The directors present the strategic report for the year ended 30 June 2023. The company is a non-trading holding company of The Dundee United Football Company Limited, and the report below reflects the activities of the trading company.
Strategy and Business Model
Dundee United Football Club (the “company” and the “club”) is committed to being a sustainable and leading competitor within the upper echelons of the Scottish Professional Football League.
The club aims to achieve success within league and cup competitions with a philosophy both on and off the field of continuous personal growth and team development supported by first-class facilities, staff, coaching, youth development and club infrastructure.
It aims to be the club of choice for highly talented players and aspiring youngsters, and through a thriving senior football and academy set-up it will ensure our players are developed to their highest level possible.
We also aim to be a club that continues to work alongside Dundee United Community Trust (DUCT) within our local community to improve the lives of people within Dundee and the surrounding areas.
Review of the Business
Financial Overview
In the year ended 30 June 2023, the company suffered the financial effect of an increase in football expenditure combined with poor results in the Scottish Premiership which led to relegation to the Scottish Championship.
The Profit and Loss Account for the year ended 30 June 2023 shows a loss of £2,831,946.
Turnover was down from £8.3m in the prior year to £8.1m.
Total wage costs increased by 18% to £6.9m and the wages/turnover ratio increased from 71% to 86% from the prior year.
The operating loss before interest and profit on sale of players was £5m, up from the £1.9m loss reported in the previous year accounts.
The profit on sale of player registrations was up from £1.2m in the previous year to £2.6m.
Interest payable of £0.4m again relates entirely to a notional interest charge on Mark Ogren’s loan account and the Scottish Government Covid-19 loan. As both these loans are provided interest-free, financial reporting standards require notional interest to be charged on them through the Profit & Loss Account. This charge is added back through Other Reserves to the P&L Reserve.
Football Income
The club entered Season 2022-2023 full of optimism and confidence for the season ahead. The fantastic loyalty of our fans continued as over 5,800 season tickets were purchased resulting in over £1m in sales. However, the poor performance of the first team in the Scottish Premiership resulted in a drop in gate receipts during the second half of the season which contributed to the reduction in turnover.
Income generated from participating in European competition for the first time in ten years was £0.7m. This was largely due to prize money from UEFA and a huge Tannadice crowd of over 10,000 supporters for the first leg fixture.
The club also generated high income from a contractual sell-on fee clause for Harry Souttar who transferred from Stoke City to Leicester City. This income is illustrated in player sales along with other contractual contingent fees which were due to the club.
Despite this, the club and in particular the footballing department over-extended itself in expenditure which resulted in the club exceeding budgeted costs. There was also a £0.6m drop in SPFL prize money in Season 2022-2023 compared to Season 2021-2022 due to finishing in 12th position in the Scottish Premiership.
Review of Our Academy
The Chairman’s significant financial investment to the DUFC Academy has continued in Season 22-23, where our Elite CAS status has again been maintained. The overall investment in the Academy Facilities and Football Operations since Mr. Ogren acquired the club in December 2018 now nears £3.9million.
As evidenced by the ongoing financial investment being made, the Chairman and the Board continue to view DUFC Academy as the “cornerstone” of the club’s future success and we are very excited at the high quality of the young players who have made first-team appearances or are on track to graduate to the first team.
In Season 2022-2023, academy graduates Ross Graham, Kieran Freeman, Archie Meekison, Rory Macleod, Kai Fotheringham and Miller Thomson were regular First Team squad members in the Scottish Premiership along with Greg Petrie and Sam Harding (both 16 years of age) also featuring on the bench.
Our academy players have also been selected regularly for Scotland National youth squads. Jamie Forrest has been selected for Scotland U15’s in the upcoming Youth Development Tournament in Portugal in December 2023 and Josh Holt has been a regular in the U15s and U16s Scotland squads.
Scott Constable has now been selected in the last two Scotland U17’s squads playing in a doubleheader vs Switzerland, where he also scored, and was selected for all three UEFA qualifiers at this level also.
Owen Stirton was selected for the UEFA qualifiers with the U17’s and scored on his debut versus Kazakhstan. Owen is now a regular first-team squad member on Matchdays.
Rory Macleod played for Scotland U16’s and U17’s in both Victory Shield tournaments and UEFA qualifiers and has been a regular member of the Scotland U19’s squad. He is currently on loan to Forfar Athletic to support his continued development.
Craig Moore and Lewis O’Donnell were both in the Scotland U17’s squad for the Euro Finals in May 2022.
Kai Fotheringham has established himself in the first-team and made his U21’s International Debut versus Belgium in the UEFA qualifiers.
Ross Graham and Archie Meekison have both established themselves in the first-team squad as well as being selected for Scotland U21’s.
