2019 Annual Report 2019 3 Isles of Scilly Steamship Company Limited Isles of Scilly Steamship Company Limited
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DELIVERING FOR SCILLY 99th Annual Report and Consolidated Financial Statements Year Ended 31 March 2019 SteamshipISLES OF SCILLY SteamshipISLES OF SCILLY GROUP GROUP SteamshipIsles of Scilly SteamshipIsles of Scilly Group Group ISLES OF SCILLY STEAMSHIP COMPANY LIMITED ISLES OF SCILLY STEAMSHIP COMPANY LIMITED CONTENTS COMPANY INFORMATION 2 KEY PERFORMANCE INDICATORS 4 CHAIRMAN'S STATEMENT 5 – 7 BOARD OF DIRECTORS 8 – 9 STRATEGIC REPORT 10 – 16 CORPORATE GOVERNANCE 17 – 19 STRATEGIC OBJECTIVES 20 – 21 OUTLOOK 22 DIRECTORS' REPORT 23 STATEMENT OF DIRECTORS' RESPONSIBILITIES 23 INDEPENDENT AUDITOR'S REPORT 24 – 25 CONSOLIDATED PROFIT AND LOSS ACCOUNT 26 – 27 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 27 CONSOLIDATED BALANCE SHEET 28 BALANCE SHEET 29 COMPANY INFORMATION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 30 Isles of Scilly Steamship Company Limited Chairman Registered office STATEMENT OF CHANGES IN EQUITY 31 Annual Report and Mr I Howard Hugh Town CONSOLIDATED STATEMENT OF CASH FLOWS 32 Consolidated Financial Statements St. Mary’s Year Ended 31 March 2019 Directors Isles of Scilly TR21 0LJ NOTES TO THE FINANCIAL STATEMENTS 33 – 43 Mr P Hardaker Company Registration Mr S Reid Auditors Number 00165746 Mr S Hicks PKF Francis Clark Mr G Randall Statutory Auditor Mr H Wiekens Lowin House Mr S Hicks Tregolls Road Mrs J E Piper Truro Cornwall TR1 2NA 2 ANNUAL REPORT 2019 ANNUAL REPORT 2019 3 ISLES OF SCILLY STEAMSHIP COMPANY LIMITED ISLES OF SCILLY STEAMSHIP COMPANY LIMITED TURNOVER OPERATING PROFIT / (LOSS) EBITDA (pre-exceptional items) YEAR ENDED 31 MARCH YEAR ENDED 31 MARCH YEAR ENDED 31 MARCH £1.52M £18.51M CHAIRMAN’S £17.46M £2.65M £17.09M STATEMENT -£0.17M £1.73M I am pleased to welcome you to the 99th Annual Report of the Isles of Scilly £0.30M Steamship Company which includes our Consolidated Financial Statements for -£4.56M the year ending 31 March 2019. 2017 2018 2019 2017 2018 2019 2017 2018 2019 As foreshadowed in my letter in August 2019 it has not been an easy year for the company. SKYBUS SCILLONIAN COMBINED AIR AND THE HEADLINES AIR PASSENGERS SEA PASSENGERS SEA PASSENGERS Island Helicopters made a substantial YEAR ENDED 31 MARCH YEAR ENDED 31 MARCH YEAR ENDED 31 MARCH operating loss in the year and the Board felt ultimately compelled to announce the closure of the helicopter service. We have reached a 95,014 120,077 215,091 settlement agreement with the operator for an early exit from our contractual obligations. 2019 2019 2019 After a major investment lasting for over 93,243 122,381 215,624 two years to render her fit for purpose, the Mali Rose underwent sea trials in January 2018 2018 2018 and February. These were not without their challenges and her inability to sit on the 96,340 113,513 209,853 bottom made for an irregular schedule. This in turn led to increasing dissatisfaction 2017 2017 2017 from our customers on Scilly. After consideration of this and other factors, the Board decided to bring the Gry Maritha back into service following her five year PROPOSED FULL YEAR DIVIDEND PASSENGER NUMBERS PASSENGER NUMBERS survey in dry dock and to look for a buyer YEAR ENDED 31 MARCH 2019 YEAR ENDED 31 MARCH 2019 SUMMER MARKET (APR-OCT) for the Mali. The market value of the Mali is materially less than her holding value was in our books and as a consequence the Board 44% decided to impair her holding value on the SKYBUS 195,650 balance sheet at the financial year end. excluding discontinued activities was lower The company needs to accumulate cash 2019 at £410,256, and this represents a cause and judicious management of assets is one A combination of these two items, the for concern. Across the spectrum of the way of achieving that. 195,449 helicopter service and the Mali Rose, has company’s activities, marine, aviation and 11p 0p led to an extraordinary loss of £4,296,060 ancillary businesses, margins are lower and MARINE 2018 at the year end which reduces shareholder decisive action has had to be taken and will Scillonian lll performed admirably throughout funds by a similar amount. continue to be taken in the months ahead. the season demonstrating a level of reliability 2018 2019 190,986 and resilience which belies her age. Whilst in FINANCIALS The Group’s balance sheet, whilst materially dry dock over the winter she completed her 2017 Air and sea passengers combined declined diminished, remains robust and free of debt. five year survey and with appropriate attention 56% SCILLONIAN by 0.25% in the year to 215,091. The The Board is reviewing all asset categories she will be good for quite a few years to come. Group's profitability before exceptional items to ensure that all assets are really needed and The Gry Maritha also performed well and