Interim Results - Part 2.

FirstGroup PLC 7 November 2000 PART 2 Consolidated profit and loss account Unaudited Unaudited Audited 6 months to 6 months to Year to 30 30 31 March September September 2000 2000 1999 Notes £m £m £m Turnover Group turnover - continuing 986.6 756.5 1,795.1 operations Share of turnover of joint 4.6 10.0 22.7 ventures Total turnover 991.2 766.5 1,817.8 Operating profit Group operating profit - continuing 75.9 64.0 161.1 operations Group operating profit before goodwill, exceptional costs and employees' profit 94.2 73.1 190.9 sharing scheme Goodwill amortisation (12.9) (1.1) (13.0) Restructuring and other (3.0) (5.2) (11.6) exceptional costs Employees' profit sharing (2.4) (2.8) (5.2) scheme Group operating profit 75.9 64.0 161.1 Share of operating profits/(losses) - (0.1) 0.4 of joint ventures Share of operating losses of (0.1) - - associate Amortisation of goodwill on (0.1) - - associate Total operating profit 75.7 63.9 161.5 Profit on disposal of fixed assets - - 4.0 4.0 continuing operations Profit on disposal of joint 13.9 - - venture Profit on ordinary activities 89.6 67.9 165.5 before interest Net interest payable and (32.8) (15.2) (44.0) similar charges Profit on ordinary activities 56.8 52.7 121.5 before taxation Tax on profit on ordinary 3 (12.6) (12.4) (24.3) activities Profit on ordinary activities 44.2 40.3 after taxation 97.2 Equity minority interests (2.8) (2.6) (3.7) Profit for the financial period 41.4 37.7 93.5 Equity dividends paid and 4 (11.9) (11.6) (36.6) proposed Retained profit for the 13 29.5 26.1 56.9 financial period Adjusted basic earnings per 5 11.2p 11.2p 28.3p share Adjusted cash earnings per 5 21.3p 18.8p 45.6p share Basic earnings per share 5 9.8p 10.5p 23.6p Diluted earnings per share 5 9.7p 10.4p 23.4p Consolidated balance sheet Unaudited Unaudited Audited 30 30 31 March September September 2000 2000 1999 Notes £m £m £m Assets employed: Fixed assets Intangible assets 6 562.2 553.8 533.8 Tangible assets 7 788.1 700.3 724.8 Investments - Investment in joint ventures - Share of gross assets 38.9 71.0 80.7 - Share of gross liabilities (37.1) (48.0) (56.7) 1.8 23.0 24.0 - Investment in associate 7.8 - - - Other investments 3.2 3.7 7.3 12.8 26.7 31.3 1,363.1 1,280.8 1,289.9 Current assets Stocks 22.9 20.1 21.9 Debtors 8 270.8 248.9 260.8 Investments 9 36.8 101.1 48.8 Cash at bank and in hand 59.7 52.2 47.8 390.2 422.3 379.3 Creditors: amounts falling due within one year 10 (582.3) (512.0) (532.4) Net current (liabilities)/assets Amounts due within one year (217.5) (113.4) (177.8) Amounts due after more than one 8 25.4 23.7 24.7 year Net current liabilities (192.1) (89.7) (153.1) Total assets less current 1,171.0 1,191.1 1,136.8 liabilities Creditors: amounts falling due after more than one year 10 (741.1) (836.5) (750.9) Provisions for liabilities and 11 (37.1) (35.8) (39.9) charges 392.8 318.8 346.0 Financed by: Capital and reserves Called up share capital 12 21.1 21.6 21.7 Share premium account 13 233.6 229.1 233.6 Revaluation reserve 13 3.6 3.3 3.7 Other reserves 13 3.4 2.8 2.8 Profit and loss account 13 118.5 51.9 74.4 Equity shareholders' funds 380.2 308.7 336.2 Equity minority interests 12.6 10.1 9.8 392.8 318.8 346.0 Consolidated cash flow statement Unaudited Unaudited Audited 6 months to 6 months to Year to 30 30 31 March September September Notes 2000 2000 1999 £m £m £m Net cash inflow from operating 14(a) 110.2 54.5 193.6 activities Returns on investments and servicing of finance 14(b) (23.8) (15.8) (42.2) Taxation Corporation tax paid (4.7) (0.3) (11.8) Capital expenditure and financial investment 14(c) (67.9) (119.0) (73.1) Acquisitions and disposals 14(d) 37.6 (611.8) (609.3) Equity dividends paid (24.2) (17.2) (28.8) Cash inflow / (outflow) before use of liquid 27.2 (709.6) (571.6) resources