Post by QPR Report on Jun 28, 2009 7:46:04 GMT
It's too much! But this is what I got; before I gave up! But the best thing is to just read the entire accounts!
www.qpr.co.uk/page/AnnualAccountsDetail/0,,10373~1698605,00.html
www.qpr.co.uk/staticFiles/19/39/0,,10373~145689,00.pdf
CHAIRMAN’S REPORT - YEAR ENDED 31 MAY 2008
- On behalf of the Board of Directors, I am delighted to present the annual financial statements and report for the year ended 30 May 2008 with a review of what has been a historic year for Queens Park Rangers Football Club. In November 2007, we saved the club from certain administration and completed the takeover of QPR Holdings Limited, with the clear aim of seeking promotion from the Championship to the Premier League. Shortly afterwards, we were pleased to announce that we had secured a 20% investment from the Mittal family.
We understand the QPR heritage and our role as fans, owners and custodians of the Club. We believe in being courageous in the development of the Club and in taking managed risks. At the same time we remain committed to developing the long-term sustainability of the Club through maintaining a business that pays its own way.
An important part of this development was the launch of a new club crest. The crest was designed to combine elements of the past, present and future of the Club. The new crest features the famous blue and white hoops, which appeared on the Club’s badge before it was redesigned in the early 1980s. The change is to be representative of our aim to re-launch the Club into a global brand.
On the Field
The 2007/08 season unfortunately commenced with the tragic death of rising star Ray Jones. The impact of this had a clear knock-on effect to the team performance at the start of the season, with no wins and 6 losses in the first 9 games. Following this poor start, we decided to part company with the first teamcoach, John Gregory. As an interim measure we appointed Mick Harford as Caretaker Manager before installing Luigi De Canio as first team coach. Luigi managed to guide QPR to 14th place, which represented an improvement on the previous season, when we finished 18th.
Following the end of the season Luigi De Canio departed bymutual consent and we appointed Iain Dowie as first teamcoach. However, after 15 games in charge achieving a points total of 18 and guiding QPR to the 4th round of the Carling Cup, we gave Iain notice to terminate his employment. Gareth Ainsworth took on the role of Caretaker Manager.
Disappointingly, we were knocked out of the first stages of the Carling and FA Cups by Leyton Orient and Chelsea respectively.
Player transfers
The key barometer of our success is the on-pitch performance and thus we intend to pursue a policy of investing surplus cash into team development. In the January 2008 transfer window, we invested heavily in the first team squad bringing in 8 new players – Patrick Agyemang fromPreston, Akos Buzsaky from Plymouth, Matthew Connolly fromArsenal, Hogan EphraimfromWest Ham, Gavin Mahon from Watford, Fitz Hall fromWigan, Rowan Vine from Birminghamand Damien Delaney fromHull.
Although such sweeping changes to the teamwill take a period of adjustment, these additional player signings to the first teamimproved our win ratio from24% pre-January to 38% post January.
During the summer transfer window, we took a prudent and measured approach to player signings by bringing in players through free transfers and loan deals, notably Kaspars Gorkss from Blackpool, Samuel Di Carmine from Fiorentina, Emmanuel Ledesma from Genoa, Daniel Parejo from Real Madrid and Lee Cook from Fulham. In addition, Simon Walton and Chris Barker were sold to Plymouth Argyle and 6 players were released fromtheir contracts.
Finally, five players were sent out on loan – Chris Barker to Plymouth (subsequently transferred), Lee Brown to AFC Hornchurch, Lee Camp to Nottingham Forest, Jake Cole to Oxford United and Zesh Rehman to Blackpool.
Commercial partners
The current financial year witnessed the end of many commercial arrangements including shirt sponsor, Car Giant and kit sponsor, Le Coq Sportif. After the year-end, we were delighted to welcome Gulf Air as our official shirt sponsor on a
two brands that have mutual objectives and desires tomove forward and embrace a global audience. In addition we attracted Lotto Sport Italia as our official kit sponsor on a five-year deal – a partnership that will benefit QPR on and off the pitch.
We also attracted a two-year sponsorship from Abbey, who will become the Club’s financial partner. The partnership will provide the financial group with a bespoke programme including joint branding at Loftus Road, access to players and senior staff and the use of the Club facilities throughout the year. Finally, we announced that leading producer and distributor of watches, Chronotech will be the official time keeper on a one-year deal. Their ethos on quality complements our desire to build an exciting and stylish future for the Club.
These deals will allow QPR tomove towards our objective of ensuring that QPR is financially self-sustaining.
In the close season, we invested heavily on refurbishing key areas of the stadium. We refurbished the VIP boxes, hospitality suites, club superstore, ticket office and seating, as well as improving disabled access and the viewing experience for fans by installing a jumbo screen and scoreboard.
As part of this major transformation, we re-branded our hospitality areas. The C Club is an exclusive club available to only 100 members, allowing members tomix with some of the highest profile business people in the world. The W12 club is a premiummembers club, available to a limited number, providingmatch day
hospitality unrivalled at other clubs.
Catering
We were excited to confirm that renowned international restaurateur Cipriani’s would provide the catering at the Loftus Road stadium for the coming season. The Cipriani empire boasts some of the best restaurants, bars and hotels in theWorld and QPR will be joining this illustrious list, providing our corporate guests with some of the finest food available. Cipriani’s will cater for the C and W12 members clubs, as
well as our VIP boxes.
Prospects
With 39 games played so far in the 2008/09 season, we have accumulated 53 points and sit in 11th place with a win ratio of 33%. In addition, we reached the 4th round of the Carling Cup drawn against Manchester United at Old Trafford.
