Final Results - Year Ended 31 December 1999
National Express Group PLC
14 March 2000
National Express Group PLC
Preliminary Results
for the year ended 31 December 1999
Financial Highlights
- Turnover up 11.7% to £1,476.7m (1998: £1,322.4m)
- Operating profit before exceptional costs and amortisation of goodwill up
18.2% to £113.2m (1998: £95.8m)
- Interest cover 16.4 times
- Normalised profit before tax up 9.9% to £107.4m (1998: £97.7m)
- Normalised diluted earnings per share up 13.3% to 62.1p (1998: 54.8p)
- Final dividend of 12.45p (1998: 11.3p), making a total dividend for the year
of 18.2p per share (1998: 16.0p), an increase of 13.8%
- Operating cashflow from continuing operations of £100.0m (1998: £98.2m)
- Significant investment programme
- £295.1m on acquiring new businesses in new markets
- £97.9m capital investment for growth in existing businesses
- Net debt at 31 December 1999 was £315.9m (1998: net cash of £35.1m)
- At 31 December 1999, the Group had net assets of £267.0m (1998: £211.9m)
Operational Highlights
- International growth strategy implemented - 25% of operations now in
international markets:
- Leading positions in US bus market
- Australia's largest privately-owned public transport company
- Investment in new technology:
- 10% shareholding in PCL will lead to introduction of travel smartcards
- Investment in further enhancement of web site to enable customers to
buy rail tickets online
- Record passenger numbers - up over 26% on 1998 levels. Over 660m passenger
journeys were made on the Group's services during 1999
- One per cent growth in bus passenger numbers for second consecutive year.
Strong passenger growth on four existing Quality Partnership schemes in West
Midlands with another three being implemented in 2000. Three year £30
million Infrastructure Investment Partnership being implemented
- 277 new low floor easy access buses put into service - representing £31m-
investment. 40% of bus fleet is now easy access and average age of buses is
less than 9 years
- Of 122 new trains on order worth £320m, 47 are already in service, with a
further 75 due in 2000. 46 of these trains are in excess of franchise
commitments. Frequency of rail services increased during 1999
- Operating profits for trains division up 8.1% to £28.0m, despite £30.9m
decrease in subsidy. 10% increase in passenger rail revenues across trains
division for second successive year
- Strengthened senior management team with new appointments to the Board.
Commenting on current trading and prospects, Chairman Michael Davies said:
'1999 was a successful year and the new year has started in line with our
expectations. Passenger numbers are continuing to increase. We can see many
opportunities for further profitable growth in all our markets, including
increasing transport privatisation worldwide.
The SSRA outlined its objectives for the franchise replacement programme at
the end of 1999 and announced on 8 March this year that our Central Trains
franchise has been selected for renewal. We welcome this announcement and are
confident that National Express can make a major contribution to meeting the
SSRA's objectives. Provided we can be satisfied that a long term commitment to
passenger rail services can deliver good returns for our shareholders, we look
forward to working with the SSRA to make its vision for a railway system for
the 21st century become reality.
We have the quality of management across the Group and the financial headroom
to take full advantage of all these opportunities and look forward to the year
ahead with confidence.'
For further information, please contact:
Phil White, Chief Executive
William Rollason, Finance Director
Helen McCorry, Group Communications Manager
National Express Group PLC 020 7529 2000
Nicola Marsden/Steve Jacobs
Financial Dynamics 020 7831 3113
There will be an analyst meeting at 0900 hours on 14th March 2000 at Financial
Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2
National Express Group PLC
Preliminary Results
For the year ended 31 December 1999
In 1999 National Express became an international passenger transport company
with 25% of our operations now in international markets. Our operating profit
before exceptional items was ahead of last year and our strong cash flows
funded investment in both new markets and in our existing businesses. 660
million passengers used our services - up over 26% on 1998 levels.
We expanded into key geographic markets. In the US we became the third-largest
school bus operator when we acquired Durham Transportation in August 1999 and
the second-largest public transit company when we added ATC Group to our
portfolio in December. In Australia, we became the largest private operator of
public transport services. We purchased National Bus Company and Transport
Management Group in May, which together operate bus services in Australia's
four major cities. In September, we took over three franchises to operate
train and tram services in Melbourne.
