ARSENAL HOLDINGS PLC - Half-yearly Report

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Arsenal Holdings plcResults for the six months ended 30 November 2014ARSENAL ANNOUNCE HALF YEAR RESULTS  * Turnover from football increased to £148.5 million (2013 - £135.9 million)    with strong growth in commercial activity driven by the new kit partnership    with PUMA.  * Significant investment in the squad with a record level of expenditure on    player acquisitions (£93.7 million) which has in turn resulted in a higher    amortisation and higher wage costs in the profit and loss account.  * Profit on sale of player registrations amounted to £26.7 million which was    significantly higher than the prior period comparative (2013 - £6.1 million).  * Minimal activity during this half year in the Property side of the Group.  * Group recorded an overall profit before tax of £11.1 million (2013 - loss    of £2.2 million).  * The Group has no short-term debt and its cash reserves, excluding the    balances designated as debt service reserves, amounted £138.8 million (2013    - £120.6 million).  * The liabilities for player acquisitions are in part payable in instalments    and transfer creditors rose to £82.8 million (2013 - £37.9 million).  * Overall result for the year expected to be fully compliant with all of the    requirements of both the Premier League and UEFA financial regulatory    regimes.Commenting on the results for the six months, the Club's Chairman, Sir ChipsKeswick, said:"Our commitment to investment in the squad was evidenced by a record level ofexpenditure on players joining the Club. Crucially, this investment remains ata level which is consistent with our principle of affordability and which isfinancially sustainable in accordance with the applicable regulatory regimes.On the field, the team has produced some strong results and the squad islooking fit and better balanced. However, we need to find our best form on amore consistent basis as we approach, what I hope will be, an exciting end tothe season."CHAIRMAN'S STATEMENTWe enter the final phase of this season in a strong position on and off thepitch.As you will see from the financial results, which are considered in more detailin the Financial Review section of this report, the Group has reported anoverall profit for the half year.This has been made possible by our continued commercial momentum. The PUMApartnership has made a very strong start and we have also made furtheradditions to our roster of Official and Regional partnerships. In addition, wehave established a retail presence in Indonesia in partnership with MAP Active,an on-line store in China in association with Venue Retail International andcontinued to invest in our retail operations at home.On the field, the team has produced some strong results and the squad islooking fit and better balanced. However, we need to find our best form on amore consistent basis as we approach, what I hope will be, an exciting end tothe season.It has been particularly rewarding to see the recent emergence into the firstteam squad of Francis Coquelin and Hector Bellerin. Francis is a great exampleto everyone of what can happen if you are patient and dedicated. He thoroughlydeserves all the accolades currently heading in his direction. Hector isanother young player who has shown tremendous application and effort and he isgrowing in confidence game by game.The progress of both players is testimony to the philosophy of the Board, ourmajority owner Stan Kroenke and manager Arsène Wenger. In an era when many areseeking short term results and instant action, we remain true to our principlesof investing in the future by continuing to sign outstanding internationaltalent while developing our own.We have assembled and developed a young squad, with many of the first team aged25 years or under, secured to long term contracts which will allow them to growtogether.  In addition, we are excited by the prospects that a number of ouryounger players can make the step up to the First Team in the next couple ofseasons.Our commitment to investment in the squad was evidenced by a record level ofexpenditure on players joining during the summer with the acquisitions of CalumChambers, Mathieu Debuchy, David Ospina, Alexis Sanchez and Danny Welbeck. Therecent acquisition of defender Gabriel from Villarreal will take our totaltransfer expenditure for the year to well in excess of £100 million. Thissubstantial investment has inevitably led to increased amortisation and wagecosts in our profit and loss account but, crucially, this remains at a levelwhich is consistent with our principle of affordability and which isfinancially sustainable in accordance with the requirements of the applicableregulatory regimes.This season has seen the Club and the entire football family mark the centenaryof the end of the First World War. There have been many poignant events acrossthe country and I know our Under-19 squad was particularly moved by a visit toa war cemetery during their Champions Youth League trip to Brussels in theautumn.Our work through the Arsenal Foundation continues to thrive and once againplayers, staff and supporters showed their generosity towards our dedicatedmatch-day in December, raising some £220,000. The money raised continues tohelp us deliver work that transforms young peoples' lives here in London andfurther afield and we are grateful for everyone's contribution.Making a difference in our community has always been central to what we standfor as a Club and 2015 marks the 30th anniversary of the formal establishmentof our Arsenal in the Community programme. That team has been led for manyyears by our own Alan Sefton who was very deservedly awarded an MBE in theQueen's New Year's Honours list. We all send him our congratulations and lookforward to seeing the team's work develop further as we move closer to openinga new Arsenal in the Community centre in the spring which will provideimportant facilities for us to develop activities for