Off the field, our season ticket sales for the 2008/09 season were extremely encouraging. In fact, we took the decision to cap season ticket numbers at 10,000 before the start of the season. We also launched a new membership scheme
which has gone extremely well and we plan to launch a new quarterly magazine soon.
Our community scheme, which seeks to engage children through themediumof football, has reached over 50,000 individuals in the current year and the target next Season is to reach 100,000. The scheme aims to encourage physical activity whilst also tackling crime and anti-social behavior.
Subsequent to the year-end, the ABC Corporation loan that attracted an interest rate of 11.76%was repaid and refinanced in July 2008 with a loan fromAmulya Property Limited, a company with which Amit Bhatia and I are connected. The interest rate under the Amulya Loan is 8.5%.
The transformation in this Club since we completed the takeover has been immense. The
changes to the Club have been very important and will allow us to ease our transition to the Premier League.
I would like to pay tribute to the shareholders, fans and commercial partners for their continued support and dedication and I look forward to welcoming you to Loftus Road to what I hope will be a successful season
QPR Accounts Excerpts
FINANCIAL REVIEW
The financial year to 31 May 2008 marked a significant moment in Queens Park Rangers’ history. The Club was saved from certain administration by a consortium led by Flavio Briatore and Bernie Ecclestone. Following completion of the takeover in November 2007, the Club then secured an investment from the Mittal family.
The results for the year demonstrate that the benefits to materialise from the new ownership will take time to filter through. In summary:
• Group turnover exceeded £9.2 million, an increase of 12% on prior year, due mainly to an increase in broadcast and retail revenue;
• Match day revenue at £2.8 million, representing an average of £123k per Football League match played at Loftus Road, fell 12% on prior year due principally to match day ticket prices being reduced from an average of £25.00 in the prior year to £22.50 in the current year;
• Group operating losses exceeded £6.0 million, an increase of 27% on prior year reflecting the new owners’ pursuit of on-pitch success through investing heavily in the playing squad;
• At the balance sheet date the Group had bank reserves of £1.5 million, representing an increase of £1.2 million on the prior year;
• At the balance sheet date the Group has improved the deficit position from £3.8 million in the prior year to £0.2 million surplus this year....
The keymeasure of the Club’s success is on-pitch performance and a critical driver of any club’s value is presence in the Premier League, which is the stated aim of the new ownership. The desire for on-pitch success and the intense competitive desire to seek promotion to the Premier League hasmeant the Club has invested significantly in the first team– payments to acquire player registrations increased from £0.4million in the prior year to £6.6m illion this year, a 1550% increase.
Income
Group turnover for the year was £9.2 million (2007 – £8.2 million). Ticketing contributed 54% (2007 – 61%) to Group turnover in the current financial year, with broadcast contributing 21% (2007 – 13%), commercial revenue falling slightly at 18% (2007 – 21%) and other revenue contributing 6% (2007 – 7%).
Ticketing
The decrease in turnover from £5.0 million in the prior year to £4.8 million in the current year was driven mainly by a reduction in match day ticket prices and season ticket prices at Loftus Road stadium, where the price of an average adult ticket was reduced from £25.00 to £22.50. The ‘buzz’ surrounding the new ownership possibly possibly helped increase the average attendance for the 23 Championship first team matches played from 12,920 to 13,594, a 5% increase.
There was also growth in the number of season ticket holders – from 6,738 in the prior year to 8,103 by the end of the current financial year, a 20% increase. Although the Club were knocked out of the Carling and FA Cup in the first and third round respectively, the draw in the FA Cup away against Chelsea helped boost revenue
As the above graph demonstrates, the stadium is clearly under-utilised and the aim is to gradually increase the percentage capacity. Over the previous 5 years, the stadium capacity percentage has fallen from a high of 83% in the 2004/05 season to 74% in the current financial year.
Broadcast
The increase in Group turnover was driven mainly by an increase in broadcasting revenues, where revenue increased to £1.9 million (2007 – £1.0 million). The increase was due to the Football League solidarity payment made to all Championship clubs and the size of this payment is of course dependant on the teams promoted and relegated in any one year.
Retail
Retail revenues increased by 108% to £0.7 million (2007 – £0.3 million) as a result of increased match attendance and partly revenue generated from new logo merchandise.
Commercial
Commercial revenue (excluding retail) fell by 35% to £0.9 million (2007 – £1.4 million). The group was tied into many commercial agreements that represented poor value and a new strategy was put in place by the new ownership, the results of which will not filter through until next year.
Expenditure
Expenditure has increased significantly from the prior year reflecting investment (salaries, sign on and appearance fees) in the first team squad (including loan players) and two first team coaches as well as costs due to termination of existing commercial arrangements.
Cost of sales
The Group’s cost of sales grew to £14.3 million (2007 – £9.6 million). Playing squad salaries increased by 43% as a result of 12 new players being brought in during the year in addition to 11 players on loan deals.
This was offset by savings made on 19 first team players being released from their contracts. Moreover, intangible asset amortisation grew significantly due to these additions to the squad. Football staff salaries also increased by 15% due to costs connected with termination of John Gregory and Luigi De Canio contracts.
Administrative expenses
The Group’s administrative expenses grew to £5.9 million (2007 - £3.5 million). In order to support the growth of the business next year, the number of non-playing staff increased by 10 during the year and is expected to rise further.
In addition, the Group incurred significant one off legal and professional costs associated with completion of the takeover in November 2007. Moreover, the Group incurred one-off costs associated with termination of the existing shirt sponsor Car Giant and kit sponsors Le Coq Sportif.
