There will now be an annual general meeting on October 24, at which the current directors will be up for re-election. As unrest grows amongst supporters at the board and the way the club has been run, The Herald analyses the accounts and what the figures mean.
What are the headline figures from the accounts?
Rangers made an operating loss of £14m on a turnover of £19.1m. Rangers raised a total of £35.2m in finance, £22m of which was from last December's Initial Public Offering of Shares. As of June, there was £11.2m cash left in the bank, which included £4.5m of season ticket renewal income. Operating expenses were £33.6m, with £13.3m attributed to "other operating charges", and staff costs of £17.9m, with £7.8m representing the wages of the playing staff. A release of negative goodwill, a gain occurring when the price paid for an acquisition is less than the value of its net tangible assets, of almost £20.5m was recorded in the profit and loss account.
What do these tell us about Rangers' financial position?
It has been a loss-making business and there is very little margin for error in the coming 12 months, since there are no credit facilities. An upturn in revenue is projected, and operating expenses have been reduced, but the £11.2m in the bank will be required for running costs unless there is a significant change to the business model. Having raised funds through a share issue, and banked revenues principally from season ticket sales, sponsorship and retail, the decision to maintain the infrastructure of a top-flight club has prevented Rangers from building up cash reserves for their eventual return to the Scottish Premiership. The club's turnover to wages ratio of 43% is higher than the IPO prospectus projections. While the Finance Director Brian Stockbridge points out savings in areas such as security, insurance and facilities, there is clearly still work to be done until the business is living within its means. It remains relatively debt free and with a strong asset base.
What has happened to the money raised in the IPO?
In effect, it has been spent, even though the share prospectus said that the money would not be used for working capital. Property assets have been purchased in Edmiston House (£800,000) and the Albion car park (£1.6m). A further £2.2m was invested in stadium improvements, such as improving advertising hoardings and the large screens. Edmiston House will need to be refurbished before it provides income, however, and unless income streams improve there does not appear to be enough cash available to fund any renovation work. £6.75m was also spent "to acquire the assets from the administrators". Rangers were due £16.1m in proceeds from the £22m raised in the IPO, which makes the costs involved to be £5.9m. The prospectus projected the costs to be £2.5m.
Will Rangers need additional investment?
The business has been signed off as a going concern, meaning that the directors and the auditors are confident that it will meet its requirements over the coming 12 months. Even so, as Rangers rise through the leagues, more investment will be needed for the football operation and while revenue will also rise, it is evident that the business will need additional investment unless further cuts are made to expenditure. An issue of further shares to raise money cannot be ruled out.
Are these accounts likely to quell the recent fan protests against the directors?
Some opinions are entrenched, but there are some Rangers supporters who remain undecided. The figures do not make for good reading and the boardroom machinations of the past 12 months have also undermined confidence. The IPO money was supposed to fund the regrowth of Rangers, but has in effect simply sustained the operation of the club. The £933,376 paid to Charles Green, the former chief executive, including a £217,850 severance package, will irk fans, as will the 100% bonus that took Stockbridge's emoluments to £409,308, and the total directors remuneration of £1.6m. Ally McCoist, the manager, has agreed to take a wage cut, but he was paid £825,858 during the accounting period.
How do the audited accounts compare to the last set of audited accounts for Rangers?
The last set of audited accounts for Rangers Football Club plc was for the 12 months to June 30, 2010. Those showed turnover of £56.3m, net operating expenses of £43.86m, operating profit of £5.1m and pre-tax profit of £4.2m. Gate receipts in a year when Rangers played in the Champions League against Unirea, Stuttgart and Sevilla, won the league cup and reached the quarter-finals of the Scottish Cup were £25.8m. Sponsorship and advertising revenue was £2.9m, broadcasting £3.76m and commercial revenue of £21.7m. Total directors' remuneration was at £832,000 with the highest paid, likely to have been Martin Bain, receiving £633,000.
Is Charles Green now no longer associated with the club?
No, despite reducing his shareholding to less than the notifiable interest - 3% - Green remains a director of Garrion Security Services, which is owned by Rangers, and Rangers Retail, a joint venture with Sports Direct.
Is it significant that Strand Hanson have stood down as the company's Nomad?
The nominated advisor (Nomad) acts as an effective regulator of the AIM-market. While it is not unusual for companies to change Nomad, Daniel Stewart & Company will be the third to work with RIFC since its flotation in December last year. That much chopping and changing is unlikely to give confidence to institutional investors.
What will now happen at the annual general meeting on October 24?
That remains uncertain. A group of shareholders, representing around 28%, want to nominate four replacement directors, as well as voting off the current board. However, the incumbent directors have refused the request. With fans agitating for change also, the mood of the AGM is likely to be fraught. The significance of the occasion depends on whether or not agreement can be reached on the nominations.