Charlatans

[JimS]

If only the Charlatan Brothers where AI generated eh?

If they were there might not be a club for us to watch.

That is certainly what they would like us to believe.

[Tony]

If only the Charlatan Brothers where AI generated eh?

If they were there might not be a club for us to watch.

I really have to question this. Yes we may well have completely run out of funding options at that time but wouldn't the more likely outcome have been that we would have ended up with a couple of successive relegation and ended up back in the lower reaches of the Isthmian league or something?

Only if someone was prepared to run the club on this basis, and let's not kid ourselves that would require funding as well. You are not going to generate much income playing in front of 60 people in the Combined Counties League and even if all players, management and staff were unpaid/ volunteers you still have the same overheads to open the ground: maintenance, pitch preparation, utilities, insurance, kit, catering, league fees, rent, rates etc. Just as likely the club would've gone bust or sold for a pound just to get rid of the hassle (see Staines for details). Let's be sensible here, dropping down the leagues is a death spiral you don't want to explore unless you have someone to pick up the tab. And you might just end up with someone worse as owner (again, see Staines). At the moment we have a degree of stability and just need to sit tight and see how the investor situation plays out. The club has no debt, sits in mid table of the NLS, has a good management team and should be attractive to new investors or possibly existing investors. We have pizza, what's not to like?

[JimS]

If they were there might not be a club for us to watch.

I really have to question this. Yes we may well have completely run out of funding options at that time but wouldn't the more likely outcome have been that we would have ended up with a couple of successive relegation and ended up back in the lower reaches of the Isthmian league or something?

Only if someone was prepared to run the club on this basis, and let's not kid ourselves that would require funding as well. You are not going to generate much income playing in front of 60 people in the Combined Counties League and even if all players, management and staff were unpaid/ volunteers you still have the same overheads to open the ground: maintenance, pitch preparation, utilities, insurance, kit, catering, league fees, rent, rates etc. Just as likely the club would've gone bust or sold for a pound just to get rid of the hassle (see Staines for details). Let's be sensible here, dropping down the leagues is a death spiral you don't want to explore unless you have someone to pick up the tab. And you might just end up with someone worse as owner (again, see Staines). At the moment we have a degree of stability and just need to sit tight and see how the investor situation plays out. The club has no debt, sits in mid table of the NLS, has a good management team and should be attractive to new investors or possibly existing investors. We have pizza, what's not to like?

And yet for every Staines there are dozens of other clubs who have dropped down the leagues but are still in existence.

[geedub]

Ramayana accounts to 31 May 2024 have now appeared at Companies House.

A couple of interesting points:

• They show the £1.4m being invested in shares in HRBFC as had been reported by the club. At 31 May 24 Ramayama is carrying their total investment in HRBFC at its total cost of £2.1M (£650K being invested in Dec 22 and earlier). There is no write-down of the value to below cost at 31 May 24. I wonder if the view on that has changed since 31 May 24.

• At 31 May 24, HRBFC owes Ramayana £350K. Quite surprising considering the £1.4M loan had just been converted to shares in HRBFC at that point. We might have hoped/expected the club to be debt-free after that loan-to-share conversion. It is possible that HRBFC had cash at 31 May 24 which it then used to clear that debt but maybe more likely that the club has ongoing debt to Ramayana.

• The accounts filed are exempt small company accounts so don't include much detail, but the movement on the P&L reserve suggests Ramayana incurred losses for the year of £809K. If that is the case, it's difficult to imagine how they arose - although the "other creditors" at 31 May 24 of £270k would likely be related. Possibly there were a lot of legal fees, architects fees, maybe also directors' fees...

[Tony]

The limited information makes it hard to follow quite what has gone on. There would appear to be more share issues than are reported at Companies House. In total Ramayana have raised just shy of £4M which is significantly more than we were aware of. £2.1M has been invested in HRBFC and nearly £1.2M has gone in losses. Hard to know how these losses were incurred. Ramayana will have had its initial set up costs and presumably directors' salaries to pay, consultants fees, a bit of admin cost etc but may well have also been incurring costs on behalf of the club which are not represented in the investment figure. The loan owing by the club to its parent is new news. Whether that is still there we won't know until this time next year. When the club publishes its accounts we may get a better idea of what has happened financially. Some of the investment will have gone on infrastructure and the balance on running costs and squad wages no doubt.

[Lord Elpus]

The fact that there is a loan owed by the club is rather worrying but as Tony seems to suggest I guess we won't know the full implications of this until next year. However...wow. Over a quarter of the money they raised gone on losses. Hardly the business geniuses we were led to believe then?
The amount we allegedly "owe" is pretty scary though. Should contingency plans start being made, or am I over worrying at this stage?

[Tony]

It's not unusual to have inter-company loans between parent and subsidiaries. The only observation I would make is that Ramayana publicly made the point that they had converted their much larger loan into equity which led people to believe that the club was debt free. It may well be the case that this further loan has also been converted, repaid, increased or stayed the same. We have no way of knowing so frankly I wouldn't worry about it until it becomes relevant. The trouble with historic accounts is that so much can change by the time they are published up to 10 months later, so we don't really have a true picture of what is happening now.

[geedub]

It's not unusual to have inter-company loans between parent and subsidiaries. The only observation I would make is that Ramayana publicly made the point that they had converted their much larger loan into equity which led people to believe that the club was debt free. It may well be the case that this further loan has also been converted or increased or stayed the same. We have no way of knowing so frankly I wouldn't worry about it until it becomes relevant. The trouble with historic accounts is that so much can change by the time they are published up to 10 months later, so we don't really have a true picture of what is happening now.

We know the additional balance has not also been converted to equity because HRBFC has not issued any further shares since then. It is possible that the balance was just a timing difference and HRBFC had spare cash which it subsequently used to clear the balance (possible but maybe unlikely). The 20 Mar 24 club announcement said "The (£1.4M) conversion will further strengthen the Club’s balance sheet making it essentially debt-free". I guess it is possible that Ramayana is charging HRBFC some sort of management fee (or recharging other expenses) and the balance has arisen from that.

I guess things will be a bit clearer when we see the HRBFC accounts due at Companies House to be filed by end of Feb.

[Tony]

According toCompanies House the club has not issued any more shares since the original takeover deal in December 2022. That clearly didn’t cover the later capitalisation of the apparent inter-company loan.

[geedub]

According toCompanies House the club has not issued any more shares since the original takeover deal in December 2022. That clearly didn’t cover the later capitalisation of the apparent inter-company loan.

Good point - looks like that issue of shares filing from March 24 has been missed from Companies House - I think I had noticed before and wondered if the loan conversion had actually taken place. The Ramayana accounts at least confirm the loan conversion did happen.

[Tony]

Another point on the inter-company loan. Any loan owed to another party will only be a concern if there is no means of repaying without creating a financial crisis. The lender may use the loan (if it cannot be repaid) to gain control over the borrower by demanding representation on the board or by converting the loan into shares in order to effectively control the company, the so called "loan to own" strategy. However, in our case, Ramayana already own over 99% of the club so can have all the control that they want. I believe under NL rules, loans from directors and shareholders need to be approved and usually are only permitted on the basis that they are subordinated to all other creditors, so in theory the lender gets little benefit by using their loan as a means of destabilising the borrower.

[Tony]

James Newman who brought the Movember relationship to the club has resigned as a director.