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People Get on With ANNUAL REPORT AND ACCOUNTS 2003 PEOPLE GET ON WITH US… 1-9 Introduction 27 Corporate Responsibility 52 Group Statement of Cash Flows 10 Our Brands 28 Finance Director’s Report 53 Group Statement of Total Recognised 12 Our Highlights 34 Board of Directors and Company Gains and Losses 14 Chairman’s Statement Secretary 53 Note of Group Historical Cost Profits 16 Chief Executive’s Statement 36 Directors’ Report and Losses 18 Review of Operations: 38 Corporate Governance 53 Reconciliation of Movements in Group 18 BUSES 43 Report on Directors’ Remuneration Equity Shareholders’ Funds 20 TRAINS 48 Statement of Directors’ Responsibilities 54 Notes to the Accounts 22 COACHES 49 Report of the Auditors 82 Ten Year Summary 24 NORTH AMERICA 50 Group Profit and Loss Account 83 Shareholder Information 26 AUSTRALIA 51 Balance Sheets 84 Dividends and Financial Calendar 84 Corporate Information > OPERATING SERVICES WHICH > DELIVERING ARE SAFE, PASSENGER PUNCTUAL, BENEFITS RELIABLE, IN THREE AFFORDABLE, CONTINENTS ACCESSIBLE AND INTEGRATED > WORKING IN PARTNERSHIP > PROVIDING WITH LOCAL ENVIRONMENTALLY- AUTHORITIES FRIENDLY SERVICES AND STAKEHOLDERS OUR STRENGTHS… NATIONAL EXPRESS GROUP IS A MAJOR CONTRIBUTOR TO THE FUTURE OF PUBLIC TRANSPORT. IN 2003 WE CARRIED MORE THAN ONE BILLION PASSENGERS ON BUSES, TRAINS, COACHES AND LIGHT RAIL SYSTEMS IN THREE KEY GEOGRAPHIC AREAS – THE UNITED KINGDOM, NORTH AMERICA AND AUSTRALIA. WE ARE AN INTERNATIONAL GROUP, HOWEVER, OUR FOCUS IS AT A LOCAL LEVEL. WE OPERATE LOCAL BUSINESSES WHICH ARE RUN BY LOCAL TEAMS TO MEET THE NEEDS OF LOCAL COMMUNITIES. OUR SERVICES DELIVER SIGNIFICANT BENEFITS AND UNDERPIN THE SOCIAL AND ECONOMIC WELL-BEING OF THE COMMUNITIES WITHIN WHICH WE OPERATE. YET WE ARE NOT COMPLACENT. OUR 43,000 EMPLOYEES CONSTANTLY STRIVE TO IMPROVE THE SAFETY, PERFORMANCE AND ACCESSIBILITY OF OUR SERVICES. INVESTMENT PLAYS A MAJOR PART IN THE DRIVE FOR IMPROVEMENT. FROM ON-BOARD CCTV CAMERAS FOR OUR TRAINS, LOW-FLOOR EASY ACCESS FOR OUR BUSES TO INNOVATIVE VALUE FOR MONEY FARES FOR OUR COACHES, WE INVEST IN ORDER TO OFFER SERVICES THAT PASSENGERS WANT TO USE – TODAY, TOMORROW AND INTO THE FUTURE. THE AIM IS TO CREATE A PUBLIC TRANSPORT CAPABILITY THAT IS APPRECIATED BY PASSENGERS WHILE ALSO DELIVERING VALUE TO SHAREHOLDERS. 1 OUR BUSES… “WE BELIEVE QUALITY PARTNERSHIPS DELIVER BUS SERVICES THAT ARE AFFORDABLE AND WELL USED BY PASSENGERS.” OUR TWM BUSINESS IN THE WEST MIDLANDS IS A STRIKING EXAMPLE OF HOW INVESTMENT IN VEHICLES, TRAINING AND MARKETING TRANSLATES INTO SERVICES THAT MORE PEOPLE WANT TO USE, MORE OFTEN. “AS THE LARGEST TRAIN OPERATOR IN THE UK, WE ARE A MAJOR PROVIDER OF COMMUTER, REGIONAL AND LONG DISTANCE TRAIN SERVICES.” PUNCTUALITY AND RELIABILITY ARE THE PRIMARY CONCERNS OF THE TRAVELLING PUBLIC AND THE FOCUS OF OUR DRIVE FOR IMPROVEMENT. WE ARE WORKING CLOSELY WITH OUR INDUSTRY PARTNERS TO DELIVER ENHANCED IMPROVEMENTS YEAR-ON-YEAR. OUR TRAINS… “THE NATIONAL EXPRESS FLEET SERVES MORE THAN 1,200 DESTINATIONS WITH A SIGNIFICANT NETWORK OF SCHEDULED SERVICES.” INNOVATIVE ‘BEST VALUE’ FARES HAVE PROVIDED THE MOMENTUM FOR SIGNIFICANT GROWTH IN PATRONAGE. THE COMFORT AND RELIABILITY OF OUR SERVICES IS COMPLEMENTED BY A DESERVED REPUTATION FOR