1. Interim Results 2006 Interim Results 6 December 2006

2. Interim Results 2006 1 Robert Speirs Chairman

3. Interim Results 2006 2 Highlights  Strong set of results for six months ended 31 October 2006  Revenue from continuing businesses + : +10.0%  Earnings per share*: +7.4%  Interim dividend: +9.1%  UK Bus: partnership and innovation driving revenue and passenger growth  Rail: further revenue growth and excellent operational performance  North America: increased operating profit** and margin  10-year South Western franchise secured  Disposal of London bus operations in August 2006 for c.£265m  Proposal to return no less than £400m of funds to shareholders + Excluding acquisitions of Glenvale and Traction, and disposed operations. *Excluding intangible asset expenses and exceptional items. ** References to the operating profit (or operating margin) of a particular business throughout this presentation mean operating profit (or operating margin) before intangible asset expenses, exceptional items and restructuring costs.

4. Interim Results 2006 3 Martin Griffiths Finance Director

5. Interim Results 2006 4 Financial highlights  Revenue +* from continuing businesses up 10.0% -£711.1m (2005: £646.5m) -Up 10.5% at constant exchange rates  Operating profit* pre intangibles and exceptionals £80.7m (2005: £68.5m)  EBITDA* (pre exceptionals) up 15.2% at £113.5m (see slide 8)  Adjusted EPS up 7.4% to 5.8p  Net debt of £135.9m converted to net funds of £140.9m + excluding acquisitions of Glenvale and Traction. * excluding disposed operations.

6. Interim Results 2006 5 Revenue* - continuing operations, excluding Glenvale and Traction Total operating profit* - pre intangibles & exceptionals* Profit before tax* - pre intangibles & exceptionals* Cash generated from operations - pre £57.0m one-off pension contribution Adjusted earnings per share Interim dividend per share October 2006 £m October 2005 £m 752.1 711.1 101.5 80.7 97.3 77.4 99.4 156.4 5.8p 1.2p 653.3 646.5 55.3 68.5 40.7 57.9 120.2 5.4p 1.1p Financial summary * excluding disposed operations

7. Interim Results 2006 6 Revenue bridge Businesses held throughout both periods UK Bus Coach USA Rail Business units closed Coach USA Businesses acquired during year ended 30 April 2006 UK Bus Businesses disposed UK Bus – London New Zealand 28.5 13.3 31.2 73.0 (5.2) 67.8 34.2 102.0 - 102.0 10.6% 10.8% 12.7% 298.6 136.5 276.8 711.9 11.4% 2.4 714.3 10.5% 41.0 755.3 - 755.3 - (3.1) - (3.1) (0.1) (3.2) - (3.2) - (3.2) 298.6 133.4 276.8 708.8 10.9% 2.3 711.1 10.0% 41.0 752.1 - 752.1 October 2006 before re- translation (Sub total) £m Changes in foreign currency exchange rates £m October 2006 (Total) £m 270.1 123.2 245.6 638.9 7.6 646.5 6.8 653.3 111.0 28.7 793.0 October 2005 previously Reported £m Revenue reclassified as “discontinued” £m Constant currency revenue growth in continuing businesses £m - (111.0) (28.7) (139.7)

8. Interim Results 2006 7 Revenue and margin growth *Constant currency revenue growth excluding impact of businesses acquired, sold and closed **Operating margin before intangible asset expenses, exceptional items and restructuring costs, excluding impact of businesses acquired and discontinued operations

9. Interim Results 2006 8 EBITDA UK Bus- excluding Glenvale/Traction - Glenvale/Traction North America Rail Group overheads & restructuring costs EBITDA from Group companies before exceptionals* Virgin Rail Group (share of EBIT) Other joint ventures and associates (share of EBIT) Total EBITDA before exceptionals* October 2006 £m October 2005 £m 52.0 3.2 24.6 34.6 (5.9) 108.5 3.9 1.1 113.5 48.0 (0.5) 23.5 27.0 (5.6) 92.4 6.1 Nil 98.5 * excluding disposed operations +17.4% +15.2%

10. Interim Results 2006 9 EBITDA from continuing Group companies before exceptionals (slide 8) EBITDA from discontinued operations Movement in pension deficit Working capital and other operating cash movements Net interest paid Tax paid Net capital expenditure including new hire purchase (slide 35) Acquisitions of businesses, intangibles and investments Disposals of businesses and investments Token sales and redemptions Dividends and loan repayments from joint ventures Foreign exchange Net movement in bond issue costs Reduction in net debt before cash flows with shareholders Equity dividends Other share capital movements Reduction in net debt Opening net debt Closing net funds October 2006 £m 108.5 7.7 (60.6) 40.1 (4.0) (11.4) 80.3 (53.2) (0.4) 260.6 (2.8) 11.0 8.3 (0.1) 303.7 (28.4) 1.5 276.8 (135.9) 140.9 Movement in net debt

