17 Jun 2010 07:00
17 June 2010
Stagecoach Group welcomes decision in South Western Trains contractual dispute
Stagecoach Group ("the Group") today, 17 June 2010, welcomed the outcome of its contractual dispute with the Department for Transport ("DfT") relating to the South Western Trains ("SWT") franchise.
The Group referred two matters relating to revenue support arrangements and franchise payments to arbitration under the Rail Industry Dispute Resolution Rules ("RIDR") in April 2009.
1.The Group and the DfT agreed that any revenue support should be invoiced by SWT from March 2011. However, in determining the amount of revenue support that is receivable for the year ending 31 March 2011 there was a dispute concerning the period over which revenue shortfalls should be assessed and, in particular, whether that period commences in April 2010 (consistent with the Group's view) or February 2011. The dispute does not affect the calculation of revenue support after 1 April 2011.
2. The Group believed that for the purpose of calculating the amount of any franchise payments due between SWT and the DfT (which include any revenue support which might be due), the actual revenue figures should be calculated to exclude all car park revenue. The DfT believed that certain car park revenue should be included.
The Arbitrator appointed under the RIDR process has now announced his decision and has ruled in favour of SWT in the key issue of revenue support timing. The Arbitrator ruled in favour of the DfT in respect of the matter related to car park revenue.
The availability of revenue support for SWT in respect of the period from April 2010 should enable the Group's UK Rail Division to remain profitable in the year ending 30 April 2011. The loss of the "car park revenue" dispute will, all other things being equal, mean that SWT future profits will be less than they would otherwise have been. In the year ending 30 April 2011, the Group estimates this will affect pre-tax profit (of each of SWT, the UK Rail Division and the Stagecoach Group) by around £8m.
A Stagecoach Group spokesman said: "We are pleased at the outcome of the arbitration process, which has ruled in our favour on the central issue of revenue support. We believed this was a matter of integrity over a contract signed in good faith and we had strong legal advice in support of our position.
"We will continue to remain focused on running punctual and reliable trains for our passengers, investing in stations and train services, and increasing customer satisfaction. At the same time, we are committed to delivering strongly on our franchise commitments to Government, providing value for money to taxpayers and ensuring good returns to our shareholders."
Ends
Enquiries:
| Smithfield |
|
| John Kiely | Tel: 020 7360 4900 |
|
|
|
| Stagecoach Group plc |
|
| Martin Griffiths, Finance Director | Tel: 01738 442111 |
| Ross Paterson, Director of Finance & Company Secretary | Tel: 01738 442111 |
| Steven Stewart, Director of Corporate Communications | Tel: 01738 442111 Mob: 07764 774680 |