[Archived] Company Accounts Til 31St March 2015

[davulsukur]

FFP is based on losses, yeah.

[Mercer]

MM - turnover £24m - wages £31m - making a deficit of £7m. £8m one off costs then makes it a total of £15m. What additional costs contribute to the total loss of £36m ?

Not an accountant - but the way players salaries used to be depreciated against the length of their contracts I always found strange - and for my simple mind skewed the P&L

Just quoted some key headline numbers. Balance includes Other Operating Costs £14m, Loss On Disposal Of Intangible Assets £5m (including payments made to dispose of those assets) and Interest £1m.

Would also point out that running an Academy is a very expensive business. I know of two PL clubs (bigger clubs than Rovers but not the 'top' clubs) whose annual Academy costs are £4m and £4.5m !

[Claytons Left Boot]

The Parent Bond Guarantee mentioned a few posts back could well be similar to a type of Cross Guarantee structure put in place by BOI. If the worst came to the worst and the bank had to call in the debt, then they could look to other Venky's assets to obtain repayment prior to looking to assets of BRFC. If that failed and, looking at it logically, it shouldn't do, then the debenture would have to be put in place.

Debentures seem to differ in different countries but in the UK it is generally a charge over the fixed and floating assets of a company. Fixed would be for example land and buildings, in Rovers' case Ewood Park and Brockhall. Floating would be the players plus things like groundwork machinery down at Brockhall, cars, vans etc etc.

I seem to remember some debate on here at the time of Venky's takeover in that Venky's did not actually own the freehold to either Ewood or Brockhall because that was thought to have been retained by the Walker Trust. Obviously good news if ever the debenture situation was to be pressed forward. Perhaps PhilipL could confirm as I think he knew the situation.

[Mercer]

Not strictly true there Mercer.

Note the very last paragraph detailing the parent holding company (VHPVT Ltd) in the eyes of a court prior to any attempt over a debenture charge the parent company of Venkys (The subsidiary) i.e VHPVT Ltd would ultimately be held to a "Parent Bond Guarantee" before such a charge could be obtained, if only they failed on that would such a charge be given.

So a 112 million pound debt of the football club, 81 million is literally owed to the Rao's in which no interest is being charged, i suspect that the tax being paid on other ventures profits are being off-set against the losses of this enterprise "BRFC" In addition to the diluting of shares via the recent share capital issues are meaning that this debt is manageable "In House" in very much a similar situation to Eddie Davies at Bolton. The problem comes when Venkys decide enough is enough and bail out.

I draw your attention to the going concern where the cash flow of the club has been predicted but not disclosed, VHPVT LTD by admission from themselves (Jitendra Rao) have now signed the accounts to provide working capital and financial assistance to ensure the club operates until March 16 although this can be partly due to a potential clust of player sales the club will still need to meet its liabilities over the next 12 months thought to be around 25 million.

BOI overdraft facility is to Blackburn Rovers Football & Athletic Limited and they reserve the right to take a debenture over the club's assets. They can do this at any point in time irrespective of either holding company or the holding company's controlling company.

Can't comment on losses to offset tax as have no detailed knowledge of Indian tax law. However, if similar to UK then hardly likely to be any mileage in it as losses incurred from a foreign trade can only be used against future profits from the same trade (chances of Rovers making profit !!!).

Diluting of shares - not an issue here given financial position and fact that VLL is well nigh 100% shareholder.

Going Concern assurances - IMV, given past experiences with other companies regarding such 'assurances', hardly worth the paper it's written on. With the financial wreckage confirmed in the accounts, they really had no option other than to offer such 'assurances'. As my earlier post, the key wording is "the directors have a REASONABLE EXPECTATION that the group will have adequate resources to continue in operational existence for the foreseeable future" - sleep tight !

The Parent Bond Guarantee mentioned a few posts back could well be similar to a type of Cross Guarantee structure put in place by BOI. If the worst came to the worst and the bank had to call in the debt, then they could look to other Venky's assets to obtain repayment prior to looking to assets of BRFC. If that failed and, looking at it logically, it shouldn't do, then the debenture would have to be put in place.

Debentures seem to differ in different countries but in the UK it is generally a charge over the fixed and floating assets of a company. Fixed would be for example land and buildings, in Rovers' case Ewood Park and Brockhall. Floating would be the players plus things like groundwork machinery down at Brockhall, cars, vans etc etc.

