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National Express (NEX)

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Thursday 13 March, 2003

National Express

Final Results

National Express Group PLC
13 March 2003

13 March 2003

                           National Express Group PLC

                              Preliminary Results

                      for the year ended 31 December 2002

Key Highlights

•   Turnover up to £2.6bn (2001: £2.5bn);

•   Group operating profit before goodwill and exceptional items of £130.9m
    (2001: £157.8m);

•   Strong cash flow from operations of £175.5m (2001: £185.5m);

•   Profit before tax, goodwill and exceptionals of £106.8m (2001: £129.2m);

•   Normalised fully diluted EPS of 60.3p (2001: 66.0p restated);

•   Increase in total dividend per share of 11% to 24.5p (2001: 22.0p);

•   Net debt of £334.6m (2001: £315.0m);

•   Continuing EBITDA interest cover before exceptional items of 9.5 times
    (2001: 7.5 times);

•   Heads of terms agreed with the Strategic Rail Authority ('SRA') for
    two-year extension for Central Trains ('Central');

•   Two-year extension for Silverlink under discussion with the SRA;

•   Purchase of Stock Transportation ('Stock') in Canada;

•   Withdrawal from Australian train and tram operations; and

•   Limited share buy-back programme to be undertaken.

Commenting on current trading and prospects, Michael Davies, Chairman said:

'In 2002 we produced a solid operating profit which led to strong operating cash
flow, a major characteristic of our business.  We took the decision to withdraw
from our Australian train and tram operations.  Our trading in 2003 is in line
with our expectations.

'With six of our nine rail franchises coming up for renewal during 2004, we will
be in a strong position to improve the cash returns in our trains division
whilst at the same time rationalising our rail portfolio.

'We look forward to developing our position in the UK bus and coach markets and
to further growth in North America.

'Given our strong cash flow and the current level of our share price, we intend
to implement a limited share buy-back programme during 2003, without affecting
the Group's dividend policy.'

                                    - ENDS -

For further information, please contact:

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

Steve Jacobs/Ben Foster/Dido Laurimore
Financial Dynamics                                                020 7831 3113

•       An analyst presentation will take place at 0900 hours on 13 March 2003
at The Regus Business Conference Centre, City Point, 9th Floor, 1 Ropemaker
Street, London, EC2

•       A copy of the analyst presentation will be available on our website at 0900 hours on 13 March 2003.  For further
information, contact 020 7529 2035

•       For details of the live webcast, please contact Elaine Holder at
Financial Dynamics on 020 7269 7121

•       Photos are available through Newscast on Tel:  020 7608 1000.

                           NATIONAL EXPRESS GROUP PLC

                            PRELIMINARY RESULTS 2002

2002 was a year of significant developments.  Despite the challenges we faced in
our UK trains division and Australia, we generated a strong cash flow from
operations of £175.5m (2001: £185.5m).

In the UK, our bus division continued to perform well with farepaying passenger
levels increasing despite the disruption in Birmingham city centre. We have
broadened the base of our London bus operations through an opportunity to
develop a bus depot in South London, in partnership with Transport for London,
with a view to bidding for bus routes during the spring and summer of 2003.

Following the acquisition of Prism in September 2000, we hold a greater number
of train operating companies ('TOCs') than we planned due to the changes in the
Strategic Rail Authority's franchising programme. In the coming year, we aim to
rationalise our portfolio to ensure we have a viable portfolio of quality TOCs.
To help the SRA achieve its strategic plans we will explore franchise extensions
where we can achieve a reasonable return with strong cash flow.

We are pleased to announce that Heads of Terms have been agreed with the SRA for
a two- year franchise extension for Central Trains from 1 April 2004.  Subject
to the agreement of Centro and approval by the Secretary of State, it is our
intention to enter into a legally binding agreement as soon as possible. The SRA
intends to enter into discussions with us with regard to a two-year extension
for the Silverlink franchise from 2004. We have recently reached agreement with
the SRA on the level of payments relating to the effects on our ScotRail
operations of the industrial action early last year.

Our coach business performed well during the period with passenger numbers
increasing by 2%. Sales via the internet increased by over 75% during the year.
Direct sales and internet bookings now account for nearly half of total sales.

In North America, we acquired one of Canada's most respected private student bus
companies, Stock Transportation. The integration of this business has gone well.
The continuing student transportation business excluding Stock produced good
year-on-year organic growth and we increased operating margins during the year.
Our public transit division performance was disappointing and we are putting in
place initiatives to address this.

In December, we exited from our Australian tram and train operations. The
one-off cost to the Group of writing off these operations was £125.9m, a
reduction on the expected cost at the time of announcing our withdrawal.  We
have taken the opportunity to assess the carrying value of our Australian bus
division in light of our withdrawal from the trains and tram operation which has
resulted in a goodwill impairment charge of £13.5m.

Results and dividends

Turnover in 2002 was £2.6bn (2001: £2.5bn) and Group operating profit before
goodwill and exceptional items of £130.9m (2001: £157.8m). After interest and
the Group's share of losses from associated undertakings, profit before tax,
goodwill and exceptionals was £106.8m (2001: £129.2m).  Normalised diluted
earnings per share were 60.3p (2001: 66.0p restated).

We are recommending an increased final dividend of 16.4p per ordinary share
(2001: 14.7p) to be paid on 16 May 2003 to shareholders on the register at 22
April 2003. Including the interim dividend, the proposed total dividend for the
year is 24.5p (2001: 22.0p).

Strong cash generation from the Group's core operations continues with £91.3m
operating cash flow (2001: £93.5m), after net capital expenditure of £84.2m
(2001: £92.0m) and the exceptional payment to the SRA of £62.5m.  The withdrawal
from the Australian train and tram franchises announced in December will cost
£49.8m cash in the coming year. We have provided for these costs during this

Board appointments

In March 2003 we were pleased to announce the appointment of two new Board
Members.  Adam Walker, formerly the Group's Corporate Development Director, has
joined the Board as Group Finance Director.  Larry Durham, the current Chief
Executive Officer of our North American division, has also joined the Board. We
look forward to the contribution which Adam and Larry will make to the Board.

Current Trading

In 2002 we produced a solid operating profit which led to strong operating cash
flow, a major characteristic of our business.  We took the decision to withdraw
from our Australian train and tram operations.  Our trading in 2003 is in line
with our expectations.

With six of our nine rail franchises coming up for renewal during 2004, we will
be in a strong position to improve the cash returns in our trains division
whilst at the same time rationalising our rail portfolio.

We look forward to developing our position in the UK bus and coach markets and
to further growth in North America.

Given our strong cash flow and the current level of our share price, we intend
to implement a limited share buy-back programme during 2003, without affecting
the Group's dividend policy.

Trading overview


Travel West Midlands is the leading bus operator in the West Midlands
incorporating Travel Coventry, Travel Dundee and Travel Midland Metro.  It
employs over 5,300 people and has a fleet of 1,900 buses operating over 600

In 2002, turnover increased to £208.7m (2001: £208.3m) following the sale in
October 2001 of Bronckaers, our Belgian bus business which contributed £3.4m to
turnover last year. Operating profit before goodwill reduced to £49.8m (2001:
£52.8m) due to further vehicle operating leases and increasing insurance costs.

