Final Results - Year Ended 31 March 2000, Part 3

FirstGroup PLC
16 May 2000

PART 3

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. Both 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:
     

                                                                              
                                          2000                            1999
                                  Earnings per                    Earnings per
                             £m      share (p)                £m     share (p)
  Profit for               93.5           23.6              69.4          19.6
  basic                                                                       
  earnings                                                                    
  per share                                                                   
  calculation                                                                 
  Goodwill                 13.0            3.3                 -             -
  amortisation                                                                
  Restructurin             11.6            2.9              17.9           5.1
  g and other                                                                 
  exceptional                                                                 
  costs                                                                       
  Profit on               (4.0)          (1.0)             (2.0)         (0.5)
  disposal of                                                                 
  fixed assets                                                                
  Taxation                (1.8)          (0.5)             (4.9)         (1.4)
  effects of                                                                  
  these                                                                       
  adjustments                                                                 
  Minority                     -             -             (0.2)         (0.1)
  interests                                                                   
  in these                                                                    
  adjustments                                                                 
  Profit for                                                                  
  adjusted                                                                    
  basic                                                                       
  earnings                                                                    
  per share               112.3           28.3              80.2          22.7
  calculation                                                                 
  Depreciation             69.4           17.5              47.0          13.3
  Minority                (0.8)          (0.2)             (0.8)         (0.2)
  interests                                                                   
  in this                                                                     
  adjustment                                                                  
  Profit for              180.9           45.6             126.4          35.8
  adjusted                                                                    
  cash                                                                        
  earnings                                                                    
  per share                                                                   
  calculation                                                                 
 
10     Intangible fixed assets 
      

                                                               
                                                      Goodwill 
                                                            £m 
                Cost                                           
                At beginning of year                       74.8
                Additions (note 23)                       473.0
                Exchange rate differences                 (0.8)
                At end of year                            547.0 
                Amortisation                                   
                At beginning of year                          -
                Charge for the year                        13.0
                Exchange rate differences                   0.2
                At end of year                             13.2 
                Net book value                                 
                At 31 March 2000                          533.8 
                At 31 March 1999                           74.8

11     Tangible fixed assets 
 

                                                                              
                 Land and   Passenger         Other     Assets in       Total 
                buildings    carrying    plant and      course of             
                               vehicle    equipment     construc-             
                                fleet                        tion             
   
                                                                          
                       £m          £m            £m            £m          £m 
  Cost or                                                                     
  valuation                                                                   
  At                126.3        584.0         79.2          13.5       803.0
  beginning                         
  of year                                                        
  Subsidiary         12.8        282.8         21.4             -       317.0
  undertakings          
  acquired                                                      
  Additions          11.5         82.5         19.8          22.2       136.0 
          
  Disposals         (0.6)       (24.3)        (4.2)             -      (29.1)
                                                                 
  Reclassifica       31.5            -          4.2        (35.7)          -
  tion                              
  Exchange              -         (0.5)           -             -       (0.5)
  rate                                                                  
  differences                                                              
  At end of         181.5         924.5       120.4             -    1,226.4
  year                   
                                                                
  Depreciation                                                                
                                                                              
  At                 29.6         230.7        53.5             -      313.8
  beginning                                       
  of year                                                                   
  Subsidiary          3.7         124.5        17.3             -      145.5
  undertakings                     
  acquired                                                                
  Charge for          3.0          56.8         9.6             -       69.4
  the year                                                     
  Disposals         (0.2)         (22.9)      (4.0)             -     (27.1)
                        
                                                                 
  At end of          36.1          389.1      76.4              -      501.6
  year                                                                        
          
  Net book                                                                    
  value                                                                       
  At 31 March       145.4          535.4      44.0              -      724.8
  2000                                            
                                                                 
  At 31 March        96.7          353.3      25.7           13.5      489.2
  1999                             
                                                                             
