Pre-Close Trading Update

7am, 14 December 2010

The Go-Ahead Group plc ("Go-Ahead" or "the Group")

PRE-CLOSE TRADING UPDATE

Good first half trading, no change to full year expectations

Go-Ahead is one of the UK's leading providers of public transport. We employ around 22,000 people and over one billion passenger journeys are made on our buses and trains each year.

Go-Ahead announces its pre-close trading update for the six months ending 1 January 2011, ahead of its half year results which will be released on Friday 18 February 2011.

Overall:

Overall trading in the period has been good and our first half operating profit* is likely to be slightly ahead of our previous expectations, primarily in rail. However, we continue to anticipate challenging economic conditions in the near term and therefore believe it is prudent to maintain our full year expectations as previously reported.

Keith Ludeman, Group Chief Executive of Go-Ahead, said:

"We continue to see growth in patronage on both our rail and bus operations. This, combined with a programme of investment in our services and a strong local market focus, mean Go-Ahead is well placed to benefit from any improvement in the economy."

Bus: 

Our bus operations have enjoyed a good period and the first half operating profit* is expected to be slightly ahead of the first half of last year (H1 2009/10: £34.3m), including around £1m of first half contribution from last year's acquisitions.

Our deregulated bus operations continue to perform well, maintaining the underlying passenger and revenue growth trends of 3-4% experienced in the first quarter. The majority of growth is from fare paying passengers, with the number of concessionary passengers similar to the same period last year. 

Our regulated London bus operations performed as anticipated. First half mileage is expected to be similar to last year and revenue to be around 7% below, as previously reported. The reduction in revenue is due to lower contract prices and less revenue from quality incentive contracts (QICs) which are expected to halve compared to the first half of last year (H1 2009/10: £7.4m). This is the result of more challenging targets and the withdrawal of QIC2 which accounted for approximately £2.5m of QIC revenue in the first half of last year.

Fuel costs are fully hedged for this year at 41 pence per litre (ppl) compared to 47 ppl last year, saving around £3.5m against the same period last year. Cost control remains a priority, with savings in energy consumption, labour utilisation and procurement offsetting increases in fuel duty, accident claims and pension costs.

In North America, our Yellow School Bus joint venture is performing as expected and we continue to believe that this provides a good platform for our strategy of cautious growth in this market.

Rail:

Rail has performed ahead of our expectations in the period, largely due to procurement savings, and we now expect first half operating profit* to be close to that achieved in the first six months of last year (H1 2009/10: £19.9m).

Southern continues to perform in line with bid. Half year revenue is expected to be around 6% above last year, supported by growth in passenger journeys of approximately 4%, and we continue to make good progress with our bid initiatives, franchise commitments and cost savings.

In Southeastern, revenue growth is expected to be up 6% against the first half of last year. This increase includes revenue generated by the full high speed service which started on 13 December 2009. As previously reported, the franchise is in 80% revenue support and is expected to remain so until the end of the franchise in March 2014. We have also achieved further procurement cost savings in this franchise during the period.

Revenue growth in our London Midland franchise has continued to be good and is expected to be around 7% for the first half, benefitting from strong operational performance and an increase in passenger numbers of around 4%. We continue to seek further cost savings to restore earnings in this franchise.

Other items:

Exceptional items are expected to be minimal for the first half compared to last year (H1 2009/10: £31.9m - primarily related to the aviation services division which has since been sold).

Cash management remains strong and capital expenditure is anticipated to be in line with our expectations at around £30m for the first half and approximately £75m for the full year. The full year and half year tax rate is expected to remain at around 27%, and the weighted average number of shares remains at 43.0 million.

Outlook:

Our operations are proving resilient with continued passenger growth across our bus and rail operations. However, we continue to anticipate challenging economic conditions in the near term and therefore believe it is prudent to maintain our full year expectations as previously reported.

Our bus division is expected to remain robust, with second half revenue in our London operations returning to similar levels to last year and modest growth assumed outside London. We continue to look for bolt-on acquisitions in the UK and cautious expansion in North America.

In rail, fares are due to increase in January 2011 in line with Government policy, based on a relatively high RPI of 4.8% following minimal increases in January 2010. Rail remains difficult to forecast and, at this stage, we are assuming that Southern continues in line with bid and that we achieve modest returns from Southeastern and London Midland for the second half. We welcome the Government's recent commitment to rail investment and industry reform.

Our cashflow and balance sheet remains strong and underpins our dividend policy. We will continue with our focus on service quality, cost savings and financial discipline and remain confident in the underlying strengths of our business.

*operating profit before exceptional items and amortisation

- End -

For further information, please contact:

The Go-Ahead Group Keith Ludeman, Group Chief Executive 020 7821 3920Nick Swift, Group Finance Director 020 7821 3922John Shield, Group Corporate Affairs Director 020 7821 3927 Holly Birch, Interim Group Communications & Investor Relations Manager 020 7821 3929

Citigate Dewe Rogerson 020 7638 9571Michael Berkeley Chris Barrie Angharad Couch

Notes to Editors

Go-Ahead

Go-Ahead is a leading UK public transport operator, providing high quality services in the bus and rail sectors. Employing around 22,000 people across the country, over one billion passenger journeys are undertaken on our services each year. We are committed to operating our companies in a safe, socially and environmentally responsible way and are proud to have been awarded the Carbon Trust Standard after taking action on climate change. In addition to the travelling public, our customers include the Department for Transport, Transport for London (TfL) and local authorities.

BUS

Go-Ahead is one of the UK's largest bus operators. With a fleet of around 3,800 buses, we carry, on average, around 1.7 million passengers every day. Our operations are focused on high density commuter markets. We have a strong presence in London, with around 21% market share, where we provide regulated services for TfL. We operate deregulated services in the Oxford, the South East, Southern and North East England. We also have a yellow school bus joint venture in North America.

RAIL

The rail operation, Govia, is 65% owned by Go-Ahead and 35% by Keolis. It is the busiest rail operation in the UK, responsible for nearly 30% of all UK passenger rail journeys through its three rail franchises: Southern (which includes the Gatwick Express), Southeastern and London Midland. In December 2009, Southeastern began operating the UK's first high speed domestic rail service between Kent and London, significantly reducing journey times.

Legal disclaimer

Certain statements included in this press release contain forward-looking information concerning the Group's strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the sectors or markets in which the Group operates. By their nature, forward-looking statements involve uncertainty because they depend of future circumstances, and relate to events, not all of which are within the Company's control or can be produced by the Company. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. Nothing in this press release should be construed as a profit forecast and no part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in The Go-Ahead Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. Except as required by law, the Company undertakes no obligation to update any forward-looking statement.