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Credit Suisse Conference 19 November 2007 PowerPoint Presentation
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Credit Suisse Conference 19 November 2007

Credit Suisse Conference 19 November 2007

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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