GB Railways eyes up franchise boom
Article Date: Nov 12 2002Following a strong trading performance in the interim period to September, GB Railways confirmed it remains in the hunt for a further two franchises that could 'materially' alter its size and profitability in the short term. Leslie Copeland reports.
Director Max Steinkopf said the group remained quietly confident that its bids for both the Wales & Borders franchise (in which it is bidding in collaboration with Connex) and its application for the Merseyrail franchise (in association with Keolis) will be taken very seriously. It has already been short-listed for the Wales & Border bid and it is on the list for Merseyrail, where the incumbent operator is already out of the equation having failed to make the short list.
'There is no doubt that GB has the experience at both management and operational levels to run both these services. The fact that we are a pure rail company, don't have any other interests and have proven that we can provide innovation in this sector should stand us in good stead.'
As well as these two franchise applications – which will be resolved next year – the group will enter the bidding again for the Greater Anglia franchise. This includes GB's current Anglia Railways route as well as the Great Eastern Franchise and the West Anglia routes of the West Anglia Northern franchise. Other interests within GB's sphere include the Scotrail Franchise and the Northern franchise.
Steinkopf said winning one of the franchises up for tender would dramatically alter the group's size and potential. If it wins more than one, some observers are speculating that it would perhaps have to raise cash. Considering its track record over the past few years, it may not find this difficult.
Indeed, GB's results for the six months to September show just how efficient its operation has become. On total turnover of £43.6 million, GB secured operating profits of £685,000 and pre-tax profits of £800,000.
Its Anglia Railway franchise eliminated its losses to reach breakeven, its Hull Trains network made a pre-tax profit of £389,000 (following a £500,000 exceptional insurance gain relating to the Hatfield disaster) and GB Railfreight made a pre-tax profit of £487,000. This last result is particularly pleasing as this operation was only set up 18 months ago.
With profits for the full year slated to hit at least £1.2 million and cash resources sitting at over £3.2 million, GB Railways looks undervalued at the current £7.74 million.
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