Concerns have been raised about the viability of the operator of Nottingham Express Transit, Tramlink Nottingham, after reports in the Nottingham Post revealed significant losses were posted in the most recent financial year. Despite the large losses – said to be £50 million – both Tramlink Nottingham and Nottingham City Council have said the figures are where they would expect them to be.
This is a story which seems to be repeated at this time of year when the financial results for the company are announced and 2021 hasn’t let us down with opposition Councillors expressing their concern about the viability of the company going forward.
The report in the Nottingham Post says that Tramlink Nottingham (Finco) – which financially supports Tramlink Nottingham – posted losses of £27.3 million, an increase on the loss of £10.8 million in 2019. This company is said to be dependent on the other company paying back loans plus interest so it can repay loans to its shareholders.
Meanwhile, Tramlink Nottingham itself posted pre-tax losses of £22.1 million which is in fact a fall from 2019 (when it was £22.5 million). Turnover also increased by 0.9% to £63.7 million.
As a result of these reported losses one annual report stated that Tramlink Nottingham was in potential breach of certain bank covenant ratios which could have led lenders to accelerate the repayment of debt although no action was taken in this regard and no suggestion is made that this is imminent.
In response to the report and these losses, Cllr Adele Williams, Nottingham City Council’s Portfolio Holder for Transport, said: “Tramlink’s finances are where we would expect them to be at this stage. It is one of the most successful tram systems in the country, which has seen increasing passenger numbers and satisfaction across a number of years. This clearly demonstrates that it’s a hugely popular part of our superb public transport network. Having invested significant up-front costs to double the size of the tram network through a Private Finance Initiative (PFI), Tramlink were always going to be mostly paying off interest early on, just like a household mortgage. Over the two decades of the contract, however, this will come down considerably and so the accounts are showing what we would expect at this relatively early stage in the repayment programme.”