Challenging year for Go-Ahead
After a delay publishing due to its rail franchise error, Go-Ahead has released its financial figures for the year ending 3 July 2021. The results have been postponed on three occasions following difficulties relating to its London and South Eastern railway (LSER) contract.
Group Chief Executive at Go-Ahead described the 12 months ending 3 July 2021 as a challenging year for the operator.
Despite the results being overshadowed by difficulties in its rail operations, Go-Ahead claims a strong financial performance in its bus business. Total bus revenue increased 7.5% to £1,088.6m (2020: £1,012.9m). Operating profit was £86.4m (2020: £70.5m restated). The Group says there has been a reassuring recovery in passenger numbers, with the temporary decline following the emergence of the Covid-19 Omicron variant reversed. It says its regional bus volumes are currently around 80% of pre-pandemic levels.
Go-ahead says its regional bus operations’ performance reflected the continued impact of Covid-19 on travel patterns and the receipt of Bus Service Support Grant (CBSSG) funding. Services were operating at between 90% and 100% of pre-Covid-19 levels at the year end and more passengers were travelling on its services than at any point during the pandemic, with volumes increasing as restrictions eased recovering to around 70% of pre-Covid-19 levels by the year end.
Regional bus revenue for the year was £427.7m (2020: £408.8m), up 4.6%, reflecting the first full year of operation of contracts in Cornwall, a full year of CBSSG receipts and an element of prior year CBSSG funding recognised in the current year.
Operating profit (excluding exceptional items) in Regional Bus reduced by £2.6m, or 12.7%, to £17.9m (2020: £20.5m) with the operating profit margin down 0.8 percentage points to 4.2% (2020: 5.0%). This reflects the breakeven performance of bus operations under the CBSSG mechanism.
Its London and international bus business had revenue growth of 9.4% to £660.9m in the year (2020: £604.1m), reflecting a full year’s operation of contracts in Ireland, contract revenue growth including route wins in London bus, timing benefits in London relating to the recognition profile of Quality Incentive Contract (QICs) and COVID-19 related government receipts in Singapore. An additional week of operation in the 2021 financial year also supported revenue growth.
Operating profit in its London & International Bus business unit was £68.5m (2020: £50m restated), up 37.0%, resulting in an increase in operating profit margin to 10.4% (2020: 8.3% restated).
Go-Ahead says it has identified £51.3m as being due to the DfT in relation to its LSER issue.
The Newcastle-based group admitted in September 2021 that it had not declared £25m of funding relating to the LSER contract. The Govia joint venture was later stripped of the contract. The Group could also face a potential financial penalty of £30m to be paid to the DfT over its rail problem.
“It’s been a very challenging year for Go-Ahead and our shareholders, for which I apologise, on behalf of the Board” – Christian Schreyer, Group Chief Executive
Christian Schreyer, Group Chief Executive, said: “It’s been a very challenging year for Go-Ahead and our shareholders, for which I apologise, on behalf of the Board. I’m pleased to be publishing these results today and I am looking firmly to the future with optimism.
“The Group’s operating performance is strong and we are seeing a reassuring recovery in passenger volumes across bus and rail following the impacts of Covid-19 with our trading expectations for 2022 unchanged.
“In relation to London & South Eastern Railway, we are optimistic that the outstanding matters will soon be settled with the DfT.
“In my 25 year career in public transport and mobility services, I have never been so proud to be part of the industry as throughout the pandemic. Transport workers all over the world stepped up and kept vital services moving at a time when much of the world appeared to stop.
“Go-Ahead’s 27,000 people have demonstrated incredible resilience and commitment through this period, and I have great confidence in my teams around the world to support the next exciting phase for the Group. We see significant opportunities ahead as public transport benefits from trends towards lower carbon travel, urbanisation, digitalisation and demographic change.
“I look forward to announcing the conclusions of my business review in the coming weeks.”