£124m London red bus charity closes due to financial difficulties

06 Dec 2022 News

HCT Group London red bus

HCT Group

A 40-year-old community transport charity that had an income of £124m will close after suffering “unsustainable commercial losses”, it has announced.

HCT Group, previously chaired by former business secretary and Liberal Democrat party leader Sir Vince Cable, sold its London red bus operations to Stagecoach in August.

It then entered administration in September and administrators were appointed last month.

Some of the charity’s 2,000 staff have lost their jobs but trustees said the “vast majority” of roles have been transferred to new employers.

The social enterprise closed due to underperforming acquisitions before the pandemic, Covid-19-related financial challenges and a surge in fuel and labour costs. 

Accounts filed with Companies House for the year ended 28 September 2020 show that the social enterprise’s total income had risen by 38% year on year to £123.7m, but it recorded a deficit of £10m that year. 

HCT Group was one of eight new entrants in this year’s Charity Finance 100 Index, moving up eight places into position 93. 

A challenging period 

The trustees explained in a statement that HCT Group was forced to close due to “a period of multiple challenges” including underperforming acquisitions prior to the pandemic, the financial impact of the pandemic and the current surge in fuel and labour costs. 

“As a small bus operator, this led to a difficult trading position and the group being unable to continue delivering and supporting its community transport services,” they wrote.  

They said that HCT Group’s operations had to be restructured to minimise the impact on staff, clients, beneficiaries, creditors and communities.

“This has been achieved through the sale of most of the business units and, where that was not possible, working with transport commissioners to identify new providers for services.”

For instance, the social enterprise’s London red bus operations were sold to Stagecoach in August 2022 and its team to the new operator. 

This, alongside other transactions, resulted in the “vast majority of the jobs” to be preserved with different employers and avoid service disruption.

The accounts show that the average number of staff at the group was 2,225 in 2020 and 1,867 the previous year. 

The group had in total £30m in current and fixed assets, of which £17m were liabilities.

‘Impossible to secure a future for the group’

On 23 November, Mark Thornton, Neville Side and Martha Thompson were appointed joint administrators of HCT Group.

Thornton, business restructuring partner at BDO, said: “Unfavourable market conditions, including the rising cost of fuel, led to unsustainable commercial losses and, unfortunately, it was not possible to secure a future for the group as a whole. 

“Prior to administration, the group, working with its advisors, was able to secure the sale of various business operations and an orderly transfer of the majority of bus routes to minimise disruption for bus passengers and saving a significant number of jobs throughout the group. As joint administrators, we will be taking all necessary steps to maximise returns for the benefit of all creditors in accordance with our legal duties.”

‘An immensely sad day’

The trustees added: “The closure of HCT Group is an immensely sad day for all the team and trustees. Everyone worked tirelessly to put the organisation on a sustainable footing, but market forces, lack of scale and multiple adverse events meant this proved impossible.  

“We deeply regret that some of our colleagues and beneficiaries have been impacted by the loss of their jobs or critical services. However, we are heartened that through the sale of subsidiaries and transfers of services, we have been able to protect so many livelihoods and services.”

The administration of HCT Group was due to end on 23 September 2023 but was extended for another 12 months.  

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