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.
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 !!!
Arvo own Ryton already gone !!
But ACL's only asset is a lease on the Ricoh which only has 40ish years left to run.
But wasn't the debt to ARVO written off during the admin?--and do Sisu not own Arvo?
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 !!!
CCC includes the cost of their investment in NCH at £1.758m but have taken a view that they would make a full provision against that cost of £1.758m so that the net value is shown £nil. It is based in part on valuations done in 2012 (I believe it was stated by CCC that none had been done since), decisions taken not to show any value from 2005 onwards in CCC or NCH accounts, and discussions with the auditors of CCC and NCH each year since 2005. Basically since 2005 (before SISU even got here) there has never been a net value to the investment in the CCC accounts.
Is that the same as valuing for loan purposes- no
Is that the same as valuing ACL as a business - no
Is that even putting any value on ACL that say SISU could rely on - no
If you look at the ACL 2013 Group accounts then including the full cost of the loan outstanding ACL group show a surplus of assets of £7.3m. The assets on the balance sheet include net values for the following
lease £18.7m
Fixtures & Fittings £5.9m
other fixed assets £150k
Debtors & prepayments £2.2m
cash £850k
creditors (£1.6m)
Loans (14.2m)
accruals & deferred income (£4.7m)
You could point to the above and say the actual value of the £1.758 invested is £50% of the £7.3m shown on the Balance Sheet
The loan as far as I understand is not made by NCH but by CCC directly. As such I think the comment about netting off investment against loan a bit misleading - it is two very different things and two different entities in same "group".
There may also be specific disclosure rules relating to Local Authorities that indicate a provision reducing the value to nil is the prudent thing to do. It might even be that taking profit on valuation would hamper rights to central government funding so they take the worst case view to avoid that.
The council can only include in their accounts that which they are entitled to - 50%
Is ACL worth nothing? Clearly the charity do not think so. The approach by CCC is to say there is no current value to the investment at 31/03/13 to include in the CCC accounts. That is not the same as saying ACL or 50% has no value in the market if it were to be sold.
They could have left it at the value of the shares in ACL that they bought £1.758m, they chose not to.
Bottom line is the value included in the CCC accounts is not the value of ACL, nor is it the value upon which any loan decision was made either by Yorkshire Bank or CCC.
But ACL's only asset is a lease on the Ricoh which only has 40ish years left to run.
So say if SISU had bought the Higgs share in 2012 for £5.5m would they have paid just that and taken on 50% of the mortgage on ACL?
I guess what I'm trying to ask is that if I sell my house for 200K it is worth the same amount regardless of whether I have £150k or £10k mortgage. Dependent on my mortgage is how much I get left over. So is it the same principle with a business like this or is it different?
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.
But wasn't the debt to ARVO written off during the admin?--and do Sisu not own Arvo?
ARVO loans stand at 11,653,000 (6,275,000 in 2012 was in CCFCH). Interest included in the accruals (creditors ie charged but not paid out by 31/05/13) was £1,328,417 (in 2012 accounts it was 218,893). There is also a further loan from ARVO £1.75m that remains unchanged from 2012. Interest on this second loan has been accrued at 233,333 in 2013 (2012 33,333)
- borrowings have gone up from 37,939,236 in 2012 to 42,132,865 and are all now due within 1 year
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...
Balance Sheet
Fixed assets after additions disposals and depreciation are now 24,818,306 (2012 was 24,016,340)
there are net current assets of 1,457,051 including 852,940 at the bank (2012 3,778,488 and 3,876,141 respectively <would include effect of £4m from Compass>)
creditors falling due after more than 1 year 14,260,975 (2012 14,893,358)
Accruals and deferred income due after more than 1 year 4,705,789 (2012 6,307,348)
Net assets £7.3m (2012 6.6m)
Or do they? my reference is OSB's report on ACL accounts 2013, what was your reference?
http://www.skybluestalk.co.uk/threads/42975-ACL-group-accounts-2013?highlight=accounts
ARVO have a charge on that.
No and no.
http://www.skybluestalk.co.uk/threa...-amp-Leisure-2013-accounts?highlight=accounts
SBS&L accounts May 2013
What Is the current exposure to ARVO Jack?
I was referring to physical assets (as in they don't own the stadium). So what form do these assets take?
Just a thought on the loan deal ......but I am sure it will become clearer in June at the JR
Say SISU & CCC did agree to purchase the loan off Yorkshire Bank for 5m. Does that mean the loan in ACL actually decreases because SISU/CCC now own the loan? Not sure it does necessarily
The deal was for SISU/CCC to buy the loan not ACL.
The transaction has nothing to do with ACL as such ..... just different name on the loan agreement.
That could leave ACL owing a £14m loan that SISU/CCC had bought for £5m.
