If you register, you can do a lot more. And become an active part of our growing community. You'll have access to hidden forums, and enjoy the ability of replying and starting conversations.

West Somerset Railway General Discussion

Discussion in 'Heritage Railways & Centres in the UK' started by gwr4090, Nov 15, 2007.

  1. 35B

    35B Nat Pres stalwart

    Joined:
    Jun 18, 2011
    Messages:
    19,346
    Likes Received:
    15,546
    Gender:
    Male
    Location:
    Grantham
    Heritage Railway Volunteer:
    No I do not currently volunteer
    I agree. But that investment is part of the cost base of the railway, and should be accounted for as such.


    Sent from my iPad using Tapatalk
     
    andrewtoplis likes this.
  2. 30854

    30854 Resident of Nat Pres

    Joined:
    Mar 8, 2017
    Messages:
    10,063
    Likes Received:
    9,709
    Gender:
    Male
    Occupation:
    Retired
    Location:
    Brighton&Hove
    Heritage Railway Volunteer:
    No I do not currently volunteer
    Where's @Bean-counter when we need him? Oh well ..... next best it'll have to be ....

    IS THERE A CHARTERED ACCOUNTANT IN THE HOUSE PLEASE?

    ..... and I never thought I'd find myself asking that! :Woot:
     
    35B likes this.
  3. Matt78

    Matt78 Well-Known Member

    Joined:
    Jun 27, 2007
    Messages:
    1,468
    Likes Received:
    2,437
    Occupation:
    Solicitor
    Location:
    South Wales
    I wouldn’t use the word “profit” but instead use the word “surplus”.
    There are three types of “surplus” on a heritage railway-

    1. firstly the direct costs of the particular operating day eg ticket sales over the costs of coal and loco hire etc.

    2. Secondly the surplus from 1 is carried forward and then applied against the fixed annual costs of the railway eg insurance, staff salaries, and other general costs ; and

    3. if a surplus results from 2 then this is often used for repairs and renewals and sometime improvements.

    Most typically railways can make a surplus/profit from 1 and 2 so the direct costs of running and fixed annual costs are covered. The big issue is 3, being funding repairs and renewals from operating surpluses, particularly where there is a “backlog” where the residual life in equipment is coming to the end. There are alternative ways such as donations but being brutally honest there is a never ending cycle of repairs and renewals for railways of more than a certain size. Hence the key figure on the profit and loss accounts is how much is invested in repairs and renewals. Better to have a break even with high investment in repairs than instead to claim a “profit” from 1 and 2 above and be lagging behind on 3.

    regards

    Matt
     
    Last edited: Mar 1, 2022
  4. 35B

    35B Nat Pres stalwart

    Joined:
    Jun 18, 2011
    Messages:
    19,346
    Likes Received:
    15,546
    Gender:
    Male
    Location:
    Grantham
    Heritage Railway Volunteer:
    No I do not currently volunteer
    Which is why, in context, I said “profit”. Where said profit is surplus after allowing for 1, 2 & 3.


    Sent from my iPad using Tapatalk
     
  5. Gladiator 5076

    Gladiator 5076 Part of the furniture

    Joined:
    Oct 2, 2015
    Messages:
    3,606
    Likes Received:
    2,842
    Gender:
    Male
    Location:
    Swanage
    Heritage Railway Volunteer:
    No I do not currently volunteer
    Whilst nothing wrong with what the market will bear, it still needs to cover your costs. A 20 mile line will have more infrastructure costs than a 10 mile line even if the locos end up running more trips on the 10 mile line each day. A line with limited competition of other attractions may end up not having much to "compete with".
    There is no "one model"
     
    Copper-capped likes this.
  6. Big Al

    Big Al Nat Pres stalwart Staff Member Moderator

    Joined:
    May 30, 2009
    Messages:
    18,740
    Likes Received:
    17,823
    Location:
    1016
    Heritage Railway Volunteer:
    No I do not currently volunteer
    My guess is that the pricing structure is designed to raise income sufficient to support a 23 mile railway. Whether it results in reduced visitor numbers will only be discovered once the season is under way. What would be interesting is to know what proportion of ticket sales is for journeys from one end of the line to the other - galas excepted - and how that breaks down between journeys that start at BL and those that start at Minehead.