On-going redevelopment work in the centres of Birmingham and Coventry continued
to make operations challenging.  However, this construction work is due for
completion by the end of 2003.

Farepaying passengers increased on last year with strong growth in day tickets
and travelcards.  However, the number of concessionary passengers decreased as a
result of the service disruptions in Birmingham city centre. Our long-term five
year pay deal agreed in April 2000 and our fuel hedging strategy ensures key
costs are kept under control.

To complement the changing face and revitalisation of the city of Coventry, we
undertook a rebranding of our operations under the Travel Coventry brand, giving
Coventry customers their own local identity.  This initiative also included
improved information, a new website, new bus-stop plates and roadside
information, further investment in more easy-access buses, new 'smartcard'
ticketing technology and a dedicated Customer Care facility.

We continue to experience double-digit growth in patronage through quality
partnerships since their inception. Looking to the future we are focusing on new
quality partnership routes including the Birmingham Outer Circle and the Walsall
Showzone.  At Travel Dundee, two quality partnerships were signed covering
routes serving Ninewells, a major regional hospital.  Revenue growth of 8% has
been achieved on these routes in the year.

We were pleased to announce in January 2003 that the Group is further broadening
its presence in the London bus market by working with Transport for London on
the development of an existing bus depot in south London. This facility has the
capacity for 120 buses. We will commence bidding for contracts in spring and
summer of this year.  Together with our existing Feltham depot we are aiming for
an initial London fleet of approximately 200 buses.

Midland Metro's operational performance continues to improve and we are
currently in discussions with Centro to improve its financial performance and
stimulate further passenger growth.

The new year has commenced well.  Birmingham city centre is now in the final
stage of redevelopment and we anticipate that the opening of new department
stores such as Selfridges and Debenhams in autumn 2003 will attract patronage
back to the city centre.


We operate c2c, Central, Gatwick Express, Midland Mainline, ScotRail,
Silverlink, Wagn including the Stansted Express, Wales & Borders and Wessex
franchises. The division employs 13,200 people.

Turnover was £1,553.2m (2001: £1,458.2m) up 6.5%. Operating profit before
goodwill and exceptional items was £33.9m (2001: £40.6m) due to increased
insurance premia and new rolling stock charges at c2c.  We are pleased to
announce that Heads of Terms have been agreed with the SRA for a two-year
extension for Central to April 2006 with a much improved financial return.
Furthermore, we are about to commence negotiations with the SRA on a two-year
extension for our Silverlink franchise. We expect this to be concluded later
this year.

Safety remains a priority for our business.  We were saddened by the tragic
Potters Bar accident which occurred on our Wagn service. We have made good
progress implementing all the recommendations of the reports of Lord Cullen. The
Train Protection Warning System ('TPWS') fitment programme continues on target
with completion scheduled for the first half of 2003. Over 90% of our fleet is
now fitted.

Performance across the trains division was mixed.  Punctuality and reliability
of services are key areas for focus and we continue to work closely through
Joint Boards with Network Rail to address these issues and reduce the number of
delays on the network. Network Rail does not expect a return to pre-Hatfield
levels in the short term. We have been improving our own operational performance
through self-help initiatives such as recruitment of additional drivers and
staff at stations.

To give greater operational and customer focus we announced a new management
structure for our rail division in March 2003.   We have split our operations
into two distinct geographic areas covering the north and south of the country.
Dominic Booth will oversee c2c, Wagn, Silverlink, Gatwick Express, Wales and
Borders and Wessex in his role as Divisional Director (South). David Franks, who
recently joined the Group from Go-Ahead Group, has responsibility for Central,
Maintrain, Midland Mainline, Qjump and ScotRail in the role of Divisional
Director (North). They report to Ian Buchan, Chief Executive of the division,
whose team also addresses strategic issues.

The new year has shown a small improvement on the same period last year. With
six out of our nine franchises coming up for renewal during 2004, we will be in
a strong position to improve the cash returns of our trains division whilst at
the same time rebalancing our rail portfolio.

London and the South East

Turnover for the year was £535.2m (2001: £516.4m) with an operating profit of
£21.8m (2001: £46.7m). The reduction in operating profit resulted from increased
rolling stock leasing charges and reduced subsidies.

Our commuter train operating companies (c2c, Silverlink and Wagn), continued to
make significant operational progress over the period.  Performance remains a
key issue and across all routes our operations have developed detailed plans to
drive forward improvements.  At c2c the introduction of the new fleet was
completed early in the year.

On the Wagn franchise, punctuality and reliability were improved after the
replacement of signalling between Bethnal Green and Cheshunt and Chingford and
Enfield Town.  During 2002, all West Anglia stations were refurbished and
rebranded.  The West Anglia Route Modernisation Programme, including
improvements to track circuit equipment, signalling, point motors and detection
gear, continued throughout the year.  This has impacted on the Stansted Express
service, particularly at weekends when engineering work has regularly taken
place.  New early morning and late night services have also been introduced to
cater for changing airline schedules.  Marketing continues to focus on low-cost
airline tie ups and a new Air Berlin contract was signed up providing a strong
foothold in the market for air passengers to Germany.

Increased travelcard sales and improved revenue protection has seen passenger
revenue growth of 11.6% at Silverlink.  However, operational performance has
been impacted by the West Coast Mainline project. A two-year self-financing pay
deal was negotiated for Silverlink drivers.

Gatwick Express continued to be affected by a significant change in the mix of
airlines operating out of Gatwick Airport.  In addition, the contraction of the
North American market and increased competition on the route affected growth.  A
new marketing and sales strategy has been implemented to tackle the changing
market conditions and a new internet retailing contract agreed with Easyjet.  As
the market has recovered, additional services have been re-introduced into the

Long distance/intercity

Turnover for the year was £135.9m (2001:  £121.7m) up 11.7% with an operating
profit of £10.4m (2001: £10.5m). With an 8.1% growth in passenger volumes,
Midland Mainline's performance has been above the industry average.  In
February, we ordered twenty-three new trains for the franchise.  In April, the
new £2.0m Customer Service Academy was opened with all staff attending courses
at the centre since its opening.

During the year a number of amendments to the two-year franchise extension were
agreed with the SRA including a fleetwide overhaul of the thirteen high-speed
trains involving interior refurbishment and exterior repaint with new engines
for fourteen of the high speed train powercars and improved information at
selected stations.  The first of the refurbished trains is currently being
launched onto the network and will provide significant improvements to

As a result of the West Coast Route Mainline project, Midland Mainline will
assist the SRA by running hourly services between London and Manchester from
summer 2003 until autumn 2004.  However, on-going construction work for the
Channel Tunnel Rail Link project at St Pancras continues to cause disruption.


