Decisive action taken to reduce costs and conserve cash.
In summary
- Strong start to the year with double-digit revenue growth before Covid-19
- Decisive action taken to reduce costs and conserve cash
- £187 million EBITDA; towards the top of guidance
- After separately disclosed items, a statutory loss after tax of £327 million
- H2 free cash flow positive and net debt reduced to £942 million
- £1.5 billion of equity and additional borrowing facilities raised
- £1.9 billion in cash, undrawn committed facilities and undrawn CCFF available
- Improving trajectory into 2021 with strong Q4 revenue, EBITDA and cash flow
|
Underlying |
Separately |
Total |
Underlying |
Separately |
Total |
|
| Revenue | 1,955.9 | - | 1,955.9 | 2,744.4 | - | 2,744.4 |
| Operating costs | (2,006.7) | (330.6) | (2,337.3) | (2,449.1) | (53.0) | (2,502.1) |
| Operating (loss)/profit | (50.8) | (330.6) | (381.4) | 295.3 | (53.0) | 242.3 |
| Share of results from associates | (2.1) | - | (2.1) | 0.4 | - | 0.4 |
| Net finance costs | (53.2) | (8.0) | (61.2) | (55.7) | - | (55.7) |
| (Loss)/profit before tax | (106.1) | (338.6) | (444.7) | 240.0 | (53.0) | 187.0 |
| Tax | 29.3 | 88.7 | 118.0 | (55.2) | 16.5 | (38.7) |
| (Loss)/profit for the year | (76.8) | (249.9) | (326.7) | 184.8 | (36.5) | 148.3 |
1. To supplement IFRS reporting, we also present our results on an Underlying basis which shows the performance of the business before separately disclosed items, comprising amortisation of intangibles for acquired businesses and, for 2020, certain costs arising as a direct consequence of the pandemic. Treatment as a separately disclosed item provides users of the accounts with additional useful information to assess the year-on-year trading performance of the Group. Further explanation in relation to these measures, together with cross-references to reconciliations to statutory equivalents where relevant, can be found on pages 243-244 of the Annual Report and Accounts.
In a year shaped by the travel restrictions imposed to slow the spread of Covid-19, Group revenue was £1,955.9 million (2019: 2,744.4m), a decrease of £788.5 million (29%). After a strong start to the year, with Group revenue up 17% in January and February, extensive lockdowns were imposed by governments in each country in which we operate.
During this extraordinary period, we were well supported by customers and governments and for the Group overall this meant that despite passenger numbers declining by nearly 80% during Q2, the revenue decline was mitigated to around 50%. As lockdowns were lifted in the summer, revenue started to recover steadily. After a 50% year-on-year drop in revenue in Q2, this improved to a 37% reduction in Q3 and a 32% reduction in Q4.
In the UK, the Group recognised £84.7 million from the Covid-19 Bus Services Support Grant (CBSSG), and the Scottish equivalent, in return for maintaining bus services at around 100% of pre-pandemic levels with social distancing provisions in place. In addition, the Group recognised £15.3 million and £15.6 million for Covid-19 government compensation in ALSA and German Rail respectively. Had these various revenuerelated grants not been available the Group would have operated a significantly lower level of services in order to further reduce costs. There was no revenue support provided by the Government for UK coach.
As set out in the table below, the Group recorded positive EBITDA in every quarter. The greatest year-on-year decline of EBITDA in 2020 was in Q2 during the peak of the restrictions on travel. Q3 is typically the Group’s smallest quarter for profit because of the school holidays in North America. Q4 recovered strongly and contributed nearly 50% of the full year EBITDA.
| Quarterly summary | Revenue year-on-year | EBITDA £m |
| Q1 (January to March) | +7% | 69.5 |
| Q2 (April to June) | -50% | 18.8 |
| Q3 (July to September) | -37% | 5.4 |
| Q4 (October to December) | -32% | 92.9 |
| Full year 2020 | -29% | 186.6 |
The Group recorded an Underlying Operating Loss for the year of £50.8 million (2019: £295.3m profit). The year-on-year reduction of £346.1 million reflected the net of £788.5 million lower revenue partially offset by £442.4 million lower underlying operating costs. After £330.6 million (2019: £53.0m) of separately disclosed items, the statutory operating loss was £381.4 million (2019: £242.3m profit).
Operating costs were originally budgeted to grow proportionately with budgeted double-digit revenue growth, but immediately as the impact of the pandemic took hold in late March, we took action to reduce operating costs by c.£100 million per month relative to budgeted levels throughout the second quarter. All variable costs were reduced in line with service reductions and all discretionary expenditure was stopped. For several months in the year the Board and senior management agreed to pay sacrifices, and salary deferral schemes were in place across the Group.
Significant numbers of employees were temporarily laid off or furloughed utilising government income protection schemes. At peak, we had furloughed or temporarily laid off 40,000 staff from a global workforce of c.55,000. The furlough arrangements in place differ by country. In the UK, the Government provides companies with funding to pay employees that would otherwise be laid off. In Spain, companies agree temporary lay-off numbers with the Government which then provides enhanced benefits directly to the impacted employees with employers partially compensated for continued social security payments. In North America, the Government put in place a package to provide funding to employers who continued to provide benefits to employees who were temporarily laid off. The table below outlines the cost support recognised in the year
| Government Covid-related cost support | £m |
| UK – Covid Job Retention Scheme | 27.1 |
| ALSA – job retention schemes in Morocco, Spain and Switzerland | 9.3 |
| North America – employee retention credits in US (and equivalent in Canada) | 18.5 |
| Full year 2020 | 54.9 |
As well as scaling back variable costs as revenue fluctuated during the year, we also undertook a review of the fixed cost base, identifying up to £100 million of annualised savings which will be fully realised in 2021.
The majority of these savings were in payroll costs, driven by headcount reductions in managerial, administrative and customer service roles and through efficiency savings from process improvements. Other cost savings have been derived from property rationalisation, travel costs and professional fees, along with process improvements driving efficiencies in areas like repairs and maintenance.
Underlying net finance costs decreased by £2.5 million to £53.2 million (2019: £55.7m) reflecting the net of higher interest costs in the first half caused by the partial doublecarry of Sterling bonds offset in the second half by the impact of lower net debt.
After finance costs and a loss of £2.1 million from the share of results from associates (2019: £0.4m profit), the Group recorded an Underlying Loss Before Tax of £106.1 million (2019: £240.0m profit).
The Underlying tax credit was £29.3 million (2019: £55.2m charge) representing an Underlying effective tax rate of 27.6% (2019: 23.0%). The statutory tax credit was £118.0 million (2019: £38.7m charge), an effective tax rate of 26.5% (2019: 20.7%). Tax losses in most jurisdictions have been recognised as deferred tax assets with forecasts of future profits supporting their utilisation.
The statutory loss for the year, after the separately disclosed items explained below, was £326.7 million (£148.3m profit).
Chris Davies
Group Chief Financial Officer
18 March 2021