There are two good things to say about the publication two weeks ago of Cairngorm Mountain (Scotland) Ltd (CMSL’s) accounts (see here) for the year ending 31st March.  The first is that they were made public just four months after the end of the financial year, well before the nine month deadline for private companies.  The second is that the £2m Highlands and Islands Enterprise has sunk into CMSL over the last year to keep it afloat attracted attention from a national newspaper (see here).  The accounts themselves are a sham and provide evidence for the degree of government complicity into what’s going on at Cairn Gorm.

The headline position is that despite earning only  £215,736, almost £1m less than the previous year, and despite retaining the services of 53 staff, just 8 fewer than the previous year, CMSL made an operating profit of £15,871. This compares to a loss of £1,006, 819 the previous year.  How did they manage that you might wonder?

The explanation for this apparent turnaround in CMSL’s financial fortunes is that the Scottish Government now appears to have decided to fund the company directly through HIE:

This change in the way HIE/the Scottish Government are supporting CMSL financially is significant.  It is an acknowledgement that the money HIE has pumped into CMSL since November 2018 is effectively worthless.  The amount HIE has “invested” in CMSL as “share capital”, £1,060,952 is way more than the company’s net assets of £54,133,.  Meanwhile the only reason this year’s accounts show CMSL paying back HIE £15,871 in loan interest is because they made an operating profit of that amount from all the revenue funding provided by HIE!  An accounting sleight of hand   The change to revenue funding, therefore, is a tacit acknowledgement by  both HIE and the Scottish Government that HIE’s shares are valueless and the loans will never be repaid.

Rather then lending CMSL yet more money, which would have increased its liabilities and raised serious questions about CMSL being a “going concern” under UK Company law, HIE and the Scottish Government decided to subsidise the company directly.  £1,507,763 of this subsidy is recorded as Revenue Grant under “Other operating income”:

This was not all.  There is a further £49,757 recorded as “Release of deferred grant income” while, under Note 12 to the accounts, which is headed “Deferred Income”, it turns out that actually CMSL received £1,775,330  in the year but £267,567 of this was not recorded under operating income:

The £267,567 of deferred income looks suspiciously  close to the £289,187 received from the UK Government to pay for furlough.  It appears therefore that HIE may have committed £1,775,330 to CMSL last financial year to keep staff in a job before realising they could claim some of this back from the UK Government.  Whatever the case, CMSL and its workforce appear privileged unlike almost any other in Scotland.

Before Britain left the European Union government subsidy on this scale might have risked a legal challenge to Brussels under the state aid rules.  These were designed to stop government favouring one business over others; in this case Cairngorm before the other ski centres in Scotland.

Rather than being honest about the costs of operating Cairngorm Mountain and accounting for the costs within its own accounts,  it’s in the interests of both HIE and the Scottish Government to manage Cairngorm through a separate company.  This means that anyone who wants to understand what is really going on has to scrutinise two sets of accounts, CMSL’s and HIE’s.  HIE can then pay accountants and lawyers to obscure what is really going on, while keeping everything squeaky clean in terms of company law:

The cost of this charade is secret but CMSL’s business plan for 2020-23 (see here) did reveal that:

One might have thought that being on the Board of CMSL must be one of the lowest risk company directorships in the UK given HIE’s blank cheque book. With no financial risks to account for, all there is for the Directors to do is spin over the current problems at Cairn Gorm and the events of the last year:

Note the implication, that if it hadn’t been for Covid, CMSL would have earned a lot more income.  That is simply not true.  With the funicular broken and ski uplift either removed or abandoned, there never would have been a winter season in 2020-21.

Perhaps HIE’s munificence has made the Directors rather casual because they included this statemen in the accounts for 2020-2021:

These works only got underway well after the end of the financial year.  Work on installing the new tube slides appears to have started in June (see here) while the long-awaited masterplan for Cairngorm (see here), on which Parkswatch is still to comment, was published on 2nd June.  All next years news! But during a year in which CMSL did little except slope smoothing (see here) – no mention of that disaster or the powerlines that were cut through in the process in the accounts – CMSL had to say something.

(As an aside, as parkswatch predicted, having established the principle of development through a temporary planning application, at the end of July CMSL applied (see here) to extend the temporary planning consent for the tube slides, which was due to expire on 1st November, until 15th June 2026. Having earmarked the former lower Coire Cas car park as an “Adventure/Play Zone” in the new masterplan, CMSL will be confident they have now ticked all the planning boxes for the development to stay.  Whether it will last five years, in the harsh environment of the Coire Cas car park, is another issue entirely).

It would be wrong to see CMSL’s accounts this year as an aberration, a consequence of the funicular breakdown.  They are a foretaste of what it to come.  HIE’s business case for repairing the funicular (see here), having taken account of the costs of repair and projected running costs, predicted a deficit of income over expenditure of £73.09m over the next 30 years.  The cost of repair will be met by HIE so that won’t appear in CMSL’s accounts.  But that still means, on the current business model, that CMSL could lose over £1m a year, year in, year out and may well need that amount in ongoing revenue support from HIE.  That money could be spent far better elsewhere in the Highlands but there is no chance of that happening while HIE own the Cairngorm Mountain Estate.