Interim Results - Pt.1

FirstGroup PLC 9 November 1999 PART 1 FIRSTGROUP PLC RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 1999 These results have been overshadowed by the tragic rail accident which happened at Ladbroke Grove on 5 October. The Group has extended its deepest sympathy to the victims and their families. This accident will have significant consequences for the whole of the rail industry. We are working closely with Government and the rest of the industry in order to help restore public confidence in the railways and contribute fully to the various inquiries into the accident. Summary of results for the period * $1 billion acquisitions in North America successfully completed * High level of investment in all divisions * Increased turnover, profit and cashflow * Bus volumes maintained - Glasgow 'Overground' plus 4% * Rail passenger volumes remain strong * Turnover £757m* up 10% * Profit before tax £55.0m* and ** up 21% * Adjusted basic earnings per share 11.2p up 24% * Net interim dividend per share 2.7 up 12.5% * Cash generation £101m*** up 22% * Investment of £73.5m up 43% * Including 2 weeks for FirstGroup America ** Before goodwill, restructuring and other exceptional items *** Group operating profit before ESOP, goodwill and restructuring and other exceptional costs, plus depreciation Commenting, FirstGroup Chief Executive, Moir Lockhead said: Results 'The Group is committed to the continuous improvement of the services we offer to our customers. This includes, above all, safety and reliability and we have a strong record of maintaining high levels of investment in new equipment and staff training and development to achieve this. This is another set of good results for the Group. The successful completion of our first acquisitions in North America now adds a significant additional strength to our business and I look forward with confidence to the continued expansion of the Group. We have a strong, experienced management team who are focused on delivering improved customer service and value for shareholders. The outlook for trading in both the UK and the US is very encouraging.' Ladbroke Grove rail accident 'I would like to pay tribute to the emergency services, our own staff, passengers and members of the local community who did so much to help those affected. First Great Western immediately organised a comprehensive support effort for passengers, relatives, staff and the emergency teams, both on site, at reception centres and at hospitals providing counselling, legal and financial help. This tragic accident will have significant consequences for the whole of the rail industry. We are working closely with Government and the rest of the industry in order to help restore public confidence in the railways and contribute fully to the various inquiries into the accident.' Enquiries: FirstGroup plc Moir Lockhead, Group Chief Executive Tel: 0207 291 0502 Tony Osbaldiston, Group Finance Director Tel: 0207 291 0510 Michael Mitchell, Corporate Communications Director Tel: 0207 291 0504 Brunswick Craig Breheny Tel: 0207 404 5959 Chief Executive's statement Results for the period In the six months to 30 September 1999 profit before tax and goodwill amortisation was £55.0m (1998: £45.4m) an increase of 21% compared to the same period last year, before restructuring costs of £5.2m (1998: £7.3m) and fixed asset disposal profits of £4.0m (1998: £nil). Adjusted basic earnings per share rose to 11.2p per share (1998: 9.0p per share as adjusted for the bonus element of the rights issue) an increase of 24%. The board has declared an interim dividend of 2.7p per share (1998: 2.4p per share as adjusted for the bonus element of the rights issue) an increase of 12.5% over 1998. This will be paid on 16 February 2000 to shareholders on the register on 10 January 2000. Highlights The first half year has seen the Group take an important strategic step into the USA transportation market through the acquisitions of both Ryder Public Transportation Services (which will operate as FirstGroup America) and Bruce Transportation Group, Inc. In the UK we continued to grow the core bus business with the acquisition of the GAG bus group which operates some 400 buses in Devon, Somerset and Dorset. In June we were pleased to announce that we have been selected as the preferred bidder for the City of Edinburgh Rapid Transit Project (CERT). This exciting project will enable the Group to capitalise on its unique expertise in the design, implementation and operation of guided busways. During the summer the first trams were tested