Northern Rail Accounts published year to 31 March 2024

[Snow1964]

Just been filed at Companies House
Annual report and accounts for 12 months to 31 March 2024

Reading the Directors report, although it is in flowery language (saying didn't we do well , and will try and gloss over negative things) it basically says :
pandemic passenger lull is over and back beyond pre covid levels;
lack of (trained) staff has been a problem;
performance is not as bad as year before (but hardly ideal)

Plenty of nuggets of info which I am sure will justify a thread and discussion.

There is a section on Going concern, and it basically says although core contract ends March 2025, expect no change until 2027. Also says Northern need to renew/extend leases and procure stock

The Accounts basically show big revenue jump compared to previous year, but because of the management contract only marginal profit change

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[LNW-GW Joint]

I think the key number is the £648.4m service agreement subsidy from DOHL on p17, an increase of 10% on 2023.
So revenue is up but the TOC still costs more to run than last year.
The rest is noise really.

 

[43066]

I think the key number is the £648.4m service agreement subsidy from DOHL on p17, an increase of 10% on 2023.
So revenue is up but the TOC still costs more to run than last year.
The rest is noise really.

The key number for what, though? (I note revenue from passenger ticket sales net of DR has also increased by circa. 10%).

Surely the key number in terms of why the railway exists is the reference on page 6 to £2.9bn economic contribution being generated, some four times the level of subsidy received. Costs increasing are probably inevitable given what’s happened in the wider economy. Next year there should (hopefully) be no strikes etc. so scope for passenger revenue net of DR to increase further.

 

[Nicholas Lewis]

Never fear they are installing an additional 159 PIS screens to keep passengers updated about delays!

Anyhow to be fair they give far more detail than a private TOC report and accounts do.

Cancellations worsened from 6.6 to 7.2% incl P coded and they do acknowledge them and the issue with Sundays.

On the finances 60% of income is from DfT 33% from fares 7% other income. Fare income increased nearly 14% which is reflective of improving ridership post covid.

Op Costs up but they have increased headcount by over 200 and have onboarded 954 staff over the year giving a staff t/o c13% which seem above average. EC4T has doubled over the year which has to be largely increased charges as im not electric train miles would have increased that much. Rolling stock costs up 10%.

Staff costs biggest cost at 396m so given the various pay agreements finally being concluded that will step up considerably so we need to hope that stability will generate additional revenue income to compensate given the pressures the Treasury have placed on spending depts to save money let alone keep within budget.

 

[Parham Wood]

A proper company would be worried about poor customer performance and in comparison with non transport companies customer satisfaction must be much lower.

 

[sansyy]

With all the cancellations and unreliability on the railway it is very upsetting to see them make a profit

 

[Geeves]

With all the cancellations and unreliability on the railway it is very upsetting to see them make a profit

I mean it's a government entity now, so the profits aren't going to Nedrail, Arriva or Serco anymore, that would be more upsetting personally

 

[Clarence Yard]

It’s not really a profit in the conventional sense, given the ownership. An after tax profit of 0.7% on sales means they just met their DfT budget, with a bit of “small change” that the company retains, presumably to help meet any potential future losses.

 

[Mcr Warrior]

I think the key number is the £648.4m service agreement subsidy from DOHL on p17, an increase of 10% on 2023.
So revenue is up but the TOC still costs more to run than last year.

Indeed. Passenger revenue £361.6mln (up ~13%) before Delay Repay costs of £1.86mln (up ~47% but still just 0.5% of revenue). Service agreement subsidy £648.4mln (up ~8%).

Staff costs £396.4mln (up ~7%). There are numerous other operating costs as well, most also being increased. Which of these others are as necessary as staff costs?

 

[syorksdeano]

I wonder how many people have decided to use those complimentary tickets instead of a payment for delayed trains. I doubt complimentary tickets would even be included in passenger numbers as nothing to scan

 

[43066]

It’s not really a profit in the conventional sense, given the ownership. An after tax profit of 0.7% on sales means they just met their DfT budget, with a bit of “small change” that the company retains, presumably to help meet any potential future losses.

The Directors’ Report (at page 39) mentions that the company earns a pre defined margin, and either makes premium payments or receives subsidy from the DfT to achieve this.

Is this what would have been distributed up to the relevant owning group beforehand as their “pay” for operating Northern?

What was the reason for that arrangement continuing - was it to facilitate an easy transfer back to a private owning group (now unlikely to happen of course)?

Presumably nowadays, in the absence of a private owning group, it makes no sense to distribute it out of the company since it would just be “wooden dollars” (which I think is your point above?)

I notice the parent co (Dft OLR Holdings) also guarantees Northern’s future liabilities in the event that the DfT exercises discretion to terminate the service agreement early. This is presumably necessary to persuade third parties that it’s safe to make contracts with the company. I imagine something similar would have been required when the ownership was private, in case the ownership was terminated early for non performance.

(Excuse the questions - I’m very much not an accountant!).

Staff costs £396.4mln (up ~7%). There are numerous other operating costs as well, most also being increased. Which of these others are as necessary as staff costs?

Rolling stock costs (up 10%) being the most obvious one. Presumably track access charges, fuel, electricity etc. All of which are the fundamentals required to run trains on the network.

 

[Clarence Yard]

The arrangement of retaining earnings is effectively to have a buffer against future losses without having to resort to further funding to cover them.

Before COVID any profit could go to the owning group but since COVID it has, for privately run DfT TOCs, been a form of fee, the NRC having the fixed and contract performance elements. None of the DOHL TOCs have this fee arrangement - the “profit” is either retained in the company or returned to the shareholder, i.e. the DfT.

 

[OneOfThe48]

It’s not really a profit in the conventional sense, given the ownership. An after tax profit of 0.7% on sales means they just met their DfT budget, with a bit of “small change” that the company retains, presumably to help meet any potential future losses.

Its also not profit in any real sense when it takes into account £660 million of taxpayer subsidy.

Actual profit would be Northern's revenue, from fares and shop rents etc, exceeding its operational costs.

What this 'profit' is is just degrees of financial loss as its still significantly reliant on subsidies.

(Which I know you'll know @Clarence Yard, just think its worth repeating for others)