The Go-Ahead Group plc 6th Floor, 1 Warwick Row, London SW1E 5ER
Telephone 020 7821 3939 Facsimile 020 7821 3938
21 June 2012
THE GO-AHEAD GROUP PLC
("GO-AHEAD" OR "THE GROUP")
PRE-CLOSE TRADING UPDATE
Solid trading in line with Board's expectations;
Robust performance in bus
The Go-Ahead Group plc today announces its pre-close trading update for the year ending 30 June 2012 ahead of its full year results announcement on 6 September 2012.
David Brown, Group Chief Executive of Go-Ahead, said:
"Go-Ahead continues to perform well, with all our companies seeing revenue growth in the year to date.
"In line with our strategy to grow our bus division, we have acquired a number of businesses during the year and have driven organic growth through smart-ticketing and providing high quality value for money services.
"In rail, we are pleased with the performance of our three franchises despite the challenging economic environment.
"Overall, we remain confident that we will deliver a full year result in line with our expectations."
Our deregulated bus division continues to see solid growth. We expect full year passenger revenue to increase by around 4% on a like-for-like basis (after adjusting for acquisitions) and passenger journey growth of around 3%.
We continue to see stronger growth in fare-paying passengers, partly offset by weaker concessionary performance. Whilst the average yield per journey remains lower as passengers continue to take advantage of our value for money period passes and smartcards, the successful uptake of these products enhances the long term growth prospects of our business.
Since our last update in April, we have acquired HC Chambers & Son Ltd, a small bus company operating on the Essex/Suffolk border. Including acquisitions, we expect full year growth in deregulated passenger revenue of around 7% and journey growth of around 4.5%.
Our regulated London bus operations have delivered a strong performance in the year to date, with like-for-like revenue expected to increase by around 6% in the full year and mileage up by around 4%. Contract wins and the acquisition of the Northumberland Park bus depot in North London will result in strong mileage growth continuing into the next financial year.
Full year revenue and mileage growth in London is expected to be around 7.5% and 5.5% respectively once the acquisition is included.
Our rail division operates the Southern (including Gatwick Express), Southeastern and London Midland franchises through our 65% owned subsidiary Govia.
Southern continues to perform well and we anticipate full year like-for-like passenger revenue growth of around 8.5% and growth in passenger numbers of around 1.5%. The current economic environment does present challenges going forward as the bid model in 2009 assumed stronger underlying economic growth rates at this stage in the franchise.
Southeastern has shown a solid performance and we expect growth in passenger revenue of around 10% in the year, with passenger numbers growing by around 1.5%.
London Midland's growth in passenger revenue and numbers remains strong, with full year expectations around 13.5% and 8% respectively. The franchise became eligible for revenue support in November 2011, but it has not been required due to successful revenue generating initiatives such as marketing campaigns and special offers.
The Group remains in a good financial position with strong cash generation and a robust balance sheet, underpinning the dividend policy and allowing flexibility to pursue further value-adding opportunities.
Full year capital expenditure should be in line with expectations at around £80m and an acquisition spend in the bus division of around £30m is expected. Net debt is expected to be between £95m and £100m at the year end with adjusted net debt to EBITDA remaining comfortably within our target range of 1.5 to 2.5 times.
Overall, we remain confident that we will deliver a full year result in line with our expectations.
Looking ahead to the next financial year, we expect the performance of our bus business to remain strong. In rail, we expect slower than assumed economic growth rates to impact performance and, as stated in April, £6m of rail bid costs are forecast next year.
We continue to concentrate on our key strengths of providing high quality innovative and locally focused transport services.
For further information, please contact:
The Go-Ahead Group
David Brown, Group Chief Executive 020 7821 3920
Keith Down, Group Finance Director 020 7821 3922
Holly Birch, Group Investor Relations Manager 07837 612 661
Catherine Robertson, Group Investor Relations Manager 020 7821 3929
Citigate Dewe Rogerson 020 7638 9571
Analyst conference call:
This will be hosted by David Brown and Keith Down at 9.00am on Thursday 21st June:
Dial in number: +44 (0) 20 3003 2666
Access Pin: 4346208
A replay facility will be available for seven days:
Dial in number: +44 (0) 20 8196 1998
Access Pin: 4346208
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Notes to Editors
Go-Ahead is a leading UK public transport operator, providing high quality services in the bus and rail sectors. Employing around 22,000 people across the country, over one billion passenger journeys are undertaken on our services each year. We are committed to operating our companies in a safe, socially and environmentally responsible way and are proud to have been awarded the Carbon Trust Standard and Gold standard in the Business in the Community Index. In addition to the travelling public, our customers include the Department for Transport, Transport for London (TfL) and local authorities.
Go-Ahead is one of the UK's largest bus operators. With a fleet of around 4,000 buses, we carry, on average, around 1.7 million passengers every day. Our operations are focused on high density commuter markets. We are the largest bus operator in London, providing regulated services for TfL. We operate deregulated services in Oxford, East Anglia, the South East, Southern and North East England. We also have a yellow school bus joint venture in North America.
Our rail division operates the Southern (including Gatwick Express), Southeastern and London Midland franchises through our 65% owned subsidiary Govia. It is the busiest rail operation in the UK, responsible for nearly 30% of all UK passenger rail journeys. In December 2009, Southeastern began operating the UK's first high speed domestic rail service between Kent and London, significantly reducing journey times.
Certain statements included in this press release contain forward-looking information concerning the Group's strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the sectors or markets in which the Group operates. By their nature, forward-looking statements involve uncertainty because they depend of future circumstances, and relate to events, not all of which are within the Company's control or can be produced by the Company. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. Nothing in this press release should be construed as a profit forecast and no part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in The Go-Ahead Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. Except as required by law, the Company undertakes no obligation to update any forward-looking statement.