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Guernsey's £26m ferry loan: interest payments decline and paper profits confirmed

Guernsey's £26m ferry loan: interest payments decline and paper profits confirmed
  • Guernsey States received £941,000 in loan interest from Condor VesselCo in 2025, down from £1.36m in 2024
  • The outstanding loan balance stood at £22.667m as of December 31, 2025, with final repayment now scheduled for 2042
  • States recorded £546,000 accounting surplus from its 50% ownership, but no actual cash dividends were paid out
  • Collateral with fair value of £35.4m protects public investment if Condor VesselCo defaults on repayment obligations
  • The Islander ferry is currently leased to Brittany Ferries, Condor's parent company, as part of joint venture arrangement
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The States Annual Accounts have provided an insight into the financial performance of its multi-million-pound investment in the Islander ferry.

In 2023, the States and Condor invested £3m. each in a joint venture to buy the boat, with the government also loaning £26m.

The outstanding balance of this loan stood at £22.667m as of 31 December 2025.

This money was provided to the joint venture, Condor VesselCo Limited, from the proceeds of the States’ 2014 Public Bond and is scheduled for final repayment in 2042 - seven years later than initially agreed after the previous Policy & Resources Committee changed the terms.

The Islander is currently leased to Brittany Ferries, which is Condor’s parent company.

Financial returns: cash vs. accounting surplus

The investment generated two distinct types of financial return for the taxpayer in 2025:

Actual cash income: The States received £941,000 in loan interest payments from Condor VesselCo during the year. This is a decrease from the £1.36m received in interest during 2024.

Accounting surplus: Through its 50% ownership of the company, the States recorded a £546,000 share of the company's operating surplus. However, the accounts clarify that this is an accounting entry under the "equity method"; no actual dividends or cash distributions were paid out by Condor to the States during 2025.

Protections in place

While the investment carries inherent risks, the accounts highlight safeguards in place to protect public money.

The States currently holds collateral against the debt with a fair value of £35.4 million.

This collateral can be enforced to satisfy the debt if Condor VesselCo fails to meet its contractual repayment obligations.

Furthermore, the States’ 50% share of the company’s total net assets is now valued at £3.7 million, up from £3.15 million the previous year.

The bigger picture

This investment is part of a broader strategy where the States uses its bond proceeds to provide "on-lending" to commercial and infrastructure projects.

Along with the Condor loan, the States manages similar arrangements with the Guernsey Housing Association (£69.4 million) and JamesCo 750 Limited (£5.9 million), which until earlier this year owned the fuel tankers - a confidential deal was announced in April to sell them.

In total, the States’ share of the surplus from its equity-accounted investments (of which Condor VesselCo is the primary component) rose to £547,000 in 2025, nearly doubling the £289,000 recorded in 2024.

Key terms

equity method
An accounting technique used when one entity owns a significant stake (typically 20-50%) in another company. The investor records its share of the company's profits or losses on its own accounts, even though no actual cash changes hands unless dividends are paid.
This is why the States can show a £546,000 profit from Condor VesselCo on paper in 2025, even though they received no actual dividend payments from the joint venture during that year.
Public Bond
A debt security issued by a government to raise money from investors. The government borrows money from bondholders and promises to pay it back with interest over a set period.
The States of Guernsey issued a Public Bond in 2014 and is using the money raised from it to provide loans to the ferry joint venture and other local infrastructure projects like the housing association.
on-lending
When a government or institution borrows money (often at favorable rates) and then lends that money onwards to other organisations, typically at a slightly higher interest rate. The difference between borrowing and lending rates can generate income.
The States is using this strategy with its 2014 bond proceeds to finance the Condor ferry loan, Guernsey Housing Association projects, and the fuel tanker purchase, totaling over £100 million in loans.
collateral
An asset pledged by a borrower to secure a loan, which the lender can seize and sell if the borrower fails to repay. It reduces the lender's risk by providing a backup source of repayment.
The States holds collateral worth £35.4 million against the £22.7 million outstanding ferry loan, providing taxpayers with protection if Condor VesselCo cannot repay the debt.
joint venture
A business arrangement where two or more parties agree to pool their resources and share ownership, profits, and losses of a new enterprise. Each party contributes capital and shares control of the venture.
The States and Condor each invested £3 million to create Condor VesselCo Limited as equal 50-50 partners to purchase and operate the Islander ferry, with the States also providing additional loan financing.
equity-accounted investments
Investments in other companies where the investor has significant influence (usually 20-50% ownership) and uses the equity method of accounting to record its share of profits and losses rather than just dividend income received.
This accounting category primarily captures the States' 50% stake in Condor VesselCo and shows how the government tracks returns from its commercial partnerships, with total surpluses nearly doubling from £289,000 to £547,000 in 2025.

Q&A

Q: How much interest did Guernsey States receive from the Condor ferry loan in 2025?
A: The States received £941,000 in loan interest payments from Condor VesselCo during 2025, which represents a decrease from the £1.36 million received in 2024.

Q: What is the difference between the cash income and accounting surplus from the ferry investment?
A: The cash income of £941,000 represents actual interest payments received, while the £546,000 accounting surplus is a paper entry reflecting the States' 50% ownership share of the company's operating surplus. No actual dividends or cash distributions were paid out by Condor to the States during 2025.

Q: What protections are in place to safeguard the public investment in the ferry?
A: The States holds collateral against the debt with a fair value of £35.4 million, which can be enforced if Condor VesselCo fails to meet its contractual repayment obligations. Additionally, the States' 50% share of the company's net assets is valued at £3.7 million, up from £3.15 million the previous year.

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