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National Express (NEX)

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Wednesday 20 March, 2002

National Express

Final Results

National Express Group PLC
20 March 2002

20 March 2002

                           National Express Group PLC

                              Preliminary Results

                      for the year ended 31 December 2001

Financial Highlights

 - Turnover from continuing operations up 25% to £2.5bn (2000: £2bn)

 - Operating profit from continuing operations before exceptionals and goodwill
   up 10.4% to £156.7m (2000: £142m)

 - Operating cash flow of £185.5m (2000: £167.5m)

 - Normalised profit before tax increased by 8.3% to £129.2m (2000: £119.3m)

 - Normalised fully diluted EPS up 14.3% to 72.8p (2000:  63.7p restated)

 - Total dividend per share up 6.3% to 22.0p (2000:20.7p)

 - Sale of UK airports for £241m

 - Net debt reduced to £315m (2000: £556.6m)

 - EBITDA interest cover increased to 8 times (2000: 5.3 times)

 - Australian train and tram interim funding agreement

 - New terms with the Strategic Rail Authority ('SRA') for our Central Trains
   and ScotRail franchises.

Operational Highlights

 - Sustained bus patronage and launch of two new Showcase routes in the Midlands

 - Focus on restoring rail performance by working with Railtrack and industry

 - UK train passenger numbers continue to be affected by network disruption

 - £160m new train order for Midland Mainline signed in March 2002

 - Launch of e-ticketing by

 - Continued growth in the USA

 - Improvements in Australian train and tram punctuality and reliability

 - Continuing to address high levels of fare evasion in Melbourne

 - £93m capital investment across our businesses.

Commenting on current trading and prospects, Phil White, Chief Executive said:

'2001 was a challenging year for the Group particularly within our UK and
Australian train and tram operations.

We were pleased to announce after the year end that agreements were reached with
the SRA in the UK and the Victorian Government in Australia which help address
some of our areas of concern. The agreements, which have been achieved through a
partnership approach, give us greater confidence to develop these businesses
further. We are continuing to work with the Victorian Government to reach a
successful conclusion for the long term viability of the franchises.

UK train patronage has recovered to pre-Hatfield levels but there is still no
real evidence of growth returning. However, we intend to play an integral part
in rebuilding consumer confidence in UK rail. Our bus businesses worldwide
continue to perform well and we intend to grow these operations both organically
and by acquisition.

Current trading for the Group is in line with market expectations.'

For further information, please contact:

Phil White, Chief Executive
William Rollason, Finance Director
Nicola Marsden, Director of Group Communications
National Express Group PLC                                       020 7529 2000

Steve Jacobs/Andrew Dowler/Ben Foster
Financial Dynamics                                               020 7831 3113

- An analyst presentation will take place at 0900 hours on 20 March 2002 at
  Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2

- A copy of the analyst presentation will be available on our website at 0900 hours on 20 March 2002. For further
  information contact 020 7529 2035

- Photos are available through Newscast on tel:  020 7608 1000.

Preliminary Results

for the year ended 31 December 2001

The year presented a number of significant challenges for our businesses as
described in our October 2001 trading statement.  The tragic events of 11
September, operational issues within our Australian train and tram businesses
and the continuing reduction in train subsidies all affected our performance for
the year.  At the same time our UK trains business continued to be impacted by
network disruption.

We are, however, pleased to report that since the year end we have reached
agreement with both the Victorian Government in Australia and the Strategic Rail
Authority in the UK to address some of these issues as follows:

- In February, we announced that we had reached an interim agreement with the
Victorian Government in Australia, which   resulted in a payment to the Group of
£16.5m.  This settles outstanding contractual claims and disputes arising from
the privatisation of the Victorian transport system in 1999 and provides for the
development of patronage recovery proposals over the next 18 months.  The
agreement has put our train and tram franchises on a stronger financial
platform. More importantly, we continue discussions with the Victorian
Government about the long term viability of our franchises with the aim of
completing these by the autumn.

- Early in March, we announced that we had agreed new terms with the SRA for our
Central and ScotRail franchises.  Under this agreement these franchises will
receive an extra £115m in grant until March 2004 in exchange for a payment to
the SRA of £59m. Based on the increased subsidy, these franchises are currently
forecast to break-even until the end of their franchise periods in early 2004.

Results and dividends

Turnover from continuing operations increased by 25% to £2.5bn (2000: £2.0bn)
and normalised operating profit from continuing operations rose by 10.4% to
£156.7m (2000: £142.0m) benefiting from the full year effect of acquisitions
made in 2000.   After interest and the Group's share of losses from associated
undertakings, normalised profit before tax increased by 8.3% to £129.2m (2000:
£119.3m).   Normalised fully diluted earnings per share, restated to exclude
discontinued activities, increased by 14.3% to 72.8p (2000: 63.7p restated).

We are recommending that a final dividend of 14.7p per ordinary share (2000:
14.2p), an increase of 3.5%, be paid on 3 May 2002 to shareholders on the
register at 5 April 2002. Including the interim dividend, the proposed total
dividend for the year is up 6.3% at 22.0p per share (2000: 20.7p).

Operating cash flow remained strong at £185.5m (2000: £167.5m) before interest,
tax and dividends, which enabled the Group to fund net capital investment in
existing businesses of £92.8m (2000: £100.4m).  During the year we sold our UK
airports for £241m and Bronckaers, our small bus business in Belgium, for £3.7m.
These disposals generated net proceeds of £237.6m and net debt was reduced from
£556.6m at the start of the year to £315.0m at

31 December 2001.  As a result EBITDA interest cover from continuing operations
increased to 8 times (2000: 5.3 times).

Net assets increased by 9.7% to £413.9m (2000: £377.3m) and gearing at the year
end was 76.1% (2000: 147.5%).

