WPL's "investment" at 31 Jan 2008

[slappy]

WPL have just published their 2008 accounts.
At 31 January 2008, WPL's investment in OUFC was £2.73MM (2007 - £1.94MM). So the extra amount they have &quotinvested&quot in OUFC in that financial year is £790K.

The investment at 30 June 2008 (the club's year-end) is not yet public, but is presumably higher because of the seasonal nature of the club's cashflows. What it is at today's date is another matter entirely.

How the oft-quoted £4MM fits into this I don't know, but it seems a little bit high to me compared to £2.7MM at Jan 08.

Just to add a bit more to this, WPL's income (presumably all interest charged to OUFC) was £172K. Operating expenses ((presumably mostly interest charged by the directors) was £175K.

This suggests the cash invested in OUFC for that year was £618K - which should be a reasonable approximation of the club's loss for that period too, assuming the clubs other debts / borrowings didn't change significantly.

[ty cobb]

When you say investment I assume you mean loan give the interest being charged?

[slappy]

I called it Investment because that is the heading (Fixed Asset - Investment) under which it is disclosed in the WPL accounts, which take advantage of small company exemptions.

Anyway, yes it almost certainly is the long term loan to OUFC, but why it is classified as an investment in WPL, but as a long term loan in the OUFC accounts is I think a side issue. The WPL accounts are only prepared for compliance purposes and the shareholders are NM and IL, so I doubt they really care if the loan is shown as investment or a long term debtor.

[recordmeister]

For those of us who are less versed in accountancy stuff, is this good or bad (or netural)?

It seems to me that £2.x million down is a better place to be than £4m down...? I have no idea.

[GodalmingYellow]

I think the £4m figure was always total club debts, not net debt, nor debts to Directors/shareholders.

As has been said above, the amount will fluctuate depending on the point in the football calendar that the balance sheet falls on, and also on the club's activity for any particular period and also the support levels.

In addition, we have to remember that those WPL accounts are not at today's date. They are for 10 months ago and a lot of water has passed under the bridge since then.

If all that were not enough, these accounts only reflect debts to Directors, and do not include any other borrowings which may have been drawn down by the club either last season or this season.

For what it's worth, and it ain't much because there ain't much that can be concluded just from these accounts, I would guess that the losses for the 07/8 season may be slightly less than Nick Merry had previously said. Nick Merry indicated the losses would be greater than £800k for the 07/8 season, and I suspect they will be nearer £700k.

Even so, that's tinkering with the pennies really, and given the current season ups and downs, well mainly downs,I would again put an educated GUESS that the club's total debts are in excess of £4m at today's date.

[Snake]

In the year ended 30 June 2007 the club accounts show “Net Liabilities

[Snake]

How the oft-quoted £4MM fits into this I don't know, but it seems a little bit high to me compared to £2.7MM at Jan 08.

That derives from when Simon Lenagan told OxVox that “the loss for 2007/08 would be higher than that for 2006/07

[GodalmingYellow]

[quote=&quotSnake&quot]In the year ended 30 June 2007 the club accounts show “Net Liabilities

[slappy]

OK back to the start.

WPL took over Spring 2006. From memory they said they'd paid £2m, which I always understood was a nominal £1 for share capital and repaid £2m of debt to Kassam.

Firoka (London Park) Ltd March '06 accounts
Disclose a disposal of shares in OUFC which had a cost of £129,813 and realised a loss of £199,725. This suggests to me the shares were sold for £1 or so and I guess other costs of £69,913 creates the balance of the loss.

OUFC June '06 accounts
Disclose long term creditors &quotamounts due to parent company&quot (WPL) as £2,099,045, secured by debenture over club's assets, and bearing interest at 1% over base rate. At June 2005 £1,606,247 was due to Firoka London Park.

WPL Jan '07 accounts
Disclose Investment as £1,936,719, with a note to say that &quotThe investment represents the amount paid by the company to acquire 89% of the issued share capital of OUFC&quot. Turnover £108K and expenses £98K. Loan accounts due were Director £61,242 and Investor £1,887,230.

OUFC June '07 accounts
Disclose long term creditors &quotamounts due to parent company&quot as £2,912,000. Interest payable and similar charges of £151K.

WPL Jan'08 accounts
Disclose Investment as £2,728,719 (an increase of exactly £792,000), with no explanatory note. Turnover £172K and expenses £175K. Loan accounts due were Directors £2,712,061.
------------------
I am quite confused as to why these don't tally. WPL in 2007 say the investment represents an amount paid for shares, but Firoka in 2006 claim to have lost money on the shares.

If the OUFC loan creditor was the same as the WPL investment, I would expect the amounts to increase from June to January, rather than decrease.

The WPL accounts don't have an accountant's name on them, so could have been prepared by someone quite different to the OUFC accountants, and is not aware of all the transactions the club has undertaken. Perhaps some more loans have been stuck in, which the WPL book-keeper doesn't know about!

