SFA have Rangers’ Interim Report…

According to Phil MacGiollabhain’s blog (www.philmacgiollabhain.com), the SFA have confirmed that they have received Rangers interim report. We don’t know if it is complete, signed off, or meets all of the SFA requirements, but they have passed over a hurdle that would have prevented the SFA from issuing Rangers with a UEFA license to play in European competitions next season.

The events surrounding the alleged takeover and failure to release the interim results by today at 5pm makes this situation take on an increasingly surreal appearance. Whatever is going on within Ibrox as we speak can only be explained by some extremely unusual occurences. The interim results normally have no bearing on any takeover- the buyer will presumably already know all of the contents of such a report in a friendly takeover. It makes me wonder if Grant Thornton are wanting to apply a ‘going concern warning’ to the report. Could the fakeover all be an elaborate charade to convince Grant Thornton that the tax risk had been underwritten by a third party and therefore did not constitute a risk any longer?

Who knows, but for sure the events of recent days will only be explained by a story that will read like a Jeffrey Archer novel.

This extract from the PLUS Market regulations makes clear that Rangers were required to release the Interim Results today.

47 An issuer must release financial information in accordance with the following timetable:
(a) interim results in respect of the first half of each financial year (beginning with the six month period following the end of the last period for which audited accounts have been published on admission) must be announced as soon as possible and in any event not later than three months after the end of the relevant period;

Source: PLUS Market Rules for “Quote” companies:
PLUS Market Rules for Quoted Issuers
Rangers operate a 1 July to 30 June financial year. So the half year ends on 31 Dec. Three months to the day after 31 December is today, 31 March.
So the interim report is no longer “delayed” or “later than normal”. They are officially “late”.

About rangerstaxcase
I have information on Rangers' tax case, and I will use this blog to provide the details of what Rangers FC have done, why it was illegal, and what the implications are for one of the largest football clubs in Britain.

33 Responses to SFA have Rangers’ Interim Report…

  1. mcguireonfire says:

    “We don’t know if it is complete, signed off, or meets all of the SFA requirements….”
    Does this mean they can submit all manner of fantasy so long as the submit something?

  2. A bit of conjecture on my part. I have no information that indicates that they are incomplete. However, the fact that they have not fulfilled the PLUS market requirements to release them today does provide food for thought. If there is a dispute with Grant Thornton over something like a going concern warning, it is possible that the accountants have not fulfilled the SFA requirements for the Interim Results.
    Something to ponder just now, but I would not read much more into it until we get to actually read the document itself.

  3. mcguireonfire says:

    Could you clarify what a going concern warning is?

    I’m trying to keep up as best I can but I have very little knowledge of these subjects.

  4. When the accountants reviewing or auditing the accounts believe that there are events within the coming 12 months which could cause the business to become insolvent.
    The First Tier Tribunal will return an answer within 12 months (for sure). If Rangers lose, the tax bill becomes payable (it is said to have “crystalized”). At that point, it is at HMRC’s discretion whether to demand payment before all of the appeals are exhausted. If they decided to press for payment, Rangers would face a bill that would be unpayable from their current capitalisation. So there would be a real risk of insolvency. If Grant Thornton do not inform stakeholders of this risk, they could be held (at least in theory) liable for the losses of shareholders, suppliers etc. (Think ArthurAndersen & Enron).
    Accountants start to become very toutchy when things start to operate on a knife-edge. I would expect them to take a cautious approach and this would put them in conflict with Rangers’ board.
    No guarantees of what they will do, but they are starting to share Rangers’ risk if they do not insist on some very clear declarations of the risks ahead.

  5. glover says:

    Grant Thornton ? I had heard they had been through the big 5, but GT would hardly make the top 20 !

  6. GT are an appropriately sized firm for Rangers. Nothing unusual about a firm like Grant Thornton being involved.

  7. Andy fitzpatrick says:

    What will happen with the shares in south Africa
    and do you smell a rat with rangers submitting there finances at the last minute.
    I don’t think even with all the talk the takeover will go through. Smoke and mirrors

  8. All shareholders must be offered the same terms. So Dave King and individual shareholders would have the right, but not the obligation, to sell as well. Any new owner would need to add 1% on to MIH’s 85% to cross the total control threshold. (A minor concern probably). I think that I have been clear that lots of things make no sense with this alleged takeover, so I am calling fakeover.

