Latest set of company accounts

Nameless
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Re: Latest set of company accounts

by Nameless » 18 Jan 2017 16:31

Hound calm down fella, I don't really care if they are there or not, and didn't say the 500k isn't useful, of course it is.

It just sounds a little low to me personally, even with the help with the upkeep of the pitch.

Realistically does anyone doubt playing Rugby on the pitch damages it? The money they give certainly isn't free money - it does come at the cost of the surface. Do RFC also need to employ additional people to cater for Irish playing there - i.e. additional groundsmen? I don't know the answer on that.

How much the damaged surface affects the ability for RFC to play football on it is a different debate though


30k a game is 'low' ? Why ? That's about £10 per person on current LI crowds.

The rugby certainly adds to the wear and tear. To me the problem hits when the fixture list throws up lots of games close together. 4 games in 8 days in mid Jan must be a nightmare. Expect Cardiff to be played on a threadbare pitch. Not having rugby would reduce that, not having the rugby pay pitch costs would probably make the pitch worse.

The club don't have special groundstaffjust for rugby. Obviously the ground staff work extra hours when there is rugby, same as all the staff do. I know one of the groundsmen and he works stupid hours and keeping the pitch half decent is a nightmare.

This is heading off into territory rather off topic and we'll discussed previously. As has been pointed out LI may move in a couple of years anyway. Hopefully we'll be earning millions from REP by then so won't miss the cash !!

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Re: Latest set of company accounts

by Nameless » 18 Jan 2017 16:34

winchester_royal
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In order to comply with FFP, the Thais converted some of the loans due to them into equity.


Thanks, and forgive my ignorance here, but how do they do that (convert to equity)?


They'll issue new shares (to themselves) at the value of the debt they are converting.

They're essentially writing off the loans as in the case of administration it is very difficult for equity holders to get their money back.


When they already own all the shares is issuing more shares simply an accounting trick and of no relevance to the value of the club etc ?
SJM converted debt to equity several times which meant he got closer and closer to being the 100% owner. When the Thai's own 100% surely it makes no difference whether it is 100% of 10 shares or 10000000 shares.

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Re: Latest set of company accounts

by Z175 » 18 Jan 2017 16:54

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winchester_royal
Brum Royal Presuming these are the same accounts that the Evening Post did an article on the other day, I'll ask the same question that went unanswered on there:
If we lost £15m this year, how come the debt only went up by £5.3m?
.


In order to comply with FFP, the Thais converted some of the loans due to them into equity.


Thanks, and forgive my ignorance here, but how do they do that (convert to equity)?


Actually that was a "post balance sheet event" so it happened after 30 June 2016, so is not reflected in the above figures. It is disclosed as it is a significant event that happened before the accounts were signed.

I think that is one of the more significant things in the accounts - it shows how the Thais have been subsequently forced to invest their own money, not just borrow money against the club's assets whilst receiving directors salaries and paying "consultancy fees" to companies that they might (not neccessarily) have an interest in. This tells me two things - FFP is actually doing something - and it might explain why the Thais' want out / new investment!

I tried to properly answer the £15m v £5.3m maths question but I can't! This difference is basically because the £15m is the accounting profit - but certain things that have lost money in accounting terms are not "cash" items so don't require any increased borrowing. For example the two big differences are the amortisation of players' transfer fees and signing on fees, which is an accounting loss for historic player purchase but was mostly already paid for in cash in previous years.

According to the cash flow on page 11, we increased "other loans" £12.7m to cover the cash needs - we just had £5m of cash to start with, so the total debt movement looks a lot smaller. Worrying we now have just £337k in the bank, and that is after the current season's STH receipts!

So then you have asked a very good question. Because on note 14 the "other loans" have only increased from £56m to £59m. Why the difference to the £12.7m increase disclosed in the cash flow?! My hunch would be that we gave away the shares in "RFC Prop Co" in place of debt.

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Re: Latest set of company accounts

by winchester_royal » 18 Jan 2017 16:55

Nameless
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Thanks, and forgive my ignorance here, but how do they do that (convert to equity)?


They'll issue new shares (to themselves) at the value of the debt they are converting.

They're essentially writing off the loans as in the case of administration it is very difficult for equity holders to get their money back.


