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BIH Announcement – What Does It Mean?
Birmingham International Holdings released an announcement to the stock exchange yesterday with respect to a warning of a predicted loss for the accounts for the year ending June 30 2013.
This has predictably led to a slew of questions about the potential ramifications for Birmingham City and thus I’ve tried to answer some of them in this article. As always, please remember I’m not an accountant and that I have tried to stick to reported facts as much as possible – where it has been impossible to do so I will say that it is speculation.
Is this a positive announcement?
It might seem strange to say this bearing in mind it’s confirming the parent company have made a loss but the answer to this question is yes. The reason for that is that this announcement is a precursor to the actual accounts being released – and the indication is that (for the first time in a long time) they will be near enough on time as they are due by September 30.
It’s vitally important for BIH to ensure that their financial reporting is up to spec if they want to get the shares relisted and thus I suspect they have done everything that they can to ensure that these results are to be released on time.
Does the size of the loss matter?
Again, this might seem a bizarre answer but from where I’m sitting it doesn’t. We know from the unaudited interim results released in April of this year that BIH had made a loss of HKD74.176million (around £6mil) and with only two major transfers out before the July 1 cutoff point (Jack Butland to Stoke and Curtis Davies to Hull; Nathan Redmond to Norwich City was in July and thus won’t be included in these figures) it seemed very unlikely that the holding company would claw that loss back.
So what does matter in these accounts?
For me, there are two important questions to be answered in these accounts. The first one is the auditor’s opinion. I honestly cannot see how an auditor would be able to sign off BIH as a going concern unless there are some fairly spectacular ideas on how to fund the company this year with the lack of players left to sell; likewise I can’t see the HKSE being happy with another set of accounts with a disclaimer of opinion on them from the auditor. Thus I will be most interested to see what the auditor has said with reference to the accounts and what explanations that BIH have given that the company is still solvent and how it can start trading in a profitable manner.
Secondly, the accounts should give us an idea of the level of debt within BIH. In the interim accounts this stood at HKD109.58mil (approx £9mil) and I’m interested to see if this level has gone up or down. Even if it has gone down it will need to be borne in mind that the figure given will not include the recent HKD20mil loan taken out in August and with the company announcing to the stock exchange in the middle of last month that it was looking to borrow more to ease liquidity concerns I think debt could be a major issue.
Thirdly, it will be interesting to see when the annual report comes out the pay packets of Carson Yeung and Peter Pannu – particularly in light of Mr Pannu’s wage from BCFC.
Does this mean the club is closer to administration?
From a simplistic point of view, no. Whilst the club as a subsidiary makes up a huge percentage of the turnover of BIH these accounts refer to the parent company and can only give us an idea how close the parent company is to the edge; if BIH were to go into administration it would present a whole new set of problems as BCFC would likely be sold as an asset – but there would have to be arrangements with respect to the loans between the two and Blues would in all likelihood still be docked ten points – as Southampton were when their parent company went into admin in the same way.
When are the club’s accounts due?
According to the Companies House website, the accounts for the football club are due December 31 2013. These will become available to the public within a week or so after that date for a nominal fee of £1.
Tags: BIH, Carson Yeung, HKSE, Peter Pannu
73 Responses to “BIH Announcement – What Does It Mean?”
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Dan, in your opinion, who is lending the money and why? They must have some idea of the overall plan to be convinced of lending money to a company that seems prima face to be insolvent. They must a) be sure that administration wont happen b) they will get their money repaid and c) burdening BIHL with yet more debt wont hasten any demise. It just seems to me that there must be a plan in place that we just aren’t party to. Thoughts?
Dan, you say you can’t see how an auditor would be able to sign off BIH as a going concern “unless there are some fairly spectacular ideas on how to fund the company this year with the lack of players left to sell”
Doesn’t that say it all about football finances at the moment? Sounds like mid-table Championship clubs like ours are basically not viable unless you have a rich sugar daddy.
The funds for this season are already in place as far as I can see. p.s don’t forget the 8 million parachute money.
zxcv – not wanting to cast aspersions mate, but there may well be more to things than you think.
