The directors present the strategic report for the year ended 30 June 2023.
The principal activity of Saracens Group Holdings Ltd ('the Company') is that of a holding company. The Company is the parent company of the wider Saracens Group ('Group') comprising Saracens Limited, a professional rugby union football club including entertainment, ticket sales, hospitality and merchandise; Saracens Copthall LLP which holds the stadium assets and related business; MBN Events Group Limited (formerly known as Premier Team Promotions Limited) which stages entertainment and business events; UK Investor Show Limited which hosts UK investor events; and Saracens Mavericks Limited which is part of the Netball Super League (‘NSL’). Additionally, affiliated to the Group are The Saracens Foundation which is the club's charitable arm and the Saracens Multi-Academy Trust which operates the Saracens High School.
Fair review of the business
We assess progress towards our long-term goals with a series of KPI’s, which in this reported year focussed on:
Safeguarding our people first, caring, high-performance culture
Retention of our key people and continuity
Managing cash flow and meeting our financial targets
Achieving entertaining, high sports performance
Remaining at the forefront of women’s sport
Commitment to the community and having a substantial socio-economic impact
Growing our audience
Group financial position
This section of our report relates to the Group as a whole, including the Company and its subsidiaries.
In the year ended 30 June 2023, the Group generated turnover of £27.0m (£11.2m for the period ended 30 June 2022), and made an operating loss of £5.0m (£1.1m loss for the period ended 30 June 2022). The results between periods are not comparable due to acquisitions being made on the 11 February 2022.
The Group had a consolidated net asset position of £8.4m at 30 June 2023, including £4.2m of cash in bank. Within the Saracens Limited balance sheet which flows through to the Group Balance sheet, there was:
A total deferred income liability of £5.6m; £3.3m of which is monies received relating to the 2023/24 season, not a liability in the traditional sense, and the liability will be released once matches in the 2023/24 season are played. There is a further £0.7m that relates to monies received relating to the 2024/25 season for multi season seasonal memberships and £1.4m also relates to Partnership revenue invoiced in advance of the 2023/24 season, to be released in the next financial year.
A deferred tax liability of £3.1m which is not payable to HMRC. It is a provision for taxes on the revaluation of shares in Premiership Rugby Limited (‘PRL’). The taxes would only ever become payable if these shares were sold by the Group and at the value held in the Balance Sheet.
The only other third-party debt (aside from the Shareholder loans) is with:
Department of Culture, Media and Sports (DCMS). As of the Balance Sheet date the outstanding loan and accrued interest totalled £7.1m.
Barnet Council relating to the property and fixed plant and machinery at the stadium. As of the Balance Sheet date the outstanding loan and accrued interest totalled £22.9m.
All payments due to both parties are up to date.
The Group has sufficient funds for working capital purposes as well as functioning its third-party debt and none of the Group entities has overdue payables to HMRC.
Saracens Limited
On an annual basis, Saracens Limited revenues (excluding amortisation of CVC deferred income) increased by £2.6m to £20.9m in year ended 30 June 2023. We saw increased revenues across many of our commercial activities, the largest increases included: £0.9m in Sponsorship revenues, £0.5m in seasonal membership sales (we sold 241 more memberships) and £0.3m in Showdown revenues. Central income from PRL and the RFU also increased by £0.8m.
Operating losses in Saracens Limited (before depreciation, amortisation, finance costs, intercompany rents, and other income) reduced by £2.1m to £6.4m in the year ended 30 June 2023. Effective cost management meant that much of the revenue increase flowed through to operating levels despite many increasing operating costs due to general inflation, especially utility costs.
From a Saracens Men’s perspective, it was a very proud moment for everyone at the club and all our fans to be crowned as Premiership Champions for the 6th time and to be back at the top of English rugby. It has been quite some journey over the past few seasons and the club is in a brilliant position to push forward both on and off the pitch. We must also mention the 13 players we supplied to the men’s 2023 Rugby World Cup in France, seven of whom were to the England team. It will always be our ambition to see our players reach their potential and help them develop as the best possible athletes they can be and best possible people.
