for the year ended 2 July 2022
Registered No: 02100855
Annual Report
and Accounts
Strategic report
1
Section 172(1) and non-financial
information statements
3
Chair’s statement
6
Operating review
9
Our business model
11
Strategy
12
Business and financial review
12
Group overview
13
Financial performance
14
Bus
16
Rail
18
Financial review
25
Stakeholder engagement
28
Climate change strategy
30
Task Force on Climate-related
Financial Disclosures
35
Safety
37
People
40
Passengers
43
Communities
45
Environment impact
49
Going concern
51
Risk management
Corporate governance
65
Promoting the long term sustainable
success of the Group
66
Board overview
70
Board activities
74
Culture
75
Stakeholder engagement
77
Evaluation
78
Division of responsibilities
81
Nomination Committee Report
83
Audit Committee Report
90
Directors’ Remuneration Report
94
Annual Report on Remuneration
106 Directors’ Report
111
Greenhouse gas emissions
115 Statement of directors’ responsibilities
Group financial statements
116 Independent Auditor’s report to the
members of Go-Ahead Group Limited
134 Consolidated income statement
135 Consolidated statement of
comprehensive income
136 Consolidated statement of changes
in equity
137 Consolidated balance sheet
138 Consolidated cashflow statement
140 Critical accounting judgements and key
sources of estimation uncertainty
146 Notes to the consolidated financial
statements
Company financial statements
212 Company balance sheet
213 Company statement of changes in equity
214 Directors’ responsibilities in relation to
the Company financial statements
215 Notes to the Company financials
statements
Strategic report
Section 172(1) and non-financial information statements
The Go-Ahead Group Limited Annual Report and Accounts 2022
1
Compliance with Section 172(1) of the Companies Act 2006
The directors are mindful of the duty they have under Section 172(1) to promote the success of the Company over the long term for
the benefit of shareholders as a whole, having regard to the interests of a range of other key stakeholders. In doing so, the Board’s
desire to act fairly between members, maintain a reputation for high standards of business conduct, and consider the long term
consequences of the decisions it takes has underpinned its operation at every level of the business for the year ended 2 July 2022. For
further information see pages 1 to 64 of the Strategic Report and pages 65 to 115 of the Corporate Governance Report.
Read more about:
• Why and how we engaged with our stakeholders, the key topics of engagement during the year ended 2 July 2022 and how we
responded, pages 25 to 27
• The Group’s goals, strategy and business model in the Strategic Report, pages 9 to 11
• The interests of the Group’s employees, pages 37 and 39
• Our approach to sustainability including our impact on the community and environment, pages 43 to 48
• How we manage risks, pages 51 to 64
• The Board’s key focus areas and principal decisions for the year ended 2 July 2022, page 70
• How our corporate governance principles:
-
Shape and monitor the culture of the Group to ensure it supports our purpose, values and strategy, page 74
-
Ensure stakeholders are considered in the decision making process and their views are understood in the boardroom including
those of the workforce, pages 75 to 76
-
Ensure there is proper consideration of the potential impact of decisions in the long term.
Strategic report
Section 172(1) and non-financial information statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
2
Non-financial information statement
We aim to comply with the Non-Financial Reporting Directive requirements. The table below sets out where relevant information can
be found within this report*:
Reporting requirement and policies
and standards which govern our approach
Information necessary to understand our business
and its impact, policy due diligence and outcomes
Environmental matters
• Environment policy
• Group energy and climate change policy
• Taskforce on Climate-related Financial Disclosures (TCFD)
• Climate change strategy
Environment impact, page 45
Climate change strategy, page 28
TCFD, page 30
GHG emissions, page 111
Employees
• Whistleblowing policy
• Conflicts of interest policy
• Equal opportunities, diversity and inclusion policy
• Code of conduct policy
• Health and safety policy
• Health and wellbeing policy
Our people, page 37
Culture, page 74
Directors’ Report, page 106
Human rights
• Human rights policy
• Modern slavery policy
• Code of conduct policy
• Sustainable Supply Chain Charter
Our business model, page 9
Our people, page 37
Communities, page 43
Culture, page 74
Social matters
• Community and charitable investment policy
• Community investment strategy
• Sustainable Supply Chain Charter
• Health and safety policy
Our business model, page 9
Communities, page 43
Safety, page 35
Anti-bribery and anti-corruption
• Anti-bribery and anti-corruption policy
Our people, page 37
Principal risks and impact on business activity
Risk management, page 51
Audit Committee Report, page 83
Description of the business model
Our business model, pages 9 and 10
Non-financial key performance indicators
Non-financial key performance indicators, pages 30 to 48
* Further details on our policies and procedures are available on our corporate website www.go-ahead.com
Strategic report
Chair’s statement
The Go-Ahead Group Limited Annual Report and Accounts 2022
3
This has been an exceptional year for the business. As the COVID-19 pandemic receded, new challenges arose, with the war in Ukraine,
spiralling energy costs and a cost-of-living crisis all having a tremendous impact on individuals, communities and businesses across the globe.
Alongside this, we navigated the settlements with the Department for Transport (DfT) in relation to London & South Eastern Railway
(LSER) and other historic franchises, the appointment of a new leadership team and, most recently, a bid for the Group which
completed in October 2022.
Throughout this extraordinary period, our colleagues across the Group have shown considerable commitment and resilience to ensure
we continued to deliver safe, reliable services for our customers and communities that rely upon them. I would like to extend my deep
appreciation and thanks to every colleague across the business for their dedication to Go-Ahead and our customers.
While some challenges remain, we are collectively focused on fulfilling our important purpose in supporting society, our communities
and the environment. This purpose was evidenced throughout the COVID-19 pandemic and it has continued to be demonstrated as a
new normal has been established. I am once again proud of how well we have lived up to this purpose.
The year in review
Corporate Governance
As reported in the previous year, the Board identified a number of areas to enhance the Group’s corporate governance and internal
controls. Primarily identified as a consequence of franchise matters in LSER and International Rail, the Board committed to a series of
improvements, including Board and leadership changes, improvements in bid investment decision making and ongoing contract
compliance monitoring. Whilst progress has already been observed through 2022 such as the refreshed management team in
Germany and the enhanced governance structure in GTR, the Board is cognisant that further improvements are required and that
these will continue to be a focus in the coming year. The impact of the new leadership team will take time to embed and the change of
ownership of the Group will also bring a fresh perspective to the control environment.
LSER
During the year, the DfT took the decision to appoint the Operator of Last Resort to take over the operation of Southeastern services,
at the end of the franchise term on 17 October 2021, rather than awarding LSER a National Rail Contract (NRC). This decision was a
consequence of failings relating to LSER which did not reflect the strong values to which Go-Ahead holds itself.
The shares and corporate bonds of Go-Ahead were temporarily suspended from trading between 4 January 2022 and 24 February
2022. At the time, I apologised sincerely to our investors for the uncertainty and inconvenience these circumstances caused, and I wish
to thank our shareholders for their patience and support throughout the year.
Board and senior leadership changes
As part of our plans to refresh and strengthen the Board, I was pleased to welcome David Blackwood and Dominic Lavelle to the Board
on 1 January 2022. David and Dominic succeeded Adrian Ewer as Senior Independent Director and Audit Committee Chair respectively
on 19 January 2022. Both brought significant insight and experience from previous finance roles encompassing audit and risk. The
decision to separate the roles of Audit Committee Chair and Senior Independent Director added greater robustness and independence
to the functioning and capacity of the Board.
Following the retirement of David Brown in late 2021, Christian Schreyer was appointed as our new Group Chief Executive. Christian’s
appointment was the result of a thorough search process. His background working at global mobility company Transdev, experience of
building relationships and collaborating with public stakeholders, and solid record of driving efficiency and better service for passengers
and clients have already shown their value and I believe they will serve Go-Ahead well into the future as we navigate both the challenges
and opportunities ahead. To further bolster the senior leadership team, Christian was joined by Group Chief Financial Officer Sarah
Mussenden, who was appointed on 9 May 2022. Sarah replaced Gordon Boyd, who served as Interim Group Chief Financial Officer from 28
September 2021 following the resignation of Group Chief Financial Officer Elodie Brian until the end of March 2022.
Following the year end, David Blackwood, Harry Holt and Leanne Wood stepped down from the Board on 10 October 2022 following
the change in ownership of the Group (see below). Sarah Mussenden also left the Group at the end of December 2022 and an Interim
Group Chief Financial Officer has been appointed.
The Next Billion Journeys
Following Christian’s appointment, an in-depth strategic review of the business was undertaken, resulting in the announcement of our
new strategy, “The Next Billion Journeys”. This strategy aims to deliver profitable growth and a sustainable future for the business in a
dynamic public transport market. The business review was undertaken in collaboration with colleagues from around the Group
drawing on experience and expertise from our UK and international bus and rail operations. This collaborative approach resulted in a
strong buy-in from colleagues and a commitment to “The Next Billion Journeys”. The new strategy, which aims to deliver growth in
existing and new markets, is underpinned by new medium term financial targets and supports the Group’s renewed purpose of
“moving you and the next generation towards a smarter and healthier planet.”. Further details on the new strategy can be found on
page 11.
Strategic report
Chair’s statement continued
The year in review continued
Strategic progress
Since the development of our new strategy, we have already made significant progress in a number of areas. I was very pleased with
the DfT’s decision to award GTR a National Rail Contract (NRC), which commenced on 1 April 2022, demonstrating the DfT’s
continued confidence in Go-Ahead to operate a UK rail franchise.
I was also delighted that, in December 2022, Go-Ahead won both of the two bus contracts to be tendered by the Mayor of Manchester
in Bolton and Wigan. The contracts comprise 55 routes, served by a fleet of 308 buses, and are worth up to £400 million in revenue
over seven years. Around 750 people will be transferring into Go North West to run the services, which will be branded as part of
Manchester’s new Bee Network.
In the same month, we won a contract to operate buses in Sydney, under a joint venture with an Australian company, UGL. This takes
us into a new market, and it’s in line with the ambition we set out for international expansion under our new strategy. The buses will
run under a brand we’ve created for the joint venture, called U-Go Mobility. From July 2023, we’ll be operating a network of 225 buses,
to be run by more than 400 colleagues in an area stretching from Sydney’s southern beaches to the city’s south-western suburbs. We’ll
be delivering more than 500,000 passenger journeys daily.
In Norway, following constructive discussions with the Norwegian Rail Directorate, a new agreement was reached in June 2022
regarding the structure of the rail contract. The new contract took effect on 1 July 2022 and runs, for the duration of the original
contract, to December 2027, with an optional two-year extension, and provides revenue support as well as an incentive scheme linked
to revenue growth. As a result of this new agreement, we have been able to reduce the onerous contract provision relating to rail
operations in Norway by £51.6m.
In Germany, we continue to progress our improvement plans in Baden-Württemberg, although financial penalties relating to
operational performance have been slightly higher than anticipated in the period. Following discussions with our client in Baden-
Württemberg, we reached a memorandum of understanding which will result in a modest improvement to the financial performance
of the contract over its life. Further negotiations remain underway. In Bavaria, the first of two contracts started on 12 December 2021
and performance has been in line with expectations. Mobilisation of the second contract commenced in December 2022. As previously
indicated, there are inherent uncertainties and risks associated with the mobilisation of this contract and in estimating the impact of
key success factors including service performance, driver recruitment and energy consumption. A detailed review and challenge of the
assumptions within the contract took place. Upon reassessment of the Bavarian rail contracts’ onerous contract provision under IAS
37, it was determined than an increase in the provision of £36.0m was necessary based on the contracts’ forecast future cashflows
discounted at a risk-free rate having considered these in light of updated market conditions and experience gained in running
operations during the year. In addition, a prior year adjustment of £5.1 million has been identified in respect of the GABY onerous
contract provision primarily relating to prior year modelling errors within the model and errors relating to revenue for which there was
contractual entitlement, but which had been omitted from the original onerous contract provision, over the life of the 12 year contract.
The impact of the restatement is to increase the provision by £5.1 million in the year ended 27 June 2020 with a corresponding
reduction of retained earnings. Refer to “Critical accounting judgements and key Sources of estimation uncertainty” section for further
details on page 140.
In line with our new strategy, we continue to explore opportunities in bus and light rail markets, and in April 2022, we acquired
Flexbuss, a family run bus company operating in southern Sweden providing scheduled bus services, school transport, medical transfer
and private hire buses. This acquisition sees the expansion of our successful London and International franchised bus business and will
play to our strengths in operating bus contracts on behalf of local authorities, partners and third parties. Our new Flexbuss colleagues
have been warmly welcomed to the Go-Ahead family.
In Singapore, we were delighted that the Land Transport Authority granted a three-year contract extension to Go-Ahead Singapore to
continue operating buses in the Loyang region of the island until September 2026.
France was identified as a priority market under our new strategy and so the exciting new partnership between Go-Ahead and Lacroix
& Savac, announced in June 2022, will offer a platform to explore opportunities to bid together for public transport contracts in Paris.
Under the partnership, the two companies will target the market for bus services in and around Paris, where the city authorities have
begun a process of putting routes out to tender as the Parisian bus market is set up to open up to competition from 2025. These
routes would benefit from Go-Ahead’s considerable experience in running busy commuter routes in densely populated cities like
London.
4
The Go-Ahead Group Limited Annual Report and Accounts 2022
Strategic report
Chair’s statement continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
5
The year in review continued
Change in ownership
In June 2022, it was announced that a consortium comprising Kinetic TCo Pty Limited (Kinetic), a leading provider of bus services in
Australia and New Zealand, and Globalvia Inversiones S.A.U. (Globalvia), a worldwide infrastructure leader in the mobility industry,
intended to make an offer to acquire Go-Ahead. This announcement followed the consortium making a series of offers earlier in the
year. Following the year end, Go-Ahead’s shareholders voted to accept the consortium’s final offer of 1,450p plus a special dividend of
100p per share. Following the shareholder vote, the High Court of Justice in England and Wales sanctioned the acquisition at the
Court Sanction Hearing and following the delivery of a copy of the Court Order to the Registrar of Companies, the acquisition
completed on 10 October 2022.
The Board recommended this offer, believing it represents fair value for shareholders. Whilst the ownership of Go-Ahead has changed,
Go-Ahead itself is not. The heritage and culture that have made Go-Ahead the Group it is today remain. The purpose and the people
that have made Go-Ahead so important to the communities it serves are unchanged. Our new owners are committed to delivering our
purpose for the benefit of all stakeholders, and they share our values and support the growth strategy we set out earlier this year. They
have placed their trust in our management team, led by Christian, to deliver our strategy and take the Group forward at this pivotal
time for public transport. Go-Ahead remains a standalone business within a global platform and Kinetic and Globalvia will leverage
their experience and strong brand equity to support new growth opportunities for Go-Ahead, both in the UK and internationally.
Christian and his senior team continue to lead the business, I remain as Chair and Dominic Lavelle continues in his role as Independent
Non-Executive Director and Audit Committee Chair. However, the change in ownership means that the other members of the Board
stepped down upon the transfer of ownership on 10 October 2022. I would like to extend my most sincere thanks to every Board
member for their commitment, wisdom and perseverance as they helped navigate the Group through this challenging time, and for
their support to me as Chair. I would also like to extend a warm welcome to the incoming Board members and look forward to working
with them as we work towards continued success for the Group and our stakeholders.
Cyber security
On 5 September 2022, unauthorised access to Go-Ahead's IT systems was discovered. The Go-Ahead IT team, in collaboration with an
external incident response specialist, acted quickly to contain the incident and restore critical services. For further information on the
steps taken, please see the Corporate Governance Report on page 73.
Suspension of corporate bond
On 19 December 2022, Go-Ahead announced a delay to the publication of its Annual Report and Accounts for the year ended 2 July
2022 due to its external auditor requiring additional time to finalise the audit process and procedures. This delay resulted in the
temporary suspension of the listing of the Company’s £250m sterling bond from 3 January 2023. The Board has applied to the FCA for
the restoration of the listing of the corporate bond.
Looking ahead
With a new strategy, new leadership team and new ownership structure, I look forward to the next chapter for Go-Ahead. While we
continue to face challenges in some areas of the business, we have a clear direction and an important purpose to fulfil.
As the world recovers and rebuilds following the COVID-19 pandemic, faces macro-economic challenges and continues on the path to
decarbonisation, I have no doubt that public transport will play a crucial role. At Go-Ahead, we are committed to shaping a successful
future which delivers value to all our stakeholders, and I am excited by the opportunities we have as we move forward.
Strategic report
Operating review
The Go-Ahead Group Limited Annual Report and Accounts 2022
6
New ownership structure
Following the year end, on 16 August 2022, Go-Ahead’s shareholders approved the recommended cash offer for the entire issued and
to be issued share capital of the Group, made by a consortium comprising Kinetic TCo Pty Limited (Kinetic) and Globalvia Inversiones
S.A.U (Globalvia) for 1,450p plus 100p special dividend per share. This was effected by means of a Court-sanctioned Scheme of
Arrangement under Part 26 of the Companies Act 2006 which completed on 10 October 2022.
Overall performance in the year
The Group delivered a solid set of results for the year ended 2 July 2022 with encouraging performance in continuing operations.
Revenue fell 19.0 per cent , largely due to the end of the Southeastern contract in October 2021, and operating profit (pre-exceptional
items) dipped 22.9 per cent reflecting the end of the Southeastern contract and a stronger prior year which benefited from a number
of one-off items, such as one-off pre-Emergency Measures Agreement (EMA) items in GTR and timing benefits in the recognition of
Quality Incentive Contract payments in London Bus. Performance was also impacted by a number of exceptional items, resulting in an
exceptional credit of £21.2m (2021: £104.1m cost) which largely relates to changes in onerous contract provisions (net £15.6m credit)
and settlements reached with the Department for Transport (DfT) in relation to London & South Eastern Railway Limited (LSER)
(£9.3m credit). The changes in the onerous contract include a reduction of £51.6m in the Norwegian onerous contract provision
recognised in the prior year and an increase of £36.0m in the existing onerous contract provision in Germany for the Bavarian contract.
Our divisions
Bus
Regional Bus
The Regional Bus division typically generates the majority of revenue through passenger fares. The companies comprising the division
are 100 per cent owned by Go-Ahead.
At the start of the year, Regional Bus services continued to be supported by the COVID-19 Bus Service Support Grant (CBSSG) as
passenger volumes remained suppressed following the pandemic. This funding, which enabled a broadly breakeven position for
operators, was replaced in September 2021 by the Bus Recovery Grant (BRG) which continues to support the transition back to a more
commercial model through the provision of a fixed sum of funding for the industry.
The Regional Bus division continued to see a steady recovery in passenger demand over the year, with commercial volumes across the
business reaching in excess of 85 per cent of pre-pandemic levels by the year end.
Since the year end, we have seen further recovery in commercial volumes, in some cases reaching more than 90 per cent of pre-
pandemic levels. These trends give us confidence in the continuation of passenger recovery in the coming months.
London & International Bus
The London & International Bus division comprises contracted bus operations in London, Singapore, Ireland and Sweden. It generates
the majority of its revenue through contracts with transport authorities. The companies comprising the division are 100 per cent
owned by Go-Ahead.
Operations in London, Singapore and Ireland traded well during the year and the acquisition of Flexbuss in Sweden in April 2022 has
seen a successful introduction and is contributing to the division’s profitability.
Revenue increased due to contract wins, however operating profit and operating profit margin for the year were lower than prior year,
which reflects the contractual nature of the operations and the £8.0m reduction in Quality Incentive Contracts (QICs) following the
higher levels recognised in London in the prior year when QICs moved from an annual to quarterly settlement thus creating greater
levels of certainty, leading to the acceleration of the recognition of this revenue and crystalising additional QICs in the prior year.
Following the year end, we were pleased to be awarded a contract extension in Singapore running from the previous end date of
September 2023 to September 2026.
Rail
UK Rail
UK Rail consists of GTR, the UK’s largest rail franchise. GTR generates revenue through a management contract with the DfT. GTR is
65 per cent owned by Go-Ahead. Keolis UK controls the remaining 35 per cent stake.
At the beginning of the financial year, UK Rail comprised GTR and Southeastern which operated under an Emergency Recovery
Measures Agreement (ERMA) and an EMA respectively. Under both agreements a fixed margin was paid for the operation of rail
services, with the potential to earn performance incentives fees in addition. In October 2021, the Southeastern contract ended
following the DfT’s decision to appoint the state-owned Operator of Last Resort (OLR).
GTR was awarded a National Rail Contract (NRC) in April 2022, running until April 2025 with the potential for a further three years at
the Secretary of State’s discretion. Like the ERMA it replaced, the NRC is a management contract through which GTR provides agreed
rail services for a fee. The contract has limited cost risk and exposure to changes in passenger demand. Changes in allowable costs (as
defined in the contract) are at the risk of the DfT, not the operator. In addition to the fixed management fee and potential performance
fee stipulated by the contract, the NRC also allows for individual project fees to be earned by GTR on the delivery of additional
initiatives as directed by the DfT.
Strategic report
Operating review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
7
Our divisions continued
Rail continued
UK Rail continued
Throughout 2022 and into 2023, industrial action has impacted rail services across the UK, including GTR on some days. We regret the
impact such action has on our customers and urge the unions to engage with us over changes to the industry that are required to
secure a sustainable and positive future. Under the management contract structure, which is based upon a management fee and
performance-related fees, in respect of industrial action, the associated cost and revenue risk of such action remains with
Government, not GTR.
International Rail
The International Rail division comprises operations in Germany and Norway. It generates the majority of its revenue through contract
fees from transport authorities. The companies comprising the division are 100 per cent owned by Go-Ahead.
Onerous contract provisions are in place in relation to rail contracts in Norway and Germany. In the financial year, there were material
exceptional items which included an onerous contract release in Norway following the contract amendment and an increase in the
existing onerous contract provision in Germany for the Bavaria contract following a reassessment of the provision using updated
market conditions. The quantum of these provisions is material and subject to a degree of estimation and uncertainty. See page 143
for more information within the key sources of estimation uncertainty section.
In Norway, passenger volumes have started to show improvement albeit have not yet reached pre COVID-19 levels. The original
contract, which began in 2019, included exposure to changes in passenger demand, and the Norwegian Government introduced a
package of financial support early in the COVID-19 crisis enabling a broadly breakeven performance. Government support although
reduced remained in place during the year and towards the end of the year, a new agreement was reached between the Norwegian
Railway Directorate and Go-Ahead Norway, regarding the structure of the contract. The amended contract took effect from 1 July
2022 and runs for the duration of the original contract, until December 2027 (plus a two-year extension option until December 2029),
providing a revenue support scheme until the end of the contract. The amended contract also includes an incentive scheme linked to
revenue growth.
Subsequent to the year-end, a dispute has arisen with the Norwegian Rail Directorate relating to specific terms for the compensation
for loss of passenger income mechanism that had been agreed under the revised agreement traffic agreement dated 28 June 2022.
Based on legal advice obtained and review of correspondence between the Company and the Rail Directorate at the time of the
signing of the revised agreement in June, the Directors are satisfied that the onerous provision has been calculated based on the terms
of the revised agreement. Whilst the Directors are confident of a successful outcome, until such time as the dispute is resolved with
the Directorate there remains a possible risk that if successfully challenged by the Directors, this could increase the onerous contract
provision by up to £20.0m. The Directors consider that the onerous contract provision reflects their best estimate of the terms agreed
at the time.
In Germany, Go-Ahead’s Bavarian contracts have limited direct exposure to passenger demand. For the contracts in Baden-
Württemberg, the focus remains on continued improvement of operational performance. Following the introduction of the first
contract in December 2021, mobilisation for the second, and final, contract in the region commenced in December 2022.
Markets
Megatrends and recent trends
The public transport industry is becoming increasingly important to society. A number of overarching societal trends will shape a
broader, but evolving, role for public transport in the years to come.
Climate change is an issue that requires swift and global action. For industrialised countries to achieve their legally binding net zero
goals, there will need to be a huge shift away from private cars to walking, cycling and public transport. Our role in this is significant –
we must build on the momentum initiated by governments by promoting this modal shift. Simultaneously, we must minimise and
mitigate the negative direct and indirect environmental impacts our operations have.
Go-Ahead’s first climate change strategy was published in July 2021, with a commitment to be net zero by 2045, five years before the
UK Government’s collective national target of 2050.
Digitalisation is changing the way customers make transport choices. People want to make smart decisions on how they get from “A
to B” based on mapping apps and journey planners spanning bus, rail, bicycles and car clubs. They no longer necessarily want, nor
expect, to purchase travel separately for each. Mobility is increasingly viewed as a consolidated service at the point of sale. The UK is
behind its continental neighbours in mobility as a service, and Go-Ahead needs to be at the forefront of change.
The steady urbanisation of societies is putting pressure on road space, increasingly creating both congestion and pollution. A double-
decker bus can take 75 cars off the road, and a train can replace as many as 500 private vehicles. As a society we must encourage and
incentivise greater use of public transport to maintain, and enhance, quality of life in towns and cities.
Demographics will also shape public transport usage. Ageing populations in Go-Ahead’s key markets will lead to greater demand for
accessibility. For many, buses and trains will be vital in accessing key public services and we will see the emergence of an older
generation that is less car reliant and has more leisure time. We must work with transport authorities to ensure a reliable and
consistent provision of services across regions, as aspired to in the UK Government’s “Levelling Up” plans.
Strategic report
Operating review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
8
Markets continued
Megatrends and recent trends continued
The long term legacies of the COVID-19 pandemic are yet to become clear. We know that commuting patterns have changed for good,
with hybrid working here to stay for many people. Other changes include where people choose to live and the make-up of our high
streets. Neighbourhoods are set to benefit from home working, with more money and time spent close by, which creates opportunities
for local buses. A car-based recovery would be hugely detrimental to the environment and our communities. Investment in local bus
services (including bus priority measures) is needed to service demand and support a resurgence in our neighbourhoods. Public
transport has a huge role to play in addressing many of society’s challenges, including climate change, physical and mental health,
social isolation and loneliness, and equal access to education and employment. To effect real change, the balance must be redressed
from today’s dependence on private car use to the more sustainable options of bus and rail travel.
In a high inflationary environment, with the current cost of living placing households under financial pressure, public transport can
provide a more economical option for people than the private car.
Government policy
In the UK, Go-Ahead’s core market, public transport is high on the Government’s agenda, with 2021 seeing two major Government
announcements: the Bus Back Better national bus strategy and the Williams-Shapps Plan for Rail. Go-Ahead is supportive of the broad
objectives of both and welcomes the additional investment the UK Government is putting into local bus services. Go-Ahead agrees
with the need for a long term strategy for rail and believes an appropriate structure must be put in place to incentivise rail operating
companies to bring innovation into the network and to grow passenger numbers. More recently, the “Levelling Up” White Paper
emphasised the importance of public transport in enhancing regional economies. These policies will shape the future of public
transport in the UK, and their significance should not be underestimated.
At the heart of both the bus and rail plans is the need for closer collaboration between government (central and local) and industry,
and between public bodies and private operators. Through decades of experience in our local markets, Go-Ahead knows that working
collaboratively delivers better outcomes for everyone, particularly our customers.
Mass transport is high on the agenda of the authorities in all our operating areas and, whilst there have not been any significant
government policy updates in the other markets we operate in, we aim to foster good relationships at all levels of government
wherever we operate.
Outlook
We remain confident about the long term prospects of the Group. Public transport usage is recovering well across our markets
following the pandemic and the megatrends and recent trends impacting the industry highlight the importance of public transport,
and continued investment in it, going forward.
Specific challenges, particularly in German rail, continue to be actively managed to deliver improvements in the outlook over the
remaining lives of the contracts.
Individual divisional outlooks are provided on pages 6 to 8.
Strategic report
Our business model
The Go-Ahead Group Limited Annual Report and Accounts 2022
9
Our purpose: Moving you and the next generation towards a smarter and
healthier planet
Delivered through our strategy:
• Performance improvement
• Organic and external growth
• Progression of new opportunities
Read about our strategy on page 11
Supported by a strong financial profile:
Strong market traction
• Modal shift resulting from policy regulation and increasing fuel prices
• Rapid urbanisation
• Market liberalisation
Unique competitive positioning
• Leading position in UK rail and London bus
• Leader in electrical transition in the UK market
• Industry leading passenger satisfaction scores
Resilient business model
• Diversified portfolio by sector and geography
• Limited exposure to passenger demand risk
• Long-term contracts
Strong financial position with a proven track record
• Track record of growth
• Robust balance sheet
• Disciplined approach to capital allocation
Positive social and environmental impact
• Science based targets to reduce carbon emissions
• Delivering public transport – a vital element in tackling climate change
• Services support social and economic inclusion
Experienced leadership
• Leadership team with significant international experience
• Highly respected Managing Directors at operating company level
How we deliver our business model:
Approach
• Strong capability in urban commuter markets
• Customer-focused decision making
• Industry leading climate change strategy
• Well defined values and behaviours
Market position
• Leading position in UK rail, London bus and UK regional bus
• High quality of service
• Strong relationships with strategic partners and stakeholders
• The UK’s largest operator of zero emission buses
Management
• Experienced leadership
• Devolved structure
• Robust balance sheet
• Strong risk management
Executive remuneration
During the year, executive remuneration was aligned to both shareholders’ and other key stakeholders’ interests and operated in line
with our business model, long term strategy, culture and values. See page 94 for more details on the executive directors’ remuneration.
Strategic report
Our business model continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
10
Creating financial and non-financial value for all our stakeholders:
Our people
Financial value - We look after our people, paying competitive salaries and offering attractive benefit packages.
Non-financial value - We create safe and enjoyable inclusive working environments in which people are empowered and enabled to
develop personally and professionally. We offer occupational health and other wellness services for both physical and mental health.
Customers
Financial value - We provide value for money services, offering convenient alternatives to car travel against a backdrop of rising costs
of private motoring.
Non-financial value - Our services facilitate our passengers’ lives, connecting people with friends and family and enabling access to
services, facilities, work and education. Our buses and trains provide safe and convenient places for people to use their travel time as
they wish.
Strategic partners and suppliers
Financial value - We support suppliers in the UK and internationally through the procurement of goods and services.
Non-financial value - Through our Sustainable Supply Chain Charter, we demonstrate high standards of integrity, responsibility and
professional conduct. We endeavour to support our suppliers to improve the sustainability of their business.
Government
Financial value - Our contribution to the Government includes corporation tax and National Insurance contributions.
Non-financial value - Through our experience and expertise we help shape policies at national and local levels through our
contribution to reviews and consultations. Through our activities we support government targets and objectives in areas such as
climate change, diversity and social inclusion.
Communities
Financial value - Our services enable and promote economic activity in our communities, providing access to retail and leisure
facilities, work and education.
Non-financial value - We strive for our services to be accessible and inclusive. We promote social inclusion in our communities, often
providing vital transport links to vulnerable people. Operating responsibly, we are committed to maximising the role we play in slowing
global climate change and improving air quality for our communities.
Investors
Financial value – During the year, prior to the acquisition of Go-Ahead’s entire issued share capital in October 2022, we aimed to
provide attractive shareholder returns. As part of the acquisition arrangements, a special dividend of 100p per share was paid to
shareholders upon completion of the transaction.
Non-financial value - Confidence in the long term sustainability of the Group is built through our approach to operating responsibly,
such as measuring and reducing our impact on climate change.
Strategic report
Strategy
The Go-Ahead Group Limited Annual Report and Accounts 2022
11
Go-Ahead communicated a new strategy in April 2022 following a business review undertaken by Christian Schreyer after his
appointment as Group Chief Executive in November 2021. The strategy is underpinned by medium term financial targets.
The business review found fundamental strengths in the Group and identified areas to deliver improvements and enable sustainable
growth. Under the new strategy the Group will strengthen, digitalise and decarbonise its operations, delivering greater profitability
and financial returns alongside improvements for customers and communities.
New strategy: “The Next Billion Journeys”
Three strategic priorities have been identified, aimed at delivering profitable and sustainable growth in existing and new markets:
Performance improvement
• Enhance the basics by focusing on operational excellence, particularly in performance management, standardisation of processes
and digitalisation
• Turn around underperforming operating companies
• Reduce the zero-emission breakeven point to accelerate fleet decarbonisation
Organic and external growth
• Accelerate passenger recovery and increase modal shift
• Grow in existing geographies, notably the UK regional bus market, maintain London market share and promote an attractive model
for Passenger Service Contracts in the UK rail market
• Replicate the successful London & International Bus business model in selected international markets, exploring partnership and
acquisition opportunities where appropriate
Progress new opportunities by leveraging existing capabilities and resources
• Explore new urban mass transit modes such as metro, light rail and bus rapid transit
• Accelerate in B2B, such as airport transport and rail replacement services
• Explore new services within the mobility value chain with existing capabilities and resources, such as zero-emission services,
Mobility as a Service (MaaS) operation and property utilisation
These strategic priorities are underpinned by five key enablers
• Strengthening governance and transparency
• Improving digital and data capabilities
• Consolidating zero-emission capabilities
• Rebuilding post COVID-19 confidence with passengers and clients
• Enhancing people engagement and collaboration
Medium term targets
• An increase in annual Group revenue to around £4bn, up by around 30 per cent*, in the medium term
• Medium term annual cost savings of £40m in bus business
• An increase in annual Group operating profit to at least £150m in the medium term
* Excluding recently ended LSER contract
KPIs for the new strategy are being developed.
Strategic report
Business and finance review
The Go-Ahead Group Limited Annual Report and Accounts 2022
12
Group overview
2022
2021
Movement
£m
£m
£m
%
Group revenue
3,288.1
4,058.5
(770.4)
(19.0)
Regional Bus operating profit
26.9
17.9
9.0
50.3
London & International Bus operating profit
57.8
68.5
(10.7)
(15.6)
Total Bus operating profit
84.7
86.4
(1.7)
(2.0)
UK Rail operating profit
23.6
56.7
(33.1)
(58.4)
International Rail operating (loss)
(19.2)
(27.6)
8.4
30.4
Total Rail operating profit
4.4
29.1
(24.7)
(84.9)
Group operating profit (pre-exceptional items) 2
89.1
115.5
(26.4)
(22.9)
Exceptional operating items
21.2
(104.1)
125.3
120.4
Group operating profit (post-exceptional items)
110.3
11.4
98.9
867.5
Results of equity accounted investments
(0.1)
(0.2)
0.1
50.0
Net finance costs
(15.5)
(18.1)
2.6
14.4
Profit/(loss) before tax
94.7
(6.9)
101.6
1,472.5
Total tax expense
(13.5)
(33.8)
20.3
60.1
Profit/(loss) for the period
81.2
(40.7)
121.9
299.5
Non-controlling interests
(13.3)
(5.3)
(8.0)
(150.9)
Profit/(loss) attributable to shareholders
67.9
(46.0)
113.9
247.6
Profit attributable to shareholders (pre-exceptional items)
50.9
46.6
4.3
9.2
Weighted average number of shares (m)
43.0
43.0
—
—
Earnings per share (pre-exceptional items) (p) 2
118.3p
108.4p
9.9p
9.1
Earnings/(loss) per share (post-exceptional items) (p)
157.9p
(107.0)p
264.9p
247.6
Proposed dividend per share (p)
—
—
—
—
Special dividend per share (p) 1
100.0p
—
100.0p
—
Additional dividend per share (p) 1
37.00p
—
37.0p
—
1 Special dividend paid on completion of sale and additional dividend to the Group’s new shareholders were not recognised as a liability at 2 July 2022. See note 11 in the
consolidated financial statements for further details.
2022
£m
2021
£m
Increase/
(decrease)
£m
Increase/
(decrease)
%
Adjusted net debt (pre-IFRS 16 basis) 2
241.0
305.9
(64.9)
(21.2)
EBITDA (excluding exceptional items and on a pre-IFRS 16 basis) 2
161.1
195.7
(34.6)
(17.7)
Adjusted net debt (excluding restricted cash) to EBITDA (excluding
exceptional items) on a pre IFRS 16 basis
1.50x
1.56x
(0.06)
(3.8)
Liquidity 2
320.5
240.3
80.2
33.3
2
Non-GAAP measure. Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
13
Financial performance
All references to operating profit, EBITDA and margins are on a pre-exceptional basis unless otherwise detailed. A full reconciliation
between pre and post-exceptional operating profit/loss is shown within the income statement and associated notes. The year ended 2
July 2022 was a 52 week period whereas the year ended 3 July 2021 was a 53 week period. Like for like comparatives have been
referenced below where meaningful.
Overview
• The Group reports encouraging financial performance for the year. The Group generated operating profit (post-exceptional items)
of £110.3m (2021: £11.4m) and operating profit (pre-exceptional items) of £89.1m (2021: £115.5m).
• An exceptional credit of £21.2m (2021: £104.1m cost) has been recognised in the year which relates largely to changes in onerous
contract provisions and settlements reached with the Department for Transport (DfT) in relation to London & South Eastern
Railway (LSER) (net £9.3m credit). The changes in the onerous contract include a reduction of £51.6m in the Norwegian onerous
contract provision recognised in the prior year and an increase of £36.0m in the existing onerous contract provision in Germany for
the Bavarian contract.
• The settlements reached in the year with the DfT related to matters of concern for LSER, other historical franchises and LSER
affiliate trading. Settlements were lower than the provision recognised in the prior year exceptional items and a credit has been
recognised in exceptional items in the current year. The prior year provision reflected the groups best estimate of the settlement
amount with information available at the time. Refer to “Critical accounting judgements and key Sources of estimation uncertainty”
section for further details on page 140.
• Material exceptional items include a reduction in the Norwegian onerous contract provision recognised in the prior year and an
increase in the existing onerous contract provision in Germany for the Bavarian contract.
• On 16 August 2022, the recommended cash offer by Gerrard Investment Bidco Limited (Bidco), a newly formed company indirectly
owned by Kinetic TCo Pty Ltd and Globalvia Inversiones S.A.U. (the Consortium), for the entire issued and to be issued share capital
of The Go-Ahead Group plc was approved by the requisite majority of shareholders. Completion of the offer occurred on 10 October
2022.
• Under the terms of the offer, the Board agreed to pay a special dividend of 100p per share. This was paid on 24 October 2022. On 29
November 2022, an additional dividend of 37p per share was paid to the new shareholders.
• The Group is positive on the long term outlook and is progressing well towards the medium term targets set as part of the Group’s
strategy, “The Next Billion Journeys”.
Performance
• The reduction in revenue principally reflects the end of the Southeastern franchise which was operated until 17 October 2021.
• The increase in operating profit (post-exceptional items) principally reflects the movement in exceptional items which was a cost in
the prior year and is a credit in the current year. Exceptional items relate largely to the onerous contract provision movements in
International Rail and settlements reached in UK Rail as well as goodwill impairment, legal, professional and takeover costs.
• The reduction in operating profit (pre-exceptional items) principally reflects the reduction in UK Rail and London & International Bus
profits following the end of the Southeastern franchise and the one-off items in the prior year which included one-off pre-
Emergency Measures Agreement (EMA) items in GTR and Quality Incentive Contracts (QICs) timing benefits in London.
• Earnings per share increased mainly due to the movement in exceptional items. There was a small increase in earnings per share on a
pre-exceptional basis.
Position
• At the year end, the Group has a robust balance sheet and improved liquidity following disciplined cashflow management.
• Adjusted net debt (excluding restricted cash) on a pre-IFRS 16 basis reduced and the ratio of pre-IFRS 16 adjusted net debt
(excluding restricted cash) to EBITDA (excluding exceptional items) has also reduced and is at the bottom of our target range of 1.5
times to 2.5 times.
Outlook
• Overall, whilst the Group continue to face challenges in some areas of the business, the outlook for the Group is positive as we move
forward with a new strategy, new leadership team and new ownership structure.
• We continue to make progress towards our medium term strategic financial targets, although net debt is expected to increase, in
part due to the impact of the Group’s acquisition which has resulted in increased dividends and costs relating to the acquisition.
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
14
Bus
Bus overview
2022
2021
Movement
£m
£m
£m
%
Total bus operations
Revenue (£m)
1,123.9
1,088.6
35.3
3.2
Operating profit1 (£m)
84.7
86.4
(1.7)
(2.0)
Operating profit margin1
7.5%
7.9%
n/a
(0.4ppt)
Regional Bus
Revenue (£m)
460.3
427.7
32.6
7.6
Operating profit1(£m)
26.9
17.9
9.0
50.3
Operating profit margin1
5.8%
4.2%
n/a
1.6ppt
London & International Bus
Revenue (£m)
663.6
660.9
2.7
0.4
Operating profit1 (£m)
57.8
68.5
(10.7)
(15.6)
Operating profit margin1
8.7%
10.4%
n/a
(1.7ppt)
Like for like revenue growth
Regional Bus2
9.7%
(1.9%)
n/a
11.6ppt
London & International Bus3
1.2%
6.7%
n/a
(5.7ppt)
Like for like volume growth
Regional Bus passenger journeys4
65.1%
(42.1%)
n/a
107.2ppt
London & International Bus miles operated 5
(0.3%)
3.8%
n/a
(4.1ppt)
1. Excluding exceptional items. Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
2. Like for like revenue is calculated after removing £8.1m in 2021 to adjust for the 53 week year.
3. Like for like revenue is calculated after removing £7.6m from 2022 revenue relating to contracts started part way through the year. £12.4m was removed in 2021 to adjust for the
53 week year in the prior year.
4. On a like for like basis, excluding the impact of the 53 week year in the prior year.
5. On a like for like basis, excluding the mileage relating to contracts started part way through the year and adjusting for the 53 week year in the prior year.
Regional Bus
2022
2021
Movement
£m
£m
£m
%
Revenue and funding
Passenger revenue
325.1
233.6
91.5
39.2
Contract revenue
70.0
70.6
(0.6)
(0.8)
Other revenue
68.8
127.5
(58.7)
(46.0)
Inter-segment revenue
(3.6)
(4.0)
0.4
10.0
Total revenue
460.3
427.7
32.6
7.6
Government funding *
58.4
120.0
(61.6)
(51.3)
* Funding is included in other revenue and includes COVID-19 Bus Service Support Grant (CBSSG) and Business Recovery Grant (BRG).
Continued Regional Bus recovery occurred during the year although profits were still below pre-COVID-19 levels. Improved year on
year profitability reflects passenger demand growth and government recovery funding for operating services. Patronage continued to
recover with total like for like passenger numbers up on prior year and commercial passenger numbers in excess of 85 per cent of pre-
COVID-19 levels at year end. The return of passenger numbers has resulted in the increase in like for like revenue although this was
partially offset by reduced funding. Vehicle mileage for the year was 90 per cent of pre COVID-19 levels.
Finance review
• Revenue growth primarily reflects passenger revenue recovery and reduced funding.
• Operating profit for the year increased and operating profit margins improved principally reflecting the recovery of passenger
revenues and the return to a more commercial operating model as passenger volumes continue to recover and funding reduces.
• Reduced government funding reflects the change from COVID-19 Bus Service Support Grant (CBSSG) to Business Recovery Grant
(BRG) funding and the transition to a more commercial model as passenger volumes continue to recover and funding reduces.
• Total capital expenditure, excluding right of use asset additions, was £13.3m (2021: £29.4m).
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
15
Bus continued
Regional Bus continued
Outlook
• Profitability is sensitive to the balance of revenue recovery, cost inflation, government funding initiatives and matching services to
demand.
• We expect further recovery in passenger demand as funding ends and we move to a more commercial operating model
• BRG funding has been extended further until June 2023 and a funded £2 fare cap has been introduced by the DfT for the period
January 2023 to June 2023.
• In April 2022, the DfT announced £1.1bn of funding allocations for local bus improvement schemes. This will enable a number of Go-
Ahead’s operating areas to benefit from improved bus priority and revenue support for lower fares
• Regional bus margin is returning to pre-pandemic margins and closer to our medium term strategic margin and is expected to
outperform our expectations in 2023 following continued extended funding and stronger passenger demand in certain areas of the
division.
• In December 2022, Transport for Greater Manchester awarded Go-Ahead two contracts to operate Manchester’s Bee Network
with bus services starting in September 2023. The contracts do not carry passenger revenue risk as Go North West will be paid a fee
to operate the buses with all fares going to TfGM.
• Longer term, we remain confident that Regional Bus will deliver attractive margins in line with our recently announced “Next Billion
Journeys” plan, as a result of our strong local market positions and networks.
London & International Bus
Profits and margins in line with pre-COVID-19 levels. Continued growth and investment in the successful division where our contracts
are operated on behalf of transport authority clients on a gross cost basis without exposure to changes in passenger demand.
Finance review
• Like for like revenue increased reflecting contract renewals, route wins and contract price inflation. Like for like mileage was broadly
in line with prior year with service cuts offset by route wins.
• Operating profit margins are closer to pre-pandemic margins and contract price inflation has helped, and will continue to help,
mitigate the risk of inflationary pressures.
• In April 2022, we acquired the Swedish bus business Flexbuss for £13.8m. Revenue is generated through contracts with the local
transport authority, without direct exposure to changes in passenger demand. Trading is positive and in line with our expectations.
• Revenue is in line with prior year. Like for like revenue is higher which principally reflects the 53-week year in the prior year, contract
price inflation and that service cuts in the year have been offset by route wins.
• Operating profit and operating profit margin for the year were lower than prior year. This is closer to pre-pandemic margins which
reflects the contractual nature of the operations and the £8.0m reduction in Quality Incentive Contracts (QICs) following the higher
levels recognised in London in the prior year when QICs moved from an annual to quarterly settlement.
Outlook
• The division has a robust business model and has already secured expected contractual revenue for the 2023 financial year through
successful contract bidding. Whilst the London & International Bus division is expected to underperform in 2023, this is mainly due
to driver shortages and the time lag of indexation. The Group expects an indexation benefit in 2024 and for the division to recover
and return to the Group’s strategic margins. In the 2023 financial year, continued revenue growth is anticipated in the division due to
indexation benefits and ongoing expansion which is driven by investment in London, the acquisition of Flexbuss in Sweden and
contract extensions.
• On 24 August 2022, the Land Transport Authority of Singapore granted a three-year contract extension to Go-Ahead Singapore to
continue operating in the Loyang region of the island. The extension begins in September 2023 and will run until September 2026.
• In December 2022, Go-Ahead signed a contract to operate buses in Sydney, under a joint venture with an Australian company UGL
with bus services starting in July 2023.
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
16
Rail
Rail overview
2022
2021
Movement
£m
£m
£m
%
Total Rail operations
Total revenue (£m)
2,164.2
2,969.9
(805.7)
(27.1)
Operating profit* (£m)
4.4
29.1
(24.7)
(84.9)
Operating profit margin *
0.2%
1.0%
n/a
(0.8ppt)
UK Rail
Total revenue (£m)
1,973.0
2,829.7
(856.7)
(30.3)
Operating profit* (£m)
23.6
56.7
(33.1)
(58.3)
Operating profit margin*
1.2%
2.0%
n/a
(0.8ppt)
International Rail
Total revenue (£m)
191.2
140.2
51.0
36.4
Operating loss* (£m)
(19.2)
(27.6)
8.4
30.4
Operating profit margin*
(10.0%)
(19.7%)
n/a
9.7ppt
* Excluding exceptional items. Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
UK Rail
The Southeastern franchise ceased in October 2021 and GTR moved from the Emergency Recovery Measures Agreement (ERMA)
contract to the National Rail Contract (NRC) in April 2022.
Finance review
Revenue, operating profit and operating profit margin were lower than last year. The reduction principally reflects the end of the
Southeastern franchise which ceased in October 2021 and a benefit in the prior year relating to favourable pre Emergency Measures
Agreement (EMA) balance sheet liability settlements in GTR. Pre EMA liabilities were estimates and the final settlements were less
than estimated resulting in the favourable settlement and balance sheet release.
GTR
• GTR operated under an ERMA up to 31 March 2022. The ERMA was a management contract with no revenue or cost risk and the
margin was capped at 1.5 per cent comprising a 0.5 per cent fee and 1.0 per cent performance incentive.
• On 1 April 2022, GTR was awarded an NRC. The NRC, like the ERMA contract it replaced, is a management contract which has
limited exposure to changes in passenger demand and no substantial cost risk to GTR.
• Under the NRC, GTR earns a fixed management fee of £8.8m per annum (equivalent to a margin of 0.5 per cent of GTR's cost base)
to deliver the contract, with an additional performance fee of up to £22.9m per annum (equivalent to an additional 1.35 per cent
margin). Subject to the achievement of performance targets set by the DfT, the maximum fee receivable by GTR, on a pre-IFRS 16
basis, would therefore be £31.7m per annum (equivalent to a margin of around 1.85 per cent).
• Operating performance for the duration of the ERMA was good, resulting in the achievement and recognition of £9.7m of ERMA
performance bonus fee in the year. This position has been confirmed by the DfT to 31 March 2022.
• Operational performance during the NRC has been in line with expectation resulting in an accrued performance fee of £2.9m, yet to
be confirmed by the DfT.
• GTR have provisions for income and costs which relate to unsettled historical performance regimes and contractual obligations.
The measurement of franchise commitments, comprising dilapidation provisions on rolling stock, depots and stations, within the UK
Rail franchises, is set out in note 25. Significant elements of the dilapidation provisions are subject to interpretation of franchise
agreements and rolling stock agreements. The Group has significant internal expertise to assess and manage these aspects of the
agreements and to enable management to assess the most probable outcomes. Where appropriate, and specifically in assessing
dilapidation provisions, this process is supported by valuations from professional external advisors to support provision levels.
LSER
• The Southeastern franchise was operated by LSER under an EMA contract until 17 October 2021 when the DfT appointed the
Operator of Last Resort (OLR) to take over the operation of Southeastern services at the end of the franchise term.
• Operating performance during the contract was good resulting in the achievement of a £3.9m EMA performance fee recognised in the year.
• Discussions are ongoing regarding the finalisation of LSER’s net asset statement.
Contingent liabilities
• The Group has disclosed contingent liabilities for (i) Boundary Zone Fare proceedings against LSER, GTR, The Go-Ahead Group
Limited, Govia Limited and Keolis (UK) Limited; and (ii) Pricing Practice proceedings against GTR, The Go-Ahead Group Limited and
Keolis (UK) Limited. No provision associated with the claim has been made and the Group cannot make a reliable estimate of any
contingent liability in respect of this matter at the time of publishing the Annual Report and Accounts. Provisions for legal fees of
£9.4m have been recognised.
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
17
Rail continued
International Rail
Improved underlying financial performance, plus amended and improved contracts. Material exceptional items which include an
onerous contract release in Norway and an increase in the existing onerous contract provision in Germany for the Bavaria contract.
Finance review
• Revenue increased from last year which reflects principally the start of the first of the Bavaria contracts in December 2021.
Operating loss for the year reduced which principally reflects diminishing losses in Germany following continued improvements to
operational and financial performance, and benefits from ongoing contract renegotiations, as well as the settlement of a claim
against the rolling stock provider.
• In Norway, a new contract was negotiated with the Rail Directorate on 28 June 2022 with improved contractual arrangements. This
has resulted in a significant reduction in the onerous contract provision as the new contract removes a significant amount of risk
from the contract.
• In Germany, the existing onerous contract provision for the Bavaria contract has been increased following a review of operational
requirements which led to revised revenue and the forecast of additional costs. Refer to ‘Key sources of estimation uncertainty’ on
page 140 for further detail.
• A prior year adjustment of £5.1 million has been identified in respect of the GABY onerous contract provision, primarily relating to
prior year modelling errors within the model and errors relating to revenue for which there was contractual entitlement, but which
had been omitted from the original onerous contract provision, over the life of the 12 year contract. The impact of the restatement is
to increase the provision by £5.1 million in the year ended 27 June 2020 with a corresponding reduction of retained earnings.
Germany
• Improvement plans in Baden-Württemberg have resulted in improved operational and financial performance. Whilst there have
been improvements, operational performance has not been as good as anticipated.
• In August 2021, an agreement was reached with the rolling stock provider in relation to liquidated and consequential damage claims
resulting in a settlement of €10m. An initial €5m (£4.2m) was received and recognised in the period with the remaining balance to be
settled in due course.
• In Baden-Württemberg, we have reached a memorandum of understanding with the client which has resulted in a modest
improvement to the financial performance of the contract over its life.
• The first of two contracts in Bavaria started on 12 December 2021 and the second commenced in December 2022. A detailed review
and challenge of the assumptions within the contract has taken place. Upon reassessment of the Bavarian rail contracts’ onerous
contract provision under IAS 37, using updated market conditions and experience gained in running operations during the year it
was determined that an increase in the provision was necessary based on the contracts’ forecast future cashflows discounted at a
risk free rate. The increase in the onerous contract provision relates to the forecast of additional driver and conductor costs, a
reassessment of energy costs and a detailed review of revenue components.
Norway
• Under the original contract, which began in December 2019, the revenue risk associated with changes in passenger demand rested
with Go-Ahead. During the COVID-19 pandemic, the Norwegian Government provided financial support to rail operators,
preventing material losses. This support, although reduced, was in place until June 2022.
• In the prior year, an onerous contract provision was recognised, and the provision covered losses in the current year.
• In June 2022, a new agreement was reached with the Norwegian Railway Directorate regarding the structure of its rail contract. The
amended contract took effect from 1 July 2022 and the contract provides a revenue support scheme until the end of the contract
which has significantly reduced the contract’s revenue risk.
• As a result of these improved contractual arrangements, the Group has significantly reduced the onerous contract provision.
Outlook
Germany
• Improvement plans in Baden-Württemberg continue to progress.
• We have reached a memorandum of understanding with our client in Baden-Württemberg which will result in an improvement to
the financial performance of the contract over its life. Further negotiations remain underway.
• Mobilisation of the second contract in Bavaria commenced in December 2022. There are inherent uncertainties and risks associated
with the mobilisation of this contract and in estimating the impact of key success factors including driver recruitment. Whilst there
has been some difficulties regarding driver shortages, plans are in place to ensure the operation of full services.
Norway
• The new agreement with the Norwegian Railway Directorate runs for the duration of the original contract, until December 2027
(plus a two-year extension option until December 2029) and it provides a revenue support scheme until the end of the contract. The
amended contract also includes an incentive scheme linked to revenue growth.
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
18
Financial review
Depreciation and amortisation
2022
2021
Movement
£m
£m
£m
%
Depreciation and amortisation
Property, plant and equipment depreciation
73.2
81.5
(8.3)
(10.2)
Right of use depreciation
371.4
486.5
(115.1)
(23.7)
Amortisation
3.5
6.3
(2.8)
(44.4)
448.1
574.3
(126.2)
(22.0)
The total depreciation and amortisation charge for the year reduced, which is largely attributable to lower right of use depreciation.
Depreciation consists of right of use depreciation and property, plant and equipment depreciation. The reduction in depreciation is
attributable to the Southeastern franchise ending and the partial year of right of use depreciation costs. The reduction in property,
plant and equipment depreciation is attributable to the lower depreciation costs in Bus and UK Rail and is driven by the increased level
of fully depreciated/impaired assets.
The amortisation charge relates to software, franchise mobilisation and customer contracts. The decrease largely reflects the prior
year intangible asset impairment in Norway and the end of the Southeastern franchise.
Exceptional items
The change in exceptional items is largely due to the movement in the onerous contract provisions and the settlements reached in the
year with the DfT relating to Southeastern, which were lower than the provision recognised in the prior year. In Norway, there was a
reduction in the existing onerous contract and in Germany there was an increase in the existing onerous contract provision for the
Bavaria contract.
2022
2021
Movement
(charge)/ credit
£m
(charge)/ credit
£m
£m
%
Norway franchise onerous contract provision and asset impairment
51.6
(76.7)
128.3
167.3
German Bavaria franchise onerous contract provision
(36.0)
—
(36.0)
n/a
Department for Transport potential financial penalty and associated costs relating
to LSER
9.3
(32.4)
41.7
128.7
Asset impairments, provisions and restructuring costs – Regional Bus
1.2
(0.2)
1.4
700
Goodwill impairment – Regional Bus
(2.7)
—
(2.7)
n/a
Asset impairments and restructuring costs – International Rail
—
5.2
(5.2)
100
Fees associated with recommended cash acquisition of the Group
(2.2)
—
(2.2)
n/a
Exceptional operating (charge)/credit
21.2
(104.1)
125.3
120.4
Refer to Note 7. Exceptional items on page 166 for full details of Exceptional items.
In Norway, the onerous contract provision has been reduced by £51.6m. The reduction is attributable to an amended contract,
between Go-Ahead Norway A/S and the Norwegian Railway Directorate, which was signed on 28 June 2022. The amended contract
provides a revenue support mechanism which takes effect from 1 July 2022 and runs for the duration of the original contract. The
amended contract takes effect from 1 July 2022 and runs for the duration of the original contract, until December 2027 (plus a two-
year extension option until December 2029). The contract provides a revenue support mechanism until the end of the contract. The
contract also includes an incentive scheme linked to revenue growth.
As a result of these improved contractual arrangements, the onerous contract provision has been reassessed and has significantly
decreased. This has resulted in a net release of £51.6m of the provision, which has been recognised as an exceptional operating credit
during the year.
In Germany, the first of the Group’s two rail franchises in Bavaria started in December 2021; the second Bavarian franchise is still in its
mobilisation phase and became operational in December 2022. Directors have performed a reassessment of the onerous contract
provision in relation to the two Bavaria franchises. Based on the Group’s current knowledge and expectations of the income and costs
associated with these contracts, it has been deemed necessary under IAS 37 to reassess the onerous contract provision. As a result, it
has been determined that an increase of £36.0m in the provision is required, which has been recognised as an exceptional operating
charge in the year ended 2 July 2022. This is primarily due to updated information and circumstances becoming available during the
current financial year, resulting in a change in assumptions to several inputs in the model, such as increased staff costs as a result of
more reliable information available through operations beginning in Bavaria in 2021. As a result, the provision recognised as at 2 July
2022 totals £58.8m (2021: £38.9m restated).
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
19
Financial review continued
Exceptional items continued
A net exceptional credit of £9.3m was recognised in relation to the matters of concern relating to LSER, other historical franchises and
LSER affiliate trading. This consists of amounts relating to settlements reached with the DfT during the year, the financial penalty
confirmation and other associated costs in relation to these matters. The provision was an estimate and the final settlement and fine
was less than the estimated resulting in the release.
In Regional Bus, successful contract renegotiations have removed the need for the onerous contract provision. As a result, this
provision has been released and recognised as an exceptional operating credit in the year.
During the year, goodwill of £2.7m has been impaired relating to Go North East due to the challenges in the current performance of the
business and slow recovery from COVID-19. The carrying value of Go North East goodwill following this impairment is £nil (2021:
£2.7m).
On 13 June 2022, it was announced that the board of directors of the Group and Gerrard Investment Bidco Limited (Bidco) had reached
an agreement on the terms of a recommended cash acquisition of the Group. Subsequent to the year-end, the shareholders of the
Group voted in favour of this agreement. Costs incurred by the Group in the year ended 2 July 2022 in relation to this totalled £2.2m
and have been recognised as exceptional given that they are expected to be one-off in nature. Subsequent to the year-end, further
costs of approximately £12m have been incurred relating to the takeover. No provision was included for the additional costs at year-
end on the basis that the outcome of the transaction was uncertain.
Net finance costs
2022
2021
Movement
£m
£m
£m
%
Finance revenue
1.8
2.1
(0.3)
(14.3)
Finance costs
(17.3)
(20.2)
2.9
14.4
Net finance costs
(15.5)
(18.1)
2.6
14.4
Net finance costs for the year were lower than the prior year reflecting lower finance costs. Finance costs are lower as they include the
£1.3m release of an interest accrual in LSER; this release was in relation to amounts owed to the DfT. Finance costs were also lower due
to reductions in the Group’s net debt which resulted in reduced interest payable on bank loans.
Profit/(loss) before taxation
2022
2021
Movement
£m
£m
£m
%
Profit before tax (pre-exceptional) *
73.5
97.2
(23.7)
(24.4)
Profit before tax (post-exceptional)
94.7
(6.9)
101.6
1,472.5
* Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
Profit before tax increased largely due to the change in exceptional items. Profit before tax (before exceptional items) decreased
largely due to the reduction in operating profit in UK Rail and London & International Bus.
Taxation
2022
2021
Movement
£m
£m
£m
%
Tax (pre-exceptional) *
13.1
34.3
(21.2)
(61.8)
Effective tax rate (pre-exceptional) *
17.8%
35.3%
—
(18.6ppt)
Tax (post-exceptional)
13.5
33.8
(20.3)
(60.1)
Effective tax rate (post-exceptional)
14.3%
(489.9%)
—
504.1ppt
* Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
Tax (pre and post-exceptional) for the year was lower. The exceptional items in current and prior year are largely non taxable, with the
effective tax rate on exceptional items being 1.9% (2021: 2%), therefore the reduction is primarily due to a reduction in pre-exceptional
profit and a £14.4m deferred tax charge in the prior year (2022: £1.3m) due to the rate change on deferred tax liabilities from 19.0 per
cent to 25.0 per cent.
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
20
Financial review continued
Non-controlling interests
2022
2021
Movement
£m
£m
£m
%
Non-controlling interests (pre-exceptional) *
9.5
16.3
(6.8)
(41.7)
Non-controlling interests (post-exceptional)
13.3
5.3
8.0
150.9
* Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
Non-controlling interests arise from our 65 per cent holding in Govia Limited, which owns our UK Rail operations and therefore
represents 35 per cent of the profit after taxation of these operations.
Non-controlling interest (on a pre-exceptional basis) in the income statement reduced following the reduction in pre-exceptional
profit after tax in UK Rail. The reduction is due to the cessation of the Southeastern franchise in the year and the pre-EMA benefits in
GTR in the prior year.
Non-controlling interests in the income statement (on a post-exceptional basis) increased as prior year profit after tax was lower. This
is largely due to the prior year exceptional costs which included the DfT’s potential financial penalty and associated costs relating to
LSER.
Earnings per share
Earnings per share (post-exceptional items) attributable to the equity shareholders of the parent increased. The increase is largely due
to the exceptional costs in the prior year.
Earnings per share (pre-exceptional items) attributable to the equity shareholders of the parent increased slightly on prior year.
Reductions in pre-exceptional operating profit were offset by lower tax and pre-exceptional non-controlling interest.
The weighted average number of shares was 43.0 million and the number of shares in issue, net of treasury shares, was 43.0 million.
2022
2021
2020 *
2019 *
2018 *
Earnings per share pre-exceptional items *
118.3p
108.4p
50.0p
169.4p
181.6p
Earnings per share after exceptional items
157.9p
(107.0p)
(153.3p)
136.8p
207.2p
* Restated. Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
Dividends
No dividend payments were made in the current year (2021: £nil). The Board agreed to pay a special dividend of 100p per share under
the terms of the acquisition by Gerrard Investment Bidco Limited, a newly formed company indirectly owned by Kinetic TCo Pty Ltd
and Globalvia Inversiones S.A.U. (the Consortium). This was paid on 24 October 2022. On 29 November 2022, an additional dividend of
37p per share was paid to the new parent.
There were no dividends paid to non-controlling interests in the year. Non-controlling interests represent the 35 per cent share of the
UK Rail business owned by Keolis UK through our subsidiary, Govia Ltd.
Cashflow and liquidity
2022
2021
Movement
£m
£m
£m
%
Net cashflows from operating activities
9.3
677.2
(667.9)
(98.6)
Net cashflows used in investing activities
(38.4)
(37.7)
(0.7)
(1.9)
Net cashflows used in financing activities
(411.8)
(576.9)
165.1
(28.6)
Effect of foreign exchange rate changes
2.1
(1.8)
3.9
216.7
Net increase/(decrease) in cash and cash equivalents after foreign
exchange rate changes
(438.8)
60.8
(499.6)
(821.7)
2022
2021
Movement
£m
£m
£m
%
Cash
191.8
630.6
438.8
69.6
Restricted cash
50.5
543.7
(493.2)
(90.7)
Unrestricted cash
141.3
86.9
54.4
62.6
Available debt *
179.2
153.4
25.8
16.8
Balance available
320.5
240.3
80.2
33.4
* Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
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Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
21
Financial review continued
Cashflow and liquidity continued
The Group’s cash and restricted cash reduced in the year. The reduction was largely driven by cash movements in UK Rail following the
end of the Southeastern franchise and the award of GTR’s NRC.
Unrestricted cash and headroom on debt both increased which has resulted in improved liquidity at year end. Improved liquidity is
attributable to the Group generating a positive free cashflow. Cashflow from operating activities reduced. The reduction is mainly due
to working capital movements and reduced EBITDA attributable to the Southeastern franchise ending.
Cashflow from investing activities increased slightly. The increase is due to the acquisition of Flexbuss and it is partly offset by lower
net capital expenditure as the Group continues to carefully manage its capital requirements.
Net cashflow from financing activities reduced. The reduction is due to lower lease liability payments which are attributable to the
Southeastern franchise ending.
The Group’s cashflow statement is significantly impacted by UK Rail’s working capital movements and restricted cash. In addition, the
Group’s banking covenants are reported on a pre-IFRS 16 basis.
Summary cashflow
2022
2021
Movement
IFRS 16
basis
£m
Pre-IFRS 16
basis
£m
IFRS 16
basis
£m
Pre-IFRS 16
basis
£m
IFRS 16
basis
£m
Pre-IFRS 16
basis
£m
EBITDA excluding exceptional items 1
538.2
161.1
695.6
195.7
(157.4)
(34.6)
Movement in restricted cash2
493.2
493.2
(68.9)
(68.9)
562.1
562.1
Cash exceptional items
(8.6)
(8.6)
—
—
(8.6)
(8.6)
Working capital and other operating cashflows
(506.0)
(504.6)
(6.5)
(48.5)
(499.5)
(456.1)
Cashflow generated from operations (excluding restricted
cash movements)
516.8
141.1
620.2
78.3
(103.4)
62.8
Tax paid
(14.3)
(14.3)
(12.1)
(12.1)
(2.2)
(2.2)
Net interest paid
(17.4)
(8.5)
(19.2)
(10.2)
1.8
1.7
Net capital investment
(39.4)
(39.4)
(47.2)
(47.2)
7.8
7.8
Dividends paid – minority partner
—
—
(3.7)
(3.7)
3.7
3.7
Free cashflow
445.7
78.9
538.0
5.1
(92.3)
73.8
Net cash on issue/purchase of shares
(0.4)
(0.4)
(0.6)
(0.6)
0.2
0.2
Inception of new leases and lease modifications
(916.6)
—
(198.3)
—
(718.3)
—
Net debt impact of business purchase
(29.2)
(22.7)
—
—
(29.2)
(22.7)
Other
9.1
9.1
11.2
11.2
(2.1)
(2.1)
Movement in adjusted net debt
(491.4)
64.9
350.3
15.7
(841.7)
49.2
Opening adjusted net debt
(615.6)
(305.9)
(965.9)
(321.6)
350.3
15.7
Closing adjusted net debt
(1,107.0)
(241.0)
(615.6)
(305.9)
(491.4)
64.9
1 Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
2
Restricted cash changes in the summary cashflow have been updated to be shown in the movement in the restricted cash line only.
Cash generated from operations before tax and excluding movements in restricted cash reduced. The reduction was largely due to the
reduction in EBITDA which was driven by the cessation of the Southeastern franchise part way through the year.
Cashflow generated from operations on a pre-IFRS 16 basis increased. The increase was driven by working capital and changes in
restricted cash; this was partly offset by a reduction in EBITDA on a pre-IFRS 16 basis.
Free cashflow (on a pre-IFRS 16 basis) increased. The increase was largely due to the increase in cashflow generated from operations
(on a pre-IFRS 16 basis) and also due to continued measures taken to control and conserve the Group’s cash including limited capital
investment.
Net debt increased primarily due to the inception of new leases in GTR following the award of the NRC which resulted in an increase in
IFRS 16 lease liabilities. Net debt on a pre-IFRS 16 basis reduced mainly due to the increase in the Group’s free cashflow.
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
22
Financial review continued
Capital expenditure
2022
2021
Movement
£m
£m
£m
%
Additions
Property, plant and equipment
45.5
52.8
(7.5)
(14.2)
Intangible
1.4
2.2
(0.8)
(36.4)
Capital expenditure (excluding right of use)
46.9
55.0
(8.3)
(15.1)
Assets held for sale and proceeds from sale of assets*
7.9
7.3
0.6
8.2
Net capital expenditure (excluding right of use)
39.0
47.7
(8.7)
(18.2)
Right of use additions
900.8
187.0
713.8
381.7
*Calculated as proceeds from sale of property, plant and equipment and assets held for sale less purchase of property, plant and equipment held for sale
Capital expenditure (excluding right of use assets) was lower than prior year and the reduction related to lower spend in Regional Bus
which was partly offset by an increase in London & International Bus. Capital expenditure in Regional Bus is typically more discretionary
and in London & International Bus capital expenditure is driven more by contractual requirements and continued investment in the
growth of the division.
Right of use additions have materially increased in the year. The material increase is attributable to UK Rail and specifically the award
of the National Rail Contract in GTR, which has resulted in additional lease liabilities and right of use assets coming on the balance
sheet for the duration of the three-year contract.
Total capital expenditure (excluding right of use assets) and net capital investment (net of sale proceeds) reflect continued disciplined
capital expenditure and the phasing of London bus contract renewals.
Group capital investment is expected to be around £100m in 2023 with investment in our London bus fleet to meet contractual
requirements. The net cash cost to the Group is expected to be lower as investment in Regional Bus is linked to the availability of
grants and government funding.
Investments
In April 2022, we acquired the Swedish bus business Flexbuss for £13.8m. The overall net debt impact (on a pre-IFRS 16 basis) at the
point of acquisition was £22.6m, comprising debt acquired of £15.1m the £7.5m net cash outflow of consideration paid less cash
acquired.
Capital structure
2022
2021
Movement
£m
£m
£m
%
Syndicated facility 2025
280.0
280.0
—
—
7 year £250m 2.5% sterling bond 2024
250.0
250.0
—
—
Euro financing facilities
16.2
13.2
3.0
22.7
Flexbuss loan
13.8
—
13.8
n/a
Total core facilities
560.0
543.2
16.8
3.1
Amount drawn down at year end
380.8
389.8
(9.0)
(2.3)
Balance available *
179.2
153.4
25.8
16.8
* Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
Total core facilities increased in the year. The increase is attributable to Flexbuss and the financial agreements that were entered into
after the acquisition. Further details can be found in note 22 of the financial statements.
At the year end, significant medium term finance was available through a £280m syndicated facility and a £250m sterling bond. The
£280.0m syndicated loan facility has had a number of extensions, the most recent of which was agreed in July 2021, extending the
maturity to July 2025.
As part of the takeover (which took place after the year-end), the Group has also considered the change of control requirements under
its financing arrangements, including its syndicate loan facility and corporate bond. It has obtained waivers from its banks, though one
member of the banking syndicate group left the syndicate causing the facility to decrease from £280.0m to £240.0m on 11 October
2022. In January 2023, both Fitch and S & P reconfirmed the Group’s credit ratings. Therefore, any risk of a put event in relation to the
bond is no longer relevant and the bond will continue to its maturity date on 6 July 2024.
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
23
Financial review continued
Net debt/cash
2022
2021
Movement
£m
£m
£m
%
Total borrowing1
380.8
389.8
(9.0)
(2.3)
Total lease liabilities
867.6
312.7
554.9
177.5
Total cash
(191.8)
(630.6)
(438.8)
(69.6)
Net debt
1,056.5
71.9
984.6
1,369.4
Restricted cash
50.5
543.7
(493.2)
(90.7)
Adjusted net debt
1,107.0
615.6
491.4
79.8
EBITDA (excluding exceptional items) 2
538.2
695.5
(157.3)
(22.6)
Adjusted net debt/EBITDA (excluding exceptional items)
2.06x
0.89x
1.17x
n/a
IFRS 16 lease liabilities
(866.0)
(309.7)
556.3
179.6
Adjusted net debt (pre-IFRS 16)
241.0
305.9
(64.9)
(21.2)
EBITDA (excluding exceptional items) (pre-IFRS 16) 2
161.1
195.7
(34.6)
(17.7)
Adjusted net debt/EBITDA (excluding exceptional items)
1.50x
1.56x
(0.06x)
n/a
1 Including interest accrued and debt issue costs
2 Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
Net debt increased primarily due to the material increase in lease liabilities following the award of the National Rail Contract in GTR
and the reduction of cash in UK Rail.
Cash and restricted cash was lower than prior year which is due to the end of the Southeastern franchise and the reduction in cash
held by GTR under the NRC at year end.
In line with our covenants, adjusted net debt is calculated using the outstanding principal value of debt and does not include accrued
interest and is gross of debt issue costs. Our primary financial covenant under the syndicated facility is a ratio of adjusted net debt to
EBITDA (excluding exceptional items and on a pre-IFRS 16 basis) of no more than 3.5x.
Adjusted net debt on a pre-IFRS 16 basis has decreased with the Group generating positive free cashflow. The adjusted net debt
(excluding restricted cash) to EBITDA (excluding exceptional items) ratio was at the bottom of our target range of 1.5 times to 2.5
times reflecting the reduction in net debt.
Liquidity
2022
2021
Movement
£m
£m
£m
%
Cash
191.8
630.6
438.8
69.6
Restricted cash
50.5
543.7
(493.2)
(90.7)
Unrestricted cash
141.3
86.9
54.4
62.6
Available debt *
179.2
153.4
25.8
16.8
Balance available *
320.5
240.3
80.2
33.4
* Note 3 to the consolidated financial statements provides further information on these non-GAAP financial measures.
Improved liquidity at year end is attributable to the Group generating a positive free cashflow which has resulted in both an increase in
unrestricted cash and headroom on debt facilities.
Fuel hedging
Our bus fuel hedging programme has continued, using fuel swaps to fix the price of our diesel fuel in advance. The year end position
was aligned with our core policy to be fully hedged for the next financial year before that year begins, and 50 per cent and 25 per cent
hedged for the two following years respectively. In light of the current market position on fuel, the Group has paused any further
hedging in our London Bus division, where fuel price inflation is covered by indexation. We continue to hedge our Regional Bus business
in line with our core policy.
At each period end, the fuel hedges are marked to market price. At year end the market fuel prices are higher than the hedged prices
resulting in the recognition of fuel derivative assets of £54.1m (2021: £8.3m). Fuel derivative liabilities were £0.1m (2021: £0.9m).
Strategic report
Business and finance review continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
24
Financial review continued
Pensions
Operating profit includes the net cost of the Group’s defined benefit pension plans for the year of £32.6m (2021: £41.2m) consisting of
bus costs of £2.3m (2021: £2.3m) and rail costs of £29.6m (2021: £39.0m). Group contributions to the schemes totalled £38.2m (2021:
£47.5m).
Bus pensions
Under accounting valuations, the net surplus after taxation on the bus defined benefit schemes was £60.1m (2021: £27.0m), consisting
of pre-tax assets of £80.2m (2021: £36.0m) less a deferred tax liability of £20.1m (2021: £9.0m). The pre-tax asset consisted of assets of
£755.9m (2021: £906.0m) less estimated liabilities of £675.7m (2021: £870.0m). The percentage of assets held in higher risk, return
seeking assets was 37.5 per cent (2021: 31.1 per cent).
Rail pensions
As the long term responsibility for the rail pension schemes rests with the DfT, the Group only recognises the share of surplus or
deficit expected to be realised over the life of each franchise. As a result, our pre-tax liability continues to be £nil (2021: £nil).
Non-GAAP measures
Our consolidated financial statements are prepared in accordance with UK-adopted International Accounting Standards. In measuring
our performance, the financial measures that we use include those which have been derived from our reported results in order to
eliminate factors which distort period-on-period comparisons. These are considered non-GAAP financial measures and include
measures such as like for like revenue. We believe this information, along with comparable GAAP measurements, is useful in providing
a basis for measuring our financial performance. Note 3 to the consolidated financial statements provides further information on these
non-GAAP financial measures.
Strategic report
Stakeholder engagement
The Go-Ahead Group Limited Annual Report and Accounts 2022
25
Stakeholder engagement
Our relationships with our stakeholders are key to our success. By engaging meaningfully, we gain insights into their needs. This
feedback forms part of our decision making process at every level of the business, from the Board to our local management teams. The
examples which follow demonstrate consideration of the matters set out in Section 172 of the Companies Act 2006. The Board’s key
focus areas and principal decisions for the year ended 2 July 2022 together with information on how we understand the views of
stakeholders in the boardroom can be found in our Corporate Governance Report on pages 75 to 76.
Stakeholders
Why we engage
How we engage
Key topics of engagement during
2022 financial year
How we responded
Our people
Our business is built by
colleagues whose commitment,
innovation and ambition help
deliver the best possible
transport service to our
customers.
We have an experienced,
diverse and dedicated
workforce who we recognise as
a key asset of our business and
to whom we have a strong
commitment to
personal development.
To maintain a highly engaged
and motivated workforce
To create a constructive, two-
way dialogue, ensuring
colleagues have a platform to
have their voices heard
To promote wellbeing and
ensure the safety of our people
To understand how we can
best provide a supportive and
collaborative workplace
To ensure alignment between
people agenda and business
strategy
To encourage equal
opportunities and a more
diverse workforce
To ensure we develop
colleagues through
professional development and
training
Defined new values and
behaviours for leadership
Colleague engagement
surveys
Effective leadership and line
management
Communication through the
Group intranet, newsletters,
forums and ad hoc meetings
Performance and
development reviews
Colleague training
programmes and workshops
Focus on development
and succession planning
Lunch and learn sessions
Business update
presentations
Board and senior
management site visits
Annual management
conference
Engagement with trade
unions
Health, safety and wellbeing
Diversity and inclusion
Maintaining and continually
improving
colleague engagement
Development and training
opportunities
Opportunities for
progression
Opportunity to share ideas
and make a difference
Flexible working
Modernising and
transforming
working environments
Colleague recognition and
reward
Working throughout the
COVID-19 pandemic,
job security and pay
Increased colleague
engagement and
communication
Development of health and
wellbeing initiatives
Continued dialogue to
understand likely scenarios
around return to office
working
Continued focus on diversity
and inclusion, including
maintaining relevant KPIs
introduced last year
Employee apps across
operations for safer and more
efficient working
Reshaped Executive
Development and Senior
Management Development
Programmes
Support for remote working
practices to balance
childcare/home-schooling,
etc. where appropriate
Customers
Customers are at the heart of
Go-Ahead and we are
dedicated to providing them
with safe, convenient and
reliable services. We
understand our local markets
and strive to exceed our
customers’ expectations.
To identify priority areas for
improvement in order to
maintain our high level of
customer satisfaction
To respond quickly and
effectively to meet changes in
customers’ needs and
preferences
To fully understand the needs
of our different and diverse
customer groups
To improve or maintain a high
quality, reliable and safe
passenger transport service
To enable us to deliver new and
innovative products and
integrated, customer-focused
solutions
To maintain a reputation for
high standards of business
conduct
Online communications –
website, newsletters, emails
and social media
Customer satisfaction
surveys
Continual review of customer
feedback
Customer-facing colleague
feedback
Customer panels and focus
groups
Customer, industry and on-
site events
Collaboration on product
innovation and service design
Reliability and punctuality of
services
Safety measures
Overall on-board experience
Value for money, including
ticket price
Quality and amount of delay
and disruption information
including timetable changes
Station amenities
Route and timetable
enquiries
Colleague training and
development
Accessibility and support for
passengers with different
needs
Active travel initiatives
Enhanced safety features and
cleaning regimes
Local interaction regarding
timetable changes
Continued rollout of tap-
on/tap-off contactless
ticketing, and increasing
emphasis on non-cash
transactions
Ongoing updates to bus app
to improve journey planning
and real time tracking
Rail station improvements
with significant cycle hubs to
make active travel easier
Created Go-Ahead
Accessibility Taskforce to
progress continuous and
customer-focused
improvements
Strategic report
Stakeholder engagement continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
26
Stakeholders
Why we engage
How we engage
Key topics of engagement during
2022 financial year
How we responded
Strategic partners
and suppliers
Collaborative strategic
partnerships are core to our
business model. We build
strong relationships with
transport authorities and
industry bodies to deliver
efficient, high quality services.
Our suppliers, which range from
large multinational companies
to small independently run
businesses, partner with us in
delivering innovative solutions
for our customers.
To develop strong relationships
To ensure closer alignment of
values
To provide collaborative and
innovative solutions to societal
challenges
To ensure those with whom we
work demonstrate a
commitment to sustainability,
employee wellness
and diversity
To ensure the effective delivery
of contracts
To enhance competitive
advantage
To effectively monitor, manage
and mitigate risks in our supply
chain
Joint membership of industry
groups
Collaborative working with
partners to deliver specific
solutions
Engagement groups to build
long term relationships
Periodic surveys of our
current suppliers
A dedicated contract
manager for each supplier
Regular meetings to discuss
supplier performance and
areas for improvement,
identifying risk
and mitigating plans
Specific industry solutions
Long term partnerships
Collaborative approach
Raising standards and
delivering long term goals
Delivering value, consistency,
engagement and better
planning
Sustainability challenges
Open terms of business
Fair contract and payment
terms
Prompt payment
Supply chain disruption
contingency planning
Maintained key principles
introduced last year to our
pre-qualification and tender
documents in relation to
ethical employment
practices, the environment,
health and wellbeing and
community cohesion
Independently assessed as
working in compliance with
the sustainable procurement
standard ISO 20400
Set targets on payment
performance and complied
with the Prompt Payment
Code
Enhanced our Sustainable
Procurement Charter with a
target of 33 per cent
controllable spend on local
businesses by 2023
Continued engagement with
Network Rail and local
transport authority providers
at multiple levels
Government
Policy and regulatory change
affect our bus and rail
businesses and create the
framework through which we
operate. Working closely with
both central and local
government enables us to
contribute our private sector
experience and expertise to the
public agenda and produce
better policy outcomes and
service delivery.
