Registration number:
for the
Year Ended
Gloucester Rugby Limited
Contents
Company Information |
|
Strategic Report |
|
Directors' Report |
|
Statement of Directors' Responsibilities |
|
Independent Auditor's Report |
|
Profit and Loss Account |
|
Balance Sheet |
|
Statement of Changes in Equity |
|
Notes to the Financial Statements |
Gloucester Rugby Limited
Company Information
Directors |
M G St Quinton A Hunt A T Brown L Bradley R C Smith T Griffiths |
Company secretary |
R C Smith |
Registered office |
|
Solicitors |
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Bankers |
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Auditors |
|
Gloucester Rugby Limited
Strategic Report for the Year Ended 30 June 2020
The directors present their strategic report for the year ended 30 June 2020.
Principal activity
The principal activity of the company is the operation of a professional Rugby Club, the provision of sporting and social entertainment and as a conference and events venue.
Fair review of the business
The 2019/20 season held exceptional challenges for Gloucester Rugby with the impact of COVID-19 and the restrictions preventing fans from attending Kingsholm in-person.
Financially, the results show the affects of COVID-19 as Gloucester Rugby faced considerable challenges commercially. With the great support of our club partners, club members, supporters, players and staff, we have managed to get through an unprecedented year for the Club. The results for the year which are set out in the profit and loss account show turnover of £15,621,025 (2019 – £16,604,386). By utilising the Coronavirus Job Retention Scheme and with careful cost control, the results show a loss before tax of £981,641 (2019 – profit before tax of £5,353,138). The balance sheet remains healthy with net assets of £8,695,192 (2019 - £9,340,555). The board are keen to reduce losses and move towards breakeven.
Following the end of the year, the club was extended a loan facility of £11,216,000 by the Department for Digital, Culture, Media and Sport, under the Sports Winter Survival Package. This injection of funds has removed the short term risk to the business and allowed for the repayment of liabilities.
On the pitch, the team finished 7th during a COVID-19 impacted season and qualified for the European Champions Cup.
Johan Ackermann left the club in June 2020 with George Skivington joining as Head Coach in July 2020. With George Skivington as Head Coach, Alex King as Attack Coach, Dom Waldouck as Defence Coach, Tim Taylor as Assistant Backs Coach and Academy Transition Coach and Trevor Woodman as Assistant Forwards Coach and Academy Transition Coach, Gloucester Rugby now have a young English coaching team who between them have considerable Premiership experience, an innate knowledge of the English game and an understanding of what it takes to win trophies.
The final post-lockdown games provided a great opportunity for the new coaching team, under George Skivington, to get a good look at the squad and see what is needed to do to get where Gloucester Rugby want to be – challenging for trophies.
The company's key financial performance indicators during the year were as follows:
Unit |
2020 |
2019 |
|
(Loss)/profit before tax |
£ |
(981,641) |
5,353,138 |
(Reduction)/growth in turnover |
% |
(6) |
7 |
Cash (outflow)/inflow |
£ |
(2,263,319) |
5,182,234 |
The company measures its non-financial performance as follows:
• Gallagher Premiership league position;
• Number of wins and points per season;
• Progression in European Cup;
• Match attendance.
Future developments
The directors continue to seek opportunities to improve the clubs position in the league and grow the company.
Gloucester Rugby Limited
Strategic Report for the Year Ended 30 June 2020
Section 172 statement
The directors of the company must act in accordance with the duties detailed in section 172 of the Companies Act 2006 which is summarised as follows:
The directors of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
a) The likely consequences of any decision in the long term.
The directors are committed to creating a sustainable business whilst delivering the best experience for our fans, colleagues, community and partners and compete at the highest level of English Rugby.
b) The interests of the company's employees.
Gloucester Rugby have a commitment to our employees and the directors recognise that our employees are fundamental to delivering the strategic ambitions. To do so Gloucester Rugby must attract and retain the right employees to achieve these goals.
c) The need to foster the company's business relationships with suppliers, customers and others.
The relationships between suppliers and customers is key to the success of Gloucester Rugby with regular dialogue to ensure that the relationships are working for all parties. Fan forums are held to ensure that improvements are continually made so the best experience is delivered to our suppliers and customers.
d) The impact of the company's operations on the community and the environment.
