If you want evidence of appalling management, just review the shambles at Redhill Station (Surrey) where relacement buses were used because of track maintenance. There was no queuing system and no organisation. Hundreds of people, including women with children found themselves in what resembled a football crowd before we had all-seater stadia. No doubt down to staff shortages; I am sure the Transport Minister will (as usual) blame the unions but nobody was on strike and nobody was working to rule. Much more of this ineptitude and surely Southern will lose its franchise.
"If you don't like the terms and conditions you have signed up to, then leave."
It is a fact that under the condition you describe, there would NEVER be any strikes. What happens, as in this case, the employee signs his contract. Then management say they are changing the contract without any discussion.
Another trick played by companies who run bus services is to harass employees who expect their contract to be honoured. What happens is that the company takes over a franchise, where the employees of the taken over company earns more than their own employees. Under TUPE the employee on the higher pay retains his pay scale. This means that bus drivers working for the same company and doing the same job are getting different pay; often the difference is 20% plus. A decent company would raise the rates to the higher rate, but they don't. Instead they harass the high paid employees in the hope that they will leave.
We know that Southern have not been negotiating with the Unions because they have been spurred on the Chris Grayling, the Minister of Transport, not to do so. The company doesn't mind because the Taxpayers have been picking up the penalties for poor performance. Unfortunately, management of this company do not understand that poor industrial relations is not cost effective.
So I am afraid you have got it a about f. The problem is always management changing the contract of employment, with a take it or leave it attitude. This is what makes employees angry; all Unions do is try to resolve issues.
As I said yesterday the strikes and guard issue are not just affecting this company - it is a nationwide issue.
I prefer to look at hard facts and the fundamentals here.
A 20% fall in 2 days on the back of RISING revenues and a 5% fall in profits - really?
These results apparently beat expectations. Strange reaction then!
It is total madness. This should have fallen no more than 2-3%
There is a great final dividend of 72p in only a few weeks.
This alone is now yielding close to 5% after this ridiculous MM/shorter orientated fall.
The P/E is 7.5
No one can deny this is very low.
Anything around 10 is considered a bargain.
Being ultra extreme if I discount the whole rail business/all the rail profits and concentrate solely on the bus side of the business the forward P/E is still only 12!
An overall dividend yield of 7% is also very high vs the 0.5-1% you get in a savings account. Furthermore this dividend is covered 2x by earnings so ample cover.
RSI only 28 so remains highly oversold.
A run back up to 1750-1800p in the short run as sense returns.
Have you any evidence that the company has not attempted to negotiate with the unions?
Apart from which it seems very clear to me - there is simply no justification for the strike. The practice that the company wants to introduce has been ruled safe by the rail safety regulator. As far as I am aware safety is the only reason for the strike is over safety concerns.
What do you think management should agree to?
I commute on Southeastern railways, also owned by Go-Ahead. This franchise has no issues with staff relations and the service for the past few years has been excellent (it was appalling under Connex).
Personally I don't believe in the right to strike. If you don't like the terms and conditions of the employment you have signed up to, then leave.
I sold out of my investment here some time ago at a small loss - sadly the unions are making life impossible and Go-Ahead are better off without this franchise.
Top, I assume from your response that you regard any negotiating to be 'caving in'. I have been in management for over 30 years and I can tell you that you get the highest productivity and best financial result when you treat employees like human beings and listen to them.
I have spent a great deal of my working life negotiating with a number of Unions; you will find that talking to them will actually help them to resolve issues for you. In the majority of cases, it is the Union members who are unhappy, not the Union itself. The Union doesn't want the aggravation anymore than you do, so will often ask for something little, so they can get their members off their backs. This obviously means you have to compromise a little, but, in financial terms, it is always worth it.
Companies like the Go-Ahead Group who believe, like you, that negotiating amounts to 'caving in' end up with a miserable, depressed and uncooperative workforce and low productivity. So when the company digs a hole for itself, the workforce refuse to bail it out. Then we get Tory politicians who complain that workers are merely honouring their contract; they are 'working to rule' they moan.