Player trading
A profit of £2.1 million was generated from the sale of player registrations (2007 – £1.6 million). This was principally as a result of the sale of Lee
Cook to Fulham in August 2007. Lee Cook has, since the year-end, returned to Loftus Road on a permanent deal.
Cash flow and treasury
Net cash outflow from operations amounted to £3.3 million as compared to £3.4 million for the previous year. The table below demonstrates how an increase in cash of £1.2 million arose:....
Subsequent to the year-end, the ABC loan that attracted an interest rate of 11.76% was repaid and refinanced with a loan from Amulya Property Limited, a company with which Flavio Briatore and Amit Bhatia, directors of the Group, are
connected. The interest rate under the Amulya Loan is 8.5%. Despite this, the cost of servicing debt rose as the loans due to Sarita Capital Investments Inc, the majority shareholder, amounted to £8.6 million (2007 - £nil) whereby
interest is payable at 7.0%. ....
Additionally, the Group repaid £1.3 million in loans during the year, repaid significant taxation and trade creditor liabilities as well as making improvements to the level of stock holding and debtor collection process.
Net debt as at 31 May 2008 has increased to £19.9 million (2007 – £18.0 million).
....
Football
The Group’s income is directly affected by the performance of the first team. The sources and level of revenue generated by the Group has a direct relationship with the performance of the team in the Championship, the Carling Cup and the FA Cup.
It is important to note that 54% (2007 – 61%) of the Group’s revenue is derived from ticket sales. The level of attendance may be influenced by factors such as the su ccess of the team, ticket prices, broadcast coverage and the general economic climate. The team in the current financial year performed better than in
the prior year finishing 4 places higher in 14th, combined with a reduction in admission prices and interest from the new ownership helped increase average attendance by 5% during the year.
The Group is importantly dependant on the performance of the playing squad, as well as the football management staff. The strategy is to ensure we retain the highest quality playing staff by securing long-terms contracts. The Group operates in a highly competitive market for talent and the market rates for transfer and wages is to a varying degree dictated by competitors and the Group may follow this in order to maintain the strength of the first team.
The Club is regulated by the rules of the various governing bodies and any change to these rules could have an impact on the Group, especially the division of broadcasting income. The Group monitors its compliance with all applicable rules
and considers the impact of any changes.
Commercial
The Group derives income from sponsorship and other commercial arrangements. Going
forward, the Group aims to enter into long -term arrangements with its key commercial partners thereby securing certainty of income in the medium term. Broadcasting and certain other revenues are derived from contracts that are currently centrally negotiated by the Football League; the Group does not have any
influence on the outcome of the relevant contract negotiations.
Outlook
The ‘credit crunch’ has led to a greater focus on balance sheets and debt servicing costs across all businesses. This has led the Group to assess various possibilities as to how it is financed over
the short-to-medium term to ensure value is maximised for shareholders. We expect to primarily focus on the operational and commercial revenue generation aspects of the
stadium and facilities.
The 2008/09 financial results will benefit from significant commercial contracts that have been signed. These include the new shirt sponsorship deal signed with Gulf Air, new kit sponsor Lotto and commercial partner deals with Santander and Chronotech. This will be offset by a fall in broadcasting revenue as a result of reduction in the solidarity payment, which is dependant on what clubs are relegated from the Premier League.
In terms of stadium development, there has been a significant spend on the corporate boxes, hospitality suites, ticket office, retail outlets and seating as well as improvement in the viewing experience through the jumbo screen and scoreboard.
Despite the revenue that we can expect to derive as a result of new commercial contracts, the Board continues to believe that the best long term policy for the Group is to re-invest cash
back into the development of the team and key areas of the stadium. Accordingly, the Group’s business plan and budgets are prepared with this objective in mind.
Gavin Taylor
Finance Director
DIRECTORS REPORT
The directors present their report and the audited group financial statements for the year ended 31 May 2008.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
...The results for the year demonstrate that the benefits to materialise from the new ownership will take time to filter through. In summary:
• Group turnover exceeded £9.2 million, an increase of 12% on prior year, due mainly to an increase in broadcast and retail revenue;
• Match day revenue at £2.8 million, representing an average of £123k per Football League match played at Loftus Road, fell 12% on prior year due principally to match day ticket prices being reduced from an average of £25.00 in the prior year
to £22.50 in the current year;
• Group operating losses exceeded £6.0 million, an increase of 27% on prior year reflecting the new owners’ pursuit of on pitch success through investing heavily in the playing squad;
.....The key measure of the Club’s success is onpitch
performance and a critical driver of any
club’s value is presence in the Premier League,
which is the stated aim of the new ownership.
The desire for on-pitch success and the intense
competitive desire to seek promotion to the
Premier League has meant the Club has
invested significantly in the first team.
CASH FLOW AND TREASURY
Net cash outflow from operations amounted
to £3.3 million as compared to £3.4 million for
the previous year.
Subsequent to the year-end, the ABC loan that attracted an interest rate of 11.76% was repaid and refinanced with a loan from Amulya Property Limited, a company with
which Flavio Briatore and Amit Bhatia,
directors of the Group, are connected. The
interest rate under the Amulya Loan is 8.5%.
Despite this, the cost of servicing debt rose as
the loans due to Sarita Capital Investments
Inc, the majority shareholder, amounted to
£8.6 million (2007 - £nil) whereby interest is payable at 7.0%.
Additionally, the Group repaid £1.3 million in loans during the year, repaid significant taxation and trade creditor liabilities as well as making improvements to the level of stock
holding and debtor collection process.