      
12     Fixed asset investments 
     

                                                                              
                       Joint            Other             Own                 
                    ventures       investments         shares           Total 
                          £m                £m             £m              £m 
  Shares                                                                      
  Cost                                                                        
  At                      0.6                 -            3.7             4.3
  beginning                                                                   
  of year                                                                     
  Additions                 -               4.0            4.1             8.1
  Cancellatio               -                 -          (3.7)           (3.7)
  n of shares                                                                 
  At end of               0.6               4.0            4.1             8.7

  year                                                                        
  Provision                                                                   
  At                        -                 -              -               -
  beginning                                                                   
  of year                                                                     
  Charge                    -                 -          (0.8)           (0.8)
  At end of                 -                 -          (0.8)           (0.8)
  year                                                                        
  Share of                                                                    
  post                                                                        
  acquisition                                                                 
  reserves                                                                    
  At                    (0.4)                 -              -           (0.4)
  beginning                                                                  
  of year                                                                     
  Share of                0.4                 -              -             0.4
  results                                                                     
  At end of                 -                 -              -               -
  year                                                                        
  Loans                                                                       
  Cost                                                                        
  At                     22.7                 -              -            22.7
  beginning                                                                   
  of year                                                                     
  Additions               0.4                 -              -             0.4
  Exchange                0.3                 -              -             0.3
  differences                                                                 
  At end of              23.4                 -              -            23.4

  year                                                                        
  Total                                                                       
  At 31                  24.0               4.0            3.3            31.3

  March 2000                                                                  
  At 31                  22.9                 -            3.7            26.6
  March 1999                                                                  
 
13     Stocks 

                                                                          
                                                       2000           1999
                                                         £m             £m
      Spare parts and consumables                      19.5           12.0
      Property development work in progress             2.4            6.2
                                                       21.9           18.2
 
14     Debtors 

                                                                           
                                                       2000            1999
                                                         £m              £m
     Amounts due within one year                                           
     Trade debtors                                    139.9            70.2
     Other debtors                                     24.0            33.3
     Deposit paid for rolling stock                    30.4            10.6
     Pension funds' prepayments                         3.0             3.4
     Other prepayments and accrued income              38.8            14.9
                                                      236.1           132.4
     Amounts due after more than one year                                  
     Deposits paid for rolling stock                      -            11.8
     Pension funds' prepayments                        23.6            20.4
     Other prepayments and accrued income               1.1             1.6
                                                       24.7            33.8
                                                      260.8           166.2
 
15     Current asset investments          

                                                       
                                           2000    1999
                                             £m      £m
                          Bank deposits    48.8    38.1
                                                       
 
     Of the bank deposits £37.6m (1999: £37.5m) support the Group's
commitments (which are guaranteed by two of the Group's bankers) under the
rail companies' season ticket bonds to the Director of Passenger Rail
Franchising. The bank deposits, which are charged to the bank, cannot be
reduced to below the amount of the season ticket bonds.
 
16     Cash at bank and in hand     

                                                               
                                            2000           1999
                                              £m             £m
                Ring fenced cash            33.8           36.6
                Other cash                  14.0            6.9
                                            47.8           43.5
 
     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.
 
17     Creditors            

                                                                           
                                                       2000            1999
                                                         £m              £m
      Amounts falling due within one year                                  
      Bank loans and overdrafts                        44.6            28.3
      Obligations under hire purchase                                      
      contracts and finance leases                     65.3            58.1
      Loan notes                                       15.6            13.7
      Trade creditors                                 120.9           101.9
      Corporation tax                                  14.9            17.2
      Other tax and social security                    12.8            11.5
      Other creditors                                  22.0            12.1
      Pension funds' creditors                          7.9             7.7
      Accruals and deferred income                    164.8           129.3
      Season ticket deferred income                    38.6            37.5
      Proposed dividends                               25.0            17.2
                                                      532.4           434.5
           

