rbr 1,247 Posted December 19, 2012 Share Posted December 19, 2012 Celtic FCâ??s £9 Million Hidden Debt paying 6% in Perpetuity Posted by footballtaxhavens ⋅ December 19, 2012 ⋅ Leave a Comment Filed Under Celtic FC, Debt Hidden round the back In Celticâ??s 2012 Annual Report, available under http://www.celticfc.net/corporate_investornews, Chairman Ian Bankier proclaims on page no. 1 under the Summary of Results, that the 2012 Year End net bank debt is £2.77m up £0.53m from 2011. Naturally Scottish football journalists regurgitate the press release, donâ??t go deeper into the figures and praise the amazing low debt. All the details in an Annual Report are in the back. It takes a bit of digging to get to the real details. Although the free market is supposed to be allow investors access to information so they can make decisions, financial reports are actually an exercise in showing the good news & hiding the bad things. Directors especially Accountants cannot be trusted to expose the full debt position up front and Celticâ??s board is full of ex-CFOs [Chief Financial Officers] & Accountants. Accountancy standards are set by auditors to also aid cover ups. If the Standards were so good why do we have the Enrons, Bear Stearns and Lehman Bros. failures. Accountants, Auditors and Lawyers are all part of the 1%ters. They donâ??t want us, the 99%, to understand what they are hiding while they distract us with the glittery stuff. Reading the 2012 Annual Report from the back, you find on page 63, there is another debt listed: â??Fair value of financial assets and financial liabilities The fair value of the Group and Companyâ??s financial assets and liabilities, as defined above, are not materially different to their book value with the exception of the debt element of the Convertible Cumulative Preference Shares, the fair value of which is considered to be £9.08m (2011: £9.08m).â?? [my emphasis] So Celticâ??s true debt position is £11.85 million. This is verified on page no.49 where under note 11 Finance costs we see the costs of the Convertible Cumulative Preference Shares £544,000 payment for both 2012 & 2011. Yet on page no10, up front, Eric J Riley, Financial Director, hides the true size & impact of the Net Debt by excluding the £9.08 million. This is like saying you own your house if you exclude your mortgage. On the previous page, page no 62 you can see Contractual maturity analysis for financial liabilities. These are debts owed in the near future and further out even to â??in perpetuityâ??: Cumulative Preference shares In Perpetuity Debt In the table above, note the Convertible Cumulative Preference Share dividends of £544,000 for each of 2012 and 2011. These securities, although called shares, have equity[shares] and debt elements. Hence their listing in this liabilities table. And please note the column heading above the £544,000 figure is â??in perpetuityâ?? in other words â??FOREVERâ??. Being a debt element the £544,000 should be called Interest rather then Dividend. Interest Rate on the Convertible Cumulative Preference Share Well what interest rate generates a charge of £544,000 on a debt of £9,080,000, itâ??s 544,000 / 9,080,000: Thatâ??s 6% per annum This is verified on page 50 where note 13 Dividends Payable describes the interest rate: â??A 6% (before tax credit deduction) non-equity dividend of £0.54m (2011: £0.54m) was paid on 31 August 2012 to those holders of Convertible Cumulative Preference Shares on the share register at 29 July 2012.â??[my emphasis] Who are the Shareholders getting the 6% Interest rate forever http://www.celticfc.net/corporate_sharecapital has them listed as: Convertible shareholders Well as expected, Line Nominees Limited, Dermot Desmondâ??s shelf company in the Gibraltar tax haven gets the largest percentage. Note: â??Dividendsâ?? are not taxable if received from a company outside Gibraltar. Maybe thatâ??s why they are called â??Dividendsâ??. Convertible Shares Now Convertible shares do have conditions allowing the holder to convert the CCPSâ??s into Preference shares but when you are guaranteed 6% per annum, under current bank interest rate of 0.25%, would you give up 6% for the possibility of an unpredictable dividend? This is the reality because very few of these securities have been converted over the years. So Celtic FC are going to be paying this high interest rate FOREVER unless they pay the £9.08 million back. 0 Quote Link to post Share on other sites More sharing options...
amms 0 Posted December 19, 2012 Share Posted December 19, 2012 I'm not sure I understand any of this. So Dermot Desmond receives £544,000 from Celtic every year because they owe him £9,080,000? He's a slippery one is old Dermot isn't he. 0 Quote Link to post Share on other sites More sharing options...
the gunslinger 3,366 Posted December 19, 2012 Share Posted December 19, 2012 this is why we shouldn't be paying a dividend. thanks for posting. 0 Quote Link to post Share on other sites More sharing options...
the gunslinger 3,366 Posted December 19, 2012 Share Posted December 19, 2012 I'm not sure I understand any of this. So Dermot Desmond receives £544,000 from Celtic every year because they owe him £9,080,000? He's a slippery one is old Dermot isn't he. not all of it but a good % 0 Quote Link to post Share on other sites More sharing options...
simplythebest 0 Posted December 19, 2012 Share Posted December 19, 2012 this is why we shouldn't be paying a dividend. thanks for posting. Yes, awful time to be a Celtic fan right now. 0 Quote Link to post Share on other sites More sharing options...
rbr 1,247 Posted December 19, 2012 Author Share Posted December 19, 2012 Not only does he and the others who hold these shares get dividends , but these Convertible Cumulative Preference Shares hold another wee secret that is not divulged , these preference shares cannot lose their value , they hold the same value now as when issued , so as we speak their share price is 39p approx , these still hold a value of £1.25 per share , Old Desmond isnt daft . Im not 100% if these were from the first , 2nd , 3rd or 4th share issue that they have had , I believe they are from the original 0 Quote Link to post Share on other sites More sharing options...
the gunslinger 3,366 Posted December 19, 2012 Share Posted December 19, 2012 Yes, awful time to be a Celtic fan right now. indeed. its taken the total financial collapse of their only rivals to put them back on top. 0 Quote Link to post Share on other sites More sharing options...
simplythebest 0 Posted December 19, 2012 Share Posted December 19, 2012 indeed. its taken the total financial collapse of their only rivals to put them back on top. Even during our much lauded three in a row two of the title races went to the last day. 0 Quote Link to post Share on other sites More sharing options...
kuznetsov 0 Posted December 19, 2012 Share Posted December 19, 2012 Yes, awful time to be a Celtic fan right now. is that sarcasm i sense? 0 Quote Link to post Share on other sites More sharing options...
kuznetsov 0 Posted December 19, 2012 Share Posted December 19, 2012 indeed. its taken the total financial collapse of their only rivals to put them back on top. how do you spin their recent european record? one of which we could only dream of, even at our peak. 0 Quote Link to post Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.