29th Apr 2014 10:38
LONDON (Alliance News) - British public transport operator Stagecoach Group PLC Tuesday said overall profitability of the group has remained "satisfactory" for the financial year to date, with like-for-like revenue growth across the business.
In a pre-close trading update, the operator of bus, coach, train and tram services said that like-for-like revenues were up 4.8% in its UK regional bus operations in the 48 weeks to March 30, up 4.6% in its London bus operations, 4.5% in UK rail, 4.1% in North America, and up 5.9% at its Virgin Rail joint venture.
Stagecoach said its UK bus regional operations division performed well, boosted by a 1.5% increase in like-for-like passenger volumes.
"An increase in our commercial revenue has contributed most to overall revenue growth, with concessionary, tendered and school revenue also continuing to grow," the company said in a statement.
However, Stagecoach said that looking ahead it does not expect any significant short-term growth in concessionary and tendered revenue, as the UK government cuts back on its budgets.
It said it also saw strong growth from its UK bus London division during the 48-week period, boosted by new contract wins last year.
Stagecoach said its UK rail division was hit earlier in the year by flooding and storms in the south west of England, although trading at its rail businesses is in line with expectations, it said, with revenue growth having since improved.
The group also said that said that its South West Trains unit and track operator Network Rail have entered into a new agreement.
"The new agreement contemplates that the single, joint alliance management team will continue to have responsibility for both train and infrastructure operations for the next five years to April 2019," it said in a statement.
The company also has bid for the Thameslink and Docklands Light Railway franchises and is in talks with the UK government about extending its South West Trains and East Midlands franchises.
It said that it continues to work on its bid with Virgin for the InterCity East Coast rail franchise. However it now expects that around GBP2 million of the bid costs will be deferred until the next financial year.
Stagecoach said that Virgin Rail Group, of which it owns 49%, and the UK Department for Transport are currently in talks to discuss revised commercial terms that could see Virgin Rail Group take greater revenue and cost risk for the period through to April 2017, for "a commensurate financial return".
Stagecoach said that its North America business, which includes its low-cost Megabus operations, was held back by winter storms in the US earlier this year, but still saw revenue growth of 4.1% on a like-for-like basis in the 11 months to March 30. It said the performance was driven by a 17% increase in revenue from Megabus, which it said was boosted by further growth in existing services, as well as contributions from its Texas and California networks launched last year.
The group also said that it will be expanding the Megabus network, with the launch of a new Florida hub next month.
Stagecoach said that its now expects to book around GBP9 million in exceptional costs associated with its share of financial costs connected with the litigation with Twin America and its joint venture partners, which included two Stagecoach US subsidiaries. The litigation alleged that the formation of the Twin America joint venture in 2009 was anti-competitive. It said it has not admitted any liability but the Twin America joint venture has agreed a cash settlement of around GBP11 million with the private plaintiffs to fully resolve the private litigation.
"Although we face a number of challenges to growing profit in the year ending April 30, 2015, overall current trading is satisfactory and the prospects for the group remain positive," Stagecoach said in its statement.
Stagecoach shares were up 0.5% at 375.70 pence per share Tuesday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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