Nottingham's tram network sees profits slip as costs grow by millions of pounds

But the network has seen passenger demand increase, with turnover also on the rise

The company which manages Nottingham's tram network has seen its profits shrink, with cost increases chipping away at its increased turnover. Nottingham Trams Limited, which is paid to run the city's network on behalf of Tramlink, has filed its financial results for the year ending December 31, 2023.

The firm operates and maintains the city's tramway services under the NET branding and has a contract to do so until 2034. Accounts put together by the company, which is a subsidiary of French state-owned public transport firm Keolis, explained passenger demand had increased from 12.7 million to 14.4 million in 2023.

Turnover had grown from £29,765,493 in 2022 to £32,357,844 in 2023, but increased costs shrunk the company's operating profit from £847,946 in 2022 to £503,749 last year. The cost of making sales rose by £1,524,106 when compared to the year before, while administrative expenses increased by £1,412,441.

The firm's strategic report, contained within the financial results submitted to Companies House, said the network's 1.7 million passenger increase had been "supported by sustained improvements in operational performance" that provided an average of 95.9 per cent tram service availability across the year.

The report added: "Focusing on initiatives to tackle fare evasion, utilising local policing has proved to be very effective in further reducing ticketless travel and improving the confidence and safety for travelling passengers. This, in conjunction with working collaboratively with local outreach charities, has also resulted in a notable decrease in reports of anti-social behaviour."

The company's directors added that tram infrastructure had been significantly improved at the network's Forest and Nottingham Railway Station stops. "These renewals will further improve the resilience of the network and deliver enhanced operational performance," the report added.

Directors said the company's success was underpinned by "continued good financial performance" that provided value to shareholders. They added the company was expected to be cash-generative in the year after its financial statements were approved, with parent company Keolis willing to provide up to £10 million during this period when taking Nottingham City Council's financial situation into consideration.

Tramlink, which is the group of companies that run the city's NET network, reported a £57 million loss in its most recent accounts. A planned 10-day strike by tram workers, which NET said would put the survival of the service in risk and severely disrupt Nottingham's Goose Fair, was recently called off after just a day.

The network first started operating in 2004, helped along by 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.

The city council pays its share through the Workplace Parking Levy, which equates to around £38m every year, alongside funding from the Government. The city council’s contribution funds the capital side, such as the building of the track and buying of new trams, while customer contributions pay for operations and provide a return for investors.

Sarah Turner, service delivery and safety director at Nottingham Trams Limited (NTL) said: “Our financial profit is driven by hitting targets set around running Nottingham's tram network as efficiently as possible. We’re pleased to share that we achieved an average of 95.9% availability of our services throughout 2023, but unfortunately unforeseen issues can sometimes impact our service and therefore, our profitability.

"Over the course of 2023, this included events such as flooding across the network, line damage and police incidents - all of which were unavoidable and incur financial cost to fix, while also affecting our availability figures.

"Other factors such as an increase in operating costs, including staff costs, and a rise in material costs also impacted profits in 2023. As a network, we're continuing to work tirelessly to improve our services consistently for all of our customers across the city.”