Go-Ahead Group PLC (LSE:GOG) is targeting an increase in operating profit to at least £150mln in the medium term, up from £115mln last year.
The bus and trains group has completed its business review and come up with a new strategy, branded 'The Next Billion Journeys', and announced it plans to reinstate its pre-Covid dividend policy of paying out between half and three-quarters of underlying earnings per share. The board intends to recommend a dividend of not less than 50p in respect of the year ending 2 July 2022.
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The company has identified three strategic priorities: performance improvement; grow organically and externally; and progress new opportunities by leveraging existing capabilities and resources.
On the financial side, the company is targeting an increase in annual group revenue to around £4bn – up by around 30% - in the medium term.
The group is aiming to keep adjusted net debt to annual underlying earnings (EBITDA) within the existing target range of between 1.5 and 2.5.
Christian Schreyer, the group’s chief executive who led the business review, said the targets were ambitious but deliverable.
“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,” Schreyer said.
"Transport is at a tipping point as we recover from the COVID-19 pandemic. The importance of mass transport is growing, reflecting trends in climate change, digitalisation, urbanisation and demographics around the world; and there are increasing opportunities for private operators to bring their expertise to public transport markets. Go-Ahead's core strength is in commuter transport and we see opportunities to grow by encouraging people to leave their cars at home, by winning new contracts and through carefully selected acquisitions,” he added.
The shares were up 5.8% at 891p in early deals.