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StockMarketWire.com
Stagecoach Group welcomed today's announcement by the Department for Transport (DfT) of its intention to award the new InterCity East Coast (ICEC) rail franchise to Stagecoach's venture with Virgin, Inter City Railways Limited (ICR).

Passengers can look forward to new services, quicker and more frequent journeys whilst taxpayers will get a bigger return than they receive under the current temporary East Coast arrangements.

ICR will transform the customer experience for around 20 million journeys a year on one of the UK's major inter-city rail routes, blending the experience, culture and service-focus of both Stagecoach and Virgin. Stagecoach holds 90% of the share capital of ICR and Virgin holds the remaining 10%.

The new franchise will start in March 2015 and is planned to run until 31 March 2023, with the option for a one-year extension at the DfT's discretion. It includes a commitment to deliver £2.3bn* in real terms in premium payments to the Government between 2015 and 2023, providing a higher return to the taxpayer than under the current arrangements.

The franchise is set to see more than £140m invested in delivering an improved service and a more personalised travel experience for passengers. Trains will operate under the 'Virgin Trains East Coast' brand.

StockMarketWire.com
Stagecoach has booked an H1 pretax profit of £98.3m, slightly lower than the prior same period's £98.5m. Revenue totalled £1.55bn, from £1.47bn. It proposed an interim dividend of 3.2p a share, up 10.3% from 2.9p.

CEO Martin Griffiths commented:
"These are a good set of results, reflecting the strength of our businesses in the UK, mainland Europe and North America. We have improved further the travel experience for our customers, provided value for money for taxpayers, invested in public transport and added value for our shareholders.

"Strong partnerships between transport operators and central and local government are the best way to maximise the value in public transport for our communities and for our regional economies. We are proud that our record of significant investment, innovation, and low fares has delivered strong transport networks and high levels of passenger satisfaction.

"Despite facing a number of challenges, our sector-leading commercial bus operations in the UK have continued to grow, helping support the economies of some of the country's biggest city regions. Working with other bus companies and building on our existing multi-million-pound digital strategy, we are planning to introduce smart multi-operator ticketing in key city regions during 2015.

"This transformational initiative demonstrates what can be achieved at local community level without the need for costly and unnecessary regulatory change. "Our megabus.com branded coach services in the UK, mainland Europe and North America have helped create hundreds of new jobs. We have significantly expanded our footprint in mainland Europe and are encouraged by the opportunities in several countries, including moves to open up the inter-city coach market in France.

"There is encouraging momentum in the UK rail sector, with the award this year of several new franchises. We have opportunities to add value from both our existing franchises and new contracts, and to improve services for passengers. In particular, we are working closely with Government and Network Rail to provide new trains, extra capacity and a more reliable service for customers.

"We are delighted to have been selected to operate the new InterCity East Coast rail franchise along with our partner, Virgin. Our plans will deliver a transformation in travel for passengers, as well as value for money for the taxpayer. We are shortlisted for the TransPennine Express franchise and look forward to agreeing new franchises with the Department for Transport to extend our time at East Midlands Trains and South West Trains.

"Overall the Group is in excellent financial shape and we are well placed to drive value through new opportunities in our core bus and rail markets.

"While we have changed our view of the likely divisional mix of profit for the year ending 30 April 2015, with lower expected operating profit from our regional UK Bus and North America businesses broadly offset by other areas, we remain on course to achieve our expected adjusted earnings per share for the year."

Highlights:
· Continued passenger volume growth in commercialised UK bus market: Successful partnership working with government, investment and low fares; Significant further investment in technology improvements for customers; Working with other bus companies to deliver smart multi-operator ticketing in key city regions during 2015

· Expansion of megabus.com coach operations in Europe

· Commercial initiatives to further grow megabus.com in North America

· Encouraging momentum in UK rail sector: New InterCity East Coast franchise due to commence in March 2015; West Coast Trains franchise through to 2017 and performing strongly; Planning for direct awards of new South West Trains and East Midlands Trains franchises in second-half of 2015; One of three shortlisted bidders for TransPennine Express franchise.

StockMarketWire.com
Stagecoach Group said recent trading has been consistent with its expectations and there is no change to the adjusted earnings per share that it is anticipating for the year to April 30.

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), 48 weeks ended 29 March 2015, 2.4%

- UK Bus (London), 48 ended 29 March 2015, 8.1%

- UK Rail, 48 weeks ended 29 March 2015, 9.0%

- North America, 11 months ended 31 March 2015, 1.0%

- Virgin Rail Group, 48 weeks ended 29 March 2015, 7.6%

Trading update

StockMarketWire.com
Stagecoach Group has reported an H1 pretax profit of GBP90.8m, from GBP98.3m. This on revenue of GBp1.97bn, from GBP1.55bn. Interim dividend was 3.5p a share, from 3.2p.

CEO Martin Griffiths said:
"These are a good set of results with overall earnings per share in line with expectations.

"We have continued to invest in making travel better and easier for our customers. Public transport is a shared responsibility between the public and private sectors.

