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Tuesday 05 September, 2000

National Express

Interim Results - Part 2

National Express Group PLC
5 September 2000

PART 2


                         

                          NATIONAL EXPRESS GROUP PLC

                                Interim Results
                     for the six months ended 30 June 2000
                                       

Group Profit and Loss Account
                  
                       Unaudited                 Unaudited            Audited
                                                                             
                Total             Total     Total             Total          
               before             after    before             after     Total
                good-    Good-    good-     good-    Good-    good-     after
                 will     will     will      will     will     will     good-
                  and      and      and       and      and      and      will
              except-  except-  except-   except-  except-  except-       and
                ional    ional    ional     ional    ional    ional   except-
                items    items    items     items    items    items     ional
               6 mths   6 mths   6 mths    6 mths   6 mths   6 mths     items
                   to       to       to        to       to       to   Year to
              30 June  30 June  30 June   30 June  30 June  30 June    31 Dec
                 2000     2000     2000      1999     1999     1999      1999
                   £m       £m       £m        £m       £m       £m        £m
                                                                     
Turnover                                                                 
- continuing   899.9       -      899.9     670.1           670.1     1,476.7
operations
- acquisitions  11.4       -       11.4        -               -           -

Turnover       911.3       -      911.3     670.1      -    670.1     1,476.7

Other            8.7       -        8.7       4.7      -      4.7        10.5
operating        
income

Other         (852.5)   (20.9)   (873.4)   (628.8)  (5.9)  (634.7)   (1,388.7)
operating                                                              
costs

Goodwill         -       (7.3)     (7.3)       -    (0.6)    (0.6)       (3.3)

Total         (852.5)   (28.2)   (880.7)   (628.8)  (6.5)  (635.3)   (1,392.0)
operating                                                               
costs

Operating       67.5    (28.2)     39.3      46.0   (6.5)    39.5        95.2
profit                             
- continuing    66.6    (27.7)     38.9      46.0   (6.5)    39.5        95.2
operations
- acquisitions   0.9     (0.5)      0.4        -      -        -           -
 
                67.5    (28.2)     39.3      46.0   (6.5)    39.5        95.2
                                                                         
Share of        (1.8)      -       (1.8)       -      -        -           -
operating
loss of
associates
                                                                         
Loss on           -      (0.4)     (0.4)       -       -        -          -
sale of
business

Profit on         -        -         -         -      0.2      0.2        0.2
sale of
investment

Profit on       65.7    (28.6)     37.1       46.0   (6.3)    39.7       95.4
ordinary
activities
before
Interest

Net            (15.3)     -       (15.3)      (0.4)    -     (0.4)      (5.8)
interest
payable

Profit on       50.4   (28.6)       21.8      45.6   (6.3)   39.3       89.6
ordinary
activities
before
taxation

Tax on         (12.2)    8.9       (3.3)     (11.8)   1.8   (10.0)     (22.8)
profit on
ordinary
activities

Profit          38.2   (19.7)      18.5      33.8    (4.5)   29.3      66.8
after tax

Minority        (0.1)     -        (0.1)     (0.1)     -     (0.1)     (0.2)
Interest

Profit          38.1   (19.7)      18.4      33.7    (4.5)   29.2      66.6
attributable
to
shareholders

Dividends      (7.6)      -        (7.6)    (6.6)      -    (6.6)     (21.0)

Retained       30.5    (19.7)      10.8     27.1     (4.5)  22.6       45.6
profit
                                                                         
             Normalised           actual   normalised       actual    actual
                                          
Earnings                                                                 
per share
 - basic     33.2p              16.0p     29.7p              25.7p    58.3p
                                                                         
 - diluted   30.1p              14.6p     26.1p              22.6p    51.9p
                                                                         

Group Balance Sheet

                                            Unaudited          Audited
                                         30 June    30 June     31 Dec
                                            2000       1999       1999
                                              £m         £m         £m
                                                                      
Fixed assets                                                          
Intangible assets                          278.8       42.9      242.6
Tangible assets                            549.6      366.4      503.8
Investments and interests in                21.7        6.6       15.0
associate undertakings
                                           850.1      415.9      761.4
                                                                      
