13 December 2011
Robust trading in bus and rail; operating profit slightly ahead of Board expectations
Go-Ahead today announces its pre-close trading update for the six months ending 31 December 2011, ahead of its half year results which will be released on 23 February 2012.
Overall:
Trading in the period has been robust and we now expect the Group to deliver operating profit slightly ahead of our previous expectations, primarily in the rail division, for the full year to 30 June 2012.
David Brown, Group Chief Executive of Go-Ahead, said:
“While we remain suitably cautious about the medium term wider economic outlook, trading in both our bus and rail divisions continues to be strong, with record numbers of passengers using our services. This demonstrates the resilience of public transport during challenging economic times as passengers seek convenient and value-for-money alternatives to the private car.
“Our bus operations both in and outside London are performing well. Our sector-leading London business has seen growth due to new contracts commencing in the period, and our regional operations continue to make progress through initiatives such as smartcard technology.
“All three of our rail franchises are showing a strong performance. In particular our smallest franchise, London Midland, is achieving double digit growth in both passenger revenue and volumes”.
Bus:
Our operations outside London have remained resilient in the period and are expected to achieve revenue growth (excluding acquisitions) of around 3.5% for the first half of the financial year. Passenger numbers (excluding acquisitions) have risen about 3% in the second quarter, helped, in part, by the continued rollout of smartcards. The increase in smartcard users has reduced the average yield per customer as passengers have taken advantage of the good value offered by period passes.
Total deregulated revenue (including the acquisition of Thames Travel) is expected to grow by over 5% in the first half of the financial year.
In London, mileage increased during the period as expected, due to new contracts beginning in the second quarter. Mileage growth of around 2% is expected for the first half. We expect a similar increase in revenue, despite lower QIC bonus payments compared to the first half of the last financial year.
Fuel costs remain fully hedged for this year at 41 pence per litre (ppl), in line with last year. We are now around 70% hedged for 2012/13 at an average of 49ppl.
Rail:
Our rail division operates the Southern (including Gatwick Express), Southeastern (including High Speed) and London Midland franchises through our 65% owned subsidiary Govia.
All three franchises are performing well. We expect Southern’s passenger revenue to increase by over 9% in the first half, and passenger journeys by around 3%. Southeastern is expected to see similar growth in passenger journeys, with revenue rising by around 9%. London Midland has been the outstanding performer, with passenger revenue up around 13% and passenger numbers by 10%.
Other items:
Cash management remains strong, with net debt expected to be around £60m at the half year, slightly lower than at the end of the last financial year. Net debt to EBITDA is also expected to remain comfortably within our target range of 1.5 to 2.5 times. Capital expenditure should be in line with expectations at around £35m for the first half and approximately £80m for the full year.
Outlook:
Although we remain cautious about the wider economic outlook, we continue to see robust performance across both divisions, leading us to expect Group operating profit for the full year to 30 June 2012 slightly ahead of our previous view.
Our cashflow and balance sheet remain strong, underpinning our dividend policy, providing support in the event of a downturn in the economy and allowing flexibility to pursue further value-adding opportunities.
ENDS
For further information, please contact:
| The Go-Ahead
Group |
|
| David Brown, Group Chief Executive |
020 7821 3920 |
| Keith Down, Group Finance Director |
020 7821 3922 |
| Samantha Hodder, Interim Group Corporate Affairs Director |
020 7821 3927 |
| Holly Birch, Group Investor Relations Manager |
07837 612 661 |
| |
|
| Citigate Dewe Rogerson |
020 7638 9571 |
| Michael Berkeley |
|
| Chris Barrie |
|
| Angharad Couch |
|
David Brown, Group Chief Executive and Keith Down, Finance Director will be hosting a conference call for analysts at 7.45am today. Please contact Holly Birch on 07837 612 661 for details.
A replay facility will be available for seven days.
GO-AHEAD
Go-Ahead is a leading UK public transport operator, providing high quality services in the bus and rail sectors. Employing around 22,000 people across the country, over one billion passenger journeys are undertaken on our services each year. We are committed to operating our companies in a safe, 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 around 3,900 buses, we carry, on average, around 1.7 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 Oxford, East Anglia, the South East, Southern and North East England. We also have a yellow school bus joint venture in North America.
RAIL
Our rail division operates the Southern (including Gatwick Express), Southeastern and London Midland franchises through our 65% owned subsidiary Govia. It is the busiest rail operation in the UK, responsible for nearly 30% of all UK passenger rail journeys. In December 2009, Southeastern began operating the UK's first high speed domestic rail service between Kent and London, significantly reducing journey times.
Legal disclaimer
Certain statements included in this press release contain forward-looking information concerning the Group’s strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the sectors or markets in which the Group operates. By their nature, forward-looking statements involve uncertainty because they depend of future circumstances, and relate to events, not all of which are within the Company’s control or can be produced by the Company. Although the Company believes that the expectations reflected in such forward–looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. Nothing in this press release should be construed as a profit forecast and no part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in The Go-Ahead Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. Except as required by law, the Company undertakes no obligation to update any forward-looking statement.