Interim Results - Part 2
National Express Group PLC
5 September 2000
PART 2
NATIONAL EXPRESS GROUP PLC
Interim Results
for the six months ended 30 June 2000
Group Profit and Loss Account
Unaudited Unaudited Audited
Total Total Total Total
before after before after Total
good- Good- good- good- Good- good- after
will will will will will will good-
and and and and and and will
except- except- except- except- except- except- and
ional ional ional ional ional ional except-
items items items items items items ional
6 mths 6 mths 6 mths 6 mths 6 mths 6 mths items
to to to to to to Year to
30 June 30 June 30 June 30 June 30 June 30 June 31 Dec
2000 2000 2000 1999 1999 1999 1999
£m £m £m £m £m £m £m
Turnover
- continuing 899.9 - 899.9 670.1 670.1 1,476.7
operations
- acquisitions 11.4 - 11.4 - - -
Turnover 911.3 - 911.3 670.1 - 670.1 1,476.7
Other 8.7 - 8.7 4.7 - 4.7 10.5
operating
income
Other (852.5) (20.9) (873.4) (628.8) (5.9) (634.7) (1,388.7)
operating
costs
Goodwill - (7.3) (7.3) - (0.6) (0.6) (3.3)
Total (852.5) (28.2) (880.7) (628.8) (6.5) (635.3) (1,392.0)
operating
costs
Operating 67.5 (28.2) 39.3 46.0 (6.5) 39.5 95.2
profit
- continuing 66.6 (27.7) 38.9 46.0 (6.5) 39.5 95.2
operations
- acquisitions 0.9 (0.5) 0.4 - - - -
67.5 (28.2) 39.3 46.0 (6.5) 39.5 95.2
Share of (1.8) - (1.8) - - - -
operating
loss of
associates
Loss on - (0.4) (0.4) - - - -
sale of
business
Profit on - - - - 0.2 0.2 0.2
sale of
investment
Profit on 65.7 (28.6) 37.1 46.0 (6.3) 39.7 95.4
ordinary
activities
before
Interest
Net (15.3) - (15.3) (0.4) - (0.4) (5.8)
interest
payable
Profit on 50.4 (28.6) 21.8 45.6 (6.3) 39.3 89.6
ordinary
activities
before
taxation
Tax on (12.2) 8.9 (3.3) (11.8) 1.8 (10.0) (22.8)
profit on
ordinary
activities
Profit 38.2 (19.7) 18.5 33.8 (4.5) 29.3 66.8
after tax
Minority (0.1) - (0.1) (0.1) - (0.1) (0.2)
Interest
Profit 38.1 (19.7) 18.4 33.7 (4.5) 29.2 66.6
attributable
to
shareholders
Dividends (7.6) - (7.6) (6.6) - (6.6) (21.0)
Retained 30.5 (19.7) 10.8 27.1 (4.5) 22.6 45.6
profit
Normalised actual normalised actual actual
Earnings
per share
- basic 33.2p 16.0p 29.7p 25.7p 58.3p
- diluted 30.1p 14.6p 26.1p 22.6p 51.9p
Group Balance Sheet
Unaudited Audited
30 June 30 June 31 Dec
2000 1999 1999
£m £m £m
Fixed assets
Intangible assets 278.8 42.9 242.6
Tangible assets 549.6 366.4 503.8
Investments and interests in 21.7 6.6 15.0
associate undertakings
850.1 415.9 761.4
Current assets
Stock 15.6 11.0 14.8
Debtors 230.1 132.6 216.6
Cash at bank and in hand 93.8 71.8 101.0
339.5 215.4 332.4
Creditors: amounts falling due (522.4) (266.7) (394.9)
within one year
Net current liabilities (182.9) (51.3) (62.5)
Total assets less current 667.2 364.6 698.9
liabilities
Creditors: amounts falling due after (365.2) (105.0) (408.8)
more than one year
Provisions for liabilities and (23.9) (16.1) (23.1)
charges
278.1 243.5 267.0
Capital and reserves
Called up share capital 5.9 5.8 5.8
Share premium account 35.9 35.3 35.7
Capital reserve 17.0 17.0 17.0
Share capital to be issued 0.4 0.5 0.5
Revaluation reserve 17.9 18.2 17.9
Profit and loss account 196.7 162.5 185.9
Equity shareholders' funds 273.8 239.3 262.8
Equity minority interest 4.3 4.2 4.2
278.1 243.5 267.0
Group Statement of Cash Flows
Unaudited Audited
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
£m £m £m
Net cash inflow from operating 44.4 45.0 95.1
activities (see note 6)
Net interest paid (16.0) (0.3) (3.9)
Interest element of finance lease (0.4) - (0.8)
rentals
Returns on investments and servicing (16.4) (0.3) (4.7)
of finance
UK corporation tax paid (6.4) (2.1) (13.7)
Overseas tax paid (1.2) - (2.2)
Taxation paid (7.6) (2.1) (15.9)
