Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

National Express (NEX)

  Print      Mail a friend

Thursday 24 February, 2005

National Express

Final Results

National Express Group PLC
24 February 2005



24 February 2005

                           National Express Group PLC

                              Preliminary Results

                      For the year ended 31 December 2004



Financial Highlights



•         Turnover of £2.6 billion (2003:  £2.6 billion restated)

•         Normalised operating profit* up 17.9% to  £152.0 million (2003:
          £128.9  million restated)

•         Normalised profit before tax* up 30.8% to £130.5 million (2003: £99.8
          million restated)

•         Profit before tax up 16.6% to £63.1 million (2003:  £54.1 million
          restated)

•         Normalised diluted earnings per share* up 35.5% to  71.8 pence (2003:
          53.0 pence restated)

•         Final dividend increased by 18.0% to 20.65 pence per share (2003:
          17.5 pence per share), making a total dividend for the year of 30.0 
          pence per share (2003:  26.0 pence per share)

•         Strong operating cashflow** of  £187.5 million (2003: £139.7 million)

•         Effective net debt** significantly reduced to £136.6 million (2003:
          £307.8 million)

•         Share buyback programme of up to £100 million to be initiated


*excluding goodwill, exceptional items and tax relief thereon as appropriate

**operating cashflow and effective net debt as defined in sections marked 'Cash
flow' and 'Year at a glance' respectively



Operating Highlights



•         Rail passenger numbers up 5% on a like-for-like basis

•         Rail punctuality and reliability above Government target of 85%

•         Launch of 'one' rail franchise with strong performance since April
          2004

•         Signing of two-year franchise extensions for Great Northern, Wessex
          Trains and Silverlink

•         New initiatives undertaken to stimulate further bus growth

•         Successful entry into London bus market

•         Coach passenger numbers up 6%

•         Further  roll-out of  best value fares in coach division alongside
          product enhancements

•         Successful bidding season and contract renewals in student
          transportation

•         Improved financial performance in Public Transit.



Commenting on current trading and prospects, Chairman, David Ross said:


'These results are ahead of market expectations following a very strong
financial and operational performance in 2004. I am pleased to report our
business has started the year well and is on target to achieve further growth in
2005.


'We remain committed to enhancing shareholder value.  This will be achieved
through using our strong balance sheet to fund both organic and acquisitive
growth, our progressive dividend policy and a share buyback programme. The Board
looks forward with confidence to the year ahead.'


                                  - E N D S -


For further information, please contact:



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

Andrew Dowler/ Ben Foster

Financial Dynamics                                                020 7831 3113



•         There will be an analyst and investor meeting at 0900 hours on 24
          February 2005 at Financial Dynamics, Holborn Gate, London, WC1.

•         A webcast of the analyst presentation will be available on our website
          www.nationalexpressgroup.com at 0900 hours on 24 February 2005. For 
          further details, contact Elaine Holder at Financial Dynamics on 
          020 7269 7121.

•         Photographs are available through Vismedia at www.vismedia.co.uk or
          telephone 020 7436 9595.



                           National Express Group PLC

                              Preliminary Results

                      For the year ended 31 December 2004



Chairman's Statement


In my first year as Chairman, I am delighted to report that 2004 has been an
excellent year for the National Express Group.  We have achieved substantial
growth in our earnings, good cash generation and a significant reduction in our
debt.  We have seen a strong performance across all our divisions in both the UK
and North America. We have also exited a number of businesses which were non
core to the Group's long term strategy. In view of the quality of these results
and the strengthening of our balance sheet, the Board is recommending an 18%
increase in our final dividend and we will seek to return value to shareholders
through a share buyback programme of up to £100 million over the next twelve
months, subject to market conditions.


The year was outstanding for our trains division.  In February, we won the new
Greater Anglia franchise which we rebranded 'one'.  This is the first time that
a single operator has been given sole use of a major London rail terminal. The
integration of three major railways was completed on time, our franchise
commitments over the first nine months were delivered and we improved overall
operational performance. I am also pleased to report that further stability was
brought to our trains division through the two-year extensions awarded for the
Great Northern, Wessex Trains and Silverlink franchises, following the Central
Trains extension during 2003.


We have been playing a leading role in the working groups set up by the
Department for Transport ('DfT') to develop its plans for the railways following
the publication of the White Paper, 'The Future of Rail'.


During the year the focus within the bus division was to stimulate growth and
promote greater social inclusion. We continue to press for greater bus priority
schemes and to encourage local councils to work with us on transport plans which
meet the needs of the local communities we serve. In February 2004, we entered
the London bus market through the acquisition of Connex's bus operations in the
capital and this business is trading in line with our expectations.


National Express coaches goes from strength to strength. Both revenue and profit
growth have continued reflecting the high quality, value for money offering
which we provide to our customers. Following on from last year's rebranding, the
business continued to modernise its image, increasing its appeal to a broader
market.


In North America, we saw further expansion of our school bus operations through
the award of new contracts and the implementation of new routes.  The
initiatives undertaken to improve the performance of our public transit business
have resulted in a significant increase in profits. However, the reported
results have been impacted by the weakening of the dollar.


In October, we sold three Australian bus businesses for £26.4 million and in
January this year our involvement in Australian public transport came to an end.


We know there is a strong correlation between the morale of our employees and
the quality of customer service.  We regularly seek the views of our employees
and develop action plans based on their views. We have undertaken extensive
research amongst 10,000 UK customers who have provided valuable information to
help us develop our businesses.  This research will enable us to measure
customer satisfaction on a regular basis. Our commitment to improved service
quality for our customers has again been reflected in the opening of our second
Customer Service Academy in Birmingham.  We are planning to open a third
training facility in Stratford, east London in 2005.


People commute, shop and go to school with us, travelling both long and short
distances. We join up people and places, making journeys easy and enjoyable by
taking the stress out of travelling. We aim to do this by making travel easy and
simple for them, being open and honest about our performance, working together
with our various stakeholders and taking the lead in bringing new ideas and
technology to both our business and the industry for the benefit of our
customers.


Safety


The safety and security of our customers and employees is of paramount
importance to us. At National Express Group, we place great importance on our
safety culture and we strive continuously to ensure that our systems and
processes meet the highest standards.


Employees


I would like to take this opportunity to thank all our employees for their
efforts during the year, including those ScotRail and Australian bus employees
'who left the Group. We wish them well for the future.  I would also like to
welcome all those people who joined us this year, in particular our new teams at
Travel London, 'one' and our new employees in Canada.


The Board


Following the retirement of Michael Davies, I was delighted to be appointed
Chairman of the Group in March.  The Board has since appointed two new
non-executives.


Sir Andrew Foster joined the Board on 1 August. Sir Andrew has had an extensive
career in the public sector serving as Chief Executive of the Audit Commission
for England and Wales between 1992 and 2003 and prior to that Deputy Chief
Executive of the NHS.  Tim Score, Chief Financial Officer of ARM Holdings PLC,
joined the Board on 21 February 2005. Tim is a chartered accountant and has
previously held senior financial roles at BTR plc, LucasVarity plc, William
Baird plc and Rebus Group Limited.


I believe the professionalism and experience of Sir Andrew and Tim will further
strengthen the board and I welcome them to the Group.


Results and Dividend


Turnover was £2.6 billion (2003: £2.6 billion as restated) and normalised Group
operating profit increased by 17.9% to £152.0 million (2003: £128.9 million
restated). After interest and the Group's share of losses from associated
undertakings, normalised profit before tax was £130.5 million (2003: £99.8
million restated). Normalised diluted earnings per share were 71.8p (2003: 53.0p
restated).


The Group experienced a strong operating cash flow of £187.5 million (2003:
£139.7 million).  We are particularly pleased with the reduction in our
effective net debt position to £136.6 million at the year end.


Given the Board's confidence in the Group's future prospects, as well as its
financial strength, we are recommending a final dividend of 20.65p per ordinary
share (2003: 17.5p), an increase of 18%, to be paid on 6 May 2005 to
shareholders on the register at 8 April 2005. Including the interim dividend,
the proposed total dividend for the year is 30.0p (2003: 26.0p).


Current trading and outlook


These results are ahead of market expectations following a very strong financial
and operational performance in 2004. I am pleased to report our business has
started the year well and is on target to achieve further growth in 2005.


We remain committed to enhancing shareholder value.  This will be achieved
through using our strong balance sheet to fund both organic and acquisitive
growth, our progressive dividend policy and a share buyback programme. The Board
looks forward with confidence to the year ahead.


Operational Review


Trains


We operate c2c, Central Trains, Gatwick Express, Midland Mainline, 'one'
including the Stansted Express, Silverlink, Great Northern and Wessex Trains
franchises. The division currently employs 11,500 people.


Turnover for the period was £1,705.2 million (2003: £1,702.2 million restated)
with normalised operating profit of £58.5 million (2003: £33.2 million
restated). These results were achieved through improved trading across the
trains division, the commencement of the new 'one' franchise and two-year
extensions granted on four of our franchises.


We achieved passenger growth of 5% on a like-for-like basis on the back of
strong operational performance. We are pleased that in the Strategic Rail
Authority's ('SRA') last National Rail Trends survey, which covered the period
from July - September 2004, 'one' and Midland Mainline ('MML') were the top long
distance operators and c2c, Great Northern and 'one' came in the top four London
and South East train operating companies. Currently the majority of our trains
portfolio is performing above pre-Hatfield levels with c2c and MML operating at
their best levels ever.


On the back of our improvement in performance, in the summer we launched a free
rail ticket promotion, the Getaway Giveaway, to encourage more people to travel
on rail. We gave away seven million free tickets, delivering both increased
awareness of the benefits of rail travel and generating additional demand on the
network during the off peak.


Following the launch of the new Greater Anglia franchise, 'one', our immediate
priority was to achieve a seamless transition for our customers and to
restructure the operation into 'one' business.  This franchise is one of the
largest and most complex in the country and therefore we were particularly
pleased that this reorganisation was achieved on time, alongside improved
operational performance.  In December, we introduced our revised Anglia Railway
and Greater Eastern timetables which provide a greater number of direct
connections to London from the Greater Anglia region.  We have upgraded the
fleet on the Norwich to London route and we have introduced a new Passengers'
Charter offering a simpler compensation regime.