in Croydon for the new Tramlink which is on target to open by the end of 1999. The performance in our rail division during this period has exceeded our expectations and rail volumes continue to grow strongly. Performance at Bristol International Airport has also continued to be very encouraging and we look forward to the opening of the new terminal in March 2000. Bus Division For the six months to 30 September 1999 turnover increased by 13% to £367.2m (1998: £324.4m) and adjusted operating profit by 15% to £50.8m (1998: £44.2m). Total passenger volumes have increased by approximately 1.0% in the period with underlying volumes remaining flat. During the half year we have invested a further £44.6m in 411 new vehicles within the bus division bringing the total investment to over £280m in some 3000 new buses over the last 4 years since the creation of FirstGroup. Excluding the effect of new acquisitions in the last 6 months the average age of our fleet has been reduced to 8.0 years. For the total fleet including acquisitions the average age is 8.2 years. We continue to work closely with local authorities to develop local transport plans. We are the leading partner with local government in the provision of Quality Partnerships across the country. We now have some 40 Quality Partnerships in place generating a turnover of over £50 million. In Glasgow we are particularly encouraged by the initial response to the new simplified network structure which was launched in August as 'The Overground'. Passenger volumes have increased by 4%, which is the first increase in Glasgow for 20 years. Through our TwinTrack initiative to assist local authorities in the funding of new projects we are involved in projects throughout the UK including Glasgow, Aberdeen, Edinburgh, Bradford, Sheffield, Bristol, Swansea, Portsmouth, Manchester and Leicester. In Leeds construction is about to commence on the East Leeds Guided Busway. This is a £10 million scheme to which FirstGroup is contributing £3.75 million, making it the largest TwinTrack initiative to date. We were very pleased to learn of the announcement last month by the Scottish Transport minister of additional transport infrastructure funding in Scotland including £3.3m in Aberdeen and £6.6m in Glasgow. Rail Division For the six months to 30 September 1999, rail division turnover including franchise grants increased to £350.6m (1998: £348.1m). Operating revenue was £247.5m (1998: £233.3m). Operating profit increased by £3.9m to £17.8m (1998: £13.9m) despite the reduction in franchise grants of £11.7m. Passenger income increased by 5.7% in First Great Eastern, 11.9% in First Great Western and 5.5% in First North Western. Performance over the period has continued to improve. By the end of the half year, all of our train operating companies were exceeding passenger charter average reliability and punctuality triggers. As part of our £210 million investment programme in our rail division, pre- delivery testing has now commenced on seventy new vehicles which are due to enter service on First North Western in early 2000. These vehicles, which will incorporate state of the art safety and comfort features, will produce a step-change in the travelling environment for customers in North Wales and the North West of England. Later in 2000 deliveries of a further thirty vehicles for First Great Western, which will provide extra capacity on routes to the South West and Wales, will commence. Airport Bristol International Airport continues to perform well with operating profit increased by 7.6% to £7.1m (1998: £6.6m) and passenger volumes up by 9%. The Airport is expected to handle in excess of 2 million passengers per annum for the first time during this year. International scheduled passenger numbers have increased by 10% as a result of additional frequencies from Bristol to Dublin by Ryanair and larger aircraft operating the key hub routes of Brussels and Amsterdam. The new terminal is due to open at the beginning of March and is within timeframe and budget. In addition work is underway on the £5 million project to divert the A38 road away from the airport to allow the installation of Category III all weather landing system. America FirstGroup America (formerly Ryder Public Transportation Services) operates some 10,000 school buses in 24 states in the USA making it the second largest operator in this market. It is also the second largest provider of public transit contracting and management in the USA and is the largest private sector provider of public fleet maintenance services. Bruce