Virgin and stagecoach net £51.2 M in dividends

[Edders23]

from BBC news website https://www.bbc.co.uk/news/business-45854824

Virgin Trains and Stagecoach shared in £51.2m worth of dividends from the West Coast main line railway, shortly before walking away from another franchise.

Virgin Rail Group's dividends, for the year ending 31 March 2018, are almost double the £27.9m that was given back to its shareholders in 2015.

The details come after the firms' East Coast franchise collapsed in June, with the government losing out on £2.3bn.

Virgin said strong performance had led to record payments for taxpayers.

But Labour said the failing rail system was "lining the pockets of billionaires".

Virgin owns 51% of the operator which runs the West Coast main line connecting London to Glasgow - known as Virgin Rail Group - while Stagecoach owns the remaining 49%.

So dividends doubled but no announcement of ploughing some back into the franchise

 

[uww11x]

from BBC news website https://www.bbc.co.uk/news/business-45854824

Virgin Trains and Stagecoach shared in £51.2m worth of dividends from the West Coast main line railway, shortly before walking away from another franchise.

Virgin Rail Group's dividends, for the year ending 31 March 2018, are almost double the £27.9m that was given back to its shareholders in 2015.

The details come after the firms' East Coast franchise collapsed in June, with the government losing out on £2.3bn.

Virgin said strong performance had led to record payments for taxpayers.

But Labour said the failing rail system was "lining the pockets of billionaires".

Virgin owns 51% of the operator which runs the West Coast main line connecting London to Glasgow - known as Virgin Rail Group - while Stagecoach owns the remaining 49%.

So dividends doubled but no announcement of ploughing some back into the franchise

Aren't they waiting to see who it's awarded to long term before ploughing even more in!

 

[Hadders]

The Dividend relates to the West Coast franchise. Fair enough. Comparisons to the East Coast situation are not helpful in the report.

 

[jagardner1984]

Whilst I’ve generally found VTWC a good service, the public simply don’t see these distinctions between different operating companies of similar names and the same parent companies.

If Privatised rail wants to have a future (given it’s under considerable political threat), delivering shareholders significant dividends whilst the same parent company is reneging on a deal made elsewhere at huge cost to the taxpayer, is a strange way to garner public trust.

 

[Carlisle]

The Dividend relates to the West Coast franchise. Fair enough. Comparisons to the East Coast situation are not helpful in the report.

Just confirms a fact we’ve known for probably a century or more. in the U.K. rail market Inter City operation is the most lucrative

 

[LNW-GW Joint]

Virgin and Stagecoach get it in the neck when they lose a fortune on VTEC, and again when they make a profit on VTWC.
VTWC has made steady profits throughout the 3 direct awards since 2012 (typically about 5%), and this year is little different to last.
The DfT has also reaped significant premiums.
Profits are set to fall in the current (4th) direct award, with a new revenue sharing deal with DfT.
It's on p21 of this: https://www.stagecoach.com/~/media/...nts/media/press/pr2018/annual-report-2018.pdf

Under the new franchise, a revenue share arrangement with the Department for Transport applies whereby the Department for Transport bears 90% of the risk of any difference in excess of 1% between the forecast revenue reflected in the contract and actual revenue. This provides Virgin Rail Group with significant protection against movements in forecast rail revenue and enables the Department to share in revenue outperformance.

 

[dk1]

I do not see where the comparison with VTEC has anything to do with it. Totally different franchise on a totally separate contract. If anything the West Coast operation has proved itself to be very well run indeed. Good luck to both companies.

 

[Robertj21a]

I do not see where the comparison with VTEC has anything to do with it. Totally different franchise on a totally separate contract. If anything the West Coast operation has proved itself to be very well run indeed. Good luck to both companies.

Agreed. There's always people anxious to criticize Virgin, or Stagecoach, regardless of whatever they do.

 

[Ianno87]

I see the whole "Government loses out on £2.3bn" makes an appearance. Which is misinterpreted by some as the collapse costing the government £2.3bn. Which is of course not the same thing.

 

[deltic]

Just confirms a fact we’ve known for probably a century or more. in the U.K. rail market Inter City operation is the most lucrative

Profits made by Virgin and Stagecoach from running the franchise are not related to the profitability or otherwise of the actual rail service. Based on ORR figures South Western Rail Franchise was the only profitable rail service (taking account of Govt payments to Network Rail and subsidy or premium paid by operators). West Coast was a £100m loss making operation.

