Owners Financials (10 Viewers)

[oldskyblue58]

For those that are interested SISU Capital Accounts have been filed at Companies House for the year to 31 March 2019. Not had time to go through properly

SISU CAPITAL LIMITED - Filing history (free information from Companies House)

Seem as a group they had a decent year showing profits of £2.6m. Although £2.2m of that was payable to non controlling interests.

Directors salaries £1.28m with i am assuming that just over £1m went to Seppala.

The directors also received profit shares in SISU Capital Partners LLP of £1.28m and drew down that amount from those profit shares (so dont double that figure up)

SISU Capital now only have 5 employees down from 7 last year

They had £1.2m debtors owed to them and £1m sitting in the bank

The investment shown in fixed assets £3.8m is the employee pension scheme and matched by a similar creditor (ie cancels each other out)

Income was down from £3.9m in 2018 to £3.2m in 2019. Costs had decreased from £1.06m to £599k

I would think that aside from grief from CCFC Seppala would be pretty pleased with her financials

 

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[robbiekeane]

Do the CCFC losses roll up into that figure? They fund it as a loan right, so does it show as an expenditure or..?

 

[oldskyblue58]

Do the CCFC losses roll up into that figure? They fund it as a loan right, so does it show as an expenditure or..?

No they dont.

ARVO made the loans which is a fund SISU Capital manage.

CCFC does not show up in these accounts at all. SISU make their money by taking a proportion of the performance of each fund. If the funds go up in value then SISU get more earnings

 

[robbiekeane]

No they dont.

ARVO made the loans which is a fund SISU Capital manage.

CCFC does not show up in these accounts at all. SISU make their money by taking a proportion of the performance of each fund. If the funds go up in value then SISU get more earnings

So each year when CCFC make a loss, these are “covered” (in the form of a loan I understand?) by the owners. This is from ARVO?

 

[ccfcway]

Good results for them.

Ccfc loses sit somewhere else and the cost of court cases will likely sit somewhere else (with a no win no fee arrangement).

 

[oldskyblue58]

So each year when CCFC make a loss, these are “covered” (in the form of a loan I understand?) by the owners. This is from ARVO?

The only loans to Otium are from ARVO or SISU Capital International fund.

They put money in to cover shortfall in cash not to cover the P&L losses there is a difference. The losses include things that are either not being paid ie loan interest or things like depreciation which is an accounting estimate. The cash flow shortfall is a timing difference between real money coming in and real money going out .... that is the bit they have put loans in to cover over the last few years

 

[robbiekeane]

The cash flow shortfall is a timing difference between real money coming in and real money going out .... that is the bit they have put loans in to cover over the last few years

Okay - and they are still outstanding loans or were they just short term loans and paid back?

We are incurring P&L losses though right? In which case, who is covering/funding these?

 

[BackRoomRummermill]

Bit weird really, it’s not a PLC with regard to CCFC , so can we buy shares in CCFC erm no

So why would the accounts interest us ? Any canny company that is not PLC has no money in the bank for tax purposes

 

[fernandopartridge]

No they dont.

ARVO made the loans which is a fund SISU Capital manage.

CCFC does not show up in these accounts at all. SISU make their money by taking a proportion of the performance of each fund. If the funds go up in value then SISU get more earnings

I can bet the £2.6m figure that somebody equates that to the Bayliss and Chaplin fees regardless of the accounting year, relationship etc

 

[fernandopartridge]

Okay - and they are still outstanding loans or were they just short term loans and paid back?

We are incurring P&L losses though right? In which case, who is covering/funding these?

They're not necessarily cash losses though, depreciation isn't cash and accrued interest isn't either.

 

[speedie87]

Bit weird really, it’s not a PLC with regard to CCFC , so can we buy shares in CCFC erm no

So why would the accounts interest us ? Any canny company that is not PLC has no money in the bank for tax purposes

How much money a company has in the bank has zero impact on its tax

 

[skybluetony176]

Well. At least we know where the Robbie Keane money went

 

[oldskyblue58]

I can bet the £2.6m figure that somebody equates that to the Bayliss and Chaplin fees regardless of the accounting year, relationship etc

More than likely ...... even if these figures finish 3 or 4 months earlier !!!

