Go-Ahead maintains good progress

BUS and train operator Go-Ahead has reported passenger revenue growth in all its companies, clocking up more than one billion annual passenger journeys for the first time in the group’s history. Operating profit for the year was £102m.

The group, which operates the London Midland rail franchise, said it continued strong cash management and had a robust balance sheet. Total dividend for the year was maintained at 81p per share.

Revenue was £2.201bn in the year to July 3,2010, which compares with £2.187bn last year – the increase of £14.4m attributed to a reduction of £194.3m due to a change in access charge regime subsidy and an underlying increase of £208.7m, or 9.5%.

Overall operating performance was £5m ahead of expectations, with operating profit of £102m supported by a strong finish to the year from bus operations and lower than anticipated electricity costs in the rail division.

Strong cash management resulted in cashflow from operations being well ahead of expectations at £160.6m (2009: £233.4m) and net debt remained low at £88.3m (2009: £91m). Capital investment was slightly ahead of depreciation, as expected, partly driven by franchise commitments in both Southern and London Midland.

The group made good progress with bus acquisitions in the year, with a total investment of £37.2m, of which cash consideration was £35.2m.

• London Midland most improved rail operator

Chairman, Sir Patrick Brown, said: “We are pleased with the progress we have made this year in challenging economic conditions. All of our bus and rail operations have increased passenger revenue, highlighting the quality and value for money of our services.

“We have sold most of our aviation services division and started our yellow school bus joint venture in North America. We have also acquisitively grown our bus operations in the UK, leading to more than one billion annual passenger journeys on our bus and rail operations for the first time in our history. We are working closely with the new Government and welcome its review of future rail franchising announced in July 2010. In summary, we are in good financial shape and continue to believe in the fundamental strengths of public transport.”

However, he said the group remained cautious on the near term prospects for the UK economy and the outlook for the next financial year was difficult to predict, especially the likely impact of Government cutbacks.

“At this stage, we have not changed our outlook for the next financial year since our trading update in June 2010, and are assuming that the broad operating trends experienced in the second half of the financial year continue throughout the next financial year,” he added.

In its bus operation, expectations are for lower fuel costs and a small additional contribution from acquisitions to be partly offset by the full year effect of lower operating profit margins in London.

For rail, it has predicted a small reduction in operating profit margin next year compared to the financial year just ended.