Officials and Advisers

Transcription

1 Annual Report 2010

2 Officials and Advisers Chairman A.J. Johnston Vice Chairman J.F. McClelland CBE Chief Executive M. Bain Finance Director D.C. McIntyre Non-Executive Directors J. Greig MBE D.C. King M.S. McGill D.W. Muir P. Murray Secretary D.C. McIntyre Registered Office Ibrox Stadium, Glasgow G51 2XD Auditors Grant Thornton UK LLP, C.A., 95 Bothwell Street, Glasgow G2 7JZ Solicitors Dundas & Wilson LLP, 191 West George Street, Glasgow G2 2LD Bankers Lloyds Banking Group, The Mound, Edinburgh EH1 1YZ Registrars Computershare Investor Services PLC, Lochside House, 7 Lochside Avenue, Edinburgh Park, Edinburgh EH12 9DJ Company Registration Number: SC004276

3 Contents Chairman s Statement 2 Manager s Report 3 Chief Executive s Report 4 Finance Director s Report 9 Report of the Directors 11 Consolidated Profit & Loss Account 14 Balance Sheets 15 Consolidated Cash Flow Statement 16 Notes to the Accounts 17 Report of the Independent Auditor 34 Five Year Summary 35 3

4 Chairman s Statement I am very pleased to present the Rangers Football Club Annual Report against a backdrop of success for the Club. To win our 26th League Cup was outstanding but to secure our second successive Clydesdale Bank Premier League title at this juncture was not only a tremendous achievement but one of paramount importance to the welfare of the Club. I would like to extend my congratulations to Walter Smith, Ally McCoist, Kenny McDowall and the playing squad for their efforts. The result of that success was qualification for the UEFA Champions League this year, the net revenues from which will, in turn, provide us with greater financial stability. One of the immediate benefits of this was the commitment by Walter to manage the team for another season and Ally and Kenny agreeing to new contracts. The benefit of participating in the UEFA Champions League in Season 2009/10 is clear with our turnover increasing by 16.6m to 56.3m. This, together with measures taken on reducing our cost base, resulted in an increase in operating profit of 22.4m to 5.1m from last year s loss of 17.3m. Retained profit for the year amounted to 4.2m, an increase of 16.9m on last year. The current year incorporates a 0.5m gain on sale of player registrations compared with a gain of 6.2m in the prior year. In terms of debt, our net cash inflow in the year amounted to 4.0m. As I highlighted last year we still had 9.2m payable in terms of historic player transfers. The cash flow in the current year reflects payments of 8.0m on these prior year acquisitions, and resulted in our year end debt in relation to the term loan and overdraft facility with Lloyds Banking Group of 22.3m. Total debt at 30 June 2010, incorporating finance leases and other loans, amounted to 27.1m. A balance has to be struck between debt reduction and remaining competitive on the playing front. To this end, we agreed a business plan with Lloyds Banking Group in recent months, and whilst we continue to look for new investment, this has enabled an allocation of funding for new players, while at the same time retaining the nucleus of the squad that has served us so well in the past two seasons. The financial results and the team s success have assisted in stabilising the business and strengthening our balance sheet. Some caution must be exercised, however, given the effect of the recession on our core revenue streams and the implications to Scottish football of the country s European ranking. Challenges therefore still remain but I am confident that the management team under the guidance of Martin Bain can continue to enhance the company s financial performance whilst maintaining our team s competitive edge on the field. Every Rangers fan, myself included, knows only too well the issues we have faced in recent times given our debt levels and the distraction of ownership speculation. However, we are now in a position to look forward more constructively and positively as we make every effort to achieve continued success for this great football club. As I did last year, it is my intention to deliver a Chairman s Address at the AGM on 18 October 2010, when I will update our shareholders and supporters on major developments pertaining to the Club and provide further insight into issues of concern and interest to all of our patrons. ALASTAIR JOHNSTON, Chairman 22 September

5 Manager s Report Season 2009/10 was a campaign of courage, character and determination. The team s successful defence of the SPL title and victory in the League Cup were immensely gratifying for the players, football management, staff and supporters alike. The manner in which we won the League Cup late in the game with just nine men at Hampden typifies the fighting spirit and character that is the hallmark of the Club and reflected the attitude of the team throughout the season. The 1-0 victory over St Mirren galvanised the players and provided the platform for our second SPL title victory in a row, and this achievement should not be underestimated. We have an enthusiastic and determined group of players with real ambition to win silverware for Rangers and they continue to give everything asked of them. I am therefore pleased to have retained the core of our double winning squad and to have added some new faces in the shape of Nikica Jelavic, Vladimir Weiss and James Beattie who will add quality to our attacking options. Richard Foster will provide defensive cover. Clearly, retaining the SPL title is our top priority this season and we are proud to be flying the flag for Scotland in the UEFA Champions League. With the ongoing and loyal backing of our supporters and this group of players, I believe that we can continue to triumph. WALTER SMITH, Manager 22 September

6 Chief Executive s Report INTRODUCTION At the beginning of 2009/10 it was clear that given the financial parameters within which the Club was operating, it was going to be a challenging season. The main focus and priority was to retain the SPL title and subsequently qualify for the group stages of the UEFA Champions League for a second successive year. Despite European exit at Christmas, the domestic success of winning the Co-operative Insurance Cup and the Clydesdale Bank Premier League resulted in one of the most important seasons in the Club s history. Tremendous credit must therefore go to the football management and players. These outstanding achievements of Walter Smith, Ally McCoist, Kenny McDowall and the playing squad, along with the continued sterling efforts of the staff at the Club in challenging circumstances, have created a more stable environment at Rangers. Adding to that stability has been the retention of Walter as our manager for a final season, along with Ally and Kenny who have both signed new contracts. Automatic qualification for the Champions League for Season 2009/10 delivered immediate benefits to the Club and played a large part in improved financial performance, underlining the importance of participation in this competition. We must however take cognisance of the fact that Scotland s diminishing European co-efficient means that there is no longer automatic qualification to the Champions League from the SPL or the significant revenues participation brings. The development of media rights will become increasingly important and we are committed to exploring ways in which we can maximise growth in this area and exercise greater control over our earning potential. We will, however, continue to work closely with all football authorities, government and relevant organisations to explore opportunities which would benefit not only the Club and its operations but Scottish football as a whole. As part of the Club s active role within the European Club Association, dialogue with UEFA will continue in recognising the growing issue of larger clubs participating in smaller domestic leagues, making it more difficult to qualify for European group stages as a result of Scotland s drop in country co-efficient within European football. We will of course, continue to improve efficiencies, and every effort will be made to refine our operations and further maximise the Club s non-playing income. FOOTBALL BUSINESS The Club is fortunate to have a nucleus of first team players who have shown true team spirit and delivered back to back titles. We are confident that these individuals, together with new recruits Nikica Jelavic, James Beattie, Vladimir Weiss and Richard Foster, can deliver further playing success. 4

7 It is beyond doubt that the continued development of our youth policy and Academy at Murray Park is of paramount importance and the Club is committed to future investment in this area of our business. Success for the youth department, however, is ultimately measured by the number of players who break into the first team. Last season, nine new players from the Academy were included in the first team squad complementing the six already there. Andrew Little, Gregg Wylde and Jordan McMillan all played for the first team whilst we witnessed the emergence of Danny Wilson who played 24 games and was sold this year to Liverpool for an initial fee of 2m with the potential to receive up to 5m. Furthermore, our under-19 team reached the final of the SFA Youth Cup for a fourth successive season and our under-17 team beat Celtic in the Glasgow Cup for the second year in a row, which again demonstrates the quality coming through. The evolving regulations, driven by FIFA and the domestic governing bodies in Scotland, make recruitment of the best young talent increasingly more difficult and costly. As the Scottish football climate continues to be challenging, the necessity for children to be playing the game is essential for football centres such as Murray Park to flourish and succeed. In addition, the growing culture in Scotland which sees fewer children playing football and being less physically active means that the standard of the new recruits entering elite academies is on the decline. In order to overcome these challenges, greater financial investment and innovation is required to ensure we can recruit and develop players worthy of first team status. We will also work with the SFA, SPL and government bodies to hopefully develop strategies for football that will encourage investment at grass roots level. TICKETING Whilst we experienced a slight decline in season ticket sales last season, as expected given the current financial climate, there were several positives which serve to once again underline the commitment of the Rangers fanbase. Season tickets reached a respectable 40,306 and match ticket sales remained comparable with the previous season. This ranks Rangers amongst the highest in the UK, despite an overall decline in football attendances across the country. Season ticket prices were frozen for the third consecutive season for 2010/11 and we continue to implement initiatives to increase the number of firsttime visitors to Ibrox Stadium on matchday with a view to maximising ticket revenues. As predicted, season ticket sales are down again for Season 2010/11, however levels remain strong which will help to protect overall matchday attendance. We continue research and analysis to ensure the Club s ticketing strategy protects our ticketing revenues and attracts new fans to Ibrox in an increasingly difficult market. 5

