TIDM34AI
6 December 2023
Stagecoach Group Limited
Interim results for the half-year ended 28 October 2023
Financial summary
"Adjusted" results
Results excluding separately
disclosed items* "Statutory" results
H1 2023
H1 2024 H1 2023 (restated) H1 2024 (restated)
------------------------- ---------------------
Revenue (GBPm) 773.2 669.6 773.2 669.6
------------------------- -------- --------------------- ------- -----------
Total operating profit
(GBPm) 43.3 46.9 51.1 33.1
Non-operating separately
disclosed items (GBPm) - - - 1.5
Net finance costs (GBPm) (2.1) (10.3) (3.5) (10.0)
------------------------- ---------------------
Profit before taxation
(GBPm) 41.2 36.6 47.6 24.6
------------------------- -------- --------------------- ------- -----------
*See definitions in note 21 to the condensed financial
statements
Strategic and operational highlights
-- Implementation of simpler, leaner organisational structure completed
-- Appointment of Claire Miles as Chief Executive Officer effective
October 2023
-- Growth in regional passenger demand with a 5.3% increase in regional bus
passenger journeys in the half-year ended 28 October 2023 compared to the
equivalent prior year period
-- Supportive government policy continued through the GBP2 bus fare cap in
England underpinning the increase in regional passenger demand
-- Recruited and trained more than 2,300 new bus drivers to deliver our
services during the half-year ended 28 October 2023
Financial highlights
-- Good financial results reflecting business initiatives and continued
strength of regional bus operations
-- Revenue from regional bus operations grew by 15.1% to GBP584.7m in the
half-year ended 28 October 2023 compared to the comparative prior year
period
-- Net debt increased by GBP60.4m from GBP241.1m at 29 April 2023 to
GBP301.5m as at 28 October 2023 reflecting net capital expenditure of
GBP62.3m in the period, supporting the transition of our bus fleet to
zero emission vehicles
-- No change to our outlook for the year ending 27 April 2024
For further information, please contact:
Stagecoach Group Limited www.stagecoachgroup.com
Investors and analysts
Bruce Dingwall, Chief Financial Officer 07917 555293
Notes to editors
Stagecoach Group
-- Stagecoach is one of Britain's leading public transport businesses,
helping connect communities for over 40 years.
-- Stagecoach is Britain's biggest bus and coach operator, and it runs the
Supertram light rail network in Sheffield.
-- Our team of around 23,000 people and our c.8,300 buses, coaches and trams
are part of the fabric of daily life in England, Scotland and Wales.
-- We connect people with jobs, skills and training. We bring customers to
our high streets, link tourists with visitor attractions, and draw
families, friends and communities together.
-- Our impact is about far more than transport -- we support the economy,
help cut congestion on our roads, protect our environment and air quality,
boost safety on our roads, and contribute to a healthier nation.
Interim management report
The Directors of Stagecoach Group Limited are pleased to present
their report on the Company for the half-year ended 28 October
2023.
Description of the business
Stagecoach Group Limited is a private limited company, limited
by shares. It is incorporated, domiciled and has its registered
office in Scotland. The Company is a wholly owned subsidiary of
Inframobility UK Bidco Limited, which is indirectly owned by an
international infrastructure fund managed and advised by DWS
Infrastructure. Throughout this document, we refer to Stagecoach
Group Limited as "the Company" and we refer to the group headed by
it as "Stagecoach" or "the Group".
Overview
Introduction
We have delivered a positive set of financial results for the
half-year ended 28 October 2023 as we work in partnership with
national and local government to maximise the opportunities from
public transport for consumers and the country while navigating the
current economic environment.
There has been a further recovery in demand for our public
transport services, with growth in regional bus passenger journeys
of 5.3% compared to the equivalent prior year period.
UK Bus (regional operations)
Bus services continue to benefit from a supportive policy
environment from national and local government. In England,
recovery funding expired at the end of July 2023 and has been
replaced by an enhanced operating grant, with forward visibility
until the end of March 2025. Further funding has also been
allocated to local authorities to support commercial and tendered
bus services over the same period. Since its launch in January
2023, the GBP2 bus fare cap scheme has driven an increase in bus
patronage, particularly from existing bus users, and the scheme has
now been extended until December 2024. In Scotland, the under-22
concessionary scheme continues to support increased patronage,
offsetting suppressed demand within the old age and disabled
concessionary scheme. In Wales, emergency COVID support ended in
July 2023, with ongoing transitionary funding confirmed in place
until March 2024.
The Department of Transport and Scottish Government have
allocated significant funding for bus transformation projects in
England and Scotland, including the delivery of bus priority
schemes. These projects are expected to deliver significant
customer benefits in future years through improved punctuality and
reliability.
The Department for Transport has launched the second phase of
the Zero Emission Bus Regional Areas ("ZEBRA2") programme in
England, with up to GBP129m of funding available to support the
introduction of zero emission buses, and we are supporting local
authority bids for this scheme. The Scottish Government launched
the second phase of the Scottish Zero Emission Bus Challenge Fund
("ScotZEB2") earlier this year, and we were disappointed to be
recently informed that those bids, in their current form, were
unsuccessful.
We are pleased with the professional and constructive manner in
which we managed the demobilisation of our Wigan depot prior to the
commencement of Transport for Greater Manchester's new franchising
system. Our plans are well advanced for the mobilisation of the
services we will operate on behalf of Transport for Greater
Manchester from the Middleton, Oldham and Queens Road depots from
March 2024.
UK Bus (London)
Similar to the experience of other operators, trading in our
London bus operations has been challenging with the losses incurred
in the period reflecting the impact of upward wage pressure and
elevated levels of staff turnover and staff shortages. The impact
of lost mileage has resulted in significant contractual penalties
and lost quality incentive income. Road works and traffic
congestion are a continuing challenge for operators in the London
market, which is adversely affecting service delivery. Engagement
is ongoing with Transport for London on these issues. However, we
expect profitability to improve as we address labour market
challenges, benefit from lagged inflationary increases in contract
revenues and seek to re-price contracts as they are tendered.
Macro-economic factors
We are actively managing the current inflationary environment by
taking a balanced approach to protecting our customers and
employees from the cost-of-living pressures as far as possible,
while ensuring we maintain properly funded and sustainable bus
networks.
Ensuring we recruit and retain sufficient staff to provide a
reliable level of service for customers remains an overriding
priority for this business. During the half-year ended 28 October
2023, we have recruited and trained more than 2,300 new bus drivers
to deliver our services. The business has delivered a net increase
of more than 500 drivers compared to the start of the year. We
remain grateful for the huge commitment and professionalism of our
people who are delivering services safely in our communities day
in, day out.
Operational structure
Following the acquisition of the Group in May 2022, a detailed
review of the Group's structure and operations was undertaken. We
have simplified our leadership organisational structure, providing
greater clarity on decision-making and more focused support to
enhance lines of communication and collaboration. We were delighted
to appoint Claire Miles as our Chief Executive Officer effective
October 2023.
Financial results
In the half-year to 28 October 2023, revenue grew to GBP773.2m
(H1 2023: GBP669.6m) and adjusted total operating profit fell
slightly to GBP43.3m (H1 2023: GBP46.9m). Revenue excludes COVID-19
grant income from government, which is reported as other operating
income. The growth in revenue reflects a continuation of recovering
passenger demand across our regional bus and tram services, impact
of favourable pricing and the effect of the new London businesses
acquired in the prior year. The modest reduction in adjusted total
operating profit in the period is principally attributable to the
higher losses in London, which stem from the elevated levels of
staff shortages in that part of the business. Unadjusted operating
profit was GBP51.1m (H1 2023: restated GBP33.1m), with the increase
due to non-recurring separately disclosed gains in the current year
and significant transaction costs reported in the prior year period
related to the two offers to acquire the Company.
During the half-year, net debt increased from GBP241.1m to
GBP301.5m, reflecting increased capital investment and loan to
shareholders, partly
offset by underlying cash generation. We expect our net capital expenditure for the year ending 27 April 2024 to be in excess of GBP250m, which reflects our continued commitment to invest in the future of the business, supporting the transition of our bus fleet to zero emission vehicles.
Outlook
We remain positive on the long-term outlook for the Group.
Public transport delivers the sustainable connectivity people need
to access work, education, healthcare, shopping, leisure, and
meeting family and friends. As we transition towards a
post-pandemic world, we are focused on further rebuilding
profitability and adapting our services to meet new and emerging
travel patterns.
Whilst the next General Election may lead to some change in the
detail of transport policy, there is broad cross-party support for
the role that buses play in delivering government objectives on
social equity and inclusion, economic development and levelling-up,
and in transport decarbonisation. We have worked closely with local
and national government in maintaining bus services through the
pandemic and into recovery. We anticipate that this close
partnership will be a continuing feature of transport policy,
including through an expansion of bus service franchising, and we
are engaging closely with national and local policy-makers to
maximise the opportunities that this will offer.
While there remains some uncertainty around the wider economic
environment, there is no change to our expected outlook for the
year ending 27 April 2024.
Summary of financial results
Revenue, split by segment, is summarised below:
REVENUE H1 2024 H1 2023 Growth
GBPm GBPm %
UK Bus (regional operations) 584.7 508.1 15.1%
UK Bus (London) 179.8 154.4 16.5%
UK Rail 8.7 7.1 22.5%
Group revenue 773.2 669.6
------- -------
Operating profit, split by segment, is summarised below:
OPERATING PROFIT H1 2024 H1 2023
GBPm % margin GBPm % margin
UK Bus (regional operations) 52.3 8.9% 50.4 9.9%
UK Bus (London) (5.8) (3.2)% (1.5) (1.0)%
UK Rail (1.5) (0.5)
Group overheads (4.5) (5.0)
Restructuring costs - (0.1)
Operating profit before joint ventures
and separately disclosed items 40.5 43.3
Joint ventures -- share of profit
after tax
WCT Group - 0.1
Citylink 2.4 2.9
Crown Sightseeing 0.4 0.6
Total operating profit before separately
disclosed items 43.3 46.9
Separately disclosed items 7.8 (13.8)
Total operating profit: Group operating
profit and share of joint ventures'
profit after taxation 51.1 33.1
----- -------- ------ --------
Financial Review
UK Bus (regional operations)
Summary
-----------------------------------------------------------
-- Good growth in revenue and operating profit
reflecting continued recovery in passenger demand
-- Supportive government funding to maintain continuing
bus services
-----------------------------------------------------------
Financial performance
The financial performance of UK Bus (regional operations) for
the half-year ended 28 October 2023 is summarised below:
H1 2024 H1 2023
GBPm GBPm Change
Revenue 584.7 508.1 15.1%
Like-for-like
revenue 584.2 497.0 17.5%
Operating profit 52.3 50.4 3.8%
Operating margin 8.9% 9.9% (100)bp
----------------- ------- ------- -------
We have been pleased with the recovery in passenger demand for
our services, which has contributed to the rise in operating profit
from the prior year. The growth in passenger demand has been
underpinned by supportive government initiatives, notably the GBP2
fare cap schemes and under-22 free bus travel in Scotland. The rise
in revenue also reflects the impact of having selectively increased
fares to reflect increased staff costs, as we continue to focus on
recruiting and retaining sufficient staff to deliver a reliable
service across the country.
The operating profit for the year includes GBP24.2m of
COVID-related bus support scheme grant income from governments (H1
2023: GBP45.9m), reflecting the moderation of the funding of these
schemes during the period.
Like-for-like vehicle miles operated in the year were 0.2% lower
than the equivalent prior year period, reflecting adjustments to
our network to take account of customer demand and staff shortages.
Like-for-like revenue per vehicle mile increased 17.8% and
like-for-like revenue per journey increased by 11.7%.
Like-for-like revenue was built up as follows:
H1 2024 H1 2023
GBPm GBPm Change
Commercial on
and off bus revenue 307.9 281.1 9.5%
Concessionary
revenue 165.5 121.9 35.8%
Commercial and
concessionary
revenue 473.4 403.0 17.5%
Tendered and
school revenue 75.3 56.7 32.8%
Contract and
other revenue 35.5 37.3 (4.8)%
Like-for-like
revenue 584.2 497.0 17.5%
--------------------- ------- ------- ------
The year-on-year recovery in passenger demand for our bus
services is reflected in the growth in commercial revenue.
The vast majority of the rise in concessionary revenue during
the period reflects the revenue received from the Department for
Transport and combined authorities in respect of GBP2 fare cap
schemes, in addition to the continued growth in the under-22 free
bus travel scheme in Scotland, all of which are encouraging more
people to travel by bus.
The substantial increase in tendered and school revenue reflects
some previously commercial services being converted to tendered
services, supported by additional central government funding
provided to local authorities for these services.
As expected, contract and other revenue has reduced from the
prior year due to the non-recurring work undertaken for the 2022
Commonwealth Games.
Outlook
Although we see ongoing forecasting uncertainty in relation to
passenger demand and cost inflation, we currently forecast
continued good regional bus profitability for the second half of
the year ending 27 April 2024. We are looking forward to commencing
the new franchised contracts that we will operate on behalf of
Transport for Greater Manchester from the Middleton, Oldham and
Queens Road depots from March 2024, with our mobilisation plans
well underway.
We continue to see positive long-term prospects for the
business, and believe the current economic environment is helping
to demonstrate the good value of our public transport services and
encourage modal shift away from the car.
UK Bus (London)
Summary
------------------------------------------------------------
-- Operationally challenging period with adverse traffic
conditions
-- Disappointing financial performance arising from
continued impact of staff shortages
------------------------------------------------------------
Financial performance
The financial performance of UK Bus (London) for the half-year
ended 28 October 2023 is summarised below:
H1 2024 H1 2023
GBPm GBPm Change
Revenue 179.8 154.4 16.5%
Like-for-like
revenue 143.5 137.0 4.7%
Operating loss (5.8) (1.5)
----------------- ------- ------- -------
Operating margin (3.2)% (1.0)% (220)bp
----------------- ------- ------- -------
The financial performance of our London business in the period
was disappointing. The losses incurred in the period reflect the
impact of upward wage pressure and increased staff turnover and
staff shortages. The impact of lost mileage has resulted in
significant contractual penalties and lost quality incentive
income. Road works and traffic congestion are a continuing
challenge for operators in the London market, which is adversely
affecting service delivery. Engagement is ongoing with Transport
for London on these issues. We expect profitability to improve as
we address labour market challenges, benefit from lagged
inflationary increases in contract revenues and seek to re-price
contracts as they are tendered.
We are pleased with our tender results in the period, and we
continuously review our bid models, contract pricing and cost
efficiency to identify opportunities to further improve our
performance on tenders for Transport for London contracts. We plan
to continue to bid for new contract opportunities at prices we
believe would deliver appropriate rates of return.
Outlook
We currently expect our operating losses to moderate in the
second half of the financial year, as we continue to focus our
efforts on recruiting and retaining sufficient bus drivers to
reliably provide the contracted bus services. We believe the
business will recover its profitability over the medium-term, and
we see good prospects for growth with our expanded garage footprint
following last year's acquisitions.
UK Rail
Summary
-------------------------------------------------------
-- Strong growth in passenger demand and revenue at
Sheffield Supertram
-------------------------------------------------------
Financial performance
The financial performance of UK Rail for the half-year ended 28
October 2023 is summarised below:
H1 2024 H1 2023
GBPm GBPm Change
Revenue 8.7 7.1 22.5%
Like-for-like
revenue 8.7 6.7 29.9%
Operating loss (1.5) (0.5)
--------------- ------- ------- ------
The like-for-like revenue is in respect of the ongoing Sheffield
Supertram business. We are pleased with the performance of the
business during the period, where a continued strong recovery in
passenger demand, combined with good cost control, has moderated
the underlying trading losses, as we continue to fulfil our
obligations under the contract.
Outlook
In October 2022, South Yorkshire Mayoral Combined Authority
decided to transition the Supertram system in Sheffield to a
publicly owned operator when the Group's concession ends in 2024.
We are proud of the service we have delivered over our period of
operation and will continue to work hard to deliver a safe, high
quality and professional service to our customers, meet our
obligation and ensure a smooth transition to the new operator. We
continue to hold an onerous contract provision for the estimated
net costs of fulfilling our contractual obligation. The level of
provision has reduced from 29 April 2023, reflecting the moderation
in operating losses arising from the strong performance in the
first half of this year.
Adjusted EBITDA, depreciation and intangible asset
amortisation
Earnings before interest, taxation, depreciation, software
amortisation and separately disclosed items ("adjusted EBITDA")
increased to GBP97.9m (H1 2023 restated: GBP100.5m). Adjusted
EBITDA can be reconciled to the financial statements as
follows:
Year
to
H1 2023 28 Oct
H1 2024 GBPm 2023
GBPm Restated GBPm
Total operating
profit 51.1 33.1 65.5
Separately disclosed
items (7.8) 13.8 8.7
Software amortisation 0.5 0.5 1.0
Depreciation 53.3 52.3 107.9
Impairment losses - - 3.3
Add back joint
venture tax 0.8 0.8 1.3
Adjusted EBITDA 97.9 100.5 187.7
---------------------- -------- --------- -------
The year-on-year increase in adjusted EBITDA principally
reflects the recovery in passenger demand for public transport in
response to the easing of COVID-19 restrictions.
Depreciation and software amortisation of GBP53.8m is higher
than the GBP52.8m for the equivalent prior year period, and
principally reflects our recommencement of capital expenditure
following constraint during the COVID-19 pandemic.
Separately disclosed items
The Directors believe that there are certain items that we
should separately disclose to help explain the consolidated
results. We summarise those "separately disclosed items" in note 4
to the condensed financial statements and further explain them
below.
Non-software intangible asset amortisation
Non-software intangible asset amortisation of GBP0.6m (H1 2023:
GBP0.4m) was recorded in the half-year ended 28 October 2023 in
relation to intangible assets arising from the two London bus
acquisitions made in the year to 29 April 2023.
Reassessment of onerous contract provision
As at 29 April 2023, an onerous contract provision of GBP8.9m
was held in respect of the Sheffield Supertram concession. We have
recalculated the onerous contract provision, reflecting our latest
forecast for the business, and recorded a separately disclosed
credit for Sheffield Supertram of GBP4.4m (H1 2023: GBP0.3m charge)
in the half-year ended 28 October 2023.
Restructuring and associated costs
Following the acquisition of the Group in the year ended 29
April 2023, a detailed review of the Group's structure and
operations was undertaken. This included the use of an external
consultancy agency along with the management experience of the new
owner. The Group expects to implement the remaining actions arising
from that review during the remainder of this year. In the
half-year ended 28 October 2023 the Group incurred redundancy and
related costs of GBP2.3m (H1 2023: GBPNil).
Expired rail franchises
As part of concluding matters in relation to its former
involvement in the UK train operating market, the Group has
recorded a separately disclosed gain of GBP1.4m (H1 2023: GBPNil).
The gain is presented as a separately disclosed item as it relates
to costs that were previously recorded as separately disclosed
items.
Property disposal
Following the demobilisation of our Wigan depot prior to the
commencement of Transport for Greater Manchester's new franchising
system the depot was sold generating a gain on its disposal of
GBP4.9m.
Changes in the fair value of Deferred Payment Instrument
We received a Deferred Payment Instrument as deferred
consideration for the sale of the North American business. The
instrument, which is accounted for at fair value through profit or
loss, has a maturity date of October 2024 and due to the credit and
other recoverability risks associated with the instrument, it
carrying value is at a discount to its face value. The Group's
exposure to the purchaser of the North American business ranks
behind the secured lenders. The carrying value of the instrument
was GBP3.5m as at 29 April 2023. We estimated the carrying value of
the instrument to be GBP2.1m as at 28 October 2023, resulting in a
loss of GBP1.4m (H1 2023: gain of GBP0.3m) recognised in finance
costs (H1 2023: finance income) in the half-year ended 28 October
2023.
Tax
The separately disclosed taxation charge of GBP1.6m (H1 2023:
credit of GBP0.8m) is in relation to the taxation effect of the
pre-tax separately disclosed items.
Net finance costs
Net finance costs, excluding separately disclosed items, for the
half-year ended 28 October 2023 were GBP2.1m (H1 2023 restated:
GBP10.3m) and are further analysed below. The decrease in net
finance costs is principally due to the higher pensions finance
income arising from the prior year reduction in the pension
deficit, in addition to higher interest received on surplus cash
balances.
H1 2023
H1 2024 (restated)
GBPm GBPm
Finance costs
Interest payable and
facility costs on
bank loans, overdrafts
and trade finance 0.5 0.7
Lease interest payable 1.9 1.7
Interest payable and
other finance costs
on bonds 8.4 8.4
Effect of interest
rate swaps 2.1 0.8
Unwinding of discount
on provisions 1.1 0.5
14.0 12.1
---------------------------- ------- -----------
Finance income
Interest receivable
on cash and money
market deposits (3.7) (1.6)
Interest receivable
on parent company
loans (0.9) -
Interest income on
defined benefit pension
schemes (7.3) (0.2)
(11.9) (1.8)
Net finance costs,
excluding separately
disclosed items ("adjusted
net finance costs") 2.1 10.3
---------------------------- ------- -----------
Taxation
The tax charge for the half-year to 28 October 2023 has been
calculated on the basis of the estimated annual effective rate for
the year ending 27 April 2024.
The tax charge on profit can be analysed as follows:
Pre-tax profit Tax Rate
Half-year to 28 October 2023 GBPm GBPm %
----------------------------------------- ---------------- -------- -------
Excluding separately disclosed items 42.0 (9.0) 21.4%
Separately disclosed items 6.4 (1.6)
----------------------------------------- ---------------- -------- -------
With joint venture taxation gross 48.4 (10.6)
Reclassify joint venture taxation for
reporting purposes (0.8) 0.8
----------------------------------------- ---------------- -------- -------
Reported in income statement 47.6 (9.8)
----------------------------------------- ---------------- -------- -------
The effective tax rate, excluding separately disclosed items, of
21.4% is lower than the standard rate of tax of 25% for the year to
27 April 2024, principally due to tax relief on additional pension
contributions in respect of defined benefit schemes which are in
surplus.
The cash tax paid in the half-year ended 28 October 2023 of
GBPNil (H1 2023: GBP16.8m) compares to the tax charge for Group
companies of GBP9.8m (H1 2023: GBP5.1m). The difference reflects
the availability of capital allowances (given the high level of
capital investment in the year coupled with the availability of
full expensing) which impacts cash tax but not effective tax
rate.
The separately disclosed tax charge of GBP1.6m (H1 2023: credit
of GBP0.8m) is explained earlier in the section headed "Separately
disclosed items".
Cash flows and net debt
The Group has continued to maintain strong available liquidity.
During the half-year ended 28 October 2023, net debt increased by
GBP60.4m from GBP241.1m to GBP301.5m and net debt plus net train
operating company liabilities increased by GBP59.9m from GBP265.8m
to GBP325.7m. We recognise that the increase in net debt largely
reflects the loans to shareholders and an increase in capital
expenditure that was constrained during the COVID-19 period. Our
capital expenditure is weighted to the second half of the year
ending 27 April 2024, partly reflecting further investment in the
transition to zero-emission vehicles.
By the half-year end date of 29 October 2022, all of the major
rail franchises previously operated by Group subsidiaries had
ended. However, the settlement of the train operating company
assets, liabilities and contractual positions continues for some
time following the end of the relevant franchises. As at 28 October
2023, the consolidated net assets included net liabilities
(excluding cash) of GBP24.2m (29 April 2023: GBP24.7m) in respect
of such items. Accordingly, if all items were settled at their 28
October 2023 carrying values, consolidated net debt would increase
by that amount. Consolidated net debt plus outstanding train
operating company net liabilities as at 28 October 2023 was
GBP325.7m (29 April 2023: GBP265.8m).
Net cash from operating activities before tax for the half-year
ended 28 October 2023 was GBP62.2m (H1 2023 restated: GBP103.5m)
and can be further analysed as follows:
H1 2023
H1 2024 (restated)
GBPm GBPm
EBITDA of Group
companies before
separately disclosed
items 94.3 96.1
Cash effect of current
period separately
disclosed items 4.5 (8.2)
Loss/(gain) on disposal
of property, plant
and equipment 0.4 (1.0)
Capital grant amortisation (2.4) (1.2)
Share based payment
movements, excluding
separately disclosed
items - 0.2
Working capital
movements (15.9) 33.7
Net interest paid (19.0) (17.9)
Dividends received
from joint ventures 0.3 1.8
Net cash flows from
operating activities
before taxation 62.2 103.5
--------------------------- ------- -----------
Net debt (as analysed in note 16 to the condensed financial
statements) increased from GBP241.1m as at 29 April 2023 to
GBP301.5m as at 28 October 2023. The movement in net debt was:
Half-year to 28 October 2023 GBPm
Net cash flows from operating
activities before taxation 62.2
Tax paid -
Investing activities (72.2)
Financing activities (50.0)
Other (0.4)
Movement in net debt in the
half-year (60.4)
Opening net debt (241.1)
Closing net debt (301.5)
------------------------------ -------
Net cash flows from operating activities were lower than the
equivalent prior period, principally due to a GBP15.9m working
capital outflow in the half-year ended 28 October 2023 relating to
a decrease in provisions following the settlement of certain
insurance claims and a slight increase in receivables. In
comparison, there was a favourable working capital inflow of
GBP33.7m in the half-year ended 29 October 2022 which included
inflows of approximately GBP12.3m in relation to COVID-19 related
payments from governments and inflows of approximately GBP11.1m in
relation to a refund from the Teesside Local Government Pension
Scheme, following the cessation of the Group's participation in the
prior year. The inflow of COVID-19 related payments was a timing
difference which reversed in the second half of the year ended 29
April 2023.
The net impact on net debt of purchases and disposals of
property, plant and equipment, split by segment, was:
H1 2024 H1 2023
GBPm GBPm
UK Bus (regional
operations) 40.4 17.7
UK Bus (London) 21.9 4.4
Net capital expenditure 62.3 22.1
------------------------ ------- -------
Net capital expenditure reconciles to the condensed financial
statements as follows:
H1 2024 H1 2023
GBPm GBPm
Cash flow from:
- Purchase of property,
plant and equipment 74.4 26.5
- Disposal of property,
plant and equipment
(including separately
disclosed items) (8.6) (3.5)
- Capital grants
received (12.8) (6.6)
Decrease in net
debt from negotiated
early termination
of lease - (0.3)
Increase in net
debt from new leases
in period 9.3 6.0
62.3 22.1
-------------------------- ------- -------
In addition to the amounts shown in the table above, the impact
of purchases of intangible assets was GBP0.9m (H1 2023:
GBP1.0m).
Financial position and liquidity
The Group maintains a good financial position, as evidenced
by:
-- We have available liquidity of over GBP400m.
-- We have comfortably complied with all applicable debt covenants for the
year ended 28 October 2023.
The ratio of net debt as at 28 October 2023 to adjusted EBITDA
for the year ended 28 October 2023 was 1.6 times (year ended 29
October 2022: 1.0 times).
Adjusted EBITDA for the half-year ended 28 October 2023 was 46.6
times (H1 2023: restated 9.8 times) adjusted net finance
charges.
Two major credit rating agencies -- S&P and Moody's --
continue to assign investment grade credit ratings to the Group's
GBP400m bonds.
Financial position of the Group
Net assets
Net assets at 28 October 2023 were GBP519.7m (29 April 2023:
GBP497.8m). The increase in the net assets principally reflects the
profit for the half-year ended 28 October 2023.
Retirement benefits
The reported net assets of GBP519.7m (29 April 2023: GBP497.8m),
that are shown on the consolidated balance sheet are after taking
account of net pre-tax retirement benefit assets, net of
withholding tax payable on surpluses, of GBP175.5m (29 April 2023:
GBP195.9m net retirement benefit liabilities) and associated
deferred tax assets of GBP3.2m (29 April 2023: GBP3.5m).
The Group recognised pre-tax actuarial losses of GBP30.7m, net
of withholding tax, in the half-year ended 28 October 2023 (H1
2023: GBP191.4m gain) on Group defined benefit schemes.
The discount rate used to determine pension scheme liabilities
as at 28 October 2023 was 5.7%, compared to 4.9% as at 29 April
2023.
The Stagecoach Group Pension Scheme is the Group's largest
defined benefit pension scheme exposure. The Scheme's latest formal
valuation was as at 31 October 2022 and showed a surplus on a
scheme funding basis of GBP87.3m. As a result of the improved
funding position, the Scheme Trustees and employers agreed
amendments to the long term Funding Agreement providing for the
employers to make deficit payments to the Scheme of GBP4.4m spread
over 12 months from 1 May 2023. Further to this, the employers have
agreed in principle to make payments into an escrow account of
GBP4.1m for each of the years to 3 May 2025 and 2 May 2026, to be
used underpin the funding position of the Scheme through to April
2031, when the escrow funds may be released back to the employers
or paid into the scheme depending on the funding position of the
Scheme.
Principal risks and uncertainties
Like most businesses, there is a range of risks and
uncertainties facing the Group. A brief summary is given below of
those specific risks and uncertainties that the Directors believe
could have the most significant impact on the Group's financial
position and/or future financial performance. Pages 9 to 15 of the
Group's 2023 Annual Report set out specific risks and uncertainties
in more detail.
The matters summarised below are not intended to represent an
exhaustive list of all possible risks and uncertainties. The focus
below is on those specific risks and uncertainties that the
Directors believe could have the most significant impact on the
Group's position or performance.
-- Major event such as a serious accident -- there is a risk that the Group
is involved (directly or indirectly) in a major operational incident.
-- Economy -- the economic environment in the geographic areas in which the
Group operates affects the demand for the Group's services, the
availability of suitable staff and the Group's costs. A weaker economy
may also increase the risk of the Group's contingent liabilities,
particularly those in relation to its former North American business,
crystallising.
-- Terrorism -- there is a risk that the demand for the Group's services
could be adversely affected by a significant terrorist incident.
-- Changing customer habits -- There is a risk that changes in people's
working patterns, shopping habits and/or other preferences affect demand
for the Group's transport services, which could in turn affect the
Group's financial performance and/or financial position. We see trends of
increased home working, home shopping, telemedicine and home schooling.
To the extent the effects of that on travel patterns are not offset by
modal shift to bus/tram, there will be a longer term adverse effect on
the Group's revenue and potentially its financial performance and/or
financial position.
-- Pension scheme funding -- the Group participates in a number of defined
benefit pension schemes, and there is a risk that the cash contributions
required increase or decrease due to changes in factors such as
regulatory approach, investment performance, discount rates and life
expectancies. There remains a risk of further significant market
movements that could result in significant changes in the amount of our
net retirement benefit assets reported in the financial statements.
-- Insurance and claims environment -- there is a risk that the cost to the
Group of settling claims against it is significantly higher or lower than
expected.
-- Climate change -- we see public transport as a critical part of the
battle against climate change. At the same time, we recognise that
climate change presents a number of risks to the Group.
-- Regulatory changes and availability of public funding -- there is a risk
that changes to the regulatory environment or changes to the availability
of public funding could affect the Group's prospects. The extent to
which payments from government continue to support public transport
services will affect the Group's future profitability and cash flow.
-- People and culture -- There is a risk that the Group is unable to attract,
develop and retain an appropriately skilled, diverse and responsible
workforce and leadership team, and maintain a healthy business culture
which encourages and supports ethical behaviours and decision making.
-- Disease -- there is a risk that demand for the Group's services could be
adversely affected by a significant outbreak of disease. This was
identified by the Board as a principal risk some years ago, but the
COVID-19 situation is a clear and substantial crystallisation of the
risk.
-- Information security -- there is a risk that potential malicious attacks
on our systems lead to a loss of data or disruption to operations.
-- Information technology -- there is a risk that technology failures or
interruptions could adversely affect the Group, including a risk that the
Group's capability to make sales digitally either fails or cannot meet
levels of demand.
-- Competition -- in certain of the markets we operate in, there is a risk
of increased competitive pressures from existing competitors and new
entrants.
-- Treasury risks -- the Group is affected by changes in fuel prices,
interest rates and exchange rates.
Use of non-GAAP measures
Our reported interim financial information is prepared in
accordance with UK-adopted International Accounting Standard 34,
Interim Financial Reporting. In measuring our financial performance
and position, the financial measures that we use include those that
we have derived from our reported results in order to eliminate
factors that distort period-on-period comparisons and/or provide
useful information to stakeholders. These are non-GAAP financial
measures and include measures such as like-for-like revenue,
adjusted EBITDA and net debt. We believe this information, along
with comparable GAAP measurements, is useful to shareholders and
analysts in providing a basis for measuring our financial
performance and position. Note 21 to the condensed financial
statements provides further information on these non-GAAP financial
measures.
Going concern
On the basis of current financial projections and the facilities
available, the Directors are satisfied that the Group has adequate
resources to continue for the foreseeable future and, accordingly,
consider it appropriate to adopt the going concern basis in
preparing the condensed financial statements for the half-year
ended 28 October 2023. We have not identified a material
uncertainty regarding the Group's ability to continue as a going
concern for a period of not less than 12 months. Further detail of
our going concern assessment is explained in note 1(c) to the
condensed financial statements.
Ray O'Toole
Executive Chairman
6 December 2023
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed consolidated interim financial information contained in this document has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted in the UK;
(b) the interim management report contained in this document includes a fair review of the information required by the Financial Conduct Authority's Disclosure and Transparency Rules ("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
(c) as the Company does not issue listed shares, DTR 4.2.8R in respect of related party transactions has not been applied.
By order of and on behalf of the Board
Ray O'Toole Bruce Dingwall
Executive Chairman Chief Financial Officer
6 December 2023 6 December 2023
Cautionary statement
The preceding interim management report has been prepared for
the
shareholder of the Company, as a body, and for no other persons. Its purpose is to assist the shareholder of the Company to assess the strategies adopted by the Company and the potential for those strategies
to succeed and for no other purpose. The interim management report contains forward-looking statements that are subject to risk factors associated with, amongst other things, the economic, regulatory policy and business circumstances occurring from time to time in the sectors
and markets in which the Group operates. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a wide range of variables that could cause actual results
to differ materially from those currently anticipated. No assurances
can be given that the forward-looking statements will be realised. The forward-looking statements reflect the knowledge and information
available at the date of preparation. Nothing in the interim management report should be considered or construed as a profit forecast
for the Group. Except as required by law, the Group has no obligation to update forward-looking statements or to correct any inaccuracies therein.
CONDENSED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited
Half-year to 28 October Half-year to 29 October
2023 2022 (Restated)
Performance Separately Performance Separately
excluding disclosed excluding disclosed
separately items Results separately items Results
disclosed (note for the disclosed (note for the
items 4) period items 4) period
Notes GBPm GBPm GBPm GBPm GBPm GBPm
CONTINUING OPERATIONS
------------------------------
Revenue 3(a) 773.2 - 773.2 669.6 - 669.6
Operating costs and other
operating income (732.7) 7.8 (724.9) (626.3) (13.8) (640.1)
Operating profit of Group
companies 3(b) 40.5 7.8 48.3 43.3 (13.8) 29.5
Share of profit of joint
ventures after taxation 3(c) 2.8 - 2.8 3.6 - 3.6
Total operating profit:
Group operating profit
and share of joint ventures'
profit after taxation 3(b) 43.3 7.8 51.1 46.9 (13.8) 33.1
Non-operating separately
disclosed item 4 - - - - 1.5 1.5
Profit before interest
and taxation 43.3 7.8 51.1 46.9 (12.3) 34.6
Finance costs (14.0) (1.4) (15.4) (12.1) - (12.1)
Finance income 11.9 - 11.9 1.8 0.3 2.1
Profit before taxation 41.2 6.4 47.6 36.6 (12.0) 24.6
Taxation (8.2) (1.6) (9.8) (5.9) 0.8 (5.1)
Profit for the period,
all attributable to equity
holders of the parent 33.0 4.8 37.8 30.7 (11.2) 19.5
------------------------------
The accompanying notes form an integral part of this
consolidated income statement.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
Half-year Half-year
to to
28 October 29 October
2023 2022 (Restated)
GBPm GBPm
Profit for the period 37.8 19.5
Items that may be reclassified to profit or loss
Cash flow hedges:
- Net fair value gains on cash flow hedges 33.9 30.0
- Reclassified and reported in profit for the
period (13.7) (43.7)
- Tax effect of cash flow hedges (5.1) 2.7
Total items that may be reclassified to profit
or loss 15.1 (11.0)
-------------------------------------------------- ----------- ----------------
Items that will not be reclassified to profit
or loss
Actuarial gains on Group defined benefit pension
schemes, excluding withholding tax (30.7) 191.4
Tax effect of actuarial gains on Group defined
benefit pension schemes (0.3) (18.5)
Total items that will not be reclassified to
profit or loss (31.0) 172.9
-------------------------------------------------- ----------- ----------------
Other comprehensive income for the period (15.9) 161.9
-------------------------------------------------- ----------- ----------------
Total comprehensive income for the period, all
attributable to equity holders of the parent 21.9 181.4
-------------------------------------------------- ----------- ----------------
CONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION)
Unaudited Audited
As at As at
28 October 2023 29 April 2023
Notes GBPm GBPm
---------------- --------------
ASSETS
Non-current assets
Goodwill 7 92.5 92.1
Other intangible assets 8 7.1 7.1
Property, plant and equipment: 9 734.2 711.3
Right-of-use assets 9 76.3 80.2
Interests in joint ventures 10 14.5 12.0
Derivative instruments at fair
value 11.7 11.5
Retirement benefit assets -- net
of withholding tax payable 12 178.8 199.4
Other receivables 12.7 15.4
1,127.8 1,129.0
--------------------------------- ------ ---------------- --------------
Current assets
Inventories 14.0 12.3
Trade and other receivables 193.6 112.1
Derivative instruments at fair
value 22.8 13.9
Current tax recoverable - 0.4
Cash and cash equivalents 180.5 245.6
Assets classed as held for sale 1.7 3.4
412.6 387.7
--------------------------------- ------ ---------------- --------------
Total assets 3(d) 1,540.4 1,516.7
--------------------------------- ------ ---------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 262.9 248.3
Current tax liabilities 0.5 -
Borrowings:
- Lease liabilities 22.1 25.0
- Other borrowings - 1.8
Derivative instruments at fair
value 0.5 9.1
Provisions 18 45.9 56.4
331.9 340.6
--------------------------------- ------ ---------------- --------------
Non-current liabilities
Other payables 62.0 51.7
Borrowings:
- Lease liabilities 59.9 60.3
- Other borrowings 401.4 407.1
Derivative instruments at fair
value 4.6 12.4
Deferred tax liabilities 74.9 59.8
Provisions 18 82.7 83.5
Retirement benefit obligations 12 3.3 3.5
688.8 678.3
--------------------------------- ------ ---------------- --------------
Total liabilities 3(d) 1,020.7 1,018.9
--------------------------------- ------ ---------------- --------------
Net assets 3(d) 519.7 497.8
--------------------------------- ------ ---------------- --------------
EQUITY
Ordinary share capital 13 3.2 3.2
Share premium account 8.4 8.4
Retained earnings 133.6 126.8
Capital redemption reserve 422.8 422.8
Own shares (69.6) (69.6)
Cash flow hedging reserve 21.2 6.1
Total equity, all attributable
to the parent 519.6 497.7
Non-controlling interest 0.1 0.1
Total equity 519.7 497.8
--------------------------------- ------ ---------------- --------------
The accompanying notes form an integral part of this
consolidated balance sheet.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total
Capital Cash flow Equity
Ordinary Share premium Retained redemption hedging attributable Non-controlling
share capital account earnings reserve Own shares reserve to parent interest Total equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 29 April 2023 3.2 8.4 126.8 422.8 (69.6) 6.1 497.7 0.1 497.8
Profit for the period - - 37.8 - - - 37.8 - 37.8
Other comprehensive income/(loss),
net of tax - - (31.0) - - 15.1 (15.9) - (15.9)
Total comprehensive income - - 6.8 - - 15.1 21.9 - 21.9
---------------------------------------- -------------- ------------- --------- ----------- ---------- --------- ------------- --------------- ------------
Balance at 28 October 2023 3.2 8.4 133.6 422.8 (69.6) 21.2 519.6 0.1 519.7
---------------------------------------- -------------- ------------- --------- ----------- ---------- --------- ------------- --------------- ------------
Balance at 30 April 2022 (restated) 3.2 8.4 (38.2) 422.8 (69.6) 75.4 402.0 0.1 402.1
---------------------------------------- -------------- ------------- --------- ----------- ---------- --------- ------------- --------------- ------------
Profit for the period - - 19.5 - - - 19.5 - 19.5
Other comprehensive income/(loss),
net of tax - - 172.9 - - (11.0) 161.9 - 161.9
Total comprehensive income/(loss) - - 192.4 - - (11.0) 181.4 - 181.4
---------------------------------------- -------------- ------------- --------- ----------- ---------- --------- ------------- --------------- ------------
Credit in relation to equity-settled
share based payments - - 3.9 - - - 3.9 - 3.9
Effect of tax deduction on share
based payments in excess of cumulative
income statement expense - - 0.4 - - - 0.4 - 0.4
Balance at 29 October 2022 (restated) 3.2 8.4 158.5 422.8 (69.6) 64.4 587.7 0.1 587.8
---------------------------------------- -------------- ------------- --------- ----------- ---------- --------- ------------- --------------- ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
Half-year Half-year
to to
28 October 29 October
2023 2022 (Restated)
Notes GBPm GBPm
Cash flows from operating activities
Cash generated by operations 14 80.9 119.5
Interest paid (23.6) (19.4)
Interest received 4.6 1.6
Dividends received from joint ventures 0.3 1.8
Net cash flows from operating activities
before tax 62.2 103.5
Tax paid - (16.8)
Net cash from operating activities after
tax 62.2 86.7
----------------------------------------- ----- ----------- ----------------
Cash flows from investing activities
Acquisition of subsidiaries 6 (1.9) (13.6)
Purchase of property, plant and equipment (74.4) (26.5)
Disposal of property, plant and equipment 1.5 3.5
Receipt of capital grants 12.8 6.6
Purchase of intangible assets (0.9) (1.0)
Net cash outflow from investing
activities (62.9) (31.0)
----------------------------------------- ----- ----------- ----------------
Cash flows from financing activities
Loan to parent company (50.0) -
Payments of principal portion of lease
liabilities (12.6) (14.4)
Net cash flow from financing activities (62.6) (14.4)
----------------------------------------- ----- ----------- ----------------
Net (decrease)/increase in cash and cash
equivalents (63.3) 41.3
Cash and cash equivalents at beginning
of period 243.8 248.9
Cash and cash equivalents at end of
period 180.5 290.2
----------------------------------------- ----- ----------- ----------------
The accompanying notes form an integral part of this
consolidated statement of cash flows.
NOTES
1 BASIS OF PREPARATION
(a) Basis of preparation
The condensed consolidated interim financial information for the
half-year ended 28 October 2023 has been prepared in accordance
with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority and UK-adopted International Accounting
Standard 34, Interim Financial Reporting. The condensed
consolidated interim financial information should be read in
conjunction with the annual financial statements for the year ended
29 April 2023, which have been prepared in accordance with
UK-adopted International Accounting Standards. The accounting
policies and methods of computation applied in the consolidated
interim financial information are the same as those of the annual
financial statements for the year ended 29 April 2023, as described
on pages 64 to 78 of the Group's 2023 Annual Report which can be
found on the Stagecoach Group website at
http://www.stagecoachgroup.com/investors/financial-analysis/reports/.
The figures for this half-year include the results for all
segments for the 26 weeks to 28 October 2023. The comparative
figures for the half-year ended 29 October 2022 include the results
for all segments for the 26 weeks ended 29 October 2022.
This condensed consolidated interim financial information for
the half-year ended 28 October 2023 has not been audited or
reviewed by the auditors. The comparative financial information
presented in this announcement for the year ended 29 April 2023
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006 and does not reflect all of the information
contained in the Company's annual financial statements. The annual
financial statements for the year ended 29 April 2023 were approved
by the Board of Directors on 29
June 2023. They received an unqualified audit report from the auditors, did not contain an emphasis of matter paragraph, did not contain a statement under section 498 of the Companies Act 2006 and have been filed with the Registrar of Companies.
The Board of Directors approved this announcement, including the
condensed consolidated interim financial information, on 6 December
2023. This announcement will be available on the Group's website
at
http://www.stagecoachgroup.com/investors/financial-analysis/reports/.
Change in the accounting policy for the treatment of Battery
Contracts
As disclosed in the annual report for the year ended 30 April
2022 the Group leases electric buses. In some cases, the Group
enters into separate agreements for the provisions of batteries to
power the buses (the "Battery Contracts"). Some judgement is
involved in determining whether each Battery Contract is, or
contains, a lease.
The Battery Contracts are separate legal agreements from any
leases of buses and contain separate terms and conditions. In the
years ended 1 May 2021 and 30 April 2022, the Directors had formed
the view that the Battery Contracts did not meet the IFRS
definition of leases as in the Directors' view the battery provider
had control of the battery assets and had substantive rights of
substitution for the batteries. This matter was disclosed as a
critical accounting judgement in both of those years.
On 29 November 2022, the IFRS Interpretations Committee
("IFRIC") met and discussed the definition of a lease. Following
the publication of the decision of IFRIC, the Group reviewed its
accounting treatment of the Battery Contracts. In light of the
IFRIC decision, the Group has decided that it would be more
appropriate for the Group to treat the Battery Contracts as
leases.
The Group has restated its results for the half-year ended 29
October 2022 to reflect this change in accounting policy. A summary
of the impact of the change in policy is summarised in the tables
on pages 18 and 19.
Change in accounting for the Group's participation in Local
Government Pension Schemes ("LGPSs")
Certain of the Company's subsidiaries participate in LGPSs,
which are all closed to new members from the Group. Where a private
sector employer ceases to have any employees who are active members
in a LGPS, that automatically triggers the employer's exit from the
LGPS except where the employer agrees alternative arrangements with
the relevant LGPS. When an exit from an LGPS is triggered, an
amount may be payable or receivable by the employer to or from the
administering authority of the relevant scheme.
In prior years, the Group had accounted for its participation in
LGPSs in the same way as its other pension arrangements, by:
-- measuring the relevant assets in respect of LGPS participations at fair
value;
-- measuring the obligations to pay pensions through to the expected deaths
of the relevant members/their dependents at discounted present value;
-- where applicable, restricting the net asset recognised (i.e. the gross
assets less the gross obligations) to the present value of economic
benefits available in the form of any future refunds from the scheme or
reductions in future contributions to the scheme.
In the year ended 30 April 2022, the Directors were of the view,
having taken independent expert advice on the accounting, that the
Group's accounting was appropriate and was consistent with other
major groups with UK public transport operations that have LGPS
participations.
1 BASIS OF PREPARATION (CONTINUED)
The Group's auditors, Ernst & Young, reached a different
conclusion to the Directors on the basis of accounting for the
Group's participation in LGPSs that are closed to new members from
the Group. In particular that:
-- the measurement of the defined benefit obligation should reflect the
expected cash flows payable under the scheme rules through to the
expected exit by the employer (for example, on the retirement of the last
active member) and including any expected exit payment or credit; and
-- there should be no additional IFRIC 14 restriction to the LGPS net asset,
given the right of the Group to receive a refund from the scheme is
limited only to the extent of the actuarially determined surplus at the
point of exit or any discretion applied by the administering authority.
Notwithstanding the different interpretation of the Group's
auditors, the Directors had concluded that the Group's accounting
for its participation in LGPSs remained appropriate and was a
reasonable interpretation of the relevant standards. Accordingly,
the Group's auditors qualified their audit opinion in relation to
the accounting for the Group's participation in Local Government
Pension Schemes that are closed to new members.
Subsequent to the acquisition of the Group by Inframobility UK
Bidco Limited, the Directors have reassessed the Group's approach
to the accounting in this area in the year ended 29 April 2023.
The policy applied by the Group has been revised such that where
a section of the LGPS is closed to new members, the defined benefit
obligation is calculated taking into consideration the specific
rules set out in The Local Government Pension Scheme Regulations
2013 ("the Regulations") and reflects the estimated cash flows
required to eliminate the Company's obligations from these schemes,
including the estimated cash flows arising on an exit. No
additional IFRIC 14 restriction is applied to any LGPS net asset,
given the right of the Group to receive a refund from the scheme is
limited only to the extent of the actuarially determined surplus at
the point of exit or any discretion applied by the administering
authority.
Comparative amounts have been restated accordingly. The effect
of the restatement, together with the effect of the change in
policy with respect to the treatment of battery contracts, is set
out below.
Unaudited half-year to 29 October
2022
Effect Effect
As of LGPS of battery
CONSOLIDATED INCOME STATEMENT reported accounting contracts Restated
GBPm GBPm GBPm GBPm
Operating costs and other operating
income excluding separately disclosed
items (626.4) - 0.1 (626.3)
Operating costs and other operating
income (640.2) - 0.1 (640.1)
Profit before interest and taxation 34.5 - 0.1 34.6
Finance costs (12.0) - (0.1) (12.1)
Finance income 1.9 0.2 - 2.1
Profit before taxation 24.4 0.2 - 24.6
Taxation (5.1) - - (5.1)
Profit for the period 19.3 0.2 - 19.5
----------------------------------------
Effect Effect
CONSOLIDATED STATEMENT OF COMPREHENSIVE As of LGPS of battery
INCOME reported accounting contracts Restated
GBPm GBPm GBPm GBPm
Profit for the year 19.3 0.2 - 19.5
Total items that may be reclassified
to profit or loss (11.0) - - (11.0)
Items that will not be reclassified
to profit or loss 172.9 - - 172.9
Total comprehensive income for
the period 181.2 0.2 - 181.4
Effect Effect
CONSOLIDATED STATEMENT OF CASH As of LGPS of battery
FLOWS reported accounting contracts Restated
GBPm GBPm GBPm GBPm
Cash generated by operations 118.7 - 0.8 119.5
Net cash flows from operating
activities before tax -- interest
paid (19.3) - (0.1) (19.4)
Net cash flows from operating
activities before tax 102.8 - 0.7 103.5
Net cash flows from operating
activities after tax 86.0 - 0.7 86.7
Cash flows from financing activities
-- Payments of principal portion of
lease liabilities (13.7) - (0.7) (14.4)
Net cash outflow from financing
activities (13.7) - (0.7) (14.4)
1 BASIS OF PREPARATION (CONTINUED)
Audited -- as at 30 April 2022
Effect Effect
As of LGPS of battery
CONSOLIDATED BALANCE SHEET reported accounting contracts Restated
GBPm GBPm GBPm GBPm
Non-current assets
Property, plant and equipment
-- Right-of-use assets 68.6 - 6.3 74.9
Retirement benefit assets 45.3 10.5 - 55.8
Non-current assets 966.0 10.5 6.3 982.8
------------------------------- --------- ----------- ----------- ---------
Total assets 1,424.3 10.5 6.3 1,441.1
------------------------------- --------- ----------- ----------- ---------
Current liabilities
Lease liabilities (22.1) - (1.4) (23.5)
Current liabilities (347.7) - (1.4) (349.1)
------------------------------- --------- ----------- ----------- ---------
Non-current liabilities
Lease liabilities (52.3) - (5.1) (57.4)
Retirement benefit obligations (75.1) 0.3 - (74.8)
Non-current liabilities (685.1) 0.3 (5.1) (689.9)
------------------------------- --------- ----------- ----------- ---------
Total liabilities (1,032.8) 0.3 (6.5) (1,039.0)
------------------------------- --------- ----------- ----------- ---------
Net assets 391.5 10.8 (0.2) 402.1
------------------------------- --------- ----------- ----------- ---------
Retained earnings (48.8) 10.8 (0.2) (38.2)
------------------------------- --------- ----------- ----------- ---------
Total equity attributable to
parent 391.5 10.8 (0.2) 402.1
------------------------------- --------- ----------- ----------- ---------
(b) New accounting standards adopted during the period
From 30 April 2023, the following standards and amendments are
effective in the Group's consolidated financial statements:
-- IAS 12 Income Taxes -- International Tax Reform -- Pillar Two Model Rules
-- IFRS 17 Insurance Contracts
-- Amendments to IAS 12 Income Taxes -- Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
-- Amendments to IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2 Making Materiality Judgements -- Disclosure of
Accounting Policies
-- Amendments to IAS 8 Accounting Policy, Changes in Accounting Estimates
and Errors -- Definition of Accounting Estimates
The application of these amendments has not had any material
impact on the disclosures or net assets of the Group.
(c) Going concern
(i) Going concern assessment
During the half-year ended 28 October 2023, we have delivered
another positive set of financial results and made progress on
delivering our key objectives. We have seen a continued recovery in
passenger demand, as we work in partnership with national and local
government to maximise the opportunities from public transport for
consumers and the country while navigating the current economic
environment.
The Board considered the liquidity position and covenant
headroom in the Group's financial forecasts which cover the period
of 12 months from the date of this announcement ("the going concern
period"), recognising the challenges around reliably estimating and
forecasting the effects of the wider economic environment on our
business.
The key areas of forecasting uncertainty include:
-- The timing and extent of the recovery in demand for regional bus
journeys;
-- Availability and cost of staff; and
-- The nature and extent of payments from government for continuing regional
bus services, including available funding to support the GBP2 fare cap
scheme in England.
Our base case forecast assumes that regional bus commercial
revenue returns to 98% of pre-COVID levels for the year ending 3
May 2025, reflecting consistent patronage with that achieved in the
year ended 29 April 2023 along with inflationary fare increases
already implemented. Concessionary revenue for the year ending 27
April 2024 is forecast at 100% of pre-COVID levels, increasing to
102% pre-COVID levels for the year ending 3 May 2025.
Our base case forecast reflects the two-year funding settlement
for bus operators in England, which included GBP300m of further
funding for the wider bus sector to protect bus services until
2025, in addition to further funding for the GBP2 fare cap to 31
December 2024.
1 BASIS OF PREPARATION (CONTINUED)
(c) Going concern (continued)
(i) Going concern assessment (continued)
Our severe and plausible downside scenarios contemplate lower
regional bus commercial revenue over the forecast period, in
addition to more cautious assumptions around our levels of cost
increases and government funding support. The downside scenario
considered in the going concern period was:
-- passenger numbers at 75%-76% of pre-COVID levels in the going concern
period;
-- commercial revenue at 90%-91% of pre-COVID levels in the going concern
period;
-- concessionary revenue at 91% of pre-COVID levels for the remainder of the
going concern period;
-- no additional government funding of zero emission buses, beyond awards
already made; and
-- failure to win the majority of its bus franchise bids resulting in the
loss of services in a number of its depots.
(ii) Mitigating actions
To the extent any severe downside scenarios materialised, we
consider that the Group would have sufficient controllable,
mitigating actions to avoid a breach of the covenant tests in our
committed bank facilities.
Having constrained the Group's capital expenditure during the
period of COVID, our base case forecast assumes we increase our
investment in capital expenditure, as we progress our plans to
transition to a zero emission bus fleet. Accordingly, reducing or
deferring this capital expenditure would be the key mitigation
available. In addition, we would be able to further reduce the
Group's cost base, in particular reducing vehicle mileage to better
match customer demand, which would result in variable cost savings.
These mitigations are within the Group's control and do not have
any associated penalties.
(iii) Covenant headroom
Under the base case and downside scenarios, the Group remains in
compliance with the covenant tests in our committed core bank
facilities which expire in March 2026. In the reverse stress test
scenario, headroom against the covenant tests exists throughout the
going concern period, after taking account of controllable,
mitigating actions.
(iv) Going concern conclusion
Accordingly, the condensed consolidated interim financial
information for the half-year ended 28 October 2023 has been
prepared on a going concern basis. Taking account of the economic
background in the UK, and other relevant factors, the Directors
concluded that it remained appropriate to adopt the going concern
basis of accounting in preparing the consolidated interim financial
information, with no material uncertainties identified. The
Directors have a reasonable expectation that the Group will
continue to operate as a going concern for at least a period of 12
months from the date of approval of this announcement.
2 SEASONALITY
We do not expect significant seasonal demand fluctuations to
affect the phasing of the Group's revenue and profit for the year
ending 27 April 2024.
3 SEGMENTAL ANALYSIS
The Group is managed, and reports internally, on a basis
consistent with its three continuing operating segments, being UK
Bus (regional
operations), UK Bus (London), and UK Rail. The Group's accounting policies are applied consistently, where appropriate, to each segment.
The segmental information provided in this note is on the basis
of those three operating segments as follows:
Segment name Service operated Countries of operation
UK Bus (regional Coach and bus operations United Kingdom
operations)
UK Bus (London) Bus operations United Kingdom
UK Rail Rail operations and business United Kingdom
development
The basis of segmentation and the basis on which segment
profit/(loss) is measured are consistent with the Group's last
annual financial statements for the year ended 29 April 2023.
The Group has interests in three joint ventures: WCT Group that
operates in UK Rail, Citylink that operates in UK Bus (regional
operations) and
Crown Sightseeing that operates in UK Bus (London). The results of these joint ventures are shown separately in note 3(c).
3 SEGMENTAL ANALYSIS (CONTINUED)
(a) Revenue
Due to the nature of the Group's business, the origin and
destination of
revenue (the United Kingdom) is the same in almost all cases. As the Group predominately sells bus and rail services to individuals, it has
few customers that are individually "major". Its major customers are typically public bodies that subsidise or procure transport services -- such customers include local authorities, transport authorities and the UK Department for Transport.
The vast majority of the UK Bus (London) revenue is from
Transport for London.
Revenue split by class and segment, was as follows:
Unaudited
Half-year to 28 October 2023
-----------------------------------------------------
Commercial Tendered Contract
passenger Concessionary & school & other
revenue revenue revenue revenue Total
GBPm GBPm GBPm GBPm GBPm
UK Bus (regional
operations) 307.9 165.5 75.8 35.5 584.7
UK Bus (London) - - - 179.8 179.8
Total bus operations 307.9 165.5 75.8 215.3 764.5
UK Rail 7.9 - - 0.8 8.7
Reported Group
revenue 315.8 165.5 75.8 216.1 773.2
--------------------- ---------- ------------- --------- -------- -----
Unaudited
Half-year to 29 October 2022
-----------------------------------------------------
Commercial Tendered Contract
passenger Concessionary & school & other
revenue revenue revenue revenue Total
GBPm GBPm GBPm GBPm GBPm
UK Bus (regional
operations) 292.2 121.9 56.7 37.3 508.1
UK Bus (London) - - - 154.4 154.4
Total bus operations 292.2 121.9 56.7 191.7 662.5
UK Rail 6.8 - - 0.3 7.1
Reported Group
revenue 299.0 121.9 56.7 192.0 669.6
--------------------- ---------- ------------- --------- -------- -----
(b) Operating profit
Operating profit split by segment, was as follows:
Unaudited Unaudited
Half-year to 29 October
Half-year to 28 October 2023 2022 (Restated)
--------------------------------- ---------------------------------
Performance Performance
excluding Separately excluding Separately
separately disclosed Results separately disclosed Results
disclosed items for the disclosed items for the
items (note 4) period items (note 4) period
GBPm GBPm GBPm GBPm GBPm GBPm
UK Bus (regional
operations) 52.3 2.6 54.9 50.4 (2.5) 47.9
UK Bus (London) (5.8) (0.6) (6.4) (1.5) (0.8) (2.3)
Total bus operations 46.5 2.0 48.5 48.9 (3.3) 45.6
UK Rail (1.5) 5.8 4.3 (0.5) (0.8) (1.3)
45.0 7.8 52.8 48.4 (4.1) 44.3
Group overheads (4.5) - (4.5) (5.0) (9.7) (14.7)
Restructuring costs - - - (0.1) - (0.1)
Total operating
profit of Group
companies 40.5 7.8 48.3 43.3 (13.8) 29.5
Share of joint ventures'
profit after taxation 2.8 - 2.8 3.6 - 3.6
Total operating
profit: Group operating
profit and share
of joint ventures'
profit after taxation 43.3 7.8 51.1 46.9 (13.8) 33.1
------------------------- ----------- ---------- -------- ----------- ---------- --------
(c) Joint ventures
The share of profit from joint ventures was further split as
follows:
Unaudited Unaudited
Half-year to Half-year to 29
28 October 2023 October 2022
GBPm GBPm
WCT Group (UK Rail)
Operating profit - 0.1
Citylink (UK Bus, regional
operations)
Operating profit 3.0 3.6
Finance income 0.1
Taxation (0.7) (0.7)
2.4 2.9
----------------------------------- ---------------- ----------------
Crown Sightseeing (UK Bus, London)
Operating profit 0.5 0.7
Taxation (0.1) (0.1)
0.4 0.6
----------------------------------- ---------------- ----------------
Share of profit of joint ventures
after taxation 2.8 3.6
----------------------------------- ---------------- ----------------
3 SEGMENTAL ANALYSIS (CONTINUED)
(d) Gross assets and liabilities
Assets and liabilities split by segment were as follows:
Unaudited Audited
As at 28 October 2023 As at 29 April 2023
Net Net
Gross Gross assets/ Gross Gross assets/
assets liabilities (liabilities) assets liabilities (liabilities)
GBPm GBPm GBPm GBPm GBPm GBPm
UK Bus (regional
operations) 1,050.0 (309.0) 741.0 1,029.5 (303.1) 726.4
UK Bus (London) 200.3 (88.2) 112.1 192.7 (80.1) 112.6
UK Rail 8.2 (33.3) (25.1) 6.8 (38.9) (32.1)
1,258.5 (430.5) 828.0 1,229.0 (422.1) 806.9
Central functions 86.9 (31.4) 55.5 29.7 (42.7) (13.0)
Joint ventures 14.5 - 14.5 12.0 - 12.0
Borrowings and cash
equivalents 180.5 (483.4) (302.9) 245.6 (494.3) (248.7)
Taxation - (75.4) (75.4) 0.4 (59.8) (59.4)
Total 1,540.4 (1,020.7) 519.7 1,516.7 (1,018.9) 497.8
---------------------- ------- ----------- -------------- ------- ----------- --------------
The UK Rail net liabilities of GBP25.1m (29 April 2023:
GBP32.1m) shown above include GBP24.2m (29 April 2023: GBP24.7m) of
train operating company net liabilities in relation to major rail
franchises previously operated by the Group.
Central assets and liabilities include interest payable and
receivable and other net assets of the holding company and other
head office companies. Segment assets and liabilities are
determined by identifying the assets and liabilities that relate to
the business of each segment but excluding intra-Group balances,
cash, cash equivalents, borrowings, taxation, interest payable and
interest receivable.
4 SEPARATELY DISCLOSED ITEMS
(a) Summary of separately disclosed items
The Group highlights amounts before certain "separately
disclosed items" as defined in note 21.
The items shown in the columns headed "separately disclosed
items" on the face of the consolidated income statement can be
further analysed as follows:
Unaudited Unaudited
Half-year to Half-year to
28 October 2023 29 October 2022
GBPm GBPm
Operating costs and other operating
income
Non-software intangible asset
amortisation (0.6) (0.4)
Reassessment of onerous contract
provision 4.4 (0.3)
Restructuring and associated costs (2.3) -
Expired rail franchises 1.4 -
Property disposal 4.9 -
Transaction costs - (12.9)
Acquisition costs - (0.2)
7.8 (13.8)
--------------------------------------- ---------------- ----------------
Non-operating separately disclosed
item
Disposal of Megabus retail and
Falcon - 1.5
Finance (costs) / income
Change in fair value of Deferred
Payment Instrument (1.4) 0.3
Separately disclosed items before
taxation 6.4 (12.0)
Taxation effect (1.6) 0.8
Separately disclosed items after
taxation 4.8 (11.2)
---------------------------------------- ---------------- ----------------
(b) Reassessment of onerous contract provision
As at 29 April 2023, an onerous contract provision of GBP8.9m
was held in respect of the Sheffield Supertram. We have
recalculated the Sheffield Supertram onerous contract provision,
reflecting our latest forecast for the business. That re-assessment
resulted in a GBP4.8m decrease (H1 2023: GBP0.4m increase) in the
level of the provision, with the increase, net of the GBP0.4m (H1
2023: GBP0.1m) of Sheffield Supertram's other operating loss (H1
2022: profit) in the half-year, charged (H1 2023: credited) to the
consolidated income statement for the half-year ended 29 October
2023 and presented as a separately disclosed item.
4 SEPARATELY DISCLOSED ITEMS (CONTINUED)
(b) Reassessment of onerous contract provision (continued)
The estimate of the Supertram onerous contract provision
involves estimation uncertainty, particularly in relation to
forecast passenger revenue, albeit the level of estimation
uncertainty is reducing as we approach the contract expiry date of
March 2024. Underlying passenger revenue has been normalised to
take account of changes in the timing of infrastructure work on the
tram system.
No specific assumptions have been made regarding climate change
in estimating the Supertram onerous contract provision. Taking
account of the remaining term of the Supertram concession being
less than a year and that the trams are electrically (rather than
diesel) powered, we do not consider that climate change
considerations materially affect the estimate of the provision as
at 28 October 2023.
(c) Restructuring and associated costs
Following the acquisition of the Group in the year to 29 April
2023, a detailed review of the Group's structure and operations was
undertaken. This included the use of an external consultancy agency
along with the management experience of the new owner. In the
half-year ended 28 October 2023, the Group incurred redundancy and
related costs of GBP2.3m (H1 2023: GBPNil).
(d) Expired rail franchises
As part of concluding matters in relation to its former
involvement in the UK train operating market, the Group has
recorded a separately disclosed gain of GBP1.4m in the half-year
ended 28 October 2023 (H1 2023: GBPNil). The gain is presented as a
separately disclosed item as it relates to costs that were
previously recorded as separately disclosed items.
(e) Property disposal
Following the demobilisation of our Wigan depot, prior to the
commencement of Transport for Greater Manchester's new franchising
system, the depot was sold, generating a gain on its disposal of
GBP4.9m. Due to the size of the profit on the disposal this has
been presented as a separately disclosed item.
(f) Transaction costs
No transaction costs were incurred in the half-year ended 28
October 2023.
In the half year to 29 October 2022 the Group recorded expenses
of GBP12.9m, predominantly professional fees, accelerated shared
based payment expenses (see below) and accelerated management
incentives, in relation to the offer from DWS Infrastructure and
the lapsed all-share combination with National Express Group plc.
Due to the non-recurring nature of the expenses, the Directors
consider that it is helpful for understanding the Group's financial
performance to disclose separately the expenses incurred.
The change of control triggered the early vesting of certain
share based awards. As a result, share based payment expenses that
were previously expected to arise in future periods were
immediately expensed and are classified within separately disclosed
items for the half-year ended 29 October 2022.
(g) Acquisition costs
No acquisition costs were incurred in the half-year ended 28
October 2023. GBP0.2m of costs incurred in connection with the
acquisition of two London bus businesses in the half-year ended 29
October 2022 have been presented as a separately disclosed item,
because the costs are not related to the ongoing trading of the
Group and due to the irregularity of business acquisitions.
(h) Disposal of megabus retail and Falcon
In August 2022, the Group disposed of the following businesses
to its joint venture, Scottish Citylink Coaches Limited:
-- the megabus retail platform and customer-service business, which sells
and markets inter-city coach services in England and Wales
-- Falcon South-West, which retails tickets for the coach route between
Plymouth and Bristol Airport.
We have assessed the assets transferred to Scottish Citylink
Coaches and consider them to constitute a business as defined in
International Financial Reporting Standard 3 ("IFRS 3"), Business
Combinations. The carrying value of the Group's interest in
Scottish Citylink has been increased by the cost of the additional
investment, being the estimated fair value of the business
transferred to Scottish Citylink. The gain resulting from the sale
of the business to Scottish Citylink has been recognised in full in
the half-year ended 29 October 2022 and has not been restricted to
the extent of the other investor's interest in the joint
venture.
4 SEPARATELY DISCLOSED ITEMS (CONTINUED)
(h) Disposal of megabus retail and Falcon (continued)
The consideration received in respect of the disposal was an
increase in the Group's share of Scottish Citylink Coaches Limited,
from 35% to 37.5%, which has resulted in a gain on disposal of
GBP1.5m being recognised during the half-year ended 29 October
2022. Due to the irregular occurrence of business disposals, the
Directors consider that it is helpful for understanding the Group's
financial performance to disclose separately the gain realised in
respect of the business disposal.
(i) Change in fair value of Deferred Payment Instrument
The Group received a Deferred Payment Instrument as deferred
consideration for the sale of the North American business in April
2019. The instrument, which is accounted for as fair value through
profit or loss, has a maturity date of October 2024 and due to
credit and other recoverability risks associated with the
instrument, it carrying value is at a discount to its face value.
The Group's exposure to the purchaser of the North American
business ranks behind all of the secured lenders. The carrying
value of the instrument was GBP3.5m as at 29 April 2023. We
estimated the carrying value of the instrument to be GBP2.1m as at
28 October 2023, resulting in a loss of GBP1.4m (H1 2023: gain of
GBP0.3m) recognised in finance costs (H1 2023: finance income) in
the half-year ended 28 October 2023.
Changes in the fair value of the Deferred Payment Instrument may
occur in several consecutive financial years until the issuer of
the instrument discharges it in full. The Deferred Payment
Instrument is part of the consideration received for the sale of a
business and it does not relate to the ongoing operating activities
of the Group. The Directors therefore consider that it is helpful
for understanding the Group's financial performance to disclose
separately changes in the fair value of the Deferred Payment
Instrument.
(j) Taxation effect
The separately disclosed taxation charge of GBP1.6m (H1 2023:
credit of GBP0.8m) is in relation to the taxation effect of the
pre-tax separately disclosed items.
5 DIVIDS
No dividends have been paid during, or declared in respect of,
the half-year ended 28 October 2023 or in respect of the half-year
ended 29 October 2022.
6 BUSINESS COMBINATIONS AND DISPOSALS
No material business combinations or business disposals were
completed by the Group in the half-year to 28 October 2023.
Details of acquisitions and disposals completed in earlier
periods are given in the Group's annual reports for the relevant
periods.
7 GOODWILL
The movements in goodwill were as follows:
Unaudited Unaudited Audited
-----------
Half-year Half-year
to to Year to
28 October 29 October 29 April
2023 2022 2023
GBPm GBPm GBPm
-----------
Net book value at beginning of period 92.1 51.9 51.9
Goodwill arising through acquisitions
of businesses 0.4 35.1 40.2
Net book value at end of period 92.5 87.0 92.1
-------------------------------------- ----------- ----------- ---------
8 OTHER INTANGIBLE ASSETS
The movements in other intangible assets were as follows:
Unaudited Unaudited Audited
-----------
Half-year Half-year
to to Year to
28 October 29 October 29 April
2023 2022 2023
GBPm GBPm GBPm
-----------
Cost at beginning of period 36.0 33.2 33.2
Acquired through business combinations 0.2 3.5 2.2
Additions 0.9 1.0 2.9
Disposals - (1.4) (2.3)
Cost at end of period 37.1 36.3 36.0
----------------------------------------- ----------- ----------- ---------
Accumulated amortisation at beginning
of period (28.9) (28.9) (28.9)
Amortisation charged to income statement (1.1) (0.9) (1.9)
Impairment charged to income statement - - (0.3)
Disposals - 1.4 2.2
-----------
Accumulated amortisation at end of period 30.0 (28.4) (28.9)
----------------------------------------- ----------- ----------- ---------
Net book value at beginning of period 7.1 4.3 4.3
----------------------------------------- ----------- ----------- ---------
Net book value at end of period 7.1 7.9 7.1
----------------------------------------- ----------- ----------- ---------
PROPERTY, PLANT AND EQUIPMENT
9
(a) Owned assets
The movements in property, plant and equipment were as
follows:
Unaudited Unaudited Audited
-----------
Half-year Half-year
to to Year to
28 October 29 October 29 April
2023 2022 2023
GBPm GBPm GBPm
-----------
Cost at beginning of period 1,574.5 1,582.6 1,582.6
Additions 65.0 8.8 66.5
Acquired through business combinations 0.4 1.0 0.8
Transfers from right-of-use assets - - 0.1
Transferred to assets held for sale (0.8) (0.1) (2.4)
Disposals (35.9) (17.8) (73.1)
Cost at end of period 1,603.2 1,574.5 1,574.5
----------------------------------------- ----------- ----------- ---------
Depreciation at beginning of period (863.2) (850.5) (850.5)
Depreciation charged to income statement (40.2) (38.5) (78.2)
Impairment charged to income statement - - (3.0)
Transfers from right-of-use assets - - (0.1)
Transferred to assets held for sale 0.3 - 0.1
Disposals 34.1 16.4 68.5
Depreciation at end of period (869.0) (872.6) (863.2)
----------------------------------------- ----------- ----------- ---------
Net book value at beginning of period 711.3 732.1 732.1
----------------------------------------- ----------- ----------- ---------
Net book value at end of period 734.2 701.9 711.3
----------------------------------------- ----------- ----------- ---------
(b) Movements in right-of-use assets
The movements in right-of-use assets were as follows:
Unaudited Unaudited Audited
----------------
Half-year Half-year
to to Year to
28 October 29 October 29 April
2023 2022 (Restated) 2023
GBPm GBPm GBPm
----------------
Cost at beginning of period 148.0 126.7 126.7
Additions 9.3 6.0 13.5
Acquired through business combinations - 20.8 20.8
Transfers to owned property, plant and
equipment - - (0.1)
Disposals (14.9) (5.8) (12.9)
Cost at end of period 142.4 147.7 148.0
---------------------------------------- ----------- ---------------- ---------
Depreciation at beginning of period (67.8) (51.8) (51.8)
Depreciation charged to income statement (13.1) (13.8) (28.7)
Transfers to owned property, plant and
equipment - - 0.1
Disposals 14.8 5.5 12.6
Depreciation at end of period (66.1) (60.1) (67.8)
---------------------------------------- ----------- ---------------- ---------
Net book value at beginning of period 80.2 74.9 74.9
---------------------------------------- ----------- ---------------- ---------
Net book value at end of period 76.3 87.1 80.2
---------------------------------------- ----------- ---------------- ---------
INTERESTS IN JOINT VENTURES
10
The movements in the carrying values of interests in joint
ventures were as follows:
Unaudited Unaudited Audited
-----------
Half-year Half-year
to to Year to
28 October 29 October 29 April
2023 2022 2023
GBPm GBPm GBPm
-----------
Net book value at beginning of period 12.0 7.2 7.2
Increase in investment (see note 4(h)) - 1.7 5.6
Share of recognised profit 2.8 3.6 1.7
Dividends received in cash (0.3) (1.8) (2.5)
Net book value at end of period 14.5 10.7 12.0
--------------------------------------- ----------- ----------- ---------
A loan payable to joint venture, Scottish Citylink Coaches
Limited, of GBP7.8m (29 April 2023: GBP7.8m) is included within
current liabilities under the caption "Trade and other
payables".
11 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Group is exposed to a variety of financial risks: market
risk (including currency risk, interest rate risk and price risk),
credit risk and liquidity risk.
These condensed financial statements do not include all
financial risk management information and disclosures required in
the annual financial
statements. They should be read in conjunction with the Group's consolidated financial statements for the year ended 29 April 2023. There have been no material changes in any of the Group's significant financial risk management policies since 29 April 2023.
Liquidity risk
There have been no material changes since 29 April 2023 in the
contractual undiscounted cash outflows for financial
liabilities.
Fair value estimation
Financial instruments that are measured in the balance sheet at
fair value are disclosed by level of the following fair value
measurement hierarchy.
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (that is, as prices) or indirectly (that is, derived from prices)
Level 3 Inputs for the assets or liabilities that are not based on observable market data (that is, unobservable inputs)
The following table represents the Group's financial assets and
liabilities that are measured at fair value within the hierarchy at
28 October 2023.
Unaudited
--------- ----------- --------
Level 2 Level 3 Total
GBPm GBPm GBPm
-------------------------------------------- --------- ----------- --------
Assets
Deferred Payment Instrument from disposal
of subsidiaries - 2.1 2.1
Financial derivatives 34.5 - 34.5
-------------------------------------------- --------- ----------- --------
Total assets 34.5 2.1 36.6
-------------------------------------------- --------- ----------- --------
Liabilities
Deferred consideration for acquisition
of businesses - (7.2) (7.2)
Financial derivatives (5.1) - (5.1)
-------------------------------------------- --------- ----------- --------
Total liabilities (5.1) (7.2) (12.3)
-------------------------------------------- --------- ----------- --------
The following table represents the Group's financial assets and
liabilities that are measured at fair value within the hierarchy at
29 April 2023.
Audited
-------- --------- --------
Level
2 Level 3 Total
GBPm GBPm GBPm
--------------------------------------------- -------- --------- --------
Assets
Deferred Payment Instrument from disposal
of subsidiaries - 3.5 3.5
Financial derivatives 25.4 - 25.4
Total assets 25.4 3.5 28.9
--------------------------------------------- -------- --------- --------
Liabilities
Deferred consideration for acquisition
of businesses - (9.6) (9.6)
Financial derivatives (21.5) - (21.5)
--------------------------------------------- -------- --------- --------
Total liabilities (21.5) (9.6) (31.1)
--------------------------------------------- -------- --------- --------
11 FINANCIAL INSTRUMENTS AND
FINANCIAL RISK MANAGEMENT
(CONTINUED)
Fair value estimation (continued)
There were no transfers between levels during the half-year
ended 28 October 2023.
