• 2009 revenue: £602.4m
• Start of franchise: August 2001
• Franchise renewal: September 2009
• Profit share: Currently in 60% profit share with the DfT
• Approx. 50% of passengers are commuters
• Regulated (peak-time) fare increases: RPI* +1%

• *Annual regulated fare increases are made in January based on the Retail Price Index (RPI) as at July of the previous year.

The Southern franchise provides frequent train services connecting central London to south London, the South Coast and East and West Sussex, including express services to Croydon, Gatwick and Brighton.

Performance Overview

Our Southern franchise performed well, delivering an integrated Gatwick Express service from 22 June 2008, significant timetable changes from December 2008, including new services on the Brighton Main Line, and operational support to the Thameslink programme, whilst maintaining high levels of operational and financial performance.

Our operational performance in Southern remained strong despite adverse weather in February, with a record public performance measure (PPM) showing that 90.7% (2008: 90.0%) of our trains arrived on time. Initial teething difficulties with rolling stock on the Brighton Main Line, which have now been resolved, resulted in a small reduction in our Spring national passenger survey customer satisfaction rating to 80% (2008: 81%).

Total revenue in Southern consisted of passenger revenue of £487.2m (2008: £393.0m), other income of £32.5m (2008: £29.8m) and net subsidy receipts of £82.7m (2008: £134.3m).

The increase in passenger revenue consisted of £63.0m from Gatwick Express and like for like growth in passenger revenue (excluding Gatwick Express) of 7.9%. Like for like passenger numbers increased by 4.4% compared to last year. As previously reported, growth rates slowed in the second half of the year, with like for like passenger revenue growth of 6.0% compared to 11.1% in the first half. Like for like passenger numbers increased by 2.2% in the second half compared to 6.7% in the first half.

As expected, Gatwick Express experienced a reduction in passenger numbers as a result of the fall in air traffic at Gatwick airport. Overall, the Gatwick operations are estimated to have contributed a small operating profit* for the year.

Like for like operating profit* for Southern was slightly below last year, with cost reduction and profit share offsetting the reduction in subsidy and the slowing in the rate of revenue growth. Approximately £21.1m of the reduction in subsidy related to the change in the Network Rail access charge regime from 1 April 2009, with an equal and opposite change in the rail access charges. Other cost reduction measures included energy savings through regenerative braking and the benefits of Group procurement. The profit share arrangements in the current franchise provide the DfT with 60% of any profit increases or decreases.