Interim Results
FIRSTGROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS TO
30 SEPTEMBER 2002
HIGHLIGHTS
UK Bus volumes +1.5% - new contracts in London and encouraging growth in urban
areas
US School bus continuing to expand strongly - on target for 1,000 extra buses
this year
UK Rail passenger volumes up 4% - improved performance on both First Great
Western and First Great Eastern
Interim dividend increased by 8% to 3.55p
FINANCIAL SUMMARY
Turnover £1,069m up 7%
Operating profit* £84.4m up 1%
Adjusted basic earnings per share 9.3p up 2%
Cash generation** £134m up 3%
Commenting, FirstGroup's Chief Executive, Moir Lockhead said:
'This is a strong set of results against a difficult economic background in the
UK and US. The performance of all of the our businesses has been encouraging.
The Group's strong cash flow puts us in an excellent position to continue to
invest for growth, reduce debt and buy back equity. We are on target to achieve
our trading objectives for the remainder of the year.'
*Before goodwill, exceptional items and profit on disposal of fixed assets
**Operating profit before goodwill, exceptional items and profit on disposal of
fixed assets plus depreciation
Enquiries:
FirstGroup plc
Moir Lockhead, Group Chief Executive Tel: 020 7291 0512
Iain Lanaghan, Group Finance Director Tel: 020 7291 0512
Michael Mitchell, Corporate Communications Tel: 020 7291 0504
Director
Photographs for the media are available at www.newscast.co.uk
An interview with Moir Lockhead, Chief Executive in video/audio and text will
be available from 0730hrs on 06 November 02 on http://www.firstgroup.com and on
http://www.cantos.com
Chairman's statement
The Group has continued to perform very well despite the more uncertain
economic environment on both sides of the Atlantic. Group turnover has
increased by 7.4% to £1,069m. Group operating profit, before goodwill,
exceptional items and profit on disposal of fixed assets plus depreciation was
£84.4m (2001: £83.8). Adjusted earnings per share (before goodwill
amortisation, restructuring and exceptional costs, and property profits) were
9.3p (2001: 9.1p). As a sign of confidence in the business, the Board has
recommended an increased interim dividend of 3.55p (2001: 3.3p), an increase of
7.6%. The dividend is covered 2.8 times and will be paid on 12 February 2003 to
shareholders on the register on 17 January 2003.
Safety is at the forefront of everything that we do and we continue to promote
a culture of safety throughout our business.
The Group has a focused strategy to develop strong businesses in major
transport markets where it can deliver increased shareholder value through the
application of its management expertise and operational efficiency. We now have
strategic positions in both the UK bus and rail markets where we are the number
one and number two operator respectively. In the US we are the second largest
operator of school bus services and we have important positions in the transit
and vehicle maintenance markets. Our businesses are in sectors which offer
encouraging opportunities for long term growth as public transport becomes a
more important alternative to the private car in our increasingly congested
urban areas. We work closely with local authorities and government agencies and
we have developed partnerships with many of them to enable us to work together
to develop improvements in the transport environment.
An important feature of our business is that a considerable amount of our
revenue is received in cash in advance of travel. Much of the balance is
represented by contractual revenue streams with local, state or national
governments. A significant proportion of our business is in sectors of the
market which are either not exposed to economic downturn (US school
transportation), or significantly less exposed to short-term business
fluctuations (UK bus). These characteristics give a resilience to our
operations which is encouraging for shareholders in more uncertain economic
times.
Earlier in the year we restructured and strengthened the senior management team
in the US with the appointment of a new President for FirstGroup America, and
the creation of a new post of President for First Vehicle Services. Robbie
Duncan, who had been acting president of our North America Division, will
retire from the Group at the end of the year. Robbie joined Grampian Regional
Transport as Finance Director in 1986 and has subsequently held a number of
senior Board positions in FirstGroup plc. I would like to thank Robbie for his
contribution to the development of the Group and wish him a long and happy
retirement.
The Group's businesses are highly cash generative with £134m arising in the
first half year. This has enabled us to continue to invest in growing the
business, as well as reducing debt and returning cash to shareholders, through
share repurchases and an increased dividend.
I am optimistic that the Group has an important role to play in working with
its public sector partners in the transport industry to deliver the
Government's aspirations for increased public transport usage in the UK. In the
US we have established an excellent base from which to continue to expand our
business in a number of highly fragmented markets.
Martin Gilbert
Chairman
Chief Executive's Operating Review
Overview
We have made a good start to the year with turnover exceeding £1 billion for
the first time at the half-year stage at £1,069m (2001: £995m). Operating
profit, before goodwill, exceptional costs and profits on disposal of fixed
assets, increased to £84.4m (2001: £83.8m). The Group has continued to generate
strong cash flows of £134m (2001: £130m) which have been used to invest over £
82m in the business through capital expenditure on new vehicles in the UK and
US and the acquisition of new school bus operations in the US.
UK Bus
For the six months to 30 September 2002 turnover increased by 5.8% to £418.7m
(2001: £395.7m). Operating profit before contract hire leasing costs was £45.9m
(2001: £43.5m), an increase of 5.5%. Operating margins were maintained despite
increased costs, primarily insurance, following September 11th.
