Assuming the role of Chairman last year, I was faced with explaining to you a loss of £112k following a previous operating profit of £116k. This year I am pleased to report that the loss has reduced to £35,990. However, if we calculate the common measurement of Earnings Before Interest, Taxation, Amortisation and Depreciation (EBITDA), then this equates to a modest profit of £13,922. But for the loss of revenue and increased operating costs caused by the landslip the results would have been considerably better.
This is an encouraging start and provides considerable comfort following the previous year. However, there is no room for complacency and as I shall discuss, we are presently facing a tight working capital position.
Examining this year’s accounts, the improved trading position is clear to see. On the top line, turnover increased by 18% to £682k and the Gross Margin increased from 56% to 60%, while Administrative Expenses increased by 4.5%.
The increase in top line turnover was primarily attributable to a blistering 52% increase in Catering income, combined with a modest 8.3% increase in Passenger Service revenue.
Ignoring rent and utilities recharge for the moment, our MyTestTrack.com business has more-or-less stalled, although we have in track today negotiations that, if they come to fruition, will revive this part of the business in future years.
These results confirm several assumptions that some may regard as self-evident. The future of this enterprise lies with high-margin services serving the general visitor seeking a pleasant and fulfilling experience rather than simple return fares. Heritage railways have the potential to survive and thrive but only if some truths are acknowledged: the organisation must be able to pay its way operationally, provided it maintains a tight rein on employee headcount, and seek to recover costs wherever possible. Heritage railways rely on the goodwill and dedication of their volunteer workforce and, of equal importance, their charitable organisation.
As we have seen from the work necessary to deal with the Duffield landslip, without the ready and unstinting support of the Ecclesbourne Valley Railway Association, we would have faced an insurmountable obstacle. In turn, EVRA has actively supported the improvement of the railway from the acquisition of an excellent, and brand new, conference room, through to the refurbishment of Wirksworth’s children’s play area and even new benches for Wirksworth station. I wish to give the company’s and my own personal thanks to EVRA for their continuing support and also acknowledge with thanks the growing contribution of the EVR Trust who have maintained a cordial and useful relationship with East Midlands Railway.
Therefore, whilst a heritage railway must work to maintain an operational surplus, the capital burden cannot be wholly funded from revenue. The landslip at Duffield, whilst not of the railway’s own making, should be regarded as an example of the issues already being experienced by other railways, both heritage and main line. We own a 150-year-old asset and whilst we know the general condition of that asset, there is an ever-present risk that one storm following a period of heavy drought might cause another slip or similar fault that could once again affect our operation.
Inspired by the generous support of the public who donated £30,000 to our landslip appeal, we are seeking to establish a contingency fund: a source of working capital to allow the company to deal with short-term exigencies. We are not in a position to announce this now as the landslip has absorbed a great deal of management time but intend to do so during the course of this year.
The diversion of attention toward the landslip has diverted a great deal of management attention. The unfortunate coincidence of our new Infrastructure Manager being forced to take sick leave has meant the burden of day-to-day management of the line slew has rested with our highly capable General Manager, Simon Scott. Simon has done an excellent job of keeping things going while, simultaneously going so far as to man a digger to help excavate the foundations for the slew. Simon’s excellent contribution notwithstanding, it is our belief that the loss to the revenue account as a result of the landslip is upwards of £50,000. The nature of this loss has manifested itself from a general increase in operation costs, including the need to hire two locomotives instead of one, and the necessity to make purchases at short notice, through to diversion from the recouping of costs, loss of passenger revenue arising at Duffield and generation of new business opportunities.
At the time of my writing this report, the path to resolution for the landslip is underway with operation to Duffield restored. These issues aside, Simon has established relations with several infrastructure training companies, and this has led to him obtaining their services for free or at heavily discounted rates. Similarly, we are about to undertake a review of costs and, in particular, seek to ensure that all users of our facilities make a fair and proportional contribution to our costs. Considering that power, light and heat costs increased by 60% from last year (in additional to a 5% increase in fuel charges), the Company cannot shoulder this burden on its own.
