Interim Results. Six months ended 31 October December 2015

Transcription

1 1 Interim Results Six months ended 31 October December 2015

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, regulatory 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 forward-looking statements in this presentation will be realised. The forwardlooking 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.

3 3 ROSS PATERSON FINANCE DIRECTOR

4 Good financial results, in line with expectations 4 Adjusted EPS up 12.6% to 17.0p Dividend up 9.4% to 3.5p Investing for growth in regional UK bus markets Accelerated expansion of megabus.com in Europe New East Midlands Trains franchise Planned extension of West Coast Trains Targeted mileage reductions at megabus.com North America Successful 400m bond re-financing, good financial position maintained Cautious outlook: softer revenue in recent weeks

5 UK Bus (regional operations) Commercial operations driving growth 5 * Excludes inter-city coach services operated as a sub-contractor 31 Oct Oct 2014 Change Revenue ( m) % Like-for-like revenue ( m) % Operating profit ( m) (18.9)% Operating margin (%) 11.8% 14.7% (290)bp Estimated like-for-like passenger journeys* (m) (0.3)% Growth driven by megabus.com and commercial revenue Commercial volume growth of over 3% in some regions Local economic challenges affecting overall growth Fuel cost savings No change to BSOG in Autumn Statement Staff costs National Living wage; Apprentice Levy New website launched, app in 2016

6 UK Bus (regional operations) Investing in growth in Europe 6 Revenue: 31 Oct Oct 2014 UK ( m) Megabus.com Europe* ( m) Division ( m) Operating profit: UK ( m) Megabus.com Europe* ( m) (9.2) (0.1) Division ( m) Operating margin: UK (%) 13.8% 14.8% Megabus.com Europe* (%) (109.5)% (2.2)% Division (%) 11.8% 14.7% * Includes megabus.com services between the UK and mainland Europe

7 UK Bus (regional operations) New National Living Wage manageable 7 Extrapolate current wages rates to April 2020 at 2.5% p.a. Pay band Projected hourly pay rate April 2020 (2.5% p.a. Inflation, ignoring Living Wage) Effect of Living Wage on rate Effect of assumed 9/hour National Living Wage in April 2020 Incremental cost of Living Wage Illustrative ripple effect on wage inflation Illustrative ripple effect Incremental cost of Living Wage + ripple % m % m % % % - 5.0% % - 4.0% % - 3.0% % - 2.0% % - 1.0% % - 0.5% % - 0.0% - Sub total: Plus assumed 20% on costs: (pensions, NI, etc) Based on a snapshot of UK Bus (regional operations) wage data, Sept 2015 Grand total: The wage inflation and ripple effect shown above are for illustration only. It is not a forecast of wage inflation or a forecast of the effect of inflation on the Division s staff costs. c.3% of staff costs over 5 years

8 UK Bus (London) Continued solid returns 8 31 Oct Oct 2014 Change Revenue and like-for-like revenue ( m) % Operating profit ( m) (2.0)% Operating margin (%) 7.5% 7.8% (30)bp 11 of 15 contracts retained on re-bid since 1 May 2 new contracts won since 1 May Road works and congestions still affecting QICs income

9 North America Positive action in response to weakened demand 9 31 Oct Oct 2014 Change Revenue (US$m) (6.6)% Like-for-like revenue (US$m) (5.0)% Operating profit (US$m) (20.8)% Operating margin (%) 8.2% 9.7% (150)bp Adverse impact of fall in oil prices Reduced megabus.com mileage to match demand c.10% cut Lapping sharp oil price fall Managing market pressures on non-megabus business overall in line with budget Further forecast savings in fuel costs

10 North America A diverse portfolio 10 Six months ended 31 October 2015 megabus.com Other Total North America Revenue (US$m) Operating profit, after North America overheads (US$m) Operating margin (%) 4.6% 9.6% 8.2% Balance of first half operating profit (%) 15.7% 84.3% 100.0% North America overheads applied proportionately to revenue for illustration Megabus.com and other both seasonal typically higher profit in first half

11 North America megabus.com opportunity from stable/rising fuel prices 11 Notes: 1) The revenue growth shown above excludes the megabus.com branded L3, L4 and Canadian services that are reported within scheduled service revenue for consistency with prior years 2) The US gasoline prices are average monthly prices for the US as a whole, sourced from gasbuddy.com

