Train Leasing Profits Treble, £400,000,000 dividends

[yorksrob]

I thought that was obvious. Everything is changeable - it depends on the political mood and how the Government wants to finance its business.

But Government funding railway rolling stock isn’t necessarily the cheapest way of paying for it, both in initial cost and the lifetime maintenance liability.

Presumably, neither is leasing it for ever more.

 

[Energy]

Presumably, neither is leasing it for ever more.

There isn't a 1 size fits all. A good transport network does what TfL does and leases or buys in cash when appropriate.

 

[WAB]

I don't think it has been mentioned on here thus far but BR leased some rolling stock in the first half of the 70s before HMG put the kibosh on it.

 

[JKF]

Suspect they’ve made quite a few bob weighing in old (and not so old) trains at Newport, what are scrap prices like these days?

 

[domcoop7]

That’s exactly why the ROSCOs came into being. Furthermore, because government TOCs are just cash flow entities, you need to avoid large changes in day to day costs and maintaining traction and rolling stock is potentially a very “lumpy” cost line.

As someone who had traction and rolling stock in his books of account in BR days (I was an Area Finance Manager in the M&EE function, later a Production FM in a sub sector), I am really glad I am not having to pay for the chaos that is the IET contract and all those emerging liabilities. I had class 50 locos, that was bad enough to budget for!

Funding rolling stock, as I have stated before, is not always done cheapest via the state financial arrangements. BR didn’t get its stock at nil interest and my predecessors often complained about not being allowed to seek external finance and having to pay inflated Treasury rates. That wasn’t only a rail issue, most nationalised industries suffered.

Repeating an earlier post, I have looked at the 2022 accounts for the big three ROSCOs and I can’t see where the ORR get their increased profits from. I can see and understand the dividends but those P&L changes from 2021 - I have no idea how the ORR got to those figures. I may ask them to clarify because they look very odd.

As you'll probably know given your background, it's often the case when random profit figures jump suddenly that it's because of accounting policy changes or reappraisals. It by no means is true that they've suddenly got more cash in the bank that they can spend (although they may have).

It's often said that - within reason - a company can make their "profit" line say pretty much whatever they want. Lot's of lines that companies put in their P & L section are based on assumptions, guesses, valuations, etc., and it's mainly a question of what you can get past the auditors!

The old saying:- turnover is vanity; profit is sanity; but cashflow is reality.

 

[Clarence Yard]

Indeed so!

The problem I have is reconciling the annual accounts of the big three to the ORR figures. Whilst they include other players, I don’t see that quoted year on year increase in profits in the total of the big three. I agree with the dividends though.

I think I may have to ask my contacts at the ORR as to how they have calculated those figures.