To secure recovery in
passenger volumes that
support economic
development, environmental
targets and social priorities
To raise public transport higher
up government agendas
To influence and inform policy
making
To represent the views of other
stakeholders: customers,
colleagues, communities and
shareholders
To formulate innovative and
attractive bids as opportunities
arise
We operate services on behalf
of the Government via the DfT
in the UK and other transport
authorities and continually
engage on matters relating to
the contracts we operate
Ongoing engagement with
government bodies and
clients, such as
the Department for
Transport (DfT)
Membership of the All Party
Parliamentary Group on
environment
Participating in various
expert working groups, select
committees and government
consultations
Engaging in policy
discussions over key industry
topics and advising
on delivery implementation
Ongoing dialogue with local
MPs
Membership of the Zemo
Partnership
Membership of International
Association of Public
Transport
Partnering with campaign
groups such as Campaign for
Better Transport and
Sustrans
Membership of ALLRAIL, the
Alliance of Passenger Rail
New Entrants in Europe
Passenger volume recovery
Negotiation of a National Rail
Contract for GTR
Financial support for the
provision of bus and
rail services
Contractual arrangements
and features
National bus strategy and rail
reform
Regional Bus service
provision
Environmental policy and
compliance, including climate
change and transition to
zero-emissions
Active travel
Apprenticeships, skills and
diversity
Proactive engagement with
local authorities
Support for local economic
plans and strategies
Sharing experience and
expertise
LSER matters of concern
Engagement with DfT and
industry partners on rail
reform: publication of Go-
Ahead manifesto, “A new
vision for train operations”
Response and participation in
Transport Select Committee
enquiry on the UK national
bus strategy
Response to UK Government
consultation on phasing out
the sale of diesel buses
Campaigns on customer
recovery and confidence,
tackling loneliness, active
travel and air quality,
including through
speaking engagements
Participation in COP26, the
United Nations Climate
Change Conference
Ongoing engagement with
transport authority clients in
the UK and internationally
regarding financial support
for bus and rail services and
contractual arrangements
and features
Agreed a settlement with the
DfT regarding LSER matters
of concern
Negotiation with
Government and transport
authorities in Norway and
Germany with regard to
amended contracts for rail
operation
Strategic report
Stakeholder engagement continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
27
Stakeholders
Why we engage
How we engage
Key topics of engagement during
2022 financial year
How we responded
Communities
As an operator of public
transport, we provide a vital
service to communities,
transporting passengers to
work, education, facilities and
services. We strive to provide
the social and economic
benefits of affordable and
accessible travel in the towns
and cities in which we operate.
To maintain our role at the
heart of our communities and
play our part in helping
communities thrive
To address economic, social
and environmental issues and
priorities
To find the best solutions for
connecting people with family,
friends, work and facilities
To enable us to respond
appropriately to the needs of
our communities
To maintain our focus on
operating responsibly within
society
To achieve our environmental
objectives and targets
To support social inclusion
and tackle isolation
Meetings with councillors,
planning officers and other
key officials to work in
partnership for common
community goals
Continual two-way
communication with local
businesses and organisations
Onsite community
engagement events to
understand the needs
of the local community
Collaboration with local
charities, participating in
volunteering and fundraising
initiatives
Regular updates through
social media, our website and
apps to keep communities
informed
Effectively managing our
environmental impact
Investment in local
infrastructure
Engaging and responding to
community needs
Direct contributions through
utilising local suppliers,
community volunteering,
sponsorship and fundraising
Providing timely and accurate
travel information to ensure
safety and adherence to
government guidelines on
public transport
Investigating and investing in
sustainable
transport solutions
Providing safe and affordable
public transport solutions to
support social mobility
Direct community
investment through
volunteering, sponsorship
and fundraising
Local meetings with MPs, the
Chamber of Commerce and
Local Economic Partnership
Boards
Regular stakeholder
newsletters
Active member of Business in
the Community ‘Place-
making’ campaign
Contributed to policy
discussion
Developed active travel plans
for customers at bus and rail
stations
Open days at depots to
educate local communities
on the importance of public
transport
Continued support of
initiatives to combat
loneliness through our
“Chatty Bus” activity
Investors
We provide investors with
open and transparent
information and encourage
two-way communication.
Feedback from our
shareholders forms part of the
strategic Board discussions. We
operate our business
responsibly and with strong
financial discipline to protect
the interests of our investors.
To ensure that our long term
strategy is aligned with the
interests of shareholders
To explain how we aim to
deliver sustainable growth and
maximise the growth potential
of the business
To provide updates relating to
the financial performance and
position of the business
To ensure the views of
shareholders are considered in
policy setting and aligned to
their ESG investment criteria
Face-to-face meetings and
phone calls
Trading updates including full
year and half year results
Results presentations and
webcasts
Investor roadshows and
conferences
Annual General Meeting
Annual Report
Investor section of the
website
Formal consultations
Independent disclosure
platforms for investors such
as the Carbon Disclosure
Project
Takeover approach
Southeastern rail franchise
Leadership changes and
Board succession planning
Corporate governance and
internal controls
Strategy and business model
Shareholder returns
Financial performance
Risk management
Passenger demand and travel
pattern
Future of UK Rail franchising
ESG performance
Political environment
Commitment to transparent
reporting with clear
communications at regular
intervals throughout the year
Regular equity market
updates as COVID-19
scenarios evolved
Increased engagement with
investment community
Access to Chair and
executive and non-executive
directors
Strategy update –
presentation to analysts and
investors
Strategic report
Climate change strategy
The Go-Ahead Group Limited Annual Report and Accounts 2022
28
We are fully committed to reducing our carbon emissions and increasing our
resilience to the impacts of climate change.
Overview
In July 2021, we released our climate change strategy with ambitious targets that are driving our environmental practices and the
decarbonisation of our business.
The climate crisis is upon us and already impacting businesses and communities around the globe. The latest United Nations’
Intergovernmental Panel on Climate Change (IPCC) report has concluded that to limit warming to 1.5°C, global emissions must peak
before 2025 and halve by the early 2030s.
In the UK, the transport sector is responsible for 24 per cent of the carbon footprint. While buses, coaches and rail account for 3 per
cent of the country’s transport-related emissions, cars and taxis are responsible for 52 per cent. These numbers highlight why the most
important role we play in tackling climate change is to enable people to reduce private car usage and make more use of public
transport.
It is also vital that we reduce our own carbon emissions. This is a top priority for the business and our climate change strategy clearly
demonstrates our commitment and the pathway we have taken.
Ambitious targets
Our climate change strategy outlines our key initiatives to reduce carbon emissions and mitigate the impacts of climate change in our
business. This includes decarbonising our transport fleet, reducing the negative impact of our operations on air quality, reducing our
water consumption and increasing our waste recycling rate.
We have set an ambitious science-based target to reduce our scope 1 (direct emissions from Company-owned and controlled
resources) and scope 2 (indirect emissions from purchased energy e.g. electricity) carbon emissions by 75 per cent by 2035 against a
2019/20 baseline, which was independently verified. This target was validated by the Science Based Targets Initiative, a collaboration
between CDP, UNGC1, WRI2 and WWF3 to ensure organisations’ emissions reduction targets are in line with leading climate science.
We have also committed to becoming a net zero carbon business by 2045.
Our climate change strategy was subjected to a thorough review as part of the wider business review undertaken during the year.
Other than ratifying our targets for each one of our workstreams, this work was the starting point for the creation of the Zero
Emission Centre of Excellence, a new area within Go-Ahead that will support our operating companies to decarbonise their fleet by
creating a hub of intelligence and expertise in zero-emission vehicles.
1. United Nations Global Compact.
2. World Resources Institute.
3. World Wide Fund for Nature.
On the right track
During the year, the deployment of our climate change strategy focused on engagement with key stakeholders (employees, operating
companies, suppliers and transport authorities) to bring them on board and ensure roles and activities to achieve our targets were
clearly defined. Just one year after the launch of our climate change strategy, we can already see positive results of our efforts (please
see page 28) and, even though we are still at the beginning of our climate journey, we are confident we are on the right track.
Visit www.go-ahead.com to read our climate change strategy in full.
Strategic report
Climate change strategy continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
29
Summary of our climate change strategy
Climate change
adaptation
Mitigation:
Decarbonisation
Mitigation:
Air quality
Mitigation:
Water
Mitigation:
Waste
Identify how climate
change impacts our
businesses, passenger
services, premises and
supply chains, and
identify adaptation
plans
Decarbonise our
fleet and
operations
Reduce our
negative impact
on air quality by
reducing
emissions: CO,
HCs, NOx and PM
Reduce our water
footprint by
embedding
responsible water
management
practices
Reduce our overall
waste volumes and
increase reuse and
recycling, by
implementing waste
initiatives
1. Identify risks and
vulnerabilities
2. Quantify costs and
source funding
3. Identify risks to
properties
4. Work with suppliers
to identify and reduce
exposure and
vulnerabilities
5. Develop business
cases for adaptation
measures
6. Work with partners
1. Bus fleet
decarbonisation
2. Rail fleet
decarbonisation
3. Ancillary fleet
decarbonisation
4. Decarbonisation
of properties
5. Develop
net/carbon zero
commitment
1. Improve bus fleet
by procuring
electric vehicles
2. Purchase new
buses at the
latest emissions
standards
3. Remove older,
lower emissions
standards
vehicles from the
fleet
4. Work on bus
priority solutions
with local
authorities
1. Address leaks
better
2. Reduce third-
party use of our
water
3. Reduce water
use
4. Improve water
sourcing
1.
Improve rail and
bus waste
management
contracts
2.
Increase recycling
rates
3.
Behaviour change
programmes for
customers and
colleagues
4.
Reduce waste in
supply chain and
operational
activities
Net zero business
by 2045
Zero-emission bus
fleet in the UK by
2035
Non-diesel rail fleet
by 2035
By 2035, reduce
carbon emissions
by 75 per cent
By 2025, reduce:
Carbon monoxide
(CO) by 17 per cent
Hydrocarbons
(HCs) by 49 per
cent
Nitrogen oxides
(NOx) by 63 per
cent
Particulate matter
(PM) by 55 per
cent
By 2025, reduce
water use by 25
per cent
By 2025, increase
waste recycling rate
to 60 per cent
Management principles and
governance
Identify projects for investing, influencing
stakeholders, driving behaviour change and
finding external funding
Prioritise solutions by their
impact on customers,
colleagues, carbon and cost
Strategic report
Task Force on Climate-related Financial Disclosures
The Go-Ahead Group Limited Annual Report and Accounts 2022
30
Established by the Financial Stability Board (FSB), the Task Force on Climate-
related Financial Disclosures (TCFD) was set up to support companies to account
for and disclose the impacts of climate change on/from their business.
Having transparency as one of our core values and complying with the UK’s climate-related regulations, the Go-Ahead Group has
taken the TCFD reporting journey. After reporting a summarised version of our disclosures in last year’s Annual Report, in the sections
below we are taking a further step and expanding our commitments to the guideline’s recommendations with enhanced reporting.
Our initial aspiration was to incorporate the TCFD recommendations fully in this year’s report. We are in the process of embedding
climate-related issues into our financial system and we did make significant progress on that task (more information below). However,
given the structural changes in our organisation that took place in the last year, we progressed at a slower pace than expected and are
now aiming to achieve full alignment with TCFD recommendations and report accordingly in our next Annual Report.
Since 10 October 2022, Go-Ahead is no longer a publicly listed company; however, we remain committed to ESG best practices and, as
a large UK-based company, we will be required to comply with the Climate-related Financial Disclosure Regulations going forward.
Governance
Board
Go-Ahead has strong climate governance. The Board is ultimately responsible for the Group’s business strategy and long term
performance, which includes climate change-related issues, and has full oversight of our climate change strategy, including its
development (2020-2021), review (2022) – as part of “The Next Billion Journeys” strategy review – and ongoing performance.
The Board receives updates at least twice annually on progress against targets, changes in legislation, and risks and opportunities
arising from climate change. The Group Chief Executive is responsible for leading discussions on climate-related topics at Board and
Group Executive Committee meetings.
The Board has ultimate accountability for Group risk management and reviews our top overall business risks at least twice a year.
Climate-related risks are identified, assessed and responded to within this risk management process in the same way as all other risks
to the Group. This work is supported by the Audit Committee, to which the Board has delegated responsibility for reviewing the
effectiveness of the Group’s risk management and internal control systems.
There is by design, a frequent and clear line of sight from the activity taking place across the business to tackle climate change to the
Board and senior leadership with full authority to set direction, manage strategic priorities and allocate resources.
Executive Committee
The Group Chief Executive is a member of the Group Board and, together with the Group Chief Financial Officer, they sit on the Group
Executive Committee, at which Group strategy, targets, business and investment priorities are discussed and overseen. The executive
sponsor of the climate change strategy, the Group Strategy and Transformation Director, also sits on the Group Executive Committee,
which creates an even stronger link between climate-related issues and overall business strategy.
Climate Change Task Force
Led by the Group Customer and Commercial Director, the Climate Change Task Force is a multi-functional, multi-business team of
people drawn from across the bus and rail businesses (UK and international divisions) – including directors of operating companies –
created to develop, implement and monitor the progress of our climate change strategy. The Task Force has established leaders for
each one of its five workstreams (Climate Change Adaptation, Decarbonisation, Air Quality, Water and Waste), meets every month to
discuss climate-related data, metrics and detailed action plans, and reports to the Group Strategy and Transformation Director.
Operating companies
Senior leadership teams in the Group’s individual operating companies are responsible for implementing the climate change strategy
within their business and for reporting performance back to the Group Executive Committee.
As part of our climate change strategy, each operating company developed its own action plan to support the Group’s targets which
were disclosed in their individual 2021 sustainability reports. Operating companies are responsible for implementing their plan and
reporting performance back to the Group Executive Committee.
Giving operating companies local ownership of actions, data and reporting is part of our strategy to ensure that adequate resources
are available, and risk/ issues are promptly identified and communicated to the Group.
Strategic report
Task Force on Climate-related Financial Disclosures continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
31
Strategy
Understanding how climate-related issues may affect our business, strategy and financial planning is vital to managing risks and
ensuring Go-Ahead’s sustainability.
Our approach to risk management generally combines a top-down strategic risk assessment with a bottom-up operational
identification and reporting process. All risks are assessed for their potential impact over the short (0-3 years), medium- (3-5 years)
and long term (5-25 years) in a multi-disciplinary/Group-wide risk management process, which ensures that adequate controls are put
in place to respond to identified risks.
Not all Group-wide strategic risks apply in the same way to all our operating companies. The inverse is also true: some operating
companies may have specific local strategic risks and opportunities that don't make it onto the Group Risk Register. For example, some
of our biggest strategic risks at Group level relate to the decarbonisation of our bus fleets but this has little relevance to our train
companies, which already operate over 95 per cent electric fleets. Similarly, the risk of flooding may be much higher for some operating
companies, or even individual sites, than others.
To ensure specific risks were captured, all operating companies were asked to develop a climate change adaptation risk register with
the most relevant climate-related risks to their business/geography. The risks are classified according to their likelihood and
operation/financial impact, which are categorised into financial bands (£10k, £100k, £500k, £1m, >£1m). The risks considered as
substantive/strategic are incorporated in the general business risk registers, which track the substantive risks from climate change at
a local and then Group level, including its potential financial impacts.
Going forward, the adaptation risk register will serve as a template to capture/monitor all climate-related events and enable us to
better assess their frequency and intensity and establish more accurate trends. This way we may move from estimated to actual
financial impacts over time.
Thorough climate risk review
In 2020, as part of the work to develop our climate change strategy, a complete review of climate-related risks and opportunities was
carried out by the Group's Climate Change Task Force. The review considered the 2°C and 4°C scenario planning analysis out to 2030
– which is aligned with TCFD requirements – and identified over 100 risks and opportunities, categorised into strategic, substantive
and operational risks. The Board and Executive Committee actively engaged and took part in this review.
All risks and opportunities were scored in a qualitative way, based on: (1) level of likelihood; (2) scale of the impacts; and (3) potential
cost/benefit, to enable the most substantive/strategic Group-level risks and opportunities to be identified and prioritised.
The main output of this review was the development of a Group Risk Register exclusively focused on all climate change-related risks and
opportunities. This register is maintained, reviewed and updated twice annually by the Taskforce – aligned with the overall business risk
review and reporting process described above. The risks and opportunities identified by this process include topics such as:
• Risks
-
Present and future carbon regulations
-
Increased fleet operating costs
-
Disrupted revenues due to weather-related events
-
Commercial impacts of climate-related commitment or/and progress
• Opportunities
-
Increased public transport ridership
-
Increased the resilience/competitiveness of the business
-
Energy cost savings
-
Reputational improvement
For more information about how we manage our business risks, please read pages 51 to 64
Strategic report
Task Force on Climate-related Financial Disclosures continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
32
Impact of climate-related risks and opportunities
The assessment of climate-related risks and opportunities has had a profound influence on our business. It was one of the primary drivers
that made us realise that a step-change in our response to tackling climate change was needed, which resulted in the development of our
climate change strategy, with a science based target (SBT) to reduce our scope 1 and 2 CO2 emissions (details below) which was validated
by the Science Based Targets initiative (SBTi), and also a net zero commitment.
We have set ourselves a goal to transition our whole fleet to zero-emission vehicles by 2035. To enable us to deliver this goal we created a
Zero Emission Centre of Excellence (mentioned above). Through our Climate Change Adaptation workstream, we have also significantly
improved climate-related risk management processes to understand in more depth the impacts of extreme weather-related events and
gradually adapt our business.
From a supply chain perspective, we identified our most business-critical suppliers and are engaging with them to ensure they have climate
change adaptation/mitigation plans in place to increase the resilience of their business and, indirectly, protect our own operation.
From an R&D perspective, we are working closely with zero-emission bus manufacturers to address technical and operational efficiency
issues (e.g. the range of electric vehicles and heating/cooling systems). We also have a number of projects to decrease our carbon
emissions/energy consumption, including Go-Ahead London’s Bus2Grid, Brighton & Hove’s geo-fenced hybrid buses and Go-Ahead
Singapore’s trial with solar panels for buses.
From a stakeholder perspective, our climate-related risks and opportunities drove our engagement with (1) organisations responsible for
the infrastructure that is essential for our operation (e.g. Network Rail) to identify key risks and develop contingency plans; (2) bus and
rolling stock manufacturers to make our vehicle fleets more resilient to extreme weather; and (3) government and local authorities to
discuss zero-emission bus funding, bus priority lanes, zero/low emission zones and other measures to accelerate transport decarbonisation
and modal shift.
Assessing our resilience through different climate scenarios
As previously mentioned, in 2019 the Group’s climate-related risks and opportunities were subject to a scenario analysis that
encompassed the bus and rail divisions (UK focus only) with a horizon that would extend to 2030. In this exercise, two scenarios were
chosen:
1) An “aggressive mitigation” scenario whereby global warming is limited to 2°C by the end of the century
2) A “rapid warming” scenario whereby global GHG emissions continue on an upward trajectory, and global warming reaches 4°C by
the end of the century
These scenarios were chosen because they represent two opposing pathways: one of rapid policy and technological change that
would help to limit the physical impacts of climate change; and another one representing “business as usual” from a policy perspective
such that rising GHG emissions result in higher-magnitude physical climate impacts.
In terms of impacts on our business, in an aggressive mitigation scenario (2°C), these would include carbon regulation's direct and
indirect impacts, and the key risks to our business would be more connected to our ability to transition to a zero-emission fleet in a
timeframe aligned with the UK Government.
As a response to these risks, we:
• Developed a decarbonisation strategy (part of our climate change strategy) with a commitment to transition 100 per cent of our
fleet to zero-emission vehicles by 2035
• Set up SBTi validated carbon target
• Developed a financial model to have a granular understanding of our key transition costs and levers
• Created a Zero Emission Centre of Excellence to support all our operating companies in their transition to a zero-emission fleet
In a rapid warming scenario (4°C), the key risks would be related to the chronic and acute physical impacts of climate change, such as
extreme heat, floods, sea level rises, an increase in landslips and other climate-related events.
As a response to these risks, we:
• Developed a climate change adaptation strategy (part of our climate change strategy) with a roadmap of planned activities
• Identified over 100 climate-related risks and prioritised them considering their likelihood, scale of business impact and potential
financial costs
• Asked each operating company to develop a climate change adaptation risk register
• Are engaging with key stakeholders to ensure they are monitoring climate change impacts and have climate change
adaptation/mitigation plans in place
Strategic report
Task Force on Climate-related Financial Disclosures continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
33
Risk management
Our approach to risk management
Our robust risk management and internal controls system categorises risks into financial, operational and strategic. Operational and
financial risks are deemed to be “substantive” if our bus and rail contract performance targets are impacted, and/or if one per cent or more
of our annual profit is impacted.
Strategic risks are deemed to be substantive if the Board, the executive directors and the Audit Committee understand they can materially
affect our ability to implement our business strategy, and/or cause reputational damage to the Group.
Our processes for identifying and assessing climate-related risks have been integrated into our risk management process. It starts at the
operating companies:
1) Each operating company undertakes biannual risk reporting that includes the submission of a series of risk reports, and an annual
assessment of its compliance with the Group’s Policies and Procedures. These registers follow the same template of identifying the
risk source, likelihood, impact on operations and financial impact
2) These risk reports are then consolidated in a single risk register, which enables our Executive Team to “look across” the business
and consider aggregate Group-wide risks, as well as to challenge any inconsistencies. The executive directors’ review includes an
assessment of emerging risks, and their potential impact and/or inclusion within the Group’s existing principal risks
3) Risk reports are also completed for Head Office functions. These reports compile risk-related information from the whole Group
and are discussed annually at a Group Executive Committee meeting, which allows for wider input from other areas of the business
4) The risks considered by the executive directors to be financially or reputationally material are included in the Risk Register Report
and in the Board papers for discussion at the Audit Committee and Board meetings
5) The Group Board also discusses risk and risk appetite at the annual Group Board Strategy Day in the context of the Group’s key
strategic objectives, in addition to it also being part of routine Board reporting
For more information about our risk management processes, please read pages 51 to 64.
Our key climate-related risks
The key risks we monitor could be classified into transition and physical risks. The first category would include risks related to:
• Current regulation: Considers the climate change regulations in in all the regions we operate in and their impact on the transport
sector
• Emerging regulation: Considers regulations such as new low/ultra-low emission zones in towns and cities we operate in, vehicle
emission standards for buses and the future ban of the sale of new non-zero-emission buses and coaches
• Technology: Considers risks such as Go-Ahead investing in zero-emission technologies that won’t progress and scale up at the pace
that is needed to be economically and operationally sustainable
• Legal: Considers the potential future litigation directed at carbon-intensive companies
• Market: Considers risks such as failing to win new contracts due to lack of commitment/progress on carbon-related targets and
new entrants or “green disruptors” in the transport sector
• Reputation: Considers risks such as not being perceived as a climate leader and attractive for private and public investment/funding
Within the category of physical risks, these could be classified into:
• Acute: Considers risks such as increased frequency/severity of extreme weather conditions and the impact on our ability to provide
reliable bus and train services
• Chronic: Considers risks such as record high summer temperatures, increased winter rainfall and flooding, and storm surge events in
coastal areas where we operate
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Task Force on Climate-related Financial Disclosures continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
34
Metrics and targets
Climate-related KPIs
We have a range of KPIs to help us manage climate-related risks and opportunities and performance against targets and monitor our
carbon emissions.
With regards to climate-related risks, we rely on the set of risk reports (which include climate-related risks) produced by our operating
companies that feeds into the Group risk processes (as described in the TCFD subsection Risk management). They indicate the status
of each risk and enable the Group’s management to make timely decisions.
As we progress with the operating companies’ individual climate change adaptation risk registers, these will be the key tool/template
to monitor the frequency and intensity of climate-related events and how they are impacting our business.
With regards to performance indicators, we monitor and report our scope 1 and 2 GHG emissions, and other key metrics used to
oversee the performance of our climate change strategy and its five workstreams (please refer to page 29 to see metrics in detail).
We also monitor a range of internal indicators related to our carbon footprint, such as fuel efficiency and ultra-low emission vehicles.
These are embedded into operating company monthly reporting and reviewed by our senior leadership team biannually, which allows
clear oversight of progress and review of risks and opportunities against targets.
Science-based targets for scope 1 and 2
As previously mentioned, Go-Ahead is committed to reducing its emissions across all three scope categories and has developed a
science-based target to reduce our scope 1 and 2 CO2 emissions by 75 per cent by 2035 which was validated by SBTi. We also set a
target, separate to the science-based targets, to become a net zero business for scope 1 and 2 emissions by 2045, which considers that
the residual carbon that cannot be removed will be offset.
In 2021, as part of the science-based target development, we carried out a screening exercise to quantify our scope 3 emissions which
established that these are less than 40 per cent of our overall GHG emissions. We are, however, currently working to develop
reduction targets for our scope 3 emissions.
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Safety
The Go-Ahead Group Limited Annual Report and Accounts 2022
35
We have a legal and moral responsibility to provide a safe, healthy and supportive
working environment for our colleagues, and we understand that there is nothing
more important to customers than us providing a safe way for them to travel. Our
responsibilities around health and safety also extend to our communities,
including other road users.
KPIs
2022
Per million miles
2021
Per million miles
2020
Per million miles
2019
Per million miles
UK Rail SPADs
0.71
0.66
0.80
0.76
Description: Across the UK rail industry, train operating companies report signals passed at danger (SPADs). The majority of SPADs
have little or no potential to cause harm.
Performance: By keeping the focus on managing key operational safety risks through the introduction of a monthly Operational Safety
Forum, which brings the operational safety communities across our rail operators together to share good practices, raise common
concerns and deal with challenges jointly, we have seen a reduction in many operational incidents. There has been an improved focus
on investigations and sharing lessons and mitigation strategies. Post-COVID-19 operations have presented many challenges including
changes to passenger demand and travel patterns as we recover and return to a new normal and, as such, the operational risks have
changed and we have noted a slight increase in the number of SPADs compared with the previous year, which is consistent with the
industry trends.
2022
Per 100 employees
2021
Per 100 employees
2020
Per 100 employees
2019
Per 100 employees
RIDDOR*
0.45
0.47
0.44
0.61
*Excludes Singapore and Sweden bus and international rail
Description: The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) relate to a workplace incident that
results in any employee absence from work for over seven days or any legally reportable incident to the Health and Safety Executive
across our UK operations.
Performance: Current performance has normalised to a similar level to the years pre- and post-COVID-19. Workforce injuries
associated with accidents have increased. While events have increased, the injury degree has improved, with a 10 per cent decrease of
lost time events. Most injuries occur in the engineering depot environment due to the nature of their work, with the remaining injuries
attributed to slips, trips and falls, carrying an object or making contact with a stationary object. The risk has not diminished, and work
is underway to understand the legacy impact of COVID-19 on our operation and our colleagues so that targeted interventions can be
actioned to manage the risk down further.
2022
Per million miles
2021
Per million miles
2020
Per million miles
2019
Per million miles
Bus accidents
40.8
32.4
36.6
37.4
Description: We monitor the number of bus accidents which result in a notification to a claims handler for every million miles we
operate, including cases where we are not at fault.
Performance: Performance has returned to pre-pandemic levels. The operating environment during the pandemic presented
additional challenges; whilst some of those risks have now diminished, a shift in our customer travel demands post pandemic has
presented new challenges. Our bus operating companies understand the local communities they serve and have plans in place to
reduce the risk of accidents, which include the use of new technology on buses.
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Safety continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
36
The health and safety of our passengers, colleagues, suppliers and those within our communities is of paramount importance to us.
Every Go-Ahead employee has a personal responsibility for their own health and safety and those around them, and for the wellbeing
of everyone that is affected by our activities.
Safety culture
Health and safety is a vitally important management focus. We have a culture of continual improvement and are always striving to
reduce our exposure to health and safety risk, with the aim of eliminating all injuries and health concerns resulting from our operations.
Our policy and strategic framework sets out the Group standards and expectations, which our local management teams put into
practice effectively through their own health and safety management systems. Each of our operating companies’ systems go through
an annual audit to ensure they meet legal requirements, are relevant for the risks faced by each business, and are linked to the specific
operational needs of the respective bus and rail sectors, with the results and lessons learned reported to the Group Board and the
Audit Committee.
Senior leaders across all our bus and rail operations ensure they are accessible to their teams to discuss health and safety matters and
they maintain a continual dialogue about the topic. This is often achieved through “Leadership Safety Tours”. The insights from these
safety tours improve thematic analysis and trends across the Group and complement the assurance and auditing process by providing
regular pulse checks in-between audits. Additionally, we have achieved accreditation to the global ISO 45001 Health and Safety
Management System Standard across a number of our UK bus operations, further demonstrating our commitment to providing safe
and healthy workplaces.
Harnessing technology
We have developed a wide-ranging Incident Management Process and a “Go-Report-it” app for our Bus division, which will enable
colleagues and managers to report and log a wide variety of safety concerns and other types of incidents, allocate responsibility for
their resolution and track progress. This will provide data at local and Bus division level, so we can learn from, and pre-empt, similar
incidents. Our business analytics solution, Power BI, is being used to identify key data and significantly raise the profile of incidents and
their management.
GTR continues to be at the forefront in the use of app technology, taking the lessons learned through the pandemic and continually
refining app-based products. GTR’s safety reporting app, which was introduced in 2021 and enables faster and more accurate
reporting of all safety-related incidents, is now on version 3 and has been instrumental in improving reporting, realising an increase in
reporting of all incidents of approximately 40 per cent. With better data and insights, GTR has been able to ensure that initiatives are
targeted, and resources focused, in the right areas.
Continuous improvements and shared best practice
Our bus operators in the UK and abroad have embarked on a comprehensive review of the methods currently used to manage health
and safety, and a workshop was held comprising all health and safety and risk specialists. The workshop developed a full and detailed
health and safety strategy with six workstreams, work for which has started to create detailed action plans.
GTR’s zero harm ambition, now embedded across the organisation, is moving to its next phase post pandemic of getting back to
basics, ensuring all colleagues are equipped to deliver on the promise of caring for each other, our customers and vulnerable persons.
To assure ourselves that our safety culture continues to move in the right direction, an assessment of safety maturity is underway
with improvements being defined that align to areas identified. Safety governance has been strengthened to ensure safety is
discussed regularly and best practice is disseminated across the organisation.
COVID-19
The health, wellbeing and safety of our colleagues and passengers has remained a top priority. Turning the lessons learned during the
pandemic into contingency plans that could be mobilised at any stage in response to a resurgence or new threat has been a priority.
We recognise that the pandemic has impacted each and every one of our colleagues in a different way, which is why our health and
wellbeing programmes continue as an enduring feature of our daily business, from Wellbeing Wednesdays to Brunch and Learn
sessions, dedicated intranet pages, training, briefings and communications and signposting, help to ensure that our colleagues are
supported as we return to a new normal.
The same can be said of our customers. We continue to refine our messaging and assess the residual risk associated with post-
pandemic life and the current socio-economic environment. We recognise that our customers can be vulnerable; that is why GTR was
the first rail company to employ a dedicated suicide prevention manager and to train colleagues to make life-saving interventions.
Additionally, new risks have emerged, such as an increase in antisocial behaviour. To respond to this, we have pioneered the first-ever
joint policing plan which has been countersigned by GTR and the British Transport Police. It pledges to collectively improve passenger
and staff confidence by increasing visibility and engagement and reducing violence and antisocial behaviour. The plan also aims to
reduce assaults and increase prosecutions and protect, support and safeguard vulnerable people and those at risk of exploitation and
harm, as well as tackle violence against females, hate crimes and sexual harassment.
GTR also instigated Operation Safeguard, which saw the introduction of Travel Safe Officers across the network, who have
collectively made over 25,000 interventions since July 2021.
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People
The Go-Ahead Group Limited Annual Report and Accounts 2022
37
Our colleagues are the foundation of our business. Their dedication, innovation
and ambition drive our success.
KPIs
2022
Per cent
2021
Per cent
2020
Per cent
2019
Per cent
Employee engagement index UK Bus*
68
71
n/a**
62
Employee engagement index UK Rail*
73
72
72
69
* Excludes international divisions.
** In 2020, bus employee engagement surveys were suspended in order to better align the timing of colleague feedback with action being taken.
Description: We measure how engaged our people are through surveys across our UK businesses. The results provide a measure of
colleague engagement and help us identify areas where we can improve as an employer. We are working to include our international
colleagues in this process over the next two years.
Performance: To better align the timing of colleague feedback with action being taken, we introduced pulse surveys across our UK bus
businesses in 2021. The results showed strong improvement compared with the last annual survey undertaken in 2019, reflecting an
increased focus on colleague engagement, health and wellbeing, personal development and performance management. In UK Rail,
where an annual survey approach continues to be used, we were pleased to maintain high levels of colleague engagement despite the
ongoing challenges associated with COVID-19.
At Go-Ahead, we believe in a world where every journey is taken care of. These journeys can only happen thanks to our 27,000 strong
team, working across the UK, Ireland, Germany, Norway, Singapore and Australia.
Engagement
Employee wellbeing has remained at the heart of the Group’s engagement strategy as we emerge from the pandemic. Across all
operations, we were pleased to see that 77 per cent of employee participants noted that they enjoyed working for the Group and 79
per cent of people said that their managers treated them with respect.
During 2021, Go-Ahead’s head office was reaccredited as Gold by Investors in People (IiP). The accreditation places Go-Ahead eighth
out of 61 companies in the “transportation and storage” category. The IiP assessment process, which involves interviewing and
surveying colleagues, determined that 90 per cent of respondents believe Go-Ahead has a positive impact on society, and 100 per cent
would recommend working for Go-Ahead.
Learning and development
Our colleagues are our most valuable assets, and we recognise the importance of investing in their development.
Equipping our leaders, and future leaders, with the skills to manage our businesses, lead our teams and deliver on our strategy is a key
area of focus. Throughout the year, we reshaped our two talent programmes – the Executive and Senior Management Development
Programmes – to more effectively align with our business strategy. Both programmes, aimed at accelerating the development of our
brightest talent, grew during the year, with an increase in the number of delegates and female representation within these
programmes. We also rolled out an online “Train the Trainer” behaviour-led programme, to allow nominated colleagues to run training
at a local level for supervisors. We have set new targets for levels of female participation in our internal talent programmes.
Despite the challenges posed by lockdown restrictions, GTR launched its first Work Academy Programme with East Sussex College in
November 2021. Targeted at those who are long term unemployed and are not in training or education, the programme has given
candidates the opportunity to develop essential employability skills whilst gaining qualifications. This new partnership builds on the
success of the operator’s established “Get into Railways” programme with the Prince’s Trust, which is now in its seventh year. So far, 89
per cent of participants have successfully completed the programme. In our International Rail operations, 15 people who had sought
asylum in Germany were recruited to become train drivers, successfully undertaking the year-long training and securing permanent
employment.
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People continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
38
New talent
Our graduate programme is an important source of new talent, helping us identify the future leaders of our operations. The scheme,
now in its tenth year, has been enhanced to expedite development and monitor personal performance more effectively, leading to
better outcomes for participants and the Group. Investment in this scheme is worthwhile; retention rates following the scheme are
very high, at 94 per cent, 7 per cent higher than industry average.
Go-Ahead is the only public transport operator registered as an approved provider of apprenticeships across both bus and rail. During
the year, the Group received an official stamp of approval, passing the Ofsted New Provider Monitoring Visit. We have received a
number of awards and accreditations for our apprenticeship programme which is sector leading.
Throughout the pandemic, Go-Ahead recruited more than 50 apprentices a month despite the disruption caused by COVID-19.
Training was adapted to the challenges of the pandemic and our teams pioneered new ways of remote working and social distancing
in our academies to ensure colleagues were always safe. We hired more than 1,055 apprentices across bus and rail in 2022. The theme
of the programme, “Build the Future”, focuses on the importance of training and retaining apprentices, delivering a return on
investment.
Health and wellbeing
There has been a sustained focus on health and wellbeing throughout the year, communicating with and signposting colleagues to the
available support. Both rail and bus have increased the pool of health and wellbeing advocates, wellbeing champions and mental health
first aiders to provide additional support to colleagues during this challenging year. And with health and wellbeing programmes now
an integral feature of our day-to-day business, examples of best practice are evident across the Group. GTR recently won an “Inside
Out” award for its mental health initiatives. This includes a network of more than 100 Wellbeing champions and a volunteer support
group for colleagues.
Meanwhile, Go-Ahead is training mental health champions at all of its bus companies in the UK and Ireland. Champions are trained to
spot triggers, reassure people in distress and seek support. Brighton & Hove was the first Go-Ahead bus company to launch the mental
health first aider programme in 2020 with over a tenth of the workforce using the scheme.
In 2021, Go-Ahead London ran a Leading Resilient Teams virtual training course in partnership with the British Red Cross. Aimed at
giving an insight into assisting and supporting colleagues who required help with their own mental health, this course trained 100
employees including managers, union representatives and apprentice assessors.
Diversity and inclusion
Gender diversity remains an issue for the transport sector and we are committed to driving change in the industry and promoting
public transport as an attractive career choice for women. We want our workforce to be representative of the communities we serve
and believe a more equal gender balance will deliver better outcomes for Go-Ahead’s many stakeholders.
We have female-focused recruitment campaigns, open days and initiatives to showcase opportunities, each with the aim of increasing
the opportunities available to women to work in the industry over the coming years. The Go-Ahead “Women in Bus” network
continues to offer online workshops focusing on topics that are pertinent to the members, including emotional resilience and building
self-confidence. We maintain our initiatives to support, develop and empower women across our bus companies, with the main goal to
increase female representation in bus to 15 per cent by 2025.
We also support the ‘Women in Rail’ initiative and are targeting female representation of 25 per cent across our rail business by 2025
and we continue to make encouraging progress against this target. Go-Ahead has launched numerous initiatives to promote careers in
rail to women, including recruitment campaigns, such as working with Mumsnet, and launching unconscious bias training to help make
the organisation a more inclusive place to work.
For the year ended 2 July 2022, the Group’s Board comprised four male (2021: three) and three female directors (2021: three) and senior
management comprised 70 male (2021:77) and 12 female (2021: 17) employees. Overall, the Group comprised 25,580 male (2021:
26,082) and 5,027 female (2021:4,740) employees.
While our focus has been on increasing gender diversity across the Group for a number of years, we recognise the importance of
diversity in all its forms. Building a diverse colleague base supported by an inclusive culture is key to our success. We were pleased to
learn that 80 per cent of colleagues surveyed as part of our employee engagement consider Go-Ahead’s culture to be inclusive to all.
Our apprentice intake has strong ethnic minority representation with 70 per cent of new apprentices being from ethnic minority
backgrounds.
We are sharing best practice across the Group to make all our workplaces more inclusive. This includes introducing new ways to
attract and recruit talented people from diverse backgrounds, reinvigorating the women’s network group, rolling out unconscious bias
training for all managers and updating relevant policies and practices to support our communities. We recognise that colleagues of
different ethnicities are better represented at operational level and first line management than they are at senior/director level. We
have therefore set a strategic target of 10 per cent ethnic diversity in UK director roles (for Rail, Bus and Group) by 2024.
Strategic report
People continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
39
Our policies
We have a comprehensive range of policies at Group and local levels. We believe in equal opportunities and apply fair and equitable
employment practices.
Our Code of Conduct facilitates the understanding and embodiment of behaviours that align colleagues with the culture as set by the
Board and sets out what is expected from colleagues and stakeholders to ensure they protect themselves as well as the Group’s
reputation and assets. It states that all employees should be treated with respect and that their health and safety should be protected.
Respect for human rights and ethical behaviour underpin this, with our human rights policy setting out how we are committed to
conducting our business in a manner that respects and upholds the rights of all those people with whom we engage and who are
affected by our actions.
Go-Ahead has a zero-tolerance approach to bribery and corruption and all our colleagues are required to adhere to our policies in place
for the prevention of corruption, fraud and bribery. We have bespoke online training for competition law, anti-bribery and corruption
which colleagues in high risk areas (including Board and senior leadership) are required to complete periodically.
Conflicts of interest, which interfere with proper performance or independent judgement, are prohibited. We also have well
established whistleblowing procedures where colleagues can, in confidence, raise concerns about wrongdoing within their workplace.
In addition to the above, colleagues are required to comply with our equal opportunities, diversity and inclusion policy; health and
wellbeing policy; and health and safety policy. Compliance with these policies is mandatory and is incorporated within all new joiner
induction programmes.
Strategic report
Passengers
The Go-Ahead Group Limited Annual Report and Accounts 2022
40
Customer satisfaction will always be a top priority for us. As we emerge from the
challenges faced during COVID-19, it is essential that we continue to build, improve
and innovate the customer experience for our existing passengers, as well as
provide the best platform to attract more passengers to our buses and trains.
KPIs
2022
Per cent
2021
Per cent
2020
Per cent
2019
Per cent
Customer satisfaction UK Regional Bus*
87
n/a
n/a
n/a
* Transport Focus suspended its bus passenger surveys during the COVID-19 pandemic. In 2022, our bus division conducted its own customer surveys hence no comparative
figures are presented.
2022
Rating out of 10
2021
Rating out of 10
2020
Rating out of 10
2019
Rating out of 10
Customer satisfaction UK Rail *
6.7
n/a
n/a
n/a
* Transport Focus suspended its rail passenger surveys during the COVID-19 pandemic. Therefore, in the absence of any industry insight, our rail division conducted its own
customer survey in 2022. As this was a new survey with a different methodology, there was no previous like-for-like data hence no comparative figures are presented. However,
the score was trended against previous waves to track progress and that any actions had been taken.
Description: Customer satisfaction is a key measure of how well we are meeting our customers’ needs. For Regional Bus and UK Rail,
customer satisfaction is normally measured by the independent passenger watchdog, Transport Focus. Due to the impact of the
pandemic, the Transport Focus surveys for both bus and rail have been suspended. However, to keep capturing the voice of the
customer, we started conducting our own customer surveys in 2021 and continued to do so in 2022. For London Bus and our
International operations, we continue to work with our clients on their own local passenger satisfaction surveys and work in
partnership to drive continuous improvements to overall satisfaction.
Performance: In 2022, our customer satisfaction result for UK Regional Bus was mainly impacted by the quality of bus stop facilities
where we, as transport operators, have limited direct control. It was also impacted by a much smoother ticketing experience with the
introduction of flexible capping, multi-operator contactless and other purchasing facilities. In UK Rail, GTR used its online passenger
panel to measure customer satisfaction which was mostly driven by train performance, helpful information and the ambience of both
our stations and trains. In Norway, we developed specific customer services training for conductors which led to improved levels of
overall customer satisfaction on both local and long-distance lines.
We provide high-quality, locally focused services. This is enabled by our devolved structure, which facilitates a strong understanding
of our customers in each region. Our aim is to deliver bus and rail services that are as convenient and accessible as possible for
customers, from ticketing and live running information to seat capacity forecasts, including assistance for passengers with additional
accessibility needs.
Welcoming passengers back
In 2022, we have seen more passengers returning and choosing to use public transport following the pandemic. Our bus and rail
companies have continued to reassure our customers about the safe nature of public transport undertaking stringent cleaning
regimes alongside delivering services within the local Government guidelines as restrictions eased across the UK.
As customers return, our local bus companies in the UK continue to deliver new and exciting innovations, such as flexible weekly
season tickets and Oyster style Tap On Tap Off (TOTO), as well as incentives to travel such as new flat fares for evening travel.
Enabling people to get back out after the pandemic has been a focus for us. The more journeys taken on public transport, the more
benefits to local economies and local communities.
Strategic report
Passengers continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
41
Continuing to innovate in ticketing
We know that travel patterns have changed. Our customers using Brighton & Hove Buses and Metrobus can now benefit from a new
flexible way of managing their tickets. In 2022, we introduced scalable capping of tickets bought via contactless payments, better suiting
the more flexible travel patterns of many of our customers. This means a customer can travel the number of times they need to each week
and still get rewarded for regular travel. Any customer who reaches the weekly price cap can travel the rest of the week for free.
In Cornwall and Bournemouth, we introduced multi-operator capping on fares via contactless payments. This enables customers to
benefit from capped fares on both Go-Ahead and non-Go-Ahead services in the region without having to worry about multiple tickets.
This means passengers now receive the best value fares by just tapping on and enjoying their bus journey, no matter who is operating
it. It also improves accessibility for customers and removes the need for customers to pre-purchase their tickets.
Oxford Bus Company worked alongside Stagecoach to successfully introduce the Oxford SmartZone. Providing a simpler way to travel
for all residents and visitors to Oxford, it gives passengers the freedom to get in and around the city. This means passengers no longer
need to get a physical ITSO enabled smartcard (The Key) for travelling and can purchase tickets that last for 24 hours to a whole year.
Appy days
Providing a smartphone app which is user friendly and easy to use is essential to our customer experience strategy. During the year, we
launched new apps across our UK Regional Bus companies, delivered in partnership with Passenger Transport Group. These apps have
been well received, scoring highly in both the Google and Apple stores for customer feedback. We also continued to develop our app in
Norway to ensure the smoothest possible retail experience.
Our UK bus apps bring real-time bus tracking into the hands of our customers, providing convenient journey planning, easy purchasing
of tickets and information on when their bus will arrive at their stop. It also enables our marketing teams to provide targeted fare
promotions and to promote the value offered by bus travel.
The new Contactless Portal rolled out at some of our bus companies also enables customers who use TOTO as their way of travelling
and, by signing up, they have a convenient place to view their contactless journey history. This innovation helps reassure passengers
and puts them in control of their weekly spend.
Lower bus fares in Cornwall
From April 2022, ticket prices on buses operating in Cornwall were cut by up to 40 per cent under a Government-backed pilot scheme,
“Make Big Savings By Bus”. Additionally, in July, we welcomed the launch of a county-wide “Tap & Cap” scheme that offers more
convenience as well as guarantees the best ticket value for bus customers in Cornwall.
Through that scheme, passengers tap their payment card when they get on the bus and tap off when they get off and are charged the correct
fare automatically. Regardless of the number of journeys taken in a day customers will not pay more than £5 and no more than £20 for a week.
These initiatives are consistent with goals under the UK Government’s national bus strategy to encourage partnership working
between operators and local authorities, and to promote the social, economic and environmental benefits of bus usage.
Participation in the UK DfT's Open Data Scheme
Analysing our data enables us to deliver new and important insights into our services. Since 2021, we started sharing our data
responsibly with the Department for Transport, particularly focused on real-time information and fares. This initiative was a positive
step toward future innovation, and it has given us the platform to collaborate with third party services and improve access to new and,
sometimes overlooked, insights.
Customer satisfaction
We use a range of research methods to capture the voice of our customers across our bus and rail operations. This enables us to place
the customer at the heart of all our decision making. Methodologies include online passenger surveys, a “One Pulse” quick answer
survey tool, brand tracking and mystery passengers who observe and report back on services.
In 2022, we conducted a bus passenger online survey during the winter which had nearly 14,000 respondents across all our UK brands.
The results indicated that 87 per cent of our regional customers are satisfied with our services. Our performance was mainly impacted
by the quality of bus stop facilities – where our operators have limited direct control – balanced by a smooth ticketing experience:
95.99 per cent of passengers found it easy to buy their tickets.
The satisfaction regarding ticket purchasing was driven through initiatives such as the introduction of flexible capping in Brighton in 2022,
allowing customers scalable discounts with different travel patterns week to week, and the deployment of our new Contactless Portal
with app integration for single sign-on, which offers our passengers greater visibility of their journeys and fares whenever required.
In rail, with Transport Focus having ceased the National Rail Passenger Survey (NRPS) in 2019, there is currently no national industry-
wide customer satisfaction survey/measure. During this time, GTR used its online passenger panel to keep up to date with customers’
satisfaction levels. For the year ended 2 July 2022, we have seen an average rating of 6.7/10 for overall satisfaction, a result mainly
driven by train performance, helpful information and the ambience of both our stations and trains despite it being a challenging period.
For London Bus and our International operations, we continue to work with our clients on their own local passenger satisfaction
surveys and work in partnership to drive continuous improvements to overall satisfaction.
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Passengers continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
42
Accessibility
We are continuously working to ensure our bus and rail services are as accessible as possible for all passengers. We also aim to equip
colleagues to support passengers across all and any access needs, including non-visible disabilities. All customer-facing staff are
specifically trained, including by expert disability trainers, to assist disabled passengers and others needing assistance to support
independent accessible travel.
Across our bus operations and in Singapore, we rolled out our “Helping Hand” card scheme, which enables the holder to discreetly
advise the bus driver if they need further assistance. On our rail services, customers can count on our Travel Support and Priority Seat
Cards. To make travelling as easy as possible for all customers, we continue to introduce audio-visual “next stop” technology on all our
buses.
Brighton & Hove Buses was one of only two public transport providers in England to be given the “Highest Leader” status under the
Department for Transport (DfT)’s Inclusive Transport Leaders scheme. The bus company was the first company outside of London to
have 100 per cent of its fleet with screens and audio announcements, and the first bus operator to implement dementia-friendly
flooring, which means that none of their buses has black floors.
GTR has an established Access Advisory Panel made up of real customers representing a range of disabilities who provide support and
insight to our rail business with their lived experience. The company also hosts “Try a Train” sessions, to assist those who may lack
confidence and the experience of travelling by rail.
GTR’s Accessibility Travel Policy outlines in detail our commitment to accessible travel and recent developments, such as the reduced
time required to book assistance from six to two hours before departure, for those who prefer to pre-book. We continue to extend our
Mobile Assistance team approach, with teams now providing assistance support from hub locations at 27 of our smaller accessible
(unstaffed or partially staffed) stations and further teams will be established to provide support at a further 24 stations in due course.
Our Accessibility Forum meets regularly to share best practice from across the Group and to enable continuous improvement and
innovation for our passengers both in the UK and internationally.
Read about our engagement with transport authority customers on page 25
Strategic report
Communities
The Go-Ahead Group Limited Annual Report and Accounts 2022
43
The towns and cities where we operate our services are vital stakeholders to our
business. Our community investment aims to support societies with their local
needs and create shared value.
KPIs
2022
(£m)
2021
(£m)
2020
(£m)
2019
(£m)
Community investment
1.7
1.0
0.9
1.0
Description: We contribute to the communities we serve across the UK and internationally.
Performance: Through a number of initiatives that included cash and goods donations, sponsorship, free travel, volunteering and
partnerships with not-for-profit organisations, we supported our communities and contributed to the UK Government’s social goals.
Community investment strategy
Public transport is an essential service. Our buses and trains sit at the heart of the communities we serve and create significant social
value by connecting people to work, family and leisure in an easy, safe and affordable way.
The towns and cities in which we operate are vital stakeholders to our business. When they thrive, we thrive. We’re committed to
supporting these stakeholders and have a community and charitable investment policy in place. In line with this policy, our businesses
regularly join in national and local fundraising events, and we support our colleagues in their volunteering activities within local
communities.
To offer extra guidance to all Group employees regarding our vision for community investment, during the year we developed a
community investment strategy that includes:
• The principles that guide us
• The social issues we focus on
• Tools we can use to create a positive social impact
• How we measure our positive social impact in local communities
Aligned with the UK Public Services (Social Value) Act 2012, and the UK Social Value Model, the ultimate purpose of our community
investment strategy is to maximise the impact of our social investment and create even greater social value for the communities we
serve.
Tackling loneliness
In 2019, we launched a campaign called “Chatty Bus” to encourage passengers to talk to someone new every day on one of our bus
services. Since then, our operating companies have shaped and moulded the initiative to suit the passengers within their communities.
This has included working with local charities and organisations to help spark conversations with passengers. In 2022, this initiative
integrated the Seeing is Believing Programme, established in 1990 by His Majesty King Charles III, and it was showcased as a case study
to all participants that joined the programme in Norwich.
In 2021, we became a champion of the UK Government’s “Tackling Loneliness Network”, a group of high-profile charities, businesses
and public figures formed to help connect groups of people at risk of isolation. Within this network, we represent the role of public
transport in preventing loneliness and social isolation, whilst also helping people to remain independent and access their communities.
Strategic report
Communities continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
44
Humanitarian support to Ukraine
In 2022, the world witnessed the start of the war in Ukraine, which already has cost the lives of thousands of civilians and triggered the
biggest refugee crisis in Europe since the Second World War. The Group and its operating companies stepped up and offered
humanitarian support to Ukrainians through multiple initiatives.
At Group level, we created a match funding scheme and invited all of our employees to contribute to the Disasters Emergency
Committee and, for each employee pound donated, the Group offered another pound. In total, £36,000 was raised through this
initiative.
Amongst our operating companies, GTR, Go-Ahead Germany, and Oxford Bus Company offered free travel for refugees. Go-Ahead
London and Go South Coast donated supplies such as first aid kits, gloves, torches, waterproof jackets and canned food. Go South
West wrapped a bus with a “support for Ukraine” banner with details about how to donate and printed 600 T-shirts for their drivers to
demonstrate support.
Social value in our supply chain
Go-Ahead is a 27,000-strong company and the way we manage our business and our supply chain has a significant social,
environmental and economic impact.
Through our code of conduct and ethical procurement policies, we set our parameters regarding how we expect our partners to
behave. We work in accordance with ISO 24001 for sustainable procurement, which has been independently verified, and we remain a
signatory to the “Prompt Payment Code” with 95 per cent of all invoices paid within 60 days.
In 2019, we launched the industry’s first Sustainable Supply Chain Charter in the UK, which established minimum criteria in core areas
of corporate responsibility. It outlined our priorities within our supply chain and included small and medium-sized enterprises (SMEs)
as an area of focus.
Read about our SME strategy on our website, www.go-ahead.com
Creating social value
Go-Ahead and its operating companies invest in the communities we operate in through a number of initiatives.
Twelve of our Go-Ahead London colleagues successfully took on the challenge of walking an incredible 45 miles from Sutton Garage to
the centre of Brighton and raised £1,400 for the Great Ormond Street Hospital Children's Charity.
Go South West branded a double-decker bus to support St Luke’s Hospice Plymouth in its 40th anniversary year and gave free bus
travel to help Plymouth Albion RFC (local rugby team) attend its training and matches. The operating company also continued to
support Jeremiah’s Journey campaign named “Follow the Bear’” a self-funded charity that help families dealing with the death of
relatives, and, with volunteers’ support, raised over £2,000 for the Children’s Hospice South West.
Through its Community Support Fund, Brighton & Hove receives applications from local charities and offers support to several causes.
During the year, the company also donated hundreds of bus tickets, offered travel discounts to charities and took part in many
community events, including Black History Family Day and Dementia Action Week.
At Go South Coast, each one of the bus company’s different brands has a community fund to support local needs. In 2022, they gave
free or heavily discounted tickets to cancer patients and charities that help people to treat the disease. The operator also helped
Shirley community litter pickers to buy a new trolley.
In our international division, Go-Ahead Nordic and Flexbuss engaged with local communities through various activities such as visiting
schools and universities to talk about the public transport contribution to local societies. They also worked with local suppliers to offer
locally produced food on their trains and sponsored local events.
During the year, in addition to our community investment initiatives and as part of our partnership with Transaid, we donated a Go-
Ahead London single-decker bus to Dar Es Salaam in Tanzania, to be used as part of a Professional Driver Training initiative. Before
departing for Africa, the bus received a full repaint and repanelling. Go-Ahead’s Managing Director of UK Regional Bus, Martin Dean, is
a member of Transaid’s Road Safety Advisory Board, which facilitates sharing industry best practice, supporting efficiency, quality
assurance and generating ideas.
Through our corporate donations, colleague fundraising and volunteering efforts, we have invested £1.7m in our local communities in
the period covered by the report.
Strategic report
Environment impact
The Go-Ahead Group Limited Annual Report and Accounts 2022
45
Continuously improving our environmental performance is vital to reducing our
impact, managing risks and enhancing the resilience of our business.
KPIs
2022
Tonnes CO2e
2021
Tonnes CO2e
2020
Tonnes CO2e
2019
Tonnes CO2e
Absolute carbon emissions - scope 1 and 2 (location based)
607,694
682,787*
752,040*
765,175
*
Figure restated due to actual data provided on premises energy consumption by the energy supplier. More information on the carbon emissions table below.
Description: We monitor all our energy consumption to calculate our absolute CO2 emissions (CO2e) for scope 1 (direct emissions)
and scope 2 (emissions from purchased energy). Our scope 2 emissions are monitored on both location and market-based
approaches*.
* According to the GHG Protocol guidelines, companies shall report their scope 2 emissions according to location-based (average emissions of grids on which energy
consumption occurs) and market-based (emissions from electricity contracts) methods. The Group reports on both methodologies.
Performance: An 11 per cent year-on-year reduction in CO2e and a 19 per cent reduction against our climate change strategy baseline
(2020). Our GHG emissions were significantly impacted by the decarbonisation of the UK’s grid, and the exit of London & South
Eastern Railway Limited (LSER) from the Group, along with other changes to our Company structure – more details are in the
greenhouse gas (GHG) emissions performance section below. Energy efficiency improvements and the ongoing transition of bus fleet
to zero-emission vehicles also contributed to the reduction.
Go-Ahead is leading the transition to a low-carbon economy in the UK public transport sector. We continue to work to maximise the
environmental benefits of mass transport while, at the same time, addressing and reducing the impacts of our operations.
We have a comprehensive environment policy and energy and climate change policy at Group and local levels. These set out the
measures we are taking to tackle the environmental impacts caused by our activities including reducing our carbon footprint. Policies,
objectives and performance are monitored and reviewed periodically, and colleagues are provided with information and training to
help them contribute towards achieving our objectives and targets.
We were selected as one of Britain’s Most Admired Companies, coming top of the list for the transport sector in the category
“Community and Environmental Responsibility”. Go-Ahead was also named one of the top 300 “European Climate Leaders” by the
Financial Times for our carbon-cutting initiatives.
Looking at ESG rating agencies, Go-Ahead was once more given the highest score by MSCI (AAA) and classified as “low risk" by
Sustainalytics. Additionally, in 2022, we maintained our highest ever rating from the CDP (A minus) – the highest score of any UK
transport operator.
Go-Ahead was the first major public transport company to achieve the ISO 50001 certificate in 2018 for energy management for all of
our UK operations. The certification independently verifies our energy management processes and data and supports compliance with
mandatory disclosures.
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Environment impact continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
46
Decarbonisation
In 2021, we set out our strategy to lead the transport industry in carbon reduction by cutting our scope 1 and 2 carbon emissions by 75
per cent by 2035 (against a 2020 baseline) and by becoming a net zero business by 2045. To achieve these targets our goal is to run a
zero-emission fleet by 2035.
Carbon reduction initiatives
As set out in our climate change strategy, we have a pathway to deliver our carbon and air quality targets that include transitioning to
zero-emission vehicles and increasing the energy efficiency of our fleet and premises.
In March 2022, Oxford Bus Group was approved by the Zero Emission Bus Regional Areas (ZEBRA) scheme to receive funding to
implement 104 electric vehicles in its fleet. These buses will replace existing diesel buses and will make the company’s fleet
significantly greener. A substation has already been installed at Cowley depot and will provide 8 megawatts of power to support rapid
charging of vehicles.
One of the largest electric bus operators in the UK, Go-Ahead London is progressing with a Bus2Grid proof of concept trial, which is
set to be the world’s first high power discharge “vehicle to grid” project. Located at Northumberland Park, where over 100 electric
vehicles are based, the trial will create a “virtual power station”, taking surplus energy from the batteries of parked buses and feeding it
back into the national grid.
After undertaking a trial of clean hydrogen fuel cell buses, Brighton & Hove and Metrobus purchased 54 hydrogen buses for their
operations in Crawley, Redhill and the Gatwick Airport area. The buses offer a long-range, quick charging capability and enhanced
accessibility and will start to be operated in late 2022.
In addition to our efforts to transition our fleet to zero-emission buses, we are also constantly investing in energy efficiency measures.
All our operating companies engage with their drivers and use different methods (e.g. training and telemetry) to support them to drive
more efficiently. Throughout the years we have also constantly upgraded our diesel bus fleet with vehicles that are more fuel efficient
and emit less carbon and air emissions.
In rail, GTR is the UK’s largest operator of electric trains with 98 per cent of our fleet comprised of electric trains. The operator’s
electric fleet includes Siemens Class 700 trains, which recycle 15.8GWh of energy each month from its braking system and return it to
the network.
Regarding our premises, we invest in behaviour change (e.g. switching off lights and equipment not in use) and also in infrastructure
improvements. For instance, in July 2021, Go North West replaced all of its light fittings with LEDs in its Manchester depot which
resulted in a 31 per cent reduction in electricity consumption.
Read about our climate change strategy on page 28
Greenhouse gas (GHG) emissions performance
In terms of absolute figures, our scope 1 and 2 carbon emissions were reduced by 11.0 per cent in the 2022 financial year when
compared to the previous year and by 19.2 per cent against 2020, the baseline year for our climate change strategy. This performance
is aligned with our science-based target, which basically requires us to reduce our scope 1 and 2 carbon emissions by 5 per cent year on
year.
Our scope 1 carbon emissions presented a slight increase of 1.2 per cent against 2021, mainly due to the acquisition of Flexbuss in
Sweden, the start of the contract to operate bus services in Cornwall (UK) through Go South West, and the recovery from the COVID-
19 pandemic, which meant busier trains and buses, and more traffic on the roads across all our operations.
Our location-based scope 2 carbon emissions, on the other hand, decreased 25.2 per cent mainly due to the exit of London & South
Eastern Railway Limited from the Group and the inherent reduction in traction electricity consumption, and the decarbonisation of the
UK grid. Our energy efficiency initiatives also contributed to the reduction in our GHG scope 2 emissions.
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Environment impact continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
47
Our carbon footprint in tonnes of equivalent carbon dioxide (CO2e)
Read more on page 111
2022
Tonnes CO2e
2021
Tonnes CO2e
2020
Tonnes CO2e
2019
Tonnes CO2e
Scope 1
Total
371,333
366,942*
382,602*
394,878
Scope 2
Total scope 2 – location-based
236,362
315,844*
369,438
370,296
Total scope 2 – market-based
12,415
39,325*
67,279
61,971
Total scope 1 and 2 aggregated (location based)
607,694
682,787*
752,040*
765,175
YoY % change
-11.00%
-9.21%
-1.72%
-7.65%
% change on 2020 baseline
-19.19%
-9.21%
n/a
n/a
Scope 3
Electricity – transmission and distribution (total)
21,261
27,820*
31,554
31,510
Out of scopes – biogenic content of bio-fuels
15,870
20,144
15,188
12,436
Total kWhs
2,631,385,885 2,917,925,461* 3,032,726,257 2,983,369,795
Scope 1, 2 and 3 and out of scopes
UK – location
538,538
626,479*
703,158
742,915
Non-UK – location
90,416
84,128*
80,918
54,616
Total – location
644,825
730,751*
784,076
797,534
UK – market
330,985
334,292*
389,243
432,914
Non-UK – market
74,022
99,795*
92,671
54,647
Total – market
405,008
434,087*
481,916
487,561
Total vehicle miles operated
659,413,857
749,034,991
733,702,870
706,393,581
Energy consumption
2022
kWhs
2021
kWhs
2020
kWhs
2019
kWhs
UK
2,277,156,069 2,578,251,899 2,728,037,565
n/a**
Non-UK
354,229,816
339,673,561
304,688,691
n/a**
Total kWhs
2,631,385,885
2,917,925,461 3,032,726,257
2,983,369,795
Total bus and rail mileage (locations)
2022
2021
2020
2019
All scopes kgs CO2e (location)/vehicle mile
0.9779
1.0045*
1.0841
1.1454
YoY % change
-2.7%
-7.4%
-4.9%
-10.4%
% change on 2020 baseline
-9.8%
-7.4%
n/a
n/a
* Figure restated due to actual data provided on premises energy consumption by the energy supplier. This data replaced estimations provided by the supplier at the end of the
2020/21 reporting period.
For more information on methodology, scope and exclusions, see page 112
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Environment impact continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
48
Air quality
As set out in our climate change strategy, we have 2025 targets to decrease our air emissions for four pollutants: carbon monoxide,
hydrocarbons, nitrogen oxides, and particulate matter. We calculate our air emissions performance based on the transition rate of our
fleet to low/zero-emission vehicles.
Our latest figures show that a year after setting our targets, driven mainly by the changes in our fleet (e.g. upgraded diesel fleet and
increased number of electric vehicles), we are on track to achieve our targets for hydrocarbons, nitrogen oxides and particulate
matter. Carbon monoxide emissions have proved to be more challenging, mainly because they depend exclusively on the transition to
zero-emission vehicles, which is happening more slowly than initially projected.
Water
Water is a precious resource for our operation. This year our activities to reduce water consumption focused on measurement and
monitoring improvement. We engaged extensively with our operating companies to share best practice and encourage them to read
water meters frequently and install data loggers/smart meters where appropriate.
At Group level, we enhanced our data intelligence by moving our water figures to our main business intelligence software (Power BI),
aiming to spot inconsistencies (e.g. spikes in consumption) more rapidly and investigate potential leaks more quickly.
In 2022 we used 756,268m3 of water, which is a 15.6 per cent reduction year on year and a 19.7 per cent decrease against our baseline
year. The reduction in consumption was achieved due to initiatives to reduce usage but was heavily impacted by changes in the
Group’s composition previously mentioned.
Waste
We are making substantial progress towards our target of increasing our recycling rate to 60 per cent by 2025. Our performance in
2022 was driven by improvements in the reporting scope (more waste streams were included) and by two waste projects:
• A trial at Brighton train station in partnership with Green Block, a waste consultancy that deployed a Mobile Segregation Unit (MSU)
to facilitate the segregation of unsorted waste and provide access to real-time data
• An internal initiative named Project Go Eco, through which we are increasing waste segregation by engaging with specific teams at
our depots (e.g. cleaners and maintenance staff) to drive behaviour change
During the year, we recycled 46.0 per cent of our waste, against 37.8 per cent in the previous year and 36.5 per cent in 2020.
Strategic report
Going concern
The Go-Ahead Group Limited Annual Report and Accounts 2022
49
Background
The financial statements for the year ended 2 July 2022 were approved by the Board on 24 February 2023.
We have responsibilities in relation to going concern under UK legislation and International Accounting Standard 1 Presentation of
Financial Statements. The Board needs to state whether it considers it appropriate to adopt the going concern basis of accounting in
preparing the financial statements, and to identify any material uncertainties to the Group’s ability to continue as a going concern over
a period of at least 12 months from the date of approval of the financial statements.
Going concern assessment
The Board used the financial forecasts prepared for business modelling and liquidity projection purposes as the basis for its
assessment of the Group’s ability to continue as a going concern for at least 12 months from the date of approval of the financial
statements.
As part of this assessment, the Group has also considered the FRC Company Guidance (updated 4 December 2020) (COVID-19), which
has encouraged companies to assess current forecasts (corporate plans) with more rigour, consider the impact of different potential
scenarios along with a likelihood assessment, and consider both the uncertainty and the likely success of any realistic mitigations.
Key areas of forecasting uncertainty include:
• The extent of any further recovery in Regional Bus revenue and the size of the network required to support passenger demand after
BRG funding ceases
• The impact of inflationary pressures and continued challenges with respect to driver recruitment on our operations
• Further losses on our German contracts following the challenging operational performance, which has impacted the Baden-
Württemberg franchise since its commencement, and the start of our final Bavarian operations which occurred in December 2022
The forecasts were modelled using the base case set out below based on the Group’s three-year Corporate Plan adjusted for M&A
activity which would be dependent on circumstances and the impact of the takeover of the Group by Gerrard Investment Bidco
Limited (Bidco), a company jointly owned by Kinetic TCo Pty Ltd (Kinetic) and Globalvia Inversiones S.A.U. (Globalvia), (together the
Consortium).
The base case
The Regional Bus forecast assumes that Regional Bus services are maintained at the level required to qualify for Bus Recovery Grant
(BRG) funding and, thereafter, at a level commensurate with passenger demand. Fares, fuel and wages are all assumed subject to
inflation with there being no restriction on the business’ ability to recover increased costs through fare increases, and savings
identified as part of the strategic business review begin to be realised during the year. BRG funding, initially expected to end in October
2022, has been extended until June 2023 which provides further support to the delivery of Regional Bus forecasts but terms and
conditions for the duration of this extension remain outstanding. The current Bus Fare Cap is assumed financially neutral with the
impact of the scheme offset by the funding provided.
In London & International Bus, passenger demand risk is borne by our transport authority clients. Whilst all clients are expected to
come under some financial pressure, there is currently no evidence of any impact on contractual payments or financial support. While
cost pressures will impact the business, there are price mechanisms within the contracts that allow these to be recovered.
In UK Rail, GTR is contracted under a National Rail Contract through to 1 April 2025 with the potential for up to a three-year extension
at the discretion of the Secretary of State for Transport.
In International Rail our German operations’ contractual payments are protected and passenger revenue risk is borne by the transport
authority client.
In Norway an agreement was reached with the Norwegian Railway Directorate regarding the structure of the rail contract. The
amended contract, which took effect from 1 July 2022 and runs to the end of the previous contract (December 2027 with a potential
two-year extension to December 2029), provides a revenue support scheme combined with an incentive scheme linked to revenue
growth and represents a significant change from the prior contract under which revenue risk arising from changes in passenger
demand rested with Go-Ahead.
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Going concern continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
50
Reasonable worst case scenario
This included assessing forecasts of severe but plausible downside scenarios related to our principal risks, notably the extent to which
the recovery in passenger demand and levels of government support is less favourable than assumed in our base case forecasts. The
reasonable downside scenario assumptions, which together reduce pre-IFRS 16 EBITDA by c. 20 per cent over the 12-month period,
were:
Regional Bus
• Slower recovery of passenger demand in Regional Bus with passenger demand lower and the impact of inflationary pressures
London & International Bus
• Impact of inflationary pressures on electricity and driver pay and the impact of driver shortages and absences
UK Rail
• Lower level of performance fees in GTR than planned.
International Rail
• Operational issues in our German operations leading to higher operational losses than those already included in the base case
Liquidity and covenant testing
The Group has no debt maturities ahead of July 2024. We have a strong balance sheet and good liquidity with adjusted net debt as at 2
July 2022 of £1,107.0m (£241.0m on a pre-IFRS 16 basis) and unutilised facilities and cash of £320.5m at the year end.
Funding is covered by a £250m corporate bond, which matures on 6 July 2024, and a revolving credit facility of £240m which matures
in July 2025. Although these arrangements extend beyond the going concern period, we would expect to refinance prior to the end of
the current going concern period and, given the level of headroom on existing covenants and forecast levels of net debt, there is no
reason not to assume that this could be done.
Following the acquisition by the Consortium, seven of the Group banks continue to participate in the funding syndicate. one bank,
however, has exercised change of control clauses and has exited the arrangement. Following the reconfirmation of the group’s credit
ratings by both Fitch and S & P in January 2024, any risk of a put event in relation to bond is no longer relevant and therefore will
continue to its maturity date on 6 July 2024.
Our primary bank covenant continues to be assessed on a pre-IFRS 16 basis. At the year end, adjusted net debt was £241.0m on a pre-
IFRS 16 basis (2020: £305.9m). Consequently, adjusted net debt to pre-IFRS 16 EBITDA (excluding exceptional items) was 1.5 times, at
the bottom of our target range of 1.5 times to 2.5 times and allowing adequate headroom on our primary bank covenant of 3.5 times.
Our covenants are measured twice a year, at year end and half year.
Under the modelled scenarios as detailed above, positive liquidity headroom exists throughout the going concern period and the
Group remains in compliance with its covenants.
In addition to the base case and the reasonable worst-case scenario, the Board has reviewed reverse stress tests, in which the Group
has assessed the set of circumstances that would be necessary for the Group to breach the limits of its covenant tests. This includes
the impact of reduced funding availability and further downside in London Bus, and UK and International Rail.
Even in the most severe of the downside scenarios, in which each of the four risks set out in the reasonable worst case scenario are all
assumed to have more severe impact resulting in breach of the EBITDA covenant threshold, there remains sufficient liquidity with
minimum thresholds achieved throughout the going concern period after taking account of controllable mitigating actions.
In applying the reverse stress tests, the directors have concluded that the set of circumstances required to exhaust this level of
liquidity is remote.
Mitigating action
The Board has considered all mitigations that would be within its control if faced with a short term material EBITDA reduction that
would reduce covenant headroom or a reduction in the level of funding available. These include cost efficiencies, adjustments in
service levels in Regional Bus to align to passenger demand, reduction or postponement of capital expenditure and sale of other assets.
Other mitigations could be considered in more severe circumstances, including requests for amendments or waivers of covenants, sale
and leaseback of vehicles, disposal of properties and disposal of investments or other assets.
Going concern statement
The directors have assessed the Group’s ability to continue as a "going concern", in light of current and anticipated economic
conditions. The directors confirm they are satisfied that the Group has adequate resources to continue in operational existence for a
period of 12 months from the date of approval of the financial statements. For this reason, they continue to adopt the "going concern"
basis in preparing the Annual Report and Accounts.
Strategic report
Risk management
The Go-Ahead Group Limited Annual Report and Accounts 2022
51
Identifying and managing our risks and
uncertainties
How we manage risk
Our governance
The successful delivery of the Group’s strategic objectives depends on effective identification, understanding and mitigation of its
principal risks and uncertainties. Ultimate accountability for risk management lies with the Board, supported by the Audit Committee,
sub-committees and executive directors. The Board’s means of mitigating and managing these risks are set out within the Group’s
Policies and Procedures Manual. Compliance with these policies and procedures is mandatory, with local senior management tasked
with ensuring compliance and reporting any non-compliance to the executive directors.
Our risk management framework
Our approach combines a top-down strategic assessment of risk and risk appetite, with a bottom-up operational identification and
reporting process. The risk management framework includes a robust means of measuring risks in a way that informs the Board’s
decision making in support of creating value in a sustainable way.
Risk management is part of good management and we empower all our colleagues to manage risk. We believe that to be effective, risk
management has to exist at every level within our organisation and form part of business as usual activities. The operating companies
are the owners of the risks they manage and are best qualified to understand those risks. Responsibility for facilitating the risk
management process resides with the Group Internal Audit function, to ensure adequacy and consistency of approach across our
devolved organisational model and to offer risk mitigation advice to management teams facing the same operational risks across the
Group. The Group Internal Audit function reports on risk quarterly to the Audit Committee. Additionally, the key risk movements
identified from quarterly risk reviews are included in quarterly business reviews undertaken by the executive directors and the
operating company management teams, including risk identification, assessment, mitigation plans and due dates.
Our risk appetite
Risk appetite is the level of risk the Group is willing to take to achieve its strategic objectives, together with the level of risk shock that
it can withstand. The Board is responsible for setting and monitoring the Group’s risk appetite, as set out in its risk appetite statement
outlined on page 53. The Group’s risk appetite statement also provides a reference point for the quarterly risk reviews, with any
changes in risk profile being reported by management. Those risk changes are consolidated and reported on a quarterly basis to the
Audit Committee by the Group Internal Audit function, as outlined on pages 51 to 52.
The Group’s risk appetite statement remains an active benchmark through which the Board’s strategic objectives are determined and
maintained. The Board reviews its risk appetite on at least an annual basis, in the context of the regulatory and economic environment,
particularly as it affects the sectors in which we operate, but also within the broader framework of our strategic ambition and the
culture of the business.
Emerging risks
An important component of the Group’s risk management process is for emerging risks to be reported promptly so that the Board can
understand and consider whether any of those identified have the potential to become a principal risk in the medium to long term. The
greater uncertainty attached to these risks means it can be more difficult to predict their likelihood, timing and impact. Emerging risks
are considered as part of the quarterly risk review process undertaken with each operating company by Group Internal Audit as
mentioned above.
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Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
52
Risk management framework
Board: ultimate accountability for risk management
• Sets strategic priorities
• Agrees the Group’s appetite for risk
• Assesses risks and tolerance levels
• Top-down risk identification
• Sets delegated levels of authority
• Approves Group policy and procedures
Audit Committee: monitors risk management and assurance arrangements and reviews the effectiveness of key risk
management and control processes through:
• Internal audit
• External audit
• Insurance
• Risk surveys
• Health and safety auditing
Executive directors: monitor performance and changes in key risks:
• Provide regular reports and updates to the Board
• Report to the Board and the Audit Committee on the status of key risks
• Provide guidance and advice to the operating companies to assist with:
-
Identifying risks, assessing extent of risks’ impact and implementing mitigating actions
-
Health and safety auditing
-
Insurance
Operating companies:
• Identify, manage and report local risks
• Maintain local risk management plans
• Assess emerging risks
• Implement mitigating actions
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
53
Risk appetite
Our risk appetite statement below sets out how we balance risk and opportunity in pursuit of achieving our strategic objectives. It
forms an integral part of the development of our corporate strategy, governance and reporting framework. During the year, the
principal risks were reviewed by the Board in the context of the Group’s risk appetite statement, which helped determine the level of
mitigation and resource required to reduce the potential impact of each principal risk. For further information on the Board’s
assessment of the risk appetite for each of the Group’s principal risks, please see pages 53 to 64.
Go-Ahead’s risk appetite statement:
The Group recognises the distinction between risks which are outside of the Group’s control or against which mitigations are
limited, such as a pandemic or other extraordinary events, and the risks the Group has an appetite for, which are categorised
in this statement.
Performance improvement
The Group has zero tolerance for certain safety risk
exposures, including an incident such as a major
passenger accident or an act of terrorism.
Grow organically and externally
The Group will only tolerate low risk with regards to the
management of its core activities.
Progress new opportunities by leveraging existing
capabilities and resources
The Group is willing to accept moderate risk within
stable and regulated markets as it bids for new bus and
rail contracts.
Develop for the future of transport
In pursuit of its objective to develop the future of transport, the
Group recognises that innovation and striving to be one step ahead
of our competitors comes with some inherent risk. Moderate risks, in
some circumstances, will be accepted in pursuit of objectives.
Definitions
Zero tolerance for risk which may impact the safety of employees,
customers or general public; reputation and brand; and/or legal and
regulatory compliance.
Low tolerance of risk within the Group’s core operations.
Moderate level of risk in investing and adopting technologies,
pursuing new markets and opportunities, etc.
Our principal risks
A robust assessment has been undertaken by the Board to assess the principal risks facing the Group that could seriously affect the
Group’s prospects or reputation. As part of this assessment, consideration was given to those that threaten our business model and
could impact on our future performance, solvency or liquidity as well as our strategic objectives.
Details of the key risks within each of the Group’s principal risk areas are shown on pages 53 to 64.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
54
External risks
1. Macro-economic environment
Increased cost of living and higher fuel and energy prices resulting in increased operational costs. Risk of recession in the economy
leading to further cost pressures and slowing the economic recovery from the COVID-19 pandemic.
Risk movement
Increased risk
Strategic objectives impacted
• Grow organically and externally
• Progress new opportunities
Risk tolerance
Low
Potential impact
Increased operational costs and lower margins from:
• Significant increases in the cost of living resulting in higher wage costs
• Increased energy and fuel prices which cannot be passed on through higher fares
• Increase in supply chain costs
• Customers make fewer journeys due to post-pandemic hybrid ways of working
• Customers switch to another mode of transport (to walking, cycling or e-scooter)
• Contractual indexation mechanisms may not reflect reality of cost base in London & International Bus
Mitigating actions
• 90 per cent of revenue is contract based; discussing continuation of funding with clients and governments. Main areas of exposure
are Regional Bus and Norwegian rail
• Group fuel hedging in place where appropriate and/or necessary
• Cost of living increases negotiated with trade unions
• Constantly assess the needs of local markets and design services and products accordingly
• Optimise the network and cost base through route rationalisation, proactive cost control and back-office synergies, supported by
robust scenario modelling in Regional Bus
Opportunity
• Higher fuel prices for motorists may lead to increased demand for public transport
• Climate change and environmental agenda driving modal shift towards public transport
• Bus Back Better national bus strategy and Bus Services Improvement Plans
• Opportunities for market consolidation once government support ends
Change in risk in the year
Increased risk during the year due to significant increases in the cost of living which cannot be passed on through fares in Regional Bus.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
55
External risks continued
2. Climate change
Climate change is physically impacting in the world in which we operate, resulting in increased instances of extreme weather
impacting the reliability of our services and the cost of maintaining our fleet.
Risk movement
Increased
Strategic objectives impacted
• Performance improvement
Risk tolerance
Low
Potential impact
• Serious injury to the public, our passengers or our people
• Service disruption with financial losses and reputational damage
• Extreme weather impacting the reliability of services, the level of passenger demand or the cost of maintaining our infrastructure
Mitigating actions
• Rigorous, high profile health and safety programme throughout the Group; high levels of safety performance; promotion of safety
culture; and reassurance over the use of public transport
• Thorough and regular training of colleagues
• Working closely with our industry partners, such as rail infrastructure provider Network Rail and government agencies
• Adaptation of workstreams as part of Climate Change Task Force
Opportunity
• Government policy and funding to tackle the effects of climate change
• Continuous review of processes and procedures can identify areas for operational improvement to mitigate the impact of extreme
weather and ensure the overall safety of operations
• Environmental awareness drives modal shift towards public transport
Change in risk in the year
Increase in risk during the year reflecting the increase in impact and occurrence of extreme weather.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
56
External risks continued
3. Political and regulatory framework
Changes to the legal and regulatory framework, impact of the UK leaving the EU, momentum around climate change adaptation, air
quality and decarbonisation agenda, and Bus Back Better national bus strategy. Increased state control of transport.
