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Business objectives and long-term strategy

The key elements of Stagecoach Group’s business strategy to deliver long-term shareholder value are:

• To deliver organic growth across all of the Group’s operations;
• To acquire businesses that are complementary to the Group’s existing operations, in areas where the Group’s management has proven expertise and which offer prospective returns on capital in excess of the Group’s weighted average cost of capital;
• In addition to organic and acquisition growth, to maintain and grow the Group’s UK Rail division by bidding for selected rail franchises and to seek to secure new franchises where the risk/return trade-off is acceptable. This part of the strategy includes working with VRG to secure an acceptable renegotiated West Coast Trains franchise.

A fundamental objective underlying this strategy is the continued provision of safe and reliable services to passengers.

Stagecoach Group has demonstrated particular strength in managing bus and coach businesses that operate scheduled services in a relatively deregulated environment. The Group’s focus is on operations with critical mass in their own local markets. In rail, Stagecoach’s skill centres on organic revenue and passenger volume growth, the management of significant change projects, the delivery of improved operational performance, and driving up customer satisfaction.