TIDMGOG
RNS Number : 4531J
Go-Ahead Group PLC
27 April 2022
The Go-Ahead Group plc 4 Matthew Parker Street, London, SW1H
9NP
Telephone 020 7799 8999
THE GO-AHEAD GROUP PLC
("GO-AHEAD" OR "THE GROUP")
Half year results for the six months ended 1 January 2022
Business overview
-- Encouraging underlying financial performance and passenger volume recovery
as Go-Ahead emerges from a challenging period
-- Group operating profit (before exceptional items) (1) of GBP42.6m (H1'21:
GBP56.4m restated). H1'21 included non-recurring items totalling GBP20.2m
(2) . Excluding these items, like-for-like operating profit(1) increased
by GBP6.4m, up 17.7%
-- Regional Bus reverts to more commercial model as passenger numbers
rebuild - currently above 80% of pre-pandemic levels
-- Resilient results from London & International Bus
-- UK Rail performance primarily reflects end of Southeastern contract
-- Management action reduces losses in International Rail
-- Statutory profit before tax of GBP50.1m (H1'21: GBP50.3m restated)
includes a net exceptional credit of GBP13.0m, primarily relating to
the expected settlement of the financial penalty relating to London
& South Eastern Railway and associated matters of concern
-- Strong balance sheet and significant liquidity: adjusted net debt(3)
of GBP217.3m (3 July 2021: GBP305.9m) and available cash and headroom
on facilities of GBP329.3m (3 July 2021: GBP240.3m). Adjusted net debt
to EBITDA ratio(3) of 1.21x (3 July 2021: 1.56x) providing significant
capacity for investment
-- Launched new strategy "The Next Billion Journeys" and medium-term financial
targets, including growth in Group operating profit to at least GBP150m
-- The Group will reinstate its pre-COVID-19 dividend policy of paying
a dividend to shareholders equivalent to between 50% and 75% of underlying
earnings per share from the 2022 full year and the board intends to
recommend a dividend of not less than 50 pence per share in respect
of the year ending 2 July 2022 in line with this policy
-- Trading in the second half of the year to date is robust and the Board
now anticipates a full year result ahead of its previous expectations
1 Before exceptional net credit of GBP13.0m (H1'21: GBP4.9m
credit). Details are provided in note 5 to the financial
statements
2 H1'21 included GBP7.2m of CBSSG funding revenue and a GBP3.8m
performance fee in GTR both relating to the 2020 financial year,
and a GBP9.2m one-off timing benefit relating to Quality incentive
contract (QIC) recognition
3 On a pre-IFRS 16 basis, in line with bank covenants
Financial summary
Increase/
(decrease)
H1'22 H1'211 %
--------------------------------------- ------- ------- ------------
Revenue (GBPm) 1,797.7 2,070.7 (13.2)
Adjusted operating profit (GBPm) 42.6 56.4 (24.5)
Adjusted profit before tax (GBPm) 37.1 45.4 (18.3)
Adjusted basic earnings per share (p) 63.1 73.7 (14.4)
Statutory operating profit (GBPm) 55.6 61.3 (9.3)
Statutory profit before tax (GBPm) 50.1 50.3 (0.4)
Statutory basic earnings per share (p) 85.0 83.4 1.9
--------------------------------------- ------- ------- ------------
Adjusted measures are presented on a pre-exceptional item
basis
1 Restated (see note 2)
H1'22 H1'22
---------------------- -----------------------
Under Impact Under Under Impact Under
I FRS of IFRS I FRS of IFRS
16 16 IAS 17 16 16 IAS 17
----------------------------------- ----- ------- ------ ------ ------- ------
Cashflow generated from operations
(excluding restricted cash)
(GBPm) 303.6 207.0 96.6 316.0 252.5 63.5
Free cashflow (GBPm) 286.4 204.6 81.8 279.0 246.8 32.2
Adjusted net debt (GBPm)(1) 340.4 123.1 217.3 699.6 399.7 299.9
Adjusted net debt/EBITDA(2,3) n/a n/a 1.21x n/a n/a 1.87x
----------------------------------- ----- ------- ------ ------ ------- ------
1 Adjusted net debt excludes restricted cash. Bank covenants
continue to be assessed under IAS 17
2 Before exceptional credit of GBP13.0m. Details are provided in
note 5 to the financial statements
3 Prior year restatements have been made. See note 2 to the financial statements
Christian Schreyer, Group Chief Executive, commented:
"These results demonstrate an encouraging performance as
Go-Ahead emerges from a challenging period. We're looking ahead
with confidence, with a new leadership team in place and a new
strategy to improve the efficiency of our bus and rail
companies.
"Our bus and rail companies are adapting to meet changing travel
patterns as we emerge from the worst of the COVID-19 pandemic. We
are digitalising, decarbonising and reducing costs to ensure we
deliver an outstanding performance for our customers while
delivering attractive returns for shareholders. We have a strong
balance sheet, with low net debt, and are well placed to take
advantage of expansion opportunities."
For further information, please contact:
The Go-Ahead Group
Media - Andrew Clark, Go-Ahead 07977 343 846
Investor Relations - Holly Gillis, Citigate
Dewe Rogerson 07940 797 560
Chief Executive's review
I am pleased to report a robust set of results for our half year
ended 1 January 2022. Go-Ahead has emerged from a challenging
period with a new management team, a refreshed strategy, resilient
operations and ambition for future growth in the business. Having
joined the Group during the first half of the year, I have spent
time meeting my colleagues across our bus and rail operations in
the UK and internationally. As I look to the future and our plans
for the business, I have full confidence in our local teams to take
the Group forward as we execute on our new strategy, "The Next
Billion Journeys", which I set out earlier this month following the
conclusion of my business review.
For the public transport industry, the past two years have been
the most difficult ever experienced, as the COVID-19 pandemic
severely reduced travel. As we emerge from the pandemic, with the
importance of our purpose reaffirmed, we, at Go-Ahead, understand
the role we have to play in supporting the rebuilding of our
communities, the recovery of our economies and the protection of
our environment. We are all ready to embark upon the next phase for
our business and our industry.
Financial performance
The Group delivered a robust financial performance in the first
half of the year. Whilst Group operating profit before exceptional
items fell 24.5% to GBP42.6m (H1'21: GBP56.4m restated), the prior
year included GBP7.2m of Coronavirus Bus Service Support Grant
(CBSSG) funding revenue and a GBP3.8m performance fee in GTR both
relating to the 2020 financial year, and a GBP9.2m one-off timing
benefit relating to Quality Incentive Contract (QIC) recognition.
Excluding these items in the prior year, operating profit increased
by GBP6.4m (17.7%).
During the period the Group recognised a total of GBP13.0m of
exceptional credits (H1'21: GBP4.9m restated), mainly relating to
London & South Eastern Railway as detailed below.
Our balance sheet remains strong and we have significant
liquidity. As at the half year end, pre-IFRS16 adjusted net debt
was GBP217.3m (3 July 2021: GBP299.9m). Adjusted net debt to EBITDA
was 1.21x, below our target range of 1.5 to 2.5x, reflecting
ongoing measures taken to mitigate the impact of COVID-19 including
lower capital investment and suspension of dividends.
The underlying strength of our business and financial position
supports the Board's intention to reinstate our pre-COVID-19
dividend policy of paying a dividend to shareholders equivalent to
between 50% and 75% of underlying earnings per share from the 2022
full year, and to recommend a final dividend of not less than 50p
in respect of the year ending 2 July 2022 in line with this policy,
as set out earlier this month following the conclusion of my
business review.
London & South Eastern Railway Ltd
In September 2021, the Department for Transport (DfT) took the
decision that operation of Southeastern rail services would
transfer to the Operator of Last Resort in October 2021 when the
London & South Eastern Railway (LSER)'s contract ended. This
was a consequence of disputes regarding the calculation of profit
share payments and the treatment of certain overpayments made by
the DfT to LSER over the course of the franchise agreements.
Details of these matters were provided in our 2021 year end
results, announced on 24 February 2022.
All outstanding matters relating to the identified matters of
concern, except for the financial penalty, at LSER have since been
settled with the DfT and the DfT has issued a GBP23.5m financial
penalty notice due to breaches of historic franchise agreements. In
our 2021 year end results, we recognised a provision of GBP30.0m
for a potential penalty in respect of these matters, and we are
therefore now recognising an exceptional credit of GBP6.5m in
relation to the expected financial penalty and a further GBP12.3m
credit in relation to settlement of other matters including
affiliated trading. These exceptional credits have been offset by
GBP6.3m of costs in relation to these matters.
Details relating to these settlements are provided within the
Business and Finance Review.
As previously indicated, we have taken steps to enhance the
Group's corporate governance arrangements, particularly in relation
to the way in which complex rail operations are overseen.
Divisional performance
Regional Bus
Our Regional Bus businesses began the financial year with
services being supported by the Government's Coronavirus Bus
Service Support Grant (CBSSG), designed to enable a breakeven
operating performance for bus companies while passenger volumes
remained suppressed. As expected, we transitioned to another form
of support for the industry in September 2021 - the Bus Recovery
Grant (BRG) - supporting the shift for bus companies back towards a
more commercial model. This funding has been confirmed until
October 2022.
Passenger numbers gradually increased over the first half,
reaching around 80% of pre-pandemic levels in November 2021 before
the emergence of the Omicron variant of COVID-19 prompted the
Government to issue 'work from home' guidance in December. This
resulted in a temporary reduction in journey numbers which has
since reversed, with passenger volumes currently above 80% of
pre-pandemic levels.
In April 2022, the DfT announced GBP1.1 billion of funding
allocations for local bus improvement schemes. This will enable a
number of Go-Ahead's operating areas to benefit from improved bus
priority and revenue support for lower fares - including the North
East of England, Brighton & Hove, Greater Manchester and East
Anglia. Meanwhile, Oxford has been successful in winning a grant to
fund zero emission buses under the Government's ZEBRA Bus Funding
scheme.
London & International bus
Our operations in London, Singapore and Ireland have delivered a
strong underlying performance in the period. We continue to work
closely with our transport authority clients to deliver reliable
bus services in these major cities in which we operate.
After the half year, we were pleased to complete the GBP11.7m
acquisition of Flexbuss in Sweden, a bus business delivering
contracted bus services (including school transport, medical
transfer and private hire buses) without direct exposure to changes
in passenger demand. We are pleased to welcome our 600 new Flexbuss
colleagues to the Go-Ahead family.
Go-Ahead London has been successful not only in retaining
Transport for London routes but in winning additional tenders, and
its bus driver apprenticeships scheme won an award for recruitment
excellence in the 2021 National Apprenticeship Awards. In April
2022, we completed a GBP13.5m purchase of land, adjacent to our
River Road depot, to support growth in East London.
In Singapore, we are having positive discussions with the Land
Transport Authority regarding an extension of our contract, and in
Ireland our business is expanding with additional mileage through
the BusConnects programme which requires the recruitment of 180
people, taking the total to nearly 800.
UK Rail
During the first half of the year, the Group's UK Rail contracts
continued operating under emergency measures contracts that
had been introduced in response to the COVID-19 pandemic. As
mentioned above, the Southeastern franchise ended on
17 October 2021.
Following the half year end, we were pleased by the DfT's
decision to award GTR a National Rail Contract (NRC), which
commenced on 1 April 2022. The NRC, which will run until at least
April 2025 with the potential for an extension of a further three
years, is a management contract with extremely limited exposure to
changes in passenger demand and no substantial cost risk to GTR.
The maximum fee receivable by GTR is GBP31.7m per annum calculated,
in accordance with the contract, on a pre-IFRS16 basis (equivalent
to a pre-IFRS16 operating margin of around 1.85%), combining the
fixed management fee and potential performance fees. The contract
also allows for individual project fees to be earned by GTR on the
delivery of additional initiatives, as directed by the DfT.
International Rail
In the first half of the year, we continued to deliver
improvements in our rail contracts in Baden Wurttemberg, Germany,
resulting in both stronger operational and financial performance.
In addition to the improved operational performance, we also
successfully settled the outstanding claim against the rolling
stock provider relating to the late delivery of trains when the
first contract in the region began in 2019.
The first of two German rail contracts in Bavaria commenced
towards the end of the first half, with a strong operational start.
In the first 100 days, more than 90% of our trains ran on time and
our new fleet of 22 trains performed well. An onerous contract
provision was taken against both contracts in this region in the
2020 financial year (the second of which is due to commence in
December 2022) and the level of provision required was unchanged at
the half year end.
Unlike our German rail contracts, which have limited exposure to
changes in passenger demand, financial performance in our rail
contract in Norway is impacted by passenger volumes. Throughout the
first half and subsequently, passenger volumes remain materially
suppressed. Government funding has remained in place, albeit at a
reduced level, which mitigates the impact of lower passenger
revenue whilst we continue to operate a full service. As previously
disclosed, an onerous contract provision was taken in the prior
year based on prudent assumptions about the performance of the
contract over its remaining life. The level of provision had not
materially changed at the half year end. Constructive discussions
with the Norwegian Railway Directorate are ongoing and we are
hopeful of reaching a satisfactory outcome.
The future of Go-Ahead
My review of the business found great strengths in Go-Ahead and
reinforced my view that the Group will remain a leading presence in
the dynamic public transport market into the future. I set out a
new strategy - "The Next Billion Journeys" - that builds on these
strengths, aimed at delivering profitable and sustainable growth in
existing and new markets. Alongside the announcement of the
strategy we set out new medium-term financial targets to grow
annual Group revenue to around GBP4bn, up by around 30% on current
continuing operations, and to increase annual Group operating
profit to at least GBP150m.
The strategy focuses on three key priorities:
Performance improvement
Across the board, we will enhance the basics of our business by
focusing on operational excellence. A new operating model is being
introduced for all Go-Ahead's operating companies to increase
transparency and raise the focus on financial performance. This
will include drilling down on common cost drivers across bus and
rail companies - costs of driving, maintenance, energy, fleet and
overheads - to identify and address inefficiencies.
We are committed to turning around underperforming operating
companies in our international markets and in the UK, and we will
focus on operational improvements across all businesses through
increased digitalisation and enhancement and standardisation of
processes. This is expected to deliver cost savings in UK Bus of
GBP40m in the medium term.
A key priority for the business is to reduce the breakeven point
for zero emission buses to accelerate decarbonisation of our
fleets. To facilitate this a Centre for Excellence will be
established at Go-Ahead London, the UK's leading operator of
electric buses, to leverage the Group's capabilities and support
the business case for the transition to zero emission.
Grow organically and inorganically
Whilst we are reassured by the level of passenger recovery to
date, as we emerge from the COVID-19 pandemic, the number of
journeys taken on bus and rail services in all our markets remains
lower than before the pandemic.
We firmly believe in the importance of facilitating a modal
shift from private cars to mass transport to support challenging
climate goals set by governments around the world, and also to
enhance the lives and wellbeing of people across the towns and
cities that we serve. In addition to working closely with clients
and local authorities to stimulate passenger demand, we are
implementing initiatives in our business to accelerate volume
growth - including leveraging data to analyse new travel patterns
and to tailor routes, schedules and ticketing to match passenger
needs. We also realise that for some people, returning to public
settings - including transport - may feel daunting after an
extended period away during the pandemic. In our local markets, we
are introducing initiatives to support these customers and rebuild
their confidence in using public transport.
Within existing geographies, Go-Ahead has identified
opportunities to grow its UK Regional Bus business, particularly in
the north of England. In addition to maintaining its market leading
position in the London bus market, the Group will seek
opportunities to build business-to-business revenue in the Capital.
In UK Rail, following the award of a National Rail Contract to GTR
in March 2022, Go-Ahead will play a constructive role in supporting
the creation of Great British Railway and in shaping future
Passenger Service Contracts to deliver the best possible rail
services for customers and an attractive model for
private operators.
Internationally, Go-Ahead will seek to replicate our proven
business models in franchised and contracted bus services as we
have done successfully in Dublin and Singapore. We have identified
three markets as development priorities for the Group - France,
Australia and Sweden - and will also give consideration to
opportunities in other selected markets. We are committed
to delivering value-adding growth and will mitigate execution
risk when entering new markets by working with experienced
local partners.
As well as seeking to grow through contract wins, the Group will
consider selected acquisitions to support our growth ambitions.
Progress new opportunities leveraging existing capabilities and
resources
Go-Ahead has deep experience and expertise across its business,
and extensive resources that can be utilised to progress new
opportunities in adjacent markets. We expect to deliver growth in
the provision of business-to-business transport services, such as
airport transport services and rail replacement buses, and will
also explore opportunities in new modes of transport, including
metro and light rail. We also see opportunities for new services
further along the mobility value chain, such as zero emission
services, Mobility as a Service (MaaS) operation and property
utilisation.
Our people
Go-Ahead has a renewed purpose - "moving you and the next
generation towards a stronger and healthier planet" - underpinned
by strong values. These values will guide our 27,000 colleagues
globally as we work collectively in building sustainable transport
services and a stronger Group.
We know that we can only achieve our ambitions for Go-Ahead by
supporting and investing in our people. Doing the right thing by
our employees benefits everyone - providing fulfilling careers,
delivering the best possible service for our customers and
supporting the sustainability of our business. We also know that
having a diverse workforce and inclusive workplaces brings benefits
to our business, our people and customers, and the communities we
serve. A lot of great work at Go-Ahead has already delivered
progress on this journey but there is more for us to do, and our
new strategy incorporates initiatives to support this.
Conclusion
Today, in the final quarter of our 2022 financial year, I am
reassured by the resilient performance across our London &
International Bus business and the level of passenger volume
recovery in our core Regional Bus business as well as our ongoing
plans and constructive discussions with transport authority clients
in International Rail. As we move forward, with a new GTR contract
and a strong pipeline of opportunities in our target markets, I am
confident about the growth prospects for the Group.
Following a very challenging couple of years for bus and rail
operators, I believe that we are entering a significant phase for
public transport which will see the importance of our vital
services grow further still as we play a key role in the
sustainable evolution of travel.
Business and finance review
All references to operating profit, EBITDA and margins are on a
pre-exceptional basis unless otherwise detailed. There were
26 weeks in H1'22 compared with 27 in H1'21. Like-for-like
comparatives have been referenced below where meaningful.
Prior year restatement
A number of restatements and adjustments were identified during
the 2021 year end process and, as a consequence, the 2021 interim
financial statements have been restated accordingly. Note 2 in the
financial statements summarises the impact to each of the primary
statements. The impact of these restatements is an increase in
profit before tax of GBP25.7m, a decrease in net assets of GBP51.7m
and an opening reserves decrease of GBP61.0m to retained earnings
and GBP16.2m to non-controlling interests.
The misstatements can be aggregated based on their nature and
cause and grouped into the following: i) LSER matters of concern,
other historic franchises, and affiliate trading; ii) German rail
onerous contract provisions; iii) correction of errors and iv)
presentational adjustments and reclassifications.
As outlined in the Group's 2021 Annual Report, several prior
year restatements were identified as a result of the dispute with
the Department for Transport (DfT) regarding historical matters
relating primarily to the Southeastern franchise. These prior year
adjustments impact the balance sheet and opening reserves and
therefore have also been restated in the prior year comparatives
for the period ended 2 January 2021. The impact of these
restatements is: a reduction in profit before tax of GBP0.5m, a
reduction in net assets of GBP39.8m and a reduction in opening
reserves of GBP26.0m.
In Germany, an understatement of GBP37.1m was identified in
respect of the accounting in the financial year to June 2020 for
the onerous contract provision in Bavaria. This has resulted in a
restatement to increase the provision in 2020. Correspondingly,
there has been a restatement to the 2021 interim results to reduce
the amount charged to the income statement in that period by
GBP25.9m. As a result of this restatement, net assets reduced by
GBP11.4m and opening reserves decreased by GBP36.6m.
The correction of errors primarily relates to provisions and
accruals balances which were identified as inappropriate. The
adjustments identified during the 2021 year end process also have
an impact on the 2021 interim financial statements. The impact of
the restatements is a decrease in net assets of GBP0.5m, a net
increase in profit before tax of GBP0.3m and an increase in opening
reserves of GBP0.4m.
The presentational adjustments and reclassifications primarily
relate to balance sheet reclassifications, cashflow statement
reclassifications and other presentational adjustments within the
financial statements. In the half year 2021 balance sheet, current
assets and liabilities both increased by GBP48.3m.
Financial overview
The Group delivered a solid financial performance in our Bus and
UK Rail businesses supported by limited exposure to changes in
passenger demand.
Revenue for the half year was GBP1,797.7m, down GBP273.0m, or
13.2%, on the prior year (H1'21: GBP2,070.7m restated). This
decrease was primarily due to the end of the Southeastern franchise
in October 2021.
Operating profit decreased to GBP55.6m (H1'21: GBP61.3m
restated) primarily reflecting the reduction in London &
International Bus profits following the prior year timing benefit
relating to the change in the recognition profiling of Quality
Incentive Contract (QIC) revenue in London Bus, and the end of the
Southeastern franchise in October 2021 offset by diminishing losses
in International Rail.
Exceptional items in H1'22 amounted to a credit of GBP13.0m
(H1'21 GBP4.9m credit restated), with GBP12.5m relating to
provision releases as a result of the DfT financial penalty and the
other matters of concern relating to the LSER investigation,
partially offset by associated costs; and GBP0.5m relating to
adjustments to the onerous contract provision for our rail contract
in Norway. Excluding exceptional items, operating profit was
GBP42.6m (H1'21: GBP56.4m restated).
