1
Annual Results
Year ended 30 April 2011
29 June 2011
Preliminary Results 2011
2
Cautionary statement
This document is solely for use in connection with a briefing on Stagecoach
Group plc (“the Group”).
This document contains forward-looking statements that are subject to risk
factors associated with, amongst other things, the economic and business
circumstances occurring from time to time in the countries, sectors and
markets in which the Group operates. It is believed that the expectations
reflected in these statements are reasonable but they may be affected by a
wide range of variables which could cause actual results to differ materially
from those currently anticipated. No assurances can be given that the forwardlooking statements in this presentation will be realised. The forward-looking
statements reflect the knowledge and information available at the date of
preparation.
This document is not a full record of the presentation because it does not
include comments made verbally by Stagecoach Group management or by
others.
3
Martin Griffiths
Finance Director
4
Highlights

Continued strong management of business
− Operational excellence and high customer satisfaction
− Winning new customers(e.g. megabus.com, modal shift)
− Acquisition (e.g. London Bus) and rail opportunities
− Reduced costs in response to changing circumstances

Excellent returns for shareholders
− Adjusted EPS 23.8p (2010: 18.7p)
− 9.2% increase in full year dividend per share

Positive outlook for 2011/12
5
Summary income statement
UK Bus (regional) operating profit
Year to
30 April 11
£m
Year to
30 April 10
£m
Change
£m
153.1
126.1
27.0
UK Bus (London) operating loss
(5.9)
Nil
(5.9)
North America operating profit
19.3
9.1
10.2
9.3
7.6
1.7
UK Rail operating profit
48.4
41.6
6.8
Virgin Rail Group profit after tax
28.4
19.2
9.2
Restructuring costs, group overheads and other items
(12.4)
(11.6)
(0.8)
Operating profit
240.2
192.0
48.2
Finance charges (net)
(34.5)
(30.7)
(3.8)
Tax
(35.1)
(27.2)
(7.9)
Profit excluding intangibles and exceptionals
170.6
134.1
36.5
Intangibles and exceptionals, net of tax
(12.7)
(26.3)
13.6
Reported profit from continuing operations
157.9
107.8
50.1
North America joint ventures’ profit after tax
6
UK Bus (regional operations)
Year to
30 April 11
893.6
Year to
30 April 10
875.4
Like-for-like revenue (£m)
883.0
864.7
2.1%
Operating profit (£m)
153.1
126.1
21.4%
Revenue (£m)
Operating margin (%)
17.1%
14.4%
Change
2.1%
270bp
Estimated like-for-like passenger journeys (m)
661.5
655.4
0.9%
Like-for-like vehicle miles operated (m)
319.2
326.3
(2.2)%
2010/11 performance
Outlook




 Concessionary and tendered revenue expected to
fall c.£15m in 2011/12
 Higher fuel costs in 2011/12
 BSOG reduction in 2012/13
 Flexibility on fares and service patterns
 Rising costs of motoring
 Challenge is to maintain similar level of operating
profit in 2011/12 versus 2010/11
Modest fare rises, as planned
Organic volume growth
Reduced fuel costs
Other costs closely managed; some mileage
reduction
 Sector-leading operating margin
7
UK Bus (London)
October 2010
to
April 2011
Revenue (£m)
133.6
Operating loss (£m)
(5.9)
Operating margin (%)
(4.4)%
2010/11 performance
Outlook
 Back-office integration completed
− £2.0m annualised savings
 Driver restructuring agreed
− £9.9m up-front costs
− £9.1m annualised savings
 Property rationalisation
 Good relationship with TfL
 Sensible tender bids
 Some contracts lost at re-tender
 Annual revenue of current contracts: c.£220m
 Cost savings improve competitive position
 Return to profitability targeted for 2011/12
8
North America
Revenue – wholly owned (US$m)
Year to
30 April 11
461.7
Year to
30 April 10
426.3
Revenue – joint ventures (US$m)
67.7
64.1
5.6%
529.4
490.4
8.0%
Operating profit – wholly owned (US$m)
30.2
14.6
106.8%
Operating profit – joint ventures (US$m)
15.2
12.8
18.8%
Operating profit – total (US$m)
45.4
27.4
65.7%
Revenue – total (US$m)
Operating margin (%)
8.6%
5.6%
Change
8.3%
300bp
2010/11 performance
Outlook
 megabus.com revenue up 67%
− Established Chicago/New York hubs up 51%
 Return to revenue growth in other business
− Like-for-like revenue up 3% in second half
 Reduced fuel costs
 Higher fuel costs in 2011/12
 Further megabus.com growth opportunities
 Further rationalisation of under-performing
business units
 Twin America opportunities – River tours from
New York, bus tours in Los Angeles
9
megabus.com North America
Financial Overview
Year ended 30 April 2011
Revenue
(US$m)
Operating
Income
(US$m)
Operating
Margin %
EBITDAR*
(US$m)
EBITDAR*
%
Megabus Chicago
(April 2006)
23.8
5.4
22.7%
8.0
33.6%
Megabus New York
(June 2008)
44.2
8.2
18.6%
14.3
32.4%
Megabus Philadelphia
(July 2010)
5.7
(3.9)
(68.4)%
(3.3)
(57.9)%
Megabus Washington DC
(December 2010)
1.7
(5.3)
(311.8)%
(4.6)
(270.6)%
-
(0.3)
n/a
(0.3)
n/a
75.4
4.1
5.4%
14.1
18.7%
Megabus Pittsburgh (May 2011)
Total megabus.com
* Earnings before interest, taxation, depreciation, amortisation and operating lease rentals
10
UK Rail
Revenue (£m)
Year to
30 April 11
1,070.0
Like-for-like revenue, excluding tram (£m)
1,026.9
968.9
6.0%
48.4
41.6
16.3%
Operating profit (£m)
Operating margin (%)
4.5%
Year to
30 April 10
1,026.7
4.1%
Change
4.2%
40bp
Estimated passenger miles – S Western (m)
3,395.7
3,262.0
4.1%
Estimated passenger miles – E Midlands (m)
1,298.3
1,214.9
6.9%
2010/11 performance
Outlook