 

[alistairlees]

from BBC news website https://www.bbc.co.uk/news/business-45854824

Virgin Trains and Stagecoach shared in £51.2m worth of dividends from the West Coast main line railway, shortly before walking away from another franchise.

Virgin Rail Group's dividends, for the year ending 31 March 2018, are almost double the £27.9m that was given back to its shareholders in 2015.

The details come after the firms' East Coast franchise collapsed in June, with the government losing out on £2.3bn.

Virgin said strong performance had led to record payments for taxpayers.

But Labour said the failing rail system was "lining the pockets of billionaires".

Virgin owns 51% of the operator which runs the West Coast main line connecting London to Glasgow - known as Virgin Rail Group - while Stagecoach owns the remaining 49%.

So dividends doubled but no announcement of ploughing some back into the franchise

The article is a pile of uninformed twaddle by knowledgeless BBC journalists who are only concerned with achieving "balance" by quoting from both sides in a totally uninformed (and unhelpful) way.

The government (and, by extension, the taxpayer) didn't lose out on anything when the VTEC franchise was ended. Stagecoach lost a lot though.

The BBC have not put "failing rail system" in quotes, when this is a Labour quote (I'm not trying to makeany political points here)

In the rest of the article, there was a Labour quote about the government "bailing out" Stagecoach. There was no bail out. Rather, the reverse.

Finally, what's wrong with making a profit? I despair.

 

[ForTheLoveOf]

West Coast was a £100m loss making operation.

I think the argument here is that, if Virgin and Stagecoach weren't taking £51m in dividends (which is likely not to be the full extent of the actual profits), the operation as a whole would only need £49m of taxpayers' subsidy - as might happen if it were run as a DOR operation. £49m is an amount which might feasibly be recouped by annual fare increases (provided there are no significant increases in operating costs), so that VTWC could become a taxpayer-independent operation.

 

[HH]

I think the argument here is that, if Virgin and Stagecoach weren't taking £51m in dividends (which is likely not to be the full extent of the actual profits), the operation as a whole would only need £49m of taxpayers' subsidy - as might happen if it were run as a DOR operation. £49m is an amount which might feasibly be recouped by annual fare increases (provided there are no significant increases in operating costs), so that VTWC could become a taxpayer-independent operation.

Except that, believe it or not, the Virgin Brand actually increases sales. Possibly by as much as 5%.

 

[Helvellyn]

Except that, believe it or not, the Virgin Brand actually increases sales. Possibly by as much as 5%.

Some people would never accept that. Nor would they accept that the private sector might have some ideas that generate growth and assume that anything delivered by the private sector would be delivered equally by the public one.

Personally I prefer the approach for the new direct award where the profit share kicks in at a better level. I've always thought that profit shares would be a better approach in general rather than trying to guess how much money could be made down the line.

 

[Camden]

With a combination of companies, subsidies, returns and profit, including where profit is made after subsidy has been paid, it becomes impossible for any ordinary person to be able to see with any certainty that the system offers value.

That is why there is criticism when losses are made, and when profits are made. It's because it's all a mess regardless.

 

[3141]

from BBC news website https://www.bbc.co.uk/news/business-45854824

Virgin Trains and Stagecoach shared in £51.2m worth of dividends from the West Coast main line railway, shortly before walking away from another franchise.

Reports at the time said that the government had terminated the East Coast franchise. Virgin and Stagecoach did not "walk away" from it.

In which case, either the people at the BBC who compiled this latest report are incompetent, or they are deliberately presenting inaccurate information in order to whip up hostility towards the owners of VTWC.

 

[SamYeager]

Reports at the time said that the government had terminated the East Coast franchise. Virgin and Stagecoach did not "walk away" from it.

In which case, either the people at the BBC who compiled this latest report are incompetent, or they are deliberately presenting inaccurate information in order to whip up hostility towards the owners of VTWC.

Perish the thought! The BBC's policy of fair and unbiased reporting is well known. If people misinterpret the article, including Labour's quoted comments, then that is hardly the BBC's fault!

 

[dk1]

Reports at the time said that the government had terminated the East Coast franchise. Virgin and Stagecoach did not "walk away" from it.

In which case, either the people at the BBC who compiled this latest report are incompetent, or they are deliberately presenting inaccurate information in order to whip up hostility towards the owners of VTWC.

Exactly & not to forget Virgin & especially Stagecoach took a huge financial hit with the East Coast franchise after exhausting the pot. Lessons learnt & all that.

 

[Carlisle]

Reports at the time said that the government had terminated the East Coast franchise. Virgin and Stagecoach did not "walk away" from it.

