WEST HAM UNITED PLC REPORT AND FINANCIAL STATEMENTS 31 MAY 2007 CON Directors and professional advisers 2 Chairman’: itement 3 Financial review 5 Statement on social responsibility 10 Directors’ report 12 Statement of directors’ responsibilities 15 Independent auditors’ report 16 Consolidated profit and loss account 7 Consolidated balance sheet 18 Company balance sheet 19 Consolidated cash flow statement 20 Notes to the consolidated cash flow statement 2 Notes to the accounts 22WEST HAM UNITED PLC DIRECTORS AND PROFESSIONAL ADVISERS, Directors, Bjorgolfur Gudmundsson Asgeir Fridgeirsson Thor Kristjansson Gudmundur Oddsson Scott Duxbury LLB ‘Nicholas Igoe BA (Hons), ACA Michae! Lee ‘Company Secretary Nicholas Igoe BA (Hons), ACA Registered Office Boleyn Ground Green Street Upton Park London E13 9AZ ‘Company Registration Number 3407691 Independent Auditors Deloitte & Touche LLP London ‘Travers Smith LLP 10 Snow Hill London ECIA 2AL, Logos 42 New Broad Sueet London EC2M 1D Bankers Barelays Bank PLC 71 Grey Street Neweastle upon Tyne ‘Tyne and Wear NE99 LJP Bank of Seotiand ‘Tho Mound Edinburgh BHI 1YZ Lombard North Central ple 3 Princess Way Redhill Surrey RHE INP Standard Bank ple ‘Cannon Bridge House 25 Dowgate Hill London ECAR 25B Straumur-Burdaras Investment Bank hf, Borgartiin 25 105 Reykjavik IcelandWEST HAM UNITED PLC CHAIRMAN’S STATEMENT Since | took over as owner of West Ham United in November 2006, the Club has experienced many ups and downs but a sense of team spirit has pulled us through on all fronts. We heve faced many challenges and Ihave been delighted by the way that the Club as a whole fas met those and moved on. ‘The 2006-07 season, culminating in the thrilling finale at Old Trafford, was certainly an eventful one both on and off the pitch. We had to deal with a Premier League enquiry and a very heavy fine as a result of the Club's handling of the transfer of Carlos Tevez, but, as an incoming leadership, I believe we dealt with the issue with fortitude and integrity ‘On the pitch an outstancling seven victories in the final nine games of the season meant we successfully secured our place in the Barclays Premier l.eague, Having achieved that aim we are able to look towards a bright new era. Lam immensely grateful to Eggert Magnusson who played such an important role as Chairman throughout this period and helped to give the Club direction in often difficult circumstances. My best wishes to Fggert and his family as he now pursues his other football and business interests. In order to progress and meet new challenges and ambitions we are now in the process of improving the management set up at the Club. We have established a new Club Board and the day to day business operations overseen by CEO Scott Duxbury and the management team are in good hands. On the piteh, Alan Curbishley and his team of coaches and backroom staff are building and shaping an outstanding blend of international class players. Operating Results, Our Finance Director, Nick Igoe, has produced his customary Financial Review on pages 5 to 9 analysing the group’s results for the year Football West Ham United’s second season back in the top flight will long be remembered. Although it began with the unfortunate ankle injury suffered by Dean Ashton on international duty, high-profile summer signings helped create a real mood of optimism. The previous campaign’s FA Cup run had also paved the way for a retum to the UEFA Cup, although a tough draw against a highly-rated Palermo meam the European adventure was short-lived. On the domestic front, the club endured a difficult time as the squad struggled to live up to the heights of the previous year. By 9 December, the club were out of the League Cup after one round, had won just four ‘games from the first 17 league matches and were stuck in the relegation zone. It did become necessary to make changes and former West Ham midfielder Alan Curbishley was appointed to replace Alan Pardew as manager. It was to be a memorable homecoming as West Ham defeated Manchester United in Alan's fitst ‘game in charge at @ noisy Boleyn Ground. Iwas to not be all plain sailing after that as injuries to key players, including transfer window recruits such as Lucas Neill and Matthew Upson, undermined team performance, while the dream of an FA Cup repeat was ended abruptly in the fourth round. Some notable league losses including 6-0 and 4-0 defeats at Reading and Charlton Athletic respectively suggested to many that relegation was looming, Such thoughts were 10 reckon though without the togetherness that was building in the squad and a 4-3 reverse at home to ‘Tottenham Hotspur on 4 March proved the unlikely catalyst for a new beginningWEST HAM UNITED PLC CHAIRMAN’S STATEMENT (continued) The Club was about to embark on a streak of seven wins from the next nine games with a tremendous team effort from the manager, his staff and the playing squad all helping us secure a very creditable 15" spot in the Premier League. Supporters Our supporters deserve specific mention, Season ticket sales smashed the previous record as fans committed themselves to the Club in even greater numbers. On many occasions the West Ham United travelling support outsung the home crowd and their loyalty to the club never wavered whatever the result on the pitch, A sold-out stadium was a regular occurrence and the tears of homegrown talent Mark Noble ~ following the dramatic home defeat by Tottenham Hotspur as the season entered its final straight — summed up what top-flight status meant to all with claret and blue in their heart, Galvanised for one last push, players and supporters refused to give in and the ultimate great escape was a credit to all Corporate Social Responsibility The club continues to take its commitment to the community seriously. As well as working closely with its two charity partners ~ Richard House Children’s Hospice and the Bobby Moore Fund for Cancer Research UK ~ the West Ham United in the Community project works tirelessly on a social and sporting basis. The Statement on Social Responsibility set out on pages 10 t0 12 emphasises the important work undertaken in the year. Could I at this stage record my particular thanks to Roger Morgan who retired recently as Head of Community having established the scheme seventeen years ago and then worked tirelessly t0 build i€ up into one of the most respected schemes in the county. The Club also has a firm commitment to projects such as the Kick It Out anti-racism initiative and, more recently, the Premier League’s new Creating Chances flagship community programme, Acknowledgements My thanks are extended to all our partners, particularly to Umbro and XL.com wino are partnered with us for the 2007/08 season and whose contributions, support and assistance are appreciated and with whom we Took forward 10 a long, fruitful collaboration, Thanks are also due to our outgoing partners, Jabserve and Reebok, for their excellent support over the past four years. The Club also enjoys excellent relationships with other key partners and suppliers who are essential to the day to day running of the club. Finally 1 would like to pay tribute to all the staff and employees of West Ham United Football Club, who do so much to make this Club so special Bjorgolfur Gudmundsson Chairman 21 December 2007WEST HAM UNITED PLC FINANCIAL REVIEW On 1 December 2006 the group was taken over by the newly formed WH Holding Limited (°WHH") and West Ham United ple (*WHU ple") and its subsidiary companies formally became subsidiaries of that company. As such WHH is required to produce consolidated accounts for the new group. There are certain disclosure obligations for the first year in which a new group is formed which, in the view of the directors, would make WIE's accounts difficult to interpret for readers. In the interests of aiding interpretation, the directors therefore determined that group accounts should also be produced for WHU ple, and that this Financial Review should focus on the resulls for the WHU ple group. ‘The excellent results for the year ended 31 May 2006 mirrored the success the club had enjoyed an the pitch achieving a 9" place finish in the league and narrow defeat in the FA Cup final. The 2006/07 results also reflect the club's playing performance in that sceson with tumover down by £2.8m and a significant increase in player costs Following the investment made in the squad in the January transfer window. Profit & Loss Account ‘The table below summarises the group’s trading results over a five year period, Total 2006/07 2005/06 2004/05 2003/04 2002/03, FAPL FAPL CCC CCC FAPL fm fm fm tm tm Em Tumover 2360 573 OL BSL SIP Wages & salaries (151.6) (44.2) 1.2) 202) 3.2) 3.3), Other administrative expenses (834) (23.9) (15.5) (13.5) (145) 05.5) Operating profit(loss) before player trading 0 (ios) i349) Interest payable 0a) 2.2) 1) 09) 2) 23) Profilss) before player trading & after interest @2) (130) LG) BY Player amortisation (32.3) (10.4) (5.1) (8.2) (5.2) (6.4) Profit on disposal of players 26.9 14 @7) 39 1B 05 Profit/(toss) before taxation 14 22.0) 6.0. 8. 