Bolton's Finances / Accounts for year ending 30th June 2021 and everything else since.

wanderlust wrote:Define "innovative"....

Innovative
adjective

(of a product, idea, etc.) featuring new methods; advanced and original.
"innovative designs"

(of a person) introducing new ideas; original and creative in thinking.

Got me thinking about the R&D tax credit scheme - another example of an appallingly policed/monitored government "initiative" that switched on companies take full advantage of.
R&D ostensibly has a clear definition, but boy has it been exploited over the years, not least because when the government launches an initiative it desperately wants high uptake so that it can claim the outputs - regardless of how actually effective the initiative is on the ground.

You can pretty much get a massive tax rebate (up to 35%?) for building a website and claiming back against the time (staff wages and expenses) ostensibly spent on "researching the market", meetings to discuss the website, planning the infrastructure, launch marketing costs, outsourced web designer costs, time on the telephone talking to them, materials used in the meetings including stationery costs and coffee, launch feedback collation, time spent on analysing the feedback...it goes on and on. And it is NEVER checked.

Wondering if the "innovative" bit of FV's application is in their "innovative approach to marketing", their "innovative MO in attracting investors", "innovative branding of the club" (new shirts - that's innovation!) and "innovative project to research new ways of making football clubs sustainable" - or even in their accounts
Frankly, it could be almost anything and the government is so desperate to get uptake they'll bend over backwards to accommodate FV.

Sluffy wrote:

Sorry but the document I copied this from won't allow me to manipulate it but if you look under the first question shown in blue the answer to it clearly states - The purpose of the FF is to support innovative UK companies...

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Mea culpa. I was wrong. In the document I linked to, which is from the British Business Bank, through which the UKFF loans were made, this is the only reference to ‘innovative’ - this time I was less lazy and actually searched rather than just scanned it. Strangely, it isn’t right at the start of the document. It’s in an answer to a question about whether or not companies that provide finance to others are excluded. Anyway, like you, Bob, I’m surprised FV qualified as innovative

We had an innovative cove at a golf club I used to belong to. He was on disability benefit claiming he couldn’t walk except that he was playing golf five times a week whilst pulling a trolley.

When the Benefits Agency caught up with him and prosecuted, his innovative defence was that he was playing golf to help alleviate his disability. Iirc the Judge wasn’t sufficiently impressed with the defence. Not innovative enough probably. I expect he might have heard it all before.

BarrygoestoBolton wrote:
Mea culpa. I was wrong. In the document I linked to, which is from the British Business Bank, through which the UKFF loans were made, this is the only reference to ‘innovative’ - this time I was less lazy and actually searched rather than just scanned it. Strangely, it isn’t right at the start of the document. It’s in an answer to a question about whether or not companies that provide finance to others are excluded. Anyway, like you, Bob, I’m surprised FV qualified as innovative

I’m surprised too, Barry. But back to the accounts, do you think that the write off of half the EDT debt was ‘other operating income’?

I don’t. I don’t think it was income at all. It was, in truth, a further reduction in the capital cost of acquiring the assets. The way it’s been dealt with in the accounts has predictably led to quite false impressions of the financial results. 

Was there an intention to mislead? It was obvious that it would mislead and evidently no attempt was made to explain the accounting treatment in the notes. It would have been very easy to do.

Norpig wanted simple explanations. ‘Savvy’ folk don’t always do ‘simple’.

Ten Bobsworth wrote:
I’m surprised too, Barry. But back to the accounts, do you think that the write off of half the EDT debt was ‘other operating income’?

I don’t. I don’t think it was income at all. It was, in truth, a further reduction in the capital cost of acquiring the assets. The way it’s been dealt with in the accounts has predictably led to quite false impressions of the financial results. 

Was there an intention to mislead? It was obvious that it would mislead and evidently no attempt was made to explain the accounting treatment in the notes. It would have been very easy to do.

Norpig wanted simple explanations. ‘Savvy’ folk don’t always do ‘simple’.

Someone call?

boltonbonce wrote:
Someone call?

Sorry, I’m not following you Boncey.

Have you just said summat funny, savvy or innovative?

Ten Bobsworth wrote:
I’m surprised too, Barry. But back to the accounts, do you think that the write off of half the EDT debt was ‘other operating income’?

I don’t. I don’t think it was income at all. It was, in truth, a further reduction in the capital cost of acquiring the assets. The way it’s been dealt with in the accounts has predictably led to quite false impressions of the financial results. 

