Preliminary Results - Part 2
FirstGroup PLC
15 May 2002
PART 2
4 Exceptional costs
UK Bus North
America
Rail Other Total Total
2002 2002 2002 2002 2002 2001
£m £m £m £m £m £m
FNW franchise amendment - - - - - 39.9
Restructuring costs 0.3 - 5.3 1.8 7.4 5.6
St Louis strike - - 1.5 - 1.5 -
Provision against cost
of investment in joint
ventures - - - 8.0 8.0 -
Transition costs - - - - - 2.3
New train commissioning
costs - - - - - 2.5
Abortive bid costs - 2.0 - - 2.0 1.3
Tram start up costs - - - - - 1.0
Other - - - - - 0.9
0.3 2.0 6.8 9.8 18.9 53.5
During the year cash payments of £48.5m (2001: £14.5m) were made in
respect of restructuring and other exceptional costs. This included the payment
of £37 million made on 2 April 2001 in connection with the FNW franchise
amendment.
The tax effect in 2002 was a credit of £5.2m. No tax relief was accrued in 2001
on the cost of the First North Western franchise amendment. The tax effect of
the other exceptional costs in 2001 was a credit of £3.9m.
5 Employees' and directors' remuneration
The average number of persons employed by the Group (including Directors) during
the year was as follows:
2002 2001
No. No.
Operational 51,272 49,214
Administration 4,566 2,770
55,838 51,984
The aggregate payroll costs of these persons were as follows:
2002 2001
£m £m
Wages and salaries 866.5 785.9
Social security costs 59.0 55.0
Other pension costs 19.5 19.3
945.0 860.2
6 Profit on disposal of businesses
2002 2001
£m £m
Bristol International Airport - 55.6
New World First Holdings - 13.8
- 69.4
On 24 January 2001, the Group sold its 51% interest in Bristol International
Airport plc for cash proceeds of £107.1m plus repayment of loans.
On 15 May 2000, the Group sold its 26% interest in New World First Holdings Ltd
for cash proceeds of HK$457m (£38.7m).
The tax effect of these disposals in 2001 was a charge of £21.8m.
7 Net interest payable and similar charges
2002 2001
£m £m
Bank loans and overdrafts 43.8 49.4
Other loans 2.1 2.9
Finance charges payable in respect of
hire purchase contracts and finance leases 11.0 14.8
56.9 67.1
Income from short term deposits and other investments (2.8) (4.4)
Notional interest on provisions 2.2 0.6
56.3 63.3
Share of interest payable of joint ventures - 1.2
Total 56.3 64.5
8 Tax on profit on ordinary activities
2002 2001
£m £m £m £m
Current taxation
UK corporation tax charge for the year 25.9 42.3
Adjustment in respect of prior years (0.5) (0.5)
Recoverable ACT previously written off (1.1) -
24.3 41.8
Overseas taxation charge
Current year 1.0 0.9
Prior years 0.3 0.2
1.3 1.1
Total current taxation 25.6 42.9
Deferred taxation
Origination and reversal of timing differences 9.1 14.1
Adjustment in respect of prior years (0.8) (1.8)
8.3 12.3
Tax on profit on ordinary activities 33.9 55.2
The adoption of FRS 19 has required a change in the method of accounting for
deferred taxation. As a result the comparative figure for the taxation on profit
on ordinary activities for 2001 has been restated from the previously reported
amount of £42.0m to £55.2m. The impact of adopting FRS 19 on the 2002 results is
an increase in the taxation charge of £3.3m.
9 Equity dividends
2002 2001
£m £m
Ordinary shares of 5p each
- Interim paid (3.3p (2001: 3.0p) per share) 13.9 12.6
- Final proposed (7.0p (2001: 6.4p) per share) 29.3 26.9
- Adjustment to prior year dividend in respect of shares cancelled (0.1) (0.7)
43.1 38.8
10 Earnings per share
Basic earnings per share is based on earnings of £75.5m (2001:
£77.7m) and on the weighted average number of ordinary shares of 419.8m (2001:
422.2m) in issue. Diluted earnings per share is based on the same earnings and
on the weighted average number of ordinary shares of 421.4m (2001: 424.6m).
