ACL has "net value of nil" (2 Viewers)

[covcity4life]

Get someone else to read it too you.

no .

 

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[chiefdave]

The CCC valuation is of the entirety of ACL.

Why do CCC have a valuation for 100% of ACL in their accounts when they only own 50%? That seems an odd thing to do.

 

[Otis]

I'll take that as a compliment!!! Thanks! LOL!

Think you're forgetting, you are Brian not Brain.

 

[lordsummerisle]

Why do CCC have a valuation for 100% of ACL in their accounts when they only own 50%? That seems an odd thing to do.

Even if it didn't and was for only 50% of it, then twice the value of nil is stil nil!

 

[duffer]

The CCC valuation is of the entirety of ACL, they give it a nett value of nil, which would value ACL at £14million minus mortgage of £14million.

Therfore if somebody took on the mortgage and paid "full value" for ACL as a business then the only cost would be the mortgage.

You are basically saying that ACL is worth £28million, adding the "value" of ACL to the cost of the mortgage.

Ah, OK, see what you're saying. So you're saying that ACL free and clear of the mortgage is worth £14million, but with the mortgage is worth nothing, right?

I'm not sure I'd agree with that, especially given that the Higgs value their share at £6.5m, but I can see how you came to it.

 

[jimmyhillsfanclub]

All a little confusing

CCC....... own 100% of North Coventry Holdings Limited (NCH)....... which owns 100% of North Coventry Regeneration Limited (NCR)and 50% of ACL

Principal activity of NCR is described as the build of the Ricoh Arena
Principal activity of NCH is described as holding shares in NCR & ACL

The shares in ACL were purchased by NCH on 27/02/2004 for £1,758,056 at £1 per share. In the NCH accounts to 31/03/2005 the value of these shares were written down to £nil. Similarly the investment in NCR was written down by 31/03/08 to nil. So it looks to me that the value of the CCC investment has always been £nil as far as the CCC accounts are concerned (even before the current dispute)

That does not mean that the value of ACL as a going concern business is nil, only that CCC & NCH accounts do not carry a value because they have adopted a very prudent view of £1.758m investment, that is agreed by their auditors. (key is that the value of assets is not overstated) Can the Charity carry a value based on a different set of criteria - yes. Does that make it all confusing yes.

So the last CCC figures to 31/03/13 took the view that their investment, the loan and the uncertainties kept the net value of the investment at nil. Well that was straight after the refinance of ACL with £14m loan and in the middle of the CCFC dispute. Even without the loan or dispute the investment in ACL had been written down to nil so the new factors were never going to improve that.

Going on the comments made it seems to imply that the value is netted down by the loan to arrive at nil. Not sure how that works in terms of valuation and disclosure as they are two separate things - an investment and loan debtor. Take it at face value of what was said and that implies that 50% of ACL is worth £14m but has been netted off against the £14m loan owed by ACL (100%) to achieve nil value in the CCC accounts. The charity values its investment in 50% are more than £nil but that has no impact at all on the CCC accounts at all.

As a long term unquoted investment in a joint venture do they actually have to include a current value of ACL every year? They do have to include a statement to give details of net assets and profits of ACL - and do in the NCH accounts

The question I have in the CCC not valuing NCH and thereby the share in ACL is the following

Is the nil valuation an indication that the CCC have no interest in selling its 50% share interest in the project at all? ......... No expectation of sale or a return or income, then you might just say the value of investment in the CCC accounts should be disclosed as £nil.

Talk of independent valuations and averaging etc are a little pointless if there is no expectation or no need to sell is felt.

The disclosure was also based on a valuation report that was done prior to the CCC 2012/13 accounts being signed off ...... have things changed since then?

So before we get all excited that ACL is worth nil, that is not what was actually said. What is actually said is that the value of the investment in NCH which owns 50% of ACL is in the opinion of CCC and its auditors written down to nil in the CCC annual financial reports. This does not give a sale value of ACL

.....bloody hell....this is almost as complex as the sisu web of companies....

...where's the "my heads exploding" smiley nick

 

[lordsummerisle]

Ah, OK, see what you're saying. So you're saying that ACL free and clear of the mortgage is worth £14million, but with the mortgage is worth nothing, right?