    But I'm sure the management has to be on top of that detail to decide prices in the first place. But I have to say that the numbers being bandied around do seem on the high side.
     
  7. ross

    ross Member

    Joined:
    May 18, 2017
    Messages:
    955
    Likes Received:
    2,320
    Gender:
    Male
    Location:
    Titfield
    Heritage Railway Volunteer:
    No I do not currently volunteer
    Question, then.
    If our notional family is staying a week or two in a place on holiday, there will be some "big ticket" days, some medium ticket days, and some cheap days out. The proportion of each will depend on their income. Currently, I would say that the steam train day is one of the "big ticket" days- it is for my family. £70-£90 basic outlay, plus a few cups of tea and ice creams, and we are around the £100 mark- rivalling the cost of a day at one of the local theme parks, the zoo or similar.
    If fares were set so that the railway was in the medium ticket range, £50-£60, could there be sufficient increase in customer numbers that the overall basic income was the same, but with a lot more people to sell tea and ice cream to?
    Or are trains already running at capacity and there isn't scope for more bums on seats without more seats and hence more operating cost? Is the customer demographic one which tends to shun crowds and prefers to have more space, and might be put off if trains were too busy?
    From what I've seen*, standard gauge lines are more expensive to visit, and appear to have surplus capacity. Narrow gauge lines tend to be shorter, cost less, and operating at or near capacity.
    A couple of years back, when the 'new' Baldwin was first out on the BMR I visited on the weekend. The train was full-all seats taken, and people of every age, shape and colour seemed to enjoy every minute. All tipped out at Pontsticill on the way down and bought lots of ice cream. Terrific jolly atmosphere. I went back a couple of weeks later on a weekday, with just my son. Train was about 1/6 loaded, and everyone seemed to be grumbling- Cost of tickets, lack of heritage, having to stop at Pontsticill with nothing to do, and being forced to buy tea to pass the time- Grumble grumble. The second trip they may well have been steam enthusiasts, but the hoi polloi seemed to enjoy themselves more.
    * I haven't been everywhere, I probably didn't go on the gala day
     
    johnofwessex likes this.
  8. Sidmouth

    Sidmouth Resident of Nat Pres Staff Member Moderator

    Joined:
    Sep 12, 2005
    Messages:
    8,911
    Likes Received:
    6,441
    Gender:
    Male
    Location:
    Alderan !
    Simple answer in an accounting sense you when you spend on capital the costs are capitalised in the balance sheet and the values reduced over the assets useful life (Depreciation) Engines could be 10 years, carriages maybe longer , Track 20+

    General repairs and maintenance on engines and stock would be expensed to the P&L

    in the case of 53808 the contract in essence has what I think is a contingent liability in it , ie an obligation to pay for the engines overhaul at the end of the ticket and that should be charged in the accounts through the useful life of the engine

    Remember as well profit is an accounting construct involving accruals , prepayments, depreciation which involve no cash movements. That is why the most interesting page in a set of accounts is the cash flow statement . A railway building cash reserves and generating cash surpluses year on year can afford to invest in capital replacement . Release a large provision from the balance sheet can create a profit even when the overall cash flow is negative so profits do not lead to the same positive cash flows
     
  9. Bayard

    Bayard Well-Known Member

    Joined:
    Apr 26, 2015
    Messages:
    1,665
    Likes Received:
    3,538
    Gender:
    Male
    Heritage Railway Volunteer:
    No I do not currently volunteer
    "What the market will bear" is the absolute maximum income you can get. Anything different in the way of a pricing structure will generate less for the same costs. If "what the market will bear" doesn't cover costs, nothing will.
     
    ross and MellishR like this.
  10. 35B

    35B Nat Pres stalwart

    Joined:
    Jun 18, 2011
    Messages:
    19,346
    Likes Received:
    15,546
    Gender:
    Male
    Location:
    Grantham
    Heritage Railway Volunteer:
    No I do not currently volunteer
    True, but sometimes setting prices on “what the market will bear” leads to an underestimation of what prices should be charged. Working from costs up is sometimes a useful challenge to assumptions about what the market will bear.


