18th Feb 2005 07:02
Go-Ahead Group PLC18 February 2005 18 February 2005 THE GO-AHEAD GROUP PLC ("GO-AHEAD") INTERIM RESULTS FOR THE SIX MONTHS ENDED 1 JANUARY 2005 Go-Ahead is one of the UK's leading providers of passenger transport managementservices operating in the bus, rail, parking and aviation sectors. Employingover 19,000 staff across the country, around 700 million passenger journeys areundertaken on its services each year and customers include Transport for London,BAA, major airlines, local authorities and the Strategic Rail Authority. HIGHLIGHTS •Turnover, including joint venture, increased to £637.9 million (2004 - £633.8 million) •Pre-tax profits, before goodwill and exceptional items, rose to £49.6 million (2004 - £47.0 million) •Adjusted earnings per share, excluding goodwill and exceptional items increased to 59.5p (2004 - 55.7p) •Interim dividend of 15.0p per share (2004 - 11.0p) is proposed, an increase of 36% •Board initiates share buy-back programme •Bus business continued to grow in London and the South where investment in staff recruitment and training improved service reliability •Thameslink passenger numbers continued to grow despite disruption caused during construction of the Channel Tunnel rail link into St Pancras. Passenger growth continued on Southern with travel between London and Brighton up around 85% compared with 10 years ago •aviance acquired the remaining 50% stake in Plane Handling which made a material contribution to the half-year result Commenting on Go-Ahead's prospects, Chairman Sir Patrick Brown said: "The proven quality of management at Go-Ahead's operating companies, coupledwith strong cash flow and continuing strategic opportunities, will provide afirm basis for the future." For further information, please contact: The Go-Ahead Group plcChris Moyes, Chief Executive 18 February : 0207 067 0700Ian Butcher, Group Finance Director Thereafter : 0191 232 3123 Weber Shandwick Square Mile (WSSM) Tel : 0207 067 0700Richard Hews/Rachel Taylor/Stephanie Badjonat An analyst's presentation will be held at 9.30am at WSSM's offices, Fox Court,14 Gray's Inn Road, London, WC1X 8WS. Copies of the presentation will beavailable on the Company's website: www.go-ahead.com.High resolution images are available for the media to download free of chargefrom www.vismedia.co.uk Chairman's Statement REVIEW OF THE SIX MONTHS Go-Ahead reports another solid half-year performance from its operatingcompanies, principally located in London and the south. Passenger numbers havecontinued to increase whilst costs have been well controlled. Investment instaff, fleet and infrastructure has been maintained, supported by generallypositive central and local government policies towards the industry. The 50%stake in Plane Handling, formerly held by Virgin Aviation Services, was acquiredduring the period bringing the company fully into Go-Ahead ownership anddelivering a number of commercial benefits. GROUP PROFITABILITY & DIVIDEND For the six months to 1 January 2005, pre-tax profits, before goodwillamortisation and exceptional items, amounted to £49.6 million (2004 - £47.0million) on turnover, including joint venture, of £637.9 million (2004 - £633.8million). Operating profit, including share of joint venture and before goodwillamortisation and exceptional items, amounted to £51.4 million (2004 - £49.1million). Adjusted earnings per share, excluding the effects of exceptionalitems and goodwill amortisation, are calculated at 59.5p (2004 - 55.7p). Theboard is declaring an increased dividend of 15.0p per share (2004 - 11.0p), anincrease of 36% and in line with its stated policy of reducing dividend covertowards the peer group average. This dividend will be payable on 7 April 2005 toshareholders on the register at close of business on 11 March 2005. OPERATING RESULT The figures below are stated before exceptional items, goodwill amortisation andafter absorbing all central costs. Aviation services