                                                                              
  Amounts falling due after more than one year                                
  Bank loans                                                                  
  Due in more than one year but not more than two years          35.5        -
  Due in more than two years but not more than five years       531.5    140.0
  Obligations under hire purchase contracts and finance                       
  leases                                                                      
  Due in more than one year but not more than two years          58.9     55.1
  Due in more than two years but not more than five years        85.9     94.0
  Due in more than five years                                     2.2      1.9
  Loan notes                                                                  
  Due in more than one year but not more than two years          36.5     43.2
  Due in more than two years but not more than five years         0.4      3.9
                                                                750.9    338.1
 
18     Provisions for liabilities and charges 
      

                                                                              
                  Deferred         Insurance          Pensions          Total 
                        tax           claims                                  
                         £m               £m                £m             £m 
  At                     3.5             15.2              11.7           30.4
  beginning                                                                   
  of year                                                                     
  Subsidiary           (5.9)                -                 -          (5.9)
  undertaking                                                                
  s acquired                                                                  
  Provided              11.9              6.7               0.1           18.7
  in the year                                                                 
  Utilised                 -            (6.2)             (0.7)          (6.9)
  in the year                                                                
  Notional                 -                -               0.3            0.3
  interest                                                                    
  Advance                3.3                -                 -            3.3
  corporation                                                                 
  tax                                                                         
  utilised                                                                    
  At end of             12.8             15.7              11.4           39.9
  year                                                                        
 
19     Deferred tax 
 

                                                                              
                  Provided          Unprovided       Provided       Unprovided
                       2000              2000            1999             1999
                         £m                £m              £m               £m
  Accelerate           10.8              44.0             8.5             40.3
  d capital                                                                   
  allowances                                                                  
  Other                (0.7)             (2.5)          (4.9)            (1.6)
  timing                                                                    
  difference                                                                  
  s                                                                           
  Trading              (0.4)             (2.4)          (2.5)            (0.8)
  losses                                                                    
  Advance                                                                     
  corporatio                                                                  
  n tax                                                                       
  recoverabl           (0.2)                -           (3.4)                -
  e                                                                          
  Unrealised            3.3               2.1             5.8              2.4
  capital                                                                     
  gains                                                                       
  Deferred             12.8              41.2             3.5             40.3
  tax                                                                         
  liability                                                                   
 
20     Reserves  
 

                                                                              
                              Share           Revaluation          Profit and 
                            premium                reserve       loss account 
                             account                                          
                                  £m                    £m                 £m 
  At beginning                      -                   3.3               25.3
  of year                                                                     
  Rights issue                  227.6                     -                  -
  Exercise of                     0.1                     -                  -
  savings                                                                     
  related share                                                               
  options                                                                     
  Issue of                        5.9                     -              (3.7)
  shares to                                                                   
  QUEST (i)                                                                   
  Cancellation                      -                     -              (3.7)
  of shares (ii)                                                              
  Transfer of                       -                   0.4              (0.4)
  realised                                                                    
  revaluation                                                                 
  reserve                                                                     
  Retained                          -                     -               56.9
  profit for                                                                  
  the year                                                                    
  At end of year               233.6                   3.7                74.4

 

                                                                              
                              Capital           Capital           Total other 
                           redemption           reserves             reserves 
                              reserve                                         
                                   £m                 £m                   £m 
  At beginning                     0.1                  -                  0.1
  of year                                                                     
  Shares issued                      -                2.7                  2.7
  in relation to                                                              
  acquisitions                                                                
  At end of year                   0.1                2.7                  2.8

 
     Notes:
 
 
(i)  2,089,200 ordinary shares were issued to the FirstGroup plc Qualifying
Employee Share Ownership Trust at a price of £2.87 and then written down to
the option price receivable. 
(ii)1,000,000 ordinary shares previously held by Mainline were 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 £464.6m and £4.7m respectively (1999: £464.6m and £4.7m) and of positive
goodwill arising from acquisitions of businesses written off was £2.3m (1999:
£2.3m).

