Loftus Road PLC EGM

On Thursday 24th October 2002 I attended the first meeting that the company of Loftus Road plc had held for its shareholders since the extraordinary general meeting which took place in May 2001. This recent meeting was again an extraordinary general one which contained 2 resolutions that basically were to give authority for directors of the company to allot a percentage of shares with a nominal value for cash to persons who are not existing shareholders that would amount to a maximum of 5% of the company's issued share capital. The 5% limit ensured that existing shareholders' rights remained protected.

With QPR 1st Supporters Trust now being an official shareholder within the company due to the transferring of some shares to the Trust, and with the other committee members of the trust who are shareholders being unable to make the meeting due to work and other commitments, it was delegated, upon receiving the notification and on sending it back to the registrars, that as Secretary of the Trust, as well as having a free afternoon, that I would represent the Trust along with any other shareholders who had proxied their votes to the Trust, as well as those who could not attend on the day, and who had contacted us with questions.

So with plenty of notice I filled out the proxy card, along with the attendance one, stating on it that I would be representing the Supporters Trust. So imagine to my intense irritation on arriving at the meeting venue at the old Wasps ground in Sudbury, Northwest London, that I encountered problems at the registration desk. The registrars had my name down on their list, a couple of times in fact as an elderly shareholder who owns a substantial amount of shares had asked me to represent his interests, however the chap on the desk informed me that as a representative I was only entitled to a proxy card, therefore not allowing me to ask any questions throughout the meeting. I then whipped out our share certificate showing him the entry of QPR 1st Supporters Society Ltd on it, as well as explaining that as the Trust cannot speak up for itself it requires a spokesman/woman on behalf of its members/shareholding, and that person had been delegated as myself as per my admittance card I'd sent off to them some two weeks previous. He wasn't having any of it insisting that I needed to have put it down in writing. Aagghhh. I pointed out that putting it in writing on the card should have been sufficient but he was insistent that a letter was needed. By now I was uncomfortably aware of the curious glances from other shareholders my exchange was attracting and so I gracefully accepted the proxy card I was issued with whilst silently fuming. I guess egm's and myself don't go together but that will not stop me from writing a letter of complaint to Lloyds Registrars about my treatment and carbon copying it onto the board members of Loftus Road plc.

After such a warm welcome I made my way upstairs to where the meeting would be taking place. I'd never been to the old Wasps ground before and the building where the meeting was held was in the clubhouse. It was actually much nicer than I had imagined it would be, a top table followed by rows of chairs with a tea-bar at the back of the room. An announcement was made for everyone to be seated as the meeting was scheduled to start and the wish was for it to begin on time.

And so onto the formality of the meeting. The top table consisted of Ross Jones, Chairman of Loftus Road plc and who was to be chairing the meeting; David Davies, Chief Executive of the Company and also CEO of QPR FC; Nick Blackburn, a non-executive director of the Company and also Chairman of QPR FC; Harold Winton, a new non-executive director of the Company; and Paul English, the Company Secretary.

Mr Jones began with introductions and then explained that the meeting would be in three parts. The first part would be the business of the egm regarding the resolutions. The second part would be a question and answer session in which shareholders would have the opportunity to question/voice any issues to the board. And the third part would be a question and answer session with Ian Holloway, team manager of QPR FC. Mr Jones asked that any questions in the second part of the meeting be reserved to company ones only, and not football related ones as the football/on the pitch issues would be discussed with Mr Holloway after a small interval for tea following the second part.

He then went onto read out the resolutions, explaining that there was a party interested in investing £150,000 at a share price of 6.5p into the company. He then asked if anyone had any questions over the resolutions. Though nobody raised their hand, I had a couple of questions regarding them that had been passed onto the Trust via a shareholder who could not attend who basically wished to know who the directors are being given authority to allocate the shares to; who the persons are who are not existing shareholders; and the reasons for the authority expiring at the end of the upcoming AGM. Unfortunately as I had already been informed I could not raise any questions I was unable to bring these issues to the attention of the company directors and though I would like to apologise to that particular shareholder for being unable to raise them, I hope he understands the circumstances beyond my control.

