By Carole Dennett
Regular readers of the IW Observer may recall Red Funnel’s unusual move earlier this year when the cross-Solent ferry operator shortened its financial year-end by a single day. This change, dubbed the “one day diddle” by some financial experts, was seen as a way to delay filing their accounts until the end of December. Now, with the festive season fast approaching, the new deadline looms – and rumours suggest the company cannot meet it.
The crux of the issue lies in Red Funnel’s desperately troubled finances. Their accountants can only sign off the company as a “going concern” if there’s evidence of financial stability – either a new buyer or a significant cash injection. Without this, they won’t rubber stamp the company’s books.
Despite management denials, it’s obvious that Red Funnel is in seriously choppy financial waters. Talks of a buy-out by Arcus Investment Partners, that looked buoyant in September, have now sunk, leaving the company exploring other options. Their current potential suitor is Real Assets Investment Management, a firm set up in 2019, with worryingly, no apparent maritime or turnaround experience. Now, why would they be so interested? Could it be that the company sold for £366 million in 2017 is now languishing in the bargain bin?
The looming Companies House deadline adds further pressure. While a late filing fine of £150 is just a drop in the Solent, failing to comply is a criminal offence, leaving directors open to personal fines and potentially barred from running a company.
If Red Funnel is really desperate, it does have potential escape routes. They could once again shorten their financial year-end by a day, buying another three months to file. However, it’s worth noting that these loopholes are set to be tightened up under the aptly named Economic Crime and Corporate Transparency Act.
Alternatively, they could extend their 2023/24 accounting year to an 18-month period ending in June 2024, pushing their filing deadline to March 2025.
With its financial stability under intense scrutiny, local residents – and any serious investors – are left questioning Red Funnel’s future.
Will it secure the funds needed to stay afloat by the end of the year, or will more creative accounting manoeuvres cause even concerns about its operations? Red Funnel’s financial wizards are likely to be busy over this festive season.
Parts ordering puzzle?
More cancellations on the vehicle ferry this week must have left regular passengers looking forward to the scheduled return of Red Falcon, currently undergoing its annual refit in Falmouth. However, they will be disappointed. The works are going to over-run significantly, as the pistons have all been condemned and there are not enough replacements available. The parts supplier is being blamed, but there appears to be more to the story. The operations director, Leanna Lakes, who has since given in her notice, was told in July that the parts would be needed, but she apparently vetoed ordering them, with no reason given. As one exasperated insider said: “Now look at the shambles of it all.”
Red Falcon is not now expected to leave Falmouth until January 18. Red Osprey will then go for refit, and as her pistons are expected to be in the same condition there is now a frantic scramble for parts.
The company is not expected to return to a three vessel service until March 27 next year.
The IW Observer has approached Red Funnel for a comment.