The Go-Ahead Group is targeting an increase in annual Group revenue to around £4bn (up by approximately 30% in the medium term) and will reinstate its pre-COVID dividend policy of paying a dividend to shareholders equivalent to between 50% and 75% of underlying earnings per share from the year ending 2 July 2022.
The growth aims to deliver an increase in annual Group operating profit to at least £150m in the medium term. It comes after the company published its new strategy titled The Next Billion Journeys, the result of a business review led by Group Chief Executive Christian Schreyer.
The strategy aims to improve performance by standardisation of processes and digitialisation. That will see a new operating model for all Go-Ahead operating companies to deliver “more transparency and to increase the focus on financial performance”. This will identify inefficiencies in driving, maintenance, energy, fleet and overheads, while turning around “underperforming” operating companies.
Another priority for the business will be to reduce the breakeven point for zero-emission vehicles. The company reveals that a Centre for Excellence will be established at Go-Ahead London to support this goal.
Passenger recovery will be assisted through data which will analyse new travel patterns and “tailor routes, schedules and ticketing to match passenger needs, plus marketing initiatives to rebuild confidence in public transport”. The Group says it has identified opportunities to grow its UK regional bus business, particularly in the north of England.
Growth will also be achieved by maintaining the business’ London market share and replicating the London and International Bus business model in certain international markets (France, Australia and Sweden have been named as priority countries), while looking to partnership and acquisition opportunities.
It will also explore new modes such as metro, light rail and bus rapid transit, accelerate the growth of business-to-business travel such as airport transport and rail replacement services, and explore Mobility as a Service operation.
The group has also reaffirmed its commitment to achieving a 75% reduction in carbon emissions by 2035.
“This is an exciting moment for Go-Ahead,” says Mr Schreyer. “My review of the business has found fundamental strengths in the business, 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.
“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.
“Today, we’ve set ambitious, but deliverable, targets. It has been a challenging two years for public transport but there is an exciting future ahead for Go-Ahead.”
