Premier_Team_Holdings_Lim - Accounts

The directors present the strategic report and financial statements for the year ended 30 June 2020.

Premier Team Holdings Limited (‘the Company’) and its group undertaking’s (‘the Group’) principal activities are corporate hospitality, events and a professional rugby club. The Company’s principal activity is that of a holding company.

Review of the business

Two events rocked our business and financial results in 2019/20: Saracens men’s team was relegated to the Championship and then a global pandemic hit whereby most of our revenue ceased overnight. Nevertheless, these crises presented our businesses with the opportunity to rebuild how we govern our business, both to contain the impacts of the crises and to make us more innovative, efficient and effective going forward.

We have called upon the loyalty and commitment of our fans, partners, staff and players, which has been incredibly humbling and so valued during this period of sustained uncertainty.

February 2020 saw the start of the rebuilding phase of our journey. We understand the importance of reinforcing our new governance processes and we will continue to safeguard our culture and care for our staff and community. We will continue to strive to live up to our values on a daily basis and we believe that, through all the turmoil of 2020, we have actually laid some very solid foundations for the future which will allow us to achieve our long term goals and ambitions.

In summary, our financial performance compared to the prior year showed:

Covid wreaked havoc on sports clubs’ finances across the country. Much of Saracens commercial revenue was wiped out overnight. £6.1m of the revenue loss was directly attributable to the Covid-effect on our income. The Executive team took immediate action, to put the Club in the best possible position to emerge strongly from the crisis, which offset some of this lost revenue with cost savings of £2.1m and furlough receipts of £1.1m.

The impact of Covid continues well into 2021, yet we have made good progress on all our other Key Performance Indicators. We have: obtained a government loan through Sport England for the ‘Sport Winter Survival Package’; secured a new headline partner and stadium naming rights partner in City Index and StoneX; extended principal partnerships with Simba and Hypro; brought on board new partnerships with Lucozade Sport, Rentokil Initial and Ranstad; and developed a healthy pipeline of potential new partners. Furthermore, Nigel Wray has confirmed his repeated and unswerving financial support as we move forward with exciting plans for the club and the business.

So… what does the future hold? We will unashamedly endeavour to consolidate our position as a market leader both on and off the field, backed up by a powerful economic model. Executing our growth strategy, even when faced with extreme uncertainty, will be vital and audience growth will be a constant goal. Our men’s team is rebuilding, and, at the time of writing, we have a very competitive Championship season to 100% focus on. Our long-term ambition is to have both men’s and women’s teams competing at the top of domestic competitions and Europe. We want to deliver genuine value to our local community and with the West Stand development underway we want to own London’s most beautiful ‘boutique’ multi-use venue.

We are dependent for commercial income on crowds attending our matches, and our prudent planning scenario is for 50% crowds to return from September 2021 and full crowds from January 2022.

Our planning also presumes our Saracens promotion back to the Premiership for 2021/22, which we hope is likely with the strength and quality of our squad. However, we continue to mark this as a risk and one for which we have developed contingency plans.

On behalf of the board

The directors present their annual report and financial statements for the year ended 30 June 2020.

Premier Team Holdings Limited (‘the Company’) and its group undertaking’s (‘the Group’) principal activities are corporate hospitality, events and a professional rugby club. The Company’s principal activity is that of a holding company.

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 10.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

Going concern

Notwithstanding the Group’s (being Premier Team Holdings and its subsidiary Saracens Limited) net current liabilities of £27,113,196 as at 30 June 2020 and a loss for the year then ended of £8,542,719, the consolidated financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.

As in previous years, the Group met its working capital needs using loans that will be satisfied by their future capitalisation as had been carried out previously over the years by the main shareholder, Nigel Wray.

Mr Wray has also confirmed his willingness to continue lending to the Group to facilitate the continued operations of the Group over twelve months from the date of the approval of the accounts to meet the requirements as outlined in its business plan.

The directors have also considered the immediate impact of the coronavirus, which, as for other professional rugby clubs, has been the prohibition of crowds attending our matches, thus reducing the income from tickets, hospitality and other aspects of home match-days. Whilst the company has taken action to reduce costs and has benefitted from the Government’s Coronavirus Job Retention Scheme and the provision by DCMS of a loan under the Sport Winter Survival Package, these have not offset fully the negative cash impact. The business plan assumes a partial return of crowds in May 2021, 50% crowds from September to December 2021 and then return to full crowds thereafter; were these assumptions not to materialise then the directors have contingency plans to reduce the impact on cash flow.

The terms of the DCMS loan include early repayment in the event of changes in certain defined conditions, 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 Men were 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 April 2022; contingency plans would be activated should that small risk materialise.

Consequently, at the time of approval of the 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 Group 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 Group’s ability to continue as a going concern.

