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OP Video Podcast: BIH Accounts Analysis
On Friday Birmingham International Holdings released their interim accounts for the six month period ending December 31, 2015. I’ve recorded this podcast to put together my thoughts on how good/bad they are and what it likely means to the club.
As always, I’m not an accountant – please take the time to read them yourself and come to your own judgements.
Key points:
- Headline figure is a loss of HKD54million – approx £5mil
- Turnover down 34% due to loss of parachute payments
- Operating expenses down 4.5% despite admin costs dropping by 49% and wages by 45%
- BIH showing net liability of HKD23.5m – £2.18mil
- BIH already borrowed HKD104M – £9.7m – from Trillion Trophy Asia in six months.
- Carson is still appealing to have the receivers set aside.
Tags: Accounts, BIH, Carson Yeung, Ernst and Young, HKSE
32 Responses to “OP Video Podcast: BIH Accounts Analysis”
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Worrying – and no end in sight, which is more worrying.
Any comment.
not sure what you’re driving at Jacky
Dan – thanks, informative as usual. I had a similar concern on the outgoings – wages and admin costs have fallen to be broadly in line with revenues but total outgoings had only fallen a fraction. One of the things not itemised in the accounts is the fees BIHL are paying to E&Y – perhaps this could make up part of that difference?
Same thought occurred to me!
As ever, insightful & informative.
TBH I think we’re in A good, but not brilliant place. To finally have some investment after Pannu’s slash & burn years is very positive as is the fact that the club is not steeped in debt.
I agree that the unknowns are worrying (who are TTA, wtf is Carson up to) but personally I give Panos & E&Y the benefit of the doubt – call me niave if you want.
The biggest +ve though is that people seem to be moving on from this saga and focusing on the pitch. We’ve got a massive game on Thursday and the m8st importsnt thing is get a big crowd and get properly behind the team. I hope Caddis returns!
Hi Dan
Thanks as ever
The more BIH owes Trillion Trophy the less likely Carson will be able to buy it back on any level ??
TT can call in the loan to prevent Carson doing anything unless he can repay the loan
I wouldn’t meet Pannu on his patch after what he perceives you did to him btw
KRO
Doesn’t stop Yeung coming back as TTA loans are secured against the ground so Yeung could still once again own the club.
Also, if TTA own the ground then am i correct in stating the club / BIHL is worth far less once the shares start trading once again, meaning it will be far easier in terms of cost to buy into the club / BIHL?
Wasn’t one of the main issues on blues cost down to the value of the hkse listing being worth circa 30m so irrespective of the value of the club the listing in itself was worth 30m. I thought one of the issues in selling blues was the need to diversify first before disposing of the club to stop the listing being a shell and thrown out of the exchange. If this is still valid then the debt would need to be written down against the value of the listing and not the club. Just basing this on dans previous post and no expertise in this myself so could be a million miles off.
Yup – you’re right, they still need to diversify the listing – which is EXACTLY what I expect TTA to do once it’s relisted.
It’s not the first BIH ,AA results that seem to effect the players more than it does the fans , I suppose if your firm has cut backs but still shows a loss , it has to effect your performance , especially if you have the ugly sisters watching over you , but hey , the ugly sisters always lose out , blues have a game in hand and we are still in there , COME ON your better than this blues ..KRO..
Tried to forget about all the ownership business the last few months but this shows really we are still a long way from stability.
On the plus side in terms of performance on the pitch, for wages to have been cut by 45% over the last year and to see the team continue to go from to strength is pretty remarkable
Sad to hear that CY still has time to appeal against EY being involved in BIH, will he ever go away? Like others I wonder if the expenditure gap is down to EY expenses, plus the legal fees must be significant.
Yes it is and reflects the fantastic work achieved by GR and his staff.
To expect a playoff position or even promotion under these circumstances is totally unrealistic and has been for some time now,
With a bit more investment we could under GR achieve promotion next year.
This is bad,bad news (imho) but not unexpected. As i have maintained for a long time there`s something seriously wrong behind the scenes and relative success on the pitch as meant we`ve averted our gaze from what is really important. In 6 short months we`ve lost,on average, about 200k a week.That is alarming to a club with such limited funding.Our turnover has shrunk by a 3rd which is huge.As Dan stated we`ve made large cuts in admin and wages yet operating costs remain high.Now i ain`t no mathematician but how does that work? Very troubling. BIH is,in real terms,insolvent and that cannot be good by anyone`s standpoint. And finally…..when we started borrowing money from TTA i made a comment on one of these blogs which broadly said..”we`re borrowing large amounts of dough from people we know nothing about with our beloved St.Andrew`s as the only collateral” I then added tongue-in-cheek “what could possibly go wrong?” Most respondents said i was being dramatic and there was nowt to worry about.Well now even Dan is saying the same thing describing this as “a little bit frightening”. What are the terms with TTA? Can they call in the debt at a moments notice? There is no end in sight and the background shenanigans will continue for a long time yet.
What could Carson do if the receivers set aside?
Who knows. With his background i can`t see many people queuing up to invest in the club so he may have to sell albeit at a loss.The TTA loan is of more concern to me.Could it be a long-winded way of gaining some decent real estate ie the ground?
