Transcript Document
Annual Results 25
th
June 2003
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Annual Results 2003
Robert Speirs Chairman
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Annual Results 2003
Highlights
Continued profitability in all four key operating divisions Strong cash generation across the Group £214.6m (28%) debt reduction since April 2002 Free cash flow up 18% c. £300m of disposals announced post year-end US £136m; Hong Kong £176m Good progress in restructuring Coach USA Terms of new franchise at South West Trains agreed with SRA Final dividend of 1.8p per share (giving full year dividend of 2.6p (2002: 2.6p)) 3
Annual Results 2003
Martin Griffiths Finance Director
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Annual Results 2003
Financial Highlights
Turnover Total operating (loss)/profit - pre goodwill & exceptionals (Loss)/profit before tax - pre goodwill & exceptionals Free cash flow* Adjusted earnings per share Dividend per share 2003 £m 2,076.6
(466.2) 146.4
(500.2) 112.9
217.8
6.4p
2.6p
2002 £m 2,111.4
96.5
166.6
42.0
106.8
184.3
6.3p
2.6p
* Free cash flow comprises net cash inflow from operating activities, dividends from joint ventures and associates, net cash outflow from returns on investments and servicing of finance, and taxation.
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Annual Results 2003
UK Bus Coach USA Overseas Bus Rail Virgin Rail Group thetrainline.com
Road King Others Overheads & restructuring EBITDA before exceptionals
EBITDA
2003 £m 112.0
49.5
51.8
40.9
7.2
(4.3) 10.5
(0.8) 266.8
(15.1) 251.7
2002 Restated £m 105.2
81.9
57.0
34.1
10.8
(4.4) 12.9
(0.8) 296.7
(17.4) 279.3
Annual Results 2003
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Movement in Net Debt
Opening net debt Cash flows from operations Road King dividends Net interest paid Tax paid Dividends paid Net capital expenditure and new hire purchase finance Acquisition/disposal of subsidiaries/investments Net token cash Foreign Exchange and other movements Closing net debt 7 £m (774.6) 272.2
5.3
(51.9) (7.8) (27.6) (52.3) (4.8) 2.1
79.4
(560.0)
Annual Results 2003
Coach USA Trading Results
Results in line with expectations set in December Turnover £603.0m (2002 - £682.3m) 3.4% like for like revenue decline* 0.4% like for like decline in coach and bus Operating profit** £14.0m (2002 - £38.4m) strict cost control Insurance and claims costs up 38.2% in US$ Decline in taxicab sales and utilisation Results stated after all claims costs (one-off and recurring) * Like for like revenue decline is measured as the change in revenue excluding the impact of acquisitions, disposals and foreign exchange movements ** Pre exceptional items and goodwill amortisation 8
Annual Results 2003
Coach USA – 2002/03 build-up
Businesses sold & closed in 2002/03 Disposals announced since 30 April 2003: West/South Central Transit New England Disposals planned: Taxi South East Canada North East/North Central Total turnover 9 Turnover $m 41.7
215.9
100.8
49.5
407.9
118.2
49.8
38.4
614.3
324.7
939.0
Annual Results 2003
UK Bus Trading Results
Sales and profit are growing Turnover growth 5.4% to £598.4m
Underlying passenger growth 3.2% Strong contribution from London companies 13.7% revenue growth Improved operating margin 11.2% versus 11.0% in 2002 11.3% versus 11.0% excluding operating lease impact Delivered through revenue growth and operating efficiencies 10
Annual Results 2003
Overseas Bus Trading Results
Turnover £183.7m (2002 - £ 194.7m) Operating profit £30.3m (2002 - £33.4m) Operating margin 16.5% (2002 - 17.2%) Impact of SARS and sluggish Hong Kong economy on Citybus Further sales and profit growth in New Zealand New Zealand Operating profit £11.2m (2002 - £9.0m) Operating margin 22.0% (2002 - 21.3%) Passenger volumes up 8.5%
Annual Results 2003
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Rail Trading Results
Rail Subsidiaries
Turnover £413.6m (2002 - £402.8m) Operating profit £38.2m (2002 - £31.0m) Passenger volumes up 2.1% at SWT (0.9% excluding strike action in prior year) Financial performance benefited from significant operational improvements at South West Trains Operating profit stated after franchise bid costs
Annual Results 2003
