TIDMSGC
RNS Number : 0771X
Stagecoach Group PLC
26 August 2015
Stagecoach Group plc
26 August 2015
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
Recent trading has been consistent with our expectations and
there is no change to the adjusted earnings per share that we are
anticipating for the year ending 30 April 2016.
Like-for-like revenue growth for the financial year to date in
each of the Group's main businesses is provided below.
UK Bus (regional operations) - twelve weeks ended 25 July 2015 1.0%
UK Bus (London) - twelve weeks ended 25 July 2015 1.5%
UK Rail - twelve weeks ended 25 July 2015 5.5%
(excluding Virgin Trains East Coast)
North America - three months ended 31 July 2015 (5.3)%
(including Megabus.com)
Virgin Rail Group - twelve weeks ended 25 July 2015 7.5%
UK Bus (regional operations)
Our UK Bus (regional operations) Division's trading is in line
with our expectations.
The Division's like-for-like revenue growth continues to come
principally from commercial on and off bus revenue, which is the
revenue we receive directly from passengers in respect of travel on
our bus services. Growth in both commercial revenue and revenue
from tendered and school services was affected by the timing of
school holidays compared to last year - we expect stronger growth
over August and September as this effect reverses.
Concessionary revenue growth remains modest. Revenue from
tendered and school services provided under contract has continued
to decline, reflecting the timing of school holidays referred to
above and the result of local authorities reducing spending on
supported services due to budget constraints.
Our expansion of the megabus.com inter-city coach operations in
mainland Europe is progressing and we remain positive about the
growth opportunities in that market. As we expected, the European
business remains loss-making at this early, high-growth phase of
its development but progress to date has been encouraging with
strong demand for our recently launched domestic coach services in
Germany and Italy.
Overall, estimated passenger journey numbers for the Division in
the 12 weeks were 0.7% below last year, which was driven by a
reduction in the number of concessionary passenger journeys that we
believe reflects the poorer summer weather in various parts of the
UK.
UK Bus (London)
Trading at the UK Bus (London) Division is consistent with our
expectations.
The portfolio of contracts that the Division has with Transport
for London is of a similar size to the prior year and the reported
revenue growth principally reflects a net increase in contract
prices resulting from the renewal of and/or variations to
contracts. Low inflation and the fall in fuel prices mean that the
annual inflation-linked adjustment to each contract's price is
minimal.
The operating environment in London continues to be adversely
affected by traffic disruption, including congestion resulting from
road works, which affects the revenue the business receives as
Quality Incentive Income based on its operational performance.
UK Rail
We are pleased with the financial performance of our UK Rail
Division. In addition to the like-for-like revenue growth of 5.5%,
overall reported revenue increased substantially year-on-year in
the 12 weeks due to the inclusion of the new Virgin Trains East
Coast franchise, which commenced on 1 March 2015.
Having been unable to agree terms with the UK Department for
Transport ("DfT") for a direct award of a new South West Trains
franchise to at least April 2019, we expect applicants to be
invited to tender for a new long-term franchise to commence in
2017. The current franchise is due to end in February 2017, and the
DfT has indicated that it expects to exercise its pre-contracted
option to extend the franchise to June 2017. We do not currently
expect South West Trains to earn a significant profit during any
extension period.
In July 2015, the DfT published a revised rail franchise
schedule. The core period of the planned East Midlands Trains
franchise direct award is now expected to run from October 2015
until March 2018, rather than October 2017. Constructive
discussions are continuing with the DfT in respect of that direct
award.
The Group has submitted its bid for a new Transpennine Express
franchise and its joint venture with Abellio is shortlisted to bid
for a new East Anglia franchise. The successful bidder for
Transpennine Express is now expected to be announced in December
2015, with the franchise commencing in April 2016. The winner of
the new East Anglia franchise is expected to be announced in June
2016, with the franchise commencing in October 2016.
North America
The fall in fuel prices continues to adversely impact demand for
our megabus.com inter-city coach services, with like-for-like
revenue at megabus.com North America in the three months ended 31
July 2015 being 3.4% below the equivalent period last year. Trading
elsewhere in the North America division is broadly in line with our
expectations notwithstanding a like-for-like revenue decline of
6.0%, which includes the effect of some low-margin contracts that
ended during the prior year. It also reflects that our sightseeing
and some of our other leisure-related businesses are being
adversely impacted by strong competition and the continued strength
of the US dollar. We continue to see a number of ongoing challenges
to growing profit for the Division and its joint venture, Twin
America, in the year ending 30 April 2016. As a result, we have
revised down our expectation of North America operating profit.
Virgin Rail Group
Virgin Rail Group's West Coast rail franchise continues to
perform strongly and that is benefitting taxpayers through profit
share payments by the business to the UK Department for Transport.
As expected, profit in the 12 weeks was significantly higher than
the equivalent prior year period because until June 2014, the
franchise operated under a temporary management contract. The
revised rail franchise schedule referred to above envisages the
franchise running until September 2017, having previously been
planned to run until at least 31 March 2017.
Financial position
The Group maintains a strong financial position with investment
grade credit ratings and appropriate headroom under its debt
facilities. Consolidated net debt has, as expected, increased from
30 April 2015, reflecting additional investment in our bus fleet
and the reversal of some favourable UK Rail working capital timing
differences in the previous financial year, partly offset by
continued strong cash generation from operations.
Outlook
Overall current trading is satisfactory and we remain 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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