Payments to acquire tangible fixed (42.0) (38.9) (97.9)
assets
Receipts from sales of tangible fixed 1.8 1.0 7.5
assets
Payments to acquire other investments (8.6) (7.8) (7.5)
Receipts from the sale of investments - 0.2 0.1
Purchase of shares to satisfy (1.5) - (7.8)
employee share scheme
Capital expenditure and financial (50.3) (45.5) (105.6)
investment
Payments to acquire subsidiary (52.4) (34.4) (264.9)
undertakings
Net cash/ (overdraft) of acquired 0.1 (0.3) 8.7
subsidiaries
Deferred consideration for business - (0.4) (3.4)
acquired
Acquisitions and disposals (52.3) (35.1) (259.6)
Equity dividends paid (14.2) (12.8) (19.4)
Cash withdrawn from short term 7.3 14.4 3.9
deposits
Management of liquid resources 7.3 14.4 3.9
Issue of ordinary share capital 0.1 0.9 1.3
Repayment of capital element of (3.6) (1.7) (4.9)
finance leases
Repayment of loan notes (0.2) (0.1) (9.9)
Movement on bank deposits and loan - - (0.5)
notes
Loans advanced 86.4 29.5 373.3
Loans repaid (16.7) (6.6) (45.9)
Net cash inflow from financing 66.0 22.0 313.4
(Decrease)/increase in net cash (23.1) (14.4) 7.2
Group Statement of Total Recognised
Gains and Losses
Unaudited Audited
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
£m £m £m
Profit attributable to members of 18.4 29.2 66.6
the parent company
Exchange differences on 6.2 (0.1) 0.4
retranslation of net assets in
subsidiary undertakings
Exchange difference on hedging loan (6.2) - (0.4)
Total recognised gains and losses 18.4 29.1 66.6
Reconciliation of Movement in Group Equity Shareholders' Funds
Unaudited Audited
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
£m £m £m
Total recognised gains and losses 18.4 29.1 66.6
Dividends (7.6) (6.6) (21.0)
New share capital issued 0.3 5.0 5.4
Shares to be issued (0.1) (0.1) (0.1)
Net addition to shareholders' funds 11.0 27.4 50.9
Opening shareholders' funds 262.8 211.9 211.9
Equity shareholders' funds 273.8 239.3 262.8
Segmental Analysis
Turnover Operating profit before
exceptional items and
goodwill
Unaudited Audit- Unaudited Audit-
ed ed
Year Year
6 6 to 6 6 to
months months 31 months months 31
to to Dec to to Dec
30 June 30 June 1999 30 June 30 June 1999
2000 1999 2000 1999
Analysis by class of £m £m £m £m £m £m
business
Buses 99.1 97.8 196.4 25.2 23.5 47.6
- continuing
Trains 466.1 457.1 921.8 14.0 13.1 28.0
- continuing
Coaches 77.8 75.1 168.2 1.5 1.6 11.0
- continuing
- acquisitions 3.0 - - 0.1 - -
80.8 75.1 168.2 1.6 1.6 11.0
Airports 15.0 16.0 33.9 4.0 4.5 12.9
- continuing
UK Operations 661.0 646.0 1,320.3 44.8 42.7 99.5
USA - continuing 126.8 16.8 64.6 15.8 3.0 9.5
- acqusitions 8.4 - - 0.8 - -
135.2 16.8 64.6 16.6 3.0 9.5
Australia 115.1 7.3 91.8 6.1 0.3 4.2
- continuing
911.3 670.1 1,476.7 67.5 46.0 113.2
Less exceptional (20.9) (5.9) (14.7)
items
Less goodwill (7.3) (0.6) (3.3)
39.3 39.5 95.2
Analysis of Exceptional Items:
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
£m £m £m
Buses - reorganisation 1.6 1.2 1.5
Trains - reorganisation 1.0 1.4 5.8
- new trains 0.7 2.6 4.9
1.7 4.0 10.7
Airports - reorganisation - - 0.2
USA - reorganisation 0.5 - 0.2
- abortive 0.2 - -
acquisition
costs
- settlement of 16.5 - -
litigation
17.2 - 0.2
Australia - reorganisation 0.4 - -
Year 2000 - 0.7 2.1
20.9 5.9 14.7
The exceptional expenditure on new trains is the costs associated with
bringing the new trains into service. The exceptional expenditure on
settlement of litigation of £16.5m is the settlement of the litigation
brought against National Express Group PLC ('the Group') in the USA by
Atlantic Express Group Inc., with no admission of liability, and the
associated professional fees.
