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Go-Ahead Group Plc

Go-Ahead Group Plc Operating profit for the half year ahead of management expectations

Go-Ahead Group Plc (LON:GOG), today released half year results for the six months ended 29 December 2018

Business overview
• Good progress made in all three strategic pillars: protect and grow the core; win new bus and rail contracts; prepare for the future of transport

• Group operating profit for the half year ahead of management expectations; full year expectations increased principally due to rail

• Bus operating profit pre-exceptional items slightly ahead of last year at £46.9m (2018: £46.6m)

• Rail operating profit at £17.6m (2018: £40.3m) ahead of expectations, though lower than last year due to the end of the London Midland franchise in December 2017

• GTR reliability significantly improved since last year’s timetable changes; contractual agreement reached with DfT in December 2018

• Strong operational and financial performance continues at Southeastern; franchise extended by 12 weeks to 22 June 2019; shortlisted for the new South Eastern Franchise

• Continued progress in our international strategy: won our fifth rail contract in Germany, first rail contract in Norway and first consultancy contract in Australia

• Maintained interim dividend of 30.17p (2018: 30.17p) in line with policy

Financial Summary

H1’19

H1’18

Increase/
(decrease)
%

Revenue (£m)

1,920.8

1,829.4

5.0

Operating profit pre-exceptional item (£m)

64.5

86.9

(25.8)

Profit before tax pre-exceptional item (£m)

61.0

79.7

(23.5)

Profit before tax (£m)

44.2

79.7

(44.5)

Basic earnings per share pre-exceptional item (p)

93.2

115.5

(19.3)

Basic earnings per share after exceptional item (p)

60.7

115.5

(47.4)

Interim dividend per share (p)

30.17

30.17

Note: Exceptional item of (£16.8m) in H1’19 relates to GMP pension equalisation (H1’18: nil)

 

 

H1’19

H1’18

Increase/
(decrease)
£m

Cashflow generated from operations (excluding restricted cash) (£m)

112.0

167.1

(55.1)

Free cashflow (£m)

58.7

93.7

(35.0)

Adjusted net debt (£m)*

261.7

254.0

7.7

Adjusted net debt/EBITDA*

1.34x

1.03x

*    Adjusted net debt is net cash less restricted cash

David Brown, Group Chief Executive, commented:
“I’m pleased to report that our half year results are ahead of our expectations. Our bus operations showed resilience with profits slightly up on last year despite a challenging market environment. Whilst overall rail profits fell due to the end of the London Midland franchise in December 2017 and a lower result at GTR, they were ahead of expectations. Southeastern delivered good financial performance, up on last year.

“Our regional bus business grew passenger journeys by 2.3% on a like for like basis and we continue to make our services better and easier to use. We have invested a further £26.3m in this business during the half year, including 82 new low or zero emission buses. In London, we have continued to make improvements to our service performance leading to an increase in our Quality Incentive Contract income.

“In UK rail, both of our franchises have delivered better punctuality; Southeastern improving by 6 percentage points to 89% with its best Autumn performance on record, and GTR by 5 percentage points to 81%. The addition of 200 more daily GTR services from December 2018 has gone well and is providing increased travel choices for our customers. Southeastern has consistently been the best performing large train franchise in the UK in recent months and we have submitted a strong bid for the new South Eastern Franchise designed to deliver value to passengers, taxpayers and shareholders.

“Positive momentum in our international expansion continues with three further contract successes – a first rail contract in Norway, our fifth rail contract in Germany and a consultancy contract in Australia. Annualised revenue from the ten international contracts secured to date is expected to be over £400m when fully mobilised, and there is a good pipeline of further opportunities in our target markets. We remain on track to deliver 15% to 20% of Group operating profit from international operations by 2022.

“Staying ahead of changing customer needs and expectations is a strategic priority. PickMeUp, our demand responsive transport operation in Oxford, has grown to 20,000 registered users and is providing 3,000 weekly rides. Our Billion Journey Project incubator is creating opportunities with dynamic start up businesses with two pilots underway and more innovations in the pipeline.

“Our companies collaborate with partners to deliver services that enable economic growth and work for all sections of society. We use smart technology to deliver efficient services and help customers take more control of their journeys. Go-Ahead is proud to be a responsible business that invests in its people and contributes to the sustainability of our cities and communities”.

Outlook
“For the Group overall, our full year expectations have increased, principally due to rail. We expect free cash flow generation to be strong, resulting in a reduction in net debt, excluding restricted rail cash, at year end and supporting the payment of dividends that are in line with our policy.

“Go-Ahead is an increasingly geographically diversified business, built on the safe and efficient provision of essential services. We remain committed to delivering long term value for all our stakeholders and our vision of a world where every journey is taken care of.”