Turnover for the year was £847.3m (2001: £779.9m) with an operating profit of
£6.0m (2001: loss of £19.0m).  In February 2002 we agreed new terms for our
Central and ScotRail franchises with the SRA which provided £114.7m additional
subsidy.  In return we made a cash payment to the SRA of £59.0m and continued to
operate additional services above the minimum level required in the franchise

At Central, performance has been affected by strike action at neighbouring train
operating companies.  However, forthcoming service changes will see Central
acquire some new key routes including Birmingham to Cardiff and Liverpool.

At ScotRail the performance of the sleeper services continues to be affected by
infrastructure issues.  The strike action earlier in the year was resolved with
a self-financing three year pay deal with productivity improvements.

In December, we agreed to procure 28 additional turbostar-type trains, funded by
the Scottish Executive, and to invest in the recruitment and training of extra
drivers.  These new trains, of which eight are anticipated to be delivered
before the end of the current franchise in March 2004, will improve capacity
requirements particularly following the opening of the new Edinburgh Park
station which is scheduled for 2003.

At Wales and Borders we completed the integration of the six Great Western
stations into the franchise and will complete the remapping process in September
this year when the First North Western train stations and services in North
Wales are integrated into the new franchise. We have submitted our initial bid
for the Wales and Borders franchise and await the timetable for the best and
final offer stage. Earlier this year a unique self-financing five year pay deal
for this franchise was agreed, the first of its type in the railway industry.

Following the creation of the Wessex Trains franchise out of the former Wales
and West franchise, the SRA launched a consultation exercise on changes to rail
franchises serving the South West.  In November, the SRA concluded that there
would be an amalgamation of the Wessex Trains, Thames Trains and Great Western
Trains franchises into a single operation from 2006.  This reorganisation will
take time to implement and we are therefore discussing a two-year extension for
this franchise.


This division includes, our on-line ticketing service and our train
maintenance company, Maintrain.

Turnover for the year was £34.8m (2001:  £40.2m) with an operating loss of £4.3m
(2001: profit £2.4m) due primarily to losses at Qjump as it develops its
businesses in its second year of operation.  The results at Maintrain were
impacted by higher insurance costs and lower turnover.


The coach division provides Britain's only scheduled national coach network and
serves more than 1,700 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 offer value-for-money European travel
by coach.  The division has 1,700 employees.

In the year turnover grew by 1.8% to £184.5m (2001: £181.3m) and operating
profit increased by 15.1% to £12.2m (2001: £10.6m). This was generated by a 2%
increase in passenger numbers and good cost control.  We disposed of Eurolines
Nederland BV in August 2002.

During the period we remained focused on improving passenger growth by way of
product development and capacity and yield management. Promotion of low price
fares continues to attract a wide customer base and increased investment in
internet sales ensures that prices remain highly competitive. Sales via the
internet increased by over 75% year-on-year as new initiatives such as
e-ticketing were added to the service. Direct sales and internet bookings now
account for nearly 50% of revenue. Well over one million passenger journeys a
year are now booked via our web-site.

We are focused on broadening the appeal of coach travel to a greater range of
customers including the less-able.  In March we introduced the first scheduled
coach service accessible for wheelchair users on the Bath/London route with the
support of the Department for Transport. Following an initial trial these
facilities have been extended to the whole fleet on this service. In addition, a
new disability helpline and code of practice for less-able travellers was
launched in May.

We have increased sales through direct channels and introduced new technology
and initiatives to speed up the customers' experience when planning and booking
their journeys.  The introduction of e-ticketing has been well received by our
customers and dedicated web promotions are also marketed regularly. To support
our agent network we developed a new web-based portal ensuring our agents are
kept abreast of latest promotions.

Interactive voice recognition technology has been introduced to simplify sales
and enquiries and to increase the capacity of our customer contact centre.
Through this and our website we now offer a 24 hours a day, 7 days a week
booking facility.

In March 2003 coinciding with the 30th birthday of the division, we launched the
new National Express coach brand and at the same time rationalised the number of
brands within the division.  The new brand will start to be rolled out across
the fleet and coach stations during 2003 and we have developed a marketing
programme around the new brand proposition.  We are focused on promoting coach
travel to a broader customer base.

We continue to develop the network with focus on short to medium journeys such
as Cambridge/London where we increased frequency.  Long distance routes to the
North West also performed well.

During the last two years Manchester coach station was redeveloped at a cost of
£2.7m in advance of the Commonwealth Games. The new design marks a radical
change in the perception of coach travel and provides a blueprint for future
coach stations.  The facility is more attractive for the customer, being modern,
innovative and more accessible with improved passenger information.  Since
Manchester reopened, passenger numbers have increased by 11%. The £1.5m
Newcastle coach station will open later this month.  We continue to discuss our
plans for a new coach facility in Birmingham with the City Council as the
current facility is in urgent need of modernisation. We believe customer
perceptions of coach travel will change as a result of this investment.

The 'Well Driven' scheme provides valuable feedback on driving standards and in
combination with a proactive accident reduction programme has reduced accident
rates by 20% during the year.

Airport Services

Scheduled services to airports have seen passenger journeys return to
pre-September 2001 levels.  We are looking to introduce new services to many of
the expanding regional airports, particularly in the South East.  The growth of
low-cost airlines during the year has also allowed a substantial upgrading of
services to Stansted airport and the development of a new operational base close
to the airport has ensured we are well placed to serve the airport. With
increased service frequency and new vehicles, we aim to capitalise on the growth
already seen on the Airbus services between London and Stansted airport.

A new five year contract with the hoteliers at Heathrow has resulted in a new
Hotel Hoppa contract, linking 17 airport hotels with Heathrow's terminals 1, 2
and 3.  The 26 strong vehicle fleet will be refurbished and a new livery

European coaches

Eurolines performed well despite competition from low-cost airlines and
increased costs incurred to prevent the illegal entry of immigrants via our
services. New day trips and scheduled services to Disneyland Paris are being
introduced. To bring more focus to our UK operations, we sold Eurolines
Nederland BV to our partner, Eurolines France, at the end of July.

North America

The North American division consists of student transportation, public transit
operations and Stewart Airport in New York State.  Following the acquisition of
Stock Transportation, the North American division employs 14,000 people,
provides services in more than 300 school districts and 70 public transit
authorities whilst operating in thirty-one states and two Canadian provinces.
It operates a fleet of 14,100 vehicles.

Turnover for the year was £408.0m (2001: £401.7m) and operating profit was
£32.6m (2001: £39.3m).  Operating profit declined primarily because of £7.5m
insurance cost pressures within our public transit division and £1.6m adverse
exchange rate movements.

Student Transportation

Turnover for the year was £219.6m (2001: £206.2m) and operating profit was
£30.9m (2001: £29.1m).  Margins from continuing operations excluding Stock
improved from 14.1% to 14.6%. Turnover and operating profit were adversely
impacted by exchange movements.  Reported margins were impacted by the timing of
the acquisition of Stock. These results include a £1.2m operating profit
contribution from Stock which was acquired in July 2002 just as Stock entered
its summer vacation period when fleet utilisation is at its lowest level of the

The new school year started very smoothly. We experienced organic growth within
our existing contracts, despite a general economic slowdown.  During 2002 the
student transportation division participated in an increased number of new bid
opportunities and had significant new contract wins in Baltimore, Long Beach,
Los Angeles and Seattle.  In addition, a new contract win of 50 buses was
awarded in Natchez, Mississippi as part of our privatisation initiative. Such
developments, together with the increased focus by school boards on reducing
costs against a background of decreased tax revenues, confirms our belief that
there are plenty of opportunities for the Group in this market. Our unique
safety culture has become both a key selling attribute and a powerful tool for
cost containment.