8 Chief Executive s Report (continued) HOSPITALITY Our average SPL game occupancy was 86% last season, a decrease of just 4% on Season 2008/09. Maintaining such a high level of occupancy in the midst of a recession is primarily a reflection of the premium product on offer at the Club. A relatively unattractive draw in the Champions League had a noticeable impact on European income and prevented the Club from capitalising on glamour ties as in previous years, by offering off-site hospitality. Nonetheless, hospitality income for the season reached 4.2m. A further downturn in seasonal sales was expected for Season 2010/11 and prices were frozen accordingly for the second consecutive season. There is no doubt that the impact of the current climate is now taking hold and the focus, more than ever, is on driving package sales and attracting new companies to join our corporate base, in an effort to maintain core revenue streams. MEDIA In Season 2009/10, RangersTV.tv launched its own ground-breaking internet channel which now covers live games and offers a matchday service for overseas fans in addition to an on-demand service for UK supporters. The channel also develops day to day programming for the Club s portfolio of multi-media channels. By the end of the season, more than 10,000 fans had signed up for RangersTV.tv and our exclusive free season ticket holder trial attracted an additional 13,000 registrations. We also ventured into the iphone market with our first Rangers application holding the number one sports application position in the UK Apple store at launch. This is an area we look forward to exploiting further over the coming season. The key focus of our media strategy is to ensure the Club can be in greater control of its revenue earning potential from media in UK and overseas markets. Rangers has been working closely with the SPL to ensure the League strategy develops in tandem with that of the Club. A key element of Rangers media strategy is to seek greater control of the strategic development and revenue potential of rangers.co.uk and other related web services. In the coming seasons there will be increasing competition for live internet games rights. In the short term, RangersTV.tv will seek to develop programming beyond the live matchday to establish and strengthen relationships with viewers and subscribers. This will ensure loyalty and fan retention, enabling us to maximise opportunities that will crystalise in the future. SPONSORSHIP Our objective to attract and work in partnership with leading brands this season was particularly successful. As the Club s partnership with Carling came to an end, our priority was to secure a new title sponsor looking to capitalise on the strength of the Rangers brand. We were delighted to confirm Tennent s as the official Club and shirt sponsor in a three year partnership agreement. 6

9 Tennent s is a brand synonymous with Scottish football and their vision and aspirations reflect those of Rangers. We are confident this partnership will deliver on a number of levels for both parties. We were also delighted to secure Lomond Audi as our new official car sponsor. The Scottish based group is one of the UK s leading Audi dealerships with locations in Glasgow, Edinburgh, Ayr and Stirling. Our relationship with Thomas Cook Sport as the Club s official travel partner was extended with an enhanced four year agreement, taking us to We were pleased with the additions to our existing partnership portfolio and although this season is proving more challenging, we aim to maintain our sponsorship levels, if not exceed them. RETAIL The Club continues to work closely with JJB to improve and enhance the retail offering to Rangers supporters. We recognise however that product range, availability and wider distribution are areas requiring further improvement and continue to drive JJB Sports in this regard. In particular, overseas distribution remains a key issue that the Club is aware of and is pursuing with both JJB and Umbro. Integral to successful product development and design is fan involvement. Testament to this has been the response to the 2010/11 home kit, featuring the Club s new shirt sponsor, Tennent s. With the three year agreement now in place, discussions are well underway for Season 2011/12 kit production. COMMUNITY As the award-winning Rangers in the Community Programme enters its 10th anniversary season, we can again reflect on a highly successful year of making a difference to people s lives, developing talented footballers and expanding the reach and influence of our Club worldwide. With more than 20 diverse social projects running simultaneously, the impact of Rangers role in changing lives is something of which we are all proud. In the region of 6,500 people participate in projects every week with attendances to date surpassing 1.5 million. Much of this success can be attributed to the influence of key partnerships formed with Government agencies and Glasgow City Council. The Rangers Soccer Schools brand continues to extend the reach of the Club to the doorsteps of fans old and new worldwide. Last season alone has seen our coaching staff work with players from more than 20 different countries with significant impact in emerging territories including Australia and New Zealand. With thousands of children now participating in our classes on a weekly basis, we now have a steady flow of players every season who are identified and who then enter the Youth Academy. Our Rangers girls and ladies programmes also had another successful year with the girls youth teams winning an International Youth Tournament and the League Cup last year as well as developing six new Scottish Internationalists. 7

10 Chief Executive s Report (continued) THE RANGERS CHARITY FOUNDATION The Rangers Charity Foundation continues to have a strong vision and an ever growing impact which is transforming thousands of lives for the better. Its unique approach and close relationship with fans brings together values and a spirit that everyone connected with the Club can feel proud of. The Foundation s long term work with international partner UNICEF is gathering momentum following the announcement of an important new project in Togo, Western Africa. With a pledge to raise 200,000 over two years to reconstruct and equip seven health care units in Togo, more than 125,000 children and their families are set to benefit from the commitment from the Foundation and generosity of supporters. During Season 2009/10 UNICEF received 50,000 in support of the project in Togo. Closer to home, our national partner, the Teenage Cancer Trust, received 30,000 to fund a kitchen diner area and lounge area for new teenage cancer units in Glasgow and Edinburgh. Community partner, Glasgow Old People s Welfare Association, received 15,000 to assist in the purchase of a specially adapted vehicle for the Temple Day Centre in the west of Glasgow. A hallmark of the Foundation s approach is to work in partnership with its key charity partners to deliver positive outcomes that go far beyond the projects receiving direct financial support. In addition, 210,000 of in-kind assistance was delivered through a comprehensive programme of non-financial support to hundreds of organisations and individuals. Fundraising highlights during the season included: the annual Charity Ball; Lucky Blue Nose Day; An Evening with the Stars; Rangers Race Nights and the many fans who have taken on a personal challenge to be a True Blue Hero for the Foundation. The commitment shown by everyone in the Rangers Family reflects the positive values the Club represents off the pitch in Glasgow, across Scotland and throughout the world. OUTLOOK As a Club we are committed to achievement for our supporters. We demonstrated clearly our appetite for success during Season 2009/10 and we remain resolute in our ambition. MARTIN BAIN, Chief Executive 22 September