The resolutions were passed though there were a fair amount of shareholders who abstained from voting. This then brought about the close of the formal part of the meeting.

Mr Jones then stated that it was time for the company q&a to commence and he also said how questions would be permitted from those present who were there representing other shareholders of the company. The first question was one of the financial indications now that the company is out of administration. Whilst Mr Jones said that the club have reduced costs, and that in his opinion we are in a healthier state than a lot of football clubs, Mr Davies explained that while we are now out of administration, things are still very tight.

The next question was about QPR Nominees Ltd and if the board would care to enlarge on its relationship with this company. Mr Jones replied that the trustees of QPR Nominees Ltd are himself and David Davies. They will hold the 26.8% of shareholding that Chris Wright transferred to QPR Nominees. He said there are two things that they can do with them in the future. Either sell them to investors or cancel them. He also said that they would have to wait to sell them because of inland revenue purposes. Basically there's some kind of IR change soon to come that will allow an exemption from paying tax on this sale should it happen in the future.Mr Davies then added for the sake of clarity that QPR Nominees is a stand-alone company and is completely separate from Loftus Road plc.

The next question was about company accounts and when would they be issued? Mr Davies replied that two years' of draft accounts are being prepared and that they should be audited and available by Christmas/early January. The AGM should then take place 28 days after they are available, bringing it to around late January/early February time.

The next question was about the identity of the lender of the £10m loan and if further info could be divulged. Mr Jones replied that due to confidential reasons they are not allowed to release the name of the lender. The money came from a Swiss Trust, via a Panamanian Company. He said there was nothing sinister in this and that the lender had no interest in taking over Loftus Road plc or QPR FC.

A question was then asked about budgeted numbers regarding crowds. Mr Davies replied that we have budgeted for between 12,600 - 12,800 crowds for this season. Mr Jones also expanded on how the board is looking at to get more revenue via merchandise and also with a new Commercial manager having been brought into the club they are looking to bring in more money via the commercial avenues.

The next question was in two parts. Firstly, how did the board come to the decision of 6.5p for the share price? And secondly are there any intentions to re-list the company as a public Ltd one? Mr Jones answered the share price part first. He said how they took a number of things into consideration, including the worth of the stadium etc. They came to the conclusion that 6.5p, as a nett value was the right price for an investor who is interested in spending £150,000 but that the price would probably be valued higher if an investor wanted a larger block of shares. They also calculated this price based on a valuation of the stadium from two years ago by a firm called Lambert Smith Hampton, which was valued at £15m.

As regards the question of re-listing the company Mr Jones responded that he felt that the whole concept of football clubs being listed is an expensive and one he is not convinced about.
Mr Davies then said that the board will be looking at in the near future towards holding a series of mini meeting with shareholders, such as they do with the football club's supporters, in order to find out their specific needs.
A shareholder then queried if the board will look at some kind of reward scheme to shareholders, and to see if any revenue can be generated that way? Mr Davies said that the board are happy to look at and consider any commercial things and if anyone has any suggestions about a reward scheme then they would listen.

The next question asked was if the lender could sell his loan onto a third party should he choose to do so? Mr Jones replied that there was nothing to stop him from doing that but just so long as we meet the repayments this was not a concern.

A shareholder then brought up the subject of the previous egm and what exactly happened regarding Chris Wright's commitment as regards the 3 way split from any future sale of the Twyford Avenue site. Mr Jones replied that if Chris Wright sells Twyford Avenue on, the company would receive 10% of the profit, plus an extra percentage equivalent to Chris Wright's shareholding at that particular time. He also said that we have a 5-year license fee at Twyford avenue, at which we pay rent, and we are now into 2 years there.

A question was then asked Fulham and if/when they are going back to Craven Cottage? The board's answer was that they don't know. A shareholder asked about thoughts on permanent groundshare? Mr Jones replied that it does make good commercial sense and that "we would agree with that, we would believe in that".