The community team are dedicated to delivering activities in the local area with ongoing support for schools, veteran support, wheelchair rugby and virtual walking groups, all activities that have been undertaken in the year. A sustainability working group has been established within the club to help identify and drive through change as the club looks to reduce its environmental impact.
e) The desirability of the company maintaining a reputation for high standards of business conduct.
Governance standards are closely monitored to ensure directors decisions are made to the highest standards of business conduct.
f) The need to act fairly between members of the company.
The directors take into consideration the impact on all stakeholder and in doing so act fairly between members of the company.
Other major stakeholder group's include the company's insurers, suppliers, bankers, advisors, auditors, regulators and HMRC. With all these stakeholder group's the directors maintain regular and open dialogue to ensure that all parties are kept informed. The directors believe this is essential to building strong working relationships.
Principal risks and uncertainties
COVID-19
COVID-19 put a strain on the business during FY20 and FY21. The directors have put in place policies and procedures to manage the pandemic, such as following Government guidelines, safeguarding staff, and where possible, adapting business operations. In the period post year end, business performance is expected to improve in line with the Government's roadmap. Although the UK's vaccine roll out is ahead of other areas of the world, the virus is continuing to mutate. The situation therefore remains dynamic and unpredictable.
Relegation
In the event of the club being relegated the company would receive a ‘parachute’ payment and additional income from central funds. The directors believe that this income, in addition to receipts generated from ongoing activities, would ensure the club has sufficient funding to regain Premiership status in the following season, or enable the company to make alternative contingency plans to manage its liquidity exposure.
Health and well being of players
This risk is managed through the employment of coaches and medical staff to ensure that players are in peak physical condition and adhere to protocols. In response to COVID-19, the club ensure that Premiership Rugby and Public Health England protocols are adhered to.
Gloucester Rugby Limited
Strategic Report for the Year Ended 30 June 2020
Revenue generation
COVID-19 has negatively impacted the revenues generated by the company in the second half of the financial year, and in the period post year end. The ability to recover revenues to pre COVID-19 levels will impact on the level of investment the company can make. The directors seek to mitigate this risk by entering into contracts with sponsors and ensuring that ticket pricing remains competitive. Broadcasting and certain other revenues are currently negotiated centrally by Premier Rugby Limited, and the club alone do not have influence over the outcome of contract negotiations.
Approved by the
.........................................
Director
Gloucester Rugby Limited
Directors' Report for the Year Ended 30 June 2020
The directors present their report and the financial statements for the year ended 30 June 2020.
Directors of the company
The directors who held office during the year were as follows:
The following directors were appointed after the year end:
Matters covered in the strategic report
Information on the engagement with suppliers, customers and others is included in the strategic report in the s172(1) statement. The company's business environment and risks, together with details of monitoring undertaken by the directors and future developments are dealt with elsewhere in the Strategic Report.
Financial instruments
Objectives and policies
The company's financial instruments comprise borrowings, cash and liquid resources and various other items such as trade debtors and trade creditors that arise directly from its operations.
The company is exposed through its operations to the following financial instruments risks: credit risk and liquidity risk. The policy for managing these risks is determined by the board, with the overall objective being to reduce the company's exposure to these risks without unduly affecting the company's competitiveness and flexibility. The company's policy in respect of each of the identified risks is detailed below.
Price risk, credit risk, liquidity risk and cash flow risk
Credit risk
The company offers certain of its customers credit. Before credit terms are agreed, an assessment of the customers credit rating is undertaken to ensure the company is not exposed to a major credit risk. Credit limits are set accordingly.
Liquidity risk
Liquidity risk arises from the company's management of working capital and the finance charges on its borrowings. It is the risk that the company will encounter difficulty in meeting financial obligations as they fall due. The liquidity of the company is monitored by the board to ensure the company is able to meet its operational requirements. At the balance sheet date, cash flow projections were considered by the board and the company is forecast to have sufficient funding facilities to meet the company's obligations as they fall due, under all reasonably expected circumstances.
Price risk
Through careful monitoring of the company's market place and competitors the company's exposure to price risk is kept to a minimum.
Interest rate risk
The most significant interest rate risk involves the interest rate fluctuations, which is managed by balancing interest rate risk between variable and fixed rates. The directors view short term base rate volatility to be low. The company is well placed to deal with any rise in interest rates.
