Go-ahead profit falls as rail costs increase

5th Sep 2013 07:50

Go-ahead Group's annual profit fell as booming bus business was offset by higher costs and lower subsidies at its rail business.Pre-tax profit for the year ended June 29th fell 8.5% to £86.2m - slightly ahead of management expectations. Go-ahead said the current financial year had started well and that trading was in line with its expectations.The company had record passenger numbers in both bus and rail. The bus business increased operating profit by 11.4% to a record £78.2m but profit fell 39.3% to £24.3m at Go-ahead's rail division. Rail passenger revenue increased by £110m but profit was dragged down by increased premium payments to the Department for Transport, reduced government subsidies and higher operating costs caused by inflation. Chief Executive David Brown said: "As our rail franchises near the end of their original terms, performance has become more challenging as the assumptions set out in the franchise bid no longer reflect the current economic conditions."Following a challenging year in the rail industry, we continue to believe in the fundamental strengths of the UK rail market and look forward to the significant opportunities available to the Group over the coming months and years. We are working hard to submit strong bids for the Thameslink and Crossrail franchises, for which we are shortlisted."The full-year dividend was unchanged at 81.0p.