interim results 2007 1 interim results 5 th december 2007

1 Interim Results 2007

Interim ResultsInterim Results55thth December 2007 December 2007


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.


Robert SpeirsRobert Speirs

ChairmanChairman


Highlights

Good underlying revenue growth in all core divisions

Interim dividend of 1.35p, up 12.5%

Adjusted earnings per ordinary share up 62.1%

Operating profit growth

Earnings-enhancing return of value in May/June 2007

Strong start to new South Western rail franchise and Manchester Metrolink tram contract

East Midlands rail franchise from November 2007


Martin GriffithsMartin Griffiths

Finance DirectorFinance Director


Financial summary

* Excluding exceptional items and intangible asset expenses

Revenue - continuing operations

Operating profit* - continuing operations

Adjusted earnings per ordinary share*

Basic earnings per ordinary share

Net (debt)/funds

Dividend per ordinary share

31 Oct 07 31 Oct 06

£820.8m

£100.0m

9.4p

9.0p

£(494.7)m

1.35p

£752.1m

£80.7m

5.8p

18.9p

£140.9m

1.20p

Change

9.1%

23.9%

62.1%

(52.4%)

12.5%


Summary income statement

UK Bus operating profit

North America operating profit excl Megabus

Megabus North America operating loss

UK Rail operating profit

Share of joint ventures’ profit after tax

Restructuring and group overheads

Finance charges (net)

Tax

Profit excluding intangibles and exceptionals

Intangibles and exceptionals, net of tax

Reported profit from continuing operations

31 Oct 07£m

31 Oct 06£m

52.5

18.0

(1.1)

25.3

13.2

(7.9)

(15.4)

(15.7)

68.9

(3.1)

65.8

34.1

17.2

(0.5)

31.4

4.4

(5.9)

(3.3)

(18.5)

58.9

15.0

73.9

Change£m

18.4

0.8

(0.6)

(6.1)

8.8

(2.0)

(12.1)

2.8

10.0

(18.1)

(8.1)


UK Bus

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

Continued underlying revenue and volume growth

Stable year-on-year fuel costs

Reduced pension costs

Revenue (£m)

Like-for-like revenue (£m)

Operating profit (£m)

Operating margin

Estimated passenger journeys (m)

Total vehicle miles operated (m)

31 Oct 07 31 Oct 06

367.1

364.5

52.5

14.3%

316.0

157.3

339.6

338.0

34.1

10.0%

304.2

157.4

Change

8.1%

7.8%

54.0%

4.3%

3.9%

(0.1)%


UK Bus - Revenue Maintaining revenue growth momentum

Focus on non-London operations delivering growth

Non-London bus revenue

220.0

240.0

260.0

280.0

300.0

320.0

340.0

360.0

380.0

Oct 2003 Oct 2004 Oct 2005 Oct 2006 Oct 2007

Half-year to 31 October

£m

Newconcessionary fares schemes

3.9% volume growth


UK Bus – Operating Profit Strong UK Bus profit progression

c. £270m for London bus sale in 2006/07

0.010.0

20.0

30.0

40.0

50.0

60.0

£m

Oct2003

Oct2004

Oct2005

Oct2006

Oct2007

Half-year to 31 October

UK Bus operating profit

Other

London


North America (excluding Megabus)

Further margin improvement from optimising asset deployment

10% annualised operating margin targeted by 30 April 2009 (12 months to 31 Oct 07: 8.7%)

Reduction in dedicated charter fleet

Some signs of economic weakness resulting in a reduced rate of revenue growth

Revenue (US$m)

Like-for-like revenue (US$m)

Operating profit (US$m)

Operating margin

31 Oct 07 31 Oct 06

258.9

255.6

36.2

14.0%

251.3

247.0

32.2

12.8%

Change

3.0%

3.5%

12.4%

1.2%


Scheduled service/line run/commuterSightseeing & tourCharterSchool bus & contractLike-for-like revenue excl MegabusClosed operations and foreign exchange movementsTotal North America excl. MegabusMegabusTotal North America

31 Oct 07US$m

31 Oct 06US$m

99.062.553.440.7

255.6 3.3

258.94.8

263.7

93.955.953.343.9

247.0 4.3

251.32.2

253.5

% Growth

5.4%11.8%

0.2%(7.3)%3.5%

(23.3)%3.0%

118.2%4.0%

North America revenue breakdown


UK Rail (wholly-owned)