A reconciliation of the number of shares used in the basic and diluted measures
is set out below:
2002 2001
Number Number
(m) (m)
Weighted average number of shares used in basic calculation 419.8 422.2
SAYE share options 1.0 1.9
Executive share options 0.3 0.4
Long term incentive plan awards 0.3 0.1
421.4 424.6
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 the adjusted basic and cash measures
of earnings per share use the same weighted average number of ordinary shares as
the basic earnings per share measure. A reconciliation of the earnings used in
these measures is set out below:
2002 2001
Earnings per Earnings per
£m share (p) £m share (p)
Restated
Profit for basic earnings per share calculation 75.5 18.0 77.7 18.4
Goodwill amortisation 29.3 7.0 27.8 6.6
Taxation effect of this adjustment (9.0) (2.2) (8.7) (2.0)
FNW franchise amendment - - 39.9 9.4
Restructuring and other exceptional costs 18.9 4.5 13.6 3.2
Taxation effect of this adjustment (5.2) (1.2) (3.9) (0.9)
Profit on disposal of businesses - - (69.4) (16.4)
Taxation effect of this adjustment - - 21.8 5.1
(Profit)/Loss on disposal of fixed assets (1.0) (0.3) 0.1 -
Profit for adjusted basic earnings
per share calculation 108.5 25.8 98.9 23.4
Depreciation 95.1 22.7 88.4 20.9
Minority interests in this adjustment - - (1.0) (0.2)
Profit for adjusted cash earnings
per share calculation 203.6 48.5 186.3 44.1
11 Intangible fixed assets
Goodwill
£m
Cost
At beginning of year 615.4
Additions (note 24) 4.2
Exchange rate differences (3.6)
At end of year 616.0
Amortisation
At beginning of year 41.8
Charge for the year 27.3
Exchange rate differences (0.1)
At end of year 69.0
Net book value
At 31 March 2002 547.0
At 31 March 2001 573.6
12 Tangible fixed assets
Land and Passenger Other Total
buildings carrying plant and
vehicle fleet equipment
£m £m £m £m
Cost or valuation
At beginning of year 116.7 1,036.2 119.0 1,271.9
Subsidiary undertakings acquired - 6.9 - 6.9
Additions 10.6 118.4 24.4 153.4
Disposals (1.9) (34.2) (7.2) (43.3)
Exchange rate differences (0.6) (1.3) 0.4 (1.5)
At end of year 124.8 1,126.0 136.6 1,387.4
Depreciation
At beginning of year 15.8 441.6 72.5 529.9
Subsidiary undertakings acquired - 3.3 - 3.3
Charge for the year 3.0 79.5 12.6 95.1
Disposals (0.2) (32.6) (4.8) (37.6)
Exchange rate differences - (0.7) (0.1) (0.8)
At end of year 18.6 491.1 80.2 589.9
Net book value
At 31 March 2002 106.2 634.9 56.4 797.5
At 31 March 2001 100.9 594.6 46.5 742.0
13 Fixed asset investments
Joint Other Own
ventures Associates Investments shares Total
£m £m £m £m £m
Cost
At beginning of year 5.5 7.9 - 2.3 15.7
Additions 2.7 - - - 2.7
Share of results (1.6) (0.4) - - (2.0)
Disposals (1.7) - - - (1.7)
Reclassification as subsidiary
undertaking (4.4) - - - (4.4)
Reclassification as investment (0.5) - 0.5 - -
At end of year - 7.5 0.5 2.3 10.3
Provision
At beginning of year (1.0) (1.8) - (0.8) (3.6)
Goodwill amortisation (0.6) (1.4) - - (2.0)
Other charges (3.7) (4.3) - - (8.0)
Reclassification as subsidiary
undertaking 4.4 - - - 4.4
Reclassification as investment 0.5 - (0.5) - -
Release of provision 0.4 - - - 0.4
At end of year - (7.5) (0.5) (0.8) (8.8)
Total
At 31 March 2002 - - - 1.5 1.5
At 31 March 2001 4.5 6.1 - 1.5 12.1
14 Stocks
2002 2001
£m £m
Spare parts and consumables 23.1 21.0
Property development work in progress 1.9 2.5
25.0 23.5
15 Debtors
2002 2001
£m £m
Amounts due within one year
Trade debtors 177.9 176.1
Other debtors 19.1 26.9
Deposit paid for rolling stock 16.7 23.4
Pension fund prepayments 5.7 3.2
Other prepayments and accrued income 36.5 23.1
255.9 252.7
Amounts due after more than one year
Pension fund prepayments 28.3 25.0
Other prepayments and accrued income 1.7 1.6
30.0 26.6
285.9 279.3
16 Current asset investments
2002 2001
£m £m
Bank deposits 60.4 11.8
17 Cash at bank and in hand
2002 2001
£m £m
Ring fenced cash 36.2 50.2
Other cash 4.8 16.4
41.0 66.6
Under the terms of the franchise agreements cash can only be distributed by the
train operating companies up to the amount of retained profits. The ring fenced
cash represents that which is not available for distribution at the year end.
