Annual Results 25 th June 2003 1 Annual

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Annual Results 25 th June 2003 1 Annual Results 2003

Annual Results 25 th June 2003 1 Annual Results 2003

Robert Speirs Chairman 2 Annual Results 2003

Robert Speirs Chairman 2 Annual Results 2003

Highlights § Continued profitability in all four key operating divisions § Strong cash generation

Highlights § Continued profitability in all four key operating divisions § Strong cash generation across the Group - £ 214. 6 m (28%) debt reduction since April 2002 - Free cash flow up 18% § c. £ 300 m of disposals announced post year-end - US £ 136 m; Hong Kong £ 176 m § Good progress in restructuring Coach USA § Terms of new franchise at South West Trains agreed with SRA § Final dividend of 1. 8 p per share (giving full year dividend of 2. 6 p (2002: 2. 6 p)) 3 Annual Results 2003

Martin Griffiths Finance Director 4 Annual Results 2003

Martin Griffiths Finance Director 4 Annual Results 2003

Financial Highlights 2003 £m Turnover 2002 £m 2, 076. 6 Total operating (loss)/profit 2,

Financial Highlights 2003 £m Turnover 2002 £m 2, 076. 6 Total operating (loss)/profit 2, 111. 4 (466. 2) 96. 5 146. 4 166. 6 (500. 2) 42. 0 - pre goodwill & exceptionals 112. 9 106. 8 Free cash flow* 217. 8 184. 3 - pre goodwill & exceptionals (Loss)/profit before tax Adjusted earnings per share 6. 4 p 6. 3 p Dividend per share 2. 6 p * Free cash flow comprises net cash inflow from operating activities, dividends from joint ventures and associates, net cash outflow from returns on investments and servicing of finance, and taxation. 5 Annual Results 2003

EBITDA UK Bus Coach USA Overseas Bus Rail Virgin Rail Group thetrainline. com Road

EBITDA UK Bus Coach USA Overseas Bus Rail Virgin Rail Group thetrainline. com Road King Others Overheads & restructuring EBITDA before exceptionals 6 2003 £m 2002 Restated £m 112. 0 49. 5 51. 8 40. 9 7. 2 (4. 3) 10. 5 (0. 8) 266. 8 (15. 1) 251. 7 105. 2 81. 9 57. 0 34. 1 10. 8 (4. 4) 12. 9 (0. 8) 296. 7 (17. 4) 279. 3 Annual Results 2003

Movement in Net Debt £m Opening net debt Cash flows from operations Road King

Movement in Net Debt £m Opening net debt Cash flows from operations Road King dividends Net interest paid Tax paid Dividends paid Net capital expenditure and new hire purchase finance Acquisition/disposal of subsidiaries/investments Net token cash Foreign Exchange and other movements Closing net debt 7 (774. 6) 272. 2 5. 3 (51. 9) (7. 8) (27. 6) (52. 3) (4. 8) 2. 1 79. 4 (560. 0) Annual Results 2003

Coach USA Trading Results § Results in line with expectations set in December §

Coach USA Trading Results § Results in line with expectations set in December § Turnover £ 603. 0 m (2002 - £ 682. 3 m) § 3. 4% like for like revenue decline* - 0. 4% like for like decline in coach and bus § Operating profit** £ 14. 0 m (2002 - £ 38. 4 m) - strict cost control - Insurance and claims costs up 38. 2% in US$ § Decline in taxicab sales and utilisation § Results stated after all claims costs (one-off and recurring) * Like for like revenue decline is measured as the change in revenue excluding the impact of acquisitions, disposals and foreign exchange movements ** Pre exceptional items and goodwill amortisation 8 Annual Results 2003

Coach USA – 2002/03 build-up Turnover $m Businesses sold & closed in 2002/03 Disposals

Coach USA – 2002/03 build-up Turnover $m Businesses sold & closed in 2002/03 Disposals announced since 30 April 2003: - West/South Central - Transit - New England Disposals planned: - Taxi - South East - Canada 41. 7 215. 9 100. 8 49. 5 407. 9 118. 2 49. 8 38. 4 614. 3 324. 7 939. 0 North East/North Central Total turnover 9 Annual Results 2003

UK Bus Trading Results § § Sales and profit are growing Turnover growth 5.

