Rather than losing money, as the company claim, the chemical plant at Grangemouth delivered £7million in profits last year, analyst Richard Murphy told the Daily Record.
Murphy said: “It is like buying a car. You can spread the cost over 10 years, you don’t spread the cost over a day.
“That is not the way I would recognise accounts to be done normally.
“The accounts are figures which are hard to understand.
“If we actually look at the accounts of the chemicals operation for 2012, the actual basic profitability, it made £7million. The year before, it made £6million. That is basic trading.
“What they did was quite unusual.
“They said they were facing major financial difficulties. They then said they were going to write off£390million of plant and equipment at the site. That is extraordinary.
“But Ineos chemicals was not loss-making.
“They then said, if we write off this sum, we won’t be able to pay off the money we have borrowed from other Ineos companies. So they were released from repaying loans of £464million.
“The net effect was they made a gain, they actually made an exceptional profit. Ineos said, you don’t have to repay the loans, so the loans they wrote off were greater than the assets.
“The net effect was they made a profit on the write-offs of £69million.
“As a result of the write-offs, they also did something else. They reckoned they had a tax credit of £79million.
“We have two conflicting stories. One is that the company were doing badly. On the other side, they are saying we are going to recognise we have got deferred tax assets.
“That means they think they are going to get profits in the future.”
Murphy added: “Using their numbers, they think they are going to save £117million in tax in future, at the rate of Corporation Tax they use in their accounts. That means they are expecting to make more than half a billion pounds in profits.
“The plant now has no more assets to write off, the loan has been written off. And actually, that massively improves the profitability of the site.
“I think there is an odd story in those accounts.
“The future of this company at the chemical plant could be quite profitable. It could make quite a
lot of money.
“How do you reconcile that, what’s going on here?
“They are using accounting rules I don’t recognise. They are using numbers I can’t find in any actual published accounts.”
Murphy said he would not have signed off the accounts.
He added: “There looks to me here to be a profitable plant. Why they want to close it, I don’t know. Are they preparing the business for sale? I just don’t know.”
In MurphyWorld Ineos writing off £464 million it had lent to a subsidiary is actually a profit.
Actually, what’s truly amusing here is that the world’s greatest advocate for proper and full corporate accounting decides not to use proper and full corporate accounting when Unite asks him to cobble something together. He’s looked only at the effects on the accounts of that specific subsidiary and entirely ignored the effects (ie, the loss of that £464 million which will now never get paid back) on the corporation as a whole.
Shameless, quite shameless.