3) ‘The £2.8m reduction in turnover can be attributed to the drop of 6 league places and modest cup runs compared with 2005/06. The club's brief foray into Europe generated a net £0.6m from the two ties with Palermo. Tumover is discussed in more detail in the following section, ‘The increase in player costs comprises increased wages, player amortisation and other expenses. The above £44.2m figure for wages includes £1.8m of costs for compensation for loss of office, for the former manager certain back room staff and a former director. The balance represents a £11.2m increase on residual prior year ‘wages and this is largely attributable to increases in player wages. ‘The £5.3m increase in player amortisation costs is a fnction of the investment in the first team squad in summer 2006 and January 2007, Player trading is discussed more fully in one of the following sections. The £8.4m increase in other expenses includes £7.1m of exceptional expenses comprising the £5.5m Premier League fine in relation to the Tevez” affair and £0.4m of associated legal costs (including the League's costs) together with £1.2m of professional fees in relation o the takeover. These were the fees incurred by WH ple further costs were borne by WHH as the company acquiring the shares. Other factors contributing tothe increase in other expenses inchide depreciation (£0.3m), consequent to the capital expenciture programme in the period, and a significant increase in player benefit costs allied to the signings in summer 2006 and January 2007. TThe £0.6m increase in interest costs is principally a consequence of the higher average borrowings inthe period.WEST HAM UNITED PLC FINANCIAL REVIEW (continued) Turnover ‘The table below shows a five year summary of group turnover: Total 200607 2005/06 2004/05 2903/04 2002/03 FAPL PAPL = CCC CCC FAPL. fm fm km im fm im Mach receipts & other football income M8 170 6ST Broadcast & central sponsorship distributions 90.7 239 Rd 83 9200 2 Commercial activities 34d 8s 73 42 509 Retail & merchandising 6732 38 27 35 38 Catering & hospitality wr 47 a3 39 34 34 260 3 dS SST. The decline in tumover is a predictable consequence of the relative decline in the first team's performance in 2006/07 which impacted directly on match receipts, broadcast income and retail sales, indirectly on many lesser sourees of income, ‘The net £0.5m increase in match receipts conceals @ £1.2m reduction in domestic cup revenue with a £1.3m increase in league match income coupled with £0.4m from the UEFA tie against Palermo, Notwithstanding the ‘eamn’s disappointing performances in the league, the club enjoyed a level of support which was unprecedented since the advent of all seater stadia, with average attendances of 34,600 representing, 98% of stadium capacity. The club was fortunate to avoid any Monday night live TV games which invariably have a negative effect on attendances but the above figures represented virtual sell out attendances for the home area of the stadium for every game: segregation issues occasionally result in unsold seats in the away end. Season tickets reached a record 24,200 to which can be added further 1,590 box holders and corporate members. The team’s performances towards the end of the season and eventual retention of Premier League status, created a high degree of optimism among supporters and strong demand for tickets. Season ticket sales have reached a new record of 25,600 with a further 1,640 box holders and corporate members. In common with all Premier League clubs WHU is dopendent on broadcast income and so the reduction of £4.39 is the single most significant variance in the 2006/07 results. Because there are no marginal costs associated with television income (unless it occasionally affects attendances for Monday night live games) most ofthe income flows straight through to profit. The club fell six places in the league, from 9" to 15", and, with the merit fee ‘worth almost £0.5m per place, this represented an income reduction of £2.9m. Te club benefited from one extra live game (£0.3m) and the UEFA cup tie (£0.1m) but domestic eup income (both live TV games and prize money) fell by £1.81. Aside from the prestige of playing in the Premier League, following the latest renegotiation of the various broadcast and sponsorship contracts distributions to clubs over the next three seasons will be approximately 60% higher than the amounts paid in the season just ended, Accordingly a club finishing 15", as WHU did in 2006/07, right expect to receive an additional £13-14m in 2007/08. The increase in commercial income was mainly attributable (© match related income from boxes an corporate memberships of lounges. Growth was however experienced in new areas of business such as the digital advertising boards installed in summer 2006 and subscriptions to WHUTV. The chub has undertaken a major drive on its commercial activities and 2007/08 will reveal a significant increase in revenue from this area, including the new sponsorship agreements with XL, com and Umbro.WEST HAM UNITED PLC FINANCIAL REVIEW (continued) 2006/07 was the final year of the four year kit deal with Reebok and, in the light of this, the £0.6m dectine in retail income was predictable, The effect was exacerbated by the high levels of demand in the build up to the cup final in May 2006 having a detrimental effect on sales in the early part ofthe year under review. The downturn in revenue coupled with a significant increase in property costs at the club’s Lakeside store resulted in a small loss for the retail subsidiary, West Ham United Sportswear Limited, in the year. By contrast with the club's retail arm, West Ham United Hospitality Limited, which operates the group's hotel and conference and banqueting division, had an excellent trading yeer. After eliminating income ftom trading between group companies, turnover increased by a mere £0.4m, However significant cost savings transformed @ prior year loss of £0.m into a profit fr the current year of £0.Sm, Cash Flow & Borrowings ‘The table below reconciles profitloss) before player trading and after interest to movements in borrowings over the period Total 2006/07 2005/06 2004/08 2003/04 2002/03 FAPL FAPL CCC -CCC_FAPL fm tm im tm tm Profioss) before player uecing andafterinterest 92) (130)«sSGB) AYO Depreciation & disposal of fixed asses Ma 932,029 27a 26 Working capital movements 290«520~«dSB Net cashflow from operations (after imterest) 78S Transfer fees received pa) a7) GO) ‘Capital expenditure (net) (8.8) G7 (2.0) (0.2) (0.2) (7) Taxation 04 04) ; Ere Net movements a sy Opening bank borrowings G27) 23) at) G38) HI) GBT) Closing borrowings a) 61) HB) wa. Having successfully reduced borrowings over a period of four years, 2006/07 saw an increase in net borrowings to £51.4m, including £26.6m of loans from companies controlied by the major shareholder. Since the year end, £6.1m of these loans were repaid while the remaining £20.Sm was converted to equity in September, as explained in more detail in the section below. Following the takeover the group embarked upon a refinancing exereise and, at the date of signing these accounts, is close to concluding negotiations for a new combined term loan and revolving eredit facility totalling £47m which replaces existing facilities, Equity Investment Following the initial investment of £90m to acquire shares in WHU ple it had always been the intention of the immediate holding company, Hansa ehf., to make further equity injections into the company to fund investment inthe first team squad, This commnitment was honoured by the advance of the £20.5m short term Joan prior to the year end and its conversion into ordinary shares in September 2007.WEST HAM UNITED PLC as FINANCIAL REVIEW (continued) The original £90m investment in WHE had comprised £45m of interest bearing loan noves, £44.99m of cumulative redeemable preference shares and just £10,000 of ordinary shares, At a meeting of the members of WHIT in September 2007, it was resolved that the loan notes and preference sheres should be converted into ordinary shares. Accrued interest on the loan notes and dividends on the preference shares were waived and there iso right of income attaching to any ofthe ordinary shares. Player Trading ‘The table below shows player trading activity for the five year period, hightighting the often significant timing differences between the year in which a player is purchased or sold and the associated cash flows, otal 2006/07 200SI06 2004/05 2003/04 2002/03 FAPL FAPL CCC C APL, fm tm fm fm fmm 679) (30) 6) QS 6) 44 : - : 44 ‘Net player sale proceeds 3833 09 46 (248 19 (18.2) 9.9) (18.7) 30 «197 47 Cash paidireceived) m3 202 74 al) (148) 86 Opening net debtor creditor) aa) (S924 35 (la) (14.7) ‘Closing net debtori(ereditor) (89 15.9 9 2s 33a) ‘OF the £33m expenditure on player transfers shown above, £9.9m related to players signed in the summer 2006 transfer window and £23.1m (o the players signed in the January 2007 window. ‘The £5.3m increase in annual player amortisation costs is a direct result of this investment As disclosed in note 33 to these accounts, the summer 2007 transfer window saw a further net investment of up to £17.4m in the squad a small element of which is dependent on contingent factors. This takes the aggregate investment in the squad in the January and summer transfer windows to £40.7m in transfer fees to which must be added the associated wage cost Capital Expenditu ‘The table below summarises capital expenditure for the last five years and reconciles this figure 10 net cash flow. Total 2006/07 200806 2004/08 2003/04 2002103, FAPL PL CCC) CCC FAPL tm tw m au 2m fn Land & buildings, ine stadium development 27 Od 02 orl) Plant, equipment & vehicles 6436 18 ol a 08 Total purchases Acerued stadium costs Sale proceeds & grants ‘Cash flow on capital expenditureWEST HAM UNITED PLC [es es FINANCIAL REVIEW (continued) ‘This year saw major investment in plant and equipment, principally comprising the new digital advertising boards, replacement video screens, the ultra violet lighting racks and all weather pitches at Chadwell Heath. The {otal investment of £3.7m was largely funded by £2.9m of hire purchase finance Notes 1 and 11 disclose thet the group’s freehold properties have been revalued, in accordance with Financial Reporting Standard 15, at an aggregate figure of £85.2m. This figure is made up as follows. m Historical cost, net of depreciation charged 287 Surplus on revaluation - current valuation 188 «previous valuations 33.5 ‘Total valuation of land & buildings ao Total valuation of relevant plant & equipment 42 FRS 15 on “Tangible Fixed Assets” was introduced in 1999/2000 with the