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Stagecoach Group plc - Interim results for the six months ended 31 October 2011

Business highlights

 · Adjusted earnings per share* of 10.1p (2010: 12.2p)

o In line with market expectations

o First half earnings reflect loss at East Midlands Trains, expected to return to profitability in second half

· Interim dividend up 9.1% to 2.4p

· Completion of return of c.£340m in cash to shareholders

· Strong organic growth across the Group's bus and rail businesses

· UK Bus regions: strong growth in commercial revenue offset reductions in concessionary and tender revenue

· UK Bus London: turnaround plan on track

· UK Rail: commuter and inter-city revenue growth underpinned by operational delivery and customer satisfaction

· North America: further expansion of megabus.com budget coach service

· Virgin Rail Group: growing business and leisure travel; eight-month franchise extension to December 2012; shortlisted for new Inter-city West Coast rail franchise

· Good start to second half of year and positive outlook for the Group's greener, smarter public transport services


Commenting on the results, Chief Executive, Sir Brian Souter, said:


"These are good results and we have achieved further revenue growth across our bus and train businesses in the UK and North America. Against a background of pressure on household incomes and rising fuel costs, we believe that providing value for money travel is increasingly important. We are seeing continuing indications of modal shift from the car to bus and rail.


"The expected period loss at East Midlands Trains resulted in a reduction in adjusted earnings per share in the first half of the year. However, the Group is well placed to deliver stronger earnings in the second half with East Midlands Trains entitled to revenue support payments and therefore expected to return to profitability.


"In our sector-leading UK Bus operations, we have invested extensively in new product innovation. This strategy has meant our business has been able to manage effectively the impact of reduced Government and local authority spending on public transport. Our turnaround plan for our London bus business remains on track.


"Excellent operational performance and high levels of customer satisfaction have underpinned continuing strong revenue growth in our commuter and long-distance UK rail businesses. We are pleased that Virgin Rail Group has secured an extension to the current West Coast franchise and we will consider further franchise opportunities that we believe will deliver value to our shareholders.


"We have pushed forward with the expansion of our budget inter-city coach brand, megabus.com, which is driving high levels of growth in our North American business. We have also started to deliver on a range of business models for the roll-out of the megabus.com brand, using contractors for services outside our existing geographic footprint, and we are considering opportunities for franchising to maximise the significant potential of the brand.


"We recently completed a c.£340m return of cash to shareholders and remain in a strong financial position. We have made a good start to the second half of the financial year and current trading remains in line with management expectations. We believe the outlook for the Group is positive and our bus and rail services are well placed to benefit from the continuing consumer focus on service and value."

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