 Supportive of many of McNulty’s
recommendations – vertical integration
opportunities
 East Midlands Trains revenue support from
November 2011
 Lower profit forecast in 2011/12
− Higher premium payments to Government
 Anglia franchise bid
Good passenger volume growth
£68.1m revenue support at South Western Trains
Loss at East Midlands Trains
Operational excellence
11
Virgin Rail Group
Year to
30 April 11
392.7
Year to
30 April 10
355.3
Operating profit – 49% share (£m)
39.5
25.5
Operating margin (%)
10.1%
Dividends received (£m)
17.1
25.1
3,530.7
3,230.2
Revenue – 49% share (£m)
Estimated passenger miles (m)
7.2%
Change
10.5%
54.9%
290bp
(31.9)%
9.3%
2010/11 performance
Outlook
 Good passenger volume growth
 April 2011 revenue down (bank holidays,
Royal wedding) but bounced back in May
2011
 Favourable contractual settlements
 Lower profit forecast in 2011/12
− Non-recurrence of contractual
settlements
 Extension potential to December 2012
 New franchise bid
 Revenue support
12
Rail revenue risk sharing
Target revenue – year to 31 March 2011 (£m)
South
Western
862.7
East
Midlands
343.9
West
Coast
825.0
Actual revenue – year to 31 March 2011 (£m)
747.4
272.0
746.3
Revenue shortfall (£m)
(115.3)
(71.9)
(78.7)
Theoretical revenue support (£m)
68.1
47.9
39.8
Actual revenue support (£m)
68.1
Nil
39.8
Revenue support bands
 Up to 2% below target revenue – no revenue support
 Between 2% and 6% below target revenue – 50% revenue support
 Over 6% below target revenue – 80% revenue support
Notes
 “Revenue” for this purpose includes items other than reported revenue such as Network Rail performance regime
payments, commissions payable and commissions receivable
 Target revenue figures include the effects of indexation and other required adjustments
 Theoretical revenue support shows the amounts that would have been receivable for the year to 31 March 2011 if the train
company were contractually entitled to revenue support for that period
13
Miscellaneous income statement items
Year to
30 April 11
Citylink joint venture (£m)
Year to
30 April 10
Change
1.8
1.2
50.0%
(11.3)
(11.6)
(2.6)%
(2.9)
(1.2)
141.7%
(12.4)
(11.6)
6.9%
Intangible asset expenses (£m)
(15.2)
(11.1)
Post-tax exceptional items (£m)
17.9
(13.0)
Group overheads (£m)
Restructuring costs (non-exceptional) (£m)