On academy Staff, Paul Cowie joined as Head of Academy after Andy Goldie left for Swansea City in July 2022. Paul has looked to take a more sustainable approach to the academy to maintain its Scottish FA Elite CAS Status and has continued to retain and recruit a host of top talented local coaches in its infrastructure. As part of the club’s strategic development, there have been several changes/ promotions which include Scott Madden being promoted to Head of Children’s and Steven Leahy being appointed as the new Head of Youth. Paul Clark is now the Head of Academy Talent ID and Recruitment (replacing Chris McKean in the summer of 2023) and Andy Payne has taken the role of Head of U18s (replacing Ryan Moon). Brian Grant Supports the U18s and acts as the Head of Academy Coaching. Niall Nicolson is the Head of Player Care and Education and former DUFC player Paul Dixon has replaced Liam Ross as our Individual Coach Analyst. Finally, the Academy Operations Manager, Daniel Hiddleston, will be moving to Hibernian FC in the New Year, and the club are currently interviewing to fill the position.
The Board remain delighted that the substantial investment being made in DUFC Academy continues to reap benefits for the club with many youth team players graduating to the First Team. The Board’s aim is to continue the long-term sustainable financial investment within the youth academy to develop and attract the best talent around the country.
Dundee United Community Trust (DUCT)
The club continues to work closely with Dundee United Community Trust. The partnership has been in place for five years now and has resulted in over £1.8m of action in our communities during this time.
Key achievements in the financial year included a return to face-to-face events within DUCT’s Festive Friends project, with over 70 individuals and families attending Tannadice on Christmas Day for a meal and entertainment. Demand for support over the festive period continues to increase year on year, a stark reminder of the challenges faced by many of the people we support, and last Christmas we supported over 250 individuals and families with food, gifts and the chance to socialise.
DUCT’s game-changing and now multi-award-winning, ‘Dundee United Para-Sports Club' continued steady growth of activities and participations now sees our community trust deliver sessions in Athletics, Badminton and Boccia as well as providing football sessions for children, young people and adults with a wide range of disabilities. The partnerships with Tayside Dynamos and Kingspark School continue to deliver fantastic impact and the club was delighted and proud to share the second ‘Best Para-Football Project in the East Region' Award from the Scottish FA.
The Chairman and Board see DUCT as an integral pillar of what we do as a club and will aim to continue the growth of the partnership in 2023-24.
Wage Costs
Total Wage costs increased by over £1m (18%) to £6.9m on the previous year. The majority of this increase was due to over-expenditure within the football department. Included in the wage costs are the terminations of football management and coaching staff who were replaced within the year.
The average monthly number of persons stayed the same as the prior year at 108.
The wages/turnover ratio increased from 71% to 86%.
In June 2023, a review of all wage costs across the club was carried out by the senior management team to ensure that going forward wage costs are much better controlled. The results of this review were all reflected in the new Season 2023-24 Budget which is geared towards ensuring greater financial stability & cost control.
Operational & Administration Costs
Direct Costs of sales excluding wage costs increased £1.3m from the previous season and administrative expenses stayed high at £2.2m. Both areas have become a real focus of the cost management team in Season 2023-2024.
Our property costs increased by £0.1m due to an increase in rent, rates & utilities charges with gas and electricity charges continuing to rise.
We continued to spend substantially on all areas of the stadium to ensure facilities met the required standards and to improve the matchday experience for all spectators. Most notably, in summer of 2022, required EICR works in the George Fox stand resulted in a significant five-figure investment and further safety certification regulatory works were also required within the Jerry Kerr Grandstand also resulting in a further five-figure investment.
These works continued across the stadium in the summer of 2023 and will continue to require investment as the stadium ages and requires additional maintenance. The senior management of the club is looking at various opportunities to ensure the sustainability and maintenance of the stadium are protected and talks were initiated with DUSF regarding continuing the ‘bricks and mortar’ investment in the club.
Net Assets
The net assets deficit of £7.3m, as reported in the Balance Sheet as at 30 June 2023, is distorted by the £10.1m (£11.3m undiscounted value) of funding provided by Mark Ogren to the above date being disclosed within Creditors. This funding has been provided to the club on an interest-free loan basis, with no intention in the short to medium term to seek any repayment of this debt.
Due to the principal activity of the company, the revenues of the business are inherently linked to the on-field performance and success of the football team. Unfortunately, in Season 2022-2023 the club were relegated which brings its own risks including the threat of a significant drop in revenue across all areas.
According to the Directors, other principal risks are the wider economy financial issues which can impact match attendances. To address this, the club are offering flexible and cost-effective ways to purchase tickets on a seasonal and match-to-match basis. The club has kept season tickets and match day prices at a consistent level despite a significant increase in match operation and utility costs.
Other principal risks include the club failing to achieve promotion quickly and remaining in the Championship long term. The Board have implemented a long-term stable strategy to ensure the best resources and facilities possible to achieve promotion in season 2023-2024 with the long-term aim of being competitive in the Scottish Premiership.
Another principal risk is high costs including wages, cost of sales and overhead costs. A complete overhaul was required at the end of season 2022-2023 to mitigate against over expenditure. The Board have implemented a 2023-2024 budget where budgeted costs are £4.6m less than actual costs spent in 2022-2023. It is evident that costs across the club were far too high therefore the CEO and Senior Management team are working to ensure every department works within the parameters set by the Championship budget to ensure a high level of control over costs going forward. The hard work by staff across the board has been illustrated in Q1 2023/24 whereby costs are £1.4m less than in Q1 2022/23. The club have also implemented new processes and a structure which has greatly improved communication and ensured greater cohesion between the Board, CEO & staff across all areas of the club.
