Preliminary results for the year ended 30 Apr 2012

Released : 26 Jun 2012

RNS Number : 1119G
Stagecoach Group PLC
26 June 2012
 



26 June 2012

 

Stagecoach Group plc - Preliminary results for the year ended 30 April 2012

 

Business highlights

 

Maximising shareholder returns

·      Adjusted earnings per share* up 6.7% to 25.4 pence (2011: 23.8 pence)

·      Full year dividend up almost 10% to 7.8 pence (2011: 7.1 pence)

·      c.£340m cash return to shareholders in October 2011

 

Leading the way in improving transport for passengers

·      Growth underpinned by innovation, value for money, investment and operational delivery

·      Expansion of megabus.com in North America and Europe

·      New Alliance with Network Rail

 

Pursuit of new opportunities for growth

·      Like-for-like revenue up 6.9% across the Group

·      Virgin Rail Group's bid for new West Coast rail franchise submitted May 2012

·      Shortlisted for two new UK rail franchises

·      US$134m planned acquisition of businesses and assets from Coach America

·      Further potential to grow operating profit at acquired London Bus business

 

Financial summary

 


Results excluding intangible asset expenses and exceptional items*

Reported results

Year ended 30 April

2012

2011

2012

2011






Revenue (£m)

2,590.7

2,389.8

2,590.7

2,389.8






Total operating profit (£m)

237.2

240.2

262.9

225.0

Non-operating exceptional items (£m)

-

-

11.6

0.7

Net finance charges (£m)

(34.7)

(34.5)

(34.7)

(34.5)

Profit before taxation - continuing operations (£m)

202.5

205.7

239.8

191.2

Discontinued operations (£m)

-

-

-

18.5

Profit before taxation (£m)

202.5

205.7

239.8

209.7






Earnings per share (pence)

25.4p

23.8p

29.5p

24.6p

Proposed final dividend per share (pence)



5.4p

4.9p

Full year dividend per share (pence)



7.8p

7.1p

 

*

see definitions in note 21 to the condensed financial statements

 

Commenting on the results, Chief Executive, Sir Brian Souter, said:

"We continue to see good organic growth in our bus and rail services in the UK and North America. This has been supported by our successful mix of innovation, value-for-money travel, continued investment in our services, and strong operational delivery.

 

"Our UK regional bus operations are delivering good returns with different management approaches applied to respond to the different conditions in each of the markets in which we operate. In London, our turnaround plan is progressing well and we have won new contracts on more acceptable profit margins.

 

"We are excited about the next phase of our growth plan for our budget coach brand, megabus.com. As well as testing the market in Europe, we are expanding to new locations in North America where the response to the product from consumers has been particularly strong.

 

"The planned acquisitions from Coach America will enable us to expand our US business at a reasonable price while further underpinning the development of megabus.com in targeted regions.

 

"In UK Rail, we are pleased that East Midlands Trains has returned to profit and South West Trains continues to perform well.  We are involved in shortlisted bids for a number of new franchises. At South West Trains, we are moving forward with our alliance with Network Rail to deliver a more efficient railway and a better service for passengers. We believe this approach can be a model for future franchises and our pioneering work can give the Group first mover advantage.

 

"Across our business, our new ideas and partnerships are helping shape the future of public transport and the Stagecoach difference is delivering strong returns to our shareholders. We believe the outlook for our bus and rail services is positive and we look forward with confidence to the year ahead."

 

Copies of this announcement are available on the Stagecoach Group website at http://www.stagecoach.com/media/news-releases/2012/2012-06-26.aspx

 

 

 

 

 

For further information, please contact:

 

Stagecoach Group plc                                                            www.stagecoachgroup.com

 

Investors and analysts

Martin Griffiths, Finance Director

01738 442111

Ross Paterson, Director of Finance & Company Secretary

01738 442111

                                                                                               

                                                                                               

Media

Steven Stewart, Director of Corporate Communications

01738 442111 or 07764 774680

John Kiely, Smithfield Consultants

020 7360 4900

 

Notes to Editors

 

Stagecoach Group

·      Stagecoach Group is a leading international public transport group, with extensive operations in the UK, United States and Canada. The company employs around 33,000 people, and operates bus, coach, rail, and tram services.

·      Stagecoach is one of the UK's biggest bus and coach operators. Around 2.5 million passengers travel on Stagecoach's 7,700 buses every day on a network stretching from south-west England to the Highlands and Islands of Scotland. The Group's business includes major city bus operations in London, Liverpool, Newcastle, Hull, Manchester, Oxford, Sheffield and Cambridge.

·      Stagecoach is a major UK rail operator, running the South West Trains, Island Line and East Midlands Trains networks. It has a 49% shareholding in Virgin Rail Group, which operates the West Coast inter-city rail franchise.

·      Stagecoach also operates the Supertram light rail network in Sheffield.

·      In North America, Stagecoach currently operates around 1,900 buses and coaches in the United States and Canada. Budget coach service, megabus.com, links around 90 key locations in North America. Stagecoach is also involved in operating commuter and transit services, as well as tours, charters, sightseeing tours and a small number of school bus services.  In May 2012, Stagecoach announced that it had agreed to acquire selected businesses and assets from Coach America, which will further expand its North American business.

 

 

 


Chairman's statement


 

The Group has delivered another strong set of results, achieving growth across its bus and rail businesses in the UK and North America. We have met the challenges in our sector and the wider economy and driven the business forward by developing innovative products and new ideas to make public transport better for our customers. Our focus continues to be on safe, good value, high quality bus and rail travel.

 

High fuel prices and motoring costs have resulted in commuters, business customers and leisure travellers switching from the car and airlines to our better value bus, coach and rail services. As well as building on our record of strong operational delivery, we are investing in improved customer service. We are using new technology to deliver quicker and smarter service information, making our services easier to use.

 

At the core of the Group are our regional bus operations in the UK where we have achieved consistent organic growth over several years. Our devolved management teams understand their local commercial markets and have achieved good financial returns. We have maintained our leading position as the UK's best value major bus operator, despite cost increases and reduced Government spending on public transport. In London, our turnaround plan for the business we acquired in late 2010 is progressing well and we have won new contracts at more acceptable levels of profitability.

 

North America is the fastest growing division in the Group and we are excited by the next phase of our growth plan for our budget coach brand, megabus.com. While megabus.com is a relatively small part of the Group, it offers good growth potential in North America and we have a clear plan to roll-out our services to new parts of the United States.

 

In May 2012, we agreed to acquire selected businesses and assets from Coach America, Inc. ("Coach America") and we expect to complete the acquisition shortly.  This will allow us to acquire selected businesses and vehicles at attractive prices in markets and regions we know well. These businesses will benefit from both our management expertise and ability to invest for growth.  The businesses to be acquired in Texas and California in particular will give us an extended geographic footprint to accelerate our growth strategy for megabus.com.

 

In UK Rail, our franchises are continuing to deliver good revenue growth, supported by high levels of operational performance and customer satisfaction, and our East Midlands Trains franchise returned to profit in the second half of the year. In partnership with the Department for Transport, we have announced new investment in extra capacity for our biggest commuter network at South West Trains. In addition, South West Trains' new alliance with Network Rail is a major step forward for the industry, offering the prospect of a more efficient railway, a better service for passengers and a better deal for taxpayers. We believe this approach can be a model for the future.

 

We are pleased to have been selected as a shortlisted bidder for each of Greater Western and Thameslink as part of the latest round of rail refranchising. Our joint venture, Virgin Rail Group, has submitted an innovative and value for money bid for the new Intercity West Coast franchise.

 

We have invested further in our online retailing capability during the year to support our fast-growing Internet sales.  This has included a new website and related systems for our megabus.com brand as we expand to cover new locations in the UK, North America and in mainland Europe.

 

Revenue for the year to 30 April 2012 was £2,590.7m (2011: £2,389.8m).  Operating profit (before intangible asset expenses and exceptional items) was £237.2m (2011: £240.2m).  Earnings per share before intangible asset expenses and exceptional items were 6.7% higher at 25.4p (2011: 23.8p).

 

In line with the Group's strong performance, the Directors have proposed a final dividend of 5.4p per share.  This gives a total dividend for the year up almost 10% at 7.8p (2011: 7.1p) in addition to the c.£340m of cash paid to shareholders during the year. The proposed final dividend is payable to shareholders on the register at 31 August 2012 and will be paid on 3 October 2012.

 

We have strong management teams at Group, divisional and regional operating level.  During the year, we put in place a succession plan at our UK Bus division which will ensure a smooth transition of responsibilities ahead of the retirement of the Division's current Managing Director in 2013.  We have also made key senior appointments at our South West Trains, East Midlands Trains and Sheffield Supertram rail businesses, which demonstrate the breadth of management talent we have across the Group.

 

Stagecoach has made a good start to the financial year ending 30 April 2013. Current trading is in line with our expectations and the Group remains in a strong financial position.

 

This summer, we look forward to playing a key role in the successful delivery of the London 2012 Olympic and Paralympic Games, including providing transport for athletes and the media.

 

I would like to take this opportunity to thank our employees in the UK and North America who make possible the many customer journeys on our regular buses and trains every day. Looking forward, I am confident the Group will continue to deliver for our customers and shareholders.

 

Sir George Mathewson

Chairman

26 June 2012



Preliminary management report

 

The Directors of Stagecoach Group plc are pleased to present their report on the Group for the year ended 30 April 2012.

 

Overview of financial results

 

The Group has achieved continued good financial and operational performance in the year ended 30 April 2012. 

 

Revenue by division is summarised below:

 

 

REVENUE

Year to 30 April

2012

2011

Functional

currency

2012

2011

Growth

 

£m

£m

        Functional currency (m)

%

Continuing Group operations







UK Bus (regional operations)

909.7

893.6

£

909.7

893.6

1.8%

UK Bus (London)

230.5

133.6

£

230.5

133.6

72.5%

North America

312.6

295.1

US$

498.0

461.7

7.9%

UK Rail

1,140.7

1,070.0

£

1,140.7

1,070.0

6.6%

Intra-Group revenue

(2.8)

(2.5)

£

(2.8)

(2.5)

12.0%

Group revenue

2,590.7

2,389.8





 

 

Operating profit by division is summarised below:

 

 

OPERATING PROFIT

Year to 30 April

 

2012

2011

 

 

Functional

currency

2012

2011


£m

% margin

£m

% margin

   Functional currency (m)

Continuing Group operations








UK Bus (regional operations)

162.7

17.9%

153.1

17.1%

£

162.7

153.1

UK Bus (London)

13.5

5.9%

(5.9)

(4.4)%

£

13.5

(5.9)

North America

19.7

6.3%

19.3

6.5%

US$

31.4

30.2

UK Rail

27.1

2.4%

48.4

4.5%

£

27.1

48.4

Group overheads

(11.1)


(11.3)





Restructuring costs

(2.3)


(2.9)






209.6


200.7





Joint ventures - share of profit after tax








Virgin Rail Group

15.9


28.4





Citylink

2.0


1.8





Twin America

9.7


9.3





Total operating profit before intangible asset expenses

237.2


240.2





Intangible asset expenses

(12.3)


(15.2)





Exceptional items

38.0


-





Total operating profit: Group operating profit and share of joint ventures' profit after tax

262.9


225.0





 




UK Bus (regional operations)

 

Financial performance

 

The financial performance of the UK Bus (regional operations) division for the year ended 30 April 2012 is summarised below:

 

Year to 30 April

2012

£m

2011

£m

Change

        %

Revenue

909.7

893.6

1.8%

Like-for-like revenue

908.1

886.7

2.4%

Operating profit*

162.7

153.1

6.3%

Operating margin*

17.9%

17.1%

80bp

 

Like-for-like passenger volume growth for the year was 1.9%.  Like-for-like revenue was built up as follows:

 

Year to 30 April

2012

£m

2011

£m

Change

        %

Commercial on and off bus revenue

 

541.9

 

511.7

 

5.9%

Concessionary revenue

225.3

230.8

(2.4)%

Tendered and school revenue

 

101.3

 

101.9

 

(0.6)%

Contract revenue

34.2

36.4

(6.0)%

Hires and excursions

5.4

5.9

(8.5)%

Like-for-like revenue

908.1

886.7

2.4%

 

We have delivered further revenue, passenger volume and operating profit growth at our UK Bus (regional operations). While investment by local authorities in contracted and supported services has decreased, we have focused closely on growing our strong commercial bus services.  Our focus on commercial revenue, where we have greater flexibility to manage pricing, service patterns and frequencies, is reflected in the like-for-like revenue growth of 5.9% reported for that category, which is a little lower than the growth rate reported for the first half of the financial year because some fare increases were effected later than in the previous year.  The decline in concessionary revenue reflects pressure from local authorities to reduce concessionary reimbursement rates in light of budgetary pressures they face, which is also putting pressure on revenue from tendered and school services.  Revenue from contracts has declined as a result of major events in the prior year period that did not recur such as providing services for the Ryder Cup golf event in Wales and the Pope's visit to Glasgow.