Gloucester Rugby Limited
Directors' Report for the Year Ended 30 June 2020
Employment of disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Energy and emissions report |
||
2020 |
||
Scope 1 emissions |
tonnes CO2e |
37.95 |
Scope 2 emissions |
tonnes CO2e |
287.44 |
Total greenhouse gas emissions |
tonnes CO2e |
339.12 |
Greenhouse gas emissions per head of stadium capacity |
tonnes CO2e |
0.02 |
Data is provided as tonnes of carbon dioxide equivalent (C02e) for all operations. Scope 1 and 2 emissions are from Kingsholm stadium. The company’s chosen intensity measure is emissions per head of stadium capacity.
The report data has been collated internally and CO2e have been calculated using average prices per kwh of energy and price per litre of fuel taken from supplier invoices. CO2e has been calculated using the National Energy Foundation Carbon Calculator. We do not consider refrigerant losses on our air conditioning units to be material and as such these are not reported in our emissions data.
We have reported on the emissions sources required under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013 apart from the exclusions noted. The reported sources fall within our Financial Statements and are for emissions over which we have financial control. We do not have responsibility for any emissions sources that are not included in our financial statements.
The company considers the environmental impact of its operations and a full energy efficiency report was carried out at Kingsholm late in 2020. This report identified a range of energy conservation measures that, if implemented, will have a positive impact on reducing the company’s carbon emissions. The COVID-19 lockdown measures have made it challenging to progress the identified measures.
As lockdown measures ease, and there is a return to normal operations, these identified measures and savings will be fed into the operational and business plan. Planned actions include:
• The hot water and heating boilers in the Main stand have been replaced with more efficient condensing units. The viability of further utilising these more efficient boilers to provide heating to the corporate boxes (replacing inefficient electric panel heaters) is being investigated.
• Insulation has been installed in many of the beer cellars, to reduce the energy used in cooling. It is planned to extend this work. Cellar cooling is now switched off between events / matches.
• Nearly all light fittings have been upgraded to LED, and it is planned to replace the remaining older fluorescent tube fittings across the stadium, as well as halogen spot lights in the hospitality suites. PIR sensors have been installed within storage areas to avoid unnecessary lighting use.
A sustainability working group has been established within the club and will help in driving through the agreed actions.
Going concern
The company made a pre tax loss of £981,645 (2019 - profit of £5,353,138) during the period and at the balance sheet date had net current liabilities of £3,545,686 (2019 - £529,730).
The directors have prepared cash flow forecasts for the company for more than 12 months from the approval of these financial statements, which considers the current COVID-19 outbreak and its ongoing impact on the business. That forecast information indicates that the company will remain within its existing facilities (comprising both facilities held at the balance sheet date and further facilities advanced post year end, as set out in the non-adjusting events after the reporting period disclosures) and have sufficient working capital for its operations. After reviewing these forecasts, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and therefore consider it appropriate to prepare the financial statements on a going concern basis.
Gloucester Rugby Limited
Directors' Report for the Year Ended 30 June 2020
Important non adjusting events after the financial period
On 28 October 2020, a Coronavirus Business Interruption Loan ("CBIL's") of £2,000,000 was obtained. On 30 March 2021, a facility of £11,216,000 was extended to the company by the Department for Digital, Culture, Media and Sport under the Sports Winter Survival Package. Of this facility, £8,206,317 was received as cash, with the balance being used to repay several outstanding loans, including the CBIL's loan mentioned above. The loan facility has an eighteen-year term with a four-year interest and capital repayment holiday.
On 15 June 2021, the club unveiled plans for their new training facility and upgrade to the existing pitch at Kingsholm. At the date of signing the financial statements, the company are committed to costs of £699,360 and negotiations with contractors are still ongoing. Accordingly, a reliable estimate cannot be made of the total financial impact of this announcement.
Disclosure of information to the auditors
Each director has taken the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.
Reappointment of auditors
In accordance with section 485 of the Companies Act 2006, a resolution for the re-appointment of Hazlewoods LLP as auditors of the company is to be proposed at the forthcoming Annual General Meeting.
Approved by the
.........................................
Director
Gloucester Rugby Limited
Statement of Directors' Responsibilities
The directors are responsible for preparing the Directors' Report, Strategic 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 apply them consistently; |
• |
make judgements and accounting estimates that are reasonable and prudent; |
• |
state whether applicable UK Accounting Standards has been followed, subject to any material departures disclosed and explained in the financial statements; and |
• |
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.
