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.
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 50 pence 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 £4 billion in the medium-term, which it said would be up by around 30%, and operating profit of at least £150 million. For the 2021 financial year, Go-Ahead posted adjusted operating profit of £115.5 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 £23.5 million fine was less than the £30 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.
Go-Ahead shares were up 3.7% at 873.23p early Tuesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,543.36
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Hang Seng: closed for Tomb-Sweeping Day
Nikkei 225: closed up 0.2% at 27,787.98
S&P/ASX 200: closed up 0.2% at 7,527.90
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DJIA: closed up 103.61 points, or 0.3%, at 34,921.88
S&P 500: closed up 36.78 points, or 0.8%, at 4,582.64
Nasdaq Composite: closed up 271.05 points, or 1.9%, at 14,532.55
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EUR: down at $1.0977 ($1.0996)
GBP: up at $1.3138 ($1.3121)
USD: up at JP¥122.75 (JP¥122.70)
Gold: down at $1,929.42 per ounce ($1,930.80)
Oil (Brent): up at $108.85 a barrel ($107.45)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday’s key economic events still to come
China Tomb Sweeping Day holiday continues. Financial markets closed
10:00 CEST EU services PMI
11:00 CEST EU quarterly balance of payments
09:55 CEST Germany services PMI
09:30 BST UK services PMI
08:30 EDT US international trade in goods & services
09:45 EDT US services PMI
10:00 EDT US ISM services PMI
16:30 EDT US API weekly statistical bulletin
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US President Joe Biden called Monday for a ‘war crimes trial’ over alleged atrocities in Bucha and vowed tougher sanctions against Moscow, as Ukraine’s leader urged the world to acknowledge a ‘genocide’ by Russian troops near Kyiv. Western leaders have united in outrage after dozens of bodies were found on the streets and in mass graves when Russian troops retreated from the devastated town near the capital, laying bare the horrors of a 40-day war that has killed thousands. Bombardments continued Monday, including in southern Mykolaiv, where officials said Russian strikes killed 10 civilians and wounded 46, as Kyiv warned that Moscow was shifting its military focus and preparing a ‘full-scale’ attack in the country’s east. With momentum building for a stiffer EU response beyond already unprecedented sanctions over Russia’s invasion, European Commission chief Ursula von der Leyen said the bloc was ready to send investigators to gather evidence of possible war crimes in Bucha.
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Japan’s services economy contracted at a slower pace in March, figures showed, while the wider private sector returned to growth for the first time in three months. The latest au Jibun Bank services purchasing managers’ index rose to 49.4 points in March, from 44.2 in February. March’s figure moved closer to the 50.0 no change mark, suggesting services activity has declined at a slower pace. ‘Activity decreased at the softest pace in the current three-month sequence, amid the first upturn in new business inflows since last December as firms noted the impact of easing Covid-19 restrictions,’ S&P Global said. ‘New business inflows returned to expansion territory for the first time in three months during March. The rise was only marginal, as panellists noted that domestic demand strengthened as Covid-19 restrictions were lifted. However, new export orders saw the rate of decline accelerate to the fastest since January 2021 as a result of renewed restrictions across China and uncertainty due to the Russia-Ukraine war.’
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Australia’s central bank left its key interest rate unchanged, but noted inflationary pressures have picked up recently. The Reserve Bank of Australia kept its cash rate target at 0.1%, as expected. The RBA, however, noted that bets on future rate hikes have picked up recently, following Russia’s invasion of Ukraine. The central bank explained: ‘Inflation has increased sharply in many parts of the world. Ongoing supply-side problems, Russia’s invasion of Ukraine and strong demand as economies recover from the pandemic are all contributing to the upward pressure on prices. In response, bond yields have risen and expectations of future policy interest rates have increased.’ The RBA added it has wanted to see evidence of inflation being ‘sustainably within the 2% to 3%’ target range before lifting interest rates.
