Company Registration No. 00224792 (England and Wales)
MORECAMBE FOOTBALL CLUB LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2019
MORECAMBE FOOTBALL CLUB LIMITED
COMPANY INFORMATION
Directors
Mr R H Taylor
Mr G A Howse
Mr J Whittingham
Mr C A Goldring
Mr M Horton
(Appointed 29 October 2018)
Mr J T Wakefield
(Appointed 9 December 2019)
Mr C E Appleyard
(Appointed 19 December 2019)
Secretary
Mr G A Howse
Company number
00224792
Registered office
Globe Arena
Christie Way
Westgate
Morecambe
LA4 4TB
Auditor
MHA Moore and Smalley
Richard House
9 Winckley Square
Preston
PR1 3HP
MORECAMBE FOOTBALL CLUB LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 26
MORECAMBE FOOTBALL CLUB LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2019
- 1 -
The directors present the strategic report for the year ended 31 May 2019.
Fair review of the business
The financial year 2018/19 has once more proved to be challenging with a loss for the year of £566,112 after tax (2017/18: £451,923). The 18/19 season was Morecambe’s twelfth consecutive season in League 2.
The 18/19 season represented the club’s second year operating a Category 3 Academy.
Key performance indicators
The club was eliminated in the first round of the F.A. Cup after losing a replay 1-0 away at Halifax, in the League Cup a first-round elimination followed a 3-1 away defeat at Championship side Preston North End. In the EFL Trophy the club was eliminated at the group stage registering no points. Final League position was 18
th
(17/18 22nd) with an average crowd of 2,072 (17/18: 1,946).
Principal risks and uncertainties
The risks identified by the directors that would have an adverse impact of the company's future trading or financial position include:
-
Relegation from the Football League and the consequential loss of income; and
-
If the company were unable to secure sufficient finance from either the directors, owners or other sources to continue funding the cashflow requirements.
These and other risks are monitored by the Board on a regular basis.
In addition to the above, the Covid-19 pandemic poses a new risk and uncertainty for the Club and its ability to continue football activities.
Future developments
On 13 March 2020, the EFL announced the suspension of matches throughout the Championship, League One and League Two. At that date, the Club still had nine fixtures of the 2019/20 season to complete.
It goes without saying that the Covid-19 pandemic has had, and will have, a significant impact on the operations of the Club both on and off the field and the directors continue to monitor the position in conjunction with governing bodies. The uncertainty around Covid-19 constitutes a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
Mr G A Howse
Secretary
21 May 2020
MORECAMBE FOOTBALL CLUB LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2019
- 2 -
The directors present their annual report and financial statements for the year ended 31 May 2019.
Principal activities
The principal activity of the company continued to be that of a professional football club.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr P McGuigan
(Resigned 30 October 2018)
Mr R H Taylor
Mr G A Howse
Mr D Brockbank
(Resigned 27 September 2018)
Mr C M Hinchcliffe
(Resigned 27 September 2018)
Mr G S Burnard
(Resigned 12 June 2018)
Mr J Whittingham
Mr C A Goldring
Mr M Horton
(Appointed 29 October 2018)
Mr J T Wakefield
(Appointed 9 December 2019)
Mr C E Appleyard
(Appointed 19 December 2019)
Results and dividends
The results for the year are set out on pages 6 and 7.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Auditor
The auditor, MHA Moore and Smalley, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of
future developments
.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
By order of the board
Mr G A Howse
Secretary
21 May 2020
MORECAMBE FOOTBALL CLUB LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 2019
- 3 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
MORECAMBE FOOTBALL CLUB LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MORECAMBE FOOTBALL CLUB LIMITED
- 4 -
Opinion
We have audited the financial statements of Morecambe Football Club Limited (the 'company') for the year ended 31 May 2019 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 May 2019 and of its loss for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the financial statements
section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1.2 in the financial statements, which highlights that the company’s operations are affected by the Covid-19 pandemic. As stated in note 1.2, impact of Covid-19 on the company indicates that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors' r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
MORECAMBE FOOTBALL CLUB LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MORECAMBE FOOTBALL CLUB LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
MORECAMBE FOOTBALL CLUB LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MORECAMBE FOOTBALL CLUB LIMITED
- 6 -
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Paul Williams (Senior Statutory Auditor)
for and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Richard House
9 Winckley Square
Preston
PR1 3HP
MORECAMBE FOOTBALL CLUB LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2019
- 7 -
2019
2018
Notes
£
£
Turnover
3
2,818,391
2,794,805
Cost of sales
(2,973,342)
(2,777,467)
Gross (loss)/profit
(154,951)
17,338
Administrative expenses
(362,228)
(399,549)
Other operating income
34
2,378
Operating loss
4
(517,145)
(379,833)
Interest payable and similar expenses
7
(56,451)
(100,271)
Loss before taxation
(573,596)
(480,104)
Tax on loss
8
7,484
28,181
Loss for the financial year
(566,112)
(451,923)
The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.
