Sunday Times follows up on ResPublica’s “cash crisis”

Posted on June 6, 2011

Following my story on Tuesday reporting the possibility of Phillip Blond’s ResPublica think tank letting “a sizeable majority of staff” go, the Sunday Times has apparently done some digging. In their article (behind the paywall here) they have dug up confirmation of my story as well as several other interesting things.

First, apparently ResPublica submitted a set of unaudited accounts to Companies House “last week, more than a month overdue”.  

Those accounts cover the period 28 July 2009 – 31 October 2010, so it’s worth noting that they give us an insight into ResPublica’s first 15 months rather than the current state of play. The accounts also reveal several other interesting things about “ResPublica Policy Limited”, to give the company its official name, particularly the fact Phillip Blond is the company’s sole director and shareholder.

The second finding in the Sunday Times is that my report that an outright majority of staff would be leaving was accurate – and in fact that the majority of them have already left. Of the 16 staff listed on their website, according to the Sunday Times “redundancies and voluntary departures mean that only about six now remain”. Presumably the person whose job it is to update the website when people leave has, erm, left. ResPublica have put out a statement saying  this dive in the number of employees is due not to any financial concerns but instead is part of a “restructuring” period.

Third, apparently ResPublica staff were actually locked out of their office by the landlord for non-payment of rent for a period which the Sunday Times’ source calls two weeks. ResPublica claim the period was only “several days” and that the failure to pay rent was due to a “technical bank account glitch” which for some reason could only be set right when Phillip Blond himself returned from (yet another) trip abroad. This is truly remarkable – and appears to be either a sign of an outfit with money troubles or one that is practically dysfunctional.

Most strikingly the accounts themselves reveal – and ResPublica acknowledge – that Phillip Blond has even taken out a loan from the company of £38,609, on top of a salary of £55,000 paid in dividends and other money towards reimbursing cash that he’d invested in setting up the company. That £38,609 loan was still outstanding as of 31st October 2010, though seeing as he’s the only director and shareholder of the company doing the lending and the recipient of the loan I’m guessing he’s not too scared that he’ll chase himself for it too hard.

So what do the numbers in the accounts show overall? The Sunday Times points to the Assets vs Creditors section of the document, which shows Assets of £244,092 and Creditors’ amounts of £257,450. In total ResPublica had net liabilities (debts exceeding assets) of £13,358. That doesn’t look like financial stability.

ResPublica’s response quoted in the Sunday Times is that the company made a “healthy profit” of about £4,000. Again, I’d argue even that isn’t very “healthy” at all for an outfit the size of ResPublica. Worse, as far as I can see that figure is actually the Profit/Loss Account of £3,197, so the reality is actually 25% less than the claimed £4,000. Furthermore, even that £3,197 only registers in the accounts as a positive figure because it takes into account tangible assets like computers and office equipment, which in this case are valued at £21,082.

The wider debate is about whether ResPublica is in “financial turmoil” (as the Sunday Times and I have reported) or not. In my view, a company doing a restructuring which involves losing or getting rid of 10 of their 16 staff, gets its staff locked out of the office for non-payment of rent and has a positive financial balance of at best just over £3,000 (including the value of the office desks) certainly gives the impression of such turmoil.

All in all, not a great picture at ResPublica Towers. I wonder if the remaining staff have considered taking it over themselves in a Red Tory mutualisation project to see if they could run it better than the current management?

NB If you’re interested, ResPublica’s full rebuttal statement – in which they quite cheekily accuse the Sunday Times of “an inability to read accounts” is on ConservativeHome here.



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Categories: Opinion, Politics, Westminster


9 Responses

  1. Tim Linacre:

    While by inclination I am on your side, in this case i am not. You appear to confuse Profit and Loss statements and items with Balance Sheet items. The P&L should show quite clearly what the profitability of the business was, over a period of time, the Balance Sheet just gives a snap-shot. (most useful of all is the cash flow). If you want an FCA to look at the numbers delighted to help. I also think the Sunday Times have shown they also cannot read a set of report and accounts ( unsurprising as they are pretty useless documents to any other than accountants).

