London Midland operator sees 14% rise in full year profit
TRANSPORT group Go-Ahead, operator of the London Midland rail franchise, has announced a 14% increase in full year operating profit to £115m.
The group saw growth in passenger revenue across both its rail and bus divisions as more consumers ditched their cars in favour of public transport.
Revenue was up 6% at £2.297bn (2010: £2.167bn), while pre-tax profit rose 11.3% to £97.6m (£87.7m). Basic earnings per share rose 291.7% to 157.1p (2010: 40.1p), while a dividend of 81p has been paid. The group also reduced net debt by 21% to £69.8m (2010: £88.3m).
It said the new financial year had started well and the group was trading in line with board expectations.
Commenting on the results, chairman, Sir Patrick Brown, said: “I am pleased with the performance of the group this year. Despite facing challenging economic conditions in the last 12 months and the adverse weather in the first half of the year, all of our operations have seen growth in like-for-like passenger revenue and passenger journeys.
“Our bus and rail operations remain fundamentally strong and have benefited from passengers leaving their cars at home and choosing better value public transport alternatives.
“Our outlook for the next financial year has not changed since our trading update in June 2011. We are assuming that the broad underlying operating trends experienced in the financial year will continue throughout the financial year to June 30, 2012 and that around £13m of the rail contract management benefits achieved in 2011 will not recur.”
The group’s rail division remained resilient with an operating profit of £48m, some £10.7m ahead of last year, underpinned by approximately £13m of non-recurring contract management benefits.
The market is competitive and, with an increasing number of operators entering the fray margins remain low. Profit margins below 5% are not untypical in the current market.
Total revenue in London Midland consisted of passenger revenue of £204.2m (2010: £191.2m), other income of £39.9m (2010: £36.9m) and net subsidy receipts of £81.2m (2010: £96.7m).
Like-for-like passenger revenue growth was 8.6% (2010: 10.0%) with first half growth at 7.1% and second half growth of 9.9%. Passenger numbers increased by 7.2% on a like-for-like basis (2010: 4.6%) for the full year, consisting of a first half year increase of 4.3% followed by 10.1% for the second half. This second half in particular benefited from award winning marketing campaigns.
The service achieved a PPM rate of 89.7% (2010: 90.4%). The figure is the percentage of franchised passenger trains arriving at their destination, having made all booked calls, and within a specified lateness margin.
Go-Ahead said costs within the franchise remained complicated by legacy issues but it would continue to restore margins. The service becomes eligible for revenue support in November 2011 and may require this at the 50% level.
