Interim Results - Pt.2
FirstGroup PLC
9 November 1999
PART 2
Notes to the accounts
1 Basis of preparation
This interim report does not constitute statutory accounts within the
meaning of section 240 of the Companies Act 1985.
The figures for the six months to 30 September 1999 include the
results of the rail businesses for the 24 weeks ended 18 September
1999, the results of New World FirstBus for the six months ended 30
September 1999 and the results of the other businesses for the 26
weeks ended 25 September 1999.
These results are unaudited but have been reviewed by the auditors,
Deloitte & Touche. The comparative figures for the six months to 30
September 1998 are unaudited and are derived from the interim report
for the six months ended 30 September 1998, which was reviewed by the
former auditors, KPMG Audit Plc.
The comparative figures for the year to 31 March 1999 are not the
company's statutory accounts for that financial year. Those accounts
have been reported on by the company's auditors, Deloitte & Touche,
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 report will be sent to all shareholders in November 1999
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 8 November 1999.
2 Principal accounting policies
FRS 15, Tangible Fixed Assets, has been adopted for the first time in
the current financial year. One of the requirements of the standard
is that each class of tangible fixed assets is either revalued
annually or not at all. In the past, the Group has revalued certain
properties. The policy that has been 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.
Other than detailed above, the results for the six months to 30
September 1999 have been prepared using the same accounting policies
as were used in the preparation of the interim report for the six
months ended 30 September 1998 and the annual report for the year
ended 31 March 1999.
Notes to the accounts (continued)
3 Tax on profit on ordinary activities
6 months to 6 months to Year to
30 September 30 September 31 March
1999 1998 1999
£m £m £m
UK corporation tax
- current year 9.9 7.3 16.2
- prior years - - (2.9)
Transfer to deferred tax
- current year 2.5 2.0 7.1
- prior years - - 2.0
_______ _______ ______
12.4 9.3 22.4
====== ===== =====
4 Dividends
6 months to 6 months to Year to
30 September 30 September 31 March
1999 1998 1999
£m £m £m
Ordinary shares of 5p
each
- Interim proposed 11.6 8.6 8.6
- Final paid - - 17.2
- Adjustment to prior
year 0.3 0.3
final dividend in
respect of new shares -
issued
______ _____ _____
11.6 8.9 26.1
===== ====== =====
The interim dividend of 2.7p per ordinary share of 5p each will be
paid on 16 February 2000 to shareholders on the register of members at
the close of business on 10 January 2000.
5 Earnings per share
Basic earnings per share is based on earnings of £37.7m (six months to
30 September 1998: £26.6m and year to 31 March 1999: £69.4m) and on
the weighted average number of ordinary shares of 358.0m (six months
to 30 September 1998: 351.8m and year to 31 March 1999: 353.3m) in
issue or committed to be issued.
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
361.7m (six months to 30 September 1998: 356.4m and year to 31 March
1999: 357.6m). 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.
In each case, the weighted average number of ordinary shares for the
previous periods has been restated to reflect the bonus element of the
September 1999 1 for 4 rights issue.