and financing Management of liquid resources Increase in liquid bank deposits 9.5 - (11.2) Financing 14(e) (21.8) 713.5 587.2 Increase in cash in period 14.9 3.9 4.4 Reconciliation of net cash flows to movements in net debt Unaudited Unaudited Audited 6 months to 6 months to Year to 30 30 31 March September September 2000 2000 1999 Notes £m £m £m Increase in cash in period 14.9 3.9 4.4 Cash inflow from increase in debt and hire purchase contract and finance lease financing (9.3) (480.1) (355.2) Movement in current asset investments (12.0) 61.6 10.7 Debt issued on acquisition of subsidiary - (5.2) (5.2) undertakings Debt and hire purchase contracts and finance leases acquired with subsidiary undertakings - (26.1) (25.9) and businesses Inception of hire purchase contracts and finance leases (21.7) (12.9) (53.8) Debt issuance fees paid - - 1.8 Amortisation of debt issuance fees (0.2) (0.5) (0.2) Foreign exchange differences (15.4) 5.5 0.2 Movement in net debt in period (43.7) (453.8) (423.2) Net debt at beginning of period 15 (779.8) (356.6) (356.6) Net debt at end of period 15 (823.5) (810.4) (779.8) Consolidated statement of total recognised gains and losses Unaudited Unaudited Audited 6 months to 6 months to Year to 30 30 31 March September September 2000 2000 1999 £m £m £m Profit for the period attributable to 41.4 37.7 93.5 shareholders Foreign exchange differences 43.0 0.5 - Total recognised gains and losses 84.4 38.2 93.5 Reconciliation of movements in shareholders' funds Unaudited Unaudited Audited 6 months to 6 months to Year to 30 30 31 March September September 2000 2000 1999 £m £m £m Profit for the financial period 41.4 37.7 93.5 Dividends (11.9) (11.6) (36.6) 29.5 26.1 56.9 Shares issued: - in respect of subsidiaries - 2.7 2.7 acquired - in respect of 1 for 4 rights issue - 233.3 231.9 - in respect of exercise of savings related - 0.1 0.1 share options - in respect of QUEST - - 6.0 Foreign exchange differences 43.0 0.5 - Own shares purchased / cancelled (31.1) - (3.7) Write down of own shares held by - - (3.7) QUEST Goodwill written back 2.6 - - Net additions to shareholders' funds 44.0 262.7 290.2 Shareholders' funds at beginning of 336.2 46.0 46.0 period Shareholders' funds at end of period 380.2 308.7 336.2 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 financial information 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 2000 include the results of the US businesses for the six months ended 30 September 2000, the results of the rail businesses for the 24 weeks ended 16 September 2000 and the results of the other businesses for the 27 weeks ended 30 September 2000. These results are unaudited but have been reviewed by the auditors. The comparative figures for the six months to 30 September 1999 are unaudited and are derived from the interim report for the six months ended 30 September 1999, which was also reviewed by the auditors. The comparative figures for the year to 31 March 2000 are not the company's statutory accounts for that financial year. 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. This interim financial information will be sent to all shareholders in November 2000 and will be available to the public at the Corporate Headquarters of the Group, 32a Weymouth Street, London, W1N 3FA. This interim report was approved by the board of directors on 6 November 2000. 2 Principal accounting policies The results for the six months to 30 September 2000 have been prepared using the same accounting policies as were used in the preparation of the annual report for the year ended 31 March 2000. 