Transcript Document

Interim Results
10 December 2003
Interim Results 2003
Robert Speirs
Chairman
2
Interim Results 2003
Highlights
 Delivery of strategic objectives in 6 months to 31 October 2003
 New South West Trains and Island Line franchises agreed
 Coach USA restructuring largely completed
 Innovative growth ideas in UK Bus introduced
 Strong trading performance across the Group
 Disposal of Citybus
 Net debt down from £560.0m to £210.9m
 Interim dividend up 12.5% to 0.9p per share
3
Interim Results 2003
Martin Griffiths
Finance Director
4
Interim Results 2003
Financial Performance



Strong financial results
 Operating profit growth in all four retained divisions
 Operating margin improvement
Actively managing cost pressures
 Revenue growth initiatives to offset cost increases
 Reduction in central overhead
 Risk sharing with Strategic Rail Authority
 Asset utilisation
Targeting investment in growth areas
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Interim Results 2003
Financial Highlights
October
2003
£m
October
2002
£m
963.8
1,067.7
Total operating profit/(loss)*
67.3
(512.4)
- pre exceptionals & goodwill*(after restructuring costs)
76.9
86.9
Profit/(loss) before tax
44.8
(524.1)
- pre exceptionals & goodwill
60.3
75.2
100.3
100.2
Turnover
Free cash flow **
Adjusted EPS
3.2p
4.4p
Dividend per share
0.9p
0.8p
* After restructuring costs of £4.1m (2002 - £2.9m)
** Free cash flow comprises net cash inflow from operating activities, dividends from associates,
net cash inflow/(outflow) from returns on investments and servicing of finance, and taxation
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Interim Results 2003
Profit Reconciliation
2002 PBT
Operating profit of retained businesses
- UK Bus
- New Zealand
- Coach USA
- Rail – underlying
Overheads
Reduction in underlying finance charges
Exceptionals & goodwill
Citybus disposal
Rail – non-recurring liquidated damages
Restructuring
JVs & associates
Gain on repurchase of bonds in 2002
2003 PBT
7
Pre goodwill
&
exceptionals
£m
Exceptionals
& Goodwill
£m
75.2
(599.3)
(524.1)
3.2
0.5
0.1
9.8
0.3
10.1
99.2
(11.6)
(7.2)
(1.2)
(3.9)
(15.0)
60.3
575.0
8.8
(15.5)
(15.5)
3.2
0.5
575.1
9.8
0.3
10.1
8.8
83.7
(11.6)
(7.2)
(1.2)
(3.9)
(15.0)
44.8
Reported
£m
Interim Results 2003
Margin Improvement
Retained Divisions
1.4%
9.6%
8.2%
2002
2003
Operating margin excl goodwill & exceptionals
Six months to 31 Oct
2002
UK Bus
New Zealand
Coach USA
Rail
Turnover
£m
293.8
21.5
334.2
206.0
855.5
2003
Op profit
£m
31.1
4.4
15.8
18.9
70.2
8.2%
UK Bus
New Zealand
Coach USA
Rail
8
Turnover
£m
317.9
26.4
234.0
216.7
795.0
Op profit
£m
34.3
4.9
15.9
21.5
76.6
9.6%
Interim Results 2003
EBITDA
UK Bus (£2.2m lower due to impact of operating leases)
Coach USA
Overseas Bus - New Zealand
- Discontinued
Rail
VRG
thetrainline
Road King
Others
Overheads & restructuring
EBITDA before exceptionals
9
2003
£m
2002
£m
54.0
25.3
6.8
3.5
22.5
5.0
(1.7)
5.0
(0.7)
119.7
(8.3)
111.4
50.4
37.1
5.9
20.6
20.2
7.7
(1.4)
5.8
(0.6)
145.7
(7.2)
138.5
Interim Results 2003
Exceptionals and Restructuring Costs
Exceptional Items
-
Loss on sale of Coach USA divisions
Loss on sale of Chongqing investment
Gain on sale of Citybus
Coach USA exceptional items
2003
£m
(5.1)
(1.1)
0.3
Nil
(5.9)
2002
£m
Nil
Nil
Nil
(575.0)
(575.0)
Redundancy/restructuring costs*
 £4.1m (2002 - £2.9m)
* Charged against operating profits
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Interim Results 2003
Movement in Net Debt
£m
Opening net debt
(560.0)
Cash flows from operations
111.4
Net interest received
1.0
Dividends paid
(23.8)
Net capital expenditure and new hire purchase/finance leases
(35.5)
Acquisition of businesses and net debt assumed
Sale of businesses and net debt eliminated
Foreign exchange, tax and other movements
Closing net debt
(6.5)
305.7
(3.2)
(210.9)
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Interim Results 2003
UK Bus Trading Results
 Turnover growth 8.2% to £317.9m
 Underlying passenger growth outwith London 1.3%
 Strong contribution from London companies
 19.8% revenue growth
 Improved operating margin
 10.8% versus 10.6% in 2002
 11.3% versus 10.7% excluding operating lease
impact
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Interim Results 2003
UK Bus Profit Analysis