MML performance was good despite the Channel Tunnel Rail Link blockade which
took effect in September. On the back of the Route Utilisation Strategy ('RUS')
issued in March 2004, the SRA has concluded that the proposed London to Leeds
services will not be required in the long term. We are in discussions with the
SRA concerning the impact of this on the franchise. In December, the Secretary
of State for Transport gave his approval for the new East Midlands Parkway
station, located between Derby and Loughborough.


In February, we signed a two-year extension for the Great Northern franchise.
This franchise achieved third place in the latest SRA London and South East
performance league table. We were pleased to complete negotiations for a
two-year extension to our Silverlink franchise in September and we continue to
work closely with Transport for London ('TfL') on the future of Silverlink
Metro. During the year c2c achieved excellent operational performance, moving to
the top of the London and South East performance league table.


The performance of Gatwick Express improved on the back of increased growth at
the airport and new ticket arrangements with low cost airlines. Gatwick Express
continues to be a loss making franchise. In September 2004, the SRA published
its RUS for the Brighton Main Line and we are currently in discussions with them
over the future of this franchise.


We signed a two-year franchise extension for Wessex Trains in February 2004.
Wessex experienced encouraging revenue growth, partly attributable to an
increase in revenue protection and the introduction of ticket vending machines
around key commuter routes.


Central Trains has improved its performance in terms of both employee and fleet
availability but we continue to work with Network Rail to increase the overall
quality of the service. In July, a new £1 million Customer Service Academy was
opened in the West Midlands. As part of the Rail Review, the SRA plans to
disaggregate the Central Trains franchise and consolidate its services into
other franchises. We have submitted proposals to the DfT and the SRA setting out
how we could assist in this exercise.


We regularly review the incidence and severity of SPADs (signals passed at
danger), a key performance indicator within our train operations.  We achieved a
10% year-on-year improvement in our SPAD record over the period.


We are working with the SRA and DfT on the rail remapping process following the
Government's Rail Review and believe that rail refranchising provides further
opportunities for growth. We have recently submitted to the SRA our
Accreditation Questionnaires for both the Greater Western and Thameslink/GN
franchises.


Buses


The bus division operates over 2,100 buses and employs 6,300 people in the West
Midlands, Dundee and London.   We also operate the Midland Metro, the light rail
service in the West Midlands.


Turnover for the period was £239.0 million (2003: £211.9 million) and normalised
operating profit was £44.2 million (2003: £47.5 million restated).  These
results are in line with expectations following the revisions made to the
passenger transport authority's concessionary fare scheme in West Midlands which
changed the provisions for new entrants to the scheme.


In the West Midlands, we continue to seek ways to stimulate the market.  Our
Saver Bus initiative, which offers competitive one-price fares on one of
Birmingham's key inner city routes, has proved very popular and latest trends
show double digit growth in passenger numbers.  This service aims to promote
greater social inclusion through increased travel opportunities in one of
Birmingham's most deprived areas.  At the beginning of this year we launched the
Premier 997 service between Walsall and Birmingham which provides a limited stop
service targeted at attracting commuters. This new service includes features
such as multi-media CCTV technology.  It has been well received.


We have also simplified our fares structure, making it easier for our customers
to use our services.


We introduced 170 new low-floor easy-access buses into the Travel West Midlands
('TWM') fleet.  TWM now has the largest low floor fleet outside London with over
70% of the fleet offering easy access.


We have improved the selection and recruitment of staff, tapping into new
opportunities arising from the opening up of the European Union. This has
resulted in over 100 new drivers being recruited from Poland.  57% of our TWM
drivers are now accredited with NVQ level II and a further 17% are working
towards the qualification.


We were pleased to sign a Concordat with Dundee City Council for the continued
investment in bus services. By November, the whole of the Travel Dundee fleet
was low-floor easy-access buses with 100% CCTV.


In February, we entered the London bus market.  Since then we have renewed
existing contracts on improved terms and won additional new contracts. We now
operate from three bus depots, including Walworth which was developed during
2003/4 in partnership with TfL. This depot still has capacity for an extra 60
buses, allowing us to bid for further contracts in the coming year.


We have also invested further in the safety of our employees and passengers
through the roll-out of CCTV and expansion of the Operation Safer Travel
initiative.


During the coming year we will stimulate further growth in the market whilst
developing closer working relationships with local authorities to improve the
quality of our bus services through the roll-out of bus priority schemes.


Coaches


The coach division provides Britain's only scheduled national coach network and
serves more than 1,200 destinations.  The airport services provide premier, high
frequency scheduled coach services to all the UK's major airports, as well as
airside coaching services.  Eurolines offers value for money European travel by
coach.  The division employs 1,900 people.


Turnover for the year was £192.4 million (2003: £186.4 million restated) with a
normalised operating profit of £18.8 million (2003: £15.9 million restated).
Coach passenger numbers during the year was up 6% through the continued use of
yield management pricing, fare innovations and changes in our service offering.


We are rolling out dynamic pricing across the network.  Fun fares have now been
extended to 28 towns and cities, enabling customers to travel for as little as
£1 each way.  Our 'go anywhere fares' allow long distance travel anywhere in the
UK for a flat £9 fare.  In our first full year of offering 'Route Sixty'
concessionary fares to the over 60s, we have carried over 3 million customers.
In addition, a new youth coachcard, the NX2 card, was launched, giving all
customers aged 16 - 26 the opportunity to obtain up to a 30% discount on coach
travel.


Our focus on moving towards more direct sales continues. Nearly 20% of all sales
are now on-line. Early in November we launched a new improved website which is
easier and faster to access and also provides better travel information
including maps, tourist guides and weather reports.


During the year we carried out a detailed route analysis to develop further the
key routes in our network.  In September we launched a new half hourly London to
Birmingham service.  This showcase route has seen the introduction of a number
of additional features including state-of-the-art coaches, incorporating leather
seating, extra leg room, air conditioning and on-board entertainment. A revised
24 hr timetable for the service has been introduced, offering a half hourly
operation throughout the day and hourly during the night. Coach passenger
numbers on this route have grown by over 15% following the relaunch.  We have
now extended this concept onto routes connecting London to the South West.


We have recently launched our own on-board TV coach entertainment channel,
called NXTV, which is to be further rolled out on 100 vehicles.  It provides
news, sports and entertainment, all of which are regularly updated via wireless
communication technology throughout the day.


We continue to improve the efficiency of the operation through investing in
better management systems.  In the next six months we will launch Coachcom, a
portable data terminal, which provides better management information as well as
enabling the driver to receive valuable traffic updates and customer information
whilst in transit. New m-tickets have also been introduced enabling the texting
of confirmed coach bookings to customer mobile phones.


We continue to work with the DfT and coach manufacturers on vehicles which are
more accessible for the less able, in accordance with European DDA legislation.
We will be introducing a wheelchair accessible vehicle onto the network in 2005.


To support our airport services we are working closely with BAA on the
redevelopment of our Heathrow airport coach facility.


On 22 February 2005 we sold our airports contract business at Heathrow.


North America


The North American division consists of student transportation, public transit
operations and Stewart Airport in New York State. The division employs 20,500
employees, with 2,500 in Canada.


Turnover in the student transportation division for the year was £208.5 million
(2003:  £228.1 million) and normalised operating profit was £29.6 million (2003:
  £32.4 million).  In US dollars, turnover was $383.7 million (2003:  $374.1
million) and normalised operating profit $54.5 million (2003:  $53.1 million).


At Durham School Services we retained a very high proportion of our contracts
that came up for renewal whilst maintaining operating margins, despite a
competitive bid season. We won new contracts in California, Connecticut and
Kansas and a conversion opportunity was gained in Texas.  We continue to improve
our operating efficiency through better asset and cost management.  Improvements
in safety management and systems achieved significant reductions in the
frequencies of accidents and personal injury incidents.  In Canada, Stock traded
well and added extra routes.


Our student bus division continues to focus on better utilisation of the fleet
through greater exploitation of the charter and field trip market. We also
continue to reduce operating costs through greater leverage of our purchasing
power.


Turnover in the public transit division for the year was £156.1 million (2003:
£172.0 million) and normalised operating profit was £7.3 million (2003:  £4.6
million).  In US dollars, turnover was $287.2 million (2003:  $282.1 million)
and normalised operating profit $13.4 million (2003:  $7.6 million).  This
improved performance was achieved on the back of increased margins through
better contract performance and a significant reduction in the frequency of
accidents.  In addition insurance costs reduced, greatly assisted by the
roll-out of Drive-Cam technology which accurately records the sequence of events
when an accident takes place.


We continue to focus on costs through national purchasing schemes. We were
pleased to introduce a new Bus Rapid Transit system into Las Vegas during the
year.  This new 'bullet bus' uses an optical guidance system and interacts with
bus priority traffic systems providing fast transit through the city.


Australia


Turnover for the period was £59.0 million (2003: £65.1 million) with operating
profit of £2.1 million (2003: £3.4 million). In October, we sold three
Australian bus businesses for £26.4 million and at the end of January our
involvement in Australia came to an end.


Associates


At Eurostar, settlement has been reached with Network Rail over the historic
application of performance regimes over the period 2001 - 2003.  This has
resulted in a one-off credit of £5 million reducing our associate losses this
year.


Finance Director's Review


Year at a glance


We have achieved a strong set of results, increasing profit on ordinary
activities before tax by 17% to £63.1m (2003: £54.1m restated), driven by an 11%
increase in operating profit from continuing operations to £89.7m (2003: £80.6m
restated). Basic earnings per share improved to 32.6p (2003: 31.9p restated).


For the remainder of this report we will refer to normalised results, which we
feel reflect the performance of the business more appropriately. Normalised
results are defined as the statutory result before the following as appropriate:
profit on the sale of businesses and charges for goodwill amortisation, goodwill
impairment, tangible fixed asset impairments, exceptional charges and tax relief
on certain exceptional items and North American goodwill amortisation.