The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     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 group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Premier Team Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2020 which comprise the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the group's and the parent company's affairs as at 30 June 2020 and of the group's 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.

Material uncertainty related to going concern

We draw attention to note 1.3 to the financial statements, which indicates that the group incurred a net loss of £8,542,719 and had net current liabilities of £27,113,196 at 30 June 2020. The note confirms that the group 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 1.3 these events or conditions, along with the other matters as set forth in note 1.3 indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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.

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.

In the light of the knowledge and understanding of the group and the parent 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company 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.

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 group's and the parent 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 group or the parent 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 group’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 group’s or the parent 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 group or the parent 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.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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.

As permitted by s408 of the Companies Act 2006, the company has not presented its own statement of comprehensive income and related notes. The company’s loss for the year was £9,344,658 (2019 - £9,456 loss).

Premier Team Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is StoneX Stadium, Greenlands Lane, Hendon, London, NW4 1RL.

The group consists of Premier Team Holdings Limited and all of its subsidiaries.

The company's and the group's principal activities and the nature of its operations are given in the strategic report on page 1.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

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.

As permitted by s408 of the Companies Act 2006, the company has not presented its own statement of comprehensive income as it prepares group accounts and the company's individual statement of financial position shows the company's profit and loss for the financial year.

The consolidated financial statements incorporate those of Premier Team Holdings Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.

All financial statements are made up to 30 June 2020. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Notwithstanding the Group’s (being Premier Team Holdings and its subsidiary Saracens Limited) net current liabilities of £27,113,196 as at 30 June 2020 and a loss for the year then ended of £8,542,719, the consolidated financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.

As in previous years, the Group met its working capital needs using loans that will be satisfied by their future capitalisation as had been carried out previously over the years by the main shareholder, Nigel Wray.

Mr Wray has also confirmed his willingness to continue lending to the Group to facilitate the continued operations of the Group over twelve months from the date of the approval of the accounts to meet the requirements as outlined in its business plan.

The directors have also considered the immediate impact of the coronavirus, which, as for other professional rugby clubs, has been the prohibition of crowds attending our matches, thus reducing the income from tickets, hospitality and other aspects of home match-days. Whilst the company has taken action to reduce costs and has benefitted from the Government’s Coronavirus Job Retention Scheme and the provision by DCMS of a loan under the Sport Winter Survival Package, these have not offset fully the negative cash impact. The business plan assumes a partial return of crowds in May 2021, 50% crowds from September to December 2021 and then return to full crowds thereafter; were these assumptions not to materialise then the directors have contingency plans to reduce the impact on cash flow.

The terms of the DCMS loan include early repayment in the event of changes in certain defined conditions, 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 Men were 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 April 2022; contingency plans would be activated should that small risk materialise.

Consequently, at the time of approval of the 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 Group 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 Group’s ability to continue as a going concern.

Turnover represents the amounts derived from ticket sales, executive boxes, sponsorship, Premier Rugby central income and non-matchday revenue arising from the sale of eventing space, net of value added tax. Turnover is recognised in the period to which it relates, and future income which has been received in advance is shown in the statement of financial position as deferred income.

Goodwill arising on the purchase of Saracens Rugby Football Club, being the excess of the cost of interests acquired over the fair value of underlying net assets, was amortised evenly over twenty years beginning in the year of acquisition. In the opinion of the directors, this represented the period over which the goodwill was effective.

Computer software is initially recognised at cost and is capitalised and amortised over its useful economic life, which is considered to be 4 years.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Residual value is calculated on prices prevailing at the reporting date, after estimated costs of disposal, for the asset as if it were at the age and in the condition expected at the end of its useful life.

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 recognised in the profit and loss account.

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

The group is entitled to income from three classes of shares owned in Premier Rugby Limited; permanent ‘P’ shares, ‘A’ and ‘B’ shares. As a founding member of the Premiership, there was no cost associated with the acquisition of ‘P’, ‘A’, or ‘B’ shares. Further details of the basis of valuation of “P” shares is given in Note 15 to the financial statements.

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks represents branded merchandise and is valued at the lower of cost and net realisable value. Net

realisable value is based upon estimated selling price less further costs expected to be incurred to completion and disposal.

Reversals of impairment losses are also recognised in profit or loss.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, 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, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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 group 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 payments 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. Amounts 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.

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the group 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 group.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

Government grants are in relation to the amounts received under the Coronavirus Job Retention Scheme where staff have been furloughed due to the global pandemic. These amounts have been included separately in other income and are recognised in the same periods as the related salary costs.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.

Exceptional items are transactions that represent ordinary business activities of the group but are presented separately due their size or nature.

In the application of the group’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 significant risks and rewards of ownership have transferred to the company as lessee, or to the lessee, where the company is a lessor.

In categorising leases as finance leases or operating leases, management makes judgements as to significant risks and rewards of ownership have transferred to the company as lessee, or to the lessee, where the company is a lessor.