I'm not sure I'd agree with that, especially given that the Higgs value their share at £6.5m, but I can see how you came to it.

Think that's what the CCC valuation is saying to be honest.

Higgs of course can value their share at whatver level they like, like I could my house if I wanted to sell it, doesn't mean I would sell it at the price I would like of course.

People like domestic house sale/rental analogies on here!

 

[Nick]

All a little confusing

CCC....... own 100% of North Coventry Holdings Limited (NCH)....... which owns 100% of North Coventry Regeneration Limited (NCR)and 50% of ACL

Principal activity of NCR is described as the build of the Ricoh Arena
Principal activity of NCH is described as holding shares in NCR & ACL

The shares in ACL were purchased by NCH on 27/02/2004 for £1,758,056 at £1 per share. In the NCH accounts to 31/03/2005 the value of these shares were written down to £nil. Similarly the investment in NCR was written down by 31/03/08 to nil. So it looks to me that the value of the CCC investment has always been £nil as far as the CCC accounts are concerned (even before the current dispute)

That does not mean that the value of ACL as a going concern business is nil, only that CCC & NCH accounts do not carry a value because they have adopted a very prudent view of £1.758m investment, that is agreed by their auditors. (key is that the value of assets is not overstated) Can the Charity carry a value based on a different set of criteria - yes. Does that make it all confusing yes.

So the last CCC figures to 31/03/13 took the view that their investment, the loan and the uncertainties kept the net value of the investment at nil. Well that was straight after the refinance of ACL with £14m loan and in the middle of the CCFC dispute. Even without the loan or dispute the investment in ACL had been written down to nil so the new factors were never going to improve that.

Going on the comments made it seems to imply that the value is netted down by the loan to arrive at nil. Not sure how that works in terms of valuation and disclosure as they are two separate things - an investment and loan debtor. Take it at face value of what was said and that implies that 50% of ACL is worth £14m but has been netted off against the £14m loan owed by ACL (100%) to achieve nil value in the CCC accounts. The charity values its investment in 50% are more than £nil but that has no impact at all on the CCC accounts at all.

As a long term unquoted investment in a joint venture do they actually have to include a current value of ACL every year? They do have to include a statement to give details of net assets and profits of ACL - and do in the NCH accounts

The question I have in the CCC not valuing NCH and thereby the share in ACL is the following

Is the nil valuation an indication that the CCC have no interest in selling its 50% share interest in the project at all? ......... No expectation of sale or a return or income, then you might just say the value of investment in the CCC accounts should be disclosed as £nil.

Talk of independent valuations and averaging etc are a little pointless if there is no expectation or no need to sell is felt.

The disclosure was also based on a valuation report that was done prior to the CCC 2012/13 accounts being signed off ...... have things changed since then?

So before we get all excited that ACL is worth nil, that is not what was actually said. What is actually said is that the value of the investment in NCH which owns 50% of ACL is in the opinion of CCC and its auditors written down to nil in the CCC annual financial reports. This does not give a sale value of ACL

For a buyer, in a standard business how would a "value" be worked out from things like that? Obviously there are lots of variables though.

 

[Otis]

.....bloody hell....this is almost as complex as the sisu web of companies....

...where's the "my heads exploding" smiley nick

 

[chiefdave]

For a buyer, in a standard business how would a "value" be worked out from things like that? Obviously there are lots of variables though.

You would value taking into consideration assets, liabilities and future projections. Of course it all ends up coming down to will the buyer pay what they owner wants, especially if the owner doesn't need to sell.

Oddly if SISU say ACL are underperforming and they can create greater profits running it themselves it could, and probably would, make the asking price increase as it would reflect the increased value to the buyer. That's why in hostile takeovers you sometimes see an offer higher than the current value or share price.

Think the problem we have with this kind of thing is people pick up on one element which supports their point of view and cling to it without really understanding the whole process.

 

[skybluetony176]

So basically any offer for ACL will have to be at least the cost of settling any outstanding debt as ACL by all accounts can afford it's bills in it's current state meaning the owners don't need to sell as they currently have a viable business.

