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Charcol bosses plug gap

After months of waiting for John Charcol to file its overdue 2006 accounts, Money Marketing revealed this week that the broker’s directors have stumped up £1.5m to plug a hole in them.

This comes after the firm’s auditor KPMG warned of “material uncertainty” of the firm continuing as a going concern.

Some very serious words for any business to hear.

A directors’ report, signed February 8 by chief executive Ian Kennedy, says three of John Charcol’s key directors – John Garfield, Jon Moulton and Charles Wishart – have put in additional loan funding of £1.5m as an “interim measure” before either a sale or a refinancing involving existing investors.

Each of the three investors provided £500,000, with the funds being received and the stock issued between December 31, 2007 and January 2, 2008.

The directors’ report forms part of the accounts for the year ended December 31, 2006 which were filed last month, nearly four months late.

Money Marketing had previously questioned John Charcol in January on why it was late in filing its latest set of accounts. It claimed it was nearly four months late due to number of “directorate changes”.

Its 2006 accounts show the company incurred a net loss of £41,000 during 2006, and its parent company’s liabilities exceeded its assets by £150,000.

The accounts include a statement from KPMG which warned of a “material uncertainty which may cast significant doubt on the group and the parent company’s ability to continue as a going concern.”

The accounts also show that £820,000 of loans due to have been repaid in June 2007 have been deferred to April 2008 at the latest. When questioned, John Charcol would not comment on whether these have been paid.

Key investors have agreed to defer existing repayment obligations and committed to make funds available for at least 12 months from the date of approval of the accounts.

John Charcol had announced in January that it was putting itself up for sale with a rumoured price tag of £50m. At the time, this figure caused a lot of raised eyebrows in the mortgage market.

The firm was sold in 2000 for £100m to Bradford & Bingley, and then sold back four years later at a huge loss.

John Charcol says it will be deciding on whether to accept a takeover offer or refinance its operations within the next eight weeks.

Its earlier accounts – for 2005 – show that it made a consolidated loss after tax of £4,712,459 for the financial period ending December 31, 2005. Turnover was £17.4m but the firm had to pay out £22m on administrative expenses.

A John Charcol spokesman told Money Marketing: “When John Charcol was bought back from Bradford & Bingley, it was a hugely underperforming company, making a loss of £4.7m in 2005. In 2006, this figure had reduced significantly to just £41,000.

“The group is dependent on the support of its investors to continue to fund the business. The £1.5m was a short-term measure prior to a full-scale refinancing or sale. The current investors have stated that they will continue to support the business if a sale is not forthcoming.”

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