Note 32 in the accounts caught my eye. A list of related party loans, interest amounts and terms.
The interest rates look alarming 10% in most cases. Total interest paid in the year to service all finance amounted to £2.6m (note 8). This represents nearly 60% of gate receipts!!!!
I think some of these loans should be converted to share capital which would save £1.3m a year. The group is very highly geared and I wouldn't be surprised if third party financiers looked for some loan to share capital conversion to address this issue, and boost the Balance Sheet.
The last entry on note 32. As follows;
On 7 February 2011 land held within Sheffield United plc, with a net book value of £250 was sold to The
Scarborough Group Foundation for £500,000. The land was subsequently leased back on an operating lease
over 10 years at a rental of £60,000 per annum.
Interesting sale and leaseback arrangement. Very expensive way to raise funds. 60/500 = 12% ? Not bad for The Scarborough Group Foundation.
The group consolidated balance sheet on page 16 shows net assets of only £1.359m. Another loss in excess of this amount will result in net liabilities! The group will be insolvent. (Although some assets maybe more valuable than stated).
Lots of information in these accounts, and a lot going on this year restructuring and reorganising group assets and finance.
Very interesting, but not good.
I feel a bit sorry for the McCabe family, there is no doubt they are bank rolling the club and group, millions of pounds of losses. Each month they must have to put money in, with no end in sight. Promotion this season will help but I can't see, how, even with that prize, the clubs finances will be solved.
HH.