includes the group's shareof the former joint venture. Six months Six months Year to to 1 Jan 05 to 3 Jan 04 3 July 04 ----------- ----------- --------- Operating Operating Operating Turnover Profit Margin Turnover Profit Margin Turnover Profit Margin -------- ------ ------ -------- ------ ------ -------- ------ ------ £m £m % £m £m % £m £m % -- -- - -- -- - -- -- -Bus 206 29.1 14.1 193 27.8 14.4 387 54.2 14.0 Rail 294 18.6 6.3 320 19.3 6.0 620 40.9 6.6 Aviation Services 138 3.7 2.7 121 2.0 1.7 237 0.6 0.3 ---- ---- ---- ---- ----- ---- 638 51.4 634 49.1 1,244 95.7 ---- ---- ---- ---- ----- ---- BUS The group's bus businesses in London and the south have continued to grow.Service reliability has continued to improve through investment in both staffrecruitment and training. The quality incentive regime in London has againenabled the group to benefit from bonus payments arising from consistently goodperformance. Development of new operating depots continues to be frustrated byplanning approval processes in certain of the local authorities in whose areaswe operate. Go-Ahead's strategy of concentration on areas with economic and populationgrowth has continued, and during the half year a major new depot opened inOxford replacing facilities dating from the 1920s. The Oxford market continuesto be highly competitive and the new facilities will enable the company toachieve a further improvement in its standards. Significant investment tookplace in upgrading services in the Poole and Bournemouth conurbation with thecommencement of the "more" network of high frequency bus routes shortly beforeChristmas. These services are expected to deliver strong patronage growth in thesecond half of the year. RAIL Passenger growth throughout the rail industry has continued. Travel over thenational rail network in 2004 was at its highest level since 1959, at which timeroute mileage was almost twice the current level. The group's two franchises,Thameslink and Southern, both benefited from this growth with, for example,travel between London and Brighton up around 85% compared with the position tenyears ago. The closure of the central portion of the Thameslink route during constructionof the Channel Tunnel rail link into St. Pancras started in September and willcontinue until May 2005. The railway has achieved a high level of operatingreliability during this period and passenger numbers have continued to growdespite this disruption. Interim arrangements, including strengthened busservices operated by Go-Ahead's London Central bus business, have worked well. The introduction of new trains to the Southern network has continued and hasagain contributed to passenger growth. By the end of December, over 500 newcarriages had been introduced to service and the slam-door train fleet is nowlargely confined to peak only service. The major upgrade in depot maintenanceand servicing facilities has continued and performance and punctuality haveimproved despite difficult operating conditions caused by the civil engineeringworks. Twelve months ago we reported that the result of the competition for theIntegrated Kent Franchise should be known before the end of 2004. Delays in thisprocess have meant that the final Invitation to Tender was not issued untilshortly after the end of the half year. A decision is not now expected duringthe company's 2005 financial year. At the same time, pre-qualification for theextended Thameslink/Great Northern and Greater Western franchises has justcommenced and the group will be bidding to pre-qualify for both in partnershipwith Keolis. AVIATION SERVICES aviance continues to adjust to meet the needs of its clients and deliver theflexibility demanded in a price sensitive market. The company has established agood reputation for service at Heathrow, the UK's biggest market, and hasbenefited from the recent withdrawal of a competitor from that market. Plane Handling delivers high quality cargo handling services