Development in the first half of 2019

¹⁾ H1 2018 figure adjusted. 

Overall performance development declined slightly driven by the current market development and portfolio adjustments. The development in the London bus market was positive.

The economic development saw a revenue growth offset by cost increases – including driver costs, bus driver training and digitalization projects led to weaker operating profit figures.

• The revenue development was positive mainly due to increased proceeds from bus sales, performance gains in London and positive exchange rate effects.
• Other operating income increased primarily driven by growth in rail replacement transport and services provided during special events.

On the expenses side, noticeable additional charges were recorded in cost of materials and personnel expenses.

• The increase in cost of materials was particularly im - pacted by the higher expenses for the purchase of buses for resale and for maintenance.
• Personnel expenses increased as a result of collective bargaining agreements and driver shortages.
• Other operating expenses rose, among other things, due to bus driver training and digitalization measures. IFRS 16 effects (offsetting effect in depreciation) had a compensating effect.
• Depreciation increased noticeably due to IFRS 16 effects.

Capital expenditures were roughly at the level of the first half of 2018.

The number of employees declined partially due to the cessation of transport contracts in non-emergency patient transport.

Performance development was adversely impacted by the cessation of the Arriva Trains Wales franchise (October 2018). The increase in volume produced at Arriva Rail North and the successfully performed timetable change in May 2019 had a partially offsetting effect.

The economic development was also particularly characterized by the cessation of the Arriva Trains Wales franchise and the ongoing delayed implementation of rail infrastructure at Arriva Rail North. As a result, adjusted EBIT declined. The increase of the adjusted EBITDA was a result of IFRS 16 effects.

• Revenues decreased due to the cessation of the Arriva Trains Wales franchise. Increased support payments, higher passenger revenues and positive exchange rate effects had a partially compensating effect.
• Other operating income increased primarily due to additional financing contributions for project costs. The cessation of the Arriva Trains Wales franchise had a partially offsetting effect.

The development of expense items was driven by the cessation of the Arriva Trains Wales franchise which resulted in lower levels of expenses.

• The noticeable increase in cost of materials resulted primarily from higher expenses for infrastructure use and lower engineering disruption-related performance regime income.
• Personnel expenses reduced due to the cessation of the Arriva Train Wales franchise.
• Other operating expenses decreased in particular due to IFRS 16 effects (offset by the effect on depreciation and the cessation of the Arriva Train Wales franchise). Higher franchise payments had only a slightly offsetting effect.
• Depreciation significantly increased due to IFRS 16 effects.

Capital expenditures also rose significantly as a result of IFRS 16 effects.

The decrease in employee numbers was mainly driven by the cessation of the Arriva Trains Wales franchise. Additional hiring at Arriva Rail North had an offsetting effect.

The performance development in the Mainland Europe line of business was mainly positive:

• In rail transport the passenger numbers increased mainly as a result of continuing development in Sweden. Volume sold and volume produced remained roughly stable.
• In bus transport, passenger numbers and the volume produced increased mainly as a result of the VT-Arriva acquisition (December 2018).

The economic development was slightly positive. Positive effects, among other things, from the business expansion in Hungary (acquisition of VT-Arriva).

• The revenue development was positive mainly related to VT-Arriva and volume growth in Sweden. Exchange rate effects had a slightly offsetting effect.
• Other operating income remained at about the same level.

The development of the expense items was primarily impacted by the acquisition of VT-Arriva and operational cost increases:

• The significant increase in cost of materials was mainly driven by higher maintenance expenses and the VTArriva acquisition.
• Personnel expenses increased slightly mainly as a result of the acquisition of VT-Arriva. A shortage of skilled workers in Central and Eastern Europe had an additional negative effect. Exchange rate effects had a compensating effect.
• The decrease in other operating expenses resulted mainly from IFRS 16 effects (with an offsetting effect in depreciation).
• Depreciation, on the other hand, increased noticeably due to IFRS 16 effects.

Capital expenditures increased significantly mainly due to the IFRS 16 effects and the purchase of buses in Sweden.

The employee number increased mainly due to the VT-Arriva acquisition. The cessation of other transport contracts had an offsetting effect.