Go-Ahead bus profit up
Go-Ahead’s overall revenue has risen 6.8% to £1,665m (H1 2015: £1,558.7m), according to its half yearly results for the period to 26 December 2015. This was in line with management’s expectations and delivered an adjusted operating profit of £80.7m (H1 2015: £67.4m). The operator’s bus division contributed a total adjusted operating profit of £47.8m (H1 2015: £47.1m).
In Go-Ahead’s regional bus division, adjusted operating profit was up 7% to £26.1m. Fare increases across the business have largely reflected the low level of inflation. While recorded passenger journeys in the first half overall were broadly consistent year-on-year, regional passenger growth was stronger in the second quarter than the first. Growth was driven by an increase in commercial passengers, offsetting a decline in concessionary travel. The company said its regional bus operations continue to benefit from its effective devolved management structure. This is designed to ensure it is able to respond quickly to the needs of customers in local markets. It said it is ‘proud’ of its high levels of customer satisfaction, which at 90% ‘remain the best in the sector’.
Growth in Go-Ahead’s London bus mileage increased year on year due to high contract retention rates and contract gains. It has also benefited from contract variations and rail replacement work. However, continued high levels of roadworks and congestion in the capital have ‘significantly impacted’ its Quality Incentive Contract (QIC) revenue, which was nil in the period (H1 2015: £4.4m). Due to this reduction in QIC, adjusted operating profit was down 4.4%. It has been working with TfL on finding ways to improve service reliability and mitigate delays. During the period, it invested £38m in 179 new buses, almost half of which are hybrids. It has continued to introduce free Wi-Fi and multi-operator smart ticketing on many of its services.
Group Chief Executive, David Brown, said, ‘I am pleased to report a solid set of results for the first half of the financial year. Our bus division performed well. Both regional revenue growth and passenger growth were stronger in the second quarter as we have continued to enhance our customer proposition. We are proud of our high levels of regional bus customer satisfaction, which remain the best in the sector at 90%. During this period the Group also welcomed news of contracts wins in both bus and rail services. Overseas, Go-Ahead was successful in bidding for a 25 route bus contract in Singapore and two German rail contracts. These opportunities establish Go-Ahead’s presence in these strategic markets and add value to our existing portfolio. Looking ahead to the full year, our expectations remain unchanged.’