intention, inter alia, of standardising the bases and frequency of property valuations included by companies in their annual accounts. Most of the ‘group’s properties are valued on a “depreciated replacement cost" basis which is deemed to be most appropriate for properties of a specialised nature. Depreciated replacement cost is defined as “The aggregate amount of the value of the land for the existing use... and the gross replacement cost of the buildings and other site works from which appropriate deductions may then be made to allow for the age, condition, economic or functional ‘obsolescence, environmental and ather relevant factors.” Financial Prospects Following the significant inctease in the Premier League broadcast contracts from season 2007/08, the major financial investment in the chub leaves it well placed to exploit the benefits ofits league status. L 21 December 2007 2 / N Igoe Finance Di CorWEST HAM UNITED PLC STATEMENT ON SOCIAL RESPONSIBILITY Im the course of the year West Ham United undertook major initiatives in the local community via its various projects, including its core community programme, Asians in Football Project and the Learaing Zone. West Ham United in the Community was incorporated as a company limited by guarantee in March 2006 and cobjained charitable status in June 2006. The scheme operates independently from the football club with a board of uustees comprising a mix of club executives and independent appointees. It has recently appointed a new chief executive whose brief is to integrate all of the valuable community work undertaken on behalf of the club and (0 expand the operations ofthe scheme. Foothall Development Afier school coaching sessions run throughout 40 weeks of the year and week long courses are staged throughout school holidays, both targeting children aged between 6-16 years. A total of 1,272 sessions were held and 47 week long courses staged with a total attendance of 8,700 participants Curvicutum time coaching ancVor theory-based modules are delivered within schools in areas of north east London, Fssex and Hertfordshire, using football as a vehicle to tackle sociat issues or providing education support. Additional coaching programmes are also set up in schools, youth clubs and spors fecilities throughout the area entering for children wishing to participate in after school activities. In total 4,836 sessions have been provided for 43,800 participants Football education days target local schools and youth football clubs educating the children on integration, fitness, diet and nutrition, The main objective is to encourage integration via participation learning, where football serves as @ common ground for young people from various backgrounds. The format of the day consists ‘of & practical session on the Boleyn Ground pitch, followed by a stadium tour. A total of 29 groups attended with 570 participants ‘The coach education programme currently being delivered covers the FA level 1, 2 and 3 certificates in coaching football. The project works in partnership with Local Authorities delivering qualifications to local residents, universities targeting sports science degree students and youth football club’s aiming to apply for FA charter standard. Inthe year 2} courses were delivered witha total of 390 participants enrolling, Social Inclusion In October 2006, West Ham United in the Community was granted funding by the Football Foundation and the Metropolitan Police Authority to deliver The Kickz Project within the London Borough of Newham. The project enables young people to access a youth social inclusion project within identified crime hot spots in the borough, using football as a vehicle for change and working towards and achieving objectives connected to the government’s “Every Child Matters” framework. The West Ham United Kickz Project is actively supported by all focal authorities, the Beckton Safer Neighbourhoods Policing Team, the Metropolitan Police Armed Response Team, University of East London, Connexions, Newham YOT, Millennium Volunteers and GRAPPA. Inthe last year 750 hours of provision were delivered to in excess of 400 young people as part of the Kickz Project Following the suecess of the first twelve months of the project, in September 2007 West Ham United in the Comunity was awarded funding to deliver a further five Kickz projects across a number of London boroughs: Havering from September 2007 and Redbridge, Tower Hamlets, Newham and Havering from February 2008 The Thames Gateway Youth Football Project continues to work with children and young people who live in the most disadvantaged areas of East London and Essex where poverty, dysfunctional families, low aspiration and discrimination are common-place. In the last year 1,100 howrs of provision were delivered to in excess of 400 ‘young people as part of the project. 10WEST HAM UNITED PLC STATEMENT ON SOCIAL RESPONSIBILITY (continued) From Offending to Employment (POTE) is a project specifically aimed at engaging socially excluded young people in seven north east London boroughs and parts of Essex with young ex-offenders and those at risk of offending between the ages of 9-25 years. The project provides the opportunity for young people to gain accredited qualifications recognised by the Football Associaton, including the FA Junior Football Organisers Course and FA Levels I and 2 Certificates in Football Coaching. The project also provides volunteer opportunities to young people, through the Millennium Volunteers Scheme providing young people with the opportunity to gain practical work experience in a professional environment. In the last year 520 hours of provision were delivered to in excess of 480 young people as pat ofthe FOTE project Asians Football Project ‘The Asians in Football Project continues to integrate young Asian players into mainstream football in partnership with the Football Foundation and London Boroughs of Newham, Tower Hamlets and Enfield to provide a comprehensive range of activites which are coordinated to be integral to the project's club development sirategies. This involves linking PE curriculum work with School Team FA Mini-Soccer Leagues as the main transition from education to be part ofthe club development process, which enabled them to * The Key Stage 2 PE programme provided 48,130 young players with coaching achieve their levels of attainment in agility, balance, co-ordination and movement, + The School Team Leagues attracted 2,450 participants who benefited from game related coaching and supervised competitive experience © Twenty three, free of charge holiday courses were provided throughout the year, altended by 7,400 players. Enthusiastic players gained referral and access to join local clubs. + The club development programme attracted 27,000 participants throughout the year. This initiative pro ‘access 10 club based football for local clubs, district teams, girls & young women, pan-disability and spec disability groups. © The players who strive for excellence attend our pre-Academy sessions, which are provided in partnership with Academy coaches, The sessions attracted 1,400 talented participants of whom 11 were referred to the West Ham United Academy. Two players from this group have been signed to represent West Ham United next season. ‘The Learning Zone ‘The WHU Leaming Zone, in the Dr Martens stand, continues to provide a stimulating and exciting educational environment, targeting over 1,000 pupils in the last year Playing for Success continues to be the main project offered and runs each evening from 3.30pm to 6.30pm providing out of school hours learning opportunities for 420 Newham children, from 36 schools, aged 9-12 years. ‘These pupils are selected as being ‘at risk of underachieving? and whilst at the Learning Zone they undertake activities that use the motivating environment of the stadium {0 improve their standards of literacy, numeracy and ter. During the day the Learning Zone offers a variety of literacy, nameracy, key skills, ICT GNVQ and GCSE sessions. These sessions are offered to any groups or schools and have included training days for local businesses, family leaming and six-week courses for pupil referral units,WEST HAM UNITED PLC STATEMENT ON SOCIAL RESPONSIBILITY, (continued) Key developments over the last year included the following, ‘+ Sydney visit. The centre manager visited Syéney, Australia with colleagues from Learning Community Services and local schools, The LECT funded trip provided an opportunity to learn about the educational programmes that have been developed since Sydney hosted the 2000 Olympic Games. Over the text year pupils can expect to see more Olympic themed activities integrated into the curriculum and begin to ‘understand the impact thatthe London 2012 Olympies might have on ther lives. + 10th anniversary. West Ham United was selected to replicate the WHULZ. experience in government offices in Westminster as part of the 10th year anniversary of Playing for Success, On both days fifteen Key stage 2 students, from focal schools, carried out their PAS lessons and were given the opportunity to interview government ministers and to take part in a special storytelling workshop. + WHULZ Building Bubbles. Building Bubbles has been a year-long project run by the West Ham United ‘Learning Zone in which volunteers from the local communtiy documented the history of the club inthe form of recorded reminiscenees, literature, photography, poetry and animation. ‘The historic ties between West Ham United and its local community were researched in various educational projects made possible by a grant from the Heritage Lottery Fund + New record of achievement developed by WHULZ student council. With the guidance of the WHULZ ‘student couneil and WHULZ mentors and volunteers we have developed an improved record of achievement \which records the learning targets and achievements of