I’m not really sure where to start if this is directed at my quote.
I spent several years working at a very large development firm on Fenchurch in the city and had a very different experience from what you describe. They may be efficient once a decision has been made (I can’t comment on that), but in my experience audits and reviews are common (particularly when the claim is large) and the denial/appeal process can be protracted (even when one year’s filing differs from a previous year’s filing only by a few dollars).
I’m not really commenting on CGI’s financial position beyond saying that counting on credits is absolutely part of the development landscape and that having to take a loan on a delayed credit is equally normal. I just thought I’d bring some light to the subject using my personal experiences.
Because they aren’t minor at all: In the past they were good for up to 48p per £ of eligible expenses and even today I think they’re still north of 25p – admittedly it’s been a few years since I last worked in the UK.
If you’re dropping 10M/yr on eligible development, that’s a 2.5-5M credit, depending.
Edit: There is (or was) some drop in rebate beyond a few million pounds of eligible expense, but I don’t recall it off-hand. Sorry :(
Ah, I’ve never had any dealings with HMRC in relation to grants. The company I work for has a smallish office outside Guildford (software multinational with EMEA sales headquarters in Ireland for obvious reasons). HMRC has always been incredibly efficient in my experience from that perspective. Apologies if that isn’t the case in terms of the development credit.
It’s capped at a maximum of 20% of total core expenditure by the way. Unaware of any limit!
Yeah, that was never an issue for us as we had a huge glut of non-eligible folk who drove our costs way up. I really don’t miss those days – I understand claiming credits is standard practice, but it always left me feeling a little dirty.
Foundry 42 Ltd received £3,319,220 from HMRC in 2016, I looked up their financials. They received £3.1million the year before and £800k the year before that.
I guess for me the question is, why do they need the income 6 months earlier, when for the last 4 years they haven’t?
That actually is relatively standard in secured business loans in the UK. Their financials do say that they already owed between £2-£3 million to other creditors who didn’t require a charge, so why are they seeking loans with such security now?
@Ginger_Yellow The change in the exchange rate is immaterial going forward, whatever hit there was to be taken already has been taken. Again, this loan isn’t to replace any of the funding currently being provided to CIG UK, it’s simply displacing when it occurs. As such, it provides zero safety from exchange rate movements.
It isn’t reducing CIGs dependence on funding from other currencies, its just changing when it receives its tax break while also having to pay interest.
If I get paid €1000, £400 and $800 per month and a once yearly lump sum of £8000, and I take out a loan of £8,000 so that I receive said £8,000 in April rather than October, i’m still receiving the same amounts per month, in the same currencies. It makes absolutely no difference to the basket of currencies I receive my continuous income in.
This. I can’t help notice that he ignores the fact that he rips off his investors (at least 2x I think!) but gets all riled up when he perceives that someone figured out a better method. He’s just jealous that someone does it better than him, proving that they are in fact smarter. And he just cannot stand anyone else being “smart”. =)
This is one if the biggest sociological experiments to ever grace our hobby. How could one not marvel at the occasional drama and rubberneck a little? This has one of the most contentious funding models in gaming so a lot of people throughout the industry are curious to see how it plays out and what the repercussions will be and if they will impact their corners of the market for good or ill.
At this point we are all Vladimir and Estragon waiting near the tree for Godot. Godot will not be coming tonight but surely tomorrow. Might as well converse.
I don’t know the details, but it does sound like you are over simplifying the financials. I don’t think they are doing this because they are stupid, I suspect there was a cost/benefit analysis to it. Financial people get paid to do all these things, and the motivations are related to a myriad of issues beyond just paying simple interest on a loan.
Perhaps they realized they could take a loan, get the money early, and not run currency risk or additional taxes and fees when moving money to pay for the UK operations from the US, because there are always additional taxes and fees when moving money.
It seems to make sense to me they would get UK monies to pay UK bills and there could be savings from that.
As far as setting up SQ42 as collateral, I suspect they see the risk of default as very low. But if they are in deep panic right now to keep their doors open, then we will know very soon.
Not to mention if they think the GBP will be devalued as Brexit talks go long it makes sense to try and delay exchanging the foreign currency into GBP just to pay bills.
It still doesn’t make sense that all those assets (including Squadron 42 itself) would be collateral for such an “ordinary” loan. That’s what strikes me as weird.
How exactly is receiving the same amount of money in GBP in June rather than January (as an example) saving them costs on moving money to the UK? They are still receiving £X million per year in a lump sum, only the date has changed. The amount received in a lump sum once per 12 month period is the same so what effect will it have on currency conversion, or exchange rate volatility?
@KallDrexx No-one knows what will happen to Sterling as Brexit talks continue. Volatility over the last 12 months has shown the exchange rate market to have been caught flat footed several times by both political events and economic data. Before the Brexit referendum it was generally accepted that GBP was overvalued given underlying economic data and the relative steadiness of the exchange rate between GBP and EUR bears this out 123
You can see when the Brexit Referendum results come in. After that it has remained remarkable stable, bar a 4 week period between May announcing when Article 50 would be triggered and Trump being elected President. I repeat, EUR:GBP Has been remarkably stable.
Things don’t add up. Star Citizen and Squadron 42 share much of the same codebase, AFAIK; so getting Squadron 42 as collateral is effectively risking the whole of Star Citizen, even if CIG says otherwise.
And if it’s just a loan for liquidity over tax returns, why would the bank require so many assets as collateral? Wouldn’t securing the tax returns themselves be enough, since few things are safer (in economical terms) than government returns?
Unless the bank doesn’t expect CIG to be operational by the time the tax returns are granted, requiring that much collateral doesn’t make any sense.
And you know what else doesn’t make sense? CIG agreeing to put all those assets as collateral for something as “trivial” as a tax return advancement. To save what, 10% of the cost they would have over money transfer? It doesn’t add up at all. Crucial info is missing, and the whole thing is just… weird.
But then again, “weird” describes most things about CIG and Star Citizen, so I guess things like this should be expected.