Frankly, I don't care what Tory politicians think (or Labour and LibDem politicians for that matter), but what I care about is trying to select profitable investments, After a great deal of research, I found the most profitable companies were the ones who looked after their employees and achieved excellent employee relationships. An example of good employee relations is 'Google.
' (parent is Alphabet).
If this company's directors would take a course in industrial relations and enacted what they learnt then the share price would increase by over 50%. Until they do, this company will never meet its full potential; the current share price tells you this,
Lintons - there is actually some support at 1532p also and then yes it is around 1485p.
These levels have not been reached since August 2013 so 4 YEAR LOWS.
It's a highly volatile share that drops rapidly but usually rises just as quickly.
Having read the entire annual report the only negative was with aspects of the rail franchise. Southern rail is old news now. All train services are having problems with strikes over the guard issue - it is not just isolated to this company. Being ultra negative and taking into account the loss of London Midland in H2 lets say rail profits halve next year. Yes I'm taking a very bearish shorters view but this still gives full year profit of £120M and EPS of 166p.
Even in this worst case scenario P/E is still only 9.3 with expansion into Germany, Singapore and Ireland to come.
I can not see any justification for such a large drop today
The balance sheet is also better with shareholder equity rising to £227M
Top, I am talking about getting rid of the guard on all trains, without being willing to negotiate. If Southern (part of the Go-Ahead group) had negotiated with the Unions everything could have been settled a year ago. For example, on the Southern route I take to London, we have had driver only trains for years; previous Union discussions here resolved everything.
The routes where a guard is needed is where long trains pass through stations with a distinct curve, meaning the driver cannot possibly see the whole train. If the company were willing to discuss this with the Unions (who after all are promoting passenger safety) then we would not have a problem. Personally, I would not invest in a company that puts politics in front of creating shareholder value.
Said I had an 'agenda' in advising more than once this share was a 'strong sell'. Well, I am afraid not. I could see what a disaster this company was (any company that would be happy to see commuters go through hell for eighteen months, just to make an irrelevant point, has to be badly managed). When companies are this poorly managed it is inevitable that at some time their share price would collapse. Well, it happened today, DOWN the best part of 10%.
On the 25 August 2016 when the price was 1,966p I suggested this company had woeful management and that investors should stay clear. I repeated this sell recommendation on 22 September 2016 when the price was 2,027p. I wrote then, "How Southern Railway (part of Go-Ahead Group) keep their franchises beggars belief". On 3 October 2016 I repeated the strong sell message, this time at 2,045p. Finally, on 26 January 2017 when the price was 2,192p I tried to warn investors yet again that this company was poorly managed and therefore was a strong sell.
On 15 March 2017 the 'Darkkight' posted that I had a personal vendetta against the company and two days later at 1,736p he recommended a 'strong buy'. Well the thing is that I don't have a vendetta against the company, but I recognise a poor management team when I see one. Their overall performance has been awful and it is just as bad when the unions are not taking strike action. You simply cannot run a company on the basis that the timetable can only operate if drivers agree to give up their rest days. You really cannot expect drivers to work unlimited overtime.
It seems that even the Department of Transport have realised what a poor performer this company really is and have taken away a franchise at the earliest opportunity. Given that Southern's appalling record contributed to the Conservatives losing their overall majority, I cannot see Grayling's support for the company being maintained. So we can expect the company to lose franchises when they expire and the share price to fall further. Of course the price may. Increase in the short term as investors forget how bad the company is and think they are getting a bargain, but long term this can only go down. Even at today's price of 1,715p,
"Is the market jaundiced towards this mid-cap rail and bus share LSE:GOG:Go-Ahead due to chronic strikes taking attention off underlying financial strength?Its chart shows a couple of big steps down in market price during the last year or so, from ..."
Southern Railway said it ran 95% of train services during the latest strike by workers in a long-running dispute over staffing and driver-only trains.
Members of the Rail, Maritime and Transport union walked out on Saturday for the 31st stoppage since the row flared a year ago.
Southern said most of its services were not affected by the action, adding that 55% of conductors and on board supervisors (OBS) reported for work, the highest number on a strike day.
