Go-Ahead Group (GAG) has released its half year-results, which it says line up with management expectations. Bus operating profit was up 14.7% to £40.6m, with total operating profit rising 21.4% from £42.1m to £51.1m, with operating profit margin rising from 3.2% to 3.7%.
The group’s profit before tax rose by 30.8% to £40.3m. The half-year dividend per share of 25.5p was maintained.
Operationally, GAG reported record passenger numbers in both bus and rail. It highlighted the bids it had submitted for the Thameslink and Crossrail franchise competitions during the period.
GAG said it is on course to reach its October 2012 target of £100m of bus operating profit by 2015/16. At 3.7%, like-for-like deregulated revenue growth for the period is slightly ahead of the group’s three year guideline and has been helped by a small expansion of the network, following investment in new services and some commercial contract wins. In the regulated business, like-for-like revenue growth of 7.9% includes around 2.5% relating to a reallocation of Bus Service Operators’ Grant (BSOG) from costs to contract revenue.
Including reduced insurance costs, GAG said it has made around £4.5m of cost savings in the first half of the year. This includes around £1m from initiatives introduced in the latter half of 2013. The group does not anticipate such significant savings in the second half of the year and says it remains on course to deliver £10m of cost savings by 2015/16.
Although the £100m target was based on organic growth, the group is continuing to assess acquisition opportunities both in and outside London. With the exception of the purchase of a small number of TfL route contracts in Dagenham from FirstGroup in June 2013 the GAG has made no acquisitions since announcing the operating profit target.
The group has invested significantly in its bus fleet in the first half of the year, spending £42.4m on 231 new buses, including 36 hybrids. This takes the total number of alternative fuel vehicles operated by Go-Ahead to around 200. The average age of the fleet stands at 7.4 years.
David Brown, Group Chief Executive, commented: “In October 2012 we set out a three-year plan of growth and business improvement with the aim of raising the performance of our UK bus business to £100m in operating profit.
“We’re making good progress, and 16 months into that timetable, our planning assumptions remain valid and we are on course for our target. Meanwhile we maintain our long-term commitment to rail and were pleased to have submitted our bids for the Thameslink and Crossrail franchise competitions during the period.
“The sustained efforts of our 23,500 people, backed by substantial targeted investments in technology, fleet and new facilities, are strengthening our business by improving services for all our customers.
“Our use of smart and mobile ticketing data helps deepen our understanding of our customers’ needs and allows us to continue to develop and improve our capabilities, to make our bus and rail services more attractive and more convenient.
“With record passenger numbers, effective cash management and a strong balance sheet, Go-Ahead is in good shape with excellent growth prospects.”
