP6.9 million (2013 - GBP47.0 million). * Low key year for property business with revenues of GBP3.2 million (2013 - GBP37.5 million including sale of the market housing site at Queensland Road) and operating profit of GBP0.4 million (2013 - GBP4.4 million). * The Group has no short-term debt and continues to be in a robust financial position with cash balances, excluding those amounts designated as debt service reserves, of GBP173.3 million (2013 - GBP119.6 million).Commenting on the results for the year the Club's Chairman, Sir Chips Keswick,said:"Our revenues have exceeded GBP300 million, underpinned by TV and thesignificant progress made on our commercial agenda, and our improved financialposition has allowed us to supplement the squad with important new signings.Our ambition is to put Arsenal Football Club at the pinnacle of the game hereand in Europe. We all want to savour a repeat of the joys of last May."The Club's Chief Executive Officer, Ivan Gazidis, said:"The Club is in excellent shape, both on and off the pitch. We are proud of our11th FA Cup success and the reward this represents to our fans in the Arsenalcommunity around the world. There is always more to do and, whether investingin the team or in training facilities which will provide long-term benefit tothe Club, our guiding principles are the same and our focus is clear, ondelivering more on field success. This remains the shared ambition of ourmajority shareholder Stan Kroenke, the Board and everyone connected with theClub. We are well placed to deliver against those ambitions."Arsenal Holdings plcChairman's StatementWhen I was appointed Chairman of this great Club I made it clear that I wantedto remain true to our philosophy and principles, whilst helping us moveforwards and competing for trophies at home and in Europe.With this in mind it was with considerable delight that I joined the team andmany tens of thousands of fans on the open top bus parade of Islingtonfollowing our FA Cup success in May. It was a very special day for all of usand one which will remain in the memory for some considerable time to come. Iwould like to thank Islington Council for their hospitality at the Town Halland their support of the whole event, which helped it to run so smoothly.The FA Cup Final victory over Hull City was the culmination of a dramaticseason where we were consistently competing close to the top of the PremierLeague. We ultimately sealed qualification for the Champions League for a 17thsuccessive season with a fourth place finish. With the intensity of competitionincreasing year on year this represents unprecedented consistency and hugecredit must go to Arsène Wenger for this achievement.Consequently, we were delighted to secure Arsène's signature on a renewedcontract. This provides us with continued stability and direction on thefootball front, which we believe are vital ingredients in the recipe forfurther success.Our improved financial position has also allowed us to supplement the squadwith important new signings. Alexis Sanchez, Mathieu Debuchy and David Ospinaenjoyed outstanding World Cup tournaments for Chile, France and Colombiarespectively and Calum Chambers is a very talented young player. We have alsocontinued to retain the core of our team on new contracts which means we canbuild on the unity and spirit that was so evident last season. Finally, on theclosing day of the transfer window we secured the signing of Englandinternational forward, Danny Welbeck.Off the pitch you will read in the following pages that our revenues haveexceeded GBP300 million and that we have reported a profit before tax of GBP4.7million. This has been underpinned by both TV revenues and the significantprogress made on our commercial agenda. Our popularity around the worldcontinues to grow apace and is making us an attractive proposition to potentialsponsors. As a result, we have brought in a number of new partners and, inparticular, we have welcomed PUMA as our new kit provider from the start of thecurrent campaign. Significant progress has also been made in our retailoperations and our media business continues to spread the Club's name far andwide through digital and social media.Our commitment to both our local and global communities has again made adifference for many thousands of people. The Arsenal Foundation goes fromstrength to strength, thanks in no small part to financial contributions fromour players and fans, whilst the Arsenal in the Community team continues itssterling work in and around the Borough of Islington.Once again we have enjoyed magnificent support from our loyal fans. EmiratesStadium was sold out for most of last season and the support we receive bothhome and away and from around the world is hugely gratifying and something wewill never underestimate.My thanks are due to our majority