Financial review
Strong passenger growth and demand in the period resulting in a 12.2% increase in Group revenue to £3.2bn.
£168.6m Adjusted Operating Profit and a £162.7m statutory loss after tax and adjusting items. £163.7m of free cash flow, representing 97% conversion, with £0.9bn in cash and undrawn commitments.
James Stamp, Group Chief Financial Officer
Summary Income Statement
|
Adjusted |
Adjusting |
Statutory Total |
Adjusted |
(Restated) |
(Restated) |
|
| Revenue | 3,150.9 | – | 3,150.9 | 2,807.5 | – | 2,807.5 |
| Operating costs | (2,982.3) | (190.0) | (3,172.3) | (2,610.2) | (370.8) | (2,981.0) |
| Operating profit/(loss) | 168.6 | (190.0) | (21.4) | 197.3 | (370.8) | (173.5) |
| Share of results from associates | (0.5) | – | (0.5) | (0.4) | – | (0.4) |
| Net finance costs | (75.2) | – | (76.4) | (51.0) | (0.4) | (51.4) |
| Profit/(loss) before tax | 92.9 | (191.2) | (98.3) | 145.9 | (371.2) | (225.3) |
| Tax | (42.5) | (21.9) | (64.4) | (30.3) | 24.4 | (5.9) |
| Profit/(loss) for the year | 50.4 | (213.1) | (162.7) | 115.6 | (346.8) | (231.2) |
1. To supplement IFRS reporting, we also present our results on an adjusted basis to show the performance of the business before adjusting items. These are detailed on pages 177 to 179 and principally comprise for the 12 months to 31 December 2023; intangible amortisation for acquired businesses, re-measurement of historic onerous contract provisions and impairments, re-measurement of the WeDriveU Put Liability, repayment of UK CJRS grant income (‘furlough’) and Group wide restructuring and other costs. In addition to performance measures directly observable in the Group financial statements (IFRS measures), alternative financial measures are presented that are used internally by management as key measures to assess performance.
2. Restated for a correction to the German Rail onerous contract provision; please refer to Note 2 of the Financial Statements section for more information.
The Group has seen strong passenger growth and demand for its services in the period resulting in Group revenue increasing by 12.2% to £3,150.9m (FY 22: £2,807.5m), with topline revenue growth across all operating segments, driven by overall passenger growth of 9.9%.
In addition to strong passenger growth, we also delivered good route recovery in North American School Bus and prices increases in a number of areas, including:
- The 40% of School Bus contracts that were up for renewal in this bid season had price increases of 13%, effective September 2023 (beginning of School Year 23/24);
- Price increases in UK Bus of 12.5% were implemented from 1 July 2023;
- Effective yield management in our UK and Spanish long-haul coach businesses increased average yields by 3.7% and 7.5% respectively.
These gains offset a £105.4m year on year reduction in Covid-related grants.
However, we also saw significant inflation and increased driver related costs which were not able to be fully offset in the year. Notwithstading good progress on Accelerate 1.0, which delivered £15m cost savings during the year, Group Adjusted Operating Profit fell to £168.6m (FY 22: £197.3m), a reduction of £28.7m. We expect the impact of run-rate benefits from our cost saving initiatives; the full year impact of pricing increases implemented during FY 23; further price increases to be implemented in FY 24; and further route recovery in North America School Bus to benefit FY 24.
After £190.0m (FY 22 restated: £370.8m) of adjusting items (described in further detail below) the statutory operating loss was £21.4m (FY 22 restated: £173.5m loss).
Net Finance Costs increased by £25.0m to £76.4m (FY 22 restated: £51.4m) due to both the refinancing of the £400m bond, which carried a 2.5% interest rate, with a €500m bond at a 4.875% interest rate; and the impact of higher interest rates on the Group’s floating rate debt.
Adjusted Profit Before Tax was £92.9m (FY 22: £145.9m) and Statutory Loss Before Tax was £98.3m (FY 22 restated: £225.3m loss).
The Adjusted effective tax rate of 45.7% (FY 22: 20.8%) resulted in an Adjusted tax charge of £42.5m (FY 22: £30.3m). The effective tax rate has been impacted by an interest disallowance in the UK due to the Corporate Interest Restriction Rules (restricting interest deductions to 30% of EBITDA) and higher interest rates.
The statutory tax charge was £64.4m (FY 22 restated: £5.9m), with an Adjusting tax charge of £21.9m (FY 22 restated: £24.4m credit). The adjustment relates to: (i) the write-off of UK and North America deferred tax assets on tax losses which are either restricted in their use or have expired of £27.2m; (ii) a further £51.3m write-off of deferred tax assets on tax losses in Germany; (iii) a £46.2m credit relating to tax on adjusting items; and (iv) a tax credit of £10.4m on intangible assets.
The Statutory Loss after tax was £162.7m (FY 22 restated: £231.2m loss).
