28th Aug 2008 07:00
|
Company |
Stagecoach Group plc |
|
TIDM |
SGC |
|
Headline |
Interim Management Statement |
|
Released |
28 August 2008 |
|
Number |
1572C |
Interim Management Statement
Stagecoach Group plc ("the Group") is today publishing an interim management statement, covering available information for the period since 1 May 2008 to the date of this announcement. The Group's Annual General Meeting will be held tomorrow, 29 August 2008.
Financial performance and significant events
The Group provided an update on trading as part of its preliminary results announcement on 25 June 2008. Trading performance since then has continued to be positive. The overall profit for the period commencing 1 May 2008 is higher than we had previously expected, principally because of better than expected revenue growth in the UK Bus Division.
Like-for-like revenue growth* in each of the Group's main businesses is provided below.
|
UK Bus |
- sixteen weeks ended 17 August 2008 |
9.3% |
|
UK Rail |
- sixteen weeks ended 17 August 2008 |
9.0% |
|
North America |
- three months ended 31 July 2008 |
7.6% |
|
(including Megabus.com) |
||
|
Virgin Rail Group |
- sixteen weeks ended 17 August 2008 |
2.0% |
The UK Bus Division continues to trade strongly with the cost pressures from increased fuel costs and higher UK inflation being more than compensated for by continued strong revenue growth. People are continuing to switch from travelling by other modes of transport to travelling by bus. Like-for-like passenger volumes for the sixteen weeks to 17 August 2008 were up 4.9% on the equivalent prior year period. Like-for-like full fare passenger volume growth was 2.3%. Total revenue, including the impact of acquisitions and disposals, was up 11.6%.
In the UK Rail Division, we continue to see strong like-for-like revenue growth and we are encouraged by this positive trend. The reported growth of 9.0% includes the negative effect of the transfer of Reading-Brighton train services from South Western Trains to another operator, which has reduced the reported growth rate by around 1.0%. Revenue trends at South Western Trains are affected by a number of factors including Network Rail engineering work, the timing of introducing new revenue protection measures and changes in fares, as well as economic factors such as reduced Central London employment.
The reported like-for-like revenue growth for UK Rail does not include East Midlands Trains. For the sixteen weeks ended 17 August 2008, the revenue of East Midlands Trains when compared to the equivalent businesses under their former ownership was 16.0% higher than the previous year reflecting marketing initiatives, improvements to customer service, new revenue protection measures, price increases and the trend of people switching to inter-city rail travel from alternative forms of transport.
The North American business continues to benefit from favourable conditions for bus and coach travel. We are encouraged by the early performance of the Megabus.com network in the North East of the United States, where we began services on 30 May 2008. Whilst this is presently a relatively small part of the North American business, passenger volumes and revenue have exceeded our initial expectations.
Profit at Virgin Rail Group since 1 May 2008 has been at the upper end of our expectations as the business continues to benefit from modal shift. The introduction of a new timetable in December 2008 is intended to result in around 30% more train services and will be an important development for Virgin Rail Group. Recent train performance and reported revenue at Virgin Rail Group have been adversely affected by work being undertaken on the railway infrastructure by Network Rail in anticipation of the increase in train services. However, because Virgin Rail Group is compensated for this disruption, its overall profitability has not been adversely affected. The outlook for Virgin Rail Group remains positive and we are optimistic of the potential for further strong financial performance if the December 2008 timetable is successfully implemented. Based on Network Rail's recent operational performance and the extent of the required infrastructure upgrade, we remain concerned that there is significant risk to the successful delivery of the December 2008 timetable. Whilst Virgin Rail Group has contractual protection against the potential adverse financial affects of this risk, it is crucial that Network Rail delivers the physical infrastructure on time and to the right quality and standard to ensure passengers are provided with a consistently reliable railway.
The Group continues to make progress in the further development of its UK Rail interests. On 31 July 2008, the Department for Transport ("DfT") confirmed Virgin Rail Group as the chosen bidder to support the DfT's plans to introduce longer "Pendolino" trains on the West Coast Main Line.
On 20 August 2008, the DfT confirmed the Group as one of four short-listed bidders for the new South Central rail franchise due to commence in September 2009.
Financial position
Against a background of difficult credit markets, the Group's financial position is strong and we have significant surplus cash and committed, undrawn bank facilities that run to 2012. There have been no significant changes in the Group's financial position since 30 April 2008.
Outlook
We are encouraged by the current trading performance of the Group, which provides further evidence of modal shift towards bus and train travel prompted by high fuel costs, environmental concerns and healthy lifestyles. Whilst we are mindful of macroeconomic developments and of continuing cost pressures such as increased fuel prices, the outlook remains positive.
* 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. In the case of Virgin Rail Group, the like-for-like revenue growth relates to West Coast Trains only and in order to obtain a like-for-like comparison, it excludes the services that were transferred from CrossCountry Trains to West Coast Trains.
For further information, please contact:
|
Stagecoach Group plc |
www.stagecoachgroup.com |
|
Martin Griffiths, Finance Director |
01738 442111 |
|
Steven Stewart, Director of Corporate Communications |
07764 774680 |
|
Smithfield |
|
|
John Kiely / Will Swan |
020 7360 4900 |
Notes
Stagecoach Group
Stagecoach Group is a leading international public transport group, with extensive bus and rail operations in the UK and North America.
Cautionary Statement
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.
Related Shares:
SGC.L