BREAKING: “ CARDIFF CITY CLUBS ACCOUNTS “
Wed Mar 04, 2020 11:56 am
Keith Morgan Accountant commentary on club accounts y/e 31/5/19.
viewtopic.php?f=2&t=213340
Cardiff City Football Club (Holdings) Limited
Commentary on the audited accounts for the year ended 31 May 2019
The following is my commentary on the audited accounts, which were signed off and approved by the board of directors and by the auditors on 28 February 2020!
viewtopic.php?f=2&t=213340
Key findings
1. There was a net loss for the year of £755k, after a tax charge of £3.3m,so a profit before tax of £2.6m. This compared to a net loss of £36m in the year to 31 May 2018 (£39m before tax). There are two points to take into account in these figures. Firstly, the 2018 loss was significantly reduced down to £9m by a £27m revaluation adjustment on the club`s stadium . Secondly, the 2019 result is after making a provision of £19.5m in respect of the club`s dispute with Nantes FC over the Emiliano Sala transfer. The club have made clear that this provision has only been made in the profit and loss account on a prudent accounting basis and that its directors are of the opinion (based on legal advice received) that this sum will eventually prove to be not payable , with a consequential improvement in reported financial results.
2. As a consequence of the above loss, the club`s net liability position worsened slightly from £10.7m to £11.5m.
3. The group remains dependent upon the financial support of its owner Tan Sri Vincent Tan, but the accounts refer to his pledge to continue supporting the club financially for the foreseeable future.
Main elements of reduction in losses
These can be summarised as follows £m
Increase in revenue 90.4
Increase in cost of sales (6.4)
Increase in Administrative expenses (47.8)
Decrease in interest payable 5.8
Increase in tax payable (6.6)
Smaller profit on sale of players (0.2)
--------
Net decrease in losses 35.2
---------
Increase in revenue
As a consequence of its season in the Premier League, income levels rose dramatically. Not only did broadcasting related revenues increase by £85m to £107m but gate receipts and sponsorship and advertising revenues also rose by over £5m.
Increase in cost of sales
The main element of this was an (expected) increase in players` wages which rose by £11.3m to £42.5m. However, a significant part of this wages increase was offset by other wage reductions so that the overall increase in wage costs across the club was limited to £5.1m.
Increase in Administrative expenses
These increased dramatically by £47.8m to £62.1m. Most of this increase was down to three main factors
The provision of £19.5m in respect of the Emiliano Sala transfer dispute. As stated above, the directors do not believe that this amount will eventually prove to be payable, but have provided for it as a prudent accounting entry.
Player amortisation costs – the amount by which their cost is written off in the accounts across their contract periods – rose by over £10m as a result of player acquisition costs being far higher in recent years than in earlier seasons
Player impairment costs – the extra write off made because players were worth less than their accounting written down value after annual amortisation (see above) when assessed at the year end. This figure was £11.6m in 2019 and zero in 2018. This figure would include , for example, an allowance for the termination of the contract of Gary Madine.
Decrease in interest payable
In 2018 there was a technical accounting tax charge of £6.4m which was not required in 2019. Other interest payable rose by £1.3m to £1.8m
Increase in tax payable
Another accounting technical adjustment to do with tax timing differences rather than to do with the underlying business of the club.
Player sale profits
These were £2.4m in 2018 season and £2.2m last season.
The Balance Sheet
As stated above, the balance sheet position worsened slightly as a result of the reported net losses for the year.
The principal assets and liabilities as at 31 May 2019 were as follows
Stadium assets
Revalued professionally in May 2018 by independent valuers at £83.5m and since depreciated down to £82.8m. In addition to the stadium itself , its fixtures and fittings and training ground improvements had a value in the balance sheet of £1.6m.
Player assets
The net (depreciated) value of players in the balance sheet at 31 May 2019 was £23.5m. The club has invested heavily in players over the last three seasons as funding support for its manager. In the year to 31 May 2018 it acquired new players of total value £14.3m (2017 was £5.9m), in the year to 31 May 2019 that rose to £38.2m and in the current season expenditure on new players has been £23.1m.
Although the club did not make major profits on the sale of players in that period, it was able to generate substantial cash inflows from the sale of players (Zohore,Reid,Manga etc) which helped offset the cash cost of new player registrations.
Other assets
The club had £2.2m of cash at the bank as at 31 May 2019 and debts due to it of £14.2m (of which over £10m related to broadcasting income earned in the season but not received until after the year end).
Current liabilities
In addition to the provision of £19.5m regarding a contract dispute referred to above (which may never actually be payable), the group had liabilities payable on or before 31 May 2020 totalling £114m.