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
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 calculation 40.1 11.2
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
===== =======
6 months to
30 September
1998
£m Earnings per
share p
Profit for basic earnings per share 26.6 7.6
calculation
Restructuring and other exceptional 7.3 2.1
costs
Taxation effects of adjustments (2.2) (0.7)
Profit for adjusted basic earnings 31.7 9.0
per share calculation
Depreciation 22.0 6.3
Minority interests in this adjustment (0.4) (0.1)
Profit for adjusted cash earnings per 53.3 15.2
share
Year to
31 March
1999
£m Earnings per
share p
Profit for basic earnings per share 69.4 19.6
calculation
Restructuring and other exceptional 17.9 5.1
costs
Profit on disposal of fixed assets (2.0) (0.5)
Taxation effects of adjustments (4.9) (1.4)
Minority interests in these (0.2) (0.1)
adjustments
Profit for adjusted basic earnings 80.2 22.7
per share calculation
Depreciation 47.0 13.3
Minority interests in this adjustment (0.8) (0.2)
Profit for adjusted cash earnings per 126.4 35.8
share
6 Intangible fixed assets
Goodwill
£m
Cost
At 31 March 1999 74.8
Additions 480.1
______
At 30 September 1999 554.9
======
Amortisation
At 31 March 1999 -
Charge for the period 1.1
_____
At 30 September 1999 1.1
======
Net book value
At 30 September 1999 553.8
======
At 31 March 1999 74.8
======
At 30 September 1998 75.1
======
7 Tangible fixed assets
Land and Passenger Other Assets Total
buildings carrying plant in
vehicle and course of
fleet equip- construc-
ment tion
£m £m £m £m £m
Cost or valuation
At 31 March 1999 126.3 584.0 79.2 13.5 803.0
Subsidiary undertakings
acquired 9.5 284.1 24.6 - 318.2
Additions 7.4 46.1 6.4 13.6 73.5
Disposals (0.2) (6.6) (1.5) - (8.3)
Foreign exchange
differences (0.2) (8.4) (0.7) - (9.3)
_____ _____ _____ _____ _______
At 30 September 1999 142.8 899.2 108.0 27.1 1,177.1
_____ _____ _____ _____ _______
Depreciation
At 31 March 1999 29.6 230.7 53.5 - 313.8
Subsidiary undertakings
acquired 4.1 125.4 16.2 - 145.7
Charge for period 1.3 22.5 3.9 - 27.7
Disposals - (4.7) (1.4) - (6.1)
Foreign exchange
differences (0.1) (3.7) (0.5) - (4.3)
_____ _____ _____ _____ _______
At 30 September 1999 34.9 370.2 71.7 - 476.8
_____ _____ _____ _____ _______
Net book value
At 30 September 1999 107.9 529.0 36.3 27.1 700.3
===== ===== ===== ===== =====
At 31 March 1999 96.7 353.3 25.7 13.5 489.2
===== ===== ===== ===== =====
At 30 September 1998 96.9 339.2 23.6 3.8 463.5
===== ===== ===== ===== =====
8 Debtors
30 September 30 September 31 March
1999 1998 1999
£m £m £m
Amounts due within one year
Trade debtors 130.3 77.8 70.2
Other debtors 32.5 28.1 33.3
Deposit paid for rolling 30.4 21.5 10.6
stock
Pension funds' prepayments 2.8 2.8 3.4
Other prepayments and
accrued 29.2 25.1 14.9
income
Advance corporate tax
recoverable - 5.0 -
Deferred taxation - 0.5 -
______ ______ ______
225.2 160.8 132.4
______ ______ ______
Amounts due after more than
one year
Other debtors - 0.5 -
Deposits paid for rolling
stock - - 11.8
Pension funds' prepayments 22.5 14.9 20.4
Other prepayments and
accrued 1.2 1.4 1.6
income
Advance corporation tax
recoverable - 6.0 -
______ ______ ______
23.7 22.8 33.8
______ ______ ______
248.9 183.6 166.2
====== ====== ======
9 Current asset investments
30 30 September 31 March
September 1998 1999
1999 £m £m
£m
Bank deposits 99.7 38.9 38.1
Own shares 1.4 - -
____ _____ _____
101.1 38.9 38.1
==== ==== ====
Of the bank deposits, £34.3m (30 September 1998: £31.6m and 31 March
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. The remaining £65.4m of bank
deposits support various bank guarantees and cannot be withdrawn while
the guarantees are in place.
The own shares are held by the FirstGroup Employee Benefit Trust.
