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Date Posted: 21:50:41, Wed, May 12 2004
Author: SteveS
Subject: Annual accounts
Mine arrived this morning. Unfortunately I only had time for a quick read. What particularly struck me as a little out of the ordinary was the criticism aimed at the previous executive management team. The non-execs (consortium) seem to feel that forecasts were made that did not end up fitting too well with reality.
There is a large loss. Revenue targets were not met.
How fair this assessment is of the previous management will I guess be one of the livlier topics of conversation at the AGM.
And end to losses is envisaged thanks to tight cost controls. Presumably among those would have the limited squad recruitments this past season.
I'm looking forward to a detailed read now.
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Re: Annual accounts -- SteveS, 4:00:25, Thu, May 13 2004 [1]
OK - for the benefit of those without access to these figures.
The document is much less wordy than some in the past - particularly the one which accompanied the last share offer. There is a conscious shift in style. Less visionary promises, more curt statements of hard facts and downbeat realities.
The joint chairman's statement opens by saying that a loss was expected and was signposted at the AGM a year ago. The problem is the scale, "greater than we anticipated and greater than the previous year".
The usual measure of profitability that the financial press use is FRS17 pre-tax profit. This shows a £1.4 million loss. The previous year's loss was £750,000 - so an uncomfortable jump there.
Why?
The chairmen's report explains: "the management's business plan for the year featured an aggressive plan for revenue growth [that] entailed a significant increase in rugby playing costs together with increased investment in sales, marketing and staff costs. The increased revenues anticipated in the managements plan were not achieved but inevitably the increased costs were incurred".
So remember, we're talking about the contracts awarded in the heady days after our cup win here. A lot was spent on the Doc's team - no doubt the likes of Doc, Naka, Pieter Roussouw, the new contracts for Awesome and Bish, etc did not come cheap. Meanwhile, we hired loads of sales and marketing people.
The playing squad failed (relegation struggle), and the sales squad failed. "many of the anticipated increase in associated revenues, particularly corporate sponsorship, hospitality and special events that were fundamantal to the managements's plan were not achieved." The only saving grace was the increase in match attendances.
The chairmen then outline the night of the long knives. "Faced with this poor business performance, your board acted quickly and decisively. A completely new management team was appointed."
Out went Richard Sanderson as MD, in came Conor. Out went Malcolm Ball as marketing/commercial supremo, in came Pat Coyne.
Perhaps once bitten, twice shy, the non-execs (the consortium board members) increased their watchful eye over the new management by making the chairman a part-time paid position - Brendam Mullin taking this on.
The new management team set about repairing the damage. The chaimen say it entailed a "significant reducation in the rugby playing cost." Hence why we only got Phil Murphy and a few other inexpensive players this season? Also "a tight control of all other costs". The repatriation of the business side to Sunbury? "And a realistic expectation of revenue growth for the year."
Now here's the GOOD news.
"As the chairman will report further at the forthcoming AGM, these actions have produced a dramatic turnround in the fortunes of the business to the extent that the business, excluding any Sunclear property profits (ie. the health club windfall) is expected to produce a profit for the first time in its history."
This will indeed be a landmark event! Fingers crossed it happens!
The chairmen then congratulate Mullin and Conor's management team for this "impressive business turnround."
The report concludes that the cash position of the group was improved by raising £700,000 in convertable loan stock, taken by the businesses/trusts of board members Mullin, Stacpoole, Clancy and Conlan.
The profit and loss account shows that turnover almost halved from 2002 from £9m to £4.7m. The consolidated balance sheet shows our net assets over liabilties plunging from £2.6m down to £1.1m. The cash in our bank accounts lessened by almost a million. The cash flow statement again shows that cash drained out of the business to an un-nerving extent. The 2002 cash flow statement had the health club and share issue money flowing in, £2.5million. In 2003, £700,000 flowed out, and that would have been much worse but for the £700,000 fundraising.
Staff costs reveal how much the Sanderson/Ball management expanded. Employees increased from 65 to 89 (the rugby side from 39 to 54). Wages increased from £2.5m to £3m.
It would be interesting to know how much the Conor/Coyne regime has rationalised those numbers!
There are more than 100 million shares in issue. You small shareholders can calculate how much influence you have in the business!
The FT recently produced a standard guide outlining the questions that small shareholders should ask at company AGMs. It may be useful to reproduce that here before the day.
The AGM is on Friday June 4 at the Guinness Bar in Sunbury. Maybe someone could ask if they could hold it in Reading next year? *ducks*
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Re: Annual accounts -- Ken E, 8:40:34, Thu, May 13 2004 [1]
Steve,
I read the figures with interest, too.
What is disappointing is that the last year's figures were worse than expected - the expectation being set at the AGM which, like this year, was towards the end of the season. I'm sure last year there was talk of a loss of £1m, when it turns out to be £1.4m.
What really interests me (because I could find no explanation in the accounts) was why the turnover dropped so dramatically, down by almost £5m. "Cost of sales" also dropped (actually by more).
The real killer seems to be the increased cost of administration, up by well over a million.
