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PurpleCanary

2010 ACCOUNTS

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[quote user="John"][quote user="Cluckbert Chase"][quote user="City1st"]"Jesus... Talk about watching paint dry............."

possibly due to the speedy you read at

trying doing it without your finger moving along the screen .....

........ or with your lips moving at the same time[/quote]

Nope.... I can''t ....Errrrr... nope.Errrrrrr.....Look...... could someone translate this for me please?

[/quote]If you''re really struggling to understand a comment as a result of a couple of grammatical mistakes, i shouldn''t think ''the internet'' is for you. Nevertheless, it''s along the lines of:"Possibly due to the speed in which you read, whilst

trying not to do it with your finger moving along the screen.... Or with your lips moving at the same time."Just doing my bit as an honest volunteer to help the elders of our community get by, by answering any questions you have Cluck.

PS. If you''re reading this out to yourself, the ''h'' in ''honest'' is silent, and the same goes for the ''w'' in ''answering''. [Y][/quote]I bet you''re really good fun at parties....... ZZzzzzzzzzzzzz.

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[quote user="PurpleCanary"]

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I’ve been inundated with private emails (OK, two emails) asking what to look for in the forthcoming accounts. The following may be helpful. It is of necessity long.[:''(]  Those uninterested[:|] should look away now. Of course the obvious thing to do would seem to be to wait until the accounts come out, but my copy will probably not reach my tax haven[ip] until after UK-based[li] shareholders have received theirs, and I may also be away from my computer. So...

 

Any set of accounts is always deeply fascinating[8-|] but the real interest lies in these being the first accounts produced in the era of the new regime, with its seven-year debt-eradication and financial stabilisation plan. Will the figures show signs of that plan? Probably yes, but also probably not that much. The first step in turning round a supertanker heading (as deemed by the new guard) full-steam in the wrong direction is to slow it down. The turning-round bit comes after that. Bear in mind, also, that these accounts cover only the first 11 months of the new regime, to May 31, 2010, so some events (the recent land sale to reduce debt, for example) will not figure, unless noted in post-balance sheet remarks.

 

1.   Have we downsized? One of the big questions. The new guard said cuts would have to be made, partly to get finances under control and partly to reflect our lower footballing status. (It should also be borne in mind that the old guard, if left in place, might well have instituted cutbacks in the wake of relegation. Academic now). There are all sorts of indicators, such as group turnover, staff costs, wages and salaries, and the number of non-football employees. Cuts may well show up. Particular in those latter areas, so here for comparison are the 2009 figures:

 

i)                    Turnover  £17,929,000

ii)                  Staff costs: £13,716,000

iii)                Wages and salaries: £10,945,000

iv)                Non-footballers:  131 (out of a total staff of 199)

 

2.      Profit and loss. One of the big headline figures. There are various measures for this, but the easy one to go by is the post-tax figure. Last year it was £4,979,000 as against £2,292,000 for 2008.

 

3. Debt. Another of the big issues. Last year net debt was £22,946,000. The majority of this is owed to two lenders – AXA and Bank of Scotland (which is part of Lloyds TSB). The accounts don’t split up the debt, but when Cullum went public in the summer of 2008 the overall bank debt figure was roughly £16m, of which around £12m was said to be owed to AXA. As is well-known, the club, as part of its stabilisation plan, got a deferral from both lenders of repayment of capital and interest until the end of the financial year about to be reported on. Those deferred payments were then due for payment from May 31, 2010.

 

However this time last year the club also said AXA was not averse to “a waiver of outstanding payments and the provision of interest-free and capital-free periods in the longer term which will reduce the additional funds required by the club to cover the period from May 31 2020 to May 31 2011.” BoS was apparently also making supportive noises. The club put that “additional funds” figure to tide it over to May 31 2011 at £2.9m. And it was this uncertainty over the future - whether the club could fund itself going forward - that prompted the auditors to issue a gentle warning about whether the club would continue to be a going concern.

 

So any more up-to-date and definite news from the directors on deferrals and the like beyond May 31 2010 may be highly significant. Equally no further news – the dog that doesn''t bark - might also be significant. Certainly something to look for.


