Trading Update

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.