10 Creditors
30 September 30 September 31 March
1999 1998 1999
£m £m £m
Amounts falling due
within one year
Bank loans and
overdrafts 54.7 31.5 28.3
Obligations under hire
purchase contracts
and 59.6 51.9 58.1
finance leases
Loan notes 11.5 14.7 13.7
Trade creditors 108.2 102.4 101.9
Corporation tax 25.1 30.6 17.2
Other tax and social
security 15.4 12.7 11.5
Other creditors 16.7 10.5 12.1
Pension funds' 7.5 4.1 7.7
creditors
Accruals and deferred
income 167.7 125.6 129.3
Season ticket deferred
income 34.0 33.1 37.5
Proposed dividends 11.6 8.6 17.2
_____ _____ _____
512.0 425.7 434.5
====== ====== =====
Amounts falling due after
more than one year
Bank loans
Due in more than one
year but not
more than two years 100.8 - -
Due in more than two
years but not
more than five years 543.7 164.5 140.0
Obligations under hire
purchase contracts
and finance leases
Due in more than one
year but not more
than two years 56.5 47.3 55.1
Due in more than two
years but not
more than five years 88.3 96.6 94.0
Due in more than five
years 5.7 4.1 1.9
Loan notes
Due in more than one
year but not more
than two years 41.5 44.3 43.2
Due in more than two
years but not
more than five years - 3.9 3.9
______ ______ _____
836.5 360.7 338.1
====== ====== =====
Bank loans and overdrafts
Whilst the majority of bank loans and overdrafts permit repayment
within six months of the balance sheet date, they have been classified
by reference to the maturity date of the longest refinancing allowed
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. £44.0m 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 beginning of period 3.5 15.2 11.7 30.4
Subsidiary undertakings
acquired 0.1 - - 0.1
Provided in the period 2.5 4.3 0.1 6.9
Utilised in the period - (3.5) (0.1) (3.6)
Advanced corporation tax
offset 2.0 - - 2.0
_____ _____ _____ ____
At end of period 8.1 16.0 11.7 35.8
===== ===== ===== ====
12 Called up share capital
30 September 30 September 31 March
1999 1998 1999
£m £m £m
Authorised
Ordinary shares of 5p each 30.0 21.3 21.3
===== ====== =====
Allotted, called up and
fully paid
Ordinary shares of 5p
each 21.6 17.3 17.3
===== ====== =====
The number of ordinary shares of 5p each in issue at the end of the
period was 432.4m (30 September 1998: 345.2m and 31 March 1999:
345.2m).
The changes in the number and amount of issued share capital during
the period are set out below:
Number
(m) £m
At beginning of period 345.2 17.3
Shares issued in relation to 0.7 -
acquisitions
Rights issue 86.5 4.3
_____ _____
At end of period 432.4 21.6
===== =====
13 Reserves
Share Revaluation Profit
premium reserve and
account £m loss
£m account
£m
At beginning of period - 3.3 25.3
Rights issue 229.0 - -
Exercise of savings
related share options 0.1 - -
Retained profit for the
period - - 26.1
Foreign exchange - - 0.5
differences
_____ _____ _____
At end of period 229.1 3.3 51.9
===== ===== ====
Capital
Redemp- Total
tion Capital other
reserve reserves reserves
£m £m £m
At beginning of period 0.1 - 0.1
Shares issued in relation
to acquisitions - 2.7 2.7
_____ _____ _____
At end of period 0.1 2.7 2.8
14 Notes to the consolidated cash flow statement
6 months to 6 months to Year to
30 September 30 September 31 March
1999 1998 1999
£m £m £m
(a) Reconciliation of
operating profit to
net cash inflow
from operating
activities
Group operating profit 64.0 51.1 121.9
Depreciation charges 27.7 22.0 47.0
Goodwill amortisation 1.1 - -
Pro Profit on sale of