 

Total like-for-like revenue growth of 2.4% is below the rate of 2.7% previously reported for the forty eight weeks ended 1 April 2012.  The reduction in the rate of growth reflects the effect of significant concessionary scheme settlements recognised in April 2011 that did not recur in April 2012, partly offset by there being one less bank holiday day in April 2012 compared to April 2011.

 

We are continuing to achieve good financial returns using tailored management solutions to respond to specific markets by managing pricing, service patterns and frequencies. Bus use in Hull, for example, has grown by 60% in less than a decade, while in East Kent passenger numbers have doubled since 2003. Strong partnerships with local transport authorities have been central to that success.  This summer, we will be playing a key role in the successful delivery of the London 2012 Olympic and Paralympic Games, including providing transport for athletes and the media.

 

We are continuing to deliver sector-leading profit margins and good organic passenger volume growth through our value fares strategy, consistent investment in our fleet, the development of innovative products and roll-out of new technology solutions to make travel easier for our customers.  In February 2012, we announced a £60m investment in 390 new buses and coaches for the 2012-13 financial year for our regional bus networks in Scotland, England and Wales. We have expanded further our megabus.com budget coach product in the UK, adding more frequent services on key routes and new locations, as well as supporting our joint venture, Scottish Citylink, in trialling a new overnight sleeper coach service. In April 2012, we launched a new network of international routes from the UK to Continental Europe. Our new services linking London with Paris, Brussels and Amsterdam have already proved popular and we are monitoring closely the moves by several countries in Europe to further deregulate domestic coach services.

 

The improvement in operating margin was built up as follows:

 

Operating margin - 2010/11

17.1%

Change in:


Staff costs

0.9%

Fuel costs

(0.3)%

Insurance and claims costs

0.4%

Other

(0.2)%

Operating margin - 2011/12

17.9%

 

Although wages have generally increased in line with average earnings, staff costs as a whole fell as a percentage of revenue, reflecting a continued focus on cost control and reduced pension costs.  Fuel costs increased by £5.2m, reflecting increased unit costs under the Group's fuel hedging programme.  Insurance and claims costs have reduced as the value of claims received relative to the revenue has been lower than in previous years.

 

Acquisition

 

The Group has agreed, subject to regulatory approval to acquire the bus assets of FirstGroup in North Devon and Torridge for £2.8m.  The process to seek regulatory approval is underway.  FirstGroup has announced plans to sell further businesses and we shall assess each further opportunity on its own merits.

 

Cost control

 

We have taken sensible steps to manage cuts in public sector spending, including the reductions in Bus Service Operators' Grant from April 2012, through changes to our fares and bus networks.  Our focus continues to be on protecting services, targeting investment in areas where buses are most used by our customers, as well as ensuring our business continues to deliver good returns to our shareholders.  These developments have also made our business less dependent on Government spending.

 

In light of the Government cuts to Bus Service Operators' Grant, reduced Government funding of concessionary and tendered revenue, and increasing fuel costs, our bus fares were increased in April 2012 by an average of 5% but generally continue to offer good value when compared to other operators' fares and the costs of other transport modes.  The effect of the April 2012 fare increases on revenue has thus far been in line with our expectations.

 

Regulatory developments

 

The Competition Commission inquiry into the local bus market in the UK (excluding London and Northern Ireland) has largely given the industry a clean bill of health and expressly ruled out structural change, price controls or increased regulation.  In another of its key conclusions, it called on local transport authorities to embrace partnerships with bus operators.  This approach has been successful in ensuring more bus priority measures, more investment and higher quality services, encouraging more people to switch from the car to greener bus travel.  In England, the Department for Transport is consulting on the Competition Commission recommendations for multi operator ticketing and some changes to service registration regulations.  These are positive outcomes and we will continue to support further improvements which will lead to greater bus use and build on the already high levels of customer satisfaction.

 

Outlook

 

We remain positive on the prospects for the Division as we continue to focus on running good value commercial services where we have flexibility on fares and service patterns.  The Division has continued to perform well during weak macroeconomic conditions and a period of downward pressure on Government spending.  We are benefitting from modal shift from the car to public transport as motoring costs and fuel prices remain high and this is a key focus for our marketing campaigns. These factors have reinforced our confidence in the robustness of the Division.  As economic conditions improve, it is well placed to grow further by capitalising on the demand for value travel, rising environmental awareness, and increasing road congestion.

 

In the year to 30 April 2013, we see the Division being well placed to at least maintain operating profit despite the challenging headwinds facing it.

 

 


UK Bus (London)

 

Financial performance

 

The financial performance of the UK Bus (London) division for the year ended 30 April 2012 is summarised below:

 

Year to 30 April

2012

£m

2011

£m

Revenue

230.5

133.6

Operating profit/(loss)

13.5

(5.9)

Operating margin

5.9%

(4.4)%

 

On 14 October 2010, the Group completed the acquisition of the bus business formerly owned by East London Bus Group Limited, acquiring four companies that together operate the business.

 

The annualised revenue from contracts which we currently operate is around £226m.  At the time of acquisition, the annualised revenue from contracts being operated was around £241m.  The number of contracts being operated has reduced from 93 at the date of acquisition, to 81 at 30 April 2012.  The loss of the majority of the contracts no longer being operated was as a result of unsuccessful bids submitted prior to our acquisition of the business. 

 

Our turnaround programme for our London Bus operations is progressing well.  We have achieved overhead cost savings through synergies with our other UK operations, and unit labour cost savings through reaching positive negotiated agreements with staff on working practices and productivity. 

 

The majority of new vehicles for our London Bus business have been obtained on operating leases since our 2010 acquisition of the business.  Although this results in lower operating profit with financing costs being incorporated in the lease cost that is expensed to operating profit, it enables the lease terms to be matched to the duration of the contracts with Transport for London.  This protects the business from residual value risk and means that our other bus businesses are not forced to accept second-hand London vehicles.

 

Bus workers across London, including those employed by the Group, have voted for industrial action in relation to their demand for bonus payments to recognise what they consider to be an increase in their workload during the 2012 Olympic Games.  Strike action took place on 22 June.  The Group is contracted by Transport for London to operate bus services in London and the price paid by Transport for London does not contemplate the payment of bonuses for the 2012 Olympic Games.   The Group continues to work with Transport for London and the trade unions to seek a resolution to this matter.

 

Outlook

 

We are encouraged by the continuing signs that our restructured business is more competitive in the tendered market and has now achieved contract wins on realistic profit margins.  We are pleased with the progress to date, and are optimistic on the prospects for further profit growth.

North America

 

Financial performance

 

The financial performance of the North America division for the year ended 30 April 2012 is summarised below:

 

Year to 30 April

2012

US$m

2011

US$m

Change

        %

Revenue

498.0

461.7

7.9%

Like-for-like revenue

478.2

419.3

14.0%

Operating profit

31.4

30.2

4.0%

Operating margin

6.3%

6.5%

(20)bp

 

Like-for-like revenue was built up as follows:

 

Year to 30 April

2012

US$m

2011

US$m

Change

        %

Megabus

115.9

75.4

53.7%

Scheduled service and commuter

 

213.6

 

194.9

 

9.6%

Charter

78.6

82.3

(4.5)%

Sightseeing and tour

20.9

19.9

5.0%

Contract

42.2

40.3

4.7%

School bus

7.0

6.5

7.7%

Revenue

478.2

419.3

14.0%

 

North America is the fastest-growing division in the Group and we have increased our operating profit during the year even after taking account of the operating profit foregone on the sale of our Wisconsin school bus operations and start-up losses on the further expansion of megabus.com.  Our focus on megabus.com and our scheduled service and commuter business has included redeploying fleet away from charter work to these businesses.  This approach is reflected in the change in the mix of revenue.  During the year, we disposed of the majority of our North American school bus operations, which represented US$17.5m of the revenue for the year ended 30 April 2012.

 

We are excited by the next phase of our growth plan for our budget coach brand, megabus.com, in North America where we are seeing growing demand for our package of value fares and high-quality travel. In December 2011, we announced a £40m investment in 95 vehicles for the megabus.com network in the United States and Canada.  During the year, we expanded our services to the South East United States and we now cover around 90 key cities. Moving forward, we have a clear plan to roll-out our services to new parts of the United States and our new Texas network started operating services from 19 June 2012.  While we have a relatively high level of investment mileage in this period of expansion, our more established routes are continuing to show excellent operating margins.

 

The North American division has reported good growth in scheduled service and commuter revenue as these services have benefited from passenger volumes shifting to bus and coach travel from other forms of transport.  Sightseeing, tour, contract and school bus revenue has held up well through difficult economic conditions.

 


The change in operating margin was built up as follows:

 

Operating margin - 2010/11

6.5%

Change in:


Fuel costs

(1.2)%

Insurance and claim costs

0.9%

Staff costs

1.6%

Other external charges

(1.5)%

Operating margin - 2011/12

6.3%

 

Fuel costs increased by US$9.8m, which is in part related to the increased mileage operated to support growth in megabus services, and also the fuel hedging arrangements mean that the average fuel cost per unit is higher than last year.  Insurance and claim costs have decreased as a percentage of revenue from last year as the expense last year included provisions for a small number of significant individual claims.  However, the year-on-year saving in insurance and claims costs is less than we reported for the first half of the financial year, reflecting more significant claims provisions recorded for matters arising in the second half of the year.  Staff costs fell as a percentage of revenue as we continue to focus on cost control.  Other external charges increased as a proportion of revenue mainly as a result of sub-contracted megabus.com services.

 

Acquisition from Coach America

 

In May 2012, we agreed to acquire selected businesses and assets from Coach America, and we expect to complete the acquisition shortly.  We have agreed to acquire:

1. Certain businesses and related assets and liabilities, for a cash consideration of US$134.2m and;

2. At the option of the Sellers, up to 85 further coaches for a cash consideration of up to US$25.6m, which would correspondingly reduce other capital expenditure.

 

Some US$16.0m of the consideration was paid in May 2012 as a refundable deposit, with the balance being due on or around the completion of the transaction. The consideration payable will be potentially adjusted based on the working capital balances of the businesses to be acquired.

 

In the year ended 31 December 2011 and applying Stagecoach accounting policies, the businesses to be acquired for US$134.2m generated estimated revenue of US$164.4m, EBITDA of US$24.6m and operating profit of US$13.3m, after taking account of estimated central overheads relating to the businesses.

 

The businesses being acquired include contract, line-run, charter and sightseeing operations. The transaction enables Stagecoach to acquire selected businesses at an attractive price and to acquire vehicles as part of its capital expenditure programme.

 

The businesses to be acquired include operations in Texas and California, which will provide depot infrastructure to enable Stagecoach to expand its megabus.com budget coach network more efficiently, more quickly and under its full control, whilst avoiding the need to pay a sub-contract profit margin in these locations. In addition, Coach America's Atlanta business is the existing sub-contractor of the megabus.com Atlanta hub and that business is amongst those to be acquired.

 

Outlook

 

The North America division continues to see excellent prospects for long-term growth. As we roll-out our megabus.com brand to new locations, we expect the benefits of continuing revenue growth at our established operations and improving profits at some megabus.com hubs as they mature to be offset by start up losses incurred at the newer megabus.com hubs.  The planned acquisition of businesses from Coach America will further add to operating profit.  Looking further forward, the outlook remains positive with the prospect of improving profit across the newer megabus.com operations and ongoing growth in the other businesses.

