23/06/2006

Stagecoach Group plc (“Stagecoach”) is pleased to announce that it has agreed to sell its London bus (“Stagecoach London”) operations to Macquarie Bank Limited (“Macquarie”). The sale is subject to regulatory approval and other closing conditions, and at the present time Stagecoach anticipates that the sale will complete within three months.

The total proceeds for the sale are £263.6m in cash, subject to adjustments dependent on the net assets of Stagecoach London at completion. Stagecoach’s consolidated gain on disposal is estimated at £120.0m although the gain will depend on the final determination of the net assets of Stagecoach London at completion of the sale. The gross assets subject to the transaction were approximately £171.2m as at 30 April 2006.

Stagecoach London comprises two companies that provide bus services on routes within and from London, principally under contract from Transport for London.

The unaudited profit before tax for the year ended 30 A pril 2006 from the assets subject to the transaction was £17.9m. Stagecoach London is estimated to account for approximately £224.6m of the unaudited revenue and £23.6m of the unaudited operating profit of Stagecoach’s UK Bus division for the year ended 30 April 2006. The operating profit is exclusive of any allocation of UK Bus divisional overheads.

Stagecoach London will establish a new defined benefit pension scheme. The liabilities of the Stagecoach Group Pension Scheme attributable to Stagecoach London members will be transferred to the new scheme. A proportion of the assets of the Stagecoach Group Pension Schemes will also be transferred to the new scheme. Stagecoach will make additional cash contributions as part of these arrangements (estimated at £60.0m).

The deficit of the Stagecoach Group Pension Scheme (as measured on the basis of Financial Reporting Standard 17 before taking account of deferred tax) will reduce by an amount approximately equal to the additional cash contributions.

The proceeds of the disposal, after making the additional pension contributions, will initially be used to reduce borrowings.

The management team of Stagecoach London led by Nigel Barrett (Managing Director Designate) will remain with Stagecoach London under its new owner.

Stagecoach’s business strategy remains focused on organic growth in its bus operations, exploring the potential for complementary bolt-on acquisitions, and selectively targeting new rail opportunities to deliver further value to shareholders.

Following the disposal, the UK Bus division will focus on the bus market outside London where it is pursuing a successful growth strategy. Over the last year, Stagecoach has completed the acquisition of significant bus operations in Merseyside, Yorkshire, Lincolnshire and Tayside. The Group believes the UK bus market outside London has scope for further growth in an environment where Stagecoach can capitalise on its industry leadership, entrepreneurial flair and innovation.

Brian Souter, Stagecoach Group plc Chief Executive, commented: “The London bus operations have been a highly successful part of Stagecoach’s UK Bus division since 1994. After assessing Macquarie’s offer and the prospects for the London bus operations, we concluded that the disposal was in the best interests of our shareholders.

“The sale of the London bus business will allow us to focus on our successful UK bus growth strategy outside London, where we have demonstrated our strength in delivering innovation, investment and strong marketing. We will continue to look for further organic growth and bolt-on acquisition opportunities in our UK and North American bus business and opportunities to grow our rail portfolio.”

Notes to editors:

Stagecoach Group is a leading international transportation group, with extensive bus and rail operations in the UK and North America. The Group’s businesses operate around 13,000 vehicles and rolling stock, and employ around 30,000 people.

Stagecoach currently operates more than 8,000 buses and employs around 20,000 people at its UK Bus division, which includes 20 regional operating companies. Its network stretches from south-west England to the Highlands of Scotland, covering major cities such as London, Manchester, Liverpool, Newcastle, Sheffield, Hull, Oxford and Cambridge, as well as key shire towns and rural areas.

Stagecoach London provides bus services on routes within and from London, principally under contract from Transport for London. It operates around 1,300 buses and employs around 4,300 staff.

Macquarie will acquire from Stagecoach Bus Holdings Limited (a wholly owned indirect subsidiary of Stagecoach), the entire share capital of East London Bus & Coach Company Limited and South East London & Kent Bus Company Limited. Macquarie will also acquire from SCOTO Limited (a wholly owned indirect subsidiary of Stagecoach), the interests of SCOTO Limited in certain of the properties operated by Stagecoach London.

The sale is conditional on the approval of Transport for London.

Stagecoach will continue to provide certain administrative and other services to Stagecoach London for a transitional period of at least twelve months and will permit Stagecoach London to use the Stagecoach name under licence for a limited period.

The Macquarie Bank Group is a diversified international provider of specialist investment banking and financial services with more than 8,000 employees in 24 countries. Macquarie Bank Limited is listed on the Australian Stock Exchange, with a market capitalisation of approximately £6.2bn. Its total assets are approximately £43.7bn, with a further £57.8bn in assets under management. Members of the Macquarie Bank Group manage equity of around £14bn invested in more than 90 businesses around the world which provide important services to communities in the UK, Germany, Portugal, Italy, France, Sweden, Denmark, the Netherlands, Belgium, Canada, US, Australia, Korea, Japan and South Africa.