Stagecoach Group PLC Trading Statement (5677B)

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RNS Number : 5677B

Stagecoach Group PLC

09 October 2020

Trading statement

9 October 2020

Introduction

Stagecoach Group plc is today (9 October 2020) providing a trading update in respect of its financial year ending 1 May 2021, ahead of a series of meetings with analysts. Our outlook for the year ending 1 May 2021 is unchanged from when we announced our full year results in July 2020, recognising that the continuing uncertainty of the COVID-19 situation and the UK's recovery makes it difficult to reliably predict our financial performance.

Regional bus operations

The UK Bus (regional operations) business continues to be affected by the substantial fall in passenger demand for public transport in response to the COVID-19 pandemic. Passenger demand had been steadily recovering since April as COVID-related restrictions were relaxed, with commercial revenues returning to around 50-60% of the prior year levels. We are now operating vehicle mileage in excess of 93% of prior year levels.

The recent government announcements to impose further restrictions may discourage public transport use in the short-term. We are grateful for the measures put in place by the respective governments in England, Scotland and Wales, and by our local authority partners, to protect the continuity of local bus services throughout this period. In August, the Department for Transport confirmed that payments for the provision of these essential services by regional bus operators in England would continue until no longer required. These COVID-19 Bus Services Support Grant Restart payments are continuing, with an eight week notice period. While this and similar arrangements are in place, we expect to continue to generate positive EBITDA and avoid significant operating losses.

London bus operations

We are pleased with the continued strong operational and financial performance of our London business. We continue to work collaboratively with Transport for London in response to the COVID-19 situation, and contract payments are now at normal levels with full service restored, while an agreement on Quality Incentive Contract income is under discussion. Our expectation is that profitability in 2020/21 will be broadly consistent with the prior year financial performance.

Rail

We continue to make positive progress in unwinding the affairs of our former train operating companies.

Similar to our local regional bus businesses, our ongoing Sheffield Supertram business is receiving government payments for continuing the essential tram services it provides.

Financial position

The Group maintains a solid financial position with investment grade credit ratings and appropriate headroom under its debt facilities. We continue to have available liquidity of over GBP800m. Since our full year results announcement on 22 July 2020, we have seen further positive cash flow (excluding movements in borrowings). As at 7 October 2020, our consolidated liquidity position was as follows:

 
   Liquidity position as at 7 October 2020                  GBPm 
    - Cash balances                                         437.7 
    - Undrawn, committed headroom under bank facilities 
     expiring March 2025                                    266.4 
                                                          -------- 
    - Undrawn, committed headroom under bank facilities 
     expiring October 2021                                  140.0 
--------------------------------------------------------  -------- 
   Available liquidity                                      844.1 
                                                          -------- 
   Less: net train operating company liabilities           (98.5) 
--------------------------------------------------------  -------- 
   Adjusted liquidity                                       745.6 
                                                          -------- 
   Less: facilities expiring October 2021                  (140.0) 
--------------------------------------------------------  -------- 
   Adjusted liquidity, excluding facilities expiring 
    October 2021, at 7 October 2020                         605.6 
 

Retirement benefits

The trustees are progressing with the 2020 triennial valuation of our main defined benefit pension scheme, assessing the impact of recent events, but also recognising that the pension benefits payable reflect very long-term obligations and investment / funding assumptions. We expect the funding deficit to be substantially lower than the GBP404.1m (included in the Group total of GBP413.1m) determined on an accounting basis as at 2 May 2020. Currently, we envisage that the funding deficit on the main scheme is in the range of GBP150-200m, which may lead to an increase in employer contributions over the medium to long-term.

Interim results

The next planned update is the announcement of the Group's interim results for the half-year ended 31 October 2020 on 9 December 2020.

Chief Executive, Martin Griffiths, said:

"The safety and well-being of customers and our people remains our absolute priority as we continue to navigate the uncertainty from COVID-19. While the situation remains fluid, we have made progress in the restoration of our networks to close to pre-COVID levels and in growing passenger volumes safely within the current restricted environment.

"We have a strong business, with good liquidity, devolved operating companies closely focused on our customers and local communities, good financial discipline and a supportive relationship with government and our local authority partners. As well as continuing to provide vital connections to jobs and public services during the current pandemic, our sustainable public transport services are central to long-term plans for a greener, smarter, safer, healthier and fairer country."

For further information, please contact:

Stagecoach Group plc www.stagecoachgroup.com

Investors and analysts

Ross Paterson, Finance Director 07714 667 897

Bruce Dingwall, Group Financial Controller 07917 555 293

Media

Steven Stewart, Director of Corporate Communications 07764 774 680

Notes

This announcement contains certain forward-looking statements with respect to the financial performance, financial position and businesses of Stagecoach Group plc. These statements and forecasts involve risk, uncertainty and assumptions because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are made only as at the date of this announcement. Except as required by law, Stagecoach Group plc has no obligation to update the forward-looking statements or to correct any inaccuracies therein.

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October 09, 2020 02:00 ET (06:00 GMT)