Normalised group operating profit was up by 18% to £152.0m (2003: £128.9m
restated), on turnover of £2,560.2m (2003: £2,565.7m restated) resulting in an
increased normalised operating margin of 5.9% (2003: 5.0% restated). Normalised
profit before tax increased by 31% to £130.5m (2003: £99.8m restated) driving up
normalised diluted earnings per share to 71.8p (2003: 53.0p restated) an
increase of 35%.  Cash flow remained strong with effective net debt* reducing by
£171.2m to £136.6m. Full year dividend per share increased by 15% to 30.0p
(2003: 26.0p).


*Effective net debt at 31 December 2003 excluded the £18.7m of cash deposits
secured as a bond in respect of future rolling stock maintenance at ScotRail.
This cash deposit was transferred with the ScotRail franchise in 2004.


Divisional review


Trains

Normalised operating profit increased to £58.5m (2003: £33.2m restated) on
constant turnover of £1,705.2m (2003: £1,702.2m restated) resulting in improved
normalised margins of 3.4% (2003: 2.0% restated). Rail passenger numbers were up
5% on a like-for-like basis across our portfolio of TOCs.


Five of our trains franchises operated under new financial terms in 2004 as a
result of extensions agreed with the SRA. This provided greater stability to our
earnings and cash inflow for a further two years.


We commenced operation of the new 'one' franchise on 1 April 2004 and we are
pleased with the progress to date. The integration of the three separate head
office and finance functions has been completed satisfactorily in the year.


Midland Mainline had a busy year with its London to Manchester services
(operated during the West Coast Mainline blockade) extended until September
which coincided with the commencement of the Thameslink blockade at St Pancras
which saw us sharing platforms at the interim station.


Gatwick Express had a better year although remains loss-making because of the
franchise premium paid to the SRA. We ceased to operate ScotRail on 17 October
2004.


Buses

Turnover before acquisitions increased by 2% to £216.2m (2003: £211.9m) with
operating profit of £43.9m (2003: £47.5m restated). Traffic flow issues in the
centre of Birmingham following the redevelopment of the Bull Ring have disrupted
our efforts to grow revenue. We continue to work with Centro as we seek to
increase the number of bus priority measures. In addition, a change in the
methodology applied to the concessionary fare scheme has reduced the continuing
operating margin to 20.3% (2003: 22.4% restated). Our effective hedging policy
in 2004 mitigated the impact of rising fuel prices.


The acquisition of Travel London in February 2004 contributed operating profit
of £0.3m on turnover of £22.8m. The low margin on the acquired business reflects
the inherited loss making contracts, which are fully funded by cash acquired
with the business. The integration of Travel London into the Bus division has
progressed smoothly.


Coaches

Our Coach operations delivered another year of strong performance, increasing
normalised operating profit by 18% to £18.8m (2003: £15.9m restated). A 6%
increase in passenger numbers, driven by improvements in our fares offering
backed by strong marketing initiatives, produced a £6.0m increase in turnover to
£192.4m (2003: £186.4m restated). The normalised operating margin improved to
9.8% (2003: 8.5% restated) reflecting strong cost controls, a record number of
internet sales with lower distribution costs and continuing investment in
management systems, which by providing improved route by route profitability
analysis has enabled us to develop the network further.


North America

In local currency, normalised operating profit increased by $7.2m, on a $14.7m
increase in turnover, improving our normalised margins to 10.1% (2003: 9.2%).
The weakening dollar reduced turnover by £39.9m year on year and operating
profit by £3.8m.

                                                          Turnover            Normalised operating profit
                                                     2004            2003            2004            2003
                                                       £m              £m              £m              £m

Student Transportation                              208.5           228.1            29.6            32.4
Public Transit                                      156.1           172.0             7.3             4.6
                                                    364.6           400.1            36.9            37.0

                                                       $m              $m              $m              $m
Student Transportation                              383.7           374.1            54.5            53.1
Public Transit                                      287.2           282.1            13.4             7.6
                                                    670.9           656.2            67.9            60.7

Average US dollar exchange rate of 1.84 (2003: 1.64).


Turnover in our Student Transportation business increased by 3% through the
benefit of new routes operated. Normalised operating margin remained consistent
at 14.2% (2003: 14.2%). The 2004 US bid environment was strongly price
competitive but we are pleased with our performance in both retaining 62
contracts with revenue of $110m and winning new business with revenue of $22m.
Stock Transportation continued to perform well. We increased the proportion of
charter work as well as gaining additional routes in the stable evergreen
Canadian market.


The normalised operating margin of our Public Transit business continued to
improve to 4.7% (2003: 2.7% and 2002: 0.9%). Cost reduction and efficiency
initiatives over the past two years have increased profitability and our
industry recognised customer service levels have led to a high retention rate of
key contracts.


Australia

Three businesses were sold for gross consideration of £26.4m in October 2004. At
the year end we have carried out an impairment review on the remaining
Australian assets.


Associates


We hold a 33% investment in Altram LRT Limited (Altram) and a 40% investment in
Inter-Capital and Regional Rail Limited (ICRRL).


Altram has operated the Midland Metro since June 1999. Our share of the
operating loss for 2004 was £0.2m (2003: £0.5m). We have continued discussions
with our fellow shareholders at Altram and Centro regarding a restructuring
which may lead to the Group taking full ownership.


ICRRL is contracted to manage the operations of Eurostar UK to 2010. Our share
of the operating loss for the year was £3.2m (2003: £3.6m), which represented a
second half profit of £1.0m. The second half benefited from a settlement with
Network Rail relating to the historic application of performance regimes. We
continue to seek an exit from Eurostar which we believe is in the best interests
of shareholders. The cash outflow of £3.1m comprises the Group's share of
funding for the 2003 losses.


Interest


Net interest payable decreased to £18.1m (2003: £25.0m), principally reflecting
a lower level of net debt in the year when compared to 2003.  In addition, the
weakening of the US dollar reduced the cost of servicing our US dollar
denominated financing. Normalised operating profit before depreciation (EBITDA)
was £209.1m (2003: £189.1m restated) and EBITDA interest cover improved to 11.6
times (2003: 7.6 times restated).


Goodwill amortisation and impairment


The annual goodwill amortisation charge increased to £52.7m (2003: £45.7m). The
amortisation charge for the year on the goodwill arising on the acquisition of
Prism Rail PLC in December 2000 has been increased by £10.0m to ensure that the
capitalised value of goodwill in the future will be supportable by the remaining
franchises. This has been offset by a lower amortisation charge for US goodwill
as a result of the weakening US dollar.


An impairment charge of £9.5m (2003: £nil) has been made on the goodwill arising
on the acquisition of Australia Bus. Following a review of the carrying value of
the remaining assets in Australia an additional impairment write down of £6.1m
has been made.


Exceptional items


Exceptional items totalled £7.9m (2003: £nil), of which £7.2m was incurred in
relation to the UK Trains division. The integration of the three legacy TOCs
into the 'one' franchise resulted in reorganisation and redundancy charges. The
Group also incurred redundancy, property and pension charges following the
merger of Qjump with the Trainline.com. Redundancy costs were incurred at
Maintrain as a result of the decision to cease tendering for external work and
focus on improving service to Central Trains and Midland Mainline. The balance
comprises the cost of reorganisations at UK Bus (£0.4m) and North America
(£0.3m).


Taxation


The tax charge on normalised profit of £130.5m (2003: £99.8m restated) was
£28.6m (2003: £22.6m restated), which represents an effective rate of 21.9%
(2003: 22.6% restated).  Effective tax rates on overseas earnings maintain a low
overall rate.


The total tax charge includes one off credits of £2.2m arising from a review of
group tax liabilities as a result of agreeing prior years' computations.  It
also includes tax relief on certain North American goodwill amortisation and UK
exceptional costs.


Cash flow


Our focus on operating cash flow produced another excellent result. We again
demonstrated our ability to convert operating profits into cash by generating
£181.4m (2003: £152.0m restated) of operating cash flow before one-offs, and
£187.5m (2003: £139.7m) after exceptional items and cash flows associated with
changes to our TOC franchise portfolio.


                                                                     North
Operating Cash Flow                       UK        UK        UK  American  Australia    Central     
                                         Bus   Coaches    Trains       Bus      Buses  functions     Total            
                                          £m        £m        £m        £m         £m         £m        £m

                                                                       
Normalised operating profit             44.2      18.8      58.5      36.9        2.1      (8.5)     152.0

Depreciation                            10.4       6.1      21.9      21.4        3.5        0.9      64.2

Amortisation of fixed asset                -         -     (6.5)         -          -          -     (6.5)
grants

Profit on disposal                     (0.3)       0.2     (0.3)     (0.2)          -          -     (0.6)

EBITDA                                  54.3      25.1      73.6      58.1        5.6      (7.6)     209.1

Working capital movement               (8.7)       3.6      47.7     (9.7)        1.9        7.1      41.9

Eurostar                                   -         -         -         -          -      (3.1)     (3.1)

Net cash inflow from operations         45.6      28.7     121.3      48.4        7.5      (3.6)     247.9

Net capital expenditure               (24.1)     (4.0)    (17.4)    (22.4)        1.5      (0.1)    (66.5)

Operating cash flow before              21.5      24.7     103.9      26.0        9.0      (3.7)     181.4
one-offs

Other

 - Exceptional items                                                                                 (5.2)

 - Franchise revisions                                                                                11.3

Operating cash flow                                                                                  187.5


Operating cash flow represents 'Net cash inflow from operating activities' plus
'Receipts from the sale of tangible assets' less 'Finance lease additions' and '
Payments to acquire tangible assets' as set out in note 20c and the cash flow
statement.


This result has been driven by a strong performance in UK Trains where the cash
inflow of £103.9m includes  the one-off benefit of £10m from the build up of
deferred season ticket income from the 'one' franchise in the last quarter and
£9m from the timing of subsidy receipts for the ScotRail franchise. The cash
implications of the entry and exit of these franchises are included in '
franchise revisions' (discussed below).  There were working capital timing gains
of approximately £25m which are expected to reverse in 2005.  These include
performance payments and profit share monies owed to the SRA.


