‘Exceptional year’ for Go-Ahead Group
In its annual Annual Report and Accounts for the year ended 2 July 2022, Go-Ahead Group reports an ‘exceptional year’.
As the pandemic receded, the report notes the 12-month period saw new challenges rise in the form of the war in Ukraine, spiralling energy costs and a cost-of-living crisis. The Group generated operating profit (post-exceptional items) of £110.3m (2021: £11.4m) and operating profit (pre-exceptional items) of £89.1m (2021: £115.5m).
It notes an exceptional credit of £21.2m (2021: £104.1m cost) in the year which relates largely to changes in onerous contract provisions and settlements reached with the DfT in relation to London & South Eastern Railway (LSER) (net £9.3m credit).
Overall bus operating profit for Go-Ahead Group dropped 2% to £84.7m (2021: £86.4m) during the year.
Regional Bus operating profit rose 50.3% to £26.9m (2021: £17.9m). At the start of the year, these services continued to be supported by the Covid-19 Bus Service Support Grant (CBSSG), replaced in September 2021 by the Bus Recovery Grant (BRG). It saw steady recovery in patronage, with commercial volumes across the business reaching in excess of 85% of pre-pandemic levels by the year end.
The Group’s London and international bus division’s operating profit dipped 15.6% to £57.8m (2021: £68.5m). Despite the profit decrease, the report says these operations traded well during the year and the acquisition of Flexbuss in Sweden in April 2022 has seen a successful introduction and is contributing to the division’s profitability. Despite an increase in revenue, operating profit and operating profit margin in this division for the year were lower than the prior year, which it says reflects the contractual nature of the operations and the £8m reduction in Quality Incentive Contracts (QICs) following the higher levels recognised in London in the prior year when QICs moved from an annual to quarterly settlement thus creating greater levels of certainty, leading to the acceleration of the recognition of this revenue and crystalising additional QICs in the prior year.
Additional points and outlook
The shares and corporate bonds of Go-Ahead were temporarily suspended from trading between 4 January 2022 and 24 February 2022.
The year also saw it appoint a new leadership team and navigate its way through a bid for the Group which completed in October 2022.
Since the year end of the report (July 2022), Go-Ahead won both of the two bus contracts to be tendered by the Mayor of Manchester in Bolton and Wigan. The contracts comprise 55 routes, served by a fleet of 308 buses, and are worth up to £400 million in revenue over seven years. Around 750 people will be transferring into Go North West to run the services, which will be branded as part of Manchester’s new Bee Network.
Overall, despite continuing to face challenges in some areas of the business, the Group’s outlook for is positive.