15 December 2009
Significant operational achievements and
progress in delivering strategy.
Trading in line with expectations.
Go-Ahead announces its pre-close trading update for
the six months ending 2 January 2010, ahead of its half year
results which will be released on 25 February 2010.
The first half of this year consists of 27
weeks, compared to 26 weeks in the first half of last year. The
additional week, from 27 December 2009 to 2 January 2010, is
estimated to account for around 2-3 percentage points of the growth
rates described below.
Overall:
In the last six months we have:
- Retained the Southern rail franchise
- Launched the UK’s first domestic high speed rail
service
- Invested £30m in three bus acquisitions (East Thames,
Horsham and Plymouth CityBus)
- Established a yellow school bus joint venture in North
America
- Agreed to sell the majority of our ground handling and cargo
operations
We are pleased with these achievements, which mark significant
progress in delivering our strategy.
We remain on track to report a profit before tax and exceptional
items for the first half of the year in line with our
expectations.
Bus:
Our bus operations continue to perform well and the first half
operating profit* is now expected to be slightly ahead of the first
half of last year (H1 2008/9: £31.4m).
In our regulated London bus operations, first half revenue
growth is anticipated to be 6-7% and mileage to be up around 5%, of
which contribution from acquisitions represents around 1 percentage
point since completion on 1 October 2009. Underlying growth is
benefitting from an increase in mileage, in part due to the phasing
of contract wins and losses. Quality incentive targets continue to
become more challenging, although our performance to date has been
particularly strong and quality incentive revenue for the first
half of this year is likely to be slightly ahead of the first half
of last year (H1 2008/9: £6.7m).
Our deregulated bus operations are also performing well, with
first half revenue growth expected to be around 7% and passenger
numbers to increase by approximately 5%, of which around 1
percentage point is due to the acquisition of Plymouth CityBus from
1 December 2009. Underlying demand continues to grow from both
concessionary passengers and fare paying passengers.
Fuel costs are fully hedged for this year at 47 pence per litre
(ppl) compared to 43 ppl last year. This will produce a first half
cost increase of around £2m given we consume around 110m
litres of fuel pa. We continue to recover the additional fuel cost
from fares and consumption improvements. The cost of providing for
accident claims is slightly below the same period last year, offset
by slightly higher pension costs. Overall, cost control remains
firm and we continue to make good progress with our cost saving
initiatives.
Rail:
We own 65% of our three rail franchises through the holding
company, Govia.
Management action has ensured a good start to the new Southern
franchise, a successful launch of the high speed services in
Southeastern on 13 December 2009, operational performance
improvement in London Midland and cost reductions of over
£20m in the period across all three franchises.
To date, the overall economic impact on rail demand has been in
line with our expectations. First half passenger revenue growth is
anticipated to be around 10% in Southern and London Midland
and 4% in Southeastern and passenger numbers to have increased
by 3-4% in Southern and London Midland, and reduced by around 2% in
Southeastern. These changes in passenger revenue and numbers
include the impact of revisions to timetables this calendar year
which have transferred around 2% of passengers from Southeastern to
Southern in the period, and added around 2% in the period to London
Midland following improvements to the West Coast Mainline.
As previously stated, the benefit from the above will not be
sufficient to offset the reductions in net franchise subsidies from
the government, and we continue to expect that first half operating
profit* will be broadly half of the first six months of last year
(H1 2008/9: £34.9m).
Aviation services:
As announced on 3 December 2009, we have recently agreed to sell
the majority of our aviation ground handling and cargo operations
to Dnata and Servisair. These transactions are expected to complete
at the end of January 2010.
After completion, this division will consist of a limited number
of aviation services operations at Heathrow Terminal 1 (required
until 2011) and our Meteor parking operations.
The first half operating profit* for this division is expected
to be close to breakeven (H1 2008/9: loss of £1.7m), as is
the full year operating profit* (2008/9: loss of £4.5m).
Other items:
First half exceptional charges are expected to be around
£41m (H1 2008/9: £58.4m), consisting of the previously
reported non cash impairment charge for aviation services of around
£35m and around £6m of restructuring costs to date.
Our tax rate is expected to remain at around 27% and the
weighted average number of shares remains at 43.0 million. Cash
management remains strong, with operating cashflow exceeding
operating profit* before depreciation to date. First half capital
expenditure is in line with our expectations at around £50m
and acquisition investment totals £30m to date. We will
continue to invest in our operations and our full year capital
expenditure is expected to be approximately £70m.
Outlook:
At this stage of the year, we have not changed our expectations
for the full year results.
We continue to believe that the economic climate will remain
difficult and we will take management action accordingly.
We expect our bus operations to remain strong in the second half
of this year and to benefit from a full year of acquisition
contributions, and a fully hedged reduction in fuel costs of around
£6m, in the next financial year.
In rail, we expect revenue growth before initiatives to be
modest in the second half given the low fare increases in January
2010. We will continue to target mid single digit percentage
increases in full year passenger revenue in Southern by delivering
bid initiatives and in Southeastern from the new High Speed
timetable. Progress in both these areas will become clearer as we
move through the second half of the financial year and, if
required, Department for Transport revenue support is available in
Southeastern from 1 April 2010.
Our cashflow and balance sheet remains strong and underpins our
dividend policy, and our financing is secure through to 2012. We
will continue with our focus on service quality, cost savings and
financial discipline and remain confident in the underlying
strengths of our business.
*operating profit before exceptional items and amortisation
- End -
For further information, please contact:
| The Go-Ahead Group |
|
| Keith Ludeman, Group Chief Executive |
020 7821 3920 |
| Nick Swift, Group Finance Director |
020 7821 3922 |
| |
|
| Citigate Dewe Rogerson |
020 7638 9571 |
| Michael Berkeley |
|
| Chris Barrie |
|
| Angharad Couch |
|
Notes to editors
Go-Ahead
Go-Ahead is a leading UK public transport operator, providing
high quality services in the bus and rail sectors. Employing around
27,000 people across the country, almost one billion passenger
journeys are undertaken on our services each year. We are committed
to operating our companies in a socially and environmentally
responsible way and are proud to have been awarded the Carbon Trust
Standard after taking action on climate change. In addition to the
travelling public, our customers include the Department for
Transport, Transport for London (TfL) and local authorities.
Bus
Go-Ahead is one of the UK's largest bus operators. With a fleet
of over 3,500 buses, we carry, on average, around 1.6 million
passengers every day. Our operations are focused on high density
commuter markets. We have a strong presence in London, with around
21% market share, where we provide regulated services for TfL. We
operate deregulated services in the north east, Oxford, the south
east and southern England. We recently expanded our UK bus
operations with the acquisition of Plymouth CityBus.
Rail
The rail operation, Govia, is 65% owned by Go-Ahead and 35% by
Keolis. It is the busiest rail operation in the UK, responsible for
nearly 30% of all UK passenger rail journeys through its three rail
franchises: Southern (which includes the Gatwick Express),
Southeastern and London Midland. On 13 December 2009, Southeastern
will launch the UK's first high speed domestic rail service between
Kent and London, significantly reducing current journey times.
Southeastern is currently running preview services.
Aviation Services
The Group's aviation services division is one of the UK's
largest independent providers of cargo services (primarily Plane
Handling), ground handling (primarily aviance UK) and car parking
(Meteor). The division operates from 14 airports and services major
airline operators such as British Airways (BA), Virgin and bmi.
Go-Ahead recently announced that it had exchanged contracts to sell
the majority of its aviation ground handling and cargo operations.
Completion is expected at the end of January 2010.