shareholder, Stan Kroenke, for his guidanceand support, my fellow directors, our management team and entire staff for alltheir hard work and dedication over the last year. I should also take thisopportunity to publicly thank Liam Brady, who leaves us after 17 years ofoutstanding work with our Youth Academy, and our Chief Commercial Officer, TomFox, who has left us to become Chief Executive Officer at Aston Villa. I alsofully recognise the support and contribution from our commercial partners.In closing, we look forward with excitement and optimism. Mr Kroenke, myselfand everyone at the Club are as one in our ambition to put Arsenal FootballClub at the pinnacle of the game here and in Europe. We all want to savour arepeat of the joys of last May.I look forward to welcoming you all to Emirates Stadium over the course of theseason.Sir Chips KeswickChairman19 September 2014Arsenal Holdings plcChief Executive's ReportOverviewSitting on the open top bus taking in the scenes of jubilation as we touredIslington with the FA Cup in May was very special for everyone associated withArsenal. The shared pride and unity was there for all to see. I know the scenesof joy were repeated in the Arsenal community around the world and it was aterrific re-affirmation of what this football club means to so many people.The nerve-jangling victory over Hull City was also a triumph delivered byremaining true to our principles and beliefs. That has been our mantra on andoff the pitch and the Wembley success showed that we are on the right path. Inaddition, we finished the League campaign just seven points short of thePremier League title and have since translated our fourth place finish into a17th successive season of Champions League football.Arsène Wenger has extended his contract for a further three years and is ashungry as ever for more success. We continue to drive forwards across everyaspect of our activities.We are making significant progress but there is plenty more to be done.FootballOur strong financial platform has allowed us to retain all of our key playerswhilst supplementing the squad with some high quality global talent.Contracts have been renewed with Santi Cazorla, Serge Gnabry, LaurentKoscielny, Per Mertesacker, Aaron Ramsey, Thomas Rosicky and Wojciech Szczesny.This builds on the re-signing of several key players last year and gives thesquad real stability for the future.In addition, Alexis Sanchez joined us from Barcelona after a highly successfulWorld Cup with Chile while Colombia's first choice keeper David Ospina hasjoined us from Lille where he has been one of the top performing goal keepersin French football. French right back Mathieu Debuchy joined us from NewcastleUnited, again after representing his country in Brazil. Calum Chambers, signedfrom Southampton, is showing huge promise with the ability to play in a numberof positions and has already earned a first England cap. Finally, anotherEngland international, Danny Welbeck, was signed to further strengthen ourattacking options.This puts us in an excellent position but I must stress that our long heldphilosophy, to identify and develop young players, remains key to our future.With this in mind Andries Jonker has succeeded Liam Brady as our Head of theYouth Academy. Andries joins us from Vfl Wolfsburg and has an outstanding trackrecord of developing young talent. He established the Dutch FA's world renownedyouth development programmes and he will bring this expertise to bear as webuild on Liam's outstanding legacy of the past 17 years.We are also putting significant financial investment into our youth developmentactivities. The first phase of extensive refurbishment work has been completedto our facilities at Hale End and work on a second phase is well underway. Weare investing in new staff and looking at the very latest techniques in sportsscience and physical development. We are also looking to strengthen our globalscouting networks to ensure we find the very best young talent in the game.This is important to our long-term success and it is a policy we will continueto pursue vigorously.Investments are also being made in people and infrastructure at our LondonColney training centre. We are putting forward plans for improvements whichwill take us to the next level in terms of fitness and preparation facilitiesand I look forward to work getting underway in 2015.The Arsenal LadiesThe Ladies won the Women's FA Cup for a remarkable 13th time after anoutstanding 2-0 victory over Everton at MK Stadium. Prior to the victory,Manager Shelley Kerr had decided to move back to Scotland after 18 months withus. We are grateful for all her hard work and wish her every success in her newrole as Manager of Stirling University in the Lowland League. We have recentlyappointed Pedro Losa from Western New York Flash as manager and