Swindon Town’s 2012/13 Accounts: Cause for concern?

Today the ‘Abbreviated Accounts’ for Swindon Town Football Company Limited in the period to 31st May 2013 were released via Companies House…

The following note by the club’s independent auditor certainly raised an eyebrow…

2013 Accounts

With the auditor stating there may be doubt about Town’s ability to continue as a going concern should we be worried? Perhaps not…

It is important to state that the accounts published by the previous regime were not accompanied by an independent auditor’s report. Therefore, those accounts were not accompanied by supplementary notes or commentary on the financial health of the business.

Clearly, given Swindon Town were formerly propped up by the benefactor Andrew Black it is highly likely that a similar or harsher conclusion by any auditor would’ve been reached concerning the company’s then ability to continue as a going concern without external funding. Particularly as Town were being continually funded by significant equity injections, which these accounts show this amounted to a staggering £4,050,000 to sustain the club in Black’s final six months.

These 2012/13 audited accounts now provide some welcome transparency from Chairman Jed McCrory on this issue, albeit there is disappointingly less disclosure on the breadth of the financial information that has disclosed to Companies House that was previously the case. I’m unsure as to the exact reasons why less information forms part of the accounts, so any comments on this issue are welcomed…

In the auditor drawing these conclusions on the ability to continue as a going concern we must remember that this statement is dated for the year to 31 May 2013, it is based upon the implementation of the financial model of the previous regime and doesn’t reflect the efforts subsequently undertaken to reduce the deficit in funding. While this note is a financial ‘wake-up-call’, we all knew that would be the case and the new board were always honest that something needed to be quickly done about it.

We already know that the board have taken drastic steps and slashed the playing budget from over £4m to a current figure of around £2.4m; the non-footballing wages have been reduced from £775k to £350k; furthermore measures to diversify and increase revenues were outlined by former director Steve Murrall in the Business Plan presentations in July – where an ambitious projected increase in revenue of £2m was stated for 2013/14.

2013 Accounts 2

The immediate financial picture does generally look more positive than a year ago, on paper. The amounts falling due within one year to creditors has decreased from £3.8 to £2.5m. Furthermore, it must be remembered that Andrew Black & Co. did write-off a significant amount of their investments and loans in the club, reducing the overall shareholder deficit from £14.7m to £4.7m. The prime concern is the significant reduction in working capital cash in the bank that has reduced from £1.3m to £166,721, highlighting the reduced buffer of funds that is available to pay debtors.

Hopefully the club will quickly move to provide full commentary on the ‘full audit’ that they have promised to have undertaken and, importantly, make a statement on their progress in implementing the Business Plan and delivery of the additional revenue streams; as these were highlighted to be crucial to cashflow and their plan for financial sustainability.

We all want to know that our club is, or will be financially solvent, hopefully that’ll be the case very soon as Jed’s plan is implemented.


  • So… and bear with me as I don’t understand all of this stuff…

    Wages are being reduced, debt was reduced but there is a lot less cash to pay any shortfalls, such as getting knocked out of the FA Cup early on?

    Doesn’t really clear up the situation as to what McCory and Power have or haven’t put in, what they are looking to get out and why a new finance guy has been brought in now – seemingly without Jed know much about him. Or does it? Does anyone know anything?


    • Cashflow is likely to be the main issue, as it has been at STFC for many years. The club will have budgeted to get to FA Cup Round 3 and the Macclesfield defeat will have hurt financially. They’ll have to make up that shortfall quickly, perhaps players will be off in January, Navarro’s contract will be cancelled..

      The issue with these accounts is that they provide a lot less detail than previous years. Whether that is because they don’t have to provide that detail to meet FCA requirements I don’t know, so it’s difficult to criticise. If a greater level of detail would have been provided then that would’ve answered many questions, although not all as the club is owned by the holding company.

      As for the appointment of Steve Anderson by Lee Power, that seems an expected course of action by a party who may have invested significant sums to protect any investment.


      • It is hard to get the full picture without full accounts. For example, these accounts do not give us a P&L breakdown – they do show there is a postive current year movement of £6m but this is distorted due to the loan write offs (which are credits) therefore operating loss is therefore anything between £nil to a loss of £4m depending on how much of the loans were actually written off and how much was “swapped” for equity by Mr Black (as opposed to injection of new cash).


  • Are you able to copy onto here the board’s narrative under note 1 referred to in the UHY audit report? If there is a decent level of disclosure in this section of the accounts (by no means guaranteed), this may give us more of an idea as to the reasons behind UHY’s conclusions on the club’s ability to continue as a going concern.

    Re shortening the level of disclosure compared with prior years, under the Companies Act, if a company is below a certain size (in summary, note there are certain caveats under the legislation, with reference to turnover, employee numbers and net assets), the directors of that company can choose to file abbreviated accounts. Can’t remember what the size exemption limits are off the top my head, but this may well be what has happened this year.

    Apologies for my ignorance, but Is there a holding company over the top of the Swindon Town Football Company Limited? If so, have these been filed at companies house yet – these may provide some more information.


  • Here’s the note. I doesn’t really add much

    Yes there is a holding company ‘Seebeck87 Ltd’. Nothing has been filed for them to shed any light.


  • Thanks for providing the note, agreed, it doesn’t really add much, looks boilerplate. Preparing accounts on a going concern basis is really about the STFC Ltd board looking forward over the next 12 months (note from the date the accounts are signed, not the 31 May year-end) and asking themselves whether the company can pay creditors as they fall due. It’s basically akin to a financial healthcheck. The board will make this judgement with reference to their financial projections for the next 12 months. UHY’s job on this part of the audit is to review those projections and consider whether the going concern basis of preparation is reasonable.

    The important part of the narrative re going concern in the note is where it talks about “the continued support of the company’s creditors”. I guess (caveated by lack of detail provided) you can infer that, over the next 12 months, there will be certain creditors that won’t be paid as they fall due (or are already overdue?) and, in preparing the accounts on a going concern basis, the board is assuming that such creditors won’t take action to recover their debts. This assumption may be incorporated into the financial projections referred to above.

    Out of interest, what does note 3 say about the make-up of creditors > 1 year? Also, is there any narrative in the notes about the continued support of the parent company Seebeck 87? Finally, any commentary on further cash injections since the year-end?

    Re Seebeck 87, we’re not going to see any numbers for quite a while for that company as it was only incorporated in December 2012. Date for the diaries, first annual return for that company is due on 4 January 2014 per Companies House. This should provide formal confirmation of whom indirectly owns the football club (STFC Ltd) if you don’t have this already.

    I don’t think this takes us any further forward in terms of understanding the current financial position. Clearly the latest published numbers show the STFC Ltd balance sheet not to be in great shape (good that the net deficit has moved by c£10m, but it’s still a deficit of £4m), but doubt that the situation is any different for the majority of other football clubs.


    • Note 3 confirms that the creditors falling due after more than one year is a liability of £2m in the form of a debenture loan.

      Regarding Seebeck the accounts just confirm that the club is controlled by that parent company and that Seebeck is “ultimately controlled by Jed”.


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