Would that be about right?

 

[duffer]

Think that's what the CCC valuation is saying to be honest.

Higgs of course can value their share at whatver level they like, like I could my house if I wanted to sell it, doesn't mean I would sell it at the price I would like of course.

People like domestic house sale/rental analogies on here!

I'm not quite sure that's what CCC are saying, but again I take your point and I can see how it can be seen that way. In truth, I'm looking at the Roadmap idea and extrapolating it out into this situation - that called for a purchase of part of ACL and a purchase of the mortgage...

Just to twist our minds a bit further, using the house sale analogy. Let's say I'm selling my house for £200k, and my mortgage is £200k, is the value of my house effectively nil, to me?

Ah, forget it, I'm not sure this gets us anywhere!

Happy to agree to differ on this.

 

[Astute]

So basically any offer for ACL will have to be at least the cost of settling any outstanding debt as ACL by all accounts can afford it's bills in it's current state meaning the owners don't need to sell as they currently have a viable business.

Would that be about right?

That is what negotiations are for. If only SISU would negotiate.

 

[chiefdave]

So basically any offer for ACL will have to be at least the cost of settling any outstanding debt as ACL by all accounts can afford it's bills in it's current state meaning the owners don't need to sell as they currently have a viable business.

Would that be about right?

Pretty much, you either settle the debt or take over repayments (as long as the lender is happy with that).T

hink of it in terms of the club, anyone who buys it will pay nothing (or the mythical pound as you have to actually make a payment) but the key thing is what happens with the money SISU are saying they are owed. If they are prepared to write everything off the value of the club is zero, if they want their £30m back then someone will need to pay them that much hence the value is £30m even though the accounts and future projections don't really support that.

 

[lordsummerisle]

So basically any offer for ACL will have to be at least the cost of settling any outstanding debt as ACL by all accounts can afford it's bills in it's current state meaning the owners don't need to sell as they currently have a viable business.

Would that be about right?

Basically what was offered by sisu, plus a payment to Higgs for only 50% of ACL.

Based on CCC's valuation a good deal.

 

[Astute]

People like domestic house sale/rental analogies on here!

Whereas some people just like being anal

 

[Godiva]

All a little confusing


The disclosure was also based on a valuation report that was done prior to the CCC 2012/13 accounts being signed off ...... have things changed since then?

Yes, thanks for making it much clearer ... or not .

Lot's have changed - like the main tenant has left the building. But they do say they have taken the present business plan into consideration, so I guess they will have included the lost revenue as well as the new loan in their valuation.
So next question - if what has changed is included, then what could be the impact of having to refinance the loan?
Surely if they have to refinance, the new lender would ask much higher interest rate as the risk is quite high?
And if a new loan load ACL with a higher interest burden, how will that impact the sustainability?

To me it looks like CCC/Higgs should have taken the original deal.

 

[_brian_]

Whereas some people just like being anal

If you're talking* about me, that was just a vicious rumour started by a neighbour who didn't take too kindly to me telling him to clear up after his dog after it fouled right in front of our house, not once, but twice!!! If you're not talking** about me then please ignore what I've just said***!

(*Typing.)

(**Typing.)

(***Typed.)

 

[DazzleTommyDazzle]

For a buyer, in a standard business how would a "value" be worked out from things like that? Obviously there are lots of variables though.

The problem around the valuation of a business is that it's an art as much as a science - if you got 10 accountants to value a business you'd probably get at least 20 valuations and most of those would be ranges rather than figures!

Broadly speaking there are two fundamental ways of valuation.

The first is that you calculate the current value of the businesses future cash flows. This obviously involves predicting the future which (with the exception of Mystic Meg) is a pretty tricky business. You then have to decide at what rate you "discount" these future cash flows - as having a pound now is worth more than the promise of getting one in, say, 10 years.

The second is that you look at the net asset value of the company. This will generally be used when it produces a higher value than the first method, for example with a business that is making losses (so effectively has a negative value with the first method) but has a factory/building etc that could be sold to raise cash.

