TRFC financials year ended June ‘23

[Keith Hill (Bolton)]

On the front of the Wirral Globe, asking for investment!

 

[dollar'sbloke]

All rather confusing have asked experts in the past, they make so many qualifying reservations, never any wiser.
The big question is, are the non-football things expanding in terms of profits? The rest we can guess at. No one to sell, need some cup money

 

[Rockford's Love Child]

The big question is, are the non-football things expanding in terms of profits?

Simple answer, no.

 

[dollar'sbloke]

Simple answer, no.

There was a £200k growth in revenue was there a corresponding wipe out in expenses?

 

[Rockford's Love Child]

There was a £200k growth in revenue was there a corresponding wipe out in expenses?

Yes, there was a significant loss in the year.

 

[O4anotherplayoff]

On the front of the Wirral Globe, asking for investment!

They’re only reporting what’s in the strategic report. Can’t be anyone who doesn’t already know there’s a “need for investment if club are to grow”.

 

[O4anotherplayoff]

At least some of that discretionary loss was eradicated by whatever fee we got for Bristow, sold a few weeks after the financial year end. Frustratingly but understandably, the strategic report is silent about that deal.

Also, as I recall MP saying in a Q&A at the time, the short term financial impact of declining £500k of bids in January was funded by the Paliosi. So, going back to the earlier question about the £4.7m other creditors, this funding might well also be included in that figure.

 

[Keith Hill (Bolton)]

They’re only reporting what’s in the strategic report. Can’t be anyone who doesn’t already know there’s a “need for investment if club are to grow”.

You do realise that I could have worded that different.
The palioi have been looking for investment since covid.
There is A lot not in that report, but it does say an awful lot about the business itself between the lines.
The club has had significant losses all this century and without PJ, I would not like to think where we would be and possibly in the future.
The club is untenable and without outside investment, the debt will grow and the future will look bleak.

 

[O4anotherplayoff]

There is A lot not in that report,

Like what?

The club has had significant losses all this century and without PJ, I would not like to think where we would be and possibly in the future.

PJ deserves credit for holding out for a credible and caring owner during the lengthy period of time (years) he was trying to offload the club. Subsequently, though, there’s no indication that he’s given any financial support since 2018, when he wrote off the £2.18m of unsustainable debt he’d racked up during his ownership.

The club is untenable and without outside investment, the debt will grow and the future will look bleak.

The club certainly isn’t untenable and there’s no evidence to say it is. Outside investment is needed in order to grow, not to survive. If it arrives, MP can pat himself on the back. If, in your doomsday scenario, it doesn’t arrive, then the club should still be able to plod along, as it has done for most of its history, playing fourth division football in front of modest support, with little appeal to anyone credible to take it on and move it forward.

 

[Rockford's Love Child]

The big concern is the cashflow. Cashflow was positive by £316k but that is only after a £1.2m increase in "Other Creditors" during the year. Without that cashflow would have been negative £884k. I am at a loss as to what it is TBH.

I have always suspected it might be PJ putting money back in the form of soft loans - it can't be MP himself or the Indonesians as if it were either of them then it would have to be disclosed in the accounts since they are directors. Not sure if anyone knows anything more?

Be it him or something else it is very curious as the total amount of such creditors is now £4.7m which is a massive number given the total Balance Sheet is only £17.5m. Also to have gone up by £1m in one year when turnover is only £5.5m is very strange.

I think the £4.7 million is Palios' director's loan account, or at least some combination of that account and other balances. In 2017 the other creditor balance of £1.5 million was actually disclosed as a director's loan, but as the balance has grown in subsequent years the narrative has been removed, presumably to make the transactions more opaque.

There is not actually a requirement to disclose loans from the directors to the company, just the other way round. However, as you say it is peculiar to have such a material balance in the accounts with no narrative explanation, and it could be argued that the reader's understanding is impeded by the failure to disclose.

 

[Rockford's Love Child]

There are circumstances in which loans from directors to a company do not have to be disclosed, notably in small companies where interest is charged at market rates. As that is not the case here, it is really for Palios and the auditor to explain why the disclosure has not been made.

The financial statements should show a 'true and fair view' and that requirement supersedes the particular requirements of the Companies Act and accounting standards. I would argue that a creditor of £4.7 million is material enough that it should be explained by a disclosure note, and the failure to explain it impairs the understanding of the accounts for the reader. ADD drew attention to the balance above precisely for this reason.

There are no reduced disclosures in medium company accounts, so the accounts signed by the auditor and filed at Companies House are the same as those presented to the shareholders at the AGM. The shareholders have the right to ask further questions of the directors and auditor at the AGM, and delve deeper into the figures, but that is another matter.

 

[O4anotherplayoff]

There are no reduced disclosures in medium company accounts,

There are some, including with respect to related party disclosures. I assume that’s why the balances owed to the Paliosi at the year end aren’t included and shown as such in the related party note, since they’d otherwise need to be, under FRS 102 at least.

 

[ADD]

I think the £4.7 million is Palios' director's loan account, or at least some combination of that account and other balances. In 2017 the other creditor balance of £1.5 million was actually disclosed as a director's loan, but as the balance has grown in subsequent years the narrative has been removed, presumably to make the transactions more opaque.

There is not actually a requirement to disclose loans from the directors to the company, just the other way round. However, as you say it is peculiar to have such a material balance in the accounts with no narrative explanation, and it could be argued that the reader's understanding is impeded by the failure to disclose.