18 Creditors
2002 2001
£m £m
Amounts falling due within one year
Bank loans and overdrafts 7.5 41.1
Obligations under hire purchase
contracts and finance leases 57.3 65.2
Loan notes 1.2 10.2
Trade creditors 122.8 113.1
Amounts due to subsidiary undertakings - -
Corporation tax 23.8 36.0
Other tax and social security 16.4 15.6
Other creditors 21.9 21.9
Pension fund creditors 8.5 7.8
Accruals and deferred income 210.2 178.8
FNW franchise amendment accrual - 37.0
Season ticket deferred income 38.4 38.1
Proposed dividends 29.4 27.0
537.4 591.8
2002 2001
£m £m
Amounts falling due after more than one year
Bank loans
Due in more than one year but not more
than two years 24.2 60.9
Due in more than two years but not more
than five years 283.4 414.8
Obligations under hire purchase contracts
and finance leases
Due in more than one year but not more
than two years 34.3 58.7
Due in more than two years but not more
than five years 27.6 61.8
Due in more than five years 0.4 0.7
Loan notes
Due in more than one year but not
more than two years 23.2 25.5
Due in more than two years but not more
than five years - 0.2
£300.0m Bond - 6.875% 2113 294.8 -
687.9 622.6
19 Provisions for liabilities and charges
Deferred tax Insurance
claims
Pensions Total
£m £m £m £m
At 31 March 2001 as previously
reported 12.3 16.4 6.3 35.0
Prior year adjustment 58.8 - - 58.8
At 31 March as restated 71.1 16.4 6.3 93.8
Provided in the year 8.3 9.1 - 17.4
Recoverable ACT 0.2 - 0.2
Utilised in the year - (2.6) (0.4) (3.0)
Notional interest - 1.9 0.3 2.2
Exchange rate differences - 0.1 - 0.1
At end of year 79.6 24.9 6.2 110.7
20 Deferred tax
Group 2002 2001
£m £m
Capital allowances in excess of depreciation 101.1 77.4
Other timing differences 11.1 2.3
Trading losses (32.6) (11.1)
Recoverable ACT - (0.2)
Unrealised capital gains - 2.7
Deferred tax provision 79.6 71.1
21 Reserves
Share Revaluation Profit and
premium reserve loss account
account
£m £m £m
At beginning of year as previously
reported 236.7 3.6 193.8
Prior year adjustment - - (58.8)
At beginning of year as restated 236.7 3.6 135.0
Cancellation of shares (i) - - (7.7)
Retained profit for the year - - 32.4
Foreign exchange differences - - (3.2)
At end of year 236.7 3.6 156.5
Capital Capital Total other
redemption reserves reserves
reserve
£m £m £m
At beginning of year 0.7 2.7 3.4
Cancellation of shares (i) 0.1 - 0.1
At end of year 0.8 2.7 3.5
Notes:
(i) 2,543,000 ordinary shares were repurchased at a total cost of £7.7m and
cancelled.
