Shareholders payout

[northwichcat]

The below was mentioned in a story about why East Coast should remain in public ownership:

The three top payers of dividends - Northern Rail, Transpennine Express and Virgin Trains paid out £97m to shareholders last year.

What's interesting about that statement is Northern and TPE are two of the most heavily subsided franchises so I think it shows that they need to be high priority for re-letting so that both the subsidy is reduced and that is a requirement to do more with capital such as station and rolling stock improvements.

 

[dk1]

The below was mentioned in a story about why East Coast should remain in public ownership:



What's interesting about that statement is Northern and TPE are two of the most heavily subsided franchises so I think it shows that they need to be high priority for re-letting so that both the subsidy is reduced and that is a requirement to do more with capital such as station and rolling stock improvements.

But isn't the payout from the 'parent' companies not from individual TOCs?

 

[northwichcat]

But isn't the payout from the 'parent' companies not from individual TOCs?

Wouldn't it be from Northern Rail Limited, First/Keolis TransPennine Limited and West Coast Trains Limited who don't do anything besides running franchised rail services opposed to Serco PLC, Virgin Group Limited, Stagecoach PLC etc.

I recall Northern Rail Limited's annual profits were £20m a couple of years ago so with TPE and Virgin having a better financial standing than Northern £97m in total across the 3 limited companies sounds feasible.

 

[dk1]

Wouldn't it be from Northern Rail Limited, First/Keolis TransPennine Limited and West Coast Trains Limited who don't do anything besides running franchised rail services opposed to Serco PLC, Virgin Group Limited, Stagecoach PLC etc.

But don't you buy shares in First Group, Keolis etc not in particular train operating companies? You would be hard pushed to buy shares in Abellio though.

 

[northwichcat]

But don't you buy shares in First Group, Keolis etc not in particular train operating companies? You would be hard pushed to buy shares in Abellio though.

You can buy shares in any limited company whether it be a Ltd or a PLC. The difference is you'll have difficulty in buying shares in a Ltd unless you're known to the board and they want you to buy shares.

The latest public figures show First/Kelios Transpennine Limited's annual profits as £27.9m, with First Group PLC making a loss of £1bn so I don't think just being a shareholder of First Group PLC will have got you a payout. (It also explains why First Group have made significant changes to their bus operations.)

 

[dk1]

You can buy shares in any limited company whether it be a Ltd or a PLC. The difference is you'll have difficulty in buying shares in a Ltd unless you're known to the board and they want you to buy shares.

The latest public figures show First/Kelios Transpennine Limited's annual profits as £27.9m, with First Group PLC making a loss of £1bn so I don't think just being a shareholder of First Group PLC will have got you a payout. (It also explains why First Group have made significant changes to their bus operations.)

I have shares in most major UK rail parent companies but none in individual franchises that come & go like the weather.

 

[gazthomas]

Dividends feed peoples pensions. No profits no pensions.

 

[northwichcat]

Dividends feed peoples pensions. No profits no pensions.

For larger companies (which includes TOCs) having a pension scheme on offer to employees is now mandatory and it's only the employee not the employer who can choose to opt out of it. So pension payments are now in the same category as employer's PAYE - the employer has to pay it unless they are insolvent.

 

[Emyr]

Dividends feed peoples pensions. No profits no pensions.

Dividends feed private pensions, who have plenty of private sector in which to invest.

 

[Monty]

Dividends feed private pensions, who have plenty of private sector in which to invest.

So anywhere so long as it's not the railway?

 

[Tetchytyke]

Dividends feed peoples pensions. No profits no pensions.

Ah, that old chestnut. That's normally the first piece of gibberish to come out of the greedy directors' mouths when obscene profits and managerial troughing gets highlighted. "It isn't the fat cat directors making the money, it's your pension". What nonsense. Of the £1bn in dividends released by Stagecoach plc in the last decade, over a third of it ended up in the pockets of two people: Brian Souter and Ann Gloag. Last time I checked, Ms Gloag did not own and run my pension scheme.

Leaving that aside, there are plenty of other opportunities for pension funds to invest their members' subscriptions, it doesn't need to be in an industry that should never have been privatised.