Trading Overview

In the UK, we were pleased with the consistency in performance of our bus
business and its ability to adjust services to meet changing passenger needs. In
view of its lack of critical mass, we sold Bronckaers, our Belgian bus business,
in October.

Our UK train operations continue to be impacted by the underperformance of
Railtrack.  We had and still have a disproportionate number of emergency speed
restrictions ('ESRs') on our network which have a negative impact on the
punctuality and reliability of our services. Whilst we are working with
Railtrack and their contractors to address this, we have developed a range of
internal initiatives designed to improve passenger journeys. In September, we
received £16m from Railtrack in full and final settlement to mitigate the
revenue shortfall incurred as a result of the ESRs following Hatfield. In
addition, the late delivery and poor performance of our new trains over the last
18 months has been offset by liquidated damages from the manufacturers.

Our brand continues to drive the progress of the coach division.
The growth in internet sales has been encouraging, with nearly 10% of total
bookings now on-line.  Also over 50% of our sales are now direct through our
customer contact centre and our own sales outlets.

We completed the integration of the businesses acquired during the last couple
of years,  particularly within the USA where since 1999 we have increased
turnover from £65m to £400m.  We are pleased with the progress of this division
and see further opportunities for growth, both organically and through

Our Australian bus operations continue to progress well. In December we acquired
the Glenorie Bus Company in Australia for A$23.5m (£8.5m). This well established
business, based in the north-west of Sydney, brings the Westbus fleet to around
500 buses and gives Westbus greater critical mass and exposure to a key growth

As highlighted in October, following 11 September our insurance premia have
doubled to £30m for the year ending 31 October 2002.


The safety of our passengers and people is of paramount importance.  We aim to
ensure that all of our operations embrace safety as a key component of their
culture.  Health and safety performance continues to be reviewed by the Board
Safety Committee at its quarterly meetings.  During 2001 we developed measures
to be applied across the Group as follows:

- The approval of a new policy on health and safety management, setting out our
  expectations for health and safety management standards;

- The establishment of safety systems which will enable us to benchmark our
  performance both against other operators and within our own operations;

- The communication of good practice across all operations; and

- Regular safety tours.

Board changes since the last Annual General Meeting

In May Sue Lyons OBE joined the Board as a Non Executive Director.  Sue has
spent her career in engineering and manufacturing culminating in her appointment
as Managing Director, Defence (Europe) at Rolls Royce. She brings valuable
industrial experience to the Board.

At the beginning of December Richard Brown resigned as a Director of the Group.
He had played an important role in the development of the Group's trains
division and we thank him for his contribution over the years.

Outlook and current trading

2001 was a challenging year for the Group particularly within our UK and
Australian train and tram operations.

We were pleased to announce after the year end that agreements were reached with
the SRA in the UK and the Victorian Government in Australia which help address
some of our areas of concern. The agreements, which have been achieved through a
partnership approach, give us greater confidence to develop these businesses
further. We are continuing to work with the Victorian Government to reach a
successful conclusion for the long term viability of the franchises.

UK train patronage has recovered to pre-Hatfield levels but there is still no
real evidence of growth returning. However, we intend to play an integral part
in rebuilding consumer confidence in UK rail. Our bus businesses worldwide
continue to perform well and we intend to grow these operations both organically
and by acquisition.

Current trading for the Group is in line with market expectations.

Review of Operations

Despite the difficult trading that we experienced this year, I am pleased to
report that considerable progress was made within all of our businesses. We
continued to invest further to deliver the improvements which we know our
customers expect from public transport.


Travel West Midlands is the leading bus operator in the West Midlands.
Incorporating Travel Midland Metro and Travel Dundee, it employs over 5,600
people and has a fleet of 2,000 buses operating over 600 routes.

Turnover was up by 4.1% to £208.3m (2000:  £200.1m) and operating profit before
goodwill and exceptional items was up 4.3% to £52.8m (2000: £50.6m). Margins
were maintained at 25.3%.

The public transport market in the West Midlands remained buoyant despite the
major construction work in Birmingham city centre. We are adapting our services
to respond to the investment in retail and leisure facilities in both city
centre and out of town destinations and as a result patronage levels were

Driver training and recruitment continues to be an area for focus.  We
implemented a package of recruitment and retention measures to tackle the tight
local labour market.  Investment in driver training enabled nearly 700 new
drivers to be trained over the year and 1,200 have been awarded a NVQ (II). A
further 800 drivers are currently in the NVQ programme.  Early in the year we
also agreed a unique five year pay deal with the drivers at TWM which has
improved the terms and conditions and removed the annual pay bargaining
negotiations.  All of these measures have improved retention rates during the

We introduced 140 'state of the art' environmentally friendly easy access double
deck buses with delivery of a further 140 due in the first six months of 2002.
These buses are Euro III compliant and additionally are being fitted with
particulate traps ensuring that they are the 'greenest' buses operating in the
UK.  These buses are being used to upgrade services on some of the West
Midlands' busiest routes.

Two major Showcase routes both serving large regional hospitals were launched
during the year. The Birmingham Heartlands Hospital is a key destination within
a major corridor, linking Birmingham and North Solihull.  In Wolverhampton the
first stage of a partnership with the city and the NHS Trust has greatly
improved access to and around a major hospital complex. We are committed to
further investment in Quality Partnerships as experience has shown that since
their inception these initiatives have increased patronage by more than 30%.

In partnership with the West Midlands local authorities, Centro, the passenger
transport executive, and other local bodies we aim to improve service quality
for our passengers through investment, innovation and better provision of
information. We are an integral partner in the delivery of the local transport
plan and the development of the accompanying bus, ticketing and information


We are the largest operator of train franchises in the UK with nearly 1,000
trains. We run c2c, Central Trains, Gatwick Express, Midland Mainline, ScotRail,
Silverlink, WAGN including the Stansted Express, Wales & Borders and Wessex
franchises. The division employs 12,600 people.

