On Thursday 16th January, the Club Board circulated to shareholders the draft annual accounts for the financial year ending 31 May 2024.
Following the AGM on Thursday 6th February, the Club will lodge statutory accounts with Companies House, which will then be publicly available for anyone to read.
This information piece is intended to help supporters understand the fundamentals behind the accounts that were circulated to shareholders. By their very nature, annual accounts are backwards-looking, and do not (on their own) explain or predict future financial performance.
However, they do provide important context for the underlying financial position of a business, and can indicate where future challenges may arise.
If you have any questions about the annual accounts, or indeed the broader financial position of the Club, please get in touch at contact@thejagsfoundation.co.uk. We will try to answer queries as best we can, and (where possible and appropriate) will seek to raise them at the Annual General Meeting.
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1. Operating Losses
The Club made an operating loss, before tax, of £132k in the financial year 2023-24. This figure is slightly smaller than was publicly anticipated back in the summer, when the operating losses were expected to be closer to £170k.
This overall result also represents a significant improvement compared with the 2022-23 financial year, when the Football Club lost £356k (despite a £280k unbudgeted windfall from a cup tie with Rangers).
2. Turnover
The Club generated a turnover of £3.2 million in 2023-24. This figure was almost £400k more than was reported in 2022-23.
These figures do not include the Tranche 1 investment of £500k. That money was put into the Club in return for Class C shares. It shored up the Club’s cash position, but had no impact on the turnover or operating loss figures.
The annual accounts point to improved revenues across three key areas:
- football income (this includes ticket sales and prize money)
- commercial income
- TJF’s monthly pledge and other donations
Revenue growth was achieved despite:
- the loss of a substantial subsidy from the Youth Academy (which previously met the cost of the Club’s modern apprentices contracts, but does no longer)
- weaker revenue results from the hospitality and events part of the business
- the absence of a big-ticket cup tie or run
3. Operating costs
The Club had expenditure of slightly less than £3.4 million in 2023-24. This was about £175k higher than the figure reported in 2022-23.
4. Impact of combining accounts
The strategic report from the directors notes that 2023-24 is the first year in which the financial activities of the Partick Thistle Women’s team are included in the Club’s accounts. This change of approach has a negligible impact on the Club’s operating losses, as the PTWFC part of the business made a loss of less than £3k.
The impact, in terms of financial reporting, is more significant for the figures on turnover and operating expenditure. Both of those figures are about £150k higher than they would have been had the accounts not been combined. The real growth in the Club’s turnover is significantly lower than the headline growth figure (£400k) implies, once this is stripped-out.
We feel that the effect of combining accounts (especially its impact on turnover) could and should have been made clearer in the directors’ strategic report, both to aid transparency about the Club’s own underlying economic performance, and to dispel some misconceptions about the “cost” to the Club of PTWFC.
5. Current assets and liabilities
At the end of season 2022-23, the Club had net current liabilities of just over £250k. This meant that, in the short term, it owed £250k more to its creditors than it had in cash and other current assets.
The position had improved by the end of season 2023-24. The Club finished the season with net current assets of just under £95k.
This change of position is pretty much entirely attributable to the Tranche 1 investment in October 2023. The Club moved away from a short-term and debt-based response to its cashflow problems (soft-loans from directors) to a longer-term and equity-based response (issuing new shares for cash).
6. Cash and cash equivalents
The Club’s cash and cash equivalents dropped from £630k in May 2023 to £418k in May 2024.
In this period, £250k of directors’ loans, advanced in season 2022-23, were fully repaid. The amount owed to other short-term creditors also fell by about £300k.
But for the £500k Tranche 1 investment in October 2023, the Club would likely have fully depleted its cash-reserves at some point mid-season in 2023-24.
Even after that substantial cash injection, the Club’s cash position was not a strong one. It would have been very difficult for the Club to commit (for example) to significant capital outlay (e.g. for urgent stadium repairs) without further investment.
Under amendments to be made to the Club-Trust Agreement, the Club Board will be expected to use its best endeavours to maintain a safety net of at least £300k in cash reserves at all times, following the Tranche 2 investment.
7. Current ratios
Another measure of liquidity, which we have referred to in previous finance summaries, is a company’s current ratio (assets divided by liabilities). If a current ratio is less than 1, it indicates that cashflow challenges may arise in the year ahead.
- In May 2023 the Club’s current ratio was 0.76.
- In May 2024 the Club’s current ratio was 1.19.
The current ratio has since fallen to below 0.9 in the current season, but would recover (as best we understand it) to above 1.5 if (as is expected) the Tranche 2 investment goes ahead.
Under amendments to be made to the Club-Trust Agreement, the Club Board will be expected to use its best endeavours to keep the current ratio above 1.2 at all times.
Given its present position, this means in practice that the Club Board has to plan for, and deliver, balanced budgets from season 2025-26 onwards.
8. Overall Assessment
The financial results for 2023-24 present few surprises, with the fundamentals having been well trailed by Club Directors prior to the publication of the draft accounts, in public statements and open meetings. This transparency is to be welcomed, but should also be built-upon. There remains much to be learned on what “good” financial communication looks like from other fan-owned clubs.
The Club’s overall financial position clearly strengthened between May 2023 and 2024, partly because of revenue growth, but mainly because of the Tranche 1 bailout. Partick Thistle is still, fundamentally, a loss-making company with modest cash reserves. It is absolutely imperative that the Club begins to live within its means, even if that means some painful decisions in future seasons.
The Club is expected to make a significant operating loss in 2024-25, and will need to use some of the Tranche 2 funds to carry out time-sensitive stadium repair work. Setting, and delivering, balanced budget is the standard against which the Club Board will, necessarily, be judged from this year onwards.
9. Other Observations
Why are the operating losses smaller than the Club indicated in the summer?
Initially, the Club had anticipated a £170k loss at the close of the financial year. The actual loss figure reported in the accounts is lower (£132k). We understand that this is discrepancy is because of two contributing factors.
- Firstly, the consolidation of PTWFC’s financial reporting into that of the Club had a (small) one-off positive impact on the Club’s cash assets, which the auditors have credited as income in 2023-24. This should be regarded as exceptional and will be non-recurring.
- Secondly, some of the expenditure incurred on stadium repairs/improvements in season 2023-24 has been credited by the auditors as increasing the value of the stadium. This is why the draft accounts show a slightly higher “tangible assets” figure for May 2024 than May 2023.
The stadium valuation is currently done on a “depreciated replacement cost” basis. The Club and current auditors may wish to consider, given the nature, age and condition of the asset, whether this basis for valuation remains appropriate and useful, especially given the extensive anticipated programme of repair works anticipated within the next 2-3 years.
Why have the Club's accounts been combined with those of PTWFC?
The Partick Thistle Women’s team operates a separate budget from the Football Club. It has its own bank account and operates independently as regards day-to-day revenue and expenditure.
Historically, the financial activity of the Women’s team has not been included in the Club’s accounts. This changed for financial year 2023-24.
We understand that this change of approach was made following discussions between the Club Board and the new auditors. Ultimately, it is for them to explain why this change of approach was considered necessary and appropriate.
The Club does provide an annual (budgeted) subsidy to the Women’s team, but we understand it to have covered less than a quarter of PTWFC’s operating expenditure in 2023-24.