SFI 'ignored crisis warning'
Pub group continued to expand against the advice of its accountants.
Sunday 24 November 2002
SFI Group, the owner of the Slug and Lettuce, Bar Med and Litten Tree pub chains, was warned in the spring that it was facing a cash crisis and would have to rein back its ambitious bar opening programme.
The warning, from accountants within the group, came a full six months before the group admitted to the financial crisis that had led to its shares being suspended, a £20m write-off and talks with its banker after it breached the covenants on its £130m of borrowings.
Andrew Latham, the chief executive, is understood to have been warned that unless the company made disposals or stopped its expansion plans it would run out of cash.
However, he decided to press on and opened 14 more sites before the end of the group's financial year in May.
Mr Latham was not available to comment about the cash crisis but Tim Andrews, who joined the group in the summer as finance director, was willing to confirm that the expansion programme had been a major factor in the write-off by the group.
Mr Andrews said that a lot of SFI's troubles had come from an "aggression in recognising assets but a laziness in admitting to liabilities".
Analysis by The Independent on Sunday has found a number of anomalies in the group's most recent accounts, which have contributed to the £20m black hole.
These include £2.95m owed by trade debtors – an increase of £2m in the year – which is mainly made up of discounts given by suppliers, such as brewers.
Another issue is £5.6m of "base stocks", essentially cutlery, glasses and crockery used by the bars, an increase of £2.5m from the year before. This would imply that the average amount of base stocks in each pub was now £30,000, an increase of £8,000 on the year before. However, nowhere else in the accounts is there any indication of SFI having bought lots of extra glasses for its pubs.
The group's biggest problem, though, may come from the expansion programme, and the fact that SFI may not have revealed the full extent of what it owes to contractors for the refitting of the new outlets. This may account for as much as £10m of the write-off.
None of these issues was contradicted by Mr Andrews, who said the group would make a full statement about its provisions when a report by accountants PricewaterhouseCoopers was completed.
Tony Hill, the former chairman of SFI, has already cast doubt on the size of the £20m black hole revealed by the group. He said: "I find the magnitude of it unbelievable ... I don't understand it and I don't think it is credible."
Website users raised funds after Jennifer Lawrence nude photo leak
- 1 David Sedaris: What I learnt from Fitbit about the world around me
- 2 Saudis risk new Muslim division with proposal to move Mohamed’s tomb
- 3 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 4 Cee Lo Green: 'It's only rape if the victim is conscious'
- 5 Katie Hopkins in tears over weight gain challenge: ‘I hate fat people for making me do this’
Emma Watson on Jennifer Lawrence nude pictures leak: 'Even worse than seeing women's privacy violated is reading the comments'
Jessica Brown Findlay: Downton Abbey actress is linked to list of celebrities targeted by hackers
Saudis risk new Muslim division with proposal to move Mohamed’s tomb
Ariana Grande nude photos leak: Pictures are completely fake, say representatives
Steven Sotloff 'beheading': British captive shown in Isis video which claims to show death of second US journalist
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
With Douglas Carswell joining Ukip, my party has taken another giant step forward
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
Ashya King: 'Cruel NHS has not given us the treatment we need', says father of five-year-old with brain tumour who fled to Spain
iJobs Money & Business
£30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...
£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...
£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...
£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...