We were pleased to acquire Stock, a well respected operator in the industry in
July 2002. Stock provides an excellent platform for growth as it is the second
largest private provider of student transportation in Canada. It transports
80,000 students per day and operates more than 1,800 vehicles in two Canadian
provinces. Stock has been integrated well and we are already experiencing gains
in procurement, particularly in the areas of vehicle maintenance and vehicle
acquisition. We believe that substantial new consolidation opportunities exist
within Canada, particularly in the province of Ontario.

Public Transit

Turnover for the year was £188.4m (2001: £195.5m) including an £8.1m adverse
foreign exchange impact and operating profit was £1.7m (2001: £10.2m). Increased
insurance premia and accident claims costs adversely affected the performance of
this division. To address the division's financial performance we have
substantially completed an orderly exit of selected contracts, which do not meet
our required financial criteria.  Additionally, we have raised our financial
targets and, as contracts are retendered, we are bidding at rates that reflect a
more appropriate return for the business, including the increased insurance
costs. New contract wins in Chula Vista, California and Columbus, Ohio were won
and extensive contract expansions were granted in San Jose and San Diego,

ATC was successful in renegotiating an extension of its fixed-route contract in
Las Vegas, one of the nation's largest systems. This new, four year contract
will deliver one of the most cost-effective, large transit systems in the US.

Moving forward we will focus on achieving higher profits by reducing our total
accident claims costs and labour costs. We have fully implemented a cost
reduction initiative designed to provide significant margin improvement in 2003.


Following the Group's decision to exit the train and tram operations in
Melbourne, the Group now operates the Blue Ribbon, Glenorie, National Bus
Company, Southern Coast Transit and Westbus bus brands.  Operations are in
Brisbane, Melbourne, Perth and Sydney and employ 1,700 people.

On 16 December we were disappointed to announce our withdrawal from our
Melbourne train and tram operations. The one-off cost to the Group of writing
off these operations is £125.9m, a lower figure than announced in December,
including a cash payment of £49.8m to indemnify the providers of the performance
bonds for these operations and to cover other exit costs. Since we ceased
funding our operations on 23 December we have worked alongside the State of
Victoria to achieve an orderly handover of the train and tram operations and
this was achieved without any disruption to service levels. We have taken the
opportunity to assess the carrying value of our Australian bus division in light
of our withdrawal from train and tram operations which has resulted in a
goodwill impairment charge of £13.5m.

Turnover for our Australian operations totalled £217.9m (2001: £207.9m) and
generated an operating profit of £2.4m (2001: £13.4m). Turnover for the train
and tram operations, which we ceased operating on 23 December, in the year to 31
December 2002 totalled £159.9m (2001: £153.0m) with operating profit of £0.1m
(2001: £9.4m).  Turnover of our bus operations in the year to 31 December 2002
totalled £58.0m (2001: £54.9m) with an operating profit of £2.3m (2001: £4.0m).

At National Bus Company (NBC) in Victoria, a review of routes is underway to
improve the inner Melbourne network and freeway services.  New services to
Melbourne's newest inner city development and increased bus priority measures
such as express lanes are being implemented.  Such initiatives, including the
creation of Melbourne's first park and ride scheme, give us a unique marketing
opportunity. Focus on preventative maintenance programmes has resulted in
performance improvements. During the year, thirteen new buses were added into
the fleet.

In Queensland, NBC has been working in association with the Trainlink rail-bus
integration service which was introduced in January. This service is promoting
integrated ticketing between Birkdale and Capalaba.  Additional off-peak
services have also been introduced on selected routes and a new busway continues
to assist with city congestion.  Integrated ticketing is still planned for
introduction over the next two years.

In Western Australia, Southern Coast Transit has seen strong patronage growth as
the partnership with Government continues to promote local bus services as the
preferred mode of transport.  A government trial on a bio-diesel project has

In New South Wales, Westbus has introduced a fleet of new articulated vehicles
increasing capacity on the popular M2 services into the Central Business
District.  Hillsbus services continue to be popular with their distinct
branding.  Special services such as the Beachbus, connecting the Hills district
to the beach were very popular, and New Year's Eve services proved popular.
Glenorie Bus company acquired late 2001 has achieved improved profitability and
expanded services in its growth markets.

Phil White

Chief Executive

12 March 2003

Finance Review


We hold a 33% investment in Altram LRT Limited ('Altram') and a 40% investment
in Inter-Capital and Regional Rail Limited ('ICRRL'). Altram started operating
the Midland Metro in June 1999. Our share of the operating loss for 2002 was
£0.5m (2001: £1.3m). The £2.6m (2001: £nil) exceptional cost for associates
comprises the Group's share of an impairment charge in the accounts of Altram
following a review of the carrying value of its fixed assets. ICRRL is
contracted to manage the operations of Eurostar UK to 2010. Our share of the
operating loss for the year was £3.5m (2001: £0.6m).


Net interest payable was reduced to £20.1m (2001: £26.7m) by a combination of
lower levels of net debt in 2002 compared to 2001 and the impact of lower
interest rates. Group operating profit before depreciation, amortisation and
exceptional items ('EBITDA') from continuing operations was £191.5m (2001:
£200.0m) and EBITDA interest cover from continuing operations improved to 9.5
times (2001: 7.5 times).

Goodwill amortisation

The goodwill amortisation charge increased to £58.7m (2001: £42.2m restated)
reflecting the £13.5m impairment of the goodwill arising on the acquisition of
the Australia bus businesses noted previously. The balance of the increase
results from the acquisition of Stock Transportation in July 2002 and the full
year effect of goodwill arising last year.

Exceptional items

Exceptional items comprise £5.0m of pre-contract bid costs incurred in the UK
Trains franchise retendering process. The increase in pre-contract bid costs
over 2001 reflects the increased pace of refranchising activity in 2002.


The tax charge on profit before tax, goodwill amortisation and exceptional items
of £106.8m (2001: £129.2m) was £24.6m (2001: £27.8m restated), which represents
an effective tax rate of 23.0% (2001: 21.5%). This tax rate principally reflects
the benefit of continuing low effective tax rates on overseas earnings. A
reconciliation to the standard UK corporation tax rate of 30% will be included
in the published financial accounts.

The total tax charge is £20.3m (2001: £1.2m), due to the tax relief available on
certain North American goodwill amortisation and on the other exceptional items.

