The directors present the strategic report for the year ended 30 June 2019.
At the time of writing, February 2021, it has been a challenging year for Saracens for a number of reasons. We were relegated to the Championship and then a global pandemic hit a year ago; almost all our revenue ceased overnight.
“ACCEPT AND ADAPT” has become a new mantra. We are adapting to our new surroundings. Saracens is one of the best club rugby brands in the world and we know we have a responsibility to uphold that and make it stronger. Rugby is back, albeit behind closed doors and our Saracens community is more important than ever in these testing times. We know that the next 12-18 months will be challenging and we are committed to rebuilding the trust and coming out of this period in an even stronger global position. We have never been just a rugby club and we want to remain innovative and caring at our core.
This crisis has definitely forced everyone to think. Many people will want to try to reduce anxiety by restoring familiar routines, procedures and traditions. The problem is that business, as we knew it, cannot be recovered. It will need to be reinvented . Returning to the familiar would be a mistake. There may never be a better opportunity to create positive, productive and lasting change. As a club we will always look for ways to get better.
The size of the challenge over the next year is not insubstantial but after everything we have been through over the past 12 months, we are still strong and we are still together. We have strong values and a vision to care constantly, be innovative and work incredibly hard. All of which we need to draw on more than ever now. From the training ground, to our commercial teams, to the Saracens Sport Foundation, our women’s teams and our Saracens High School – we have been so impressed with some of the new ideas emerging, the new revenue lines that we are looking to initiate and the new ways of working. At Saracens, we thrive off other people’s energy and desire to make a difference.
When Remgro left Saracens Copthall as shareholders, it became our intention to find new investors in Saracens. We felt that being reliant solely on one family was not in the best interests of the long-term future of the club. In recent months we have reassessed the financing needs going forward, and whilst Nigel Wray has underwritten losses in 18/19 and 19/20, we are actively looking for new investors to sit alongside the Wray Family in underwriting any future needs and allowing the organisation to achieve its goals and ambitions. Conversations are ongoing and we are confident of finding a partner who shares our culture and vision for the future. In the meantime, Nigel Wray has confirmed his willingness to support the club through and beyond those new investors increasing shareholder funds.
2018/2019 season and a short recap of that year
Completing the “double” in June 2019 by winning the Gallagher Premiership in an extremely hard-fought battle with Exeter and the Champions Cup against Leinster, feels like a lifetime ago at the time of writing. Of course, we are proud of our on-field achievements, but I have a feeling that we will look back in a few years’ time and be more proud of how strong our culture and togetherness has been in the bad times – when it really counts.
We have an outstanding group of players and coaches.
2018/19 saw us continue to invest in our Academy, which will always be at the heart of our long-term planning, and our coaching and team management.
During the year various KPIs are used to assess ongoing financial and operating performance. These include year to year comparison of revenue and cost control against budgets and prior year. These are illustrated below, with exceptional costs omitted:
|
2019 |
2018 |
% Change |
|
|
|
|
Revenue |
£23.19m |
£17.93m |
29% |
Operating loss (excluding exceptional costs) |
£4.97m |
£3.86m |
29% |
Due primarily to the Salary Cap breaches which were confirmed in November 2019, there are also exceptional costs relating to this financial year of £7.68m which have been fully covered by Nigel Wray. Saracens were fined £5.36m and incurred legal fees amounting to £2.08m.
Aside from these exceptional items, operating losses have increased by £1.12m to a total of £4.97m, with the increase in turnover of £5.26m more than offset by increased costs of £6.38m. Commercial margins have come down, when compared with prior year, however this is primarily due to bringing catering ‘in house’ and year one teething problems and the margins are also distorted by an away knock out European quarter final against Leinster in 17/18 which accounted for circa £500,000 of revenue with virtually no associated costs. A proportion of the increased operating costs is due to investment in a number of different areas of the business including; the Academy, coaching & team management, Saracens Women and substantial investment into our data warehousing, website, CRM system and marketing. We have strengthened our commercial team with a few high-level hires and ensured that all our sales team are incentivised to hit their targets. This, alongside contractual pay rises for key members of staff at our training ground, accounts for the increase in salaries of £1.53m compared to prior year. A key objective of the organisation will be to reduce our costs as a % of revenues and this is a significant focus area of the new executive team.
