Packet made a £9m profit in year it was nationalised

Tuesday 15th October 2019 4:21 am
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The Steam Packet made a profit of £9.3m in the year that it was acquired by the Manx government.

But operating profits have fallen slightly.

Accounts for the Isle of Man Steam Packet Company Group Ltd for the year ending December 31, 2018, will be laid before this week’s Tynwald sitting.

They show profits for the year attributable to equity owners at £9,332,364 compared to £8,421,874 in 2017.

But operating profit, at £10,470,595, was down slightly from £10,813,574 the previous year.

The group was acquired by the Treasury on May 24 last year for a total of £124.7m, represented by debt of £75.9m and equity of £48.8m.

Revenue in 2018 was £59,086,118, up from £58,457,001 in 2017.

Profit from continuing operations was £9,332,364. No dividend was paid.

Passenger revenue was £29,658,578, up from £29,560,269 in 2017. Freight revenue was £22,939,297 (£21,589,530 in 2017).

Treasury Minister Alfred Cannan told the Examiner: ’The increase in profits is not due to the purchase of the company and indeed the operating profits of the group were down slightly for 2018.

’Whilst we did not purchase the company solely for financial return, we recognise that this is a profitable business and should remain so in order to protect the taxpayers’ investment.’

Unaudited financial statements, filed with UK Companies House, had put the figure for profits in 2017 at £10,879,673, up from £9,746,886 in 2016.

The latest directors’ report and financial statements show the company entered into a shareholder agreement on November 28 with the Manx Treasury as from January 1 this year.

Its purpose, the report states, is to establish operational commitments with which the company is required to comply.

Two days later the company changed its name from MIOM Ltd to the Isle of Man Steam Packet Group Ltd.

Deemed cost of ships at £78m, less accumulated depreciation of £64m, gave a carrying value of £14m.

A second report to Tynwald, on the refinancing of the £75m loan to the Steam Packet, says a government guarantee is required to make the cost of financing the purchase of new ships competitive.

Mr Cannan explained: ’A government guarantee should remove any requirement for third party lenders to place charges over the assets of the company.

’Securing the strategic assets of the company for the island was a key driver for government’s acquisition of the business in 2018.

’In addition, it will allow the company to secure competitive financing and thereby minimise financing costs.’

He added: ’If the loans were not guaranteed, in the event of a default, third party lenders could seize the assets of the business and sell them to satisfy the outstanding loan balances. This would place the island’s sea services at risk.’

Subsidiaries of the group are listed in the accounts as SPC Ltd and Isle of Man Steam Packet Holdings Ltd, both holding companies; Isle of Man Steam Packet Company Ltd which is the ferry operator; package holiday firm Steam Packet Holidays Ltd; employment agency Manx Sea Transport Ltd and Guernsey-based crew management firm Manx Sea Transport Guernsey Ltd.

The accounts show that the group’s previous loan was repaid on May 24 last year when the company and its ferry operating subsidiary entered into a £76m loan facility with the Treasury.

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