BSH: EGM Announced

On Monday Birmingham International Holdings finally announced to the Stock Exchange of Hong Kong details of their delayed EGM to approve the second part of a investment deal into Cambodian property. If approved by shareholders, the deal will see another 832million shares in the company created and reinstate Vong Pech as second largest shareholder in the company.

Hong Kong Stock Exchange

The announcement can be viewed here.

What is this announcement about?

In November last year, BSH completed a deal to invest in a property scheme known as “One Park”, based in Phnom Penh, Cambodia. The deal saw a Cambodian company led by Vong Pech called Graticity Real Estate Development take a stake in BSH in return for BSH receiving part of the property.

BSH announced in August of this year that they were intending to take a further stake in the property to increase their potential rent income. As it requires another tranche of shares to be created, it needs to be approved by shareholders and thus requires an Extraordinary General Meeting (EGM) to take place.

BSH have issued an 81-page circular to shareholders so that they can familiarise themselves with information about the project before they vote. As you can imagine, this document is about as dry as it gets, but it does point out the obvious – that the company needs to diversify its income and this will help that.

Why is it important?

I can take it as read that people are not as interested in this announcement as they are in the game on Sunday – after all, it’s just another humongous piece of paperwork from Hong Kong that isn’t directly connected to the football club.

However, this an important thing for the holding company to sort out as it improves the holding company’s standing with the Stock Exchange and makes it less reliant on BCFC for profit – which is good for the club in the long run.

Moreover, there are a few titbits of information within the circular that make for interesting reading about the current financial standing.

Borrowings Oct 31 2018

On page 57, the company confirms that as of close of business October 31, it owes around £33.7 million in loans to a shareholder and other parties.

Borrowings June 2018

This compares to borrowings of around £16.5million as at the end of the last accounting period (June 30), which indicates that BSH have had to borrow £17.2million in four months.

This only goes to show how reliant the company is currently on loans for cashflow purposes at least; and how much it and BCFC needs to diversify their revenue streams to become more sustainable.

Player liabilities October 2018

It’s also interesting to note that despite Blues being under transfer restrictions imposed on them by the EFL, transfer costs have risen.

Player Transfer Costs June 2018

The amount of money that could be payable for transfers if conditions are met – so called “transfer add-ons” – has also risen around £5.7mil as of June 30 to £6.64million in October.

What does this mean for Blues?

While there is no direct impact on the club in the short term, it’s hard not to see this announcement as good news to some degree.

It shows that despite a little delay, things are still moving in Hong Kong and that the business is trying to diversify its interests, taking reliance off the club for income and helping to satisfy the Stock Exchange that everything is alright.

Revenue from another part of the business could also be seen by some as a way for the holding company to invest more in the football club, although that remains to be seen if it would happen.

The EGM is due to take place at the Novotel on Jaffe Road, Wan Chai on December 8.

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