The Go-Ahead Group has issued its full year results for the year ending 27 June 2020
The company has announced that results were slightly above its revised guidance, with overall financial performance significantly impacted by Covid-19 in regional bus and losses in German rail. Its regional bus divisions have been heavily impacted by Covid-19, with an operating profit of £20.5m (2019: £44.5m) and government support enabling break-even performance since March.
The London & International bus businesses, where revenue is protected by contracted income, are described as resilient, with an operating profit of £48.5m (2019: £51.2m). The Group’s rail operating profit of £8.9m (2019: £25.4m) was impacted by lower contractual margins in Southeastern and significant operational and commercial challenges in German rail.
Go-Ahead said that during the Covid-19 crisis, it has three priorities: to safeguard the health and wellbeing of its colleagues and customers; to play its role in society in challenging times; and to protect its business. The operator said it has a resilient business model with 90% of revenues secured through contracts with no revenue risk from changes in passenger demand. It also highlighted that public transport remains critical to environmental sustainability, economic recovery, the delivery of health and wellbeing outcomes, and keeping communities connected.
The Group reports a robust balance sheet, strong cashflows and good liquidity. Total bus revenue increased by 1.1% including the contribution of acquisitions, offset by reductions in the last four months of the year due to the impact on demand of Covid-19. Operating profit was £69.0m and the operating profit margin decreased by 2.7% to 6.8%.
Regional bus revenue for the year was £408.8m, down 5.6%, predominantly as result of significantly reduced travel since March, offset by the CBSSG and the inclusion of revenue from new businesses and operations. Excluding the impact of acquisitions, revenue declined by 11.4%.
Go-Ahead Group’s London & International bus division, which includes Singapore and Ireland, where the businesses operate contracts on behalf of transport authority clients on a gross cost basis, recorded an operating profit of £48.5m, down £2.7m, resulting in a corresponding reduction in operating profit margin to 8.0% (2019: 9.0%).
The Group says it expects market conditions to remain challenging. David Brown, Group Chief Executive, commented: “Throughout this challenging period, my thoughts have been with the families and friends of our colleagues who have tragically lost their lives as a result of Covid-19.
“Our absolute priority is safeguarding the health and wellbeing of our colleagues and customers. Colleagues have been provided with additional protective equipment and cash handling has been reduced, aided significantly by our mobile ticketing, smartcards and contactless payment channels across all Go-Ahead bus and rail services.
“Our financial results for the year have been significantly impacted by the pandemic despite only four months of the crisis period falling within our financial year. 90% of Go-Ahead revenues are secured through contractual arrangements, largely comprising revenues from our London & International bus business and UK rail franchises.
“Our regional bus business has been heavily impacted by the crisis as the number of passengers travelling on our services reduced significantly in March as a result of lockdown restrictions. While we hope to be operating under more normal circumstances as soon as possible, we welcome the vital financial support that these services receive through government funding until passenger numbers recover.
“We are pleased to see more and more people travelling on our buses and trains. Our regional bus services are now carrying around 50 to 60% of normal passenger numbers, enabling us to contribute to economic recovery while supporting social distancing requirements.
“Our devolved structure, strong values, resilient business model, disciplined financial management and risk appetite gave us a stable footing as the crisis unfolded. I believe these attributes will continue to support our business as we look to the future.
“While we live with the uncertainty that the pandemic has brought to our communities and our business, public transport continues to provide vital connectivity between jobs, education and leisure. We believe that the only way the UK Government can achieve its Net Zero carbon commitment, economic recovery and its health and wellbeing strategy, is through increased investment and focus on the use of public transport.”