A financial analysis of Gozo Channel Company Limited

Abstract

The aim of this long essay is to analyse the financial performance and position of the Gozo Channel Company Limited over the five year period 2010 to 2014. This is achieved through a mixed methodology since the documentary analysis of the company's financial statements are supported by qualitative data collected from one-to-one in depth interviews with the management of the company. Ratio analysis is used to analyse the financial data. SWOT analysis is also used to take into consideration nonfinancial factors affecting the operations of the company. The findings show that Gozo Channel Company Limited is highly dependent on the Public Service Obligation, as it represents the subsidy given from the government, to Gozo Channel Company Limited; as a refund for the costs incurred to Gozitans and elderly ferry tickets and rebates to variable costs incurred for night and cargo services. Gozo Channel Company Limited still has a long road to travel to curb its expenditure and become a profitable and effective operation. Figures for the year 2014 which shows a reduction in costs due to a low record of gasoil prices and a substantial increase in revenue owing to a high surge in patronage, are making it possible for the company to generate more profits. The SWOT analysis confirms that the company has a vision in respect to its mission. However, GCCL ought to prepare some sort of contingency plan and seek alternatives that could replace any reduction in operations, especially by the threat it is facing of a tunnel between Malta and Gozo. Another financial risk that GCCL will encounter arises from the expiry of the current Public Service Obligation agreement in 2017. This risk is exacerbated because of potential competitors in the market. This makes contingency planning for the future extremely important for GCCL. This study is vital because Gozo Channel Company Limited is a Government owned entity. Ultimately, the taxpayers are the shareholders and thus the general public has a vested interest.