MORECAMBE FOOTBALL CLUB LIMITED
BALANCE SHEET
AS AT 31 MAY 2019
31 May 2019
- 8 -
2019
2018
Notes
£
£
£
£
Fixed assets
Tangible assets
9
7,655,653
7,697,938
Current assets
Stocks
10
25,104
24,734
Debtors
11
151,746
208,822
Cash at bank and in hand
42,243
45,889
219,093
279,445
Creditors: amounts falling due within one year
12
(2,441,939)
(2,532,838)
Net current liabilities
(2,222,846)
(2,253,393)
Total assets less current liabilities
5,432,807
5,444,545
Creditors: amounts falling due after more than one year
13
(18,477)
(193,145)
Provisions for liabilities
16
(981,288)
(988,772)
Deferred income
19
-
(13,474)
Net assets
4,433,042
4,249,154
Capital and reserves
Called up share capital
20
4,773,260
4,023,260
Share premium account
10,000
10,000
Profit and loss reserves
(350,218)
215,894
Total equity
4,433,042
4,249,154
The financial statements were approved by the board of directors and authorised for issue on 21 May 2020 and are signed on its behalf by:
Mr R H Taylor
Director
Company Registration No. 00224792
MORECAMBE FOOTBALL CLUB LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2019
- 9 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 June 2017
4,023,160
10,000
667,817
4,700,977
Year ended 31 May 2018:
Loss and total comprehensive income for the year
-
-
(451,923)
(451,923)
Issue of share capital
20
100
-
-
100
Balance at 31 May 2018
4,023,260
10,000
215,894
4,249,154
Year ended 31 May 2019:
Loss and total comprehensive income for the year
-
-
(566,112)
(566,112)
Issue of share capital
20
750,000
-
-
750,000
Balance at 31 May 2019
4,773,260
10,000
(350,218)
4,433,042
MORECAMBE FOOTBALL CLUB LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2019
- 10 -
2019
2018
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
25
(323,963)
(394,836)
Interest paid
(56,451)
(100,271)
Net cash outflow from operating activities
(380,414)
(495,107)
Investing activities
Purchase of tangible fixed assets
(37,683)
(26,211)
Proceeds on disposal of tangible fixed assets
79
-
Net cash used in investing activities
(37,604)
(26,211)
Financing activities
Proceeds from issue of shares
750,000
100
Proceeds from borrowings
1,496,142
635,527
Repayment of borrowings
(1,248,777)
(72,746)
Payment of finance leases obligations
(18,292)
(31,999)
Net cash generated from financing activities
979,073
530,882
Net increase in cash and cash equivalents
561,055
9,564
Cash and cash equivalents at beginning of year
(518,812)
(528,376)
Cash and cash equivalents at end of year
42,243
(518,812)
Relating to:
Cash at bank and in hand
42,243
45,889
Bank overdrafts included in creditors payable within one year
-
(564,701)
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2019
- 11 -
1
Accounting policies
Company information
Morecambe Football Club Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Globe Arena, Christie Way, Westgate, Morecambe, LA4 4TB.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements have been prepared with early application of
the
FRS 102 Triennial Review 2017 amendments in full.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
1
Accounting policies
(Continued)
- 12 -
1.2
Going concern
At the date of approving these financial statements, the club has been affected by the Covid-19 pandemic. On 13 March 2020, the EFL announced the suspension of matches throughout the Championship, League One and League Two. At that date, the club still had nine fixtures of the 2019/20 season to complete. As time has progressed it is looking most likely that the remaining fixtures will either not be fulfilled or would have to be completed behind closed doors.
true
At the date of approving these financial statements, it is not clear what impact Covid-19 will have on the start of the 2020/21 season – whether it be a delay of the start of the season or matches being played behind closed doors.