We are encouraged that total passenger volumes have increased by 1.5 % in the
period, slightly ahead of the same period last year. We have benefited from new
and enlarged contracts to operate buses in London on behalf of Transport for
London partly in preparation for the introduction in February 2003 of
congestion charging. The success of this scheme will benefit passengers in
London and could provide a blueprint for similar programmes in other towns and
cities. Elsewhere in the UK we have seen good growth in a number of urban areas
where we have been able to improve bus services. This has been achieved through
the introduction of the Overground, our simplified route and fares structure,
or by other measures to improve reliability in co-operation with local
authorities and Passenger Transport Executives (PTEs). Our marketing activity
is focused on improving customer information about services and tickets and
developing and promoting compelling fare deals to attract profitable growth in
bus travel.
Increasing costs continued to put pressure on margins. We have experienced an
increase in our insurance premiums following September 11th and increases in
personnel costs are running ahead of inflation. As far as possible we are
attempting to absorb these increases without putting up fares at a time when we
are seeing passengers returning to buses. We are also looking at ways to
further increase our operational efficiency. We have already made annual
savings of £3m through improved procurement and we will be looking at ways of
reducing driver turnover.
During the first half year we have invested £30.5m in new buses in the UK. The
fleets in York, Leicester, Glasgow, Sheffield and Northampton are being
substantially upgraded. On behalf of Greater Manchester PTE we introduced new
low-floor minibuses to operate the largest free bus service in the UK. In East
Anglia we have invested £1.6m in new coaches for our highly successful Excel
service which runs from Peterborough railway station to Norwich and Lowestoft.
This is an excellent example of a commercial service which provides both a rail
integration link and serves a number of rural centres. Such services play a key
part in achieving the Government's ongoing objectives of providing integrated
transport for both urban and rural areas.
The Group has established strong partnership relationships with many of the
local authorities where we operate buses. Buses are often the most practical
way of providing a socially inclusive service in urban areas which are most in
need. We believe that we are able to offer competitive, efficient services for
all our passengers. However, in our view the way to improve services is not
through regulation and red tape but through a genuine sharing of best practice
and operational experience between private operators and local authorities. We
are encouraged that Central Government has made substantial amounts of money
available for investment in road transport and we are actively working with
many local authorities to speed up the application of this funding.
UK Rail
Rail turnover during the period was £385.4m (2001: £364.3m) an increase of 6%.
Passenger volumes on First Great Western and First Great Eastern have increased
by 4%. Operating profit was £29.5m (2001: £29.5m) a creditable performance
given the reduction in subsidy, lower performance regime payments and increased
costs.
In First Great Western we have benefited from a return of tourist traffic this
summer after the foot and mouth outbreak in 2001. In First Great Eastern, our
London commuter railway, we have seen a good recovery in passengers but we are
monitoring the situation in relation to London employment closely. In First
North Western, which we operate on behalf of the Strategic Rail Authority
(SRA), passenger volumes were flat.
Across the board our railway companies have shown improved operating
performance in the first six months with punctuality now running at 80% or more
in all three companies. First Great Eastern was the most punctual operator in
London and the South East in the SRA's first quarter 2002/3 Public Performance
Measure. There has been a gradual improvement in the rail infrastructure as
Railtrack (now Network Rail) overcomes the backlog of maintenance work. On
First Great Western additional investment of £18m to upgrade the performance of
the High Speed Train fleet has begun. During the period we introduced the first
of the new class 180 fleet on First Great Western into the summer timetable and
the majority of the remainder entered service in September.
The division continues to manage cost pressures tightly. However we are
experiencing increases ahead of inflation with particular pressure on insurance
premiums and payroll. In addition train leasing costs will rise as new rolling
stock is brought into service.
The Group has a clear objective to renew its existing rail franchises and to
bid for new franchises in areas where we already operate trains or buses. We
are shortlisted for the new TransPennine Express franchise with our partner
Keolis. We have pre-qualified for the new Greater Anglia franchise which will
incorporate First Great Eastern, Anglia and the West Anglia lines of WAGN. We
believe that we have a strong track record of service delivery on First Great
Eastern, as well as an unrivalled position to offer transport integration in
East Anglia through our bus operations in Essex and the Eastern Counties. We
look forward to submitting competitive proposals to the SRA in due course. On
First Great Western we have already submitted proposals to the SRA which would
enable us to provide up to 40% more capacity on trains from Paddington station,
through the integration of our services with those currently operated by Thames
Trains whose franchise expires in 2004. This would give early and substantial
passenger benefits without the need for any infrastructure investment.
During the last six months we have seen important developments in the UK
transport sector including the establishment of Network Rail as the track
infrastructure operator and a number of announcements from the Strategic Rail
Authority outlining the likely future direction of the industry. We think it is
important that the focus remains on restoring the railway to normality and
lifting some of the uncertainty surrounding the refranchising process. We look
forward to working with the SRA on the development of the new railway map for
the UK. We are now more optimistic about the future of the railways and we
believe that First has important role to play.
North America
In North America the Group is the second largest operator of student
transportation with almost 16,000 school buses across the US and Canada. We
also operate transit contracting and management, and vehicle maintenance
services. In the six months to 30 September 2002 turnover increased to £261.6m
(2001: £231.9m) an increase of 13%. Operating profit was £16.5m (2001: £17.8m)
reflecting primarily the increased insurance premiums post September 11th. We
have continued to invest in the business with £56.5m in the first half year.