wish him everysuccess.I would also like to pay tribute to Vic Akers who is stepping away from the dayto day running of the Ladies' team after 27 years. Vic has been the drivingforce behind the team since its inception and has been named Founder andHonorary President. Former player Clare Wheatley moves into the position ofGeneral Manager, where she will oversee player transfers, contract renewals andcertain aspects of coaching.Business updateThe financial results for the year, which are covered in more detail in theFinancial Review section, show our turnover moved above GBP300 million. Thiswas driven by the uplift in Premier League broadcasting revenues and theinclusion of a full year contribution from our extended partnership withEmirates.Commercial PartnershipsIn January this year we announced our new partnership with PUMA, who become theClub's Official Kit Partner from 1 July 2014. The deal represents the biggestpartnership agreement in both Arsenal and PUMA's history and the financialimpact of this deal will begin to be realised in the next financial year. Thepartnership is testimony to the strength of the Arsenal name around the world.We continue to enjoy significant momentum in attracting new partners to theArsenal family. During the course of the past year we have agreed partnershipswith brands including Gatorade, Huawei, Cooper Tires, Lanvin, JEANRICHARD, PruHealth, Europcar, Hansa Pilsener and BT Sport as well as renewing our globaldeals with Citroen and Indesit. This represents strong achievement anddemonstrates the progress we have made in transforming our commercial operationin recent years.Following Tom Fox's departure to become Chief Executive Officer at Aston Villa,Vinai Venkatesham, who has led our partnership business since joining us fouryears ago from the London 2012 Organising Committee, has been appointed ChiefCommercial Officer. Having worked closely with Vinai during thisperiod I am confident he will continue to driveour commercial activities forward.RetailWe continue to invest in our retail operations. Our flagship Armoury storeunderwent a transformation at the end of last season, as part of a jointproject with PUMA, and trading has been very strong since we re-opened in July. Moving forward, we have plans to invest in our on-line retail systems toimprove the experience for supporters, both in the UK and Internationally.Arsenal.comOur media group continued to drive strong reach and engagement with supportersaround the world through digital and social media channels. www.Arsenal.comremains the first port of call for all Arsenal news, with very strong trafficnumbers. We also now have 28 million followers on Facebook, more than 4 millionon Twitter and our recently launched YouTube channel already has 135,000subscribers. In addition, we continue to develop our usage of Instagram, SoundCloud, Flickr and our social media presence in China.We also recently renewed our partnership with MP & Silva, who will continue todistribute the club's international programming block (The Arsenal MediaChannel) and will remain the Club's strategic media advisor. In the 2013/14season, MP & Silva delivered a record distribution of the Arsenal Media Channelto 130 territories in five continents, covering a potential audience reach of392 million households in Europe, Asia-Pacific, MENA, Latin America and NorthAmerica.Pre-season 2014/15We made a successful, albeit brief, trip to New York as part of our pre-seasonpreparations. It was great to be reunited with our old friend Thierry Henry forthe game against the New York Red Bulls and the reception we received from ourfans in America was phenomenal. We were all struck by the depth of followingfor Arsenal and the increased interest and understanding for the game as awhole. Football continues its long-term growth in the US and increasedtelevision promotion and exposure will accelerate the game's growth across alldemographics in the States.The visit to New York was followed by another highly successful Emirates Cup.The weekend attracted 120,000 fans, many of whom were young families visitingus for the first time. They saw La Liga side Valencia take the trophy after anexciting weekend of football involving ourselves, Portuguese champions Benficaand French club AS Monaco.Arsenal Foundation and Community ActivitiesThe Arsenal Foundation has continued to provide essential funding for a varietyof local and global projects and our partnerships with Save the Children, theWillow Foundation and Islington Giving continue to flourish. In addition ourArsenal in the Community team continues to deliver hugely important programmesin Islington and surrounding boroughs, reaching more than 5,000 people through350 sessions every week.Looking aheadThe Club is in excellent shape, both on and off the pitch.We are proud of our 11th FA Cup success