annual results year ended 30 april 2009 24 june 2009

Preliminary Results 2009

Annual ResultsAnnual ResultsYear ended 30 April 2009Year ended 30 April 2009

24 June 2009 24 June 2009


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 for a particular business unit or division within the Group refers to profit 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 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.

Net debt is the net of cash and borrowings as reported on the consolidated balance sheet, adjusted to exclude any accrued interest and deferred gains on derivatives.


Robert SpeirsRobert Speirs

ChairmanChairman


Highlights

Strong financial results

Revenue and operating profit growth

Adjusted EPS up 12.8%

Full-year dividend per share up 11.1%

Growing bus operations in UK and North America

Current trading in line with expectations


Martin GriffithsMartin Griffiths

Finance DirectorFinance Director


Financial summary

* excluding exceptional items and intangible asset expenses

Revenue

Operating profit*

Adjusted earnings per ordinary share*

Basic earnings per ordinary share

Net debt

Dividend per ordinary share

Year to 30 April 09

Year to 30 April 08

£2,103.3m

£227.8m

22.9p

18.7p

£(340.1)m

6.0p

£1,763.6m

£205.3m

20.3p

34.6p

£(319.7)m

5.4p

Change

19.3%

11.0%

12.8%

(46.0)%

6.4%

11.1%


Summary income statement

UK Bus operating profit

North America operating profit excluding megabus

megabus North America operating loss

UK Rail operating profit

Share of joint ventures’ profit after tax

Restructuring costs (non-exceptional) and group overheads

Operating profit

Finance charges (net)

Tax

Profit excluding intangibles and exceptionals

Intangibles and exceptionals, net of tax

Reported profit from continuing operations

Year to 30 April 09

£m

Year to 30 April 08

£m

125.6

28.0

(2.8)

55.7

35.3

(14.0)

227.8

(31.4)

(33.0)

163.4

(29.9)

133.5

109.9

23.9

(2.9)

59.1

32.6

(17.3)

205.3

(30.9)

(28.3)

146.1

83.1

229.2

Change£m

15.7

4.1

0.1

(3.4)

2.7

3.3

22.5

(0.5)

(4.7)

17.3

(113.0)

(95.7)


UK Bus

Strong, consistent like-for-like revenue growth throughout 2008/9

Revenue and journeys benefiting from marketing campaigns, investment in fleet, excellent value fares and concessionary fare schemes

Acquisitions of small, complementary businesses

First full year of new national concessionary fare scheme ended March 2009

Flexible cost base – contingency plans in place for any revenue slowdown

Revenue (£m)

Like-for-like revenue (£m)

Operating profit (£m)

Operating margin (%)

Estimated like-for-like passenger journeys (m)

Like-for-like vehicle miles operated (m)

Year to 30 April 09

Year to 30 April 08

830.8

799.0

125.6

15.1%

646.1

317.2

743.9

733.4

109.9

14.8%

625.9

312.0

Change

11.7%

8.9%

14.3%

0.3%

3.2%

1.7%


North America (excluding megabus)

Overall solid performance

Further margin improvement

Expansion of megabus.com

New York sightseeing joint venture from 31 March 2009

Revenue (US$m)

Like-for-like revenue (US$m)

Operating profit (US$m)


Year to 30 April 09

Year to 30 April 08

463.7

407.4

47.0

10.1%

474.3

399.3

48.0

10.1%

Change

(2.2)%

2.0%

(2.1)%

0.0%


UK Rail (wholly-owned)

Reduced revenue growth rate

Revenue now below franchise target

c.£50m annualised cost savings implemented

Revenue (£m)

Like-for-like revenue (£m)

Operating profit (£m)


Estimated passenger miles (m) - South Western

- East Midlands

Year to 30 April 09

Year to 30 April 08

977.7

689.5

55.7

5.7%

3,298.4

1,206.9

777.8

649.3

59.1

7.6%

3,228.7

1,188.0

Change

25.7%

6.2%

(5.8)%

(1.9)%

2.2%

1.6%


Impact of UK Rail, revenue changes

Illustrative passenger revenue per annum (£m)

1% change on revenue (£m)

1% change on revenue post 28% tax (£m)

Impact on adjusted earnings per share (pence)

East Midlands

Virgin Rail Group (49%)

257.7

2.6

1.9

0.3

322.3

3.2

2.3

0.1*

Total

1,254.7

12.5

9.0

1.1

South Western

674.7

6.7

4.8

0.7

The analysis shown above is for illustrative purposes only to show how a 1% change in revenue affects earnings per share, assuming no changes in costs and based on the number of shares (715.0m) ranking for dividend as at 30 April 2009.

