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Annual Report 2001 National Express Group PLC Annual Report 2001 Contents 2 National Express Group PLC at a glance 4 Highlights of the year 6 Chairman’s statement 8 Chief Executive’s statement Review of operations: 10 Buses 14 Trains 20 Coaches 22 USA 26 Australia 28 Corporate responsibility 30 Finance Director’s report 34 Board of Directors 36 Directors’ report 38 Corporate governance 40 Report on Directors’ remuneration 44 Statement of Directors’ responsibilities 45 Report of the Auditors 46 Group profit and loss account 47 Balance sheets 48 Group statement of cash flows 49 Group statement of total recognised gains and losses Note of historical cost Group profits and losses Reconciliation of movements in Group equity shareholders’ funds 50 Notes to the accounts 76 Nine year summary 77 Shareholder information 78 National Express Group principal brands 80 Dividends and financial calendar Corporate information Click on the title in the contents above to go directly to that section. To return to the contents click on the folio. 1 National Express Group is a leading international public transport group. We carry over one billion passengers a year worldwide on our bus, train, tram and express coach operations. 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 whilst also receiving quality local services. Our 45,000 employees are committed to improving the quality, value for money and the safety of all our services. 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 international public transport market. National Express Group PLC 2 National Express Group PLC at a glance Operational highlights Sustained bus patronage and launch of two new Showcase routes in the Midlands Focus on restoring rail performance by working with Railtrack and industry parties UK train passenger numbers continue to be affected by network disruption £160m new train order for Midland Mainline signed in March 2002 Buses Trains Services High frequency urban bus services Largest train operator in the UK. operating primarily in Birmingham and Provides a range of intercity, urban and across the West Midlands – representing rural passenger train services and a the largest single area bus network in dedicated train maintenance operation. the UK outside London. Also operates the Midland Metro light-rail service. Principal brands Travel West Midlands, Travel Midland c2c, Caledonian Sleeper, Central Trains, Metro, Travel Dundee Eurostar, Gatwick Express, Maintrain, Midland Mainline, Qjump, ScotRail, Silverlink, Stansted Express, WAGN, Wales & Borders, Wessex Trains Continuing operations 2001 2000 2001 2000 Turnover (£m) 208.3 200.1 1,458.2 1,058.6 Operating profit (£m) 52.8 50.6 40.6 34.1 Operational fleet 1,930 2,086 968 959 Passenger journeys (m) 357 361 267 180 Employees 5,697 5,462 12,588 10,784 Operating profit from continuing operations before goodwill and Turnover from continuing operations exceptional items Diluted earnings per share – normalised (£m) (£m) (p) 01 2,457.4 01 156.7 01 72.8 00 1,968.6 00 142.0 00 63.7 99 1,442.8 99 100.3 99 54.6 98 1,280.4 98 82.0 98 47.1 97 1,089.4 97 70.4 97 38.3 National Express Group PLC 3 Launch of e-ticketing by GoByCoach.com Continued growth in the USA Improvements in Australian train and tram punctuality and reliability Continuing to address high levels of fare evasion in Melbourne £93m capital investment across our businesses Coaches USA Australia Extensive integrated network of One of the largest private operators Largest private operator of public scheduled and contracted coach of student transportation bus services, transport in Australia. services in three business segments – public transit bus services and Provides bus services in Brisbane, UK express coaches, airport services paratransit services. Melbourne, Perth and Sydney, train and and European coaching. tram operations in Melbourne and across the State of Victoria. UK express coach services: Student transportation: Durham School Buses: Blue Ribbon, Glenorie Bus GoByCoach.com, “Rapide” and “Shuttle” Services Company, National Bus Company, AirLinks: Airbus, Flightlink, Jetlink, Public transit and demand-response: ATC Southern Coast Transit, Westbus Heathrow Hotel hoppa, Railair, Speedlink Airports: Stewart International Trains and trams: M>Train, M>Tram, Eurolines: UK and The Netherlands V/Line Passenger 2001 2000 2001 2000 2001 2000 181.3 186.8 401.7 301.6 207.9 221.5 10.6 11.3 39.3 32.7 13.4 13.3 347 376 11,544 11,150 1,725 1,765 22 22 286 243 209 215 2,047 2,007 19,648 16,635 4,478 3,998 Dividends per share Net assets (p) (£m) Average number of employees 01 22.0 01 413.9 01 44,508 00 20.7 00 377.3 00 39,302 99 18.2 99 267.0 99 19,222 98 16.0 98 