Monday, 10 January 2011

Rathlin Island Ferry Limited - Liabilities Exceed Assets

Rathlin Island Ferry Limited - Liabilities Exceed Assets
Accountant's statement 23 November 2010*:

"Emphasis of Matter Going Concern

In forming our opinion we have considered the adequacy of the disclosures made in the financial statements concerning the company's ability to continue as a going concern The company incurred a net loss during the period ended 31 March 2010 and as of that date the company's current liabilities exceeded its total assets. These conditions along vvirh other matters as set forth in Note 11 to the financial statements indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern The financial statements do not include anv adjustments that would result from a failure to continue as a going concern. Details of the circumstances relating to this emphasis of matter are described in Note 11. Our opinion is not qualified in this respect.

Going concern

The company has incurred losses in its first two periods of trading with the result that its current liabilities exceed its total assets The contract with the DRD is currently under review and the directors believe that the outcome of the review will enable the company lo continue in operational existence and to improve its profitability

Whilst there is some uncertainly regarding the outcome of the review the directors believe that it is appropriate for the financial statements to be prepared on a going concern basis"

* The RIFL Board Meeting the same day came one day after the RIFL directors were represented at an industrial tribunal.

The abbreviated accounts shed no light on the amount of public subsidy being paid to the company, the value of ticket sales, the amount paid to one or more of the company directors for the leasing of passenger only vessels and the remunerations paid to each of the four directors.

Is the company currently financially solvent? 

When does a company become insolvent? When it is unable to pay its creditors as and when they fall due for payment, and/or when the value of its assets does not cover its liabilities.

What is the future for the service? Will there be more redundancies or reduced service? What does the Department for Regional Development have to say regarding the company position?

Less than a year ago the O Driscolls threw up their Cape Clear ferry contract in Co Cork: "The service was losing money from the beginning". Questions have also been asked about the Cape Clear accounts and why financial guarantees were excluded from the second tendering process for the Rathlin ferry contract in 2007/8.

Updated January 14

DRD - £400,000 Rathlin Ferry Cuts - 'Indicative savings' are to be funded by a reduction in 'in-house staff costs'.

In light of RIFL's alleged financial difficulties why was an additional family member added to the board in 2010? Presumably DRD will have been asking questions about the company's trading status based on information available from monthly/quarterly balance sheet returns. What savings have been achieved by DRD since 2008 when the position of engineering and business manager was made redundant?