DCFC Accounts....

[ramblur]

Just noticed that the interest free loans from the investors are 'secured', does anyone know what these are secured against?

There's a rather cryptic investors' loan of $5m+ (I think it was closer to $6m) that I commented on yonks ago.Because of currency problems.it's a little difficult to work out-the security taken was a quantity of Gellaw shares.I suspect (but I don't know) that the £1.7m GSE loan might form part of it,and it also appears (and I don't know for sure,but the amount looks right) that certain investors may have made a loan of just over £1m to facillitate the AP buyout.Even if my assumptions are correct,it still appears to leave something unaccounted for,so I've put it on the back burner (but not forgotten it).

I suspect that the new loan/s would also be secured against Gellaw stock,though I've not seen any new charge documents as yet.

The value set against "investment" in the GS Derby UK accounts appears to be greater than shareholder funds by just over £1m,which is what you'd expect to find if the AP buyout was non equity.Furthermore,a creditor (which must surely be the investment group) value consists of the GSE £1.7m loan (+accrued interest),together with the value of the new loan,together with an amount that exactly matches the difference between the "investment" value and shareholders' funds.

Now all that's given a few people headaches 'http://www.dcfcfans.co.uk/public/style_emoticons/<#EMO_DIR#>/biggrin' class='bbc_emoticon' alt=':D' />

[sage]

So is a fair summary, the owners gambled on Jewell getting us back up and then have charged NC with getting us back towards break even over 3-4 years. In this time they have subsidised the club for £16m on top of the original £28m investment. The £16m has been a mixture of investment and loans that are likely not to be repaid. Tom Glick is paid a salary to run the club, but none of the substantial owners have received any payments or dividends.

Next season depending on ST sales and gate receipts we should break even or nearly break even.

[curb]

So is a fair summary, the owners gambled on Jewell getting us back up and then have charged NC with getting us back towards break even over 3-4 years. In this time they have subsidised the club for £16m on top of the original £28m investment. The £16m has been a mixture of investment and loans that are likely not to be repaid. Tom Glick is paid a salary to run the club, but none of the substantial owners have received any payments or dividends.

Next season depending on ST sales and gate receipts we should break even or nearly break even.

I'd say that's a fair summary, but I'd add that now the gamble has failed the only plan left is damage limitation. They're going to drive down the wage bill until they don't have to keep topping up the running costs.

I doubt if we'll be anywhere near break even next season, a loss of 7.7 million with a wage bill of 11.6 million, the net spend was very little so the only saving this year will be wages. Should be considerably lower without Bywater, Leacock, Pearson, Savage? and Green on a reduced rate or gone, but the saving will be nowhere near 7.7m, and with little or no investment in players in the summers gates will drop, hence the turnover will drop, and we'll need to drive down the wage bill even further.

Interesting to note from the Leeds fan's article [url=http://www.thescratchingshed.com/2012/04/championship-clubs-financial-results-2010-11/]http://www.thescratchingshed.com/2012/04/championship-clubs-financial-results-2010-11/, that our wages to turnover ratio was one of the lowest in the division for this period (64%), with all those big earners gone next year it'll probably be down to around 50%.

[GboroRam]

Very interesting article, and very similar comments on their forum to the ones we hear here.

[observer]

Sorry but I am confused, how can we have a respectable turnover in the league, one of the best wage to turnover ratios yet still be delivering a loss,

Where does the money go in laymans terms!

[curb]

Every club bar Leeds is running at a huge loss, the only difference between the clubs is whether they have owners who can stand the losses. For instance Boro made a loss of 14 million but have an owner who is happy to write the money off, similar to what Nigel Doughty was doing at Forest.

Players wages account for the majority of the losses.

[G STAR RAM]

I'd say that's a fair summary, but I'd add that now the gamble has failed the only plan left is damage limitation. They're going to drive down the wage bill until they don't have to keep topping up the running costs.

I doubt if we'll be anywhere near break even next season, a loss of 7.7 million with a wage bill of 11.6 million, the net spend was very little so the only saving this year will be wages. Should be considerably lower without Bywater, Leacock, Pearson, Savage? and Green on a reduced rate or gone, but the saving will be nowhere near 7.7m, and with little or no investment in players in the summers gates will drop, hence the turnover will drop, and we'll need to drive down the wage bill even further.

Interesting to note from the Leeds fan's article [url=http://www.thescratchingshed.com/2012/04/championship-clubs-financial-results-2010-11/]http://www.thescratc...esults-2010-11/, that our wages to turnover ratio was one of the lowest in the division for this period (64%), with all those big earners gone next year it'll probably be down to around 50%.

Although we will certainly post another accounting loss, I imagine we are edging ever closer to a break even point from a cash flow persepective.