 

UK Rail

 

Financial performance

 

The financial performance of the UK Rail division for the year ended 30 April 2012 is summarised below:

 

Year to 30 April

2012

£m

2011

£m

Change

        %

Revenue

1,140.7

1,070.0

6.6%

Like-for-like revenue (excluding tram)

1,119.1

1,026.9

9.0%

Operating profit

27.1

48.4

(44.0)%

Operating margin

2.4%

4.5%

(210)bp

 

The UK Rail division made an operating profit of £27.1m in the year to 30 April 2012 (2011: £48.4m).  This reduction was principally due to losses incurred at East Midlands Trains in the first half of the year where revenue was below the level forecast when the contract was originally awarded, and the premium payments made to the Department for Transport ("DfT") were agreed.  From November 2011, East Midlands Trains has earned revenue support payments from the DfT, which have returned that business to profitability for the second half of the year.  South West Trains, which also makes premium payments to the DfT, continues to receive revenue support. We have a strong and profitable rail portfolio and our wholly-owned franchises recognised net premium payments of £283.1m in 2011-12 to the DfT, ensuring taxpayers share in our success in attracting more people to rail travel.

 

Like-for-like revenue growth of 9.0% is above the rate of 8.8% previously reported for the forty eight weeks ended 1 April 2012.  The increase in the rate of growth is principally due to there being one less bank holiday day in April 2012 compared to April 2011.

 

The decline in operating margin was built up as follows:

 

Operating margin - 2010/11

4.5%

 

Change in:


Amounts paid to / from DfT

(4.9)%

Rolling stock lease and maintenance

0.2%

Network Rail charges

1.3%

Traction energy costs

(0.7)%

Staff costs

1.6%

Other

0.4%

Operating margin - 2011/12

2.4%

 


The net amount paid to the DfT by our two rail franchises, which includes revenue support payments received, has increased at a faster rate than revenue, as actual revenue growth has not been as high as was expected at the time the franchise contracts were awarded.  Rolling stock costs have a large fixed element which is not subject to inflationary increases and therefore decrease as a proportion of revenue as revenue grows.  Network Rail charges as a proportion of revenue have decreased as revenue growth has been higher than the inflationary increase in these costs, along with changes in the amount of performance regime income received.  Traction energy costs have increased ahead of the rate of revenue growth due mainly to rises in diesel costs.  Staff costs have in general seen inflationary increases, along with some savings from more efficient use of staff, which has resulted in staff costs growing at a lower rate than revenue.

 

The recent strikes by East Midlands Trains drivers have not had an adverse financial impact on the Group, and we can confirm that agreement in principle has now been reached with all of the major trade unions, setting reduced pension contribution rates at East Midlands Trains from July 2012 in accordance with the formal actuarial valuation.  No further strike action is expected in relation to this matter.

 

The Group disposed of its Manchester tram operations, Stagecoach Metrolink Limited, in August 2011, realising an £7.0m gain on disposal, which is separately reported as an exceptional item.

 

Operational performance, passenger satisfaction and cost control

 

Strong revenue growth in our UK Rail division has been underpinned by consistently high levels of punctuality and customer satisfaction.  South West Trains was named Passenger Operator of the Year in 2011 and operational performance at our East Midlands Trains and South West Trains franchises remains amongst the highest of the UK train operators.  The most recent figures show that the moving annual average for punctuality1 at South West Trains is 91.9% and at East Midlands Trains is 93.5%.  Satisfaction amongst our passengers also remains high.  The latest National Passenger Survey, carried out during Autumn 2011, shows overall satisfaction of 84% at South West Trains and 87% at East Midlands Trains.

 

We continue to critically review our operational cost base to identify and drive out efficiency savings, while improving the service for our customers.  In April 2012, South West Trains and Network Rail announced the formation of an alliance to deliver better and more efficient rail services in the south and south-west of England. It delivers a key element of the Government's Rail Command Paper, issued in March 2012, which called for closer co-operation between operations and infrastructure. A single senior joint management team now has responsibility for both trains and track on the route operating out of London Waterloo in a first for the UK rail industry. It is aiming to cut delays for passengers, provide better customer service, deliver more effective management of disruption, and reduce the costs of the railway through more collaborative working and better decision-making. The new alliance is also expected to benefit rail freight operators who use the Wessex route. It builds on the existing joint working between South West Trains and Network Rail through the Wessex Integrated Control Centre at London Waterloo, as well as recent moves by Network Rail to devolve operational responsibility to regional units. The alliance has been approved by the DfT and the Office of Rail Regulation. It is planned to run until 4 February 2017, the expiry date of the South West Trains franchise agreement.

 

The Alliance includes an agreed financial baseline for the costs and revenues of its activities, with variances to the financial baseline being shared equally between South West Trains and Network Rail. The agreement also includes a "taxpayer benefit" whereby the DfT takes a share of any financial upside generated by the Alliance in excess of agreed financial thresholds.

 

_______________

Punctuality is measured on the basis of the Department for Transport’s Public Performance Measure, being the percentage of trains that arrive at their final destination within 5 minutes (or 10 minutes for inter-city services) of their scheduled arrival time having called at all scheduled stations. Figures quoted are taken from the latest train performance results, which measured punctuality to 26 May 2012.

 

Investment

 

We are continuing to invest in services for passengers, delivering additional capacity on our trains and improving our stations. A total of 108 extra carriages are to be introduced on South West Trains, one of the busiest commuter networks in Europe, between May 2013 and December 2014. Under the agreement with the DfT, thousands of extra seats will be provided for commuters during peak times. As part of the capacity enhancements, Platform 20 at the former Waterloo International Terminal will be brought back into use and South West Trains is working with the Government and other agencies to re-open the platform earlier than the previously planned timescale of December 2013. Proposals are also being developed by the DfT, Network Rail and South West Trains to provide a long-term solution to congestion at London Waterloo. South West Trains is currently investing over £100m in a range of improvements for passengers, including better station facilities, additional car parking spaces, fleet refurbishment and provision of better customer information.  At East Midlands Trains, passengers are benefitting from investment of around £70m on improving every single train in the fleet, delivering better station facilities, creating more car parking spaces, providing 200 extra secure cycle spaces and installing new ticket machines.

 

Rail franchises

 

The Government is continuing its review of rail franchising in light of the McNulty report on value for money in the rail industry and publication of the Rail Command Paper. The evolving franchise model incorporates longer franchises, some additional flexibility in service levels, a more customer-focused measure of quality, changes to risk share in a move to a GDP-based sharing mechanism and profit share and more responsibility for stations being transferred to train operators.  Stagecoach has a combination of commercial and operational expertise which means the Group is well placed to benefit from franchise reform. We have an experienced business development team, which has been refreshed with senior operational expertise. The Group has a record of major project delivery, good cost control, generating passenger growth and increased revenue from smart timetabling, and delivering consistently high levels of performance and passenger satisfaction. We are currently shortlisted for both of the franchises we recently applied for, Greater Western and Thameslink. The DfT programme for the medium-term will see at least 7 franchises market tested within the next 3 years and we will seek to add to our existing portfolio where we believe there is the right risk-reward profile and we can add value for our shareholders.

 

Outlook

 

The profit of our existing rail franchises is now less sensitive to macroeconomic conditions given the availability of revenue support.  Revenue growth remains good and although our bidding costs will increase in 2012-13 as we invest in new franchise opportunities and premia payments to the DfT will rise, we see potential for increased profit from the UK Rail Division with a full year of revenue support at East Midlands Trains.

 

Virgin Rail Group

 

Financial performance

 

The financial performance of the Group's Virgin Rail joint venture for the year ended 30 April 2012 is summarised below:

 

Year to 30 April

49% share:

2012

£m

2011

£m

Change

        %

Revenue

429.5

392.7

9.4%

Like-for-like revenue

425.2

392.0

8.5%

Operating profit

21.5

39.5

(45.6)%

Net finance income

0.3

0.2

50.0%

Taxation

(5.9)

(11.3)

(47.8)%

Profit after tax

15.9

28.4

(44.0)%

Operating margin

5.0%

10.1%

(510)bp

 

Virgin Rail Group ("VRG") has continued to grow its business and leisure base on the West Coast franchise.  Annual passenger journeys have risen from around 14 million to over 30 million in just 7 years, following significant investment in new trains and improved infrastructure, with VRG train services winning significant market share from domestic airlines. The VRG operating margin is lower than last year mainly because the increase in the net amounts paid by VRG to the DfT was proportionately higher than the growth in passenger revenue.

 

Like-for-like revenue growth of 8.5% is above the rate of 7.9% previously reported for the forty eight weeks ended 1 April 2012.  The increase in the rate of growth is principally due to there being one less bank holiday day in April 2012 compared to April 2011, with revenue around the time of the Royal Wedding in April 2011 being notably lower than usual.

 

Performance has improved in recent months, with a moving annual average of 85.4% punctuality to 26 May 2012. However, it remains below what VRG believes is acceptable for its customers and VRG continues to press Network Rail for changes that will deliver better, more consistent infrastructure performance on the West Coast mainline to improve train punctuality for customers.

 

VRG has agreed an eight month extension to the franchise, which has been extended to 8 December 2012.  As well as providing continuity of service over the period of the London 2012 Olympics, VRG will manage the introduction of more than 100 new Pendolino train carriages, during the extension period.

 

We expect the Group's share of VRG's profit after tax for the extension period from 1 April 2012 to 8 December 2012 to be below £10.0m.  This expected return reflects the relatively low revenue risk in the extension period and the strategic importance to VRG of it remaining the franchise incumbent. VRG received contractual revenue support payments from the DfT under the West Coast franchise for the year to 31 March 2012. The DfT's target revenue for the franchise extension is challenging and VRG expects to be in revenue support for the extension period as a whole.

 

In May 2012, VRG submitted its bid for the new West Coast rail franchise, which will start on 9 December 2012 and run until 31 March 2026, with an option to be extended by up to 20 months. VRG's innovative bid is centred on improving services for passengers, building on its strong record of passenger volume growth, leveraging the investment made in train services and infrastructure, and providing a significant premium to taxpayers.

 

Outlook

 

VRG expects to remain profitable through to the end of the now extended West Coast franchise in December 2012. As indicated, it has submitted a strong bid for the new West Coast franchise, and will evaluate opportunities to bid for other major inter-city rail franchises as they come up for re-tender.

 

Twin America

 

Financial performance

 

The financial performance of the Group's Twin America joint venture for the year ended 30 April 2012 is summarised below:

 

Year to 30 April

60% share:

2012

US$m

2011

US$m

Change

        %

Revenue

80.6

67.7

19.1%

Operating profit

16.2

15.2

6.6%

Taxation

(0.8)

(0.6)

33.3%

Profit after tax

15.4

14.6

5.5%

Operating margin

20.1%

22.5%

(240)bp

 

The tax treatment of our share of profit is such that the joint venture's own profit is partially taxed but an additional tax charge falls on the joint venture partners and the effect of that on the Group is included within "taxation" in the consolidated income statement.

 

We are pleased by the strong financial performance of our Twin America joint venture in the year ended 30 April 2012.  The main New York sightseeing operation has continued to deliver a high operating margin.  Overall profit growth was partly constrained by losses at a now terminated venture in Los Angeles and legal costs associated with the regulatory matters explained below.  In June 2011, Twin America commenced sightseeing boat tours on the River Hudson around Manhattan, where demand has been encouraging and these operations have generated operating profit over the past quarter. The outlook for Twin America remains positive.

 

Twin America was notified by the United States Surface Transportation Board ("STB") in February 2011 that its application for formal approval of the joint venture had not been approved.  The STB confirmed that the joint venture, as currently structured, did require its approval and therefore, having decided not to approve the joint venture, the STB gave Twin America the option of separating the business, assets and management of the joint venture. Alternatively, the joint venture could terminate or divest its interstate services, which account for around 1% of the joint venture's revenues. The interstate services are now no longer part of the joint venture and this removed the transaction from STB jurisdiction and placed it within the authority of the New York State Attorney General and the United States Department of Justice.  The New York Attorney General and Department of Justice are now undertaking reviews of the transaction and Twin America is co-operating with them.  Twin America believes customers have benefitted from good quality, high value, and better co-ordinated services, while the joint venture has achieved cost savings and other synergies. We and Twin America will continue to assist all regulatory authorities and will present any further evidence as appropriate to help inform any future decision.

 

Depreciation and intangible asset expenses

 

Earnings from continuing operations before interest, taxation, depreciation, intangible asset expenses and exceptional items (pre-exceptional EBITDA) amounted to £343.9m (2011: £342.7m).  Pre-exceptional EBITDA can be reconciled to the condensed financial statements as follows:

 

 

 

Year to 30 April

 

2012

£m

 

2011

£m

Total operating profit before intangible asset expenses and exceptional items

237.2

240.2

Depreciation

99.9

90.3

Add back joint venture finance income & tax

6.8

12.2

Pre-exceptional EBITDA

343.9

342.7

 

The income statement charge for intangible assets decreased from £15.2m to £12.3m as certain intangible assets became fully amortised and the rate charged on Virgin Rail Group goodwill was reduced so as to spread the remaining carrying value of goodwill over the now extended remaining period of its West Coast rail franchise.  Of the charge, £3.2m (2011: £5.1m) related to joint ventures. 