As is the debt owed to various directors and ex-directors, that amounted to £5,312,000 (although interestingly the club put the amount of unsecured, interest-free loans slightly higher, at £5,815,000):

 

Smith and Jones: £2,142,000

Foulger: £670,000

The Turners £2,500,000

 

A fair assumption is that the Turners have not lent any more, but have the others? Beyond a doubt. At least £800,000. But possibly more. McNally, in saying recently the accounts would not make pretty reading, hinted that Lambert’s spending had been bankrolled by directors. The assumption is that debt, by way of loans (or are they effectively gifts?) from directors, has increased. It is unlikely that the banks, having given us a repayment holiday, would have let us borrow more. I mean, what kind of crazy banking policy would that be? It needs to be stressed, as with other issues, that only new loans up to the end of May 2010 will show up, although more recent ones might appear in post-balance sheet information.

 

4.    Land and buildings. Otherwise known as Tangible Fixed Assets.[;)] In the 2009 accounts the club said it thought these assets were undervalued at £34,503,000, but didn’t know by how much since it lacked a professional assessment. By now it should have had that assessment and the new accounts should include its valuations.

 

5.    Shares. There were 32,000 ordinary shares (the voting kind) available to be bought, if the club wanted. It’s the difference between the number authorised (568,000) and the number actually paid for (536,000). Presumably the three new directors (Bowkett, Phillips and McNally) who joined in July 2009 have bought some shares. How many will show up in the directors’ holdings, normally listed on the first page proper of the accounts. Assuming they bought shares from the club’s available stockpile that money has gone into the coffers, at the number of shares times £30. Last year, for comparison, only 84 ordinary shares were issued by the club. Stephen Fry, of course, will not appear until the 2011 accounts. The recent “For sale” sign put up on £85,000 worth of shares won’t figure either, being a private transaction.

 

6.      How much are they paying McNally? This comes under directors’ emoluments. But unless things have changed, only the chief executive out of the directors gets paid. Neil Doncaster was on £179,000 in 2008. The 2010 figure for McNally will probably not be quite comparable, as it should only cover 11 months, but equally should give an indication.

 

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[/quote]

 

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Might be helpful to bump this back up. Especially for people who (unlike me) can access the PDF file to see the accounts in greater detail. For now I only have the club''s statement to go by. But some interim points to make:



1. No great surprise that the post-tax loss increased. From £4.9m to £5.8m.

 

2. The reduction in debt is a surprise, given that the car park sale came after the period of these accounts.

 

3. The restructuring deal that extends repayment to 2022 is especially interesting, for various reasons. It suggests our banks are still reasonably happy with the club''s finances. But it also at odds with the board''s quite recent claim that the club would be debt-free in seven years'' time. That presumably has been quietly consigned to the dustbin.

 

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"But it also at odds with the board''s quite recent claim that the club would be debt-free in seven years'' time"

I would suggest that the idea was to clear the various loan notes, overdrafts and borrowings that have been cobbled together to keep the club runningThe funding for the new South Stand would have been structured over a number of years and I doubt could be redeemed early - nor would we have the means to do it ..... unless we acquired one of those mythical demi godsan ''hinvestor'' *

* happly clappies fall to their knees and make the sign of the cross at the mere mention of the word, whilst heavenly choirs burst forth in reverential song

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Having now seen the accounts, the following (for those who are interested) may be useful. It deals in (I hope) an explanatory way with some of the topics I suggested beforehand might be worth looking out for, especially given these are the first accounts of the new guard.

 

1.   New directors. This is not a criticism but the new directors have not bought a significant number of shares.  Bowkett (who had 1,000) has 1,117, McNally 100 and Phillips 100. That is £39,510 worth of shares, from the club or elsewhere. In addition, out of the 32,000 shares that the club could make available, only 111 were sold during the year, as against 84 the year before. The NCISA initiative should see that sales figure increase in 2011. As a result of new shares being issued, Smith and Jones’s holding has reduced, irrelevantly, from 61.2 per cent to 61.1 per cent.

 

2.  In the accounts last year the club said it thought the tangible fixed assets (Carrow Road etc) would exceed their book value but needed a professional assessment to find out by how much. It is still saying the same thing, so plainly it has not yet got that assessment (or at least not in time for these accounts). No explanation of why this delay. Anyway, they are now (having depreciated) listed at £32.9m rather £34.5m.

 

3. A going concern? Last year the accountants issued a gentle warning, saying they were worried by long-term funding issues which had yet to be resolved. This year there is no such admonition. Presumably the impending restructuring deal with AXA and Lloyds (dealt with later on) had satisfied them.