Transportation operates over 1000 school buses in New England and was the largest private operator in the region. Completion of both these acquisitions took place in September 1999. The FirstGroup America management board has been constituted to include the Finance Director of FirstGroup plc and myself as well as a senior financial controller from the UK. These acquisitions give the Group a strong platform for growth within North America. Both companies enjoy strong reputations within the industry and we anticipate that we will be able to develop the businesses by organic growth and further acquisition in the highly fragmented school bus market. Joint Ventures In Hong Kong passenger volumes continue to grow strongly and we are pleased with the progress that has been made in developing the business and our contacts in the region. We anticipate tendering for further bus routes in Hong Kong and we believe that there are significant opportunities for further development in mainland China. On 2 November New World First Bus announced that it had acquired The Hong Kong and Yaumati Ferry Company Ltd which operates ferry services in Hong Kong. During the summer the first trams were tested for Croydon Tramlink and we are ready to commence operations when the construction and safety testing work is complete, which is anticipated to be within the next few weeks. We believe that the experience we have gained from the building and development of this scheme will stand us in good stead to take part in further light rail projects both in the UK and overseas. Management On the 20 September, Trevor Smallwood retired as Chairman of the Group. The board would like to thank Trevor for his outstanding contribution to the creation and success of FirstGroup and wish him all the best for the future. A new non-executive chairman will be appointed in due course together with a further non-executive director to replace Bill Foreman who left the board at the end of August. The board has been strengthened by the appointment today of Dr Mike Mitchell as Managing Director of the rail division. Dr Mitchell, who began his career in the rail industry, has been with the Group for 5 years. He worked in both our bus and rail operations most recently as Deputy Director of the rail division. He will be responsible for co-ordinating the Group's rail operations including all operational and safety matters. Outlook In the UK we look forward to the introduction of the Transport Bill which will bring forward the ideals of the Government's White Paper on integrated transport. In America we believe that there are excellent opportunities for further expansion of the Group's activities. We are optimistic about the outlook in both the UK and USA and remain confident about trading during the second half of the year. Moir Lockhead Chief Executive 9 November 1999 Financial review Overall The financial performance in the half year to 30 September 1999 continues FirstGroup's record of strong earnings growth with a rise in adjusted basic earnings per share before goodwill of 24% to 11.2p. In the four and a half years since the formation of FirstGroup in 1995, the annual growth in earnings per share has averaged 30%. Turnover in the half year increased by 9.6% or £66.2m to £756.5m, of which £54.1m is attributable to acquisitions. Operating profit before ESOP, goodwill and one-off restructuring costs was £73.1m an increase of 21% or £12.7m, of which £8.4m was due to acquisitions. Trading in the first half was ahead of expectations, particularly as a result of strong passenger volumes in the rail division. In the UK bus division, absolute volumes increased by 1.0%, reflecting net gains in routes and small in-fill acquisitions. Trend volumes overall were at the same level as last year. Initiatives under Quality Partnerships performed particularly well. The 'Overground' initiative in Glasgow had led to encouraging volume growth, although the benefits of this will come through in the second half. Bus margins continue to improve. Despite the loss of duty free sales to passengers travelling within the European Union, BIA performed strongly again as a result of increased passenger volumes. The results for the first half include two weeks' trading by the US acquisitions. Early experience after completing the Ryder acquisition leads us to be yet more confident of the potential to enhance shareholder value through volume growth, margin enhancement and in-fill acquisitions. Bruce Transportation is proving to be a very great success, having already increased its annualised sales