Annual Results. Year ended 30 April June 2014

Transcription

1 1 Annual Results Year ended 30 April June 2014

2 Cautionary statement 2 This document is solely for use in connection with a briefing on the group headed by Stagecoach Group plc ( the Group ). This document contains forward-looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries, sectors and markets in which the Group operates. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. No assurances can be given that the forwardlooking statements in this presentation will be realised. The forward-looking statements reflect the knowledge and information available at the date of preparation. This document is not a full record of the presentation because it does not include comments made verbally by Stagecoach Group management or by others. Figures from previous years have been restated as appropriate to reflect the application of new accounting rules in respect of pensions.

3 3 ROSS PATERSON FINANCE DIRECTOR

4 Continued good financial performance and investment 4 Adjusted EPS up 5.7% to 26.0p Full year dividend per share up 10.5% to 9.5p Organic volume and revenue growth in UK regional bus business Over 80% increase in North America operating profit 9m invested in pursuing new rail franchise opportunities 118.9m net capital expenditure investment

5 UK Bus (regional operations) Delivering further organic growth 5 Year to 30 April 2014 Year to 30 April 2013 Change Revenue ( m) 1, % Like-for-like revenue ( m) % Operating profit ( m) % Operating margin (%) 14.6% 14.8% (20)bp Estimated like-for-like passenger journeys* (m) % 8.2m rise in operating profit, excluding Olympics contracts in 2012 Continued organic growth c.4% commercial revenue growth Increased share of tender market revenue up 7% Wage awards over last six months averaging c.2.5% * Excludes inter-city coach services operated as a sub-contractor

6 UK Bus (regional operations) Growth and outperformance through the recession and beyond 6 Change in passenger journeys six years from 2006/7 to 2012/13* Stagecoach UK Bus (regional operations) Great Britain local bus excluding London Bus industry share of all road passenger kilometres** 2006/7 5.6% 93.0% 1.4% 2011/12 6.0% 92.6% 1.4% Change +0.4% -0.4% - * Sources: Stagecoach UK Bus compounded like-for-like passenger volumes for years to 30 April; Great Britain - derived from Transport Statistics Great Britain, table BUS0103, for years to 31 March; includes effect of new concessionary schemes but also government cuts to tendered services ** Source: Great Britain derived from Transport Statistics Great Britain, table TSGB0101, for years to 31 March. Bus and coach shown together and includes London

7 UK Bus (regional operations) Taking a long-term perspective for a sustainable business 7 Wigan bus operations Acquired March 2012 Stagecoach route costing implemented Weekly ticket reduced 50% from 18 to 9 (now 11) New Wigan Dayrider ticket at vehicles replaced with better models Passenger volume growth estimated at 28% over two years Profit down but growing and on a significantly larger customer base

8 UK Bus (London) Winning new profitable business 8 Year to 30 April 2014 Year to 30 April 2013 Change Revenue and like-for-like revenue ( m) % Operating profit ( m) % Operating margin (%) 9.8% 8.2% 160bp Success in winning profitable new business reflected in return to revenue growth New business wins underpin prospects for 2014/15 18 bids submitted since 1 May 2013: 100% retention rate on 3 incumbent services 29% win rate from bids for new services (2 out of 7) Awaiting outcome on 8 others Drivers wage agreements concluded through to April 2015 c.2.4% Focus remains on tight control of costs and growth through new contract wins

9 North America Substantial profit growth 9 Year to 30 April 2014 Year to 30 April 2013 Change Revenue (US$m) % Like-for-like revenue (US$m) % Operating profit (US$m) % Operating margin (%) 5.5% 3.3% 220bp Significant increase in operating profit, principally from megabus.com Strong performance whilst absorbing the adverse effects of severe weather 16.4% growth in megabus.com revenue Progressing further expansion of megabus.com

10 UK Rail Pursuing new opportunities 10 Year to 30 April 2014 Year to 30 April 2013 Change Revenue and like-for-like revenue ( m) 1, , % Operating profit ( m) (16.7)% Operating margin (%) 2.7% 3.4% (70)bp Estimated passenger miles South West* (m) 3, , % Estimated passenger miles East Midlands (m) 1, ,380.5 (0.8)% Solid results despite severe weather in South West England and substantial bid costs Profit is after 9.0m bid costs as we invest in pursuing new opportunities South West Trains Alliance extended Negotiation of terms for new franchises - South West to 2019; East Midlands to 2017 One of three bidders for new Docklands Light Railway franchise to start September 2014 Bid submitted with Virgin for new East Coast franchise franchise to start March 2015 * The growth in South West Trains passenger miles is inflated by changes made by Transport for London to London Travelcard allocations.