Gloucester Rugby Limited
Independent Auditor's Report to the Members of Gloucester Rugby Limited
Opinion
We have audited the financial statements of Gloucester Rugby Limited (the 'company') for the year ended 30 June 2020, which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, 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 Financial Reporting Standard 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 30 June 2020 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. |
Basis for opinion
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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
• |
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or |
• |
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. |
Other information
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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Gloucester Rugby Limited
Independent Auditor's Report to the Members of Gloucester Rugby Limited
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.
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 Statement of Directors' Responsibilities set out on page 8, 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 www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of this report
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.
......................................
For and on behalf of
Staverton Court
Staverton
GL51 0UX
Gloucester Rugby Limited
Profit and Loss Account for the Year Ended 30 June 2020
Note |
2020 |
(As restated) |
|
Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Other operating income |
981,968 |
- |
|
Operating loss |
( |
( |
|
Fair value gain on fixed asset investment |
- |
|
|
Other interest receivable and similar income |
|
|
|
Interest payable and similar charges |
( |
( |
|
(Loss)/profit before tax |
( |
|
|
Taxation |
|
( |
|
(Loss)/profit for the financial year |
( |
|
The above results were derived from continuing operations.
The company has no other comprehensive income for the year.
Gloucester Rugby Limited
(Registration number: 00034603)
Balance Sheet as at 30 June 2020
Note |
2020 |
(As restated) |
|
Fixed assets |
|||
Intangible assets |
|
|
|
Tangible assets |
|
|
|
Investments |
|
|
|
|
|
||
Current assets |
|||
Stocks |
- |
|
|
Debtors |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current liabilities |
( |
( |
|
Total assets less current liabilities |
|
|
|
Creditors: Amounts falling due after more than one year |
( |
( |
|
Provisions for liabilities |
( |
( |
|
Net assets |
|
|
|
Capital and reserves |
|||
Called up share capital |
|
|
|
Share premium reserve |
|
|
|
Retained earnings |
|
|
|
Total equity |
|
|
Approved and authorised by the
.........................................
Director
Gloucester Rugby Limited
Statement of Changes in Equity for the Year Ended 30 June 2020
Share capital |
Share premium |
Profit and loss account |
Total |
|
At 1 July 2019 |
|
|
|
|
Loss for the year |
- |
- |
( |
( |
At 30 June 2020 |
|
|
|
|
Share capital |
Share premium |
Profit and loss account |
Total |
|
At 1 July 2018 |
|
|
( |
|
Profit for the year |
- |
- |
|
|
At 30 June 2019 |
|
|
|
|
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
General information |
The company is a private company limited by share capital incorporated and domiciled in England and Wales.
The address of its registered office is:
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (March 2018).
Basis of preparation
These financial statements have been prepared using the historical cost convention except for, where disclosed in these accounting policies, certain items that are shown at fair value.
The presentational currency of the financial statements is UK £, being the functional currency of the primary economic environment in which the company operates. Monetary amounts in these financial statements are rounded to the nearest £.
Prior period errors
A prior year restatement has been recognised in the financial statements, details of which are set out in note 28 to these financial statements.
Going concern
The company made a pre tax loss of £981,645 (2019 - profit of £5,353,138) during the period and at the balance sheet date had net current liabilities of £3,545,686 (2019 - £529,730).
The directors have prepared cash flow forecasts for the company for more than 12 months from the approval of these financial statements, which considers the current COVID-19 outbreak and its ongoing impact on the business. That forecast information indicates that the company will remain within its existing facilities (comprising both facilities held at the balance sheet date and further facilities advanced post year end, as set out in the non-adjusting events after the reporting period disclosures) and have sufficient working capital for its operations. After reviewing these forecasts, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and therefore consider it appropriate to prepare the financial statements on a going concern basis.
Critical accounting 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 amounts 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Revenue recognition
Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the company.
The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and it is probable that future benefits can be reliably measured.
Revenue is recognised in respect of match-day income, including season tickets, match-day tickets, executive boxes, hospitality packages and other match-day income, when the relevant match takes place.
For annual income streams such as central funding and sponsorship arrangements, revenue is recognised in equal instalments across the relevant period.