21     Notes to the consolidated cash flow statement 
 

                                                                              
                                                           2000           1999
                                                             £m             £m
                      (a)                                                     
                      Reconciliation of                                       
                      operating profit                                        
                      to net                                                  
                      cash inflow from                                        
                      operating                                               
                      activities                                              
                      Operating profit                    161.1          121.9
                      Depreciation and                     82.4           47.0
                      amortisation                                            
                      charges                                                 
                      Write down in                         0.8              -
                      value of own                                            
                      shares                                                  
                      Profit on sale of                   (1.2)          (0.8)
                      non property                                            
                      fixed assets                                            
                      (Increase)/decreas                  (2.2)            1.4
                      e in stocks                                             
                      Increase in                        (44.8)          (8.7)
                      debtors                                                 
                      Decrease in                         (2.5)         (10.6)
                      creditors and                                           
                      provisions                                              
                      Net cash inflow                     193.6          150.2
                      from operating                                          
                      activities                                              
                      (b) Returns on                                          
                      investments and                                         
                      servicing of                                            
                      finance                                                 
                      Interest received                     5.8            6.2
                      Interest paid                      (30.0)         (18.5)
                      Interest element                                        
                      of hire purchase                                        
                      contract                                                
                      and finance lease                  (14.8)         (14.9)
                      payments                                                
                      Fees on issue of                    (2.8)          (0.2)
                      bank loans                                              
                      Dividends paid to                   (0.4)          (1.0)
                      minority                                                
                      shareholders                                            
                      Net cash outflow                                        
                      from returns on                                         
                      investments                                             
                      and servicing of                   (42.2)         (28.4)
                      finance                                                 
  (c) Capital expenditure and financial                                       
  investment                                                                  
  Purchase of tangible fixed assets                      (78.1)         (42.2)
  Purchase of fixed asset investments                     (4.0)              -
  Sale of fixed asset properties                           14.8            8.8
  Sale of other tangible fixed assets                       3.5            1.7
  Deposits for rolling stock                              (8.0)         (22.4)
  Acquisition of own shares                               (1.8)              -
  Decrease/(increase) in other current                      0.5          (2.2)
  asset investments                                                           
  Net cash outflow from capital                                               
  expenditure                                                                 
  and financial investment                               (73.1)         (56.3)
  (d) Acquisitions and disposals                                              
  Purchase of subsidiary undertakings                   (613.2)         (63.3)
  Net cash acquired with subsidiary                         5.0            1.6
  undertakings                                                                
  Purchase of businesses                                  (0.7)          (2.5)
  Purchase of investment in joint                         (0.4)         (22.8)
  ventures                                                                    
  Net cash outflow from acquisitions                    (609.3)         (87.0)
  and disposals                                                               
 
21     Notes to the consolidated cash flow statement (continued)
 

                                                                       
                                                         2000   1999   
                                                           £m   £m     
        (e) Financing                                                  
        Issue of share capital                          232.0       0.1
        New bank loans                                  668.0     136.0
        Repayment of amounts borrowed - bank loans    (230.2)    (31.7)
        - other loans                                  (14.4)    (23.4)
        Capital element of hire purchase contract                      
        and finance lease payments                     (68.2)    (48.1)
        Net cash inflow from financing                  587.2      32.9
 