If the management team managed to renegotiate the asset purchase price having previously declared it at full whack, why would they put it in the return as "other operating income"? That would make some sort of sense if they'd paid it out and then it was rebated in a later transaction.
But an explanatory note would have been helpful if that was indeed what happened.

Ten Bobsworth wrote:
Sorry, I’m not following you Boncey.

Have you just said summat funny, savvy or innovative?

I heard 'simple'. At home my ears start burning.

boltonbonce wrote:I heard 'simple'. At home my ears start burning.

Surely they must have burnt off by now?

wanderlust wrote:
If the management team managed to renegotiate the asset purchase price having previously declared it at full whack, why would they put it in the return as "other operating income"? That would make some sort of sense if they'd paid it out and then it was rebated in a later transaction.
But an explanatory note would have been helpful if that was indeed what happened.

They didn’t renegotiate the asset purchase, they got away with not paying the amount agreed with EDT so it cost FV less. But this is a saving of capital not income. 

By accounting for it as part of the income statement, they have understated the operating loss making it look like they have made savings they haven’t made.

Savvy folk will have known this. They chose not to mention it.

Brother McGuire picked up on it but didn’t explain how it had been dealt with. Iles and his acolytes seem to have fallen for it hook, line and sinker.

Even Barry was taken in at first but that was before he had chance to read the whole thing.

Natasha Whittam wrote:

Surely they must have burnt off by now?

At least only my ears singed.

Ten Bobsworth wrote:

BarrygoestoBolton wrote:
Mea culpa. I was wrong. In the document I linked to, which is from the British Business Bank, through which the UKFF loans were made, this is the only reference to ‘innovative’ - this time I was less lazy and actually searched rather than just scanned it. Strangely, it isn’t right at the start of the document. It’s in an answer to a question about whether or not companies that provide finance to others are excluded. Anyway, like you, Bob, I’m surprised FV qualified as innovative

I’m surprised too, Barry. But back to the accounts, do you think that the write off of half the EDT debt was ‘other operating income’?

I don’t. I don’t think it was income at all. It was, in truth, a further reduction in the capital cost of acquiring the assets. The way it’s been dealt with in the accounts has predictably led to quite false impressions of the financial results. 

Was there an intention to mislead? It was obvious that it would mislead and evidently no attempt was made to explain the accounting treatment in the notes. It would have been very easy to do.

Norpig wanted simple explanations. ‘Savvy’ folk don’t always do ‘simple’.

I've had another little think about the Other Operating Income shown on FV's accounts as £5,294,707 (the not full explained 'Note 4') and delved a little further into it to see if I could work out all the items that comprised it.

I started with the assertion that FV accounts are a total of both itself and all its subsidiary companies so I had a look to see what was stated on the hotel accounts for income under Note 4 (which similarly was not expressed against that item as such on that page of the accounts) - which was £480,487

Similarly I did so for the footy club which was £4,814,220 and adding both total together tallies exactly to the £5,294,707.

So I looked a bit further to see if I could establish where the £480,487 income for the hotel came from - which turned out to be remarkably easy as both above it and below it in the notes 3 and 5 in the explanation remarks section, showed this amount to be a government grant (furlough) for the very sum.

So the total of £4,814,220 for the footy club must also include £425,008 government grants received.

That sum added to the £2.75m EDT write off amounts to £3,175.008 and when deducted from the £4,814,220 leaves a balance of £1,639,212

This amount seems to be according to Note 4 in the footy accounts arise in part/full from other unsecured creditors writing down/off the amounts owed to them.

So

£2,750,000 - EDT
£905,495 - Gov Covid grant
£1,639,212 - unsecured creditors agreed write off/write downs

5,294,707 - Total

Kept me out of mischief for half an hour or so if nothing else!

wanderlust wrote:If the management team managed to renegotiate the asset purchase price having previously declared it at full whack, why would they put it in the return as "other operating income"? That would make some sort of sense if they'd paid it out and then it was rebated in a later transaction.
But an explanatory note would have been helpful if that was indeed what happened.

It wasn't an assets purchase - it was a secured loan set against capital as security.

Ten Bobsworth wrote:They didn’t renegotiate the asset purchase, they got away with not paying the amount agreed with EDT so it cost FV less. But this is a saving of capital not income. 

I don't understand why a loan would be viewed as a capital saving?

FV owns the capital, EDT's loan was secured against the capital but was never a capital purchase.

Unless I'm not understanding something?

Ten Bobsworth wrote:
They didn’t renegotiate the asset purchase, they got away with not paying the amount agree with EDT so it cost FV less. But this is a saving of capital not income. 

