There seems to be a lot of this floating around on the mailing list at the moment so I hope to bring you a brief summary. It has been reported that some of the staff at Boots & Laces have been failing to get paid and the heating there is being used extremely frugally. The staff were told by John Main that finances are strained and the wage bill is a bit much.
Some listees have reported fears that the club may be being wound down, bringing us back to some of the earlier fears about the Martin Dawn takeover.
On this page I simply want to bring to you some of the more credible rumours I have heard and you should read all this with the standard disclaimer: It could all be lies, make up your own mind.
My thanks to Colin Nicoll, who posted this to the Southend United list on 11th July 1998, for the information.
The accounts are dated 11 Feb 1997, the auditors report is dated 18 Feb 1997
The accounts for the year ended 31st July 1997 are now long overdue, in fact the accounts for 31st July 1998 should shortly be prepared.
The auditors report is not qualified but they do state that provisions may be required against the carrying value of equity shares in the property (i.e. equity shares in the flats sold in the joint venture with Fairclough Homes Ltd). There is a dispute as to the interpretation of certain clauses in the joint venture agreement and final accounts have not been produced so the SUFC Ltd has not accounted for either profits or losses from the joint venture.
There are 8 directors and 2 associate directors. The secretary J W Adams is also a director.
There would appear to be nothing untoward in the accounts, but there
would seem that some
In the year there were improvements to freehold land and buildings of £804 482 and this together with previous additions of £2 229 673 have been transferred to freehold land and buildings (from improvements).
In previous years there had been accumulated depreciation of £97 874 against the improvements but this had been back on revaluation of the property. The revaluation of the freehold added £1 215 845 to the freehold and £525 000 to the long leasehold land and buildings.
Only £19 000 depreciation has been charged in the year for freehold and £10 000 for long leasehold. The charge for the year for depreciation of fixtures, fittings and equipment, also motor vehicles appears adequate.
The revaluation of property was carried out by DTZ Debenham Thorpe, chartered surveyors. It would be useful to find out if any of the partners of this firm have any connection with the board of directors either directly or indirectly. The land and buildings were valued at market value on the basis of existing use.
Although we know how the income was made up, there is no detail of the administration expenses £121 656.
The company owns 50% of Crevette Clothing Ltd, but their accounts have not been consolidated with SUFC Ltd. It would be useful to know who are the directors and shareholders of C.C. Ltd.
No significant changes have occurred in the share holdings of SUFC Ltd (up to 31st July 1996). I would like to find out the changes since!
Directors fees and remuneration seemed reasonable— the chairman received £63 736 (V.J.Jobson).
No dividends have been paid in 1995 nor 1996.
The company made a loss (historical cost) of £1 028 216 against a profit the previous year of £768 038.
There would seem to be little to comment upon regarding these accounts but I feel that the next year and the current year might well show up something of interest!
From the shareholders point of view the dangerous situation is that the current liabilities exceeded the current assets by £2 359 588 against the previous year of £648 173. The dangerous situation has been covered by the revaluation of the fixed assets. The Profit & Loss Account balance has changed from a credit balance of £227 024 to a debit of £801 192. All in all a very bad position.
In an ordinary commercial concern such a situation would lead the directors to seek a liquidation or a merger / takeover, as the company is not in a position to pay its creditors. However football clubs seem to be in a unique position and many of them struggle along in similar circumstances relying on the goodwill of their bankers and others. Very often, chairman and others inject large sums to keep the clubs alive without any commercial consideration.
The '97 & '98 accounts are eagerly awaited!
That's all for now!
Post Balance Sheet Events
In September 1997 the Company sold and leased back fixtures and fittings at the ground for £800 000 plus VAT. If the VAT is at 17.5% this would amount to £140 000. The leasing agreement is for 4 years with repayments being made monthly at a rate of £16 666.66 (x48 = £800 000) and £7 611.57 in respect of interest (x48 = £365 355).
How is the VAT to be accounted for ?
At the end of the 4 year period there is a Secondary Period rental of £8 000 for each Secondary Period.
Is the Secondary Period 4 years or some other length of time ?
Sale and leaseback of training ground
On 12 May 1998 the Company sold, to Martin Dawn PLC, and leased back its training ground at Eastern Avenue for £525 000. The lease which is for 25 years, is subject to 5 yearly reviews and an annual rental of £72 000. Even if the annual rental were to stay the same it would cost the Company £1 800 000 over 25 years.
Fairclough Homes deal
The Auditors report have brought to the attention of the shareholders the fundamental uncertainty relating to the joint venture with Fairclough Homes Ltd.
Balance Sheet as at 31st July 1997
The Net Current Liabilities have increased from the previous year of £2 359 588 to £3 153 246 an increase of £793 658— a serious situation.
The Net Assets have decreased from £3 507 056 to £2 947 475— a decrease of £559 581— again a serious situation.
The Profit and Loss account is in deficit: this year £1 323 554 against £801 192— a worsening situation of £522 362.
Transfer fees receivable have reduced from £1 066 175 to £335 000 and transfer fees payable have reduced from £1 105 020 to £41 000.
Bank interest payable on loans and overdraft (repayable within 5 years) has increased from £18 008 to £117 141.
The Bank loans and overdrafts have increased from £1 316 936 to £1 604 468 (repayable within 1 year or on demand).
The amount owing to the Inland Revenue (presumably for PAYE/NI) has increased from £169 168 to £718 272.
Joint venture agreement with Fairclough Homes Ltd.
In the absence of any independent valuation report, uncertainties exist over the realisable value and the ability of the lessees to settle the remainder of the sale price in the absence of agreed facilities to fulfil this commitment.
Proceedings have been commenced against the Company by Fairclough Homes Ltd, claiming £871 183 in relation to the joint venture.
At the Balance sheet date there were various legal actions in progress, the final outcome of which is unknown. These cases may be subject to further actions.
Roots Hall, Southend United's stadium, is set to be sold off and then rented back to the club
An Extraordinary General Meeting will be held on 24th March at which shareholders will be asked to vote on the issue. The club has already admitted that this is basically a publicity exercise as 55% (or so) of the shares are held by Martin Dawn PLC and, as is written below, there is no real choice:
I read the EGM documents on Saturday (6th March 1999), and I have to say that I was pleasantly surprised.
Now, before I get misinterpreted, my position was one of severe scepticism before reading the document— I saw another Brighton, etc happening. As soon as the takeover was announced involving a property development company, alarm bells were ringing very loudly, especially as it involved Vic's next door neighbour.
However, I know people who have been in close contact with John Main, and the impression I have given was that at first they saw the development issue as a big money-maker for them, but they also saw the team / supporters as having big potential to grow as well. I was obviously still sceptical until I saw it myself.
© Luke Bosman Monday, 23 April 2007 at 21:09:06
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With thanks to Colin Nicoll and others