Stagecoach results show slow but steady growth
Preliminary results for the Stagecoach Group for the year ended 30 April 2014 show that group revenue grew 4.5% to £2.930bn (2013: £2.805bn). Group total operating profit before intangible asset expenses and exceptional items only increased 1.3% to £223.3m (2013: £220.7m).
Strong cash generation resulted in a net debt fall of 14.2% to £461.6m (2013: £538.0m), and net finance costs fell slightly to £42.6m (2013: £43.3m). EBITDA (earnings before interest, tax, debt and amortisation) rose 1.9% to £340.2m (2013: £333.9m).
The Stagecoach Group consists of four main business units: UK Rail, UK Bus (Regional), UK Bus (London) and North America.
UK Rail: The rail sector is the biggest and accounts for 43% of group turnover. Revenue was up 4.2% to £1.252bn (2013: £1.201bn), but operating profit slumped 16.7% to £34.3m (2013: £41.2m), and the operating margin dropped to 2.7% (2013: 3.4%).
Stagecoach runs the South West Trains and East Midlands passenger franchises. It paid out £599.0m to the DfT in premiums, but received £301.3m back in revenue support in the money-go-round system. This is the ‘subsidy’ operators receive if the revenue falls short of the one agreed at the time the franchise was set.
UK Bus (Regional): This sector is the second largest and accounts for around 35% of group turnover. Revenue increased 4.8% to £1.013bn (2013: £0.967bn), and operating profit was 2.9% up at £147.4m (2013: £143.2m). The operating margin declined slightly to 14.6% (2013: 14.8%). Like-for-like revenue results were 4.6% up on the previous year (which had been affected by the Olympics factor).
UK Bus (London): London buses account for 8% of group turnover, but this sector turned in the best results. Revenue increased 5.2% to £244.9m (2013: £232.7m), operating profit rose 25.8% to £23.9m (2013: £19.0m), and the operating margin went up to 9.8% (2013: 8.2%). BSOG (Bus Service Operator’s Grant) has not been paid since October 2013, but the losses have been more than offset by gains from higher contract prices.
North America: The North American operation accounts for 15% of group turnover. Operating profit was 80% on 2013 though this partly reflected on the acquisition of Coach America in July 2012. Megabus continues to do well and shows the greatest growth.