The Group First group of companies, comprising the unregulated store pod investment scheme Store First and the unregulated car park space investment scheme Park First, has just filed the group’s accounts for the period ending June 2017.
Some selected highlights of the accounts follow. Anyone seeking a full picture of the companies’ accounts should consult the originals on Companies House, where they can be downloaded for free.
Group First Global Ltd, the holding company (note: the following are the results for the group, rather than the individual Group First Global Ltd company)
- Total turnover was £163m. Cost of sales was £185m, meaning that the group was making a gross loss of £22m before we even get to overheads. After overheads (administrative expenses), the group made a loss of £44m, with the final loss after tax and interest being £42m.
Despite Group First’s heavy losses, ordinary dividends of £250,000 were paid. These would have been paid to Group First Global Limited’s sole shareholder, which is Toby Whittaker. Note that there is nothing illegal about this because Group First Global as a company had retained earnings from previous years, even though the group as a whole had negative earnings.
- In 2017, Park First was ordered by the FCA to stop promoting a collective investment scheme without authorisation, and instead allowed to restructure its investment offering as a “lifetime leaseback” scheme. Investors have two options: either continue in the lifetime leaseback scheme, which means that instead of receiving a “guaranteed” 8% per annum return as originally promised, they receive 2%pa plus variable dividends depending on profitability. (Park First was, and remains, heavily loss-making – see below.) Or receive their money back, minus any returns already paid to them, after at least a year.
- Group First Global has made a provision of £62 million in its accounts for making repayments to investors under both these options.
- After allowing for this provision, Group First is £31 million in the red (net liabilities). They would have had net assets of £29 million had this provision not been needed.
- The Government has lodged a petition to wind up the Store First companies. Group First intends to defend this petition, and has put in place a provision of £2 million to cover the cost of doing so.
- Group First’s previous auditors, Pierce C.A. Limited, resigned in September 2017. The latest accounts are audited by the new auditors, Lopian Gross Barnett & Co.
Park First Limited
- Total turnover in the period was £18m. Cost of sales was £41m, meaning that the company was making a loss before we even get to overheads. The final loss after overheads, interest and tax was £30 million.
- Net liabilities were £30.2 million.
- With Park First failing to even cover the gross cost of its services, even before overheads are taken into account, it is clear that a significant turnaround will be needed before there is a prospect of dividends for investors who opt for the lifetime leaseback option.
Store First Limited
- Store First Limited made a gross profit of £1.1 million on turnover of £4.0 million. After overheads, however, it made a £7.1 million net loss.
- Net liabilities were £14 million, consisting of £466k debtors (mostly trade debtors and amounts owed by other Group First companies), minus £12.2m creditors (mostly amounts owed to other Group First companies) and a £2m provision for liabilities.
- In regard to the winding up petition, the directors state “On the 1 August 2017 a hearing was scheduled in High Court by the Insolvency Service calling for a petition to wind up Store First Limited. The result of this hearing led to an adjournment. Subsequently it remains uncertain whether Store First will remain trading or enter into insolvency proceedings. The outcome of this is likely to be reached after a period of 12 months and while this casts significant doubt on the entity’s ability to continue as a going concern in the long term future, it does not cast significant doubt on the entity’s ability to continue trading for the forseeable future.”
Group First has a number of other subsidiaries, which I will summarise very quickly below as they were exempt from filing full accounts under the small companies regime, so little meaningful information is available. “No P&L” indicates the company did not file a profit and loss statement.
- The following subsidiaries were all listed as dormant: Residential First Ltd, Select Escapes Ltd, B1 Workspace Ltd, Group First International Sbn Bhd (registered in Malaysia), Store First Singapore Branch and Park First Singapore Branch (both registered in Singapore).
- Simonstone Parking Limited – no P&L, net assets £53k
- Park First Skyport Limited – no P&L, net assets minus £21.5 million
- Store First St Helens Ltd – no P&L, net assets £450k
- Equestrian First Ltd – no P&L, net assets £6.7 million
- Ground Rental Ltd – no P&L, net assets minus £27k
- SFM Services Ltd (formerly Store First Management Limited) – £19k profit, £765 net assets
- Business First Ltd – no P&L, net assets minus £1.4 million
- Park First Management Ltd – no P&L, net assets £9k
- Help Me Park Gatwick Ltd – no P&L, net assets minus £16 million
- Cophall Parking Gatwick Ltd – no P&L, net assets minus £16 million
- Help-Me-Park.com Ltd – no P&L, net assets £506k
- London Luton Airport Parking Ltd – no P&L, net assets £11 million
The Store First investment opportunity collapsed several years ago. Investors were initially promised returns of 8% in the first two years, rising to 10% in year 3 and 12% in year 5 if Store First and the investor chose to continue the leaseback. However, numerous investors have reported that these returns quickly dried up. No investor to our knowledge has succeeded in selling their store pod on the open market or selling the pod back to Store First.
The “guaranteed” 8% returns from Park First investment opportunity have similarly dried up, although this time after FCA intervention. The FCA appears to have washed its hands of Park First after the investment was restructured in such a way that it no longer counted as a collective investment.
Park First investors who opt for the new “leaseback” scheme paying 2% and variable dividends will clearly have to hope for a remarkable turnaround in Park First Limited’s profitability, given that at present it doesn’t even cover the cost price of offering its car park spaces, according to its accounts.
As for those who opt to receive their initial investment back, they face a long wait (at least a year, plus however long it takes for Park First to transfer the title to their parking space) while they hope that Park First has enough money to pay them back, despite the significant net liabilities reported by Park First and its associated companies.