A Southern spokesman said: Whether heading to the seaside on the hottest day of the year or shopping in London, were pleased we could get our passengers where they wanted to be in the main.
Now being able to run a near-normal service and with more and more conductors and OBS coming into work on strike days, the RMT needs to call a halt to their futile industrial action on Southern. They now need to resume talks with us, shake hands on a deal and lets move forward together.
Despite the disappointing results, its encouraging to see that most of the groups bus and rail businesses continue to perform well. With the share price collapsing to three-year lows, Go-Ahead has certainly been punished by the market, but I think this is far more than it deserves. A forward P/E ratio of eight is simply too cheap for this business, and more so given the generous dividend which yields a healthy 5.2%, and is covered more than twice by expected earnings.
You seem to have a personal vendetta against this company.
Post after post slagging it off.
Never bring emotion into investing.
The facts are the P/E is now a ludicrous 7.8, dividend approaching 6%, minimal debt & trading at levels not seen for 4+ years. This was £26.73 not so long ago. Also the rail strikes are not just limited to this company.
As predicted. Now well below the 2,000p mark. Their costs will shoot up when they have recruited enough drivers to run an acceptable service, The days of creaming it in by doing absolutely nothing and blaming the unions for everything seems to be over,
I read in today's paper that at long last the government have got the message that the Southern franchise (60% owned by the Go-Ahead Group) is an understaffed disaster. They have suddenly realised that Southern can only meet their timetable if their drivers accept substantial levels of overtime and agree to work on their non-working days. So the government has demanded a recruitment drive and are proposing to nationalise the franchise until it can be let to a responsible operator.
At the moment the Go-Ahead Group creams it in for doing very little. When the gravy train is derailed their profits will go down, as will their share price.
Why do Southern want to go to the Supreme Court when they make most profit on strike days. On strike days, they still get the revenue, but have no costs.
Besides, even if they win in the Supreme Court they are not going to be able to run a proper service as they don't employ enough drivers. The Supreme Court cannot force drivers to work seven days a week and complete four hours overtime each day to boot.
Obviously there is no incentive to have the correct staff numbers under the current contractual terms, We need a passenger class action to take Southern to the Supreme Court to get rid of them. They are useless!
I could not understand why this company made no effort to resolve the dispute between its Southern Rail subsidiary and the Unions. Now I get it; it turns out that management have been fiendishly clever. They have done a deal with our government that Southern Railways receive a fixed subsidy and in return the government receive all the revenue from the fares. Brilliant!
The Go-Ahead Group absolutely love it when the workers go on strike. They don't have to run any trains, so they save running costs and they don't have to pay any wages, but they still receive their full subsidy.
Given the number of strike days being planned for January 2017, Go-Ahead's profits will go through the roof. I expect that behind the scenes Southern Railway's management are on a bonus which increases in line with strikes.
Of course, such a clever ploy relies upon having a Minister of Transport and government that don't care about the plight of rail travellers and that is what they have got. So the recommendation is to buy these shares and sell them just before the next general election.
The answer to your query is this: Since the introduction of IFRS the Income Statement has become sheer fantasy. The alleged surplus in the pension scheme is notional; the profit could evaporate, The only statement that is viable these days is the Cash Flow Statement.
Talking about cash, the company is wasting a fortune on legal expenses to avoid strikes when it could resolve all issues if only it would negotiate with the Unions. How shareholders tolerate the company throwing their money away is a mystery to me.
This, apparently, was the cost of Southern's failed media campaign (see previous email). Thousands of posters that were to be put up in stations are to be destroyed, Why would anyone want to invest in a company where incompetent management waste shareholders' money?
Southern Railways (Go-Ahead Group is the overall parent) tweeted begging passengers to tweetly complain to the RMT Union. How low can they sink? It didn't do them any good, as the response was the opposite of what they wanted. One response summed up the overall reaction: " I dislike unions but I dislike incompetent management more."
You would think that by now the directors of this company would sort the management of Southern out by banging a few heads together. As they are apparently unwilling to do this a further decline (to below 2,000p) is inevitable.
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