The Board of Directors (“the Board”) are required to prepare the statutory financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business. In satisfaction of this responsibility the Board have considered the Group’s ability to meet its liabilities as they fall due. The Group’s business activities, together with the factors likely to affect its future development and performance are set out in the Strategic Report. The Strategic Report also describes how the Group manages its capital, its liquidity risk and its exposure to credit risk. The Group meets its day to day working capital requirements through existing cash facilities, shareholder loans and finance leases. Management information tools including budgets and cash flow forecasts are used to monitor and manage current and future liquidity. The Board acknowledges that there is a level of uncertainty in the general economic environment which may impact the trading position of its customers and suppliers.
The Board has undertaken a recent and thorough review of the Group’s forecasts and the associated risks. These forecasts extend for a period beyond one year from the date of approval of these financial statements. The extent of this review reflected the current economic environment, the Club’s current and projected trading and position in Scottish football.
The forecasts make key assumptions, based on information available to the Board, around:
- Continued progression through the Scottish league structure. The Group’s forecast assumes the Club will achieve promotion to the SPFL Premiership at the conclusion of the 2015/16 season and will consolidate its position in the SPFL Premiership in 2016/17.
- Season ticket sales, the timing and amount of which are consistent with the Club’s historic experience. The forecasts include an uplift in season ticket numbers and prices from season 2015/16 to reflect the expected return to the SPFL Premiership (while still remaining below the levels when the Club was previously in the SPL).
- Matchday income, which is projected to grow as the Club progresses through the Scottish League structure.
- Sponsorship, commercial and other non-matchday income reflecting customer confidence returning and increased hospitality demand.
- The exclusion of cash flows from dividends from Rangers Retail Limited, as the Board considers that it has limited visibility as regards the timing of anyof these cash inflows.
- Continued overhead cost reduction measures to reflect the Club’s operations returning to a more stable operating environment.
- Payroll costs reflecting the current squad size and composition in perspective to its assumptions around league progression. The forecast cash flows assume conservative amounts generated from player sales.
- The Group’s ability to secure further debt or equity finance to allow the Group to continue to meet its liabilities as they fall due.
The current and future financial position of the Group, its cash flows and liquidity position have been reviewed by the Board.
The Board recognises that achievement of the forecast is critically dependent on the football performance for the rest of the current season and next season. Consequently, sensitivities have been applied to the forecast based on a variety of football performance factors.
The forecast identifies that the group will require up to £2.5m by way of debt or equity funding by the end of season 2015/2016 in order to meet its liabilities as they fall due. Further funding will be required during the 2016/17 season, the quantum of which is dependent on future football performance and promotion to the SPFL Premiership. The forecast indicates that an initial tranche of funds will be required in December 2015.
The Board of Directors has received undertakings from certain shareholders that they will provide financial support to the Group and have satisfied themselves as to the validity of these undertakings and that the individuals have the means and authority to provide such funding as and when it is required. The Board acknowledge that had these assurances not been secured then a material uncertainty would exist which may cast doubt over the Groups ability to continue as a going concern and therefore it’s ability to realise its assets and discharge its liabilities in the normal course of business. The Board is delighted that this uncertainty has been removed and the appropriate assurances obtained.
The financial support to be made available more than covers the projected shortfall for this season and beyond.
As such, after making the enquiries referred to above, the Board of Directors believe that there is a reasonable expectation that the Group will at all times have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing this report and the statutory financial statements.