    06.06.2011 11:07 Reply

    • Foreign Aid is Evil:

      Tim, you may be a chartered accountant but, like an increasing number of your profession, you don’t seem to know your business, getting lost in technical details whilst missing the bigger picture.

      The Balance Sheet is indeed a snap-shot but it is also reality. The historical profitability shown by the P&L and whether this might in time make up any shortfall in assets over liabilities is merely an opinion. The definition of insolvency is when you liabilities exceed your assets. To continue to trade in this circumstance, legally, you need to make a note on the accounts explaining how the situation is realistically expected to be resolved.

      Mr Blond’s loan to himself is an added concern and hard to explain. When a company is in distress you would normally expect directors to make loans to the company, not the other way around. If Blond is found to have put his personal interest before that of his company’s creditors, he could find himself in trouble with the police.

      06.06.2011 12:46 Reply

      • Tim Linacre:

        Thanks for the ( somewhat bemusing ) snide opening paragraph. Why do some contributors have to resort to ill-informed personal insult against those who are on the same side? Takes me right back to student politics.

        Having looked at the accounts some points ( for the likes of John below who probably hasn’t had the chance to see them)
        The accounts are very abbreviated. There is no separate P&L, or cash flow- just a simplified balance sheet and some cursory notes.
        The P&L reserve shows a balance of £3,197. The net assets are of course separate from that.
        The oddity is the note to the accounts that
        “During the year PB introduced capital of £66,857 and had drawings of £160,466. At the year end a balance of £38, 609 was due to the company by Mr P Blond (this balance is included in other creditors). PB received £55, 000 of dividends in the period to 31 July 2010.
        There is no sign of the capital introduced in the balance sheet (called up share capital is only £100, no share premium reserve). Equally how did he pay a dividend with no distributable profits? This looks to be salary by another name, and thus would have shown the company being substantially loss-making.
        If PB wants to clear up any misunderstandings he should release a proper set of numbers, including a P&L (which the notes to the accounts confirm was prepared.

        07.06.2011 13:48 Reply

        • Foreign Aid is Evil:

          Snide opening remarks are fun. Try it and learn to take it too. This isn’t a safe place for wine sipping socialists with thin skins.

          I make no apology for my generalisaton against accountants who continue to let this country down by failing to do their job properly and let crooks like Sir Fred get away with it.

          Thanks, however, for your added detail on the accounts which seems to back up the suspicision that something dodgy is going on.

          28.06.2011 14:36 Reply

  2. Money:

    Someone really needs to look into these numbers, what is that 21k tangible assets doing in the P/L account.

    06.06.2011 12:32 Reply

  3. Jon:

    Oh dear Mark! You’re obviously not an accountant! It’s a good job you don’t opine on business or financial matters, no… wait!

    A profit of £3,197 would be in a separate section of the accounts (the profit and loss account) from the tangible assets (balance sheet). The only way in which the fixed assets could affect the P&L would be in their capitalisation (which is an accounting policy decision – normally predicated on whether assets are useful on an ongoing basis rather than trading stock or consumables) or through their depreciation.

    This isn’t to detract from your central point, though, which is that Respublica doesn’t look well. Most importantly – how much cash do they have and will their debtors pay them?

    06.06.2011 12:43 Reply

  4. Jez:

    Respublica?…never heard of ‘em.

    06.06.2011 16:41 Reply

  5. John:

    How does office equipment impact the profit and loss? To stop yourself looking foolish, you might want to read up a bit before you write a blog piece on a set of accounts.

    07.06.2011 10:56 Reply

    • markwallace:

      I can assure you I’ve read plenty of accounts, John! Feel free to email me at mrmewallace@gmail.com and I’ll happily send you the RP document for your scrutiny…

      07.06.2011 12:10 Reply

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