Take this quote from the auditors for instance:- “We have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and we were unable to determine whether adequate accounting records have been kept.”
Bearing in mind I’m a layman and not an accountant . . . The figures do cast some light on the operations of the retail side of Rangers but they require careful reading, comparison with past years and the keeping of an eye on various related factors.
The accounts should have been filed with Companies House no later than 9 months after the year end. That would have been 26th January not August.
You can apply for more time of course.
Companies House may extend your accounts deadline if both:
•an event you couldn’t control stops you from sending your accounts
•you apply for more time before the filing deadline
In a company with £4.3m of sales, £3.5m cost of sales and a gross profit of £0.8m, I would have expected to see some breakdown of cost of sale, but with £3.8m of purchases from related party Sports Direct it’s clear where that is going.
With no split of cost of sales it’s impossible to see who makes what. SD sell the strips etc to RR for £3.8m but we have no idea how much money SD makes on that. It could easily be half of that or more. All we can see is that RR made £800,000.
There has been an interim (for half a year)dividend of £2.7m paid out to preference shareholders. I can see no mention of preference shares anywhere in the accounts. The money has gone. Who is the owner – who got the £2.7m. We can only guess!! What was the shareholder split at the time of the disbursement?
There is also an odd statement about the share capital. Again, the story is not clear from the accounts. They state that “During the year it was identified that the issued share capital of the company was 200 shares, not the 100 shares stated in the 2014 and prior financial statements. 100 of these shares were alloted in error. The Directors of the company, having being alerted to this error, will now take all necessary steps to cancel these shares.” Make of that what you will!
The company has positive working capital, and does not need funded by RFC or anybody else.
If you take the gross profit, less distribution costs and admin expenses but ignore the one-off reversal of provisions identified in Note 2 and other operating income (income generated from licence) apply a 21% tax charge then RFC’s 51% is not worth anything. In terms of dividends, it is not clear how much of the £2.7m RFC received.
These accounts are late and opaque and given that the year to April 2016 is already complete they are a blurred snapshot of the past.
FACTORS TO TAKE INTO CONSIDERATION
The key figure I always try to bear in mind with anything to do with Rangers Retail is a profit of £4 million a year - this is roughly what the shops and online were producing in the old days under Nick Peel. That would mean, all things considered, approximately £6 million a year PROFIT to Rangers these days.
Of course - things have changed - the 2007 economic collapse, the change in football fashion buying, etc. And let’s recall it was Murray and Bain who hived off the Retail operation to JJB and broke up one of Britain’s top football retail teams in doing so.
Secondly, all accounts are merely a snapshot of what the position was more than a year ago. Circumstances change. People may be more aware of the Sports Direct contract now than they were, they may be more inclined to boycott. Or they may not.
Thirdly, the operation of Rangers Retail is massively influenced by the power given to Sports Direct by the former director who signed the contract. Rangers pay for over-ordering of stock even if it doesn't sell. The contract has a deal breaker clause which means in the event of the directors of Rangers Retail not agreeing on an issue then Sports Direct always have the final say due to the structure of the shareholdings. The seven year notice period also looms over every decision - it gives Sports Direct a huge threat to hold over the club. The timing of dividends - note that when Sports Direct had 75% of the shares (as a result of their loan to the club) they chose to pay dividends then and hence kopped 75% rather than 50% - possibly legal but certainly morally reprehensible.
Fourthly, the time lag in producing accounts and the lack of consistency, comparable data from previous years - in-house retail, JJB, JJB in admin, Rangers in admin, one-off costs etc means that you can provide yourself with almost endless excuses for poor performance.
WHAT DOES IT ALL MEAN FOR RANGERS?
It means - keep boycotting. Being involved with Sports Direct under these circumstances is dreadfully bad for Rangers, both financially now and for the club in future years.
Rangers are handcuffed to a retail partner whose names reeks of worker exploitation, shabby practices and a reputation for killing brands at the top end. With shareholders revolting and the main man having to be dragged unwillingly before the House of Commons to answer for his behaviour.
Fans breathed a collective sigh of relief when Dave King and the current board took over and the pressure came off Sports Direct for a while as it was assumed they would come to a reasonable accommodation over the retail contract. It’s time to tighten the boycott.
The club is now taking court action against Sports Direct. We fans need to keep pressure up by boycotting and encouraging friends, family and anyone else we know to do the same. It’s going to be a long slog.