The group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

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 the deferred tax asset is deemed to be £Nil. Further details are given in Note 12 to the financial statements.

The group 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 the valuation methodology used by other clubs in the league as described in note 15.

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 21 and 22.

The turnover split between rugby and stadium activities has been amended in 2020, and 2019 amounts were adjusted to be consistent with the current year.

The above prior year 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 in prior year related to one-off legal costs in relation to an employee contract issue.

The average monthly number of persons (including directors) employed by the group and company during the year was:

Their aggregate remuneration comprised:

The actual charge for the year can be reconciled to the expected charge based on the profit or loss and the standard rate of tax as follows:

At 30 June 2020, tax losses within the parent company amounted to £1,145,676 (2019: £1,028,006). The deferred tax asset measured at 19% (2019: 17%) of £217,678 (2019: £174,761) has not been recognised. On the basis of available evidence, it is more likely than not that there will be insufficient taxable profits in the foreseeable future against which the asset can be recovered.

Saracens Limited has tax losses of approximately £79 million (2019: £71 million) for use in future years. The deferred tax asset measured at 19% (2019: 17%) of £15.01 million (2019: £12.07 million) has not been recognised. On the basis of available evidence, it is more likely than not that there will be insufficient taxable profits in the foreseeable future against which the asset can be recovered.

£13,865,147 of the above other investments relates to an investment in Premiership Rugby Limited ("PRL"). In line with other shareholding clubs, the Group 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 in the prior year, the Group 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.

Details of the company's subsidiaries at 30 June 2020 are as follows:

Details of associates at 30 June 2020 are as follows:

The above deferred income balance relates to the CVC deal signed on 29 March 2019 where Saracens Limited received the inflow of £12.8m and this is being recognised over 48 months.

Shareholder loans of £350,000 (2019: £347,979) are subject to interest cover and capital repayments. Interest is payable on these loans at a variable interest rate at 1.5% above LIBOR.

In the prior year the Company took out an additional loan of £335,658, which was not subject to interest cover or capital repayments in the short term.

There is an amount of £1,050,000 due to Euroblue Investments Limited, on which no interest is charged. The loan is due for repayment on demand, and is secured on the 'P' shares held in Saracens Limited.

The remaining £7,913,000 loan is due to Glengrace Limited in relation to the loan facility of £8,500,000. The loan is repayable within 12 months of the year, and the interest is charged at the official HMRC rate (which at the year end was 2.25%).

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Unrecognised deferred tax assets of the group and company are disclosed in note 12 to the financial statements.

The group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. Contributions totalling £40,194 (2019: £75,244) were payable to the fund at the year end and are included in creditors.

The 'A' shares individually entitle the holders to 1% of income or capital arising so far as such income or capital represents profits arising from the ownership or disposal of the group's entire interest in one of its group undertakings. The 'A' shares have no other income or capital rights.

The 'B' shares only have rights over assets distributed on winding up or other return of capital, pro rata to their holdings of such shares and ordinary shares.

The 'C' shares have the right to income equal to 379.7% of the amount of any dividend declared or other income receipt in respect of one ordinary share. The 'C' shares and their holders shall have no other rights to income. Each of the 'C' shares shall have the right to capital equal to 369% of the amount of any assets distributed by the company on a winding up or other return of capital to the company in respect of one ordinary share. The 'C' shares and their holders shall have no other right to capital.

The 'D' shares have rights to special dividends. Special dividends require board approval of 75% of the voting shares. The 'D' shares shall have no rights to capital.

Each 'E' share has a right to income equal to 377 times the amount of any dividend declared in respect of one ordinary share. The 'E' shares are entitled to receive notice of, attend and vote at general meetings of the company.

The share premium account represents the consideration received for shares issued above their nominal value net of transaction costs.

The capital redemption reserve represents the shares cancelled during the previous year.

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 group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

The company has no operating lease commitments at the reporting date.

Included in the above commitments held under non-cancellable lease agreements is a licence 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 £193,272 (2019: £188,000) exists under this licence arrangement.

During the year the Company's subsidiary signed the new lease for stadium rental conditional on the West Stand development completing, which is currently scheduled to be June 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, who include directors and senior management staff, is as follows.

No remuneration was paid by the company during the year.

During the year the group 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 with common control to the group are interest free and have no fixed repayment date.

Saracens Copthall LLP is a related entity due to the company being a member.

During the year the Company contributed £32,178 (2019: £nil) to the expenses of Saracens Mavericks Limited.

The company has taken advantage of the exemption conferred by section 33.1A of FRS102 to not disclose transactions with its subsidiary company, Saracens Limited.

In line with other Premiership rugby clubs, Saracens Limited has received a ‘Check of Employer Scheme Records’ notice from HMRC.  The group 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 group accounts.