Our Saracens Women’s Rugby team continue to be at the forefront of elite female sport. This year, we have seen record crowds and generated more ticket revenue than ever before; successfully tendered to be part of the Premiership Women’s Rugby professionalisation plans; and aligned the coaching, sports science and administration support of our female athletes with that for their male counterparts.
On the pitch, our women rugby players continue to demonstrate their incredible ability and work-rate. This year, they earnt a place in the Allianz Premier-15s semi-finals having secured third position in the league table. It was a tough start to the season with an incredible 17 Saracens players at the women’s Rugby World Cup in New Zealand (eight Saracens players representing the Red Roses). This meant that our semi-final was away from home at Sandy Park against a strong Exeter Chiefs Women’s team. Despite a heroic performance on the road, Saracens Women were denied a spot in the final in the cruellest way possible, as Exeter scored a last-minute try to take a narrow victory. Whilst a spot in the final evaded Saracens Women this year, the squad can take great heart from their fantastic performances through the season and the development across the team.
Saracens Copthall LLP
This year was the first full year with all the West Stand facilities available to us, and the positive impact on the spectator experience has been tremendous. Also, there has been a positive impact on many other stakeholders, including but not limited to, participants in the Saracens Foundation programmes, players, coaches, officials, medical, and media to name a few.
Middlesex University occupy a significant proportion of the floor space within the West Stand building. There is an excellent partnership between the Saracens Group and Middlesex University, and we look forward to continuing to develop this partnership further.
The covered space behind the North Stand (The Oasis) is proving to be popular with spectators and has been an excellent addition to our facilities. The new hospitality facilities of The Park and the W Club have added to our hospitality offering and were well received in their first full season.
It is such a pleasure that the wider community benefit from the facilities at StoneX Stadium. Over the summer months the stadium hosted 38 school sports days, the vast majority being for schools in the state sector. The Saracens Foundation delivers thousands of hours of community projects from StoneX Stadium. Every week, over 150 disabled young people aged 8-30 attend dance, rugby and multi- skills sessions at the stadium.
We are extremely thankful for the continued support and positive partnership approach of both Barnet Council and Middlesex University.
Entertainment events
During the year, MBN Events Group Limited have continued to provide a range of high-quality events such as a London Christmas Sporting Lunch, World Cup Glory Dinner, player testimonial events and charitable dinners. Given the economic backdrop and a cost-of-living crisis, we are pleased with the results that the team managed to deliver of a £0.2m profit for the year.
The UK Investor Show business did not perform as well as hoped during the year. Lower sales in conjunction with fixed running costs for events resulted in the company making a small loss compared to a small profit the year before.
Saracens Mavericks
During the year, the Group increased its investment in Saracens Mavericks Limited from 50% to 75%. The results for the entity post-consolidation into the Group were a loss of £0.3m.
On the court, Saracens Mavericks achieved the position of 5th in the NSL. They were the only NSL franchise that beat a top four team, having beaten London Pulse in the final match of the season. In 2023, we aimed to build a performance environment that truly lived the Saracens Values to provide the best possible place for our athletes and coaches to develop, while also enabling them to enjoy what they do. This can be shown by over 83% of players wanting to be retained within the squad.
Off the court, Saracens Mavericks sold out three fixtures during the season and increased ticketing income from £81k to £97k. Our attendances at games continue to grow and we have currently sold out our first matchday of 2024. The Netball Super League 2.0 will be launched in the 2025 season with a franchise tender process launching in 2024. The NSL hopes to professionalise the franchised clubs fully over the following 10-year period.
Saracens Foundation & ESG
The Saracens Foundation continued to make life changing impacts on the health, education and employability of local people. The charity had a measurable impact on over 15,500 local people in 2022/23, with over 62,000 secondary impacts on the wellbeing of family and friends of beneficiaries. The charity invested over £1.3m in over 30 projects across North London, Hertfordshire and Essex, working with people aged 4 to 106.