It goes without saying that the Covid-19 pandemic has had, and will have, a significant impact on the operations of the club, not just on the field but off it too with the club’s ability to generate revenue being adversely affected.
The directors have prepared projections covering several scenarios but until there is clarity over the way forward for football clubs it is difficult to accurately predict the full impact of Covid-19 on operations and future cash requirements.
The club are making use of relevant Government initiatives that are available to them as well as support offered from the EFL to manage the business but there will be a requirement for additional funding over the next 12 months.
The club’s owners and financiers have confirmed their intention to continue to support the club over the next 12 months but in the opinion of the directors, support will be required not just from the club’s owners but also the governing bodies to help clubs through these uncertain times.
Whilst the directors believe that the company will be able to continue to operate and meet its obligations over the next 12 months, the impact of Covid-19 naturally brings uncertainty as to when the club will return to some form of normality.
Based on the above, the directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However, the uncertainty around Covid-19 constitutes a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
1.3
Turnover
Turnover represents income receivable, net of VAT, from football and related commercial activities. Sponsorship and similar income are recognised over the duration of the respective contracts. Gate and other match day revenues are recognised over the period of the football season as games are played. Other corporate and hospitality revenues are recognised at the time of the event.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
1
Accounting policies
(Continued)
- 13 -
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold land
No depreciation provided
Leasehold property
2% straight line
Plant and machinery
15% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to sell.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash at bank and in hand
Cash at bank and in hand
are basic financial assets
and
include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
1
Accounting policies
(Continued)
- 14 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
1
Accounting policies
(Continued)
- 15 -
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the following exception:
Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
1.14
Sale and finance lease back
FRS 102 requires that where a sale and leaseback transaction results in a finance lease the seller shall not recognise immediately, as income, any excess of sale proceeds over carrying amount but should instead defer such excess and amortise it over the lease term. However it is silent on the treatment of any deficit of sale proceeds over carrying amount. Therefore in formulating an accounting policy the directors have looked up the hierarchy of accounting standards to IFRS 16 which requires that the seller continues to recognise the assets and to recognise a financial liability equal to the transfer proceeds.
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant
effect on amounts recognised in the financial statements.
Classification of finance and operating leases
At the inception of each lease, management undertake an assessment of the terms of the lease including payments to be made over the life of the lease, the fair value of the asset subject to the lease, the length of the lease and whether the terms of the lease transfer substantially all of the risks and rewards of ownership.
Based on this assessment, management will determine whether the lease should be classified as a finance or operating lease.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows.
The residual value and estimated useful life of leasehold property
At the acquisition date of the property, management made an assessment of the useful life of the property. They have used their knowledge of the business, geographical area and the property itself in reaching a decision of a useful life of 50 years.
Management have also assessed the estimated residual value of the property at the end of its 50 year useful life. Using the factors noted above as well as the property market in the area they have reached an appropriate residual value which has been applied in the depreciation calculation.