Of the above total of £114m, £40.1m is shown as due to the owner Vincent Tan , some £32.3m of his debt having apparently been repaid during the year. This reduction in debt due to him was replaced by other loans of £39.5m from other (unnamed) parties who are not shareholders or directors (if they were the loans would have had to have been disclosed as related party transactions).
The remaining debt due to TSVT is split into two elements. £14.8m is stated to be interest bearing at 7% a year and carrying the right to convert into shares with the vast majority of the balance being non-interest bearing and having no conversion rights. Both elements are secured by charges over the assets of the football group.
The loans from other parties are also stated to be secured over future guaranteed income streams – probably broadcasting fees earned but not yet paid. That security would have had to be given with the specific consent of creditors having registered security over the group`s assets.
Summary and conclusions
The season in the Premier League in 2018/19 enabled the club to make a profit from its trading activities of around £22m before tax and before making the provision for a debt which may or may not prove to be payable.
In addition, the resultant “parachute payments” receivable in the current season and, to a lesser extent, in 2020/21 season, will assist in stabilising the club`s financial position.
However, it must be appreciated that there will still be a major reduction in the club`s income stream as those payments are greatly less than the broadcasting rights the club earned in 2018/19. Costs will have to be controlled accordingly as best possible in order to comply with Profitability and Sustainability (Financial Fair Play) requirements of the EFL. It is therefore highly likely that the levels of recent expenditure on player recruitment will not be repeated in the near future.
The football club is also likely to remain reliant on the ongoing financial support of its owner, and others, for the foreseeable future.
viewtopic.php?f=2&t=213340
Cardiff City Football Club (Holdings) Limited
Commentary on the audited accounts for the year ended 31 May 2019
The following is my commentary on the audited accounts, which were signed off and approved by the board of directors and by the auditors on 28 February 2020!
viewtopic.php?f=2&t=213340
Key findings
1. There was a net loss for the year of £755k, after a tax charge of £3.3m,so a profit before tax of £2.6m. This compared to a net loss of £36m in the year to 31 May 2018 (£39m before tax). There are two points to take into account in these figures. Firstly, the 2018 loss was significantly reduced down to £9m by a £27m revaluation adjustment on the club`s stadium . Secondly, the 2019 result is after making a provision of £19.5m in respect of the club`s dispute with Nantes FC over the Emiliano Sala transfer. The club have made clear that this provision has only been made in the profit and loss account on a prudent accounting basis and that its directors are of the opinion (based on legal advice received) that this sum will eventually prove to be not payable , with a consequential improvement in reported financial results.
2. As a consequence of the above loss, the club`s net liability position worsened slightly from £10.7m to £11.5m.
3. The group remains dependent upon the financial support of its owner Tan Sri Vincent Tan, but the accounts refer to his pledge to continue supporting the club financially for the foreseeable future.
Main elements of reduction in losses
These can be summarised as follows £m
Increase in revenue 90.4
Increase in cost of sales (6.4)
Increase in Administrative expenses (47.8)
Decrease in interest payable 5.8
Increase in tax payable (6.6)
Smaller profit on sale of players (0.2)
--------
Net decrease in losses 35.2
---------
Increase in revenue
As a consequence of its season in the Premier League, income levels rose dramatically. Not only did broadcasting related revenues increase by £85m to £107m but gate receipts and sponsorship and advertising revenues also rose by over £5m.
Increase in cost of sales
The main element of this was an (expected) increase in players` wages which rose by £11.3m to £42.5m. However, a significant part of this wages increase was offset by other wage reductions so that the overall increase in wage costs across the club was limited to £5.1m.
Increase in Administrative expenses
These increased dramatically by £47.8m to £62.1m. Most of this increase was down to three main factors
The provision of £19.5m in respect of the Emiliano Sala transfer dispute. As stated above, the directors do not believe that this amount will eventually prove to be payable, but have provided for it as a prudent accounting entry.
Player amortisation costs – the amount by which their cost is written off in the accounts across their contract periods – rose by over £10m as a result of player acquisition costs being far higher in recent years than in earlier seasons
Player impairment costs – the extra write off made because players were worth less than their accounting written down value after annual amortisation (see above) when assessed at the year end. This figure was £11.6m in 2019 and zero in 2018. This figure would include , for example, an allowance for the termination of the contract of Gary Madine.
Decrease in interest payable
In 2018 there was a technical accounting tax charge of £6.4m which was not required in 2019. Other interest payable rose by £1.3m to £1.8m
Increase in tax payable
Another accounting technical adjustment to do with tax timing differences rather than to do with the underlying business of the club.