Risk movement
No change
Strategic objectives impacted:
• Performance improvement
• Grow organically and externally
• Progress new opportunities
• Develop for the future of transport
Risk tolerance
Low
Potential impact
• Increased state control in the UK of bus and rail through the national bus strategy and Williams-Shapps reform
• Ceasing of public funding ahead of passenger demand recovery (Regional Bus and Norway) and change in government policy
towards private operators (Norway)
• Williams-Shapps rail reform focused on cost control rather than passenger demand recovery
• Reduced funding for public transport, including reduction in bus concessionary rates or the Bus Service Operators Grant (BSOG), as
local authorities come under pressure to reduce spend
• Additional investment requirements to comply with air quality and decarbonisation requirements
• The impact of Brexit on economic growth, material supply and availability of employees
• Pressure on Transport for London’s finances
Mitigating actions
• Maintain strong levels of punctuality and customer satisfaction
• Limit exposure to local authority funding through optimisation of network and cost base and stimulation of passenger demand
• Active participation in key industry, trade and government steering and policy development groups, including the Williams-Shapps
Plan for Rail, Bus Back Better national bus strategy and bus franchising
• Collaboration and partnership working with local authorities
• Strong track record on air quality initiatives: electric bus depots in London, air filtering buses, Climate Change Task Force and fleet
conversion to cleaner emission standards
• The climate change strategy which plans how we will both decarbonise and adapt to climate change
• Brexit contingency measures in place including increased stock levels of spare parts maintained across bus and rail and
apprenticeships and colleague engagement plans to support recruitment and retention
Opportunity
• Influence decisions through close dialogue with the Government, local authorities and other key parties
• The Bus Services Act 2017 could provide business opportunities in new markets, and facilitate the consolidation of existing
relationships
• Working closely with local authorities on Bus Services Improvement Plans
• Proven ability to run profitable regulated bus contracts
• Political momentum around air quality: large number of cities announcing transition to clean air zones and zero-emission zones and
further momentum for modal shift from cars to public transport
• Being able to showcase our expertise and decarbonisation and adaptation plans can enable further strategic conversations with
customers
Change in risk in the year
No change in risk during the year due to:
• Bus Back Better national bus strategy, Decarbonisation of Transport review and Williams-Shapps Plan for Rail all reinforce the
importance of public transport, and Go-Ahead’s role, in supporting the Government’s agenda
• Although there continues to be budget pressure for our major client, Transport for London, and emerging pressures on other clients
and local authorities as economies recover from COVID-19, the Government’s agenda indicates that there is likely to be continued
support of public transport albeit the degree remains uncertain
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
57
Strategic risks
4. Delivery of strategic targets including decarbonisation
Failure to deliver our new strategic objectives and failure to identify appropriate funding solutions to deliver our climate strategy and
associated targets, particularly the decarbonisation of our fleet. Failure to manage organisational change and digitisation to planned
timescales, resulting in efficiencies and savings not being realised.
Risk movement
New risk introduced during the year
Strategic objectives impacted
• Performance improvement
• Grow organically and externally
Risk tolerance
Low
Potential impact
• Lower profitability
• Loss of contracts
• Reputational damage
Mitigating actions
• Strengthening of executive leadership with the appointment of a new Group Chief Executive, Group Chief Financial Officer and
Group Strategy and Transformation Director
• Development of quarterly business reviews and KPIs to monitor performance and progress against plans
• Clear direction and expectation on strategy communicated throughout the business with improved coordination and control of
strategy from the centre
• Open and transparent dialogue with contractual counterparty and wider external stakeholders
Opportunity
• Improved understanding of business model and cost base resulting in improved operational efficiency and effectiveness
• Centralised coordination and decision-making supports delivery of strategy across individual operating companies
• Work collaboratively with contractual counterparty and wider stakeholders
• Government policy in relation to the Green Agenda and net zero targets
Change in risk in the year
New risk introduced in the year.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
58
Strategic risks continued
5. Competition and the transport sector
Competition from existing and new market participants and loss of business to other modes of transport and from market disruptors.
Risk that the anticipated modal shift to public transport does not happen.
Risk movement
No change
Strategic objectives impacted
• Performance improvement
• Grow organically and externally
• Develop for the future of transport
Risk tolerance
Moderate
Potential impact
• Loss of revenue and profits
• Reputational damage
• Rapid change required to business model and structure
Mitigating actions
• Adapt to changing customer requirements and technological advancements
• Foster close relationships with stakeholders to ensure we are meeting requirements including service quality, price and offering
• Work in partnership with local authorities and other operators, including through interoperability
• Promote multi-modal travel, improving the overall door-to-door experience for passengers
• Focus on customer needs and expectations, including improved channels for ticket purchase and journey planning
Opportunity
• Strategic partnerships provide opportunities and aim to improve the passenger experience and perception of public transport as a
whole
• Increased competition in the market encourages innovation which improves the customer experience
• The economic crisis could lead to further consolidation opportunities
Change in risk in the year
No change in risk during the year.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
59
Operational risks
6. Catastrophic incident or severe infrastructure failure
An incident, such as a major accident, an act of terrorism, a pandemic or a severe failure of transport infrastructure.
Risk movement
No change
Strategic objectives impacted
• Performance improvement
Risk tolerance
Zero
Potential impact
• Serious injury to the public, our passengers or our people
• Service disruption with financial losses, reputational damage and switch to other modes of transport
• Acts of terrorism, while not directly targeting rail/bus public transport, may discourage travel and tourism
Mitigating actions
• Rigorous, high profile health and safety programme throughout the Group; high levels of safety performance; promotion of safety
culture; and reassurance over the use of public transport
• Crisis management policy updated and rolled out across the operating companies
• Appropriate and regularly reviewed and tested contingency and disaster recovery plans
• Thorough and regular training of colleagues
• Working closely with our industry partners, such as rail infrastructure provider Network Rail and government agencies
Opportunity
• COVID-19 has tested our crisis response. Colleagues are now better trained and prepared as a result
• Continuous review of processes and procedures can identify areas for operational improvement and improve overall safety on our
networks
• Environmental awareness drives modal shift towards public transport; our preparedness can drive strategic conversations with
customers ahead of competitors
Change in risk in the year
No change in risk during the year.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
60
Operational risks continued
7. Employee relations, resource planning and talent management
Rising inflation making wage negotiations more challenging. Changes in the labour market causing staff shortages and retention
issues, particularly drivers. Failure to effectively engage with our people and trade unions to provide reassurance, manage costs and
drive organisational change. Requirement to drive rail workforce reform could lead to industrial dispute and service disruption.
Organisational change strategy increases the demands on our people leading to higher staff turnover. Further risk to staff
engagement and retention due to change of business ownership and delisting. Failure to develop and retain our top talent.
Risk movement
Increased
Strategic objectives impacted
• Performance improvement
Risk tolerance
Low
Potential impact
• Wage costs increase higher than necessary or affordable in light of higher costs of living
• Service disruption, costs and reputational damage arising from industrial action
• Rail workforce reform leading to industrial action
• Low levels of morale and engagement lead to inadequate customer service or inability to deploy new technology and work practices
for the benefit of customers
• Inability to recruit and retain enough drivers resulting in bus and train service disruption
• Expansion in bus services further impacting driver resource and operational delivery
• Failure to attract, retain and develop the diverse talent required for robust succession planning
Mitigating actions
• People strategy focusing on leadership, talent and succession, management, culture and organisation, diversity and inclusion and
employee experience
• Succession planning exercise carried out annually
• Apprenticeship, graduate and leadership development programmes
• Robust and regularly reviewed recruitment and retention policies, training schemes, resource planning and working practices
• Experienced approach to wage negotiations and proactive engagement on driver fatigue
• Widening the recruitment pool through initiatives aimed at attracting diverse talent, for example the Women in Bus network, active
recruitment of female drivers and defining our employee proposition around ESG and climate change
Opportunity
• Through fostering positive employee relations and offering good employment packages we have a motivated and committed
workforce, and offer a good employee value proposition
• Workforce planning and identification of critical skills shortage improve visibility and ability to plan
• Access to a wider recruitment pool through our focus on diversity and inclusion and a purpose-driven employee proposition
Change in risk in the year
Increase in risk during the year due to increased cost of living, inflation and rail workforce reform.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
61
Operational risks continued
8. Information technology failure/interruption/security breach
Prolonged or major failure of the Group’s IT systems or a significant data breach.
Risk movement
Increased
Strategic objectives impacted
• Performance improvement
Risk tolerance
Low
Potential impact
• Disruption to trading and/or operational service delivery
• Reputational damage and regulatory breach from misuse of data
• Enforcement action against rail companies under the Networks & Information Systems (NIS) framework
• Financial loss
Mitigating actions
• Data protection officers in place in all operating companies to monitor Group-wide GDPR compliance and full time Group Data
Protection Officer
• Robust processes and procedures in place to ensure compliance with the relevant laws and best practices; process standardisation
and continued investment in best practice systems
• IT function focused on operational delivery; continued investment in and maintenance of IT systems across the Group
• Design Authority Board in place for change control
• Clear and tested business continuity plans; test scenarios conducted across the Group
• Achieved Cyber Essentials standard; GTR and Southeastern successfully audited against the NIS framework during the year
• Adoption of a cyber security strategy and Information Security Management System (ISMS) framework across the Group, with the
publication of monthly KPIs measuring mitigating actions
Opportunity
• Ensuring our systems and processes are efficient and reliable strengthens day-to-day operations across the Group
Change in risk in the year
Increase in risk due to increases in cyber-attacks, including ransomware attacks, across the public and private sector during the year.
Following the year-end, unauthorised access to Go-Ahead’s IT systems was identified. Further details are set out in the Chair’s
statement on page 5.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
62
Operational risks continued
9. German rail contracts
Failure to deliver required levels of operational performance.
Risk movement
No change
Strategic objectives impacted
• Performance improvement
• Grow organically and externally
Risk tolerance
Moderate
Potential impact
• Significant financial losses (e.g. lost mileage, penalties etc.)
• Reputational damage impacting future international business opportunities
• Safety incident
Mitigating actions
• New Group Chief Executive in place with significant German rail experience
• Quarterly business review process in place
• Experienced local teams; ability to mobilise internal UK Rail and Bus expertise
• Strengthening of senior leadership team with the appointment of a new Group Strategy and Transformation Director
• Building strong relationships with local authorities
• Compliance with local regulation; established Safety Management Systems and Group Safety Audits
• Governance review of the German bid and mobilisation processes undertaken, with all lessons learnt categorised into future bid
processes and contract mobilisations
• Chief Executive of Go-Ahead’s German rail operations and restructuring consultancy have transformed operational performance
and delivery in Germany
Opportunity
• Further international opportunities arising from strong reputation based on successful mobilisation and operation of services
Change in risk in the year
No change in risk during the year.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
63
Operational risks continued
10. UK Rail contract compliance
Failure to comply with contractual obligations.
Risk movement
New risk introduced during the year
Strategic objectives impacted
• Performance improvement
• Grow organically and externally
Risk tolerance
Low
Potential impact
• Financial penalties
• Loss of contract
• Reputational damage
Mitigating actions
• Strengthening of the senior leadership team with the appointment of a new Chief Financial Officer of Govia Thameslink Railway
• Strengthening of the Group senior leadership team with the appointment of a new Group Strategy and Transformation Director
• Develop KPIs to monitor contract performance
• Elimination of revenue risk from the new contract
• Group Audit Committee Chair appointed to the board of Govia Thameslink Railway Limited
• Open and transparent dialogue with contractual counterparty
• Remit and scope of Internal Audit has expanded, with a clear responsibility for the compliance functions within our rail businesses
Opportunity
• Deploy lessons from LSER issues
• Work collaboratively with contractual counterparty
Change in risk in the year
Increased risk due to the change in contractual requirements from a franchise model to the new contract.
Strategic report
Risk management continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
64
Operational risks continued
11. Supply chain
Increased costs due to suppliers passing on their increased costs of raw material, energy, fuel and labour which we cannot pass on
through fare increases. Disruption in the supply chain due to the war in Ukraine and sanctions against Russia. Global shortages of raw
materials for electrical components increase their costs and limit availability of supply.
Risk movement
Increased
Business objective
• Performance improvement
Risk tolerance
Low
Potential impact
• Lower profitability due to increases in costs
• Disruption to bus and rail operations due to shortages of supplies
• Reputational loss arising from operational disruption
Mitigating actions
• Fuel hedging in place
• Group procurement contracts for essential supplies in place
• Flexible and experienced Group procurement team actively engaged with our suppliers and the market
• Supplier contract performance monitoring in place
Opportunity
• Strengthening of purchasing power from new ownership
Change in risk in the year
Increase in risk due to higher costs, increased pressure on diesel stocks in the UK due to the embargo of Russian fuel, and delays in
receiving orders for electrical components due to global shortages.
The strategic report was approved by the Board and signed on behalf of the Board:
Carolyn Ferguson
Group Company Secretary
24 February 2023
The Go-Ahead Group Limited
Registered in England and Wales
No. 02100855
Corporate governance
Governance continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
65
Promoting the long term sustainable
success of the Group
Statement of corporate governance arrangements
On 13 June 2022, the board of directors of Gerrard Investment Bidco Limited (Bidco) and Go-Ahead announced they had reached
agreement on the terms of a recommended cash offer for Go-Ahead, pursuant to which Bidco would acquire the entire issued and to
be issued share capital of Go-Ahead (the Scheme of Arrangement). That offer was increased on 4 August 2022 and approved by the
requisite majority of shareholders on 16 August 2022. The Scheme of Arrangement was sanctioned by the Court on 6 October 2022
and became effective on 10 October 2022 with the Group’s shares ceasing to be listed on the London Stock Exchange with effect from
7.30am on 11 October 2022.
For the year ended 2 July 2022, while it was equity listed, the Company applied the principles of the UK Corporate Governance Code
(the Code), issued by the Financial Reporting Council (available from www.frc.org.uk). Following delisting of the Group’s shares on
11 October 2022, the requirements in the FCA Listing Rules in relation to the Code ceased to apply. Therefore, this Annual Report does
not provide detailed disclosure regarding the Company’s compliance with Code provisions, but it does provide information on how the
Company has applied the Principles of the Code during the year as signposted in the table below. In the future, we will be subject to the
Companies (Miscellaneous Reporting) Regulations 2018 which require us to provide a statement in the Directors’ Report about the
corporate governance arrangements applied by the Company.
Board leadership and
Group purpose
Role of the Board
Purpose, values and strategy
Culture
Control framework
Stakeholder engagement
Workforce policies and practices
Read more page 78
Read more page 9
Read more page 74
Read more page 52
Read more page 75
Read more page 37
Division of
responsibilities
Chair
Roles and responsibilities
Board policies, procedures and logistics
Read more page 79
Read more page 78
Read more page 79
Board composition,
succession and
evaluation
Board appointments and succession
Composition and refreshing
Evaluation
Read more page 81
Read more page 82
Read more page 77
Audit, risk and
internal control
Independence and effectiveness of internal and external audit
Fair, balanced and understandable reporting
Risk management
Read more page 88
Read more page 88
Read more page 51
Remuneration
Alignment of remuneration to purpose, values and strategy
Development of remuneration policy
Determination of director and senior management remuneration
Remuneration outcomes
Read more page 90
Read more page 105
Read more page 105
Read more page 94
Corporate governance
Governance continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
66
Board overview
Biographies
The Directors and Officers of the Group who were in office during the year ended 2 July 2022 were:
Clare Hollingsworth, Non-Executive Chair
Appointment: Clare Hollingsworth joined the Board as Non-Executive Chair Designate on 1 August 2019 before becoming Non-
Executive Chair of the Group on 31 October 2019.
Independent: On appointment.
Committee membership: Nomination Committee Chair and Remuneration Committee member
Relevant skills, experience and contributions: Extensive board experience both at executive and non-executive level across a range of
sectors, including safety critical businesses in rail, aviation and healthcare. Worked nationally and internationally, and within different
ownership models. Significant stakeholder management experience, including across regulators and UK Government. Former Non-
Executive Chair of Eurostar International Ltd, Non-Executive Director of UK Government Investments, Savills plc and Assura plc and
Chief Executive Officer of Caledonian Airways Ltd, Bupa Hospitals Ltd and Spire Healthcare Ltd.
Other appointments: None.
Christian Schreyer, Group Chief Executive
Appointment: Christian Schreyer was appointed to the Board on 1 November 2021 and became Group Chief Executive with effect from
5 November 2021.
Independent: Not applicable.
Committee membership: None.
Relevant skills, experience and contributions: Christian is a highly experienced transport leader. As a former senior executive of
Transdev, he oversaw large scale bus and rail operations at an international level with accountability for seven countries and more
than 26,000 people. Prior to that, he worked at Deutsche Bahn where he held several senior roles including Head of Corporate Strategy.
He brings to the Board a high level of strategic awareness, significant experience in sustainability and decarbonisation, a deep
understanding of the relationships between government and public transport and a wealth of experience of delivering outstanding
transport services to customers.
Other appointments: None.
Sarah Mussenden, Group Chief Financial Officer
Appointment: Sarah Mussenden was appointed to the Board as Group Chief Financial Officer on 9 May 2022. Sarah left Go-Ahead at
the end of the year and an interim CFO has been appointed.
Independent: Not applicable.
Committee membership: None.
Relevant skills, experience and contributions: A qualified Chartered Accountant, Sarah has extensive experience across multiple
sectors. Her previous roles include Interim Chief Financial Officer of Royal Mail UK, Chief Financial Officer of Centrica Consumer
Services (British Gas), Chief Financial Officer of Barts and The London NHS Trust and Financial Director of British Airways.
Other appointments: Non-Executive Director of Premier Miton Group plc (member of the Audit and Risk Committee).
David Blackwood, Senior Independent Director
Appointment: David Blackwood joined the Board as Independent Non-Executive Director and Senior Independent Director Designate
with effect from 1 January 2022 and became Senior Independent Director with effect from 19 January 2022.
Independent: Yes.
Committee membership: Nomination, Audit and Remuneration Committee member
Relevant skills, experience and contributions: David has extensive business and listed company experience, notably in finance, audit
and risk. He has previously been Audit Committee Chair and Senior Independent Director of Scapa plc and Dignity plc, and, for both,
served on the Nomination and Remuneration Committees. David was formerly Chief Financial Officer of Synthomer plc, prior to which
he was Group Treasurer and Group Financial Controller of Imperial Chemical Industries plc (ICI). David has previously served as a
member of the Cabinet Office Audit and Risk Committee and on the Board for Actuarial Standards.
Other appointments: Non-Executive Chair of Smiths News plc (Chair of the Nomination Committee and a member of the
Remuneration Committee) and Deputy Chairman and Senior Independent Director of FTSE SmallCap Esken Limited (previously
Stobart Group Limited) (Chair of the Audit Committee and member of the Remuneration and Nomination Committees).
Corporate governance
Governance continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
67
Board overview continued
Biographies continued
Dominic Lavelle, Non-Executive Director and Audit Committee Chair
Appointment: Dominic Lavelle joined the Board as Independent Non-Executive Director and Audit Committee Chair Designate with
effect from 1 January 2022 and became Audit Committee Chair with effect from 19 January 2022.
Independent: Yes.
Committee membership: Audit Committee Chair and Nomination and Remuneration Committee member
Relevant skills, experience and contributions: Dominic has extensive corporate and financial experience in listed businesses, with
previous positions including Chief Financial Officer of SDL plc, Group Finance Director of Alfred McAlpine plc and Group Finance
Director of Allders plc. He has also previously served as Non-Executive Director of McColls Retail Group plc where he was Chair of the
Audit and Risk Committee.
Other appointments: Non-Executive Director of AIM quoted company FIH group plc (Chair of the Audit Committee and member of
the Nomination and Remuneration Committees) and Senior Independent Non-Executive Director of AIM quoted company Fulcrum
Utility Services Limited (Chair of the Audit Committee and member of the Remuneration Committee).
Leanne Wood, Non-Executive Director and Remuneration Committee Chair
Appointment: Leanne Wood joined the Board on 23 October 2017 and was appointed as Remuneration Committee Chair on 31 October
2019.
Independent: Yes.
Committee membership: Remuneration Committee Chair and Nomination and Audit Committee member
Relevant skills, experience and contributions: Leanne has broad expertise in leading corporate strategy and organisational
transformation obtained while working in senior roles at major consumer brands, including Vodafone, Burberry and Diageo. She has a
particular strength for customer insight, which is key in leading Board discussions on stakeholder engagement and considering the
views of the workforce. Her ability to consider the consequences of remuneration decisions, drawing on her understanding of the
employee and wider business perspectives, allows her to be an effective Remuneration Committee Chair.
Other appointments: Chief Human Resources Officer at Vodafone Group plc and non-independent Non-Executive Director of
Vodacom (member of the Remuneration, Nomination and Social and Ethics Committees).
Harry Holt, Non-Executive Director
Appointment: Harry Holt joined the Board on 23 October 2017 and, during the year, was the non-executive director responsible for
workforce engagement.
Independent: Yes.
Committee membership: Nomination, Audit and Remuneration Committee member.
Relevant skills, experience and contributions: Harry has fulfilled a number of senior executive positions at Rolls-Royce including
President of its Nuclear Business Division and Chief People Officer. He is skilled in all aspects of leadership, with a deep and practical
experience of leading large organisations through change to successful attainment of their strategic ambitions.
Other appointments: Deputy Chief Executive Officer and Chief Operating Officer of Vertical Aerospace Group Ltd until October and
March 2022 respectively.
Carolyn Ferguson, Group Company Secretary
Appointment: Carolyn Ferguson was appointed as Group Company Secretary on 1 July 2006.
Independent: Not applicable.
Committee membership: Secretary to Nomination, Audit and Remuneration Committees.
Relevant skills, experience and contributions: Carolyn is an experienced Company Secretary and governance professional with a proven
track record of working with the Group Board and senior leadership team to the highest of ethical and professional standards,
supported by robust corporate governance principles. She is also an effective driver of pensions de-risking strategy for the Group’s
defined benefit bus schemes. She is a fellow of The Chartered Governance Institute and a qualified and practising coach and mentor.
Her previous employment includes working for Northern Electric, predominantly in the field of pensions.
Other appointments: Non-Executive Director of Better Boards Ltd.
Corporate governance
Governance continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
68
Board overview continued
Board changes during the year ended 2 July 2022
As set out in last year’s Annual Report, following the retirement of Group Chief Executive, David Brown, in late 2021, Christian Schreyer
was appointed as Group Chief Executive. At the time of Christian’s appointment, he was supported by an experienced Interim Group
Chief Financial Officer, Gordon Boyd, who was appointed to the Board in September 2021 following the resignation of the former
Group Chief Financial Officer, Elodie Brian. Gordon remained in the role until the end of March 2022 and a permanent Group Chief
Financial Officer, Sarah Mussenden, was appointed on 9 May 2022.
On 1 January 2022, we welcomed David Blackwood and Dominic Lavelle to the Board as non-executive directors. David and Dominic
succeeded Adrian Ewer as Senior Independent Director and Audit Committee Chair respectively on 19 January 2022.
Full details for all new appointments can be found in the Nomination Committee Report from page 81 and in the Remuneration
Committee Report from page 90.
Board changes following Scheme of Arrangement
Following completion of the Scheme of Arrangement between Go-Ahead and Bidco on 10 October 2022, Clare Hollingsworth,
Christian Schreyer and Dominic Lavelle remain as Chair, Group Chief Executive and Audit Committee Chair respectively. Sarah
Mussenden left Go-Ahead at the end of the year and an interim CFO has been appointed. David Blackwood, Leanne Wood and Harry
Holt stepped down from the Board as non-executive directors with effect from 10 October 2022.
With effect from 10 October 2022, Michael Sewards, Adam Begg and James Culley were appointed as directors to the Board by Kinetic
TCo Pty Ltd and Javier Perez Fortea, Lucas Martinez Vuillier and Daniel Quintero Martinez were appointed as directors to the Board by
Globalvia Inversiones S.A.U.
Board balance
At 2 July 2022, the Board composition was 57 per cent male, 43 per cent female, 29 per cent executive and 71 per cent non-executive.
Corporate governance
Governance continued
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69
Board overview continued
Board and committee meeting attendance
The following table shows the directors’ attendance at scheduled meetings they were eligible to attend for the year ended 2 July 2022:
Board11
Audit Committee 12
Remuneration Committee 13
Nomination Committee 14
Board attendance
Scheduled
Scheduled
Scheduled
Scheduled
Total meetings
8
5
4
3
Clare Hollingsworth1
8/8
—
4/4
3/3
Christian Schreyer2 3
6/6
—
—
—
Sarah Mussenden2 4
2/2
—
—
—
David Blackwood5
4/4
2/2
1/1
1/1
Dominic Lavelle5
4/4
2/2
1/1
1/1
Leanne Wood6
8/8
4/5
4/4
3/3
Harry Holt6
7/8
5/5
3/4
3/3
David Brown2 7
3/3
—
—
—
Elodie Brian2 8
2/2
—
—
—
Gordon Boyd9
3/3
—
—
—
Adrian Ewer10
4/4
3/3
3/3
2/2
1. The Chair attended Audit Committee meetings by invitation as appropriate but, not being a member, her attendance has not been included.
2. The executive directors attended committee meetings by invitation as appropriate but, not being members, their attendance has not been included.
3. Christian Schreyer joined the Board on 1 November 2021 and succeeded David Brown as Group Chief Executive with effect from 5 November 2021.
4. Sarah Mussenden was appointed as Group Chief Financial Officer on 9 May 2022.
5. David Blackwood and Dominic Lavelle were appointed as non-executive directors on 1 January 2022 and succeeded Adrian Ewer as Senior Independent Director and Audit
Committee Chair with effect from 19 January 2022 respectively.
6. Leanne Wood was unable to attend one Audit Committee meeting and Harry Holt was unable to attend one Board and Remuneration Committee meeting due to pre-existing
commitments.
7. David Brown retired from the Board as Group Chief Executive with effect from 5 November 2021.
8. Elodie Brian resigned from the Board as Group Chief Financial Officer with effect from 27 September 2021.
9. Gordon Boyd was appointed to the Board as Interim Group Chief Financial Officer on 28 September 2021 and resigned with effect from 28 March 2022.
10. Adrian Ewer resigned from the Board as Senior Independent Director and Audit Committee Chair with effect from 19 January 2022.
11. Several unscheduled Board meetings were held during the year in relation to a number of corporate actions (the acquisition of the Group by Bidco, the delayed announcement of
year end results and subsequent suspension of share trading and LSER matters of concern) as well as in relation to succession planning, new Board appointments, the strategic
business review and contract wins.
12. Unscheduled Audit Committee meetings were held throughout the year in relation to outstanding audit-related matters regarding the delayed publication of the 2021 Annual
Report and Accounts, LSER matters of concern, the independent review, remit of Internal Audit and risk management and internal control procedures.
13. Unscheduled Remuneration Committee meetings were held during the year relating to the executive remuneration policy review, executive director appointment and leaver
arrangements, the Restricted Share Plan and actions relating to the acquisition of the Group by Bidco.
14. Unscheduled Nomination Committee meetings were held during the year relating to non-executive and executive succession planning, including the appointments of the new
Audit Committee Chair and Senior Independent Director and search for a permanent Group Chief Financial Officer.
Corporate governance
Governance continued
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70
Board activities
The Board held eight scheduled meetings during the year ended 2 July 2022, including a meeting dedicated to discussing the Group’s
strategy. Board members attended the majority of scheduled meetings physically with video conference being used where this was
not possible. The meeting attendance record of Board members can be found on page 69.
The Board’s key focus areas and principal decisions for the year ended 2 July 2022 are set out below.
Offers for takeover
During the year, the Board considered cash offers for the entire issued share capital of the Group from a consortium consisting of
Kinetic TCo Pty Ltd and Globalvia Inversiones S.A.U (the Consortium) and also from Kelsian Group Limited (Kelsian).
The Board carefully evaluated the approaches of each offer together with its financial advisor, Rothschild & Co. Increased offers were
submitted by both the Consortium and Kelsian before the Board deemed them both at a level which, should a firm offer be made, the
Board would be minded to recommend to Go-Ahead’s shareholders. Such a level was reached in June 2022, with both parties given
access to undertake confirmatory due diligence. Kelsian subsequently withdrew its intention to make an offer for the Group in July 2022.
At the outset of receiving the offers, the Board appointed a Defence Committee comprising the Chair, Group Chief Executive, Senior
Independent Director, Audit Committee Chair and Interim Group Chief Financial Officer/Group Chief Financial Officer with power to
carry out all actions which were necessary, appropriate, desirable or expedient in connection with the offers. This included discussions
with the bidder and its advisors and negotiating the terms of any appropriate arrangements and related documentation, as well as
overseeing the robust due diligence process. The Chair provided regular updates from the Defence Committee to the Board.
On 13 June 2022, the Board and Gerrard Investment Bidco Limited (Bidco), a newly formed company indirectly owned by the
Consortium, announced they had reached agreement on the terms of a recommended cash acquisition of the Group by Bidco which
was intended to be effected by means of a Scheme of Arrangement under Part 26 of the Companies Act 2006 (the Scheme).The initial
acquisition value proposed was 1,500p for each Go-Ahead share comprising 1,450p in cash and a special dividend of 50p per Go-Ahead
share and was subsequently increased to 1,550p per Go-Ahead share comprising 1,450p in cash and a special dividend of 100p per Go-
Ahead share on 4 August 2022. Approval for the Scheme was granted by shareholders on 16 August 2022 and became effective on 10
October 2022 having received Court Sanction.
In reaching the decision to recommend the offer to shareholders, the Board carefully considered the terms of the offer and was
comfortable that they were fair and reasonable. It also carefully considered all matters relating to deal certainty, management,
governance, employees and pensions. Each director’s personal assessment with regard to Section 172 of the Companies Act 2006
remained at the forefront of all Board discussions.
London & South Eastern Railway Limited (LSER)
As reported in the Group’s 2021 Annual Report and Accounts, the Board and the Audit Committee carefully considered findings from
the Independent Committee established in relation to LSER. The Independent Committee’s focused, open, collaborative and
constructive engagement with the DfT helped resolve substantially all of the remaining LSER matters of concern including the historic
profit share and affiliate trading disputes. As previously indicated, the Board has taken steps to enhance the Group’s corporate
governance arrangements, particularly in relation to the way in which complex rail operations are overseen. Further details are set out
below with work to strengthen processes and underlying financial controls still ongoing.
Strategic business review and renewed purpose
In conjunction with the comprehensive strategic business review that was undertaken shortly after the Group Chief Executive took
office, the Board considered and approved a new strategy, “The Next Billion Journeys”. This strategy, which aims to deliver profitable
and sustainable growth in both existing and new markets, is underpinned by new medium term financial targets. It will be delivered
through three strategic pillars, supported by five strategic enablers of governance, digital, zero emissions, customers and people. See
our business model and strategy sections on pages 9 to 10 and page 11 respectively for further details.
In reaching approval of the strategy, discussions centred around critical market challenges with agreement reached on which market
segments would not be considered for strategic development. The Board also reviewed and agreed the setting of ambitious but
deliverable targets for revenue, operating margin, net debt, dividends and climate change.
Purpose, values and behaviours were also a key focus area with the Board reviewing and approving a renewed purpose of “Moving you
and the next generation towards a smarter and healthier planet”, which was underpinned by a set of new values and behaviours. The
implementation of these values and behaviours is supported by a cultural roadmap, further details of which are provided on page 74.
Whilst implementation and delivery of the new strategy will be overseen by the new Board, a decision was taken to reshape the Group
Executive Committee which now comprises the Group Chief Executive, Group Chief Financial Officer, Group Strategy and
Transformation Director, Group HR Director, Managing Director (UK Rail), Managing Director (London & International Bus), Managing
Director (UK Regional Bus) and Group Company Secretary. There has also been a change in reporting structure with the Managing
Directors of Go-Ahead Nordic and Go-Ahead Germany now reporting directly to the Group Chief Executive.
Corporate governance
Governance continued
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71
Board activities continued
Strategic business review and renewed purpose continued
In reaching its decision to approve the new strategy, the Board was comfortable that it had explicitly considered the impact on each of
the Group’s key stakeholder groups. Through its comprehensive discussions, the Board also took into account the matters set out in
Section 172(1) of the Companies Act 2006 including how the proposed strategy underpinned long term value creation and the
implications for business resilience.
Further information on the conclusions of the business review and “The Next Billion Journeys” strategy can be found on our corporate website.
Governance
As reported in the previous year, the Board identified a number of areas to enhance the Group’s corporate governance and internal
controls. Primarily identified as a consequence of franchise matters in LSER and International Rail, the Board committed to a series of
improvements, including Board and leadership changes, improvements in bid investment decision making and ongoing contract
compliance monitoring. Whilst progress has already been observed throughout 2022, such as the refreshed management team in
Germany and the enhanced governance structure in GTR, the Board is cognisant that further improvements are required and that
these will continue to be of focus in the coming year. The impact of the new leadership team will take time to embed and the change of
ownership of the Group will also bring a fresh perspective to the control environment.
During the year, the Board approved a new operating model aimed at better understanding and challenging value creation in the
operating companies with the implementation of a simple set of digitalised key performance indicators bringing more transparency
and consistency of interpretation. This devolved model and a number of key processes will be optimised to strengthen governance
with the role of the Group and operating companies having more clearly defined responsibilities going forward.
Reflecting the reviewed devolved model, the Board also approved a new governance framework under which freedoms,
accountabilities and individual/collective responsibilities have been more clearly defined and local leaders empowered and equipped
to deliver for their companies, customers, stakeholders and the Group. The new framework optimises the benefits of our scale and
enables the effective co-ordination and focus of change and innovation. Governance bodies within the Group have been strengthened
to ensure more transparency and collaboration with new platforms and forums facilitating the sharing of information and driving
improvement. The opportunity has also been taken to harmonise existing core policies, processes and tools which are now aligned to
the optimised devolved model.
Shorter monthly operating company board meetings have been replaced with longer quarterly and deep dive review meetings. In GTR,
board meetings continue to be held on a monthly basis, with longer deep dive review meetings held every quarter. The Group’s Audit
Committee Chair was appointed to the board of GTR with effect from 1 April 2022, the date of the new National Rail Contract, and
provides a clear line of sight to the Group Audit Committee and Group Board.
As set out on page 51 of the Risk Management section, risk reviews with local senior management now take place quarterly instead of
every six months, and these reviews are supported by more robust procedures and documentation around risk identification,
mitigation and reporting. A summary of the risk and control framework and its effectiveness is set out in the Strategic Report on pages
51 to 53.
Investment approval process
During the year the Board reviewed the Group’s investment approval process with this being the first area optimised to reinforce the
new approach to governance. New rules of investment for tenders, acquisitions and capital expenditure, including clearly defined
thresholds for investment validation committees and delegations of authority, were set to better manage risks and an independent
challenge team was created to challenge the financial, technical and legal assumptions of the projects.
Dividend
In conjunction with the business review, the Board resolved to reinstate its pre-COVID-19 dividend policy of paying a dividend to
shareholders equivalent to between 50 per cent and 75 per cent of earnings per share (pre-exceptional items) and intended to
recommend a dividend of not less than 50p in respect of the financial year ended 2 July 2022. Under the terms of the Scheme of
Arrangement between Go-Ahead and Bidco, which became effective on 10 October 2022, the Board subsequently resolved to pay an
increased special dividend of 100p per share in lieu of the financial year ended 2 July 2022 and, on the 29 November 2022, an additional
dividend of 37p per share was paid. In reaching these decisions, the impact on shareholders and other stakeholder groups, particularly with
regard to the Scheme of Arrangement, remained at the forefront of the Board’s considerations and discussions.
Corporate governance
Governance continued
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72
Board activities continued
Climate change
Climate change has remained a key focus area for the Board during the year. The Group Chief Executive is ultimately responsible for
delivering the Group’s climate change strategy and leads discussion on climate change response, risks and opportunities at Board
meetings. A governance framework has been put in place specifically for climate change which supports clear accountability and
transparent reporting structures.
The Board acknowledges the importance of working in collaboration with governments, partners and suppliers in order to deliver the
strategy and is responsible for monitoring performance against the targets set. The Board’s latest review, which took place in July
2022, concluded that the Group continues to effectively deliver our climate change strategy and remains on track to deliver CO2
emissions reduction targets.
During the year, the Board was also updated on the wider workflows underway to strengthen our ESG credentials. Such activities
included engaging with ESG rating agencies, focusing on improving our Carbon Disclosure Project (CDP) rating (currently A-), planning
to develop carbon targets for scope 3 (indirect emissions), planning to refresh materiality assessment, launching a cross-Group
community investment strategy, supporting overseas operating companies with upcoming human rights regulations, the publication
of new sustainability and social value policies and working on new key performance indicators to monitor modal shift. For further
information, please read pages 28 to 48.
Risk reviews
During the year, the Board undertook in-depth risk reviews on cyber security and data protection, and on operations in Germany. These
took the form of presentations by the Group IT Director and the Chief Executive of German operations respectively followed by Q&A
with the Board. This format enabled key developments to be presented by the relevant senior manager and discussed with the Board.
A deep dive review was also performed on the Norwegian rail contractual arrangements with the Group Chief Executive providing an
overview of the main terms and conditions of the renegotiations enabling the Board to make an informed assessment of the risks
involved.
Contract, bids and acquisitions
A key focus area for the Board during the year has been oversight of a number of contracts/bid submissions with discussions centred
on rationale, contract components, profitability, deliverability and key risks and mitigations.
GTR was awarded a National Rail Contract by the Department for Transport which commenced on 1 April 2022. Undertaking an
extensive review of the contract terms formed a key focus area during the year and, in doing so, the Board, GTR board and Govia board
received regular training on NRC contract compliance from external counsel to support each board’s assessment of compliance
requirements.
The Board was also delighted by the acquisition of Flexbuss in Sweden in April 2022 (a bus operator in southern Sweden which runs
local bus routes and school buses and provides medical transfer and charter services). The Board also noted the agreement of an
amended contract between the Norwegian Railway Directorate and Go-Ahead Norway A/S (which became effective from 1 July 2022,
provides a revenue support scheme until the end of the contract and includes an incentive scheme linked to revenue growth), and that
Singapore had been awarded a contract prolongation for three years to 2026.
Post year end, the group has won the first two contracts to be awarded by Transport for Greater Manchester as part of its plan to re-
regulate bus services in the city region under its new Bee Network and has acquired 100% of the issued share capital of both Dartline
Coaches and Southline Buses. Refer to ‘’Post-balance sheet events’’ for further details on page 106.
Board discussions throughout the year also centred on German rail operations. Since his appointment in January 2022, the Chief
Executive of Go-Ahead’s German operations has regularly attended Board meetings, providing an update on progress against
improvement plans in Baden-Württemberg and progress with mobilisation in Bavaria. Additionally, the Board provided oversight of
the robust process followed to review and challenge the preparation of onerous contract provisions. This process included detailed
reviews undertaken by the local German finance team with full sign-off by the German Chief Executive and Finance Directors and an
independent review and challenge process undertaken by a team comprising senior members from the Group Finance and Financial
Planning & Analysis teams in addition to rail specialists who had previously worked in GTR and LSER. Final oversight and review was
provided by the Group Chief Financial Officer. The Board was also updated on the scope and conclusions of independent reviews
commissioned by the Group on the financial models for Bavaria and income model of Baden-Württemberg.
Corporate governance
Governance continued
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73
Board activities continued
Cyber security incident
On 5 September 2022, unauthorised access to Go-Ahead's IT systems was discovered. The Go-Ahead IT team, in collaboration with an
external incident response specialist, acted quickly to contain the incident and restore critical services. As a precaution, steps were
taken to disconnect inbound and outbound data centre traffic, as well as identify and disconnect connections to operational systems.
Improved monitoring and response tools were also installed to detect and stop malicious activities on the IT infrastructure and
network as soon as possible. The police and data protection authorities were notified, and communications were sent to all employees
(including former employees and members of the Go-Ahead pension scheme) outlining the precautionary measures they should take
in relation to personal data. The Board was kept informed from the moment the incident was discovered and on a regular basis
throughout the containment and system recovery processes. The forensic investigation into the root cause has been completed, and a
set of recommendations to improve the cyber security posture has been agreed. Following the incident, Go-Ahead Finance teams
followed procedures to ensure the integrity of financial information, with no data loss or corruption noted. We have been informed by
the ICO that regulatory action is not required in this case. In addition, the PDPC have concluded they will not be taking further action in
relation to the incident. As is customary in these matters both Regulatory Authorities reserve the right to revisit these decisions
should further relevant information become available. We are still engaging with the DPC in Ireland in providing responses to their
enquiries.
How the Board reviews strategy
This year’s annual review of strategy took place in March 2022 and was aligned with the conclusion of the new Group Chief Executive’s
business review. On an ongoing basis, strategy is reviewed at each Board meeting, with the Group Chief Executive providing updates
on performance against strategic objectives and any opportunities arising throughout the year.
Corporate governance
Governance continued
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74
Culture
Cultural framework
The Board is responsible for shaping and monitoring the culture of the Group to ensure it supports our purpose, values and strategy
and is a key driver of performance. A number of key cultural indicators, examples of which are shown in the table below, continued to
inform the Board’s assessment of culture across the Group during the year.
As part of the wider business review, a culture change programme was introduced during the year, the implementation of which is
supported by a cultural roadmap consisting of two phases each with their own articulated high-level deliverables.
The Board will monitor the successful implementation of the culture change programme through regular updates from the Group HR
Director, targets and key performance indicators, annual leadership and pulse surveys and a new personal development review
process. Our new operating model that supports our devolved approach and the senior leadership team in particular will be the most
effective levers of driving and sustaining culture change.
How the Board monitors culture
Cultural indicator
Link to culture
Health and safety performance
KPI reporting on a range of safety metrics enables the Board to assess the
effectiveness of safety practices and behaviours and receive assurance that the
business continues to drive a culture of continuous improvement. For further
information on safety, together with KPIs, see pages 35 to 36.
Workforce and remuneration policies
The Group HR Director’s annual review of policies and update to the Board
provide assurance that policies are consistent with our values, support the right
behaviours and support a healthy culture. See page 39 for information on this
year’s review.
Whistleblowing policies, incidents or matters
of concern
The Board’s review of the whistleblowing policies in place across the business,
and the nature of employee concerns, provides reassurance that policies are
clear and accessible with no adverse trends. The Board is also satisfied that
appropriate arrangements are in place for the proportionate independent
investigation of any such matters together with any follow-up action required.
Colleague experience
Feedback from a number of channels provides the Board with an understanding
of the colleague experience, in addition to reviewing indicators such as
employee engagement index, absenteeism and employee turnover.
Leadership and talent review
Regular updates provided by the Group HR Director enable the Board to
monitor and assess the robustness and diversity of our leadership and talent
pipeline. This is supported by a review of leadership, graduate and
apprenticeship demographics and targets.
Diversity and inclusion policies and targets
The setting of targets and oversight of the programmes and initiatives
underway to support diversity policies enable the Board to see how these
measures demonstrably increase diversity and inclusion across our businesses.
Modern slavery statement
The Board’s annual review of the Group’s modern slavery policy supports its
oversight of the steps taken to prevent modern slavery and human trafficking
across the business and its supply chain.
Stakeholder survey results
Our annual stakeholder survey provides the Board with direct insights into how
our colleagues are perceived by key stakeholders and whether there are any
areas for improvement. This enables the Board to reflect on the decisions it
makes in the context of stakeholder input both prior to and after decisions have
been made.
Other key cultural indicators
The review of other key cultural indicators, such as customer satisfaction survey
results, targets on promptness of payment to suppliers and results of internal
audit reviews further supports the Board’s review of culture throughout the
business.
Corporate governance
Governance continued
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75
Stakeholder engagement
A description of the Group’s key stakeholders and engagement with them is set out on pages 25 to 27 of the Strategic Report.
Board consideration of stakeholder interests
The Board has a meaningful programme of stakeholder engagement. Aimed at identifying and understanding the views of all of our
key stakeholder groups, it ensures that their interests are always considered when decisions are taken.
We engage with our stakeholders in different ways including surveys, newsletters and events. Formal feedback is presented to the
Board biannually. Whilst the executive directors typically lead on the interface, the Chair and other non-executive directors also have
opportunities to talk directly with stakeholders.
At the heart of this programme is an annual stakeholder survey which first began in 2016. This year the survey was conducted for all
our UK bus companies (except Go-East Anglia), Go-Ahead Ireland and Go-Ahead Singapore. A separate stakeholder survey was
conducted for GTR.
The stakeholder survey is conducted by an independent specialist insight agency using a consistent research methodology which
enables us to track trends over time. This year’s survey included bespoke questions on COVID-19, climate change strategy and
strategic initiatives such as mobility hubs. It also provided helpful insights into key themes such as perception, reputation, service
performance and relationship and engagement.
The Board was reassured that, with a few exceptions, the positive sentiment across the business continued from previous years, with
the general consensus being that operating companies were professional, reliable and responsive.
The Board understands the importance of assessing the effectiveness of its engagement strategies. The Company works in
collaboration and partnership with all our stakeholders which has the benefit of ensuring that ongoing dialogue is maintained
throughout the year.
Approach to workforce engagement
During the year, Harry Holt was the non-executive director designated to review and support workforce engagement across the
business. Having fulfilled a number of senior executive positions at Rolls-Royce, including the role of Chief People Officer, the Board
deemed Harry to have the depth of experience and skills suitable for the role.
Supported by the Group HR Director and Group Company Secretary, Harry undertook an annual review of the effectiveness of the
arrangements in place to provide the Board with assurance that its approach remained effective and provided a genuine means of
two-way engagement with the workforce.
This year, following the outputs of the business review, culture, devolved model and governance workstreams, an opportunity arose
for the Board to consider how its overall approach to workforce engagement could be strengthened.
2021 annual workforce policy and engagement update
In December 2021, the Group HR Director provided the Board with a summary of the annual workforce and remuneration policy review
and process. This had been undertaken across the business and highlighted that the future focus would be on developing a
harmonised policy framework which allowed for some flexibility for individual operating company policies within their highly unionised
working environments. Through this review, the Board concluded that workforce and remuneration policies and practices were
consistent with the Group’s values and supported its long term sustainable success.
During the year, the Board reviewed the results of pulse surveys, further details of which are provided on page 37. The Board also
discussed the key themes that mattered most to colleagues around the business during the year ended 2 July 2022, which broadly
included operational issues, COVID-19 recovery, engaging with trade unions, health, safety and wellbeing, leadership and
communication and working together.
Further information on how and why we engage with our workforce and the key topics raised during the year, together with examples
of how we responded, can be found on page 25.
Corporate governance
Governance continued
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76
Stakeholder engagement continued
Customers, strategic partners and suppliers, government and communities
The pandemic has emphasised the importance of public transport services to our customers, communities and society. Engaging with
our customers enables us to provide safe, convenient and reliable services that serve our local markets and communities. As the
independent Transport Focus customer satisfaction surveys were paused in spring 2020, the Board reviewed the results of the surveys
undertaken by our individual operating companies to ensure that we have up to date insights from our customers that help shape our
decisions to support our communities effectively.
We have continued to work closely and collaboratively with our key partners, regulators and supply chain to ensure that service
provision remains at the right level and that suitable funding is received to enable essential services to continue to be delivered.
The majority of this engagement is through the Group Chief Executive and members of the senior leadership team, particularly in
relation to the operation of our bus and rail services, and in shaping the policy landscape within which the business operates. The
Board receives regular updates on matters such as government strategy and funding, policy changes, contract negotiations, existing
contract performance and changes in regulation or legislation that are relevant to the business.
During the year, the Group has sought to maintain an open, collaborative and constructive engagement with the DfT to help resolve
the identified LSER franchise matters of concern. For further information on the Board’s response together with actions taken to better
safeguard and assure compliance obligations of complex rail contracts, please see the Chair’s statement on pages 3 to 5 and Board
activities on pages 70 to 73.
Investors
The Board maintained an open dialogue with its investors to ensure that their feedback informed decision making. This was achieved
through a programme of structured engagement. The executive directors engaged regularly with investors linked to the reporting
cycle and, this year, more frequent discussions took place between the Chair and shareholders. Topics of focus included the situation
relating to the Southeastern rail franchise, succession and leadership changes, and the offers made for Go-Ahead (which resulted in
shareholder approval of the offer made by the Consortium comprising Kinetic TCo Pty Limited and Globalvia Inversiones S.A.U). During
the year, the Board received regular updates on investor sentiment. As reported last year, Leanne Wood, Remuneration Committee
Chair, also carried out a consultation exercise with our major shareholders and proxy voting agencies on our new directors’
remuneration policy, which was approved by shareholders at the General Meeting in March 2022. More details of this process and the
outcome of our engagement are available within the 2021 Directors’ Remuneration Report on pages 108 to 142.
Corporate governance
Governance continued
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77
Evaluation
Board effectiveness review
For the year ended 2 July 2022, an internally facilitated review of the performance of the Board and its committees was undertaken.
Using Independent Audit Limited’s new board effectiveness review software, each director completed a questionnaire for the Board
and each of the committees of which they were a member. Automated reports were then received and discussed at the respective
Board and committee meetings. This process was supplemented by the Chair having a one to one discussion with each director on
their personal performance and any training or development needs. The Senior Independent Director appraised the Chair’s
performance.
The outcome of this review was that the Board and its committees continued to perform effectively, with each director having
sufficient time, knowledge and commitment to contribute to the long term sustainable success of the business. In particular, the more
recent changes to Board composition and progress against all of the actions identified in last year’s review had improved overall Board
effectiveness. The Board and Audit Committee in particular will continue to focus on these key areas over the year ahead and take the
relevant learnings forward as appropriate Board protocols are established under our new ownership.
The Board’s last external evaluation was facilitated by Independent Audit Limited for the year ended 27 June 2020.
Corporate governance
Governance continued
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78
Division of responsibilities
Our governance framework
Set out below is a summary of the Group’s governance framework during the year ended 2 July 2022.
Board
The Board is collectively responsible for creating and delivering long term sustainable value for the business. The main
responsibilities of the Board during the year are set out below:
• Strategic direction, purpose and values
• Decision making in accordance with
Section 172
• Risk management and risk appetite
• Health and safety
• Environmental, social and governance
factors
• Culture and reputation
• Cyber security
• Corporate plan and KPIs
• Financial reporting and dividends
• Climate change
• Stakeholder engagement
• Contracts, bids and acquisitions
• Board development and effectiveness
• Non-executive director fees
• Oversight of Group’s response to major
crises and other significant challenges
Board committees
During the year, the Board delegated authority for specific matters to the Nomination, Audit and Remuneration Committees. Each
Committee Chair reported to the Board on their respective committee’s activities after each meeting, making recommendations to
the Board as appropriate. The main responsibilities of each committee during the year are set out below:
• Nomination Committee
• Board and committee composition,
structure and size
• Succession planning
• Board appointments
• Diversity and inclusion
• Time commitments and independence
Read more on pages 81 to 82
• Audit Committee
• Financial reporting
• Risk management and internal controls
system
• Health and safety auditing
• Internal audit
• External audit
Read more on pages 83 to 89
• Remuneration Committee
• Design and implementation of
remuneration policy
• Consideration of exercise of discretion
• Determination of executive and senior
leadership remuneration
• Chair fees
Read more on pages 90 to 105
Executive Committee/Investment Committee
Under the new operating model, as explained on page 71, responsibility for the day-to day management of the Group’s activities and
oversight still resides with the executive directors. They are supported in this role by the newly reshaped Group Executive
Committee/Investment Committee which is headed by the Group Chief Executive and comprises the Group Chief Financial Officer,
Group Strategy and Transformation Director, Group HR Director, Managing Directors of UK Rail, London & International Bus and UK
Regional Bus, and Group Company Secretary. The Executive Committee/Investment Committee oversees implementation of Group
strategy, allocates financial and human resources, and oversees and provides support to the bus and rail businesses.
Independent Challenge Team
A newly established Challenge Team comprising members of the Group’s Strategy and Transformation, Finance, Legal and, on
occasion, Corporate Services teams brings diversity of voice, backgrounds and experience facilitating different perspectives and fresh
thinking into the decision making process.
Devolved structure
The Group Executive/Investment Committee is supported by a senior leadership team comprising individuals responsible for key
centralised Group corporate functions and the managing directors of each operating company, who are encouraged and empowered
to manage our operating companies as autonomous business units. Further details of our senior leadership team and operating
company managing directors can be found on our website.
The executive directors formally meet with the senior leadership team on a regular basis, through local operating company, Group
Executive/Investment Committee and senior leadership team meetings. These more formal meetings are supported by several cross-
business forums that serve to facilitate the sharing of knowledge, ideas and best practice. These meetings and forums are an essential
part of the Group’s devolved management approach, facilitating quality discussion and decision making while also preserving the
management and autonomy of local operations within the Group’s values and behaviours. We believe that this approach encourages a
good balance between local and Group initiatives and facilitates the sharing of best practice and expertise across the Group.
Corporate governance
Governance continued
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79
Division of responsibilities continued
Roles and responsibilities
During the year ended 2 July 2022, there was a clear division of responsibilities on the Board which ensured accountability and
oversight. The roles of the Chair and Group Chief Executive are separately held and their responsibilities are well defined, set out in
writing, and regularly reviewed by the Board. A summary of the responsibilities of the Chair, Group Chief Executive and Senior
Independent Director are set out below.
Group Chair
• Leads the Board and demonstrates objective judgement
• Advocates the highest standards of corporate governance
• Sets the agenda and drives Board effectiveness
• Promotes a culture of open and constructive debate
• Engages with stakeholders and ensures their views are understood and considered appropriately in Board decision making
• Ensures Board decisions are taken on a sound and well-informed basis
Group Chief Executive
• Responsible for the day-to-day management of the Group and the Group’s performance
• Leads the senior leadership team, including development and succession planning
• Promotes the Group’s purpose, vision and culture agenda
• Ensures the development and execution of strategy, with responsibility for the Group’s overall performance
• Facilitates effective two-way communication between the Board, the business and the workforce
• Represents Go-Ahead externally to all stakeholders
Senior Independent Director
Following completion of the Scheme of Arrangement, the Senior Independent Director stepped down from the Board. The
responsibilities of this role were acting as a sounding board for the Chair, appraising the Chair’s performance and acting as an
intermediary for other directors and shareholders, if needed. These responsibilities were in addition to fulfilling normal non-executive
director duties of:
• Contributing to strategy development
• Scrutinising and challenging management’s execution of strategy within the Group’s risk appetite and control framework
• Providing support to the executive directors through external perspective and experience
• Serving on Nomination, Audit and Remuneration Committees
Board decision-making framework
Go-Ahead’s culture ensures that there is a proper consideration of the potential impact of decisions. As a matter of course, Section 172
matters are considered in the Board’s discussions on strategy, including how they underpin long term value creation and the
implications for business resilience. The Board oversees the implementation of decisions taken. Annual Board strategy meetings,
effectiveness reviews, post-investment reviews and lessons learned provide the opportunity for reflection.
The Board’s general approach to decision making is facilitated as follows:
Board and committee meetings
The Board agenda is set in collaboration between the Chair, Group Chief Executive and Group Company Secretary. The Board’s
Forward Planner supports meeting agenda content over the year to ensure that time is balanced between different elements of
strategy and operational performance, as well as the Board’s wide-ranging governance and regulatory responsibilities.
Ensuring there is sufficient time allocated to key strategic decisions is an important consideration for the Chair, to enable directors to
discharge their duties fully and effectively.
There is a clearly defined schedule of matters reserved for the Board and the Group Company Secretary ensures all Board procedures
are complied with. To allow directors to utilise their time and skills effectively at Board meetings, papers are circulated securely and
electronically to all directors a week before each meeting.
During the year, members of the senior leadership team and advisors were invited to attend and present at meetings, providing the
non-executive directors with a broader perspective and insight.
Corporate governance
Governance continued
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80
Division of responsibilities continued
Board decision-making framework continued
Board and committee meetings continued
Informal meetings and Board dinners are held usually either before or after Board meetings. Unscheduled meetings are held as required
where topics warrant more time or decisions need to be made outside of the normal cycle of meetings.
Each director is expected to attend all meetings of the Board and of those committees on which they serve and is required to devote
sufficient time to the Group’s affairs allowing them to fulfil their duties effectively.
Board training and development
The Board believes that continuous director training and development supports Board effectiveness. With the ever-evolving
regulatory and policy landscape in which the Group operates, it is critical that the Board maintains a good working knowledge of the
transport sector and how the Group operates within this sector, as well as being aware of recent and upcoming developments in the
wider legal and regulatory environment.
Directors are encouraged to be proactive and identify areas where they would like additional information to ensure that they are
adequately informed about the Group.
The Board confirms that all members have the requisite knowledge, ability and experience.
Information and support
The Board is supplied with high quality information, presented in a form designed to enhance Board effectiveness. During the year, the
Board continued to operate in accordance with its comprehensive Board Procedures Manual, which includes formal procedures for the
working of the Board and its committees within the governance framework, delegated authorities, the timely provision of appropriate
information and the duties and responsibilities of directors, including standards of conduct and compliance.
The Board also had access to a dedicated online resource centre portal, containing Board related policies, reference documents and
training and support materials.
Directors have access to the advice and services of the Group Company Secretary and may also take independent legal and/or
financial advice at the Group’s expense when it is judged necessary in order to discharge their responsibilities effectively.
Board induction programme
All new directors receive a tailored induction programme either shortly before or upon joining the Board. This programme ensures that
new Board members have a full understanding of the business and their responsibilities and duties as directors so that they can be
effective in their roles. The Chair and the Group Company Secretary agree the personalised induction plan, which is designed for each
individual, taking into account their existing knowledge, specific areas of expertise and proposed committee appointments.
Corporate governance
Nomination Committee Report
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81
Board composition and succession
Composition of Committee
As at 9 October 2022, being the day prior to the Scheme of Arrangement between Go-Ahead and Gerrard Investment Bidco Limited
becoming effective, the Nomination Committee comprised the Committee Chair (Clare Hollingsworth) and four independent non-
executive directors (David Blackwood, Dominic Lavelle, Harry Holt and Leanne Wood). By invitation, the executive directors and Group
HR Director attended some meetings, with presentations from external advisors as appropriate.
Meetings
Attendance at Committee meetings can be found on page 69.
Overview of responsibilities
During the year, the Committee operated in accordance with its terms of reference which were reviewed and approved by the Board.
Key responsibilities were as follows:
Board composition and succession planning
During the year the Committee kept under review the size and structure of the Board with succession planning continuing to be a key
priority. The following changes took place to the Board’s composition:
• Following retirement of David Brown in late 2021, Christian Schreyer was appointed as the new Group Chief Executive, full details of
which were set out in last year’s Nomination Committee Report
• David Blackwood and Dominic Lavelle were appointed as non-executive directors in January 2022, succeeding Adrian Ewer as Senior
Independent Director and Audit Committee Chair respectively. The step taken to separate the roles of Audit Committee Chair and
Senior Independent Director added greater non-executive capacity and therefore greater robustness and independence to the roles
and responsibilities of the Board. The Audit Committee Chair was also appointed to the board of GTR to provide a clear line of sight
to the Audit Committee and Board
• Sarah Mussenden was appointed as Group Chief Financial Officer in May 2022, succeeding the Interim Group Chief Financial Officer,
Gordon Boyd
Biographies for each Board member during the year can be found on pages 66 to 67 including the relevant skills, experience and
contributions to the roles. Details of Board changes following the year end can be found on page 68.
Appointment process and time commitments
During the year, the Group engaged Odgers Berndtson (OB) to assist with the search that led to the appointments of the new Board
members above. OB was engaged because of its strong credentials, knowledge of the business and cultural fit, in addition to its ability
to access a diverse pipeline of talent.
For each appointment, a detailed role specification was agreed and used to produce an initial long-list of candidates. A short-list of
candidates was then taken through to the next stages which included fireside chats with the Chair, first stage interviews with a sub-
committee of the Committee and then final preferred candidates meeting the wider Committee.
Prior to appointment to the Board, any significant time commitments were required to be disclosed and approved by the Committee.
The letters of appointment for the Chair and non-executive directors also set out expected time commitments to the Board, with any
additional external appointments following appointment requiring prior approval by the Board. A full list of external appointments
held by our directors during the year ended 2 July 2022 can be found on pages 66 and 67.
Corporate governance
Nomination Committee Report continued
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82
Leadership and talent succession planning
A key area of focus for the Committee continued to be overseeing the executive talent pipeline and senior leadership succession
plans.
The Committee supported the reshaping of the Group Executive Committee which emerged from the Group Chief Executive’s
business review with the new set of values and behaviours, which underpin Go-Ahead’s renewed purpose and the Group’s new
business model, providing further clarity and focus for leadership.
The Committee was also briefed on the initiatives underway to support, develop and retain the senior leadership team as well as
attract new talent into the business. This included updates on the extensive work being carried out across the business to improve
ethnic and gender diversity. Importantly our graduate and apprenticeship schemes continue to deliver a good supply of increasingly
diverse talent. More details about the initiatives underway are included on pages 37 to 39.
Diversity and inclusion
The Board Diversity Policy, which is reviewed on an annual basis, sets out the approach towards inclusion and diversity for the Board of
directors of the Group and this policy sits alongside the Group’s wider inclusion and diversity policy and initiatives which seek to have
a workforce reflecting the diversity of the communities we serve.
The Board recognises the benefits of having an inclusive and diverse Board, seeing it as an essential element of its strategy and
building competitive advantage. It is the Board’s belief that a diverse Board with different perspectives enhances the quality of debate
and decision making to the benefit of all stakeholders. The objective of the policy is to maintain a Board whose membership reflects as
broad a combination of skills, experience, age, disability, ethnicity, gender, sexuality, education and social background as possible.
The Board Diversity Policy has been implemented by ensuring that the terms of reference of the Committee reflect diversity in the
criteria for identifying suitable candidates for nomination to the Board. The policy is also reflected in the Committee’s discussions with
external search consultancies in any search process for a new director.
We consider that our policy in respect of Board diversity has remained effective during the financial year ended 2 July 2022.
In addition to Board diversity, the Group believes in promoting diversity and inclusion at all levels of the organisation. During the year,
the Committee welcomed the key areas of focus to deliver the Group’s wider diversity and inclusion strategy and the examples of the
range of initiatives underway across the business, further details of which are provided on pages 37 to 39.
Gender pay gap
The Committee annually reviews the Group’s gender pay gap data and the strategies in place to recruit more women into all positions
throughout the business. As at the date of our 2021 Gender Pay Gap Report, the median pay gap was 7.5 per cent and 21.8 per cent
across our UK bus and rail businesses respectively against the national average median pay gap of 10.4 per cent in the UK. For further
detail on the 2021 Gender Pay Gap Reports, please go to https://www.go-ahead.com/our-people/gender-pay-gap-reporting.
Board and committee effectiveness
For details of the internal effectiveness review undertaken for the Board and committees for the year ended 2 July 2022, please see
page 77 of the Corporate Governance Report.
Corporate governance
Audit Committee Report
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83
Audit, risk and internal control
Purpose
The Committee has been established by the Board primarily for the purpose of overseeing accounting, financial reporting, the role and remit
of our Internal Audit function, internal control and risk management processes and the external audit of the Group’s financial statements.
Composition
As at 9 October 2022, being the day prior to the Scheme of Arrangement between Go-Ahead and Gerrard Investment Bidco Limited becoming
effective, the Audit Committee comprised the Committee Chair (Dominic Lavelle) and three independent non-executive directors
(David Blackwood, Leanne Wood and Harry Holt). Dominic Lavelle has recent and relevant financial experience. Committee members
are considered to have the appropriate range of financial, commercial and sectoral competence. Detailed information on their relevant
skills, experience and contributions can be found on pages 66 and 67. Committee membership changed following the purchase and
delisting of the Group’s shares, but the Committee will continue to meet for the purposes outlined above for the foreseeable future.
The Chair, Group Chief Executive, Group Chief Financial Officer, Group Financial Controller, Group Head of Internal Audit, Group Safety
Lead and external auditor are regularly invited to attend Committee meetings. The Committee Chair holds additional pre-Committee
meetings with the Group Chief Financial Officer, Group Financial Controller and external and internal auditors in preparation for the
forthcoming meeting. At least annually, the Committee meets privately with the external and internal auditors without the executive
directors or management present.
Meetings
Committee meetings usually take place immediately prior to Board meetings. Attendance at Committee meetings can be found on page 69.
Overview of responsibilities
During the year, the Committee operated in accordance with its terms of reference which were reviewed and approved by the Board.
Key responsibilities were as follows:
External audit and financial reporting
• Reviewed the 2021 Annual Report and Accounts, ensuring information was fair, balanced and understandable
• Monitored the continued recovery from the impact of COVID-19
• Reviewed the impact on the 2022 Annual Report and Accounts of the movements in the onerous contract provisions for rail
contracts in both Germany and Norway
• Considered findings of the independent review and settlement of LSER matters of concern (as detailed in the 2021 Annual Report
and Accounts)
• Considered prior year adjustments, misstatements and related control issues and ensured appropriate mitigations and
improvements in processes and controls for the current year end
• Monitored the integrity of the Group’s financial statements including related regulatory news announcements
• Reviewed significant financial reporting judgements and estimates made by senior leadership
• Reviewed the going concern assessment
• Reviewed the external auditor’s remuneration, terms of engagement and reappointment
• Monitored the independence, objectivity and effectiveness of the external auditor
• Approved the use of the external auditor for non-audit services in line with policy
• Commenced audit retender process
• Reviewed external auditor and senior leadership reports on half and full year results
• Monitored progress of preparation and filing of subsidiary statutory annual accounts
Risk management and internal controls
• Reviewed the effectiveness of risk management and internal control procedures
• Assessed the Group’s principal and emerging risks
• Reviewed the impact of the settlement of the LSER matters of concern and the subsequent finalisation of the amounts in the current
year Group financial statements
Corporate governance
Audit Committee Report continued
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84
Overview of responsibilities continued
Internal audit including health and safety
• Considered and reviewed reports from the co-sourced internal audit function (PricewaterhouseCoopers LLP (PwC), Ernst & Young
LLP (EY) and the Group Internal Audit team) on the Group’s financial controls, disclosures and accounting and fraud risk assessment
policies and processes
• Reviewed results of health and safety audits across the business, benchmarking against international and best practice standards
• Reviewed the effectiveness of the Internal Audit function
• Agreed a new three-year internal audit plan
Cyber security
Following year end, a major cyber security incident was identified and was a critical focus area for the Board. Further information is
provided in the Board activities section of the Corporate Governance Report.
Significant issues and judgements
Significant accounting issues, judgements and estimates are reviewed at the half year and full year Committee meetings. The matters
considered by the Committee to be significant for the 2022 Annual Report are set out in the following table. These were subject to
robust challenge and debate between the executive directors, management, the external auditor and the Committee.
Key financial matters for 2022
How the Committee addressed these key financial matters
Review of the accounting
treatment of income and costs
arising from franchise
agreements in the rail
components of the Group.
See pages 148 and 149 for more information
The Committee regularly reviews the accounting policies relating to income and costs arising
from franchise agreements and considers a range of reasonably probable outcomes. At interim
and year end reviews, a full schedule of material income statement and balance sheet figures is
assessed against the Committee’s expectations and discussed with the executive directors and,
where appropriate, the external auditor.
The Committee also considered the accounting for rail as a consequence of the Emergency
Measures Agreement and Emergency Recovery Measure Agreement and the new National Rail
Contract in GTR and agreed with the treatment that was applied including the assessment and
recognition of performance bonuses.
Assessment of settlements and
associated accounting
treatments in connection with
the old Southeastern franchise,
including the settlements of
financial penalty.
The Committee reviewed the final settlements agreed with the Department of Transport (DfT)
in respect of the LSER matters of concern and items in commercial dispute. Where appropriate,
independent advice was sought to inform the Committee. Having considered the findings of the
Independent Committee, the Committee agreed with management’s proposed accounting
treatment and related disclosures.
Under the Railways Act 1993, the DfT imposed a financial penalty of £23.5m. In the prior year, in
the absence of a specific precedent or relevant guidance, it was difficult to estimate precisely
the likely quantum of any penalty. The Group, having considered independent legal advice,
included a provision for £30.0m. The difference, a £6.5m credit, has been included as an
exceptional item in the financial statements of the year.
Ongoing review of provisions for
liabilities, specifically relating to
third-party claims, lease return
and dilapidation provisions for
rolling stock, stations, depots and
other properties and
measurement of uninsured
liabilities.
See note 24 of the consolidated financial
statements
At interim and year end, the levels of provision for third-party claims, lease return and
dilapidation provisions are reviewed with the Committee. This also included the decision by the
DfT to award GTR a National Rail Contract on 1 April 2022 and the amounts that are still subject
to agreement in relation to dilapidations for both depots and rolling stock. Management’s
review is supported by reports from appropriate third-party experts who independently assess
the required provision based on their industry knowledge and an understanding of the Group’s
specific circumstances. Specific legal advice is also taken, where appropriate, in relation to third-
party claims such as boundary fare claims. Increases in provisions, utilisation and release of
provisions are all reviewed for reasonableness in light of these reports and the Group’s specific
circumstances and having considered the proposed provisions and their reasonableness the
Committee agreed with management’s proposed treatment and disclosures.
Impairment testing in respect of
the value of goodwill and tangible
and intangible assets on the
Group and company only
investments.
See note 14 of the consolidated financial
statements
The ongoing review of goodwill, tangible and intangible assets and carrying value of investments,
as presented by management, is reviewed and challenged, as necessary, by the Committee.
The assessment is done by assessing the expected performance of the individual cash
generating units and ensuring that relevant risk factors are imputed to the rate of return used to
assess net present value of future cashflows. The Committee also reviews historical
performance against expectations set in previous years. Having considered the reviews
undertaken and financial projections, including the valuation of the takeover, the Committee
was satisfied that the process followed, and the accounting treatment were appropriate.
Corporate governance
Audit Committee Report continued
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85
Key financial matters for 2022
How the Committee addressed these key financial matters
Prior year adjustment relating to
asset backed pension scheme.
As part of the impairment review carried out above, a review of the investments and
intercompany receivables were also undertaken, which identified historical errors in the
treatment of pension scheme assets in the Parent Company balance sheet.
The Committee has reviewed the re-statement along with independent advice in relation to
both the assessment of the fair value of the pension asset and the associated tax treatment. The
Committee is satisfied with the process followed and the resulting accounting treatment.
Assessment of the Group’s
German rail contracts and
carrying value of associated
assets.
See note 7 of the consolidated financial
statements
The German business commenced the operation of its rail services in June 2019 in Baden-
Württemberg with a further contract in Bavaria going live in December 2021. The remaining
contract commenced in December 2022.
Whilst initial operating losses were planned due to the initial ramp-up of services, the level of
operating losses continues to be higher than was originally expected. In line with IAS 36 and IAS
37, an assessment of the carrying value of assets and future contract liabilities has been
performed both at the half and full year with a full review of the future forecast and operational
plans to assess whether the contracts are onerous in nature. The Committee challenged the
controls for the preparation of the onerous contract provision, enhancing some of the steps
from previous years. This included several stages of review and challenge at both Divisional and
Group level, and the utilisation of third-party experts as appropriate.
Whilst one of the contracts in Bavaria had yet to commence at year end and the other contract
has just recently started, due to market changes, clarity gained regarding matters with the local
rail authorities and experience obtained since the recent start of operations, there was a need to
update the assumptions made in the original bid and in past forecasts.
During the year, we performed a full detailed review of all material contracts across the Group to
consider the completeness of the onerous contract provisions. This involved a detailed review
and challenge of the assumptions within each contract.
As a result, it has been determined that an increase of £41.1m in the provision is required, of
which £36.0m has been recognised as an exceptional operating charge in the year ended 2 July
2022. It was also identified that some of the assumptions and modelling errors applied to the
German Bavarian 2020 model were incorrect and therefore a prior year adjustment was
recognised as a result. The impact of this adjustment is to decrease the 2021 opening reserves by
£5.1m and increase the value of the onerous contract provision by £5.1m.
The Committee considered and challenged the inputs of these models and cashflow forecasts as
presented by management and considered the appropriateness of the resulting disclosure with
reference to IAS 1. The Committee also considered and challenged the changes in judgements in
the models made for the FY2022 year end in line with IAS 8.
Corporate governance
Audit Committee Report continued
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86
Key financial matters for 2022
How the Committee addressed these key financial matters
Assessment of the Group’s
Norwegian rail contracts and
carrying value of associated
assets.
See note 7 of the consolidated financial
statements
The Norwegian business commenced the operation of its rail services in December 2019.
Under the original contract, which began in December 2019, the revenue risk associated with
changes in passenger demand rested with Go-Ahead. During the COVID-19 pandemic, the
Norwegian Government provided financial support to rail operators, preventing material losses.
The ongoing impacts of COVID-19 and the levels of Norwegian Government support triggered a
requirement to update the assumptions made in the original bid.
An amended contract takes effect from 1 July 2022 and runs for the duration of the original
contract, until December 2027 (plus a two-year extension option until December 2029). The
contract provides a revenue support mechanism until the end of the contract. The contract also
includes an incentive scheme linked to revenue growth. As a result of these improved
contractual arrangements, the onerous contract provision has been reassessed and has
significantly decreased.
In line with IAS 36 and IAS 37 an assessment of the carrying value of assets and future contract
liabilities has been performed post-year end to assess whether the contract is onerous in nature.
As a result, it has been determined that a decrease of £51.6m in the provision is required, which
has been recognised as an exceptional operating credit in the year ended 2 July 2022.
The Committee considered and challenged the inputs of these models and cashflow forecasts as
presented by management and considered the appropriateness of the resulting disclosure with
reference to IAS 1.
The Committee also considered and challenged the changes in judgements in the models made
for the FY2022 year end in line with IAS 8.
As disclosed on page 211 there are subsequent discussions with the RD in relation to the
contract. The committee has made appropriate challenges and assessment as part of their
processes.
Assessment of the available
resources to support the going
concern assumption.
See page 49 to 50 for more information
The Committee reviewed and challenged management’s forecasts and the impact of various
possible downside scenarios including reverse stress assumptions. These took account of the
recovery for COVID-19 on passenger volumes, the availability and duration of government
funding measures and the impact on the Group’s funding arrangements and associated ring-
fencing measures as a result of a change of control following the takeover of the Group.
In undertaking this evaluation and the sources of liquidity available, including ring-fencing of the
Group facilities and the extension of the facilities in the new parent, the Committee concluded
that existing debt facilities would continue to be available.
Following the review, which the Committee carried out at its meeting in January 2023, the
Committee recommended to the Board the adoption of the going concern statement for
inclusion in this Annual Report.
Assumptions underpinning the
calculation of the Group’s defined
benefit pension liabilities.
See note 28 of the consolidated financial
statements
Pension scheme liabilities are assessed on behalf of the Group by independent actuaries.
Additionally, management reviews and challenges the underlying assumptions with other
professional advisors to ensure that the actuaries’ own assumptions are appropriate for the
Group. The Committee also discusses the appropriateness of the assumptions with the Group’s
external auditor.
Corporate governance
Audit Committee Report continued
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87
Key financial matters for 2022
How the Committee addressed these key financial matters
Understanding and treatment of
separately disclosed items in the
year end accounts.
See note 7 of the consolidated financial
statements
The Committee has considered separately disclosed items in the light of the FRC
recommendations of a balanced and consistent approach. The Committee is mindful of the need
to understand the underlying trends of each division within the business with the impact of large
and unusual items separated out as necessary to avoid distortions from such non-recurring
aspects.
For each item, the Committee has considered the judgements made by management,
considering each item in isolation, as well as the aggregate view of the impact on both
alternative performance measures and statutory profits. In addition, the Committee considers
and takes account of any bias towards recording items as exceptional which may have an impact
on the covenant reporting.
The Committee agreed it was appropriate to treat as exceptional the onerous contract
provisions relating to International Rail, and the settlement of the financial penalty and
associated matters of concern in relation to LSER.
Whilst the Committee considered the treatment of Stadler settlements in Germany and pre-
EMA settlements in GTR, it was determined that they should not be treated as exceptional
because material contractual settlements such as these, are not uncommon in the normal
operation of these businesses and losses relating to Germany from the Stadler issues had been
not been taken as exceptional when they arose.
Costs relating to the takeover of the Group have also been treated as exceptional. This
treatment has been applied in line with the Group’s accounting policy for exceptional items.
Ensuring operating company
compliance with Group policies
and procedures and maintaining
the required financial control
environment.
The Committee, with input from the executive directors, approves the remit, scope and three-
year plan of internal audit including the cycle of visits to test operating company compliance and
financial controls, based on a risk assessment. The results of the internal audit visits are
considered by the Committee, together with management’s responses to any improvement
points. Control matters and reporting issues identified as part of the external auditor interim and
year end audits are also reviewed by the Committee, which considers the adequacy of any
management responses which, in particular, were in respect of IT controls during the year ended
2 July 2022. In addition, management ensures that the recruitment and review process for
operating company directors gives confidence in the calibre of the operating company teams
and their management, and the control environment in which they operate.
Corporate governance
Audit Committee Report continued
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88
Risk management and internal controls
As reported in the previous year, the Board identified a number of areas to enhance the Group’s corporate governance and internal
controls. Primarily identified as a consequence of franchise matters in LSER and International Rail, the Board committed to a series of
improvements, further information of which can be found in the Chair’s statement and Corporate Governance Report.
During the year, and in light of the award to GTR of a National Rail Contract, the Committee Chair and the Group Chief Financial
Officer were both appointed to the board of GTR to strengthen the Committee’s oversight of risk management and internal control
within that business. In addition, GTR's internal audit function, including NRC compliance, was placed under the oversight of the Group
Internal Audit function. The Committee considered and approved separate Group and GTR internal audit plans for FY2023, with NRC
non-compliance forming a key part of GTR's FY2023 plan.
Throughout the year, the Committee monitored the Group’s risk management and internal control systems by receiving regular
internal audit reports and holding meetings with the Head of Internal Audit. A summary of the risk and control framework and its
effectiveness is set out in the Strategic Report on pages 51 to 64 together with the Board’s assessment and description of the Group’s
principal risks, procedures to identify emerging risks and an explanation of how risks are mitigated and how the mitigating controls are
assessed and tested. The Committee receives quarterly reports from the Internal Audit function and formally considers the Group’s
principal and emerging risks twice a year.
The Committee’s review took into account the Board’s biannual review of significant risks and emerging risks, as well as the
effectiveness of the co-sourced model for internal audit (see below).
Internal Audit
The Head of Internal Audit attends Committee meetings on a quarterly basis to provide an update on progress against the approved
internal audit plan. The Committee has approved a new three-year risk-based internal audit plan which focuses on the key financial, IT,
operational and compliance risks faced by the business. The Head of Internal Audit reports to the Group Chief Financial Officer and has
direct access to the Committee Chair. In FY2022, the Committee approved the move to a co-sourced model it established an in-house
internal audit function and retained the services of the outsourced assurance provider to supplement the delivery of assurance engagements.
Fair, balanced and understandable
At the Board’s request, the Committee considered whether the 2022 Annual Report, taken as a whole, is fair, balanced and
understandable, and whether it provides the information necessary for shareholders to assess the Group’s position, performance,
business model and strategy. The Committee reviewed both the narrative and financial sections of the reports to ensure they were
consistent and presented clearly and gave a balanced view of business performance during the year, and that appropriate weight was
given to both positive and negative aspects. The Statement of Directors’ Responsibilities on page 115 includes a statement that the
Annual Report is fair, balanced and understandable.
External audit
The Committee has primary responsibility for overseeing the relationship with, and performance of, the external auditor, Deloitte LLP
(Deloitte). This includes making recommendations to the Board concerning the appointment, reappointment and removal of the
external auditor, as well as assessing its independence on an ongoing basis and negotiating the audit fee.
Independence and objectivity of external auditor
The Board recognises the importance of auditor independence, and its impact on effectiveness, and is aware of the situations which
may give rise to the impairment of auditor independence. The Committee regularly considers the objectivity and effectiveness of the
auditor in relation to both the audit process and the relationship with the Group.
In light of the matters of concern at LSER, the Committee reconsidered auditor independence and, following discussions with the
external auditor, the Committee was satisfied that the external auditor remained independent.
Policy on the provision of non-audit services
The Committee is responsible for developing, implementing and monitoring the Group’s policy on the engagement of the external
auditor to supply non-audit services. In line with the FRC’s Ethical Standard, the principal requirements of that policy are:
• The auditor will only be used for the provision of non-audit work if it can be demonstrated that the engagement will not impair
independence or is a natural extension of its audit work or there are other overriding reasons that make it the most suitably qualified
to undertake the work
• The auditor will not provide certain categories of non-audit services to the Group, such as internal audit and litigation support, the
full list of which can be found in the Committee’s terms of reference
• The provision of certain non-audit services is subject to approval by the Committee
The ratio of the external auditor’s audit to non-audit fees during the year, as a proportion of the annual external audit fee, is kept under
review by the Committee.
Corporate governance
Audit Committee Report continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
89
External audit continued
Fees of external auditor
During the financial year, the Group external auditor’s fees were £3.5m (2021: £2.7m). Non-audit fees payable to the Group’s external
auditor were nil (2021: £0.2m).
