Shares in Go-Ahead Group (GOG) recorded a double-digit increase on results day, which must have been a welcome relief to management since the market valuation has been on a downward trajectory over the past couple of years. UK investors have become somewhat pessimistic about listed transport operators, and so expectations-beating results in the rail division came as a pleasant surprise. At the full-year results in September, chief financial officer Patrick Butcher said UK rail margins were at “historically low levels”, but since then the operating profit margin has improved by 90 basis points to 3 per cent thanks to a recovery in the GTR division, which includes Southern Rail, Gatwick Express, Thameslink and Great Northern.
Group operating profit, up by a fifth to £86.9m, also benefited from a recovery in rail, along with a one-off £6.4m from selling the assets from the London Midlands franchise to the new operator. This franchise may have come to an end for Go-Ahead, but the group is shortlisted to continue to run the South Eastern service. The bus service also beat expectations with operating profit up slightly from last year to £46.6m. Go-Ahead spent £30m on new buses and another £9m on improving the experience for customers with Wi-Fi and convenient payment options.
Analysts at Investec expect £116m in pre-tax profits during the year to June 2018, giving EPS of 181p, from £137m and 207p in FY2017.
| GO-AHEAD GROUP (GOG) | ||||
| ORD PRICE: | 1,529p | MARKET VALUE: | £659m | |
| TOUCH: | 1,528-1,531p | 12-MONTH HIGH: | 2,303p | LOW: 1,310p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 582p* | NET DEBT: | 88% | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 1.72 | 67.0 | 108 | 30.17 |
| 2017 | 1.83 | 79.7 | 116 | 30.17 |
| % change | +7 | +19 | +7 | - |
| Ex-div: | 05 Apr | |||
| Payment: | 20 Apr | |||
| *Includes intangible assets of £94.6m or 219p per share | ||||