For example, Tom Ross stated that the parachute money for this season was sold last year; this hasn’t been denied by the club and he’s not retracted it…
Al, if true i presume that would be in these accounts due at the end of this month?
Yes, it would be, but I suspect it would be obfuscated somewhat. A clearer picture would come from the BCFC accounts I reckon.
Very true Almajir, (I had not heard Tom mention that) and i would doubt anyone knows all that’s going on. I understand the obvious stuff may not be so at this club of ours.
I thought we were due more moneys from Cardiff in respect of the Mutch transfer, becoming due once they gained promotion, am I wrong?
do you think we are likely to go into admin before the end of the season and would we be docked 10 points this season or next ?
this
I have absolutely no idea – the situation is too fluid at the moment to say I think.
we would be docked 10 points this season unless Blues or BIHL went into admin after i think it’s the third week in March 2014.
if its this season, its relegation, i cant see anyway out, if its next seaon un less something
happens were be -10 and bottom of the championship and yes looks like relegation again.KRO.
If the worst came to the worst dave and we were docked 10 points next season… take heart from Coventry. After 6 games, they’re already on +1pt… and there’s one team below them (Notts Co.) Other teams have done well too after being docked 10 points or more. KRO.
on a bit of a tangent i know, but i notice that jack butland is 3rd choice keeper at stoke now, bet he wishes he could have stayed at blues
Yes, typical of top flight English teams, buying youth to let them rot in the reserves or ship them off on loan. Very unfortunate for Jack because he would have stayed with Blues if it wasn’t for finances and he was a very mature lad.
Most of the big teams, for a few years now, have bought young talent, simply to stop other teams getting their hands on them. These young lads rarely make the grade at the club that bought them, hence the need to keep shipping them out on loan… or keeping them for 3 or 4 years and flogging them to a lower division club. It’s not too much of a surprise that British international scene is so shite now.
The one that springs to mind, is Scott Parker’s transfer to Chelsea. Looking at the player he was before Chelsea and the player he became after Chelsea, you have to say he completely wasted that part of his career. England could have benefitted for at least another 5 years.
Nobody made him go anywhere. He did not have to move. I respected his decision to go to Stole and not Chelsea, thinking he would have a better chance- but he did make the decision. His contract means he was not forced to go anywhere.
With the loans they are trying to raise, it seems they are doing everything to keep going till Yeung’s trial is completed.
So, unless a bill or loan repayment is missed by BIHL or Blues, i can’t see anything changing till the verdict is announced.
Why would anyone lend money to a company who warns the HKSE that anyone considering investing is at risk as BIHL are losing money?
What is happening to Carson Yeungs money, if he is being paid, as his assets are frozen?
Though another informative article it seems to ask more questions than giving any answers. Surely anyone with an ounce of common sense would see what a futile situation BIHL are in, unless they know something is in the pipeline that is a fairy godmother waiting in the wings.
The end of the month should be very interesting from a BCFC point of view.
Why would anyone lend money to a company who warns the HKSE that anyone considering investing is at risk as BIHL are losing money?
Who knows? But someone has…
What is happening to Carson Yeungs money, if he is being paid, as his assets are frozen?
I should imagine a wedge of it is helping pay his hefty legal bills.
Surely anyone with an ounce of common sense would see what a futile situation BIHL are in, unless they know something is in the pipeline that is a fairy godmother waiting in the wings.
I think we’ve seen that common sense and BIH don’t go in the same sentence…
Why would BIHL pay Carson Yeungs legal bill, unless BIHL are being accused of laundering money as well, I see no reason why a Ltd company be liable for his legal bills especially now he has said he will voluntarily suspended his management duties from BIHL.
Surely his legal bills will be on the never never for now and when his verdict come in, whatever the outcome, the lawyers will get paid via his legitimate assets once released after the trial
Eh?
BIh pays Carson a wage, not his legal bills. I’m just surmising that as I know Carson’s legal bills are hefty and as I know that his solicitors don’t work on credit, Carson might use some of his wages to pay his legal bills.
