Chief Pleas, which owns the company but enables it to act independently as its shareholder, held an emergency meeting on Wednesday evening, where it was agreed that the company would have its loan facility extended to the end of November.
Policy & Finance made clear that it expects significant changes in the company’s financial management very soon.
‘Despite extensive engagement, clear and timely financial information has still not been available to the standard Chief Pleas should expect,’ it said.
‘Weak financial reporting, outdated systems and delays in management information have made proper oversight significantly more difficult than it should have been, and the committee regards that as unacceptable.’
The committee stressed that the extension was not an endorsement of the current financial position.
‘It is a short, controlled step to protect Sark’s lifeline shipping service while requiring the board to produce reliable information, a credible revised agreement and a clear route towards capital repayment.’
P&F thanked the company’s crews and office staff for continuing to provide an essential service, but said the company needed to be better organised, better governed and better able to meet the island’s needs in future. And it was firm that the loan extension should not be misinterpreted.
‘This is a disciplined and practical decision, but no one should mistake it for satisfaction with the current position. Chief Pleas should not have found itself in a situation where such fundamental questions remain about the company’s finances and financial reporting.’
The short extension avoids immediate default and provides time for a revised agreement, including provision for capital repayment, to be proposed in time for Chief Pleas to consider it at the Budget meeting in November.
P&F said it did have confidence in the new non-executive directors it appointed earlier this year and was satisfied that they understood the seriousness of the position and what needed to change, and were taking a constructive and rigorous approach to addressing its concerns.
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