UK Bus Trading Results § § Sales and profit are growing Turnover growth 5. 4% to £ 598. 4 m Underlying passenger growth 3. 2% Strong contribution from London companies - 13. 7% revenue growth § Improved operating margin - 11. 2% versus 11. 0% in 2002 - 11. 3% versus 11. 0% excluding operating lease impact - Delivered through revenue growth and operating efficiencies 10 Annual Results 2003

Overseas Bus Trading Results § Turnover £ 183. 7 m (2002 - £ 194.

Overseas Bus Trading Results § Turnover £ 183. 7 m (2002 - £ 194. 7 m) § Operating profit £ 30. 3 m (2002 - £ 33. 4 m) § Operating margin 16. 5% (2002 - 17. 2%) § Impact of SARS and sluggish Hong Kong economy on Citybus § Further sales and profit growth in New Zealand § New Zealand - Operating profit £ 11. 2 m (2002 - £ 9. 0 m) - Operating margin 22. 0% (2002 - 21. 3%) - Passenger volumes up 8. 5% 11 Annual Results 2003

Rail Trading Results Rail Subsidiaries § Turnover £ 413. 6 m (2002 - £

Rail Trading Results Rail Subsidiaries § Turnover £ 413. 6 m (2002 - £ 402. 8 m) § Operating profit £ 38. 2 m (2002 - £ 31. 0 m) § Passenger volumes up 2. 1% at SWT (0. 9% excluding strike action in prior year) § Financial performance benefited from significant operational improvements at South West Trains § Operating profit stated after franchise bid costs 12 Annual Results 2003

Joint Ventures and Associates Virgin Rail Group § Share of revenue £ 276. 1

Joint Ventures and Associates Virgin Rail Group § Share of revenue £ 276. 1 m (2002 - £ 261. 2 m) § Share of operating profit £ 7. 2 m (2002 - £ 10. 8 m) Trainline § Share of revenue £ 11. 0 m (2002 - £ 11. 7 m) § Share of operating loss £ 4. 3 m (2002 - £ 4. 4 m) Road King § Share of operating profit £ 10. 5 m (2002 - £ 12. 9 m) 13 Annual Results 2003

Disposals announced Reduction in Gross Deferred consolidated consideration net debt £m £m £m Disposals

Disposals announced Reduction in Gross Deferred consolidated consideration net debt £m £m £m Disposals completed in year ended 30 April 2003 - Australia - Coach USA – various units Disposals announced since 30 April 2003 - Citybus - Coach USA – South Central & West - Coach USA – New England - Coach USA – Transit 2. 1 4. 9 7. 0 176. 5 97. 0 25. 0 14. 1 319. 6 16. 6 4. 4 21. 0 2. 1 4. 9 7. 0 176. 5 80. 4 20. 6 14. 1 298. 6 Foreign currency amounts have been translated using the average exchange rate for the year ended 30 April 2003 for disposals completed in the year and using the 30 April 2003 rate for the other disposals 14 Annual Results 2003

Balance sheet impact § Minimal net asset impact from disposals - No significant gain

Balance sheet impact § Minimal net asset impact from disposals - No significant gain or loss § Net Debt £m As at 30 April 2003 Disposals announced post year-end Pro-forma net debt (560. 0) 291. 6 (268. 4) § Pro-forma gearing – 84. 6% § Significant improvement (i. e. reduction) in Net Debt/EBITDA 15 Annual Results 2003

Pensions § Increased employer and employee contributions § £ 31. 2 m total pension

Pensions § Increased employer and employee contributions § £ 31. 2 m total pension costs (2002 - £ 18. 0 m) § £ 26. 9 m cash paid (2002 - £ 19. 5 m) § FRS 17 post-tax deficit of £ 156. 2 m for UK Bus/Group § Financial support in new SWT franchise allows for cost of funding the deficit for SWT § Managed as part of overall cost base 16 Annual Results 2003

Current Trading § Group trading in line with expectations § Continuing revenue and profit

Current Trading § Group trading in line with expectations § Continuing revenue and profit growth in UK Bus § SWT trading under the terms of the one-year franchise extension § Coach USA - restructuring ongoing - no significant change in trading environment § Further growth in New Zealand § Virgin Rail Group - one year SRA budget 2003/04 17 Annual Results 2003

