TIDMGOG
RNS Number : 9594Z
Go-Ahead Group PLC
06 September 2018
The Go-Ahead Group plc 4 Matthew Parker Street,
London, SW1H 9NP
Telephone 020 7799 8999
PRESS RELEASE
THE GO-AHEAD GROUP PLC
("GO-AHEAD" OR "THE GROUP")
FULL YEAR RESULTS FOR THE YEARED 30 JUNE 2018
Business overview
-- Good progress made in all three strategic pillars: protect
and grow the core; win new bus and rail contracts; prepare for the
future of transport
-- Overall results ahead of expectations
-- Bus operating profit pre-exceptional items at GBP91.4m (2017:
GBP90.7m); regional bus achieved highest ever passenger
satisfaction score (91%)
-- Rail operating profit at GBP44.5m (2017: GBP59.9m), due in
part to the expiry of the London Midland franchise in December
2017
-- GTR impacted by industry implementation of May timetable
change; reliability significantly improved since subsequent July
timetable amendment
-- Southeastern rail franchise extended to 1 April 2019;
shortlisted for the replacement franchise
-- Further progress towards our international target; won second
bus contract in Ireland and fourth rail contract in Germany
-- Successfully launched UK's largest demand responsive bus
transport service
-- Maintained full year dividend of 102.08p (2017: 102.08p)
Financial summary
Increase/
(decrease)
FY'18 FY'17 %
================================================= ======= ======= ============
Revenue (GBPm) 3,461.5 3,481.1 (0.6)
================================================= ======= ======= ============
Operating profit pre-exceptional items (GBPm) 135.9 150.6 (9.8)
================================================= ======= ======= ============
Profit before tax (GBPm) 145.7 136.8 6.5
================================================= ======= ======= ============
Basic earnings per share pre-exceptional items
(p) 181.6 207.7 (12.6)
================================================= ======= ======= ============
Basic earnings per share after exceptional items
(p) 207.2 207.7 (0.2)
================================================= ======= ======= ============
Proposed full year dividend per share (p) 102.08 102.08 -
================================================= ======= ======= ============
Increase/
(decrease)
FY'18 FY'17 GBPm
========================================================= ===== ===== ===========
Cashflow generated from operations (excluding restricted
cash) (GBPm) 232.8 224.4 8.4
========================================================= ===== ===== ===========
Free cashflow (GBPm) 57.7 11.6 46.1
========================================================= ===== ===== ===========
Adjusted net debt (GBPm)* 289.0 285.8 3.2
========================================================= ===== ===== ===========
Adjusted net debt/EBITDA* 1.30x 1.30x
========================================================= ===== ===== ===========
* Adjusted net debt is net cash less restricted cash
David Brown, Group Chief Executive, commented:
"I'm pleased to report full year results that are ahead of our
expectations. Our bus operations performed resiliently with profits
slightly up on last year despite a challenging market environment.
Rail profits fell partly due to the expiry of the London Midland
franchise in December, but one-off disposal gains at the end of the
franchise and some cost improvement benefits at Southeastern led to
a better performance than originally expected.
"Our regional bus business received customer satisfaction levels
of 91%, the highest ever recorded in the sector. Our London bus
business also improved its operational performance with punctuality
levels 12.5% better than last year. In rail, the timetable change
in May was the largest in decades and will deliver substantial
customer benefits. In Southern, the timetable change supported
continuing improvement, with services now operating at the highest
level of reliability since before the start of the current
franchise.
"In Thameslink and Great Northern, collective industry failures
over the timetable change resulted in a period of service
performance which was severely below our expectations and those of
our customers. We are sorry for the significant disruption that the
change caused to our passengers and are working very hard with the
rest of the industry to improve the service. The interim timetable
that has been in place since mid-July is providing a much improved
train service in terms of both reliability and punctuality. More
services will be introduced over the coming months.
"Our international strategy has progressed well with two further
contract successes - a second bus contract in Ireland and a fourth
rail contract in Germany. Annualised revenue from the seven
international contracts secured to date is now around GBP250m, and
there is a good pipeline of upcoming opportunities in our target
markets. We remain on track to meet our target of generating 15% to
20% of Group operating profit from international operations by
2022.
"As we look ahead, we recognise that future transport needs of
customers and society are changing, and we are actively pursuing
initiatives to further benefit our customers. Projects include the
launch of the UK's largest demand responsive bus transport trial of
high-quality minibuses in Oxford, working with logistics partners
on utilising our spare depot capacity, environmentally friendly car
sharing schemes, developing Mobility as a Service apps for
end-to-end journeys, and launching a business accelerator programme
for start-up and scale-up businesses looking to shape the future of
transport.
"Go-Ahead is one of the UK's largest providers of public
transport and we have a crucial role in building a thriving
economy, connecting people and communities, reducing congestion and
improving air quality. We are focused on doing business in the
right way and strive to deliver value for all our stakeholders -
great services for our customers; an attractive workplace for our
people; sustainable returns for our shareholders; effective
partnerships with government and suppliers; and connecting
communities.
Outlook
"For the Group overall, we expect to deliver a robust
performance in 2018/19, taking into account the expiry of the
London Midland franchise last year which contributed positively for
the first six months of 2017/18. We expect free cash flow
generation to be strong, resulting in a further reduction in net
debt excluding restricted rail cash.
"Looking forward, we remain confident that we are in a good
position to deliver long term value for all our stakeholders and
deliver our vision of a world where every journey is taken care
of."
S
Notes to editors
The annualised revenue figure of cGBP250m relates to annual
revenues that we estimate we will derive from the international
contracts that we have won. This includes expected annual revenues
on a bus contract in Singapore, two bus contracts in Ireland and
four rail contracts in Germany.
For further information, please contact:
The Go-Ahead Group
David Brown, Group Chief Executive 020 7799 8971
Patrick Butcher, Group Chief Financial Officer 020 7799 8973
Mitesh Kotecha, Interim Head of Investor Relations 07973 698 187
Citigate Dewe Rogerson 020 7638 9571
Michael Berkeley/Chris Barrie/Angharad Couch/Toby
Moore
David Brown, Group Chief Executive, and Patrick Butcher, Group
Chief Financial Officer, will be hosting a presentation for
investors and analysts at 9.00am today at The London Stock
Exchange, 10 Paternoster Square, London EC4M 7LS.
A live audio webcast of the presentation will be available on
Go-Ahead's website - www.go-ahead.com. The presentation slides will
be added to Go-Ahead's website www.go-ahead.com at around 7:30am
today
Chairman's LETTER
Dear Shareholder,
The provision of an effective, safe and efficient public
transport system is crucial to the lives of the people and
communities we serve. As a leading provider of public transport
services, we play a vital role in getting people to their work,
leisure, shopping and other destinations, and in connecting
communities.
As well as being focused on delivering good shareholder returns,
including an attractive dividend, we believe in delivering value to
a wide range of stakeholders. It is our strong belief that the
delivery of shareholder value is totally consistent with, and
dependent upon, delivering for our customers, our colleagues and
our partners in an environmentally responsible and sustainable
way.
Shifts in the socio-economic and technological landscapes are
changing the way in which we all go about our lives. This includes
changes in the way we work, the way we shop, and the consequent
impact on our transportation needs and preferences. These changes
create both challenges and opportunities. At Go-Ahead, we have
adopted a forward thinking approach, by adapting our business to
these changes to deliver improvements that will create long term
benefits for all our stakeholders.
Our strategy
We have a clear and defined strategy with three core pillars: to
protect and grow our core businesses; to win new bus and rail
contracts; and to develop for the future of transport. We have been
embedding these strategic priorities into everything we do and
measuring our performance on the progress we have made.
The purpose of our strategy is to deliver value to our
stakeholders and is supported by financial discipline, a rigorous
approach to cost efficiency and capital allocation, a strong
balance sheet and resilient profits in our bus division, which lay
the foundation to our ability to pay an attractive dividend for our
shareholders.
Our customers
Go-Ahead takes care of over a billion passenger journeys a year.
We are the largest bus operator in London, have a well established,
high quality regional bus business, and are the UK's busiest train
operator. Our vision is a world where every journey is taken care
of.
As customer habits change and we strive to be at the forefront
of using technology to make transport ever easier, our innovation
continues at pace. Contactless has been further rolled out with
increasing customer adoption, and we are trialling and developing
various other initiatives to benefit our customers.
GTR
In partnership with the industry, we embarked upon the
introduction of the largest timetable change in decades for rail
customers in May. This was a complex and ambitious project which
will deliver new routes, greater connectivity and increased peak
frequency through central London with the new automatic train
operation technology. However, the implementation of these changes
let down some of our customers and, alongside our industry
partners, we take collective responsibility for the shortfall
against expected service levels. We deeply regret and are sorry for
the inconvenience caused to our customers. We are working hard in
collaboration with our industry partners to improve the situation
for our customers and are co-operating fully with the Office of
Rail and Road (ORR) in its independent inquiry.
We also remain committed to working with the Department for
Transport (DfT) to resolve the long outstanding contract variations
which support the delivery of new services and will address
remaining contractual performance issues, as explained in more
detail on page 41 of the Annual Report.
Our people
The Board would like to thank all of our 28,000 colleagues who
work diligently every day in pursuit of our vision. Without the
commitment, professionalism and dedication of our people, we would
not be able to provide the services we do. Our vision and strategy
are supported by a set of beliefs and attitudes which we live and
breathe.
At Go-Ahead, we are committed to taking care of our people,
providing good working conditions and fair pay, and supporting them
in their development. We are proud to be the first provider of bus
and rail services to become an Employer Provider of
Apprenticeships, gaining certification from the Education and
Skills Funding Agency (ESFA) which operates under the Department
for Education. We are also pleased to have been awarded two
Investors in People Gold accreditations during the year, an
internationally recognised standard which defines what it takes to
lead, support and manage people effectively to promote a culture of
high performance.
As an organisation dedicated to equality, inclusion and
diversity, we have fairness enshrined in our pay practices and are
determined to address the pay gap between men and women working
across our businesses. The industry in which Go-Ahead operates has
historically had a high proportion of male employees but, as
reported in our Gender Pay Gap Report, the number of women in
leadership and management roles in our UK bus workforce has
increased from 13% to 15.4% over the past three years. The number
of women in our UK rail workforce has increased to 17.3%, which is
higher than the industry wide average. The Group is implementing an
action plan to improve gender balance at all levels, including a
pledge to attract 40% of train driver applications from females by
2021.
The environment
We have a commitment to help cities tackle key issues around
congestion, air pollution and transport accessibility. Our business
model is built on sustainability as we take cars off the road. A
Euro 6 bus, for example, produces less nitrogen dioxide emissions
than a Euro 6 car and can carry many more passengers to reduce
pollution. We have been reducing our carbon footprint
significantly, with a reduction in emissions per vehicle mile by
over 30% over the past three years.
Traffic congestion in the UK is 11% worse than it was three
years ago and a recent analysis by INRIX put the cost of congestion
in the UK at over GBP37.7 billion in 2017 alone. A fully loaded
double decker bus can take 75 cars off the road and we continue to
promote solutions to reduce congestion. We also support the London
Mayor's Transport Strategy which seeks to increase the proportion
of journeys made on foot, by cycling or by public transport where
travel by bus and rail has a crucial role to play.
Go-Ahead is the largest operator of electric buses in the UK,
and the operator of the UK's only all-electric bus garage. We are
working on further environmental initiatives including how we can
make a positive impact in actioning the United Nations Sustainable
Development Goals and incorporating the financial implications of
climate change in our reporting going forward, in compliance with
the Taskforce on Climate-Related Financial Disclosures (TCFD).
Our investors
Despite the challenging market backdrop that we have seen in our
bus businesses this year, operational challenges in our GTR
franchise, and the expiry of the London Midland franchise mid-way
through the year, we have delivered results ahead of our
expectations at the beginning of the year. As a result, the Board
has recommended a final dividend of 71.91p which brings the full
year dividend to 102.08p. Subject to shareholder approval, this
will be paid on 23 November 2018 to shareholders on the register on
9 November 2018.
The Board continues to recognise the importance of dividends to
shareholders and accordingly has updated its dividend policy. The
Group will target a dividend payout ratio of 50% to 75% of net
income. This better reflects the historic and expected future
payout ratio and provides shareholders with more clarity and the
Group with the appropriate flexibility to continue to pay an
attractive dividend.
Your Board
The Board's focus this year has been on ensuring that good
governance supports the delivery of our strategic objectives,
particularly in respect of ensuring that we address the needs of
all our stakeholders. The way in which we develop and monitor
strategy has improved through the Board's Strategy Day, routine
reporting to the Board and a clear forward looking agenda which
enables us to discuss key priorities. An increased focus on
innovation and building resilience has also enabled the Board to
remain forward thinking with the Group's culture, reputation and
stakeholder engagement now all an integral part of Board
deliberations.
We have continued to build upon last year's Board development
programme to improve the effectiveness of the Board. During the
year, we were delighted to welcome Harry Holt and Leanne Wood as
independent non-executive directors in October 2017. Together they
have brought with them a diversity of experience and perspective
which is already enhancing Board debate.
Patrick Butcher will be leaving the Group towards the end of the
year. On behalf of the Board, I would like to thank Patrick for the
valuable contribution he has made to the Group and the strong
financial position that he has safeguarded. The Board has begun a
process to appoint a successor.
The future
Our business has a clear strategy which I am confident positions
us to address the industry challenges and opportunities we face and
for the Group's future development. With the continued dedication
of our colleagues and our ongoing focus on our customers, I believe
that we are taking the necessary actions to deliver value to all
our stakeholders whilst appropriately balancing short, medium and
long term considerations.
chief executive's review
In a challenging market environment, our businesses have
demonstrated a resilient financial performance and delivered an
operating profit which is higher than our initial expectations. We
are firmly of the view that this is a result of our clear and
simple strategy, supported by our devolved business model and an
ethos which seeks to deliver for all of our stakeholders.
Protect and grow the core
Go-Ahead has been a leading provider of bus and rail services to
passengers across the UK for over 30 years. Our core bus operations
in London and the UK regions provide us with stable profits and
cash flows, and our UK rail operations generate additional
cashflows and high returns on capital. The first pillar of our
strategy is to protect and grow these activities through a strong,
local customer focus, efficient operations and with appropriate
investment in the future.
Bus
Operating profit, pre-exceptional items, in our bus division at
GBP91.4m (2017: GBP90.7m) was slightly higher than last year, with
a lower result in our regional bus business offset by an increased
performance in London.
In regional bus, the industry backdrop for passenger volumes
remains challenging with journeys across regional markets in
England reducing by over 2%, driven largely by local authority
cuts, congestion and changes in consumer behaviour. Our regional
business, with its weighting towards urban areas in the south of
the country, and with devolved management teams that have the
flexibility and agility to respond effectively to local market
conditions, saw a slightly better performance with a decline in
like for like passenger volumes of 1.6%. Within this overall
performance, trends remained mixed across our various markets with
growth in some areas offset by declines in others. Our like for
like passenger revenues grew by 0.4% and with a continued focus on
cost efficiencies, our pre-exceptional operating profit of GBP45.8m
(2017: GBP47.1m) was only slightly below last year's level with an
operating margin of 11.9% remaining close to industry leading
levels.
Air quality and congestion are high on the agenda and we remain
resolute in our efforts to demonstrate that buses are the solution
to these issues. The potential impact of the Bus Services Act
remains unclear and we continue to monitor developments in
Manchester, the first area where there could be changes to the
current model. We believe that working with local authorities in a
collaborative, mutually beneficial way is the best solution to
deliver desired outcomes for passengers and taxpayers alike.
Our approach in regional bus is to focus on urban areas with
growth potential. We retain our strong customer focus and are proud
to have achieved the highest ever passenger satisfaction score of
91% from Transport Focus, including the highest scores for
punctuality and journey time. We continue to use technology to
promote bus use by making services simpler and more comfortable to
use. The roll out of contactless continues across our regional bus
business, accounting for up to 30% of transactions at some of our
operators. Over 2,000 buses have been enabled, with Brighton and Go
East Anglia also on track to provide contactless by the end of the
year.
The market environment is presenting us with further
consolidation and bolt-on acquisition opportunities. We remain very
selective about those which we pursue and are pleased to have
acquired Tom Tappin Limited, a small sightseeing operation in
Oxford, and East Yorkshire Motor Services (EYMS), a larger, well
established operator of over 300 buses and coaches. We are
confident that these businesses will contribute positively to our
results in the future.
In London, buses are still the most popular means of public
transport, carrying 200 million more passenger journeys than all
other Transport for London (TfL) services combined. We are the
largest bus operator in the UK capital with just under a quarter of
the market. Passenger demand in London is decreasing as it is in
the rest of the country, with more people working from home and
increasing online shopping. Budgetary pressure at TfL is resulting
in a reduction in mileage for operators in London, with TfL's
business plan suggesting a reduction of around 7.5% in mileage over
the coming three years.
As anticipated, our mileage in London for the year was down by
1% reflecting contract tenders. In this environment, we have
focused our efforts on quality, which has helped us to achieve
strong Quality Incentive Contract income (QICs), and on tight cost
control with the development of lean engineering. This has enabled
our London bus division to deliver an increased operating profit of
GBP45.6m (2017: GBP43.6m) with a stable operating margin of
8.3%.
Looking forward, we support the Mayor of London's aspiration to
increase the number of trips made on foot, by cycle and by public
transport and believe that buses have a key role to play in
delivering that vision. London is still an attractive place to run
buses, and we believe that as London heads towards a population of
nine million people, population growth in the suburbs will continue
to stimulate demand.
Rail
Operating profit in our rail division at GBP44.5m (2017:
GBP59.9m) declined by 25.7% compared to last year.
London Midland performed very well during the first six months
of the year prior to the expiry of the franchise and we were very
disappointed that we were unsuccessful in our bid to retain the
routes under the new West Midlands franchise.
Southeastern experienced a year on year reduction in passengers
during the first half of the year, impacted by a shift in working
patterns. This led us to accelerate our efforts to deliver business
efficiencies which have borne fruit and supported profitability.
During the second half of the year, passenger journeys and revenue
growth showed an improvement, boosted by the resumption of full
services through London Bridge station.
At GTR, prior to the introduction of the May timetable changes,
operational performance was steadily improving with higher
passenger satisfaction levels on our Thameslink service than at any
point since 1999 according to the Spring 2018 National Rail
Passenger Satisfaction (NRPS) survey. This showed an 86% overall
satisfaction rate, an increase of 11 percentage points over the
previous year.
In May, in partnership with the industry, we began the
introduction of the largest timetable change in decades to provide
new routes, greater connectivity and increased peak frequency
through central London. Due mainly to the sheer number of changes
required, approvals for service alterations being delayed and some
timetable requests being amended, there was much less time than
originally planned to prepare adequately for the new timetable. We
are very sorry for the severe disruption this caused some of our
passengers and we are working very hard with our industry partners
to restore service to levels that we expect to deliver and our
customers rightfully expect from us.
In July, we implemented a new timetable which focuses on running
as many peak services as possible. I am pleased that this has
stabilised the service and is now providing a schedule on which
passengers can better rely and plan around. We continue to work
hard to progressively implement the full benefits of the changes
that had been planned for May by the next timetable change.
Win new bus and rail contracts
Our international expansion is a significant part of the second
pillar of our strategy. Our extensive experience in the UK
positions us well in international markets. Our bus contract in
Singapore, which began operating in September 2016, has continued
to perform well.
In Ireland, mobilisation of our first contract to operate bus
services in the outer Dublin area is progressing apace and
operations will commence in September 2018. Similar to the
structure of bus contracts in London and Singapore, this contract
will run for five years with a possible extension of two years.
During the financial year, we were pleased to have been awarded a
second bus contract in Ireland for services linking Dublin to
commuter towns in Offaly, Laois, Kildare and Meath. These routes
will begin operating in early 2019, also on a five-year contract
with a possible two-year extension, and will bring the total number
of routes in Ireland up to 30.
Mobilisation in Germany for the start of three rail contracts in
2019 is progressing according to plan and we were pleased to have
been awarded a fourth contract to operate the E-Netz Allgäu routes.
This new contract will provide regional services and important
links between Munich and Lindau, within the German federal states
of Bavaria and Baden-Württemberg, on a 12 year franchise which is
due to start in 2021.
In total, we have now secured seven contract wins outside the UK
which are expected to have an annualised turnover of around GBP250m
once they are all operating. We are actively pursuing other
opportunities in our existing and other targeted markets within a
clear framework. International work enriches our market knowledge
and expertise, and provides further opportunities for sharing of
experiences and best practices across the Group. The goal of
generating 15% to 20% of Group profit from international operations
by 2022 remains unchanged and we are on a good trajectory to
achieve this.
Develop for the future of transport
The third pillar of our strategy revolves around adapting to
changes in the way people live their lives and how this impacts
their mobility needs. We constantly strive to be more relevant to
customers tomorrow than we are today so that we can continue to
fulfil their evolving travel preferences. A forward thinking
approach is key to future proofing the business as we seek new ways
to apply skills, knowledge and assets to enable sustainable
performance over the long term. We are focused on ensuring that we
invest sufficiently to understand changing trends and are able to
capture opportunities through a process of researching, testing and
trialling.
In June, we launched the UK's largest on-demand bus service in
Oxford, called PickMeUp. Passengers can summon buses via a mobile
app to virtual bus stops nearby. There has been a positive initial
response and we look forward to seeing how this develops with a
possible roll out to other areas in the future.
During the financial year, we began working with logistics
partners including the commencement of a pilot at our Crawley depot
to manage deliveries in the area. Elsewhere, our Hammock IT
consulting business uses existing retail and IT knowledge to
provide technology solutions to local authorities and other
customers and has been making good progress, winning two contracts
this year. We also invested in a 12% stake in Mobileeee, a
Frankfurt based, award winning start up to forge environmentally
friendly car sharing schemes.
We are developing Mobility as a Service (MaaS) in Brighton to
make public transport and not owning a car an easy, clear and
transparent choice for end-to-end journeys. We also piloted the
UK's first bus ticket system using iBeacons in Southampton earlier
in the year.
In July, we launched the Billion Journey Project, a business
accelerator programme to partner with scale-up businesses looking
to innovate and improve the experience of travel. The programme,
which will initially nurture 10 companies, offers technical
assistance and mentorship from our team of transport experts and
aims to support new businesses looking to change and shape the
future of transport by focusing on improving passenger
experiences.
Outlook
Whilst these are challenging times, we are convinced that such
an environment can provide opportunities for agile, forward looking
businesses. The provision of customer focused and efficient public
transport services has an important role to play in local
communities as an enabler of social and economic activity and it is
also an answer to congestion and air quality issues. We are
confident that our clear and focused strategy positions us well to
address the challenges and capture the opportunities over the long
term.
The business ethics and values which have always been important
to us are becoming increasingly relevant. The people we have in our
businesses, with our commitment to help them develop, along with
our devolved management structure and forward thinking ethos, help
us to keep one step ahead and our strong balance sheet provides us
with the financial resources to capture opportunities and weather
short term turbulence.
Looking to 2018/19, in our regional bus business, we remain
focused on maintaining our leading passenger satisfaction scores,
on the continued adoption of smart technology, and on capturing
more benefits from the roll out of our Lean framework. Market
conditions are expected to remain challenging, but we expect
operating profit to show a slight improvement on the level achieved
in 2017/18.
Our London bus business will see a reduction in mileage for
2018/19 resulting from TfL budget pressures and some contract
losses towards the end of 2017/18. The value of our own contracts
available for tender in 2018/19 is markedly lower than has been the
case in the preceding two years and there are good opportunities to
win work from competitors during the year.
In rail, our focus is on working with our industry partners to
deliver an improved service for passengers, particularly for those
travelling on services operated by our GTR franchise who
experienced severe disruption after the timetable change in May. We
remain hopeful of winning the new South Eastern franchise and have
submitted a deliverable and economically sensible bid.
We will continue to execute our international strategy with the
start of operations in Dublin and continued mobilisation in
Germany, and we also expect to submit bids for additional
international contracts in our targeted markets. Further progress
will also be made on our various initiatives around developing for
the future of transport.
For the Group overall, we expect to deliver a robust performance
in 2018/19, taking into account the expiry of the London Midland
franchise last year which contributed positively to the first six
months of 2017/18. We expect free cashflow generation to be strong,
resulting in a further reduction in net debt excluding restricted
rail cash.
Looking forward, we remain confident that we are in a good
position to deliver long term value for all our stakeholders and
deliver our vision of a world where every journey is taken care
of.
Business and finance review
All references to operating profit and margins are on a
pre-exceptional basis unless otherwise detailed. A full
reconciliation between pre- and post-exceptional operating profit
is shown within the income statement and associated notes.
Financial overview
Revenue for the year was GBP3,461.5m, down GBP19.6m, or 0.6%, on
last year (2017: GBP3,481.1m). This small decrease was attributable
to the rail division, following the ending of the London Midland
franchise in December 2017, partially offset by inflationary
increases in revenue.