Or you get a bit of a mixture of the two methods e.g. the projections in method 1 might look a bit aggressive, but you get some comfort from the asset value backing in method 2.

So, lots of variables which bluntly come down to the fact that a deal only happens when the buyer and seller's valuations meet.

 

[oldskyblue58]

For a buyer, in a standard business how would a "value" be worked out from things like that? Obviously there are lots of variables though.

That's the problem Nick there is no "standard business" each case has to be looked at separately because of all the variables - not least of which is what is actually being sold or valued and on what basis.

Looking at ACL some of the things to be considered are
- is the lease secure, how at risk is the landlord, what is the relationship with landlord, length of lease and how long remaining etc....
- what is the rental roll received by ACl, terms of leases, durations, any defaults, lease breaks etc
- business plans, budgets, cashflows, past financials
- dispute and risk attached
- ease to replace income streams, likelihood of achieving
- value of fixtures etc
- forward order book, conversion rate, risk from competition
- going concern basis, lease basis, break up basis, discounted basis of valuation
- risk from creditors, will loan get called in, will legal cases affect the loan, would lender step in and support
- expectations, needs of vendor & purchaser

etc etc etc ............

If it is for a sale between two willing parties then in the end it boils down to horse trading not valuations....

If it is for inclusion in accounts then it is likely to be conservative in value ......

if it is for purposes of loans it is likely to be discounted to factor in the risk of default.......

People seem to think that a valuation is one figure or a couple of figures close to each other ...... but the reality is it depends on purpose and basis and a whole lot of variables

 

[chiefdave]

The problem around the valuation of a business is that it's an art as much as a science - if you got 10 accountants to value a business you'd probably get at least 20 valuations and most of those would be ranges rather than figures!

And of course a valuation is based on a value today. Looking at things in accounts will only show a value at the point the accounts were prepared.

 

[dongonzalos]

So before we get all excited that ACL is worth nil, that is not what was actually said. What is actually said is that the value of the investment in NCH which owns 50% of ACL is in the opinion of CCC and its auditors written down to nil in the CCC annual financial reports. This does not give a sale value of ACL


Cheers OSB

 

[lamtara2006]

Thanks to OSB58 for posts #26 and #55 above. You've made a horribly complex subject probably as simple as possible while highlighting all the salient facts. It still takes some digesting though!

 

[sky blue john]

Whilst we are talking about Acl's current business plan.
We don't know exactly what the last rental offer to the club was. But maybe 150k with add ons like access to some f&b.
If this is the case then pretty much rent free. If they were able to offer this sort of deal does that not prove they are not reliant on CCFC anymore ?

 

[ccfcway]

All a little confusing

CCC....... own 100% of North Coventry Holdings Limited (NCH)....... which owns 100% of North Coventry Regeneration Limited (NCR)and 50% of ACL

Principal activity of NCR is described as the build of the Ricoh Arena
Principal activity of NCH is described as holding shares in NCR & ACL

The shares in ACL were purchased by NCH on 27/02/2004 for £1,758,056 at £1 per share. In the NCH accounts to 31/03/2005 the value of these shares were written down to £nil. Similarly the investment in NCR was written down by 31/03/08 to nil. So it looks to me that the value of the CCC investment has always been £nil as far as the CCC accounts are concerned (even before the current dispute)

That does not mean that the value of ACL as a going concern business is nil, only that CCC & NCH accounts do not carry a value because they have adopted a very prudent view of £1.758m investment, that is agreed by their auditors. (key is that the value of assets is not overstated) Can the Charity carry a value based on a different set of criteria - yes. Does that make it all confusing yes.

So the last CCC figures to 31/03/13 took the view that their investment, the loan and the uncertainties kept the net value of the investment at nil. Well that was straight after the refinance of ACL with £14m loan and in the middle of the CCFC dispute. Even without the loan or dispute the investment in ACL had been written down to nil so the new factors were never going to improve that.

Going on the comments made it seems to imply that the value is netted down by the loan to arrive at nil. Not sure how that works in terms of valuation and disclosure as they are two separate things - an investment and loan debtor. Take it at face value of what was said and that implies that 50% of ACL is worth £14m but has been netted off against the £14m loan owed by ACL (100%) to achieve nil value in the CCC accounts. The charity values its investment in 50% are more than £nil but that has no impact at all on the CCC accounts at all.

