Nottingham tram company 'losing almost £1m a week'

Tramlink Nottingham lost more than £3 per trip

The company which runs Nottingham's tram service could be unable to pay its debts in future, auditors have warned.

Tramlink Nottingham's annual report showed the company was losing nearly £1m a week in the year up to March 2017, despite 15 million passengers using the service during that period.

The company lost more than £3 per trip - more than the price of a ticket.

Tramlink Nottingham said the loss was due to an impairment charge, but turnover increased by more than £15m.

The annual report shows losses of £48.51m, despite passengers numbers rising from 11.5 million in 2016.

In the year up to March 2017 - the first full year of operation since the latest extension of the service - the company had a turnover of about £60.63m, up from £44.53m in the previous financial year.

The tram system was extended in August 2015

According to the annual report, which was audited by PricewaterhouseCoopers, there is a "potential risk" of the ratio between debt and cashflow agreed in Tramlink Nottingham's financial model "being breached in the foreseeable future if no action is taken".

It found concerns over how debts would be paid "indicate the material uncertainty that may cast significant doubt on the company's ability to continue as a going concern".

But it also said the company was talking to lenders over "partial refinancing".

A spokesman for Tramlink Nottingham said the company had reduced its debt by £4.8m in the most recent financial period, and that it was due to meet all the requirements of its contract, which runs until 2034.

They said: "The nature of private finance initiative (PFI) concessions is well-known. It is recognised that during the early years of any concession, the project carries a high level of commercial debt, reflecting the front-end cost of construction of the new infrastructure."