[G STAR RAM]

Sorry but I am confused, how can we have a respectable turnover in the league, one of the best wage to turnover ratios yet still be delivering a loss,

Where does the money go in laymans terms!

Admin expenses and interest in a nut shell.

The loss includes amortisation of signing on fees etc (non cash transactions)

[curb]

Although we will certainly post another accounting loss, I imagine we are edging ever closer to a break even point from a cash flow persepective.

Not according to the DET article;

"The owners have continued to fund the club. They put in another £7m in the year ending June 2011.

Since then, there has been another £6m put in and much of that funding has come in loan capital from the owners but it is not third-party debt."

"This year again we will lose on operations about what we did in the year we are talking about but going forward, we are committed to getting to a balanced budget model."

So from that I guess it's safe to assume that the loan capital will be around 14 million up to this June, and will go higher again in the next period.

[G STAR RAM]

Not according to the DET article;

"The owners have continued to fund the club. They put in another £7m in the year ending June 2011.

Since then, there has been another £6m put in and much of that funding has come in loan capital from the owners but it is not third-party debt."

"This year again we will lose on operations about what we did in the year we are talking about but going forward, we are committed to getting to a balanced budget model."

So from that I guess it's safe to assume that the loan capital will be around 14 million up to this June, and will go higher again in the next period.

Sorry I was talking about this current season.

[CornwallRam]

So is a fair summary, the owners gambled on Jewell getting us back up and then have charged NC with getting us back towards break even over 3-4 years. In this time they have subsidised the club for £16m on top of the original £28m investment. The £16m has been a mixture of investment and loans that are likely not to be repaid. Tom Glick is paid a salary to run the club, but none of the substantial owners have received any payments or dividends.

Next season depending on ST sales and gate receipts we should break even or nearly break even.

Haven't you got the £16m and the £28m the wrong way round? I was sure that they paid c£16m for the club and have invested c£28m since.

With the money they have supposedly put in since the accounts they must be now in for c£50m (which will surely make PeteDerby smile - wherever he is 'http://www.dcfcfans.co.uk/public/style_emoticons/<#EMO_DIR#>/biggrin' class='bbc_emoticon' alt=':D' /> ). The big question is, how on earth are they planning to get a return on that? I wonder if some investors are regretting not taking Gadsby's £37m?

[curb]

Sorry I was talking about this current season.

That covers the current season;

"Since then (June 2011), there has been another £6m put in and much of that funding has come in loan capital from the owners"

Then he goes on to say that there will be a similar operating loss posted this year, but they hope to balance the books sometime in the future;

"This year again we will lose on operations about what we did in the year we are talking about but going forward, we are committed to getting to a balanced budget model."

[ramblur]

That covers the current season;

"Since then (June 2011), there has been another £6m put in and much of that funding has come in loan capital from the owners"

Then he goes on to say that there will be a similar operating loss posted this year, but they hope to balance the books sometime in the future;

"This year again we will lose on operations about what we did in the year we are talking about but going forward, we are committed to getting to a balanced budget model."

I'm pretty certain that he was talking about cash break even rather than headline profit/loss break even.I heard/read him say earlier this season that we could break even with a good cup run,however this was probably said with a greater expectation of savings on players' wages this year.If his latest comments are right,then one should expect EBITDA to be the same at about £2.5m,and you could add on another £1m to cover interest.Any movements in debtors/creditors have nothing to do with trading and are best ignored for the purpose of analysis, as they vary from year to year (some years they may reduce the EBITDA deficit).

I think the big problem people have is in realising that there are 2 divides to a business,the capital and revenue(operations) parts.I know it's not easy to understand,but I'll have one more go at trying to explain it.

In the 10/11 accounts,a depreciation charge of £1.998m was included in the figures in respect of tangible assets (predominantly PP)-this bears no relation to the amount spent on new assets (on the capital side),which amounted to £450k.Below I give the amounts spent versus the depreciation charges for the years from 06/07 to 10/11,starting with 06/07:-

£475k/£1.215m £732k/£1.609m £481k/£1.966m £535k/£1.969m £450k/£1.998m

Thus you can see that the paper transaction of depreciation bears no relationship to what was spent in cash terms on the capital side.The reason for the increase is because of the PP revaluation (now depreciated at revalued value).Because there's a greater degree of permanancy about these assets,their yearly figure won't swing as much as the more volatile amortisation of players' regs.

Now onto amortisation.The best way I can explain this is to give you an imaginary scenario.Lets say that the £5.8m put in by the owners this year subsidised a deficit and totally paid for all players (not saying this happened!).Let's then go on to say that any player purchases were exactly matched by player sales in 12/13 and 13/14 ,in both cases all fees being paid upfront.Now in both of these years the actual cash spent on the capital side (net) would be nil ,yet the operating side would still show heavy amortisation charges (paper losses).You would have the amortisation of the players bought in all of the 3 years from 11/12 to 13/14. I gave this example because we are already primed for horse trading next year.

