Go-Ahead changes accounting policy for rail pension schemes

Go-Ahead has changed its accounting policy for rail pension schemes in line with its commitment to transparent reporting and to be consistent with emerging industry practice, a move that has pushed up its statutory profit.

The FTSE 250 transport operator said its balance sheet only recognises the share of surplus or deficit expected to be realised over the life of each franchise. The current assessment is that there is no surplus or deficit to be recognised and so no asset or liability is provided for.

But Go-Ahead said that in order to better reflect the group's limited responsibility for rail pensions, it is revising its accounting policy under which operating profit will now only recognise the group's agreed cost for rail pensions, rather than the full service charge previously included.

This will be effected by means of a franchise adjustment to the income statement, in line with emerging industry practice. Go-Ahead said the change in reporting will only affect reported profit and not cash.

Statutory operating profits for the years between 2013 and 2016 will be restated higher, with statutory operating profit for 2016 of £165.6m compared to £120.4m.

Reported statutory operating profit for 2013 will be restated at £96.3m from £86.7m, for 2014 at £114.5m from £103.2m and for 2015 at £138.6m from £114.7m.

Meanwhile, group earnings before interest, taxes, depreciation and amortisation for 2016 will be restated at £220.8m compared to £175.6m.

At 1230 GMT, the shares were up 4.3% to 2,100p.