Stagecoach Group PLC Stagecoach London Acquisition (0044N)

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RNS Number : 0044N

Stagecoach Group PLC

27 May 2022

27 May 2022

Stagecoach acquires east London bus operations from Kelsian Group

Stagecoach is pleased to confirm that its subsidiary, Stagecoach Bus Holdings Limited, has entered into binding agreements to acquire Kelsian Group's east London bus operations and depot at Lea Interchange for total consideration of GBP20m. Upon completion, GBP10m will be payable, with a further GBP1m per annum payable for ten years commencing on the first anniversary following completion, subject to certain conditions.

The acquisition is a good strategic fit with Stagecoach's existing operations in east and south-east London. Lea Interchange depot is well located close to Stratford, the busiest station in the UK. It operates eleven contracts on behalf of TfL using a fleet of around 150 buses, with an annual turnover of around GBP38m.

The acquired contracts have an acceptable expiry profile and there are opportunities to improve operational performance and grow contract margins as routes are retendered.

Additionally, the acquired depot provides a positive platform to bid for new contracts in the area over the short and medium term. In addition to the initial GBP10m consideration, we would anticipate the incremental impact on Stagecoach's net debt upon completion to increase by around a further GBP20m, reflecting the IFRS 16 liabilities associated with the vehicle and property leases.

Martin Griffiths, Stagecoach Chief Executive, said: "We have an extensive track-record of operating high-quality and profitable bus services on behalf of Transport for London.

"This targeted acquisition provides operational and margin improvement opportunities that we have successfully delivered at our other London bus depots.

"We look forward to working with TfL to deliver even better bus links to local communities in east London and also helping support the Mayor's drive to deliver a net zero transport system."

ENDS

For further information, please contact:

Stagecoach Group plc www.stagecoach.com

Investors and analysts

Ross Paterson, Finance Director 07714 667897

   Bruce Dingwall, Group Financial Controller                                       07917 555293 

Media

   Steven Stewart, Director of Communications                      01738 442111 or 07764 774680 

John Kiely, Smithfield Consultants 07785 275665

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May 27, 2022 02:01 ET (06:01 GMT)