LONDON (Alliance News) - Rail and road transport provider Go-Ahead Group PLC Thursday said it will increase its interim dividend after reporting a rise in profit and revenue in the first half of the year, as its bus division reported strong profit growth.
For the six months ended December 27, the FTSE 250 company reported profit before tax of GBP44.7 million, an 11% increase from GBP40.3 million reported a year earlier after a significant rise in revenue.
Operating profit for the period rose by 6.1% to GBP55.3 million from GBP52.1 million, driven by strong profit growth for Go-Ahead's bus division. Operating profit from its regional bus division increased by 15%, whilst profit from its London bus services rose by 3.8%, partially offset by a 2.9% fall in profit from the company's rail division.
Revenue for the period rose by 14% to GBP1.55 billion from GBP1.37 billion, after sales increased in both its rail and bus divisions. Rail revenue reported an 18% rise from the first half of 2013, while bus revenue climbed 3.4%.
"It has been a busy period in which the group has delivered good financial results. The first half of the year has seen the start of significant new rail contracts, including GTR [Govia] which will shortly become the UK's largest franchise. In our bus operations, we have made further progress towards our operating profit target of GBP100 million by 2015 to 16," said Go-Ahead.
As a result of the improved profit, Go-Ahead increased its interim dividend by 4.3% to 26.6 pence per share from 25.5 pence paid a year earlier.
"The group is in a good financial position with strong cash generation and a robust balance sheet, supporting our progressive dividend policy. We are committed to this policy, recognising the importance of the dividend to the investment decision of many of our shareholders," Go-Ahead said.
At the end of the period, Go-Ahead reported net cash of GBP169.2 million, swinging from a net debt position of GBP42.7 million a year earlier, largely reflecting increased season ticket cash and other positive working capital movements in the rail division, the company said.
"Overall, the board's expectations for the full-year results remain unchanged, with second half profits similar to those achieved in the first half year for both our bus and rail divisions," the company said.
Looking forward, Go-Ahead said it will continue to emphasise the value of its regional bus business and improving operational performance from its rail division to minimise disruption.
In addition, Go-Ahead said it continues to look at new opportunities and said it has made a bid for a contract in the Singaporean bus market and has started exploring opportunities in the German regional rail market, it said.
Go-Ahead shares were up 0.1% to 2,449.00 pence per share on Thursday morning, reversing opening losses down to 2,377.00p.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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