Annual Results 27th June 2007

1
Annual Results27th June 2007

2
Definitions

• Like-for-like refers to the comparison of
  businesses and individual operating units that
  have been part of the Group throughout the whole
  of the most recent financial year and the
  immediately preceding financial year.
• 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
Robert SpeirsChairman
4
Highlights

• Good underlying revenue growth in all core
  divisions
• 63 pence per ordinary share returned to
  shareholders in May/June 2007
• Full year dividend of 4.1p, up 10.8
• Further strong growth in profit
• Adjusted earnings per ordinary share up 10.4
• Strong start to new South Western rail franchise
• New franchise wins East Midlands, Manchester
  Metrolink

5
Martin GriffithsFinance Director
6
Financial summary
Year to 30 April 07
Year to 30 April 06
Change
Revenue continuing operations Operating margin
- continuing operations () Adjusted earnings per
ordinary share Basic earnings per ordinary
share Net funds/(debt) Dividend per ordinary
share
1,504.6m 9.8 11.7p 25.4p 186.4m 4.1p
1,343.9m 9.5 10.6p 10.7p (135.9)m 3.7p
12.0 0.3 10.4 137.4 n/a 10.8
excluding exceptional items and intangible
asset expenses UK GAAP
7
Summary income statement
Year to 30 April 07 m
Year to 30 April 06 m
Change m
UK Bus operating profit like-for-like UK Bus
operating profit 2005/6 acquisitions North
America operating profit Rail operating
profit Share of joint ventures
profit Restructuring and group overheads Finance
income/(charges) (net) Tax Profit excluding
intangibles and exceptionals Intangibles and
exceptionals, net of tax Reported profit from
continuing operations
82.5 2.0 18.1 58.8 14.2 (14.3) 0.7 (37.8)
124.2 16.3 140.5
65.0 (1.9) 16.9 58.9 5.6 (11.5) (15.9) (25
.3) 91.8 (20.6) 71.2
17.5 3.9 1.2 (0.1) 8.6 (2.8) 16.6 (12.5)
32.4 36.9 69.3
8
Development of UK Bus

• Operating profit increased
• and 267.8m collected from London sale!

Year to 30 April 07 m
Year to 30 April 06 m
Change m
Operating profit Like-for-like 2005/06
acquisitions London
82.5 2.0 5.2 89.7
65.0 (1.9) 23.6 86.7
17.5 3.9 (18.4) 3.0
9
UK Bus (like-for-like)
Year to 30 April 07
Year to 30 April 06
Change
Revenue (m) Operating profit (m) Operating
margin Passenger journeys (m)
608.0 82.5 13.6 547.9
551.1 65.0 11.8 513.9
10.3 26.9 1.8 6.6

• Revenue and journeys benefiting from strong
  marketing, competitive fares strategy,
  concessionary travel schemes and continued fleet
  investment
• Continued underlying revenue and volume growth
• Some benefit in second half from more stable
  crude oil prices
• Pension scheme changes mitigated potential cost
  increases in second half
• Stable insurance claims costs

10
UK Bus (2005/6 acquisitions)
Year to 30 April 07
Year to 30 April 06
Change
Revenue (m) Operating profit (m) Operating
margin
82.4 2.0 2.4
38.5 (1.9) (4.9)
114.0 n/a 7.3

• Margin improvement from integration of acquired
  businesses
• Further margin improvement expected

Partial year, 2007 represents full year
11
North America
Year to 30 April 07
Year to 30 April 06
Change
Revenue (USm) Like-for-like revenue
(USm) Operating profit (USm) Operating margin
463.6 455.6 34.6 7.5
439.5 417.6 30.0 6.8
5.5 9.1 15.3 0.7
Adjusted to exclude revenue from businesses
sold or closed during the two years and to
include revenue from Canada on a constant
currency basis

• Further margin improvement from optimising asset
  deployment
• Double digit margin targeted by 30 April 2009
• Excellent response in the US to Megabus
• Launch of Splash Tours in New York

12
North America revenue breakdown
Year to 30 April 2007 USm
Year to 30 April 2006 USm
Growth

• Scheduled service/line run/commuter
• Charter
• Sightseeing tour
• School bus contract
• Like-for-like revenue
• Closed operations and Canada fx
• Total

191.8 86.5 87.2 90.1 455.6 8.0 463.6
174.3 79.9 79.6 83.8 417.6 21.9 439.5
10.0 8.3 9.5 7.5 9.1 (63.5) 5.5
13
Rail (wholly-owned)
Year to 30 April 07
Year to 30 April 06
Change
Revenue (m) Operating profit (m) Operating
margin Passenger miles (000s)
571.5 58.8 10.3 3,051.6
506.7 58.9 11.6 2,802.1
12.8 (0.2) (1.3) 8.9

• Strong start to new South Western franchise
• Challenging but deliverable revenue and cost
  targets
• Manchester Metrolink from July 2007
• East Midlands from November 2007
• Sheffield Supertram record passenger volumes