211.9 98 15,427 97 13.5 97 146.1 97 15,171 National Express Group PLC 4 Highlights of the year At the beginning of the year The growing popularity of We have spearheaded the first buses in the UK fitted booking tickets on the internet the introduction of a new with Euro III engines were has encouraged us to open portable ticketing system introduced at Travel West a telesales facility to support across the UK rail network. Midlands. These buses are the this channel. Alison Nimmo, New ticketing units called cleanest in the UK and are Chief Executive of Sheffield Advantix Mobile, fitted with revolutionary One, opened a new high March incorporating leading edge January ecobusting particulate traps tech 27,000 sq ft call centre technology, will provide which help to keep exhaust February in Sheffield for our UK rail greater flexibility, efficiency emission levels to a minimum. companies to provide and improved service for telesales, customer service passengers and staff by and co-ordinated customer providing latest ticketing and contact handling. timetable information. The Rt Hon John Spellar MP, Hillary Clinton and Charles At the beginning of Minister for Transport, Schumer (right), Senators for September we launched opened our 30,000 sq ft New York, visited Stewart Durham School Services, the July customer contact centre for International Airport to mark new branding for the USA the coach division in the opening of the new Facility student transportation division. Birmingham. This facility Inspection Station which This distinctive new branding provides valuable internet will make the airport more has been rolled out across August and direct sales support. attractive for international all our school bus operations, cargo carriers. Chuck Seliga, providing the division with Managing Director of the a consistent umbrella brand airport pictured left. September which incorporates all the established Durham values. National Express Group PLC 5 A new customer service Wales & West undertook Work began on the improvement programme, a number of successful construction of the Midland Silver Service, was introduced marketing campaigns during Mainline new Customer on Silverlink this year. This the year including “Join the Service Academy based in May April programme was designed to Movement”. One million free June Derby. The Academy, which improve customer service and tickets were distributed to opened in April 2002, provides to respond to the findings householders across the a multi-purpose centre for of customer research. Wales & West catchment area recruitment, induction, On-going progress is regularly to attract potential customers customer service and skills monitored through a mystery to train travel. development for rail staff shopper programme. within the Group. As part of the Strategic Rail We acquired the Glenorie Bus In December our coach Authority’s remapping of the Company, opening the way division won the best UK rail network, the new for new and better integrated marketing campaign of 2001 Wales & Borders and Wessex services. This acquisition for its £10 travel offer at the franchises were launched gives our Sydney Westbus Coach and Bus Week Awards. on 1 October. As part of the operations critical mass. A key 250,000 customers took Prism acquisition we agreed objective for 2002 is to grow advantage of the promotion October with the SRA to oversee their our business in the Hills district over the ten week transition and formation. of Sydney where Glenorie promotional period. operates under the Hillsbus December November brand. National Express Group PLC 6 Chairman’s statement Financial highlights The year presented a number of and tram franchises on a stronger ● Turnover from continuing significant challenges for our financial platform. More impor- operations up 25% to £2.5bn businesses as described in our October tantly, we continue discussions (2000: £2bn) 2001 trading statement. The tragic with the Victorian Government ● Operating profit from continuing events of 11 September, operational on the long-term viability of operations before exceptionals and issues within our Australian train and our franchises, with the aim of goodwill up 10.4% to £156.7m tram businesses and the continuing completing these by the autumn. (2000: £142m) reduction in train subsidies all affected ● Early in March, we announced that ● Operating cash flow of £185.5m our performance for the year. we had agreed new terms with the (2000: £167.5m). SRA for our Central and ScotRail ● Normalised profit before tax At the same time our UK trains franchises. Under this agreement increased by 8.3% to £129.2m business continued to be impacted by these franchises will receive an (2000: £119.3m) network disruption.