Management review

It is pleasing that the group achieved a seven per cent increase in EBITDA from continuing operations and a seven per cent increase in operating profit, against the backdrop of continued increases in fuel costs and substantial expenditure on bidding for new rail tenders. Revenue grew to over £2 billion for the first time, and with 79 per cent growth in the group’s future contracted revenue, including the CrossCountry rail franchise win in the UK and an 18 per cent increase in the mainland Europe order book, we have built the momentum for further growth.

The signing, in early August, of a new £615 million five-year revolving credit facility on improved terms was timely, ahead of the full impact of the ‘credit crunch’, and has provided significant additional financial capacity for the group.

On winning the CrossCountry franchise, we fixed the fuel price for 75 per cent of our anticipated fuel requirements over the life of the franchise. This has considerably reduced the fuel price risk in this significant contract. The £33 million value of the hedge is included in derivative financial instruments in the balance sheet.