Go-Ahead in fast lane as it unveils record profits
PUBLIC transport giant Go-Ahead says it is firing on all cylinders as it beat both the market’s and its own expectations to announce record £131m profits and a 20% jump in revenues.
The group, which includes bus, rail and aviation interests, is reaping the rewards seen across the sector as the credit crunch drives commuters out of their cars.
Go-Ahead, which has its financial base in Newcastle, announced a 20.4% annual increase in revenue to £2.2bn and reported a 19.1% hike in underlying pre-tax profits to £131.1m, beating the market’s forecast of £118m for the year to June 28.
Finance director Nick Swift said: “We’ve got 12 groups and all have improved their earnings year on year. We’ve enjoyed pretty strong demand for bus and rail services.
“People are increasingly using our services. It is much more expensive by car. People are switching modes of transport.”
Go-Ahead employs more than 27,500 people and operates bus services in the North East, South East, London, South West and the Isle of Wight, plus rail franchises in the South and Midlands and has ground-handling aviation interests. It disposed of its under-
performing Go West Midlands bus
operation and added the London
Midland and Gatwick Express rail
franchises during the financial year.
Mr Swift says investment to modernise its services is paying dividends.
“People who haven’t been on a bus or train for a while are finding it is much better. Crucially, it tends to arrive on time. The sector and our company has never been better.”
Bus fuel costs rose by around £8m, with prices increasing from 26.4p/litre last year to 33.7p/litre this year. It uses around 110m litres annually and has hedged all of next year’s expected fuel consumption at an average price of 43p/litre.
Work has also started with bus drivers to improve fuel efficiency.
“Fuel consumption is very heavily dependent on the way people drive. We have been investing in black box technology, that gives the profile of optimal travel and shows how people drive against the optimal,” said Mr Swift.
Fares on bus networks outside London increased by 5% to 6% and rail fares have been hiked by to 8% to offset fuel price rises.
Go-Ahead is now the UK’s busiest rail operator, carrying around 30% of the country’s rail passengers and this was its fastest growing division.
“Our priorities are in rail. We have the renewal of our Southern franchise coming up and we are pretty keen to retain that. In buses, we are looking at typically smaller bolt-on operations,” said Mr Swift.
The group’s interests are all UK-based and although looking
at overseas opportunities, Mr Swift said he was in no hurry invest abroad.
Go-Ahead’s head office is now in London but Mr Swift insisted the Tyneside office remains at the heart of the business.
“We are absolutely committed to keeping our finance office in Newcastle. The team there really is outstanding.”
A final dividend of 55.5p per share was recommended, giving a final dividend of 81p. The annual dividend has increased by 324% since 2003.