Business disposals and other exceptional items

 

The following exceptional items were recognised in the year ended 30 April 2012:

 

·      A pre-tax gain of £7.0m on the sale of the Group's Manchester tram operations, which has been updated since the results of the six months ended 31 October 2011, was reported following finalisation of the disposal accounting, and a pre-tax loss of £0.1m was reported in relation to adjustments to amounts receivable from previous disposals.

 

·      A pre-tax gain of £10.8m (US$17.2m) on the November 2011 sale of the Group's Wisconsin school bus operations.  The proceeds for the sale were £31.5m (US$50.2m, after taking account of additional proceeds of US$3.2m received as part of an adjustment for working capital balances), transaction costs were £0.5m (US$0.8m) and the carrying value of the net assets disposed was £20.2m (US$32.2m).  Although the business had performed well, Stagecoach's share of the US school bus market was relatively small and the sale enabled Stagecoach to focus its management and capital on less regulated North American operations, including the fast growing megabus.com business.

 

·      A pre-tax gain of £38.0m arising from a reduction in the Group's retirement benefit obligations following pension scheme changes to secure the continued provision by the Group of high quality pension arrangements for its employees.  The principal change giving rise to the exceptional gain was a reduction in the maximum rate by which pensionable pay may increase.

 

·      A pre-tax loss of £5.6m (US$9.0m) related to the continued re-focussing of the Group's North American business.  The loss arises from the closure of certain business units and the expected withdrawal from certain contracts and other operations.  The largest components of the exceptional loss are a £4.6m (US$7.3m) impairment of goodwill and a £0.7m (US$1.1m) provision for an onerous property lease.

 

·      Expenses of £0.5m were incurred in the year in relation to the planned acquisition of businesses from Coach America.

 


Finance costs

 

Net finance costs for the year ended 30 April 2012 were £34.7m (2011: £34.5m) and can be further analysed as follows:

 

Year to 30 April

2012

£m

2011

£m

Finance costs



Interest payable and other facility costs on bank loans, overdrafts and trade finance

 

5.6

 

5.7

Hire purchase and finance lease interest payable

 

6.2

 

6.8

Interest payable on bonds

23.7

23.5

Unwinding of discount on provisions

2.7

3.9


38.2

39.9

Finance income



Interest receivable on cash

(2.0)

(2.2)

Effect of interest rate swaps

(1.5)

(3.2)


(3.5)

(5.4)

Net finance costs

34.7

34.5

 

Taxation

 

The effective tax rate for the year ended 30 April 2012, excluding exceptional items, was 22.9% (2011: 21.9%). The effective rate is lower than the standard rate of UK corporation tax for the year of 25.8% due primarily to the utilisation of previously unrecognised tax losses and the impact of the reduction in the rate at which deferred tax is calculated (following the reduction in the corporation tax rate from 26% to 24%). The tax charge for continuing operations can be analysed as follows:

 

 

Year ended 30 April 2012

Pre-tax profit

£m

 

Tax

£m

 

Rate

%

Excluding intangible asset expenses and exceptional items

 

 

209.6

 

 

(47.5)

 

 

22.7%

Intangible asset expenses

(12.3)

2.4

19.5%


197.3

(45.1)

22.9%

Exceptional items

49.6

(13.5)

27.2%


246.9

(58.6)

23.7%

Reclassify joint venture taxation for reporting purposes

 

 

(7.1)

 

 

7.1

 

 

 

Reported in income statement

239.8

(51.5)

21.5%

 

Fuel costs

 

The Group's operations as at 30 April 2012 consume approximately 363.7m litres of diesel fuel per annum.  As a result, the Group's profit is exposed to movements in the underlying price of fuel.  The Group's fuel costs include the costs of delivery and duty as well as the costs of the underlying product.  Accordingly, not all of the cost varies with movements in oil prices.

 

The proportion of the Group's projected fuel usage that is now hedged using fuel swaps is as follows:

 

Year ending 30 April

2013

2014

2015

2016

Total Group

80%

54%

5%

1%

The Group has no fuel hedges in place for periods beyond 30 April 2016.

 

Cash flows

 

Net cash from operating activities before tax for the year ended 30 April 2012 was £279.2m (2011: £252.2m) and can be further analysed as follows:

 

Year ended 30 April

2012

£m

2011

£m

EBITDA of Group companies before exceptional items

 

309.5

 

291.0

Loss on disposal of plant and equipment

0.6

0.9

Equity-settled share based payment expense

 

3.0

 

4.7

Working capital movements

(0.2)

(22.7)

Net interest paid

(30.8)

(30.1)

Dividends from joint ventures

25.8

28.8

Net cash from operating activities before excess pension contributions

 

307.9

 

272.6

Pension contributions in excess of non-exceptional pension costs

 

(28.7)

 

(20.4)

Net cash flows from operating activities before taxation

 

279.2

 

252.2

 

The net working capital outflow for the year ended 30 April 2012 of £0.2m (2011: £22.7m) was better than previously expected, principally due to active management of working capital to maximise cash conversion.

 

Net cash from operating activities before tax was £279.2m (2011: £252.2m) and after tax was £257.5m (2011: £231.8m).  Net cash outflows from investing activities were £75.6m (2011: £198.2m), which included in the prior year £57.0m in relation to acquisitions and net cash used in financing activities was £299.4m (2011: £49.7m), which includes the part of the return of cash (see below) to shareholders that was funded from excess cash.

 

The net impact of purchases of property, plant and equipment for the year on net debt was £211.4m (2011: £164.4m).  This primarily related to expenditure on passenger service vehicles, and comprised cash outflows of £176.1m (2011: £156.3m) and new hire purchase and finance lease debt of £35.3m (2011: £8.1m).  In addition, £65.4m (2011: £14.7m) cash was received from disposals of property, plant and equipment.

 

Return of cash

 

A return of cash to shareholders of approximately £340m was completed in October 2011.  This equated to 47p per ordinary share.  The return of cash was approved by shareholders at a general meeting on 7 October 2011.  Note 13 to the condensed financial statements includes further information on the return of cash.

 


Net debt

 

Net debt (as analysed in note 16 to the condensed financial statements) increased from £280.9m at 30 April 2011 to £523.8m at 30 April 2012, primarily due to the return of cash to shareholders.  The Group's net debt at 30 April 2012 is further analysed below:

 

 

 

Fixed rate

£m

Floating rate

£m

 

Total

£m

Unrestricted cash

-

52.0

52.0

Cash held within train operating companies

-

169.2

169.2

Restricted cash

-

19.8

19.8

Total cash and cash equivalents

-

241.0

241.0

Sterling bond

(398.3)

-

(398.3)

Sterling hire purchase and finance leases

(7.4)

(126.6)

(134.0)

US dollar hire purchase and finance leases

(56.2)

-

(56.2)

Loan notes

-

(20.9)

(20.9)

Bank loans

-

(155.4)

(155.4)

Net debt

(461.9)

(61.9)

(523.8)

 

Liquidity and bank re-financing

 

The Group's financial position remains strong and is evidenced by:

·     The ratio of net debt at 30 April 2012 to pre-exceptional EBITDA for the year ended 30 April 2012 was 1.5 times (2011: 0.8 times). 

·     Pre-exceptional EBITDA for the year ended 30 April 2012 was 10.0 times (2011: 10.0 times) net finance charges (including joint venture net finance income).

·     Undrawn, committed bank facilities of £265.3m at 30 April 2012 (2011: £423.6m) were available to be drawn as bank loans with further amounts available only for non-cash utilisation.  In addition, the Group continues to have available asset finance lines.

·     The three main credit rating agencies continue to assign investment grade credit ratings to the Group.

The Group's main bank facilities are committed through to 2016. 

 

The Group plans to initially finance the acquisition of businesses and assets from Coach America from its undrawn, committed bank facilities but has plans to restore facility headroom through the issue of new debt to part re-finance the acquisition. 

 



Capital expenditure

 

Additions to property, plant and equipment for the year were:

 

Year to 30 April

2012

£m

2011

£m

UK Bus (regional operations)

89.9

85.1

UK Bus (London)

32.3

17.1

North America

50.0

31.4

UK Rail

42.4

34.2

Other

0.1

-


214.7

167.8

 

The differences between the amounts shown above and the impact of capital expenditure on net debt arose from movements in fixed asset deposits and creditors.

 

Net liabilities

 

Net liabilities at 30 April 2012 were £57.3m (2011: net assets £246.2m) with the decrease primarily reflecting the return of cash to shareholders in October 2011, actuarial losses on Group defined benefit pension schemes of £72.8m after tax and after-tax movements on Group cash flow hedges of £29.2m, partly offset by strong results for the year.

 

Retirement benefit obligations

 

The reported net liabilities of £57.3m (2011: net assets £246.2m) that are shown on the consolidated balance sheet are after taking account of net pre-tax retirement benefit liabilities of £124.1m (2011: £97.1m), and associated deferred tax assets of £29.8m (2011: £25.2m).

 

The Group recognised pre-tax actuarial losses of £93.7m in the year ended 30 April 2012 (2011: pre-tax actuarial gains £76.5m) on Group defined benefit schemes. 

 

 

Related parties

 

Details of significant transactions and events in relation to related parties are given in note 18 to the condensed financial statements.

 

Principal risks and uncertainties

 

Like most businesses, there are a range of risks and uncertainties facing the Group.  A brief summary of the principal risks and uncertainties is given below.  The principal risks and uncertainties facing the Group have not changed since the publication of the Group's 2011 Annual Report, where a more detailed explanation of the risks and uncertainties can be found on pages 14 to 16.  Further information and updates will be provided in the 2012 Annual Report.  These matters are not intended to be an exhaustive list of all possible risks and uncertainties. 

 

The focus below is on those specific risks and uncertainties that the Directors believe could have the most significant impact on the Group's performance.

 

·      Catastrophic events- there is a risk that the Group is involved (directly or indirectly) in a major operational incident.

·      Terrorism - there is a risk that the demand for the Group's services could be adversely affected by a significant terrorist incident.

·      Economy - the economic environment in the geographic areas in which the Group operates affects the demand for the Group's bus and rail services. 

·      Rail cost base- a substantial element of the cost base of the UK Rail division is essentially fixed as under its UK rail franchise agreements, the Group is obliged to provide a minimum level of train services and is less able to flex supply in response to changes in demand.

·      Sustainability of rail profits - there is a risk that the Group's revenue and profit could be significantly affected (either positively or negatively) as a result of the Group winning new UK rail franchises or failing to retain its existing franchises.

·      Breach of franchise- if the Group fails to comply with certain conditions as part of its rail franchise agreements it may be liable to penalties including potential termination of one or more of the rail franchise agreements.

·      Pension scheme funding - the Group participates in a number of defined benefit pension schemes, and there is a risk that the cash contributions required increase or decrease due to changes in factors such as investment performance, discount rates and life expectancies.

·      Insurance and claims environment - there is a risk that the cost to the Group of settling claims against it is significantly higher or lower than expected.

·      Regulatory changes and availability of public funding - there is a risk that changes to the regulatory environment or changes to the availability of public funding could affect the Group's prospects.

·      Management and board succession - succession planning for the Directors and senior management is an important issue.

·      Disease - there is a risk that demand for the Group's services could be adversely affected by a significant outbreak of disease.

·      Information technology- there is a risk that the Group's capability to make Internet sales either fails or cannot meet levels of demand.

·      Treasury risks- the Group is affected by changes in fuel prices, interest rates and exchange rates.

 

 



Current trading and outlook

 

The Group has made a good start to its financial year ending 30 April 2013 and is trading in line with our expectations.  Further investment in growth is planned over the next year, notably in expanding megabus.com to new locations, bidding for new rail franchise opportunities and in capital expenditure on new vehicles and other assets.

 

The Group is well positioned to withstand any further deterioration in macroeconomic conditions with its solid financing arrangements, its robust bus operations and its current rail franchises benefiting from the protection of Government revenue support.  As well as these strong defensive attributes, the Group has a range of opportunities to drive growth and add further value including the acquisition from Coach America, the further expansion of its successful megabus.com services, the continued turnaround of the acquired London Bus operations, pursuing rail franchise opportunities for which it is shortlisted, developing the Alliance between South West Trains and Network Rail, and furthering its longstanding successful strategy to deliver organic passenger volume and revenue growth, particularly in its regional UK Bus operations.   These opportunities combined with the positive long-term environment for public transport created by rising road congestion, rising car operating costs, supportive government policy and public concerns for the environment augur well for the future of the Group.

