Accounts (year end 2022)

[gilbertshoot]

This is amazing especially after covid. Well done to all. Proud.

 

[fred binneys head]

This article was great to see but I was a bit mystified by this paragraph:

"The club remains unburdened by debt, and over many years has overperformed the base case budget by overperformance in the FA Cup and EFL League Cup competitions, player divestment (including sell-on clauses) and TV revenues," board chairman Nick Hawker said in a statement accompanying the accounts.

I mean player divestment is the main cause, I wouldn't say we've overperformed in cup competitions.

I think he means that we budget to exit all cup competitions in the first round, to be prudent. Therefore, because we’ve reached round 2 in recent seasons (FA Cup this year for instance, although that will be in next year’s accounts), we’ve outperformed the budget.

 

[Nigel E]

I think he means that we budget to exit all cup competitions in the first round, to be prudent. Therefore, because we’ve reached round 2 in recent seasons (FA Cup this year for instance, although that will be in next year’s accounts), we’ve outperformed the budget.

Also, last season we had bits and pieces of prize money from the Pizza Trophy.

Contriving to have three matches in the 1st Round of the FA Cup also helped with gate receipts!

Edit: actually, I seem to remember we gave away our share of the third match to charity. As you were.

 

[MJP_Exeter]

Also, last season we had bits and pieces of prize money from the Pizza Trophy.

Contriving to have three matches in the 1st Round of the FA Cup also helped with gate receipts!

The replay of the replay we donated the profits to food banks in Bradford and Exeter from memory.

 

[Nigel E]

The replay of the replay we donated the profits to food banks in Bradford and Exeter from memory.

Hah, yes, remembered this at the same time as you!

 

[SEA Grecian]

Also, last season we had bits and pieces of prize money from the Pizza Trophy.

Contriving to have three matches in the 1st Round of the FA Cup also helped with gate receipts!

Edit: actually, I seem to remember we gave away our share of the third match to charity. As you were.

Unfortunately the attendance at Bradford was pitiful so I'm not sure we'd have made much out of that game either.

 

[cambmike]

Selling players is a big part of our financial success. In League 1 perhaps there will be less opportunity for Academy players to get the necessary exposure......

 

[Gilbert]

Antman wrote "I am very proud of what the club has achieved on a financial level, it is completely against all the prevailing trends of football in the lower tiers or anywhere for that matter to be self-sustaining. Let's hope it continues". Cambmike wrote "Selling players is a big part of our financial success. In League 1 perhaps there will be less opportunity for Academy players to get the necessary exposure..... "

I agree with both these comments in that I too am pleased and proud of where the club is now - period, but especially when considering where it was when we took over. Trust ethos has always been to support the youth and it has certainly paid dividends. But cambmike's thought is one that deserves much consideration. In the absence of a financial backer, we rely on the academy so much, that we can hardly afford not to give young players opportunity and exposure. This, in and of itself, is a significant part of our business model and as a club (all together and very much including the fans) we have to be prepared to keep giving young academy products every opportunity, even if this results in slower upward momentum and results on the pitch. I get concerned with each new season when posters moan that we are not making big marquee signings and we are not going all out for promotion at seemingly any cost. Me, I'll take a financially sound and secure club with a guaranteed short term foreseeable future, with the opportunity to see our own kids wearing the shirt before following them as they go on to play top flight football and represent their respective countries over throwing cash at it in a sh*t or bust kind of way, any day. Like antman, I am taking much more pleasure in being self sustaining, and achieving all we are achieving, than doing it on the back of someone else's dollar or running up huge debt.

 

[Gilbert]

By the way. I forgot to say "many thanks" to Fred. Much appreciate the leg work you have done and the kind explanation you provided.

 

[ExmouthMart]

OK, I've had a look through the accounts and would make the following observations:

