Market Report: Go-Ahead up with Southern strikes 'harmless' to profits

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Its trains might be stuck motionless at stations, but shares in Go-Ahead Group were full steam ahead ton Tuesday.

The train and bus operator, which has been blighted by strikes at Southern and is preparing for another in a fortnight, has simplified its accounting policy by separating the full costs of its rail pension from profits, which gives a better indication of underlying performance.

The changes, which affect its rail arm but not its bus division, mean Go-Ahead actually generated statutory operating profit of £165.6 million last year, up from the £120.4 million it reported in September.

Analysts at investment bank Jefferies hailed the simplified accounting, which chimes with changes already made by rival FirstGroup. “Go-Ahead’s statement limits itself to the accounting issue. We interpret that positively: that there’s nothing to add on trading or the latest news that the drivers on Southern have now also voted in favour of strike action,” said Jefferies’ Joe Spooner.

He repeated his view that strikes at Southern will be “harmless” to the group. Shares in the company were up 66p or 3.3% today at 2080p.

The FTSE 100, down 26.99 points at 6772.48, took its lead from natural resources shares as mining and oil companies were in the red, dragged lower by cheaper commodities prices.

Oil continued to yo-yo ahead of tomorrow’s crucial Opec meeting. A 31-cent fall for Brent to $47.93 a barrel nudged BP down 6.5p to 445.75p.

Investors were back dumping Aberdeen Asset Management, which fell another 12.24p to 262.56p as broker RBC slashed its profit forecasts after a gloomy outlook from the emerging markets fund manager, triggered by Donald Trump’s election victory.

Though its target price is still above the present share price, RBC warned: “Our assumption for a flow and investment performance recovery may prove too optimistic.”

Small-cap oil favourite Pantheon Resources dived 19.08p, or 21%, to 71.92p after disappointing fracking results from its well in Texas.

Investors dialled into Satellite Solutions Worldwide, the rural broadband group backed by property tycoon and tech investor Nick Candy. Its shares rose 0.47p, or 6%, to 7.85p as it told the market its annual results will be ahead of analysts’ forecasts.

First-half results for payments specialist Eckoh, up 1.95p to 40.7p, provided no shocks, reassuring investors that business is back to normal after September’s profit warning that lost it almost a third of its value.

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November 30, 2016 |
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