When they already own all the shares is issuing more shares simply an accounting trick and of no relevance to the value of the club etc ?
SJM converted debt to equity several times which meant he got closer and closer to being the 100% owner. When the Thai's own 100% surely it makes no difference whether it is 100% of 10 shares or 10000000 shares.


Pretty much, that's why I'm saying they are pretty much writing off their loans.

It's an easy way for a 100% owner to pump money into the club without ruining the balance sheet. Of course it's more complicated when a company with split ownership tries to do it, often Plc's will try and solve that problem with a rights issue but that's a completely different kettle of fish.

Either way, it improves RFC's balance sheet as the net asset figure will be higher, and the Thais aren't 'owed' as much money by the club, but it will correspondingly increase their asking price in a sale as their investment will be higher.

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Re: Latest set of company accounts

by Nameless » 18 Jan 2017 16:59

IT's good having people who seem to know what they are talking about to shed some light on things !


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Re: Latest set of company accounts

by winchester_royal » 18 Jan 2017 17:05

Okay having actually proper read GetReading's report which BR's question was based on, and the financial statements, you'll be unsurprised to hear that GetReading are talking out their arse.

What they are calling 'net debt' is only the current assets less the current liabilities. In non-accountancy speak, it is only taking into accounts amounts that are either owed to/by us in the next year.

It does not take into account fixed (long term assets) such as the stadium, players, fixtures and fittings etc etc.

ZJ is right in that the equity/loan write off was a post balance sheet event, so in that scenario some of the loans included within the balance sheet within the accounts will have been written off, and as they all seem to have been included within the current liabilities figure, our 'current debt' amount (or 'net debt' if you're an EP journalist) will actually have improved.

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Re: Latest set of company accounts

by PieEater » 19 Jan 2017 09:18

Z175 According to the cash flow on page 11, we increased "other loans" £12.7m to cover the cash needs - we just had £5m of cash to start with, so the total debt movement looks a lot smaller. Worrying we now have just £337k in the bank, and that is after the current season's STH receipts!


If our wages are about £30m that means we're burning about £500k per week on wages, £2.5m per month. How are we going to get to the end of the season? There's some matchday income and I guess we're owed some TV money/ManU cup cash, but it does look like we'll need further loans to tide us over.

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Re: Latest set of company accounts

by Nameless » 19 Jan 2017 09:28

Makes the club's subsidising of the ManU tickets and the Fulham replay even more interesting if cash flow really is tight.

When are the parachute payments actually made ?

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Re: Latest set of company accounts

by PieEater » 19 Jan 2017 09:41

I thought we dropped the last one last season. There's no more.

Given wages exceed income by £5m, I'm probably stating the bleedin' obvious though.


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Re: Latest set of company accounts

by tidus_mi2 » 19 Jan 2017 09:48

PieEater I thought we dropped the last one last season. There's no more.

Given wages exceed income by £5m, I'm probably stating the bleedin' obvious though.

We got £10m this season and that's the final parachute payment so revenue wise we're £10m worse off next season, unless we get promoted of course.

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Re: Latest set of company accounts

by Nameless » 19 Jan 2017 09:49

I forgot it went up to 4 seasons of payment the year after we came down....

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Re: Latest set of company accounts

by No Fixed Abode » 19 Jan 2017 09:59

tidus_mi2
PieEater I thought we dropped the last one last season. There's no more.

Given wages exceed income by £5m, I'm probably stating the bleedin' obvious though.

We got £10m this season and that's the final parachute payment so revenue wise we're £10m worse off next season, unless we get promoted of course.


Looks like promotion is really important this season. That guarantee wad of tv money is much needed.

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Re: Latest set of company accounts

by Nameless » 19 Jan 2017 10:03

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tidus_mi2
PieEater I thought we dropped the last one last season. There's no more.

Given wages exceed income by £5m, I'm probably stating the bleedin' obvious though.

We got £10m this season and that's the final parachute payment so revenue wise we're £10m worse off next season, unless we get promoted of course.


Looks like promotion is really important this season. That guarantee wad of tv money is much needed.


Would rather the Chinese came in and wiped the debt.....


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Re: Latest set of company accounts

by lewesroyal » 19 Jan 2017 13:18

Brum Royal
winchester_royal
Brum Royal Presuming these are the same accounts that the Evening Post did an article on the other day, I'll ask the same question that went unanswered on there:
If we lost £15m this year, how come the debt only went up by £5.3m?
.


In order to comply with FFP, the Thais converted some of the loans due to them into equity.