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
- 17 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2019
2018
£
£
Turnover analysed by class of business
Football
2,020,486
2,017,898
Shop
62,208
79,428
Corporate
59,167
114,204
Hospitality
534,796
539,279
Other
37,802
43,996
Player sales
103,932
-
2,818,391
2,794,805
2019
2018
£
£
Turnover analysed by geographical market
United Kingdom
2,818,391
2,794,805
4
Operating loss
2019
2018
Operating loss for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
11,000
10,500
Depreciation of owned tangible fixed assets
59,230
58,713
Depreciation of tangible fixed assets held under finance leases
20,738
23,631
Profit on disposal of tangible fixed assets
(79)
-
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Playing and management staff
49
41
Other football related staff
67
90
Shop staff
2
2
Hospitality staff
66
55
Support and administrative staff
6
7
190
195
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
5
Employees
(Continued)
- 18 -
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
2,019,368
1,855,390
Social security costs
165,941
150,381
Pension costs
13,103
6,248
2,198,412
2,012,019
6
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
11,490
-
7
Interest payable and similar expenses
2019
2018
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
4,295
19,946
Interest on finance leases and hire purchase contracts
11,014
11,014
Other interest on financial liabilities
39,468
52,789
54,777
83,749
Other finance costs:
Other interest
1,674
16,522
56,451
100,271
8
Taxation
2019
2018
£
£
Deferred tax
Origination and reversal of timing differences
(7,484)
(28,181)
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
8
Taxation
(Continued)
- 19 -
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2019
2018
£
£
Loss before taxation
(573,596)
(480,104)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
(108,983)
(91,220)
Tax effect of expenses that are not deductible in determining taxable profit
1,629
3,755
Change in unrecognised deferred tax assets
98,989
79,324
Depreciation on assets not qualifying for tax allowances
8,365
8,365
Other permanent differences
-
(224)
Rolled over gain timing difference
(7,484)
(28,181)
Taxation credit for the year
(7,484)
(28,181)
Factors affecting future tax and charges
In his budget speech on 16 March 2016, the UK Chancellor of the Exchequer announced changes which have an effect on the company's future tax position. He announced a reduction in the rate of UK corporation tax to 17% from 1 April 2020. A reduction in the rate of UK corporation tax from 20% to 19% from 1 April 2017 had previously been announced.
As at the balance sheet date, the reductions in the rate of corporation tax had been substantively enacted and therefore any deferred tax has been provided at these rates.
At the balance sheet date, the company had tax losses carried forward of £7,764,026 (2018: £7,177,885). The company has not recognised a deferred tax asset in respect of these losses due to the uncertainty as to when future profits will arise.
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
- 20 -
9
Tangible fixed assets
Freehold land
Leasehold property
Plant and machinery
Total
£
£
£
£
Cost
At 1 June 2018
185,133
7,636,334
658,112
8,479,579
Additions
-
-
37,683
37,683
At 31 May 2019
185,133
7,636,334
695,795
8,517,262
Depreciation and impairment
At 1 June 2018
-
344,444
437,197
781,641
Depreciation charged in the year
-
44,025
35,943
79,968
At 31 May 2019
-
388,469
473,140
861,609
Carrying amount
At 31 May 2019
185,133
7,247,865
222,655
7,655,653
At 31 May 2018
185,133
7,291,890
220,915
7,697,938
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2019
2018
£
£
Plant and machinery
94,784
102,174
Leasehold property
269,030
274,493
363,814
376,667
Tangible fixed assets
with a carrying amount of £7,655,653 (2018 - £7,697,938) have been pledged to secure borrowings of the company.
10
Stocks
2019
2018
£
£
Finished goods and goods for resale
25,104
24,734
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
- 21 -
11
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
35,486
29,570
Other debtors
82,075
147,441
Prepayments and accrued income
34,185
31,811
151,746
208,822
12
Creditors: amounts falling due within one year
2019
2018
Notes
£
£
Bank loans and overdrafts
14
-
564,701
Obligations under finance leases
15
37,231
32,000
Other borrowings
14
1,861,321
1,462,811
Trade creditors
216,186
180,681
Taxation and social security
74,890
64,540
Other creditors
9,235
13,452
Accruals and deferred income
243,076
214,653
2,441,939
2,532,838
13
Creditors: amounts falling due after more than one year
2019
2018
Notes
£
£
Obligations under finance leases
15
8,477
32,000
Other borrowings
14
10,000
161,145
18,477
193,145
Amounts included above which fall due after five years are as follows:
Payable by instalments
-
58,184
Payable other than by instalments
-
45,360
-
103,544
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
- 22 -
14
Loans and overdrafts
2019
2018
£
£
Bank overdrafts
-
564,701
Other loans
1,871,321
1,623,956
1,871,321
2,188,657
Payable within one year
1,861,321
2,027,512
Payable after one year
10,000
161,145
Bank overdrafts above are secured by way of a fixed and floating charge over the property and assets of the company.
Of the other loan balance above £418,639 (2018: £578,594) is secured by way of a fixed and floating charge over the property and assets of the company.
15
Finance lease obligations
2019
2018
Future minimum lease payments due under finance leases:
£
£
Within one year
37,231
32,000
In two to five years
8,477
32,000
45,708
64,000
The above finance lease obligations are secured over the assets to which they relate.