and the reward this represents to ourfans in the Arsenal community around the world. There is always more to do and,whether investing in the team or in training facilities which will providelong-term benefit to the Club, our guiding principles are the same and ourfocus is clear, on delivering more on field success. This remains the sharedambition of our majority shareholder Stan Kroenke, the Board and everyoneconnected with the Club. We are well placed to deliver against those ambitions.We look forward to the rest of the season with excitement.I E GazidisChief Executive Officer19 September 2014Arsenal Holdings plcFinancial ReviewThe Group recorded a profit before tax for the 2013/14 year of GBP4.7 million(2013 - GBP6.7 million).Essentially, this result reflects a balance of two factors: * Increased revenues from broadcasting and sponsorship, taking the Group's turnover above GBP300 million and resulting in an operating profit which was more than doubled at GBP62.4 million (2013 - GBP29.7 million) * A quiet year in terms of outbound player transfers which meant an overall deficit on player trading of GBP32.6 million (2013 - profit of GBP1.6 million). 2014 2013 GBPm GBPmGroup turnover 301.9 280.4Operating profit before amortisation, 62.4 29.7depreciation and player tradingPlayer trading (see table below) (32.6) 1.6Amortisation of goodwill and depreciation (12.8) (12.5)Joint venture 0.7 0.9Net finance charges (13.0) (13.0)Profit before tax 4.7 6.7The main drivers for the revenue increase were the significantly improvedPremier League television contracts, recognition of a full year of the enhancedpartnership arrangements with Emirates and our FA Cup success. These footballrevenue gains were partially offset by a lower level of activity in theproperty business.Player trading consists of the profit from the sale of player registrations,the amortisation charge, including any impairment, on the cost of playerregistrations and fees charged for player loans. 2014 2013 GBPm GBPmProfit on disposal of player registrations 6.9 47.0Amortisation of player registrations (40.0) (41.3)Impairment of player registrations - (5.7)Loan fees 0.5 1.6Total Player Trading (32.6) 1.6The profit on sale of players for the year amounted to GBP6.9 million (2013 -GBP47.0 million) with only the sales of Gervinho and Mannone generatingappreciable fees; this was a significant reduction as compared to the profitsgenerated from the sales of van Persie and Song in the prior year. There was norequirement to book any impairment charges against the carrying values of theplaying squad for the year under review.During the period we invested strongly in the playing squad and GBP64 millionwas booked in relation to the acquisition of new players, including Mesut Özil,and, to a lesser extent, the extension of contract terms for certain existingplayers. The cash impact of these acquisitions was partially offset by thecollection of receivables on previous player sales and by the credit termsagreed with the vendor clubs, which meant that overall the Group has maintainedits strong cash position.At the balance sheet date, the Group's total cash and bank balances amounted toGBP207.9 million (2013 - GBP153.5 million), inclusive of debt service reservebalances of GBP34.6 million (2013 - GBP33.8 million). The Group's overall netdebt was GBP32.6 million (2013 - GBP93.2 million).Football Segment 2014 2013 GBPm GBPmTurnover 298.7 242.8Operating profit before depreciation and 62.1 25.2player tradingPlayer trading (32.6) 1.6Profit before tax 3.8 1.6There were three more home fixtures than in the prior year, with one more gamein the UEFA Champions League and two more home FA Cup ties. Our 29 homefixtures (19 Barclays Premier League, five UEFA Champions League, fourBudweiser FA Cup and one Capital One Cup) achieved an average tickets sold pergame of 59,790 (2013 - 59,928). In addition, the Emirates Cup returnedsuccessfully to our pre-season schedule after its Olympic break in 2012.Overall match-day revenue rose to GBP100.2 million (2013 - GBP92.8 million) -only the second time this has topped the GBP100 million mark. Despite achievinga near record high, match-day was replaced by Broadcasting as the Group'snumber one source of revenue.Broadcasting revenues benefited from the Premier League's significantlyimproved deals with Sky and BT and in addition our league form meant weattracted a higher number of live game facility fees, 25 for the season (2013 -22). Broadcasting fees for FA Cup coverage are paid at a much lower rate, butnone the less our run to Wembley made a contribution as did the sale of the TVrights for the Emirates Cup. In total, broadcasting revenue rose by some 40 percent to GBP120.8 million (2013 - GBP86.0 million). With BT's exclusiveacquisition of the UK rights to the UEFA Champions League for season 