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2013-10-08 EAS-001
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Directly Operated Railways publishes financial results for 2012/13


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East Coast

Directly Operated Railways publishes financial results for 2012/13
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related documents


2011-09-19 DOR publishes second annual report and financial results (East Coast)

2010-11-04 Directly Operated Railways publishes first annual report (East Coast)

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date
8 October 2013
source East Coast
type Press release



• 4.2% increase in total sales at East Coast
• £208.7 million returned to the taxpayer during the year in premium and dividend payments – an increase of 6.6%
• Highest level of staff engagement recorded at East Coast in history of the franchise
• Record level of customer satisfaction achieved during the year at East Coast

NEWS RELEASE ISSUED FOR DIRECTLY OPERATED RAILWAYS LIMITED

LONDON, 8 OCTOBER 2013: Directly Operated Railways Limited (DOR), the company established in July 2009 and wholly owned by the Secretary of State for Transport, today published its fourth Annual Report and Financial Statements, for the period from 1 April 2012 to 31 March 2013. The figures include the results for the Company’s subsidiary, East Coast Main Line Company Limited (East Coast). Turnover for the year to 31 March 2013 amounted to £693.8 million (2011/12: £665.9 million), mainly reflecting ticket revenue earned from passenger services at East Coast and associated income earned from catering, car parks and commission from the sale of tickets on other train operators’ services. Operating expenditure in the period amounted to £690.0 million (2011/12: £661.0 million), comprising access charges payable to Network Rail for stations and depots, rolling stock leasing costs, staff and other operating costs.

This generated an operating profit for DOR before Department of Transport (DfT) service payments and taxation, of £208.7 million (2011/12: £195.7 million), and an operating profit after DfT service payments before taxation of £5.9 million (2011/12: £7.1 million).

The Company exists to manage Train Operating Companies that are returned to temporary public ownership. It is planned that the East Coast franchise will transfer to a new private operator in February 2015 and DOR is working closely with the Department of Transport, to assist this process. Unlike previous franchise changes/ transfers, the Company ‘East Coast’ will be the subject of a business sale to a new private sector owner. By delivering these results, DOR has achieved the objectives set for the Company by the Department of Transport.

Commenting on the results, Doug Sutherland, Chairman of Directly Operated Railways, said:

“During the year, we continued to make further good progress with the business turnaround of East Coast, and we were able to achieve the best train punctuality on line since records began in the summer of 2012, the best customer satisfaction result in the Passenger Focus autumn 2012 National Passenger Survey since rail privatisation in 1993, and the highest level of employee engagement of any previous franchisee on the East Coast Main Line.

“East Coast remains Britain’s busiest train operator, with average loads per train exceeding 225 customers, which is more than 36% ahead of the next busiest operator.

“DOR is continuing to invest in the East Coast business, and from November 2009 to date, some £48 million has been re-invested directly in the business, on improving its assets, delivering the introduction of new and improved customer service benefits, and in people and training.

“In September 2012, DOR was also asked by the Department to undertake contingency planning relating to potential transfers of franchises under Section 30 of the Railways Act 1993 – and these activities have become a significant part of the workload for the core team at DOR. This work is continuing and a programme has been developed to support the DfT’s Direct Award timetable.”

Safety & Environment

The safety of customers and employees at East Coast continues to remain the top priority. Progress over the last year has continued, with improvements in many of the operational and occupational targets, and a number of key indicators are now at an all time best. In particular, the number of accidents to East Coast employees reduced by 20% during the year.

At the time of handover to DOR in November 2009, East Coast safety performance had been deteriorating, targets were not being met, and there was a poor safety ‘culture’ in the business. Whilst it is not complacent and remains vigilant, East Coast is now one of the best safety performers in the UK rail industry.

During the year, East Coast met 12 of its 14 environment plan objectives, whilst supporting the wider aims for business efficiency and cost reduction. In this context for example, the proportion of waste recycled increased from 12% to 47.5% by the year-end 2013.

Employee engagement

East Coast’s people remain at the heart of the service offered by the business. The last four years have seen substantial change for employees, and the remaining period until the franchise is re-let again in February 2015 will see the consolidation of previous achievements, the development of further initiatives and improvements, and continuation of efforts to find more efficient ways of doing things better.