Our stadium events business was again disappointing, and this is an area where we need to improve. Likewise, our big match at The London Stadium did not perform well financially. We were waiting to sign a long-term partnership with Tottenham Hotspur and due to their stadium build delays, we ended up going to market late with the game and in a location which did not suit our fanbase. We have subsequently signed a 5 year partnership with Tottenham Hotspur and are incredibly excited to play our first match at the incredible Tottenham Hotspur Stadium. This was due to take place on March 28 th 2020 but sadly had to be cancelled due to Covid-19.
The commercial team had worked extremely hard to sell the stadium out and it was going to be of substantial financial gain to the club. We still look forward to our first game there.On a positive note, during this year there was an increased focus on the commercial side of the organisation which saw annual revenue (directly controlled by the club and excluding central distributions from PRL and RFU) increase by £4.23m when compared to prior year. The significant Saracens contributors to this rise in revenue were: ticketing, hospitality and sponsorship.
We have pivoted the organisation to be far more sales focussed with a dedicated sales team and a desire to improve our communications and relationships with key stakeholders.
Saracens Women
Saracens continued to lead the way in the women’s game, retaining the Tyrrells Premier 15s title for 2019, defeating rivals Harlequins with a dominant display at Franklins Gardens in what was a repeat of the 2018 final. The women’s Academy side also secured silverware, finishing top of the table in the Tyrrells Premier 15s Development league.
Eight Saracens were part of England’s Grand Slam winning Six Nations squad, including debut caps for Bryony Cleall and Rosie Galligan. A Saracens quartet helped secure Great Britain’s place at the Tokyo 2020 Olympic Games, with Emma Uren shortlisted for the HSBC World Rugby Women's Sevens Series Rookie of the Year 2019 following a stellar first year on the World Series. Saracens Girls Centre of Excellence programme completed its first full cycle with 35 players from six surrounding counties in the U15- U18 age range. Eighteen players were retained from the 2018/19 class, six graduated into the senior squad and five have gone on to represent England U18 Talent Development group. Saracens Women also supported girl’s community outreach programmes in collaboration with the Saracens Sport Foundation.
Saracens Mavericks
Mavericks began 2019 with the announcement of a new partnership with Saracens. The new look ‘Saracens Mavericks’ relationship would be underpinned by the sharing resources and insight for elite player performance, access to a wider fanbase, commitment to community outreach programmes and the integration of key business functions.
On court, Mavericks slipped up in the final round to narrowly miss out on a semi final spot, finishing 5 th in the Vitality Netball Super League for the second consecutive season. The squad enjoyed knock out action in the Autumn, finishing runners up to Wasps Netball in the British Fast5 Netball All-Stars Championship final.
Five Mavericks were selected for England’s Red Roses in the International Quad Series against Australia, New Zealand and South Africa. Michelle Drayne also represented Northern Ireland in the 2019 Netball World Cup.
Mavericks established a partnership with Oaklands Wolves Netball Academy to provide academic and high-performance sporting support to young players. It was also a successful pathway season with over 250 athletes participating within three Mini Mavericks and seven Futures Academy programmes. The netball camps and masterclass programme expanded to deliver more opportunities to young girls across the region.
Saracens Sport Foundation
2018-19 has been a milestone year for our charity, the Saracens Sport Foundation as it raised and invested over £1m in its charitable objectives for the first time in its 19-year history. At the time of writing this report the charity has also undergone an internal and external review and revised its vision and mission, establishing a fresh narrative that is more reflective of the charities current work. The charity aims to ‘transform lives on and off the pitch to build stronger communities’ and achieves this by ‘working collaboratively to enhance the education, employability and health of our communities, to build a stronger and more inclusive society for all’.
At the heart of the charities work is the focus on reducing inequalities of those that are underrepresented in sport, including those who are from deprived communities, disabled young people and those who are from Black, Asian or Minority Ethnic groups (BAME). In 2018-19, through our Project Rugby programme we engaged over 1,300 young people from BAME and deprived communities in weekly rugby activities, while supporting them to transition into grass roots rugby clubs.