The combined effects of the heavy loss in 2022-23, the landslip and a degree of dislocation as our management structure consolidated after the retirement of Mike Evans has left WyvernRail with a very tight working capital position. Although turnover this year indicates further progress over 2023-24, money is very tight and I thank my management team for their forbearance while we navigate our way to a better cash position. I feel acknowledgement of our Finance Director, Allan Speakman, is necessary here as Allan has worked very hard to navigate our way forward during this difficult period.
Leading a heritage railway involves the management of a coalition of individuals and groups. All are heading in a generally similar direction, but the players often bump into one another, sometimes in broadly the same direction, occasionally diametrically opposite. It is necessary to maintain a sense of purpose and direction. This has been difficult as we have gone through the upheavals in management and infrastructure in the past couple of years but I have the evidence of progress, from Tim Oaks taking on the role of Company Secretary and outsourcing our shareholder management processes (I hope to have more news of that before the AGM) to our catering function being bolstered by an excellent rebuild of our kitchen car to allow the full preparation of meals on the move.
This leads me to my final observation. As I have discussed, our catering sales have grown by 52% and with the kitchen car rebuild, plus one and later a third LMS dining car coming into traffic, I must acknowledge and thank our catering team, led by Sam Weaver, who have established a reputation for a very quality of service and an excellent and varied range of dining options. This high margin business is essential to our growth.
The catering team makes great use of paid staff, not least because of the burden of time and the need for a fully professional team. In turn, the catering team offers a first step on the career ladder for many young people in the locality. I am proud of our employees, and it is important that our enterprise provides genuine careers in a variety of disciplines.
It is my fervent hope that we can continue to expand and keep our coalition of volunteers, supporters, employees and other stakeholders working toward a noble common purpose. As the owners of this business, I thank you for your support and forbearance and look forward to meeting you on the 27th July.
The directors present their annual report and financial statements for the year ended 31 January 2024.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company holds or issues financial instruments in order to achieve three main objectives, being:
(a) to finance its operations.
(b) to manage its exposure to interest risk arising from its operations and from its source of finance; and
(c) for trading purposes.
In addition, various financial instruments (e.g trade debtors, trade creditors, accruals and prepayments) arise directly from the company's operations.
Transactions in financial instruments result in the company assuming or transferring to another party one or more of the financial risks described below:
Liquidity risk
The company monitors its cash flow closely on a day-to-day basis.
Interest rate risk
The company has managed its interest rate risk by borrowing at at fixed rate.
Credit risk
The company monitors credit risk closely and considers that its current policies of credit checks meet its objectives of managing exposure to credit risk.
The directors present the strategic report for the year ended 31 January 2024.
The directors aim to present a balanced and comprehensive review of the development and performance of the company during the year and its position at the year end. The review is consistent with the size and nature of the company and is written in the context of the risks and uncertainties faced.
The Company trades within the security of freehold ownership of the Railway. The company has had a difficult year with a further change in management. Added to this there has been a major disruption with the landslip. This has resulted in significant capital costs which have been partly funded by EVRA. Also the non running to Duffield we believe effects turnover by 15% plus there are additional costs. The net loss for the year was £35,990, including depreciation and amortisation charges, and we refer you to the comments made in the Chairman's Statement regarding the review of the performance throughout the year.
As at the balance sheet date, the net asset position of the Company remains strong due to the capital spend and infrastructure projects that have taken place over the years. The Company's cash position has remained stable over the period.
For the 2024 season there has again been a concentration on the successful policy of more family events. Also due to EVRAs support the renovation of the children's play ground and miniature railway has provided more facilities for the family entertainment. The expansion of these facilities has again lead to additional income which has been borne out with healthy trading in the first 3 months of the season. The landslip has been further major expense of around £50k but with EVRAs support for materials we have been able to remedy the situation.
