Tramlink Nottingham – the company who operate Nottingham Express Transit – are losing almost £1 million a week according to their annual report for the year up to March 2017, which has just been released. More than £3 was being lost per trip with auditors warning that they could be unable to pay its debts in the future.
Turnover increased by £15 million but losses of £48.51 million were recorded with Tramlink Nottingham saying the loss was due to an impairment charge. This report is the first to show a full year of the extended NET system in operation and there as turnover of £60.63 million (up from 44.53 million).
A spokesman for Tramlink Nottingham said: “In common with any Private Finance Initiative (PFI) concession, the level of interest payments on initial commercial lending used to fund new infrastructure delivery is profiled throughout the course of the contract in accordance with agreements with the lenders. This is the case here and the concession’s commercial debt reflects the front end construction and infrastructure costs incurred in completing the two new tramlines and buying new trams. Clearly the expanded network is now operating successfully and is fully financed for the duration of the concession.”
Tramlink Nottingham have reduced their debt by £4.8 million in the most recent period and they have stated that they will continue to meet all requirements of their contract, which is due to run until 2034.
PricewaterhouseCoopers, the auditor for the annual report, expressed concerns over how debts would be paid in the future but did also acknowledge that to lenders over partial refinancing. The auditors said: “The company’s financial model indicates that there is a potential risk of bank covenant ratios being breached in the foreseeable future if no action is taken.”
A Nottingham City Council spokesman reiterated that they had no current concerns of the viability of the company: “We’re pleased with the performance of the tram operator, which has attracted more passengers and seen an increased turnover since the system was expanded. We have robust arrangements in place which mean that over the course of contract, liabilities rest with Tramlink and it receives payments from us for running services to a set of performance-related targets. Tramlink has been clear about its financial plans and we are confident in its ability to continue to deliver a successful tram service for the city.”
It would be interesting to see how they are losing that much. When Brittaney Ferries declared they were losing 1 million pounds a month they later stated it was due to a drop in duty free sales. It is the way you tell the storey.