11 Finance Director s Report FINANCIAL RESULTS As highlighted in my report last year, the effect of the economic downturn and the focus on the level of debt within the Club resulted in the Board imposing greater financial disciplines to ensure the long term sustainability of the Club. The continuing attention on cost reduction and revenue enhancing initiatives together with our participation in the 2009/10 UEFA Champions League and qualification for the group stages of the 2010/11 UEFA Champions League, have resulted in the Club surpassing initial objectives and being on a more sound financial footing than last year. Cost control and revenue generating initiatives continue to be key challenges for all SPL clubs in light of decreased broadcasting rights, the impact of the recession on core revenue streams and Scotland s ranking in European competition. Balanced measures have been, and will continue to be taken at the Club to reduce any negative impact, while maintaining our competitive edge on the pitch, to ensure long term financial stability. Bank debt levels as at 30 June 2010 under our Term Loan and overdraft facilities improved by 3.7m to 22.3m reflecting the net income earned from Champions League participation, offset by the outlay of 8.0m in the year on historic player transfers and a decrease in advance season ticket sales for the forthcoming season. The Group s turnover at 56.3m and operating profit of 5.1m increased by 16.6m and 22.4m respectively on last year, benefitting from Champions League income and a reducing cost base. Gate receipts and hospitality sales increased by 1.6m to 25.8m due to the additional games in the season. In total 54 matches were played in all competitions in 2009/10 as against 49 in the prior year. The three home European ties made up the majority of the increase in revenue, although this was slightly offset by the exit at the quarter final stage from the Active Nation Scottish Cup. While the number of season tickets reduced due to the impact of the recession by 2,801 to 40,306, the improved mix of adult versus concession tickets and increased matchday income meant that the decrease was not as pronounced in revenue terms. Hospitality sales were affected by the economic downturn, with seasonal occupancy levels dropping to 56% ( %), with occupancy for SPL matches averaging 86% ( %). Challenges remain in the key revenue streams of ticketing and hospitality for the current season given the state of the economy. Income from sponsorship and advertising increased by 4% to 2.9m in a difficult market. The Carling agreement came to a close in May 2010, and has been replaced by a three year sponsorship deal with Tennent s from 2010/11. As has been well documented, the demise of Setanta in the summer of 2009 has had a major impact on broadcasting revenues in Scotland. While the new BSkyB and ESPN contract with the Scottish Premier League is welcomed, the financial impact on the Club s income is highlighted in the 1.4m reduction in broadcasting revenue to 3.8m. This reduction includes a decrease in income from domestic cup competition and the Club s TV channel. In August 2009 the new media offering was launched. This offers live broadcasts and archive material to be viewed on demand and at the year end had 23,000 registered users. Commercial income increased by 16.1m to 21.7m as a result of participation bonuses and market pool related income from the UEFA Champions League group phase, together with improved revenue from publishing. The market pool element from UEFA was enhanced given we were the sole Scottish representative in the group stages. Although we have secured direct qualification into the 2010/11 Champions League group phase, a cautionary note should be made for the 2011/12 season, when, due to the Scottish co-efficient in European competitions, the winners of the Scottish Premier League may have up to three qualifying rounds to negotiate before entering the lucrative group stages. The guaranteed net royalty receipts from JJB Sports plc of 3.0m together with the annual amortisation of the initial 2006 payment of 14.5m are included within the commercial turnover figures. Other operating income principally comprising events and catering income increased by 8% to 2.0m due to our participation in Europe. Net operating expenses decreased by 4.4m to 43.9m reflecting the reduced salary levels and efficiencies introduced in the year. Total payroll costs as a percentage of turnover reduced to 50% ( %) as a result of the 2.5m decrease in salary costs and the improvement in turnover. Despite the cost to service the European campaign and the launch of the new media platform, other operating charges also decreased by 1.1m to 13.6m. 9

12 Finance Director s Report (continued) With player amortisation costs decreasing by 1.5m to 7.3m, reflecting the disposals from the squad, operating profit increased by 22.4m from a loss of 17.3m to a profit of 5.1m. The gain on disposal of player registrations, including Barry Ferguson, Charlie Adam and Pedro Mendes, was 5.7m less than the prior year at 0.5m. Interest costs of 1.4m, reflecting the reduction in debt and lack of activity in the transfer market, resulted in a profit before tax of 4.2m, an increase of 18.3m on last year s loss. As there are sufficient tax losses brought forward from prior years to negate the current year s taxable profit, the tax charge was nil as against a credit of 1.4m due to Group relief in the prior year. The retained profit for the year to 30 June 2010 amounted to 4.2m, an overall increase of 16.9m on the prior year loss of 12.7m. FIXED ASSETS The cost of player registrations in the year amounted to 0.4m ( m), reflecting only contract extensions. The net book value of player registrations at 30 June 2010 stood at 10.9m ( m). FUNDING Total net debt at 30 June 2010, including our bank facilities, finance lease and other loans, amounted to 27.1m, a reduction of 4.0m on the prior year resulting in a debt to equity (gearing) ratio of 38% ( %), and headroom on existing facilities of 11.7m. The cash outflow of 8.0m relating to historic transfers, together with the cost to service debt, diluted the impact of cash receipts from the Club s participation in the 2009/10 Champions League. The term loan, repayable over 19 years, stands at 19m following the scheduled repayments during the year, with the 15m revolving credit facility reviewed annually in November. The 15m swap arrangement entered into with the Bank of Scotland in March 2008 remains in place at a fixed rate of 4.67% until at least March Last year a rigorous plan was embarked upon to reduce costs and debt levels. Cost reductions and on-field success has resulted in these targets being surpassed both in terms of profit and debt reduction. This, coupled with securing direct qualification for the 2010/11 Champions League group stages, has resulted in the Club being in a more stable position financially than twelve months ago. The Club is now in direct contact with Lloyds Banking Group, with more constructive dialogue and an improved understanding from both parties of the current issues and future objectives. A level of investment has been agreed for the playing squad within a revised business plan, but the future has to be viewed with a degree of caution given the current Scottish co-efficient for European competition. A balance has to be struck on remaining competitive, whilst reducing our dependency on debt funding and thereby ensuring the longer term sustainability of the Club. OTHER MATTERS In May 2010 UEFA approved the Financial Fair Play Regulations. This means that the Club s financial position and ultimately European participation will be assessed on a series of different indicators and requirements. A phased implementation of the regulations will take place over the next three years, culminating in a break-even requirement, being a balance between expenditure, in particular salaries and transfer fees, and income generated. These requirements will be closely monitored to ensure compliance. On the basis of expert tax advice, the Club is defending a query raised by HMRC into the operation of the Murray Group Management Limited Remuneration Trust, established to provide incentives to certain employees and other service providers. This is part of an ongoing tax enquiry scheduled to be heard by a tax tribunal before the end of the year. It would therefore be inappropriate to comment further on matters pending the outcome of this tribunal. In conjunction with Glasgow City Council and Glasgow Housing Association, a number of options are currently being explored regarding the potential development and regeneration of land adjacent to Ibrox stadium. The wider community will be involved and consulted in the planning process once specifics on mixed use and financial returns have been agreed between the main parties. DONALD C. MCINTYRE, Finance Director 22 September

13 Report of the Directors The Directors present the Group Financial Statements for the year ended 30 June Principal Activity and Business Review The principal activity of the Company and Group is the operation of a professional football club. A review of the Group s business together with relevant key performance indicators are contained in the Chairman s Statement, Manager s Report, Chief Executive s Report, Finance Director s Report and the Five Year Summary. Results The retained profit for the year of 4,209,000 ( loss 12,651,000) was transferred to reserves. The Directors do not recommend the payment of a dividend ( nil). Directors and their Interests The Directors who held office at 30 June 2010 are listed below. They had the following interests in the ordinary shares of the Company: 30 June July 2009 Or on appointment if later A.J. Johnston (Chairman) 10,020 10,020 J.F. McClelland CBE (Vice Chairman) 76,000 76,000 M. Bain 2,000 2,000 D.C. McIntyre - - J. Greig MBE 5,000 5,000 D.C. King - - M.S. McGill - - D.W. Muir - - P. Murray - - In addition to the Directors interests, the Company has been notified or is aware of the following interests of over 3% of the issued ordinary share capital as at 22 September 2010: Registered Holder Ordinary shares Percentage of issued share capital Murray MHL Limited 62,060, % RFC Investment Holdings Limited 37,448, % Sir David E. Murray has an interest of 9,185,065 A Ordinary shares of 10p in the share capital of Murray International Holdings Limited ("MIH"), representing 62.81% of the voting rights of MIH's issued share capital. Accordingly, Sir David E. Murray is deemed to have an interest in the 62,060,479 ordinary shares of the Company ( ,060,479) held by Murray MHL Limited, a subsidiary of MIH. Sir David E. Murray has an interest of 11,305,137 ordinary shares of 10p in the share capital of Murray Sports Limited ("MSL"), representing 57.1% of MSL's issued share capital. Accordingly, Sir David E. Murray is deemed to have an interest in the 37,448,489 ordinary shares of the Company ( ,448,489) held by RFC Investment Holdings Limited, a subsidiary of MSL. Other Directors who have an interest in the share capital of MSL are A.J. Johnston 76,616 ordinary shares ( ,616) and, as an authorised representative of Metlika Trading Ltd, a BVI company, D.C. King 3,064,627 ordinary shares (2009-3,064,627). A.J. Johnston and J. Greig MBE retire by rotation and, being eligible, offer themselves for re-election. 11