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Joint Ventures and Associates
Virgin Rail Group
Share of revenue £276.1m (2002 - £261.2m) Share of operating profit £7.2m (2002 - £10.8m)
Trainline
Share of revenue £11.0m (2002 - £11.7m) Share of operating loss £4.3m (2002 - £4.4m)
Road King
Share of operating profit £10.5m (2002 - £12.9m)
Annual Results 2003
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Disposals announced
Gross consideration £m Deferred consideration £m Reduction in consolidated net debt £m Disposals completed in year ended 30 April 2003 - Australia - Coach USA – various units 2.1
4.9
7.0
2.1
4.9
7.0
Disposals announced since 30 April 2003 - Citybus - Coach USA – South Central & West - Coach USA – New England - Coach USA – Transit 176.5
97.0
25.0
14.1
319.6
16.6
4.4
21.0
176.5
80.4
20.6
14.1
298.6
Foreign currency amounts have been translated using the average exchange rate for the year ended 30 April 2003 for disposals completed in the year and using the 30 April 2003 rate for the other disposals 14
Annual Results 2003
Balance sheet impact
Minimal net asset impact from disposals No significant gain or loss Net Debt As at 30 April 2003 Disposals announced post year-end Pro-forma net debt £m (560.0) 291.6
(268.4) Pro-forma gearing – 84.6% Significant improvement (i.e. reduction) in Net Debt/EBITDA 15
Annual Results 2003
Pensions
Increased employer and employee contributions £31.2m total pension costs (2002 - £18.0m) £26.9m cash paid (2002 - £19.5m) FRS17 post tax deficit of £156.2m for UK Bus/Group Financial support in new SWT franchise allows for cost of funding the deficit for SWT Managed as part of overall cost base
Annual Results 2003
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Current Trading
Group trading in line with expectations Continuing revenue and profit growth in UK Bus SWT trading under the terms of the one-year franchise extension Coach USA restructuring ongoing no significant change in trading environment Further growth in New Zealand Virgin Rail Group - one year SRA budget 2003/04
Annual Results 2003
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Divisional Strategy
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Annual Results 2003
Graham Eccles Director – Rail Operations
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Annual Results 2003
Rail
The new SWT Franchise Prospects for Virgin Rail Group Rail Business Development 20
Annual Results 2003
Brian Souter Chief Executive
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Annual Results 2003
Coach USA
Reducing exposure to leisure related businesses Realising value through sales process Reducing management stretch Retaining businesses with geographically large units and more predictable revenue streams Redeploying assets to maximise utilisation and eliminate unnecessary capital expenditure 22
70/30 30/70
Annual Results 2003
Hong Kong - Citybus Disposal
HK$2.2 billion enterprise value – compelling offer for the business Economic uncertainty Changing political landscape Pressure to reduce fares Costly bus modifications relating to the environment, e.g. catalytic convertors Pressure for market consolidation Increasing capital spend to retain franchises New depot Fleet replacement Competition – Railway extensions 23
Annual Results 2003
Other Overseas Interests
New Zealand
Commercial structure Organic growth Dominant market share Strong management team core part of the Stagecoach portfolio
Road King
Sound underlying business but non core to Stagecoach Group Would exit if the right opportunity arose 24
Annual Results 2003
UK Bus
Historic performance and trends Growth prospects London Provincial companies Organic growth in southern networks Refresh “tired” northern networks New Products Taxibus Kick Start 25
Annual Results 2003
Summary
Coach USA sales programme and restructuring on schedule Terms of new franchise at SWT agreed with SRA Ongoing discussions between VRG and the SRA to re-negotiate the West Coast and Cross Country franchises Operating margin improvement at UK Bus Continued organic growth in New Zealand US and Citybus disposals – substantial debt reduction Significant de-risking of the Group portfolio
Annual Results 2003
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Where next for Stagecoach?