The Foundation continues to adapt projects to the greatest challenges and needs of local communities and people so that it can make the biggest difference. This season, the charity created a project called ‘Sporting Roots’. The aim of this new project is to provide refugees and asylum seekers with the opportunity to participate in sport to enable them to integrate into their local community. The programme supports those at risk and often marginalised groups to become healthier and reduce social isolation. In addition, the charity created a falls prevention programme in five local care homes called ‘Love to Balance’. This programme supported older adults to build friendships within the care home and live more independent and active lives while living in care. The programme consists of chair-based strength and balance exercises which aim to enable these older adults to gain confidence and improve their physical wellbeing and mental health.
The Saracens Foundation is on track to achieve the target of investing £1.8m into projects supporting our local communities in the 23/24 season. This represents a growth of 38% year-on-year. It is also on target to impact the lives of over 90,000 people, providing an improvement in their health, education or employment.
The Group has also made progress in the 22/23 season with our aim to become the most socially conscious sports and entertainment company. The Group has been working on our ‘Saracens in Seven’ strategy, namely our aim to be by 2030: carbon net zero; zero waste to landfill; 75% waste recycled; and boosting biodiversity across our stadium.
Saracens Multi-Academy Trust
In 2023 the Saracens High School launched its sixth form, having grown from entries year-on-year since opening in 2018. The Saracens High School has subsequently partnered with Middlesex University to offer T-Levels, which support students to gain vocational skills in courses such as midwifery; enabling students to get into university to study.
Also in 2023, the Saracens High School received their first GCSE results with 76.7% of pupils achieving a grade 4 or above in English and Maths, and 62.3% at the 5+ grading; both percentages are significantly above the national average.
The Saracens Multi-Academy Trust continue to use the Saracens Values in education. We plan for the Trust to grow with more schools coming on board to join the Saracens family.
Principal risks and uncertainties
The directors consider that the principal risks to the Group are any further changes to the Premiership or European competition structure; lower broadcast revenues impacting central funding; inflation; and rising interest rates negatively impacting ticket, hospitality and events sales.
Governance
The directors recognise that strong Governance is vital to fulfilling our purpose of ‘enriching lives through sport and entertainment’. We adhere to leading Governance practices appropriate to the size and scope of our business, which include having: a clear vision and strategy to deliver it; robust risk management; an emphasis on complying with regulatory requirements; a comprehensive financial controls framework; and optimised business processes and systems.
The Board also leads the way in safeguarding our culture, behaving in line with our corporate values: discipline, honesty, humility and work rate. Also guided by ambitions for socio-economic impact, environmental sustainability and Diversity, Equity and Inclusion, we establish Group goals annually, including financial plans, which are aimed at sustaining long-term corporate success.
Our Audit and Risk Committee as well as our Salary Cap Committee meet quarterly and are now well established to support the directors in achieving these Governance objectives.
On behalf of the Board
The directors present their annual report and financial statements for the year ended 30 June 2023.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 13.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
We forecast continued commercial growth in 2023/24: primarily in match by match revenues. This is to be accompanied by careful cost management. In 2024/25 we expect to see an improvement in central income from the RFU under a new Professional Game Partnership and further commercial growth.
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The financial statements have been prepared on a going concern basis.
As at 30 June 2023, Saracens Group Holdings Limited had net assets of £8.4m (2022: net assets of £6.2m) which is primarily driven by the capital contribution recognised in the current year on account of fair valuation of interest free shareholder loans.
The owners of Saracens Group Holdings Limited (Kimono House Limited and Euroblue Investments Limited) have confirmed their willingness to continue lending to Saracens Group Holdings Limited through the signing of an agreement for an additional £14 million of funding. This will facilitate the continued operations of the Group for the period up to June 2025 to meet the cash requirements as outlined in its business plan.
The business plan assumes the continued levels of crowd attendances but were this assumption not to be valid then the directors have contingency plans to reduce the impact on cash flow. Whilst there is some uncertainty over the future structure of the Premiership and there is a challenging general economic environment, both of which could impact the incoming cash flows for the group, the directors are not aware of any other events or conditions beyond the period of their assessment which may cast significant doubt on the group's ability to continue as a going concern.
