Stagecoach Group
Driving growth through
innovation and service
Brian Souter
Chief Executive
Credit Suisse Conference
19 November 2007
1
Agenda
1. Business overview
2. Strategy
3. Stagecoach equity proposition
4. The Stagecoach differential
5. Summary
6. Questions & Answers
2
Business overview
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One of the world’s leading public transport groups
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Three key operating divisions with strong market
positions
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Annualised turnover in excess of £1.7bn
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Annual EBITDA in excess of £200m
3
Group Structure
Stagecoach Group plc*
UK Bus
North America
Rail
100 depots across UK
7,000 vehicles
18,100 employees
USA and Canada
3,000 vehicles
4,800 employees
South Western, Supertram, Metrolink
1,400 vehcles, 4,200 employees
plus 49% equity stake in Virgin Rail Group
plus East Midland from November 2007
*Full listing on the London Stock Exchange
Market capitalisation approximately £1.75 billion
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UK Bus
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Approx 14% share of UK domestic bus market
Annual revenue over £700m
19 operating companies, 100 depots
Metropolitan, suburban, rural and inter-city services
>90% of revenues from scheduled passenger services
Provincial, de-regulated, commercial market
UK Bus division accounts for approx46% of continuing
Group turnover and 52% of continuing Group profit*
*Profit = pre goodwill and exceptionals for year ended 30 April 2007 (including Group overheads and redundancy/restructuring costs)
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Rail - 1
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Approximately 25% of UK passenger rail journeys
Franchises let by UK Department for Transport
Group runs two major wholly-owned UK rail
franchises
 South Western: largest UK commuter rail
network with mainline and suburban
services from London Waterloo to southwest England; revenue approx £557m
 East Midlands: main line train services to
London St Pancras International, regional
rail services in East Midlands, inter-regional
services between Norwich and Liverpool;
revenue approx £235m
49% interest in Virgin Rail Group
 Operator of West Coast inter-city rail
franchise; revenue approx [x]m
*Profit = pre goodwill and exceptionals for year ended 30 April 2007 (including Group overheads and redundancy/restructuring costs)
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Rail - 2
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Britain’s biggest tram operator
 Sheffield Supertram
 Manchester Metrolink
 Operations and maintenance contracts
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Rail division accounts for approx 38% of continuing
Group turnover and 36% of continuing Group profit*
*Profit = pre goodwill and exceptionals for year ended 30 April 2007 (including Group overheads and redundancy/restructuring costs)
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North America
Significant operator in North American
market
Market mix:
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Geography:
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Scheduled service/line run/commuter (New
York, Chicago)
Sightseeing (mainly New York, plus Chicago
and Montreal)
School bus (Wisconsin)
Tour and charter
North East
Midwest
Canada
Revenue approx US $465m
North America accounts for approx 16% of
continuing Group turnover and 11% of
continuing Group profit*
*Profit = pre goodwill and exceptionals for year ended 30 April 2007
(including Group overheads and redundancy/restructuring costs)
8
Group Strategy
Delivering shareholder value through:
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Organic revenue growth in all key divisions
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New product development (eg budget inter-city coach
service megabus.com)
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Complementary bolt-on acquisitions
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Targeted opportunities and maximising contract value
in franchised UK rail market
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Stagecoach equity proposition
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Strong growth track-record
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Cash-generative business
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Predictable earnings
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Alignment of management and shareholders
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Strong capital discipline
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Excellent potential for further growth
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Excellent potential for further growth - 1
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Supportive environment for public transport
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Rising road congestion
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Climate change agenda
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Pro-public transport Govt policy
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concessionary travel schemes
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road pricing
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‘green’ taxation
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Excellent potential for further growth - 2
• Stagecoach expertise
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Entrepreneurial and performance-focused
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Innovation
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new product development
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marketing
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Experienced management
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Strong stakeholder partnerships
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Good operational delivery driving financial results
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Delivering above–industry growth
12
The Stagecoach differential:
UK Bus - 1
 Revenue growth*:
 10.3% v average market revenue growth of 8.4%**
 Stagecoach out-performance of 22.6%
 Organic passenger growth
 Underlying full fare passenger volume growth of
approx 2.4%
 Over-and-above concessionary travel growth
 Like-for-like operating profit up 26.9%* from £65.0m to
£82.5m
- Year ended 30 April 2007
* Like-for-like
** Determined from most recently rolling 12 months’ revenues available for UK Bus divisions of major UK-listed Groups
13
The Stagecoach differential:
UK Bus - 2
 Market-leading innovation and
marketing generating modal shift
 megabus.com
 Goldline
 telemarketing campaigns
 online sales (eg Unirider)
 Competitive pricing strategy
 lower than average weekly ticket prices
 increases financial flexibility
 underpins volume growth and long-term
prospects
 High fleet reliability
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Stagecoach: Bus of Britain
TV campaign
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Goldline: targeting modal shift
• Pilot of new premium bus
concept
• ‘BMW’ of bus travel
• Luxury leather seats
• State-of-the-art green
travel
• Customer promise:
service guarantees
• Hand-picked, uniformed
drivers
• Price: no initial premium
• Pilot projects launched in
Perth and Leamington
Spa
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Award-winning telemarketing
• Telemarketing unit based in Perth
• Focus on people whose lifestyle is most
suited to switching from car to bus
• Desktop research using demographics data
from census and other sources
• Discuss travel choices, local bus network and
environmental issues
• Offer seven days’ free travel
• More than 610,000 customers contacted in
past two years
• Campaigns included Manchester, Newcastle,
Sheffield, Lincoln, Aldershot
• Generated more than 4.2 million additional bus
passenger journeys a year - 2.95m previously
made by car.
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Yield management
 Budget travel concept - flexible pricing from £1
 Online booking via secure e-commerce website
 megabus.com: 40 UK cities, 2m customers a year
 megatrain.com introduced at South West Trains in
Nov 2005
 Maximising off-peak capacity and generating new
customers
 megatrain.com -16 destinations at South West
Trains; more than 3,000 passengers a week
 integrated budget coach and rail website since
March 2007
 Expansion to East Midlands franchise
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Summary
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Strong portfolio of businesses
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Excellent organic growth delivered and continuing
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Rail division expanded through franchise wins
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Clear strategy for further success
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Stagecoach expertise
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Supportive environment for public transport sector
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Questions & Answers
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Stagecoach Group
Driving growth through
innovation and service
Brian Souter
Chief Executive
Credit Suisse Conference
19 November 2007
21