interim results 2007 1 interim results 5 th december 2007
TRANSCRIPT
1 Interim Results 2007
Interim ResultsInterim Results55thth December 2007 December 2007
2 Interim Results 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.
3 Interim Results 2007
Robert SpeirsRobert Speirs
ChairmanChairman
4 Interim Results 2007
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
5 Interim Results 2007
Martin GriffithsMartin Griffiths
Finance DirectorFinance Director
6 Interim Results 2007
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%
7 Interim Results 2007
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)
8 Interim Results 2007
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)%
9 Interim Results 2007
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
10 Interim Results 2007
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
11 Interim Results 2007
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$m)
Operating margin
31 Oct 07 31 Oct 06
258.9
255.6
36.2
14.0%
251.3
247.0
32.2
12.8%
Change
3.0%
3.5%
12.4%
1.2%
12 Interim Results 2007
Scheduled service/line run/commuterSightseeing & tourCharterSchool bus & contractLike-for-like revenue excl MegabusClosed operations and foreign exchange movementsTotal North America excl. MegabusMegabusTotal North America
31 Oct 07US$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
13 Interim Results 2007
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%
14 Interim Results 2007
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%
15 Interim Results 2007
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)%
16 Interim Results 2007
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
17 Interim Results 2007
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
18 Interim Results 2007
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
19 Interim Results 2007
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
20 Interim Results 2007
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
21 Interim Results 2007
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
22 Interim Results 2007
Brian SouterBrian Souter
Chief ExecutiveChief Executive
23 Interim Results 2007
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
24 Interim Results 2007
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
25 Interim Results 2007
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
26 Interim Results 2007
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
27 Interim Results 2007
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
28 Interim Results 2007
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
29 Interim Results 2007
Interim ResultsInterim Results55thth December 2007 December 2007
30 Interim Results 2007
Appendices
31 Interim Results 2007
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
32 Interim Results 2007
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
33 Interim Results 2007
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
34 Interim Results 2007
Interim ResultsInterim Results55thth December 2007 December 2007