14 Report of the Directors (continued) Share Options M. Bain and D.C. McIntyre were granted options to purchase 1,000,000 and 200,000 ordinary shares of 10p each respectively at a price of 62.5p per share. The option period is from June 2008 to December Corporate Governance The Directors take Corporate Governance seriously and in this respect meet frequently throughout the year. The Board comprises three executive and six non-executive Directors. The Board is responsible for the overall Group strategy and monitors the executive management. Financial policy and budgets, including major capital expenditure, are approved and monitored by the Board. Key operational decisions including safety, planning and appointment of advisers are subject to Board approval. The Directors have access to the advice and services of the Company Secretary and can seek independent professional advice, at the Company s expense, to assist them in the performance of their duties. Non-Executive Directors J. Greig MBE received fees in total of 15,000 (2009-1,250) in respect of his duties as a non-executive Director. As at 30 June 2010, the non-executive Directors had no other material financial or contractual interest in the Group or Company, and their positions were not pensionable. 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 law the Directors have elected to prepare financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). The financial statements are required by law to give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently make judgements and estimates that are reasonable and prudent state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that 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 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. In so far as each of the Directors is aware: there is no relevant audit information of which the Company's auditors are unaware; and the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Going Concern The Group has agreed bank facilities in place up to 31 December 2010 and has sought and received confirmation that the bank expect to renew the facilities in the normal course of business. The Group has prepared trading projections which shows it should stay within the facilities for the foreseeable future. On this basis, the Directors are satisfied that they can continue to adopt the going concern basis of accounting in preparing the annual financial statements. Foreign Currency Risk The Group is exposed to translation and transaction foreign exchange risk. The Group is party to non-speculative hedging instruments in the management of its exchange rate exposures. 12

15 Credit Risk The Group is exposed to credit related losses in the event of non performance by counter-parties to financial instruments, but mitigates such risk through its policy of selecting only counter-parties with high credit ratings and ensuring credit insurance is obtained where required. Liquidity Risk Operations are financed by a mixture of shareholders funds and bank borrowings. The objective is to ensure a mix of funding methods offering flexibility and cost effectiveness to match the needs of the Group. Cashflow Interest Rate Risk The Group s policy is to arrange its core debt, bank loans and overdrafts with a floating rate of interest plus an agreed margin. The Group uses interest rate swaps to manage its exposure to interest rate movements on its bank borrowings. Charitable Donations During the year, a total of 99,000 ( ,000) was given for various charitable purposes through the Rangers Charity Foundation. Creditors Payment Policy It is the Group s policy to settle terms of payment with suppliers when agreeing the terms of the transaction, to ensure suppliers are aware of these terms and abide by them. Trade creditors (excluding player transfer fees which have specific agreed repayment terms which may exceed one year) at the year end amounted to 23 days of average supplies for the year. Employee Consultation The Group places considerable value on the involvement of its employees, and has continued its previous practice of keeping them informed on matters affecting them as employees and on the various factors affecting the performance of the Group. This is achieved through formal and informal meetings and media publications. Disabled Employees Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes and abilities of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled employees should, as far as possible, be identical with that of other employees. Auditors Grant Thornton UK LLP offer themselves for reappointment as auditors in accordance with section 489 of the Companies Act BY ORDER OF THE BOARD D.C. MCINTYRE, Secretary, Ibrox Stadium, Glasgow G51 2XD 22 September 2010 Company Registration Number: SC

16 Consolidated Profit & Loss Account for the year ended 30 June 2010 Notes Turnover 2 56,287 39,704 Net operating expenses 3 ( 43,856 ) ( 48,231 ) Trading profit/(loss) 12,431 ( 8,527 ) Amortisation of player registrations 4 ( 7,339 ) ( 8,798 ) Operating profit/(loss) 5,092 ( 17,325 ) Exceptional items: Gain on disposal of player registrations 512 6,171 Loss on the termination of discontinued operations 5 - ( 579 ) Profit/(loss) before interest and taxation 5,604 ( 11,733 ) Interest payable 7 ( 1,395 ) ( 2,352 ) Profit/(loss) on ordinary activities before taxation 4,209 ( 14,085 ) Taxation 8-1,434 Profit/(loss) for the year 21 4,209 ( 12,651 ) Basic and diluted earnings/(loss) per share p ( ) p Consolidated Statement of Total Recognised Gains and Losses for the year ended 30 June 2010 There were no other material gains or losses other than the profit for the year. Consolidated Note of Historical Cost Profits and Losses for the year ended 30 June Reported profit/(loss) on ordinary activities before taxation 4,209 ( 14,085 ) Difference between historical cost depreciation and the actual charge for the year calculated on the revalued amount Historical cost profit/(loss) on ordinary activities before taxation 4,772 ( 13,522 ) Historical cost profit/(loss) on ordinary activities after taxation 4,772 ( 12,088 ) The accompanying notes form an integral part of these financial statements. 14

17 Balance Sheets as at 30 June 2010 Group Company Notes FIXED ASSETS Tangible assets , , , ,307 Intangible assets 11 11,594 20,934 10,781 20,167 Investments , , , ,225 CURRENT ASSETS Stock Debtors 14 5,640 6,400 7,806 7,705 Cash at bank and in hand ,990 6,996 7,816 7,712 CREDITORS Amounts falling due within one year 15 ( 27,568 ) ( 40,941 ) ( 27,316 ) ( 40,395 ) NET CURRENT LIABILITIES ( 21,578 ) ( 33,945 ) ( 19,500 ) ( 32,683 ) TOTAL ASSETS LESS CURRENT LIABILITIES 108, , , ,542 CREDITORS Amounts falling due after more than one year 16 ( 37,938 ) ( 41,739 ) ( 37,941 ) ( 41,739 ) NET ASSETS 70,766 66,557 72,717 67,803 CAPITAL AND RESERVES Called up share capital 20 10,879 10,879 10,879 10,879 Share premium account , , , ,973 Capital reserve 21 9,185 9,185 9,185 9,185 The Rangers Bond 22 7,736 7,736 7,736 7,736 Revaluation reserve 21 57,770 58,333 57,770 58,333 Profit & loss account 21 ( 135,777 ) ( 140,549 ) ( 133,826 ) ( 139,303 ) SHAREHOLDERS FUNDS 23 70,766 66,557 72,717 67,803 The financial statements on pages 14 to 33 were approved by the Board on 22 September A.J. Johnston, Chairman The accompanying notes form an integral part of these financial statements. 15

18 Consolidated Cash Flow Statement for the year ended 30 June 2010 Reconciliation of Operating Profit/(Loss) to Net Cash Inflow/(Outflow) from Operating Activities Notes Operating profit/(loss) 5,092 ( 17,325 ) Depreciation 10 2,416 2,687 Amortisation of intangible fixed assets 11 7,391 8,850 Advance royalty release ( 1,450 ) ( 1,450 ) Capital grant release 19 ( 226 ) ( 226 ) Loss on disposal of fixed assets 27 - Decrease in debtors 2,262 1,409 Decrease in creditors ( 3,356 ) ( 659 ) Outflow on termination of discontinued operations ( 260 ) ( 565 ) Net cash inflow/(outflow) from operating activities 11,896 ( 7,279 ) Cash Flow Statement Net cash inflow/(outflow) from operating activities 11,896 ( 7,279 ) Returns on investments and servicing of finance 24 ( 1,392 ) ( 2,227 ) Taxation 24-1,770 Capital expenditure and financial investment 24 ( 6,460 ) ( 1,823 ) Cash inflow/(outflow) before financing 4,044 ( 9,559 ) Financing 24 ( 1,328 ) ( 1,094 ) Increase/(decrease) in cash 2,716 ( 10,653 ) Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash 2,716 ( 10,653 ) Decrease in debt 1,328 1,094 Movement in net debt in the period 4,044 ( 9,559 ) Net debt at 1 July 2009 ( 31,118 ) ( 21,559 ) Net debt at 30 June ( 27,074 ) ( 31,118 ) The accompanying notes form an integral part of these financial statements. 16