Strong start to new South Western franchise

South Western revenue growth 15.3%

Timing of revenue initiatives may result in profit variability

Manchester Metrolink from July 2007

East Midlands from November 2007

Revenue (£m)

Like-for-like revenue (£m)

Operating profit (£m)

Operating margin

South Western estimated passenger miles (000’s)

31 Oct 07 31 Oct 06

322.7

318.8

25.3

7.8%

1,619.0

276.8

276.8

31.4

11.3%

1,513.1

Change

16.6%

15.2%

(19.4)%

(3.5)%

7.0%


Virgin Rail Group

Re-negotiated West Coast franchise performing well

Winning market share from airlines

Network expansion - 21 Super Voyager Trains

CrossCountry franchise ended November 2007

Revenue - 49% share (£m)

- West Coast

Operating profit - 49% share (£m)

Operating margin

Dividends received (£m)

Estimated Passenger miles (000’s) - West Coast

31 Oct 07 31 Oct 06

225.8

149.1

16.3

7.2%

11.0

1,284.7

202.4

131.3

3.9

1.9%

7.7

1,172.8

Change

11.6%

13.6%

317.9%

5.3%

42.9%

9.5%


Scottish Citylink/Megabus JV

JV has delivered significant passenger benefits

Better value-for-money

More sensible co-ordination of routes, timetables, etc.

More services

Strong support from passengers, politicians and other stakeholders

Resolution of Competition Commission issues

Revenue - 35% share (£m)

Operating profit - 35% share (£m)

Operating margin

31 Oct 07 31 Oct 06

4.8

0.9

18.8%

4.3

1.1

25.6%

Change

11.6%

(18.2)%

(6.8)%


Miscellaneous income statement items

Intangible asset expenses (£m)

Group overheads (£m)

Restructuring costs (£m)

Pre-tax exceptional net gains (£m)

31 Oct 07 31 Oct 06

(6.2)

(6.2)

(1.7)

2.0

(7.5)

(5.2)

(0.7)

155.9

Change

17.3%

(19.2)%

(142.9)%

(98.7)%

£2.0m gain on sale of Darlington bus operations

Prior year exceptional gains include London bus sale and past service pensions credit


Finance charges and credit ratios

Net finance charges (£m)

EBITDA from continuing operations and joint ventures excl exceptional items (£m)

Ratio of EBITDA from continuing operations and joint ventures excl exceptional items to net finance charges

31 Oct 07 31 Oct 06

15.4

135.1

8.8 times

3.3

113.5

34.4 times

Efficient capital structure

Good credit ratios


Liquidity & interest rate risk

31 October 2007 net debt £494.7m

£329.2m

66.5%

Fixed Rate at 6.0% blended*

£165.5m

33.5%

Floating Rate

* Taking account of interest rate derivatives and amortisation of deferred gains on early settlement of derivatives (cash rate 7.3%)

Excellent liquidity

Over £280m of undrawn bank facilities (through to 2012)

Over £100m of other undrawn available credit lines

Cash generative


Taxation

Pre-tax profit excluding intangible asset expenses and exceptional items- Before joint ventures- Joint ventures

Intangible asset expensesExceptional items

Joint venture taxReported in income statement

Cash tax paid (net)

Pre-taxProfit£m

Tax£m

71.418.790.1(6.2)2.0

85.9(5.5)80.4

(15.7)(5.5)

(21.2)1.1

-(20.1)

5.5(14.6)

Rate%

22.0%29.4%23.5%

23.4%

18.2%

31 Oct 2007

4.9


EBITDA from Group companies before exceptionals Equity-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 purchaseAcquisitions of businesses, intangibles and investmentsDisposals of businesses and investmentsMovement in loans to joint venturesToken sales and redemptionsForeign exchange/otherReduction in net debt before cash flows with shareholdersReturn of value, including related costsEquity dividendsOther share capital movementsIncrease in net debtOpening net fundsClosing net debt

31 Oct 07£m

118.21.6

11.0(47.0)

7.1(12.7)

(4.9)73.3

(41.6)(2.6)3.3

(0.2)(2.0)5.4

35.6(693.0)

(20.5)(3.2)

