Fraser Eagle has ‘bright future’

Group MD says rail replacement company has turned corner

By Mel Holley, Route One

Announcing an improved set of annual accounts, Fraser Eagle Group Managing Director Kevin Dean says the company is strongly positioned for further growth and has a bright future ahead.

The figures, for the year to 30 June 2007, show that the Padiham-based company, Lancashire, turned a pre-tax loss of £426,063 in the previous year into a £789,774 profit, on a £30.3m turnover. Responding to criticism from operators about slow payment, Mr Dean says: “We are paying £2.2 million to coach and bus operators every month. We recognise that increased fuel and other costs are putting pressure on operators, but I can assure them they will all be paid. We’re the sponge in the middle, and when people delay paying us, it has a knock-on effect.

Although other players in the market - notably First, National Express and more recently Arriva - are carrying out rail replacement work for their own rail franchises using in-house own procurement teams, Mr Dean points to Fraser Eagle’s extension of its West Coast Main Line contract and newly-won four-year Serco Docklands Light Railway contract (for which a London office is about to open in Canary Wharf) as indicators of its long-term stability. It also holds a three-year deal with Flybe for air-replacement.

“We have good contracts, which we’re happy with, and despite competition we are not going to be squeezed out.”

During the period under review Fraser Eagle provided “significant financial support” to open-access operator Grand Central Railway Company (GCR), while it was trying to obtain a licence to run Sunderland-London King’s Cross passenger trains. This contributed a £877,000 operating loss, but Fraser Eagle sold its interest in GCR in March 2007, providing a £3.9m one-off profit on disposal.

At the end of the financial year, the board put subsidiary company, Fraser Eagle Contracts (FEC), into liquidation after it made a £739,000 operating loss. FEC undertook refurbishment of hotels and leisure premises and its activities were unconnected with the core passenger transport business, or its in-house coach operation.

Mr Dean adds that, adjusting for non-recurring items, the group generated an underlying operating profit from core activities of £1.3m, and this improvement from the previous year’s loss “is being sustained in the current year to 30 June 2008.”

“In addition, our cash position in the current and future financial years will benefit significantly from the fixed deferred consideration of £2.66m due in relation to the disposal of GCR.”