Member Article

Go Ahead sees steady performance in South East despite year of chaos

Having experienced a difficult year of delays and congestion across its bus and rail networks, Go Ahead has reported financial performance falling ‘slightly short’ of the board’s expectation.

In its rail network, Go Ahead’s Southeastern division saw revenue support decrease by £59.8m as a result of ongoing delays and network issues in the region. Under its new direct award contract, which began in October 2014, Southeastern made profit share contributions to the Department of Transport (DfT) of £23.9m during the year.

In the group’s London bus network, growth in contract mileage is expected to be 2-3% in the full year, with contract revenue expected to increase accordingly. Ongoing roadworks and congestion in London are expected to result in further year on year reduction in QIC payments.

In 2015/16, Go Ahead expects total capital expenditure to be around £70m due to the timing of London contract renewals and continued investment in its regional bus services.

Nationally, the group’s bus division achieved its highest ever operating profit, despite a number of “headwinds”, including network-wide congestion.

The first half of the year saw the start of significant new rail contracts for Go Ahead, including GTR. This has faced operational issues and constraints associated with the Thameslink Programme from the outset.

The group cites “demanding economic and operating conditions” in some of its bus markets for a more testing trading environment. Go Ahead said the Board now expects to achieve the £100m bus operating profit target in 2016/17, a year later than the initial target date.

David Brown, group chief executive, said: “I am pleased with the Group’s financial performance in the year; with overall operating profit of £114.7m, slightly ahead of our expectations.

“Through our regional bus operations, Go-Ahead has continued to keep people in cities and towns across the UK moving over the last three decades and we have heavily invested in our operations over this time. In the last five years alone, we have invested over £180m in our regional bus services. This focus on delivering high quality bus operations has improved services for our passengers and we are proud of our high levels of customer satisfaction, which remain the best in the sector at 90%.

“Despite facing a number of headwinds in the year, including lower passenger volumes and congestion in London as a result of infrastructure improvement works, we were pleased to deliver another year of record bus profits.

“We now expect to deliver £100m of bus operating profit in 2016/17, a year later than originally anticipated. We expect some of the headwinds experienced over the past year to reverse over time and this, along with reduced fuel costs, gives us continued confidence in the prospects for the bus division.

“We continue to play a key role in the delivery of the Government’s £6.5bn Thameslink Programme. While an investment programme of this scale will inevitably result in disruption while infrastructure improvements are made, it will ultimately improve services for passengers in the long term. During the year we have worked closely with our industry partners to minimise the impact of this disruption and we will continue to focus our efforts on delivering improvements to services.

“Overall for rail, the Board’s expectations remain unchanged as a stronger performance in Southeastern continues to offset underperformance in GTR.”

This was posted in Bdaily's Members' News section by Ellen Forster .