Profit attributable to shareholders for the year decreased by
GBP0.1m, or 0.1%, to GBP89.0m (2017: GBP89.1m) and earnings per
share fell by 0.2% to 207.2p (2017: 207.7p) with exceptional gains
offsetting declining rail profit.
Excluding exceptional items, profits attributable to
shareholders decreased by GBP11.1m or 12.5% to GBP78.0m and
earnings per share by 12.6% to 181.6p (2017: 207.7p).
The adjusted net debt (excluding restricted cash) at the year
end was GBP289.0m (2017: GBP285.8m). The higher net debt largely
reflects the expiry of the London Midland franchise, working
capital movements relating to the timing of franchise payments and
increased capital expenditure in London bus, reflecting contract
renewal commitments. The adjusted net debt (excluding restricted
cash) to EBITDA ratio of 1.30x (2017: 1.30x) remains below our
target range of 1.5x to 2.5x.
Group overview
Increase/ Increase/
2018 2017 (decrease) (decrease)
GBPm GBPm GBPm %
========================================= ======= ======= ============ ============
Group revenue 3,461.5 3,481.1 (19.6) (0.6)
========================================= ======= ======= ============ ============
Regional bus operating profit 45.8 47.1 (1.3) (2.8)
========================================= ======= ======= ============ ============
London bus operating profit 45.6 43.6 2.0 4.6
========================================= ======= ======= ============ ============
Total bus operating profit 91.4 90.7 0.7 0.8
========================================= ======= ======= ============ ============
Rail operating profit 44.5 59.9 (15.4) (25.7)
========================================= ======= ======= ============ ============
Group operating profit (pre-exceptional
items) 135.9 150.6 (14.7) (9.8)
========================================= ======= ======= ============ ============
Exceptional operating items 25.1 - 25.1 n/a
========================================= ======= ======= ============ ============
Group operating profit (post-exceptional
items) 161.0 150.6 10.4 6.9
========================================= ======= ======= ============ ============
Share of result of joint venture (1.1) (0.4) (0.7) (175)
========================================= ======= ======= ============ ============
Net finance costs* (14.2) (13.4) (0.8) (6.0)
========================================= ======= ======= ============ ============
Profit before tax 145.7 136.8 8.9 6.5
========================================= ======= ======= ============ ============
Total tax expense* (36.4) (25.3) (11.1) (43.8)
========================================= ======= ======= ============ ============
Profit for the period 109.3 111.5 (2.2) (2.0)
========================================= ======= ======= ============ ============
Non-controlling interests (20.3) (22.4) 2.1 9.4
========================================= ======= ======= ============ ============
Profit attributable to shareholders 89.0 89.1 (0.1) (0.1)
========================================= ======= ======= ============ ============
Profit attributable to shareholders
(pre-exceptional items) 78.0 89.1 (11.1) (12.5)
========================================= ======= ======= ============ ============
Weighted average number of shares
(m) 43.0 42.9 0.1 0.2
========================================= ======= ======= ============ ============
Proposed dividend per share (p) 102.08 102.08 - -
========================================= ======= ======= ============ ============
Reported results for the London bus division include our bus
operation in Singapore, which started trading on 4 September 2016,
due to similarities
between the contract structures.
* Including exceptional items
Bus
Go-Ahead is a leading bus operator in the UK, both in and
outside London. Around two million passenger journeys are made on
our services every day.
Bus overview
Increase/ Increase/
(decrease) (decrease)
2018 2017 GBPm %
================================ ====== ====== ============ ============
Total bus operations
================================ ====== ====== ============ ============
Revenue (GBPm) 934.2 902.0 32.2 3.6
================================ ====== ====== ============ ============
Operating profit (GBPm) 91.4 90.7 0.7 0.8
================================ ====== ====== ============ ============
Operating profit margin 9.8% 10.1% n/a (0.3ppt)
================================ ====== ====== ============ ============
Regional bus
================================ ====== ====== ============ ============
Revenue (GBPm) 383.7 376.6 7.1 1.9
================================ ====== ====== ============ ============
Operating profit (GBPm) 45.8 47.1 (1.3) (2.8)
================================ ====== ====== ============ ============
Operating profit margin 11.9% 12.5% n/a (0.6ppt)
================================ ====== ====== ============ ============
London bus
================================ ====== ====== ============ ============
Revenue (GBPm) 550.5 525.4 25.1 4.8
================================ ====== ====== ============ ============
Operating profit (GBPm) 45.6 43.6 2.0 4.6
================================ ====== ====== ============ ============
Operating profit margin 8.3% 8.3% n/a -
================================ ====== ====== ============ ============
Like for like revenue growth
================================ ====== ====== ============ ============
Regional bus 0.4% 1.0% n/a (0.6ppts)
================================ ====== ====== ============ ============
London bus 3.1% 1.5% n/a 1.6pts
================================ ====== ====== ============ ============
Like for like volume growth
================================ ====== ====== ============ ============
Regional bus passenger journeys (1.6%) (0.2%) n/a (1.4ppts)
================================ ====== ====== ============ ============
London bus miles operated (1.0%) (1.7%) n/a 0.7ppts
================================ ====== ====== ============ ============
Overall bus performance
Total bus revenue increased by 3.6%, or GBP32.2m, to GBP934.2m
(2017: GBP902.0m) including the contribution of acquisitions and
the full year impact of the Singapore business. While operating
profit was slightly ahead of the prior year at GBP91.4m (2017:
GBP90.7m), the operating profit margin decreased slightly by
0.3ppts to 9.8%. This performance, which was in line with our
expectations for the year, reflected a good performance in London,
offset by continued challenges in the regional bus business.
Regional bus
Regional bus revenue was GBP383.7m (2017: GBP376.6m), up
GBP7.1m, or 1.9%, including the contribution of acquisitions. Like
for like revenue growth of 0.4% was broadly in line with our
expectations and slightly ahead of wider industry trends. Growth in
passenger journeys in some regions was offset by softer performance
in other operating areas including some contract losses, resulting
in an overall decline in like for like passenger volumes of 1.6%.
Growth in revenue and passenger numbers was also impacted by the
restructuring of selected route networks to match passenger demand
and reduce costs, and the impact of the extreme weather during
early 2018.
Operating profit in the regional bus division fell GBP1.3m, or
2.8%, to GBP45.8m (2017: GBP47.1m), with operating profit margin
down 0.6ppts to 11.9% (2017: 12.5%). Depreciation costs increased
in the year, reflecting continued investment in buses. While the
division benefited from a reduction in fuel costs due to lower
hedge prices, inflationary increases impacted costs during the
year.
GBPm
============================================ =====
2017 operating profit 47.1
============================================ =====
Changes:
============================================ =====
Net impact of acquisitions 0.3
============================================ =====
Prior year one offs 2.8
============================================ =====
Passenger volume (including weather impact) (4.6)
============================================ =====
Contract volumes (4.1)
============================================ =====
Yield, route restructures and pricing 8.8
============================================ =====
Net cost inflation (4.5)
============================================ =====
2018 operating profit 45.8
============================================ =====
London bus
Reported results for the London bus division include our bus
operation in Singapore. London bus revenue grew by 4.8%, to
GBP550.5m in the year (2017: GBP525.4m).
Quality Incentive Contract bonuses (QICs) were GBP13.2m (2017:
GBP6.9m) as a result of improved performance against TfL quality
targets. This has been achieved in partnership with TfL, which has
implemented additional bus prioritisation measures and fewer
roadworks on our routes, while we have further strengthened our
service control capabilities. As anticipated, like for like mileage
decreased by 1.0% due to the timing of contract renewals and TfL's
route restructuring. Operating profit in the London bus division
was GBP45.6m (2017: GBP43.6m), up GBP2.0m, or 4.6%, with operating
profit margin stable at 8.3% (2017: 8.3%). As with regional bus,
our London operations saw a reduction in fuel costs reflecting the
lower hedge price, and higher depreciation as a result of
significant capital expenditure.
GBPm
====================== =====
2017 operating profit 43.6
====================== =====
Changes:
====================== =====
Singapore 1.4
====================== =====
QIC bonuses 6.3
====================== =====
Volume (0.4)
====================== =====
Margin (1.1)
====================== =====
Net inflation 0.1
====================== =====
One offs (2.7)
====================== =====
Other (1.6)
====================== =====
2018 operating profit 45.6
====================== =====
Capital expenditure and depreciation
2018 2017
GBPm GBPm
================================================ ===== =====
Regional bus fleet (inc. vehicle refurbishment) 41.1 37.1
================================================ ===== =====
London bus fleet (inc. vehicle refurbishment) 46.2 60.0
================================================ ===== =====
Technology and other 8.4 8.8
================================================ ===== =====
Depots 3.9 6.8
================================================ ===== =====
Total capital expenditure 99.6 112.7
================================================ ===== =====
In London, the purchase of 135 new buses (2017: 261 buses)
reflects the timing of contract renewals. In regional bus,
demonstrating our commitment to maintaining a young and greener bus
fleet, 173 new buses (2017: 102 buses) were bought. The average age
of our buses is now 6.5 years (2017: 7.0 years).
Depreciation for the division was GBP61.8m (2017: GBP56.1m),
reflecting the increased capital spend in recent years.
In 2018/19, we expect total capital expenditure for the bus
division to be around GBP65m with a significantly lower level in
London due to the timing of contract renewals and continued
investment in our regional bus services.
Fuel
In the year, the bus division required around 137 million litres
of fuel, with a net cost of GBP98.2m.
Bus fuel hedging prices
We have continued our bus fuel hedging programme which uses fuel
swaps to fix the price of our diesel fuel in advance. Our core
policy is to be fully hedged for the next financial year before the
start of that year, at which point we aim to have also fixed at
least 50% of the following year and 25% of the year after that.
This hedging profile is then maintained on a month by month
basis.
With Board approval, additional purchases can be made to lock in
future costs for greater certainty. The table below reflects the
year end position; no significant purchases have been made
following the year end.
2019 2020 2021
======================== ===== ==== ====
% hedged Fully 55% 30%
======================== ===== ==== ====
Price (pence per litre) 32.5 33.2 33.9
======================== ===== ==== ====
At each period end, the fuel hedges are marked to market price.
The change in the fuel hedge liability to a fuel hedge asset during
the year represents the increase in the mark to market value of the
fuel hedges during the year.
Bus financial outlook
Regional bus trading in the early part of the current year has
been consistent with the fourth quarter of 2017/18. We expect a
slight improvement in regional bus operating profit for 2018/19
despite market conditions remaining challenging.
The London bus business has already secured almost all of its
revenue for the current year. While competitive pressure and TfL
funding constraints continue to result in market contraction in bus
miles operated, we have the opportunity to bid for around GBP95m of
additional work in 2018/19.
Rail
Go-Ahead's rail operations are the busiest in the UK,
responsible for around 30% of all train passenger journeys.
Rail performance
The rail division has delivered a financial result slightly
ahead of the Board's expectations, supported by a better
performance and one-off disposal gains at the end of the London
Midland franchise in the first half, and some cost improvement
benefits at Southeastern. Overall margins have remained at
historically low levels, impacted in particular by GTR.
Rail overview
Increase/ Increase/
(decrease) (decrease)
2018 2017 GBPm %
======================================= ======= ======= ============ ============
Total rail operations
======================================= ======= ======= ============ ============
Total revenue (GBPm) 2,527.3 2,579.1 (51.8) (2.0)
======================================= ======= ======= ============ ============
Operating profit (GBPm) 44.5 59.9 (15.4) (25.7)
======================================= ======= ======= ============ ============
Operating profit margin 1.8% 2.3% n/a (0.5ppt)
======================================= ======= ======= ============ ============
Like for like passenger revenue growth
======================================= ======= ======= ============ ============
Southeastern 3.8% 3.2% 0.6ppt
======================================= ======= ======= ============ ============
GTR 7.7% (4.1)% 11.8ppt
======================================= ======= ======= ============ ============
Like for like passenger growth
======================================= ======= ======= ============ ============
Southeastern 1.4% (0.9)% 2.3ppt
======================================= ======= ======= ============ ============
GTR 2.1% (3.9)% 6.0ppt
======================================= ======= ======= ============ ============
Revenue
Total revenue decreased by 2.0%, or GBP51.8m, to GBP2,527.3m
(2017: GBP2,579.1m), consisting of:
2018 2017 Increase/(decrease) Increase/(decrease)
GBPm GBPm GBPm %
================================== ======= ======= =================== ===================
Passenger revenue
================================== ======= ======= =================== ===================
Southeastern 786.3 755.6 30.7 4.1
================================== ======= ======= =================== ===================
London Midland 156.2 339.6 (183.4) (54.0)
================================== ======= ======= =================== ===================
GTR 1,271.3 1,148.2 123.1 10.7
================================== ======= ======= =================== ===================
Total passenger revenue 2,213.8 2,243.4 (29.6) (1.3)
================================== ======= ======= =================== ===================
Other revenue
================================== ======= ======= =================== ===================
Southeastern 34.1 43.2 (9.1) (21.1)
================================== ======= ======= =================== ===================
London Midland 35.1 55.1 (20.0) (36.3)
================================== ======= ======= =================== ===================
GTR 139.5 105.1 34.4 32.7
================================== ======= ======= =================== ===================
Germany 0.3 - 0.3 n/a
================================== ======= ======= =================== ===================
Total other revenue 209.0 203.4 5.6 2.8
================================== ======= ======= =================== ===================
Subsidy and revenue support
================================== ======= ======= =================== ===================
Southeastern subsidy 67.3 45.2 22.1 48.9
================================== ======= ======= =================== ===================
London Midland subsidy 36.6 87.0 (50.4) (57.9)
================================== ======= ======= =================== ===================
Southern revenue support* 0.6 (0.4) 1.0 n/a
================================== ======= ======= =================== ===================
London Midland revenue support - 0.5 (0.5) n/a
================================== ======= ======= =================== ===================
Total subsidy and revenue support 104.5 132.3 (27.8) (21.0)
================================== ======= ======= =================== ===================
Total revenue 2,527.3 2,579.1 (51.8) (2.0)
================================== ======= ======= =================== ===================
*Southern revenue support and core premium payments relate to
the Southern franchise which ended in July 2015.
Premium payments, profit share payments and revenue share
payments
Core premium payments, profit share payments and revenue share
payments are included in operating costs.
2018 2017 Increase/(decrease) Increase/(decrease)
GBPm GBPm GBPm %
============================ ====== ====== =================== ===================
Southern core premium - (1.4) 1.4 n/a
============================ ====== ====== =================== ===================
Southeastern profit share 16.2 22.9 (6.7) (29.3)
============================ ====== ====== =================== ===================
London Midland profit share 4.4 8.7 (4.3) (49.4)
============================ ====== ====== =================== ===================
Operating profit
Operating profit in the rail division was down GBP15.4m at
GBP44.5m (2017: GBP59.9m), with the operating profit margin
decreasing to 1.8% (2017: 2.3%). This was mainly driven by the
expiry of the London Midland franchise in December 2017.
GBPm
=========================== ======
2017 operating profit 59.9
=========================== ======
Changes:
=========================== ======
Southeastern 10.4
=========================== ======
London Midland (13.0)
=========================== ======
GTR / Southern (10.0)
=========================== ======
Bid and mobilisation costs (2.8)
=========================== ======
2018 operating profit 44.5
=========================== ======
Individual franchise performance
GTR
The business reported a 2.1% rise (2017: 3.9% decline) in
passenger journeys and a 7.7% rise (2017: 4.1% decline) in
passenger revenue. Prior to the timetable change in May 2018, train
performance had consistently improved, especially when compared to
the period of intense industrial action in the prior year. This led
to increased passenger journeys and revenue, particularly on longer
distance Southern services, which generate higher income. All
passenger income is payable to the government.
In May, the rail industry began the introduction of the largest
and most complex timetable change in decades to provide new routes,
greater connectivity and increased peak frequency through central
London. Unfortunately delays in finalising the timetable by the
rail industry resulted in insufficient time to implement it
smoothly and effectively, resulting in significant disruption
across the rail network.
We continue to work hard to progressively implement the full
benefits of the changes which had been planned for May.
Southeastern
Southeastern recorded a good trading performance. On a like for
like basis, passenger revenue rose by 3.8% (2017: 3.2%) while
passenger numbers increased by 1.4% (2017: 0.9% decrease).
Underlying passenger journeys and revenue growth improved,
following the resumption of full services through London Bridge
station, after three years of partial closure. Continued good
progress in the delivery of our efficiency programme also led to an
increase in profit for the year.
Southeastern's strong financial performance enabled a
contribution of GBP16.2m to be made to the DfT during the year
through the profit sharing mechanism included in the directly
awarded contract that it has operated under since October 2014.
London Midland
The London Midland franchise ceased operations on 10 December
2017. Assets with a net book value of GBP6.1m were sold to the
incoming operator for GBP12.5m, resulting in a GBP6.4m profit on
disposal.
Rail bid costs and international
Rail bid and contract mobilisation costs in the year were
GBP13.9m (2017: GBP11.1m), primarily relating to the bids for, and
mobilisation of German rail contracts, the South Eastern franchise
bid and international bidding in the Nordic countries.
Capital expenditure and depreciation
Capital expenditure for the rail division was GBP27.1m (2017:
GBP29.2m), predominantly relating to GTR, including expenditure on
station improvements and ticket machines. Depreciation was GBP20.9m
(2017: GBP9.3m), reflecting the high level of capex which is being
depreciated over the life of the franchises.
In 2018/19, capital expenditure for the rail division is
expected to be around GBP20m, reflecting continued investment in
GTR and mobilisation of our German operations.
Rail financial outlook
The existing Southeastern franchise has now been extended until
31 March 2019. Passenger journeys and revenue growth for
Southeastern are expected to continue the improvement shown in the
second half of 2017/18, boosted by the resumption of full services
through London Bridge station. However the 2018/19 financial
performance of our rail division will be impacted by the expiry of
the London Midland franchise and by the scheduled end of the
Southeastern franchise.
We have submitted a deliverable and economically sensible bid
for the South Eastern franchise which is currently scheduled to
commence on 1 April 2019.
As previously announced, discussions between GTR and the DfT
about a number of contractual variations remain ongoing, in
particular regarding payment for operating more and longer trains
as part of the Thameslink train service increases. The outcome of
these discussions, relating to events up to 30 June 2018, is that
the impact on rail profitability is likely to remain within a range
of plus or minus GBP5m.
Following the implementation of a revised timetable in May, the
performance of GTR services has been below certain contractual
thresholds. These shortfalls are in large measure attributable to
failings across the industry and are not the sole responsibility of
GTR. Discussions are continuing with the DfT to apportion
accountability for these shortfalls. It is possible that the DfT
will determine that a sufficient part of these failings are down to
GTR and that it is in breach of its contractual obligations. At
that point, the DfT may choose, as is usual, to require the
production of a Remedial Plan and/or seek to impose penalties or
may seek to terminate the contract.
In the event of a termination, it is possible that there will be
costs that the DfT will seek to recover from GTR. These are not
possible to estimate at this stage and in any event would be
contested. GTR continues to work hard to further stabilise and
improve services for customers and remains committed to working
with the DfT to resolve the long outstanding contract variations
which support the delivery of new services and will address
remaining contractual performance issues described above.
As previously announced, the margin over the life of the GTR
contract is expected to be in the range of between 0.75% and
1.5%.
Financial review
Earnings per share
Earnings were GBP89.0m (2017: GBP89.1m), resulting in a decrease
in earnings per share from 207.7p to 207.2p. Excluding exceptional
items, earnings were GBP78.0m, resulting in decrease of earnings
per share from 207.7p to 181.6p. The weighted average number of
shares was 43.0 million and the number of shares in issue, net of
treasury shares, was 43.1 million.
2018* 2017 2016 2015 2014
=================== ====== ====== ====== ====== ======
Earnings per share 181.6p 207.7p 218.2p 147.9p 174.3p
=================== ====== ====== ====== ====== ======
* Pre-exceptional
Dividend
The Board is proposing a total dividend for the year of 102.08p
per share (2017: 102.08p), consistent with the prior year. This
includes a proposed final payment of 71.91p per share (2017:
71.91p) payable on 23 November 2018 to shareholders registered at
the close of business on 9 November 2018. Dividends of GBP43.8m
(2017: GBP41.8m) paid in the period represent the payment of the
prior year's final dividend of 71.91p per share (2017: 67.52p) and
the interim dividend in respect of this year of 30.17p per share
(2017: 30.17p). Dividends paid to non-controlling interests were
GBP13.9m (2017: GBP21.3m), and dividend payout was 56% (2017: 49%)
on a pre-exceptional earnings basis.
Summary cashflow
Increase/
2018 2017 (decrease)
GBPm GBPm GBPm
======================================================= ======= ======= ===========
EBITDA 221.9 219.1 2.8
======================================================= ======= ======= ===========
Working capital/other items (excluding restricted cash
movements) 10.9 5.3 5.6
======================================================= ======= ======= ===========
Cashflow generated from operations 232.8 224.4 8.4
======================================================= ======= ======= ===========
Tax paid (28.7) (34.1) 5.4
======================================================= ======= ======= ===========
Net interest paid (13.3) (12.7) (0.6)
======================================================= ======= ======= ===========
Net capital investment (119.2) (144.7) 25.5
======================================================= ======= ======= ===========
Dividends paid - minority partner (13.9) (21.3) 7.4
======================================================= ======= ======= ===========
Free cashflow 57.7 11.6 46.1
======================================================= ======= ======= ===========
Net acquisitions (7.5) (11.2) 3.7
======================================================= ======= ======= ===========
Other (9.1) (4.2) (4.9)
======================================================= ======= ======= ===========
Net cash on issue/purchase of shares (0.5) (0.9) 0.4
======================================================= ======= ======= ===========
Dividends paid (43.8) (41.8) (2.0)
======================================================= ======= ======= ===========
Increase in adjusted net debt* (3.2) (46.5) 43.3
======================================================= ======= ======= ===========
Opening adjusted net debt* (285.8) (239.3) n/a
======================================================= ======= ======= ===========
Closing adjusted net debt* (289.0) (285.8) n/a
======================================================= ======= ======= ===========
* Adjusted net debt is net cash less restricted cash.
Cashflow
Cash generated from operations before tax and excluding
movements in restricted cash was GBP232.8m (2017: GBP224.4m). This
increase of GBP8.4m is largely due to movements in working capital,
primarily reflecting structural changes in rail franchises. Tax
paid of GBP28.7m (2017: GBP34.1m) comprised payments on account in
respect of the current and prior years' liabilities. Net interest
paid of GBP13.3m (2017: GBP12.7m) was lower than the net charge for
the period of GBP14.2m (2017: GBP13.4m) after excluding the impact
of non-cash interest on pensions and the unwinding of discounting
on provisions. Capital expenditure, net of sale proceeds, was
GBP25.5m lower in the year at GBP119.2m (2017: GBP144.7m),
predominantly due to lower investment in our London bus fleet from
the prior year's elevated level, and the proceeds received from the
sale of the London Midland assets. Net group capital investment is
expected to be around GBP85.0m in 2018/19.
During the year, as part of a planned programme of monthly share
purchases to satisfy future share awards, the Group purchased
64,012 ordinary shares for a total consideration of GBP1.1m (2017:
121,084 ordinary shares for a total consideration of GBP2.4m).
At the year end, significant medium term finance was secured
through a revolving credit facility (RCF) and a GBP250m sterling
bond. The GBP280m five year RCF had an initial maturity of July
2019 with two one-year extension options, the second of which was
agreed on 20 June 2016, extending the maturity of the facility to
July 2021. On 20 July 2018 an additional extension of two years was
agreed, extending the maturity of the facility to July 2023. A
further two one-year extensions are available which if exercised
would extend the maturity to July 2025.
Capital expenditure
Expenditure on capital during the year can be summarised as:
2018 2017
GBPm GBPm
============= ===== =====
Regional bus 47.9 49.6
============= ===== =====
London bus 51.7 63.1
============= ===== =====
Total bus 99.6 112.7
============= ===== =====
Rail 27.1 29.2
============= ===== =====
Group total 126.7 141.9
============= ===== =====
Net cash/debt
Net cash of GBP149.9m (2017: GBP230.3m) comprised debt arising
from the GBP250m sterling bond (2017: GBP200m sterling bond),
amounts drawn down against the GBP280m five year RCF of GBP136.0m
(2017: GBP156.0m), amounts drawn down against the EUR8m revolving
credit facility and EUR10.6m financial facility of GBP11.2m (2017:
GBP0.9), and hire purchase and lease agreements of GBP9.4m (2017:
GBP3.0m), offset by cash and short term deposits of GBP556.5m
(2017: GBP590.2m) including GBP438.9m of restricted cash in rail
(2017: GBP516.1m). There were no overdrafts in use at the year end
(2017: GBPnil).