to airlines,predominantly at Heathrow, where it continues to develop warehouse capacity forkey clients. Former joint venture partner, Virgin Aviation Services, continuesas a major client and it is pleasing to note that a new long-term relationshiphas been established. Plane Handling made a material contribution to thehalf-year result. Meteor has continued to perform well in its core market of airport car parking.It has also made progress in extending its activities into airside transport andinto revenue security services for the railways. Meteor staff are becoming aregular sight on Southern train services, complementing the work of therailways' own ticket inspection staff. GROUP CASH FLOW AND NET DEBT The group's cash flow from operating activities for the half year amounted to£65.7 million (2004 - £71.7 million), in line with the operating result plusdepreciation. The group's balance sheet remains strong with net debt, after theacquisition of Plane Handling for a net cash outflow of £18.5 million during theperiod, of £39.7 million (£31.5 million at 3 July 2004). In view of the group's strong balance sheet and cash generation, the board hasconsidered the options for returning capital to shareholders and concluded thatthe group should initiate an on-market share buy-back programme, the authorityfor which was granted at the company's annual general meeting in October 2004. STRATEGY AND PROSPECTS As predicted twelve months ago, we now expect a period of relative stability inthe scale of our operations for Transport for London, rather than a continuationof the recent rate of growth. Growth opportunities remain in the south ofEngland, however, and the introduction of further phases of the highlysuccessful Gatwick Fastway guided bus services is a good example. The group willcontinue to seek acquisition and investment opportunities where they fit withinour strategic focus on growth. In this context, we intend to bid for the YellowBuses company in Bournemouth, the sale of which was recently announced byBournemouth Council. 2005 will be an extraordinarily busy period for our rail franchise bid team withthree important franchises at varying stages of the bid process. Success in justone of these would represent an increase in the group's rail activity. The groupwill again maintain its focus on rail franchises with a significant Londoncommuter element from which further patronage growth can be anticipated. Airport ground handling remains under pressure but growth in passenger numbersand cargo tonnage through UK airports continues to provide opportunities foraviance, Plane Handling and Meteor and results are gradually improving. The proven quality of management at Go-Ahead's operating companies, coupled withstrong cash flow and continuing strategic opportunities, will provide a firmbasis for the future. SIR PATRICK BROWNCHAIRMAN 17 February 2005 Consolidated Profit & Loss Accountfor the six months ended 1 January 2005 Six months Six months Year to to 1 Jan 05 to 3 Jan 04 3 July 04 £m £m £m NOTES Unaudited Unaudited Audited Turnover: Group and share of joint venture 637.9 633.8 1,244.0Less: share of joint venture turnover (3.5) (9.5) (19.1) Continuing operations - ongoing 620.2 624.3 1,224.9 - acquisitions 14.2 - - GROUP TURNOVER 2 634.4 624.3 1,224.9 --------- --------- ---------Operating costs (excluding goodwill charges and exceptional items) (583.6) (575.5) (1,129.7)Goodwill charges (1.2) (1.2) (69.4)Exceptional items 3 - - 1.0 --------- --------- --------- (584.8) (576.7) (1,198.1) --------- --------- ---------OPERATING PROFITContinuing operations - ongoing 47.7 47.6 26.8 - acquisitions 1.9 - - Share of JV operating profit 0.6 0.3 0.5 --------- --------- ---------TOTAL OPERATING PROFIT 2 50.2 47.9 27.3 Analysed as: Before goodwill charges and exceptional items 51.4 49.1 95.7 Goodwill charges and exceptional items (1.2) (1.2) (68.4) Loss on disposal of business - - (3.2)Profit on disposal of properties 