Final Results - Part 2

FirstGroup PLC 15 May 2001 PART 2 1 Principal accounting policies The financial information set out herein does not constitute statutory accounts but has been extracted from the accounts for the years ended 31 March 2000 and 2001. The accounts for the year ended 31 March 2000 have been delivered to the Registrar of Companies and the accounts for the year ended 31 March 2001 will be delivered to the Registrar of Companies in due course. The auditors have reported on both sets of accounts: their reports were unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The accounts for the year ended 31 March 2001 have been prepared using the same accounting policies as were used in the preparation of the accounts for the year ended 31 March 2000. Copies of the statutory accounts for the year ended 31 March 2001 will be sent to all shareholders by early June and will be available thereafter at the Registered Office of the Company at 395 King Street, Aberdeen AB24 5RP. 2 Profit and loss account analysis and segmental information Continu Disconti Total Continu Discontin Total ing Acquisiti nued 2001 ing ued 2000 operati ons operatio operati operation ons ns ons s £m £m £m £m £m £m £m Group turnover 2,015.7 3.4 34.9 2,054.0 1,763.8 31.3 1,795.1 Group operating costs - (1,809.2) (2.9) (23.4) (1,835.5)(1,582.8) (21.4) (1,604.2) General - Goodwill (25.8) (0.1) - (25.9) (13.0) - (13.0) amortisat ion - Exception al costs (note 4) (53.5) - - (53.5) (11.6) - (11.6) - Employees' profit sharing scheme (4.2) - - (4.2) (5.2) - (5.2) Total Group operating costs (1,892.7) (3.0) (23.4) (1,919.1) (1,612.6) (21.4) (1,634.0) (note 3) Group operating profit 123.0 0.4 11.5 134.9 151.2 9.9 161.1 The discontinued operation is Bristol International Airport. Segmental information is as follows: Turnover Profit before Net assets interest /(liabilities) 2001 2000 2001 2000 2001 2000 £m £m £m £m £m £m UK Bus 788.6 744.3 95.8 105.3 522.4 442.0 UK Rail 761.2 767.4 16.2 38.0 (18.5) (20.5) North 462.7 246.4 25.7 20.8 305.4 235.8 America Airport 34.9 31.3 11.5 9.9 - 8.5 Group 6.6 5.7 52.1 (8.5) (350.7) (329.6) items 2,054.0 1,795.1 201.3 165.5 458.6 336.2 All of the Group turnover and Group operating profit for the year was generated in the United Kingdom, except that shown above as being generated in North America. 3 Operating costs Continu Discontin Total Continui Discontin Total ing Acquisitio ued ng ued operati ns operation 2001 operatio operation 2000 ons s ns s £m £m £m £m £m £m £m Materials and 234.3 0.6 1.1 236.0 180.3 1.1 181.4 consumables Staff costs 853.2 1.6 5.4 860.2 687.6 6.0 693.6 (note 5) External charges 688.4 0.4 14.8 703.6 663.9 12.7 676.6 Depreciation, amortisat ion and other amounts 116.8 0.4 2.1 119.3 80.8 1.6 82.4 written off fixed assets 1,892.7 3.0 23.4 1,919.1 1,612.6 21.4 1,634.0 4 Exceptional costs UK Bus Rail North America Other Total Total 2001 2001 2001 2001 2001 2000 £m £m £m £m £m £m FNW franchise - 39.9 - - 39.9 - amendment Restructuring costs 1.8 - 3.8 - 5.6 6.8 Transition costs - - 2.3 - 2.3 0.6 New train - 2.5 - - 2.5 0.8 commissioning costs Abortive project - - - 1.3 1.3 - costs Tram start up costs - - - 1.0 1.0 - Southall court fine - - - - - 1.5 Other - - - 0.9 0.9 1.9 1.8 42.4 6.1 3.2 53.5 11.6 During the year cash payments of £14.5m (2000: £12.5m) were made in respect of restructuring and other exceptional costs. No tax relief has been accrued on the cost of the FNW franchise amendment. The tax effect of the other exceptional costs was a credit of £2.5m (2000: £3.0m). 