In the UK, we further developed the quality and value for money of our
services for passengers and all of our UK divisions increased profits. Our
business philosophy centres on encouraging more people to use public
transport. To that end, we are working closely with all of our public-sector
partners to implement the Government's integrated transport policy.
Management
During the year we greatly strengthened our senior management team. Richard
Brown, previously head of our UK trains division, joined the Board in July as
Commercial Director. In November, Ray O'Toole joined from FirstGroup plc to
become Chief Operating Officer of our UK businesses and in the following month
William Rollason, who was previously at Carlton Communications Plc, joined us
as Finance Director. In November we appointed Barry Gibson, Group Chief
Executive of Littlewoods, as a non-executive Director. I welcome all the new
Board members whose fresh ideas, energy and enthusiasm will help shape our
ability to meet our objectives for long term, sustainable growth.
Financial Results and Dividend
Turnover increased by 11.7% to to £1,476.7m (1998: £1,322.4m). Operating
profit, before exceptional costs and the amortisation of goodwill, increased
to £113.2m (1998: £95.8m), up 18.2%. Profit before tax, goodwill and
exceptional costs was up 9.9% to £107.4m (1998: £97.7m). Diluted, normalised
earnings per share increased by 13.3% to 62.1p (1998: 54.8p).
We generated cash of £100.0m (1998: £98.2m) from continuing operations and
invested £97.9m in new assets and £295.1m in acquiring new businesses.
A final dividend of 12.45p per ordinary share (1998: 11.3p) will be paid on 5
May 2000 to shareholders on the register at 31 March 2000. Including the
interim dividend, the proposed total dividend for the year is up 13.8% at
18.2p per share.
Review of Operations
1999 was a successful year. We invested in new markets, in our existing
businesses and in new technology. This has helped us become a leading supplier
of high-quality, value for money passenger transport services worldwide.
Investing in new markets - United States and Australia
In the important US public transport market the acquisitions of Durham and ATC
gave us nationwide coverage and critical mass in key sectors. Our new US
division, National Express Corporation, is the second-largest provider of
public transit bus services and the third-largest student transportation
company. With a combined fleet of 8,000 vehicles, these operations serve 210
million passengers a year and employ over 12,500 people, including more than
10,000 drivers. Turnover in 1999 for the new US division, following the
acquisition of Durham in August, was £64.6m and operating profit was £9.5m.
There are excellent opportunities for further growth in our US markets where
only 30% of the student transportation sector and 8% of the public transit
sector is privatised. Our new businesses have impressive records for winning
contracts and extending existing ones as well as encouraging their customers -
the school districts and local municipalities - to contract-out their
services. The combination of added-value service provision and attention to
working in partnership with customers has enabled our companies to outperform
the underlying growth rates in their sectors. We are confident that during
this year we will increase our market share by winning new contracts and
making further strategic acquisitions.
In Australia, we are now the largest privately-owned public transport company.
During the year we strengthened the management of our bus operations and
established a clear plan for achieving greater efficiencies. New bus
timetables were launched in Melbourne in February 2000, and we are working
with other local operators to replace the current ticketing systems with a
smartcard system by the end of 2001. We extended our networks in Perth and in
Sydney, where we worked closely with our public sector partners to develop a
highly successful commuter bus priority route. Turnover for our Australian bus
companies for the eight months following acquisition was £32.7m and operating
profit was £1.1m.
When Victoria's public transport system was privatised last year we won three
long-term franchises to operate trains and trams in Melbourne. Over 148
million passenger journeys were made on these services in 1999. Turnover for
our Australian train and tram businesses for the four months following
acquisition was £59.1m and operating profit was £3.1m.
We have already improved performance since we took over these companies at the
beginning of September. We launched new products to encourage more off-peak
travel and introduced more morning peak services.
We are building on this excellent beginning: 150 new trains and trams, worth
£310m, are being ordered to be delivered by 2004 onwards and refurbishment of
the existing fleet has already commenced. We are committed to making
Victoria's public transport system more efficient and to encourage more
passengers onto our services.
