Shaping the Future of Transport

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Shaping the Future of Transport Shaping the Future of Transport Stagecoach Group Annual Report and Financial Statements 2012 IDEAS & INNOVATION SUSTAINABLE GROWTH w Stagecoach Group overview We provide greener, smarter and better value UK Bus (regions) UK Bus (London) UK Rail North America transport for around 18,400 4,100 6,700 3,500 employees employees employees employees 3 million customers a day across our bus and rail networks in the UK and 6,600 1,300 2,200 1,900 buses and coaches buses train services a day buses and coaches North America. The Group employs around 33,000 670m 316m 245m 91m people and runs nearly journeys a year journeys a year journeys a year vehicle miles a year 12,000 buses and trains. Budget travel Note: all figures are approximate. Total megabus.com brand revenues in UK Total megabus.com North America and North America, 2003-04 to 2011-12. revenue, 2011-12. UK megabus.com £m UK megatrain.com 120 110 100 90 80 29.5% 70 60 66.2% 50 40 30 4.3% 20 10 0 03/0404/05 05/06 06/07 07/08 08/09 09/1010/11 11/12 The chart includes all revenues from megabus.com branded services in the UK and North America, including 100% of megabus.com branded services within the Scottish Citylink joint venture. Operational performance Customer service UK rail South Western Trains UK rail customer South Western Trains punctuality East Midlands Trains satisfaction East Midlands Trains Virgin Trains Virgin Trains National Rail National Rail 95 95 90 90 85 85 80 80 2009-10 2010-11 2011-12 Spring 2010 Spring 2011 Spring 2012 Source: Network Rail, Public Source: National Passenger Performance Measure Moving Survey, Spring Wave, 2010, Annual Average. 2011, 2012. Note: figures used refer to the measure of train punctuality – also known as PPM (public Note: data extracted from National Passenger Survey, Spring Wave, 2010, 2011 and 2012. performance measure) – which is commonly used throughout Europe. For long distance Percentages are for overall satisfaction. The National Passenger Survey (NPS) is conducted operators, such as East Midlands Trains and Virgin Trains, this shows the percentage of trains twice a year from a representative sample of passenger journeys across the UK. It surveys arriving within 10 minutes of timetabled arrival at final destination. London and South East passengers’ overall satisfaction and satisfaction with 30 individual aspects of service for each operators (including South Western Trains), and regional operators show the percentage individual train operating company (TOC). Passenger ratings are totalled for all TOCs across arriving within five minutes of the timetabled arrival. Data covers the period 1 April 2009 the country to provide a National Rail average. to 31 March 2012. National Rail average is for all franchised train operating companies. 86303_STC_FrontPRINT_86303_STC_FrontPRINT 02/07/2012 13:46 Page 1 Business highlights Maximising shareholder returns Leading the way in improving Pursuit of new opportunities transport for passengers for growth Ǧ ǻȡǀȢʏ to 25.4 pence (2011: 23.8 pence) Ǧ ƽ ǂǂǻ Ǧ Ȝțʏ value for money, investment 6.9% across the Group to 7.8 pence (2011: 7.1 pence) and operational delivery Virgin Rail Group’s bid for new West Ǧ ǀȘȞȟț Ǧ ǀ Coast rail franchise submitted May 2012 shareholders in October 2011 North America and Europe Shortlisted for two new Ǧ UK rail franchises Network Rail US$134m planned acquisition of businesses and assets from Coach America Further potential to grow operating profit at acquired London Bus business ǻȞȠ Financial overview Group revenue Operating profit 6.0% (by division) 12.1% (by division) 8.3% UK Bus regions 35.1% UK Bus regions UK Bus London UK Bus London 11.4% UK Rail UK Rail North America North America 5.7% 68.6% 44.0% Other (incl JVs) 8.9% Adjusted earnings per share Dividend per ordinary share (Year ended 30 April) (Year ended 30 April) 08 20.3p 08 5.4p 09 22.9p 09 6.0p 10 18.7p 10 6.5p 11 23.8p 11 7.1p 12 25.4p 12 7.8p Notes 1. Group revenue: Total shareholder return Revenue is for the year ended 30 April 2012, excluding joint ventures. See Note 2 to the (Five year comparative performance to 30 April 2012) consolidated financial statements. 2. Operating profit: The chart shows the breakdown of total operating profit for the year ended 30 April 2012, 48.0% excluding intangible asset expenses and exceptional items. See Note 2 to the consolidated financial statements. -63.2% Stagecoach Group 3. Adjusted earnings per share: -43.0% See Note 9 to the consolidated financial statements. First Group 4. Dividend per ordinary share: -60.6% Go-Ahead See Note 8 to the consolidated financial statements. National Express 5. Total shareholder return: The graph compares the performance of the Stagecoach Group Total Shareholder Return 10.4% FTSE 250 FTSE 350 Travel (‘TSR’) (share value movement plus reinvested dividends) over the 5 years to 30 April -24.5% 2012 compared with that of First Group, Go-Ahead, National Express, the FTSE Travel and and Leisure Leisure All-Share Index, and the FTSE 250 Index. 