"It is crucial that the investment of transport operators is matched by steps by the public sector to tackle the growing challenge of road congestion, which is holding back the potential of the bus.

"At the same time, shrinking public investment in local transport can impact on the cost of travel and the network of services. We look for efficiencies within our own businesses to protect our customers as far as we can from any impact of Government cuts.

"Our bus passengers in the UK are now benefitting from our new UK Bus website, which enables them to check live running times for their bus services and purchase travel on their smart phones. In 2016, we will also introduce a new mobile bus app.

"In addition, we are on track to complete delivery of smart multi-operator bus ticketing in England's main city regions within the next few weeks.

"Our rail businesses have demonstrated the benefits of a commercially-led approach, with passenger revenue growth and ongoing investment in improved facilities and better information for customers. We are working closely with Government and Network Rail to deliver new trains, greater capacity and more train services.

"We are pleased that the Department for Transport has agreed to extend our operation of East Midlands Trains and plans to extend Virgin Rail Group's operation of West Coast Trains. This will allow us and Virgin to continue to deliver improvements to our customers, attract more people to rail travel and increase the future value of these franchises to Government.

"In North America, we have taken steps to mitigate the impact of lower motoring costs on demand for our megabus.com inter-city coach services by better matching the level of vehicle mileage to current demand. The rest of the North America Division is performing in line with our expectations.

"Overall, the Group is in good financial shape and we were pleased to have put new bond financing arrangements in place earlier this year. Challenges remain in our sector in the short-term but the underlying strength of our businesses across the UK, continental Europe and North America, means we are well placed to drive value for our customers and investors."

Deutsche Bank comment:
"There can be no hiding our disappointment at several aspects of the first half results. Trading has been impacted by a multitude of factors - some new, some one-off and some recurring. A special dividend looks remote until possibly FY17 at the earliest. We have cut our earnings estimates for FY16 by 6%, for FY17 by 9%, and our target price by 15% to 390p. Despite this, and after reflecting on the recommendation and make-up of our earnings cuts, we still believe Stagecoach is a mid-term high return business that is under-levered and not priced aggressively. Today may be grim, but we maintain buy.
The rub is that our operating profit estimates for UK Bus are cut materially (FY16 from £135m to £122m; FY17 from £139m to £134m), similarly for UK Rail in FY17 (FY16 from £66m to £63m; FY17 from £60m to £45m) but London Bus, North America and Joint Ventures are broadly unchanged. Overall we are cutting our Group EBITA forecast by 6%, and also our EPS by 6% with the financial gearing offset by marginal tax rate improvement to 19%. Clearly investors are likely to focus on the £13m cut to FY16 UK bus operating profit. The conclusion however is that nine million is arguably one-off in nature, a combination of weak intercity bookings following the Paris attacks and extremely bad roadworks. The last three to four million however is an out and out slowing of underlying revenue growth. Unfortunately this move has no obvious explanation and is a continuation of regional macro and general passenger weakness. It is this part of the downgrade that carries most weight, and is potentially recurring. As such, we think it prudent to carry forward a £5m cut to our FY17 UK bus forecasts as well. The earnings cut in UK rail, as well as the effective termination of the joint bid with Abellio for East Anglia, are also detailed on page three.
It’s clear that today’s results are disappointing. Our forecast of a special dividend in FY16 has proven too early - we have now moved it back to FY17. Earnings cuts for this year and next are material (c6%-10%) and more importantly impacting the crown jewel that is regional bus. The inability to reach a joint bid with Abellio is obviously disappointing given that the joint venture would have been well placed to win.
But after picking apart the downgrade we find that although some parts are clearly concerning, and potentially recurring, at least half ought to be one-off in nature. Similarly whereas the delay of a capital return is clearly a blow to our thesis, it doesn’t change the fact that Stagecoach is still underlevered – the cash has not disappeared. Taking a step back, even post our earnings revisions and pre-market open Stagecoach trades at 12.2x April-17 which isn’t a price for perfection. Therefore whilst we are reducing our target price by 15% to 390p we maintain buy and see medium term value. Our investment case, valuation, forecast changes and risks are shown on pages three to five.
We value SGC using a FY17 EV/EBITA multiple of 12.0x, a small premium to the five year average. The key risk to our view is a continued deterioration in regional bus volumes."

StockMarketWire.com
Investec has lifted its recommendation on public transport company Stagecoach (LON:SGC) to reduce from sell, which is says is primarily down to the recent share price weakness.

The shares have fallen by over 14 per cent in the past month and are down 17 per cent on a three-month view.

Despite today's upgrade, the broker commented: "Stagecoach reported slightly disappointing interim results and has lowered its outlook on a recent deterioration in trading that appears to have been at least partially caused by the attacks in Paris.

"After an unsuccessful bid for Trans-Pennine and the withdrawal from equity participation in the East Anglia franchise, we believe it is challenging for Stagecoach to retain its current market share in UK rail."

Analysts have left their target unchanged at 300 pence per share, which implies a forecast total return of 2.2 per cent.

Liberum Capital today downgrades its investment rating on Stagecoach Group PLC (LON:SGC) to sell (from hold) and cut its price target to 185p (from 215p).