Investing in existing businesses
Buses
Turnover for our UK bus division was up 3.3% to £196.4m (1998: £190.1m) and
operating profit was up 8.7% to £47.6m (1998: £43.8m). For the second
successive year one per cent more passengers used Travel West Midlands'
(TWM's) services in 1999.
In November, the UK Government held a national Bus Summit where a number of
commitments were made by the industry. We are already meeting many of these,
including investment in new buses and people, partnership initiatives and
integration. During the year we invested £31m in 277 new low-floor, easy-
access buses including the first high-capacity 'Bendi-Buses' and easy access
double deckers. Since embarking on our fleet replacement programme after we
acquired TWM four years ago, we have invested over £80m in over 800 new
vehicles. The average age of our buses is now less than nine years and 40% of
our fleet comprises low floor easy-access buses. The vast majority are in
service on our TWM network - making this the largest fleet of easy-access
vehicles to be operating on a single bus network in Europe. All of these new
buses run on low emission fuel, which reduces their impact on the environment.
More frequent and new services were introduced across TWM's network and new
fare offers and promotions were introduced during the year. Travelcard sales
increased by over 6% when we cut the cost of commuting by bus in and around
Birmingham to under £10 a week.
We continued to strengthen our partnership programmes with local authorities.
Strong growth on all four of our existing quality partnerships in the West
Midlands proves that more people will use buses if journey times are improved
and quality standards raised. A further three quality partnerships are being
implemented in 2000. Construction work has also been completed at the first
congestion 'hot spot' in the West Midlands as part of our innovative
'Infrastructure Investment Partnership' under which we have agreed to invest
£30m over three years. Further projects will be completed during 2000 and will
help to alleviate the impact of congestion and improve the efficiency of bus
services across the West Midlands - two of the most important criteria for
encouraging more people to travel by bus.
At the end of May 1999, the £145m Midland Metro light-rail system, which
operates between Wolverhampton and Birmingham, was launched. Three million
passenger journeys were made on this service in the first six months. The
Midland Metro not only represents a completely new public transport system in
its own right but, thanks to the work that has been done to integrate it fully
with the existing bus and heavy-rail systems across the region, it also means
that the West Midlands can now rightfully claim to have one of Britain's most
accessible public transport networks.
Trains
Total turnover for our trains division was up to £921.8m (1998: £918.0m).
However, excluding franchise payments, which reduced in 1999 by £30.9m,
turnover was up 8.3% to £453.6m and passenger revenue increased by 10%.
Operating profit increased by 8.1% to £28.0m (1998: £25.9m).
The first 47 new trains from our £320 million order of 122 were put into
service. Of the 122, 46 of these trains are in excess of our franchise
commitments. It is disappointing that in some cases the manufacturers have
failed to deliver all of our new trains on time as this has delayed our
ability to implement fully plans for developing passenger services. The
remaining 75 new trains are due to come into service during 2000. Those trains
that are now in service have delivered tangible customer benefits. The
frequency of many services has doubled and new destinations are being served.
This has given greater flexibility and choice of travel options to our
customers.
In February 2000 we launched 'Airport Express' with BAA. 'Airport Express'
will improve public transport links to airports and the two companies will
jointly market the Gatwick and Heathrow Express rail links to develop common
standards of service quality. We aim to develop this initiative further by
integrating our extensive airport coach networks with these businesses.
Together with BAA we put forward a proposal to the SSRA, under its franchise
replacement programme, to operate Stansted Express as part of an integrated
set of London Airport Express services.
We developed our sales distribution channels during the year and sales through
our train call centres increased by 50% in 1999. We are building on this, and
our success at selling our coach services on the internet, by investing in a
new web site which, when launched later this year, will enable customers to
buy rail tickets online.
Good punctuality and reliability performances continued to be achieved across
the division. In particular, Silverlink made major improvements to its
performance.
The SSRA announced on 8 March 2000 that Central Trains was to be included in
the second tranche of its franchise replacement programme. We have already
submitted a proposal to the SSRA for improving Central's services across its
network and look forward to developing these ideas further over the next few
weeks. We also submitted proposals to the SSRA for the Silverlink County line
and London orbital routes.