(681.1)186.4

(494.7)

Movement in net debt


29.92.2--

32.1

33.76.63.40.2

43.9

(1.9)(0.4)

--

(2.3)

31.86.23.40.2

41.6

3.84.43.40.2

11.8

Capital expenditure

UK BusNorth AmericaUK RailGroup

Capex on new hire purchase

£m

Impact ofcapex onnet debt

£m

Disposalproceeds**

£mNet£m

Cash spent on capex*

£m

* Excludes capitalised intangible assets of £1.1m (2006: £0.1m) and assets acquired through business combinations

** Excludes proceeds from selling businesses

Significant capital expenditure planned for second half of year to 30 April 2008


Brian SouterBrian Souter

Chief ExecutiveChief Executive


The Stagecoach Equity Story

Strong Earnings Momentum EPS* up 62.1% - 5 year CAGR 16.3% Operating profit* up 23.9% Efficient capital structure -

approximately £940m returned to shareholders in last five years

Dividend up 12.5% - 5 year CAGR 12.1%

Revenue up 9.1% UK Bus** 7.8% v industry 6.7%

South Western 15.6% v industry 10.7%

Above-industry organic growth

** Like-for-like Determined from applying the most recently available year on year revenue growth trends for UK Bus divisions

of major UK-listed Groups London & South East train operating companies revenue growth for six months to 31 October 2007

* Before intangible asset expenses and exceptional items For last full financial year


Well balanced portfolioExcellent potential for further growth

Drivers of bus and rail growth Supportive government policy: e.g. concessionary fare

schemes; road pricing Increasing environmental awareness Rising road congestion Inward immigration

Stagecoach factors Innovative and entrepreneurial management with

short chains of command New products Good operational delivery Strong stakeholder partnerships

Deliveringabove-industry growth


UK BusA Continuing Growth Story

Revenue growth* 7.8% (1.1% higher than average market revenue growth of 6.7%**)

Underlying estimated full fare passenger volume growth of approximately 2.4% Operating profit up 54.0% from £34.1m to £52.5m New products, marketing and branding

TV Campaign Goldline

Environmental initiatives Building long-term stakeholder partnerships

* Like-for-like** Determined from applying the most recently available year on year revenue growth trends for UK Bus divisions of

major UK-listed Groups


North AmericaContinuing Margin Improvement

“Sweating” the assets; segment profitability; cost control

revenue growth* 4.5%

further underlying margin** improvement from 12.8% to 14.0%

Product developments

Splash Tours

megabus.com

Internet selling

Environmental initiatives

Still targeting 10% annualised operating margin on core business by April 2009

* Like-for-like constant currency including megabus** Excluding megabus


UK RailConsolidated Market Share

Now have excellent portfolio of high growth franchises on long term contracts

Continued excellent operational performance

Revenue growth above the industry average

Integrating recent wins

East Midlands

Manchester Metrolink

Maximising shareholder value from existing rail contracts


Current trading and outlook

Strong earnings momentum good operational delivery efficient capital structure

Current trading in line with our upgraded expectations Continued focus on organic growth and bolt-on

acquisitions Increased fuel costs in 2008/9 but outlook remains

positive and good potential for further growth


Appendices


Fuel Hedging

Product

Approximate annual usage

% hedged

2007/08

2008/09

2009/10

Average hedge price

2007/08

2008/09

2009/10

UK Bus North America

ULSD 10ppm

188m litres

86%

95%

N/A

25.0p/litre

33.6p/litre

N/A

Heating Oil No 2

72m litres

93%

76%

N/A

45.5 cents/litre

56.8 cents/litre

N/A

UK Rail

Gasoil 0.1%

62m litres

56%

77%

77%

30.5p/litre

30.5p/litre

30.5p/litre


Interest on cash & debtNon-utilisation/commitment/arrangement feesInsurance letters of creditDiscount on insurance provisionsInterest on notes receivable

Finance income/

(charges)£m

(12.6)(1.0)(0.3)(1.6)0.1

(15.4)

Finance charges


Exchange rates

US$C$

Closing rate Average rate

1.9073 2.1370

1.8687 2.0914

October 2006

Closing rate Average rate

2.07741.9731

2.01332.1034

October 2007

interim results 2007 1 interim results 5 th december 2007

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