Our primary financial covenant under the 2018 RCF is an adjusted
net debt to EBITDA ratio of not more than 3.5x. Adjusted net debt
(excluding restricted cash) to EBITDA of 1.30x (2017: 1.30x)
remains below the target range of 1.5x to 2.5x.
Capital structure
2018 2017
GBPm GBPm
=========================================== ======= =======
Syndicated facility 2023 280.0 280.0
=========================================== ======= =======
7 year GBP250m 2.5% sterling bond 2024 250.0 -
=========================================== ======= =======
7.5 year GBP200m 5.375% sterling bond 2017 - 200.0
=========================================== ======= =======
Euro financing facilities 16.5 17.5
=========================================== ======= =======
Total core facilities 546.5 497.5
=========================================== ======= =======
Amount drawn down at 1 July 2017 397.2 356.9
=========================================== ======= =======
Balance available 149.3 140.6
=========================================== ======= =======
Restricted cash 438.9 516.1
=========================================== ======= =======
Net cash (149.9) (230.3)
=========================================== ======= =======
Adjusted net debt 289.0 285.8
=========================================== ======= =======
EBITDA 221.9 219.1
=========================================== ======= =======
Adjusted net debt/EBITDA 1.30x 1.30x
=========================================== ======= =======
Investment grade ratings from Moody's (Baa3, stable outlook) and
Standard & Poor's (BBB-, stable outlook) have been recently
reconfirmed and remain unchanged.
Exceptional items
On 28 March the Group and the Trustee of The Go-Ahead Group
Pension Plan agreed to change the reference inflation index for the
purpose of annual increases to the majority of pensions payable by
the Bus Plan. From 1 April 2018 onwards, the Consumer Prices Index
is used to increase pensions in payment rather than the Retail
Prices Index. This change reduces the financial risks of the Plan
and enhances the long term sustainability of the scheme, providing
an improvement in the security of Plan members' benefit.
As a result of this change, the IFRS balance sheet valuation of
the Group's pension liabilities has reduced by GBP35.2m and the
Group has recognised a pre-tax, non-cash exceptional credit of this
value in the income statement.
The Group has also reviewed the carrying value of goodwill and
associated tangible assets on its regional bus businesses. This has
led to an exceptional impairment charge of GBP10.1m.
Included within net finance costs and taxation are exceptional
items relating to an ongoing HMRC enquiry as explained below. There
were no exceptional operating items in the prior year
Amortisation
The amortisation charge for the year was GBP3.3m (2017:
GBP3.1m), which relates to the non-cash cost of amortising software
costs, franchise mobilisation costs and customer contracts.
Net finance costs
Net finance costs for the year were ahead of the prior year at
GBP14.2m (2017: GBP13.4m) including finance costs of GBP16.7m
(2017: GBP15.8m) less finance revenue of GBP2.5m (2017: GBP2.4m).
Finance costs include an exceptional cost of GBP2.6m (2017: GBPnil)
in respect of the estimated settlement of the HMRC capital
allowances enquiry. The average net interest rate for the period
was 4.1% (2017: 4.2%).
Taxation
Net tax for the year was GBP36.4m (2017: GBP25.3m), equivalent
to an effective rate of 25.0% (2017: 18.5%). A provision has been
made in the tax charge in relation to a current HMRC enquiry and is
shown as exceptional. Excluding the impact of this one-off
provision and the impact of exceptional items, the tax rate would
have been 21.0%, as a result of non-deductible items such as bid
costs in Germany and other international areas.
The statutory rate will reduce to 17% in 2020. We expect our
effective tax rate to be 2% to 3% above the statutory rate in
future years.
Non-controlling interest
The non-controlling interest in the income statement of GBP20.3m
(2017: GBP22.4m) arises from our 65% holding in Govia Limited,
which owns 100% of our current rail operations and therefore
represents 35% of the profit after taxation of these
operations.
Pensions
Operating profit includes the net cost of the Group's defined
benefit pension plans for the year of GBP35.4m (2017: GBP37.4m)
consisting of bus costs of GBP1.8m (2017: GBP0.4m) and rail costs
of GBP33.7m (2017: GBP37.0m). Group contributions to the schemes
totalled GBP40.3m (2017: GBP42.9m).
An exceptional gain of GBP35.2m (2017: GBPnil) was recognised in
the year as explained above.
Bus pensions
Under accounting valuations, the net surplus after taxation on
the bus defined benefit schemes was GBP30.3m (2017: a deficit of
GBP17.3m), consisting of pre-tax assets of GBP36.8m (2017:
liabilities of GBP20.9m) less a deferred tax liability of GBP6.5m
(2017: deferred tax asset of GBP3.6m). The pre-tax asset consisted
of assets of GBP829.3m (2017: GBP784.6m) less estimated liabilities
of GBP792.5m (2017:GBP805.5m). The percentage of assets held in
higher risk, return seeking assets was 48.5% (2017: 53.4%).
Rail pensions
As the long term responsibility for the rail pension schemes
rests with the DfT the Group only recognises the share of surplus
or deficit expected to be realised over the life of each franchise.
As a result, our pre-tax liability continues to be GBPnil (2017:
GBPnil).
Key Risks
The key risks described in the Group's Annual Report for the
year ended 30 June 2018 can be summarised as below. More detail can
be found in the 2018 Group Annual Report and Accounts, available on
our website at www.go-ahead.com
External risks
Economic environment and society
Lower economic growth or reduction in economic activity.
Mitigating actions
-- Continue to focus our operations in more resilient
geographical areas
-- Local management constantly assesses the needs of local
markets and direct services and products accordingly
-- Provide attractive services and products
-- Focus on driving volumes through innovative and targeted
marketing
-- Generate customer loyalty through initiatives such as smart
ticketing
-- Proactive cost control
-- Make public transport easier to access and use
-- Robust bid modelling considers differing economic scenarios,
including the UK's exit from the European Union
Political and regulatory framework
Changes to the legal and regulatory framework, the
implementation of the Bus Services Act 2017, and the impact of the
UK leaving the EU.
Mitigating actions
-- Limited exposure to local authority funding, as our
operations are largely commercial
-- Actively participate in key industry, trade
and government steering and policy development groups
-- Collaboration and partnership working with local
authorities
-- Devise strategy for bus franchising
-- Demonstrate the value delivered by the private sector through
investment in services, responding quickly and flexibly to
passenger needs
Strategic risks
Sustainability of rail profits or loss of franchise
Failure to retain Southeastern franchise on acceptable terms and
failure to stabilise GTR's business performance, and comply with
franchise terms.
Mitigating actions
-- Flexible and experienced management team which responds
quickly and expertly to changing circumstances
-- Shared risk through the Govia joint venture, which is 65%
owned by Go-Ahead and 35%
by Keolis
-- Invest in performance improvements
-- Work constructively with industry partners, such as Network
Rail and the DfT, to deliver long term economic and infrastructure
benefits
-- Significant resource and financial investment in bidding for
new franchises
-- Regular Board review of rail performance,
and Board approval of overall rail bidding strategy
-- Compliance with franchise conditions closely monitored
-- Recovery plan for GTR
-- Reduce head office costs across the Group
-- Preparation for German rail contract ahead of its start date
in 2019
Inappropriate strategy or investment
Failure to make appropriate strategic or investment
decisions.
Mitigating actions
-- Comprehensive strategic discussions with main Board and
advisors
-- Extensive valuation and due diligence, supported by external
expertise
-- Maintain strong financial discipline when assessing viability
of opportunities
-- Cautious approach to investment opportunities overseas and
outside our core operating areas
-- The Board has a clear stated risk appetite that governs the
acceptable level of risk in pursuit of objectives
Competition
Competition from existing and new market participants, loss of
business to other modes and threats from market disruptors.
Mitigating actions
-- Disciplined and focused bidding
-- Adapt to changing customer requirements and technological
advancements
-- Foster close relationships with stakeholders to ensure we are
meeting requirements including service quality and price
-- Work in partnership with local authorities and other
operators
-- Promote multi-modal travel, improving the overall
door-to-door experience for passengers
-- Remain at the forefront of promoting and introducing
inter-operable ticketing schemes
-- Focus on customer needs and expectations, including more
channels for ticket purchase and journey planning
Operational risks
Catastrophic incident or severe infrastructure failure
An incident, such as a major accident, an act of terrorism, a
pandemic, or a severe failure of rail infrastructure.
Mitigating actions
-- Rigorous, high profile health and safety programme throughout
the Group
-- Appropriate and regularly reviewed and tested contingency and
disaster recovery plans
-- Thorough and regular staff training
-- Work closely with our industry partners, such as rail
infrastructure provider, Network Rail, and government agencies
-- We have maintained high levels of safety performance,
demonstrating our continuing efforts to minimise this risk
Large scale infrastructure projects
Large scale infrastructure projects on and around the networks
on which we operate, such as the Thameslink Programme, HS2 and
major roadworks.
Mitigating actions
-- Work constructively with industry partners, such as Network
Rail, to minimise the impact of any disruption on our
passengers
-- Strong engagement with stakeholders, including our customers,
to enable effective communication, especially during structural
change programmes and disruption to the service
-- Good relationships with local authorities and industry
bodies, such as the DfT
Labour costs, employee relations and resource planning
Failure to effectively engage with our people and trade unions
in making change and managing costs, including pensions.
Mitigating actions
-- Work to maintain good relationships with employees and trade
unions
-- Robust workforce planning with skill requirements
identified
-- Robust and regularly reviewed recruitment and retention
policies, training schemes, resource planning and working
practices
-- Experienced approach to wage negotiations
-- Employee engagement surveys across all businesses to identify
issues
-- Engaging all our people in the vision, beliefs and
attitudes
-- Proactive management of pension risks
Information technology failure or interruption or security
breach
Prolonged or major failure of the Group's IT systems or a
significant data breach.
Mitigating actions
-- Implementation of the Group-wide GDPR project, to ensure
compliance
-- Appointment of a Group Data Protection Officer
-- Robust processes and procedures in place to ensure compliance
with the relevant laws and best practices
-- Process standardisation and continued investment in best
practice systems, including 'light sites' and 'load bearing'
servers
-- Clear and tested business continuity plans
-- Proactive approach to cyber security issues
-- Cyber Essentials, a government backed cyber security
certification scheme, was achieved
-- Continued investment in and maintenance of IT systems across
the Group
-- Test scenarios conducted across the Group
Consolidated income statement
for the year ended 30 June 2018
Exceptional
Pre-exceptional items Post-exceptional
2018 2018 2018 2017
Notes GBPm GBPm GBPm GBPm
=============================================== ===== =============== =========== ================ =========
Group revenue 4 3,461.5 - 3,461.5 3,481.1
Operating costs 5, 7 (3,325.6) 25.1 (3,300.5) (3,330.5)
=============================================== ===== =============== =========== ================ =========
Group operating profit 135.9 25.1 161.0 150.6
Share of result of joint venture (1.1) - (1.1) (0.4)
Finance revenue 4, 8 2.5 - 2.5 2.4
Finance costs 8 (14.1) (2.6) (16.7) (15.8)
=============================================== ===== =============== =========== ================ =========
Profit before taxation 123.2 22.5 145.7 136.8
Tax expense 9 (24.9) (11.5) (36.4) (25.3)
=============================================== ===== =============== =========== ================ =========
Profit for the year from continuing operations 98.3 11.0 109.3 111.5
Attributable to:
Equity holders of the parent 78.0 11.0 89.0 89.1
Non-controlling interests 20.3 - 20.3 22.4
=============================================== ===== =============== =========== ================ =========
98.3 11.0 109.3 111.5
=============================================== ===== =============== =========== ================ =========
Earnings per share
- basic 10 181.6p 25.6p 207.2p 207.7p
- diluted 10 181.2p 25.5p 206.7p 207.1p
Dividends paid (pence per share) 11 102.08p 97.69p
Final dividend proposed (pence per share) 11 71.91p 71.91p
=============================================== ===== =============== =========== ================ =========
Consolidated statement of comprehensive income
for the year ended 30 June 2018
2018 2017
Notes GBPm GBPm
==================================================== ===== ===== ======
Profit for the year 109.3 111.5
Other comprehensive income
Items that will not be reclassified to profit or
loss:
Remeasurement gains/(losses) on defined benefit
pension plans 27 18.9 (24.2)
Tax relating to items that will not be reclassified 9 (3.3) 4.1
==================================================== ===== ===== ======
15.6 (20.1)
Items that may subsequently be reclassified to
profit or loss:
Unrealised gains/(losses) on cashflow hedges 30.5 (3.2)
(Gains)/losses on cashflow hedges taken to income
statement - operating costs (2.3) 6.7
Tax relating to items that may be reclassified 9 (5.2) (0.9)
Foreign exchange gain/ (loss) 0.8 (0.3)
==================================================== ===== ===== ======
23.8 2.3
Other comprehensive gains/(losses) for the year,
net of tax 39.4 (17.8)
Total comprehensive income for the year 148.7 93.7
==================================================== ===== ===== ======
Attributable to:
Equity holders of the parent 128.4 71.3
Non-controlling interests 20.3 22.4
==================================================== ===== ===== ======
148.7 93.7
==================================================== ===== ===== ======
Consolidated statement of changes in equity
for the year ended 30 June 2018
Reserve Share Capital Total
Share for own Hedging premium redemption Retained shareholders' Non-controlling Total
capital shares reserve reserve reserve earnings equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================ ======= ======== ======== ======== ========== ======== ============= =============== =======
At 2 July 2016 72.1 (70.9) (10.8) 1.6 0.7 178.4 171.1 24.0 195.1
Profit for the
year - - - - - 89.1 89.1 22.4 111.5
Net movement on
hedges
(net of tax) - - 2.6 - - - 2.6 - 2.6
Remeasurement on
defined
benefit
retirement
plans
(net of tax)
(note 27) - - - - - (20.1) (20.1) - (20.1)
Foreign exchange
loss - - - - - (0.3) (0.3) - (0.3)
================ ======= ======== ======== ======== ========== ======== ============= =============== =======
Total
comprehensive
income - - 2.6 - - 68.7 71.3 22.4 93.7
Exercise of
share options - 1.4 - - - (1.4) - - -
Share based
payment charge
(and associated
tax)
(note 6) - - - - - 2.4 2.4 - 2.4
Acquisition of
own shares - (2.4) - - - - (2.4) - (2.4)
Share issue 1.5 - - - - - 1.5 - 1.5
Dividends (note
11) - - - - - (41.8) (41.8) (21.3) (63.1)
================ ======= ======== ======== ======== ========== ======== ============= =============== =======
At 1 July 2017 73.6 (71.9) (8.2) 1.6 0.7 206.3 202.1 25.1 227.2
Profit for the
year - - - - - 89.0 89.0 20.3 109.3
Net movement on
hedges
(net of tax) - - 23.0 - - - 23.0 - 23.0
Remeasurement on
defined
benefit
retirement
plans
(net of tax)
(note 27) - - - - - 15.6 15.6 - 15.6
Foreign exchange
gain - - - - - 0.8 0.8 - 0.8
================ ======= ======== ======== ======== ========== ======== ============= =============== =======
Total
comprehensive
income - - 23.0 - - 105.4 128.4 20.3 148.7
Exercise of
share options - 1.7 - - - (1.7) - - -
Share based
payment charge
(and associated
tax)
(note 6) - - - - - 1.7 1.7 - 1.7
Acquisition of
own shares - (1.1) - - - - (1.1) - (1.1)
Share issue 0.6 - - - - - 0.6 - 0.6
Dividends (note
11) - - - - - (43.8) (43.8) (13.9) (57.7)
================ ======= ======== ======== ======== ========== ======== ============= =============== =======
At 30 June 2018 74.2 (71.3) 14.8 1.6 0.7 267.9 287.9 31.5 319.4
================ ======= ======== ======== ======== ========== ======== ============= =============== =======
Consolidated balance sheet
as at 30 June 2018
2018 2017
Notes GBPm GBPm
====================================== ===== ========= =========
Assets
Non-current assets
Property, plant and equipment 12 628.7 575.2
Intangible assets 13 91.5 91.5
Deferred tax assets 9 0.1 6.1
Investments 28 0.3 -
Interests in joint ventures - 0.8
Other financial assets 23 8.1 -
Retirement benefit obligations 27 41.4 -
====================================== ===== ========= =========
770.1 673.6
====================================== ===== ========= =========
Current assets
Inventories 16 15.2 18.9
Trade and other receivables 17 342.9 332.5
Other financial assets 23 10.0 0.2
Assets classified as held for sale 15 13.1 1.7
Cash and cash equivalents 18 556.5 590.2
====================================== ===== ========= =========
937.7 943.5
====================================== ===== ========= =========
Total assets 1,707.8 1,617.1
====================================== ===== ========= =========
Liabilities
Current liabilities
Trade and other payables 19 (804.8) (836.6)
Other financial liabilities 23 - (7.3)
Interest-bearing loans and borrowings 20 (8.4) (201.5)
Current tax liabilities 9 (20.5) (12.0)
Provisions 24 (29.6) (40.3)
====================================== ===== ========= =========
(863.3) (1,097.7)
====================================== ===== ========= =========
Non-current liabilities
Trade and other payables 19 (1.0) (1.0)
Other financial liabilities 23 - (3.0)
Interest-bearing loans and borrowings 20 (394.8) (157.6)
Retirement benefit obligations 27 (4.6) (20.9)
Deferred tax liabilities 9 (51.0) (47.8)
Provisions 24 (73.7) (61.9)
====================================== ===== ========= =========
(525.1) (292.2)
====================================== ===== ========= =========
Total liabilities (1,388.4) (1,389.9)
====================================== ===== ========= =========
Net assets 319.4 227.2
====================================== ===== ========= =========
Capital & reserves
Share capital 25 74.2 73.6
Reserve for own shares 25 (71.3) (71.9)
Hedging reserve 25 14.8 (8.2)
Share premium reserve 25 1.6 1.6
Capital redemption reserve 25 0.7 0.7
Retained earnings 25 267.9 206.3
====================================== ===== ========= =========
Total shareholders' equity 287.9 202.1
Non-controlling interests 31.5 25.1
====================================== ===== ========= =========
Total equity 319.4 227.2
====================================== ===== ========= =========
Consolidated cashflow statement
for the year ended 30 June 2018
2018 2017
Notes GBPm GBPm
======================================================= ===== ======= =======
Profit after tax for the year 109.3 111.5
Net finance costs 8 14.2 13.4
Tax expense 9 36.4 25.3
Depreciation of property, plant and equipment 12 82.7 65.4
Amortisation of intangible assets 13 3.3 3.1
Goodwill/asset impairment 7 10.1 -
Share of result of joint venture 1.1 0.4
Profit on sale of assets held for sale (0.9) -
Profit on sale of property, plant and equipment (7.3) (0.3)
Share based payment charges 6 2.2 2.7
Difference between pension contributions paid and
amounts recognised in the income statement (6.3) (6.0)
Pension scheme exceptional items 7 (35.2) -
Decrease/(increase) in inventories 1.5 (0.3)
(Increase)/decrease in trade and other receivables (1.9) 8.0
Decrease in trade and other payables (18.9) (40.7)
Movement in provisions 0.7 (4.3)
======================================================= ===== ======= =======
Cashflow generated from operations 191.0 178.2
Taxation paid 9 (28.7) (34.1)
======================================================= ===== ======= =======
Net cashflows from operating activities 162.3 144.1
======================================================= ===== ======= =======
Cashflows from investing activities
Interest received 2.5 2.4
Proceeds from sale of property, plant and equipment 15.4 2.2
Proceeds from sale of assets held for sale 1.7 -
Purchase of property, plant and equipment (126.7) (141.9)
Purchase of property, plant and equipment held
for sale (11.4) -
Purchase of intangible assets (10.1) (5.0)
Purchase of businesses 14 (9.2) (11.7)
Cash acquired with subsidiary 2.0 0.5
Transferred with franchise (23.5) -
Acquisition of investments (0.3) -
======================================================= ===== ======= =======
Net cashflows used in investing activities (159.6) (153.5)
======================================================= ===== ======= =======
Cashflows from financing activities
Interest paid (15.8) (15.1)
Dividends paid to members of the parent 11 (43.8) (41.8)
Dividends paid to non-controlling interests (13.9) (21.3)
Payment to acquire own shares (1.1) (2.4)
Foreign exchange gain/(loss) 0.8 (0.3)
Repayments of borrowings (222.5) -
Proceeds from borrowings 260.2 43.8
Proceeds from issue of shares 0.6 1.5
Payment of finance lease and hire purchase liabilities (0.9) (1.1)
======================================================= ===== ======= =======
Net cash outflows on financing activities (36.4) (36.7)
======================================================= ===== ======= =======
Net decrease in cash and cash equivalents (33.7) (46.1)
Cash and cash equivalents at 1 July 2017 18 590.2 636.3
======================================================= ===== ======= =======
Cash and cash equivalents at 30 June 2018 18 556.5 590.2
======================================================= ===== ======= =======
Cash balances of GBP438.9m (2017: GBP516.1m) were restricted at
30 June 2018, further details are shown in note 18.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation and directors' responsibility statement
Basis of preparation
The financial information set out herein does not constitute the
Company's statutory accounts for the years ended 30 June 2018 or
2017 but is derived from those accounts. Statutory accounts for
2017 have been delivered to the Registrar of Companies and those
for 2018 will be delivered in due course. The auditor's reports on
the 2018 and 2017 accounts were unqualified, did not draw attention
to any matters by way of emphasis and did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006. The 2018
Annual Report has been authorised for issue and signed by the Board
of directors at the time of this announcement.
Directors' responsibility statement
The responsibility statement has been prepared in connection
with the preparation of the company's full annual report for the 52
week period ended 30 June 2018. Certain parts thereof are not
included within this announcement.
We confirm to the best of our knowledge:
1. the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
2. the Chairman's Statement, Group Chief Executive's Review, and
the Finance Review will form part of the Strategic Report and will
be incorporated into the directors' report. They include a fair
review of the development and performance of the business and the
position of the Company and the undertakings included in the
consolidation taken as a whole.
The announcement was approved by the Board of directors on 5
September 2018 and is signed on its behalf by:
David Brown Group, Chief Executive
Patrick Butcher Group, Chief Financial Officer
2. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management
to make judgements, estimates and assumptions. Although these
judgements and estimates are based on management's best knowledge,
actual results ultimately may differ from these estimates.
Critical accounting judgements
The following are the critical judgements, apart from those
involving estimations, that the directors have made in the process
of applying the Group's accounting policies and that have the most
significant effect on the amounts recognised in the financial
statements:
Exceptional operating items
In certain years the Group presents as exceptional operating
items on the face of the income statement, material items of
revenue or expense which, because of the size or the nature and
expected infrequency of the events giving rise to them, merit
separate presentation to allow better understanding of financial
performance. The determination of whether items merit treatment as
exceptional in a particular year is therefore a matter of
judgement.
During the year, the following items have been classified as
exceptional and further details are given in note 7, a gain on the
change in pension plan assumptions from RPI to CPI, certain
goodwill and asset impairments and provisions in respect of an
ongoing HMRC capital allowances taxation enquiry.
There were no exceptional items in the comparative year.
Accounting for the rail pension schemes
The train operating companies participate in the RPS, a defined
benefit pension scheme which covers the whole of the UK rail
industry. This is partitioned into sections and the Group is
responsible for the funding of these schemes whilst it operates the
relevant franchise. In contrast to the pension schemes operated by
most businesses the RPS is a shared cost scheme which means that
costs are formally shared 60% employer 40% employee. The Group only
recognises its share of costs in the income statement.
Uninsured claims
The measurement of uninsured liabilities is based on an
assessment of both the expected settlement of known claims and of
the cost of claims not yet reported to the Group, as detailed in
note 24. In order to assess the appropriate level of provisions the
Group engages with its brokers and claims handlers to ensure
external expertise is adequately factored in to the provision for
known claims.
Key sources of estimation uncertainty
The key sources of estimation uncertainty that have a
significant risk of causing material adjustments to the carrying
value of assets and liabilities within the next financial year are
in relation to:
Contract and franchise accounting
The commercial entities in the UK rail industry were created at
the time of privatisation and the relationships between them are
governed by a number of contracts between the major participants,
the DfT, Network Rail and train operating companies. These
contracts include detailed performance regimes which determine the
allocation of financial responsibility relating to the attribution
of delays. The processes for attribution, whilst well understood,
require detailed assessment and can take significant time to
resolve, particularly in unusual circumstances.
The Group makes provision for income and costs relating to
performance regimes and contractual obligations relating to
operating delays caused by Network Rail, or caused by our own
operating companies. This process can be based primarily on
previous experience of settling such claims, or, in certain
circumstances, based on management's view of the most likely
outcome of individual claims. The Group has significant internal
expertise to assess and manage these aspects of the agreements and
the issues relating to delay attribution to enable management to
assess the most probable outcomes, nonetheless significant
judgements are required, which can have material impacts on the
financial statements.
