Trading statement

28 September 2017

Introduction

Stagecoach Group plc is today (28 September 2017) providing a trading update in respect of its financial year ending 28 April 2018, ahead of a series of meetings with analysts. Our expectation of the Group's earnings per share for the year ending 28 April 2018 has not changed from when we announced our 2016/17 results in June 2017.

Revenue growth

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)                   - sixteen weeks ended 19 August 2017    (0.4)%

UK Bus (London)                                   - sixteen weeks ended 19 August 2017    (0.1)%

North America                                       - four months ended 31 August 2017        0.8%

UK Rail (excluding South West Trains)    - sixteen weeks ended 19 August 2017    3.8%

Virgin Rail Group                                    - sixteen weeks ended 19 August 2017    4.4%

UK Bus (regional operations)

As we explained in our 2017 Annual Report, we have implemented targeted mileage reductions and selective fare rises in our UK Bus (regional operations) Division, as we make changes to our services that we consider will support the long-term success of the business. The effects of these actions on our core local bus businesses has been broadly as we expected, with revenue per mile up 2.8% year-on-year and the fare rises contributing to increased yield per journey. In addition, our costs remain well controlled. In light of these factors, and notwithstanding lower than expected demand in recent months for our longer distance inter-city coach services, our expectation of the Division's operating profit for the year is unchanged.

UK Bus (London)

As previously reported, our UK Bus (London) Division has experienced a small net reduction in contracts with Transport for London. We continue to anticipate an increase in the rate of revenue decline later on in the year, reflecting the timing of contracts expiring. We are satisfied with the overall outcome from our bids for new contracts so far this financial year and we believe our strategy of bidding prudently is the right one for the long-term sustainability of the business.  

North America

Trading at our megabus.com inter-city coach business in North America continues to show some signs of improvement. The market remains challenging due to the previously highlighted effects of sustained lower fuel prices, which have heightened car and air competition. The like-for-like revenue increase of 0.8% for the Division includes 4.4% decline for megabus.com North America, with megabus revenue per vehicle mile remaining broadly stable. Trading at the other businesses in North America remains in line with our expectations. Like-for-like revenue at these businesses increased by 3.1%, which includes revenue from new contracts.

UK Rail and Virgin Rail Group

Revenue growth across our rail operations during the period has been broadly consistent with the trends seen in the second half of the prior year.

We continue discussions with the Department for Transport regarding the terms of our ongoing operation of the Virgin Trains East Coast franchise.

The Department for Transport has formally exercised the pre-contracted one year extension to our East Midlands Trains franchise through to March 2019. It has also indicated its intention to negotiate us continuing to operate the business to at least August 2019, with an option to extend the contract further by up to one year.

We have worked collaboratively with the new operator and industry partners to ensure the smooth transition of the South Western franchise. We are proud to have operated the franchise for more than 20 years and are most grateful to all of our employees and partners who have contributed to its success during that period.

Updating definition of adjusted earnings per share

In our preliminary results announcement of 28 June 2017, we noted our intention to discuss with analysts and investors whether adjusting our definition of adjusted earnings per share to include software amortisation costs would provide them with a more useful measure of performance.  We also set out what the effect of making the adjustment would be on the reported adjusted earnings per share for the year ended 29 April 2017.  Based on those discussions and consistent with emerging market practice, we have decided that from now on, we will report adjusted earnings per share inclusive software amortisation costs.

Interim results

The next planned update is the announcement of the Group's interim results for the half-year ended 28 October 2017 on 6 December 2017.

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.