164-year-old ferry company – now in need of a lifeboat! – Isle of Wight Observer News

September is traditionally when The Southampton Isle of Wight and South of England Royal Mail Steam Packet Company Limited – better known as Red Funnel – toasts its long heritage.

The company was formed in 1861, when two steam packet companies merged, and Wednesday (September 10) marks its 164th anniversary. But celebrations may turn to crisis shortly afterwards with the steam coming from the finance office, as September 28 is the deadline for the company and its associated businesses to file its 2024 accounts.

It feels that we were only recently reporting on their 2023 accounts. Time seems to accelerate with age, but it isn’t the calendar playing tricks. Those accounts were six months late, thanks to enthusiastic use of the “one-day diddle” – not once, but twice. The crafty little manoeuvre gave them an extra half-year to tell the world about their finances, only to reveal the biggest loss ever recorded for a cross-Solent operator.

Unfortunately for the troubled ferry firm, Parliament has dictated. The one-day diddle is banned from 2026. So Red Funnel has one more chance to use it before it disappears. If it does, it will be only the ninth company to have used the ploy two times.

Their auditors, BDO, may not be keen, as they were criticised in July by the Financial Reporting Council who called on BDO to “urgently and robustly reassess how to improve its audit quality.”

The concern is because the company’s finances have been shown to be less “smooth sailing” and more “taking on water”. The 2023 accounts revealed a £196 million loss and a formal warning about the company’s ability to continue trading. To keep the business afloat, lenders agreed to roll over repayments for £40 million to 2026. But Red Funnel still has over £116 million debt, and the banks decreed new investment must be found or the business be sold by the end of this month, or they may call in loans. Red Funnel has admitted it cannot repay them.

As previously reported, CEO, Fran Collins, recently told staff “things are just taking longer than we anticipated.” Translated, she means company’s been for sale for 18 months and we still haven’t found a taker. Miss Collins sounds as though she is steering a steady ship, but she and Stephen Ridgeway – Red Funnel’s chairman – are also directors of Hythe Ferry, whose accounts will be six months late on September 27. We asked them for a comment, but didn’t receive any response.

So, what are their options? They could extend Red Funnel’s accounting period, only allowed once every five years or just not file their accounts. However, that is not just bad form – it’s a criminal offence and anybody can report an offending director. Persistent defaulters risk disqualification as directors for up to 15 years.

If Red Funnel do produce their accounts at the end of this month, they will reveal whether the company’s financial position improved after the disastrous 2023. If they don’t file, as insiders predict, we might assume it’s not good news being hidden.

In any event, come September 30, unless the company finds buyers urgently, it’s future survival (or not) will be in the hands of its bankers, not its boardroom.

Happy birthday, Red Funnel!