Go-Ahead Group on track to meet expectations

The FTSE 250 transport operator said its regional bus operations followed similar trends in the quarter to the first half of the year, with revenue up 2.5% but passenger journeys declining 0.5%.

It said revenue growth was continuing to benefit from higher contract income.

In London, where the company measures performance by mileage rather than passenger journeys, Go-Ahead said both revenue growth and mileage were consistent with expectations in the third quarter, improving 4% and 3% respectively.

It said contract gains, contract variations and rail replacement work helped offset reduced ‘Quality Incentive Contract’ revenue.

That revenue, which is derived from Transport for London, is reduced when a bus operator’s on-time performance drops. As in previous updates, Go-Ahead blamed external factors, including roadworks, for the reduced revenue there.

Go-Ahead’s rail businesses all experienced growth, with London Midland the frontrunner. It saw passenger revenue improve 9.5% during the quarter, and passenger journeys increase 5%.

London Midland had been operating under a new direct award contract since 1 April.

Southeastern saw passenger revenue increase 5.5% and journeys go up 2%, while the figure for Govia Thameslink Railway was 3% on both measures.

"Overall trading performance has been satisfactory and our full year expectations for both bus and rail operations remain unchanged,” said Go-Ahead CEO David Brown.

"We continue to make progress in our bus division. Our locally-run bus companies work in partnership with local authorities and are focused on the needs of the communities they serve. We are proud of our high levels of customer satisfaction, which at 89% remain sector-leading.

"In our rail division overall underlying trading remains in line with our expectations,” Brown added.

Looking ahead, Go-Ahead’s board was confident the group remained on course to meet full-year expectations for both the bus and rail divisions.

Go-Ahead Singapore will also contribute to the group later this year, starting operations in the third calendar quarter.

“The group remains in a good financial position with strong cash generation and a robust balance sheet, supporting our sustainable dividend policy and allowing flexibility to pursue value-adding opportunities,” the board said in a statement.