Annual Results 28 th June 2006 1 Annual

Annual Results 28 th June 2006 1 Annual Results 2006

Robert Speirs Chairman 2 Annual Results 2006

Highlights § Strong operational and financial performance across the Group - Headline earnings per share up 11. 6% - fourth year of successive growth - Innovation driving growth at UK Bus - Excellent performance in UK Rail - Further growth in North America with increase in operating margin to 7. 2% § Final dividend of 2. 6 p per share giving full year dividend of 3. 7 p (2005: 3. 3 p) – up 12. 1% § Bid to be submitted for South Western franchise by 30 June 2006 § Disposals of New Zealand London bus § Acquisitions of Glenvale and Traction Group 3 Annual Results 2006

Martin Griffiths Finance Director 4 Annual Results 2006

Financial highlights § Revenue+* from continuing businesses up 8. 2% - £ 1, 530. 0 m (2005: £ 1, 413. 4 m) - Up 7. 3% at constant exchange rates § Operating profit* pre intangibles and exceptionals £ 156. 6 m (2005: £ 153. 1 m) § EBITDA* from Group companies (pre exceptionals) up 6. 9% at £ 219. 7 m § Adjusted EPS up 11. 6% to 10. 6 p excluding acquisitions of Glenvale and Traction and disposed New Zealand operations * excluding disposed New Zealand operations + 5 Annual Results 2006

Financial summary Revenue* - continuing operations, excluding Glenvale and Traction 2006 £m 1, 568. 5 2005 £m 1, 420. 5 1, 530. 0 1, 413. 4 Total operating profit* 136. 1 132. 9 - pre intangibles & exceptionals* 156. 6 153. 1 Profit before tax* 115. 0 104. 9 - pre intangibles & exceptionals* 140. 6 131. 2 Net cash from operating activities 175. 5 173. 6 Adjusted earnings per share 10. 6 p 9. 5 p Full-year dividend per share 3. 7 p 3. 3 p * excluding disposed New Zealand operations 6 Annual Results 2006

EBITDA UK Bus - excluding Glenvale/Traction - Glenvale/Traction North America Rail Group overheads & restructuring costs EBITDA from Group companies before exceptionals Virgin Rail Group Other joint ventures and associates Total EBITDA before exceptionals 7 2006 £m 2005 £m 132. 2 0. 5 33. 7 64. 7 (11. 4) 219. 7 5. 3 0. 1 225. 1 132. 5 Nil 30. 0 53. 4 (10. 3) 205. 6 14. 2 (0. 4) 219. 4 Annual Results 2006

Movement in net debt EBITDA from Group companies before exceptionals (slide 7) EBITDA from discontinued operations Working capital and other operating cash movements Net interest paid Tax paid Net cash from operating activities Net capital expenditure including new hire purchase Acquisitions of businesses, intangibles and investments Disposals of businesses and investments Token sales and redemptions Foreign exchange/other Reduction in net debt before cashflows with shareholders Repurchase of ‘B’ shares Equity dividends Other share capital movements Reduction in net debt Opening net debt Closing net debt 8 30 April 2006 £m 219. 7 8. 5 (5. 8) (19. 4) (27. 5) 175. 5 (94. 4) (52. 4) 105. 3 (4. 0) (8. 5) 121. 5 (13. 9) (36. 6) 7. 7 78. 7 (214. 6) (135. 9) Annual Results 2006

UK Bus trading results § Revenue growth 13. 0% to £ 814. 2 m (2005: £ 720. 3 m) - revenue growth 7. 7%, excluding acquisitions of Glenvale and Traction § Like for like passenger growth of 2. 1%, excluding London/Megabus § Operating margin 11. 4% (2005: 12. 2%), excluding acquisitions of Glenvale and Traction § Glenvale/Traction operating loss £ 1. 9 m 9 Annual Results 2006

UK Bus Revenue Development London £m % Outwith London £m % 207. 0 Glenvale/Traction Nil n/a 38. 5 7. 6% Nil n/a 38. 5 5. 3% Passenger volumes Nil n/a 10. 6 2. 1% Nil n/a 10. 6 1. 5% 10. 6 5. 1% 7. 1 1. 4% Nil n/a 17. 7 2. 5% Fare increases 7. 0 3. 4% 19. 1 3. 8% Nil n/a 26. 1 3. 6% megabus. com Nil n/a 1. 0 16. 1% 1. 0 0. 1% 14. 8% 7. 2 16. 1% 814. 2 13. 0% 2005/06 Revenue 224. 6 8. 5% 582. 4 10 6. 2 UK Bus 2004/05 Revenue Tender wins/ contract amendments 507. 1 Megabus 720. 3 Annual Results 2006