local people.FINANCIAL REVIEWThe financial results for the six months ended 30 November 2014 show furthergrowth in the Group's revenues driven by the commencement of our kitpartnership with PUMA. The total turnover from football was £148.5 millioncompared with £135.9 million for the same period last year.These improved commercial revenues and the underlying strong financial positionhave allowed us to make further significant investments into the Club's playingresources. Additions to player registrations in the first half of the year were£93.7 million and these additions, together with certain contract extensions,have driven both a higher amortisation charge in the profit and loss accountand a higher wage bill.The final main feature of the half year results is the gain of £26.7 million(2013 - £6.1 million) made from the sale of players and from realising thevalue of an option the Club held in relation to the registration of formerplayer, Carlos Vela.The overall result for the period was a profit before tax of £11.1 million ascompared to a loss of £2.2 million for the first half last year.                                     2014                       2013                                      £m                         £mTurnoverFootball                             148.5                     135.9Property development                  0.3                       2.0Total turnover                       148.8                     137.9Operating profits*Football*                            21.9                       22.2Property development                  0.1                       0.7Total operating profit*              22.0                       22.9Player trading                        1.4                      (12.6)Depreciation and                     (6.5)                     (6.4)amortisation of goodwillJoint venture                         0.5                       0.4Net finance charges                  (6.3)                     (6.5)Profit / (loss) before tax           11.1                      (2.2)*= operating profits before depreciation and player trading costsBroadcasting was again the largest source of income at £53.0 million (2013 - £52.0 million). The similar level of TV income is to be expected given we are inthe second season of three for the current Premier League broadcastingcontracts and the final year of the existing UEFA contracts.Looking beyond the current year, UEFA's successful marketing of ChampionsLeague broadcast and commercial rights for its next three year cycle (includingBT's purchase of exclusive UK rights) should drive further growth in values forthe participating English clubs from next season. The expected underlyingrevenue growth may be slightly offset by a weaker Euro. The Premier League hasrecently announced a significant uplift in the value achieved for the UK TVrights for the three seasons commencing 2016/17. The process of tendering theinternational rights has yet to fully commence. An investigation into the saleof live broadcast rights in the UK is currently being undertaken by OFCOM theoutcome of which cannot be predicted at this early stage.Our combined Commercial and Retail revenues rose sharply and at £52.3 million(2013 - £38.4 million) fell only just below the total for broadcasting. Growthof 36% on top of 39% in the prior period demonstrates a significant stepforward although, inevitably, this growth rate will now slow as we have our keypartnerships with Emirates and PUMA in place for the medium term.Our new kit partnership with PUMA has made an excellent start with a reallypositive impact on our retail and licensing businesses. In addition, webenefited from a major re-fit of our flagship Armoury store which was completedto coincide with the launch of the new PUMA kits at the start of July.We can also report good progress in terms of secondary partnerships, addingCapital Bank and Markets.com to the seven new deals and renewals previouslyreported for 2014/15 and bringing the Club's total number of currentpartnerships up to 25. The previously reported new partnerships being withVitality, Europcar, Cooper and Hansa (new deals) and BT, Citroen and Indesit(renewals)Match day revenue includes the match fees received in respect of our pre-seasonmatches and overseas tours. Although there was time to stage another verysuccessful and well attended Emirates Cup, last summer's World Cup meant thewindow for participating in pre-season activity was truncated, resulting in asingle overseas fixture, against New York Red Bulls. As a consequence match dayrevenue was lower at £42.9 million (2013 - £45.0 million). Match day revenueremains weighted to the second half of the financial year and at 30 November wehad played 11 (2013 - 11) of the 27 home fixtures we are so far certain ofplaying for the full season.Operating costs for the football side of the business were increased to £126.2million (2013 - £113.2 million). Our new signings, together with certain playercontract extensions, mean that higher football wage costs are the mostsignificant factor behind this increase. It is worth repeating that having theresources to grow our wage bill in a rational and responsible manner actuallyrepresents a positive outcome in line with our objectives of achieving moreon-field success for the Club. Outside player wage costs we also increased thelevel of expenditure in our football support and coaching staff and in certainother key areas such as youth development. Increased revenue activity,particularly within the retail business, has led to an up-lift to our directcosts of sales.In contrast to football, activity in the Group's property business was veryquiet with revenue of £0.3 million (2013 - £2.0 million) and operating profitof £0.1 million (2013 - £0.7 million), mainly from the rental of certainretained commercial units, such as the gym at Highbury Square. The timing ofsale for the remaining major property sites, on Hornsey Road and Holloway Road,is tied to the resolution of the underlying planning consents.Player