Profit attributable to shareholders increased by GBP0.5m or 1.4%
to GBP36.5m (H1'21 GBP36.0m restated) and earnings per share to
85.0p (H1'21 83.4p restated). Excluding exceptional items, profit
attributable to shareholders decreased by GBP4.7m or 14.8% to
GBP27.1m (H1'21: GBP31.8m restated) and earnings per share
decreased by 14.4% to 63.1p (H1'21: 73.7p restated).
Adjusted net debt (excluding restricted cash) on a pre-IFRS 16
basis at the half year was GBP217.3m (3 July 2021: GBP305.9m). The
reduction in net debt reflects the ongoing measures taken to
mitigate the impact of COVID-19 including lower capital investment
and suspension of dividends. A reconciliation of net debt to
adjusted net debt is included below.
The pre-IFRS 16 adjusted net debt (excluding restricted cash) to
EBITDA ratio of 1.21x (3 July 2021: 1.56x) is below our 1.5x to
2.5x target range and well below our bank covenant of 3.5x.
Prior to the 2021 financial year, UK Rail and International Rail
were reported together as one Rail segment. They are now reported
separately due to growth in the international businesses and in
response to differences in characteristics and challenges between
UK and International Rail contracts.
Group overview
H1'21
H1'22 (restated)
GBPm GBPm
---------------------------------------------------- ------- -----------
Group revenue 1,797.7 2,070.7
Regional Bus operating profit 11.7 12.3
London & International Bus operating profit 25.7 37.3
---------------------------------------------------- ------- -----------
Total Bus operating profit(1) 37.4 49.6
UK Rail operating profit1 10.8 22.9
International Rail operating loss (5.6) (16.1)
Total Rail operating profit(1) 5.2 6.8
---------------------------------------------------- ------- -----------
Group operating profit (pre-exceptional items) 42.6 56.4
Exceptional Items 13.0 4.9
---------------------------------------------------- ------- -----------
Group operating profit (post-exceptional items) 55.6 61.3
Results of equity accounted investments (0.3) (0.5)
Net finance costs (5.2) (10.5)
---------------------------------------------------- ------- -----------
Profit before tax 50.1 50.3
Total tax expense2 (3.9) (8.4)
---------------------------------------------------- ------- -----------
Profit for the period 46.2 41.9
Non-controlling interests (9.7) (5.9)
---------------------------------------------------- ------- -----------
Profit attributable to shareholders 36.5 36.0
---------------------------------------------------- ------- -----------
Profit attributable to shareholders pre-exceptional
items 27.1 31.8
---------------------------------------------------- ------- -----------
Weighted average number of shares (m) 42.9 43.2
---------------------------------------------------- ------- -----------
Proposed dividend per share (p) - -
---------------------------------------------------- ------- -----------
1. Here and throughout, H1'21 operating profit is stated before exceptional items.
2. Includes the taxation impact of the H1'21 exceptional items.
BUS
Bus overview
H1'22 H1'21
--------------------------------------------- --------- ---------
Revenue
Regional Bus GBP225.9m GBP214.5m
London & International Bus GBP325.3m GBP335.6m
--------------------------------------------- --------- ---------
Total Bus GBP551.2m GBP550.1m
--------------------------------------------- --------- ---------
Operating profit(1)
Regional Bus GBP11.7m GBP12.3m
London & International Bus GBP25.7m GBP37.3m
--------------------------------------------- --------- ---------
Total bus GBP37.4m GBP49.6m
--------------------------------------------- --------- ---------
Operating profit margin
Regional Bus 5.2% 5.7%
London & International Bus 7.9% 11.1%
--------------------------------------------- --------- ---------
Total Bus 6.8% 9.0%
--------------------------------------------- --------- ---------
Revenue growth
Regional Bus2 9.4% (8.2)%
London & International Bus3 0.6% 9.4%
Volume growth
Regional Bus - passenger journeys4 53.9% (52.9)%
London & International Bus - miles operated4 2.4% 2.0%
--------------------------------------------- --------- ---------
1. Excluding exceptional items
2. Like for like revenue is calculated after removing GBP7.9m
from H1'21 revenue to adjust for the 27 week period.
3. Like for like revenue is calculated after removing GBP12.4m
from H1'21 revenue to adjust for the 27 week period.
4. On a like for like basis, excluding the impact of the 27 week period in H1'21.
Overall bus performance
The Bus division had a good start to the year owing to London
& International Bus generating profits at pre-COVID levels and
Regional Bus performance reflecting the post pandemic recovery and
return to a more commercial operating model.
Operating profit declined 24.6% to GBP37.4m (H1'21 GBP49.6m)
despite revenue growth of 0.2%. Operating profit margin
subsequently decreased 2.2ppts to 6.8% (H1'21: 9.0%).
The reduction in operating profit is mainly driven by the
GBP9.2m reduction in Quality Incentive Contract (QIC) income in
London & International Bus due to a prior year timing benefit.
This was a result of Transport for London (TfL) moving from annual
to quarterly settlement in the prior year.
Regional Bus
Regional Bus performance in the first half of the year reflects
the continued impact of COVID-19 on travel patterns with the
receipt of government funding and passenger volumes, despite
growing, still below pre-pandemic levels .
Revenue increased by GBP11.4m or 5.3% to GBP225.9m (H1'22
GBP214.5m). Like for like revenue grew GBP19.3m or 9.4% when
adjusting for the 27-week period in H1'22. This growth reflects the
recovery of passenger revenue partially offset by a reduction in
funding as a result of the replacement of CBSSG with the BRG
funding scheme.
Operating profit in Regional Bus decreased GBP0.6m or 4.9% to
GBP11.7m (H1'21: GBP12.3m) with the operating profit margin
down
0.5 percentage points at 5.2%.
The prior period operating profit comparative included GBP7.2m
of CBSSG which related to the 2019/20 financial year and was only
recognised when it was certain it would be received. Excluding the
2019/20 CBSSG recognised in H1'21, underlying increased by GBP6.6m
to GBP11.7m. This increase reflects the end of CBSSG funding, the
introduction of the Bus Recovery Grant (BRG) and the return to a
more commercial operating model as passenger volumes continue to
recover and funding reduces.
In the first half of the year, excluding funding from central
government, revenue improved GBP32.6m with passenger revenue
GBP33.5m higher than H1'21 as passenger demand recovered to the
highest levels since the start of the pandemic at nearly 80% of
pre-COVID levels. Demand subsequently dropped following the
emergence of the Omicron variant but has since recovered to and
exceeded pre-Omicron levels. Demand is currently just over 80% of
pre-COVID levels as passengers continue to return to our
services.
Service changes and inflation contributed to a GBP4.3m increase
in costs.
The UK Government provided CBSSG funding until the end of August
2021. The funding received was subject to a reconciliation process
every 12-16 weeks. At the half year, the reconciliations for the
periods to 21 December 2020 had been concluded. CBSSG was replaced
by the Bus Recovery Grant (BRG) from September 2021, with GBP255m
of funding being made available for bus operators in England for
the period to March 2022. Additional funding was announced on 1
March 2022 with funding extended to October 2022.
Funding received in the first half of the year was GBP28.9m
lower at GBP33.3m (H1'21: GBP62.2m). This reduction reflects the
end of Coronavirus Job Retention scheme (CJRS) and the change from
CBSSG to BRG funding and the transition to a more commercial model.
Excluding the GBP7.2m of CBSSG reported in H1'21, which related to
the previous financial year, CBSSG, BRG and CJRS funding was
GBP21.7m lower than the prior year.
The table below illustrates the key drivers of the movements in
segmental operating profit which are summarised in the above
narrative:
GBPm
---------------------------------------------------------- ------
H1'21 operating profit 12.3
---------------------------------------------------------- ------
- CBSSG Prior Year Settlement (7.2)
2021 excluding CBSSG recognised related to 2020 5.1
---------------------------------------------------------- ------
Change:
- Improved revenue (excluding central government funding) 32.6
- Reduced funding (CBSSG, BRG and CJRS) (21.7)
- Inflation and service changes (4.3)
---------------------------------------------------------- ------
H1'22 operating profit 11.7
---------------------------------------------------------- ------
London & International Bus
London & International Bus comprises our operations in
London, Singapore and Ireland. All operations performed well in the
first half of the year. Our contracts, which run on a gross cost
basis without exposure to changes in passenger demand, have
continued to generate revenues at pre-crisis levels.
Like for like mileage, when adjusting for the 27 week period,
increased by 2.4% mainly due to contract renewals and route wins in
London.
Revenue decreased by GBP10.3m or 3.1% to GBP325.3m (H1'21:
GBP335.6m), reflecting both the additional week of trading in H1'21
and the QICs timing benefit in the prior year. On a life for like
basis, when adjusting for the 27 week period, revenue grew by 0.6%.
Excluding the QICs timing benefit and the 27 week period, revenue
grew by 3.5% which mainly reflects route wins and contract price
inflation in London.
Operating profit was GBP25.7m (H1'21: GBP37.3m), down GBP11.6m,
or 31.1% on prior year, with a corresponding reduction in operating
profit margin to 7.9% (H1'21: 11.1%). This is a return closer to
pre-pandemic margins and reflects the GBP9.2m reduction in QICs and
the higher levels recognised in London in the prior period when
QICs moved from an annual to quarterly settlement.
International Bus profits are GBP3.3m lower than the prior year
and performance has returned to pre pandemic levels. The prior year
comparative included benefits relating to local government COVID-19
support which did not reoccur in the current period.
The table below illustrates the key drivers of the movements in
segmental operating profit which are summarised in the above
narrative:
GBPm
----------------------- -----
H1'21 operating profit 37.3
----------------------- -----
Change:
- QICs (9.2)
- International Bus (3.3)
- Other 0.9
----------------------- -----
H1'22 operating profit 25.7
----------------------- -----
Capital expenditure and depreciation
Total capital expenditure, excluding leases, for the Bus
division was GBP5.5m (H1'21: GBP26.3m), of which GBP2.6m (H1'21:
GBP25.2m) related to Regional Bus. While this investment is
materially below typical pre-pandemic levels, the average age of
our buses remains consistent with the prior period at 8.0 years (3
July 2021: 7.9 years).
Depreciation on owned assets for the Bus division was GBP30.3m
(H1'21: GBP32.7m). The reduction reflects the shorter period of 26
weeks in H1'22 and the lower level of capital expenditure.
Depreciation on right of use assets was GBP12.5m (H1'21:
GBP12.8m).
For the full year, we expect total capital expenditure for the
Bus division to be around GBP40.0m. This is lower than the GBP55.0m
we originally anticipated due to delays in the delivery of new
hydrogen buses which are now expected to be delivered in the
2022/23 financial year. Following the half year end, in April 2022,
we completed a purchase of land, for additional depot capacity in
London, for GBP13.5m.
Fuel
In the period, the bus division required around 68 million
litres of fuel, with a net cost of GBP49.4m. (H1'21: 67 million
litres of fuel, with a net cost of GBP46.8m).
Bus fuel hedging prices
Our bus fuel hedging programme has continued, using 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 that year
begins, and 50% and 25% hedged for the two following years
respectively.
2022 2023 2024 2025
------------------------ ----- ---- ---- ----
% hedged at 1 Jan 2022 Fully 76% 39% 12%
Price (pence per litre) 32.8 34.4 33.6 38.9
------------------------ ----- ---- ---- ----
This hedging profile is then maintained on a month by month
basis. The position as at April 2022, updated for the latest hedged
position and fuel usage expectations is as follows:
2022 2023 2024 2025
------------------------ ----- ---- ---- ----
% hedged at April 2022 Fully 85% 44% 17%
Price (pence per litre) 32.8 35.6 35.1 41.3
------------------------ ----- ---- ---- ----
At each period end, the fuel hedges are marked to market
price.
Bus financial outlook
Regional Bus
Passenger volumes increased over the first five months of the
financial year, with a slowing in the recovery, in line with the
industry, towards the end of 2021 following the emergence of the
COVID-19 Omicron variant. Since the lifting of the
UK Government's "Plan B" restrictions, passenger volumes have
returned to pre-Omicron levels and are now over 80% of
pre-COVID-19 patronage.
We expect passenger numbers to continue to increase over the
medium term as workers return to offices, airport travel
accelerates and higher education normalises. Longer term, we remain
confident that Regional Bus will deliver attractive margins in line
with our recently announced Next Billion Journeys plan, as a result
of our strong local market positions and networks.
We have worked with the DfT to establish a framework to
transition back to a commercial operating model. CBSSG ended on
31 August 2021 and was replaced by the Bus Recovery Grant (BRG),
with GBP255m of funding being made available for bus services in
England until March 2022. The DfT announced a GBP150 million
funding package in March 2022 for local bus and light rail services
for the six months until October 2022. This will help us maintain
and build a broader network of successful bus services whilst
passengers continue to return to our services.
Following the publication of the UK Government's first national
bus strategy in March 2021, our local management teams have worked
in close collaboration with their local authorities to produce Bus
Service Improvement Plans focused on providing high quality, fast,
reliable and value-for-money bus services which will deliver bus
priority plans and support climate change targets in our towns and
cities. These plans will form the basis of Enhanced Partnerships in
the majority of our bus markets.
As we emerge from the pandemic, and in the context of ambitious
national climate change targets, it is more important than ever for
bus travel to be on the Government's agenda and receive the focus
and investment it warrants.
Profitability is sensitive to the balance of passenger demand
and government support. The Board expects Regional Bus to deliver a
2022 result slightly ahead of the prior two years.
London & International Bus
Through the robust business model we have already secured our
expected contractual revenue for the 2022 financial year as a
result of successful contract bidding.
In London, the market remains challenging and competitive
Quarterly QICs settlements will continue until the end of March
2022 and will start the transition back to annual settlements from
April 2022.
We are expanding our successful London & International Bus
segment. In April 2022, we acquired the Swedish bus business
Flexbuss for GBP11.7m. All revenue will be generated through
contracts, without direct exposure to changes in passenger
demand.
In April 2022, we completed a GBP13.5m purchase of land,
adjacent to our River Road depot, to support growth in East
London
The ongoing expansion of our business in Ireland continues; the
business is increasing capacity in order to meet the requirements
of implementing the new BusConnects network design. Go-Ahead
Ireland currently operates two services on the recently launched
BusConnects network.
The Board expects London & International Bus to deliver a
2022 result similar to that of pre-pandemic levels.
RAIL
Rail overview
H1'22 H1'21*
------------------------ ----------- -----------
Total Rail operations
Total revenue GBP1,246.5m GBP1,520.6m
Operating profit GBP5.2m GBP6.8m
Operating profit margin 0.4% 0.4%
UK Rail
Total revenue GBP1,164.3m GBP1,454.9m
Operating profit GBP10.8m GBP22.9m
Operating profit margin 0.9% 1.6%
International Rail
Total revenue GBP82.2m GBP65.7m
GBP(5.6)m GBP(16.1)
Operating loss m
Operating profit margin (6.8)% (24.5)%
------------------------ ----------- -----------
* Restated
Overall Rail Performance
There have been changes in how results for our Rail business are
reported with effect from 2021. Due to the growth of the German and
Norwegian businesses, and also due to the different characteristics
and challenges faced between International and UK Rail franchises,
we now report under two segments - UK Rail and International
Rail.
Total Rail revenue decreased by 18.0%, or GBP274.1m, to
GBP1,246.5m (H1'21: GBP1,520.6m restated) reflecting the reduction
in UK Rail revenues with the Southeastern franchise ending in
October 2021.
Operating profit increased to GBP18.2m (H1'21: GBP12.0m
restated) due to an exceptional credit of GBP13.0m being recognised
in the period. Operating profit excluding exceptional items was
GBP5.2m (H1'21: GBP6.8m restated). The reduction in UK Rail profits
was offset by reduced losses in International Rail.
These factors resulted in pre-exceptional operating profit
margin remaining unchanged at 0.4% (H1'21: 0.4%).
UK Rail
Operating profit reduced by GBP12.1m or 52.8% to GBP10.8m
(H1'21: GBP22.9m restated).
The Southeastern franchise ended part way through the period, in
October 2021, resulting in GBP6.4m of lower profits compared to
H1'21.
The GBP5.1m reduction in GTR profits was mainly attributable to
the recognition of a GBP3.8m performance fee in the H1'21
comparative which related to the 2020 financial year and was
recognised in H1'21 only once certain. Excluding this, GTR prior
period operating profit was down GBP1.3m.
Head office and bid costs were GBP0.6m higher than H1'21.
These factors resulted in the pre-exceptional operating profit
margin reducing 0.7 percentage points to 0.9% (H1'21: 1.6%).
The table below illustrates the key drivers of the movements in
segmental operating profit which are summarised above:
GBPm
--------------------------------- -----
H1'21 operating profit* 22.9
--------------------------------- -----
Change:
- Southeastern (6.4)
- GTR (5.1)
* Head office and bid costs (0.6)
--------------------------------- -----
H1'22 operating profit 10.8
--------------------------------- -----
* Restated
GTR
Throughout the period GTR operated under an Emergency Recovery
Measures Agreement (ERMA) which commenced on
19 September 2020. GTR's ERMA was a management contract with no
revenue or cost risk. The ERMA's margin was capped at 1.5%
comprising a 0.5% fee and 1.0% performance incentive. Operational
performance has been strong, resulting in the achievement of the
majority of the 1.0% performance payment under the ERMA, which has
been recognised in the period.
On 25 March 2022, the DfT awarded GTR a National Rail Contract
(NRC). The new contract commenced on 1 April 2022 and will run
until at least 1 April 2025, with the option to extend at the DfT's
discretion for a further three years to 1 April 2028.
Southeastern
The Southeastern franchise was operated by LSER under an EMA
contract until October 2021. Operating performance was good
resulting in the achievement of GBP0.8m in EMA performance fee
recognised in the period.
The EMA commenced in April 2020 and ended on 17 October 2021
when the DfT appointed the Operator of Last Resort to take over the
operation of Southeastern services at the end of the franchise
term. The DfT's decision not to award a National Rail Contract to
LSER was a consequence of disputes with the DfT regarding the
calculation of profit share payments under the terms of the
relevant franchise agreements and the treatment of certain
overpayments made by the DfT to LSER over the course of the
franchise agreements.
On 17 March 2022, the DfT announced it was issuing a GBP23.5m
penalty notice to LSER due to breaches of historic franchise
agreements. The Group had previously recognised a provision of
GBP30.0m in its accounts for the year ended 3 July 2021 in respect
of this potential financial penalty. The difference of GBP6.5m has
been recorded as an exceptional credit in the half year income
statement. The amount payable to the DfT will be settled from
LSER's restricted cash balance and the unutilised provision has
been released and recognised within exceptional items, see note 5
for further details.
In addition to this, settlements were reached with the DfT in
relation to the outstanding matters relating to LSER and other
historic franchises, including affiliate trading disputes. This has
resulted in a net credit of GBP12.3m which has been recorded as
exceptional. Amounts payable to the DfT in relation to these items
have been settled from LSER's restricted cash balance.
These items are offset by GBP6.3m of associated legal,
professional and other costs incurred in relation to this
matter.
International Rail
Operating loss has reduced by GBP10.5m or 65.2% to a loss of
GBP5.6m (H1'21: GBP16.1m) due to diminishing losses in Germany
following continued improvements to operational and financial
performance.
In Germany, the improved performance resulted in a GBP6.8m
reduction in losses compared to H1'21. In addition, the initial
settlement of a claim against the rolling stock provider resulted
in the recognition of GBP4.2m (EUR5m) in the period, the remaining
EUR5m will be recognised over the next 3 years reflecting the
settlement reached with the rolling stock provider.
Norway's performance is largely unchanged from the prior year at
a broadly breakeven position. The reduction in government funding
was offset by the utilisation of the onerous contract provision
which was recognised in the 2021 financial year.
The table below illustrates the key drivers of the movements in
segmental operating profit which are summarised in the above
narrative:
GBPm
--------------------------------------- ------
H1'21 operating loss (16.1)
--------------------------------------- ------
Change:
- Germany 6.8
- Germany rolling stock provider claim 4.2
- Norway (0.1)
* Other (0.4)
--------------------------------------- ------
H1'22 operating loss (5.6)
--------------------------------------- ------
Onerous contract provisions
The Group's onerous contract provisions of GBP89.4m (3 July
2021: GBP100.3m) primarily relate to the Norwegian rail contract
and the German Bavarian rail contracts.
Utilisation of the onerous contract provision in Germany was in
line with expectations. Following the confirmation that further
government support would be received in relation to the Norwegian
rail franchise, a GBP2.8m release was made in relation to the
onerous contract provision. An additional GBP2.3m has been provided
during the period following a reassessment due to increasing cost
pressures as a result of higher energy costs.
GBPm
----------------------------------- -----
At 3 July 2021 100.3
----------------------------------- -----
- Provided 2.3
- Utilised (9.7)
- Released (2.8)
* Effects of foreign exchange (0.7)
----------------------------------- -----
At 1 January 2022 89.4
----------------------------------- -----
Germany
The German rail business operates under management contracts and
is not exposed to changes in passenger demand. As a result, the
impact of COVID-19 on the financial performance of the business has
been limited.
Financial performance for our rail operations in
Baden-Württemberg was broadly in line with our expectations in the
first half of the year and operational results were in line with
our structured improvement plan. Operational and financial
performance have continued to improve with lower and stable levels
of operational penalties, improved driver recruitment and improved
cost controls. Losses from these operations continue to diminish
and are expected to reduce further in the 2022 financial year.
In August 2021, an agreement was reached with the rolling stock
provider in relation to liquidated and consequential damage claims
resulting in a settlement of EUR10m. EUR5m (GBP4.2m) was received
and recognised in the period, the balance will be settled over the
next three years.
