£3m eh? What about the other £6,050,000 shown as owing to Barclays and now written off.
No idea mate. I am not an accountant. But it’s got me wondering so I looked at the back story of GFC accounts to try to make some sense of it…Long post alert….
In accounts up to May 2007 we had a bank overdraft of £12.5m. This is basically the height of our debts. It’s stated in point 27 (‘going concern’) that directors have come to an agreement with BOS on a restructuring exercise which would result in substantial interest saving over the next three years – due for completion on the 14th December. At this point we are spending around 800k a year on servicing the high overdraft.
Then in the accounts up to May 2008 (with our bankers still stated as BOS) we sold the ground to a previously dormant company ‘Priestfield Developments’ for £10m. We also became part of GFC Holdings Ltd. which owned both GFC and PD. The accounts tell us that we used the proceeds of this stadium sale to reduce the overdraft to £3.3m.
All charges over Priestfield associated to GFC by BOS are also now recorded as satisfied in 2008 on Companies house. New charges are set up between BOS and Priestfield Developments Ltd from 2008.
However in GFC’s 2009 accounts (with our bankers still as BOS) it then states that the 3.5m bank overdraft is secured by a debenture (dated 6th June 2008) over the whole of the company’s assets and by a legal charge over Priestfield stadium. Firstly, how can they secure an overdraft using a property they don’t legally own, secondly, this is not recorded on the charges register against GFC either. It’s only recorded against PD Ltd.
The main question to me at this point is, where did Priestfield Developments get the money to buy the stadium from GFC? To answer this we need to look at the Priestfield Developments accounts:
So in the first full set of accounts for Priestfield Developments, made up to end of May 2008, there is the 10m purchase of the stadium (with 100k costs), and then a
new bank loan of 10.1m (Notable IMO that this is a bank loan as opposed to an overdraft), which is now only repayable within 2-5 years (i.e. aligning with the statement in 2007 GFC accounts that it might be a 3 year deal). It’s notable that there are no annual (part)repayments of the loan, nor is there any interest paid/accrued on it stated in these accounts.
Subsequent accounts show no activity in PD whatsoever until the accounts made up to May 2011. At that point, the loan is now repayable within 1 year/on demand. It also states that the ground has been sold back to GFC Ltd for £1,050,000. At this point then on the Charges Register all debentures and charges for PD are recorded as satisfied by BOS. So BOS now have no connection to GFC in our accounts or on Companies house. Consequently, a new debenture and charges over the stadium is now recorded in GFC’s accounts. However this time not to BOS, but to Barclays and to 3 directors Ltd. As per Wayne’s concerns, these are all still recorded as outstanding today. Worth noting, in GFC’s accounts the banker is now recorded as Barclays from 2011 onwards.
In the PD accounts made up to May 2012 then, the bank loan now sits at the magic number of £9,050,000 (which is noted in this year’s accounts as being written off), following the income of the 1m from the sale of the club back to GFC. And it states that security has been given for this loan – despite no charges being associated with PD at this point in time. Again, except this time the opposite way around, exactly how Priestfield Developments can use a property they don’t now legally own (it’s been sold to GFC at this point), as security for their loan: I won’t pretend to understand. I can only assume the bank were happy with the arrangement, and it may have been something to do with the group structure and liability.
The accounts then for Priestfield Developments stay the same until the last filed accounts in May 2015. The company is then dissolved on 3rd Jan 2017. This is notable because the accounts have not been filed for the final year and a half of the companies operation. This makes it virtually impossible to see what actually happened to the Bank loan and how/whether it was repaid or transferred to another company. It’s very possible that this loan was finally formally written off by the bank after this point, as was possibly agreed way back in 2008. Maybe it’s worth noting this period covers almost a nicely ‘round’ 10 years since the original agreement was made with BOS. I don’t know if this was the consideration for any debt being written off.
A look back at GFC’s accounts then at this time:
In 2012, the year after we bought the ground back, we repaid the Overdraft, and now the main significant debt appearing on our balance sheet was a 1.8m debt to 3 directors. It would appear they paid off the overdraft. One would assume then that Three directors charge over GFC is nothing more than the security for their 1.8m loan.
Wayne seems certain that Barclays’ charge over Priestfield is for 9m. but I can see nothing in the accounts or the charge that suggests this. Apologies if I’ve missed it. It looks like nothing other than security for a £3.5m overdraft facility which in 2012 was paid off when 3 directors put their loan in to the club, but that the facility was kept open at Barclays in case we needed it, and hence the charge has stayed on Priestfield until now. In fact I think in subsequent years the facility has been used at points as shown in the accounts.
Of course then we all know now as well that in the most recent set of accounts the 9m debt is recorded formally as written off. I’ve no idea why this is even mentioned in the most recent accounts. It might have something to do with the lack of accounts for PD for this period.
The key unanswered questions would be then, why have no accounts been filed for PD for 1.5 years before they were dissolved. This creates the confusion over how the 9m debt disappeared. But whether there’s any concern here, I don’t think so.
Yes it might be worth asking what the nature of the charge that Barclays bank has over GFC. Is it only for the limited overdraft facility, and nothing to do with the 9m? yes it would be worth asking why no accounts were filed for the final year of PD’s history. This would all clarify the matter and put everyone at ease. But I also understand that Scally might simply not be able to share more on the matter.
Scally’s statements which he has been very clear in making, are that the only debts we have are to 3 directors, and an operational overdraft now to Barclays. There does not appear to be a loan hanging over us any longer. If he’s lying would be done for fraud/various other offences. I may be proven to be wrong, but I don’t think Scally would put himself and his family in that situation. I am not an accountant as Wayne and many on here seem to be, but I for one think there’s reason to be cheerful, and have no/limited concerns over any further charges over Priestfield in relation to the 9m debt. Will we ever find out what happened to it? I doubt it, but it seems gone, so fair play to Scally. He takes the blame for getting the club in the debt (overspend on stadium etc.), we were also quite unlucky at the time – Marlon King going to jail and ITV for example costing us millions, but mis-spend was also his fault. But what is clear is that he has worked very hard to rectify his errors in the subsequent 10 years and he seems to have worked a minor miracle (at best), or been extremely lucky (at worst) to get us out of it.
Yes we do seem to file accounts late, and don’t always complete our paperwork on time, but that's not criminal. Yes, there’s still unanswered questions - but I think that's need for confidentiality with the bank, rather than any dodgy dealings.
My conclusion is that Scally does deserve credit for the way he’s resolved this in the last 10 years. The future is going to be interesting. It’s the first time we have no significant debt hanging over us, no legal cases hanging over us. The Banqueting facilities are starting to bring in profit. We now have a school which is bringing in great profits in comparison, and that is supplementing the poor attendances (which are a concern). We have the opportunity to finish as high as 12th this year. If we do that then this season would have been a significant success, despite many of the scally basher’s moans. Hopefully a strong end to the season and as strong early transfer window dealings this summer will create some positivity improve ticket receipts for next year and get those back on track as they are the only significant concern for me at the moment really.