I seem to remember some debate on here at the time of Venky's takeover in that Venky's did not actually own the freehold to either Ewood or Brockhall because that was thought to have been retained by the Walker Trust. Obviously good news if ever the debenture situation was to be pressed forward. Perhaps PhilipL could confirm as I think he knew the situation.

BOI facility is directly with Rovers, not the holding company nor the controlling company. Normal practice is to pursue the debt directly through the borrower which can ultimately lead to insolvency. If there is still outstanding debt at the end of this process (principal, interest and costs), only then would a lender call upon 'third party' guarantees.

[Stuart]

Alternatively you might say that if we come off the drug immediately we die. Whereas if we stay on it for the time being, there is at least a glimmer of hope that a cure might eventually be found, either in the form of promotion or new owners.

That can't happen if we've "died" i.e. ceased to exist.

I'm in agreement with Gav on this one. I don't see us dying but we may have to go the way of Portsmouth first.

Venky will never get us promoted. They don't know what it takes and don't listen to anyone who tells them.

So that leaves new owners. Got any suggestions? If Venkys are offering the club for a quid, it's a heck of a lot more likely we'll end up with a Gaydamak than a Sheik Mansour (sp).

Prescription methadone isn't a solution, it's just delaying the inevitable.

Putting £30mil in ay?

Just imagine if they'd have handed that to John Williams in 2009/2010.

Don't.

[McClarky]

This makes grim reading. I'm no accountant but I can't imagine any other business losing almost 150% of it's turnover in a year and surviving. If it is just the Venky cash which is keeping us afloat and we need to get back into the PL to give us any chance of surviving why the hell didn't they do something before FFP came in. Fiddling while Rome burns again from this bunch of clowns. Seems to me that at every stage of this 5 year nightmare they have made basic errors and we have suffered as a result and they are doing the same thing now. Look at how much worse even these results were than the previous year despite the cost cuttings that have been made. The turnover is down hugely, assets are well down, and wages are 130 of turnover which is shocking. If wage costs have been reduced then turnover will continue to fall as well as the team struggles so I can't see how the losses can come down short of selling our 2 main assets. The longer they stay the nearer we get to the abyss.

[Dunnfc]

BOI overdraft facility is to Blackburn Rovers Football & Athletic Limited and they reserve the right to take a debenture over the club's assets. They can do this at any point in time irrespective of either holding company or the holding company's controlling company.

Can't comment on losses to offset tax as have no detailed knowledge of Indian tax law. However, if similar to UK then hardly likely to be any mileage in it as losses incurred from a foreign trade can only be used against future profits from the same trade (chances of Rovers making profit !!!).

Diluting of shares - not an issue here given financial position and fact that VLL is well nigh 100% shareholder.

Going Concern assurances - IMV, given past experiences with other companies regarding such 'assurances', hardly worth the paper it's written on. With the financial wreckage confirmed in the accounts, they really had no option other than to offer such 'assurances'. As my earlier post, the key wording is "the directors have a REASONABLE EXPECTATION that the group will have adequate resources to continue in operational existence for the foreseeable future" - sleep tight !

BOI facility is directly with Rovers, not the holding company nor the controlling company. Normal practice is to pursue the debt directly through the borrower which can ultimately lead to insolvency. If there is still outstanding debt at the end of this process (principal, interest and costs), only then would a lender call upon 'third party' guarantees.

Not strictly true, if BRFC could no longer pay its bills then the process of winding up petitions begin however if BRFC were to enter administration before orders issued it would deny any opportunity for wind up orders. From a legal perspective it is then covered as per any UK business in this situation from such orders and claims of charges relating to x,y,z. As the business would be in administration from a financial perspective it means that it cannot meet any financial obligations and dues falling and as such an appointed administrator assumes control of the business operations and assets and when dealing with a football club they tend to look at settling financial aspects in the hope of exiting the administration process through a CVA.

Going back to the bond issue yes the debt is in relation to BRFC and they are the holder of "debt" however this is underwritten by VENKYS parent company to which if liabilities are not met they in turn under the bond conditions and with consent of BRFC and in this case BOI go after the parent company as the chances of obtaining anything of value from BRFC would be insignificant with what could be re-copied going after the parent company and bond issuer.