Net debt as at 31 May 2008 has increased to £19.6 million (2007 – £18.0 million).
RISKS AND UNCERTAINTIES
There are a number of potential risks and
uncertainties that could have a material impact
on the Group’s long term performance. These
risks and uncertainties are monitored by the
Board on a regular basis.
FOOTBALL
The Group’s income is directly affected by the performance of the first team. The sources and level of rev enue generated by the Group has a direct relationship with the performance of the
teamin the Championship, the Carling Cup and the FA Cup.
It is important to note that 54% (2007 – 61%) of the Group’s revenue is derived from ticket sales. The level of attendancemay be influenced by factors such as the success of the team, ticket prices, broadcast coverage and the
general economic climate. The teamin the
current financial year performed better than in the
prior year finishing 4 places higher in 14th,
combined with a reduction in admission prices and
interest fromthe new ownership helped increase
average attendance by 5%during the year.
The Group is importantly dependant on the
performance of the playing squad, as well as the
footballmanagement staff. The strategy is to
ensure we retain the highest quality playing staff
by securing long-terms contracts. The Group
operates in a highly competitivemarket for talent
and themarket rates for transfer and wages is,
to a varying degree, dictated by competitors and
the Groupmay be required to follow this in order
to maintain the strength of the first team.
The Club is regulated by the rules of the
various governing bodies and any change to
these rules could have an impact on the
Group, especially the division of broadcasting
income. The Group monitors its compliance
with all applicable rules and considers the
impact of any changes.
COMMERCIAL
The Group derives income from sponsorship and other commercial arrangements. Going forward, the Group aims to enter into long-term arrangements with its key commercial partners
thereby securing certainty of income in the
medium term.
Broadcasting and certain other revenues are
derived from contracts that are currently
centrally negotiated by the Football League; the
Group does not have any influence on the
outcome of the relevant contract negotiations.
FUTURE DEVELOPMENTS
The ‘credit crunch’ has led to a greater focus
on the balance sheet and debt servicing costs
across all businesses. This has led the Group
to assess various possibilities as to how it is
financed over the short-to-medium term to
ensure value is maximised for shareholders.
We expect to primarily focus on the operational
and commercial revenue generation aspects of
the stadium and facilities.
The 2008/09 financial results will benefit from significant commercial contracts that have been signed. These include the new shirt sponsorship deal signed with Gulf Air, new kit
sponsor Lotto and commercial partner deals
with Santander and Chronotech. This will be
offset by a fall in broadcasting revenue as a
result of reduction in the solidarity payment,
which is dependant on which clubs are
relegated from the Premier League.
In terms of stadium development, there has been a significant spend on the corporate
boxes, hospitality suites, ticket office, retail outlets and seating as well as improving in the viewing experience through the jumbo screen and scoreboard.
Despite the revenue that we can expect to derive as a result of new commercial contracts, the Board continues to believe that the best long term policy for the Group is to re-invest cash back into the development of the team and
key areas of the stadium. Accordingly, the Group’s business plan and budgets are
prepared with this objective in mind.
RESULTS AND DIVIDENDS
The loss for the year amounted to £6,009,000 (2007 – loss £4,729,000). The directors have not recommended a dividend.
GROUP PROFIT AND LOSS ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS
2. TURNOVER
The turnover and loss before tax are attributable to the one principal activity of the group.
An analysis of turnover is given below:
2008 2007
£000 £000
Match day receipts 4,696 5,008
Television andmedia 1,925 1,032
Sponsorship,merchandising and commercial 1,627 1,731
Other 991 453
Total 9,239 8,224
3. OTHER OPERATING INCOME
2008 2007
£000 £000
Waiver of loan 4,213 –
On the 1 September 2007 Mr A Caliendo waived £4,212,882 of his loan owed to himby QPR Holdings Limited.
5. DIRECTORS AND STAFF COSTS
The remuneration of the directors was:
2008 2007
£000 £000
Directors Remuneration 174 140
Amounts paid to third parties in respect of directors services
249 214
The highest paid director received £196,670 during the year.
The average number of staff, including executive directors,
employed by the group during the financial year can be analysed as follows:
2008 2007
No No
Administrative staff 11 13
Players,managers, coaches and support staff 68 54
Commercial,marketing and retail staff 11 10
Stadiumandmaintenance staff 7 5
Community projects 20 15
117 97
The aggregate payroll costs of the above were:
2008 2007
£000 £000
Wages and salaries 9,271 6,977
Social security costs 1,074 749
Other pension costs 53 6
10,398 7,732
....
A £10,000,000 loan from ABC Corporation, interest bearing at 11.76%, secured by way of fixed charge over the Loftus Road Stadium, which was repaid in July 2008. . This has been reclassified as amounts falling due in less than one year, in the year ending 31 May 2008, as it was repaid post year-end. (See Note 24)
16.CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Group Company
2008 2007 2008 2007
£000 £000 £000 £000
Other loans 11,100 16,974 11,100 16,974
Included within long termcreditors are the following unsecured convertible loans:
A £8,600,000 loan fromSarita Capital Investments, interest bearing at 7% and is repayable on demand.
A £500,000 loan fromValentin Ehmer, interest bearing at 8.72%and is repayable on 29 April 2010.
A £2,000,000 (interest free) loan owing to Mr A Caliendo is repayable on 28 February 2011 and redeemable at any time prior to that date at the sole discretion of QPR.
...