trading, which resulted in a surplus of £1.4 million (2013 - deficit of£12.6 million), has, as usual, played a fairly key role in differentiating theoverall financial result against its prior period comparative. Player sales,including Thomas Vermaelen, generated a profit of £26.7 million (2013 - £6.1million); also included within this heading is the net proceeds of cancellingan option which the Club held to reacquire the registration of former playerCarlos Vela. This was a substantially higher profit than that achieved in theprior period and was only partially offset by an increased charge foramortisation of player registrations, which amounted to £25.6 million (2013 - £19.3 million).The book value of player registrations (intangible fixed assets) has beenincreased significantly to £181.3 million, from £115.0 million as at 31 May2014, mainly as a result of the player acquisitions to which we have alreadyreferred.In cash terms, as the liabilities for these acquisitions are in part payable ininstalments, the net outlay on transfers for the period was £30.7 million (2013- £12.7 million). This meant that the Group has actually slightly improved itsalready strong cash position with balances at 30 November amounting to £161.5million (2013 - £143.5 million), inclusive of debt service reserve balances,which are not available for football purposes, of £22.8 million (2013 - £22.8million). However, in contrast, the amount owing on transfers was increased to£82.8 million (2013 - £37.9 million).The Group enters into a number of transactions, relating mainly to itsparticipation in European competition (UEFA Champions League distributions arepaid in €) and player transfers, which create exposure to movements orvolatility in foreign exchange, including €. The Group monitors this foreignexchange exposure on a continuous basis and will usually hedge any significantexposure in its currency receivables and payables.SUMMARYThe Group's overall after tax profit for the six months was £10.1 million (2013- profit of £2.8 million).As always, the actual outcome for the second half will be strongly influencedby the extent of progress in the knock-out competitions and final PremierLeague position. We expect the overall result for the year to be fullycompliant with all of the requirements of both the Premier League and UEFAfinancial fair play rules.Looking ahead to next season we have recently announced that we will not bemaking any increase in ticket prices. This will be the sixth season since themove to Emirates Stadium that prices have been held.In closing I should thank everyone for their support so far this season. Theatmosphere at Emirates Stadium has been terrific and the support at every awaygame has, as ever, been first class. Keep backing the team and enjoy the restof the season.Sir Chips KeswickChairman27 February 2015Arsenal Holdings PlcConsolidated profit and loss accountFor the six months ended 30 November 2014                                                                 Six months                                                                      to 30  Year ended                                                                   November      31 May                               Six months to 30 November 2014          2013        2014                                         Unaudited                Unaudited     Audited                               Operations                               excluding                                  player    Player                                 trading   trading      Total       Total       Total                         Notes     £'000     £'000      £'000       £'000       £'000Turnover of the Group            149,959       258    150,217     139,149     304,267including its share ofjoint venturesShare of turnover of              (1,449)        -     (1,449)     (1,214)     (2,395)joint ventures                                ________  ________    _______    ________    ________Group turnover              4    148,510       258    148,768     137,935      301,872Operating expenses- other                         (132,935)         -  (132,935)   (120,862)   (251,736)- amortisation of player               -   (25,560)   (25,560)    (19,284)    (40,072)registrationsTotal operating expenses        (132,935)  (25,560)  (158,495)   (140,146)   (291,808)                                ________  ________    _______    ________    ________Operating profit/(loss)           15,575   (25,302)    (9,727)     (2,211)      10,064Share of operating                   470         -        470         405         710profit of joint ventureProfit on disposal of                  -    26,740     26,740       6,120       6,912player registrations                                ________  ________    _______    ________    ________Profit on ordinary                16,045     1,438     17,483       4,314      17,686activities before netfinance charges                                ________  ________Net finance charges                                    (6,337)     (6,490)    (13,018)                                                     ________    ________    ________Profit/(loss) onordinary activitiesbefore taxation                                        11,146      (2,176)      4,668Taxation                                               (1,084)       4,988      2,603                                                     ________    ________    ________Profit after taxationretained forthe financial period                                   10,062       2,812       7,271                                                     ________    ________    ________Earnings per share          5                         £161.72      £45.20     £116.87                                                     ________    ________    ________All trading resulted from continuing operations.The accompanying notes are an integral part of these statements.Arsenal Holdings PlcConsolidated balance sheetAt 30 November 2014                                       