Cash flow and balance sheet

Strong cash flow remains a feature of the Group and for the full year we
generated £175.5m (2001: £185.5m) of cash flow from operations and operating
cash flow after capital expenditure, of £91.3m (2001: £93.5m). The £44.1m
improvement in working capital was before the £71.0m cash out flow relating to
exceptional items, including £62.5m for the franchise amendment payment to the
SRA. Net divisional cash flow after capital expenditure is stated in the table

                             UK           UK        UK North America     Australia     Australia      Total
                          Buses      Coaches    Trains                         Bus        Trains
                             £m           £m        £m            £m            £m            £m         £m
Operating profit           49.8         12.2      33.9          32.6           2.3           0.1      130.9
before exceptionals
Depreciation               10.6          4.5      18.6          23.4           3.6          10.8       71.5
EBITDA                     60.4         16.7      52.5          56.0           5.9          10.9      202.4
Working capital           (9.2)          1.6      40.2           5.6         (0.8)           6.7       44.1
Exceptional items             -            -    (69.3)         (1.6)         (0.1)             -     (71.0)
Net cash inflow from       51.2         18.3      23.4          60.0           5.0          17.6      175.5
Net capital               (0.2)        (2.1)    (17.1)        (23.8)         (8.4)        (32.6)     (84.2)
Operating cash flow        51.0         16.2       6.3          36.2         (3.4)        (15.0)       91.3

In the UK, the Bus and Coach divisions generated £67.2m of cash and Trains
remained cash positive in spite of the payment to the SRA. North America
contributed £36.2m after capital expenditure of £23.8m, assisted by improvements
in receivable collections.  In Australia, the Bus division was cash negative
with a high capex requirement in the year and the discontinued train division
absorbed cash of £15.0m.

After the acquisition of Stock Transportation for £74.9m, net debt only
increased by £19.6m to £334.6m (2001: £315.0m) as a result of the strong cash
flow performance and a £29.0m benefit from foreign exchange movements,
principally on our US$ denominated debt. Dividends paid in the year utilised
£29.9m (2001: £28.1m) of cash.

The £139.5m reduction in net assets to £262.6m at 31 December 2002 (2001:
£402.1m restated) was principally a reflection of the £125.9m cost of
withdrawing from the Australia Trains business and Australia bus goodwill
impairment of £13.5m.


The Group's principal defined benefit pension schemes are all in the UK. Our
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.

The actuarial valuations showed that the Bus schemes were in surplus by £58.7m
but under FRS17 rules, at 31 December 2002, were in deficit by £18.7m (2001:
£39.4m surplus).  Approximately 40% of the Bus Division employees are members of
these schemes, which have been closed to new members for some years.  The
actuarial valuation of the Coach Division scheme showed a deficit of £6.8m,
which under FRS17 rules at 31 December 2002 increased to a deficit of £9.5m
(2001: £6.7m deficit). In order to improve the funding level the Group injected
£5m into this scheme on 11 March 2003. This scheme, which comprises one third of
the relevant employees, was closed to new members during 2002. In the Bus and
Coach Divisions new members of staff are offered membership of defined
contribution pension schemes.

The actuarial valuations of the Train pension schemes at 31 December 2001 showed
a range of funding between 89% and 109%. As our main obligation on rail pensions
is to pay contributions as agreed with the scheme actuary we have split out the
short term TOCs from the longer term businesses.  Our objective is to provide
increased transparency, as, owing to a variety of contractual arrangements with
the SRA, there is no direct linkage between additional pension costs and profits
for many of these short term TOCs.  Under the FRS 17 rules the reported deficit
for the short term TOCs at 31 December 2002 was £44.2m (2001: £39.1m surplus).
The long term train businesses showed an FRS 17 deficit, at 31 December 2002, of
£9.6m (2001: £13.9m surplus).

Accounting Policies

FRS 19 'Deferred Tax' has been adopted as at 1 January 2002 and prior year
figures restated to reflect the change in policy from partial provision to full
provision.  Details of the restatement are given in Note 1 to the Preliminary
Results.  We continued to apply the transitional arrangements of FRS 17 '
Retirement Benefits' and plan to move directly to the International Accounting
Standard equivalent (IAS 19) in 2005 following the ASB's decision to defer full
adoption of FRS 17.



For the year ended 31 December 2002

                              Total before    Goodwill &        Total  Total before    Goodwill &        Total
                                goodwill &   exceptional                 goodwill &
                               exceptional         items         2002   exceptional   exceptional        
                                     items                                    items         items              
                                      2002          2002                      2001*         2001*        2001*          
                        Note            £m            £m           £m            £m            £m           £m

- continuing operations            2,396.8             -      2,396.8       2,304.4             -      2,304.4
- acquisitions                        15.6             -         15.6             -             -            -
- discontinued                       159.9             -        159.9         159.8             -        159.8
Turnover                   2       2,572.3             -      2,572.3       2,464.2             -      2,464.2
Other operating income                10.8             -         10.8          12.4             -         12.4

Other operating costs
before goodwill and
exceptional items                (2,452.2)             -    (2,452.2)     (2,318.8)             -    (2,318.8)

Goodwill amortisation
and impairment             2             -        (58.7)       (58.7)             -        (42.2)       (42.2)
Franchise amendment
costs                      2             -             -            -             -        (67.0)       (67.0)
Other exceptional items    2             -         (5.0)        (5.0)             -        (16.5)       (16.5)
Total operating costs            (2,452.2)        (63.7)    (2,515.9)     (2,318.8)       (125.7)    (2,444.5)
Group operating profit/              130.9        (63.7)         67.2         157.8       (125.7)         32.1
- continuing operations              129.6        (62.7)         66.9         147.3       (125.3)         22.0
- acquisitions                         1.2         (1.0)          0.2             -             -            -
- discontinued                         0.1             -          0.1          10.5         (0.4)         10.1

Group operating profit/    2         130.9        (63.7)         67.2         157.8       (125.7)         32.1

Share of operating
losses of associates       2         (4.0)         (2.6)        (6.6)         (1.9)             -        (1.9)
Total operating profit/              126.9        (66.3)         60.6         155.9       (125.7)         30.2
(Loss)/profit on closure
/sale of businesses                      -       (126.1)      (126.1)             -         112.0        112.0
Profit/(loss) on
ordinary activities
before interest                      126.9       (192.4)       (65.5)         155.9        (13.7)        142.2
Net interest payable                (20.1)             -       (20.1)        (26.7)             -       (26.7)
Profit/(loss) on
ordinary activities
before taxation                      106.8       (192.4)       (85.6)         129.2        (13.7)        115.5
Tax on profit/(loss) on
ordinary activities        3        (24.6)           4.3       (20.3)        (27.8)          26.6        (1.2)
Profit/(loss) after tax               82.2       (188.1)      (105.9)         101.4          12.9        114.3
Minority interest                      0.6             -          0.6           0.1             -          0.1
Profit/(loss) for the                 82.8       (188.1)      (105.3)         101.5          12.9        114.4
financial year
Dividends                           (32.4)             -       (32.4)        (28.6)             -       (28.6)
Retained profit /(loss)               50.4       (188.1)      (137.7)          72.9          12.9         85.8

