THE parent company of East Midland Trains, which was bailed out by a £46m Government grant last year after making a £25m loss, reported a slight rise in revenues and a small dip in profits it prepares to expand its Megabus services in the USA and Europe.

Stagecoach reported like-for-like revenue was up 6.9 per cent across the group to £2.6bn from £2.4bn in the year ending April 29, 2012, reflected in a ten per cent hike in the dividend to 7.8p.

The UK Rail division saw its operating profit down 40 per cent to £27.1m in the year to April 30 2012, compared to £48.4m for the same period the previous year.

The group said this was a result of East Midlands Trains gaining lower than expected passenger revenues, making it eligible for a Government revenue support grant under the terms of its franchise.

The franchise, which has been running local and London services in the region for five years, incurred a £25m loss in six months and received £46,443,000 in Government revenue support grants between last November and June, returning it to profitability.

Scottish-based Stagecoach said in its statement: “We have a strong and profitable rail portfolio and our wholly-owned franchises recognised net premium payments of £283.1m in 2011 to 12 to the Department for Transport, ensuring taxpayers share in our success.”

South West Trains is continuing its joint plan with Network Rail to improve customer service after the National Passenger Survey, published in January, found a drop in performance in the three months to January 7, with punctuality dropping to 86.8 per cent in the final four weeks of that period.

The firm believes this could be used as a model for future rail franchises.

Stagecoach, which jointly owns Virgin Rail with Richard Branson’s Virgin Group, has been shortlisted for the Greater Western and Thameslink rail franchises.

Virgin’s bid to win back the West Coast Mainline franchise, which runs from London to Scotland, is still ongoing after the Department for Transport initially awarded the 13 year franchise to rival FirstGroup, a decision which was subsequently overturned when flaws in managing the bidding process were revealed. Virgin will continue to run the franchise until a final decision is made within the next year.

Regional bus groups were reported as delivering good returns, despite subsidy cuts and rising fuel prices.

Overseas, the group is expanding its budget coach brand, Megabus, in both Europe and its fastest growing division, the United States and Canada, where the group now cover 90 cities and have expanded to the south west.

To continue the expansion, the group has planned a £83m acquisition of businesses and assets from Coach America, which the group believe will help them expand provision at a “reasonable price”.

Chief Executive, Sir Brian Souter, said: “We continue to see good organic growth in our bus and rail services in the UK and North America. This has been supported by our successful mix of innovation, value-for-money travel, continued investment in our services, and strong operational delivery.

“Across our business, our new ideas and partnerships are helping shape the future of public transport and the Stagecoach difference is delivering strong returns to our shareholders. We believe the outlook for our bus and rail services is positive and we look forward with confidence to the year ahead.”