Just to explain the onerous contract provision (OCP) a bit further - in the c.15 month accounting period to 18 September 2016 to 31 December 2017, the recognition that the new stock would be heavily delayed and other factors resulting in much higher operating costs than were originally forecast, resulted in an
additional £49m being booked to the OCP.
Note there was already an OCP as at Sept 2015 of £14m and £8.7m at Sept 2016 - meaning even at these points Serco were expecting to make losses over the full term of the contract.
After movements in the OCP during the period to Dec 2017 (including the additional £49m booked), the provision stood at
£44.3m on the balance sheet. This meant that as at 31 Dec 2017, Serco's best estimate was that over the remaining term of the contract to 31 March 2030 they would make (after subsidies etc.) a further £44.3m of operating losses. Accounting principles/standards require that such losses related to an onerous contract need to be recognised in their entirety when identified - even though it may seem a bit odd that what in effect is £44m losses over 12+ years all has to be taken as a bit hit "up front" in one year.
In the 3 month period ended 31 March 2018, Serco Caledonian Sleepers Ltd reported:
Turnover: £8,142,000 (of which £4,180,000 were franchise payments from Transport Scotland, aka subsidy as
@gingerheid notes above)
Operating Profit: £42,000
LOSS After Interest and Tax: £350,000 (the main movement from the small operating profit being the interest payable to Serco Group of £300,000).
Note that the £42,000 operating profit is arrived at
after releasing £4,727,000 of the onerous contract provision booked in 2017 to offset the losses in the 3 month period to 31 March 2018.
So if you take away the subsidy (£4,180k) and the release of the OCP booked in the prior year (£4,727k) from the £42k operating profit reported, the "real" operating losses made by Serco Caledonian Sleepers Ltd in that period were
£8,865k (in just 3 months).
As noted above, this is the Off Peak season for the Sleeper, but does give an indication of the scale of losses the operation incurs before any subsidies or accounting treatments for OCPs come into effect.
The Serco Caledonian Sleeper Ltd accounts are prepared on the Going Concern basis, though, as Serco Group (as at the date of these accounts) formally committed via a "letter of support" to ensure Serco CS Limited's liabilities are met as they fall due.
[Worth noting these accounts were for the (3 months) period ended 31 March 2018, so almost already a year out of date - and with the Mk5s being delayed even further since then, it's difficult to think the 2018/2019 accounts will paint any more positive a picture.]