External audit tenure
On behalf of the Board, the Committee oversees the relationship with the external auditor. Deloitte was appointed as the Group’s
auditor in October 2015 and was most recently reappointed at a General Meeting of the Company held in March 2022. The Group has
commenced a retender process for its external audit for the 2023 financial year but Deloitte has confirmed that it will not participate
in the tender process.
Corporate governance
Directors’ Remuneration Report
The Go-Ahead Group Limited Annual Report and Accounts 2022
90
Dear Shareholder
On behalf of the Board, I am pleased to present the Directors’ Remuneration Report for the year ended 2 July 2022.
The Committee spent considerable time over the last year working on the remuneration arrangements for both the outgoing and
incoming executive directors, as well as finalising the details of the new remuneration policy, and the Committee was pleased with the
strong support achieved at the General Meeting in March 2022 for both the Remuneration Report (99.03%) and the new remuneration
policy (86.79%).
This Directors’ Remuneration Report is divided into two principal sections:
• This annual statement on pages 90 to 91, which provides the context for the Committee’s decisions during the year and other
regulatory information
• The Annual Report on Remuneration, which comprises information on the activities of the Remuneration Committee on page 92
and provides details of remuneration paid to the Board during the 2022 financial year and how we will apply the remuneration policy
in the 2023 financial year on pages 94 and 105
Board changes
As detailed in last year’s Directors’ Remuneration Report, David Brown retired as Group Chief Executive on 5 November 2021.
Following his retirement, David voluntarily waived his rights to his outstanding unvested 2019 Deferred Share Bonus Plan award and
2019 and 2020 LTIP awards. Given his retirement from the Board, the Committee determined that no annual performance-related
bonus would be awarded to David for the 2022 financial year.
Christian Schreyer joined the Board on 1 November 2021 and succeeded David Brown as Group Chief Executive with effect from 5
November 2021. Elodie Brian resigned as Group Chief Financial Officer on 27 September 2021, and Gordon Boyd joined the Board on 28
September 2021 as Interim Group Chief Financial Officer before resigning from the Board with effect from 28 March 2022. Details of
the remuneration arrangements for all three individuals were in line with the relevant remuneration policy and were set out in last
year’s report.
Following a thorough selection process, Sarah Mussenden was appointed as Group Chief Financial Officer with effect from 9 May
2022. Taking into account her extensive experience in transport and regulated businesses, as well as her strong financial accounting
and audit background, the Committee determined that the remuneration package for the new Group Chief Financial Officer would be
as set out in the table below.
New Group Chief Financial Officer remuneration
Base salary
£375,000
Annual performance-related bonus
Maximum of 150 per cent of base salary
RSP
Maximum of 50 per cent of base salary
Pension
Eligible to join Go-Ahead’s Workplace Savings Section (which is the pensions auto-enrolment
vehicle for the majority of employees) or receive a cash alternative equivalent representing 3
per cent of qualifying earnings
Relocation allowance
n/a
Other benefits
Eligible to join the Group’s family healthcare membership
The Group Chief Financial Officer left Go-Ahead at the end of the year. The remuneration she was paid on leaving was in accordance
with our remuneration policy.
Corporate governance
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91
Performance for the 2022 financial year
As set out in further detail in our operating review, the Group has delivered promising financial performance throughout the year as it
emerges from a challenging period.
Group operating profit has exceeded targets set for the year, with strong performance across both our bus and rail divisions. The
Group operating profit element of the annual performance-related bonus in relation to 2022 performance (60 per cent weighting)
achieved 97 per cent of maximum payout. Despite the significant external challenges, Group cashflow performance (15 per cent
weighting) exceeded the stretch targets and as such vested in full. Performance against the remaining strategic measures (25 per cent
weighting) was also exceptionally strong, with the National Rail Contract in GTR being secured and successful development of a new
corporate strategy approved by the Board, amongst achievement of other targets set out on page 96, which resulted in an overall
bonus outcome of 98.2 per cent of maximum.
The Interim Group Chief Financial Officer was not eligible for a 2022 annual performance-related bonus. The new Group Chief
Executive and Group Chief Financial Officer’s 2022 annual performance-related bonus is pro-rated for time on the Board.
The above strong performance led to an overall annual performance-related bonus outcome for 2022 of 147.3 per cent of salaries, pro-
rated to time employed during the year. The Committee reviewed this outcome in light of overall business performance and wider
stakeholder experience and determined that the formulaic outcome for the Group Chief Executive and the Group Chief Financial
Officer was appropriate. For the Group Chief Executive, it is reflective of the progress made in the year both against the targets set
and in preparing the business for the next stage of its development by completing the business review. The Committee also noted the
Group Chief Executive’s critical role in leading the Company through the discussions with Gerrard Investment Bidco Limited on the
terms of a recommended cash acquisition of the Company, further details of which are set out in the Chair’s statement on page 5 and
the Board activities section of the Corporate Governance Report on page 70. For the Group Chief Financial Officer, the outcome
reflects the pivotal role she played in the completion of the takeover mentioned above.
No Restricted Share Plan (RSP) awards granted to the executives were due to vest in the year.
Implementation of remuneration policy in 2022
The directors’ remuneration policy was successfully approved by shareholders at the 2022 General Meeting including the introduction
of the Restricted Share Plan (RSP). The Committee is satisfied that our policy is aligned to both shareholders’ and other key
stakeholders’ interests and continues to operate in line with our long term business strategy, culture and values.
The full directors’ remuneration policy is set out on pages 117 to 128 of our 2021 Annual Report and Accounts, available on our website.
For information on how the proposed remuneration policy is to be implemented for the 2023 financial year, please see page 105.
Looking forward
Now that the Group’s shares have delisted from the London Stock Exchange, this report will not be subject to a shareholder vote at an
annual general meeting. I would like to thank shareholders for their support and constructive feedback over recent years.
Clare Hollingsworth
Chair
24 February 2023
Corporate governance
Directors' Remuneration Report continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
92
Remuneration Committee
Composition of Committee
As at 9 October 2022, being the day prior to the Scheme of Arrangement between Go-Ahead and Gerrard Investment Bidco Limited
becoming effective, the Remuneration Committee comprised the Committee Chair (Leanne Wood), the Group Chair (Clare
Hollingsworth) and three independent non-executive directors (David Blackwood, Dominic Lavelle and Harry Holt).
The members of the Committee had no personal interests in the matters to be decided by the Committee other than as shareholders
and have no conflicts of interest arising from cross-directorships.
The Group Chief Executive (and his predecessor), former Group Chief Financial Officer, Group HR Director and Group Legal Director
attended relevant parts of the Committee meetings during the year ended 2 July 2022. No individual was present when their own
remuneration was being determined.
Meetings
The number of Committee meetings held throughout the year and attendance can be found on page 69.
Overview of responsibilities
The Committee operates in accordance with its terms of reference which are reviewed and approved by the Board annually. The
Committee’s responsibilities during the year ended 2 July 2022 included:
Remuneration policy
• Continued review of remuneration policy ahead of three-year renewal
• Approved the change in non-executive director notice periods from six months to three months consistent with market practice
Executive director target setting and outcomes
• Approved nil payment of the 2021 annual performance-related bonus and nil vesting of the 2018 Long Term Incentive Plan (LTIP)
award
• Established financial and non-financial underpins for the 2021 Restricted Share Plan (RSP) award and targets for the 2022 annual
performance-related bonus
Board and senior leadership remuneration
• Reviewed and approved Chair fees and senior leadership salaries. Reviewed payout of senior management 2021 annual performance-
related bonuses
Shareholder engagement
• Consulted with major shareholders ahead of the proposed new remuneration policy
• Consulted with major shareholders on the introduction of the 2021 RSP award including financial and non-financial underpins
• Ensured the new remuneration policy promotes long term shareholdings by executive directors that align with shareholders’
interests
Wider stakeholders
• Reviewed wider workforce remuneration and related policies to ensure consistency with Group values and culture
• Considered remuneration-related themes (including employee pay) arising from colleague engagement
Governance and Committee effectiveness
• Approved the 2021 Directors’ Remuneration Report which included reviewing the effectiveness and transparency of remuneration
reporting
• Considered findings of internal effectiveness review
• Kept under review the relationship with Committee’s external advisors
• Undertook annual review of Committee’s terms of reference
• Monitored the UK Corporate Governance Code as well as general updates on market best practice provided by the Committee’s
external advisors
Scheme of Arrangement
• Approved treatment of options under the Deferred Share Bonus Plan (DSBP), LTIP and RSP
Board changes during the year
• Approved the remuneration for the new Group Chief Executive and Interim and permanent Group Chief Financial Officers
• Approved the former Group Chief Executive and Group Chief Financial Officer leaver arrangements
Corporate governance
Directors' Remuneration Report continued
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93
External advisors to the Committee
PricewaterhouseCoopers LLP (PwC) acts as an independent remuneration advisor to the Committee. PwC was appointed by the
Committee in June 2020, following a rigorous tender process. PwC is one of the founding members of the Remuneration Consultants
Group Code of Conduct and adheres to this Code in its dealings with the Committee.
As disclosed last year, PwC has previously supported the Audit Committee with internal audit which, during the year ended 3 July 2021,
transitioned to in-house resource. Following this transition, PwC has continued to provide resource, technical capability and ad-hoc
specialist internal audit work as required and the Remuneration Committee is satisfied that these services do not impede PwC’s
objectivity in providing remuneration advice. The Committee is also comfortable that the PwC engagement partner and team, which
provide remuneration advice to the Committee, do not have connections with the Group or individual directors of the Group that
might impair their independence and that the advice received is independent and objective.
The fees payable to PwC for advice during the year ended 2 July 2022 were £141,375 (excluding VAT), charged on a time and material
basis.
Statement of voting at the General Meeting (GM) of shareholders
At the Company’s GM held on 28 March 2022, the Directors’ Remuneration Report and policy received the following votes from
shareholders:
Votes for and
discretionary
Votes against
Total votes
Withheld
Remuneration Report
29,541,032
288,638
29,829,670
5,886
99.03%
0.97%
100.00%
Remuneration policy
25,381,326
3,862,674
29,244,000
591,556
86.79%
13.21%
100.00%
Corporate governance
Directors' Remuneration Report continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
94
Annual Report on Remuneration
Set out below is the Annual Report on Directors’ Remuneration for the year ended 2 July 2022. As the Scheme of Arrangement
between Go-Ahead and Gerrard Investment Bidco Limited completed on 10 October 2022, this report, together with the Annual
Statement on pages 90 to 91 is not subject to a shareholder vote at an annual general meeting.
The Remuneration Committee has prepared this report on behalf of the Board in line with the Companies Act 2006 and Schedule 8 of
The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) and applies the main
principles relating to remuneration which are set out in the UK Corporate Governance Code.
The Annual Report on Remuneration is divided into three sections:
Section 1: Single figure tables
Section 2: Additional information on 2022 remuneration
Section 3: Implementation of remuneration policy in 2023
The external auditor has reported on certain sections of this report and stated whether, in its opinion, those sections have been
properly prepared. Those sections which have been subject to audit are clearly indicated.
Section 1: Single figure tables
Executive directors’ single figure table (audited)
The table below summarises all remuneration that was earned by each executive director during the year ended 2 July 2022.
The Remuneration Committee reviews all incentive awards prior to payment and uses judgement to ensure that the final assessments
of performance are fair and appropriate.
For further information on the figures footnoted within the table below, please see pages 95 to 97.
Salary 1
£’000
Taxable
benefits 2
£’000
Short term incentives
(performance-related bonuses)
Long Term
Incentive Plan
(LTIP) 4
£’000
Pension
allowance 5
£’000
Total single
remuneration
figure
£’000
Total fixed pay
£’000
Total variable
pay
£’000
Cash bonus 3
£’000
Deferred
share bonus 3
£’000
Executive directors
Group Chief Executive, Christian Schreyer
2022
367
68
540
—
—
1
976
436
540
2021
—
—
—
—
—
—
—
—
—
Group Chief Financial Officer, Sarah Mussenden
2022
56
—
82
—
—
—
138
56
82
2021
—
—
—
—
—
—
—
—
—
Former Group Chief Executive, David Brown
2022
202
1
—
—
—
—
203
203
—
2021
543
4
—
—
—
1
548
548
—
Former Group Chief Financial Officer, Elodie Brian
2022
81
—
—
—
—
—
81
81
—
2021
313
—
—
—
—
1
314
314
—
Former Interim Group Chief Financial Officer, Gordon Boyd
2022
601
—
—
—
—
—
601
601
—
2021
—
—
—
—
—
—
—
—
—
Corporate governance
Directors' Remuneration Report continued
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95
Section 1: Single figure tables continued
Commentary on the executive directors’ single figure table
1. Salary
Base salary levels for the executive directors are shown below:
From
1 April 2022
From
1 April 2021
%
increase
Executive directors
Group Chief Executive, Christian Schreyer1
£550,000
£550,000
N/A
Group Chief Financial Officer, Sarah Mussenden1
£375,000
N/A
N/A
Former Group Chief Executive, David Brown2
N/A
£581,710
—
Former Group Chief Financial Officer, Elodie Brian3
N/A
£335,000
—
1. Christian Schreyer and Sarah Mussenden joined the Board on 1 November 2021 and 9 May 2022 respectively. The base salaries stated above were pro-rated for their respective
time in role during the financial year.
2. David Brown retired as Group Chief Executive on 5 November 2021.
3. Elodie Brian resigned as Group Chief Financial Officer with effect from 27 September 2021.
Gordon Boyd acted as Interim Group Chief Financial Officer between 28 September 2021 and 28 March 2022. He received an all-
inclusive base salary of £100,000 per month and did not participate in any incentive awards or receive any additional benefits,
including pension.
2. Taxable benefits (audited)
The taxable benefit for the former Group Chief Executive comprised family healthcare membership.
The taxable benefit for the current Group Chief Executive comprises his relocation allowance (£8,333 payable monthly for the first 24
months of employment) and a contribution to his private medical scheme which commenced in January 2022 and for which he
receives £265 per month.
3. Annual performance-related bonus (audited)
The table below illustrates the components of the 2022 annual performance-related bonus award for the Group Chief Executive and
Group Chief Financial Officer at maximum and actual payouts for business objectives set at the start of the year. Due to the delay in
publication of the Company’s audited financial statements for the year ended 2 July 2022, payout was determined by the
Remuneration Committee’s preliminary assessment of performance undertaken in July 2022. No discretion was applied by the
Committee to the formulaic outcome.
Under the terms of the Scheme of Arrangement which completed between Go-Ahead and Gerrard Investment Bidco Limited on 10
October 2022, the annual performance-related bonus was paid fully in cash and pro-rated for the time the Group Chief Executive and
Group Chief Financial Officer had been on the Board.
Metric
Performance measure
Weighting
(percentage
of maximum)
Maximum
opportunity
(percentage
of salary)
Achieved
Actual payout
(percentage
of salary)
Group profit
Group operating profit 2022
60%
90%
58.2%
87.3%
Group cashflow
Net debt after adding back restricted cash
15%
22.5%
15%
22.5%
Strategic KPIs
See page 96
25%
37.5%
25%
37.5%
Total
100%
150%
98.2%
147.3%
The following tables illustrate in more detail the actual performance against each individual metric.
Group operating profit (60 per cent)
For Group operating profit for the year ended 2 July 2022, target vesting was proportionately weighted between the operating profit
contribution from bus (42 per cent) and rail (18 per cent), with payout on a sliding scale. The actual Group operating profit, before
exceptional items and based on the Remuneration Committee’s preliminary assessment of performance in July 2022, was £80m for
bus and £4.3m for rail resulting in a 97 per cent vesting for both bus and rail. These figures were calculated on a pre-IFRS 16 and a pre-
exceptional basis.
Measure
Bus (70%)
Rail (30%)
Weighting
(% of bonus)
Actual Group
operating
profit
(bus)
Actual
payout
(bus)
Actual Group
operating
profit
(rail)
Actual
payout
(rail)
Group operating
Threshold: £58m
Threshold: (£5m)
0%
profit
Target: £68m
Target: (£1.6m)
50%
£80.0m
70%
£4.3m
27%
Maximum: £78m
Maximum: £5m
100%
Corporate governance
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96
Section 1: Single figure tables continued
Commentary on the executive directors’ single figure table continued
3. Annual performance-related bonus (audited) continued
Cashflow (15 per cent)
The target for Group cashflow (defined as net debt on a pre-IFRS 16 basis excluding restricted cash) was £202.1m, with maximum
vesting at £192.1m, revised to £259.7m which accounted for the Flexbuss acquisition and the delay of DfT dividend payments. Actual
Group cashflow for the year ended 2 July 2022, based on the Remuneration Committee’s preliminary assessment of performance in
July 2022, was £240.4m (2021: £305.9m). Since this was below the revised maximum level of £259.7m, this resulted in a 100 per cent
payout.
Measure
Bus (70%)
Weighting
(% of bonus)
Actual
net debt
Actual
payout
Net debt
Threshold: £212.1m
0%
Target: £202.1m
50%
£240.4m
100%
Maximum: £192.1m (revised to £259.7m)
100%
Strategic KPIs (25 per cent)
The Committee determined that there should be full vesting of the strategic element of bonus. This took into account the
Committee’s assessment of the strategic KPI measures as outlined below as well as an assessment of strategic performance generally.
Strategic KPI measure
Commentary
UK Rail – secure National Rail Contract in GTR
Achieved - contract commenced on 1 April 2022
German Rail – successful start of operations in Bavaria
The first of two contracts started on 12 December 2021 and
performance has been in line with the mobilisation plan and
expectations. Mobilisation for the start of the second, and
final, contract in the region commenced in December 2022
Regional Bus – transition to enhanced partnerships
Achieved several enhanced partnerships across the
business
Develop new corporate strategy and receive approval of the Board
Achieved and announced to the market in April 2022
People strategy – progress against the current overall engagement score Achieved
Health and safety target threshold
The annual performance-related bonus includes a health and safety underpin that enables the Committee to use its discretion to
reduce bonus payments potentially to zero should it be considered appropriate. The Committee concluded that no scaling back of
bonus would have been required in light of the Group’s health and safety performance having been maintained during the year.
4. 2019 LTIP award – former Group Chief Executive only (audited)
Following his retirement, the former Group Chief Executive, David Brown, voluntarily waived his rights to his unvested 2019 LTIP
award. There was therefore no vesting of this award upon completion of the three-year performance period ending with the 2022
financial period.
5. Pension allowance
The Group Chief Executive has opted to receive a cash allowance of 3 per cent of qualifying earnings, as did his predecessor. The Group
Chief Financial Officer also opted to receive the same cash allowance, with the first payment made in September 2022 and backdated
to the date she joined the Group, amounting to £203 for the year ended 2 July 2022. This is equivalent to the employer contribution
rate they would have received had they participated in the Workplace Savings Section of The Go-Ahead Group Pension Plan (the
pensions auto-enrolment vehicle for the majority of employees).
For the purposes of auto-enrolment legislation, qualifying earnings for the tax year 2022/23 are gross taxable earnings between £6,240
per annum and £50,270 per annum. The lower and upper thresholds are reviewed each year by the Government.
The Interim Group Chief Financial Officer received no pension allowance during his time in post.
Corporate governance
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The Go-Ahead Group Limited Annual Report and Accounts 2022
97
Section 1: Single figure tables continued
Non-executive directors’ remuneration for the year ended 2 July 2022 (audited)
The table below sets out the total single remuneration figure received by each non-executive director for the year ended 2 July 2022
and the prior year:
Committee membership and other responsibilities as at 2 July 2022
Total single remuneration figure
Non-executive director
Nomination
Committee
Audit
Committee
Remuneration
Committee
Other
2022
£’000
2021
£’000
Clare Hollingsworth
Chair
—
Member
Chair
190
176
David Blackwood*
Member
Member
Member
Senior
Independent
Director
29
N/A
Dominic Lavelle*
Member
Chair
Member
—
38
N/A
Harry Holt
Member
Member
Member
—
53
49
Leanne Wood
Member
Member
Chair
—
61
57
Adrian Ewer*
—
—
—
—
38
61
* David Blackwood and Dominic Lavelle joined the Board as non-executive directors on 1 January 2022. They succeeded Adrian Ewer as Senior Independent Director and Audit
Committee Chair respectively with effect from 19 January 2022 when Adrian stepped down from the Board with effect from the same date.
Fees payable to the Chair and non-executive directors
Base fee levels for the Chair and non-executive directors for the year ended 2 July 2022 are shown below.
The fee level for the Chair was reviewed on 1 April 2022 and increased by 3 per cent. The base fee levels for the non-executive directors
were also reviewed on 1 April 2022 and similarly increased by 3 per cent in line with those of the general workforce and the wider
Board. There was no change to the additional fees paid for chairing the Remuneration and Audit Committees, or for the role of Senior
Independent Director.
In addition to the below, Dominic Lavelle receives an additional fee of £30,000 per annum for his appointment to the GTR board which
provides a line of sight to the Audit Committee and Board.
David Blackwood (Senior Independent Director), Leanne Wood (Remuneration Committee Chair) and Harry Holt (Non-Executive
Director) stepped down from the Board with effect from the completion of the Scheme of Arrangement.
From
1 April 2022
£’000
Chair
194
Non-Executive Director
54
Senior Independent Director
5
Audit Committee Chair
8
Remuneration Committee Chair
8
Corporate governance
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98
Section 2: Additional information on 2022 remuneration
Directors’ shareholdings and share plan interests (audited)
A summary of all directors’ shareholdings and share plan interests as at 2 July 2022 are shown in the table below.
Outstanding scheme interests as at 2 July 2022
Actual shares held10
Plan
Unvested
scheme
interests
(subject to
performance
measures) 1
Unvested
scheme
interests
(not subject to
performance
measures)2
Vested but
unexercised
share options
Total shares
subject to
outstanding
scheme
interests
As at
3 July 2021
As at
2 July 2022
Total of all
share scheme
interests and
shareholdings
as at
2 July 202211
Executive directors
Christian Schreyer
42,203
—
—
42,203
—
—
42,2033
Sarah Mussenden
—
—
—
—
—
—
—
Former executive directors
Gordon Boyd (interim)4
N/A
N/A
N/A
N/A
N/A
N/A
N/A
David Brown
135,061
16,123
18,612
169,796 5
87,919
N/A6
N/A6
Elodie Brian
—
—
2,4397
2,439
5,900
N/A8
N/A8
Non-executive directors
Clare Hollingsworth
—
—
—
—
2,290
2,290
2,2909
David Blackwood
—
—
—
—
—
—
—
Dominic Lavelle
—
—
—
—
—
—
—
Harry Holt
—
—
—
—
—
—
—
Leanne Wood
—
—
—
—
294
294
2949
Adrian Ewer12
—
—
—
—
3,022
N/A
N/A
1. Nil cost options awarded under the Long Term Incentive Plan (LTIP) and Restricted Share Plan (RSP) and subject to performance measures or underpins respectively.
2. Nil cost options awarded under the Deferred Share Bonus Plan (DSBP) and not subject to performance conditions.
3. Following the Court hearing on 6 October 2022, which sanctioned the Scheme of Arrangement between Go-Ahead and Gerrard Investment Bidco Limited (the Scheme of
Arrangement), Christian Schreyer’s 2021 RSP award vested in full.
4. Gordon Boyd resigned from the Board as Interim Group Chief Financial Officer on 28 March 2022.
5. Of the 169,796 ordinary shares, 135,061 relate to the 2019 and 2020 LTIP awards and 16,123 shares relate to the 2019 DSBP award which David Brown voluntarily waived following
his retirement. Further details can be found on page 99.
6. David Brown retired from the Board as Group Chief Executive on 5 November 2021.
7. Relates to vested but unexercised 2014, 2015, 2016, 2017 and 2018 deferred share bonus awards which were granted on 25 November 2014, 19 November 2015, 15 November
2016, 17 November 2017 and 16 November 2018 respectively when Elodie Brian was Finance and Contracts Director of Southeastern.
8. Elodie resigned from the Board as Group Chief Financial Officer on 27 September 2021.
9. Following completion of the Scheme of Arrangement on 10 October 2022, all outstanding shares were acquired by Gerrard Investment Bidco Limited.
10. Actual shares are beneficial holdings which include the directors’ personal holdings and those of their spouses. They also include the beneficial interests in shares which were
held in trust under the Group’s Share Incentive Plan.
11. All share plan interests, vested, unvested and unexercised, together with any holdings of ordinary shares.
12. Adrian Ewer resigned from the Board as Audit Committee Chair and Senior Independent Director with effect from 19 January 2022.
Directors’ share ownership guidelines (audited)
Prior to the Scheme of Arrangement which completed on 10 October 2022, executive directors were encouraged to build up a high
level of personal shareholding to ensure a continuing alignment of interests with shareholders as soon as possible and within five years
of their date of appointment. The shareholding guidelines required executive directors to hold ordinary shares which equalled in value
to 200 per cent of their base salary.
In addition, executive directors were required to retain 50 per cent of the post-tax gain on vested LTIP, RSP and DSBP awards until the
shareholding requirement was met. Additionally, LTIP and RSP awards were required to be retained until the fifth anniversary from
date of grant.
As at 2 July 2022, neither the Group Chief Executive nor Group Chief Financial Officer held any beneficial shares given they had only
been in post for a short time. Trading in Go-Ahead’s shares had also been restricted for a significant time due to the delays in the
announcement of the Group’s 2021 results and the subsequent suspension of its shares. Therefore, their shareholding as a percentage
of salary was nil and the shareholding guideline had not been met.
Corporate governance
Directors' Remuneration Report continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
99
Section 2: Additional information on 2022 remuneration continued
Executive directors’ interests in outstanding share awards and options (audited)
The following tables set out details of the executive directors’ outstanding share awards as at 2 July 2022. The Group Chief Financial
Officer, in post between 9 May 2022 and 31 December 2022, and the Interim Group Chief Financial Officer in post between 28
September 2021 and 28 March 2022 did not have any outstanding share awards and options during the year ended 2 July 2022.
Group Chief Executive, Christian Schreyer
Christian Schreyer received a 2021 Restricted Share Plan (RSP) award, details of which are set out in the table below, and further
information is provided on page 100.
Plan
Date of
grant
Mid-market
price on date
of grant
£
Balance at
3 July
2021
Granted
in year
Exercised
in year
Lapsed
in year
Balance at
2 July
2022
RSP
5.5.22
9.774
—
42,203
—
—
42,203
Total
—
42,203
—
—
42,203
Former Group Chief Executive, David Brown
Following his retirement, David Brown voluntarily waived his rights to his 2019 Deferred Share Bonus Plan (DSBP) award and to his
unvested 2019 and 2020 Long Term Incentive Plan (LTIP) awards. His 2018 DSBP award vested on 16 November 2021.
Date of
grant
Mid-market
price on date
of grant
£
Balance at
3 July
2021
Granted
in year
Exercised
in year
Lapsed
in year
Balance at
2 July
2022
DSBP
16.11.18
15.61 1
18,612
—
—
—
18,612
15.11.19
20.49 2
16,123
—
—
—
16,123
LTIP
16.11.18
15.793
53,912
—
—
53,912
—
15.11.19
20.49 3
42,580
—
—
—
42,580
15.12.20
9.44 3
92,481
—
—
—
92,481
Total
223,708
—
—
53,912
169,796
1. The number of shares over which the 2018 Deferred Share Bonus Plan award was granted was calculated using the average of the middle market quotations during the period of
20 dealing days immediately prior to the date of grant in accordance with the Plan Rules.
2. In accordance with emerging best practice, the number of shares over which the 2019 Deferred Share Bonus Plan award was granted was calculated using the average of the
middle market quotations during the period of five dealing days immediately prior to the date of grant also in accordance with the Plan Rules.
3. The number of shares over which the 2018–2020 LTIP awards were granted was calculated using the average of the middle market quotations during the period of five dealing
days immediately prior to the date of grant in accordance with the Plan Rules.
Former Group Chief Financial Officer, Elodie Brian
Elodie Brian’s 2018 DSBP award vested on 16 November 2021. Her 2019 DSBP award and 2019 and 2020 LTIP awards lapsed upon her leaving date.
Plan
Date of
grant
Mid-market
price on date
of grant
£
Balance at
3 July
2021
Granted
in year
Exercised
in year
Lapsed
in year
Balance at
2 July
2022
DSBP
25.11.14
24.74 1
505 3
—
—
—
505 4
19.11.15
25.17 1
658 3
—
—
—
658 4
15.11.16
20.81 1
374 3
—
—
—
374 4
17.11.17
17.27 1
402 3
—
—
—
402 4
16.11.18
15.61 1
500 3
—
—
—
500 4
15.11.19
20.49 1
2,503
—
—
2,503
—
LTIP
15.11.19
20.49 2
16,347
—
—
16,347
—
15.12.20
9.44 2
35,506
—
—
35,506
—
Total
56,795
—
—
54,356
2,439
1. The number of shares over which the 2014–2018 DSBP awards were granted was calculated using the average of the middle market quotations during the period of 20 dealing
days immediately prior to the date of grant in accordance with the Plan Rules. In accordance with emerging best practice, the number of shares over which the 2019 DSBP award was granted
was calculated using the average of the middle market quotations during the period of five dealing days immediately prior to the date of grant in accordance with the Plan Rules.
2. The number of shares over which the 2019 and 2020 LTIP awards were granted was calculated using the average of the middle market quotations during the period of five
dealing days immediately prior to the date of grant in accordance with the Plan Rules.
3. Relates to the DSBP awards granted to Elodie Brian between 2014 and 2018, prior to her statutory appointment to the Group Board in June 2019, and during her employment as
Finance and Contracts Director for Southeastern.
4. Relates to the DSBP awards granted to Elodie Brian between 2014 and 2018 which vested on 25 November 2017, 19 November 2018, 15 November 2019, 17 November 2020 and 16
November 2021 and remained unexercised as at 2 July 2022. Following year end, Elodie exercised her 2014-2018 DSBP awards on 14 September 2022, 6 October 2022, 25 August
2022, 1 September 2022 and 6 October 2022 respectively.
Corporate governance
Directors' Remuneration Report continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
100
Section 2: Additional information on 2022 remuneration continued
Restricted Share Plan (RSP)
2021 RSP award granted during the year ended 2 July 2022 (audited)
Executive director
Basis of
award granted
Share price
at grant date
Number of
shares over
which award
was granted 1
Face value
of award 2
£’000
% of award which
vests at threshold
Vesting determined
by performance over
Christian Schreyer 75% of base salary
£9.84
42,203
415
No threshold or
other level of
performance that
dictates a
formulaic
outcome. See
financial and non-
financial underpins
below this table.
Three financial
years ending on
29 June 2024
1. The number of shares over which the award was granted was calculated using a share price of £9.774, this being the average of the middle market quotations during the period
of five dealing days immediately prior to the date of grant in accordance with the Plan Rules.
2. The face value of the award has been calculated on a share price of £9.84. This was the share price on 5 May 2022, the date of grant.
Financial and non-financial underpins attaching to the 2021 RSP award (audited)
The financial and non-financial underpins set at the time of grant attaching to the 2021 RSP award were as follows:
1.
Cash generation/net debt ratio – maintain a healthy level of cash generation, maintain a net debt/EBITDA ratio (excluding
exceptionals) within the target range set by the Group’s capital allocation policy and resume appropriate returns to shareholders
2.
Colleague engagement – continue to progress the colleague engagement score as measured regularly through surveys and
drive the diversity and inclusion agenda to increase the proportion of female and ethnically diverse colleagues at all levels in the
organisation
3.
Health and safety – maintain key safety metrics and avoid any major incident causing harm or reputational damage
4.
Climate change strategy – develop the business case for decarbonisation and progress towards net zero target
Total shareholder return (TSR) performance graph 2012- 2022
The graph below shows a comparison of The Go-Ahead Group plc (now re-registered as The Go-Ahead Group Limited) cumulative
TSR against that achieved by the FTSE 250 Index for the last ten financial years to 2 July 2022. The chart shows cumulative TSR over
the same period for the other major UK transportation groups. In assessing the performance of the Group’s TSR, the Committee
believes that the FTSE 250 index comparator group is still an appropriate and fair benchmark in assessing the performance of the
Group’s TSR.
30/06/2012
2/07/2022
! The Go-Ahead Group plc ! National Express Group plc
! FirstGroup plc
! Stagecoach Group plc ! FTSE 250
0
50
100
150
200
250
300
29/06/2013
28/06/2014
27/06/2015
2/07/2016
1/07/2017
30/06/2018
29/06/2019
27/06/2020
3/07/2021
Value (£) (rebased)
Corporate governance
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101
Section 2: Additional information on 2022 remuneration continued
Remuneration of the Group Chief Executive over the last ten years
The table below shows the remuneration of the Group Chief Executive for the period from 29 June 2013 to 2 July 2022. The total
remuneration figure includes the annual performance-related bonus and LTIP awards (and the percentage of the maximum
opportunity that these represent).
Group Chief Executive’s remuneration history
Year
Group Chief Executive
Total single
remuneration figure
£’000
Annual performance-related bonus
(actual award vs maximum
opportunity)
% vesting
Long term incentive
(vesting vs maximum opportunity)
% vesting
2022
Christian Schreyer
976
98.2%1
nil2
2022
David Brown
203
nil3
nil4
2021
David Brown
548
nil 5
nil6
2020
David Brown
558
nil 7
nil 8
2019
David Brown
1,269
75.8% 9
nil 10
2018
David Brown
1,175
68.3% 11
nil 12
2017
David Brown
782
nil 13
54.0%
2016
David Brown
1,214
nil13
90.0%
2015
David Brown
2,134
69.6%
100.0%
2014
David Brown
1,960
97.5%
80.0%
2013
David Brown
942
55.3%
—
1. Based on the assessment of performance against targets, the Group Chief Executive was awarded an overall annual performance-related bonus of 98.2 per cent of the maximum
bonus opportunity (147.3 per cent of base salary) for the year ended 2 July 2022 which was pro-rated for his time on the Board.
2. Following completion of the Scheme of Arrangement between Go-Ahead and Gerrard Investment Bidco Limited on 10 October 2022, the Group Chief Executive’s 2021 RSP
award vested in full.
3. The former Group Chief Executive was awarded no annual performance-related bonus for the year ended 2 July 2022.
4. Following his retirement, the former Group Chief Executive voluntarily waived his 2019 and 2020 LTIP awards.
5. The Group Chief Executive was awarded no annual performance-related bonus for the year ended 3 July 2021.
6. The 2018 LTIP award lapsed in full from November 2021 on account of none of the performance measures being met following the three-year performance period ended 3 July
2021.
7. The Group Chief Executive was awarded no annual performance-related bonus for the year ended 27 June 2020.
8. The 2017 LTIP award lapsed in full in November 2020 on account of none of the performance measures being met following the three-year performance period ended 27 June
2020.
9. Based on the assessment of performance against targets, the Group Chief Executive was awarded an overall annual performance-related bonus of 75.8 per cent of the maximum
bonus opportunity (113.6 per cent of base salary) for the year ended 29 June 2019.
10. The 2016 LTIP award lapsed in full from November 2019 on account of none of the performance measures being met following the three-year performance period ended 29 June
2019.
11. In accordance with the executive directors’ request to reduce any performance-related bonus by 25 per cent, the Committee exercised discretion and reduced the Group Chief
Executive’s overall 2018 bonus by 25 per cent resulting in an actual bonus of 68.3 per cent of maximum bonus (102.4 per cent of salary).
12. The 2015 LTIP award lapsed in full in November 2018 on account of none of the performance measures being met following the three-year performance period ended 30 June
2018.
13. At the request of the Group Chief Executive, there were no annual performance-related bonuses paid for the years 2017 and 2016.
Corporate governance
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Section 2: Additional information on 2022 remuneration continued
Annual change in directors’ remuneration compared to average employee remuneration
In accordance with the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the table
below shows the movement in the salary, benefits and annual bonus for all directors between the current and previous financial year
compared to the average change for all employees of the Group’s parent company.
The increase in percentage change from 2021 to 2022 of salary/fees reflects the 20 per cent reduction in base salaries that the
executive and non-executive directors voluntarily waived for part of the 2021 financial year in response to the COVID-19 pandemic. For
non-executive directors only, it is also reflective of the 3 per cent increase to base fee levels applicable from 1 April 2022.
% change from 2021 to 2022
% change from 2020 to 2021
% change from 2019 to 2020
Salary/fees
Benefits
Bonus
Salary /fees
Benefits
Bonus
Salary /fees
Benefits
Bonus
Christian Schreyer1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Sarah Mussenden1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Gordon Boyd1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
David Brown
7.1%2
4.1%3
0.0%4
(1.8)%5
2.6%
0.0%4
(3.2)%5
7.3%
(100)%4
Elodie Brian
7.1%7
0.0%
0.0%4
(2.0)%5
0.0%
0.0%4
(4.8)%56
0.0%
0.0%4
Clare Hollingsworth8
7.9%
N/A
N/A
(1.8)% 5
N/A
N/A
N/A
N/A
N/A
David Blackwood9
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Dominic Lavelle9
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Harry Holt
7.9%
N/A
N/A
(1.8)% 5
N/A
N/A
(3.2)% 5
N/A
N/A
Leanne Wood10
7.9%
N/A
N/A
3.0% 5
N/A
N/A
6.3%5
N/A
N/A
Adrian Ewer11
7.9%
N/A
N/A
0.9%5
N/A
N/A
1.7% 5
N/A
N/A
Average employees of
parent company12
5.6%
2%
N/A%13
2.6%
(10%)
N/A 13
3.6%
0.9%
(100)% 13
1. Christian Schreyer and Sarah Mussenden were appointed as Group Chief Executive and Group Chief Financial Officer with effect from 5 November 2021 and 9 May 2022
respectively. Gordon Boyd was Interim Group Financial Officer between 28 September 2021 and 28 March 2022. No remuneration was received by any of these directors during
the year ended 3 July 2021.
2. David Brown stepped down from the Board as Group Chief Executive on 5 November 2021. To provide a representative comparison, the percentage change has been calculated
as if he received his full base salary of £581,710 for the full year ended 3 July 2021.
3. To provide a representative comparison, the percentage change has been calculated as if David Brown received family healthcare membership for the full financial year. For the
year 2 July 2022, this would have amounted to £4,620. The Group Chief Executive received family healthcare membership in the amount of £4,439 for the year ended 3 July 2021
and £4,325 for the year ended 27 June 2020 (2019: £4,030).
4. Neither David Brown or Elodie Brian were awarded an annual performance-related bonus for the years ended 2 July 2022, 3 July 2021 or 27 June 2020 (2019: £660,882 and £nil respectively)
5. No executive or non-executive director was awarded a base salary or fee increase for the years ended 3 July 2021 or 27 June 2020. Each director volunteered to temporarily
waive 20 per cent of their base salaries/fees between 1 April 2020 and 31 October 2020.
6. The Group Chief Financial Officer was appointed as statutory director from 5 June 2019. To provide a representative comparison, the percentage change has been calculated as
if she received her full base salary of £335,000 for the full year ended 29 June 2019.
7. Elodie Brian stepped down from the Board as Group Chief Financial Officer on 27 September 2021. To provide a representative comparison, the percentage change has been
calculated as if she received her full base salary of £335,000 for the full year ended 2 July 2022.
8. Clare Hollingsworth was appointed to the Board as Non-Executive Chair Designate on 1 August 2019 before succeeding Andrew Allner as Non-Executive Chair at the conclusion
of the 2019 AGM. Remuneration for 2020 was part year from 1 August 2019 to 27 June 2020. To provide a representative comparison, the percentage change from 2020 to 2021
has been calculated as if she received fees of £179,360 for the full year ended 27 June 2020. No remuneration was received for 2019.
9. David Blackwood and Dominic Lavelle were appointed as non-executive directors in January 2022, succeeding Adrian Ewer as Senior Independent Director and Audit Committee
Chair respectively. No remuneration was received by either of them for the year ended 3 July 2021.
10. Leanne Wood succeeded Katherine Innes Ker as Remuneration Committee Chair with effect from the conclusion of the 2019 AGM. She receives an additional £8,000 per annum
for this role.
11. Adrian Ewer succeeded Katherine Innes Ker as Senior Independent Director with effect from the conclusion of the 2019 AGM and received an additional £5,000 per annum from assumption
of that role together with an additional £8,000 per annum for his role of Audit Committee Chair. Adrian stepped down from the Board with effect from 19 January 2022. To provide a
representative comparison, the percentage change from 2021 to 2022 has been calculated as if he received fees of £66,127.26 for the full year ended 2 July 2022.
12. Reflects the average percentage change in salary, benefits and bonus for employees of the parent company for the current and previous financial year (excluding the Board) on a
full time equivalent basis. Leavers, joiners and employees on reduced pay (due to sick pay, maternity leave, etc.) have been excluded as have employees on secondment. Where
applicable, reduced salaries of 80 per cent in respect of furloughed employees have been included in the calculation plus any annual leave taken during the furlough period, which
was paid at 100 per cent, whilst receiving a reduction in salary.
13. In total, employees of the Group’s parent company earned £1.5m in bonus for the year ended 2 July 2022 (2021: £1.0m). Given bonuses in the prior year were paid at minimal levels, no
meaningful increase in percentage can be presented in the current year. No bonuses were paid to employees of the Group’s parent company for the year ended 27 June 2020.
Corporate governance
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Section 2: Additional information on 2022 remuneration continued
Group Chief Executive pay ratio
The table below sets out the ratios of the combined total remuneration of the Group Chief Executive and his predecessor in the
financial year ended 2 July 2022 to the equivalent pay for the lower quartile, median and upper quartile UK employees (calculated on a
full time basis). The ratios have been calculated in accordance with The Companies (Miscellaneous Reporting) Regulations 2018.
Year
Method
25th percentile
pay ratio
50th percentile
pay ratio
75th percentile
pay ratio
2022
Option A
43:1
34:1
26:1
2021
Option A
22:1
17:1
14:1
2020
Option A
22:1
17:1
13:1
2019
Option A
47:1
37:1
29:1
Total pay and benefits
Year
CEO
£’000
25th percentile
pay ratio £’000
50th percentile
pay ratio £’000
75th percentile
pay ratio £’000
2022
1,179
27
35
45
Base salary component of total pay and benefits
Year
CEO
£’000
25th percentile
pay ratio £’000
50th percentile
pay ratio £’000
75th percentile
pay ratio £’000
2022
569
20
27
41
The 2022 total pay and benefits for the Group Chief Executive was calculated by combining the total remuneration of the former Group Chief
Executive (David Brown) and the new permanent Group Chief Executive (Christian Schreyer) as set out in the total single figure remuneration
table on page 94. Calculations have been based on remuneration received by Christian Schreyer from 1 November 2021, the date he joined the
Board as a statutory director, notwithstanding he succeeded David Brown as Group Chief Executive with effect from 5 November 2021.
The median pay ratio has increased between 2021 and 2022 due to the combined Group’s Chief Executive’s total pay and benefits
having increased by £631,000. This includes an increase in salary due to (i) the former Group Chief Executive temporarily waiving 20%
of his base salary between 1 April 2020 and 31 October 2020 in response to the COVID-19 pandemic and hence resulting in a lower
than normal salary for the financial year ended 3 July 2021 and (ii) the five day overlap from the date Christian Schreyer joined the
Board as statutory director and the date the former Group Chief Executive retired as mentioned above. It also includes an increase in
taxable benefits primarily due to the relocation allowance received by the current Group Chief Executive (£8,333 payable monthly for
the first 24 months of employment). The largest contributory factor is however the current Group Chief Executive’s annual
performance-related bonus awarded for the year ended 2022, awarded in recognition of the progress made in the year both against
the targets set and in preparing the business for the next stage of its development by completing the business review. The bonus
awarded also reflected the Group Chief Executive’s critical role in leading the Company through the discussions with Gerrard
Investment Bidco Limited on the terms of a recommended cash acquisition of the Company, further details of which are set out in the
Chair’s statement on page 5 and the Board activities section of the Corporate Governance Report on page 70.
By contrast, the former Group Chief Executive did not receive an annual performance-related bonus for 2020 or 2021 due to the
impact of the COVID-19 pandemic resulting in lower total single remuneration figures for these years and hence lower pay ratios. The
2022 median CEO pay ratio is therefore more in line with 2019.
The Committee believes that the median pay ratio is consistent with the Group’s pay, reward and progression policies. Base salaries of
all colleagues, including the executive directors, are set with reference to a range of factors including market comparators, individual
experience and performance in role.
1.
“Option A” methodology was selected on the basis that it provides the most robust and statistically accurate means of identifying
the median, lower quartile and upper quartile colleagues.
2.
The workforce comparison is based on actual payroll data for the period 3 July 2021 to 2 July 2022.
3.
The total single figure remuneration calculated for each employee includes full time equivalent base pay, annual bonuses for the
2021 performance year, overtime, benefits, allowances and employer pension contributions. For furloughed employees, total single
figure remuneration is based on reduced salaries of 80 per cent.
4.
Due to the timing constraints of when employee annual bonuses are determined and paid across the Group, the value of employee
annual bonus payments included in the calculation is in respect of the year ended 3 July 2021.
5.
Part time workers have been included by calculating the full time equivalent value of their pay and benefits.
6.
Leavers, joiners and employees on reduced pay (due to sick pay, maternity leave, etc.) have been included.
7.
Smart pension reductions have been excluded on the basis that these are a voluntary arrangement whereby an employee forgoes
part of their salary in exchange for additional pension contributions rather than a reduction in the salary provided.
Corporate governance
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104
Section 2: Additional information on 2022 remuneration continued
Relative importance of spend on pay
The following table sets out the percentage change in dividends and overall spend on pay in the financial year ended 2 July 2022 being
reported compared with the previous financial year ended 3 July 2021.
For further information on the figures footnoted within the table below, please see page 164.
Year
2022
£m
2021
£m
%
change
Dividends*
Nil
Nil
Nil
Overall expenditure on pay
1,291.5
1,418.8
(9.0)
* Given the financial position of the Group, the Board took the decision not to propose an interim dividend to shareholders. Under the terms of the Scheme of Arrangement
between Go-Ahead and Gerrard Investment Bidco Limited which completed on 10 October 2022, a special dividend of £1.00 per share has been paid to shareholders on
24 October 2022 in lieu of a final dividend for the year ended 2 July 2022 (2021 total dividend: £nil).
The Group has not made any other significant distributions and payments or other uses of profit or cashflow deemed by the directors
to assist in understanding the relative importance of spend on pay.
Payments to former directors and payments for loss of office (audited)
The Group made a contribution of £15,000 plus VAT towards the former Group Chief Financial Officer’s legal fees in connection with
her departure. Other than this there were no payments made to former executive directors or payments for loss of office during the
year ended 2 July 2022 (2021: £nil).
Material contracts
There have been no other contracts or arrangements during the financial year in which a director of the Group was materially
interested and/or which were significant in relation to the Group’s business.
Appointments – executive directors and non-executive directors’ service contracts
Details of the service agreements of executive directors, letters of appointment for the Chair and non-executive directors, retirement
and re-election of directors and external appointments are outlined within the remuneration policy on pages 117 to 128 of the 2021
Annual Report and Accounts.
Corporate governance
Directors' Remuneration Report continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
105
Section 3: Implementation of remuneration policy in 2023
Following approval at the 2022 General Meeting, the Committee is not proposing any changes to the Group’s remuneration policy for
the 2023 financial year.
Executive directors’ 2023 base salaries
The Group Chief Executive was appointed on a base salary of £550,000. The Group Chief Financial Officer was appointed on a base
salary of £375,000.
Benefits
The benefits for executive directors will be in line with the remuneration policy, as set out in our 2021 report.
Pensions
Pension provision for executive directors has been aligned with the majority of the workforce, with the executive directors being
eligible to receive 3 per cent of qualifying earnings as pension provision or receive a cash alternative equivalent.
2023 performance-related bonus
The Committee has determined that the Group Chief Executive will be eligible to receive a 2023 annual performance-related bonus
opportunity, equal to 150 per cent of base salary.
The performance measures and weightings for 2023, which remain unchanged from 2022, are as follows:
Metric
Weighting (% of maximum bonus)
Operating profit
60%
Group cashflow
15%
Strategic KPIs
25%
The Group cashflow metric will be defined as free cashflow in order to provide focus on working capital. Operating profit, cashflow
and strategic KPI targets will be stretching for the 2023 financial year.
Discretion exists to adjust the formulaic outcome of any incentive to better reflect the underlying performance of the business, which
will include a review of health and safety performance.
Given completion of the Scheme of Arrangement between Go-Ahead and Gerrard Investment Bidco Limited, the outcome of the
performance-related bonus will be assessed at the end of the year.
Malus and clawback provisions will apply to the annual performance-related bonus.
2022 Restricted Share Plan (RSP) award
Given the sanction of the Scheme of Arrangement between Go-Ahead and Gerrard Investment Bidco Limited completed prior to the
grant date of the 2022 RSP awards, the awards will not be made.
Relocation allowance
Due to the international relocation required to perform the role, the Group Chief Executive will continue to receive a monthly
relocation allowance of £8,333 for the first 24 months of his employment, as disclosed in last year’s report. The Committee felt that a
relocation allowance spread over two years was appropriate under the circumstances taking into account the specifics of the
international relocation to the UK including the ongoing uncertainty around the international travel constraints.
Group Chief Financial Officer leaver arrangements
The Group Chief Financial Officer left Go-Ahead at the end of the year. The remuneration she was paid on leaving was in accordance
with our remuneration policy.
Non-executive directors’ fees
Non-executive directors’ fees and the supplement paid for chairing a committee or being the Senior Independent Director remained
unchanged from 1 April 2022 up until the Scheme of Arrangement between Go-Ahead and Gerrard Investment Bidco Limited
completed on 10 October 2022.
Arrangements on change of ownership
Given the recent change of ownership, remuneration arrangements are expected to remain broadly in line with the relevant provisions
of the Remuneration Policy, save that a review of the Policy is being undertaken in the context of the business no longer being listed on
the London Stock Exchange.
Clare Hollingsworth
Chair
24 February 2023
Corporate governance
Directors’ Report
The Go-Ahead Group Limited Annual Report and Accounts 2022
106
The directors present their Directors’ Report and audited financial statements for the year ended 2 July 2022.
Information incorporated by reference
The following information is provided in other appropriate sections of this Annual Report and Accounts and is incorporated by
reference:
Information
Reported in
Page(s)
Corporate governance
Corporate Governance Report
Directors’ Statement of Responsibilities
65 to 114
115
Directors
Board overview
Directors’ Remuneration Report – directors’ shareholdings
and share plan interests
66 to 69
98 to 100
Employees
Non-Financial Information Statement
Strategic Report – employee policies, employee engagement
and information on diversity and inclusion
Directors’ Report – employee involvement
(including policy on employment of disabled persons)
2
37 to 39
108
Business model
Strategic Report
9 to 10
Likely future developments in the business
Strategic Report
1 to 64
Important events since 2 July 2022
Strategic Report
106 and 107
Greenhouse gas emissions and
energy consumption
Strategic Report
Appendix to Directors’ Report
45 to 48
111 to 114
Risk factors and principal risks
Strategic Report
51 to 64
Stakeholder engagement
Strategic Report
Corporate Governance Report
25 to 27
75 to 76
Going concern
Strategic Report
49 to 50
Post-balance sheet events
Regional Bus
On 19 August 2022, the DfT announced that the Bus Recovery Grant (BRG) will be extended for a further 6 months to the end of March
2023, with £130.0m of funding available for UK bus services. Following this, on 17 February 2023 a further extension of BRG funding to
30 June 2023 was announced, with an additional £80.0m of funding available.
On 19 December 2022, the DfT announced the introduction of a scheme to cap most single bus fares in England (outside London) to £2
from 1st January 2023 until 31st March 2023, with funding available for UK bus services of £60.0m. Following this on 17 February 2023
an extension to the scheme was announced to 30 June 2023, with £75.0m of additional funding available.
The Group has won the first two contracts to be awarded by Transport for Greater Manchester as part of its plan to re-regulate bus
services in the city region under its new Bee Network. Go-Ahead’s Go North West operating company will run 55 bus routes in both
Wigan and Bolton from 17 September 2023.
On 14 November 2022, Go-Ahead purchased 100% of the issued share capital of Clyst St-Mary-based coach and bus operator, Dartline
Coaches, for approximately £5.0m. The acquisition saw 118 employees and 84 vehicles become part of Go South West’s operating
company and will expand the Group’s business in the region. Goodwill of approximately £1.0m was recognised as a result of the
transaction. At the acquisition date, Dartline Coaches held tangible fixed assets of approximately £3.4m, current assets of £2.0m and
liabilities of £1.5m. The accounting for this transaction is currently being finalised at the time of publication of the Annual Report and
Accounts.
On 1 February 2023, Go-Ahead acquired 100% of the issued share capital of Southdown Buses for approximately £5.0m. Southdown
Buses is a bus company operating in East Surrey, Kent and Sussex. Southdown, which operates 25 buses and employs 43 people, will
operate as a subsidiary of Go-Ahead’s Brighton-based operating company. The company runs scheduled routes and provides rail
replacement bus services, and it will expand the Group’s business in the region. The accounting for this transaction is currently in
progress at the time of publication of the Annual Report and Accounts.
Corporate governance
Directors’ Report continued
Post-balance sheet events continued
London & International Bus
On 24 August 2022, it was confirmed that the Land Transport Authority of Singapore had granted a three-year contract extension to
Go-Ahead Singapore to continue operating in the Loyang region of the island. The extension begins in September 2023 and will run
until September 2026. This follows the initial five-year contract which saw the Group’s entry into the Singapore bus market in
September 2016. This is Go-Ahead Singapore’s second contract extension, with the first being a two-year extension awarded in
August 2020, running from September 2021 to September 2023.
In December 2022, Go-Ahead won a contract to operate buses in Sydney, under a joint venture with an Australian company, UGL. This
takes the Group into a new market, and is in line with the ambition set out for international expansion under the Group’s new strategy.
The buses will run under a brand the Group has created for the joint venture, called U-Go Mobility. From July 2023, the Group will be
operating a network of 225 buses, to be run by more than 400 colleagues in an area stretching from Sydney’s southern beaches to the
city’s south-western suburbs. The Group will be delivering more than 500,000 passenger journeys daily.
International Rail
Subsequent to the year-end, a dispute has arisen with the Norwegian Rail Directorate relating to specific terms for the compensation
for loss of passenger income mechanism that had been agreed under the revised agreement traffic agreement dated 28 June 2022.
Based on legal advice obtained and review of correspondence between the Company and the Rail Directorate at the time of the
signing of the revised agreement in June, the Directors are satisfied that the onerous provision has been calculated based on the terms
of the revised agreement. Whilst the Directors are confident of a successful outcome, until such time as the dispute is resolved with
the Directorate there remains a possible risk that if successfully challenged by the Directorate, this could increase the onerous
contract provision by up to £20.0m. The Directors consider that the onerous contract provision reflects their best estimate of the
terms agreed at the time.
Offer and subsequent purchase of Go-Ahead by Gerrard Investment Bidco Limited (“Bidco”)
On 13 June 2022, the boards of directors of Bidco and Go-Ahead announced they had reached agreement on the terms of a
recommended cash offer for the Group, pursuant to which Bidco would acquire the entire issued share capital of Go-Ahead (the
“Scheme of Arrangement”). Bidco is a newly formed company indirectly owned by Kinetic TCo Pty Ltd (Kinetic) and Globalvia
Inversiones S.A.U. (Globalvia). This offer was increased on 4 August 2022, to 1,550p for each Go-Ahead share, comprising 1,450p in cash
and a special dividend of 100p per Go-Ahead share.
On 16 August 2022, the Scheme of Arrangement was approved by the requisite majority of shareholders. The Scheme of Arrangement
was subject to certain other conditions including sanction by the Court which took place on 6 October 2022, with the Scheme of
Arrangement becoming effective on 10 October 2022 and the Group’s shares being delisted on 11 October 2022.
Cyber security incident
On 5 September 2022, a cyber security incident was announced by the Group after unauthorised activity was detected on its network.
Upon becoming aware of the incident, the Group immediately engaged external forensic specialists and took precautionary measures
with its IT infrastructure. There is no financial impact of this in the financial year ended 2 July 2022 and the financial impact in FY23 is
currently still being assessed.
Board changes
For information on Board changes that occurred subsequent to the year ended 2 July 2022, please see the Board Overview on pages 66
to 69 of the Corporate Governance Report.
Group’s articles of association (the articles)
The articles may only be amended by a special resolution at a general meeting of shareholders and must comply with the provisions of
the Companies Act 2006 (the Act). In conjunction with the re-registration of the Company to a private limited company on 13 October
2022, new articles of association were adopted by special resolution on 10 October 2022.
107
The Go-Ahead Group Limited Annual Report and Accounts 2022
Corporate governance
Directors’ Report continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
108
Directors’ conflicts of interests
The Board has established robust procedures for ensuring that its power to authorise conflicts of interest is operated in accordance
with the Group’s articles of association and conflicts of interest policy. All Board directors are required to make the Board aware of any
other commitments and potential conflicts of interest are advised to and approved by the Board and recorded in the conflicts register.
The Board has delegated authority to the Nomination Committee to keep under annual review any conflict or potential conflict of
interest situations authorised by the Board and to determine whether it is appropriate for such matter(s) to remain so authorised.
Following a review in 2022, the Nomination Committee concluded that no changes were required to the conflicts register.
Appointment and removal of directors
During the year ended 2 July 2022, the appointment and removal of directors was governed by the articles, the UK Corporate
Governance Code (the Code), the Act and related legislation. Directors could be appointed by the Company, by ordinary resolution or
by the Board. The Company could, by ordinary resolution, remove any director before the expiry of the director’s period of office. The
powers of the directors continue to be set out in the articles and the Act. Following completion of the acquisition, a joint venture
agreement between Globalvia, Kinetic and the Company was entered into setting out additional approval mechanisms for Board
changes.
Directors’ indemnities
In accordance with our articles, and to the extent permitted by law, directors are granted an indemnity from the Group in respect of
liability incurred as a result of their office. In addition, we maintained a directors’ and officers’ liability insurance policy throughout the
year. Neither an indemnity nor the insurance provides cover in the event that a director is proven to have acted dishonestly or
fraudulently. Qualifying third-party indemnity provisions (as defined in Section 234 of the Act) were in force during the year ended 2
July 2022 and continue to remain in force.
Employee involvement and equal opportunities
Go-Ahead is committed to employee involvement throughout the business. The Group is intent on motivating staff, keeping them
informed on matters that concern them in the context of their employment, and involving them through local consultative procedures.
Employees are kept well informed on matters of interest and the financial and economic factors affecting the Group’s performance.
This is done through management channels, Group forums, meetings, publications and intranet sites. More detail on inclusion and
development, together with information on employee engagement and learning and development, can be found in the “Our people”
section of the Strategic Report.
During the year, Go-Ahead supported employee share ownership by operating an all-employee Share Incentive Plan, in which 1,691
colleagues participated as at 2 July 2022. Following completion of the Scheme of Arrangement, the Share Incentive Plan ceased to
operate.
The Group believes in equal opportunities regardless of gender, age, religion or belief, sexual orientation, race and, where practicable,
disability. This approach is underpinned by our commitment to providing equal opportunities to our current and potential employees
and applying fair and equitable employment practices. The Group gives full and fair consideration to job applications from people with
disabilities, considering their skills and abilities. Where an employee may become disabled, whether through accident, illness or injury,
every reasonable and practicable consideration will be given to ensure that they may remain in employment. There may be some
instances where reasonable adjustments cannot be made; where this occurs the Company will endeavour to find a suitable alternative
position. The Group’s equal opportunities, diversity and inclusion policy forms part of our code of conduct policy.
Substantial shareholdings
As at 2 July 2022, the Group had been notified of the following major interests in voting rights in the Company:
Number of
ordinary shares
disclosed
% of
voting rights
disclosed
abrdn plc
5,240,801
12.14
Jupiter Fund Management plc
4,375,421
10.13
Aberforth Partners LLP
2,194,233
5.08
Following completion of the Scheme of Arrangement and, as at the date of this report, Bidco controls 100 per cent of the Company’s
issued share capital (excluding shares held in treasury) and voting rights.
The Go-Ahead Group Limited Annual Report and Accounts 2022
109
Corporate governance
Directors’ Report continued
Shareholder and control structure
As at 2 July 2022, the Group’s issued share capital comprised a single class of shares referred to as ordinary shares, with a nominal
value of 10p each. As at this date, there were 47,079,620 ordinary shares in issue, of which 3,902,230 were held in treasury and carried
no voting rights. Until 7.30am on 11 October 2022, the ordinary shares were admitted to trading on the London Stock Exchange.
The Group did not purchase any of its own shares during the year either for cancellation or to hold as treasury shares, and no such
shares were purchased between the period end and the date of this report. However, Computershare Trustees (Jersey) Limited, the
Trustees of The Go-Ahead Group Employee Trust (the Trust), purchased ordinary shares of 10p each in the Group as part of a planned
programme of share purchases to satisfy awards made under the Group’s Restricted Share Plan, Long Term Incentive Plan and
Deferred Share Bonus Plan awards.
The Group is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities or on
voting rights other than:
• Certain restrictions which may from time to time be imposed by laws and regulations
• Restrictions whereby certain employees of the Group require the approval of the Group to deal in the Group’s securities
All shareholders have the same voting rights for each share regardless of the total number of shares held. On a show of hands at a
general meeting of the Group, every holder of shares present in person or by proxy and entitled to vote shall have one vote (except in
circumstances where a proxy has been appointed by more than one member, in which case he or she will have one vote for and one
vote against if he or she has been instructed by one or more member to vote for the resolution and by one or more member to vote
against). On a poll, every member present in person or by proxy and entitled to vote has one vote for every ordinary share held. The
notice of a general meeting will specify any deadlines for exercising voting rights in respect of the meeting concerned.
The powers of the directors to issue or repurchase ordinary shares are as set out by a resolution passed by shareholders at the 2021
Annual General Meeting. The authorities for the directors to allot relevant securities, up to an aggregate nominal amount of £1,439,246
and for the disapplication of pre-emption rights on the allotment of securities, for cash up to an aggregate nominal amount of
£215,886 were not utilised in the financial year or up to the date of this Annual Report and Accounts and such authorities expired on 30
December 2022.
At the 2021 Annual General Meeting, the Company was granted authority by its shareholders to repurchase up to 4,317,739 of its
ordinary shares. No shares were acquired under this authority which expired on 30 December 2022.
The Group’s UK Rail franchise agreement, and any successor thereof, is subject to change of control criteria that would mean, on a
change of control, there would be deemed to be an “event of default” that could potentially terminate the rail franchise. This is,
however, subject to the discretion of the Secretary of State. Additionally, the Group’s sterling bond issue dated 6 July 2017, and the
revolving credit and loan facilities dated 16 July 2014, 27 April 2017, 23 October 2017, 20 July 2018, 9 July 2019 and 30 September 2021
are subject to change of control clauses that contain certain specified conditions which could lead to a compulsory repayment of the
bond and loans respectively. Transport for London, the Land Transport Authority (LTA) in Singapore and the National Transport
Authority in Ireland all have powers to prevent the operation of, respectively, London Bus, Go-Ahead Loyang PTE. Limited and Go-
Ahead Transport Services (Dublin) Limited contracts by an existing operator which is the subject of a change of control. In Germany,
certain areas of our franchise arrangements contain change of control provisions which require approval from the Passenger
Transport Authority. These are the E-Net Allgäu Bavaria and ABN Lot 1 franchise arrangements. Also, in Norway there is a change of
control clause in the agreement stating that change of control must be approved by the client, the Railway Directorate.
In parallel with the takeover process, and where appropriate, consent of third parties to the change of control of the Group was
sought. As at the date of this report, consent has been received for all material contracts. Additionally, consent has been received from
the relevant lessors of rolling stock.
There are no agreements between the Group and its directors or employees providing for compensation for loss of office or
employment (whether through resignation, purported redundancy or otherwise) that occurs because of a takeover bid.
Results and dividend
The results for the year are set out in the consolidated income statement on page 134.
Under the terms of the Scheme of Arrangement which became effective on 10 October 2022, the Board recommended a special
dividend of 100p per share in lieu of a final dividend for the year ended 2 July 2022.
Political donations and expenditure
It is the Group’s policy not to make political donations and, accordingly, no such payments were made in the year (2021: £nil).
Additionally, the Group did not incur any political expenditure as defined in the Act (2021: £nil).
Financial instruments
Details of the Group’s financial risk management in relation to its financial instruments are available in note 24 of the consolidated
financial statements.
Corporate governance
Directors’ Report continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
110
Share schemes
Employee Benefit Trust
During the year, Computershare Trustees (Jersey) Limited, the Trustees of The Go-Ahead Group Employee Trust (the Trust), held
shares for the benefit of the Group’s executive directors and senior managers, and in particular for the satisfying of awards made
under the Group’s Restricted Share Plan (RSP), Long Term Incentive Plan (LTIP) and Deferred Share Bonus Plan (DSBP). During the
financial period, as part of a planned programme of monthly share purchases, the Trust purchased a total of 42,882 ordinary shares at a
total price of £359,950 (including all associated costs). The average price was £8.32 per share. As at 9 October 2022 (being the day
prior to the Scheme of Arrangement becoming effective) the Trust held 185,814 ordinary shares representing 0.43 per cent of the
issued share capital of the Group, less treasury shares, in trust for the benefit of the executive directors and senior managers of the
Group under the RSP, LTIP and DSBP. Up until this date, the voting rights in relation to these shares were exercised by the Trustee and
dividends waived while the shares were held by the Trustee.
Share Incentive Plan
The Group operated a Share Incentive Plan during the year under review, enabling employees of the Group to acquire shares in The Go-
Ahead Group plc. In order to preserve certain tax benefits, these shares were held in a trust by Computershare Trustees Limited for
participating employees. Whilst these shares were held in trust, the voting rights attached to them were not exercised by the Trustee
or the employees for whom they are held.
As at 6 October 2022 (being the day the Scheme of Arrangement was sanctioned by the Court), 1.63 per cent of the issued share
capital of the Group, less treasury shares, was held by Computershare Trustees Limited.
In accordance with the Share Incentive Plan rules, employees were entitled to direct Computershare Trustees Limited to accept the
offer from Bidco in respect of the shares held on their behalf.
Approval
The Directors’ Report was approved for issue by the Board of directors on 24 February 2023.
By order of the Board
Carolyn Ferguson
Group Company Secretary
24 February 2023
Corporate governance
Greenhouse gas emissions
Our carbon footprint in tonnes of equivalent carbon dioxide (CO2e):
2021/22
2020/21
2019/20
2018/19
Consumption
tCO2e
Consumption
tCO2e
Consumption
tCO2e
Consumption
tCO2e
Scope 1
Gas (bus) (kWh)
5,887,933
1,075
6,363,349
1,166
5,640,483
1,037
6,015,533
1,106
Gas biogas (bus) (Kgs)
238,343
—*
—
—
—
—
—
—
Gas premises (bus) (kWh)
23,789,343
4,343
27,091,214
4,962**
25,327,060
4,657
23,811,076
4,381
Gas premises (rail) (kWh)
14,361,594
2,622
28,213,640**
5,168**
23,026,795
4,234
24,922,178
4,582
Bus diesel (10% biodiesel blend)
(ltrs)
132,762,139
339,584
132,291,707
332,360
136,608,713
347,810 142,617,090
369,964
Bus diesel (100% bio-diesel
blend) (ltrs)
66,033
11
—
—
—
—
—
—
Bus HVO biodiesel (ltrs)
289,147
10
—
—
—
—
—
—
Ancillary fleet diesel (bus) (ltrs)
820,695
2,099
961,820
2,416
—
—
—
—
Ancillary fleet diesel (rail) (ltrs)
142,624
365
—
453
—
—
—
—
Gas oil (rail) (ltrs)
4,556,261
12,569
—***
10,656
4,325,028
11,927
5,381,957
14,845
AdBlue (bus) (ltrs)
5,706,952
1,358
4,992,905
1,188
4,414,278
1,051
n/a***
n/a***
Fugitive HFC emissions from air
conditioner (bus)
—
4,410
—
4,370
—
7,384
—
n/a***
Fugitive HFC emissions from air
conditioner (rail)
—
2,887
—
4,203
—
4,502
—
n/a***
Total scope 1 (tCO2e)
371,333
366,942**
382,602**
394,878
Scope 2
Traction electricity (kWh)
1,114,087,851
218,261 1,380,109,732**
293,610 1,477,645,807
346,306 1,356,323,985
346,676
Mains electricity premises (bus)
(including Singapore and
Ireland) (kWh)
19,914,310
4,804
19,833,628**
4,999**
19,264,512
5,179
18,789,409
3,953
Mains electricity premises (rail)
(kWh)
53,560,125
10,393
71,293,912
15,165
71,999,941
16,814
74,410,676
19,019
Mains electricity premises
(head office) (kWh)
133,566
26
115,257
24
122,954
29
183,629
47
Mains electricity electric bus
(kWh)
14,149,779
2,879
9,206,680**
2,046**
4,729,277
1,110
2,352,029
601
Solar electricity generated and
consumed in premises (bus)
(kWh)
208,563
—
222,800
—
211,301
—
175,415
—
Solar electricity generated and
consumed in premises (rail)
(kWh)
521,769
—
857,865
—
734,430
—
431,706
—
Solar electricity generated and
consumed in premises (total)
(kWh)
730,332
—
1,080,665
—
945,731
—
607,121
—
Total scope 2 – location (tCO2e)
236,363
315,844**
369,438
370,296
Total scope 2 – market (tCO2e)
12,415
39,325**
67,279
61,971
Scope 1 & 2
Total scope 1 & 2 aggregated
(location-based)
—
607,696
—
682,786
—
752,040
—
765,174
YoY % change
—
(11.00)%
—
(9.21)%
—
(1.72)%
—
(7.65)%
% change on 2019/20 baseline
—
(19.19)%
—
(9.21)%
—
n/a
—
n/a
Scope 3
Electricity – transmission and
distribution (total)
—
21,261
—
27,820**
—
31,554
—
31,510
* Figure is 0.3 rounded down to nil.
** Figure restated due to actual data provided on premises energy consumption by the energy supplier. This data replaced estimations provided by the supplier at the end of the
2020/21 reporting period. More information in the ‘Methodology, scope and exclusions’ subsection below.
*** Figure not available.
111
The Go-Ahead Group Limited Annual Report and Accounts 2022
Corporate governance
Greenhouse gas emissions continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
112
Breakdown by division:
2021/22
2020/21
2019/20
2018/19
Location
Market
Location
Market
Location
Market
Location
Market
Scope 1, 2 and 3
Bus (tCO2e)
361,175
355,714
354,053**
348,918**
368,761
364,115
381,314
382,413
Rail (tCO2e)
267,752
49,291
356,527**
85,167**
415,283
117,798
416,169
105,084
Head Office (tCO2e)
28
2
27
2
31
2
51
63
Total (tCO2e)
628,955
405,007
710,607
434,087
784,075
481,916
797,534
487,561
Scopes 1-3 by country
UK (tCO2e)
538,538
330,983
626,479
334,292
703,158
389,243
742,915
432,914
Singapore (tCO2e)
46,759
46,759
46,593
46,593
47,010
47,010
48,283
48,283
Ireland (tCO2e)
13,933
14,022
13,671**
13,718**
11,964
12,010
6,336
6,364
Norway (tCO2e)
1,248
1,009
1,044
768
1,025
736
—
—
Germany (tCO2e)
28,342
12,092
22,820**
38,716**
20,919
32,915
—
—
Sweden (tCO2e)
135
142
—
—
—
—
—
—
Total (tCO2e)
628,955
405,007
710,607**
434,087**
784,075
481,916
797,534
487,561
Out of scopes
Biogenic content of biodiesel
(tCO2e)
15,870
—
20,144
—
15,188
—
12,436
—
Scope 1, 2 and 3 and Out of
scopes
Total (tCO2e)
644,825
420,878
730,751**
454,231**
799,263
497,104
809,121
500,795
YoY % change
(11.76)%
(7.34)%
(8.57)%
(8.62)%
(1.22)%
(0.74)%
(7.33)%
(2.52)%
% change on 2019/20 baseline
(19.32)%
(15.33)%
(27.28)%
(16.68)%
(20.45)%
(8.82)%
(19.46)%
(8.15)%
Total vehicle miles operated
659,413,857
— 749,034,991
— 733,702,870
— 706,393,581
—
Total bus and rail mileage
All scopes kg CO2e/vehicle mile
0.9779
0.6383
1.0045**
0.6244**
1.0841
0.6775
1.1454
0.7089
YoY % change
(2.7)%
2.2%
(7.4)%
(5.4)%
(4.9)%
(4.4)%
(10.4)%
(5.7)%
% change on 2019/20 baseline
(9.8)%
(5.3)%
(7.4)%
(5.4)%
n/a*
n/a*
n/a*
n/a*
Total global energy
consumption (kWh)
2,631,385,886
2,917,925,461
3,032,726,257
2,983,369,795
* Figure not available.
** Figure restated due to actual data provided on premises energy consumption by the energy supplier. This data replaced estimations provided by the supplier at the end of the
2020/21 reporting period. More information in the ‘Methodology, scope and exclusions’ subsection below.
Annual emissions figures for prior years have been restated to reflect the collation of subsequent changes in consumption data and
the correction of emissions.
Methodology, scope and exclusions
We report on greenhouse gas (GHG) emissions in accordance with the GHG Protocol Corporate Accounting and Reporting Standard,
and the UK Government’s Environmental Reporting Guidance methodologies.
In line with the GHG Protocol and guidance, we have reported all scope 1 and 2 emissions, and CO2 relating to fugitive emissions from
air-conditioning equipment in our premises and fleet, the consumption of AdBlue (used in exhaust abatement technology installed on
some of our latest diesel buses to reduce NOx emissions) and CO2 emissions relating to fuel consumption by ancillary vehicles. Our
materiality threshold for GHG emissions is 5 per cent.
We do not currently report on our scope 3 emissions other than those arising from losses within the electricity transmission and distribution
systems. As part of the work in setting a science-based target (SBT), a screening exercise was carried out in 2021 to quantify our scope 3
emissions and established that these emissions were under the 40 per cent threshold specified by the Science-Based Targets initiative (SBTi).
Therefore, we did not have to set reduction targets for our scope 3 emissions but plan to do so as well as incorporate it into future GHG
reporting. We also report our “out of scopes” CO2e emissions which relate to the biogenic content of fuels used by our bus fleets.
To ensure consistency, all scope 1 emissions (UK and overseas) are calculated by using the UK’s Department for Business, Energy & Industrial
Strategy (BEIS) CO2e conversion factor for each energy source. We report our scope 2 emissions on both a “location” and a “market” basis.
This dual reporting applies to CO2e emissions arising from our electricity consumption only. The location-based method uses the national
average carbon emission factors for mains electricity that take the whole mix of fuels used to generate electricity into account in each country
we operate. The correct location-based CO2e conversion factors for 2022 were used for all electricity consumed. The market-based method
uses supplier or product-specific carbon factors (where available) that reflects supply contract specifications agreed between supplier and
customer. In some instances, particularly for traction electricity where we do not contract directly with the energy provider, the supplier or
product-specific market-based CO2 conversion factors are not available. Where this occurs, we follow the hierarchy of market-based factors
as specified in the GHG Reporting Protocol and have used the most recent national mix residual factors that are available instead.
Corporate governance
Greenhouse gas emissions continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
113
Methodology, scope and exclusions continued
All the above emissions sources fall within the businesses included in our consolidated financial statements. We define our
organisational reporting boundary by applying the financial control approach with a materiality threshold set at 5 per cent.
Emissions are expressed in terms of carbon dioxide equivalent (CO2e). Our relative performance metric is kilogrammes of CO2e per
vehicle mile operated. This metric ensures there is a direct correlation between our performance and the purchase of increasing
numbers of low carbon vehicles as well as the measures we are taking to improve our energy efficiency.
To maintain transparency and enable stakeholders to see our performance trends over time, we provide historical data for both our absolute
CO2e emissions and our relative performance metric. We restate figures for historical CO2e emissions and our relative performance when
there has been a subsequent change in energy consumption data or if methodologies change or if accounting errors were made. 2021 figures
have been restated due to actual data provided on premises energy consumption by the energy supplier, replacing the estimated figures
available at the date the prior year Annual Report and Accounts were signed.
Context
We provide historical GHG emissions data back to 2019 – as disclosed in the table above. Our performance over time must be seen in
the context of the changes in the composition of the Group since 2019 but also, in particular, since 2020, which is the baseline year for
our climate change strategy and validated science-based target.
Within the Bus division, Go-Ahead Ireland and Go North West began operating in September 2018 and June 2019 respectively.
Additionally, Swedish Flexbuss Sverige AB was acquired in April 2022. It is relevant to remark that Go South West’s operations and CO2
emissions increased by 40 per cent in 2021 following the start of the contract to operate bus services throughout Cornwall.
Within the Rail Division, we began operating rail services in Germany in June 2019 (with further expansion of services in December 2021)
and in Norway in December 2019 – please note that the 2020 Norwegian rail data (baseline year) presented in the table above
correspond to part year only. All these additions expanded our operations and consequently increased our absolute CO2 emissions. On
the other hand, in October 2021, London & South Eastern Railway Limited exited the Group, which contributed to a CO2 emissions reduction.
Performance
Our SBTi-approved science-based target requires us to achieve a 75 per cent absolute reduction in our total scope 1 and 2 GHG
emissions by 2035 from our 2020 baseline performance, with scope 2 GHG emissions calculated on a location basis. In 2022, we
achieved an 11.0 per cent year on year absolute reduction in scope 1 and 2 CO2 emissions and a 19.2 per cent absolute reduction
compared to our 2020 baseline. We are therefore on track to achieve our science-based target. On the same basis, our CO2 emissions
per vehicle mile in 2022 were 1.8 per cent lower year on year and were 9.7 per cent lower than in our 2020 baseline.
Our CO2 reduction performance has been driven by efficiency improvements in our fleet and premises, and heavily impacted by the
decarbonisation of the national electricity networks in the countries in which we operate and changes to our Company structure, which
includes the exit of London & South Eastern Railway Limited, the expansion of our train services in Germany, and the acquisition of Flexbuss.
Actions we are taking to reduce energy consumption and improve energy efficiency to drive down our CO2 emissions
In 2022, the main focus of our activities was the implementation of our climate change strategy which includes our science-based
target to reduce our scope 1 and 2 CO2 emissions by 75 per cent by 2035 relative to our 2020 baseline performance. In the context of
carbon emissions and energy consumption, we looked for opportunities to accelerate the transition of our fleet away from fossil fuels,
increase number of passengers on our buses and trains (modal shift) and improve our energy efficiency regardless of the energy source.
Read more about our climate change strategy at www.go-ahead.com
Transition to zero-emission fleet initiatives
We have a target to transition our entire bus and rail fleets to zero emission by 2035. While this is particularly challenging for buses, within rail
all of our operations are fully electric other than GTR services on two small sections of non-electrified track where a limited diesel fleet
operates. GTR continues to work closely with industry partners to enable their diesel fleet to be replaced by zero-emission trains.
During the year ended 2 July 2022, we focused on the following activities:
• Engaging with the UK Government to ensure adequate funding for the bus transition to zero emission buses
• Working in partnership with transport authorities to submit proposals to access funding via existing schemes: Bus Service Improvement
Plans (BSIPs) and Zero Emission Bus Regional Areas (ZEBRA). In 2022, Oxford Bus Company was granted funding to purchase 104 electric
buses – and their necessary infrastructure – that are expected to start operating in 2024
• Expanding our electric bus fleet – we reached c.350 vehicles in 2022. Most of the new electric buses were acquired by Go-Ahead London, but Go
North East, Go South Coast, Go-Ahead Singapore, Oxford Bus Company and Go North West have also extended their electric bus fleet. Overall,
we registered a 264 per cent increase in electric bus mileage and a 201 per cent increase in consumption by electric buses since 2020. These
electric buses have all displaced diesel buses and their CO2 emissions are typically 80 per cent lower than equivalent diesel buses
• Working to create our Zero Emission Centre of Excellence, a new area within Go-Ahead that will support our operating companies to
decarbonise their fleet by creating a hub of intelligence and expertise in zero-emission vehicles
• Purchasing our first hydrogen-powered buses (54 vehicles) that will be operated by Brighton & Hove and Metrobus in the Crawley,
Redhill and Gatwick Airport area and securing a 15-year hydrogen supply deal with Air Products
Corporate governance
Greenhouse gas emissions continued
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114
Energy efficiency measures
Fleet
Within the Bus division, whilst transition to zero emission buses remains the long term ambition and is the only way for us to achieve
our science-based targets, we are constantly working to we operate our diesel vehicles as efficiently as possible to drive down fuel
consumption and related CO2 emissions.
When purchasing new diesel buses, we have long specified that, other than in exceptional circumstances, all new buses must be
certified as low-emission buses (LEBs), which are, by definition, the most fuel-efficient and cleanest diesel buses available to us to
purchase. These new buses are generally far more fuel efficient than the older buses that they replace, so investment to refresh the bus
fleet has been one of the main drivers of improved fuel efficiency throughout the years.
Training all drivers to drive in the most fuel-efficient way is also key. We have invested in systems (e.g. telemetry) to improve our
driving techniques and monitor our driving performance as well as working with local authorities to introduce bus priority measures to
increase our fuel efficiency.
As a result of the initiatives mentioned above, our
diesel fleet efficiency in 2022 was 3.2 per cent better
than it was in 2020, which equates to a saving of 4.25
million litres of diesel or nearly 11,000 tCO2e.
