28/04/2003

Ahead of its close period meetings and updates with analysts, Stagecoach Group plc confirms that Group profit before tax and exceptional items for the year to 30 April 2003 is anticipated to be at the top end of current market expectations. Across the Group, we are seeing strong cash generation from each of our divisions. In the UK, our bus and rail divisions continue to make good progress. The strategy to restructure our Coach USA division remains on schedule and our Overseas Bus division continues to perform satisfactorily.

TRADING UPDATE

UK Bus Division

The UK Bus division continues to perform well and we are benefiting from revenue and passenger growth. Performance has been particularly strong in London where we have won and retained a number of tenders. Overall UK Bus revenues for the 48 weeks to 30 March 2003 are 5.1% above the prior year.

Operating profit from UK Bus for the year ending 30 April 2003 is expected to be marginally higher than the prior year operating profit of £62.7m. This increase in profit is after taking account of increased operating costs arising from a greater use of vehicle operating leases and increases in labour costs including pensions.

Rail Division

The positive performance of our Rail division is continuing. Financial performance has benefited from significant operational improvements at South West Trains.

Overall revenues for the 48 weeks to 30 March 2003 are up 3.7% on the prior year with passenger volumes up 2.8%. After excluding the periods affected by industrial action in the prior year, passenger volumes and revenues are 1.8% and 0.6% respectively above the prior year.

Rail operating profit for the year ending 30 April 2003 is expected to exceed the prior year of £31.0m. This includes liquidated damages of £8.5m in relation to Class 458 trains mostly received in the six months ended 31 October 2002 and ongoing Schedule 8 compensation received from Network Rail.

Virgin Rail Group

At Virgin Rail Group, the business continues to benefit from the significant investment in new trains and focus on service delivery. Passenger revenues for the 48 weeks ended 30 March 2003 are 9.8% above prior year, with passenger volumes up 4.5%.

Discussions are ongoing with the Strategic Rail Authority (“SRA”) in respect of Virgin Rail Group’s budget for the year ending 27 February 2004 in accordance with the agreement reached in July 2002. The final results for the year ending 30 April 2003 will partly depend on the outcome of these discussions. At the current time therefore, we do not change the guidance we gave previously that Stagecoach will report a profit for Virgin Rail Group in the year to 30 April 2003 slightly below the prior year level of £10.8m.

Overseas Bus Division

Our Overseas Bus businesses and our investment in Road King Infrastructure Limited continue to perform satisfactorily.

In New Zealand, our operations have delivered further strong revenue and volume growth, particularly in the Auckland region. Revenue and volume growth of 10.6% and 8.8% respectively was achieved in New Zealand over the 48 weeks to 30 March 2003.

The sluggish Hong Kong economic environment and the effect of exiting from smaller operations in Mainland China has resulted in a decline in Citybus’ overall revenue of 1.3% with passenger volumes up 0.4% in the 11 months to 31 March 2003. Citybus, in common with other public transport operators, has been affected in recent weeks by the outbreak of Severe Acute Respiratory Syndrome (“SARS”). The main impact has been on off-peak travel volumes and we have managed the situation by implementing short-term selective reductions in service levels. We now estimate that overall revenues for the month of April 2003 will be approximately 25% below that of April 2002. It is still too early to assess any future impact of SARS.

With the movements in foreign exchange rates applied in translating overseas profits to sterling, and the disposals of operations in Australia and Portugal, we anticipate that Overseas Bus operating profit will be up to £5m below the prior year profit of £33.4m. In addition, our share of Road King’s profits will be between £10m and £11m.

Coach USA

As anticipated in our December 2002 statement we have not seen a significant improvement in trading at Coach USA in the second half of the year. Overall, like for like revenues for the 11 months ended 31 March 2003 were 3.2% below prior year levels. As previously announced we anticipate that operating profits before exceptional items for the year to 30 April 2003 will be in the range of £10-16 million.

OTHER MATTERS

US Strategy

Our strategy to restructure our Coach USA division remains on course to deliver our key objectives within the 12 to 18 month timetable we outlined in December 2002. We are in discussions with a number of interested parties regarding the sale of the specific regional businesses for which we announced plans to exit. Further announcements will be made when appropriate.

Results Announcement

The company expects to announce its results for the year to 30 April 2003 on 25 June 2003.

ENDS

Enquiries to:

Martin Griffiths, Group Finance Director, 01738 442111
Steven Stewart, Stagecoach Group, 01738 442111
John Kiely, Smithfield Financial, 020 7360 4900