DEC 2017
StockMarketWire.com
Stagecoach Group booked a rise in first-half profit that was largely boosted by one-off items as revenue fell.

Pre-tax profit rose 8% to £96.7m, while revenue fell 10% to £1.80b.

Adjusted pre-tax profit, which strips out intangible asset amortisation and exceptional items, fell to £96.7m from £97.2m.

The railway company kept its dividend unchanged at 3.8p per share.

"We are focussed on making further progress in the second half of the year and have maintained our expectation of full year adjusted earnings per share," chief executive Martin Griffiths said.

Rail franchising update
Stagecoach Group plc ("Stagecoach") notes the statement by the UK Secretary of State for Transport today regarding rail franchising matters and in particular that:

· Consistent with the plan announced by the Department for Transport ("DfT") in December 2016, the DfT and our joint venture, Virgin Rail Group ("VRG"), have agreed a new West Coast rail franchise to run from 1 April 2018 until potentially 31 March 2020.

· A Stagecoach subsidiary has been shortlisted to bid for the next competitively tendered East Midlands franchise, currently planned to begin in August 2019.

· The DfT will continue to explore entering into new commercial terms with Virgin Trains East Coast ("VTEC") on the continued operation of the East Coast franchise subject to certain criteria being met.

As detailed below in this statement, the outcome of the ongoing discussions between VTEC and the DfT might result in further cash and non-cash exposures in the Stagecoach consolidated financial statements in addition to those already accounted for. That could result, all other things being equal, in Stagecoach's consolidated non-rail net debt being up to around £19m higher than previously forecast.

The DfT has previously announced that a Stagecoach subsidiary is shortlisted to bid for the new South Eastern franchise. Stagecoach is also announcing today that it intends Alstom to join that shortlisted bid, subject to receiving formal consent from the DfT.

Deutsche Bank today reaffirms its buy investment rating on Stagecoach Group PLC (LON:SGC) and cut its price target to 205p (from 210p).

StockMarketWire.com
British railway line operator Stagecoach Group kept its annual earnings per share guidance unchanged, amid rising revenue at its train business offset by falling revenue at its bus business.

Like-for-like revenue at its UK rail division, excluding South West Trains, had grown by 3.2% in the 44 weeks to 3 March, the company said. Revenue at the Virgin Trains joint venture, meanwhile, had grown by 2.8% over the same time period.

UK bus regional revenue had fallen 0.1% on a like-for-like basis, impacted by severe snow storms, while falling by a deeper 4.3% in the London bus division.

In the company's North American business, year-to-date like-for-like revenue had fallen by 0.6%.

'Our expectation of the group's adjusted earnings per share for the year ending 28 April 2018 has not changed from when we announced our interim results in December 2017,' Stagecoach said.

StockMarketWire.com
Bus and coach operator group Stagecoach slashed its dividend Thursday as adjusted annual pre-tax profit and revenue slipped and the company reported an £85.6m increase in expenses after the company lost a key franchise earlier this year.

For the 12 months to 28 April, adjusted pre-tax profit fell 4.1% to £144.8m, from £151.0m a year ago, revenue slipped 18.1% to £2.23bn, operating profit fell to £179.9m from £185.1m.

The company blamed the slip in revenue growth on the end of its South West trains franchise in August 2017.

While company managed to reduce annual net debt to £395.8m from £409.4m a year ago, its efforts were held back by £85.6 hit from expenses as it prepares to transfer its Virgin Trains East Cost Business.

The loss of its Virgin Trains East Coast Business comes after the Secretary of State for Transport's decided to appoint an Operator of Last Resort to take over the operation of InterCity East Coast train services from the company's Virgin Trains East Coast business. 'We expect cash outflows in the year to 27 April 2019 in respect of the transfer of the East Coast rail business, further cash outflows in respect of the unwind of the expired South West Trains rail franchise and the reversal of cash flow timing benefits at East Midlands Trains,' the company said. The company also said it would be moderating spending in its bus divisions following several years of significant fleet and technology expenditure.

The full year dividend was slashed to 7.7p per share from 11.9p a year earlier.

StockMarketWire.com
Train and bus company Stagecoach Group swung to a first-half loss after it wrote down the value of its US business, which it is considering selling.

Underlying profit, however, while falling, was ahead of the company's expectations and it upgraded its guidance for the full year.

Pre-tax losses for the six months through 27 October amounted to £22.6m, compared a £96.7m profit on-year.

Stagecoach said it wrote down the value of its US assets by £85.4m as revenue fell and profit came in below expectations, reflecting 'a number of factors including increased competition'.

The company said it was in discussion about a possible sale of all or parts of the US unit.

Adjusted pre-tax profit fell 10% to £87.0m, which the company nevertheless said was ahead of expectations,due in part to strong profits at Virgin Rail.

Stagecoach kept its interim dividend steady at at 3.8p per share.

'I am pleased to report positive half-year financial results, ahead of expectations,' Martin Griffiths said.

'We have delivered encouraging results at our UK regional bus business, where we continue to deliver high customer satisfaction.'

'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.'

'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.'