The safety of our rail services is our priority and is an important part of
our culture. National Express was instrumental in helping to establish the
National Safety Task Force in November to improve safety across the railway
network. One of its first actions was to launch a national confidential
telephone hotline for staff concerned about safety. This system was modeled on
a ScotRail innovation which has a proven record of success.
Coaches
Turnover for ongoing businesses within our coach division was up 2.7% to
£168.2m (1998: £163.8m) and operating profit increased to £11.0m (1998:
£10.3m). Passenger journeys increased by 5% year-on-year.
We made coach travel easier by introducing more turn-up-and-ride 'Shuttles' on
our core National Express network. These Shuttles help meet the increasing
demand for routes which directly link to major towns and cities.
We developed our sales and distribution channels and sales through our call
centres and internet site - which now account for 17% of sales - grew by 16%.
More locations were fitted with our 'Smart' system, which enables
ticketing-on-departure. Customers can now book via our call centres or web
site and collect their tickets at the point of departure, making it easier to
buy tickets and reducing the time between ticket purchase and time of travel.
At the start of the year we further developed our range of dedicated branded
airport coach services by launching Airlinks. We acquired the net assets of
Silverwing, which provides crew and passenger transfers at Heathrow and
Gatwick Airports and, together with our existing businesses, we are now able
to provide the most complete range of air and landside passenger and crew
transportation services to airlines in the UK. We acquired Cambridge Coach
Services to expand our express coach links from East Anglia to London's four
airports and to enable us to capitalise on the substantial growth which is
anticipated at Stansted Airport.
Eurolines launched promotional fares to build on its policy of providing the
best value-for-money in the cross-channel travel market, against strong
competition from no-frills airlines. Passenger numbers on its key London to
Paris and London to Amsterdam routes grew strongly.
Airports
Turnover was up 3.7% to £33.9m (1998: £32.7m) and operating profit increased
by 3.2% to £12.9m (1998: £12.5m), despite the loss of duty free sales for the
last six months of the year, which affected operating profit by approximately
£1.0m.
1999 was another record year for East Midlands Airport (EMA), with passenger
numbers up 4% and cargo tonnage up 15%.
We continued to improve EMA's facilities. Work began on the joint £70m
investment in a new air cargo centre with DHL. This is due to be fully
operational in April 2000 when it will be able to handle 20,000 letters and
25,000 parcels each hour. Work also began on extending EMA's runway.
Completion is expected later this year and will enable the airport to handle
passenger and cargo aircraft to long-haul destinations.
The first phase of the Pegasus business park at EMA, which is being jointly
developed with a local property company, is due to be completed later this
year. Powergen has already chosen the site for its East Midlands Regional
Headquarters and we have reached an agreement with Holiday Express for the
development of a 90-bedroom hotel.
Investing in new technology
We made a number of important moves towards using new technology to make
public transport easier to use. Our express coach business was the first
public transport operator to promote and sell its services on the internet.
Since its launch in 1998, the National Express web site has received high
praise and, in a recent independent review, was estimated to be among the top
30 fastest growing web sites in the UK. Sales of coach tickets on the internet
increased three-fold in 1999. We are now building on our internet skills and
experience and are investing in a new web site to be launched this year which
will give passengers access to rail service and fare information and enable
them to buy tickets for all UK rail services on line. The web site will be
extended to enable our customers to buy tickets for all our other UK services
online.
In January 2000, we took a 10% shareholding in PCL, which is introducing a UK-
wide, multi-modal travel smartcard. A similar system has been successfully
introduced in Hong Kong where the ability to use a single smartcard across the
public transport network has proved to be a major step in delivering a fully-
integrated system. Our travel smartcards, which will have multi-application
potential, will help us to develop our services to meet passenger needs better
by giving us a clearer understanding of their travel patterns. We will be
launching a pilot smartcard scheme on our buses in Coventry and we will then
roll out the new technology across the whole of our UK operations.
