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RNS Number : 3173G

Stagecoach Group PLC

03 March 2015

3 March 2015

Stagecoach Group plc

Trading update

Stagecoach Group plc ("the Group") is today publishing a trading update, covering available information for the period to the date of this announcement.

Financial performance

Since the announcement in December 2014 of the Group's half-year results to 31 October 2014, the overall profitability of the Group has remained satisfactory, and there has been no material change to our expected adjusted earnings per share for the year ending 30 April 2015.

Like-for-like revenue growth for the financial year to date in each of the Group's main businesses is provided below.

 
                                 - forty weeks ended 1 February 
 UK Bus (regional operations)     2015                             2.7% 
                                 - forty weeks ended 1 February 
 UK Bus (London)                  2015                             9.8% 
                                 - forty weeks ended 1 February 
 UK Rail                          2015                             7.6% 
 North America (including        - nine months ended 31 January 
  Megabus.com)                    2015                             1.9% 
                                 - forty weeks ended 1 February 
 Virgin Rail Group                2015                             6.7%

UK Bus (regional operations)

We are pleased that on a like-for-like basis, the UK Bus (regional operations) Division has grown year-to-date passenger volumes by 0.4% and revenue by 2.7%, consistent with its strategy to deliver organic growth. Although growth in January was lower than in the previous months of the year, this was largely due to year-on-year variations in weather and we do not believe it is indicative of any change in the underlying rates of growth.

We remain excited at the prospect of further expanding megabus.com coach services in continental Europe, building on the success of megabus.com in the UK and North America. Taking account of our latest expansion plans, we now expect net start-up losses of around GBP5m for the year ending 30 April 2015 (slightly higher than our previous expectations) and further losses next year as we develop this significant opportunity.

UK Bus (London)

Revenue growth in our UK Bus (London) Division has been satisfactory during the period although some revenue was lost in January as a result of a 24-hour strike by bus drivers affecting all major operators of Transport for London bus contracts. Excluding the previously reported uplift in contract prices to compensate for the cessation of Bus Service Operators' Grant (a rebate of fuel duty), revenue increased by 7.3%.

UK Rail

The financial performance of our UK Rail Division is in line with our expectations, reflecting our focus on growing revenue and controlling costs to mitigate the substantial increases in premia payments to the Department for Transport.

The new InterCity East Coast rail franchise began on 1 March 2015 and we are pleased to have taken over responsibility for East Coast train services together with our partner, Virgin. The new franchise is expected to significantly enhance the profitability of the UK Rail Division in the year ending 30 April 2016 and beyond.

North America

Since December 2014, there has been no significant change to our expectation of North America operating profit for the year ending 30 April 2015. Like-for-like revenue growth of 1.9% for the nine months includes revenue growth of 10.3% at megabus.com. The rate of revenue growth is below that experienced earlier in the year reflecting (a) the effect of the significant fall in fuel prices on demand for our services, particularly inter-city coach services on our megabus.com network and (b) lower revenue growth in December and January for both megabus.com and non-megabus.com services, partly due to the effects of adverse weather conditions. The operating environment in North America remains competitive, but we continue to see market opportunities within the division.

Virgin Rail Group

Trading to date under Virgin Rail Group's West Coast Trains franchise remains strong, and under the terms of the franchise contract, UK taxpayers are benefitting from this performance as part of a profit sharing agreement with the Department for Transport.

Twin America

We and our joint venture partner are continuing to progress towards a settlement with the US Department of Justice and the New York Attorney General of the previously reported litigation relating to our Twin America joint venture.

The New York sightseeing market remains highly competitive and we still expect a relatively low profit from Twin America in the year to 30 April 2015.

Outlook

Although there are a number of previously reported challenges to growing profit in the year ending 30 April 2015, overall current trading is satisfactory and we are on course to meet our expectations for the year.

For further information, please contact:

Stagecoach Group plc

www.stagecoachgroup.com

Investors and analysts

   Ross Paterson, Finance Director                                                      01738 442111 
   Bruce Dingwall, Group Financial Controller                                       01738 442111

Media

   Steven Stewart, Director of Corporate Communications                  07764 774680

Notes

(1) Like-for-like revenue growth is derived, on a constant currency basis, by comparing year-to-date revenue with the equivalent prior year period for those businesses and individual operating units that have been part of the Group throughout both periods.

(2) This announcement contains certain forward-looking statements with respect to the financial performance, financial position and businesses of Stagecoach Group plc. These statements and forecasts involve risk, uncertainty and assumptions because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are made only as at the date of this announcement. Except as required by law, Stagecoach Group plc has no obligation to update the forward-looking statements or to correct any inaccuracies therein.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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