Public transport operator Go-Ahead on track to match full-year expectations

David Brown, chief executive at Go-Ahead.

David Brown, chief executive at Go-Ahead. - Credit: Archant

Bus and train operator Go-Ahead said today it remained on course to deliver full-year results in line with expectations.

In a pre-close trading update ahead of its figures for the year to June 27, due out on September 3, Go-Ahead

said that its regional bus business, which includes the Chambers, Hedingham, AnglianBus and Konectbus services in East Anglia, saw trading continue to slow during the fourth quarter with revenue growth of 3% now expected for the full year and passengers journeys expected to show a 1% fall.

Go-Ahead said the fourth quarter performance was affected in particuarly by ongoing economic weakness in the north east and roadworks in Oxford and Brighton.

The group’s bus services in London were expected to see revenue growth of 1.5%, with roadworks and congestion representing a hit of about £3million, and mileage was expected to show a 1% fall but with the figure helped by the start of some new contracts during the final quarter.

Go-Ahead said that, within its rail business, its established Southern, Southeastern and London Midland franchises were on track for annual revenue growth of 7%, 8% and 5% respectively.

The new GTR operation (Govia Thameslink Railway, a joint venture between Go-Ahead and French group Keolis) was expected to see full-year revenue growth of 8%, based on a comparison with the former First Capital Connect franchise operated by FirstGroup.

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Besides the former Capital Connect services from King’s Lynn, Peterborough and Cambridge to London, GTR now includes the former Thameslink operations from Bedford and Luton to Sevenoaks, Gatwick and Brighton, and these will soon be joined by the Southern and Gatwick Express services.

Go-Ahead today repeated a warning that “inherited operational challenges” and changes in the operating network could lead to lower margins at GTR in the short term, but with any shortfall in profit being recoverable over the lifetime of the franchise.

The group said that Southern’s trading performance had remained in line with expectations, with the franchise continuing to receive revenue support until its integration into GTR next month, while Southeastern had continued to outperform expectations.

London Midland was also performing in line with expectations, with discussions in progress with the Department for Transport over an extension of the franchise from March 2016 to June 2017, it added.

David Brown, group chief executive of Go-Ahead, said: “In rail, we continue to work closely with Network Rail and other industry partners to minimise the impact on passengers of the major infrastructure works associated with the Government’s £6.5billion Thameslink programme, including at London Bridge.

“Our locally-run bus companies work in partnership with local authorities and are focused on the needs of the communities they serve, responding quickly to their changing requirements.”

Looking ahead, the group said: “Our expectations for the full year are unchanged. We remain committed to our strategic target in our bus division and continue to focus on delivering efficiencies across this business. Overall, trading in our rail business is in line with our expectations.

“In the first quarter of next year we expect the DfT to announce the successful bidders for the Northern and TransPennine Express franchises for which we are bidding.

“The group remains in a good financial position with strong cash generation and a robust balance sheet, supporting our progressive dividend policy and allowing flexibility to pursue value-adding opportunities.”