 

[oldskyblue58]

Okay - and they are still outstanding loans or were they just short term loans and paid back?

We are incurring P&L losses though right? In which case, who is covering/funding these?

Some of it got repaid..... clearly cash flow prohibited all of it.

As for covering losses see previous or others comments

 

[skybluetony176]

Well. At least we know where the Aron Gunnarsson money went

 

[robbiekeane]

As for covering losses see previous or others comments

Well that's really helpful thanks.

There's a reason accountants who can present and explain things in terms easily understandable are paid bags (shout out to hicks)...because they are rare as fuck

 

[robbiekeane]

They're not necessarily cash losses though, depreciation isn't cash and accrued interest isn't either.

Appreciate you trying to help - not sure I fully understand though.

All i'm trying to understand is - given they are the SISU accounts up top which show they made 2.6m profit...does that include the shortfalls they are apparently funding for CCFC/Otium?

So far the response has been that they don't actually put any money in they just cover temporary cashflow shortfalls. However...sometimes they aren't paid back apparently. So...they DO put money in then?

Can't be that difficult to explain

 

[pipkin73]

Think what people are trying to say (and i also get confused) is that OTIUM are the company that cover our losses (so it won't shown on SISU books. We owe the money to OTIUM but it's not being called in (just like Chelsea to RA etc..), but if they ever did we are screwed, just like Chelsea would be. Our owners have kept us going, they are no saints but they continue to cover any shortfall (notice i said shortfall, not fund us). I think the real question is, how long will they continue too and for what reason.

 

[Fergusons_Beard]

OSB can you hazard a guess on value of the club (inc debts owed) if someone wanted to buy it?

Asking for a friend...


Sent from my iPhone using Tapatalk Pro

 

[oldskyblue58]

Well that's really helpful thanks.

There's a reason accountants who can present and explain things in terms easily understandable are paid bags (shout out to hicks)...because they are rare as fuck

Oh dear....... and trying to insult my professional ability is really going to encourage me to even attempt to answer any specific questions you have isnt it :banghead:

 

[oldskyblue58]

OSB can you hazard a guess on value of the club (inc debts owed) if someone wanted to buy it?

Asking for a friend...


Sent from my iPhone using Tapatalk Pro

Depends if you are buying just the assets or not fb. Buy the company with all the debt included and the value is £1. Buy just the assets and the value of golden share playing squad and ryton less football creditors is probably up to 10m. To do a deal with sisu I think they would be looking for north of 20m

 

[Deleted member 5849]

Appreciate you trying to help - not sure I fully understand though.

All i'm trying to understand is - given they are the SISU accounts up top which show they made 2.6m profit...does that include the shortfalls they are apparently funding for CCFC/Otium?

So far the response has been that they don't actually put any money in they just cover temporary cashflow shortfalls. However...sometimes they aren't paid back apparently. So...they DO put money in then?

Can't be that difficult to explain

A loss can be a paper loss, which doesn't involve putting money in. Covering a cash shortfall is effectively our overdraft facility.

 

[Grendel]

Appreciate you trying to help - not sure I fully understand though.

All i'm trying to understand is - given they are the SISU accounts up top which show they made 2.6m profit...does that include the shortfalls they are apparently funding for CCFC/Otium?

So far the response has been that they don't actually put any money in they just cover temporary cashflow shortfalls. However...sometimes they aren't paid back apparently. So...they DO put money in then?

Can't be that difficult to explain

A capital fund they manage loan the club money. Loan not give.

