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Club failed to report auditor had quit

Rangers reports loss as Murray attacks ‘mismanagement’

Rangers panoramaRangers made a £2.6 million half year loss in the last set of results under its former board which came in for further criticism for its “staggering” mismanagement of the club.

While the loss was down on the £3.5m loss in the corresponding period in 2013, interim chairman Paul Murray used the statement to take another swipe at the board and promise that any evidence of impropriety by the former directors will be investigated.

He said the focus of the new board is putting finance in place a seven year plan to rebuild the club.

“The new directors have been in place only a matter of weeks but have already started to repair the damage caused through recent years of neglect and disrespect for this Club, its people and its history,” he says. “The mismanagement of the Club in recent years has been simply staggering.”

He revealed that the club had not revealed that its auditors Deloitte had resigned last June. The new board brought in Jeffreys Henry to review the accounts and will make a further announcement once a new auditor has been found.

These results are historical and relate to a period before the new board took office. I wish to draw shareholders’ attention to the fact that these interim results have been reviewed by Jeffreys Henry LLP.

“‎I have been informed by Deloitte, the existing auditor, that they informed the previous Board of their intention to resign following the June 2014 audit. The previous Board chose not to announce this nor did they find a replacement for Deloitte.

“With limited time to have these results reviewed the board asked Jeffreys Henry to perform the exercise as independent reporting accountants, not auditors.  They have previously carried out work for the club and therefore know the finance functions well.

“The board will make a further announcement on this subject once we have found a replacement firm for Deloitte.”

Mr Murray, who was voted on to the board following the exit of the old board at an extraordinary meeting earlier this month, spoke of the “honour” of occupying the role.

“We are in the process of developing a business and funding plan which will help us rebuild the club and ensure it enjoys football and commercial success in the future.

“We will work closely with our shareholders, supporters and other stakeholders to achieve our vision of building a modern football club founded on our traditional values and standards. The recovery process will take time but if we work closely together we are confident of success.”

Todays’s statement revealed that 24,589 season tickets had been sold by the end of the period. The average home league attendance of 32,321 during the period, the 13th highest football attendance in the UK.

Revenue for the period was £13.1m, a  of £160,000 over the 2013 half year. The combined effect of lower SPFL attendances and the absence of a home friendly fixture reduced  ticketing revenue in these areas by £700,000.

This was offset against total revenue of £400,000 generated from four rounds of the League Cup against only one away round in the previous season. Broadcasting income increased by £300,000 to £600,000, reflecting higher SPFL central pool revenue and additional match day coverage in cup competitions.

Ibrox hosted the Commonwealth Games rugby sevens during July and also an SFA International fixture in October. These two events generated additional revenue of £1.3m from stadium rental and the provision of event security.

Retail revenue was £4.3m, a reduction of £500,000 from the previous period due to the closure of the Belfast and Glasgow Airport retail outlets and a demonstration by some supporters of dissatisfaction with the previous Rangers board and arrangements with the club’s retail partner.

Sponsorship revenue decreased by £300,000 to £400,000. Sponsorship contracts were replaced on a less favourable basis from the previous period reflecting the difficult business environment the club was operating within.

Operating expenses, excluding amortisation of players’ registrations, decreased by £900,000 compared to the comparative period, to £15.7m.

The decrease included an overall reduction in costs attributable to the retail business of £400,000.  Staff costs reduced by £300,000 to a total of £7.1m for the period.

This reduction was net of an increase of £200,000 in payroll costs incurred in providing event security and also includes a charge of £400,000 on severance payments to former employees, including former manager Ally McCoist.

The operating loss reduced to £2.8m from a loss of £3.6m in the comparative period. Finance costs were £32,000 against a previous year cost of £31,000 reflecting interest charges incurred on finance leases.

A net cash outflow of £1.3m in the period resulted in a closing net cash position of £3.3m. The cash outflow included £5.3m from operations which was principally a result of the operating loss of £2.8m and decrease in the season ticket deferred income balance. Expenditure on fixed assets was £100,000 and related mainly to replacement of mechanical equipment.

The company raised additional equity in September 2014. The gross proceeds of the issue were £3.1m and £2.8m net after expenses of the issue.

Shareholder loans of £1.5m which had been made available to provide working capital facilities to support the club were repaid by September 2014. These loans were replaced by £3m of loans provided by  Mike Ashley’s MASH Holdings.

 

 

 

 

 

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