1 Annual Results Year ended 28 April 2018 28 June 2018
2 Cautionary statement 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 forward- looking 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.
3 ROSS PATERSON FINANCE DIRECTOR
4 Good momentum in bus and rail Financial ▪ Adjusted EPS 22.3p (2017 restated: 23.3p) ▪ Basic EPS of 12.3p (2017: 5.5p) reflect exceptional charges ▪ Full year dividend per share rebased to 7.7p (2017: 11.9p) ▪ No significant change to our 2018/19 adjusted EPS expectation Bus & Coach ▪ Commercial and technology-led initiatives to drive growth ▪ UK bus pricing and network changes delivering improved revenue per vehicle mile ▪ Moderating capital investment following several years of significant fleet and technology expenditure Rail ▪ Greater clarity on Virgin Trains East Coast – operation of train services now transferred to publicly owned company ‒ £85.6m net exceptional expenses ▪ East Midlands Trains franchise extended to March 2019, with plan for further Direct Award ▪ New Virgin Trains West Coast Direct Award franchise expected to run to at least September 2019 ▪ Bid submitted for new South Eastern franchise ▪ Progressing work on our shortlisted bids for East Midlands and West Coast Partnership franchises ▪ Reduced revenue risk on new franchise opportunities
5 UK Bus (regional operations) Focus on improving short-term revenue per mile & long-term revenue growth Year to Year to 29 April 2017 28 April 2018 (Restated) Change Revenue (£m) 1,012.5 1,015.7 (0.3)% Like-for-like revenue (£m) 1,012.3 1,013.8 (0.1)% Operating profit (£m) 112.9 117.0 (3.5)% Operating margin (%) 11.2% 11.5% (30)bp Estimated like-for-like passenger journeys* (m) 652.6 671.5 (2.8)% ▪ Actions to adjust pricing and networks ▪ Like-for-like revenue per vehicle mile up 2.7% ▪ Like-for-like revenue per journey up 2.7% ▪ Commercial growth initiatives ▪ 90% customer satisfaction ▪ No significant change to our 2018/19 operating profit expectation * Excludes inter-city coach services operated as a sub-contractor
6 UK Bus (London) Positive tender results in a competitive market Year to Year to 28 April 2018 29 April 2017 Change Revenue and like-for-like revenue (£m) 251.8 263.4 (4.4)% Operating profit (£m) 13.3 18.4 (27.7)% Operating margin (%) 5.3% 7.0% (170)bp ▪ Positive tender results in year ▪ Maintaining sustainable contract pricing ▪ New site in South East London ▪ Pressure on staff costs versus historic bidding assumptions ▪ 2018/19 operating margin expected to remain below 7%
7 North America Building on 2017/18 management actions Year to Year to 29 April 2017 28 April 2018 (Restated) Change Revenue (US$m) 630.0 632.3 (0.4)% Like-for-like revenue (US$m) 628.7 630.6 (0.3)% Operating profit (US$m) 28.1 23.5 19.6% Operating margin (%) 4.5% 3.7% 80bp ▪ Continued focus on new contract wins ▪ New megabus.com website performing well ▪ Looking to build on management actions in 2018/19 ▪ Higher oil prices should be “net positive” for the business
8 Rail Clarity on the way forward and new opportunities ahead Year to Year to 29 April 2017 28 April 2018 (Restated) Change Revenue (£m) 1,495.2 2,160.7 (30.8)% Like-for-like revenue (£m) 1,183.7 1,142.6 3.6% Operating profit (£m) 24.9 28.5 (12.6)% Operating margin (%) 1.7% 1.3% 40bp ▪ Good profits from East Midlands Trains and South West Trains ▪ 3.5% revenue growth at East Midlands Trains, franchise extended to March 2019 with plan for further direct award ▪ Unwinding residual matters on South West and East Coast franchises ▪ Bids for three new franchises ▪ UK Rail franchises moving to a more balanced risk profile
9 Virgin Trains East Coast A clear decision ▪ Services transferred to publically-owned company ▪ Period of transition and legal/financial unwind 2017/18 exceptional items: Income statement OCI* Total £m £m £m Provision for payment in lieu of performance bond (21.0) - (21.0) Pensions actuarial loss - (32.9) (32.9) Onerous contract and other adjustments (28.0) - (28.0) (49.0) (32.9) (81.9) Tax (14.5) 2.5 (12.0) (63.5) (30.4) (93.9) Non-controlling interest 5.6 2.7 8.3 (57.9) (27.7) (85.6) * Other comprehensive income