Within the Rail division, whilst we are not responsible
for specifying and purchasing the rolling stock that we
operate (as we do for buses), we used equivalent fuel
efficiency initiatives to improve performance and saw
the diesel and electric fleet in 2022 improve its
efficiency by 8.0 per cent and 10.5 per cent
respectively compared with performance in 2020,
resulting in a CO2 reduction of over 23,000 tCO2.
Premises
Within our premises our longstanding initiatives to
drive down electricity and gas consumption by
continuously improving efficiency are ongoing. The
rollout of LED lighting across our property portfolio
has largely been completed already but in 2022 the
lighting at Manchester and Loyang (Go-Ahead
Singapore) bus depots was upgraded to LED, with a
31 per cent reduction in total electricity consumption
achieved at Manchester. Other initiatives include an
ongoing programme to replace life-expired plant and
equipment with new, more efficient equipment,
fitment of controls on lighting and heating and
ensuring that energy efficiency is incorporated into
the basic design of all new build and major
refurbishment projects.
We are also seeking to utilise lower carbon energy
sources where possible. From July 2019, all electricity consumed in the Group’s UK premises, including that used by our electric bus
fleet, was generated from renewable sources and zero rated for CO2 on a market basis. In 2022, the same became valid for all our UK
and Norwegian traction electricity, as well as approx. 75 per cent of traction electricity consumed in Germany.
Additionally, we are looking into continuing to install solar electricity panels. These have been installed at Go-Ahead Germany’s
Essingen depot and at four bus depots in the UK. Within the Rail division, GTR has worked in partnership with Network Rail to install
solar film at Denmark Hill station. We plan to install solar PV at more sites in future and are presently carrying out a feasibility study to
identify further potential sites.
Certification
In October 2018, Go-Ahead’s Bus division achieved ISO 50001 certification regarding its energy management systems. The scope of
the certification was extended during 2020, to include East Yorkshire Motor Services and Go North West, and extended again in 2021
to include Go-Ahead Ireland.
Considering the existing certifications already held by Govia Thameslink Railway, all of Go-Ahead’s UK and Ireland operations are now
covered by ISO 50001 certification, recognised as best practice for energy management. In October 2021, our Bus division’s ISO 50001
certification was successfully re-certified for further three years.
Measures to increase energy efficiency and reduce GHG emissions
Actions
2021
2022
Purchasing low and/or zero-emission buses
Investing in fuel-efficient driving (e.g.
telemetry) for bus and rail
Replacing incandescent lighting for LED
across our premises
Replacing life-expired equipment with new/
more efficient equipment across our
premises
Installing solar electricity panels
Group electricity supply from fully
renewable sources
ISO 50001 certification for UK operations
Science-based target for GHG emissions
reduction - scope 1 and 2
SBTi validated science-based target for
GHG emissions reduction - scope 1 and 2
Corporate governance
Statement of directors' responsibilities
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115
The directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and regulations.
Detailed below are statements made by the directors in relation to their responsibilities and disclosure of information to the auditor.
Directors’ responsibilities in respect of the preparation of the financial statements
Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have elected
to prepare the Group financial statements in accordance with United Kingdom International Accounting Standards. The financial
statements also comply with International Financial Reporting Standards (IFRSs) as issued by the IASB. The directors have also chosen
to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law), including FRS 101 Reduced Disclosure Framework.
Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group at the end of the financial year and of the profit or loss of the Group for that period.
In preparing the parent company financial statements, the directors are required to:
• Select suitable accounting policies and then apply them consistently
• Make judgements and accounting estimates that are reasonable and prudent
• State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained
in the financial statements
• Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in
business
In preparing the Group financial statements, International Accounting Standard 1 requires that directors:
• Properly select and apply accounting policies
• Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information
• Provide additional disclosures when compliance with the specific requirements of the financial reporting framework are insufficient
to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position
and financial performance
• Make an assessment of the Group’s ability to continue as a going concern
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group, and to enable them to ensure that
the Group financial statements comply with the Companies Act 2006.
The directors are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
The directors consider that the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and
provide information necessary for shareholders to assess the Company’s performance, business model and strategy.
Disclosure of information to the auditor
Each of the persons who are directors at the date of approval of this report confirms that:
• There is no relevant audit information (as defined in Section 418(3) of the Act) of which the Group’s auditor is unaware
• They have taken all the steps they ought to have taken as directors to make themselves aware of any relevant audit information and
to establish that the Group’s auditor is aware of that information
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Act.
By order of the Board
Clare Hollingsworth
Chair
24 February 2023
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GO-AHEAD GROUP LIMITED
Report on the audit of the financial statements
1. Opinion
In our opinion:
the financial statements of Go-Ahead Group Limited (the ‘parent company’) and its subsidiaries (the
‘group’) give a true and fair view of the state of the group’s and of the parent company’s affairs as at 2 July
2022 and of the group’s profit for the 52 weeks then ended;
the group financial statements have been properly prepared in accordance with United Kingdom adopted
international accounting standards and International Financial Reporting Standards (IFRSs) as issued by
the International Accounting Standards Board (IASB);
the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced
Disclosure Framework”; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
We have audited the financial statements which comprise:
the consolidated income statement;
the consolidated statement of comprehensive income;
the consolidated and parent company balance sheets;
the consolidated and parent company statements of changes in equity;
the consolidated cash flow statement;
the critical accounting judgements and key sources of estimation uncertainty; and
the related notes to the consolidated financial statements 1 to 31 and to the parent company financial
statements 1 to 20.
The financial reporting framework that has been applied in the preparation of the group financial statements
is applicable law and United Kingdom adopted international accounting standards and IFRSs as issued by the
IASB. The financial reporting framework that has been applied in the preparation of the parent company
financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced
Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of our report.
We are independent of the group and the parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the
‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit services provided to the group and
parent company for the financial year are disclosed in note 5 to the financial statements. We confirm that we
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The Go-Ahead Group Limited Annual Report and Accounts 2022
have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the group or the parent
company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
Valuation of onerous contracts within overseas rail operations;
Rail franchise accounting within UK rail operations; and
Impact of control deficiencies.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
The materiality that we used for the group financial statements was £3.8m which
was determined on the basis of 5% of profit before tax and before exceptional
items.
In response to the issues identified relating to the DfT rail franchise investigation
and broader control observations in the prior year, we determined it appropriate to
retain performance materiality at 50% of materiality in the current year.
Scoping
The components in full audit scope represent the principal business units and
account for 91% (2021: 97%) of the Group’s revenue, 88% (2021: 93%) of the
Group’s profit before tax and 79% (2021: 97%) of the Group’s net assets.
Significant changes in
our approach
In the prior year, a number of key audit matters were identified directly as a
consequence of the Department for Transport (‘DfT’) rail franchise investigation
and the significant number of errors and control weaknesses identified.
Having reassessed our audit risks in the current year, we did not consider the
following key audit matters identified in the prior year to be key audit matters in
the current year.
Going concern; and
Presentation of exceptional items.
These changes arise from the completion of the DfT investigation and the
established presentation of exceptional items, together with the change in
ownership of the group. Further details on our response to control deficiencies are
set out in section 5.3 of this audit opinion.
Further, following the creation of a new National Rail Contract (‘NRC’) and the end
of previous UK Government support packages, we have refined our key audit risks
in the current year to cover key accounting matters and judgements associated
with rail contracts, being the settlement of the DfT investigation, the completeness
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The Go-Ahead Group Limited Annual Report and Accounts 2022
of disallowable costs, and franchise related accruals and provisions. The key audit
matter of ‘Rail franchise accounting’ therefore replaces the following key audit
matters from the prior year:
Accounting treatment for UK Government support packages;
Completeness of disallowable costs within the UK rail operations; and
The Department for Transport rail franchise investigation.
Within the UK bus division, we have considered the greater level of experience over
the accuracy of the claims process for both Covid-19 Bus Services Support Grant
(CBSSG) and Quality Incentive Contract premiums (QICs) and also the more
simplistic terms for the Bus Recovery Grant (BRG) schemes introduced in the
current year. We therefore no longer consider revenue recognition for the bus
division to be a key audit matter in the current year.
4. Conclusions relating to going concern
In evaluating management’s assessment of the group’s and parent company’s ability to continue as a going
concern we considered many factors including:
•
assessing the impact of the takeover and subsequent delisting of the Group on the going concern
conclusion;
•
evaluating the credit ratings issued by the ratings agencies subsequent to the change in control;
•
obtaining evidence of the change in control waivers and waivers provided by the group’s bankers in
response to the delays in filing the financial statements;
•
confirming availability of the facilities during the going concern period;
•
performing accuracy, completeness and reasonableness checks on the underlying cash flow forecasts in
the base case scenario by comparing to historic results and detailed knowledge of the business;
•
challenging each of management’s assumptions applied by agreeing to supporting evidence such as
contractual agreements, and performing additional sensitivity on assumptions where necessary;
•
assessing whether management’s assumptions were in line with our understanding of the external factors
and forecast market trends;
•
assessing any contradictory evidence as part of our audit work and the impact on management’s
conclusion;
•
understanding and assessing covenant requirements for the going concern period, performing covenant
compliance tests and sensitivities on key variables; and
•
evaluating the appropriateness of the disclosures made by management within the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s
ability to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified. These matters included those which
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had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
5.1. Valuation of the onerous contract provisions within overseas rail operations
Key audit matter
description
Onerous contract provisions amounting to £69.9m (2021 – £105.4m, as restated)
have been recognised in respect of international rail contracts in Germany and
Norway. Further detail is set out in Note 25 to the accounts.
Germany
The Bavarian rail franchise (‘GABY’) is made up of two rail contracts, one of which
commenced in December 2021 and the other became operational in December
2022. Following the commencement of the ENA line in December 2021, the Group
has gained greater experience of running the GABY contract and has continued to
prepare for mobilisation of the ABN line in December 2022. During this period the
Group has continued to refine the timetable and operating schedule with the
Bavarian authorities, predominantly resulting in changes to the estimated subsidy
revenue and staff cost assumptions. Together with changes in macro-economic
factors such as energy and inflation, the updated operating plan has resulted in a
revision to the estimate of the cash flows expected during the 12 year contract,
increasing the provision recognised as at 2 July 2022 to £58.8m (2021: £38.9m, as
restated). The GABY franchise is primarily exposed to cost risk due to the fixed
nature of the majority of the revenues over the life of the franchise. Consequently,
key estimates included in the assessment of the onerous provision include energy
costs, driver and conductor recruitment and operational penalty levels.
Furthermore, given one of the contracts only commenced in December 2022, there
remains uncertainty of the final mobilisation plans and operating and financial
performance for the contract.
Norway
In addition, an onerous provision was identified in the prior year in relation to the
group’s Norwegian rail franchise. The prolonged impact of COVID-19 on public
transportation resulted in a significant reduction in passenger demand and slower
than previously estimated recovery rates. On 28 June 2022, Go-Ahead Norway
signed an agreement with the Norwegian Rail Directorate to revise its rail contract.
This revision included certain obligations being waived. Compensation for loss of
income from the continued impacts of the COVID-19 pandemic was agreed at
specified levels covering the difference between actual passenger income and
income levels estimated when the contract was awarded. Incentives have also been
agreed for reaching specified levels of passenger income, and other certain areas
including compensation for 50% of energy costs when prices are at specified levels.
Consequently, updating cashflow forecasts for the revision to the contract with the
Rail Directorate, as well as updating the discount rate and inputs, resulted in a
material reduction in the value of the onerous contract provision to £11.1m (2021:
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£65.3m). Key estimates include exposure to passenger revenue risk associated with
the Norwegian franchise and estimates of the recovery rates of passenger volumes.
A key audit matter and fraud risk has been identified in relation to the valuation of
these onerous contract provisions and specifically the key estimates noted above.
This is due to several factors including the complexity and infancy of the contract in
Germany given it is still in mobilisation, and also that a new contract was signed in
Norway in close proximity the year end, increasing the risk that management may
not have fully reflected the terms of the new contract in the underlying models.
Additionally, there is extensive reliance on manual spreadsheets and manual
interventions when determining the valuation. In assessing the risk, we also
considered the significant deficiencies in controls and misstatements were
highlighted in our audit report for the year ended 3 July 2021. A prior year
adjustment was recognised in respect of the German onerous contract of £5.1m,
primarily relating to mechanical errors within the prior year model and errors in
recognising certain ancillary elements of income.
Given the level of estimation uncertainty, management has included further
information in the critical accounting judgements and key sources of estimation
uncertainty note on pages 140-145 of the Annual Report and in the operational
risks section of the Audit Committee report on page 62 of the Annual Report.
How the scope of our
audit responded to the
key audit matter
We have challenged management’s assessment of the onerous contract provisions
through the following procedures:
Germany:
•
obtaining an understanding of the relevant controls in respect of the
significant inputs and assumptions in the model;
•
inspecting the GABY contract to challenge completeness of matters
included within the onerous provision model, taking into consideration of
the performance obligations of the contract;
•
challenging management’s estimates for revenue including assessment
against the framework of the contract and the expected services to be
delivered over the life of the contract. This included the change in
estimation for the pairing of routes expected as part of the contract
mobilisation and the level of variable revenues estimated by management
for incentives and penalty deductions;
•
assessing the reasonableness of key assumptions, the level of estimation
uncertainty and any changes since the previous year end against
supporting evidence, including challenging the basis for the growth in staff
costs by inspecting latest agreements with unions for staff benefits that
impact the cash flows, meeting with operations management to
understand the latest operating plan for conductors and drivers and
evaluating latest trends in penalties based on the initial mobilisation of the
ENA contract;
•
challenging the completeness of costs included in the model. This included
inspection of franchise commitments for demobilisation and exit costs,
subcontractor agreements, rolling stock agreements and comparison to the
existing German franchise cost experience;
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•
in conjunction with our valuation specialists, challenging the
appropriateness of the discount rate applied in the onerous provision
model;
•
reviewing the correspondence between the Company and the local rail
authorities;
•
performing historical accuracy testing by comparing most recent budget
information to actual performance;
•
testing the arithmetical integrity of the model involving analytics and
modelling specialists;
•
considering the latest performance and experience in the existing German
franchise operation to challenge the risk of optimism or conservatism
within the GABY model;
•
challenging whether movements in the onerous contract provision related
to changes in estimate or prior period errors (in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors); and
•
assessing the adequacy of the financial statement disclosures, including the
key source of estimation uncertainty disclosures in on pages 140-145.
Norway:
•
obtaining an understanding of the relevant controls in respect of the
significant inputs and assumptions in the model;
•
inspecting the new Norwegian contract to challenge completeness of
matters to include within the onerous provision model;
•
assessing the reasonableness of key assumptions with specific focus on
management’s assumptions in relation to passenger demand and the level
of estimation uncertainty. This included review of historical passenger
levels, review of latest industry data, discussion with industry experts and
performing sensitivity analysis;
•
challenging the completeness of costs included in the model. This included
inspection of franchise commitments for demobilization and exit costs,
third party agreements for key cost components and review of historical
cost performance of the franchise;
•
in conjunction with our valuation specialists, challenging the
appropriateness of the discount rate applied in the onerous provision
model;
•
reviewing the correspondence between the Company and the local rail
authorities;
•
testing the arithmetical integrity of the model involving analytics and
modelling specialists;
•
considering the latest performance of the Norway rail franchise to
challenge the assumptions in the model;
•
challenging whether movements in the onerous contract provision related
to changes in estimate or prior period errors (in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors); and
•
assessing the adequacy of the financial statement disclosures, including the
key source of estimation uncertainty disclosures on pages 140 to 145.
Key observations
The results of our procedures were satisfactory and we concur with the provisions
recognised by management. We note that control deficiencies were identified in
respect of this matter and these have been considered in more detail in 5.3.
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5.2. Rail franchise accounting within UK rail operations
Key audit matter
description
Settlement of DfT rail franchise investigation
On 18 March 2022, the Secretary of State for Transport and LSER signed a
Reconciliation Agreement following the matters of concerns identified in the prior
year, resulting in a final settlement amount payable to the DfT. In addition, on 9
May 2022 a final penalty notice was issued to LSER by the Secretary of State in
accordance with the Railways Act 1993, resulting in a final settlement of £23.5
million. In the prior year, there was significant judgment involved in assessing the
expected cost of the investigation, which resulted in exceptional costs of £81.3
million being recognised by the Group, this was reflective of the status of the
investigation at the date of signing of the Annual Report. The final settlements in
the current year have resulted in a credit to exceptional costs of £11.7 million.
Completeness of disallowable costs within the UK rail operations
As a result of industry wide decreases in rail passenger numbers due to COVID-19,
the Secretary of State signed an Emergency Recovery Measures Agreement (ERMA)
with GTR which ran from 19 September 2020 until the end of March 2022. Under
the agreement, all allowable costs are covered by the DfT via a subsidy mechanism
to achieve a ‘breakeven’ point and in return for continuing to run the franchises,
train operating companies (‘TOCs’) earn a fixed management fee each period, with
a variable performance-based fee also earnt based on the achievement of
operational and financial performance metrics. On 1 April 2022, GTR commenced
the operation of its National Rail Contract (‘NRC’), the subsidy mechanism of the
NRC operates in a way consistent with the ERMA contract.
Given the complexity of the government support contracts and judgement involved
in determining “disallowable costs”, which are not subject to subsidy under the
Government support arrangements and the NRC, this has been determined as a
potential judgement in relation to revenue recognition under IFRS 15 ‘Revenue
from contracts with customers’. The risk is focused on certain costs where there is a
greater degree of judgment and therefore risk within GTR’s subsidy income
recognised.
In addition to the risk in relation to the completeness of the disallowable costs
identified under both the ERMA and NRC arrangements, we have also determined
that there is a risk, similar to disallowable costs for any costs or credits which arise
relating to the pre-EMA period and are not subject to subsidy.
Under the NRC there are increased compliance obligations for GTR, in particular
with regarding to the tendering of affiliate trading contracts. In the event that these
obligations are not met there is a risk that the associated costs incurred are
determined by the DfT to be disallowable, and therefore not subject to subsidy
income.
Settlement of ERMA franchise
Following the end of the ERMA franchise at the end of March 2022, a settlement
agreement is required to be reached between GTR and the DfT to close out
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The Go-Ahead Group Limited Annual Report and Accounts 2022
historical balances held, including reaching agreement on the dilapidation for
rolling stock and depots, which reflects the fact that the responsibility for these
dilapidations are taken on by the DfT under the NRC. This requires a judgment to be
made regarding management’s best estimate of both the amount of the settlement
to be determined with DfT, and how any residual credits which may arise would be
allocated between GTR and DfT. The total provision held at the balance sheet date
in respect of GTR’s franchise commitments is £66.2 million. Management’s
judgment, as disclosed in note 25, reflects their best estimate of the amounts due
back to DfT and the lessors, but significant judgement has had to be applied.
Rail franchise accounting disclosures
Given the level of judgement in respect of both the completeness of disallowable
costs and the settlement of the ERMA franchise, management has included further
information in the critical accounting judgements and key sources of estimation
uncertainty note on pages 140 to 145 of the Annual Report and in the operational
risks section of the Audit Committee report on page 63 of the Annual Report.
How the scope of our
audit responded to the
key audit matter
Our audit procedures included:
Settlement of DfT rail franchise investigation
•
obtaining the final reconciliation agreement and penalty notice issued by
Secretary of State for Transport (‘SoST’) to LSER and assessed the
appropriateness of the treatment of the current year credits as exceptional;
•
agreeing the amounts confirmed in the final settlement notice to the those
recognised in the underlying books and records.
Completeness of disallowable costs within the UK rail operations
•
obtaining an understanding of the relevant controls over the accounting for
transactions within the ERMA and NRC contracts in the UK rail businesses,
in particular focusing on the controls over the identification and
completeness of disallowable and pre-EMA items and management’s
review of key judgements;
•
inspecting the ERMA and NRC contracts to challenge the appropriateness
of costs included or excluded by management in the subsidy income
calculations. This included:
i.
performing a risk assessment to identify the costs over which
there is more judgment in the determination of the
classification as allowable or disallowable;
ii.
testing a sample of allowable costs by agreeing to supporting
evidence and made further enquires of management to
challenge whether they should be considered disallowable;
iii.
agreeing the disallowable costs reported to the DfT to third
party evidence to test the accuracy of the submissions;
iv.
testing a sample of pre-EMA costs and credits to supporting
evidence, including through direct inquiries with the DfT or
obtaining supporting documentation confirming the
appropriateness of the treatment from the Department;
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The Go-Ahead Group Limited Annual Report and Accounts 2022
v.
assessing the appropriateness of treatment of these items as
pre-EMA and challenging management on whether the facts
and circumstances which drove the pre-EMA treatment were
current year events.
•
assessing the financial performance of the contract against budget and pre-
EMA costs / credits for each period to identify any potential costs that may
be deemed to not be compliant with the “good & efficient operator”
criteria as defined by the franchise agreement;
•
evaluating the affiliate (related party) trading submissions to the DfT to
assess whether any costs would be deemed to be allowable under the
ERMA and NRC contracts.
Settlement of ERMA franchise
•
obtaining the dilapidation reports provided by the lessors in the current
year, challenging the movement in these estimates, including utilisation in
the period, from the prior year, and gaining an understanding of the scope
of these third party valuations across both periods;
•
obtaining an understanding from management as to the status of the
settlement process and performing direct inquiries with the DfT to
corroborate this;
•
challenging the build-up of the provision over the life of the GTR franchise,
specifically assessing the nature of the contract and funding positions that
affects how any residual credits that may arise would be attributed to GTR
and DfT; and
•
considering the appropriateness of the disclosures included in the financial
statements, with particular focus given to the disclosures included within
the critical judgments and key sources of estimation uncertainty.
Key observations
The results of our procedures within the UK rail divisions were satisfactory and we
concur with the amounts recognised in respect of the DfT rail franchise
investigation within exceptional costs, subsidy income within revenue and the
franchise commitment provisions. We note that control deficiencies were identified
in respect of this key audit matter and these have been considered in more detail in
5.3. We concur that the disclosures made with regards to the settlement of the
franchise commitments in note 25 to the financial statements to be appropriate.
5.3 Impact of control deficiencies
Key audit matter
description
In our prior year audit opinion, we observed the need for significant improvement
in the Group’s control environment. However, since the 2021 Annual Report was
published, the Group has seen significant change. Notably there have been a
number of changes in key personnel at both Group and divisional level, the Group
settled the LSER investigation with the DfT, it was subsequently acquired and in
September 2022 the Group announced that it had been the subject to a cyber-
attack. These events have adversely affected the Group’s capacity to address the
control deficiencies noted in the prior year.
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The Go-Ahead Group Limited Annual Report and Accounts 2022
Similar to last year, a significant number of misstatements were identified during
the 2022 audit which were material. The misstatements highlighted the complexity
of the Group’s franchise and contractual arrangements along with the need to
improve the underlying controls relating to financial reconciliations and review
controls. Where management review controls exist, there is a need to improve the
precision of such controls, the quality of evidence supporting the extent to which
the control owner reviewed and challenged the information presented to them,
and to ensure adequate capacity and expertise within the finance teams to provide
detailed oversight. Improvements were however observed in the rigour and
challenge applied to the German and Norway onerous contract provisions, albeit a
prior year adjustment of £5.1m was identified and subsequently corrected by
management in relation to Germany (see section 5.1).
For a number of the Group’s key judgements and estimates, the Group is heavily
reliant on manual controls which rely on a significant number of inputs and
assumptions, increasing the inherent risk of error. Across the Rail segment, this has
required substantial audit effort to challenge and test the integrity of the
underlying data and assumptions made. Further, a number of complex technical
accounting matters exist across the Group, and we observe the need to improve
related controls, particularly where enhanced technical or specialist support should
be sought to ensure that policies and practices are appropriate.
The deficiencies in the control environment have resulted in significant amount of
additional time for the audit procedures to be completed. As a result, we
considered assessing the impact of control deficiencies on our audit procedures to
be a key audit matter. On page 3 of the Annual Report for the year ended 2 July
2022, the Board has acknowledged these and is, we understand, committed to a
plan of improvement. For further details of the issues underpinning these control
deficiencies refer to sections 5.1 and 5.2.
How the scope of our
audit responded to the
key audit matter
In order to respond to the pervasive and specific risks arising from deficiencies in
the control environment, we modified the nature, extent and timing of our audit
procedures. Specifically:
•
retaining our performance materiality judgement (as described in section
3) at 50% of materiality. This increased the volume of substantive testing
completed;
•
increasing the level of senior input to the audit team including continued
partner involvement with relevant rail industry experience;
•
involving specialists and experienced team members to challenge certain
areas of judgement including the assessment of discount rates and leasing
assumptions;
•
making direct enquiries of the DfT and other transportation authorities to
assess franchise-related risks and assumptions;
•
senior members of the audit team performing audit testing directly in more
complex areas of accounting where control deficiencies had been identified
including the onerous provision assessments in Norway and Germany;
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The Go-Ahead Group Limited Annual Report and Accounts 2022
•
engaging external legal experts to support the audit team with matters of a
legal and regulatory nature, including the boundary zone fare matter
detailed in note 28;
•
modifying the nature, extent and timing of procedures in relation to journal
entries posted by management, including increasing unpredictability in our
audit procedures for the testing of journal entries in specific areas. This
included additional risk characteristics to search for an increased range of
keywords, combining those of importance from the investigation and
searching for posts made by certain members of management;
•
challenging management’s assessment of the nature and cause of errors in
specific components to consider the risk that there is a pervasive risk of
bias; and
•
extending the group’s reporting timetable in order to give us additional
time to perform the work required as a result of the control deficiencies
identified. It has also enabled the use of an extended hindsight period to
assess the appropriateness of year end judgements.
Key observations
Consistent with last year, a significant number of misstatements were identified
during the audit, which were material. We recognise the level of focus from
management and those charged with Governance to respond to the issues
identified in the prior and current year. We have seen management make an effort
to improve the quality of underlying detail and analysis in certain areas but further
improvement is needed. The finalisation of the 2021 financial statements was
delayed and acknowledging the proximity of this to the start of the 2022 audit, and
therefore the limited time management had to respond to these findings, there
remains a need for the Group to make improvements to the control environment.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use
materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
Group financial statements
Parent company financial statements
Materiality
£3.8m (2021: £4.1m)
£1.9m (2021: £2.0m)
Basis for
determining
materiality
We have determined materiality of the
group based on 5% of profit before tax pre-
exceptional items (2021: 4.2%)
Parent company materiality equates to less
than 1% of net assets (2021: less than 1% of
net assets) which is capped at approximately
50% of Group materiality.
Group financial statements
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Rationale for the
benchmark
applied
We consider the profit before tax pre-
exceptional items was an appropriate
benchmark, being a key metric for the users
of the financial statements. We excluded the
exceptional items to mitigate the volatility
caused by the significant items recognised in
the year
Net assets have been selected as an
appropriate measure on which to determine
materiality as the parent company is a
holding company.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate,
uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements
Parent company financial statements
Performance
materiality
50% (2021: 50%) of group materiality
50% (2021: 50%) of parent company
materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the following factors:
a.
the quality of the control environment and the significant control deficiencies
identified in the prior year;
b.
the nature, volume and size of misstatements in the previous audit; and
c.
prior period errors found in the current year.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of
£0.2m (2021: £0.2m), as well as differences below that threshold that, in our view, warranted reporting on
qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.
PBT £74m
Group materiality
£4m
Component
materiality range
£1m to £2m
Audit Committee
reporting threshold
£0.20m
PBT
Group materiality
Group financial statements
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The Go-Ahead Group Limited Annual Report and Accounts 2022
7.
An overview of the scope of our audit
7.1. Identification and scoping of components
Our group audit scope was determined after obtaining an understanding of the group and its environment,
including group-wide controls, and assessing the risks of material misstatement at the group level. Based on
that assessment, we focused our group audit scope primarily on the audit work at 10 (2021: 13) principal
components. We performed specified audit procedures on The Oxford Bus Company, Go-Ahead Dublin and
Go-Ahead Singapore which were considered to be full scope in 2021 as a result of the issues identified from
the DfT rail franchise investigation and the assurance we sought to determine whether this was a pervasive
issue across the Group. Given no significant issues were noted in respect of these entities in the prior year, we
have revised the scope as explained in the current year. Our scoping decisions considered a number of factors
including the individual financial significance of a component.
The components in full audit scope and specified audit procedures represent the principal business units and
account for 96% (2021: 97%) of the Group’s revenue, 94% (2021: 93% of loss before tax) of the Group’s profit
before tax and 84% (2021: 97%) of the group’s net assets.
Component performance materiality was used to perform the audit work at all components and for the
current year audit, this was £1.0m.
At the group level, we also tested the consolidation process and carried out analytical procedures to confirm
our conclusion that there were no significant risks of material misstatement of the aggregated financial
information of the remaining components not subject to audit.
7.2. Our consideration of the control environment
As previously reported, a number of significant control deficiencies were identified in the prior year. The
finalisation of the 2021 financial statements was delayed and acknowledging the proximity of this to the start
of the 2022 audit and therefore the limited time management had to respond to these findings, we assessed
the impact of this on the nature, extent and timing of our audit procedures as summarised in section 5.3
above.
In relation to IT controls, we involved our IT specialists to assess relevant controls over the Group’s
information technology (‘IT’) systems. Given the importance of IT to recording of financial information and
transactions we have tested the General IT controls relating to certain of the Group’s systems where relevant
92%
4%4%
Revenue
Full audit scope
Specified audit procedures
Review at group level
89%
5% 6%
Profit
before tax
Full audit scope
Specified audit procedures
Review at group level
79%
5%
16%
Net assets
Full audit scope
Specified audit procedures
Review at group level
Group financial statements
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The Go-Ahead Group Limited Annual Report and Accounts 2022
to our audit work. As part of our IT controls testing, we obtained an understanding of the group’s processes
and tested controls through a combination of tests of inquiry, observation, inspection and reperformance.
We recognise the level of focus from the group on driving improvement in the IT environment across the past
few years. We did not identify any significant control deficiencies in relation to this work.
Whilst we did not identify any significant control deficiencies, given the control issues identified above we did
not consider it appropriate to seek to rely on controls for any of the business cycles within the group.
7.3. Working with other auditors
The Group audit team have directed and supervised the work of the component audit teams during the course
of the year. As part of our planning, we issued detailed instructions to our component audit teams and
included all component teams in our team briefing, discussed their risk assessments and remained in contact
throughout the audit process. In addition, we attended planning and close meetings with them and
component management teams, and reviewed their component reporting.
Due to the significance of the onerous provisions in Germany and Norway, the group engagement team led
the audit work of this key audit matter as referred to in section 5.1.
For all UK components, the Senior Statutory Auditor has access to the audit files and directly reviews the work
performed in key risk areas relevant to the group, including significant risk areas. For overseas components,
we remained in close communication with them throughout the audit process and reviewed significant work
papers to gain sufficient oversight of the work performed.
8.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
9.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
Group financial statements
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The Go-Ahead Group Limited Annual Report and Accounts 2022
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or the
parent company or to cease operations, or have no realistic alternative but to do so.
10.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11.
Extent to which the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
11.1.
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-
compliance with laws and regulations, we considered the following:
•
the nature of the industry and sector, control environment and business performance including the
design of the group’s remuneration policies, key drivers for directors’ remuneration, bonus levels
and performance targets;
•
results of our enquiries of management, internal audit and the audit committee about their own
identification and assessment of the risks of irregularities. These risks are detailed on pages 54 to 64
of the Annual Report;
•
any matters we identified having obtained and reviewed the group’s documentation of their policies
and procedures relating to:
o
identifying, evaluating and complying with laws and regulations and whether they were aware of
any instances of non-compliance;
o
detecting and responding to the risks of fraud and whether they have knowledge of any actual,
suspected or alleged fraud; and
o
the internal controls established to mitigate risks of fraud or non-compliance with laws and
regulations.
the matters discussed among the audit engagement team including significant component audit
teams and involving relevant internal specialists, including tax, valuations, pensions and IT specialists
regarding how and where fraud might occur in the financial statements and any potential indicators of
fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the
organisation for fraud and identified the greatest potential for fraud in the following areas:
Group financial statements
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The Go-Ahead Group Limited Annual Report and Accounts 2022
valuation of onerous contract provisions within overseas rail operations;
rail franchise accounting;
revenue recognition for performance-based fees on the NRC and QICs; and
revenue recognition in respect of UK regional bus contract income.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to
the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the group operates in,
focusing on provisions of those laws and regulations that had a direct effect on the determination of material
amounts and disclosures in the financial statements. The key laws and regulations we considered in this
context included the UK Companies Act, Listing Rules, pensions legislation, tax legislation and franchise
agreements.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the
financial statements but compliance with which may be fundamental to the group’s ability to operate or to
avoid a material penalty. These include the Railways Act 1983 and compliance with the terms of the group’s
schedules of the franchise agreements for the train operating companies which are fundamental to the
group’s business operations.
11.2.
Audit response to risks identified
As a result of performing the above, we identified the valuation of onerous contract provisions within overseas
rail operations and rail franchise accounting within the UK rail operations as key audit matters related to the
potential risk of fraud. The key audit matters section of our report explains the matters in more detail and also
describes the specific procedures we performed in response to those key audit matters.
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess
compliance with provisions of relevant laws and regulations described as having a direct effect on the
financial statements;
enquiring of management, the audit committee and in-house and external legal counsel concerning
actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance, reviewing internal audit reports and
reviewing correspondence with the DfT and other transportation authorities in relation to the
operating of the rail and bus franchises;
to address revenue recognition for performance-based fees on the NRC and QICs, our procedures
included assessing the appropriateness of the judgements applied by management with reference to
the scoring criteria outlined in the NRC and QICs contract, including consideration of historical
performance, sensitivity analysis on a range of possible outcomes and substantive testing of the
underlying inputs that go into the performance evaluation;
to address revenue recognition in respect of UK regional bus contract income, our procedures
included reviewing on a sample basis original contracts and other supporting evidence with local
authorities to agree the final pricing negotiations and contract amendments and recalculating the
revenue recognised in the year and whether it is in line with the performance obligations under IFRS
15; and
in addressing the risk of fraud through management override of controls, testing the appropriateness
of journal entries and other adjustments; assessing whether the judgements made in making
Group financial statements
132
The Go-Ahead Group Limited Annual Report and Accounts 2022
accounting estimates are indicative of a potential bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement
team members including internal specialists and significant component audit teams, and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified any material misstatements in the strategic report
or the directors’ report.
13.
Matters on which we are required to report by exception
13.1.
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
we have not received all the information and explanations we require for our audit; or
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and
returns.
We have nothing to report in respect of these matters.
13.2.
Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’
remuneration have not been made or the part of the directors’ remuneration report to be audited is not in
agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
Group financial statements
133
The Go-Ahead Group Limited Annual Report and Accounts 2022
14.
Other matters which we are required to address
14.1.
Auditor tenure
Following the recommendation of the audit committee, we were appointed by Company’s members on 22
October 2015 to audit the financial statements for the year ending 2 July 2016 and subsequent financial
periods. The period of total uninterrupted engagement including previous renewals and reappointments of
the firm is 7 years, covering the financial years ending 2 July 2016 to 2 July 2022.
14.2.
Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in
accordance with ISAs (UK).
15.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR)
4.1.14R, these financial statements form part of the European Single Electronic Format (ESEF) prepared
Annual Financial Report filed on the National Storage Mechanism of the UK FCA in accordance with the
ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report provides no assurance over whether
the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.
Scott Bayne, FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Leeds, United Kingdom
24 February 2023
Group financial statements
Consolidated income statement
Year ended 2 July 2022
The Go-Ahead Group Limited Annual Report and Accounts 2022
134
Notes
Pre-
exceptional
2022
£m
Exceptional
items
2022
£m
Post-
exceptional
2022
£m
Pre-
exceptional
2021
£m
Exceptional
items
2021
£m
Post-
exceptional
2021
£m
Group revenue
4
3,288.1
—
3,288.1
4,058.5
—
4,058.5
Operating costs
5–7
(3,201.0)
21.2
(3,179.8)
(3,935.9)
(104.1)
(4,040.0)
Impairment losses (including reversals) on financial
assets and contract assets
5, 18
2.0
—
2.0
(7.1)
—
(7.1)
Group operating profit/(loss)
89.1
21.2
110.3
115.5
(104.1)
11.4
Share of result of joint venture
(0.1)
—
(0.1)
(0.2)
—
(0.2)
Finance income
8
1.8
—
1.8
2.1
—
2.1
Finance costs
8
(17.3)
—
(17.3)
(20.2)
—
(20.2)
Profit/(loss) before taxation
73.5
21.2
94.7
97.2
(104.1)
(6.9)
Tax expense
9
(13.1)
(0.4)
(13.5)
(34.3)
0.5
(33.8)
Profit/(loss) for the year from continuing
operations
60.4
20.8
81.2
62.9
(103.6)
(40.7)
Attributable to:
Equity holders of the parent
50.9
17.0
67.9
46.6
(92.6)
(46.0)
Non-controlling interests
9.5
3.8
13.3
16.3
(11.0)
5.3
60.4
20.8
81.2
62.9
(103.6)
(40.7)
Earnings per share
– Basic
10
118.3p
39.6p
157.9p
108.4p
(215.4)p
(107.0)p
– Diluted
10
117.8p
39.4p
157.2p
108.0p
(214.7)p
(106.7)p
Dividends paid (pence per share)
11
—
—
Special dividend proposed (pence per share)
11
100.0
—
Group financial statements
Consolidated statement of comprehensive income
Year ended 2 July 2022
The Go-Ahead Group Limited Annual Report and Accounts 2022
135
Notes
2022
£m
2021
£m
Profit/(loss) for the year
81.2
(40.7)
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Remeasurement gains (losses) on defined benefit pension plans
29
37.9
(23.2)
Tax relating to items that will not be reclassified
9
(9.6)
5.3
28.3
(17.9)
Items that may subsequently be reclassified to profit or loss:
Unrealised gains on cashflow hedges
24
20.3
15.7
Tax relating to items that may be reclassified
9
(7.7)
(3.1)
Foreign exchange differences on translation of foreign operations
0.6
5.9
13.2
18.5
Other comprehensive income for the year, net of tax
41.5
0.6
Total comprehensive income/(expense) for the year
122.7
(40.1)
Attributable to:
Equity holders of the parent
109.4
(45.4)
Non-controlling interests
13.3
5.3
122.7
(40.1)
Group financial statements
Consolidated statement of changes in equity
Year ended 2 July 2022
The Go-Ahead Group Limited Annual Report and Accounts 2022
136
Share
capital
£m
Reserve for
own shares
£m
Hedging
reserve
£m
Share
premium
reserve
£m
Capital
redemption
reserve
£m
Translation
reserve
£m
Retained
earnings
£m
Total
shareholders’
equity
£m
Non-
controlling
interests
£m
Total
equity
£m
At 27 June 2020 (as previously
reported)
75.2
(71.3)
(12.3)
1.6
0.7
(2.3)
179.1
170.7
20.7
191.4
Restatements
—
—
—
—
—
0.2
(5.3)
(5.1)
—
(5.1)
At 27 June 2020 (restated)*
75.2
(71.3)
(12.3)
1.6
0.7
(2.1)
173.8
165.6
20.7
186.3
(Loss)/profit for the year
—
—
—
—
—
—
(46.0)
(46.0)
5.3
(40.7)
Movement on hedges (net of
tax) (note 24)
—
—
12.6
—
—
—
—
12.6
—
12.6
Remeasurement on defined
benefit retirement plans (net
of tax) (note 29)
—
—
—
—
—
—
(17.9)
(17.9)
—
(17.9)
Foreign exchange
—
—
—
—
—
5.9
—
5.9
—
5.9
Total comprehensive
income/(expense)
—
—
12.6
—
—
5.9
(63.9)
(45.4)
5.3
(40.1)
Transfer of cash flow hedging
(gains)/losses and cost of
hedging to the initial carrying
amount of hedged items
—
—
5.5
—
—
—
—
5.5
—
5.5
Exercise of share options
—
0.6
—
—
—
—
(0.6)
—
—
—
Share based payment charge
(note 6)
—
—
—
—
—
—
1.2
1.2
—
1.2
Acquisition of own shares
(note 26)
—
(0.6)
—
—
—
—
—
(0.6)
—
(0.6)
Deferred tax on share-based
payment transactions
—
—
—
—
—
—
0.1
0.1
—
0.1
Dividends (note 11)
—
—
—
—
—
—
—
—
(3.7)
(3.7)
At 3 July 2021*
75.2
(71.3)
5.8
1.6
0.7
3.8
110.6
126.4
22.3
148.7
Profit for the year
—
—
—
—
—
—
67.9
67.9
13.3
81.2
Movement on hedges (net of
tax) (note 24)
—
—
12.6
—
—
—
—
12.6
—
12.6
Remeasurement on defined
benefit retirement plans (net
of tax) (note 29)
—
—
—
—
—
—
28.3
28.3
—
28.3
Foreign exchange
—
—
—
—
—
0.6
—
0.6
—
0.6
Total comprehensive
income
—
—
12.6
—
—
0.6
96.2
109.4
13.3
122.7
Transfer of cash flow hedging
(gains)/losses and cost of
hedging to the initial carrying
amount of hedged items
—
—
21.4
—
—
—
—
21.4
—
21.4
Exercise of share options
—
0.8
—
—
—
—
(0.8)
—
—
—
Share based payment charge
(note 6)
—
—
—
—
—
—
0.1
0.1
—
0.1
Acquisition of own shares
(note 26)
—
(0.4)
—
—
—
—
—
(0.4)
—
(0.4)
Deferred tax on share-based
payment transactions
—
—
—
—
—
—
0.1
0.1
—
0.1
Dividends (note 11)
—
—
—
—
—
—
—
—
—
—
At 2 July 2022
75.2
(70.9)
39.8
1.6
0.7
4.4
206.2
257.0
35.6
292.6
*Restated – Profit/(loss) and foreign exchange in 2020 was restated given the impact of the prior year restatements which are set out in note 2.
Group financial statements
Consolidated balance sheet
Year ended 2 July 2022
The Go-Ahead Group Limited Annual Report and Accounts 2022
137
*Restated – see note 2
The consolidated notes 1 to 31 are an integral part of the consolidated financial statements.
The financial statements were approved and authorised for issuance by the Board of directors on 24 February 2023 and were signed
on its behalf by:
Clare Hollingsworth - Chair
Christian Schreyer - Group Chief Executive
Notes
2022
£m
2021*
£m
2020*
£m
Assets
Non-current assets
Property, plant and equipment
12
540.8
553.8
589.0
Right of use assets
13
880.4
345.4
648.9
Goodwill
14
78.4
73.5
73.5
Other intangible assets
14
6.1
8.5
22.6
Deferred tax assets
9
0.5
1.5
3.3
Derivative financial assets
24
14.1
3.4
0.1
Finance lease receivables
19
5.7
—
—
Trade and other receivables
18
3.1
2.0
—
Retirement benefit assets
29
81.6
41.5
63.3
1,610.7
1,029.6
1,400.7
Current assets
Inventories
17
14.5
19.5
19.7
Trade and other receivables
18
539.9
413.2
290.5
Finance lease receivables
19
4.7
2.3
—
Derivative financial assets
24
40.0
4.9
0.1
Assets classified as held for sale
16
0.1
3.2
7.2
Current tax assets
9
14.6
13.4
4.9
Cash and cash equivalents
20
191.8
630.6
569.8
805.6
1,087.1
892.2
Total assets
2,416.3
2,116.7
2,292.9
Liabilities
Current liabilities
Trade and other payables
21
(510.8)
(883.4)
(765.3)
Derivative financial liabilities
24
—
(0.6)
(11.0)
Interest-bearing loans and borrowings
22
(14.3)
(12.0)
(12.3)
Lease liabilities
13
(309.0)
(263.9)
(517.3)
Current tax liabilities
9
(22.9)
(17.6)
(0.9)
Provisions
25
(132.7)
(159.1)
(51.2)
(989.7)
(1,336.6)
(1,358.0)
Non-current liabilities
Trade and other payables
21
(17.5)
(13.5)
(15.6)
Derivative financial liabilities
24
(0.1)
(0.3)
(5.6)
Interest-bearing loans and borrowings
22
(371.5)
(382.5)
(403.9)
Lease liabilities
13
(558.6)
(48.7)
(131.3)
Retirement benefit obligations
29
(1.4)
(5.5)
(10.3)
Deferred tax liabilities
9
(72.8)
(59.7)
(48.9)
Provisions
25
(112.1)
(121.2)
(133.0)
(1,134.0)
(631.4)
(748.6)
Total liabilities
(2,123.7)
(1,968.0)
(2,106.6)
Net assets
292.6
148.7
186.3
Capital and reserves
Share capital
26
75.2
75.2
75.2
Reserve for own shares
26
(70.9)
(71.3)
(71.3)
Hedging reserve
26
39.8
5.8
(12.3)
Share premium reserve
26
1.6
1.6
1.6
Capital redemption reserve
26
0.7
0.7
0.7
Translation reserve
26
4.4
3.8
(2.1)
Retained earnings
206.2
110.6
173.8
Total shareholders’ equity
257.0
126.4
165.6
Non-controlling interests
35.6
22.3
20.7
Total equity
292.6
148.7
186.3
Group financial statements
Consolidated cashflow statement
Year ended 2 July 2022
The Go-Ahead Group Limited Annual Report and Accounts 2022
138
Notes
2022
£m
2021
£m
Profit/(loss) after tax for the year
81.2
(40.7)
Net finance costs
8
15.5
18.1
Tax expense
9
13.5
33.8
Depreciation of property, plant and equipment
12
73.2
81.5
Depreciation of right of use assets
13
371.4
486.5
Amortisation of intangible assets
14
3.5
6.3
Asset impairment, excluding exceptional items
1.0
5.7
Non-cash exceptional items*
7
(29.8)
104.1
Share of result of joint venture
0.1
0.2
(Profit)/loss on sale of fixed assets
(0.5)
0.1
Share based payment charge
6
0.1
1.2
Difference between pension contributions paid and amounts recognised in the income statement
(5.6)
(5.3)
Decrease in inventories
3.1
0.2
Increase in trade and other receivables
(127.6)
(125.8)
(Decrease)/increase in trade and other payables
(365.1)
120.7
Movement in provisions, excluding exceptional items
(10.4)
2.7
Cashflows generated from operations
23.6
689.3
Taxation paid
9
(14.3)
(12.1)
Net cashflows from operating activities
9.3
677.2
Cashflows from investing activities
Interest received
0.9
1.1
Proceeds from sale of property, plant and equipment
3.8
6.3
Proceeds from sale of property, plant and equipment held for sale
7.9
7.3
Cash income from finance lease receivables
19
7.7
8.4
Purchase of property, plant and equipment (including assets under construction)
(45.4)
(52.9)
Purchase of businesses
15
(13.9)
—
Cash acquired with businesses
15
6.4
—
Purchase of property, plant and equipment held for sale
(4.4)
(5.7)
Purchase of intangible assets
(1.4)
(2.2)
Net cashflows used in investing activities
(38.4)
(37.7)
Cashflows from financing activities
Interest paid on lease liabilities
(8.9)
(9.0)
Other interest paid
(9.4)
(11.3)
Dividends paid to non-controlling interests
—
(3.7)
Payment to acquire own shares
(0.4)
(0.6)
Gross repayments of borrowings
(73.5)
(307.2)
Gross proceeds from borrowings
48.6
289.4
Payment of lease liabilities
(368.2)
(534.5)
Net cashflows used in financing activities
(411.8)
(576.9)
Net (decrease)/increase in cash and cash equivalents
(440.9)
62.6
Cash and cash equivalents at 3 July 2021
20
630.6
569.8
Effect of foreign exchange rate changes
2.1
(1.8)
Cash and cash equivalents at 2 July 2022**
20
191.8
630.6
* This consists of certain exceptional items as per note 7, namely the increase and release of onerous contract provisions totalling a £16.9m net credit plus the £6.5m LSER financial
penalty provision release, impairment of goodwill of £2.7m and a £12.2m provision release following settlements with the DfT offset with payables relating to prior year
exceptional professional fees of £3.0m.
** Cash balances of £50.5m (2021: £543.7m) were restricted at 2 July 2022. Further details are shown in note 20.
Group financial statements
Consolidated cashflow reconciliations
Year ended 2 July 2022
The Go-Ahead Group Limited Annual Report and Accounts 2022
139
A reconciliation of cash generated from operations to free cashflow and net debt, two non-GAAP measures used by management, is
shown below. Free cashflow and adjusted net debt are measures used by management, which reflect the impact of restricted cash on
cashflows.
2022
2021
Summary cashflow
IFRS 16
basis
£m
IFRS 16
effect
£m
Pre-IFRS 16
basis
£m
IFRS 16
basis
£m
IFRS 16
effect
£m
Pre-IFRS 16
basis
£m
EBITDA (excluding exceptional items)
538.2
377.1
161.1
695.6
499.9
195.7
Movement in restricted cash
493.2
—
493.2
(68.9)
—
(68.9)
Cash exceptional items
(8.6)
—
(8.6)
—
—
—
Working capital and other operating cashflows
(506.0)
(1.4)
(504.6)
(6.5)
42.0
(48.5)
Cashflow generated from operations (excluding
restricted cash movements)
516.8
375.7
141.1
620.2
541.9
78.3
Tax paid
(14.3)
—
(14.3)
(12.1)
—
(12.1)
Net interest paid
(17.4)
(8.9)
(8.5)
(19.2)
(9.0)
(10.2)
Net capital investment
(39.4)
—
(39.4)
(47.2)
—
(47.2)
Dividends paid to non-controlling interests
—
—
—
(3.7)
—
(3.7)
Free cashflow
445.7
366.8
78.9
538.0
532.9
5.1
Payments to acquire own shares
(0.4)
—
(0.4)
(0.6)
—
(0.6)
Inception of new leases
(21.9)
(21.9)
—
(31.7)
(31.7)
—
Lease modifications
(894.7)
(894.7)
—
(166.6)
(166.6)
—
Net cash spent in business acquisitions
(7.5)
—
(7.5)
—
—
—
Debt and leases acquired in business acquisitions
(21.7)
(6.5)
(15.2)
—
—
—
Other
9.1
—
9.1
11.2
—
11.2
Movement in adjusted net debt*
(491.4)
(556.3)
64.9
350.3
334.6
15.7
Opening adjusted net debt*
(615.6)
(309.7)
(305.9)
(965.9)
(644.3)
(321.6)
Closing adjusted net debt*
(1,107.0)
(866.0)
(241.0)
(615.6)
(309.7)
(305.9)
* Adjusted net debt represents net cash less restricted cash, see note 3.
EBITDA (excluding exceptional items) reconciliation
EBITDA (excluding exceptional items) is defined as earnings before interest, tax, depreciation, amortisation and impairment and
excludes exceptional items, as shown below. This metric is used in the calculation of our pre-IFRS 16 EBITDA (excluding exceptional
items) which is relevant to our debt covenants.
2022
£m
2021
£m
Profit/(loss) after tax for the year
81.2
(40.7)
Exceptional operating items
(21.2)
104.1
Net finance costs
15.5
18.1
Tax expense
13.5
33.8
Depreciation of property, plant and equipment
73.2
81.6
Depreciation of right of use assets
371.4
486.5
Amortisation of intangible assets
3.5
6.3
Share of result of joint venture
0.1
0.2
Asset impairment, excluding exceptional items
1.0
5.7
EBITDA (excluding exceptional items)
538.2
695.6
IFRS 16 effect1
(377.1)
(499.9)
EBITDA (excluding exceptional items) (pre-IFRS 16)
161.1
195.7
1. IFRS 16 effect relates to costs that would have been incurred in operating costs relating to leases not on the balance sheet before IFRS 16 was adopted. Deducting this amount
from EBITDA (excluding exceptional items) results in an EBITDA (excluding exceptional items) (pre-IFRS 16) figure.
Group financial statements
Critical accounting judgements and key sources of estimation uncertainty
The Go-Ahead Group Limited Annual Report and Accounts 2022
140
The preparation of the financial statements requires management to make judgements, estimates and assumptions. Although these
judgements and estimates are based on management’s best knowledge, actual results ultimately may differ from these estimates.
Critical accounting judgements
The following are the critical judgements, apart from those involving estimations, that the directors have made in the process of
applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial
statements:
Contract and franchise accounting
The commercial entities in the UK rail industry were created at the time of privatisation and the relationships between them are
governed by a number of contracts between the major participants: the DfT, Network Rail and train operating companies (TOCs).
These contracts include detailed performance regimes which determine the allocation of financial responsibility relating to the
attribution of delays. The processes for attribution, whilst well understood, require detailed assessment and judgement, and can take
significant time to resolve, particularly in unusual circumstances.
The useful economic lives of assets are determined by reference to the length of the franchise and are matched to the contractual
franchise end date. The residual value of assets is determined by applying judgement to their condition at the franchise end date and
by the level of maintenance that has been undertaken during the period of operation.
The Group makes provision for income and costs relating to performance regimes and contractual obligations relating to operating
delays caused by Network Rail or caused by our own operating companies. This process involves judgement can be based primarily on
previous experience of settling such claims, or, in certain circumstances, based on management’s view of the most likely outcome of
individual claims. The Group has significant internal expertise to assess and manage these aspects of the agreements and the issues
relating to delay attribution to enable management to assess the most probable outcomes; nonetheless significant judgements are
required, which can have material impacts on the financial statements.
Accordingly, judgements in these and other areas are made on a continuing basis with regard to amounts due and the recoverable
carrying value of related assets and liabilities arising from franchises and other contracts. Regular reviews are performed on the
expected outcome of these arrangements, which require assessments and judgements relating to the expected level of revenues and
costs.
Please refer to notes 25 and 28 for details of contingent liabilities relating to these judgements and estimations.
Group financial statements
Critical accounting judgements and key sources of estimation uncertainty continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
141
Critical accounting judgements continued
Exceptional operating items
In certain years the Group presents as exceptional operating items, on the face of the income statement, material items of income or
expense which, because of the size, nature or expected infrequency of the events giving rise to them, merit separate presentation to
allow an alternative understanding of financial performance. The determination of whether items merit presentation as exceptional in
a particular year is therefore a matter of judgement.
Items of income or expense that are considered by management for designation as exceptional include onerous contract provisions,
impairment of assets, restructuring provisions, fines or penalties, and income from legal settlements, and the related tax on these
items. Set out below are details of the transactions against which management has considered the exceptional items accounting
policy, outlined on page 150.
Provisions – Regional Bus
In Regional Bus in the year ended 3 July 2021, additional costs of £1.2m were recognised in relation to loss making contracts where
passenger demand was not recovering at the same levels as the wider commercial network. Following renegotiation of these
contracts, it was determined necessary to release £1.2m of this onerous contract provision in the year ended 2 July 2022. In line with
the Group’s accounting policy and the consistent with the classification of the charge in the prior year and also with the treatment
described below for the release of the Norwegian onerous contract provision, the release of this provision has been classified as an
exceptional credit.
Goodwill impairment – Regional Bus
During the year, goodwill of £2.7m has been impaired relating to Go North East due to the challenges in the current performance of the
business and slow recovery from COVID-19 when compared to the other Regional Bus cash-generating units (CGUs). The Group have
mitigating actions to increase profitability in Regional bus, including optimising the network and cost base through route
rationalisation and proactive cost control and back-office synergies, which apply to Go North East. However, it has been determined
that the goodwill in Go North East is not recoverable even with these mitigations. The carrying value of the Go North East cash-
generating unit following this impairment is £nil.
Department for Transport settlements and associated costs relating to LSER
During the year ended 2 July 2022, settlements were reached with the DfT in relation to substantially all of the remaining LSER matters
of concern including the historic profit share and affiliate trading disputes. This has resulted in a number of credits in the current year
as a result of settlements being reached at a lower amount than initially estimated and provided for. This difference arose following
the completion of the DfT’s internal investigation with the subsequent credit predominantly relating to clarification of a historic
affiliate trading transaction of £12.3m. These credits have been classified as exceptional items consistently with the prior year
provision’s classification and in line with the Group’s exceptional items accounting policy.
Further, an exceptional release of £6.5m has been recorded in relation to the financial penalty provision made at the prior year end. At
the time of announcing the results for the year ended 3 July 2021, the financial penalty was not known, however £30.0m was recorded
as a provision in relation to this as management’s best estimate at the time. Subsequent to this, on 9 May 2022, a final penalty notice
was issued stating that the amount of the financial penalty would be £23.5m, as a result £6.5m of the provision was released. The
£23.5m financial penalty was paid during the current year.
In line with the approach adopted for the year ended 3 July 2021, professional and legal fees of £8.9m associated with the LSER matters
of concern have been recognised as exceptional items in the results for the year ended 2 July 2022. In the prior year, it was determined
that all project costs should be recorded as exceptional items on the basis that they are material in size and are also expected to be
infrequent given that they are a direct result of the LSER matters which are considered one-off in nature.
In addition to this, a settlement was reached in relation to the other closed franchises of £6.0m. The Group had provided £5.4m in
relation to this at the prior year end and therefore a further £0.6m has been recorded as an exceptional debit. It has been determined
that these settlement amendments should be recognised as exceptional in line with the Group’s accounting policy given these are
material and such significant settlements are considered to be one-off in nature.
Takeover legal and professional fees
On 13 June 2022, it was announced that Go-Ahead had been approached by two separate bidders for a potential takeover. It was then
announced later that day that a cash offer which was recommended by the Board to shareholders had been made by Gerrard
Investment Bidco Limited. a newly formed company indirectly owned by Kinetic TCo Pty Ltd ("Kinetic") and Globalvia Inversiones
S.A.U. ("Globalvia"). As a result of this, legal, advisory and professional fees have been incurred.
As of 2 July 2022, the total amount incurred was £2.2m and this amount has been recognised as exceptional in line with the Group’s
accounting policy as these costs are a result of a recommended takeover bid which is one-off in nature and considered qualitatively
material. These amounts only relate to the costs incurred and committed at 2 July 2022.
Subsequent to the year-end, further costs of approximately £12m have been incurred relating to the takeover. No provision was
included for the additional costs at year-end on the basis that the outcome of the transaction was uncertain.
Group financial statements
Critical accounting judgements and key sources of estimation uncertainty continued
Critical accounting judgements continued
Exceptional operating items continued
German Bavaria franchise onerous contract provision
The directors have performed a detailed review of all material contracts across the Group to consider the completeness of onerous
contract provisions. This involved a detailed review and challenge of the assumptions within each contract, including those relating to
full year 2021 and the 2022 interim results.
Upon reassessment of the Bavarian rail contracts’ onerous contract provision under IAS 37 it was determined that an increase in the
provision of £36.0m was necessary based on the contracts’ forecast future cashflows discounted at a risk-free rate, in addition to a
prior year adjustment impacting the opening reserves and the value of the provision by £5.1m. Refer to note 2 for further information.
The quantum of this provision increase is deemed to be sufficiently material and one-off in nature to be classified as exceptional in line
with the Group’s accounting policy and the equivalent treatment in the prior year. See below for more information in the key sources
of estimation uncertainty section.
Norway franchise onerous contract provision and asset impairment
In the financial year ended 3 July 2021, the impact of the reduction and possible cessation of funding, the predominantly fixed nature of
the operating costs to service the contractual obligations and the longer than expected duration of lower passenger demand
following the impact of COVID-19 resulted in a reduction of the estimated value in use of the contract, which is based on the expected
future cashflows and a risk-free discount rate. This reduction in future revenue resulted in an onerous contract provision of £65.3m
and asset impairments of £10.5m being recognised at 3 July 2021.
On 28 June 2022, Go-Ahead Norway signed an agreement with the Norwegian Rail Directorate to revise its rail contract. This revision
included certain obligations being waived, compensation for loss of income from the impacts of the COVID-19 pandemic, incentives
for reaching specified levels of passenger income, and other areas of agreement including compensation for 50% of energy costs when
prices reach specified levels. Updating cashflow forecasts for the revision to the contract with the Rail Directorate, as well as updating
the discount rate and other inputs as a result of the developments in the year, has led to a material reduction in the value of the
onerous contract provision and a release of the provision of £51.6m.
The quantum of this provision release is deemed to be sufficiently material and one-off in nature to be classified as exceptional in line
with the Group’s accounting policy and the equivalent treatment in the prior year. See page 143 below for more information in the key
sources of estimation uncertainty section.
Subsequent to the year-end, a dispute has arisen with the Norwegian Rail Directorate relating to specific terms for the compensation
for loss of passenger income mechanism that had been agreed under the revised agreement traffic agreement dated 28 June 2022.
Based on legal advice obtained and review of correspondence between the Company and the Rail Directorate at the time of the
signing of the revised agreement in June, the Directors are satisfied that the onerous provision has been calculated based on the terms
of the revised agreement. Whilst the Directors are confident of a successful outcome, until such time as the dispute is resolved with
the Directorate there remains a possible risk that if successfully challenged by the Directorate, this could increase the onerous
contract provision by up to £20.0m. The Directors consider that the onerous contract provision reflects their best estimate of the
terms agreed at the time.
The two items below were considered by management for designation as exceptional items but were determined not to meet the
criteria stated in the Group’s accounting policy.
Regional Bus restructuring costs
Restructuring costs in Regional Bus totalling £0.7m, were considered for classification as exceptional items. These costs, while
considered one-off in nature, are not material in aggregate and therefore do not meet the Group’s exceptional items criteria.
International Rail Stadler settlement
In August 2021, a settlement was reached with Stadler in relation to liquidated and consequential damages. The value of the
settlement is considered material at €5.0m in cash and up to €5.0m in credit notes against future spend and therefore has been
considered against the Group’s exceptional accounting policy. It was determined that this settlement compensates the Group for
increased costs incurred since the start of German operations in 2019 which were not classified as exceptional and so the
compensation received should also not be classified as exceptional.
During the prior year, costs and provisions associated to the LSER matters of concern and potential penalty, the recognition of
provisions for onerous contracts in Norway and Regional Bus restructuring and impairment of assets resulting from the impact of the
COVID-19 pandemic were classified as exceptional. The profit on sale of fixed assets and provision releases in relation to our German
business were classified as exceptional in the prior year.
Accounting for the Railways Pension Scheme (RPS)
The UK train operating companies participate in the Railways Pension Scheme (RPS), a defined benefit pension scheme which covers
the whole of the UK rail industry. In contrast to the pension schemes operated by most businesses, the RPS is a shared cost scheme which
means that costs are formally shared 60% employer and 40% employee. The Group only recognises amounts in relation to its share of
costs in the income statement. The RPS is partitioned into sections and the Group is responsible for the funding of these sections whilst
it operates the relevant franchise. At the end of the franchise term, responsibility for the funding, and consequently any deficit or surplus
existing at that date, is passed to the next franchisee. At each balance sheet date, a franchise adjustment is recognised to the IAS 19 net
pension asset or liability to reflect that portion expected to pass to the next franchisee.
142
The Go-Ahead Group Limited Annual Report and Accounts 2022
Group financial statements
Critical accounting judgements and key sources of estimation uncertainty continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
143
Critical accounting judgements continued
Accounting for the Railways Pension Scheme (RPS) continued
The directors have judged that this arrangement as synonymous to the circumstances described in paragraphs 92–94 of IAS 19
Employee Benefits (Revised), with a third party taking on the obligation for future contributions. As there is no requirement to make
contributions to fund the current deficit, then it is assumed that all of the current deficit will be funded by another party and hence
none of the deficit is attributable to the current franchisee. In respect of the future service costs, there is currently no pension
obligation in respect of those costs. When the costs are recognised in the income statement, the extent to which the committed
contributions fall short determines the amount that is to be covered by contributions of another party in the future, which is
recognised as an adjustment to service cost in the income statement. As a result, any portion of service cost not expected to be
covered by contributions paid during the franchise but expected to transfer at the end of the franchise is treated as an adjustment to
the income statement.
Under circumstances where contributions are renegotiated, for example, following a statutory valuation, an adjustment will be
recognised in the income statement, whilst changes in actuarial assumptions continue to be recognised through the statement of
other comprehensive income.
The directors deem this to be the most appropriate interpretation of IAS 19 to reflect the specific circumstances of the RPS where the
franchise commitment is only to pay contributions during the period in which we run the franchise. An alternative approach would
involve not limiting the measurement of the service cost through the recognition of an income statement franchise adjustment but
recognising all movements on the franchise adjustment as a movement in a reimbursement right in other comprehensive income. For
the year ended 2 July 2022, the impact of this alternative treatment, on a post-tax basis, would be an increase in costs of £70.3m (2021:
£97.6m) to the income statement and a credit to other comprehensive income of £306.7m (2021: debit of £122.3m). Since the franchise
contract only refers to the contribution requirements during the franchise term, and not any reimbursement rights, the directors
consider that viewing the treatment as contribution sharing with the next franchisee is most appropriate.
Accounting for the end of the LSER franchise
As referred to on page 16, the LSER franchise ceased in October 2021 following the DfT’s decision not to award LSER with a national rail
contract. In preparing the financial statements, the directors have considered whether the cessation of this franchise should be
treated as a discontinued operation under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. They have concluded
that it should not be presented as discounted operations on the basis that the Group remains committed to the remaining UK rail
franchise and its ongoing relationship with the DfT.
Key sources of estimation uncertainty
The key sources of estimation uncertainty that have a significant risk of causing material adjustments to the carrying value of assets and
liabilities within the next financial year are in relation to:
Retirement benefit schemes – bus
The measurement of defined benefit pension schemes requires the estimation of future changes in salaries, inflation, longevity of
current and deferred members and the selection of a suitable discount rate, as set out in note 29. The Group engages Willis Towers
Watson, a global professional services company whose specialisms include actuarial advice, to support the process of establishing
reasonable bases for all of these estimates, to ensure they are appropriate to the Group’s particular circumstances. Management also
benchmarks these assumptions on a periodic basis with other professional advisors. Sensitivity analysis on the bus retirement defined
benefit schemes is detailed in note 29.
Norwegian rail franchises
In December 2019, the Group began operating rail services in Norway, its first contract in this market and the first commercially run
network in the country. After a successful start to operations, the effects of the COVID-19 pandemic were felt just three months into
this contract. As the contract involved exposure to changes in passenger demand, the Norwegian Government introduced a package
of financial support early in the COVID-19 crisis.
In the financial year ended 3 July 2021, the impact of the reduction and possible cessation of this funding, the fixed nature of the
operating costs and the longer than expected duration of lower passenger demand following the continued impact of COVID-19
resulted in a reduction of the estimated value in use of the contract. This value in use is based on the expected future cashflows and a
risk-free discount rate and triggered the need to reassess the assumptions made in the onerous contract and impairment models. This
reduction in future revenue resulted in an onerous contract provision of £65.3m and asset impairments of £10.5m being recognised as
at 3 July 2021.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets requires a provision to be made for an onerous contract where it is
probable that the future economic benefits to be derived from the contract are less than the unavoidable costs under the contract.
On 28 June 2022, Go-Ahead Norway signed an agreement with the Norwegian Rail Directorate to revise its rail contract. This revision
of the contract included certain obligations being waived, compensation for loss of income from the continued impacts of the COVID-
19 pandemic was agreed at specified levels covering the difference between actual passenger income and income levels estimated
when the contract was won. Incentives have also been agreed for reaching specified levels of passenger income, and other specific
areas including compensation for 50% of energy costs when prices are at specified levels. The revised contract also allows Go-Ahead
Norway to increase ticket prices to customers to recover future inflation increases.
Group financial statements
Critical accounting judgements and key sources of estimation uncertainty continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
144
Key sources of estimation uncertainty continued
Norwegian rail franchises continued
Updating cashflow forecasts for the revision to the contract with the Rail Directorate, as well as updating the discount rate and inputs
as a result of the developments in the year, leads to a material reduction in the value of the onerous contract provision to £11.1m.
The estimation of both the cashflow forecasts and discount rate involves a significant degree of judgement. Cashflow forecasts are
derived from the most recent Board approved corporate plan. Cashflows for the remainder of the contract years are based on the third
year of the corporate plan, updated to reflect the most recent experience of the franchises, updates made to the contract with the Rail
Directorate, and other expected future developments. In line with IAS 37 paragraph 47, the pre-tax risk-free discount rates applied to
risk adjusted future cashflows are derived with reference to relevant government bond yields in order to reflect the current market
assessment of the time value of money.
Whilst the directors are taking every possible measure to mitigate the expected losses associated with the contract, the
determination of the onerous contract provision involves inherent uncertainties and the estimation of many inputs, including future
variations in passenger demand, energy costs, service performance, and staff costs. The provision is most sensitive to changes in
passenger demand and energy costs and therefore these have been considered further below.
The key areas of estimation uncertainty are expected to become clearer as passenger recovery continues. Considering the estimated
reasonably possible changes outlined below gives a range of estimation uncertainty whereby in the reasonably possible worst-case
scenario the contract would still be loss making at a discounted loss of £19.8m, and the reasonably possible best-case scenario
matches the best estimate of the provision as it is recorded. In accordance with IAS 1, this disclosure focuses on assumptions and other
major sources of estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material
adjustment to the carrying amounts of the provision within the next financial year. The key areas of estimation uncertainty, and the
associated reasonably possible sensitivities, are as follows:
• Passenger demand: in determining the value of the onerous contract provision, certain assumptions have been made in respect of
the recovery of passenger levels to pre-COVID levels, a reduction in the level of recovery, which indicates a fall in the long-term
passenger recovery levels of 5% would result in an increase of £4.1m to the provision.
• Energy costs: A reduction or increase in energy costs of 30% would reduce or increase the provision by £4.6m.
The percentage movements shown above are presented to show the movement required to result in a material movement, which are
considered to be independent of each other. The provision is included within onerous contract provisions and further details can be
found in note 25.
German rail franchises
The Group has a number of contractual commitments in Germany in respect of its current rail franchises in Baden-Württemberg and
Bavaria.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets requires a provision to be made for an onerous contract where it is
probable that the future economic benefits to be derived from the contract are less than the unavoidable costs under the contract.
In prior years, the Group concluded that assets with a net book value of £16.5m in relation to the three Baden-Württemberg franchises
were impaired down to £1.7m and it maintains that view. However, it also continues to hold the view that the contract is not onerous
as the risk-adjusted discounted future cash inflows are expected to exceed the unavoidable costs over the life of the contracts.
In relation to Bavaria, the Group has two rail routes, each running for 12 years, which are collectively worth €2bn in lifetime revenues.
The ENA route became operational in December 2021 and the ABN route mobilised in December 2022.
Based on the Group’s current knowledge and expectations of the income and costs associated with these contracts, it has been
deemed necessary under IAS 37 to reassess the onerous contract provision. Due to market changes, clarity gained regarding matters
with the local rail authorities and experience obtained since the recent start of operations, the provision recognised as at 2 July 2022
has increased to £58.8m (2021: £38.9m restated). Specific events that have taken place during the year have led to the significant
increase in the provision. The key assumptions in the model that have changed relate to the following:
• Driver and conductor costs: during the year, the latest mobilisation activities resulted in the business gaining greater visibility into
the running schedule, timetable and operational requirements. In conjunction with this, the business gained experience of operating
the ENA Line of the contract that started in December 2021. The combination of these factors resulted in an increase in the overall
staff costs for drivers and conductors.
• Subsidy: Whilst a significant portion of subsidy revenues are fixed over the life of the contract, there is a level of variability for
matters such as anticipated changes in the finalisation of the mobilisation, performance incentives and penalty deductions. As
disclosed in the prior year Annual Report and financial statements, an estimate was included for anticipated revenues from the
pairing of unpaired train kilometres. In previous periods, this estimate was based on the recent experience in the Group’s other
German rail business and wider industry experience of management. Latest discussions with the transportation authority have
confirmed that whilst future pairing of routes may be considered, at this stage, no additional subsidies will be agreed. Consequently,
this estimate has been reversed in the current year.
Group financial statements
Critical accounting judgements and key sources of estimation uncertainty continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
145
Key sources of estimation uncertainty continued
German rail franchises continued
• Macro-economic factors – during the year, the significant volatility in the macro-economic environment has affected a number of
the assumptions underpinning revenues and costs in the onerous contract model. In particular, the assumptions have been affected
by changes to inflation and energy prices. Whilst the revenue subsidy mechanism provides some protection for indexation risk, this
is not covered 100%.
Whilst the directors are taking every possible measure to mitigate the expected losses associated with these contracts, the
determination of the onerous contract provision involves inherent uncertainties and the estimation of many inputs which may give
rise to a material adjustment of the provision in future years.
The degree of estimation uncertainty associated with the onerous contract provision is expected to reduce as operations commence
and develop, as some of the existing estimation uncertainty derives from the fact that the final operational plan, contractual terms and
operational model are still being determined. Considering reasonably possible favourable and adverse movements in these key inputs
over each contract’s 12-year life, gives a range of outcomes whereby in the best-case scenario the contracts would still be loss making
at a discounted loss of £56.2m and in the reasonably possible worst-case scenario, which are disclosed further below, the contract
would incur a discounted loss of £74.4m.
In accordance with IAS 1, this disclosure focuses on assumptions and other major sources of estimation uncertainty at the end of the
reporting period, that have a significant risk of resulting in a material adjustment to the carrying amounts of the provision within the
next financial year. The contracts currently in operation are management contracts and consequently there is no material revenue risk
associated with these contracts. The key areas of estimation uncertainty, and the associated sensitivity, are therefore as follows:
• Service performance: A deterioration in service performance is considered more likely in the early years of operation, while a
stabilisation of performance is then expected in the later years of operation. An increase of 0.5 percentage points in the level of
penalties would increase the provision by £7.6m.
• Driver and conductor costs: There is an industry-wide issue in Germany with a lack of available train drivers. Increases in driver costs
could be driven by an increase in the number of drivers required or an increased use of external drivers as a result of the industry
shortage. Any increase in wages is received back as an increase in subsidy and a training academy has also been set up to train
drivers to help mitigate this risk. The business has developed a plan for both the headcount necessary to deliver services and
operating efficiency as the contract matures. In the early years of the model, the business has prepared the model based on a higher
level of resource than would be required when the operations mature. This is to mitigate risk of penalties in the early years,
recognising the challenges caused by staffing shortages in the industry. The estimate is sensitive both to costs of drivers and the
number required to operate. An increase of 5% in driver and conductor costs would increase the provision by £8.1m.
• Energy consumption: as part of the onerous contract provision, management have made an assumption regarding the level of gross
energy consumption and percentage of regeneration of the trains. Given the infancy of the contract, this is assumed to be at the
lower end of the manufacturers’ estimates. Consequently, there is potential for upside with the provision. If performance improved,
resulting in a reduction in the overall energy consumption (net of regeneration) of 5%, the provision would decrease by £2.5m.
The estimates included in the onerous contract calculation are made based on the current level of agreed kilometres as per the
contract. However, should the agreed kilometres change there will be corresponding changes in the estimates around other inputs.
Further, estimates around rolling stock dilapidation costs and the renting out of trained drivers may depend upon the outcome of
future events and may need to be revised as circumstances change. Energy costs are not determined to be a key source of estimation
uncertainty in the German onerous contract provision model due to the subsidy mechanism in the rail contract which covers the
majority of energy cost increases, so the risk is not borne by Go-Ahead.
Penalty to the Department for Transport relating to London & South Eastern Railway Limited (LSER)
Under the Railways Act 1993, the DfT had the power to impose a financial penalty in relation to LSER as outlined in the Annual Report
for the year ended 3 July 2021. At the time of publishing the Annual Report for that financial year, in absence of specific precedent or
relevant guidance, it was difficult to estimate precisely the likely quantum of any penalty. Following consideration of independent legal
advice received by the Independent Committee, a provision of £30.0m, which reflected the Group's current best estimate of any
penalty at the time, was included. This matter is no longer considered a key source of estimation uncertainty as the financial penalty
was levied in March 2022 and subsequently paid at £23.5m.
Group financial statements
Notes to the consolidated financial statements
The Go-Ahead Group Limited Annual Report and Accounts 2022
146
1. Authorisation of financial statements and statement of compliance with International Financial Reporting
Standards (IFRSs)
The consolidated financial statements of The Go-Ahead Group Limited (the Group) for the year ended 2 July 2022 were authorised for
issue by the Board of directors on 24 February 2023 and the balance sheet was signed on the Board’s behalf by Clare Hollingsworth and
Christian Schreyer. The Group is a private company that is incorporated, domiciled and registered in England and Wales. The
immediate parent of the Group is Gerrard Investment Bidco Limited which is a joint venture between Kinetic TCo Pty Ltd ("Kinetic")
and Globalvia Inversiones S.A.U. ("Globalvia"). The registered office of the Group is 3rd Floor, 41–51 Grey Street, Newcastle upon Tyne,
NE1 6EE, UK. At the year end the Group’s ordinary shares were publicly traded on the London Stock Exchange and were not under the
control of any single shareholder. Subsequent to the year end the entire share capital of the group was purchased by Gerrard
Investment Bidco Limited, a newly formed company indirectly owned by Kinetic and Globalvia.
The consolidated financial statements of the Group have been prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards as issued by the IASB.
The Group is required to comply with IFRSs under IAS 1 Presentation of Financial Statements, except in extremely rare circumstances
where management concludes that compliance would be so misleading that it would conflict with the objective to “present fairly” its
financial statements.
2. Summary of significant accounting policies
Basis of preparation
This note details the accounting policies which have been applied in the Group’s consolidated financial statements. New accounting
standards and interpretations which require adoption in future years have also been listed.
The financial statements are prepared under the historical cost basis, except for financial instruments that are measured at fair values
at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of
the consideration given in exchange for goods and services.
The consolidated financial statements are presented in pounds sterling and all values are rounded to the nearest one hundred
thousand (£0.1m) except when otherwise indicated.
Going concern
The directors have considered the Group’s current and future prospects, risks and uncertainties set out in the risk management
objectives and policies, and its availability of financing, and are satisfied that the Group can continue to pay its liabilities as they fall due
for a period of at least 12 months from the date of approval of these financial statements. For this reason, the directors continue to
adopt the going concern basis of preparation for these financial statements. Further detailed information is provided in the going
concern statement in the directors’ report on pages 49 to 50 and is therefore not replicated here.
New standards
The following new standards or interpretations are mandatory for the first time for the financial year ended 2 July 2022:
• Impact of the initial application of Interest Rate Benchmark Reform – Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
• Impact of the initial application of COVID-19 Related Rent Concessions beyond 30 June 2021 - amendment to IFRS 16
Adoption of the standards and interpretations had no material impact on the Group’s financial position or related performance.
New standards and interpretations not applied
The International Accounting Standards Board (IASB) has issued the following standards and interpretations with an effective date
after the date of these financial statements:
International Accounting Standards
(IAS/IFRSs)
Effective date
(periods beginning on or after)
IFRS 17 Insurance Contracts
1 January 2023
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets Between an Investor and its
Associate or Joint Venture
Not yet announced by IASB
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
1 January 2023
Amendments to IFRS 3 Reference to the Conceptual Framework
1 January 2022
Amendments to IAS 16 Property, Plant and Equipment – Proceeds Before Intended Use
1 January 2022
Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract
1 January 2022
Annual Improvements to IFRS Standards 2018-2020 Cycle
1 January 2022
Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies
1 January 2023
Amendments to IAS 8 Definition of Accounting Estimates
1 January 2023
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction
1 January 2023
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
147
2. Summary of significant accounting policies continued
Prior year restatements
A prior year adjustment of £5.1m has been identified in respect of the Bavarian German onerous contract provision, primarily relating
to prior year modelling errors within the model and errors relating to revenue for which there was contractual entitlement, but which
had been omitted from the original onerous contract provision, over the life of the 12 year contract. The impact of the restatement is
to increase the provision by £5.1m in the year ended 27 June 2020 with a corresponding reduction of retained earnings.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and the entities it controls (its subsidiaries) as
at 2 July 2022. The financial year represents the 52 weeks ended 2 July 2022 (prior financial year 53 weeks ended 3 July 2021). For the
UK and the Republic of Ireland (UK and ROI), the results are for the 52 weeks ended 2 July 2022 (prior financial year 53 weeks ended 3
July 2021). For all other operations, the results are for the 52 weeks ended 30 June 2022 (prior financial year 52 weeks ended 30 June
2021).
Control is achieved when the Group:
• Has the power over the investee;
• Is exposed, or has rights, to variable returns from its involvement with the investee; and
• Has the ability to use its power to affects its returns.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more
of the three elements of control listed above.
When the Group has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the
voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group
considers all relevant facts and circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to
give it power, including:
• The size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
• Potential voting rights held by the Group, other vote holders or other parties;
• Rights arising from other contractual arrangements; and
• Any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to direct the relevant
activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date
on which control is transferred out of the Group. The financial statements of subsidiaries for use in the consolidation are prepared for
the same reporting year as the parent company and are based on consistent accounting policies. All intra-group balances and
transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.
Non-controlling interests represent the equity interests not held by the Group in Govia Limited, a 65% owned subsidiary, and are
presented within equity in the consolidated balance sheet, separately from shareholders’ equity.
Joint ventures represent the 50% equity interest held by the Group in respect of On Track Retail Limited, which is accounted for as a
joint arrangement, and disclosures are limited in this Annual Report as the business is currently immaterial to the Group.
Joint arrangements
A joint arrangement is defined as an arrangement by which two or more parties have joint control and rights to the net assets. Joint
control is the contractually agreed sharing of control, which exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control. Interests in joint arrangements are accounted for as either a joint venture or a joint operation in
accordance with IFRS 11 Joint Arrangements.
