Sell-off cash is critical to WGC's survival

Woof woof! GTN Newshound here, back from yet another foray through the dark afforested territory known as Wyevale Garden Centres. Yes, hound-lovers, it’s still there, despite the best efforts of its parent, Terra Firma, to find good homes for everybody.

Although the two sets of 2017 accounts published recently (one for WGC Capital, the trading arm, and the other for WGC Holdings, the real estate and employment contracts arm, with neither set available, as they used to be, on the WGC website) are as impenetrable as corporate accounts inevitably end up (unless you’re an FD), these steered my moist little scout-snout towards what you could call ‘insights’.

The accounts themselves, which show a loss for the year-ended December 2017 of £116m and an operating loss for the year of £60.4m (mostly one-off write-downs of the value of non-cash assets), include ‘post-accounts’ financial statements chronicling the fortunes of the group during the following year, in which Terra Firma’s Guy Hands announced (on 22 May 2018) that WGC was for sale.

Companies House rules dictate that large businesses must make honest and, as far as possible, accurate declarations about their forward viability.

Under the ‘going concern’ sub-heading, the notes are pretty unequivocal about the cash flow risks the group faces unless it continues to find buyers for its remaining 99 garden centres.

The directors seem pretty happy with ‘Wyvexit’ so far, having realised £183m from the sale of 43 sites (excluding the six latest disposals to British Garden Centres and Rochmills). They are apparently also cheered by interest from potential purchasers of the rest of the group as an entity.

Debt has come down and there’s cash in the bank (£17.6m plus £2.7m cash in transit). Enough, then, barring unforeseen mishaps, to help the group meet its liabilities and keep a hound’s tail wagging softly (if unenthusiastically).

But then comes the warning about “material uncertainty” caused by the ongoing sell-off , potential Brexit issues, the weather-related volatility and unpredictable consumer sentiment. These, says the statement, “may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities”. The statement makes it clear that the key requirement is that future disposals are successfully concluded.

In other words, it looks like the WGC ship is sailing much closer to the wind than the directors would wish.

Despite this, credit analysts Experian upgraded WGC’s credit risk rating to “below average” last week. Newshound asked three suppliers for their reaction to that news. They said: