Bus and train operator Go Ahead Group Plc's new financial year has started in line with expectations, it said on Friday as it posted a 4 percent fall in annual profit after a rise in fuel costs.

Finance director Ian Butcher said momentum built during the year was being maintained.

This time last year we were quite concerned because of the immediate aftermath of the July (2005) bombings in London. We were also faced with very high fuel prices in our bus division, he said.

Certainly the first half of the year was tough, and we were down on the previous year quite a lot. The good news, however, is that we have rebounded quite strongly in the second half and we were well ahead (year on year).

Go Ahead, which also has an aviation services business, made a pretax profit before exceptional items and amortisation of 91.9 million pounds in the year to July 1, on revenues up 12 percent at 1.46 billion pounds.

Fuel costs at its bus business rose 9 million pounds, having risen 6 million pounds in 2004/05. Butcher said he had budgeted 32 pence per litre for the 115 million litres needed in 2006/07.

While Go-Ahead does not fully hedge its fuel costs, Butcher said he kept his eye open for opportunities.

The current spot market price of 28.5 pence meant Butcher was considering option strategies such as buying a cap at 32 pence and paying for that by selling a floor at 28 pence.

I lock in the downside. I know that I am not going to pay any worse than 32 pence, and yet I can get the upside if the price stays where it is.

Bus and train operator Go-Ahead Group Plc's new financial year has started in line with expectations, it said on Friday as it posted a 4 percent fall in annual profit after a rise in fuel costs.

Finance director Ian Butcher said momentum built during the year was being maintained.

This time last year we were quite concerned because of the immediate aftermath of the July (2005) bombings in London. We were also faced with very high fuel prices in our bus division, he said.

Certainly the first half of the year was tough, and we were down on the previous year quite a lot. The good news, however, is that we have rebounded quite strongly in the second half and we were well ahead (year on year).

Go Ahead, which also has an aviation services business, made a pretax profit before exceptional items and amortisation of 91.9 million pounds in the year to July 1, on revenues up 12 percent at 1.46 billion pounds.

Fuel costs at its bus business rose 9 million pounds, having risen 6 million pounds in 2004/05. Butcher said he had budgeted 32 pence per litre for the 115 million litres needed in 2006/07.

While Go Ahead does not fully hedge its fuel costs, Butcher said he kept his eye open for opportunities.

The current spot market price of 28.5 pence meant Butcher was considering option strategies such as buying a cap at 32 pence and paying for that by selling a floor at 28 pence.

I lock in the downside. I know that I am not going to pay any worse than 32 pence, and yet I can get the upside if the price stays where it is.