A joint arrangement is accounted for as a joint venture when the Group, along with other parties, has joint control and rights to the net
assets of the arrangement. Joint ventures are equity accounted in accordance with IAS 28 Investments in Associates and Joint
Ventures (Revised). A joint arrangement is accounted for as a joint operation when the Group, along with other parties, has joint
control of the arrangement, rights to the assets and obligations for the liabilities relating to the arrangement. Joint operations are
accounted for by including the Group’s share of the assets, liabilities, income and expense on a line-by-line basis.
Revenue recognition
The revenue of the Group, arising from contracts with customers, mainly comprises income from road passenger transport and rail
passenger transport.
The Group has a number of revenue streams which consist of revenue from passengers, contracts and franchise subsidies as well as
other miscellaneous revenue streams. Revenue is recognised on satisfaction of performance obligations which are generally clear.
Revenue is measured based on the fair value of the consideration received or receivable (excluding discounts, rebates, VAT and other
sales taxes or duty) to which the Group expects to be entitled and excludes amounts collected on behalf of third parties.
Group financial statements
Notes to the consolidated financial statements continued
2. Summary of significant accounting policies continued
Revenue recognition continued
As the Group has the right to consideration corresponding directly with the value of performance completed to date, customer
contract revenue is recognised consistent with the amount that the Group has the right to invoice. The Group is therefore exercising
the practical expedient not to explain transaction prices allocated to unsatisfied performance obligations at the end of the
reporting period.
An explanation of the main revenue streams is set out below.
Passenger revenue
Passenger revenue mainly relates to revenue from ticket sales in Regional Bus and the Rail divisions.
In Regional Bus, passenger revenue mainly consists of commercial and concessionary revenue. Commercial passenger revenue relates
to ticket sales for travel on the Regional Bus transport services and is recognised in the period in which the travel occurs. Season
tickets and travel cards enable passengers to use travel services over a period of time. Management assesses amounts received in the
period and future revenue is deferred, within liabilities, and subsequently recognised in the income statement within the applicable
accounting period.
Concessionary revenue is received from public bodies, such as local authorities, with a performance obligation to transport certain
eligible passengers free of charge. The transaction price varies between agreements and the revenue is recognised in the period of
travel.
In UK Rail, revenue comprises amounts based principally on agreed models of route usage by Railway Settlement Plan Limited (RSP)
(which administers the income allocation system within the UK rail industry), in respect of passenger receipts and other related
services such as rolling stock maintenance and commission on tickets sold. In relation to the GTR franchise, passenger revenue is
collected and remitted to the DfT net of management charges. In accordance with the GTR franchise agreement and IFRS 15 Revenue
from Contracts with Customers, passengers are regarded as customers and therefore passenger income is regarded as revenue. In
situations where the entity receives an amount from the DfT, the DfT is regarded as a customer of the entity and therefore such
amounts received are recognised as revenue. Over their lifetime, the UK Rail franchises may switch between being in a “premium”
position (when the amounts payable to the DfT exceed the amounts received from it) and being in a “subsidy” position (when the
amounts received from the DfT exceed the amounts paid to it). When the franchises are in a subsidy position, subsidy revenue is
recognised, in addition to passenger revenue, in the period in which the performance obligations are satisfied. In relation to the
Southeastern franchise, passenger revenue is not remitted to the DfT; however, prior to the introduction of the Emergency Measures
Agreement, passenger revenue was subject to a profit-sharing mechanism as described below on page 149.
In Germany, in line with the requirements of IFRS 15, passenger revenue is allocated by the tariff authority in each region between the
various transport providers based on ticket income declared, passenger counts, tariff authority estimates and historical trends.
Revenue is recognised based on the allocations made by the tariff authority or where these are not yet available, on the payments on
account made by the tariff authority or on other best estimates. The revenue is recognised as the service is provided to the passenger.
In Norway, rail passenger revenue is dependent on passenger numbers and the type of ticket purchased. It is recognised when the
passenger travels and when the service is delivered. During the COVID-19 pandemic, the Norwegian government provided financial
support to rail operators, preventing material losses. On 28 June 2022, a new agreement was reached between Go-Ahead Norway A/S
and the Norwegian Railway Directorate regarding the structure of the contract. The amended contract takes effect from 1 July 2022
and contains a revenue support scheme until the end of the contract. The amended contract also includes an incentive scheme linked
to revenue growth.
Contract revenue
Contract revenue mainly relates to London & International Bus and comprises contractual income from government bodies which are
recognised in the period to which they relate. Quality Incentive Contracts (QICs) income in London and Bus Service Reliability
Framework (BSRF) income in Singapore are received as part of contract revenue and the potential premiums or penalties are assessed
cumulatively on a contract-by-contract basis, at the end of each period based on key performance obligations, including reliability
performance measures. The whole of cumulative penalties/premiums is recognised in the income statement on a pro-rata basis in the
contract year.
When determining the QIC and BSRF income to be recognised, the Group utilises a weighted average approach to estimate the variable
consideration element but constrains this estimate to ensure that variable consideration is only included in revenue to the extent that it is
highly probable that it will not reverse when the final outcomes are known. The determination of this constrained estimate includes
consideration of past performance and other performance expectations. Reflecting the current consistent portfolio of contracts which
are spread throughout the year, there is not expected to be a material impact from this approach in year on year performance.
In Regional Bus, revenue generated from services provided on behalf of local transport authorities is also recognised as income in the
period to which it relates.
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Group financial statements
Notes to the consolidated financial statements continued
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2. Summary of significant accounting policies continued
Revenue recognition continued
Other revenue
Other revenue mainly relates to revenue for ancillary services, such as rail replacement bus services, maintenance and cleaning. Other
revenue also includes rental income which is generated from rental of surplus properties and subleasing of railway infrastructure
access. Other revenue is recognised in the period to which it relates, for the transaction price specified in the contract.
Revenue in relation to the COVID-19 Bus Service Support Grant (CBSSG) and Bus Recovery Grant (BRG) has been recognised within other
revenue and is recognised in the period in which the operational revenue and costs it is supporting relate to. CBSSG requires that a minimum
level of service is operated and revenue is variable and includes areas of estimation when determining the transaction price with the actual
revenue not confirmed until the reconciliation process is complete. BRG is based upon mileage operated and a portion of the overall funding
based on the operating company. The Group has recognised revenue where the amount can be measured reliably, and it is highly probable
that a significant reversal in the amount of cumulative revenue will not occur. Judgement is applied in determining whether some amounts
are allowable in applying the terms of the scheme.
Effective from 1 September 2021, CBSSG was replaced by BRG. The BRG is intended to compensate operators for continuing to provide bus
services during the COVID-19 recovery period and is allocated to operators across the industry based on revenue and mileage operated.
Revenue is recognised when the bus services have been provided. There is no judgement applied in determining the amount of revenue to be
recognised.
Franchise subsidy
Franchise subsidy revenue arises in the Rail division and comprises receipts from the relevant local transport authorities which are
receivable under the terms of the franchise agreements. The franchise agreements include minimum specifications of passenger
services to be provided by the operator, which is determined to be the performance obligation within the contract. Franchise premium
payments to the DfT, for amounts due under the terms of the UK franchises, are recognised in operating costs.
The Emergency Measures Agreements (EMAs) and later Emergency Recovery Measures Agreements (ERMAs) in the UK transferred
all revenue and cost risk to the Government from 1 March 2020 until 17 October 2021 for the Southeastern franchise and to the end of
March 2022 for the GTR franchise. UK Rail companies are paid a small management fee to continue running a revised National Rail
timetable across the UK. Net EMA funding, including the management fee, is recognised as franchise subsidy within revenue. For
EMAs, the performance payment is assessed through a review process, which awards rail franchisees with a score of 1, 2 or 3 against
three criteria (four for the ERMA) over the entire term of the EMA in areas of; operational performance, customer experience and
acting as a good and efficient operator and was extended to include collaboration for the ERMA. The performance payment is
recognised in accordance with IFRS 15 paragraph 56 only to the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur. The most likely method is applied in estimating the variable consideration.
On 1 April 2022, GTR began operating its NRC. Under this arrangement, similarly to the EMA and ERMA agreements, GTR is paid a fixed
management fee to run the franchise, with an additional performance fee element.
In Germany, the franchise contracts determine subsidy revenue without reference to the passenger revenue; the shortfall between
passenger revenue and franchise contract revenue is paid as a subsidy by the Public Transport Authority (PTA). Franchise contract
revenue is based, among other factors, on mileage and performance/quality levels. Revenue is recognised based on the performance
figures reported monthly to the PTA. In accordance with IFRS 15:70, costs payable to the PTA, such as rolling stock lease payments, are
netted against subsidy income as the PTA is regarded as the customer and provides the rolling stock under IFRIC 12.
In Norway, subsidy revenue is received from the Rail Directorate (the customer) as per the Traffic Agreement. This is mainly fixed,
although there are variable elements with bonuses and penalties payable based on performance. The revenue subsidy is inter-related with
a number of costs payable to the customer. These costs are payable to the state, are specified by the Traffic Agreement and are
accounted for as a reduction in transaction price in accordance with IFRS 15:70. Following the impact of COVID-19, the Norwegian
Government continued to support the rail industry with a package materially covering losses. This temporary support continued until
the end of the financial year when it was replaced by revised contractual terms. The amended contract takes effect from 1 July 2022
and contains a revenue support scheme until the end of the contract. The amended contract also includes an incentive scheme linked
to revenue growth.
All franchise subsidies are recognised in the period to which they relate.
Profit and revenue sharing/support agreements
The UK Rail companies have certain revenue and profit sharing agreements with the DfT. An accrual is made within amounts payable to
central government for the estimated cost to the Group of the relevant amounts accrued at the balance sheet date. Costs are charged to
operating costs. The profit share agreements were terminated when the EMAs and ERMAs were put in place from 1 March 2020.
Costs of obtaining a contract
Costs of obtaining a contract are capitalised under IFRS 15 and amortised on a straight-line basis over the life of the franchise, which
ranges from 5 to 13 years. Refer to “Franchise set-up costs” section for further details on page 153.
Group financial statements
Notes to the consolidated financial statements continued
2. Summary of significant accounting policies continued
Property, plant and equipment
Property, plant and equipment is stated at cost, or deemed cost, less accumulated depreciation, any impairment in value and any
residual value. Freehold land is not depreciated.
Residual values and useful economic lives are reviewed annually. Where there is a contract end date, useful economic lives are based
on this, not including any possible extensions not yet confirmed. Depreciation is charged on all additions to, or disposals of,
depreciating assets in the year of purchase or disposal and over their expected useful life on a straight-line basis, to operating costs in
the income statement, as follows:
Leasehold land and buildings
The life of the lease
Freehold buildings
Over 50 to 100 years
Bus vehicles
Over 8 to 15 years
Plant and equipment
Over 3 to 15 years
The carrying values of items of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable. If any such indication exists the assets are written down to their recoverable
amount, being the higher of value in use or fair value less costs of disposal. Any impairment in value is recognised immediately in the
income statement.
Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all
attaching conditions will be complied with. When the grant relates to an expense item, it is recognised in operating costs within the
income statement over the period necessary to match on a systematic basis to the costs that it is intended to compensate. Where the
grant relates to a non-current asset, the value is credited to a deferred income account and is released to the income statement over
the expected useful life of the relevant asset.
Share based payment transactions
The cost of options granted to employees during the year is measured by reference to the fair value at the date at which they are
granted, determined by an external valuation using an appropriate pricing model. In granting equity-settled options, conditions are
linked to some or all of the following: the price of the shares of the Group (market conditions); conditions not related to performance
or service (non-vesting conditions); performance conditions (a vesting condition); and service conditions (a vesting condition).
The cost of options is recognised in the income statement over the period from grant to vesting date, being the date on which the
relevant employees become fully entitled to the award, with a corresponding increase in equity. The cumulative expense recognised at
each reporting date reflects the extent to which the period to vesting has expired and the directors’ best estimate of the number of
options that will ultimately vest or, in the case of an instrument subject to a market or non-vesting condition, be treated as vesting as
described above. This includes any award where non-vesting conditions within the control of the Group or the employee are not met.
No cost is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or non-
vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied,
provided that all other performance and/or service conditions are satisfied. Where an equity-settled award is cancelled, it is treated as
if it had vested on the date of cancellation, and any cost not yet recognised for the award is recognised immediately.
Subsequent to the year-end, the Group was acquired by Gerrard Investment Bidco Limited which is a joint venture between Kinetic
TCo Pty Ltd ("Kinetic") and Globalvia Inversiones S.A.U. ("Globalvia"). As a result, the Group’s shares were delisted. Refer to Note 30 for
further information.
Exceptional operating items
The Group presents as exceptional operating items on the face of the income statement material items of income or expense which,
because of the size, nature and expected infrequency of the events giving rise to them, merit alternative presentation to allow an
alternative understanding of financial performance. In considering the nature of the event, management considers factors such as
ensuring consistent treatment between favourable and unfavourable transactions, the precedent for similar items, and the
commercial context for the particular transaction.
Items of income or expense that are considered by management for presentation as exceptional include onerous contract provisions,
impairment of assets, restructuring provisions, takeover costs and fines or penalties, and the related tax on these items. Refer to the
critical accounting judgements section on pages 140-145 for further detail on why certain items have been presented as exceptional
items.
Finance income
Interest on deposits is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
Interest-bearing loans and borrowings
Debt is initially stated at the amount of the net proceeds, being the fair value of the consideration received after deduction of issue
costs. Following initial recognition, the carrying amount is measured at amortised cost using the effective interest method.
Amortisation of liabilities and any gains and losses arising on the repurchase, settlement or other derecognition of debt are recognised
directly in the income statement. Issue costs relating to any term extensions are offset against the proceeds and amortised over the
life of the extension.
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Group financial statements
Notes to the consolidated financial statements continued
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2. Summary of significant accounting policies continued
Leases
Lease identification
At inception of a contract, the Group shall assess whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Right of use asset
Right of use assets are measured initially at cost based on the value of the associated lease liability, adjusted for any payments made
before inception, initial direct costs and an estimate of the dismantling, removal and restoration costs required in the terms of the
lease.
The right of use assets are subsequently depreciated on a straight-line basis over the shorter of the estimated useful life of the asset
or the lease term. The lease term shall include the period of an extension option where it is reasonably certain that the option will be
exercised. Where the lease contains a purchase option the asset is written off over the useful life of the asset when it is reasonably
certain that the purchase option will be exercised.
In addition, the right of use asset is periodically reduced by impairment losses, if applicable, and adjusted for certain remeasurements
of the lease liability.
Lease liability
At the commencement date of the lease, the lease liability is initially measured at the present value of lease payments to be made over
the lease term with payments discounted at the rate implicit in the lease or, where that cannot be measured, at the Group’s
incremental borrowing rate. being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions. Due to the
capital structure of the Group, the Group’s cost of debt forms the base of the IBR with specific finance and lease adjustments made,
when applicable, which are linked to the lease term, country of lease and start date.
The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid by the Group under residual value guarantees. The lease
payments also include the exercise price of a purchase option if the Group is reasonably certain to exercise that option. Payments of
penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate the lease, are also included.
The lease liability is subsequently measured by increasing the carrying amount to reflect the interest on the lease liability and reducing
the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right of use asset) whenever:
• the lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a
revised discount rate;
• the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in
which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless
the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); and
• a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is
remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at
the effective date of the modification.
Short term and low value asset leases
The Group has elected not to recognise right of use assets and lease liabilities for short term leases that have a lease term of less than
12 months and leases of low value assets. Lease payments relating to short term leases and leases of low value assets are recognised as
an expense on a straight-line basis over the lease term.
The Group recognises the rolling stock leases in Germany and Norway in accordance with IFRIC 12 Service Concession Arrangements, rather
than IFRS 16 and therefore does not have a right-of-use asset or separate lease liability on the balance sheet in respect of these contracts.
Foreign currencies
In preparing the financial statements of the Group, transactions in currencies other than the entity’s functional currency (foreign
currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary
assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary
items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair
value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are
translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates
for the period. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a foreign
exchange translation reserve (attributed to non-controlling interests as appropriate).
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
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2. Summary of significant accounting policies continued
Taxation
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities on an
undiscounted basis at the tax rates that are expected to apply when the related asset is realised or the liability is settled, based on tax
rates and tax laws that have been enacted or substantively enacted at the balance sheet date.
Deferred tax is provided, using the liability method, on temporary differences at the balance sheet date between the tax base of assets
and liabilities for taxation purposes and their carrying amounts in the financial statements. It is provided for on all temporary
differences, except:
• On the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss
• In respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future
Deferred tax assets are only recognised to the extent that it is probable that the temporary differences will be reversed in the
foreseeable future and taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Tax relating to items recognised outside the income statement is recognised in other comprehensive income, or directly, in equity in
correlation with the underlying transaction. Otherwise, tax is recognised in the income statement.
Business combinations and goodwill
Business combinations are accounted for under IFRS 3 Business Combinations (Revised) using the acquisition method. The cost of an
acquisition is measured as the aggregate of the consideration transferred, measured at acquisition-date fair value and the amount of
any non-controlling interest in the acquiree. The choice of measurement of non-controlling interest, either at fair value or at the
proportionate share of the acquiree’s identifiable assets, is determined on a transaction by transaction basis. Acquisition costs
incurred are expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance
with IFRS 9 in the income statement.
Goodwill is initially measured at cost, being the excess of the aggregate of the acquisition-date fair value of the consideration
transferred and the amount recognised for the non-controlling interest (and where the business combination is achieved in stages, the
acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree) over the net identifiable amounts of the assets
acquired and the liabilities assumed in exchange for the business combination. Assets acquired and liabilities assumed in transactions
separate from the business combinations, such as the settlement of pre-existing relationships or post-acquisition remuneration
arrangements, are accounted for separately from the business combination in accordance with their nature and applicable IFRSs.
Identifiable intangible assets, meeting either the contractual-legal or separability criterion, are recognised separately from goodwill.
Contingent liabilities representing a present obligation are recognised if the acquisition-date fair value can be measured reliably.
If the aggregate of the acquisition-date fair value of the consideration transferred and the amount recognised for the non-controlling
interest (and where the business combination is achieved in stages, the acquisition-date fair value of the acquirer’s previously held
equity interest in the acquiree) is lower than the fair value of the assets, liabilities and contingent liabilities and the fair value of any
pre-existing interest held in the business acquired, the difference is recognised in the income statement.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing,
goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units (or
groups of cash generating units) that are expected to benefit from the combination, irrespective of whether other assets or liabilities
of the acquiree are assigned to those units. Each unit or group of units to which goodwill is allocated shall represent the lowest level
within the entity at which the goodwill is monitored for internal management purposes and not be larger than an operating segment
before aggregation.
Where goodwill forms part of a cash generating unit and part of the operation within that unit is disposed of, the goodwill associated
with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the
portion of the cash generating unit retained.
Group financial statements
Notes to the consolidated financial statements continued
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2. Summary of significant accounting policies continued
Software
Software, which is not integral to the related hardware, is capitalised as an intangible asset and stated at cost less amortisation and
any impairment in value. Amortisation is charged to the income statement evenly over its expected useful life of three to five years.
Franchise set-up costs
A key part of the Group’s activities is the process of bidding for and securing franchises, principally to operate rail services in the UK
and bus and rail services internationally. In the UK, all franchise bid costs incurred prior to achieving preferred bidder status are treated
as an expense in the income statement irrespective of the ultimate outcome of the bid. Internationally, all franchise bid costs incurred
prior to a contract win are treated as an expense in the income statement irrespective of the ultimate outcome of the bid. Directly
attributable, incremental costs incurred after achieving preferred bidder status, entering into a franchise extension or winning an
international bid are capitalised as an intangible asset and amortised on a straight-line basis over the life of the franchise, which ranges
from 5 to 13 years. The amortisation expense is taken to the income statement within operating costs.
Customer contracts
Customer contracts relate to the value attributed to contracts and relationships purchased as part of the Group’s acquisitions. The
value is based on the unexpired term of the contracts at the date of acquisition. Customer contracts have a residual value of £nil and
are amortised on a straight-line basis over the unexpired contract term, which is determined on an individual customer basis. The
amortisation expense is taken to the income statement as operating costs.
Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists,
or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount, being the
higher of the asset’s or cash generating unit’s fair value less costs to sell and its value in use. Value in use is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, and
the estimated future cashflows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered to be impaired and is written down to
its recoverable amount.
Impairment losses (including goodwill impairment) of continuing operations are recognised in the income statement in those expense
categories consistent with the function of the impaired asset. An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the
recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognised. Goodwill impairment losses are not
reversed. The reinstated amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. After such a reversal, the depreciation charge is adjusted in future periods
to allocate the asset’s revised carrying amount, on a systematic basis less any residual value, over its remaining useful life.
Assets held for sale
Assets held for sale are measured at the lower of carrying amount and fair value less costs to sell. Assets are classified as held for sale
if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as
met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be
committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of
classification.
Inventories
Inventories of fuel and engineering spares are valued at the lower of cost and net realisable value on a first in first out basis after
making due allowance for obsolete and slow moving items. Cost comprises direct materials and costs incurred in bringing the items to
their present location and condition. Net realisable value represents the estimated selling price less costs of sale. Purchases of fuel may
be subject to cash flow hedges for commodity price risk. The initial cost of hedged fuel is adjusted by the associated hedging gain or
loss transferred from the cash flow hedge reserve (basis adjustment).
Cash and cash equivalents
Cash and short term deposits in the balance sheet comprise cash at bank and in hand, and short term deposits with an original
maturity of three months or less. For the purpose of the consolidated cashflow statement, cash and cash equivalents consist of cash
and cash equivalents as defined above, net of outstanding bank overdrafts which are repayable on demand and form an integral part
of the Group’s cash management.
Group financial statements
Notes to the consolidated financial statements continued
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2. Summary of significant accounting policies continued
Financial instruments
Financial assets
The Group’s financial assets are initially recognised at fair value, being the transaction price plus, in the case of financial assets not
recorded at fair value through profit or loss in the income statement, directly attributable transaction costs. Financial assets are
subsequently classified as being measured at amortised cost, fair value through other comprehensive income, or fair value through the
income statement.
The Group’s financial assets at amortised cost are non-derivative financial assets held for collection of contractual cashflows where
those cashflows represent solely payments of principal and interest. Financial assets at amortised cost are subsequently measured
using the effective interest method and are subject to impairment. Gains and losses are recognised in the income statement when the
asset is derecognised, modified or impaired.
The Group does not have any financial assets held at fair value through the income statement.
The Group does not have any financial assets held at fair value through other comprehensive income.
The Group uses an impairment model with impairment provisions based on expected credit losses. The Group applies the IFRS 9
simplified approach and measures the loss allowance on the lifetime expected credit losses at each reporting date for trade
receivables, contract assets, accrued income and lease receivables using a provision matrix based on the Group’s historical credit loss
experience. The loss allowance on the receivables from central government is measured at an amount equal to 12-months’ expected
credit losses because these assets have a low credit risk at the reporting date.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk (such as
changes to credit ratings or when the contractual payments are overdue by more than 30 days) since initial recognition. However, if
the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to 12-month ECL.
Trade receivables, amounts recoverable on contracts and accrued income are written-off when there is no reasonable expectation of
recovery. Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent
recoveries of amounts previously written-off are credited against the same line item.
Financial assets are derecognised when the right to receive cash flows from the asset has expired, the right to receive cash flows has
been retained but an obligation to on-pay them in full without material delay has been assumed or the right to receive cash flows has
been transferred together with substantially all the risks and rewards of ownership.
Financial liabilities
The Group’s financial liabilities include trade payables, accruals, interest-bearing loans and borrowings and derivative financial
instruments. At initial recognition, the Group measures financial liabilities at fair value plus, in the case of a financial liability not at fair
value through the income statement, transaction costs that are directly attributable to the issue of the financial liability.
With the exception of derivative financial instruments, all other financial liabilities are subsequently measured on an amortised costs
basis.
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired.
The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is
recognised in the income statement.
When the Group exchanges with the existing lender one debt instrument into another one with substantially different terms, such
exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the
original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted
present value of the cashflows under the new terms, including any fees paid net of any fees received and discounted using the original
effective rate, is at least 10% different from the discounted present value of the remaining cashflows of the original financial liability. If
the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the
present value of the cashflows after the modification should be recognised in profit or loss as the modification gain or loss within
other gains and losses.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
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2. Summary of significant accounting policies continued
Financial instruments continued
Derivative financial instruments
The Group uses derivatives to hedge its risks associated with fuel price fluctuations. These derivatives are designated as cash flow
hedges. Such derivatives are initially recognised at fair value by reference to market values for similar instruments, and subsequently
remeasured at fair value at each balance sheet date.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged
item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting
changes in fair values or cashflows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all
of the following hedge effectiveness requirements:
• There is an economic relationship between the hedged item and the hedging instrument
• The effect of credit risk does not dominate the value changes that result from that economic relationship
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group
actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management
objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e.
rebalances the hedge) so that it meets the qualifying criteria again.
Gains or losses on fuel derivatives are recycled from equity into inventory on qualifying hedges to achieve fixed rate fuel costs with
operating results.
Financial guarantees
Financial guarantees are accounted for in accordance with IFRS 9. Financial Guarantees are initially recognised at their fair value and
are subsequently measured at the higher of the IFRS 9 expected credit losses and the amount initially recognised less any cumulative
amount of income/amortisation recognised.
Fair value measurement
The Group measures financial instruments (derivatives) and non-financial assets at fair value at each balance sheet date. Fair values of
financial instruments measured at amortised cost are disclosed in note 24.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either:
• in the principal market for the asset or liability; or
• in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by
using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 – quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 – valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable
• Level 3 – valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers
have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each reporting period.
At each reporting date, the Group analyses the movements in the values of assets and liabilities which are required to be remeasured
or reassessed as per the Group’s accounting policies. For this analysis, the Group verifies the major inputs applied in the latest
valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Group also compares the changes in the fair value of each asset and liability with relevant external sources to determine whether
the change is reasonable.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
156
2. Summary of significant accounting policies continued
Fair value measurement continued
When required, the Group presents the valuation results to the audit committee. This includes a discussion of the major assumptions
used in the valuations.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect is
material, expected future cashflows are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to
the liability.
Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only
when recovery is virtually certain. The expense relating to any provision is presented in the income statement net of any
reimbursement. Where discounting is used, the increase in the provision due to unwinding the discount is recognised as a finance cost.
The Group provides for property, station and fleet dilapidations, where appropriate, based on the future expected repair costs required
to restore them to their fair condition at the end of their respective lease terms, where it is considered that a reliable estimate can be
made. The Group also provides for penalties where appropriate.
A provision is recognised in the Group’s consolidated balance sheet for any contract that is onerous. A contract is considered onerous
where it is probable that the unavoidable costs of delivering the contract exceed the future economic benefits expected to be derived
from the contract. Determining the amount of an onerous contract provision (the lower of the net costs of fulfilling the contract or
costs of terminating the contract) may involve forecasting future financial performance, where the most likely amount method is
used. The amount of any onerous contract provision is re-assessed at each balance sheet date. Any increase or decrease required to
the amount of the provision is charged or credited to the consolidated income statement. The Group has recognised onerous contract
provisions in respect of the Bavarian and Norwegian rail franchises – refer to pages 192-193 for further details, including details of the
key judgements made in relation to these provisions.
Uninsured liabilities
The Group limits its exposure to the cost of motor, employer and public liability claims through insurance policies issued by third
parties. These provide individual claim cover, subject to high excess limits for total claims within the excess limits. A discounted
provision is recognised for the estimated cost to settle claims for incidents occurring prior to the balance sheet date.
The estimation of this provision is made after taking appropriate professional advice and is based on an assessment of the expected
settlement on known claims, together with an estimate of settlements that will be made in respect of incidents occurring prior to the
balance sheet date but that have not yet been reported to the Group by the insurer.
Provisions are accounted for on a gross basis with a separate reimbursement asset recognised for amounts recoverable from
insurance providers.
Treasury shares
Reacquired shares in the Group, which remain uncancelled, are deducted from equity. Consideration paid and the associated costs are
also recognised in shareholders’ funds as a separate reserve for own shares.
Investments
Investments are held at fair value through profit or loss. The Group’s subsidiary Go-Ahead Verkehrsgesellschaft Deutschland GmbH
holds a 7.4% shareholding in Mobileeee Betriebsgesellschaft mbh & Co KG, an all-electric car-sharing service based in Germany. The
value of this investment in the financial statements is £nil (2021: £nil).
Retirement benefits
The Group operates a number of pension schemes, both defined benefit and defined contribution. The costs of these are recognised in
the income statement.
Bus retirement benefit schemes
The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit
method, which attributes entitlement to benefits to the current period (to determine current service cost) and to the current and prior
periods (to determine the present value of defined benefit obligation) and is based on actuarial advice. Net interest is calculated by
applying the discount rate to the net defined benefit liability or asset.
Remeasurements, comprising actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan
assets (excluding net interest), are recognised in the statement of comprehensive income in the period in which they occur.
The current service cost is recognised in the income statement within operating costs. The net interest expense or income is
recognised in the income statement within finance costs.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
157
2. Summary of significant accounting policies continued
Retirement benefits continued
Bus retirement benefit schemes continued
The defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined
benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the
obligations are to be settled directly. Fair value is based on market price information and in the case of quoted securities is the
published bid price. Any surplus is limited to the present value of any economic benefits available in the form of refunds from the plans
or reductions in future contributions to the plans.
Past service costs are recognised in the income statement on the earlier of the date of the plan amendment or curtailment, and the
date that the Group recognises restructuring-related costs. When a settlement (eliminating all obligations for benefits already
accrued) or a curtailment (reducing future obligations as a result of a material reduction in the scheme membership or a reduction in
future entitlement) occurs, the obligation and related plan assets are remeasured using current actuarial assumptions and the
resultant gain or loss is recognised in the income statement during the period in which the settlement or curtailment occurs.
Contributions payable under defined contribution schemes in both Regional Bus and London & International Bus are charged to
operating costs in the income statement as they fall due.
Rail retirement benefit schemes
The Group’s UK train operating companies (TOCs) participate in the Railways Pension Scheme (RPS), which is an industry-wide defined
benefit scheme. The Group is obligated to fund the relevant section of the scheme over the period for which the franchise is held.
All the costs, and any deficit or surplus, are shared 60% by the employer and 40% by the members. In addition, at the end of the
franchise, any deficit or surplus passes to the subsequent franchisee with no compensating payments from or to the outgoing
franchise holder. The Group’s obligations are therefore limited to its contributions payable during the period over which it operates
the franchise, these contributions being subject to change on consideration of future statutory valuations. The net liability reflects the
Group’s obligation to fund the statutory deficits of the relevant RPS sections over the franchise term.
The last statutory valuation of the RPS scheme sections in which the Group is involved, carried out on 31 December 2013 as noted in note 29,
and its IAS 19 actuarial valuation are carried out for different purposes and may result in materially different amounts. There are ongoing
funding deficits across the RPS schemes in which the Group participates and the IAS 19 valuation is set out in the disclosures below.
The accounting treatment for the time based risk-sharing feature of the Group’s participation in the RPS is not explicitly considered by
IAS 19 Employee Benefits (Revised). Since the contributions currently committed to being paid to each TOC section are lower than the
share of the service cost (for current and future service) than would normally be calculated under IAS 19 Employee Benefits (Revised),
the Group does not account for uncommitted contributions towards the section’s current or expected future deficits. This reflects the
legal position that some of the existing deficit and some of the service costs in the current year will be funded in future years beyond
the term of the current franchise and committed contributions. As a result, the Group consequently reduces any section deficit
balance and reduces any service costs that would give rise to an increase in such deficit through the use of a franchise adjustment. The
franchise adjustment reflects the extent to which third parties are expected to contribute towards the cost of the plan as a
consequence of the deficit transferring at the end of the franchise, which is deemed, in the directors’ view, in line with paragraphs 92–
94 of IAS 19 Employee Benefits (Revised). Under circumstances where contributions are renegotiated, for example, following a
statutory valuation, an adjustment will be recognised in the income statement, whilst changes in actuarial assumptions continue to be
recognised through the statement of other comprehensive income.
Contributions payable under defined contribution schemes in Germany and Norway are charged to operating costs in the income
statement as they fall due.
Please refer to note 29 for further details.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
158
3. Reconciliation of alternative profit measures (APMs)
The Group uses a number of alternative performance measures (APMs) throughout the Annual Report and Accounts. Management
believes that adjusting for these items provides an alternate understanding of the Group’s operating performance and financial
position.
APMs used by the Group may not be comparable with similarly titled measures and disclosures by other companies. APMs have
limitations as an analytical tool and a user of the financial statements should not consider these measures in isolation from, or as a
substitute for, analysis of the Group’s results of operations; and they may not be indicative of the Group’s historical operating results,
nor are they meant to be a projection or forecast of its future results.
The APMs used by the Group are disclosed below:
Operating profit pre-exceptional items
Exceptional operating items represent material items of revenue or expenses because of the size or nature and the expected
infrequency of the events giving rise to them. This metric is a key metric reviewed by management and adjusting operating profit for
exceptional items gives an alternative understanding of the Group’s recurring performance.
Reconciliation of pre and post-exceptional operating profit:
2022
£m
2021
£m
Operating profit
110.3
11.4
Exceptional items:
– Norway franchise onerous contract provision charge/(release) and asset impairment
(51.6)
76.7
– German Bavaria franchise onerous contract provision
36.0
—
– Department for Transport settlements, financial penalty and associated costs relating to LSER and other
historic franchises
(9.3)
32.4
– Asset impairments and provisions – Regional Bus
(1.2)
0.2
– Goodwill impairment – Regional Bus
2.7
—
– Asset impairments and restructuring costs – International Rail
—
(5.2)
– Takeover legal and professional fees
2.2
—
Operating profit pre-exceptional items
89.1
115.5
Further detailed information on the exceptional items is given in note 7.
A summary of the impact of the exceptional items on other statutory measures is as follows:
Pre-
exceptional
2022
£m
Exceptional
2022
£m
Post-
exceptional
2022
£m
Pre-
exceptional
2021
£m
Exceptional
2021
£m
Post-
exceptional
2021
£m
Group operating profit
89.1
21.2
110.3
115.5
(104.1)
11.4
Profit/(loss) before taxation
73.5
21.2
94.7
97.2
(104.1)
(6.9)
Tax expense
(13.1)
(0.4)
(13.5)
(34.3)
0.5
(33.8)
Profit/(loss) for the year from continuing
operations
60.4
20.8
81.2
62.9
(103.6)
(40.7)
Attributable to:
– Equity holders of the parent
50.9
17.0
67.9
46.6
(92.6)
(46.0)
– Non-controlling interests
9.5
3.8
13.3
16.3
(11.0)
5.3
60.4
20.8
81.2
62.9
(103.6)
(40.7)
Earnings per share
– Basic
118.3p
39.6p
157.9p
108.4p
(215.4)p
(107.0)p
– Diluted
117.8p
39.4p
157.2p
108.0p
(214.7)p
(106.7)p
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
159
3. Reconciliation of alternative profit measures (APMs) continued
Headroom on facilities plus unrestricted cash
Headroom on facilities plus unrestricted cash is the total amounts available on the facilities listed below, added to the value of
unrestricted cash available as of the year-end date, as shown below. This is a key metric reviewed by management to help assess the
liquidity of the Group.
2022
£m
2021
£m
Syndicated loans
280.0
280.0
£250m sterling seven-year bond
250.0
250.0
€8m revolving credit facility
6.9
5.5
€10.85m loan
9.3
7.7
Flexbuss loan
13.8
—
Total core facilities
560.0
543.2
Amount drawn down at year end (see below)
380.8
389.8
Headroom on facilities
179.2
153.4
Unrestricted cash1
141.3
86.9
Headroom on facilities and unrestricted cash
320.5
240.3
1 Unrestricted cash is calculated as total cash of £191.8m (2021: £630.6m) less restricted cash of £50.5m (2021: £543.7m).
Reconciliation of "Amount drawn down at year end" to Liabilities arising from financing activities
Amount drawn down at 2 July 2022
Syndicated
loan facility
£m
Lease
liabilities
£m
£250m
sterling bond
£m
Flexbuss loan
£m
Euro RCF
£m
Euro loan
£m
Total
£m
Liabilities arising from financing activities
(Note 22)
(104.3)
(867.6)
(255.5)
(13.8)
(5.3)
(6.9)
(1,253.4)
Interest outstanding at year end
—
—
6.3
—
—
—
6.3
Debt issue costs
(0.5)
—
(0.8)
—
—
—
(1.3)
Adjust lease liabilities
—
867.6
—
—
—
—
867.6
Amount drawn down at year end
(104.8)
—
(250.0)
(13.8)
(5.3)
(6.9)
(380.8)
Amount drawn down at 3 July 2021
Syndicated
loan facility
£m
Lease
liabilities
£m
£250m
sterling bond
£m
Flexbuss loan
£m
Euro RCF
£m
Euro loan
£m
Total
£m
Liabilities arising from financing activities
(Note 22)
(126.2)
(312.6)
(255.1)
—
(5.5)
(7.7)
(707.1)
Interest outstanding at year end
—
—
6.2
—
—
—
6.2
Debt issue costs
(0.4)
—
(1.1)
—
—
—
(1.5)
Adjust lease liabilities
—
312.6
—
—
—
—
312.6
Amount drawn down at year end
(126.6)
—
(250.0)
—
(5.5)
(7.7)
(389.8)
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
160
3. Reconciliation of alternative profit measures (APMs) continued
Adjusted net debt
Adjusted net debt is the net cash/debt position of the Group adjusted to reflect the impact of restricted cash on cashflows. Net
cash/debt is the value of cash and cash equivalents offset by borrowings, including interest-bearing loans and borrowings and lease
liabilities. Restricted cash represents amounts held in UK Rail which can only be distributed with the agreement of the relevant local
transport authorities and are therefore outside of management’s control.
Management presents adjusted net debt on pre and post-exceptional item bases. Management also present adjusted net debt
excluding the impact of the adoption of IFRS 16 in line with the requirement of debt covenants. The components of adjusted net debt
are shown within note 22.
Free cashflow
Free cashflow is used by management to determine the amount of cash the Group has generated in the year from its operations that
can be utilised for strategic purposes. A summary of free cashflow and the reconciliation between the cashflow statement and the
adjusted net debt position is presented as part of the consolidated cashflow statement. Free cashflow is calculated as cashflow
generated from operations (excluding restricted cash movements) less tax paid, net interest paid, net capital investment and
dividends paid to non-controlling interests.
Management also presents free cashflow on a pre-IFRS 16 basis. This is presented to aid review of the free cashflow excluding the
impacts of IFRS 16 on the Group.
Cashflow reconciliation
A reconciliation of cash generated from operations to free cashflow and net debt, two non-GAAP measures used by management, is shown
on pages 158 to 160. Free cashflow and adjusted net debt are measures used by management, which reflect the impact of restricted cash
on cashflows.
EBITDA (excluding exceptional items) reconciliation
EBITDA (excluding exceptional items) is defined as earnings before interest, tax, depreciation, amortisation and impairment and
excludes exceptional items, as shown on page 166. This metric is used in the calculation of our pre-IFRS 16 EBITDA (excluding
exceptional items) which is relevant to our debt covenants.
EBITDA (excluding exceptional items) pre-IFRS 16 is calculated as EBITDA (excluding exceptional items) less the IFRS 16 effect which is
the costs that would have been incurred in operating costs relating to leases not on the balance sheet before IFRS 16 was adopted.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
161
4. Segmental analysis
The Group’s businesses are managed on a divisional basis. Selected financial data is presented on this basis below.
For management purposes, the Group is organised into four reportable segments: Regional Bus, London & International Bus, UK Rail,
and International Rail. Operating segments are reported to the chief operating decision maker, considered to be the Group Chief
Executive, on a periodic basis for the purposes of resource allocation and assessment of segmental performance. Segments are
organised based on the long-term economic characteristics as well as the similar nature of the business activities and are reported as
follows:
Regional Bus comprises UK bus operations outside London.
The London & International Bus segment comprises bus operations in London under the control of Transport for London (TfL), rail
replacement and other contracted services in London, bus operations in Singapore under the control of the Land Transport Authority
(LTA) of Singapore, bus operations in Ireland under the control of the National Transport Authority (NTA) of Ireland and bus
operations, school transport, medical transfer and private hire buses in Sweden through the acquisition of Flexbuss during the current
year. These are aggregated as a single segment for internal management purposes given the similar contractual nature of the services
and how these services are provided, the type of customer, the similar economic characteristics and the similar regulatory
environment. The operations are also governed and controlled by a distinct management team.
The UK Rail segment comprises UK Rail operations. The UK Rail operation, through an intermediate holding company, Govia Limited, is
65% owned by Go-Ahead and 35% by Keolis and during the year, included two rail franchises: Southeastern (until 17 October 2021) and
GTR. The registered office of Keolis (UK) Limited is in England and Wales. The UK Rail operating companies have similar business
activities and objectives, to provide passenger rail services and to achieve a modest profit margin through franchise agreements.
The International Rail segment comprises overseas rail operations in Germany and Norway. International Rail operations commenced
on 15 June 2019 in Germany and on 15 December 2019 in Norway. A new operation in Bavaria started during the year on 12 December
2021 and a further train line has been mobilising during the year which started operating on 11 December 2022. These operations are
managed collectively by the local transport authorities. The German operations are 100% owned by Go-Ahead. Germany and Norway
operations are aggregated as a single segment for internal management purposes given the similar business activities and objectives
and the fact that they each operate services under heavily controlled regimes and specifications, set by the local transport authorities
in their respective countries.
The information reported to the Group Chief Executive in his capacity as chief operating decision maker does not include an analysis of
assets and liabilities and accordingly IFRS 8 does not require this information to be presented. Segment performance is evaluated
based on operating profit or loss, on a pre and post-exceptional basis below.
Transfer prices between operating segments are on an arm’s length basis similar to transactions with third parties.
The following tables present information regarding the Group’s reportable segments for the year ended 2 July 2022 and the year
ended 3 July 2021.
Year ended 2 July 2022
Regional
Bus
£m
London &
International
Bus
£m
Total
Bus
£m
UK Rail
£m
International
Rail
£m
Total
Rail
£m
Total
Operations
£m
Passenger revenue
325.1
—
325.1
1,119.2
78.6
1,197.8
1,522.9
Contract revenue
70.0
676.9
746.9
0.2
—
0.2
747.1
Other revenue
68.8
4.0
72.8
142.1
20.8
162.9
235.7
Franchise subsidy
—
—
—
722.6
91.8
814.4
814.4
Segment revenue
463.9
680.9
1,144.8
1,984.1
191.2
2,175.3
3,320.1
Inter-segment revenue
(3.6)
(17.3)
(20.9)
(11.1)
—
(11.1)
(32.0)
Group revenue
460.3
663.6
1,123.9
1,973.0
191.2
2,164.2
3,288.1
Operating costs including impairment losses
(433.4)
(605.8)
(1,039.2) (1,949.4)
(210.4)
(2,159.8)
(3,199.0)
Group operating profit/(loss)
(pre-exceptional items)
26.9
57.8
84.7
23.6
(19.2)
4.4
89.1
Exceptional operating items
(2.3)
(0.9)
(3.2)
8.9
15.5
24.4
21.2
Group operating profit/(loss)
(post-exceptional items)
24.6
56.9
81.5
32.5
(3.7)
28.8
110.3
Share of result of joint venture
(0.1)
Net finance costs
(15.5)
Profit before tax and non-controlling interests
94.7
Tax expense
(13.5)
Profit for the year
81.2
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
162
4. Segmental analysis continued
Year ended 2 July 2022
Further information on exceptional operating items is disclosed in note 7.
Regional
Bus
£m
London &
International
Bus
£m
Total
Bus
£m
UK Rail
£m
International
Rail
£m
Total
Rail
£m
Total
Operations
£m
Other segment information
Capital expenditure:
– Additions
12.9
29.8
42.7
1.2
1.5
2.7
45.4
– Intangible assets
0.4
0.4
0.8
0.3
0.3
0.6
1.4
– Right of use assets
3.3
15.0
18.3
879.4
3.1
882.5
900.8
Depreciation:
– Owned assets
35.6
25.0
60.6
11.3
1.3
12.6
73.2
– Right of use assets
5.8
19.1
24.9
346.0
0.5
346.5
371.4
Amortisation:
– Intangible assets
0.4
1.7
2.1
1.3
0.1
1.4
3.5
Year ended 3 July 2021
Regional
Bus
£m
London &
International
Bus
£m
Total
Bus
£m
UK Rail
£m
International
Rail
£m
Total
Rail
£m
Total
Operations
£m
Passenger revenue
233.6
—
233.6
661.6
50.8
712.4
946.0
Contract revenue
70.6
682.9
753.5
0.5
—
0.5
754.0
Other revenue
127.5
1.6
129.1
132.2
7.2
139.4
268.5
Franchise subsidy
—
—
—
2,071.5
82.2
2,153.7
2,153.7
Segment revenue
431.7
684.5
1,116.2
2,865.8
140.2
3,006.0
4,122.2
Inter-segment revenue
(4.0)
(23.6)
(27.6)
(36.1)
—
(36.1)
(63.7)
Group revenue
427.7
660.9
1,088.6
2,829.7
140.2
2,969.9
4,058.5
Operating costs including impairment losses
(409.8)
(592.4)
(1,002.2)
(2,773.0)
(167.8)
(2,940.8)
(3,943.0)
Group operating profit/(loss)
(pre-exceptional items)
17.9
68.5
86.4
56.7
(27.6)
29.1
115.5
Exceptional operating items
(0.2)
—
(0.2)
(32.4)
(71.5)
(103.9)
(104.1)
Group operating profit/(loss)
(post-exceptional items)
17.7
68.5
86.2
24.3
(99.1)
(74.8)
11.4
Share of result of joint venture
(0.2)
Net finance costs
(18.1)
Loss before tax and non-controlling interests
(6.9)
Tax expense
(33.8)
Loss for the year
(40.7)
Further information on exceptional operating items is disclosed in note 7.
Regional
Bus
£m
London &
International
Bus
£m
Total
Bus
£m
UK Rail
£m
International
Rail
£m
Total
Rail
£m
Total
Operations
£m
Other segment information
Capital expenditure:
– Additions
28.5
21.5
50.0
2.3
0.6
2.9
52.9
– Intangible assets
0.9
—
0.9
0.4
0.9
1.3
2.2
– Right of use assets
7.9
9.9
17.8
168.2
1.0
169.2
187.0
Depreciation:
– Owned assets
37.5
27.6
65.1
15.3
1.1
16.4
81.5
– Right of use assets
5.3
20.2
25.5
460.6
0.4
461.0
486.5
Amortisation:
– Intangible assets
0.7
2.1
2.8
1.6
1.9
3.5
6.3
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
163
4. Segmental analysis continued
Inter-segment revenue relates to transactions between the Group’s operating segments and includes rail replacement bus services
and sub-leasing of rolling stock.
At 2 July 2022, there were non-current assets included within the London & International Bus segment of £7.2m (2021: £9.4m) relating
to operations in Singapore and Ireland. Operations in Singapore generated a revenue of £60.8m (2021: £55.4m) and operations in
Ireland generated a revenue of £37.6m (2021: £39.2m) during the year.
Non-current assets included within International Rail of £26.4m relate to international operations in Germany (2021: £23.1m).
Operations in Norway generated a revenue of £52.1m (2021: £43.5m) and operations in Germany generated a revenue of £139.1m (2021:
£96.7m).
We have two major customers which individually contribute more than 10% of Group revenue, one of which contributed £1,185.4m
(2021: £2,195.6m), and the other contributed £547.0m (2021: £560.5m). No other individual customer contributed 10% or more to the
Group’s revenue in either the current or prior year.
5. Operating costs
Detailed below are the key amounts recognised in arriving at our operating costs. For accounting policies see ‘Profit and revenue sharing/support
agreements’, ‘Property, plant and equipment’, ‘Government grants’ and ‘Franchise set-up costs’ in note 2. Exceptional items are outlined in note 7.
2022
£m
2021
£m
Employee costs (note 6)
1,291.5
1,418.8
Rail operating charges (see below)
706.5
1,102.7
Energy costs (see below)
246.8
278.8
DfT franchise agreement payments/(receipts)
2.5
(10.9)
Depreciation (see below)
444.6
568.0
Intangible amortisation
3.5
6.3
Auditor’s remuneration (see below)
3.5
1.7
Impairment losses (including reversals) on financial assets and contract assets
(2.0)
7.1
Profit on assets held for sale
(0.3)
—
Reimbursement of operating costs
(10.4)
(13.5)
Government grants
(2.6)
(2.8)
Government grants: COVID-19
—
(22.8)
Profit on disposal of property, plant and equipment
(0.5)
(0.2)
Other operating costs
515.9
609.8
Total operating costs (pre-exceptional operating items)
3,199.0
3,943.0
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
164
5. Operating costs continued
Further analysis of the above operating costs is as follows:
2022
£m
2021
£m
Rail operating charges
– Rail rolling stock
156.7
214.7
– Other rail
170.9
215.7
– Other non-rail
2.3
1.0
Total lease and sublease payments recognised as an expense (excluding rail access charges)
329.9
431.4
– Rail access charges
376.6
671.3
Total lease and sublease payments recognised as an expense
706.5
1,102.7
Depreciation
– Owned assets
73.2
81.5
– Right of use assets
371.4
486.5
Total depreciation expense
444.6
568.0
Auditor’s remuneration
– Audit fee for the audit of the parent financial statements
0.1
0.1
– Audit fee for the audit of the subsidiary financial statements
3.4
1.4
– Additional audit fees incurred as a result of the matters of concern relating to LSER and other historic
franchises and affiliate trading
—
1.2
Total audit fees for the audit of the financial statements
3.5
2.7
Total non-audit fees
—
0.2
Total auditor’s remuneration (post-exceptional)
3.5
2.9
Energy costs
– Bus fuel
104.2
89.4
– Rail diesel fuel
3.4
2.3
– Rail electricity
116.4
171.6
– Cost of site energy
22.8
15.5
Total energy costs
246.8
278.8
The Group’s rail operating companies hold agreements with different entities for access to the railway infrastructure (track, stations
and depots). These are classified as rail operating charges as they do not constitute a right of use asset.
Government grant income of £2.6m (2021: £2.8m) is mainly attributable to the release of grants received to support the mobilisation of
international business operations and service improvements including smart ticketing, deliverable over a period of up to 15 years.
6. Employee costs
This note shows total employment costs, inclusive of share-based payment charges. We have a number of share plans used to award
shares to directors and employees. A charge is recognised over the vesting period in the consolidated income statement, based on the
fair value of the award at the date of grant. The note also shows the average number of people employed by the Group during the year.
For accounting policies see ‘Share based payment transactions’ in note 2.
2022
£m
2021
£m
Wages and salaries
1,122.3
1,234.5
Social security costs
116.4
121.3
Other pension costs
52.7
61.8
Share based payments (credit)/charge
0.1
1.2
1,291.5
1,418.8
The average monthly number of employees during the year, including directors, was:
2022
2021
Administration and supervision
3,038
3,614
Maintenance and engineering
2,570
2,787
Operations
21,531
24,172
27,139
30,573
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
165
6. Employee costs continued
The detailed information required by Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 is provided in the Directors’ remuneration report. Aggregate directors’ emoluments are also disclosed
in note 30.
Long Term Incentive Plans
The former executive directors participated in The Go-Ahead Group Long Term Incentive Plan 2015 (LTIP). The LTIP provided for
executive directors to be awarded nil cost shares in the Group conditional on specified performance conditions being met over a
period of three years. Refer to the Directors’ remuneration report for further details of the LTIP.
The charge recognised for the LTIP during the year to 2 July 2022 was £nil (2021: £0.1m expense) in respect of granted shares (net of
the impact of lapsed/cancelled shares).
The fair value of LTIP options granted is estimated as at the date of grant using a Monte Carlo model, taking into account the terms
and conditions upon which the options were granted. The inputs to the model used for the options granted in the year to 2 July 2022
and 3 July 2021 were:
2022
% per annum
2021
% per annum
The Go-Ahead Group
Future share price volatility
50.0
40.0
FTSE Mid-250 index comparator:
Future share price volatility
n/a
25.0
Correlation between companies
n/a
30.0
The following table shows the number of share options for the LTIP:
2022
2021
Outstanding at the beginning of the year
240,826
162,832
Granted during the year1
42,203
127,987
Forfeited during the year2
(105,765)
(49,993)
Exercised during the year
—
—
Outstanding at the end of the year
177,264
240,826
1. On 5 May 2022, share options were granted with a nil exercise price under The Go-Ahead Group Long Term Incentive Plan 2015 ("2021 RSP"). These were granted to the Group
Chief Executive and vesting will be subject to achievement of financial and non-financial underpins measured over a three-year performance period, commencing with the start
of the 2021/22 financial year and ending with the end of the 2023/24 financial year. For more information, please see the remuneration report.
2. Following the year-end, all outstanding LTIP awards (with the exception of the new RSP awards) lapsed or were cancelled following a remuneration committee meeting. Further
information can be found in the remuneration report on pages 90 to 105.
The weighted average fair value of these options granted during the year was £8.16 (2021: £9.44). The weighted average remaining
contractual life of the options was 1.66 years (2021: 1.81 years).
The weighted average exercise price at the date of exercise for the options exercised in the period was £nil (2021: £nil).
The estimated amounts due to the relevant tax authorities in relation to the above transactions are detailed in the directors’
Remuneration Report.
Deferred Share Bonus Plan
The Deferred Share Bonus Plan (DSBP) provides for certain senior employees to be awarded shares in the Group conditional on the
achievement of financial and strategic targets. The shares are deferred over a three-year period. Refer to the Directors’ remuneration
report for further details of the DSBP. The DSBP options are not subject to any market-based performance conditions. Therefore, the
fair value of the options is equal to the share price at the date of grant.
The expense recognised for the DSBP during the year to 2 July 2022 was £0.1m (2021: £1.2m).
The following table shows the number of share options for the DSBP:
2022
2021
Outstanding at the beginning of the year
277,012
180,055
Granted during the year
14,777
135,084
Forfeited during the year
(32,668)
(7,369)
Exercised during the year
(19,030)
(30,758)
Outstanding at the end of the year
240,091
277,012
Group financial statements
Notes to the consolidated financial statements continued
6. Employee costs continued
Deferred Share Bonus Plan continued
The weighted average fair value of options granted during the year was £8.32 (2021: £8.32). At the year end, 57,367 options related to DSBP
awards which had vested before the year end but remained unexercised by participants. Of these, 524 options related to the award granted in
November 2013, 3,276 related to the award granted in November 2014, 2,904 related to the award granted in November 2015, 2,937 related to
the award granted in November 2016 and 8,123 related to the award granted in November 2017, 39,603 related to the award granted in
November 2018. The weighted average share price of the options at the year end was £15.80 (2021: £11.40).
The weighted average remaining contractual life of the options was 0.94 years (2021: 1.59 years). The weighted average exercise price
at the date of exercise for the options exercised in the period was £8.54 (2021: £8.83).
Following the year-end, Go-Ahead announced they had reached agreement on the terms of a recommended cash offer for the Group,
pursuant to which Bidco would acquire the entire issued and to be issued share capital of Go-Ahead (the Scheme of Arrangement becoming
effective 10 October 2022). All DSBP awards were paid out in cash in line with the terms in the Scheme of Arrangement. See note 31 and
the Directors Report on pages 90 to 110 for further details on the takeover.
7. Exceptional items
This note identifies items of an exceptional nature that have a significant impact on the results of the Group in the period. For
accounting policies see ‘Exceptional items’ in note 2.
2022
£m
2021
£m
Norway franchise onerous contract provision and asset impairment
(51.6)
76.7
German Bavaria franchise onerous contract provision
36.0
—
Department for Transport settlements, financial penalty and associated costs relating to LSER and other
historic franchises
(9.3)
32.4
Asset impairments and provisions – Regional Bus
(1.2)
0.2
Goodwill impairment – Regional Bus
2.7
—
Asset impairments and restructuring costs – International Rail
—
(5.2)
Takeover legal and professional fees
2.2
—
Exceptional operating (credit)/charge
(21.2)
104.1
Year ended 2 July 2022
Total exceptional operating items in the year were a net credit of £21.2m to the income statement.
Norway franchise onerous contract provision and asset impairment
On 28 June 2022, an amended contract was signed between Go-Ahead Norway A/S and the Norwegian Railway Directorate following
discussions over a number of months, regarding the structure of its rail contract.
Under the original contract, which began in December 2019, the revenue risk associated with changes in passenger demand rested
with Go-Ahead. During the COVID-19 pandemic, the Norwegian Government provided financial support to rail operators, preventing
material losses. However, this support was only temporary, so an onerous contract provision was initially recognised for the expected
future losses over the life of the contract.
The amended contract takes effect from 1 July 2022 and runs for the duration of the original contract, until December 2027 (plus a
two-year extension option until December 2029). The contract provides a revenue support mechanism until the end of the contract.
The contract also includes an incentive scheme linked to revenue growth.
As a result of these improved contractual arrangements, the onerous contract provision has been reassessed and has significantly
decreased. This has resulted in a net release of £51.6m of the provision, which has been recognised as an exceptional operating credit
during the year.
Sensitivity analysis of the key variables in the provision model are shown on pages 140 to 145.
166
The Go-Ahead Group Limited Annual Report and Accounts 2022
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
167
7. Exceptional items continued
Year ended 2 July 2022 continued
German Bavaria franchise onerous contract provision
Following the commencement of the first of the Group’s two rail franchises in Bavaria in December 2021, the Directors have performed
a reassessment of the onerous contract provision in relation to these franchises. The second Bavarian franchise became operational in
December 2022.
Based on the Group’s current knowledge and expectations of the income and costs associated with these contracts, it has been deemed
necessary under IAS 37 to reassess the onerous contract provision. As a result, it has been determined that an increase of £36.0m in the
provision is required, which has been recognised as an exceptional operating charge in the year ended 2 July 2022. This is primarily due
to updated information and circumstances becoming available during the current financial year, resulting in a change in assumptions
to several inputs in the model, such as increased staff costs as a result of more reliable information available through operations
beginning in Bavaria in 2021. As a result, the provision recognised as at 2 July 2022 totals £58.8 (2021: £38.9m restated).
Refer to page 229 for further information, including sensitivity analysis of the key variables in the provision model.
Department for Transport settlements, financial penalty and associated costs relating to LSER and other historic franchises
A net exceptional credit of £9.3m has been recognised during the year ended 2 July 2022 in relation to the matters of concern relating
to LSER and other historic franchises and LSER affiliate trading. This consists of amounts relating to settlements reached with the DfT
during the year, the financial penalty confirmation and other associated costs in relation to these matters.
On 9 May 2022, the Department for Transport issued the final penalty notice to LSER of £23.5m due to breaches of historic franchise
agreements. The Group had recognised a provision of £30.0m in relation to this in the Group’s 2021 Annual Report as an exceptional
operating charge. The financial penalty was paid from LSER’s restricted cash balance during the year and a release of £6.5m to the
provision has been recorded as an exceptional operating credit in the current year accordingly.
In addition to this, settlements were reached with the DfT in relation to substantially all of the outstanding matters relating to LSER
and other historic franchises, including affiliate trading disputes. This has resulted in a net credit of £11.7m which has been recorded as
exceptional. This is offset by £8.9m of associated legal and professional costs incurred in relation to this matter.
Asset impairments and provisions – Regional Bus
During the year ended 3 July 2021, an onerous contract provision of £1.2m was recognised as an exceptional operating charge in
relation to a loss-making contract where passenger demand was not recovering at the same levels as the wider commercial network.
During the year ended 2 July 2022, this contract was renegotiated, removing the need for the onerous contract provision. As a result,
this provision has been released and recognised as an exceptional operating credit in the year ended 2 July 2022, consistent with the
treatment in the prior year.
Goodwill impairment – Regional Bus
During the year, goodwill of £2.7m has been impaired relating to Go North East due to the challenges in the current performance of the
business and slow recovery from COVID-19. The carrying value of Go North East goodwill following this impairment is £nil (2021:
£2.7m).
Takeover legal and professional fees
On 13 June 2022, it was announced that the board of directors of the Group and Gerrard Investment Bidco Limited (Bidco) had reached
an agreement on the terms of a recommended cash acquisition of the Group. Subsequent to the year-end, the shareholders of the
Group voted in favour of this agreement. Costs incurred by the Group in the year ended 2 July 2022 in relation to this totalled £2.2m
and have been recognised as exceptional given that they are expected to be one-off in nature. Subsequent to the year-end, further
costs of approximately £12m have been incurred relating to the takeover. No provision was included for the additional costs at year-
end on the basis that the outcome of the transaction was uncertain.
Year ended 3 July 2021
Total exceptional operating items in the prior year comprised a charge of £104.1m to the income statement.
Department for Transport potential financial penalty and associated costs relating to LSER
The Group recognised a provision of £30.0m in the year ended 3 July 2021 in relation to a potential financial penalty from the DfT in
relation to LSER.
In the absence of specific precedent or relevant guidance, it was difficult to precisely estimate the likely quantum of any penalty. The
Group, having considered independent legal advice received by the Independent Committee, included a provision of £30.0m which
reflected the Group's best estimate of any penalty as at the date of signing the Group’s 2021 Annual Report and Accounts. The Group
also recognised associated legal and professional costs in relation to this of £2.4m.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
168
7. Exceptional items continued
Year ended 3 July 2021 continued
Asset impairments and restructuring costs – Regional Bus
During the year ended 3 July 2021, an impairment charge of £1.1m was recognised in relation to property, plant and equipment
following the termination of further contracts in Regional Bus. Further, costs of £1.2m were also recognised in relation to loss making
contracts where passenger demand was not recovering at the same levels as the wider commercial network. This was offset by the
release of restructuring provisions of £1.0m and an impairment reversal of £1.1m following the sale of some coaches that were
previously impaired and recognised as exceptional operating charges during the year ended 27 June 2020.
Asset impairments, provisions and restructuring costs – International Rail
During the year ended 3 July 2021, a depot that had previously been impaired was sold for an amount greater than the previously
estimated recoverable amount. Further, as part of this sale agreement, there was no longer an obligation to pay break fees on the
depot which were provided for as of 27 June 2020, and therefore this provision was released. This resulted in an exceptional operating
credit of £5.2m.
Norway franchise onerous contract provision and asset impairment
In December 2019, the Group began operating rail services in Norway, its first contract in this market and the first commercially run
network in the country. After a successful start to operations, the effects of the COVID-19 pandemic were felt just three months into
this contract. As the contract involved exposure to changes in passenger demand, the Norwegian Government introduced a package
of financial support early in the COVID-19 crisis, initially with 100% loss coverage. As the pandemic continued, loss coverage was
reduced from this level down to 85%. The impact of the reduction and possible cessation of funding, the fixed nature of the operating
requirements and the longer than expected duration of lower passenger demand following the impact of COVID-19 have resulted in a
reduction of the net economic benefits of the contract. This reduction in future revenue resulted in an onerous contract provision
charge of £66.2m and asset impairments of £10.5m being recognised at the year end.
8. Finance income and costs
Finance income mainly comprises interest received from bank deposits. Finance costs mainly arise from interest due on the bond and
bank loans. For accounting policies see ‘Finance income’ and ‘Interest-bearings loans and borrowings’ in note 2.
2022
£m
2021
£m
Bank interest receivable on bank deposits
0.5
0.7
Interest on net pension asset
0.7
1.0
Interest receivable on net investment
0.1
0.1
Other interest receivable
0.5
0.3
Finance income
1.8
2.1
Interest payable on bank loans and overdrafts
(2.3)
(2.7)
Interest payable on £250m sterling seven-year bond
(6.3)
(6.2)
Other interest payable*
0.5
(2.2)
Unwinding of discounting on provisions
(0.2)
—
Interest payable on lease liabilities
(8.9)
(9.0)
Interest on net pension liability
(0.1)
(0.1)
Finance costs
(17.3)
(20.2)
*
Other interest payable includes the release of an interest accrual in LSER in the year of £1.3m in relation to amounts owed to the DfT.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
169
9. Taxation
This note explains how our Group tax charge arises. The deferred tax section of the note sets out the deferred tax assets and liabilities
held across the Group. For accounting policies see ‘Taxation’ in note 2.
The Group taxation policy can be found at www.go-ahead.com.
a. Tax recognised in the income statement and in other comprehensive income
Tax relating to items charged or credited in the income statement:
2022
£m
2021
£m
Current year tax charge
10.7
21.0
Adjustments in respect of current tax of previous years
(1.5)
(0.7)
Total current tax
9.2
20.3
Deferred tax relating to origination and reversal of temporary differences at 25% (2021: 25%)
3.1
(1.1)
Adjustments in respect of deferred tax of previous years
(0.1)
0.2
Impact of opening deferred tax rate
1.3
14.4
Total deferred tax
4.3
13.5
Tax reported in consolidated income statement
13.5
33.8
The tax reported in the consolidated income statement in the current year includes exceptional amounts relating to legal and
professional costs. See note 7 for further details.
Tax relating to items charged or credited outside of the income statement:
2022
£m
2021
£m
Tax on remeasurement gains on defined benefit pension plans
9.6
(5.3)
Current tax on cashflow hedges
9.2
—
Deferred tax on cashflow hedges
(1.5)
4.4
Deferred tax on share based payments (taken directly to equity)
0.1
(0.1)
Tax reported outside of the consolidated income statement
17.4
(1.0)
b. Reconciliation
A reconciliation of income tax applicable to accounting profit before taxation, at the statutory tax rate, to tax at the Group’s effective
tax rate for the years ended 2 July 2022 and 3 July 2021 is as follows:
2022
£m
2021
£m
Accounting profit/(loss) before taxation
94.7
(6.9)
At United Kingdom tax rate of 19.0% (2021: 19.0%)
18.0
(1.3)
Share scheme costs not allowable for tax purposes
—
(0.3)
Non-qualifying depreciation
0.8
1.0
Expenditure not allowable for tax purposes
2.2
7.0
Income not taxable
(5.0)
(2.1)
Adjustments in respect of tax of previous years
(1.6)
(0.5)
Movement on unrecognised deferred tax on losses carried forward
(1.6)
16.1
Effect of the difference between current year corporation tax and deferred tax rates
(0.4)
0.1
Overseas tax rate difference
(0.2)
(0.6)
Impact of opening deferred tax rate
1.3
14.4
Tax reported in consolidated income statement
13.5
33.8
Effective tax rate
14.3%
(489.9%)
The 2022 effective tax rate on a pre-exceptional basis is 17.8% (2021: 35.3%). The pre and post-exceptional effective tax rates include a
£1.3m (2021: £14.4m) charge in relation to the UK corporation tax rate change from an opening rate 19% to a closing rate of 25%.
Excluding this charge, the effective tax rate is 12.8% (2021: 20.5%).
The Group had subsidiary trading companies in Germany, Ireland, Norway, Australia and Singapore during the year. The tax residencies
of these companies are the same as the countries of incorporation, which are disclosed in note 30.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
170
9. Taxation
b. Reconciliation continued
Singapore and Ireland profits are generated through the provision of bus passenger services and have been taxed at the appropriate
local taxation rates of 17% and 12.5% respectively and have been included in the total statutory tax charge. Germany and Norway have
faced trading difficulties which have resulted in historic losses; therefore no taxation has been recognised during the financial year.
Australia’s trading results for the financial year are immaterial.
The Group has not recognised deferred tax assets of £40.3m (2021: £26.0m) based on a taxation rate of 30.0% (2021: 30.0%) in respect
of losses incurred of £134.4m (2020: £86.7) in Germany carried forward and £5.6m (2021: £16.9m) based on a taxation rate of 22.0%
(2021: 22.0%) in respect of losses incurred of £25.3m (2020: £76.7m) in Norway carried forward. There is no time limit on the utilisation
of these assets in Germany and Norway and they have not been recognised due to the uncertainty over their recovery in future
periods.
c. Reconciliation of net current tax (asset)/liability
A reconciliation of the net current tax (asset)/liability is provided below:
2022
£m
2021
£m
Current tax liability/(asset) at the start of the year
4.2
(4.0)
Corporation tax reported in consolidated income statement
9.2
20.3
Corporation tax reported in other comprehensive income
9.2
—
Net paid in the year
(14.3)
(12.1)
Net current tax liability at the end of the year
8.3
4.2
d. Deferred tax
The deferred tax included in the balance sheet is as follows:
2022
£m
2021
£m
Deferred tax liability
Accelerated capital allowances
(24.8)
(21.1)
Other temporary differences
(14.7)
(14.2)
Revaluation of land and buildings treated as deemed cost on conversion to IFRS
(13.2)
(13.9)
Cashflow hedges
—
(1.5)
Retirement benefit obligations
(20.1)
(9.0)
Deferred tax liability included in balance sheet
(72.8)
(59.7)
Deferred tax asset
Other temporary differences
—
0.9
Share based payments
0.5
0.6
Deferred tax asset included in balance sheet
0.5
1.5
The deferred tax asset, as shown above, is recognised as it is considered probable that there will be future taxable profits available.
The deferred tax liabilities and assets included in the balance sheet have been calculated using applicable enacted rates.
The movements in deferred tax in the income statement and other comprehensive income for the years ended 2 July 2022 and
3 July 2021 are as follows:
Year ended 2 July 2022
At 3 July
2021
£m
Recognised in
income
statement
£m
Recognised
in other
comprehensive
income
£m
Recognised
directly in
equity
£m
Acquisitions
£m
At 2 July
2022
£m
Accelerated capital allowances
(21.1)
(3.7)
—
—
—
(24.8)
Asset backed funding pension arrangement
(13.2)
0.3
—
—
—
(12.9)
Other temporary differences
(0.1)
(0.1)
—
—
(1.6)
(1.8)
Revaluation of land and buildings treated
as deemed cost on conversion to IFRS
(13.9)
0.7
—
—
—
(13.2)
Retirement benefit obligations
(9.0)
(1.5)
(9.6)
—
—
(20.1)
Cashflow hedges
(1.5)
—
1.5
—
—
—
Share based payments
0.6
—
—
(0.1)
—
0.5
(58.2)
(4.3)
(8.1)
(0.1)
(1.6)
(72.3)
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
171
9. Taxation continued
d. Deferred tax continued
Year ended 3 July 2021
At 27 June
2020
£m
Recognised in
income
statement
£m
Recognised
in other
comprehensive
income
£m
Recognised
directly in
equity
£m
At 3 July
2021
£m
Accelerated capital allowances
(18.8)
(2.3)
—
—
(21.1)
Asset backed funding pension arrangement
(10.5)
(2.7)
—
—
(13.2)
Other temporary differences
2.0
(2.1)
—
—
(0.1)
Revaluation of land and buildings treated
as deemed cost on conversion to IFRS
(11.5)
(2.4)
—
—
(13.9)
Retirement benefit obligations
(10.1)
(4.2)
5.3
—
(9.0)
Cashflow hedges
2.9
—
(3.1)
(1.3)
(1.5)
Share based payments
0.3
0.2
—
0.1
0.6
(45.7)
(13.5)
2.2
(1.2)
(58.2)
The deferred tax included in the Group income statement is as follows:
2022
£m
2021
£m
Accelerated capital allowances
3.9
(1.9)
Revaluation
(1.1)
(0.6)
Retirement benefit obligations
1.5
1.6
Other temporary differences
(0.1)
—
Share based payments
—
(0.2)
4.2
(1.1)
Adjustments in respect of prior years
(1.2)
0.2
Adjustment in respect of opening deferred tax rate
1.3
14.4
Deferred tax expense
4.3
13.5
e. Factors affecting tax charges
The standard rate of UK corporation tax is 19% and therefore 19% applies to the current tax charge arising during the year ended 2 July
2022. Legislation within the Finance Bill 2021 amended this rate to 25.0% with effect from April 2023 and therefore 25.0% has been
applied, where applicable, to the Group’s deferred tax balance as at the balance sheet date for balances which are expected to reverse
after date.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
172
10. Earnings per share
Basic earnings per share is the amount of profit after tax for the financial year attributable to equity shareholders divided by the
weighted average number of shares in issue during the year.
Basic and diluted earnings per share
Pre-
exceptional
2022
£m
Exceptional
items
2022
£m
Post-
exceptional
2022
£m
Pre-
exceptional
2021
£m
Exceptional
items
2021
£m
Post-
exceptional
2021
£m
Net profit/(loss) attributable to equity holders of the
parent
50.9
17.0
67.9
46.6
(92.6)
(46.0)
Pre-
exceptional
2022
£m
Exceptional
items
2022
£m
Post-
exceptional
2022
£m
Pre-
exceptional
2021
£m
Exceptional
items
2021
£m
Post-
exceptional
2021
£m
Basic weighted average number of shares in issue
(‘000)
42,994
—
42,994
42,988
—
42,988
Dilutive potential share options (‘000)
193
—
193
142
—
142
Diluted weighted average number of shares in issue
(‘000)
43,187
—
43,187
43,130
—
43,130
Earnings per share:
Basic earnings per share (pence per share)
118.3
39.6
157.9
108.4
(215.4)
(107.0)
Diluted earnings per share (pence per share)
117.8
39.4
157.2
108.0
(214.7)
(106.7)
The weighted average number of shares in issue excludes treasury shares held by the Group, and shares held in trust for the LTIP and
DSBP arrangements.
No shares were bought back and cancelled by the Group in the period from 2 July 2022 to the completion of the acquisition of the
Group by Gerrard Investment Bidco Limited on 10 October 2022, see note 31 for details.
11. Dividends paid and proposed
Dividends are one type of shareholder return, historically paid to our shareholders in April and November.
2022
£m
2021
£m
Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for 2021: nil per share (2020: nil)
—
—
Interim dividend for 2022: nil per share (2021: nil)
—
—
—
—
2022
£m
2021
£m
Special dividend paid on completion of sale (not recognised as a liability as at 2 July 2022)
Equity dividends on ordinary shares:
Special dividend 2022: 100p per share (2021: nil)
43.1
—
Payment of proposed dividends does not have any tax consequences for the Group.
On 29 November 2022, an additional dividend of 37p per share (£16.0m) was paid to the Group’s new shareholders.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
173
12. Property, plant and equipment
The Group holds significant investments in land and buildings, bus vehicles and plant and equipment, which form our tangible assets.
All assets (excluding freehold land) are depreciated over their useful economic lives. For accounting policies see ‘Property, plant and
equipment’ in note 2.
Freehold land
and buildings
£m
Short term
leasehold land
and properties
£m
Bus vehicles
£m
Plant and
equipment
£m
Total
£m
Cost
At 30 June 2020
227.6
18.0
716.7
187.3
1,149.6
Additions
0.3
2.8
42.8
6.9
52.8
Disposals
(4.8)
—
(25.7)
(1.7)
(32.2)
Transfer of ROU assets
—
—
1.1
—
1.1
Effect of foreign exchange rate changes
(1.1)
(0.2)
—
(0.3)
(1.6)
At 3 July 2021
222.0
20.6
734.9
192.2
1,169.7
Additions*
14.6
1.5
22.3
7.1
45.5
Acquisitions
1.5
—
15.8
0.2
17.5
Disposals
(0.1)
(6.6)
(28.0)
(45.3)
(80.0)
Transfer to/from other categories
—
—
0.7
(0.3)
0.4
Other
—
—
0.6
—
0.6
Effect of foreign exchange rate changes
0.1
0.1
—
0.1
0.3
At 2 July 2022*
238.1
15.6
746.3
154.0
1,154.0
Depreciation and impairment
At 27 June 2020
22.8
8.1
393.5
136.2
560.6
Charge for the year
2.0
3.4
54.4
21.7
81.5
Impairment
—
—
3.4
0.2
3.6
Disposals
(4.4)
—
(24.5)
(1.6)
(30.5)
Transfer to/from other categories
—
—
0.8
—
0.8
Effect of foreign exchange rate changes
—
(0.1)
—
—
(0.1)
At 3 July 2021
20.4
11.4
427.6
156.5
615.9
Charge for the year
2.1
2.7
50.9
17.5
73.2
Impairment
0.3
—
0.2
0.2
0.7
Disposals
—
(6.4)
(27.6)
(43.3)
(77.3)
Transfer to/from other categories
—
—
0.5
—
0.5
Effect of foreign exchange rate changes
0.1
—
—
0.1
0.2
At 2 July 2022*
22.9
7.7
451.6
131.0
613.2
Net book value
At 2 July 2022*
215.2
7.9
294.7
23.0
540.8
At 3 July 2021
201.6
9.2
307.3
35.7
553.8
At 27 June 2020
204.8
9.9
323.2
51.1
589.0
* Included in this note are assets under construction with a carrying value of £4.1m at 2 July 2022 (2021: nil). These assets mostly relate to buses requiring refurbishment and
which will eventually be transferred into rolling stock and a small amount into PPE under construction. The Group expects these to be in use within 12 months of the year-end.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
174
13. Leases
This note details right of use assets and the associated lease liabilities. For accounting policies see ‘Leases’ in note 2.
The Group has lease liabilities for land and buildings, rail rolling stock, bus vehicles and various items of plant and equipment. These
contracts have no terms of renewal or purchase option escalation clauses.
Right of use assets
Leasehold land
and properties
£m
Rolling stock
£m
Plant and
equipment
£m
Total
£m
Cost
At 27 June 2020
29.7
1,000.4
0.3
1,030.4
Additions*
1.7
184.8
0.5
187.0
Disposals
(0.1)
(15.3)
—
(15.4)
Transfer to owned assets
—
(1.1)
—
(1.1)
Effect of foreign exchange rate changes
(0.3)
—
—
(0.3)
At 3 July 2021
31.0
1,168.8
0.8
1,200.6
Additions*
12.3
888.5
—
900.8
Acquisitions
3.1
3.5
—
6.6
Disposals
(5.4)
(255.6)
(0.8)
(261.8)
Transfer to owned assets
—
(0.7)
—
(0.7)
Other
0.2
—
—
0.2
At 2 July 2022
41.2
1,804.5
—
1,845.7
Depreciation and impairment
At 27 June 2020
6.8
374.6
0.1
381.5
Charge for the year
6.7
479.3
0.5
486.5
Impairment
0.8
3.2
—
4.0
Disposals
0.1
(15.2)
—
(15.1)
Transfer to owned assets
—
(0.9)
—
(0.9)
Effect of foreign exchange rate changes
(0.1)
—
—
(0.1)
Other
0.2
(0.9)
—
(0.7)
At 3 July 2021
14.5
840.1
0.6
855.2
Charge for the year
6.0
365.2
0.2
371.4
Disposals
(5.0)
(255.0)
(0.8)
(260.8)
Transfer to owned assets
—
(0.5)
—
(0.5)
At 2 July 2022
15.5
949.8
—
965.3
Net book value
At 2 July 2022
25.7
854.7
—
880.4
At 3 July 2021
16.5
328.7
0.2
345.4
At 27 June 2020
22.9
625.8
0.2
648.9
* Additions include £879.0m (2021: £165.9m) of contract modifications in relation to Govia Thameslink Railway as a result of the National Rail Contract (NRC) being awarded
during the year, commencing 1 April 2022. In the prior year, additions included £165.9m of contract modifications when the Govia Thameslink Railway previous franchise
contract was extended.
Lease liabilities
The balance sheet includes the following amounts:
2022
£m
2021
£m
Current
309.0
263.9
Non-current
558.6
48.7
867.6
312.6
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
175
13. Leases continued
Lease liabilities continued
The remaining contractual maturities of the lease liabilities, which are gross and undiscounted, are as follows:
2022
£m
2021
£m
Less than one year
326.0
268.3
One to two years
300.2
16.8
Two to three years
246.0
11.6
Three to four years
7.6
9.1
Four to five years
8.3
4.4
More than five years
12.6
5.8
Total undiscounted lease liability
900.7
316.0
See note 22 for a reconciliation of the opening to closing lease liabilities.
Amounts recognised in the Group income statement
2022
£m
2021
£m
Depreciation expense on right of use assets
371.4
486.5
Interest payable on lease liabilities
8.9
9.1
Expenses relating to short term leases
3.1
0.4
Expenses relating to low value leases
0.2
0.2
383.6
496.2
Amounts recognised in the Group cashflow statement
2022
£m
2021
£m
Total cash outflow for leases
377.1
543.5
Sale and leaseback transactions
A number of bus vehicles in the Group are leased with some purchased and sold immediately at fair value and for the same value as the
carrying value of the asset at no gain or loss and leased back. This is to match vehicles to specific income streams. The cashflow
impact of these transactions results in the cash received for the sale of vehicles offsetting the payments made for the purchase of
vehicles. Cash payments are subsequently made over the life of the lease.
Service concession agreements
International Rail operations are similar in nature and consist of the operation of service concession agreements and the provision of
transport services on behalf of local government bodies. The Group has access to infrastructure whilst operating the service
agreement which is returned to the grantor at the end of the contract. Consideration received is determined by the franchise
agreement with variable elements attributable to performance and revenue is accounted for and classified in line with IFRS 15. There
are no construction or upgrade elements to the service agreement; therefore, no financial or intangible assets have been recognised.
Terminations
A significant number of the Group’s rolling stock lease contracts include extension options which mirror potential franchise and
revenue agreement extensions. The award of revenue extensions is at the discretion of the customer and outside the control of the
Group. Therefore, it is management’s judgement that it is not reasonably certain that the lease will be extended and therefore the
lease term excludes extension periods.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
176
14. Goodwill and intangible assets
The consolidated balance sheet contains significant intangible assets mainly in relation to goodwill, software, franchise set-up costs
and customer contracts. Goodwill, which arises when the Group acquires a business and pays a higher amount than the fair value of
the net assets primarily due to the synergies the Group expects to create, is not amortised but is subject to annual impairment reviews.
