The Red Funnel Group has posted an accumulated loss of £195.9million and faces the threat of being unable to meet its financial obligations unless a major investment, refinancing deal, or sale is secured by September.
The stark warning is contained across the newly published accounts for Red Funnel Limited, Southampton Isle of Wight and South of England Royal Mail Steam Packet Company Limited, and parent company Falcon Acquisitions Limited, covering the year ending 31st December 2023.
While the operating company reported a modest pre-tax loss of £279,000 for the year, the consolidated accounts reveal a much larger financial picture. Red Funnel Limited, the group’s UK parent entity, now carries accumulated losses of £195.9million – an increase of £168.2million since 2022 – backed almost entirely by £195.4million in shareholder debt.
Despite a 10.4% increase in revenue to £61.1million, earnings fell by 21% as the company faced steep operating costs, asset impairments and rising interest expenses. Cash reserves dropped by over £4million, leaving just £6million in the bank at year-end.
Auditors BDO LLP issued a rare ‘material uncertainty related to going concern’ statement in the audit reports for both Red Funnel Limited and its operating subsidiary, highlighting a significant risk to the group’s future viability.
A revised agreement has been reached between Red Funnel Limited and its lenders, extending repayment of approximately £78million in loans to September 2026. This includes a £40million facility that was originally due in July 2022, extended to July 2024, and now further extended – with a £6million top-up added in March 2024. A second facility of around £30million is also due in 2026.
However, the refinancing comes with a critical condition. The company must secure an acceptable new investment, refinancing package, or a sale of the business by 30th September 2025. Failure to meet this milestone could see lenders demand full repayment of the loans.
The accounts state:
“The Group would have insufficient cash or available finance to make the repayments and meet its liabilities as they fall due.”
Directors stress that such a scenario is considered ‘very unlikely’ but acknowledge the potential exposure.
Operationally, Red Funnel continues to carry around 2.8 million passengers annually, maintaining a 36.7% share of the high-speed market and 35.5% of vehicle traffic. But reliability remains a challenge, with ageing vessels such as Red Eagle experiencing repeated breakdowns and requiring recertification.
The group is known to be seeking to replace all 3 Raptor-class vehicle ferries, although any replacement programme would take a minimum of 4 years to complete.
Red Funnel has not paid a dividend for the second year running. No buyer or refinancing deal has yet been finalised.
Red Funnel has been approached for a statement, but no response has been received.
Hate to say it, but I told you so. I knew they were hiding something, £195,000,000 is a ridiulous amount of money. This needs a full independent investigation, and a takeover. Red Funnel are finished. Where’s our never present Quigley now then ????
Independent investigations are a waste of time and
money.
Look at the Covid inquiry, a total farce / cover up!.
I said investigation NOT inquiry. Try reading it carefully, they are different. Criminal investigation is need, that means the police, fraud officers etc.
An accounting fiasco where red funnel ferries has been made the scapegoat from it’s parent “companies” losses and the whole thing is hidden in the depths of the accounting balance sheets under numerous diversions to other named entities, their real owners, the “parent company”, Red Funnel Ltd, Falcon acquisitions.
And, these are the end of year accounts for the year 2023. What’s been happening since?
Should make it easier to be taken back into public ownership. I’d be interested to see the un-consolidated accounts for the operating company (RF Ltd). A loss of just £279k certainly looks doable if run as a non-profit given a revenue total of over £60m.
Public ownership would be the fairest option for
everyone.
So where are these hundreds of £millions going to magically appear from?
IW Council could roll out islandwide parking
permit charges and a ULEZ / CONGESTION charge
scheme to raise enough money to buy and bring
Red Funnel into public ownership.
I was behind a large van nr the Heights yesterday
it was blowing out so much sh*t, there is no way
this piece of trash had a genuine MOT
So many filthy vehicles are polluting the island and
the climate.
So much can be done to get these polluting vehicles
off our roads.
“IW Council could roll out islandwide parking
permit charges and a ULEZ / CONGESTION charge
scheme to raise enough money to buy and bring
Red Funnel into public ownership.”
The IW Council’s total budget is approx £400million. Yet you reckon they could raise around another £200million just from Island motorists! You must live on Cloud Cuckoo. Dream on!
“Should make it easier to be taken back into public ownership.”
Remind me, when was Red Funnel ever in public ownership? Oh yeah, Never!
In over 150 years Red Funnel has always been a private enterprise. Therefore how can you take back something you have never had?
What might be possible is for council to compulsory purchase the dock area in Cowes, and then franchise a competing operator (similar to Open Access operator on the railways), or a replacement “Phoenix” operator if RF collapses, taking over the current boats and staff.
Ideally the Southampton dock area that RF uses would also be purchased but that’s likely to be legally more difficult for IoW council (maybe easier at city or county level, also purchasing Hythe jetty)
As an example of a better run public service that is similar: Cape May-Lewes, jointly owned by states of New Jersey and Delaware. They are just about to replace their boats too (although their boats are closer in size to Wightlink’s Lexington service). Note that CMLF fares are similar to RF’s off peak fares (CMLF doesn’t handle much freight)
It doesn’t make sense with the prices they charge to
be £195,900,000.00 in losses
something ain’t being done right.
Lenders can “demand full repayment” til they’re blue in the face, the only way they’ll get anything at all is a fire-sale of RF assets – and most of those are mortgaged.
The collapse of the RF “service” will be a disaster for IW, so it would be nice to think that the powers-that-be have a masterplan up their sleeves. I don’t expect them to be shouting it from the rooftops, but a little hint that they are at least thinking about it would be reassuring.
But just in case they haven’t, what about us deeply-affected citizens coming up with some practical ideas?
If RF does collapse, a public buy-out would probably be affordable, and without all that debt to service, there might even be a possibility of a viable, reliable, affordable service.
No doubt our two (are there two?) MPs are on the case, but there’s no sign…
The two MPs are probably on holiday
I bet they claim their ferry fares on tax payers expenses
they ain’t silly enough to pay what we have to pay to travel
5 miles.
We are not in this together!
MP’s have met with relevant minister but it needs central government change, and Labour have rowed back on their manifesto promises in this area. Only thing that can be done by MP is ongoing influence in the matter.
What might be possible without legislation is a demand from government (maybe via CMA) is to require ferries to operate a easy to claim generous compensation for non-weather delays and cancellations, similar to Delay Repay on the railway (Delay Repay may already operate for passengers who have through rail tickets to Ryde).
RF financial issues have been featured in Private Eye though (I think I managed to nudge the Eye to take a look).
Transport committee has some non Labour members who might be influenceable, e.g. Aquarone.
Good now sell it off and put fran out of a job..
I though Fran had gone already!
Before anyone suggests that the Isle of Wight Council take over Red Funnel please just remember the floating bridge fiasco, the councillors couldn’t run a bath and there is nobody in the council with the slightest experience or intelligence to run a ferry company.