credit suisse conference 19 november 2007
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Stagecoach Group Driving growth through innovation and service. Credit Suisse Conference 19 November 2007. Brian Souter Chief Executive. Agenda. Business overview Strategy Stagecoach equity proposition The Stagecoach differential Summary Questions & Answers. Business overview. - PowerPoint PPT PresentationTRANSCRIPT
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Credit Suisse Conference19 November 2007
Stagecoach Group Driving growth through innovation and service
Brian SouterChief Executive
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Agenda
1. Business overview
2. Strategy
3. Stagecoach equity proposition
4. The Stagecoach differential
5. Summary
6. Questions & Answers
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• One of the world’s leading public transport groups
• Three key operating divisions with strong market positions
• Annualised turnover in excess of £1.7bn
• Annual EBITDA in excess of £200m
Business overview
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Group Structure
1 0 0 d e p o ts ac ro ss U K7 ,0 00 ve h ic les
1 8 ,10 0 e m p lo ye es
U K B us
U S A a n d C an a da3 ,0 00 ve h ic les
4 ,8 00 em plo ye es
N o rth A m e rica
S o u th W es te rn , S up e rtra m , M e tro link1 ,4 00 ve hc le s, 4 ,20 0 e m plo ye es
p lu s 49 % eq u ity s ta ke in V irg in R a il G ro upp lu s E a st M id la n d fro m N ove m b e r 2 0 07
R a il
S ta ge coa ch G ro u p p lc*
*Full listing on the London Stock Exchange Market capitalisation approximately £1.75 billion
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UK Bus• 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• 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 south-west 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• Britain’s biggest tram operator
Sheffield Supertram Manchester Metrolink Operations and maintenance contracts
• 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:
Scheduled service/line run/commuter (New York, Chicago)
Sightseeing (mainly New York, plus Chicago and Montreal)
School bus (Wisconsin) Tour and charter
• Geography: 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)
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Group Strategy
Delivering shareholder value through:
• Organic revenue growth in all key divisions
• New product development (eg budget inter-city coach service megabus.com)
• Complementary bolt-on acquisitions
• Targeted opportunities and maximising contract value in franchised UK rail market
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Stagecoach equity proposition
• Strong growth track-record
• Cash-generative business
• Predictable earnings
• Alignment of management and shareholders
• Strong capital discipline
• Excellent potential for further growth
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Excellent potential for further growth - 1• Supportive environment for public transport
• Rising road congestion
• Climate change agenda
• Pro-public transport Govt policy
concessionary travel schemes
road pricing
‘green’ taxation
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Excellent potential for further growth - 2• Stagecoach expertise
• Entrepreneurial and performance-focused
• Innovation
new product development
marketing
• Experienced management
• Strong stakeholder partnerships
• Good operational delivery driving financial results
• Delivering above–industry growth
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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
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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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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
• Strong portfolio of businesses
• Excellent organic growth delivered and continuing
• Rail division expanded through franchise wins
• Clear strategy for further success
• Stagecoach expertise
• Supportive environment for public transport sector