COWIE Group this morning became the second-largest UK bus operator when its #282m bid for British Bus took effect. Yesterday it spent #24.5m buying North East Bus from National Express.
NEB, which operates in the County Durham and Teesside areas, had a turnover of #29m last year which generated profits of #3m. The acquisition appears marginally cheap as recent bus purchase prices have been based on turnover.
These two deals mean Cowie has a 18% share of the UK market. It now has 16 operations with an annual turnover of #419m. These include Clydeside Buses, which turns over around #14m.
The largest bus operator is FirstBus, whose recent acquisition of Strathclyde Buses gave it a 20% market share, while Stagecoach is third with 17%.
As turnover in the original Cowie, which is heavily oriented towards London, was just #54.5m in the first six months, the group is obviously in a period of hefty transition.
That includes the car business, where the 36 dealerships are in a state of flux as Cowie comes to terms with changes introduced by Ford and Vauxhall in particular and their aggressive price cutting to generate volumes.
Chief executive Gordon Hodgson said that orders for P registered cars, which go on sale today, were 15% ahead of last year, although this is a very narrow margin business which scarcely did better than break even in the first six months.
In the half year to June, group turnover was unchanged at #529m, but profits rose 19% to #32.2m, with the bus operations some 74% ahead at #6.87m. Leasing raised its contribution by 8.5% to #17.6m helped by improving values from residuals or cars sold off after the contract period, reflecting the general shortage of good second-hand vehicles. Cowie has a fleet of 68,500 cars and is looking to add substantially through acquisition.
Chairman Sir James McKinnon, best known as the former finance director of Imperial Tobacco and then as the Ofgas regulator, ruled out Cowie becoming interested in rail franchises.
The interim dividend has been raised 11.5% to 3.4p.
Although its gearing is 174% following the acquisitions, Cowie has interest cover of more than three-and-a-half times, which gives reassurance as to future trading prospects.
The shares closed down 1p at 373p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article