The facts are simple: EastCoast is the only TOC that is making sensible money for the Government, and the Government want to sell it for a pittance. It goes to show that they have absolutely no intention of learning the lessons of the Royal Mail fiasco, or the Railtrack fiasco. All they are interested in is making sure that my hard-earned wedge ends up in the pockets of their banking chums, and the fraudsters and killers at Serco plc.

 

[Emyr]

So anywhere so long as it's not the railway?

Anywhere so long as it's not in public services or government-managed monopolies.

 

[LateThanNever]

Ah, that old chestnut. That's normally the first piece of gibberish to come out of the greedy directors' mouths when obscene profits and managerial troughing gets highlighted. "It isn't the fat cat directors making the money, it's your pension". What nonsense. Of the £1bn in dividends released by Stagecoach plc in the last decade, over a third of it ended up in the pockets of two people: Brian Souter and Ann Gloag. Last time I checked, Ms Gloag did not own and run my pension scheme.

Leaving that aside, there are plenty of other opportunities for pension funds to invest their members' subscriptions, it doesn't need to be in an industry that should never have been privatised.

The facts are simple: EastCoast is the only TOC that is making sensible money for the Government, and the Government want to sell it for a pittance. It goes to show that they have absolutely no intention of learning the lessons of the Royal Mail fiasco, or the Railtrack fiasco. All they are interested in is making sure that my hard-earned wedge ends up in the pockets of their banking chums, and the fraudsters and killers at Serco plc.

Very well said. Nobody seems to be learning that 'Private is Good Public is Bad' is not a sufficient maxim in government!

 

[gazthomas]

We all have different politics - makes life more colourful!

 

[AngusH]

Whether public or private ownership of transport is better is something I've often wondered, and it really needs a solid analysis done by someone who is wholly unbiased. (Could be difficult to find such a person )

However I'm somewhat unhappy with figures like this, out of context and combining several different things together.


As a data point the latest interim report from First Group PLC, appears to indicate that they made an operating profit on UK rail of (£) 32.8 million on revenues of (£) 1395.2 million for the 6 months ending 30th Sept 2013.
Which is stated to be a 2.4% margin.

Year to 31 March 2013 stated 1.4% margin on slightly worse numbers

This doesn't seem very profiteering to me ...

see page 3: http://www.firstgroup.com/assets/pd...stgroup-half-yearly-financial-report-2013.pdf


(If I've misread the figures I welcome corrections)

[edit millions on the total revenue figure]

 

[Tetchytyke]

the latest interim report from First Group PLC, appears to indicate that they made an operating profit on UK rail of (£) 32.8 million on revenues of (£) 1395.2 million for the 6 months ending 30th Sept 2013. Which is stated to be a 2.4% margin.

Year to 31 March 2013 stated 1.4% margin on slightly worse numbers

This doesn't seem very profiteering to me ...

We're not talking about margins of 20% in the rail industry, those levels of profits are reserved for deregulated buses. But 2.4% profit, coming out of my pocket (as both a fare-payer and a taxpayer), and for what? The trains to be painted purple?

And that's before we consider the rampant profiteering in other sectors of the industry, the ROSCOs in particular.

My season ticket went up by 4% this year, and it is being used to pay these fat cats their dividends. My wage increase? £100 and don't spend it all at once.

 

[Clip]

My season ticket went up by 4% this year, and it is being used to pay these fat cats their dividends. My wage increase? £100 and don't spend it all at once.

Yes, thats exactly what it is being used for. :roll:

 

[Tetchytyke]

Yes, thats exactly what it is being used for. :roll:

Less of the sarcasm, it is exactly what the money is being spent on. Income - expenditure = profit.

Unless Giles Fearnley has a magic money tree that he's not told any of us about?

 

[Clip]

Less of the sarcasm, it is exactly what the money is being spent on. Income - expenditure = profit.

Unless Giles Fearnley has a magic money tree that he's not told any of us about?

Ok then seeing as you dont like sarcasm and think you know what you are talking about, please show me the facts to back up your claim that the 4% rise in your fare is going directly to pay the alleged fat cats and thier dividends.







.....

 

[Tetchytyke]

Ok then seeing as you dont like sarcasm and think you know what you are talking about, please show me the facts to back up your claim that the 4% rise in your fare is going directly to pay the alleged fat cats and thier dividends.