12 UK Rail Profit growth from franchise wins Oct Oct 2014 Change Revenue ( m) 1, % Like-for-like revenue ( m) % Operating profit ( m) % Operating margin (%) 4.0% 2.2% 180bp Estimated passenger miles S West (m) 2, , % Estimated passenger miles E Midlands (m) % Full six months of new Virgin Trains East Coast franchise New East Midlands Trains franchise to at least March 2018 South West Trains franchise expected to run to June 2017 Some revenue weakness following Paris terrorist attacks

13 Virgin Rail Group Strongly performing franchise now planned to run to March Oct Oct 2014 Change Revenue and like-for-like revenue 49% share ( m) % Operating profit 49% share ( m) % Operating margin (%) 6.1% 4.5% 160bp Estimated passenger miles (m) 2, , % Strong financial performance, shared with DfT Run-rate close to profit cap Franchise planned to run to March 2018 Private sector innovation delivering for customers e.g. Automatic delay-repay

14 Maintained good financial position Oct Oct 2014 Change Net finance charges (including share of net finance income of joint ventures) ( m) (22.9) (21.0) (1.9) EBITDA from continuing operations and joint ventures* ( m) Closing net debt ( m) (458.0) (430.7) (27.3) Net Debt/EBITDA rolling 12 months* 1.2x 1.2x - EBITDA*/Net finance charges* (including share of net finance income of joint ventures) 9.2x 9.1x 0.1x 400m bond re-financing complete New bonds to 2025 Extended core bank facilities to 2020 Good financial position supporting rail franchise bids and megabus.com expansion in Europe * excluding exceptional items

15 15 MARTIN GRIFFITHS CHIEF EXECUTIVE

16 Positive external drivers of future growth 16 Population growth UK population forecast to grow by 10m over the next 25 years Urbanisation greater concentration of people and businesses in denser cities Growing traffic gridlock and impact on economic productivity expected traffic growth of 19% to 55% between 2010 and 2040 (DfT estimate, 2015) road congestion estimated to cost UK economy 21.4 billion in 2030 (Centre for Economics and Business Research, 2014) Pressure to address climate change and impact of pollution on health Increasing role of private-sector led solutions in era of austerity 30% cut in day-to-day expenditure of DfT over next four years

17 Commercial partnership model delivering for bus passengers 17 Multi-operator smart card ticketing in English city regions by end of 2015 Private-sector led with bus operators working in partnership New UK Bus website and transformational digital tools Stagecoach innovation in partnership with digital experts Growing evidence that enhanced partnerships offer best future direction Success of award-winning Sheffield bus partnership Operators and authorities delivering for customers Failure of QCS in Tyne & Wear weakens case for bus franchising Increasing recognition of need for passengers and taxpayer safeguards in Buses Bill

18 megabus.com Europe a growing opportunity 18 Positive growth trends in France, Germany and Italy Almost four fold year-on-year increase in continental Europe mileage* Significant proportion of new travellers 35% of passengers in France previously did not travel via any mode (Stagecoach research, May 2015) Liberalised, non-franchised domestic inter-city markets with good expansion opportunities Inter-city coach travel (government estimates/forecasts): Germany France Year Passengers Year Passengers million million , million * Six months ended 31 October 2015 versus six months ended 31 October 2014, includes services between the UK & Continental Europe

19 North America adjusting supply to demand 19 Overall non-megabus in line with budget, notwithstanding weaker demand for leisure services (e.g. sightseeing, shopping mall services) Upside megabus.com potential in medium term with return of fuel price trends to historic norms Megabus.com mileage can be increased/reinstated quickly as demand recovers

20 Rail franchise portfolio 20 Franchise DfT planned expiry date Opportunity South West Trains June 2017 Strong incumbent position East Midlands Trains March 2018 Value in new Direct Award franchise and looking beyond Virgin Trains East Coast March year opportunity to deliver for customers and investors West Coast Trains March 2018 Planned extension to March 2018 and well positioned for a re-bid

21 21 Good performance, cautious outlook Good first half results Good financial position Further opportunities ahead Rail: Further franchise opportunities in UK Europe: megabus.com expansion Bus: continued organic growth potential Revenue weakness in recent weeks Positive external drivers of public transport growth