Basic (loss)/earnings
per share                  4                                  (80.0p)                                    88.4p
Normalised basic
earnings per share         4         62.9p                                    70.5p
Diluted (loss)/earnings
per share                  4                                  (80.0p)                                    82.7p
Normalised diluted
earnings per share         4         60.3p                                    66.0p

* Restated for change in accounting policy for deferred tax (see note 1)



At 31 December 2002

                                                                                   2002                2001*
                                                           Note                      £m                   £m

Fixed assets

Intangible assets                                                                 467.7                508.3
Tangible assets                                                                   420.5                512.8
Investments and interests in associates                                            25.3                 26.4
                                                                                  913.5              1,047.5
Current assets

Stock                                                                              19.7                 21.4
Debtors                                                       8                   359.8                376.1
Cash at bank and in hand                                                           93.7                 92.3

                                                                                  473.2                489.8
Creditors: amounts falling due within one year                9                 (659.7)              (610.6)
Net current liabilities                                                         (186.5)              (120.8)

Total assets less current liabilities                                             727.0                926.7

Creditors: amounts falling due after more than one           10                 (360.0)              (405.1)
Provisions for liabilities and charges                                          (104.4)              (119.5)
                                                                                  262.6                402.1

Capital and reserves

Called up share capital                                                             6.7                  6.6
Share premium account                                                              44.7                 43.7
Share capital to be issued                                                          0.2                  0.3
Merger reserve                                                                     15.4                 15.4
Capital reserve                                                                     0.4                    -
Revaluation reserve                                                                 0.8                  0.8
Profit and loss account                                                           189.6                330.0
Equity shareholders' funds                                                        257.8                396.8
Equity minority interest                                                            4.8                  5.3
                                                                                  262.6                402.1

* Restated for change in accounting policy for deferred tax (see note 1)



For the year ended 31 December 2002

                                                                                           2002        2001
                                                                                Note         £m          £m

Net cash inflow from operating activities                                      6 (a)      175.5       185.5

Interest received                                                                           7.0         9.5
Interest paid                                                                            (24.1)      (37.7)
Interest element of finance lease rentals                                                 (1.9)       (1.0)

Return on investments and servicing of finance                                           (19.0)      (29.2)
UK corporation tax paid                                                                   (9.4)       (5.4)
Overseas tax paid                                                                         (2.4)       (0.6)

Taxation                                                                                 (11.8)       (6.0)
Payments to acquire tangible assets                                                      (91.6)     (102.6)
Receipts from sale of tangible assets                                                       7.4        10.6
Payments to acquire shares to satisfy employee share scheme                               (2.7)       (0.7)
Payments to acquire other investments                                                     (1.2)       (0.1)
Capital expenditure and financial investment                                             (88.1)      (92.8)
Receipts from the sale of businesses                                                        2.9       237.6
Cash disposed in businesses closed/sold                                                   (3.3)       (1.7)
Payments to acquire businesses                                                           (74.9)       (8.6)
Cash acquired in businesses purchased                                                       2.2         0.4
Deferred consideration for businesses acquired                                            (2.4)       (1.5)

Acquisitions and disposals                                                               (75.5)       226.2
Equity dividends paid                                                                    (29.9)      (28.1)

Cash (outflow)/inflow before financing activities                                        (48.8)       255.6

Management of liquid resources

Cash (paid in to)/withdrawn from short term deposits                                     (50.4)         4.5


Issue of share capital                                                                      1.0         3.2
Cash inflow from lease financing                                                           20.3        21.2

Repayment of loan notes                                                                   (0.9)           -

Loans advanced                                                                             32.0           -

Loans repaid                                                                                  -     (241.2)

Net cash inflow/(outflow) from financing                                                   52.4     (216.8)

(Decrease)/increase in cash                                                  6 (b)       (46.8)        43.3



For the year ended 31 December 2002

                                                                                            2002      2001*
                                                                                              £m         £m

(Loss)/profit for the financial year                                                     (105.3)      114.4
Exchange differences on foreign currency net investments                                   (2.7)      (0.6)
Total recognised gains and losses relating to the period                                 (108.0)      113.8
Prior year adjustment for deferred tax (see note 1)                                       (11.8)
Total recognised gains and losses                                                        (119.8)

* Restated for change in accounting policy for deferred tax (see note 1)


For the year ended 31 December 2002

                                                                                       2002      2001*
                                                                                         £m         £m

(Loss)/profit for the financial year                                                 (105.3)     114.4
Dividends                                                                             (32.4)    (28.6)
Exchange differences on foreign currency net investments                               (2.7)     (0.6)
New share capital issued for cash                                                        1.0       3.2
Goodwill realised                                                                        0.4    (32.6)
Net (reduction)/addition to shareholders' funds                                      (139.0)      55.8

Equity shareholders' funds at 1 January +                                              396.8     341.0
Equity shareholders' funds at 31 December                                              257.8     396.8

* Restated for accounting policy for deferred tax (see note 1)

+ Shareholders' funds at 1 January 2002 were originally £408.6m before deducting
the prior year adjustment of £11.8m.



1.                    Basis of preparation

The Preliminary Results presented have been prepared using the accounting
policies set out in the Group's 2001 statutory accounts with the exception of
the policy on deferred tax.

Financial Reporting Standard ('FRS') 19, 'Deferred Tax' has been adopted with
effect from 1 January 2002.  The adjusted accounting policy is that deferred tax
be recognised on a full provision basis in respect of all material timing
differences that have originated, but not reversed, by the balance sheet date.
Deferred tax is measured on a non-discounted basis at tax rates that are
expected to apply in the periods in which the timing differences reverse.
Deferred tax assets are recognised where their recovery is considered more
likely than not in that there will be suitable taxable profits from which the
future reversal of underlying timing differences can be deducted. Prior to 1
January 2002, the Group's accounting policy was to provide for deferred tax on
all material timing differences to the extent that it was probable that the
liability would crystallise.

The prior year comparatives have been restated to comply with FRS 19, resulting
in a deferred tax provision of £16.5m at 31 December 2001.  The net effect on
reserves of £11.8m includes an increase in the net book value of goodwill as at
31 December 2001 of £4.7m. Due to the additional deferred tax provision on the
Airport balance sheet at disposal, the profit on disposal for the year to 31
December 2001 is increased by £20.3m to £112.0m. After an additional
amortisation charge for the Group in 2001 of £0.3m the net effect is to increase
the Group's profit after tax by £20.0m from £94.3m to £114.3m. Basic earnings
per share has been increased by 15.5p to 88.4p.  The Group's loss for the
current year has been reduced by £6.0m as a result of the change in accounting

2.                    Turnover and segmental analysis

The turnover of the Group comprises revenue from road passenger transport, train
passenger services, airport operations and related activities in the UK, North
America and Australia.  Where appropriate, amounts are shown net of rebates and
sales tax.  Due to the nature of the Group's businesses, the origin and
destination of turnover is the same.  Within the Trains division, franchise
agreement receipts from the Strategic Rail Authority ('SRA') and local Passenger
Transport Executives within the West Midlands region and Scotland are treated as
turnover.  During the year, annual franchise agreement receipts amounted to
£634.9m (2001: £554.8m) in the UK and £62.5m (2001: £56.0m) from the Victoria
Department of Public Transport in Australia.