Sponsorship, rental and service charge income are recognised over the period that services are offered. Hospitality, catering and facilities management services income is recognised at the point that the services are rendered.
Income received relating to future periods is included as deferred income until the appropriate revenue recognition criteria are met.
An agreement to sell a significant minority interest in Premiership Rugby Limited (PRL) to certain funds advised or managed by CVC Capital Partners (CVC Funds) was signed on 29 March 2019 and the club received a cash inflow of £12.8 million as a result of this transaction. This income is being recognised in the Profit and Loss over 48 months, with amounts relating to future periods being recognised as deferred income.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Judgement and key sources of estimation uncertainty
Recognition of CVC transaction proceeds
An agreement to sell a significant minority interest in Premiership Rugby Limited (PRL) to certain funds advised or managed by CVC Capital Partners was signed on 29 March 2019 and the club received proceeds of £12.8m as a result of this transaction. The income is being recognised in the profit and loss account over 48 months, with amounts relating to future periods being recognised as deferred income.
Commercial contracts/transactions
When to recognise income derived from commercial contacts, including amounts received form Premiership Rugby Limited, is an area of significant judgement due to the complexity of the arrangements and the fact that the agreements typically span multiple accounting periods, with the timing of cash receipt often being in advance of the services being provided.
Investment carrying value
The Company holds its investment in Premiership Rugby Limited at fair value as required under FRS 102. The Directors carry out an assessment of the fair value on an annual basis, taking into account the expected future cash flows due to the Club fro Premiership Rugby Limited.
Government grants
Government grants are recognised based on the accrual model and are measured at the fair value of the amount receivable. Grants relating to revenue are recognised in income over the period in which the related costs are recognised. The company received grants in relation to the Coronavirus Job Retention Scheme (CJRS) which is accounted as a revenue grant. £956,968 (2019 £nil) has been credited to the profit and loss account in relation to this grant. This carrying value in accrued income at the year end was £nil (2019 - £nil).
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.
Tangible assets
Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Land is not depreciated. Depreciation on other assets is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Freehold building and ground improvements |
2-15% straight line |
Fixtures, fittings and equipment |
15-33% straight line |
Intangible assets
Intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses.
Software costs are amortised over a period of between 3 - 5 years which the Directors consider to be a reasonable assessment of the useful economic life of these assets.
The costs of acquired player registrations are capitalised as intangible assets and amortised over the period of the players' contracts, with appropriate adjustments for any impairments assessed to have taken place.
Investments
Fixed asset investments held by the company are measured at fair value at each balance sheet date using a valuation technique, with any gains or losses being reported in the Profit and Loss Account.
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.
The cost of finished goods and work in progress comprises direct materials and those overheads that have been incurred in bringing the inventories to their present location and condition.
At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to it's selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.
Trade debtors
Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. All trade debtors are repayable within one year and hence are included at the undiscounted cost of cash expected to be received. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the debtors.
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and all are repayable within one year and hence are included at the undiscounted amount of cash expected to be paid.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.
Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.
Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.
Borrowings
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Financial instruments
Classification
Recognition and measurement
Impairment
A non financial asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.
The recoverable amount of goodwill is derived from measurement of the present value of the future cash flows of the cash-generating units ('CGUs') of which the goodwill is a part. Any impairment loss in respect of a CGU is allocated first to the goodwill attached to that CGU, and then to other assets within that CGU on a pro-rata basis.
Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. Where a reversal of impairment occurs in respect of a CGU, the reversal is applied first to the assets (other than goodwill) of the CGU on a pro-rata basis and then to any goodwill allocated to that CGU.
For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.
Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Revenue |
The analysis of the company's revenue for the year by class of business is as follows:
2020 |
(As restated) |
|
Central income |
|
|
Ticket income |
|
|
Hospitality, conferencing and events |
1,427,669 |
1,736,901 |
Sponsorship and advertising |
2,485,465 |
2,296,217 |
Community development |
19,599 |
54,579 |
Commission on catering, bar and shop sales |
127,477 |
145,913 |
Bar sales |
675,348 |
1,060,674 |
Other mixed income |
489,755 |
482,104 |
Donations from refunded ticket sales |
522,027 |
- |
|
|
The total turnover of the company has been derived from activities wholly undertaken in the United Kingdom.