The working capital outflow in UK Bus came from a VAT timing difference. In UK
Coaches the excellent cash flow performance underlines the strength of the
business model.  The working capital outflow in North America represents a
partial reversal of 2003's strong inflow, and has been driven by the prompt
settlement of insurance claims provided in previous years and slightly slower
receivable collections.


Net capital expenditure of £66.5m from continuing operations (2003: £43.1m)
includes £24.1m (2003: £9.1m) in UK Buses, £17.4m (2003: £8.4m) in UK Trains,
and £18.3m (2003: £17.0m) in North American school buses. This expenditure
includes £16.2m (2003: £8.0m) of additions purchased under finance lease
comprising £0.2m (2003: £0.1m) in UK Buses, £0.3m (2003: £0.3m) in UK Coaches,
£2.9m (2003: £1.0m) in UK Trains, £12.7m (2003: £6.6m) in North America and
£0.1m (2003: £nil) in Central functions. Approximately £8m of capital
expenditure incurred in the year will be paid for in early 2005.


The increase in capital expenditure in UK Buses reflects the increased vehicle
purchases in UK Buses of 186 (2003: 74) both at Travel West Midlands and at
Travel London following the awarding of new routes. An additional 28 (2003: 83)
vehicles were funded by operating lease in the division.  The capital
expenditure in UK Buses is net of an £8.2m inflow from a property disposal in
Birmingham, completed at the end of December.  The increase in UK Trains
reflects an increased spend on franchise commitments (including the 'one'
franchise). In North America we purchased 771 (2003: 701) school buses, of which
230 (2003: 127) were for new routes and contracts.


The net £11.3m of cash receipts in relation to the change in UK Trains
franchises include an inflow of £29.9m from 'one' and outflows of £15.7m from
ScotRail and £2.9m incurred as part of the exit from Wales and Borders.




   Reconciliation of net debt                      2004                     2003
                                                     £m                       £m

   Operating cash flow                            187.5                    139.7
   Net interest                                  (20.3)                   (23.9)
   Taxation                                       (3.2)                   (22.3)
   Free cash flow                                 164.0                     93.5
   Financial investments & shares                   2.6                     10.6
   Acquisitions and disposals                      22.8                   (54.1)
   Dividends                                     (36.4)                   (33.2)
   Net funds flow                                 153.0                     16.8
   Foreign exchange                                18.2                     10.0
   Funds flow post exchange                       171.2                     26.8
   Opening effective net debt                   (307.8)                  (334.6)
   Closing effective net debt                   (136.6)                  (307.8)


Net interest paid of £20.3m (comprising the cash outflow of £18.5m adjusted for
loan fee amortisation of £1.8m) reduced in the year following the reduction in
Group net debt. The receipt of tax rebates in respect of prior years resulted in
a significant reduction in tax payments.


Therefore, we generated £164.0m (2003: £93.5m) in free cash flow which, after
the effect of acquisitions, disposals, investments, shares issued and dividends
generated a net funds inflow of £153.0m (2003: £16.8m).


Acquisitions and disposals include £26.4m from the sale of three Australian Bus
subsidiaries in October 2004. The 2003 outflow includes £49.8m to indemnify the
providers of performance bonds and to cover accrued exit costs in respect of our
Australian Trains division which was exited in December 2002. The net inflow
from acquisitions of £22.8m comprises the cash flow from acquisition and
disposals of £31.3m, offset by the £8.5m of finance leases and loans acquired
and disposed.


Dividend


An interim dividend of 9.35p per share was paid in October 2004 and a final
dividend of 20.65p per share will be paid in May 2005, bringing the total
dividend for the year to 30.0p. This is a 15.4% increase in total dividends
declared compared to 2003.  This dividend is covered 2.5 times (2003: 2.2 times
restated) by normalised profits after tax.


Pensions


The Group's principal defined benefit pension schemes are all in the UK. The
most recent triennial actuarial valuations were carried out at 31 March 2001 and
31 March 2002 for the two Bus schemes, 5 April 2001 for Coaches and 31 December
2001 for the Train schemes.  These valuations showed funding levels of 107% to
119% on the Bus schemes, 67% on the Coach scheme and 89% to 108% on the Train
schemes.  Approximately 1,600 (25%) Bus division employees are members of the
two schemes, which have been closed for some years, and some 450 members of
staff are members of the Coach division scheme which was closed in June 2002.
New employees in the Bus and Coach division are offered membership of defined
contribution pension schemes.  In the Trains division approximately 11,000
employees are members of the Train schemes.


We continue to provide full disclosure, in the notes to the accounts, of the FRS
17 position of the defined benefit schemes in the group which includes the rail
pension schemes (RPS), where our main obligation is to pay the contributions
agreed with the scheme actuary over the life of our franchise.


Overall, the FRS 17 deficits have grown as the increased values of the financial
assets, reflecting the improvements in global equities, have been offset by
increased liabilities arising from decreases in the discount rate and an
increase in the longevity assumptions. In the coach scheme the deficit increased
to £11.0m (2003: £4.7m), mainly as a result of increased liabilities of £6m
arising from increased longevity assumptions. In the Bus schemes the deficit has
reduced slightly to £36.2m (2003: £38.7m).  We expect to increase the Group's
contribution to the Bus schemes during 2005 when the results of the next
actuarial valuation are available. In the long term Train franchises the deficit
increased by £19.1m to £37.0m mainly with the inclusion of a £14.6m deficit from
the new 'one' franchise.  In the short term Train franchises (expiring in 2006)
the deficit reduced by £4.4m to £48.5m as a result of a £29.1m deficit being
handed over to new franchises almost offset by an actuarial loss of £24.2m.  We
report the RPS results in full compliance with FRS 17 although we have now
experienced three changes of TOC ownership where the pension deficit has
transferred to the new operator.


Post balance sheet events


At year end, the Group's remaining bus operations in Australia, operating under
the trading names of Westbus, Glenorie and Blue Ribbon, were subsidiary
companies of Bosnjak Holding Pty Limited (BHPL).  BHPL is a 57% subsidiary of
National Bus Company (NBC) Pty Limited whose ultimate parent is National Express
Group PLC.


On 31 January 2005, BHPL went into voluntary administration as the company had
been unable to renegotiate its loan with NBC.


Accounting policies


UK GAAP

We continue to apply the transitional arrangements of FRS 17 'Retirement
Benefits' and will move directly to the International Accounting Standard
equivalent (IAS 19) in 2005 following the Accounting Standards Board's decision
to defer full adoption of FRS 17.


UITF 38 'Accounting for ESOP trusts' has been adopted, resulting in own shares
held as fixed asset investments at 31 December 2003 being deducted in the
calculation of both shareholders' funds and the company's distributable reserves
at 1 January 2004.


In accordance with FRS 18, 'Accounting Policies' the Group's accounting policies
are reviewed regularly and changed when a new policy becomes more appropriate.
Under the previous revenue accounting policy, the Group accounted for tickets
sold in advance and for return journeys on a cash basis, with the exception of
season tickets in the UK Trains division which were recognised evenly over the
life of the season ticket. Following improvements in the Group's information
systems we are now able to reliably measure the deferred revenue adjustment
required in relation to these tickets, and therefore a change in accounting
policy is appropriate. As discussed in note 1, the effect is not material.


As reported in the Interim 2004 results, the costs incurred in bidding for
franchises in our UK Trains division are now classified as operating costs and
the costs and assets incurred and utilised in operating the Group management
function are now disclosed separately as Central functions. See note 2 to the
accounts for further details.


IFRS

The Council of the European Union announced in June 2002 that all listed
companies would adopt International Financial Reporting Standards (IFRS),
formerly known as International Accounting Standards (IAS), from 1 January 2005.
The adoption of IFRS will be first reflected in the Group's financial statements
for the half year ending 30 June 2005 and the year ending 31 December 2005.


The Group is well prepared to convert to IFRS and we will issue IFRS restated
2004 results on 3 May 2005.  The main areas impacted are expected to be
pensions, share based payments, goodwill, financial instruments, dividends and
taxation.  The detailed application of IAS19 to the rail pension schemes is
still under discussion with both our transport peer sector companies and our
auditors, Ernst & Young LLP, who are considering the issue with the other major
accounting firms.


Adam Walker

Finance Director




NATIONAL EXPRESS GROUP PLC

GROUP PROFIT AND LOSS ACCOUNT


                                    Total before   Goodwill &       Total  Total before   Goodwill &       Total
                                      goodwill &  exceptional                goodwill &  exceptional
                                     exceptional        items        2004   exceptional        items       2003*
                                           items         2004                     items        2003*
                                            2004                                  2003*
For the year ended 31 December
2004
                              Note            £m           £m          £m            £m           £m          £m
Turnover

- continuing operations                  2,475.3            -     2,475.3       2,497.9            -     2,497.9
- acquisitions                              22.8            -        22.8             -            -           -
- discontinued operations                   62.1            -        62.1          67.8            -        67.8

Turnover                         4       2,560.2            -     2,560.2       2,565.7            -     2,565.7
Other operating income                       8.8            -         8.8          10.9            -        10.9


Other operating costs before
goodwill and exceptional items         (2,417.0)            -   (2,417.0)     (2,447.7)            -   (2,447.7)

Goodwill amortisation and
impairment                       4             -       (62.2)      (62.2)             -       (45.7)      (45.7)

Tangible fixed asset
impairment                       4             -        (6.1)       (6.1)             -            -           -

Other exceptional items          4             -        (7.9)       (7.9)             -            -           -

Total operating costs                  (2,417.0)       (76.2)   (2,493.2)     (2,447.7)       (45.7)   (2,493.4)

Group operating profit                     152.0       (76.2)        75.8         128.9       (45.7)        83.2

- continuing operations                    149.2       (59.5)        89.7         125.1       (44.5)        80.6
- acquisitions                               0.3            -         0.3             -            -           -
- discontinued operations                    2.5       (16.7)      (14.2)           3.8        (1.2)         2.6


Group operating profit           4         152.0       (76.2)        75.8         128.9       (45.7)        83.2

Share of operating losses of
associates                       4         (3.4)            -       (3.4)         (4.1)            -       (4.1)

Total operating profit                     148.6       (76.2)        72.4         124.8       (45.7)        79.1
Loss on sale of properties                     -        (0.1)       (0.1)             -            -           -
Profit on sale of businesses    11             -          8.9         8.9             -            -           -
Profit on ordinary activities
before interest                            148.6       (67.4)        81.2         124.8       (45.7)        79.1

Net interest payable             5        (18.1)            -      (18.1)        (25.0)            -      (25.0)

Profit on ordinary activities
before taxation                            130.5       (67.4)        63.1          99.8       (45.7)        54.1

Tax on profit on ordinary
activities                       6        (28.6)          6.3      (22.3)        (22.6)         10.2      (12.4)

Profit after tax                           101.9       (61.1)        40.8          77.2       (35.5)        41.7

Minority interest                            1.0          2.6         3.6           1.0            -         1.0
Profit for the financial year              102.9       (58.5)        44.4          78.2       (35.5)        42.7

Dividends                                 (41.3)            -      (41.3)        (35.1)            -      (35.1)
Retained profit                             61.6       (58.5)         3.1          43.1       (35.5)         7.6


Basic earnings per share         7                                  32.6p                                  31.9p

Normalised basic earnings per    7         72.9p                                  54.6p
share
                                 
Diluted earnings per share       7                                  32.1p                                  31.0p

Normalised diluted earnings      7         71.8p                                  53.0p
per share
                                                                                 


* Restated for change in revenue recognition (see note 1) and classification
(see note 2).



