interim results 2003 interim results 10 december 2003
TRANSCRIPT
Interim Results 2003Interim Results 2003
Interim ResultsInterim Results10 December 200310 December 2003
2 Interim Results 2003Interim Results 2003
Robert SpeirsChairman
3 Interim Results 2003Interim Results 2003
Highlights
Delivery of strategic objectives in 6 months to 31 October 2003 New South West Trains and Island Line franchises agreed Coach USA restructuring largely completed Innovative growth ideas in UK Bus introduced
Strong trading performance across the Group Disposal of Citybus Net debt down from £560.0m to £210.9m Interim dividend up 12.5% to 0.9p per share
4 Interim Results 2003Interim Results 2003
Martin GriffithsFinance Director
5 Interim Results 2003Interim Results 2003
Financial Performance
Strong financial results Operating profit growth in all four retained divisions Operating margin improvement
Actively managing cost pressures Revenue growth initiatives to offset cost increases Reduction in central overhead Risk sharing with Strategic Rail Authority Asset utilisation
Targeting investment in growth areas
6 Interim Results 2003Interim Results 2003
Turnover
Total operating profit/(loss)*
- pre exceptionals & goodwill*(after restructuring costs)
Profit/(loss) before tax
- pre exceptionals & goodwill
Free cash flow **
Adjusted EPS
Dividend per share
October 2003£m
October2002£m
963.8
67.3
76.9
44.8
60.3
100.3
3.2p
0.9p
1,067.7
(512.4)
86.9
(524.1)
75.2
100.2
4.4p
0.8p
Financial Highlights
* After restructuring costs of £4.1m (2002 - £2.9m)** Free cash flow comprises net cash inflow from operating activities, dividends from associates,
net cash inflow/(outflow) from returns on investments and servicing of finance, and taxation
7 Interim Results 2003Interim Results 2003
2002 PBTOperating profit of retained businesses- UK Bus- New Zealand- Coach USA- Rail – underlyingOverheadsReduction in underlying finance chargesExceptionals & goodwill
Citybus disposalRail – non-recurring liquidated damagesRestructuringJVs & associatesGain on repurchase of bonds in 2002 2003 PBT
Profit Reconciliation
(599.3)
--
575.0-- -8.8
(15.5) - -
- - - (15.5)
(524.1)
3.20.5
575.19.80.3
10.18.8
83.7(11.6)(7.2)(1.2)(3.9)
(15.0)44.8
75.2
3.20.50.19.80.3
10.1 -
99.2(11.6) (7.2)(1.2)(3.9)
(15.0)60.3
Reported£m
Exceptionals & Goodwill
£m
Pre goodwill &
exceptionals£m
8 Interim Results 2003Interim Results 2003
Margin ImprovementRetained Divisions
UK BusNew ZealandCoach USARail
Turnover£m
Op profit£m
293.821.5
334.2206.0855.5
31.14.4
15.818.970.2
8.2%
2002
UK BusNew ZealandCoach USARail
Turnover£m
Op profit£m
317.926.4
234.0216.7795.0
34.34.9
15.921.576.6
9.6%
2003
8.2% 9.6%
2002 2003Operating margin excl goodwill & exceptionals
Six months to 31 Oct
1.4%
9 Interim Results 2003Interim Results 2003
EBITDA
UK Bus (£2.2m lower due to impact of operating leases)
Coach USAOverseas Bus - New Zealand - Discontinued RailVRGthetrainlineRoad KingOthers
Overheads & restructuringEBITDA before exceptionals
2003£m
2002£m
54.025.3
6.8 3.5
22.55.0
(1.7)5.0
(0.7)119.7
(8.3)111.4
50.437.1
5.9 20.6 20.2
7.7(1.4)5.8
(0.6)145.7
(7.2)138.5
10 Interim Results 2003Interim Results 2003
2003£m
2002£m
(5.1)(1.1)0.3Nil
(5.9)
NilNilNil
(575.0)(575.0)
- Loss on sale of Coach USA divisions- Loss on sale of Chongqing investment- Gain on sale of Citybus- Coach USA exceptional items
Redundancy/restructuring costs*
£4.1m (2002 - £2.9m)
Exceptional Items
Exceptionals and Restructuring Costs
* Charged against operating profits
11 Interim Results 2003Interim Results 2003
Opening net debt
Cash flows from operations
Net interest received
Dividends paid
Net capital expenditure and new hire purchase/finance leases
Acquisition of businesses and net debt assumed
Sale of businesses and net debt eliminated
Foreign exchange, tax and other movements
Closing net debt
£m
(560.0)
111.4
1.0
(23.8)
(35.5)
(6.5)
305.7
(3.2)
(210.9)
Movement in Net Debt
12 Interim Results 2003Interim Results 2003
UK Bus Trading Results
Turnover growth 8.2% to £317.9m
Underlying passenger growth outwith London 1.3%
Strong contribution from London companies
19.8% revenue growth