                                                                      
Current assets                                                        
Stock                                       15.6       11.0       14.8
Debtors                                    230.1      132.6      216.6
Cash at bank and in hand                    93.8       71.8      101.0
                                           339.5      215.4      332.4
                                                                      
Creditors: amounts falling due            (522.4)    (266.7)    (394.9)
within one year
                                                                      
Net current liabilities                   (182.9)     (51.3)     (62.5)
                                                                      
Total assets less current                  667.2      364.6      698.9
liabilities
                                                                      
Creditors: amounts falling due after      (365.2)    (105.0)    (408.8)
more than one year
                                                                      
Provisions for liabilities and             (23.9)     (16.1)     (23.1)
charges
                                                                      
                                           278.1      243.5      267.0
                                                                      
Capital and reserves                                                  
Called up share capital                      5.9        5.8        5.8
Share premium account                       35.9       35.3       35.7
Capital reserve                             17.0       17.0       17.0
Share capital to be issued                   0.4        0.5        0.5
Revaluation reserve                         17.9       18.2       17.9
Profit and loss account                    196.7      162.5      185.9
Equity shareholders' funds                 273.8      239.3      262.8
Equity minority interest                     4.3        4.2        4.2
                                           278.1      243.5      267.0

Group Statement of Cash Flows

                                           Unaudited          Audited
                                        6 months   6 months   Year to
                                              to         to    31 Dec
                                         30 June    30 June      1999
                                            2000       1999
                                              £m         £m        £m
                                                                     
Net cash inflow from operating              44.4       45.0      95.1
activities (see note 6)
                                                                     
Net interest paid                          (16.0)      (0.3)     (3.9)
Interest element of finance lease           (0.4)        -       (0.8)
rentals
Returns on investments and servicing       (16.4)      (0.3)     (4.7)
of finance
UK corporation tax paid                     (6.4)      (2.1)    (13.7)
Overseas tax paid                           (1.2)        -       (2.2)
Taxation paid                               (7.6)      (2.1)    (15.9)
                                                                     
                                                                     
Payments to acquire tangible fixed         (42.0)     (38.9)    (97.9)
assets
Receipts from sales of tangible fixed        1.8       1.0       7.5
assets
Payments to acquire other investments       (8.6)     (7.8)     (7.5)
Receipts from the sale of investments         -        0.2       0.1
Purchase of shares to satisfy               (1.5)       -       (7.8)
employee share scheme
Capital expenditure and financial          (50.3)    (45.5)   (105.6)
investment
                                                                     
Payments to acquire subsidiary             (52.4)    (34.4)   (264.9)
undertakings
Net cash/ (overdraft) of acquired            0.1      (0.3)      8.7
subsidiaries
Deferred consideration for business            -      (0.4)     (3.4)
acquired
Acquisitions and disposals                (52.3)     (35.1)   (259.6)
Equity dividends paid                     (14.2)     (12.8)    (19.4)
                                                                     
Cash withdrawn from short term              7.3       14.4       3.9
deposits
Management of liquid resources              7.3       14.4       3.9
Issue of ordinary share capital             0.1        0.9       1.3
Repayment of capital element of            (3.6)      (1.7)     (4.9)
finance leases
Repayment of loan notes                    (0.2)      (0.1)     (9.9)
Movement on bank deposits and loan             -          -     (0.5)
notes
Loans advanced                             86.4       29.5     373.3
Loans repaid                              (16.7)      (6.6)    (45.9)
Net cash inflow from financing             66.0       22.0     313.4
(Decrease)/increase in net cash           (23.1)     (14.4)      7.2

Group Statement of Total Recognised
Gains and Losses

                                          Unaudited            Audited
                                        6 months   6 months    Year to
                                              to         to     31 Dec
                                         30 June    30 June       1999
                                            2000       1999
                                              £m         £m         £m
                                                                      
Profit attributable to members of           18.4       29.2       66.6
the parent company
Exchange differences on                      6.2       (0.1)       0.4
retranslation of net assets in
subsidiary undertakings
Exchange difference on hedging loan         (6.2)        -        (0.4)
                                                                      