In the 10/11 accounts,amortisation came in at £2.468m against net cash purchases (on the capital side) of £1.565m.This will change dramatically.The amortisation will be included in direct operating costs,whereas the depreciation will be split between this and admin expenses(proportions unknown).

As I've said before,forget the headline loss and concentrate on EBITDA.We need to get EBITDA positive and sufficient to cover interest charges.In an ideal world it should do both this and contribute to the capital side.In short,to achieve the bare minimum,we need savings on wages this year (expanded to full year savings next year),less any drop in income to amount to c£3.5m.A big ask,but it could at least be close,depending on the kind of season we have (including cup runs).

Just to clarify one last thing-The £44.6m total investment includes the £5.8m put in this year,so PeteDerby won't be happy yet.

[CornwallRam]

Just to clarify one last thing-The £44.6m total investment includes the £5.8m put in this year,so PeteDerby won't be happy yet.

Well it's pretty close. Afterall, I keep being told that Peter Gadsby's offer of a £5m investment in the playing squad was nothing, so the same(ish) difference in this case must be nothing.

Although seriously, £44.6m is a huge amount of cash - it's a shame it couldn't have been put to better use.

[ramblur]

Well it's pretty close. Afterall, I keep being told that Peter Gadsby's offer of a £5m investment in the playing squad was nothing, so the same(ish) difference in this case must be nothing.

Although seriously, £44.6m is a huge amount of cash - it's a shame it couldn't have been put to better use.

Seems to me that a load of it went on creating and clearing up a mess,though I agree it's a great shame.

[curb]

Well it's pretty close. Afterall, I keep being told that Peter Gadsby's offer of a £5m investment in the playing squad was nothing, so the same(ish) difference in this case must be nothing.

Although seriously, £44.6m is a huge amount of cash - it's a shame it couldn't have been put to better use.

There's the rub, and if you add on the 2 x parachute payments as well there has been a serious amount of money at their disposal, and what they've got to show for it 'don't add up to a hill of beans'.

There was an amount of dead wood to clear away, but not £50 million;s worth. You can only come to one conclusion, and that's poor management, the buck stops with GSE and Tom Glick, but Messrs Jewell and Clough have to share the blame too.

[sage]

When it comes to wasting money, what blame do you want to put at Clough's door?

[curb]

When it comes to wasting money, what blame do you want to put at Clough's door?

How about poor use of the resources at his disposal?

He has an empoyee that he decided to bring into the company on a three year contract on reasonable wages, and he's utilised him so few times (7 weeks of meaningful work) that he's decided to pay his wages to go and work for one of our direct competitors in order for him to keep his hand in. Times that by 5 or so staff, mostly on higher than average wages, that we are paying to play for other clubs and the waste of resources has been incredible.

As a manager of staff at an electrical installation company, if I did that what do you think my director would say to me at my annual revue?

I'm sure I'd get a big pat on the back.

[sage]

How about poor use of the resources at his disposal?

He has an empoyee that he decided to bring into the company on a three year contract on reasonable wages, and he's utilised him so few times (7 weeks of meaningful work) that he's decided to pay his wages to go and work for one of our direct competitors in order for him to keep his hand in. Times that by 5 or so staff, mostly on higher than average wages, that we are paying to play for other clubs and the waste of resources has been incredible.

As a manager of staff at an electrical installation company, if I did that what do you think my director would say to me at my annual revue?

I'm sure I'd get a big pat on the back.

So you're suggesting that we are paying all the wages for Croft, Addison and Maguire?

And you're also suggesting that any manager who loans out a player is rubbish?

Finally, you're suggesting that the manager who has had to halve our wage bill is a spendthrift?

[ramblur]

How about poor use of the resources at his disposal?

He has an empoyee that he decided to bring into the company on a three year contract on reasonable wages, and he's utilised him so few times (7 weeks of meaningful work) that he's decided to pay his wages to go and work for one of our direct competitors in order for him to keep his hand in. Times that by 5 or so staff, mostly on higher than average wages, that we are paying to play for other clubs and the waste of resources has been incredible.

As a manager of staff at an electrical installation company, if I did that what do you think my director would say to me at my annual revue?

I'm sure I'd get a big pat on the back.

Tbf Curb,Wenger has made a lot of mistakes,and his overall record would lead to most considering him to be an astute trader in the market.Allied to that is the fact that he gets to assess most of his targets in the context of their playing at a high level,possibly incuding CL.