NATIONAL EXPRESS GROUP PLC

GROUP BALANCE SHEET
                                                                                                 2004            2003*
At 31 December 2004                                                             Note               £m               £m

Fixed assets

Intangible assets                                                                  8            324.4            404.6
Tangible assets                                                                    9            380.3            405.6
Investments and interests in associates                                           10             10.5              7.3
                                                                                                715.2            817.5
Current assets

Stock                                                                             12             16.3             17.3
Debtors                                                                           13            328.5            343.7
Cash at bank and in hand                                                          14            147.2             97.0

                                                                                                492.0            458.0
Creditors: amounts falling due within one year                                    15          (610.6)          (605.2)
Net current liabilities                                                                       (118.6)          (147.2)

Total assets less current liabilities                                                           596.6            670.3

Creditors: amounts falling due after more than one year                           16          (256.0)          (347.3)
Provisions for liabilities and charges                                            18           (76.1)           (58.8)
Net assets                                                                                      264.5            264.2


Capital and reserves

Called up share capital                                                                           7.0              6.8

Share premium account                                                             19             47.5             45.1
Other reserves                                                                    19             10.3             10.3

Revaluation reserve                                                               19                -              0.8
Profit and loss account                                                           19            198.8            196.5
Equity shareholders' funds                                                                      263.6            259.5

Equity minority interest                                                                          0.9              4.7
                                                                                                264.5            264.2


* Restated for change in revenue recognition and accounting policy for own
shares (see note 1).



NATIONAL EXPRESS GROUP PLC

GROUP STATEMENT OF CASH FLOWS
                                                                                                2004          2003
For the year ended 31 December 2004                                                  Note         £m            £m


Net cash inflow from operating activities                                           20(a)      254.1         182.8

Interest received                                                                               13.1           7.6
Interest paid                                                                                 (24.7)        (26.7)
Interest element of finance lease rentals                                                      (6.9)         (3.9)

Return on investments and servicing of finance                                                (18.5)        (23.0)
UK corporation tax paid                                                                        (2.2)        (22.2)
Overseas tax paid                                                                              (1.0)         (0.1)

Taxation                                                                                       (3.2)        (22.3)
Payments to acquire tangible assets                                                           (69.2)        (48.0)
Receipts from sale of tangible assets                                                           18.8          12.9
Receipts from sales of shares to satisfy employee share scheme                                   0.1           2.1
Receipts in respect of other investments                                                           -           8.1
Capital expenditure and financial investment                                                  (50.3)        (24.9)
Receipts from the sale of businesses                                                   11       25.0           0.8
Cash disposed in businesses closed                                                     11      (0.3)             -
Payments in respect of businesses sold/closed                                          11      (1.5)        (49.8)
Payments to acquire businesses                                                         11      (7.3)         (4.7)
Cash acquired in businesses purchased                                                  11       19.9             -
Net deferred consideration for businesses (acquired)/disposed                                  (4.5)         (0.4)

Acquisitions and disposals                                                                      31.3        (54.1)
Equity dividends paid                                                                         (36.4)        (33.2)

Cash inflow before financing activities                                                        177.0          25.3

Management of liquid resources

Cash (paid in to)/withdrawn from short term deposits                                20(c)     (53.1)          14.2

Financing

Issue of share capital                                                                           2.5           0.4
Cash outflow from lease financing                                                   20(c)     (15.8)        (13.8)

Repayment of loan notes                                                             20(c)      (0.9)         (0.7)

Loans repaid                                                                        20(c)     (93.1)        (26.1)

Net cash outflow from financing                                                              (107.3)        (40.2)

Increase/(decrease) in cash                                                         20(b)       16.6         (0.7)



NATIONAL EXPRESS GROUP PLC

GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
                                                                                                 2004      2003*
For the year ended 31 December 2004                                                   Note         £m         £m


Profit for the financial year                                                                    44.4       42.7
Exchange differences on foreign currency net investments                                19     (27.3)     (25.9)
Exchange differences on foreign currency borrowings                                     19       29.8       27.9
Tax on exchange differences on foreign currency net investments                         19      (4.1)        0.8
Total recognised gains and losses relating to the period                                         42.8       45.5
Prior year adjustment for revenue recognition (see note 1)                                      (4.2)
Total recognised gains and losses                                                                38.6



* Restated for change in revenue recognition (see note 1).



RECONCILIATION OF MOVEMENT IN GROUP EQUITY SHAREHOLDERS' FUNDS
                                                                                                 2004      2003*
For the year ended 31 December 2004                                                   Note         £m         £m


Profit for the financial year                                                                    44.4       42.7
Dividends                                                                                      (41.3)     (35.1)
Exchange differences on foreign currency net investments                                19     (27.3)     (25.9)
Exchange differences on foreign currency borrowings                                     19       29.8       27.9
Tax on exchange differences on foreign currency net investments                         19      (4.1)        0.8
New share capital issued for cash                                                                 2.5        0.4
Net reduction in own shares                                                                       0.1        0.5
Net addition to shareholders' funds                                                               4.1       11.3

Equity shareholders' funds at 1 January*                                                        259.5      248.2
Equity shareholders' funds at 31 December                                                       263.6      259.5



* Restated for change in revenue recognition and accounting policy for own
shares (see note 1).


Shareholders' funds at 1 January 2004 were originally £268.9m before deducting
prior year adjustments of £4.2m for the change in accounting policy for revenue
recognition and £5.2m for the change in accounting policy for own shares.




NATIONAL EXPRESS GROUP PLC

NOTES



1.   Basis of preparation and changes in accounting policies



Basis of preparation

The Preliminary Results presented have been prepared using the accounting
policies set out in the Group's 2003 statutory accounts, except as noted below.



Changes in accounting policies

•         Own shares

UITF38, 'Accounting for ESOP Trusts', has been adopted with effect from 1
January 2004. The adjusted accounting policy is that shares held in respect of
employee benefit trusts should be deducted from shareholders' funds. Prior to 1
January 2004 these shares were held as fixed asset investments. The prior year
comparatives have been restated to comply with UITF 38, resulting in a reduction
in the net book value of investments and reserves of £5.2m at 31 December 2003
and £5.7m at 1 January 2003.



•         Revenue recognition

In accordance with FRS18, 'Accounting Policies' the Group's accounting policies
are reviewed regularly and changed when a new policy becomes more appropriate.
Under the previous revenue accounting policy, the Group accounted for tickets
sold in advance and for return journeys on a cash basis, with the exception of
season tickets in the UK Trains division which were recognised evenly over the
life of the season ticket. Following improvements in the Group's information
systems we are now able to reliably measure the deferred revenue adjustment
required in relation to these tickets, and therefore a change in accounting
policy is appropriate.



The prior year comparatives have been restated for this change in revenue
recognition resulting in an additional £5.9m recognised as deferred income at 31
December 2003, and a £1.7m reduction in the corporation tax liability. The net
effect is to reduce the Group's profit after tax by £0.3m from £42.0m to £41.7m
in the year to 31 December 2003, comprising a reduction in turnover and
operating profit of £0.4m, and a reduction in the tax charge of £0.1m. Basic
earnings per share has been decreased by 0.2p to 31.9p. There was no impact on
the prior year comparatives for the Company. The Group's profit after tax for
the current year has been reduced by £0.5m as a result of this change in revenue
recognition comprising a £0.7m reduction in turnover and operating profit and a
£0.2m reduction in the tax charge. Net assets and reserves have been reduced by
£4.2m at 31 December 2003 and £3.9m at 1 January 2003.



2.   Change in segmental analysis classification

A number of changes have been made to the Group segmental analysis as follows:

(a)   The costs incurred in bidding for franchises in our UK Trains division are
now classified as operating costs. These costs were previously classified as
operating exceptional items. The change in classification aligns our reporting
with the majority of our sector peer group.

(b)   Costs and assets incurred and utilised in operating the Group management
function are now disclosed separately as Central functions. These were
previously allocated across the Divisions. The change in classification is
intended to align our external reporting with the Group's internal management
reporting.

(c)   Restatement of comparatives following the amendment to the revenue
recognition accounting policy as set out in note 1.

(d)   Removal of own shares from net assets following the adoption of UITF 38 as
set out in note 1, and change to net assets following the  change in the revenue
recognition accounting policy as set out in note 1.



