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Annual Report 2002 National Express Group PLC Annual Report 2002 People get on with us Contents National Express Group PLC principal brands 3 National Express Group PLC at a glance 6 A snapshot of the year 8 Chairman’s statement 10 Chief Executive’s statement 12 Review of operations: Buses 14 Trains 18 Coaches 24 North America 28 Australia 32 Corporate responsibility 35 Finance Director’s report 36 Board of Directors 40 Directors’ report 42 Corporate governance 44 Report on Directors’ remuneration 46 Statement of Directors’ responsibilities 50 Report of the Auditors 51 Group profit and loss account 52 Balance sheets 53 Group statement of cash flows 54 Group statement of total recognised gains and losses 55 Note of historical cost Group profits and losses 55 Reconciliation of movements in Group equity shareholders’ funds 55 Notes to the accounts 56 Ten-year summary 86 Shareholder information 87 Dividends and financial calendar 88 Corporate information 88 Front cover: Ron Clarke, a Travel West Midlands employee, who has worked for TWM for eight years. National Express Group PLC principal brands Buses The leading bus operator in the West Provides 100 buses covering routes Operates a comprehensive network Midlands covering over 600 routes in and around Coventry of bus services in and around Dundee www.travelwm.co.uk www.travelcoventry.co.uk www.traveldundee.co.uk Trains Links South Essex towns, including Southend Provides a high-speed rail link between Operates inter-city services along the and Basildon, with Fenchurch Street Station London, Brussels and Paris. The Group has M1 corridor between Yorkshire, the East in London a 40% shareholding in Eurostar’s parent Midlands and London www.c2c-online.co.uk company www.midlandmainline.com www.eurostar.co.uk Provides overnight services between Provides regular services between central The rail on-line ticketing service, Qjump.co.uk, London Euston and main cities in Scotland London and Gatwick Airport provides accurate and impartial timetable www.scotrail.co.uk www.gatwickexpress.co.uk and fares information, ticket purchase and reservations for all UK national rail journeys www.Qjump.co.uk Provides high-frequency local train services Provides operational maintenance services Provides suburban, inter-urban and rural in the East and West Midlands and to a wide range of rail customers, including services north of the border and the long-distance services between the Midlands train operating companies Caledonian Sleepers which link Scotland and East Anglia, Mid and South Wales, www.maintrain.co.uk with London the North of England and the East Coast www.scotrail.co.uk www.centraltrains.co.uk Coaches Provides a network of scheduled coach Operates short, direct, high frequency Operates a range of dedicated airport services around Britain services between major cities and towns in services to and around the UK’s main www.nationalexpress.com Britain. Customers benefit from a flexible airports, including over 500 daily payment system that allows them to buy a departures from London Heathrow ticket at the departure point or from the driver. www.nationalexpress.com www.nationalexpress.com Student transportation Public transit North America Provides student transportation services Provides student transportation services Provides paratransit and transit fixed- throughout the United States in two provinces in Canada schedule bus services in 17 states www.durhamschoolservices.com www.stock-transport.com www.atc-nec.com Australia Operates scheduled bus services in Sydney Operates scheduled bus services in Sydney Operates commuter routes and student www.blue-ribbon.com.au www.glenoriebus.com.au transportation throughout Melbourne www.nationalbus.com.au 3 National Express Group PLC Provides a fast, efficient tram link between Wolverhampton and Birmingham city centres www.travelmetro.co.uk Silverlink County runs from Birmingham to Operates services from London terminals Operates local and long-distance rail London and provides a regular service King’s Cross, Liverpool Street and Moorgate, services in Cornwall, Devon, to local communities in-between. Silverlink to Eastern Hertfordshire, Cambridgeshire, Somerset, Dorset, Wiltshire, Metro provides a suburban train service West Norfolk, North Essex and North-East Hampshire, Gloucestershire to communities in North, East and West London. Also provides services in inner www.wessextrains.co.uk London, with links to London Underground London and regional centres including and other suburban rail services Cambridge, Huntingdon, Peterborough and www.silverlink-trains.com Stevenage www.wagn.co.uk Provides train services between central Operates rural and inter-urban services London and Stansted Airport between Manchester, Holyhead, www.stanstedexpress.co.uk Birmingham, Fishguard, London, Brighton and Penzance www.walesandborderstrains.co.uk AirLinks holds operating licences for Provides scheduled coach services Heathrow, Gatwick and Stansted airports and from the UK to over 500 destinations