Turnover was up 37.7% to £1.5 billion (2000: £1.1 billion). This included a full
year's contribution from Prism. Operating profit before goodwill and exceptional
items increased by 19.1% to £40.6m (2000: £34.1m).

2001 proved to be a challenging year for the UK train network.  The large number
of ESRs imposed on the network following the Hatfield accident in October 2000
continued to impact on the punctuality and reliability of our services. Extended
and unpredictable travelling times discouraged passengers from travelling by
train. The situation was compounded by the outbreak of foot and mouth disease at
Easter and the events of 11 September after which there was a severe reduction
in international travel. Our Gatwick Express service was significantly affected
by the reduction of in-bound USA flights.

In September, we received £16m in compensation from Railtrack in full and final
settlement to mitigate the revenue shortfall incurred as a result of the ESRs
following Hatfield. In addition, the late delivery and poor performance of our
new trains over the last 18 months has been offset by liquidated damages from
the manufacturers.

We continued to invest in multiple distribution channels for the sale and
distribution of train tickets. Our retailing strategy was expanded through the
launch of, our fast and easy ticket-buying site for UK train travel,
and with the roll-out of the internet retailing system on all our train company
websites.  In October, the Qjump service was launched on third party websites
including GNER. In addition, we have invested £10m in technology which prints
rail tickets to and from anywhere in the UK as well as providing a portable
database of up-to-date rail network timetabling and fare information.

In April 2002, our new Customer Service Academy in Derby will open and provide a
multi-purpose centre for recruitment, induction, customer service and skill
development for rail staff.

Following the appointment of Ian Buchan as Chief Executive of the Trains
Division in May we are reorganising the division into three market sectors:
London and the South East, Long Distance/Intercity and Regional Services.

London and the South East - Turnover for the year was £516.4m (2000: £264.2m)
with an operating profit of £46.7m (2000: £32.7m). In March we launched the
London Lines organisation to encompass the support functions of our c2c,
Silverlink and WAGN (including Stansted Express) businesses. This involved the
consolidation of a number of central functions such as fleet maintenance and
customer relations.

During the year the performance of c2c was dominated by two key factors: the new
trains and the impact of industrial action, now resolved, which related to the
introduction of driver only operated trains, which will be completed during

On Silverlink, the service was badly disrupted by ESRs and a temporary timetable
was introduced to accommodate the West Coast re-modernising work, which was
withdrawn in September following remedial work by Railtrack.

WAGN's performance was severely affected throughout the year by ESRs and the
poor quality of the infrastructure on which the service runs.  We are strongly
encouraging Railtrack as a matter of urgency to address this issue. This did
not, however, stop us from investing in the service with the delivery of a new
branding partnership with local councils and the installation of CCTV at
selected stations.

Gatwick Express services were significantly impacted by the reduction in air
travel following 11 September and we made changes to the timetable to reflect
the reduction in demand.  Patronage levels are currently running 12% below last
year. During 2002, we have increased focus on working with low-cost airlines to
promote rail-air services following British Airways' decision to downsize its
operations at Gatwick.  This work should have a long-term benefit to the Gatwick
Express business.

Long Distance/Intercity - Turnover for the year was £121.7m (2000: £113.2m) with
an operating profit of £10.5m (2000: £10.7m).  Midland Mainline's ('MML')
performance was impacted by ESRs on its network throughout the year. In February
2002 we announced the signing of a £160m order for the manufacture and supply by
Bombardier of new rolling stock for MML. The new fleet, to be called 'Meridien',
will be fully in service by January 2005 and will replace the current Turbostar
fleet, which will be reallocated within the Group.

Regional Services - Turnover for the year was £779.9m (2000: £647.3m) with an
operating loss of £19m (2000: loss £13.4m). Following the agreement with the
SRA, Central and ScotRail, which form part of our Regional Services, are
currently forecast to break-even until the end of their franchise periods in
early 2004.

At Central, an additional 70 drivers and conductors were recruited to prevent
cancellations caused by staff shortages. The SRA and Centro have also agreed to
enter into good faith negotiations, which have already begun, to extend the
Central franchise by two years to March 2006. This extension was set out in the
SRA's Strategic Plan which was published in January 2002.

At ScotRail a special timetable was introduced in response to the withdrawal by
train drivers of rest day and overtime working as part of a pay dispute.  Four
one day strikes have been held in March 2002.  We continue to hold discussions
with ASLEF with a view to finding a solution. However, whilst these strikes
continue we will be incurring losses.

In October the remapping of the Wales & West franchise concluded with the
establishment of the Wales and Borders and Wessex Trains franchises.  We will
continue to operate these franchises until they are awarded.


The coach division provides Britain's only scheduled express coach network and
serves more than 1,200 destinations. AirLinks, the airport coach service,
operates premier, high-frequency scheduled coach services between the major UK
airports, as well as airside coaching services at Heathrow and Gatwick. The
division has 2,000 employees.

Turnover for the year fell 2.9% to £181.3m (2000: £186.8m) primarily as a result
of a reduction in the number of people travelling post 11 September. Operating
profit reduced by 6.2% to £10.6m (2000: £11.3m).

Denis Wormwell joined the division as Managing Director in January. Denis brings
a range of travel marketing and operations experience as the division increases
its direct sales focus.

UK Express coaches - Our scheduled routes remained popular despite a severe
reduction in in-bound tourism due to 11 September, foot and mouth and the
strength of sterling.

Providing accurate travel information to customers continues to be a priority.
In July a new £1.4m customer contact centre opened in Birmingham offering a 'one
stop shop' for all our products and services.  We also introduced new frontline
customer service staff at principal departure points.

Passenger revenue increased with sales through direct channels growing by 29%.
Sales via the website doubled reflecting the increased usage of
this facility by our customers. We continued to develop the Shuttle brand, which
provides turn up and go high frequency commuter services. Technology will play a
major role in the development of the division. Ticket collection points were
increased and during December was enhanced to offer customers the
facility to print e-tickets directly from the website.