19.RELATED PARTY TRANSACTIONS
During the year, the company paid consultancy fees amounting to £75,000 (2007: £73,750) to Moorbound Ltd, a company in which O Paladini, the wife of G Paladini, a director, is the only shareholder. In addition the company provided an interest free loan of £140,000 (2007:£nil) to G Paladini.
www.qpr.co.uk/page/AnnualAccountsDetail/0,,10373~1698605,00.html
www.qpr.co.uk/staticFiles/19/39/0,,10373~145689,00.pdf
CHAIRMAN’S REPORT - YEAR ENDED 31 MAY 2008
- On behalf of the Board of Directors, I am delighted to present the annual financial statements and report for the year ended 30 May 2008 with a review of what has been a historic year for Queens Park Rangers Football Club. In November 2007, we saved the club from certain administration and completed the takeover of QPR Holdings Limited, with the clear aim of seeking promotion from the Championship to the Premier League. Shortly afterwards, we were pleased to announce that we had secured a 20% investment from the Mittal family.
We understand the QPR heritage and our role as fans, owners and custodians of the Club. We believe in being courageous in the development of the Club and in taking managed risks. At the same time we remain committed to developing the long-term sustainability of the Club through maintaining a business that pays its own way.
An important part of this development was the launch of a new club crest. The crest was designed to combine elements of the past, present and future of the Club. The new crest features the famous blue and white hoops, which appeared on the Club’s badge before it was redesigned in the early 1980s. The change is to be representative of our aim to re-launch the Club into a global brand.
On the Field
The 2007/08 season unfortunately commenced with the tragic death of rising star Ray Jones. The impact of this had a clear knock-on effect to the team performance at the start of the season, with no wins and 6 losses in the first 9 games. Following this poor start, we decided to part company with the first teamcoach, John Gregory. As an interim measure we appointed Mick Harford as Caretaker Manager before installing Luigi De Canio as first team coach. Luigi managed to guide QPR to 14th place, which represented an improvement on the previous season, when we finished 18th.
Following the end of the season Luigi De Canio departed bymutual consent and we appointed Iain Dowie as first teamcoach. However, after 15 games in charge achieving a points total of 18 and guiding QPR to the 4th round of the Carling Cup, we gave Iain notice to terminate his employment. Gareth Ainsworth took on the role of Caretaker Manager.
Disappointingly, we were knocked out of the first stages of the Carling and FA Cups by Leyton Orient and Chelsea respectively.
Player transfers
The key barometer of our success is the on-pitch performance and thus we intend to pursue a policy of investing surplus cash into team development. In the January 2008 transfer window, we invested heavily in the first team squad bringing in 8 new players – Patrick Agyemang fromPreston, Akos Buzsaky from Plymouth, Matthew Connolly fromArsenal, Hogan EphraimfromWest Ham, Gavin Mahon from Watford, Fitz Hall fromWigan, Rowan Vine from Birminghamand Damien Delaney fromHull.
Although such sweeping changes to the teamwill take a period of adjustment, these additional player signings to the first teamimproved our win ratio from24% pre-January to 38% post January.
During the summer transfer window, we took a prudent and measured approach to player signings by bringing in players through free transfers and loan deals, notably Kaspars Gorkss from Blackpool, Samuel Di Carmine from Fiorentina, Emmanuel Ledesma from Genoa, Daniel Parejo from Real Madrid and Lee Cook from Fulham. In addition, Simon Walton and Chris Barker were sold to Plymouth Argyle and 6 players were released fromtheir contracts.
Finally, five players were sent out on loan – Chris Barker to Plymouth (subsequently transferred), Lee Brown to AFC Hornchurch, Lee Camp to Nottingham Forest, Jake Cole to Oxford United and Zesh Rehman to Blackpool.
Commercial partners
The current financial year witnessed the end of many commercial arrangements including shirt sponsor, Car Giant and kit sponsor, Le Coq Sportif. After the year-end, we were delighted to welcome Gulf Air as our official shirt sponsor on a
two brands that have mutual objectives and desires tomove forward and embrace a global audience. In addition we attracted Lotto Sport Italia as our official kit sponsor on a five-year deal – a partnership that will benefit QPR on and off the pitch.
We also attracted a two-year sponsorship from Abbey, who will become the Club’s financial partner. The partnership will provide the financial group with a bespoke programme including joint branding at Loftus Road, access to players and senior staff and the use of the Club facilities throughout the year. Finally, we announced that leading producer and distributor of watches, Chronotech will be the official time keeper on a one-year deal. Their ethos on quality complements our desire to build an exciting and stylish future for the Club.
These deals will allow QPR tomove towards our objective of ensuring that QPR is financially self-sustaining.
In the close season, we invested heavily on refurbishing key areas of the stadium. We refurbished the VIP boxes, hospitality suites, club superstore, ticket office and seating, as well as improving disabled access and the viewing experience for fans by installing a jumbo screen and scoreboard.
As part of this major transformation, we re-branded our hospitality areas. The C Club is an exclusive club available to only 100 members, allowing members tomix with some of the highest profile business people in the world. The W12 club is a premiummembers club, available to a limited number, providingmatch day
hospitality unrivalled at other clubs.
Catering
We were excited to confirm that renowned international restaurateur Cipriani’s would provide the catering at the Loftus Road stadium for the coming season. The Cipriani empire boasts some of the best restaurants, bars and hotels in theWorld and QPR will be joining this illustrious list, providing our corporate guests with some of the finest food available. Cipriani’s will cater for the C and W12 members clubs, as
well as our VIP boxes.
Prospects
With 39 games played so far in the 2008/09 season, we have accumulated 53 points and sit in 11th place with a win ratio of 33%. In addition, we reached the 4th round of the Carling Cup drawn against Manchester United at Old Trafford.