by 25% through contract gains. Divisional results 6 months to 6 months to Year to 30 September 30 September 31 March 1999 1999 1998 Turn- Operat- Operat- Turn- Operat-Operat-Turn- Operat-Operat- over ing ing over ing ing over ing ing profit margin profit margin profit margin * * * * * * £m £m % £m £m % £m £m % UK Bus Division 367.2 50.8 13.8 324.4 44.2 13.6 686.1 102.1 14.9 North America Division 18.0 2.7 15.0 - - - - Rail Division 350.6 17.8 5.1 348.1 13.9 4.0 753.3 41.6 5.5 Bristol Inter- national Airport 18.1 7.1 39.2 16.8 6.6 39.3 28.6 9.7 33.9 Other** 2.6 (5.3) 1.0 (4.3) 2.4 (8.6) ______________________________________________________________ Total 756.5 73.1 9.7 690.3 60.4 8.8 1,470.4 144.8 9.8 * Before ESOP, goodwill and restructuring and other exceptional costs ** Tram operations, central management, Group information technology and other items In the UK bus division, including new acquisitions, overall margins improved by 0.2% to 13.8%. Notwithstanding cost pressures, we believe that further margin enhancement is possible. The bus business has a seasonal bias favouring the second half, which in consequence enjoys better margins. The rail division improved profit by £3.9m against a background of subsidy reductions of £11.7m. All the TOCs achieved volume gains with absolute growth being 11.9% at FGW, 5.7% at FGE and 5.5% at FNW. It should be noted that in the half year the rail results incorporate one day less than the comparative period. Inevitably the financial implications of the tragic accident at Ladbroke Grove must be considered. As the First Great Western train was proceeding in accordance with a green signal we do not expect the direct financial consequences arising from the accident to be borne by First Great Western. To the extent that losses do fall upon First Great Western, adequate levels of insurance are available, including consequential loss and loss of revenue for up to two years. The longer term effects are more difficult to assess, particularly on passenger confidence. The earliest indications are that passengers are returning as services get back to normal. However, with the human consequences of the accident uppermost in all our minds, it is too early to make a more definitive statement. BIA continued to perform strongly with passenger growth of 8.9%. Owing to the seasonality of the leisure market, approximately 70% of its profit is earned in the first half. The worse than expected impact of the loss of duty free within the EU was offset by increased passenger charges and volumes. Joint ventures New World FirstBus (NWFB), the 26% joint venture in Hong Kong with New World Developments, completed its first year of trading. The results have been in line with our expectations, with a small loss (Group share £0.2m) being incurred in the half year. Double-digit operating margins are now being achieved alongside very high customer satisfaction at the transformation of this franchise. Tramtrack Croydon, in which we have a 20% interest, has virtually completed construction of what will be the first tram system in London for nearly 50 years. The Group will operate the trams on behalf of the joint venture company through a wholly owned subsidiary, Tram Operations Limited, and £1.7m of turnover is included for this company in Other activities in the first half. Restructuring and other exceptional costs Restructuring and other exceptional costs of £5.2m were incurred in the half year. These include the £1.5m fine incurred by First Great Western in connection with the Southall accident (which predates FirstGroup's ownership of Great Western) and £2.9m for the rationalisation programmes at First Great Western and First North Western. Other restructuring costs included profit improvement plans at Southern National and North Devon. Interest The net interest charge for the half year was £15.2m against £12.9m in the same period last year, the rise principally reflecting the increases in net debt arising from acquisitions and the investment programme. The interest charge is covered 6.6 times by cash generation. Taxation The taxation charge for the half year has been based on the estimated likely effective rate for the full year by division. The low effective rate of 23.5% reflects the high level of investment that has taken place, particularly in new buses. The overall effective rate is expected to be lower for the full year with the inclusion of a significant level of profits from the US. The goodwill amortisation on Ryder is fully tax deductible in the USA and is expected to absorb most of the US