During the year a further £3,275 of share capital was raised, primarily to fund the expansion of facilities for the Railway's visitors.
The decision was taken at the August 2014 EGM to authorise the Directors to accept the return of shares as gifts from the estates of decreased shareholders; in this period no shares have been returned to the Company following this resolution, making a total of 156,700 shares returned to date.
On behalf of the board
Principal risks and uncertainties
The principal elements of the Company’s trading base are leisure/tourism and provision of testing and training facilities for the rail industry; the performance of both is subject to any change in general economic conditions.
The Company is dependent on its volunteer workforce to run its railway services.
The Company owns the freehold of the Railway. It has financial responsibility for the upkeep of all the Railway’s nine miles of infrastructure bar two bridges. Consequently revenue spending may have to increase should any unexpected incident arise.
The Directors understand the business and the evolving environment in which we operate. The board meet at least once per month to discuss any issues and to consider how decisions will impact the stakeholders of WyvernRail plc.
The directors recognise that WyvernRail plc’s employees and volunteers are fundamental and core to our business and delivery of strategic ambitions. The success of our business depends on attracting, retaining, and motivating employees and volunteers. From ensuring that we remain a positive employer, from pay and benefits to health, safety and workplace environment, the Directors factor the implications of decisions on employees and volunteers and the wider workplace, where relevant and feasible.
Delivering our strategy requires strong mutually beneficial relationships with suppliers and customers. WyvernRail plc seeks the promotion and application of certain general principles in such relationships. The ability to promote these principles effectively is an important factor in the decision to enter into or remain in such relationships and this alongside other standards are reviewed and approved by the board periodically. The business continuously assesses the priorities related to customers and those with whom we do business on these topics, for example, within the context of business strategy updates and investment proposals.
This aspect is inherent in our strategic ambitions, most notably in our ambitions to preserve and operate the full line between Duffield and Wirksworth as a working heritage railway for the enjoyment of the general public, providing both educational and entertainment activities. Specific measures are contained within our Safety Management System (SMS).
The Board periodically reviews and approves clear frameworks, such as Non-executive Director appointment policy, Dignity at Work policy, Equality Policy and Volunteer’s Handbook, to ensure that its high standards are maintained both within the WyvernRail plc business and the business relationships we maintain. This, complemented by the ways the Board is informed and monitors compliance with relevant governance standards, helps assure its decisions are taken and that WyvernRail plc acts in ways that promote high standards of business conduct.
After weighing up all relevant factors, the Directors consider which course of action best enables delivery of our strategy through the long-term, taking into consideration the impact on stakeholders. In doing so, our Directors act fairly as between the Company’s members but are not required to balance the Company’s interest with those of other stakeholders, and this can sometimes mean that certain stakeholder interests may not be fully aligned.
The Board recognises that it has an important role in assessing and monitoring that our desired culture is embedded in the values, attitudes and behaviours we demonstrate, including in our activities and stakeholder relationships. The Board has established honesty, integrity and respect for people as WyvernRail plc’s core values. The Non-executive Director appointment policy, Dignity at Work policy, Equality Policy, Volunteer’s Handbook and Rule Book help everyone at WyvernRail plc act in line with these values and comply with relevant laws and regulations. The WyvernRail plc Safety Management System is designed to help protect people and the environment. We also strive to maintain a diverse and inclusive culture.