 

 

 

Sir Brian Souter

Chief Executive

26 June 2012 

 

 




 

Cautionary statement

 

The preceding preliminary management report and Chairman's statement have been prepared for the shareholders of the Company, as a body, and no other persons.  Their purpose is to assist shareholders of the Company to assess the strategies adopted by the Company and the potential for those strategies to succeed and for no other purpose.  The preliminary management report and Chairman's statement contain forward-looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries, sectors and markets in which the Group operates.  It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables that could cause actual results to differ materially from those currently anticipated.  No assurances can be given that the forward-looking statements will be realised.  The forward-looking statements reflect the knowledge and information available at the date of preparation.  Nothing in the Chairman's statement or in the preliminary management report should be considered or construed as a profit forecast for the Group.  Except as required by law, the Group has no obligation to update forward-looking statements or to correct any inaccuracies therein.

 


CONDENSED FINANCIAL STATEMENTS

 

CONSOLIDATED INCOME STATEMENT

 



Audited

Audited




Year to 30 April 2012

Year to 30 April 2011




Performance pre intangibles and exceptional items

Intangibles and exceptional items

(note 4)

Results for the year

Performance pre intangibles and exceptional items

Intangibles and exceptional items

(note 4)

Results for the year



 









Notes

£m

£m

£m

£m

£m

£m


CONTINUING OPERATIONS









Revenue

3(a)

2,590.7

-

2,590.7

2,389.8

-

2,389.8


Operating costs and other operating income


(2,381.1)

28.9

(2,352.2)

(2,189.1)

(10.1)

(2,199.2)


Operating profit of Group companies

3(b)

209.6

28.9

238.5

200.7

(10.1)

190.6


Share of profit of joint ventures after finance income and taxation

3(c)

27.6

(3.2)

24.4

39.5

(5.1)

34.4


Total operating profit: Group operating profit and share of joint ventures' profit after taxation

3(b)

237.2

25.7

262.9

240.2

(15.2)

225.0


Non-operating exceptional items

4

-

11.6

11.6

-

0.7

0.7


Profit before interest and taxation


237.2

37.3

274.5

240.2

(14.5)

225.7


Finance costs


(38.2)

-

(38.2)

(39.9)

-

(39.9)


Finance income


3.5

-

3.5

5.4

-

5.4


Profit before taxation


202.5

37.3

239.8

205.7

(14.5)

191.2


Taxation


(40.4)

(11.1)

(51.5)

(35.1)

1.8

(33.3)


Profit from continuing operations


162.1

26.2

188.3

170.6

(12.7)

157.9


DISCONTINUED OPERATIONS









Profit from discontinued operations


-

-

-

-

18.5

18.5











TOTAL OPERATIONS









Profit after taxation for the period attributable to equity shareholders of the parent


162.1

26.2

188.3

170.6

5.8

176.4


 

Earnings per share from continuing and discontinued operations









   -  Adjusted/Basic

6

25.4p


29.5p

23.8p


24.6p


   -  Adjusted diluted/Diluted

6

25.0p


29.1p

23.5p


24.3p


Earnings per share from continuing operations









   -  Adjusted/Basic

6

25.4p


29.5p

23.8p


22.0p


   -  Adjusted diluted/Diluted

6

25.0p


29.1p

23.5p


21.7p


Dividends per ordinary share









   -  Interim paid

5



2.4p



2.2p


   -  Final proposed

5



5.4p



4.9p


 

 

The accompanying notes form an integral part of this consolidated income statement.

 


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 


Audited


Year to

30 April 2012

Year to

30 April 2011


£m

£m




Profit for the year

188.3

176.4

Other comprehensive (expense)/income



Foreign exchange differences on translation of foreign operations (net of hedging)

 

0.4

 

(5.4)

Actuarial (losses)/gains on Group defined benefit pension schemes

(93.7)

76.5

Share of actuarial losses on joint ventures' defined benefit pension schemes

 

(0.4)

 

(0.7)

Share of other comprehensive expense on joint ventures' cash flow hedges

 

(1.5)

 

(0.1)

Net fair value (losses)/gains on cash flow hedges

(6.8)

52.6


(102.0)

122.9

 

Transfers to the income statement



Cash flow hedges reclassified and reported in profit for the period

(33.2)

(21.8)




Tax on items taken directly to or transferred from equity



Tax effect of foreign exchange differences on translation of foreign operations (net of hedging)

 

0.6

 

(0.4)

Tax effect of actuarial losses/(gains) on Group defined benefit pension schemes

 

20.7

 

(24.0)

Tax effect of actuarial losses on joint ventures' defined benefit pension schemes

 

0.1

 

0.2

Tax effect of share of other comprehensive expense on joint ventures' cash flow hedges

 

0.5

 

-

Tax effect of cash flow hedges

10.8

(7.4)


32.7

(31.6)

Net comprehensive income and total comprehensive income for the year attributable to equity shareholders of the parent

85.8

245.9

 



 

 

CONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION)

 



Audited

Audited


 

 

Notes


As at

30 April 2012

£m

As at

30 April 2011

£m

ASSETS





Non-current assets





Goodwill

7


91.4

95.3

Other intangible assets

8


17.5

24.2

Property, plant and equipment

9


961.6

924.3

Interests in joint ventures

10


56.6

58.1

Available for sale and other investments



2.3

2.1

Derivative instruments at fair value



1.6

20.7

Retirement benefit asset

12


17.0

23.7

Other receivables



16.4

19.4

 



1,164.4

1,167.8

Current assets





Inventories



22.2

26.6

Trade and other receivables



221.2

221.5

Derivative instruments at fair value



20.8

50.8

Foreign tax recoverable



0.4

1.4

Cash and cash equivalents



241.0

358.3

 



505.6

658.6

Total assets

3(d)


1,670.0

1,826.4

LIABILITIES





Current liabilities





Trade and other payables



543.4

529.6

Current tax liabilities



23.6

20.4

Borrowings



55.9

62.5

Derivative instruments at fair value



0.6

0.1

Provisions



57.2

56.9

 



680.7

669.5

Non-current liabilities





Other payables



22.2

24.3

Borrowings



721.0

592.1

Derivative instruments at fair value



0.4

0.1

Deferred tax liabilities



40.0

46.8

Provisions



121.9

126.6

Retirement benefit obligations

12


141.1

120.8

 



1,046.6

910.7

Total liabilities

3(d)


1,727.3

1,580.2

Net (liabilities)/assets

3(d)


(57.3)

246.2

EQUITY





Ordinary share capital

13


3.2

7.1

Share premium account



8.4

9.8

Retained earnings



(489.7)

(217.4)

Capital redemption reserve



422.8

416.3

Own shares



(18.2)

(14.6)

Translation reserve



2.1

1.7

Cash flow hedging reserve



14.1

43.3

Total equity



(57.3)

246.2

 

The retained earnings deficit of £489.7m (2011: £217.4m) is the consolidated position.  The holding company's distributable reserves as at 30 April 2012 under UK GAAP were £226.2m (2011: £453.4m).

 

The accompanying notes form an integral part of this consolidated balance sheet.

 


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (AUDITED)

 


 

Ordinary share capital

£m

Share premium

account

£m

 

Retained earnings

£m

Capital redemption reserve

£m

 

 

Own shares

£m

 

Translation reserve

£m

Cash flow hedging reserve

£m

 

Total

equity

£m

Balance at 30 April 2010 and 1 May 2010

7.1

9.8

(433.5)

415.6

(13.3)

7.1

19.9

12.7

Profit for the year

-

-

176.4

-

-

-

-

176.4

Other comprehensive income/(expense), net of tax

-

-

51.5

-

-

(5.4)

23.4

69.5

Total comprehensive income/(expense)

-

-

227.9

-

-

(5.4)

23.4

245.9

Preference shares redeemed

-

-

(0.7)

0.7

-

-

-

-

Credit in relation to equity-settled share based payments

-

-

4.7

-

-

-

-

4.7

Own ordinary shares sold

-

-

-

-

0.5

-

-

0.5

Own ordinary shares purchased

-

-

-

-

(1.8)

-

-

(1.8)

Dividends paid on ordinary shares

-

-

(15.8)

-

-

-

-

(15.8)

Balance at 30 April 2011 and 1 May 2011

7.1

9.8

(217.4)

416.3

(14.6)

1.7

43.3

246.2

Profit for the year

-

-

188.3

-

-

-

-

188.3

Other comprehensive (expense)/income, net of tax

-

-

(73.7)

-

-

0.4

(29.2)

(102.5)

Total comprehensive income/(expense)

-

-

114.6

-

-

0.4

(29.2)

85.8

Preference shares redeemed

-

-

(2.6)

2.6

-

-

-

-

Credit in relation to equity-settled share based payments

-

-

3.0

-

-

-

-

3.0

Tax credit in relation to equity-settled share based payments

-

-

0.2

-

-

-

-

0.2

Return of cash to shareholders

(3.9)

(1.4)

(338.5)

3.9

-

-

-

(339.9)

Own ordinary shares sold

-

-

-

-

2.1

-

-

2.1

Own ordinary shares purchased

-

-

-

-

(5.7)

-

-

(5.7)

Dividend paid on ordinary shares

-

-

(49.0)

-

-

-

-

(49.0)

Balance at 30 April 2012

3.2

8.4

(489.7)

422.8

(18.2)

2.1

14.1

(57.3)

 

 

 


CONSOLIDATED STATEMENT OF CASH FLOWS

 


 

Audited

Audited



Year ended

30 April

2012

Year ended

30 April

2011


Notes

£m

£m

Cash flows from operating activities




Cash generated by operations

14

284.2

253.5

Interest paid


(34.4)

(35.6)

Interest received


3.6

5.5

Dividends received from joint ventures


25.8

28.8

Net cash flows from operating activities before tax


279.2

252.2

Tax paid


(21.7)

(20.4)

Net cash from operating activities after tax


257.5

231.8

Cash flows from investing activities




Acquisition of subsidiaries, net of cash acquired


(2.3)

(57.0)

Disposals and closures of subsidiaries and other businesses, net of cash disposed of


 

40.3

 

1.2

Purchase of property, plant and equipment


(176.1)

(156.3)

Disposal of property, plant and equipment


65.4

14.7

Purchase of intangible assets


(2.6)

(0.4)

Purchase of other investments


(0.3)

(0.4)

Net cash outflow from investing activities


(75.6)

(198.2)

Cash flows from financing activities




Redemption of 'B' shares


(2.6)

(0.7)

Purchase of and dividends paid on 'D' shares ("Return of Cash")


(338.5)

-

Costs of Return of Cash


(1.6)

-

Investment in own ordinary shares by employee share ownership trusts


 

(5.7)

 

(1.8)

Sale of own ordinary shares by employee share ownership trusts


2.1

0.5

Repayments of hire purchase and lease finance


(66.6)

(24.1)

Movement in other borrowings


164.1

(5.1)

Dividends paid on ordinary shares

5

(49.0)

(15.8)

Sale of tokens


1.3

1.4

Redemption of tokens


(2.9)

(4.1)

Net cash used in financing activities


(299.4)

(49.7)

Net decrease in cash and cash equivalents


(117.5)

(16.1)

Cash and cash equivalents at the beginning of the year


358.3

375.7

Exchange rate effects


0.2

(1.3)

Cash and cash equivalents at the end of the year


241.0

358.3

 

Cash and cash equivalents for the purposes of the consolidated cash flow statement comprise cash at bank and in hand, overdrafts and other short-term highly liquid investments with maturities at the balance sheet date of twelve months or less.

 

The accompanying notes form an integral part of this consolidated statement of cash flows.



NOTES

 

1

BASIS OF PREPARATION

 

These results are extracts of consolidated financial statements that have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations as adopted by the European Union (that therefore comply with Article 4 of the EU IAS Regulation), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.  The accounting policies and methods of computation adopted are consistent with those used in the last set of published financial statements.