3 Tax on profit on ordinary activities 6 months to 6 months to Year to 30 September 30 September 31 March 2000 1999 2000 £m £m £m Corporation tax - current year 14.6 9.9 14.7 - prior years - - (2.3) Transfer (from) / to deferred tax - current year (2.0) 2.5 12.8 - prior years - - (0.9) 12.6 12.4 24.3 4 Dividends 6 months to 6 months to Year to 30 September 30 September 31 March 2000 1999 2000 £m £m £m Ordinary shares of 5p each - Interim proposed 12.6 11.6 11.6 - Final paid - - 25.0 - Adjustment to prior year final dividend in respect of shares cancelled (0.7) - - 11.9 11.6 36.6 The interim dividend of 3.0p per ordinary share will be paid on 14 February 2001 to shareholders on the register of members at the close of business on 19 January 2001. 5 Earnings per share Basic earnings per share is based on earnings of £41.4m (six months to 30 September 1999: £37.7m and year to 31 March 2000: £93.5m) and on the weighted average number of ordinary shares of 424.1m (six months to 30 September 1999: 358.0m and year to 31 March 2000: 396.8m) 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 426.7m (six months to 30 September 1999: 361.7m and year to 31 March 2000: 400.1m). 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: 6 months to 30 September 2000 £m Earnings per share p Profit for basic earnings per share 41.4 9.8 calculation Goodwill amortisation 13.0 3.1 Restructuring and other exceptional costs 3.0 0.7 Profit on disposal of joint venture (13.9) (3.3) Taxation effects of adjustments 3.8 0.9 Profit for adjusted basic earnings per 47.3 11.2 share calculation Depreciation 43.8 10.3 Minority interests in this adjustment (0.7) (0.2) Profit for adjusted cash earnings per share 90.4 21.3 calculation 6 months to 30 September 1999 £m Earnings per share p Profit for basic earnings per share calculation 37.7 10.5 Goodwill amortisation 1.1 0.3 Restructuring and other exceptional costs 5.2 1.5 Profit on disposal of fixed assets (4.0) (1.1) Taxation effects of adjustments 0.1 - Profit for adjusted basic earnings per share 40.1 11.2 calculation Depreciation 27.7 7.7 Minority interests in this adjustment (0.4) (0.1) Profit for adjusted cash earnings per share 67.4 18.8 calculation Year to 31 March 2000 £m Earnings per share p Profit for basic earnings per share calculation 93.5 23.6 Goodwill amortisation 13.0 3.3 Restructuring and other exceptional costs 11.6 2.9 Profit on disposal of fixed assets (4.0) (1.0) Taxation effects of adjustments (1.8) (0.5) Profit for adjusted basic earnings per share 112.3 28.3 calculation Depreciation 69.4 17.5 Minority interests in this adjustment (0.8) (0.2) Profit for adjusted cash earnings per share 180.9 45.6 calculation 6 Intangible fixed assets Goodwill £m Cost At 31 March 2000 547.0 Additions 0.6 Exchange rate differences 42.2 At 30 September 2000 589.8 Amortisation At 31 March 2000 13.2 Charge for the period 12.9 Exchange rate differences 1.5 At 30 September 2000 27.6 Net book value At 30 September 2000 562.2 At 31 March 2000 533.8 At 30 September 1999 553.8 7 Tangible fixed assets Land and Passenger Other Assets in Total buildings carrying plant and course of vehicle equip- construc- fleet ment tion £m £m £m £m £m Cost or valuation At 31 March 2000 181.5 924.5 120.4 - 1,226.4 Businesses acquired - 0.3 - - 0.3 Additions 3.0 80.8 12.7 - 96.5 Disposals (1.6) (22.1) (3.1) - (26.8) Exchange rate 1.1 25.0 1.8 - 27.9 differences At 30 September 184.0 1,008.5 131.8 - 1,324.3 2000 Depreciation At 31 March 2000 36.1 389.1 76.4 - 501.6 Charge for period 2.2 35.5 6.1 - 43.8 Disposals (0.3) (19.1) (2.4) - (21.8) Exchange rate 0.5 11.0 1.1 - 12.6 differences At 30 September 38.5 416.5 81.2 - 536.2 2000 Net book value At 30 September 145.5 592.0 50.6 - 788.1 2000 At 31 March 2000 145.4 535.4 44.0 - 724.8 At 30 September 107.9 529.0 36.3 27.1 700.3 1999 8 Debtors 30 September 30 September 31 March 2000 1999 2000 £m £m £m Amounts due within one year Trade debtors 137.0 130.3 139.9 Other debtors 25.3 32.5 24.0 Deposit paid for rolling stock 28.5 30.4 30.4 Pension funds' prepayments 