We have audited the financial statements of Saracens Group Holdings 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 group's and 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 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 company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, UK taxation legislation and salary cap regulations imposed by Premier Rugby Limited.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of noncompliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and the company’s members as a body, for our 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 statement of comprehensive income and related notes. The company’s loss for the period was £7,280,616 (2022 - £5,816,695 loss).
Saracens Group Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is StoneX Stadium, Greenlands Lane, London, United Kingdom, NW4 1RL.
The group consists of Saracens Group Holdings 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, modified to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Saracens Group Holdings 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
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.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
As at 30 June 2023, Saracens Group Holdings Limited had net assets of £8.4m (2022: net assets of £6.2m) which is primarily driven by the capital contribution recognised in the current year on account of fair valuation of interest free shareholder loans.
The owners of Saracens Group Holdings Limited (Kimono House Limited and Euroblue Investments Limited) have confirmed their willingness to continue lending to Saracens Group Holdings Limited through the signing of an agreement for an additional £14 million of funding. This will facilitate the continued operations of the group for the period up to June 2025 to meet the cash requirements as outlined in its business plan.
The business plan assumes the continued levels of crowd attendances but were this assumption not to be valid then the directors have contingency plans to reduce the impact on cash flow. Whilst there is some uncertainty over the future structure of the Premiership and there is a challenging general economic environment, both of which could impact the incoming cash flows for the group, the directors are not aware of any other events or conditions beyond the period of their assessment which may cast significant doubt on the group's ability to continue as a going concern.
Turnover represents the amounts derived from ticketing and hospitality sales, merchandise, catering, stadium rental, executive boxes, sponsorship, Premier Rugby central income, RFU funding, non-matchday revenue arising from the sale of eventing and stadium space and other events income, 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.
If, at the balance sheet date, completion of contractual obligations is dependent on external factors (and thus outside the control of the group), then revenue is recognised only when the event occurs. In such cases, costs incurred up to the balance sheet date are carried forward as work in progress.
Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
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 statement of comprehensive income.
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.
Saracens Limited 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 the fixed asset investment note in 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 group 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.
At each reporting date, the group assesses whether stock is impaired or if an impairment loss recognised in prior periods has reversed. Any excess of the carrying amount of stock over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss.
Reversals of impairment losses are also recognised in profit or loss.
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 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 statement of comprehensive income 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. Tax credits in relation to research and development expenditure are recognised when received.
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 statement of comprehensive income, 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 group 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. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments.
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
Subsidiary audit exemption
The Company’s active subsidiaries MBN Events Group Limited (formerly Premier Team Promotions Limited), UK Investor Show Limited and Saracens Mavericks Limited are exempt from the requirements of the Companies Act 2006 relating to the audit of their individual accounts by virtue of section 479A of the Companies Act 2006.
The parent company has therefore guaranteed all existing liabilities of the above entities and this guarantee will remain in force until those liabilities are settled.
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 whether the significant risks and rewards of ownership have transferred to the group as a lessee, or to the lessee where the group is a lessor.
The valuation of the stadium is subjective as there is no open market value due to no market of comparable stadiums. Because of this a fair value cannot be measured reliably and as such the asset is held under the historical cost model. The full amount is recognised under tangible fixed assets rather than investment property as it is held for the purpose of earning income through the provision of services rather than rental income, as defined by FRS 102.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The recoverable amount of the deferred tax asset is based on estimates of taxable profits in the foreseeable future. As such, the carrying value of the deferred tax asset is determined to be £nil. Further details are given in note 23 to the financial statements.
Saracens Limited holds an investment in 'P' shares in Premier Rugby Limited entitling the holder to future income streams. The investment in Premier Rugby Limited is held at the most recent valuation provided by Premier Rugby Limited and in accordance with other clubs in the league as described in note 14.