Player sale profits
These were £2.4m in 2018 season and £2.2m last season.
The Balance Sheet
As stated above, the balance sheet position worsened slightly as a result of the reported net losses for the year.
The principal assets and liabilities as at 31 May 2019 were as follows
Stadium assets
Revalued professionally in May 2018 by independent valuers at £83.5m and since depreciated down to £82.8m. In addition to the stadium itself , its fixtures and fittings and training ground improvements had a value in the balance sheet of £1.6m.
Player assets
The net (depreciated) value of players in the balance sheet at 31 May 2019 was £23.5m. The club has invested heavily in players over the last three seasons as funding support for its manager. In the year to 31 May 2018 it acquired new players of total value £14.3m (2017 was £5.9m), in the year to 31 May 2019 that rose to £38.2m and in the current season expenditure on new players has been £23.1m.
Although the club did not make major profits on the sale of players in that period, it was able to generate substantial cash inflows from the sale of players (Zohore,Reid,Manga etc) which helped offset the cash cost of new player registrations.
Other assets
The club had £2.2m of cash at the bank as at 31 May 2019 and debts due to it of £14.2m (of which over £10m related to broadcasting income earned in the season but not received until after the year end).
Current liabilities
In addition to the provision of £19.5m regarding a contract dispute referred to above (which may never actually be payable), the group had liabilities payable on or before 31 May 2020 totalling £114m.
Of the above total of £114m, £40.1m is shown as due to the owner Vincent Tan , some £32.3m of his debt having apparently been repaid during the year. This reduction in debt due to him was replaced by other loans of £39.5m from other (unnamed) parties who are not shareholders or directors (if they were the loans would have had to have been disclosed as related party transactions).
The remaining debt due to TSVT is split into two elements. £14.8m is stated to be interest bearing at 7% a year and carrying the right to convert into shares with the vast majority of the balance being non-interest bearing and having no conversion rights. Both elements are secured by charges over the assets of the football group.
The loans from other parties are also stated to be secured over future guaranteed income streams – probably broadcasting fees earned but not yet paid. That security would have had to be given with the specific consent of creditors having registered security over the group`s assets.
Summary and conclusions
The season in the Premier League in 2018/19 enabled the club to make a profit from its trading activities of around £22m before tax and before making the provision for a debt which may or may not prove to be payable.
In addition, the resultant “parachute payments” receivable in the current season and, to a lesser extent, in 2020/21 season, will assist in stabilising the club`s financial position.
However, it must be appreciated that there will still be a major reduction in the club`s income stream as those payments are greatly less than the broadcasting rights the club earned in 2018/19. Costs will have to be controlled accordingly as best possible in order to comply with Profitability and Sustainability (Financial Fair Play) requirements of the EFL. It is therefore highly likely that the levels of recent expenditure on player recruitment will not be repeated in the near future.
The football club is also likely to remain reliant on the ongoing financial support of its owner, and others, for the foreseeable future.
Re: BREAKING CLUBS ACCOUNTS
Wed Mar 04, 2020 12:11 pm
Cheers Roger 
Summary and conclusions
The season in the Premier League in 2018/19 enabled the club to make a profit from its trading activities of around £22m before tax and before making the provision for a debt which may or may not prove to be payable.
In addition, the resultant “parachute payments” receivable in the current season and, to a lesser extent, in 2020/21 season, will assist in stabilising the club`s financial position.
However, it must be appreciated that there will still be a major reduction in the club`s income stream as those payments are greatly less than the broadcasting rights the club earned in 2018/19. Costs will have to be controlled accordingly as best possible in order to comply with Profitability and Sustainability (Financial Fair Play) requirements of the EFL. It is therefore highly likely that the levels of recent expenditure on player recruitment will not be repeated in the near future.
The football club is also likely to remain reliant on the ongoing financial support of its owner, and others, for the foreseeable future.
Summary and conclusions
The season in the Premier League in 2018/19 enabled the club to make a profit from its trading activities of around £22m before tax and before making the provision for a debt which may or may not prove to be payable.
In addition, the resultant “parachute payments” receivable in the current season and, to a lesser extent, in 2020/21 season, will assist in stabilising the club`s financial position.
However, it must be appreciated that there will still be a major reduction in the club`s income stream as those payments are greatly less than the broadcasting rights the club earned in 2018/19. Costs will have to be controlled accordingly as best possible in order to comply with Profitability and Sustainability (Financial Fair Play) requirements of the EFL. It is therefore highly likely that the levels of recent expenditure on player recruitment will not be repeated in the near future.
The football club is also likely to remain reliant on the ongoing financial support of its owner, and others, for the foreseeable future.