On behalf of the board
Basis for opinion
Material uncertainty relating to going concern
We draw attention to note 1.2 to the financial statements, which indicates that the company incurred a net loss of £35,990 during the year ended 31 January 2024 and, as at that date, the company’s current liabilities exceeded its current assets by £208,007. As stated in note 1.2, these conditions indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
We are not responsible for preventing irregularities. Our approach to detecting irregularities included, but was not limited to, the following:
obtaining an understanding of the legal and regulatory framework applicable to the entity and how the entity is complying with that framework;
obtaining an understanding of the entity's policies and procedures and how the entity has complied with these, through discussions and walkthrough testing;
obtaining an understanding of the entity's risk assessment process, including the risk of fraud;
enquiring of management as to actual and potential fraud, litigation and claims;
designing our audit procedures to respond to our risk assessment;
performing audit testing over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness and evaluating the business rationale of significant transactions outside the normal course of business;
assessing whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and
performing analytical procedures to identify any large, unusual or unexpected relationships.
Whilst considering how our audit work addressed the detection of irregularities, we also consider the likelihood of detection based on our approach. Irregularities arising from fraud are inherently more difficult to detect than those arising from error.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
WyvernRail plc is a public company limited by shares incorporated in England and Wales. The registered office is Wirksworth Station, Station Road, Wirksworth, Derbyshire, DE4 4FB.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have risk of causing material adjustment to the carrying amount of assets and liabilities are set out below:
Fixed asset impairment and depreciation - land and buildings represents a significant proportion of the asset base of the company and hence estimates and assumptions made in determining their carrying value are significant to the business. The depreciation charge is derived after determining an estimate of an assets useful life and residual value at the end of its life. The useful lives and residual values for the company's assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness.
Impairment of financial assets - management considers in detail when it is appropriate to recognise impairment reserves against specific financial assets including debtors and accrued income. This judgement will take into account the aging profile and historical experience.
Government grants received, included within other operating income, relate to amounts received from the National Lottery Heritage Fund.
The amount of grants recognised in the financial statements was £2,500 (2023 - £8,190).
Government grants received in prior years which relate to capital expenditure have been recognised in the accounts of £8,754 (2023 - £8,754).
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
During the year £12,000 (2023 - £2,008) of wages have been capitalised as part of the project management of the capital developments to date and are therefore not reflected in the profit and loss charge for the year.
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
The carrying value of land and buildings comprises:
Included in land and buildings above is freehold land with a cost price of £124,001. In accordance with the Company's accounting policy such land is recognised at cost. The directors have carried out their own assessment of this land and believe it to have a current fair value in the region of £640,000, however this is not supported by any external professional valuations.
The above loan is in respect of a Bounce Back Loan to support the company during the Covid epidemic. As with all loans of this nature these are secured by the government.
Bank borrowings is denominated in Sterling (£) with a nominal interest rate of 2.5% and the final instalment is due in April 2030.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Ordinary shares have the following rights, preferences and restrictions:
Every member (being an individual) present in person or (being a corporation) is present by a representative, not being himself a member, shall have one vote and on a poll, every member present or by proxy shall have one vote for each share of which he is the holder. Each share has equal rights to dividends and is entitled to participate in a distribution arising from a winding up of the company.
During the year 3,275 Ordinary shares having an aggregate nominal value of £3,275 were allotted for an aggregate consideration of £3,275.
The profit and loss account represents cumulative profits and losses net of dividends and other adjustments.
Other reserves represents the nominal value of ordinary shares that have been re-purchased by the company.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The amount of non-cancellable operating lease payments recognised as an expense during the year was £10,500 (2023 - £4,375).
The total of future minimum lease payments is as follows:
The amount of non-cancellable operating lease receipts recognised as income during the year was £9,180 (2023 - £9,180).
Summary of transactions with other related parties
Shareholders of the company
During the year the company recharged costs to these related parties of £9,316 (2023 - £21,687), made purchases of £5,864 (2023 - £18,495). The balance owed to the related parties at the balance sheet date was £37,414 (2023 - £37,382).
Company with common director
The balance owed to the related party at the balance sheet date was £6,500 (2023 - £nil).
Other transactions with directors
During the year, the company has made purchases totalling £7,775 (2023 - £nil). At the balance sheet date the amount owed to the directors was £30,275 (2023 - £6,000).