 

4.    Have we downsized as promised? The  number of staff has been cut from 199 to 181, while the football element of that has stayed the same at 63. As to costs, down from £13.7m to £12.1m. Leaving out exceptional bonuses, the wages and salaries fell from £10.9m to £9.03m. Not to be sneezed at. Any regime would have downsized in the wake of relegation, but those figures suggest the new guard has taken if not an axe then at least something reasonably sharp to costs. However it should be remembered that in the last year of the old regime there were staff cuts (from 210 to 199) and wages and salaries fell by £500,000. Perhaps significantly, McNally has now said there is no need for more staff cuts. A hunch would be that staff numbers may creep back over the next year or so.

 

5.   McNally’s pay compared to Doncaster’s? Roughly (he started after the accounting year started etc) up 15 per cent from £185,000 to £214,000. We will return to this...

 

6.   Loans from (ex-) directors. Or are they really gifts? Impossible to know. McNally hinted a while ago that a lot of Lambert''s spending had been bankrolled by directors, and indeed Foulger put in another £770,000. Interestingly, the amount owed to Smith and Jones has fallen marginally, by £33,000, but is still £2.1m. There was also a gift from someone or other (not necessarily a director) of £206,000. There may have been further loans from directors since May 31, but there is no mention of that in the post-balance sheet tems.

 

7. Colchestergate. The full cost of the mishandling of the issue of compensation for Lambert et al has been revealed. In all it cost us £626,000, although that includes the compensation. But even assuming Colchester could not have been negotiated down from the £400,000 they said they wanted for Lambert, that means the unnecessary costs (the fine of £75,000 and the legal fees) were around an eye-watering £200,000. Not forgetting the suspended £125,000 fine hanging over us for a repeat offence. Still, since McNally is on more than £200,000 the solution is obvious. He works without pay for a year.

 

8. Short-term financial stuff. In my preview I suggested there would not be too many signs of the effects of the club''s seven-year plan. "The first step in turning round a supertanker heading (as deemed by the new guard) full-steam in the wrong direction is to slow it down. The turning-round bit comes after that." The bottom-line loss of £5.75m (£4.98m in 2009) is eye-catching but the club can to an extent point to some exceptional items, such as the Colchester compensation case, although part of that was a self-inflicted wound. And football clubs are often compensating someone for something. The club has, with some reason, headlined the sharp fall in the operating loss if you strip out exceptionals such as transfers. And Bowkett, based on the current half-year performance, is predicting an operating profit for 2011. A clearer picture should emerge this time next year, because these accounts are essentially transitional. Between one division and another (which very much cuts both ways), between one regime and another, between one way of doing things and another. Between the pre-cutback era and the (post-) cutback era.

 

9. Long-term financial stuff. Firstly the debt specifically. There has been some confusion about this, partly because of "Premier League" debt now being repayable within a year, and partly because of the land sale, which came too late for these accounts. Unless I have misunderstood the situation, the fact that we owe £2m less than we did (£20.9m instead of £22.9m) is not because the main debt (the bank loans and the stuff owed to directors) has been reduced (it hasn''t) but mainly because we have cash in hand now which we didn''t have this time last year. £1.6m in credit as opposed to £0.6 in debit.

 

Secondly, THE PLAN. The famous seven-year plan. A totally facetious comparison would be that Stalin and Mao both had plans. Having a plan isn''t the point. It''s having the right plan. And even good plans can be upset by events. Think ITV Digital. Or a world economic crisis. Moving on, the accounts have a throwaway line which - as far as I can see - has simply not been reported. That we breached our banking covenants. Certainly not highlighted by the club. So, serious or not? Not, in practice, since it has been overtaken by a new, longer-term restructuring of debt repayments. With AXA, the main lender, it lasts until May 2022. With BoS, until 2013. So effectively the seven-year plan has been replaced by a 12-year plan. Plainly we have a decent relationship with our lenders.

 

And, leaving aside all the minutiae of these and other accounts, it will be the club''s ability (or otherwise) to fulfil that plan that matters. And this is assuming it''s a good plan. In other unnoticed remarks McNally has now said the Deloitte''s seach for new investment has turned up zilch. That, of course, is only for now. Who knows what white knights, freighted with gold, might even now be approaching the horizon. But the directors will have to assume there are none.