  9. Ardee says:

    I would expect trading results to be positive considering their European revenue up to December and an aggressive paring of wages.
    The delay in releasing these interim figures are probably more to do with takeover talks than poor results. I don’t think they usually show too much detail anyway.
    If it’s imposed, any fine will be nominal.

  10. Boab says:

    I don’t think there’s any doubt that trading results will be very good indeed, for the reasons you suggest. They will have made a lot of money in Europe and they have been cutting wages, both in numbers of players and what wages those players are getting. In a word they have been downsizing.

    However there are two things which are of particular interest. If the debt level is down, then that is because the profits have gone to paying that back. Have Lloyds in effect demanded that all of the profit from trading goes towards paying back the debt. If that’s the case then where will the money come from to strengthen the squad. Would it be further borrowing, that seems unlikely as it would kind of defeat the purpose.

    The other really interesting point is the value they place on Ibrox stadium. If memory serves that is around £120m. Again if memory serves that’s well over double Celtic Park, or Murrayfield. That really does seem an untenable position. It will be interesting to see if that has been lowered and by how much.

    Pure conjecture here, but that figure may well influence any future sell and lease back arrangement that someone wants to put in place.

  11. ramsay smith says:

    I’d like to know if the balance sheet valuation for the fixed assets is accurate and if it’s not what effect an accurate valuation would have on the overall solvency of the company ie would the value of the debts have been greater than the value of the assets at any time over say the last ten years.

  12. stevie says:

    It is understood that the conclusion of any such deal would leave Murray responsible for any of Rangers’ remaining tax liabilities.

    taken from the bbc website. Is this true?

  13. And if Murray’s responsibility is just laundered through a series of shell companies and ends up in some asset-less offshore trust?

    Rangers would still be liable for the tax bill, but Murray and RFC avoid the stigma of admission a bit longer. Is the entire point of this “sale” a way of keeping the bad news off the books?
    Is that the delay? Getting the accountants to sign off?

    If only I knew someone with experience of operating a boiler room and who knew a lot about creating a confusing network of offshore transactions to help construct such a plan!

  14. Ardee says:

    Can’t believe that it’s possible since the bank will be dictating policy at MIH.

  15. mcguireonfire says:

    Thanks for the explanation. Keep up the good work.

  16. Keith Sharp says:

    Could it be that the accounts are submitted after the Market closes but before the midnight deadline meaning these will be updated in the morning when Plus Market opens ?

    This is exactly what happened with MIH last year, only with Companies House rather than Plus Market and a lot of people got excited about late accounts when in fact they were submitted before the deadline.

  17. Boab says:

    I think MIH actually opted to go for 15 months accounts the last time, rather than the normal yearly. Which is a perfectly legitimate thing to do before anyone suggests I am saying it is not. I don’t think you can do it regularly though.

    I think what “got people excited” was the fact that they also converted £150m of debt (to Lloyds) into equity of about 11% of the MIH shares. Meaning that Lloyds then owned around 24% of MIH.

    The other thing which “got people excited” was the rumour that MIH had actually breached bankings covenants with Lloyds. Basically failed to stick to the agreements they had with the bank.

    Those things combined, and allied to the remaining debt (about £600m) put the Lloyds and MIH relationship on a whole new footing.

  18. kalashz says:

    All in all what are the chance’s of a big tax bill?

    And whats the chance’s of them walking tax free?

  19. Cautious Dave says:

    There appears to be a lot of speculation that MIH may have agreed to pay the tax bill. Surely the only way that MIH could imdemnify RFC’s new owners against the HMRC tax bill would be if they (MIH) were to provide a conditional bankers bond (the conditions of pulling the bond would be if the tax bill had to be paid by RFC’s new owners). Alternatively a Parent Company Guarantee could be offered to pay the tax bill? My understanding is a PCG is only worth something if the parent company is in itself financially sound which MIH does not appear to be. In any case LBG effectively own MIH so surely a PCG is in effect a bankers bond? It all keeps coming back around in circles for me i.e. if the new owners of RFC are not liable for the tax bill, then essentially it would be LBG that would have to stump up if and when HMRC win the tax case. Why would LBG agree to release the assets of RFC but retain the tax liability?

