Red Wimp
Vital Football Legend
I know a little. Little known fact many years ago I went to try and help with the accounts when we were on our uppers and couldn't afford to employ an accountant
Annual Accounts Released
- Thread starter Luke Imp
- Start date
imps_joe
Vital Football Hero
GrotierBranfootLeigh
Vital Squad Member
Spot on. I suspect the bulk of the increase is season ticket payments received before 30 June that won’t be included in turnover till after 30 June.
German Imp
Vital Football Hero
Where’s Harry ?
City made a loss of £ 1,089,485 in season 2017-8 compared to a profit of £ 1,259,394 the season before. The primary reason for this is a huge increase in wage costs from £K 2,562 to £K 4,429 an increase of £K 1,867 (73%.) There was a much smaller increase in sales income from £K 4,682 to £K 5,285,an increase of £K 603 ( 13%).
There was a significant effect of the one off decision to change the year end to June leading to a 13 month year.An additional June,where little income is generated,would lead to the reported loss being bigger than it normally would be.My very approximate estimate of this effect would be around £K 300.
The training ground cost so far has been capitalised and there has been no depreciation charge so far so not affecting the profit and loss account.
There was a cash outflow of £K 303 over the period even though there was an injection of £K 676 from new share investment and a net increase of £K 284 from supporters buying new bonds.The biggest items of expenditure was a staggering £K 1,712 on fixed assets.This included of £K 795 on players transfers plus associated costs ,£K 664 on the training ground,plus another £K 246 on Equipment. The £K 795 expenditure on player transfers seems high-Unsure what this consists of but I expect this includes those costs relating to John Akinde ,Harry Anderson and Michael Bostwick .
Clive Nates said in his Board review that it was critical that these investments deliver their expected returns to ensure the long-term sustainability of the club.
The year-end cash figure was £K 2,365 (including the Impfiniti balance of £K 2,300),compared with £K 2,668 the year before. The high cash figure is distorted by the large payments up ,front of next years’ season ticket and commercial income. The balance sheet is not so strong when you look at the ability of LCFC to meet its short term commitments. When you look at the current assets (which include cash) to the current liabilities, you have a defecit of £K 432,compared to a surplus the prior year of £K 1,152. So yes last season the Board could take advantage of the strong financial situation from the year before, but there is no spare cash now. Indeed with a likely continued large loss for the 2018-19,there would be a requirement for more investment to keep things on an even keel ,and that seems to have been borne out by events.
The only debt is £K 567 due to the bondholders. The Directors loans are now zero having been repaid as a consequence of Directors leaving the Board.
Large losses funded mainly by new share investments is nothing new,in fact most clubs operate that way.As long as Shareholders are happy to continue that way then there is no problem.It is when they don’t the problems arise. And lets face it we all want to compete at the highest level possible.I do think the “self-financing” illusion has been broken.
There was a significant effect of the one off decision to change the year end to June leading to a 13 month year.An additional June,where little income is generated,would lead to the reported loss being bigger than it normally would be.My very approximate estimate of this effect would be around £K 300.
The training ground cost so far has been capitalised and there has been no depreciation charge so far so not affecting the profit and loss account.
There was a cash outflow of £K 303 over the period even though there was an injection of £K 676 from new share investment and a net increase of £K 284 from supporters buying new bonds.The biggest items of expenditure was a staggering £K 1,712 on fixed assets.This included of £K 795 on players transfers plus associated costs ,£K 664 on the training ground,plus another £K 246 on Equipment. The £K 795 expenditure on player transfers seems high-Unsure what this consists of but I expect this includes those costs relating to John Akinde ,Harry Anderson and Michael Bostwick .
Clive Nates said in his Board review that it was critical that these investments deliver their expected returns to ensure the long-term sustainability of the club.
The year-end cash figure was £K 2,365 (including the Impfiniti balance of £K 2,300),compared with £K 2,668 the year before. The high cash figure is distorted by the large payments up ,front of next years’ season ticket and commercial income. The balance sheet is not so strong when you look at the ability of LCFC to meet its short term commitments. When you look at the current assets (which include cash) to the current liabilities, you have a defecit of £K 432,compared to a surplus the prior year of £K 1,152. So yes last season the Board could take advantage of the strong financial situation from the year before, but there is no spare cash now. Indeed with a likely continued large loss for the 2018-19,there would be a requirement for more investment to keep things on an even keel ,and that seems to have been borne out by events.
The only debt is £K 567 due to the bondholders. The Directors loans are now zero having been repaid as a consequence of Directors leaving the Board.
Large losses funded mainly by new share investments is nothing new,in fact most clubs operate that way.As long as Shareholders are happy to continue that way then there is no problem.It is when they don’t the problems arise. And lets face it we all want to compete at the highest level possible.I do think the “self-financing” illusion has been broken.
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cherryexile
Vital 1st Team Regular
Thank you for that analysis.