Operational and financial performance to date for our first
Bavaria contract, which started in December 2021, are in line with
our expectations and the provision recognised in previous years.
The second contract will commence in December 2022 and the level of
provision relating to both these contracts will remain under review
as we progress through the mobilisation period and into the start
of operations of the second contract.
Whilst the directors are taking every possible measure to
mitigate the expected losses associated with these contracts, the
determination of the onerous contract provision involves inherent
uncertainties. The degree of estimation uncertainty associated with
the onerous contract provision is expected to reduce as operations
commence and develop, as some of the existing estimation
uncertainty derives from the fact that the final operational plan,
contractual terms and operational model are still being determined.
Key assumptions in the model relate to future variations in
passenger capacity (additional vehicle km), route pairing outcomes,
service performance, energy costs and consumption levels, staff
costs, and maintenance costs.
Further detail on the onerous contract provision can be found in
note 13 of the interim financial statements.
Norway
Our Norwegian rail contract began in December 2019 and it
includes exposure to changes in passenger demand.
Following the impact of COVID-19 on passenger travel, the
Norwegian Government introduced a package of financial support
early in the pandemic. In the first half of the year, 85-90% of
losses were covered by government funding and this support was
extended to March 2022 following the emergence of the COVID-19
Omicron variant.
Passenger volumes remain supressed and they reached up to 80% of
expected levels in the first half of the year on commuter routes.
However recovery on the long distance routes has been slower.
In the prior year, an onerous contract provision was recognised
to cover potential losses resulting from an expected reduction in
government support and also from the suppressed passenger volumes
due to the impact of COVID-19. The model upon which the provision
is based is most sensitive to: passenger demand, levels of
government support, service performance, energy costs, employee
costs and the exercise of the contract's two potential extension
years.
The level of the contract provision involves inherent
uncertainties and the directors are taking every possible measure
to mitigate the expected losses associated with the contract. The
provision remains under review and constructive discussions with
the Norwegian Railway Directorate are ongoing which we are hopeful
will lead to a satisfactory outcome which would in turn reduce the
required onerous contract provision.
Capital expenditure and depreciation
In the first half of the year, total capital expenditure,
excluding leases, for the Rail division was GBP2.6m (H1'21:
GBP1.7m).
Depreciation on owned assets was GBP9.6m (H1'21: GBP10.5m).
Depreciation on right of use assets was GBP196.7m (H1'21:
GBP235.1m), the reduction from prior year reflects the Southeastern
franchise ending part way through the period in October 2021.
Full year capital expenditure for the Rail division is expected
to be around GBP5.0m.
Rail financial outlook
UK Rail
On 25 March 2022, the DfT awarded GTR a National Rail Contract
(NRC). The new contract commenced on 1 April 2022 and will run
until at least 1 April 2025, with the option to extend at the DfT's
discretion for a further three years until 1 April 2028. The NRC,
like the Emergency Recovery Measures Agreement (ERMA) contract it
replaced, is a management contract with no exposure to changes in
passenger demand and no substantial cost risk to GTR.
GTR will earn a fixed management fee of GBP8.8m per annum
(equivalent to a margin of 0.5% on GTR's cost base) to deliver the
contract, with an additional performance fee of up to GBP22.9m per
annum (equivalent to an additional 1.35% margin). Subject to the
achievement of performance targets set by the DfT, the maximum fee
receivable by GTR would therefore be GBP31.7m per annum (equivalent
to a margin of around 1.85%).
The Board expects UK Rail to deliver operating profit of
GBP25-30m in 2022.
International Rail
In Germany, we continue to deliver against our improvement plans
to reduce financial penalties and costs in Baden-Württemberg. Our
financial expectations relating to the Baden-Württemberg contracts
remain unchanged and we forecast losses will diminish in 2022.
The first of two contracts in Bavaria started on 12 December
2021 and the second will commence in December 2022. Following the
successful mobilisation of the first contract, work is underway to
ensure the smooth introduction of the remaining contract.
There are inherent uncertainties and risks associated with the
mobilisation of the second contract and in estimating the impact of
the key success factors including driver recruitment. Current
performance is in line with financial expectations which reflect
the impairments and provisions recognised. As the mobilisation
process progresses, the visibility of future income and costs will
improve.
In Norway, the recently elected Government has confirmed that
financial support for rail services will remain in place until at
least March 2022 covering 85% of losses and additional support has
been confirmed until June 2022.
Although COVID-19 restrictions were removed in Norway in
February 2022, and we have seen some recovery of passenger volumes
since then, the speed and extent of longer term passenger recovery
remains unclear. Discussions with the Norwegian Railway Directorate
continue regarding the ongoing support of rail services.
The Board expects International Rail to deliver an operating
loss of GBP15-20m in 2022.
Financial review
Earnings per share
Excluding exceptional items, earnings were GBP27.1m (H1'21:
GBP31.8m restated), resulting in decrease in pre-exceptional
earnings per share from 73.7p (restated) in H1'21 to 63.1p.
Post-exceptional earnings were GBP36.5m (H1'21: GBP36.0m restated),
resulting in an increase in earnings per share from 83.4p
(restated) to 85.0p. The weighted average number of shares was 42.9
million and the number of shares in issue, net of treasury shares,
was 43.1 million.
Dividend
No dividends have been paid or proposed in the period. As set
out in the Business Review on 5 April 2022, the Group will
reinstate its pre-COVID-19 dividend policy of paying a dividend to
shareholders equivalent to between 50% and 75% of underlying
earnings per share for the 2022 financial year and the Board
intends to recommend a dividend of not less than 50p per share, in
respect of the year ending 2 July 2022 in line with this policy, to
be announced with the Group's full year results. Dividends paid to
non-controlling interests were GBPnil (H1'21: GBPnil). Payments to
non-controlling interests represent the 35% share of the UK Rail
business owned by Keolis through our subsidiary, Govia Limited.
Capital structure & liquidity
H1'22 H1'21 FY'21
GBPm GBPm GBPm
---------------------------------------------- ----- ----- -----
5 year revolving credit facility (RCF) 2025 280.0 280.0 280.0
7 year GBP250m 2.5% sterling bond 2024 250.0 250.0 250.0
Euro financing facility 14.3 17.0 13.2
---------------------------------------------- ----- ----- -----
Total core facilities 544.3 547.0 543.2
Amount drawn down at period end 350.1 410.9 389.8
---------------------------------------------- ----- ----- -----
Balance available 194.2 136.1 153.4
---------------------------------------------- ----- ----- -----
Total cash 388.9 540.8 630.6
---------------------------------------------- ----- ----- -----
Restricted cash 253.8 426.1 543.7
---------------------------------------------- ----- ----- -----
Unrestricted cash 135.1 114.7 86.9
---------------------------------------------- ----- ----- -----
Headroom on facilities plus unrestricted cash 329.3 250.8 240.3
---------------------------------------------- ----- ----- -----
At the half year end, significant medium-term finance was
available through a GBP280m syndicated facility and a GBP250m
sterling bond. The GBP280.0m syndicated loan facility has had a
number of extensions, the most recent of which was agreed during
the period in July 2021, extending the maturity to July 2025 with a
value of GBP240.0m in the final year.
Total borrowing reduced by GBP39.7m to GBP350.1m (3 July 2021:
GBP389.8m). Borrowing comprises debt arising from the GBP250m
sterling bond, amounts drawn down against the GBP280m syndicated
facility of GBP87.8m (3 July 2021: GBP126.7m), and amounts drawn
down against the Euro loan facilities of GBP12.4m (3 July 2021:
GBP13.2m).
Headroom on facilities increased by GBP89.0m to GBP329.3m (3
July 2021: GBP240.3m) as unrestricted cash increased GBP48.2m to
GBP135.1m (3 July 2021: GBP86.9m) and available debt increased
GBP40.8m to GBP194.2m (3 July 2021: GBP153.4m).
Net debt
H1'22 H1'21 FY'21
GBPm GBPm GBPm
----------------------------------------------------- ----- ----- -----
Total borrowing 350.1 410.9 389.8
Total lease liabilities 125.3 403.4 312.5
Total cash 388.9 540.8 630.6
----------------------------------------------------- ----- ----- -----
Net debt 86.5 273.5 71.8
----------------------------------------------------- ----- ----- -----
Restricted cash 253.8 426.1 543.7
----------------------------------------------------- ----- ----- -----
Adjusted net debt 340.4 699.6 615.5
EBITDA (12 month rolling basis excluding exceptional
items) 639.7 620.7 695.6
Adjusted net debt/EBITDA (12 month rolling
basis excluding exceptional items) 0.53x 1.13x 0.88x
----------------------------------------------------- ----- ----- -----
Adjusted net debt 340.4 699.6 615.5
IFRS 16 lease liabilities 123.1 399.7 309.6
----------------------------------------------------- ----- ----- -----
Adjusted net debt (pre-IFRS 16) 217.3 299.9 305.9
EBITDA (12 month rolling basis excluding exceptional
items) (pre-IFRS 16) 180.2 160.8 195.7
Adjusted net debt/EBITDA (excluding exceptional
items) 1.21x 1.87x 1.56x
----------------------------------------------------- ----- ----- -----
In line with our covenants, adjusted net debt is calculated on a
pre-IFRS 16 basis using the outstanding principal value of debt and
does not include accrued interest and is gross of debt issue
costs.
Adjusted net debt on a pre-IFRS 16 basis, in line with banking
covenants, reduced GBP88.6m to GBP217.3m (3 July 2021:
GBP305.9m).
This included GBP350.1m (3 July 2021: GBP389.8m) of debt and non
IFRS 16 lease agreements of GBP2.2m (3 July 2021: GBP2.9m).
This
was offset by cash and short term deposits of GBP388.9m (3 July
2021: GBP630.6m) including GBP253.8m of restricted cash in rail
(3 July 2021: GBP543.7m).
The adjusted net debt (excluding restricted cash) to EBITDA
reduced to 1.21x, on a pre-IFRS 16 basis, (3 July 2021: 1.56x).
This is below our target range of 1.5x to 2.5x. Our primary
financial covenant under the syndicated facility is an adjusted net
debt to EBITDA ratio (on a pre-IFRS 16 basis) of not more than
3.5x.
Cashflow
The Group's cashflow statement is significantly impacted by UK
Rail's working capital movements and restricted cash.
Please note that the Group's banks covenants are reported on a
pre-IFRS 16 basis.
Unrestricted cash in the Group increased GBP48.2m to GBP135.1m
(2021: GBP86.9m). Despite the Group's cash reducing by
GBP241.7m
to GBP388.9m (2021: GBP630.6m), the reduction in restricted cash
of GBP289.8m to GBP253.8m (2021: GBP543.7m) resulted in the
increase
in unrestricted cash.
We expect GBP70-80m of GTR restricted cash to become
unrestricted with an element being released before year end and the
remainder in the 2022/23 financial year. Of this cash 65% will be
retained by the Group in line with the ownership structure
of GTR.
On a statutory basis, cash flow from operating activities
reduced by GBP257.0m to cash generated of GBP7.5m (2021:
GBP264.5m).
The decrease is mainly due to working capital movements in our
UK Rail businesses. Cash generated from operations before tax and
excluding movements in restricted cash was GBP12.4m lower at
GBP303.6m (H1'20: GBP316.0m).
Summary cashflow
H1'22 H1'21 Increase/(decrease)
---------------- ---------------- ---------------------
IFRS IAS
IFRS IAS 16 17 IFRS
16 17 Basis Basis 16 IAS 17
basis basis * * basis basis
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------- ------- ------- ------- ---------- ---------
EBITDA1 294.0 82.8 350.9 98.5 (56.9) (15.7)
Working capital and other operating
cashflows (280.2) (276.0) (83.5) (83.6) (196.7) (192.4)
Movement in restricted cash 289.8 289.8 48.6 48.6 241.2 241.2
------------------------------------ ------- ------- ------- ------- ---------- ---------
Cashflow generated from operations
(excluding movement in restricted
cash) 303.6 96.6 316.0 63.5 (12.4) 33.1
Tax paid (6.2) (6.2) (2.9) (2.9) (3.3) (3.3)
Net interest paid (8.7) (6.3) (13.0) (7.3) 4.3 1.0
Net capital investment (2.3) (2.3) (21.1) (21.1) 18.8 18.8
Dividends paid - minority partner - - - - - -
------------------------------------ ------- ------- ------- ------- ---------- ---------
Free cashflow 286.4 81.8 279.0 32.2 7.4 49.6
Payment to acquire treasury shares (0.4) (0.4) (0.1) (0.1) (0.3) (0.3)
Dividends paid - - - - - -
Inception of new leases (18.0) - (12.8) - (5.2) -
Other 7.2 7.2 0.2 (10.4) 7.0 17.6
------------------------------------ ------- ------- ------- ------- ---------- ---------
Movement in adjusted net debt(2) 275.2 88.6 266.3 21.7
------------------------------------ ------- ------- ------- ------- ---------- ---------
Opening adjusted net debt2 (615.6) (305.9) (965.9) (321.6)
------------------------------------ ------- ------- ------- ------- ---------- ---------
Closing adjusted net debt2 (340.4) (217.3) (699.6) (299.9)
------------------------------------ ------- ------- ------- ------- ---------- ---------
* Restated
1. EBITDA is profit after tax excluding, amortisation,
depreciation, results of joint ventures and exceptional items as
disclosed in the Interim consolidated cashflow statement in the
financial statements
2. Adjusted net debt is net debt less restricted cash
Cash generated from operations before tax and excluding
movements in restricted cash was GBP12.4m lower at GBP303.6m
(H1'20: GBP316.0m) reflecting lower EBITDA and movements in
working capital and restricted cash .
The GBP56.9m reduction in EBITDA is primarily driven by the end
of the Southeastern franchise and the reduction in London &
International following a return to pre-pandemic performance.
Cashflow generated from operations on a pre-IFRS 16 basis was
GBP33.1m higher at GBP96.6m (H1'21: GBP63.5m). The improvement
reflects the movements in working capital and restricted cash. This
was partly offset by the GBP15.7m reduction in EBITDA in the
current year.
Free cashflow on a pre-IFRS 16 basis was GBP49.6m higher at
GBP81.8m (H1'21: GBP32.2m) reflecting the GBP18.8m reduction in net
capital expenditure and the GBP33.1m increase in cashflow generated
from operations on a pre-IFRS 16 basis.
Tax paid of GBP6.2m (H1'21: GBP2.9m) comprised payments on
account in respect of the current and prior years' liabilities with
the reduction in the current half year reflecting the impact of
prior year overpayments. Net interest paid was GBP8.7m (H1'21:
GBP13.0m) reflecting lower interest on leases. Interest paid on a
pre-IFRS 16 basis was down GBP1.0m at GBP6.3m (H1'21: GBP7.3m).
Total capital investment, net of sale proceeds and including
spend on intangible assets and assets held for sale was GBP18.8m
lower in the year at GBP2.3m (H1'21: GBP21.1m). This reflects
continued disciplined capital expenditure since the outset of the
pandemic with the Group continuing to conserve cash. The reduction
relates to lower spend across the Group.
Capital investment (excluding leases)
Capital investment on tangible and intangible assets during the
period can be summarised as:
Increase/
H1'22 H1'21 (decrease)
GBPm GBPm GBPm
--------------------------- ----- ----- -----------
Regional Bus 2.6 25.2 (22.6)
London & International Bus 2.9 1.1 1.8
--------------------------- ----- ----- -----------
Total Bus 5.5 26.3 (20.8)
--------------------------- ----- ----- -----------
UK Rail 1.4 0.8 0.6
--------------------------- ----- ----- -----------
International Rail 1.2 0.9 0.3
--------------------------- ----- ----- -----------
Total Rail 2.6 1.7 0.9
--------------------------- ----- ----- -----------
Total capital investment 8.1 28.0 (19.9)
--------------------------- ----- ----- -----------
In addition, leases with a capital value of GBP12.7m were
entered into during the period (H1'21 GBP12.8m). Of these, GBP9.4m
(H1'21 GBP4.6m) related to the London & International bus
division where capital expenditure is driven more by contractual
requirements.
Group capital investment, excluding leases, is expected to be
around GBP45m in 2022, lower than typical levels in response to the
ongoing impact of COVID-19. and lower than our previous guidance of
GBP60m at year end with some spend, mainly in relation to hydrogen
buses, now expected in the 2022/23 financial year.
Exceptional operating items
H1'22 H1'21
GBPm GBPm
---------------------------------------------------------- ------ -----
Department for Transport financial penalty and associated
costs relating to LSER (12.5) -
Norway franchise onerous contract provision and asset
impairment (0.5) -
Asset impairments and restructuring costs - Regional
Bus - 0.3
Asset impairments, provisions and restructuring costs
- International Rail - (5.2)
---------------------------------------------------------- ------ -----
Exceptional operating credit (13.0) (4.9)
---------------------------------------------------------- ------ -----
Total exceptional operating items in the period ended 1 January
2022 comprised a credit of GBP13.0m (H1'21: credit of GBP4.9m) to
the income statement.
A net credit of GBP12.5m has been recognised during the period
in relation to the matters of concern relating to LSER and other
historic franchises and LSER affiliate trading. This consists of
amounts relating to settlements reached with the DfT during the
period, the financial penalty and other associated costs in
relation to these matters, as outlined below.
On 17 March 2022, the DfT announced that it was imposing a
financial penalty on LSER of GBP23.5m due to breaches of historic
franchise agreements. The Group had recognised a provision of
GBP30.0m in relation to this in its 2021 financial statements. The
release of GBP6.5m has been recorded as an exceptional operating
credit in the current period.
In addition to this, settlements were reached with the DfT in
relation to the outstanding matters relating to LSER and other
historic franchises, including affiliate trading disputes. This has
resulted in a net credit of GBP12.3m which has been recorded as
exceptional.
These credits are offset by GBP6.3m of associated legal,
professional and other costs incurred in relation to this
matter.
A net credit of GBP0.5m has been recognised in relation to the
Norwegian rail onerous contract provision. Following the
confirmation that further government support would be received, a
GBP2.8m release was made from this provision. This was offset by an
additional GBP2.3m being provided, following a reassessment of the
underlying model to take account of increasing cost pressures due
to higher energy costs.
Bidding and international developments
Bidding and international development costs in the half year
were GBP2.3m (H1'21: GBP2.4m), primarily relating to the Nordics
and UK business development. We expect full year costs of around
GBP6.4m, with ongoing bidding activity in our target markets.
Amortisation
A non-cash amortisation charge of GBP2.1m (H1'21: GBP3.3m)
related to software costs, franchise mobilisation costs and
customer contracts. Amortisation is GBP1.2m lower than the prior
period following the impairment of International Rails assets in
the prior year.
Net finance costs
Net finance costs for the period were lower than the prior year
at GBP5.2m (H1'21: GBP10.5m restated) due to lower finance
costs.
Finance costs of GBP6.0m (H1'21: GBP11.7m restated) reduced due
to lower IFRS 16 interest charges as we approach the end of the UK
Rail contracts and IFRS 16 lease liabilities diminish. The average
interest rate for finance costs for the period was 2.3% (H1'21:
2.2%).
Finance revenue was GBP0.8m (H1'21: GBP1.2m) and the average
interest rate for finance revenue for the period was 0.1% (H1'21:
0.2%).
Non-controlling interests
The non-controlling interest in the income statement of GBP9.7m
(H1'21: GBP5.9m) arises from our 65% holding in Govia Limited,
which owns 100% of our current UK 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 period of GBP18.1m (H1'21: GBP22.2m)
comprising bus costs of GBP1.1m (H1'21: GBP1.9m) and rail costs of
GBP17.0m (H1'21: GBP20.3m). Group contributions to the schemes
totalled GBP21.3m (H1'21: GBP24.6m).
Bus Pensions
Under accounting valuations, the net surplus after taxation on
the bus defined benefit schemes was GBP30.6m (3 July 2021: a
surplus of GBP27.0m), consisting of pre-tax assets of GBP40.8m (3
July 2021: GBP36.0m) less a deferred tax liability of GBP10.2m (3
July 2021: GBP9.0m). The pre-tax asset consisted of estimated
assets of GBP929.5m (3 July 2021: GBP906.0m) less estimated
liabilities of GBP888.7m (3 July 2021: GBP870.0m). The percentage
of assets held in higher risk, return seeking assets was 31.3% (3
July 2021: 31.1%).
An asset backed funding arrangement is in place which gives the
bus pension scheme trustees a right to the income generated from
some Group properties. This reduces the actuarial deficit in the
scheme at triennial scheme valuations which are used to determine
future contribution levels. For the purposes of IAS 19 (revised)
this interest has nil value within scheme assets as the properties
involved are included in property, plant and equipment in the Group
financial statements.
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 at the half year end continues
to be GBPnil (3 July 2021: GBPnil).
Risk management
Details about the going concern risks can be found in note 2 in
the notes to the interim consolidated financial statements.
During the period, the Board reviewed the risks and
uncertainties described in the Group's Annual report and Accounts
for the year ended 3 July 2021 and confirmed the principal risks
and uncertainties affecting the Group's business. These key risks
and uncertainties include external, strategic and operational
factors as outlined in note 3 in the notes to the interim
consolidated financial statements.
The Audit Committee has taken the decision to begin a formal
tender process for the position of the Group's external auditor in
respect of financial year ending 1 July 2023. The tender process
will begin in final quarter of the current financial year. The
purpose of the audit tendering exercise will be to market test the
quality and effectiveness of the services provided by the incumbent
auditor against those offered by other firms, with the aim of
obtaining the best quality and most effective audit.
