£800,000 loss for West Somerset
However, uncertainty hangs over ‘company as a going concern’, admits chairman.
The West Somerset Railway is confident that it “will return to trading profitably”, despite making a loss of £807,909 for the previous financial year, said WSR plc chairman Jonathan Jones-Pratt.
This assertion follows the publication of the railway’s accounts for the 15-month period up to March 31 2019, which make for “unacceptable reading,” said Mr Jones-Pratt. In addition to the £807k loss – one of the biggest losses ever suffered by a preserved railway – the WSR states that the “small trading profit of £12,719 [the previous financial year] would have been a loss of £211,000” without the visit of Flying Scotsman during 2017.
Despite the challenging financial situation, “the directors have considered the future trading of the business and are confident that the company will return to trading profitably and that the company has adequate cash reserves to continue trading for a period of at least 12 months from the date of approval of these accounts,” said Mr Jones-Pratt in the report.
He added: “However, the railway remains in need of regular and significant capital investment. In recent years, this investment has been financed from cash reserves as the level of profit generated has not been sufficient. In the future, the company will need to generate more profit or identify other ways to finance this continued investment in the railway.
“In addition, future forecasts include a number of assumptions, including revenue generated from special events such as the Christmas timetable, and the ability to generate increased margins from sales, which may or may not be achieved.
“These events or conditions indicate that a material uncertainty exists that may cast significant doubt over the ability of the company to continue as a going concern.”
Steam Railway asked Mr Jones-Pratt and other WSR directors what avenues it was exploring to generate sufficient income, but they declined to comment before the annual general meeting had taken place, which was scheduled for December 14.
In the report however, the WSR identifies: “One significant element of the cost-saving exercise was to reduce the soaring wage bill that had reached a staggering £1.2m per annum at its peak” and that the railway has so far reduced this by around £350,000 and that it was “hopeful” it could “remove an additional £80k-£100k of payroll cost.” Directors emoluments would also be “significantly reduced”.
The 2020 timetable has also been modified from previous years to “eliminate loss-making services”, but the railway has yet to clarify what these changes were.
Mr Jones-Pratt added: “I am pleased to report income this year has been good and, combined with the ongoing driving down of costs, means that we can look forward to the future with more certainty.
“Since the beginning of this financial year on April 1, we have carried 142,000 passengers, improved the company’s cash position by £545,000 and made an operating margin of £1,080,000.”
In a statement, Mr JonesPratt said: “When I took over as chairman, I found a bad financial position. We had been told by our safety regulator that it had real doubts about our capability to operate a safe railway. I had to take some very hard decisions. But these are starting to work.
“Is the job done? Not yet, and there remain big challenges. We still need more funds, we must bring in more active volunteers so we don’t have to rely so heavily on a few, and we still need to improve the way we work together. But we are making real progress.
“We can only make this railway that we love – and we all do love it – continue to live on if the money we raise through the fare box, commercial activities, donations and grants exceeds our costs. No excess, no money to repair and renew the track; no excess, no money to mend the locomotives; no excess, no money to keep our stations in a safe condition. We have to have a clear business focus.
“I do feel so positive about this great railway. So many people have done so much to make the last few months a success. From a position where our auditors were questioning our survival, we now have our accounts signed off, and we can move on.”
The WSR has now ceased regular operations until March – barring Santa services – and has committed to a £250,000 programme of work to repair its permanent way and infrastructure. The Rail Renewal appeal, launched to raise funds to cover this work, had raised over £128,000 at the time of going to press. To donate, visit www.justgiving.com/ campaign/railrenewal2019
●● Jeremy Hosking-owned Raveningham Hall, a WSR resident until the line’s axle load limit was reduced, will now remain at the Severn Valley Railway until its boiler certificate expires in July 2021.