London deal for Go-Ahead

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GO-AHEAD, the recently floated local bus operator, said it was still on the takeover trail as it picked up one of the 10 London bus companies yesterday for pounds 23.8m, writes Tom Stevenson.

London Central is the fourth of the capital's red bus companies to be privatised. Two were recently acquired by Stagecoach and one sold to its management.

Martin Ballinger, Go-Ahead's managing director, said London Central was attractive because - like its other companies in the North-east, Oxford and Brighton - it served a heavily populated area with lower than average car ownership and high bus usage.

In the year to March London Central made pre-tax profits of pounds 2.5m on sales of pounds 40.6m. Mr Ballinger said the group was targeting operating margins of 15 per cent.

Pre-tax profits in the period were pounds 2.87m, 25 per cent higher than forecast at the time of flotation in March and an almost tenfold increase on the previous year.

Much of the increase came from higher productivity after 200 staff in the North-east accepted a one- off payment of pounds 4,000 in exchange for a pounds 30-a-week wage reduction.

Earnings per share rose from 1.5p to 8.2p. As stated in March the first dividend will be the next interim payment. The shares, floated at 120p, closed 6p higher at 132p.

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