19 Notes to the Accounts for the year ended 30 June ACCOUNTING POLICIES The Group s principal accounting policies set out below have remained unchanged from the previous year. Basis of Preparation The Financial Statements have been prepared in accordance with applicable UK Accounting Standards (UK GAAP) and under the historical cost convention with the exception of certain freehold properties, which are included at valuation. The Directors are comfortable that the Financial Statements have been prepared under the going concern principle for the reasons outlined in the Report of the Directors. Basis of Consolidation The consolidation includes the Financial Statements of the Company and its subsidiary undertakings and is based on their audited Financial Statements for the year ended 30 June Acquisitions are accounted for under the acquisition method, and goodwill on consolidation is capitalised and written off over its expected useful life from the year of acquisition. The results of the companies acquired, or disposed of are included in the Profit and Loss Account after or up to the date that control passes respectively. As provided by Section 408 of the Companies Act 2006, a separate Profit and Loss Account has not been provided for the Company. Tangible Fixed Assets The Group s freehold properties are carried at the lower of depreciated replacement cost and recoverable amount. Independent valuations are performed every five years, or in any year where there has been a material change in value. Depreciation is provided on the cost or valuation of the asset other than freehold land on a straight line basis to write down the cost or valuation over its useful economic life at the following rates: Fixtures and Fittings 10%-25% per annum Freehold Properties 1%-2% per annum Long Leasehold Properties Lower of asset s life and period of lease As certain freehold properties are depreciated over a period in excess of 50 years, the Directors carry out annual impairment reviews in order to support the carrying value of the assets. Player Registrations The costs associated with the acquisition and retention of football personnel are capitalised as Intangible Assets and amortised over the period of the respective contracts. Payments which are contingent on the performance of the team or the player are recognised where the criteria are considered likely to be met. Receipts which are contingent on the performance of the team or the player are not recognised until the events crystallising such receipts have taken place. Trade Marks The costs of trade marks are capitalised as Intangible Assets and are written off on a straight line basis over 20 years. Goodwill Positive goodwill arising on acquisitions is capitalised, classified as an Intangible Asset on the Balance Sheet, and amortised on a straight line basis over 20 years, which is in line with the Director s assessment of its useful life. It is reviewed for impairment at the end of its first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. If a subsidiary is subsequently sold, any goodwill arising on acquisition that has not been amortised through the Profit and Loss Account is taken into account in determining the profit or loss on sale. Negative goodwill is written back to the Profit and Loss Account to match the recovery of the non-monetary asset acquired. Capital Contributions Capital contributions from the Rangers F.C. Development Fund Ltd. are credited directly to Capital Reserve on date of receipt. Grants Capital grants from the Football Trust, Football Foundation, sportscotland and the Rangers F.C. Development Fund Ltd. are credited to Capital Grants Deferred on receipt and released to the Profit and Loss Account over a period approximating to the lives of the relevant assets. Revenue grants are credited to the Profit and Loss Account to match the incurred expenditure. 17

20 Notes to the Accounts (continued) for the year ended 30 June ACCOUNTING POLICIES (continued) Turnover Turnover represents income receivable from football and related activities and is stated net of value added tax. Turnover is analysed principally between gate receipts, hospitality, sponsorship, broadcasting rights and commercial income. Ticket and hospitality income is recognised over the period of the football season as games are played. The fixed element of broadcasting revenues is recognised over the duration of the football season, whilst UEFA distributions are spread over the European matches played, with distributions relating to match performance taken when earned. Sponsorship and similar commercial income is recognised over the term of the respective contracts. In June 2006, the Club agreed to grant a ten year licence to JJB Sports plc for an initial advanced consideration together with a guaranteed minimum annual royalty in each year of the licence. The advance consideration is spread evenly over the term of the agreement. The royalty income receivable is classed as turnover net of value added tax. Foreign Currencies Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the Balance Sheet date. Any exchange differences are dealt with through the Profit and Loss Account. Investments Investments are included at cost, less amounts written off. Deferred Taxation Deferred taxation is provided in full on timing differences which result in an obligation at the Balance Sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law enacted or substantively enacted at the balance sheet date. Timing differences arise from the inclusion of items in income and expenditure in taxation computations, in periods different from those in which they are included in the Financial Statements. Deferred taxation is not provided on timing differences arising from the revaluation of fixed assets where there is no commitment to sell the asset. Deferred tax assets are recognised to the extent that it is regarded more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted. Pension Costs Defined contribution pension arrangements are made for certain employees to which contributions are made by the Group. Amounts due to insurance companies are charged against the Profit and Loss Account in the year in which they become payable. The assets of pension schemes are held separately from those of the Group in independently administered funds. Leases Assets held under finance leases and hire purchase contracts, where the risks and rewards of ownership are transferred to the Company, are initially reported at the fair value of the asset with an equivalent liability categorised as appropriate under creditors due within or after one year. The asset is depreciated over its useful economic life. Finance charges are allocated to accounting periods over the period of the contracts to produce a constant rate of return on the balance. Rentals are apportioned between finance charges and reduction of the liability. Rentals under operating leases are charged on a straight line basis over the lease term. Financial Instruments Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. A financial liability exists where there is a contractual obligation to deliver cash or another financial asset to another entity, or to exchange financial assets or financial liabilities under potentially unfavourable conditions. Finance costs and gains or losses relating to financial liabilities are included in the Profit and Loss Account. The carrying amount of the liability is increased by the finance cost and reduced by payments made in respect of that liability. Finance costs are calculated so as to produce a constant rate of charge on the outstanding liability. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Dividends and distributions relating to equity instruments are debited directly to reserves. 18

21 Notes to the Accounts (continued) for the year ended 30 June ACCOUNTING POLICIES (continued) Compound Financial Instruments Compound instruments comprise both a liability and an equity component. At date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar debt instrument without the equity feature. The liability component is accounted for as a financial liability in accordance with the accounting policy set out above. The residual is the difference between the net proceeds of issue and the liability component (at time of issue). The residual is the equity component, which is accounted for as an equity instrument. The Directors consider the Rangers Bond to be a compound financial instrument. The Directors have assessed the liability component of the bonds and consider this to be an immaterial element and as such have recognised the full amount as an equity instrument. Share Based Payments The Company issues equity-settled share-based payments to certain employees (including Directors). Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity, based upon the Company's estimate of the shares that will eventually vest. Derivatives The Group uses derivative financial instruments to reduce its exposure to interest rate and exchange rate movements. The Group does not hold or use derivative instruments for speculative purposes and accordingly does not recognise them at fair value within the financial statements. For an interest rate swap to be treated as a hedge, the instrument must be related to actual assets or liabilities or a probable commitment and must change the nature of the interest rate by converting a fixed rate to a variable rate or vice versa. Interest differentials under these swaps are recognised by adjusting net interest payable over the period of the contracts. For foreign exchange contracts the transactions to which they relate are translated at the contracted rate of agreement. 2. TURNOVER Contributions to turnover, which is derived entirely in the United Kingdom and is related to one activity, are as follows: Gate receipts and hospitality 25,834 24,228 Sponsorship and advertising 2,941 2,835 Broadcasting rights 3,760 5,133 Commercial 21,730 5,633 Other operating income 2,022 1,875 In the opinion of the Directors all business is related to one activity and as such no segmental disclosures have been provided. 3. NET OPERATING EXPENSES 56,287 39, Staff costs (Note 6) 28,133 30,662 Other operating charges 13,596 14,673 Loss on disposal of fixed assets 27 - Hire of plant and machinery Depreciation of tangible fixed assets (Note 10) 2,416 2,687 Amortisation of trade marks and goodwill (Note 11) Auditor s remuneration Revenue grants ( 382 ) ( 401 ) Capital grants released (Note 19) ( 226 ) ( 226 ) Write off of Media Income ,856 48,231 19