Off the field, our season ticket sales for the 2008/09 season were extremely encouraging. In fact, we took the decision to cap season ticket numbers at 10,000 before the start of the season. We also launched a new membership scheme
which has gone extremely well and we plan to launch a new quarterly magazine soon.
Our community scheme, which seeks to engage children through themediumof football, has reached over 50,000 individuals in the current year and the target next Season is to reach 100,000. The scheme aims to encourage physical activity whilst also tackling crime and anti-social behavior.
Subsequent to the year-end, the ABC Corporation loan that attracted an interest rate of 11.76%was repaid and refinanced in July 2008 with a loan fromAmulya Property Limited, a company with which Amit Bhatia and I are connected. The interest rate under the Amulya Loan is 8.5%.
The transformation in this Club since we completed the takeover has been immense. The
changes to the Club have been very important and will allow us to ease our transition to the Premier League.
I would like to pay tribute to the shareholders, fans and commercial partners for their continued support and dedication and I look forward to welcoming you to Loftus Road to what I hope will be a successful season
QPR Accounts Excerpts
FINANCIAL REVIEW
The financial year to 31 May 2008 marked a significant moment in Queens Park Rangers’ history. The Club was saved from certain administration by a consortium led by Flavio Briatore and Bernie Ecclestone. Following completion of the takeover in November 2007, the Club then secured an investment from the Mittal family.
The results for the year demonstrate that the benefits to materialise from the new ownership will take time to filter through. In summary:
• Group turnover exceeded £9.2 million, an increase of 12% on prior year, due mainly to an increase in broadcast and retail revenue;
• Match day revenue at £2.8 million, representing an average of £123k per Football League match played at Loftus Road, fell 12% on prior year due principally to match day ticket prices being reduced from an average of £25.00 in the prior year to £22.50 in the current year;
• Group operating losses exceeded £6.0 million, an increase of 27% on prior year reflecting the new owners’ pursuit of on-pitch success through investing heavily in the playing squad;
• At the balance sheet date the Group had bank reserves of £1.5 million, representing an increase of £1.2 million on the prior year;
• At the balance sheet date the Group has improved the deficit position from £3.8 million in the prior year to £0.2 million surplus this year....
The keymeasure of the Club’s success is on-pitch performance and a critical driver of any club’s value is presence in the Premier League, which is the stated aim of the new ownership. The desire for on-pitch success and the intense competitive desire to seek promotion to the Premier League hasmeant the Club has invested significantly in the first team– payments to acquire player registrations increased from £0.4million in the prior year to £6.6m illion this year, a 1550% increase.
Income
Group turnover for the year was £9.2 million (2007 – £8.2 million). Ticketing contributed 54% (2007 – 61%) to Group turnover in the current financial year, with broadcast contributing 21% (2007 – 13%), commercial revenue falling slightly at 18% (2007 – 21%) and other revenue contributing 6% (2007 – 7%).
Ticketing
The decrease in turnover from £5.0 million in the prior year to £4.8 million in the current year was driven mainly by a reduction in match day ticket prices and season ticket prices at Loftus Road stadium, where the price of an average adult ticket was reduced from £25.00 to £22.50. The ‘buzz’ surrounding the new ownership possibly possibly helped increase the average attendance for the 23 Championship first team matches played from 12,920 to 13,594, a 5% increase.
There was also growth in the number of season ticket holders – from 6,738 in the prior year to 8,103 by the end of the current financial year, a 20% increase. Although the Club were knocked out of the Carling and FA Cup in the first and third round respectively, the draw in the FA Cup away against Chelsea helped boost revenue
As the above graph demonstrates, the stadium is clearly under-utilised and the aim is to gradually increase the percentage capacity. Over the previous 5 years, the stadium capacity percentage has fallen from a high of 83% in the 2004/05 season to 74% in the current financial year.
Broadcast
The increase in Group turnover was driven mainly by an increase in broadcasting revenues, where revenue increased to £1.9 million (2007 – £1.0 million). The increase was due to the Football League solidarity payment made to all Championship clubs and the size of this payment is of course dependant on the teams promoted and relegated in any one year.
Retail
Retail revenues increased by 108% to £0.7 million (2007 – £0.3 million) as a result of increased match attendance and partly revenue generated from new logo merchandise.
Commercial
Commercial revenue (excluding retail) fell by 35% to £0.9 million (2007 – £1.4 million). The group was tied into many commercial agreements that represented poor value and a new strategy was put in place by the new ownership, the results of which will not filter through until next year.
Expenditure
Expenditure has increased significantly from the prior year reflecting investment (salaries, sign on and appearance fees) in the first team squad (including loan players) and two first team coaches as well as costs due to termination of existing commercial arrangements.
Cost of sales
The Group’s cost of sales grew to £14.3 million (2007 – £9.6 million). Playing squad salaries increased by 43% as a result of 12 new players being brought in during the year in addition to 11 players on loan deals.
This was offset by savings made on 19 first team players being released from their contracts. Moreover, intangible asset amortisation grew significantly due to these additions to the squad. Football staff salaries also increased by 15% due to costs connected with termination of John Gregory and Luigi De Canio contracts.
Administrative expenses
The Group’s administrative expenses grew to £5.9 million (2007 - £3.5 million). In order to support the growth of the business next year, the number of non-playing staff increased by 10 during the year and is expected to rise further.
In addition, the Group incurred significant one off legal and professional costs associated with completion of the takeover in November 2007. Moreover, the Group incurred one-off costs associated with termination of the existing shirt sponsor Car Giant and kit sponsors Le Coq Sportif.
