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Accounts and Directors Analysis
Yesterday was a busy day for the club on the financial side of things with the release of the accounts for the club and it’s UK parent along with the appointment of three directors of the holding company in Hong Kong.
I’ve spent yesterday evening and this morning going through the announcements and looking into what we should make of them to try to make some sense of where we are headed. Please be aware I’m not a trained accountant or lawyer and thus treat my thoughts with the scepticism they deserve. The club accounts can be downloaded from the Companies House website for the cost of £1 – the club’s company number is 27318.
How Bad Are The Accounts?
From my perspective, these accounts aren’t brilliant at all. I’m not so concerned by the loss made by the club as I am the fact that the auditors will not sign off the accounts as they say that they have not seen enough evidence that the club can raise the money needed to keep it a going concern. The club was swift to point out to me yesterday that despite there being an operating loss of around £9.1mil, £6.094mil profit was brought in via transfer profits which vastly reduced that figure.
Reference is made to the club requiring funding to cover a financial shortfall and that they intend to obtain £5.4million in funding via loan finance. However – it doesn’t say how this finance will be raised; whether it is forward funding of the final parachute payment or potentially on the £6.68mil that the accounts say is owed in player transfer fees we do not know. The auditors have said that they have not seen enough evidence that this loan finance will be achieved.
Pannu also stated in his statement in the accounts that the holding company will look to loan the club £6-7mil raised from the share placing that was announced last month on an interest free loan basis – however, he also states that this is dependent on the re-listing of shares on the stock exchange and I have seen no evidence that BIH are any closer to that; indeed, with the BIH accounts having a disclaimer of opinion on them also the re-listing of shares seems as far away as ever. I believe it’s also worth noting that the loan amount owed to BIH has dropped from £6,987,670 to £3,846,954 which means over three million pounds has been paid back to HK. When I asked the club if there was a regular payment schedule in place for money to be repaid to the holding company they advised they would look into it and come back to me but as yet they have not.
Where’s The Money Gone?
Simply put – the money has gone the same place it has always gone – mainly into the player’s pockets. Despite the club only turning over £24.198mil last season they paid out £22.914mil in wages – meaning for every £1 the club took in, it paid out 94.6pence in wages. That kind of wage/turnover ratio is unsustainable and it is not surprise that wages have had to be so drastically trimmed this season.
It’s confirmed in the accounts that one director was paid just shy of £400,000 last year although it doesn’t confirm which director; whilst I would not want to be accused of harassment I would suggest that would refer to Peter Pannu and represents a decrease of nearly half of the sum from last year of £687,611 – perhaps Mr Pannu had fewer pocket expenses this year. However – it’s worth noting that the club is also paying out £60,000 per annum in rental income on a property owned by Asia Rays (a company solely owned and directed by Peter Pannu) for premises that are used by the club and the holding company and that this arrangement is in place until next February. There is no confirmation of which property this is – I would note that from the last information I have, the Asia Rays company office in Connaught Road West, Sheung Wan, Hong Kong was rented out to an Australian insurance brokerage.
There is also a note to say that the club committed £37,256 to the ladies team in 2012/3 and have signed a commitment of up to £150,000 for the 2013/4 season to help ensure that the ladies’ team remained in the FAWSL.
Is The Club Close To Administration?
On the face of it one could see why that might be the case; James Nursey tweeted yesterday that administration in the next month was inevitable but I have to admit that I think he is wrong. I can only go on what I am told and I am still repeatedly told by my sources within the club that the club is confident it has enough money to survive the season. I think there is definitely a possibility that the holding company could be close to the edge but I think any pronouncements of such could well be premature; as much as people believe that Carson is stupid and is holding on by his fingertips I think it would be foolish to underestimate things out in HK. I am fairly sure he will have thought about every eventuality in his trial and should the worst happen I’m also fairly sure he will have some sort of succession plan in place.
It’s my opinion that despite the public pronouncements of James Nursey (and I must stress I’m not picking on him, he’s just the only person to have stuck his head above the parapet recently) with respect to Gianni Paladini aren’t helpful either as I do not believe Paladini is any closer to buying the club than he has ever been. I think it’s false to say that Paladini is the only bid on the table – a) because Paladini’s bid has been ignored by Carson anyway and b) because it would appear from the rumour mill in HK that there is interest from the mainland and that BIH are in negotiations with them.
Should We Read Anything Into The Announcements Of The New Directors?
I will admit I’m wandering into speculation territory here but I can only go on what I know and what I have heard.
There is no doubt that Panagiotis Pavlakis has experience in raising money in the capital markets and right now that is something BIH need desperately. Mr Pavlakis has been a securities broker in HK for a number of years and thus will know the way things are done out there inside out. How long he has been working for BIH is interesting; he finished at Kingsway in September and according to Mr Pavlakis’ Facebook account he has been a director at BIH since October, despite the announcement of his appointment only coming out yesterday. It’s also interesting to note that he is connected on FB to Kassi Yeung Tak-Wai, Carson’s niece.