More details about the risks can be found on pages 60-64 of the
'Risk Management' section of the Group Annual Report and Accounts
for the year ended 3 July 2021, available on our website at
www.go-ahead.com
Interim consolidated income statement
for the six months ended 1 January 2022
Six months to Six months to 53 weeks to
1 Jan 22 2 Jan 21 3 Jul 21
---------------------------------------------- ------------------------------------------------ -------------------------------------
Exceptional Exceptional Pre- Exceptional Post-
Pre-exceptional items Post-exceptional Pre-exceptional* items* Post-exceptional* exceptional items exceptional
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Note Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
---------------------- ---- --------------- ----------- ---------------- ---------------- ----------- ----------------- ----------- ----------- -----------
Group revenue 4 1,797.7 - 1,797.7 2,070.7 - 2,070.7 4,058.5 - 4,058.5
Operating costs 5 (1,756.5) 13.0 (1,743.5) (2,011.3) 4.9 (2,006.4) (3,935.9) (104.1) (4,040.0)
Impairment losses
(including reversals)
on financial
assets and contract
assets 1.4 - 1.4 (3.0) - (3.0) (7.1) - (7.1)
---------------------- ---- --------------- ----------- ---------------- ---------------- ----------- ----------------- ----------- ----------- -----------
Group operating
profit 42.6 13.0 55.6 56.4 4.9 61.3 115.5 (104.1) 11.4
Share of result
of joint venture (0.3) - (0.3) (0.5) - (0.5) (0.2) - (0.2)
Finance revenue 0.8 - 0.8 1.2 - 1.2 2.1 - 2.1
Finance costs (6.0) - (6.0) (11.7) - (11.7) (20.2) - (20.2)
---------------------- ---- --------------- ----------- ---------------- ---------------- ----------- ----------------- ----------- ----------- -----------
Profit/(loss)
before taxation 37.1 13.0 50.1 45.4 4.9 50.3 97.2 (104.1) (6.9)
Tax expense 6 (5.7) 1.8 (3.9) (7.7) (0.7) (8.4) (34.3) 0.5 (33.8)
---------------------- ---- --------------- ----------- ---------------- ---------------- ----------- ----------------- ----------- ----------- -----------
Profit/(loss)
for the period
from continuing
operations 31.4 14.8 46.2 37.7 4.2 41.9 62.9 (103.6) (40.7)
---------------------- ---- --------------- ----------- ---------------- ---------------- ----------- ----------------- ----------- ----------- -----------
Attributable
to:
Equity holders
of the parent 27.1 9.4 36.5 31.8 4.2 36.0 46.6 (92.6) (46.0)
Non-controlling
interests 4.3 5.4 9.7 5.9 - 5.9 16.3 (11.0) 5.3
---------------------- ---- --------------- ----------- ---------------- ---------------- ----------- ----------------- ----------- ----------- -----------
31.4 14.8 46.2 37.7 4.2 41.9 62.9 (103.6) (40.7)
---------------------- ---- --------------- ----------- ---------------- ---------------- ----------- ----------------- ----------- ----------- -----------
Earnings per
share
- basic 7 63.1p 21.9p 85.0p 73.7p 9.7p 83.4p 108.4p (215.4)p (107.0)p
- diluted 7 62.8p 21.8p 84.6p 73.7p 9.7p 83.4p 108.0p (214.7)p (106.7)p
Dividend paid
(pence per
share) 10 nil nil nil nil nil nil nil nil nil
Dividend proposed
(pence per share) 10 nil nil nil nil nil nil nil nil nil
---------------------- ---- --------------- ----------- ---------------- ---------------- ----------- ----------------- ----------- ----------- -----------
* Restated (see note 2)
Interim consolidated statement of comprehensive income
for the six months ended 1 January 2022
Six months Six months
to to Year to
1 Jan 2 Jan 3 Jul
22 21 21
GBPm GBPm GBPm
Notes Unaudited Unaudited* Audited
----------------------------------------------- ----- ---------- ----------- --------
Profit/(loss) for the period 46.2 41.9 (40.7)
Other comprehensive income/(expense)
Items that will not be reclassified to
profit or loss:
Remeasurements on defined benefit retirement
plans 1.2 (48.2) (23.2)
Tax relating to items that will not be
reclassified 6 (0.3) 9.2 5.3
----------------------------------------------- ----- ---------- ----------- --------
0.9 (39.0) (17.9)
----------------------------------------------- ----- ---------- ----------- --------
Items that may subsequently be reclassified
to profit or loss:
Unrealised losses/(gains) on cashflow
hedges 9.1 (1.7) 15.7
Tax relating to items that may be reclassified 6 (1.9) 0.3 (3.1)
Foreign exchange differences on translation
of foreign operations 1.9 0.2 5.9
----------------------------------------------- ----- ---------- ----------- --------
9.1 (1.2) 18.5
----------------------------------------------- ----- ---------- ----------- --------
Other comprehensive income/(expense)
for the period, net of tax 10.0 (40.2) 0.6
----------------------------------------------- ----- ---------- ----------- --------
Total comprehensive income/(expense)
for the period 56.2 1.7 (40.1)
----------------------------------------------- ----- ---------- ----------- --------
Attributable to:
Equity holders of the parent 46.5 (4.2) (45.4)
Non-controlling interests 9.7 5.9 5.3
----------------------------------------------- ----- ---------- ----------- --------
56.2 1.7 (40.1)
----------------------------------------------- ----- ---------- ----------- --------
* Restated (see note 2)
Interim consolidated statement of changes in equity
for the six months ended 2 January 2021 (unaudited)
Reserve
for Capital Total Non-
Share own Hedging Other redemption Translation Retained shareholders' controlling
capital shares reserve reserve reserve reserve earnings equity interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- ------
At 30 June 2020* 75.2 (71.3) (12.3) 1.6 0.7 (2.3) 179.1 170.7 20.7 191.4
Profit for the
period - - - - - - 36.0 36.0 5.9 41.9
Net movement on
hedges
(net of tax)
(note
12) - - (1.4) - - - - (1.4) - (1.4)
Remeasurement on
defined
benefit
retirement
plans
(net of tax) - - - - - - (39.0) (39.0) - (39.0)
Foreign exchange - - - - - 0.2 - 0.2 - 0.2
----------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- ------
Total
comprehensive
(expense)/income - - (1.4) - - 0.2 (3.0) (4.2) 5.9 1.7
Transfer of cash
flow
hedging losses
and
cost of hedging
to
the initial
carrying
amount of hedged
items
(net of tax) - - 5.7 - - - - 5.7 - 5.7
Exercise of share
options - 0.6 - - - - (0.6) - - -
Share based
payment
charge
(and associated
tax) - - - - - - 0.2 0.2 - 0.2
Acquisition of
own
shares - (0.1) - - - - - (0.1) - (0.1)
----------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- ------
At 2 January 2021 75.2 (70.8) (8.0) 1.6 0.7 (2.1) 175.7 172.3 26.6 198.9
----------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- ------
* Restated (see note 2)
For the year ended 3 July 2021 (audited)
Reserve
for Capital Total Non-
Share own Hedging Other redemption Translation Retained shareholders' controlling
capital shares reserve reserve reserve reserve earnings equity interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- -------
At 27 June 2020* 75.2 (71.3) (12.3) 1.6 0.7 (2.3) 179.1 170.7 20.7 191.4
(Loss)/profit for
the year - - - - - - (46.0) (46.0) 5.3 (40.7)
Movement on
hedges
(net of tax)
(note
12) - - 12.6 - - - - 12.6 - 12.6
Remeasurements on
defined benefit
retirement
plans (net of
tax) - - - - - - (17.9) (17.9) - (17.9)
Foreign exchange - - - - - 5.9 - 5.9 - 5.9
----------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- -------
Total
comprehensive
income/(expense) - - 12.6 - - 5.9 (63.9) (45.4) 5.3 (40.1)
Transfer of cash
flow
hedging losses
and
cost of hedging
to
the initial
carrying
amount of hedged
items
(net of tax) - - 5.5 - - - - 5.5 - 5.5
Exercise of share
options - 0.6 - - - - (0.6) - - -
Share based
payment
charge
(and associated
tax) - - - - - - 1.2 1.2 - 1.2
Acquisition of
own
shares - (0.6) - - - - - (0.6) - (0.6)
Deferred tax on
share-based
payment
transactions - - - - - - 0.1 0.1 - 0.1
Dividends (note
10) - - - - - - - - (3.7) (3.7)
----------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- -------
At 3 July 2021 75.2 (71.3) 5.8 1.6 0.7 3.6 115.9 131.5 22.3 153.8
----------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- -------
* Restated (see note 2)
Interim consolidated statement of changes in equity
for the six months ended 1 January 2022 (unaudited)
Reserve
for Capital Total Non-
Share own Hedging Other redemption Translation Retained shareholders' controlling
capital shares reserve reserve reserve reserve earnings equity interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- -----
At 3 July 2021 75.2 (71.3) 5.8 1.6 0.7 3.6 115.9 131.5 22.3 153.8
Profit for the
period - - - - - - 36.5 36.5 9.7 46.2
Movement on
hedges
(net of tax)
(note
12) - - 7.2 - - - - 7.2 - 7.2
Remeasurements
on
defined benefit
retirement
plans
(net of tax) - - - - - - 0.9 0.9 - 0.9
Foreign exchange - - - - - 1.9 - 1.9 - 1.9
---------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- -----
Total
comprehensive
income - - 7.2 - - 1.9 37.4 46.5 9.7 56.2
Transfer of cash
flow
hedging gains
and
cost of hedging
to
the initial
carrying
amount of
hedged items
(net of tax) - - (3.0) - - - - (3.0) - (3.0)
Exercise of
share
options - 0.8 - - - - (0.8) - - -
Share based
payment
charge
(and associated
tax) - - - - - - (0.5) (0.5) - (0.5)
Acquisition of
own
shares - (0.5) - - - - - (0.5) - (0.5)
---------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- -----
At 1 January
2022 75.2 (71.0) 10.0 1.6 0.7 5.5 152.0 174.0 32.0 206.0
---------------- ------- ------- ------- ------- ---------- ----------- -------- ------------- ----------- -------
Interim consolidated balance sheet
as at 1 January 2022
1 Jan 2 Jan 3 Jul
22 21* 21
GBPm GBPm GBPm
Notes Unaudited Unaudited Audited
-------------------------------------- ----- ---------- ---------- ---------
Assets
Non-current assets
Property, plant and equipment 517.6 570.3 553.8
Right of use assets 148.8 414.2 345.4
Goodwill 73.5 73.5 73.5
Intangible assets 7.4 20.6 8.5
Deferred tax assets 3.6 2.6 1.5
Derivative financial assets 12 5.1 0.4 3.4
Trade and other receivables 3.3 1.4 2.0
Retirement benefit asset 8 45.5 18.4 41.5
-------------------------------------- ----- ---------- ---------- ---------
804.8 1,101.4 1,029.6
-------------------------------------- ----- ---------- ---------- ---------
Current assets
Inventories 15.1 20.8 19.5
Trade and other receivables 375.0 401.8 413.2
Derivative financial assets 12 7.9 0.3 4.9
Assets classified as held for sale 11 0.1 0.3 3.2
Current tax asset 14.6 - 13.4
Finance lease receivables 2.5 10.6 2.3
Cash and cash equivalents 388.9 540.8 630.6
-------------------------------------- ----- ---------- ---------- ---------
804.1 974.6 1,087.1
-------------------------------------- ----- ---------- ---------- ---------
Total assets 1,608.9 2,076.0 2,116.7
-------------------------------------- ----- ---------- ---------- ---------
Liabilities
Current liabilities
Trade and other payables (584.7) (807.2) (883.4)
Derivative financial liabilities 12 - (7.5) (0.6)
Interest-bearing loans and borrowings (8.5) (8.3) (12.0)
Lease liabilities (73.2) (347.8) (263.9)
Current tax liabilities (17.2) (2.4) (17.6)
Provisions 13 (132.7) (92.3) (159.1)
-------------------------------------- ----- ---------- ---------- ---------
(816.3) (1,265.5) (1,336.6)
-------------------------------------- ----- ---------- ---------- ---------
Non-current liabilities
Trade and other payables (12.1) (14.6) (13.5)
Derivative financial liabilities 12 (0.2) (4.0) (0.3)
Interest-bearing loans and borrowings (343.4) (403.9) (382.5)
Lease liabilities (52.1) (55.6) (48.7)
Retirement benefit obligations 8 (4.7) (10.7) (5.5)
Deferred tax liabilities (62.7) (39.0) (59.7)
Provisions 13 (111.4) (83.8) (116.1)
-------------------------------------- ----- ---------- ---------- ---------
(586.6) (611.6) (626.3)
-------------------------------------- ----- ---------- ---------- ---------
Total liabilities (1,402.9) (1,877.1) (1,962.9)
-------------------------------------- ----- ---------- ---------- ---------
Net assets 206.0 198.9 153.8
-------------------------------------- ----- ---------- ---------- ---------
Capital & reserves
Share capital 75.2 75.2 75.2
Reserve for own shares (71.0) (70.8) (71.3)
Hedging reserve 10.0 (8.0) 5.8
Share premium reserve 1.6 1.6 1.6
Capital redemption reserve 0.7 0.7 0.7
Translation reserve 5.5 (2.1) 3.6
Retained earnings 152.0 175.7 115.9
-------------------------------------- ----- ---------- ---------- ---------
Total shareholders' equity 174.0 172.3 131.5
Non-controlling interests 32.0 26.6 22.3
-------------------------------------- ----- ---------- ---------- ---------
Total equity 206.0 198.9 153.8
-------------------------------------- ----- ---------- ---------- ---------
* Restated (see note 2)
Interim consolidated cashflow statement
for the six months ended 1 January 2022
Six months Six months
to to Year to
1 Jan 2 Jan 3 Jul
22 21* 21
GBPm GBPm GBPm
Notes Unaudited Unaudited Audited
--------------------------------------------------- ----- ---------- ---------- --------
Profit/(loss) after tax for the period 46.2 41.9 (40.7)
Net finance costs 5.2 10.5 18.1
Tax expense 6 3.9 8.4 33.8
Depreciation of property, plant and equipment 39.9 43.2 81.5
Depreciation of right of use assets 209.2 247.9 486.5
Amortisation of intangible assets 2.1 3.3 6.3
Asset impairment 0.2 - 5.7
Share of result of joint venture 0.3 0.5 0.2
(Profit)/loss on sale of property, plant
and equipment (0.1) 0.2 0.1
Share based payment (credits)/charges (0.7) 0.2 1.2
Difference between pension contributions
paid and amounts recognised
in the income statement (3.1) (2.9) (5.3)
Exceptional items (13.0) (4.9) 104.1
Decrease/(increase) in inventories 4.4 (1.1) 0.2
Decrease/(increase) in trade and other receivables 37.1 (113.8) (125.8)
Decrease/(increase) in trade and other payables,
excluding exceptional items (297.0) 36.0 120.7
Movement in provisions, excluding exceptional
items (20.9) (2.0) 2.7
--------------------------------------------------- ----- ---------- ---------- --------
Cashflow generated from operations 13.7 267.4 689.3
Taxation paid (6.2) (2.9) (12.1)
--------------------------------------------------- ----- ---------- ---------- --------
Net cashflows from operating activities 7.5 264.5 677.2
--------------------------------------------------- ----- ---------- ---------- --------
Interest received 0.4 1.3 1.1
Proceeds from sale of property, plant and
equipment 2.8 4.5 6.3
Proceeds from sale of property, plant and
equipment held for sale 7.5 7.2 7.3
Purchase of property, plant and equipment (6.8) (27.0) (52.9)
Movement in finance lease receivables 5.1 - 8.4
Purchase of property, plant and equipment
held for sale (4.4) (4.8) (5.7)
Purchase of intangible assets (1.4) (1.0) (2.2)
--------------------------------------------------- ----- ---------- ---------- --------
Net cashflows used in investing activities 3.2 (19.8) (37.7)
--------------------------------------------------- ----- ---------- ---------- --------
Interest paid on lease liabilities (2.4) (5.7) (9.0)
Other interest paid (6.7) (8.6) (11.3)
Dividends paid to members of the parent 10 - - -
Dividends paid to non-controlling interests - - (3.7)
Payment to acquire own shares (0.4) (0.1) (0.6)
Repayment of borrowings (59.0) (222.6) (307.2)
Proceeds from borrowings 21.3 221.7 289.4
Payment of lease liabilities (205.3) (258.0) (534.5)
--------------------------------------------------- ----- ---------- ---------- --------
Net cashflows used in financing activities (252.5) (273.3) (576.9)
--------------------------------------------------- ----- ---------- ---------- --------
Net (decrease)/increase in cash and cash
equivalents (241.8) (28.6) 62.6
Cash and cash equivalents at start of period 9 630.6 569.8 569.8
Effect of foreign exchange rate changes 0.1 (0.4) (1.8)
--------------------------------------------------- ----- ---------- ---------- --------
Cash and cash equivalents at end of period 9 388.9 540.8 630.6
--------------------------------------------------- ----- ---------- ---------- --------
* Restated (see note 2)
Notes to the consolidated financial statements
for the six months ended 1 January 2022
1. Corporate information
The Go-Ahead Group plc is a public limited company that is
incorporated, domiciled and has its registered office in England
and Wales. Its ordinary shares are publicly traded and it is not
under the control of any single shareholder.
2. Basis of preparation
The condensed financial statements for the six months ended 1
January 2022 have been prepared in accordance with the Disclosure
and Transparency Rules (DTR) of the Financial Conduct Authority and
IAS 34, 'Interim Financial Reporting', in conformity with the
requirements of the Companies Act 2006 and International Financial
Reporting Standards adopted pursuant to Regulation (EC) No
1606/2002. The financial statements have also been prepared in
accordance with International Financial Reporting Standards as
issued by the IASB. The condensed financial statements have been
prepared using the same accounting policies and methods of
computation used to prepare the Group's 2021 Annual Report and
Accounts as described on pages 190 to 199 of that report which can
be found on the Group's website at www.go-ahead.com and the
adoption of new standards and interpretations, noted below. The
annual financial statements of the Group are prepared in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006 and International Financial
Reporting Standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
The financial statements for the six months ended 1 January 2022
and the comparative financial statements for the six months ended 2
January 2021 have not been audited. The comparative financial
statements for the year ended 3 July 2021 have been extracted from
the 2021 Annual Report and Accounts. The financial statements
contained in this interim report do not constitute statutory
accounts as defined in section 434 of the Companies Act 2006 and do
not reflect all of the information contained in the Group's 2021
Annual Report and Accounts. The statutory accounts for the year
ended 3 July 2021, which were approved by the Board of Directors on
23 February 2022 and have been filed with the Registrar of
Companies, received an unqualified audit report which 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 preparation of the financial statements requires the use
of estimates and assumptions. Although these estimates are based on
management's best knowledge, actual results ultimately may differ
from these estimates. The key sources of estimation uncertainty
disclosed on pages 176-181 of the Group Annual Report and Accounts
for the year ended 3 July 2021 continue to apply other than that
relating to the expected GBP30.0m financial penalty levied by the
DfT under the Railways Act 1993. The amount payable to the DfT will
be settled from LSER's restricted cash balance and the unutilised
provision has been released and recognised within exceptional
items, see note 5 for further details.
The Group's operations do not suffer from significant seasonal
demand fluctuations.
New standards
The following new standards or interpretations are mandatory for
the first time for the financial year ending 2 July 2022:
-- Amendments to IFRS 9 and IFRS 7 Interest Rate Benchmark Reform
Amendments to IFRS 16 COVID-19-Related Rent Concessions beyond 30 June
-- 2021
Adoption of these standards and interpretations had no material impact
-- on the Group's financial position or related performance.
New standards and interpretations not yet applied
The International Accounting Standards Board ('IASB') has issued
the following standards and interpretations with an effective date
after the date of these financial statements:
Effective date
(periods beginning
International Accounting Standards (IAS/IFRSs) on or after)
----------------------------------------------------------- -------------------
Amendments to IFRS 3 Reference to the Conceptual Framework 1 January 2022
----------------------------------------------------------- -------------------
Amendments to IAS 16 Property, Plant and Equipment
- Proceeds before Intended Use 1 January 2022
----------------------------------------------------------- -------------------
Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling
a Contract 1 January 2022
----------------------------------------------------------- -------------------
Annual Improvements to IFRS Standards 2018-2020 Cycle 1 January 2022
----------------------------------------------------------- -------------------
IFRS 17 Insurance contracts 1 January 2023
----------------------------------------------------------- -------------------
Amendments to IAS 1 Classification of Liabilities
as Current or Non-Current 1 January 2023
----------------------------------------------------------- -------------------
Amendments to IAS 1 and IFRS Practice Statement 2
Disclosure of Accounting Policies 1 January 2023
----------------------------------------------------------- -------------------
Amendments to IAS 8 Definition of Accounting Estimates 1 January 2023
----------------------------------------------------------- -------------------
Amendments to IAS 12 Deferred Tax related to Assets
and Liabilities arising from a Single transaction 1 January 2023
----------------------------------------------------------- -------------------
IFRS 10 and IAS 28 (amendments) Sale or Contribution
of Assets between an Investor and its Associate or Not yet announced
Joint Venture by IASB
----------------------------------------------------------- -------------------
The directors do not anticipate adoption of the remaining
standards and interpretations will have a material impact on the
Group's financial statements.
Prior year restatements
A number of restatements and adjustments were identified during
the 2021 year which also have an impact on the Group's results for
the period ending 2 January 2021. The impact of these restatements
is an increase in profit before tax of GBP25.7m, a decrease in net
assets of GBP51.7m and an opening reserves decrease of GBP61.0m to
retained earnings and GBP16.2m to non-controlling interests.
