West Coast Main Line keeps transport group on track
TRANSPORT group Stagecoach, which operates East Midlands Trains and has a minority stake in Virgin Rail, has seen full year performance boosted by the two operations.
Full year revenue for the group, which also operates UK bus services, the Megabus coach network and the Sheffield Supertram light rail network, came in at £3,871.1m, up from £3,204.4m last year.
However, pre-tax was relatively flat, coming in at £187.4m, up from £185m last year.
Stagecoach has a 49% shareholding in Virgin Rail Group, which operates the West Coast Main Line rail franchise. It also has a 90% shareholding in Virgin Trains East Coast, which operates the East Coast rail franchise.
Its share of the group saw revenue increase to £525.3m (2015: ££510.3m), with pre-tax profit at £24.2m (2015: £22.3m.
“Virgin Rail Group’s West Coast rail franchise continues to perform strongly and that is benefitting taxpayers through profit share payments by the business to the Department for Transport,” it said.
The DfT has extended the current franchise, which began in June 2014, to run until March 31, 2018 on the commercial terms already agreed.
“Despite a recent reduction in revenue growth, the West Coast franchise continues to perform ahead of our expectations at the time the contract was agreed.
“We look forward to seeing more detail on the Department’s plans for the West Coast business beyond March 2018,” it added.
Revenue at East Midlands Trains grew 4.1% in the year. The group said the business was strong financially and a share of that strong performance is being paid to the DfT under the franchise profit-share arrangement.
That arrangement also provides some financial protection to the business if future revenue is less than currently anticipated because, all other things being equal, the revenue shortfall would be partly offset by profit share payments also being lower than currently anticipated, said the group.
In September 2015, the group agreed a new East Midlands Trains franchise with the DFT to run until March 2018. The DfT has the option to extend the contract by up to one year on commercial terms that have been agreed, and the group said the Department had already indicated that it expects the franchise to run until at least July 2018.
“East Midlands Trains remains Britain’s most punctual long-distance train operator and passengers are benefitting from the previously announced investments of around £13m under the new agreement,” it said.
“We have made a good start to the new franchise and investment is continuing in improved stations, such as the introduction of new cycling facilities.”
The group began operating the Virgin Trains East Coast franchise in March 2015, in which it has a 90% interest.
“We have made significant strides in the delivery of our planned £140m programme of investment to transform customer journeys. Although, as expected, our initiatives have yet to have a significant impact on revenue, the business’ revenue did grow by 5.2% in the year,” it said.
“Virgin Trains East Coast does not benefit from profit share payments like East Midlands Trains. Accordingly, its future profitability is more exposed to changes in forecast revenue than the revenue of those other franchises. However, we are pursuing a wide range of actions to grow the business.
“In the first 12 months of the franchise, we have invested almost £18m.”