Go-Ahead publishes delayed 2021 results

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Following delays arising as a result of the London & South Eastern rail franchise, the Go-Ahead Group has published its financial results for the year to July 2021. Overall, the Group reported a strong financial performance in its bus and GTR rail divisions, overshadowed by matters relating to London & South Eastern Railway (LSER) and challenges in its international rail business. The Group reported an adjusted operating profit of £115.5m against £76.4m in 2020, and a statutory loss before tax of £6.9m against a £39.5m loss the previous year.

In its regional bus businesses, the adjusted operating profit amounted to £17.9m against £20.5m in 2020, a decrease of 12.7%. The London and international bus division produced an adjusted operating profit of £68.5m against a 2020 figure of £50m, a 37% increase.

Christian Schreyer, Group Chief Executive, commented: “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.”

Looking forward, he said: “Our industry is only going to become more important to society over the years ahead. A number of overarching societal trends will shape a broader, but evolving, role for public transport. First and foremost, climate change is an issue that requires swift and global action.”

Meanwhile, digitalisation is radically changing the way customers make transport choices.

“The long-term legacies of the Covid-19 pandemic are yet to become clear. We know that commuting patterns have changed for good, with hybrid working here to stay for many people. There will be other changes, too – in where people choose to live, and in the make-up of our high streets there is no doubt that the past two years have been the most challenging in the Group’s history. I do not underestimate the task ahead.

“My priorities include enhancing the basics by focusing on performance improvement of the core business, building on our strengths by securing new business in existing markets and exploring new services and opportunities. I am committed to shaping a successful future for the Group which delivers value to customers, colleagues, partners, shareholders and all our other stakeholders, and I am excited by the opportunities we have as we move forward.

“While none of us have a clear line of sight into the future, I am firmly of the belief that although travel patterns will change and public transport will evolve, it will continue to be vital to societies and economies long into the future. The environmental and societal trends that we are seeing are set to drive strong growth in the years ahead. I am excited about the role Go-Ahead will play in building a transport network for the future.”

Bus ups and downs

Total bus revenue increased by £75.7m, or 7.5%, to £1,088.6m against a 2020 figure of £1,012.9m, including an additional week of operations with 2021 being a 53-week financial year plus contract revenue growth in the London and international bus division and a full year of operating contracted bus services in Cornwall, which commenced in April 2020.

Operating profit was £86.4m, against a restated figure of £70.5m for 2020) and the operating profit margin increased from 7.0% in 2020 to 7.9%.

Regional Bus revenue for the year was £427.7m against £408.8m in 2020, up £18.9m or 4.6%. Like for like revenue reduced by 1.9% compared to a reduction of 11.4% in 2020, and operating profit reduced by £2.6m (12.7%) on 2020 figures to £17.9m, with its operating profit margin down 0.8% to 4.2%, refecting the breakeven performance of bus operations under the CBSSG mechanism. Operating profit was £10.7m.

The Group’s operations in Singapore and Ireland performed well, with Singapore up £1.9m and Ireland up £0.7m against the prior year. In both cases, contracts are operated on behalf of transport authorities on a gross cost basis without exposure to changes in passenger demand, therefore revenue continued at pre-crisis levels.

Outlook

Following the year end, the Group said passenger volumes increased over the first five months of the 2022 financial year, with a slowing in the recovery towards the end of 2021 following the emergence of the Covid-19 Omicron variant. Since the lifting of the UK Government’s ‘Plan B’ restrictions, passenger volumes have returned to pre-Omicron levels.

“We expect passenger numbers to continue to increase over the medium term as workers return to offices, airport travel accelerates and self-isolation rules are relaxed,” the Group said. “Longer term, we remain confident that Regional Bus will deliver attractive margins and returns given its strong local market positions and networks. The Department for Transport (DfT) maintained Regional Bus funding throughout the year and has continued to support the provision of services in line with its August 2020 commitment that support would continue until no longer required.

As the number of journeys taken on our bus services has grown, the required level of Government support for these services has reduced. We have worked with the DfT to establish a framework to transition back to a commercial operating model.”

Contract revenue grew in 2021, with the group completing its first full year of operating contracted bus services in Cornwall, which commenced in April 2020. RICHARD SHARMAN