The misstatements can be aggregated based on their nature and
cause into the following:
London & South Eastern Railway Limited (LSER) matters of concern, other
-- historic franchises, and affiliate trading;
-- Germany onerous contract provision;
-- Correction of errors; and
-- Presentational adjustments and reclassifications.
Consolidated income statement for the six months ended 2 January
2021
Matters
of
concern
relating
to
LSER
and
other As
As historic previously
previously franchises reported Germany As restated As previously As
reported and Correction As restated Exceptional onerous Exceptional reported restated
Pre-exceptional affiliate of Pre-exceptional items contract items Post-exceptional Post-exceptional
2 Jan trading errors 2 Jan 2 Jan provision 2 Jan 2 Jan 2 Jan
21 (a) (c) 21 21 (b) 21 21 21
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- --------------- ---------- ---------- --------------- ----------- --------- ----------- ---------------- ----------------
Group revenue 2,070.2 - 0.5 2,070.7 - - - 2,070.2 2,070.7
Operating costs (2,014.1) - (0.2) (2,014.3) (21.0) 25.9 4.9 (2,035.1) (2,009.4)
---------------- --------------- ---------- ---------- --------------- ----------- --------- ----------- ---------------- ----------------
Group operating
profit/(loss) 56.1 - 0.3 56.4 (21.0) 25.9 4.9 35.1 61.3
Share of result
of joint
venture (0.5) - - (0.5) - - - (0.5) (0.5)
Finance revenue 1.2 - - 1.2 - - - 1.2 1.2
Finance costs (11.2) (0.5) - (11.7) - - - (11.2) (11.7)
---------------- --------------- ---------- ---------- --------------- ----------- --------- ----------- ---------------- ----------------
Profit/(loss)
before taxation 45.6 (0.5) 0.3 45.4 (21.0) 25.9 4.9 24.6 50.3
Tax expense (7.7) 0.1 (0.1) (7.7) (0.7) - (0.7) (8.4) (8.4)
---------------- --------------- ---------- ---------- --------------- ----------- --------- ----------- ---------------- ----------------
Profit/(loss)
for
the period
from continuing
operations 37.9 (0.4) 0.2 37.7 (21.7) 25.9 4.2 16.2 41.9
Attributable
to:
Equity holders
of the parent 32.0 (0.3) 0.1 31.8 (21.7) 25.9 4.2 10.3 36.0
Non-controlling
interests 5.9 (0.1) 0.1 5.9 - - - 5.9 5.9
---------------- --------------- ---------- ---------- --------------- ----------- --------- ----------- ---------------- ----------------
37.9 (0.4) 0.2 37.7 (21.7) 25.9 4.2 16.2 41.9
---------------- --------------- ---------- ---------- --------------- ----------- --------- ----------- ---------------- ----------------
Consolidated statement of other comprehensive income for the six
months ended 2 January 2021
Matters
of
concern
relating
to
LSER and
other
historic Germany
As previously franchises onerous Correction
reported and affiliate contract of Presentational As restated
2 Jan trading provision errors adjustments 2 Jan
21 (a) (b) (c) and reclassifications 21
GBPm GBPm GBPm GBPm (d) GBPm
-------------------------- ------------- -------------- ---------- ---------- ---------------------- -----------
Profit/(loss) for the
period 16.2 (0.4) 25.9 0.2 - 41.9
Other comprehensive
(expense)/income
Items that will not be
reclassified
to profit or loss
Remeasurements on defined
benefit retirement plans (48.2) - - - - (48.2)
Tax relating to items that
will not
be reclassified 9.2 - - - - 9.2
-------------------------- ------------- -------------- ---------- ---------- ---------------------- -----------
(39.0) - - - - (39.0)
-------------------------- ------------- -------------- ---------- ---------- ---------------------- -----------
Items that may
subsequently
be reclassified to profit
or loss
Unrealised losses on
cashflow
hedges (0.9) - - - (0.8) (1.7)
Losses/(gains) on cashflow
hedges taken to income
statement
- operating costs 6.1 - - - (6.1) -
Tax relating to items that
may be reclassified (0.9) - - - 1.2 0.3
Foreign exchange
differences
on translation
of foreign operations 0.4 - (0.2) - - 0.2
-------------------------- ------------- -------------- ---------- ---------- ---------------------- -----------
4.7 - (0.2) - (5.7) (1.2)
-------------------------- ------------- -------------- ---------- ---------- ---------------------- -----------
Other comprehensive
expense
for the period,
net of tax (34.3) - (0.2) - (5.7) (40.2)
-------------------------- ------------- -------------- ---------- ---------- ---------------------- -----------
Total comprehensive
(expense)/income
for
the period (18.1) (0.4) 25.7 0.2 (5.7) 1.7
-------------------------- ------------- -------------- ---------- ---------- ---------------------- -----------
Attributable to:
Equity holders of the
parent (24.0) (0.3) 25.7 0.1 (5.7) (4.2)
Non-controlling interests 5.9 (0.1) - 0.1 - 5.9
-------------------------- ------------- -------------- ---------- ---------- ---------------------- -----------
(18.1) (0.4) 25.7 0.2 (5.7) 1.7
-------------------------- ------------- -------------- ---------- ---------- ---------------------- -----------
Consolidated balance sheet as at 2 January 2021
Matters
of concern
relating
to
LSER and
other
historic Germany Presentational
adjustments
franchises onerous and
contract Correction
As previously and affiliate provision of reclassifications
trading errors
reported (a) (b) (c) (d) As restated
2 Jan 2 Jan 2 Jan 2 Jan 2 Jan 2 Jan
21 21 21 21 21 21
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Assets
Non-current assets
Deferred tax assets 2.2 - - 0.4 - 2.6
Other non-current assets 1,098.8 - - - - 1,098.8
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
1,101.0 - - 0.4 - 1,101.4
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Current assets
Trade and other receivables 353.0 - - 0.5 48.3 401.8
Other current assets 572.8 - - - - 572.8
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
925.8 - - 0.5 48.3 974.6
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Total assets 2,026.8 - - 0.9 48.3 2,076.0
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Liabilities
Current liabilities
Trade and other payables (729.9) (40.8) - 7.8 (44.3) (807.2)
Derivative financial
liabilities (6.7) - - - (0.8) (7.5)
Interest-bearing loans and
borrowings (5.1) - - - (3.2) (8.3)
Current tax liabilities (2.4) 1.0 - (1.0) - (2.4)
Provisions (89.2) - 2.8 (5.9) - (92.3)
Other current liabilities (347.8) - - - - (347.8)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
(1,181.1) (39.8) 2.8 0.9 (48.3) (1,265.5)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Non-current liabilities
Provisions (67.3) - (14.2) (2.3) - (83.8)
Other non-current liabilities (527.8) - - - - (527.8)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
(595.1) - (14.2) (2.3) - (611.6)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Total liabilities (1,776.2) (39.8) (11.4) (1.4) (48.3) (1,877.1)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Net assets 250.6 (39.8) (11.4) (0.5) - 198.9
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Capital and reserves
Retained earnings 210.5 (26.4) (10.7) 0.6 1.7 175.7
Translation reserve (1.4) - (0.7) - - (2.1)
Other capital and reserves (1.3) - - - - (1.3)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Total shareholders' equity 207.8 (26.4) (11.4) 0.6 1.7 172.3
Non-controlling interests 42.8 (13.4) - (1.1) (1.7) 26.6
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Total equity 250.6 (39.8) (11.4) (0.5) - 198.9
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Consolidated cashflow statement for the six months ended 2
January 2021
Matters
of concern
relating
to
LSER and
other
historic Germany Presentational
adjustments
franchises onerous and
contract Correction
and affiliate provision of reclassifications
As previously trading errors
reported (a) (b) (c) (d) As restated
2 Jan 2 Jan 2 Jan 2 Jan 2 Jan 2 Jan
21 21 21 21 21 21
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Profit/(loss) after tax for
the period 16.2 (0.4) 25.9 0.2 - 41.9
Net finance costs 10.0 0.5 - - - 10.5
Tax expense 8.4 (0.1) - 0.1 - 8.4
Depreciation of property,
plant and equipment 43.2 - - - - 43.2
Depreciation of right of
use assets 247.9 - - - - 247.9
Amortisation of intangible
assets 3.3 - - - - 3.3
Asset impairment - - - - - -
Share of result of joint
venture 0.5 - - - - 0.5
Loss on sale of property,
plant and equipment 0.2 - - - - 0.2
Share based payment charges 0.2 - - - - 0.2
Difference between pension
contributions paid and
amounts
recognised in the income
statement (2.9) - - - - (2.9)
Exceptional items 21.0 - (25.9) - - (4.9)
Increase in inventories (1.1) - - - - (1.1)
Increase in trade and other
receivables (87.0) - - (0.5) (26.3) (113.8)
Increase in trade and other
payables 9.7 - - - 26.3 36.0
Movement in provisions,
excluding
exceptional items (2.2) - - 0.2 - (2.0)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Cashflow generated from
operations 267.4 - - - - 267.4
Taxation paid (2.9) - - - - (2.9)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Net cashflows from operating
activities 264.5 - - - - 264.5
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Interest received 1.3 - - - - 1.3
Proceeds from sale of
property,
plant
and equipment 4.5 - - - - 4.5
Proceeds from sale of
property,
plant and equipment held
for sale 7.2 - - - - 7.2
Purchase of property, plant
and equipment (27.0) - - - - (27.0)
Movement in finance lease
receivables - - - - - -
Purchase of property, plant
and equipment held for sale (4.8) - - - - (4.8)
Purchase of intangible assets (1.0) - - - - (1.0)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Net cashflows used in
investing
activities (19.8) - - - - (19.8)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Interest paid on lease
liabilities (5.7) - - - - (5.7)
Other interest paid (8.6) - - - - (8.6)
Dividends paid to members
of the parent - - - - - -
Dividends paid to
non-controlling
interests - - - - - -
Payment to acquire own shares (0.1) - - - - (0.1)
Repayment of borrowings (0.9) - - - (221.7) (222.6)
Proceeds from borrowings - - - - 221.7 221.7
Payment of lease liabilities (258.0) - - - - (258.0)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Net cashflows used in
financing
activities (273.3) - - - - (273.3)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Net decrease in cash and
cash equivalents (28.6) - - - - (28.6)
Cash and cash equivalents
at start of period 569.8 - - - - 569.8
Effect of foreign exchange
rate changes (0.4) - - - - (0.4)
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Cash and cash equivalents
at end of period 540.8 - - - - 540.8
----------------------------- ------------- -------------- ----------- ---------- ------------------ -----------
Notes of restatements
(a) Matters of concern relating to LSER, other historic
franchises and LSER affiliate trading
As outlined in the Group's 2021 Annual Report and Accounts,
several prior year restatements were identified as a result of the
ongoing dispute with the DfT regarding historical matters relating
to the Southeastern and other historic franchises. These prior year
adjustments impact the balance sheet and opening reserves and
therefore have also been restated in the prior year comparatives
for the period ended 2 January 2021.
Since the publication of the Group's full year results on 24
February 2022, settlements have been reached with the DfT in
respect of the affiliate trading and other outstanding matters.
These settlements have been recognised as exceptional items in the
current period's results ended 1 January 2022. Refer to note 5 for
further details.
(b) Germany onerous contract provision
At the year-end, the directors performed a detailed review of
all material contracts across the Group to consider the
completeness of the onerous contract provisions. This resulted in
the Germany onerous contract provision as at 27 June 2020 being
restated by an increase of GBP37.1m. Correspondingly, there is a
reduction of GBP25.9m charged to the consolidated income statement
in the Group's 2021 interim results. Please refer to page 188 of
the Group's 2021 Annual Report and Accounts for further
details.
(c) Correction of errors
During the 2021 financial year, it was identified that certain
provisions and accruals balances were not appropriate. As a result,
the Group's 2020 and 2019 consolidated balance sheets were restated
in the Group's 2021 Annual Report and Accounts. These adjustments
also have an impact on the Group's balance sheet as of 2 January
2021. The adjustments include inaccurate maintenance, dilapidation
and employee bonus provisions and accruals. The net impact of these
restatements on the consolidated balance sheet is a decrease in net
assets of GBP0.5m and a net increase in profit before tax of
GBP0.3m.
(d) Presentational corrections and reclassifications
1. IAS 32 Balance Sheet Classifications
During the 2021 financial year, it was identified that some
items had been presented as net within the balance sheet and
associated notes rather than presenting as gross receivables and
payables in accordance with IAS 32. These items relate to the
presentation of balances with the DfT and Network Rail. The impact
of these reclassifications is to increase both current assets and
current liabilities by GBP48.3m in the consolidated balance sheet
as at 2 January 2021.
2. Gross presentation of repayments of and proceeds from
borrowings
For the period ending 2 January 2021, in the consolidated
cashflow statement, the repayment of borrowings and proceeds from
borrowings lines have been restated in order to present these lines
gross and on the same basis as shown above for the period ending 1
January 2022 and the year ended 3 July 2021. This has resulted in
an increase to repayment of borrowings of GBP221.7m and an increase
to proceeds from borrowings of the same amount. There is no effect
on the cash and cash equivalent balances at the end of each
period.
3. Interest reclassification
Interest on the Group's loans and borrowings has been
reclassified from other payables to interest bearing loans and
borrowings to reflect the fact that these loans and borrowings are
held at amortised cost. This has been restated in the consolidated
balance sheet as at 2 January 2021. The impact is a decrease in
current other payables of GBP3.2m and an increase in current
interest-bearing loans and borrowings of the same amount.
4. IFRS 9 cashflow hedge reclassification
During the 2021 financial year, it was identified that when cash
flow hedging purchases of fuel, the amount accumulated in hedging
reserve was incorrectly reclassified, once the forecast transaction
happened, to the consolidated statement of other comprehensive
income instead of being removed directly from equity and included
in cost of fuel (i.e. basis adjustment was not applied). As a
result, GBP4.9m, net of tax, in relation to this has been
reclassified for the period ending 2 January 2021.
Going concern
(i) Going concern assessment
The Group understands the importance of rebuilding confidence in
Go-Ahead that may have been undermined for some stakeholders as a
result of the matters at LSER, which have now been settled with the
Department for Transport (DfT). New leadership and a refreshed and
strengthened Board to take the Group forward at a pivotal time for
our industry, and our business as shared recently in our new
strategy, The Next Billion Journeys. A priority over the coming
months is helping passengers return to the Group's services and
welcoming new passengers who may be looking for a greener,
value-for-money travel choice. Whilst the pace and nature of
recovery from the pandemic remains uncertain, the Group considers
that public transport will continue to play a crucial role.
The Group has a resilient business model, with exposure to
changes in passenger demand limited to Regional Bus and our rail
contract in Norway, and has received various forms of government
support across the business. Our businesses are key parts of the
communities they serve and have played a fundamental role in
supporting them through the COVID-19 crisis.
During the pandemic both governments and our clients recognised
that it was critical to maintain essential services for key workers
to get to their places of work and to provide appropriate funding
to sustain services. This funding has been testament to the
importance of our business and wider industry.
In all our geographies we have seen recovery in passenger
demand, but the future pace and nature of the recovery remain
uncertain. Governments have begun to reduce or withdraw the more
generalised COVID-19 support packages but funding packages to
rebuild demand, grow public transport and encourage
de-carbonisation continue to develop. In the UK the Government,
through the Bus Recovery Grant (BRG) Extension has committed to
funding through to October 2022, while in Norway discussions with
the Norwegian Government continue regarding the future of rail
services as a consequence of the expected cessation of support for
ongoing operations in June 2022.
The Board considered the financial forecasts prepared for
business modelling and liquidity projection purposes as the basis
for its assessment of the Group's ability to continue as a going
concern for at least 12 months from the date of this
announcement.
The key areas of forecasting uncertainty include:
-- The pace and nature of the ongoing recovery from the pandemic in the
UK and across the world and the appropriate service levels required
to support the resultant levels of passenger demand.
-- Revenue recovery rates in Norwegian rail operations along with the
duration and scale of government support and the potential to renegotiate
or exit the contract.
-- Recovery rates in Regional Bus passenger demand, including airline
and coach services, and the size of the network required to support
that level of passenger demand.
-- Losses on our German contracts with impact of potential risks, despite
improved operational performance in the
Baden-Württemberg franchise since its commencement.
While the most recent liquidity review is based on the Group's
Corporate Plan approved by the Board in July 2021, this has been
updated to reflect changes since the year end with revised
estimates for 2022 based on the latest forecast prepared by all
operating companies in March 2022 and with updated assumptions for
key areas in the outer years.
Our base case forecast assumes that:
-- In Regional Bus, the Bus Recovery Grant Extension funding continues
until October 2022 with vehicle mileage at levels commensurate with
both the BRG Extension conditions and passenger demand.
-- In London & International Bus, passenger demand risk is borne by our
transport authority clients. Whilst all clients are expected to come
under some financial pressure, there is currently no evidence of any
impact on contractual payments or financial support. Consequently,
the base case for the London & International Bus is consistent with
pre-COVID-19 operational performance.
-- In UK Rail, the matters of concern with respect to LSER have been settled
and GTR commenced operating under a minimum three-year National Rail
Contract on 1 April with the potential for further extensions.
-- In International Rail, our German rail operations contractual payments
continue to be protected and passenger revenue risk is borne by the
transport authority client. In Norwegian rail our forecasts assume
that revenue support from the Norwegian Government will continue through
to June 2022, support in February covered 90% of losses but this is
expected to reduce.
Dividend payments will resume following the announcement of the
2021/22 full year results.
Plausible and severe downside scenarios relate to our principal
risks, notably the extent to which the recovery in passenger demand
and levels of government support are less favourable than assumed
in our base case forecasts.
The reasonable downside scenario assumptions used were:
-- Slower recovery of passenger demand in Regional Bus.
-- Cost pressures and higher employee sickness rates in London bus.
-- Lower than expected performance fees in GTR under the National Rail
Contract.
-- Continuing operational issues in our German rail operation leading
to higher operational losses than those included in the base case.
-- Government support for our Norwegian rail operations reduces and passenger
demand recovers more slowly than our base case assumes.
In addition to the base case and the reasonable worst case
scenario as detailed, the Board has reviewed reverse stress tests,
which assess the set of circumstances that would be necessary for
the Group to breach the limits of its covenant tests. These are
explained in the section of liquidity headroom detailed below.
(ii) Liquidity headroom
The Group has no debt maturities ahead of 2024, a strong balance
sheet and good liquidity with adjusted net debt at
1 January 2022 of GBP340.4m (GBP217.3m on a pre-IFRS 16 basis)
and unutilised facilities and cash of GBP329.3m at the half year
end.
Funding is covered by a GBP250m corporate bond, which matures on
6 July 2024, and the Revolving Credit Facility of GBP280m which
matures in July 2025. Although these arrangements extend beyond the
viability review period, we would expect to refinance prior to the
end of the current viability period and, given the level of
headroom on existing covenants and forecast levels of net debt,
there is no reason not to assume that this could not be done.
Our primary bank covenant continues to be assessed on a pre-IFRS
16 basis with an adjusted net debt to EBITDA ratio of 1.21 times at
the half year position, below our target range and allowing
adequate headroom on our primary bank covenant of 3.5 times. Our
covenants are measured twice a year, at half year and full year,
and are measured under frozen accounting standards.
Under the modelled scenarios as detailed above, positive
liquidity headroom exists throughout the going concern period and
the Group remains in compliance with its covenants.
In addition to the base case and the reasonable worst case
scenario, the Board has reviewed reverse stress tests, in which the
Group has assessed the set of circumstances that would be necessary
for the Group to breach the limits of its covenant tests. In this
regard the settlement of the matters of concern with respect to
LSER and the subsequent agreement of the National Rail Contract for
GTR have significantly reduced the level of uncertainty within the
UK Rail business.
Even in the most severe of the downside scenarios there remains
sufficient liquidity with minimum thresholds achieved throughout
the going concern assessment period after taking account of
controllable mitigating actions.
In applying the reverse stress test to this the directors have
concluded that the set of circumstances required to exhaust this
level of liquidity headroom is considered to be remote.
(iii) Mitigating actions
The Board has considered all mitigations that would be within
their control if faced with a short term material EBITDA reduction
that would reduce covenant headroom. These include cost
efficiencies, additional restructuring, reduction or postponement
of capital expenditure, temporary re-suspension of dividends, and
sale of other assets. Whilst these mitigating actions cover the
entire business, they are particularly focused on Regional Bus
where, under the current government funding arrangement, revenue
risk has been reintroduced. Within International Rail, Norway is
also subject to revenue risk and active discussions of potential
amendments to the contractual arrangements with counterparties
continue, however the outcome of these discussions remain
uncertain.
Other mitigations could be considered in more severe
circumstances, including requests for amendments or waivers of
covenants, raising further equity, sale and leaseback of vehicles,
disposal of properties and disposal of investments or other
assets.
(iv) Going concern conclusion
The consolidated interim financial information for the half year
ended 1 January 2022 has been prepared on a going concern
basis.
In applying the going concern basis, the directors recognise
that the continued uncertainty caused by the COVID-19 pandemic
requires a higher level of judgement in assessing whether the Group
is a going concern. The directors have considered the expected
operational performance of the Group, the significant liquidity
headroom, the risk of downside scenarios and identified possible
mitigating actions as outlined above and have a reasonable
expectation that the Group will continue as a going concern.
The directors confirm they are satisfied that the Group has
adequate resources to continue in operational existence for a
period of at least 12 months from the date of this
announcement.