Turnover
Operating profit
Add back increased operating lease costs
Deduct saving in depreciation arising from
operating leases
Add back Megabus & Taxibus R&D
Exclude Devon
Adjusted margin
October 2003
£m
October 2002
£m
317.9
34.3*
10.8%
2.6
293.8
31.1
10.6%
0.4
(0.9)
36.0
11.3%
0.3
(0.4)
35.9
(0.2)
31.3
10.7%
(1.6)
29.7
11.3%
10.1%
*after £3.5m increase in pensions/NI costs and £3.3m increase in insurance costs
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Interim Results 2003
Coach USA Trading Results
 Turnover £234.0m (2002- £334.2m)
 3.1% like for like revenue decline*
 Operating profit** £15.9m (2002 - £15.8m)
 strong cost control
 profit levels maintained on reduced revenue
 Operating margin up from 4.7% to 6.8%
* Like for like revenue decline is measured as the change in revenue
excluding the impact of acquisitions, disposals and foreign exchange
** Pre exceptional items and goodwill amortisation throughout presentation
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Interim Results 2003
Coach USA Turnover Breakdown
Residual businesses
- North East
- North Central
- Canada
Discontinued
Remaining taxi operations (to be sold)
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October 2003
October 2002
Turnover
$m
Turnover
$m
113.7
57.5
22.5
193.7
156.0
32.3
382.0
115.7
59.7
23.1
198.5
276.4
34.9
509.8
Interim Results 2003
New Zealand Trading Results
 Turnover £26.4m (2002 - £21.5m)
 Underlying 6.1% revenue growth (excluding currency
movements)
 Operating profit £4.9m (2002 - £4.4m)
 Operating margin 18.6% (2002 – 20.5%)
 Passenger volumes up 5.5%
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Interim Results 2003
Rail Trading Results
Rail Subsidiaries
 Turnover £216.7m (2002 - £206.0m)
 Operating profit £21.5m (2002 - £18.9m*)
 Operating margin 9.9% (2002 – 9.2%)
 Passenger volumes up 3.1% at SWT
 Sustained improvement in SWT-caused delay minutes
* Included £7.2m of non-recurring liquidated damages
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Interim Results 2003
Rail Profit Analysis
October
2003
£m
Operating Profit per Bid
12.7
Passenger income
8.8
Net Sch 7/Sch 8
1.7
EC4T
5.2
Other Costs
5.3
Revenue/Profit share to the SRA
(11.7)
Actual SWT operating profit
22.0
Other
(0.5)
Total Rail operating profit
21.5
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Interim Results 2003
Joint Ventures & Associates
Virgin Rail Group
 Share of revenue £149.5m (2002 - £140.6m)
 Share of operating profit £5.0m (2002 – £7.7m)
thetrainline
 Share of revenue £5.4m (2002 - £5.1m)
 Share of operating loss £1.7m (2002 - £1.4m)
Road King
 Share of operating profit £5.0m (2002 - £5.8m)
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Interim Results 2003
Disposals
Completed in six months to 31 Oct 2003:
- Coach USA
- Citybus
- Chongqing associates
Reduction in
net debt
£m
Net cash
proceeds
£m
133.0
171.8
0.9
305.7
133.0
128.7
0.9
262.6
(Loss)/gain
before tax
£m
(5.1)
0.3
(1.1)
(5.9)
Non-core:
- Road King
- Remaining US taxi businesses
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Interim Results 2003
Balance Sheet & Financing
 Net debt down to £210.9m (April 2003 - £560.0m)
 EBITDA*/Interest cover 6.7 times
 Progressive dividend policy
 Evaluate optimum balance sheet structure in conjunction with
2004 re-financing of Eurobond and bank facilities
* pre exceptionals
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Interim Results 2003
Current Trading & Outlook
 Maintaining Coach USA profit on lower revenue base
 H1 is seasonally stronger
 Sustainable SWT profits at upper end of original
expectations
 Operating profit growth in UK Bus and New Zealand
 H2 to date in line with expectations
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Interim Results 2003
Brian Souter
Chief Executive
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Interim Results 2003
Group Strategy (1)
• Objectives in the last 12 months
– Seek new SWT franchise
– Restructure Coach USA
– Seek substantial improvement in SWT’s
own train performance
– Get the basics right at UK Bus
•
•
•
•
STATUS
Done
Largely complete
Ongoing
Ongoing
Fares
Driver recruitment
Engineering
Core networks
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Interim Results 2003
Group Strategy (2)
Where next for Stagecoach?