First Student is on target to increase its school bus fleet by around 1,000
buses during the current year. The bidding market for new school bus contracts
has been more competitive this year. However, we have been successful in
retaining around 90% of our existing contracts which came up for renewal during
the year. This result reflects the high level of service offered and strong
relationships established between First Student and the school boards. Our
strategy remains that we will not bid for new business at the expense of
margins. As a result much of our expansion this year has been through the
acquisition of small, privately owned operators where we have been able to
acquire the businesses on attractive terms.
Turnover in our Transit division increased by 22% in the period reflecting the
encouraging level of new business start-ups during the first half including
important new contracts in Denver, San Francisco and Houston as well as in the
new states of Arkansas and Wyoming. In a marketplace that is becoming more
competitive, First Transit will focus on improving cost control and becoming
the best value, low cost service provider in the sector.
We have now established a separate management structure for First Vehicle
Services to focus on developing this part of the business more rapidly. We have
had a very good six months with major new business wins from authorities in
Washington DC and Puerto Rico. The division has also renewed several other
important contracts. We are now focused on growing the business and improving
margins through the use of new purchasing systems, improved operational
efficiency and delivering superior service to our clients.
Across our North American division costs have increased, particularly insurance
premiums which have risen in the aftermath of September 11th. We are currently
examining ways in which we may be able to minimise insurance premiums in the
future. Other costs including fuel and labour are tightly controlled and
although margins are lower in the first half we expect to see some recovery in
the second half.
We remain optimistic about the opportunities in North America and we believe
that we have a strong management team in place to deliver further improvements
in performance and growth going forward.
Outlook
This is a strong set of results against a difficult economic background in the
UK and North America and the performance of all of the Group's businesses has
been encouraging. The Group's strong cash flow puts us in an excellent position
to continue to invest for growth, reduce debt and buy back equity. We are on
target to achieve our trading objectives for the remainder of the year.
Moir Lockhead
Chief Executive
Financial review
Overall
Turnover increased by £73.9m (7.4%) to £1,068.9m and operating profit, before
goodwill, exceptional items and profit on disposal of fixed assets, was up £
0.6m (0.7%) at £84.4m.
Divisional results
6 months to 6 months to Year to
30 September 2002 30 September 2001 31 March 2002
Turnover Operating Operating Turnover Operating Operating Turnover Operating Operating
profit* £ margin* profit* £ margin* profit* £ margin*
£m m £m m £m m
% % %
UK Bus 418.7 45.9 11.0 395.7 43.5 11.0 811.5 105.7 13.0
UK Rail 385.4 29.5 7.7 364.3 29.5 8.1 802.9 66.8 8.3
North America 261.6 16.5 6.3 231.9 17.8 7.7 542.9 60.8 11.2
Financing element of - (2.9) - - (1.2) - - (3.4) -
leases**
Other*** 3.2 (4.6) - 3.1 (5.8) - 6.8 (14.9) -
Total Group 1,068.9 84.4 7.9 995.0 83.8 8.4 2,164.1 215.0 9.9
* Before goodwill, exceptional items and profit on disposal of fixed assets
** Financing element of UK PCV operating lease costs
*** Tram operations, central management, Group information technology, ESOP and
other items
Turnover in the UK Bus division increased by £23.0m (5.8%). Passenger volumes
rose 1.5% and new contracts in London accounted for £13.3m of the uplift in
turnover. Operating profit for the period, before the financing element of
operating leases, increased by £2.4m (5.5%). The margin achieved of 11.0% was
the same as the first half of last year.
UK Rail division turnover increased by £21.1m (5.8%) with passenger revenue
growth of 4%, compared to an industry average of only 2%. Operating profit was
in line with last year principally reflecting higher passenger revenue, offset
by subsidy reductions and lower levels of compensation as the performance of
Railtrack (now Network Rail) improved. During the period we have recognised £
5.6m of the £17.3m additional compensation for gauge corner cracking which
represents the current view of revenue losses. It is anticipated that the
remaining compensation will be utilised to match revenue losses in the second
half of the year.
North American turnover increased by £29.7m (12.8%) including exchange rate
movements, with the majority of this new business attributable to First Student
which is on target to achieve 1,000 new buses. Operating profit was £16.5m
(2001: £17.8m) including exchange rate movements. This reflects an increase in
First Student profit offset by reductions in the profits of First Transit and
First Vehicle Services. There has been margin pressure in all three businesses,
principally due to cost increases following September 11th, particularly in
insurance and fuel.
Property gains on disposal
Gains on disposal of £11.2m were realised in the six months to 30 September
2002 compared with none for the first half of last year. These disposals are
part of a five year property disposal plan which will release cash from prime
city centre sites, much of which will be reinvested in modern bus depots, which
will further enhance our UK Bus operations.
Restructuring and other exceptional costs
Restructuring and exceptional costs of £1.0m were incurred during the six
months to 30 September 2002 compared to £5.9m for the first half of last year.
These comprised £1.7m of UK Bus restructuring costs and £1.8m of bid costs,
partly offset by a £2.5m gain on the disposal of our interest in Tramtrack
Croydon Limited.
Joint ventures and associates
There was no exposure to losses from joint ventures or associates during the
period (2001: £1.3m) as we provided for all unamortised costs in the year ended
31 March 2002.
Goodwill amortisation
The goodwill charge for the half year was £13.1m which is £1.6m lower than the
first half of last year. This represents the elimination of goodwill on joint
ventures and associates of £1.0m with the balance being attributable to foreign
exchange movements.