Exceptional items include £18.5m of gains from the resolution of liabilities relating to
past business disposals
14
Finance charges and credit ratios
Year to
30 April 11
Year to
30 April 10
Net Group finance charges* (£m)
(34.5)
(30.7)
12.4%
EBITDA from continuing operations and joint ventures* (£m)
330.5
283.9
16.4%
(280.9)
(296.7)
(5.3)%
Net Debt/EBITDA*
0.8x
1.0x
(0.2)x
EBITDA*/Net finance charges*
9.6x
9.2x
0.4x
Year-end net debt (£m)
−
Successful re-financing of bank facilities, now committed through to 2016
− Capital structure under review – will report conclusion by AGM in late August 2011
* excluding exceptional items
Change
15
Taxation
Year to 30 April 2011
Pre-tax
Profit
£m
Tax
£m
Reclassify joint venture taxation for reporting purposes
218.1
(15.2)
0.7
203.6
(12.4)
(47.5)
3.1
(1.3)
(45.7)
12.4
21.8%
20.4%
185.7%
22.4%
n/a
Reported in income statement
191.2
(33.3)
17.4%
Excluding intangible asset expenses and exceptional
items
Intangible asset expenses
Exceptional items
Cash tax paid (net)
(20.4)
Rate
%
16
Movement in net debt
Year to
30 April
2011
£m
EBITDA from Group companies before exceptional items
Loss on disposal of plant and equipment
Equity-settled share based payment
Dividends from joint ventures
Movement in retirement benefit obligations
Working capital movements
Net interest paid
Tax paid
Net cash from operating activities
Net capital expenditure including new hire purchase and finance leases
Acquisitions /disposals of businesses, intangibles and investments
Token sales and redemptions
Cash generation
Foreign exchange/income statement movements
Equity dividends
Share capital movements
Decrease in net debt
Opening net debt
Closing net debt
291.0
0.9
4.7
28.8
(20.4)
(22.7)
(30.1)
(20.4)
231.8
(149.7)
(56.6)
(2.7)
22.8
10.1
(15.8)
(1.3)
15.8
(296.7)
(280.9)
17
Capital expenditure
Cash spent
on capex*
£m
UK Bus (regional operations)
UK Bus (London)
North America
UK Rail
Central
(92.3)
(1.4)
(27.3)
(35.2)
(0.1)
(156.3)
New hire
purchase
and finance
leases
£m
(8.1)
(8.1)
Impact of
capex on
net debt
£m
Disposal
proceeds**
£m
Net
2010/11
Actual
£m
(100.4)
(1.4)
(27.3)
(35.2)
(0.1)
(164.4)
1.7
0.3
3.2
9.5
14.7
(98.7)
(1.1)
(24.1)
(25.7)
(0.1)
(149.7)
* Excludes capitalised intangible assets and assets acquired through business combinations
** Excludes proceeds from selling businesses
18
Pensions
UK Bus/Central
North America
UK Rail
2011
Pension
expense
£m
2010
Pension
expense
£m
2011
Cash
contributions
£m
2010
Cash
contributions
£m
16.2
1.1
24.9
42.2
22.0
1.7
21.1
44.8
33.2
1.0
28.4
62.6
33.8
1.0
27.2
62.0

Post-tax deficit of £71.9m (2010: £145.5m)

Deficit reduction from asset outperformance and CPI switch

Accounting value of pension assets, liabilities and costs will continue to vary with
market fluctuations and assumptions

Rail – risks mitigated with obligations limited to contributions payable over
duration of franchises

Bus – schemes closed to new entrants and contributions have stabilised
19
Summary

Results ahead of original expectations

Positive management action underpins profitability
− Operational excellence
− Organic growth
− Acquisition turnaround opportunities
− Rail franchise opportunities
− Cost control
− Financial discipline

Positive outlook for 2011/12

Encouraging start to the new financial year
20
Sir Brian Souter
Chief Executive
21
Winning new customers

Positive environment for public transport
− Rising fuel prices driving modal shift
− High growth on all Mega products
− New rail franchise opportunities
− Clarity on bus and rail regulatory framework
− Commercial model at heart of future delivery
22
Budget travel
megabus.com revenue
2010/11 revenue by business
UK and North America
90
UK
megatrain
4.8%
80
North
America
megabus
62.2%
70
£m
60
50
40
UK
megabus
33.0%
30
20
10
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11