Other operating income |
The analysis of the company's other operating income for the year is as follows:
2020 |
2019 |
|
Government grants |
|
- |
Miscellaneous other operating income |
|
- |
|
- |
The company received grants in relation to the Coronavirus Job Retention Scheme (CJRS) which is accounted as a revenue grant. £956,968 (2019 - £nil) was recognised in the profit and loss account in relation to this grant.
The company did not directly or indirectly benefit from any other forms of government grant.
Operating profit |
Arrived at after charging/(crediting)
2020 |
2019 |
|
Depreciation expense |
|
|
Amortisation expense |
|
|
Operating lease expense - property |
|
|
Operating lease expense - other |
17,484 |
14,208 |
Loss on disposal of property, plant and equipment |
- |
30,214 |
Loss on disposal of intangible fixed assets |
- |
47,131 |
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Auditors' remuneration |
2020 |
2019 |
|
Audit of the financial statements |
|
|
Other fees to auditors |
||
Taxation compliance services |
|
|
All other non-audit services |
|
|
|
|
Other interest receivable and similar income |
2020 |
2019 |
|
Interest income on bank deposits |
|
|
Distribution of profits |
|
- |
|
|
Interest payable and similar expenses |
2020 |
2019 |
|
Interest on bank overdrafts and borrowings |
|
|
Interest on obligations under finance leases and hire purchase contracts |
|
|
|
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2020 |
(As restated) |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
|
|
The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:
2020 |
2019 |
|
Players and training ground |
|
|
Commercial, administration and support |
|
|
|
|
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Directors' remuneration |
The directors' remuneration for the year was as follows:
2020 |
2019 |
|
Remuneration |
|
|
Contributions paid to money purchase schemes |
|
|
355,135 |
403,229 |
During the year the number of directors who were receiving benefits and share incentives was as follows:
2020 |
2019 |
|
Accruing benefits under money purchase pension scheme |
|
|
In respect of the highest paid director:
2020 |
2019 |
|
Remuneration |
|
|
Company contributions to money purchase pension schemes |
- |
|
Taxation |
Tax charged/(credited) in the profit and loss account
2020 |
2019 |
|
Current taxation |
||
UK corporation tax adjustment to prior periods |
( |
- |
Deferred taxation |
||
Arising from origination and reversal of timing differences |
( |
|
Arising from changes in tax rates and laws |
235,126 |
- |
Total deferred taxation |
( |
|
Tax (receipt)/expense in the income statement |
( |
|
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2019 - higher than the standard rate of corporation tax in the UK) of
The differences are reconciled below:
2020 |
(As restated) |
|
(Loss)/profit before tax |
( |
|
Corporation tax at standard rate |
( |
|
Effect of expenses not deductible in determining taxable profit (tax loss) |
|
|
Deferred tax expense (credit) relating to changes in tax rates or laws |
|
( |
Effect of adjustment in prior periods on deferred tax |
( |
- |
Tax increase (decrease) from effect of capital allowances and depreciation |
|
|
Other tax adjustments, reliefs and transfers |
- |
( |
Chargeable gains/(losses) |
- |
|
Income not taxable for tax purposes |
- |
( |
Other permanent differences |
- |
|
Deferred tax not recognised |
( |
|
Total tax (credit)/charge |
( |
|
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2016 (on 7 September 2016). These included a reduction to the main rate to 17% from 1 April 2020, however this reduction in rate was reversed in the 2020 budget and remains at 19%. Deferred taxes at the balance sheet date have been measured using the enacted tax rates and reflected in these financial statements. Further changes to the UK corporation tax system were announced in the Budget on 3 March 2021. These include an increase in the main rate of corporation tax to 25% with effect from 1 April 2023. As the change to 25% had not been substantively enacted at the balance sheet date its effects are not included in these financial statements.
Deferred tax
Deferred tax assets and liabilities
2020 |
Liability |
Accelerated tax depreciation |
( |
Short term timing differences |
|
Tax losses available |
|
Chargeable gains/(losses) |
( |
( |
2019 |
Liability |
Accelerated tax depreciation |
( |
Short term timing differences |
|
Tax losses available |
|
Chargeable gains/(losses) |
( |
( |
Deferred tax assets are not recognised where there is insufficient certainty over the availability of suitable taxable profits against which these loans can be utilised. At 30 June 2020 the company has not recognised a further deferred tax asset of £480,316 (2019 - £741,426) as it is unclear when the tax losses associated with this asset will be utilised.
