5th Apr 2022 08:47
(Alliance News) - Go-Ahead Group PLC on Tuesday said it will reinstate its pre-Covid dividend policy as it set out medium-term plans to boost revenue and profit.
Shares were up 4.5% at 879.44 pence in London early Tuesday - though the stock remains 37% lower compared to this time a year ago.
The public transport operator will return to paying a dividend equivalent to between 50% and 75% of underlying earnings per share. As such, it intends to recommend a dividend of not less than 50p in respect of the financial year ending July 2022.
It revealed payout plans alongside a new strategy, "The Next Billion Journeys".
"This is an exciting moment for Go-Ahead. My review of the business has found fundamental strengths, and has identified areas where we can deliver improvements and sustainable growth. We plan to strengthen, digitalise and decarbonise our operations, delivering greater profitability and stronger returns to investors alongside improvements for our customers and communities," said Chief Executive Christian Schreyer.
Go-Ahead wants to grow in existing geographies as well as replicate the London & International Bus business model in selected international markets. The company aims to explore new urban mass transit modes such as metro, light rail and bus rapid transit.
It has reaffirmed a commitment to reduce carbon emissions by 75% by 2035.
On the financial side, Go-Ahead is targeting annual group revenue of around GBP4 billion in the medium-term, which it said would be up by around 30%, and operating profit of at least GBP150 million. For the 2021 financial year, Go-Ahead posted adjusted operating profit of GBP115.5 million.
"Today, we've set ambitious, but deliverable, targets. It has been a challenging two years for public transport but there is an exciting future ahead for Go-Ahead," said Schreyer.
As well as a challenging time for the wider sector, it's been a difficult period for Go-Ahead. Last month it received a fine - albeit one that was lower-than-expected - from the UK government in relation to its mishandling of its former London & South Eastern Railway franchise.
The GBP23.5 million fine was less than the GBP30 million it set aside.
DfT did not renew Go-Ahead's franchise agreement in September of last year, with the government stepping in to run operations as the 'operator of last resort'. This was the result of "serious errors" identified in LSER's dealing with DfT over several years.
Though later that month, Go-Ahead subsidiary Govia Thameslink Railway won a three-year contract extension from National Rail for the Thameslink, Southern and Great Northern rail services.
By Lucy Heming; [email protected]
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