By Joe Locker, Local Democracy Reporter
The operator of Nottingham’s tram network has reported losses of £57m – more than double that of the previous year.
Companies House documents show the losses for Tramlink Nottingham Limited went from £20,424,000 in 2022 to £57,119,000 up to March 2023.
The increase has largely been put down to assets decreasing in value following a review, known as impairment.
An ‘exceptional impairment charge’ of over £26m has been reported in the year to March 2023, owing to the depreciation of NET Phase 2 assets.
Much of the rest of the network’s cost relate to repayments on long-term loans taken out to fund its construction.
While the documents reveal there is “some liquidity risk”, due to insufficient revenue from fares to fund the network’s operation, the company’s funding is established on long-term financing arrangements.
“The company adopts a prudent approach to liquidity management by endeavouring to maintain sufficient cash resources to meet its obligations as they fall due,” they say.
In a statement on January 9, the operator also says the loss reported in its latest accounts “is in line with financial expectations”.
Keolis and its subsidiary Nottingham Trams Limited run the city’s network as part of the Tramlink consortium, under the Nottingham Express Transit (NET) name and branding.
Speaking of the latest accounts, Tim Hesketh, the chief executive officer 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 per cent 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.”
Documents go on to show passenger journeys recovered to 14.4m, compared to 9.1m in the previous year.
Turnover increased by 15 per cent from £55m to £63.3m.
Mr Hesketh says the network has been struggling ever since passenger numbers plummeted during the Covid pandemic and settled at just 80 per cent of pre-pandemic levels.
Soaring energy bills have also been blamed.
Before Russia’s invasion of Ukraine, annual energy bills for the network had been £3.5m, however at the height of the energy crisis, costs increased by almost 500 per cent to £15m.
They now sit at around £6m.
In a bid to stabilise its finances, the operator recently renegotiated the terms of its considerable loans and it is now believed the network “is in a much more stable and robust position for the coming financial year”.
The restructuring project was done in partnership with the Department for Transport and Nottingham City Council.
The network first started operating in 2004, paid for through a Private Finance Initiative (PFI) deal, whereby investors put money into a public project with the promise of a financial return in the future.
Nottingham City Council and Nottinghamshire County Council were both initially responsible for the network, but when the County Council pulled out in 2015, the deal was transferred to Tramlink for 22 years.
Back in 2011 loans were taken out based on the pre-Covid passenger number projections, and these were intended to be paid off by March 2030.
However due to lower passenger numbers and higher interest rates, it has been renegotiated that loans will be repaid by 2033 instead.
The amount of money the operator has to keep in its reserves has also been lowered.
Reserves now sit at £5m instead of £20m, having been used to reduce overall debt.
Mr Hesketh added: “[The restructuring] 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.
“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.”
It comes as the second ticket price hike in 12 months came into force on Monday, January 8.
Ticket prices went up across the board, with adult single ticket costing 20p extra having been increased to £3.20.
A zero tolerance campaign against ticket fare evasion will also continue for the foreseeable future, after the operator revealed the issue is costing it an estimated £2m a year out of its £20m revenue from ticket sales.
Correction as of 11/01 at 12.55pm: The accounts were incorrectly attributed to Nottingham Trams Limited. They are in fact Tramlink Nottingham Limited’s accounts.
