12th Mar 2020 09:19
(Alliance News) - Go-Ahead Group PLC on Thursday reported a first-half earnings rise and added that its majority-owned Southeastern rail unit is in the "final stages of discussions" with the UK's Department of Transport over a franchise contract.
Shares in the transport operator were 21% lower at 1,337.00 pence each in London on Thursday morning.
Go-Ahead said Southeastern - in which it has a 65% stake through the Govia joint-venture - has a direct award contract for the franchise which expires on March 31. The franchise runs between London and Kent.
In the six months ended December 28, Go-Ahead's revenue rose 2.7% to GBP1.97 billion from GBP1.92 billion. Pretax profit rose 11% to GBP49.0 million from GBP44.2 million.
However, not including an exceptional charge of GBP16.8 million from the year prior, pretax profit fell 20% from GBP61.0 million. Finance costs in the first half of the current year more than doubled to GBP13.4 million.
Go-Ahead held its interim payout at 30.17 pence per share.
Chief Executive David Brown said: "Our London & International bus business is performing well and in line with expectations for the full year, while our expectations for our regional bus business have slightly reduced, reflecting cost pressures and adverse weather on passenger travel."
In UK rail, the company also is waiting on the results of the Williams Review, a market-wide probe which will then make recommendations for the future of the industry.
Brown added: "We are in the final stages of discussions with the Department for Transport regarding a potential direct award contract for Southeastern. The stronger than expected UK rail performance has offset the impact of operational challenges in the first six months of running our German rail contracts. We began running rail services in Norway in December and are delivering high levels of operational performance.
"In the second half of the year our focus will be on continued management of our regional bus cost base, integrating new contracts and recent acquisitions, and improving our German rail operations. While it is unclear how the coronavirus situation will evolve in the coming weeks, travel patterns are likely to be impacted in the second half of the year."
Go-Ahead said in recent weeks, passenger revenue was been hurt by "adverse weather" and areas "most exposed to tourism" have been hurt by the virus spread.
Storms Ciara, Dennis and Jorge swept the UK last month, leading to widespread flooding during the country's wettest February on record.
By Eric Cunha; [email protected]
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