Northern Rail finances for 2014

[northwichcat]

NORTHERN RAIL paid out dividends of £17.8m last year as revenues from passengers increased during 2014.

The company is a joint venture between Serco and Abellio and runs 2,500 train services through 464 stations every day across the north of England as part of its franchise agreement.

Northern Rail took £243.5m in passenger revenues in the 52 weeks to January 3, a 6.1% increase. However its income was badly hit by a £79.4m reduction in grants received from the Department for Transport, which was the dominant factor in a £74.1m fall in turnover.

This also affected its profitability, with pre-tax profits down 40% to £23.5m.

Northern Rail's franchise runs until April 1 next year, having had two small extensions, and the successful bidder for the next franchise is expected to be announced before Christmas.

The company Northern Rail Ltd will cease to trade at the end of the current franchise period, regardless of the Department for Transport's decision on the franchise operator, with the new franchise being operated through a different legal vehicle.

http://www.thebusinessdesk.com/nort...ail-owners-share-nearly-18m-in-dividends.html

Profits of Northern Rail Limited don't seem to gone down as much as some people were suggesting they would as part of the Direct Award.

I wonder how much of the extra revenue taken is down to additional off-peak ticket restrictions and the withdrawal of evening returns and how much of it is down to additional patronage and increased numbers of RPIs.

I don't think the RMT have seen this story yet as they've not made any of their usual 'greedy private company' comments.

 

[WatcherZero]

49.4% fall in operating profits from £35m to £17.8m, mainly because of £83.1m reduction in public grants. Farebox revenue up 6.1% or £14.8m. Results were released early October.

 

[thenorthern]

And the #NorthernFail tweeting passengers expect Northern Rail to be able to buy new trains with profit margins like that.........

 

[northwichcat]

49.4% fall in operating profits from £35m to £17.8m, mainly because of £83.1m reduction in public grants. Farebox revenue up 6.1% or £14.8m. Results were released early October.

Some people were predicting profits wouldn't even be close to £10m as a result of the Direct Award conditions.
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And the #NorthernFail tweeting passengers expect Northern Rail to be able to buy new trains with profit margins like that.........

Northern probably have made at least £150m in profits over the course of the franchise.

If they'd had a crystal ball then spending £150m on rolling stock would have bought around 110 diesel Turbostar carriages, they would have saved a fortune in leasing costs, had a much better reputation with passengers and had very valuable assets available to sell on at the end of the franchise. It seems without the crystal ball TOCs won't take risks with their profits.

 

[HH]

Some people were predicting profits wouldn't even be close to £10m as a result of the Direct Award conditions.

Northern probably have made at least £150m in profits over the course of the franchise.

If they'd had a crystal ball then spending £150m on rolling stock would have bought around 110 diesel Turbostar carriages, they would have saved a fortune in leasing costs, had a much better reputation with passengers and had very valuable assets available to sell on at the end of the franchise. It seems without the crystal ball TOCs won't take risks with their profits.

1. It seems that DfT weren't very good at negotiating in any of the DAs. If you are surprised, I have a great bridge over the Thames going cheap.

2. Profit levels were fairly high. but not huge over the franchise length; from what I hear Abellio wanted to plough more back into the railway, but Serco wanted the money...

3. You don't simply spend £150m on rolling stock. I'm sure that you know it's an awful lot more complicated than that. Without a DfT undertaking, at what point is any sensible operation going to commit to spending that sort of money? They don't have a crystal ball, and long-term they might not have a use for the RS.

Basically the DfT is not fit for purpose. Maybe they should privatise it.

 

[WatcherZero]

Also you could blow the £150m on rolling stock, but then they wouldn't have made any profit in the 12 years they had been running the franchise. An average of £10m profit a year in a company with a turnover of well over £500m is hardly excessive, about 2% profit margin after financing costs and the interest on the bonds they will have had to put up.

 

[northwichcat]

£150m is an estimate of their accumulative profits so far, I've not worked out the exact figure, it could actually be much higher than that. Obviously they could have ordered a smaller quantity of rolling stock if they had chosen to invest in rolling stock. £150m could have replaced the Newton Heath 142s but it would have been much cheaper to replace the 153s in the Northern fleet. However, I gave the in response to the claim that pre tax profits of £23.5m wouldn't buy much rolling stock.

I recall there was a disagreement between NedRailways (as they were then known) and Serco before the franchise even started over whether the low cost DMU CSRE had produced designs for was a viable Pacer replacement.

 

[WatcherZero]

During the franchise they were still interested in the Chinese Sprinter clone (they had aquired blueprints when they bought a british maintenance firm) and were willing to host a trial unit since a new manufacturers unit would require trial to validate but despite saying they were sending two trial units to the UK they never did.

 

[HH]

£150m is an estimate of their accumulative profits so far, I've not worked out the exact figure, it could actually be much higher than that. Obviously they could have ordered a smaller quantity of rolling stock if they had chosen to invest in rolling stock. £150m could have replaced the Newton Heath 142s but it would have been much cheaper to replace the 153s in the Northern fleet. However, I gave the in response to the claim that pre tax profits of £23.5m wouldn't buy much rolling stock.

It probably was much higher. They were making 5-6% towards the end of the franchise IIRC. The problem is that all Northern would get from investing in rolling stock at that stage is a much lower profit, unless DfT section 54 it, which they appear to no longer want to do.

In any case if DfT and Network Rail hadn't lashed everything up there could have already been new, electric rolling stock running by now.

 

[daccer]

An £80m cut in subsidy in one year seems an awful lot to absorb. Was there a reduction in track access or some other counterbalancing actor did Northern really manage to achieve this and maintain services levels. What does their subsidy profile look like going forward?

 

[WatcherZero]

Yes track access was recalculated for the new control period and saw a healthy drop at Northern (though many argued they had been unfairly paying too much anyway), there was also increases in fare revenue from organic growth and the Government ordering them to implement the evening peak restriction which was supposed to raise another £30m a year in revenue.

Their network grant fell from 25.7p per passenger mile to 17.6p and their operating subsidy fell from 25.8p to 16.6p. All together about a 1/3rd drop in public support. With franchise premiums and revenue clawbacks the net cost to government fell from 7.8p per passenger kilometre to 4.9p.

 

[daccer]

Many thanks for the reply. A one third reduction in support in one year is pretty good/bad depending on your standpoint. Is this reduction due to carry on going forward?

 

[WatcherZero]

Network grant will carry forward until the end of the control period. Subsidy/premium will depend on the winning bid and will change at the end of the rranchise. Normal profile of a franchise is that net subsidy increases in the early years while the new franchisee is investing and is lower than before from the mid-end of the franchise length as the investment produces higher returns.