General comments
The overall group loss for the year was just over £8.1m, far worse than the 2008 figure of £2.9m.
Before making a profit on player sales, the group operating loss was a horrendous £11.4m (2008 £6.3m). On top of those losses , a further £3.3m of interest charges were incurred (2008 £2.2m).
Despite the huge loss of £8m, the actual level of net liabilities decreased by £17m as a result of taking an increase in the valuation of the new stadium of £25m into the books.
Turnover
Income dropped by £2.3m to £10.4m, almost certainly because of the impact of not repeating the 2008 FA Cup run and the extra prize and gate money that brought.
Cost of sales and administrative expenses
These were up £1m and £1.8m respectively compared to 2008 and its hard to come up with a reasonable reason why as the main costs which make up those figures don`t have to be and aren`t explained in the accounts. Wage costs of £13.5m which would be the main part of the cost of sales figure of £15.9m are hardly up at all from 2008 , so why the big increase is a bit of a mystery. A bigger mystery is the big unexplained increase in administrative expenses. Why? - Extra non-football employees? Increase in repair costs in the last year at Ninian Park? Even the accounts notes don`t help on this. It doesn`t help that in the apparent rush to get them published , the notes get confused between 2008 and 2009 in a few places which makes it harder to analyse (in note 22 on page 24 they even give up on this and put xx instead of numbers and dates!)
Player movements and profits
The club again made a healthy profit on player sales, up to £6.6m compared to £5.5m in 2008. But neither figure was anywhere near enough to cover the losses made elsewhere on trading. New players joining the club in the year cost £4m. Those leaving had cost only £672k.Hence the big profit on their sale.
Interest payable
If it wasn`t for the ridiculous amount of interest of £1.25m our former Chairman committed to on behalf of the club to Sports Asset Management in borrowing £2.5m sometime during the year (so interest rate at least 50% - or 100% if borrowed half way through the year!!), interest costs would actually have gone down slightly in the year compared to 2008.
Balance sheet assets
The player asset increased by £3.2m in the year, largely due to the £3.3m of net additions to the squad referred to above. As at 31 May 2009 the net value in the books of the squad was £4m (but its "true" value according to Ridsdale at the EGM was over £30m - a figure those who were there will know I questionned at the time as it appeared to have no basis other than PR`s imagination).
The stadium asset is now in the books at £48.4m based on its cost to replace should it have to be built again. A further £3m will be added to the cost in the 2010 accounts re the fit-out costs incurred after the 2009 accounts year end.A big figure, but still a lot less that the value of £60m PR was trying to get put in the accounts. As I have said before , no independent valuer would risk his reputation by agreeing to such a figure.
The important point here is that it only actually cost the club a net £23.4m to build (build cost of £50.6m, including £3m in 2008, less costs paid for by others - PMG to get the retail park etc. - of £27.2m). So, by revaluing the stadium at £48.4m the asset was increased by £25m and the net liabilities reduced by the same amount. No actual or real gain of course unless and until the stadium is sold for that higher value so really just a very good accounting adjustment making the overall balance sheet look far better.
I see the stock figure was just £941 (no £k or £m missed out). Probably an accurate reflection of the low quantities and poor quality available to purchase in the club shop at the time.
Balance sheet liabilities - payable by 31 May 2010
Normal suppliers of goods and services, including stadium build creditors were £8.4m. Note 26 goes on to say that repayment of the key stadium creditors were renogotiated in May 2010 so that the debts are now repayable over a period of up to 15 months ending in August 2011.
Other creditors of £19m include £9.8m due to PMG which should have been repaid by May this year. Again, note 26 shows this to be renegotiated so that part can be converted into shares (£2.7m - we knew that from the last EGM) and the rest is repayable over the period up to December 2013 , including interest.
Another £7.1m of other creditors relates to a bridging loan taken out (it was Barclays Bank) to fund the stadium build. This was fully repaid in Sept 2009 by the sale of Ninian Park to Redrow so the balance sheet has since been improved by that amount from that sale.
There is a further £8.1m due of accrauals and deferred income. This will have included all the 2009/10 season ticket money received by fans paying up early during the season before.
Balance sheet liabilities - payable after 31 May 2010
The big one here is of course Langston and there are some interesting revelations in the accounts about this.
The debt due to Langston is shown at £17.5m, which is £15m plus interest to date, plus a further (maximum) figure of £9m due should the club sell on the stadium naming rights. It doesn`t say whether any naming rights income has to be paid over forever or whether it is a fixed period. My guess (and it is only that) is that it would be payable for as long as the main debt to Langston remained unpaid or until 2016 (the latest date by which Langston had to be repaid) if later.
The accounts clearly show that neither interest nor capital had to be repaid to Langston until Dec 2016 under the Nov 2006 agreement in force as at 31 May 2009. They also disclose the terms renegotiated in Dec 2009 to reduce the main debt down to £10m if repaid by the end of this year and the stadium naming rights liability down to £5m (also now includes an "either/or" of promotion to the Premiership if achieved before the main debt is repaid).
Both the club and Langston undertake to reach a settlement agreement on the debt due by the end of 2010 if the debt is not fully repaid by then.
There is absolutely nothing in the accounts to suggest that non-payment of the £10m by Dec 2010 will mean the debt goes back up to the pre-2006 level of £24m. It seems pretty clear that instead, the 2006 figure of £15m plus interest plus up to £9m will remain in force.
Other creditors of £6.3m include the "dodgy" S.A.M loan of £3.75m , a Football League loan of £500k, and a loan from a former director (almost certainly M Isaac) of £2.1m.
That`s my initial appraisal of the accounts
In summary, a completely crap set of figures for the year indicating very poor control of the finances. But a set of figures which will have improved by many millions after the year end (sale of Ninian Park, conversion of debt to shares , rescheduling other debts etc. plus a potential "bonus" of a further £11m if the Langston debt is settled before the year end (or otherwise by negotiation with Langston).
On a further positive note , the underlying losses for the year to 31 May 2010 should have been significantly less that 2009 as crowds were up at the new stadium and League general prize money went up by £1.8m last season.And we still sold on players at a profit as well - we wasted some on new additions mind!!
I know this opinion won`t be well received by some, but it would appear to me that in a very short time indeed , the new management of the club under the direction of the new Chairman have already made hugely significant progress in sorting out the financial mess left behind by their predecessors.
Keith.