Let's stop there because there is little point reading on from there until we get the P&L position right.Bangitintrnet wrote: April 17th, 2024, 7:35 amThank you, a detailed and knowledgable explanation.Amberexile wrote: April 16th, 2024, 9:51 pmI have no idea what happened during the Covid period so no idea what payments you think were brought forward.Bangitintrnet wrote: April 16th, 2024, 3:19 pmBut we know that during covid, payments were brought forward as there was no income. It didn't therefore mean that there would be a next payment due, because it had already been paid.Amberexile wrote: April 16th, 2024, 2:31 pmYou clearly don't understand double entry book keeping.Bangitintrnet wrote: April 16th, 2024, 12:50 pmThe concept of debt in relation to loss is important. Companies short of funds will use every opportunity including the overdraft up to the maximum. So 900k of loss on the 30 June could be a small profit on the 30 July after our TV money comes in. Likewise season ticket loss is not a loss in real terms as it is what we sell! All of which is why you can have the same loss appearing year after year, as the cut off point of the accounts dictates wether a loss or small profit occurs.Amberexile wrote: April 16th, 2024, 12:32 pmWell it absolutely is the case and in my opinion there is nothing to stop them from doing so now other than Hj lacking the desire to sell them more shares. We did after all pass a resolution at the last AGM to allow more shares to be allocated but the club has yet to do so.Bangitintrnet wrote: April 16th, 2024, 12:00 pmThat might be the case, but what you're not considering is can they directly buy shares in the club?Amberexile wrote: April 16th, 2024, 11:07 amIt is a matter of public record that the trust bought shares in the club with the money from the Community Share issue.Bangitintrnet wrote: April 16th, 2024, 8:47 am
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The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
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IMO the answer to that is likely to be no, as they can raise capital via community shares, that don't have a company linked to them, and therefore no requirement for tax or liability in paying back creditors.
To me that's why the club had little actual debt, as its owner was a trust that couldn't get a loan or raise capital. The club as a business could probably only get a business overdraft set against guaranteed income such as the EFL and Premiership £1 million.
I think you have a problem understanding the concept of debt. The club has always carried debt and always will, The club had debt before it was owned by the Trust, had debt while owned by the Trust and will have debt into the future now that it is no longer owned by the Trust.
The club did borrow money from the bank while Trust owned, both the 2020 and 2021 accounts show Bank borrowing of exactly £50,000. The club could have issued shares to raise capital. It was more a lack of the desire to do these things rather than being prevented from doing so. However, had they done so, I doubt things would have worked out much different.
EDIT: If as you suggest, EFL money is due during July, the accounts for the period to 30th June will show the payment from the previous year in them. If you move the accounting year forward a month, the payment made in July this year will appear in them but the payment made in July last year will drop off the back end so the end result is the same. Each year's accounts will include one year's worth of EFL payments. A loss is a loss, a debt is a debt.
So, so far you have mentioned debts of £100k in the accounts that you can find...... I've just found you a £1millon.
I have also asked you about accrued expenses? What might these be? Could it be related?
And for the sake of ballance can you also attempt to calculate how much of the loss would be due to season ticket sales etc.? These being included as a debt, due to them being a service paid up front, but not received until the final game of the following season.
I will be grateful therefore for some answers please.......
To the best of my knowledge I haven't mentioned £100k. I have mentioned the same £50k debt in 2 different years so maybe you are mistaking the same £50k in both years'accounts as being separate amounts.
As I remember it from a long time ago, the treatment of season ticket sales in accrual accounting terms should be as follows - When we sell a season ticket, it is not included in our revenue at the time of the sale. The way it is treated in the accounts is that the amount is debited to our bank or cash account and a credit entry is made to deferred revenue (or similarly named account) as both Cash/Bank and deferred revenue (as a current liability) are both Balance Sheet items, this will have zero impact on profit and loss but is a liability (i.e. debt) that will be included in the Creditors section of the Balance Sheet being balanced by the cash at bank.
Then as each match is played, the relevant amount (usually 1/23rd of the season ticket price) is debited to deferred revenue and credited to Revenue. It is at this point that the profit from each match represented by season ticket sales will flow through. This method is used to ensure that profit is recognised at the correct time.
Now for the guesswork, deferred revenue and accrued expenses are very similar beasts. In simple terms, deferred revenue is something you have been paid for but not yet delivered and accrued expenses are things you have received but not yet been billed/paid for thus both are current liabilities as in the near future you have to deliver the goods or services you have been paid for and you have to pay for the goods or services you have received. I suspect that in our Balance Sheet, the season ticket sales are being shown in accrued expenses but can't be certain
I hope that helps but as I said, it is many years (over 40) since I studied accountancy making me by no means an expert and somebody else on this messageboard will surely be able to explain this better than I have.
So at 30th of June it's likely that season ticket sales is making up half of the annual loss, as none of them would have been credited to revenue at that point?
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The season ticket sales treatment does not impact the profit and loss account. As of 30th June it is wholly a balance sheet transaction.
The only way I can see that it could impact on the profit and loss in a season is if the accounting treatment changed from cash accounting to accrual accounting for that season. However if that was the case, the impact would balance out somewhat in the following season being a second consecutive seasons under accrual accounting.
So if in one year you account for season ticket sales as revenue and in the following year you accrue them, with all other things being equal, you will have a higher profit in the first year and a lower profit in the second year. BUT if you continue with accrual accounting in the third year, your profit will return to normal.
So it may be possible to explain away some of our loss in 2021 by saying that we took the season ticket revenue in 2020 and have now corrected that. That may be the case and it would be helpful if the Board had ever come out and given such an explanation of how they recorded a £1,2million loss in that year's accounts. And while it would call into question the performance of our financial management, accountancy advice and auditing process, it would be a one-off hit in one set of accounts.
However, they have also reported a loss of £913k in 2022. If we accept the cash accounting/accrual accounting explanation for part of the £1,2million loss in 2021. The loss in the following year has just become even bigger failure in comparison. If this is correct, the financial position of the club was far worse than we were told last June and we should be even more worried about our future.
The thing is we can;t be certain because we have never had a reasonable explanation of how things went so horribly wrong so quickly, we have never been walked through the declining financial health of the club from 2020 to 2023 and until we do get this, all we can do is speculate based on the small amount of information we have some of which appears to be inaccurate resulting in some people believing the fraud office should be involved.