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BROKER RATING CHANGES
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Barclays cuts Virgin Money to ’equal weight’ (overweight) - price target 225 (250) p
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Barclays cuts Moneysupermarket to ’equal weight’(overweight) - price target 220(260)p
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Barclays cuts Lloyds to ’equal weight’ (overweight) - price target 58 (64) pence
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COMPANIES - FTSE 100
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Airtel Africa said it has adopted regulatory SIM card measures at its Nigeria telecommunications unit, though the financial impact of the move is uncertain. Under a directive announced by the Nigerian Communications Commission back in December 2020, operators were required to ensure all their subscribers provided a valid National Identification Number to update SIM registration records. Africa-focused telecommunications provider Airtel said that so far, it has collated NIN records for 73% of its Nigeria active customer base, accounting for 79% of revenue at the unit. By nation, Nigeria was Airtel’s largest revenue contributor in the first half ended September 30. The Nigeria arm generated revenue of $896 million, up 25% yearly. Airtel’s total interim revenue was $2.27 billion. ‘However, our experience of adopting similar procedures in other countries suggests that SIM consolidation is likely to occur in response to implementation, potentially reducing any financial impact,’ Airtel explained.
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COMPANIES - FTSE 250
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Homeserve said it made good progress in financial 2022, both strategically and financially, delivering an acceleration in performance compared to 2021, in line with expectations. The home repairs and improvements firm said the Membership business continued to show resilience and value to homeowners in times of economic uncertainty, with customer satisfaction remaining high and global policy retention at 84% compared to 83% the year before. Further, Homeserve said there was good strategic progress in each of its three business divisions, with new products gaining traction in North America; good progress in building three complementary businesses in EMEA - Membership, HVAC and Claims Assistance; and progress in Home Experts. In addition, Homeserve said its Home Experts division was profitable for the first time on a full year basis, predominantly thanks to progress at its Checkatrade business. Checkatrade ended the financial year with 47,000 paying trades, up from 44,000 the year before, and average revenue per trade is expected to exceed the milestone 1 target of £1,200, compared to £939 last year.
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Online greetings card retailer Moonpig Group said its performance for the financial year to April 30 has remained strong. Moonpig expects annual revenue to be around £300 million, with the upgrade reflecting the temporary impact of Covid-19 on customer behaviour in late December and January. Its expectations for underlying revenue in financial 2022 remain unchanged at approximately £265 million. Further, it said trading in February and March has provided further evidence that supports expectations of a ‘permanent uplift in customer cohort frequency’ compared to before Covid-19. Accordingly, Moonpig remains confident in existing expectations for the next financial year. It reiterated a medium-term target for an adjusted earnings before interest, tax, depreciation, and amortisation margin of approximately 24% to 25%.
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Crest Nicholson Holdings confirmed its intention to sign the Building Safety Pledge, which it believes is in the best interests of the company. The Building Safety Pledge programme was established by the UK government in the wake of the Grenfell Tower fire in 2017 to make sure that residents of high-rise buildings are safe by removing combustible materials. The housebuilder said it would be taking further steps to support those living in affected buildings. As a result of making these new commitments, it said it would need to record a further exceptional charge in its financial statements. ‘This is a complex and judgemental area, and the group will continue to work at speed to refine its latest estimate of these costs,’ it explained. Crest said it considers that a charge in the range of £80 million to £120 million currently represents its best estimate of this further liability. ‘The cash outflows required to remediate the affected buildings will occur over several years. Given the group’s well capitalised financial position and strong current trading performance,’ it added.
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COMPANIES - SMALL CAP
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TheWorks.co.uk said it was victim to a cyber security incident involving unauthorised access to its computer systems. There was some limited disruption to trading and business operations but store deliveries are expected to resume imminently and normal online service levels are progressively being reintroduced. The firm does not currently expect the incident will have a ‘material adverse impact’ on its forecasts or financial position. While payment data has not been compromised, it ‘has not yet been possible to establish the full extent to which any other data may have been affected.’ As such the company has informed the Information Commissioner’s Office.
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COMPANIES - GLOBAL
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Volkswagen presented lower figures for the first quarter of the calendar year due to an ongoing shortage of semiconductors and persistent global supply chain problems that are affecting the car industry. VW sold just under 65,000 new cars there in the opening quarter, according to a statement on Monday, 29% fewer than a year ago. Sales in the US had already dropped significantly in the final quarter of 2021. VW saw significant losses for sales of all its most important models in the first quarter of 2022. Sales of the Tiguan and Atlas SUVs, both popular in the US and a major source of income for the company, fell as steeply as the Jetta and Passat.
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Tuesday’s shareholder meetings
Allied Minds PLC - GM
Athelney Trust PLC - AGM
Scottish American Investment Co PLC - AGM
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