Interim Management Statement
Good performance in bus and rail; in line with management expectations
The Go-Ahead Group plc today announces its Interim Management Statement for the period from 29 December 2013 to 30 April 2014. The figures in this statement are reported on a year to date basis from 30 June 2013 to 29 March 2014.
David Brown, Group Chief Executive of Go-Ahead, said:
“I am pleased with the overall performance of both our bus and rail businesses and our expectations for the full year remain unchanged.
“We continue to make good progress in our bus division and are on course to achieve our operating profit target of £100m by 2015/16. Our focus remains on achieving cost efficiencies in all areas of the business and driving revenue growth through our high quality operations. During the period we welcomed the results of the independent statutory watchdog Passenger Focus’ national customer satisfaction survey in which Go North East achieved 90% satisfaction.
“In our rail division overall underlying trading remains in line with our expectations. We await the outcome of the DfT’s Thameslink franchise competition and our bid team continues to work on upcoming opportunities.”
Bus:
Deregulated:
Solid underlying revenue growth in our deregulated bus operations has been driven by good growth in passenger numbers and increased mileage, as previously reported. Both commercial and concessionary travel continue to grow on our network.
Year to date growth rates*:
Revenue
Passenger journeys
Total
(including Olympics)
Underlying
(excluding Olympics)
Total
(including Olympics)
Underlying
(excluding Olympics)
c.3.5%
c.4%
c.2%#
c.2%
#The Olympic contract was on a gross cost basis. Passenger journeys were not recorded.
Regulated:
Our London bus operations have delivered a strong performance with further mileage growth in the third quarter due to continued higher levels of rail replacement work. Following on from an extended period of stronger than expected QICs performance, bonus payments declined slightly in the quarter.
Year to date growth rates*:
Revenue
Mileage
Total
(including Olympics)
Underlying
(excluding Olympics)
Total
(including Olympics)
Underlying
(excluding Olympics)
c.6%
c.8%
c.2%
c.2.5%
Rail:
Our rail division operates the Southern (including Gatwick Express), Southeastern and London Midland franchises through our 65% owned subsidiary Govia.
Underlying revenue growth in the overall rail division remains solid and in line with our expectations. Passenger journey data across all companies continues to be impacted by changes in Travelcard allocations, inflating growth rates.
Year to date growth rates*:
Passenger revenue
Passenger journeys
Total
(including Olympics)
Underlying
(excluding Olympics)
Total
(including Olympics)
Underlying
(excluding Olympics)
Southern
c.7%
c.7.5%
c.4%
c.4.5%
Southeastern
c.4.5%
c.6%
c.4%
c.6.5%
London Midland
c.8%
c.9%
c.5.5%
c.6%
Trading in the Southern franchise remains in line with our expectations and as previously reported, the franchise is expected to enter revenue support in the fourth quarter of the year.
During the quarter Southeastern commenced a seven-month extension period on the original franchise terms. As previously reported, this will have a negative impact on rail profitability in the second half of the year.
We continue to invest to improve operational performance, however the rate of passenger revenue growth in the London Midland franchise is beginning to slow as a result of increased competition on the west coast mainline.
Against a backdrop of reduced subsidy receipts, more challenging trading conditions and higher operational costs, London Midland has carried out a reorganisation to reduce the number of management and administrative staff, in order to reduce costs. This reorganisation will result in an exceptional charge in the current financial year.
Outlook:
Overall, trading in both our bus and rail businesses in the year to date has been solid and we remain confident that we will deliver a full year result in line with our expectations.
The Group remains in a good financial position with strong cash generation and a robust balance sheet, underpinning the dividend policy and allowing flexibility to pursue value-adding opportunities. We continue to focus on our key strengths of providing high quality, locally-focused and innovative transport services.
N.B. Our £100m bus operating profit target excludes amortisation and exceptional items
*The Olympic and Paralympic Games impacted on growth rates in the first quarter of the prior financial year. They have therefore been excluded for comparative purposes in these underlying figures.
