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Go-Ahead raises dividend as passenger numbers soar

Bus and rail group Go-Ahead said record passenger numbers drove profits higher - triggering the first hike in its dividend in six years.

The group, which runs over 4,600 buses as well as the Southern, Southeastern and London Midland rail franchises, said increased passenger journeys contributed to jump in pre-tax profits of 44.5% to £91.2 million in the year to June 28. Revenues rose 5.1% to £2.7 billion.

During the year the group's Govia joint venture won the expanded Thameslink Southern and Great Northern franchise, which is Britain's largest and due to come into service from next week.

The group said its bus services turned in an 11% rise in operating profits to reach a record £83.5 million, adding it was "confident" of meeting its £100 million target by 2015/2016. Bus journeys grew by 1.9% during the year.

Go-Ahead's bus division carries nearly two million passengers every day, focusing on busy commuter markets in the South and South East as well as Oxford, East Anglia and North East England.

The operator said its rail division beat management expectations by posting an operating profit up 71% at £19.7 million. Rail passenger journeys lifted 4% over the year.

Shares in the operator rose 4% after it said it would boost its final dividend by 4.3% to 84.5p per share, which will be paid on November 14.

Chief executive David Brown said: "The group performed very well in the financial year with our bus and rail divisions both delivering strong results, which were significantly ahead of our initial expectations for the year."

The group said the coming 12 months was a "transitional" period for its rail division.

It is also working on its bids for the Northern and TransPennine Express services which were shortlisted by the Department for Transport and are due to be submitted next spring.

Chairman Andrew Allner added: "We are well equipped to handle the complexity and challenges in our industry, including the significant changes associated with the beginning of a major new franchise."

Investec analyst John Lawson said Go-Ahead "has had a strong year" adding that the dividend increase was "a nice surprise."

Go-Ahead was formed in 1987 and handles over one billion passenger journeys a year.

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