5 Employees' and directors' remuneration The average number of persons employed by the Group (including directors) during the year was as follows: 2001 2000 Operational 49,214 38,996 Administration 2,770 2,122 51,984 41,118 The aggregate payroll costs of these persons were as follows: 2001 2000 £m £m Wages and salaries 785.9 630.3 Social security costs 55.0 45.0 Other pension costs 19.3 18.3 860.2 693.6 6 Profit on disposal of businesses 2001 2000 £m £m Bristol International Airport 55.6 - New World First Holdings 13.8 - 69.4 - On 24 January 2001, the Group sold its 51% interest in Bristol International Airport for cash proceeds of £107.1m plus repayment of loans. On 15 May 2000, the Group sold its 26% interest in New World First Holdings for cash proceeds of HK$457m (£38.7m). 7 Net interest payable and similar charges 2001 2000 £m £m Bank loans and overdrafts 49.4 32.3 Other loans 2.9 3.5 Finance charges payable in respect of hire purchase contracts and finance leases 14.8 15.0 67.1 50.8 Income from short term deposits and other investments (4.4) (5.9) Interest capitalised - (1.2) Notional interest on provisions 0.6 0.3 63.3 44.0 Share of interest payable of joint ventures 1.2 - Total 64.5 44.0 The interest capitalised was in relation to the construction of the new terminal at Bristol International Airport. 8 Tax on profit on ordinary activities 2001 2000 £m £m Corporation tax Current year - UK at 30% (2000: 30%) 42.3 13.1 Current year - overseas 0.9 1.6 Prior years - UK (0.5) (2.3) Prior years - overseas 0.2 - Transfer to deferred tax Current year - UK (2.0) 12.2 Current year - overseas 2.2 0.6 Prior years - UK (1.1) (0.9) Group 42.0 24.3 9 Equity dividends 2001 2000 £m £m Ordinary shares of 5p each - Interim paid (3.0p (2000: 2.7p) per share) 12.6 11.6 - Final proposed (6.4p (2000: 5.8p) per share) 26.9 25.0 - Adjustment to prior year dividend in respect of shares (0.7) - cancelled 38.8 36.6 10 Earnings per share Basic earnings per share is based on earnings of £90.9m (2000: £93.5m) and on the weighted average number of ordinary shares of 422.2m (2000: 396.8m) in issue. Diluted earnings per share is based on the same earnings and on the weighted average number of ordinary shares of 424.6m (2000: 400.1m). A reconciliation of the number of shares used in the basic and diluted measures is set out below: 2001 2000 Number Number (m) (m) Weighted average number of shares used in basic 422.2 396.8 calculation SAYE share options 1.9 2.8 Executive share options 0.4 0.3 Long term incentive plan awards 0.1 0.2 424.6 400.1 The adjusted basic earnings per share and adjusted cash earnings per share measures are intended to demonstrate recurring elements of the results of the Group before goodwill amortisation. No adjustment is made for the tax relief of £7.8m (2000: £3.9m) obtained in the US as a result of the S338(h)(10) election on the Ryder goodwill as this cash benefit is not dependent on the accounting treatment. Both the adjusted basic and cash measures of earnings per share use the same weighted average number of ordinary shares as the basic earnings per share measure. A reconciliation of the earnings used in these measures is set out below: 2001 2000 Earnings per Earnings per £m share (p) £m share (p) Profit for basic 90.9 21.5 93.5 23.6 earnings per share calculation Goodwill amortisation 27.8 6.6 13.0 3.3 FNW franchise 39.9 9.4 - - amendment Restructuring and 13.6 