profits in the medium term. Acquisitions During the first half, the Group made its first acquisitions in America. On 13 September 1999 the Group completed its acquisition of Ryder Public Transportation Services, Inc. for US$940m. The acquisition was financed partly by a £238m (net £233m) rights issue and the remainder by debt. The provisional goodwill figure is £466m, although this may be revised during the second half. On 14 September 1999 the Group also acquired Bruce Transportation Group, Inc. (BTG), a school bus operator in New England, for US$12.9m, paid in cash. Goodwill provisionally amounted to £6.3m. Also, on 8 April 1999 the Group acquired GAG Limited, a bus and coach operator in the South West of England. The total consideration of £10.6m was satisfied by £2.7m in cash, £5.2m in loan notes and 657,734 ordinary shares in FirstGroup. Goodwill arising is provisionally £6.8m. The goodwill arising on each of these acquisitions is being amortised over 20 years. Cash flow and investment in the business Cash generation (operating profit, before ESOP, goodwill and one off costs, plus depreciation) rose from £82.4m to £100.8m. Capital expenditure for the period amounted to £73.5m. This included £44.6m for 411 new vehicles, with a further £44m (nearly 400 new vehicles) committed for the second half of the year. Expenditure on the new terminal and related improvements at Bristol International Airport was £13.6m in the period, taking the total to date to £27.1m. The terminal is now nearing completion and is expected to be opened within budget and on timetable in March 2000. This will double the existing capacity of BIA and considerably enhance the value of FirstGroup's investment. A deposit of £6.9m was paid towards the purchase of 30 diesel train vehicles for First Great Western. This is in addition to the order for 110 vehicles that was placed last year and against which a £22.4m deposit was paid. It is intended to finance these trains in the conventional manner through operating leases with the rolling stock companies during the current financial year. Net debt Net debt increased in the half year to £810m. This mainly reflected the £643m increase in debt arising from the acquisitions of Ryder and Bruce in the US and GAG Limited in the UK, less the £233m net proceeds of the rights issue. In addition, there was a high level of capital investment plus an increase in working capital due to seasonality which will reverse in the second half. In line with the policy of reducing exposure to interest rate risk, additional interest rate swaps have been put in place to cover the higher level of debt. Over 70% of the net debt is now on fixed terms. Borrowings include bank loans of US$250m to hedge the net assets of the US businesses. Analysis of net debt Fixed Variable Total £m £m £m _____________________________________________________________________ Cash - 20.8 20.8 Cash backing guarantees - 65.4 65.4 Rail ring-fenced cash - 31.4 31.4 Rail season ticket bonded cash - 34.3 34.3 Sterling bank loans and overdrafts - (526.3) (526.3) US dollar bank loans - (152.2) (152.2) Hong Kong dollar bank loans - (20.7) (20.7) HP and finance leases (161.6) (48.5) (210.1) Loan notes (8.8) (44.2) (53.0) Interest rate swaps (427.2) 427.2 - _____________________________________________________________________ Total (597.6) (212.8) (810.4) _____________________________________________________________________ Balance sheet and net assets Net assets increased from £46.0m to £308.7m, a rise of £262.7m. This reflects the £233.3m rights issue. As a result of the goodwill written off in previous years of £462m, the balance sheet does not reflect the value of the business and the Board believes that the Group's financial strength lies in its highly dependable cash flows. Shares in issue The total number of shares in issue increased by 87.2m to 432.4m, due to the 1 for 4 rights issue and the shares issued as part of the acquisition of GAG Limited. The average number of shares in issue for the period (excluding own shares held in a subsidiary) was 358.0m. On the basis that the number of shares remain unchanged in the second half of the year, the average number in issue for the full year would be 396.8m. The adjustment to comparative per share ratios which has been made to reflect the bonus element of the rights issue is a decrease of 3%. Dividend The interim dividend is 2.7p for ordinary shares against 2.4p last year (after adjustment for the bonus elements of the rights issue), an increase of 12.5%, which is covered 3.3 times. Year 2000 An executive