The other two appointments – Liu Enxue and Li Hanguo are interesting also. Both are communist party members and have held fairly senior positions; Mr Liu has been involved in oil whilst Mr Li is an accountant. I’m not sure how much to take in about new people being involved being connected to the party apparatus in the PRC but I am reminded that Yang Yuezhou, who has loaned a large amount of money to BIH is also connected to the party. The oil connection interests me as there has been a rumour kicking around since April of last year that Carson was looking into an oil exploration project in Indonesia; the truth of that rumour is very difficult to ascertain but it was explained to me that the stock exchange are very strict on companies being involved in oil and that they would require various executives in place with experience before allowing a company to go further; Mr Liu would be the fourth such executive at BIH after Cheng Liang, Cheung Shing and Gao Shi Kui.
So What Now?
The truth is nothing changes; the club continues as it has been doing and the holding company will carry on trying to raise money and execute whatever plans it is making. Nothing will change until the shares are re-listed or until we hear the verdict in Carson’s trial – which is due February 28. All these announcements do is give us more to ponder and add more grist to the rumour mill; we will have to wait and see.
Tags: Accounts, BIH, Li Hanguo, Liu Enxue, Panagiotis Pavlakis, Peter Pannu
40 Responses to “Accounts and Directors Analysis”
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Great piece again and thanks for keeping us informed.
Do you think BIHL are trying to get relisted while trying to pass on most of the debt to BCFC, as there loses seem to be mirroring Blues loses ?
Daniel, as ever you are information personified.
keep up the good work
kro
Almajir;, as usual, You are the only source of reliable information that can be freely obtained, Your hard work and dilligence informs us Bluenoses,in such a way that can be understood clearly in as much as the murky waters of H,K. allow.
My real question is that if, — B,I,H. cannot be re-enlisted, — Would that force a sale of B,C,F,C. and therefore allow a proper ” sale ” of our club, ??.
Basically, the status quo continues. Move along the bus. *ding ding*
It still comes back to “DELAY NO MORE” . More loans means more debt. More debt means more problems. The club is owned by people who have no scruples.
We’ll done lad.
excellent as usual no flies on you mate………………spot on mate players salary a refusal of some fans who dont take this on board…………..would rather make waves instead…………. pleasing though these players work there bollox for their money……………..and for the blue shirt…………….kro
You’re spot on about the players mark. They may not be the most gifted players to ever play for the club, but they’re real grafters for the shirt and the badge. For me, they’re worth their wages far more than those lazy sods who got us relegated.
Well said Staffs, can’t fault them for effort or commitment, I’m just worried that at the end of the day Administration might still take us down and that would be an injustice for the players and their valiant efforts.
KRO+DNM
I’d hate that too Chris… but, it may be the only way we’ll rid ourselves of the cancer that’s killing our club. At least then, we’ll be starting with a clean slate and be ripe for someone with a bit of money, a lot of business nous and a bucket load of common descency to come in and build from the ground (literally) up. I don’t care if it takes a decade to get back to the premier…. as long as there’s a club left to support.
My sentiments exactly Staffs, I hope I’m wrong with Administration, the club seem to think we can hold out to the summer and by then we should be rid of Ziggy’s wages too.
KRO+DNM
To be fair though the club has apparently been in negotiations with investors from the far east for the last 18months or more and nothing has come of it. Personally think myself they are stringing those investors along the same as paladini as the only one to come out and say anythink was Sammy Yu and he seemed as miffed as paladini as to the dealings with yeung and BIHL. And yeung is not gonig to come out and say there is no one else interested in buying the club because if things go the wrong way in feb for him paladini would hold the cards then if yeung needed to sell being the only intrested party. Me myself they know how to play the media and let little snippets out when they want to maybe lead people on but the truth is not ONE of these apparent investors/buyers has ever happened to agree to take us forward and that goes for all these apparent far east people intrested as well as paladini, and dont think that will change to carson knows his fate
Dan, thank you for the hard work to keep us informed on the financial situation of our club. You may not bring us much cheer or hope, but your diligence is very much appreciated.
All we as supporters can do is get behind the team and hope for some good cheer come February when certain aspects will be taken out of CY’s hands, should he be found guilty that is.
KRO+DNM
Nice, I had a look at panos pavlakis facebook too he’s also friends with 2 people with the surname Yeung.
In fairness do you know how common the surname Yeung is?
since he only has around 150 friends and most of them are probably greek I think the chance of the yeungs being related are quite likely…I feel quite sad Ive looked into his friends in such detail to be honest!
Good point although to be fair to Al, the guy’s been living in HK for a while so may well have picked up some mates named Yeung with no relation to CY. But who knows.