I think going forward the House of Cards / Pyramid Scheme / Catch 22 situation that all clubs find themselves in is that they need a few things to come together to make profits,
a) success
b) TV appearances and therefore TV money (see a)
c) Cup run vs. big club (see a & b)
d) big money transfers out (see a, b and possibly c)
Other than the above, most income has a relatively low ceiling in terms of growth,
I think going forward the House of Cards / Pyramid Scheme / Catch 22 situation that all clubs find themselves in is that they need a few things to come together to make profits,
a) success
b) TV appearances and therefore TV money (see a)
c) Cup run vs. big club (see a & b)
d) big money transfers out (see a, b and possibly c)
Other than the above, most income has a relatively low ceiling in terms of growth,
imps_joe
Vital Football Hero
Yeah thanks for the summary. It doesn't make great reading, but I think we were all expecting to make a loss. Realisticallly, going forward, we'll be looking to develop and sell players (whilst hoping for cup runs). Looks like we might become a little reliant on investment?
Brendan Bradley
Vital Squad Member
“We recognise that we are in a development and growth phase requiring significant investment in assets, systems and people, which will have a negative effect on the income statement in the immediate future.
“It is critical however that we ensure that these investments deliver their expected returns in order to ensure the long-term sustainability of the club."
Forget the bit in that part of his statement that referred to assets and systems, and focus only on "people".
It means the club has been engaging players on contracts beyond the level at which the club can afford without having to cover losses - like everyone else as you said.
The translation of that statement is that it is essential the team is promoted. It's probably nothing but phrases like "ensure the long-term sustainably" contain a strong element of foreboding. But professional football is a gamble, not an investment.
MaineRoad_96
Vital 1st Team Regular
You cynical old goat Notty! ?
NottyImp
Vital Football Legend
That's me!
GrotierBranfootLeigh
Vital Squad Member
[QUOTE="57harry, post: 1728650, member:
The biggest items of expenditure was a staggering £K 1,712 on fixed assets.This included of £K 795 on players transfers plus associated costs ,£K 664 on the training ground,plus another £K 246 on Equipment. The £K 795 expenditure on player transfers seems high-Unsure what this consists of but I expect this includes those costs relating to John Akinde ,Harry Anderson and Michael Bostwick .
Clive Nates said in his Board review that it was critical that these investments deliver their expected returns to ensure the long-tern sustainability of the club..[/QUOTE]
John Akinde’s transfer wasn’t announced till 6 July 2018 so his fee won’t be included in the accounts to 30 June 2018. The figure of £795,000 on transfers is significantly higher than previous years. It’d be interesting to know what is included in that figure, presumably it includes fees to other clubs for loan players in lieu of wages, it is far too large to just be traditional transfer fees.
The biggest items of expenditure was a staggering £K 1,712 on fixed assets.This included of £K 795 on players transfers plus associated costs ,£K 664 on the training ground,plus another £K 246 on Equipment. The £K 795 expenditure on player transfers seems high-Unsure what this consists of but I expect this includes those costs relating to John Akinde ,Harry Anderson and Michael Bostwick .
Clive Nates said in his Board review that it was critical that these investments deliver their expected returns to ensure the long-tern sustainability of the club..[/QUOTE]
John Akinde’s transfer wasn’t announced till 6 July 2018 so his fee won’t be included in the accounts to 30 June 2018. The figure of £795,000 on transfers is significantly higher than previous years. It’d be interesting to know what is included in that figure, presumably it includes fees to other clubs for loan players in lieu of wages, it is far too large to just be traditional transfer fees.
westbanker
Vital Reserves Team
Getting season ticket money early has a cash flow benefit today, however from an accounting point of view (on Paper) it wont be recognised until next years accounts. In a previous life I used to sell IT hardware contracts and to out do the competition I used to sell them early, as we are doing here, but my FD had to break them down monthly after the start date for account purposes as we had to provide the service over 12 months. I’m guessing as you are paying to attend an event that hasn’t happened yet you can’t count the cash. it makes sense, if you accounted the cash today, we would lose a fortune (on paper) every home game as 6200 would be attending free in the following accounting period.
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Brendan Bradley
Vital Squad Member
The £795k has been capitalised so that means it's a proportion of the transfer and signing on fees of players contracted to the club.
Loan fees would just have been an expense contributing to the £1m loss.
Skip155
Vital Champions League
I think that's what the accruals / deferred income figure is in current liabilities. The ST sales cash will be on the balance sheet but the accruals figure will offset it because the cost associated with that income hasn't yet been incurred?
GrotierBranfootLeigh
Vital Squad Member
If that’s correct players like Anderson and Bostwick must have been significantly more expensive than the figures quoted at the time.
Brendan Bradley
Vital Squad Member
As I said, the player's signing on fee would also be included. A lot of players were signed in 2017-18 as well as Anderson and Bostwick: Eardley, Vickers, Palmer, Long, Green, Wilson, Frecklington, Pett
... and the much sought after Bruno Andrade.