Divisional Strategy 18 Annual Results 2003

Divisional Strategy 18 Annual Results 2003

Graham Eccles Director – Rail Operations 19 Annual Results 2003

Graham Eccles Director – Rail Operations 19 Annual Results 2003

Rail § The new SWT Franchise § Prospects for Virgin Rail Group § Rail

Rail § The new SWT Franchise § Prospects for Virgin Rail Group § Rail Business Development 20 Annual Results 2003

Brian Souter Chief Executive 21 Annual Results 2003

Brian Souter Chief Executive 21 Annual Results 2003

Coach USA § § § Reducing exposure to leisure related businesses Realising value through

Coach USA § § § Reducing exposure to leisure related businesses Realising value through sales process Reducing management stretch Retaining businesses with geographically large units and more predictable revenue streams Redeploying assets to maximise utilisation and eliminate unnecessary capital expenditure 30/70 70/30 22 Annual Results 2003

Hong Kong - Citybus Disposal § § § HK$2. 2 billion enterprise value –

Hong Kong - Citybus Disposal § § § HK$2. 2 billion enterprise value – compelling offer for the business Economic uncertainty Changing political landscape - Pressure to reduce fares - Costly bus modifications relating to the environment, e. g. catalytic convertors - Pressure for market consolidation Increasing capital spend to retain franchises - New depot - Fleet replacement Competition – Railway extensions 23 Annual Results 2003

Other Overseas Interests § New Zealand - Commercial structure - Organic growth - Dominant

Other Overseas Interests § New Zealand - Commercial structure - Organic growth - Dominant market share - Strong management team core part of the Stagecoach portfolio § Road King - Sound underlying business but non core to Stagecoach Group - Would exit if the right opportunity arose 24 Annual Results 2003

UK Bus § Historic performance and trends § Growth prospects - London - Provincial

UK Bus § Historic performance and trends § Growth prospects - London - Provincial companies - Organic growth in southern networks - Refresh “tired” northern networks § New Products - Taxibus - Kick Start 25 Annual Results 2003

Summary § Coach USA sales programme and restructuring on schedule § Terms of new

Summary § Coach USA sales programme and restructuring on schedule § Terms of new franchise at SWT agreed with SRA § Ongoing discussions between VRG and the SRA to renegotiate the West Coast and Cross Country franchises § Operating margin improvement at UK Bus § Continued organic growth in New Zealand § US and Citybus disposals – substantial debt reduction § Significant de-risking of the Group portfolio 26 Annual Results 2003

Where next for Stagecoach? § § § § Maximise shareholder value from existing Portfolio

Where next for Stagecoach? § § § § Maximise shareholder value from existing Portfolio A portfolio now dominated by UK Bus and Rail businesses - Organic growth - New products - Maximise value from existing rail franchises Residual US Portfolio - Over US$300 m of revenue - More predictable - $22 m operating profit in 2002/03 can be sustained and grown despite lower revenue base; EBITDA base of approximately $40 m - Organic growth opportunities/small bolt on acquisitions Growth characteristics in New Zealand Strong cash generation - Further debt reduction - Well placed for refinancing in 2004 Evaluate capital structure post US restructuring Progressive Dividend policy 27 Annual Results 2003

Annual Results 25 th June 2003 28 Annual Results 2003

Annual Results 25 th June 2003 28 Annual Results 2003

Appendices 29 Annual Results 2003

Appendices 29 Annual Results 2003

UK Bus Revenue Development 2001/02 Turnover Passenger volumes outside London £m % 567. 9

UK Bus Revenue Development 2001/02 Turnover Passenger volumes outside London £m % 567. 9 - 1. 8 0. 3% London contract changes 14. 6 2. 6% Fares/tender prices/business mix 14. 1 2. 5% 598. 4 5. 4% 2002/03 Turnover 30 Annual Results 2003

UK Bus - London/Other 2003 Turnover £m Operating Profit £m 2002 Operating Margin %

UK Bus - London/Other 2003 Turnover £m Operating Profit £m 2002 Operating Margin % Turnover £m Operating Profit Restated £m Operating Margin Restated % London 144. 2 15. 1 10. 5% 126. 8 13. 5 10. 6% Other 454. 2 51. 9 11. 4% 441. 1 49. 2 11. 2% 598. 4 67. 0 11. 2% 567. 9 62. 7 11. 0% 31 Annual Results 2003

Overseas Bus Revenue Development 2001/02 Turnover Disposal of Portugal and Australia Withdrawal of PRC