 

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 May 2011, but do not have any significant effect on the consolidated financial statements of the Group:

 

·        Amendments resulting from May 2010 Annual Improvements to IFRSs

·        IFRS 1 (amended), ' First time adoption of IFRSs - Limited exemption from comparative IFRS 7 disclosures for first-time adopters'

·        IAS 24 (revised), 'Related party disclosures'

·        IFRIC 14 (amended), 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction'

·        IFRIC 19, 'Extinguishing financial liabilities with equity instruments'

 

Where appropriate, comparative figures for the previous year have been adjusted to conform to changes in presentation.  These changes have no impact on the consolidated income statement or on consolidated net assets.

 

The Board of Directors approved this announcement on 26 June 2012. 

 

In June 2011, the International Accounting Standards Board issued an amended version of International Accounting Standard 19 ("IAS 19"), "Employee Benefits".  The Group will be required to apply the new version of IAS 19 to its financial statements for the year ending 30 April 2014 and re-state comparative amounts accordingly.  The IAS 19 change that will have the most significant effect on the Group's reported profit is that the Group's annual expense for defined benefit pension schemes will be required to include net interest expense or income calculated by applying the discount rate to the net defined benefit asset or liability.  This net interest expense or income will replace the finance charge on scheme liabilities and the expected return on scheme assets and is expected to result in a higher annual expense.  Had the new IAS 19 been applied to the Group's financial statements for the year ended 30 April 2012, the revenue, consolidated balance sheet and the consolidated statement of cash flows would have been the same as is reported in this announcement and the segmental operating profit and profit from continuing operations would have been affected as follows:


Audited


Reported profit

Effect of

applying

new IAS 19

Pro forma

profit including

new IAS 19

 


£m

£m

£m

 

Operating Profit




UK Bus (regional operations)

198.6

(16.1)

182.5

UK Bus (London)

13.5

(4.3)

9.2

North America

19.7

0.2

19.9

Total bus continuing operations

231.8

(20.2)

211.6

UK Rail

27.9

(7.1)

20.8

Total continuing operations

259.7

(27.3)

232.4

Group overheads

(9.8)

(0.5)

(10.3)

Intangible asset expenses

(9.1)

-

(9.1)

Restructuring costs

(2.3)

-

(2.3)

Total operating profit of continuing Group companies

238.5

(27.8)

210.7

Share of joint ventures' profit after finance income and taxation

24.4

(1.8)

22.6

Total operating profit: Group operating profit and share of joint ventures' profit after taxation

 

262.9

 

(29.6)

 

233.3

Non-operating exceptional items

11.6

-

11.6

Profit before interest and taxation

274.5

(29.6)

244.9

Finance charges (net)

(34.7)

(2.9)

(37.6)

Profit on ordinary activities before taxation

239.8

(32.5)

207.3

Taxation

(51.5)

7.9

(43.6)

Profit from continuing operations

188.3

(24.6)

163.7

Adjusted earnings per share (pence)

25.4p

(3.9)p

21.5p



 

1

BASIS OF PREPARATION (CONTINUED)

 

The pro forma profit shown above, reflects:

 

·      The inclusion of the pensions current service cost within the operating profit of each division in the consolidated income statement.

·      The inclusion of investment administration costs and taxes, such as amounts levied by the UK Pension Protection Fund, in the actual return on investment, with the difference between the actual return on investment and the discount rate applied to the scheme assets being reflected in other comprehensive income.

·      The inclusion of net interest expense on the net defined benefit liability within finance charges (net) in the consolidated income statement.

 

2

FOREIGN CURRENCIES

 

The principal rates of exchange used to translate the results of foreign operations are as follows:

 


Year to

30 April

2012

Year to

30 April

2011

US Dollar:



Period end rate

1.6239

1.6680

Average rate

1.5931

1.5646

Canadian Dollar:



Period end rate

1.6043

1.5827

Average rate

1.5860

1.5823

 

3

SEGMENTAL ANALYSIS

 

The Group is managed, and reports internally, on a basis consistent with its four continuing operating segments, being UK Bus (regional operations), UK Bus (London), North America and UK Rail.  The Group's IFRS accounting policies are applied consistently, where appropriate, to each segment.


The segmental information provided in this note is on the basis of four operating segments as follows:

 

Segment name

Service operated

Countries of operation

UK Bus (regional operations)

Coach and bus operations

United Kingdom (and immaterial operations in mainland Europe)

UK Bus (London)

Bus operations

United Kingdom

North America

Coach and bus operations

United States and Canada

UK Rail

Rail operations

United Kingdom

 

The basis of segmentation is consistent with the Group's last annual financial statements for the year ended 30 April 2011.

 

The Group has interests in three joint ventures: Virgin Rail Group that operates in UK Rail, Citylink that operates in UK Bus (regional operations) and Twin America that operates in North America.  The results of these joint ventures are shown separately in note 3(c). 

 

(a)

Revenue

 

Due to the nature of the Group's business, the origin and destination of revenue (i.e. United Kingdom or North America) is the same in all cases, except in respect of an immaterial amount of revenue for services operated by UK Bus (regional operations) between the UK and mainland Europe.   As the Group sells bus and rail services to individuals, it has few customers that are individually "major".  Its major customers are typically public bodies that subsidise or procure transport services - such customers include local authorities, transport authorities and the UK Department for Transport. 


 

3

SEGMENTAL ANALYSIS (CONTINUED)

 

(a)

Revenue (continued)

 

Revenue split by segment was as follows:

 


Audited

Audited


Year to

30 April

2012

Year to

30 April

2011


£m

£m

Continuing operations



UK Bus (regional operations)

909.7

893.6

UK Bus (London)

230.5

133.6

North America

312.6

295.1

Total bus continuing operations

1,452.8

1,322.3

UK Rail

1,140.7

1,070.0

Total Group revenue

2,593.5

2,392.3

Intra-Group revenue - UK Bus (regional operations)

(2.8)

(2.5)

Reported Group revenue

2,590.7

2,389.8

 

 

(b)

Operating profit

 

Operating profit split by segment was as follows:

 



Audited

Audited



Year ended 30 April 2012

Year ended 30 April 2011



Performance pre intangibles and exceptional items

Intangibles and exceptional items

(note 4)

Results for the year

Performance pre intangibles and exceptional items

Intangibles and exceptional items

(note 4)

Results for the year


 








 

£m

£m

£m

£m

£m

£m

Continuing operations








UK Bus (regional operations)


162.7

35.9

198.6

153.1

-

153.1

UK Bus (London)


13.5

-

13.5

(5.9)

-

(5.9)

North America


19.7

-

19.7

19.3

-

19.3

Total bus continuing operations


195.9

35.9

231.8

166.5

-

166.5

UK Rail


27.1

0.8

27.9

48.4

-

48.4

Total continuing operations


223.0

36.7

259.7

214.9

-

214.9

Group overheads


(11.1)

1.3

(9.8)

(11.3)

-

(11.3)

Intangible asset expenses


-

(9.1)

(9.1)

-

(10.1)

(10.1)

Restructuring costs


(2.3)

-

(2.3)

(2.9)

-

(2.9)

Total operating profit of continuing Group companies


209.6

28.9

238.5

200.7

(10.1)

190.6

Share of joint ventures' profit after finance income and taxation


27.6

(3.2)

24.4

39.5

(5.1)

34.4

Total operating profit:

Group operating profit and share of joint ventures' profit after taxation


237.2

25.7

262.9

240.2

(15.2)

225.0

 



 

3

SEGMENTAL ANALYSIS (CONTINUED)

 

(c)

Joint ventures

 

The share of profit from joint ventures was further split as follows:

 



Audited

Audited



Year ended 30 April 2012

Year ended 30 April 2011



Performance pre intangibles and exceptional items

Intangibles and exceptional items

(note 4)

Results for the year

Performance pre intangibles and exceptional items

Intangibles and exceptional items

(note 4)

Results for the year


 








 

£m

£m

£m

£m

£m

£m

Virgin Rail Group (UK Rail)








Operating profit


21.5

-

21.5

39.5

-

39.5

Finance income (net)


0.3

-

0.3

0.2

-

0.2

Taxation


(5.9)

-

(5.9)

(11.3)

-

(11.3)



15.9

-

15.9

28.4

-

28.4

Goodwill charged on investment in continuing joint ventures


-

(3.2)

(3.2)

-

(5.1)

(5.1)



15.9

(3.2)

12.7

28.4

(5.1)

23.3

Citylink (UK Bus regional operations)








Operating profit


2.7

-

2.7

2.5

-

2.5

Taxation


(0.7)

-

(0.7)

(0.7)

-

(0.7)



2.0

-

2.0

1.8

-

1.8

Twin America (North America)








Operating profit


10.2

-

10.2

9.7

-

9.7

Taxation


(0.5)

-

(0.5)

(0.4)

-

(0.4)



9.7

-

9.7

9.3

-

9.3

Share of profit of joint ventures after finance income and taxation


27.6

(3.2)

24.4

39.5

(5.1)

34.4

 

 

 

(d)

Gross assets and liabilities

 

Assets and liabilities split by segment were as follows:

 



Audited

Audited



As at 30 April 2012

As at 30 April 2011



Gross assets

Gross liabilities

Net assets/

(liabilities)

Gross assets

Gross liabilities

Net

assets/

(liabilities)


 

£m

£m

£m

£m

£m

£m

 

Continuing operations








UK Bus (regional operations)


740.7

(261.9)

478.8

733.9

(240.0)

493.9

UK Bus (London)


117.3

(84.2)

33.1

146.0

(92.1)

53.9

North America


261.6

(78.4)

183.2

266.9

(76.3)

190.6

UK Rail


232.4

(417.3)

(184.9)

232.5

(411.6)

(179.1)



1,352.0

(841.8)

510.2

1,379.3

(820.0)

559.3

Central functions


20.0

(45.0)

(25.0)

29.3

(38.4)

(9.1)

Joint ventures


56.6

-

56.6

58.1

-

58.1

Borrowings and cash


241.0

(776.9)

(535.9)

358.3

(654.6)

(296.3)

Taxation


0.4

(63.6)

(63.2)

1.4

(67.2)

(65.8)

Total


1,670.0

(1,727.3)

(57.3)

1,826.4

(1,580.2)

246.2

 


 

4

EXCEPTIONAL ITEMS AND INTANGIBLE ASSET EXPENSES

 

The Group separately highlights intangible asset expenses and exceptional items.  Exceptional items are defined in note 21. The items shown in the columns headed "Intangibles and exceptional items" on the face of the consolidated income statement can be further analysed as follows:

 


Audited

Audited


Year ended 30 April 2012

Year ended 30 April 2011


Exceptional items

Intangible asset expenses

Intangibles and exceptional items

Exceptional items

Intangible asset expenses

Intangibles and exceptional items


£m

£m

£m

£m

£m

£m

Operating costs







Curtailment gain - pension scheme

38.0

-

38.0




Intangible asset expenses

-

(9.1)

(9.1)

-

(10.1)

(10.1)

Operating costs

38.0

(9.1)

28.9










Goodwill charged on investment in joint ventures

-

(3.2)

(3.2)

-

(5.1)

(5.1)

Non-operating exceptional items - continuing operations







Loss on disposal of properties

-

-

-

(0.1)

-

(0.1)

Net gain/(loss) on disposal of businesses

17.7

-

17.7

(3.2)

-

(3.2)

Loss on closure or restructuring of certain operations in North America

(5.6)

-

(5.6)

-

-

-

Revision to the estimated insurance provision relating to pre-acquisition liabilities

-

-

-

4.6

-

4.6

Expenses incurred in relation to acquisition of businesses

(0.5)

-

(0.5)

(0.6)

-

(0.6)

Non-operating exceptional items - continuing operations

11.6

-

11.6

0.7

-

0.7

Intangible asset expenses and exceptional items - continuing operations

49.6

(12.3)

37.3

0.7

(15.2)

(14.5)

Tax effect

(13.5)

2.4

(11.1)

(1.3)

3.1

1.8

Intangible asset expenses and exceptional items after taxation  - continuing operations

36.1

(9.9)

26.2

(0.6)

(12.1)

(12.7)

Resolution of certain liabilities re disposals  - discontinued operations

-

-

-

18.5

-

18.5



 

5

DIVIDENDS

 

Dividends on ordinary shares are shown below.

 


Audited

Audited

Audited

Audited


Year to

30 April

2012

Year to

30 April 2011

Year to

30 April

2012

Year to

30 April 2011


pence per share

pence per share

£m

£m

Amounts recognised as distributions in the year





Dividends on ordinary shares:





Final dividend in respect of the previous year

4.9

-

35.2

-

Interim dividend in respect of the current year

2.4

2.2

13.8

15.8

Amounts recognised as distributions to equity holders in the year

 

7.3

 

2.2

 

49.0

 

15.8

Dividends declared or proposed but neither paid nor included as liabilities in the financial statements





Dividends on ordinary shares:





Final dividend in respect of the current year

5.4

4.9

31.0

35.2

 

 

The interim dividend of 2.4p per ordinary share was declared by the Board of Directors on 7 December 2011 and paid on 7 March 2012.  The Board has proposed a final dividend of 5.4p per ordinary share payable on 3 October 2012 to shareholders on the register at 31 August 2012.