Accordingly judgements in these and other areas are made on a
continuing basis with regard to amounts due and the recoverable
carrying value of related assets and liabilities arising from
franchises and other contracts. Regular reviews are performed on
the expected outcome of these arrangements, which require
assessments and judgements relating to the expected level of
revenues and costs. The GTR franchise is complex and there are a
number of contractual discussions underway with the DfT that have a
range of reasonably possible outcomes. Management's judgements are
that, relating to events up to 30 June 2018, the impact on rail
profitability of these outcomes is likely to be within a range of
plus or minus GBP5m.
Following the implementation of a revised timetable in May, the
performance of GTR services has been below certain contractual
thresholds. These shortfalls are in large measure attributable to
failings across the industry and are not the sole responsibility of
GTR. Discussions are continuing with the DfT to apportion
accountability for these shortfalls. It is possible that the DfT
will determine that a sufficient part of these failings are down to
GTR and that it is in breach of its contractual obligations. At
that point, the DfT may choose, as is usual, to require the
production of a Remedial Plan and/or seek to impose penalties or
may seek to terminate the contract.
In the event of a termination, it is possible that there will be
costs that the DfT will seek to recover from GTR. These are not
possible to estimate at this stage and in any event would be
contested. GTR continues to work hard to further stabilise and
improve services for customers and remains committed to working
with the DfT to resolve both the long outstanding contract
variations which support the delivery of new services and will
address remaining contractual performance issues described
above.
Contract and franchise accounting specific to the rail business
is disclosed in the segmental analysis in note 3.
Measurement of franchise commitments
The measurement of franchise commitments, comprising
dilapidation provisions on rolling stock, depots and stations and
also income claims from other rail franchise operators, is set out
in note 24. Significant elements of the provisions required are
subject to interpretation of franchise agreements and rolling stock
agreements. The Group has significant internal expertise to assess
and manage these aspects of the agreements and to enable management
to assess the most probable outcomes. Where appropriate, and
specifically in assessing dilapidation provisions, this process is
supported by valuations from professional external advisors to
support provision levels.
Retirement benefit obligations - Bus schemes
The measurement of defined benefit pension obligations requires
the estimation of future changes in salaries, inflation, longevity
of current and deferred members and the selection of a suitable
discount rate, as set out in note 27. The Group engages Willis
Towers Watson, a global professional services company whose
specialisms include actuarial advice, to support the process of
establishing reasonable bases for all of these estimates, to ensure
they are appropriate to the Group's particular circumstances.
Management also benchmark these assumptions on a periodic basis
with other professional advisors.
3. Segmental analysis
The Group's businesses are managed on a divisional basis.
Selected financial data is presented on this basis below.
For management purposes, the Group is organised into three
reportable segments: regional bus, London bus and rail. Operating
segments within those reportable divisions are combined on the
basis of their long term characteristics and similar nature of
their products and services, as follows:
The regional bus division comprises UK bus operations outside
London.
The London bus division comprises bus operations in London under
control of Transport for London (TfL), rail replacement and other
contracted services in London, bus operations in Singapore under
control of the Land Transport Authority (LTA) of Singapore and bus
operations in Ireland under the control of the National Transport
Authority (NTA) of Ireland. The Irish operations are currently
being mobilised. These are aggregated as a segment given the
similar contractual nature of the business.
The rail division comprises UK and overseas rail operations. The
UK rail operation through an intermediate holding company, Govia
Limited, is 65% owned by Go-Ahead and 35% by Keolis and comprises
two rail franchises: Southeastern and GTR. The division is
aggregated for the purpose of segmental reporting under IFRS 8 as
each operating company has similar objectives, to provide passenger
rail services and achieve a modest profit margin through its
franchise arrangements with the Department for Transport (DfT).
Each company targets similar margins, has similar economic risks
and is viewed and reacted to as one segment by the chief operating
decision maker, considered to be the Group Chief Executive. The
registered office of Keolis (UK) Limited is in England and
Wales.
Overseas rail operations are currently being mobilised in
Germany and are 100% owned by Go-Ahead. The German rail franchises
are included with the UK rail operations for reporting purposes and
will be considered in further detail when operational in June
2019.
The information reported to the Group Chief Executive in his
capacity as chief operating decision maker does not include an
analysis of assets and liabilities and accordingly IFRS 8 does not
require this information to be presented.
Transfer prices between operating segments are on an arm's
length basis similar to transactions with third parties.
The following tables present information regarding the Group's
reportable segments for the year ended 30 June 2018 and the year
ended
1 July 2017.
Year ended 30 June 2018
Regional London Total Total
bus bus bus Rail operations
GBPm GBPm GBPm GBPm GBPm
================================================ ======== ======= ======= ========= ===========
Segment revenue 418.8 571.2 990.0 2,554.7 3,544.7
Inter-segment revenue (35.1) (20.7) (55.8) (27.4) (83.2)
================================================ ======== ======= ======= ========= ===========
Group revenue 383.7 550.5 934.2 2,527.3 3,461.5
Operating costs (337.9) (504.9) (842.8) (2,482.8) (3,325.6)
================================================ ======== ======= ======= ========= ===========
Group operating profit (pre-exceptional
items) 45.8 45.6 91.4 44.5 135.9
Exceptional operating items 25.1
Group operating profit (post-exceptional
items) 161.0
Share of result of joint venture (1.1)
Net finance costs (14.2)
================================================ ======== ======= ======= ========= ===========
Profit before tax and non-controlling interests 145.7
Tax expense (36.4)
================================================ ======== ======= ======= ========= ===========
Profit for the year 109.3
================================================ ======== ======= ======= ========= ===========
Within exceptional items, a charge of GBP10.1m, relating to
goodwill and asset impairment, is within the regional bus segment.
The other exceptional items relate to central activities and
therefore cannot be allocated between the operating segments.
Regional London Total Total
bus bus bus Rail operations
GBPm GBPm GBPm GBPm GBPm
========================== ======== ====== ===== ===== ===========
Other segment information
Capital expenditure:
- Additions 47.9 51.7 99.6 27.1 126.7
- Acquisitions 20.7 - 20.7 - 20.7
- Intangible assets 4.6 2.0 6.6 5.4 12.0
Depreciation 34.1 27.7 61.8 20.9 82.7
========================== ======== ====== ===== ===== ===========
At 30 June 2018, there were non-current assets included within
London bus of GBP7.2m (2017: GBP2.1m) relating to operations in
Singapore and Ireland. The operations in Singapore commenced
trading on 4 September 2016 and the revenue generated during the
year to 30 June 2018 was GBP52.1m (2017: GBP39.7m). Operations in
Ireland are currently being mobilised and trading is due to
commence in September 2018. Non-current assets included within rail
of GBP11.0m (2017: GBP3.0m) relate to operations being mobilised in
Germany.
We have two major customers which individually contribute more
than 10% of Group revenue, one of which contributed GBP1,278.5m
(2017: GBP1,148.6m), and the other contributed GBP491.8m (2017:
GBP479.1m).
Year ended 1 July 2017
Regional London Total Total
bus bus bus Rail operations
GBPm GBPm GBPm GBPm GBPm
================================================ ======== ======= ======= ========= ===========
Segment revenue 406.8 545.3 952.1 2,594.6 3,546.7
Inter-segment revenue (30.2) (19.9) (50.1) (15.5) (65.6)
================================================ ======== ======= ======= ========= ===========
Group revenue 376.6 525.4 902.0 2,579.1 3,481.1
Operating costs (329.5) (481.8) (811.3) (2,519.2) (3,330.5)
================================================ ======== ======= ======= ========= ===========
Group operating profit 47.1 43.6 90.7 59.9 150.6
Share of result of joint venture (0.4)
Net finance costs (13.4)
================================================ ======== ======= ======= ========= ===========
Profit before tax and non-controlling interests 136.8
Tax expense (25.3)
================================================ ======== ======= ======= ========= ===========
Profit for the year 111.5
================================================ ======== ======= ======= ========= ===========
Regional London Total Total
bus bus bus Rail operations
GBPm GBPm GBPm GBPm GBPm
========================== ======== ====== ===== ===== ===========
Other segment information
Capital expenditure:
- Additions 49.6 63.1 112.7 29.2 141.9
- Acquisitions 8.7 - 8.7 - 8.7
- Intangible assets 8.4 - 8.4 3.3 11.7
Depreciation 31.5 24.6 56.1 9.3 65.4
========================== ======== ====== ===== ===== ===========
4. Group revenue
This note provides an analysis of Group revenue. For accounting
policies see 'Revenue recognition', 'Rendering of services',
'Rental income' and 'Profit and revenue sharing/support agreements'
in notes to the accounts.
2018 2017
GBPm GBPm
=============================================== ======= =======
Rendering of services 3,319.5 3,322.9
Rental income 37.5 25.9
Franchise subsidy receipts and revenue support 104.5 132.3
=============================================== ======= =======
Group revenue 3,461.5 3,481.1
Finance revenue 2.5 2.4
=============================================== ======= =======
Total Group revenue 3,464.0 3,483.5
=============================================== ======= =======
5. Operating costs
Detailed below are the key amounts recognised in arriving at our
operating costs. For accounting policies see 'Profit and revenue
sharing/support agreements', 'Property, plant and equipment',
'Government grants' and 'Franchise bid costs' in notes to the
accounts.
2018 2017
GBPm GBPm
============================================================= ======= =======
Employee costs (note 6) 1,224.4 1,237.6
Operating lease payments
- bus vehicles 14.5 14.0
- non-rail properties 2.0 2.6
- other non-rail 0.1 0.1
- rail rolling stock 478.1 465.9
- other rail 188.1 165.5
============================================================= ======= =======
Total lease and sublease payments recognised as an expense
(excluding rail access charges)1 682.8 648.1
- rail access charges 482.4 489.4
============================================================= ======= =======
Total lease and sublease payments recognised as an expense2 1,165.2 1,137.5
DfT franchise agreement receipts (24.6) (35.2)
Other operating income (24.0) (17.9)
Depreciation of property, plant and equipment
- owned assets 82.1 64.9
- leased assets 0.6 0.5
============================================================= ======= =======
Total depreciation expense 82.7 65.4
Intangible amortisation 3.3 3.1
Auditor's remuneration
- audit fee for the audit of the parent financial statements 0.1 0.1
- audit fee for the audit of the subsidiary financial
statements 0.7 0.6
Total audit fees for the audit of the financial statements 0.8 0.7
============================================================= ======= =======
- other non-audit3 0.1 0.4
============================================================= ======= =======
Total non-audit fees 0.1 0.4
============================================================= ======= =======
Total auditor's remuneration 0.9 1.1
Trade receivables not recovered 0.2 0.7
Energy costs
- bus fuel 98.2 102.7
- rail diesel fuel 7.0 10.8
- rail electricity 128.1 120.6
- cost of site energy 16.2 15.4
============================================================= ======= =======
Total energy costs 249.5 249.5
Government grants (4.7) (2.1)
Profit on disposal of property, plant and equipment (7.3) (0.9)
Profit on sale of assets held for sale (0.9) -
Costs expensed relating to franchise bidding activities 13.9 11.1
DfT profit share 20.6 33.5
Other operating costs 626.5 647.1
============================================================= ======= =======
Total operating costs (pre-exceptional operating items) 3,325.6 3,330.5
============================================================= ======= =======
1. The total lease and sublease payments recognised as an
expense (excluding rail access charges) are made up of minimum
lease payments of GBP696.4m (2017: GBP661.9m), net of sublease
payments of GBP13.6m (2017: GBP13.8m) relating to other rail
leases.
2. The total lease and sublease payments recognised as an
expense (including rail access charges) are made up of minimum
lease payments of GBP1,178.8m (2017: GBP1,151.3m), net of sublease
payments of GBP13.6m (2017: GBP13.8m) relating to other rail
leases.
3. Other non-audit services of GBP0.1m (2017: GBP0.4m) are
detailed in the section on how we have complied with the 2016 UK
Corporate Governance Code in the Annual Report.
Government grant income of GBP4.7m (2017: GBP2.1m) is mainly
attributable to service improvements including smart ticketing,
deliverable over a period of up to five years.
6. Employee costs
This note shows total employment costs, inclusive of share based
payment charges. We have a number of share plans used to award
shares to directors and employees. A charge is recognised over the
vesting period in the consolidated income statement, based on the
fair value of the award at the date of grant. The note also shows
the average number of people employed by the Group during the year.
For accounting policies see 'Share based payment transactions' in
notes to the accounts.
2018 2017
GBPm GBPm
============================ ======= =======
Wages and salaries 1,067.5 1,077.8
Social security costs 105.1 107.2
Other pension costs 49.6 49.9
Share based payments charge 2.2 2.7
============================ ======= =======
1,224.4 1,237.6
============================ ======= =======
The average monthly number of employees during the year,
including directors, was:
2018 2017
=============================== ====== ======
Administration and supervision 3,263 3,189
Maintenance and engineering 2,583 2,698
Operations 22,308 23,187
=============================== ====== ======
28,154 29,074
=============================== ====== ======
The information required by Schedule 8 of the Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 is provided in the directors'
remuneration report.
Sharesave scheme
Shareholder approval was obtained at the 2013 AGM for the
introduction of a new HM Revenue & Customs approved
Savings-Related Share Option scheme, known as The Go-Ahead Group
plc 2013 Savings-Related Share Option Scheme (the Sharesave scheme)
for employees of the Group and its operating companies.
The Sharesave scheme is open to all full time and part-time
employees (including executive directors) who have completed at
least six months of continuous service with a Go-Ahead Group
company at the date they are invited to participate in a scheme
launch. To take part, qualifying employees have to enter into a
savings contract for a period of three years under which they agree
to save a monthly amount, from a minimum of GBP5 to a maximum (not
exceeding GBP500) specified by the Group at the time of invitation.
For the February 2016 launch (Sharesave 2016), the maximum monthly
savings limit set by the Group was GBP50. At the end of the savings
period, employees can buy shares at a 20% discount of the market
price set at the date of invitation or take their full savings
back. Sharesave 2016 will mature on 1 May 2019.
The fair value of equity-settled share options granted is
estimated as at the date of grant using the Black-Scholes model,
taking into account the terms and conditions upon which the options
were granted. The key assumptions input into the model are future
share price volatility, future dividend yield, future risk free
interest rate, forfeiture rate and option life.
There are savings-related options at 30 June 2018 as
follows:
1 May 1 May
Scheme maturity 2019 2017
=========================================== ======= ======
Option price (GBP) 19.11 17.34
No. of options unexercised at 30 June 2018 249,242 -
No. of options exercised during the year 400 33,954
=========================================== ======= ======
No. of options exercisable at 30 June 2018 - -
=========================================== ======= ======
The expense recognised for the scheme during the year to 30 June
2018 was GBP0.6m (2017: GBP0.8m).
The following table illustrates the number and weighted average
exercise price (WAEP) of share options for the Sharesave
scheme:
2018 2017
2018 WAEP 2017 WAEP
No. GBP No. GBP
========================================= ========= ===== ======== =====
Outstanding at the beginning of the year 589,744 18.32 764,904 18.19
Granted during the year - - - -
Forfeited during the year (306,148) 17.79 (89,693) 18.14
Exercised during the year (34,354) 17.36 (85,467) 17.34
========================================= ========= ===== ======== =====
Outstanding at the end of the year 249,242 19.11 589,744 18.32
========================================= ========= ===== ======== =====
The weighted average exercise price at the date of exercise for
the options exercised in the period was GBP17.36 (2017:
GBP17.34).
At the year end no options (2017: 262,816) were exercisable and
the weighted average exercise price of the options was GBPnil
(2017: GBP18.32).
The options outstanding at the end of the year have a weighted
average remaining contracted life of 0.83 years (2017: 1.01
years).
Long Term Incentive Plans
The executive directors participate in The Go-Ahead Group Long
Term Incentive Plan 2005 and 2015 (LTIP). The LTIP provides for
executive directors to be awarded nil cost shares in the Group
conditional on specified performance conditions being met over a
period of three years. Refer to the directors' remuneration report
for further details of the LTIP.
The expense recognised for the LTIP during the year to 30 June
2018 was GBP0.8m (2017: GBP0.6m).
The fair value of LTIP options granted is estimated as at the
date of grant using a Monte Carlo model, taking into account the
terms and conditions upon which the options were granted. The
inputs to the model used for the options granted in the year to 30
June 2018 and
1 July 2017 were:
2018 2017
% per % per
annum annum
=============================== ======= =======
The Go-Ahead Group plc:
Future share price volatility 29.0 28.0
FTSE Mid-250 index comparator:
Future share price volatility 25.0 25.0
Correlation between companies 30.0 30.0
=============================== ======= =======
The weighted average fair value of options granted during the
year was GBP12.92 (2017: GBP14.90).
The following table shows the number of share options for the
LTIP:
2018 2017
========================================= ======== ========
Outstanding at the beginning of the year 111,724 84,415
Granted during the year 72,755 57,771
Forfeited during the year (9,815) (3,047)
Exercised during the year (11,520) (27,415)
========================================= ======== ========
Outstanding at the end of the year 163,144 111,724
========================================= ======== ========
The LTIP award granted to the Group Chief Executive in November
2015 will lapse in full from November 2018 as none of the
performance measures were achieved following the three year
performance period ending 30 June 2018. The weighted average share
price of the options at the year end was GBP15.88 (2017:
GBP17.77).
All of the LTIP awards granted to the Group Chief Financial
Officer will lapse on his cessation of employment in 2018/19.
The weighted average remaining contractual life of the options
was 1.25 years (2017: 1.33 years). The weighted average exercise
price at the date of exercise for the options exercised in the
period was GBP16.23 (2017: GBP20.33).
Deferred Share Bonus Plan
The Deferred Share Bonus Plan (DSBP) provides for executive
directors and certain other senior employees to be awarded shares
in the Group conditional on the achievement of financial and
strategic targets. The shares are deferred over a three year
period. Refer to the directors' remuneration report for further
details of the DSBP.
The expense recognised for the DSBP during the year to 30 June
2018 was GBP0.8m (2017: GBP1.3m).
The DSBP options are not subject to any market based performance
conditions. Therefore the fair value of the options is equal to the
share price at the date of grant.
The weighted average fair value of options granted during the
year was GBP16.30 (2017: GBP20.08).
The following table shows the number of share options for the
DSBP:
2018 2017
========================================= ======== ========
Outstanding at the beginning of the year 176,258 165,646
Granted during the year 34,804 44,490
Forfeited during the year (7,654) (7,711)
Exercised during the year (56,175) (26,167)
========================================= ======== ========
Outstanding at the end of the year 147,233 176,258
========================================= ======== ========
At the year end, 20,752 options related to DSBP awards, which
vested before the year-end, which have not yet been exercised by
participants.
Of these 20,752 options, 5,165 options related to the award
granted in November 2013 and 15,587 related to the award granted in
November 2014. 50,924 options, relating to the DSBP award granted
in November 2015, will be eligible to vest from November 2018
following the end
of a three year deferral period. The weighted average share
price of the options at the year-end was GBP15.88 (2017:
GBP17.77).
All of the DSBP awards granted to the Group Chief Financial
Officer will lapse on his cessation of employment in 2018/19.
The weighted average remaining contractual life of the options
was 0.67 years (2017: 0.81 years). The weighted average exercise
price at the date of exercise for the options exercised in the
period was GBP16.01 (2017: GBP20.10).
Share incentive plans
The Group operates an HM Revenue & Customs (HMRC) approved
share incentive plan, known as The Go-Ahead Group plc Share
Incentive Plan (SIP). The SIP is open to all Group employees
(including executive directors) who have completed at least six
months' service with a Group company at the date they are invited
to participate in the plan.
The SIP permits the Group to make four different types of awards
to employees (free shares, partnership shares, matching shares and
dividend shares), although the Group has, so far, made awards of
partnership shares only. Under these awards, the Group invites
qualifying employees to apply between GBP10 and GBP150 per month in
acquiring shares in the Group at the prevailing market price. Under
the terms of the scheme, certain tax advantages are available to
the Group and employees.
7. Exceptional items
This note identifies items of an exceptional nature that have a
significant impact on the results of the Group in the period. For
accounting policies see 'Exceptional items' in notes to the
accounts.
2018 2017
GBPm GBPm
====================================== ====== =====
Gain on change in RPI/CPI assumptions 35.2 -
Goodwill and asset impairment (10.1) -
Exceptional operating items 25.1 -
====================================== ====== =====
Year ended 30 June 2018
Total exceptional operating items in the year were GBP25.1m.
During the year The Go-Ahead Group Pension Plan (the Go-Ahead
Plan) changed the reference inflation index used to estimate the
annual increases to the majority of pensions payable. From 1 April
2018, the Consumer Prices Index (CPI) is used to increase pensions
in payment rather than the Retail Prices Index (RPI). The change
reduces the financial risks of the Go-Ahead Plan and enhances the
long term sustainability of the scheme, providing an improvement in
the security of Plan members' benefits. A one-off gain of GBP35.2m
has been recognised in respect of this change in line with IAS 19
and the Group's accounting policies set out on page 135 of the
Annual Report.
During the year, goodwill of GBP8.4m has been impaired relating
to Konectbus, Thames Travel and Carousel bus operations, following
a period of underperformance in all three individual
cash-generating units. More details of the impairment reviews are
given in note 13. The carrying value of the goodwill in Konectbus,
Thames Travel and Carousel is now GBPnil. Assets with a carrying
value of GBP2.4m were also deemed to be impaired within the East
Anglian and Oxford bus operations.
During the year, negative goodwill of GBP0.7m arose on the
business combinations in the year.
The tax impact of the above exceptional items plus accrued
amounts relating to an ongoing HMRC capital allowances enquiry is
GBP11.5m (2017: GBPnil). In addition, an accrued amount of GBP2.6m
has been provided for within finance costs in relation to the
interest payable of this enquiry.
Year ended 1 July 2017
There were no exceptional items in the year ended 1 July
2017.
8. Finance revenue and costs
Finance revenue comprises interest received from bank deposits.
Finance costs mainly arise from interest due on the bond and bank
loans. For accounting policies see 'Finance revenue' and
'Interest-bearings loans and borrowings' in notes to the
accounts.
2018 2017
GBPm GBPm
======================================================== ====== ======
Bank interest receivable on bank deposits 2.5 2.4
======================================================== ====== ======
Finance revenue 2.5 2.4
======================================================== ====== ======
Interest payable on bank loans and overdrafts (2.5) (2.7)
Interest payable on GBP200m sterling 7.5 year bond (2.6) (11.0)
Interest payable on GBP250m sterling 7 year bond (6.3) -
Other interest payable (4.3) (1.7)
Unwinding of discounting on provisions (0.4) (0.2)
Interest payable under finance leases and hire purchase
contracts (0.2) (0.2)
Interest on net pension liability (0.4) -
======================================================== ====== ======
Finance costs (16.7) (15.8)
======================================================== ====== ======
Other interest payable includes an exceptional accrued interest
charge of GBP2.6m (2017: GBPnil) in relation to the ongoing HMRC
capital allowances taxation enquiry.
9. Taxation
This note explains how our Group tax charge arises. The deferred
tax section of the note sets out the deferred tax assets and
liabilities held across the Group. For accounting policies see
'Taxation' in notes to the accounts.
The Group tax policy can be found at www.go-ahead.com.
a. Tax recognised in the income statement and in equity
Tax relating to items charged or credited in the income
statement:
2018 2017
GBPm GBPm
=============================================================== ===== =====
Current year tax charge 23.9 27.2
Adjustments in respect of current tax of previous years 13.3 -
=============================================================== ===== =====
Total current tax 37.2 27.2
=============================================================== ===== =====
Deferred tax relating to origination and reversal of temporary
differences at 19.0% (2017: 19.75%) 6.6 1.9
Adjustments in respect of deferred tax of previous years (7.4) 0.3
Impact of opening deferred tax rate reduction - (4.1)
=============================================================== ===== =====
Total deferred tax (0.8) (1.9)
=============================================================== ===== =====
Tax reported in consolidated income statement 36.4 25.3
=============================================================== ===== =====
The tax reported in consolidated income statement includes
exceptional amounts arising on the change in RPI/CPI assumptions on
The Go-Ahead Group Pension Plan (the Go-Ahead Plan) and amounts in
relation to the HMRC enquiry, as discussed in note 7.