1. Interesting review of the year provided in the Strategic Report, talks a lot about the importance of our youth development, the investment in the Cat & Fiddle and the changes in the board
2. Financial performance is strong because of the transfer fees and the insurance claim - day to day trading incurs a significant loss, which shows how vital the academy is to the success and sustainability of the club
3. The key risks identified are as expected
4. Not sure why the board of Directors signed the accounts off on 15 December but the Auditor didn't sign until 27 February - that's sometimes due to concerns around whether a business will continue in existence (going concern) but is very rare - the normal practice is that the accounts are signed by the Directors and then the Auditor signs within a day or two
5. Interesting information in the Directors' Report about the current financial year (to 30 June 2023) - we got "significant compensation" from Rotherham for KMT and his team, a "significant" fee for the transfer of Alfie Pond to Wolves and a further £516k insurance proceeds due to the 'loss of profits' claim arising from Covid - not sure why this second tranche of insurance income wouldn't have been included in the 2022 accounts, but there you go
6. Talking of the insurance claim, what a brilliant piece of work someone did with this (Justin Quick?) - to recover in excess of £1.5m would have taken a lot of work so well done to whoever was involved
7. The Strategic Report explains about the departure of three directors, but the Directors' Report shows there were actually four Directors who resigned in the year (P F Holding being the additional one) - not sure why this resignation wasn't covered off in the Strategic Report
8. The Audit Report is clean with no concerns raised by the Auditor, which is good news. My only concern here is why they signed the accounts two months after the Directors
9. The Profit & Loss account is strong due to the transfer fees and the insurance income, which is fine - I imagine many of the expenses were incurred when the transfer and insurance income was known i.e. it was a deliberate trading loss which helped us to get promoted - but it does starkly show that the club staying in business is 100% reliant on selling our players at the right time
10. As a result of the huge transfer fees of recent seasons, the Balance Sheet is strong, lots of cash in the bank and plenty of assets to cover our liabilities - the year to 30 June 2023 will though show the significant expenditure at the Cat & Fiddle so it will be interesting to see how much of this cash is used to fund the training ground redevelopment - the accounts disclose a commitment of £2.9m so it looks like our bank balance will be significantly reduced next year (not sure whether we got any grants for the redevelopment?)
11. The payments from the Trust to the club (approx. £100k in the year) are still being treated as donations
12. The split of turnover doesn't look right to me - according to note 5, the revenue from match tickets and season tickets was only £311k in 2021 but £1.7m in 2022 and the revenue from selling food and drink was only £6k in 2021 but £408k in 2022 - I'm sure at least some of those numbers are wrong. The overall turnover is probably right, but the split in note 5 can't be right
13. Note 7 shows our number of employees rising significantly from 130 to 212 - the non-playing staff surprised me, but maybe all the part time and volunteer staff are included here - otherwise why would we need 164 non-playing staff?
14. The highest paid director (Taggy?) received £49k remuneration in the year, an increase on the prior year when they received £13k, and total Directors' remuneration increased from £25k to £72k (that's for 9 Directors don't forget). Whether the club needs so many Directors is another question and, as I don't know what they do, I can't say, but assuming we get value from them all, paying £72k for 9 senior people leading the club doesn't seem over the top to me
15. The Audit fee is £5,000 which is very low considering the work involved, Haines Watts are doing us a favour here
16. The tax charge is around 19% of the profit when adjusted for the usual differences in fixed asset treatment - we've used up all of our previous tax losses that we had from years ago
17. We spent £112k on players registrations in the year, I can't think who that would be, but someone on here will know
18. I know there has been a focus on what Taggy takes out of the club in the past but these accounts show that it is fairly modest (unless you're of the view that Directors should be putting money in, not taking it out) - he gets a salary of £49k IF he is the highest paid director disclosed in the accounts, plus £29k rent for a property he leases to the club for loan players to live in (sounds reasonable to me) and £2,650 paid to a business in which he is a director but has no financial interest - not a huge amount and I imagine we get a lot more value from him that it costs us. These accounts don't show anything to me that would give me cause for concern about Taggy

That's it, a decent set of accounts and great to see the full accounts being filed and plenty of disclosure in there to explain what's happened. The only concerns I have are the movement in turnover as the split in the prior year doesn't seem right to me, and the fact that the Auditor signed the accounts more than two months after the Directors. I can't see what would have happened in January / February that would have given the Auditor assurance that they wouldn't have had in December, when the Board approved the accounts?

The current year's accounts will be more interesting - some sizeable income from KMT, Alfie and the second tranche of insurance income, but a huge amount of expenditure on the Cat & Fiddle.

Reading through that as a layman it all seems to make sense and thanks for breaking that down from Accounting gobbledygook!
The Food and Drink difference is pretty startling. Going from £5965 to £408290. What were we doing before, giving it away?!
The highest paid Director on £49253 needs more of an explanation, particularly as no one puts one penny of their own money in and so risks/loses nothing. The figure is in the public domain so everyone knows and in the spirit of openness and transparency a breakdown of what exactly the return of this is justified in my eyes at least as a Trust Member and Supporter. Every single penny spent should be justified to make sure we as The Owners are getting full value and continue to.
Presumably the property lease arrangement is ‘ a mates rates’ contract otherwise isn’t there a conflict of interest, no matter how well intentioned it appears to be.
Again as I’ve said before £17174 to McQueenie Mulholland on a rolling contract (isn’t that a red flag straight away?!) needs an explanation. Again it could be seen as a conflict of interest.
OTR……. I might be thick but I can’t get my head around this. A company set up in 1999 with an interest free loan by the then Directors who were joined by other ‘ investors’ in 2001 and subsequently sold off some of the land for building for apparently @£180000 which was used to repay some of the original loans and then in 2018 the club paid Mr Perryman and Mr Tagg £45000 to repay their loans still owes £326,616?! Back in 2014 the club was paying an annual rent of @£42000 and according to the latest accounts has just renegotiated a new ten year £60000 a year deal! If you only have a limited income mostly covered by selling players on why are still paying out this amount of money when we according to Mr Tagg can demand to purchase OTR by paying off the remainder of the loan with no interest or dividend.