Go-Ahead sees decent revenue performance in year-to-date

29th Nov 2018 07:36

(Sharecast News) - Passenger transport operator the Go-Ahead Group updated the market on its trading for the period from 1 July to 28 November on Thursday, leaving its full-year expectations unchanged.The FTSE 250 company said it saw growth in passenger volumes and revenues for the regional bus division, with its London bus operations continuing to deliver "strong" Quality Incentive Contract income.Its Southeastern rail division continued to perform "very well", with improved operational performance at the Govia Thameslink Railway superfranchise.During the period, a rail contract in Norway South was awarded to Go-Ahead as well.Looking at its regional bus operations, on a like-for-like basis, year-to-date revenue had grown 3% and passenger journeys were ahead 1.5%.The board said the rollout of contactless payment had continued, with East Yorkshire Motor Services (EYMS), which it acquired in June, having been contactless-enabled since the end of October and Brighton since earlier in November.Go-Ahead said it anticipated that customers in East Anglia would also be using it by the end of the financial year.The 'Pick Me Up' service in Oxford increased its registered users during the period, growing to more than 15,000 since it started in June."We expect regional bus profit for the first half of the year to be lower than the same period last year but that this will be offset by a stronger performance in the second half, reflecting a contribution from EYMS and the impact of the severe winter weather in the comparative period last year," the Go-Ahead board said in its statement."Accordingly, for the full year, we continue to expect regional bus operating profit to show a slight improvement over last year."In London buses, revenue was 0.5% higher for the year-to-date, while mileage had slipped 4%.Go-Ahead noted that Transport for London (TfL) was carrying out a review of bus services in the capital, with a stated intention to reduce mileage in central London while affording the opportunity to re-shape the network in other areas.It said its continued improvements in operational performance had resulted in "strong" Quality Incentive Contract income for the period.Mileage and peak vehicle requirement were down as expected, which was blamed on contract losses during the last financial year.As it had previously disclosed, that was expected to result in London bus profits for the full year being lower than last year.Capital expenditure would also be significantly lower than last year, the board said, which would increase free cash flow generation."We continue to bid for new work with financial discipline and are satisfied with our current success rate," Go-Ahead said.Reported within the London bus division, its bus operation in Singapore continued to perform well, both operationally and financially.Operations in Dublin also began successfully during the period."On 22 November, there was a fire at our Orpington garage. Thankfully no-one was injured, and we are very grateful to the London Fire Brigade and our colleagues on site for their help."Go-Ahead said the garage was operational again, and it was working with the authorities to investigate the causes of the fire, with its insurers also engaged.In its rail division, which operates the Southeastern and Govia Thameslink Railway franchises through its 65%-owned subsidiary Govia, Southeastern saw year-to-date passenger revenue growth of 7%, while the number of passenger journeys taken improved 5%.Go-Ahead said passenger journey and revenue trends had continued the improvement seen in the second half of last year at Southeastern.Growth was supported by the resumption of full services through London Bridge station since January, and by good weather during the period."We continue to focus on delivering good operational performance and reliability for our customers."Around 5% more trains ran on time than in the previous year and Southeastern is currently the most punctual major train operator in the country."We have submitted a deliverable and economically sensible bid for the new South Eastern franchise."At Govia Thameslink Railway, which operates the troubled Southern franchise as well as Thameslink, Great Northern and Gatwick Express, Go-Ahead said that since the interim timetable was put into place in mid-July, operational performance improved "substantially" while it also operated an additional 200 services per day.Performance on Southern was said to be "the best" since the start of the franchise, with cancellations on Thameslink and Great Northern services also significantly reduced.Go-Ahead said preparations for the addition of a further 200 daily services from 9 December were well-advanced."Implementation of these will result in a boost to capacity for our passengers with around 400 more services running every day and space into London for an extra 50,000 passengers in the morning peak compared to the levels available earlier in the year."Constructive discussions with the Department for Transport (DfT) relating to the GTR franchise continue."Looking internationally, Go-Ahead was awarded the Norway South package of rail services in October, covering a mix of long-distance and suburban routes.It was the first rail contract to be let in Norway, and would run for eight years, with the possibility of a two-year extension, beginning in December 2019.Go-Ahead said it would build further on its international footprint.The eight non-UK bus and rail contracts that had been secured to date were estimated to deliver around £320m of annualised revenue.Mobilisation of rail contracts in Germany was continuing, ahead of the start of operations in June 2019.On the executive front, Go-Ahead confirmed Elodie Brian had been appointed interim chief financial officer, starting on 3 December."She has spent over 10 years with Southeastern, latterly as the finance and contracts director, and is very familiar with the group's business," the board said."Our recruitment process for a permanent new CFO continues."Additionally, looking at pensions, Go-Ahead said it was currently evaluating the extent to which the recent High Court ruling around the equalisation of guaranteed minimum pensions between men and women could crystallise additional liabilities in its schemes.It said it expected that any required adjustment would be recognised in the half-year results, and be shown as a 'non-cash' exceptional item.Under accounting valuations, the net surplus after taxation on its bus defined benefit schemes was £30.3m at the end of the last financial year, and the company said it expected the schemes to remain in surplus after accounting for that change."The group has delivered revenue growth since the start of our new financial year," said chief executive David Brown."In bus, our London operations have continued to earn strong Quality Incentive Contract income through the delivery of good service performance."In our regional bus business, overall passenger volumes have grown although the trends remain mixed across the country."Brown said that in rail, he was "pleased" that the past few months had seen a "marked improvement" in the operational performance of GTR.He also noted that Southeastern had continued to perform very well, and had "consistently" been the best performing large train franchise in the UK in recent months."Positive momentum in our international strategy has been sustained with the award of a new rail contract in Norway, the start of bus operations in Dublin and a continuing good performance in Singapore."Our 'Pick Me Up' operation in Oxford continues to grow and now has over 15,000 registered users, providing a new convenient service for our customers."