her (including those referred to above) and are working appropriately for the company. return to work has been welcomed by Scilly. All figures for year ended 31 March 2019 4 ANNUAL REPORT 2019 ANNUAL REPORT 2019 5 ISLES OF SCILLY STEAMSHIP COMPANY LIMITED ISLES OF SCILLY STEAMSHIP COMPANY LIMITED Lyonesse Lady and Swift Lady continue to By way of a post balance sheet remark, I would serve the off islands and their resilience in also like to welcome the appointment of Judith adverse sea conditions is recognised by all. Piper (Chief Financial Officer) to the Board as The Board is not blind to the facts however, Executive Director with effect from 16 May these are ageing assets which require 2019 and most importantly the consolidation increasing amounts of money spending of Stuart Reid’s position as Chief Executive on them to maintain their seaworthiness. Officer (he was previously acting Managing Director) from 1 August 2019. To that end the Board has formed a new Committee to review the whole issue of I am convinced that we have a Board marine asset replacement. Taking into equipped to tackle the many obstacles that lie account the company’s financial position, between where we are now and a successful both current and prospective, and the best practise operation. views of a wide range of stakeholders, the Board will develop a clear strategy The draft Articles of Association which are for the replacement of these assets in proposed for adoption at the forthcoming the medium term. AGM include formal provision for term limits for directors to ensure that a refresh takes AVIATION place automatically in future. The challenges of running a small airline were initially masked during the year by Andrew May stood down at the end of the performance of the helicopter service. the Financial Year as foreshadowed at last With that issue being addressed the year’s AGM and I stepped into his shoes. magnitude of the task before us is clearer. Andrew has been a loyal servant of the Increased landing fees, pilot retention, company for 17 years and we wish him fuel price rises, weather induced cancellations: well with his new activities. all these things contributed to an operating loss of £552,323 for the year and that is The Board thanks the Advisory Board clearly not a sustainable position. To make which has contributed constructively matters even more critical, the Penzance throughout the year. We have discussed Helicopter operation is due to commence strategic issues with the Advisory Board in the Spring of 2020. and have received very helpful feedback. The Advisory Board has also raised more The Board recognises that competition practical customer related issues which we makes for increased choice for our customers have been able to respond to promptly. and intends to rise to the challenge, but in practical terms we will almost certainly see DIVIDEND an overall reduction in passenger numbers. The Board is not proposing to pay a dividend We will have no option but to tighten our for the last Financial Year. Whilst the belt accordingly. company does have distributable reserves, the Board feels that against the current The much anticipated EGNOS landing backcloth of a large extraordinary loss and system may give us some advantage over a poor trading performance, it would not the helicopter service, as will our lower fare be appropriate to make this gesture. structure and the reduced environmental impact of our fixed wing aircraft over the The Board recognises however that AW139 helicopter. shareholders should as a rule receive a commensurate return on their investment and GOVERNANCE will propose a suitable dividend policy at the The composition of the Board changed next Annual General Meeting. substantially over the course of the year with four new appointments in total. Joining Gary Randall (appointed August 2018), were Steve Hicks and Henk Wiekens (September 2018) and myself on 1 February 2019. The Board is determined to embrace best practice governance and a refresh of the directors Ian Howard TD is an important part of that. Chairman, 24 July 2019 6 ANNUAL REPORT 2019 ANNUAL REPORT 2019 7 ISLES OF SCILLY STEAMSHIP COMPANY LIMITED ISLES OF SCILLY STEAMSHIP COMPANY LIMITED BOARD OF DIRECTORS BOARD OF DIRECTORS STUART REID IAN HOWARD PETER HARDAKER JUDITH PIPER STEPHEN HICKS GARY RANDALL SAM HICKS HENK WIEKENS CHIEF EXECUTIVE CHAIRMAN VICE-CHAIRMAN CHIEF FINANCIAL OFFICER AND OFFICER Born on St Mary’s, Steve Gary was appointed to the Sam Hicks is from a Henk is a time served COMPANY SECRETARY Hicks was educated on the Board in August 2018 and longstanding St Agnes family. engineer who founded in Ian joined the Board on Peter Hardaker joined the Judith Piper joined the island and at Truro School is from St. Mellion, in east He was educated in Scilly, 1978 Weidewiek Boatbuilders Stuart joined Isles of Scilly 1 February this year becoming Board in 2003.