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
16
Provisions for liabilities
2019
2018
Notes
£
£
Deferred tax liabilities
17
981,288
988,772
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
- 23 -
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2019
2018
Balances:
£
£
Rolled over gains
981,288
988,772
2019
Movements in the year:
£
Liability at 1 June 2018
988,772
Credit to profit or loss
(7,484)
Liability at 31 May 2019
981,288
Due to the level of trading losses carried forward, deferred tax is not recognised on fixed asset timing differences. The movement on deferred tax in respect of the rolled over gain is not expected to change materially in the next reporting period.
18
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
13,103
6,248
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Deferred income
2019
2018
£
£
Arising from government grants
-
13,474
-
13,474
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
- 24 -
20
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
4,717,079 (2018: 3,967,079) Ordinary shares of £1 each
4,717,079
3,967,079
56,181 Ordinary 'A' shares of £1 each
56,181
56,181
4,773,260
4,023,260
During the year the company issued 750,000 (2018: 100) Ordinary shares of £1 each. The consideration received amounted to £750,000 (2018: £100).
21
Financial commitments, guarantees and contingent liabilities
During the year ended 31 May 2017, the company gave a guarantee to Mr P McGuigan, a director, in respect of G50 Holdings Limited’s obligations under agreements between Mr P McGuigan and G50 Holdings Limited for the sale and purchase of his shareholdings in both Morecambe Football Club Limited and PMG Leisure Limited.
The guarantees were entered into by the company for £500,000 in total plus any costs and interest to ensure promised investment in the football club by G50 Holdings Limited and this therefore represents a contingent liability at the date of the directors' approval of these financial statements.
During the year, Mr P McGuigan transferred the rights under the guarantee to Bond Group Investments Limited.
22
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2019
2018
£
£
Within one year
12,464
8,537
Between two and five years
11,116
12,738
23,580
21,275
23
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
23
Related party transactions
(Continued)
- 25 -
Sales
Purchases
2019
2018
2019
2018
£
£
£
£
Key management personnel
7,752
8,827
-
-
Other related parties
9,785
7,423
114
108
Interest payable
2019
2018
£
£
Entities with control, joint control or significant influence over the company
39,467
-
The following amounts were outstanding at the reporting end date:
2019
2018
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the company
1,757,541
635,582
Key management personnel
-
218,650
The following amounts were outstanding at the reporting end date:
2019
2018
Amounts due from related parties
£
£
Other related parties
(498)
366
Additionally, during the year 750,000 ordinary shares were issued to Bond Group Investments Limited, as detailed in the share capital note.
24
Ultimate controlling party
As at 31 May 2018, G50 Holdings Limited owned 80% of the company's share capital. During the year, control of the company passed to Bond Group Investments Limited. As at 31 May 2019, Bond Group Investments Limited owned 80% of the company's share capital. Bond Group Investments Limited are also the ultimate controlling party.
MORECAMBE FOOTBALL CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2019
- 26 -
25
Cash generated from operations
2019
2018
£
£
Loss for the year after tax
(566,112)
(451,923)
Adjustments for:
Taxation credited
(7,484)
(28,181)
Finance costs
56,451
100,271
Gain on disposal of tangible fixed assets
(79)
-
Depreciation and impairment of tangible fixed assets
79,968
82,344
(Decrease) in deferred income
(13,474)
(2,378)
Movements in working capital:
(Increase) in stocks
(370)
(9,606)
Decrease/(increase) in debtors
57,076
(54,114)
Increase/(decrease) in creditors
70,061
(31,249)
Cash absorbed by operations
(323,963)
(394,836)
26
Analysis of changes in net debt
1 June 2018
Cash flows
31 May 2019
£
£
£
Cash at bank and in hand
45,889
(3,646)
42,243
Bank overdrafts
(564,701)
564,701
-
(518,812)
561,055
42,243
Borrowings excluding overdrafts
(1,623,956)
(247,365)
(1,871,321)
Obligations under finance leases
(64,000)
18,292
(45,708)
(2,206,768)
331,982
(1,874,786)
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Mr G A Howse
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Mr R H Taylor
Mr G S Burnard
Mr J Whittingham
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