22 Notes to the consolidated cash flow statement
2002 2001
£m £m
(a) Reconciliation of operating profit to net
cash inflow from operating activities
Operating profit 168.8 134.9
Depreciation and other amounts written off tangible fixed assets 95.1 93.4
Amortisation charges 27.3 25.9
Write down of investment in joint venture and associate 8.0 0.9
Profit on sale of non property fixed assets (0.7) (1.5)
Increase in stocks (2.1) (0.3)
Increase in debtors (12.8) (22.0)
Increase in creditors and provisions 63.7 30.5
FNW Franchise amendment payment (37.0) -
Net cash inflow from operating activities 310.3 261.8
(b) Returns on investments and servicing of finance
Interest received 2.8 4.7
Interest paid (52.0) (43.0)
Interest element of hire purchase contract
and finance lease payments (11.5) (14.9)
Fees on issue of Bond (5.1) -
Dividends paid to minority shareholders - (1.4)
Net cash outflow from returns on investments
and servicing of finance (65.8) (54.6)
22 Notes to the consolidated cash flow statement (continued)
2002 2001
£m £m
(c) Capital expenditure and financial investment
Purchase of tangible fixed assets (154.7) (108.1)
Sale of fixed asset properties 2.1 2.4
Sale of other tangible fixed assets 5.7 10.7
Deposits for rolling stock 6.6 7.0
Decrease in other current asset investments - 37.6
Net cash outflow from capital expenditure
and financial investment (140.3) (50.4)
(d) Acquisitions and disposals
Purchase of subsidiary undertakings (1.0) (11.6)
Net cash acquired with subsidiary undertakings - 1.0
Net overdraft sold on disposal of subsidiary undertaking - 22.9
Purchase of businesses (6.1) (1.5)
Sale of subsidiary undertaking - 106.1
Sale of investment in joint ventures - 38.5
Purchase of investment in joint ventures (4.9) (4.2)
Purchase of investment in associate (2.0) -
Net cash (outflow)/inflow from acquisitions and disposals (14.0) 151.2
(e) Financing
Issue of share capital - 3.4
Own shares repurchased (7.7) (31.1)
Bond 300.0 -
New bank loans 77.5 24.4
Repayment of amounts borrowed - bank loans (277.7) (137.7)
- other loans (11.5) (16.7)
Capital element of hire purchase contract
and finance lease payments (66.8) (69.8)
Net cash inflow/(outflow) from financing 13.8 (227.5)
23 Analysis of net debt
At beginning Cash flow Other At end
of year non-cash of year
changes
£m £m £m £m
Current asset investments 11.8 48.6 - 60.4
Cash at bank and in hand 66.6 (25.6) - 41.0
Bank overdrafts (2.7) 2.7 - -
Cash 63.9 (22.9) - 41.0
Bank loans due within one year (38.4) 31.9 (1.0) (7.5)
Bank loans due after one year (475.7) 168.3 (0.2) (307.6)
Bond - (294.8) - (294.8)
Obligations under hire purchase
contracts and finance leases (186.4) 66.8 - (119.6)
Loans and loan notes (35.9) 11.5 - (24.4)
Financing (736.4) (16.3) (1.2) (753.9)
Net debt (660.7) 9.4 (1.2) (652.5)
Current asset investments represent unencumbered bank deposits of maturity of
less than one year.
24 Summary of purchase of subsidiary undertakings and businesses
Total Total
2002 2001
£m £m
Fair value of net assets acquired:
Tangible fixed assets 3.6 6.2
Other current assets - 2.0
Cash at bank and in hand - 1.0
Bank loans and other loans - (1.9)
Obligations under hire purchase contracts and finance leases - (0.3)
Other creditors (1.7) (3.3)
Deferred taxation - 0.1
1.9 3.8
Goodwill 4.2 9.6
6.1 13.4
Satisfied by:
Cash paid and payable 6.1 13.2
Other - 0.2
6.1 13.4
25 Sale of subsidiary undertaking
Total Total
2002 2001
£m £m
Net assets sold:
Goodwill - 37.2
Tangible fixed assets - 55.9
Other current assets - 4.8
Bank overdrafts - (22.9)
Pension funds' creditors - (5.1)
Other creditors - (7.8)
Deferred taxation - 0.5
Minority interests - (12.8)
- 49.8
Profit on disposal - 55.6
- 105.4
Satisfied by:
Net cash receivable - 105.4
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