2015/16there is a further uplift in this revenue line on the horizon which only servesto further increase the financial significance of a top four Premier Leagueplacing.Commercial revenue growth has been a key target over recent years and we havemade excellent progress - in the five years since 2009 the Group's commercialrevenues have risen by more than 70%.Combined retail and commercial revenues for the year rose by some 24% toGBP77.1 million (2013 - GBP62.4 million). The main driver for this growth wasthe extended partnership contract with Emirates which made a full yearcontribution; in the prior year there was only a six month benefit from thiscontract. We also added to our roster of secondary partnerships with CooperTires, JEANRICHARD and Lanvin amongst the new business secured.Our retail business made a strong start to the year but, as predicted, was heldback in the second half by lower available stocks of replica kit as part of theplanned transition from Nike to PUMA. The new five year kit partnership withPUMA did not come into force until after the financial year end and thereforeno revenues or costs from this contract have been included in the profit andloss account for 2013/14.Payroll was once again the largest and most important area of cost. Wage costsfor the year rose by 7.7% (2013 - 7.7%) to GBP166.4 million (2013 - GBP154.5million), which was mainly attributable to increases in the cost of ourfootball playing and support staff. In light of the strong correlation whichexists between player wage expenditure and on-field success we should be clearthat having the resources to grow our wage bill in a rational and responsiblemanner actually represents a positive outcome. Given the greater financialresources of certain of our main competitors, it remains an imperative that themoney we do commit to wages is spent as efficiently as possible.Our average permanent headcount for the year was 548, only marginally increasedover the prior year (2013 - 537). We will continue to invest prudently inpeople as and when there is an opportunity to grow or improve our business as aresult.As a consequence of our increased revenues, the ratio of total wage bill tofootball revenues was reduced to 55.7% (2013 - 63.6%). This ratio is widelyused as a benchmark in analysis of football club finance. However, the Groupdoes not set any particular wage ratio as a performance target but rathermonitors its total player spend, a combination of wages plus transferexpenditure and related costs, on a rolling three year basis against itsprojections for the available funds generated over that period by the Group'sbusiness activities.Other operating costs, which include all the direct and indirect costs andoverheads associated with the Club's football operations and revenues, rose toGBP69.9 million (2013 -GBP61.6 million). The reasons for this change weremulti-faceted. Elements of our increased revenue inevitably carry an associatedincreased cost, for example the costs of staging an increased number of homegames including the Emirates Cup and the costs of servicing our larger numberof partnership deals. Our other operating costs expressed as a percentage ofour football revenues were 23.4% (2013 - 25.4%).Property Segment 2014 2013 GBPm GBPmTurnover 3.2 37.5Operating profit 0.4 4.4Profit before tax 0.9 5.1In contrast to last year, which included the sale of the major development siteat Queensland Road north-east, sales activity in our property business was at avery low level and confined to the disposal of a small number of housesassociated with the Highbury Square development. As a consequence thecontribution from property to the Group's profit before tax was reduced toGBP0.9 million (2013 - GBP5.1 million).We continue to investigate the opportunities for viable development schemes forour two remaining property sites on Hornsey Road and Holloway Road. The outcomeof a judicial review process, decided earlier this year, meant we were unableto progress one possible scheme for Hornsey Road and that decision is itselfnow subject to an appeal. Planning consent for this site is proving to be adifficult process and until it is resolved we are unable to unlock the value ofthis site.Profit after TaxOverall there is a tax credit of GBP2.6 million (2013 - charge of GBP0.8million) on the pre-tax result for the period.This meant that the retained profit for the year was increased to GBP7.3million (2013 - GBP5.8 million).There are two significant elements to the tax credit on the result. Firstly,the reduction in corporation tax rates to 20% from April 2015 means that theGroup's deferred tax liabilities have been re-valued to this lower rate; thisresulted in a GBP5.1 million credit. Secondly, the tax deductibility of theamortisation charge on player registrations is partially restricted as a resultof previous