celtic's debt

[Big Spliff 0]

Perhaps a certain one or two of our residents could help me by explaining why celtic report their debt in the way they do?

 

"Bank debt (net of cash) = �£1.5m"

 

but also...........

 

Interest Bearing Liabilities/Bank Loan................... �£12m

Debt Element of Convertible Preference Shares .... �£ 3m

 

 

(from Annual report)

 

Cheers.

[Bluedell 5,356]

Accounting rules require elements of the Preference Shares and the Convertible Preferred Ordinary Shares to be classified as debt.

 

They want to try and make their accounts appear slightly better than they are so they use the phrase "bank debt" and ignore the �£3m that you refer to that they should add onto it.

 

Their 2007 accounts show their debt in the correct manner, but their 2008 accounts exclude the net debt note and they now tend to only refer to "net bank debt. (one of a number of changes they made in their 2008 accounts to try and make them appear better.)

 

Their net debt should be calculated as follows:

 

Cash 10,489

Bank loan (12,000)

Pref shares (3,027)

 

Total (4,538)

 

Hope this explains it without getting too technical.

 

 

Out of interest, why are you asking?

Edited August 24, 2009 by Bluedell

[craig 5,199]

I hadnt read the financials so thanks for that BD.

 

That really is a nonsense. They will try to use the 4.5 mill as their "debt" figure which is a complete fallacy. Their true debt is 15 mill.

 

I am sure we dont have 10 mill in cash lying around but I bet Rangers' debt figures are being quoted solely on the actual debt we have without netting off against cash.

[Bluedell 5,356]

Craig, both clubs use the net debt position which i think is fair enough, as it's only a snapshot. Celtic just try and ignore accounting rules and exclude some of their debt.

 

Rangers, for example had �£11m cash on hand in June 2007 and �£27m of other loans, and everybody talked about the net debt of �£16m.

[Big Spliff 0]

Accounting rules require elements of the Preference Shares and the Convertible Preferred Ordinary Shares to be classified as debt.

 

They want to try and make their accounts appear slightly better than they are so they use the phrase "bank debt" and ignore the �£3m that you refer to that they should add onto it.

 

Their 2007 accounts show their debt in the correct manner, but their 2008 accounts exclude the net debt note and they now tend to only refer to "net bank debt. (one of a number of changes they made in their 2008 accounts to try and make them appear better.)

 

Their net debt should be calculated as follows:

 

Cash 10,489

Bank loan (12,000)

Pref shares (3,027)

 

Total (4,538)

 

Hope this explains it without getting too technical.

 

 

Out of interest, why are you asking?

 

Thanks mate

 

Just reading stuff on-line yesterday and it triggered some questions really. First I was thinking about our reduced squad and our financial situation. Then I wandered into what celtic could do to us. Then I was wondering (again) why on earth they didn't bury us in January instead of signing Willo Flood. Then I remembered they only made �£2m profit last season despite playing in the CL.

 

Then I wondered what they'll do now that they've spent cash but probably won't be in the CL - I wonder if they calculate that they'll make a loss this season, and how they'll react? The I was wondering how much Desmond has taken out of celtic and what he'll do next. Preference shares, MON's included etc. So i fired up their recent report and that's when my mind REALLY started to wander

 

Can't shake the thought that (despite past performance) all could actually not be very well across the city. So the �£3m above is effectively future known liabilities relating to preference shares?

[craig 5,199]

Craig, both clubs use the net debt position which i think is fair enough, as it's only a snapshot. Celtic just try and ignore accounting rules and exclude some of their debt.

 

Rangers, for example had �£11m cash on hand in June 2007 and �£27m of other loans, and everybody talked about the net debt of �£16m.

 

I was sure I saw it in some media outlets that our debt was running at as much as 30 million. Creative journalism then ? Or is it that our debt rose considerably since June 2007 ? I should spend more time myself looking at the numbers rather than throwing suggestions out there....

 

I am not suggesting they aren't within their rights to report it this way, not at all. I should have been clearer - my gripe is the manner in which the MEDIA report it.

 

Net debt is indeed net debt after cash, obviously. But the media should be reporting it the same for both clubs. Unless I am mistaken (which could easily be so) I am not convinced it is.

[Big Spliff 0]

I was sure I saw it in some media outlets that our debt was running at as much as 30 million. Creative journalism then ? Or is it that our debt rose considerably since June 2007 ? I should spend more time myself looking at the numbers rather than throwing suggestions out there....

 

I am not suggesting they aren't within their rights to report it this way, not at all. I should have been clearer - my gripe is the manner in which the MEDIA report it.

 

Net debt is indeed net debt after cash, obviously. But the media should be reporting it the same for both clubs. Unless I am mistaken (which could easily be so) I am not convinced it is.

 

Hi Craig, thanks for chipping in.

 

When del comes back he'll say that the figures aren't out yet (due very soon) so nobody knows what the debt is at the moment. He'll also say that �£30m is a reasonable estimate give or take a few �£m's. He's already done the fag-packet on this and posted it.

 

On this basis, the media are reporting what is widely believed so I've no issue with that. In terms of reporting equally, yes but you need to start making adjustments and explaining accounting practices so (giving them the benefit of the doubt) I guess thats why the media don't bother.

[Bluedell 5,356]

I was sure I saw it in some media outlets that our debt was running at as much as 30 million. Creative journalism then ? Or is it that our debt rose considerably since June 2007 ? I should spend more time myself looking at the numbers rather than throwing suggestions out there....

 

I am not suggesting they aren't within their rights to report it this way, not at all. I should have been clearer - my gripe is the manner in which the MEDIA report it.

 

Net debt is indeed net debt after cash, obviously. But the media should be reporting it the same for both clubs. Unless I am mistaken (which could easily be so) I am not convinced it is.

 

Our net debt at June 2008 was �£21.6m

 

The general estimate of our net debt as at 30/6/09 is �£30m. It's a difficult figure to estimate as it depends on receipt of season ticket cash and the timing of transfer fees in and out, none of which we have access to.

 

The press do seem to be using the figure of �£30m so either they have had it leaked to them by SDM, they have used some of my posts or they have stuck a finger in the air. I feel it is probably the first of these. It's not the first time SDM has subtley leaked some of the financial information.

 

In theory it can't be more than �£35m given that is our current bank facility, and given we have received some ST cash in before the year end, �£30m seems a reasonable estimate, although it may be a little on the light side, given my estimate of a loss of �£12m, although the above is back of a fag packet as B_S has said.

[craig 5,199]

The 2008 figures are out though B_S. BD gave us June 2007 results and I am 100% sure that the June 2008 figures are out, otherwise we would be in some bother with late filing of accounts.

 

Yeah, when I was typing that it was later into my post that I realised BD was using 2007 figures and not 2008. So I am probably off track with my theory that there is inconsistency in the reporting of the debt levels.

[Big Spliff 0]

The 2008 figures are out though B_S. BD gave us June 2007 results and I am 100% sure that the June 2008 figures are out, otherwise we would be in some bother with late filing of accounts.

 

Yeah, when I was typing that it was later into my post that I realised BD was using 2007 figures and not 2008. So I am probably off track with my theory that there is inconsistency in the reporting of the debt levels.

 

Think dell was just using 2007 figs as an example mate (see new post above). The inconsistency is there it seems - precipitated by celtic's decision to re-categorise their pref. shares debt.

 

Either way, our's has been rising dramatically, while theirs has not unfortunatley.

 

DELL - so what do you think DD's up to ?