Software is amortised over its expected useful life. Franchise set-up costs are amortised over the life of the franchise. Customer
contracts are amortised over the life of the contract. For further details see accounting policies for; “Software”, “Franchise set-up
costs”, “Business combinations and goodwill”, “Impairment of assets” and “Customer contracts” in note 2.
Goodwill
£m
Software
costs
£m
Franchise
set-up costs
£m
Rail franchise
asset
£m
Customer
contracts
£m
Total
£m
Cost
At 27 June 2020
87.4
28.5
50.1
16.7
10.0
192.7
Additions
—
2.2
—
—
—
2.2
Disposals
—
(0.7)
(2.5)
—
(7.1)
(10.3)
Effect of foreign exchange rate changes
—
—
(1.4)
—
—
(1.4)
At 3 July 2021
87.4
30.0
46.2
16.7
2.9
183.2
Additions
—
1.4
—
—
—
1.4
Acquisitions
7.6
—
—
—
—
7.6
Disposals
—
(5.6)
—
(16.7)
—
(22.3)
Transfers to other asset categories
—
0.3
—
—
—
0.3
At 2 July 2022
95.0
26.1
46.2
—
2.9
170.2
Amortisation and impairment
At 27 June 2020
13.9
21.7
35.0
16.7
9.3
96.6
Charge for the year
—
3.1
3.1
—
0.1
6.3
Impairment
—
2.1
7.6
—
—
9.7
On disposal
—
(0.4)
(2.5)
—
(7.1)
(10.0)
Effect of foreign exchange rates
—
—
(1.2)
—
—
(1.2)
Other
—
(0.2)
—
—
—
(0.2)
At 3 July 2021
13.9
26.3
42.0
16.7
2.3
101.2
Charge for the year
—
1.9
1.5
—
0.1
3.5
Impairment
2.7
0.3
—
—
—
3.0
On disposal
—
(5.3)
—
(16.7)
—
(22.0)
At 2 July 2022
16.6
23.2
43.5
—
2.4
85.7
Net book value
At 2 July 2022
78.4
2.9
2.7
—
0.5
84.5
At 3 July 2021
73.5
3.7
4.2
—
0.6
82.0
At 27 June 2020
73.5
6.8
15.1
—
0.7
96.1
Software costs
Software costs capitalised exclude software that is integral to the related hardware. Software is amortised on a straight-line basis over
its expected useful life of three to five years.
Franchise set-up costs
A part of the Group’s activities is the process of bidding for and securing franchises to operate rail and bus services in the UK and
overseas. Directly attributable, incremental costs incurred after achieving preferred bidder status, entering into a franchise extension
or winning an international bid are capitalised as an intangible asset and amortised on a straight-line basis over the life of the franchise,
currently between 5 and 13 years, in accordance with IFRS 15.
Rail franchise asset
This reflects the cost of the right to operate a rail franchise and relates to the cost of the intangible asset acquired on the handover of
the franchise assets relating to the Southeastern rail franchise. The intangible asset was being amortised on a straight-line basis over
the original life of the franchise and has been recorded as a disposal of nil net book value in the current year, following the end of the
Group operating the franchise in October 2021.
Customer contracts
This relates to the value attributed to customer contracts and relationships purchased as part of the Group’s acquisitions on a
straight-line basis. The value is calculated based on the unexpired term of the contracts at the date of acquisition and is amortised
over that period. The unexpired term is 5.5 years.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
177
14. Goodwill and intangible assets continued
Goodwill
Goodwill acquired through acquisitions has been allocated to individual cash generating units (CGUs) for impairment testing on the basis of
the Group’s business operations. The carrying value of goodwill is tested annually for impairment by cash generating unit and is as follows:
2022
£m
2021
£m
Go South Coast
34.6
34.6
Brighton & Hove
12.7
12.7
Plymouth Citybus
13.0
13.0
Go North East
—
2.7
Regional Bus
60.3
63.0
Go-Ahead London
10.5
10.5
Flexbuss
7.6
—
London & International Bus
18.1
10.5
Total
78.4
73.5
During the year, goodwill of £2.7m has been impaired relating to Go North East due to the challenges in the current performance of the
business and slow recovery from COVID-19. The carrying value of the Go North East cash-generating unit following this impairment is
£nil.
The recoverable amount of goodwill has been determined based on a value in use calculation for each cash generating unit, using
cashflow projections based on financial budgets and forecasts approved by senior management covering a three-year period which have
then been extended over an appropriate period. The directors feel that the extended period is justified because of the long-term stability
of the relevant income streams. The assumptions used are consistent with the historical performance of each unit and are expected to be
realistically achievable in light of economic and industry measures and forecasts. The assessment of the value in use for Regional Bus
cash generating units sensitive to the return of passenger revenue to pre-COVID-19 levels and cost inflation. The directors have also
considered the implications of climate change and the Group’s net zero commitment by 2045, when assessing the medium to long term
projections. The Group, as a public transport services provider, has a vital role to play in helping reduce carbon emissions, and they
therefore feel there is no adverse impact on the assumptions used.
Growth has been extrapolated forward, using a growth rate of 2%, from the end of the three-year forecasts over a total period of five
years plus a terminal value using a growth rate of 2% which reflects the directors’ view of long term growth rates in each business, and
the long term recurrent nature of the businesses given the continued focus on public transport initiatives in response to government
and public focus on climate change.
Separate discount rates have been calculated for the different cash generating units due to the varying impact of IFRS 16 on the
underlying cashflows.
Pre-tax and post-IFRS 16
discount rate
Terminal growth rate
2022
%
2021
%
2022
%
2021
%
Regional Bus
11.2
8.7
2.0
2.0
London & International Bus
11.2
8.4
2.0
2.0
Financial modelling adopting the assumptions outlined confirms that the carrying amount of the CGUs does not exceed their
recoverable amount and no impairment charge is required.
The principal assumptions in the goodwill models are the forecasted cashflows in the three-year forecast period, the extrapolated
growth rates and the discount rate. The calculation of value in use for each CGU is most sensitive to the discount rate and growth
rates applied. Sensitivity analysis has been performed to understand what the percentage change in the principal assumptions would
erode the headroom to zero. Details have been disclosed below of where a possible change in key assumptions would cause the
carrying amount to exceed its recoverable amount.
The sensitivity analysis below is shown in relation to the Go South Coast CGU as this CGU is the most sensitive to changes in
assumptions. The other CGUs can tolerate a higher discount rate and lower terminal growth rate before eroding the headroom to
zero. The base case scenario for Go South Coast has headroom of £29.3m. The following assumption changes, holding others constant,
would erode the headroom to zero for this CGU.
%
Discount rate
13.8
Terminal growth rate
(1.8)
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
178
15. Business combinations
This note details acquisition transactions carried out in the current and prior periods. For accounting policies see ‘Business
combinations and goodwill’ and ‘Customer contracts’ in note 2.
Year ended 2 July 2022
On 1 April 2022, Go-Ahead Sverige AB, a wholly owned subsidiary of the Group, acquired 100% of Flexbuss Sverige AB for an initial sum
of 144.7m SEK (GBP £11.8m) with a further payment of 25.9m SEK (GBP £2.1m) made on 14 June 2022. This gives a total consideration
paid of 170.6m SEK (GBP £13.9m). The company’s operations consist of procured community-paid traffic, such as school traffic, ride
services and scheduled traffic for municipalities and regions.
Aggregate net assets at the date of acquisition:
SEK
m
GBP
m
Property, plant and equipment
218.1
17.8
ROU assets
82.1
6.6
Investment in subsidiary
0.1
—
Inventories
1.4
0.1
Cash and cash equivalents
79.1
6.4
Lease liability
(80.8)
(6.6)
Trade and other receivables
47.7
3.9
Trade and other payables
(83.3)
(6.8)
Interest-bearing loans and borrowings
(186.4)
(15.1)
Net assets
78.0
6.3
Goodwill
92.6
7.6
Cash
170.6
13.9
Total consideration
170.6
13.9
Acquisition costs of 1,854 SEK (GBP £0.2m) have been expensed through operating costs.
From the date of acquisition in the period, the acquisition recorded an operating profit of less than £0.3m (3.4m SEK) and revenue of
£7.6m (93.7m SEK). Had the acquisitions been completed on the first day of the financial period, the impact on the Group’s operating
profit would have been an increase of £0.9m (11.2m SEK) and the impact on revenue would have been an increase of £22.1m (269.8m
SEK).
Acquisition accounting is provisional and will be finalised in financial year 2022/23.
Year ended 3 July 2021
No business combinations occurred during the prior year.
16. Assets classified as held for sale
This note identifies any non-current assets or disposal groups that are held for sale. The carrying amounts of these assets will be
recovered principally through a sale rather than through continuing use. For accounting policies see ‘Assets held for sale’ in note 2.
At 2 July 2022, assets held for sale had a carrying value of £0.1m (2021: £3.2m) and related to property, plant and equipment. Assets
held for sale relating to bus rolling stock with a carrying value of £nil (2021: £3.1m) are included in London & International Bus. Assets
held for sale relating to land and buildings have a carrying value of £0.1m (2021: £0.1m). Of these, £0.1m (2021: £0.1m) are included with
Regional Bus and £nil (2021: £nil) are included within the Rail division.
The Group expects to sell £0.1m of these assets within 12 months of them going onto the “for sale” list and being actively marketed or
reflecting contracts already in place for certain bus assets. Assets held for sale of £0.1m relate to land and buildings, within property,
plant and equipment. The value at each balance sheet date represents management’s best estimate of their resale value less disposal
costs.
During the year ended 2 July 2022, assets held for sale were sold for a profit of £0.3m (2021: £0.3m) which was included within
operating costs in the income statement (2021: £nil) and £nil (2021: £0.3m) was included in exceptional costs.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
179
17. Inventories
Inventory primarily consists of vehicle spares and fuel and is presented net of allowances for obsolete products. For accounting
policies see ‘Inventories’ in note 2.
2022
£m
2021
£m
Raw materials and consumables
14.5
19.5
The amount of any reduction in value of inventories recognised as an expense during the year is £0.8m (2021: nil).
18. Trade and other receivables
Trade and other receivables mainly consist of amounts owed by principal contracting authorities and other customers, amounts paid
to suppliers in advance, amounts receivable from central government and taxes receivable. Trade receivables are shown net of a loss
allowance for expected credit losses.
2022
£m
2021
£m
Current
Trade receivables
166.6
146.0
Less: loss allowance for trade receivables
(8.6)
(10.8)
Trade receivables – net
158.0
135.2
Other receivables
92.6
31.9
Prepayments
25.7
77.5
Accrued income
55.8
40.6
Receivable from central government
207.8
128.0
539.9
413.2
Included within amounts receivable from central government is VAT of £24.0m (2021: £47.1m).
Contract assets
2022
£m
2021
£m
Contract assets*
239.6
121.5
* Contract assets are the sum of accrued Income and amounts receivable from central government shown net of VAT.
Amounts receivable from central government consists of UK and overseas VAT balances and amounts due from the DfT in the UK.
Accrued income and amounts receivable from central government principally comprise amounts relating to contracts with customers
and make up the contract assets balance in the table above. Accrued income primarily comprises contract income which is billed on a
regular basis and which is reclassified to trade receivables, as time passes, at the point at which it is billed. Contract assets have
increased during the year as a result of amounts due under the CBSSG scheme and the timing of payments versus the recognition of
related income. The non-current prepayment of £3.1m (2021: £2.0m) relates to a maintenance contract in Germany.
Non-current trade and other receivables
2022
£m
2021
£m
Prepayments
3.1
2.0
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
180
18. Trade and other receivables continued
Ageing of trade receivables
As at 2 July 2022 and 3 July 2021, the ageing analysis of trade receivables and the loss allowance for trade receivables based on
expected credit losses were as follows:
Year ended 2 July 2022
Total
£m
Not overdue
£m
Less than
30 days
£m
30–60 days
£m
61–90 days
£m
91–120 days
£m
Greater than
120 days
£m
Expected rate of credit losses
5.2%
—
0.1%
—
0.1%
—
58.1%
Gross carrying value of trade
receivables
166.6
132.3
12.1
4.6
1.7
1.1
14.8
Loss allowance for trade receivables
8.6
—
0.0
—
0.0
0.0
8.6
The expected rate of credit losses have been revised during the year in light of changes to regulation within the UK Rail sector that
facilitated the pursuit of property debtors which, in the previous period, was restricted as a result of COVID measures implemented by
government.
Year ended 3 July 2021
Total
£m
Not overdue
£m
Less than
30 days
£m
30–60 days
£m
61–90 days
£m
91–120 days
£m
Greater than
120 days
£m
Expected rate of credit losses
7.4%
—
1.9%
1.8%
70.8%
23.3%
49.0%
Gross carrying value of trade
receivables
146.0
112.3
5.3
5.6
2.4
4.3
16.1
Loss allowance for trade receivables
10.8
—
0.1
0.1
1.7
1.0
7.9
Loss allowance for trade receivables
Movements in the loss allowance for trade receivables were as follows:
2022
£m
2021
£m
At 3 July 2021
10.8
4.1
Charge for the year
0.8
7.6
Utilised
(0.2)
(0.4)
Unused amounts reversed
(2.8)
(0.5)
At 2 July 2022
8.6
10.8
Impairment losses (including reversals) on financial assets and contract assets is amounts charged in the year less amounts reversed
at £(2.0)m (2021: £7.1m).
Contract assets and accrued income were also considered for impairment but it was determined that provision for impairment was
trivial both for the year ended 2 July 2022 and the year ended 3 July 2021. Loss allowance for other receivables and receivables from
central government was measured as amount equal to 12-months’ expected credit losses. Due to very low credit risk, no provision was
required either for the year ended 2 July 2022 and the year ended 3 July 2021.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
181
19. Finance lease receivables
On 25 March 2022 the Group entered into a new head lease for 962 train vehicles. On the same date, 44 train vehicles were subleased
to SE Trains Limited. This lease structure was agreed with the DfT to meet the expected rail demands in the South East region of the
United Kingdom.
Amounts receivable under finance leases
2022
£m
2021
£m
Within year 1
4.8
2.3
Between year 1 and year 2
3.6
—
Between year 2 and year 3
2.4
—
Undiscounted lease payments receivable
10.8
2.3
Effect of discounting
(0.4)
—
Present value of lease payments
10.4
2.3
Net investment in the lease
10.4
2.3
Included in the income statement is finance income on the net investment in finance leases of £0.1m (2021: £0.1m).
The Group’s finance lease arrangements do not include variable payments. The average effective interest rate approximates 2.44%
(2021: 1.87%) per annum.
None of the finance lease receivables at the end of the reporting period are past due and management considers that no finance lease
receivable is impaired.
20. Cash and cash equivalents
The majority of the Group’s cash is held in bank deposits which have a maturity of three months or less to comply with DfT short term
liquidity requirements. For accounting policies see ‘Cash and cash equivalents’ in note 2.
2022
£m
2021
£m
Cash at bank and in hand
186.8
410.9
Cash equivalents
5.0
219.7
191.8
630.6
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying
periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the
respective deposit rates. The fair value of cash and cash equivalents is not materially different from book value.
Amounts held by UK Rail companies included in cash at bank and on short term demand deposit can be distributed only with the
agreement of the DfT, normally up to the value of distributable reserves or based on a working capital formula. Following the
introduction of the Emergency Measures Agreements (EMAs), the Emergency Recovery Measures Agreements (ERMAs) and then the
National Rail Contracts (NRCs), under these agreements the calculation mechanism for restricted cash continues to be in place. From
19 September 2020 until the end of March 2022, GTR was operating under an Emergency Recovery Measures Agreement (ERMA) and
from 1st April 2022, GTR was operating under its successor National Rail Contract (NRC). Distributions of profit in respect of the period
prior to the commencement of the EMA on 1 March 2020, amounting to £16.9m, were paid by the DfT in October 2022. As at year end,
under the terms of the ERMA and the NRC, the remainder of GTR’s cash continues to be restricted. South Eastern was operating under
the EMA agreement at 3 July 2021 and its restricted cash balance was based on total cash less distributable reserves. Remaining
restricted cash balances within South Eastern are balances owed to the DfT. As at 2 July 2022, balances amounting to £50.5m (2021:
£543.7m) were restricted, with the decrease being primarily attributable to the cessation of the Group’s Southeastern franchise in
October 2021. Part of this amount is to cover deferred income for rail season tickets, which was £12.3m at 2 July 2022 (2021: £18.3m).
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
182
21. Trade and other payables
Trade and other payables mainly consist of amounts owed to suppliers that have been invoiced or accrued, deferred income and
deferred season ticket income. They also include taxes and social security amounts due in relation to our role as an employer and
amounts owed to central government.
Current trade and other payables
2022
£m
2021
£m
Trade payables
114.6
120.0
Other taxes and social security costs
32.8
34.4
Other payables
61.2
57.4
Deferred season ticket income
12.3
18.3
Accruals
226.6
318.5
Deferred income
48.6
143.9
Payable to central government
13.2
187.5
Government grants
1.5
3.4
510.8
883.4
Terms and conditions of the above financial liabilities are as follows:
• Trade payables are non-interest bearing and are normally settled on 30-day terms.
• Amounts payable to central government consist of amounts payable to the DfT in the UK.
• Other payables are non-interest bearing and have varying terms of up to 12 months.
Deferred season ticket income and deferred income principally comprise amounts relating to contracts with customers:
Contract liabilities
2022
£m
2021
£m
2020
£m
Contract liabilities
60.9
162.2
116.2
Contract liabilities at each balance sheet date are expected to be recognised as revenue within the next financial year. The contract
liabilities balance as at 3 July 2021 was recognised as revenue during the year ended 2 July 2022. The balance as at 2 July 2022 has
decreased primarily due to the end of the LSER franchise in the year.
Non-current trade and other payables
2022
£m
2021
£m
Government grants
17.5
13.5
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
183
22. Interest-bearing loans and borrowings
The Group’s sources of borrowing for funding and liquidity requirements come from a range of committed bank facilities and a capital
market bond. For accounting policies see ‘Interest-bearing loans and borrowings’, ‘Cash and cash equivalents’ and ‘Leases’ in note 2.
Net cash/debt and interest-bearing loans and borrowings
The net cash/debt position comprises cash, short term deposits, interest-bearing loans and borrowings. In line with our debt
covenants, net debt is calculated using the outstanding principal value of debt and does not include accrued interest and is gross of
debt issue costs. It can be summarised as:
Year ended 2 July 2022
Current
Non-current
Effective
interest rate
%
Maturity
Within
one year
£m
After one year
but not more
than five years
£m
After
more than
five years
£m
Total
£m
Syndicated loans
0.60
1–4 years
—
104.7
—
104.7
Interest accrued on syndicated loans
0.1
—
—
0.1
Debt issue costs on syndicated loans
(0.2)
(0.3)
—
(0.5)
£250m sterling seven-year bond
2.50
1–3 years
—
250.0
—
250.0
Interest accrued on £250m sterling seven-year bond
6.2
—
—
6.2
Debt issue costs on £250m sterling seven-year bond
(0.3)
(0.4)
—
(0.7)
€8m revolving credit facility
2.10
0–1 years
5.3
—
—
5.3
€10.85m loan
2.79 Over 5 years
0.8
3.6
2.5
6.9
Flexbuss loan
0.60
0–9 years
2.4
9.1
2.3
13.8
Lease liabilities (note 13)
3.11
0–7 years
309.0
548.6
10.0
867.6
Total interest-bearing loans and borrowings
323.3
915.3
14.8
1,253.4
Interest accrued
(6.3)
—
—
(6.3)
Debt issue costs
0.5
0.7
—
1.2
Total interest-bearing loans and borrowings**
(adjusted by debt issue costs and interest)
317.5
916.0
14.8
1,248.3
Cash and short term deposits (note 20)
(191.8)
—
—
(191.8)
Net debt
125.7
916.0
14.8
1,056.5
Restricted cash*
50.5
Adjusted net debt
1,107.0
Year ended 3 July 2021
Current
Non-current
Effective
interest rate
%
Maturity
Within
one year
£m
After one year
but not more
than five years
£m
After
more than
five years
£m
Total
£m
Syndicated loans
0.63
1–4 years
—
126.6
—
126.6
Interest accrued on syndicated loans
0.1
—
—
0.1
Debt issue costs on syndicated loans
(0.1)
(0.4)
—
(0.5)
£250m sterling seven-year bond
2.50
1–4 years
—
250.0
—
250.0
Interest accrued on £250m sterling seven-year bond
6.2
—
—
6.2
Debt issue costs on £250m sterling seven-year bond
(0.5)
(0.7)
—
(1.2)
€8m revolving credit facility
2.10
0–1 years
5.5
—
—
5.5
€10.85m loan
2.79 Over 5 years
0.8
3.5
3.4
7.7
Lease liabilities (note 13)
2.26
0–7 years
263.9
42.0
6.8
312.7
Total interest-bearing loans and borrowings
275.9
421.1
10.2
707.2
Interest accrued
(6.3)
—
—
(6.3)
Debt issue costs
0.6
1.0
—
1.6
Total interest-bearing loans and borrowings**
(gross of debt issue costs and interest)
270.2
422.1
10.2
702.5
Cash and short term deposits (note 20)
(630.6)
—
—
(630.6)
Net (cash)/debt
(360.4)
422.1
10.2
71.9
Restricted cash*
543.7
Adjusted net debt
615.6
* See note 20 for further information in relation to the Group’s restricted cash balance.
** Net debt excludes accrued interest on debt and debt issue costs, therefore the total ‘interest-bearing loans and borrowings’ per the Balance Sheet and in provided table differs.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
184
22. Interest-bearing loans and borrowings continued
Analysis of Group net debt/(cash)
Cash and cash
equivalents
£m
Syndicated
loan facility
£m
Lease
liabilities
£m
£250m
sterling bond
£m
Flexbuss loan
£m
Euro RCF
£m
Euro loan
£m
Total
£m
At 27 June 2020
569.8
(147.4)
(648.6)
(256.2)
—
(5.8)
(9.1)
(497.3)
Net cashflow
62.5
17.0
534.3
—
—
—
0.8
614.6
Interest paid on loans and
borrowings
(0.7)
0.7
9.0
6.2
—
—
0.4
15.6
Inception of new leases
—
—
(31.7)
—
—
—
—
(31.7)
Interest income/(expense)
0.7
(0.8)
(9.0)
(6.2)
—
—
(0.4)
(15.7)
Lease modifications
—
—
(166.6)
—
—
—
—
(166.6)
Effect of foreign exchange
rate changes
(1.7)
3.8
—
—
—
0.3
0.6
3.0
At 3 July 2021 (*)
630.6
(126.7)
(312.6)
(256.2)
—
(5.5)
(7.7)
(78.1)
Acquired loan
—
—
—
—
(15.1)
—
—
(15.1)
Acquired lease liabilities
—
—
(6.6)
—
—
—
—
(6.6)
Net cashflow
(440.9)
22.7
368.2
—
1.1
0.3
0.8
(47.8)
Interest paid on loans and
borrowings
(0.5)
0.5
8.9
6.3
0.1
—
0.3
15.6
Inception of new leases
—
—
(21.9)
—
—
—
—
(21.9)
Interest income/(expense)
0.5
(0.5)
(8.9)
(6.3)
(0.1)
—
(0.3)
(15.6)
Lease modifications
—
—
(894.7)
—
—
—
—
(894.7)
Effect of foreign exchange
rate changes
2.1
(0.8)
—
—
0.2
(0.1)
—
1.4
At 2 July 2022
191.8
(104.8)
(867.6)
(256.2)
(13.8)
(5.3)
(6.9)
(1,062.8)
At 2 July 2022, included within net cash/(debt) is the value of interest accrued of £6.3m (2021: £6.2m), leading to an overall net debt
figure of (£1,056.5m) (2021: (£71.9m)).
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
185
22. Interest-bearing loans and borrowings continued
Reconciliation of liabilities arising from financing activities
Syndicated
loan facility
£m
Lease
liabilities
£m
£250m
sterling bond £m
Flexbuss loan
£m
Euro RCF
£m
Euro loan
£m
Total liabilities
from financing
activities
£m
At 27 June 2020
(146.8)
(648.6)
(254.5)
—
(5.8)
(9.1)
(1,064.8)
Net Cashflow
17.0
534.3
—
—
—
0.8
552.1
Interest paid on loans and borrowings
0.7
9.0
6.2
—
—
0.4
16.3
Movement in debt issue costs
(0.1)
—
(0.6)
—
—
—
(0.7)
Inception of new leases
—
(31.7)
—
—
—
—
(31.7)
Interest expense
(0.8)
(9.0)
(6.2)
—
—
(0.4)
(16.4)
Lease modifications
—
(166.6)
—
—
—
—
(166.6)
Effect of foreign exchange rate changes
3.8
—
—
—
0.3
0.6
4.7
At 3 July 2021
(126.2)
(312.6)
(255.1)
—
(5.5)
(7.7)
(707.1)
Acquired loan
—
—
—
(15.1)
—
—
(15.1)
Acquired lease liabilities
—
(6.6)
—
—
—
—
(6.6)
Net Cashflow
22.7
368.2
—
1.1
0.3
0.8
393.1
Interest paid on loans and borrowings
0.5
8.9
6.3
0.1
—
0.3
16.1
Movement in debt issue costs
—
—
(0.4)
—
—
—
(0.4)
Inception of new leases
—
(21.9)
—
—
—
—
(21.9)
Interest expense
(0.5)
(8.9)
(6.3)
(0.1)
—
(0.3)
(16.1)
Lease modifications
—
(894.7)
—
—
—
—
(894.7)
Effect of foreign exchange rate changes
(0.8)
—
—
0.2
(0.1)
—
(0.7)
At 2 July 2022
(104.3)
(867.6)
(255.5)
(13.8)
(5.3)
(6.9)
(1,253.4)
Syndicated loan facility
On 16 July 2014, the Group entered into a £280.0m syndicated loan facility. The loan facility is unsecured and interest is charged at
SONIA + margin, where the margin is dependent upon the gearing of the Group. The original facility was for a period of five years and
has had a number of extensions, the most recent of which was agreed in July 2021, extending the maturity to July 2025 with a value of
£240.0m in the final year. On 11 October 2022 change of control clauses present in the syndicated loan facility agreement were
activated as a result of the purchase of the Group by Gerrard Investment Bidco Limited. These change of control clauses resulted in
one member of the banking syndicate group leaving the syndicate causing the facility commitments to decrease from £280.0m to
£240.0m.
The primary financial covenant under the syndicated loan facility is an adjusted net debt to EBITDA (excluding exceptional items) ratio
of not more than 3.5x and at 2 July 2022 it was 1.50x (2021: 1.56x). This is on a pre-IFRS 16 basis.
As at 2 July 2022, £104.7m (2021: £126.6m) of the facility was drawn down.
£250m sterling bond
On 6 July 2017, the Group raised a £250.0m bond of seven years maturing on 6 July 2024, with a coupon rate of 2.5%.
Euro RCF
On 24 October 2017, the Group’s subsidiary, Go-Ahead Verkehrsgesellschaft Deutschland GmbH, entered into an €8.0m one-year
revolving credit facility.
As at 2 July 2022, €6.1m or £5.3m (2021: €6.4m or £5.5m) was drawn down. The facility is unsecured and interest is charged at 2.1%
plus EURIBOR.
Euro loan
On 24 October 2017, the Group’s subsidiary, Go-Ahead Facility GmbH, entered into a €10.6m 10.5-year loan, which subsequently
increased to €10.85m.
As at 2 July 2022, €8.1m or £6.9m (2021: €9.0m or £7.7m) was outstanding. The loan is secured against the German land and buildings
included within property, plant and equipment. Interest is charged at a fixed rate of 2.79%.
Flexbuss loan
After acquisition of Flexbuss in Sweden in April 2022, the Group’s subsidiary entered into finance agreements with eight banks for
each individual bus owed by the company. The total number of buses accounts for 243 loans varying between each bank.
As at 2 July 2022, SEK172.7m or £13.8m (2021: nil) of loans were outstanding.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
186
22. Interest-bearing loans and borrowings continued
Debt issue costs
There are debt issue costs of £0.5m (2021: £0.5m) on the syndicated loan facility.
The £250m sterling seven-year bond has debt issue costs of £0.7m (2021: £1.1m).
Debt issue costs are unamortised and remain capitalised as at 2 July 2022.
The Group is subject to two covenants in relation to its borrowing facilities. The covenants specify a maximum adjusted net debt to
EBITDA (excluding exceptional items) and a minimum net interest cover. These covenants are on a pre-IFRS 16 basis. At the year end
and throughout the year, the Group was not in breach of any bank covenants.
During the year, following delays to the publication of the 2020/21 year end financial statements, waivers were obtained from the
Group's banks in relation to the information covenant requirements in the Group's borrowing facilities to submit accounts within a
defined timeframe. Subsequent to year end, waivers have again been obtained from the Group’s banks for the covenant requirements
due to the delay in the publication of the 2021/22 year end financial statements.
23. Financial risk management objectives and policies
This note details our treasury management and financial risk management objectives and policies, as well as the exposure and
sensitivity of the Group to interest rate, liquidity, foreign exchange and credit risk, and the policies in place to monitor and manage
these risks.
Financial risk factors and management
The Group’s principal financial instruments comprise bank loans, a sterling bond, lease contracts and cash and short term deposits.
The main purpose of these financial instruments is to provide an appropriate level of net debt to fund the Group’s activities, namely
working capital, fixed asset expenditure, acquisitions and dividends. The Group has various other financial instruments such as trade
receivables and trade payables, which arise directly from its operations.
It is Group policy to enter into derivative transactions relating to fuel swaps. The purpose of these is to manage the fuel price risks
arising from the Group’s operations.
It is, and has been throughout 2021/22 and 2020/21, the Group’s policy that no trading in derivatives shall be undertaken and
derivatives are only purchased for internal benefit.
The main financial risks arising from the Group’s activities are interest rate risk, liquidity risk, credit risk and commodity price risk,
managed via fuel derivatives.
Interest rate risk
The Group borrows and deposits funds and is exposed to changes in interest rates. The Group’s policy towards cash deposits is to
deposit cash short term on UK money markets.
The Group is exposed to the risk of both increases and decreases in interest rates given it has cash balances on deposit and debt at
floating rates.
The maturity and interest rate profile of interest-bearing loans and borrowings (excluding unamortised debt issue cost) and lease
liabilities as at 2 July 2022 and 3 July 2021 is as follows:
Average
rate
%
Within
1 year
£m
1–2 years
£m
2–3 years
£m
3–4 years
£m
4–5 years
£m
More than
5 years
£m
Total
£m
Year ended 2 July 2022
Floating rate liabilities
Syndicated loans
0.60
0.6
0.6
0.6
104.8
—
—
106.6
€8m revolving credit facility
2.10
5.4
—
—
—
—
—
5.4
Gross floating rate liabilities
6.0
0.6
0.6
104.8
—
—
112.0
Fixed rate liabilities
£250m sterling seven-year bond
2.50
6.3
6.2
250.5
—
—
—
263.0
€10.85m loan
2.79
1.0
1.1
1.0
1.0
1.0
2.6
7.7
Flexbuss loan
2.90
2.8
2.6
2.5
2.5
2.4
2.3
15.1
Lease liabilities
3.11
326.0
300.2
246.0
7.6
8.3
12.6
900.7
Net fixed rate liabilities
336.1
310.1
500.0
11.1
11.7
17.5
1,186.5
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
187
23. Financial risk management objectives and policies continued
Average
rate
%
Within
1 year
£m
1–2 years
£m
2–3 years
£m
3–4 years
£m
4–5 years
£m
More than
5 years
£m
Total
£m
Year ended 3 July 2021
Floating rate liabilities
Syndicated loans
0.63
0.8
0.7
0.7
0.8
127.4
—
130.4
€8m revolving credit facility
2.10
5.6
—
—
—
—
—
5.6
Gross floating rate liabilities
6.4
0.7
0.7
0.8
127.4
—
136.0
Fixed rate liabilities
£250m sterling seven-year bond
2.50
6.2
6.3
6.3
250.5
—
—
269.3
€10.85m loan
2.79
1.0
1.0
1.1
1.0
1.0
3.5
8.6
Lease liabilities
2.26
268.3
16.8
11.6
9.1
4.4
5.8
316.0
Net fixed rate liabilities
275.5
24.1
19.0
260.6
5.4
9.3
593.9
Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. Interest on financial
instruments classified as fixed rate is fixed until the maturity of the instrument. The other financial instruments of the Group that are
not included in the tables above are non-interest bearing and are therefore not subject to interest rate risk.
Interest rate risk table
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held
constant, of the Group’s profit before tax (through the impact on floating rate borrowings) based on recent historical changes with
increased reasonably possible change disclosed versus that of the prior year being reflective of the current economic circumstances.
Increase/
(decrease) in
basis points
Effect on profit
before tax
£m
2022
GBP
200.0
(2.0)
GBP
(200.0)
2.0
2021
GBP
50.0
(0.6)
GBP
(50.0)
0.6
Liquidity risk
The Group has in place a £280.0m syndicated loan facility of which £104.7m (2021: £126.6m) was drawn down at year end, as well as a
£250m bond of seven years which matures on 6 July 2024. See note 22 for further information on the syndicated loan facility.
The Group’s subsidiary, Go-Ahead Verkehrsgesellschaft Deutschland GmbH, has in place a €8.0m one-year revolving credit facility, of
which €6.1m or £5.3m (2021: €6.4m or £5.5m) drawn down as at 2 July 2022. Further, the Group’s subsidiary, Go-Ahead Facility GmbH,
has in place a €10.85m 10.5-year loan.
After acquisition of Flexbuss in Sweden in April 2022, the Group’s subsidiary entered into finance agreements with eight banks for
each individual bus owed by the company. The total number of buses accounts for 243 loans varying between each bank. As at 2 July
2022, SEK172.7m or £13.8m (2021: nil) of the facilities were drawn down.
More information on the level of drawdowns and prevailing interest rates are detailed in note 22.
The Go-Ahead Group Limited Annual Report and Accounts 2022
188
Group financial statements
Notes to the consolidated financial statements continued
23. Financial risk management objectives and policies continued
Liquidity risk continued
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously
monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The information
about the borrowings and prevailing interest rates is provided in note 22.
Details of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk are set out below:
2022
£m
2021
£m
Syndicated loans
280.0
280.0
£250m sterling seven-year bond
250.0
250.0
€8m revolving credit facility
6.9
5.5
€10.85m loan
9.3
7.7
Flexbuss loan
13.8
—
Total core facilities
560.0
543.2
Amount drawn down at year end
380.8
389.8
Headroom
179.2
153.4
The Group’s rail rolling stock and bus vehicles can be financed by lease arrangements, or term loans at fixed rates of interest over two
to eight-year primary borrowing periods. This provides a regular inflow of funding to cover expenditure as it arises.
As at 2 July 2022, balances included in cash at bank and on short term deposit amounting to £50.5m (2021: £543.7m) were restricted.
See note 20 on page 181 for further details.
The tables below summarise the maturity profile of the Group’s financial liabilities at 2 July 2022 and 3 July 2021 based on contractual
undiscounted payments.
Year ended 2 July 2022
On demand
£m
Less than
3 months
£m
3–12 months
£m
1–5 years
£m
More than
5 years
£m
Total
£m
Interest-bearing loans and borrowings
—
2.4
7.4
120.1
4.9
134.8
£250m sterling seven-year bond
—
6.3
—
256.7
—
263.0
Lease liabilities
—
81.5
244.5
562.1
12.6
900.7
Derivative financial liabilities
—
—
—
0.1
—
0.1
Contractual trade and other payables
31.2
233.6
114.8
—
—
379.6
31.2
323.8
366.7
939.0
17.5
1,678.2
Year ended 3 July 2021
On demand
£m
Less than
3 months
£m
3–12 months
£m
1–5 years
£m
More than
5 years
£m
Total
£m
Interest-bearing loans and borrowings
—
1.7
5.7
133.7
3.5
144.6
£250m sterling seven-year bond
—
6.2
—
263.1
—
269.3
Lease liabilities
—
104.8
163.5
41.9
5.8
316.0
Derivative financial liabilities
—
0.2
0.4
0.3
—
0.9
Contractual trade and other payables*
63.8
461.9
96.4
—
—
622.1
63.8
574.8
266.0
439.0
9.3
1,352.9
* Financial liabilities held within trade and other payables as at 3 July 2021 have been restated to exclude £66.0m of non-financial liabilities identified as a misclassification in the
year.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
189
23. Financial risk management objectives and policies continued
Managing capital
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios
in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it,
in light of changes in economic conditions. Details of the issued capital and reserves are shown in note 26. Details of interest-bearing
loans and borrowings are shown in note 22.
To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders
or issue new shares. No changes were made in the objectives, policies or processes during the years ended 2 July 2022 and 3 July 2021.
The Group applies the primary objective by managing its capital structure such that net debt (adjusted to exclude restricted cash) to
EBITDA* (excluding exceptional items) is within a range which retains an investment grade debt rating of at least BBB-.
In the year ended 2 July 2011, the Group obtained an investment grade long term credit rating from Standard & Poor’s as follows:
Standard & Poor’s
BBB- (stable outlook)
This rating was maintained in the year ended 2 July 2022.
Subsequent to the year end, S&P reaffirmed its credit rating.
In the year ended 2 July 2022, the Group obtained an investment grade long term issuer default rating from Fitch as follows:
Fitch
BBB- (RWN**)
This rating was recently reconfirmed with a stable outlook.
The Group’s policy is to maintain an adjusted net debt to EBITDA (excluding exceptional items) ratio of 1.5x to 2.5x. The Group’s calculation of
adjusted net debt is set out in note 22 and includes cash and short term deposits, interest-bearing loans and borrowings, and excludes
restricted cash. The Group continues to take measures to protect its cash including suspension of dividend and careful management of
discretionary expenditure and capital investment. These actions were taken by the Board as a measure to protect this ratio.
* Operating profit before interest, tax, depreciation and amortisation.
** Rating Watch Negative
Currency risk
The Group has foreign exchange exposure in respect of cashflow commitments to its operations in Germany, Singapore, the Nordics,
Ireland and Australia. These are currently not material to the Group.
Credit risk
The Group’s credit risk is primarily attributable to its financial assets, comprising trade and other receivables (see note 18), cash and
cash equivalents (see note 20) and fuel hedge derivatives (see note 24). The maximum credit risk exposure of the Group as at the year
end was £736.9m (2021: £922.1m) and comprises amounts from a number of unconnected parties.
The considerable majority of the Group’s receivables are with public (or quasi-public) bodies (such as the DfT), and the majority of
sales with other entities are paid as they arise. Historically the annual cost due to expected credit losses has been immaterial so limited
disclosures are therefore provided. The trade receivables from such public bodies are not considered to present a significant credit
risk, which is supported by cash payment performance.
Smaller sundry individual trade receivables with third parties that have arisen are assessed as required for credit loss and a provision
accrued when considered appropriate. The Group applies the IFRS 9 simplified approach and measures the loss allowance on the
lifetime expected credit losses at each reporting date. Expected credit losses are assessed based on the number of days past due, the
customer type, a judgement on credit risk, consideration of macroeconomic forecasts, as well as past experience when relevant.
Movement in the provisions for the impairment of trade receivables are recorded within operating costs within the income statement.
Risk of exposure to non-return of cash on deposit is managed through a treasury policy of holding deposits with banks rated A- or A3 or above by
at least one of the credit rating agencies. The treasury policy outlines the maximum level of deposit that can be placed with any one given financial
institution. As at 2 July 2022, all cash and cash equivalents are held with financial institutions with a credit rating of A- or above as per Fitch ratings.
Commodity price risk
The Group is exposed to commodity price risk as a result of fuel usage. The Group closely monitors fuel prices and uses fuel derivatives
to hedge its exposure to increases in fuel prices, when it deems this to be appropriate. The Group operates a bus fuel hedging policy
which uses fuel hedges to fix the price of diesel fuel in advance. The core policy is to be fully hedged for the next financial year before
the start of that year, with at least 50% of the following year fixed and 25% of the year thereafter. This hedging profile is then
maintained on a month-by-month basis. After year end, the Group reviewed the hedging policy and going forward will only hedge for
regional bus. Any litres hedged prior to year end will remain but all litres hedged post 2 July 2022 will be specifically for regional bus.
Additional purchases can be made to lock in future costs, subject to Board approval. Risk component hedging has been adopted under
IFRS 9, meaning that the hedged price risk component of the purchased fuel matches that of the underlying derivative commodity. The
hedged risk component is considered to be separately identifiable and reliably measurable. Gasoil is considered to be the risk
component and there is a strong correlation between the movements in the price of the derivative and the fuel price purchased.
Variances in pricing between the derivative commodity and the purchased price relate to underlying costs such as duty and delivery
and are excluded from the hedge relationship. Further details are given in note 24.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
190
24. Derivatives and other financial instruments
A derivative is a security whose price is dependent upon or derived from an underlying asset. For accounting policies see ‘Financial
assets’, ‘Financial liabilities’, ‘Derivatives financial instruments’, and ‘Fair value measurement’ in note 2.
The carrying value of the Group’s financial assets and liabilities is as follows:
Year ended 2 July 2022
Amortised
cost
£m
Derivatives
used for
cashflow
hedging
£m
Total
carrying value
£m
Financial assets and derivatives
Trade and other receivables
480.6
—
480.6
Cash and cash equivalents
191.8
—
191.8
Fuel price derivatives
—
54.1
54.1
Finance lease receivables
10.4
—
10.4
682.8
54.1
736.9
Financial liabilities and derivatives
Interest-bearing loans and borrowings
(385.8)
—
(385.8)
Lease liabilities
(867.6)
—
(867.6)
Trade and other payables classified as financial liabilities
(379.6)
—
(379.6)
Fuel price derivatives
—
(0.1)
(0.1)
(1,633.0)
(0.1)
(1,633.1)
Year ended 3 July 2021
Amortised
cost
£m
Derivatives
used for
cashflow
hedging
£m
Total
carrying value
£m
Financial assets and derivatives
Trade and other receivables1
280.9
—
280.9
Cash and cash equivalents
630.6
—
630.6
Fuel price derivatives
—
8.3
8.3
Finance lease receivables
2.3
—
2.3
913.8
8.3
922.1
Financial liabilities and derivatives
Interest-bearing loans and borrowings
(394.5)
—
(394.5)
Lease liabilities
(312.6)
—
(312.6)
Trade and other payables classified as financial liabilities2
(622.1)
—
(622.1)
Fuel price derivatives
—
(0.9)
(0.9)
(1,329.2)
(0.9)
(1,330.1)
1. Financial assets held within trade and other receivables as at 3 July 2021 have been restated to exclude £7.7m of non-financial assets identified as a misclassification in the year.
2. Financial liabilities held within trade and other payables as at 3 July 2021 have been restated to exclude £60.9m of non-financial liabilities identified as a misclassification in the year.
a. Fair values
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly
or indirectly
• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable
market data
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
191
24. Derivatives and other financial instruments continued
a. Fair values continued
The Group’s financial instruments carried at fair value in the financial statements have been reviewed as at 2 July 2022 and 3 July 2021
and are as follows:
2022
£m
2021
£m
Non-current financial assets: fuel price derivatives
14.1
3.4
Current financial assets: fuel price derivatives
40.0
4.9
54.1
8.3
Current financial liabilities: fuel price derivatives
—
(0.6)
Non-current financial liabilities: fuel price derivatives
(0.1)
(0.3)
(0.1)
(0.9)
Net financial derivatives
54.0
7.4
As at 2 July 2022 and 3 July 2021, the fair value of the fuel price derivatives is based on the external Mark-to-Market (MtM) valuations
provided by the derivative providers. The valuations are prepared in accordance with the provider’s own internal models and
calculation methods based upon well-recognised financial principles. Only observable and relevant market inputs were used in the
valuation therefore the fair value measurement was classified as level 2 valuation.
There are a small number of foreign currency fuel hedges in place as at 2 July 2022 and 3 July 2021. The foreign currency fuel hedge
valuations are based on the external MtM valuations and are currently not material to the Group.
The fair values of all other assets and liabilities in notes 18, 19 and 22 are not significantly different from their carrying amount, with the
exception of the £250m sterling seven-year bond which has a fair value of £242.1m (2021: £257.7m) but is carried at its amortised cost
of £250.0m (2021: £250.0m). The fair value of the £250m sterling seven-year bond has been determined by reference to the price
available from the market on which the bond is traded, and is therefore a level 1 valuation.
During the years ended 2 July 2022 and 3 July 2021, there were no transfers between valuation levels.
b. Hedging activities
Fuel derivatives
As discussed in note 23, the Group is exposed to commodity price risk as a result of fuel usage. The Group uses derivatives to hedge its
risks associated with fuel price fluctuations and these derivatives are designated as cash flow hedges.
As at 2 July 2022, the Group had derivatives against fuel of 175 million litres for the three years ending June 2025. The fair value of the
asset or liability has been recognised on the balance sheet. The value has been generated since the date of the acquisition of the
instruments due to the movement in market fuel prices.
As at 2 July 2022 the Group’s hedging profile is as follows:
<1 year
1–2 years
2–5 years
Actual percentage hedged
Fully
50%
25%
Litres hedged (million)
105
48
22
Average hedged rate (pence per litre)
36.5
37.7
45.9
As at 3 July 2021 the Group’s hedging profile was as follows:
<1 year
1–2 years
2–5 years
Actual percentage hedged
Fully
50%
25%
Litres hedged (million)
96
55
26
Average hedged rate (pence per litre)
32.8
32.1
31.2
Amounts that have affected the consolidated statement of comprehensive income as a result of applying hedge accounting during
the year are as follows:
2022
£m
2021
£m
Changes in fair value of hedged item used for calculating hedge ineffectiveness
46.6
22.5
Changes in fair value of hedging instrument used for calculating hedge ineffectiveness
(46.6)
(22.5)
Changes in fair value recognised in other comprehensive income (net of tax)
12.6
12.6
Amount removed from cash flow hedge reserve and included in the initial cost of inventory
21.4
5.5
The maturity of the hedge profile range is between July 2022 and June 2025.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
192
24. Derivatives and other financial instruments continued
b. Hedging activities continued
Fuel derivatives continued
In relation to the hedging reserve, the following balances are included with respect to the fuel derivatives:
2022
£m
2021
£m
Balance in the cashflow hedging reserve for continuing hedges
39.8
5.8
The potential sources of fuel hedge ineffectiveness include a larger change in the volume of litres than originally anticipated and
variations on the settlement date or amount. At the year end no ineffectiveness was recognised on the cashflow hedges (2021: nil).
The following analysis details the Group’s sensitivity on equity if the price of diesel fuel had been 10p per litre higher during the 52
weeks ending 2 July 2022 (2021: 53 weeks ending 3 July 2021):
2022
£m
2021
£m
Impact on hedging reserve
8.0
10.6
25. Provisions
A provision is a liability recorded in the consolidated balance sheet, where there is uncertainty over the timing or amount that will be
paid, and is therefore often estimated. The main provisions we hold are in relation to onerous contracts in Norway and Germany,
uninsured claims and dilapidation provisions relating to franchise commitments. For accounting policies see ‘Provisions’ and
‘Uninsured liabilities’ in note 2.
*Restated – see note 2
2022
£m
2021*
£m
Current
132.7
159.1
Non-current
112.1
121.2
244.8
280.3
*Restated – see note 2
Franchise commitments
Franchise commitments of £115.6m (2021: £83.3m) relate to dilapidation provisions on vehicles, depots and stations across our UK Rail
franchises and maintenance obligation provisions arising from the contractual relationships in place with the lessors. Of these
provisions, £88.7m (2021: £83.3m) are classified as current and £26.9m (2021: nil) are classified as non-current. Transfer of franchise
commitments of £6.2m relate to provisions transferred by LSER to the OLR following the cessation of the franchise in October 2021.
During the year £1.8m (2021: £3.4m) of dilapidation provisions which had been previously provided for were released in GTR. The
remaining dilapidation costs will be incurred as part of a rolling maintenance contract. The provisions are based on management’s
assessment of most probable outcomes, supported where appropriate by valuations from professional external advisors.
Franchise
Commitments
£m
Onerous
contract
provisions (as
previously
reported)
£m
Restatement*
£m
Onerous
contract
provisions
£m
Uninsured
claims
£m
Potential
DfT penalty
£m
Other
£m
Total
£m
At 27 June 2020
72.1
44.3
5.1
49.4
49.9
—
12.8
184.2
Provided (after discounting)
20.6
66.5
—
66.5
19.6
30.0
4.1
140.8
Utilised
(6.0)
(8.1)
—
(8.1)
(16.0)
—
(1.1)
(31.2)
Released
(3.4)
—
—
—
(5.6)
—
(2.1)
(11.1)
Effect of foreign exchange rate
changes
—
(2.4)
—
(2.4)
—
—
—
(2.4)
At 3 July 2021
83.3
100.3
5.1
105.4
47.9
30.0
13.7
280.3
Provided (after discounting)
55.0
—
—
36.1
19.2
—
5.4
115.7
Utilised
(11.3)
—
—
(18.2)
(14.4)
(23.5)
(3.7)
(71.1)
Released
(5.2)
—
—
(52.8)
(6.1)
(6.5)
(2.4)
(73.0)
Transfers
(6.2)
—
—
—
—
—
(0.3)
(6.5)
Unwinding of discount
—
—
—
—
(0.1)
—
—
(0.1)
Effect of foreign exchange rate
changes
—
—
—
(0.6)
—
—
0.1
(0.5)
At 2 July 2022
115.6
—
—
69.9
46.5
—
12.8
244.8
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
193
25. Provisions continued
Franchise commitments continued
Included within the franchise commitments of £115.6m are provisions relating to the settlement of dilapidation obligations as part of
the transition from the GTR ERMA franchise to the NRC, amounting to £66.2m. Under that transition, future obligations for
dilapidations become the responsibility of the DfT. Therefore, a settlement agreement is required between lessors, the Group and the
DfT, which is expected to be completed in 2023 once the DfT have finalised their own analysis and review. This will involve
consideration of the build-up of the provision over the life of the franchise against historical contract and funding positions and the
amounts utilised over the same period for which the directors do not consider it likely that a significant credit to the Income
Statement will be recognised. Consequently these factors will impact how any liabilities or credits that may arise following the
settlement would be attributed between the different parties involved. The amounts held reflect the Group’s best estimate of the
amounts to be paid to settle the remaining franchise obligations.
In addition, the franchise commitments includes a provision of £43.9m for GTR’s future maintenance obligations expected under the
rolling stock lease contracts held. This provision reflects the Group’s best estimates of the maintenance obligations to be discharged
over the minimum period of the NRC to 1 April 2025. A corresponding reimbursement asset is also recognised reflecting the amounts
inherent within the opening maintenance reserves retained by the lessors at the start of the NRC, see note 18 for further details.
Onerous contracts
The directors have performed a detailed review of all material contracts across the Group to consider the completeness of the
onerous contract provisions and any significant developments in these in the year to 2 July 2022.
On 28 June 2022, Go-Ahead Norway signed an agreement with the Norwegian Rail Directorate to revise its rail contract. This revision
included certain obligations being waived, compensation for loss of income from the impacts of the COVID-19 pandemic, incentives
for reaching specified levels of passenger income, and other areas of agreement including compensation for 50% of energy costs when
prices reach specified levels. Updating cashflow forecasts for the revision to the contract with the Rail Directorate, as well as updating
the discount rate and other inputs as a result of the developments in the year, has led to a material reduction in the value of the
onerous contract provision and so a release of the provision of £51.6m.
Whilst the directors are taking all actions available to them to reduce the impact of difficulties in the Group’s German operations, upon
reassessment of the Bavarian rail contracts’ onerous contract provision under IAS 37 it was determined than an increase in the
provision of £36.1m was necessary based on the contracts’ forecast future cashflows discounted at a risk-free rate having considered
these in light of updated market conditions and experience gained in running operations during the year.
In the year ended 3 July 2021, additional costs of £1.2m were recognised in relation to loss making contracts where passenger demand
was not recovering at the same levels as the wider commercial network. Following renegotiation of these contracts, it was determined
necessary to release £1.2m of this onerous contract provision in the year ended 2 July 2022.
Uninsured claims
The uninsured claims provision represents the cost to settle claims for incidents occurring prior to the balance sheet date based on an
assessment of the expected settlement, together with an estimate of settlements that will be made in respect of incidents that have
not yet been reported to the Group by the insurer. Claims can primarily be categorised as either motor insurance-related claims or
employers’ liability and public liability claims. Of the uninsured claims, £13.6m (2021: £13.5m) are classified as current and £32.9m (2021:
£34.4m) are classified as non-current based on past experience of uninsured claims paid out annually. It is estimated that the majority
of uninsured claims will be settled within the next six years. Both the estimate of settlements that will be made in respect of claims
received as well as the estimate of settlements made in respect of incidents not yet reported are based on historical trends which can
alter over time reflecting the length of time some matters can take to be resolved. No material changes to carrying values are
expected within the next 12 months.
Uninsured claims are provided on a gross basis and a separate reimbursement asset, for amounts due back from the insurance
providers, of £2.6m is included within other receivables.
DfT financial penalty
Under the Railways Act 1993, in the prior year the DfT had the power to impose a financial penalty in relation to LSER. In the absence of
specific precedent or relevant guidance, it was difficult to estimate precisely the likely quantum of any penalty. The Group, having
considered independent legal advice received by the Independent Committee, included a provision of £30.0m at 3 July 2021 which
reflected the Group's best estimate of the penalty at that time. On 9 May 2022, a final penalty notice was issued stating that the
amount of the financial penalty would be £23.5m, as a result £6.5m of the provision was released.
For further Information please see the key source of estimation uncertainty relating to this matter on pages 140 to 145.
Other
The other provisions of £12.8m (2021: £13.7m) include dilapidations in the Bus division of £11.1m (2021: £13.5m), of which £3.8m (2021:
£4.0m) are classified as current and £7.3m (2021: £9.5m) are classified as non-current. It is expected that the dilapidation costs will be
incurred within two to six years. Reflecting the nature of the judgements associated with the provisioning for dilapidations, it is not
practicable to provide further sensitivity analysis of the extent by which these amounts could change in the next financial year.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
194
26. Issued capital and reserves
Called up share capital is the number of shares in issue at their par value. For accounting policies see ‘Treasury shares’ in note 2.
Allotted, called up and fully paid
Millions
2022
£m
Millions
2021
£m
At 2 July 2022 and 3 July 2021
47.1
4.7
47.1
4.7
The Group has one class of ordinary shares which carry no right to fixed income and have a par value of 10p per share.
Share capital
Share capital represents proceeds on issue of the Group’s equity, both nominal value and share premium. The nominal value is set out
above and the balance is share premium with a value of £70.5m as of 2 July 2022 (2021: £70.5m). Note the share premium is separate to
the share premium reserve.
Reserve for own shares
The reserve for own shares relates to 4,088,044 ordinary shares (8.7% of share capital), of which 185,814 are held to satisfy awards
made under the Group’s Restricted Share Plan, Long Term Incentive Plan or Deferred Share Bonus Plan (“Discretionary Share Plans”).
(2021: The reserve for own shares had 4,094,851 ordinary shares 8.7% of share capital, of which 192,621 were held for LTIP and DSBP
arrangements).
The remaining shares were purchased in order to enhance shareholders’ returns and are being held as treasury shares for future issue
in appropriate circumstances. During the year ended 2 July 2022 the Group repurchased 42,882 shares for a total consideration of
£0.36m to be used to satisfy awards made under the Group’s Discretionary Share Plans. (2021: 57,176 shares repurchased for a total
consideration of £0.56m). The Group has not cancelled any shares during the year or the prior year.
Total number of shares held are 4,088,044 with a value of £70.9m as at 2 July 2022 (2021: £71.3m).
Hedging reserve
The hedging reserve records the movement in value of fuel price derivatives designated in the effective cashflow hedges, offset by any
movements recognised directly in equity.
Share premium reserve
The share premium reserve represents the premium on shares that have been issued to fund or part fund acquisitions made by the
Group. This treatment is in line with Section 612 of the Companies Act 2006.
Capital redemption reserve
The redemption reserve reflects the nominal value of cancelled shares.
Translation reserve
The translation reserve records exchange differences arising from the translation of the balance sheets of foreign currency
denominated subsidiaries.
2022
£m
2021
£m
Translation reserve
4.4
3.8
27. Commitments
A commitment is a contractual obligation to make a payment in the future, mainly in relation to rail operating charges and agreements
to procure assets. These amounts are not recorded in the consolidated financial statements as we have not yet received the goods or
services from the supplier.
Capital commitments
2022
£m
2021
£m
Contracted for but not provided – acquisition of property, plant and equipment
78.0
26.0
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
195
27. Commitments continued
Rail operating charges – Group as lessee
The Group’s train operating companies hold agreements with various different local entities for access to the railway infrastructure
(track, stations and depots). These are now classified as rail operating charges, as they do not result in an IFRS 16 right of use asset. The
agreements typically run for a period until the end of the relevant franchise.
Future minimum rentals payable under non-cancellable rail operating arrangements as at 2 July 2022 and 3 July 2021 were as follows:
As at 2 July 2022
Rail rolling
stock
£m
Rail access
charges
£m
Rail and other
£m
Total
£m
Within one year
172.6
365.4
61.5
599.5
In the second to fifth years inclusive
430.2
964.4
120.1
1,514.7
Over five years
283.7
841.0
9.8
1,134.5
886.5
2,170.8
191.4
3,248.7
As at 3 July 2021
Rail rolling
stock
£m
Rail access
charges
£m
Rail and other
£m
Total
£m
Within one year
159.4
324.6
105.2
589.2
In the second to fifth years inclusive
194.1
390.8
17.6
602.5
Over five years
295.2
641.5
6.5
943.2
648.7
1,356.9
129.3
2,134.9
Rail operating charges – Group as lessor
The Group’s rail operating companies sub-lease access to stations and depots to other commercial organisations.
Future minimum rentals receivable under non-cancellable rail operating arrangements as at 2 July 2022 and 3 July 2021 were as
follows:
2022
2021
Land and
buildings
£m
Other rail
agreements
£m
Land and
buildings
£m
Other rail
agreements
£m
Within one year
—
3.2
0.2
0.7
In the second to fifth years inclusive
—
4.5
0.4
—
Over five years
—
—
—
—
—
7.7
0.6
0.7
28. Contingencies
Performance bonds and other guarantees
The Group has provided bank guaranteed performance bonds of £45.1m (2021: £37.5m), a loan guarantee bond of £36.3m (2021:
£36.3m) and season ticket bonds of £nil (2021: £66.5m) to the DfT in support of the Group’s UK Rail franchise operations. In addition,
the Group, together with Keolis, has a joint parental company commitment to provide funds of £136.4m (2021: £136.4m) to the DfT in
respect of the Govia Thameslink Railway franchise, of which the Group has a 65% share equating to £88.4m (2021: £88.4m). At the year
end £nil (2021: £nil) has been provided.
To support subsidiary companies in their normal course of business, the Group has provided parental company guarantees and
indemnified certain banks and insurance companies which have issued certain performance bonds and a letter of credit. The letter of
credit at 2 July 2022 is £55.1m (2021: £59.8m).
There is a pension bond of £1.8m (2021: £1.8m) in place in respect of the payment obligations of the Group to the local government
pension scheme for employees of Plymouth City Limited.
The Group has a bond of $4.2m SGD (2021: $4.2m SGD) to the Land Transport Authority (LTA) of Singapore in support of the Group’s
Singapore bus operations. At the year end exchange rate this equates to £2.5m (2021: £2.3m).
The Group has bonds of €33.8m (3 July 2021: €34.5m) in favour of the local rail authorities in support of the Group’s German rail
operations. At the year end exchange rate these equate to £29.1m (3 July 2021: £29.6m). The Group has provided parental company
guarantees to provide funds of €214.6m (3 July 2021: €158.2m) in respect of the Germany operations, of which €nil (3 July 2021: €nil)
has been provided for at period end. At the period end exchange rate this equates to £184.9m (3 July 2021: £135.7m).
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
196
28. Contingencies continued
Performance bonds and other guarantees continued
The Group has bonds of €10.0m (2021: €10.0m) in favour of the National Transport Authority in Ireland in support of the Group’s Irish
bus operations. At the year end exchange rate this equates to £8.6m (2021: £8.6m).
The Group has bonds of 271.3m NOK (2021: 271.3m NOK) in favour of the local rail authorities in Norway in support of the Group’s
Nordic rail operations. At the year end exchange rate this equates to £22.5m (2021: £22.8m). The Group has provided a parental
company guarantee to provide funds of 300.0m NOK (2021: 300.0m NOK) in respect of the Norway operations, of which €nil (2021:
€nil) has been provided for at year end. At the year end exchange rate this equates to £24.9m (2021: £25.2m).
Contingent liabilities
Boundary Zone Fare proceedings against London & South Eastern Railway Limited (LSER), The Go-Ahead Group Limited,
Govia Limited and Keolis (UK) Limited
On 27 February 2019 a Collective Proceedings Application (CPA) was filed at the Competition Appeal Tribunal (CAT) under Section
47B of the Competition Act 1998 against one of the Group’s subsidiary companies, LSER. The Go-Ahead Group Limited, Govia Limited
and Keolis (UK) Limited have since also been added as defendants to the claim (together with LSER, the Defendants). The claim alleges
that LSER failed to make Boundary Zone Fares sufficiently available to those rail passengers who held TfL travelcards across its
multiple sales channels and failed to ensure that customers were aware of these. Equivalent applications were made against South
West Trains and South Western Railway.
The CAT heard the Application for a Collective Proceedings Order (CPO) between 9 and 12 March 2021. This hearing was an initial
stage in proceedings to decide whether this is a claim that meets the legislative criteria for this type of claim to proceed to a full trial.
On 19 October 2021, notice of the CPO judgement was received and the claim was certified, meaning it can proceed to trial as a
collective proceeding (the Decision). LSER appealed the Decision to the Court of Appeal and the appeal was heard in June 2022.
Judgment was handed down on 28 July 2022, refusing the appeal, and the claim will now proceed to a substantive trial. A hearing is to
be held on 22 March 2023 to determine next steps in the claim, including the timetable for the filing of LSER’s defence, whether the
Department for Transport (DfT) should be granted permission to intervene in the claim, and whether the claim should be jointly case
managed with a similar claim against Govia Thameslink Railway Limited (GTR) (see below).
The proceedings remain at an early stage. Certification of the claim to proceed is an initial procedural step and does not entail any
judgement on the merits of the claim or on the defendants’ potential liability. The claim is disputed in respect of its technical merits
and the basis of the claim appears to be an initial estimate with assumptions that cannot initially be substantiated. At this early stage
of the proceedings, prior to consideration of the substantive merits of the claim and the filing of full pleadings and evidence, it is not
yet possible to assess the likely outcome of the case, or to quantify any potential liability of the Defendants. No provision associated
with the claim (other than for legal costs of £2.5m) has accordingly been made.
There is no legal precedent both in respect of this type of claim or how it would be valued if found to be a valid claim. Accordingly, the
Group cannot make a reliable estimate of any contingent liability in respect of this matter at the time of publishing the Annual Report
and Accounts.
Pricing practices proceedings against Govia Thameslink Railway Limited (GTR), The Go-Ahead Group Limited and Keolis
(UK) Limited
On 10 June 2021 a CPA was filed at the CAT under Section 47B of the Competition Act 1998, against one of the Group’s subsidiary
companies, GTR, as well as The Go-Ahead Group Limited and Keolis (UK) Limited (together, the Defendants). The collective
proceedings combine claims against the Defendants caused by alleged infringements of the Chapter II prohibition on abuse of
dominance in Section 18 of the Competition Act 1998 in respect of alleged loss suffered by rail passengers travelling on the London-
Brighton mainline as a result of pricing and other practices of GTR.
The CAT heard the application for a CPO in July 2022. As with the CPO hearing involving LSER in respect of Boundary Zone Fares (see
above), this hearing was an initial stage in proceedings to decide whether the claim meets the legislative criteria to proceed to a full
trial. Judgment was handed down on 25 July 2022, certifying the claim to proceed to trial as a collective proceeding. The DfT has been
granted permission to intervene in the proceedings. The CAT has ordered a first stage trial of liability issues starting in November
2023 for four weeks. This trial will determine whether GTR has abused a dominant position in a relevant market(s) but will not
determine the amount of damages due if GTR is found to be liable. Issues of quantum of loss will be determined at a second stage trial,
a date for which has yet to be determined.
The claim is disputed in respect of its technical merits and the basis of the claim appears to be an initial estimate with assumptions
that cannot be substantiated by GTR at this stage. It is therefore not yet possible to assess with any certainty the likely outcome of
this case, or to quantify any potential liability of the Defendants. No provision associated with the claim (other than for legal costs of
£4.8m) has accordingly been made.
There is no legal precedent both in respect of this type of claim or how it would be valued if found to be a valid claim. Finally,
determining how such a claim would be allocated amongst the various parties, and other stakeholders including the Department for
Transport (DfT), is highly uncertain.
Accordingly, the Group cannot make a reliable estimate of any contingent liability in respect of this matter at the time of publishing
the Annual Report and Accounts.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
197
28. Contingencies continued
Contingent liabilities continued
Boundary Zone Fare proceedings against Govia Thameslink Railway Limited (GTR), The Go-Ahead Group Limited, Govia
Limited and Keolis (UK) Limited
On 24 November 2021 a CPA was filed at the CAT under Section 47B of the Competition Act 1998, against one of the Group’s
subsidiary companies, GTR, as well as Govia Limited, The Go-Ahead Group Limited and Keolis (UK) Limited (together, the Defendants).
The claim alleges, similarly to the allegations made against LSER in relation to Boundary Zone Fares, that GTR failed to make Boundary
Zone Fares sufficiently available to those rail passengers who held TfL travelcards across its multiple sales channels and failed to
ensure that customers were aware of these.
On 15 December 2021 the CAT stayed proceedings pending the determination of any appeals in the Boundary Zone Fare proceedings
against LSER. The stay has now expired, and the claim will proceed to a determination on certification to decide whether this is a claim
that meets the legislative criteria for this type of claim to proceed to a full trial. This means that proceedings are at an earlier stage
than both the collective proceedings against LSER in relation to Boundary Zone Fares, and the proceedings against GTR in respect of
pricing practices on the London-Brighton mainline (see above). The Defendants do not oppose certification of this claim given the
outcome of the appeal of the Boundary Zone Fare proceedings against LSER. A hearing is to be held on 22 March 2023 to determine
certification and next steps in the claim, including whether the DfT should be granted permission to intervene in the claim and
whether the claim should be jointly case managed with the Boundary Zone Fare proceedings against LSER (see above). The claim is
disputed in respect of its technical merits and the basis of the claim appears to be an initial estimate with assumptions that cannot
initially be substantiated. It is not yet possible to assess with any certainty the likely outcome of this case, or to quantify any potential
liability of the Defendants.
There is no legal precedent both in respect of this type of claim or how it would be valued if found to be a valid claim. Finally, determining
how such a claim would be allocated amongst the various parties, and other stakeholders including the Department for Transport (DfT), is
highly uncertain. No provision associated with the claim (other than for legal costs of £2.1m) has accordingly been made.
Accordingly, the Group cannot make a reliable estimate of any contingent liability in respect of this matter at the time of publishing
the Annual Report and Accounts.
29. Retirement benefit schemes
The Group operates a defined contribution pension scheme and a Workplace Savings Scheme for our employees and administers a
defined benefit pension scheme which is closed to new entrants and future accruals. The UK train operating companies participate in
the Railways Pension Scheme (RPS), a defined benefit scheme which covers the whole of the UK rail industry. This is partitioned into
sections and the Group is responsible for the funding of these schemes whilst it operates the relevant franchise. For accounting
policies see ‘Retirement benefits’ in note 2.
Retirement benefit obligations consist of the following:
2022
2021
Bus
£m
Rail
£m
Total
£m
Bus
£m
Rail
£m
Total
£m
Pre-tax pension scheme asset
80.2
—
80.2
36.0
—
36.0
Deferred tax liability
(20.1)
—
(20.1)
(9.0)
—
(9.0)
Post-tax pension scheme asset
60.1
—
60.1
27.0
—
27.0
The net surplus before taxation on the bus defined benefit schemes was £80.2m (2021: £36.0m), consisting of estimated assets of
£755.9m (2021: £906.0m) less liabilities of £675.7m (2021: £870.0m). The year end position of each bus scheme has been disclosed as a
gross value in the balance sheet which equates to both a surplus and a deficit.
The net deficit before taxation on the rail schemes was £nil (2021: £nil). The nature of these schemes means at the end of the franchise,
any deficit or surplus in the scheme passes to the subsequent franchisee with no compensating payments from or to the outgoing
franchise holder. The Group’s obligations are therefore limited to its contributions payable to the schemes during the period over
which it operates under the franchise.
2022
2021
Bus
£m
Rail
£m
Total
£m
Bus
£m
Rail
£m
Total
£m
Remeasurement gains/(losses) due to:
– Experience on benefit obligations
(10.0)
(117.7)
(127.7)
3.7
(43.2)
(39.5)
– Changes in demographic assumptions
9.4
—
9.4
1.3
92.9
94.2
– Changes in financial assumptions
179.3
488.8
668.1
(8.1)
(129.1)
(137.2)
– Return on assets greater than discount rate
(140.8)
37.8
(103.0)
(20.1)
230.4
210.3
Franchise adjustment movement
—
(408.9)
(408.9)
—
(151.0)
(151.0)
Remeasurement losses on defined benefit
pension plans
37.9
—
37.9
(23.2)
—
(23.2)
Group financial statements
Notes to the consolidated financial statements continued
29. Retirement benefit schemes continued
Bus schemes
The Go-Ahead Group Pension Plan
For the majority of bus employees, the Group operates one main pension scheme, The Go-Ahead Group Pension Plan (the Go-Ahead
Plan), which consists of funded defined benefit sections and defined contribution sections as follows.
The defined contribution sections of the Go-Ahead Plan are not contracted out of the State Second Pension Scheme. The Money
Purchase Section is now closed to new entrants, except by invitation from the Company, and has been replaced by the Workplace
Savings Section, which is also a defined contribution plan. The expense recognised for the Money Purchase Section of the Go-Ahead
Plan is £9.5m (2021: £9.5m), being the contributions paid and payable. The expense recognised for the Workplace Savings Scheme is
£8.8m (2021: £8.2m), being the contributions paid and payable.
The defined benefit sections of the Go-Ahead Plan are contracted out of the State Second Pension Scheme and provide benefits based
on a member’s final pensionable salary. The assets of the defined benefit sections are held in a separate trustee-administered fund.
Contributions to these sections are assessed in accordance with the advice of an independent qualified actuary. The defined benefit
sections of the Go-Ahead Plan have been closed to new entrants since 1 October 1994 and closed to future accrual from 31 March 2014.
The Go-Ahead Plan is a plan for related companies within the Group where risks are shared. The overall costs of the Go-Ahead Plan
have been recognised in the Group’s financial statements according to IAS 19 (Revised). Each of the participating companies account
on the basis of contributions paid by that company. The Group accounts for the difference between the aggregate IAS 19 (Revised)
cost of the scheme and the aggregate contributions paid.
The Go-Ahead Plan is governed by a Trustee Company in accordance with a Trust Deed and Rules. It is also subject to regulation from
the Pensions Regulator and relevant UK legislation. This regulatory framework requires the Trustees of the Go-Ahead Plan and the
Group to agree upon the assumptions underlying the funding target, and the necessary contributions as part of each triennial
valuation. The last actuarial valuation of the Go-Ahead Plan had an effective date of 31 March 2021 and this has been used as the basis
for the pension results reported in this note.
The investment strategy of the Go-Ahead Plan, which aims to meet liabilities as they fall due, is to invest plan assets in a mix of
equities, other return seeking assets and liability driven investments to maximise the return on plan assets and minimise risks
associated with lower than expected returns on plan assets. Trustees are required to regularly review investment strategy. The Go-
Ahead Plan invests a portion of its portfolio in assets which seek to protect the Plan’s funding level by matching the interest rate and
inflation sensitivities of the Plan’s liabilities. These Liability Driven Investments (LDI) utilise leverage (or gearing) to increase the level
of funding protection which they provide for a given capital allocation. In September and October 2022, there was a substantial and
sharp increase in the yield on UK government bonds which caused the value of the Plan’s liabilities and LDI assets to fall quickly and
considerably. As a result of this, most UK pension schemes, including the Plan, were required to give additional capital to the manager
of their LDI portfolio in order to seek to maintain this protection. The Fiduciary Manager managed this process on behalf of the
Trustee, selling down liquid assets elsewhere in the Plan’s portfolio and moving capital to the LDI portfolio. The Plan was able to
maintain a high level of protection throughout the period and beyond.
Other pension plans
Some employees of Plymouth Citybus Limited are members of a Devon County Council defined benefit scheme. This scheme is
externally funded and no further entrants can join. Contributions to the scheme are assessed in accordance with the advice of an
independent qualified actuary.
Some employees of East Yorkshire Motor Services Limited are members of the EYMS Group pension defined benefit scheme. The
scheme was closed to future accrual with effect from 6 January 2011 having previously been closed to new entrants with effect from 6
April 2001. Contributions to the scheme are based on advice from an independent qualified actuary. Existing contributions are based
on the 5 April 2020 valuation.
The actuarial assumptions disclosed are in respect of the Go-Ahead Plan and EYMS Plan only, given the respective sizes of the three
bus pension schemes.
The Germany business operates a defined contribution scheme, the expense recognised for the scheme is £0.1m (2021: £0.1m).
The Ireland business operates the Go-Ahead Transport Services Ireland Pension Plan which is a defined contribution scheme. The
expense recognised for the scheme is £0.3m (2021: £0.3m).
The Nordic operation has a defined contribution scheme open to new entrants, the expense recognised for the scheme is £1.7m (2021:
£1.7m). Some employees are members of the Government Pension Fund (SPK) defined benefit scheme, which is now closed to new
members. The Norwegian Railway Directorate will cover the fulfilment of the regulatory obligation for these employees. The company
has no further payment obligations.
198
The Go-Ahead Group Limited Annual Report and Accounts 2022
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
199
29. Retirement benefit schemes continued
Bus schemes continued
Summary of bus schemes’ year end assumptions
2022
%
2021
%
Retail price index inflation
3.3
3.2
Consumer price index inflation
2.8
2.7
Discount rate
3.5
1.8
Rate of increase in salaries
n/a
n/a
Rate of increase of pensions in payment and deferred pension
2.8
2.7
The discount rate is based on the anticipated return of AA rated corporate bonds with a term matching the maturity of the scheme
liabilities.
The most significant non-financial assumption is the assumed rate of longevity. The table below shows the life expectancy
assumptions used in the accounting assessments based on the life expectancy of a male member of each pension scheme at age 65.
2022
Years
2021
Years
Pensioner
21
21
Non-pensioner
22
22
Sensitivity analysis
In making the valuation, the above assumptions have been used. For bus pension schemes, the following is an approximate sensitivity
analysis of the impact of the change in the key assumptions. In isolation, the following adjustments would adjust the pension deficit as
shown.
2022
Pension deficit
%
2021
Pension deficit
%
Discount rate – increase of 0.5%
(6.2)
(7.9)
Price inflation – increase of 0.5%
4.5
7.4
Rate of increase in salaries
n/a
n/a
Rate of increase of pensions in payment – increase of 0.5%
3.2
4.1
Increase in life expectancy of pensioners or non-pensioners by one year
3.4
4.2
The sensitivity analysis presented above has been calculated using approximate methods. The use of 0.5% (2021: 0.5%) and one year in
the sensitivity analysis is considered to be a reasonable illustrative approximation of possible changes, as these variations have
recently arisen.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
200
29. Retirement benefit schemes continued
Bus schemes continued
Maturity profile of bus schemes’ defined benefit obligation
The following table shows the expected future benefit payments of the bus schemes at 2 July 2022.
2022
£m
June 2023
31.2
June 2024
32.1
June 2025
33.0
June 2026
33.9
June 2027
34.9
June 2028 to June 2032
189.8
Category of assets at the year end
2022
2021
£m
%
£m
%
Equities
66.3
8.8
84.6
9.3
Bonds
75.7
10.0
85.0
9.4
Property
67.5
8.9
62.1
6.9
Liability driven investment portfolio
221.5
29.3
417.5
46.1
Cash/other
324.9
43.0
256.8
28.3
755.9
100.0
906.0
100.0
Most of the asset categories are held within pooled funds and are classed as quoted in an active market where the underlying assets
are exchanged or traded or can be valued with a reasonable degree of certainty based on market data. Any liquidity funds have been
classed as unquoted in active markets. Asset categories requiring judgement, mainly relating to property portfolios, are subject to
uncertainty.
The plan invests a significant portion of its assets in a “liability driven investment” (LDI) portfolio which aims to match the Go-Ahead
Plan’s liabilities. This is expected to reduce the volatility of the Go-Ahead Plan’s funding level due to changes in interest rates and
inflation. The plan also has a “Journey Plan” in place, which means that over time as opportunities arise, the level of risk within the
investment strategy is expected to reduce, with a larger portion of the plan’s assets transitioned to matching assets. The plan
measures the LDI portfolio at fair value at each reporting date using the following fair value hierarchy:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly
or indirectly
• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable
market data
At 2 July 2022, the LDI portfolio was valued, using a level 1 valuation, as follows:
• At the closing bid price or, if single priced, at the closing single price
• At the latest available net asset value (NAV)
Funding position of the Group’s pension arrangements
2022
£m
2021
£m
Employer’s share of pension scheme:
Liabilities at the end of the year
(675.7)
(870.0)
Assets at fair value
755.9
906.0
Pension scheme asset
80.2
36.0
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
201
29. Retirement benefit schemes continued
Bus schemes continued
Pension cost for the financial year
2022
£m
2021
£m
Administration costs
3.0
2.2
Past service cost
—
1.0
Settlement charge
—
—
Interest income on net liabilities
(0.7)
(0.9)
Total pension costs
2.3
2.3
On 20 November 2020, the High Court ruled that individual transfer payments made since 17 May 1990 would need to be equalised for
the effect of Guaranteed Minimum Pensions (GMP) between men and women. This judgement followed on from the previous
judgement on 26 October 2018, where the High Court ruled that schemes had a legal obligation to pay benefits allowed for GMP
equalisation. The previous judgement had not considered historical transfer values. The judgement has implications for many defined
benefit schemes, including those in which the Group participates.
As a result of this change, a pre-tax, non-cash, non-exceptional past service cost of £1.0m was recognised in the income statement in
the prior year. Nothing was recognised in current year in respect of this.
Analysis of the change in the pension scheme liabilities over the financial year
2022
£m
2021
£m
Pension scheme liabilities – at start of year
870.0
881.4
Interest cost
15.4
12.9
Past service cost
—
1.0
Remeasurement (gains)/losses due to:
– Experience on benefit obligations
10.0
(3.7)
– Changes in demographic assumptions
(9.4)
(1.3)
– Changes in financial assumptions
(179.3)
8.1
Benefits paid
(31.0)
(28.4)
Pension scheme liabilities – at end of year
675.7
870.0
Analysis of the change in the pension scheme assets over the financial year
2022
£m
2021
£m
Fair value of assets – at start of year
906.0
934.4
Interest income of plan assets
16.1
13.8
Remeasurement gains due to return on assets greater than discount rate
(140.8)
(20.1)
Actuarial loss on assets
—
—
Administration costs
(3.0)
(2.2)
Group contributions
8.6
8.5
Benefits paid
(31.0)
(28.4)
Fair value of plan assets – at end of year
755.9
906.0
Estimated contributions for future
£m
Estimated Group contributions in financial year 2023
7.3
Estimated employee contributions in financial year 2023
—
Estimated total contributions in financial year 2023
7.3
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
202
29. Retirement benefit schemes continued
Rail schemes
The Railways Pension Scheme (RPS)
The majority of employees in our train operating companies are members of sections of the Railways Pension Scheme (RPS), an
industry-wide defined benefit scheme. The Group is obligated to fund the relevant section of the scheme over the period for which the
franchise is held.
The RPS is governed by the Railways Pension Trustee Company Limited and is subject to regulation from the Pensions Regulator and
relevant UK legislation.
All the costs, and any deficit or surplus, are shared 60% by the employer and 40% by the members. The RPS sections are all open to
new entrants and the assets and liabilities of each company’s section are separately identifiable and segregated for funding purposes.
In addition, at the end of the franchise, any deficit or surplus in the scheme passes to the subsequent franchisee with no compensating
payments from or to the outgoing franchise holder. The Group’s obligations are therefore limited to its contributions payable to the
schemes during the period over which it operates the franchise.
Changes in financial assumptions include the effect of changes in the salary cap agreed to offset additional National Insurance costs
as a result of the schemes no longer “opting out”.
The accounting policy for the Railways Pension Scheme (RPS) is detailed in note 2 and the accounting judgements are covered in the
“critical accounting judgements and key sources of estimation uncertainty” section in the Group financial statements.
British Railways Additional Superannuation Scheme (BRASS) matching AVC Group contributions of £0.2m (2021: £0.3m) were paid in
the year.
Summary of year end assumptions
2022
%
2021
%
Retail price index inflation
3.1
3.1
Consumer price index inflation
2.7
2.7
Discount rate
1.9
1.9
Rate of increase in salaries
3.4
3.4
Rate of increase of pensions in payment and deferred pension
2.7
2.7
The discount rate is based on the anticipated return of AA rated corporate bonds with a term matching the maturity of the scheme
liabilities.