22 Notes to the Accounts (continued) for the year ended 30 June NET OPERATING EXPENSES (continued) Auditor s Remuneration by Category: Fees paid to Group auditor for the audit of the annual accounts Fees payable to the Group auditor for other services: The audit of the Company s subsidiaries, pursuant to legislation All other services Fees in respect of the Company pension schemes: Audit AMORTISATION OF PLAYER REGISTRATIONS Amortisation of player registrations (Note 11) 7,339 8, EXCEPTIONAL ITEMS The loss on the termination of discontinued operations relates to contract and lease terminations associated with the retail activities that were discontinued during the year ended 30 June STAFF COSTS Wages and salaries 23,667 24,908 Contributions to employee trusts 1,358 2,360 Social security costs 2,818 3,003 Defined contribution pension costs ,133 30,662 The Murray Group Management Ltd. Remuneration Trust was established to provide incentives to certain employees and other service providers. Payments to the Trust are charged to the Group Profit and Loss Account in the year incurred. On the basis of expert tax advice, the Club is defending a query raised by HMRC into this Trust, which is part of an ongoing tax enquiry scheduled to be heard by a tax tribunal before the end of the year Directors remuneration: Emoluments Pension contributions to money purchase pension schemes During the year, 2 Directors ( Directors) participated in money purchase pension schemes. The emoluments of the highest paid Director were 633,000 ( ,000), including money purchase pension contributions of 55,000 ( ,000) The average monthly number of employees was made up as follows: Football players Others In addition, the Group employed an average of 45 part-time employees ( ) during the year

23 Notes to the Accounts (continued) for the year ended 30 June INTEREST Interest payable on bank loans and overdrafts, and other charges 1,260 2,072 Interest payable on hire purchase agreements Total interest charged to profit and loss account 1,395 2, TAXATION Corporation tax Group Company Current year - ( 1,434 ) - ( 1,434 ) Prior year Total - ( 1,434 ) - ( 1,434 ) Deferred tax Current year Prior year Total Potential deferred tax asset 34,587 36,294 35,147 36,670 Based on Trading Losses Decelerated capital allowances 33, , , , The balance of historical tax losses are available for offset against any future profits as and when these are generated. The difference between the tax charge of nil (2009-1,434,000 credit) and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows: Profit/(loss) on ordinary activities before tax 4,209 ( 14,085 ) Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 28% ( %) 1,180 ( 3,943 ) Expenditure not deductible for tax purposes Capital allowances for the period (greater than)/less than depreciation 308 ( 444 ) Tax losses (utilised)/arising ( 1,838 ) 2,687 Capital grants released ( 66 ) ( 66 ) Accounting depreciation not eligible for tax purposes 2 - Other short term timing differences 1 ( 73 ) Current Corporation Tax Credit - ( 1,434 ) 9. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has 1,200,000 of potential dilutive ordinary shares at 30 June As the current share price is below the option price, the basic and diluted earnings per share is the same. Reconciliations of earnings and weighted average number of shares used in the calculations are set out overleaf. 21

24 Notes to the Accounts (continued) for the year ended 30 June Weighted average Weighted average Profit number of shares Per share amount Loss number of shares Per share amount Basic and diluted EPS 000 s in thousands pence 000 s in thousands pence Attributable to ordinary shareholders 4, , ( 12,651 ) 108,791 ( ) 10. TANGIBLE FIXED ASSETS Group Long Fixtures Freehold Leasehold And Properties Properties Fittings Total At 1 July 2009 As valued , ,874 At cost to date 13 3,976 20,052 24, ,887 3,976 20, ,915 Additions Disposals ( 510 ) - - ( 510 ) AT 30 JUNE ,380 3,976 20, ,671 As valued , ,874 At cost to date ( 494 ) 3,976 20,315 23,797 AT 30 JUNE ,380 3,976 20, ,671 Depreciation at 1 July , ,621 24,608 Charge for year 1, ,110 2,416 Disposals ( 41 ) - - ( 41 ) AT 30 JUNE , ,731 26,983 NET BOOK VALUE 30 JUNE ,088 3,016 3, ,688 NET BOOK VALUE 30 JUNE ,807 3,069 4, ,307 22

25 Notes to the Accounts (continued) for the year ended 30 June TANGIBLE FIXED ASSETS (continued) Company Long Fixtures Freehold Leasehold And Properties Properties Fittings Total At 1 July 2009 As valued , ,874 At cost to date 13 3,976 20,045 24, ,887 3,976 20, ,908 Additions Disposals ( 510 ) - - ( 510 ) AT 30 JUNE ,380 3,976 20, ,593 As valued , ,874 At cost to date ( 494 ) ,237 23,719 AT 30 JUNE ,380 3,976 20, ,593 Depreciation at 1 July , ,614 24,601 Charge for year 1, ,101 2,407 Disposals ( 41 ) - - ( 41 ) AT 30 JUNE , ,715 26,967 NET BOOK VALUE 30 JUNE ,088 3,016 3, ,626 NET BOOK VALUE 30 JUNE ,807 3,069 4, ,307 Assets of the Group and Company held under finance leases are as follows: Net Book Value at 30 June ,016-3,016 Net Book Value at 30 June ,069-3,069 Depreciation provided in the year The Directors determined the valuation of freehold properties based on their recoverable amount as at 30 June No provision has been made in the deferred taxation account for the estimated corporation tax that would be payable on the disposal of the revalued assets because, in the opinion of the Directors, the land and buildings are unlikely to be disposed of in the foreseeable future. On an historical cost basis, the Group s and Company s freehold heritable properties would have been 54,318,000 ( ,474,000) for the Group and 54,318,000 ( ,474,000) for the Company. The Group and Company cumulative borrowing costs capitalised to 30 June 2010 total 1,740,000 (2009-1,740,000). 23

26 Notes to the Accounts (continued) for the year ended 30 June INTANGIBLE FIXED ASSETS Group Player Trade Registrations Marks Goodwill Total Cost: At 1 July , ,319 Additions Disposals ( 10,390 ) - - ( 10,390 ) AT 30 JUNE , ,371 Amounts written off: At 1 July , ,385 Charge for year (see Notes 3 & 4) 7, ,391 Eliminated on disposal ( 7,999 ) - - ( 7,999 ) AT 30 JUNE , ,777 NET BOOK VALUE 30 JUNE , ,594 NET BOOK VALUE 30 JUNE , ,934 Company Cost: At 1 July , ,260 Additions Disposals ( 10,342 ) - - ( 10,342 ) AT 30 JUNE , ,210 Amounts written off: At 1 July , ,093 Charge for year 7, ,287 Eliminated on disposal ( 7,951 ) - - ( 7,951 ) AT 30 JUNE , ,429 NET BOOK VALUE 30 JUNE , ,781 NET BOOK VALUE 30 JUNE , ,167 24

27 Notes to the Accounts (continued) for the year ended 30 June INVESTMENTS Company Subsidiary undertakings 000 Cost AT 30 JUNE 2010 AND 30 JUNE NET BOOK VALUE AT 30 JUNE 2010 AND 30 JUNE Details of the investments in which the Company holds 20% or more of the nominal value of any class of share capital are as follows: Name of Company Holding Proportion of Voting Nature of Rights and Shares Business Subsidiary Undertakings (all incorporated in the United Kingdom): Rangers Youth Development Ltd Ordinary Shares 100% Youth Development Rangers Media Investments Ltd Ordinary Shares 100% Dormant Rangers Media Investments Ltd Preference Shares 100% Dormant Rangers Financial Services Ltd Ordinary Shares 100% Dormant The Rangers Shop Ltd Ordinary Shares 100% Dormant Rangers.co.uk Ltd Ordinary Shares 100% Media 25

28 Notes to the Accounts (continued) for the year ended 30 June STOCK Group Group Company Company Goods for Resale DEBTORS Group Group Company Company Trade debtors 3,877 3,019 3,796 2,994 Amounts due from subsidiary undertakings - - 2,246 1,446 Other debtors Prepayments and accrued income 1,733 3,287 1,673 3,110 Included within trade debtors is 458,000 ( nil) due outwith one year. 15. CREDITORS - Amounts falling due within one year 5,640 6,400 7,806 7,705 Group Group Company Company Bank overdraft 3,695 6,657 3,695 6,657 Bank loan 1,000 1,000 1,000 1,000 Other loans Trade creditors 2,231 8,637 2,174 8,529 Amounts due to subsidiary undertakings Social security and other taxes 2,724 4,065 2,915 4,256 Other creditors Deferred income: Capital Grants (see Note 19) Accruals and other deferred income 16,833 19,282 16,640 19,045 Lease creditor ,568 40,941 27,316 40, CREDITORS - Amounts falling due after more than one year Group Group Company Company Bank loan 18,000 19,000 18,000 19,000 Trade creditors 260 1, ,434 Accruals and other deferred income 7,354 8,617 7,357 8,617 Deferred income: Capital Grants (see Note 19) 8,456 8,678 8,456 8,678 Lease creditor 3,868 4,010 3,868 4,010 37,938 41,739 37,941 41,739 26

