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Half year results centre

  • Half year results in line with management expectations. Full year expectations lowered due to challenges in GTR and a slowdown in passenger numbers in regional bus
  • Regional bus operating profit* up 6.2% to £25.7m. Revenue growth was 0.8% whilst passenger numbers fell by 0.7%, slightly outperforming subdued national trends
  • Achieved highest customer satisfaction score in regional bus sector of 89%
  • London bus, now including new Singapore bus operations, saw operating profit* up 8.6% to £21.5m. Excluding Singapore, revenue growth in London bus was 2.8% while mileage was broadly flat
  • Largest operator of electric buses in the UK. Opened the UK’s first fully dedicated electric depot; in London
  • Rail operating profit* fell 35.0% to £26.9m, owing to losses at GTR and known bid costs. Contribution to the DfT of £42.9m
  • Statutory operating profit in bus and rail was £46.4m (H1’16: £42.8m) and £26.6m (H1’16 restated: £41.0m) respectively
  • Increasing levels of customer satisfaction at Southeastern and continued high levels at London Midland. Good financial performance in both franchises
  • Lengthy and significant industrial relations issues at GTR related to the modernisation of working practices, required by the contract, have caused months of disrupted travel. We are working towards a resolution so we can provide a reliable service for customers
  • Awaiting the outcome of bid competitions in UK rail, German rail and Singaporean bus markets. Exploring opportunities in targeted international markets, including Scandinavia
  • Strong cash generation and robust balance sheet
  • Stable bus profits support interim dividend increase of 6.5%

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*   Restated for the change in accounting policy regarding rail pension schemes as explained in note 3

**  Adjusted net debt is net cash less restricted cash











David Brown, Group Chief Executive, commented:

“We have delivered financial results in line with expectations. Beneath these overall results there is a mixed picture. Both of our bus divisions and two of our three rail businesses performed well, but there are clearly ongoing issues at GTR which we are working hard to resolve.

“In regional bus, while variations exist between different geographical areas, revenue has continued to grow. Passenger volumes, while subdued, have outperformed national trends. The London bus business performed in line with our expectations.

“We began operating our first bus contract in Singapore in September 2016 and are pleased with the service we are providing to customers on behalf of the Land Transport Authority.

“We recently acquired two regional bus businesses which will deliver cost synergies and drive revenue in the long-term through the expertise of our local teams.

“In rail, the GTR franchise has been challenging from the outset. It is the largest and most complex franchise ever tendered in the UK, designed to facilitate change arising as a consequence of the Thameslink Programme infrastructure works. We have made significant investment in GTR, the full benefit of which cannot yet be felt by passengers while service disruption continues. Since the franchise began in September 2014, over 400 new train carriages have been introduced by GTR, more than the rest of the UK rail network combined. We have also invested in a significant driver recruitment and training programme – the largest in the UK – and have recruited an additional one hundred On Board Supervisors. In addition to the inherent challenges of operating this complex franchise, we have faced lengthy and significant industrial relations issues related to the modernisation of working practices required by the contract. Our customers have suffered months of disrupted travel, impacting work and family lives and we are sorry that such inconvenience and hardship has been caused. Discussions with trade unions are ongoing as we strive to reach a full resolution of these issues.

“During the period, the DfT indicated that it will extend the Southeastern franchise by 24 weeks, to December 2018, on existing contract terms. We look forward to our customers beginning to feel the benefit of the improvements made on this part of the railway through the Thameslink Programme, as the project nears its end in 2018.

“By the end of this financial year we expect to learn the outcome of the West Midlands franchise competition. We hope to be given the opportunity to continue the progress that has been made during our time operating as London Midland which was recently named ‘the most improved organisation’ in the latest UK Customer Satisfaction Index.

“Following the start of our first bus operations in Singapore, we submitted a bid for a further tranche of work during the period. We look forward to learning the outcome of the competition in the coming months and hope to continue expanding in this region. Mobilisation of our German rail contract is well underway ahead of its 2019 start date and our Berlin-based team are currently working on a number of bids. We have recently established a bid team based in Sweden to coordinate bids in Scandinavia and have been shortlisted for a rail contract in Sweden and have pre-qualified for a Norwegian rail competition.

“Despite the near term challenges, our bus and rail businesses remain fundamentally strong and we are committed to protecting our core business and delivering value. The Group is in a good financial position, with strong cash generation and a robust balance sheet allowing flexibility to pursue value-adding opportunities and make returns to shareholders.”