Improved operating margin
10.8% versus 10.6% in 2002
11.3% versus 10.7% excluding operating lease impact
13 Interim Results 2003Interim Results 2003
UK Bus Profit Analysis
TurnoverOperating profit
Add back increased operating lease costsDeduct saving in depreciation arising fromoperating leases
Add back Megabus & Taxibus R&DExclude Devon
Adjusted margin
October 2002£m
317.934.3*10.8%
2.6
(0.9)36.011.3%0.3
(0.4) 35.9
11.3%
293.831.110.6%
0.4
(0.2)31.310.7%
-(1.6)29.7
10.1%
October 2003£m
*after £3.5m increase in pensions/NI costs and £3.3m increase in insurance costs
14 Interim Results 2003Interim Results 2003
Coach USA Trading Results
Turnover £234.0m (2002- £334.2m)
3.1% like for like revenue decline*
Operating profit** £15.9m (2002 - £15.8m)
strong cost control
profit levels maintained on reduced revenue Operating margin up from 4.7% to 6.8%
* Like for like revenue decline is measured as the change in revenue excluding the impact of acquisitions, disposals and foreign exchange** Pre exceptional items and goodwill amortisation throughout presentation
15 Interim Results 2003Interim Results 2003
Coach USA Turnover Breakdown
Residual businesses- North East- North Central- Canada
DiscontinuedRemaining taxi operations (to be sold)
October 2003
113.7 57.5 22.5
193.7156.0 32.3
382.0
Turnover$m
October 2002
115.7 59.7 23.1
198.5276.4 34.9
509.8
Turnover$m
16 Interim Results 2003Interim Results 2003
New Zealand Trading Results
Turnover £26.4m (2002 - £21.5m)
Underlying 6.1% revenue growth (excluding currency movements)
Operating profit £4.9m (2002 - £4.4m)
Operating margin 18.6% (2002 – 20.5%)
Passenger volumes up 5.5%
17 Interim Results 2003Interim Results 2003
Rail Trading Results
Rail Subsidiaries
Turnover £216.7m (2002 - £206.0m)
Operating profit £21.5m (2002 - £18.9m*)
Operating margin 9.9% (2002 – 9.2%)
Passenger volumes up 3.1% at SWT
Sustained improvement in SWT-caused delay minutes
* Included £7.2m of non-recurring liquidated damages
18 Interim Results 2003Interim Results 2003
Rail Profit Analysis
Operating Profit per Bid
Passenger income
Net Sch 7/Sch 8
EC4T
Other Costs
Revenue/Profit share to the SRA
Actual SWT operating profit
Other
Total Rail operating profit
October 2003£m
12.7
8.8
1.7
5.2
5.3
(11.7)
22.0
(0.5)
21.5
19 Interim Results 2003Interim Results 2003
Joint Ventures & Associates
Virgin Rail Group
Share of revenue £149.5m (2002 - £140.6m)
Share of operating profit £5.0m (2002 – £7.7m)
thetrainline
Share of revenue £5.4m (2002 - £5.1m)
Share of operating loss £1.7m (2002 - £1.4m)
Road King
Share of operating profit £5.0m (2002 - £5.8m)
20 Interim Results 2003Interim Results 2003
Completed in six months to 31 Oct 2003:- Coach USA- Citybus- Chongqing associates
Non-core:- Road King- Remaining US taxi businesses
Net cash proceeds
£m
(Loss)/gain before tax
£m
133.0128.7
0.9262.6
(5.1)0.3
(1.1)(5.9)
Disposals
Reduction in net debt
£m
133.0171.8
0.9305.7
21 Interim Results 2003Interim Results 2003
Balance Sheet & Financing
Net debt down to £210.9m (April 2003 - £560.0m)
EBITDA*/Interest cover 6.7 times
Progressive dividend policy
Evaluate optimum balance sheet structure in conjunction with 2004 re-financing of Eurobond and bank facilities
* pre exceptionals
22 Interim Results 2003Interim Results 2003
Current Trading & Outlook
Maintaining Coach USA profit on lower revenue base
H1 is seasonally stronger
Sustainable SWT profits at upper end of original expectations
Operating profit growth in UK Bus and New Zealand
H2 to date in line with expectations
23 Interim Results 2003Interim Results 2003
Brian SouterChief Executive
24 Interim Results 2003Interim Results 2003
Group Strategy (1)
• Objectives in the last 12 months STATUS
– Seek new SWT franchise Done
– Restructure Coach USA Largely complete
– Seek substantial improvement in SWT’s own train performance Ongoing
– Get the basics right at UK Bus Ongoing
• Fares
• Driver recruitment
• Engineering
• Core networks
25 Interim Results 2003Interim Results 2003
Group Strategy (2)Where next for Stagecoach?• UK Bus
– Continue to get the basics right– Research and development– Challenge is the delivery of organic growth