I had been ticking off various questions that were on my own list as they were being asked and it was at this stage that Ross Jones asked for a show of hands from those who still had any questions/points to raise in order to give the board an idea of how many more questions they were looking at before breaking off for an interval before the final part of the meeting with Ian Holloway took place. There were a couple of outstanding questions on my list so I raised my hand and asked about whether financial penalties regarding the loan repayments will apply after 5 years. And what shareholding Chris Wright or his representatives are retaining? Mr Davies replied on the first point that while a penalty may be incurred if we brought back the loan before 5 years, there will not be a penalty after 5 years. Regarding Chris Wright's remaining shareholding he has 21.9%.

I then brought up the subject of the poor show regarding attendance at the afternoon's meeting (Taking into consideration that there are over 5000 shareholders of the company there was probably around 70 people in attendance). I asked the board if they were aware of the good practice as recommended for AGM/EGM's in the corporate governance booklet, which recommends such meetings taking place near to the clubs, themselves, and also to encourage good attendances, that they be held either of an evening or a weekend. Mr Davies replied that he is more than aware of the booklet and that the recommendation was for club agm's etc. Mr Jones advised that as far as he is aware the board is following the basic guidelines for plc's, and that the majority of them are held in the afternoons. He also informed there was nothing sinister regarding the time and venue of the meeting.

I took their points on board but the fact of the matter is that Annual/Extraordinary general meetings are a key part of any company/club's, (whether they be private or public) calendar which basically provide accountability, democracy and representation to its shareholders. Celtic plc, held their last AGM of a weekend, and at Celtic Park, due to the Celtic Trust pushing this issue via a resolution. It just seems a shame that out of so many Loftus Road plc shareholders, only an extremely limited number of people were able to take the opportunity to attend last Thursday's egm.

Anyway, back to the meeting. The next question to be asked by a shareholder was the matter of our finances this season.
Mr Jones replied that in some circumstances we would not have enough money. He went on to mention the £150,000 being brought in from the potential investor and added about the need to sell a piece of land "right here" (Sudbury).

Another question regarding finances was then brought up. This time about the plans to pay off the £10m loan, what happens at the end of the 10-year period and will the ground be at risk?
Mr Jones replied that though there are no plans to start to pay back the capital of the loan as of yet, he said that 10 years is a long time and that maybe in two years time they would look at plans for the 5th anniversary. He also said that maybe in time we would be able to renegotiate for better terms. He also mentioned how the club is always on the look-out for fresh investment and that they are talking to interested parties at present.

Just as the second part of the meeting was being brought to a close, a shareholder asked for a convention to give a shareholders vote of thanks to the board for "their superb effort" in doing their utmost to bring the company out of administration. A round of applause was given, though there were a number of shareholders who did not join in with the applause.

Mr Jones said a word of thanks and then closed the second part of the meeting, saying that the on the pitch matters with Ian Holloway would take place after the short interval.

Other matters of interest which were brought up were:
Though the player wages are currently budgeted at 2.5m - 2.7m for the season, we are still somewhat over budget.
On this note Mr Winton stated how hard he finds things sometimes as he would love for us to be able to bring in extra players to the club.
30 players on the books though 16 will be out contract at the end of the season. Richard Langley and Clarke Carlisle's contracts run out at the end of next season.
Mr Davies said promotion to division 1 would bring in extra revenue.

I personally found it rather odd that the team-manager was going to be answering questions at a shareholders egm, though having said that I would have liked to have stayed to hear Mr Holloway's views but unfortunately I had to leave in order to get back for my children's sakes, plus I had to go to work that evening.
Before I did leave though Jim Frayling, QPR's Marketing Manager caught up with me and explained that holding the meeting at the Sudbury ground also helped to keep the costs down, even in comparison to holding it at the club, and also informed how the facilities were good.

I left the meeting with mixed feelings, and I have found some of the feedback received from shareholders that did attend the meeting, highly interesting. There are also still a number of outstanding issues, of which some facts and figures need to be checked in time, in order for these matters to be hopefully brought up at the forthcoming AGM.

Tracy

Tuesday 22nd October 2002