11 UK Rail Meeting the challenges of extended severe weather 11 In two days at South West Trains 23 & 24 December incidents 140+ fallen trees Landslides Flooding in 9 locations Huge clear up operation over Christmas 2 Jan: 93% of services ran South Western Railway area

12 UK Rail Growth and outperformance through the recession and beyond 12 Change in passenger miles five years from 2006/7 to 2011/12* Stagecoach UK Rail Great Britain Rail Rail industry share of all modes passenger kilometres** 2006/7 7.4% 2011/12 9.1% Change +1.7% * Sources: Stagecoach UK Rail compounded like-for-like passenger volumes for years to 30 April for South West Trains, East Midlands Trains and 49% of West Coast Trains; Great Britain derived from Transport Statistics Great Britain, table TSGB0101, for years to 31 March. Rail and tram shown together. ** Source: Great Britain derived from Transport Statistics Great Britain, table TSGB0101, for years to 31 March. Rail and tram shown together.

13 Virgin Rail Group Transition to new franchise 13 Year to 30 April 2014 Year to 30 April 2013 Change Revenue and like-for-like revenue 49% share ( m) % Operating profit 49% share ( m) (75.2)% Operating margin (%) 0.6% 2.4% (180)bp Dividends received ( m) (68.2)% Estimated passenger miles (m) 3, , % Operating margin reflects full year of 1% management contract New franchise effective from 22 June 2014 Until 31 March 2017 with DfT option to extend by one year

14 Virgin Rail Group New franchise to benefit all stakeholders 14 Customer benefits Taxpayer benefits High bandwidth wi-fi Nectar loyalty scheme More standard class seating c. 20m stations investment Upgraded website and more ticket vending points New destinations Blackpool; Shrewsbury Shareholder benefits 433m expected premium over three years Government option to extend by one year (further 261m premium) Share of any financial outperformance Share of any GDP outperformance HS2 co-operation Community and employee benefits Improved risk-return trade off 3 to 4 years of further expected cash flows Appropriate GDP risk share Apprenticeships, internships and other young people s benefits Community Rail Partnerships and Champions Ex-offender and Princes Trust placements Virgin Unite Additional driver alerts to cut energy consumption CO 2 and waste reduction plans

15 Stagecoach Group A strong financial position 15 Year to 30 April 2014 Year to 30 April 2013 Change Net finance charges (including share of net finance income of joint ventures) ( m) (42.3) (42.8) 0.5 EBITDA from continuing operations and joint ventures* ( m) Closing net debt ( m) (461.6) (538.0) 76.4 Net Debt/EBITDA * 1.4x 1.6x (0.2)x EBITDA*/Net finance charges (including share of net finance income of joint ventures) 8.0x 7.8x 0.2x * excluding exceptional items

16 16 MARTIN GRIFFITHS CHIEF EXECUTIVE

17 Private operators underpin UK Bus industry success 17 Continued delivery Value for money: best value weekly ticket; average TfL weekly ticket costs 50% more Stable bus networks: commercial services largely maintained v cuts to LA contracted services Innovation: launch of new products (StagecoachGold, sleepercoach network) High customer satisfaction: Stagecoach leading major operators Growing proportion of network commercially funded Partnerships: schemes in place and under discussion Opportunities ahead Building on strong partnerships Recovering economy and modal shift Improved retail options and customer information through technology investment

18 Growing momentum in UK Rail 18 Continued delivery UK has highest passenger satisfaction, best safety record and fastest growth of any major European railway Rail Delivery Group providing leadership and focus on improvements to franchising model Insight from alliancing New terms agreed at West Coast Opportunities ahead Extensions at South West & East Midlands Additional rail capacity One of three bidders for DLR One of three bidders for East Coast

19 Investment and innovation driving growth in North America 19 Continued delivery Launch of megabus.com Florida network megabus.com now links c.130 destinations in US and Canada Progress with Twin America litigation Sale of small non-core business units Opportunities ahead Expansion of new megabus.com premium seat reservation facility Further scope to rationalise nonmegabus.com portfolio

20 Growing inter-city coach services in UK and mainland Europe 20 UK France Germany Belgium High load factors on sleepercoach services Existing European services now profitable New London-Paris-Toulouse-Barcelona route Scope for further services in Europe The Netherlands Spain

21 21 Strong performance and healthy outlook Good 2013/14 results amidst significant challenges Current trading as expected Strong financial position Further opportunities ahead Extensions and new franchises in UK Rail megabus.com expansion North America and Europe Further organic growth

22 22 ANNUAL RESULTS YEAR ENDED 30 APRIL 2014

23 APPENDICES 23

24 Summary income statement 24 Year to 30 April 2014 m Year to 30 April 2013 m UK Bus (regional) operating profit UK Bus (London) operating profit Citylink profit after tax North America operating profit Change Twin America profit after tax (6.2) UK Rail operating profit (6.9) Virgin Rail Group profit after tax (6.3) Restructuring costs, Group overheads and other items (14.8) (17.4) 2.6 Operating profit Finance charges (net) (42.6) (43.3) 0.7 Tax (31.2) (36.3) 5.1 Profit excluding intangibles and exceptionals Intangibles and exceptionals, net of tax (17.0) (14.6) (2.4) Reported profit from continuing operations Adjusted earnings per share (pence) 26.0p 24.6p 1.4p m

