Rams release their financial results 2014/2015

[ramblur]

Finally (I hope) for tonight,though I do hope to be on tmw,as I want to start a new thread on a subject I'd like to be remembered by (not getting morbid,as I'd still take Eddie on at blow football -always did hate losing),just a word about FFP. I was a bit surprised when Sam linked FFP and payment by instalments as the original FFP guidelines,under 'exemptions' clearly stated that whilst depreciation of infrastructure was exempt,amortisation of players' regs wasn't (which of course indicated that amortisation rather than amounts paid counted against FFP -no surprise to me at the time,as I knew it was amortisation,rather than capital payments,that was charged to P/L). When the new guidelines came out they said little about exemptions and I took it to mean nothing had changed.In view of Sam's comments,it could well be that under the new arrangements it's the amounts actually paid that count.I must admit I find that a little odd,because it would mean stripping out the amortisation from P/L and replacing it with the capital payments.Of course,it could just be that Sam didn't fancy explaining amortisation to the fan base! In fairness though,I did notice that this years accounts set out payments to be made over the next 4 years,whereas I'd never before seen anything o/s for over 12 months (indicating instalments over a max 2 years),so it may well be right.As it happens,if the instalments were spread evenly over the length of contracts,then the amounts would be no different to amortisation anyway.

If Mel's reading,I wish you all the best.I understood (and approved of) you vision for the club from the off. Just when the accounts are getting really interesting I'm fecked ,grrrrrr  

[CornwallRam]

Welcome back Ramblur. Always a pleasure to read your brilliantly insightful posts.

[Guest]

8 hours ago, ramblur said:

Finally (I hope) for tonight,though I do hope to be on tmw,as I want to start a new thread on a subject I'd like to be remembered by (not getting morbid,as I'd still take Eddie on at blow football -always did hate losing),just a word about FFP. I was a bit surprised when Sam linked FFP and payment by instalments as the original FFP guidelines,under 'exemptions' clearly stated that whilst depreciation of infrastructure was exempt,amortisation of players' regs wasn't (which of course indicated that amortisation rather than amounts paid counted against FFP -no surprise to me at the time,as I knew it was amortisation,rather than capital payments,that was charged to P/L). When the new guidelines came out they said little about exemptions and I took it to mean nothing had changed.In view of Sam's comments,it could well be that under the new arrangements it's the amounts actually paid that count.I must admit I find that a little odd,because it would mean stripping out the amortisation from P/L and replacing it with the capital payments.Of course,it could just be that Sam didn't fancy explaining amortisation to the fan base! In fairness though,I did notice that this years accounts set out payments to be made over the next 4 years,whereas I'd never before seen anything o/s for over 12 months (indicating instalments over a max 2 years),so it may well be right.As it happens,if the instalments were spread evenly over the length of contracts,then the amounts would be no different to amortisation anyway.

If Mel's reading,I wish you all the best.I understood (and approved of) you vision for the club from the off. Just when the accounts are getting really interesting I'm fecked ,grrrrrr  

I took it to mean that the contract detail of a signing can dictate the amount to be amortised.

eg. Bradley costs a headline £6m. But possible £2m linked to him being with us in say two years time. Accounting wise could get to amortise just £4m initially......

amortisation would increase a lot towards end of contract ...... But plan is to be out of FFP and in the Premier league in two-years. And if in the Prem likely a fair few of the new recruits will be moved on. Due to lower amortisation, a lower profit on sale, but not an issue with a club wishing to spend as much as possible now.

many ways to "defer" costs from the p&l through specifically written contracts. Danger always is the costs come through the p&l eventually

[ramblur]

14 hours ago, igorlegend said:

Best bit in accounts is fact we made £2m + from playoffs...heaven forbid we lose at Wembley again, but it sure is a lot of money towards helping us stay right side of FFP.

thr PBSE costs will be circa £6m per year over four years. Wages though likely to have increased by at least £5M, more likely closer to £10M 

so on a year on year basis we could be £11M to £16M worse off.

 

 

Wages is always a difficult one,Igor,not least because we've absolutely no idea what the wages of incomings are.Also there'll be a big saving on loanees' wages this year compared to last. Additional amortisation/transfer instalments (whichever way you care to look at it) is a lot easier to assess.The way I look at it,because of this exceptional income in 14/15,our starting base for this season's FFP (all other things being equal) is now £8.6m rather than the £5.6m reported.Simply adding on additional amortisation/instalments already appears to take us over the £13m allowed,without even considering wage increases.Still,I'm now confident another large rabbit will be pulled out of the hat,and it might even be something entirely different to that which I suggested earlier.