Airport services - The impact of 11 September affected the performance of
AirLinks in the last quarter of the year.  However, a number of important
contracts were secured with British Airways, BAA, Gatwick airport passenger
services, JMC, Virgin Atlantic and NCP.

European coaching - With the growth in internet booking, Eurolines has upgraded
its central reservation system to accommodate increased internet sales. This
business has, however, been badly affected by the reduction in in-bound tourism
both to the UK and Continental Europe.


The USA division consists of student transportation (Durham School Services),
public transit operations (ATC) and Stewart International Airport.  It employs
19,000 people and has a fleet of 11,500 vehicles.

Turnover for the year was up 33.2% to £401.7m (2000: £301.6m) and operating
profit was up 20.2% to £39.3m (2000: £32.7m). During 2001 we saw a number of
significant developments in our USA division, with the consolidation of
businesses and functions as well as the sharing of best practice across
operations.  The division benefited as a slower US economy helped improve the
quality and availability of driver applicants. Our operations remain
contractually based and during 2001 we continued to enjoy a high level of
success in renewing our existing contracts while we strategically bid or
negotiated an exit from those contracts which did not meet our financial returns
or had little or no strategic relevance to the overall business. We were
impacted by the increase in insurance costs after the renewal of the annual
policies in October 2001.

Student Transportation - The division had a strong start to the 2002 school year
largely due to the improved availability of drivers. We continue to invest in
the quality of our staff, formalising and expanding our training programmes for
all general managers, operation supervisors and dispatchers. We anticipate these
programmes will be completed by April 2002.

In August 2001, we rebranded the division 'Durham School Services'.  The Durham
brand is well established and brand equity research showed that we would benefit
from a consistent umbrella brand. The rebranding was combined with standard
policies and procedures in financial reporting, safety, maintenance, recruitment
and retention of personnel being extended throughout the division.

Durham School Services continues to focus on expanding the market. Moving
forward, in view of the changing economic climate in the USA, school districts
are likely to outsource more of their services, including their school bus
operations. Currently 30% of the student transportation market is outsourced.
With only a 2% market share of the total school bus transportation market and 7%
of the privatised market we are well positioned to benefit from this
development. We also continue to review potential share shift opportunities.

Public Transit - ATC's focus is on the combination of the provision of quality
services and the delivery of improved financial results. During the year we
strengthened our contract bidding team which has resulted in improved
consistency in bidding and the re-negotiation of lower margin contracts. As a
result significant contract wins were achieved in California and Washington.

Currently 10% of the public transit market is outsourced and ATC holds a 2.5%
market share leaving it well placed to benefit from any increase in outsourcing.

Consolidation and centralisation of operations, most notably within the finance
function,  ensured improved financial control and increased standardisation of
the ATC product offering.

Training and the continuous maintenance of skills are the two most important
elements of transportation delivery. ATC requires its managers and supervisors
to attend the ATC Management University once a year. It has also established a
separate ATC Maintenance University to improve the skills of its maintenance
managers and supervisors, bringing them up to speed on the latest technological

ATC commands a strong position in the industry as a provider of quality services
with reliability on average exceeding 90% and has one of the lowest accident and
complaint rates in the industry.

Stewart Airport - The tragic events of 11 September severely impacted the
operations of Stewart International Airport, located 55 miles north-west of New
York, and passenger numbers declined by 20%. Performance was also impacted by
the ComAir strike and the bankruptcy of Midway Airlines.  Despite this,
significant progress was made during the year, including the completion and
opening of a federal government facility cargo inspection station, continued
development of the industrial park, as well as certain facility improvements
which were primarily funded in partnership with government aviation programmes.


In Australia, we are the largest private operator of train, tram and bus
services with operations in Brisbane, Melbourne, Perth and Sydney, under the
rail brands, M>Train, M>Tram and V/Line and the bus brands Blue Ribbon,
Glenorie, National Bus Company, Southern Coast Transit and Westbus. Our fleet
includes 1,100 buses and 570 trains and trams.  4,500 people are employed by the

Turnover fell to £207.9m (200:0:  £221.5m) after a reduction of £14m in
franchise payments and operating profit was maintained at £13.4m (2000: £13.3m).
The interim agreement reached earlier this month with the Victorian Government
has secured the short term financial viability of our train and tram businesses.
The current discussions with the Victorian Government continue to address the
long term viability of these franchises and the continuing decline in franchise

Trains and Trams - We have been working to address key operational issues in our
Melbourne train and tram businesses and were pleased to announce in February
2002 an interim agreement was reached with the Victorian Government. This
agreement has put these businesses on a stronger financial footing and enables
us to develop patronage recovery proposals which will address some of the key
operational issues such as fare evasion. For example, we are working with the
State Government and the other operators through a dedicated ticketing task
force to develop proposals to improve and ultimately replace the ticketing
system.  This initiative will improve the availability, ease of use and security
of ticket machines.  A major media campaign promoting heavy penalties for fare
evasion has also been launched, coupled with intensive fare evasion 'blitz'
inspection activity.

In October our two metropolitan Victorian businesses were officially rebranded
under the 'Moving Melbourne' banner; Bayside Trains became M>Train and Swanston
Trams became M>Tram. The launch of the new brand was supported by a new customer
friendly website - and new customer information at tram
stops.  We also began the roll-out of refurbished trains and trams in Victoria,
delivering improved features.

A major highlight of 2001 was the signing of a A$410m (£147m) contract to build
29 new two-car diesel trains for regional Victoria.  The new 160kph trains, to
be delivered from 2004, will improve services and customer comfort as well as
significantly reduce journey times.

Buses - During the year good progress was made in our bus operations.
Significant improvements in both punctuality and reliability were achieved. In
August John Lee joined as Managing Director of Westbus. John was formerly senior
adviser to New South Wales' inaugural Co-ordinator General of Rail and brings
extensive experience from his involvement in co-ordinating commuter services for
the Sydney 2000 Olympics.