3. Risks and uncertainties
The Board has undertaken a review of the principal risks and
uncertainties affecting the Group for the six months ended 1
January 2022. The Board considers that the principal risks and
uncertainties (as discussed in the 'Risk management' section on
pages 56 to 64 of the Group Annual Report and Accounts for the year
ended 3 July 2021, available on the Group's website
www.go-ahead.com), remain relevant, with only minor changes made to
the explanatory narrative.
The successful delivery of the Group's strategic objectives
depends on effective identification, understanding and mitigation
of its principal risks and uncertainties. The financial year ended
3 July 2021 was one of unprecedented disruption and uncertainty,
primarily due to the ongoing COVID-19 pandemic. Restrictions
introduced to combat the pandemic, including country-wide
lockdowns, adversely affected passenger volumes within the public
transport sector. Against such a backdrop, robust risk management
has remained critical in protecting the Group's core strategic
objectives.
As an outcome of the Independent Review into LSER and the
onerous contract provisions recognised in Germany and Norway, the
systems and processes used to identify and manage the key risks
facing each of our businesses and the Group as a whole, were
reviewed. A number of improvements have been implemented, including
Board and leadership changes, for example appointing the Audit
Committee Chair to the board of GTR, improving bid investment
decision making and ongoing contract compliance monitoring.
A summary of the key risks, discussed and agreed during the
Board's half-year risk review in April 2022, together with their
mitigating actions, are set out below:
External risks
1. Economic environment and society post COVID-19
Slow recovery from the COVID-19 pandemic. Reduction in economic
activity and passenger demand accelerated by the pandemic.
Mitigating actions
-- 90% of revenue currently contract based; discussing continuation of
funding with clients and governments. Main area of exposure is Regional
Bus and Norwegian rail
-- Take all required actions to provide a safe environment and reassure
about public transport and promote it as a safe and accessible form
of travel
-- Continue to focus our operations in more resilient geographical areas
-- Constantly assess the needs of local markets and design services and
products accordingly
-- Optimise the network and cost base through route rationalisation, proactive
cost control and back-office synergies; supported by robust scenario
modelling in Regional Bus
-- Group fuel hedging in place
2. Political and regulatory framework
Changes to the legal and regulatory framework, impact of the UK
leaving the EU, momentum around climate change adaptation, air
quality and decarbonisation agenda, and Bus Back Better national
bus strategy. Increased state control of transport.
Mitigating actions
-- Maintain strong levels of punctuality and customer satisfaction
-- Limit exposure to local authority funding through optimisation of
network and cost base and stimulation of passenger demand
-- Active participation in key industry, trade and government steering
and policy development groups, including the Williams--Shapps Plan
for Rail, Bus Back Better national bus strategy and bus franchising
-- Collaboration and partnership working with local authorities
-- Strong track record on air quality initiatives: electric bus depots
in London, air filtering bus, climate change taskforce,
fleet conversion to cleaner emission standards
-- The climate change strategy which plans how we will both decarbonise
and adapt to climate change
-- Brexit contingency measures in place including increased stock levels
of spare parts maintained across bus and rail, apprenticeships and
colleague engagement plans to support recruitment and retention
Strategic risks
3. Sustainability of UK Rail profits
Failure to retain UK Rail franchises on acceptable terms
Mitigating actions
-- National Rail Contracts (NRCs) reducing revenue and cost risk
-- 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 UK
-- Close involvement through RDG and GTR to influence shape of Passenger
Service Contracts (PSCs)
4. Inappropriate investment
Failure to deliver strategy or make appropriate investment
decisions. Failure to deliver expected returns in International
Rail. Failure to build sufficient investment capability to manage
decarbonisation of the bus fleet and priority adaption mechanisms
to climate change.
Mitigating actions
-- Comprehensive strategic discussions with the Board and advisors
-- Extensive valuation and due diligence, supported by external expertise,
and strong financial discipline when assessing viability of opportunities
-- Review and improvement of Group investment approval process and delegation
of authority
-- Restructure of the German business; early focus on Bavarian mobilisation;
decision to cease business development activities in Germany and rail
business development in new geographies; early focus on Bavarian mobilisation;
negotiating share of revenue risk with Norwegian authorities
-- Seek to renegotiate changes to the contractual arrangements in our
Norwegian rail operations with a view to reducing the Group's exposure
-- Cautious approach to investment opportunities overseas and outside
our core operating areas; clear risk appetite statement that governs
the acceptable level of risk in pursuit of strategic objectives
-- Decarbonisation plan informing discussions with industry partners,
and climate change adaptation plans identifying priority impacts and
mitigating actions
5. Competition
Competition from existing and new market participants, loss of
business to other modes and threats from market disruptors.
Mitigating actions
-- Promote safe use of public transport
-- 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, and offering climate
change (decarbonisation and adaptation) solutions
-- Work in partnership with local authorities and other operators, including
through interoperability
-- Promote multi-modal travel, improving the overall door-to-door experience
for passengers
-- Focus on customer needs and expectations, including improved channels
for ticket purchase and journey planning
Operational risks
6. Catastrophic incident or severe infrastructure failure or
extreme weather
An incident, such as a major accident, an act of terrorism, a
pandemic, or a severe failure of rail infrastructure. Extreme
weather impacts the reliability of services, the level of passenger
demand or the cost of maintaining our infrastructure.
Mitigating actions
-- Rigorous, high-profile health and safety programme throughout the
Group; high levels of safety performance; promotion of safety culture;
and reassurance over the use of public transport
-- Crisis management policy updated and rolled out across the operating
companies
-- Appropriate and regularly reviewed and tested contingency and disaster
recovery plans
-- Thorough and regular training of colleagues
-- Work closely with our industry partners, such as rail infrastructure
provider Network Rail and government agencies
-- COVID-19 has created a precedent for strong Government support to
the industry and reinforced its role within local communities
-- Adaptation of workstreams as part of Climate Change Task Force
7. Employee relations, resource planning and talent
management
Failure to effectively engage with our people and trade unions
in providing reassurance, managing costs, and driving change.
Requirement to drive rail workforce reform could lead to industrial
dispute and service disruption. Failure to attract, retain and
develop talent.
Mitigating actions
-- People Strategy focusing on leadership, talent & succession, management,
culture & organisation, diversity & inclusion and employee experience
-- Succession planning exercise carried out annually
-- Apprenticeship, graduate, and leadership development programmes
-- High level of colleague engagement across our businesses supported
by surveys and action planning; strong response and relationships
during the COVID-19 crisis
-- Robust and regularly reviewed recruitment and retention policies,
training schemes, resource planning and working practices
-- Experienced approach to wage negotiations and proactive engagement
on driver fatigue
-- Proactive management of pension risks including active engagement
with The Pension Regulator and DfT over the review of the Railways
Pension Scheme
-- Widening the recruitment pool through initiatives aimed at attracting
diverse talent, for example through apprenticeships, the Women in
Bus network, active recruitment of female drivers and defining our
employee proposition around ESG and climate change
8. Information technology failure/interruption/security
breach
Prolonged or major failure of the Group's IT systems, or a
significant data breach.
Mitigating actions
-- Data protection officers in place in all operating companies to monitor
Group-wide GDPR compliance and full time 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
-- IT function focused on operational delivery; continued investment in
and maintenance of IT systems across the Group
-- Design Authority Board in place for change control
-- Clear and tested business continuity plans; test scenarios conducted
across the Group
-- Achieved Cyber Essentials standard; GTR successfully audited against
the NIS framework during the year
-- Adoption of cyber security strategy and information security management
(ISMS) framework across the Group, with the publication of monthly
KPIs measuring mitigating measures
9. Mobilisation of International Rail contracts
Failure to fully mobilise contracts within contractual
timescales, especially driver recruitment and delivery of rolling
stock, and to deliver required levels of operational
performance.
Mitigating actions
-- Experienced local teams; ability to mobilise internal UK Rail & Bus
expertise
-- Strengthening of senior leadership team
-- Building strong relationships with local authorities
-- Compliance with strong local regulation; established Safety Management
Systems and Group Safety Audits
-- Governance review of the German bid and mobilisation processes undertaken,
with all lessons learnt categorised into future bid processes and contract
mobilisations
-- Chief Executive of Go-Ahead's German rail operations and restructuring
consultancy are transforming operational performance and delivery in
Germany
-- Remit and scope of Internal Audit is to be expanded, with a clear responsibility
for the compliance functions within our rail businesses
10. Compliance with rail franchise agreements
Failure to comply with contractual obligations.
Mitigating actions
-- Specific annual briefings/updates of key commercial terms to the Board
and wider management team
-- Strengthening of senior leadership team
-- Develop KPIs to monitor contract performance
-- Increase role of group assurance to complement assurance undertaken
at local level
-- Group Audit Committee Chair appointed to UK Rail operating company
board
-- Open and transparent dialogue with contractual counterparty
-- Remit and scope of Internal Audit is to be expanded, with a clear responsibility
for the compliance functions within our rail businesses
Critical accounting judgements and key sources of estimation
uncertainty
The critical accounting judgements and key sources of estimation
uncertainty disclosed on pages 176-181 of the Group Annual Report
and Accounts for the year ended 3 July 2021 continue to apply other
than that relating to expected GBP30.0m financial penalty levied by
the DfT under the Railways Act 1993. The amount payable to the DfT
will be settled from LSER's restricted cash balance and the
unutilised provision has been released and recognised within
exceptional items, see note 5 for further details. In particular,
the key sources of estimation uncertainty associated with the
German and Norwegian rail franchises and contract and franchise
accounting continue to apply. Contract and franchise accounting is
specific to the rail business as disclosed in the segmental
analysis in note 4, with judgements made on a continuing basis.
4. Segmental analysis
The Group's businesses are managed on a divisional basis.
Selected financial data is presented on this basis below.
As outlined in the Group's 2021 Annual Report, for management
purposes, the Group is organised into four reportable segments:
Regional Bus, London & International Bus, UK Rail and
International Rail. International Rail was separated from UK Rail
during 2021 due to the growth of the German and Norwegian
businesses and also due to the different characteristics and
challenges faced between International and UK Rail franchises. The
comparatives for these segments are presented for comparability.
Operating segments are reported to the chief operating decision
maker, considered to be the Group Chief Executive, on a periodic
basis for the purposes of resource allocation and assessment of
segmental performance. Segments are organised based on the
long-term economic characteristics as well as the similar nature of
the business activities and are reported as follows:
The Regional Bus segment comprises UK bus operations outside
London.
The London & International Bus segment 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.
These are aggregated as a segment for internal management purposes
given the similar contractual nature of the services and how these
services are provided, the type of customer, the similar economic
characteristics and the similar regulatory environment. The
operations are also governed and controlled by a distinct
management team.
The UK Rail segment comprises UK Rail operations. The UK Rail
operation, through an intermediate holding company, Govia Limited,
is 65% owned by Go-Ahead and 35% by Keolis and at the half year
includes just GTR. The registered office of Keolis (UK) Limited is
in England and Wales. The UK Rail operating companies have similar
business activities and objectives, to provide passenger rail
services and to achieve a modest profit margin through franchise
agreements. The International Rail segment comprises overseas rail
operations in Germany and Norway. International Rail operations
commenced on 15 June 2019 in Germany and on 15 December 2019 in
Norway. A further contract was being mobilised in Germany as at 1
January 2022. One contract successfully started on 12 December 2021
with the final contract due to commence in December 2022. These
operations are 100% owned by Go-Ahead. These are aggregated as a
single segment for internal management purposes given the similar
business activities and objectives and the fact that they each
operate services under heavily controlled regimes and
specifications, set by the local transport authorities in their
respective countries.
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 by segment and accordingly IFRS
8 does not require this information to be presented. Segment
performance is evaluated based on operating profit or loss, on a
pre and post-exceptional basis as presented below.
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 six months ended 1 January 2022, the
six months ended 2 January 2021 and the year ended 3 July 2021.
Six months ended 1 January 2022 (unaudited)
London
&
Regional International Total International Total Total
Bus Bus Bus UK Rail Rail Rail operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- -------- -------------- ------- --------- ------------- --------- -----------
Passenger revenue 155.6 - 155.6 580.0 37.9 617.9 773.5
Contract revenue 33.4 331.6 365.0 0.2 - 0.2 365.2
Other revenue 38.5 2.1 40.6 79.0 8.9 87.9 128.5
Franchise subsidy - - - 512.3 35.4 547.7 547.7
---------------------------- -------- -------------- ------- --------- ------------- --------- -----------
Segment revenue 227.5 333.7 561.2 1,171.5 82.2 1,253.7 1,814.9
Inter-segment revenue (1.6) (8.4) (10.0) (7.2) - (7.2) (17.2)
---------------------------- -------- -------------- ------- --------- ------------- --------- -----------
Group revenue 225.9 325.3 551.2 1,164.3 82.2 1,246.5 1,797.7
Operating costs (214.2) (299.6) (513.8) (1,153.5) (87.8) (1,241.3) (1,755.1)
---------------------------- -------- -------------- ------- --------- ------------- --------- -----------
Group operating profit
(pre--exceptional items) 11.7 25.7 37.4 10.8 (5.6) 5.2 42.6
Exceptional operating
items - - - 12.5 0.5 13.0 13.0
---------------------------- -------- -------------- ------- --------- ------------- --------- -----------
Group operating profit
(post--exceptional
items) 11.7 25.7 37.4 23.3 (5.1) 18.2 55.6
Share of result of
joint venture (0.3)
Net finance costs (5.2)
---------------------------- -------- -------------- ------- --------- ------------- --------- -----------
Profit before tax and
non--controlling interests 50.1
Tax expense (3.9)
---------------------------- -------- -------------- ------- --------- ------------- --------- -----------
Profit for the period 46.2
---------------------------- -------- -------------- ------- --------- ------------- --------- -----------
Further information on exceptional operating items is disclosed
in note 5.
Inter-segment revenue relates to transactions between the
Group's operating segments and includes rail replacement services
and revenue from intercompany sub-leases.
During the six months ended 1 January 2022, segment revenue of
GBP128.9m (H1'21: GBP113.6m; 2021: GBP234.8m), related to external
customers outside the United Kingdom, from the Singapore and Irish
bus operations and the German and Nordic rail operations.
Six months ended 2 January 2021 (unaudited)
London As
& previously
Regional International Total reported UK International Total Total
Bus2 bus bus UK Rail Restate-ments1 Rail Rail3 Rail operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ------------- ------- ---------- -------------- --------- ------------- --------- ----------
Passenger revenue 122.2 - 122.2 331.3 - 331.3 25.8 357.1 479.3
Contract revenue 36.0 346.7 382.7 0.3 - 0.3 - 0.3 383.0
Other revenue 58.4 0.8 59.2 65.1 - 65.1 2.5 67.6 126.8
Franchise subsidy - - - 1,079.1 0.5 1,079.6 37.4 1,117.0 1,117.0
------------------ -------- ------------- ------- ---------- -------------- --------- ------------- --------- ----------
Segment revenue 216.6 347.5 564.1 1,475.8 0.5 1,476.3 65.7 1,542.0 2,106.1
Inter-segment
revenue (2.1) (11.9) (14.0) (21.4) - (21.4) - (21.4) (35.4)
------------------ -------- ------------- ------- ---------- -------------- --------- ------------- --------- ----------
Group revenue 214.5 335.6 550.1 1,454.4 0.5 1,454.9 65.7 1,520.6 2,070.7
Operating costs (202.2) (298.3) (500.5) (1,431.8) (0.2) (1,432.0) (81.8) (1,513.8) (2,014.3)
------------------ -------- ------------- ------- ---------- -------------- --------- ------------- --------- ----------
Group operating
profit
(pre-exceptional
items) 12.3 37.3 49.6 22.6 0.3 22.9 (16.1) 6.8 56.4
Exceptional
operating
items (0.3) - (0.3) - - - 5.2 5.2 4.9
------------------ -------- ------------- ------- ---------- -------------- --------- ------------- --------- ----------
Group operating
profit
(post-exceptional
items) 12.0 37.3 49.3 22.6 0.3 22.9 (10.9) 12.0 61.3
Share of result
of
joint venture (0.5)
Net finance costs (10.5)
------------------ -------- ------------- ------- ---------- -------------- --------- ------------- --------- ----------
Profit before
tax and
non-controlling
interests 50.3
Tax expense (8.4)
------------------ -------- ------------- ------- ---------- -------------- --------- ------------- --------- ----------
Profit for the
period 41.9
------------------ -------- ------------- ------- ---------- -------------- --------- ------------- --------- ----------
1. Details of the restatements in respect of the period ending 2
January 2021 are explained in note 2, including restatements to the
Group's net finance costs.
2. In addition to the restatements outlined in note 2, the
presentation of Regional Bus revenue for the period ending 2
January 2021 has also been restated in order to disclose this on a
consistent basis with the equivalent disclosure for the period
ending 1 January 2022 and the year ended 3 July 2021. This
restatement's effect is limited to equal and opposite adjustments
to the Regional Bus segment's passenger revenue and inter-segment
revenue lines of GBP14.5m such that the Group revenue line is
unaffected. This restatement removes the revenue pertaining to The
Go-Ahead Group plc's activities as a Group company from each
affected line.
3. International Rail exceptional items have been restated as a
result of the Germany onerous contract provision adjustment, as
outlined in note 2.
Year ended 3 July 2021 (audited)
London
&
Regional International Total International Total Total
bus bus bus UK Rail Rail Rail operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- -------- -------------- --------- --------- ------------- --------- -----------
Passenger revenue 233.6 - 233.6 661.6 50.8 712.4 946.0
Contract revenue 70.6 682.9 753.5 0.5 - 0.5 754.0
Other revenue 127.5 1.6 129.1 132.2 7.2 139.4 268.5
Franchise subsidy - - - 2,071.5 82.2 2,153.7 2,153.7
---------------------------- -------- -------------- --------- --------- ------------- --------- -----------
Segment revenue 431.7 684.5 1,116.2 2,865.8 140.2 3,006.0 4,122.2
Inter-segment revenue (4.0) (23.6) (27.6) (36.1) - (36.1) (63.7)
---------------------------- -------- -------------- --------- --------- ------------- --------- -----------
Group revenue 427.7 660.9 1,088.6 2,829.7 140.2 2,969.9 4,058.5
Operating costs (409.8) (592.4) (1,002.2) (2,773.0) (167.8) (2,940.8) (3,943.0)
---------------------------- -------- -------------- --------- --------- ------------- --------- -----------
Group operating profit
(pre--exceptional items) 17.9 68.5 86.4 56.7 (27.6) 29.1 115.5
Exceptional operating
items (0.2) - (0.2) (32.4) (71.5) (103.9) (104.1)
---------------------------- -------- -------------- --------- --------- ------------- --------- -----------
Group operating profit
(post--exceptional
items) 17.7 68.5 86.2 24.3 (99.1) (74.8) 11.4
Share of result of
joint venture (0.2)
Net finance costs (18.1)
---------------------------- -------- -------------- --------- --------- ------------- --------- -----------
Loss before tax and
non--controlling interests (6.9)
Tax expense (33.8)
---------------------------- -------- -------------- --------- --------- ------------- --------- -----------
Loss for the year (40.7)
---------------------------- -------- -------------- --------- --------- ------------- --------- -----------
The capital expenditure and depreciation charges for the Group
is as follows:
Six months Six months Year to
to to 2 Jul
1 Jan 22 2 Jan 21 21
GBPm GBPm GBPm
Unaudited Unaudited Audited
------------------------------------------------ ---------- ---------- --------
Tangible capital expenditure (excluding leases)
Regional Bus 2.4 24.7 28.5
London & International Bus 2.2 1.1 21.5
UK Rail 1.2 0.8 2.3
International Rail 1.0 0.4 0.6
------------------------------------------------ ---------- ---------- --------
Total 6.8 27.0 52.9
------------------------------------------------ ---------- ---------- --------
Leases capital expenditure
Regional Bus - 7.6 7.9
London & International Bus 9.4 4.6 9.9
UK Rail 0.4 0.5 168.2
International Rail 2.9 0.1 1.0
------------------------------------------------ ---------- ---------- --------
Total 12.7 12.8 187.0
------------------------------------------------ ---------- ---------- --------
Depreciation (excluding right-of-use assets)
Regional Bus 17.9 18.5 37.5
London & International Bus 12.4 14.2 27.6
UK Rail 9.0 9.9 15.3
International Rail 0.6 0.6 1.1
------------------------------------------------ ---------- ---------- --------
Total 39.9 43.2 81.5
------------------------------------------------ ---------- ---------- --------
Right-of-use assets depreciation
Regional Bus 2.8 2.5 5.3
London & International Bus 9.7 10.3 20.2
UK Rail 196.5 234.9 460.6
International Rail 0.2 0.2 0.4
------------------------------------------------ ---------- ---------- --------
Total 209.2 247.9 486.5
------------------------------------------------ ---------- ---------- --------
During the six months to 1 January 2022 the carrying value of
the Group's right-of-use assets fell to GBP148.8m (H1'21:
GBP414.2m; 2021: GBP345.4m). Similarly, in the same period, the
Group's total lease liability fell to GBP125.3m (H1'21: GBP403.4m;
2021: GBP312.6m). These decreases can be primarily attributed to
the planned end dates of the Southeastern and GTR UK Rail
franchises in September 2021 and March 2022 respectively. On 17
October 2021, the LSER franchise ended. On 25 March 2022, it was
announced that GTR had been awarded a National Rail Contract (NRC)
commencing on 1 April 2022 to at least 1 April 2025, with up to a
further three years extension at the Secretary of State's
discretion.
5. Exceptional operating items
This note identifies items of an exceptional nature that have a
significant impact on the results of the Group in the period.