That could leave ACL paying back £14m capital and the interest on that capital (ie not on £5m).
In SISUs case that would have left an outlay of £2.5m for the loan plus £5.5m for the shares (only 1.5m in cash up front rest over 10 yrs) against which ACL would have repaid them £7m plus interest
Could that have got SISU 50% of ACL pretty much for nothing? because ACL paid for it in effect
Is this what CCC were not comfortable with? ...... all conjecture on my part, but :thinking about:
Would you recommend buying it for £20 million?
Just a thought on the loan deal ......but I am sure it will become clearer in June at the JR
Say SISU & CCC did agree to purchase the loan off Yorkshire Bank for 5m. Does that mean the loan in ACL actually decreases because SISU/CCC now own the loan? Not sure it does necessarily
The deal was for SISU/CCC to buy the loan not ACL.
The transaction has nothing to do with ACL as such ..... just different name on the loan agreement.
That could leave ACL owing a £14m loan that SISU/CCC had bought for £5m.
That could leave ACL paying back £14m capital and the interest on that capital (ie not on £5m).
In SISUs case that would have left an outlay of £2.5m for the loan plus £5.5m for the shares (only 1.5m in cash up front rest over 10 yrs) against which ACL would have repaid them £7m plus interest
Could that have got SISU 50% of ACL pretty much for nothing? because ACL paid for it in effect
Is this what CCC were not comfortable with? although it would seem to benefit them too despite costing another 2.5m...... all conjecture on my part, but :thinking about:
SISU/CCC buy loan at a discount say this mythical £5m....... that clears Yorkshire Bank. Who repays SISU/CCC their £5m? ACL didn't have the funds to do it, if they had that cash they wouldn't have needed it from SISU/CCC they could have bought the loan themselves. So that leaves some sort of loan on ACL books due to SISU/CCC..... and at least the potential for interest. Or are you suggesting that SISU/CCC would write off their £5m? and ACL could write down its creditors by £14m?
The book entries have to work
Don't forget the SISU definition of debt free is owing no one else but themselves ....... everyone else sees it as a creditor....... plus if not a debt how is interest charged on the items that make CCFC "debt free"?
I think it has been said many times that the loan was to be bought (at a discount) and then discharged.
So no interest payments.
ACL would have no debt and have net assets of £14m more compared to now.
The club would own 50% of ACL - so it makes sense for sisu to spend £5m and gain assets worth 50% of £14m.
Think you will find the loan being discharged that TF was referring to was the YB one. As for the transcripts not got time to go through them again but if you can point to where it says the monies paid by SISU/CCC were to be written off I am happy to accept that
Being discharged could be paid up, written off or taken on by someone else or a mixture of those.
Somewhere down the line the settlement of £14m, and ramifications of how it was to be settled, have to be reconciled.
perhaps SISU were originally expected to settle the loan as payment for the 125 year lease ..... in which case why did CCC need to share the settlement?
Like I said to wingy ...... there has been a lot said about the discussions in October through to December 2012 but so far not a lot of proper detail eg copies of the HoT's
ACL's assets are essentially the lease it has, a diminishing asset. Assuming of course the lease makes money.
ACL has already had one sub tenant pay them to get out of their lease so the value of its lease has to be open for debate.
The lease comes with costs, maintaining the structure and paying off loans being the obvious one.
It has a sizable loan to the Council, that has to be paid off out of its not very large net income.
I can see why CCC do not see their shares holding has much or any value, more interestingly is how secure the loan is. The Bank did not think the loan was that solid, things have got worse since then.
ACL do not have 14m to pay of the loan, I seriously wonder if anybody else would step in.
Would not be the first time that a so called asset (ACL Loan) has proven to be worth not that much.
It appears you haven't read any of the thread before posting.
ACL's assets are essentially the lease it has, a diminishing asset. Assuming of course the lease makes money.
ACL has already had one sub tenant pay them to get out of their lease so the value of its lease has to be open for debate.
The lease comes with costs, maintaining the structure and paying off loans being the obvious one.
It has a sizable loan to the Council, that has to be paid off out of its not very large net income.
I can see why CCC do not see their shares holding has much or any value, more interestingly is how secure the loan is. The Bank did not think the loan was that solid, things have got worse since then.
ACL do not have 14m to pay of the loan, I seriously wonder if anybody else would step in.
Would not be the first time that a so called asset (ACL Loan) has proven to be worth not that much.
There is no evidence that the bank were seriously concerned about the loan.
Also turnover has apparently increased since then.
Turnover doubled, profits down by 30%.
Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors
Cost of staging the Olympics wasn't it?
No that was the added turnover you fool.
Additional costs increase turnover?
Your really are a baffoon at times.
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