                                                         Turnover         Operating profit      Net assets
                                                                         before goodwill and
                                                                          exceptional items

                                                       2002      2001      2002     2001*      2002     2001*

Analysis by class of business                            £m        £m        £m        £m        £m        £m
Buses                                                 208.7     208.3      49.8      52.8      34.7      63.8
Trains                                              1,553.2   1,458.2      33.9      40.6       3.3       9.8
Coaches                                               184.5     181.3      12.2      10.6      28.1      35.8
UK operations                                       1,946.4   1,847.8      95.9     104.0      66.1     109.4
North America bus        - continuing                 392.4     401.7      31.4      39.3     451.2     505.6
                         - acquisitions                15.6         -       1.2         -      70.3         -
                                                      408.0     401.7      32.6      39.3     521.5     505.6

Australia bus                                          58.0      54.9       2.3       4.0      48.9      49.4
Continuing operations                               2,412.4   2,304.4     130.8     147.3     636.5     664.4
Discontinued operations  - Australia trains           159.9     153.0       0.1       9.4    (49.8)      52.2
                         - Airports                       -       6.8         -       1.1         -         -
                                                      159.9     159.8       0.1      10.5    (49.8)      52.2
                                                    2,572.3   2,464.2     130.9     157.8     586.7     716.6
Annual goodwill amortisation                                             (45.2)    (42.2)
Goodwill impairment                                                      (13.5)         -
Exceptional items (see table below)                                       (5.0)    (83.5)
Group operating profit                                                     67.2      32.1
Share of operating losses of associates                                   (6.6)     (1.9)
Total operating profit                                                     60.6      30.2
(Loss)/profit on closure/sale of businesses                             (126.1)     112.0
(Loss)/profit on ordinary activities before                              (65.5)     142.2
Unallocated net liabilities                                                                 (328.9)   (319.8)
                                                                                              257.8     396.8
Equity minority interest                                                                        4.8       5.3
Total net assets                                                                              262.6     402.1

* Restated for change in accounting policy for deferred tax (see note 1)

Annual goodwill amortisation of £45.2m (2001:£42.2m) is analysed as Trains
£23.2m (2001:£21.6m), Coaches £0.8m (2001:£0.4m), North America bus £19.4m
(2001: £18.8m) and Australia bus £1.8m (2001:£1.4m).  The goodwill impairment
charge for 2002 relates to Australia bus.

Exceptional items are analysed as follows:
                                             Buses    Trains   Coaches North America    Australia         Total
                                                £m        £m        £m            £m           £m            £m         
Pre-contract bid costs                           -       5.0         -             -            -           5.0

Franchise amendment costs                       -       67.0         -             -            -          67.0
New trains                                      -        3.0         -             -            -           3.0
Reorganisation                                  -        4.8       3.1           3.6          0.6          12.1
Pre-contract bid costs                        0.2        1.0         -             -          0.2           1.4
                                              0.2       75.8       3.1           3.6          0.8          83.5

The exceptional franchise amendment costs in 2001 includes the cost to the Group
of its renegotiations with the SRA of the Central Trains and ScotRail rail

The exceptional expenditure on new trains in 2001 is the costs associated with
bringing the new trains into service. Reorganisation costs in 2001 include £1.7m
relating to the impairment of goodwill previously written off to reserves in
respect of a coach business.

Included in the share of operating losses of associates of £6.6m (2001:£1.9m) is
a £2.6m exceptional loss (2001:£nil) which comprises the Group's share of an
impairment charge in the accounts for Altram LRT Limited following a review of
the carrying value of its fixed assets.  There is no tax effect in the profit
and loss account relating to the exceptional items recognised below Group
operating profit (2001:£nil).

The Group withdrew from the Australia trains division resulting in a loss on
disposal of £125.9m.  The companies within the division were put into
administration and receivership on 23 December 2002.  The combined loss on the
sale of Eurolines Nederland BV and Multisystems IT Division on 2 August 2002 and
15 August 2002 respectively was £0.2m.

Unallocated net liabilities comprise other investments, cash at bank and in
hand, borrowings (other than finance leases), deferred consideration payable,
dividends payable and taxation.  The net assets in respect of the Group's
investment in associates have been analysed according to the activities of the

3.                    Taxation

Analysis of taxation charge in the year
                                                                                                Total      Total
                                                                                                 2002      2001*
                                                                                                   £m         £m
Current taxation:
UK Corporation tax                                                                               27.5       27.4
Prior years - UK                                                                                    -      (1.8)
                                                                                                 27.5       25.6
Double tax relief                                                                                   -      (2.9)
                                                                                                 27.5       22.7
Overseas taxation                                                                                 3.4        5.1
                                                                                                 30.9       27.8
Tax relief on goodwill and exceptional items:
UK corporation tax                                                                              (1.4)     (21.5)
Overseas                                                                                        (2.9)      (5.1)
Total current taxation                                                                           26.6        1.2

Deferred taxation
Origination and reversal of timing differences                                                  (6.3)          -
Tax on profit on ordinary activities                                                             20.3        1.2

* Restated for change in accounting policy for deferred tax (see note 1)

4.                    Earnings per share

                                                                                        2002              2001*
Basic (loss)/earnings per share                                                      (80.0p)              88.4p
Normalised basic earnings per share                                                    62.9p              70.5p
Diluted (loss)/earnings per share                                                    (80.0p)              82.7p         
Normalised diluted earnings per share                                                  60.3p              66.0p

* Restated for change in accounting policy for deferred tax (see note 1)

Basic (loss)/earnings per share is calculated by dividing the loss for the
financial period of £105.3m (2001: £114.4m profit restated) by the weighted
average number of ordinary shares in issue in the period, 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 dilutive potential ordinary
shares.  These represent share options granted to employees where the exercise
price is less than the average market price of the Company's ordinary shares
during the year.  For 2002, the weighted average number of ordinary shares for
the purpose of calculating the diluted loss per share is identical to that used
for basic loss per share. This is because the adjustment for dilutive potential
ordinary shares would have the effect of reducing the loss per ordinary share
and is therefore not dilutive under the terms of FRS14, 'Earnings per share'.

The reconciliation of weighted average number of ordinary shares is detailed as

                                                                                      Number             Number
                                                                                   of shares          of shares
                                                                                        2002               2001
Basic weighted average shares                                                    131,602,152        129,457,561
Adjustment for dilutive potential ordinary shares                                  5,622,274          8,852,402         
Diluted weighted average shares                                                  137,224,426        138,309,963

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

The normalised diluted earnings per share for the year ended 31 December 2002
and 31 December 2001 exclude the earnings from discontinued operations, with
2001 earnings restated to exclude earnings from operations discontinued in 2002.
  They have not been adjusted to reflect the interest earned on the cash
proceeds from the disposal of the discontinued operations in 2001.