 

It''s just them, and their plan.

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[quote user="nutty nigel"]

Thanks Purple, I found this very helpful[Y]

 

Maybe that camel bloke was right about you[;)]

 

 

[/quote]

 

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Kind of you to say so, nutty.[Y] Actually I think that "camel bloke" was right about lots of things, but that is another story.[;)]

 

I was ever so slightly surprised that McNally admission about the failure to find investment didn''t get commented on here. What he said was:

“We have excellent professional advisers in Deloitte, who have helped us on the investment search and other matters,” said McNally. “They have not been successful in a difficult market in finding somebody who put together a credible business proposition to the club.

 

“But when you consider how difficult Liverpool have found it and the fact that Newcastle United were on sale for almost two years and they weren’t able to find significant new investment, the market’s not been right for that.

 

“So we had to have a plan B and, in the absence of new investment coming in, we are focusing on selling non-core, non-football property assets. The sale of a car park or any other non-core, non-football asset will be used to pay down debt.”

 

If I were a cynic[6] I might think the lack of comment here is because this rather cuts the ground from under the common argument that Smith and Jones never really tried to find investment and that once our ultra-professional Nasty Twins, aided by ultra-professionals in the shape of Deloitte''s, got to work we would be fighting off would-be buyers.

 

Luckily I''m an innocent soul[A][8-|][A] and not at all cynical...[;)][:P][;)]

 

 

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[quote user="PurpleCanary"][quote user="nutty nigel"]

Thanks Purple, I found this very helpful[Y]

 

Maybe that camel bloke was right about you[;)]

 

 

[/quote]

 

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Kind of you to say so, nutty.[Y] Actually I think that "camel bloke" was right about lots of things, but that is another story.[;)]

 

I was ever so slightly surprised that McNally admission about the failure to find investment didn''t get commented on here. What he said was:

“We have excellent professional advisers in Deloitte, who have helped us on the investment search and other matters,” said McNally. “They have not been successful in a difficult market in finding somebody who put together a credible business proposition to the club.

 

“But when you consider how difficult Liverpool have found it and the fact that Newcastle United were on sale for almost two years and they weren’t able to find significant new investment, the market’s not been right for that.

 

“So we had to have a plan B and, in the absence of new investment coming in, we are focusing on selling non-core, non-football property assets. The sale of a car park or any other non-core, non-football asset will be used to pay down debt.”

 

If I were a cynic[6] I might think the lack of comment here is because this rather cuts the ground from under the common argument that Smith and Jones never really tried to find investment and that once our ultra-professional Nasty Twins, aided by ultra-professionals in the shape of Deloitte''s, got to work we would be fighting off would-be buyers.

 

Luckily I''m an innocent soul[A][8-|][A] and not at all cynical...[;)][:P][;)]

[/quote]

If I were a cynic....I would certainly wonder why the ''Nasty Twins'' haven''t yet passed comment or made a statement welcoming Stephen Fry onto the NCFC board?......

Or, why the ''Turner Two'' and our most successful Marketeer Andrew Cullen, really departed the club....?

 

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do the accounts give away the exact amount the News of the World paid us for their silly story last year? Can''t rememeber if this was ever announced. No doubt it was just bundled into ''income'' somewhere.

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[quote user="Wandsworth Canary"]do the accounts give away the exact amount the News of the World paid us for their silly story last year? Can''t rememeber if this was ever announced. No doubt it was just bundled into ''income'' somewhere.[/quote]

 

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Wandsworth, it''s not listed separately.

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[quote user="PurpleCanary"]

[quote user="Wandsworth Canary"]do the accounts give away the exact amount the News of the World paid us for their silly story last year? Can''t rememeber if this was ever announced. No doubt it was just bundled into ''income'' somewhere.[/quote]

 

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Wandsworth, it''s not listed separately.

[/quote]

 

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I should have added that there is often in such cases an agreement by the winners not to disclose the amount of damages, and I understand that was the situation here. A separate item in the accounts would have effectively broken that deal, so I wasn''t expecting to see it itemised.

 

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[quote user="PurpleCanary"]

[quote user="Wandsworth Canary"]do the accounts give away the exact amount the News of the World paid us for their silly story last year? Can''t rememeber if this was ever announced. No doubt it was just bundled into ''income'' somewhere.[/quote]

 

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Wandsworth, it''s not listed separately.