Total recognised gains and losses           18.4       29.1       66.6

Reconciliation of Movement in Group Equity Shareholders' Funds

                                            Unaudited          Audited
                                        6 months   6 months    Year to
                                              to         to     31 Dec
                                         30 June    30 June       1999
                                            2000       1999
                                              £m         £m         £m
                                                                      
Total recognised gains and losses          18.4       29.1       66.6
Dividends                                  (7.6)      (6.6)     (21.0)
New share capital issued                    0.3        5.0        5.4
Shares to be issued                        (0.1)      (0.1)      (0.1)
                                                                      
Net addition to shareholders' funds        11.0       27.4       50.9
Opening shareholders' funds               262.8      211.9      211.9
                                                                      
Equity shareholders' funds                273.8      239.3      262.8

Segmental Analysis
                             Turnover          Operating profit before
                                                exceptional items and
                                                      goodwill
                         Unaudited     Audit-     Unaudited     Audit-
                                           ed                       ed
                                         Year                     Year
                            6        6     to        6        6     to
                       months   months     31   months   months     31
                           to       to    Dec       to       to    Dec
                      30 June  30 June   1999  30 June  30 June   1999
                         2000     1999            2000     1999
Analysis by class of       £m       £m     £m       £m       £m     £m
business
                                                                      
Buses                    99.1     97.8  196.4     25.2     23.5   47.6
- continuing
                                                                      
Trains                  466.1    457.1  921.8     14.0     13.1   28.0
- continuing
                                                                      
Coaches                  77.8     75.1  168.2      1.5      1.6   11.0
- continuing
- acquisitions            3.0       -      -       0.1       -      -

                         80.8     75.1  168.2      1.6      1.6   11.0
                                                                      
Airports                 15.0     16.0   33.9      4.0      4.5   12.9
- continuing
                                                                      
UK Operations           661.0    646.0  1,320.3     44.8     42.7   99.5
                                           
                                                                      
USA - continuing        126.8     16.8   64.6     15.8      3.0    9.5
- acqusitions             8.4       -      -       0.8       -      -

                        135.2     16.8   64.6     16.6      3.0    9.5
                                                                      
Australia               115.1      7.3   91.8      6.1      0.3    4.2
- continuing
                                                                      
                        911.3    670.1  1,476.7   67.5     46.0  113.2
                                           
Less exceptional                                 (20.9)    (5.9)  (14.7)
items                                                                
Less goodwill                                     (7.3)    (0.6)  (3.3)
                                                  39.3     39.5   95.2
                                                                      

Analysis of Exceptional Items:
                           6 months    6 months    Year to
                                 to          to     31 Dec
                            30 June     30 June       1999
                               2000        1999
                                 £m          £m         £m

Buses - reorganisation          1.6         1.2        1.5
                                                                  
Trains - reorganisation         1.0         1.4        5.8
       - new trains             0.7         2.6        4.9
                                1.7         4.0       10.7
                                                          
Airports - reorganisation        -           -        0.2

                                                          
USA - reorganisation            0.5          -        0.2
    - abortive                  0.2          -         -
    acquisition
    costs
    - settlement of            16.5          -         -
    litigation
                               17.2          -        0.2
                                                          
Australia - reorganisation      0.4          -         -
                                                          
Year 2000                        -          0.7       2.1
                                                
                               20.9         5.9      14.7

  The  exceptional  expenditure on new trains is  the  costs  associated  with
  bringing  the  new  trains  into service.  The  exceptional  expenditure  on
  settlement  of  litigation  of £16.5m is the settlement  of  the  litigation
  brought  against  National Express Group PLC ('the Group')  in  the  USA  by
  Atlantic  Express  Group  Inc.,  with no admission  of  liability,  and  the
  associated professional fees.