 

A return of cash of approximately £340m to shareholders was completed in October 2011.  This equated to 47p per ordinary share.  Shareholders were able to choose to receive the 47p returned as a dividend payable on 'D' shares.  £85.0m of the total return of cash was paid to shareholders as a dividend on 'D' shares.  The dividend paid on 'D' shares is not included in the analysis above.  Note 13 includes further information on the return of cash.

 

 

6

EARNINGS PER SHARE

 

Basic earnings per share ("EPS") have been calculated by dividing the profit attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period, excluding any ordinary shares held by employee share ownership trusts.

 

The diluted earnings per share was calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares in relation to share options and long-term incentive plans.  In respect of share options, a calculation was done to determine the number of ordinary shares that could have been acquired at fair value (using the average market share price of the Company's ordinary shares during the year) based on the monetary value of the subscription rights attached to outstanding share options.  The number of ordinary shares calculated as above is compared with the number of ordinary shares that would have been issued assuming the exercise of the share options.  The difference is added to the denominator as an issue of ordinary shares for no consideration and no adjustment is made to earnings (numerator).



 

6

EARNINGS PER SHARE (CONTINUED)

 


 

Audited

Audited



 

Year ended

30 April 2012

 

Year ended

30 April 2011



No. of shares

million

No. of shares

million

Basic weighted average number of ordinary shares


638.7

717.5

Dilutive ordinary shares




   - Executive Share Option Scheme


-

0.3

   - Long Term Incentive Plan


5.1

3.2

   - Executive Participation Plan


4.1

4.1

Diluted weighted average number of ordinary shares


647.9

725.1

 

 


 

Audited

Audited



 

Year ended

30 April 2012

 

Year ended

30 April 2011


Notes

£m

£m

Profit after taxation including discontinued operations (for basic EPS calculation)


 

188.3

 

176.4

Intangible asset expenses

4

12.3

15.2

Exceptional items before tax

4

(49.6)

(0.7)

Tax effect of intangible asset expenses and exceptional items

4

11.1

(1.8)

Profit for the year from discontinued operations

4

-

(18.5)

Profit for adjusted EPS calculation


162.1

170.6

 

 

Earnings per share before intangible asset expenses and exceptional items is calculated after adding back intangible asset expenses and exceptional items after taking account of taxation, as shown on the consolidated income statement.  This has been presented to allow shareholders to gain a clearer understanding of underlying performance.  The basic and diluted earnings per share can be further analysed as follows:

 


Audited


Year ended 30 April 2012

Year ended 30 April 2011


Earnings

£m

 

Weighted average number of shares

million

Earnings per share

pence

Earnings

£m

 

Weighted average number of shares

million

Earnings per share

pence

Basic







- Continuing operations

188.3

638.7

29.5

157.9

717.5

22.0

- Discontinued operations

-

638.7

-

18.5

717.5

2.6


188.3

638.7

29.5

176.4

717.5

24.6

Adjusted basic







- Continuing operations

162.1

638.7

25.4

170.6

717.5

23.8

- Discontinued operations

-

638.7

-

-

717.5

-


162.1

638.7

25.4

170.6

717.5

23.8

Diluted







- Continuing operations

188.3

647.9

29.1

157.9

725.1

21.7

- Discontinued operations

-

647.9

-

18.5

725.1

2.6


188.3

647.9

29.1

176.4

725.1

24.3

Adjusted diluted







- Continuing operations

162.1

647.9

25.0

170.6

725.1

23.5

- Discontinued operations

-

647.9

-

-

725.1

-


162.1

647.9

25.0

170.6

725.1

23.5

 

 

7

GOODWILL

 

The movements in goodwill were as follows:

 


Audited

Audited


Year to

30 April

2012

Year to

30 April

2011


£m

£m

Net book value at beginning of year

95.3

99.4

Acquired through business combinations

0.7

3.7

Disposals

(1.7)

(2.5)

Impairment

(4.6)

-

Foreign exchange movements

1.7

(5.3)

At end of year

91.4

95.3

 

 

8

OTHER INTANGIBLE ASSETS

 

The movements in other intangible assets were as follows:

 


Audited

Audited


Year to

30 April

2012

Year to

30 April

2011


£m

£m

Cost at beginning of year

70.2

52.7

Additions

2.6

0.4

Acquired through business combinations

-

17.8

Disposals

(0.2)

(0.3)

Foreign exchange movements

0.1

(0.4)

Cost at end of year

72.7

70.2

Accumulated amortisation at beginning of year

(46.0)

(36.6)

Amortisation charged to income statement

(9.1)

(10.1)

Disposals

-

0.3

Foreign exchange movements

(0.1)

0.4

Accumulated amortisation at end of year

(55.2)

(46.0)

Net book value at beginning of year

24.2

16.1

Net book value at end of year

17.5

24.2

 

 



 

9

PROPERTY, PLANT AND EQUIPMENT

 

The movements in property, plant and equipment were as follows:

 


Audited

Audited


Year to

30 April

2012

Year to

30 April

2011


£m

£m

Cost at beginning of year

1,536.1

1,400.5

Additions

214.7

167.8

Acquired through business combinations

1.6

82.2

Disposal of subsidiaries/businesses

(25.2)

(7.7)

Disposals

(122.3)

(82.6)

Foreign exchange movements

5.6

(24.1)

Cost at end of year

1,610.5

1,536.1

Depreciation at beginning of year

(611.8)

(604.3)

Depreciation charged to income statement

(99.9)

(90.3)

Disposal of subsidiaries/businesses

10.3

4.2

Disposals

56.3

66.1

Foreign exchange movements

(3.8)

12.5

Depreciation at end of year

(648.9)

(611.8)

Net book value at beginning of year

924.3

796.2

Net book value at end of year

961.6

924.3

 

 

10

INTERESTS IN JOINT VENTURES

 

The movements in the carrying values of interests in joint ventures were as follows:

 


Audited

Audited


Year to

30 April

2012

Year to

30 April

2011


£m

£m

Cost at beginning of year

111.4

104.9

Share of recognised profit

27.6

39.5

Share of actuarial losses on defined benefit schemes, net of tax

(0.3)

(0.5)

Share of other comprehensive expense on cash flow hedges, net of tax

(1.0)

(0.1)

Dividends received in cash

(25.8)

(28.8)

Foreign exchange movements

1.2

(3.6)

Cost at end of year

113.1

111.4

Amounts written off at beginning of year

(53.3)

(48.2)

Goodwill charged to income statement

(3.2)

(5.1)

Amounts written off at end of year

(56.5)

(53.3)

Net book value at beginning of year

58.1

56.7

Net book value at end of year

56.6

58.1

 

A loan payable to Scottish Citylink Limited of £1.7m (30 April 2011: £1.7m) is included within current liabilities under the caption "Trade and other payables".



 

11

BUSINESS COMBINATIONS AND DISPOSALS

 

(i)

Disposal of Stagecoach Metrolink Limited

 

On 1 August 2011, the Group completed the sale of its subsidiary, Stagecoach Metrolink Limited, to Ratp Dev UK Limited, a wholly owned subsidiary of Ratp Développement.  Stagecoach Metrolink Limited operates and maintains the Manchester Metrolink tram network under a ten-year contract with Transport for Greater Manchester through to July 2017.  A £7.0m gain on disposal has been reported within exceptional items.

 

(ii)

Disposal of Wisconsin School Bus

 

On 15 November 2011, the Group completed the sale of its school bus operations in the US state of Wisconsin ("Wisconsin School Bus") to Student Transportation, Inc..  A £10.9m gain on disposal has been reported within exceptional items.

 

(iii)

Other business combinations

 

During the year ended 30 April 2012, the Group acquired two small bus businesses, one in the UK and one in North America.  The revenue and profit of the businesses acquired are immaterial to the Group.  The amount paid for these two acquisitions totalled £2.3m, settled in cash during the year.

 



 

12

RETIREMENT BENEFITS

 

The Group contributes to a number of pension schemes.  The principal defined benefit occupational benefit schemes are as follows:

 

·

Stagecoach Pension Schemes ("SPS") comprising the Stagecoach Group Pension Scheme and the East London and Selkent Pension Scheme;

·

The South West Trains section of the Railways Pension Scheme ("RPS");

·

The Island Line section of the Railways Pension Scheme ("RPS");

·

The East Midlands Trains section of the Railways Pension Scheme ("RPS"); and

·

A number of UK Local Government Pension Schemes ("LGPS");

 

The Directors believe that separate consideration should be given to RPS as the Group has no rights or obligations in respect of sections of the scheme following expiry of the related franchises. In addition, under the terms of RPS, any fund deficit or surplus is shared by the employer (60%) and the employees (40%) in accordance with the shared cost nature of RPS. The employees' share of the deficit (or surplus) is reflected as an adjustment to the RPS liabilities (or assets). Therefore the liability (or asset) recognised for the relevant sections of RPS reflects that part of the net deficit (or surplus) of each section that the employer is expected to fund (or expected to recover) over the life of the franchise to which the section relates. The "franchise adjustment" is the portion of the deficit (or surplus) that is expected to exist at the end of the franchise and which the Group would not be obliged to fund (or entitled to recover).

 

In addition, the Group contributes to a number of defined contribution schemes.

 

The movements for the year ended 30 April 2012 in the net pre-tax liabilities recognised in the balance sheet were as follows:

 


SPS

£m

RPS

£m

LGPS

£m

Other

£m

Unfunded plans

£m

Total

£m

Liability at beginning of year

21.5

46.4

21.8

3.2

4.2

97.1

Current service cost

24.3

29.2

1.6

0.1

-

55.2

Curtailment gain

(38.0)

-

-

-

-

(38.0)

Interest cost

57.3

30.6

14.8

0.2

-

102.9

Expected return on plan assets

(72.5)

(31.6)

(19.2)

(0.1)

-

(123.4)

Unwinding of franchise adjustment

-

(5.6)

-

-

-

(5.6)

Employers' contributions

(25.7)

(27.1)

(4.8)

-

(0.2)

(57.8)

Actuarial losses

92.0

0.9

0.5

-

0.3

93.7

Liability at end of year

58.9

42.8

14.7

3.4

4.3

124.1

 

The net liability shown above is presented in the consolidated balance sheet as:

 


Audited

Audited


As at

30 April

2012

As at

30 April

2011


£m

£m

Retirement benefit asset

(17.0)

(23.7)

Retirement benefit obligations

141.1

120.8

Net retirement benefit liability

124.1

97.1

 



 

13

ORDINARY SHARE CAPITAL

 

At 30 April 2012, there were 576,099,960 ordinary shares in issue (2011: 720,124,950).

 

The balance on the share capital account represents the aggregate nominal value of all ordinary shares in issue.

 

The Group operates two Employee Share Ownership Trusts: the Stagecoach Group Qualifying Employee Share Ownership Trust ("QUEST") and the Stagecoach Group Employee Benefit Trust ("EBT").  Shares held by these trusts are treated as a deduction from equity in the Group's financial statements.  Other assets and liabilities of the trusts are consolidated in the Group's financial statements as if they were assets and liabilities of the Group.  As at 30 April 2012, the QUEST held 300,634 (2011: 333,372) ordinary shares in the Company and the EBT held 2,295,204 (2011: 1,854,213) ordinary shares in the Company.  The trusts have waived dividends on the shares they hold.

 

On 10 October 2011, a share capital consolidation took place that replaced every 5 existing ordinary shares with 4 new ordinary shares.  The effect of this share capital consolidation changed the par value of an ordinary share from 56/57 pence to 125/228 pence.

 

Also on 10 October 2011, shareholders received 1 'D' share for each existing ordinary share held.  This was a means of returning cash to shareholders.  The 'D' shares were subsequently dealt with as follows:

·      A dividend of 47 pence per 'D' share was paid on 180,922,880 'D' shares, with the dividend paid to holders on 21 October 2011.  These 'D' shares were then converted to deferred shares.  The deferred shares have been subsequently cancelled.