2.   Change in segmental analysis classification (continued)


The segmental analysis as restated, and as reported, is as follows:


                                           Turnover           Operating profit before        Net assets/
                                                              goodwill and exceptional       (liabilities)
                                                                      items
                                _________________________   __________________________  __________________________
                       Details         2003          2003          2003           2003         2003           2003
                         above  As restated   As reported   As restated    As reported  As restated    As reported
                                         £m            £m            £m             £m           £m             £m
UK Bus                     (b)        211.9         211.9          47.5           47.2         45.6           46.3

UK Trains            (a), (b),      1,702.2       1,702.4          33.2           32.0       (10.9)          (8.0)
                           (c)

UK Coach              (b), (c)        186.4         186.6          15.9           15.0         21.5           24.8

UK operations                       2,100.5       2,100.9          96.6           94.2         56.2           63.1

North American             (b)
Bus                                   400.1         400.1          37.0           37.0        442.8          449.9

Australian Bus             (b)         65.1          65.1           3.4            3.4         58.0           58.9

Central functions          (b)            -             -         (8.1)              -          9.0              -

                                    2,565.7       2,566.1         128.9          134.6        566.0          571.9

Goodwill                                                         (45.7)         (45.7)
amortisation

Exceptional items-         (a)                                        -          (5.3)
UK Train bid costs

Group operating                                                    83.2           83.6
profit

Unallocated net            (d)                                                              (306.5)        (303.0)
liabilities

                           (d)                                                                259.5          268.9

Equity minority                                                                                 4.7            4.7
interest

Net assets                 (d)                                                                264.2          273.6


3.   Exchange rates


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


                                                                 2004          2004          2003          2003
                                                        Closing  rate  Average rate Closing  rate  Average rate

US dollar                                                        1.92          1.84          1.79          1.64

Australian dollar                                                2.45          2.48          2.37          2.53

Canadian dollar                                                  2.31          2.38          2.32          2.31


If the results for the year ended 31 December 2003 were retranslated at the
average exchange rates for the year ended 31 December 2004, North America would
have achieved an operating profit before goodwill and exceptional items of
£33.5m on turnover of £360.5m, and Australian Bus an operating profit before
goodwill and exceptional items of £3.5m on turnover of £66.5m.



4.   Turnover and segmental analysis


Due to the nature of the Group's businesses, the origin and destination of
turnover is the same.  During the year, franchise agreement receipts from the
SRA and PTEs amounted to £497.0m (2003: £684.0m) in UK Trains.


                                                         Turnover       Operating profit before     Net assets/
                                                                        goodwill and exceptional   (liabilities)
                                                                                 items
                                                    _________________      ___________________    ______________
                                                       2004     2003*      2004          2003*    2004     2003*

Analysis by class of business                            £m        £m        £m             £m      £m        £m

UK Bus  - continuing operations                       216.2     211.9      43.9           47.5    66.0      45.6
        - acquisitions                                 22.8         -       0.3              -  (15.6)         -
                                                      239.0     211.9      44.2           47.5    50.4      45.6
UK Trains                                           1,705.2   1,702.2      58.5           33.2  (95.1)    (10.9)
UK Coach - continuing operations                      189.3     183.7      18.4           15.5    12.5      19.1
         - discontinued operations                      3.1       2.7       0.4            0.4     2.2       2.4
                                                      192.4     186.4      18.8           15.9    14.7      21.5
UK operations                                       2,136.6   2,100.5     121.5           96.6  (30.0)      56.2
North American Bus                                    364.6     400.1      36.9           37.0   407.4     442.8
Australian Bus - discontinued operations               59.0      65.1       2.1            3.4    20.6      58.0
Central functions                                         -         -     (8.5)          (8.1)     2.4       9.0

                                                    2,560.2   2,565.7     152.0          128.9   400.4     566.0

Continuing operations                               2,475.3   2,497.9     149.2          125.1   393.2     505.6
Acquisitions                                           22.8         -       0.3              -  (15.6)         -
Discontinued operations                                62.1      67.8       2.5            3.8    22.8      60.4

                                                    2,560.2   2,565.7     152.0          128.9   400.4     566.0

Goodwill amortisation                                                    (52.7)         (45.7)
Goodwill impairment                                                       (9.5)              -
Tangible fixed assets impairment                                          (6.1)              -
Exceptional items (see table below)                                       (7.9)              -
Group operating profit                                                     75.8           83.2
Share of operating losses of associates                                   (3.4)          (4.1)
Total operating profit                                                     72.4           79.1
Loss on sale of properties                                                (0.1)              -
Profit on sale of businesses                                                8.9              -
Profit on ordinary activities before interest                              81.2           79.1
Unallocated net liabilities                                                                    (136.8)   (306.5)

                                                                                                 263.6     259.5

Equity minority interest                                                                           0.9       4.7
Net assets                                                                                       264.5     264.2


* Restated for change in revenue recognition and accounting policy for own
shares (see note 1)  and classification (see note 2)


Goodwill amortisation of £52.7m (2003: £45.7m) is analysed as UK Trains £33.3m
(2003: £24.3m), UK Coach £0.7m (2003: £0.9m), North American Bus £17.7m (2003:
£19.4m) and Australian Bus £1.0m (2003: £1.1m).  The goodwill and tangible fixed
asset impairment charge for 2004 relates to the Bosnjak Group, comprising
Westbus Pty Limited, Glenorie Bus Company Pty Limited and Westbus (UK) Limited.


Exceptional items are analysed as follows:
                                                                                                 2004      2003*
                                                                                                   £m         £m

UK Bus- Reorganisation                                                                            0.4          -

UK Trains - Reorganisation                                                                        7.2          -

North America - Reorganisation                                                                    0.3          -
Total exceptional items                                                                           7.9          -


* Restated for change in classification (see note 2)



4.   Turnover and segmental analysis (continued)


The exceptional costs in UK Trains were incurred at 'one' (integration of the
three legacy TOCs resulted in reorganisation and redundancy charges), Qjump
(redundancy, property and pension charges following the merger with the
Trainline.com) and Maintrain (redundancy costs incurred as a result of the
decision to cease tendering for external work and focus on improving service to
Central Trains and Midland Mainline). The balance of exceptional items comprises
the cost of reorganisations at UK Bus (£0.4m) and North America (£0.3m).



Unallocated net liabilities comprise other investments, cash at bank and in
hand, borrowings (other than finance leases), deferred consideration payable,
dividends payable and taxation.



5.   Net interest payable


                                                                                               2004          2003
                                                                                                 £m            £m
Interest payable and similar charges:

Bank loans and overdrafts                                                                    (23.0)        (26.7)

Other loans                                                                                   (0.5)         (0.9)

Finance lease charges                                                                         (6.9)         (3.5)

                                                                                             (30.4)        (31.1)

Interest receivable                                                                            13.5           7.6

Unwinding of discount on insurance provisions (see note 18)                                   (1.2)         (1.5)

Net interest payable                                                                         (18.1)        (25.0)



6.   Taxation

                                                                                               2004         2003*
                                                                                                 £m            £m
Current taxation:

UK corporation tax                                                                             24.3          21.2

Prior years - UK                                                                              (2.2)           0.4
                                                                                               22.1          21.6
Overseas taxation                                                                               5.4           5.1

Prior years - overseas                                                                        (0.1)             -

                                                                                               27.4          26.7

Tax relief on goodwill and exceptional items:

UK corporation tax: current                                                                   (2.1)             -

UK corporation tax: prior year adjustment                                                         -         (6.0)

Overseas                                                                                      (4.2)         (4.2)

Total current taxation                                                                         21.1          16.5

Deferred taxation (see note 18):

Origination and reversal of timing differences                                                  1.2         (4.1)

Tax on profit on ordinary activities                                                           22.3          12.4

*Restated for change in revenue recognition (see note 1) and classification (see
note 2).

There is no tax arising on the profit on sale of businesses. The exceptional
prior year adjustment in 2003 consists of one off credits arising from a review
of Group tax liabilities as a result of agreeing prior years' computations.



7.   Earnings per share


                                                                                        2004              2003*

Basic earnings per share                                                               32.6p              31.9p

Normalised basic earnings per share                                                    72.9p              54.6p

Diluted earnings per share                                                             32.1p              31.0p

Normalised diluted earnings per share                                                  71.8p              53.0p

* Restated for change in revenue recognition (see note 1) and classification
(see note 2)




7.   Earnings per share (continued)



Basic earnings per share is calculated by dividing the profit for the financial
year of £44.4m (2003: £42.7m) by the weighted average number of ordinary shares
in issue in the year, excluding those held by employees' 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 potentially dilutive 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 detailed as
follows:
                                                                                      Number             Number
                                                                                   of shares          of shares
                                                                                        2004               2003

Basic weighted average shares                                                    136,166,921        133,765,928

Adjustment for dilutive potential ordinary shares                                  2,066,108          3,951,354

Diluted weighted average shares                                                  138,233,029        137,717,282



The normalised basic and normalised diluted earnings per share have been
calculated in addition to the basic and diluted earnings per shares required by
FRS 14 since, in the opinion of the Directors, they reflect the financial
performance of the core business more appropriately.



                                            2004            2004            2004      2003*         2003* 2003* Diluted
Normalised profits for the                             Basic eps     Diluted eps                Basic eps           eps 
financial year are:                           £m           pence           pence         £m         pence         pence

Profit for the financial year               44.4            32.6            32.1       42.7          31.9          31.0

Goodwill amortisation                       52.7            38.7            38.1       45.7          34.1          33.1

Goodwill impairment                          9.5             7.0             6.9          -             -             -

Tangible fixed assets impairment
            (net of minority                 
             interest)                       3.5             2.6             2.5          -             -             -
                                             

Exceptional operating costs                  7.9             5.8             5.7          -             -             -
                                           
Profit on disposal of businesses           (8.9)           (6.5)           (6.4)          -             -             -
                                             
Loss on disposal of properties               0.1               -               -          -             -             -

Results from discontinued
          operations (net of
           minority interest)              (3.6)           (2.6)           (2.5)      (5.1)         (3.8)         (3.7)


Tax relief on goodwill and
      exceptional items                    (6.3)           (4.7)           (4.6)     (10.2)         (7.6)         (7.4)

Normalised profits for the
      financial year                        99.3            72.9            71.8       73.1          54.6          53.0

* Restated for change in revenue recognition (see note 1) and classification
(see note 2)



8.   Intangible assets



Goodwill arising on all acquisitions, except Prism, is amortised evenly over the
Directors' estimate of its useful economic life of 20 years. The goodwill
arising on the acquisition of Prism in the year ended 31 December 2000 is
amortised over the weighted average life of the franchises.