3.2 11.6 2.9 other exceptional costs Taxation effect of (2.5) (0.6) (3.0) (0.8) this adjustment Profit on disposal of (69.4) (16.4) - - businesses Taxation effect of 21.8 5.2 - - this adjustment Loss/(profit) on 0.1 - (4.0) (1.0) disposal of fixed assets Taxation effect of - - 1.2 0.3 this adjustment Profit for adjusted basic earnings per share calculation 122.2 28.9 112.3 28.3 Depreciation 88.4 20.9 69.4 17.5 Minority interests in (1.0) (0.2) (0.8) (0.2) this adjustment Profit for adjusted 209.6 49.6 180.9 45.6 cash earnings per share calculation 11 Intangible fixed assets Goodwill £m Cost At beginning of year 547.0 Additions (note 24) 9.6 Exchange rate differences 58.8 At end of year 615.4 Amortisation At beginning of year 13.2 Charge for the year 25.9 Exchange rate differences 2.7 At end of year 41.8 Net book value At 31 March 2001 573.6 At 31 March 2000 533.8 12 Tangible fixed assets Land and Passenger Other Total buildings carrying plant and vehicle fleet equipment £m £m £m £m Cost or valuation At beginning of year 181.5 924.5 120.4 1,226.4 Subsidiary undertakings 0.8 8.6 0.5 9.9 acquired Additions 8.3 115.9 26.7 150.9 Disposals (4.4) (48.2) (10.6) (63.2) Subsidiary undertakings (70.9) - (20.5) (91.4) sold Exchange rate differences 1.4 35.4 2.5 39.3 At end of year 116.7 1,036.2 119.0 1,271.9 Depreciation At beginning of year 36.1 389.1 76.4 501.6 Subsidiary undertakings - 3.5 0.2 3.7 acquired Charge for the year 6.7 72.2 14.5 93.4 Disposals (2.7) (38.5) (9.8) (51.0) Subsidiary undertakings (24.9) - (10.7) (35.6) sold Exchange rate differences 0.6 15.3 1.9 17.8 At end of year 15.8 441.6 72.5 529.9 Net book value At 31 March 2001 100.9 594.6 46.5 742.0 At 31 March 2000 145.4 535.4 44.0 724.8 13 Fixed asset investments Other Joint invest- Own ventures Associates ments shares Total £m £m £m £m £m Cost At beginning of year 24.0 - 4.0 4.1 32.1 Additions 5.6 4.1 - 1.1 10.8 Reclassification - 4.0 (4.0) - - Share of results (2.0) (0.2) - - (2.2) Disposals (23.2) - - (2.9) (26.1) Exchange differences 1.1 - - - 1.1 At end of year 5.5 7.9 - 2.3 15.7 Provision At beginning of year - - - (0.8) (0.8) Goodwill amortisation (0.1) (1.8) - - (1.9) Other charges (0.9) - - - (0.9) At end of year (1.0) (1.8) - (0.8) (3.6) Total At 31 March 2001 4.5 6.1 - 1.5 12.1 At 31 March 2000 24.0 - 4.0 3.3 31.3 14 Stocks 2001 2000 £m £m Spare parts and consumables 21.0 19.5 Property development work in progress 2.5 2.4 23.5 21.9 15 Debtors 2001 2000 £m £m Amounts due within one year Trade debtors 176.1 155.1 Other debtors 26.9 24.0 Deposit paid for rolling stock 23.4 30.4 Pension funds' prepayments 3.2 3.0 Other prepayments and accrued income 23.1 23.6 252.7 236.1 Amounts due after more than one year Pension funds' prepayments 25.0 23.6 Other prepayments and accrued income 1.6 1.1 26.6 24.7 279.3 260.8 16 Current asset investments 2001 2000 £m £m Bank deposits 11.8 48.8 17 Cash at bank and in hand 2001 2000 £m £m Ring fenced cash 50.2 33.8 Other cash 16.4 14.0 66.6 47.8 Under the terms of the franchise agreements cash can only be distributed by the train operating companies up to the amount of retained profits. The ring fenced cash represents that which is not available for distribution at the year end. 18 Creditors 2001 2000 £m £m Amounts falling due within one year Bank loans and overdrafts 41.1 44.6 Obligations under hire purchase contracts and 65.2 65.3 finance leases Loan notes 10.2 15.6 Trade creditors 113.1 120.9 Corporation tax 36.0 14.9 Other tax