provides airside services as well as in continental Europe engineering services for its entire fleet. www.nationalexpress.com www.airlinks.co.uk Airports Located in New Windsor, New York www.stewartintlairport.com Provides Transperth bus services in the Provides local and long-distance commercial southern region of Perth, Western Australia services and contracted bus operations www.sctransit.com.au across New South Wales, Australia www.westbus.com.au National Express Group PLC 4 We are a leading international public transport group. We carry more than one billion passengers a year worldwide on our bus, train, light rail and express coach operations. We hold strong positions in each of our geographical markets – the United Kingdom, North America and Australia. We operate local transport businesses which are run by local people to meet the needs of the communities we serve. We conduct our business to ensure that these communities benefit economically from our activities while also receiving quality local services. Our 46,000 employees are committed to improving the safety, quality and value for money of all our services. We focus on: G highly decentralised autonomous companies; G local businesses run by local management teams; G local brands which have a strong local presence; G investing to drive growth; and G a sufficient return to provide investment. We invest in all aspects of our businesses to provide services that passengers want to use, thereby maximising the use of public transport systems. We are committed to exploring the many opportunities for growth which exist in the public transport market. National Express Group PLC 5 National Express Group PLC at a glance Operational highlights G Turnover up to £2.6bn (2001: £2.5bn) G Group operating profit before goodwill and exceptional items of £130.9m (2001: £157.8m) G Strong cash flow from operations of £175.5m (2001: £185.5m) G Profit before tax, goodwill and exceptional items of £106.8m (2001: £129.2m) G Normalised fully diluted EPS of 60.3p (2001: 66.0p restated) G Increase in total dividend per share of 11% to 24.5p (2001: 22.0p) G Net debt of £334.6m (2001: £315.0m) G Continuing EBITDA interest cover before exceptional items of 9.5 times (2001: 7.5 times) G Heads of Terms agreed with the Strategic Rail Authority (SRA) for two-year extension for Central Trains G Two-year extension for Silverlink under discussion with the SRA G Purchase of Stock Transportation in Canada G Withdrawal from Australian train and tram operations G Limited share buy-back programme to be undertaken Buses Trains Coaches High-frequency urban bus A range of intercity, Extensive integrated services operating primarily in commuter and rural network of scheduled and Birmingham and across the passenger train services contracted coach services West Midlands – representing and a dedicated train in three business segments the largest single area bus maintenance operation. – shuttle, airport and network in the UK outside European coaching. London. Also operates buses in Dundee, Scotland, and the Midland Metro light-rail service in Birmingham. Travel West Midlands, Travel c2c, Caledonian Sleeper, National Express, National Coventry, Travel Dundee, Central Trains, Eurostar, Express Shuttle, National Travel Midland Metro Gatwick Express, Maintrain, Express Airport, AirLinks, Midland Mainline, Eurolines Qjump.co.uk, ScotRail, Principal brands Silverlink, Stansted Express, Wagn, Wales & Borders, Wessex Trains 2001 2002 2001 2002 2001 2002 Turnover (£m) 208.3 208.7 1,458.2 1,553.2 181.3 184.5 Operating profit (£m) 52.8 49.8 40.6 33.9 10.6 12.2 Operational fleet 1,930 1,904 968 973 347 300 Passenger journeys (m) 357 346 261 260 17 17 Employees (FTEs) 5,225 5,327 12,349 13,217 2,006 1,807 Continuing operations Services Turnover (£m) Operating profit from continuing Diluted earnings per share – operations before goodwill and normalised (p) exceptional items (£m) 66.0 2,572.3 2,464.2 60.3 57.7 52.2 157.8 155.1 2,002.6 47.1 130.9 1,476.7 1,322.4 113.2 95.8 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 6 National Express Group PLC Providing safe travel North America Australia The third-largest operator Bus services in Brisbane, of student transportation bus Melbourne, Perth and services in the States as well Sydney. as a provider of public transit and paratransit services. Student transportation: Blue Ribbon, Glenorie Bus Durham School Services, Company, National Bus Stock Transportation Company, Southern Coast Public transit and Transit, Westbus demand-response: ATC Airports: Stewart International 2001 2002 2001 2002 401.7 408.0 54.9 58.0 39.3 32.6 4.0 2.3 11,544 14,080 916 987 286 336 47 46 12,057 14,037 1,884 1,748 Dividend per share (p) Cash flow from operations (£m) Average number of employees 24.5 45,974 185.5 44,508 175.5 22.0 167.5 20.7 39,302 18.2 16.0 98.2 95.1 19,222 15,427 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 National Express Group PLC 7 A snapshot of the year January At the beginning of this year Sydney, Australia, experienced its worst bushfires since 1994.