Income and profits dip at Newcastle firm Go-Ahead

Feb 25 2010 By Karen Dent, The Journal

BUS users are keeping Go-Ahead's profits on the road but the Newcastle public transport giant's income has fallen in what it said was still a "difficult" economic environment.

The group, which runs buses, trains and airport car parking services, reported a £51.7m drop in revenue to £1,097m in the six months to January 2 and its pre-tax profits plunged by 28.3% to £12m. The figures are after exceptional charges of almost £32m were taken into account.

But Go-Ahead said both its revenue and operating profits - which fell to £54.2m from £65.6m - were better than it had expected.

Chief executive Keith Ludeman said: “We are pleased with the way the group has responded to the current economic challenges and we have made good operational and strategic progress.”

Buses were the star performer in the Go-Ahead stable during the first half of its financial year. It spent £29m on three new British bus businesses, signed its first US deal to set up a Yellow School Bus joint venture and was rewarded with a 7.7% increase in bus income and a 9.2% jump in operating profits at £34.3m.

Around 1.6 million people use Go-Ahead’s 3,500 buses every day in the North East, London, Oxford, the South East and Southern England.
The group introduced the UK’s first high speed domestic rail service in December on the Southeastern franchise between London and Kent. It also kept the contract to run the Southern rail franchise. Go-Ahead’s other rail business is the London Midland line.

Earnings from rail passengers rose by 7.6% but the changes in the way network rail access charges are paid led to a £117.5m fall in income from subsidies, which Go-Ahead said was behind the group’s over all fall in revenue.

It completed the sale of most of its loss-making aviation services division in January, although it still owns the Meteor airport car parking business. It is now reviewing its final aviation ground handling operation at Heathrow Terminal 1.

Go-Ahead says it expects the bus division to remain robust over the next six months but was harder to predict the outlook for the rail side of the business.

Chairman, Sir Patrick Brown, said: "Overall, recent strategic progress means we are now well placed to focus on our bus and rail operations.

“Our devolved management structure supports strong local attention to organic growth and makes us a potentially attractive acquirer of locally branded UK bus operations.

“We will seek to replicate a similar structure as we carefully build our Yellow School bus operations with our joint venture partner in North America.”