The most significant non-financial assumption is the assumed rate of longevity. The table below shows the life expectancy
assumptions used in the accounting assessments based on the life expectancy of a male member of each pension scheme at age 65.
2022
Years
2021
Years
Pensioner
21
21
Non-pensioner
22
22
The mortality assumptions adopted as at 2 July 2022 and as at 3 July 2021 are based on the initial results of the funding valuation as at
31 December 2019, which has not yet been finalised.
Sensitivity analysis
Due to the nature of the franchise adjustment, the balance sheet position in respect of the RPS is not sensitive to small movements in
any of the assumptions and therefore we have not included any quantitative sensitivity analysis.
Category of assets at the year end
2022
2021
£m
%
£m
%
Equities
1,567.3
99.9
2,557.1
99.3
Property
—
—
8.9
0.3
Cash
1.6
0.1
10.3
0.4
1,568.9
100.0
2,576.3
100.0
All of the asset categories above are held within pooled funds and therefore unquoted in active markets.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
203
29. Retirement benefit schemes continued
Rail schemes continued
Funding position of the Group’s pension arrangements
2022
£m
2021
£m
Employer’s 60% share of pension scheme:
Liabilities at the end of the year
(1,887.5)
(3,602.2)
Assets at fair value
1,568.9
2,576.3
Gross deficit
(318.6)
(1,025.9)
Franchise adjustment
318.6
1,025.9
Pension scheme liability
—
—
Pension cost for the financial year
2022
£m
2021
£m
Service cost
105.1
135.6
Administration costs
3.4
6.7
Franchise adjustment to current period costs
(78.9)
(103.3)
Interest cost on net liabilities
14.9
17.2
Interest on franchise adjustments
(14.9)
(17.2)
Pension cost
29.6
39.0
Analysis of the change in the employer’s 60% share of pension scheme liabilities over the financial year
2022
£m
2021
£m
Pension scheme liabilities less members’ share (40%) of the deficit – at start of year
3,602.2
3,231.0
Franchise adjustment (100%)
(1,025.9)
(1,056.3)
2,576.3
2,174.7
Liability movement for members’ share of assets (40%)
55.9
187.9
Service cost (60%)
104.9
135.5
Interest cost (60%)
35.2
37.3
Interest on franchise adjustment (100%)
(14.9)
(17.2)
Franchise adjustment to current period costs (100%)
(78.9)
(103.3)
Remeasurement losses/(gains) due to:
– Experience on benefit obligations (60%)
117.8
43.2
– Changes in demographic assumptions (60%)
—
(92.9)
– Changes in financial assumptions (60%)
(488.8)
129.1
Benefits paid (100%)
(55.5)
(69.0)
Franchise adjustment movement (100%)
408.9
151.0
Divestitures
(1,092.0)
—
1,568.9
2,576.3
Franchise adjustment (100%)
318.6
1,025.9
Pension scheme liabilities less members’ share (40%) of the deficit – at end of year
1,887.5
3,602.2
Analysis of the change in the pension scheme assets over the financial year
2022
£m
2021
£m
Fair value of assets – at start of year (100%)
2,576.3
2,174.7
Interest income of plan assets (60%)
20.2
20.2
Remeasurement gains due to return on assets greater than discount rate (60%)
37.8
230.3
Administration costs (100%)
(5.8)
(11.1)
Group contributions (100%)
29.4
38.7
Benefits paid (100%)
(55.5)
(69.0)
Members’ share of movement of assets (40%)
58.5
192.5
Divestitures
(1,092.0)
—
Fair value of plan assets – at end of year (100%)
1,568.9
2,576.3
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
204
29. Retirement benefit schemes continued
Rail schemes continued
Estimated contributions for future
£m
Estimated Group contributions in financial year 2023
25.8
Estimated employee contributions in financial year 2023
17.2
Estimated total contributions in financial year 2023
43.0
Franchise adjustment
The effect of removing the franchise adjustment on the financial statements is provided below:
2022
£m
2021
£m
Balance sheet
Defined benefit pension plan
(318.6)
(1,025.9)
Deferred tax asset
79.6
194.9
(239.0)
(831.0)
Other comprehensive income
Remeasurement losses
(408.9)
(151.0)
Tax on remeasurement losses
102.2
28.7
(306.7)
(122.3)
Income statement
Franchise adjustment to current period costs
(78.9)
(103.3)
Interest on franchise adjustments
(14.9)
(17.2)
Deferred tax charge
23.5
22.9
(70.3)
(97.6)
Risks associated with defined benefit plans
UK Rail schemes
Despite remaining open to new entrants and future accrual, the risks posed by the RPS are limited as, under the franchise
arrangements, the train operating companies are not responsible for any residual deficit at the end of a franchise. As such, there is
limited short term cashflow risk within this business and, if agreed, it would also be proportionately borne by the employees as well as
the Group.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
205
29. Retirement benefit schemes continued
Risks associated with defined benefit plans continued
Bus schemes
The number of employees in defined benefit plans is reducing, as these plans are closed to new entrants, and, in the case of the Go-
Ahead Plan and the EYMS Plan, closed to future accrual.
The key risks relating to the defined benefit pension arrangements and the steps taken by the Group to mitigate them are as follows:
Risk
Description
Mitigation
Asset volatility
The liabilities are calculated using a discount rate set
with reference to bond yields with maturity profiles
matching pension maturity; if assets underperform this
yield, this may lead to a deficit. Most of the defined
benefit arrangements hold a proportion of return seeking
assets (equities, diversified growth funds and global
absolute return funds) and, to offset the additional risk,
hold a proportion in liability driven investments, which
should reduce volatility relative to the liabilities.
Asset liability modelling has been undertaken recently
in all significant plans to ensure that unrewarded risks
are hedged where appropriate and that we have a
balance of risk seeking and liability driven investments.
Inflation risk
A significant proportion of the UK benefit obligations are
linked to inflation, and higher expected inflation will lead
to higher liabilities.
The business has some inflation linking in its revenue
streams, which helps to offset this risk. During the 2018
financial year, the key inflation measure for the Group
final salary scheme was changed from RPI to CPI when
looking at future pension increases, which has helped to
lower the magnitude of the inflation risk.
Life expectancy
The majority of the scheme’s obligations are to provide
benefits for the life of the member, so increases in life
expectancy will result in an increase in the liabilities.
The Group final salary scheme has recently carried out a
pensioner buy-in for a small subset of the pensioner
population. This has mitigated the longevity risk for the
members included in the buy-in. The assumptions used
to fund the scheme are regularly reviewed and updated
to reflect changes in expected life expectancy.
Legislative risk
Future legislative changes are uncertain. In the past these
have led to increases in obligations, introducing pension
increases, and vesting of deferred pensions, or reduced
investment return through the ability to reclaim advance
corporation tax.
The Group takes professional advice to keep abreast of
legislative changes.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
206
30. Related party disclosures and Group undertakings
The subsidiaries, joint arrangements and investments listed below each contribute to the profits, assets and cashflow of the Group.
The Group has a number of related parties including joint ventures, pension schemes and directors. For accounting policies see
‘Interests in joint arrangements’ in note 2.
The consolidated financial statements include the financial statements of The Go-Ahead Group Limited and the following Group undertakings:
Country of incorporation
and principal place of business
% equity interest
Name
2022
2021
Trading subsidiaries
Go-Ahead Holding Limited
United Kingdom 1
100
100
Go North East Limited
United Kingdom
100
100
London General Transport Services Limited
United Kingdom
100
100
Go-Ahead London Rail Replacement Services Limited
United Kingdom
100
100
Brighton & Hove Bus and Coach Company Limited
United Kingdom
100
100
The City of Oxford Motor Services Limited
United Kingdom
100
100
Go South Coast Limited
United Kingdom
100
100
Plymouth Citybus Limited
United Kingdom
100
100
Konectbus Limited
United Kingdom
100
100
Thames Travel (Wallingford) Limited
United Kingdom
100
100
Carousel Buses Limited
United Kingdom
100
100
New Southern Railway Limited
United Kingdom2
65
65
London & South Eastern Railway Limited
United Kingdom 2
65
65
London & Birmingham Railway Limited
United Kingdom 2
65
65
Southern Railway Limited
United Kingdom 2
65
65
Govia Thameslink Railway Limited
United Kingdom 2
65
65
Govia Limited
United Kingdom 2
65
65
Go-Ahead Scotland Limited
United Kingdom
100
100
Tom Tappin, Limited
United Kingdom
100
100
EYMS Group Limited
United Kingdom
100
100
East Yorkshire Motor Services Limited
United Kingdom
100
100
NetCourt Properties Limited
United Kingdom
100
100
Go-Ahead Verkehrsgesellschaft Deutschland GmbH
Germany
100
100
Go-Ahead Baden-Württemberg GmbH
Germany
100
100
Go-Ahead Facility GmbH
Germany
100
100
Go-Ahead Bayern GmbH
Germany
100
100
Go-Ahead Singapore PTE Ltd
Singapore
100
100
Go-Ahead Sverige AB
Sweden
100
100
Flexbuss Sverige AB
Sweden
100
100
Kanten Fastigheter och Förvaltning AB
Sweden
100
100
Go-Ahead Norge AS
Norway
100
100
Go-Ahead Transport Services (Dublin) Limited
Ireland
100
100
Go North West Limited
United Kingdom
100
100
GA Retail Services Limited
United Kingdom
100
100
Go-Ahead Australia Pty. Limited
Australia
100
100
Jointly controlled entities
On Track Retail Limited
United Kingdom 3
50
50
Investments
Mobileeee GmbH
Germany4
7
7
1. Held by The Go-Ahead Group Limited (formerly The Go-Ahead Group plc) which is 100% owned by Gerrard Investment Bidco Limited, a newly formed company indirectly
owned by Kinetic TCo Pty Ltd (Kinetic) and Globalvia Inversiones S.A.U. (Globalvia) . All other companies are held through subsidiary undertakings.
2. The rail companies are 65% owned by The Go-Ahead Group Limited and 35% owned by Keolis (UK) Limited and held through Govia Limited.
3. On Track Retail Limited is a joint venture with Assertis Limited.
4. Mobileeee GmbH is an investment of Go-Ahead Verkehrsgesellschaft Deutschland GmbH.
The above trading subsidiaries have one class of ordinary shares which carry no right to fixed income, with the exception of On Track
Retail Limited, which also has redeemable preference shares.
The registered office of all trading subsidiaries incorporated in the United Kingdom is 3rd Floor, 41–51 Grey Street, Newcastle upon Tyne NE1 6EE, UK.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
207
30. Related party disclosures and Group undertakings continued
The registered offices of trading subsidiaries incorporated outside of the United Kingdom are as follows:
Subsidiary
Registered office
Go-Ahead Verkehrsgesellschaft Deutschland GmbH
Zehdenicker Straße 1, D-10119, Berlin, Germany
Go-Ahead Baden-Württemberg GmbH
Büchsenstraße 20, D-70174, Stuttgart, Germany
Go-Ahead Facility GmbH
Bahnhof 2, D-73457, Essingen, Germany
Go-Ahead Bayern GmbH
Logwidstr 1, D-86150, Augsburg, Germany
Go-Ahead Sverige AB
Hamngatan 4, 211 22 Malmö, Sweden
Go-Ahead Norge AS
Jernbanetorget 1, 0154 Oslo, Norway
Flexbuss Sverige AB
Prästgårdsgränd 4, 382 33 Nybro, Sweden
Kanten Fastigheter och Förvaltning AB
Prästgårdsgränd 4, 382 33 Nybro, Sweden
Go Ahead Singapore PTE Ltd
2 Loyang Way, Singapore 508776
Go-Ahead Dublin Services (Transport) Limited
Ballymount Road Lower, Dublin 12, D12 X201, Ireland
Go-Ahead Australia Pty. Limited
DW Accounting & Advisory Pty Ltd, Level 4, 91-97 William
Street, Melbourne, Vic 3000, Australia
% equity interest
Name
Company number
Country of incorporation
2022
2021
Dormant subsidiaries
Go-Ahead Events Services Limited (previously East Midlands
Railway Limited)
7164882
United Kingdom
100
100
Go Wear Buses Limited
2019645
United Kingdom
100
100
Go-Reading Limited
3158846
United Kingdom
100
100
The Go-Ahead Group Trustee Company limited
2125799
United Kingdom
100
100
Go-Ahead Property Development Limited
7128594
United Kingdom
100
100
GHI Limited
4262016
United Kingdom
100
100
Southern Vectis Limited
2005917
United Kingdom
100
100
Birmingham Passenger Transport Services Limited
2901263
United Kingdom
100
100
Go Coastline Limited
2018469
United Kingdom
100
100
Go London Limited
2849983
United Kingdom
100
100
Go West Midlands Limited
2490584
United Kingdom
100
100
Levers Coaches Limited
2524573
United Kingdom
100
100
MetroCity (Newcastle) Limited
4153866
United Kingdom
100
100
Thames Trains Limited
3007943
United Kingdom
100
100
Victory Railway Holdings Limited
3147927
United Kingdom
100
100
Abingdon Bus Company Limited
3151270
United Kingdom
100
100
Gatwick Handling Limited
2984113
United Kingdom
100
100
GH Heathrow Ltd.
2813292
United Kingdom
100
100
GH Manchester Limited
1883900
United Kingdom
100
100
GH Stansted Limited
1983429
United Kingdom
100
100
Go-Ahead Finance Company
4699524
United Kingdom
100
100
Go-Ahead Finland Oy
2958257-7
Finland
100
100
Go-Ahead Seletar PTE Ltd
201541899Z
Singapore
100
100
Go North West (2021) Limited
13275587
United Kingdom
100
100
Hants & Dorset Motor Services Limited
2752603
United Kingdom
100
100
Hants & Dorset Trim Limited
2017829
United Kingdom
100
100
Solent Blue Line Limited
2103030
United Kingdom
100
100
Marchwood Motorways (Southampton) Limited
1622531
United Kingdom
100
100
The Southern Vectis Omnibus Company Limited
0241973
United Kingdom
100
100
Tourist Coaches Limited
3006529
United Kingdom
100
100
Wilts & Dorset Bus Company Limited
1671355
United Kingdom
100
100
Wilts & Dorset Investments Limited
4613075
United Kingdom
100
100
Wilts & Dorset Holdings Limited
2091878
United Kingdom
100
100
Dockland Buses Limited
3420004
United Kingdom
100
100
Blue Triangle Buses Limited
3770568
United Kingdom
100
100
Go-Ahead Leasing Limited
5262810
United Kingdom
100
100
Go Northern Limited
0132492
United Kingdom
100
100
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
208
30. Related party disclosures and Group undertakings continued
% equity interest
Name
Company number
Country of incorporation
2022
2021
Metrobus Limited
1742404
United Kingdom
100
100
London Central Bus Company Limited
2328565
United Kingdom
100
100
Hants & Dorset Transport Support Services Limited
8669065
United Kingdom
100
100
Thamesdown Transport Limited
1997617
United Kingdom
100
100
Excelsior Coaches Limited
4329621
United Kingdom
100
100
Excelsior Transport Limited
4329645
United Kingdom
100
100
Excelsior Travel Limited
4342549
United Kingdom
100
100
East Yorkshire Concert Tours Limited
2142740
United Kingdom
100
100
East Yorkshire Coach Holidays Limited
0243051
United Kingdom
100
100
Bus UK Limited
2232813
United Kingdom
100
100
Buscall Limited
3887602
United Kingdom
100
100
Connor and Graham Limited
0546796
United Kingdom
100
100
East Yorkshire Buses Limited
0254844
United Kingdom
100
100
East Yorkshire Coaches Limited
0331077
United Kingdom
100
100
East Yorkshire Properties Limited
2256485
United Kingdom
100
100
East Yorkshire Tours Limited
0172326
United Kingdom
100
100
East Yorkshire Travel Limited
3225828
United Kingdom
100
100
East Yorkshire Holiday Tours Limited
2140988
United Kingdom
100
100
Frodingham Coaches Limited
2135501
United Kingdom
100
100
Hull and District Motor Services Limited
2183936
United Kingdom
100
100
Hull Park and Ride Limited
3886603
United Kingdom
100
100
Kingstonian Travel Services Limited
3561955
United Kingdom
100
100
EYMS Bus & Coach Training Limited
2123369
United Kingdom
100
100
Scarborough and District Motor Services Limited
2133854
United Kingdom
100
100
Hedingham & District Omnibuses Ltd.
0863658
United Kingdom
100
100
Anglian Bus Limited
1260689
United Kingdom
100
100
H.C.Chambers & Son Limited
0327497
United Kingdom
100
100
Aviance UK Limited
1036291
United Kingdom
100
100
% equity interest
Name
Company number
Country of incorporation
2022
2021
Jointly controlled dormant entities
South Tyneside Smartzone Limited
09907829
United Kingdom
50
50
Newcastle Smartzone Limited
09907839
United Kingdom
33
33
North Tyneside Smartzone Limited
09907842
United Kingdom
33
33
Thameslink Rail Limited
3013232
United Kingdom*
65
65
London & South East Passenger Rail Services Limited
6537238
United Kingdom*
65
65
U-Go Mobility PTY Ltd
644573526
Australia
50
50
Sunderland Smartzone Limited
09907836
United Kingdom
33
33
* The rail companies are 65% owned by The Go-Ahead Group Limited and 35% owned by Keolis (UK) Limited and held through Govia Limited.
The above dormant entities have one class of ordinary shares which carry no right to fixed income.
The registered office of all UK dormant subsidiaries incorporated in the United Kingdom is 3rd Floor, 41–51 Grey Street, Newcastle
upon Tyne, NE1 6EE, UK. The registered office for Go-Ahead Finland Oy is Bulevardi 1A, 00100 Helsinki, Finland and the registered office
for Go-Ahead Seletar PTE Ltd is 2 Loyang Way, Singapore 508776.
The registered office of all jointly controlled dormant entities is Kepier House, Belmont Business Park, Durham, DH1 1TH.
All dormant companies listed above, incorporated in the United Kingdom, have taken advantage of the UK Companies Act 2006,
Section 480 exemption from audit.
Transactions with other related parties
The Group meets certain costs of administering the Group’s retirement benefit plans, including the provision of meeting space and
office support functions to the Trustees. Costs borne on behalf of the retirement benefit plans amounted to £0.2m (2021: £0.2m).
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
209
30. Related party disclosures and Group undertakings continued
Joint ventures
The Group’s joint venture, On Track Retail Limited (OTR), has its principal place of business in the United Kingdom. The principal
activity of OTR is the development and provision of web ticketing applications for the rail industry. The activities of the joint venture
are strategically important to the business activities of the Group. The Group owns 50% of the ordinary share capital of OTR and the
Group’s share of OTR’s result for the year is disclosed on the face of the income statement.
Investments
The Group’s subsidiary Go-Ahead Verkehrsgesellschaft Deutschland GmbH holds a 7.4% shareholding in Mobileeee
Betriebsgesellschaft mbh & Co KG, an all-electric car-sharing service based in Germany. The value of this investment in the financial
statements is £nil (2021: £nil).
Compensation of key management personnel of the Group
The key management are considered to be the directors of the parent company.
2022
£m
2021
£m
Short term employee benefits
2.7
1.4
Long term employee benefits*
—
—
Post-employment benefits
—
—
2.7
1.4
* The long term employee benefits relate to the LTIP and DSBP.
Material partly owned subsidiaries
Financial information of subsidiaries that have material non-controlling interests is provided below:
Proportion of equity interest held by non-controlling interests:
Country of incorporation
and operation
2022
2021
Govia Limited
United Kingdom
35%
35%
London & South Eastern Railway Limited*
United Kingdom
35%
35%
Southern Railway Limited*
United Kingdom
35%
35%
London & Birmingham Railway Limited*
United Kingdom
35%
35%
Govia Thameslink Railway Limited*
United Kingdom
35%
35%
Thameslink Rail Limited*
United Kingdom
35%
35%
New Southern Railway Limited*
United Kingdom
35%
35%
* Subsidiary of Govia Limited.
2021
£m
2021
£m
Accumulated balances of material non-controlling interest:
Govia Limited
35.6
22.3
Total comprehensive income allocated to material non-controlling interest:
Govia Limited
13.3
5.3
The summarised financial information of these subsidiaries is provided on the subsequent page. The information is based on amounts
before intercompany eliminations.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
210
30. Related party disclosures and Group undertakings continued
Summarised income statement of Govia Limited and its subsidiary companies for the years ended 2 July 2022 and 3 July 2021
2022
£m
2021
£m
Revenue
1,983.9
2,865.3
Operating costs
(1,949.3)
(2,798.3)
Exceptional items
11.5
(31.8)
Finance income
0.4
0.8
Finance costs
(6.0)
(9.2)
Profit before taxation*
40.5
26.8
Tax expense
(2.4)
(11.4)
Profit for the year from controlling operations*
38.1
15.4
Total comprehensive income*
38.1
15.4
Attributable to non-controlling interests*
13.3
5.3
Dividends paid to non-controlling interests
—
3.7
*post-exceptional
Summarised balance sheet of Govia Limited and its subsidiary companies as at 2 July 2022 and 3 July 2021
2022
£m
2021
£m
Current assets – inventories, trade and other receivables, and cash
492.0
847.9
Non-current assets – property, plant and equipment, intangible assets, and deferred tax
814.9
287.9
Current liabilities – trade and other payables, and provisions
(696.4)
(1,069.6)
Non-current liabilities – provisions
(508.6)
(2.3)
Total equity
101.9
63.9
Attributable to:
Equity holders of the parent
66.3
41.6
Non-controlling interest
35.6
22.3
These balance sheet amounts are shown before intercompany eliminations.
Summarised cashflow information of Govia Limited and its subsidiary companies for the years ended 2 July 2022 and 3 July 2021
2022
£m
2021
£m
Operating
(131.7)
571.6
Investing
(1.0)
(2.0)
Financing
(332.2)
(515.7)
Net (decrease)/increase decrease in cash and cash equivalents
(464.9)
53.9
The non-controlling interests have no significant restrictions on the ability of the Group to access or use assets and settle liabilities.
There are no terms or conditions relating to any related party transactions which need to be separately disclosed.
Group financial statements
Notes to the consolidated financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
211
31. Post balance sheet events
Regional Bus
On 19 August 2022, the DfT announced that the Bus Recovery Grant (BRG) will be extended for a further 6 months to the end of March
2023, with £130.0m of funding available for UK bus services. Following this, on 17 February 2023 a further extension of BRG funding to
30 June 2023 was announced, with an additional £80.0m of funding available.
On 19 December 2022, the DfT announced the introduction of a scheme to cap most single bus fares in England (outside London) to £2
from 1st January 2023 until 31st March 2023, with funding available for UK bus services of £60.0m. Following this on 17 February 2023
an extension to the scheme was announced to 30 June 2023, with £75.0m of additional funding available.
The Group has won the first two contracts to be awarded by Transport for Greater Manchester as part of its plan to re-regulate bus
services in the city region under its new Bee Network. Go-Ahead’s Go North West operating company will run 55 bus routes in both
Wigan and Bolton from 17 September 2023.
• On 14 November 2022, Go-Ahead purchased 100% of the issued share capital of Clyst St-Mary-based coach and bus operator,
Dartline Coaches, for approximately £5.0m. The acquisition saw 118 employees and 84 vehicles become part of Go South West’s
operating company and will expand the Group’s business in the region. Goodwill of approximately £1.0m was recognised as a result
of the transaction. At the acquisition date, Dartline Coaches held tangible fixed assets of approximately £3.4m, current assets of
£2.0m and liabilities of £1.5m. The accounting for this transaction is currently being finalised at the time of publication of the Annual
Report and Accounts.
• On 1 February 2023, Go-Ahead acquired 100% of the issued share capital of Southdown Buses for approximately £1.5m. Southdown
Buses is a bus company operating in East Surrey, Kent and Sussex. Southdown, which operates 25 buses and employs 43 people, will
operate as a subsidiary of Go-Ahead’s Brighton-based operating company. The company runs scheduled routes and provides rail
replacement bus services, and it will expand the Group’s business in the region. The accounting for this transaction is currently in
progress at the time of publication of the Annual Report and Accounts.
London & International Bus
On 24 August 2022, it was confirmed that the Land Transport Authority of Singapore had granted a three-year contract extension to
Go-Ahead Singapore to continue operating in the Loyang region of the island. The extension begins in September 2023 and will run
until September 2026. This follows the initial five-year contract which saw the Group’s entry into the Singapore bus market in
September 2016. This is Go-Ahead Singapore’s second contract extension, with the first being a 2-year extension awarded in August
2020, running from September 2021 to September 2023.
In December 2022, Go-Ahead won a contract to operate buses in Sydney, under a joint venture with an Australian company, UGL. This
takes the Group into a new market, and in line with the ambition set out for international expansion under the Group’s new strategy.
The buses will run under a brand the Group has created for the joint venture, called U-Go Mobility. From July 2023, the Group will
operate a network of 225 buses, to be run by more than 400 colleagues in an area stretching from Sydney’s southern beaches to the
city’s south-western suburbs. The Group will be delivering more than 500,000 passenger journeys daily.
Offer and subsequent purchase of the Go-Ahead Group (“Go-Ahead”) by Gerrard Investment Bidco Limited ("Bidco")
On 13 June 2022, the boards of directors of BidCo and Go-Ahead announced they had reached agreement on the terms of a
recommended cash offer for the Group, pursuant to which BidCo would acquire the entire issued share capital of Go-Ahead (the
“Scheme of Arrangement”). BidCo is a newly formed company indirectly owned by Kinetic TCo Pty Ltd (“Kinetic”) and Globalvia
Inversiones S.A.U. (“Globalvia”). This offer was increased on 4 August 2022, to 1,550 pence for each Go-Ahead share, comprising 1,450
pence in cash and a special dividend of 100 pence per Go-Ahead share.
On 16 August 2022, the Scheme of Arrangement was approved by the requisite majority of shareholders. The Scheme of Arrangement
was subject to certain other conditions including sanction by the Court which took place on 6 October 2022, with the Scheme of
Arrangement becoming effective on 10 October 2022 and Go-Ahead’s shares being delisted on 11 October 2022.
International Rail
Subsequent to the year-end, a dispute has arisen with the Norwegian Rail Directorate relating to specific terms for the compensation
for loss of passenger income mechanism that had been agreed under the revised agreement traffic agreement dated 28 June 2022.
Based on legal advice obtained and review of correspondence between the Company and the Rail Directorate at the time of the
signing of the revised agreement in June, the Directors are satisfied that the onerous provision has been calculated based on the terms
of the revised agreement. Whilst the Directors are confident of a successful outcome, until such time as the dispute is resolved with
the Directorate there remains a possible risk that if successfully challenged by the Directorate, this could increase the onerous
contract provision by up to £20.0m. The Directors consider that the onerous contract provision reflects their best estimate of the
terms agreed at the time.
Cyber security Incident
On 5 September 2022, a cyber security incident was announced by the Group after unauthorised activity was detected on its network.
Upon becoming aware of the incident, the Group immediately engaged external forensic specialists and took precautionary measures
with its IT infrastructure. There is no financial impact of this in the financial year ended 2 July 2022 and the financial impact in FY23 is
currently still being assessed.
Board Changes
For information on Board changes that occurred subsequent to the year ended 2 July 2022, please see pages 66 to 69 of the Board
overview section of Governance.
Company financial statements
Company balance sheet
as at 2 July 2022
Registered No. 02100855
The Go-Ahead Group Limited Annual Report and Accounts 2022
212
Notes
2022
£m
2021*
£m
Assets
Non-current assets
Intangible assets
4
1.9
2.4
Property, plant and equipment
5
0.5
0.6
Right of use assets
6
3.5
2.5
Investment property
7
200.4
190.3
Investments
8
48.4
151.9
Trade and other receivables
9
598.0
539.2
Derivative financial assets
12
14.1
3.4
Retirement benefit assets
15
99.8
62.4
966.6
952.7
Current assets
Trade and other receivables
9
125.6
226.4
Cash and cash equivalents
41.8
36.4
Assets held for sale
0.1
0.1
Derivative financial assets
12
40.0
4.9
207.5
267.8
Total assets
1,174.1
1,220.5
Liabilities
Current liabilities
Trade and other payables
10
(114.0)
(102.7)
Provisions
(0.1)
(0.1)
Interest-bearing loans and borrowings
11
(5.8)
(5.7)
Lease liabilities
6
(1.4)
(2.1)
Derivative financial liabilities
12
—
(0.6)
(121.3)
(111.2)
Non-current liabilities
Trade and other payables
10
(58.2)
(60.6)
Provisions
13
(13.8)
(13.3)
Interest-bearing loans and borrowings
11
(249.6)
(249.4)
Lease liabilities
6
(5.6)
(5.2)
Derivative financial liabilities
12
(0.1)
(0.3)
Deferred tax liabilities
14
(58.9)
(50.7)
(386.2)
(379.5)
Total liabilities
(507.5)
(490.7)
Net assets
666.6
729.8
Capital and reserves
Share capital
16
75.2
75.2
Revaluation reserve
16
53.5
56.9
Share premium reserve
16
1.6
1.6
Capital redemption reserve
16
0.7
0.7
Reserve for own shares
16
(70.9)
(71.3)
Retained earnings
606.5
666.7
Total equity
666.6
729.8
* Restated – see Note 1.
The loss for the year ended 2 July 2022 was £84.9m (2021: profit of £57.7m). The Company notes 1 to 20 are an integral part of the
Company financial statements.
The financial statements were approved and authorised for issuance by the Board of directors on 24 February 2023 and were signed on its behalf by:
Christian Schreyer
Group Chief Executive
24 February 2023
Company financial statements
Company statement of changes in equity
for the year ended 2 July 2022
The Go-Ahead Group Limited Annual Report and Accounts 2022
213
Share
capital
£m
Revaluation
reserve
£m
Share
premium
reserve
£m
Capital
redemption
reserve
£m
Reserve of
own shares
£m
Retained
earnings
£m
Total
equity
£m
At 27 June 2020*
75.2
60.3
1.6
0.7
(71.3)
621.9
688.4
Profit for the year
—
—
—
—
—
57.7
57.7
Remeasurement on defined benefit retirement
plans (net of tax)*
—
—
—
—
—
(16.6)
(16.6)
Total comprehensive income*
—
—
—
—
—
41.1
41.1
Dividend paid (note 3)
—
—
—
—
—
—
—
Movement on revaluation reserve (note 16)
—
(3.4)
—
—
—
3.4
—
Acquisition of own shares
—
—
—
—
(0.6)
—
(0.6)
Net share-based payment charge
—
—
—
—
—
0.9
0.9
Exercise of share options
—
—
—
—
0.6
(0.6)
—
At 3 July 2021*
75.2
56.9
1.6
0.7
(71.3)
666.7
729.8
Loss for the year
—
—
—
—
—
(84.9)
(84.9)
Remeasurement on defined benefit retirement
plans (net of tax)
—
—
—
—
—
22.0
22.0
Total comprehensive income
—
—
—
—
—
(62.9)
(62.9)
Dividend paid (note 3)
—
—
—
—
—
—
—
Movement on revaluation reserve (note 16)
—
(3.4)
—
—
—
3.4
—
Acquisition of own shares
—
—
—
—
(0.4)
—
(0.4)
Deferred tax on share-based payment
transactions
—
—
—
—
—
0.1
0.1
Exercise of share options
—
—
—
—
0.8
(0.8)
—
At 2 July 2022
75.2
53.5
1.6
0.7
(70.9)
606.5
666.6
* Restated – see Note 1.
Company financial statements
Directors’ responsibilities in relation
to the Company financial statements
The Go-Ahead Group Limited Annual Report and Accounts 2022
214
The directors are responsible for preparing the Annual Report and Accounts in accordance with applicable UK law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected
to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law) including FRS 101 Reduced Disclosure Framework. Under company law the directors must
not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to:
• Select suitable accounting policies and then apply them consistently
• Make judgements and accounting estimates that are reasonable and prudent
• State whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed
and explained in the financial statements
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in
business
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company, and to enable them to ensure
that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Company financial statements
Notes to the Company financial statements
The Go-Ahead Group Limited Annual Report and Accounts 2022
215
1. Company accounting policies
Authorisation of financial statements and statement of compliance with Financial Reporting Standard 101 (FRS 101)
The Company financial statements of The Go-Ahead Group Limited for the year ended 2 July 2022 were authorised for issue by the
Board of directors on 24 February 2023 and the balance sheet was signed on the Board’s behalf by Christian Schreyer. The Go-Ahead
Group Limited is a private company, limited by shares, that is incorporated, domiciled and registered in England and Wales. The
Company is the immediate and ultimate parent company of The Go-Ahead Group. The registered office is 3rd Floor, 41–51 Grey Street,
Newcastle upon Tyne, NE1 6EE, UK. The Company’s ordinary shares at the year-end were publicly traded on the London Stock
Exchange and were not under the control of any single shareholder. Subsequent to the year end the entire share capital of the group
was purchased by Gerrard Investment Bidco Limited, a newly formed company indirectly owned by Kinetic TCo Pty Ltd ("Kinetic") and
Globalvia Inversiones S.A.U. ("Globalvia").
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS
101) and in line with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs).
No income statement is presented by the Company as permitted by Section 408 of the Companies Act 2006.
Basis of preparation
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 2 July
2022. The financial year represents the 52 weeks to 2 July 2022 (prior financial year 53 weeks to 3 July 2021).
The financial statements are prepared under the historical cost convention as modified by financial instruments recognised at fair
value.
The financial statements are prepared in pounds sterling and are rounded to the nearest one hundred thousand (£0.1m).
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures
and standards not yet effective:
• The requirements of paragraphs 45(b) and 46–52 of IFRS 2 Share Based Payment
• The requirements of paragraphs 62, B64(b), B64(e), B64(g), B64(h), B64(j) to B64(m), B64(n)(ii), B64(o)(ii), B64(p), B64(q)(ii), B66 and
B67 of IFRS 3 Business Combinations
• The requirements of IFRS 7 Financial Instruments: Disclosures
• The requirements of paragraphs 91–99 of IFRS 13 Fair Value Measurement
• The requirements in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of:
-
Paragraph 79(a)(iv) of IAS 1
-
Paragraph 73(e) of IAS 16 Property, Plant and Equipment
-
Paragraph 118(e) of IAS 38 Intangible Assets
• The requirements of paragraphs 10(d), 10(f), 16, 39(c), 40A, 40B, 40C, 40D, 111 and 134–136 of IAS 1 Presentation of Financial
Statements
• The requirements of IAS 7 Statement of Cashflows
• The requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• The requirements of paragraph 17 of IAS 24 Related Party Disclosures
• The requirements of paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets
• The requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more
members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member
• The requirements of paragraphs 110 (2nd sentence), 113(a), 114, 115, 118, 119(a)-119(c), 120–127 and 129 of IFRS 15 Revenue from
Contracts with Customers
• The requirements of paragraph 52, 89 (2nd sentence), 90, 91 and 93 of IFRS 16 Leases and the requirements of paragraph 58 of IFRS
16, provided that the disclosure of details of indebtedness required by paragraph 61(1) of Schedule 1 to the Regulations is presented
separately for lease liabilities and other liabilities, and in total.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods. Although these judgements and estimates are based on management’s best
knowledge, actual results ultimately may differ from these estimates.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
216
1. Company accounting policies continued
Critical accounting judgements and key sources of estimation uncertainty continued
Key sources of estimation uncertainty
The key sources of estimation uncertainty that have a significant risk of causing material adjustments to the carrying value of assets and
liabilities within the next financial year are in relation to:
Retirement benefit scheme
The measurement of defined benefit pension schemes requires the estimation of future changes in salaries, inflation and longevity of
current and deferred members and the selection of a suitable discount rate, as set out in note 15. The Company engages with Willis
Towers Watson, a global professional services company whose specialisms include actuarial advice, to support the process of
establishing reasonable bases for all of these estimates, to ensure they are appropriate to our particular circumstances. Management
also benchmarks these assumptions on a periodic basis with other professional advisors. Sensitivity analysis on the retirement defined
benefit schemes is detailed in note 15.
Accounting policies
Revenue recognition
Revenue is recognised to the extent that it is probable that the income will flow to the Company and the value can be reliably
measured. Revenue is measured at the fair value of the consideration received or receivable and comprises intercompany management
charges and property rental. The Company recognises revenue when the entity satisfies a performance obligation by transferring the
management and property rental services to the customer.
Property, plant and equipment
Property, plant and equipment is stated at cost or deemed cost on transition to IFRSs less accumulated depreciation, any impairment in
value and residual value. Freehold land is not depreciated.
Residual values and useful economic lives are reviewed annually. Depreciation is charged on all additions to, or disposals of,
depreciating assets in the year of purchase or disposal and over their expected useful life on a straight-line basis, to operating costs in
the income statement, as follows:
Leasehold land and buildings
The life of the lease
Freehold buildings
Over 50 to 100 years
Plant and equipment
Over 3 to 15 years
The carrying values of items of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable. If any such indication exists the assets are written down to their recoverable
amount, being the higher of value in use or fair value less costs of disposal. Any impairment in value is recognised immediately in the
income statement.
Investments
Fixed asset investments in subsidiaries and associates are shown at cost less provision for impairment.
Investment property
The fair value of the land and property held as investment property was last revalued in 2007. Since this date, the Company has
transitioned to FRS101 and adopted the cost model. Any costs associated with the item are included within the carrying amount of the
property when it is probable that the future economic benefit associated with the item is probable and can be measured reliably. All
other repair and maintenance costs are charged to the income statement. Investment property is measured at cost and is reviewed in
line with the impairment review policy noted below.
Derivative financial instruments
The Company uses derivatives to hedge risks associated with fuel price fluctuations. These derivatives are not designated in hedge
relationships. They are initially recognised at fair value and subsequently measured at fair value through profit or loss.
Leases
Lease identification
At inception of a contract, the Company shall assess whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Right of use assets
Right of use assets are measured initially at cost based on the value of the associated lease liability, adjusted for any payments made
before inception, initial direct costs and an estimate of the dismantling, removal and restoration costs required in the terms of the lease.
The right of use assets are subsequently depreciated on a straight-line basis over the shorter of the estimated useful life of the asset or
the lease term. The lease term shall include the period of an extension option where it is reasonably certain that the option will be
exercised. Where the lease contains a purchase option the asset is written off over the useful life of the asset when it is reasonably
certain that the purchase option will be exercised.
In addition, the right of use asset is periodically reduced by impairment losses, if applicable, and adjusted for certain remeasurements
of the lease liability.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
217
1. Company accounting policies continued
Accounting policies continued
Leases continued
Lease liability
At the commencement date of the lease, the lease liability is initially measured at the present value of lease payments to be made over
the lease term with payments discounted at the rate implicit in the lease or, where that cannot be measured, at the Company’s
incremental borrowing rate.
The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid by the Company under residual value guarantees. The lease
payments also include the exercise price of a purchase option if the Company is reasonably certain to exercise that option. Payments of
penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate the lease, are also included.
The lease liability is subsequently measured by increasing the carrying amount to reflect the interest on the lease liability and reducing
the carrying amount to reflect the lease payments made. The carrying value is remeasured when there is a change in future lease
payments arising from the effective date of a change in an index or rate, if there is a change in the Company’s estimate of the amount
expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a
purchase, extension or termination option.
Short term and low value asset leases
The Company has elected not to recognise right of use assets and lease liabilities for short term leases that have a lease term of less
than 12 months and leases of low value assets. Lease payments relating to short term leases and leases of low value assets are recognised
as an expense on a straight-line basis over the lease term.
Sale and leaseback transactions
On transition to IFRS 16, the Company applied the modified retrospective approach. Under the modified retrospective approach, the
Company did not revisit and amend the sale and lease back transactions that were ongoing as of the date of transition.
Retirement benefits
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method, which attributes
entitlement to benefits to the current period (to determine current service cost) and to the current and prior periods (to determine
the present value of defined benefit obligation) and is based on actuarial advice. Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset.
Remeasurements, comprising actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan
assets (excluding net interest) are recognised in the statement of comprehensive income in the period in which they occur.
The current service cost is recognised in the income statement within operating costs. The net interest expense or income is
recognised in the income statement within finance costs.
Past service costs are recognised in the income statement on the earlier of the date of the plan amendment or curtailment, and the
date that the Group recognises restructuring-related costs. When a settlement (eliminating all obligations for benefits already
accrued) or a curtailment (reducing future obligations as a result of a material reduction in the scheme membership or a reduction in
future entitlement) occurs, the obligation and related plan assets are remeasured using current actuarial assumptions and the
resultant gain or loss is recognised in the income statement during the period in which the settlement or curtailment occurs.
The defined benefit pension asset or liability in the balance sheet comprises the present value of the defined benefit obligation (using a
discount rate based on high quality corporate bonds), less the fair value of plan assets out of which obligations are to be settled
directly for The Go-Ahead Group Pension Plan. Fair value is based on market price information and in the case of quoted securities is
the published bid price. Any surplus is limited to the present value of any economic benefits available in the form of refunds from the
plans or reductions in future contributions to the plans.
For the defined contribution schemes, the amount charged to the income statement in respect of pension costs and other post-
retirement benefits is the contributions payable in the year. Differences between contributions payable in the year and contributions
actually paid are shown as either accruals or prepayments in the balance sheet.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
218
1. Company accounting policies continued
Accounting policies continued
Share based payment transactions
The cost of options granted to employees is measured by reference to the fair value at the date at which they are granted, determined
by an external valuation using an appropriate pricing model. In granting equity-settled options, conditions are linked to some or all of
the following: the price of the shares of The Go-Ahead Group plc (market conditions); conditions not related to performance or service
(non-vesting conditions); performance conditions (a vesting condition); and service conditions (a vesting condition).
The cost of options is recognised in the income statement over the period from grant to vesting date, being the date on which the
relevant employees become fully entitled to the award, with a corresponding increase in equity. The cumulative expense recognised, at
each reporting date, reflects the extent to which the period to vesting has expired and the directors’ best estimate of the number of
options that will ultimately vest or, in the case of an instrument subject to a market or non-vesting condition, be treated as vesting as
described above. This includes any award where non-vesting conditions within the control of the Group or the employee are not met.
No cost is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or non-
vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied,
provided that all other performance and/or service conditions are satisfied. Where an equity-settled award is cancelled, it is treated as
if it had vested on the date of cancellation, and any cost not yet recognised for the award is recognised immediately.
Taxation
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities on an
undiscounted basis at the tax rates that are expected to apply when the related asset is realised or the liability is settled, based on tax
rates and tax laws that have been enacted or substantively enacted at the balance sheet date.
Deferred tax is provided, using the liability method, on temporary differences at the balance sheet date between the tax base of assets
and liabilities for taxation purposes and their carrying amounts in the financial statements. It is provided for on all temporary
differences, except:
• In respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future
Deferred tax assets are only recognised to the extent that it is probable that the temporary differences will be reversed in the
foreseeable future and taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. The carrying
amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Tax relating to items recognised outside the income statement is recognised in other comprehensive income or directly in equity in
correlation with the underlying transaction. Otherwise, tax is recognised in the income statement.
Uninsured liabilities
The Company limits its exposure to the cost of motor, employer and public liability claims through insurance policies issued by third
parties. These provide individual claim cover, subject to high excess limits and an annual aggregate stop loss for total claims within the
excess limits. A discounted provision is recognised for the estimated cost to settle claims for incidents occurring prior to the balance
sheet date.
The estimation of this provision is made after taking appropriate professional advice and is based on an assessment of the expected
settlement on known claims, together with an estimate of settlements that will be made in respect of incidents occurring prior to the
balance sheet date but that have not yet been reported to the Company by the insurer.
Provisions are accounted for on a gross basis with a separate reimbursement asset recognised for amounts recoverable from
insurance providers.
Impairment of assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount,
being the higher of the asset’s or cash generating unit’s fair value less costs to sell and its value in use. Value in use is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of
assets, and the estimated future cashflows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered to be impaired and is written down to
its recoverable amount.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
219
1. Company accounting policies continued
Accounting policies continued
Impairment of assets continued
Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the
function of the impaired asset. An assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognised. The reinstated amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. After such
a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, on a systematic basis
less any residual value, over its remaining useful life. We have considered indicators of impairment in the carrying value of the assets,
including the excess in value compared to both the market capitalisation and the consolidated net assets of the Group. In concluding
that there is no impairment required, we have considered different methods to value the assets, including the use of estimated future
cashflows, which are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset discounted forecast cashflows and using an appropriate multiple of forecasted
cashflows.
Treasury shares
Reacquired shares in the Company, which remain uncancelled, are deducted from equity. Consideration paid and the associated costs
are also recognised in shareholders’ funds as a separate reserve for own shares.
Interest-bearing loans and borrowings
Debt is initially stated at the amount of the net proceeds, being the fair value of the consideration received after deduction of issue
costs. Following initial recognition, the carrying amount is measured at amortised cost using the effective interest method.
Amortisation of liabilities and any gains and losses arising on the repurchase, settlement or other derecognition of debt are recognised
directly in the income statement.
Issue costs relating to any term extensions are offset against the proceeds and amortised over the life of the extension.
Provisions for liabilities
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect is
material, expected future cashflows are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to
the liability.
Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only
when recovery is virtually certain. The expense relating to any provision is presented in the income statement net of any
reimbursement. Where discounting is used, the increase in the provision due to unwinding the discount is recognised as a finance cost.
Other liabilities include dilapidations provisions; reflecting the nature of the judgements associated with the provisioning for
dilapidations it is not practicable to provide sensitivity analysis of the extent by which these amounts could change in the next
financial year.
Financial instruments
Financial assets
The Company’s financial assets are initially recognised at fair value, being the transaction price plus, in the case of financial assets not
recorded at fair value through the income statement, directly attributable transaction costs. Financial assets are subsequently
classified as being measured at amortised cost, fair value through other comprehensive income, or fair value through the income
statement.
The Company’s financial assets at amortised cost are non-derivative financial assets held for collection of contractual cashflows
where those cashflows represent solely payments of principal and interest. Financial assets at amortised cost are subsequently
measured using the effective interest method and are subject to impairment. Gains and losses are recognised in the income statement
when the asset is derecognised, modified or impaired.
The Company’s impairment policies in relation to financial assets are consistent with those of the Group, with additional consideration
given to amounts owed by Group undertakings (note 10) and loans to Group companies (note 9). In respect of these assets, the
Company recognises lifetime ECL when there has been a significant increase in credit risk (such as changes to credit ratings or when
the contractual payments are overdue by more than 30 days) since initial recognition. However, if the credit risk on the financial
instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial
instrument at an amount equal to 12-month ECL.
Financial assets are derecognised when the right to receive cash flows from the asset has expired, the right to receive cash flows has
been retained but an obligation to on-pay them in full without material delay has been assumed or the right to receive cash flows has
been transferred together with substantially all the risks and rewards of ownership.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
220
1. Company accounting policies continued
Accounting policies continued
Financial instruments continued
Financial liabilities
The Company’s financial liabilities include trade payables, accruals, interest-bearing loans and borrowings and derivative financial
instruments. At initial recognition, the Company measures financial liabilities at fair value plus, in the case of a financial liability not at
fair value through the income statement, transaction costs that are directly attributable to the issue of the financial liability.
With the exception of derivative financial instruments, all other financial liabilities are subsequently measured on an amortised cost
basis.
The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have
expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is
recognised in the income statement.
When the Company exchanges with the existing lender one debt instrument into another one with substantially different terms, such
exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
Similarly, the Company accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the
original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted
present value of the cashflows under the new terms, including any fees paid net of any fees received and discounted using the original
effective rate, is at least 10% different from the discounted present value of the remaining cashflows of the original financial liability. If
the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the
present value of the cashflows after modification should be recognised in profit or loss as the modification gain or loss within other
gains and losses.
Fair value measurement
The Company measures financial instruments and non-financial assets at fair value at each balance sheet date. Fair values of financial
instruments measured at amortised cost are disclosed in note 12.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either:
• In the principal market for the asset or liability
• In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using
the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
221
1. Company accounting policies continued
Accounting policies continued
Fair value measurement continued
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly
observable
• Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
At each reporting date, the Company analyses the movements in the values of assets and liabilities which are required to be
remeasured or reassessed as per the Company’s accounting policies. For this analysis, the Group verifies the major inputs applied in the
latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Company also compares the changes in the fair value of each asset and liability with relevant external sources to determine
whether the change is reasonable.
When required, the Company presents the valuation results to the audit committee. This includes a discussion of the major
assumptions used in the valuations.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Software
Software, which is not integral to the related hardware, is capitalised as an intangible asset and stated at cost less amortisation and
any impairment in value. Amortisation is charged to the income statement evenly over its expected useful life of three to five years.
New standards
The following new standards or interpretations are mandatory for the first time for the financial year ended 2 July 2022:
• Impact of the initial application of Interest Rate Benchmark Reform – Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
• Impact of the initial application of COVID-19 Related Rent Concessions beyond 30 June 2021 - amendment to IFRS 16
Adoption of the standards and interpretations had no material impact on the Group’s financial position or related performance.
Prior year restatements
Investment in subsidiary reclassification
In 2014, the Group implemented an Asset Backed Funding (ABF) arrangement for the Group’s defined benefit pension scheme. As part
of this arrangement, the parent company, Go-Ahead Group Limited (previously Go-Ahead Group plc), made a contribution to the
Pension Scheme of £63.2m. This amount was previously, incorrectly, disclosed in the Company only financial statements within
investments as a loan due from group undertakings. Therefore this item has been revalued and reclassified as a pension scheme asset
and is fair valued in accordance with IAS 19 which impacts the 2021 opening reserves. The impact of this to the opening position of the
Company’s 2021 financial statements is a reduction of £63.2m in investment in subsidiaries, an increase of £17.0m in pension asset and
a reduction of £46.2m in 2021 opening reserves. The incremental impact on this adjustment to the 2021 closing balance sheet is an
increase of £4.0m to the pension scheme asset and reduction in reserves by the same amount.
Company financial statements
Notes to the Company financial statements continued
1. Company accounting policies continued
Accounting policies continued
Parent company guarantee
For the year ended 2 July 2022, the following subsidiaries of the Company are exempt from the requirements of the Companies Act
2006 relating to the audit of individual accounts by virtue of Section 479A of that Act relating to subsidiary companies:
Subsidiary name
Company number
Subsidiary name
Company number
East Yorkshire Motor Services Limited
00216628
Konectbus Ltd
03149258
EYMS Group Limited
02065145
Plymouth Citybus Limited
02004966
Carousel Buses Limited
04062073
Go North West Limited
08205871
Thames Travel (Wallingford) Limited
04184436
GA Retail Services Limited
04173713
Tom Tappin, Limited
00350802
Go-Ahead Scotland Limited
SC447303
NetCourt Properties Limited
03740809
For the year ended 2 July 2022, the following subsidiaries of the Company are exempt from the requirements of the Companies Act
2006 relating to the preparation and filing of individual accounts by virtue of Section 394A and 394 of that Act relating to dormant
subsidiary companies:
Partnership exemption
For the year ended 2 July 2022, by virtue of Regulation 7 of the Partnerships (Accounts) Regulations 2008, Go-Ahead Scottish Limited
Partnership (SL013471) is entitled to exemption from the requirement to prepare, publish and have its individual accounts audited
under Regulations 4 – 6 of the Partnerships (Accounts) Regulations 2008. The results of Go-Ahead Scottish Limited Partnership are
consolidated within The Go-Ahead Group Limited consolidated results.
222
The Go-Ahead Group Limited Annual Report and Accounts 2022
Dormant subsidiary name
Company number Dormant subsidiary name
Company number
Abingdon Bus Company Limited
03151270
Go-Ahead Events Services Limited (previously East
Midlands Railway Limited)
07164882
Anglian Bus Limited
01260689
Go-Ahead Finance Company
04699524
Aviance UK Limited
01036291
Go-Ahead Leasing Limited
05262810
Birmingham Passenger Transport Services Limited 02901263
Go-Ahead Property Development Limited
07128594
Blue Triangle Buses Limited
03770568
Go-Reading Limited
03158846
Bus UK Limited
02232813
H.C.Chambers & Son Limited
00327497
Buscall Limited
03887602
Hants & Dorset Motor Services Limited
02752603
Connor and Graham Limited
00546796
Hants & Dorset Transport Support Services Limited
08669065
Dockland Buses Limited
03420004
Hants & Dorset Trim Limited
02017829
East Yorkshire Buses Limited
00254844
Hedingham & District Omnibuses Ltd.
00863658
East Yorkshire Coach Holidays Limited
00243051
Hull and District Motor Services Limited
02183936
East Yorkshire Coaches Limited
00331077
Hull Park and Ride Limited
03886603
East Yorkshire Concert Tours Limited
02142740
Kingstonian Travel Services Limited
03561955
East Yorkshire Holiday Tours Limited
02140988
Levers Coaches Limited
02524573
East Yorkshire Properties Limited
02256485
London Central Bus Company Limited
02328565
East Yorkshire Tours Limited
00172326
Marchwood Motorways (Southampton) Limited
01622531
East Yorkshire Travel Limited
03225828
Metrobus Limited
01742404
Excelsior Coaches Limited
04329621
Metrocity (Newcastle) Limited
04153866
Excelsior Transport Limited
04329645
Scarborough and District Motor Services Limited
02133854
Excelsior Travel Limited
04342549
Solent Blue Line Limited
02103030
EYMS Bus & Coach Training Limited
02123369
Southern Vectis Limited
02005917
Frodingham Coaches Limited
02135501
Thamesdown Transport Limited
01997617
Gatwick Handling Limited
02984113
Thames Trains Limited
03007943
GH Heathrow Limited
02813292
The Go-Ahead Group Trustee Company Limited
02125799
GH Manchester Limited
01883900
The Southern Vectis Omnibus Company Limited
00241973
GH Stansted Limited
01983429
Tourist Coaches Limited
03006529
GHI Limited
04262016
Victory Railway Holdings Limited
03147927
Go Coastline Limited
02018469
Wilts & Dorset Holdings Limited
02091878
Go London Limited
02849983
Wilts & Dorset Investments Limited
04613075
Go Northern Limited
00132492
Wilts & Dorset Bus Company Limited
01671355
Go Wear Buses Limited
02019645
Go West Midlands Limited
02490584
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
223
2. Employee costs
This note shows total employment costs, inclusive of share-based payment charges. We have a number of share plans used to award
shares to directors and employees. A charge is recognised over the vesting period, based on the fair value of the award at the date of
grant. The note also shows the average number of people employed by the Company during the year. For accounting policies see Share
based payments in note 1.
2022
£m
2021
£m
Wages and salaries
14.1
11.3
Social security costs
1.7
1.2
Other pension costs
3.2
3.5
Share based payments (credit)/ charge
(0.5)
0.5
18.5
16.5
On 20 November 2020, the High Court ruled that individual transfer payments made since 17 May 1990 would need to be equalised for
the effect of Guaranteed Minimum Pensions (GMP) between men and women. This judgement followed on from the previous
judgement on 26 October 2018, where the High Court ruled that schemes had a legal obligation to pay benefits allowed for GMP
equalisation. The previous judgement had not considered historical transfer values. The judgement has implications for many defined
benefit schemes, including those in which the Group participates.
As a result of this change, a pre-tax, non-cash, non-exceptional past service cost of £1m was recognised in the income statement in the
prior year. Nothing was recognised in current year in respect of this.
The average monthly number of employees during the year, including executive directors, was:
2022
No.
2021
No.
Administration and supervision
212
198
The information required by Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013 is provided in the Directors’ remuneration report.
Long Term Incentive Plans
The former executive directors participated in The Go-Ahead Group Long Term Incentive Plan 2015 (LTIP). The LTIP provides for
executive directors to be awarded nil cost shares in the Company conditional on specified performance conditions being met over a
period of three years. Refer to the Directors’ remuneration report for further details of the LTIP.
The expense recognised for the LTIP during the year to 2 July 2022 was £nil (2021: £0.1m).
The fair value of LTIP options granted is estimated as at the date of grant using a Monte Carlo model, taking into account the terms
and conditions upon which the options were granted. The inputs to the model used for the options granted in the year to 2 July 2022
and 3 July 2021 were:
2022
% per annum
2021
% per annum
The Go-Ahead Group
Future share price volatility
50.0
40.0
FTSE Mid-250 index comparator:
Future share price volatility
n/a
25.0
Correlation between companies
n/a
30.0
The following table shows the number of share options for the LTIP:
2022
No.
2021
No.
Outstanding at the beginning of the year
240,826
162,832
Granted during the year1
42,203
127,987
Forfeited during the year2
(105,765)
(49,993)
Exercised during the year
—
—
Outstanding at the end of the year
177,264
240,826
1. On 5 May 2022, share options were granted with a nil exercise price under The Go-Ahead Group Long Term Incentive Plan 2015 ("2021 RSP"). These were granted to the Group
Chief Executive and vesting will be subject to achievement of financial and non-financial underpins measured over a three-year performance period, commencing with the start
of the 2021/22 financial year and ending with the end of the 2023/24 financial year. For more information, please see the remuneration report.
2. Following the year-end, all outstanding LTIP awards (with the exception of the new RSP awards) lapsed or were cancelled following a remuneration committee meeting. Further
information can be found in the remuneration report on pages 90 to 110.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
224
2. Employee costs continued
Long Term Incentive Plans continued
The weighted average fair value of options granted during the year was £8.16 (2021: £9.44).
The weighted average remaining contractual life of the options was 1.66 years (2021: 1.81 years). The weighted average exercise price
at the date of exercise for the options exercised in the period was £nil (2021: £nil).
The estimated amounts due to the relevant tax authorities in relation to the above transactions are detailed in the Directors’
remuneration report.
Deferred Share Bonus Plan
The Deferred Share Bonus Plan (DSBP) provides for executive directors and certain other senior employees to be awarded shares in the
Company conditional on the achievement of financial and strategic targets. The shares are deferred over a three-year period. Refer to
the Directors’ remuneration report for further details of the DSBP.
The DSBP options are not subject to any market-based performance conditions. Therefore, the fair value of the options is equal to the
share price at the date of grant.
The expense recognised for the DSBP during the year to 2 July 2022 was £0.2m (2021: £0.4m).
The following table shows the number of share options for the DSBP:
2022
No.
2021
No.
Outstanding at the beginning of the year
79,610
79,588
Granted during the year
—
16,485
Forfeited during the year
(25,546)
(7,369)
Exercised during the year
(5,779)
(9,094)
Outstanding at the end of the year
48,285
79,610
The weighted average fair value of options granted during the year was £nil (2021: £8.32).
At the year end, 27,392 options related to DSBP awards, which had vested before the year end and have not yet been exercised by
participants.
Of these 26,431 options related to the award granted in November 2018, 437 options related to the award granted in November 2017
and 524 options related to the award granted in November 2013.
21,340 options, relating to the DSBP award granted in November 2019, are now eligible to vest following the end of a three-year
deferral period in November 2022. The weighted average share price of the options at the year end was £15.80 (2021: £11.40).
The weighted average remaining contractual life of the options was 0.49 years (2021: 1.21 years). The weighted average exercise price
at the date of exercise for the options exercised in the period was £7.92 (2021: £10.81).
3. Dividends
Dividends are one type of shareholder return, historically paid to our shareholders in April and November.
2022
£m
2021
£m
Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for 2021: nil per share (2020: nil)
—
—
Interim dividend for 2022: nil per share (2021: nil)
—
—
—
—
2022
£m
2021
£m
Special dividend paid on completion of sale (not recognised as a liability as at 2 July 2022)
Equity dividends on ordinary shares:
Special dividend 2022: 100p per share (2021: nil)
43.1
—
Payment of proposed dividends does not have any tax consequences for the Group.
On 29 November 2022, an additional dividend of 37p per share (£16.0m) was paid to the Group’s new shareholders.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
225
4. Intangible assets
Software
£m
Cost
At 3 July 2021
15.2
Additions
0.4
At 2 July 2022
15.6
Amortisation and impairment
At 3 July 2021
12.8
Charge for the year
0.9
At 2 July 2022
13.7
Net book value
At 2 July 2022
1.9
At 3 July 2021
2.4
Software costs capitalised exclude software that is integral to the related hardware. Software is amortised on a straight-line basis over
its expected useful life of three to five years.
5. Property, plant and equipment
Plant and
equipment
£m
Cost
At 3 July 2021
8.4
Additions
0.1
At 2 July 2022
8.5
Depreciation and impairment
At 3 July 2021
7.8
Charge for the year
0.2
At 2 July 2022
8.0
Net book value
At 2 July 2022
0.5
At 3 July 2021
0.6
6. Leases
The Company has lease liabilities for land and buildings. These contracts have no terms of renewal or purchase option escalation clauses.
Right of use assets
Leasehold land
and buildings
£m
Cost
At 3 July 2021
3.6
Additions
1.5
At 2 July 2022
5.1
Depreciation and impairment
At 3 July 2021
1.1
Charge for the year
0.5
At 2 July 2022
1.6
Net book value
At 2 July 2022
3.5
At 3 July 2021
2.5
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
226
6. Leases continued
Right of use assets continued
During the year ended 28 June 2014, The Go-Ahead Group plc undertook a sale and leaseback of certain properties used by the Group.
Lease liabilities for the inter-group leases are disclosed within note 10.
Lease liabilities
The balance sheet includes the following amounts:
2022
2021
Right of use
assets
£m
Investment
property - right
of use assets
£m
Total
£m
Right of use
assets
£m
Investment
property - right
of use assets
£m
Total
£m
Current
(0.4)
(1.0)
(1.4)
(0.1)
(2.0)
(2.1)
Non-current
(3.4)
(2.2)
(5.6)
(2.2)
(3.0)
(5.2)
(3.8)
(3.2)
(7.0)
(2.3)
(5.0)
(7.3)
The remaining contractual maturities of the lease liabilities, which are gross and undiscounted, are as follows:
2022
2021
Right of use
assets
£m
Investment
property - right
of use assets
£m
Total
£m
Right of use
assets
£m
Investment
property - right
of use assets
£m
Total
£m
Less than one year
(0.4)
(1.0)
(1.4)
(0.1)
(2.1)
(2.2)
One to two years
(0.6)
(0.4)
(1.0)
(0.6)
(1.1)
(1.7)
Two to three years
(0.5)
(0.4)
(0.9)
(0.6)
(0.4)
(1.0)
Three to four years
(0.5)
(0.3)
(0.8)
(0.5)
(0.4)
(0.9)
Four to five years
(0.5)
(0.3)
(0.8)
(0.5)
(0.1)
(0.6)
More than five years
(1.6)
(1.5)
(3.1)
—
(1.5)
(1.5)
Total undiscounted lease liability
(4.1)
(3.9)
(8.0)
(2.3)
(5.6)
(7.9)
Cash outflow on leases is as follows:
2022
£m
2021
£m
Total cash outflow for leases
3.7
5.8
7. Investment property
Owned
property
£m
Inter-group
leasehold land
and buildings
£m
Right of use
assets
£m
Total
£m
Cost
At 3 July 2021
130.4
76.6
9.0
216.0
Additions
13.5
—
—
13.5
At 2 July 2022
143.9
76.6
9.0
229.5
Depreciation and impairment
At 3 July 2021
19.7
2.2
3.8
25.7
Charge for the year
1.1
0.3
1.7
3.1
Impairment
0.3
—
—
0.3
At 2 July 2022
21.1
2.5
5.5
29.1
Net book value
At 2 July 2022
122.8
74.1
3.5
200.4
At 3 July 2021
110.7
74.4
5.2
190.3
Owned property includes non-depreciable land amounting to £81.6m (2021: £68.1m).
If investment properties had been revalued, they would have been included at the following fair value:
2022
£m
2021
£m
Owned property
138.2
113.8
Owned investment properties were valued on market value basis in May 2022 by a third party chartered surveyor.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
227
8. Investments
Shares in
Group
companies
£m
Cost
At 2 July 2022 and 3 July 2021
151.9
Impairments
At 3 July 2021
—
Impairment
(103.5)
At 2 July 2022
(103.5)
Net carrying amount
At 2 July 2022
48.4
At 3 July 2021*
151.9
* Restated – see Note 1 for further details.
For details of the subsidiary undertakings as at 2 July 2022, refer to note 30 of the Group financial statements.
At the year end, an impairment review was performed of the carrying value of the investments in subsidiaries and the intercompany
receivables held by the Company. Using the takeover value which provided an observable fair value of the Group (see Note 31 to the
consolidated financial statements for more information), the directors assessed that an impairment charge of £103.5m should be
recognised.
9. Trade and other receivables
Amounts falling due within one year
2022
£m
2021
£m
Amounts owed by Group companies
119.5
217.2
Trade and other debtors
6.1
9.2
125.6
226.4
Amounts falling due after more than one year
2022
£m
2021
£m
Amounts owed by Group companies
598.0
539.2
All current outstanding amounts owed by Group companies are repayable on demand and arise from funding provided by the
Company to its subsidiaries. Given the way in which the group is funded, in order to assess the carrying values of the intercompany
receivables held, the directors assessed the recoverability of intercompany balances using the takeover value and the inherent
estimated future cash flows that underpinned that valuation.
An impairment charge of £0.5m has been recognised in the year (2021: £7.9m) increasing the year-end provision to £23.5m.
10. Trade and other payables
Amounts falling due within one year
2022
£m
2021
£m
Amounts owed to Group undertakings
98.6
88.4
Trade and other creditors
15.4
14.3
114.0
102.7
Amounts falling due after more than one year
2022
£m
2021
£m
Amounts owed to Group undertakings
58.2
60.6
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
228
10. Trade and other payables continued
Amounts falling due after more than one year continued
During the year ended 28 June 2014, The Go-Ahead Group plc undertook a sale and leaseback of certain properties used by the Group.
Included in the amounts owed to Group undertakings is an amount of £60.5m (2021: £62.9m) relating to this transaction. This
arrangement has no terms of renewal or purchase option escalation clauses and there are no restrictions imposed by the arrangement.
The remaining contractual maturities of these lease liabilities, which are gross and undiscounted, are as follows:
2022
£m
2021
£m
Less than one year
5.2
5.1
One to two years
5.4
5.2
Two to three years
5.5
5.4
Three to four years
5.7
5.5
Four to five years
5.9
5.7
More than five years
53.7
59.5
Total undiscounted lease liability
81.4
86.4
11. Interest-bearing loans and borrowings
Amounts falling due within one year
2022
£m
2021
£m
Accrued interest on £250m sterling seven-year bond
6.2
6.2
Debt issue costs
(0.4)
(0.5)
5.8
5.7
Amounts falling due after more than one year
2022
£m
2021
£m
£250m sterling seven-year bond (due in 1-3 years)
250.0
250.0
Debt issue costs
(0.4)
(0.6)
249.6
249.4
Interest-bearing loans and borrowings comprise a £250m sterling bond, less issue costs. For further details refer to note 22 of the
Group financial statements. The Company has no security over its liabilities.
12. Financial instruments at fair value
The fair values of the Company’s financial instruments carried in the financial statements have been reviewed as at 2 July 2022 and 3
July 2021 and are as follows:
2022
£m
2021
£m
Non-current financial assets: fuel price derivatives
14.1
3.4
Current financial assets: fuel price derivatives
40.0
4.9
54.1
8.3
Current financial liabilities: fuel price derivatives
—
(0.6)
Non-current financial liabilities: fuel price derivatives
(0.1)
(0.3)
(0.1)
(0.9)
Net financial derivatives
54.0
7.4
Further information on the financial derivatives can be found in note 24 of the Group financial statements.
Fuel derivatives
As discussed in note 24 of the Group financial statements, the Company is exposed to commodity price risk as a result of fuel usage.
The Company uses derivatives to hedge its risks associated with fuel price fluctuations. These derivatives are not designated in hedge
relationships. They are initially recognised at fair value and subsequently measured at fair value through profit or loss.
As at 2 July 2022, the Company had derivatives against fuel of 175 million litres for the three years ending June 2025. The fair value of
the asset or liability has been recognised on the balance sheet. The value has been generated since the date of the acquisition of the
instruments due to the movement in market fuel prices.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
229
13. Provisions
Uninsured
claims
£m
Other
£m
Total
£m
At 27 June 2020
9.9
0.3
10.2
Provided (after discounting)
5.8
0.5
6.3
Released
(2.3)
—
(2.3)
Utilised
(0.9)
—
(0.9)
At 3 July 2021
12.5
0.8
13.3
Provided (after discounting)
2.4
—
2.4
Released
(1.3)
—
(1.3)
Utilised
(0.3)
(0.3)
(0.6)
At 2 July 2022
13.3
0.5
13.8
Uninsured claims represent the cost to the Company to settle claims for incidents occurring prior to the balance sheet date based on an
assessment of the expected settlement, together with an estimate of settlements that will be made in respect of incidents that have not yet
been reported to the Company by the insurer, subject to the overall stop loss. It is estimated that the majority of uninsured claims will be
settled within six years. Both the estimate of settlements that will be made in respect of claims received, as well as the estimate of settlements
made in respect of incidents not yet reported, are based on historical trends which can alter over time reflecting the length of time some
matters can take to be resolved. No material changes to carrying values are expected within the next 12 months.
Uninsured claims are provided on a gross basis and a separate reimbursement asset, for amounts due back from the insurance
providers, of £nil (2021: £nil) is included within other receivables.
The other provisions include £0.3m relating to dilapidation costs which are expected to be incurred within three to four years. The
remaining £0.2m relates to an onerous contract provision for a vacant property. Future costs relating to rental charges, business rates
and dilapidation costs have been provided for and will be utilised within one to three years.
Reflecting the nature of the judgements associated with the provisioning for dilapidations it is not practicable to provide further
sensitivity analysis of the extent by which these amounts could change in the next financial year.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
230
14. Current and deferred taxation
Amounts falling due within more than one year
Deferred taxation provided at the enacted rate is as follows:
2022
£m
2021
£m
Accelerated capital allowances
(12.2)
(12.7)
Other timing differences
(13.5)
(13.8)
Revaluation of land and buildings treated as deemed cost on conversion to IFRS
(13.2)
(13.8)
Retirement benefit obligations
(20.0)
(10.4)
Deferred taxation
(58.9)
(50.7)
The movements in deferred tax in the income statement and other comprehensive income for the year ended 2 July 2022 are as
follows:
At 3 July
2021
£m
Recognised in
income
statement
£m
Recognised
in other
comprehensive
income
£m
Recognised
directly in
equity
£m
At 2 July
2022
£m
Accelerated capital allowances
(12.7)
0.5
—
—
(12.2)
Asset backed funding pension arrangement
(13.2)
0.3
—
—
(12.9)
Other temporary differences
(1.2)
0.1
—
—
(1.1)
Revaluation of land and buildings treated as deemed cost on
conversion to IFRS
(13.8)
0.6
—
—
(13.2)
Retirement benefit obligations
(10.4)
(1.4)
(8.2)
—
(20.0)
Share based payments
0.6
—
—
(0.1)
0.5
(50.7)
0.1
(8.2)
(0.1)
(58.9)
The deferred tax asset relating to the share-based payments was recognised in the current and prior year as it is considered probable
that there will be future taxable profits available.
15. Retirement benefits
Defined contribution scheme
During the year ended 2 July 2022, the Company participated in the defined contribution scheme of The Go-Ahead Group Pension Plan
(the Go-Ahead Plan). This scheme is not contracted out of the State Second Pension Scheme. It is now closed to new entrants and has
been replaced by a Workplace Savings Scheme, which is also a defined contribution pension scheme. The expense recognised in these
accounts for the year in respect of the defined contribution scheme of the Go-Ahead Plan was £0.4m (2021: £0.4m), being the
contributions paid and payable. The expense recognised for the Workplace Saving Scheme was less than £0.1m (2021: less than £0.1m),
being the contributions paid and payable.
Defined benefit scheme
During the year ended 2 July 2022, the Company participated in a scheme which is part of the Go-Ahead Plan. The assets of the
scheme are held separately from those of the Company in an independently administered fund.
The defined benefit section of the Go-Ahead Plan has been closed to new entrants and to future accrual.
The most recent actuarial valuation of the scheme was at 31 March 2021 and was updated by Willis Towers Watson to take account
of the requirements of IAS 19 (Revised) in order to assess the liabilities of the scheme at 2 July 2022 and 3 July 2021.
In 2014, the Group implemented an Asset Backed Funding (ABF) arrangement for the Group’s defined benefit pension scheme. As part
of this arrangement, the parent company, Go-Ahead Group Limited (previously Go-Ahead Group plc), made a contribution to the
Pension Scheme of £63.2m. This item has been fair valued in accordance with IAS 19 leading to an overall pension asset value of £19.8m
(2021: £20.9m).
The total net assets and liabilities of the scheme are recognised on the Company balance sheet.
2022
£m
2021*
£m
Pre-tax pension scheme asset
80.0
41.5
Other pension asset
19.8
20.9
Total pre-tax pension scheme asset
99.8
62.4
Deferred tax liability
(20.0)
(10.4)
Post-tax pension scheme asset
79.8
52.0
* Restated – see Note 1.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
231
15. Retirement benefits continued
Defined benefit scheme continued
The following disclosures provide details of the entire defined benefit scheme.
The main assumptions are:
2022
%
2021
%
Rate of increase in salaries
n/a
n/a
Rate of increase of pensions in payment and deferred pensions
2.8
2.7
Discount rate
3.5
1.8
Retail price index inflation
3.3
3.2
Consumer price index inflation
2.8
2.7
The most significant non-financial assumption is the assumed rate of longevity. The table below shows the life expectancy
assumptions used in the accounting assessments based on the life expectancy of a male member of the pension scheme at age 65.
2022
Years
2021
Years
Pensioner
20
21
Non-pensioner
21
22
Sensitivity analysis
In making the valuation, the above assumptions have been used. For the Go-Ahead Plan, the following is an approximate sensitivity
analysis of the impact of the change in the key assumptions. In isolation, the following adjustments would adjust the pension deficit as
shown.
2022
Pension deficit
%
2021
Pension deficit
%
Discount rate – increase of 0.5%
(6.2)
(8.0)
Price inflation – increase of 0.5%
4.6
7.5
Rate of increase in salaries
n/a
n/a
Rate of increase of pensions in payment – increase of 0.5%
3.2
4.0
Increase in life expectancy of pensioners or non-pensioners by one year
3.4
4.2
The sensitivity analysis presented above has been calculated using approximate methods. The use of 0.5% and one year in the
sensitivity analysis is considered to be a reasonable approximation of possible changes, as these variations have recently arisen.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
232
15. Retirement benefits continued
Maturity profile of defined benefit obligation
The following table shows the expected future benefit payments of the plan.
2022
£m
June 2023
28.7
June 2024
29.5
June 2025
30.3
June 2026
31.1
June 2027
32.0
June 2028 to June 2032
173.8
Category of assets at the year end
2022
2021
£m
%
£m
%
Equities
53.6
7.6
68.7
8.1
Bonds
73.5
10.4
84.0
9.9
Property
66.3
9.4
61.1
7.2
Liability driven investment portfolio
210.9
29.9
406.3
47.9
Cash/other
301.2
42.7
228.2
26.9
705.5
100.0
848.3
100.0
All of the asset categories above are held within pooled funds and are classed as quoted in an active market where the underlying
assets are exchanged, traded or can be valued with a reasonable degree of certainty based on market data. Any
funds have been classed as unquoted in active markets.
Funding position of the Group’s pension arrangements
2022
£m
2021
£m
Employer’s share of pension scheme:
Liabilities at the end of the year
(625.5)
(806.8)
Assets at fair value
705.5
848.3
Pension scheme asset
80.0
41.5
Deferred tax liability
(20.0)
(10.4)
Post-tax pension scheme asset
60.0
31.1
Pension cost for the financial year
2022
£m
2021
£m
Administration costs
2.5
2.0
Past service costs
—
1.0
Settlement gain
—
—
Interest income on net liabilities
(0.8)
(1.0)
Total pension costs
1.7
2.0
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
233
15. Retirement benefits continued
Analysis of the change in the pension scheme liabilities over the financial year
2022
£m
2021
£m
Pension scheme liabilities – at start of year
806.8
814.7
Interest cost
14.3
12.0
Remeasurement (gains)/losses due to:
– Experience on benefit obligations
9.7
(2.2)
– Changes in demographic assumptions
(9.4)
—
– Changes in financial assumptions
(168.0)
7.0
Past service cost
—
1.0
Benefits paid
(27.9)
(25.7)
Pension scheme liabilities – at end of year
625.5
806.8
Analysis of the change in the pension scheme assets over the financial year
2022
£m
2021
£m
Fair value of assets – at start of year
848.3
878.0
Interest income on plan assets
15.1
13.0
Remeasurement gains due to return on assets greater than discount rate
(134.7)
(22.0)
Administration costs
(2.5)
(2.0)
Group contributions
7.2
7.0
Benefits paid
(27.9)
(25.7)
Fair value of plan assets – at end of year
705.5
848.3
Estimated contributions for future
£m
Estimated Company contributions in financial year 2023
5.9
Estimated employee contributions in financial year 2023
—
Estimated total contributions in financial year 2023
5.9
Risks associated with the defined benefit plan, the nature of the benefits provided by the plan, a description of the regulatory
framework and a description of the responsibilities for the governance of the plan are outlined in note 29 to the Group financial
statements.
Compensation of key management personnel is detailed in note 30 of the Group financial statements.
16. Issued capital and reserves
Allotted, called up and fully paid
Millions
2022
£m
Millions
2021
£m
At 2 July 2022 and 3 July 2021
47.1
4.7
47.1
4.7
The Company has one class of ordinary shares which carry no right to fixed income and have a par value of 10p per share.
Share capital
Share capital represents proceeds on issue of the Group’s equity, both nominal value and share premium. The nominal value is set out
above and the balance is share premium.
Revaluation reserve
The revaluation reserve represents the value of properties involved in an asset backed funding transaction with the Go-Ahead Pension
Plan, adjusted for amortisation, together with historical revaluation balances. The movement on the revaluation reserve represents the
write down of the revaluation reserve over the expected useful life of the properties, offsetting the depreciation charges being taken
to the profit or loss account.
Share premium reserve
The share premium reserve represents the premium on shares that have been issued to fund or part fund acquisitions made by the
Group. This treatment is in line with Section 612 of the Companies Act 2006.
The information required by Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013 is provided in the Directors’ report.
Capital redemption reserve
The capital redemption reserve reflects the nominal value of cancelled shares.
Company financial statements
Notes to the Company financial statements continued
The Go-Ahead Group Limited Annual Report and Accounts 2022
234
16. Issued capital and reserves continued
Reserve for own shares
The reserve for own shares relates to 4,088,044 ordinary shares (8.7% of share capital), of which 185,814 are held to satisfy awards
made under the Group’s Restricted Share Plan, Long Term Incentive Plan or Deferred Share Bonus Plan (“Discretionary Share Plans”).
The remaining shares were purchased in order to enhance shareholders’ returns and are being held as treasury shares for reissue in
appropriate circumstances. During the year ended 2 July 2022, the Company repurchased 42,882 shares for a total consideration of
£0.4m to be used to satisfy awards made under the Group’s Discretionary Share Plans (2021: 57,176 shares repurchased for a total
consideration of £0.6m). The Company has not cancelled any shares during the year or the prior year.
Retained earnings
The audit fee for the audit of the financial statements payable in respect of the Company was £0.1m (2021: £0.1m). Please refer to
note 5 of the Group financial statements.
17. Capital commitments
There were capital commitments of £nil at 2 July 2022 (2021: £nil).
18. Contingent liabilities
The Company provides guarantees in respect of bank and equipment finance borrowings of the subsidiaries of The Go-Ahead Group Limited.
The Company has issued guarantees dated 30 March 2006 to participating subsidiaries of The Go-Ahead Group Pension Plan in
respect of scheme liabilities arising. Total assets on a post-tax basis in respect of this guaranteed scheme were £60.0m as at 2 July
2022 (2021: assets of £31.1m) excluding ABF arrangements.
At 2 July 2022 letters of credit amounting to £55.1m (2021: £59.8m) were provided by a Company banker, guaranteed by the Company,
in favour of the Group’s insurers, to cover liabilities of the Company and its subsidiaries.
19. Related party transactions
The Company has taken advantage of the exemption under FRS 101, and transactions with 100% subsidiaries of The Go-Ahead Group
Limited have not been disclosed.
The Company owns 65% of the ordinary shares in Govia Limited. London & South Eastern Railway Limited (Southeastern), London &
Birmingham Railway Limited (London Midland), Thameslink Rail Limited (Thameslink), New Southern Railway Limited (New Southern),
Southern Railway Limited (Southern) and Govia Thameslink Railway Limited (GTR) are 100% owned by Govia Limited and hence the
Company owns a 65% interest.
Govia
South Eastern
London Midland
Thameslink
New Southern
GTR
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
Interest received from related
party
0.1
0.1
—
—
—
—
—
—
—
—
—
—
Repayment of loan by related
party
—
35.0
—
—
—
—
—
—
—
—
—
—
Management charges
—
—
1.0
2.8
—
—
—
—
—
—
4.9
5.1
Amounts owed from related
party
11.5
5.8
0.4
3.4
0.4
1.7
—
—
—
—
1.7
2.3
Amounts owed to related party
—
—
—
—
—
—
0.6
0.6
3.9
3.8
—
—
20. Post balance sheet events
For detail on post balance sheet events relating to the Company, see Note 31 to the consolidated financial statements.
Head office
The Go-Ahead Group Limited
4 Matthew Parker Street
Westminster, London
SW1H 9NP
+44 (0) 191 232 3123
Registered office
The Go-Ahead Group Limited
3rd Floor 41–51 Grey Street
Newcastle Upon Tyne
NE1 6EE
+44 (0) 191 232 3123