pupil in the centre. ‘+ Awards For All Funding was secured to develop a music academy project. ‘© A new Leaming Zone wobsite was launched (www.whulearningzone.org.uk) and further development undertaken of an interactive website showeasing learners’ work ‘+ Internationat Links ~The Learning Zone has had special visits from a delegation of Dutch educationalists and also a visit from @ Chinese head teachers showeasing the work of the Learning Zone and PAS in general. ‘© The Reading Is Fundamental project was launched as a summer schoo! project ‘The following initiatives are under way for the forthcoming year ‘+ Itis intended to build upon contacts already made with various local organisations in the hope of increasing the use of our facilities by local schools and the community. ‘+ The centre will continue to develop its existing resources and offer new ones to enable us to offer a fan, enriching programme which will aid pupils’ development on an academic and aesthetic level ‘* The centre will continue to offer holiday school including Summer and Easter school programmes to all pupils across the borough, +The contre will seck to increase pupils’ iavolvement in the future direction of the centre by continued consultation with the student council, 12WEST HAM UNITED PLC DIRECTORS’ REPORT “The directors present their annul report together with the aucited financial statements for the year ended 31 May 2007. ‘On 1 December 2006 the company was taken over by the newly formed WH Holding Limited and, as such, WHH is required to produce consolidated accounts for the new group. Although this company is no longer required to produce consolidated accounts the directors have nevertheless efeote to do so. Principat Activity ‘The principal activity of the company is to act as a holding company. The principal activity of the group is that of a professional football club as a member of The FA Premier League and The Football Association together with related and ancillary activities. Results and Dividends ‘The results of the group are as set out in the profit and loss account on page 17. The directors do not propose the payment ofa dividend (2006 - ni). Review of the Group’s Activities & Future Prospects [A review of the group's activities and future prospects is set out in the Chairman's Statement on pages 3 10 4 and the rancial Review on pages 5 t0 9. Principal Risks and Uncertainties The groups principal business risk is that of the club being relegated from the PA Premier League with the serious financial consequences which follow. Having endured this experience in 2002/03 the group believes it has a good ‘understanding of the strategy required, However, of paramount importance is the need to make contingency plans for such an event, The group prepares budgets up to three seasons in advance which jnelude an evaluation of the impact of relegation and associated contingency plans. The risk is mitigated to some extent by the long term contractual nature of significant element of the group's turnover, including centrally negotiated broadcast and sponsorship deals, Financial assots that expose the group to financial risk consist principally of cash, trade receivables and other receivables. Financial liabilities that expose the graup to financial risk consist principally of trade payables and other payables. The financial risks associated with these financial instruments are considered minis ‘The directors are of the view that the group is not exposed to any significant foreign exchange risk. ‘The group places its cash with creditworthy institutions. The group performs ongoing credit evaluation of its debtors? financial condition, The carrying amounts of cash, trade receivables and other receivables represent the maximum ‘credit risk that the group is exposed to. ‘The group's exposure to interest rate risk is managed through the use of an interest rate collar, details of which are set ‘out in note 19 to the financial statements. Directors and their Interests The directors who held office throughout the year are as follows, B Gudimundsson (appointed 12 December 2007) ‘A Fridgeirsson (appointed 12 December 2007) T Ksistansson (appointed 1 December 2006) GJ Oddsson (appointed | December 2006) SE Duxbury appointed 1 December 2006) Nigoe M Lee (appointed 12 December 2007) EA Magnusson (appointed | December 2006; resigned 12 December 2007) TW Brown (resigned 23 February 2007) CF Wamer (resigned 1 December 2006) PM Aldridge (resigned 4 December 2006),WEST HAM UNITED PLC DIRECTORS’ REPORT Directors and th r Interests (continued) ‘The directors had no interests in the shares of the company or its subsidiaries, The directors” interests in the ultimate parent company, Olafsfell eh, ae disclosed in that company's accounts In accordance with the Articles of Association of the company, Mr Gudmundsson, Mr Fridgeirsson, Mr Lee and Mr Igoe will retire at the forthcoming Annual General Meeting of the company and, being eligible, offer themselves for re-election, Payment of Suppliers ‘The Companies Act 1985 (Directors" Report) (Statement of Payment Practice) Regulations 1997 require the company fo make a statement of its policy on the payment of creditors ‘The group seeks the best possible terms from suppliets appropriate (o its business and, in placing orders, gives consideration to quality, price and terms of payment which will be agreed with suppliers when the details of each transaction are seitled. The group will continue to honour its contractual and other legal obligations and to pay reditors on the dates agreed in contacts ané purchase orders. AC3I May 2007 the aggregate amount owed to trade creditors, as a proportion of the ageregate amounts invoiced by suppliers to the group during the year then ended, represented an average of 51 days* credit (2006 - 43 days’) Average figures calculated on the basis laid down by the regulations may be distorted by the irregular patiemn of invoiced supplies during the year. n Given (0 Au Statement on Inform rs Each of the persons who is @ Director atthe date of approval of this report confirms that 1) 50 far as the Director is aware, there is no relovant audit information of which the Company's auditors are unaware; and 2). the Director has taken all the steps that he/she ought to have taken as a director in order 1 make himselftherself aware of any relevant audit information and to establish that the Company's auditors are aware ofthat information ‘This confirmation is given and should be interpreted in accordance with the provisions of s234ZA of the Companies Act 1985, Auditors Deloitte & Touche LLP have expressed their willingness to continue in office and, accordingly, a resolution for their reappointment wil be proposed at the forthcoming Annual General Meeting. By onder ofa ay N Igoe Secretary 21 December 2007 14WEST HAM UNITED PLC STATEMENT OF DIRECTORS’ RESPONSIBILITIES. The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that lw the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: ‘* select suitable accounting policies and then apply them consistently; © make judgments and estimates that are reasonable and prudent; * state whether applicable UK Accounting Standards have been followed and * prepare the financial statements on the going concem basis unless it is inappropriate to presume that the company will continue in business, The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. By order of the board 21 December 2007WEST HAM UNITED PLC REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF WEST HAM UNITED PLC We have audited dhe group and parent company ficial statements (he “nancial statements") of West Ham United ple for the pear ended 31 My 2007 which comprise he Consolidated Profi ad Loss Account, the Consolidated and Company Balance Sheets. the Consolidated Cash Flow Statement, the Consolidated Statement of Total Recognised Gains and Losses and the related notes 1 10 36. These financial statements have besn prepated under the aecowoting policies set ou herein ‘This report is made solely fo the company's members, as 2 body, in accordance with section 238 ofthe Companies Act 1985, Out ‘uit work has boen undertaken s0 thet we might slate tothe company's meanbers those maters we are required to state to them in sn auditors’ report and for no other purpose. To the fullest extent permitied by Inv, we da not accept or assume responsibility 0 anyone other than the company and the company's members as a body, for our audit wor, fortis reper, or fr the opinions we Dhave formed Respective responsibilities of directors and auditors The directors’ responsibilities for preparing the Annual Report and the finanval statements in noeordance with applicable fst and United Kingdom Accounting Standards (Linted Kingdom Generally Asegpled Accounting Practice) ate sot out i the Slatement of Directors Responsibilities. (Our esponsbiiy’is to ai the finanetal statements in accordance with relevant lege and rotatory reeuitements and Intemational Standards on Auditing (UK and Ireland) We report tp you our opinion as {0 whether the financial statements give @ tue and fair view and are properly prepared in accordance with the Companies Act 1985, We also report ta you whether io our epinion the information piven inthe Directors Reports consistent with the nancial statements In adaition we report to yaw iin our opinion, the company has not kept proper accounting records, if we have not reecved all the information and explanations we requive far atau, oF if information specified by lw vegarding directors remuneration and other ‘ransaction i nt disclosed. ‘We read the other infarmation contained in the Annual Report, and consider whether i is consistent with the audited financia) slatements. We consider the implications for our report if we become aware of any apparent misstatements or materia inconsistencies with the financial statements. Our responsibilities do not extend to any further informetion outside the Annual Report Basis of audit opinion We conducted our andit in accordance with Inernationsl Standards on Auditing (UK and Ireland) issued by the Auditing Practiws Board. An audit inchudes examination, on a test basis, of evidence relevant 10 the amounts and disclosures in the financial satersens. I als includes an assessment ofthe significant estimates and judgments made by the directors inthe preparation ofthe financial siatemenis, and of whether the sccounting policies are appropriate to the group's and company’s circumsianees, consstenlly applied and adequately disclosed, ‘We planned and performed ovr audit sos to obtain ll the infarmation and explanations which we considered necessary inorder to provide us with suficient evidence to give weasonable assurance that the finanial statements ae fre from material misstatement whether caused by frand or other inegularity or error. In forming our opinion we also evaluated the overall adequacy of the tation of infrmavin inthe Financia statements. 