11. Interim Results 2006 10 UK Bus trading results  Revenue growth 22.6% to £339.6m (2005: £276.9m)  revenue growth 10.6%, excluding acquisitions of Glenvale and Traction  new concessionary fare schemes  Like-for-like passenger volume growth 6.1% (see slide 11)  includes impact of new concessionary fare schemes  Operating margin 11.3% (2005: 11.2%), excluding acquisitions of Glenvale and Traction  Glenvale and Traction operating profit £0.5m (2005: operating loss £0.8m)  Disposal of London bus completed August 2006

12. Interim Results 2006 11 UK Bus revenue development 2005 revenue as previously reported Traction Disposals in year Passenger volumes (incl impact of new concessionary fare schemes) Tender wins/ contract amendments Fare increases megabus.com (incl impact of services transferred out to Citylink JV) Timing impact of prior year acquisition 2006 revenue n/a 6.1% 0.6% 4.5% (0.6)% n/a 10.6% Continuing £m % 6.8 30.3 Nil Nil 3.9 41.0 445.6% n/a 57.3% 502.9% 111.0 Nil (111.0) Nil n/a (100.0)% n/a (100.0)% 270.1 Nil 16.4 1.7 12.1 (1.7) Nil 298.6 Glenvale/ Traction £m % Discontinued £m % 387.9 30.3 (111.0) 16.4 1.7 12.1 (1.7) 3.9 339.6 7.8% (28.6)% 4.2% 0.4% 3.1% (0.4)% 1.0% (12.5)% Total £m %

13. Interim Results 2006 12 UK Bus revenue growth  Stagecoach UK Bus: 10.6% like-for-like revenue growth  Growing share of UK Bus market  Consistent like-for-like revenue growth

14. Interim Results 2006 13 North America trading results  Revenue £135.7m (2005: £130.8m)  10.8% increase in constant currency revenue excluding closed/disposed business units  Operating margin 12.3% (2005: 12.0%)  Deploying assets to maximise returns  Excluding Megabus, operating margin up from 12.0% to 12.8%  Operating profit £16.7m (2005: £15.7m)  US$31.2m (2005: US$28.3m)  excellent revenue growth  strict cost control

15. Interim Results 2006 14 Megabus Scheduled service/Line run/Commuter Charter Sightseeing & Tour School Bus & Contract Before closed business units Closed business units Total October 2006 US$m October 2005 US$m 2.2 93.9 53.3 55.9 43.9 249.2 4.3 253.5 - 87.3 47.1 51.9 35.3 221.6 13.8 235.4 % Growth n/a 7.6% 13.2% 7.7% 24.4% 12.5% 7.7% North America revenue breakdown by product

16. Interim Results 2006 15 Rail trading results Rail subsidiaries  Revenue £276.8m (2005: £245.6m), up 12.7%  Operating profit £31.4m (2005: £24.4m)  Passenger volumes up 8.5% at SWT  Revenue and profit share to Department for Transport £43.0m (2005: £27.8m)  Bid costs £8.0m (2005: £6.9m)

17. Interim Results 2006 16 Virgin Rail Group (“VRG”)  Share of profit after finance income and tax £3.7m (2005: £4.5m)  Significant progress on agreeing long-term commercial arrangements for West Coast  CrossCountry  Current contract ends on 10 November 2007  VRG invited to tender for New CrossCountry franchise

18. Interim Results 2006 17 Taxation Pre intangibles and exceptionals* Exceptional items Intangible asset expenses Results for the period* Cash tax paid (net) Pre-tax Profit £m Tax £m 79.6 27.4 (7.5) 99.5 (20.7) (6.4) 1.5 (25.6) 11.4 Effective Rate % 26.0% 23.4% 20.0% 25.7% October 2006 * Adjusted for share of VRG’s tax, classified within operating profit under IFRS Excludes discontinued operations and any exceptional items relating to these discontinued operations

19. Interim Results 2006 18 Pensions  Significant reduction in retirement benefit obligations  £144.3m (30 April 2006: £222.2m)  £22.8m exceptional past service credit reduces IAS19 pension liability  £57.0m of additional contributions reduces IAS19 pension liability  Rail pension schemes: under IFRS, only the part of the deficit that we expect to fund is recognised  Changes to schemes

20. Interim Results 2006 19 Balance sheet & financing  Net funds + £140.9m ( October 2005: net debt £208.9m)  EBITDA*/finance charges cover 32.9 times (2005: 8.7 times)  Continuing management objective to optimise capital structure  Proposed return of value of no less than £400m  Shareholders to participate pro-rata to ordinary shareholdings  Ordinary share consolidation  £50.0m pension contribution agreed in principle + UK GAAP definition * from continuing group companies, before exceptional items

