Annual Results Annual Results 28 th June 2006

Annual Results Robert Speirs Chairman

Annual Results Highlights  Strong operational and financial performance across the Group  Headline earnings per share up 11.6% - fourth year of successive growth  Innovation driving growth at UK Bus  Excellent performance in UK Rail  Further growth in North America with increase in operating margin to 7.2%  Final dividend of 2.6p per share giving full year dividend of 3.7p (2005: 3.3p) – up 12.1%  Bid to be submitted for South Western franchise by 30 June 2006  Disposals of New Zealand and London bus  Acquisitions of Glenvale and Traction Group

Annual Results Martin Griffiths Finance Director

Annual Results Financial highlights  Revenue +* from continuing businesses up 8.2% -£1,530.0m (2005: £1,413.4m) -Up 7.3% at constant exchange rates  Operating profit* pre intangibles and exceptionals £156.6m (2005: £153.1m)  EBITDA* from Group companies (pre exceptionals) up 6.9% at £219.7m  Adjusted EPS up 11.6% to 10.6p + excluding acquisitions of Glenvale and Traction and disposed New Zealand operations * excluding disposed New Zealand operations

Annual Results Revenue* - continuing operations, excluding Glenvale and Traction Total operating profit* - pre intangibles & exceptionals* Profit before tax* - pre intangibles & exceptionals* Net cash from operating activities Adjusted earnings per share Full-year dividend per share 2006 £m 2005 £m 1, , p 3.7p 1, , p 3.3p Financial summary * excluding disposed New Zealand operations

Annual Results EBITDA UK Bus- excluding Glenvale/Traction - Glenvale/Traction North America Rail Group overheads & restructuring costs EBITDA from Group companies before exceptionals Virgin Rail Group Other joint ventures and associates Total EBITDA before exceptionals 2006 £m 2005 £m (11.4) Nil (10.3) (0.4) 219.4

Annual Results EBITDA from Group companies before exceptionals (slide 7) EBITDA from discontinued operations Working capital and other operating cash movements Net interest paid Tax paid Net cash from operating activities Net capital expenditure including new hire purchase Acquisitions of businesses, intangibles and investments Disposals of businesses and investments Token sales and redemptions Foreign exchange/other Reduction in net debt before cashflows with shareholders Repurchase of ‘B’ shares Equity dividends Other share capital movements Reduction in net debt Opening net debt Closing net debt 30 April 2006 £m (5.8) (19.4) (27.5) (94.4) (52.4) (4.0) (8.5) (13.9) (36.6) (214.6) (135.9) Movement in net debt

Annual Results UK Bus trading results  Revenue growth 13.0% to £814.2m (2005: £720.3m)  revenue growth 7.7%, excluding acquisitions of Glenvale and Traction  Like for like passenger growth of 2.1%, excluding London/Megabus  Operating margin 11.4% (2005: 12.2%), excluding acquisitions of Glenvale and Traction  Glenvale/Traction operating loss £1.9m

Annual Results UK Bus Revenue Development 2004/05 Revenue Glenvale/Traction Passenger volumes Tender wins/ contract amendments Fare increases megabus.com 2005/06 Revenue n/a 5.1% 3.4% n/a 8.5% London £m % Nil % 2.1% 1.4% 3.8% n/a 14.8% 6.2 Nil n/a 16.1% Nil Nil Outwith London £m % Megabus £m % % 1.5% 2.5% 3.6% 0.1% 13.0% UK Bus £m %

Annual Results Sale of London Bus  Conditional sale to Macquarie agreed  Subject to regulatory approval and other conditions  Headline consideration £263.6m  2005/06 EBITDA £31.3m  8.4 times EV/EBITDA  c.£120m gain on disposal  Completion expected within three months

Annual Results Sale of London Bus - Pensions  c.£60m cash contribution to Stagecoach Group Pension Scheme  Stagecoach’s IAS 19 deficit reduces by c.£60m  Significant reduction in pensions volatility  c.£165m of pension scheme liabilities (and matching assets) transfer with London Bus  Transfer with London Bus is broadly IAS 19 neutral (no significant impact on transaction multiples)

Annual Results North America trading results  Revenue £247.6m (2005: £220.8m)  11.0% increase in US$ revenue from continuing operations  Operating margin up from 7.0% to 7.2%, excluding megabus  Operating profit £17.7m (2005: £15.5m), excluding megabus  US$31.5m (2005: US$28.7m), excluding megabus  excellent revenue growth  strict cost control  overhead reduction  £0.8m megabus loss  marketing and other start-up costs

Annual Results Scheduled service/line run/commuter Charter Sightseeing & tour School bus & contract Total 2006 US$m 2005 US$m % Growth 7.8% 9.1% 11.7% 20.0% 11.0% North America continuing revenue breakdown by product

Annual Results Rail trading results Rail subsidiaries  Revenue £506.7m (2005: £479.4m)  Operating profit £58.9m (2005: £50.0m)  Passenger volumes up 1.3% at SWT, adversely affected by terrorist attacks  Revenue and profit share to DfT £66.7m (2005: £46.0m)  Bid costs £11.7m (2005: £3.0m)

Annual Results Virgin Rail Group  Share of profit after finance income and tax £5.5m (2005: £10.7m)  New long-term commercial arrangements on West Coast – discussions with DfT ongoing  CrossCountry – current franchise terminates on 10 November Joint bid with Virgin for new franchise

