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Go-Ahead Group surges on back of one-off gains
Go-Ahead Group said its expectations for the full year had improved after the train and bus operator benefited from a one-off boost in the first half after it lost one rail contract.
The operator of South Eastern Trains via its 65% owned Govia subsidiary, reported revenue for the six months to 30 December of £1.8bn, which was up 6.5% on the same period the year before.
Operating profit of £86.9m was up 19% as the operating profit margin improved to 4.8% from 4.3% thanks to rail. Profit before tax of £79.7m was up 19% and basic earnings per share by 7.3% to 115.5p.
The rail operating profit of £40.3m was up from £26.6m a year earlier, better than expected after a one-off profit of £6.4m from the sale of assets to the incoming operator as it lost its London Midland franchise in December and was aided by the phasing of contractual settlements in Southeastern.
The bus division generated a flat operating profit of £46.6m in line with expectations. The mobilisation of Dublin bus contract and three German rail contracts was "progressing well" ahead of respective 2018 and 2019 start dates.
The interim dividend was held flat at 30.1p at per share.
Looking forward, full year expectations for the bus and rail businesses remain unchanged.
"Both regional and London bus markets present challenges for all operators, however, we believe that our resilient business model, the emphasis we place on understanding our customers and our considerable experience and expertise leave us well placed to address these challenges and protect our bus business," chief executive David Brown said.
"Looking to rail, our expectations for GTR and Southeastern are unchanged. Our previous guidance relating to the expected profitability of the GTR franchise remain the same, with an anticipated operating profit margin of between 0.75% and 1.5% over the contract life."
Overall, full year expectations for the rail division were increased driven by the one-off rail benefits in the first half relating to London Midland.