I could see no earthly reason for BIH to pay those fees.
Although his assets are frozen, I think it would be ridiculous (if not illegal) not to allow a certain amount to be ‘unfrozen’ so that CY could pay for a decent defence. It may be frozen, but it’s still his money (I would think) until/unless the courts decide different.
Hi, the only positive in this is that it will force a conclusion. Administration will arrive when the club is uanble to meet its creditors demands eg paying the player’s wages. It will be the club itself that requests Administration to prevent multiple litigation claims that it can’t meet. The fact that player sales is cited as the means of creating profit indicates that there is little support from BIH – why would they want to pay creditors now when Administration anyway is probably inevitable and would result in substantially lower liabilities.
Profitability has nothing to do with Administration – it is the ability to service its debt. Once that stops it’s curtains, and this isn’t far off.
As I said earlier non of us really know what is going on at this club anymore but I really would guess that we are much closer or rapidly reaching the point where adnin is inevitable. But like Dan as said these accounts might tell us more. ,,,,,,,,,,,,,or not.
Yep I expect a lot of movement one way or the other when the verdict in yeungs trial is known. This state of affairs simply cannot keep going till the new year in my opinion. Their stark choice will be to sell up for less than they want or watch it all crumble and get nothing.
You’re assuming that there will be a resolution in Carson’s trial before the New Year. I think you’re going to be disappointed.
I think the crumbling has already started and no business man in his right mind would try to buy now especially if you are the only one on the playing field.
However a favourable verdict for CY will change everything as I believe he will try to resurrect Blues fortunes and that may be just as painful. If he is found guilty then he will appeal I suspect, but from his cell as he will be guilty until proven innocent and this should remove him from BIH office and BCFC.
But then there is Pannu
Any good, successful, knowledgeable business man/entrepreneur would not have paid 81million for the club, totally, completely fkin bonkers, ridiculous thing to do, just like holding onto a business that constantly needs cash injections without which totally drains any profit your holding company may make Infact forcing it into huge debts by borrowing millions of pounds, and in its current situation has absolutely no chance of paying any of the money borrowed back, so why keep it, what is actually the point, most or if not all good business men would drop that club like a hot potato and get out quick, absolutely no logic to anything that ridiculous fkin thing has done since the day it arrived in Birmingham
Dan, I ask as my memory has failed me, how long was Carson’s case adjourned for?
until October 15
Don’t you hate lawyers: total sluggards. I don’t believe they needed to wait three months before restarting the trial just because of Carson’s operation.
2015 lol
Dan
Do you think they can keep us running to the new year when its been us keeping them running?
I think that something may happen between Oct to Dec, if they can keep us going that is
if people keep going down the ground then yeung and Pannu will hang an and on until they’re eventually forced out! If they’ve got no money coming in through the gates then they’ll think twice about selling up.
DoctorD
I think its right with the op date cause I had a major op in Jan and I had till Sep to recover
Fair enough, but his op seemed very “well timed”.
administration and relegation on top off everything else thats going on, so much to look
forward to for the rest off the season, its just great being a blue nose cause you never
know whats round the corner, or do we? KRO.
Never mind dave, you could have been unlucky enough to have been born in Manchester and been a Man U fan…. knowing that you’re probably going to win the premier league 7 times out of every 10 seasons…. gonna win the FA Cup every couple of years…. gonna be in europe every season….. gonna sign multi-million pound players every year. *yawn*
Yeah I can see how that would be terrible.
Depends what you’ve grown up with I suppose. I’m proud to have been a Blues fan for 44 years. At least we’ve been unpredictable. You never know what’s going to happen next.
Hi Staffs
With regard to our relationship with the Blues, I think that you and I are on the same wavelength. United FC of Manchester reflects the reaction of two thousand Manchester based fans to what has been done to ManU by the PL.
They’re not called plastic fans for nothing.
Thats down to having bad owners mainlyover the years and one or two odd managers! When we’ve had good owners we’ve done well.
