(Press Association) Shares in Go-Ahead have gathered steam after the group pencilled in a rosier outlook for the rail business following a “one-off” boost linked to the London Midland franchise.
The firm behind strike-hit Southern Railway surged more than 15% on the London Stock Exchange, as the rail arm outstripped expectations thanks to the £6.4m profit made from selling London Midland assets to the incoming operator.
Pre-tax profits were also bright, jumping by nearly a fifth to £79.7m for the half-year. Revenues rose by 7% to £1.8bn for the six months ending in December last year, with operating profits at the rail division climbing 52% to £40.3m.
The update comes after the firm was dogged by persistent disruption to its Southern rail service last year due to strike action over driver-controlled trains.
Group chief executive David Brown said there were 36% fewer cancellations on the Southern service during the four weeks to January 6 compared to the same period the year before. He said: “Our bus operations have performed as anticipated and our full year expectations for the division remain unchanged.
“In rail, GTR and Southeastern are trading in line with our expectations, while a better-than-expected trading performance towards the end of the London Midland franchise, combined with gains realised on the sale of the franchise’s assets, have resulted in an increase in our full year expectations for the rail division.”
Operating profits in the bus business edged up by £200,000 to £46.6m, with revenues rising 2% to £192.1m.
The Government unveiled plans on Wednesday to split Thameslink, Southern and Great Northern franchises when Govia’s contract expires in 2021.
Liberum analyst Gerald Khoo said: “Strong interim results were rather flattered by rail, which was supported by one-offs related to the now ended London Midland franchise. “The rest of the group appears to be trading in line, which was reassuring.”