annual report 2003
group headquarters 10 dunkeld road perth ph1 5tw scotland
t 44 0 1738 442 111 f 44 0 1738 643 648 wwwstagecoachgroupcom
annual report 2003 stagecoach group plc company no sc100764
2003
contents
1 highlights
2 group overview
4 chairman’s statement
6 chief executive’s statement
8 operating review
8 uk bus
9 coach usa
11 overseas bus
12 rail
14 investments
15 corporate social responsibility
19 finance director’s review
22 board of directors
23 directors’ report
26 corporate governance
30 remuneration report
35 auditors’ report
36 accounts
75 shareholder information
76 five year financial summary business highlights
ı continued profitability in all four key operating divisions
ı good progress in restructuring coach usa
ı c »300m of disposals announced post yearend
ı terms of new franchise at south west trains finalised
ı improved operational performance benefiting rail division
ı margin improvement at uk bus
ı strong revenue and volume growth in new zealand
financial highlights
ı turnover »2077m 2002  »2111m
ı total operating profit »146m 2002  »167m
ı profit before tax »113m 2002  »107m
ı »575m of exceptional writedowns from coach
usa review resulting in a statutory loss before tax of
»500m 2002  profit of »42m
ı earnings per share 64p up from 63p
ı free cash flow up 18 to »218m
ı net debt down »215m to »560m
ı full year dividend 26p 2002  26p
 excluding goodwill amortisation and exceptional items
highlights 2003
stagecoach group is a leading international
transport provider committed to developing
innovative solutions across our operations
1 group overview 2003
turnover »5984m »6030m
operating profit »670m »140m
no of vehicles


Summary:
 stagecoach group has made positive progress this year towards
achieving its key strategic objectives despite challenging issues
within the transport sector and a difficult economic environment
across the group we are seeing strong cash generation from
each of our four key operating divisions and all are trading
profitably in the uk our bus division has had a successful year
and is delivering increased operating margins with solid revenue
and passenger volume growth we have agreed terms with the
strategic rail authority ‘‘sra’’ for a new threeyear franchise
at south west trains which is one of the uk’s largest rail
franchises we are awaiting final approval of this new franchise
agreement from the government restructuring of our coach
usa division is progressing well earlier this month we
completed the disposal of our citybus business in hong kong
while our new zealand bus business continues to deliver strong
growth
the group’s strong cash flow generation coupled with the
favourable movement in exchange rates has allowed us to
reduce debt for the longterm benefit of the business net debt
reduced by »2146m in the year ended 30 april 2003 from
»7746m to »5600m subsequent to the yearend we have
announced disposals with a gross consideration of approximately
»300m of these proceeds approximately »20m relates to
deferred consideration and the remainder will initially be used
to reduce group debt
turnover for the year ended 30 april 2003 was »20766m
2002  »21114m total operating profit before goodwill
amortisation and exceptional items was »1464m
2002  »1666m earnings per share on an equivalent basis
were up at 64 pence 2002  63 pence
the board of directors is recommending that the total dividend
for the year is 26 pence per share 2002  26 pence this
comprises the interim dividend of 08 pence 2002  13 pence
and a proposed final dividend of 18 pence per share
2002  13 pence the board has firm confidence in the future
prospects for the group and based on continued strong and
stable cash flows and profits within the business we will look
to increase the dividend each year
our two key priorities in recent months have been the
restructuring of our coach usa operations following a
comprehensive business review and finalising the new south
west trains franchise focused management action on both
of these issues will deliver greater stability and certainty
at coach usa we remain on course to deliver on our key
restructuring objectives within the 12 to 18 month timetable we
set out in december 2002 and this will produce a smaller but
nevertheless substantial and more robust business
we believe the financial and commercial terms we have agreed
with the sra for the new franchise at south west trains will
deliver a good and predictable return for our shareholders
virgin rail group in which we have a 49 interest is
continuing to work with the sra with a view to negotiating new
longterm commercial arrangements for both the west coast
and crosscountry franchises both franchises are presently
receiving sra funding on the basis of a one year budget set by
the sra for the period to february 2004 we remain confident
that new franchise terms can be agreed that will secure
shareholder value for stagecoach
our uk bus operations are producing revenue and passenger
volume growth most notably where we work closely with
forwardlooking local authorities we have been particularly
successful in the london market we are also pleased that the
government has taken forward our ‘‘kick start’’ proposals for
targeted funding to support the introduction of new services
and help reinvigorate the uk bus network
in the overseas bus division performance at our new zealand
businesses where we are seeing strong growth continues to be
very satisfactory citybus our hong kong bus operation has
chairman’s statement 2003
stagecoach group has made positive progress this year
towards achieving its key strategic objectives despite
challenging issues within the transport sector
and a difficult economic environment
4 been an excellent investment for the group since 1999 however
the board received an approach for the business and felt it was
appropriate to review the strategic options for stagecoach group
in the region in view of the limited opportunities to develop
significantly elsewhere in other pacific rim countries and the
longterm prospects for the business in hong kong we believe
the offer was a good one and that selling the business at this
time was in the best interests of shareholders
we have a clear strategy for the group and are on schedule with
our sales programme and restructuring at coach usa the sale of
citybus has put the group in a strong financial position further
derisking the group’s portfolio and will allow management to
focus on developing our uk bus and rail businesses a smaller but
more robust north american business and our successful new
zealand operations the group continues to be a leading
international transport company with a strong portfolio of cash
generative businesses
following the business review in north america i was delighted
to announce six months ago that brian souter had taken up the
position of chief executive on a permanent basis his energy and
entrepreneurial vision have been the driving force behind the
group and the considerable work he has done in restructuring
our us operations is laying firm foundations for a stronger north
american business
i was happy to accept the invitation in december 2002 to
continue as chairman of the board we have been working
closely to refocus the company and i am confident stagecoach
group has a dedicated senior management team and a
committed board that will ensure the group continues to thrive
and deliver shareholder value
robert speirs
chairman
25 june 2003
robert speirs
chairman
5