Losses spiral at tram operator – but boss remains confident
Losses at the firm which runs Nottingham’s tram network have spiralled after being hit with a huge impairment charge.
The company slumped to a loss of £57.1m for the year-ending March 2023, compared to £20.4m for the prior year. An impairment charge is made when a company’s assets are considered to have fallen in value.
The latest figures show that passenger figures on Nottingham Express Transit (NET) are still 20% less than pre-pandemic levels.
However, following the recent financial restructuring project in partnership with the Department for Transport and Nottingham City Council, Tramlink Nottingham Limited, which operates the NET concession, believes the network is in a much more stable and robust position for the coming financial year.
The year to March 2023 saw passenger journeys recover to 14.4m, compared to 9.1m in the prior year. The company also made a gross profit of £7.65m compared to £4.90m in the previous year, before taking into account COVID relief grants from central government and exceptional fixed asset impairment charges.
Tim Hesketh, CEO of Tramlink said: “Like many other public transport operators, there’s no denying that we’re still feeling the effects of the pandemic. It’s promising to see that post-pandemic passenger levels are well on their way to recovery, with figures showing they’re at 80% of what they were before COVID. However, we remain committed to doing all we can to ensure the network can continue to provide a sustainable and convenient option for the thousands of people who rely on it for travel in and around the city. That’s why we believe the restructure was essential for helping us make some key improvements to our operations.
“It will not only give us a much more secure financial position, but it will also allow us to make a raft of investments into areas such as new technology, updates to our ticket systems and the recruitment of additional revenue protection officers.”
As part of the recent financial restructuring project, which took two years to complete, Tramlink Nottingham has negotiated with its senior and junior lenders to revise the terms of it loans. This will ensure the business remains a going concern.
Hesketh added: “It’s been a challenging few years and we’d like to thank the City Council and Department of Transport for all their support. Thanks to the restructure, we look forward to a brighter year ahead for the network and the wider city.”
The concession which allows Tramlink to run the NET tram system runs until 2034 and factors in losses in the earlier years due to investments in the system, including expanding the network in 2015 and buying new tram vehicles.
The loss reported during this year’s accounts is in line with financial expectations.
