Go-Ahead to reinstate pre-Covid dividends as new strategy focuses on accountability
Go-Ahead said today it would go back to paying dividends to shareholders from fiscal year 2022, as part of its new accountability-focused strategy.
Following a few troubled months, Go-Ahead’s board recommended between 50 and 75 per cent of underlying earnings per share.
The group – which has recently been under scrutiny for a series of financial irregularities – announced it was targeting an annual group revenue of around £4bn and an operating profit of £150m for the mid-term.
“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,” said chief executive Christian Schreyer.
“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.
Schreyer’s comment come amid Go-Ahead’s new strategy, ‘The Next Billion Journeys’, which was announced today after the chief executive concluded his business review.
Under the new blueprint, the transport giant will aim to reduce its net-zero breakeven point to accelerate decarbonisation while maintaining a hold on the UK regional bus market and expanding into other modes such as metro and light rail.
The focus on heavy rail will be reduced following mistakes made in international projects such as tenders in Germany.
“My review of the business has found fundamental strengths, and has identified areas where we can deliver improvements and sustainable growth,” the chief executive added.
“We plan to strengthen, digitalise and decarbonise our operations, delivering greater profitability and stronger returns to investors alongside improvements for our customers and communities.”
The strategy will aim to make the company more transparent and accountable following its recent legal and financial troubles.
“I want to know what is happening in the company, I want people to speak up and create a safe environment,” Schreyer said.
The FTSE-250 company made the headlines when it was suspended from the London Stock Exchange, after it failed to complete its financial accounts in time.
Go-Ahead’s financial issues were exacerbated by subsidiary Govia Thameslink facing heavy fines from the UK regulator.
Last month Govia – a joint venture between Go Ahead and French firm Keolis – was forced to pay £23.5m after the government stripped it of its Southeastern franchise for concealing £25m of taxpayer’s money related to HS1.
The fine, Go-Ahead said, had a positive effect as the company had already set aside £31m for the financial year.