Perth-based transport firm Stagecoach Group said on Wednesday its revenue grew 27% to £579.4 million in the half-year to October 30, 2021, with profit before tax soaring to £31.1 million from £5.4 million.
Stagecoach said “constructive discussions” are continuing with National Express Group plc on a potential merger “that would deliver strong value creation for both sets of shareholders.”
But Stagecoach added: “In the meantime, it is business as usual for our business and our people.
“Regardless of the outcome of those discussions, we see a positive future for our business, and we are focused on delivering high quality, good value public transport services in our communities.”
Stagecoach reported passenger journeys and commercial sales at over 70% and over 80% respectively of equivalent 2019 levels for most of November but “some recent softening with Storm Arwen and changing COVID-19 guidance.”
It said Government COVID-19 support schemes were in place for the firm through to Spring 2022 and reported “good progress in reaching employee pay agreements, while addressing the effects of sector-wide staff shortages and higher than usual levels of lost mileage.”
National Express has a December 14 deadline by which it must make a firm offer for Stagecoach.
National Express announced on September 21 it was in talks to buy Stagecoach in an all-share deal that would value the Scottish company at about £445 million.
Under the terms of that potential combination, it is expected that Stagecoach shareholders would receive 0.36 new National Express ordinary shares for each Stagecoach ordinary share, resulting in them owning approximately 25% of the combined group.
Stagecoach founders Brian Souter and his sister Ann Gloag announced in April a 10-year plan to reduce their shareholdings in the firm from 27% to 5% — a move that some analysts viewed as paving the way for a takeover.
On dividends, Stagecoach said: “While we are not planning an interim dividend in respect of the half-year ended 30 October 2021, we continue to recognise the importance of dividends to many shareholders.
“In line with previous guidance and dependent on progress on the National Express transaction, it is our ambition to resume dividend payments in due course when supported by appropriate profit and cash flow generation, relative to our net debt and pension liabilities.”
Stagecoach CEO Martin Griffiths said: “We are pleased at the positive progress of the business as confidence in public transport returns and more customers use our bus, coach and tram services.
“This has been achieved as a result of the fantastic commitment of our frontline employees and management teams, combined with our strong partnerships with national and local government, and supportive public policy and investment.
“While the pace of recovery may vary, we are well-placed to deliver on the extensive opportunities beyond the pandemic and on the back of the COP26 climate change conference to attract people out of cars to more sustainable public transport.
“In the first half of the financial year, we have delivered positive new contract wins, including key transport contracts for the Birmingham 2022 Commonwealth Games.
“We are also progressing several investments to enhance our customer offer, as well as new ticketing initiatives to respond to post-pandemic lifestyles.
“The group maintains a solid financial position with investment grade credit ratings, substantial available liquidity and appropriate headroom under its debt facilities.
“We are also continuing to manage effectively the short-term operational challenges in the transport and logistics sector, to protect the future of our transport networks.
“We continue to see a positive outlook for our bus, coach and tram services, whether as a standalone business or as part of a combined future group.
“Greener and smarter public transport is central to delivering government ambitions around decarbonisation, levelling up of communities, driving economic recovery, and securing better health outcomes for citizens.”