Tax relating to items charged or credited outside of the income
statement:
2018 2017
GBPm GBPm
======================================================== ===== =====
Tax on remeasurement gains/(losses) on defined benefit
pension plans 3.3 (4.1)
Deferred tax on cashflow hedges 5.2 0.9
Deferred tax on share based payments (taken directly to
equity) 0.5 0.3
Tax reported outside of profit or loss 9.0 (2.9)
======================================================== ===== =====
b. Reconciliation
A reconciliation of income tax applicable to accounting profit
before taxation, at the statutory tax rate, to tax at the Group's
effective tax rate for the years ended 30 June 2018 and 1 July 2017
is as follows:
2018 2017
GBPm GBPm
========================================================== ===== =====
Accounting profit before taxation 145.7 136.8
========================================================== ===== =====
At United Kingdom tax rate of 19.0% (2017: 19.75%) 27.7 27.0
Bid costs not allowable for tax purposes 0.6 0.6
Share scheme costs not allowable for tax purposes 0.7 0.3
Non-qualifying depreciation 1.1 0.6
Expenditure not allowable for tax purposes 1.4 0.4
Adjustments in respect of deferred tax of previous years (7.4) 0.3
Movement on unrecognised deferred tax on losses carried
forward (0.2) 0.6
Effect of the difference between current year corporation
tax and deferred tax rates (0.8) (0.4)
Impact of opening deferred tax rate reduction - (4.1)
Adjustments in respect of current tax of previous years 13.3 -
========================================================== ===== =====
Tax reported in consolidated income statement 36.4 25.3
========================================================== ===== =====
Effective tax rate 25.0% 18.5%
========================================================== ===== =====
The Group had subsidiary companies in Germany, Ireland,
Scandinavia and Singapore during the year.
Singapore profits have been taxed at the appropriate local
taxation rates and have been included in the total statutory tax
charge. Germany and Ireland are currently in mobilisation and so
have not made a profit in the financial year.
Costs incurred by the Scandinavia companies were either expensed
in the UK without tax relief being claimed or were carried forward
as prepayments without tax relief being claimed during the
year.
The Group has not recognised a deferred tax asset of GBP1.1m
(2017: GBP0.9m) based on a rate of 30% (2017: 29%) in respect of
losses incurred in Germany carried forward.
c. Reconciliation of current tax liabilities
A reconciliation of the current tax liability is provided
below:
2018 2017
GBPm GBPm
========================================================== ====== ======
Current tax liability at start of year 12.0 18.9
Corporation tax reported in consolidated income statement 37.2 27.2
Paid in the year (28.7) (34.1)
========================================================== ====== ======
Current tax liability at end of year 20.5 12.0
========================================================== ====== ======
d. Deferred tax
The deferred tax included in the balance sheet is as
follows:
2018 2017
GBPm GBPm
========================================================= ====== ======
Deferred tax liability
Accelerated capital allowances (20.2) (25.0)
Other temporary differences (9.6) (10.8)
Revaluation of land and buildings treated as deemed cost
on conversion to IFRS (11.4) (12.0)
Cashflow hedges (3.3) -
Retirement benefit obligations (6.5) -
========================================================= ====== ======
Deferred tax liability included in balance sheet (51.0) (47.8)
========================================================= ====== ======
Deferred tax asset
Retirement benefit obligations - 3.6
Cashflow hedges - 1.9
Share based payments 0.1 0.6
========================================================= ====== ======
Deferred tax asset included in balance sheet 0.1 6.1
========================================================= ====== ======
The deferred tax asset is recognised as it is considered
probable that there will be future taxable profits available.
The deferred tax liabilities and assets included in the balance
sheet have been calculated using applicable enacted rates.
The movements in deferred tax in the income statement and other
comprehensive income for the years ending 30 June 2018 and 1 July
2017 are as follows:
Year ended 30 June 2018
Recognised
Recognised in other Recognised
At 1 July in income comprehensive directly At 30
2017 statement income in equity Acquisitions June 2018
GBPm GBPm GBPm GBPm GBPm GBPm
====================================== ========= ========== ============== ========== ============ ==========
Accelerated capital allowances (25.0) 5.8 - - (1.0) (20.2)
Asset backed funding pension
arrangement (10.1) 0.2 - - - (9.9)
Other temporary differences (0.7) 1.0 - - - 0.3
Revaluation of land and buildings
treated as deemed cost on conversion
to IFRS (12.0) 0.6 - - - (11.4)
Retirement benefit obligations 3.6 (6.8) (3.3) - - (6.5)
Cashflow hedges 1.9 - (5.2) - - (3.3)
Share based payments 0.6 - - (0.5) - 0.1
====================================== ========= ========== ============== ========== ============ ==========
(41.7) 0.8 (8.5) (0.5) (1.0) (50.9)
====================================== ========= ========== ============== ========== ============ ==========
Year ended 1 July 2017
Recognised
Recognised in other Recognised
At 2 July in income comprehensive directly At 1 July
2016 statement income in equity Acquisitions 2017
GBPm GBPm GBPm GBPm GBPm GBPm
====================================== ========= ========== ============== ========== ============ =========
Accelerated capital allowances (28.4) 3.2 - - 0.2 (25.0)
Asset backed funding pension
arrangement (8.3) (1.8) - - - (10.1)
Other temporary differences (0.1) 0.2 - - (0.8) (0.7)
Revaluation of land and buildings
treated as deemed cost on conversion
to IFRS (13.3) 1.3 - - - (12.0)
Retirement benefit obligations 0.5 (1.0) 4.1 - - 3.6
Cashflow hedges 2.8 - (0.9) - - 1.9
Share based payments 0.9 - - (0.3) - 0.6
====================================== ========= ========== ============== ========== ============ =========
(45.9) 1.9 3.2 (0.3) (0.6) (41.7)
====================================== ========= ========== ============== ========== ============ =========
The deferred tax included in the Group income statement is as
follows:
2018 2017
GBPm GBPm
============================================================== ===== =====
Accelerated capital allowances 0.5 (0.4)
Revaluation (0.6) (0.6)
Retirement benefit obligations 6.7 1.0
Temporary differences arising on pension spreading - 2.3
Other temporary differences - (0.4)
============================================================== ===== =====
6.6 1.9
Adjustments in respect of prior years (7.4) 0.3
Adjustments in respect of opening deferred tax rate reduction - (4.1)
============================================================== ===== =====
Deferred tax expense (0.8) (1.9)
============================================================== ===== =====
e. Factors affecting tax charges
The standard rate of UK corporation tax reduced from 20% to 19%
from 1 April 2017. A rate of 19% therefore applies to the current
tax charge arising during the year ended 30 June 2018.
In addition to the change in rate of corporation tax identified
above, further reductions in the rate to 17% from 1 April 2020 were
substantively enacted prior to the balance sheet date and have been
applied where applicable to the Group's deferred tax balance at the
balance sheet date.
The current tax charge, reported in the consolidated income
statement, of GBP37.2m includes amounts provided for in relation to
an ongoing HMRC capital allowances taxation enquiry. In addition,
the deferred tax relating to origination and reversal of temporary
differences includes a movement which relates to the exceptional
gain of GBP35.2m arising on the change in RPI/CPI assumptions on
The Go-Ahead Group Pension Plan and the adjustments in respect of
deferred tax of previous years include amounts in relation to the
HMRC enquiry.
10. Earnings per share
Basic earnings per share is the amount of profit generated for
the financial year attributable to equity shareholders divided by
the weighted average number of shares in issue during the year.
Basic and diluted earnings per share
Exceptional
Pre-exceptional items Post-exceptional
2018 2018 2018 2017
GBPm GBPm GBPm GBPm
========================================== =============== =========== ================ =====
Net profit attributable to equity holders
of the parent 78.0 11.0 89.0 89.1
========================================== =============== =========== ================ =====
Exceptional
Pre-exceptional items Post-exceptional
2018 2018 2018 2017
============================================= =============== =========== ================ ======
Basic weighted average number of shares
in issue ('000) 42,958 - 42,958 42,902
Dilutive potential share options ('000) 101 - 101 122
============================================= =============== =========== ================ ======
Diluted weighted average number of shares
in issue ('000) 43,059 - 43,059 43,024
============================================= =============== =========== ================ ======
Earnings per share:
Basic earnings per share (pence per share) 181.6 25.6 207.2 207.7
Diluted earnings per share (pence per share) 181.2 25.5 206.7 207.1
============================================= =============== =========== ================ ======
The weighted average number of shares in issue excludes treasury
shares held by the Group, and shares held in trust for the LTIP and
DSBP arrangements.
No shares were bought back and cancelled by the Group in the
period from 30 June 2018 to 5 September 2018.
11. Dividends paid and proposed
Dividends are one type of shareholder return, historically paid
to our shareholders in April and November.
2018 2017
GBPm GBPm
=========================================================== ===== =====
Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for 2017: 71.91p per share (2016: 67.52p) 30.9 28.9
Interim dividend for 2018: 30.17p per share (2017: 30.17p) 12.9 12.9
=========================================================== ===== =====
43.8 41.8
=========================================================== ===== =====
2018 2017
GBPm GBPm
========================================================= ===== =====
Proposed for approval at the AGM (not recognised as a
liability as at 30 June 2018)
Equity dividends on ordinary shares:
Final dividend for 2018: 71.91p per share (2017: 71.91p) 31.0 31.0
========================================================= ===== =====
Payment of proposed dividends will not have any tax consequences
for the Group.
12. Property, plant and equipment
The Group holds significant investments in land and buildings,
bus vehicles and plant and equipment, which form our tangible
assets. All assets (excluding freehold land) are depreciated over
their useful economic lives. For accounting policies see 'Property,
plant and equipment' in notes to the accounts.
Long term Short
Freehold leasehold term leasehold Plant
land land land and
and buildings and properties and properties Bus vehicles equipment Total
GBPm GBPm GBPm GBPm GBPm GBPm
============================== ============== =============== =============== ============ ========== =======
Cost:
At 2 July 2016 198.9 0.4 14.7 572.8 211.3 998.1
Additions 8.2 - 1.0 97.1 35.6 141.9
Acquisitions 4.0 - - 4.5 0.2 8.7
Disposals - - (0.1) (28.6) (8.3) (37.0)
Transfer categories - - - 1.7 (1.7) -
Transfer of assets held for
sale (1.7) - - - - (1.7)
Transfer of intangible assets - - - - (1.8) (1.8)
============================== ============== =============== =============== ============ ========== =======
At 1 July 2017 209.4 0.4 15.6 647.5 235.3 1,108.2
Additions 4.8 2.0 1.7 87.3 30.9 126.7
Acquisitions 3.5 1.2 - 15.7 0.3 20.7
Disposals (24.1) - - (45.8) (47.4) (117.3)
Transfer categories - (0.4) 0.4 (0.6) 0.6 -
Transfer of assets held for
sale 0.5 - - - - 0.5
Transfer of intangible assets - - - - 0.3 0.3
============================== ============== =============== =============== ============ ========== =======
At 30 June 2018 194.1 3.2 17.7 704.1 220.0 1,139.1
============================== ============== =============== =============== ============ ========== =======
Depreciation and impairment:
At 2 July 2016 32.1 - 8.8 295.0 167.9 503.8
Charge for the year 1.1 - 1.4 50.0 12.9 65.4
Disposals - - (0.1) (27.8) (8.1) (36.0)
Impairment of assets 0.7 - - - 0.2 0.9
Transfer assets held for sale (0.8) - - - - (0.8)
Transfer of intangible assets - - - - (0.3) (0.3)
============================== ============== =============== =============== ============ ========== =======
At 1 July 2017 33.1 - 10.1 317.2 172.6 533.0
Charge for the year 2.1 - 1.2 54.6 24.8 82.7
Disposals (22.9) - - (44.3) (40.9) (108.1)
Impairment of assets - - - 1.9 0.5 2.4
Transfer assets held for sale 0.4 - - - - 0.4
At 30 June 2018 12.7 - 11.3 329.4 157.0 510.4
============================== ============== =============== =============== ============ ========== =======
Net book value:
At 30 June 2018 181.4 3.2 6.4 374.7 63.0 628.7
============================== ============== =============== =============== ============ ========== =======
At 1 July 2017 176.3 0.4 5.5 330.3 62.7 575.2
============================== ============== =============== =============== ============ ========== =======
At 2 July 2016 166.8 0.4 5.9 277.8 43.4 494.3
============================== ============== =============== =============== ============ ========== =======
The net book value of leased assets and assets acquired under
hire purchase contracts is:
2018 2017
GBPm GBPm
============= ===== =====
Bus vehicles 14.7 0.7
============= ===== =====
13. Intangible assets
The consolidated balance sheet contains significant intangible
assets mainly in relation to goodwill, software, franchise set-up
costs and customer contracts. Goodwill, which arises when Group
acquires a business and pays a higher amount than the fair value of
the net assets primarily due to the synergies the Group expect to
create, is not amortised but is subject to annual impairment
reviews. Software is amortised over its expected useful life.
Franchise set-up costs are amortised over the life of the
franchise/franchise extension. Customer contracts are amortised
over the life of the contract. For further details see 'Software',
'Franchise set-up costs', 'Business combinations and goodwill',
'Impairment of assets' and 'Customer contracts' in notes to the
accounts.
Franchise
Software set-up Rail franchise Customer
Goodwill costs costs asset contracts Total
GBPm GBPm GBPm GBPm GBPm GBPm
============================= ======== ======== ========= ============== ========== =====
Cost:
At 2 July 2016 80.8 21.3 11.5 16.7 12.3 142.6
Additions - 1.9 3.1 - - 5.0
Acquisitions 5.6 - - - 1.1 6.7
Transfer from tangible fixed
assets - 1.8 - - - 1.8
Disposals - (1.9) - - - (1.9)
============================= ======== ======== ========= ============== ========== =====
At 1 July 2017 86.4 23.1 14.6 16.7 13.4 154.2
Additions 0.4 3.3 6.4 - - 10.1
Acquisitions 0.6 - - - 1.3 1.9
Transfer from tangible fixed
assets - (0.3) - - - (0.3)
At 30 June 2018 87.4 26.1 21.0 16.7 14.7 165.9
============================= ======== ======== ========= ============== ========== =====
Amortisation and impairment:
At 2 July 2016 4.9 17.3 9.3 16.7 11.6 59.8
Charge for the year - 1.8 0.8 - 0.5 3.1
Transfer from tangible fixed
assets - 0.3 - - - 0.3
Disposals - (0.5) - - - (0.5)
============================= ======== ======== ========= ============== ========== =====
At 1 July 2017 4.9 18.9 10.1 16.7 12.1 62.7
Charge for the year - 2.3 0.8 - 0.2 3.3
Impairment 8.4 - - - - 8.4
At 30 June 2018 13.3 21.2 10.9 16.7 12.3 74.4
============================= ======== ======== ========= ============== ========== =====
Net book value:
At 30 June 2018 74.1 4.9 10.1 - 2.4 91.5
============================= ======== ======== ========= ============== ========== =====
At 1 July 2017 81.5 4.2 4.5 - 1.3 91.5
============================= ======== ======== ========= ============== ========== =====
At 2 July 2016 75.9 4.0 2.2 - 0.7 82.8
============================= ======== ======== ========= ============== ========== =====
Software costs
Software costs capitalised exclude software that is integral to
the related hardware. Software is amortised on a straight-line
basis over its expected useful life of three to five years.
Franchise set-up costs
A part of the Group's activities is the process of bidding for
and securing franchises to operate rail and bus services in the UK
and overseas. Directly attributable, incremental costs incurred
after achieving preferred bidder status or entering into a
franchise extension are capitalised as an intangible asset and
amortised over the life of the franchise/franchise extension.
Rail franchise asset
This reflects the cost of the right to operate a rail franchise,
and relates to the cost of the intangible asset acquired on the
handover of the franchise assets relating to the Southeastern rail
franchise. The intangible asset was being amortised on a
straight-line basis over the original life of the franchise.
Customer contracts
This relates to the value attributed to customer contracts and
relationships purchased as part of the Group's acquisitions. The
value is calculated based on the unexpired term of the contracts at
the date of acquisition and is amortised over that period.
Goodwill
Goodwill acquired through acquisitions has been allocated to
individual cash-generating units for impairment testing on the
basis of the Group's business operations. The carrying value of
goodwill is tested annually for impairment by cash-generating unit
and is as follows:
2018 2017
GBPm GBPm
================= ===== =====
Go South Coast 34.6 34.2
Brighton & Hove 12.7 12.7
Plymouth Citybus 13.0 13.0
Go-Ahead London 10.5 10.5
Go North East 2.7 2.7
Oxford 0.6 -
Konectbus - 3.6
Thames Travel - 2.7
Carousel - 2.1
================= ===== =====
74.1 81.5
================= ===== =====
The recoverable amount of goodwill has been determined based on
a value in use calculation for each cash-generating unit, using
cashflow projections based on financial budgets and forecasts
approved by senior management covering a three year period which
have then been extended over an appropriate period. The directors
feel that the extended period is justified because of the long term
stability of the relevant income streams. Growth has been
extrapolated forward from the end of the three year forecasts over
a total period of ten years plus a terminal value using a growth
rate of 2.0% which reflects the directors' view of long term growth
rates in each business, and the long term recurrent nature of the
businesses.
The Group's weighted average cost of capital has been initially
calculated as 5.2% (2017: 4.6%). Given the current low weighted
average cost of capital the calculation of value in use has been
initially derived based on the internal rate of return that the
Group uses to appraise investments, currently 8.0%, to identify any
goodwill balances requiring further consideration and review. The
economic conditions that the cash-generating units operate in are
considered similar enough, primarily being UK based, to use the
same discount rate.
The calculation of value in use for each cash-generating unit is
most sensitive to the forecast operating cashflows, the discount
rate and the growth rate used to extrapolate cashflows beyond the
budget period. The operating cashflows are based on assumptions of
revenue, employee costs and general overheads. These assumptions
are influenced by several internal and external factors. The
directors consider the assumptions used to be consistent with the
historical performance of each unit and to be realistically
achievable in light of economic and industry measures and
forecasts.
Following this impairment review, the goodwill of Konectbus (a
division of the East Anglian business), Thames Travel and Carousel
(both separate divisions of the Oxford bus business) have been
fully impaired reflecting their continued underperformance and this
being reflected in budgets and forecasts going forward. Goodwill
totalling GBP8.4m has been impaired in respect of the three
businesses. In respect of the East Anglian tangible assets of
GBP1.7m have also been impaired but in the case of Thames Travel
and Carousel the tangible assets represent buses which can be
utilised or sold without further impairment being applicable.
A 0.5% increase in the internal rate of return or revenue growth
falling by 1.0% are considered the most likely sensitivities that
could impact recoverable amounts. Following the impairments noted
above the remaining cash-generating units have significant headroom
when the impairment testing has been completed and accordingly
these sensitivities would not cause the carrying value to exceed
their recoverable amount.
14. Business combinations
This note details acquisition transactions carried out in the
current and prior periods. For accounting policies see 'Business
combinations and goodwill' and 'Customer contracts' in notes to the
accounts.
Year ended 30 June 2018
During the year the following acquisitions were made:
-- On 7 December 2017, The City of Oxford Motor Services
Limited, a wholly owned subsidiary of the Group, acquired 100%
of
Tom Tappin Limited. The company operates the Guide Friday and
City Sightseeing Oxford city bus tours.
-- On 16 June 2018, Go North East Limited, a wholly owned
subsidiary of the Group, acquired 100% of The East Yorkshire Motor
Services Group Limited (EYMS). The EYMS group operates buses and
coaches throughout Hull, East Riding and the North Yorkshire
coast.
Aggregate net assets at date of acquisition:
Total acquisitions
- Provisional
fair value
to Group
GBPm
========================================= ==================
Property, plant and equipment 20.7
Intangible assets 1.3
Inventories 0.3
Cash and cash equivalents 2.0
Deferred tax liabilities (1.0)
Trade and other receivables 2.9
Trade and other payables (5.3)
Current taxation liabilities (0.1)
Interest-bearing loans and borrowings (7.3)
Retirement benefit obligations (3.0)
Provisions (1.2)
========================================= ==================
Net assets 9.3
========================================= ==================
Negative goodwill arising on acquisition (0.7)
Goodwill arising on acquisition 0.6
========================================= ==================
Cash 9.2
========================================= ==================
Total consideration 9.2
========================================= ==================
Acquisition costs of GBP0.2m have been expensed through
operating costs.
Negative goodwill of GBP0.7m (2017: GBPnil) has been included as
an exceptional item.
From the dates of acquisition in the period, the acquisitions
recorded an operating profit of less than GBP0.1m and revenue of
GBP0.7m. Had the acquisitions been completed on the first day of
the financial period, the impact on the Group's operating profit
would have been an increase of GBP0.6m and the impact on revenue
would have been an increase of GBP31.5m.
Year ended 1 July 2017
As disclosed in the 2017 Annual Report, Go South Coast Limited,
a wholly owned subsidiary of the Group, acquired the Excelsior
group of companies on 4 October 2016 and Thamesdown Transport
Limited on 3 February 2017. The total consideration paid was
GBP11.7m and no significant changes to the fair values previously
reported were subsequently identified. Given the size and prior
year disclosures further detail is not replicated in the annual
report.
15. Assets classified as held for sale
This note identifies any non-current assets or disposal groups
that are held for sale. The carrying amounts of these assets will
be recovered principally through a sale rather than through
continuing use. For accounting policies see 'Non-current assets
held for sale' in notes to the accounts.
At 30 June 2018, assets held for sale, with a carrying value of
GBP1.7m, related to property, plant and equipment available for
sale, and were included in the regional bus segment (2017:
GBP1.7m). Assets held for sale with a carrying value of GBP11.4m
related to bus rolling stock available for sale and were included
in the London bus segment (2017: GBPnil).
The Group expects to sell GBP13.1m within 12 months of them
going onto the 'for sale' list and being actively marketed or
reflecting contracts already in place for certain bus assets.
Assets held for sale of GBP1.7m relate to land and buildings,
within property, plant and equipment, whereby offers have been made
which management are currently assessing. The value at each balance
sheet date represents management's best estimate of their resale
value less disposal costs.
During the year ended 30 June 2018, assets held for sale were
sold for a profit of GBP0.9m (2017: GBPnil), which is included
within operating costs in the income statement.
At 1 July 2017, assets held for sale, with a carrying value of
GBP1.7m, related to property, plant and equipment available for
sale, and were included in the regional bus segment.
16. Inventories
Inventory primarily consists of vehicle spares and fuel and is
presented net of allowances for obsolete products. For accounting
policies see 'Inventories' in notes to the accounts.
2018 2017
GBPm GBPm
============================== ===== =====
Raw materials and consumables 15.2 18.9
============================== ===== =====
The amount of any write down of inventories recognised as an
expense during the year is immaterial.
17. Trade and other receivables
Trade and other receivables mainly consist of amounts owed by
principal contracting authorities and other customers, amounts paid
to suppliers in advance, amounts receivable from central government
and taxes receivable. Trade receivables are shown net of an
allowance for bad or doubtful debts.
2018 2017
GBPm GBPm
============================================== ===== =====
Current
Trade receivables 168.1 147.5
Less: Provision for impairment of receivables (1.7) (2.1)
============================================== ===== =====
Trade receivables - net 166.4 145.4
Other receivables 10.8 37.2
Prepayments 76.7 68.2
Accrued income 29.2 42.4
Receivable from central government 59.8 39.3
============================================== ===== =====
342.9 332.5
============================================== ===== =====
As at 30 June 2018 and 1 July 2017, the ageing analysis of trade
receivables was as follows:
Past due
but not
impaired
Neither - more
past due Less than 30-60 60-90 90-120 than 120
Total nor impaired 30 days days days days days
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
===== ===== ============= ========= ===== ===== ====== =========
2018 166.4 152.5 9.5 1.6 1.0 1.1 0.7
2017 145.4 130.8 4.9 1.9 3.3 1.2 3.3
===== ===== ============= ========= ===== ===== ====== =========
Trade receivables at nominal value of GBP1.7m (2017: GBP2.1m)
were impaired and fully provided for. Movements in the provision
for impairment of receivables were as follows:
Total
GBPm
======================== =====
At 1 July 2017 2.1
Charge for the year 0.2
Utilised (0.4)
Unused amounts reversed (0.3)
On acquisitions 0.1
======================== =====
At 30 June 2018 1.7
======================== =====
As at 30 June 2018, the ageing analysis of impaired and fully
provided for trade receivables is as follows:
2018 2017
GBPm GBPm
=================== ===== =====
60-90 days 0.1 0.1
90-120 days - -
More than 120 days 1.6 2.0
======================== ===== =====
1.7 2.1
=================== ===== =====
18. Cash and cash equivalents
The majority of the Group's cash is held in bank deposits which
have a maturity of three months or less to comply with DfT short
term liquidity requirements. For accounting policies see 'Cash and
cash equivalents' in notes to the accounts.
2018 2017
GBPm GBPm
========================== ===== =====
Cash at bank and in hand 89.9 87.0
Cash and cash equivalents 466.6 503.2
========================== ===== =====
556.5 590.2
========================== ===== =====
Cash at bank and in hand earns interest at floating rates based
on daily bank deposit rates. Short term deposits are made for
varying periods of between one day and three months, depending on
the immediate cash requirements of the Group, and earn interest at
the respective deposit rates. The fair value of cash and cash
equivalents is not materially different from book value.