14
Virgin Rail Group
Year to 30 April 07
Year to 30 April 06
Change

• Revenue 49 share (m)
• West Coast
• CrossCountry
• Operating profit 49 share (m)
• Operating margin
• Dividends received (m)
• Passenger miles (000s)

412.5 271.5 141.0 12.4 3.0 31.1 4,156.1
357.4 231.9 125.5 5.3 1.5
Nil 3,742.3
15.4 17.1 12.4 134.0 1.5
n/a 11.1

• Good prospects for re-negotiated West Coast
  franchise
• Winning market share from airlines
• Further yield management
• Successful marketing campaigns
• Capacity increases in December 2007 December
  2008

15
Scottish Citylink/Megabus JV
Year to 30 April 07
Year to 30 April 06
Change
Revenue 35 share (m) Operating profit 35
share (m) Operating margin
8.5 1.3 15.3
3.8 0.1 2.6
123.7 1200.0 12.7

• JV has delivered enormous passenger benefits
• Better value-for-money
• More sensible co-ordination of routes,
  timetables, etc.
• More services
• Strong support from passengers, politicians and
  other stakeholders
• Concerning decision from Competition Commission

Partial year, 2007 represents full year
16
Miscellaneous income statement items
Year to 30 April 07
Year to 30 April 06
Change
Intangible asset expenses (m) Group overheads
(m) Restructuring costs (m) Pre-tax exceptional
items (m)
(14.7) (11.1) (3.2) 169.6
(20.5) (10.0) (1.5) 17.4
28.3 (11.0) (113.3) 874.7

• Exceptional gains include sale of London Bus and
  restructuring of main Group pension scheme
• 4.3m further gain in second half from London Bus
  completion accounts and tax finalisation
• Further pension credit in second half of 6.1m

17
Finance income/(charges) and credit ratios
Year to 30 April 07
Year to 30 April 06
Change
Net finance income/(charges) (m) EBITDA from
continuing operations and joint ventures excl
exceptional items (m) Year-end net funds/(debt)
(m) Net Debt/EBITDA - Net funds increased by
726m for Return of Value special
pension contributions
0.7 229.6 186.4 n/a 2.3
(15.9) 194.0 (135.9) 0.7 0.7
16.6 35.6 322.3 n/a 1.6
18
Interest rate risk
m
30 April 2007 net funds Approximate return of
value (including costs) Special pension
contribution June 2007 Pro forma net debt
186.4 (696.0) (30.0) (539.6)
324.6m 60.2 Fixed Rate at 6.2 blended
215.0m 39.8 Floating Rate
Taking account of interest rate derivatives
19
Taxation
2007
Pre-tax Profit m
Tax m
Rate

• Excluding intangible asset expenses and
  exceptional items
• - Before joint ventures
• - Joint ventures
• Intangible asset expenses
• Exceptional items
• Joint venture tax
• Reported in income statement
• Cash tax paid (net)

147.8 17.2 165.0 (14.7) 36.8 187.1 (3.0)
184.1
(37.8) (3.0) (40.8) 2.9 (8.7) (46.6) 3.
0 (43.6) 22.9
25.6 17.4 24.7 19.7 23.6 24.9 23.
7
Excludes London Bus
20
Capital structure

• c.700m return of value completed
• Reflects robust business model
• Quantum determined with reference to credit
  ratios, including Net Debt/EBITDA and Debt
  Service Cover
• Ordinary shares currently in issue 707.9m
• 2007/08 pro forma average Ordinary shares in
  issue 724.3m

21
Pensions

• 21.7m total pension costs (2006 33.4m)
• 18.1m (2006 27.1m) continuing operations
• IAS 19 pre-tax deficit of 36.2m (2006 222.2m)
  for Group
• c.107m of additional contributions to reduce
  deficit
• 77m paid by 30 April 2007
• 30m paid in June 2007 ? further deficit
  reduction
• Rail pension schemes under IFRS, only the part
  of the deficit that we expect to fund during the
  relevant franchise is recognised
• Positive changes to schemes

excluding past service adjustment
22
Movement in net debt
30 April 2007 m
EBITDA from Group companies before exceptionals
EBITDA from discontinued operations Dividends
from joint ventures Movement in retirement
benefit obligations Working capital and other
operating cash movements Net interest paid Tax
paid Net cash from operating activities Net
capital expenditure including new hire
purchase Acquisitions of businesses, intangibles
and investments Disposals of businesses and
investments Movement in loans to joint
ventures Token sales and redemptions Foreign
exchange/other Reduction in net debt before
cashflows with shareholders Equity
dividends Other share capital movements Reduction
in net debt Opening net debt Closing net funds
215.4 7.7 31.1 (94.9) 29.8 (3.9) (22.9) 1
62.3 (82.5) (2.2) 267.2 1.4 (2.3) 16.4 360.
3 (41.5) 3.5 322.3 (135.9) 186.4
23
Capital expenditure
Capex on new hire purchase m
Impact of capex on net debt m
Disposal proceeds m
Net m
Cash spent on capex m
49.0 Nil Nil 49.0
68.1 21.4 4.0 93.5
(8.2) (2.8) Nil (11.0)
59.9 18.6 4.0 82.5
19.1 21.4 4.0 44.5