Keeping BIH afloat is one legitimate way of maintaining an income for CY. It doesn’t make sense but then again not much does where this company, CY or PP are concerned. If there is 1-2 more years of appeals processes to exhaust, old Carson will probably need £1m or more to pay his legal fees. If BIH and Blues are sold or move into other hands, where will CY get his funds?
The fella is way beyond most types of assistance or help, but this avenue just about keeps his head above water.
At this moment in time BCFC, BIHL or anyone or anything else do not matter to CY other than to try and keep himself going and hoping not to come out of it with too much damage and perhaps a small amount of finances to try and build something with once he gets out of click. He well and truly messed up with the way he tried to wrest control of the club from Sullivan and the Golds. By paying £15m for the original stake of nearly 30% in 2007 and then tabling that ridiculous offer of £1 per share for the rest. It was quite obvious the finances were not sound and in fairness he could have done a lot worse to us initially but seems to have got carried away with the euphoria and signing the likes of Zigic and Hleb. Can you imagine if that infamous “£40m” remark had actually resulted in another Ziggy or two on the books for 3-4 contracts?
Where would we be then?
“Does this mean the club is closer to administration”??
Something I asked yesterday or the day before,and got a stupid/sarcastic answer back from you….I rest my case…
Dan, Is BIH receiving income from any other source apart from BCFC to pay staff located in Hong Kong?
ih his piece Mickey07, Dan said that simplisticly no were not any closer to administration so
i suppose were after leave it at that and whatch this space as they say for further developments.
All i can say that since carson took over its been a laugh a muinite, very enjoyable, very exiting
very not true, just pulling your leg, a nightmare regime thats made us a laughing stock! KRO.
If administration was imminent I can’t see how would have paid for Caddiis and refused Burke to Leeds. I would think signs of I pending administration will be players wages not being paid and HMRC chasing PAYE.
…………..CARSON is a businessman, there are people out there that wont want carson to go under as it would probably put their own company under threat ,…hence the loan …….or if carson owed money to somebody they will not want him to lose every thing to admin ….they would rather lend him more till they owned the club….or if somebody that wants the club but not until every thing is sorted out at court and not with 10 points docked could be lending the club money……who knows….but somebody out there doesn’t want admin …….or somebody out there owes everything to carson for giving them a start…???????
when or if that happens then we will be swimming against the tide, i personally have been
saying all along that we wont go in to administration but the longer this mess goes on the
more likely it will happen, if it does then its gotta happen this season surely cause i cant
see us still having our head above water by the spring off next year, so we need to be
ready to fear the worst and act accordingly. GET THESE COWBOYS OUT AND GET SOME
PROPER CHIEFS IN BEFORE ITS TO LATE. KRO.
Just what is it that BIH do? Is their only vehicle for making money BCFC?
And if not why isn’t the rest of the BIH putting into this seemingly bottomless pit.
I for one hope we go into administration sooner rather than later to give us a fighting chance
of staying in the division and get rid of this hairdresser once and for all .
We will KRO.
Dan what was Gloria on about the other day this 20 mill was it true, and was it HK $ or sterling?.
Hi Dan
Well researched and written. Thanks to you, we now mostly know the unknowns and have certainty about the uncertains.
Business is mostly a mix of market, people and money. We know (1) that within BCFC money is in short supply but we don’t know how short. We can also surmise (2) that the owners want to get back all of their loans and investment. What we don’t know is how much the owners can sustain (1) to achieve (2).
would appear to me by finally getting accounts ready on time , an interested party has insisted this and a final bid will be made – lets hope new owners in 3 weeks time !!
Hi Sutton
Or the cost of the fines outweighs the benefits of delaying the accounts. However, I like your interpretation of three weeks. Then what will we do for headscratching discussion.
What it means (in a nutshell) … is
that the Golden Goose (that is B.C.F.C) has run out of ‘golden eggs’ to sell
So the pointless ‘edifice that is BIHL no longer has no source of income, unless they could ‘perhaps’ sell the ground.
