Thresher auditor warns of 'uncertain' future

10 June, 2009

A financial statement produced by First Quench Group auditors has indicated “material uncertainty” about the ability of the company to continue as a going concern.

First Quench acknowledged that the “emphasis of matter” document included the warning, but said it was still confident that the transformation programme begun by Vision Capital after buying the business in 2007 would give it a long-term future.

Auditors are making increasing numbers of such statements about going concerns in light of the recession.

“There has been a reduction in cash flow and some credit lines have been withdrawn as a result of the downturn,” said a First Quench spokesman.

The Independent newspaper today reported Companies House documents that showed a pre-tax loss of £30 million for the 13 months to last July, but First Quench said cost savings and operational streamlining had improved the position since then.

Over half the 2007/8 losses were made up of exceptional items, including redundancy costs, transition to a new national distribution network and onerous lease charges.

Like-for-like sales in the year to date are down 2.7%, though there has been some sales growth in recent weeks.

First Quench described the overall position as “in line with current expectations” with “relative material improvements”.

Some 162 loss-making stores have been disposed of since December and others are in the process of being weeded out, with the programme scheduled for completion by June 2010.

Stockholding has been reduced by £6 million since January with a further £14 million saving sought over the next 18 months.

Savings are also being made through head office job cuts.

First Quench currently operates around 1,400 stores in total.

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