• Rail– Priority to renegotiate XC and WC franchises– Other franchise opportunities
• Integrated Kent• Manchester Metrolink• UK Intercity
• North America– Deliver profitable growth– Small bolt on acquisitions– Fleet improvement
• New Zealand– Sustain revenue and profit growth
26 Interim Results 2003Interim Results 2003
Summary
Delivery of strategic objectives Strong trading performance across the Group Focused management Strengthened balance sheet Increased dividend Current trading in line with expectations
Interim Results 2003Interim Results 2003
Interim ResultsInterim Results10 December 200310 December 2003
28 Interim Results 2003Interim Results 2003
Appendices
29 Interim Results 2003Interim Results 2003
UK Bus Revenue Development
2002 TurnoverPassenger volumes outside LondonLondon contract changesFares/tender prices2003 Turnover
London£m
Provincial£m
69.2-
11.72.0
82.9
224.62.9-7.5
235.0
TotalUK Bus
£m
293.82.9
11.79.5
317.9
30 Interim Results 2003Interim Results 2003
82.9
235.0
317.9
9.0%
11.4%
10.8%
7.5
26.8
34.3
69.2
224.6
293.8
9.8%
10.8%
10.6%
6.8
24.3
31.1
UK Bus - London/Other
October 2003
Operating Operating
Turnover Profit Margin
£m £m %London
Other
October 2002
OperatingOperating
Turnover Profit Margin
£m £m %
31 Interim Results 2003Interim Results 2003
Rail Revenue Development
2002 Turnover
SWT Passenger volumes
SWT Fares
Other
2003 Turnover
£m %
206.0
6.3
4.1
0.3
216.7
3.1%
2.0%
0.1%
5.2%
32 Interim Results 2003Interim Results 2003
Overseas Bus Revenue Development
2002 TurnoverDisposal of Citybus and AustraliaCurrency movementsVolumesFares2003 Turnover
Citybus£m
New Zealand
£m
70.3(45.5)
(4.5)(2.5)
-17.8
21.5-3.41.30.2
26.4
Other£m
0.5(0.5)
----
Total£m
92.3(46.0)
(1.1)(1.2)0.2
44.2
33 Interim Results 2003Interim Results 2003
Overseas BusSegmental results
70.3
21.5
0.5
92.3
17.9%
20.5%
0.0%
18.4%
12.6
4.4
-
17.0
17.8
26.4
-
44.2
5.6%
18.6%
0.0%
13.3%
1.0
4.9
-
5.9
October 2003
Operating Operating
Turnover Profit Margin
£m £m %Citybus*
New Zealand
Other
Total
October 2002
OperatingOperating
Turnover Profit Margin
£m £m %
* Disposal completed June 2003
34 Interim Results 2003Interim Results 2003
Coach USA Revenue Development
2002 Turnover
Disposals
Currency movement
Underlying decline
2003 Turnover
£m %
334.2
(76.2)
(16.4)
(7.6)
234.0
(22.8)%
(4.9)%
(2.3)%
(30.0)%
35 Interim Results 2003Interim Results 2003
Gross debt & related derivativesCash
Joint ventures & associatesNon-utilisation/commitment feesAmortisation of bond issue costs/bank chargesInsurance letters of creditDiscount on insurance provisionsOther
Finance charges
£m
AnnualEffective rate
%
16.9(3.0)13.9(0.6)0.30.40.81.50.3
16.6
5.6%2.5%7.5%
Finance Charges
Average balance*
£m
607.0 (237.0)
370.0
*Average of month end debt/cash balances
36 Interim Results 2003Interim Results 2003
Interest/Debt Ratios
Finance charges* (net)
EBITDA pre-exceptionals
EBITDA pre-exceptionals/Finance charges
2003£m
2002£m
16.6
111.4
6.7 times
11.7*
138.5
11.8 times
* 2002 includes £15.0m gain on repurchase of bonds
37 Interim Results 2003Interim Results 2003
Taxation
Pre-goodwill and exceptionalsExceptional itemsGoodwill amortisation
Pre-tax£m
Tax£m
60.3(5.9)(9.6)44.8
(17.9)2.00.8
(15.1)
%
29.7%33.9%
8.3%33.7%
2003
38 Interim Results 2003Interim Results 2003
10.9---
10.9
21.99.35.91.1
38.2
(1.8)(0.8)(0.1)
-
(2.7)
20.18.55.81.1
35.5
11.09.35.91.1
27.3
Capital Expenditure
UK BusCoach USAOverseas BusRail
Capex on new hire purchase
£m
Impact ofcapex onnet debt
£m
Disposalproceeds
£mNet£m
Cash spent on
capex £m
39 Interim Results 2003Interim Results 2003
Fuel Hedging
% of group fuel usage hedged
Average hedge price $/barrel*
Average floating price $/barrel*
Variable fuel costs
FY2004 FY2003
100%
$24
$30
c.£40m
63%
$24
$20
c.£50m
FY2002
90%**
$24
$23
c.£53m
* Based on blended comparable crude oil price for the year** 6 months to April 2002
40 Interim Results 2003Interim Results 2003
Exchange Rates
US$HK$NZ$
Closing rate Average rate
1.564512.2017
3.2177
1.525211.8957
3.2177
October 2002
Closing rate Average rate
1.697013.1780
2.7617
1.632412.7120
2.7875
October 2003