* Impact on earnings is net of 80% revenue support for Virgin Rail Group


South Western TrainsContractual matters

In dispute with Department for Transport regarding aspects of the franchise agreement

Period covered by revenue support

Treatment of car park revenue (LENNON element) when calculating revenue support

Seeking resolution through arbitration

Appropriate legal advice taken and we consider our position to be strong


Virgin Rail Group

Poor Network Rail operational performance Significant compensation received

c.30% more services from January 2009 Revenue support available from December 2008

First support payment applied for in June 2009 c.£10m annualised cost savings

Revenue – 49% share (£m)

- West Coast (£m)

- West Coast like-for-like (£m)

- CrossCountry (£m)

Operating profit – 49% share (£m)


Dividends received (£m)

Estimated like-for-like passenger miles (m) – West Coast

Year to 30 April 09

Year to 30 April 08

322.3

322.3

302.9

-

42.7

13.2%

43.9

2,515.0

394.0

310.3

301.9

83.7

41.9

10.6%

30.5

2,553.0

Change

(18.2)%

3.9%

0.3%

(100.0)%

1.9%

2.6%

43.9%

(1.5)%


Miscellaneous income statement items

Twin America joint venture (New York Sightseeing) commenced 31 March 2009

Exceptional items include £12.0m (2008: £Nil) of UK Rail restructuring costs

Citylink joint venture (£m)

Splash Tours joint venture (£m)

Twin America joint venture (£m)

Intangible asset expenses (£m)

Group overheads (£m)

Restructuring costs (non-exceptional) (£m)

Post-tax exceptional items (£m)

Year to 30 April 09

Year to 30 April 08

1.0

(0.6)

0.9

(13.4)

(11.5)

(2.5)

(18.7)

0.8

(0.4)

Nil

(13.0)

(13.0)

(4.3)

113.9

Change

25.0%

50.0%

-

3.1%

(11.5)%

(41.9)%

(116.4)%


Finance charges and credit ratios

Net Group finance charges* (£m)

EBITDA from continuing operations and joint ventures* (£m)

Year-end net debt (£m)

Net Debt/EBITDA*

EBITDA*/Net finance charges

Year to 30 April 09

Year to 30 April 08

(31.4)

299.9

(340.1)

1.1x

9.6x

(30.9)

271.9

(319.7)

1.2x

8.8x

Change

1.6%

10.3%

6.4%

(0.1)x

0.8x

* excluding exceptional items


Liquidity Excellent liquidity

£473.5m undrawn committed core bank facilities available for cash drawings at 30 April 2009

Sufficient bank facilities to refinance US$ bond (US$293.1m) in November 2009

Key refinancing required by 2012

Other undrawn available credit lines – e.g. asset finance

Operating well within bank covenants

Cash generative

Upward pressure on debt pricing

Monitoring all financing alternatives, including debt capital markets


Taxation

Excluding intangible asset expenses and exceptional itemsIntangible asset expensesExceptional items

Joint venture taxation for reporting purposes

Reported in income statement

Cash tax paid (net)

Pre-taxProfit£m

Tax£m

207.8(13.4)(12.2)182.2(11.4)

170.8

(44.4)2.2

(6.5)(48.7)11.4

(37.3)

(3.7)

Rate%

21.4%16.4%

n/a26.7%

n/a

21.8%

Year to 30 April 2009


EBITDA from Group companies before exceptional itemsLoss on disposal and impairment of plant and equipmentEquity-settled share based paymentDividends from joint venturesMovement in retirement benefit obligationsWorking capital movementsExceptional restructuring costsNet interest paidTax paidNet cash from operating activitiesNet capital expenditure including new hire purchase and finance leasesAcquisitions of businesses, intangibles and investmentsToken sales and redemptions/othersCash generationForeign exchangeEquity dividendsShare capital movementsIncrease in net debtOpening net debtClosing net debt