Notes        30 November         31 May                                                    2014       2013       2014                                               Unaudited  Unaudited    Audited                                                   £'000      £'000      £'000Fixed assetsGoodwill                                           1,285      1,711      1,498Tangible assets                                  419,931    418,826    421,402Intangible assets                         6      181,269    130,001    114,986Investment in joint venture                        3,943      3,340      3,571                                                ________   ________   ________                                                 606,428    553,878    541,457                                                ________   ________   ________Current assetsStock - Development properties                     9,843     12,467      9,849Stock - Retail merchandise                         4,169      2,426      4,935Debtors - Due within one year                     52,922     59,572     65,642Debtors - Due after one year                      10,624      9,741      4,861Cash and short-term deposits              7      161,546    143,474    207,878                                                ________   ________   ________                                                 239,104    227,680    293,165Creditors: Amounts falling due                  (198,146)  (167,486)  (203,032)within one year                                                ________   ________   ________Net current assets                                40,958     60,194     90,133                                                ________   ________   ________Total assets less current                        647,386    614,072    631,590liabilitiesCreditors: Amounts falling due after            (274,346)  (251,881)  (266,478)more than one yearProvisions for liabilities                       (52,355)   (56,029)   (54,494)                                                ________   ________   ________Net assets                                       320,685    306,162    310,618                                                ________   ________   ________Capital and reservesCalled up share capital                               62         62         62Share premium                                     29,997     29,997     29,997Merger reserve                                    26,699     26,699     26,699Profit and loss account                   8      263,927    249,404    253,860                                                ________   ________   ________Shareholders' funds                       9      320,685    306,162    310,618                                                ________   ________   ________The accompanying notes are an integral part of this consolidated balance sheet.Arsenal Holdings PlcConsolidated cash flow statementFor the six months ended 30 November 2014                                             Six months to 30 November Year ended                                                                           31 May                                                     2014        2013        2014                                               Unaudited    Unaudited     Audited                                                   £'000        £'000       £'000Net cash inflow from operating activities          5,490        20,129     96,169Player registrations                             (30,667)     (12,728)    (11,121)Returns on investment and servicing of            (6,018)      (6,227)    (12,409)financeTaxation                                            (996)           58     (2,445)Capital expenditure                               (6,867)      (4,316)     (8,873)                                                 ________     ________    ________Cash (outflow)/inflow before financing           (39,058)      (3,084)      61,321Financing                                         (7,274)      (6,899)     (6,900)Management of liquid resources                    42,689        24,283    (39,781)                                                 ________     ________    ________Change in cash in the period                      (3,643)      14,300       14,640Change in short-term deposits                    (42,689)     (24,283)      39,781                                                 ________     ________    ________(Decrease)/increase in cash and short-term      (46,332)       (9,983)      54,421deposits                                                 ________     ________    ________Arsenal Holdings PlcNotes to the cash flow statement                                             Six months to 30 November Year ended                                                                           31 May                                                    2014         2013        2014                                               Unaudited    Unaudited     Audited                                                   £'000        £'000       £'000a)  Reconciliation of operating resultto netcash inflow/(outflow)from operatingactivitiesOperating (loss)/profit                           (9,727)      (2,211)     10,064Loss/(profit) on disposal of tangible fixed           297          (9)       (140)assetsAmortisation of goodwill                             213          213         426Depreciation (net of grant amortisation)           6,554        6,211      12,418Amortisation of player registrations              25,560       19,284      40,072Decrease/(increase) in stock                         772           225     (2,472)Decrease in debtors                               17,574        17,033      9,657(Decrease)/increase in creditors                 (35,753)     (20,617)     26,144                                                ________     ________    ________Net cash inflow from operating activities          5,490        20,129     96,169                                                ________     ________    ________b)  Reconciliation of net cash flow tomovement in net debt(Decrease)/increase in cash and short term      (46,332)      (9,983)      54,421depositsCash outflow from decrease in debt                 7,274        6,899       6,900                                                ________     ________    ________Change in net debt resulting from cash flows    (39,058)       (3,084)     61,321Increase in debt resulting from non cash            (337)        (341)       (677)changesNet debt at start of period                      (32,577)     (93,221)    (93,221)                                                ________     ________    ________Net debt at close of period                      (71,972)     (96,646)    (32,577)                                                ________     ________    ________c)  Analysis of changes in net debt                                At 1 June   Non cash        Cash  At 30 November                                     2014    changes       flows            2014                                    £'000      £'000       £'000           £'000Cash at bank and in hand           80,555          -     (3,643)          76,912Short-term deposits               127,323          -    (42,689)          84,634                                  _______    _______     _______         _______                                  207,878          -    (46,332)         161,546Debt due within one year (         (6,704)    (7,678)      7,274          (7,108)bonds)Debt due after more than one     (205,921)      7,530          -        (198,391)year (bonds)Debt due after more than oneyear(debenture subscriptions)         (27,830)      (189)          -         (28,019)                                  _______    _______     _______         _______Net debt                          (32,577)      (337)   (39,058)         (71,972)                                  _______    _______     _______         _______Non cash changes represent £288,000 in respect of the amortisation of costs ofraising finance, £189,000 in respect of rolled up, unpaid debenture interestfor the period less £140,000 in respect of amortisation of the premium oncertain of the Group's interest rate swaps.d)  Gross cash flows                                            Six months to 30 November Year ended                                                                          31 May                                                   2014         2013        2014                                              Unaudited    Unaudited     Audited                                                  £'000        £'000       £'000Player registrations:Payments for purchase of players                (48,568)     (35,054)    (40,419)Receipts from sale of players                    17,901       22,326      29,298                                                _______      _______     _______                                                (30,667)     (12,728)    (11,121)                                                _______      _______     _______Returns on investment and servicing offinance:Interest received                                   540          418         862Interest paid                                    (6,558)      (6,645)    (13,271)                                                _______      _______     _______                                                 (6,018)      (6,227)    (12,409)                                                _______      _______     _______Capital expenditure:Payments to acquire tangible fixed assets        (6,890)      (4,326)     (9,019)Receipts from sale of tangible fixed assets          23           10         146                                                _______      _______     _______                                                 (6,867)      (4,316)     (8,873)                                                _______      _______     _______Financing:Repayment of borrowings                          (7,274)      (6,899)     (6,900)                                                _______      _______     _______Total debt repayment                             (7,274)      (6,899)     (6,900)                                                _______      _______     _______Arsenal Holdings PlcNotes to the interim accounts30 November 20141   Basis of preparation of Group financial statementsThe Group financial statements consolidate the assets, liabilities and resultsof the company and its subsidiary undertakings made up to 30 November 2014. TheGroup has two classes of business - the principal activity of operating aprofessional football club and property development.The interim results have been prepared, in accordance with United KingdomGenerally Accepted Accounting Practice, on the same basis and using the sameaccounting policies as those used in the preparation of the full year'saccounts to 31 May 2014. The status of the Group's financing arrangements issummarised in the Chairman's Statement. The directors have a reasonableexpectation that the Group has adequate resources to continue in operationalexistence for the foreseeable future and the financial statements continue tobe prepared on the going concern basis.2   Significant accounting policiesIncome recognitionGate and other match day revenue is recognised over the period of the footballseason as games are played and events are staged. Sponsorship and similarcommercial income is recognised over the duration of the respective contracts.The fixed element of broadcasting revenues is recognised over the duration ofthe football season whilst facility fees for live coverage or highlights aretaken when earned at the point of broadcast. Merit awards are accounted foronly when known at the end of the financial period. UEFA pool distributionsrelating to participation in the Champions League are spread over the matchesplayed in the competition whilst distributions relating to match performanceare taken when earned; these distributions are classified as