AFFORDABILITY. OUR COACHES… “FROM THE DISTINCTIVE YELLOW SCHOOL BUSES THAT CARRY STUDENTS EVERY DAY TO REGULAR TRANSIT SERVICES IN 18 STATES, WE ARE BUILDING A TRACK RECORD FOR PERFORMANCE AND GROWTH IN NORTH AMERICA.” DESPITE COST PRESSURES ACROSS THE CONTINENT, WE CONTINUE TO IDENTIFY AND SEIZE OPPORTUNITIES FOR GROWTH IN NORTH AMERICA. OUR NORTH AMERICAN BUSES… 1 2 3 7 8 9 12 13 17 18 19 23 24 25 BUSES 7 SILVERLINK 13 CALEDONIAN SLEEPER Silverlink County operates locally between Birmingham Provides overnight services between London Euston and 1 TRAVEL WEST MIDLANDS and London. Silverlink Metro operates through North, the main cities in Scotland The leading bus operator in the West Midlands covering East and West London. www.scotrail.co.uk over 500 routes. www.silverlink-trains.com www.travelwm.co.uk 14 STANSTED EXPRESS 8 WESSEX TRAINS Provides services between Central London and Stansted 2 TRAVEL COVENTRY Operates rail services through Cornwall, Devon, Airport Provides 80 bus routes in and around Coventry Somerset, Dorset,Wiltshire, Hampshire, and www.stanstedexpress.com Gloucestershire www.travelcoventry.co.uk www.wessextrains.co.uk 3 TRAVEL DUNDEE 9 WAGN COACHES Operates a comprehensive network of bus services in Operates services from London terminals to Eastern and around Dundee Hertfordshire, Cambridgeshire, West Norfolk, North 15 NATIONAL EXPRESS www.traveldundee.co.uk Essex and North-East London. Also provides services Provides a network of scheduled coach services to 1,200 throughout inner London. destinations within the UK 4 THE METRO www.wagn.co.uk www.nationalexpress.com Provides a tram link between Wolverhampton and Birmingham City Centre 10 SCOTRAIL 16 NATIONAL EXPRESS SHUTTLE Operates short, direct coach services between cities and www.midlandmetro.co.uk Provides rail services in Scotland and others linking towns in Britain Scotland and London www.nationalexpress.com www.scotrail..co.uk TRAINS 17 NATIONAL EXPRESS AIRPORT 11 CENTRAL TRAINS Operates dedicated coach services to main UK airports. 5 C2C Provides high-frequency local train services in the East www.nxairport.com Links South Essex towns with London Fenchurch Street and West Midlands and long-distance services between Station. the Midlands, East Anglia, South Wales, North West and 18 AIRLINKS www.c2c-online.co.uk the East Coast. Provides contract bus/coach services for airlines and the www.centraltrains.co.uk wider airport community at both Heathrow and Gatwick 6 MIDLAND MAINLINE www.airlinks.co.uk Operates inter-city services between Yorkshire, Manchester, 12 GATWICK EXPRESS the East Midlands and London Provides services between Central London and Gatwick www.midlandmainline.com Airport www.gatwickexpress.com 10 4 5 6 10 11 1416 15 16 20 21 22 26 27 28 19 EUROLINES 25 GBC Provides scheduled coach services from the UK to over Operates scheduled bus services in Sydney 500 European destinations www.glenoriebus.com.au www.eurolines.co.uk 26 NATIONAL BUS Operates commuter routes and student transportation NORTH AMERICA in Melbourne and Brisbane www.nationalbus.com.au 20 DURHAM SCHOOL SERVICES 27 SOUTHERN COAST TRANSIT Provides student transportation throughout the United Provides transperth bus services in South Perth States www.sctransit.com.au www.durhamschoolservices.com 28 WESTBUS 21 