Often Partisan

Accounts Analysis

On Friday Birmingham International Holdings published their accounts for the year ending 2015. Having had some time to digest what was in them, I wanted to share my analysis and why I think these accounts point towards a brighter future.

As always, prior to reading this please bear in mind I have no training as an accountant and that my opinion is that of a lay person; I would stress that it’s important to read the accounts for yourself to see if you come to the same conclusions.

Massive decline in losses

The first thing to take into consideration is the change in the bottom line figure – having lost HK$139.549M prior to taxation the year before (approx 11.9M GBP), losses for the last season are much lower, at HK$7.879M (approx 670K GBP). This is despite virtually no change in turnover.

The chief reason for this is the drop in wages paid out. With the much-quoted 5k per week wage cap for most players wages are quoted at HK$170.495M (14.45M GBP) in the accounts, a drop of HK$77.689M (6.6M GBP) from the season before. That’s a 31.30% cut in wage costs, and means the wages:turnover ratio is a much healthier at 67.16% (98% the previous year).

Admin expenses also dropped by HK$27.517M (2.340M GBP).

To quote the accounts:

Such improvement in result was mainly driven by better performance of football players during the reporting period and conservative spending, in particular, staff costs.

From my perspective – this is good news. If Blues are to become a more sustainable club it’s evident player wages need to be kept fairly in check. I know people talk about a lack of ambition but I think the last eleven months under Rowett have shown that splashing the cash isn’t always what is needed.

I think it’s also possible that the removal of some directors on high pay and the subsequent forfeiture of their Spearmint Rhino Gold Card (or what ever the Wan Chai equivalent is) has also contributed to BIH being in healthier shape.

Revenue streams steady

The revenue for last season remained almost static with the year before, rising just HK$227,000 (19,297 GBP). Once again, it’s worth pointing out where the majority of Blues money comes from:

  • TV Revenue – HK149.49M (58.95% of revenue)
  • Commercial Revenue – HK56.188M (22.16% of revenue)
  • Ticketing revenue – HK$47.906M (18.89% of revenue)

This is broadly similar with the way it was last year – the majority of revenue the club receives comes from the TV deals. It’s a similar story across most clubs – if not higher.

Loans paid off/Court Action

BIH have got two large monkeys off their back by agreeing deals on outstanding loans. China Energy agreed to write off HK$21M in interest provided the debt of HK$22,79M or so was paid off by September – this has been done so. iMerchants have also wiped off nearly HK$7M in interest and as of June 30 HK$4M has been paid off.

While this doesn’t affect BCFC so much directly, this is important too as it means BIH are now in a much less toxic position. The only real issues they have outstanding debt wise are of their own creation – the convertible bonds/loan from U-Continent and the debt conversion bond owed to Carson himself. Both are the subjects of ongoing court action and I think it would be wise not to comment further other than to confirm Carson is due in court on October 12. BIH/EY have requested that Peter Pannu be added to that court case and he would have 42 days from the court agreeing to that application to file his own defence.

Conclusion

Although there is a disclaimer of opinion on the accounts I do feel upbeat about them. BIH have stated that Trillion Trophy is willing to loan more money if required to fund the company (and by extension the club); as I see it as long as the club continues a fairly prudent path they don’t have to worry too much about the short term because there is a safety net.

Are we out of the woods? No, not yet – but it’s just possible the trees are thinning out a bit and we’re almost there.

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30 Responses to “Accounts Analysis”

  • Andy P says:
    October 4, 2015 at 9:49 am

    The old saying there is no gain without pain is certainly true in our case.if the last 4 years of misery are coming to an end with the hope of new ambitious owners and the best manager for years I’ll have some of that.just remember to give Villa a wave at the end of the season when they pass us going the other way

  • Tolster66 says:
    October 4, 2015 at 10:08 am

    Excellent summary, thank you, onwards and upwards. Capped by an excellent result yesterday KRO.

  • atko says:
    October 4, 2015 at 10:11 am

    I’d have to agree with your analysis, Dave. I was waiting for the release of the figures & made sure I read through everything on Friday before seeing anything on here that may prejudice my reading. It was a long read but worth it. I still find it frustrating that there is a lot that E&Y cannot substantiate though. Glad to see they have independent panels in place now to investigate any changes within the company. One thing that was always a concern was the frequent changes to board members – they were changing members more frequent than Gary Rowett changed his team at one point. Now everything has to be reviewed by an independent board. Between them they seem to have steadied the sinking ship well & reading between the lines, talks with TTA seem to be coming along nicely. Let’s hope things continue rise over there just like the football team over here. KRO!

