Introduction
Stagecoach Group plc (LON: SGC) has today provided a trading update in respect of its financial year ending 2 May 2020, ahead of a series of meetings with analysts.
Our forecast of the Group’s adjusted earnings per share (both inclusive and exclusive of rail businesses) for the year ending 2 May 2020 is unchanged from when we announced our full year results in June 2019.
Bus operations
The financial performance of our non-rail operations has been broadly in line with our expectations.
We are pleased by the strong performance during the period of our UK Bus (London) Division, where favourable service performance has resulted in higher than anticipated Quality Incentive Contract income. We are also encouraged with our performance on current year tenders for Transport for London contracts, and believe our bidding strategy will support the long-term sustainability of the business.
Like-for-like revenue growth at our UK Bus (regional operations) Division was 1.0% for the twenty weeks ended 14 September 2019. That lower than anticipated growth is below the growth rate we reported last year, reflecting various factors including 2018’s exceptionally good summer weather contrasting with this summer’s poorer weather and the non-recurrence of prior year revenue from operating bus services related to rail re-signalling work in the Derby area. We continue to see regional variations in performance, with patronage trends typically strongest in urban areas and the southern half of the country. We remain focussed on initiatives to grow revenue over the longer term and are exploring potential new income streams, including partnerships with airports, festivals and events around the UK.
Rail operations
We have worked collaboratively with the new operator to ensure the smooth transition of the East Midlands rail franchise. We are proud to have operated the franchise for 12 years and are most grateful to all of our employees and partners who have been involved in delivering our transformation of the East Midlands rail network. We and our joint venture partner, Virgin, will approach the forthcoming transition of the West Coast franchise in the same spirit of collaboration.
We continue to pursue our claims against the Secretary of State for Transport regarding his decisions to disqualify us from three rail franchise competitions. The three cases are due to be heard in the High Court in early 2020.
Share buyback programme
On 25 April 2019, Stagecoach Group plc announced a share buyback programme to buy back shares with an aggregate market value of no more than £60m. Since then until the close of business on 2 October 2019, the Company bought back 21,830,035 ordinary shares at a cost of approximately £28.5m.
The Board is satisfied that the programme has largely achieved its objective of making appropriate use of our cash, whilst retaining a good financial position and maintaining an investment grade credit rating. In line with the Company’s strong capital discipline, the Board now plans to continue the programme until around £30m of shares have been bought back.
Interim results
The next planned update is the announcement of the Group’s interim results for the half-year ended 26 October 2019 on 11 December 2019.
