RAIL and bus group Go-Ahead posted a 24 per cent fall in annual pre-tax profit yesterday, as passenger numbers grew but margins fell.
The group’s profit of £88.7m, which was slightly ahead of expectations, was boosted by a 7.7 per cent increase in revenues from bus ticket sales.
Go-Ahead bus and train services, which include the Gatwick Express and London Midland, provided more than 1bn journeys last year, the firm’s busiest ever year.
Keith Ludeman, group chief executive, told City A.M. yesterday: “There are pretty good reasons for the fall in profit: reduced subsidies, reduced quality incentive payments in London and different targets from January.”
The firm said in its results statement that it was concerned by the weakness in the economy and the possibility of government cuts to travel subsidies including the 60-plus bus pass at the October spending review.
However, Ludeman said the firm was prepared to weather any cuts. “There’s a shadow over all UK industries that are in some way involved in the government, but we are fairly sanguine about the impact of cuts on our business.
“Firstly, we have detailed contracts that protect us, and the government has showed no signs of wanting to renegotiate. Secondly, only around 15 per cent of our bus revenue comes from subsidised concessionary fares.”
The company said maintaining its dividend payments is a priority.
Go-Ahead plans to expand its yellow school bus scheme in America next year, from 120 buses to as many as 300.
Meanwhile, it finalised the sale of its Meteor airport parking business yesterday, severing the last of its ties to the aviation industry.
Shares closed 7.1 per cent up at £11.65 yesterday.