Almost 1 in 5 people in England have a long-standing limiting disability or illness. We have continued our work to reduce inequalities in disabled young people accessing sporting and learning activities. The Foundation currently runs eight disability projects, providing opportunities for disabled young people with learning and physical disabilities. New in 2018-19 is our Saracens Wheelchair Rugby project, developed in Partnership with partners Allianz, which this year provided over 50 wheelchair users with the opportunity to participate in regular weekly wheelchair rugby sessions for the first time. The aim is to establish a regional structure for Wheelchair Rugby, from participation to elite level across the Saracens community.
The charity is not only focused on supporting young people within our community. According to Age UK, more than 2 million in England over the age of 75 live alone, and more than a million older people say they go for over a month without speaking to a friend, neighbour or family member and are at risk of poor physical, emotional and social wellbeing. The Foundation strives to reduce loneliness and improve health and wellbeing by providing regular sport and physical activities that get some circa 350 older people moving every week.
Saracens are extremely proud of the achievements of the Saracens Sport Foundation and in 2020 we celebrated the charity’s 20 th Anniversary.
The Saracens High School
The Saracens High School opened its doors for the first time in September 2018 to 156 year 7 pupils, all living within close proximity to the school’s temporary accommodation in Grahame Park estate, Colindale. The school has set an inspiring vision for the future, ‘to develop aspirational life-long learners, who will thrive in their chosen career path. Our young people will embrace our core values and demonstrate a desire to make a positive contribution to society and their local community into adulthood. The school will be a hub of the local community, creating mutually beneficial partnerships and relationships with local business, organisations, and individuals. We will be an outstanding school in every sense and provide all pupils opportunities to develop into the best that they can be, both academically and as young men and women.’
The first year of the school was a huge success and was celebrated with a special awards evening on 4th July 2019 at Allianz Park when players from the Saracens Men’s and Women’s teams, and Saracens Mavericks netball team, joined members of the Saracens High School community to celebrate the achievements of pupils. The school has created significant excitement amongst parents in the Colindale community. Ofsted visits and mini inspections reinforce the school’s strong start and highlight that the school is on course to become an outstanding school.
Technical complications on the site of the new school building have led to delays, however these have now been overcome and the school now has a confirmed timeline for the construction of the new building that will see teachers, pupils and staff transition across to the state of the art facility in early 2022.
West Stand
The development of StoneX Stadium as a vibrant community asset within the broader Copthall estate has transformed this once poorly used green space and acted as a catalyst for the creation of a Masterplan that will see Copthall as the sporting and leisure hub for the London Borough of Barnet. We have been working hard with a range of stakeholders to develop this future vision for the broader site and are excited about being part of the group that will deliver it.
The new West Stand at StoneX Stadium is an important element of this vision, that will not only see dramatically improved facilities for Saracens players, coaches, staff and supporters, but also improved facilities for athletics and community sport, and maybe most importantly a new home for Middlesex University staff and students who will occupy a significant proportion of the building. The partnership with Middlesex University is an extremely positive and exciting collaboration as there is so much we share with regards to vision and aspiration.
With loan agreement in place with Barnet Council on commercial terms we undertook a series of enabling works at the stadium during 2019 and started the main construction phase recently.
Principal risks and uncertainties
We are now in a world of huge uncertainty, due to the global pandemic, and there is no doubt it has been difficult to plan. We have undergone a vast amount of scenario planning, building flexibility and resilience within the organisation.
In doing so, we recognise two particular uncertainties. As for the sport sector as a whole, we are dependent for commercial income on crowds attending our matches, and our central planning scenario is for that to occur this summer, albeit initially in limited numbers to achieve prescribed social distancing requirements. Our financial circumstances have been helped in the short-term by the provision of a loan under the Government’s Sport Winter Survival Package, for which we are most grateful.
A second uncertainty relates to our relegation to the Championship for the current 2020/21 season. Our planning presumes our promotion back to the Premiership for 2021/22, which we believe is highly likely with the strength and quality of our playing squad. However, we mark this as a risk and one for which we have developed contingency plans in line with our mantra of ‘Accept and Adapt’.
