Gocollective A/S

Beskrivelse af usikkerhed ved indregning eller måling
Recognition and measurement uncertainties
The recognition and measurement of items in the annual report is not associated with any uncertainty.

Beskrivelse af udviklingen i virksomhedens aktiviteter og økonomiske forhold
Operating and Financial review
The company/group entered into an agreement to divest the business from Deutsche Bahn (DB) to the private equity firm Mutares SE & Co. KGaA in September 2022. During the early months of 2023 the company completed the divestment and secured a successful closing of the transaction on May 15th 2023 with the new owner also committing to a 24-month insolvency guarantee.
The finalization of the transaction put the company on a new strategic trajectory ending 3 years of strategic stalemate and non-investment in the business. During the sales process, commencing for Arriva Danmark in 2020 and ending with the final closing of the new ownership on May 15th, 2023, the company was under severe capital constraints and did not have a mandate from its owner to bid on and commit to any new transportation contracts. As a result, the company was unable to defend a very significant portion of its existing contract portfolio which came up for retender during the period. Consequently, in 2023 the company’s finances continued to be burdened by contract run-off from the existing Bus contract portfolio – corresponding to a total activity reduction of almost 25% compared to 2022. In all, the business has seen a c. 50% reduction of its contracted revenue since 2020, as a direct result of not being able to defend existing contracts.
Cost saving measures and operational improvements positively impacts results
With the successful divestment to Mutares the company was finally free from mid-2023 to initiate an ambitious transformation and growth strategy, named Go 2026, based on a 3-step action plan to drive a comprehensive restructuring of the company and repositioning the business for growth as an autonomous operator in the Danish public transportation market.
During 2023 the company has therefore already implemented operational improvements and cost saving measures across the Group with an annualized run-rate impact of c. mDKK 75 – based primarily on fixed cost reductions (Indirect and Fixed) as well as productivity improvements. Additional initiatives aimed at mitigating the negative drag from declining revenues will come into effect during 2024, with an expected total annualized run-rate value of c. mDKK 120.
Focus on core businesses – car sharing service SHARE NOW discontinued
In 2022, SHARE NOW reached mDKK 1.1 individual rides in its fleet of shared cars in urban and greater Copenhagen, whilst also yielding a significant contribution to emission-, congestion-, and noise reduction. However, despite the obvious customer success, and due to significant future investment needed to achieve consistent profitability, it was decided to close down the SHARE NOW business and secure full strategic and operational focus on the core Bus and Rail businesses. The termination of SHARE NOW was announced in October 2023, with all operations finally ending on February 29th, 2024.
Re-engaging in tendering with positive outcome
Following the divestment from DB, initiatives to retain and grow the Bus contract portfolio have commenced with success. GoCollective thus bid on its first bus contract since 2019 immediately after closing in mid-2023, winning a respectable portion of Movia’s A22 tender on Zealand - with 22 electric busses commencing operations from Q4 2024. This has been followed up with wins in Midttrafik’s MT66 tender in Jutland (54 electrical busses), Fynbus’ Svendborg tender on Funen in early 2024 (9 electrical buses) and Movia’s A23 tender on Zealand (55 electrical buses) – thereby cementing GoCollective’s competitiveness and providing comfort in the company’s ability to execute effectively on the commercial aspects of its strategic plan. Growth was also pursued in UCplus, with the business winning an important Danish language tuition contract in in Southern Jutland adding a further c. mDKK 19 in annual recurring revenues.
Inflations mitigated with delay due to price increase limitations
GoCollective is not free to independently increase its unit pricing in public transport contracts in response to inflationary pressures – relying instead on the indexation mechanisms inherent to individual contracts. For the Bus business this mechanism is quite dynamic with general price inflation trends being reflected in revenue adjustments with a delay of only 2 to 6 months. For the Rail business however, this mechanism works with a much longer lag of 12 to 18 months. The sharp peak in inflation during the second half of 2022 was therefore not offset for the Rail contract until January 2024, thus impacting performance negatively throughout 2023.
Positive development in Rail passenger volume normalization
Throughout 2023 the company experienced operational disruptions due to an unusually high level of storm damages and maintenance of the track system by the infrastructure provider Banedanmark as well as supplier delivery difficulties for heavy overhaul of trainsets, causing a higher than anticipated level of train groundings. Despite this situation and its impact on punctuality, it is positively noted that the year saw an almost 10% increase on average in monthly passengers compared to 2022. The passenger base is, however, still not back to the 2019 level, impacting the business negatively, given that rail ticket revenues are collected directly from passengers. The company still doesn’t expect passenger volumes to be fully normalized until the end of 2025 at the earliest.
Write-down of fine receivables in Rail
The collection of receivables related to fines issued to passengers travelling without a ticket is under the purview of the Danish Tax Authorities (Danish Debt Collection Agency). GoCollective does not have a mandate to collect these receivables independently, and during 2023 the Rail business wrote-down receivables for c. mDKK 83 in recognition of the slow rate of reclaim from the collector (Danish Debt Collection Agency).
New ERP platform to provide strengthened productivity
As part of the separation from Deutsche Bahn, a substantial part of the company’s IT-platform, including the ERP and HR systems, needed to be replaced. These projects have been comprehensive in terms of both costs and use of internal resources, and will continue in 2024, with the new systems going live mid-year 2024. Despite the initial cost burden, there is an expectation that the new IT platform will increase productivity going forward, thus supporting the Group’s ongoing transformation and efficiency ambitions.
Development in contract loss provisions
In 2020, Arriva Denmark set aside mDKK 214.3 for future expected losses on Bus contracts, and in the financial year 2023, mDKK 29.8 of this sum has been reversed.
Divestment of Property
As part of the divestment process, the company sold its large Copenhagen depot on Sibeliusgade, Østerbro to the Arriva Group plc, and in this connection realized a gain of mDKK 210 in 2023.
Financing
As part of the divestment to Mutares, the previous owner Deutsche Bahn provided a combined equity injection to the GoCollective Group of mDKK 837. This inflow of funds was used largely to bring down existing debt and allow for the transaction to complete on a debt free basis. The Groups equity is thus strengthened, and the company expects to be able to finance future activities and growth through operations and loans secured by the company's assets.
As a result of the above, GoCollective Group realizes a consolidated loss before tax of mDKK 114.3 compared to a loss of mDKK 95.9 in 2022.
The total result after tax for 2023 is a loss of mDKK 141.2 and the groups consolidated equity per 31 December 2023 is mDKK 722.5.
Management considers this year's result to be satisfactory.