The BWML disaster
PERHAPS it was just coincidence that Canal & River Trust (CaRT) marina subsidiary BWML's 2013/14 results were published just before the Trust advertised for a new Financial Director to replace Philip Ridal, writes Allan Richards.
Then again, Philip Ridal is a director of BWML and it was his proposal, which was accepted by British Waterways board, that it should invest heavily in its subsidiary such that it could ‘expand by acquisition'.
Sums completely wrong
Having encouraged developers to build new marinas with promises of excellent returns on their investment due to demand for moorings outstripping supply, British Waterways was faced with the dilemma that their sums were completely wrong, very quickly realising there was a surplus of marina moorings in many parts of the country.
Ridal's plan was to cash in on competitor marina operators' problems of empty berths by buying marinas cheaply in a depressed market, obtaining residential planning permission and then marketing these residential berths (for which CaRT believed there was is still a strong demand) at a premium. British Waterways board approved his plan and agreed to provide up to £4m initially to buy failing marinas.
Operating plan
CaRT's 2012-2015 Operating Plan stated that a growth area for BWML was obtaining residential planning permission for some 450 berths. It forecast that, in the financial year 2013/14, BWML's turnover would be £7,644,000 and it would make a contribution to CaRT of £1,363,000.
However BWML's annual report gives turnover as just £6,552,939 (over £1m less than plan) and, more importantly, the contribution made to CaRT was nothing.
That's right, BWML's 20 marinas and 3,327 berths contributed absolutely nothing to CaRT last year rather than the almost £1.4 millions predicted!
Down, down, down
Revenue from moorings, retail, boat management, brokerage, marina services (i.e. repairs/lifting) and caravan permits were all down on 2012/13. Only property rents were up slightly.
Having invested quite heavily in boat management schemes in the past, CaRT pulled out of this market completely and income for last year was—zero.
Yet, despite BWML's abysmal performance, the Trust seems hell bent on throwing good money after bad. It invested another £1m in BWML last year bringing total investment to a staggering £13.5m.
Reward for failure
The bottom line is BWML has been in existence for ten years. CaRT now have £13.5m invested in it. Last year, instead of BWML making its planned profit of £1.4m and returning that profit to CaRT, it made a post tax profit of just £77,210 none of which was returned.
Despite this financial disaster, BWML's Managing Director, Derek Newman, had his salary increased from £92,626 to £97,182. Perhaps it's just as well that he decided to take responsibility for the companies abysmal performance and resign.
But will Philip Ridal also take responsibility for BWML's performance? Not a chance! He will just quietly retire being replaced by a new financial director on less salary with the board thanking Philip Ridal for his years of service and perhaps giving him a financial inducement to leave.