                                                                                                        Goodwill
                                                                                                              £m
Cost:

At 1 January 2004                                                                                          571.3

Additions                                                                                                    5.4

Disposal of businesses                                                                                    (14.6)

Exchange adjustment                                                                                       (22.4)

At 31 December 2004                                                                                        539.7

Amortisation:

At 1 January 2004                                                                                          166.7

Charge for the year (including impairment of £9.5m)                                                         62.2

Disposal of businesses                                                                                     (8.4)

Exchange adjustments                                                                                       (5.2)

At 31 December 2004                                                                                        215.3


Net book value:

At 31 December 2004                                                                                        324.4

At 31 December 2003                                                                                        404.6



9.   Tangible assets


                             Freehold       Long      Short                   Public         Plant
                             land and  leasehold  leasehold        Infra-    service           and
                            buildings   property   property     structure   vehicles     equipment     Total
                                   £m         £m         £m            £m         £m            £m        £m
                                                                            
Cost or valuation:

At 1 January 2004                45.3       46.6       31.1           1.8      335.8         109.1     569.7
Additions                         3.2        0.7        3.6             -       52.2          27.0      86.7
Acquisitions of                     -          -          -             -        7.9             -       7.9
businesses
Disposals                       (4.1)      (9.2)      (1.4)             -      (9.9)        (17.8)    (42.4)
Disposal of businesses          (0.6)          -      (0.4)             -     (17.2)         (8.4)    (26.6)
Reclassification                (5.3)      (1.0)        6.2             -          -           0.1         -
Exchange adjustments            (0.8)      (1.9)      (0.1)         (0.1)     (14.8)         (1.0)    (18.7)
At 31 December 2004              37.7       35.2       39.0           1.7      354.0         109.0     576.6
Depreciation:
At 1 January 2004                 5.4        3.8       16.1           0.3       84.2          54.3     164.1

Charge for the year               1.3        1.2        3.6           0.1       34.2          23.8      64.2

Impairment                        1.2          -          -             -        4.9             -       6.1

Disposals                       (0.7)          -      (1.4)             -      (7.2)        (12.8)    (22.1)

Disposal of businesses              -          -      (0.2)             -      (3.7)         (4.4)     (8.3)

Reclassification                (0.9)      (0.1)        1.0             -          -             -         -

Exchange adjustments            (0.1)      (0.4)          -             -      (6.6)         (0.6)     (7.7)

At 31 December 2004               6.2        4.5       19.1           0.4      105.8          60.3     196.3

Net book value:

At 31 December 2004              31.5       30.7       19.9           1.3      248.2          48.7     380.3

At 31 December 2003              39.9       42.8       15.0           1.5      251.6          54.8     405.6



10.  Investments and interest in associates


                                                Loan to  Interests in         Other          Own         
                                             associates    associates   investments       shares         Total
                                                     £m            £m            £m           £m            £m
Cost or valuation:

At 1 January 2004 as previously reported            0.3           5.6          12.8          5.5          24.2

Prior year adjustment (note 1)                        -             -             -        (5.5)         (5.5)

                                                    0.3           5.6          12.8            -          18.7

Additions (note 11)                                   -             -           3.2            -           3.2

At 31 December 2004                                 0.3           5.6          16.0            -          21.9

Share of post-acquisition reserves:

At 1 January and 31 December 2004                     -         (5.6)             -            -         (5.6)

Provisions:

At 1 January 2004 as previously reported              -             -         (5.8)        (0.3)         (6.1)

Prior year adjustment (note 1)                        -             -             -          0.3           0.3

At 1 January and 31 December 2004                     -             -         (5.8)            -         (5.8)

Net book value:

At 31 December 2004                                 0.3             -          10.2            -          10.5

At 31 December 2003 as restated                     0.3             -           7.0            -           7.3

At 31 December 2003 as previously
reported                                            0.3             -           7.0          5.2          12.5


The Group's share of associates post acquisition reserves in excess of the cost
of investment are included within provisions (see note 18).



11.  Acquisitions and disposals during the year

 (a)  Acquisitions



The Group acquired the entire share capital of Connex Bus UK Limited (since
renamed Travel London Limited), a bus operator in the UK, on 26 February 2004,
the entire share capital of 1114448 Ontario Limited, the holding company of
Student Express Limited,  a school bus operator in North America on 8 July 2004
(together referred to as 'Student Express'), and certain assets of M&O Bus Lines
(Handicab) Limited on 16 August 2004, another school bus operator in North
America.



Net assets at date of acquisition:               Book Value      Book Value Book Value    Fair Value      Fair
                                                     Travel Student Express      Total   Adjustments     Value          
                                                     London         and M&O                              Total
                                                         £m              £m         £m            £m        £m

Intangible fixed assets                                 0.3               -        0.3         (0.3)         -
Tangible fixed assets                                   0.8             3.4        4.2           3.7       7.9
Stock                                                   0.2               -        0.2             -       0.2
Debtors                                                 2.2             0.2        2.4           1.6       4.0
Cash at bank and in hand                               19.1             0.8       19.9             -      19.9
Creditors: amounts falling due within one year        (3.3)           (0.8)      (4.1)         (2.5)     (6.6)
Creditors: amounts falling due after more than
one year                                              (0.1)           (0.6)      (0.7)         (8.1)     (8.8)
Provisions                                           (19.3)           (0.7)     (20.0)           5.3    (14.7)
Net assets acquired                                   (0.1)             2.3        2.2         (0.3)       1.9
Goodwill on acquisition                                                                                    5.4
Total consideration                                                                                        7.3
Total consideration                                                                                        7.3
Less: net cash acquired                                                                                 (19.9)
Net cash inflow                                                                                         (12.6)


The acquisition balance sheets have been adjusted to reflect provisional fair
value adjustments.



11.  Acquisitions and disposals during the year (continued)


For Travel London this comprises the elimination of goodwill in Connex Bus UK
Limited's balance sheet (£0.3m), the recognition of finance lease assets for
public service vehicles (£10.1m), the impairment of public service vehicles to
reflect their net realisable value on the expiry of the onerous contracts
acquired (£6.0m), the recognition of group relief receivable on that impairment
(£1.9m), onerous contract adjustments net of deferred tax (£5.3m),   and other
sundry amendments to reduce debtors (£0.1m) and increase creditors (£0.5m).


For Student Express this comprises a downward revaluation of tangible fixed
assets (£0.4m) and an adjustment to reduce debtors (£0.2m).


Consideration for the North American acquisitions was £7.1m, and acquisition
costs for Travel London of £0.2m were incurred.


The Connex Bus UK Limited year end prior to acquisition was 31 December 2003.
The profit after tax and minority interest for the year then ended was £4.5m and
for the period from 1 January 2004 to acquisition was £0.4m.


The Student Express year end prior to acquisition was 31 August 2003. The profit
after tax and minority interest for the year then ended was £0.5m and for the
period from 31 August 2003 to acquisition was £0.6m.


During the year ended 31 December 2003, the Group acquired the entire share
capital of Shantz Enterprises Inc, a school bus operator in North America.  No
revisions to the fair value adjustments made in the year ended 31 December 2003
have been made in the current year.


(b)   Disposals

The Group sold National Bus Company (Victoria) Pty Limited, National Bus Company
(Queensland) Pty Limited and Transport Management Group Pty Limited on 1 October
2004 for gross proceeds of £26.4m, before costs of £1.7m.


Qjump Limited was sold on 9 February 2004. In exchange for the net assets of
Qjump Limited the Group received a 14% shareholding in Trainline Holdings
Limited, and a £1.0m loan note from the same company. Additionally the Group has
provided £1.5m to fund working capital since disposal which is included in other
debtors.

                                                                            Australia                 
                                                                                Buses        Qjump         Total
Net assets  disposed of:                                                           £m           £m            £m

Tangible fixed assets                                                            14.2          4.1          18.3
Stock                                                                             0.3            -           0.3
Debtors                                                                           2.1          6.5           8.6
Cash at bank and in hand                                                          0.3            -           0.3
Creditors                                                                       (7.3)        (7.3)        (14.6)
Provisions                                                                          -        (0.1)         (0.1)
Net assets disposed                                                               9.6          3.2          12.8
Goodwill realised                                                                 6.2            -           6.2
Profit on sale of businesses                                                      8.9            -           8.9
Net consideration                                                                24.7          3.2          27.9
Net consideration                                                                24.7          3.2          27.9
Less: investment in Trainline Holdings Limited (note 10)                            -        (3.2)         (3.2)
Less: net cash disposed                                                         (0.3)            -         (0.3)
Add: disposal costs accrued                                                       0.3            -           0.3
Net cash inflow                                                                  24.7            -          24.7



The Australian bus companies disposed of in the year contributed £26.8m (2003:
£33.8m) to the Group's turnover and £3.1m (2003: £4.0m) to the Group's operating
profit.  They also contributed £6.4m (2003: £5.1m) to the Group's net operating
cash flow and paid out £0.1m (2003: £1.1m) in respect of capital expenditure.
The turnover, operating result and cash flow of the Qjump business sold are not
disclosed, as the amounts are not material.



During the year ended 31 December 2003 the Group sold the Multisystems
Consultancy Division for £0.8m resulting in no gain or loss on disposal. Cash
payments of £49.8m were also paid in the year ended 31 December 2003 to
indemnify the providers of the performance bonds and to cover other accrued exit
costs on the Group's withdrawal from the Australian Trains division.



12.  Stock

                                                                                                     2004         2003
                                                                                                       £m           £m

Raw materials and consumables                                                                        16.3         17.3


13.  Debtors


                                                                                                      2004         2003
                                                                                                        £m           £m

Trade debtors                                                                                        169.7        175.3

Amounts due from associates                                                                           12.5          9.2

Other debtors                                                                                         61.9         75.4

Prepayments and accrued income                                                                        84.4         83.8

                                                                                                     328.5        343.7


Included within other debtors is £1.7m (2003: £2.8m) which is recoverable after
more than one year.  Included within prepayments is £12.3m (2003: £5.9m) which
is recoverable after more than one year.  £4.9m (2003: £5.2m) of the
prepayments recoverable after more than one year are in respect of pensions.