Player trading
A profit of £2.1 million was generated from the sale of player registrations (2007 – £1.6 million). This was principally as a result of the sale of Lee
Cook to Fulham in August 2007. Lee Cook has, since the year-end, returned to Loftus Road on a permanent deal.
Cash flow and treasury
Net cash outflow from operations amounted to £3.3 million as compared to £3.4 million for the previous year. The table below demonstrates how an increase in cash of £1.2 million arose:....
Subsequent to the year-end, the ABC loan that attracted an interest rate of 11.76% was repaid and refinanced with a loan from Amulya Property Limited, a company with which Flavio Briatore and Amit Bhatia, directors of the Group, are
connected. The interest rate under the Amulya Loan is 8.5%. Despite this, the cost of servicing debt rose as the loans due to Sarita Capital Investments Inc, the majority shareholder, amounted to £8.6 million (2007 - £nil) whereby
interest is payable at 7.0%. ....
Additionally, the Group repaid £1.3 million in loans during the year, repaid significant taxation and trade creditor liabilities as well as making improvements to the level of stock holding and debtor collection process.
Net debt as at 31 May 2008 has increased to £19.9 million (2007 – £18.0 million).
....
Football
The Group’s income is directly affected by the performance of the first team. The sources and level of revenue generated by the Group has a direct relationship with the performance of the team in the Championship, the Carling Cup and the FA Cup.
It is important to note that 54% (2007 – 61%) of the Group’s revenue is derived from ticket sales. The level of attendance may be influenced by factors such as the su ccess of the team, ticket prices, broadcast coverage and the general economic climate. The team in the current financial year performed better than in
the prior year finishing 4 places higher in 14th, combined with a reduction in admission prices and interest from the new ownership helped increase average attendance by 5% during the year.
The Group is importantly dependant on the performance of the playing squad, as well as the football management staff. The strategy is to ensure we retain the highest quality playing staff by securing long-terms contracts. The Group operates in a highly competitive market for talent and the market rates for transfer and wages is to a varying degree dictated by competitors and the Group may follow this in order to maintain the strength of the first team.
The Club is regulated by the rules of the various governing bodies and any change to these rules could have an impact on the Group, especially the division of broadcasting income. The Group monitors its compliance with all applicable rules
and considers the impact of any changes.
Commercial
The Group derives income from sponsorship and other commercial arrangements. Going
forward, the Group aims to enter into long -term arrangements with its key commercial partners thereby securing certainty of income in the medium term. Broadcasting and certain other revenues are derived from contracts that are currently centrally negotiated by the Football League; the Group does not have any
influence on the outcome of the relevant contract negotiations.
Outlook
The ‘credit crunch’ has led to a greater focus on balance sheets and debt servicing costs across all businesses. This has led the Group to assess various possibilities as to how it is financed over
the short-to-medium term to ensure value is maximised for shareholders. We expect to primarily focus on the operational and commercial revenue generation aspects of the
stadium and facilities.
The 2008/09 financial results will benefit from significant commercial contracts that have been signed. These include the new shirt sponsorship deal signed with Gulf Air, new kit sponsor Lotto and commercial partner deals with Santander and Chronotech. This will be offset by a fall in broadcasting revenue as a result of reduction in the solidarity payment, which is dependant on what clubs are relegated from the Premier League.
In terms of stadium development, there has been a significant spend on the corporate boxes, hospitality suites, ticket office, retail outlets and seating as well as improvement in the viewing experience through the jumbo screen and scoreboard.
Despite the revenue that we can expect to derive as a result of new commercial contracts, the Board continues to believe that the best long term policy for the Group is to re-invest cash
back into the development of the team and key areas of the stadium. Accordingly, the Group’s business plan and budgets are prepared with this objective in mind.
Gavin Taylor
Finance Director
DIRECTORS REPORT
The directors present their report and the audited group financial statements for the year ended 31 May 2008.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
...The results for the year demonstrate that the benefits to materialise from the new ownership will take time to filter through. In summary:
• Group turnover exceeded £9.2 million, an increase of 12% on prior year, due mainly to an increase in broadcast and retail revenue;
• Match day revenue at £2.8 million, representing an average of £123k per Football League match played at Loftus Road, fell 12% on prior year due principally to match day ticket prices being reduced from an average of £25.00 in the prior year
to £22.50 in the current year;
• Group operating losses exceeded £6.0 million, an increase of 27% on prior year reflecting the new owners’ pursuit of on pitch success through investing heavily in the playing squad;
.....The key measure of the Club’s success is onpitch
performance and a critical driver of any
club’s value is presence in the Premier League,
which is the stated aim of the new ownership.
The desire for on-pitch success and the intense
competitive desire to seek promotion to the
Premier League has meant the Club has
invested significantly in the first team.
CASH FLOW AND TREASURY
Net cash outflow from operations amounted
to £3.3 million as compared to £3.4 million for
the previous year.
Subsequent to the year-end, the ABC loan that attracted an interest rate of 11.76% was repaid and refinanced with a loan from Amulya Property Limited, a company with
which Flavio Briatore and Amit Bhatia,
directors of the Group, are connected. The
interest rate under the Amulya Loan is 8.5%.
Despite this, the cost of servicing debt rose as
the loans due to Sarita Capital Investments
Inc, the majority shareholder, amounted to
£8.6 million (2007 - £nil) whereby interest is payable at 7.0%.
Additionally, the Group repaid £1.3 million in loans during the year, repaid significant taxation and trade creditor liabilities as well as making improvements to the level of stock
holding and debtor collection process.
Net debt as at 31 May 2008 has increased to £19.6 million (2007 – £18.0 million).
