Now East Coast fiasco cuts divi at Stagecoach

STAGECOACH has taken an £85.6m hit to its finances after it was stripped of the East Coast Main Line rail franchise by the Government.

The transport group and its partner, Virgin, lost the route between London and Edinburgh on Sunday after failing to hit revenue targets. Yesterday Stagecoach revealed the cost of the debacle, and said it was slashing the dividend to 7.7p from 11.9p in a further blow to investors.

Martin Griffiths, Stagecoach’s chief executive, said: ‘I am disappointed to be reporting significant exceptional costs in respect of Virgin Trains East Coast but I am pleased that there is now clarity for both customers and shareholders.

‘The group remains in a good financial position and net debt has reduced in the year.’

He added: ‘Whilst the Board understands the importance of dividends to its shareholders ... the dividend needs to be set at a level from which it can grow over time as well as being covered by normalised non-rail cash flows. Given these factors, the Board has taken the decision to rebase the dividend to 7.7p for the full year.’

Stagecoach said profits at its rail division fell 12.6pc and warned they were likely to fall again this year. Bus earnings fell 3.5pc across the UK, and by 28pc in London.

Its shares rose 4.3pc, or 5.8p, to 139p.