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This from Karl Hunter. Some of what he says has been debunked by the CEO of Wightlink, Keith Greenfield. Ed
Earlier this year I looked through Wightlink’s (WL) latest set of published accounts for 2021 and 2022. I wanted to know the truth behind Keith Greenfield’s (CEO of Wightlink) mid-2021 claim, that without taxpayer subsidy, the full cost of ferry services will be borne by WL customers through ticket prices, and the narrative that unless WL secured financial emergency support the firm risked bankruptcy.
The government handouts to WL totalled £6.4 million in 2021 with a further £894,000 in 2022.
Why would profitable a company need Government handouts?
Prior to this the accounts from 2017-2019 showed WL made net profits of over £50 million. So why would a company that made £50 million pure profit over the previous three years need to take the public’s money?
Looking into those years revealed that over 90 per cent of that profit was payout as dividends apportioned between Arca Shipping (WL’s parent company) and WL Directors, detailed in my letter to the County Press dated 10th July 2021.
A private limited company
However, it’s only WL’s latest published accounts (2021/2022) that would reveal the accuracy behind Mr Greenfield’s claim.
Firstly, it’s important to note that WL is not a public limited company, meaning the public cannot own WL shares. It’s a private limited company and so shares are owned by WL Directors and WL’s parent company Arca Shipping.
£9.387 million insurance payout
In 2021 WL received a £9.387 million insurance payout for the reduction in revenue caused by the Covid crisis. This negated the need to claim against the taxpayer and take the public’s money.
As unethical as that might appear, shockingly, barely a year later in June 2022 after WL received that huge sum from the Government, they paid themselves £8,000,000 in dividends.
The obvious question is why take taxpayers’ money, if you can afford to give yourself £8 million from profits, especially given they didn’t maintain the services and took so long to return them?
Dividends of £8,000,000
What’s more, in a highly irregular move WL waited until the 2022 accounts were closed off before declaring they paid themselves £8 million in dividends. Therefore, you won’t see this sum entered on the WL’s balance sheet for 2022.
Instead, it is listed as the last entry on their financial statement that simply states, “In June 2022 the company declared a dividend of £8,000,000 in total.”
Did taxpayers money subside dividend payouts?
I suspect that the dividend payout was only declared after the accounts were signed off due to the fact it would make for bad reading by having two opposing entries so close together.
If on one hand you’re pleading poverty and taking huge sums of public money, but on the other hand paying £8 million in dividends to Directors and the corporate owners, then it looks like taxpayers money has just subsided their dividend payouts, when it should have gone to maintaining services.
£77 million net profit since 2017
The reality is if you can afford to pay yourselves £8 million so soon after receiving public money, you didn’t need the public’s money. This is especially true if one considers the fact that since 2017 WL has made £77 million net profit.
Furthermore, WL accounts are extremely complicated with parent companies of parent companies four times over, so ultimately, outside of the WL Directors allocation, it’s hard to trace whose pockets the remaining dividends finally fall in.
£6.8m in tax rebates
There remains one last shocking, but not surprising truth. Having looked through WL’s published accounts dating back to 2017 I discovered WL has effectively paid no tax.
In fact, over the last six years, WL has received a further £2.2 million of the public’s money. Since 2017 WL has paid £4,625,000 in tax, with tax rebates of £6,822,000.
Where’s the better deal for Islanders?
The accounts show WL can afford to offer all Islanders a much better deal, and with average net profits of nearly £247,000 per week for the last six years, it certainly does not need to be subsidised by the taxpayer.
Yet, Mr Greenfield has the gall to claim ticket prices would increase if this was not the case.
Call for investigation
In light of all this I have written to the Department of Transport asking what criteria need to be met to take a closer look at WL’s accounts.
Image: TaxRebate.org.uk under CC BY 2.0