Interest
The net interest charge for the half year was £28.6m compared to £27.0m for the
same period last year. The charge includes £1.6m (2001: £0.8m) of notional
interest on provisions (mainly insurance and pensions). The interest charge is
covered 4.7 times by cash generation.
Taxation
The taxation charge for the half year was £12.2m (2001: £11.3m) in line with
increased profits. No tax has been provided on property gains as these are
rolled over into new property purchases. The taxation charge for the half year
has been based on the estimated likely effective rate for the full year of 30%
(2001: 31%) on profit before goodwill and exceptional items. The actual cash
cost of taxation to the Group is estimated to be 20% for the full year (2001:
23%).
Earnings per share
The adjusted basic earnings per share (EPS) figure was 9.3p (2001: 9.1p), an
increase of 2.2%. Basic earnings per share was 9.7p (2001: 5.6p), significantly
higher than the restated figure for the first half of last year due to property
gains and lower exceptional costs.
Cash flow and investment in the business
Cash generation (operating profit before goodwill and one-off costs plus
depreciation) rose from £129.7m to £133.5m. Capital expenditure during the
period amounted to £67.9m of which £56.5m was spent on North American buses.
There is a significant first half bias to North American capital expenditure in
the run up to the start of the school year. In addition acquisitions of £14.0m
were made in North America.
Net debt
Net debt at 30 September 2002 was £691.7m (2001: £772.6m), a reduction year on
year of £80.9m. This reduction principally reflects stronger cash generation,
reduced capital expenditure and lower interest payments.
Since 1 April 2002 the Sterling value of the Group's dollar borrowings
decreased by £23.8m as a result of the period end exchange rate movement from £
1:$1.43 to £1:$1.56.
In line with the policy of reducing exposure to interest rate risk, 78% of the
Group's net debt is on fixed terms. Net debt at 30 September 2002 included
$409m to hedge the net assets of the North American businesses.
Analysis of net debt Fixed Variable Total
£m £m £m
Cash - 11.8 11.8
Rail ring-fenced cash - 78.6 78.6
Bond (2013: 6.875%) (294.8) - (294.8)
Sterling bank loans and overdrafts - (102.6) (102.6)
US dollar bank loans and overdrafts - (261.7) (261.7)
Canadian dollar bank loans - (10.7) (10.7)
HP and finance leases (73.6) (15.3) (88.9)
Loan notes (9.0) (14.4) (23.4)
Interest rate swaps (160.2) 160.2 -
Total (537.6) (154.1) (691.7)
Balance sheet and net assets
The restatement of pre-contract costs, in accordance with UITF 34, decreased
opening net assets by £2.3m. Net assets decreased over the period by £28.5m
reflecting a retained profit of £25.9m offset by an adverse foreign exchange
movement of £49.0m and share repurchases of £5.4m. As US dollar borrowings
broadly match US dollar net assets excluding goodwill, the foreign exchange
movement principally arises from the impact on US goodwill of the 9%
strengthening of Sterling against the US dollar since the start of the period.
Shares in issue
During the half year to 30 September 2002, 2.1m shares (0.5% of share capital)
were repurchased and cancelled at a total cost of £5.4m, which leaves 417.7m
shares in issue. The average number of shares in issue for the purpose of
earnings per share calculation (excluding own shares held) during the first
half was 418.1m.
Dividend
The interim dividend is 3.55p per ordinary share compared to 3.3p for the same
period last year. This represents an increase of 7.6% and the dividend is
covered 2.8 times.
Foreign Exchange
The profits from North America have been translated at an average rate of £1:
$1.49, while the period end exchange rate was £1:$1.56, which compares with £1:
$1.43 at 31 March 2002 and £1:$1.47 at 30 September 2001.
Accounting Standards
As noted above the Group has adopted UITF 34 pre-contract costs. As a result
all general bid costs are expensed as incurred. Prior year figures have been
restated to reflect this change in accounting policy and more details are given
in note 2 to the interim financial information.
The Group has continued to account for pension costs under SSAP 24. The
application of SSAP 24 is likely to continue in light of the extended
implementation period for FRS 17 and the review of IAS 19 'Employee Benefits'.
