Rugger Guy and the Sevco interims

Just when I think I’m out they….

As ever, I’m grateful to Rugger Guy for this promptness and his precision.

Within a couple of hours of messaging him he sent me this:

 

Phil, you have asked me to comment on the interim results of Rangers International Football Club plc. “Rangers” for the 6 months to 31 December 2018.

First and foremost, like last year, there is no audit opinion and 2 pages of results. Rangers’ full year results to 30 June 2018 had some 50 pages. The recent interims of Celtic had 16 pages, a trading review, profit and loss account, balance sheet, and cash flow, limited notes to accounts and listing of post balance sheet events and comment from the auditors with no qualification.

Rangers had an income statement and review by Dave King, the chairman. NOTHING ELSE.

There is little point in expressing a detailed view on these numbers as there is no back up details, no cash flows, and no notes to the accounts.

However, can I take you back to my review of the full year results published just over 3 months ago.

These result were published with a fairly good idea of what the performance would be from Rangers in the 6 months to 31 December 2018.

I highlighted the various points.

1. The auditor’s report emphasised concerns regarding going concern. I highlighted in a few places that as a consequence of receiving only £1.5m fresh cash from the share issue, £7.6m is required to continue trading and £4.6m is needed in season 2018/19. Have things changed radically in 3 months? I suspect not, financing will still be needed.
2. Post balance sheet events. Since the year end investors/directors have provided additional further loans of £2m.

Mr John Bennett very recently indicated that the directors cannot continue to provide the required financing.

3. Contingencies. No comments but there have been several outstanding issues outstanding. Are these accounted for in the interims? Impossible to tell.
4. Working capital was in deficit by £16.4m at the end of June. Has this improved significantly? Impossible to tell.
5. Cash outflows last year were £8.5m. Given the comments of auditors that £7.6m was required to continue trading, I am inclined to rely on this independent commentary.

 

The interim unaudited results showed an 80% increase in turnover to £35m, and profit before tax was £5.1m after inclusion of profit on sale of players of £2.8m.

 

I would summarise my review of these numbers as follow.

Clearly a big increase in revenue helped largely by the contribution from Europa league, however operating expenses have increased by £10m in the first 6 months, to a higher base. Revenues will fall sharply in the second half, but costs will not. Rangers are hopeful that they will be close to breaking even, but in simple terms, on an optimistic basis will report a pre-tax loss once again, albeit lower than previous years. I refer you to my comment above regarding poor cash flow, auditors’ emphasis on further cash required, and Mr Bennett indicating that directors cannot continue to plug the shortfall any more.

Make of that what you will.

Unsurprisingly the figures were met with glee by the credulous klan.

I think the key word is “unaudited”.

Such details will not perturb The People in the slightest.

After all, they once believed that Craig Whyte was a billionaire.

Of course, the common factor is a compete absence of journalistic scrutiny.

Now, if you’ll excuse me I have to wrestle with a subplot.

I don’t mind reporting on Sevco’s creative efforts, but I really need to concentrate on my own!