4.5 - - --------- --------- --------- PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 54.7 47.9 24.1 Net interest payable - group (1.8) (2.1) (4.3) - share of joint venture - - (0.1) --------- --------- --------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 52.9 45.8 19.7 Analysed as: Before goodwill charges and exceptional items 49.6 47.0 91.3 Goodwill charges and exceptional items 3.3 (1.2) (71.6) Taxation 4 - group (13.8) (13.8) (26.6) - share of joint venture (0.2) - (0.1) --------- --------- ---------PROFIT/(LOSS) ON ORDINARY ACTIVITIES AFTER TAXATION 38.9 32.0 (7.0)Equity Minority Interests (5.4) (5.0) (9.3) --------- --------- ---------PROFIT/(LOSS) ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY 33.5 27.0 (16.3)Dividends (7.6) (5.6) (19.3) --------- --------- ---------RETAINED PROFIT/(LOSS) FOR THE PERIOD 25.9 21.4 (35.6) --------- --------- ---------DIVIDEND PER SHARE 15.0p 11.0p 38.0pEARNINGS/(LOSS) PER SHARE - basic 5 66.1p 53.3p (32.1p) - adjusted 5 59.5p 55.7p 110.3p - diluted 5 64.6p 52.2p (31.4p) Consolidated Balance Sheetas at 1 January 2005 1 Jan 05 3 Jan 04 3 July 04 £m £m £m Unaudited Unaudited AuditedFIXED ASSETS Intangible assets 61.9 113.7 47.3 Tangible assets 250.6 229.3 238.0 Investments Investment in joint venture share of gross assets - 7.6 8.5 share of gross liabilities - (3.9) (4.8) - 3.7 3.7 --------- --------- --------- 312.5 346.7 289.0 --------- --------- --------- CURRENT ASSETS Stocks 6.0 6.2 5.6 Debtors 164.4 161.8 136.2 Cash on deposit 50.7 38.6 60.0 Cash at bank and in hand 25.1 19.4 14.7 --------- --------- --------- 246.2 226.0 216.5 CREDITORS: due within one year (333.7) (291.0) (311.4) --------- --------- ---------NET CURRENT LIABILITIES (87.5) (65.0) (94.9) --------- --------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 225.0 281.7 194.1 CREDITORS: due after more than one year (60.8) (88.4) (57.5) PROVISIONS FOR LIABILITIES AND CHARGES (22.9) (29.7) (24.4) --------- --------- ---------NET ASSETS 141.3 163.6 112.2 --------- --------- --------- CAPITAL AND RESERVES Called up share capital 5.1 5.1 5.1 Share premium 51.6 51.4 51.5 Revaluation reserve 9.9 11.7 11.5 Other reserve 0.6 0.6 0.6 Profit and loss account 62.6 87.7 35.1 --------- --------- ---------EQUITY SHAREHOLDERS' FUNDS 129.8 156.5 103.8MINORITY INTERESTS Equity 11.2 7.1 8.4 Non-Equity 0.3 - - --------- --------- --------- 141.3 163.6 112.2 --------- --------- --------- Consolidated Cash Flow Statement Six months Six months Year to NOTES TO to 1 Jan 05 to 3 Jan 04 3 July 04 CASH FLOW £m £m £m Unaudited Unaudited Audited NET CASH INFLOW FROM OPERATING ACTIVITIES 1 65.7 71.7 150.3 --------- --------- ---------DIVIDENDS RECEIVED FROM JOINT VENTURE - 0.1 0.1 --------- --------- ---------RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid (net) (0.9) (2.4) (4.1) Dividends paid to minority interests (3.5) (2.4) (7.7) --------- --------- --------- (4.4) (4.8) (11.8) --------- --------- ---------TAXATION (16.1) (9.9) (21.6) --------- --------- ---------CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible assets (32.8) (17.5) (46.3) Purchase of intangible assets - - (0.4) Sale of tangible assets 13.2 0.7 4.9 --------- --------- --------- (19.6) (16.8) (41.8) --------- --------- ---------ACQUISITIONS AND DISPOSALS Purchase of subsidiary undertakings Consideration (20.1) (32.0) (32.6) Cash acquired 1.6 5.5 2.9 --------- --------- --------- (18.5) (26.5) (29.7) --------- --------- ---------EQUITY DIVIDENDS PAID (13.7) (9.1) (14.7) --------- --------- ---------MANAGEMENT OF LIQUID RESOURCES Decrease/(increase) in cash on deposit 9.3 (13.2) (31.9) --------- --------- ---------FINANCING Issue of ordinary share capital 0.1 0.1 0.2 Issue of non-equity minority interest 0.3 - - Loan to minority interest (8.4) - - Repayment of long-term loans (0.9) 3.1 (37.8) Receipts from long-term loans 56.7 - - Receipts from hire purchase and lease finance 28.7 7.7 67.5 Repayments of hire