Year to 30 April

2009£m

264.62.23.1

44.9(32.0)43.7

(12.0)(33.0)

(3.7)277.8

(170.7)(26.2)

(1.5)79.4

(58.3)(41.8)

0.3(20.4)

(319.7)(340.1)

Movement in net debt


71.517.1

Nil88.6

113.233.436.9

183.5

(9.3)(3.4)(0.1)

(12.8)

103.930.036.8

170.7

41.716.336.994.9

Capital expenditure

UK BusNorth AmericaUK Rail

New hire purchase

and financeleases

£m

Impact ofcapex onnet debt

£m

Disposalproceeds**

£m

Net2008/9Actual

£m

Cash spent on capex*

£m

* Excludes capitalised intangible assets and assets acquired through business combinations

** Excludes proceeds from selling businesses


Fuel Hedging

2008/9 - average effective price (per litre)

2009/10 - % of forecast consumption hedged

- average hedge price (per litre)





Market price (per litre)

UK BusNorth

America

32.0p

96%

46.1p

90%

35.9p

10%

37.2p

30.2p

63.1 cents

76%

82.2 cents

75%

50.5 cents

10%

54.2 cents

48.6 cents

UK Rail

33.4p

75%

31.3p

75%

31.3p

-

-

30.2p

Market prices are as at 19 June 2009

Prices exclude premia payable on fuel caps, delivery margins, duty, taxes and Bus Services Operators Grant


(172.9)

74.7

(98.2)

(32.8)

(5.4)

(136.4)

(3.5)

1.2

(20.0)

(158.7)

(191.8)

75.5

(116.3)

(42.6)

(5.0)

(163.9)

(7.9)

3.1

(21.7)

(190.4)

Fuel costsLatest forecasts

UK Bus, excluding BSOG*

UK Bus, BSOG*

UK Bus, including BSOG*

North America

South Western Trains

2008/9 UK Bus Acquisitions+, excluding BSOG*

2008/9 UK Bus Acquisitions+, BSOG*

East Midlands Trains

Total

2008/09Actual

£m

2009/10Forecast

£m

Fuel costs

(150.1)

68.5

(81.6)

(25.1)

(4.3)

(111.0)

-

-

(8.9)

(119.9)

2007/08Actual

£m

Market prices are as at 19 June 2009, when Brent Crude was US$70 per barrel

Forecast costs for the unhedged element of fuel are based on 19 June 2009 spot prices

Above costs include delivery margins, duty and taxes (duty forecast at current levels) but exclude 3rd party fuel costs

* Bus Services Operators Grant (“BSOG”) represents a rebate of an element of fuel duty costs in respect of certain UK Bus services+ Bullocks, Highland (Rapsons), Cavendish, Preston Bus, Eastbourne

189.0

-

189.0

76.6

12.0

277.6

7.8

-

51.1

336.5

2009/10ForecastLitres m

Volumes

(176.5)

75.5

(101.0)

(31.2)

(5.0)

(137.2)

(7.3)

3.1

(21.7)

(163.1)

2010/11Forecast

£m

(171.4)

75.5

(95.9)

(30.8)

(5.0)

(131.7)

(7.0)

3.1

(21.1)

(156.7)

2011/12Forecast

£m


Brian SouterBrian SouterChief ExecutiveChief Executive


UK Rail

Weakening demand, but strong balance sheet to manage business cycle

Strong operational performance Delivery on franchise commitments to passengers and

Government Decisive management action to minimise risk and maximise

opportunities Cost reduction programme Revenue generation: new timetables, new stations, gating, off-

peak travel


North America

Flexible business model

Weaker leisure demand

megabus.com ahead of expectations

Twin America joint venture


UK Bus

Strong performance and flexible business model

Successful and growing provincial bus operations

Around 19% of UK bus market outside London

Not index-related (eg, regulated London bus operators)

Stagecoach differentiation in market

Above-industry growth rates

Successful discount ticketing strategy

Bolt-on acquisitions and continued investment

Successful partnerships


0

20000

40000

60000

80000

100000

120000

Pas

sen

ger

s 00

0 p

a

Stagecoach Manchester

Adults

Concess

Total

Growing the market for bus travel

Passenger volumes up 27% since 2003/04 Discount ticketing strategy: weekly travel £11 £40m vehicle investment in past four years


Growing online sales

Investment in UK and North America online sales sites

Buymymegarider.com, Buymyunirider.com

Megabus.com

Coachusa.com

Total online bus and rail sales increasing

Total bus internet sales in UK and North America up 62% compared to 2007/08

SWT and EMT up 23% compared to 2007/08

Total Group online sales now around £110m p.a.


