Go-Ahead Group PLC (LON:GOG) said it hopes to resume dividends this year even though its rail and bus services are being paid for by the government.
The cost of the support package for the transport industry is expected to reach £10bn by the middle of this year, but David Brown, Go-Ahead’s chief executive, said that the government was getting an ‘absolute bargain’.
Rail and bus services were effectively nationalised at the start of the first lockdown to keep them running for essential workers even though passenger numbers overall slumped.
Talking to the Press Association, Brown said: “We’re running (services) on behalf of Government to a schedule that they want us to run… and managing the whole of the resource and process that goes into that for an absolutely minuscule margin, and we’re getting paid to run that contract.”
Go-Ahead saw profits fall to £24.6mln from £49mln in the half-year to 2 January 2021 after a further provision of £25.9mln for its rail operations in Bavaria.
The group which runs the Southeastern and Thameslink franchises saw revenues rise over the half-year by 3.1%. Some 90% of revenues secured through contracts with no revenue risk from changes in passenger demand it said, while the other 10% are underpinned by government support packages.
In the statement, Brown said:" As the economy opens throughout the spring, we expect to see passengers return, with evidence of pent up demand for leisure journeys, including high levels of staycations.
“Prior to the second lockdown, our regional bus services were up to 60 per cent of normal passenger journeys.”
Liberum said “The figures themselves were flattered by timing recognition issues. Net debt was better than guided.
“The additional German Rail provision for franchises yet to start operations was disappointing, but does not undermine the core investment case.”
Shares rose 5.3% to 1,351p.