22     Analysis of net debt 
 

                                                                              
                      At      Cash  Acquisi-tions         Other        At end 
             beginning      flow                        Non-cash      of year 
               of year                                   Changes              
                     £m        £m               £m            £m           £m 
  Liquid               -      11.2                -             -        11.2 
  resource                                                                    
  s                                                                           
  Other current     38.1     (0.5)                -             -        37.6 
  asset                                                                      
  investments                                                                 
  Current           38.1      10.7                -             -        48.8 
  asset                                                                       
  investme                                                                    
  nts                                                                         
  Cash at           43.5       4.3                -             -        47.8 
  bank                                                                        
  and in                                                                      
  hand                                                                        
  Bank             (7.3)       0.1                -             -       (7.2) 
  overdraf                                                                   
  ts                                                                          
  Cash              36.2       4.4                -             -        40.6 
  Bank            (21.0)     (9.5)            (7.4)           0.5      (37.4)
  loans                              
  due                                                                         
  within                                                                      
  1 year                                                                      
  Bank           (140.0)   (428.3)                -           1.3     (567.0)
  loans               
  due                                                                         
  after 1                                                                     
  year                                                                        
  Obligations                                                                 
  under hire                                                                  
  purchase                                                                    
  contracts and  (209.1)      68.2           (17.6)        (53.8)     (212.3)
  finance leases                  
  Loans           (60.8)      14.4            (0.9)         (5.2)      (52.5)
  and                                         
  loan                                                                        
  notes                                                                       
  Financing      (430.9)   (355.2)           (25.9)        (57.2)     (869.2)
                    
  Net debt       (356.6)   (340.1)           (25.9)        (57.2)     (779.8)
                       

     The Group includes as liquid resources unencumbered bank deposits of
maturity of less than one year.
 
23     Summary of purchase of subsidiary undertakings and businesses 
 

                                                                              
             Southern     Ryder      Bruce         Other     Total      Total 
            National                             Acquis       2000       1999 
                                               -itions 1                      
                   £m        £m         £m           £m         £m         £m 
                                                                              
  Fair                                                                        
  value                                                                       
  of net                                                                      
  assets                                                                      
  acquired                                                                    
  :                                                                           
  Tangible         8.3      139.2      23.0          1.0       171.5      34.2
  fixed                      
  assets                                                                      
  Fixed              -         -          -            -          -        3.7
  asset                                                                       
  investme                                                                    
  nts                                                                         
  Other            2.0       48.4       0.8          0.3        51.5       5.1
  current                                                                  
  assets                                                                      
  Cash at          0.5        4.7       0.1             -        5.3       1.6
  bank                                                                     
  and in                                                                      
  hand                                                                        
  Bank               -         -          -        (0.3)       (0.3)        - 
 overdraf                                                   
  ts                                                                          
  Bank               -      (0.9)     (7.4)           -        (8.3)     (5.5)
  loans                       
  and                                                                         
  other                                                                       
  loans                                                                       
  Obligati                                                                    
  ons            (3.6)      (0.2)    (13.6)        (0.2)      (17.6)    (18.9)
  under            
  hire                                                                       
  purchase                                                                    
  contract                                                                    
  s and                                                                       
  finance                                                                     
  leases                                                                      
  Pension        (0.2)        -         -            -         (0.2)     (2.0)
  funds'           
  creditor                                                                   
  s                                                                           
  Other          (3.0)     (52.6)     (1.5)        (0.5)      (57.6)    (20.8)
  creditor         
  s                                                                        
  Deferred         -          1.5       -           4.4         5.9        0.5

  taxation                                                                    
                                                                              
  Other            -          -         -            -           -       (6.1)
  provisio                                                                   
  ns                                                                          
  Minority         -          -         -            -           -       (0.1)
  interest                                                                   
  s                                                                           
                   4.0      140.1       1.4         4.7        150.2     (8.3)
                    
  Goodwill         6.8      461.8       6.8         (2.4)      473.0      74.8
                              
                  10.8      601.9       8.2          2.3       623.2      66.5
                          
                                                                              
  Satisfie                                                                    
  d by:                                                                       
  Cash             2.9      601.9       8.2          2.3       615.3      36.6
  paid                        
  and                                                                         
  payable                                                                     
  Shares           2.7         -         -            -          2.7      27.2
  includin                                                                  
  g                                                                           
  premium                                                                     
  Loan             5.2         -         -            -          5.2         -
  notes                                                                     
  Existing         -           -         -            -           -        2.7
  investme                                                                    
  nt                                                                          
                  10.8      601.9       8.2         2.3        623.2      66.5
                         
                                                                              
 
     1 Including adjustments to goodwill on prior year acquisitions in
relation to revised estimates for deferred taxation.