Sale of London Bus § Conditional sale to Macquarie agreed § Subject to regulatory approval and other conditions § Headline consideration £ 263. 6 m § 2005/06 EBITDA £ 31. 3 m § 8. 4 times EV/EBITDA § c. £ 120 m gain on disposal § Completion expected within three months 11 Annual Results 2006

Sale of London Bus - Pensions § c. £ 60 m cash contribution to Stagecoach Group Pension Scheme § Stagecoach’s IAS 19 deficit reduces by c. £ 60 m § Significant reduction in pensions volatility - c. £ 165 m of pension scheme liabilities (and matching assets) transfer with London Bus - Transfer with London Bus is broadly IAS 19 neutral (no significant impact on transaction multiples) 12 Annual Results 2006

North America trading results § § Revenue £ 247. 6 m (2005: £ 220. 8 m) 11. 0% increase in US$ revenue from continuing operations Operating margin up from 7. 0% to 7. 2%, excluding megabus Operating profit £ 17. 7 m (2005: £ 15. 5 m), excluding megabus - US$31. 5 m (2005: US$28. 7 m), excluding megabus - excellent revenue growth - strict cost control - overhead reduction § £ 0. 8 m megabus loss - marketing and other start-up costs 13 Annual Results 2006

North America continuing revenue breakdown by product Scheduled service/line run/commuter Charter Sightseeing & tour School bus & contract Total 14 2006 US$m 2005 US$m % Growth 178. 7 92. 1 84. 0 84. 7 439. 5 165. 8 84. 4 75. 2 70. 6 396. 0 7. 8% 9. 1% 11. 7% 20. 0% 11. 0% Annual Results 2006

Rail trading results Rail subsidiaries § Revenue £ 506. 7 m (2005: £ 479. 4 m) § Operating profit £ 58. 9 m (2005: £ 50. 0 m) § Passenger volumes up 1. 3% at SWT, adversely affected by terrorist attacks § Revenue and profit share to Df. T £ 66. 7 m (2005: £ 46. 0 m) § Bid costs £ 11. 7 m (2005: £ 3. 0 m) 15 Annual Results 2006

Virgin Rail Group § Share of profit after finance income and tax £ 5. 5 m (2005: £ 10. 7 m) § New long-term commercial arrangements on West Coast – discussions with Df. T ongoing § Cross. Country – current franchise terminates on 10 November 2007. Joint bid with Virgin for new franchise 16 Annual Results 2006

Taxation 2006 Excluding intangible asset amortisation and exceptional items - Before joint ventures - Joint ventures Intangible asset amortisation Exceptional items Joint venture tax Reported in income statement Cash tax paid (net) Pre-tax Profit £m Tax £m Rate % 135. 0 7. 1 142. 1 (20. 5) (5. 1) 116. 5 (1. 5) 115. 0 (31. 4) (1. 5) (32. 9) 2. 2 2. 8 (27. 9) 1. 5 (26. 4) 23. 3% 21. 1% 23. 2% 23. 9% (27. 5) 17 Annual Results 2006

Pensions § £ 33. 4 m total pension costs (2005: £ 32. 9 m) § IAS 19 pre-tax deficit of £ 222. 2 m (2005: £ 220. 9 m) for Group - Includes £ 21. 5 m increase on acquisition of Glenvale/Traction § c. £ 60 m of additional contributions to reduce deficit § Rail pension schemes: under IFRS, only the part of the deficit that we expect to fund is recognised § Proposed changes to schemes 18 Annual Results 2006

Balance sheet & financing § Net debt £ 135. 9 m (2005: £ 214. 6 m) § EBITDA*/finance charges cover 14. 1 times (2005: 10. 0 times) § Progressive dividend policy UK GAAP definition * From continuing businesses, before exceptional items 19 Annual Results 2006

Brian Souter Chief Executive 20 Annual Results 2006

Group strategy Quality operations driving strong results Excellent operational performance § § § Bus operator of the Year Train operator of the Year South West Trains punctuality circa 90% Improved punctuality at Virgin Rail Group UK Bus reliability 99. 3%* Strong financial results § § Adjusted EPS up 11. 6% Revenue from continuing operations* up 8. 2% Absorbing increased fuel costs Full year dividend up 12. 1% ↓ * excluding acquired Glenvale and Traction operations 21 Annual Results 2006

Group strategy – UK Bus § Focus on less regulated bus operations outside London – Sale of London operations – Capitalise on innovation and marketing expertise § Build on four years of consistent passenger growth – Development of Kickstart projects – Organic growth opportunities in Southern companies – Concessionary travel schemes § Exploit growth potential of bus company acquisitions § Business development – Inter-city bus and coach services 22 Annual Results 2006

