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South West Trains
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type Press release
Ahead of its close period and updates with analysts Stagecoach Group plc announces the following trading update.
All of our divisions continue to trade profitably, to generate operating cash flow and, with the exception of Coach USA where trading remains difficult, all divisions continue to trade in line with our expectations.
UK Bus Division
Our UK Bus business continues to benefit from strong revenue and passenger growth in the London market, arising as a result of our success in winning and retaining tenders. Overall revenues for the 20 weeks ended 15 September 2002 are 4.0% above the prior year. Passenger volumes have increased by approximately 1.4% in the same period.
UK Rail Division
At South West Trains we have seen a decline in season ticket revenues, in line with other London and South East operators. Although passenger volumes have seen a 0.5% increase, this has mainly been in the lower priced off-peak sector. Peak product sales have suffered from the decline in Central London employment. Overall revenues for the 20 weeks ended 15 September 2002 are 0.6% below prior year levels. Passenger volumes and revenues are 0.4% and 1.3% respectively below prior year, after excluding the period affected by industrial action in May 2001. The company continues to receive compensation payments from Railtrack related to poor infrastructure performance that have partly offset the revenue decrease to date.
The Group continues to be in discussions with the Strategic Rail Authority about a new franchise for South West Trains. The Group’s current franchise at South West Trains expires in February 2003. A number of options are currently being explored and a further announcement in this regard will be made in due course.
Virgin Rail Group
At Virgin Rail Group revenues have increased in the first half of the year. Passenger revenues for the 20 weeks ended 15 September 2002 are 14.0% above prior year. Under an agreement reached with the Strategic Rail Authority, the West Coast Trains franchise is operating under SRA support until March 2003 and the Cross Country franchise until March 2004. During this time discussions will continue with the Strategic Rail Authority to renegotiate both the West Coast and Cross Country franchises on a long term commercial basis through to 2012.
The revised agreement with the SRA anticipates that Virgin Rail Group will break-even in its current financial year. This will result in Stagecoach recording a profit in the year to 30 April 2003 slightly below prior year levels which offsets losses recorded in March and April 2002.
Trading at Coach USA remains difficult reflecting a soft US economy and an increasingly competitive market. Overall, like for like revenues for the five months ended 30 September 2002 were 7.2% below prior year levels.
Within our coach and bus operations, like for like revenues from scheduled services and contracts have held up well compared to the prior year. However, like for like revenues from charter, sightseeing and tour are 12.1% down year on year, excluding the impact of the New York operations commenced in the prior year.
Transit division revenues are 4.8% below prior year levels largely reflecting the loss of a major contract in San Francisco in the second half of last year.
In our taxi division revenues are 21.1% down year on year, which includes a 46.7% fall in taxicab sales to owner-drivers. We have also seen an increase in vehicle repossessions and bad debt expenses.
Costs across the Coach USA division remain under control but we have seen an increase in insurance costs ahead of our current year expectations. In the five months to 30 September insurance and costs of risk were approximately £7.5m (47%) above the prior year. Approximately half of the increase was anticipated with the remainder reflecting increased provisions for a fatal accident in May and additional claims costs in the taxi division.
Traditionally, September and October have been strong months for Coach USA, although the prior year was impacted by the September 11 attacks. The year on year improvement in revenues for September was less than expected and we do not believe that trading conditions will improve significantly during the remainder of the year. Despite the difficult trading environment and adverse currency movements we anticipate that, based on current trends, Coach USA will be profitable in the year to 30 April 2003 but operating profits before exceptional items will be in the region of £20 million to £30 million below prior year levels.
The detailed review of all of Coach USA’s operations that we announced in July is continuing under the direction of the Acting Chief Executive and we expect to announce the results of this review together with the interim results on 4 December 2002.
Our Asia/Pacific bus businesses and our investment in Road King Infrastructure Limited continue to perform well.
The New Zealand operations continue to show strong volume and revenue growth, particularly in the Auckland bus market. Revenue and volume growth of 9.7% and 7.8% respectively was achieved in New Zealand in the 20 weeks ended 15 September 2002.
Overall revenue in Hong Kong for the 5 months ended 30 September is in line with the prior year. Passenger volumes over the same period increased 1.2% on prior year levels. Excluding the prior year impact of severe weather conditions and disposals, like for like revenues in Hong Kong are 0.6% lower than prior year levels.
Finance Costs and Interest Charges
The Group continues to benefit from the current low interest rate environment and the favourable foreign exchange rate in respect of dollar denominated debt. As a result of these factors combined with gains made on the repurchase of our 2004 Eurobonds and 2009 Yankee bonds made during the year we anticipate that interest and financing costs for the year ended 30 April 2003 will be approximately £10 million to £15 million lower than in the prior year.
The company will announce its interim results for the six months ended 31 October 2002 on 4 December 2002.
Martin Griffiths, Group Finance Director, 01738 442111
Steven Stewart, Stagecoach Group, 01738 442111
John Kiely, Smithfield Financial, 020 7360 4900
Railhub Archive ::: 2002-10-23 STG-001