I don’t know much about business, but could it be that TTA have given the loan against the stadium with a view to strong-arming CY in to selling? Take the 20m for the club or we will just call in the loan and you have no stadium, no club, no pot to p*ss in to show for it? As doing there due diligence they will know BIH couldn’t afford it if called in.
Possible i suppose. Take a cut-price offer or end up with next to nothing.St.Andrew`s is one of our only assets.
Some points to note:
-they put down HK$50m losses attributable to owners of the company. That’s up from 4m the previous year. That makes the difference between profit and loss. Is that part of the claim against Yeung/Pannu?;
-we are in the black if one puts all assets against current liabilities. Essentially there is HK$50m or so for deferred capital grants and tax liabilities – both of which are down from the previous year – that are not repayable in the near future;
-there is a loan facility that will provide another £10m or so at any given time – which looks to me like TTA are basically loading debt to set off against the purchase price. If Yeung tries to assert his rights over the shares, TTA will ask for repayment of all of that. Is that game worth the candle? E&Y are discussing more things with TTA about future options as well;
-Yeung has not provided a defence to Blues’ claim against him yet. It is due in late May;
-HK$120m, or over £11m, of the borrowing is an amount U Continent is entitled to under the convertible bonds. BIH disputes U Continent is entitled to it, and has issued proceedings for a declaration that BIH is right. But as the proceedings have not even been served yet – the HK Court, it seems to me, needs to give permission to serve it in Mainland China – BIH have thrown it back into the borrowings.
So, if BIH is right on that, then Blues are not insolvent. Indeed over half of the borrowings would be due to U Continent.
You’re right and make a very good point re U-Continent. That’s a major sticking point re borrowings. It’s not Mainland China though, it’s BVI (where U-Continent are offshored).
I honestly believe TTA aren’t after the club but the listing – but I think it’s some way off.
Ah, OK. I thought U-C had an office in Beijing as well – if they did, they could be served there.
I’m not sure whether links with mainland China of anyone involved will have an effect. The HK legal system is like the English, so people litigate to a result, with settlement talks late on. The Chinese legal system is far more mediation-focussed, to avoid litigants losing face. The accounts mention settlement negotiations, which might be there just because it’s the sort of thing that’s expected, or it might be because there is a genuine move to settle these things. If TTA are well-connected that would put more pressure on.
What is vaguely worrying me is whether the claims against Yeung/Pannu have been inflated just to extinguish the U-C bonds…
If the valuable listing is what TTA are after rather than BCFC where does that leave us? Owners who have little interest in our welfare? I worry about the future of the ground and in turn the club itself.I hope i`m just painting a bleak picture without foundation but to my layman`s eyes things are simply not adding up.
How about ones who will look to sell it on?
That’s what I think will happen.
Wouldn`t that leave them with a HKSE listing but no meaningful asset?
Not if they put another company that they are interested in into it first ;)
I’ll be surprised if the listing is ever active again. It’s in too much of a mess even for E&Y to sort out. Best thing for everyone is to cut their losses with BIHL & sell the club. I’m sure whilst getting a listing on the HKSE may be difficult it has to be easier just starting again with another business than all this lot!!
Is part or all of this £5 million loss down to E&Y fees?
As Dan says the accounts don’t tell us where this loss has come from.
The club / BIHL seem to be on a knife edge depending on different court cases and how they pan out.
BIHL / BCFC still seems to be loaded with debt and wasted £1.5 m on Fabrinni that it can ill afford.
Does anyone have any idea how much is St Andrews would be worth as building (residential housing) land? That is assuming Birmingham City Council granted a planning application.
My thoughts are that it hopefully isn’t worth as much as the value of the football club, even in its current parlous state. If it is worth more and I had was only interested in making money, I would develop the ground and **** the football club.
If E & Y haven`t found the evidence to `nail him` by now i have little expectation that they ever will. My own feeling is that nothing will happen until that 2 year period is up.TTA will ,perhaps,have to show their hand and maybe other potential buyers might come forward.i hope the latter is the case because Dan has intimated that TTA are not as interested in BCFC as they are in a listing on the HKSE. All in all it`s a bloody mess but KRO regardless.
As always Dan very thought provoking and insightful. One point that does concern me is IF (and its a big IF), Carson wins his appeal and E&Y are dismissed how does he intend to run a virtually insolvent company and what money does he still have to move BIHL and Blues forward. As I have said before his own debts and expenses must be crippling and who would stand with him investing in a joke of a company.
The only outcome I can realistically see IF Carson is successful is the demise of our beloved club and in the space of maybe a season or two we would be extinct. What protection do Blues have if this scenario is allowed to be played out.
Reading between the line it appears to me (with my warped sense of thinking) that the HKSE or the Courts don’t want Carson anywhere near a listed business but are not in any position to do anything about it apart from letting nature take its course and hoping that E&Y can find the evidence needed to nail him and his cohorts. I personally think that it wont happen within the two year exclusivity period given to TTA and that will then start a different set of problems that I cant see a successful outcome to. I hope I am wrong but I will continue to enjoy the footballing side of Blues while it lasts.
[…] that court hearing, we’ve seen two sets of accounts – from Birmingham City PLC and BIH which have confirmed that BCFC has only managed to maintain operation due to the loans made to it […]