Group strategy UK Bus passenger growth Like for like passenger growth by operating company – excluding London & Megabus April 2006 v April 2005 Overall passenger growth 2. 1% 3% + 0 -3% <0% Stagecoach London 23 Annual Results 2006

Group strategy – Rail § Powerful, value-for-money bid for South Western franchise § Successful renegotiation of West Coast franchise § Evaluate opportunities to expand rail portfolio – East Midlands – West Midlands – Cross. Country § Further development of megatrain. com 24 Annual Results 2006

Group strategy – North America § Revenue and margin growth – Core scheduled services – Contract wins – Capitalise on continued strong leisure bounce-back – Further growth in sightseeing and charter § New product development and improved marketing – megabus. com – Launch of New York Duck Tours – Web-based sales 25 Annual Results 2006

Current trading and outlook § Current trading in line with our expectations § Continued focus on organic growth and bolt-on acquisitions § Good potential for further growth 26 Annual Results 2006

Annual Results 28 th June 2006 27 Annual Results 2006

Appendices 28 Annual Results 2006

North America revenue development Continuing US$m Discontinued US$m Total US$m 396. 0 13. 1 409. 1 Nil (13. 1) 5. 1 - 5. 1 Underlying growth 38. 4 - 38. 4 2005/06 Revenue 439. 5 - 439. 5 2004/05 Revenue Impact of disposals and other movements on discontinued turnover US$/C$ currency impact 29 Annual Results 2006

Rail revenue development £m 2004/05 Revenue % 479. 4 SWT passenger volumes 6. 1 1. 3% 19. 0 4. 0% SWT other 1. 3 0. 3% Island Line/Supertram 0. 9 0. 2% 506. 7 5. 7% SWT fares/yield 2005/06 Revenue 30 Annual Results 2006

Finance charges ratios 2006 £m Finance charges (net)* EBITDA pre-exceptionals*/finance charges* Net Debt+/EBITDA* 2005 £m 16. 0 21. 9 225. 1 219. 4 14. 1 times 0. 6 times 10. 0 times 1. 0 times * From continuing businesses + UK GAAP definition 31 Annual Results 2006

Finance charges Gross debt & related derivatives Interest bearing cash balances Average balance* £m Finance charges £m 352. 0 (155. 0) 197. 0 20. 4 (7. 1) 13. 3 0. 6 0. 4 3. 3 (0. 9) (1. 1) 16. 0 Non-utilisation/commitment fees Amortisation of bond issue costs/bank charges Insurance letters of credit Discount on insurance provisions Interest on notes receivable Other Annual effective rate % 5. 8% 4. 6% 6. 8% *Average of month end debt/cash balances 32 Annual Results 2006

Fuel hedging Forecast 2006/07 % of Group fuel hedged Forecast 2007/08 2008/09 - fixed 18% Nil - cap/floor 75% 44% 38% US$54 n/a Average hedge price (crude price US$/barrel) - fixed - cap/floor US$83/US$54 • Continuing Bus divisions use 1. 9 m barrels of fuel a year • Each US$10 per barrel movement in crude oil price impacts variable fuel costs by approximately US$19 m if no hedging in place • Amounts shown above include London bus operations • 2006/07 year-on-year increase of £ 30 m-£ 35 m for continuing operations 33 Annual Results 2006

Capital expenditure UK Bus North America New Zealand Rail Cash spent on capex* £m Capex on new hire purchase £m Impact of capex on net debt £m 61. 1 23. 5 3. 4 3. 9 91. 9 10. 7 Nil Nil 10. 7 71. 8 23. 5 3. 4 3. 9 102. 6 Disposal proceeds** £m (3. 9) (3. 6) (0. 7) Nil (8. 2) Net £m 67. 9 19. 9 2. 7 3. 9 94. 4 * Excludes capitalised intangible assets of £ 0. 6 m and additions made as part of business combinations ** Excludes proceeds from selling businesses Note: No vehicles were acquired by UK Bus during the year on operating leases (2005: capital value of vehicles acquired on operating leases - £ 25. 1 m ) 34 Annual Results 2006

Exchange rates April 2006 US$ NZ$* C$ April 2005 Closing rate Average rate 1. 8176 2. 4606 2. 0368 1. 7751 2. 5641 2. 1079 1. 9099 2. 6088 2. 3969 1. 8530 2. 7240 2. 3621 * Average and closing rates up to date of disposal used – 29 November 2005 35 Annual Results 2006

Annual Results 28 th June 2006 36 Annual Results 2006