Go-ahead bus profits up but business dragged-down by rail strikes

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Go-Ahead Group has posted its half year results for the six months ended December 31, 2016, with profits dragged down by rail industrial action.

Revenue increased 3% from £1.67bn to £1.72bn, though statutory operating profit fell 12.9% to £73m from £83.8m the previous year. Profit before tax fell by 11.7% to £67m.

Basic earnings per share stood at 107.6p, a 6.6% fall from 115.2p previously.

Regional bus operating profit was up by 6.2% to £25.7m at £0.8m revenue growth, with a 0.7% fall in passenger numbers. Meanwhile, London bus operations, with the new Singapore bus operations included, saw operating profit growth of 8.6% to £21.5m. Excluding Singapore, revenue growth in London was 2.8% on broadly flat mileage.

Group CEO, David Brown, commented: “We have delivered financial results in line with expectations. Beneath these overall results there is a mixed picture. Both of our bus divisions and two of our three rail businesses performed well, but there are clearly ongoing issues at GTR which we are working hard to resolve.

“In regional bus, while variations exist between different geographical areas, revenue has continued to grow. Passenger volumes, while subdued, have outperformed national trends. The London bus business performed in line with our expectations.

“We began operating our first bus contract in Singapore in September 2016 and are pleased with the service we are providing to customers on behalf of the Land Transport Authority.

“We recently acquired two regional bus businesses which will deliver cost synergies and drive revenue in the long-term through the expertise of our local teams.

“In rail, the GTR franchise has been challenging from the outset. It is the largest and most complex franchise ever tendered in the UK, designed to facilitate change arising as a consequence of the Thameslink Programme infrastructure works. We have made significant investment in GTR, the full benefit of which cannot yet be felt by passengers while service disruption continues.”

David added that the group’s expectations for the full year had been lowered in both bus and rail, as a result of the slowdown in bus passenger volumes across the business, most notably in the north east and Oxford, along with the long-running industrial relations issues in GTR.