Iain M Lanaghan
Group Finance Director
5 November 2002
Consolidated profit and loss account
Notes Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2002 2001 2002
£m (restated) (restated)
£m £m
Turnover
Continuing operations 1,068.9 995.0 2,164.1
Share of turnover of joint - 1.4 0.1
ventures
Total turnover 1,068.9 996.4 2,164.2
Operating profit
Continuing operations 70.3 64.2 167.2
Group operating profit before
goodwill and
exceptional costs 84.4 83.8 215.0
Goodwill amortisation (13.1) (13.7) (27.3)
Other exceptional costs (1.0) (5.9) (20.5)
Group operating profit 70.3 64.2 167.2
Share of operating losses of - (1.1) (1.6)
joint ventures
Share of operating losses of - (0.2) (0.4)
associate
Amortisation of goodwill on - (0.3) (0.6)
joint ventures
Amortisation of goodwill on - (0.7) (1.4)
associate
Total operating profit 70.3 61.9 163.2
Profit on disposal of fixed 11.2 - 1.0
assets
Profit on ordinary activities 81.5 61.9 164.2
before interest
Net interest payable and (28.6) (27.0) (56.3)
similar charges
Profit on ordinary activities 52.9 34.9 107.9
before taxation
Tax on profit on ordinary 3 (12.2) (11.3) (33.9)
activities
Profit on ordinary activities 40.7 23.6 74.0
after taxation
Equity minority interests - (0.1) (0.1)
Profit for the financial period 40.7 23.5 73.9
Equity dividends paid and 4 (14.8) (13.8) (43.1)
proposed
Retained profit for the 13 25.9 9.7 30.8
financial period
Adjusted basic earnings per 5 9.3p 9.1p 25.8p
share
Adjusted cash earnings per 5 21.1p 20.0p 48.5p
share
Basic earnings per share 5 9.7p 5.6p 17.6p
Diluted earnings per share 5 9.7p 5.6p 17.5p
Consolidated balance sheet
Notes Unaudited Unaudited Audited
30 September 30 September 31 March
2002 2001 2002
£m (restated) (restated)
£m £m
Assets employed:
Fixed assets
Goodwill 6 501.9 544.4 547.0
Tangible fixed assets 7 790.3 803.9 797.5
Investments
- Investment in joint ventures
- Goodwill - 2.4 -
- Share of gross assets - 3.1 -
- Share of gross liabilities - (0.4) -
- 5.1 -
- Other investments 1.1 6.6 1.5
1.1 11.7 1.5
1,293.3 1,360.0 1,346.0
Current assets
Stocks 27.0 27.3 25.0
Debtors 8 347.1 303.9 284.0
Investments 9 50.9 30.1 60.4
Cash at bank and in hand 39.5 50.3 41.0
464.5 411.6 410.4
Creditors: amounts falling 10 (611.2) (599.8) (537.8)
due within one year
Net current (liabilities)/
assets
Amounts due within one year (183.3) (216.6) (157.4)
Amounts due after more than one 8 36.6 28.4 30.0
year
Net current liabilities (146.7) (188.2) (127.4)
Total assets less current 1,146.6 1,171.8 1,218.6
liabilities
Creditors: amounts falling 10 (635.4) (685.9) (687.9)
due after more than one year
Provisions for liabilities and 11 (119.7) (101.3) (110.7)
charges
391.5 384.6 420.0
Financed by:
Capital and reserves
Called up share capital 12 20.9 21.0 21.0
Share premium account 13 236.7 236.7 236.7
Revaluation reserve 13 3.6 3.5 3.6
Other reserves 13 3.6 3.5 3.5
Profit and loss account 13 125.7 118.9 154.2
Equity shareholders' funds 390.5 383.6 419.0
Equity minority interests 1.0 1.0 1.0
391.5 384.6 420.0
Consolidated cash flow statement
Notes Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2002 2001 2002
£m £m £m
Net cash inflow from operating 14(a) 79.6 85.1 310.3
activities
Returns on investments and 14(b) (15.1) (29.6) (65.8)
servicing of finance
Taxation
Corporation tax paid (11.3) (16.0) (37.6)
Capital expenditure and 14(c) (71.9) (120.5) (140.3)
financial investment
Acquisitions and disposals 14(d) (9.7) (9.8) (14.0)
Equity dividends paid (29.4) (26.8) (40.7)
Cash (outflow)/inflow before use (57.8) (117.6) 11.9
of liquid
resources and financing
Management of liquid resources
Decrease/(increase) in liquid 9.5 (18.3) (48.6)
bank deposits
Financing 14(e) 44.6 109.3 13.8
Decrease in cash in period (3.7) (26.6) (22.9)
Reconciliation of net cash flows to movements in net debt
Notes Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2002 2001 2002
£m £m £m
Decrease in cash in period (3.7) (26.6) (22.9)
Cash outflow from decrease in (49.8) (113.4) (21.5)
debt and hire purchase contract
and finance lease financing
Movement in current asset (9.5) 18.3 48.6
investments
Fees on issue of Bond 0.2 - 5.2
Amortisation of debt issuance (0.2) (0.2) (1.1)
fees
Foreign exchange differences 23.8 10.0 (0.1)
Movement in net debt in period (39.2) (111.9) 8.2
Net debt at beginning of period 15 (652.5) (660.7) (660.7)
Net debt at end of period 15 (691.7) (772.6) (652.5)
Consolidated statement of total recognised gains and losses
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2002 2001 2002
£m (restated) (restated)
£m £m
Profit for the period attributable to 40.7 23.5 73.9
shareholders
Foreign exchange differences (49.0) (21.1) (3.2)
Total recognised (losses)/gains for (8.3) 2.4 70.7
the period
Prior year adjustment (2.3)
Total recognised losses since last (10.6)
annual report
Reconciliation of movements in shareholders' funds
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2002 2001 2002
£m (restated) (restated)
£m £m
Profit for the financial period 40.7 23.5 73.9
Dividends (14.8) (13.8) (43.1)
25.9 9.7 30.8
Foreign exchange differences (49.0) (21.1) (3.2)
Own shares purchased / cancelled (5.4) (4.1) (7.7)
Net (reduction)/addition to (28.5) (15.5) 19.9
shareholders' funds
Shareholders' funds at beginning 419.0 399.1 399.1
of period
Shareholders' funds at end of 390.5 383.6 419.0
period
No note of historical cost profits and losses is given as there are no material
differences between the results as set out in the consolidated profit and loss
account and their historical cost equivalents.
