After months of delays, Salford City Reds (2013) Ltd, the parent company of Salford Red Devils, has published its accounts for the year ending January 2017, with updates on its current status.
The accounts show that the company made losses of £727,176 during the year, and has net liabilities of £8,945,677, with £1.045million due to be paid out within one year.
Long term creditors (due after one year) are owed £7.899million, which breaks down as £5.111million owed to former owner Marwan Koukash, and £2.788million to companies that are part of the historic Creditors Voluntary Agreement (CVA) which includes the Salford City Council debt, specified in the Council's accounts as £1.038million.
The Reds accounts show that over the year Marwan Koukash gave the club a further loan of £911,864 (making the £5.111million total) but that he "has provided certain other assurances to the club in respect of historical liabilities and has additionally confirmed that he will not request repayment of his loan account until the company has sufficient funds to do so".
Meanwhile, the £2.788million CVA has a 'temporary holiday' (for further details see previous Salford Star article – click here). With these conditions in place, and with Koukash relinquishing ownership to Salford RD Holdings Ltd - a 'not for profit holding company governed by a consortium of fans' - the directors produced a statement arguing that the company is a 'going concern'...
They state that Koukash has injected a further £70,000; that the cost base of the club has reduced considerably as a result of restructuring decisions that will be "fully recognised in the next 12 months"; that key functions at the club, including legal, HR and finance, "will be offset partially or in full by contra deals"; and that projections assume "increased revenues based on key commercial appointments and third party consultancy at no cost to the club". The directors conclude that "forecasts prepared show a modest profit".
At the end of the published accounts, the Reds auditor states that having considered the adequacy of the directors' 'going concern' statement, the conditions "indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern...".
The Salford Star contacted the new holding company for the club last week for a comment but, as yet, has received no response.
Update: 9:05am 19th February
The club's directors have now responded...
"The Jan 2017 Accounts are before the ownership change as are the Accounts for the period ending January 2018. Whilst January 2018 Accounts are yet to be prepared the management accounts reveal further substantial reductions in losses and historical creditors.
"The delays encountered in getting RFL approval to the new ownership structure have impacted on the budget for the current financial year as there has been insufficient time to roll out many of the planned pre season initiatives. However, these are now gathering pace and investment has been made in generating more Corporate Sponsorship income and non match day revenues. We are also working very closely with the fans including the newly reformed Supporters Trust to improve the match day experience, entice new fans to the ground and to recruit volunteers to help the Club
"It will always be a challenge to balance the books whilst maintaining a competitive side on the pitch but we will be trying everything we can to engage further with the people of Salford and the Business Community to support the Club. We are always interested in listening to new ideas and welcome anyone with a genuine desire to help the Club to make contact."
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