Taxpayers have dumped huge amounts of money on many of the largest companies through the compensation system, but this is not the only form of public waste that has diverted money from society to business owners.
Swedish hotel chain Scandic has received a lot of support for the Corona virus Owner’s Quarterly Report He explains that the company also has an additional profit of NOK 175 million just from the sale of unused hotel rooms to the Norwegian state.
The company that wants to get the most money out of the treasury has a fundamental problem. In the media, it is important to appear as if the situation is completely black and the company is bleeding in order to get more sympathy and money. But in the report to the owners, it is important to show that you are good at making money, and therefore it is not tempting to hide profits.
So, even though Scandic sends redundancy notices to employees every time they need sympathy in the media and say big words about how dramatic the situation is and that it is necessary to put in place schemes that really work (DN 16 Dec), the situation is far from bad. So far this year, the company has generated an operating profit (before depreciation etc., ebitda) of NOK 379 million in Norway, giving a higher operating margin this year compared to the two previous years to the pandemic.
In the same time period, the company received more than 160 million tax kroner through the compensation scheme, but the latest quarterly report reveals an even bigger boost from the treasury – a gain of 175 million for unused rooms set aside for quarantine hotels in Norway.
In a situation where almost all hotel rooms are empty, it is curious how the country was able to participate in an agreement where they also have to pay for the rooms you don’t use.
The scope of this scheme could be greater. When a single player earns $175 million exclusively for empty rooms, how much is spent on the industry as a whole?
Big hotel chains are already some of the biggest recipients of coronavirus support. It is not clear whether the large payments for empty rooms is an additional support scheme for hotels or whether it is due to miscalculation by the state.
Politicians and the media have a responsibility to understand that companies intentionally use media coverage to gain sympathy and money. The next time a business asks for money, you may want to check the information they themselves give the owners before opening the bag of money.
For the largest companies, it is often better to read the quarterly reports, since they provide information from the same year, but it is easy to check the results of all companies from the last year, for example on Proff.no. In recent weeks, media across the country have covered companies complaining of their exposure to the pandemic. Many of these companies have made big profits in 2020, and this information is available to everyone via a quick search.
It is to be hoped that companies receiving government aid in the future will be closely scrutinized, and one can especially hope to pursue a scheme of spending large sums on unused hotel rooms.
On the other hand, the general compensation system has already been examined and criticized a lot, and in the new version some criticisms were taken into account. Going forward, there will be a condition that profit-making companies do not receive Corona support. This is basically fine, but then it will be very important to check the accounts carefully.
There are ways companies with good profits can use – for example related to revaluation of assets – to make the result negative even if the earnings are already good.
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