In simplistic broad brush terms......

Take Norwich accounts, there is cash generated that associated with the profit (revenue - costs). The profit is subject to tax. In simplistic terms part of the cash will pay the tax bill later and the rest of the cash can be used to pay off the debt.

However in calculating the tax there are capital allowances and sometimes there are loss allowances brought forward from prior years. NCFC used such loss allowances with respect to the big profit we generated last year.

Another source of cash comes from selling a capital item such as the land behind the River End. This is subject to a different type of tax calculation - Capital Gains Tax which I dont propose to go into any detail here. At the end of May 2005, if I remember rightly there was ?2.5m+ due (to NCFC) from the sale of the River End land which will obviously help to clear some of the outstanding debt.

Posted By: Financebod, Jan 22, 22:45:22