3.0 2.8 3.0 Other prepayments and accrued 51.6 29.2 38.8 income 245.4 225.2 236.1 Amounts due after more than one year Pension funds' prepayments 24.2 22.5 23.6 Other prepayments and accrued 1.2 1.2 1.1 income 25.4 23.7 24.7 270.8 248.9 260.8 9 Current asset investments 30 September 30 September 31 March 2000 1999 2000 £m £m £m Bank deposits 36.8 99.7 48.8 Own shares - 1.4 - 36.8 101.1 48.8 Of the bank deposits, £35.1m (30 September 1999: £34.3m and 31 March 2000: £ 37.6m) supported the Group's commitments (which are guaranteed by two of the Group's bankers) under the rail companies' season ticket bonds. The bank deposits, which are charged to the bank, cannot be reduced to below the amount of the season ticket bonds. The own shares were held by the FirstGroup Employee Benefit Trust. 10 Creditors 30 September 30 September 31 March 2000 1999 2000 £m £m £m Amounts falling due within one year Bank loans and overdrafts 107.9 54.7 44.6 Obligations under hire purchase contracts and finance leases 65.6 59.6 65.3 Loan notes 5.4 11.5 15.6 Trade creditors 111.1 108.2 120.9 Corporation tax 24.7 25.1 14.9 Other tax and social security 18.1 15.4 12.8 Other creditors 22.3 16.7 22.0 Pension funds' creditors 7.2 7.5 7.9 Accruals and deferred income 172.7 167.7 164.8 Season ticket deferred income 34.6 34.0 38.6 Proposed dividends 12.6 11.6 25.0 Dividend payable 0.1 - - 582.3 512.0 532.4 Amounts falling due after more than one year Bank loans Due in more than one year but not more than two years 51.8 100.8 35.5 Due in more than two years but not more than five years 524.3 543.7 531.5 Obligations under hire purchase contracts and finance leases Due in more than one year but not more than two years 60.2 56.5 58.9 Due in more than two years but not more than five years 72.4 88.3 85.9 Due in more than five years 1.3 5.7 2.2 Loan notes Due in more than one year but not more than two years 30.8 41.5 36.5 Due in more than two years but not more than five years 0.3 - 0.4 741.1 836.5 750.9 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. While the contracts vary in length between four and ten years, all new contracts entered into during the period were for five years. Loan notes The loan notes have been classified by reference to the earliest date on which the loan note holders can request redemption. £32.3m (30 September 1999: £ 44.0m and 31 March 2000: £43.6m) of the loan notes are backed up by guarantees provided under the banking facilities. 11 Provisions for liabilities and charges Deferred Insurance Tax Claims Pensions Total £m £m £m £m At 31 March 2000 12.8 15.7 11.4 39.9 Released / provided in the period (2.0) 3.1 0.4 1.5 Utilised in the period - (3.9) (0.3) (4.2) Notional interest - - 0.1 0.1 Exchange rate difference (0.2) - - (0.2) At 30 September 2000 10.6 14.9 11.6 37.1 12 Called up share capital 30 September 30 September 31 March 2000 1999 2000 £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 21.1 21.6 21.7 The number of ordinary shares of 5p each in issue at the end of the period was 420.8m (30 September 1999: 432.4m and 31 March 2000: 433.5m). The changes in the number and amount of issued share capital during the period are set out below (of which further details are given in the Financial Review): Number (m) £m At 31 March 2000 433.5 21.7 Shares cancelled (12.7) (0.6) At 30 September 2000 420.8 21.1 13 Reserves Share premium Revaluation Profit and account reserve loss account £m £m £m At 31 March 2000 233.6 3.7 74.4 Cancellation of shares - - (31.1) Retained profit for the - - 29.5 period Goodwill written back on disposal of joint venture - - 1.6 Goodwill written back on purchase of business - - 1.0 Foreign exchange - 43.0 differences Transfer of depreciation on revalued assets - (0.1) 0.1 At 30 September 2000 233.6 3.6 118.5 Capital redemption