Probably worthwhile pointing out that without the bond issuer/parent company supporting us it would have been extremely difficult in obtaining the actual initial lending facilities something which was facilitated when purchasing the club and paying the Barclays overdraft of.

My view is they will bankroll the club for another 12 months before a firesale to minimize losses before plunging the club into the abyss. If something was to be a miss or the first indicator of trouble is when the HMRC are not paid.

[bob fleming]

BOI facility is directly with Rovers, not the holding company nor the controlling company. Normal practice is to pursue the debt directly through the borrower which can ultimately lead to insolvency. If there is still outstanding debt at the end of this process (principal, interest and costs), only then would a lender call upon 'third party' guarantees.

So in your professional opinion do you believe that the Bank of India believe that there are a £100m plus worth of assets in BRFC? A club that was bought for £23m 5 years ago when in the lucrative Premier League. Can you explain what assets the presumably incredibly naive BOI believe are within the club? Or is it more a realistic case that Venkys have actually put their own assets up as protection?

Are you saying that Venkys would still be liable for the debt - even after BRFC became insolvent and was wound up? If so what would the sense be in that? Finally, and without wanting to go off topic, if you are convinced that Venkys are desperate to raise cash and at very short notice why have they just sanctioned two new signings? And more to the point, and forgive me as I have just skim read this, what's this £28m they have put in?

[Dunnfc]

So in your professional opinion do you believe that the Bank of India believe that there are a £100m plus worth of assets in BRFC? A club that was bought for £23m 5 years ago when in the lucrative Premier League. Can you explain what assets the presumably incredibly naive BOI believe are within the club? Or is it more a realistic case that Venkys have actually put their own assets up as protection?

Are you saying that Venkys would still be liable for the debt - even after BRFC became insolvent and was wound up? If so what would the sense be in that? Finally, and without wanting to go off topic, if you are convinced that Venkys are desperate to raise cash and at very short notice why have they just sanctioned two new signings? And more to the point, and forgive me as I have just skim read this, what's this £28m they have put in?

Remember 81million is debt to Venkys which is interest free and no-chance of payback for a long time or if at all. To recoup any money are shortish notice bar player sales is for the club to go to administration in the chance they become a secured creditor. With no money at all and assets at an all time low the best they could hope for in this case is a pence to a pound ratio which makes me think that this wont become a plausible option.

[yoda]

So in your professional opinion do you believe that the Bank of India believe that there are a £100m plus worth of assets in BRFC? A club that was bought for £23m 5 years ago when in the lucrative Premier League. Can you explain what assets the presumably incredibly naive BOI believe are within the club? Or is it more a realistic case that Venkys have actually put their own assets up as protection?

Are you saying that Venkys would still be liable for the debt - even after BRFC became insolvent and was wound up? If so what would the sense be in that? Finally, and without wanting to go off topic, if you are convinced that Venkys are desperate to raise cash and at very short notice why have they just sanctioned two new signings? And more to the point, and forgive me as I have just skim read this, what's this £28m they have put in?

Paid up share issue I believe

[Mercer]

Not strictly true, if BRFC could no longer pay its bills then the process of winding up petitions begin however if BRFC were to enter administration before orders issued it would deny any opportunity for wind up orders. From a legal perspective it is then covered as per any UK business in this situation from such orders and claims of charges relating to x,y,z. As the business would be in administration from a financial perspective it means that it cannot meet any financial obligations and dues falling and as such an appointed administrator assumes control of the business operations and assets and when dealing with a football club they tend to look at settling financial aspects in the hope of exiting the administration process through a CVA.

Going back to the bond issue yes the debt is in relation to BRFC and they are the holder of "debt" however this is underwritten by VENKYS parent company to which if liabilities are not met they in turn under the bond conditions and with consent of BRFC and in this case BOI go after the parent company as the chances of obtaining anything of value from BRFC would be insignificant with what could be re-copied going after the parent company and bond issuer.

Probably worthwhile pointing out that without the bond issuer/parent company supporting us it would have been extremely difficult in obtaining the actual initial lending facilities something which was facilitated when purchasing the club and paying the Barclays overdraft of.

My view is they will bankroll the club for another 12 months before a firesale to minimize losses before plunging the club into the abyss. If something was to be a miss or the first indicator of trouble is when the HMRC are not paid.