Analysis of Goodwill Amortisation:
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
Coaches - continuing 0.2 - -
USA - continuing 5.8 0.6 2.4
- acquisitions 0.5 - -
Australia - continuing 0.8 - 0.9
7.3 0.6 3.3
Notes to the Interim Accounts
1 Basis of preparation
These unaudited accounts, which do not constitute statutory accounts, have
been prepared using accounting policies set out in the Group's 1999
statutory accounts. The 1999 accounts received an unqualified auditors'
report and have been delivered to the Registrar of Companies. The Group
has adopted two new accounting standards in the year, which are FRS 15,
Tangible Fixed Assets and FRS 16, Current Taxation. The only significant
impact of these on the Group is in the area of revaluation of fixed assets.
FRS 15 requires that each class of tangible fixed assets is either re-
valued annually or not at all. The policy that has been adopted is not to
re-value in future, although as permitted by the standard, properties that
have been re-valued in the past will retain the existing book value.
Adoption of these standards has no other material impact on the Group.
2 Turnover
The turnover of the Group comprises revenue from road passenger transport,
airport operations, train passenger services and related activities. Within
the UK trains division and in Australia, franchise agreement receipts from
the shadow Strategic Rail Authority, local Passenger Transport Executives
within the West Midlands region and Scotland and the Victorian Government
are treated as turnover. Franchise agreement payments are treated as an
operating cost. During the first half year, franchise agreement receipts
amounted to £221.2m (1999 interim: £236.5m; 1999 full year: £468.2m) in the
UK and £39.3m (1999 interim: nil; 1999 full year: £27.9m) in Australia.
3 Taxation
Taxation on operating profit before exceptional items and goodwill has been
calculated using an estimated annual effective rate of 24.2% (1999 interim
25.9%; 1999 full year 25.7%).
4 Earnings per share
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
(a) Basic earnings per share 16.0p 25.7p 58.3p
The calculation of the basic earnings per share is based on earnings of
£18.4m (1999 interim: £29.2m, 1999 full year: £66.6m) and on 114,761,359
ordinary shares being the weighted average number of ordinary shares in
issue in the period (1999 interim: 113,566,739, 1999 full year:
114,232,918).
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
(b) Normalised basic earnings per 33.2p 29.7p 69.7p
share
The calculation of normalised basic earnings per share is based on
normalised earnings of £38.1m (1999 interim: £33.7m, 1999 full year:
£79.6m) and on 114,761,359 ordinary shares being the weighted average
number of ordinary shares in issue in the period (1999 interim:
113,566,739, 1999 full year: 114,232,918).
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
(c) Diluted basic earnings per 14.6p 22.6p 51.9p
share
The calculation of diluted earnings per share is based on earnings of
£18.4m (1999 interim: £29.2m, 1999 full year: £66.6m) and on the weighted
average number of potential dilutive ordinary shares in issue during the
period, which was 126,441,704 (1999 interim: 129,022,406, 1999 full year:
128,266,998).