Notes to the interim financial information
1 Basis of preparation
This interim report does not constitute statutory accounts within the meaning
of section 240 of the Companies Act 1985.
The figures for the six months to 30 September 2002 include the results of the
rail businesses for the 24 weeks ended 14 September 2002 and the results of the
other businesses for the 26 weeks ended 28 September 2002.
These results are unaudited but have been reviewed by the auditors. The
comparative figures for the six months to 30 September 2001 are unaudited and
are derived from the interim report for the six months ended 30 September 2001,
which was also reviewed by the auditors.
The comparative figures for the year to 31 March 2002 are not the company's
statutory accounts for that financial year but have been derived from them.
Those accounts have been reported on by the company's auditors and delivered to
the Registrar of Companies. The report of the auditors was unqualified and did
not contain a statement under section 237(2) or (3) of the Companies Act 1985.
The comparative figures have been restated for the adoption of UITF 34 as
explained in note 2 and comparative figures have also been amended, where
appropriate, for minor changes in presentation.
This interim report will be sent to all shareholders in November 2002 and will
be available to the public at the Registered Office of the Company, 395 King
Street, Aberdeen, AB24 5RP. This interim report was approved by the Board of
Directors on 5 November 2002.
2 Principal accounting policies
The results for the six months to 30 September 2002 have been prepared using
the same accounting policies as were used in the preparation of the annual
report for the year ended 31 March 2002 except as set out below.
UITF34 Pre-contract costs has now been adopted. Pre-contract costs are now
expensed as incurred. The impact of this change in accounting policy for the 6
months to 30 September 2001 is an increase in exceptional costs of £1.7m, and
for the year to 31 March 2002 an increase in exceptional costs of £1.6m. The
impact on exceptional costs for the 6 months to 30 September 2002 is an
increase of £1.3m. The restatement of bid costs at 31 March 2002 has resulted
in a reduction of £1.9m in other debtors and prepayments, an increase of £0.4m
in accruals and deferred income, and a reduction in equity shareholders' funds
of £2.3m to £419.0m.
3 Tax on profit on ordinary activities
6 months to 6 months to Year to
30 September 30 September 31 March
2002 2001 2002
£m £m £m
Corporation tax 9.6 7.9 25.6
Deferred tax 2.6 3.4 8.3
12.2 11.3 33.9
4 Dividends
6 months to 6 months to Year to
30 September 30 September 31 March
2002 2001 2002
£m £m £m
Ordinary shares of 5p each
- Interim proposed 14.8 13.9 13.9
- Final paid - - 29.3
- Adjustment to prior year final - (0.1) (0.1)
dividend in
respect of shares cancelled
14.8 13.8 43.1
The interim dividend of 3.55p per ordinary share will be paid on 12 February
2003 to shareholders on the register of members at the close of business on 17
January 2003.
5 Earnings per share
Basic earnings per share is based on earnings of £40.7m (six months to 30
September 2001: £23.5m and year to 31 March 2002: £73.9m) and on the weighted
average number of ordinary shares of 418.1m (six months to 30 September 2001:
420.4m and year to 31 March 2002: 419.8m) in issue.
Diluted earnings per share is based on the same earnings for each of the
periods and on the weighted average number of ordinary shares of 419.1m (six
months to 30 September 2001: 422.0m and year to 31 March 2002: 421.4m). The
difference in the number of shares between the basic calculation and the
diluted calculation represents the weighted average number of dilutive
potential ordinary shares.
The adjusted basic earnings per share and adjusted cash earnings per share are
intended to demonstrate recurring elements of the results of the Group before
goodwill amortisation. A reconciliation of the earnings used in the bases is
set out below:
£m 6 months to
30 September 2002
Earnings per share
p
Profit for basic earnings per share 40.7 9.7
calculation
Goodwill amortisation 13.1 3.1
Group restructuring and other exceptional 1.0 0.3
costs
Profit on disposal of fixed assets (11.2) (2.7)
Taxation effects of adjustments (4.5) (1.1)
Profit for adjusted basic earnings per 39.1 9.3
share calculation
Depreciation 49.1 11.8
Profit for adjusted cash earnings per 88.2 21.1
share calculation
£m 6 months to
30 September 2001
(restated)
Earnings per share
p
Profit for basic earnings per share 23.5 5.6
calculation
Goodwill amortisation 14.7 3.5
Restructuring and other exceptional costs 5.9 1.4
Joint venture marketing costs 0.3 0.1
Taxation effects of adjustments (6.2) (1.5)
Profit for adjusted basic earnings per 38.2 9.1
share calculation
Depreciation 45.9 10.9
Profit for adjusted cash earnings per 84.1 20.0
share calculation
£m Year to
31 March 2002
(restated)
Earnings per share
p
Profit for basic earnings per share 73.9 17.6
calculation
Goodwill amortisation 29.3 7.0
Restructuring and other exceptional costs 20.5 4.9
