The transport group saw its pre-tax profits before exceptional items fall by 24% to £61mln, down from £79.7mln a year earlier but well above Liberum Capital's forecast of £45mln
Go-Ahead Group PLC () saw its shares rise as a big drop in first-half profits, reflecting the expiry of the London Midland rail franchise, still beat analysts' expectations and the passenger transport group said its full-year expectations have increased, principally due to rail.
The FTSE 250-listed firm saw its pre-tax profits before exceptional items fall by 24% to £61mln for the six months ending December 2018, down from £79.7mln a year earlier, but well above Liberum Capital's forecast of £45mln, as revenue rose by 5% to £1.9mln.
The company said its Bus operating profit pre-exceptional items of £46.9mln was slightly ahead of last year's number, while Rail operating profit at £17.6mln was also ahead of expectations, albeit lower than last year's £40.3mln due to the end of the London Midland franchise in December 2017.
David Brown, Go-Ahead's chief executive said: "Whilst overall rail profits fell due to the end of the London Midland franchise in December 2017 and a lower result at GTR (Govia Thameslink Railway), they were ahead of expectations. Southeastern delivered good financial performance, up on last year.”
On the outlook for the group, Brown added: "For the Group overall, our full year expectations have increased, principally due to rail. We expect free cash flow generation to be strong, resulting in a reduction in net debt, excluding restricted rail cash, at year end and supporting the payment of dividends that are in line with our policy.”
In a note to clients, Liberum analysts commented: “A better than expected H1 performance, but mainly driven by Rail so with limited implications for the long term and valuation.”
Liberum reiterated a ‘hold’ rating and 1,850p sum-of-the-parts based target price on Go-Ahead shares, which in early afternoon trading were up 3.4% at 1,980p.
Go-Ahead maintained its interim dividend at 30.17p per share.