Normalised profits for the financial year are:                                         2002               2001*
                                                                                         £m                  £m
(Loss)/profit for the financial year                                                (105.3)               114.4
Earnings from discontinued operations                                                 (0.1)              (10.2)
Goodwill amortisation (including impairment of £13.5m)                                 58.7                42.2
Exceptional operating costs                                                             5.0                83.5
Exceptional loss of associate                                                           2.6                   -
Loss/(profit) on closure/sale of businesses                                           126.1             (112.0)
Tax relief on goodwill and exceptional items                                          (4.3)              (26.6)
Normalised profits for the financial period                                            82.7                91.3

*  Restated for change in accounting policy for deferred tax (see note 1)

5.                    Net borrowings

                                                                                       2002                2001
                                                                                         £m                  £m
Due within one year                                                                    
Loan notes                                                                              9.1                10.0
Bank loans                                                                             53.2                 3.6   
Other loans                                                                               -                 0.1         
Bank overdrafts                                                                           -                 0.5         
Finance lease obligations                                                              10.0                 6.3         
                                                                                       72.3                20.5

Due within one to two years
Bank loans                                                                            308.0                70.8 
Finance lease obligations                                                              11.5                 6.8         
                                                                                      319.5                77.6

Due within two to five years
Bank loans                                                                                -               285.2
Finance lease obligations                                                              31.3                18.9         
                                                                                       31.3               304.1

Due by instalment after five years                                                     
Finance lease obligations                                                               5.2                 5.1         
Total borrowings                                                                      428.3               407.3
Cash at bank and in hand                                                             (93.7)              (92.3)         
Net borrowings                                                                        334.6               315.0

Secured borrowings within the Group (representing finance leases) total £58.0m

6.                    Cash flow statement

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

                                  Continuing   Discontinued    Total  Continuing   Discontinued    Total
                                  operations     operations           operations     operations
                                        2002           2002     2002       2001*          2001*    2001*           
                                          £m             £m       £m          £m             £m       £m            
Group operating profit                  67.1            0.1     67.2        22.0           10.1     32.1
Depreciation of tangible assets         60.7           10.8     71.5        52.7            7.9     60.6
Annual goodwill amortisation            45.2              -     45.2        42.2              -     42.2
Goodwill impairment                     13.5              -     13.5           -              -        -
Increase in stocks                     (0.5)          (0.3)    (0.8)       (1.1)          (0.3)    (1.4)
(Increase)/decrease in debtors        (10.5)            5.7    (4.8)      (53.9)          (1.0)   (54.9)
Increase/(decrease) in creditors        44.8          (2.9)     41.9        38.4          (7.0)     31.4
(Decrease)/increase in                (62.8)            5.2   (57.6)        80.4              -     80.4
Other movements                          0.4          (1.0)    (0.6)       (4.9)              -    (4.9)
Net cash inflow from operating
activities                             157.9           17.6    175.5       175.8            9.7    185.5
* Restated for change in accounting policy for deferred tax (see note 1)

The net cash flow from operating activities includes outflows of £71.0m (2001:
£15.6m) from continuing operations which related to exceptional costs, and £nil
(2001: £0.4m) from discontinued operations.

(b) Reconciliation of net cash flow to movement in net debt                           2002                2001
                                                                                        £m                  £m
(Decrease)/increase in cash in the year                                             (46.8)                43.3
Cash (inflow)/outflow from movement in debt and lease financing                     (51.4)               220.0  
Cash outflow/(inflow) from movement in liquid resources                               50.4               (4.5)          
Change in net debt resulting from cash flows                                        (47.8)               258.8
Loans and finance leases of subsidiaries acquired in year                                -               (1.4)
Other non cash movements in net debt                                                  28.2              (15.8)          
Change in net debt resulting from non cash flows                                      28.2              (17.2)
Movement in net debt in the year                                                    (19.6)               241.6
Net debt at 1 January                                                              (315.0)             (556.6)          
Net debt at 31 December                                                            (334.6)             (315.0)

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

(c) Analysis of changes in net debt                                At     Cash flow         Other            At
                                                            1 January                   movements   31 December
                                                                 2002                                      2002
                                                                   £m            £m            £m            £m
Cash                                                             29.7        (12.3)         (0.6)          16.8
Overnight deposits                                               54.5        (35.0)             -          19.5 
Liquid resources - other short term deposits                      8.1          50.4         (1.1)          57.4
Cash at bank and in hand                                         92.3           3.1         (1.7)          93.7
Bank overdrafts                                                 (0.5)           0.5             -             -
Debt due within one year
Loan notes                                                     (10.0)           0.9             -         (9.1)
Bank and other loans                                            (3.7)           3.7        (53.2)        (53.2)
                                                               (13.7)           4.6        (53.2)        (62.3)
Debt due after one year
Bank and other loans                                          (356.0)        (35.7)          83.7       (308.0)
                                                              (356.0)        (35.7)          83.7       (308.0)
Finance lease obligations                                      (37.1)        (20.3)         (0.6)        (58.0)
Net debt                                                      (315.0)        (47.8)          28.2       (334.6)

Short term deposits included within liquid resources relate to term deposits
repayable within three months.  Changes in net debt arising from acquisitions
and disposals in the year are disclosed separately on the face of the cash flow

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

                                                                 2002          2002          2001          2001
                                                        Closing  rate  Average rate  Closing rate  Average rate
US dollar                                                        1.61          1.51          1.46          1.44
Australian dollar                                                2.86          2.78          2.84          2.80
Canadian dollar                                                  2.54          2.47             -             -

8.                    Debtors
                                                                                              2002         2001

                                                                                                £m           £m
Trade debtors                                                                                192.8        158.6
Amounts due from associates                                                                    4.7          3.0
Other debtors                                                                                 78.1        120.7         
Prepayments and accrued income                                                                84.2         93.8         
                                                                                             359.8        376.1

Included within other debtors is £4.7m (2001: £6.8m) and within prepayments is
£1.7m (2001: £1.7m) which is recoverable after more than one year.

9.                    Creditors: amounts falling due within one year

                                                                                              2002         2001
                                                                                                £m           £m
Loan notes                                                                                     9.1         10.0
Bank loans                                                                                    53.2          3.6   
Other loans                                                                                      -          0.1
Bank overdrafts                                                                                  -          0.5
Trade creditors                                                                              201.6        169.2  
Amounts owed to associates                                                                     0.1          0.2
Finance lease obligations                                                                     10.0          6.3         
Corporation tax                                                                               25.3         15.1         
Social security and other taxation                                                            21.7         22.2         
Accruals and deferred income                                                                 317.0        364.2         
Proposed dividend                                                                             21.7         19.2         
                                                                                             659.7        610.6

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

                                                                                              2002         2001
                                                                                                £m           £m
Bank loans                                                                                   308.0        356.0
Finance lease obligations                                                                     48.0         30.8 
Accruals and deferred income                                                                   4.0         18.3         
                                                                                             360.0        405.1

11.           The financial information set out above, which was approved by the
Board on 13 March 2003, is derived from the full Group accounts for the year
ended 31 December 2002 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 1985 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

                                    - ENDS -

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