roll-over reliefs claimed on player sales. This meant that ourtaxable profit was higher than our accounts pre-tax profit and resulted incorporation tax charge payable for the year of GBP3.7 million.Financial RegulationThe Club is subject to the Financial Fair Play regulations put in place by UEFAand the Premier League. Both sets of regulations have a rolling three yearbreak-even test as their cornerstone, albeit with differing levels of allowablelosses. The Premier League regulations also include a wage cap control on aninitial short term (three year) basis of which 2013/14 was the first controlledyear.It remains to be seen exactly what impact these regulations will have on thefinancial landscape at the top of the game domestically and in Europe.Arsenal continues to be in a strong financial position. We are fully compliantwith the FFP requirements and well placed to continue to invest toward furtheron-field success.Stuart WiselyChief Financial Officer19 September 2014Arsenal Holdings plcConsolidated profit and loss accountFor the year ended 31 May 2014 2014 2013 Note Operations Player Total Operations Player Total excluding trading GBP'000 excluding trading GBP'000 player GBP'000 player GBP'000 trading trading GBP'000 GBP'000Turnover of the group 303,754 513 304,267 281,176 1,598 282,774including its share ofjoint venturesShare of turnover of (2,395) - (2,395) (2,400) - (2,400)joint venture ---------- ---------- ---------- ---------- ---------- ----------Group turnover 3 301,359 513 301,872 278,776 1,598 280,374Operating expenses (251,736) (40,072) (291,808) (261,634) (47,021) (308,655) ---------- ---------- ---------- ---------- ---------- ----------Operating profit/(loss) 49,623 (39,559) 10,064 17,142 (45,423) (28,281)Share of joint venture 710 - 710 945 - 945operating resultProfit on disposal of - 6,912 6,912 - 46,986 46,986player registrations ---------- ---------- ---------- ---------- ---------- ----------Profit/(loss) on 50,333 (32,647) 17,686 18,087 1,563 19,650ordinary activitiesbefore net financecharges ---------- ---------- ---------- ----------Net finance charges (13,018) (12,996) ---------- ----------Profit on ordinary 4,668 6,654activities beforetaxationTaxation credit/ 2,603 (849)(charge) ---------- ----------Profit after taxation 7,271 5,805retained for thefinancial year ---------- ----------Earnings per shareBasic and diluted 4 £116.87 £93.30 ---------- ----------Player trading consists primarily of loan fees receivable, the amortisation ofthe costs of acquiring player registrations, any impairment charges and profiton disposal of player registrations. All trading resulted from continuingoperations.Arsenal Holdings plcConsolidated balance sheetAt 31 May 2014 2014 2013 GBP'000 GBP'000Fixed assetsGoodwill 1,498 1,924Tangible fixed assets 421,402 421,539Intangible fixed assets 114,986 96,570Investments 3,571 3,031 ---------- ---------- 541,457 523,064Current assetsStock - development properties 9,849 12,987Stock - retail merchandise 4,935 2,131Debtors - due within one year 65,642 88,484- due after one year 4,861 8,287Cash and short-term deposits 207,878 153,457 ---------- ---------- 293,165 265,346Creditors: amounts falling due within one year (203,032) (149,931) ---------- ----------Net current assets 90,133 115,415 ---------- ----------Total assets less current liabilities 631,590 638,479Creditors: amounts falling due after more than one (266,478) (274,721)yearProvisions for liabilities and charges (54,494) (60,403) ---------- ----------Net assets 310,618 303,355 ---------- ----------Capital and reservesCalled up share capital 62 62Share premium 29,997 29,997Merger reserve 26,699 26,699Profit and loss account 253,860 246,597 ---------- ----------Shareholders' funds 310,618 303,355 ---------- ----------Arsenal Holdings plcConsolidated cash flow statementFor the year ended 31 May 2014 2014 2013 GBP'000 GBP'000Net cash inflow from operating activities 96,169 53,359Player registrations (11,121) (25,915)Returns on investment and servicing of finance (12,409) (12,356)Taxation (2,445) (47)Capital expenditure (8,873) (6,496)Acquisition of subsidiary - (2,164) ---------- ----------Net cash inflow before financing 61,321 6,381Financing (6,900) (6,549)Management of liquid resources (39,781) 36,811 ---------- ----------Change in cash in the year 14,640 36,643Change in short-term deposits 39,781 (36,811) ---------- ----------Increase/(decrease) in cash and short-term deposits 54,421 (168) ---------- ----------Management of liquid resources represents the transfer of cash from/(to) theGroup's bank accounts to short-term bank treasury deposits.Reconciliation of operating profit/(loss) to net 2014 2013cash inflow from operating activities GBP'000 GBP'000Operating profit/(loss) 10,064 (28,281)Amortisation of player registrations 40,072 41,349Impairment of