22 22 INTERIM RESULTS SIX MONTHS ENDED 31 OCTOBER 2015

23 APPENDICES 23

24 Summary income statement Oct 2015 m 31 Oct 2014 m Change UK Bus (regional operations) operating profit (14.6) UK Bus (London) operating profit (0.2) Citylink profit after tax North America operating profit (3.2) Twin America profit after tax (1.0) UK Rail operating profit Virgin Rail Group profit after tax Restructuring costs and Group overheads (8.1) (7.7) (0.4) Operating profit Finance charges (net) (23.1) (21.2) (1.9) Tax (22.3) (22.1) (0.2) Profit excluding intangibles and exceptionals Intangibles and exceptionals, net of tax (25.0) (6.6) (18.4) Reported profit from continuing operations (5.7) Adjusted earnings per share (pence) 17.0p 15.1p 1.9p m

25 Rail premium profiles 25 Year to 31 March: South West m East Midlands m West Coast m East Coast m 2016 (583.6) (151.1) (141.8) (206.3) 2017 (569.1) (59.3) (206.7) (276.9) (64.0) - (341.7) (357.4) (325.7) (423.6) (516.1) (594.0) The above amounts are subject to adjustment for: (1) various inflation measures (2) risks borne by the Department for Transport ( DfT ) (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. 100% of the relevant amounts are shown above irrespective of the Group s percentage stake in each business.

26 Miscellaneous income statement items Oct Oct 2014 Change Twin America joint venture after tax* ( m) (1.0) Citylink joint venture after tax ( m) Group overheads ( m) (6.9) (7.2) 0.3 Restructuring costs (non-exceptional) ( m) (1.2) (0.5) (0.7) Intangible asset expenses ( m) (7.4) (5.0) (2.4) Post-tax exceptional items ( m) (18.6) (3.2) (15.4) Exceptional items related to bond re-financing * excluding exceptional items

27 Taxation 27 Pre-tax profit m 31 October 2015 Excluding intangible asset expenses and exceptional items (26.1) 20.8% Intangible asset expenses (7.4) % Exceptional items (23.3) % Tax m Rate % 94.6 (20.4) 21.6% Reclassify joint venture taxation for reporting purposes (3.8) Reported in income statement 90.8 (16.6) 18.3% Cash tax paid (net) (5.3)

28 Movement in net debt 28 Total for six months to 31 Oct 15 m EBITDA from Group companies before exceptional items Loss on disposal of property, plant and equipment 0.2 Equity-settled share based payment expense 1.1 Dividends from joint ventures 4.9 Working capital movements (92.2) Net interest paid (25.4) Tax paid (5.3) Net cash from operating activities 73.8 Repayment by joint venture of loan made by Group 5.9 Net capital expenditure including new hire purchase and finance leases (83.9) Acquisitions /disposals of businesses, intangibles and investments (5.9) Token sales and redemptions (0.2) Cash generation (10.3) Foreign exchange/income statement movements (22.3) Equity dividends (41.9) Net own shares purchased (2.2) Movement in net debt (76.7) Opening net debt (381.3) Closing net debt (458.0)

29 Fuel hedging 29 UK Bus (Regional operations)* UK Bus (London) North America UK Rail 2015/16 - % of forecast consumption hedged 99% 51% 80% 97% - average hedge price (per litre) 43.4p 44.2p 69.3 cents 35.5p 2016/17 - % of forecast consumption hedged 99% 39% 77% 94% - average hedge price (per litre) 35.3p 42.9p 53.9 cents 31.9p 2017/18 - % of forecast consumption hedged 73% 26% 15% 95% - average hedge price (per litre) 36.9p 40.7p 50.2 cents 32.1p 2018/19 - % of forecast consumption hedged - 13% 3% - - average hedge price (per litre) p 61.5 cents /20 - % of forecast consumption hedged - - 1% - - average hedge price (per litre) cents - Market price (per litre) 23.6p 23.6p 33.1 cents 23.9p * excludes megabus.com Europe fuel volumes Market prices are as at 30 November Prices exclude delivery margins, duty, taxes and Bus Services Operators Grant

30 Definitions and abbreviations 30 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 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 and the effect of fair value hedges on the carrying value of borrowings. Net debt (or net funds) is the net of cash and gross debt. DfT refers to the United Kingdom Department for Transport, a Government department. QICs Income refers to income under Quality Incentive Contracts receivable by bus operators in London subject to performance on various measures. QCS refers to a Quality Contract Scheme, being a scheme that involves bus services being determined by local authorities and the operation of those services being contracted or franchised to one or more bus operators.

31 31 INTERIM RESULTS SIX MONTHS ENDED 31 OCTOBER 2015