Amounts held by rail companies included in cash at bank and on
short term deposit can be distributed only with the agreement of
the DfT, normally up to the value of distributable reserves or
based on a working capital formula. As at 30 June 2018, balances
amounting to GBP438.9m (2017: GBP516.1m) were restricted. Part of
this amount is to cover deferred income for rail season tickets,
which was GBP162.8m at 30 June 2018 (2017: GBP178.0m).
19. Trade and other payables
Trade and other payables mainly consist of amounts owed to
suppliers that have been invoiced or accrued, deferred income and
deferred season ticket income. They also include taxes and social
security amounts due in relation to our role as an employer and
amounts owed to central government.
2018 2017
GBPm GBPm
====================================== ===== =====
Current
Trade payables 240.9 266.0
Other taxes and social security costs 31.8 32.4
Other payables 53.0 77.3
Deferred season ticket income 165.9 178.0
Accruals 133.5 114.6
Deferred income 45.0 54.2
Payable to central government 130.9 108.9
Government grants 3.8 5.2
====================================== ===== =====
804.8 836.6
====================================== ===== =====
2018 2017
GBPm GBPm
================== ===== =====
Non-current
Government grants 1.0 1.0
================== ===== =====
1.0 1.0
================== ===== =====
Terms and conditions of the above financial liabilities are as
follows:
-- Trade payables are non-interest-bearing and are normally
settled on 30 day terms
-- Other payables are non-interest-bearing and have varying
terms of up to 12 months
20. Interest-bearing loans and borrowings
The Group's sources of borrowing for funding and liquidity
requirements come from a range of committed bank facilities and a
capital market bond. For accounting policies see 'Interest-bearing
loans and borrowings' and 'Cash and cash equivalents' in notes to
the accounts.
Net cash/debt and interest-bearing loans and borrowings
The net cash/debt position comprises cash, short term deposits,
interest-bearing loans and borrowings, and can be summarised
as:
Year ended 30 June 2018
Current Non-current
===================================== ========= ============ ========= ======================= =======
After
one year After
Effective but not more than
interest Within more than five
rate one year five years years Total
% Maturity GBPm GBPm GBPm GBPm
===================================== ========= ============ ========= =========== ========== =======
Syndicated loans 1.00 Over 5 years - - 136.0 136.0
Debt issue costs on syndicated
loans (0.3) (0.3) - (0.6)
GBP250m sterling 7 year bond 2.50 Over 5 years - - 250.0 250.0
Debt issue costs on GBP250m sterling
7 year bond (0.6) (2.2) - (2.8)
EUR8m revolving credit facility 1.30 0-1 years 6.5 - - 6.5
EUR10.6m financing facility 1.50 Over 5 years - 1.6 3.1 4.7
Finance leases and HP commitments
(note 21) 7.74 0-5 years 2.8 5.9 0.7 9.4
===================================== ========= ============ ========= =========== ========== =======
Total interest-bearing loans and
borrowings 8.4 5.0 389.8 403.2
Debt issue costs 0.9 2.5 - 3.4
===================================== ========= ============ ========= =========== ========== =======
Total interest-bearing loans and
borrowings
(gross of debt issue costs) 9.3 7.5 389.8 406.6
Cash and short term deposits (note
18) (556.5) - - (556.5)
===================================== ========= ============ ========= =========== ========== =======
Net cash (547.2) 7.5 389.8 (149.9)
===================================== ========= ============ ========= =========== ========== =======
Restricted cash* 438.9
===================================== ========= ============ ========= =========== ========== =======
Adjusted net debt 289.0
===================================== ========= ============ ========= =========== ========== =======
Year ended 1 July 2017
Current Non-current
=================================== ========= ========= ========= ======================= =======
After
one year After
Effective but not more than
interest Within more than five
rate one year five years years Total
% Maturity GBPm GBPm GBPm GBPm
=================================== ========= ========= ========= =========== ========== =======
Syndicated loans 1.00 0-4 years - 156.0 - 156.0
Debt issue costs on syndicated
loans (0.3) (0.5) - (0.8)
GBP200m sterling 7.5 year bond 5.38 0-1 years 200.0 - - 200.0
EUR20m revolving credit facility 1.30 0-1 years 0.9 - - 0.9
Finance leases and HP commitments
(note 21) 4.96 0-5 years 0.9 2.0 0.1 3.0
=================================== ========= ========= ========= =========== ========== =======
Total interest-bearing loans and
borrowings 201.5 157.5 0.1 359.1
Debt issue costs 0.3 0.5 0.8
=================================== ========= ========= ========= =========== ========== =======
Total interest-bearing loans and
borrowings
(gross of debt issue costs) 201.8 158.0 0.1 359.9
Cash and short term deposits (note
18) (590.2) - - (590.2)
=================================== ========= ========= ========= =========== ========== =======
Net cash (388.4) 158.0 0.1 (230.3)
=================================== ========= ========= ========= =========== ========== =======
Restricted cash* 516.1
=================================== ========= ========= ========= =========== ========== =======
Adjusted net debt 285.8
=================================== ========= ========= ========= =========== ========== =======
* Restricted cash balances are amounts held by rail companies
which are included in cash and cash equivalents. The restricted
cash can only be distributed with the agreement of the DfT,
normally up to the value of revenue reserves or based on the
working capital formula.
Analysis of Group net cash
Hire purchase/ GBP200m GBP250m
Cash and Syndicated finance sterling sterling EUR10.6m
cash equivalents loan facility leases bond bond EURRCF loan Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============== ================= ============== ============== ========= ========= ====== ======== ======
2 July 2016 636.3 (113.0) (0.3) (200.0) - - - 323.0
Cashflow (46.6) (43.0) 1.1 - - (0.9) - (89.4)
On acquisition 0.5 - (3.8) - - - - (3.3)
=============== ================= ============== ============== ========= ========= ====== ======== ======
1 July 2017 590.2 (156.0) (3.0) (200.0) - (0.9) - 230.3
Cashflow (35.7) 20.0 0.9 200.0 (250.0) (5.6) (4.7) (75.1)
On acquisition 2.0 - (7.3) - - - - (5.3)
=============== ================= ============== ============== ========= ========= ====== ======== ======
30 June 2018 556.5 (136.0) (9.4) - (250.0) (6.5) (4.7) 149.9
=============== ================= ============== ============== ========= ========= ====== ======== ======
Reconciliation of liabilities arising from financing
activities
Total
liabilities
Hire purchase/ GBP200m GBP250m from
Syndicated finance sterling sterling EUR10.6m financing
loan facility leases bond bond EURRCF loan activities
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============== ============== ============== ========= ========= ====== ======== ============
1 July 2017 (156.0) (3.0) (200.0) - (0.9) - (359.9)
Cashflow 20.0 0.9 200.0 (250.0) (5.6) (4.7) (39.4)
On acquisition - (7.3) - - - - (7.3)
=============== ============== ============== ========= ========= ====== ======== ============
30 June 2018 (136.0) (9.4) - (250.0) (6.5) (4.7) (406.6)
=============== ============== ============== ========= ========= ====== ======== ============
Syndicated loan facility
On 16 July 2014, the Group re-financed and entered into a
GBP280.0m five year syndicated loan facility. The loan facility is
unsecured and interest is charged at LIBOR + Margin, where the
margin is dependent upon the gearing of the Group. The facility had
an initial maturity of July 2019, with two one-year extensions, the
second of which was agreed on 20 June 2016, extending the maturity
of the facility to July 2021 from that date. On 20 July 2018, an
additional extension of two years was agreed, extending the
maturity of the facility to July 2023. A further two one-year
extensions are available which if exercised would extend the
maturity to July 2025.
As at 30 June 2018, GBP136.0m (2017: GBP156.0m) of the facility
was drawn down.
GBP200m sterling bond
On 24 March 2010, the Group raised a GBP200.0m bond of 7.5 years
which matured, and was repaid, on 29 September 2017. The bond had a
coupon rate of 5.375%.
GBP250m sterling bond
On 6 July 2017, the Group raised a GBP250.0m bond of 7 years
maturing on 6 July 2024, with a coupon rate of 2.5%. This replaced
the GBP200.0m sterling bond which was repaid on 29 September
2017.
EUR8m revolving credit facility (RCF)
On 27 April 2017, the Group's subsidiary, Go-Ahead
Verkehrgesellschaft Deutschland GmbH, entered into a EUR20m one
year RCF. On 24 October 2017, EUR12.0 m of this facility was
replaced with a EUR10.6m 10.5 year loan facility with the Group's
subsidiary,
Go-Ahead Facility GmbH, leaving a EUR8.0m RCF.
As at 30 June 2018, EUR7.4m or GBP6.5m (2017: EUR1.0 or GBP0.9m)
was drawn down. The facility is unsecured and interest is charged
at
1.3% plus EURIBOR.
EUR10.6m loan facility
On 24 October 2017, the Group's subsidiary, Go-Ahead Facility
GmbH, entered into a EUR10.6m loan facility.
As at 30 June 2018, EUR5.2m or GBP4.7m (2017: EURnil) was drawn
down and is repayable over the 10.5 year term. The facility is
secured against the German land and buildings included within
plant, property and equipment. Interest is charged at 1.5% plus
EURIBOR until 1 June 2019 when interest will be charged at a fixed
rate of 2.79%.
Debt issue costs
There are debt issue costs of GBP0.6m (2017: GBP0.8m) on the
syndicated loan facility.
The GBP250m sterling 7 year bond has debt issue costs of GBP2.8m
(2017: GBPnil).
The Group is subject to two covenants in relation to its
borrowing facilities. The covenants specify a maximum adjusted net
debt to EBITDA and a minimum net interest cover. At the year end
and throughout the year, the Group has not been in breach of any
bank covenants.
21. Finance lease and hire purchase commitments
This note details finance lease and hire purchase commitments.
For accounting policies see 'Interest bearing loans and borrowings'
in notes to the accounts.
The Group has finance leases and hire purchase contracts for bus
vehicles and various items of plant and equipment. These contracts
have no terms of renewal or purchase option escalation clauses.
Future minimum lease payments under finance leases and hire
purchase contracts, together with the present value of the net
minimum lease payments, are as follows:
2018 2017
============================================ ======================= =======================
Present Present
Minimum value Minimum value
payments of payments payments of payments
GBPm GBPm GBPm GBPm
============================================ ========= ============ ========= ============
Within one year 2.9 2.8 0.9 0.9
After one year but not more than five years 6.3 5.9 2.3 2.0
Over five years 0.7 0.7 0.1 0.1
============================================ ========= ============ ========= ============
Total minimum lease payments 9.9 9.4 3.3 3.0
Less amounts representing finance charges (0.5) - (0.3) -
============================================ ========= ============ ========= ============
Present value of minimum lease payments 9.4 9.4 3.0 3.0
============================================ ========= ============ ========= ============
22. Financial risk management objectives and policies
This note details our treasury management and financial risk
management objectives and policies, as well as the exposure and
sensitivity of the Group to interest rate, liquidity, foreign
exchange and credit risk, and the policies in place to monitor and
manage these risks.
Financial risk factors and management
The Group's principal financial instruments comprise bank loans,
a sterling bond, hire purchase and finance lease contracts, and
cash and short term deposits. The main purpose of these financial
instruments is to provide an appropriate level of net debt to fund
the Group's activities, namely working capital, fixed asset
expenditure, acquisitions and dividends. The Group has various
other financial instruments such as trade receivables and trade
payables, which arise directly from its operations.
It is Group policy to enter into derivative transactions,
primarily fuel swaps and interest rate swaps. The purpose of these
is to manage the fuel price and interest rate risks arising from
the Group's operations and its sources of finance. At the year end,
the Group did not hold any interest rate swaps.
It is, and has been throughout 2016/17 and 2017/18, the Group's
policy that no trading in derivatives shall be undertaken and
derivatives are only purchased for internal benefit.
The main financial risks arising from the Group's activities are
interest rate risk, liquidity risk and credit risk. Commodity price
risk is managed via fuel derivatives. Risks arising from these are
explained in note 23.
Interest rate risk
The Group borrows and deposits funds and is exposed to changes
in interest rates. The Group's policy toward cash deposits is to
deposit cash short term on UK money markets.
The Group manages interest rate risk through a combination of
fixed rate instruments and/or interest rate derivatives. During the
years ended 30 June 2018 and 1 July 2017 the Group had no interest
rate swaps in place. The Group has net cash and hence the present
adverse risk is a decrease in interest rates.
The maturity and interest rate profile of the financial assets
and liabilities of the Group (excluding unamortised debt issue
costs) as at 30 June 2018 and 1 July 2017 is as follows:
Average Within More than
rate 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
% GBPm GBPm GBPm GBPm GBPm GBPm GBPm
==================================== ======= ======= ========= ========= ========= ========= ========= =======
Year ended 30 June
2018
Floating rate (assets)/liabilities
Syndicated loans 1.00 - - - - - 136.0 136.0
Euro revolving credit
facility 1.30 6.5 - - - - - 6.5
EUR10.6m financing
facility 1.50 - 0.4 0.4 0.4 0.4 3.1 4.7
==================================== ======= ======= ========= ========= ========= ========= ========= =======
Gross floating rate
liabilities 6.5 0.4 0.4 0.4 0.4 139.1 147.2
Cash assets (556.5) - - - - - (556.5)
==================================== ======= ======= ========= ========= ========= ========= ========= =======
Net floating rate
(assets)/liabilities (550.0) 0.4 0.4 0.4 0.4 139.1 (409.3)
==================================== ======= ======= ========= ========= ========= ========= ========= =======
Fixed rate liabilities
GBP250m sterling 7
year bond 2.50 - - - - - 250.0 250.0
Obligations under finance
lease and hire purchase
contracts 7.74 2.8 2.0 1.5 1.4 1.0 0.7 9.4
==================================== ======= ======= ========= ========= ========= ========= ========= =======
Net fixed rate liabilities 2.8 2.0 1.5 1.4 1.0 250.7 259.4
==================================== ======= ======= ========= ========= ========= ========= ========= =======
Year ended 1 July 2017
Floating rate (assets)/liabilities
Syndicated loans 1.00 - - - 156.0 - - 156.0
Euro revolving credit
facility 1.30 0.9 - - - - - 0.9
==================================== ======= ======= ========= ========= ========= ========= ========= =======
Gross floating rate
liabilities 0.9 - - 156.0 - - 156.9
Cash assets 0.31 (590.2) - - - - - (590.2)
==================================== ======= ======= ========= ========= ========= ========= ========= =======
Net floating rate
(assets)/liabilities (589.3) - - 156.0 - - (433.3)
Fixed rate liabilities
GBP200m sterling 7.5
year bond 5.38 200.0 - - - - - 200.0
Obligations under finance
lease and hire purchase
contracts 4.96 0.9 0.6 0.5 0.4 0.5 0.1 3.0
==================================== ======= ======= ========= ========= ========= ========= ========= =======
Net fixed rate liabilities 200.9 0.6 0.5 0.4 0.5 0.1 203.0
==================================== ======= ======= ========= ========= ========= ========= ========= =======
The expected maturity of the financial assets and liabilities in
the table above is the same as the contractual maturity of the
financial assets and liabilities.
Interest on financial instruments classified as floating rate is
re-priced at intervals of less than one year. Interest on financial
instruments classified as fixed rate is fixed until the maturity of
the instrument. The other financial instruments of the Group that
are not included in the tables above are non-interest bearing and
are therefore not subject to interest rate risk.
Interest rate risk table
The following table demonstrates the sensitivity to a reasonably
possible change in interest rates, with all other variables held
constant, of the Group's profit before tax (through the impact on
floating rate borrowings) based on recent historic changes.
Increase/ Effect
decrease on profit Effect
in before on
basis tax equity
points GBPm GBPm
===== ========= ========== =======
2018
GBP 50.0 (0.6) (0.6)
GBP (50.0) 0.6 0.6
===== ========= ========== =======
2017
GBP 50.0 (0.8) (0.8)
GBP (50.0) 0.8 0.8
===== ========= ========== =======
Liquidity risk
The Group has in place a GBP280.0m syndicated loan facility
which allows the Group to maintain liquidity within the desired
gearing range.
On 16 July 2014, the Group re-financed and entered into a
GBP280.0m five year syndicated loan facility, with two one-year
extensions replacing the previous GBP275.0m five year syndicated
loan facility. The second of the one-year extensions was agreed on
20 June 2016, extending the maturity of the current facility to
July 2021. On 20 July 2018, an additional extension of two years
was agreed, extending the maturity of the facility to July 2023. A
further two one-year extensions are available which, if exercised,
would extend the maturity to July 2025.
On 24 March 2010, the Group raised a GBP200.0m bond of 7.5 years
which matured, and was repaid, on 29 September 2017. The bond had a
coupon rate of 5.375%.
On 6 July 2017, the Group raised a GBP250m bond of 7 years
maturing on 6 July 2024 with a coupon rate of 2.5% which replaced
the GBP200m sterling bond.
On 27 April 2017, the Group's subsidiary, Go-Ahead
Verkehrgesellschaft Deutschland GmbH, entered into a EUR20m one
year revolving credit facility. On 24 October 2017, EUR12.0 m of
this facility was replaced with a EUR10.6m 10.5 years loan facility
with the Group's subsidiary, Go-Ahead Facility GmbH.
The level of drawdowns and prevailing interest rates are
detailed in note 20.
Available liquidity as at 30 June 2018 and 1 July 2017 was as
follows:
2018 2017
GBPm GBPm
=========================================== ===== =====
Syndicated loans 280.0 280.0
GBP200m 7.5 year 5.375% sterling bond 2017 - 200.0
GBP250m 7 year 2.5% sterling bond 2024 250.0 -
Euro revolving credit facility 7.1 17.5
EUR10.6m financing facility 9.4 -
=========================================== ===== =====
Total core facilities 546.5 497.5
=========================================== ===== =====
Amount drawn down at year-end 397.2 356.9
=========================================== ===== =====
Headroom 149.3 140.6
=========================================== ===== =====
The Group's bus vehicles can be financed by hire purchase or
finance lease arrangements, or term loans at fixed rates of
interest over two to five year primary borrowing periods. This
provides a regular inflow of funding to cover expenditure as it
arises.
Foreign currency risk
The Group has foreign exchange exposure in respect of cashflow
commitments to its operations in Germany, Singapore, Scandanavia
and Ireland. These are currently not material to the Group.
Credit risk
The Group's credit risk is primarily attributable to its trade
receivables (see note 17) and cash deposits (see note 18). The
maximum credit
risk exposure of the Group comprises the amounts presented in
the balance sheet, which are stated net of provisions for doubtful
debt. A provision is made where there is an identified loss event
which, based on previous experience, is evidence of a reduction in
the recoverability of future cashflows.
The majority of the Group's receivables are with public (or
quasi-public) bodies (such as the DfT). The Group does not consider
these counterparties to be a significant credit risk. Risk of
exposure to non-return of cash on deposit is managed through a
treasury policy of holding deposits with banks rated A- or A3 or
above by at least one of the credit rating agencies. The treasury
policy outlines the maximum level of deposit that can be placed
with any one given financial institution.
Contractual payments
The tables below summarise the maturity profile of the Group's
financial liabilities at 30 June 2018 and 1 July 2017 based on
contractual undiscounted payments.
Year ended 30 June 2018
Less than More than
On demand 3 months 3-12 months 1-5 years 5 years Total
GBPm GBPm GBPm GBPm GBPm GBPm
============================= ========= ========= =========== ========= ========= =====
Interest-bearing loans and
borrowings - 0.3 7.2 6.7 139.2 153.4
GBP250m sterling 7 year bond - 6.1 - - 247.4 253.5
Trade and other payables 24.6 424.2 110.3 - - 559.1
============================= ========= ========= =========== ========= ========= =====
24.6 430.6 117.5 6.7 386.6 966.0
============================= ========= ========= =========== ========= ========= =====
Year ended 1 July 2017
Less than More than
On demand 3 months 3-12 months 1-5 years 5 years Total
GBPm GBPm GBPm GBPm GBPm GBPm
=============================== ========= ========= =========== ========= ========= =====
Interest-bearing loans and
borrowings - 0.3 3.7 162.4 0.1 166.5
GBP200m sterling 7.5 year bond - 210.7 - - - 210.7
Other financial liabilities - 2.0 5.5 3.0 - 10.5
Trade and other payables 18.2 458.5 84.3 - - 561.0
=============================== ========= ========= =========== ========= ========= =====
18.2 671.5 93.5 165.4 0.1 948.7
=============================== ========= ========= =========== ========= ========= =====
Managing capital
The primary objective of the Group's capital management is to
ensure that it maintains a strong credit rating and healthy capital
ratios in order to support its business and maximise shareholder
value. The Group manages its capital structure and makes
adjustments to it, in light of changes in economic conditions.
Details of the issued capital and reserves are shown in note 25.
Details of interest-bearing loans and borrowings are shown in note
20.
To maintain or adjust the capital structure, the Group may
adjust the dividend payment to shareholders, return capital to
shareholders or issue new shares. No changes were made in the
objectives, policies or processes during the years ended 30 June
2018 and 1 July 2017.
The Group applies the primary objective by managing its capital
structure such that net debt (adjusted to exclude restricted cash)
to EBITDA* is within a range which retains an investment grade debt
rating of at least BBB-.
In the year ended 2 July 2011, the Group obtained investment
grade long term credit ratings from Standard & Poor's and
Moody's as follows:
Standard & Poor's BBB- (Stable outlook)
Moody's Baa3 (Stable outlook)
Those ratings have been maintained in the year ended 30 June
2018 and recently reconfirmed.
The Group's policy is to maintain an adjusted net debt to EBITDA
ratio of 1.5x to 2.5x. The Group's calculation of adjusted net debt
is
set out in note 20 and includes cash and short term deposits,
interest-bearing loans and borrowings, and excludes restricted
cash. During the year no specific actions were required to be taken
by the Group with regard to this ratio or to ensure the investment
grade debt rating.
Our primary financial covenant under the 2023 syndicated loan
facility is an adjusted net debt to EBITDA ratio of not more than
3.5x and at
30 June 2018 it was 1.30x (2017: 1.30x).
* Operating profit before interest, tax, depreciation and
amortisation.
Operating leases
The Group uses operating leases for bus and coach purchases
across the Group primarily where the vehicles service specific
contracts
to mitigate the risk of ownership at the end of the contract.
This results in GBP1.8m (2017: GBP1.5m) of cost within operating
charges which
would otherwise have been charged to interest. The Group holds
operating leases for its bus fleet with an asset capital value of
GBP45.9m
(2017: GBP30.2m).
The majority of assets in the rail division are financed by
operating leases, in particular rolling stock.
23. Derivatives and financial instruments
A derivative is a security whose price is dependent upon or
derived from an underlying asset. The Group uses energy derivatives
to hedge its risks associated with fuel price fluctuations.
Financial instruments held by the Group include fuel hedge
derivatives and finance lease/hire purchase contracts. For
accounting policies see 'Financial assets and derivatives', 'Fair
value measurement' and 'Interest bearing loans and borrowings' in
notes to the accounts.
a. Fair values
The fair values of the Group's financial instruments carried in
the financial statements have been reviewed as at 30 June 2018 and
1 July 2017 and are as follows:
2018 2017
GBPm GBPm
========================== ===== ======
Non-current assets 8.1 -
Current assets 10.0 0.2
========================== ===== ======
18.1 0.2
========================== ===== ======
Current liabilities - (7.3)
Non-current liabilities - (3.0)
========================== ===== ======
- (10.3)
========================== ===== ======
Net financial derivatives 18.1 (10.1)
========================== ===== ======
Year ended 30 June 2018
Held for
trading
- Fair
value
through Total
Amortised income carrying
cost statement value Fair value
GBPm GBPm GBPm GBPm
========================================= ========= ========== ========= ==========
Fuel price derivatives - 18.1 18.1 18.1
========================================= ========= ========== ========= ==========
Net financial derivatives - 18.1 18.1 18.1
Obligations under finance lease and hire
purchase contracts (9.4) - (9.4) (9.4)
========================================= ========= ========== ========= ==========
(9.4) 18.1 8.7 8.7
========================================= ========= ========== ========= ==========
Year ended 1 July 2017
Held for
trading
-Fair
value
through Total
Amortised income carrying
cost statement value Fair value
GBPm GBPm GBPm GBPm
========================================= ========= ========== ========= ==========
Fuel price derivatives - (10.1) (10.1) (10.1)
========================================= ========= ========== ========= ==========
Net financial derivatives - (10.1) (10.1) (10.1)
Obligations under finance lease and hire
purchase contracts (3.0) - (3.0) (3.0)
========================================= ========= ========== ========= ==========
(3.0) (10.1) (13.1) (13.1)
========================================= ========= ========== ========= ==========
The fair values of all other assets and liabilities in notes 17,
19 and 20 are not significantly different from their carrying
amount, with the exception of the GBP250m sterling 7 year bond
which has a fair value of GBP245.4m (2017: GBP200m sterling bond
with a fair value of GBP202.1m) but is carried at its amortised
cost of GBP250.0m (2017: GBP200m). The fair value of the GBP250m
sterling 7.5 year bond has been determined by reference to the
price available from the market on which the bond is traded. The
fuel price derivatives were valued externally by the respective
banks by comparison with the market fuel price for the relevant
date.