and social security 15.6 12.8 Other creditors 21.9 22.0 Pension funds' creditors 7.8 7.9 Accruals and deferred income 178.8 164.8 FNW franchise amendment accrual 37.0 - Season ticket deferred income 38.1 38.6 Proposed dividends 27.0 25.0 591.8 532.4 Amounts falling due after more than one year Bank loans Due in more than one year but not more than two 60.9 35.5 years Due in more than two years but not more than five 414.8 531.5 years Obligations under hire purchase contracts and finance leases Due in more than one year but not more than two 58.7 58.9 years Due in more than two years but not more than five 61.8 85.9 years Due in more than five years 0.7 2.2 Loan notes Due in more than one year but not more than two 25.5 36.5 years Due in more than two years but not more than five 0.2 0.4 years 622.6 750.9 19 Provisions for liabilities and charges Deferred tax Insurance Pensions Total claims £m £m £m £m At beginning of year 12.8 15.7 11.4 39.9 Subsidiary undertakings (0.1) - - (0.1) acquired Subsidiary undertakings 0.5 - (5.1) (4.6) sold Provided/(released) in (0.9) 5.8 0.2 5.1 the year Utilised in the year - (5.4) (0.5) (5.9) Notional interest - 0.3 0.3 0.6 At end of year 12.3 16.4 6.3 35.0 20 Deferred tax Provided Unprovided Provided Unprovided 2001 2001 2000 2000 £m £m £m £m Accelerated capital 1.7 75.7 10.8 44.0 allowances Other timing differences 8.1 (5.8) (0.7) (2.5) Trading losses - (11.1) (0.4) (2.4) Advance corporation tax recoverable (0.2) - (0.2) - Unrealised capital gains 2.7 2.1 3.3 2.1 Deferred tax liability 12.3 60.9 12.8 41.2 21 Reserves Share premium Revaluation Profit and account reserve loss account £m £m £m At beginning of year 233.6 3.7 74.4 Exercise of executive share 0.5 - - options Issue of shares to QUEST (i) 2.6 - (1.5) Cancellation of shares (ii) - - (31.1) Transfer of realised revaluation - (0.1) 0.1 reserve Retained profit for the year - - 52.1 Goodwill written back on disposal - - 1.6 of joint venture Goodwill written back on disposal - - 38.2 of business Foreign exchange differences - - 60.0 At end of year 236.7 3.6 193.8 Capital Redemption Capital Total other reserve reserves reserves £m £m £m At beginning of year 0.1 2.7 2.8 Cancellation of shares (ii) 0.6 - 0.6 At end of year 0.7 2.7 3.4 Notes: (i) 1,070,707 ordinary shares were issued to the FirstGroup plc Qualifying Employee Share Ownership Trust at a price of £2.475 and then written down to the option price receivable. (ii) 12,658,108 ordinary shares were repurchased at a total cost of £31.1m and cancelled. The cumulative amount of positive and negative goodwill arising from acquisitions of subsidiary and associates written off at the end of the year was £429.6m and £4.7m respectively (2000: £469.4m and £4.7m). 22 Notes to the consolidated cash flow statement 2001 2000 £m £m (a) Reconciliation of operating profit to net cash inflow from operating activities Operating profit 134.9 161.1 Depreciation and other amounts written off tangible 93.4 69.4 fixed assets Amortisation charges 25.9 13.0 Write down of investment in joint venture 0.9 - Write down of own shares - 0.8 Profit on sale of non property fixed assets (1.5) (1.2) Increase in stocks (0.3) (2.2) Increase in debtors (22.0) (44.8) Increase/(decrease) in creditors and provisions 30.5 (2.5) Net cash inflow from operating activities 261.8 193.6 (b) Returns on investments and servicing of finance Interest received 4.7 5.8 Interest paid (43.0) (30.0) Interest element of hire purchase contract