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Intangible assets |
Player registrations |
Computer software |
Total |
|
Cost or valuation |
|||
At 1 July 2019 |
|
|
|
Disposals |
( |
- |
( |
At 30 June 2020 |
|
|
|
Amortisation |
|||
At 1 July 2019 |
|
|
|
Amortisation charge |
- |
|
|
Amortisation eliminated on disposals |
( |
- |
( |
At 30 June 2020 |
|
|
|
Carrying amount |
|||
At 30 June 2020 |
- |
|
|
At 30 June 2019 |
- |
|
|
Tangible assets |
Freehold land and buildings |
Fixtures, fittings and equipment |
Total |
|
Cost or valuation |
|||
At 1 July 2019 |
|
|
|
Additions |
|
|
|
At 30 June 2020 |
|
|
|
Depreciation |
|||
At 1 July 2019 |
|
|
|
Charge for the year |
|
|
|
At 30 June 2020 |
|
|
|
Carrying amount |
|||
At 30 June 2020 |
|
|
|
At 30 June 2019 |
|
|
|
Assets held under finance leases and hire purchase contracts
The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:
2020 |
2019 |
|
Fixtures, fittings and equipment |
76,715 |
27,062 |
Included in land and buildings is freehold land at a cost of £842,000 (2019 - £842,000) which is not subject to depreciation.
The cost of the freehold land and buildings include capitalised finance costs of £404,766 of which an amount of £nil was capitalised during the year.
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Fixed asset investments |
2020 |
2019 |
|
Fixed asset investments |
|
|
Fixed asset investments |
£ |
Fair value |
|
At 1 July 2019 and 30 June 2020 |
|
Carrying amount |
|
At 30 June 2019 and 30 June 2020 |
|
Financial assets at fair value represent the company's holding of invested units in Premier Rugby Limited ("PRL") . The company has also co-invested, in an additional minority shareholding in PRL.
Stocks |
2020 |
2019 |
|
Bar stock |
- |
|
Debtors |
2020 |
2019 |
|
Trade debtors |
|
|
Other debtors |
|
|
Prepayments |
|
|
Accrued income |
|
|
|
|
Cash and cash equivalents |
2020 |
2019 |
|
Cash on hand |
|
|
Cash at bank |
|
|
|
|
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Creditors |
Note |
2020 |
(As restated) |
|
Due within one year |
|||
Loans and borrowings |
|
|
|
Trade creditors |
|
|
|
Social security and other taxes |
|
|
|
Outstanding defined contribution pension costs |
|
|
|
Other payables |
|
|
|
Accrued expenses |
|
|
|
Deferred income |
|
|
|
|
|
||
Due after one year |
|||
Loans and borrowings |
|
|
|
Deferred income |
|
|
|
11,440,090 |
13,984,469 |
Details of the security over the bank loans and overdraft are disclosed in note 19 to the financial statements.
Loans and borrowings |
2020 |
2019 |
|
Current loans and borrowings |
||
Bank borrowings |
|
|
Finance lease liabilities |
|
|
|
|
2020 |
2019 |
|
Non-current loans and borrowings |
||
Bank borrowings |
|
|
Finance lease liabilities |
|
|
|
|
2020 |
2019 |
|
After more than five years by instalments |
|
|
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Bank borrowings
Bank borrowings in the current and prior year include the following liabilities, on which security has been given by the company:
• A bank loan with a carrying amount of £3,350,051 (2019 - £3,554,962) which is denominated in GBP and bears interest at a rate of 0.95% above the Bank of England base rate. The loan is repayable in monthly instalments of £27,282, with the final instalment falling due in June 2031. In March 2020, the bank granted a six month payment holiday following the outbreak of COVID-19 during which only the interest was repayable.
• A bank loan with a carrying amount of £1,355,876 (2019 - £1,418,964) which is denominated in GBP and bears interest at a rate of 2% above the Bank of England base rate. The loan is repayable in monthly instalments of £10,113, with the final instalment falling due in June 2033. In March 2020, the bank granted a six month payment holiday following the outbreak of COVID-19 during which only the interest was repayable.
The bank loans and borrowings of the company are secured by way of a fixed legal charge over the freehold property of the company and a fixed and floating charge all other property and assets of the company.