All other fair values shown above have been calculated by
discounting cashflows at prevailing interest rates.
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly
or indirectly; and
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data
As at 30 June 2018 and 1 July 2017, the Group has used a level 2
valuation technique to determine the fair value of the fuel price
derivatives. The valuations are based on the external
Mark-to-Market (MtM) valuations provided by the derivative
providers and are prepared in accordance with the providers own
internal models and calculation methods based upon well recognised
financial principles, relevant current market conditions and
reasonable estimates about relevant future market conditions.
During the year ended 30 June 2018, there were no transfers
between valuation levels.
b. Hedging activities
Fuel derivatives
The Group is exposed to commodity price risk as a result of fuel
usage. The Group closely monitors fuel prices and uses fuel
derivatives to hedge its exposure to increases in fuel prices, when
it deems this to be appropriate.
The movement during the year on the hedging reserve was GBP23.0m
credit (net of tax) (2017: GBP2.6m credit (net of tax)) taken
through other comprehensive income.
Bus
As at 30 June 2018, the Group had derivatives against bus fuel
of 182 million litres for the three years ending June 2021. The
fair value of the asset or liability has been recognised on the
balance sheet. The value has been generated since the date of the
acquisition of the instruments due to the movement in market fuel
prices.
As at 30 June 2018 the amounts hedged are as follows:
2019 2020* 2021*
========================= ==== ===== =====
Actual percentage hedged 100% 55% 30%
========================== ==== ===== =====
Litres hedged (million) 97 55 30
========================== ==== ===== =====
Price (pence per litre) 32.5 33.2 33.9
========================== ==== ===== =====
* Assuming consistent usage and that hedging is completed at
June 2018 market price.
Rail
As at 30 June 2018 the Group had no derivatives against rail
fuel for the 2019 financial year (2017: 4 million litres).
24. Provisions
A provision is a liability recorded in the consolidated balance
sheet, where there is uncertainty over the timing or amount that
will be paid, and is therefore often estimated. The main provisions
we hold are in relation to uninsured claims and dilapidation
provisions relating to franchise commitments. For accounting
policies see 'Provisions' and 'Uninsured liabilities' in notes to
the accounts.
Franchise Uninsured
commitments claims Other Total
GBPm GBPm GBPm GBPm
============================= ============ ========= ===== ======
At 2 July 2016 60.1 42.1 3.5 105.7
Provided (after discounting) 8.8 22.3 1.7 32.8
Utilised (6.3) (15.7) - (22.0)
Released (9.7) (4.5) (0.3) (14.5)
Unwinding of discounting 0.1 0.1 - 0.2
============================= ============ ========= ===== ======
At 1 July 2017 53.0 44.3 4.9 102.2
Provided (after discounting) 24.1 18.3 1.5 43.9
Utilised (16.1) (14.8) - (30.9)
Released (9.0) (3.1) (0.6) (12.7)
On acquisition - 0.9 0.3 1.2
Unwinding of discounting (0.1) (0.3) - (0.4)
============================= ============ ========= ===== ======
At 30 June 2018 51.9 45.3 6.1 103.3
============================= ============ ========= ===== ======
2018 2017
GBPm GBPm
============ ===== =====
Current 29.6 40.3
Non-current 73.7 61.9
============ ===== =====
103.3 102.2
============ ===== =====
Franchise commitments
Franchise commitments comprise GBP51.5m (2017: GBP50.5m)
dilapidation provisions on vehicles, depots and stations across our
two (2017: three) active rail franchises, and GBP0.4m (2017:
GBP2.5m) provisions relating to other franchise commitments. Of the
dilapidations provisions, GBP15.1m (2017: GBP21.2m) are classified
as current. All of the GBP0.4m (2017: GBP2.5m) provision relating
to other franchise commitments is classified as current. During the
year GBP9.0m (2017: GBP9.7m) of provisions previously provided were
released following the successful renegotiation of certain contract
conditions. The dilapidations will be incurred as part of a rolling
maintenance contract over the next three years. The provisions are
based on management's assessment of most probable outcomes,
supported where appropriate by valuations from professional
external advisors.
Uninsured claims
Uninsured claims represent the cost to the Group to settle
claims for incidents occurring prior to the balance sheet date
based on an assessment of the expected settlement, together with an
estimate of settlements that will be made in respect of incidents
that have not yet been reported to the Group by the insurer. Of the
uninsured claims, GBP13.4m (2017: GBP13.2m) are classified as
current and GBP31.9m (2017: GBP31.1m) are classified as non-current
based on past experience of uninsured claims paid out annually. It
is estimated that the majority of uninsured claims will be settled
within the next six years. Both the estimate of settlements that
will be made in respect of claims received, as well as the estimate
of settlements made in respect of incidents not yet reported, are
based on historic trends which can alter over time reflecting the
length of time some matters can take to be resolved. No material
changes to carrying values are expected within the next 12
months.
Other
The other provisions of GBP6.1m (2017: GBP4.6m) relate to
dilapidations in the bus division of which GBP0.7m (2017: GBP3.1m)
are classified as current, and GBP5.4m (2017: GBP1.5m) are
classified as non-current. It is expected that the dilapidations
will be incurred within two to five years. Reflecting the nature of
the judgements associated with the provisioning for dilapidations
it is not practicable to provide further sensitivity analysis of
the extent by which these amounts could change in the next
financial year. In the prior year, the remaining other current
provision of GBP0.3m related to completion claims regarding the
sale of our aviation business.
25. Issued capital and reserves
Called up share capital is the number of shares in issue at
their par value. For accounting policies see 'Treasury shares' in
notes to the accounts.
Allotted, called up and fully
paid
===================================
2018 2017
Millions GBPm Millions GBPm
=================================== ========= ====== ========= =====
As at 30 June 2018 and 1 July 2017 47.0 4.7 47.0 4.7
=================================== ========= ====== ========= =====
The Group has one class of ordinary shares which carry no right
to fixed income and have a par value of 10p per share.
Share capital
Share capital represents proceeds on issue of the Group's
equity, both nominal value and share premium.
Reserve for own shares
The reserve for own shares is in respect of 4,060,479 ordinary
shares (8.6% of share capital), of which 158,249 are held for LTIP
and DSBP arrangements.
The remaining shares were purchased in order to enhance
shareholders' returns and are being held as treasury shares for
future issue in appropriate circumstances. During the year ended 30
June 2018 the Group has repurchased 64,012 shares for LTIP and DSBP
arrangements (2017: 121,084 shares purchased). The Group has not
cancelled any shares during the year (2017: no shares
cancelled).
Hedging reserve
The hedging reserve records the movement in value of fuel price
derivatives, offset by any movements recognised directly in
equity.
Share premium reserve
The share premium reserve represents the premium on shares that
have been issued to fund or part fund acquisitions made by the
Group. This treatment is in line with Section 612 of the Companies
Act 2006.
Capital redemption reserve
The redemption reserve reflects the nominal value of cancelled
shares.
26. Commitments
A commitment is a contractual obligation to make a payment in
the future, mainly in relation to operating leases and agreements
to
procure assets. These amounts are not recorded in the
consolidated financial statements as we have not yet received the
goods or services from the supplier.
Capital commitments
2018 2017
GBPm GBPm
=========================================================== ===== =====
Contracted for but not provided - acquisition of property,
plant and equipment 34.8 45.7
=========================================================== ===== =====
Operating lease commitments - Group as lessee
The Group has entered into commercial leases on certain
properties and other items. Renewals are at the option of the
lessee. There are no restrictions placed upon the lessee by
entering into these leases.
The Group's train operating companies hold agreements under
which they lease rolling stock from rolling stock operating
companies, and agreements with Network Rail for access to the
railway infrastructure (track, stations and depots).
Future minimum rentals payable under non-cancellable operating
leases as at 30 June 2018 and 1 July 2017 were as follows:
As at 30 June 2018
Bus vehicles Rail rolling Rail access
and other Bus property stock charges Rail other Total
GBPm GBPm GBPm GBPm GBPm GBPm
======================= ============ ============ ============ =========== ========== =======
Within one year 11.0 1.3 575.8 361.4 134.9 1,084.4
In the second to fifth
years inclusive 27.2 5.0 1,060.8 239.1 243.2 1,575.3
Over five years - 5.2 162.4 - - 167.6
======================== ============ ============ ============ =========== ========== =======
38.2 11.5 1,799.0 600.5 378.1 2,827.3
======================= ============ ============ ============ =========== ========== =======
As at 1 July 2017
Bus vehicles Rail rolling Rail access
and other Bus property stock charges Rail other Total
GBPm GBPm GBPm GBPm GBPm GBPm
============================= ============ ============ ============ =========== ========== =======
Within one year 12.7 1.5 584.0 387.4 156.6 1,142.2
In the second to fifth years
inclusive 28.3 5.4 1,389.2 183.0 334.2 1,940.1
Over five years - 5.0 163.9 - - 168.9
============================= ============ ============ ============ =========== ========== =======
41.0 11.9 2,137.1 570.4 490.8 3,251.2
============================= ============ ============ ============ =========== ========== =======
Operating lease commitments - Group as lessor
The Group's rail operating companies sub lease access to
stations and depots to other commercial organisations.
Future minimum rentals receivable under non-cancellable
operating leases as at 30 June 2018 and 1 July 2017 were as
follows:
2018 2017
======================================= ======================= =======================
Other Other
Land and rail Land and rail
buildings agreements buildings agreements
GBPm GBPm GBPm GBPm
======================================= ========== =========== ========== ===========
Within one year 2.3 11.1 2.9 9.3
In the second to fifth years inclusive 0.4 62.7 0.2 51.2
Over five years - - - -
2.7 73.8 3.1 60.5
======================================= ========== =========== ========== ===========
Performance bonds and other guarantees
The Group has provided bank guaranteed performance bonds of
GBP76.9m (2017: GBP76.9m), a loan guarantee bond of GBP36.3m (2017:
GBP36.3m), and season ticket bonds of GBP154.1m (2017: GBP226.2m)
to the DfT in support of the Group's UK rail franchise operations.
In addition the Group, together with Keolis, has a joint parental
company commitment to provide funds of GBP136.0m (2017: GBP136.0m)
to the DfT in respect of the Govia Thameslink Railway franchise, of
which Group has a 65% share equating to GBP88.4m. At the year end
GBPnil (2017: GBPnil) has been provided.
To support subsidiary companies in their normal course of
business, the Group has provided parental company guarantees and
indemnified certain banks and insurance companies who have issued
certain performance bonds and a letter of credit. The letter of
credit at 30 June 2018 is GBP58.0m (2017: GBP72.0m).
The Group has a bond of $4.2m SGD (2017: $4.2m SGD) to the Land
Transport Authority (LTA) of Singapore in support of the Group's
Singapore bus operations. At the year end exchange rate this
equates to GBP2.4m (2017: GBP2.4m).
The Group has a bond of EUR5.0m (2017: EUR4.6m) in favour of the
Ministry of Transport of BW and bonds of EUR1.1m (2017: EUR1.1m) in
favour of the Ministry of Transport of BW and the Bavarian Rail
Authority. Both are in support of the Group's German rail
operations, currently being mobilised. At the year end exchange
rate these equate to GBP5.4m (2017: GBP4.9m).
The Group has provided a parental company guarantee to provide
funds of EUR35.0m (2017: EUR35.0m) in respect of the Germany
operations, of which EURnil (2017: EURnil) has been provided for at
year end. At the year end exchange rate this equates to GBP31.0m
(2017: GBP30.1m).
The Group has bonds of EUR8.0m (2017: EURnil) in favour of the
National Transport Authority in Ireland in support of the Group's
Irish bus operations which will commence trading in September 2018.
At the year end exchange rate this equates to GBP7.1m (2017:
GBPnil).
27. Retirement benefit obligations
The Group operates a defined contribution pension scheme and a
workplace saving scheme for our employees. We also administer a
defined benefit pension scheme, which is closed to new entrants and
future accruals. The train operating companies participate in the
Rail Pension Scheme, a defined benefit scheme which covers the
whole of the UK rail industry. This is partitioned into sections
and the Group is responsible for the funding of these schemes
whilst it operates the relevant franchise. For accounting policies
see 'Retirement benefits' in notes to the accounts.
Retirement benefit obligations consist of the following:
2018 2017
=========================================== =================== =====================
Bus Rail Total Bus Rail Total
GBPm GBPm GBPm GBPm GBPm GBPm
=========================================== ===== ===== ===== ====== ===== ======
Pre-tax pension scheme asset/(liabilities) 36.8 - 36.8 (20.9) - (20.9)
=========================================== ===== ===== ===== ====== ===== ======
2018 2017
========================================= ======================= ========================
Bus Rail Total Bus Rail Total
GBPm GBPm GBPm GBPm GBPm GBPm
========================================= ===== ======= ======= ====== ======= =======
Remeasurement gains/(losses) due
to:
Experience on benefit obligations (4.7) (23.8) (28.5) 8.0 9.7 17.7
Changes in demographic assumptions - 38.3 38.3 (0.1) - (0.1)
Changes in financial assumptions 16.4 58.5 74.9 (52.8) (193.5) (246.3)
Return on assets greater than discount
rate 7.2 62.6 69.8 20.7 128.8 149.5
Franchise adjustment movement - (135.6) (135.6) - 55.0 55.0
========================================= ===== ======= ======= ====== ======= =======
Remeasurement gains /(losses) on
defined benefit pension plans 18.9 - 18.9 (24.2) - (24.2)
========================================= ===== ======= ======= ====== ======= =======
Bus schemes
The Go-Ahead Group Pension Plan
For the majority of bus employees, the Group operates one main
pension scheme, The Go-Ahead Group Pension Plan (the Go-Ahead
Plan), which consists of funded defined benefit sections and
defined contribution sections as follows.
The defined contribution sections of the Go-Ahead Plan are not
contracted-out of the State Second Pension Scheme. The Money
Purchase Section is now closed to new entrants, except by
invitation from the Company, and has been replaced by the Workplace
Saving Section, which is also defined contribution. The expense
recognised for the Money Purchase Sections of the Go-Ahead Plan is
GBP9.9m (2017: GBP9.6m), being the contributions paid and payable.
The expense recognised for the Workplace Saving Scheme is GBP4.0m
(2017: GBP2.9m), being the contributions paid and payable.
The defined benefit sections of the Go-Ahead Plan are
contracted-out of the State Second Pension Scheme and provide
benefits based
on a member's final pensionable salary. The assets of the
defined benefit sections are held in a separate
trustee-administered fund. Contributions to these sections are
assessed in accordance with the advice of an independent qualified
actuary. The defined benefit sections of the Go-Ahead Plan have
been closed to new entrants and closed to future accrual from 31
March 2014.
The Go-Ahead Plan is a plan for related companies within the
Group where risks are shared. The overall costs of the Go-Ahead
Plan have been recognised in the Group's financial statements
according to IAS 19 (revised). Each of the participating companies
accounts on the basis of contributions paid by that company. The
Group accounts for the difference between the aggregate IAS 19
(revised) cost of the scheme and the aggregate contributions
paid.
The Go-Ahead Plan is governed by a Trustee Company in accordance
with a Trust Deed and Rules. It is also subject to regulation from
the Pensions Regulator and relevant UK legislation. This regulatory
framework requires the Trustees of the Go-Ahead Plan and the Group
to agree upon the assumptions underlying the funding target, and
the necessary contributions as part of each triennial valuation.
The last actuarial valuation of the Go-Ahead Plan had an effective
date of 31 March 2015, and the next will have an effective date of
31 March 2018.
The investment strategy of the Go-Ahead Plan, which aims to meet
liabilities as they fall due, is to invest plan assets in a mix of
equities, other return seeking assets and liability driven
investments to maximise the return on plan assets and minimise
risks associated with lower than expected returns on plan assets.
Trustees are required to regularly review investment strategy.
Other pension plans
Some employees of Plymouth Citybus Limited are members of a
Devon County Council defined benefit scheme. This scheme is
externally funded and no further entrants can join. Contributions
to the scheme are assessed in accordance with the advice of an
independent qualified actuary.
Some employees of EYMS Group Limited, which was acquired during
the year, are members of the EYMS Group pension defined benefit
scheme. The scheme was closed to future accrual with effect from 6
January 2011 having previously been closed to new entrants with
effect from 6 April 2001. Contributions to the scheme are based on
advice from an independent qualified actuary. Existing
contributions are based on the 5 April 2014 valuation.
The actuarial assumptions disclosed are in respect of the
Go-Ahead Plan given the respective sizes of the three bus pension
schemes.
Summary of bus schemes year end assumptions
2018 2017
% %
============================================================= ==== ====
Retail price index inflation 3.1 3.3
Consumer price index inflation 2.1 2.3
Discount rate 2.7 2.6
Rate of increase in salaries n/a n/a
Rate of increase of pensions in payment and deferred pension 1.8 2.0
============================================================= ==== ====
The discount rate is based on the anticipated return of AA rated
corporate bonds with a term matching the maturity of the scheme
liabilities.
The most significant non-financial assumption is the assumed
rate of longevity. The table below shows the life expectancy
assumptions used in the accounting assessments based on the life
expectancy of a male member of each pension scheme at age 65.
2018 2017
Years Years
============== ====== ======
Pensioner 21 21
Non-pensioner 22 22
============== ====== ======
Sensitivity analysis
In making the valuation, the above assumptions have been used.
For bus pension schemes, the following is an approximate
sensitivity analysis of the impact of the change in the key
assumptions. In isolation, the following adjustments would adjust
the pension deficit as shown.
2018 2017
Pension Pension
deficit deficit
% %
============================================================ ======== ========
Discount rate - increase of 0.1% (1.7) (1.7)
Price inflation - increase of 0.1% 1.5 1.5
Rate of increase in salaries n/a n/a
Rate of increase of pensions in payment - increase of 0.1% 0.9 0.9
Increase in life expectancy of pensioners or non-pensioners
by 1 year 3.6 3.6
============================================================ ======== ========
The sensitivity analysis presented above has been calculated
using approximate methods. The use of 0.1% and 1 year in the
sensitivity analysis is considered to be a reasonable illustrative
approximation of possible changes, as these variations can
regularly arise.
Maturity profile of bus schemes defined benefit obligation
The following tables shows the expected future benefit payments
of the plan at 30 June 2018.
2018
GBPm
======================= =====
June 2019 31.1
June 2020 31.7
June 2021 32.5
June 2022 33.1
June 2023 33.7
June 2024 to June 2028 179.8
======================== =====
Category of assets at the year end
2018 2017
===================================== ============ ============
GBPm % GBPm %
===================================== ===== ===== ===== =====
Equities 95.3 11.5 306.3 39.1
Bonds 109.3 13.2 15.4 2.0
Property 53.9 6.5 43.5 5.5
Liability driven investing portfolio 246.9 29.8 341.4 43.5
Cash/other 323.9 39.0 78.0 9.9
===================================== ===== ===== ===== =====
829.3 100.0 784.6 100.0
===================================== ===== ===== ===== =====
All of the asset categories above are held within pooled funds
and are classed as quoted in an active market where the underlying
assets are exchanged, traded or can be valued with a reasonable
degree of certainty based on market data. Any liquidity funds have
been classed as unquoted in active markets.
Funding position of the Group's pension arrangements
2018 2017
GBPm GBPm
==================================== ======= =======
Employer's share of pension scheme:
Liabilities at the end of the year (792.5) (805.5)
Assets at fair value 829.3 784.6
==================================== ======= =======
Pension scheme asset/(liability) 36.8 (20.9)
==================================== ======= =======
Pension cost for the financial year
2018 2017
GBPm GBPm
================================= ====== =====
Service cost - -
Administration costs 1.7 1.6
Settlement gain (35.2) (1.2)
Interest cost on net liabilities 0.4 -
================================= ====== =====
Total pension costs (33.1) 0.4
================================= ====== =====
On 28 March 2018 the Group and the Trustee of the Go-Ahead Plan
agreed to change the reference inflation index for the purpose of
annual increases to the majority of pensions payable by the Bus
Plan. From 1 April 2018 onwards, the Consumer Prices Index (CPI) is
used to increase pensions in payment rather than the Retail Prices
Index (RPI). The change reduces the financial risks of the Go-Ahead
Plan and enhances the long-term sustainability of the scheme,
providing an improvement in the security of Plan members'
benefit.
As a result of this change, a pre-tax, non-cash exceptional
settlement gain of GBP35.2 million has been recognised in the
income statement.
In the prior year, the GBP1.2m settlement gain represents a gain
made by the pension scheme in respect of the pension increase
exchange exercise undertaken in the prior year.
Analysis of the change in the pension scheme liabilities over
the financial year
2018 2017
GBPm GBPm
============================================== ====== ======
Pension scheme liabilities - at start of year 805.5 765.8
Interest cost 20.5 20.7
Settlement gain (35.2) (1.2)
Remeasurement (gains)/losses due to:
Experience on benefit obligations 4.7 (8.0)
Changes in demographic assumptions - (0.1)
Changes in financial assumptions (16.4) 52.8
Benefits paid (28.5) (24.5)
On acquisition 41.9 -
============================================== ====== ======
Pension scheme liabilities - at end of year 792.5 805.5
============================================== ====== ======
Analysis of the change in the pension scheme assets over the
financial year
2018 2017
GBPm GBPm
========================================================= ====== ======
Fair value of assets - at start of year 784.6 763.1
Interest income of plan assets 20.1 20.7
Remeasurement gains due to return on assets greater than
discount rate 7.2 20.7
Actuarial gain on assets - (0.3)
Administration costs (1.7) (1.6)
Group contributions 6.6 6.5
Benefits paid (28.5) (24.5)
On acquisition 41.0 -
========================================================= ====== ======
Fair value of plan assets - at end of year 829.3 784.6
========================================================= ====== ======
Estimated contributions for future
GBPm
======================================================== ====
Estimated Group contributions in financial year 2019 7.3
Estimated employee contributions in financial year 2019 -
======================================================== ====
Estimated total contributions in financial year 2019 7.3
======================================================== ====
Rail schemes
The Railways Pension Scheme (RPS)
The majority of employees in our train operating companies are
members of sections of the Railways Pensions Scheme (RPS), an
industry-wide defined benefit scheme. The Group is obligated to
fund the relevant section of the scheme over the period for which
the franchise is held.
The RPS is governed by the Railways Pension Trustee Company
Limited and is subject to regulation from the Pensions Regulator
and relevant UK legislation.
All the costs, and any deficit or surplus, are shared 60% by the
employer and 40% by the members. The RPS sections are all open to
new entrants and the assets and liabilities of each company's
section are separately identifiable and segregated for funding
purposes.
In addition, at the end of the franchise, any deficit or surplus
in the scheme passes to the subsequent franchisee with no
compensating payments from or to the outgoing franchise holder. The
Group's obligations are therefore limited to its contributions
payable to the schemes during the period over which it operates the
franchise.
Changes in financial assumptions includes the effect of changes
in the salary cap agreed to offset additional national insurance
costs as a result of the schemes no longer "opting out".
The accounting treatment for such pensions scheme is not
explicitly considered by IAS 19 Employee Benefits (Revised).
However, since the contributions currently committed to being paid
to each train operating company section are lower than the share of
the service cost (for current and future service) that would
normally be calculated under IAS 19 (Revised), the Group does not
account for uncommitted contributions towards the sections' current
or expected future deficits. This reflects the legal position that
some of the existing deficit and some of the service costs in the
current year will be funded in future years beyond the term of the
current franchise. As a result, the Group consequently reduces any
section deficit balance that would otherwise remain after
reflecting the cost sharing with the members and reduces any
service costs that would give rise to an increase in such deficit
through the use of a franchise adjustment with movements in that
franchise adjustment meaning that the service costs appropriately
reflect contracted contributions resulting over the term of the
franchise, as occurred on the transfer of the London Midland
franchise during the year.
British Railways Additional Superannuation Scheme (BRASS)
matching AVC Group contributions of GBP0.6m (2017: GBP0.6m) were
paid in the year.
Summary of year end assumptions
2018 2017
% %
============================================================= ==== ====
Retail price index inflation 3.1 3.3
Consumer price index inflation 2.1 2.3
Discount rate 2.7 2.6
Rate of increase in salaries 3.4 3.5
Rate of increase of pensions in payment and deferred pension 2.1 2.3
============================================================= ==== ====
The discount rate is based on the anticipated return of AA rated
corporate bonds with a term matching the maturity of the scheme
liabilities.
The most significant non-financial assumption is the assumed
rate of longevity. The table below shows the life expectancy
assumptions used in the accounting assessments based on the life
expectancy of a male member of each pension scheme at age 65.