Safety
The Board regularly reviews the safety of the Group's operations. In 1999 we
commissioned an independent report on the effectiveness of our safety systems.
We expect to receive this report in the Summer. In addition we established a
new Safety Committee of the Board to review, monitor and measure our progress
in fulfilling our safety responsibilities and to ensure that best practice is
consistently applied across the Group. I am confident that at all levels
across the Group we take our primary responsibility - the safety of our
passengers and employees - extremely seriously and that our commitment to
delivering safe services is an important part of our culture.
Investing In People
Our most valuable resource is our people. We have capitalised on the quality
and strength of our management teams by moving people between businesses,
disciplines and, in some cases, countries, with great success. We could not
have achieved the successes of the past year without the commitment of our
people. It is their constant focus on quality, service and safety which gives
us our competitive edge and I thank them for their contribution to the Group's
ongoing success.
Current Trading and Prospects
The new year has started in line with our expectations with passenger numbers
continuing to increase. We can see many opportunities for further profitable
growth in our markets, including increasing transport privatisation worldwide.
The SSRA outlined its objectives for the franchise replacement programme at
the end of 1999 and announced on 8 March this year that our Central Trains
franchise has been selected for renewal. We welcome this announcement and are
confident that National Express can make a major contribution to meeting the
SSRA's objectives. We have submitted a range of innovative ideas which could
help to create additional capacity, improve services and stimulate and cope
with the substantial growth which is anticipated over the next two decades.
Provided we can be satisfied that a long term commitment to passenger rail
services can deliver good returns for our shareholders, we look forward to
working with the SSRA to make its vision for a railway system for the 21st
Century become reality.
We have the quality of management across the Group and the financial headroom
to take full advantage of all these opportunities and look forward to the year
ahead with confidence.
Michael Davies, Chairman
14 March 2000
GROUP PROFIT AND LOSS ACCOUNT
For the year ended 31 December 1999
Total Total Total Total
before Goodwill after before Goodwill after
goodwill and goodwill goodwill and goodwill
and exceptio and and exceptio and
exceptio nal exceptio exceptio nal exceptio
nal items nal nal items nal
items 1999 items items 1998 items
1999 1999 1998 1998
Note £m £m £m £m £m £m
Turnover
- 1,341.2 - 1,341.2 1,313.0 - 1,313.0
continuing
operations
-
acquisitions 135.5 - 135.5 - - -
-discontinued
operations - - - 9.4 - 9.4
Turnover 1 1,476.7 - 1,476.7 1,322.4 - 1,322.4
Other
operating
income 10.5 - 10.5 9.5 - 9.5
Other
operating
costs (1,374.0) (14.7) (1,388.7) (1,236.1) (10.7) (1,246.8)
Goodwill - (3.3) (3.3) - (0.2) (0.2)
Total
operating
costs (1,374.0) (18.0) (1,392.0) (1,236.1) (10.9) (1,247.0)
Operating
profit 113.2 (18.0) 95.2 95.8 (10.9) 84.9
-
continuing 101.7 (14.9) 86.8 94.5 (10.9) 83.6
operations
-
acquisitions 11.5 (3.1) 8.4 - - -
-
discontinued - - - 1.3 - 1.3
operations
1 113.2 (18.0) 95.2 95.8 (10.9) 84.9
Share of
operating
loss of
joint
venture - - - (0.2) - (0.2)
Profit on - 0.2 0.2 - 5.4 5.4
sale of
investment
Release
of
provision
against
fixed - - - - 4.8 4.8
asset
investment
Profit on
ordinary
activitie
s before
interest 113.2 (17.8) 95.4 95.6 (0.7) 94.9
Net
interest
(payable) (5.8) - (5.8) 2.1 - 2.1
/
receivable
Profit on
ordinary
activities
before
taxation 107.4 (17.8) 89.6 97.7 (0.7) 97.0
Tax on
profit on
ordinary
services (27.6) 4.8 (22.8) (26.4) 3.6 (22.8)
Profit
after 79.8 (13.0) 66.8 71.3 2.9 74.2
taxation
Minority
interest (0.2) - (0.2) - - -
Profit
attributable
to
shareholders 79.6 (13.0) 66.6 71.3 2.9 74.2
Dividends (21.0) - (21.0) (18.1) - (18.1)
