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Stagecoach Group PLC

Stagecoach Group plc Positive half-year results ahead of expectations

Stagecoach Group plc (LON:SGC), today announced  Interim results for the half-year ended 27 October 2018.

Financial highlights

· Adjusted earnings ahead of expectations, principally reflecting:

o Positive resolution of contractual matters for the former South West Trains franchise

o Strong profitability at Virgin Rail Group

· Adjusted earnings per share 12.9 pence (H1 2018: 13.6 pence)

o Prior year includes strong contribution from the South West Trains franchise that ended in August 2017

· Statutory loss per share 5.5 pence (H1 2018: earnings per share 13.6 pence)

o £85.4m non-cash exceptional impairment charge in respect of North America goodwill

· Interim dividend maintained at 3.8 pence per share

· Full-year adjusted earnings will reflect the rail out-performance in the first half of the year

Operational highlights

· Continuing innovation and leadership

o Trial of autonomous buses carrying passengers between Edinburgh and Fife, with £4.35m Innovate UK funding

o Second largest “contactless transit merchant” in Europe, after Transport for London

o New initiatives on enhanced use of data and demand responsive transport

· Encouraging performance from UK Bus (regional operations)

o Commercial initiatives delivering passenger revenue growth

o Like-for-like revenue per vehicle mile up 4.4%

· Good profitability and further opportunities in UK rail

o Involved in shortlisted bids for three new franchises

o Good progress on negotiation of new Direct Award franchise at East Midlands Trains through to at least August 2019

· North America strategic review

o First half performance in North America in line with revised expectations

o No significant change since September trading update in expected 2018/19 profit, but £85.4m non-cash goodwill impairment recorded to reflect a revised view on long-term profitability

o Reviewing strategic options and in discussions regarding a possible sale of all or part of the business

o Focus on growing scheduled service (including megabus.com) and contract parts of business

Financial summary

“Adjusted” results

(Results excluding intangible asset amortisation (exc. software) and exceptional items*)

“Statutory” results

H1 2019

H1 2018 (Restated**)

H1 2019

H1 2018 (Restated**)

Revenue (£m)

1,230.8

1,794.0

1,230.8

1,794.0

Total operating profit/(loss) (£m)

103.4

114.8

(6.2)

114.8

Net finance charges (£m)

(16.4)

(18.1)

(16.4)

(18.1)

Profit/(loss) before taxation (£m)

87.0

96.7

(22.6)

96.7

Earnings per share (pence)

12.9p

13.6p

(5.5)p

13.6p

Interim dividend per share (pence)

3.8p

3.8p

3.8p

3.8p

 

*

see definitions in note 23 to the condensed financial statements

**

see note 1 for details of the restatement of revenue and operating costs arising from implementing IFRS 15

Stagecoach Group Chief Executive, Martin Griffiths, said:

“I am pleased to report positive half-year financial results, ahead of expectations.

“Our strategy is designed to grow our core business, to support innovation, and to position the Group to benefit from future opportunities.

“We have delivered encouraging results at our UK regional bus business, where we continue to deliver high customer satisfaction. Targeted fleet and technology investment is helping to enhance operational delivery and improve cost efficiency. We continue to innovate across a range of areas including autonomous buses, contactless payment, data analytics and demand responsive transport.

“We are well positioned in UK rail, with three live contract bids and more than 20 years’ experience of delivering innovation and investment for customers. We welcome the UK Government’s rail review as an opportunity to deliver better value and day-to-day performance for passengers, a partnership structure and contracting system which is sustainable for the long-term, and reform of outdated regulations which are holding back customer-focused improvements.

“While we recognise the competitive challenges in some of our markets in the UK and North America, we are confident that public transport will be central to delivering Government priorities to grow the economy, connect people and communities, reduce road congestion and improve air quality. We are reviewing strategic options for the North America Division and that includes ongoing discussions regarding a possible sale of all or part of the business.

“The Group is focused on making further progress in the second half of the year and we have increased our expectation of full-year adjusted earnings per share to reflect the above-forecast rail earnings in the first half of the year.”