Overseas Bus Revenue Development 2001/02 Turnover Disposal of Portugal and Australia Withdrawal of PRC services Currency movements Volumes - Severe weather impact in prior year - Underlying growth Impact of SARS Fares 2002/03 Turnover 32 Citybus £m 148. 6 (0. 1) (11. 9) New Zealand £m 42. 2 3. 8 0. 9 (2. 3) (2. 9) 132. 3 4. 6 0. 4 51. 0 Other £m 3. 9 (3. 5) 0. 4 Total £m 194. 7 (3. 5) (0. 1) (8. 1) 0. 9 2. 3 (2. 9) 0. 4 183. 7 Annual Results 2003

Overseas Bus Segmental results 2003 Turnover £m Citybus 2002 Operating Profit Margin £m %

Overseas Bus Segmental results 2003 Turnover £m Citybus 2002 Operating Profit Margin £m % Turnover £m Operating Profit Restated £m Operating Margin Restated % 132. 3 19. 1 14. 4% 148. 6 25. 2 17. 0% 51. 0 11. 2 22. 0% 42. 2 9. 0 21. 3% Other 0. 4 - 3. 9 (0. 8) - Total 183. 7 33. 4 17. 2% New Zealand - 30. 3 16. 5% 33 194. 7 Annual Results 2003

Citybus – SARS Impact 2003 HK$m Revenue 1, 607. 4 SARS effect - March

Citybus – SARS Impact 2003 HK$m Revenue 1, 607. 4 SARS effect - March 7. 3 - April 27. 6 Normalised revenue (excluding SARS) § 2002 HK$m 1, 660. 3 Nil 34. 9 1, 642. 3 Nil 1, 660. 3 May 2003 revenues 20% down on prior year 34 Annual Results 2003

Coach USA Segmental results 2003 Turnover £m 2002 Operating Profit £m Operating Margin %

Coach USA Segmental results 2003 Turnover £m 2002 Operating Profit £m Operating Margin % Turnover £m Taxi 91. 4 4. 7 5. 1% 133. 2 Transit 64. 7 - 0. 0% Operating Profit Restated £m Operating Margin Restated % 16. 9 12. 7% 63. 5 4. 5 7. 1% Coach & Bus 446. 9 9. 3 2. 1% 485. 6 17. 0 3. 5% Total 603. 0 14. 0 2. 3% 682. 3 38. 4 5. 6% 35 Annual Results 2003

Capital Expenditure UK Bus Coach USA Overseas Bus Rail Capital Expenditure £m Disposal Proceeds*

Capital Expenditure UK Bus Coach USA Overseas Bus Rail Capital Expenditure £m Disposal Proceeds* £m 15. 8 21. 5 13. 3 2. 3 52. 9 (13. 9) (5. 1) (1. 1) (20. 1) 2003 Net £m 1. 9 16. 4 12. 2 2. 3 32. 8 2002 Net £m 19. 6 48. 4 7. 4 1. 6 77. 0 *excludes proceeds from selling businesses 36 Annual Results 2003

Interest/Debt Ratios Finance charges* (net) EBITDA pre-exceptionals 2003 £m 33. 5 251. 7 2002

Interest/Debt Ratios Finance charges* (net) EBITDA pre-exceptionals 2003 £m 33. 5 251. 7 2002 £m 59. 8 279. 3 EBITDA pre-exc/Finance charges 7. 5 times 4. 7 times Net Debt/EBITDA 2. 2 times 2. 8 times * 2003 includes £ 13. 1 m net gain on early redemption of bonds and close out of interest rate swaps Annual Results 2003 37

Taxation 2003 Pre-tax £m 112. 9 (575. 5) (37. 6) (500. 2) Pre-goodwill and

Taxation 2003 Pre-tax £m 112. 9 (575. 5) (37. 6) (500. 2) Pre-goodwill and exceptionals Exceptional items Goodwill amortisation Cash tax § Tax £m (28. 8) Nil 3. 8 (25. 0) (7. 8) % 25. 5% Nil 10. 1% 5. 0% 33. 4% effective rate excluding £ 575. 0 m Coach USA write-downs 38 Annual Results 2003

Annual Results 25 th June 2003 39 Annual Results 2003

Annual Results 25 th June 2003 39 Annual Results 2003