STAGECOACH has reported lower than anticipated growth in its UK bus division as it said it would take the government to court early next year over a rail contracts ban.

The Perth-based transport giant said like-for-like growth in its bus division was less than forecast last year because of the poorer summer this year, in a London Stock Exchange update.

Stagecoach, founded by Sir Brian Souter and sister Ann Gloag, said: “Like-for-like revenue growth at our UK bus division was one per cent for the 20 weeks ended September 14, 2019.

“That lower than anticipated growth is below the growth rate we reported last year, reflecting various factors including 2018’s exceptionally good summer weather contrasting with this summer’s poorer weather.”

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It added it is “exploring potential new income streams including partnerships with airports, festivals and events around the UK”. It will also stop its share buy back at £30 million, instead of £60m, having “largely achieved its objective” it said

Stagecoach was blocked from bidding on three franchises over pension deficit concerns. It said: “We continue to pursue our claims against the secretary of state for transport regarding his decisions to disqualify us from three rail franchise competitions.”

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A Department of Transport spokesman said: “Stagecoach is an experienced bidder who knowingly submitted non-compliant bids. In doing so, they disqualified themselves from the South Eastern, West Coast and East Midlands franchise competitions.

“We do not comment on legal proceedings. However, we have total confidence in our franchise competition process and will robustly defend decisions that were taken fairly following a thorough and impartial evaluation process.” Shares rose 1% to 133p.