player registrations - 4,740Amortisation of goodwill 426 213Profit on disposal of tangible fixed assets (140) (53)Depreciation (net of grant amortisation) 12,418 12,294(Increase)/decrease in stock (2,472) 24,158Decrease/(increase) in debtors 9,657 (29,659)Increase in creditors 26,144 28,598 ---------- ----------Net cash inflow from operating activities 96,169 53,359 ---------- ----------Analysis of changes in net debt At 1 June Non cash Cash flows At 31 May 2013 changes 2014 GBP'000 GBP'000 GBP'000 GBP'000Cash at bank and in hand 65,915 - 14,640 80,555Short-term deposits 87,542 - 39,781 127,323 ---------- ---------- ---------- ---------- 153,457 - 54,421 207,878Debt due within one year (bonds) (6,310) (7,294) 6,900 (6,704)Debt due after more than one year (212,905) 6,984 - (205,921)(bonds)Debt due after more than one year (27,463) (367) - (27,830)(debentures) ---------- ---------- ---------- ----------Net debt (93,221) (677) 61,321 (32,577) ---------- ---------- ---------- ----------Non cash changes represent GBP590,000 in respect of the amortisation of costsof raising finance, GBP367,000 in respect of rolled up, unpaid debentureinterest and GBP280,000 in respect of amortisation of the premium on certain ofthe Group's interest rate swaps.Arsenal Holdings plcNotes to preliminary resultsFor the year ended 31 May 20141. The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 May 2013 or 2014, but is derived fromthose accounts. Statutory accounts for 2013 have been delivered to theRegistrar of Companies and those for 2014 will be delivered following thecompany's annual general meeting. The auditor has reported on those accounts;their reports were unqualified, did not draw attention to any matters by way ofemphasis without qualifying their report and did not contain statements unders498(2) or (3) Companies Act 2006.The accounting policies applied by the Group are as set out in detail in theAnnual Report for the year ended 31 May 2014.The company has complied with the Guidance note 69.1 of the ISDX Growth Market- Rules for Issuers throughout the year ended 31 May 2014.2. Segmental analysisClass of business:- Football 2014 2013 GBP'000 GBP'000Turnover 298,658 242,825 ---------- ----------Segment operating profit/(loss) 9,650 (32,713)Share of operating profit of joint venture 710 945Profit on disposal of player registrations 6,912 46,986Net finance charges (13,455) (13,614) ---------- ----------Profit on ordinary activities before taxation 3,817 1,604 ---------- ----------Segment net assets 272,449 266,037 ---------- ----------Class of business:- Property development 2014 2013 GBP'000 GBP'000Turnover 3,214 37,549 ---------- ----------Segment operating profit 414 4,432Net finance charges 437 618 ---------- ----------Profit on ordinary activities before taxation 851 5,050 ---------- ----------Segment net assets 38,169 37,318 ---------- ----------Class of business:- Group 2014 2013 GBP'000 GBP'000Turnover 301,872 280,374 ---------- ----------Segment operating profit/(loss) 10,064 (28,281)Share of operating profit of joint venture 710 945Profit on disposal of player registrations 6,912 46,986Net finance charges (13,018) (12,996) ---------- ----------Profit on ordinary activities before taxation 4,668 6,654 ---------- ----------Segment net assets 310,618 303,355 ---------- ----------Operating profit from football before amortisation, depreciation and playertrading amounted to GBP62.1 million (2013 - GBP25.2 million); being segmentoperating profit (as above) of GBP9.7 million (2013 - loss of GBP32.7 million),adding back depreciation (net of grant amortisation) of GBP12.4 million (2013 -GBP12.3 million), amortisation of goodwill of GBP0.4 million (2013 - GBP0.2million) and operating loss from player trading of GBP39.6 million (2013 -GBP45.4 million).3. TurnoverTurnover, all of which originates in the UK, 2014 2013comprises the following: GBP'000 GBP'000Gate and other match day revenues 100,229 92,780Broadcasting 120,762 86,025Retail and licensing 17,938 18,057Commercial 59,216 44,365Property development 3,214 37,549Player trading 513 1,598 ---------- ---------- 301,872 280,374 ---------- ----------4. Earnings per shareEarnings per share (basic and diluted) are based on the weighted average numberof ordinary shares of the Company in issue being 62,217 shares (2013 - 62,217shares).5. Reconciliation of movement in shareholders' funds 2014 2013 GBP'000 GBP'000Profit for the year 7,271 5,805Exchange difference (8) 2Opening shareholders' funds 303,355 297,548 ---------- ----------Closing shareholders' funds 310,618 303,355 ---------- ----------6. Annual General MeetingThe annual general meeting will be held at Emirates Stadium, London, N7, onThursday 16 October 2014 at 11.30 am. The full statement of accounts and annualreport will be posted to shareholders on 22 September 2014.