committee sponsored by the Group Finance Director was established with responsibility to ensure that all operating companies within the Group have identified the systems (including those using embedded chips) which require change and are associated with critical functions. The work to date has been reviewed by external consultants and formally reported to the board. The UK Bus division and its subsidiaries together with Bristol International Airport have completed a full assessment of their readiness for Year 2000. Their critical systems have been tested and, where appropriate amended, and are now considered to be compliant. This includes the underlying hardware and operating software. Suitable contingency plans have been or are being prepared. Most of the systems used by our rail businesses are provided by third parties contracted to provide similar systems to the whole rail industry. We have actively participated on all appropriate rail Year 2000 committees in order to ensure that FirstGroup's best interests are being served. Year 2000 compliance for the railways is being coordinated by the Rail Millennium Programme Office, which has reported that the industry is now Millennium compliant. In the opinion of the Office of the Rail Regulator, 100% of the country's railways operations are now Year 2000 compliant and pose no risk of material disruption. All business critical and non-critical systems used by FirstGroup America have been assessed for Year 2000 compliance. All critical computer hardware has had any necessary changes made, as has all locally supported application software, with two small exceptions. These exceptions are currently undergoing final testing prior to installation. Compliance statements are being received from all critical suppliers, including Ryder System Inc., who provide a number of key systems on a contracted bureau basis. Business contingency planning is well advanced, with all local plans currently being reviewed by senior management. Accounting Standards There is one new accounting standard for the Group to adopt in the current year, which is FRS 15, Tangible Fixed Assets. The only significant impact of the standard on the Group is in the area of revaluation of fixed assets. The standard requires that each class of tangible fixed assets is either revalued annually or not at all. The policy that is being adopted is not to revalue in future, although as permitted by the standard, properties that have been revalued in the past will retain the existing book values. Adoption of the standard has no other material impact on the Group. Tony Osbaldiston Group Finance Director 9 November 1999 Consolidated profit and loss account Unaudited Unaudited Audited 6 months to 6 months to Year to 30 30 31 March September September 1999 Notes 1999 1998 £m £m £m Turnover Continuing operations 729.7 690.3 1,470.4 Acquisitions 26.8 - - _______ _______ _______ Group turnover 756.5 690.3 1,470.4 Share of turnover of joint ventures 10.0 1.2 9.9 _______ _______ _______ Total turnover 766.5 691.5 1,480.3 Operating profit Continuing operations 61.0 51.1 121.9 Acquisitions 3.0 - - _______ _______ _______ Group operating profit 64.0 51.1 121.9 _______ _______ _______ Group operating profit before goodwill, exceptional costs and employees' profit sharing scheme 73.1 60.4 144.8 Goodwill amortisation (1.1) - - Restructuring and other exceptional costs (5.2) (7.3) (17.9) Employees' profit sharing scheme (2.8) (2.0) (5.0) _______ _______ _______ Group operating profit 64.0 51.1 121.9 _______ _______ _______ Share of operating losses of joint ventures (0.1) (0.1) (0.4) _______ _______ _______ Total operating profit 63.9 51.0 121.5 Profit on disposal of fixed assets - continuing operations 4.0 - 2.0 _______ _______ _______ Profit on ordinary activities before interest 67.9 51.0 123.5 Net interest payable and similar charges (15.2) (12.9) (28.3) _______ _______ _______ Profit on ordinary activities before taxation 52.7 38.1 95.2 Tax on profit on ordinary 3 activities (12.4) (9.3) (22.4) _______ _______ _______ Profit on ordinary activities after 40.3 28.8 72.8 taxation Equity minority interests (2.6) (2.2) (3.4) _______ _______ _______ Profit for the financial period 37.7 26.6 69.4 Equity dividends paid and 4 proposed (11.6) (8.9) (26.1) _______ _______ _______ Retained profit for the 13 financial period 26.1 17.7 43.3 ======= ======= ====== Adjusted basic earnings 5 per 11.2p 9.0p 22.7p share Adjusted cash earnings per 5 share 18.8p 15.2p 35.8p Basic earnings per share 5 10.5p 7.6p 19.6p Diluted earnings per share 5 