Economic Conditions
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Political/Geopolitical Regulatory Landscape
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Brexit
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Potential impact
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Potential impact
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Potential impact
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- Declining economic conditions potentially impact demand for discretionary travel
- Improving economic conditions may impact the Group’s ability to recruit drivers and other staff, or cause inflationary pressure on costs
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- Changes to government policy, funding regimes or the legal and regulatory framework may result in structural market changes or impact the Group’s operations in terms of reduced profitability, increased costs and/or a reduction in operational flexibility or efficiency
- Franchise renewal risk in Spain
- UK bus franchising or alternative models
- Financial or reputational cost of failure
- To comply with changing regulations or legislation
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- Continued uncertainty around the terms of the UK’s exit from the EU creates general and specific risks in our markets in the UK, Spain and Germany
- An economic downturn in the UK could adversely impact demand for our services
- Reduced travel volumes to/from UK airports could affect demand for our UK coach services
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Management/mitigation
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Management/mitigation
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Management/mitigation
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- Geographical diversification of the Group provides a natural hedge to some economic risk
- Strategic plans are stress-tested for differing economic scenarios
- Exit from the UK rail market and focus on international opportunities
- Strong strategic focus on people/talent management and recruitment/retention.
- Delivery of excellence in service and operations
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- Constant monitoring of the political landscape and focus on effective stakeholder management
- Political risk is specifically considered when considering bids or new market entry
- Strategic alliances and partnerships are used where appropriate to mitigate risk
- The Group carries out appropriate lobbying and communication, highlighting especially the importance of public transport to central and local government
- Focus on operational excellence and delivering value in our franchises and contracts, and to our fare paying customers
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- Ongoing close monitoring of specific Brexit-related risk issues
- Geographical diversification reduces Group-level risk; exposure to UK market is circa 25% of total revenue
- Restructured our small UK to Europe coach partnership
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Opportunity
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Opportunity
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Opportunity
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- GDP growth in our major markets is forecast at 1.5%-2% per annum to 2023
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- Increasing city regulation and investment in bus and Bus Rapid Transit (‘BRT’) schemes
- Continued liberalisation of markets in many territories
- Political pressure on congestion and clean air favours public transportation.
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- Translated profits from our international operations will increase in the event of a weakening GBP
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Change in risk in the year
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Change in risk in the year
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Change in risk in the year
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- Economies in our core markets have generally shown good growth
- Unemployment rates continue to fall in key markets, causing ongoing pressure on staff costs and turnover
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- Continued delays in Spanish franchise renewals
- Continued strengthening of our relationships with key political stakeholders and our reputation as a high quality, innovative partner
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- Increased possibility of a ‘no-deal’ exit adds to uncertainty
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