THERE is a doubt about the future of Shannon Knights, according to accounts filed during the summer, which show accumulated losses of almost €1.75 million.
Established in 1972, Shannon Knights has always been family run and has been one of the most prominent social centres in Shannon for decades.
A little over five years ago, there was a multi-million euro revamp and in advance of its reopening in 2010, management spoke of expanding their clientele to Limerick and Ennis but economic conditions since then have proven difficult.
The accounts, which were prepared by Curtin O’Friel & Co Chartered Certified Accountants and deal with the year up to the end of August of last year, state that the company had accumulated losses of €1,745,549.
They state, “These conditions, along with the other matters explained in note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.”
An analysis of their accounts for the previous year shows a similar warning was issued then, so financial difficulties have been an issue for some time.
Also in the most recent document it is stated, “The directors have reviewed the deterioration in the financial and economic environment, which has occurred in the past three years.
“The company, in line with many other companies involved in the restaurant and licence vintner sector, is trading through extremely difficult conditions but continues to work proactively with its principal lending institution.”
However, confidence was expressed that it can continue to trade, despite a number of issues. “The company has net current liabilities of €658,338. However, the directors are confident that the trade of the bar and restaurant can be significantly improved, despite the poor economic conditions. Budgets, cash-flow projections and cost-cutting plans have been prepared and implemented. The directors are also of the view that the company will continue to receive the support of its shareholders and principal lending institution in relation to the future financing of the business. On that basis, the directors consider it appropriate to prepare the accounts on a going concern basis.
“The financial statements have been prepared on a going concern basis, which may not be appropriate unless trading losses are eliminated and continued adequate finance is available for the company’s future operation.
“The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, the classification of recorded liability amounts or the possibility of new liabilities that may arise by reason of the company being unable to continue trading.”
The number of employees was unchanged compared to the previous year, with 72 working in the bar and restaurant and another three in administration. However, the amount spent on wages, social welfare costs and other pension costs dropped from €1,273,660 to €1,231,378.
In relation to borrowings, it states that there are bank loans of just over €3.4m to be repaid.