The accounting losses are a combination of factors as described above

The loans are to cover cash flows which can be nothing to do with P and L but when costs are greater than cash and cash in the bank is too low to cover the difference

JLR has in the past had major cash flow concerns even when profit wise its seemingly healthy

So the fund loans the club and I assume the loan is shown as owing in the company accounts. The loans have had to happen every year and some remain outstanding. I can only see the situation getting worse in that regard

Bayliss was sold I assume to raise cash as again the cash flow issue was rearing and they wanted to make a signing

I think from memory a large part of revenues has been from non match day source - I assume add ons for player sales

I can’t see that as a long term (or medium even) way eh continue to conduct business and the revenue on matches must now at least be halved and costs increased

So unless we can keep selling players for large fees and hope they are sold on for even larger fees it’s at some point going to crash and burn

 

[Grendel]

Depends if you are buying just the assets or not fb. Buy the company with all the debt included and the value is £1. Buy just the assets and the value of golden share playing squad and ryton less football creditors is probably up to 10m. To do a deal with sisu I think they would be looking for north of 20m

Perhaps the Bury chap can spend another £1 he will be without a club soon

 

[oldskyblue58]

Otium trades as ccfc match incomes commercial income and player sales largely fund the club. It is a separate legal entity controlled via investment funds by sisu.

When there is not enough physical cash received to pay creditors, wages etc then otium has over recent years topped up the shortfall with loans from ARVO or sisu international fund. There has not been enough subsequent cash flow to allow otium to repay most of the new loans so they are still outstanding. 2016 to 2018 loans 1.53m still outstanding 1.17m. Basically arvo acted as an emergency bank overdraft when there was not enough cash to pay the bills as they fell due

The losses shown in the otium ccfc accounts include items that are not physically paid but are due such as loan interest ,1.8m, owed each year to arvo etc which is added to the debt rather than paid in cash. There is not enough cash flow to make payments on the interest. That means losses which includes loan interest payable can be significantly different to cash flow shortfall which doesn't include the loan interest because it isnt physically paid. It also means no one is covering all the losses each year by paying in cash, it is "met" by increasing the debt owed to arvo.

Cash flow is a reconciliation between what cash is actually physically received and what is physically paid. Some things must be paid and if not enough cash received that creates a shortfall that arvo or sisu international fund have covered. Other items such as loan interest can be left at the option of arvo to add on to debt so dont affect cash flow because no physical payments of cash are made. Any actual loan repayments would form part of the cash flow calculation.

Arvo is a fund managed by sisu capital. The loans are owed to arvo and would show as an asset in that fund. The interest charged (whether paid or not) to otium is income to that fund. Otium ccfc the company is not shown as part of the Arvo fund only the loan total and interest due plus the value of the shares they own in sbs&l and otium. Sisu charge the arvo fund a percentage of its asset valuation and income to manage the fund each year. There appears to be much more to arvo than its loans to otium, ccfc is not it's only "investment "

Sisu capital accounts show the fee charged to arvo as income. Otium ccfc does not show as an asset or liability in sisu capital accounts. The ccfc losses do not roll up in to sisu capital accounts nor does any ccfc income. So the losses of ccfc are not netted off the figures in the sisu capital financial statements nor are any other ccfc liabilities or assets

Seppala owns sisu capital and by that ownership and investment management agreement controls all other entities mentioned above

 

[robbiethemole]

Depends if you are buying just the assets or not fb. Buy the company with all the debt included and the value is £1. Buy just the assets and the value of golden share playing squad and ryton less football creditors is probably up to 10m. To do a deal with sisu I think they would be looking for north of 20m

That's a bugger!!!! it's gonna be a hefty wedge out of the £107m euromillions I won last night, but I can probably stretch to it. How much will it cost to get rid of Wasps at the same time?

 

[Gibbo]

Why pay £20m when you can probably pick up a decent club for a quid from someone desperate to get out. It is the Newcastle problem in miniature. A cost-plus valuation being out of synch with a market-based one

 

[Sky_Blue_Dreamer]

Well that's really helpful thanks.

There's a reason accountants who can present and explain things in terms easily understandable are paid bags (shout out to hicks)...because they are rare as fuck

Explaining this stuff without getting technical or getting dull with the figures is difficult even to those that've studied it - it can be incredibly convoluted. OSB does a good job of getting the points across IMO.

We are incurring P&L losses though right? In which case, who is covering/funding these?

P&L losses aren't really relevant because they don't actually exist in reality. They include 'paper' figures that are artifically created as a means of trying to more accurately represent the value of the business assets- thing like depreciation/amortisation that are just made up using agreed accounting practices.

