Going Concern

[saintbob40]

Extract from Annual Report with emphasis added:

 

"Going concern

 

The Directors have prepared cash flow forecasts for the period to 30 November 2009 which include the sales of various assets, further cost reductions and deferrals, and rely on the support of the bank and loan note holder.

The Group currently manages its working capital through a bank overdraft facility and in addition has issued long term loan notes to finance the development and construction of the St Mary's Stadium.

 

Whilst the Group presently has an overdraft facility, for £4.5m, the Board remain in negotiations with Barclays Bank, who are seeking a progressive reduction in their position, and the loan note holder. These negotiations involve the Group having to achieve further significant asset sales in 2009, which the Board are confident they can achieve, but there can be no certainty at this time. Furthermore the Group are seeking to reschedule the payment of certain current liabilities, and the Board are confident that these will be successfully negotiated.

 

In the event that the Group do not comply with the terms of the new overdraft facility being discussed and the agreement still to be reached with the loan note holder such that the facilities would be withdrawn, alternative financing would need to be found for the Group to continue as a going concern. The Directors would then consider seeking additional opportunities for finance from internal sources. The Board continues to explore avenues for external funding. Based on the above, the Board consider it appropriate to prepare the accounts on a going concern basis.

 

The above matters indicate the existence of a material uncertainty which may cast material doubt over the Group's ability to continue as a going concern. The accounts do not include any adjustments that would result if the Group is unable to continue as a going concern.

 

The auditors have reported on those accounts; their report was unqualified and did not contain statements under Section 237 (2) or (3) of the Companies Act 1985. However, it did contain an emphasis of matter paragraph which drew attention to the material uncertainties surrounding the going concern assumptions as set out above."

 

Interestingly, no going concern qualification in the auditors' report just an emphasis of matter paragraph (certainly much the lesser of two evils). On my understanding of accounts this means that the auditors believe there is a plausible way out of this mess and they certainly wouldn't hold back with a listed company if they thought otherwise given the risk of liability the auditors themselves face.

 

Also, the Chairman's statement is pretty blunt in allocating the blame. We seem to have been following the Peter Ridsdale mantra of hope based accounting and gambled heavily on promotion last year. Top job (not) and by the looks of it not Lowe's fault....cat, pigeons.... let the fur and feathers fly!

[bridge too far]

Extract from Annual Report with emphasis added:

 

"Going concern

 

The Directors have prepared cash flow forecasts for the period to 30 November 2009 which include the sales of various assets, further cost reductions and deferrals, and rely on the support of the bank and loan note holder.

The Group currently manages its working capital through a bank overdraft facility and in addition has issued long term loan notes to finance the development and construction of the St Mary's Stadium.

 

Whilst the Group presently has an overdraft facility, for £4.5m, the Board remain in negotiations with Barclays Bank, who are seeking a progressive reduction in their position, and the loan note holder. These negotiations involve the Group having to achieve further significant asset sales in 2009, which the Board are confident they can achieve, but there can be no certainty at this time. Furthermore the Group are seeking to reschedule the payment of certain current liabilities, and the Board are confident that these will be successfully negotiated.

 

In the event that the Group do not comply with the terms of the new overdraft facility being discussed and the agreement still to be reached with the loan note holder such that the facilities would be withdrawn, alternative financing would need to be found for the Group to continue as a going concern. The Directors would then consider seeking additional opportunities for finance from internal sources. The Board continues to explore avenues for external funding. Based on the above, the Board consider it appropriate to prepare the accounts on a going concern basis.

 

The above matters indicate the existence of a material uncertainty which may cast material doubt over the Group's ability to continue as a going concern. The accounts do not include any adjustments that would result if the Group is unable to continue as a going concern.

 

The auditors have reported on those accounts; their report was unqualified and did not contain statements under Section 237 (2) or (3) of the Companies Act 1985. However, it did contain an emphasis of matter paragraph which drew attention to the material uncertainties surrounding the going concern assumptions as set out above."

 

Interestingly, no going concern qualification in the auditors' report just an emphasis of matter paragraph (certainly much the lesser of two evils). On my understanding of accounts this means that the auditors believe there is a plausible way out of this mess and they certainly wouldn't hold back with a listed company if they thought otherwise given the risk of liability the auditors themselves face.

 

Also, the Chairman's statement is pretty blunt in allocating the blame. We seem to have been following the Peter Ridsdale mantra of hope based accounting and gambled heavily on promotion last year. Top job (not) and by the looks of it not Lowe's fault....cat, pigeons.... let the fur and feathers fly!

 

The bit in red bothers me.

[Window Cleaner]

The bit in red bothers me.

 

It just says to prospective lenders and investors-well If they go bust don't say I didn't tell you so;

It's just ritual ass covering speak.

[John B]

Does it mean that we are OK as long as we reduce the £4.5 million

 

But by how much I wonder

[Weston Super Saint]

Does it mean that we are OK as long as we reduce the £4.5 million

 

But by how much I wonder

 

Probably £4.6 million.