Retained
profit
for the
financial
year 58.6 (13.0) 45.6 53.2 2.9 56.1
Normalised Actual Normalised Actual
Earnings
per
share -diluted 2 62.1p 51.9p 54.8p 57.8p
Earnings
per -basic 2
share 69.7p 58.3p 63.1p 66.5p
GROUP BALANCE SHEET
At 31 December 1999
1999 1998
Note £m £m
Fixed assets
Intangible
assets 242.6 9.1
Tangible 503.8 293.8
assets
Investments
and
investments
in associate 15.0 6.8
undertakings
761.4 309.7
Current
assets
Stock 14.8 8.6
Debtors 216.6 137.6
Cash at bank 4
and in hand 101.0 94.2
332.4 240.4
Creditors:
amounts
falling due
within one (394.9) (274.0)
year
Net current
liabilities (62.5) (33.6)
Total assets
less current
liabilities 698.9 276.1
Creditors:
amounts
falling due
after more (408.8) (50.4)
than one
year
Provision
for
liabilities (23.1) (13.8)
and charges
267.0 211.9
Capital
reserves
Called up
share 5.8 5.7
capital
Share
premium 35.7 30.4
account
Capital 17.0 17.0
reserve
Share
capital to 0.5 0.6
be issued
Revaluation
reserve 17.9 18.2
Profit and
loss account 185.9 140.0
Equity
shareholders'
funds 262.8 211.9
Equity
minority 4.2 -
interest
267.0 211.9
GROUP STATEMENT OF CASH FLOWS
For the year ended 31 December 1999
1999 1998
Note £m £m
Net cash inflow 5
from operating 95.1 98.2
activities
Interest 6.2 6.7
received
Interest paid (10.1) (4.3)
Interest
element of
finance lease (0.8) (0.5)
rentals
Return on
investments and
servicing of (4.7) 1.9
finance
UK corporation
tax paid (13.7) (4.1)
Overseas tax (2.2) (0.3)
paid
Taxation (15.9) (4.4)
Payments to
acquire
intangible - (0.8)
assets
Payments to
acquire (97.9) (52.6)
tangible assets
Receipts from
sales of 7.5 4.3
tangible assets
Purchase of
shares to
satisfy (7.8) -
employee share
scheme
Payment to
acquire other (7.5) (5.0)
investments
Receipts from
the sale of 0.1 -
investments
Receipts from
investment in
preference - 0.1
shares
Capital
expenditure and
financial
investment (105.6) (54.0)
Payments to 3
acquire
subsidiary (264.9) (8.9)
undertakings
Cash acquired
in companies 8.7 0.9
purchased
Disposal of
subsidiary
undertakings - 12.0
Net cash of
subsidiaries - (1.2)
sold
Deferred
consideration
for businesses (3.4) (0.4)
acquired
Acquisitions
and disposals (259.6) 2.4
Equity
dividends paid (19.4) (15.7)
Cash withdrawn
from /
(deposited in) 3.9 (11.2)
short term
deposits
Management of
liquid 3.9 (11.2)
resources
Financing
Issue of share
capital 1.3 3.8
Repayment of
capital element
of finance (4.9) (2.8)
lease rentals
Repayment of
loan notes (9.9) (3.6)
Movement on
bank deposits
and loan notes (0.5) (0.6)
Loans advanced 373.3 24.2
Loans repaid (45.9) (10.6)
Net cash inflow
from financing 313.4 10.4
Increase in 7.2 27.6
cash
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 1999
1999 1998
£m £m
Profit attributable to
members of the parent 66.6 74.2
company
Exchange differences
on retranslation of
net assets of 0.4 0.1
subsidiary
undertakings
Exchange difference on
hedging loan (0.4) -
Total recognised gains
and losses for the 66.6 74.3
year
RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
For the year ended 31 December 1999
1999 1998
£m £m
Total recognised gains 66.6 74.3
and losses
Dividends (21.0) (18.1)
New share capital issued 5.4 3.9
Goodwill write back on - 6.2
disposals
Other goodwill - (0.4)
adjustments
Shares to be issued (0.1) (0.1)
Net addition to 50.9 65.8
shareholders' funds
Shareholders' funds at 1 211.9 146.1
January
Shareholders' funds at
31 December 262.8 211.9
Notes
1. Turnover and segmental analysis
The turnover of the Group comprises revenue from road passenger transport,
airport operations, train passenger services and related activities in the UK,
Australia and the US. Within the Trains division, franchise agreement
receipts from the Shadow Strategic Rail Authority and local Passenger
Transport Executive services within the West Midlands region and Scotland are
treated as turnover. Franchise agreement payments are treated as an operating
cost. During the year franchise agreement receipts amounted to £468.2m (1998:
£499.1m) and £27.9m (1998: £nil) from the Victoria Department of Public
Transport in Australia.