Re: BREAKING CLUBS ACCOUNTS
Wed Mar 04, 2020 12:12 pm
One of the bits that stuck out for me was the £39.5m of loans from third parties who are not shareholders or directors?
No mention of what interest if any is being repaid on those loans.
I wonder who they might be?
No mention of what interest if any is being repaid on those loans.
I wonder who they might be?
Re: BREAKING CLUBS ACCOUNTS
Wed Mar 04, 2020 12:21 pm
davids wrote:One of the bits that stuck out for me was the £39.5m of loans from third parties who are not shareholders or directors?
No mention of what interest if any is being repaid on those loans.
I wonder who they might be?
?
I am interested as well?
Of the above total of £114m, £40.1m is shown as due to the owner Vincent Tan , some £32.3m of his debt having apparently been repaid during the year.
This reduction in debt due to him was replaced by other loans of £39.5m from other (unnamed) parties who are not shareholders or directors (if they were the loans would have had to have been disclosed as related party transactions).
Re: BREAKING: “ CARDIFF CITY CLUBS ACCOUNTS “
Wed Mar 04, 2020 12:26 pm
it looks like £32.3m of debt has been repaid to Vincent Tan whilst being replaced by £39.5 of borrowing from another source unknown?
It's not clear who the other lender is but not a member of the board. So a third party, is there anything worrying about this now that this amount of debt is with someone else rather than Vincent Tan, who has repeatedly reduced our debt?
Or maybe it's an accounting process?
It's not clear who the other lender is but not a member of the board. So a third party, is there anything worrying about this now that this amount of debt is with someone else rather than Vincent Tan, who has repeatedly reduced our debt?
Or maybe it's an accounting process?
Re: BREAKING: “ CARDIFF CITY CLUBS ACCOUNTS “
Wed Mar 04, 2020 2:13 pm
Accounts show the results of the impairment review of a write down of £11 million on players where "the carrying amount of the player may not be recoverable"- page 18 note 2.12
Would love to know who those players are and who made the judgement! Any guesses on the former.
Would love to know who those players are and who made the judgement! Any guesses on the former.
Re: BREAKING: “ CARDIFF CITY CLUBS ACCOUNTS “
Wed Mar 04, 2020 2:25 pm
Could the repayment of loans be from Mr Tan to himself for accounting purposes ( cough cough ) ?
Anyway, nice to see we are going to cut our cloth to suit.
Anyway, nice to see we are going to cut our cloth to suit.
Re: BREAKING: “ CARDIFF CITY CLUBS ACCOUNTS “
Wed Mar 04, 2020 3:35 pm
Cardiff City cut losses from £34m to £755,000 after Premier League relegation
Cardiff's debt now stands at £114m, of which roughly £40m is owed to owner Vincent Tan.
Wednesday 4th March 2020
By Dafydd Pritchard
BBC Sport Wales
Cardiff City spent one season in the Premier League before dropping back down to the Championship in May 2019
Cardiff City cut their losses from £34m to £755,000 in the year they were relegated from the Premier League.
Accounts ending 31 May 2019 show the Bluebirds' turnover rose from £35m to £125m, primarily driven by the "significant increase in TV and league revenue" in the top flight.
Cardiff lasted only one season in the Premier League and, despite spending £38m on their squad, increased matchday and commercial revenues also helped them significantly reduce the £34m loss they recorded in 2018.
The 2019 figures take into account a provision of £19.5m regarding the club's dispute with Nantes about the Emiliano Sala transfer - but Cardiff believe they will not need to pay this sum.
The Welsh club are still fighting their case against payment of the £15m transfer fee agreed with Nantes, a year on from the deaths of the Argentine striker and pilot David Ibbotson.
Their case with Nantes is set to for the Court of Arbitration for Sport, with Cardiff earlier submitting a file to French prosecutors they claim contained "sufficient evidence of wrongdoing" on Nantes' behalf regarding the transfer.
Based on legal advice, Cardiff insist that they remain confident they will not need to pay the fee, but have put £19.5m to one side as a contingency.
Cardiff's latest accounts also show the club's player wage bill was £42.5m for the 2018-19 season, an increase of £11.3m from the previous campaign.
Cardiff's debt now stands at £114m, of which roughly £40m is owed to owner Vincent Tan.
That means around £32m was repaid to the Malaysian businessman, who was shown to be owed £72m in 2018's accounts.
The reduction in debt due to Tan has been replaced by other loans of £39.5m from other unnamed parties, who are not shareholders or directors.
These loans are secured over future guaranteed income, likely to be some of the aforementioned Premier League broadcast fees earned but not yet paid.
