1 annual results year ended 30 april 2010 23 june 2010 preliminary results 2010

1

Annual ResultsAnnual ResultsYear ended 30 April 2010Year ended 30 April 2010

23 June 2010 23 June 2010

Preliminary Results 2010

2

Cautionary statement

This document is solely for use in connection with a briefing on Stagecoach Group plc (“the Group”).

This document contains forward-looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries, sectors and markets in which the Group operates. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. No assurances can be given that the forward-looking statements in this presentation will be realised. The forward-looking statements reflect the knowledge and information available at the date of preparation.

This document is not a full record of the presentation because it does not include comments made verbally by Stagecoach Group management or by others.

3

Robert SpeirsRobert Speirs

ChairmanChairman

4

Highlights

Successful management of business through economic cycle

Further revenue growth

Tight cost control

Continued investment

Robust financial position

Adjusted EPS 18.7p (2009: 22.9p)

8.3% increase in full year dividend per share

Positive outlook for 2010/11

5

Martin GriffithsMartin Griffiths

Finance DirectorFinance Director

6

Summary income statement

UK Bus operating profit

North America operating profit

North America joint ventures’ profit after tax

UK Rail operating profit

Virgin Rail Group profit after tax

Restructuring costs, group overheads and other items

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 10

£m

Year to 30 April 09

£m

126.1

9.1

7.6

41.6

19.2

(11.6)

192.0

(30.7)

(27.2)

134.1

(26.3)

107.8

125.6

25.2

0.3

55.7

34.0

(13.0)

227.8

(31.4)

(33.0)

163.4

(29.9)

133.5

Change£m

0.5

(16.1)

7.3

(14.1)

(14.8)

1.4

(35.8)

0.7

5.8

(29.3)

3.6

(25.7)

7

UK Bus

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 10

Year to 30 April 09

875.4

839.5

126.1

14.4%

650.1

314.7

830.8

805.9

125.6

15.1%

653.0

319.2

Change

5.4%

4.2%

0.4%

(0.7)%

(0.4)%

(1.4)%

2009/10 performance Outlook

Robust financial performance despite weak UK economy and some severe weather

Flexible services and cost base Revenue growth: Spring 2009 fare

increases; concessions £28.1m more fuel and pensions costs but

profit maintained

Slowing revenue growth as Spring 2009 fare increases now in base revenue

Relatively modest 2010/11 fare & revenue growth

Significant fuel cost reduction in 2010/11 Fuel costs likely to rise in 2011/12 Well placed for 2010/11 profit growth

8

North America

Revenue – wholly owned (US$m)

Revenue – joint ventures (US$m)

Revenue - total (US$m)

Operating profit – wholly owned (US$m)

Operating profit – joint ventures (US$m)

Operating profit – total (US$m)


Year to 30 April 10

Year to 30 April 09

426.3

64.1

490.4

14.6

12.8

27.4

5.6%

499.5

9.6

509.1

42.3

0.5

42.8

8.4%

Change

(3.7)%

(36.0)%

(2.8)%


Weaker revenue and profit – weak North American economy, some severe weather, and higher fuel costs

Strong growth at megabus.com – full-year profit Positive performance from Twin America

Signs of improving revenue trends but patchy by geography and product type

Significant fuel cost reduction in 2010/11 Fuel costs likely to rise in 2011/12 Evaluating megabus expansion potential 2010/11 profit recovery potential

* Includes US$60.0m for business transferred to Twin America from 31 March 2009

9

UK Rail

Revenue (£m)

Like-for-like revenue, excluding tram (£m)

Operating profit (£m)


Estimated passenger miles – S Western (m)

Estimated passenger miles – E Midlands (m)

Year to 30 April 10

Year to 30 April 09

1,026.7

968.9

41.6

4.1%

3,262.0

1,214.9

977.7

932.4

55.7

5.7%

3,298.4

1,219.6

Change

5.0%

3.9%

(25.3)%

(1.6)%

(1.1)%

(0.4)%

2009/10 performance Outlook Central London employment levels better than

feared Cost reduction programme – over £70m

annualised savings – protected profit Positive resolution of open items with Department

for Transport – e.g. revenue support, smartcards Improved customer satisfaction

Improving revenue trends in recent months East Midlands Trains likely to be loss making in

2010/11 and 2011/12 – revenue support period begins November 2011

South Western Trains revenue support now confirmed from April 2010

Well positioned to deliver another year of good UK Rail profitability in 2010/11

10

Virgin Rail Group

Revenue – 49% share (£m)

Operating profit - 49% share (£m)


