Although Underbelly has received over £ 750,000 in government support under coronavirus support programs, it is understood that at least two suppliers owe around £ 350,000 between them for the last major pre-Covid event held by the company.
The company says it has a plan in place to deal with the debt and is ready to turn a profit by year-end.
Underbelly reveals Edinburgh Christmas Festival expansion plans for Princes Street …
At least £ 121,000 of that debt is owed to a Scottish supplier, with Underbelly’s latest accounts showing he owed his creditors £ 2.7million in March 2020, though that figure is significantly lower today , the company declaring that it is in a “strong financial position”.
The news comes a day after Underbelly announced plans to revamp the Edinburgh Christmas Festival this winter.
The pandemic has hit the live events industry particularly hard, with the Scottish government approving a £ 10million bailout for the country’s events sector and around £ 6.5million specifically for Edinburgh festivals .
The Scottish Tourism Alliance warned on Monday that next year’s entire tourist season is at risk due to the Scottish government’s looming decision to maintain Covid-19 testing requirements for inbound travelers.
Yesterday Underbelly announced new plans for Edinburgh Christmas 2021 and has had a contract with Edinburgh City Council since 2017, with a new tender expected to be released in the coming months for winter festivals. from 2022/23.
The accounts filed by Underbelly for the 2019/20 fiscal year, which ended in March 2020, show the company in a difficult situation due to the pandemic.
Around £ 870,000 was owed to the IRS through the deferred payment of VAT, which was due in June of this year, although the company has confirmed that around half of that has been paid and an agreement is in place with HMRC to pay the remaining balance by January.
Last year the company also owed £ 71,000 more than its assets, putting the business at risk if creditors decided to call on their debts. However, the company said it would return to profit by 2022.
Underbelly’s adventure in Asia is also straining the company, which owes more than £ 423,000. The accounts indicate that he “does not have sufficient funds to pay off this balance”.
Shows have resumed in the region with the production of Underbelly ‘La Clique’ slated to open in Singapore later this month, with profits from that show being key to repaying money owed by the company.
By Popular Demand Promotions Ltd, of which Underbelly is the majority shareholder and which acts as a holding company for directors Charlie Wood and Ed Bartlam, also owes the main company Underbelly £ 313,881.
The accounts also show that Underbelly has accessed “significant funding” under the UK government’s coronavirus business interruption loan program, as well as several “non-repayable grants” from government programs.
Underbelly also said it received grants under the leave program and that “directors and their families” have loaned “large amounts” in long-term loans to the company.
The entertainment company has also received more than half a million grants from the Arts Council England, as well as an additional £ 250,000 from the Scottish government.
In response, a spokesperson for Underbelly said the company was in a “very different financial situation today.”
The spokesperson said: “As a business, there is no doubt that the restrictions placed on the events industry over the past 18 months have been extremely difficult to manage.
“During this time, we took advantage of the financial assistance that was offered to us. We have managed our cash flow and, with the support of partners and suppliers, we are in a good financial position to move forward.
“Underbelly cleared its overdraft, took out a CBIL loan and repaid more than half of its VAT due under the agreed Covid deferral scheme, with the balance to be paid by January.
“Of the debts owed to suppliers in 2019, there is only £ 121,000 left in Scotland due to a single supplier.
“This supplier has incredibly supported our position and provided us with extended payment terms, which we expect to have fully repaid by the end of this year.”
Commenting on the potential impact of the additional Covid-19 restrictions on winter festivals, the spokesperson said only one in five Christmas visitors to Edinburgh and one in four to Hogmanay were international.
The spokesperson said: ‘Our planning for Edinburgh’s winter festivals this year has taken into account the many restrictions that have been placed on the events industry by the Scottish Government and we will continue to navigate this. domain over the next few weeks. Despite this, we are confident that we can still organize a great event for the city of Edinburgh while providing a safe environment for our visitors.
“Edinburgh’s winter festivals don’t depend on international tourism to be successful. Only 19% of Edinburgh Christmas visitors and 26% of Edinburgh Hogmanay visitors are international and 65% of Edinburgh Christmas visitors are from Scotland.
“As demonstrated this summer, we are confident that Edinburgh will benefit from an increase in domestic visitors from across the UK to fill any gaps.”