GY's theory of the WPL accounts being cash based is a possibility, but the turnover reported for WPL seems similar to the interest payable reported by OUFC. I can't think of what other turnover WPL might have.

Anyway - not sure how much it matters. The club owes WPL a LOT of money and has no means of repaying the capital.

[GodalmingYellow]

OK back to the start.

WPL took over Spring 2006. From memory they said they'd paid £2m, which I always understood was a nominal £1 for share capital and repaid £2m of debt to Kassam.

Firoka (London Park) Ltd March '06 accounts
Disclose a disposal of shares in OUFC which had a cost of £129,813 and realised a loss of £199,725. This suggests to me the shares were sold for £1 or so and I guess other costs of £69,913 creates the balance of the loss.

OUFC June '06 accounts
Disclose long term creditors &quotamounts due to parent company&quot (WPL) as £2,099,045, secured by debenture over club's assets, and bearing interest at 1% over base rate. At June 2005 £1,606,247 was due to Firoka London Park.

WPL Jan '07 accounts
Disclose Investment as £1,936,719, with a note to say that &quotThe investment represents the amount paid by the company to acquire 89% of the issued share capital of OUFC&quot. Turnover £108K and expenses £98K. Loan accounts due were Director £61,242 and Investor £1,887,230.

OUFC June '07 accounts
Disclose long term creditors &quotamounts due to parent company&quot as £2,912,000. Interest payable and similar charges of £151K.

WPL Jan'08 accounts
Disclose Investment as £2,728,719 (an increase of exactly £792,000), with no explanatory note. Turnover £172K and expenses £175K. Loan accounts due were Directors £2,712,061.
------------------
I am quite confused as to why these don't tally. WPL in 2007 say the investment represents an amount paid for shares, but Firoka in 2006 claim to have lost money on the shares.

If the OUFC loan creditor was the same as the WPL investment, I would expect the amounts to increase from June to January, rather than decrease.

The WPL accounts don't have an accountant's name on them, so could have been prepared by someone quite different to the OUFC accountants, and is not aware of all the transactions the club has undertaken. Perhaps some more loans have been stuck in, which the WPL book-keeper doesn't know about!

GY's theory of the WPL accounts being cash based is a possibility, but the turnover reported for WPL seems similar to the interest payable reported by OUFC. I can't think of what other turnover WPL might have.

Anyway - not sure how much it matters. The club owes WPL a LOT of money and has no means of repaying the capital.

Slappy, would you mind emailing a pdf of the WPL 07 accounts please, as mine has got lost on a hard drive somehwere.

Ta.

To correct your interpretation of what I said:
The WPL accounts are not prepared on a cash basis - that would be illegal. However, the investment shown on the balance sheet of the WPL accounts represents cash paid for shares and cash advances to the football club and is therefore effectively on a cash basis.
The equivalent entries in the football club accounts respresent the same as the WPL figure, together with variations in reserves.

Sorry, I know some may find that horribly complicated to follow.

When I've got the WPL07 accounts I can plot the movement of funds a little better.

On the shares, you are right that £1 was paid for the shares with the balance of the £2m being repayment of debt, and the difference between the shares nominal value and the price paid will be one of the differences between the WPL accounts and the OUFC accounts.

[Snake]

Some points and question to throw into this horrible spaghetti-like OUFC finance discussion…

Point 1 - The WPL accounts are exempt from audit because of section 249A(1) of the Companies Act 1985 (subsequently amended in 2004 by this piece of statute on grounds of turnover.

Point 2 - The “transaction cost

[Ascension Ox]

[quote=&quotSnake&quot]Some points and question to throw into this horrible spaghetti-like OUFC finance discussion…

Point 1 - The WPL accounts are exempt from audit because of section 249A(1) of the Companies Act 1985 (subsequently amended in 2004 by this piece of statute on grounds of turnover.

Point 2 - The “transaction cost

[Snake]

[quote=&quotAscension Ox&quot][quote=&quotSnake&quot]Some points and question to throw into this horrible spaghetti-like OUFC finance discussion…

Point 1 - The WPL accounts are exempt from audit because of section 249A(1) of the Companies Act 1985 (subsequently amended in 2004 by this piece of statute on grounds of turnover.

Point 2 - The “transaction cost

[Ascension Ox]

[quote=&quotSnake&quot][quote=&quotAscension Ox&quot][quote=&quotSnake&quot]Some points and question to throw into this horrible spaghetti-like OUFC finance discussion…

Point 1 - The WPL accounts are exempt from audit because of section 249A(1) of the Companies Act 1985 (subsequently amended in 2004 by this piece of statute on grounds of turnover.

Point 2 - The “transaction cost

[recordmeister]

I think if it is Diamonds you have in mind, then you need to look to Rushden!