non property fixed
assets (0.3) (0.3) (0.8)
(Increase)/decrease in
stocks (0.9) 0.1 1.4
Increase in debtors (27.3) (22.1) (8.7)
Decrease in creditors and
provisions (9.8) (18.6) (10.6)
______ _______ ______
Net cash inflow from
operating activities 54.5 32.2 150.2
====== ====== ======
14 Notes to the consolidated cash flow statement (continued)
6 months to 6 months to Year to
30 September 30 September 31 March
1999 1998 1999
£m £m £m
(b) Returns on
investments and
servicing
of finance
Interest received 1.7 3.4 6.2
Interest paid (7.7) (6.4) (18.5)
Interest element of hire
purchase contract and
finance lease payments (7.6) (7.3) (14.9)
Fees on issue of bank
loans (2.2) - (0.2)
Dividends paid to
minority shareholders - - (1.0)
_____ ______ _____
Net cash outflow from
returns on
investments and
servicing of finance (15.8) (10.3) (28.4)
====== ====== ======
(c) Capital expenditure
and financial investment
Purchase of tangible
fixed assets (61.2) (23.2) (42.2)
Sale of fixed asset
properties 10.5 5.2 8.8
Sale of other tangible
fixed assets 1.6 0.5 1.7
Deposits for rolling
stock (6.9) (21.5) (22.4)
Acquisition of own shares (1.4) - -
(Increase)/decrease in
other
current asset (61.6) 4.3 (2.2)
investments
______ ______ _____
Net cash outflow from
capital
expenditure and
financial investment (119.0) (34.7) (56.3)
======= ======= =======
(d) Acquisitions and
disposals
Purchase of subsidiary
undertakings (615.6) (63.3) (63.3)
Net cash acquired with
subsidiary
undertakings 4.4 1.6 1.6
Purchase of businesses (0.1) (0.2) (2.5)
Purchase of investment
in joint ventures (0.5) (20.7) (22.8)
______ ______ _____
Net cash outflow from
acquisitions
and disposals (611.8) (82.6) (87.0)
====== ====== ======
14 Notes to the consolidated cash flow statement (continued)
6 months to 6 months to Year to
30 September 30 September 31 March
1999 1998 1999
£m £m £m
(e) Financing
Issue of share capital 233.4 - 0.1
New bank loans 604.7 133.2 136.0
Repayment of amounts
borrowed - bank loans (82.4) - (31.7)
- other loans (13.0) (21.3) (23.4)
Capital element of
hire purchase
contract and finance
lease payments (29.2) (21.6) (48.1)
______ ______ ______
Net cash inflow from
financing 713.5 90.3 32.9
====== ======= ======
15 Analysis of net debt
Other
At Cash Acqui- non- At end
beginning flow sitions cash of
of period £m £m changes period
£m £m £m
Other current
asset
investments 38.1 61.6 - - 99.7
_______ ______ ______ ______ ______
Current asset
investments 38.1 61.6 - - 99.7
_______ ______ ______ ______ ______
Cash at bank and
in hand 43.5 8.9 - (0.2) 52.2
Bank
overdrafts (7.3) (5.0) - - (12.3)
_______ ______ ______ ______ ______
Cash 36.2 3.9 - (0.2) 39.9
_______ ______ ______ ______ ______
Bank loans due
within one year (21.0) (14.3) (7.6) 0.5 (42.4)
Bank loans due
after one year (140.0) (508.0) (0.7) 4.2 (644.5)
Obligations
under hire
purchase
contracts and
finance leases (209.1) 29.2 (17.8) (12.4) (210.1)
Loans and loan
notes (60.8) 13.0 - (5.2) 53.0)
_______ ______ ______ ______ ______
Financing (430.9) (480.1) (26.1) (12.9) (950.0)
_______ ______ ______ ______ ______
Net debt (356.6) (414.6) (26.1) (13.1) (810.4)
====== ====== ====== ====== ======
16 Major non-cash transactions
During the period the Group entered into hire purchase contracts in
respect of assets with a capital value of £12.9m (6 months to 30
September 1998: £29.4m and year to 31 March 1999: £63.8m).
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