2018 2017
Years Years
============== ====== ======
Pensioner 21 22
Non-pensioner 23 24
============== ====== ======
The mortality assumptions adopted as at 30 June 2018 and 1 July
2017 are based on the results of the latest funding valuation as at
31 December 2013.
Sensitivity analysis
Due to the nature of the franchise adjustment, the balance sheet
position in respect of the rail pension schemes is not sensitive to
small movements in any of the assumptions and therefore we have not
included any quantitative sensitivity analysis.
Category of assets at the year end
2018 2017
========= ============== ==============
GBPm % GBPm %
========= ======= ===== ======= =====
Equities 1,859.3 98.0 2,154.2 96.8
Property 34.1 1.8 69.0 3.1
Cash 3.8 0.2 2.2 0.1
========= ======= ===== ======= =====
1,897.2 100.0 2,225.4 100.0
========= ======= ===== ======= =====
All of the asset categories above are held within pooled funds
and therefore quoted in active markets.
Funding position of the Group's pension arrangements
2018 2017
GBPm GBPm
======================================== ========= =========
Employer's 60% share of pension scheme:
Liabilities at the end of the year (2,474.1) (3,010.9)
Assets at fair value 1,897.2 2,225.4
======================================== ========= =========
Gross deficit (576.9) (785.5)
Franchise adjustment 576.9 785.5
======================================== ========= =========
Pension scheme liability - -
======================================== ========= =========
Pension cost for the financial year
2018 2017
GBPm GBPm
============================================= ====== ======
Service cost 95.4 92.6
Administration costs 3.5 7.2
Franchise adjustment to current period costs (65.2) (62.8)
Interest cost on net liabilities 18.9 18.7
Interest on franchise adjustments (18.9) (18.7)
============================================= ====== ======
Pension cost 33.7 37.0
============================================= ====== ======
Analysis of the change in the employer's 60% share of pension
scheme liabilities over the financial year
2018 2017
GBPm GBPm
======================================================== ======= =======
Pension scheme liabilities less members' share (40%) of
the deficit - at start of year 3,010.9 2,625.8
Franchise adjustment (100%) (785.5) (649.0)
======================================================== ======= =======
2,225.4 1,976.8
Liability movement for members' share of assets (40%) 80.9 126.4
Service cost (60%) 95.4 92.6
Interest cost (60%) 49.6 51.1
Interest on franchise adjustment (100%) (18.9) (18.7)
Franchise adjustment to current period costs (100%) (65.2) (62.8)
Remeasurement losses/(gains) due to:
Experience on benefit obligations (60%) 23.8 (9.7)
Changes in demographical assumptions (60%) (38.3) -
Changes in financial assumptions (60%) (58.5) 193.6
Benefits paid (100%) (61.3) (68.9)
Transfer of franchise (628.4) -
Franchise adjustment on transfer of franchise 157.1 -
Franchise adjustment movement (100%) 135.6 (55.0)
======================================================== ======= =======
1,897.2 2,225.4
Franchise adjustment (100%) 576.9 785.5
======================================================== ======= =======
Pension scheme liabilities less members share (40%) of
the deficit - at end of year 2,474.1 3,010.9
======================================================== ======= =======
Analysis of the change in the pension scheme assets over the
financial year
2018 2017
GBPm GBPm
========================================================= ======= =======
Fair value of assets - at start of year (100%) 2,225.4 1,976.8
Interest income of plan assets (60%) 30.7 32.5
Remeasurement gains due to return on assets greater than
discount rate (60%) 62.5 128.8
Administration costs (100%) (5.9) (12.0)
Group contributions (100%) 33.1 36.4
Benefits paid (100%) (61.3) (68.9)
Transfer of franchise (471.3) -
Members' share of movement of assets (40%) 84.0 131.8
========================================================= ======= =======
Fair value of plan assets - at end of year (100%) 1,897.2 2,225.4
========================================================= ======= =======
Estimated contributions for future
GBPm
======================================================== ====
Estimated Group contributions in financial year 2019 28.4
Estimated employee contributions in financial year 2019 19.0
======================================================== ====
Estimated total contributions in financial year 2019 47.4
======================================================== ====
Franchise adjustment
The effect of the franchise adjustment on the financial
statements is provided below:
2018 2017
GBPm GBPm
============================================= ======= =======
Balance sheet
Defined benefit pension plan (576.9) (785.5)
Deferred tax asset 98.1 133.5
============================================= ======= =======
(478.8) (652.0)
============================================= ======= =======
Other comprehensive income
Remeasurement gains (135.6) 55.0
Tax on remeasurement gains 23.1 (9.4)
============================================= ======= =======
(112.5) 45.6
============================================= ======= =======
Income statement
Franchise adjustment to current period costs (65.2) (62.8)
Interest on franchise adjustments (18.9) (18.7)
Deferred tax charge 14.3 13.9
============================================= ======= =======
(69.8) (67.6)
============================================= ======= =======
Risks associated with defined benefit plans
Rail schemes
Despite remaining open to new entrants and future accrual, the
risks posed by the RPS are limited as under the franchise
arrangements, the train operating companies are not responsible for
any residual deficit at the end of a franchise. As such, there is
limited short term cashflow risk within this business and if agreed
it would also be proportionately borne by the employees as well as
the Group.
Bus schemes
The number of employees in defined benefit plans is reducing, as
these plans are closed to new entrants, and, in the case of the
Go-Ahead Plan and the EYMS Plan, closed to future accrual.
The key risks relating to the defined benefit pension
arrangements and the steps taken by the Group to mitigate them are
as follows:
Risk Description Mitigation
================ ======================================== ======================================
Asset volatility The liabilities are calculated Asset liability modelling has
using a discount rate set with been undertaken recently in
reference to bond yields with all significant plans to ensure
maturity profiles matching pension that any risks taken are rewarded
maturity; if assets underperform and that we have a balance of
this yield, this will create risk seeking and liability driven
a deficit. Most of the defined investments.
benefit arrangements hold a proportion
of return-seeking assets (equities,
diversified growth funds and
global absolute return funds),
and to offset the additional
risk, hold a proportion in liability
driven investments, which should
reduce volatility.
================ ======================================== ======================================
Inflation A significant proportion of the The business has some inflation
risk UK benefit obligations are linked linking in its revenue streams,
to inflation, and higher inflation which helps to offset this risk.
will lead to higher liabilities. During the year, changes in
assumptions were made from RPI
to CPI when looking at future
pension payments, which will
help offset the risk.
================ ======================================== ======================================
Life expectancy The majority of the Scheme's The Group final salary scheme
obligations are to provide benefits has closed to future accrual,
for the life of the member, so reducing exposure to increases
increases in life expectancy in life expectancy risk.
will result in an increase in
the liabilities.
================ ======================================== ======================================
Legislative Future legislative changes are The Group final salary scheme
risk uncertain. In the past these has closed to future accrual,
have led to increases in obligations, reducing risk to legislative
introducing pension increases, change. The Group takes professional
and vesting of deferred pensions, advice to keep abreast of legislative
or reduced investment return changes.
through the ability to reclaim
Advance Corporation Tax. The
UK government has legislated
to end contracting out in 2016.
Further legislation could result
in an increase in the value of
Guaranteed Minimum Pension. If
this legislation is implemented,
this would increase the defined
benefit obligation of the arrangements.
================ ======================================== ======================================
DISCLOSURE GUIDANCE AND TRANSPARENCY RULE 6.3.5
In accordance with FCA's Disclosure Guidance and Transparency
Rule 6.3.5, the information set out below, together with the
condensed set of the Group's financial statements, information on
important events that have occurred during the year ended 30 June
2018 and their impact on the financial statements, and the Group's
principal risk,uncertainties and mitigating actions as detailed
above, constitute the requirements of DTR 6.3.5 which is required
to be communicated to the media in full unedited text through a
Regulatory Information Service. This announcement is not a
substitute for reading the full 2017/18 Annual Report and Accounts.
Page references in the text below refer to page numbers in the
2017/18 Annual Report and Accounts.
RELATED PARTY DISCLOSURES AND GROUP UNDERTAKINGS
The information below is extracted from pages 176 to 180 of the
2017/18 Group's Annual Report and Accounts and is repeated here for
the purposes of DTR 6.3.5:
28. Related party disclosures and Group undertakings
Our subsidiaries listed below each contribute to the profits,
assets and cashflow of the Group. The Group has a number of related
parties including joint ventures, pension schemes and directors.
For accounting policies see 'Interests in joint arrangements' in
notes to the accounts.
The consolidated financial statements include the financial
statements of The Go-Ahead Group plc and the following Group
undertakings:
% equity interest
===================
Country of incorporation
and principal
Name place of business 2018 2017
============================================== ========================= ========= ========
Trading subsidiaries
Go-Ahead Holding Limited United Kingdom2 100 100
Go North East Limited United Kingdom 100 100
London General Transport Services Limited United Kingdom 100 100
Go-Ahead London Rail Replacement Services
Limited United Kingdom 100 100
Brighton & Hove Bus and Coach Company Limited United Kingdom 100 100
The City of Oxford Motor Services Limited United Kingdom 100 100
Go South Coast Limited United Kingdom 100 100
Plymouth Citybus Limited United Kingdom 100 100
Konectbus Limited United Kingdom 100 100
Thames Travel (Wallingford) Limited United Kingdom 100 100
Carousel Buses Limited United Kingdom 100 100
Hedingham & District Omnibuses Ltd. United Kingdom 100 100
Anglian Bus Limited United Kingdom 100 100
HC Chambers & Son Limited United Kingdom 100 100
Aviance UK Limited United Kingdom 100 100
New Southern Railway Limited United Kingdom1 65 65
London & South Eastern Railway Limited United Kingdom1 65 65
London & Birmingham Railway Limited United Kingdom1 65 65
Southern Railway Limited United Kingdom1 65 65
Govia Thameslink Railway Limited United Kingdom1 65 65
Govia Limited United Kingdom1 65 65
Go-Ahead Scotland Limited United Kingdom 100 100
Go-Ahead Verkehrsgesellschaft Deutschland
GmbH Germany 100 100
Go-Ahead Baden Württemberg GmbH Germany 100 100
Go-Ahead Facility GmbH Germany 100 100
Go-Ahead Seletar PTE. Ltd Singapore 100 100
Go-Ahead Singapore PTE. Ltd Singapore 100 100
Go-Ahead Sverige AB Sweden 100 100
Go-Ahead Norge AS Norway 100 100
Go-Ahead Transport Services (Dublin) Limited Ireland 100 -
Tom Tappin, Limited United Kingdom 100 -
EYMS Group Limited United Kingdom 100 -
East Yorkshire Motor Services Limited United Kingdom 100 -
Jointly controlled entities
On Track Retail Limited United Kingdom3 50 50
Investments
Mobileeee GmbH Germany4 12 -
============================================== ========================= ========= ========
1. The rail companies are 65% owned by The Go-Ahead Group plc
and 35% owned by Keolis (UK) Limited and held through Govia
Limited.
2. Held by The Go-Ahead Group plc. All other companies are held
through subsidiary undertakings.
3. On Track Retail Limited is a joint venture with Assertis
Limited.
4. Mobileeee GmbH is an investment of Go-Ahead
Verkehrsgesellschaft Deutschland GmbH.
The above trading subsidiaries have one class of ordinary shares
which carry no right to fixed income, with the exception of On
Track Retail Limited, which also has redeemable preference
shares.
The registered office of all trading subsidiaries incorporated
in the United Kingdom is: 3rd Floor, 41-51 Grey Street, Newcastle
upon Tyne, NE1 6EE.
The registered offices of trading subsidiaries incorporated
outside of the United Kingdom are as follows:
Subsidiary Registered office
===================================== =========================================
Go-Ahead Verkehrsgesellschaft Jean-Monnaie-Straße 2, D-10557,
Deutschland GmbH Berlin, Germany
Go-Ahead Baden Württemberg Büchsenstraße 20, D-73457,
GmbH Stuttgart, Germany
Go-Ahead Facility GmbH Bahnhof 2, D-73457, Essingen, Germany
Go-Ahead Sverige AB Mäster Samuelsgatan 20, SE 101 39,
Stockholm, Sweden
Go-Ahead Norge AS Filipstad Brygge 1, NO 0125, Oslo, Norway
Go-Ahead Seletar PTE Ltd and Go-Ahead 2 Loyang Way, Singapore 508776
Singapore PTE Ltd
Go-Ahead Dublin Services (Transport) Holmes O'Malley Sexton Solicitors 2-4
Limited Ely Place Dublin 2
===================================== =========================================
% equity interest
===================
Name Company number Country of incorporation 2018 2017
===================================== ============== ======================== ========= ========
Dormant subsidiaries
East Midlands Railway Limited 7164882 United Kingdom 100 100
Go Wear Buses Limited 2019645 United Kingdom 100 100
Go-Reading Limited 3158846 United Kingdom 100 100
GA Retail Services Limited 4173713 United Kingdom 100 100
The Go-Ahead Group Trustee Company
limited 2125799 United Kingdom 100 100
Go-Ahead Property Development
Limited 7128594 United Kingdom 100 100
Go-Ahead XX Limited 8205871 United Kingdom 100 100
GHI Ltd 4262016 United Kingdom 100 100
Southern Vectis Limited 2005917 United Kingdom 100 100
Birmingham Passenger Transport
Services Limited 2901263 United Kingdom 100 100
Go Coastline Limited 2018469 United Kingdom 100 100
Go London Limited 2849983 United Kingdom 100 100
Go West Midlands Limited 2490584 United Kingdom 100 100
Levers Coaches Limited 2524573 United Kingdom 100 100
MetroCity (Newcastle) Limited 4153866 United Kingdom 100 100
Thames Trains Limited 3007943 United Kingdom 100 100
Victory Railway Holdings Limited 3147927 United Kingdom 100 100
Thameslink Rail Limited 3013232 United Kingdom1 65 65
London and South East Passenger
Rail Services Limited 6537238 United Kingdom1 65 65
London & East Midlands Railway
Limited 5814586 United Kingdom1 65 65
London and West Midlands Railway
Limited 5537947 United Kingdom1 65 65
Abingdon Bus Company Limited 3151270 United Kingdom 100 100
Reed Investments Limited 4236536 United Kingdom 100 100
Gatwick Handling Limited 2984113 United Kingdom 100 100
GH Heathrow Ltd. 2813292 United Kingdom 100 100
GH Manchester Ltd 1883900 United Kingdom 100 100
GH Stansted Limited 1983429 United Kingdom 100 100
Midland Airport Services Limited 1592083 United Kingdom 100 100
Oxford Newco Limited 9542008 United Kingdom 100 100
London General Trustee Company
Limited 6953098 United Kingdom 100 100
Go-Ahead Finance Company 4699524 United Kingdom 100 100
Hants & Dorset Motor Services
Limited 2752603 United Kingdom 100 100
Hants & Dorset Trim Limited 2017829 United Kingdom 100 100
Solent Blue Line Limited 2103030 United Kingdom 100 100
Marchwood Motorways (Services)
Limited 2201331 United Kingdom 100 100
Marchwood Motorways (Southampton)
Limited 1622531 United Kingdom 100 100
The Southern Vectis Omnibus Company
Limited 0241973 United Kingdom 100 100
Tourist Coaches Limited 3006529 United Kingdom 100 100
Wilts and Dorset Bus Company Limited 1671355 United Kingdom 100 100
Wilts & Dorset Investments Limited 4613075 United Kingdom 100 100
Wilts & Dorset Holdings Limited 2091878 United Kingdom 100 100
Dockland Buses Limited 3420004 United Kingdom 100 100
Blue Triangle Buses Limited 3770568 United Kingdom 100 100
Go-Ahead Leasing Limited 5262810 United Kingdom 100 100
Go Northern Limited 0132492 United Kingdom 100 100
London Central Bus Company Limited 2328565 United Kingdom 100 100
Metrobus Limited 1742404 United Kingdom 100 100
Hants & Dorset Transport Support
Services Limited 8669065 United Kingdom 100 100
Thamesdown Transport Limited 1997617 United Kingdom 100 100
Excelsior Coaches Limited 4329621 United Kingdom 100 100
Excelsior Transport Ltd. 4329645 United Kingdom 100 100
Excelsior Travel Limited 4342549 United Kingdom 100 100
East Yorkshire Concert Tours Limited 2142740 United Kingdom 100 -
East Yorkshire Coach Holidays
Limited 0243051 United Kingdom 100 -
Bus UK Limited 2232813 United Kingdom 100 -
Buscall Limited 3887602 United Kingdom 100 -
Connor and Graham Limited 0546796 United Kingdom 100 -
East Yorkshire Buses Limited 0254844 United Kingdom 100 -
East Yorkshire Coaches Limited 0331077 United Kingdom 100 -
East Yorkshire Properties Limited 2256485 United Kingdom 100 -
East Yorkshire Tours Limited 0172326 United Kingdom 100 -
East Yorkshire Travel Limited 3225828 United Kingdom 100 -
East Yorkshire Holiday Tours Limited 2140988 United Kingdom 100 -
Frodingham Coaches Limited 2135501 United Kingdom 100 -
Hull and District Motor Services
Limited 2183936 United Kingdom 100 -
Hull Park and Ride Limited 3886603 United Kingdom 100 -
Kingstonian Travel Services Limited 3561955 United Kingdom 100 -
EYMS Bus & Coach Training Limited 2123369 United Kingdom 100 -
Scarborough and District Motor
Services Limited 2133854 United Kingdom 100 -
Go-Ahead Mobility UG - Germany 100 -
===================================== ============== ======================== ========= ========
Jointly controlled dormant entities
South Tyneside Smartzone Limited 09907829 United Kingdom 50 50
Newcastle Smartzone Limited 09907839 United Kingdom 33 33
North Tyneside Smartzone Limited 09907842 United Kingdom 33 33
Sunderland Smartzone Limited 09907836 United Kingdom 33 33
===================================== ============== ======================== ========= ========
The rail companies are 65% owned by The Go-Ahead Group plc and
35% owned by Keolis (UK) Limited and held through Govia
Limited.
The registered office of all dormant subsidiaries incorporated
in the United Kingdom is: 3rd Floor, 41-51 Grey Street, Newcastle
upon Tyne, NE1 6EE.
The registered office of all dormant subsidiaries incorporated
in Germany is: Jean-Monnaie-Straße 2, D-10557, Berlin, Germany.
The registered office of all jointly controlled dormant entities
is: Kepier House, Belmont Business Park, Durham, DH1 1TH.
All dormant companies listed above, incorporated in the United
Kingdom, have taken advantage of the UK Companies Act 2006, S480
exemption from audit.
Transactions with other related parties
The Group meets certain costs of administering the Group's
retirement benefit plans, including the provision of meeting space
and office support functions to the trustees. Costs borne on behalf
of the retirement benefit plans amounted to GBP0.2m (2017:
GBP0.2m).
Joint ventures
The Group's joint venture, On Track Retail Limited (OTR), has
its principal place of business in the United Kingdom. The
principal activity of OTR is the development and provision of web
ticketing applications for the rail industry. The activities of the
joint venture are strategically important to the business
activities of the Group. The Group owns 50% of the ordinary share
capital of OTR.
Investments
The Group's subsidiary, Go-Ahead Verkehrsgellschaft Deutschland
Gmbh acquired a 12% shareholding in Mobileeee Betriebsgesellschaft
mbh & Co KG, an all-electric car-sharing service based in
Germany.
Compensation of key management personnel of the Group
The key management are considered to be the directors of the
parent company.
2018 2017
GBPm GBPm
============================= ===== =====
Short term employee benefits 2.0 1.4
Long term employee benefits* 0.4 0.3
Post employment benefits 0.1 0.1
============================= ===== =====
2.5 1.8
============================= ===== =====
* The long term employee benefits relate to LTIP and DSBP.
Material partly owned subsidiaries
Financial information of subsidiaries that have material
non-controlling interests is provided below:
Proportion of equity interest held by non-controlling
interests:
Country of incorporation
and operation 2018 2017
========================================== ========================= ==== ====
Govia Limited United Kingdom 35% 35%
London and South Eastern Railway Limited* United Kingdom 35% 35%
Southern Railway Limited* United Kingdom 35% 35%
London and Birmingham Railway Limited* United Kingdom 35% 35%
Govia Thameslink Railway Limited* United Kingdom 35% 35%
Thameslink Rail Limited* United Kingdom 35% 35%
New Southern Railway Limited* United Kingdom 35% 35%
========================================== ========================= ==== ====
* Subsidiary of Govia Limited.
2018 2017
GBPm GBPm
================================================================= ===== =====
Accumulated balances of material non-controlling interest:
Govia Limited 31.1 23.7
Total comprehensive income allocated to material non-controlling
interest:
Govia Limited 20.3 22.4
================================================================= ===== =====
The summarised financial information of these subsidiaries is
provided below. The information is based on amounts before
inter-company eliminations:
Summarised income statement of Govia Limited and its subsidiary
companies for the year ended 30 June 2018 and 1 July 2017:
2018 2017
GBPm GBPm
================================================ ========= =========
Revenue 2,527.0 2,579.1
Operating costs (2,457.7) (2,499.8)
Finance revenue 2.4 2.3
Finance costs (1.8) (1.9)
================================================ ========= =========
Profit before taxation 69.9 79.7
Tax expense (11.9) (16.4)
================================================ ========= =========
Profit for the year from controlling operations 58.0 63.3
================================================ ========= =========
Total comprehensive income 58.0 63.3
================================================ ========= =========
Attributable to non-controlling interests 20.3 22.4
================================================ ========= =========
Dividends paid to non-controlling interests 13.9 21.3
================================================ ========= =========
Summarised balance sheet of Govia Limited and its subsidiary
companies as at 30 June 2018 and 1 July 2017:
2018 2017
GBPm GBPm
=============================================================== ======= =======
Current assets - inventories, trade and other receivables,
cash 807.1 850.7
Non-current assets - property, plant and equipment, intangible
assets, deferred tax 46.5 51.9
Current liabilities - trade and other payables, provisions (704.4) (776.0)
Non-current liabilities - provisions (60.2) (58.9)
=============================================================== ======= =======
Total equity 89.0 67.7
=============================================================== ======= =======
Attributable to:
Equity holders of the parent 57.8 44.0
Non-controlling interest 31.1 23.7
=============================================================== ======= =======
These balance sheet amounts are shown before intercompany
eliminations.
Summarised cashflow information of Govia Limited and its
subsidiary companies for the year ended 30 June 2018 and 1 July
2017:
2018 2017
GBPm GBPm
========================================== ====== ======
Operating 12.9 (18.4)
Investing (9.4) 30.0
Financing (41.4) (62.9)
========================================== ====== ======
Net decrease in cash and cash equivalents (37.9) (51.3)
========================================== ====== ======
DIRECTORS' RESPONSIBILITY STATEMENT
This statement is repeated here solely for the purposes of
complying with Disclosure Guidance and Transparency Rule 6.3.5.
This statement relates to and is extracted from page 108 of the
2017/18 Annual Report and Accounts. Responsibility is for the full
2017/18 Annual Report and Accounts and not for the condensed
statements required to be set out in this full year results
announcement.
Each of the current directors, whose names and functions are
listed on pages 54 and 55 of the 2017/18 Annual Report and
Accounts, confirms that, to the best of their knowledge:
-- The Group financial statements, prepared in accordance with
the relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Group and the undertakings included in the
consolidation taken as a whole
-- The strategic report includes a fair view of the development
and performance of the business and the position of the Group and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face
-- The Annual Report and Accounts, taken as a whole, are fair,
balanced and understandable and provide the information necessary
for shareholders to assess the Group's performance, business model
and strategy
corporate information
www.go-ahead.com
Secretary and Registered Office
Carolyn Ferguson
The Go-Ahead Group plc
3rd Floor, 41-51 Grey Street
Newcastle upon Tyne, NE1 6EE
Tel: 0191 232 3123
Head Office
The Go-Ahead Group plc
4 Matthew Parker Street,
London, SW1H 9NP
Tel: 020 7799 8999
Registrar
Equiniti Ltd
Aspect House, Spencer Road
Lancing
West Sussex, BN99 6DA
Tel: 0371 384 2193*
Auditor
Deloitte LLP
1 New Street Square
London, EC4A 3HQ
Joint Corporate Broker
Investec Bank plc
2 Gresham Street
London, EC2V 7QP
Joint Corporate Broker
Jefferies Hoare Govett Ltd
Vintners Place
Upper Thames Street
London, EC4V 3BJ
Principal Banker
The Royal Bank of Scotland plc
Corporate Banking
9th Floor, 280 Bishopsgate
London, EC2M 4RB
Financial PR Advisors
Citigate Dewe Rogerson
3 London Wall Buildings
London, EC2M 5SY
* Lines are open 8:30am to 5:30pm Monday to Friday (excluding
public holidays in England and Wales)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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