Date: 18th February 2018 at 2:23pm
Written by:

There doesn`t seem to be much underlying improvement in the reported profits / (losses) here with a substantial reduction in income broadly offset by a corresponding reduction in costs, “staff costs”:

The Operating loss reported in 2016/2017 of £14.5m looks fairly clean, in so much as there are no exceptional / book write-offs reported. It did however benefit from £4.8m from player transactions – being amortisation (book write-off) of players registrations (transfer fees, etc) of (£23.7m) plus book profit on the disposal of players of £26.6m and “turnover” from such of £1.9m.

Thus 2016/2017 Operating losses before player transactions were reported at £19.3m.




2015/2016 was less clean as the Directors opted to impair / write-off the value of both players and property in aggregate for £79.6m. This amount was included in the reported Operating losses of £81.3m:

£m
Reported Operating losses (81.3)
Add back exceptional items:
Impairment of players registrations 34.8
Impairment of property values 44.8

Payoff to Directors in respect of loss of office 2.6
Underlying Operating profit 0.9

To aid comparison to the above – add back other “player transactions” amounts:
“Turnover” (3.0)
Amortisation of player registrations 16.0
Profit on disposal of players (34.8)

Operating losses (20.9)




So an underlying loss, before the “cost” of player transactions of £19.3m in 2016/2017 versus £20.9m in 2015/2016.

Income fell substantially from £108.8m to £73.8m:

2016/17 £m
2015/16 £m
Gate Receipts
10.7
12.5
TV
48.1
65.0
Sponsorship
2.7
11.8
Commercial/Other
12.3
19.3
Total
73.8
108.8



But there was a corresponding reduction in costs; the biggest reduction reported within “Staff costs”, £93m to £61.5m.

Interestingly it has been reported that the aggregate net income from players bought and sold after the balance sheet date (31/05/17) was £19.5m (£22.4m of income versus £2.9m of costs).




For the conspiracy theorists out there, the accounts state that Mr J Xia is the “ultimate controlling party” and the auditors PwC would have obtained comfort on such…

Cash / loans provided indirectly from such to support the club amounted to £49m in 2016/2017 (£23.6m in 2015/2016). This was principally used to finance player purchases (£57.8m gross, £14.3m net of sales income) – there is a lag between signing a player and paying the club bought from, and operating losses (real / cash income less costs).




My apologies if there are any inaccuracies or oversights in the above – I have reviewed very quickly prior to other commitments…

Forum Thread.



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