Sunday 8 July 2018

IOSSG finances - Are the Steamship Group’s finances in a good shape?
A back of the envelope calculation - £5m a year being wasted?

IOSSG’s helicopter service

Costs: IOSSG helicopter is an 8 seater;  IOSSG have apparently signed an 18 month contract for £1.8m hire + £2k per flying hour.

So their weekly costs might be:

Standing charge £1.8m/78 weeks =  £24k per week.

Assuming 4 hours actual flying time per day (1 hour per round trip)
four returns per day is £8k x 6 days per week = £48k a week;

Any other costs?  Airport charges, licences?  Ignore these for now!

Total cost per week might exceed of £72k.

Revenue:  With 8 seats sold at average of £120 single, 8 flights/day 6 days a week brings revenue of £46k a week.   If half full, income would be £23k per week.

Loss per week if flying full would be £72k - £46k = £26k or over a year £1.3m.

If flying average half full, loss = £49k per week or over 1 year £2.5m.

The Mali Rose

The new (to IOSSG) freight ship, the Mali Rose, has since purchase, had to have and replating, its bow thruster propeller fell off during trials with the Marine and Coastguard Inspector on board, It had a controls failure when entering Penzance wet dock resulting in damage to it and a fishing boat.  With only a small clearance between the ship and dock gates, the harbourmaster at Penzance is reported to be requiring the IOSSG to have a tug in attendance every time it docks; at a cost of £4k per visit from Falmouth (twice a week would cost £416k per year).   More recently, a burst oil pipe in the engine room caused a problem in the engine compartment and risked a serious fire.  Then there are perhaps £5k a week harbour dues in Penzance on top of those for the Gri Maritha.

Estimated costs of the above and other alterations are £4.5k spread over the last and present financial years. It is reported that another £2m must be spent to make the vessel fit for purpose.  
Allow £7m in total effectively wasted.

The financial state of the Company

Last year’s (to 31 March 2017) turnover was £17m.

With the above Mali Rose costs spread over perhaps two years, being generous, one might see per year:

£2m loss on the helicopter and £3.5m loss on Mali Rose, say £5m per year wasted!

Operating profit £1.52m.   

Fares have shot up in the last few years to around £50 single for the Scillonian (March to October only) and £90 single for Skybus, making travel unaffordable for many people.

Can the company survive a £5m loss on a £17m turnover for at least two years running?

Is the Board fulfilling its fiduciary duty?   Is the company trading at a loss?

Why are the shareholders not complaining at the money wasted on two ‘vanity’ projects?

Customers have no choice – either they use this monopoly or don’t travel.

This is one of the reasons why, on 16th May 2016 FRIST has written to the Chairman of the IOSSG and its Board:

‘we must conclude that the necessary changes cannot be achieved under the current control of Andrew May as Chairman supported by major shareholders.’

Marian Berkeley, FRIST Co-ordinator, 07770 341302,


July 2018

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