I have to say that I don’t actually believe it myself:
The figures are astonishing. In the financial year ending in March 2012, the train companies gained an average return of 147% on every pound they put into their business. Forget about high: that is stratospheric. It suggests that – despite all the promises made by the freshly rehabilitated John Major – the train operators are investing barely anything, but making bumper returns.
If you’re a pensioner, imagine a savings account that promised to give you next year a 147% return on your cash, rather than the 1% you’ll typically get now. If you’re a first-time buyer, imagine selling up next year at a 147% markup – impossible even in primest, most central London.
Other businesses would kill for the kind of low-investment, high-returns that Arriva, Stagecoach and the rest are making from their train sets. Big supermarkets get about £1.08 back for every quid they put in: all that stock ties up a lot of cash. Even the supposed profiteers over at Barclays would punch the air at a 10% return. For every pound the railway barons put in, they get £2.47 back.
And that most recent figure isn’t a fluke. The Cresc team went back all the way to the start of the electronic database in 2004, and found that year after year the pre-tax return on capital employed was never less than 100%. Just as remarkable are the train operators’ dividends: pretty much all the profit after tax was paid to shareholders.
Anyone care to enlighten us as to what is going on here?