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Credit Suisse Conference 19 November 2007

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.

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Credit Suisse Conference 19 November 2007

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  1. Stagecoach Group Driving growth through innovation and service Credit Suisse Conference19 November 2007 Brian Souter Chief Executive

  2. Agenda Business overview Strategy Stagecoach equity proposition The Stagecoach differential Summary Questions & Answers

  3. Business overview • 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

  4. Group Structure *Full listing on the London Stock Exchange Market capitalisation approximately £1.75 billion

  5. 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)

  6. 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)

  7. 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)

  8. 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)

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. Stagecoach: Bus of Britain TV campaign

  16. 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

  17. 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.

  18. 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

  19. 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

  20. Questions & Answers

  21. Stagecoach Group Driving growth through innovation and service Credit Suisse Conference19 November 2007 Brian Souter Chief Executive

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