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
(d) Normalised diluted earnings 30.1p 26.1p 62.1p
per share
The calculation of normalised diluted earnings per share is based on
normalised earnings of £38.1m (1999 interim: £33.7m, 1999 full year:
£79.6m) and on the weighted average number of potential dilutive ordinary
shares in issue during the period, which was 126,441,704 (1999 interim:
129,022,406, 1999 full year: 128,266,998).
The reconciliation of the weighted average number of shares in issue during
the period is as follows:
Number Number Number
Basic weighted number of average 114,761,359 113,566,739 114,232,918
shares
Adjustment for effect of share 11,680,345 15,455,667 14,034,080
options issued at 'NIL'
consideration
Diluted weighted average number 126,441,704 129,022,406 128,266,998
of shares
Notes to the Interim Accounts
Continued
The analysis of normalised profit after tax and minority interest is as
follows:
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999
£m £m £m
Profit after tax and minority 18.4 29.2 66.6
interest
Exceptional costs 14.7 4.0 10.7
Loss on disposal of business 0.3 - -
Profit on sale of investment - (0.2) (0.2)
Goodwill 4.7 0.7 2.5
38.1 33.7 79.6
The normalised diluted earning per share has been calculated in addition to
the basic earnings per share required by FRS 14 since in the opinion of the
directors, it reflects the financial performance of the core business more
appropriately.
5 Acquisitions
On 6 January 2000 the Group acquired the entire share capital of Forsythe &
Associates, Inc. Other acquisitions during the period were, Blue Ribbon
Bus Company Pty Limited, Stewart International Airport, Inc and two coach
division businesses.
Forsythe Other Total
£m £m £m
Consideration:
Cash 23.3 29.1 52.4
Other acquisition costs 0.1 - 0.1
Total cost of investment 23.4 29.1 52.5
Net (liabilities) / assets (0.2) 25.1 24.9
acquired
Goodwill on acquisition 23.6 4.0 27.6
On 31 May 2000 the Group announced the acquisition of School Services &
Leasing Inc. in the USA for £136.7m in cash. The transaction was completed
on 31 August 2000. On 18 July 2000 the Group announced a recommended cash
and share offer ('the offer') for Prism Rail PLC ('Prism'). The offer is
282.5p cash plus 0.375 new National Express Group PLC ordinary shares for
each Prism share. There is also a mix and match election. In addition
Prism shareholders are entitled to a special dividend of 40 pence per Prism
share, which becomes payable when the offer becomes, or is declared
unconditional, in all respects. The offer valued Prism at £165.8m. The
first closing date of the offer was 11 August 2000 when the Group received
valid acceptances representing 88.4% of the issued share capital of Prism.
The offer was extended to 29 August 2000. The offer became unconditional as
to acceptances on 18 August 2000 when the Group received valid acceptances
representing 90.8% of the issued share capital of Prism. The offer and the
mix and match election remain open until further notice.
6 Cashflow Reconciliation
The reconciliation of the operating profit to net cashflow from operating
activities is as follows:
6 mths to 30 June 2000
Contin- 6 mths Year
uing Acquisi- Total to 30 to 31
operat tions June Dec
ions 1999 1999
£m £m £m £m £m
Operating profit 38.9 0.4 39.3 39.5 95.2
Depreciation of tangible fixed 20.0 0.6 20.6 10.6 26.6
assets
Amortisation of goodwill 6.8 0.5 7.3 0.6 3.3
Profit on sale of tangible (0.2) - (0.2) (0.3) (2.4)
fixed assets
Increase in stocks (0.7) - (0.7) (2.0) (0.8)
(Increase)/decrease in debtors (8.0) (4.1) (12.1) 13.6 (31.7)
(Decrease)/increase in (9.9) (0.2) (10.1) (17.5) 4.2
creditors
Increase in provisions 0.3 - 0.3 0.5 0.7
Net cash inflow / (outflow) 47.2 (2.8) 44.4 45.0 95.1
from operating activities
Copies of the interim statement may be obtained from the Company Secretary
at 75 Davies Street, London W1K 5HT.
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