The Level 2 assets shown in the above tables comprise
financial
derivatives. The fair value of each financial derivative is determined by the third-party financial institution with which the Group holds the instrument, in line with the market value of similar financial instruments.
The Group applies relevant hedge accounting to all financial
derivatives outstanding as at 28 October 2023 and 29 April 2023.
All designated hedge relationships were effective under
International Financial Reporting Standard 9 ("IFRS 9"), Financial
Instruments.
The consideration for the sale of the North American business in
April 2019 included a Deferred Payment Instrument of US$65m. The
Deferred Payment Instrument carries a term of 66 months and a
compounding payment in kind interest rate of 6% per annum. It falls
due for payment only on (a) 16 October 2024 or (b) in part, after
distributions of US$30m have been made to the purchaser and is
secured by a pledge of shares held in the underlying investment
vehicle. Early repayment provisions apply in the event that the
purchaser sells all of its shareholding, albeit still subject to
the US$30m shareholder distribution priority and in such
circumstances, all or part of the Deferred Payment Instrument may
never be repaid. If the purchaser sells down below 50% but retains
some shares, the whole outstanding amount becomes immediately
payable. The instrument is accounted for as fair value through
profit or loss and due to credit and other recoverability risks
associated with the instrument, its carrying value is at a discount
to its face value. The Group's exposure to the purchaser of the
North American business ranks behind all of the secured lenders. As
a result, the discount rate applied to the Group's exposure on this
instrument is higher than the cost of the Group's secured funding.
The cost of second lien/mezzanine debt has been considered a more
approximate estimate for the credit risk of the instrument. This
has led to the carrying value of the instrument being estimated to
be GBP2.1m as at 28 October 2023 (29 April 2023: GBP3.5m).
The North America business continues to operate a variety of
different types of transportation services over a wide area of
North America. The Group has no control or significant influence
over the North America business following its disposal on 16 April
2019.
The financial performance of the North America business is
influenced by various different factors, many of which are specific
to the individual markets and locations in which it operates.
Factors that can affect financial performance include the extent
and timing of how demand recovers from the COVID-19 situation;
changes in local economies, local competition, fuel prices, working
patterns, shopping patterns, traffic conditions; cost pressures
including the availability of sufficient staff; and regulatory
change. The performance of the North America business has a direct
impact on the purchaser's ability to settle the instrument. The
initial contractual value of the instrument was for US$65m and the
range of values that the Group could recover over the 66 months of
its term varies from US$Nil up to US$65m plus interest.
No specific assumptions have been made regarding climate change
in valuing the Deferred Payment Instrument. While climate change
does present both opportunities and risks to the North America
business, we do not consider that climate change considerations
materially affect the fair value of the instrument as at 28 October
2023, taking account of the approximate remaining one-year term of
the instrument.
11 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Fair value estimation (continued)
The carrying amounts of financial assets and financial
liabilities and their respective fair values were:
Carrying value Fair value
--------------------
28 October 29 April 28 October 29 April
2023 2023 2023 2023
Unaudited Audited Unaudited Audited
GBPm GBPm GBPm GBPm
--------
Financial assets
Financial assets measured
at fair value through profit
or loss
-- Non-current assets
-- Other receivables - Deferred
Payment Instrument - 3.5 - 3.5
-- Current assets
-- Other receivables - Deferred
Payment Instrument 2.1 - 2.1 -
Financial assets measured
at amortised cost
-- Non-current assets
-- Insurance claim receivables 10.6 8.9 10.6 8.9
-- Other receivables - -
-- Current assets
-- Accrued income 44.4 29.9 44.4 29.9
-- Trade receivables, net
of impairment 35.4 29.2 35.4 29.2
-- Other receivables 51.4 2.7 51.4 2.7
-- Cash and cash equivalents 180.5 245.6 180.5 245.6
----------------------------------------------- --------
Total financial assets 324.4 319.8 324.4 319.8
-------- ---------- --------
Financial liabilities
Financial liabilities measured
at amortised cost
-- Non-current liabilities
-- Borrowings (461.3) (467.4) (440.6) (445.3)
-- Deferred consideration
for business combinations (5.5) (8.0) (5.5) (8.0)
-- Current liabilities
-- Trade payables (33.1) (37.0) (33.1) (37.0)
-- Deferred consideration
for business combinations (1.7) (1.6) (1.7) (1.6)
-- Payables for purchase
of property, plant and equipment (3.5) (9.3) (3.5) (9.3)
-- Interest payable (0.1) (0.4) (0.1) (0.4)
-- Accruals (144.8) (135.3) (144.8) (135.3)
-- Loan from joint venture (7.8) (7.8) (7.8) (7.8)
-- Borrowings (22.1) (26.8) (22.1) (26.8)
----------------------------------------------- --------
Total financial liabilities (679.9) (693.6) (659.2) (671.5)
----------------------------------------------- ---------- -------- ---------- --------
Net financial liabilities (355.5) (373.8) (334.8) (351.7)
--------
Financial derivatives with bank counterparties are not shown in
the above table.
The fair values of financial assets and financial liabilities
shown in the table are determined as follows:
-- The determination of the fair value of the Deferred Payment Instrument is
described earlier in this note 11.
-- The carrying value of cash and cash equivalents, accrued income, trade
receivables, insurance claim receivables and other receivables is
considered to be a reasonable approximation of fair value. Given the
short average time to maturity, no specific assumptions on discount rates
have been made. The effect of credit losses not already reflected in the
carrying value as impairment losses is assumed to be immaterial.
-- The fair value of contingent consideration payable in respect of business
combinations is estimated with reference to the applicable contractual
terms and the expected outcomes on the contingent elements, then
discounted to present value.
-- The carrying value of trade payables, payables for purchase of property,
plant and equipment, interest payable, accruals and loans to/from joint
ventures is considered a reasonable approximation of fair value. Given
the relatively short average time to maturity, no specific assumptions on
discount rates have been made.
-- The fair value of fixed-rate notes (included in borrowings) that are
quoted on a recognised stock exchange is determined with reference to the
"bid" price at the balance sheet date.
-- The fair value of leases is presented above as being equal to their
carrying value as International Financial Reporting Standard 7 ("IFRS 7"),
Financial Instruments: Disclosure, does not require the disclosure of
fair values for leases.
12 RETIREMENT BENEFITS
(a) Overview
The Group contributes to a number of pension schemes. The principal defined benefit pension schemes are as follows:
The Stagecoach Group Pension Scheme ("SPS"); and
Two UK Local Government Pension Schemes ("LGPS").
In addition, the Group contributes to a number of defined
contribution schemes.
(b) Presentation in consolidated balance sheet
Where a scheme has a net asset (i.e. gross assets exceeds gross
liabilities and any asset ceiling) at the balance sheet date, the
net asset is shown within retirement benefit assets on the
consolidated
balance sheet. Where a scheme has a net liability, that is shown within retirement benefit obligations on the consolidated balance sheet. The amounts presented are:
Unaudited Audited
As at As at
28 October 2023 29 April 2023
GBPm GBPm
Retirement benefit assets 178.8 199.4
Retirement benefit obligations (3.3) (3.5)
175.5 195.9
------------------------------- ---------------- --------------
(c) Gross pension scheme assets and obligations
The gross pension scheme assets and the present value of
obligations as at 28 October 2023 were as follows:
Unaudited
Funded schemes
SPS LGPS Other Unfunded plans Total
GBPm GBPm GBPm GBPm GBPm
Fair value of scheme
assets 1,277.7 143.9 16.0 - 1,437.6
Present value of
obligations (1,047.4) (121.3) (9.5) (3.3) (1,181.5)
Pension
asset/(liability)
before withholding
tax 230.3 22.6 6.5 (3.3) 256.1
Withholding tax
payable on surplus (80.6) - - - (80.6)
Net asset/(liability) 149.7 22.6 6.5 (3.3) 175.5
---------------------- --------- ------- ----- -------------- ---------
(d) Movements in net pre-tax retirement benefit liabilities
The movements for the half-year ended 28 October 2023 in the net
pre-tax retirement benefit assets/liabilities (excluding
withholding tax on surpluses) recognised in the balance sheet were
as follows:
SPS LGPS Other Unfunded plans Total
Unaudited GBPm GBPm GBPm GBPm GBPm
Asset/(liability) at beginning of period 162.9 29.7 6.8 (3.5) 195.9
Current service cost (1.4) (0.1) - - (1.5)
Administration costs (0.4) - - - (0.4)
Net interest income 6.0 0.7 0.6 - 7.3
Employers' contributions 4.3 0.2 0.1 0.2 4.8
Recognised in the consolidated statement of comprehensive
income (21.8) (7.9) (1.0) - (30.7)
Asset/(liability) at end of period 149.7 22.6 6.5 (3.3) 175.5
---------------------------------------------------------- ------ ----- ----- -------------- ------
12 RETIREMENT BENEFITS (CONTINUED)
(e) Scheme valuations
The Stagecoach Group Pension Scheme ("SPS") is the Group's
largest defined benefit scheme exposure comprising almost 90% of
the total retirement benefit obligations. In the prior year, the
Trustees took advantage of the exceptional rise in gilt yields to
transition from its equity and multi-asset led growth strategy to a
liability-driven investment ("LDI") strategy, locking in an overall
funding surplus with hedging ratios achieved of 96-97% of interest
and inflation liabilities.
To update and to align to its new investment and funding
strategies, the Scheme undertook an out-of-cycle valuation as at 31
October 2022. This showed a funding surplus of GBP87.3m, being a
further improvement on the 30 September 2021 out-of-cycle valuation
surplus of GBP48.7m. At 28 October 2023, taking the various
sections in aggregate, the Scheme was fully funded at around 109%
against its long term self-sufficiency target using a gilts plus
0.5% discount rate.
The latest actuarial valuations of the relevant LGPS schemes
were completed as at 31 March 2022. The combined surplus across
those schemes on the funding basis agreed by each of the
Administering Authorities was GBP0.3m, comprising scheme assets of
GBP197.8m less benefit obligations of GBP197.5m.
13 ORDINARY SHARE CAPITAL
At 28 October 2023, there were 576,099,960 ordinary shares in
issue (29
April 2023: 576,099,960). This figure includes 14,143,274 (29 April 2023: 14,143,274) ordinary shares held in treasury, which are treated as
a deduction from equity in the Group's financial statements. The shares held in treasury do not qualify for dividends.
14 RECONCILIATION OF OPERATING PROFIT TO CASH GENERATED BY
OPERATIONS
The operating profit of Group companies reconciles to cash
generated by operations as follows:
Unaudited Unaudited
Half-year Half-year
to to
28 October 29 October
2023 2022 (Restated)
GBPm GBPm
Operating profit of Group companies 48.3 29.5
Separately disclosed items (7.8) 13.8
Depreciation 53.3 52.3
Software amortisation 0.5 0.5
EBITDA of Group companies before separately
disclosed items ("Adjusted EBITDA from Group
companies") 94.3 96.1
Cash effect of current period separately disclosed
items 4.5 (8.2)
Loss/(gain) on disposal of property, plant
and equipment 0.4 (1.0)
Capital grant amortisation (2.4) (1.2)
Share based payment movements (excluding separately
disclosed items) - 0.2
Operating cashflows before working capital
movements 96.8 85.9
Increase in inventories (1.7) (0.6)
(Increase)/decrease in receivables (25.8) 12.2
Increase in payables 22.8 31.2
Decrease in provisions (8.2) (3.4)
Differences between employer contributions
and pension expense in operating profit (3.0) (5.8)
Cash generated by operations 80.9 119.5
---------------------------------------------------- ----------- ----------------
15 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
The movement in cash and cash equivalents reconciles to the
movement in net debt as follows:
Unaudited Unaudited
Half-year to Half-year to
28 October 29 October
2023 2022
Notes GBPm GBPm
(Decrease)/increase in cash and cash
equivalents (63.3) 41.3
Cash flow from movement in borrowings 12.6 13.7
(50.7) 55.0
New leases in period (9.3) (6.0)
Lease additions from business combinations - (20.8)
Negotiated early termination of lease - 0.3
Other movements (0.4) (0.4)
(Increase)/decrease in net debt (60.4) 28.1
Net debt at beginning of period 16 (241.1) (224.3)
Net debt at end of period 16 (301.5) (196.2)
------------------------------------------- ----- ------------ ------------
NET DEBT AND CHANGES IN LIABILITIES ARISING FROM FINANCING
16 ACTIVITIES
Changes in net debt (as defined in note 21) are summarised
below:
Unaudited
Half-year to 28 October 2023
Opening Cashflows New leases Charged to income statement Closing
GBPm GBPm GBPm GBPm GBPm
------- --------- ---------- --------------------------- -------
Cash and
cash
equivalents 243.8 (63.3) - - 180.5
Gross debt
-- see
split in
following
table (484.9) 12.6 (9.3) (0.4) (482.0)
Net debt (241.1) (50.7) (9.3) (0.4) (301.5)
------------ ------- --------- ---------- --------------------------- -------
Liabilities arising from financing activities include all
liabilities that give rise to cash flows that are classified as
financing activities in the consolidated statement of cash flows.