·      539,202,070 'D' shares were purchased by the Company for 47 pence each and the proceeds paid to shareholders on 21 October 2011.  These 'D' shares have been subsequently cancelled.

·      No 'D' shares remained in issue as at 30 April 2012.

 

 

14

RECONCILIATION OF OPERATING PROFIT TO CASH GENERATED BY OPERATIONS

 

The operating profit of Group companies reconciles to cash generated by operations as follows:

 


Audited

Audited


Year to

30 April

2012

Year to

30 April

2011


£m

£m

Operating profit of Group companies

238.5

190.6

Exceptional pensions curtailment gain

(38.0)

-

Depreciation

99.9

90.3

Loss on disposal of plant and equipment

0.6

0.9

Intangible asset expenses

9.1

10.1

Equity-settled share based payment expense

3.0

4.7

Operating cashflows before working capital movements

313.1

296.6

Increase in inventories

(2.6)

(2.1)

Increase in receivable

(2.6)

(13.4)

Increase/(decrease) in payables

12.5

(4.4)

Decrease in provisions

(7.5)

(2.8)

Differences between employer contributions and pre-exceptional amounts recognised in the income statement

 

(28.7)

 

(20.4)

Cash generated by operations

284.2

253.5

 

During the period, the Group entered into hire purchase and finance lease arrangements in respect of new assets with a total capital value at inception of the contracts of £36.6m (2011: £8.9m).  After taking account of deposits paid up-front, new hire purchase and finance lease liabilities of £35.3m (2011: £8.1m) were recognised.

 



 

15

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

 

The decrease in cash reconciles to the movement in net debt as follows:

 


 

Audited

Audited



Year ended

30 April 2012

Year ended

30 April 2012


Notes

£m

£m

Decrease in cash


(117.5)

(16.1)

Cash flow from movement in borrowings


(90.0)

29.9



(207.5)

13.8

New hire purchase and finance leases


(35.3)

(8.1)

Foreign exchange movements


0.5

10.8

Other movements


(0.6)

(0.7)

(Increase)/decrease in net debt


(242.9)

15.8

Opening net debt

16

(280.9)

(296.7)

Closing net debt

16

(523.8)

(280.9)

 

 

16

ANALYSIS OF NET DEBT

 

IFRS does not explicitly define "net debt".  The analysis provided below therefore shows the analysis of net debt as defined in note 21.  The analysis below further shows the other items classified as net borrowings in the consolidated balance sheet.

 


Opening

£m

Cashflows

£m

New hire purchase and finance leases

£m

Foreign exchange movements

£m

Charged to income statement/

Other

£m

Closing

£m

Cash and cash equivalents

338.0

(117.0)

-

0.2

-

221.2

Cash collateral

20.3

(0.5)

-

-

-

19.8

Hire purchase and finance lease obligations

(220.7)

66.6

(35.3)

(0.8)

-

(190.2)

Bank loans and loan stock

(21.1)

(159.2)

-

4.0

-

(176.3)

Bonds

(394.8)

-

-

(2.9)

(0.6)

(398.3)

'B' preference shares

(2.6)

2.6

-

-

-

-

Net debt

(280.9)

(207.5)

(35.3)

0.5

(0.6)

(523.8)

Accrued interest on bonds

(8.6)

23.0

-

-

(23.0)

(8.6)

Effect of fair value hedges

(3.9)

-

-

-

3.9

-

Unamortised gain on early settlement of interest rate swaps

 

-

 

(4.9)

 

-

 

-

 

1.4

 

(3.5)

Foreign exchange derivatives not included in borrowings in balance sheet

 

(2.9)

 

-

 

-

 

2.9

 

-

 

-

Net borrowings (IFRS)

(296.3)

(189.4)

(35.3)

3.4

(18.3)

(535.9)

 

The cash collateral balance as at 30 April 2012 of £19.8m (2011: £20.3m) comprises balances held in trust in respect of loan notes of £18.7m (2011: £18.9m) and North America restricted cash balances of £1.1m (2011: £1.4m).  In addition, cash includes train operating company cash of £169.2m (2011: £163.1m).  Under the terms of the franchise agreements, other than with the DfT's consent, train operating companies can only distribute cash out of retained earnings and only to the extent they do not breach any franchise liquidity ratios.

 



 

17

CHANGES IN COMMITMENTS AND CONTINGENCIES

 

(i)

Capital commitments

Capital commitments contracted but not provided at 30 April 2012 were £31.7m (2011: £119.8m).

 

(ii)

Performance and season ticket bonds

At 30 April 2012, the Group has provided performance bonds backed by bank facilities or insurance arrangements of £51.7m (2011: £70.8m) and season ticket bonds backed by bank facilities or insurance arrangements of £53.1m (2011: £51.8m) to the Department for Transport in relation to the Group's rail franchise operations.

 

(iii)

Legal actions

The Group and the Company are from time to time party to legal actions arising in the ordinary course of business.  Liabilities have been recognised in the financial statements for the best estimate of the expenditure required to settle obligations arising under such legal actions.  As at 30 April 2012, the accruals in the consolidated financial statements for such claims total £2.1m (2011: £2.0m).

 

 

18

RELATED PARTY TRANSACTIONS

 

Details of major related party transactions during the year ended 30 April 2012 are provided below, except for those relating to the remuneration of the Directors and management.

 

(i)

Virgin Rail Group Holdings Limited - Non-Executive Directors

Two of the Group's managers are non-executive directors of the Group's joint venture, Virgin Rail Group Holdings Limited.  During the year ended 30 April 2012, the Group earned fees of £60,000 (2011: £60,000) from Virgin Rail Group Holdings Limited in this regard.

 

(ii)

West Coast Trains Limited

West Coast Trains Limited is a subsidiary of Virgin Rail Group Holdings Limited (see above).  In the year ended 30 April 2012, East Midlands Trains (a subsidiary of the Group) had purchases totalling £0.3m (2011: £0.3m) from West Coast Trains Limited. 

(iii)

Noble Grossart Limited

Ewan Brown (Non-Executive Director) is a former executive director and current non-executive director of Noble Grossart Limited that provided advisory services to the Group. At 30 April 2012, Noble Grossart Investments Limited, a subsidiary of Noble Grossart Limited, held 3,267,999 (2011: 4,084,999) ordinary shares in the Company, representing 0.6% (2011: 0.6%) of the Company's issued ordinary share capital. 

 

(iv)

Alexander Dennis Limited

Sir Brian Souter (Chief Executive) and Ann Gloag (Non-Executive Director) collectively hold 46.8% (2011: 37.9%) of the shares and voting rights in Alexander Dennis Limited.  Noble Grossart Investments Limited (see (iii) above) controls a further 35.1% (2011: 28.4%) of the shares and voting rights of Alexander Dennis Limited. None of Sir Brian Souter, Ann Gloag or Ewan Brown is a director of Alexander Dennis Limited nor do they have any involvement in the management of Alexander Dennis Limited. Furthermore, they do not participate in deciding on and negotiating the terms and conditions of transactions between the Group and Alexander Dennis Limited. 

 

For the year ended 30 April 2012, the Group purchased £85.6m (2011: £87.1m) of vehicles from Alexander Dennis Limited and £8.6m (2011: £5.7m) of spare parts and other services.  As at 30 April 2012, the Group had £0.4m (2011: £1.3m) payable to Alexander Dennis Limited, along with outstanding orders of £8.8m (2011: £63.5m).

 

(v)

Pension Schemes

Details of contributions made to pension schemes are contained in note 12.

 



 

18

RELATED PARTY TRANSACTIONS (CONTINUED)

 

 

 

(vi)

 

Robert Walters plc

Martin Griffiths (Finance Director) is a non-executive director and the Senior Independent Director of Robert Walters plc and received remuneration of £61,373 (2011: £58,927) in respect of his services for the year ended 30 April 2012.  Martin Griffiths holds 20,000 (2011: 20,000) shares in Robert Walters plc, which represents less than 0.1% (2011: less than 0.1%) of the issued share capital.  During the year ended 30 April 2012, the Group paid Robert Walters plc £10,000 (2011: £5,286) for recruitment services.

 



 

(vii)

AG Barr plc

Martin Griffiths (Finance Director) became a non-executive director of AG Barr plc on 1 September 2010 and received remuneration of £39,297 (2011: £25,125) in respect of his services for the year ended 30 April 2012.  Martin Griffiths holds 1,800 (2011: 1,800) shares in AG Barr plc, which represents less than 0.1% (2011: less than 0.1%) of the issued share capital.

 

 

(viii)

Scottish Citylink Coaches Limited

A non interest bearing loan of £1.7m (2011: £1.7m) was due to Scottish Citylink Coaches Limited as at 30 April 2012.  The Group received £18.5m in the year ended 30 April 2012 in respect of the operation of services subcontracted by Scottish Citylink Coaches Limited (2011: £16.0m).  As at 30 April 2012, the Group had a net £0.2m (2011: £1.6m) receivable from Scottish Citylink Coaches Limited, excluding the loan referred to above.

 

 

(ix)

Argent Energy Group Limited

Sir Brian Souter (Chief Executive) and Ann Gloag (Non-Executive Director) collectively hold 39.3% (2011: 39.3%) of the shares and voting rights in Argent Energy Group Limited.  Neither Sir Brian Souter nor Ann Gloag is a director of Argent Energy Group Limited nor do they have any involvement in the management of Argent Energy Group.  Furthermore, they do not participate in deciding on and negotiating the terms and conditions of transactions between the Group and Argent Energy Group.

 

For the year ended 30 April 2012, the Group purchased £7.3m (2011: £2.0m) of biofuel from Argent Energy Group.  As at 30 April 2012, the Group had £0.3m (2011: £0.2m) payable to Argent Energy Group, along with outstanding orders of £0.1m (2011: £0.2m).

 

 

(x)

Twin America LLC

In the year ended 30 April 2012, the Group received £3.9m (2011: £2.9m) from its joint venture, Twin America LLC, in respect of ticket sales made by Twin America LLC for tour services provided by Group subsidiaries.  As at 30 April 2012, the Group had £0.3m (2011: £Nil) receivable from Twin America LLC.    

 

 

19

POST BALANCE SHEET EVENTS

 

Details of the final dividend proposed are given in note 5.

 

In May 2012, the Group agreed to acquire selected businesses and assets from Coach America as follows:

 

1. Certain businesses and related assets and liabilities, for a cash consideration of US$134.2m and;

 

2. At the option of the Sellers, up to 85 further coaches for a cash consideration of up to US$25.6m.

 



 

20

STATUTORY FINANCIAL STATEMENTS

 

The financial information set out in the preliminary announcement does not constitute the Group's statutory financial statements for the year ended 30 April 2012 within the meaning of section 434 of the Companies Act 2006 and has been extracted from the full financial statements for the years ended 30 April 2012 and 30 April 2011 respectively.

 

Statutory financial statements for the year ended 30 April 2011, which received an unqualified audit report, have been delivered to the Registrar of Companies.

 

The reports of the auditors on the financial statements for each of the years ended 30 April 2011 and 2012 were unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.  The financial statements for the year ended 30 April 2012 will be delivered to the Registrar of Companies and made available to all shareholders in due course.  These financial statements will also be available on the Group's website and from the registered office of the Company at 10 Dunkeld Road, Perth PH1 5TW.

 

The Board of Directors approved this announcement on 26 June 2012.

 

 

21

DEFINITIONS

 

The following definitions are used in this document:

·              Adjusted earnings per share is calculated by dividing profit after taxation excluding intangible asset expenses and exceptional items by the basic weighted average number of shares in issue in the period.

·              Like-for-like amounts are derived, on a constant currency basis, by comparing the relevant year-to-date amount with the equivalent prior year period for those businesses and individual operating units that have been part of the Group throughout both periods.

·              Operating profit for a particular business unit or division within the Group refers to profit before net finance income/charges, taxation, intangible asset expenses, exceptional items and restructuring costs.

·              Operating margin for a particular business unit or division within the Group means operating profit as a percentage of revenue.

·              Exceptional items means items which individually or, if of a similar type, in aggregate need to be disclosed by virtue of their nature, size or incidence in order to allow a proper understanding of the underlying financial performance of the Group.

·              Gross debt is borrowings as reported on the consolidated balance sheet, adjusted to exclude accrued interest, the effect of fair value hedges on the carrying value of borrowings and unamortised gains on the early settlement of interest rate swaps, and to include the effect of foreign exchange derivatives that synthetically convert an element of borrowings from one currency to another.

·              Net debt (or net funds) is the net of cash and gross debt.

 

 


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