Rail operator First Hull Trains ‘disappointed’ as it slips into red

Hull Trains, one of the UK’s few open access rail operators, reported pre-tax losses of £286,000 in the year to the end of March 2012, compared with £1.74m profits a year earlier.

However, the operator which runs between Hull and London King’s Cross, still paid dividends totalling £500,000 to its owners First Group and Renaissance Trains.

The company also revealed the departure of its managing director, Cath Bellamy, who resigned last month after a long illness.

Operating costs hit almost £22m from £20m a year earlier, with more spent on maintenance, fuel, wages and consultancy.

Hull Trains described the 2011/12 financial performance as “disappointing” in results recently lodged with Companies House.

Revenues fell 0.5 per cent or £114,000 to £21.63m year-on-year – which Hull Trains said was “satisfactory given the economic environment affecting the markets served by the company”.

That compared with a three per cent revenue gain in 2010/11.

“The economic slowdown and reducing job security is resulting in an increased demand for value from customers,” said the company.

“Challenges to household/business disposable income and competitor pricing positions can affect the performance of the company in terms of both sales and costs.”

Hull Trains did not quantify passenger volumes during the specific results period. However, it said passenger numbers rose by almost 10 per cent in 2012 to almost 800,000.

The firm recently told passengers fares will rise by an average of 1.3 per cent this year, below the 3.9 per cent expected across the rail industry.

It increased fares by an average of 4.5 per cent in 2012.

“As one of only two non-franchised train operating companies in the UK, our pricing policy is based on listening to the needs of our customers and adapting our service offering and pricing accordingly,” it said.

“We have worked hard to keep any increases to a minimum and we are pleased that we remain one of the most competitive rail companies on Britain’s rail network.”

The company confirmed Ms Bellamy resigned in December after a long illness. She was replaced on an acting basis by First Group director Richard Parry.

Mr Parry was behind First Group’s bid to run the West Coast Main Line. The Department for Transport is being probed over the bungled refranchising, which was initially won by First from Virgin but later rescinded by the Government. Mr Parry was unavailable for comment.

The firm’s open access nature means it operates without subsidy from the DfT. Hull Trains insisted the results were on budget and “disappointing but not unexpected”.

It added: “While the external environment remained uncertain and periodic performance blips caused some anxiety in the media and amongst regular customers, the company largely maintained an equilibrium position in many aspects of what was achieved.”

Among its priorities in 2012/13 are to “offer value for money tickets for customers at a yield that is acceptable to shareholders”.

The route was dogged by cancellations in late 2012, which it blamed on infrastructure problems on the East Coast Main Line. It said other than this, it has recorded some of its “best ever” performance in recent months.

The operator highlighted its 95 per cent satisfaction score in the industry benchmark National Passenger Survey for the year – which dipped to 93 per cent in the spring 2012 survey.

Its trains have been upgraded in recent years – including a £2.4m internal and external refresh and a £4.5m mechanical and electrical overhaul.

The firm said over the past year, a “commercial and operational restructure within the business is paying dividends with revenue and operating performance exceeding targets”.

Hull Trains’ £500,000 dividends during 2011/12 compared with a £1m payout a year earlier.

The operator said: “As a privately run venture the dividends paid are fully ratified by the board and in line with previous results and forecast performances.

“The distribution of dividends is a matter for First Hull Trains’ board, and reflects the healthy reserves in the business.”

After payouts, shareholders’ funds ended March 2012 at £697,000, versus £1.8m a year earlier.

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