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Train and bus operator Arriva has reported a marginal improvement to its half-year operating profits, which grew despite "significant" costs associated with bids for three UK rail franchises and rising fuel costs.

In a statement the transport group confirmed that its operating profit from continuing operations rose to £52.9 million in the six months to June 30th, up from £52.6 million for the corresponding period of the previous year.

Nonetheless Arriva confirmed that investment in acquisitions and higher interest rates had resulted in a slight reduction in first-half pre-tax profits, which dropped from £48 million last year to £47.3 million.

But Arriva remains upbeat about its future prospects, claiming that its success in securing the UK's New Cross Country rail franchise – the most geographically extensive in the country - will "transform" the outlook for its trains division.

The company said that a reduction in revenues for the UK , as a result of bid costs, was offset by a rise of around ten per cent in passengers using its rail services over the first half.

Arriva said that operating profit for its UK bus division increased by 16 per cent during the first six months of the year, up from £32.7 million at the start of 2006, to £37.8 million.

Its tourist bus operation in London, The Original Tour, also attracted more passengers despite poor weather.

Meanwhile Arriva indicated that it was continuing to explore additional opportunities to develop its business further, with the company having made a number of acquisitions within Europe at the start of the year.

Commenting on the results, Arriva's chief executive, David Martin, said: "In 2007 so far we have further strengthened our position in Europe, made excellent progress on contract wins, and achieved improvements in operational performance in many parts of the group.

"With a number of contracts won and due to start over the coming months, we are already well positioned for 2008," he added.