1m ow opinion: ‘+ the financial statemencs give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of he state of te group's and the parent company’s afTas as at 31 May 2007 and of the group's los for he year then ended; ‘+ the Gnanclal statements have been properly prepared in accordance with tbe Companies Act 198; ant ‘+ the information given in tbe Directors" Repo is consistent with the financial statements et fo Nelle 1 Viele, COP 21 December 2007 16WEST HAM UNITED PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 May 2007 2007 Operations Player excluding play Notes trading © 8&12) Total Total £000 2000 £000 £000 Turnover 3 37,302 : 57,302 60,093 Other operating income 970 : 970 37 ‘ceptional expenses (8888) (8,888) oe dministrative expenses 4 (60,216) (70,646) Total operating expenses (69,104) (79,534) Operating (loss)/profit 3 W082) i263) 8342 Profit/(loss) on disposal of players 8 : 1,458 1,458 (710) (Loss)/profit before interest (8.972) ~ (19,804) 7,632 Net interest payable ° Q151) (1,646) (Loss)/profit on ordinary activities before taxation (21,955) Tax oredit/(charge) on (loss)/profit on ordinary activities lo 2,341 (2,108) (19,614) (Loss)/profit for the financial year 26 * Player trading represents the amortisation of registrations and the profit or loss on disposal of registrations. All activities derive from continuing operations. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 31 May 2007 2007 2006 £000 £000 (Loss)/profit for the financial year (19,614) 3,878 Unrealised surplus on revaluation of properties 19,419 - Untealised loss on revaluation of properties 43) : Total recognised gains and losses for the year 338) 3,878 7WEST HAM UNITED PLC CONSOLIDATED BALANCE SHE! as at 31 May 2007 Note 2007 2006 £000 £000 £000 £000 Fixed assets Intangible assets 12 35,287 14,389 Tangible a IL 89,397 69,675 124,684 84,064 Current assets Stocks 1 313 Debtors 157,528 Cash at bank and in hand 13,714 21,555 Creditors - amounts falling due within one year 16 (80.300) (22,980) Net current liabilities (58,745) (14,590) Total assets less current liabilities 9 474 Creditors — amounts falling due after more than one year 16 (17,848) (24,364) Deferred grants 21 (2,896) (2,964) Provisions for liabilities and charges 22,23 (5,765) (2,378) Net assets 39,430 39,768 Capital and reserves Called up share capital 24 5,051 5,051 Capital redemption reserve 449 449 Share premium account 4,847 4,847 Revaluation reserve 25 46,652 27,735 Profit and loss account 26 (17,569) 1,686 ‘Total shareholders? funds 27 39,430 39,768 These financial statements were approved by the board of directors on 2] December 2007. Director DirectorWEST HAM UNITED PLC COMPANY BALANCE SHEET as at 31 May 2007 Note 2007 2006 £000 £000 £000 © £000 Fixed assets Investments 13 5,550 5,550 Current assets Debtors 15 387 1,570 Creditors - amounts falling due within one year 16 (450) (450) Net current (liabilities)/assets (63) 1,120 Total assets less current liabil and nef assets 487 Capital and reserves Called up share capital 4 5,051 5,051 Capital redemption reserve 449 449 Profit and loss account 26 (3) 1,170 Total shareholders’ funds 5,487 These financial statements were approved by the board of directors on 21 December 2007. Signed on behalf of the board of directors Ngoc DirectorWEST HAM UNITED PLC CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 May 2007 Note 2007 2006 £000 £000 £000 £000 Net cash (outflow)/ inflow from operating activities A (2,389) 17,953 Returns on investments & servicing of finance Interest paid (2,262) (1,706) Interest received in 60 Net cash outflow from returns on investments and servicing of finance 2,151) (1,646) Corporation tax paid (385) - Capital expenditure and financial investment Purchase of tangible fixed assets (804) (1,967) Proceeds on disposal of tangible fixed assets 7 6 Purchase of player registrations (21,963) (12,460) Proceeds on disposal of player registrations 1,780 5,072 Net cash outflow from capital expenditure and financial investment (20,987) (9,349) Net cash (outflow)/inflow before financing 6,958, Financing Bank loans advanced 13,905 - Loans from companies controlled by major investor 26,600 - Bank and other loans repaid (2.220) (2,220) Hire and lease purchase loans repaid (288) (119) Net cash inflow/(outflow) from finaneing 37,997 Increase in cash & bank balances 8 12,085 20WEST HAM UNITED PLC NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 May 2007 A Recoutiliation of Operating (Loss)/Profit to Net Cash Inflow from Operating Activities 2007 2006 £000 £000 Operating (oss)/profit from continuing activities (21,262) 8342 Depreciation charge 3.293 2,961 Loss on disposal of tangible fixed assets, 1 7 Release of deferred grant income (68) (59) Amorisation of cost of player registrations 10,430 5,067 Decrease/{increase) in stocks 39 (12) Decrease/{inerease} in debtors 5M 2.847) Increase in creditors 4614 4.494 Net cash (outflowyinflow from operating activities RD] B Analysis of Changes in Net Debt Other 1 June Cash noneash_— 31 May 2006 flows changes. 2007 £000 £000 £000 £000 Cash at bank and in hand 1,629 12,085 - agra Loans from companies controlled by major investor - 26,600) 26,600) 2 (02886) Debt due within one year 2,220) (11,685) @,220) (16,125) Debt due after one year 2.470) : 2220 (20,250) Hire and lease purchase loans 9) 288 = (2.936) —,707) Gar WTR ) _asi7 (23.120) _(25,912)___2,936)__ (51,968) During the year the group entered into finance lease arrangements in respect of assets with a total capital value at the inception of the leases of £2,936,000 (2006 ~ £73,000) € Reconciliation of Net Cash Flow to Movement in Net Debt 2007 2006 £000 £000 (Decrease)/inerease in cash & short term loans in the year (14,sis) 4.619 Cash (inflow)outflow from decrease in debt and lease financi (11,397) 2339 Change in net debt resulting from cash flows ei 6538 New hire purchase loans (2,936) 3) Net debt at 1 June 2006 23,120) (30,005) Net debt at 31 May 2007 ~_ G1 968 21WEST HAM UNITED PLC NOTES TO THE ACCOUNTS for the year ended 31 May 2007 1 Accounting Policies The accounts have been prepared in accordance with applicable United Kingelom aecounting standards. ‘The following ate the accounting policies used by the company, These policies have been consistently applied throughow the current and preceding year Accounting convention The aecounts have been prepared under the historical cost convention es modified by the revalvation of freshold land and buildings. Basis of consolidation The consolidated financial statements incorporate the financial statements of the company ane all is subsidiasies. AIT inte 210up transactions, balances, ineome and expenses are eliminated on consolidation. Turnover ‘Tumover represents all amounts recsived and receivable in respect of football matches played, goods sold anxl services provided during the year excluding value added tax. Gate receipts and otler match day revenue is recognised as games are played. Sponsorship and similar commercial income is recognised aver the duration of the respective contracts. The fixed ‘element of broadcasting revenues is recognised over the duration ofthe Football season whilst facility fees received for tive coverage or highlights are taken when carned. Merit awards are aecounied for only when known at the end of the football Signing on fees Signing on fees payable under an employment contract are accounted for on an earnings basis. Where such fees are paysble in equal annual instalments, under Football League and FA Premier League regulations, they are charged to the profi and loss account evenly aver the period af the player's contract. In the event of te player's egistation being sold, the balaee of any signing on fees paid or payable to a player i treated as a cost of disposal ofthe registration Fongible ied assets 1m accordance with Financial Reporting Standard 15 “Tangible Fixed Assets”, the Boleyn Ground stediumn and adjoining land, the Chadwell Heath taining ground and the Beckion Community Centre are valued on a depreciated replacement cost basis. The Litlle Heath training ground is valued on a current existing use value basis Full valuations are undertaken a least very five years as required by FRS 15 and any surplus or deficit is transfered tothe revaluation reserve ‘Whore depreciation charges are increased fallowing a revaluation, where materia, an amount equal 10 the inerease is teansferred annually from the revaluation reserve to the profit and loss account as a movement on reserves. On the disposal oF recognition of a provision for impairment of a revalued fixed asset, any related balance remaining in the revaluation reserve is also transferred 10 the profit and loss account as a movement on reserves, Depreciation is provided at the following rates on a straight line basis. The rotes used are expected to write off