boss

RR has actually paid a (very) small dividend - see page 28 of the Accounts. Just to tie up a few numbers, as Bluedell says RR made a profit of £1.655m to date (£1,157k this year and £498k last year). No dividend was paid last year therefore SD's minority interest was £244k (p25) carried into this year. SD's share of profit this year was £567k (p23) and they received a dividend of £109k (p28) leaving a minority interest due to SD of £702k (p25) at the year end. (244+567-109) Another way to look at that is: RR profit to date £1.655m SD's 49% = £811k Dividend to SD this year £109k Leaving £702k I agree with Bluedell that only some of the money in the bank that we can't currently get our hands on can possibly have come from RR profit. The rest was presumably paid in by us/SD to set up RR.

Many thanks for posting the document - I'll read it fully later when off my phone.

Haven't had a chance to look at your first point. Re the second point, I think any new shares have to be notified to the market. You see, for instance, them having to announce when someone takes shares in lieu of dividends.

Further to this post, I also now see that same fall of £1,008k appears in the cashflows between 31 December 2012 and 30 June 2013 (£30,798k down to £29,790k). So the £1,008k was actually physically paid out in that period. Could be to do with the 'real' IPO costs but I assume they should have been accrued in the Interims even although the cashflow would change?

Strangely between 31 December 2012 and 30 June 2013, no more shares were issued but the share premium arising increased by £300k and the costs of fundraising increased by £1,308k, with the balance on the share premium account falling by £1,008k. A missing link?

I seem to recall that CF leaked the share list/cost some months ago but it was taken down. Wish now that I had taken a copy.

Yes, I laughed as well when I typed the date. Green was the only director. He owned the 2 shares (which became 200 shares on subdivision, hence he ended up with 5,000,200) and he probably didn't pay the £2 for them either!

As bad as Mather.

Agreed, but the contract incorporated the Option that was approved by the board on 29 May 2012 which was before we knew what league we were in. It's ultimately the exercise of the Option that gives rise to the 'cost'.

Ah, I thought I had. I even apologised to Frankie for messing up his forum as I didn't mean to start a new thread. And I didn't!

I think we've all had our fill of aggressive tax avoidance!

Ahmad loaned the company £200k on 11 May 2012 - before a deal had even been done with D&P. This seems to have been something of a punt for him as it could in theory have been swallowed up in fees and he got back nothing. Anyway, he got back £178k on 15 August 2012 and the other £22k was converted to to 2.2m 1p shares on that date. We don't know how much, if any, share premium was accounted for as it is all lumped in with other share issues in the period to 31 August 2012. Ahmad also got a £50k arrangement fee for this loan.

Yes. And it would represent a significant tax saving for Green, perhaps £0.5m.

(I posted this thread on RM. I would like to have spent more time on this post but work commitments don't permit. I hope this can be the basis for further investigation, particularly amongst the accountants and solicitors on the forum, on a matter that does appear to have been missed by everyone from McMurdo to McCollco and everyone in between. Feel free to correct the post as necessary given my lack of time to follow through some points, but I believe it is basically correct and explains several unresolved issues from the Accounts. For the avoidance of doubt, no illegality is implied.) The Mystery of the £5.7m Share Issue Costs It was Charlie wot done it. One of the main issues raised from the Accounts was that £5.7m of costs were charged against the IPO proceeds. But we were told the IPO costs would be about £2.5m. So why the difference and who got the other £3.2m? I believe the answer is that there wasn’t actually £3.2m more physically paid out because it was simply a paper transaction. And it relates to the 5m shares issued to Charles Green basically for free. As we know, Green was due a percentage of the shares (complicated but basically more than 10% of the company post IPO) for doing the initial deal to buy the club and for getting the initial investors (pre-IPO) to buy £7.7m of shares. There is reference in the prospectus to both an employment contract and an option for Green to buy shares at 1p. The option was eventually satisfied by the issue of 5m shares to Green on 31 October 2012 as part of his agreement for the IPO to go ahead. Green ended up with under 8% of the company - less than originally agreed. This did not cost the company any money – it merely diluted the shareholdings of the initial pre-IPO investors. It is an important technical point that this issue of shares was heavily dependent on a successful IPO. When shares are issued, the value of those shares (as opposed to the issue price) needs to be reflected in the share capital and share premium accounts. We don’t have the information to know exactly what value was put on these shares because nor do we know exactly how much the IPO costs were, but I would suggest 50p-70p is likely (£2.5m-£3.5m) given the IPO price and the information previously leaked about the pre-IPO share issues. So far as the company was concerned, the premium element of this deemed value of shares was to be charged against the share premium account as part of the cost of doing the IPO, so it had no net effect on the cash raised. Read Accounts note 23 and think of it like this: 10-6=4. If you add 2 onto both numbers you get 12-8=4. You still end up with the same number. It is accountants playing with bits of paper. Why was this done? One consequence is that the (say) £3m doesn’t then get charged to the profit and loss account, which would have worsened our loss. But I don’t think that’s the real reason. It was to shift what may be an income tax matter (up to 45%) for Green, to be a capital gains tax matter (up to 28%). HMRC may want to look further at this structure but Green has indemnified the company against any tax that arises, which again points to this being the reason, so it’s not really our problem. For this structure to work, the share premium had to be charged on paper against the IPO money. That’s why it looks like the IPO cost so much and why the issue to Green was specifically dependent upon a successful IPO. But in layman's terms, it didn’t really cost £5.7m in money paid out – the (say) £3m was really Green’s cut for the initial work. That was of course before we knew what league we would be playing in, hence Mather’s comments today are not incorrect. A further point worth noting is that the £7.7m initial fund raising exercise is what effectively paid for the purchase of the Club, not the IPO money. It was the initial (pre-IPO) shareholders who gave Green a free ride, not the IPO proceeds. The purchase of the Club appears in the Cashflow Statement as a result of merger (as opposed to acquisition) accounting - an unusual one even for accountants. So Green walked away with not just £933,376 salary but also 5m shares worth about £2.5m by today’s prices. Nice work if you can get it. The costs of £5.7m charged to the IPO share proceeds are therefore technically correct but the real pound note cost to us was closer to the original estimate of £2.5m The rest was bits of paper that did not affect the cash from the IPO or the shareholders who invested in the IPO.

I reckon it's about £3.2m to raise £13.3m. And I agree it's high! Although if the IPO at 10% is in order, the pre IPO issues were riskier. Even still, Malcolm Murray approved the share issues so given his strong corporate governance background you would hope they are in order.