UK: c.60 towns and cities, c.3 million passengers a year

North America: five US hubs, c.60 towns and cities, c.10 million passengers since 2006
23
megabus.com North America network
24
megabus.com North America
Market Demographics
Customer Profile
Previous Modes
45%
45%
40%
40%
39%
39%
35%
30%
35%
30%
31%
25%
25%
20%
23%
20%
15%
17% 17%
16%
14%
10%
2% 2%
0%
11%
40-49
2009
50-59
60-69
70+
9%
9%
7%
0%
CAR
30-39
14%
9%
5%
8%
5%
18-30
14%
10%
14%
10%
21%
20%
20%
15%
32%
AIR
TRAIN
2009
2011
G/HOUND
BOLT
OTHER BUS
2011
Key Market
Student/Young Professional
Key Market
Car Travel
Source: Online tracking survey by Stagecoach Group plc, December 2010 – March 2011 versus June 2009 – September 2009, new Megabus
users only
25
megabus.com expansion strategy
 Targeting megabus.com revenue of over US$110m in North
America in 2011/12
 Considering accelerating roll-out
− Short-term reduction in profitability
− But prospect of good margin once established
 Roll-out model options:
− Direct Operation
− Contract
− Franchise
26
UK regulatory environment


UK Bus
−
Changes now largely known
−
Reduced BSOG, concessionary revenue and tendered revenue
unwelcome - but lowers dependency on Government
−
Competition Commission findings manageable - will closely monitor
developments
UK Rail
−
McNulty recommendations welcome
−
Potential for more commercial, customer-focused model
−
Excited by vertical integration opportunities
−
Work closely with Government and Network Rail to implement
structural change
27
UK Bus
 Winning new customers through:
− Value fares strategy
− Leading position in smartcard technology and products
− Continued investment (e.g. hybrid buses)
− Innovation: biomethane powered buses
28
UK Rail/Virgin Rail Group
 Strengths
− Stagecoach low-cost model good fit with McNulty
recommendations
− Continued high performance and customer satisfaction, above
industry average
− Passengers benefitting from fleet renewals and station
investment
 Opportunities
− Discussions with DfT on extension to current WC franchise
− VRG shortlisted for new WC franchise
− Stagecoach shortlisted for Greater Anglia franchise
− Potential for greater commercial freedom from franchise reform
− Vertical integration
29
Current trading and outlook
 Current trading in line with expectations
 Outlook positive
 Build on track record of winning new customers
 Continue to focus on opportunities to deliver value to
shareholders
30
Annual Results
Year ended 30 April 2011
29 June 2011
31
Appendices
32
Divisional income statements
Year ended 30 April 2011
UK Bus
(Regional)
£m
Revenue
Rail franchise premia
Rail revenue support
Other operating income
Staff costs
Fuel costs (i.e. diesel)
Insurance and claims costs
Depreciation
Rolling stock costs – lease & maintenance
Other operating leases
Network Rail
Electricity for trains
Commissions payable
Materials & consumables
Other costs
Operating profit
893.6
14.7
(436.8)
(107.9)
(31.6)
(60.8)
(8.6)
(36.2)
(73.3)
153.1
UK Bus
(London)
£m
North
America
£m
133.6
1.2
(99.6)
(15.5)
(5.0)
(2.7)
(5.0)
(6.3)
(6.6)
295.1
3.1
(126.0)
(31.5)
(24.8)
(21.1)
(7.5)
(22.6)
(45.4)
(5.9)
19.3
UK Rail
£m
1,070.0
(284.8)
68.1
74.9
(271.3)
(35.0)
(5.4)
(5.6)
(185.7)
(2.9)
(196.0)
(29.3)
(25.5)
(34.7)
(88.4)
48.4
Virgin Rail
Group (100%)
£m
801.5
(159.2)
43.6
52.3
(130.3)
(20.8)
(3.9)
(2.7)
(214.9)
(134.1)
(23.0)
(37.9)
(0.8)
(89.2)
80.6
33
UK Bus (regional) revenue
Year to
30 April 2011
£m
Year to
30 April 2010
£m
883.0
864.7
Acquisitions:
Islwyn (acquired January 2010)
2.0
0.7
Disposals:
Preston Bus (disposed January 2011)
6.9
7.7
Start-ups:
Rail replacement South (started May 2009)
1.7
2.3
893.6
875.4
Like-for-like
Total reported
Change
%
2.1%
2.1%
34
North America
revenue breakdown
Scheduled service/line run/commuter
School bus & contract
Charter
Megabus
Sightseeing & tour
Like-for-like revenue
“Disposed” & closed operations and Canada fx
Total North America
Year to
30 April 2011
US$m
Year to
30 April 2010
US$m
193.0
87.0
81.9
75.4
19.7
457.0
4.7
461.7
184.5
87.1
85.3
45.1
19.1
421.1
5.2
426.3
