LLANGOLLEN Railway has issued an apology to customers who will "lose money" due to a "regrettable" situation with its finances.

The trust has been advised by its administrators’ lawyers that £30,000 placed in a separate bank account by the directors of the PLC trading arm, intended to cover sales of tickets, experiences, etc in advance, will have to be made available to the general body of creditors.

A spokesman said whilst this is "a very regrettable revelation" from its viewpoint, the trust also has "to acknowledge the administrators are only fulfilling their legal obligations."

The spokesman added: "Having made legal representation ourselves also, the administrators sought opinion from legal counsel and that opinion is unequivocal.

"The administrators will now be in touch with numerous customers fairly shortly to invite them to claim in the administration."

Phil Freeth, finance director, said: “We are very disappointed with this outcome and wish to extend our sincere apologies to all those customers of Llangollen Railway Plc who will lose money over this. At the same time we also have to acknowledge the administrators are only doing their job as the law dictates.

“The directors of the PLC didn’t do anything wrong particularly, it is fairly common practice to use advance sales and customer deposits to fund working capital.

"However, we can’t have this situation arising again if it can be avoided.

"One of the issues was the funds were only put into the separate account, very late in the day, from an overdrawn account.

"The directors of the new board of the Trust have therefore created a Sales in Advance Reserve in our books, cash-backed from an account substantially in credit, with immediate effect.

"It will therefore show in our audited accounts at the coming December year end and thereafter.

"This will cover advance sales at any one time and hopefully this early step will prevent any similar recurrence should the Trust fall into financial difficulties in future.”

The trust said it was decided to be "prudent" to withdraw its National Heritage Lottery Fund (NHLF) application to fund the post of general manager for two years.

The NHLF remains supportive, the trust said, but the organisation has "to work on governance, organisational structure, culture, strategic plan, business development plan, documented policies and procedures so as to establish firm foundations before they will entertain a further application."