Our regulated bus operations in London continued to perform well. Revenue increased by 6.1% in the period, consisting of an increase in contracted mileage of 1.8%, an average increase in contract prices of approximately 4% and an increase in quality incentive bonuses to £14.2m (2008: £13.7m). We continue to perform well in the TfL quality league tables and operated in excess of 99.6% of our target mileage before traffic congestion losses.

Revenue trends were as expected. The second half growth rate of 3.8% compared to a first half of 8.5% was due to a 2.5% reduction in mileage resulting from a net loss of contracts in the second half. Much of this has been subsequently recovered for the new financial year. Around 85% of our depot capacity in London is owned as freehold which provides a strong base for contract renewals.

During 2009, TfL commenced the decommissioning of articulated ‘bendy’ buses as contracts are renewed. This is expected to reduce residual values and so we will provide for accelerated depreciation of around £4m over the next three years as an exceptional cost, of which £0.8m has been recognised in 2009.

Go-Ahead’s London bus depots

Having a good network of bus depots is important for London operators. Go-Ahead has 15 strategically located London depots with around 85% of our capacity owned as freehold.