purchase and lease finance (70.0) (10.5) (33.2) --------- --------- --------- Net cash inflow/(outflow)from financing 6.5 0.4 (3.3) --------- --------- ---------INCREASE/(DECREASE)IN CASH 2 9.2 (8.1) (4.4) --------- --------- --------- Notes to the Cash Flow Statement 1. RECONCILIATION OF GROUP OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Six months Six months Year to to 1 Jan 05 to 3 Jan 04 3 July 04 £m £m £m Unaudited Unaudited Audited Group operating profit 49.6 47.6 26.8 Exceptional items (0.6) - 1.0 Depreciation 17.1 17.6 34.5 Goodwill charges 1.2 1.2 69.4 Amortisation of franchise bid costs 0.2 0.1 0.4 Profits on disposal of tangible fixed assets (0.4) (0.1) (1.2) (Increase)/decrease in stocks (0.4) (0.2) 0.4 Increase in debtors (19.7) (32.6) (5.9) Increase in creditors 18.7 38.1 24.9 --------- --------- ---------Net cash inflow from operating activities 65.7 71.7 150.3 --------- --------- --------- 2. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Six months Six months Year to to 1 Jan 05 to 3 Jan 04 3 July 04 £m £m £m Unaudited Unaudited Audited Increase/(decrease) in cash 9.2 (8.1) (4.4) Cash flow from movement in debt and leasing/hire purchase obligations (6.2) (0.3) 3.5 (Decrease)/increase in cash on deposit (9.3) 13.2 31.9 --------- --------- --------- Change in net debt resulting from cash flows (6.3) 4.8 31.0 --------- --------- --------- Amortisation of debt issue costs (0.1) (0.1) - Loans acquired in the period (0.9) - - Leasing obligations of subsidiaries acquired in the period (0.9) (9.2) (9.2) Cash on Deposit acquired in the period - 6.5 9.1 Issue of loan notes - - (0.7) --------- --------- --------- Change in net debt resulting from non-cash flows (1.9) (2.8) (0.8) --------- --------- --------- Movement in net debt in the period (8.2) 2.0 30.2 --------- --------- --------- Opening net debt (31.5) (61.7) (61.7) --------- --------- --------- Closing net debt (39.7) (59.7) (31.5) --------- --------- --------- Notes to the Financial Statements 1. BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION The accounting policies used in the preparation of these interim financial statements are as disclosed in the 2004 Directors' Report & Financial Statements. The group is preparing to implement International Financial Reporting Standards for the year ended June 2006. At present the group is not required to report under these Standards. 2. SEGMENTAL ANALYSIS The turnover of the group is revenue from road passenger transport, rail passenger transport and aviation services. Rail passenger transport turnover includes financial support receivable from the Strategic Rail Authority and associated income. Six months Six months Year to to 1 Jan 05 to 3 Jan 04 3 July 04 £m £m £m Unaudited Unaudited Audited Turnover Bus - ongoing 206.0 193.1 387.5 Rail - ongoing 293.7 319.4 619.9 Aviation services - ongoing 120.5 111.8 217.5 - acquisitions 14.2 - - --------- --------- --------- Group turnover 634.4 624.3 1,224.9 Share of joint venture turnover aviation services 3.5 9.5 19.1 --------- --------- --------- Turnover: Group and share of joint Venture 637.9 633.8 1,244.0 --------- --------- --------- Operating profit Bus - ongoing 29.1 27.8 54.2 Rail - ongoing 18.6 19.3 40.9 Aviation services - ongoing 1.2 1.7 0.1 - acquisitions 1.9 - - Goodwill charges (1.2) (1.2) (69.4) Exceptional items - - 1.0 --------- --------- --------- Group operating profit 49.6 47.6 26.8 Share of joint venture operating profit aviation services 0.6 0.3 0.5 --------- --------- --------- Total operating profit 50.2 47.9 27.3 --------- --------- --------- Net assets/(liabilities) Bus 211.8 197.5 191.3 Rail (52.4) (41.5) (37.4) Aviation services 69.2 113.7 45.4 --------- --------- --------- 228.6 269.7 199.3 Unallocated net liabilities: Taxation (40.0) (40.8) (42.0) Dividends proposed and payable (7.6) (5.6) (13.7) Interest bearing net liability (39.7) (59.7) (31.4) --------- --------- --------- Total net assets 