The Greater Anglia (GA) franchise began operations on 16th October 2016 for a period of 9 years. In April 2017 40% of this franchise was divested to Mitsui for an amount of £40 million. The franchise is let by the DfT and provides train services in the East Anglia region on intercity, commuter and rural networks, including services between Stansted Airport and London Liverpool Street. GA is undertaking a transformation in the next couple of years underpinned by a complete fleet replacement with new trains that will significantly increase capacity on the network. The first of the new trains will come into service in 2019 and all will be in service by the end of 2020. The timely delivery of new trains and infrastructure projects will take a lot of effort for the organisation in the next years.
The franchise faces the implications of the DfT’s imposition of the Central London Employment (CLE) mechanism. Intended to provide protection against the risk of external economic factors having an impact on passenger revenues, CLE is predicated on an assumed correlation between growth in central London employment levels and passenger growth with corresponding revenue growth. However, it is now clear that this correlation does not exist, due to changes in working travel patterns and growth in home working. As a result Greater Anglia, like other franchises in the London area, is facing a potentially further payment to the DfT for supposedly growth in CLE, without a corresponding rise in passenger numbers and revenues. The first payment to the DfT of € 41 million has been charged in 2018 for the period 2016-2018 and put the franchise into an in-year loss-making position in 2018. Shareholder loans (PCS) of € 89 million in total have been drawn in 2018 to finance the CLE payments and capital expenditures at an interest rate of 8%. These loans are repayable before the end of the franchise. Work is ongoing to resolve the CLE issue.
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Operating result before CLE
Operating result after CLE
Intercompany financial result
Profit after taxation
of the total CLE impact 2018 € 19 million relates to prior years.
Comparative figures have been adjusted for change in accounting principle regarding railway pension schemes.