?681k loss

[fabienleclerq]

can someone explain in plain English why a 680k loss is good? And what 1.5m debt been paid

[Kiwidoug]

Cash reserves of ?3.5m guys. And all the debt owed to FoH (in principle) and Bidco.

 

Very positive set of results.

What a difference from the nightmare time when we couldn't pay wages, tax or anything else.

 

Massive congratulations due to everyone involved.  I do look forward however to the critical financial analysis on partyplanners.

[Footballfirst]

can someone explain in plain English why a 680k loss is good? And what 1.5m debt been paid

The loss was a budgeted one.  The first budget was set with a forecast loss of ?1.28M.  That was based on a predicted 8,000 ST sales in the Championship, but with the expectation that the FOH contribution of ?1.4M would more than cover it.

 

As the ST sales and attendances increased the budget was altered, new targets were set, better players were acquired. The forecast at the half year was still for a loss, but reduced to ?886K with the team romping the league.  Further investment in players and full houses continued with an end of year position of a loss of ?681K. So yes there was a bit of speculating to accumulate but as each bit of extra income came in during the season, some was reinvested in the team and the infrastructure, but with some retained to reduce the deficit.  All was well managed.

 

The debt that was reduced was primarily down to a bit of creative (but honest) accounting.  The ?1M received by the club from the 2012 share offer, but with no shares issued was recorded as a debt in the 2014 accounts.  Over the past year the new shares were issued to those who participated in the share offer.  In accounting terms it effectively became a debt for equity swap. In 2014 the club owed ?1M to the participants in the share offer. In 2015 new shares were issue in lieu of the debt and the debt was gone.  

[RobNox]

The loss was a budgeted one.  The first budget was set with a forecast loss of ?1.28M.  That was based on a predicted 8,000 ST sales in the Championship, but with the expectation that the FOH contribution of ?1.4M would more than cover it.

 

As the ST sales and attendances increased the budget was altered, new targets were set, better players were acquired. The forecast at the half year was still for a loss, but reduced to ?886K with the team romping the league.  Further investment in players and full houses continued with an end of year position of a loss of ?681K. So yes there was a bit of speculating to accumulate but as each bit of extra income came in during the season, some was reinvested in the team and the infrastructure, but with some retained to reduce the deficit.  All was well managed.

 

The debt that was reduced was primarily down to a bit of creative (but honest) accounting.  The ?1M received by the club from the 2012 share offer, but with no shares issued was recorded as a debt in the 2014 accounts.  Over the past year the new shares were issued to those who participated in the share offer.  In accounting terms it effectively became a debt for equity swap. In 2014 the club owed ?1M to the participants in the share offer. In 2015 new shares were issue in lieu of the debt and the debt was gone.  

An excellent explanation as ever FF.

 

So the 1.5m debt reduction would be the 1m you explained re the 2012 share offer plus c 500k of footballing debts outstanding pre-administration which we were obliged to honour post-administration?

[Unknown user]

In 2014 the club owed ?1M to the participants in the share offer. In 2015 new shares were issue in lieu of the debt and the debt was gone.

Basically, we owed it to ourselves. I can hear the gnashing of teeth from here.

[Footballfirst]

Basically, we owed it to ourselves. I can hear the gnashing of teeth from here.

 

That's another reason why net debt is not a good measure of a company's well-being.

 

As another example, let's say a company has a net debt of ?10M at the start of a financial year.  It is trading on a break even basis, so net debt at the end of the year should be unchanged at ?10M.

 

However the Board is keen to show an improving position, so in the last couple of months it delays paying its bills and as a result it retains an extra ?1M in cash.  The way that net debt is calculated involves debts being set off against cash balances, so the net debt will show an improvement to ?9M.  Job done.

 

Well not quite. Your trade creditors bill has increased by ?1M so the company's overall position is unchanged.

 

That's how easy it is to create an illusion using net debt.

[fabienleclerq]

The loss was a budgeted one. The first budget was set with a forecast loss of ?1.28M. That was based on a predicted 8,000 ST sales in the Championship, but with the expectation that the FOH contribution of ?1.4M would more than cover it.

 

As the ST sales and attendances increased the budget was altered, new targets were set, better players were acquired. The forecast at the half year was still for a loss, but reduced to ?886K with the team romping the league. Further investment in players and full houses continued with an end of year position of a loss of ?681K. So yes there was a bit of speculating to accumulate but as each bit of extra income came in during the season, some was reinvested in the team and the infrastructure, but with some retained to reduce the deficit. All was well managed.

 

The debt that was reduced was primarily down to a bit of creative (but honest) accounting. The ?1M received by the club from the 2012 share offer, but with no shares issued was recorded as a debt in the 2014 accounts. Over the past year the new shares were issued to those who participated in the share offer. In accounting terms it effectively became a debt for equity swap. In 2014 the club owed ?1M to the participants in the share offer. In 2015 new shares were issue in lieu of the debt and the debt was gone.

Thanks FF.

[Thomaso]

The fact is that the fan in the street does not have a scobby when it comes to interpreting Company accounts.

 

The bottom line is that our current owner and Board have put together a thought through plan to bring long term financial stability to our Club. We are ahead of that plan and the next set of Company accounts will confirm this.

 

We are in safe hands.