Capital Total other reserves reserves reserve £m £m £m At 31 March 2000 0.1 2.7 2.8 Cancellation of shares 0.6 - 0.6 0.7 2.7 3.4 At 30 September 2000 14 Notes to the consolidated cash flow statement 6 months to 6 months to Year to 30 September 30 September 31 March 2000 1999 2000 £m £m £m (a) Reconciliation of operating profit to net cash inflow from operating activities Group operating profit 75.9 64.0 161.1 Depreciation charges 43.8 27.7 69.4 Goodwill amortisation 12.9 1.1 13.0 Write down in value of own shares - - 0.8 Profit on sale of non property fixed (0.9) (0.3) (1.2) assets Increase in stocks (0.3) (0.9) (2.2) Increase in debtors (5.3) (27.3) (44.8) Decrease in creditors and provisions (15.9) (9.8) (2.5) Net cash inflow from operating 110.2 54.5 193.6 activities 6 months to 6 months to Year to 30 30 September 31 March September 1999 2000 2000 £m £m £m (b) Returns on investments and servicing of finance Interest received 2.1 1.7 5.8 Interest paid (18.3) (7.7) (30.0) Interest element of hire purchase contract and finance lease payments (7.6) (7.6) (14.8) Fees on issue of bank loans - (2.2) (2.8) Dividends paid to minority - - (0.4) shareholders Net cash outflow from returns on investments and servicing of (23.8) (15.8) (42.2) finance (c) Capital expenditure and financial investment Purchase of tangible fixed assets (78.4) (61.2) (78.1) Purchase of fixed asset investments - - (4.0) Sale of fixed asset properties 1.4 10.5 14.8 Sale of other tangible fixed assets 4.7 1.6 3.5 Deposits for rolling stock 1.9 (6.9) (8.0) Acquisition of own shares - (1.4) (1.8) (Increase)/decrease in other current asset investments 2.5 (61.6) 0.5 Net cash outflow from capital expenditure and financial investment (67.9) (119.0) (73.1) (d) Acquisitions and disposals Purchase of subsidiary (0.4) (615.6) (613.2) undertakings Net cash acquired with subsidiary undertakings - 4.4 5.0 Purchase of businesses (0.6) (0.1) (0.7) Purchase of investment in joint - (0.5) (0.4) venture Sale of investment in joint 38.6 - - venture Net cash inflow / (outflow) from acquisitions 37.6 (611.8) (609.3) and disposals 6 months to 6 months to Year to 30 30 31 March September September 2000 2000 1999 £m £m £m (e) Financing Issue of share capital - 233.4 232.0 Own shares repurchased (31.1) - - New bank loans 119.9 604.7 668.0 Repayment of amounts borrowed - bank loans (59.3) (82.4) (230.2) (16.1) (13.0) (14.4) - other loans Capital element of hire purchase contract and finance lease payments (35.2) (29.2) (68.2) Net cash (outflow) / inflow from (21.8) 713.5 587.2 financing 15 Analysis of net debt Other At 30 non-cash September At 31 Cash changes 2000 March 2000 flow £m £m £m £m Liquid resources 11.2 (9.5) - 1.7 Other current asset investments 37.6 (2.5) - 35.1 Current asset investments 48.8 (12.0) - 36.8 Cash at bank and in hand 47.8 11.5 0.4 59.7 Bank overdrafts (7.2) 3.4 - (3.8) Cash 40.6 14.9 0.4 55.9 Bank loans due within one year (37.4) (65.8) (0.9) (104.1) Bank loans due after one year (567.0) 5.2 (14.3) (576.1) Obligations under hire purchase contracts and finance leases (212.3) 35.2 (22.4) (199.5) Loans and loan notes (52.5) 16.1 (0.1) (36.5) Financing (869.2) (9.3) (37.7) (916.2) Net debt (779.8) (6.4) (37.3) (823.5) 16 Major non-cash transactions During the period the Group entered into hire purchase contracts in respect of assets with a capital value of £21.7m (6 months to 30 September 1999: £12.9m and year to 31 March 2000: £53.8m). 17 Post balance sheet event Since the period end, £140m of new facilities have been put into place to replace a £150m facility that was due to expire in January 2001. The new facilities comprise 364 day revolving credit facilities with the Group having the option to convert the facilities to two year term loans.

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