Lets have a look at the accounts for my local TOC, London Midland, and their parent Go-Ahead.

http://www.go-ahead.com/~/media/Fil...statistics-and-financial-summary-20022014.pdf

As you will note, overall profits at Go Ahead's Rail division rose by a whopping 56.7% compared to the previous year. This has sent the dividend payments soaring to a final figure of 81p per share at the end of the 2013 financial year, off a profit of 117p per share.

Approximately 70% of profits generated by Go-Ahead go to their fat cats in dividend payments.

Underlying debt levels at Go-Ahead have increased, so it is clear that the profits are not being invested in the business. So there goes the argument that "higher fares means better trains".

In this same period, the regulated rail fares rose by 4.2% in 2013 and 3.1% in 2014. Fares for Go-Aheads customers in Kent faced rises even higher than this, with increases of almost 6% in 2013. Income - expenditure = profit, and the greedy fat cats at Go-Ahead are making plenty of juicy profit.

Someone is doing very well out of the privatised railway industry. Sadly it isn't the passengers, who are getting ripped off to pay the dividends and bonuses to the fat cats. I guess we're "investing" in something, it's just a shame it's some greedy banker's second yacht.
Never mind, we're all in it together.

 

[LBSCR Times]

Lets have a look at the accounts for my local TOC, London Midland, and their parent Go-Ahead.

Someone is doing very well out of the privatised railway industry. Sadly it isn't the passengers, who are getting ripped off to pay the dividends and bonuses to the fat cats. I guess we're "investing" in something, it's just a shame it's some greedy banker's second yacht.
Never mind, we're all in it together.

Yes, a lot of whom are rail staff of all grades.
They invested money in Go-Ahead and then bought shares in their company.

 

[Andrewlong]

I wish everything was so black and white! Should NR not use private sector companies because although they help out NR with workload/expertise - they make a profit!

Those setting franchises should demand more innovation and there should be real competition/choice on a route. Plus competition on fares. Trouble is what you tend to get is same service different colour carriages.

Those denigrating the private sector overlook the impact on our daily lives whereby it be getting food to supermarket shelves, low cost airlines and the mobile phone/internet revolution. Should the state run these either ?
--- old post above --- --- new post below ---

Yes, a lot of whom are rail staff of all grades.
They invested money in Go-Ahead and then bought shares in their company.

BT employees did the same and made substantial profits too. Fat cats as well I suppose ?

Nothing wrong with employees sharing in the success of your own company. I put down the deposit on my current house in the late 90s with the capital gains on my then employers share price. I must be a fat cat too!

 

[Tetchytyke]

Those denigrating the private sector overlook the impact on our daily lives whereby it be getting food to supermarket shelves, low cost airlines and the mobile phone/internet revolution. Should the state run these either ?

There is nothing wrong with the private sector in the right setting.

There is nothing wrong with the public sector in the right setting.

I don't think the private sector should be operating where there is an inherent monopoly, and where that monopoly can't realistically be eradicated. As we've seen with water rates, with the electricity and gas markets, and with train fares, where there is no natural competition the private sector simply ramps up prices to grotesque levels, simply to provide income to the fat cats. BT did the same in the telecoms market until the regulator made their Openreach division behave properly. And as the mobile telephone market has contracted into three big players, we're seeing worse service and the rise of unfair contract terms allowing price increases within the fixed contract period.

It's interesting you talk about private contractors within Network Rail. Network Rail are regularly criticised for their inability to get good value from their contractors, with engineering, maintenance and upgrade work all costing far more than it should. The ORR are the National Audit Office have both said this. Again, where there is a lack of genuine competition, the private sector goes for the highest price it can, not the fairest price. If they did this work "in house" it would probably be significantly cheaper, just as it was in BR days. Compare and contrast the cost of the ECML upgrade in the late 90s and the disastrous and incomplete WCML upgrade a decade later.

The private sector's raison d'etre is to make profits for shareholders. Sometimes this fits in with good service and ethical trading practices, but often it simply does not. It definitely does not where there is an inherent monopoly. The railways are pretty much an inherent monopoly. It's only on the few occasions where there is genuine competition between TOCs, e.g. between Brighton and London or Birmingham and London, that you see innovative pricing and good service.