Towards the end of the year we acquired Glenorie Bus Company for A$23.5m (£8.5m)
which gave critical mass to our Sydney operations. Growth of our business in the
Hills district of Sydney is a key objective for 2002 and this acquisition opens
the way for new and better integrated services, including in-bound commuter
services from Glenorie's catchment area, the fast growing western suburbs of
Sydney.  Demand for school services in New South Wales continues to grow and we
expect this aspect of the business to generate further revenue in 2002, with
continued population growth in north-western Sydney in particular and new
private schools opening in the area.

National Bus Company in Victoria is working with the State Government on a
number of proposals aimed at growing patronage.   Most notable are plans to
build Melbourne's first bus 'Park 'n Ride' in the eastern suburbs and a proposal
to upgrade significantly the central business district services.  We are also
undertaking a commercial trial of diesel to LPG conversion technology with
assistance from the Federal Government's Greenhouse Office.

                                    - ENDS -

Notes to Editors:

Train market sector split by turnover and operating profit/loss:

                                                     Turnover                    Operating profit/(loss) 
                                                2001           2000                       2001      2000 
                                                  £m             £m                         £m        £m 
              London and the South East        516.4          264.2                       46.7      32.7 
              Long distance/Intercity          121.7          113.2                       10.5      10.7 
              Regional                         779.9          647.3                     (19.0)    (13.4) 
              Other                             40.2           33.9                        2.4       4.1 
              Total                          1,458.2        1,058.6                       40.6      34.1 

For the year ended 31 December 2001

                                 Total before                            Total before
                                 goodwill and  Goodwill and              goodwill and  Goodwill and                     
                                  exceptional   exceptional               exceptional   exceptional                     
                                        items         items       Total         items         items       Total
                                         2001          2001        2001          2000          2000        2000
                           Note            £m            £m          £m            £m            £m          £m


- continuing operations               2,457.4             -     2,457.4       1,968.6             -     1,968.6
- discontinued                            6.8             -         6.8          34.0             -        34.0
Turnover                      1       2,464.2             -     2,464.2       2,002.6             -     2,002.6

Other operating income                   12.4             -        12.4          13.4             -        13.4

Other operating costs
before goodwill and
exceptional items                   (2,318.8)             -   (2,318.8)     (1,860.9)             -   (1,860.9)
Franchise amendment
costs                                       -        (67.0)      (67.0)             -             -           -
Other exceptional items                     -        (16.5)      (16.5)             -        (30.6)      (30.6)
Goodwill amortisation                       -        (41.9)      (41.9)             -        (22.7)      (22.7)
Total operating costs               (2,318.8)       (125.4)   (2,444.2)     (1,860.9)        (53.3)   (1,914.2)

Operating profit                        157.8       (125.4)        32.4         155.1        (53.3)       101.8

- continuing operations                 156.7       (125.4)        31.3         142.0        (53.3)        88.7
- discontinued                            1.1             -         1.1          13.1             -        13.1

Operating profit              1         157.8       (125.4)        32.4         155.1        (53.3)       101.8

Share of operating                      (1.9)             -       (1.9)         (1.8)             -       (1.8)
of associated
Profit/(loss) on sale of
businesses                                  -          91.7        91.7             -         (1.0)       (1.0)
Profit on ordinary
activities before                       155.9        (33.7)       122.2         153.3        (54.3)        99.0
Net interest payable                   (26.7)             -      (26.7)        (34.0)             -      (34.0)
Profit on ordinary
activities before                       129.2        (33.7)        95.5         119.3        (54.3)        65.0
Tax on profit on
activities                             (27.8)          26.6       (1.2)        (25.7)          12.8      (12.9)
Profit after tax                        101.4         (7.1)        94.3          93.6        (41.5)        52.1

Minority interest                         0.1             -         0.1         (0.7)             -       (0.7)
Profit attributable to
shareholders                            101.5         (7.1)        94.4          92.9        (41.5)        51.4

Dividends                              (28.6)             -      (28.6)        (26.3)             -      (26.3)
Retained profit for the
financial year                           72.9         (7.1)        65.8          66.6        (41.5)        25.1

Basic earnings per share      2                                   72.9p                                   43.4p

Diluted earnings per          2                                   68.3p                                   39.7p

Normalised diluted
earnings per share            2         72.8p                                   63.7p


At 31 December 2001

                                                                       Group              Company
                                                                  2001      2000      2001      2000
                                                                    £m        £m        £m        £m
Fixed assets

Intangible assets                                                503.6     523.7         -         -
Tangible assets                                                  512.8     653.6       1.4       3.4
Investments and interests in associated undertakings              26.4      27.3     582.0     915.3
                                                               1,042.8   1,204.6     583.4     918.7

Current assets

Stock                                                             21.4      20.7         -         -
Debtors                                                          376.1     327.1     621.4     515.4
Cash at bank and in hand                                          92.3      53.8      56.7       7.2

                                                                 489.8     401.6     678.1     522.6

Creditors: amounts falling due within one year                 (610.6)   (751.1)   (460.5)   (312.5)

Net current (liabilities)/assets                               (120.8)   (349.5)     217.6     210.1

Total assets less current liabilities                            922.0     855.1     801.0   1,128.8

Creditors: amounts falling due after more than one year        (405.1)   (458.2)   (355.6)   (428.8)
Provisions for liabilities and charges                         (103.0)    (19.6)     (6.1)     (8.1)
                                                                 413.9     377.3     439.3     691.9

Capital and reserves

Called-up share capital                                            6.6       6.5       6.6       6.5

Share premium account                                             43.7      40.5      43.7      40.5
Share capital to be issued                                         0.3       0.4       0.3       0.4
Merger reserve                                                    15.4      57.3         -     214.2