Current trading and outlook

UK Bus performing strongly

Flexibility to respond if revenue weakens

Challenging year at UK Rail

Weak demand and significant step up in premium payments

Manageable through action plans and strong Group balance sheet

Current trading in line with management expectations


Fundamentals

Business prepared to weather economic environment

Stagecoach track record of organic growth and product development

High-quality operational performance and good cashflows

Public transport central to Government action on congestion and climate change



24 June 2009 24 June 2009


Appendices


UK Bus Revenue

Like-for-like

Acquisitions:Highland excluding Inverness depot (acquired May 2008)Inverness depot (integrated Highland and Bluebird business)Fens (acquired March 2008)Rennies (acquired March 2008)Preston Transport (acquired January 2009)Eastbourne (acquired December 2008)Cavendish (acquired January 2009)

Disposals:Darlington (disposed August 2007)Huddersfield (disposed April 2008)

Start-ups:Rail replacement (started May 2008)

Total reported

Change%

8.9%

11.7%

Year to30 April 2009

£m


£m

799.0

9.38.64.52.42.31.70.2

--

2.8

830.8

733.4

-6.10.40.3---

1.02.7

-

743.9

Assets of Bullocks integrated with existing operations and now not distinguishable from like-for-like revenue


Scheduled service/line run/commuter/casinoCharterSightseeing & tourSchool bus & contractLike-for-like revenue (excluding Megabus)“Disposed” & closed operations and Canada fxTotal North America (excluding Megabus)MegabusTotal North America

Year to 30 April

2009US$m


US$m

199.295.820.891.6

407.456.3

463.735.8

499.5

200.192.219.887.2

399.375.0

474.311.3

485.6

% Growth

(0.4)%3.9%5.1%5.1%2.0%

(2.2)%

2.9%

North America revenue breakdown


Divisional income statementsYear ended 30 April 2009

Revenue

Rail franchise 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

UK Bus £m

North America

£m

830.8

Nil

14.0

(417.8)

(100.5)

(32.8)

(50.4)

Nil

(11.1)

Nil

Nil

Nil

(35.8)

(70.8)

125.6

297.7

Nil

3.6

(129.0)

(32.8)

(20.1)

(19.5)

Nil

(5.0)

Nil

Nil

Nil

(19.7)

(50.0)

25.2

UK Rail£m

977.7

(66.4)

68.4

(264.5)

(31.9)

(5.5)

(2.1)

(185.3)

(7.2)

(238.1)

(41.1)

(24.5)

(36.7)

(87.1)

55.7

Virgin Rail Group (100%)

£m

657.7

15.3

105.9

(141.2)

(9.2)

(4.3)

(0.4)

(211.9)

Nil

(173.4)

(28.0)

(41.2)

Nil

(82.1)

87.2


Rail subsidy/(premium) profiles

2009

2010

2011

2012

2013

2014

2015

2016

2017

South Western

£m

East Midlands

£m

21.1

(42.0)

(93.2)

(149.7)

(218.6)

(286.8)

(355.1)

(429.0)

(422.6)

121.7

98.5

62.2

19.6

(11.2)

(30.2)

(85.7)

-

-

West Coast£m

288.1

279.5

225.5

191.1

-

-

-

-

-

Year to 31 March:

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.

The amounts shown above do not reflect charges arising from changes to Network Rail charges for Control Period 4, which began on 1 April 2009, because these charges are not yet finalised.


Exchange rates

US$C$

Closing rate Average rate

1.98061.9947

2.00722.0525

April 2008

Closing rate Average rate

1.48181.7605

1.67801.8955

April 2009



24 June 2009 24 June 2009

annual results year ended 30 april 2009 24 june 2009

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