By accounting for it as part of the income statement, they have understated the operating loss making it look like they have made savings they haven’t made.

Savvy folk will have known this. They chose not to mention it.

Brother McGuire picked up on it but didn’t explain how it had been dealt with. Iles and his acolytes seem to have fallen for it hook, line and sinker.

Even Barry was taken in at first but that was before he had chance to read the whole thing.

I have to agree, that it seems odd that the reduction in debt of £2.75m is shown as income.  As I've said before, I'm no accountant, but I'm surprised that wasn't simply a balance sheet item rather than P&L item.  I see that according to Sluffy's research he has concluded that some of the other written down debts also appear in income.

When I did a preliminary scan, I certainly noticed that there had been a saving of £2.75m (good!), but not where it appeared in the numbers in the accounts.

Sluffy wrote:It wasn't an assets purchase - it was a secured loan set against capital as security.


I don't understand why a loan would be viewed as a capital saving?

FV owns the capital, EDT's loan was secured against the capital but was never a capital purchase.

Unless I'm not understanding something?

FV agreed to pay £28.5million for the assets almost entirely on deferred payment terms. That is capital expenditure.

Part of the capital commitment was £5.5million to EDT. By agreeing to pay EDT less than the amount agreed 
FV secured a capital saving. Nothing to do with operating income or expenditure which is where it has been ‘lost’ in the accounts.

We don’t know what else has been included in ‘other operating income’ but it plainly includes the EDT capital saving and furlough income. That’s another tidy sum that FV has decided not to reveal to interested parties.

Having had a little perusal of the hotel's accounts (lost £1,172,632 in the year) I see FV gave them an inter company loan of £2,263,869.

Note 9 (page 18, 21 of 26) says -

...this sum was deemed not to be payable and therefore has been released to the profit and loss account.

To be honest I don't really understand what that means?

I'm thinking the hotel got the loan but it doesn't require being repaid?

I also had a look on FV accounts to see where it showed this loan (and write off?) but couldn't see it.

I just post this up for Bob and Barry's interest and attention.

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Ten Bobsworth wrote:FV agreed to pay £28.5million for the assets almost entirely on deferred payment terms. That is capital expenditure.

Part of the capital commitment was £5.5million to EDT. By agreeing to pay EDT less than the amount agreed 
FV secured a capital saving. Nothing to do with operating income or expenditure which is where it has been ‘lost’ in the accounts.

We don’t know what else has been included in ‘other operating income’ but it plainly includes the EDT capital saving and furlough income. That’s another tidy sum that FV has decided not to reveal to interested parties.

Thanks Bob, I can see where you are coming from now.

I still am struggling with it though.

FV bought the assets from the Administrator for £28.5m.

As part of the deal EDT, PBP and Warburton waived their charges on the Capital assets of Burnden Leisure.

They instead accepted an equal charge on the capital assets of FV.

So I see that as FV buying their capital assets for a discount (£28.5m minus the sums owed to EDT, PBP and Warburton) from the Administrator who at that time owned them.

To make clearer, the Administrator required £28.5m to sell the assets to FV and that was achieved by EDT (£5.5m), PBP (£5m) and Warburton (£2.5m(?)) waiving their charges bringing down what FV had to pay to the Admin for all the capital assets of something like £15.5m.

Charges of equal amounts were then set against the capital assets acquired by FV from the Administrator for £15.5m but worth to them of £28.5m

I don't see EDT, PBP or Warburton loans to be Capital ones - they didn't loan anything to FV to buy the assets - they wrote off their charges to allow FV to buy the capital assets at the now discounted price.

If the loans were indeed Capital ones then would they not be included as Capital and Reserves - Note 22 (page 13, 16 of 41)?

This simply shows called up share capital at the time of just £2.75m plus Profit and Loss reserves of £14.3m in debit - showing FV.s actual loss for the year to be £13,769,015

Hence the need for Sharon, Luckock and James to pump their millions into FV for the required capital equity it urgently needed?


Obviously you are vastly more knowledge about these things than I am - but the above was my thinking on all of this.

Just to add a little bit more to this, in the hotel accounts 17 Loans and overdraughts (page 21, 24 of 26) it states about the PBP £5.5m loan -

...the original capital element of £5.5m with (the then) Bolton Whites Hotel which was novated under Administration.

I read that as PBP having a new contract now with FVWL Hotel but as a normal loan and not as a capital one.


Maybe I'm wrong about reading it this way - I don't know?

If this is all simplified then i'm definitely thicker than i thought.

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