Dividends received (£m)

Estimated passenger miles

Year to 30 April 10

Year to 30 April 09

355.3

25.5

7.2%

25.1

3,318.8

322.3

42.7

13.2%

43.9

2,757.4

Change

10.2%

(40.3)%

(6.0)%

(42.8)%

20.4%


Strong revenue growth - January 2009 capacity increases; improved Network Rail performance; investment in marketing

Significantly improved punctuality 90% customer satisfaction

Already benefiting from revenue support Exploring franchise extension and re-

tendering opportunities

11

Rail revenue risk sharing

Target revenue – year to 31 March 2010 (£m)

Actual revenue – year to 31 March 2010 (£m)

Revenue shortfall (£m)

Theoretical revenue support (£m)

Actual revenue support (£m)

South Western

EastMidlands

785.9

703.8

(82.1)

43.7

Nil

303.8

257.3

(46.5)

28.7

Nil

WestCoast

795.6

671.0

(124.6)

77.4

77.4

Revenue support bands

Up to 2% below target revenue – no revenue support Between 2% and 6% below target revenue – 50% revenue support Over 6% below target revenue – 80% revenue support

Notes “Revenue” for this purpose includes items other than reported revenue such as Network Rail performance regime

payments, commissions payable and commissions receivable Target revenue figures include the effects of indexation and other required adjustments Theoretical revenue support shows the amounts that would have been receivable for the year to 31 March 2010 if the train

company were contractually entitled to revenue support

12

Miscellaneous income statement items

Exceptional items include £20.5m of ineffective interest rate derivatives arising in connection with December 2009 bond issue

Citylink joint venture (£m)

Group overheads (£m)

Restructuring costs (non-exceptional) (£m)

Intangible asset expenses (£m)

Post-tax exceptional items (£m)

Year to 30 April 10

Year to 30 April 09

1.2

(11.6)

(1.2)

(11.6)

(11.1)

(13.0)

1.0

(11.5)

(2.5)

(13.0)

(13.4)

(18.7)

Change

0.2

(0.1)

1.3

1.4

2.3

5.7

13

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 10

Year to 30 April 09

(30.7)

283.9

(296.7)

1.0x

9.2x

(31.4)

300.1

(340.1)

1.1x

9.6x

Change

(2.2)%

(5.4)%

(12.8)%

(0.1)x

(0.4)x

* excluding exceptional items

14

Taxation

Excluding intangible asset expenses and exceptional itemsIntangible asset expensesExceptional items

Reclassify joint venture taxation for reporting purposes

Reported in income statement

Cash tax paid (net)

Pre-taxProfit£m

Tax£m

168.7(11.1)(24.3)133.3

(7.4)

125.9

(34.6)1.77.4

(25.5)7.4

(18.1)

(0.7)

Rate%

20.5%15.3%30.5%19.1%

n/a

14.4%

Year to 30 April 2010

15

EBITDA from Group companies before exceptional itemsOperating exceptional itemsLoss on disposal of plant and equipmentEquity-settled share based paymentDividends from joint venturesMovement in retirement benefit obligationsWorking capital movementsNet interest paidTax paidNet cash from operating activitiesNet capital expenditure including new hire purchase and finance leasesAcquisitions /disposals of businesses, intangibles and investmentsToken sales and redemptions/othersCash generationForeign exchange/income statement movementsEquity dividendsShare capital movementsDecrease in net debtOpening net debtClosing net debt

Year to 30 April

2010£m

255.9(1.8)2.06.3

35.7(17.2)(10.7)(53.1)

(0.7)216.4

(101.9)(1.4)(0.2)

112.96.3

(76.7)0.9

43.4(340.1)(296.7)

Movement in net debt

16

(63.8)(1.9)

Nil(65.7)

(96.3)(12.5)(46.1)

(154.9)

4.1 Nil

48.953.0

(92.2)(12.5)

2.8(101.9)

(32.5)(10.6)(46.1)(89.2)

Capital expenditure

UK BusNorth AmericaUK Rail

New hire purchase

and financeleases

£m

Impact ofcapex onnet debt

£m

Disposalproceeds**

£m

Net2009/10Actual

£m

Cash spent on capex*

£m

* Excludes capitalised intangible assets and assets acquired through business combinations

** Excludes proceeds from selling businesses

17

Funding

Net Debt (£m)

Undrawn, committed bank facilities (£m)

Average debt maturity (years)