I assume the academy accounted for the increase in the rugby department.
Pension contributions look low, as do the directors emoluments.
But an upbeat chairman's summary and additional investment was forthcoming without recourse to we (very small, as you point out) shareholders.
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Re: Annual accounts -- SteveS, 9:32:33, Thu, May 13 2004 [1]
The turnover drop figure and costs of sales fall both seem odd, I wonder if they are not directly comparable figures. Maybe they were slanted in some way by a one-off item, the health club sale?
It's the fashionable thing to ask for details of directors' remuneration, but as you say, they don't seem huge.
In my earlier posting, I meant to refer to FRS3 pre-tax profit, FRS17 is all about pensions. Doh.
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Re: Annual accounts -- Alex22, 12:02:58, Thu, May 13 2004 [1]
The property sale in 2002 seems the most likely cause of the dramatic drop in turnover and costs, but as property is not the company's main business it is not normal accounting practice to show it this way. Rather the profit on disposal should be a separately identifiable line which impacts neither turnover or costs.
If the club has been turned into a profitable business, then it has joined a rare group indeed - not many profesional sports clubs do so in any sport.
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Re: Annual accounts -- SteveS, 17:15:02, Thu, May 13 2004 [1]
Agreed Alex. But I can't see any exceptional items listed anywhere. Very difficult to spot the property effect on any of the figures. Maybe as LI is not a public company it can do its accounting info differently.
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Re: Annual accounts -- gabriel, 20:51:06, Thu, May 13 2004 [1]
Well; thank you for the clear and informed comments on the subject. Compare and contrast with the comments in 'the other place', as they say in Westminster.
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Re: Annual accounts -- Ken E, 21:48:03, Thu, May 13 2004 [1]
But Im not sure how many over there are shareholders....
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Re: Annual accounts -- James_LI, 22:25:40, Thu, May 13 2004 [1]
a vertible hornets nest you stirred up over there. BC threw his toys right out of pram.
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Re: Annual accounts -- gabriel, 23:12:25, Thu, May 13 2004 [1]
James
I am sure you, of all people, would understand that the young gentlemen of St Malachy' were never keen on those from Barrack Street getting above themselves. Clearly talking about annual accounts is such a tetchy subject. I could understand it if it was on principled grounds such as shareholders are exploiters of the working masses and growing fat on the profits made by the labours of others. But I haven't seen any sign of profits at LI and sometimes there doesn't appear to be much productive labour. Our last three lineouts of the season were clearly a last ditch revolt of the workers against the capitalist lackies in Peter's Patch.
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Re: Annual accounts -- James_LI, 22:35:29, Fri, May 14 2004 [1]
Gabriel,
Oh I agree that one belongs with their own, so that is the beauty of LI.
We are one group who SHOULD all be singing from the same hymnsheet but as always the minority try to bu99er it all up.
Still, we shall remain loyal to the badge and to Peters Patch.
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Re: Annual accounts -- SteveS, 2:13:00, Fri, May 14 2004 [1]
Quite so James. I'm thinking we should christen May 11th on the Craic as "Rattle and Pram" day. I think it has quite a ring to it. ;)
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Re: Annual accounts -- JamesC, 22:30:01, Thu, May 13 2004 [1]
Call yourself a financial journalist getting your FRS' in a twitter. Next you'll be banging on about the impact of International Accounting Standards !
I prefer it when you cover the rugby
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Re: Annual accounts -- SteveS, 22:42:54, Thu, May 13 2004 [1]
Hah! I knew it - prompt corrections never work - I should have just bluffed it out!
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Re: Annual accounts -- Kieran M, 18:57:37, Fri, May 14 2004 [1]
"As the chairman will report further at the forthcoming AGM, these actions have produced a dramatic turnround in the fortunes of the business to the extent that the business, excluding any Sunclear property profits (ie. the health club windfall) is expected to produce a profit for the first time in its history."
Yippee!!
Does this mean we may get a dividend payment.
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Re: Annual accounts -- gabriel, 22:02:08, Fri, May 14 2004 [1]
I'd prefer to have D'Arcy and O'Driscoll! I assume that the recent player signings have been made on the basis of a healthy financial position. I am sure most of the credit should go to Conor for this much improved situation. It is not easy to get involved in sorting such a mess out and doing it in a club that you are so much a part of must be twice as difficult. I know! What about a cartoon strip celebrating his achievement?
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Re: Annual accounts -- The Ed, 23:01:41, Fri, May 14 2004 [1]
A cartoon strip would be ok if I had someone who could draw. It was hard enough the first time around. I can give you a story board, but I can't draw for toffington.
Still, the achievement lauded in the original comic strip (which I fully intend to reproduce once we have somewhere permanent to live) was a once in a lifetime moment.
I remember the thrill to this very day, and shall carry it to my grave. First and last time I ever got drunk (or, indeed, drank after a match) at Sunbury. Haven't even imbibed a swift half after a game since then, as far as I can recall. Myself, Tim and a Greek Cypriot called Alexis spent the evening in the Top Bar in hysterics. One of the best nights of my entire life.
Conor, I salute you.
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