Birmingham Sports Holdings Ltd (BSH), the parent company of Birmingham City FC, has published its Annual Report (and Accounts). Nearly all the business of BSH relates to BCFC and so this report is of interest to Blues Fans. At Blues Trust we have looked through it and provide a summary and comment here. Please note the writer is not an Accountant or Lawyer and so these comments are personal interpretation and carry no professional authority.

BSH has five executive directors including Mr. Huang Dongfeng (Chief Executive Officer) and four non executive directors (three of whom are independent). The names and biographies of all the Directors are given within the report.

The chairman, Mr. Zhao Wenqing, in his summary states:

“the Company endeavors to strengthen the football team with a goal to achieve an advance position in the league. Although the result of the Club was far from our expectation during the season 2016/17, the Company will continue to give full support to the Club”. Also he states  “Looking forward, the management will continue to develop its principal football business and will step up its effort to identify new business opportunities so as to strengthen and broaden the revenue stream of the Company”.

The income generated is similar to last year at around £18M (40% from TV, 35% from commercial activity and 25% from match day receipts), however spending, at around £32M, increased significantly over the previous year, mainly due to increased wages resulting from acquisition of new players and managerial changes. This means that the loss made by the company of around £19M is much greater than in the previous year. The consolidated group accounts for BSH show a net asset value of around £30M;  this is worked out by adding together the value of things owned by the company like property, cash holdings and monies owed to BSH and taking away any monies or bills payable by BSH (including borrowings).

During the year the loans that Trillion Trophy had made to BSH that were secured on BCFC assets (mainly St. Andrews) were converted to shares in BSH making (or reinforcing) Trillion Trophy as the controlling shareholder. It is more complex than a simple transaction and is explained in detail in the report. I think this was the completion of the complex arrangements required to rescue the club from previous owners and my reading of the detail leads me to believe there is no longer  a legal charge over St Andrews and financial arrangements between Trillion Trophy and BSH have been amended to the benefit of BSH now it is a stable and compliant company.

BSH has started to diversify its business and looking forward is involved through subsidiaries in property and land investment and development in Phnom Penh, Cambodia.

The independent auditor’s statement concludes that the accounts are a true and fair representation of the companies finances and that its audit has found that BSH complies with relevant regulation and codes of practice.

An issue that is minor within the report but of particular interest to Blues Trust is the description of a share option scheme for employees and stakeholders. We will pursue and would welcome the opportunity of discussing whether Blues trust could join the share option scheme.

Overall I think BSH is financially sound and has resources to support BCFC in its efforts to improve the team’s league position. Although this is in the context of making an increasing operating loss, which would not be sustainable in the medium or long term. Our work at Blues Trust is about protecting the long term sustainability of our club; therefore we are very interested in discussing the medium and long term business plan and financial projections with the owners to be reassured about the long term sustainability of BCFC.

Cliff Horrocks

Chair, Blues Trust