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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.'