• UK Bus
– Continue to get the basics right
– Research and development
– Challenge is the delivery of organic growth
• Rail
– Priority to renegotiate XC and WC franchises
– Other franchise opportunities
• Integrated Kent
• Manchester Metrolink
• UK Intercity
• North America
– Deliver profitable growth
– Small bolt on acquisitions
– Fleet improvement
• New Zealand
– Sustain revenue and profit growth
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Interim Results 2003
Summary
 Delivery of strategic objectives
 Strong trading performance across the Group
 Focused management
 Strengthened balance sheet
 Increased dividend
 Current trading in line with expectations
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Interim Results 2003
Interim Results
10 December 2003
Interim Results 2003
Appendices
28
Interim Results 2003
UK Bus Revenue Development
2002 Turnover
Passenger volumes outside London
London contract changes
Fares/tender prices
2003 Turnover
29
London
£m
Provincial
£m
Total
UK Bus
£m
69.2
11.7
2.0
82.9
224.6
2.9
7.5
235.0
293.8
2.9
11.7
9.5
317.9
Interim Results 2003
UK Bus - London/Other
October 2003
Turnover
£m
London
Other
Operating
Profit
£m
October 2002
Operating
Margin
%
9.0%
Turnover
£m
Operating
Profit
£m
Operating
Margin
%
69.2
6.8
9.8%
82.9
7.5
235.0
26.8
11.4% 224.6
24.3
10.8%
317.9
34.3
10.8% 293.8
31.1
10.6%
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Interim Results 2003
Rail Revenue Development
£m
2002 Turnover
%
206.0
SWT Passenger volumes
6.3
3.1%
SWT Fares
4.1
2.0%
Other
0.3
0.1%
216.7
5.2%
2003 Turnover
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Interim Results 2003
Overseas Bus Revenue Development
Citybus
£m
New
Zealand
£m
70.3
(45.5)
(4.5)
(2.5)
17.8
21.5
3.4
1.3
0.2
26.4
2002 Turnover
Disposal of Citybus and Australia
Currency movements
Volumes
Fares
2003 Turnover
32
Other
£m
0.5
(0.5)
-
Total
£m
92.3
(46.0)
(1.1)
(1.2)
0.2
44.2
Interim Results 2003
Overseas Bus
Segmental results
October 2003
Turnover
£m
October 2002
Operating Operating
Profit
Margin
£m
%
Turnover
£m
Operating
Profit
£m
Operating
Margin
%
Citybus*
17.8
1.0
5.6%
70.3
12.6
17.9%
New Zealand
26.4
4.9
18.6%
21.5
4.4
20.5%
0.0%
0.5
-
0.0%
13.3%
92.3
17.0
18.4%
Other
-
Total
44.2
5.9
* Disposal completed June 2003
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Interim Results 2003
Coach USA Revenue Development
£m
%
2002 Turnover
334.2
Disposals
(76.2)
(22.8)%
Currency movement
(16.4)
(4.9)%
(7.6)
(2.3)%
Underlying decline
2003 Turnover
234.0
34
(30.0)%
Interim Results 2003
Finance Charges
Gross debt & related derivatives
Cash
Average
balance*
£m
Finance
charges
£m
Annual
Effective rate
%
607.0
(237.0)
370.0
16.9
(3.0)
13.9
(0.6)
0.3
0.4
0.8
1.5
0.3
16.6
5.6%
2.5%
7.5%
Joint ventures & associates
Non-utilisation/commitment fees
Amortisation of bond issue costs/bank charges
Insurance letters of credit
Discount on insurance provisions
Other
*Average of month end debt/cash balances
35
Interim Results 2003
Interest/Debt Ratios
Finance charges* (net)
2003
£m
16.6
EBITDA pre-exceptionals
111.4
EBITDA pre-exceptionals/Finance charges
2002
£m
11.7*
138.5
6.7 times
11.8 times
* 2002 includes £15.0m gain on repurchase of bonds
36
Interim Results 2003
Taxation
2003
Pre-tax
£m
60.3
(5.9)
(9.6)
44.8
Pre-goodwill and exceptionals
Exceptional items
Goodwill amortisation
37
Tax
£m
(17.9)
2.0
0.8
(15.1)
%
29.7%
33.9%
8.3%
33.7%
Interim Results 2003
Capital Expenditure
UK Bus
Coach USA
Overseas Bus
Rail
Cash
spent on
capex
£m
Capex on
new hire
purchase
£m
Impact of
capex on
net debt
£m
11.0
9.3
5.9
1.1
10.9
-
21.9
9.3
5.9
1.1
(1.8)
(0.8)
(0.1)
-
20.1
8.5
5.8
1.1
27.3
10.9
38.2
(2.7)
35.5
38
Disposal
proceeds
£m
Net
£m
Interim Results 2003
Fuel Hedging
% of group fuel usage hedged
FY2004
100%
FY2003
63%
FY2002
90%**
Average hedge price $/barrel*
$24
$24
$24
Average floating price $/barrel*
$30
$20
$23
c.£40m
c.£50m
c.£53m
Variable fuel costs
* Based on blended comparable crude oil price for the year
** 6 months to April 2002
39
Interim Results 2003
Exchange Rates
October 2003
US$
HK$
NZ$
October 2002
Closing rate
Average rate
Closing rate
Average rate
1.6970
13.1780
2.7617
1.6324
12.7120
2.7875
1.5645
12.2017
3.2177
1.5252
11.8957
3.2177
40
Interim Results 2003