Capital reserve                                                      -      17.0      26.4      52.1

Revaluation reserve                                                0.8      17.5         -         -
Profit and loss account                                          341.8     233.6     362.3     378.2

Equity shareholders' funds                                       408.6     372.8     439.3     691.9

Equity minority interest                                           5.3       4.5         -         -
                                                                 413.9     377.3     439.3     691.9

For the year ended 31 December 2001

                                                                                      2001                2000
                                                                 Note                   £m                  £m

Net cash inflow from operating activities                        4(a)                185.5               167.5

Interest received                                                                      9.5                 3.1
Interest paid                                                                       (37.7)              (20.7)
Interest element of finance lease rentals                                            (1.0)               (1.6)

Return on investments and servicing of finance                                      (29.2)              (19.2)

UK corporation tax paid                                                              (5.4)              (24.8)
Overseas tax paid                                                                    (0.6)               (1.8)

Taxation                                                                             (6.0)              (26.6)

Payments to acquire tangible assets                                                (102.6)              (89.3)
Receipts from sale of tangible assets                                                 10.6                 3.6
Purchase of own shares to satisfy employee share scheme                              (0.7)               (1.6)
Payments to acquire other investments                                                (0.1)              (13.1)
Capital expenditure and financial investment                                        (92.8)             (100.4)

Receipts from the sale of businesses                                                 237.6                   -
Payments to acquire businesses                                                       (8.6)             (283.0)
Cash disposed in businesses sold                                                     (1.7)                   -
Cash acquired in businesses purchased                                                  0.4                52.6
Deferred consideration for businesses acquired                                       (1.5)                   -

Acquisitions and disposals                                                           226.2             (230.4)

Equity dividends paid                                                               (28.1)              (22.0)

Cash inflow/(outflow) before financing activities                                    255.6             (231.1)

Management of liquid resources

Cash withdrawn from short term deposits                                                4.5                19.4


Issue of share capital                                                                 3.2                 4.9
Cash inflow/(outflow) from lease financing                                            21.2               (4.4)

Movements on bank deposits relating to loan notes                                        -                 3.1

Loans advanced                                                                           -               187.5

Loans repaid                                                                       (241.2)                   -

Net cash (outflow)/inflow from financing                                           (216.8)               191.1

Increase/(decrease) in cash                                      4(b)                 43.3              (20.6)

For the year ended 31 December 2001

                                                                        2001             2000
                                                                          £m               £m

Profit attributable to shareholders                                     94.4             51.4

Exchange differences on foreign currency net investments               (0.6)            (0.5)
Total recognised gains and losses for the year                          93.8             50.9

For the year ended 31 December 2001

                                                                                2001              2000
                                                                                  £m                £m

Total recognised gains and losses                                               93.8              50.9
Dividends                                                                     (28.6)            (26.3)
New share capital issued for cash                                                3.2               4.9
New share capital issued for non cash consideration                                -              80.5
Goodwill realised                                                             (32.6)                 -
Net addition to shareholders' funds                                             35.8             110.0
Equity shareholders' funds at 1 January                                        372.8             262.8
Equity shareholders' funds at 31 December                                      408.6             372.8



1.             Turnover and segmental analysis

The turnover of the Group comprises revenue from road passenger transport,
airport operations, train passenger services and related activities in the UK,
USA and Australia.  Within the trains division, franchise agreement payments
from the Strategic Rail Authority and local Passenger Transport Executives
within the West Midlands region and Scotland are treated as turnover.  During
the year franchise agreement payments amounted to £554.8m (2000: £482.6m) in the
UK and £56.0m (2000: £69.6m) from the Victoria Department of Public Transport in
                                                              Operating profit
                                                           before goodwill and
                                           Turnover          exceptional items         Net assets
                                       2001         2000      2001        2000       2001       2000
Analysis by class of business            £m           £m        £m          £m         £m         £m

Buses                                 208.3        200.1      52.8        50.6       63.8      108.0
Trains                              1,458.2      1,058.6      40.6        34.1        9.8       91.0
Coaches                               181.3        186.8      10.6        11.3       35.2       32.4
UK operations                       1,847.8      1,445.5     104.0        96.0      108.8      231.4

USA                                   401.7        301.6      39.3        32.7      501.5      496.5
Australia                             207.9        221.5      13.4        13.3      101.6       55.0
Continuing operations               2,457.4      1,968.6     156.7       142.0      711.9      782.9
Discontinued operations -               6.8         34.0       1.1        13.1          -      162.4
                                    2,464.2      2,002.6     157.8       155.1      711.9      945.3
Exceptional items (see table                                (83.5)      (30.6)
Goodwill amortisation                                       (41.9)      (22.7)
                                                              32.4       101.8
Unallocated net liabilities                                                       (303.3)    (572.5)
                                                                                    408.6      372.8
Equity minority interest                                                              5.3        4.5
Total net assets                                                                    413.9      377.3

Exceptional items can be analysed as follows:

                            Buses       Trains     Coaches       USA   Australia    Other      Total
                               £m           £m          £m        £m          £m       £m         £m
Franchise amendment             -         67.0           -         -           -        -       67.0
New trains                      -          3.0           -         -           -        -        3.0
Reorganisation                  -          4.8         3.1       3.6         0.6        -       12.1
Abortive bid costs            0.2          1.0           -         -         0.2        -        1.4
                              0.2         75.8         3.1       3.6         0.8        -       83.5
New trains                      -          2.4           -         -           -        -        2.4
Reorganisation                1.6          5.6           -       1.5         2.4        -       11.1
Abortive bid costs              -            -           -       0.6           -        -        0.6
Atlantic Express                -            -           -         -           -     16.5       16.5
                              1.6          8.0           -       2.1         2.4     16.5       30.6

The exceptional franchise amendment expenditure represents the cost to the Group
of its renegotiations with the Strategic Rail Authority of the Central Trains
and ScotRail rail franchises.  The exceptional expenditure on new trains is the
costs associated with bringing the new trains into service.  Reorganisation
costs include £1.7m (2000: £nil) relating to the impairment of goodwill
previously written off to reserves in respect of a coach business.  The
exceptional expenditure during the year ended 31 December 2000 of £16.5m is the
settlement, with no admission of liability, of the litigation brought against
the Group by Atlantic Express Group Inc. in the USA, and the associated
professional fees.

