It's That Time Of Year Again......

Dropping through the letterbox on Tuesday morning (actually, it was probably afternoon as I don't think postmen get up early in the morning anymore) was a letter containing an invitation to the club's Annual General Meeting and a copy of the Accounts for the year ended 31 May 2008.

The AGM will be held at Firhill on Tuesday 31 March commencing at 1900hrs. The covering letter from Tom Hughes states that "the operating loss was reduced from £510,297 to £268,523 in the year to 31 May 2008" and goes on to comment that "losses for the current year are at a similar level and it goes without saying that in the medium to longer term that is unsustainable".

Over the past number of years it has been Firhill itself that has been at the root of any reinvestment plans. In the letter, Tom goes on to say that "In previous years capital and revenue expenditure had been committed on the basis that there would be advantageous realisations from the property. (In the year in question) that has not happened and the current set of accounts includes a reversal of a previous option which did not crystallise"

Whilst recounting some of the initiative taken to improve the position in the last year, it is noted that "further steps will have to be taken to increase revenue and reduce expenditure"

The somewhat sombre tone is continued in the accounts themselves where the auditors have added a comment on the club's ability to continue as a going concern. It is worth quoting this section in full :-

In forming our opinion, which is not qualified, we have considered the adequacy of disclosures made in note 1 to the accounts concerning the company's ability to continue as a going concern.

The Company incurred a loss for the year ended 31st May, 2008 of £268,523 and is projecting further trading losses in the year to 31st May, 2009 prior to any anticipated gain on the redevelopment of the company's property. The bank has provided a facility of £550,000 which is being fully utilised and support from the bank is being confirmed on a month to month basis. The directors consider the company to be a going concern as the redevelopment of the company's property will provide an injection of funds and enable the company to substantially reduce its borrowing costs which for the year to 31st May, 2008 were £117,000.

These statements indicate the uncertainty of the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern."

We are undoubtedly not alone in finding challenges in the current climate, but the combined effect of these statements seem to indicate that all our eggs are in a Firhill-shaped basket at a time when any property developments are up in the air.

Given all that, it is somewhat disconcerting to find in the notes to the accounts that "the company has received a claim for damages of £443,000 from Regency Homes (Scotland) Limited". It confirms that this claim is being defended and that "the directors assess the probability of a settlement being made as low" and, as such, no provision for this is made in the accounts. Let us hope that judgement proves to be sound.

As an indication of the glorious manner in which banks operate, the notes to the account also confirm that it will cost the club the princely sum of £200,000 when the bank loan is paid in full.

The JagsTrust will be present at the Annual General Meeting and will be considering the information just received along with other shareholders. We'd welcome any input from members of an accounting or other numerate background to assist us in understanding the finer points of detail that we might wish to consider. If you would be able to assist, please contact Sandy Wilkie.