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united’s parent company post financial results

united’s parent company post financial results


Gulf Finance House, the parent company of Leeds United’s owners GFH Capital, have announced their financial results for the first half of 2013.

The Bahrain based investment bank reported a net profit of US$4.2 million, down from US$5.7 million in the first half of 2012. Total income of US$24.4 million for the six months ending 30th June 2013 was down from US$32.6 million for the same six months in 2012, despite a sharp increase in income from management fees from US$1.6 million in the first half of 2012 to US$5.2 million in the first six months of this year.

Operating costs reduced by 27% from US$26.9 million to US$19.6 million, “underlining ongoing efforts in the streamlining of operations and achieving greater efficiencies across the business,” according to the press release (pdf link) submitted to the Bahrain Bourse.

The bank’s ‘assets held for sale,’ the column under which Leeds United has previously been accounted, halved in value, from a net US$42 million at 31st December to US$22 million. As only a truncated extract from the accounts (pdf link) is currently available, the reason for the drop is unknown.

UPDATE: A more complete version of the accounts has been posted (pdf link)  with the following disclosed at note 11, on page 18:

Assets and liabilities held-for-sale represented the Group’s 100% investment in Leeds City Holdings Limited (LCHL), a holding company for a number of trading entities whose activities form the operations of Leeds United Football Club (LUFC)…During the period, based on placement of majority stake in LUFC to strategic investors, the Group de-consolidated LUFC Holdings Company, and accordingly, the previously consolidated asset and liabilities of LUFC Holdings Company were derecognised resulting in a net gain of US$ 776 thousand included in the condensed consolidated income statement under gain from discontinued operations. The Group’s remaining stake continues to be classified as held for sale and is recognised as an investment in associate at its estimated fair value less cost to sell.

The phrases "placement of majority stake in LUFC to strategic investors" and "the Group de-consolidated LUFC Holdings Company" suggest that GFH are no longer majority shareholders of Leeds United, and that a controlling stake has been transferred to unnamed ‘strategic investors’; however there is no other detail in the documents to clarify this.

In the press release, GFH’s acting chief executive and director of Leeds United, Hisham Al Rayes, referred specifically to the bank’s ownership of the club, saying, “during the quarter we focused on building platforms to extract value from our existing assets. In this regard, we secured a number of strategic investors alongside GFH in Leeds United FC.”

The translation from stock exchange-speak is that GFH have looked for and found other investors in Leeds United to help them turn the club into a money-maker.

GFH Capital completed their takeover of Leeds United in December, the end of a lengthy process that began at the end of the 2011/12 season. Boardroom changes at Elland Road this summer have seen previous owner Ken Bates replaced by Salah Nooruddin of International Investment Bank, which took a 10% interest in the club in March, with GFH-C’s David Haigh becoming managing director. Bates, meanwhile, was completely removed from the club less than a month into a three year term as president, after a dispute over a private jet contract.

The new season began with a win over Brighton at Elland Road on Saturday, watched by over 33,000, ten thousand more than attended the opening fixture last season. The removal of Bates, as well as reduced ticket prices and increased engagement with supporters, led to an optimistic mood before the game, matched by the attendance and Luke Murphy’s injury time winner. Off the pitch, with season ticket money paid to Ticketus LLP due to the East Stand financing undertaken by Ken Bates and Shaun Harvey, the opening day’s match ticket sales will have generated over £400,000 in cash for the club.

Leeds supporters, and Brian McDermott, will hope that GFH-C’s search for strategic investors, reduction of running costs through the closure of Yorkshire Radio, and increased income from ticket sales and merchandise, will result in money being available to buy players before the transfer window closes in a month. McDermott, who was able to spend £1m on Saturday’s matchwinner Murphy when other players left the wage bill at the end of May, has been frustrated in his search for wingers and one big signing, believed to be Bolton’s Matt Mills. McDermott has spoken of the need for players to leave before more can come in, saying last week, “If someone left the building, someone could possibly come in. That’s how it is.”

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