We would like to end by saying thank you to every single person in the Saracens family. The loyalty and resilience of our fans, players, coaches, staff and partners have been overwhelming during a very tough period.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2019.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 13.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Basis for opinion
Material uncertainty related to going concern
We draw attention to note 1.2 to the financial statements, which indicates that the company incurred a net loss of £6,551,081 and had net liabilities of £4,292,282 at 30 June 2019. The note confirms that the company is dependent on the availability of additional funding from its owner in order to continue in business and meet its liabilities as they fall due. The current forecasts prepared by the directors, based on the group as currently constituted, are prepared on the basis of the Saracens rugby team being promoted back to the Gallagher Premiership for the 2021/22 season, which when combined with the support from the owner will enable the group to continue in business and meet its liabilities as they fall due for at least twelve months from the date of approval of the financial statements, based on anticipated outgoings and the receipt of revenues from services.
Although the Board believes that promotion to the Gallagher Premiership will be achieved, there can be no guarantee this will be the case.
As stated in note 1.2 these events or conditions, along with the other matters as set forth in note 1.2 indicate 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.
Other information
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' Report 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.
As explained more fully in the Directors' Responsibilities Statement, 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.
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.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and the company’s members as a body, for our work, for this report, or for the opinions we have formed.
Saracens Limited is a private company limited by shares incorporated in England and Wales. The registered office is Allianz Park, Greenlands Lane, Hendon, United Kingdom, NW4 1RL.
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 pound.
The company has taken exemption from preparing the statement of cash flows and related notes as permitted under FRS102 on the basis that it is a qualifying entity and is included in the consolidated accounts of Premier Team Holdings Limited.
The company has been offered a ten-year DCMS loan under the Sports Winter Survival Package, which the directors have taken up and which has been included in the business plan. The terms of the loan include early repayment in the event of certain events, however after consultation with the management of the Scheme the directors do not foresee there being any cause for the early repayment to be invoked.
Saracens Club was relegated to the Championship at the end of the 2019/20 season. The business plan assumes promotion back to the Premiership for the 2021/22 season, based on the Club having retained the vast core of the playing and coaching squads that successfully won the Premiership and European Championship in 2018/19. There is however a chance that promotion would not be secured in 2020/21, and the directors have evaluated the impact on the Club’s finances in 2021/22, including that element of the season relating to the twelve months ending February 2022; contingency plans would be activated should that small risk materialise.
Consequently, at the time of the approval of financial statement no certainty can exist that this promotion will be achieved, and this indicates that a material uncertainty exists in relation to the ability of the company to continue as a going concern as the business plan is dependent on Club’s return to the Premiership. The directors are not aware of any other events or conditions beyond the period of their assessment that may cast significant doubt on the entity’s ability to continue as a going concern.
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 .
At each reporting date, the company assesses whether stocks are impaired or if an impairment loss recognised in prior periods has reversed . Any excess of the carrying amount of stock over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss.
Reversals of impairment losses are also recognised in profit or loss.
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.
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.
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.
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, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are s ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Exceptional items
Exceptional items are transactions that represent ordinary business activities of the company but are presented separately due their size or nature.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
In categorising leases as finance leases or operating leases, management makes judgements as to whether the significant risks and rewards of ownership have transferred to the company as a lessee, or to the lessee where the company is a lessor.
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 recoverable amount of the deferred tax asset is based on estimates of taxable profits in the foreseeable future. As such, the carrying value of deferred tax asset is determined to be £nil. Further details are given in note 9 to the financial statements.
The company holds an investment in 'P' shares in Premier Rugby Limited entitling the holder to future income streams. The investment in Premier Rugby Limited is valued at fair value as determined by Premier Rugby Limited and in accordance with other clubs in the league as described in note 14.
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 £12.8m as a result of this transaction. This income is being recognised in the Profit and Loss Account over 48 months which is in line with the other major commercial contracts entered into by PRL, with amounts relating to future periods being recognised as deferred income, and this has been reflected in notes 18 and 19.
The above fine and associated legal costs are in relation to the salary cap breach by the club for 3 seasons as concluded by the investigation into the club by the PRL in November 2019.
Employment matters related to one-off legal costs in relation to an employee contract issue.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2018 - 1).
The actual charge 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:
The company has tax losses of approximately £71 million (2018: £65 million) to use in future years. The deferred tax asset measured at 17% (2018: 17%) has not been recognised. On the basis of available evidence, it is more likely than not that there will be no taxable profits in the foreseeable future against which the asset can be recovered.