Goodwill amortisation of £41.9m (2000: £22.7m) is analysed as Trains £21.6m
(2000: £6.0m), Coaches £0.4m (2000: £0.2m), USA £18.5m (2000: £15.2m) and
Australia £1.4m (2000: £1.3m).

The allocation of net assets by division for the year ended 31 December 2000 has
been restated to reflect a reassessment of the allocation of certain net assets.
Unallocated net liabilities comprise other investments, cash at bank and in
hand, borrowings (other than finance leases), deferred consideration payable,
dividends payable and taxation.  The net assets in respect of the Group's
investment in associated undertakings have been analysed according to the
activities of the associated undertakings.

2.             Earnings per share

                                                                                          2001      2000
Basic earnings per share                                                                 72.9p     43.4p

Diluted earnings per share                                                               68.3p     39.7p

Normalised diluted earnings per share                                                    72.8p     63.7p

Basic earnings per share is calculated by dividing the profit attributable to
shareholders of £94.4m (2000: £51.4m) by the weighted average number of ordinary
shares in issue during the year, excluding those held by employee share
ownership trusts which are treated as cancelled.

For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares.  These represent share options granted to employees where the exercise
price is less than the average market price of the Company's ordinary shares
during the year.

The reconciliation of weighted average number of ordinary shares is                Number        Number
detailed as follows:                                                            of shares     of shares
                                                                                     2001          2000
Basic weighted average shares                                                 129,457,561   118,393,605
Adjustment for dilutive potential ordinary shares                               8,852,402    11,191,236
Diluted weighted average shares                                               138,309,963   129,584,841

The normalised diluted earnings per share has been calculated in addition to the
basic and diluted earnings per share required by Financial Reporting Standard 14
since, in the opinion of the Directors, it reflects the financial performance of
the core business more appropriately.

The normalised diluted earnings per share for the year ended 31 December 2000
has been restated to exclude the earnings from discontinued operations.  The
normalised diluted earnings per share for the year ended 31 December 2001
excludes the earnings from discontinued operations.  It has not been adjusted to
reflect the interest earned on the cash proceeds from the disposal of the
discontinued operations.

Normalised profits after tax and minority interest are:                              2001          2000
                                                                                       £m            £m
Profit after tax and minority interest                                               94.4          51.4
Earnings from discontinued operations                                               (0.8)        (10.4)
Exceptional operating costs                                                          83.5          30.6
Goodwill amortisation                                                                41.9          22.7
(Profit)/loss on sale of businesses                                                (91.7)           1.0
Tax relief on goodwill and exceptional items                                       (26.6)        (12.8)
                                                                                    100.7          82.5

3.             Net borrowings


                                                               Group                      Company
                                                         2001         2000        2001            2000
                                                           £m           £m          £m              £m
Due within one year

Loan notes                                               10.0          5.5         1.5             1.5
Bank loans                                                3.6        156.2         3.6           149.0
Other loans                                               0.1          0.3           -               -
Bank overdrafts                                           0.5          0.4       177.5            59.7

Finance lease obligations                                 6.3          3.6           -               -
                                                         20.5        166.0       182.6           210.2
Due within one to two years

Loan notes                                                  -          0.6           -               -

Bank loans                                               70.8         42.6        70.4            42.6

Other loans                                                 -          0.1           -               -

Finance lease obligations                                 6.8          3.6           -               -

                                                         77.6         46.9        70.4            42.6

Due within two to five years

Loan notes                                                  -          1.8           -               -

Bank loans                                              285.2        386.2       285.2           386.2

Finance lease obligations                                18.9          6.2           -               -

                                                        304.1        394.2       285.2           386.2

Due by instalments after five years

Finance lease obligations                                 5.1          0.9           -               -

Due other than by instalments after five years

Loan notes                                                  -          2.4           -               -

Total borrowings                                        407.3        610.4       538.2           639.0

Cash at bank and in hand                               (92.3)       (53.8)      (56.7)           (7.2)

Net borrowings                                          315.0        556.6       481.5           631.8

During the year ended 31 December 1999, the Company agreed a part term (£550m),
part revolving (£250m) syndicated loan facility for a total of £800m.  During
the year ended 31 December 2001, the Company voluntarily repaid £190m of the
term loan from the Group's cash resources.

Secured borrowings within the Group total £37.1m (2000: £14.3m).

4.             Cash flow statement

(a) The reconciliation of operating profit to net cash inflow from operating
activities is shown below:

                          Continuing    Discontinued                Continuing   Discontinued
                          operations      operations       Total    operations     operations      Total
                                2001            2001        2001          2000           2000       2000
                                  £m              £m          £m            £m             £m         £m

Operating profit                31.3             1.1        32.4          88.7           13.1      101.8
Depreciation of                 59.6             1.0        60.6          39.6            4.3       43.9
tangible assets
Amortisation of                 41.9               -        41.9          22.7              -       22.7
Increase in stocks             (1.4)               -       (1.4)         (1.5)              -      (1.5)

(Increase) / decrease         (54.9)               -      (54.9)        (57.5)            0.4     (57.1)
in debtors
Increase / (decrease)           38.5           (7.1)        31.4          65.8          (4.1)       61.7
in creditors
Increase / (decrease)           80.4               -        80.4         (4.3)              -      (4.3)
in provisions
Other movements                (4.9)               -       (4.9)           0.3              -        0.3
Net cash inflow/               190.5           (5.0)       185.5         153.8           13.7      167.5
(outflow) from
operating activities

The operating cash inflows include outflows of £16m (2000: £28.8m) from
continuing operations which relate to exceptional costs.