% Growth
4.6%
(0.1)%
(4.0)%
67.2%
3.1%
8.5%
(9.6)%
8.3%
35
Rail premium profiles
Year to 31 March:
South
Western
£m
East
Midlands
£m
2011
(227.1)
(31.7)
(145.6)
2012
(316.6)
(80.9)
(203.2)
2013
(410.9)
(118.3)
-
2014
(468.5)
(126.2)
-
2015
(550.2)
(189.2)
-
2016
(636.9)
-
-
2017
(616.9)
-
-
West Coast
£m
The above amounts are subject to adjustment for: (1) various inflation measures (2) risks borne
by the Department for Transport (3) called options and (4) changes in Regulated Network Rail
charges. The amounts shown above are based on estimated inflation and options called to date,
and exclude revenue support.
36
Fuel Hedging
UK Bus
(Regional)
UK Bus
(London)
North
America
UK Rail
2010/11
- average effective price (per litre)
36.9p
46.7p
53.3 cents
34.2p
2011/12
- % of forecast consumption hedged
96%
50%
77%
76%
- average hedge price (per litre)
42.0p
44.3p
60.3 cents
40.6p
- % of forecast consumption hedged
51%
38%
28%
61%
- average hedge price (per litre)
42.5p
46.1p
77.4 cents
46.1p
2012/13
2013/14
2014/15
- % of forecast consumption hedged
-
25%
-
5%
- average hedge price (per litre)
-
48.3p
-
54.6p
- % of forecast consumption hedged
-
13%
-
-
- average hedge price (per litre)
-
53.0p
-
-
Market price (per litre)
48.0p
48.0p
72.9 cents
Market prices are as at 24 June 2011
Prices exclude premia payable on fuel caps, delivery margins, duty, taxes and Bus Services Operators Grant
46.8p
37
Fuel costs
Latest forecasts
Fuel costs
Volumes
2009/10
Actual
£m
2010/11
Actual
£m
2011/12
Forecast
£m
2012/13
Forecast
£m
2013/14
Forecast
£m
UK Bus (regional), excluding BSOG*
UK Bus (regional), BSOG*
UK Bus (regional), including BSOG*
(201.2)
80.0
(121.2)
(185.1)
78.7
(106.4)
(194.1)
78.7
(115.4)
(204.6)
68.7
(135.9)
(209.9)
68.7
(141.2)
189.0
UK Bus (London), excluding BSOG*
UK Bus (London), BSOG*
UK Bus (London), including BSOG*
-
(25.7)
10.2
(15.5)
(45.6)
18.2
(27.4)
(47.0)
14.5
(32.5)
(47.3)
14.5
(32.8)
42.4
(38.7)
(5.0)
(21.3)
(31.5)
(6.4)
(22.4)
(37.8)
(7.2)
(27.4)
(42.7)
(7.2)
(30.1)
(42.0)
(7.2)
(30.6)
75.6
12.0
50.6
(186.2)
(182.2)
(215.2)
(248.4)
(253.8)
369.6
North America
South Western Trains
East Midlands Trains
Total
Market prices are as at 24 June 2011, when Brent Crude was US$105 per barrel
Forecast costs for the unhedged element of fuel are based on 24 June 2011 spot prices
Above costs include delivery margins, duty and taxes and exclude 3rd party fuel costs
The forecasts are based on the latest announced duty rates and BSOG rates and in the absence of any announcements, rates are assumed to remain constant.
*
Bus Services Operators Grant (“BSOG”) represents a rebate of an element of fuel duty costs in respect of certain UK Bus Services.
2011/12
Forecast
Litres m
38
Definitions

Like-for-like amounts are derived, on a constant currency basis, by comparing the relevant
year-to-date amount with the equivalent prior year period for those businesses and individual
operating units that have been part of the Group throughout both periods.

Operating profit or loss for a particular business unit or division within the Group refers to
profit or loss before net finance income/charges, taxation, intangible asset expenses,
exceptional items and restructuring costs.

Operating margin for a particular business unit or division within the Group means operating
profit or loss as a percentage of revenue.

Exceptional items means items which individually or, if of a similar type, in aggregate need
to be disclosed by virtue of their nature, size or incidence in order to allow a proper
understanding of the underlying financial performance of the Group.

Gross debt is borrowings as reported on the consolidated balance sheet, adjusted to exclude
accrued interest and the effect of fair value hedges on the carrying value of borrowings, and
to include the effect of foreign exchange derivatives that synthetically convert an element of
borrowings from one currency to another.

Net debt (or net funds) is the net of cash and gross debt.
39
Annual Results
Year ended 30 April 2011
29 June 2011