[/quote]

 

I reckon that''s gone in the cooks purse[:@]

 

And what''s more the Turners or Peter Cullum would have doubled it[:O]

 

 

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[quote user="nutty nigel"][quote user="PurpleCanary"]

[quote user="Wandsworth Canary"]do the accounts give away the exact amount the News of the World paid us for their silly story last year? Can''t rememeber if this was ever announced. No doubt it was just bundled into ''income'' somewhere.[/quote]

 

---

 

Wandsworth, it''s not listed separately.

[/quote]

 

I reckon that''s gone in the cooks purse[:@]

 

And what''s more the Turners or Peter Cullum would have doubled it[:O]

[/quote]

Yeah, I also still wonder who/what funded the extension on the rear of the Barclay......Y''know, it went up quicker than a tent - just after we got rid of Bellers..... 

 

Do you know the real reasons why the Turners and Andrew Cullen left the club?.....If it was just for business reasons, why don''t the Turner Two still attend just as occasional spectators? I mean, Roger M and Gunny still attend games....As for Andrew Cullen.....shame he left for MK Dons, I think him and the current CE would have worked very well together.....

 

 

 

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[quote user="PurpleCanary"][quote user="PurpleCanary"]

[quote user="Wandsworth Canary"]do the accounts give away the exact amount the News of the World paid us for their silly story last year? Can''t rememeber if this was ever announced. No doubt it was just bundled into ''income'' somewhere.[/quote]

 

---

 

Wandsworth, it''s not listed separately.

[/quote]

 

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I should have added that there is often in such cases an agreement by the winners not to disclose the amount of damages, and I understand that was the situation here. A separate item in the accounts would have effectively broken that deal, so I wasn''t expecting to see it itemised.

 

[/quote]

Could part of it be that £200k odd you said was ''gifted'' from somewhere?

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[quote user="Mello Yello"]

 

As for Andrew Cullen.....shame he left for MK Dons, I think him and the current CE would have worked very well together.....

 

 

 

[/quote]

 

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Mello, this is the same Andrew Cullen whose affordable family football policy is being steadily dismantled by our current CEO because, according to him, the club can''t afford it?! Sounds like a real match made in heaven...[;)][:D][;)]

 

Slightly more seriously, chicken, the NotW damages could just possibly be part (and I''m sure it would only be part) of that £206,000, although legal damages don''t strictly come under the heading of "Donations and gifts". Perhaps, though, it is a rare example of accountancy[8-|] black humour.[;)]

 

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I could be wrong but wasn''t the settlement made out of court rather than in it which although as you say would make it rather humerous in some aspects but accurate in another.

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[quote user="Mello Yello"][quote user="nutty nigel"][quote user="PurpleCanary"]

[quote user="Wandsworth Canary"]do the accounts give away the exact amount the News of the World paid us for their silly story last year? Can''t rememeber if this was ever announced. No doubt it was just bundled into ''income'' somewhere.[/quote]

 

---

 

Wandsworth, it''s not listed separately.

[/quote]

 

I reckon that''s gone in the cooks purse[:@]

 

And what''s more the Turners or Peter Cullum would have doubled it[:O]

[/quote]

Yeah, I also still wonder who/what funded the extension on the rear of the Barclay......Y''know, it went up quicker than a tent - just after we got rid of Bellers..... 

 

Do you know the real reasons why the Turners and Andrew Cullen left the club?.....If it was just for business reasons, why don''t the Turner Two still attend just as occasional spectators? I mean, Roger M and Gunny still attend games....As for Andrew Cullen.....shame he left for MK Dons, I think him and the current CE would have worked very well together.....

 

[/quote]

 

I''m not so sure that McNally would have worked well with The Turners or Andrew Cullen. It does seem that Bowkett and McNally are totally opposed to having so many tickets sold on concessions and they don''t seem to agree with the clever than the rest loan policy. I doubt very much if Roeder would have been Bowkett and McNally''s cup of tea.

 

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[quote user="chicken"]I could be wrong but wasn''t the settlement made out of court rather than in it which although as you say would make it rather humerous in some aspects but accurate in another.[/quote]

 

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chicken, the totally serious answer is that in court or out of court doesn''t make any difference; these were still legal damages. As England are batting on rather than having declared I am for the moment stumped (ho, ho) for the less than serious answer...

 

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