    Sent from my iPhone using Tapatalk
     
    Morris_mad likes this.
  11. 30854

    30854 Resident of Nat Pres

    Joined:
    Mar 8, 2017
    Messages:
    10,063
    Likes Received:
    9,709
    Gender:
    Male
    Occupation:
    Retired
    Location:
    Brighton&Hove
    Heritage Railway Volunteer:
    No I do not currently volunteer
    In the specific case of charitable entities (i.e. no share will ever pay over a dividend to the shareholder) I appreciate that, but there remain statutory accounting requirements which do have financial implications. Of course, none of the terminological niceties ultimately count for anything much if income from the sources enumerated by @Jamessquared fail to cover the costs of operating.
     
  12. andrewtoplis

    andrewtoplis Well-Known Member

    Joined:
    Mar 28, 2006
    Messages:
    1,298
    Likes Received:
    737
    Heritage Railway Volunteer:
    Yes I am an active volunteer
    Whilst I know what you mean, I think that should be "if income from all sources fails to meet the costs of operating, maintaining and renewing the railway".
     
  13. 30854

    30854 Resident of Nat Pres

    Joined:
    Mar 8, 2017
    Messages:
    10,063
    Likes Received:
    9,709
    Gender:
    Male
    Occupation:
    Retired
    Location:
    Brighton&Hove
    Heritage Railway Volunteer:
    No I do not currently volunteer
    Indeed ..... I'd merely thought, income wise, Tom's list had pretty much nailed the lot. For the sake of completeness, the UK's Gift Aid facility really deserves a specific mention too.
     
  14. 35B

    35B Nat Pres stalwart

    Joined:
    Jun 18, 2011
    Messages:
    19,346
    Likes Received:
    15,546
    Gender:
    Male
    Location:
    Grantham
    Heritage Railway Volunteer:
    No I do not currently volunteer
    As someone who processes Gift Aid, I'd say it's vitally important - but not a separate income stream. It needs to be seen as maximising the existing charitable streams, not a separate strand.
     
  15. andrewtoplis

    andrewtoplis Well-Known Member

    Joined:
    Mar 28, 2006
    Messages:
    1,298
    Likes Received:
    737
    Heritage Railway Volunteer:
    Yes I am an active volunteer
    It was the ops, maintenance and renewals bit I meant to emphasise, not just operations :D
     
  16. simon

    simon Resident of Nat Pres

    Joined:
    Jun 26, 2006
    Messages:
    11,096
    Likes Received:
    4,751
    Perhaps the finances of railways needs a thread all of its own, its not just the WSR that faces this issue?
     
    Last edited: Mar 2, 2022
    Bluenosejohn, Matt78 and 35B like this.
  17. 30854

    30854 Resident of Nat Pres

    Joined:
    Mar 8, 2017
    Messages:
    10,063
    Likes Received:
    9,709
    Gender:
    Male
    Occupation:
    Retired
    Location:
    Brighton&Hove
    Heritage Railway Volunteer:
    No I do not currently volunteer
    Oh ... them!
    Agreed, though perhaps widened to all pw related? Coo-eee .... How about it mods? :)
     
  18. Paulthehitch

    Paulthehitch Member

    Joined:
    Feb 13, 2020
    Messages:
    869
    Likes Received:
    941
    Gender:
    Male
    Location:
    Hayling Island
    Heritage Railway Volunteer:
    Yes I am an active volunteer
    Well there are a few that buy a small quantity of new rail each year, paid for from revenue. Alas, there are others who don't but resort to public appeals.
     
  19. RailWest

    RailWest Part of the furniture

    Joined:
    Dec 7, 2011
    Messages:
    3,113
    Likes Received:
    5,610
    Gender:
    Male
    Location:
    West Country
    But....passengers get off at places like Ropley to visit the loco shed etc. Would they get off at WD just for a playground and/or miniature railway in sufficient numbers to warrant providing such facilities there?
     
  20. Bayard

    Bayard Well-Known Member

    Joined:
    Apr 26, 2015
    Messages:
    1,665
    Likes Received:
    3,538
    Gender:
    Male
    Heritage Railway Volunteer:
    No I do not currently volunteer
    If it does, then you have got it wrong somewhere. "What the market will bear" is just the same as "the maximum the market will bear", i.e. the maximum you can charge for a given cost of production. Working from costs up will possibly give you the same figure, but is most likely to bring in less, either because you are charging less than most people are prepared to pay for what you are offering or because most people are not prepared to pay what you are charging.
     
    ross likes this.

Share This Page