Go-Ahead Group PLC Changes in accounting for rail pension schemes (3454Q)
29 November 2016 - 6:00PM
UK Regulatory
TIDMGOG
RNS Number : 3454Q
Go-Ahead Group PLC
29 November 2016
The Go-Ahead Group plc 4 Matthew Parker Street, London, SW1H
9NP
PRESS RELEASE
29 November 2016
THE GO-AHEAD GROUP PLC
("GO-AHEAD" OR "THE GROUP")
CHANGES IN ACCOUNTING FOR RAIL PENSION SCHEMES
AND DISCLOSURE OF ADJUSTED RESULTS
In line with its commitment to transparent reporting and to be
consistent with emerging industry practice, The Go-Ahead Group will
change the way in which it accounts for rail pensions in its income
statement. The first financial statements reported under the new
methodology will be the half year results for the six months ending
31 December 2016, due to be announced on 28 February 2017. Prior
year comparative figures will be restated accordingly.
The long term contractual responsibility for the rail pension
schemes rests with the Department for Transport. Accordingly, the
Group's balance sheet only recognises the share of surplus or
deficit expected to be realised over the life of each franchise.
The current assessment is that there is no surplus or deficit to be
recognised and so no asset or liability is provided for. However,
the income statement charge has included the full rail pension
service cost, although a substantial part of this service charge
relates to an estimate of the future cost of benefits, accrued in
the current year, but falling beyond the duration of the
franchises. Therefore, to better reflect the Group's limited
responsibility for rail pensions, the Group is revising its
accounting policy under which operating profit will now only
recognise the Group's agreed cost for rail pensions, rather than
the full service charge previously included. This will be effected
by means of a franchise adjustment to the income statement, in line
with emerging industry practice.
Relevant restated figures for the financial years 2012/13 to
2015/16 are presented below to show the impact of this change on
the income statement. This change in reporting will only affect
reported profit and has no impact on cash.
Dividend cover was previously calculated excluding the
incremental impact of IAS 19 (revised). In future, the calculation
will be based on statutory earnings. Our dividend cover policy
remains at around two times earnings.
No changes will be made to the way in which bus pensions are
accounted for and the Group will no longer report financial results
for the bus division adjusting for the incremental impact of IAS 19
(revised).
H1 2016 2016 2015 2014 2013
GBPm GBPm GBPm GBPm GBPm
Group operating profit
Reported Group statutory
operating profit* 61.6 120.4 114.7 103.2 86.7
Impact of restated rail
pension cost 23.8 45.2 23.9 12.2 9.6
Restated statutory operating
profit* 85.4 165.6 138.6 115.4 96.3
Group EBITDA
Reported Group EBITDA 88.8 175.6 185.2 163.9 144.8
Impact of restated rail
pension cost 23.8 45.2 23.9 12.2 9.6
Restated EBITDA 112.6 220.8 209.1 176.1 154.4
Adjusted net debt (excluding
restricted cash) 260.8 239.3 244.7 260.0 299.6
Reported adjusted net
debt to EBITDA 1.42x 1.36x 1.32x 1.59x 2.07x
Restated adjusted net
debt to EBITDA 1.19x 1.08x 1.17x 1.48x 1.94x
Reported statutory basic
EPS 86.4p 162.3p 121.6p 164.0p 107.8p
Impact of restated rail
pension cost 28.3p 54.2p 26.3p 10.3p 6.5p
Restated statutory basic
EPS 114.7p 216.5p 147.9p 174.3p 114.3p
Reported adjusted EPS* 89.1p 167.2p 150.8p 148.6p 117.6p
Impact of restated rail
pension cost 28.8p 54.7p 28.7p 14.3p 11.1p
Restated adjusted EPS* 117.9p 221.9p 179.5p 162.9p 128.7p
* Excluding amortisation, goodwill impairment
and exceptional operating items
The Group has previously disclosed operating
profit and EPS adjusted for the incremental impact
of IAS19 (revised). Figures on this basis are
shown below for completeness.
H1 2016 2016 2015 2014 2013
GBPm GBPm GBPm GBPm GBPm
Reported Group adjusted
operating profit 80.7 157.4 134.7 118.8 102.5
Reported adjusted EPS 116.8p 220.5p 181.8p 172.6p 139.6p
ENDS
For further information, please contact:
The Go-Ahead Group
Patrick Butcher, Group Chief Financial 020 7799
Officer 8973
020 7799
Paul Edwards, Group Finance Director 8984
020 7799
Holly Gillis, Head of Investor Relations 8984
Citigate Dewe Rogerson
Michael Berkeley/Chris Barrie/Eleni 020 7638
Menikou/Toby Moore 9571
GO-AHEAD
Go-Ahead is a leading UK public transport operator, providing
high quality services in the bus and rail sectors. Employing around
27,500 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 accredited with triple
Carbon Trust Standard for reductions in carbon, water and waste. In
addition to the travelling public, our customers include the
Department for Transport, Transport for London (TfL) and local
authorities.
BUS
Go-Ahead is one of the UK's largest bus operators. With a fleet
of around 4,800 buses, we carry around two million passengers every
day. Our operations are focused on high density commuter markets.
We have a strong presence in London, with around 24 per cent market
share, where we provide regulated services for TfL. We operate
deregulated services in Oxford, East Anglia, the South East,
Southern and North East England. In September 2016, the Group began
operating a bus contract in Singapore, on behalf of the Singaporean
Local Transport Authority.
RAIL
The rail operation, Govia, is 65 per cent owned by Go-Ahead and
35 per cent by Keolis. It is the largest rail operation in the UK,
responsible for over 30 per cent of all UK passenger rail journeys
through its rail franchises: GTR (Govia Thameslink Railway)
Southeastern and London Midland.
Disclaimer
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 Group's
control or can be produced by the Group. Although the Group
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. 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 Group
undertakes no obligation to update any forward looking
statement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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