Advocates argue that when employee engagement is high, organisations perform better – and the management of East Coast are a firm believer in this approach. Since it has operated the franchise, the year-on-year levels of employee engagement have continued to improve. At 71% (2011/2: 66%, 2010/11: 62%) the most recent score from the East Coast Employee Survey was the best yet, and a record number, 69% of all employees took part.

In another comparator, an analysis of the number of sickness absence days taken by employees during the year showed a further reducing trend. The average number of sickness absence days per employee per year stood at over 14 immediately prior to handover in November 2009, and the most recent a result shows that this figure has now reduced to less than 9.5 days.

Train Punctuality

With ageing assets, which are being utilised more intensively, operational performance continues to be a major challenge for East Coast. During 2012/13 however, the Company started to see the benefits of the work instigated to improve fleet availability and reliability, and in 2013/14, this has now resulted in reduced cancellations and delays caused by train defects.

However, more than 80% of all delays to customers on the East Coast Main Line are a direct result of external factors, outside of the control of East Coast, with almost 70% of these total delays being directly attributable to infrastructure failures, which are the responsibility of Network Rail.

Whilst overall operational performance improved during the spring and summer of 2012, when East Coast was able to deliver the best punctuality on the line since records began, this position reversed during the severe winter of 2012/13. This period also saw a greater number of very significant infrastructure failures, and since the 2012/13 year-end, the position has deteriorated further.

At the half-way point in the 2013/14 financial year, Network Rail openly apologised to East Coast and its customers for the delays on the East Coast Main Line – as a result of a spate of infrastructure failures, and engineering possession overruns. The biggest delays occurred as a result of overhead wire failures, in three separate incidents.

DOR remains very concerned about this position, and is actively working with colleagues at Network Rail to tackle the underlying causes of this sustained poor performance.

Industry Recognition

During the year, the progress at East Coast was again recognised by numerous industry organisations, and to date, the Company has been the recipient of no fewer than 37 industry awards, including successes in safety best practice, people development, customer service, special projects, marketing and PR.

Transparency

As a responsible publicly owned Company, DOR believes that it is in the best interests of its shareholder, its customers, employees, and other stakeholders of East Coast that it makes freely available as much data as is reasonably possible about the business. East Coast has recently decided to publish such historical data that is available, including on punctuality, delays and cancellations to services, the reliability of its fleet, ridership and overcrowding, and customer complaints.

Doug Sutherland concludes: “The business plan for the remainder of the franchise during 2013/ 14 and the first two months of 2015 will see the good work continuing, with the twin aims of ensuring a successful transfer of the business back to the private sector – in good condition, and maximising the value of the franchise achieved by the Government and the taxpayer.”

ENDS


For further information:

Paul Emberley, 07802 776777, Neal Smith, 07500 447624, John Gelson, 0845 059 3988

Out of normal office hours (17.30 to 09.00 hours) please call 08700 005151 and ask for the duty press officer to be paged. Visit the East Coast Media Centre at http://www.mediacentre.eastcoast.co.uk for a full image library and press release archive.

Follow East Coast on Twitter, Facebook and LinkedIn

Notes to Editors

1. Directly Operated Railways was established by the UK Government's Department of Transport in July 2009. It fulfils the Secretary of State's requirements under Section 30 of the Railways Act to secure the continued provision of passenger railway services should an existing franchise not be able to complete its full term. National Express East Coast was awarded the operation of the East Coast Main Line rail franchise in December 2007 and this was scheduled to run until 31 March 2015, subject to its achievement of performance targets. However, in July 2009, the parent company, National Express Group, stated that it was limiting its financial support to the franchisee in view of the poor trading conditions that the Group was experiencing. This led to termination of the National Express East Coast franchise on 13 November 2009. Directly Operated Railways has assumed the role of a supportive parent organisation for East Coast until the franchise is re-let again to a new private sector operator in February 2015, and will also assist the Department for Transport franchise team as necessary to achieve this.

2. East Coast operates 155 weekday train services along the 936 mile East Coast Main Line, linking London King's Cross, the East Midlands, Yorkshire and Humberside, North East England and Scotland. The Company employs some 2,850 staff and is headquartered in York.

3. The DOR 2012/13 Annual Report and Financial Statements can be downloaded here. http://www.directlyoperatedrailways.co.uk/html/


Contact Information

Name
Media Centre
Telephone
0845 059 3988
Email
media.centre@eastcoast.co.uk


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