29 Notes to the Accounts (continued) for the year ended 30 June BORROWINGS Borrowings are repayable as follows: Group Group Company Company Overdraft amounts falling due within one year: 3,695 6,657 3,695 6,657 Bank loan 1,000 1,000 1,000 1,000 Other loans Lease creditor ,554 8,702 5,304 8,202 Amounts falling due within one to two years: Bank loan 1,000 1,000 1,000 1,000 Lease creditor ,129 1,159 1,129 1,159 Amounts falling due within two to five years: Bank loan 3,000 3,000 3,000 3,000 Lease creditor ,472 3,435 3,472 3,435 Amounts falling due after five years: Bank loan 14,000 15,000 14,000 15,000 Lease creditor 3,267 3,416 3,267 3,416 Details on securities granted over assets are given in Note ,267 18,416 17,267 18,416 27,422 31,712 27,172 31,212 27

30 Notes to the Accounts (continued) for the year ended 30 June FINANCIAL INSTRUMENTS The Group s financial instruments comprise borrowings, cash, and various items such as trade debtors and trade creditors that arise directly from its operations. The main purpose of the financial instruments is to finance the Group s operations. The Group also enters into derivative transactions such as interest rate swaps and forward foreign exchange contracts. The purpose of such transactions is to manage the interest rate and currency risks arising from the Group s operations and sources of finance. The main risks arising from the Group s financial instruments are interest rate risk, liquidity risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. These policies remain unchanged from previous years. All transactions in derivatives, principally interest rate swaps, are undertaken to manage risks arising from the underlying business activities and no transactions of a speculative nature are undertaken. Interest Rate Risk of Financial Liabilities The Group finances its operations through a mixture of shareholders capital, borrowings and leasing. The Group s exposure to interest rate fluctuations on its borrowings is managed by the use of both fixed and floating rates of interest. The Group policy is to have the majority of its net borrowings at fixed rates of interest. At the year end, the Group held one interest rate swap of 15.0m ( m). The swap structure is in place for a period of 33 months maturing in March The Bank has the option to cancel the swap at any point after March The interest rate exposure of the financial liabilities of the Group as at 30 June 2010 was 15,000,000 ( ,000,000) and 11,922,000 ( ,368,000) at a fixed and floating rate respectively. Loans of 500,000 ( ,000) are interest free. The weighted average fixed interest rate for financial liabilities was 4.67% ( %) for which the weighted average period until maturity is 9 months ( months). The floating rate borrowings bear interest at various rates above LIBOR for which the weighted average period until maturity is 222 months ( months). The interest free loans of 500,000 are repayable on average over 2 months ( months). Liquidity Risk The Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs, to invest cash assets safely and to deliver market returns. Maturity of Financial Liabilities The maturity profiles of the Group s borrowings are set out in Note 17. Borrowing Facilities There is a term loan of 19,000,000 repayable over 19 years at a fixed rate above LIBOR which is the Group s benchmark interest rate. The Bank of Scotland plc has a floating charge and guarantees from each Group company on account of each other in respect of the loans and the overdraft. At 30 June 2010 the Group had a revolving credit facility of 15,000,000, which is reviewed annually in November. 28

31 Notes to the Accounts (continued) for the year ended 30 June FINANCIAL INSTRUMENTS (continued) Currency Risk The Group may from time to time acquire foreign currency in advance of payment dates for transfer fees or UEFA receipts for European competition. During the year the Group made recognised exchange losses of 85,000 ( ,000) which are included in this year s Profit and Loss Account. These exchange losses relate mainly to the acquisition of players where purchase contracts were denominated in Euros or US Dollars. There are no unrecognised gains or losses as at 30 June The Group is exposed to translation and transaction foreign exchange risk. The table below shows the extent to which the Group has net monetary liabilities in currencies other than sterling: Cash (Euros) 1, Trade Creditors (Euros) ( 6 ) ( 1,272 ) Trade Creditors (USD) - ( 1,562 ) Trade Debtors (Euros) Fair Values The interest rate swap agreement has been included in the financial statements at a book value of nil ( nil). The fair value of swap agreements at 30 June 2010, if recognised, would be a liability of 1,324,000 ( liability 938,000). At the year end the Group had nil (2009: nil) forward foreign exchange contracts outstanding. Short Term Debtors and Creditors Short term debtors and creditors have been excluded from the above disclosures, other than the currency risk disclosures. 19. CAPITAL GRANTS DEFERRED Group and Company At 1 July ,904 9,130 Grant released ( 226 ) ( 226 ) At 30 June ,678 8,904 Grants received from the Rangers F.C. Development Fund Ltd. during the year were revenue grants (Note 3) supporting the costs of the youth development policy. 29

32 Notes to the Accounts (continued) for the year ended 30 June SHARE CAPITAL Authorised: 120,280,602 ordinary shares of 10p each 12,028 12,028 Issued and fully paid: 108,791,499 ( ,791,499) ordinary shares of 10p each 10,879 10, RESERVES Group Share Premium Capital Revaluation Profit Account Reserve Reserve and Loss Account At 1 July ,973 9,185 58,333 ( 140,549 ) Retained profit for the year ,209 Transfer from revaluation reserve to profit and loss account - - ( 563 ) 563 At 30 June ,973 9,185 57,770 ( 135,777 ) Company At 1 July ,973 9,185 58,333 (139,303 ) Retained profit for the year ,914 Transfer from revaluation reserve to profit and loss account - - ( 563 ) 563 At 30 June ,973 9,185 57,770 ( 133,826 ) The retained profit for the Company for the year ended 30 June 2010 was 4,914,000 (2009-3,017,000). 30

33 Notes to the Accounts (continued) for the year ended 30 June THE RANGERS BOND At 1 July At 1 July & 30 June & 30 June Class Number 000 A Debenture stock at 1,000 each 1,673 1,673 B Debenture stock at 1,300 each 2,724 3,541 C Debenture stock at 1,500 each 1,371 2,057 D Debenture stock at 1,650 each ,050 7,736 The debentures rank pari passu with respect to voting and repayment, are unsecured and no interest is payable. The debentures are repayable under the following conditions: i. at the discretion of the Company on or after 16 December 2026, being the 35th anniversary of the completion of the Club Deck in the Bill Struth Main Stand, or ii. if an order is made or an effective resolution is passed for the winding up of the Company, or iii. if an administrator or receiver is appointed to the undertaking of the Company or any of its property or assets, or iv. if the Company ceases on a permanent basis to carry on its business at the Stadium. The benefits which accrue to the debenture holders are: a. the right to purchase a season ticket in respect of a designated seat; b. where the Company has control over allocation of the designated seats for an event which is not covered by the season ticket, the opportunity to purchase a ticket in respect of the designated seat for that event, within such periods as the Company shall notify by public announcement or otherwise for the relevant event; c. the right to the use of such facilities as shall from time to time be available within the Club Deck in the Bill Struth Main Stand of the Stadium; and d. the right to have the name of the Registered Holder affixed to the designated seat. 23. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS FUNDS Profit/(Loss) for the financial year 4,209 ( 12,651 ) Net addition/(reduction) to shareholders funds 4,209 ( 12,651 ) Opening shareholders funds 66,557 79,208 Closing shareholders funds 70,766 66,557 31

34 Notes to the Accounts (continued) for the year ended 30 June ANALYSIS OF CASH FLOW STATEMENT HEADINGS Returns on investment and servicing of finance Interest paid ( 1,259 ) ( 1,965 ) Interest element of finance lease rentals paid ( 133 ) ( 262 ) Net cash outflow from returns on investment and servicing of finance ( 1,392 ) ( 2,227 ) Group relief of tax losses - 1,770 Capital expenditure and financial investment Purchase of tangible fixed assets ( 264 ) ( 1,061 ) Purchase of intangible fixed assets ( 8,039 ) ( 15,743 ) Sale of tangible fixed assets Sale of intangible fixed assets ,981 Net cash outflow from capital expenditure and financial investment ( 6,460 ) ( 1,823 ) Financing Capital elements of finance lease rentals ( 78 ) ( 94 ) Repayment of term loan ( 1000 ) ( 1,000 ) Other loans repaid ( 250 ) - Net cash outflow from financing ( 1,328 ) ( 1,094 ) 32