25 Divisional income statements Year ended 30 April UK Bus (Regional) m UK Bus (London) m North America US$m Revenue 1, ,252.0 UK Rail m Rail franchise premia (599.0) Rail revenue support Other operating income Staff costs (499.8) (143.2) (276.7) (307.4) Fuel costs (i.e. diesel) (148.7) (35.4) (90.6) (52.6) Insurance and claims costs (27.3) (6.7) (46.6) (5.1) Depreciation (68.7) (5.9) (52.0) (8.2) Rolling stock costs lease & maintenance (205.1) Other operating leases (9.4) (15.0) (21.6) (1.9) Network Rail (217.5) Electricity for trains (33.4) Commissions payable (33.2) Materials & consumables (39.0) (8.6) (54.5) (32.9) Other costs (83.6) (8.7) (113.6) (116.5) Operating profit

26 26 Rail premium profiles Year to 31 March: South West m East Midlands m 2014 (465.4) (123.8) 2015 (515.8) (187.8) 2016 (598.4) (100.0)* 2017 (589.0) The amounts shown above do not reflect the changes to premium payments that result from the Rail Regulator s determination of Network Rail s charging of train operating companies for the five year control period that commenced on 1 April The effect on the premium payments has yet to be agreed with the Department for Transport. The above amounts are subject to adjustment for: (1) various inflation measures (2) risks borne by the Department for Transport (3) called options and (4) changes in Regulated Network Rail charges. The amounts shown above are based on estimated inflation and options called to date, and exclude revenue support. * Part year to October 2017

27 Miscellaneous income statement items 27 Year to 30 April 2014 Year to 30 April 2013 Change Twin America joint venture after tax* ( m) (6.2) Citylink joint venture after tax ( m) Group overheads ( m) (13.9) (15.7) 1.8 Restructuring costs (non-exceptional) ( m) (0.9) (1.7) 0.8 Intangible asset expenses ( m) (14.0) (16.1) 2.1 Post-tax exceptional items ( m) (7.5) (3.2) (4.3) Tough trading conditions at Twin America. Increased competition and loss of market share Principal exceptional items: Further refund of West Coast franchise bid costs Provision for Twin America litigation * excluding exceptional items

28 Taxation 28 Pre-tax profit m Year to 30 April 2014 Excluding intangible asset expenses and exceptional items (32.7) 17.9% Intangible asset expenses (14.0) % Exceptional items (8.5) % Tax m Rate % (27.2) 17.0% Reclassify joint venture taxation for reporting purposes (1.7) 1.7 Reported in income statement (25.5) 16.1% Cash tax paid (net) (20.2)

29 Movement in net debt 29 Year to 30 April 2014 m EBITDA from Group companies before exceptional items Loss on disposal of property, plant and equipment 2.1 Equity-settled share based payment expense 2.2 Dividends from joint ventures 8.2 Difference between employer pension contributions and pension expense in operating profit 1.6 Working capital movements (42.3) Net interest paid (33.5) Tax paid (20.2) Net cash from operating activities Net capital expenditure including new hire purchase and finance leases (118.9) Acquisitions /disposals of businesses, intangibles and investments (11.4) Token sales and redemptions (0.3) Cash generation Foreign exchange, income statement and other movements 12.0 Equity dividends (51.0) Net own shares purchased (2.3) Decrease in net debt 76.4 Opening net debt (538.0) Closing net debt (461.6)

30 Fuel hedging 30 UK Bus (regional operations) UK Bus (London) North America UK Rail 2014/15 - % of forecast consumption hedged 94% 50% 81% 72% - average hedge price (per litre) 49.1p 49.9p 75.8 cents 48.8p 2015/16 - % of forecast consumption hedged 36% 37% 30% 37% - average hedge price (per litre) 46.2p 48.4p 73.7 cents 47.2p 2016/17 - % of forecast consumption hedged - 25% 1% - - average hedge price (per litre) p 73.6 cents /18 - % of forecast consumption hedged - 12% 1% - - average hedge price (per litre) p 73.6 cents - Market price (per litre) 45.4p 45.4p 75.4 cents 45.6p Market prices are as at 30 May 2014 Prices exclude delivery margins, duty, taxes and Bus Service Operators Grant

31 Definitions 31 Like-for-like amounts are derived, on a constant currency basis, by comparing the relevant yearto-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 or loss for a particular business unit or division within the Group refers to profit or loss 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 or loss 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. Gross debt is borrowings as reported on the consolidated balance sheet, adjusted to exclude accrued interest, the effect of fair value hedges on the carrying value of borrowings and unamortised gains on the early settlement of interest rate swaps. Net debt (or net funds) is the net of cash and gross debt.

32 32 ANNUAL RESULTS YEAR ENDED 30 APRIL 2014