Incidentally,you can work out the exemptions for 14/15 (doubt they'll be much different for this year) by deducting £5.6m from the headline loss.I must say the level of information given in the accounts (and reports) has shot up -a great sign of transparency.

[ramblur]

12 hours ago, CornwallRam said:

Welcome back Ramblur. Always a pleasure to read your brilliantly insightful posts.

Thanks Cornwall,very generous of you.For someone who's never claimed any accounting qualifications,I've always found your posts on financial matters pretty good.

[ramblur]

20 hours ago, Boycie said:

Hope everything gets a bit better Ramblur.

Thanks,Boycie. It's certainly better than it was all winter,even if I have to use the wretched nebuliser 3 times a day!

[ramblur]

20 hours ago, eddie said:

Sounds as though we've got about one lung between us, @ramblur.

Keep fighting, mate.

Thanks eddie. I know you've your own issues,but you probably don't complain as much as me! Does the old Queen still send telegrams to centurians? If so,my lungs missed out.

[ramblur]

20 hours ago, igorlegend said:

Great to hear from you Ramblur.

you have probably read about Leicesters attempt to avoid FFP penalties......whereby they seemingly gave the sponsorship rights to an unknown start up business, who managed to get a load more income for them......from the same sponsor.....King Power who are owned by Leicesters owners. 

FL still investigating if the increase was valid, and imho if it passes accounting. Audit standards how can the FL 

what I am trying to say is, there are many ways we can stay safely within FFP.....IF we are still in the FL next year.

 

take care and great to hear from you, although the medical update is sadly not as good as you would like.

keep battling away, and all the best. 

Thanks Igor,all the best.

[eddie]

1 hour ago, ramblur said:

Thanks eddie. I know you've your own issues,but you probably don't complain as much as me! Does the old Queen still send telegrams to centurians? If so,my lungs missed out.

Transplant?

[Curtains]

2 hours ago, ramblur said:

Thanks Igor,all the best.

All the best to you ramblur 

[Diag Ram]

Hi Ramblur, great to hear from you! Thanks for the posts, will get up to speed tomorrow!

[Diag Ram]

Just printed them off, I'm at work so will try and have a look over lunch. That £3m exceptional income is interesting....

[Diag Ram]

 

@ramblur

Haven't had much chance to look yet, but re: £3m:

There was £3m included in the 2014 "other creditors" figure which is now shown as unsecured loan in the 2015 note.

We appeared to have paid a £15m debt with £12m of cash (I want that negotiator at my next mortgage appointment!). To fund this, the owners (at the time NAP and MM, now just MM) have issued £12m of preference share capital in Global Derby (see GD accounts), which has in turn been loaned down to the club (hence huge increase in amounts owed to group at note 13 in the DCFC accounts). 

As we paid off a £15m debt with £12m of cash, there was a £3m balance left over which has been taken as profit. 

[Diag Ram]

Oh and RE: £12m- if you look in note 21, you will see the £12m. The accountants have forgotten to show this additional £3m of short term loans that were in other creditors in 2014.

[Animal is a Ram]

Little wonder accountants and tax advisors are paid so handsomely!

Top work @ramblur - all the best mate.

Thanks to @Diag Ram too.

[Diag Ram]

On 4/13/2016 at 22:33, ramblur said:

Seem to remember last autumn that I was leaving the forum for a week to fight a chest infection -famous last words,I've had a gruesome winter culminating in my GP taking a spirometer reading a couple of months ago indicating that I had the lung performance of a 103 year old! It was only a nebuliser session bringing it down to a sprightly 94 yr old that saved me from yet another hospital stay.To cap it all,a drug which had shown promise in controlling my acquired haemophillia became innefective,so I had to go on yet another big steroid dose,which has only just reduced to a level that doesn't give me grief (although I'm almost a cert to sample the delights of osteoporosis,if I survive that long).The chest problems may well mean that the pulmonary fibrosis hasn't been arrested,but I go for tests next month-if the results are bad,my outlook is very bleak.Anyway,I've promised myself that I'll only return here for tonight and as much of tomorrow as I can manage.

