murray international balance sheet supported by £93 million of goodwill

Paul 67 of CQN fame gives us his take on the release of the MIM accounts at the beginning of December

Rangers' parent company, Murray International Holdings, submited their annual accounts for the year ending 31st January 2005 yesterday. The figures reveal an insight into the financial constraints that lie behind that club's current malaise.

The company has a value of £96million on the balance sheet (2004:£93 million), however this is underpinned by £102 million of intangible assets (2004: £4.6 million), £93million of which is Goodwill (2004: £3.2million). That is a whole lot of Goodwill.

Net debt, that most pernicious of monsters, stood at £556 million (2004: £230 million), accruing interest charges of £17million (2004: £10.5 million). Turnover was £342 million (2004: £233 million). Pre-dividend profit for the year was just below £14 million (2004: £18 million), leaving a retained profit of £8 million (2004: £12.8million).

Profitability was helped significantly by a sale of player registrations surplus of £6.1million, presumably the Boumsong sale.

Forget managers, forget players, forget tactics, money is the most important long-term determinant in the success of a football team. The financial stability of Murray International Holdings will go a long way towards establishing where the balance of football power in Glasgow lies. To use the vernacular; I don't fancy yours.

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BlantyreKev said: These figures are staggering, and quite why the Herald and others ran with a positive story based on a Murray news release is equally astonishing, and in fact damning of their journalistic integrity....and that wasn't even the sports section! I was expecting to see the incresed debt supported by an increased asset base. I was ready to write a balanced piece on profitability, unrealised asset values and our (Celtic fans) propensity to overstate the debt issue of MIH which is quite obvioulsy not comparable on a like for like basis with Celtic plc. To see the debt supported by this level of 'goodwill' is frankly a little frightening. This is akin to the revaluation issue over Ibrox stadium and how it keeps Rangers FC techincally solvent. It's Frightening in that beyond our delight in Rangers Football Club's demise I genuinely fear for those in the employ of MIH or its subsidiary and associated companies. Nevertheless David Murray has been in business a long time. He is a man of power and means. He's on the floor and the referee is counting, '5-ah!.....6-ah!.....7-ah!........' but we've seen some remarkable comebacks. Nomatter what the future holds we can be sure that in the short to medium term it's a future of turmoil for RFC

JohnBhoy said: This goodwill nonsense is utterly astonishing. How could £68 million of goodwill rest on the Rangers balance sheet when the club is worth nowhere near that amount? I can only presume this represents the difference between the nominal worth of Rangers when it was transferred out of MIH and what it is worth after being transferred back in. In which case, the figure is utterly meaningless, as it represents a drop in value which MIH can never hope to recoup. Goodwill? Good one, David. The benefit of having around 200 separate companies in the one group is that cash, assets, 'goodwill', debt, services and so on can be shuffled around till the cows come home. But Halifax Bank of Scotland know what they are owed. And having seen the paltry ASSETS that underpin their investment, they must be very worried this morning. And these figures were posted before the slump in steel prices. Murray has already admitted that returns in this sector will not be so hot this year. So he continues to borrow to buy assets, some of which he sells to accrue 'profits'. It's a massive gamble which has tied in one of Britain's biggest banks to the tune of HALF A BILLION POUNDS and threatens the jobs of 4,000 workers. It's like watching an oil tanker heading for the rocks ... and the ship is going faster. Full steam ahead, Cap'n Murray!

Glass Half Full said: I agree with Paul67 that it would be virtually impossible to find a buyer for FC Dignity as its assets are being used to underpin the MIH company - The buyer would be effectively buying David Murray's wider debt. In any event, why would Darth Vader want to sell? As well as ridiculously high valuations of a wee stadium being used as a basis for large borrowings, the majority of the good will (£68 m) is also attributed to FC Dignity. Put into context, one MIH company which accounts for approx 20% of total turnover has 75% of the goodwill.

barcabhoy said: On the property company, MIH have some very capable and highly regarded people in there. Murray knows this , and this is very much going to be the mainstream business for him going forward Debt is inevitable in this type of business and they manage it well in property. The metals business is reasonably stable but vulnerable to commodity price swings, MIH have made some acquisitions in this area and goodwill is also usually inevitable. The white elephants , especially Rangers, are playthings or deals with pals (mining). If they don't work they will/must be ditched. The overall results are shaky, especially as they contain the £15 million gain on the NTL share revaluation, which most people would certainly raise an eyebrow over. All in all, these accounts and more importantly the actions of the last two years in selling and pruning with low cost low quality replacements tell us all we need to know about Rangers, and their lack of financial muscle.

Goodwill and Dignity said: On reading this chapter on the MIH's accounts then it makes me think that if I were a Rangers supporter then I would be very worried. At the moment, their team is stuttering along on the pitch, and they believe that they are being run by a man who, if need be, will pump his own personal fortune into the club. However, if you cast your mind back to the tabloid's account of events throughout the 90s, you will remember that it was perceived that it was The Mint's money that was paying for the multi million pound 'stars'. Amazingly when the brown stuff starts to hit the fan in the 21st century, we are told that all of the signings have gone towards Rangers' debt. Admittedly since they are now part of the MIH group then I suppose indirectly he has paid for them himself.

GM said: Can anyone recall the song and dance the media made following the publication of Celtic's latest set of accounts? They showed net debt of £19.5m and gave rise to many a 'cash strapped Celtic' headine. Now, following the publication of the MIH accounts do you think we'll see headlines saying that at the time of Murray's share issue Rangers HAD NET DEBT OF £110 MILLION POUNDS??? To any 'journalists' reading, HELLO, get yourself a set of accounts and look at note 11(c) on page 24. It's there for you in black and white. It also shows the reason for the £68m of goodwill - RANGERS WERE BUST!! Murray paid £68.6m for a business that had a book value of MINUS £11.4m. That's right folks, the value of Rangers' liabilities exceeded their assets by £11.4m, EVEN WITH IBROX VALUED AT £121.5m!!! Unbelievable financial management.