Since December 2018 when Mark Ogren took control of the club, over £13m has been invested into the club to enhance the infrastructure, the playing squad, academy and facilities.
The owner remains fully committed and promotion to the Premiership remains paramount. Achieving promotion is vital for the club to be back on track towards financial self-sustainability. The club aims to regain its position in the Scottish Premiership and challenge in the top half of the Premiership. The club also seeks to operate transparently with supporters and all stakeholders and to continue to make a positive contribution to Scottish football.
To conclude, the Board would like to express its thanks to all employees, players, supporters, and associates including sponsors and partners for their continued support during a difficult season.
| 2023 | 2022 | 2021 |
SPFL Premiership | 12th | 4th | 9th |
Scottish Cup | 5th Round | Quarter-Final | Semi-Final |
Scottish League Cup | Quarter-Final | Quarter-Final | Group Stage |
Turnover | £8.1m | £8.28m | £3.79m |
Operating Loss | £5m | £1.90m | £2.27m |
Wages to Turnover Ratio | 86% | 71% | 132% |
Financial Year Profit/(Loss) | (£2.8m) | £0.28m | (£2.52m) |
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2023.
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Thomson Cooper were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
We have audited the financial statements of OPG-4 UK Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 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 significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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 their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which 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 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 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: existence and timing of recognition of income, posting of unusual journals along with complex transactions and manipulating the Company’s key performance indicators to meet targets. We discussed these risks with management, designed audit procedures to test the timing and existence of revenue, tested a sample of journals to confirm they were appropriate and reviewed areas of judgement for indicators of management bias to address these risks.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussion with the officers and other management (as required by the auditing standards).
We reviewed the laws and regulations in areas that directly affect the financial statements including financial and taxation legislation and considered the extent of compliance with those laws and regulations as part of our procedures on the related financial statement items.
With the exception of any known or possible non-compliance with relevant and significant laws and regulations, and as required by the auditing standards, our work in respect of these was limited to enquiry of the officers and management of the company.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £399,071 (2022 - £346,927 loss).
OPG-4 UK Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 15 Atholl Crescent, Edinburgh, EH3 8HA .
The group consists of OPG-4 UK Limited and all of its subsidiaries.
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 is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company OPG-4 UK Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 June 2023. 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.
Dundee United Football Club Limited has been included in the group financial statements using the purchase method of accounting. Accordingly, the group profit and loss account and statement of cash flows include the results and cash flows of Dundee United Football Club Limited for the period from its acquisition on 18 December 2018. The purchase consideration has been allocated to the assets and liabilities on the basis of fair value at the date of acquisition.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
The group incurred pre tax losses of £3,670,931 (2022: £1,420,738) during the year, has net liabilities of £554,725 (2022: assets £1,152,020) and a balance sheet deficit of £8,155,294 (2022: £5,141,877). Excluding the loan from the majority shareholder the group has net assets of £2,985,933 (2022: £5,197,326).
The current and future cash position of the group has been reviewed by the Board. This included a comprehensive review of the financial projections and cash-flow requirements, covering a period beyond one year from the date of approval of the financial statements. The projections make key assumptions around:
Maintaining at least Scottish Championship status with a view to regaining the club’s Premiership status
Season ticket revenues and match day income being consistent with operating in the SPFL Championship
Sponsorship and commercial income being consistent, subject to inflationary rises
Overheads and payroll costs being reduced to a reflect the division in which the club currently resides whilst pushing for promotion, subject to inflationary rises;
Income from net player transfer activities;
No repayment of Mark Ogren’s loan being made for a period of at least 12 months from the date of approval of the accounts
The directors acknowledge that the group's liquidity position is reliant on the continued support from Mark Ogren and without this a material uncertainty would exist which may cast doubt over the groups's ability to continue as a going concern.
After due consideration of the above, including the potential impact of key assumptions not materialising and having received assurances from the majority shareholder of the group, the Board are satisfied that they consider that the group has adequate resources to continue in operational existence for a period of not less than twelve months from the date of approval of the accounts. Accordingly, the Board consider it appropriate to prepare the financial statements on the going concern basis.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
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.
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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the 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.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss 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 leased asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
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 in the period are included in profit or loss.
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/(credit) for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 30 June 2023 are as follows:
Other borrowings relate to amounts owed to OPG-4 Inc, OPG-4 UK Limited's parent company. These loans are interest free and have been discounted at 3.5% over a period of between 6 and 6½ years in accordance with FRS102 Section 11.
Deferred income is included in the financial statements as follows:
Football grounds improvement grants of £1,381,654 (2022: £1,433,654) are included in deferred income and released to the Income Statement at a rate equal to the depreciation rate of the asset to which the grant relates. Amounts falling due within one year are £52,000 (2022: £53,000).
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Amounts contracted for but not provided in the financial statements:
The company considers OPG-4 Inc. to be its parent company and considers Mark Ogren, director, to be its ultimate controlling party.