Annual Results Taxation Excluding intangible asset amortisation and exceptional items - Before joint ventures - Joint ventures Intangible asset amortisation Exceptional items Joint venture tax Reported in income statement Cash tax paid (net) Pre-tax Profit £m Tax £m (20.5) (5.1) (1.5) (31.4) (1.5) (32.9) (27.9) 1.5 (26.4) (27.5) Rate % 23.3% 21.1% 23.2% 23.9% 2006

Annual Results Pensions  £33.4m total pension costs (2005: £32.9m)  IAS 19 pre-tax deficit of £222.2m (2005: £220.9m) for Group  Includes £21.5m increase on acquisition of Glenvale/Traction  c.£60m of additional contributions to reduce deficit  Rail pension schemes: under IFRS, only the part of the deficit that we expect to fund is recognised  Proposed changes to schemes

Annual Results Balance sheet & financing  Net debt  £135.9m (2005: £214.6m)  EBITDA*/finance charges cover 14.1 times (2005: 10.0 times)  Progressive dividend policy  UK GAAP definition * From continuing businesses, before exceptional items

Annual Results Brian Souter Chief Executive

Annual Results Group strategy Quality operations driving strong results Excellent operational performance Strong financial results  Bus operator of the Year  Train operator of the Year  South West Trains punctuality circa 90%  Improved punctuality at Virgin Rail Group  UK Bus reliability 99.3%*  Adjusted EPS up 11.6%  Revenue from continuing operations* up 8.2%  Absorbing increased fuel costs  Full year dividend up 12.1% ↓ * excluding acquired Glenvale and Traction operations

Annual Results Group strategy – UK Bus  Focus on less regulated bus operations outside London –Sale of London operations –Capitalise on innovation and marketing expertise  Build on four years of consistent passenger growth –Development of Kickstart projects –Organic growth opportunities in Southern companies –Concessionary travel schemes  Exploit growth potential of bus company acquisitions  Business development –Inter-city bus and coach services

Annual Results Group strategy UK Bus passenger growth Like for like passenger growth by operating company – excluding London & Megabus April 2006 v April 2005 Overall passenger growth 2.1% 3% + 0-3% <0% Stagecoach London

Annual Results Group strategy – Rail  Powerful, value-for-money bid for South Western franchise  Successful renegotiation of West Coast franchise  Evaluate opportunities to expand rail portfolio –East Midlands –West Midlands –CrossCountry  Further development of megatrain.com

Annual Results Group strategy – North America  Revenue and margin growth –Core scheduled services –Contract wins –Capitalise on continued strong leisure bounce-back –Further growth in sightseeing and charter  New product development and improved marketing –megabus.com –Launch of New York Duck Tours –Web-based sales

Annual Results Current trading and outlook  Current trading in line with our expectations  Continued focus on organic growth and bolt-on acquisitions  Good potential for further growth

Annual Results Annual Results 28 th June 2006

Annual Results Appendices

Annual Results North America revenue development 2004/05 Revenue Impact of disposals and other movements on discontinued turnover US$/C$ currency impact Underlying growth 2005/06 Revenue Nil (13.1) (13.1) Continuing US$m Discontinued US$m Total US$m

Annual Results Rail revenue development 2004/05 Revenue SWT passenger volumes SWT fares/yield SWT other Island Line/Supertram 2005/06 Revenue £m % % 4.0% 0.3% 0.2% 5.7%

Annual Results Finance charges ratios Finance charges (net)* EBITDA pre-exceptionals* EBITDA pre-exceptionals*/finance charges* Net Debt + /EBITDA* 2006 £m 2005 £m times 0.6 times times 1.0 times * From continuing businesses + UK GAAP definition

Annual Results Gross debt & related derivatives Interest bearing cash balances Non-utilisation/commitment fees Amortisation of bond issue costs/bank charges Insurance letters of credit Discount on insurance provisions Interest on notes receivable Other Finance charges £m Annual effective rate % 20.4 (7.1) (0.9) (1.1) % 4.6% 6.8% Finance charges Average balance* £m (155.0) *Average of month end debt/cash balances

Annual Results Fuel hedging % of Group fuel hedged - fixed - cap/floor Average hedge price (crude price US$/barrel) - fixed - cap/floor Forecast 2006/07 18% 75% US$54 US$83/US$54 Continuing Bus divisions use 1.9m barrels of fuel a year Each US$10 per barrel movement in crude oil price impacts variable fuel costs by approximately US$19m if no hedging in place Amounts shown above include London bus operations 2006/07 year-on-year increase of £30m-£35m for continuing operations Forecast 2007/08 Nil 44% n/a US$83/US$54 Forecast 2008/09 Nil 38% n/a US$83/US$54

Annual Results Nil (3.9) (3.6) (0.7) Nil (8.2) Capital expenditure UK Bus North America New Zealand Rail Capex on new hire purchase £m Impact of capex on net debt £m Disposal proceeds** £m Net £m Cash spent on capex* £m * Excludes capitalised intangible assets of £0.6m and additions made as part of business combinations ** Excludes proceeds from selling businesses Note: No vehicles were acquired by UK Bus during the year on operating leases (2005: capital value of vehicles acquired on operating leases - £25.1m )

Annual Results Exchange rates US$ NZ$* C$ Closing rateAverage rate April 2005 Closing rateAverage rate April 2006 * Average and closing rates up to date of disposal used – 29 November 2005

Annual Results Annual Results 28 th June 2006