Net Debt / pre-exceptional EBITDA

Pre-exceptional EBITDA / Finance charges

30 April 10 30 April 09

296.7

345.9

6.3

1.0x

9.2x

340.1

508.0

2.3

1.1x

9.6x

Change

(12.8)%

(31.9)%

4.0

(0.1)x

(0.4)x


Robust financial position Debt maturity extended Reliance on bank debt reduced £400m 5.75% bonds issued, due Dec 2016 c.£180m new / extended bonding facilities £285m facilities cancelled by Group

Commitment to investment grade credit rating

Re-financing of bank facilities expiring 2012 Investment through the economic cycle Capital discipline

18

Robust funding & cash conversion

Net debt/EBITDA

0.3

1.0

0.7

(0.8)

1.2

1.1

1.0

Track record of relatively low leverage

Year

2003/4

2004/5

2005/6

2006/7

2007/8

2008/9

2009/10

Net cash flows from operating activities after tax

Profit after tax

Exclude:

Depreciation

Amortisation

Non-cash net gains on disposals of businesses and fixed assets

Profit after tax excluding significant non-cash items

Conversion ratio

5 years to 30 Apr 10

£m

1,155.5

887.0

361.2

72.7

(145.0)

1,175.9

98%

Strong conversion of profits to cash

Rating

BBB-

BBB

Baa2

Investment grade credit ratings of new bonds

Agency

S&P

Fitch

Moody’s

19

Pensions

UK Bus/CentralNorth AmericaUK Rail

22.01.7

21.1*44.8

2010Pensionexpense

£m

2009Pension expense

£m

2010Cash

contributions £m

15.31.0

12.428.7

33.8 1.0 27.2* 62.0

Post-tax deficit of £145.7m (2009: £57.7m)

Accounting value of pension assets, liabilities and costs will continue to vary with market fluctuations and assumptions

Rail – risks mitigated with obligations limited to contributions payable over duration of franchises

Bus – schemes closed to new entrants and contributions have stabilised

2009Cash

contributions £m

37.31.0

22.460.7

* Includes £5.7m increase from salary sacrifice

20

Summary

Results significantly ahead of original expectations

Positive management action underpins profitability

Strong financial position and reduced leverage

Track record of strong cash conversion

Positive outlook for 2010/11

Encouraging start to the new financial year

21

Brian SouterBrian SouterChief ExecutiveChief Executive

22

The Stagecoach difference

Comparative fares data extracted from TAS National Fares Survey 2009. The tables compare urban single fare levels by bus operator ownership.

23

The Stagecoach difference

Operational performance Customer service

Figures used refer to the measure of train punctuality – also known as PPM (publicperformance measure) – which is commonly used throughout Europe. For longdistance operators, such as East Midlands Trains, this shows the percentageof trains arriving within ten minutes of timetabled arrival at final destination.London and south east operators (including South Western Trains), and regionaloperators show the percentage arriving within five minutes of the timetabledarrival. data covers the period 3 May 2009 to 1 May 2010. National Rail averageis for all franchised train operating companies.

Data extracted from National Passenger Survey, Spring Wave 2010. Percentagesare for overall satisfaction The National Passenger Survey (NPS) is conductedtwice a year from a representative sample of passenger journeys across the UK. Itsurveys passengers’ overall satisfaction and satisfaction with 30 individual aspectsof service for each individual train operating company (TOC). Passenger ratingsare totalled for all TOCs across the country to provide a National Rail average.

24

Growing the megabus brand - 1

2003: first pilot routes in UK

2006: first routes in North America

2005: megatrain launch; Scottish Citylink JV

2007: UK megabus network in profit

2009: North America megabus network in profit

2009: megabus launched in Canada

megabus.com revenueUK and North America

10

20

30

40

50

60

70

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

£m

25

Growing the megabus brand - 2

42 locations in United States and Canada

50 locations in UK, plus 28 destinations with megatrain.com and 10 on megabusplus.com

UK North America

26

Sector-leading returns

The graph compares the performance of the Stagecoach Group Total Shareholder Return (‘TSR’) (share value movement plus reinvested dividends) over the 5 years to 30 April 2010 compared with that of Arriva, First Group, Go-Ahead, National Express, the FTSE Transport and Leisure All-Share Index, and the FTSE 250 Index.