86303_STC_FrontPRINT_86303_STC_FrontPRINT 02/07/2012 13:46 Page 2 STAGECOACH GROUP PLC COMPANY No. SC100764 YEAR ENDED 30 APRIL 2012 Contents 1 Interview with the Chief Executive 41 Directors’ remuneration report 3 Chairman’s statement 48 Responsibility statement 4 Operating and Financial Review 49 Group independent auditors’ report 26 Board of Directors 50 Consolidated financial statements 28 Directors’ report 55 Notes to the consolidated financial statements 32 Corporate governance report 107 Company independent auditors’ report 37 Audit Committee report 108 Company financial statements 39 Nomination Committee report 109 Notes to the Company financial statements 40 Health, Safety and Environment 114 Shareholder information Committee report Financial summary Results excluding intangible asset expenses and exceptional items* Reported results Year ended 30 April 2012 2011 2012 2011 Revenue (£m) 2,590.7 2,389.8 2,590.7 2,389.8 Total operating profit (£m) 237.2 240.2 262.9 225.0 Non-operating exceptional items (£m) – – 11.6 0.7 Net finance charges (£m) (34.7) (34.5) (34.7) (34.5) Profit before taxation – continuing operations (£m) 202.5 205.7 239.8 191.2 Discontinued operations (£m) – – – 18.5 Profit before taxation (£m) 202.5 205.7 239.8 209.7 Earnings per share (pence) 25.4p 23.8p 29.5p 24.6p Proposed final dividend per share (pence) 5.4p 4.9p Full year dividend per share (pence) 7.8p 7.1p * see definitions in note 35 to the consolidated financial statements Stagecoach Group plc | page 2 86303_STC_FrontPRINT_86303_STC_FrontPRINT 02/07/2012 13:46 Page 1 STAGECOACH GROUP PLC INTERVIEW WITH THE CHIEF EXECUTIVE Stagecoach Group Chief Executive, Sir Brian Souter, discusses the challenges facing the transport sector, what sets Stagecoach apart and why the Group is well placed to deliver on the opportunities for growth in the future. How was 2011-12 for public transport in general and for Stagecoach Group in particular? Sir Brian: We’ve had another strong year right across the whole Group. There’s no doubt the general weakness in the economy and the reduction in public sector spending on transport have brought their challenges for our sector, but Stagecoach has been resilient and is continuing to grow strongly. We’re seeing commuters and leisure travellers switching from the car to our bus and rail services in the UK and North America. The Group is also well positioned to benefit from opportunities for growth in the year ahead. Why has Stagecoach been able to manage the challenges better than some other businesses? Sir Brian: Stagecoach has always been different from other transport groups – and that is one of our strengths. We manage a portfolio of business assets and look at how we can do that to deliver value to our shareholders. It’s not about getting bigger for the sake of it. I think we have pursued the right strategy over several years by targeting organic growth. We’ve developed a successful mix of innovation, value-for-money travel, continued investment in our services and strong operational delivery. Our management teams have used tailored solutions in their specific markets, regardless of their geography. All of these factors have meant we’ve had a resilient business that has been able to continue to grow through the economic cycle. There’s been a lot of focus in the media over the past year about the threat to bus networks in the UK. What is your view on the future for the bus? Sir Brian: We have always been focused on having at our core a strong commercial bus business. That has stood us in good stead. You can’t expect the level of public sector cuts and cost pressures we are seeing not to impact prices and bus networks. But it’s how you respond to that challenge which is important. Stagecoach is the best value major bus operator in the UK and our approach has been to work hard to continue to offer the lowest fares, maintain strong networks and keep on investing in our bus fleet. That is why, in UK Bus, we have consistently delivered organic growth and sector leading profit margins over many years and I’m confident the bus can play a major role in our transport future. What about the London contracted market - how is your turnaround plan progressing? Sir Brian: It’s going well. Turning around an under performing business is a challenge and one we went into with our eyes open. The real positive is that we have been able to make significant cost savings and changes in working practices, productivity and the culture of the business with the support of our people.
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