RNS Number:0660M
Stagecoach Group PLC
09 June 2003







9 June 2003

       Stagecoach Group sells Hong Kong Citybus operation for #176 million

Stagecoach Group plc is pleased to announce that it has agreed terms for the
sale of SGC (HK Group) Limited to Delta Pearl Limited ("the purchaser"), a 100%
indirect subsidiary of Chow Tai Fook Enterprises Limited, the privately owned
company of the Cheng Yu Tung family and the major shareholder in New World
Development Company Limited which in turn has an interest in New World First Bus
Services Limited, one of Hong Kong's major bus operators. SGC (HK Group) Limited
owns the Citybus business in Hong Kong. The sale is unconditional and completion
of the transaction is expected to take place later this month.

The gross consideration for the disposal is HK$2,200 million (approximately #176
million). The net cash amount receivable by Stagecoach will be the gross
consideration less the amount of net third party debt as at 30 April 2003, being
HK$554 million (approximately #44 million). On completion of the proposed
disposal, Stagecoach will receive cash proceeds of HK$1,646 million
(approximately #132 million) with the purchaser assuming all of the net third
party debt of SGC (HK) Group Limited and its subsidiaries.

The purchaser will also assume capital commitments of approximately HK$239
million (approximately #19 million) relating mainly to the completion of a new
depot for Citybus at Chaiwan in Hong Kong.

Background on Citybus

Stagecoach acquired control of Citybus Group Limited in March 1999 and completed
the privatisation of Citybus on 17 July 1999. Citybus is the second largest
franchise bus operator in Hong Kong and provides franchised bus services on Hong
Kong Island and to and from Hong Kong's international airport. It also provides
a number of non-franchise services throughout Hong Kong, including express daily
coach services between residential developments and city/town centres. In
addition, Citybus operates a small number of metropolitan bus services in
Mainland China.

Background to and Reasons for the Disposal

The acquisition of Citybus has been successful for Stagecoach and has delivered
good financial returns. Under our ownership since 1999, the business has
produced strong organic growth in passenger volumes and a significant reduction
in operating costs.

On receiving an initial approach about the possibility of disposal, the Board
reviewed the strategic options for Stagecoach Group in the region in view of the
limited opportunities to develop significantly elsewhere in other Pacific Rim
countries and the long-term prospects for the business in Hong Kong.

The Board believes that a combination of the uncertainties about the economic
climate in Hong Kong, the growing levels of regulation to which the business is
becoming subject and the inability to grow profit without very significant
investment or critical mass synergies required it to take very seriously the
approach and to negotiate terms which were in the best interests of Stagecoach
shareholders.

The outbreak of Severe Acute Respiratory Syndrome ("SARS") earlier this year
continues to impact the profitability of the Hong Kong business but the Board's
assessment of the proposed disposal has been based on a long-term view of the
profitability and capital requirements of the business and not the immediate
trading conditions.

Citybus has two franchise operations, one on Hong Kong Island and the other
operating to and from the international airport. These franchises expire in June
2006 and May 2013 respectively. The business will require significant new
investment in property and vehicles to ensure that the franchises are retained
and renewed. The purchaser already has a relationship with a significant
franchised bus operation in Hong Kong and the proposed combination can benefit
from synergies and economies of scale which will give a solid platform for any
further investment that is required in the Hong Kong franchised bus market.

The Board therefore believes that the offer represents fair value for Citybus
and that the disposal is in the best interests of Stagecoach shareholders.

Financial effects of the disposal

The transaction will reduce Group consolidated net debt by HK$2,200 million
(approximately #176 million). It will also reduce Group consolidated capital
commitments by HK$239 million (approximately #19 million).

The consideration is broadly in line with the anticipated book value of the net
assets at completion and accordingly, the transaction will not result in a
material gain or loss on disposal in the consolidated accounts of Stagecoach
Group plc. Sales proceeds will initially be used to reduce the Group's
outstanding debt. The disposal will result in a small reduction in annual
earnings per share.

The unaudited results of Citybus to be included in Stagecoach Group's
consolidated results for the year ended 30 April 2003 are estimated to be a
turnover of #132.7m and operating profit before goodwill amortisation of #19.0m.
The profit before tax but after interest and goodwill amortisation is estimated
at #10.0m for the year.

Brian Souter, Stagecoach Chief Executive, said: "Citybus has been a sound
investment for Stagecoach and its shareholders. The offer for the sale of
Citybus represents good value for the business in light of the uncertainties
over the economic climate in Hong Kong and the ongoing capital requirements of
the Citybus business.

"We have a clear strategy for the Group and I am very satisfied with the
progress we are making. We are on schedule with our sales programme and
restructuring at Coach USA. The sale of Citybus will put the Group in a strong
financial position, further de-risks the Group's portfolio and will allow
management to focus on further developing our UK bus and rail businesses, a
smaller and more robust portfolio in North America and our successful and
growing New Zealand operations.

"Stagecoach Group is committed to pursuing its strategy as a leading
international transport company. Moving forward, we will continue to have a
strong portfolio of cash generative businesses with annual total Group turnover
of approximately #1,650 million."




ENDS

Enquiries to:

Martin Griffiths, Group Finance Director, Stagecoach Group, 01738 642015

Steven Stewart, Corporate Communications, Stagecoach Group, 01738 642040

John Kiely, Smithfield Financial, 020 7360 4900














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