An agreement to sell a significant minority interest in Premiership Rugby Limited (PRL) to certain funds advised or managed by CVC Capital Partners (CVC Funds) was signed on 29 March 2019 and the club received a cash inflow of £12.8m as a result of this transaction. This income is being recognised in profit or loss 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 note 19.
Negative goodwill is amortised over the same period assigned to the non-monetary assets it relates to, beginning in the year of acquisition. In the opinion of the directors, this represents the period over which the negative goodwill is effective.
The average monthly number of persons (excluding non-remunerated directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022: 0).
Investment income includes the following:
The actual 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:
One of the subsidiaries acquired on 11 February 2022 has carried forward tax losses of approximately £97 million (2022: £92 million) to use in future years (after considering the offset against the revaluation gains as detailed in note 23). The deferred tax asset measured at 25% has not been recognised. On the basis of available evidence, it is more likely than not that there will be no taxable profits in the foreseeable future against which the asset can be recovered.
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the Group Statement of Comprehensive Income.
£17,551,780 (2022: £17,551,780) of the above unlisted investments relates to an investment in Premiership Rugby Limited ("PRL").
In line with other shareholding clubs, Saracens Limited holds this investment at the most recent valuation provided by PRL which based on the income stream into perpetuity, discounted at a rate of 8%. There is a fixed charge registered in relation to these shares.
Saracens Limited also holds, along with the CVC funds, an additional minority shareholding in PRL of £2,133,007 (2022: £2,133,007). The investment is held at its fair market value, which is considered to be £2,133,007 (2022: £2,133,007).
Details of the company's subsidiaries at 30 June 2023 are as follows:
In January 2023, Saracens Group Holdings acquired a further 25% of the share capital of Saracens Mavericks Limited meaning it is now included in the consolidated financial statements as a subsidiary (2022: associate).
Included in the above deferred income balance is an amount of £nil (2022: £2,349,832) that relates to the CVC deal signed on 29 March 2019 where Saracens Limited received a cash inflow of £12.8m and this was being recognised over 48 months.
Other creditors relate to loans received from shareholders. Under the initial investment agreement these amounts are initially recognised as repayable in 2026. An interest rate of 6% per annum has been applied to the loans based on the rate charged on other borrowings. On the subsequent completion date these loans are then converted to loan notes payable in 2052 which do not carry an interest charge.
Included within other loans is £22,927,420 (2022: £23,290,322) in relation to the loan secured by a first and second fixed and floating charges over the land and property at Copthall Playing Fields, Greenlands Lane, London NW4 1RL and fixed plant and machinery. The loan amount includes the long-term portion of total drawndown amounts as at 30 June 2023, repayable in instalments from 1 July 2023, on which interest is charged and rolled-up into the loan balance at 6.0%.
A further £7,090,147 (2022: £6,954,667) relates to a DCMS loan under the government scheme, which attracts interest of 2% per annum. The first repayment date is 30 September 2024 and the last repayment date is 31 March 2038.
The remaining amount of £57,278 relates to bank and other loans.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Of the above deferred tax liability of £3,137,945 is not expected to reverse with 12 months of the reporting date. The deferred tax liability is a provision which would only become payable if the group was to sell its unlisted investment, which is currently held at £17,551,780, in Premier Rugby Limited. Given this investment is intrinsically linked to the existence of the Premiership league, this liability is extremely unlikely to become payable.
Unrecognised deferred tax assets, to the extent that they cannot be offset against the unlisted investment noted above, are shown in note 10 to the financial statements.
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.
All shares hold equal voting rights.
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:
A HMRC enquiry into prior year R&D claims remains open at the date of approval of the financial statements. The directors are complying with HMRC's checks and are using professional advisors as appropriate. The directors' best estimate of any potential reduction to the R&D claims has been included in the financial statements.
The remuneration of key management personnel is as follows.
The following amounts were outstanding at the reporting date:
The ultimate parent company is Kimono House Limited, a company incorporated in the UK. The registered office of Kimono House Limited is Bank House, 81 St Judes Road, Englefield Green, United Kingdom, TW20 0DF.