14.  Cash at bank and in hand


                                                                                                      2004         2003

                                                                                                        £m           £m

Cash                                                                                                  26.8         33.2

Overnight deposits                                                                                    24.1          2.3

Other short term deposits                                                                             96.3         61.5

                                                                                                     147.2         97.0


Included in cash at bank and in hand are restricted balances of £73.9m (2003:
£62.7m) held by the train companies which cannot be distributed by means of a
dividend or loaned to other Group companies.  Within the restricted balances is
£nil (2003: £18.7m) of cash deposits secured as a bond in respect of future
rolling stock maintenance at ScotRail Railways Limited.



15.  Creditors: amounts falling due within one year


                                                                                                      2004        2003*
                                                                                                        £m           £m

Loan notes                                                                                             7.5          8.4

Bank loans                                                                                             8.0         19.9

Bank overdrafts                                                                                          -          0.2

Trade creditors                                                                                      175.1        160.1

Amounts owed to associates                                                                             0.1          0.2

Finance lease obligations                                                                             16.3         11.6

Corporation tax payable                                                                               36.8         16.7

Social security and other taxation                                                                    17.4         16.4

Accruals and deferred income                                                                         216.2        175.3

Other creditors                                                                                      104.7        172.8

Proposed dividend                                                                                     28.5         23.6

                                                                                                     610.6        605.2

*Restated for change in revenue recognition (see note 1)


Included in other creditors is £nil (2003: £18.7m) of cash deposits secured as a
bond in respect of future rolling stock maintenance at ScotRail Railways
Limited.



16.  Creditors: amounts falling due after more than one year


                                                                                                      2004         2003
                                                                                                        £m           £m

Bank loans                                                                                           207.5        304.5

Finance lease obligations                                                                             45.5         41.5

Other creditors                                                                                        3.0          1.3

                                                                                                     256.0        347.3

17.  Net borrowings


                                                                                                      2004         2003
                                                                                                        £m           £m

Due within one year

Loan notes                                                                                             7.5          8.4

Bank loans                                                                                             8.0         19.9

Bank overdrafts                                                                                          -          0.2

Finance lease obligations                                                                             16.3         11.6

                                                                                                      31.8         40.1
Due within one to two years

Finance lease obligations                                                                             16.7         12.2

                                                                                                      16.7         12.2
Due within two to five years

Bank loans                                                                                           207.5        304.5

Finance lease obligations                                                                             25.1         27.7

                                                                                                     232.6        332.2

Due by instalment after five years

Finance lease obligations                                                                              3.7          1.6

Total borrowings                                                                                     284.8        386.1

Cash at bank and in hand (see note 14)                                                             (147.2)       (97.0)

Other debt receivable                                                                                (1.0)            -

Net borrowings                                                                                       136.6        289.1


Secured borrowings within the Group (representing finance leases) total £61.8m
(2003: £53.1m).


18.  Provisions for liabilities and charges


                                                 Unfunded   Insurance                         
                                                  pension      claims     Deferred     Associates     Other
                                                provision         (b)          tax            (c)       (d)       Total
                                                      (a)
                                                       £m          £m           £m             £m        £m          £m

At 1 January 2004                                     0.8        42.8          6.8            8.4         -        58.8

Provided in the year                                    -        29.7          1.2            3.4         -        34.3

Utilised in the year                                (0.2)      (26.5)            -              -     (4.6)      (31.3)

Unwinding of discount                                   -         1.2            -              -         -         1.2

Acquisition of subsidiary undertakings                  -         3.0        (4.1)              -      15.8        14.7

Disposal of subsidiary undertakings                     -           -        (0.1)              -         -       (0.1)

Exchange difference                                     -       (1.6)          0.1              -         -       (1.5)

At 31 December 2004                                   0.6        48.6          3.9           11.8      11.2        76.1


(a)     The unfunded pension provision relates to commuted pensions not provided
within the pension schemes, which will be paid out over 15 to 20 years.

(b)     The insurance claims provision arises from estimated exposures at the
year end, the majority of which will be utilised in the next six years, and
principally comprises provisions for existing claims arising in the UK and North
America.

(c)     The interests in net liabilities of associates comprises £1.0m (2003:
£0.8m) for Altram LRT Limited and £10.8m (2003: £7.6m) for Inter-Capital and
Regional Rail Limited.

(d)     An onerous contract provision of £15.8m was assumed on the acquisition
of Travel London. This was prefunded by the vendor on acquisition and £4.6m has
been utilised up to 31 December 2004.



19.  Reserves


                                                Share        Share Reval-uation Own shares    Merger    Profit    Total
                                              premium   capital to      reserve              reserve  and loss
                                                         be issued                                     account         
                                                   £m           £m           £m         £m        £m        £m       £m

At 1 January 2004 as previously reported         45.1          0.1          0.8          -      15.4     200.7    262.1
Prior year adjustments (see note 1)                 -            -            -      (5.2)         -     (4.2)    (9.4)
At 1 January 2004 as restated                    45.1          0.1          0.8      (5.2)      15.4     196.5    252.7
Shares issued during the year                     2.4        (0.1)            -          -         -         -      2.3

Own shares released to satisfy
          employee share schemes                    -            -            -        0.1         -         -      0.1

Transfers                                           -            -        (0.8)          -         -       0.8        -

Exchange differences                                -            -            -          -         -       2.5      2.5

Tax on exchange differences                         -            -            -          -         -     (4.1)    (4.1)

Retained profit for the year                        -            -            -          -         -       3.1      3.1

At 31 December 2004                              47.5            -            -      (5.1)      15.4     198.8    256.6



20.  Cash flow statement


 (a)          Reconciliation of operating profit to net cash inflow from operating activities

                                     Continuing     Discontinued         Total   Continuing Discontinued         Total
                                     operations       Operations          2004   operations   Operations         2003*
                                           2004             2004                      2003*        2003* 
                                             £m               £m            £m           £m           £m            £m

Group operating profit                     90.0           (14.2)          75.8         80.6          2.6          83.2

Depreciation of tangible assets            60.5              3.7          64.2         60.6          4.1          64.7

Tangible fixed assets impairment              -              6.1           6.1            -            -             -

Amortisation of fixed asset               (6.5)                -         (6.5)        (3.0)            -         (3.0)
grants
                                          
Profit on disposal of fixed               (0.6)                -         (0.6)        (1.2)        (0.3)         (1.5)
assets                                     

Goodwill amortisation                      51.6              1.1          52.7         44.5          1.2          45.7  

Goodwill impairment                           -              9.5           9.5            -            -             -

Decrease in stocks                          0.8            (0.1)           0.7          1.9          0.1           2.0

Decrease in debtors                        17.1              2.1          19.2         16.9          0.7          17.6

Increase/(decrease) in creditors           34.9            (0.3)          34.6       (33.3)        (0.5)        (33.8)

(Decrease)/increase in
provisions                                (1.6)                -         (1.6)          8.0        (0.1)           7.9

Net cash inflow from operating            246.2              7.9         254.1        175.0          7.8         182.8
activities

*Restated for change in revenue recognition (see note 1)


The net cash flows from operating activities include outflows of £5.2m (2003:
£nil) from continuing operations which related to exceptional costs.


                                                                                                2004        2003
(b) Reconciliation of net cash flow to changes in net debt (note 20(c))                           £m          £m

Increase/(decrease) in cash in the year                                                         16.6       (0.7)

Cash outflow from movement in debt and lease financing                                         109.8        40.6

Cash outflow/(inflow) from movement in liquid resources                                         53.1      (14.2)
Change in net debt resulting from cash flows                                                   179.5        25.7
Change in net debt resulting from non cash flows                                              (27.0)        19.8
Movement in net debt in the year                                                               152.5        45.5

Net debt at 1 January                                                                        (289.1)     (334.6)
Net debt at 31 December                                                                      (136.6)     (289.1)



20.  Cash flow statement (continued)


                                             At                                                             At 31
(c) Analysis of changes in net        1 January              Acquisitions/      Exchange       Other     December       
debt                                       2004   Cash flow      disposals   Differences   movements         2004
                                             £m          £m             £m            £m          £m           £m
                                                                                   
Cash                                       33.2       (5.4)              -         (1.0)           -         26.8

Overnight deposits                          2.3        21.8              -             -           -         24.1

Bank overdrafts                           (0.2)         0.2              -             -           -            -
Net cash                                   35.3        16.6              -         (1.0)           -         50.9
Liquid resources - other short
term deposits                              61.5        53.1              -           0.4      (18.7)         96.3
Other debt receivable                         -           -            1.0             -           -          1.0
Debt due within one year:
      Loan notes                          (8.4)         0.9              -             -           -        (7.5)
      Bank loans                         (19.9)        13.7              -             -       (1.8)        (8.0)
                                         (28.3)        14.6              -             -       (1.8)       (15.5)
Debt due after one year:

   Bank loans                           (304.5)        79.4              -          17.6           -      (207.5)
   Finance lease obligations             (53.1)        15.8          (9.5)           1.2      (16.2)       (61.8)
Net debt                                (289.1)       179.5          (8.5)          18.2      (36.7)      (136.6)

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


Other non cash movements in net debt represent finance lease additions of £16.2m
(2003: £8.0m), £1.8m (2003: £0.9m) amortisation of loan arrangement fees, and
£18.7m outflow (2003: £18.7m inflow) of cash deposits which were secured as a
bond in respect of future rolling stock maintenance at ScotRail Railways
Limited.


21. The financial information set out above, which was approved by the Board 
on 24 February 2005, is derived from the full Group accounts for the year ended
31 December 2004 and does not constitute the full accounts within the meaning of
section 240 of the Companies Act (as amended). The Group accounts on which the
auditors have given an unqualified report, which does not contain a statement
under section 237 (2) or (3) of the Companies Act 1995, will be delivered to the
Registrar of Companies in due course.


Copies of the Preliminary Results may be obtained from the Company Secretary at
75 Davies Street, London, W1K 5HT. Copies are also available via
www.nationalexpressgroup.com.



                                    - ENDS -


                      This information is provided by RNS
            The company news service from the London Stock Exchange