Tan's remaining debt is split into two elements - £14.8m interest bearing at 7% a year and carrying the right to convert into shares, with the majority of the balance non-interest bearing and having no conversion rights.
A Cardiff City club statement said: "Whilst long term funding is not guaranteed, the ultimate owner has indicated that providing the business develops as planned, he will continue to support the group in the foreseeable future and provide additional finance in order that it can settle its liabilities as they fall due."
"In conclusion, in the opinion of the directors, there is sufficient funding available to meet the group's trading requirements for the foreseeable future."
Cardiff's debt now stands at £114m, of which roughly £40m is owed to owner Vincent Tan.
Wednesday 4th March 2020
By Dafydd Pritchard
BBC Sport Wales
Cardiff City spent one season in the Premier League before dropping back down to the Championship in May 2019
Cardiff City cut their losses from £34m to £755,000 in the year they were relegated from the Premier League.
Accounts ending 31 May 2019 show the Bluebirds' turnover rose from £35m to £125m, primarily driven by the "significant increase in TV and league revenue" in the top flight.
Cardiff lasted only one season in the Premier League and, despite spending £38m on their squad, increased matchday and commercial revenues also helped them significantly reduce the £34m loss they recorded in 2018.
The 2019 figures take into account a provision of £19.5m regarding the club's dispute with Nantes about the Emiliano Sala transfer - but Cardiff believe they will not need to pay this sum.
The Welsh club are still fighting their case against payment of the £15m transfer fee agreed with Nantes, a year on from the deaths of the Argentine striker and pilot David Ibbotson.
Their case with Nantes is set to for the Court of Arbitration for Sport, with Cardiff earlier submitting a file to French prosecutors they claim contained "sufficient evidence of wrongdoing" on Nantes' behalf regarding the transfer.
Based on legal advice, Cardiff insist that they remain confident they will not need to pay the fee, but have put £19.5m to one side as a contingency.
Cardiff's latest accounts also show the club's player wage bill was £42.5m for the 2018-19 season, an increase of £11.3m from the previous campaign.
Cardiff's debt now stands at £114m, of which roughly £40m is owed to owner Vincent Tan.
That means around £32m was repaid to the Malaysian businessman, who was shown to be owed £72m in 2018's accounts.
The reduction in debt due to Tan has been replaced by other loans of £39.5m from other unnamed parties, who are not shareholders or directors.
These loans are secured over future guaranteed income, likely to be some of the aforementioned Premier League broadcast fees earned but not yet paid.
Tan's remaining debt is split into two elements - £14.8m interest bearing at 7% a year and carrying the right to convert into shares, with the majority of the balance non-interest bearing and having no conversion rights.
A Cardiff City club statement said: "Whilst long term funding is not guaranteed, the ultimate owner has indicated that providing the business develops as planned, he will continue to support the group in the foreseeable future and provide additional finance in order that it can settle its liabilities as they fall due."
"In conclusion, in the opinion of the directors, there is sufficient funding available to meet the group's trading requirements for the foreseeable future."
Re: BREAKING: “ CARDIFF CITY CLUBS ACCOUNTS “
Wed Mar 04, 2020 4:22 pm
Nice to see that the transfer fee for Sala is provided within the figures and not been covered up as spent in another way, they are prepared to pay it if they have too.
No mention though of how much they payed NW nor how much they actually paid VT this past year either it’s a guesstimate of £32m, not disputing we owe VT but they could have been a bit more clearer than “around £32m”
No mention though of how much they payed NW nor how much they actually paid VT this past year either it’s a guesstimate of £32m, not disputing we owe VT but they could have been a bit more clearer than “around £32m”
Re: BREAKING: “ CARDIFF CITY CLUBS ACCOUNTS “
Wed Mar 04, 2020 4:37 pm
Do we know if Tan has converted any further shares into equity since the last reported conversion?
Re: BREAKING: “ CARDIFF CITY CLUBS ACCOUNTS “
Wed Mar 04, 2020 4:38 pm
could be that tan is converting debt in this season s accounts also the loan was an overdraft facility?snoopystorm wrote:Nice to see that the transfer fee for Sala is provided within the figures and not been covered up as spent in another way, they are prepared to pay it if they have too.
No mention though of how much they payed NW nor how much they actually paid VT this past year either it’s a guesstimate of £32m, not disputing we owe VT but they could have been a bit more clearer than “around £32m”
Re: BREAKING: “ CARDIFF CITY CLUBS ACCOUNTS “
Wed Mar 04, 2020 4:38 pm
BarryWelsh88 wrote:Do we know if Tan has converted any further shares into equity since the last reported conversion?
No he didnt last season