Oh yeah, and II don’t like his dodgy tattoos on his FB photos either.
if only we had the quality of the early naughties team and the work rate of this team then
eveything would be rosy……but we havent so lets get on with it and concentrate on whats
going on on the pitch and not of it, its carsons club and he can do what he wants so whats
the point in us fans doing anything in protest, he hasent lisened yet and he aint gonna start
now so lets put up or shut up!! KRO.
What have the fans done to make him listed?
Listen.
It’s worrying that BIHL maybe so close to admin. Not sure if the rules have since changed but Southampton had 10 points deducted in 2009 when their parent company went into admin regardless of the fact that the club itself didn’t.
Thanks dan its nice to get some sort of breakdown to what is happening but like other readers we have heard for nearly two years that bih are trying to raise investment and it never happensand the only way money is raised for the club is by selling ourplayers they have a way of manipulatinv the media and say what they think the fans want to hear newspapers radio and I have no doubt tv have asked peter pannu to answer the questions to issues we have about our club I for one dont care about bih but delay no more mr yeung sell the club before there is no club to sell
interest free loans saddling the club with more debt!!
the debt being caused by the same people now using share issues to keep us afloat, blind leading the blind springs to mind. i wonder whether any of the loans money will be used to pay directors a greater salary or consultancy fees?
Great piece – DELAY NO MORE !!
bread and butter players that are young learning gaining in
skill ..and as they proved against bournemouth it is what you
do between the sticks that counts …so lets get those gate
bigger and give these fellow bluenoses the support they deserve
……..kro
Daniel you noted several times in your blogs that administration is very unlikely,along with points been decreased……………the single biggest issue for blues is cash flow………….trouble with james Nursey he has simply got nothing better to say…………..it would be better for bcfc if he kept his mouth shut.
Firstly where are his facts?? Daniel secondly you live and breath bcfc why not ask you your opinion, instead of him randomly picking things out of fresh air…………….thirdly he could do with reading your blogs to bring himself up to date…………..lol
I stopped reading Nursey last season, when I counted that, of his last 20 articles, 1 was about Blues, 1 Wolves 1 Albion and…. 17 Villa. For a “non-villa supporter,” that’s a bit one-sided don’t you think?
extremely one-sided staffsblue…………….
He supports Norwich mate
Simply put – the money has gone the same place it has always gone – mainly into the player’s pockets…………….well said Daniel fans please take note………….. you can make all the accusations you like it very plain really and staring you in the face………………………..players wages
So it’s finally nailed it is the players wages causing the debt. So those staying away not putting the dough in are causing the debt to increase.
Now we know it aint Carson et al I presume all the stayaways will come back unless they think we shouldn’t pay players now?
What’s the latest excuse everyone I can’t keep up??
Might just scrape 15K on Saturday cos forest are bring 3K
Club are expecting 20k plus Saturday mate ;)
The cash position of the group overall must now be getting perilous. It appears CY will do everything he can to hold on to the club even though the trial result is fast approachng. I think raising cash is obviosly getting very difficult hence the appointment of Pavlikis. I think we may start to see a situation where players wages are unpaid before we get to the adminstration stage as this would allow him to hang on a bit longer.
Start worrying about Administration after a few local traders complain they haven’t been paid for four to six months.
It’s not just the worry of the club itself going into admin though, it’s BIHL too and Dan intimates that that is looking more likely at the moment.
If BIHL go into administration will that still mean a points deduction for BCFC too?
I think that clubs being punished for the way they have been run by incompetent owners is wrong, not just because of Blues situation, Portsmouth and Coventry are in a worse situation because of these sanctions.
The FA and FL have a “fit and proper” criteria so if these people fail then these criteria are not up to standard.
I BCFC’s case our predicament has come about because of dealings prior to CY purchasing the club, however, he only bought 29%, so what are the owners of the remaining 71% doing regards the current situation. I would have thought that if they really cared about what was happening to the club they would have called for a vote of no confidence in the current chairperson or his representative i.e. PP
I might be barking entirely up the wrong tree or just barking mad, but that is how I see it, the supporters are the life and heart of any football club yet get punished for things they have no control over… the ownership of their club.
KRO+DNM
It will – it happened to Southampton
That’s the club I couldn’t think of, thanks.
Still think the system of points deductions is wrong as it is the supporters who suffer, the players just move on to other clubs.
KRO+DNM
Dan — that percentage of turnover going into wages must surely be one of the highest in the league, if not the highest?
All things being equal, Zigic leaving in the summer would reduce the wage bill to £19.9m, taking the percentage into wages down to 82%, assuming turnover is static and all other salaries stay the same. I imagine this year’s recruits are on much lower wages, so you can see how that figure is going to fall even further.
QPR was 182% last year I think. Scary innit?