Although the accounts are now out,I want to devote the majority of this post to DiagRam,if he's still willing to analyse the accounts. I'm just not up to going into any details and may even have to split the post up. So,hi mate,hope you're ok.It appears we were both right to scratch our heads over the 14/15 results and FFP (although I always acknowledged it was guesswork,I couldn't work out why I was so far over) ,because it appears we've only been 'saved' by exceptional income of £3m,which just happens to be the amount of this rather attractive looking unsecured/no repayment date/no interest (bet we'd all like some of that) Co-op loan.Now I don't remember seeing any of this in 13/14,so I went to have a look.Only £15m was shown as repayable within 12 months,yet the 14/15 accounts (which gives the comparative 13/14 figure) gives this figure at £18m! Looking at the analysis of change in net cash flow to change in net debt,I did notice that there was a £3m gain recorded in relation to the mortgage repayment,so that (somehow,by some financial wizardry) must be it.I always did like the cut of Stephen Pearce. My own guess (and it's only that) is that this £3m may have been shelved as part of the settlement,perhaps becoming payable only upon promotion.That might possibly create an environment whereby the debt is (almost) written off and (almost) justify an exceptional gain -what do you reckon?

Of course,the other thing then is that this particular exceptional income can't be repeated this year,which initially meant that I didn't think we had a cat in hell's chance in meeting this year's £13m.......until I started thinking.We now have internal debt in respect of the stadium loan,which means that Mel 'owns' the debt owed to Global Derby and the liability within DCFC, so it'd be no skin off his nose to write off part of this debt to generate more exceptional profit to play with,if needs be (and there's £12m to play with). I did point out to members when the QPR business came up that what they did might actually be allowable under FFP.

Anyway,taking a break now and will get back to you shortly,as there are one or two things I wanted to mention.I can't guarantee to answer any posts tonight,nor can I guarantee to be around tmw. Tonight's one of my better nights,which ain't saying much.

I'd be sceptical of writing off debt to count towards FFP, but as you say QPR argued, apparently successfully, that this was the case. In essence, it's exactly the same as issuing shares. And, if it was so freely allowed, any owner could pump £x into the club and write it off, causing the club to make an artificial profit. 

On Global Derby ownership, I looked at this some time ago when the AR came out, and I noted the current ownership. Essentially, Mel now controls all share capital (including preference shares) of the club. All share capital is owned through a new company, Sevco 5112, which in turn is wholly owned by Mel (to the best of my knowledge). A Christopher Morris (Mel's son?) is a director in this company. The £12m of preference share capital which was issued to settle the Co-op debt, and shown as a creditor in Global Derby, is held partially by Mel directly and partially by another new company, Sevco 5113, also wholly owned by Mel (to the best of my knowledge).

There are now quite a few companies in the group, which appear to be the remains of various takeovers (I think I saw that Gellaw, the intermediate parent, was APs vehicle to buy the club, and Global Derby was the Americans'), so I wouldn't be surprised to see at least Gellaw, and possible GD, wound up to tidy up the group and make any future loans and share issues down to the club a more straightforward process. 

[Diag Ram]

You can access the accounts, annual returns etc. of any company through the Companies House Beta Service for free. Google "Companies House Beta" and it will come up.

[Diag Ram]

I've done a simple reconciliation between last year's loss and this years. All amounts in thousands:
 

2014 loss before tax        (7,062)

Additional revenue            1,292

Additional wages              (5,381)

Exceptional income 2015  3,000

Exceptional costs 2014       1,448

Foreign exchange shift         (229)

Change in player related costs  (1,538)

Changes in other costs          (593)

Changes in interest               (1,005)

2015 loss before tax            (10,068)

[Diag Ram]

The total debt in DCFC Limited has reduced from £18.4m to £15.4m, with £3m gain on the Co-op debt and the remaining £12m being swapped to the shareholders.

On a group level, £14m was loaned down from NAP and an additional £12m in preference shares. £17m of additional capital was injected in the form of shares into DCFC, and £28m into Gellaw, which was used to write off debts to Global Derby. So total cash investment by the owners was approximately £45m.

Appreciate this may be confusing, happy to field questions. 

[eddie]

Could you explain 'Sevco'? I thought that was Rangers FC.