Turnover and operating profit are analysed as follows:
Operating profit
before
Turnover exceptional
items and
goodwill
1999 1998 1999 1998
£m £m £m £m
UK Buses
- 196.4 190.1 47.6 43.8
continuing
UK Trains
- 921.8 918.1 28.0 25.9
continuing
UK
Coaches
- 167.7 163.8 10.9 10.3
continuing
- 0.5 - 0.1 -
acquisitions
- - 9.4 - 1.3
discontinued
168.2 173.2 11.0 11.6
UK
Airports
- 33.9 32.7 12.9 12.5
continuing
UK 1,320.3 1,314.1 99.5 93.8
operations
US
- 21.4 8.4 2.3 2.0
continuing
- 43.2 - 7.2 -
acquisitions
64.6 8.4 9.5 2.0
Australia
- 91.8 - 4.2 -
acquisitions
1,476.7 1,322.5 113.2 95.8
Less:
turnover
of joint
venture - (0.1) - -
1,476.7 1,322.4 113.2 95.8
Exceptional
items
(see (14.7) (10.7)
table
below)
Goodwill (3.3) (0.2)
95.2 84.9
Exceptional items can be
analysed as follows:
UK UK UK US
Buses Trains Airports Other Total
Buses
1999
New Trains - 4.9 - - - 4.9
Year 2000 - - - - 2.1 2.1
Reorganisation 1.5 5.8 0.2 0.2 - 7.7
1.5 10.7 0.2 0.2 2.1 14.7
1998
New Trains - 0.9 - - - 0.9
Year 2000 - - - - 1.0 1.0
Reorganisation 1.2 7.5 0.1 - - 8.8
1.2 8.4 0.1 - 1.0 10.7
2. Earnings per share
Basic earnings per share:
The calculation of basic earnings per share is based on earnings of £66.6m
(1998: £74.2m) and on 114,232,918 (1998: 111,638,886) ordinary shares, being
the weighted average number of ordinary shares in issue in the year.
Basic normalised earnings per share:
The calculation of basic normalised earnings per share is based on normalised
earnings of £79.6m (1998: £70.4m) and on 114,232,918 (1998: 111,638,886)
ordinary shares, being the weighted average number of ordinary shares in issue
in the year.
Diluted earnings per share:
The calculation of diluted earnings per share is based on earnings of £66.6m
(1998: £74.2m). An adjustment has been made to the weighted average number of
ordinary shares to reflect the number of dilutive potential ordinary shares.
The weighted average diluted number of shares in issue during the year was
128,266,998 (1998: 128,404,691).
Diluted normalised earnings per share:
The calculation of diluted normalised earnings per share is based on
normalised earnings of £79.6m (1998: £70.4m) and on the weighted average
number of potential dilutive ordinary shares in issue during the year, which
was 128,266,998 (1998: 128,404,691).
