MCGILL'S Bus Service, the company owned by Rangers investors James and Sandy Easdale, has hiked profits in its latest financial year - in spite of challenges posed by the Scottish Government's free bus travel for over 60s policy.

Greenock-based McGill's, which runs bus services across the west of Scotland, has posted pre-tax profits of £1.7 million for the year ended December 31, 2013, accounts newly available reveal.

It had delivered pre-tax profits of £659,000 in the previous year.

The company, which saw turnover rise by 22.3 per cent to £33.9 million, lifted profits in spite of operational challenges, including a move to scale down its Dumbarton-based Loch Lomond Bus Services division. This was due to "a lack of commercial take up and a shortage of local quality staff". It also flagged a "sizeable reduction" in the reimbursement it receives from the Scottish Government to implement its free travel to over-60s policy, a cap on the bus operator's subsidy it receives from government, and ongoing difficulties in attracting quality staff.

The company said it dealt with challenges posed by the national concessionary travel scheme through cost management and increasing fares by more than it had anticipated.

The directors said: "The Scottish Government compels bus operators to carry their concession card holders so the company has no choice in the matter, yet reimbursement has been reduced by the government consistently and was 60 per cent of the adult cash fare at the year end with a further reduction notified for 2014.

"This level of compulsory discounting exerts a significant imbalance within the business and careful management of costs is needed to ensure that tight budgetary control is maintained."

McGill's also highlighted its concern over "political intervention" in the operation of bus services, chiefly through Statutory Quality Partnerships with transport authorities.

It warned growing political interest in the arena has not been matched by the "political will to make hard decisions on infrastructure, traffic management, containment of road works and other measures that cause disruption to the bus passenger.

"This is becoming ever more important as the internal factors impacting upon the business continue to increase and more and more strategic time is being spent in the political arena educating and influencing politicians."

McGill's employed an average of 699 staff over the year, up from 589, with the cost of wages and salaries rising to £14.7 million from £12 million. No acquisitions were made during the year.