broadcastingrevenues. Fees receivable in respect of the loan of players are included inturnover over the period of the loan.Income from the sale of development properties is recognised on legalcompletion of the relevant sale contract. Where elements of the sale price aresubject to retentions by the purchaser the retained element of the sale priceis not recognised until such time as all of the conditions relating to theretention have been satisfied.Player registrationsThe costs associated with acquiring players' registrations or extending theircontracts, including agents' fees, are capitalised and amortised, in equalinstalments, over the period of the respective players' contracts. Where acontract life is renegotiated the unamortised costs, together with the newcosts relating to the contract extension, are amortised over the term of thenew contract. Where the acquisition of a player registration involves anon-cash consideration, such as an exchange for another player registration,the transaction is accounted for using an estimate of market value for thenon-cash consideration. Under the conditions of certain transfer agreements orcontract renegotiations, further fees will be payable in the event of theplayers concerned making a certain number of First Team appearances or on theoccurrence of certain other specified future events. Liabilities in respect ofthese additional fees are accounted for, as provisions, when it becomesprobable that the number of appearances will be achieved or the specifiedfuture events will occur. The additional costs are capitalised and amortised asset out above.3   Segmental analysisClass of business                                           Football                                              Six months to 30 November Year ended                                                                            31 May                                                      2014        2013        2014                                                Unaudited    Unaudited     Audited                                                    £'000        £'000       £'000Turnover                                          148,498      135,958     298,658                                                  _______      _______     _______Profit/(loss) on ordinary activities before        10,780      (3,111)       3,817taxation                                                  _______      _______     _______Segment net assets                                282,150      268,111     272,449                                                  _______      _______     _______Class of business                                     Property development                                              Six months to 30 November Year ended                                                                            31 May                                                     2014         2013        2014                                                Unaudited    Unaudited     Audited                                                    £'000        £'000       £'000Turnover                                              270        1,977       3,214                                                  _______      _______     _______Profit on ordinary activities before taxation         366          935         851                                                  _______      _______     _______Segment net assets                                 38,535       38,051      38,169                                                  _______      _______     _______Class of business                                             Group                                              Six months to 30 November Year ended                                                                            31 May                                                     2014         2013        2014                                                Unaudited    Unaudited     Audited                                                    £'000        £'000       £'000Turnover                                          148,768      137,935     301,872                                                  _______      _______     _______Profit/(loss) on ordinary activities before        11,146       (2,176)      4,668taxation                                                  _______      _______     _______Net assets                                        320,685      306,162     310,618                                                  _______      _______     _______4   Turnover                                             Six months to 30 November Year ended                                                                           31 May                                                    2014         2013        2014                                               Unaudited    Unaudited     Audited                                                   £'000        £'000       £'000Gate and other match day revenues                 42,939       44,961     100,229Player trading                                       258          540         513Broadcasting                                      52,992       52,025     120,762Retail and licensing income                       14,212       10,389      17,938Commercial                                        38,097       28,043      59,216Property development                                 270        1,977       3,214                                                 _______      _______     _______                                                 148,768      137,935     301,872                                                 _______      _______     _______5   Earnings per shareThe calculation of earnings per share is based on the profit for the perioddivided by the weighted average number of ordinary shares in issue being 62,217(period to 30 November 2013 - 62,217 shares and year to 31 May 2014 - 62,217shares).6   Intangible fixed assets                                                                         £'000Cost of player registrationsAt 1 June 2014                                                         249,265Additions                                                               93,684Disposals                                                              (34,101)                                                                        _______At 30 November 2014                                                    308,848                                                                        _______Amortisation of player registrationsAt 1 June 2014                                                         134,279Charge for the period                                                   25,560Disposals                                                              (32,260)                                                                        _______At 30 November 2014                                                    127,579                                                                        _______Net book amountAt 30 November 2014                                                    181,269                                                                       _______At 31 May 2014                                                         114,986                                                                       _______7   Cash at bank and in hand                                                    30 November         31 May                                                    2014       2013       2014                                               Unaudited  Unaudited    Audited                                                   £'000      £'000      £'000Debt service reserve accounts                     22,781     22,831     34,557Other accounts                                   138,765    120,643    173,321                                                 _______    _______    _______                                                 161,546    143,474    207,878                                                 _______    _______    _______The Group is required under the terms of its fixed and floating rate bonds tomaintain specified amounts on bank deposit as security against future paymentsof interest and principal. Accordingly the use of these debt service reserveaccounts is restricted to that purpose. Included in other accounts is a balanceof £0.2 million (30 November 2013 £0.5 million and 31 May 2014 £0.3 million)which is held in connection with the site works at Queensland Road. The use ofthis deposit is restricted to that purpose and Newlon Housing Trust is a jointsignatory.The Group uses short-term bank treasury deposits as a means of maximising theinterest earned on its cash balances.                                                    30 November         31 May                                                    2014       2013       2014                                               Unaudited  Unaudited    Audited                                                   £'000      £'000      £'000Cash at bank and in hand                          76,912     80,215     80,555Short-term deposits                               84,634     63,259    127,323                                                 _______    _______    _______                                                 161,546    143,474    207,878                                                 _______    _______    _______8   Profit and loss account                                                   30 November           31 May                                                   2014        2013        2014                                              Unaudited   Unaudited     Audited                                                  £'000       £'000       £'000At start of period                              253,860     246,597     246,597Profit for the period                            10,062       2,812       7,271Exchange difference                                   5         (5)         (8)                                             __________  __________  __________Balance at end of period                        263,927     249,404     253,860                                             __________  __________  __________9   Reconciliation of shareholders' funds                                                   30 November           31 May                                                   2014        2013        2014                                              Unaudited   Unaudited     Audited                                                  £'000       £'000       £'000Opening shareholders' funds                     310,618     303,355     303,355Profit for the period                            10,062       2,812       7,271Exchange difference                                   5         (5)         (8)                                             __________  __________  __________Closing shareholders' funds                     320,685     306,162     310,618                                             __________  __________  __________10   Additional informationa)  The interim financial statements do not constitute statutory financialstatements within the meaning of Section 435 of the Companies Act 2006. Thefinancial information for the year ended 31 May 2014 has been extracted fromthe statutory accounts for the year then ended which have been filed with theRegistrar of Companies. The audit report on these accounts was unqualified anddid not contain any statements under Section 498 (2) or (3) Companies Act 2006.b)  These results will be announced to ICAP Securities & Derivatives Exchange(ISDX Growth Market) on 27 February 2015 and posted to all shareholders on theregister at 26 February 2015. Copies of this interim report will be availablefrom the company's registered office at Highbury House, 75 Drayton Park, LondonN5 1BU.c) These interim results have been reviewed by the Group's auditors, DeloitteLLP, who have issued a review report on the results.