‘GREEN SHOOTS OF RECOVERY’ SHOW FOR WEST SOMERSET
Troubled railway insists it is still a going concern and expects to return to profit this spring.
TURNOVER WAS TOO LOW AND COSTS WERE TOO HIGH
WSR SPOKESMAN
The West Somerset Railway is showing “green shoots of recovery” and expects to see a “modest profit” this year, after enduring one of the biggest losses suffered by a preserved railway.
The news was the over-arching headline at the annual general meeting of the West Somerset Railway plc – the line’s operating company – held on December 14, at which shareholders were informed exactly why the railway suffered a £807,909 loss for the 15-month period up to March 31 2019, a figure which prompted speculation over the WSR’s status as a going concern (SR500).
However, the WSR insists things have turned a corner and the financial situation is improving. A spokesman told Steam Railway: “There are some good green shoots of recovery already this year, with the figures from April to October showing a surplus of £160k above the budget, a significant increase in income, and a reduction in costs. We expect to see a modest profit towards the end of March 2020 if the Santa season performs to budget too.”
One of the main reasons for the six-figure loss was the decision to extend the financial year from 12 to 15 months to avoid holding the AGM at the height of the summer season, a period which included an extended winter closure period, resulting in “nearly six months in which the trains were not running, instead of the normal two and a half months,” said the WSR in a statement at the AGM. “Our analysis shows that over £500k of losses were made as a result of the fallow January to March 2019 period.”
Another contributing factor was the decision to terminate the 25-year hire agreement of Fowler ‘4F’ No. 44422, which left the line in early December for its new home on the Churnet Valley Railway (SR500). During its time on the WSR, the railway spent over £140,000 towards its overhaul, “expenditure that was previously treated as an asset as it was intended that the plc would have the benefit of it.
“Once the hire agreement was terminated, the plc could no longer carry this cost as an asset and, under accounting standards, the value had to be impaired in the 2019 period. This impairment added £142k to the loss in the period.”
The WSR added: “The reality of this 15-month period is that turnover was too low and costs were too high throughout. The management accounts as presented to the board showed continual under-performance, with turnover under budget and expenditure over budget which, by December 2018, culminated in a loss of £250k.
“When you take into account the second fallow period and the impairment of 44422, you can see how you can arrive at the reported loss.”
Talking about how the railway was improving its financial stability and reducing costs going forward, WSR plc chairman Jonathan Jones-Pratt told Steam Railway: “We have implemented cost control centres, new budgets and a modern purchasing system, along with carrying out a detailed procurement exercise which is seeing on paper over 40% in savings! We are running it tight but right basically.”
One cost saving measure is a reduction in services during 2020. “We have cut around 16% of services, which will see an overall 20% saving,” said Mr Jones-Pratt. “We are working hard to save costs in the shoulder months but maximize income in the peak.”