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Borders UK's auditors, Ernst & Young, have raised concerns about the retailer's ability to continue trading, according to documents filed at Companies House.
In the directors report and financial statements for the year to 2nd February 2008, the retailer said its losses increased by 36% from £9.9m to £13.5m. Turnover marginally increased by one per cent from £215.0m to £218.2m.
However, auditor Ernst & Young drew a series of concerns about Borders UK's long term ability to trade. These included the competitiveness of the high street bookselling trade plus a difficulty in predicting sales performance. A "significant" quarterly rent cost, was also highlighted, that led the majority of the chain's landlords to renegotiate to monthly payments, as well as uncertainty surrounding the continuing support of suppliers and the availability of credit insurance.
Ernst & Young said: "These events and conditions indicate the existence of material uncertainties which may cast doubt about the group's ability to continue as a going concern."
That financial year includes when Borders UK was bought by Luke Johnson's Risk Capital Partners in September 2007. Borders UK went through a management buyout last month led by c.e.o. Philip Downer, who was unavailable to comment at the time of going to press.