Thanks, and forgive my ignorance here, but how do they do that (convert to equity)?

Accounting voodoo

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Re: Latest set of company accounts

by 3points » 19 Jan 2017 13:52

Nameless
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tidus_mi2 We got £10m this season and that's the final parachute payment so revenue wise we're £10m worse off next season, unless we get promoted of course.


Looks like promotion is really important this season. That guarantee wad of tv money is much needed.


Would rather the Chinese came in and wiped the debt.....

they won't wipe the debt. It just isn't the way most clubs are run. Brighton have significant shareholder loans. Having debt (rather than injecting cash as equity initially) is the easiest way for owners to get money back. An example - let's say we get promoted and receive £100m in TV money. Let's say our wage bill stays the same at £30m. The owners could then use the £70m surplus to repay their debts. If it is in the form of equity, that money could only be repaid as dividends, and there are more rules around paying dividends than repaying debt.

It is a very simplistic example, but hopefully you get the point. However, if you never have a surplus of income over expenditure then my example really means nothing until they want to sell the club. Again, debt would be repaid before receiving value for shares (and there are tax advantages, etc etc.

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Re: Latest set of company accounts

by Ian Royal » 19 Jan 2017 21:01

Yeah, they'll just buy the debt from the Thais.

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Re: Latest set of company accounts

by Elm Park Kid » 23 Jan 2017 11:09

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Looks like promotion is really important this season. That guarantee wad of tv money is much needed.


Would rather the Chinese came in and wiped the debt.....

they won't wipe the debt. It just isn't the way most clubs are run. Brighton have significant shareholder loans. Having debt (rather than injecting cash as equity initially) is the easiest way for owners to get money back. An example - let's say we get promoted and receive £100m in TV money. Let's say our wage bill stays the same at £30m. The owners could then use the £70m surplus to repay their debts. If it is in the form of equity, that money could only be repaid as dividends, and there are more rules around paying dividends than repaying debt.

It is a very simplistic example, but hopefully you get the point. However, if you never have a surplus of income over expenditure then my example really means nothing until they want to sell the club. Again, debt would be repaid before receiving value for shares (and there are tax advantages, etc etc.


Yeah, this is spot on. When you have private owners of a club then debt is just an accounting/tax avoidance mechanism. Chelsea owe Abramovich Billions. It's when the clubs owe money to people other than the owners and there is no feasible way of making the repayments that a problem emerges.

Successful Championship teams have to run at a loss, it's as simple as that. Gone are the days of being able to build up a successful squad with astute transfers and strong gate receipts. It's now all about whether you have an owner rich enough to finance the wages needed for the team building process over a long enough period before you get to the Prem.

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Re: Latest set of company accounts

by One8Seven1* » 01 Feb 2017 09:27

I was saying only a few months ago the debts had increased. Then £15m received for REP paid off a creditor immediately, reducing the debt a pinch, and now of course the Chinese loan on top of £10.4m. Obviously with this transfer window everything is glossed over and the feel-good feeling is back, but there is genuine concern at the club that without new ownership, who are prepared to invest in the football club (unlike the Thai's have), then Administration is a very real possibility. We have to hope that the £10.4m loan is a sign of the Chinese ambitions, and also that they are cleared to take over the football club, otherwise it could very well be win or bust for Reading Football Club.

I haven't been online for some time as been away on business, but if not mentioned by anyone else already, Chris Samuelson is still sniffing around and has put together yet another consortium and their offer was rejected. But that poisonous little Oik just wont go away!

Here's hoping to finally finding new owners who have genuine ambitions for the football club.

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Re: Latest set of company accounts

by Nameless » 01 Feb 2017 21:00

The Thai's have not invested in the football side ?
Really ?
Well done for appointing 4 managers and bringing in 30+ players without it costing anything !

Interesting to hear that you feel people within the club feel administration is a real possibility. I'd guess most clubs are potentially in that situation. FWIW. People I know at the club (who work in non finance roles ) are pretty positive. They say the feeling at the club is good and whilst no one is throwing money around it's also not the zero spend situation it was a couple of years ago.

I do think getting extra investment to back up the Thai's is important, fingers crossed !

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Re: Latest set of company accounts

by Royals and Racers » 06 Feb 2017 12:38

On Reading football club company there has just been a charge registered. Anyone who knows about such things can you find out more ?

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