Profit on disposal of fixed assets (1.0) (0.3)
Taxation effect of adjustments (14.2) (3.4)
Profit for adjusted basic earnings per 108.5 25.8
share calculation
Depreciation 95.1 22.7
Profit for adjusted cash earnings per 203.6 48.5
share calculation
6 Goodwill
£m
Cost
At 1 April 2002 616.0
Additions 8.0
Exchange rate differences (46.3)
At 30 September 2002 577.7
Amortisation
At 1 April 2002 69.0
Charge for the period 13.1
Exchange rate differences (6.3)
At 30 September 2002 75.8
Net book value
At 30 September 2002 501.9
At 31 March 2002 547.0
At 30 September 2001 544.4
7 Tangible fixed assets
Land and Passenger Other Total
buildings carrying plant and £m
£m vehicle equip-
fleet ment
£m £m
Cost or valuation
At 1 April 2002 124.8 1,126.0 136.6 1,387.4
Businesses acquired - 6.4 0.2 6.6
Additions 5.3 56.3 6.3 67.9
Disposals (3.7) (21.3) (2.9) (27.9)
Exchange rate differences (1.5) (38.0) (2.8) (42.3)
At 30 September 2002 124.9 1,129.4 137.4 1,391.7
Depreciation
At 1 April 2002 18.6 491.1 80.2 589.9
Businesses acquired - - - -
Charge for period 1.7 40.8 6.6 49.1
Disposals (0.6) (18.0) (2.6) (21.2)
Exchange rate differences (0.4) (14.6) (1.4) (16.4)
At 30 September 2002 19.3 499.3 82.8 601.4
Net book value
At 30 September 2002 105.6 630.1 54.6 790.3
At 31 March 2002 106.2 634.9 56.4 797.5
At 30 September 2001 103.9 650.8 49.2 803.9
8 Debtors
30 September 30 September 31 March
2002 2001 2002
£m (restated) (restated)
£m £m
Amounts due within one year
Trade debtors 187.6 178.2 177.9
Other debtors 40.8 30.0 19.1
Deposit paid for rolling stock 16.7 21.4 16.7
Pension funds' prepayments 6.6 3.5 5.7
Other prepayments and accrued 58.8 42.4 34.6
income
310.5 275.5 254.0
Amounts due after more than one
year
Pension funds' prepayments 35.1 26.8 28.3
Other prepayments and accrued 1.5 1.6 1.7
income
36.6 28.4 30.0
347.1 303.9 284.0
9 Current asset investments
30 September 30 September 31 March
2002 2001 2002
£m £m £m
Bank deposits 50.9 30.1 60.4
10 Creditors
30 September 30 September 31 March
2002 2001 2002
£m £m (restated)
£m
Amounts falling due within one year
Bank loans and overdrafts 98.2 100.6 7.5
Obligations under hire purchase 47.2 60.6 57.3
contracts and finance leases
Loan notes 1.3 5.9 1.2
Trade creditors 125.7 114.3 122.8
Corporation tax 22.1 27.9 23.8
Other tax and social security 19.1 18.2 16.4
Other creditors 23.3 17.9 21.9
Pension funds' creditors 10.3 8.4 8.5
Accruals and deferred income 214.6 196.7 210.6
Season ticket deferred income 34.6 35.3 38.4
Proposed dividends 14.8 13.9 29.4
Dividend payable - 0.1 -
611.2 599.8 537.8
Amounts falling due after more than
one year
Bank loans
Due in more than one year but not 267.2 211.2 24.2
more than two years
Due in more than two years but not 9.6 360.1 283.4
more than five years
Obligations under hire purchase
contracts and finance leases
Due in more than one year but not 27.3 47.5 34.3
more than two years
Due in more than two years but not 14.2 42.6 27.6
more than five years
Due in more than five years 0.2 0.6 0.4
Loan notes
Due in more than one year but not 22.1 23.7 23.2
more than two years
Due in more than two years but not - 0.2 -
more than five years
£300.0m Bond - 6.875% 2013 294.8 - 294.8
635.4 685.9 687.9
Bank loans and overdrafts
Whilst the majority of bank loans and overdrafts are repayable within three
months of the balance sheet date, they have been classified by reference to the
maturity date of the longest refinancing permitted under these facilities. The
bank loans and overdrafts are unsecured.
Hire purchase contracts and finance leases
Hire purchase contract and finance lease liabilities are secured on the assets
to which they relate. The contracts vary in length between four and ten years.
No new contracts were entered into during the period.
Loan notes
The loan notes have been classified by reference to the earliest date on which
the loan note holders can request redemption. £21.3m (30 September 2001: £27.2m
and 31 March 2002: £21.7m) of the loan notes are backed up by guarantees
provided under the banking facilities.
Bond
The Bond is repayable in March 2013 and is shown net of £5.2m of issue-related
costs which are being amortised over the term of the Bond. Certain subsidiary
companies have issued guarantees to the Company's Bondholders and these
guarantees rank pari passu with guarantees provided by those subsidiaries to
the Group's other major lenders.
11 Provisions for liabilities and charges
Deferred Insurance Pensions Total
Tax Claims £m £m
£m £m
At 1 April 2002 79.6 24.9 6.2 110.7
Provided in the period 2.6 10.3 - 12.9
Utilised in the period - (3.8) (0.2) (4.0)
Notional interest - 1.4 0.2 1.6
Exchange rate difference - (1.5) - (1.5)
At 30 September 2002 82.2 31.3 6.2 119.7
12 Called up share capital
30 30 September 31 March
September
2001 2002
2002
£m £m
£m
Authorised
Ordinary shares of 5p each 30.0 30.0 30.0
Allotted, called up and fully
paid
Ordinary shares of 5p each 20.9 21.0 21.0
The number of ordinary shares of 5p each in issue at the end of the period was
417.7m (30 September 2001: 421.1m and 31 March 2002: 419.8m).