27

Outlook

Improving trends, consistent with economic recovery UK Bus less sensitive to economic cycle Cautious on bus fares: organic volume growth as

economy recovers Lower fuel costs in 2010/11 with increase in 2011/12 Revenue support at South Western Trains and West

Coast Trains Well placed to increase earnings in 2010/11

28


23 June 2010 23 June 2010

29

Appendices

30

Divisional income statementsYear ended 30 April 2010

Revenue

Rail revenue support

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

875.4

-

-

16.6

(437.5)

(122.2)

(30.9)

(54.8)

-

(11.4)

-

-

-

(35.6)

(73.5)

126.1

266.1

-

-

2.8

(117.8)

(38.7)

(19.4)

(20.1)

-

(6.8)

-

-

-

(19.2)

(37.8)

9.1

UK Rail£m

1,026.7

7.8

(148.7)

67.7

(264.0)

(31.7)

(6.4)

(16.7)

(186.8)

(2.9)

(181.3)

(41.4)

(24.0)

(52.6)

(104.1)

41.6

Virgin Rail Group (100%)

£m

725.1

72.1

(95.1)

43.8

(134.1)

(18.2)

(3.7)

(1.9)

(211.7)

-

(154.8)

(41.6)

(44.0)

(0.7)

(83.1)

52.1

31

UK Bus revenue

Like-for-like

Acquisitions:Highland excluding Inverness depot (acquired May 2008)Inverness depot (integrated Highland and Bluebird business)Preston Bus (acquired January 2009)Eastbourne / Cavendish (acquired December 2008)Islwyn (acquired January 2010)

Start-ups:Rail replacement (started May 2008)

Total reported

Change%

4.2%

5.4%

Year to30 April 2010

£m


£m

839.5

9.38.57.75.90.7

3.8

875.4

805.9

9.38.62.31.9-

2.8

830.8

32

Scheduled service/line run/commuterSchool bus & contractCharterMegabusSightseeing & tourLike-for-like revenue “Disposed” & closed operations and Canada fxTotal North America

Year to 30 April 2010

US$m


US$m

182.986.783.945.119.1

417.78.6

426.3

196.990.491.532.820.7

432.367.2

499.5

% Growth

(7.1)%(4.1)%(8.3)%37.5%(7.7)%(3.4)%

(87.2)%(14.7)%

North America revenue breakdown

33

Rail subsidy/(premium) profiles

2010

2011

2012

2013

2014

2015

2016

2017

South Western

£m

East Midlands

£m

(41.7)

(99.8)

(166.6)

(242.0)

(313.7)

(387.3)

(462.7)

(454.2)

96.9

61.2

17.6

(14.2)

(33.8)

(91.5)

-

-

West Coast£m

(100.6)

(147.2)

(200.2)

-

-

-

-

-

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 for South Western and East Midlands do not reflect changes to subsidy/(premium) amounts arising from changes to Network Rail charges for Control Period 4, which began on 1 April 2009, because these changes are not yet finalised.

34

Fuel Hedging

2009/10 - average effective price (per litre)

2010/11 - % of forecast consumption hedged

- average hedge price (per litre)

2011/12 - % of forecast consumption hedged

- average hedge price (per litre)

Market price (per litre)

UK BusNorth

America

45.4p

98%

36.0p

60%

40.6p

38.9p

76.6 cents

83%

50.5 cents

77%

57.7 cents

54.9 cents

UK Rail

32.5p

77%

31.3p

50%

41.1p

38.4p

Market prices are as at 16 June 2010

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

35

(201.2)

80.0

(121.2)

(38.7)

(5.0)

(21.3)

(186.2)

(184.5)

77.4

(107.1)

(30.7)

(6.2)

(21.5)

(165.5)

Fuel costsLatest forecasts

UK Bus, excluding BSOG*

UK Bus, BSOG*

UK Bus, including BSOG*

North America

South Western Trains

East Midlands Trains

Total

2009/10Actual

£m

2010/11Forecast

£m

Fuel costs

(175.4)

75.9

(99.5)

(32.8)

(5.4)

(20.0)

(157.7)

2008/09Actual

£m

Market prices are as at 16 June 2010, when Brent Crude was US$76 per barrel

Forecast costs for the unhedged element of fuel are based on 16 June 2010 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

193.1

69.1

12.4

49.2

323.8

2010/11ForecastLitres m

Volumes

(195.1)

76.2

(118.9)

(33.4)

(6.2)

(25.6)

(184.1)

2011/12Forecast

£m

36

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.

Gross debt is borrowings as reported on the consolidated balance sheet, adjusted to exclude accrued interest, deferred gains on derivatives and the effect of fair value hedges on the carrying value of borrowings, and to include the effect of foreign exchange derivatives that synthetically convert an element of borrowings from one currency to another.

Net debt (or net funds) is the net of cash and gross debt.

37


23 June 2010 23 June 2010

1 annual results year ended 30 april 2010 23 june 2010 preliminary results 2010

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