Which is irrelevant given Virgin/Stagecoach, couldn’t afford the rest of their premium payments without a renegotiation in their favour .

 

[LNW-GW Joint]

The VTWC profits are not new news by the way.
Stagecoach published them in July.

 

[6Gman]

I think the argument here is that, if Virgin and Stagecoach weren't taking £51m in dividends (which is likely not to be the full extent of the actual profits), the operation as a whole would only need £49m of taxpayers' subsidy - as might happen if it were run as a DOR operation. £49m is an amount which might feasibly be recouped by annual fare increases (provided there are no significant increases in operating costs), so that VTWC could become a taxpayer-independent operation.

Or might not, of course. Government and Operator entered into a contract. Contract met. Profit made. End of story.

[Declaration of Interest. I have a small shareholding in Stagecoach. Got my Final Dividend payment this week. About £18.]

 

[dk1]

Or might not, of course. Government and Operator entered into a contract. Contract met. Profit made. End of story.

[Declaration of Interest. I have a small shareholding in Stagecoach. Got my Final Dividend payment this week. About £18.]

£16.46 here. What are we going to do with it all?

 

[bnsf734]

£16.46 here. What are we going to do with it all?

Patisserie Valerie have a financial black hole that needs help! Although I think the owner has now dug into his pockets.

 

[dk1]

Patisserie Valerie have a financial black hole that needs help! Although I think the owner has now dug into his pockets.

Wonder why he caused so much stress for the staff rather than simply stumping up the £20m in the first place?

 

[6Gman]

£16.46 here. What are we going to do with it all?

I think we are what they call "fat cats". Or maybe "skinny kittens" in our case.

More seriously I've been annoyed by the TV reporting which has implied that Branson and Souter have pocketed the £50m

The reality is that it's company dividends like this which fund pension schemes, insurance policies, even charity investments which benefit millions.

 

[Realfish]

I see the whole "Government loses out on £2.3bn" makes an appearance...

In fairness in that piece the, 'World's most trusted broadcaster', only mentions it three times.

 

[WatcherZero]

The article is a pile of uninformed twaddle by knowledgeless BBC journalists who are only concerned with achieving "balance" by quoting from both sides in a totally uninformed (and unhelpful) way.

The government (and, by extension, the taxpayer) didn't lose out on anything when the VTEC franchise was ended. Stagecoach lost a lot though.

Half a dozen news outlets just printed the Shadow Chancellors condemnation verbatim as news, check it out identical wording by all the different 'journalists'.

What is notable from the ORR financial statistics published this month is that this last year is the first time ever since privastisation the West Coast franchise was operationally a net contributor to the treasury before Network Grant is calculated (meaning it covered its operational costs but not infrastructure investment costs). It made a net franchise payment of £7.7m. By contrast a decade ago it was receiving around £300m a year net in subsidy, a subsidy of 6.6p per passenger km.

 

[DynamicSpirit]

from BBC news website https://www.bbc.co.uk/news/business-45854824

So dividends doubled but no announcement of ploughing some back into the franchise

This looks like a complete non-story to me. The company that runs Virgin West Coast (West Coast Trains Limited) made a profit, which is what private companies do. The dividends simply represent the profit being transferred to the two companies that between them own West Coast Trains Limited. The Government and the public will presumably have neither lost nor gained anything from these dividends: The dividends should have no impact on the amount of corporation tax being paid by any company, since the the profit on which companies pay corporation tax is calculated before any dividends are paid out. Companies pay corporation tax on their profits, and after that, if they choose, they can pay their shareholders dividends out of whatever money is left.

If there was going to be a reasonable story, it would be about the profit that was made in the first place. But as far as I'm aware, West Coast Trains Limited made their profit by providing a reasonable train service to the public, and there doesn't seem any reason to believe their profits are excessive (£64 million pre-tax profit out of turnover of just over £1 billion, so about 6% profit). So, nothing obviously untoward in that regard, and I doubt there's any real newsworthy story there either.

 

[Edders23]

Any good company would be ploughing some of the profits back into it's business to improve the chances of more profits in later years and giving added benefit to their customers

 

[DarloRich]

I do not see where the comparison with VTEC has anything to do with it. Totally different franchise on a totally separate contract. If anything the West Coast operation has proved itself to be very well run indeed. Good luck to both companies.

Agreed. There's always people anxious to criticize Virgin, or Stagecoach, regardless of whatever they do.

That doesn't matter to the last man in the street. The ownership split between stagecoach and virgin is unknown. People see one company: Virgin.

To see a nice dividend payment while chucking in one franchise will not play well