Maximise shareholder value from existing Portfolio A portfolio now dominated by UK Bus and Rail businesses Organic growth New products Maximise value from existing rail franchises Residual US Portfolio Over US$300m of revenue More predictable $22m operating profit in 2002/03 can be sustained and grown despite lower revenue base; EBITDA base of approximately $40m Organic growth opportunities/small bolt on acquisitions Growth characteristics in New Zealand Strong cash generation Further debt reduction Well placed for refinancing in 2004 Evaluate capital structure post US restructuring Progressive Dividend policy 27
Annual Results 2003
Annual Results 25
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June 2003
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Annual Results 2003
Appendices
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Annual Results 2003
UK Bus Revenue Development
2001/02 Turnover Passenger volumes outside London London contract changes Fares/tender prices/business mix 2002/03 Turnover £m 567.9
1.8
14.6
14.1
598.4
% 0.3% 2.6% 2.5% 5.4%
Annual Results 2003
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UK Bus - London/Other
London Other Turnover £m 144.2
454.2
598.4
2003
Operating Operating Profit £m Margin % 15.1
10.5% Turnover £m 126.8
51.9
67.0
11.4% 11.2% 441.1
567.9
2002
Operating Operating Profit Margin Restated £m Restated % 13.5
10.6% 49.2
62.7
11.2% 11.0%
Annual Results 2003
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Overseas Bus Revenue Development
2001/02 Turnover Disposal of Portugal and Australia Withdrawal of PRC services Currency movements Volumes - Severe weather impact in prior year - Underlying growth Impact of SARS Fares 2002/03 Turnover Citybus £m 148.6
(0.1) (11.9) New Zealand £m 42.2
3.8
0.9
(2.3) (2.9) 132.3
4.6
0.4
51.0
Other £m 3.9
(3.5) 0.4
Total £m 194.7
(3.5) (0.1) (8.1) 0.9
2.3
(2.9) 0.4
183.7
Annual Results 2003
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Citybus New Zealand Other Total
Overseas Bus Segmental results
Turnover £m 132.3
51.0
0.4
183.7
2003
Operating Operating Profit £m Margin % 19.1
14.4% 11.2
30.3
22.0% 16.5% Turnover £m 148.6
42.2
3.9
194.7
2002
Operating Operating Profit Margin Restated £m Restated % 25.2
17.0% 9.0
(0.8) 33.4
21.3% 17.2%
Annual Results 2003
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Citybus – SARS Impact
Revenue SARS effect - March - April Normalised revenue (excluding SARS) 7.3
27.6
2003 HK$m 1,607.4
34.9
1,642.3
2002 HK$m 1,660.3
Nil Nil 1,660.3
May 2003 revenues 20% down on prior year
Annual Results 2003
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Taxi Transit Coach & Bus Total
Coach USA Segmental results
Turnover £m 91.4
64.7
446.9
603.0
2003
Operating Operating Profit £m Margin % 4.7
5.1% Turnover £m 133.2
9.3
14.0
0.0% 2.1% 2.3% 63.5
485.6
682.3
2002
Operating Operating Profit Margin Restated £m Restated % 16.9
12.7% 4.5
17.0
38.4
7.1% 3.5% 5.6%
Annual Results 2003
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UK Bus Coach USA Overseas Bus Rail
Capital Expenditure
Capital Expenditure £m 15.8
21.5
13.3
2.3
52.9
Disposal Proceeds* £m (13.9) (5.1) (1.1) (20.1) 2003 Net £m 1.9
16.4
12.2
2.3
32.8
2002 Net £m 19.6
48.4
7.4
1.6
77.0
*excludes proceeds from selling businesses 36
Annual Results 2003
Interest/Debt Ratios
Finance charges* (net) EBITDA pre-exceptionals 2003 £m 33.5
251.7
2002 £m 59.8
279.3
EBITDA pre-exc/Finance charges 7.5 times 4.7 times Net Debt/EBITDA 2.2 times 2.8 times * 2003 includes £13.1m net gain on early redemption of bonds and close out of interest rate swaps 37
Annual Results 2003
Pre-goodwill and exceptionals Exceptional items Goodwill amortisation Cash tax
Taxation
Pre-tax £m 112.9
(575.5) (37.6) (500.2) 2003 Tax £m (28.8) Nil 3.8
(25.0) (7.8) % 25.5% Nil 10.1% 5.0% 33.4% effective rate excluding £575.0m Coach USA write-downs 38
Annual Results 2003
Annual Results 25
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June 2003
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Annual Results 2003