Full year losses widen for Birmingham City parent
LOSSES have widened for Birmingham City FC as it continues to try and extricate itself from the financial mire created by its parent group, Birmingham International Holdings.
Latest accounts for the year ended June 30, 2016 – released by receivers in Hong Kong acting for BIH – show the group made a pre-tax loss of £6.014m (2015: £0.8m), with revenues plunging from £25.4m during the previous year, to £16.96m.
Receivers from Ernst & Young have spent the last two years picking their way through the various agreements put in place by former owner Carsen Yeung and his advisors while at the same time trying to find a buyer for the business.
A deal for Yeung to relinquish control of the club in return for a share agreement has been resolved but attempts by the businessman to manipulate events were dashed earlier this year when a court in Hong Kong quashed his appeal against a six-year jail sentence for a £55m money laundering operation, and ordered him to serve out the remainder of his sentence.
A complex restructuring deal has been agreed which barring any unforeseen last minute hiccups, should see the ownership of the business transferred to Trillion Trophy Asia Ltd later this month.
In the results statement, the receivers said: “The group (BIH) incurred a loss attributable to owners of the company of approximately HK$58,574,000 (£5.86m) for the year ended 30 June 2016 and had a net current liabilities and net liabilities of approximately HK$141,155,000 (£14.14m) and HK$54,106,000 (£5.42m) as at 30 June 2016.
“These conditions indicate the existence of a material uncertainty which may cast significant doubt on the group’s ability to continue as a going concern and therefore may be unable to realise its assets and discharge its liabilities in the normal course of business.”
Nevertheless, the receivers said they were of the opinion that the group would have sufficient working capital to meet its financial obligations as and when they fall, due to loan agreements put in place with Trillion Trophy for £21.32m (HK$212,813,600) – although where the financing for this money comes from is not clear.
So far, £18.94m (HK$189,113,600) has been drawn on this agreement, leaving a balance of just £2.37m (HK$23,700,000) to fund ongoing operations.
“The directors (receivers) are of the opinion that in the absence of unforeseeable circumstances, following completion of the proposed restructuring, which is anticipated to be completed in mid-October 2016, the financial position of the company will be improved and the group will have sufficient working capital for at least the next twelve months,” adds the report.
The club’s precarious position has not been helped by the fact that BCFC is no longer entitled to receive parachute payments from the Premier League. The loss of the parachute payment – paid to football clubs relegated from the Premier League to help cushion the economic blow from the loss of TV revenue – has left a black hole of approximately £7.8m (HK$90m) in the club’s revenue.
Despite the situation, the club continues to punch well above its weight in the Championship, with manager Gary Rowett working wonders considering the limited funds available to him for players.
The team currently stands sixth in the table, above both Wolves and Aston Villa – both under new Chinese ownership and which have invested heavily in new players.
The Blues’ city neighbours have endured a poor start to the season, languishing 19th in the table, a performance which has cost manager Roberto Di Matteo his job.