21. Interim Results 2006 20 Brian Souter Chief Executive

22. Interim Results 2006 21 Group strategic objectives  Key 5 year strategic objectives achieved –Restructuring of North American operations –Repositioning of UK Bus –Retention of South Western rail franchise –Organic growth in core operations

23. Interim Results 2006 22 Group strategy Quality operations driving strong results Excellent operational performance Strong financial results  Bus operator of the Year – second year running  South West Trains punctuality consistently above 90%  Improved punctuality at Virgin Rail Group  UK Bus reliability 99.5%*  Adjusted EPS up 7.4%  Revenue from continuing operations* up 10.0%  Absorbing increased fuel costs  Interim dividend up 9.1% ↓ * excluding acquired Glenvale and Traction operations

24. Interim Results 2006 23 UK Bus Drivers of continued strong performance  Entrepreneurial expertise and investment focused on regional bus operations  Strong partnerships with public sector (e.g. Kickstart successes)  Marketing strategies generating growth  Acquisition integration on target at Glenvale and Traction Group  Concessionary travel schemes  Strong like-for-like volume growth

25. Interim Results 2006 24 Group strategy UK Bus passenger volume growth Passenger volume growth by operating company – excluding London October 2006 v October 2005 Overall passenger growth 6.1% > 10% 6 - 10% 0 - 5%

26. Interim Results 2006 25 Group strategy – Rail  Deliver on commitments and opportunities in South Western and West Coast Mainline franchises  Opportunities to expand rail portfolio –East Midlands –New CrossCountry franchise (at Virgin Rail Group)  Further development of megatrain.com

27. Interim Results 2006 26 Group strategy – North America  Revenue and margin growth –Core scheduled services –Contract wins –Capitalise on continued strong leisure bounce- back  New product development and improved marketing –megabus.com –Launch of New York Duck Tours –Web-based sales

28. Interim Results 2006 27 Current trading and outlook  Current trading in line with our expectations  Continued focus on organic growth and bolt-on acquisitions in UK and North American bus markets  Evaluate opportunities for new rail franchises  Good potential for further growth

29. Interim Results 2006 Interim Results 6 December 2006

30. Interim Results 2006 29 Appendices

31. Interim Results 2006 30 North America revenue development 2005 revenue Year on year impact of closed/disposed business units US$/C$ currency impact Underlying growth 2006 revenue Closed/ disposed units US$m Total US$m 13.8 (9.5) Nil 4.3 Ongoing business units US$m 221.6 Nil 3.7 23.9 249.2 235.4 (9.5) 3.7 23.9 253.5

32. Interim Results 2006 31 Rail revenue development 2005 revenue SWT Passenger volumes SWT Fares/yield SWT Other Island Line/Supertram 2006 revenue £m % 245.6 20.4 8.2 1.8 0.8 276.8 8.3% 3.3% 0.7% 0.3% 12.7%

33. Interim Results 2006 32 Finance charges ratios Finance charges (net)* EBITDA from continuing Group companies, pre- exceptionals* (slide 8) EBITDA from continuing Group companies, pre- exceptionals*/finance charges* October 2006 £m October 2005 £m 3.3 108.5 32.9 times 10.6 92.4 8.7 times * UK GAAP definition

34. Interim Results 2006 33 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 Other Finance charges £m Annual effective rate % 8.0 (6.5) 1.5 0.5 0.1 0.4 1.4 (0.6) 3.3 4.7% 4.9% Finance charges Average balance* £m 337.0 265.0 *Average of month end debt/cash balances

35. Interim Results 2006 34 Fuel hedging % of Group fuel hedged - fixed - cap/floor Average hedge price (crude price US$/barrel) - fixed - cap/floor 6 months to 30 April 2007 19% 77% US$60 US$83/US$54 The Group’s UK Bus and North American bus operations consume the equivalent of 1.6m barrels of fuel a year Each US$10 per barrel movement in crude oil price impacts variable fuel costs by approximately US$16m if no hedging in place Amounts shown for future periods exclude London bus operations Forecast 2007/08 Nil 52% n/a US$83/US$54 Forecast 2008/09 Nil 45% n/a US$83/US$54 6 months to 31 October 2006 20% 76% US$50 US$83/US$54

36. Interim Results 2006 35 32.2 - 32.2 43.9 8.5 1.9 54.3 (0.7) (0.4) - (1.1) 43.2 8.1 1.9 53.2 11.7 8.5 1.9 22.1 Capital expenditure UK Bus North America 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 £0.1m and additions made as part of business combinations ** Excludes proceeds from selling businesses

37. Interim Results 2006 36 Exchange rates US$ NZ$ C$ Closing rateAverage rate 1.7703 2.5295 2.0881 1.7989 2.5706 2.1836 October 2005 Closing rateAverage rate 1.9073 n/a 2.1370 1.8687 n/a 2.0914 October 2006

38. Interim Results 2006 Interim Results 6 December 2006