The latest Accounts do not reflect the welcome conversion of debt to equity by Parent. This was a massive formal action.
The Accounts for Year to June 30th 2023
A Nett Loss of £4.5m is a £10.9m improvement on the £15.3m loss for the previous year. This is obviously very good.
The biggest factor was the £22.5m Profit from Sales of Registrations (the most volatile measure in the P&L).
Spence and Tavernier's reported fees were all accounted for as pure profit (as I said they would Rob). When the payments are made is a cash flow dimension. The Published Club accounts don't need to provide Cash Flow reports.
Home League ticket sales were +£2.8m, but the club made -£2.7m on Cup ticket sales.
The club drove +£1.2m on Commercial/Sponsorship, +£0.4m on Merchandising and +£0.5m on Broadcasting. Better results for Bausor.
Overall Turnover +£1.7m or +6.3%. (Cup windfalls are just that and shouldn't be budgeted for).
Cost of Sales was £45.0m +£9.7m versus previous year or +27.4%.
The Wage Bill within Cost of Sales was +£1.2m at £29.6m or +4.2%.
There is no further breakdown of Cost of Sales (never is), but this is where the Total Cost of Loan Players will sit.
It is not clear what else makes up the Total Cost of sales, but the Non Wage element was £15.4m +£8.5m versus previous year or +123.2%
It is too simplistic to say, but directionally true that the 6 loans (Steffen, Giles, Muniz, Mowatt, Archer and Ramsey) cost £8.5m more (fees and wages) for the season than the previous year's loans. This seems believable, but there could of course be other Cost of Sales factors that reduce their impact.
Amortisation of contracts was £9.1m for the year +£2.8m, or +45.1%.
The Club also took a £3.6m Impairment charge against Player Valuation, which was £1.8m more than they took the previous year. This appears to be writing off Payero value as he was by far the biggest recent spend? (This would indicate a scope for his subsequent sale to be reflected as profit in next Accounts).
Other Operating Income was £3.9m or +£2.7m or +218.7% versus previous year. This increase was purely down to the £2.7m settlement fee from Morris.
Profit before Tax (Start point for P&S/FFP) was -£6.4m, so £13.1m better than previous year.
Despite losing money, as usual the Club benefitted from Group Tax management by £1.9m (£2.2m less than they did in 2022).
There was no other Comprehensive Income, so Total Comprehensive Income was -£4.5m, £10.9m better than previous year.
The Club still loses money, just much less, based on better Commercial performance and sale of players without book value.
This is reflected in the Balance Sheet.
The Club have lost £250.3m since 1986.
They owed Group £148.9 at 30th June 2023 an increase of £6.5m. (Group converted £106.7m of this Debt to new Equity in Oct 2023. We will see this in the Balance Sheet of the next accounts).
Negative Nett shareholder value obviously increased (by the £4.5m Loss of Total Comprehensive Income) to -£136.4m. This again will collapse, following the Debt to Equity move Gibson made, and be reflected in the next Accounts.
It is worth noting our entire squad at 30th June 2023 had a book value of just £10.6m. Clearly that has risen following the summer acquisitions, but I would estimate Hackney alone to have a market value significantly more than the entire book value of our current squad, let alone the one at June 30th 2023.
This is a very good position. Fry, Jones, Hackney, Coburn, all have no book value, but huge combined market value.
Championship clubs will all lose money. We can't change the environment we operate in. Promotion allows us to.
In real terms MFC have lost £59.1m in just 3 years, offset by Tax magic by Group of £9.6m.
Without promotion, the club needs either continued Equity injection, or continued Profit from player sales to maintain a competitive playing squad and budget.
Profit & Sustainability (FFP)
The position here is much more rosy in the crazy world where huge losses are permissable.
The allowances that can be added back to Profit Before Tax are:
Community Spend, Women's Football, U21/Academy spend, Depreciation of Fixed Assets, Covid Allowance and Fixed Asset Revaluation Surplus.
The calculation is a rolling 3 year one. Covid rules mean we average 2020 and 2021 to provide 2021 input.
Profit Before Tax for 3 years to June 30th 2023 is indisputably -£59.1m
Community Spend at £1m pa is c £3m.
Women's Football currently Nil.
U21/Academy for Cat A is £5m pa so c £15m.
Depreciation across 3 years is actually £8.7m.
Covid Allowance for those 3 years is £7.5m.
The P&S Nett Figure is thus c-£22.2m.
The Club is allowed to lose £15m on this measure.
The Club can also inject up to £24m in either Equity or Loans converting to equity, so the max permitted loss is £39m across the 3 years.
As I have already shown Group Undertakings increased by £6.5m, (which alone would have kept us within that £15m permitted loss).
The fact is it is clear that a large chunk of the Group Undertakings were convertible to Equity at some future point, so qualified as relief for FFP.
That Gibson O'Neill converted £107m of Loan to Equity shows the club have been kept nowhere near danger from an FFP perspective.
The really good news is that we lose the Covid ravaged history of 2020/21 in the 3 year calculation to 2024.
Turnover is on the rise, Squad market value is way above book and Gibson has injected the equity since these last accounts.
No real surprises in the Accounts, but overall very good progress and vitally, a massive injection by Gibson/Parent.
in the council tax cell for Feb and Mar - as there is none to pay.