the cast, less any estimated residual value, of exch asset over its expected user lif Freehold buildings 2% Plan, ftings & equipment 1033% Motor vehicles 25% Assets ae stated net of any provision for impairment. Intangible asseis~ player registrations Payments made to third parties in order to acquire a player's registration are capitalised at cost. astaight line basis over the period of the player's contact, ye cost is then amortsed on In the event of disposal of a player's registration, the unamortised cost of acquiring dhe regisiration is deducted from the nel proceeds of disposal ro arrive a a profit or loss on disposal ature payments for the acquisition ofa player's registration, which may become due dependent on the performance of the ‘eam and/or the individual player, are recognised within the original cost of sequistion if, inthe opinion ofthe directors tis probable that these payments will eventual'y be made. 22WEST HAM UNITED PLC W NOTES TO THE ACCOUNTS (continued) 1 Accounting Policies (continued) Intangibte assets - player registrations (continued) Similar terms may exist én contract for se sale of players’ registrations but such payments are nol recognised as part of the proceeds of disposal uni de event upon which the payment is dependent is known to have occured. Gromis and deferred income Grants receivable fiom the Football Stata Improvement Fund (formerly the Football Trust) and the former Football Grounds Improvement Trust in respect of capital expenditure are treated as deferred income andl released to the proft and Toss account So as fo match the depreciation charged on the fixed assets purchased withthe grant. Deferred ineame in the balance she represents total grants receivable less amounts released to the profit and loss account ‘Stocks Stocks are stated atthe lower of cost and net realisnble value. Cost ig the invoiced value of goods purchased for resale Provision is made to reduce enst to net realisable value having rogan (0 age, condition and saleability of stocks, Taxation ‘Current tax is provided at amounts expected to be pai (oF recovered) using the tax tales and laws that have been enacted! or ‘substantially enacted by the balance sheet date. Deferred taxation is provided in fol on timing differences that result in an obligetion at the balance sheet date to pay more (ax, oF aright to pay less tax, ala future date, at rates expected to apply when they erystallise based an current tex rates and law. Timing differences arise from the inehusion of items of income and expenditure in taxation computations in periods differen from those in whieh they ate included in financial statements. Defeared tax is not provided on timing differences arising from the revaluation of fined assets wheve there is no binding contract to dispose of these assets, Deferred tax assets ave recognised to the extent that itis segarded as more likely than not that they will be recovered, Deferred tax assess and liabilities are not discounted, Pension costs The group makes contributions on behalf of employees and directors 10 a 0) contribution and money purchase sehemes the principal one of which is ‘The Football League Pension and Li ‘Scheme. Contributions are charged tothe profit and loss gecount over the period to which they relate nber of independently contalled defined e Assurance In addition the group is making contributions in respect ofits share af the deficit of the defined benefit section of The Football Lezgue Pension and Life Assurance Scheme (the "Schems"), Conttibutions are charged to the profit and loss count as soon as they ave clsimed by the Scheme. Under PRS 17 - Retirement Benefits - The Scheme would be treated as a defined benefit muli-employer scheme. The Scheme's actusty has advised that the participating employers’ share of the underlying assets and liabilities cannot be identified on a reasonable basis and accordingly’ no disclasures are made under the provisions of FRS 17, The assets ofall schemes are held in funds independent from the group. Leases Assets held under finance leases and the related lease obligations are recorded in the balance sheet at the fair value of the leased asseis at the inception ofthe leases. The amounts by whieh the lease payments exczed the recorded lease obligations ae treated as finance charges \which are amortsed over each lease term to give a constant rate of charge oa the remaining balance ofthe obligation Rental costs under operating leases are charged to the profit and Toss account in equal annual amounts aver the perils ofthe Foreign exchange Transactions denominated in foreign currencies are translated ino sterling at the rates ruling athe dates ofthe transactions. Monetary assets and liabilities denominated in Toreign currencies al the balance sheot date are trenslnted at the rates ruling at that date. Translation differences are dealt with in the profit and loss account Financial Instruments The Group uses a interest rate collar agreement to mitga interest rate collar are recognised on an accruals basis and arc shaun as intrest expense ar income respectively. The does not hold or issue derivative financial instruments for speculative purposes. interest rate risk, Amounts payable or receivable ip respect of the rou 23WEST HAM UNITED PLC NOTES TO THE ACCOUNTS, (continued) 2 Company Profit and Loss Account In accordance with the provisions of section 230 of the Companies Act 1985, the profit and loss account for the parent company is not included in these accounts. The retained less forthe parent company ameunted to £1,183,000 for the year (2006 ~ nit, 3 Turnover ‘An nalysis of tumover by less of business is provided below. All tunover is derived in the United Kingdom. Group 2007 2006 £000 +2000 Match receipts and related football activities 16,967 15,483, Broadeast and central sponsorship cstributions 230911 28,282 ‘Commercial netvities 3549) 7248, Reail and merchandising 3,185 3.799 Catering and hospitality 4720 57302 «60,007 4 Exceptional Items Group 2007 2006 £000 2000 Premier League fine and associated legal fees 5917 ‘ ‘Compensation for loss of oftice 1.788 ‘i Professional fees relating to takeover by WH Holding Limited 1183 : 3a - a. In the prior year, included within administrative expenses, there was an exceptional charge of £287,000 relating 10 a conteibution towards deficit of the Football League Limited Pension and Life Assurance Scheme (see also note 32). Tax tributable ta exceptional items was £661,000 (2006 ~ £86,000) 5 Operating (Loss)Protit Operating {loss)profit is stated afer charging/(crediting) the following. Group 2007 2006 £000 2000 mnployment costs (note 6) 44,160 31,228 Depreciation on tangible fixed assets (note 11) ~ owned assets 2,866 2.957 + asses held under hive and lease purchase contracts 27 4 Release of grant income (68) co) Fees payable to the company’s auditors forthe audit of the company’s anguab accounts 4 5 Fees payable fo the company’s auditors for other services + audit of company's subsidiaries pursuant to legislation 7 31 = ax services B a + sorviges related to corporate finance 25 : Operating leases 335 208 Loss on disposal of fixed assets 1 1 ‘The aut fe forthe company of £4,000 (2006 - £5,000) is bosne by West Hans United Foeiball Club ple 24WEST HAM UNITED PLC NOTES TO THE ACCOUNTS, (continued) 6 Staff Costs and Employees ‘Wages and sala Disectors’ fees (including fees paid to decors of subsidiary companies) Compensation for loss of office Social secuity costs (Other pension conttibutions Average number of persons omplaved (including directors) Players, team management & taining, Commercial & administrative Part-time employees Stal costs elude exceptional expenciture of £1,788,000 (2006 ~ £287,000) (see note 4). 7 Directors’ Emoluments moments Compensation for loss of office Foce ‘Aggregate payments mace to «defied ontibution persion scheme Frrolunens of highest paid decor Enotimenis Compensation for oss of office ‘Agrezae payments made toa defined contusion pension scheme Directors who are members ofa defined contributions pension scheme 2s Group 2007 2000 37,613 25 1,788 4.483 251 Number of 146 3H Las 1335 2007 ‘000 1391 ‘21 2s 85 2006 000 Lon so er}& WEST HAM UNITED PLC NOTES TO THE ACCOUNTS, (contimued) 8 Profit(.oss) on Disposal of Players Group 2007 2006 000 2000 Disposst proceeds (net of costs of realisation) 82 [Net book value of players sald (note 12) 1,592) aD) 1x atibutable tothe profit on disposal of players was a charge of £437,000 (2005 - £213,000 ere), 9 Not Interest Payable Group 2007 2006 £000 000 Interest payable on bank overdrafts and loans 2,120 1,603 ire purehase loan interest 50 B Interest payable to other group undertakings 52 - 1706 Bank and other interest receivable (60) 10 Taxation on (LossyProfit on Ordinary Activities Group 2007 2006 000 2000 Corporation tax (creditveharge (383) Deferred tax (erediticharge (1.958) 254) ‘As st 31 May 2007, cumulative tox losses available 10 catty forward against future trading profits were approximately £12,800,000 (2006 — nil) subject to agreement withthe Inland Revenue Factors aeoting the corporation tax charge forthe period are explained below. Group 2007 2006 2000 2000 (Loss}forofit on ordinary activities before tax (21,955 5.986, Tax (erediticharge @ 30% thereon (6.587) 1,796 Expenses not dedutible for tax purposes 2,358 303 Capital allowances for period les than (2006 ~ in excess of) depreciation 28) RB Disposal of intangible assets— timing differences on allowances for tox 225 (108) uber timing differences en 4 (DecreaseYinerease in ta losses 3,680 (1,686) Adjustment for set! companies” rate in subsidiary company - a Current corporation tax (ereditcharge for year 383) 26WEST HAM UNITED PLC NOTES TO THE ACCOUNTS, (continued) 11 Group Tangible Fixed Assets Freehold Plant land &—fitings& = Motor Dulldings equipment vehicles Total ‘000 £000 000 000 Tune 2008 r2083 nai 210 Aaitions 62 3662 16 “Agjastmen arising on revaluation 18770 306 7 Disposals : 0,095) es) 31 May 2007 300 sont 6237 159 14,867 Charge forthe yer 1846 134 16 3293 Disposals : (094) 2 (1120) 3 May 2007 oor 3 iw s0.970 8.376 si 99.397 31 May 2006 «3.984 5.640 3 rs Edward Symmons & Partners, Chartered Surveyors, undertook valuations of the freehold properties belonging tothe group as a 6 September 2007. A summary of valvations ofthe properties and the bases of valuation is sat out below. Property Basis of valuati 000 Boleyn Ground and adjoining land Depreciated replacement cost 77,600 Chavet! Heath eaining ground Depreciated replacement cast 5,385 Little Heath training geound Existing use value 960 Beckton Community Centre Depreciated replacement cost 1,265 ‘The value of land included in the above is £22,065,000, The valuation of the Boleyn Ground includes plant, ftings & equipment valued at 42,801,000, The valuation of the Chadwell Heath training ground includes plamt, ftings & equipraent valued at £1.438,000 ‘The comparable amounts for Heehold land and buildings determined according to the historical cost convention are cost af ££38,638,000 (2006 ~ £38,575,000) and accumulated depreciation of £8,197, 000 (2006 ~ £6,710,000), Tite Boleyn Ground and Chacwell Heath and Little Heath training grounds are charged to Barclays Bank PLLC as trustee for lemiselves, Bank of Seotland and Lombard North Cental ple, The net book value of assets held under bi wid fease purchase contacts is as Follows, Group 2007 2006 £000 £000 Plant, fittings & equipment 2972 4B Motor vehicles 4 2» 2586 & The company cloes not hold any tangible fixed assets, 27WEST HAM UNITED PLC NOTES TO THE ACCOUNTS (continued) (Cost of plaver registrations T ane 2006 Additions Disposals 31 May 2007 Amortisation of player repistations 1 June 2006 (Charge for he year Disposals 31 May 2007 Net book vl 31 May 2007 31 May 2006 13 Investments held as Fixed Assets Ordinary shares in subsidiary undertakings at cost Subsidiary undertakings comprise the following Percentage of ordinary Company shares held ‘West Ham United Football Club ple 100% ‘West Ham United Sportswear Limited 100% West Ham United Hospitality Limited 100% ‘Thames Iron Warks & Shipbuilding Company Limited 100% Group 2000 24,648 52,950 984) 10.259 103430 (2,362) TRI 35.287 14,389 Company 2007 2006 000 £000 5,550, Country of incorporation fand operation Principal activities Professional football club Retail & merchandising Catering & hospitality ‘Non wading reat Britain Great Britain Great Britain Great Britain The proportion of voting rights held in respect of each of the investments above is the same as the proportion of oninary shares held. The company also has a 50% interest in West Ham United in the Community, a company lin Xd by guarantee and registered charity. The results of West Ham United in the Community have nat been consolidated, 14 Stocks Goods for resale ‘The company does not hold any stock. 28 Group 2007 2006 2000 000 313 32WEST HAM UNITED PLC NOTES TO THE ACCOUNTS (continued) 1s DebI0rs Group Compa 2007 2006 2007 2006 000 000 2000 00 Trade debiors 102s 170 ‘| : ‘Amounts sting by group undertaking - - 387 4570 ‘other debtors 2.008 #35 - Corporation tax recoverable 383 : ‘ : Prepayments and acerued income due within one yer 3878 3.22 - - ~ due ater moe than one yar m4 1a 7 : 728 a 7, 1370 16 Creditors Group Company 2007 2006 2007 2006 2000 +2000 £000 e000 Dye within one year Bank overdrafts (note 19) : : i a Bank loan (notes 17 & 19) 22.671 2,220 - : Loans from companies controlled by major shareholder 26,600 - - . Obligations under hire and Tease purchase contracts (notes 17 & 20) ssa 18 : . Trade eredivors 2.745 1,806 - : ‘Amount owing to UK parent company 569 : ‘ f Corporation tax : 385 : 7 Taxation and social security 2,803 3,195 : 7 Other ereditors 17381 6.704 o F Season ticket and other receipts in advance 963 2483, F f Accruals ssid 6,209 430 450 33980, a ‘Due afler more than one year Debenture loans & subscriptions (notes 17 & 18) au on = 7 Bank loan (notes 17 & 19) 13.093 21,859 ; 5 Obligations wader hie and lease purchase contracis (notes 17 & 20) 24153 al - ; Season ticket and other recsipts in advance 630 840 - : Other creditors 1361 1013 - : 17a 24364 : : 1m June 2007, £6,100,000 of the above figure for teans from companies controlled by major shareholder was repaid. In Seplember 2007, the balance of £20,500,000 was converted to equity (322 note 33) 29WEST HAM UNITED PLC NOTES TO THE ACCOUNTS (continued) 17 Total Loan and Hire Purchase Obligations Group 2007 2006 £000 £000 ‘Debenture loans & subscriptions repayable after 5 years or more ou an Bank loan repayable: Within I year or on demand aT Between 1 and 2 years 1480 Between 2 and 5 years 4440 Afler $ years or more 313 | 35.764 ‘Obligations under hie and lease purchase contracts repayable: Within 1 year 3a Bewveen 1 and 2 years 2.153 2,707 2” 30082 2 accounts, is close to 8 Fotlowing the akeover the group embarked upon a refinancing exereise and, a the date of signing thes concluding negotiations for a new combined tern loan and revolving credit facility totalling £47m which replaces exis Facies, 18 Debenture Loans and Subseriptions The balance of £611,000 comprises both full and part payments towards the purchase of debentures under the Hammers Bond Scheme. Under the terms of the issue the definitive certificate can only be issued ance payment has been received in [ull At31 May 2007 and 2006 the following applications had been received, Group 2007 2006 £000 2000 974" bonds | 49 ao 641 ‘B" bonds 481 481 70°C" bonds 68 os art payments 3 i _a a Under the terms and conditions of the scheme, the debentures are repayable at par after 150 years, ‘The debentures are non fnverest bearing and are unsecured. 19 Bank Loan and Overdraft The main Joan, in the sum of €21,859,000 is provided by’ a syndicate of three banks. This loan is repayable between July 2002 and July 2016 and interest is charged at 1.5% over LIBOR, This loan and the bank overdraft are secured by legal charges on eeriain of the group's freehold land and buildings and debentures overall the assets and undertaking of the company in favour ofthe syndicate af three banks. 30WEST HAM UNITED PLC NOTES TO THE ACCOUNTS (continued) 19 Bank Loan and Overdraft (continued) ‘At the date of draw down of he loan the group was required to enter info an interest rae collar agreement whereby’ the Interest rate on the loan (subject fo @ maximum of £15 million) is capped at 9.25% per annum and has a Mloot of 5.25% per annum. At the balance sheet date, this interest rate collar agreement had a negative fair value of £60,000 (2006 ~ £353,000). (On 13 July 2007 the interest rate floor agreement was cancelled in consideration of a payment of £62,000. ‘wo further loans, inthe sums of 8,350,000 and £5,555,000 are repayable within one year and interest on bath loans fs chharged at 3% over LIBOR, Both loans are guaranteed by the UK parent company WH Holding Limited, 20 Obligations Under Hire and Lense Purchase Contracts ‘Obligations under hire andl lease purchase contracts are in respect of certain assets ofthe themselves. up and are secured on the assets 21 Deferred Grants Grant income has been received from the Football Stadia Improvement Fund (formerly the Football Trust) against approved capita projects and is not repayable. 11 isthe group's poley to release deferred income (othe profit and loss account so a 40 ‘match the depreciation charged on the fixed assets purchased with the gran. The movements forthe year ate as follows. Group 2007 2006 £000 £000 dane 3023 Released to profit & loss account 59) 31 May 2.364 22 Provisions for Liabilities and Charges - Cost of Player Registrations Group 2007 2006 £000 000 June 420 196 Movement for year 5345 24 31 May 3s 20 ‘The above provision represents estimated contingent amounts payable under the terms of transfer agreementsWEST HAM UNITED PLC NOTES TO THE ACCOUNTS. (continued) 23 Provisions for Liabilities ancl Charges ~ Deferred Taxation The movements in the provision ate as follows, Group 2007 2006 £000 000 1 dune 1.938 235 (Ceoditedchargea to profit and loss account (1.958) Lips 31 May The amount of deferred taxation provided in the accounts is as follows, Group, 2007 2006 000 ‘2000 Capital allowances in excess of depreciation 2,082 Other timing differences (262) Unutlised tax losses (1,820) r Total deferred tex lability = 7958 ‘The amount of potential deferred taxation not provided in the accounts is as Fallows. Group 2007 2006 £000 £000 Depreciation in excess of capital allowances (63) (32) Other timing differences: 2 @) Unutilised tax losses (2,008) «a4y) (2,073) (785) Surplus on revaluation of properties 8.974 5.208 Unprovided deferred tax tiabitity 6.901 as The deferred tax asset of £2,073,000 (2008 ~ £185,000} has not bean recognised as, in the opinion of the board, there is insufficient vidence of appropriate profits inthe future that would lead tothe asset erystalising. ‘The group's frechold properties have been revalued in accordance with FRSIS “Tangible Fined Assets”. The group presently has no agresment in place 10 dispose of any of these properties. No deferred tax has therefore been provided on the gains arising from the revaluation as such tax would only become payable iTany ofthe properties were sold without rollover tele being obtained 32WEST HAM UNITED PLC NOTES TO THE ACCOUNTS, (continued) led up Share Capital Group & Company 2007 2006 £000 +2000 Authorised 27,500,000 ordinary shares of 25 pence each 6875 hares of 25 pence each 5,051 5,051 26 Revaluation Reserve Group 2007 2006 £000 2000 1 June 21,735 28,095 [Net surphis on revaluation of properties 19,276 ‘Transfert profit and loss account G59) (360) 31 May 26 Profit and Loss Account Group Company 2007 2007 2006 #000 2000 £000 one 1.686 1,170 1.170 Retained (Ioss)profit for the year «gio1ay (1183) - ‘Transfer from revaluation reserve 359 