Most businesses don't fail due to losses or not having sufficient assets (insolvency), they fail due to not having enough cash (liquidity). The important thing is the cashflow, and this is what SISU cover, via loans from either their capital fund or ARVO

Okay - and they are still outstanding loans or were they just short term loans and paid back?

As stated above CCFC run at a cash loss each year so it relies on a cash top-up from the owners. Sometimes during the year some of the previous loans are paid back, but these are then having to be covered by new loans from the owners. I don't know if the interest rate on these loans are different, but I would say it's probably to make the loans due later in the accounts and thus makes the finances look a bit better
For example if you borrowed a tenner from a mate and he wanted it back in a week
A week later you don't have it. So you borrow another tenner from the same mate who says he wants that back in a week. You then give him that same tenner back immediately to pay back the £10 you borrowed last week. You still owe him a tenner, but instead of you owing it him now you've got an extra week to get it. This is what the owners are doing in an almost constant cycle.

So far the response has been that they don't actually put any money in they just cover temporary cashflow shortfalls. However...sometimes they aren't paid back apparently. So...they DO put money in then?

They are putting money in via the capital fund or ARVO, but the point is how it's classified.

The money put in are as loans, so they're owed it back (with interest). In accounting, 'putting money in' is largely thought of as capital investment and isn't owed back.

For example, let's say you needed a bit of extra cash and took out a loan - would you say the bank had 'put money in'?

So they're covering the losses by increasing the club debt, not by just giving the club money.


Don't know if any of that helps - I think OSB explains it better than I do

 

[chiefdave]

Why pay £20m when you can probably pick up a decent club for a quid from someone desperate to get out. It is the Newcastle problem in miniature. A cost-plus valuation being out of synch with a market-based one

That's the big problem. Unless you're a fan why on earth would you buy CCFC over any other club?

 

[robbiekeane]

Oh dear....... and trying to insult my professional ability is really going to encourage me to even attempt to answer any specific questions you have isnt it :banghead:

It was tongue in cheek mate - hence the Hickman comment! Appreciate the help.

,
Don't know if any of that helps - I think OSB explains it better than I do

It does thanks!

A capital fund they manage loan the club money. Loan not give.

The accounting losses are a combination of factors as described above

The loans are to cover cash flows which can be nothing to do with P and L but when costs are greater than cash and cash in the bank is too low to cover the difference

JLR has in the past had major cash flow concerns even when profit wise its seemingly healthy

So the fund loans the club and I assume the loan is shown as owing in the company accounts. The loans have had to happen every year and some remain outstanding. I can only see the situation getting worse in that regard

Bayliss was sold I assume to raise cash as again the cash flow issue was rearing and they wanted to make a signing

I think from memory a large part of revenues has been from non match day source - I assume add ons for player sales

I can’t see that as a long term (or medium even) way eh continue to conduct business and the revenue on matches must now at least be halved and costs increased

So unless we can keep selling players for large fees and hope they are sold on for even larger fees it’s at some point going to crash and burn

Thank you.

Arvo is a fund managed by sisu capital. The loans are owed to arvo and would show as an asset in that fund. The interest charged (whether paid or not) to otium is income to that fund. Otium ccfc the company is not shown as part of the Arvo fund only the loan total and interest due plus the value of the shares they own in sbs&l and otium. Sisu charge the arvo fund a percentage of its asset valuation and income to manage the fund each year. There appears to be much more to arvo than its loans to otium, ccfc is not it's only "investment "

Thanks - and now we get to what’s behind my questions.
So the loans are showed as an asset to Arvo, and the interest is showed as income even if it’s not paid.

So, following the trail...in any given year Arvo could have had to loan Otium/CCFC money to cover a cash shortfall, say a cool £1m, and this not be paid back/off. They charge interest, 10%, which also shows as income without it even being paid either.

So despite in effect being £1.1m out of pocket, would this Arvo fun be showing a positive performance (based on just this CCFC stuff, although I of course appreciate they have other investments to your point), and therefore SISU charge a chunky fee?* If so, it’s incredible how SISU can actually make money or show as profitable despite just managing funds that are a shambles.