Analysis of Goodwill Amortisation:
                          6 months    6 months     Year to
                                to          to      31 Dec
                           30 June     30 June        1999
                              2000        1999
Coaches  - continuing           0.2           -           -

USA     - continuing           5.8         0.6         2.4
        - acquisitions         0.5          -           -
  
Australia - continuing         0.8          -          0.9

                               7.3         0.6         3.3

Notes to the Interim Accounts

1    Basis of preparation
  These  unaudited accounts, which do not constitute statutory accounts,  have
  been  prepared  using  accounting policies  set  out  in  the  Group's  1999
  statutory  accounts.  The  1999 accounts received an  unqualified  auditors'
  report  and  have been delivered to the Registrar of Companies.   The  Group
  has  adopted  two new accounting standards in the year, which  are  FRS  15,
  Tangible  Fixed  Assets and FRS 16, Current Taxation. The  only  significant
  impact  of these on the Group is in the area of revaluation of fixed assets.
  FRS  15  requires  that each class of tangible fixed assets  is  either  re-
  valued  annually or not at all. The policy that has been adopted is  not  to
  re-value  in future, although as permitted by the standard, properties  that
  have  been  re-valued  in  the past will retain  the  existing  book  value.
  Adoption of these standards has no other material impact on the Group.
  
2    Turnover
  The  turnover of the Group comprises revenue from road passenger  transport,
  airport operations, train passenger services and related activities.  Within
  the  UK trains division and in Australia, franchise agreement receipts  from
  the  shadow  Strategic Rail Authority, local Passenger Transport  Executives
  within  the  West Midlands region and Scotland and the Victorian  Government
  are  treated  as turnover. Franchise agreement payments are  treated  as  an
  operating  cost.  During the first half year, franchise  agreement  receipts
  amounted to £221.2m (1999 interim: £236.5m; 1999 full year: £468.2m) in  the
  UK and £39.3m (1999 interim: nil; 1999 full year: £27.9m) in Australia.

3    Taxation
  Taxation on operating profit before exceptional items and goodwill has been
  calculated using an estimated annual effective rate of 24.2% (1999 interim
  25.9%; 1999 full year 25.7%).

4    Earnings per share
                                                                
                                     6 months  6 months  Year to
                                           to        to   31 Dec
                                      30 June   30 June     1999
                                         2000      1999
(a) Basic earnings per share            16.0p     25.7p    58.3p

  The  calculation  of the basic earnings per share is based  on  earnings  of
  £18.4m  (1999  interim: £29.2m, 1999 full year: £66.6m) and  on  114,761,359
  ordinary  shares  being the weighted average number of  ordinary  shares  in
  issue   in   the  period  (1999  interim:  113,566,739,  1999   full   year:
  114,232,918).

                                     6 months  6 months  Year to
                                           to        to   31 Dec
                                      30 June   30 June     1999
                                         2000      1999
(b) Normalised basic earnings per       33.2p     29.7p    69.7p
share

  The  calculation  of  normalised  basic  earnings  per  share  is  based  on
  normalised  earnings  of  £38.1m  (1999 interim:  £33.7m,  1999  full  year:
  £79.6m)  and  on  114,761,359  ordinary shares being  the  weighted  average
  number   of   ordinary  shares  in  issue  in  the  period  (1999   interim:
  113,566,739, 1999 full year: 114,232,918).

                                     6 months  6 months  Year to
                                           to        to   31 Dec
                                      30 June   30 June     1999
                                         2000      1999
(c) Diluted basic earnings per          14.6p     22.6p    51.9p
share

  The  calculation  of  diluted earnings per share is  based  on  earnings  of
  £18.4m  (1999  interim: £29.2m, 1999 full year: £66.6m) and on the  weighted
  average  number  of potential dilutive ordinary shares in issue  during  the
  period,  which was 126,441,704 (1999 interim: 129,022,406, 1999  full  year:
  128,266,998).
  
                                     6 months  6 months  Year to
                                           to        to   31 Dec
                                      30 June   30 June     1999
                                         2000      1999
(d) Normalised diluted earnings         30.1p     26.1p    62.1p
per share

  The  calculation  of  normalised diluted earnings  per  share  is  based  on
  normalised  earnings  of  £38.1m  (1999 interim:  £33.7m,  1999  full  year:
  £79.6m)  and  on the weighted average number of potential dilutive  ordinary
  shares  in  issue  during the period, which was 126,441,704  (1999  interim:
  129,022,406, 1999 full year: 128,266,998).
  