RISKS AND UNCERTAINTIES
There are a number of potential risks and
uncertainties that could have a material impact
on the Group’s long term performance. These
risks and uncertainties are monitored by the
Board on a regular basis.
FOOTBALL
The Group’s income is directly affected by the performance of the first team. The sources and level of rev enue generated by the Group has a direct relationship with the performance of the
teamin the Championship, the Carling Cup and the FA Cup.
It is important to note that 54% (2007 – 61%) of the Group’s revenue is derived from ticket sales. The level of attendancemay be influenced by factors such as the success of the team, ticket prices, broadcast coverage and the
general economic climate. The teamin the
current financial year performed better than in the
prior year finishing 4 places higher in 14th,
combined with a reduction in admission prices and
interest fromthe new ownership helped increase
average attendance by 5%during the year.
The Group is importantly dependant on the
performance of the playing squad, as well as the
footballmanagement staff. The strategy is to
ensure we retain the highest quality playing staff
by securing long-terms contracts. The Group
operates in a highly competitivemarket for talent
and themarket rates for transfer and wages is,
to a varying degree, dictated by competitors and
the Groupmay be required to follow this in order
to maintain the strength of the first team.
The Club is regulated by the rules of the
various governing bodies and any change to
these rules could have an impact on the
Group, especially the division of broadcasting
income. The Group monitors its compliance
with all applicable rules and considers the
impact of any changes.
COMMERCIAL
The Group derives income from sponsorship and other commercial arrangements. Going forward, the Group aims to enter into long-term arrangements with its key commercial partners
thereby securing certainty of income in the
medium term.
Broadcasting and certain other revenues are
derived from contracts that are currently
centrally negotiated by the Football League; the
Group does not have any influence on the
outcome of the relevant contract negotiations.
FUTURE DEVELOPMENTS
The ‘credit crunch’ has led to a greater focus
on the balance sheet and debt servicing costs
across all businesses. This has led the Group
to assess various possibilities as to how it is
financed over the short-to-medium term to
ensure value is maximised for shareholders.
We expect to primarily focus on the operational
and commercial revenue generation aspects of
the stadium and facilities.
The 2008/09 financial results will benefit from significant commercial contracts that have been signed. These include the new shirt sponsorship deal signed with Gulf Air, new kit
sponsor Lotto and commercial partner deals
with Santander and Chronotech. This will be
offset by a fall in broadcasting revenue as a
result of reduction in the solidarity payment,
which is dependant on which clubs are
relegated from the Premier League.
In terms of stadium development, there has been a significant spend on the corporate
boxes, hospitality suites, ticket office, retail outlets and seating as well as improving in the viewing experience through the jumbo screen and scoreboard.
Despite the revenue that we can expect to derive as a result of new commercial contracts, the Board continues to believe that the best long term policy for the Group is to re-invest cash back into the development of the team and
key areas of the stadium. Accordingly, the Group’s business plan and budgets are
prepared with this objective in mind.
RESULTS AND DIVIDENDS
The loss for the year amounted to £6,009,000 (2007 – loss £4,729,000). The directors have not recommended a dividend.
GROUP PROFIT AND LOSS ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS
2. TURNOVER
The turnover and loss before tax are attributable to the one principal activity of the group.
An analysis of turnover is given below:
2008 2007
£000 £000
Match day receipts 4,696 5,008
Television andmedia 1,925 1,032
Sponsorship,merchandising and commercial 1,627 1,731
Other 991 453
Total 9,239 8,224
3. OTHER OPERATING INCOME
2008 2007
£000 £000
Waiver of loan 4,213 –
On the 1 September 2007 Mr A Caliendo waived £4,212,882 of his loan owed to himby QPR Holdings Limited.
5. DIRECTORS AND STAFF COSTS
The remuneration of the directors was:
2008 2007
£000 £000
Directors Remuneration 174 140
Amounts paid to third parties in respect of directors services
249 214
The highest paid director received £196,670 during the year.
The average number of staff, including executive directors,
employed by the group during the financial year can be analysed as follows:
2008 2007
No No
Administrative staff 11 13
Players,managers, coaches and support staff 68 54
Commercial,marketing and retail staff 11 10
Stadiumandmaintenance staff 7 5
Community projects 20 15
117 97
The aggregate payroll costs of the above were:
2008 2007
£000 £000
Wages and salaries 9,271 6,977
Social security costs 1,074 749
Other pension costs 53 6
10,398 7,732
....
A £10,000,000 loan from ABC Corporation, interest bearing at 11.76%, secured by way of fixed charge over the Loftus Road Stadium, which was repaid in July 2008. . This has been reclassified as amounts falling due in less than one year, in the year ending 31 May 2008, as it was repaid post year-end. (See Note 24)
16.CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Group Company
2008 2007 2008 2007
£000 £000 £000 £000
Other loans 11,100 16,974 11,100 16,974
Included within long termcreditors are the following unsecured convertible loans:
A £8,600,000 loan fromSarita Capital Investments, interest bearing at 7% and is repayable on demand.
A £500,000 loan fromValentin Ehmer, interest bearing at 8.72%and is repayable on 29 April 2010.
A £2,000,000 (interest free) loan owing to Mr A Caliendo is repayable on 28 February 2011 and redeemable at any time prior to that date at the sole discretion of QPR.
...
19.RELATED PARTY TRANSACTIONS
During the year, the company paid consultancy fees amounting to £75,000 (2007: £73,750) to Moorbound Ltd, a company in which O Paladini, the wife of G Paladini, a director, is the only shareholder. In addition the company provided an interest free loan of £140,000 (2007:£nil) to G Paladini.
