Financial Highlights 2006
Seems the rhetoric is not matched by the numbers...not that the numbers provide immense enlightenment.
The dot point summary seems to be as follows:
Balance Sheet - continued to deteriorate - by Yen 500 million
Free cash depletion Yen 80 million
Accounts receivable up Yen 64 million
Inventories up by Yen 10 million
In addition there is a mumbo jumbo raft of verbage in the Property & Equipment notes which seems to say the Club paid about Yen 200 million to obtain one extra unit in Azabu Towers ( compared to Yen 74 million in 2005).
P&L - Revenues flat, Operating Expenses up by Yen 750 million
F&B up by net Yen 20 million
Employee costs up by Yen 150 million
Investment income down by Yen 70 million
Income from AT down Yen 50m, costs upYen 90m
Basically the Club ran a Yen 500 million operating deficit in its last minute mad rush to depreciate fixed assets.
I must be missing something or is all this rhetoric about fiscal rectitude and sharpened management just a farrago of twisted dingleberries.
posted by Unlock at 12:32 AM
6 Comments:
OK but simplistic.
You need to take a peek inside the tent.
The big ticket on the balance sheet is the Property & Equipment. The rest is petty cash.
The club took some accelerated depreciation..approx Y0.5bn in 2006. Fair to assume they might take about Y0.5bn this year.
This would logically leave on the balance sheet the mark to market value of the underlying property asset on the balance sheet dressed as land and buildings & structures (residual that couldn't be depreciated).
Therefore, the market value of the land is about Y8bn.
Subtract debt of Y4.1bn
Let's say net Y4bn
There is about Y2bn of bonds that can be liquidated or leveraged.
Stack this against the redevelopment cost of about Y10bn and temp facility Y2.5bn (including projected overrun) and you can see the size of the hole that is being dug.
Item 5 LIABILITY FOR EMPLOYEES' AND OFFICERS SEVERANCE AND RETIREMENT BENEFITS also worthy of scrutiny.
Total unfunded liabilities of Y645 million.
This is supposedly being amortized over 15 years.
Isn't the Club planning to drastically reduce staff from end 2007?
Surely the Club must liquidate this in one hit as an extraordinary rather than keep it as a smelly and lingering liability.
Item 6. LONG-TERM DEBT
Long-term Debt
The club has been in non-compliance with banking covenants since mid-2005 with the result that Shinsei has been sweeping all surplus cash out of the Azabu Towers vehicle to reduce debt.
Is the club in dispute with it's banker?
Interest Rate Cap Agreement:
Who sold them this?
What has it cost the club over the past 5 years?
Last Holdout at Azabu Towers
Yes...this guy gouged Yen 200 million from TAC to get him over the stress and anxiety of departing.
But as he is a loyal member of the club he probably thinks he was owed it.
Employee Severance...
Keep your eye on this little item.
The plan is to cull one quarter of the current workforce at the time of the move.
Their continued loyalty and compliance is 'guaranteed' by a package that cannot be accessed without them staying until the end...bit like being paid to attend your own funeral.
This is a selective system and has been ticked by the lawyers. Therefore it is obviously non-discriminatory.
Good luck..and with such a display of confidence it may be time to remove 'Litigation' as a separate line item in the budget.
More likley he figured he should get his snout and all four trotters in the trough before it was empty!!
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