Beg to differ with some of this.

IMV, BOI can and will take a debenture over Rovers' assets (fixed and floating charge) - sooner rather than later.

As to what guarantees (personal or company or both) the Raos or PVHL or both have provided or for what, I am not sure anyone knows with certainty.

[bob fleming]

Paid up share issue I believe

So they've put 28m in and converted it to shares? Have I got that right?

[yoda]

So they've put 28m in and converted it to shares? Have I got that right?

I think it is about £16 million new shares

[Mercer]

So they've put 28m in and converted it to shares? Have I got that right?

£15.9m by share issue and an additional £12.8m capital contribution (latter relatively unusual in UK but frequently used in USA). Taxation around 'Capital contributions' can be very complex for both trading company and person(s) making the contribution.

[yoda]

£15.9m by share issue and an additional £12.8m capital contribution (latter relatively unusual in UK but frequently used in USA). Taxation around 'Capital contributions' can be very complex for both trading company and person(s) making the contribution.

How much in hard cash of their own are they in for now MM, is it around £97 million mark ?

[Mercer]

How much in hard cash of their own are they in for now MM, is it around £97 million mark ?

At 31 March 2015, about £125million which includes additional £10m share issue in Rovers which was a condition of purchase.

This is growing daily and I would think we are now up to c£135million.

Key question is how much of this money have they borrowed from BOI using their Indian land as security !?!?

[yoda]

At 31 March 2015, about £125million which includes additional £10m share issue in Rovers which was a condition of purchase.

This is growing daily and I would think we are now up to c£135million.

Key question is how much of this money have they borrowed from BOI using their Indian land as security !?!?

Yes, I was meaning money they have used without borrowings or secured. It must be a tidy sum.

That would disappear if they pulled the plug yes ?

[Mercer]

Yes, I was meaning money they have used without borrowings or secured. It must be a tidy sum.

That would disappear if they pulled the plug yes ?

VLL accounts show Rovers owe VLL £81m. This could be partly paid back through player sales and the window of opportunity is closing pretty quickly now !

There one chance of financial salvation was a quick return to the PL. IMV, they blew this by sticking with Bowyer in the last two seasons.

Difficult to see any way out for them without taking a huge financial hit.

[adsfortheblues]

FFP is based on losses, yeah.

Obviously, but there are varying losses, not just 'losses' and that's that. There's net loss, operating loss etc. A figure around the £36mill mark was mentioned in relation to losses, however FFP concentrates purely on operating losses, of which stands at £29mil.

So I'm wanting to fully understand if this is the figure the FL will look at, and if so, presume it will be some time before they even consider lifting the embargo?

[davulsukur]

Ah right,sorry. My bad.

[bob fleming]

Mercer, seeing how your struggling to answer some of the points in post 58, in fact you've just ignored it. I'll ask again, if they are desperate to claw money back *dramatic punctuation alert in a Mercer styley* "!!!" How do you explain the fact they have just signed off two players? Relaid the pitch? Paid for the team to go to Portugal? Stuck in 16 odd million or whatever it is in share issue?

Also with the 80m you claim Rovers owe VLL where do you think they think that's coming from? Cause they'll do well to get 25% of that in player sales.

The only way they'll get their cash back is via promotion. Let's be honest. Why they didn't go all out to recruit a top draw manager is one of life's mysteries, that I can only explain away by believing they are absolutely loaded and that these losses really aren't hurting them. Otherwise Rhodes (and Gestede) would have gone a long time ago - as you've predicted practically every transfer window since we signed him.

[Rover_Shaun]

Bob's right it just doesn't add up. We could do with an impartial professional to disect it and put it in laymans terms for the confused, like me

[Feniscowles Blue]

What a waste having a amateur in charge of the team whilst we have the funds for a real good manager to get us up. Amazingly arse-about-face . ....

[jim mk2]

Ah right,sorry. My bad.

Your bad what ?

[awhom111]

Going to wait until the club accounts come out before taking a closer look, but I have one question. Is anyone aware of any payoffs for contract termination of staff and players besides Leon Best that were agreed after March?

Unfortunately the Cairney deal apparently did not happen before these were finished, because events that happen after the date of the accounts are some of the rare cases in which you can actually get a fairly accurate cost.