Come back the Kumars !
i tell you what frankie, id welcome back the kumars tommorow if it meant getting rid off
these club destroying morons, imagine the uproar if they were to try and sell the ground,
doesent bare thinking about. new owners, administration, ime getting to the point now of
past caring because the whole situation is a terrible mess. KRO if possible!
I wonder if we could tempt David Gold back…. and get him to bring KB with him.
The thing I couldn’t stand about the Brady Bunch was their constant bleating of how they saved the club and the club was nothing before they arrived etc, etc etc.
Well Mr Porn, Mr Shop Porn and The Tea Lady you were all nothing in the public arena before Birmingham City.
It worked for us both at the time. All relationships start great but as in Marriage they often fail after a few years. Sullivan hated the Blues fans and the fans didn’t respect him. END The final nail in their coffin was no new stadium on the horizon so they took the money and ran to the hills.
Just a shame they sold out to Carson Yeung and not the royal family of Dubai.
that would be a god send… happy days would be here again.KRO.
I think we could do without that miserable old get Sullivan… but Gold and Brady would be a dream team. It might take them a couple of years to get us back on track, but I’d have 100% faith in them, like I did last time.
Whats the point in getting Gold and Brady back? They’re both West Ham fans and wouldn’t invest in the club, just do enough to get it promoted then it would be languishing at the bottom of the Premier League making a profit but not going anywhere so we would be back to square one!
those who wanted them out at the time and replaced, got thee wish and i hope there all very
pleased with themselves, theyed be welcome back with open arms by those fans now who
slagged them off because they wouldnt go that extra mile financually, we were stable, had
a very good side and were in the premiership on more than one occasion, look at us now,
it would never ever have happened if they had stayed 100% definetleyKRO.
Sullivan and Gold did many good things for Birmingham City, there is no doubt about that.
Was never a fan of Brady, who was in it for herself.
They all also did very well out of our club, trousering a nice ‘wedge’ each.
The worst thing though was elling to these parasites we now have in charge.
Brady may have been in it for herself… but tell me an owner/director/CEO who isn’t? She deserved every penny for what she did. We were financially sound… not spectacular, but solid. So what if they didn’t splash the zeros. Could you see them giving out the kind of stupid contracts we’ve seen since they left? As for trousering a nice ‘wedge’… tell me one single owner who wouldn’t accept double what his club is worth?
Well said.
Would agree with Brady & Gold, but no Sullivan. That would be perfect.
Wealthy fans who bought their club with a view to running it for the sake of the club and the fans have usually failed. Two successes that spring to mind are Elton John at Watford, in the end he was defeated by the ever rising demand for more money and Jack Walker at Blackburn, he got in at the beginning and in time the trust ran out of money and was forced to sell.
Bill Shankly said “football is not a matter of life or death, it is more important than that”.
Sullivan and co were at the Blues unashamedly to make money and it took them twelve years to learn how to run the Club. Ralph Gold was quickly fed up and wanted out and Sullivan regularly offered to sell his share for whatever he had put in. I think that whoever we get will be a gamble.
As someone who has seen this Happen many times before it stands out like a sore thumb !!!!!
Why have the council not moved on the asset action ?????
What is the only asset Birmingham have that is worth anything ??
Namely the Ground !!!!!!!
It is the only asset Birmingham have which BIH have as coloteral,& until Birmingham Council act to take it out of the equation then the uncertainty will remain.
It raises the question why the Council are dragging their feet with regarding the Blues Trusts asset of community application
So here we are, droning on, dreaming of better days and yester years.
Sadly I have at long last decided to vote with my feet, alas my heart still screams KRO.
I remember the £40 million dream, the glorious victory at Wembley (Carson’s burpday present!)…the dream / reality of Europe. Half a century of pain. Gil Merrick,Trevor Smith, Johnny Watts, Bertie Auld, Colin Green, Malcolm Page, Hatton, Francis, Latchford, Handyside, Dugarry, Grainger et al.
Bump! …….what if we don’t have a suiter? no buyer? what if Tom Ross is spinning his timeless speculative journalistic tale? Where does that really leave us….AND WHAT ABOUT MY CLOCK???!!!!!