As HUFC fans may well be aware, HUFC recently published their annual accounts for the year ending July 2021. As we have done in previous years, HUST have produced a summary report which includes reasoned comments (in italics) which should be taken as such. The report has kindly been supported by a HUST member who is also a chartered accountant.
Overview
When reading the financial statements for the year ended 31 July 2021 it must always be remembered that this included the 2020/2021 “COVID” football season.
The statement of financial position as at 31 July 2021 indicates a trading loss for the year then ended of approx. £366k. Previous years losses were as follows:
- 2020 – £323k loss
- 2019 – £860k loss
- 2018 – £1.587 million loss
- 2017 – £930k loss
It is not clear if Play-Off television and any promotion prize money are included in the figures, nor the exact figure of any of grants obtained during the covid-hit season via the Premier League which would have supported the Club during this period.
Cash at bank and in hand
There is a significant increase in funds of almost £1.9 million compared to the previous year end, this has been funded by increases in both short term (due within 12 months) and long term (due after more than 12 months) creditors as detailed in the relevant sections below.
Creditors: Amounts falling due within one year
There are 2 main contributing parts to the increase in short term creditors, Taxation and Social Security (VAT & PAYE) increased by £112k but it was accruals and deferred income that increased the most by £980k.
It should be noted that there is a difference between accruals and deferred income whereby accruals are money owed to others whereas deferred income belongs to the company but just in a later accounting period. A lot of this balance of £1.083 million could potentially be deferred income, such as season ticket sales for the 2021/2022 season received before 31 July 2021. In the next accounts for the year ended 31 July 2022 these season ticket sales would be taken out of accruals and transferred into income.
This may also be the reason for the increase in Taxation and Social Security creditor being the VAT on the season ticket sales.
Creditors: Amounts falling due after more than one year
The increase in long term creditors was due to the loan received from Sport England under the Sports Winter Survival Programme. This loan of £1.186 million (which is secured against all property and undertakings of the company) has normal repayments terms of 10 years at 2% interest with a 2 year repayment holiday.
It is believed that these loans were part of the ‘sport survival package’ that was offered and you can read more about these here.
Share Capital
There was no additional share capital issued during the year.
Going Concern Basis
The company has a letter of continuing financial support from Clarence 18 Limited confirming that support will continue to be provided for at least 12 months from the date of signing of the financial statements (i.e. 28 July 2022).
The Going Concern paragraph within the notes to the accounts also states that “Following the team’s promotion to the Football League the company’s financial performance and cashflows are significantly improved.” but that “The company’s forecasts and projections for the next 12 months show that it should be able to continue in operational existence for that period with the continued support of the controlling shareholders…”
This suggests that annual losses should continue to reduce in the next year but not quite to the extent yet where the company is self-sufficient without financial support from the parent company and/or controlling party.
Staff Numbers
Average staff numbers have decreased significantly from 143 in 2020 to just 49 in 2021 which is quite a significant reduction.
- 2020 – 143
- 2019 – 202
- 2018 – 128
- 2017 – 128
A fair assumption is that it is likely that Covid was responsible for most of this reduction with no need for matchday staff etc. when no supporters were allowed to attend matches. Casual and relief staff would not normally be accounted for in these figures.
Amounts Owed by Group Undertakings
There is a small amount owing from P&R Construction Limited of about £8k relating to tax losses surrendered, this has also been done in previous years and always get paid.
Amounts Owed to Group Undertakings
No further advances were received from Clarence 18 Limited during this period and there was even £50k repaid leaving the year end balance owed to Clarence 18 Limited at £2.175 million. Furthermore, the annual report of Clarence 18 Limited confirms that a further £1million was repaid after the year end which should be reflected in the next years accounts. Despite having previously been written off by Clarence 18 Limited this amounts has now been brought back into its accounts as a debtors. It is a possibility that the same could happen with the remaining £1.175 million if HUFC become in a position to repay it.
At the year ended there was also £3k owed to Prestige Care Group Holdings Limited, this was part of a total management fee charged to HUFC by that company of £30k during the year.
Other Creditors
The £265,000 listed as Other Creditors Due after one year and £20,000 of the £30,452 Other Creditors Due within one year are likely to be amounts owed to Sage Investments Limited. The actual amount to be paid will depend on performances on the pitch within 15 years of takeover.
Financial Commitments
The amount of financial commitments not included in the statement of financial position is £1,165,192, down from £1,186,143 in 2020.
Other Comments
The accounts for Clarence 18 Limited and Hartlepool United Football Club should normally have been filed by 30 April 2022 so permission would have been granted to allow an extension to file these, although it is not clear why this was the case.
It it also noted that Prestige Group Investments Ltd is the main shareholder in Clarence 18 Limited for which Mr Singh is the sole Director. On 22 July 2022, just prior to the accounts being filed for Clarence 18 Limited and Hartlepool United Football Club, the accounting period for Prestige Group Investments Ltd was shortened by just one day. Furthermore, the accounts for this Company up to 30 June 2021 are now due by 22 October 2022 so a significant filing extension has been granted. It is not clear why this is the case.