AUDITORS sounded a warning over whether Dundee United can continue as a going concern, it has emerged.
The warning came in financial documents confirming pre-tax annual losses at The Dundee United Football Company Ltd of £1.55 million following the club’s relegation from the Scottish Premiership last season.
Condie and Co, which took over auditor responsibilities after the resignation of Deloitte in November, last year, highlighted a “material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern, and therefore its ability to realise its assets and discharge its liabilities in the normal course of Business.”
Sharon Collins of Condie and Co said in a view signed of at the end of Feburary, that she took into account the club’s need for “significant additional funding” in the next 12 months in order to enable the company to meet its liabilities in the normal course of Business.”
Dundee United announced the losses in a club statement at the end of March, but would not release the annual accounts at that time, preferring to talk up a £1.5 million cost-cutting programme during the current financial year.
The club chairman Stephen Thompson said there was boardroom confidence that it “continues to take corrective measures to cope with the significant financial impact of relegation”.
It has further emerged that the club has secured a £300,000 cash bail out from New York-based Scottish banker Alastair Borthwick in the form of a loan.
Documents show that the Glasgow-born ex-Goldman Sachs banker’s funding is secured against club’s assets including Gussie Park Sports Ground and club store, and Gussie Car Park.
The financial statements around the accounts for the year to June 30, 2016 reveal the auditors’ concerns surrounding future financing.
It provided a “qualified opinion” on the club’s financial statements in a statement signed off at the end of February, saying they did not receive sufficient appropriate audit evidence surrounding trade debtors, having been appointed on September 23, 2016.
And it said the financial analysis of the year did not include the adjustments that would result if the company was unable to continue as a going concern.
Mr Thompson insisted at the end of March that the club will not slip into administration, should they fail to return to the Premiership this season.
Dundee United drew with Falkirk in a Premiership play-off semi final first leg at Tannadice on Tuesday. The sides will meet again at the Falkirk Stadium today (Friday) and the eventual winner will face Hamilton Academical or Inverness Caledonian Thistle – whichever side finishes second bottom in the top flight – in the final.
The auditors’ view came while taking into account the board’s acknowledgement that whether the club will compete in the Championship or the Premiership next season will “significantly impact” prize money, gate receipts and television revenues. It would also effects the company’s attractiveness to potential investors and lenders as well as sponsors and corporate customers.
The directors said they were “confident ” that a course of action will be agreed that would enable the club to raise the additional funding required.
The board said: “After making enquiries and considering the uncertainties… the directors have a reasonable expectation that the company should have adequate resources to continue in operational existence for the foreseeable future.”
The report says the it has made “significant progress” in managing down its net debt, helped by player transfers, from £7.3 million, 10 years ago, £1.1 million.
Unhappy United fans have vented their anger at Mr Thompson since the end of last season, calling for his removal as the club surrendered its Premiership status for the first time since 1995.
Dundee United would not comment further on the finances, referring the Herald to previous statements made by Mr Thompson at the annual general meeting. There he said there had been no formal approach for the club — to buy the club or speak to the club.
Source : HeraldScotland