(b) Reconciliation of net cash flow to movement in net debt (note 4(c))

                                                                                     2001          2000
                                                                                       £m            £m
Increase/(decrease) in cash in the year                                              43.3        (20.6)
Cash outflow/(inflow) from movement in debt and lease financing                     220.0       (186.2)
Cash inflow from movement in liquid resources                                       (4.5)        (19.4)
Change in net debt resulting from cash flows                                        258.8       (226.2)
Loans and finance leases of subsidiaries acquired in year                           (1.4)             -
Other non cash movements in net debt                                               (15.8)        (14.5)
Change in net debt resulting from non cash flows                                   (17.2)        (14.5)
Movement in net debt in the year                                                    241.6       (240.7)
Net debt at 1 January                                                             (556.6)       (315.9)
Net debt at 31 December                                                           (315.0)       (556.6)

Other non cash movements in net debt primarily represent exchange movements.

(c) Analysis of changes in net debt

                                           At                                                    At 31
                                    1 January        Cash   Acquisitions/           Other     December
                                         2001        flow       disposals       movements         2001
                                           £m          £m              £m              £m           £m

Cash                                     21.0         9.1               -           (0.4)         29.7
Overnight deposits                       20.2        34.3               -               -         54.5
Liquid resources - other                 12.6       (4.5)               -               -          8.1
short term deposits
Cash at bank and in hand                 53.8        38.9               -           (0.4)         92.3

Bank overdrafts                         (0.4)       (0.1)               -               -        (0.5)
Debt due within one year
Loan notes                              (5.5)         0.3               -           (4.8)       (10.0)
Bank and other loans                  (156.5)       159.5               -           (6.7)        (3.7)
                                      (162.0)       159.8               -          (11.5)       (13.7)

Debt due after one year

Loan notes                              (4.8)           -               -             4.8            -

Bank and other loans                  (428.9)        81.4           (0.4)           (8.1)      (356.0)

                                      (433.7)        81.4           (0.4)           (3.3)      (356.0)

Finance lease obligations              (14.3)      (21.2)           (1.0)           (0.6)       (37.1)

Net debt                              (556.6)       258.8           (1.4)          (15.8)      (315.0)

Short term deposits included within liquid resources relate to term deposits
repayable within three months.

During the year, following the voluntary repayment of £190m of the term loan,
certain tangible fixed assets were refinanced through finance leases.  The
£21.2m cash movement in finance lease obligations represents the associated £30m
inflow arising from this, offset by repayments of the capital element of finance
lease rentals of £8.8m.

5.             Exchange rates

The most significant exchange rates to the pound for the Group are as follows:

                                                             2001         2001        2000        2000
                                                          Closing      Average     Closing     Average
                                                             rate         rate        rate        rate
US dollar                                                    1.46         1.44        1.49        1.51
Australian dollar                                            2.84         2.80        2.69        2.63

6.             Retirement Benefits

Under the transitional arrangements for the implementation of FRS 17, 
'Retirement Benefits', the Group continues to account for pensions in accordance
with SSAP 24.

The additional disclosures required by FRS 17, 'Retirement Benefits,' during the
transitional period, for the bus, coaches and trains divisions' defined benefit
schemes are set out below.  They are based on the most recent actuarial
valuations, which have then been updated by independent professionally qualified
actuaries to take account of the requirements of FRS 17.  In respect of the
Australian state run multi-employer schemes, the Group is unable to identify its
share of the underlying assets and liabilities in these schemes on a consistent
and reasonable basis and therefore they will be accounted for as if they were
defined contribution schemes.

                                                                                   Buses and      Trains
                                                                                           %           %
Rate of increase in salaries                                                             4.0         4.0
Rate of increase of pensions in payment                                                  2.5         2.5
Discount rate                                                                            6.0         6.0
Inflation assumption                                                                     2.5         2.5

The assets in the schemes and the expected long-term rate of return as at 31
December 2001 were:

                                                         Rate of    Buses and       Trains       Total
                                                          return      Coaches
                                                               %           £m           £m          £m
Equities                                                     8.0        269.6        579.4       849.0
Bonds                                                        5.4         93.6         65.7       159.3
Property                                                     6.7          0.7         39.2        39.9
Other                                                        5.0          6.8          2.1         8.9
                                                                        370.7        686.4     1,057.1

The following amounts at 31 December 2001 were measured in accordance with the
requirements of FRS 17.

                                                                      Buses and
                                                                        Coaches       Trains      Total
                                                                             £m           £m         £m
Total market value of assets                                              370.7        686.4    1,057.1
Present value of scheme liabilities                                     (338.0)      (603.0)    (941.0)
Surplus in the schemes                                                     32.7         83.4      116.1
Irrecoverable surplus                                                         -       (30.4)     (30.4)
Pension asset                                                              32.7         53.0       85.7
Related deferred tax liability                                            (9.8)       (15.9)     (25.7)
Net pension asset                                                          22.9         37.1       60.0

If FRS 17 had been adopted, the Group's net assets and profit and loss reserve
at 31 December 2001 would have been as follows:

Net assets excluding pension assets/liabilities                                                    412.6
Pension asset                                                                                       60.0
Net assets including pension asset                                                                 472.6

Profit and loss reserve excluding pension assets/liabilities                                       340.5
Pension reserve                                                                                     60.0
Profit and loss reserve                                                                            400.5

Copies of the preliminary statement may be obtained from the Company Secretary
at 75 Davies Street, London W1K 5HT.  Copies are also available via

The preliminary announcement is an abridged version of the full accounts upon
which the auditors have given an unqualified opinion.  The full accounts will be
filed with the Registrar of Companies in due course.

                                    - ENDS -

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