Amortisation of intangible fixed assets is included within net operating expenses in the statement of comprehensive income.
£13,865,147 of the above unlisted investments relates to an investment in Premiership Rugby Limited ("PRL"). In line with other shareholding clubs, the Company has valued its investment in PRL based on the income stream into perpetuity, discounted at a rate of 8%. This valuation methodology has been approved by the PRL board.
Additionally during the year, the Company has also co-invested £2,133,007, along with the CVC funds, in an additional minority shareholding in PRL. The investment is held at cost, which is based on the same valuation methodology.
The prior year's valuation was based on 6 years' projected future income at a discount rate of 6%.
The above deferred income balance relates to the CVC deal signed on 29 March 2019 where the club received a cash inflow of £12.8m and this is being recognised over 48 months.
Shareholder loans of £420,000 (2018: £840,000) are subject to interest cover and capital repayments. Interest is payable on these loans at a variable interest rate: the amount due within one year is 5.5%pa, and amounts payable after one year is at 1.5% above LIBOR. These are offset by the amount of £78,268 of trading balances owed to the company by the shareholders.
A shareholder loan to the value of £518,114 existed in 2018, which was not subject to interest cover or capital repayments in the short term. This loan has now been fully paid off.
The provisions for liabilities recognised by the company are :
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The above deferred tax liability is not expected to reverse with 12 months of the reporting date.
Unrecognised deferred tax assets are shown in note 11 to the financial statements.
The company operates a defined contribution pension scheme . The assets of the scheme are held separately from those of the company in an independently administered fund. Contributions totalling £75,244 (2018: £32,260) were payable to the fund at the year end and are included in creditors.
Each ordinary share entitles the holder to one vote at general meetings. The deferred shares shall rank pari passu with the ordinary shares of 1p each in the capital of the company in respect of dividends and on a return of capital (whether in a winding up or otherwise), save that all of the holders of the deferred shares shall, in aggregate, be entitled to payment of 1p on any dividend and 1p on a return of capital. The deferred shares shall not entitle the holders thereof to receive notice or attend or vote at any general meetings of the company, shall not be redeemable, and shall not be capable of transfer at any time hereafter other than as provided with the consent of the directors of the company
The special share may only be held or transferred to the amateur club, Saracens RFC Limited, providing certain rights relating to the name and activities of the club. It confers no voting rights on the holder of the special share.
The share premium account represents the consideration received for shares issued above their nominal value net of transaction costs.
The profit and loss account represents cumulative profit and loss net of distribution to owners, and the fair value reserve previously shown separately. This reflects the treatment of fair value gains and losses on investments under FRS 102 which requires such gains and losses to be shown in profit or loss. As the gains or losses relate to unlisted investments, they are not distributable until the gains or losses are realised on disposal.
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:
Included in the above commitments held under non-cancellable lease agreements is a license arrangement for the use of land and buildings. This arrangement is non-cancellable for a period of 1 year, and therefore has been included within the above commitments. An annual commitment of £188,000 (2018: £106,077) exists under this license arrangement.
During the year the company signed the new lease for stadium rental conditional on the West stand development completing, which is currently scheduled to be July 2022 where the new commitment will replace the current lease. The total annual commitment under the new agreement is £1,000,000 per annum.
The remuneration of key management personnel is as follows.
During the year the company entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The amounts owed to other related parties which are under common control with the company are interest free and have no fixed repayment date.
Saracens Copthall LLP is a related entity due to Premier Team Holdings Limited, the parent company, being a member of the LLP.
The company has taken advantage of the exemption conferred by section 33.1A of FRS102 to not disclose transactions with its parent company.
Premier Team Holdings Limited, a company registered in the UK, is the immediate and ultimate parent company and is the parent of the largest and smallest group for which consolidated accounts are prepared. The registered office of Premier Team Holdings Limited is Allianz Park, Greenlands Lane, Hendon, London, NW4 1RL.
In line with other Premiership rugby clubs, Saracens has received a ‘Check of Employer Scheme Records’ notice from HMRC. The Company has responded to HMRC and whilst the check is not yet concluded and the matter closed, the directors do not expect the outcome from the review to lead to any material adjustment in the Company accounts.