and finance lease payments (14.9) (14.8) Fees on issue of bank loans - (2.8) Dividends paid to minority shareholders (1.4) (0.4) Net cash outflow from returns on investments and servicing of finance (54.6) (42.2) (c) Capital expenditure and financial investment Purchase of tangible fixed assets (108.1) (78.1) Purchase of fixed asset investments - (4.0) Sale of fixed asset properties 2.4 14.8 Sale of other tangible fixed assets 10.7 3.5 Deposits for rolling stock 7.0 (8.0) Acquisition of investment in own shares - (1.8) Decrease in other current asset investments 37.6 0.5 Net cash outflow from capital expenditure and financial investment (50.4) (73.1) (d) Acquisitions and disposals Purchase of subsidiary undertakings (11.6) (613.2) Net cash acquired with subsidiary undertakings 1.0 5.0 Net overdraft sold on disposal of subsidiary undertaking 22.9 - Purchase of businesses (1.5) (0.7) Sale of subsidiary undertaking 106.1 - Sale of investment in joint ventures 38.5 - Purchase of investment in joint ventures (4.2) (0.4) Net cash inflow/(outflow) from acquisitions and 151.2 (609.3) disposals (e) Financing Issue of share capital 3.4 232.0 Own shares repurchased (31.1) - New bank loans 24.4 668.0 Repayment of amounts borrowed - bank loans (137.7) (230.2) - other loans (16.7) (14.4) Capital element of hire purchase contract and finance lease payments (69.8) (68.2) Net cash (outflow)/inflow from financing (227.5) 587.2 23 Analysis of net debt At Cash flow Acquisitions Other At end beginning non-cash of year of year changes £m £m £m £m £m Liquid 11.2 0.6 - - 11.8 resources Other current 37.6 (37.6) - - - asset investments Current asset 48.8 (37.0) - - 11.8 investments Cash at bank 47.8 18.2 - 0.6 66.6 and in hand Bank (7.2) 4.5 - - (2.7) overdrafts Cash 40.6 22.7 - 0.6 63.9 Bank loans (37.4) 0.8 (0.6) (1.2) (38.4) due within 1 year Bank loans (567.0) 112.5 (1.3) (19.9) (475.7) due after 1 year Obligations under hire purchase contracts and (212.3) 69.8 (0.3) (43.6) (186.4) finance leases Loans and (52.5) 16.7 - (0.1) (35.9) loan notes Financing (869.2) 199.8 (2.2) (64.8) (736.4) Net debt (779.8) 185.5 (2.2) (64.2) (660.7) The Group includes as liquid resources unencumbered bank deposits of maturity of less than one year. 24 Summary of purchase of subsidiary undertakings and businesses Hertz Other acquis Total Total -itions 2001 2000 £m £m £m £m Fair value of net assets acquired: Tangible fixed assets 5.4 0.8 6.2 171.5 Other current assets 2.0 - 2.0 51.5 Cash at bank and in hand 1.0 - 1.0 5.3 Bank overdrafts - - - (0.3) Bank loans and other loans (1.9) - (1.9) (8.3) Obligations under hire purchase - (0.3) (0.3) (17.6) contracts and finance leases Pension funds' creditors - - - (0.2) Other creditors (3.0) (0.3) (3.3) (57.6) Deferred taxation (0.6) 0.7 0.1 5.9 2.9 0.9 3.8 150.2 Goodwill 8.0 1.6 9.6 473.0 10.9 2.5 13.4 623.2 Satisfied by: Cash paid and payable 10.9 2.3 13.2 615.3 Shares including premium - - - 2.7 Loan notes - - - 5.2 Other - 0.2 0.2 - 10.9 2.5 13.4 623.2 25 Sale of subsidiary undertaking 2001 2000 £m £m Net assets sold: Goodwill 37.2 - Tangible fixed assets 55.9 Other current assets 4.8 - Bank overdrafts (22.9) - Pension funds' creditors (5.1) - Other creditors (7.8) - Deferred taxation 0.5 - Minority interests (12.8) - 49.8 - Profit on disposal 55.6 - 105.4 - Satisfied by: Net cash receivable 105.4 -

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FirstGroup (FGP)
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