*I wouldn’t previously have even found myself asking this but given the smoke and mirrors above - is this fee actually paid to SISU in cash or is is just more paper money “owed”.

 

[oldskyblue58]

There are no details available regarding the funds so it is hard to say how they are performing or if they are a shambles. But in theory it would be possible to create paper value or profits.... they would have to make sure it was documented and based on sound principles though. To just create make believe figures would be fraud. No evidence at all of any fraud.

Clearly the interest due from ccfc is as it stands a paper figure because it hasn't been paid over. But it is based on a legal agreement and at least some of the loans are secured on assets.

They would do as a minimum an annual review of the fund (more likely monthly) which would value the fund and account for income receivable. Then take their slice. If the assessment is the loan is not recoverable its value would be written down creating a loss. The maximum value of the loan is the amount lent. The only increase or profit is the interest receivable

So did sisu capital draw down the fees that are shown as income ? It looks to me that they have. The debtors carried forward are not significantly different to those at start of year so that implies the fees in the year being paid if they hadn't then debtors would have increased. Also the expenses wages and drawings have been paid so there must have been cash available to pay them. In addition the money in bank by year end had doubled to over £1m so that means cash being paid in, sufficient to pay the costs and increase the balance.

For sisu to draw down fees means that the fund must have significant other investments that create the cash because the loans to ccfc do not

So what you say could happen, I dont think it has though.

 

[HuckerbyDublinWhelan]

So what you’re saying is... if Coventry City makes losses, this doesn’t show on the SISU accounts....

I.E if we as fans stopped going, SISU aren’t really affected?

Who could have predicted that

Eyes ro

 

[oldskyblue58]

not exactly.

The effect is not great certainly so long as the overall fund performance is good.

However if ccfc continue to make cash shortfalls and assuming sisu want to keep ccfc going then they have to top those shortfalls up with further loans. Those loans are nor secured and so far remain outstanding which in time may lead to the fund incurring capital losses and revenue reserve write downs, all of which medium to long term may affect the ability of SISU to extract their slice from the funds involved in future. Also if other fund investments under perform this might affect the fund ability to cover the cash available to distribute because there is no physical cash received from ccfc.

Of course one solution for the club is operate in a way that does not require further loans from the funds to cover the cash shortfalls. This would certainly have to involve paying less for players and players wages....... that scenario being greatly affected by the income the club can generate

It really is not as straight forward on either side of the NOPM argument as going or not going affects SISU directly now

 

[Colin Steins Smile]

not exactly.

The effect is not great certainly so long as the overall fund performance is good.

However if ccfc continue to make cash shortfalls and assuming sisu want to keep ccfc going then they have to top those shortfalls up with further loans. Those loans are nor secured and so far remain outstanding which in time may lead to the fund incurring capital losses and revenue reserve write downs, all of which medium to long term may affect the ability of SISU to extract their slice from the funds involved in future. Also if other fund investments under perform this might affect the fund ability to cover the cash available to distribute because there is no physical cash received from ccfc.

Of course one solution for the club is operate in a way that does not require further loans from the funds to cover the cash shortfalls. This would certainly have to involve paying less for players and players wages....... that scenario being greatly affected by the income the club can generate

It really is not as straight forward on either side of the NOPM argument as going or not going affects SISU directly now

Thanks OSB you have provided a clear insight into the structure and processes behind the SISU management of the Arvo fund and Otium.

Within the reports is there any indication of the percentage rate of interest attached to the loans to Otium? Secondly, are there any reports on the current Otium & sbs&l debt? Finally, if the loans were made on a zero percentage basis.....what would the level of debt be for Otium & abs&l, as that would give us an indication of the financial viability of the club.

 

[oldskyblue58]

No specific mention no in the SISU accounts From the Otium accounts you can estimate the percentage rates. One of the loans (£6m) attract interest at 19.5% APR another £1.8m at 11.4% APR and a third £1.2m at 14.8% APR. Interest added to the debt each year so far

last figure available on size of Otium & SBS&L debts was in the 2018 accounts.
SBS&L owed £28.54m with no interest accruing
Otium/CCFC owed £8.9m capital with a further amount of unpaid interest accumulated of £7.17m total £16.07m