The bank loans impose a negative pledge which prohibits the company from creating any security interests over the assets pledged as security.
Finance lease liabilities
Obligations under finance lease and hire purchase contracts are secured against the assets to which they relate.
Share capital |
Allotted, called up and fully paid shares
2020 |
2019 |
|||
No. |
£ |
No. |
£ |
|
|
|
7,134,434 |
|
7,134,434 |
Reserves |
Called up share capital
This represents the nominal value of the issued share capital of the company.
Share premium reserve
This reserve contains the premium arising on the issue of the share capital. Any transaction costs associated with the issuing of shares are deducted from the share premium.
Retained earnings
This reserve includes all current and prior period retained profits and losses, net of dividends paid and other adjustments.
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Obligations under leases and hire purchase contracts |
Finance leases
The total of future minimum lease payments is as follows:
2020 |
2019 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
|
|
|
|
Operating leases
The total of future minimum lease payments is as follows:
2020 |
2019 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
- |
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £
Contributions totalling
£
Related party transactions |
Summary of transactions with other related parties
F3Group Limited
(a company in which M St Quinton and G Gleave are directors and shareholders)
During the year the company made sales of £125,000 (2019 - £120,000) to F3Group Limited in respect of sponsorship for the 2019/20 season. At the balance sheet date the amount due from F3Group Limited was £45,000 (2019 - £nil) in respect of sponsorship invoiced in advance.
Gloucester Rugby Foundation
(a charity in which previous director L Ferraby is a registered trustee)
During the year the company recharged costs of £238,936 (2019 - £267,896) and income of £11,058 (2019 - £73,613) to Gloucester Rugby Community Charity. At the balance sheet date the amount due from Gloucester Community Charity was £5,720 (2019 - £86,647).
Financial instruments |
Categorisation of financial instruments
2020 |
2019 |
|
Financial assets measured at fair value through profit or loss |
|
|
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Financial assets measured at fair value
Fixed asset investments
Fixed asset investments held by the company are measured at fair value at each balance sheet date with any gains or losses being reported in the Profit and Loss Account.
The fair value is £15,998,154
(2019 - £15,998,154)
and the change in value included in profit or loss is
£
Nil
(2019 - £7,382,065)
.
Items of income, expense, gains or losses
2020 |
Income |
Expense |
Net gains |
Net losses |
Financial liabilities measured at amortised cost |
- |
121,128 |
- |
- |
2019 |
Income |
Expense |
Net gains |
Net losses |
Financial assets measured at fair value through profit or loss |
- |
- |
7,382,065 |
- |
Financial liabilities measured at amortised cost |
- |
136,769 |
- |
- |
- |
136,769 |
7,382,065 |
- |
The total interest income for financial assets not measured at fair value through profit or loss is £53,223 (2019 - £10,821) . The total interest expense for financial liabilities not measured at fair value through profit or loss is £121,128 (2019 - £136,769).
Analysis of net debt |
At 1 July 2019 |
Cash flow |
Other non-cash changes |
At 30 June 2020 |
|
£ |
£ |
£ |
£ |
|
Cash at bank and in hand |
5,458,314 |
(2,263,319) |
- |
3,194,995 |
Bank overdraft |
- |
- |
- |
- |
5,458,314 |
(2,263,319) |
- |
3,194,995 |
|
Bank loan 1 |
(3,554,962) |
204,911 |
- |
(3,350,051) |
Bank loan 2 |
(1,418,964) |
63,088 |
- |
(1,355,876) |
Finance lease and hire purchase contract |
(22,335) |
19,051 |
(62,530) |
(65,814) |
Net debt |
462,053 |
(1,976,269) |
(62,530) |
(1,576,746) |
Other non-cash changes reflect advances under finance leases and hire purchase contracts and accrued interest.
Parent and ultimate parent undertaking |
The directors regard Martin St Quinton to be the ultimate controlling party.
Prior period adjustment |
A prior year restatement has been recognised to reclassify recharges of £209,375 in respect of staff costs recharged to Gloucester Rugby Foundation from revenue to administrative expenses. In addition, deferred income of £400,000 presented as a current liability in the prior year has been reclassified to non-current.
Gloucester Rugby Limited
Notes to the Financial Statements for the Year Ended 30 June 2020
Non adjusting events after the financial period |
|