• UK Bus
• North America
• Rail

Excludes capitalised intangible assets of
13.3m (2006 0.6m) Excludes proceeds from
selling businesses Note Vehicles with a capital
value of 12.1m were acquired by UK Bus during
the year on operating leases (2006 Nil )
24
Brian SouterChief Executive
25
Five-year track record
Year ended 30 April
2003
2004
2005
2006
2007
CAGR
Adjusted EPS Dividend per Ordinary Share Share
Price Return of value announced
6.4p 2.6p 44.0p -
6.7p 2.9p 82.25p 240m
9.5p 3.3p 103.0p -
10.6p 3.7p 108.5p -
11.7p 4.1p 186.75p 700m
16.3 12.1 43.5
dividends
Before intangible asset expenses and
exceptional items (2002 2004 UK GAAP 2005
2007 IFRS)
26
The Stagecoach Differential UK Bus

• Revenue growth 10.3 (22.6 higher than average
  market revenue growth of 8.4)
• Underlying full fare passenger volume growth of
  approximately 2.4
• Like-for-like operating profit up 26.9 from
  65.0m to 82.5m
• Lower than average weekly ticket prices
• increases financial flexibility
• underpins volume growth and long term prospects
• High fleet reliability
• Getting modal shift from innovation and marketing

Like-for-like Determined from most recently
rolling 12 months revenues available for UK Bus
divisions of major UK-listed Groups
27
The Stagecoach Differential North America

• Sweating the assets units closed segment
  profitability
• revenue growth 9.1
• further margin improvement from 7.1 to 7.9
• Product developments
• Splash Tours
• megabus.com
• internet selling
• Targeting 10 margin on core business by April
  2009

Like-for-like constant currency
28
The Stagecoach Differential UK Rail

• Winning Franchises
• South Western
• East Midlands ? strong momentum
• Manchester Metrolink
• Revenue growth 12.9 (9.3 higher than the
  London and South East TOC average of 11.8)
• Passenger Performance Measure Punctuality
• South Western 90.3
• West Coast 87.2
• CrossCountry 84.3
• Passenger Satisfaction
• South Western 81
• West Coast 87
• CrossCountry 84

• London South East TOCs 89.3
• Long distance TOCs 85.2
• Industry 79

Industry passenger performance measure for
calendar year 2006 Year to 31 March
2007 Percentage of passengers satisfied
overall as determined by Spring 2007 National
Passenger Survey
29
The Stagecoach Differential Addressing the
issues

• CAPITAL STRUCTURE
• Consistently generating surplus cash for
  investment shareholder return
• 940m returned to shareholders in three years
• Plus continued dividend growth
• PENSIONS
• Accelerating funding
• Securing employee pensions ? affordable
  pension scheme
• Managing cost and volatility
• INVESTMENT
• UK Bus Fleet
• Addressing the London issue
• Modern fleet for a modern business

30
Current trading and outlook

• Strong start to new financial year
• Current trading in line with our expectations
• Continued focus on organic growth and bolt-on
  acquisitions
• Good potential for further growth

31
Annual Results27th June 2007

32
Appendices
33
Finance income
Finance income/ (charges) m
Annual effective rate
Average balance m
(16.6) 20.6 4.0 (0.8) (0.5) (2.9) 0.3 1.2
1.3
5.0 4.8 4.2
(332.0) 428.0 96.0
Gross debt related derivatives Interest bearing
cash balances Non-utilisation/commitment
fees Insurance letters of credit Discount on
insurance provisions Interest on notes
receivable Other
Average of month end debt/cash balances
0.7m reported as net finance income in income
statement and 0.6m relating to London Bus
reported within profit from discontinued
operations
34
Fuel hedging
Forecast 2007/08
Forecast 2008/09
Forecast 2009/10

• of Group fuel hedged - fixed
• - cap/floor
• Average hedge price (crude price US/barrel) -
  fixed
• - cap/floor

37 51 59 US59/US28
Nil 44 n/a US89/US58
Nil Nil n/a n/a

• Continuing Bus divisions use 1.6m barrels of fuel
  a year
• Each US10 per barrel movement in crude oil price
  impacts variable fuel costs by approximately
• US16m if no hedging in place
• 2006/07 year-on-year increase of 21m in fuel
  costs of continuing operations

35
Exchange rates
April 2006
April 2007
Closing rate
Average rate
Closing rate
Average rate
US NZ C
1.8176 2.4606 2.0368
1.7751 2.5641 2.1079
1.9999 n/a 2.2102
1.9103 n/a 2.1738
Average and closing rates up to date of
disposal used 29 November 2005
36
Annual Results27th June 2007