 

[Clip]

Lets have a look at the accounts for my local TOC, London Midland, and their parent Go-Ahead.

http://www.go-ahead.com/~/media/Fil...statistics-and-financial-summary-20022014.pdf

As you will note, overall profits at Go Ahead's Rail division rose by a whopping 56.7% compared to the previous year. This has sent the dividend payments soaring to a final figure of 81p per share at the end of the 2013 financial year, off a profit of 117p per share.

Approximately 70% of profits generated by Go-Ahead go to their fat cats in dividend payments.

Underlying debt levels at Go-Ahead have increased, so it is clear that the profits are not being invested in the business. So there goes the argument that "higher fares means better trains".

In this same period, the regulated rail fares rose by 4.2% in 2013 and 3.1% in 2014. Fares for Go-Aheads customers in Kent faced rises even higher than this, with increases of almost 6% in 2013. Income - expenditure = profit, and the greedy fat cats at Go-Ahead are making plenty of juicy profit.

Someone is doing very well out of the privatised railway industry. Sadly it isn't the passengers, who are getting ripped off to pay the dividends and bonuses to the fat cats. I guess we're "investing" in something, it's just a shame it's some greedy banker's second yacht.
Never mind, we're all in it together.

So no actual facts or figures to back your statement that the 4% rise went to pay the top brass and dividends then. Nothing about the staff who also had pay rises, maybe a rise in access charges, leasing costs,external factors such as agency cover needed. It all went to the top brass and the dividend payouts.

Right. You. Are.


And dividends to the staff from their stock options is bad? Also their very own pensions recieing dividends too for their old age - are these all bad things too?

 

[Emyr]

Those denigrating the private sector overlook the impact on our daily lives whereby it be getting food to supermarket shelves, low cost airlines and the mobile phone/internet revolution. Should the state run these either ?

The state is granting local monopolies to private TOCs.

There barriers to entry in the food retail market are nothing like that, so enough competition can exist to influence the behaviour of each business.

I commute from Altrincham to somewhere south of Knutsford. Even considering alternative means of transport, the only viable competition for Northern's hourly Pacer/Sprinter service is cycling. I'm an avid cyclist, but I can't commit to commuting exclusively by bike.

What's the motivation for Northern to re-invest rather than merely paying out?

 

[Tetchytyke]

So no actual facts or figures to back your statement that the 4% rise went to pay the top brass and dividends then. Nothing about the staff who also had pay rises, maybe a rise in access charges, leasing costs,external factors such as agency cover needed. It all went to the top brass and the dividend payouts.

If Go Ahead's expenditure had risen by 4%, profits would have remained stable. If Go Ahead's expenditure had risen by more than 4%, profits would have dropped.

Go Ahead's profits rose by 57%.

I think that's fairly conclusive proof that the ticket increases have purely funded the dividends to the fat cats.

 

[Clip]

If Go Ahead's expenditure had risen by 4%, profits would have remained stable. If Go Ahead's expenditure had risen by more than 4%, profits would have dropped.

Go Ahead's profits rose by 57%.

I think that's fairly conclusive proof that the ticket increases have purely funded the dividends to the fat cats.

*sigh* never mind. At least you tried.

 

[anme]

Not all this money goes to private company shareholders. Some goes back to, for example, the German, French and Dutch governments and their taxpayers. I've always wondered what privatisation enthusiasts think of this kind of government involvement. Anyone care to comment?

I'm not taking sides, just curious.

 

[Clip]

Not all this money goes to private company shareholders. Some goes back to, for example, the German, French and Dutch governments and their taxpayers. I've always wondered what privatisation enthusiasts think of this kind of government involvement. Anyone care to comment?

I'm not taking sides, just curious.

If someone legally holds a share in a company then they should recieve a dividend if that company pays out. Be that a government or the bloke next door - it matters little.

 

[WatcherZero]

The other thing to factor in is more money will be returned to shareholders near the end of a franchise, at the start they may have to put in more and it may make a paper loss and during the middle they will want to keep any excess for a comfortable cushion. As you approach the end of a franchise, everythings paid for, you dont need cash in the bank anymore so they return it to shareholders.

These companies arent going on and on being handed on to their sucessors, they are set up to bid (sometimes a second seperate company from the bidder is set up to run it if they win), when they get to the end of the franchise they are wound up.