STOCK TRANSPORTATION Provides local and long-distance services across New Provides student transportation in two provinces of South Wales Canada www.westbus.com.au www.stock-transport.com 22 ATC Provides paratransit and transit bus services in 18 states www.atc-nec.com 23 STEWART INTERNATIONAL AIRPORT OUR Located in New Windsor, New York www.stewartintlairport.com AUSTRALIA 24 BLUE RIBBON Operates scheduled bus services in Sydney BRANDS… www.blue-ribbon.com.au 11 OUR HIGHLIGHTS… BUSES TRAINS COACHES High-frequency urban bus A range of intercity, commuter Extensive integrated network services operating primarily and rural passenger train of scheduled and contracted in Birmingham and across the services. coach services in three West Midlands – representing business segments – shuttle, the largest single area bus airport and European coaching. network in the UK outside London. Also operates buses SERVICES in Dundee, Scotland, and the Midland Metro light-rail service in Birmingham. Travel West Midlands, Travel c2c, Caledonian Sleeper, National Express, National Coventry, the Metro, Travel Central Trains, Gatwick Express Shuttle, National Dundee Express, Midland Mainline, Express Airport, Airlinks, ScotRail, Silverlink, Stansted Eurolines Express, Wagn, Wessex Trains BRANDS PRINCIPAL 2002 2003 2002 2003 2002 2003 Turnover (£m) 208.7 211.9 1,553.2 1,702.4 184.5 186.6 Normalised operating profit* (£m) 49.8 47.2 33.9 32.0 12.2 15.0 Operational fleet 1,933 1,898 964 888 300 331 OPERATIONS Passenger journeys (m) 346 341 260 274 16 17 Employees (FTEs) 5,327 5,361 13,227 13,869 1,807 1,768 * excluding goodwill and exceptional items 12 Turnover (£m) Operating profit before goodwill and exceptional items (£m) 2,566.1 2,572.3 157.8 155.1 2,464.2 134.6 130.9 2,002.6 NORTH AMERICA AUSTRALIA 113.2 1,476.7 The third largest operator of Bus services in Brisbane, student transportation bus Melbourne, Perth and Sydney. services in the United States as well as a student bus operator 99 00 01 02 03 99 00 01 02 03 in Canada. A provider of public transit and paratransit services Normalised diluted earnings per share – (p) Dividend per share (p) in the United States. 26.0 24.5 22.0 66.0 20.7 59.7 60.3 57.7 18.2 52.2 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 99 00 01 02 03 99 00 01 02 03 International Cash flow from operations (£m) Total number of employees 185.5 182.8 175.5 45,612 167.5 42,952 43,883 2002 2003 2002 2003 42,819 408.0 400.1 58.0 65.1 32,551 32.6 37.0 2.3 3.4 95.1 14,080 13,882 987 967 316 335 46 64 14,037 13,903 1,748 1,629 99 00 01 02 03 99 00 01 02 03 OPERATIONAL HIGHLIGHTS OF 2003 • RAIL PATRONAGE UP 5% • COACH PATRONAGE UP 2% • SIGNING OF FIRST PUBLIC TRANSPORT CONCORDAT AT TRAVEL COVENTRY • ENTRY INTO LONDON BUS MARKET THROUGH ACQUISITION OF CONNEX BUS • AWARD OF GREATER ANGLIA FRANCHISE • SIGNING OF TWO YEAR EXTENSIONS FOR CENTRAL TRAINS, GREAT NORTHERN AND WESSEX TRAINS • SOLID PERFORMANCE FROM NORTH AMERICAN STUDENT BUS DIVISION AND AN IMPROVEMENT IN PUBLIC TRANSIT 13 CHAIRMAN’S STATEMENT 2003 WAS AN EXCELLENT YEAR Michael Davies Non Executive Chairman Our coach division marked its 30th anniversary with a complete rebranding of its operations, reinforcing our high quality, value for money services.
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