Review of the Financial Statements of Murray International Holdings Limited (MIH)

Last updated : 11 May 2010 By WEE BLOO

At as 30 June 2009



MIH breached banking covenants and as a result have had to undertake financial restructuring.  They have extended their financial year end from 31 January 2009 to 30 June 2009 to enable the restructuring to take place and to report in more stable economic conditions.  The extension of an accounting period can only take place once in 5 years, so this option will not be available again in the short term.



The financial restructuring took place on 21 April 2010. The main element of this involved Lloyds Bank increasing its ownership of the Company by subscribing for £150m of shares and reducing debt levels by a similar amount.  In addition, the financing arrangements for each division were separated.  Lloyds Group owns just over 12% of the Company.  David Murray and his family own 76%, reduced from 88% last year.


The Numbers

The balance sheet value is a negative position of £95m, as at 31 January 2008 this was £5m positive.  If the restructuring had occurred before 30 June 2009, then the balance sheet would be £36m positive.  This is significantly down from the figure as at 31 January 2008 of £159m positive.  The loss for the period is £174m, down from a profit of £5m last financial year.  

Included within this loss is a downward revaluation of properties held by the Group of £154m, approximately 20% of the development and investment portfolio.


What about Rangers?

The financial statements affirm that Rangers does not and never has cross guaranteed the debt obligations of the group.   Rangers contributes to the Group figures with a loss of £11.7m, and income of £39.7m.  Furthermore, the gain made on the disposal of football player registrations is £6.2m.


Ability to keep trading?

The notes to the accounts stipulate the Directors' opinion on the viability of the Group. They assert that the Directors have taken the decision that the company is viable,taking into account the restructuring.  In their opinion, the current projections and forecasts indicate that the Group should be able to operate within the level of its current facilities.  Read into that what you will!  It should be noted that the auditors do not highlight any issues with the company's ability to keep trading in their report.



The financial statements seem to reveal that the Group was in a perilous position and had to be assisted by Lloyds Bank taking an increased share.  The Directors are of the opinion that the forecasts suggest that the company should be able to work within the restructured credit facilities.  As Rangers do not provide any cross guarantees, the Club should not be involved in any group difficulties.