Six months Six months 53 weeks
to to to
1 Jan 2 Jan 3 Jul
22 21* 21
GBPm GBPm GBPm
Unaudited Unaudited Audited
------------------------------------------------ ---------- ---------- --------
Department for Transport settlements, financial
penalty and associated costs relating to LSER
and other historic franchises (12.5) - 32.4
------------------------------------------------ ---------- ---------- --------
Norway franchise onerous contract provision
and asset impairment (0.5) - 76.7
------------------------------------------------ ---------- ---------- --------
Asset impairments and restructuring costs -
Regional Bus - 0.3 0.2
------------------------------------------------ ---------- ---------- --------
Asset impairments, provisions and restructuring
costs - International Rail - (5.2) (5.2)
------------------------------------------------ ---------- ---------- --------
Exceptional operating items (13.0) (4.9) 104.1
------------------------------------------------ ---------- ---------- --------
* In the interim report for the period ending 2 January 2021,
the German onerous contract provision was included in the 'Asset
impairments, provisions and restructuring costs - International
Rail' line. The onerous contract provisions for Germany and Norway
have now been presented separately. The German onerous contract
provision has been restated - see note 2 for further details.
Six months ended 1 January 2022 (unaudited)
Total exceptional operating items in the period ended 1 January
2022 comprised a credit of GBP13.0m to the income statement.
Department for Transport settlements, financial penalty and
associated costs relating to LSER and other historic franchises
A net exceptional credit of GBP12.5m has been recognised during
the period ending 1 January 2022 in relation to the matters of
concern relating to LSER and other historic franchises and LSER
affiliate trading. This consists of amounts relating to settlements
reached with the DfT during the period, the financial penalty and
other associated costs in relation to these matters, as outlined
below.
On 17 March 2022, the Department for Transport announced that it
was imposing a financial penalty on LSER of GBP23.5m due to
breaches of historic franchise agreements. The Group had recognised
a provision of GBP30.0m in relation to this in the Group's 2021
Annual Report. This was recorded as an exceptional operating
charge. The financial penalty will be paid from LSER's restricted
cash balance. The release of GBP6.5m has been recorded as an
exceptional operating credit in the current period.
In addition to this, settlements were reached with the DfT in
relation to the outstanding matters relating to LSER and other
historic franchises, including affiliate trading disputes. This has
resulted in a net credit of GBP12.3m which has been recorded as
exceptional.
This is offset by GBP6.3m of associated legal and professional
costs incurred in relation to this matter.
Norway franchise onerous contract provision and asset
impairment
For the period ending 1 January 2022, a net credit of GBP0.5m
has been recognised in relation to the Norwegian onerous contract
provision.
This is due to further government support being confirmed in
relation to the Norwegian rail franchise by the Railway Directorate
in Norway. As a result of this, a release was made in relation to
the onerous contract provision of GBP2.8m relating to the
additional periods covered by the extended government support.
This is offset by a further provision of GBP2.3m being made at
the reporting date, following a reassessment of the provision. It
was identified during this review that increasing cost pressures
due to higher energy costs and the continuing impacts of the
COVID--19 Omicron variant resulted in an increase of the provision.
Overall, this resulted in a net credit of GBP0.5m in the
period.
The onerous contract provision was recorded as an exceptional
operating charge in the prior year, and therefore the release and
further provision amounts have also been treated as exceptional for
consistency.
Six months ended 2 January 2021 (unaudited)
Total exceptional operating items in the period ended 2 January
2021 comprised a credit of GBP4.9m (restated) to the income
statement.
Asset impairments and restructuring costs - Regional Bus
During the period ended 2 January 2021, further contracts were
terminated in the Regional Bus division resulting in an impairment
charge of GBP1.1m in relation to plant, property and equipment.
This is partially offset by a profit on disposal of assets of
GBP0.8m. During the year ended 27 June 2020, the carrying values of
a number of coaches were impaired, some of which have subsequently
been sold for an amount greater than the impaired carrying value.
This resulted in a profit on disposal and therefore a partial
reversal of the previous exceptional impairment charge.
Asset impairments, provisions and restructuring costs -
International Rail
During the year ended 27 June 2020, freehold land and buildings
were impaired by GBP4.4m in the German rail division and recognised
as an exceptional operating item. In the period ended 2 January
2021, a depot that had previously been impaired was sold for an
amount greater than the previously estimated recoverable amount.
Further, as part of this sale agreement, there is no longer an
obligation to pay break fees relating to the depot which were
provided for at the year-end, and therefore this provision has been
released. This has resulted in an exceptional operating credit of
GBP5.2m in the period ended 2 January 2021.
German Bavaria franchise onerous contract provision
At 3 July 2021 the directors performed a detailed review of all
material contracts across the Group to consider the completeness of
the onerous contract provisions. This involved a detailed review
and challenge of the assumptions within each contract, including
those relating to the year ended 27 June 2020 and the Group's FY21
interim results.
A number of errors were identified in respect of the assumptions
used when calculating the onerous provision in the Bavarian rail
franchise in the prior year and the Group's FY21 interim results.
The provision as at 27 June 2020 was determined to be understated
by GBP36.6m which resulted in a restatement in these financial
statements. Correspondingly there was a reduction of GBP25.9m
charged to the consolidated income statement in the Group's FY21
interim results. The calculation of the understatement was
determined following a review of historical information and
consideration given to what information then available could
reasonable have been included in the previous cash flow assumptions
underpinning the provision.
Year ended 3 July 2021 (audited)
Total exceptional operating items in the year comprised a charge
of GBP104.1m to the income statement.
Department for Transport potential financial penalty and
associated costs relating to LSER
Under the Railways Act 1993, the DfT has the power to impose a
financial penalty in relation to LSER. In the absence of specific
precedent or relevant guidance, it was difficult to precisely
estimate the likely quantum of any penalty. The Group, having
considered independent legal advice received by the Independent
Committee, included a provision of GBP30.0m which reflected the
Group's best estimate of any penalty as at the date of signing the
Group's 2021 Annual Report and Accounts. The Group also recognised
associated legal and professional costs in relation to this of
GBP2.4m.
Asset impairments and restructuring costs - Regional Bus
During the year ended 3 July 2021, an impairment charge of
GBP1.1m was recognised in relation to property, plant and equipment
following the termination of further contracts in Regional Bus.
Further, costs of GBP1.2m were also recognised in relation to loss
making contracts where passenger demand was not recovering at the
same levels as the wider commercial network. This was offset by the
release of restructuring provisions of GBP1.0m and an impairment
reversal of GBP1.1m following the sale of some coaches that were
previously impaired and recognised as exceptional operating charges
during the year ended 27 June 2020.
Asset impairments, provisions and restructuring costs -
International Rail
During the year ended 3 July 2021, a depot that had previously
been impaired was sold for an amount greater than the previously
estimated recoverable amount. Further, as part of this sale
agreement, there was no longer an obligation to pay break fees on
the depot which were provided for as of 27 June 2020, and therefore
this provision was released. This resulted in an exceptional
operating credit of GBP5.2m.
Norway franchise onerous contract provision and asset
impairment
In December 2019, the Group began operating rail services in
Norway, its first contract in this market and the first
commercially run network in the country. After a successful start
to operations, the effects of the COVID-19 pandemic were felt just
three months into this contract. As the contract involves exposure
to changes in passenger demand, the Norwegian Government introduced
a package of financial support early in the COVID-19 crisis,
initially with 100% loss coverage. As the pandemic continued, loss
coverage was reduced from this level down to 85%. The impact of the
reduction and possible cessation of funding, the fixed nature of
the operating requirements and the longer than expected duration of
lower passenger demand following the impact of COVID-19 have
resulted in a reduction of the net economic benefits of the
contract. This is based on the expected future cashflows and a
risk-free discount rate, which triggered the need to reassess the
assumptions made in the onerous contract and impairment models.
This reduction in future revenue resulted in an onerous contract
provision charge of GBP66.2m and asset impairments of GBP10.5m
being recognised at the year end.
As a non-adjusting post balance sheet event in accordance with
IAS 10, in December 2021 government support was subsequently
prolonged to include November 2021 to March 2022. Whilst temporary
support at an equivalent level is in place until March 2022, after
this period the government has indicated further support at an
unconfirmed level may be in place until at least June 2022.
The inclusion of government support at 85% loss coverage from
November 2021 to the end of March 2022 in the calculation of the
onerous contract provision would reduce its size by GBP6.8m. There
is ongoing dialogue with the Government in relation to a possible
renegotiation of the contract.
6. Taxation
a. Tax recognised in the income statement
The total taxation charge recognised in the income statement is
made up as follows:
Six months Six months
to to Year to
1 Jan 2 Jan 3 Jul
22 21 21
GBPm GBPm GBPm
Unaudited Unaudited Audited
-------------------------------------------------- ---------- ---------- --------
Current tax charge 4.7 9.5 21.0
Adjustments in respect of current tax of previous
years - - (0.7)
-------------------------------------------------- ---------- ---------- --------
Total current tax 4.7 9.5 20.3
-------------------------------------------------- ---------- ---------- --------
Deferred tax relating to origination and reversal
of temporary differences in the period at 25%
(3 Jul 2021: 25%; 2 January 2021: 19%) 0.3 (1.1) (1.1)
Adjustments in respect of deferred tax of a
prior period - - 0.2
Impact of opening deferred tax rate (1.1) - 14.4
-------------------------------------------------- ---------- ---------- --------
Total deferred tax (0.8) (1.1) 13.5
-------------------------------------------------- ---------- ---------- --------
Tax reported in the consolidated income statement 3.9 8.4 33.8
-------------------------------------------------- ---------- ---------- --------
The taxation charge has been calculated by applying the
directors' best estimate of the annual effective tax rate to the
profit for the period. The pre-exceptional effective tax rate is
15.4% (H1'21(pre-exceptional): 16.5%; 2021 (pre-exceptional):
35.3%). The pre and post-exceptional effective tax rates include a
GBP1.1m (H1'21: GBPnil; 2021 charge: GBP14.4m) credit in relation
to the UK corporation tax rate change from an opening rate of 19.0%
to a closing rate of 25.0%. This change was substantively enacted
at the balance sheet date. Excluding this charge, the effective tax
rate is 18.3% (H1'21: 16.5%; 2021: 20.5%).
b. Tax recognised in equity
The tax relating to items charged or credited to the statement
of comprehensive income or directly to equity is made up as
follows:
Six months Six months
to to Year to
1 Jan 2 Jan 3 Jul
22 21 21
GBPm GBPm GBPm
Unaudited Unaudited Audited
----------------------------------------------------- ---------- ---------- --------
Tax on remeasurements on defined benefit pension
plans 0.3 (9.2) (5.3)
Deferred tax on cashflow hedges (other comprehensive
income and equity) 1.2 0.9 4.4
Deferred tax on share based payments (taken
directly to equity) - - (0.1)
----------------------------------------------------- ---------- ---------- --------
Tax reported outside of profit or loss 1.5 (8.3) (1.0)
----------------------------------------------------- ---------- ---------- --------
c. Factors affecting future tax charges
The standard rate of UK corporation tax is 19.0% and therefore
19.0% applies to the current tax charge arising during the period
ended 1 January 2022. Legislation advised a UK corporation tax rate
to 25.0% from 1 April 2023 and this rate was applied, where
applicable, to the Group's deferred tax balance as at the balance
sheet date.
7. Earnings per share
Basic and diluted earnings per share
Six months to Six months to Year to
1 Jan 22 2 Jan 21 3 Jul 21
------------------------------------- -------------------------------------- -------------------------------------
Pre- Exceptional Post- Pre- Exceptional Post- Pre- Exceptional Post-
exceptional items exceptional Exceptional* Items* exceptional exceptional items exceptional
Unaudited Unaudited Unaudited Audited Audited Audited Audited Audited Audited
------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Net profit
attributable
to equity
holders
of the
parent
(GBPm) 27.1 9.4 36.5 31.8 4.2 36.0 46.6 (92.6) (46.0)
------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Basic
weighted
average
shares
in issue
('000) 42,934 - 42,934 43,159 - 43,159 42,988 - 42,988
Dilutive
potential
share
options
('000) 201 - 201 15 - 15 142 - 142
------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Diluted
weighted
average
number
of shares in
issue ('000) 43,134 - 43,134 43,174 - 43,174 43,130 - 43,130
------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Earnings per
share:
Basic
earnings
per share
(pence
per share) 63.1 21.9 85.0 73.7 9.7 83.4 108.4 (215.4) (107.0)
Diluted
earnings
per share
(pence
per share) 62.8 21.8 84.6 73.7 9.7 83.4 108.0 (214.7) (106.7)
------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
* Restated (see note 2). Earnings per share has been restated
due to impact of restatements to profit and loss.
The weighted average number of shares in issue excludes treasury
shares held by the Company, and shares held in trust for the Long
Term Incentive Plan (for executive directors only) and the Deferred
Share Bonus Plan (for executive directors and certain other senior
employees).
No shares were bought back and cancelled by the Group in the
period from 2 January 2022 to 26 April 2022.
8. Pensions
Retirement benefit assets consist of the following:
1 Jan 22 3 Jul 21
---------------------------------- -----------------------------
Bus Rail Total Bus Rail Total
GBPm GBPm GBPm GBPm GBPm GBPm
Unaudited Unaudited Unaudited Audited Audited Audited
------------------------------ ---------- ---------- ---------- -------- -------- ---------
Pre-tax pension scheme asset 40.8 - 40.8 36.0 - 36.0
Deferred tax liability (10.2) - (10.2) (9.0) - (9.0)
------------------------------ ---------- ---------- ---------- -------- -------- ---------
Post-tax pension scheme asset 30.6 - 30.6 27.0 - 27.0
------------------------------ ---------- ---------- ---------- -------- -------- ---------
The net surplus before taxation on the bus defined benefit
scheme was GBP40.8m (3 July 2021: surplus of GBP36.0m), consisting
of estimated assets of GBP929.5m (3 July 2021: GBP906.0m) less
liabilities of GBP888.7m (3 July 2021: GBP870.0m).
The net deficit before taxation on the rail schemes was GBPnil
(3 July 2021: GBPnil). The nature of these schemes means at the end
of the franchise, any deficit or surplus in the schemes 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.
The net surplus/deficit on the pension schemes was calculated
based on the following assumptions.
Six months
to Year to
1 Jan 3 Jul
22 21
% %
Unaudited Audited
----------------------------------------------------- ---------- --------
Retail price index inflation 3.4 3.2
Consumer price index inflation 3.0 2.7
Discount rate 1.8 1.8
Rate of increase in salaries* n/a n/a
Rate of increase of pensions in payment and deferred
pension 2.9 2.7
----------------------------------------------------- ---------- --------
* For rail pension schemes only (the defined benefit section of
the bus scheme is closed to future accrual for all members).
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.
1 Jan 22 3 Jul 21
---------------------- ------------------
Bus Rail Bus Rail
Years Years Years Years
Unaudited Unaudited Audited Audited
--------------------------------------- ---------- ---------- -------- ----------
Pensioner 21 21 21 21
Non-Pensioner 22 22 22 22
--------------------------------------- ---------- ---------- -------- ----------
Sensitivity analysis
The following is an approximate sensitivity analysis of the
impact of the change in the key assumptions for the bus scheme
calculated as at 3 July 2021. In isolation the following
adjustments would adjust the pension (deficit)/surplus as
shown.
Bus
2021
Pension
surplus/
deficit)
%
------------------------------------------------------------ ---------
Discount factor - increase of 0.5% (7.9)
Price inflation - increase of 0.5% 7.4
Rate of increase of pension in payment - increase of 0.5% 4.1
Increase in life expectancy of pensioners or non-pensioners
by 1 year 4.2
------------------------------------------------------------ ---------
9. Notes to the cashflow statement
Analysis of Group net debt (unaudited)
Cash and Syndicated GBP250m Euro
cash loan Lease Sterling financing
equivalents facility liabilities Bond facilities Total
GBPm GBPm GBPm GBPm GBPm GBPm
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
--------------------------- ------------ ---------- ------------ ---------- ----------- ----------
At 3 July 2021 630.6 (126.7) (312.6) (256.2) (13.2) (78.1)
Net cashflow (excluding
interest) (241.8) 37.2 205.3 - 0.5 1.2
Interest (received)/paid (0.2) 0.4 2.4 6.3 0.1 9.0
Inception of new leases - - (18.0) - - (18.0)
Interest income/(expense) 0.2 (0.5) (2.4) (3.1) (0.1) (5.9)
Effect of foreign exchange
rate changes 0.1 1.8 - - 0.3 2.2
--------------------------- ------------ ---------- ------------ ---------- ----------- ----------
At 1 January 2022 388.9 (87.8) (125.3) (253.0) (12.4) (89.6)
--------------------------- ------------ ---------- ------------ ---------- ----------- ----------
Cash and cash equivalents include overdrafts amounting to
GBP388.9m (3 July 2021: GBP630.6m).
On 16 July 2014, the Group entered into a GBP280.0m syndicated
loan facility. The loan facility is unsecured and interest is
charged at SONIA + margin, where the margin is dependent upon the
gearing of the Group. The original facility was for a period of
five years and has had a number of extensions, the most recent of
which was agreed in July 2021, extending the maturity to July 2025
with a value of GBP240.0m in the final year.
On 6 July 2017, the Group raised a GBP250m bond of seven years
maturing on 6 July 2024 with a coupon rate of 2.5%.
On 24 October 2017, the Group's subsidiary, Go-Ahead
Verkehrsgesellschaft Deutschland GmbH, entered into an EUR8.0m
one-year revolving credit facility. The facility is unsecured and
interest is charged at 2.1% plus EURIBOR.
On 24 October 2017, the Group's subsidiary, Go-Ahead Facility
GmbH, entered into a EUR10.6m 10.5-year loan which subsequently
increased to EUR10.85m. The loan is secured against the German land
and buildings included within property, plant and equipment.
Interest is charged at a fixed rate of 2.79%.
Group net debt excludes unamortised issue costs of GBP1.4m (3
July 2021: GBP1.6m).
As at 1 January 2022 balances amounting to GBP253.8m (H1'21:
GBP426.1m; 3 July 2021: GBP543.7m) were restricted, including
amounts to cover deferred income for season tickets sold in advance
of GBP12.2m (H1'21: GBP16.2m; 1 July 2021: GBP18.3m) and amounts
held by rail companies which can only be distributed up to the
value of distributable reserves, subject to DfT dispensation.
10. Dividends paid and proposed
Six months Six months
to to Year to
1 Jan 2 Jan 3 Jul
22 21 21
GBPm GBPm GBPm
Unaudited Unaudited Audited
--------------------------------------------- ---------- ---------- --------
Declared and paid during the period
Equity dividends on ordinary shares:
Final dividend for 2021: nil per share (2020: - - -
nil per share)
Interim dividend for 2021: nil per share - - -
--------------------------------------------- ---------- ---------- --------
- - -
--------------------------------------------- ---------- ---------- --------
Six months Six months
to to Year to
1 Jan 2 Jan 3 Jul
22 21 21
GBPm GBPm GBPm
Unaudited Unaudited Audited
------------------------------------------------- ---------- ---------- --------
Dividend proposed (not recognised as a liability)
Equity dividends on ordinary shares:
------------------------------------------------- ---------- ---------- --------
Interim dividend for 2022: nil per share (2021: - - -
nil per share)
------------------------------------------------- ---------- ---------- --------
11. Assets classified as held for sale
At 1 January 2022, assets held for sale had a carrying value of
GBP0.1m (3 July 2021: GBP3.2m) and related to property, plant and
equipment. Assets held for sale, relating to bus rolling stock, had
a carrying value of GBPnil (3 July 2021: GBP3.1m). Assets held for
sale, relating to land and buildings, had a carrying value of
GBP0.1m (3 July 2021: GBP0.1m).
12. Derivatives and financial instruments
a. Fair values
The fair values of the Group's financial derivatives carried in
the financial statements have been reviewed as at 1 January 2022
and 3 July 2021 and are as follows:
1 Jan 3 Jul
22 21
GBPm GBPm
---------------------------------------------------------- ----- -----
Non-current financial assets: fuel price derivatives 5.1 3.4
Current financial assets: fuel price derivatives 7.9 4.9
---------------------------------------------------------- ----- -----
13.0 8.3
---------------------------------------------------------- ----- -----
Current financial liabilities: fuel price derivatives - (0.6)
Non-current financial liabilities: fuel price derivatives (0.2) (0.3)
---------------------------------------------------------- ----- -----
(0.2) (0.9)
---------------------------------------------------------- ----- -----
Net financial derivatives 12.8 7.4
---------------------------------------------------------- ----- -----
The fair value of all other financial assets and liabilities is
not significantly different from their carrying amount, with the
exception of the GBP250.0m sterling 7 year bond which has a fair
value of GBP246.8m (3 July 2021: GBP257.6m) but is carried at its
amortised cost of GBP250.0m (3 July 2021: GBP250.0m). The fair
value of the GBP250m sterling 7 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 cash flows 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 1 January 2022, 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. There
are a small number of foreign currency hedges in place as at 1
January 2022. The foreign currency hedge valuations are based on
the external MtM valuations and are currently not material to the
Group.
During the period ended 1 January 2022 and year ended 3 July
2021, 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.
Bus
As at 1 January 2022 the Group had derivatives against UK bus
fuel of 180 million litres for the three and a half years ending
June 2024. The fair value of the asset or liability has been
recognised on the balance sheet. The value has been generated since
the date of acquisition of the instruments due to the movement in
market fuel prices.