35 Notes to the Accounts (continued) for the year ended 30 June ANALYSIS OF NET DEBT At Cash At 1 July Flow 30 June Cash at bank and in hand ( 6,063 ) 2,716 ( 3,347 ) Bank loan ( 20,000 ) 1,000 ( 19,000 ) Other loans ( 950 ) 250 ( 700 ) Finance Leases ( 4,105 ) 78 ( 4,027 ) Net Debt ( 31,118 ) 4,044 ( 27,074 ) 26. RELATED PARTY TRANSACTIONS During the year, in the normal course of business, the Group had sales of 150,000 ( ,000) to companies of which Sir David E. Murray, or companies controlled by him, are the principal shareholders, and received services of 665,000 (2009-1,140,000), principally in relation to call centre, advertising and information technology services from them. At the year end, balances due from these companies were 5,000 ( ,000) and due to them were 53,000 ( ,000), and are included within trade debtors and trade creditors respectively. 27. CONTINGENT ASSETS / LIABILITIES For the Group and Company at 30 June 2010, additional transfer fees payable of nil ( ,000) and transfer fees receivable of 100,000 ( nil) would arise if certain conditions in transfer contracts are fulfilled. 28. CAPITAL COMMITMENTS / FINANCIAL COMMITMENTS The Group and the Company had capital commitments in respect of tangible fixed assets as at 30 June 2010 of nil ( nil). 29. OPERATING LEASE COMMITMENTS At 30 June 2010, the Group was committed to making payments of nil ( ,000) during the next year in respect of operating leases expiring within 1 year, payments of 175,000 ( ,000) in respect of operating leases expiring between 2 and 5 years, and 33,000 ( ,000) in respect of operating leases expiring after 5 years. All of the Group s operating lease commitments are in respect of land and buildings. 30. ULTIMATE HOLDING COMPANY The Directors consider that the ultimate holding company is Murray International Holdings Ltd. (reg. no. SC ). As Sir David E. Murray has a controlling interest in the share capital of the ultimate holding company he is considered to be the ultimate controlling related party. The largest and smallest group in which the results of the Company are consolidated is that headed by the ultimate holding company whose registered office is at 9 Charlotte Square, Edinburgh, EH2 4DR. 33

36 Independent Auditor's Report to the Members of The Rangers Football Club plc We have audited the financial statements of The Rangers Football Club plc for the year ended 30 June 2010 which comprise the Consolidated Profit and Loss Account, the Group and Parent Company Balance Sheets, the Consolidated Cash Flow Statement, the Consolidated Statement of Total Recognised Gains and Losses, the Consolidated Note of Historical Cost Profits and Losses and notes 1 to 30. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). 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 Our audit work has been undertaken so that we might state to the company s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Directors Responsibilities Statement set out on page 12, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s (APB s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB's website at Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the group's and the parent company's affairs as at 30 June 2010 and of the group's profit for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act Opinion on other matters prescribed by the Companies Act 2006 In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. ROBERT HANNAH SENIOR STATUTORY AUDITOR FOR AND ON BEHALF OF GRANT THORNTON UK LLP, STATUTORY AUDITOR, CHARTERED ACCOUNTANTS Glasgow 22 September

37 Five Year Summary FINANCIAL TURNOVER Continuing operations 56,287 39,704 64,452 41,768 43,483 Discontinued operations ,682 Total 56,287 39,704 64,452 41,768 61,165 Trading profit/(loss) 12,431 ( 8,527 ) 7,635 ( 1,320 ) 6,218 Player registration charge ( 6,827 ) ( 2,627 ) 677 ( 2,744 ) ( 888 ) Loss on termination of discontinued operations - ( 579 ) - ( 955 ) ( 3,823 ) Net interest payable ( 1,395 ) ( 2,352 ) ( 1,745 ) ( 1,291 ) ( 1,415 ) Profit/(loss) before tax 4,209 ( 14,085 ) 6,567 ( 6,310 ) 92 Taxation - 1, Transfer to/(from) Reserves 4,209 ( 12,651 ) 7,172 ( 6,253 ) 92 Fixed assets 130, , , , ,123 Net current and long term liabilities ( 59,516 ) ( 75,684 ) ( 64,883 ) ( 63,148 ) ( 56,968 ) Net Assets 70,766 66,557 79,208 71,902 78,155 FOOTBALL Season 09/10 08/09 07/08 06/07 05/06 Premier League Winners Winners Runners Up Runners Up 3rd Premier League Matches Premier League Points Scottish Cup 5th Round Winners Winners 3rd Round 4th Round League Cup Winners Final Winners Quarter-Final Quarter-Final European Ties Played Capital Investment in Intangible Assets ( 000) ,791 17,979 7,231 4,754 Stadium Capacity 51,082 51,082 51,082 51,082 50,444 Average Home Attendances 44,091 47,076 46,278 48,517 47,739 Season Ticket Holders 40,306 43,107 42,556 43,187 41,801 35

38 Season 2009/10 Statistics Date Opposition Venue Comp Score Crowd 15-Aug Falkirk H SPL , Aug Hearts A SPL , Aug Hamilton H SPL , Sep Motherwell A SPL 0-0 9, Sep Stuttgart A CL , Sep Kilmarnock A SPL , Sep Queen of the South A LC R , Sep Aberdeen H SPL , Sep Sevilla H CL ,572 4-Oct Celtic H SPL , Oct St Johnstone A SPL 2-1 7, Oct Unirea Urziceni H CL , Oct Hibernian H SPL , Oct Dundee A LC R ,654 4-Nov Unirea Urziceni A CL ,000 7-Nov St Mirren H SPL , Nov Kilmarnock H SPL , Nov Stuttgart H CL , Nov Aberdeen A SPL ,153 5-Dec Falkirk A SPL 3-1 6,903 9-Dec Sevilla A CL , Dec St Johnstone H SPL , Dec Dundee United A SPL , Dec Motherwell H SPL , Dec Hibernian A SPL , Dec Dundee United H SPL ,721 3-Jan Celtic A SPL , Jan Hamilton A SC R , Jan Hamilton A SPL 1-0 5, Jan Hamilton H SC R4 Replay 2-0 AET 21, Jan Hearts H SPL , Jan St Mirren A SPL 2-0 5, Jan Falkirk H SPL ,907 3-Feb St Johnstone N LC SF ,371 6-Feb St Mirren A SC R , Feb Motherwell A SPL 1-1 9, Feb Hibernian H SPL , Feb St Mirren H SC R5 Replay , Feb Celtic H SPL ,320 6-Mar St Mirren H SPL ,474 9-Mar Kilmarnock A SPL 2-0 8, Mar Dundee United H SC R , Mar St Mirren N LC Final , Mar Dundee United A SC R6 Replay , Mar Hearts A SPL , Mar St Johnstone A SPL 1-4 6,189 3-Apr Hamilton H SPL ,068 7-Apr Aberdeen H SPL , Apr Dundee United A SPL , Apr Hearts H SPL , Apr Hibernian A SPL ,573 1-May Dundee United A SPL ,003 4-May Celtic A SPL ,000 9-May Motherwell H SPL ,321 Appearances Season 2009/10 App'ns Sub Goals Weir Davis Whittaker Papac McGregor McCulloch Miller Boyd Thomson Naismith Lafferty Wilson Bougherra Novo Broadfoot Fleck Smith Edu Beasley Alexander Mendes Rothen Little McMillan Wylde Clydesdale Bank Premier League P W D L F A Pts GD Rangers Celtic Dundee United Hibernian Motherwell Hamilton Hearts St Johnstone Aberdeen St Mirren Kilmarnock Falkirk SPL Scottish Premier League, LC League Cup, CL Champions League, SC Scottish Cup 36

39 Annual Report 2010

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