The chief executive of transport operator Go-Ahead says he is encouraged by the group's performance, despite a drop in operating profit.
North East-based Go-Ahead saw operating profit fall 24.5% from £56.4m to £42.6m in the six months to January 1, 2022 and revenue fall 13% from £2.07bn to £1.79bn as Christian Schreyer said all of the business' divisions were operating in-line with, or above, expectations.
Earlier this month Go-Ahead launched a growth strategy, aiming to turn the page on a troubled period in which it was found to have concealed funding relating to the London & South Eastern Railway (LSER) contract run as part of its Govia joint venture. It was fined £23.5m and ordered to pay back £64m owed to the taxpayer.
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In an update to investors, the group said all outstanding matters - except for the fine - have now been settled with the Department for Transport.
Operating profits across Go-Ahead's UK rail business more than halved in the period, falling from £22.9m to £10.8m, and legal and advisory costs associated with the LSER issues were said to have reached £6.3m.
Despite what the Government called an "appalling breach of trust" over the LSER contract, Go-Ahead's Govia Thameslink Railway (GTR) joint venture was awarded retained the UK's largest rail contract - Thameslink, Southern and Great Northern rail services - in a decision made just a week later.
Go-Ahead said the management contract would not expose it to changes in passenger demand and posed no substantial cost risk to GTR, with a maximum annual fee of £31.7m available to the group. Mr Schreyer said the move "demonstrates clearly that we were able to reinstall trust with the Department for Transport".
Overall, the UK rail division is expected to generate operating profits of between £25m-30m in 2022.
Elsewhere, efforts to "stop the bleeding" across the group's German rail operations meant the international rail division saw losses narrow from £16.1m to £5.6m, with further improvements expected this year.
And across Go-Ahead's bus division, operating profits fell 24.6% from £49.6m to £37.4m despite revenue growth of 0.2% - mainly driven by a £9.2m reduction due to a contract changes with Transport for London. Regional bus passenger numbers had returned to 80% of pre-pandemic levels.
The group said £1.1bn of Department for Transport funding for local bus improvement schemes would benefit some of its operations, including revenue support for lower fares in areas such as the North East, Brighton & Hove, Greater Manchester and East Anglia.
Christian Schreyer, group chief executive, said: "These results demonstrate an encouraging performance as Go-Ahead emerges from a challenging period. We're looking ahead with confidence, with a new leadership team in place and a new strategy to improve the efficiency of our bus and rail companies.
"Our bus and rail companies are adapting to meet changing travel patterns as we emerge from the worst of the Covid-19 pandemic. We are digitalising, decarbonising and reducing costs to ensure we deliver an outstanding performance for our customers while delivering attractive returns for shareholders. We have a strong balance sheet, with low net debt, and are well placed to take advantage of expansion opportunities."
Mr Schreyer also said Go-Ahead was "back on track" and that he was very confident the group would either meet or exceed market expectations for the full year.
