Go-Ahead on the path to recovery as it reinstalls trust with DfT

Go-Ahead said today it has emerged from the both the pandemic and recent financial troubles with a strong recovery in passenger numbers and healthy profits.

In its half-year results, the transport group revealed operating profits of £42.6m, a 17.7 per cent boost year-on-year, while its £50.1m statutory profit before tax included a net exceptional credit of £13m.

As the company is performing better than anticipated, Go-Ahead could exceed 2022 market expectations of £4bn in revenue and £150m in operating profits.

“To wrap up, Go-Ahead is back on track,” chief executive Christian Schreyer told journalists this morning. “We have resolved the issues of concern and we have a clearly-defined strategy and strong balance sheet that provides us with the capacity to invest.”

In a sign of returning normality, the company’s regional bus service gas reverted to a more commercial model as passenger numbers rebuild – currently above 80 per cent of pre-pandemic levels, especially in big cities such as London and Manchester.

Passenger numbers across Go Ahead’s GTR rail network remained slightly below 70 per cent, but the company said demand is expected to go back to 100 per cent on pre-pandemic levels.

The group brushed off Analysts’ concerns that profits across the rail network being were lower year-on-year saying in the previous year Go Ahead reaped the benefits of the crystallisation of performance bonuses.

“What had happened in the previous year was that the performance bonus had not been accrued but it then came into that financial year,” said the group’s financial controller Mark Ferriday.

“If you look at GTR’s profits they are broadly the same as they were in the previous year.”

According to the chief executive, the company can look to the future after it put its financial troubles behind and regained the trust of the Department for Transport (DfT).

Go Ahead’s subsidiary Govia was slapped in March with a £23.5m government fine for concealing £25m of taxpayer’s money related to HS1 but a month later the group was awarded a national rail contract to continue operating its Thameslink, Southern and Great Northern rail franchises.

“[The GTR contract] demonstrates clearly we were able to reinstall trust with the Department for Transport,” Schreyer added.

As a result of things improving, Go Ahead reiterated it would reinstate its pre-Covid policy of paying dividends to shareholders equivalent to between 50 per cent and 75 per cent of underlying earnings per share.