The changes in the number and amount of issued share capital during the period
(of which further details are given in the Financial Review) are set out below:
Number £m
(m)
At 1 April 2002 419.8 21.0
Shares cancelled (2.1) (0.1)
At 30 September 2002 417.7 20.9
Between 3 June 2002 and 12 September 2002 2,140,000 ordinary shares were
repurchased at a total cost of £5.4m (an average price of 251 pence per share)
and cancelled.
13 Reserves
Share Revaluation Profit and
premium reserve loss
account
account £m
£m
£m
At beginning of period as previously 236.7 3.6 156.5
reported
Prior year adjustment - - (2.3)
At beginning of period as restated 236.7 3.6 154.2
Cancellation of shares - - (5.4)
Retained profit for the period - - 25.9
Foreign exchange differences - - (49.0)
At 30 September 2002 236.7 3.6 125.7
Capital Capital Total other
reserves reserves
Redemption
£m £m
Reserve
£m
At 1 April 2002 0.8 2.7 3.5
Cancellation of shares 0.1 - 0.1
At 30 September 2002 0.9 2.7 3.6
14 Notes to the consolidated cash flow statement
6 months to 6 months to Year to
30 September 30 September 31 March
2002 2001 2002
£m (restated) (restated)
£m £m
(a) Reconciliation of operating
profit to
net cash inflow from operating
activities
Group operating profit 70.3 64.2 167.2
Depreciation charges 49.1 45.9 95.1
Goodwill amortisation 13.1 13.7 27.3
Write down of investment in joint - - 8.0
venture and associate
Profit on sale of non-property - (0.2) (0.7)
fixed assets
Profit on sale of investment in (2.5) - -
associate
Decrease/(increase) in stocks 0.2 (2.8) (2.1)
Increase in debtors (47.6) (29.8) (11.6)
(Decrease)/increase in creditors (3.0) 31.1 64.1
and provisions
FNW franchise amendment payment - (37.0) (37.0)
Net cash inflow from operating 79.6 85.1 310.3
activities
(b) Returns on investments and servicing
of finance
Interest received 1.0 1.2 2.8
Interest paid (12.1) (24.4) (52.0)
Interest element of hire purchase (4.0) (6.4) (11.5)
contract and finance lease payments
Dividends paid to minority shareholders - - (5.1)
Net cash outflow from returns on (15.1) (29.6) (65.8)
investments and servicing of finance
(c) Capital expenditure and financial
investment
Purchase of tangible fixed assets (74.7) (123.8) (154.7)
Sale of fixed asset properties 2.0 0.9 2.1
Sale of other tangible fixed assets 0.8 0.4 5.7
Deposits for rolling stock - 2.0 6.6
Net cash outflow from capital (71.9) (120.5) (140.3)
expenditure and financial investment
6 months to 6 months to Year to
30 30 September 31 March
September
2001 2002
2002
£m £m
£m
(d) Acquisitions and
disposals
Purchase of subsidiary - (0.8) (1.0)
undertakings
Purchase of businesses (14.0) (4.1) (6.1)
Net cash acquired with 1.8 - -
purchase of businesses
Purchase of investment in - (4.9) (4.9)
joint venture
Purchase of investment in - - (2.0)
associate
Sale of investment in joint 2.5 - -
venture
Net cash outflow from (9.7) (9.8) (14.0)
acquisitions and disposals
(e) Financing
Own shares repurchased (5.4) (4.1) (7.7)
Bond - - 300.0
New bank loans 125.9 194.7 77.5
Repayment of amounts borrowed - (44.6) (40.3) (277.7)
bank loans
- loan notes (0.9) (6.1) (11.5)
Capital element of hire purchase (30.4) (34.9) (66.8)
contract and finance lease payments
Net cash inflow from financing 44.6 109.3 13.8
15 Analysis of net debt
At 31 Cash Other At 30
non-cash September
March 2002 flow changes
2002
£m £m £m
£m
Current asset investments 60.4 (9.5) - 50.9
Cash at bank and in hand 41.0 (1.5) - 39.5
Bank overdrafts - (2.2) - (2.2)
Cash 41.0 (3.7) - 37.3
Bank loans due within one (7.5) (93.6) 5.1 (96.0)
year
Bank loans due after one (307.6) 12.3 18.5 (276.8)
year
Bond (294.8) 0.2 (0.2) (294.8)
Obligations under hire (119.6) 30.4 0.3 (88.9)
purchase contracts and
finance leases
Loan notes (24.4) 0.9 0.1 (23.4)
Financing (753.9) (49.8) 23.8 (779.9)
Net debt (652.5) (63.0) 23.8 (691.7)
16 Major non-cash transactions
During the period the Group entered into hire purchase contracts in respect of
assets with a capital value of £nil (6 months to 30 September 2001: £nil and
year to 31 March 2002: £nil). Other non-cash changes include £23.8m (6 months
to 30 September 2001: £10.0m and year to 31 March 2002: £0.1m) of foreign
exchange movements.
5
Latest directors dealings
- 2 days ago The Renewables Infrastructure Group Limited
- 2 days ago The Renewables Infrastructure Group Limited
- 2 days ago Smurfit Westrock (DI)
- 2 days ago Menhaden Resource Efficiency
- 2 days ago BP