    Alternatively could Murray himself warrant the tax bill? Putting aside the obvious question of why he would do such a charitable act, what would the mechanism be for providing the money to the new owner? My limited knowledge of this is that these are very expensive therefore are only used when absolutely necessary.

    Hail Hail and stay safe

  20. Cautious Dave says:

    Re the last comment, meant to say my limited knowldege of bankers bonds are very expensive therefore only used when absoluty necessary.

  21. Auldheid says:

    Operation Mincemeat?

    When nothing makes sense nonsense can.

    If the words “going concern” appear it might not mean a licence is not granted but it should mean questions have to be answered.

  22. Glover says:

    Interesting that most of the media comment is around the profit & loss account. I have not seen much debate on the balance sheet which if there has been a revaluation of the ground and other assets could put the club in the insolvent position. Perhaps the reason for the delay?

  23. Rangers’ interims have traditionally not mentioned the balance sheet much- if at all. IIRC, they it didn’t mention the debt last year. When any business starts walking on thinner ice, their accountants (auditors/reviewers- call them whatever) start to get nervous and become sticklers. Directors also have reason to fear missing an opportunity to make disclosures. I hope Rangers are keeping up payments on the Director Liability Insurance policy.

  24. ramsay smith says:

    To me the nub of all this is the valuation of the tangible fixed assets.

    Have they been over valued to the extent that an insolvent company has been presented as being solvent?

  25. JohnBhoy says:

    Apparently disclosures of interims for companies listed on the Plus Market now have to be much more extensive.
    So the Balance Sheet will have to be included. I believe.

    There was a mention of boiler rooms earlier on. Any ideas of names and/or locations?
    The years 2001 to 2008 seem to be a mystery.
    I’ve got a certain person’s CV to fill in and I’m looking to plug a few gaps.
    All contributions gratefully received.

  26. Yes- but Rangers aren’t “listed”, they are “quoted”. I have not found any explicit requirement for non-listed firms to comply with IAS 36. Perhaps others with direct experience of this area can clarify?

    The challenge for Grant Thornton in the absence of explicit regulatory requirements is to minimise its own liability. So even if IAS 36 is not an explicit requirement, in the absence of anything else, they may well have used it as a guideline. As you say, this would require closer to the full accounts being reported, along with disclosures of contingent liabilities and asset writedowns. These would certainly make for spirited discussions with the Rangers board.

  27. Keith Sharp says:

    So basically, i was right. Cheers :-)

  28. Pedro says:

    Interesting Rangers still seem very confident in winning the tax case according to the Chairmans statement.

    Time will tell you is telling the truth.

  29. As Mandy Rice Davies famously put it “Well he would. Wouldn’t he”. :-)

  30. More likely that the “tell them the truth” faction on the board lost and it was decided to bluff it out.

    But by being asked a pointed question, Johnston has been put on the spot in a way in which few Rangers executives will be accustomed. he had no alternative but to give that answer. Anything else would put his personal wealth on the line.

  31. Pedro says:

    The reporting today has been pretty pitiful it has to be said.

    The latest being the comment Johnston made regarding IF Rangers lost the tax case HEAVILY, would the club go out of business?

    The obvious answer is yes. And yet people are getting awfully excited, about ifs and buts all over again.

    Still, it is the west of Scotland so same old same old.

  32. The key point is the effective admission of where responsibility lies. I expect that many Rangers fans are experiencing cognitive dissonance right now. They were intentionally misled in the past. So they are right to feel bewildered and betrayed.

    It might be vanity, but I hope that this board might help journalists understand the issues better and to start asking the questions which need asked.

  33. Boab says:

    It’s interesting if he used the word heavily. To me that is tantamount to an acceptance that they may lose it. I think that’s a first coming from him. Has he also dropped the position that it’s an MIH problem anyway.


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