1. Return of Value 2007 Update on current trading and prospects and proposed Return of Value to Shareholders 14 March 2007

2. Return of Value 2007 1 Current trading and prospects  Overall trading remains strong  EPS* for FY07 anticipated to be at upper end of our expectations  Prospects for FY08 trading have further improved reflecting:  continuing strong revenue growth  sustained reduction in fuel prices  Earnings enhancement from:  return on additional contributions to pension schemes  proposed Return of Value  Group’s consolidated net funds expected to be between £130m - £150m at 30 April 2007 * before intangible asset expenses and exceptional items

3. Return of Value 2007 2 Drivers of capital structure review  Continually seeking to maximise Shareholder value  Periodic evaluation of the optimal capital structure  Predictable, cash generative nature of Group’s operations has potential to support greater levels of debt  Increased level of debt has potential to reduce the Group’s cost of capital and increase Shareholder returns  Maintain flexibility to invest in operations and bolt-on acquisitions

4. Return of Value 2007 3 Why is recommendation increased from £400m?  Further detailed analysis undertaken by the Board and advice taken  Improved visibility of future cash flows:  West Coast renegotiated with strong prospects  Lower fuel prices (further hedging in place)  Continued strong revenue growth in UK Bus and Rail  Appetite from banking market to provide facilities at acceptable pricing  Increasing market acceptance of higher debt levels

5. Return of Value 2007 4 Return of Value structure Mechanism  Return equivalent to 63 pence per Existing Ordinary Share  Issue of redeemable “B” and/or irredeemable “C” Shares  Share Capital Consolidation – ratio to be determined Why this structure?  Allows all Shareholders to be treated equally  Allows Shareholders choice as to when and in what form they receive their cash  Clarity as to the quantum and financial effect of the Return of Value Impact of share price  Value to Shareholders is not affected by share price or consolidation ratio

6. Return of Value 2007 5 Expected timetable  14 March 2007  Trading statement  Announcement of Return of Value proposals  Late March/early April 2007 – Circular posted to Shareholders  Late April /early May 2007 – EGM  By 30 June 2007– Return of Value payments to Shareholders

7. Return of Value 2007 6 Pensions  Reached agreement with Trustees for additional funding of £50m to Stagecoach Group Pension Scheme (“SGPS”)  £20m of £50m expected to be paid to SGPS by 30 April 2007  Balance to be paid by 30 June 2007  Remainder of deficit in SGPS expected to be eliminated in 4 years  Ongoing employer contributions expected to exceed the net pensions charge to the Group’s income statement

8. Return of Value 2007 7 Funding  Return of Value to be funded from Group’s available cash balances and bank facilities  Bank facilities of approximately £825m arranged, majority of which mature in 2012  Appetite from existing and new banks to lend at acceptable rates

9. Return of Value 2007 8 Dividend policy  Maintain progressive dividend per share policy  Total dividend reduced due to less shares  Board has option to change dividend policy in future Illustrative example*  2006/7 market consensus full-year dividend of 4.1 pence  2.6% yield on 160 pence share price  On existing dividend policy and £700m return  2007/8 market consensus full-year dividend of 4.4 pence  2.8% yield on 160 pence share price * NOTE: The dividend and yield figures are for illustration only and have been sourced from the Company’s records of analysts’ forecasts. These figures are neither the Company’s forecast nor a statement of the Company’s intended dividend policy.

10. Return of Value 2007 9 Impact on analyst forecasts  Interest charges on approximately £700m Return of Value  2007/08 (approx 11 months)  2008/09 (full year)  Interest charges on additional pension contributions  Tax shield on interest  Some one-off implementation costs c.£4m  Reduction in weighted average ordinary shares  Subject to consolidation ratio  Ordinary shares currently in issue 1,100.3m  Pro-forma Ordinary Shares in issue (illustrative based on 13 March 2007 closing share price) 669.1m  Pro-forma 2007/08 weighted average (illustrative based on 13 March 2007 closing share price and mid-May 2007 consolidation date ) 687.0m  Adjust for subsequent share issues

11. Return of Value 2007 10 Financial ratios considered  Net Debt/EBITDA  Net Debt/(EBITDA plus dividends from joint ventures)  Impact of working capital cash in rail franchises  EBITDA/Interest

12. Return of Value 2007 11 Conclusion  Overall strong trading performance  Return of Value is intended to establish a more appropriate and efficient capital structure  Maintain financial flexibility to continue investing in operations and bolt-on acquisitions  Number of factors led Board to conclude that £700m should be returned to Shareholders before 30 June 2007  Return of Value is conditional upon Shareholder approval  Further details on Return of Value to be announced within next two weeks