141.3 163.6 112.2 --------- --------- --------- All operations are of UK origin except for turnover of £2.3m (2003 - £2.6m and 2003/04 - £4.2m) and operating profit of £0.2m (2003 - £0.2m and 2003/04 - £0.3m) arising from our aviation subsidiary in Spain. The whole of the post acquisition trading of Plane Handling is reflected in the above table under "acquisitions", notwithstanding that the group owned 50% prior to acquisition (see note 6). Results prior to the acquisition of the remaining 50% shareholding are disclosed under the heading "share of joint venture". This treatment has been adopted in order to comply with UK Accounting Standards. 3. EXCEPTIONAL ITEMS Six months Six months Year to to 1 Jan 05 to 3 Jan 04 3 July 04 £m £m £m Unaudited Unaudited Audited Recognised before operating profit: Continuing operations Reorganisation costs and other employee claims - - (1.8) Onerous contract provision released - - 2.8 --------- --------- --------- - - 1.0 --------- --------- --------- 4. TAX ON PROFIT ON ORDINARY ACTIVITIES Six months Six months Year to to 1 Jan 05 to 3 Jan 04 3 July 04 £m £m £m Unaudited Unaudited Audited Group Corporation tax on profit for the period 15.7 15.0 27.7 relating to prior years (0.5) - (0.5) Deferred tax (1.4) (1.2) (0.6) --------- --------- --------- 13.8 13.8 26.6 Share of joint venture 0.2 - 0.1 --------- --------- --------- 14.0 13.8 26.7 --------- --------- --------- 5. EARNINGS PER SHARE The calculation of basic earnings per ordinary share is based upon earnings of £33.5 million (2003 - £27.0 million and 2003/04 - loss of £16.3 million) and on 50,770,619 ordinary shares (2003 - 50,674,351 and 2003/04 - 50,685,421) being the weighted average number of shares in issue during the periods. An adjusted earnings per share is also presented to eliminate the impact of non-recurring costs and revenues. This is analysed as follows: Six months Six months Year to to 1 Jan 05 to 3 Jan 04 3 July 04 pence pence pence per share per share per share Unaudited Unaudited Audited Earnings per share - unadjusted 66.1 53.3 (32.1) Exceptional items (9.0) - 4.3 Goodwill charges 2.4 2.4 136.9 Taxation on exceptional items - - 1.2 --------- --------- --------- 59.5 55.7 110.3 --------- --------- --------- Diluted earnings per share is based on 51,909,677 ordinary shares (2003 - 51,791,741 and 2003/2004 - 51,802,592). The difference from the basic calculation being due to the inclusion of 1,139,058 (2003 - 1,117,390 and 2003/ 2004 - 1,117,171) dilutive potential ordinary shares under share option schemes. 6. ACQUISITION OF SUBSIDIARIES On 31 August 2004, Aviance UK Limited (a wholly owned subsidiary of the group) acquired full ownership of Plane Handling Limited, its cargo handling joint venture, by the acquisition of the remaining 50% shareholding. The total consideration for the 50% share was £20.1 million including fees, payable in cash. The provisional fair value of the assets acquired was £8.2 million including net cash balances of £1.6 million. This gave rise to goodwill of £16.0 million. Plane Handling, since ownership was taken, has contributed £2.2 million to the group's net operating cash flows. 7. PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information contained in this interim statement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the year to 3 July 2004 is based on the latest published report and accounts which have been delivered to the Registrar of Companies and contain an unqualified audit report. The financial information for the six months ended 3 January 2004 is derived from the interim report dated 19 February 2004. This interim statement is being sent to all shareholders and is also available upon request from the Company Secretary, The Go-Ahead Group plc, 3rd Floor, 41 - 51 Grey Street, Newcastle upon Tyne, NE1 6EE or viewed at www.go-ahead.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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