  • Paul Lester says:
    October 4, 2015 at 10:11 am

    Thanks for the update
    The accounts seem to confirm the general trend in the improvement of both BIH and BCFC over the year.
    BCFC have got rid of a poor manager and board members who were not interested in the club.
    BIH have similarly got rid of some toxic board members and debts to suit and are legally are chasing them down
    EY seem to be gradually clearing the mess they inherited to make way for the sale of BCFC. It’s a long haul with a way still to go, but 1 year on we are in a much better place.
    With the club maintaining the improvement and perhaps bettering the form they showed in finishing last season, I am almost expecting results such as the latest games against Leeds and Brentford, which is such a change from the last couple of years and l am now looking forward to games.
    Scary stuff from a Bluenose!!!

  • Dave Mann says:
    October 4, 2015 at 10:18 am

    Things are taking shape on and off the pitch and that day when we’re back in the premiership with millions to spend might not be as far away as some fans think. Kro

  • Richard Duggan says:
    October 4, 2015 at 10:59 am

    Just to say that any further references to our outstanding manager as ‘the Bromsgrove Mourinho’ will now seem something of an insult.

    • Dave Mann says:
      October 4, 2015 at 12:13 pm

      He’s having a dodgy spell Richard but even with what’s going on at Chelsea on and off the pitch I still have the greatest of respect for Jose… He his the special one ! ..but we have the Bromsgrove one and that will do for me . Kro

  • Oldbluenose says:
    October 4, 2015 at 11:15 am

    Quite a lot of the report, goes over-my-head, but the gist of it, — simplified by your analysis fills me with a tremendous relief that things are begining to come together in a reassuring way, i,e.

    Our club is being responsibly run [ Through E, and Y, ] whilst our own people at the club HAVE always done sterling work in the background,!!., It will still take time to further progress the club, but i have faith in the long run.

  • Blueb says:
    October 4, 2015 at 1:09 pm

    Dan, any view of what charges are stacking up/pending for E&Y

    • almajir says:
      October 4, 2015 at 1:45 pm

      You mean how much we’re paying them?

      I don’t think we are. As I’ve explained before, the last time EY dealt with Paul Suen (the guy behind Trillion Trophy), he paid EY off. I wouldn’t be surprised if he is again…

  • zxcv says:
    October 4, 2015 at 1:43 pm

    More good work Dan. Thought the money owed to China Energy was quite a bit more than the £1.8m (About) that we actually ended up paying them even allowing for the interest payments that were dropped, thought it was around 5/6 million tbh. But your right it is another monkey off our backs. Can`t wait now for the 20th or the case to start proper, Win that and that will be the start of things big time and maybe the final straight so to speak..

  • Waycoolblue says:
    October 4, 2015 at 1:50 pm

    It also shows the club Don’t have massive debits . So Don’t have to sell any player to pay them Off as suggested by the Birmingham Mail and that other rag the Daily Mirror. KRO

  • Dave Mann says:
    October 4, 2015 at 3:18 pm

    Rags to riches me old China . Kro

  • AdamTrueBlue says:
    October 5, 2015 at 8:50 am

    Slightly off topic, I am not a betting man and as such I do not understand why our promotion odds with the bookies do not reflect our points consistancy, win ratio and table position, teams that are lower than us, that we have beaten are shown as better favorites to go up? Am I missing something?

    Thanks for the tireless work that you have put in yet again Dan, keeping us all informed and enlightened, when the tyrants are all gone they should name a stand after you (just for a season :-) ) for helping to instigate the changes.

  • Dave Mann says:
    October 5, 2015 at 9:32 am

    I don’t think the bookies Adam have any faith in our manager and team to keep it going all season .. A bit like some fans on here but only time will tell and none of us can say we’re gonna be right or wrong about where were finish come May.. We can only guess not know about where were finish .. The bookies are never far off to be honest but let’s wait and see but enjoy the here and now because yes it could be a mid table finish .. Let’s hope the bookies and some more negative fans are totally wrong .. It would be massive for our club.. Kro

    • Mitchell says:
      October 5, 2015 at 5:43 pm

      If it ok with Daniel, it would be interesting during this footy break to predict the top 6 by Xmas day. Just a bit of fun. I will kick off- Middllesbro.Hull, Burnley, Derby, Blues and QPR. Top prize for the winner will be a VIP invite to Mr.Mann’s New Years eve party!

      • AdamTrueBlue says:
        October 6, 2015 at 8:29 am

        Reading, Birmingham, Middlesbrough, Sheffield Wednesday, Derby, Cardiff. Thats my selection and as Mr Mann is not obliging looks like the party will be at yours Mitchell ! Kro

  • Dave Mann says:
    October 5, 2015 at 6:28 pm

    Don’t go out New Year’s Eve or have an house party unless my brother invites me to his
    Mitchell but as for the top six .. Middlesbrough , Hull, Derby , Burnley , Brighton , Blues… We’re see! Kro

  • BhamCityJulian says:
    October 6, 2015 at 10:14 am

    If, as it appears, the accounts don’t overtly show E&Y’s costs because they are not there doesn’t it suggest that Trillion intend to buy BIH or BCFC?


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