Go-Ahead on track despite fears of cuts to come

Published on Wednesday 1 September 2010 21:30

Transport group Go-Ahead yesterday warned that prospects for the year ahead were shrouded in uncertainty despite better-than-expected annual profits.

The firm, which runs the Southeastern and Southern rail franchises south of the Border in a joint venture with French company Keolis , said the outlook for the business was "difficult to predict" as the UK government's spending review looms in October.

Alongside a still weak economy, Go-Ahead fears possible deficit-busting measures could include reduced UK government support for the bus industry, which is also facing a Competition Commission probe.

The firm, which recorded more than one billion passenger journeys across its business for the first time in the year to 3 July, saw overall pre-tax profits fall 24 per cent to 88.7 million.

The slide was driven by lower rail subsidies from the UK Department for Transport - offsetting higher revenues on its new high-speed services - but the drop was smaller than expected by the City due to lower electricity costs from Network Rail.

Go-Ahead chairman Sir Patrick Brown said the group was "pleased with progress" despite challenging conditions.

Total revenues across the rail arm - which also includes the London Midland franchise - were down 0.9 per cent to 1.54 billion while operating profits slid from 61.5m to 37.3m.

The group's bus business posted better than expected profits and expects prospects to remain "robust" over the coming year despite lower margins in its key London commuter market.

Cheaper fuel costs should also help the firm make savings of 7m a year.