As a long term unquoted investment in a joint venture do they actually have to include a current value of ACL every year? They do have to include a statement to give details of net assets and profits of ACL - and do in the NCH accounts

The question I have in the CCC not valuing NCH and thereby the share in ACL is the following

Is the nil valuation an indication that the CCC have no interest in selling its 50% share interest in the project at all? ......... No expectation of sale or a return or income, then you might just say the value of investment in the CCC accounts should be disclosed as £nil.

Talk of independent valuations and averaging etc are a little pointless if there is no expectation or no need to sell is felt.

The disclosure was also based on a valuation report that was done prior to the CCC 2012/13 accounts being signed off ...... have things changed since then?

So before we get all excited that ACL is worth nil, that is not what was actually said. What is actually said is that the value of the investment in NCH which owns 50% of ACL is in the opinion of CCC and its auditors written down to nil in the CCC annual financial reports. This does not give a sale value of ACL

yer, you could have left it at the 1st 4 words

 

[chiefdave]

If they were able to offer this sort of deal does that not prove they are not reliant on CCFC anymore ?

Think this is a point that's often overlooked. We see lots of talk of ACL needing to replace a huge amount of lost revenue yet if they can now offer a much better deal to the club it would indicate they don't need as much revenue. It also means they can more than likely replace the revenue with a couple of events like the games thing and the music fest they had.

 

[ccfcway]

Think this is a point that's often overlooked. We see lots of talk of ACL needing to replace a huge amount of lost revenue yet if they can now offer a much better deal to the club it would indicate they don't need as much revenue. It also means they can more than likely replace the revenue with a couple of events like the games thing and the music fest they had.

The streakers and spiders arena

 

[chiefdave]

The streakers and spiders arena

may sound crap events but as long as the people putting it on pay their fee and people turn up and spend their money it's all good from an ACL standpoint.

 

[ccfcway]

may sound crap events but as long as the people putting it on pay their fee and people turn up and spend their money it's all good from an ACL standpoint.

i agree, for the sake of the town, I am glad the place isnt rusting away and no-one using it.

 

[Ian1779]

Apologies if already covered, but if the council valued ACL as 'zero net value' then surely a £14m loan to a business with no value makes no sense?

It is even more complicated/confusing because ACL have no assets other than a long term lease...

 

[sky blue john]

Acl only have a small amount of staff because everything is virtually subcontracted. So overheads should be low.
I don't think for one second that Acl/ccc
don't want the club at the Ricoh. Could you blame them for not wanting Sisu back though ?

 

[skybluefred]

Pretty much, you either settle the debt or take over repayments (as long as the lender is happy with that).T

hink of it in terms of the club, anyone who buys it will pay nothing (or the mythical pound as you have to actually make a payment) but the key thing is what happens with the money SISU are saying they are owed. If they are prepared to write everything off the value of the club is zero, if they want their £30m back then someone will need to pay them that much hence the value is £30m even though the accounts and future projections don't really support that.

Do the Club/sisu own the ryton complex? Surely that has a value of something Between £5m & £10m. Therefore a sale of the Club would need to take that into
consideration.

 

[lewys33]

Apologies if already covered, but if the council valued ACL as 'zero net value' then surely a £14m loan to a business with no value makes no sense?

It is even more complicated/confusing because ACL have no assets other than a long term lease...

Wow, you certainly don't get it at all do you?!

 

[sky blue john]

Apologies if already covered, but if the council valued ACL as 'zero net value' then surely a £14m loan to a business with no value makes no sense?

It is even more complicated/confusing because ACL have no assets other than a long term lease...

Come on Ian its not rocket science !!
Higgs share is 6.5million + whatever the council would sell for + the 14million loan.
So minimum 20.5million !!!

 

[sky blue john]

Do the Club/sisu own the ryton complex? Surely that has a value of something Between £5m & £10m. Therefore a sale of the Club would need to take that into
consideration.

Arvo own Ryton already gone !!