Ferrying sports fans around London during the Olympics meant Go-Ahead (GOG) finished the first half ahead of City forecasts. Management expects the bus business to beat full-year forecasts, too, which it must if it's to offset further weakness in rail. Analysts at Investec Securities certainly think it will. They expect buses will generate nearly three-quarters of their £100.5m operating profit estimate for the 12 months to June to produce adjusted EPS of 134.1p (141.2p in 2012).
Go-Ahead's regulated bus operation was the star this time. A £1.6m Olympics windfall and extra £1.4m of performance bonus payments meant operating profit rose by 17 per cent to £20.2m. That offset a 6 per cent decline from its regional routes, hurt by £5m of extra fuel costs and lower subsidies, and left profit from all buses up 5 per cent at £37.1m. Cost-cutting should help improve margins through the second half and steady passenger growth, coupled with further rollout of smartcards, keeps Go-Ahead on track to make £100m from buses by 2015-16. That, it says, will underpin the dividend and effectively replace rail profits in three years' time.
In 2012, rail profits fell 14.5 per cent to £14.1m, although that was better than feared, and even the troublesome Southern franchise, which enters revenue support in September, should make money this year. Go-Ahead is also in the running for the new Thameslink franchise, which will merge with Southern, and the resumption of rail franchising can't come quick enough.
GO-AHEAD (GOG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,370p | MARKET VALUE: | £589m | |
| TOUCH: | 1,367-1,371p | 12-MONTH HIGH: | 1,400p | Low: 1,074p |
| DIVIDEND YIELD: | 5.9% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 41p* | NET CASH: | £26.5m** | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.20 | 39.2 | 61.4 | 25.5 |
| 2012 | 1.30 | 38.0 | 62.8 | 25.5 |
| % change | +8 | -3 | +2 | - |
Ex-div: 20 Mar Payment: 12 Apr *Includes intangible assets of £101.3m, or 236p a share **Includes £90.6m from sale of rolling stock repaid to the Department for Transport (DfT) in January 2013 | ||||
