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Experts 'blow hole' in Ineos' claims over fin...

Experts 'blow hole' in Ineos' claims over finances

17 October 2013

Unite, accused Ineos of using 'fancy accounting manoeuvres' and expressed fury over the company’s demands at Acas talks to collude in what it believes is an inaccurate financial representation of the Grangemouth site aimed at slashing jobs, pay, pensions and skills. 

The union refused demands by the company to sign a legally binding agreement supporting PriceWaterhouseCoopers assessment of the company's accounts and the attempt to gag expert analysis which the union can reveal for the first time.

An analysis of Ineos accounts by tax experts show that Ineos ‘Chemicals’ expect to make profits of half a billion pounds in the coming years, blowing a massive hole in Ineos' claims that its petro-chemical operations are in serious financial difficulties at its site in Grangemouth Scotland.

The accounts also show that despite company claims of high employment costs; labour costs including pensions account for just under 17 per cent of total turnover. 

The company also claims the pension fund is in serious difficulties but fails to mention in press statements that the pension fund actually made a gain of £7.2 million in 2012.

On 4 October, Ineos announced that it had written down the value of its Grangemouth petrochemical assets to “nil value”. This valuation has been made public in Ineos' statutory accounts for the 2012 financial year, which have now been filed at Companies House. 

But Unite, Britain's biggest union has asked the tax expert Richard Murphy from Fulcrum Chartered Accountants to analyse the 2012 accounts and filings of Ineos Chemicals Grangemouth Limited. 

The accounts simultaneously paint both a gloomy and upbeat assessment of the company's finances and future profitability. According to Mr Murphy the accounts appear to be contradictory raising questions as to whether Ineos' auditors PricewaterHouseCoopers were right to sign-off the accounts. 

The company claims it is suffering difficult trading conditions and poor cash flows and has written-off the value of £389 million of plant equipment, some of which was invested in as recently as 2012. Ineos says the future profitability of the site cannot be assured and use the same doubt to write off a further £464 million of intra-group loans.

However, at the same time the accounts show sales in the last year increased by 50 per cent, gross profits grew by a margin of 20 per cent and operating profit grew by 56 per cent.

At the heart of the accounting contradiction lies the fact that the accounts paint such a pessimistic view of future profitability, they also claim that the company will be sufficiently profitable in future to realise deferred tax assets of £117 million. This requires more than £500 million worth of profits to be earned. 

Unite regional secretary, Pat Rafferty said:" We're astonished that Ineos attempted to legally gag Unite from exposing what we legitimately believe is the truth about the company's finances. This attempt to tie our hands has only increased our suspicions that Ineos is using fancy accounting manoeuvres to pull the wool over the country's eyes and treat us with contempt.  The workers at Grangemouth and the people of Scotland have a right to see the truth. Thousands of jobs and the country's economy depend on it.

" Ineos expects to make profits of half a billion pounds in the coming years, blowing a massive hole in the company's claims that there are serious financial difficulties at its site in Grangemouth Scotland. We believe The site has a great future and a great workforce. 

"The company gives the impression it is broke and it may need to close the Grangemouth site but we believe this is just a ploy to justify attacking its workforce and to demand government hand outs. 

"We are baffled by the company's claims of financial hardship. This leads us to believe that the company only wants to break the union and is using the innocent Stephen Deans and claims of financial hardship to do so.
"Our message to Jim Ratcliffe is that you have been found out. Your scheming will not work and you can be sure that Unite will not stand by and allow you to try to crush the union.”

ENDS

For more information, or to talk to Richard Murphy, contact Ciaran Naidoo on 07768 931 315

Notes to editors: 

  • Unite is Britain and Ireland’s largest trade union with 1.4 million members working across all sectors of the economy. The general secretary is Len McCluskey