Accountants view

[BEARGER 1,856]

"Borrowed" from FF, hope that's ok.

 

I print below extracts of a couple of emails a chartered accountant pal of mine sent me.

 

He had a look at the December management accounts that were published online, took note of the figures released through the Sun newspaper, took on board comments made at the fans meeting with the directors on 8th August, and the projections made in the Prospectus which accompanied the IPO.

 

You can download his analysis as a spreadsheet using this link - https://www.hightail.com/download/OG...Z1ArV3hwdmNUQw

 

 

Key issues are:

 

Rangers Retail performance and dividend policy.

 

How much of this 2013/2014 season ticket money is included at June 2013

 

In simple terms if running costs are £2m per month (£24m per annum) and we have £10m cash at June 2013, we need another £14m receipts in the next 12 months.This looks highly unlikely unless we get some decent dividends from Rangers Retail or large sponsorship funding. I suspect we wont run out of cash until the turn of the year but really need to understand how and when cash is extracted from Rangers Retail.

 

Excluding Rangers retail the coffers will be empty in Q1 next year but there must be a mechanism for extracting cash from Rangers Retail ( probably dividends) but I have no info of the quantum and timing of this cash.

 

Sorry forgot to mention in first email that Rangers retail figures shown include 100% of their figures so we are only entitled to our share (50%) of the profits with the the rest going to Sports Direct (shown as minority interest in the P&L account)

 

 

Begin forwarded message:

 

Mark,

 

I attach a one page summary of the revenue and cost figures extracted from the management accounts.

 

This highlights how the boards own forecasts for improving results rely almost entirely on a massive improvement in Rangers Retail revenues (from less than £1m first half to £11m second half) and profits (from c £0.5m first half to c £7.0m second half).

 

Excluding Rangers Retail the board forecast an Operating Loss of £5.8m in the second half (c £1m per month) with running costs at £13.3m (£2.2m per month).

The cash forecast at June was £15.6m including an assumption of £6.8m of season ticket money for the new season.

 

As you know BS has said the actual balance was only £10m at June but it is highly unlikely anything like £6.8m was received before June so this would account for some of the shortfall.

 

We will need to wait to see the actual results but I would expect the Rangers Retail profit forecasts to be highly optimistic and the running costs to be underestimated given the fees and bonuses agreed since December. There may however be some additional sponsorship income which was not anticipated when these were prepared in January.

 

At least it gives us a much better insight into the the breakdown of revenues and costs.

 

Yours,

[the gunslinger 3,366]

a bleak projection for sure.

[bossy 0]

The drama queens are out in force over on FF. But, actually, the numbers in that projection are not all that horrible. The problem is not what the numbers tell us but, rather, what they don't tell us. Notably, how much of the revenue is getting syphoned off by third parties in the forms of commission, revenue sharing, etc.. The number s don't tell us if the deals negotiated by management are good for the club or good for management.

[Zappa 0]

The drama queens are out in force over on FF. But, actually, the numbers in that projection are not all that horrible. The problem is not what the numbers tell us but, rather, what they don't tell us. Notably, how much of the revenue is getting syphoned off by third parties in the forms of commission, revenue sharing, etc.. The number s don't tell us if the deals negotiated by management are good for the club or good for management.

 

People are rightfully concerned bossy, so I don't really agree about the drama queens comment, but I agree with the rest of your post. I think we're going to have the same issues when the accounts are released too, even the full accounts when they finally appear.

[ian1964 10,831]