  The reconciliation of the weighted average number of shares in issue during
  the period is as follows:
  
                                   Number        Number       Number
Basic weighted number of average   114,761,359   113,566,739  114,232,918
shares                                            
                                                                 
Adjustment for effect of share      11,680,345    15,455,667   14,034,080
options issued at 'NIL'                             
consideration
                                                                 
Diluted weighted average number    126,441,704   129,022,406  128,266,998
of shares                                         
Notes to the Interim Accounts
Continued
  
  The analysis of normalised profit after tax and minority interest is as
  follows:
  
                                     6 months  6 months  Year to
                                           to        to   31 Dec
                                      30 June   30 June     1999
                                         2000      1999       
                                           £m        £m       £m
Profit after tax and minority            18.4      29.2     66.6
interest
Exceptional costs                        14.7       4.0     10.7
Loss on disposal of business              0.3         -        -
Profit on sale of investment                -      (0.2)    (0.2)
Goodwill                                  4.7       0.7      2.5
                                         38.1      33.7     79.6
  
  The normalised diluted earning per share has been calculated in addition  to
  the  basic earnings per share required by FRS 14 since in the opinion of the
  directors,  it reflects the financial performance of the core business  more
  appropriately.

5    Acquisitions
  On 6 January 2000 the Group acquired the entire share capital of Forsythe  &
  Associates,  Inc.   Other acquisitions during the period were,  Blue  Ribbon
  Bus  Company Pty Limited, Stewart International Airport, Inc and  two  coach
  division businesses.
  
                                     Forsythe     Other    Total
                                           £m        £m       £m
Consideration:                                                  
Cash                                     23.3      29.1     52.4
Other acquisition costs                   0.1         -      0.1
Total cost of investment                 23.4      29.1     52.5
                                                                
Net  (liabilities) / assets             (0.2)      25.1     24.9
acquired
                                                                
Goodwill on acquisition                  23.6       4.0     27.6
  
  On  31  May  2000 the Group announced the acquisition of School  Services  &
  Leasing  Inc. in the USA for £136.7m in cash. The transaction was  completed
  on  31 August 2000.   On 18 July 2000 the Group announced a recommended cash
  and  share offer ('the offer') for Prism Rail PLC ('Prism').  The  offer  is
  282.5p  cash plus 0.375 new National Express Group PLC ordinary  shares  for
  each  Prism  share.   There is also a mix and match election.   In  addition
  Prism  shareholders are entitled to a special dividend of 40 pence per Prism
  share,  which  becomes  payable  when the  offer  becomes,  or  is  declared
  unconditional,  in  all  respects. The offer valued Prism  at  £165.8m.  The
  first  closing date of the offer was 11 August 2000 when the Group  received
  valid  acceptances representing 88.4% of the issued share capital of  Prism.
  The offer was extended to 29 August 2000. The offer became unconditional  as
  to  acceptances on 18 August 2000 when the Group received valid  acceptances
  representing 90.8% of the issued share capital of Prism.  The offer and  the
  mix and match election remain open until further notice.
  
6    Cashflow Reconciliation
  The reconciliation of the operating profit to net cashflow from operating
  activities is as follows:
                                6 mths to 30 June 2000   

                               Contin-                   6 mths    Year
                                 uing   Acquisi-  Total   to 30   to 31
                                operat     tions           June     Dec
                                  ions                     1999    1999
                                    £m       £m     £m       £m      £m  
                                                                    
Operating profit                  38.9    0.4    39.3      39.5   95.2
                                     
Depreciation of tangible fixed    20.0    0.6    20.6      10.6   26.6
assets                               
Amortisation of goodwill          6.8     0.5     7.3       0.6    3.3
Profit on sale of tangible       (0.2)     -     (0.2)     (0.3)  (2.4)
fixed assets                        
Increase in stocks               (0.7)     -     (0.7)     (2.0)  (0.8)
                                  
(Increase)/decrease in debtors   (8.0)   (4.1)  (12.1)     13.6  (31.7)
                                                   
(Decrease)/increase in           (9.9)   (0.2)  (10.1)    (17.5)   4.2
creditors                                          
Increase in provisions            0.3      -      0.3       0.5    0.7
Net cash inflow / (outflow)      47.2    (2.8)   44.4      45.0   95.1
from operating activities            
  
  Copies  of  the interim statement may be obtained from the Company Secretary
  at 75 Davies Street, London W1K 5HT.