Takeover target Arriva saw operating and pre-tax profits fall sharply ahead of an exceptional pension credit in the year to 31 December 2009, according to its annual accounts.

Turnover growth in the business was limited to 3.5%, though this was after a £150m cut in rail revenues caused by reduced track access charges feeding through into lower subsidies. Operating costs were 5.7% ahead, leaving operating profits 33.9% lower at £113.5m – a margin of just 3.6% (down from 5.6% in 2008).

A sharp increase in net financing costs meant that the company’s pre-tax profit before exceptional items was 50% lower. The exceptional item represents a curtailment credit arising from the pension plan in Arriva Passenger Services.

The change to UK rail access charges led to a 16% fall in turnover in the division, whilst profits were also down from £31.5m last year to just under £10m this year. The UK bus division saw turnover growth of just over 4%, but profit margins fell back from 10.8% to 9.5%. The European division saw turnover growth of 15.7%, as earlier acqusiitions worked through and extra contracts were won. However, margins also fell back, from 4.7% to 2.1%.

Fuller report on the TAS Business Monitor web site.