10.4p 7.5p 19.4p ======= ======= ====== Consolidated balance sheet Unaudited Unaudited Audited 30 September 30 September 31 March 1999 1998 1999 Notes £m £m £m Assets employed: Fixed assets Intangible assets 6 553.8 75.1 74.8 Tangible assets 7 700.3 463.5 489.2 Investments - Joint ventures - Share of gross assets 71.0 48.5 60.4 - Share of gross liabilities (48.0) (28.3) (37.5) _______ ______ ______ 23.0 20.2 22.9 - Other 3.7 3.7 3.7 _______ ______ ______ 26.7 23.9 26.6 _______ ______ ______ 1,280.8 562.5 590.6 _______ ______ ______ Current assets Stocks 20.1 22.0 18.2 Debtors 8 248.9 183.6 166.2 Investments 9 101.1 38.9 38.1 Cash at bank and in hand 52.2 39.0 43.5 _______ ______ ______ 422.3 283.5 266.0 Creditors: amounts falling due within one year 10 (512.0) (425.7) (434.5) _______ ______ ______ Net current liabilities) /assets Due within one year (113.4) (165.0) (202.3) Amounts due after more 8 than one year 23.7 22.8 33.8 _______ ______ ______ Net current liabilities (89.7) (142.2) (168.5) _______ ______ ______ Total assets less current liabilities 1,191.1 420.3 422.1 Creditors: amounts falling due after more than one 10 year (836.5) (360.7) (338.1) Provisions for liabilities 11 and charges (35.8) (31.7) (30.4) _______ ______ ______ 318.8 27.9 53.6 ======= ====== ====== Financed by: Capital and reserves Called up share capital 12 21.6 17.3 17.3 Share premium account 13 229.1 - - Revaluation reserve 13 3.3 3.7 3.3 Other reserves 13 2.8 0.1 0.1 Profit and loss account 13 51.9 (0.7) 25.3 _______ ______ ______ Equity shareholders' funds 308.7 20.4 46.0 Equity minority interests 10.1 7.5 7.6 _______ ______ ______ 318.8 27.9 53.6 ======= ====== ====== Consolidated cash flow statement Unaudited Unaudited Audited 6 months to 6 months to Year to 30 September 30 September 31 March Notes 1999 1998 1999 £m £m £m Net cash inflow from 14(a) 54.5 32.2 150.2 operating activities Returns on investments and servicing of finance 14(b) (15.8) (10.3) (28.4) Taxation Corporation tax paid (0.3) (4.8) (15.6) Capital expenditure and financial investment 14(c) (119.0) (34.7) (56.3) Acquisitions and disposals 14(d) (611.8) (82.6) (87.0) Equity dividends paid (17.2) (15.2) (23.9) _______ ______ ______ Cash outflow before use of liquid resources and financing (709.6) (115.4) (61.0) Management of liquid resources Decrease in liquid bank deposits - 30.2 37.5 Financing 14(e) 713.5 90.3 32.9 _______ ______ ______ Increase in cash in period 3.9 5.1 9.4 ======= ====== ====== Reconciliation of net cash flows to movements in net debt Unaudited Unaudited Audited 6 months to 6 months to Year to 30 September 30 September 31 March 1999 1998 1999 Notes £m £m £m Increase in cash in period 3.9 5.1 9.4 Cash inflow from increase in debt and hire purchase contract and finance lease financing (480.1) (90.3) (32.8) Movement in current asset investments 61.6 (34.5) (35.3) Debt issued on acquisition of subsidiary undertakings (5.2) - - Debt and hire purchase contracts and finance leases acquired with subsidiary undertakings and businesses (26.1) (23.1) (24.4) Inception of hire purchase contracts and finance leases (12.9) (29.4) (63.8) Amortisation of debt issuance fees (0.5) (0.2) (0.3) Foreign exchange differences 5.5 0.7 (0.2) ______ ______ _____ Movement in net debt in (147.4) period (453.8) (171.7) Net debt at beginning of 15 period (356.6) (209.2) (209.2) _______ ______ ______ Net debt at end of period 15 (810.4) (380.9) (356.6) ======= ======= ======= 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 1999 1998 1999 £m £m £m Profit for the period 37.7 26.6 69.4 attributable to shareholders Foreign exchange differences 0.5 - - _______ _______ ______ Total recognised gains and 26.6 69.4 losses 38.2 ======= ======= ====== Reconciliation of movements in shareholders' funds Unaudited Unaudited Audited 6 months to 6 months to Year to 30 September 30 September 31 March 1999 1998 1999 £m £m £m Profit for the financial 26.6 69.4 period 37.7 Dividends (11.6) (8.9) (26.1) _______ ______ ______ 26.1 17.7 43.3 Foreign exchange differences 0.5 - - Shares issued: - in respect of subsidiaries acquired 2.7 27.2 27.2 - in respect of 1 for 4 rights issue 233.3 - - - in respect of exercise of savings related share options 0.1 - - _______ ______ ______ Net additions to shareholders' funds 262.7 44.9 70.5 Shareholders' funds at beginning of period 46.0 (24.5) (24.5) _______ ______ ______ Shareholders' funds at end of period 308.7 20.4 46.0 ======= ====== ===== 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. 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