10 Virgin Rail Group (incorporates West Coast franchise) New franchise and continued good financial performance Year to Year to 28 April 2018 29 April 2017 Revenue – 49% share (£m) 574.0 556.8 Operating profit – 49% share (£m) 30.0 31.5 Operating margin (%) 5.2% 5.7% Dividends received (£m) 24.1 28.1 ▪ Continued good financial performance ▪ High customer satisfaction ▪ New Direct Award franchise to potentially March 2020 ‒ Successor franchise currently planned from September 2019
11 Modest current rail revenue risk and risk capital East Midlands Virgin Trains Trains West Coast Season ticket bonds (£m) 7.2 ** Performance bonds (£m) 15.0 ** Guarantees to suppliers (£m) 3.0 ** Undrawn parent company loan facilities (£m) 25.0 ** Total risk capital (£m) 50.2 ** Latest end date March 2019* March 2020 Revenue risk GDP sharing with DfT takes 90% of DfT revenue variance in excess of 1% variance to “bid” * A new East Midlands direct award franchise is being negotiated to start from March 2019 ** Currently, there is no recourse to Stagecoach for Virgin Trains West Coast risk capital
12 More inclusive sharing of rail revenue risk ▪ Forecast Revenue Mechanism (“FRM”) ‒ DfT shares in revenue variances to bid, irrespective of cause ‒ FRM start date varies by franchise ‒ Deadband and sharing % varies by franchise ‒ Need to “elect” for “revenue support” in advance ‒ Additional obligations and lower profit share thresholds when revenue support elected West Coast South Eastern East Midlands Partnership Franchise start (date) April 2019 August 2019 September 2019 GDP share from (date) n/a n/a September 2019 Deadband n/a n/a 2% DfT share n/a n/a 90% FRM from (date) April 2020 April 2021 April 2021 Deadband 3% 4% 4% DfT share 80% 80% 80%
13 Rail value Existing franchises Share of April 18 Net assets £m East Midlands 7.3 + post-tax profits to March 2019 Virgin Rail Group (West Coast) 21.2 + post-tax profits to March 2019 28.5 Negotiating/extension opportunities East Midlands DA Competitively tendered franchise not expected to begin before August 2019 West Coast extension Competitively tendered franchise not expected to begin before September 2019; DfT option to extend up to March 2020 Shortlisted bids ▪ South Eastern (expected 80% share) ▪ West Coast Partnership (50% share) ▪ East Midlands (100% share)
14 Stagecoach Group Good financial position Year to Year to 28 April 2018 29 April 2017 Change Net finance charges (including share of net finance income of joint ventures) (£m) (34.7) (33.6) (1.1) EBITDA from continuing operations and joint ventures* (£m) 334.4 345.4 (11.0) Closing net debt (£m) (395.8) (409.4) 13.6 Net Debt/EBITDA* 1.2x 1.2x - EBITDA*/Net finance charges (including share of net finance income of joint ventures) 9.6x 10.3x (0.7)x ▪ Net pension liability down £90.3m to £142.2m ▪ Non-rail net debt down £61.8m to £567.0m ‒ further forecast reduction in 2018/19 ‒ lower capital expenditure and dividends * excluding exceptional items
15 Dividend policy ▪ Board recognises that dividends are important to shareholders ▪ Dividend rebased to 7.7p per share per annum ▪ Rebased to sustainable level, covered by normalised non-rail cash flow ▪ Broadly 50:50 split between interim and final ▪ No change to earnings expectation or growth ambitions
16 MARTIN GRIFFITHS CHIEF EXECUTIVE
17 Progress in 2017/18 Clear Group strategy with progress across bus and rail: ▪ Digital technology : development of industry-leading ticketing and information tools for bus and rail customers ▪ People : biggest employee engagement programme to date ▪ Customer : strong passenger satisfaction across bus, tram and rail ▪ Commercial initiatives : piloting new mobility services; launched new low-cost sightseeing product; successful partnership with Norwegian Airlines ▪ Contract markets : tender wins in London and North America ▪ Competitive and regulatory environment : more balanced rail risk profile; partnership working on bus and rail
Recommend
More recommend