[La BoIS Saint]

If you want to become an expert read these:

 

http://www.frc.org.uk/apb/publications/pub0704.html

 

http://www.frc.org.uk/apb/publications/pub1170.html

 

http://www.frc.org.uk/apb/publications/pub1486.html

 

Christ my job is dull....

Edited 24 November, 2008 by La BoIS Saint
Wrong dullness!

[John B]

Probably £4.6 million.

 

No it does not say that

 

Just a reduction

[John B]

If you want to become an expert read these:

 

http://www.frc.org.uk/apb/publications/pub0704.html

 

http://www.frc.org.uk/apb/publications/pub1025.html

 

http://www.frc.org.uk/apb/publications/pub1486.html

 

Christ my job is dull....

 

I do not want to learn how to be dull thank you

[Window Cleaner]

Does it mean that we are OK as long as we reduce the £4.5 million

 

But by how much I wonder

 

Well if you listen to some we're already at 8 million anyway .

 

It is evident from the accounts that the 6.63 million financial debt is made up from the 5.69 million overdraft and I suppose about a million renegociated

stadium payment.

We had 1.256 million in hand at the bank so I suppose we had enough to

pay our way for a while. We got a bit in for Davies and something on the Bale add ons. The AR makes no mention of the extra monies for the Crouch knock on,don't know what that means.

Since then if we haven't been living within our means our overdraft will have gone up.

25 cheap players @16000£/month x 5 months = 2 million

5 expensive as f*ck players@40000/monthx5=1 million

 

Normal everyday stuff, probably 2 mill more

 

So out 5 million, in say 3 million from player sales, and 6000x12x20 on tickets

=1.44 million.Bit of TV money,some commercial income, probably roughly even given that there was a league cup game or two and a couple of home friendlies.

 

I can't see that we would be on 8 million pure overdraft though, perhaps

5.5 million on overdraft plus the other million probably on reported interest payment.Buit there again if all the ST money bar 1.25 million was already gone by the end of June and we had to pay everybody through July and August things might be different.

[Gemmel]

I'm no expert, but given we are in discussions with the bank and the Loan note holder (Norwich Union) that would suggest all is not rosy with Norwich Union (Hardley a surprise) but to what tune? It then goes on to say we are they are looking to reschedule payments of certain other liabilities, which i read as additional to the bank and NW. Does anybody know what these could be? Do we owe outstanding fees for players?

 

Looks like it comes down to January and how much we can raise. Although interestingly if the bank do remove the overdraft (Which would effectively put us in Administration) it mentions that they would look to consider oppurtunities of financing from internal sources - As a pure guess, i would say that's Crouch, which if true makes it quite ineteresting in the sense that if Barclays know that if they pull the plug, Crouch will pay up (I would assume on the condition lowe and wilde do one) then it must be quite tempting. Having said that as an agreement is already in place as long as lowe sticks to it, he should be ok....just not sure what sort of team that leaves us with

[EastleighSoulBoy]

I do not want to learn how to be dull thank you

 

Then you'll never become an accountant!

 

B.T.W. You'll be glad you never bothered.

[um pahars]

I'm no expert, but given we are in discussions with the bank and the Loan note holder (Norwich Union) that would suggest all is not rosy with Norwich Union (Hardley a surprise) but to what tune? It then goes on to say we are they are looking to reschedule payments of certain other liabilities, which i read as additional to the bank and NW. Does anybody know what these could be? Do we owe outstanding fees for players?

 

Looks like it comes down to January and how much we can raise. Although interestingly if the bank do remove the overdraft (Which would effectively put us in Administration) it mentions that they would look to consider oppurtunities of financing from internal sources - As a pure guess, i would say that's Crouch, which if true makes it quite ineteresting in the sense that if Barclays know that if they pull the plug, Crouch will pay up (I would assume on the condition lowe and wilde do one) then it must be quite tempting. Having said that as an agreement is already in place as long as lowe sticks to it, he should be ok....just not sure what sort of team that leaves us with

 

Haven't had long to look at the words that accompany the accounts, but like you I was drawn to the fact that "the Board remain in negotiations with Barclays Bank, who are seeking a progressive reduction in their position, and the loan note holder".

 

I'll have to look what was said in the interims (and last years accounts), but this certainly doesn't suggest that we have come to an agreement with either, but instead we are still in negotiations!!!!

 

As for the Going Concern note, it's been there a while (and the accounts have never been qualified), but I think there are a few more more strings attached this time around as you would expect as our financial position deteriorates (e.g the loan note holder is mentioned in here for the first time for these accounts).

[John B]

Then you'll never become an accountant!

 

B.T.W. You'll be glad you never bothered.

 

Yes I never wanted to be a bean counter although it is well paid

 

 

But I still do not understand whether Alpine's view is right or Alpine's View is wrong that we are heading for administration from the facts from the AR.

 

Also the banks are supposed to be lending more to small companies it is a shame we are with Barclays which took no government money

Edited 24 November, 2008 by John B