They include borrowings (excluding bank overdrafts) and loans from
joint ventures. They also include certain interest rate derivatives
that are hedging instruments of liabilities that give rise to
financing cash flows.
The liabilities arising from financing activities presented in
the consolidated balance sheet are as follows:
Unaudited Audited
As at 28 October 2023 As at 29 April 2023
GBPm GBPm
Current liabilities: borrowings (22.1) (26.8)
-- Less bank overdrafts shown in cash and cash
equivalents in this note - 1.8
Non-current liabilities: borrowings (461.3) (467.4)
Current liabilities: interest rate derivatives included
in financial derivatives - (4.7)
Current liabilities: loan from joint venture (7.8) (7.8)
Total liabilities arising from financing activities (491.2) (504.9)
-------------------------------------------------------- --------------------- -------------------
NET DEBT AND CHANGES IN LIABILITIES ARISING FROM FINANCING
16 ACTIVITIES (CONTINUED)
Changes in liabilities from financing activities are presented
in the table below.
Unaudited
Half-year to 28 October 2023
Opening Cashflows New leases Fair value movements on hedge Charged to income statement Closing
GBPm GBPm GBPm GBPm GBPm GBPm
Lease liabilities (85.3) 12.6 (9.3) - - (82.0)
Bonds
- Principal (400.0) - - - - (400.0)
- Unamortised costs & discounts on issue 0.4 - - - (0.4) -
Gross debt (484.9) 12.6 (9.3) - (0.4) (482.0)
Loan from joint venture (7.8) - - - - (7.8)
Accrued interest on bonds (9.4) 16.0 - - (8.0) (1.4)
Effect of fair value hedges on carrying value of
borrowings 1.9 - - (1.9) - -
Interest rate derivatives that hedge liabilities from
financing activities (4.7) 4.9 - 1.9 (2.1) -
Total liabilities arising from financial activities (504.9) 33.5 (9.3) - (10.5) (491.2)
------------------------------------------------------ ------- --------- ---------- ----------------------------- --------------------------- -------
17 NON-CASH TRANSACTION
As explained in note 4(h), the Group disposed of businesses in
the half-year ended 29 October 2022 in exchange for non-cash
consideration in the form of shares in its joint venture, Scottish
Citylink Coaches Limited. The estimated fair value of the shares
received by the Group was GBP1.7m.
18 PROVISIONS
The Group's provisions at each of 29 April 2023 and 28 October
2023 principally relate to claims provisions for estimated
liabilities on incurred incidents up to the balance sheet date.
The total claims provisions of GBP99.7m (29 April 2023:
GBP100.6m) have decreased during the half-year, reflecting the
latest assessment of the
required provision for claims on major incidents. These provisions contain GBP11.6m (29 April 2023: GBP8.9m) which is recoverable from
insurance companies and is included within other receivables. The Group engages with third party actuarial professionals to assist in the calculation of these provisions.
19 COMMITMENTS AND CONTINGENCIES
(i) Capital commitments
Capital commitments contracted for the purchase of property,
plant and equipment but not provided for at 28 October 2023
were GBP181.4m (29 April 2023: GBP42.6m) and primarily relate
to the commitment to purchase zero emission electric buses.
The figure of GBP181.4m excludes the benefit of any government
funding expected to be received in respect of these committed
purchases.
(ii) Legal actions
On 27 February 2019, an application for a collective proceedings
order (a form of class action) was filed with the UK Competition
Appeal Tribunal ("CAT") against Stagecoach South Western Trains
Limited ("SSWT"), a subsidiary of the Company that formerly
operated train services under franchise. Equivalent claims have
been brought against First MTR South Western Trains Limited,
which succeeded SSWT as the operator of the South Western franchised
train services, and London & South Eastern Railway Limited (the
"Defendants"). It is alleged that SSWT and the other Defendants
breached their obligations under competition law, by (i) failing
to make sufficiently available, or (ii) restricting the practical
availability of, boundary fares for Transport for London ("TfL")
Travelcard holders wishing to travel outside the TfL fare zones
in which the Travelcard was valid. The claim seeks compensation
for all those who have allegedly been affected by the train
operating companies' allegedly anti-competitive behaviour. The
total sought from SSWT is estimated at around GBP38m (excluding
interest).
In October 2021, the CAT granted the collective proceedings
order ("CPO") sought by the proposed class representative. The
proceedings have been split into three trials, the first two
of which have been set for June 2024 and June 2025 respectively,
with no date currently set for the final trial.
The claim is disputed in respect of its technical merits. No
provision is held as at 28 October 2023 (29 April 2023: GBPNil)
for any damages or settlement payable in respect of this matter
The Group and the Company are from time to time party to other
legal actions arising in the ordinary course of business. Liabilities
have been recognised in the financial statements for the best
estimate of the expenditure required to settle obligations arising
under such legal actions. As at 28 October 2023, the liabilities
in the consolidated financial statements for such matters total
GBP0.5m (29 April 2023: GBP0.6m) in addition to those covered
by the claims provisions.
19 COMMITMENTS AND CONTINGENCIES (CONTINUED)
(iii) Contingent liabilities re former North America Division
As explained in note 28(iii) to the Group's consolidated financial
statements for the year ended 29 April 2023, the Group has certain
contingent liabilities in respect of claims from third parties
against its former North American business. The estimated amount
of those contingent liabilities has reduced from GBP19.1m as
at 29 April 2023 to GBP14.4m as at 28 October 2023.
20 RELATED PARTY TRANSACTIONS
During the half-year ended 28 October 2023 the Group made a loan
of GBP50.0m to its immediate parent, Inframobility UK Bidco
Limited. The loan is interest bearing with an interest rate of 7.4%
and is repayable in May 2024. At 28 October 2023 the loan of
GBP50.0m is outstanding along with related interest receivable of
GBP1.1m.
21 DEFINITIONS
(a) Alternative performance measures
The Group uses a number of alternative performance measures in
this document to help explain the financial performance and
financial
position of the Group. More information on the definition of these alternative performance measures and how they are calculated is provided
below. All of the alternative performance measures explained below have been calculated consistently for the half-year ended 28 October 2023 and for comparative amounts shown in this document for prior periods.
Like-for-like amounts
Like-for-like amounts are derived by comparing the relevant
year-to-date amount with the equivalent prior year amount for those
businesses and individual operating units that have been part of
the Group throughout both periods.
Like-for-like revenue growth for the half-year ended 28 October
2023 is calculated by comparing the revenue for the current and
comparative
periods, each adjusted as described above. The revenue of each segment
is shown in note 3(a) to the condensed financial statements. Where applicable, the reconciliation to the adjusted revenue figures for the purposes of calculating like-for-like revenue growth is shown below:
Unaudited
Half-year to 28 October 2023
Exclude
expired
Reported rail Like-for-like
revenue Exclude effect of acquisitions Exclude effect of disposals franchises revenue
-------- ------------------------------- ---------------------------- ---------- -------------
UK Bus (regional
operations) GBPm 584.7 (0.5) - - 584.2
UK Bus (London) GBPm 179.8 (36.3) - - 143.5
UK Rail GBPm 8.7 - - - 8.7
Unaudited
Half-year to 29 October 2022
Exclude
expired
Reported rail Like-for-like
revenue Exclude effect of acquisitions Exclude effect of disposals franchises revenue
-------- ------------------------------- ---------------------------- ---------- -------------
UK Bus (regional
operations) GBPm 508.1 - (11.1) - 497.0
UK Bus (London) GBPm 154.4 (17.4) - - 137.0
UK Rail GBPm 7.1 - - (0.4) 6.7
Liquidity
References to liquidity mean the aggregate amount of cash and
cash equivalents (net of bank overdrafts in bank offset
arrangements), money market deposits and undrawn committed headroom
under bank facilities, adjusted to exclude: (i) foreign currency
bank and cash balances, (ii) petty cash balances, (iii) cash in
transit and (iv) cash pledged as collateral in respect of
liabilities for loan notes.
Operating profit
Operating profit for the Group as a whole is profit before
non-operating separately disclosed items, finance costs, finance
income, taxation and non-controlling interest. Operating profit of
Group companies is operating profit on that basis, excluding the
Group's share of joint ventures' profit/loss after taxation. Both
total operating profit and operating profit of Group companies are
shown on the face of the consolidated income statement.
Operating profit (or loss) for a particular business unit or
segment within the Group refers to profit (or loss) before net
finance income/costs, taxation and non-controlling interest,
separately
disclosed items and restructuring costs. The operating profit (or loss) for each segment is directly identifiable from note 3(b) to the condensed financial statements.
21 DEFINITIONS (CONTINUED)
(a) Alternative performance measures (continued)
Adjusted operating profit
Adjusted operating profit for the Group as a whole is operating
profit before all separately disclosed items as shown on the face
of the consolidated income statement.
Operating margin
Operating margin for a particular business unit or segment
within the
Group means operating profit (or loss) as a percentage of revenue. The revenue and operating profit (or loss) for each segment is directly identifiable from the financial statements -- see notes 3(a) and 3(b) to
the condensed financial statements. The revenue, operating profit (or loss) and operating margin for each segment are also shown on page 4 of this document.
Adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxation,
depreciation, software amortisation and separately disclosed
items.
A reconciliation of adjusted EBITDA for the half-year ended 28
October 2023, and the comparative prior year period, to the
condensed financial statements is shown on page 6 of this
document.
Adjusted EBITDA is also presented for the year to 28 October
2023. That, and the constituent elements of the reconciliation for
that year, are determined by adding the amounts for the half-year
ended 28 October 2023 to the amounts for the year ended 29 April
2023, and deducting the amounts for the half-year ended 29 October
2022.
Adjusted EBITDA from Group companies
Adjusted EBITDA from Group companies is earnings before
interest, taxation, depreciation, software amortisation and
separately disclosed items from Group companies (i.e. the parent
company and all of its subsidiaries consolidated but excluding
share of profit/loss from joint ventures).
Adjusted EBITDA from Group companies is directly identifiable
from the condensed financial statements -- see note 14 to the
condensed financial statements.
Net finance costs
Net finance costs are finance costs less finance income, each as
shown on the face of the consolidated income statement.
Adjusted net finance costs
Adjusted net finance costs are net finance costs (see above)
excluding separately disclosed items.
Gross debt
Gross debt is borrowings as reported on the consolidated balance
sheet, adjusted to exclude bank overdrafts, accrued interest on
bonds and the effect of fair value hedges on the carrying value of
borrowings.
The components of gross debt are shown in note 16 to the
condensed financial statements.
Net debt
Net debt (or net funds) is the net of cash/cash equivalents,
bank overdrafts and gross debt (see above).
The components of net debt are shown in note 16 to the condensed
financial statements.
Net capital expenditure
Net capital expenditure is the impact of purchases, new leases,
lease disposals and sales of property, plant and equipment, and the
impact of
capital grants received, on net debt. Its reconciliation to the condensed financial statements is explained on page 8 of this document.
Net debt plus train operating company liabilities
Net debt plus train operating company liabilities is the
aggregate of net debt (see above) and net liabilities (excluding
cash) in relation to major rail franchises previously operated by
the Group. The reconciliation to the consolidated financial
statements is shown below:
As at As at
28 October 29 April
2023 2023
GBPm GBPm
-------------------------------------------------- ------------- -----------
Net debt as shown in note 16 301.5 241.1
Net train operating company liabilities
as shown in note 3(d) 24.2 24.7
-------------------------------------------------- ------------- -----------
Net debt plus train operating company
liabilities 325.7 265.8
-------------------------------------------------- ------------- -----------
21 DEFINITIONS (CONTINUED)
(b) Other definition
The following other definition is also used in this
document:
Separately disclosed items
Separately disclosed items means:
-- Non-software intangible asset amortisation;
-- Items which individually or, if of a similar type, in aggregate need to
be separately disclosed by virtue of their nature, size or incidence in
order to allow a proper understanding of the underlying financial
performance of the Group; and
-- Changes in the fair value of the Deferred Payment Instrument received in
relation to the sale of the North America Division in April 2019 (see
note 4(i)).
Changes in the fair value of the Deferred Payment Instrument may
occur in several consecutive financial years until the issuer of
the
instrument discharges it in full. The Deferred Payment Instrument is part of the consideration received for the sale of a business and it
does not relate to the ongoing operating activities of the Group. The Directors therefore consider that it is helpful for understanding the Group's financial performance to disclose separately changes in the fair value of the Deferred Payment Instrument.
Separately disclosed items can include both pre-tax and
tax-related items.
(END) Dow Jones Newswires
December 06, 2023 02:00 ET (07:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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