Headlines
BALANCED ON a financial knifeedge, the Llangollen Railway PLC was expected to go into receivership as this issue closed for press in mid-March. On March 1 the PLC said claims against it by creditors meant it had “invited” its banker, Nat West, “to appoint a receiver”. Two weeks later a receiver had not been appointed, although it is understood the option of Administration had been explored.
This follows a torrid three years for the PLC, with profits turning to loss and the collapse of its once well-regarded engineering department, leading to a perilous financial position. The PLC’s accounts show pre-tax losses of £330,601 (2018), £329,175 (2019) and £258,804 (2020). Its major assets are a Class 08, some plant and around 20 coaches.
In its March 1 statement the PLC says: “A number of significant engineering contract disputes, all of which arose in the years prior to the current board taking over in October 2020, have crystallised in the last few days. “The claims against the company are compelling and are in excess of £250,000. There is no prospect of meeting these liabilities, even over an extended period. As a result, the balance sheet is now insolvent to around £350,000, adjusting for intangible assets.”
The claims relate to disputes over the price and quality of work for at least two contracts: the overhaul of Bo’ness-based LNER D49 4-40 246 Morayshire and the construction of new-build LMS 4-6-0 Patriot 5551 The Unknown Warrior. Problems came to a head pre-COVID-19 in January 2020. The PLC raised £150,000 in an appeal to avoid going into administration. At the same time a damning independent report criticised the railway’s governance by the PLC and Trust boards, with issues over conflicts of interest and lack of suitable management/financial skills.
Despite a series of COVID-19 loans and grants, at the end of 2020 the PLC warned there was a “real risk of insolvency” due to £600,000 debts for steaming fees (two locos over three years), loans, creditors and the Llangollen Railway Trust (owed £90,000). The trackbed and buildings are owned by the local council. The Trust owns most fixed assets. Although the Light Railway and Transport & Works Orders are in the Trust’s name, the PLC operates the line. Now, the Office of Rail and Road (ORR) has withdrawn permission to run trains as the Safety Management System (SMS) is held by the PLC. Mel Holley