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20 January 2004
The Herald
Stagecoach cuts Road King stake

KRISTY DORSEY January 20 2004
STAGECOACH has all but completed its retreat from Asia following yesterday's announcement that it had sold the majority of its stake in toll road operator Road King.
The Perth-based transport group, which has been selling various overseas businesses to concentrate on core bus and rail operations, said it had sold 25% of Road King to Hong Kong-listed Shenzhen Investment, a subsidiary of conglomerate Shum Yip Holdings.
That leaves Stagecoach with a residual 6.6% stake in Road King.
Stagecoach will receive about 52m in cash from the disposal, with that going towards cutting its own debts, which stood at 210m at the end of October.
Martin Griffiths, finance director at Stagecoach, said the company had not sold the whole of its stake because a 25% investment best suited Shenzhen in its efforts to meet certain accountancy requirements. However, the size of the disposal means Road King will still cease to be treated as an associated undertaking of Stagecoach.
Stagecoach's Road King stake has been up for sale since mid-2001, when the Scottish transport group made it clear the business was no longer regarded as a core operation. It follows a number of other disposals by Stagecoach, including last year's surprise sale of Hong Kong Citybus, and the sale of several of its troubled Coach USA businesses.
Stagecoach paid an initial 67m to acquire 20% of Road King in 1998, with this quickly followed by a 40m subscription for convertible shares that eventually took the Stagecoach stake up to 30.6%. However, Road King's contribution to profits has been sliding in recent years, as certain joint venture contracts that guaranteed minimum levels of income have lapsed.
For the year to April 30, 2003, Road King contributed operating profits of 10.5m to Stagecoach, while its share of profit before tax amounted to 9.2m. This compared to the group's pre-tax profit of 113m, a figure which did not include a 575m exceptional cost from writing down the value of Coach USA.
Griffiths said that barring one or two further disposals in the US which would be minor businesses such as taxi operations Stagecoach was now happy with the shape of the organisation.
This consists primarily of bus and rail operations in the UK, bus and coach operations in the US, and a relatively small bus company in New Zealand.
Shares in Stagecoach, which will report in June on its performance for the current financial year, closed 2.25p lower yesterday at 89.25p.

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