The normalised profits after tax and minority interest is summarised below:
1999 1998
£m £m
Profit after tax and
minority interest 66.6 74.2
Exceptional costs 10.7 7.2
Release of provision
against a fixed asset - (4.8)
investment
Profit on sale of
investments / (0.2) (5.4)
discontinued
operations
Discontinued - (0.9)
operations
Goodwill 2.5 0.1
Normalised profits 79.6 70.4
3. Acquisitions during the year
During the year the group acquired the entire share capital of Robinson Bus
Services Inc (2 February 1999), National Bus Company Pty Limited (7 May 1999),
Transport Management Group Pty Limited (31 May 1999), Kenneth E Bauman Inc (31
July 1999), Durham Transportation Inc (13 August 1999), National Express Group
Australia (Bayside Trains) Pty Limited (1 September 1999), National Express
Group Australia (Swanston Trams) Pty Limited (1 September 1999), National
Express Group Australia (V/Line Passengers) Pty Limited (1 September 1999),
MultiSystems Inc (13 December 1999) and ATC Group (30 December 1999). The
group also acquired the assets and liabilities of various coach division
businesses.
Durham ATC Other Tota
Transportation Group l
£m £m £m £m
Consideration:
Cash 111.2 106.7 44.1 262.0
Other acquisition 1.0 0.3 1.6 2.9
costs
Shares issued - - 4.1 4.1
Deferred - 0.9 4.7 5.6
consideration
Total cost of
investment 112.2 107.9 54.5 274.6
Net assets 26.5 11.5 - 38.0
acquired
Goodwill on 85.7 96.4 54.5 236.6
acquisition
The net assets acquired are as follows:
Book Fair value Fair
value Adjustments value
to Group
£m £m £m
Intangible
assets 9.9 (9.9) -
Tangible
assets 134.3 - 134.3
Investments 2.7 - 2.7
Stock 5.4 - 5.4
Debtors 47.2 (1.4) 45.8
Cash 10.4 - 10.4
Total 209.9 (11.3) 198.6
assets
Bank
overdrafts (1.7) - (1.7)
Creditors:
amounts
falling
due
within (67.6) - (67.6)
one year
Creditors:
amounts
falling
due after
more than
one year (77.3) - (77.3)
Total
liabilities (146.6) - (146.6)
Provisions (15.5) 5.5 (10.0)
Minority
interest (4.0) - (4.0)
Net 43.8 (5.8) 38.0
assets
The net debt acquired (including cash and bank overdrafts) amounted to £30.2m.
4. Net (borrowings) / cash
1999 1998
£m £m
Borrowings
Loan notes (10.3) (10.6)
Bank loans (382.9) (42.0)
Other loans (0.5) -
Bank overdrafts (4.5) (2.0)
Finance leases (18.7) (4.5)
(416.9) (59.1)
Cash
Cash at bank in 20.9 5.4
hand
Overnight 45.0 50.8
deposits
Other short
term deposits 32.0 35.6
Bank deposits
relating to
loan notes 3.1 2.4
101.0 94.2
Net
(borrowings) / (315.9) 35.1
cash
Gearing 118% n/a
5. Cash flow statement
The reconciliation of operating profit to net cash inflow from operating
activities is shown below:
Continuing
operations Acquisitions Total
1999 1999 1999 1998
£m £m £m £m
Operating
profit 86.8 8.4 95.2 84.9
Depreciation
on
tangible 20.4 6.2 26.6 17.5
fixed
assets
Amortisation
of 0.4 2.9 3.3 -
goodwill
Profit on
sale of
tangible (1.2) (1.2) (2.4) (0.8)
fixed
assets
(Increase)
/ decrease
in stocks (0.8) - (0.8) 0.8
Increase in
debtors (21.7) (10.0) (31.7) (21.3)
Increase /
(decrease)
in 15.4 (11.2) 4.2 15.5
creditors
Increase in
provisions 0.7 - 0.7 1.6
Net cash
inflow from
operating
activities 100.0 (4.9) 95.1 98.2
6. Outstanding litigation
On 19 June 1998 Atlantic Express Transportation Group Inc. issued a writ
against the Group claiming breach of confidentiality. The claim is for an
amount in excess of $75.0m. Based on legal advice that the Group has a strong
defence, no provision has been made in these accounts and the Directors are
vigorously defending the claim.
The preliminary announcement is an abridged version of the full accounts upon
which the auditors have given an unqualified opinion. The full accounts will
be filed with the Registrar of Companies in due course.
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