Interesting RLC - thanks for that. I had assumed that legal requirement went both ways so had assumed it couldn't be MP and so had convinced myself it was PJ rather than MP....

 

[Rockford's Love Child]

Interesting RLC - thanks for that. I had assumed that legal requirement went both ways so had assumed it couldn't be MP and so had convinced myself it was PJ rather than MP....

I think O4A is right that is probably the reduced Companies House disclosures Palios has taken advantage of, rather than the Companies Act rules. The loan should still strictly be disclosed as a related party transaction under FRS102, but we have probably taken the filing exemption.

Either way, it seems it is a conscious decision of the club not to disclose.

 

[bring back the cowshed!]

Amazing. On what other football fan forum can you get debates on company law and pictures of high-end cuisine?

 

[Ian]

I'm far too clueless to be breaking down company accounts, there are some very knowlegable members on here; fascinating to read though chaps

 

[O4anotherplayoff]

I think the £4.7 million is Palios' director's loan account, or at least some combination of that account and other balances. In 2017 the other creditor balance of £1.5 million was actually disclosed as a director's loan, but as the balance has grown in subsequent years the narrative has been removed, presumably to make the transactions more opaque.

There are bits more narrative elsewhere within subsequent years accounts, as my cursory look found (#20). But, overall, it’s normal for companies to take whatever exemptions are available to them, so I don’t see (and can’t imagine) anything more to it than that here.

I suppose it does raise the question of what reaction, if any, there’d be amongst fans if the financials did spell out that the club owes the Paliosi over £4m (or at least a fair chunk of that). My guess is it’d arouse little more than curiosity or passing interest, at least amongst the majority.

 

[bring back the cowshed!]

Nerd alert. On the subject of the club's potential, seeing that my 65 years of support had got the club one league lower than when I started, I looked at the fate of the 24 clubs who formed the original Third Division on 1958.

I was amazed to find that only one club was playing there in both 1958/59 and 2023/24. That club is Reading and they are there mainly because of financial irregularities.

Brentford and Bournemouth are in the EPL, while Norwich, QPR, Hull, Plymouth and Southampton are in the Championship. Note that all have had either big investors, a new stadium or no local rivals. We have no such benefits.

Almost half of the clubs (11) including TRFC are in League Two. Why? Because since promotion into the league became easier, sides like Burton, Fleetwood and Cambridge have squeezed us out. In English football, you have to run fast to stay where you are. So, statistically, I think we will remain a tier four side or thereabouts for the foreseeable future, barring investment of some sort. The move to Bidston Moss could have been the impetus we needed, but it needs money, vision and possibly even a local philanthropist with bigger pockets than the Palioses.

Four clubs are now in the National League and the 24th club is Bury, who have reformed and are in the lower echelons. The good news is that all clubs but one are now in the top five tiers and Bury will probably get back into the EFL in five to ten years. Note that of the 11 clubs in L2, nearly all of them (including of course Rovers) have had recent spells in non-league.

My conclusion is that as things stand we will remain a League Two side with the possibility of a year or two in League One if we get lucky. However, if we drop out of the league, the long-term prospects are not that bad. Even if we fold, we will almost certainly reform and fight our way back as did all the other clubs. The "traditional" league clubs are resilient, more so than the likes of newbies Yeovil, Hereford and Rushden & Diamonds, all of whom had long spells in the EFL, all reaching the second tier, but are all now either struggling or non-existent.

I am not sure how cheerful you will find this. I am fairly confident there will be a TRFC for the foreseeable future, but I can't see us getting much further up the league without a lot of external help.

 

[Boz]

This has made me take a look at what's happened to sides when I first watched Rovers about 12 years after BBTC. in the then named division 3, now League One.

Aston Villa, Brighton and Hove Albion and Fulham are now all top flight sides.
At the opposite end of the spectrum, Halifax, Chesterfield, Torquay Rochdale and Bury all dropped out of the FL
Bristol Rovers, Barnsley, Shrewsbury Town and Port Vale were L1 teams then and now.

I think the gap between L1 and L2 has expanded by comparison with the old divisions 3 and 4 and it would be a real achievement for Rovers to get back to L1 in the current climate. Think it's more likely we'd go the other way and while there is some consolation in BBTCs remarks, would prefer we stayed in the FL!

 

[drwhoman]

This has made me take a look at what's happened to sides when I first watched Rovers about 12 years after BBTC. in the then named division 3, now League One.

Aston Villa, Brighton and Hove Albion and Fulham are now all top flight sides.
At the opposite end of the spectrum, Halifax, Chesterfield, Torquay Rochdale and Bury all dropped out of the FL
Bristol Rovers, Barnsley, Shrewsbury Town and Port Vale were L1 teams then and now.

I think the gap between L1 and L2 has expanded by comparison with the old divisions 3 and 4 and it would be a real achievement for Rovers to get back to L1 in the current climate. Think it's more likely we'd go the other way and while there is some consolation in BBTCs remarks, would prefer we stayed in the FL!

I agree that L2 is our most likely home at least until we get some new investment, however unlikely that might be at the present time. Indeed, it might be argued that this was the case historically until we got the PJ money and then enjoyed a period of success unparalleled in our history! We did have spells in the old Third Division but we were rarely in the promotion race from that Division. What we have sadly lost is the number of local derbies. While we now have Wrexham again, thanks to American money, games against Chester and Southport were always good to look forward to. Indeed, even before my time (!) there were games against New Brighton. I think they went in 51?