7 : 31 May a I ‘The historical cost toss for the group for the period was £19.255,000 (2006: profit ~ £4,238,000). The diffevenes from the retained (loss’profit for the year arses from the historical cost depreciation charge being lower than the actual depreciation charge for the year. 27 Reconeiliation of Movements in Shareholders? Funds Group 2007 2006 £000 2000 Retained (1oss)/profit forthe year 914) 3,878 [Net siyplus op revaluation of properties 19.276 Opening sharcholders’ funds 39,768 35,890 Closing shareholders’ funds BB 33WEST HAM UNITED PLC NOTES TO THE ACCOUNTS, (continued) 28 Capital Commitments Group 007 2006 ‘000 ‘000 Contacte for but not provided in the finial statements 2950 29 Operating Lease Commit Ss ‘AL3I May 2007 the group was commited to making the following payments in respect of operating leases. Group 2007 2006 £000 £000 Land ond buildings Expiring after five years 195 195, Other eneratng leases cing within one year 8 : Expiring within «wo to five years 128 13 oT a 386 308 Under the terms of certain contracts for the sale of peers egstrations, future payments may be received over a number of yews, dependent on the future performance of the players sold andthe future success of the buying clubs. I ths stage iis ‘practical quantify the likely financial effec oF these provisions orto sat with any’ degre of certainty that ny payments be reocived. Accordingly no fanher disclosure is mae s & Guarantees 3M Contingent Liabi Under 2 group banking facility, the company has guaranteed certsin bank overdrafis and loans of ether group companies. AL 31 May 2007 the balances outstanding on these overdrafs and loans etalled £8, 198,000 (2006 ~ £22,670,00). 4 common with other group companies, the company is party o 8 group VAT registration whereby each member company ‘quarantees the liability (0 VAT of the other members ‘Under the terms of transfer agreements for certain players additional transfer fees might be payable dependent on the success of the football club or those players moking a certain number of club or itemational appearances. At the balance sheet date the maximum contingent liability was £250,000 (2006 ~ £250,000), Contingent labiliies are not expected to give rise to any materia losses 34WEST HAM UNITED PLC ie NOTES TO THE ACCOUNTS, (continued) 32 Pension Scheme Eligible sta are members of the Football League Limited Pension and Life Assurance Scheme which is a defined contribution scheme with a defined benefit ssetion. The assets ofthe scheme are held separately fom those of the company, the defined contribution section being invested with an insurance company and the defined benefit section with professional investment managers, Uniit 31 August 1999 the Football League Limited Pension and Life Assurence Scheme had been a defined benefit scheme, Following a review of the minimum funding requirement (MER) of the scheme, he scheme actuary identified a substantial efict and accrual of benefits was suspended with effect fom 31 August 1999. Thereafter, the defined eontsibutions section ‘was established for Fowure contributions on bebal of members. Under the Pensions Act 1995, participating employers to de scheme, including the group, ate required t0 contribute to the deficit in accordance with an azreed schedule of contributions. An MFR valuation of the deficit as at 31 August 1999 was caied out and a schedule of contsibutions was put in place in July 2001. Since itis necessary to carry outa revaluation of the deficit every three years MFR valuetions of the deffeit at 31 August 2002 and 31 August 2005 were certified bythe scheme actuary in Janvary 2003 and March 2006 respectively. New schedules of consributions were put in place in pit 2003 an April 2005 which took account of market movements since the date af certification Following these three valuations, the group's total contribution towards the deficit was calculated as £2,327,000. Legislation permits participating employers to make good any deficit over & ten year period and so the revised schedule provides for the balance of contributions to be paid between April 2006 and May 2016, Total pension costs ch «during the year amounted to £251,000 (2006 - £665,000). 38 Post Balanee Sheet Events “Transfers of pleyer registrations completed subsequent to 31 May 2007 amount fo a net £17,719,000 payable by the group (2006 ~ £5,543,000 payable) with a further net £300,000 ceceivable (2006 ~ £8,100,000 payable) contingent on certain fire events ‘As set out in note 16, creditors at 31 May 2007 included a fonn of £20, $00,000 made by Hansa ehf., a company controlled by the company’s major shareholder, Mr B Gudmundsson. On 27 Sepiember 2007, this loan was converted to equity by the ‘issue of 20,500,000 £1.00 ordinary shares by WH Holding Limited, the company’s UK parent company. On the same date, West Ham United ple issued 5,128,000 ordinary shares at a price af £4.00 each to WH Holding Limited. The £20,500,000 Joan already advanced by Hansa ef. was applied in consideration for the share issues, Interest on the loan, from the date frst, advanced 19 27 September 2007, has been waived by Hansa eb, n 12 December 2007 the company issued a further 40,000,000 ordinary shares ata price of 25p to WH Holding Limited for 34 Ultimate Parent Company ‘The immediate parent company is WII Holding Limited. COlafsell eh. (company number $20570-1019), a company incorporated in Jeeland, is the parent company of the lagest group of which the company is @ member and for which group Hnancial saiements are drawn up. Olalstell ch. ill be Fequited to prepare its group accounts for the accounting period ending on 31 December 2007. Copies of the financial statements will be available from the RSK Register of Enterprises, Laugavegur 166, 150 Reykjavik, leeland, Mer Gndmundsson, a director of the company, is the ultimate controling party of the company as a result of controling, iteely or indirectly, 100% ofthe issued share capital ofthe company. 35WEST HAM UNITED PLC NOTES TO THE ACCOUNTS. (continued) 35. Related Party Transactions Note 16 disctoses loans made to the group by companies controlled by its major shereholder in the sur of £26,600,000. Taese loans included a Joan of £2,000,000 from Bentis Holding Limited and a losn of £4,100,000 from Fjarfestingarfelagid Grettr he. These loans atracted interest at 7.5% per annum and interest of £26,300 and £21,600 respectively was accrued al 31 May 2007 and paid alter the year end. These loans were repaid in June 2007, ‘The group's major shareholder, Mr B Guehmundsson, is the controling shareholder of both Bents Holding Limited snd Fjarfestingarfelagid Greir bf. The balance of the figure for loans made 10 group by companies contolled by its major shareholder is Toan of £20,500,000 from Hansa cht. Hansa ehf. holds 100% of the issued share capital of WH Holding Limited, the group’s UK parent company. The group's major shareholder, Mr B Guémundsson, isthe controlling sharcholdcr of Hansa chi, ‘As set out in note 33, on 27 September 2007, this loan was converted to equity by the issue of 20,500,000 £1.00 ordinary shares by WH Holding Limited, On the same date, West Harn United ple issued! 5,125,000 ordinary shares at a price of £4.00 each 10 WH Holding Limited. The £20,500,000 oan already advanced by Hansa ehf. was applied in consideration far the share isstes. Interest on the loan, from the date fist advanced to 27 September 2007, has been waived! by Mansa ehf ‘On 19 February 2007 the group obtained a loan inthe sum of £5,555,000 from Straumur-Buraras Fjarlestingabankt hf, an Icelandic bank in which the group's major shareholder, Mr B Gudmundsson, has a significant interest. The loan remained ‘outstanding atthe year end and is disclosed within the total for bank loans in creditors due within ane year (note 17), The loan bore interest st 3% over LIBOR and interest paid or aecrved inthe course ofthe year rotalled £115,674. The group also paid an arrangement fee of £55,000 in respect ofthe loan. Other than acerued interest there were no amounts owing at 31 May 2007, Mr E Magnusson was a director of Sirsumur-Burdaras Fjanfestingabanki hl until February 2007, In the course af the year the group provided match day hospitality feilites o Landsbanki Holdings (UK) ple in the sum of £253,319. There were no amounts owing by Landsbanki Holdings (UK) ple at 31 May 2007, The group's major holder, Mr B Gudmundsson, has a significant interest in Landsbanki Islands hf, the holding company of Landsbanki Holdings (UK) ple. Mr Krisijansson is a director of Landsbankt fslands hf, the holding company of Landsbanki [oldings (UK) ple Mr GI Ockisson, a director of the company since { December 2006, is also a partner in Logos, a firm of solicitors, which undertook legal work on behalf of both the group and WH Holding Limited, the UK parent company, in the course of the year, Fees paid 10 Logos in respect ofthese serviees Iota £26,000. Of this toal, £17,000 remained outstanding at 31 May 2007. Mr CBC Manhire, a director of a subsidiary company between | June and | December 2006, is also a director of Nash & Partners Linited, a firm of surveyors, which wndertook work on behalf of the group in the course of the year, Fees paid 10 [Nash & Pariners Limited in respeet of these services totalled £24,200 (2006 - £29,600). There were no amounts ving to [Nash & Pariners Limited at 31 May 2007, Mr C} Wamer, a director of the company between 1 June and 1 December 2006, is also a partner in Warners, a firm of solicitors, which undertook legal work on behalf of the group in the course of the yeer. Fees paid to Warners in respect of these services totalled £3,100 (2006 - £2,600). There were no amounis ewing to Watners at 31 May 2007. 1m accordance with the exemption permitted by paragraph 3(c) Financial Reporting Standard 8 (Related Party Transaction), Uansaetions between group companies have not been disclosed, 36