As at 1 January 2022 the Group's external hedging profile is as
follows:
H2'22 2023* 2024* 2025*
----------------------------------------------- ----- ----- ----- -----
Actual percentage of forecast usage externally
hedged Fully 76% 39% 12%
Litres hedged (million) 53.8 80.6 38.4 10.8
Price (pence per litre) 32.8 34.4 33.6 38.9
----------------------------------------------- ----- ----- ----- -----
* Assuming consistent usage and that hedging is completed at 1 January 2022 market price
The movement during the six months ended 1 January 2022 on the
hedging reserve was GBP7.2m credit (net of tax) (H1'2021: GBP1.4m
debit (net of tax)) taken through other comprehensive income.
13. Provisions
Onerous
Franchise contract Uninsured
commitments provisions claims DfT Penalty Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
--------------------------- ------------ ----------- ---------- ----------- ---------- ----------
At 3 July 2021 83.5 100.3 47.9 30.0 13.7 275.4
Provided 2.7 2.3 10.1 - 1.5 16.6
Utilised (9.9) (9.7) (6.8) - (0.8) (27.2)
Released (0.5) (2.8) (3.8) (6.5) (0.2) (13.8)
On transfer of franchise (6.2) - - - - (6.2)
Effect of foreign exchange
rate changes - (0.7) - - - (0.7)
--------------------------- ------------ ----------- ---------- ----------- ---------- ----------
At 1 January 2022 69.6 89.4 47.4 23.5 14.2 244.1
--------------------------- ------------ ----------- ---------- ----------- ---------- ----------
1 Jan 3 Jul
22 21
GBPm GBPm
Unaudited Audited
------------ ---------- --------
Current 132.7 159.1
Non-current 111.4 116.1
------------ ---------- --------
244.1 275.2
------------ ---------- --------
Franchise commitments of GBP69.5m (3 July 2021: GBP83.5m)
comprise dilapidation provisions on vehicles, depots and stations,
mainly across LSER and GTR rail franchises. At both 1 January 2022
and 3 July 2021, all franchise commitment provisions were
categorised as current.
Onerous contract provisions of GBP89.4m (3 July 2021: GBP100.3m)
primarily relate to the Norwegian rail franchise and the German
Bavarian rail franchise. A review of each contract was performed at
the reporting date. Of the onerous contract provisions, GBP21.2m (3
July 2021: GBP28.1m) is classified as current, with GBP68.2m (3
July 2021: GBP72.2m) as non-current.
Uninsured claims represent the cost to the Group to settle
claims for incidents occurring prior to the balance sheet date,
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, GBP14.1m (3 July 2021:
GBP13.5m) are classified as current and GBP33.4m (3 July 2021:
GBP34.4m) 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.
The provision for DfT financial penalty relates to the penalty
of GBP23.5m (3 July 2021: GBP30.0m) due to the Department for
Transport, of which GBP23.5m (3 July 2021: GBP30.0m) is classified
as current. Under the Railways Act 1993, the DfT has the power to
impose a financial penalty in relation to LSER in relation to the
historic matters of concern. The DfT announced it was imposing this
penalty on 17 March 2022 and therefore GBP6.5m has been released in
the period.
The other provisions of GBP14.2m (3 July 2021: GBP13.7m) include
dilapidations in the Bus division of GBP13.6m (3 July 2021:
GBP13.5m), of which GBP3.8m (3 July 2021: GBP4.0m) are classified
as current and GBP9.8m (3 July 2021: GBP9.5m) are classified as
non-current, and other current legal provisions of GBP0.6m (3 July
2021: GBP0.2m) the International Rail division. It is expected that
the dilapidation costs will be incurred within two to six 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.
14. Commitments and contingencies
Capital commitments
Capital commitments contracted but not provided at 1 January
2022 were GBP34.9m (3 July 2021: GBP26.0m).
Performance bonds and other guarantees
The Group has provided bank guaranteed performance bonds of
GBP39.1m (3 July 2021: GBP37.5m), a loan guarantee bond of GBP36.3m
(3 July 2021: GBP36.3m) and season ticket bonds of GBP50.6m (3 July
2021: GBP66.5m) in favour of the DfT in support of the Group's rail
franchise operations. In addition, the Group, together with Keolis,
has a joint parental company commitment to provide funds of
GBP136.4m (3 July 2021: GBP136.4m) to the DfT in respect of the
Govia Thameslink Railway franchise, of which Group has a 65% share
equating to GBP88.7m (3 July 2021: GBP88.4m). At the period end
GBPnil (3 July 2021: GBPnil) has been provided.
To support subsidiary companies in their normal course of
business, the Group has indemnified certain banks and insurance
companies who have issued certain performance bonds and a letter of
credit. The letter of credit at 1 January 2022 is GBP55.1m (3 July
2021: GBP59.8m).
The Group has a bond of $4.2m SGD (3 July 2021: $4.2m SGD) in
favour of the Land Transport Authority of Singapore in support of
the Group's Singapore bus operations. At the period end exchange
rate this equates to GBP2.3m (3 July 2021: GBP2.3m).
The Group has bonds of EUR33.8m (3 July 2021: EUR34.5m) in
favour of the local rail authorities in support of the Group's
German rail operations. At the period end exchange rate these
equate to GBP30.1m (3 July 2021: GBP29.6m). The Group has provided
parental company guarantees to provide funds of EUR200.6m (3 July
2021: EUR158.2m) in respect of the Germany operations, of which
EURnil (3 July 2021: EURnil) has been provided for at period end.
At the period end exchange rate this equates to GBP168.5m (3 July
2021: GBP135.7m).
The Group has bonds of EUR10.0m (3 July 2021: EUR10.0m) in
favour of the National Transport Authority in Ireland in support of
the Group's Irish bus operations. At the period end exchange rate
this equates to GBP8.4m (3 July 2021: GBP8.6m).
The Group has bonds of 271.3m NOK (3 July 2021: 271.3m NOK) in
favour of the local rail authorities in Norway in support of the
Group's Nordic rail operations. At the period end exchange rate
this equates to GBP22.8m (3 July 2021: GBP22.8m). The Group has
provided a parental company guarantee to provide funds of 300.0m
NOK (3 July 2021 300.0m NOK) in respect of the Norway operations,
of which EURnil (2021: EURnil) has been provided for at year end.
At the year end exchange rate this equates to GBP25.2m (3 July
2021: GBP25.2m).
Contingent liabilities
Boundary Zone Fare proceedings against London & Southeastern
Railway Limited (LSER)
On 27 February 2019 a Collective Proceedings Application (CPA)
was filed at the Competition Appeal Tribunal (CAT) under Section
47B of the Competition Act 1998 against one of the Group's
subsidiary companies, LSER. The Go-Ahead Group plc and Govia
Limited have since also been added as defendants to the claim. The
claim alleges that the company failed to make Boundary Zone Fares
sufficiently available to those rail passengers who held TfL
travelcards across its multiple sales channels and failed to ensure
that customers were aware of these. Equivalent applications were
made against South West Trains and South Western Railway.
The CAT heard the Application for a Collective Proceedings Order
(CPO) between 9 and 12 March 2021. This hearing was an initial
stage in proceedings to decide whether this is a claim that meets
the legislative criteria for this type of claim to proceed to a
full trial.
On 19 October 2021, notice of the CPO judgement was received and
the claim was certified, meaning it can proceed to trial as a
collective proceeding (the Decision). LSER requested the CAT's
permission to appeal the Decision on 8 November 2021, and the CAT
refused to give such permission at a case management conference on
18 November 2021. LSER has since been granted permission by the
Court of Appeal to appeal the Decision. LSER's appeal will be heard
in June 2022.
The Proceedings remain at an early stage. Certification of the
claim to proceed (subject to LSER's appeal) is an initial
procedural step and does not entail any judgement on the merits of
the claim or on the defendant's potential liability. The claim is
disputed in respect of its technical merits and the basis of the
claim appears to be an initial estimate with assumptions that
cannot initially be substantiated. At this early stage of the
Proceedings, prior to consideration of the substantive merits of
the claim and the filing of full pleadings and evidence, it is not
yet possible to assess the likely outcome of the case, or to
quantify any potential liability of LSER. No provision associated
with the claim (other than legal costs) has accordingly been
made.
There is no legal precedent both in respect of this type of
claim or how it would be valued if found to be a valid claim.
Accordingly, the Group cannot make a reliable estimate of any
contingent liability in respect of this matter at the time of
publishing the Annual Report and Accounts
Pricing practices proceedings against Govia Thameslink Railway
Limited (GTR), The Go-Ahead Group plc and others
On 10 June 2021 a CPA was filed at the Competition Appeal
Tribunal (CAT) under Section 47B of the Competition Act 1998,
against one of the Group's subsidiary companies, GTR, as well as
The Go-Ahead Group plc and Keolis (UK) Limited (together, the
Proposed Defendants). The proposed collective proceedings would
combine claims against the Proposed Defendants caused by alleged
infringements of the Chapter II prohibition on abuse of dominance
in Section 18 of the Competition Act 1998 in respect of alleged
loss suffered by rail passengers travelling on the London-Brighton
mainline as a result of pricing and other practices of GTR.
Proceedings are at an early stage (and at an earlier stage than
the collective proceedings against LSER in respect of Boundary Zone
Fares, see above). Before the claim can proceed to a full trial the
CPA must be heard to decide whether this is a claim that meets the
legislative criteria for this type of claim. That hearing has been
listed for July 2022. Should the CPA be granted the DfT has
permission to intervene.
At the initial Case Management Conference held in December 2021
it was determined that GTR's response to the CPA and any
accompanying witness evidence be filed in February 2022. GTR has
since filed its response, and the Proposed Class Representatives
have filed a Reply.
The claim is disputed in respect of its technical merits and the
basis of the claim appears to be an initial estimate with
assumptions that cannot be substantiated by GTR at this stage. It
is therefore not yet possible to assess with any certainty the
likely outcome of this case, or to quantify any potential liability
of GTR. No provision associated with the claim (other than legal
costs) has accordingly been made. There is no legal precedent both
in respect of this type of claim or how it would be valued if found
to be a valid claim. Finally, determining how such a claim would be
allocated amongst the various parties, and other stakeholders
including the Department for Transport (DfT), is highly
uncertain.
Accordingly, the Group cannot make a reliable estimate of any
contingent liability in respect of this matter at the time of
publishing the Annual Report and Accounts.
Boundary Zone Fare proceedings against Govia Thameslink Railway
Limited (GTR) and others
On 24 November 2021 a Collective Proceedings Application was
filed at the Competition Appeal Tribunal (CAT) under Section 47B of
the Competition Act 1998, against one of the Group's subsidiary
companies, GTR, as well as Govia Limited, The Go-Ahead Group plc
and Keolis (UK) Limited. The claim alleges, similarly to the
allegations made against LSER in relation to Boundary Zone Fares,
that the company failed to make Boundary Zone Fares sufficiently
available to those rail passengers who held TfL travelcards across
its multiple sales channels and failed to ensure that customers
were aware of these.
On 15th December 2021 the CAT stayed proceedings pending the
determination of any appeals in the Boundary Zone Fare proceedings
against LSER. Following this stay, and before the claim can proceed
to a full trial, the Collective Proceedings Application must be
heard to decide whether this is a claim that meets the legislative
criteria for this type of claim to proceed to a full trial. That
hearing has not yet been scheduled. This means that proceedings are
at an earlier stage than both the collective proceedings against
LSER in relation to Boundary Zone Fares, and the proceedings
against GTR in respect of pricing practices on the London-Brighton
mainline (see above).
The claim is disputed in respect of its technical merits and the
basis of the claim appears to be an initial estimate with
assumptions that cannot initially be substantiated. It is not yet
possible to assess with any certainty the likely outcome of this
case, or to quantify any potential liability of GTR.
There is no legal precedent both in respect of this type of
claim or how it would be valued if found to be a valid claim.
Finally, determining how such a claim would be allocated amongst
the various parties, and other stakeholders including the
Department for Transport (DfT), is highly uncertain.
Accordingly, the Group cannot make a reliable estimate of any
contingent liability in respect of this matter at the time of
publishing the Annual Report and Accounts.
15. Own shares reserve
The reserve for own shares is in respect of 4,088,044 (03 July
2021: 4,094,851) ordinary shares (8.7% of share capital), of which
185,814 (03 July 2021: 192,621) 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 six months ended 1 January 2022 the Company has
repurchased 42,882 shares (3 July 2021: 57,176). No shares were
cancelled in the period (3 July 2021: no shares cancelled).
16. Reconciliation of alternative performance measures
(APMs)
The Group uses a number of alternative performance measures
(APMs) throughout the Annual Report and Accounts. Management
believes that adjusting for these items provides an alternate
understanding of the Group's operating performance and financial
position.
The APMs used by the Group are disclosed below:
Operating profit pre-exceptional items
Exceptional operating items represent material items of revenue
or expenses because of the size or nature and the expected
infrequency of the events giving rise to them. This metric is a key
metric reviewed by management and adjusting operating profit for
exceptional items gives an alternative understanding of the Group's
recurring performance.
Reconciliation of pre and post-operating profit:
Six months Six months
to to Year to
1 Jan 2 Jan 3 July
22 21* 21
GBPm GBPm GBPm
Unaudited Unaudited Audited
-------------------------------------------------- ---------- ---------- --------
Operating profit 55.6 61.3 11.4
Exceptional items:
- Department for Transport financial penalty
and associated costs relating to LSER and other
historic franchises (12.5) - 32.4
- Norway franchise onerous contract provision
and asset impairment (0.5) - 76.7
- Asset impairments and restructuring costs
- Regional Bus - 0.3 0.2
- Asset impairments, provisions and restructuring
costs - International Rail - (5.2) (5.2)
-------------------------------------------------- ---------- ---------- --------
Operating profit pre-exceptional items 42.6 56.4 115.5
-------------------------------------------------- ---------- ---------- --------
* Restated. Details of the restatements and the impact on the
above table in respect of the six months to 2 January 2021 are
explained in note 2.
A summary of the impact of the exceptional items on other
statutory measures can be seen in the consolidated income
statement.
Headroom on facilities plus unrestricted cash
Headroom on facilities plus unrestricted cash is the total
amounts available on the facilities listed below, added to the
value of unrestricted cash available as of the year-end date, as
shown below. This is a key metric reviewed by management to help
assess the liquidity of the Group.
Six months Six months
to to Year to
1 Jan 2 Jan 3 July
22 21 21
GBPm GBPm GBPm
Unaudited Unaudited Audited
--------------------------------------------- ---------- ---------- --------
Syndicated loans 280.0 280.0 280.0
GBP250m sterling seven-year bond 250.0 250.0 250.0
Euro financing facilities 14.3 17.0 13.2
--------------------------------------------- ---------- ---------- --------
Total core facilities 544.3 547.0 543.2
Amount drawn down at period end 350.1 410.9 389.8
--------------------------------------------- ---------- ---------- --------
Headroom on facilities 194.2 136.1 153.4
Unrestricted cash 135.1 114.7 86.9
--------------------------------------------- ---------- ---------- --------
Headroom on facilities and unrestricted cash 329.3 250.8 240.3
--------------------------------------------- ---------- ---------- --------
EBITDA
The Group's primary financial covenant under the syndicated
facility is a ratio of adjusted net debt to EBITDA (excluding
exceptional items and on a pre-IFRS 16 basis) of no more than 3.5x.
EBITDA (excluding exceptional items) is defined as earnings before
interest, tax, depreciation, amortisation and impairment and
excludes exceptional items.
Reconciliation of EBITDA (IFRS 16 basis):
As previously
reported As restated
Six months six months six months
to to to Year to
1 Jan 2 Jan 2 Jan 3 July
22 21 21 21
GBPm GBPm GBPm GBPm
Unaudited Unaudited Restatements* Unaudited Audited
------------------------------------ ---------- ------------- ------------- ----------- --------
(Loss)/profit after tax 46.2 16.2 25.8 41.9 (40.7)
Exceptional items (13.0) 21.0 (25.9) (4.9) 104.1
Net finance costs 5.2 10.0 0.5 10.5 18.1
Tax expense 3.9 8.4 - 8.4 33.8
Depreciation of property, plant and
equipment 39.9 43.2 - 43.2 81.6
Depreciation of right of use assets 209.2 247.9 - 248.0 486.5
Amortisation of intangibles 2.1 3.3 - 3.3 6.3
Share of JV result 0.3 0.5 - 0.5 0.2
Asset impairment 0.2 - - - 5.7
Investment impairment - - - - -
------------------------------------ ---------- ------------- ------------- ----------- ----------
EBITDA 294.0 350.5 0.4 350.9 695.6
------------------------------------ ---------- ------------- ------------- ----------- --------
* Restated. Details of the restatements and the impact on the
above table in respect of the six months to 2 January 2021 are
explained in note 2.
The impact of IFRS16 on EBITDA is GBP211.2m. The pre-IFRS 16
EBITDA was GBP82.8m (H1'21: GBP98.5m).
Adjusted net debt
Adjusted net debt excludes restricted cash. Bank covenants
continue to be assessed on a pre-IFRS16 basis.
Reconciliation of adjusted net debt:
Six months Six months
to to Year to
1 Jan 2 Jan 3 July
22 21 21
GBPm GBPm GBPm
Unaudited Unaudited Audited
----------------------------- ---------- ---------- --------
Cash 388.9 540.8 630.6
Bank borrowing (350.1) (410.9) (389.9)
Finance lease creditor (2.3) (3.6) (2.9)
----------------------------- ---------- ---------- ----------
Net cash pre-IFRS16 36.5 126.3 237.8
----------------------------- ---------- ---------- --------
Restricted cash (253.8) (426.2) (543.7)
----------------------------- ---------- ---------- --------
Adjusted net debt pre-IFRS16 (217.3) (299.9) (305.9)
----------------------------- ---------- ---------- --------
17. Related party transactions
There are no related party transactions or changes since the
last year end that could have a material effect on the Group's
financial position or performance for the period.
18. Post balance sheet events
UK Rail
On 25 March 2022 the Department for Transport (DfT) awarded a
National Rail Contract (NRC) to Govia Thameslink Railway (GTR) to
continue operating the Thameslink, Southern and Great Northern rail
services, the UK's largest railway network. The new contract
commenced on 1 April 2022 and will run until at least 1 April 2025,
with the option to extend until 2028.
GTR will earn a fixed management fee of GBP8.8m per annum
(equivalent to a margin of 0.5% of GTR's cost base) to deliver the
contract, with an additional performance fee of up to GBP22.9m per
annum (equivalent to an additional 1.35% margin). Subject to the
achievement of performance targets set by the DfT, the maximum fee
receivable by GTR would therefore be GBP31.7m per annum (equivalent
to a margin of around 1.85%).
London & International Bus
On 1 April 2022, the Group's subsidiary, Go-ahead Sverjge AB
acquired 100% shareholding in Flexbuss Sverige AB, a bus company in
Sweden for a consideration for GBP11.7m.
On the 12 April 2022, the Group also acquired 100% shareholding
in Netcourt Properties Limited, a transaction to acquire land for
depot development for a cash consideration of GBP13.5m. This asset
will be used by Go Ahead London.
Board changes
The Interim Group Chief Finance Officer, Gordon Boyd, who was
appointed to the Board in September 2021, left the Group as planned
on 28 March 2022. A new Group Chief Financial Officer, Sarah
Mussenden, will join the Group on 9 May 2022.
Responsibility and cautionary statements
Responsibility statements
We confirm that to the best of our knowledge:
-- the interim financial statements, which have been prepared in accordance
with IAS 34 'Interim Financial Reporting', give a true and fair view
of the assets, liabilities, financial position and profit or loss of
The Go-Ahead Group plc as required by the Financial Conduct Authority's
Disclosure and Transparency Rules ('DTR') 4.2.4R;
-- the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first
six months and description of principal risks and uncertainties for
the remaining six months of the year); and
-- the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions and
changes therein).
The directors of The Go-Ahead Group plc are listed in the Group
Annual Report and Accounts for the year ended 3 July 2021.
Following the conclusion of the Group's General Meeting on 28 March
2022, Gordon Boyd resigned from the Board as Interim Chief
Financial Officer. A list of current directors is maintained on
Go-Ahead's website: www.go-ahead.com.
By order of the Board
Christian Schreyer
Group Chief Executive Officer
26 April 2022
Cautionary statement
This report is addressed to shareholders of The Go-Ahead Group
plc and has been prepared solely to provide information to them and
should not be relied on by any other party or for any other
purpose.
This half yearly report is intended to inform the shareholders
of the Group's performance during the six months to 1 January 2022
and this report and the announcement under which it was released do
not constitute an invitation to underwrite, subscribe for, or
otherwise acquire or dispose of any Go-Ahead Group shares or other
securities. This report contains forward looking statements based
on knowledge and information available to the directors at the date
the report was prepared. These statements should be treated with
caution due to the inherent uncertainties underlying any such
forward looking information and any statements about the future
outlook may be influenced by factors that could cause actual
outcomes and results to be materially different.
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
Head Office
The Go-Ahead Group plc
4 Matthew Parker Street
London
SW1H 9NP
Tel switchboard: 0191 232 3123
Joint Corporate Broker
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
Joint Corporate Broker
Peel Hunt LLP
7th Floor, 100 Liverpool St
London
EC2M 2AT
Registrar
Equiniti Ltd
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Tel: 0371 384 2193*
* Lines are open 9.00am to 5.00pm, Monday to Friday (excluding
public holidays in England and Wales).
Auditor
Deloitte LLP
1 New Street Square
London
EC4A 3HQ
Principal Banker
The Royal Bank of Scotland plc
Corporate Banking
9th Floor
280 Bishopsgate
London
EC2M 4RB
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END
IR GZGZDFVKGZZZ
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