National Express Group PLC
The Directors have pleasure in submitting to shareholders their Annual Report together with the audited financial statements for the year ended 31 December 1997. The Accounts, which were approved by the Directors on 19 March 1998, are shown in the Financial Statements.
Principal activities
The Group's principal activities are the provision of express coach,
bus, airport and passenger train services.
Review of business
A review of the Group's activities and developments during the
financial year, together with future prospects, is given in the
Chairman's Statement, in the
Chief Executive's Review and in
the Financial Review.
Profit, dividends and reserves
The Board recommends a net final dividend of 9.5p per share,
which, together with the net interim dividend of 4.0p per share paid
on 24 October 1997, gives a total net dividend for the year of 13.5p
per share (1996:11.5p). If approved by shareholders, the final
dividend will be paid on 1 May 1998 to shareholders on the register
at 3 April 1998. The profit for the year attributable to ordinary
shareholders amounted to £36.0m and retained profits of
£21.4m were transferred to reserves.
Principal changes in the Group
West Midlands Travel Limited acquired the Dundee-based Taybus
Holdings Limited, which now operates as Travel Dundee, in February
1997.
The Group was awarded three new rail franchises during the year; Silverlink Train Services Limited formerly North London Railways Limited, and Central Trains Limited at the beginning of March 1997, and ScotRail Railways Limited at the end of the same month.
On 22 May 1997 the Trade and Industry Secretary announced the referral of the Group's acquisitions of the Central Trains and ScotRail franchises to the Monopolies and Mergers Commission. The acquisitions were subsequently cleared subject to the divestment of Scottish Citylink on or before 16 June 1998 and the Group providing certain undertakings to the Office of Fair Trading.
In December 1997 the Group acquired Group Bronckaers, one of the largest privately owned bus operators in Belgium.
In addition, during the year Midland Main Line Limited and Gatwick Express limited placed orders for new rolling stock with an aggregate capital value in excess of £91m. Subsequent to the year end ScotRail has invited tenders for further rolling stock with a capital value in excess of £140m and Central Trains has also invited tenders for a further 13 trains with a capital value of £13m.
The Group has made a provision against fixed asset investments of £10.8m, reflecting the Group's shareholding in London & Continental Railways Limited (LCR), as a consequence of the uncertainty over LCR's future involvement in the construction of the Channel Tunnel Rail Link. Although at the time of printing this report LCR has not concluded its discussions with the Government, the Group believes it is prudent to provide fully against the cost of this investment.
Directors and their interests
The names and responsibilities of the current Directors are shown in
the Board of Directors.
Mr P M White was appointed Group Chief Executive on 13 January 1997.
Mr J C Myers and Mr P M White retire by rotation in accordance with the Articles and, being eligible, offer themselves for re-election. Mr Myers is a Non-Executive Director and does not have a service contract. Mr White's service agreement is terminable on twelve months' notice from the Company. Mr Myers' and Mr White's biographical details are set out in the Board of Directors.
Mr E Patterson resigned, by mutual agreement with the Board, as Group Chief Executive on 13 January 1997. Mr A Kelsey resigned, by mutual agreement with the Board, from his position as Group Corporate Development Director on 26 February 1998. Responsibility for corporate development was assumed by Mr P M White and Mr C C Child and Mr Child was appointed Group Deputy Chief Executive, in addition to his position as Group Finance Director, on 26 February 1998.
Mr W A Cathcart was appointed Non-Executive Deputy Chairman of the Group on 26 February 1998.
Full details of the Directors' interests are set out in the Report of the Remuneration and Nomination Committee.
Employment policies
The Group is committed to providing equality of opportunity to all
employees and potential employees. This applies to appropriate
training, career development and promotion for all employees
regardless of any physical disability, their sex, religion or ethnic
origin.
The Group gives full and fair consideration to applications for employment received from disabled persons, consistent with their aptitudes and skills. So far as particular disabilities permit, the Group will give those disabled during their period of employment continued employment in the same job or, if this is not practicable, a suitable alternative job wherever possible.
Employee involvement
The Group seeks to enhance the level of employee involvement in its
affairs. The divisions produce a range of internal newsletters and
circulars which keep employees abreast of developments. Employees are
encouraged to discuss matters of interest to them and subjects
affecting day to day operations of the Group with management.
Discussions take place regularly with the trade unions representing
the Group's employees on a wide range of issues. Employees are able
to share in the Group's results through a number of profit sharing
and share incentive schemes. Since flotation in 1992, there have been
four invitations to subscribe to the Group's ShareSave Scheme, all of
which have met with encouraging levels of response.
Political and charitable contributions
Charitable donations made during the year totalled £51,118. No
political contributions were made.
Creditors payment policy and practice
It is not the Company's policy to follow a code of standard payment
practice. Payments are made in accordance with terms agreed in
advance with each individual supplier.
Trade creditor days of the Company for the year ended 31 December 1997 were 13 days based on the ratio of Company trade creditors at the end of the year to the amounts invoiced during the year by trade creditors.
Substantial shareholdings
The Directors of the Company have been notified of the following
holders of 3% or more of its issued share capital for the purpose of
section 198 of the Companies Act 1985, as at 19 March 1998.
|
Merrill Lynch & Co. Inc. (previously disclosed as Mercury Asset Management plc) |
12,267,323 |
11.03% |
|
WMT employees Shareholding Trustees Limited |
11,050,310 |
9.98% |
|
Glyn's Nominees Limited |
3,510,000 |
3.17% |
Year 2000 compliance
The Group has established a committee whose remit is to assess
the impact of the year 2000 on the business and to manage the
millennium compliance process. Plans have been developed to address
the main compliance issues on hardware and software applications. The
identification and assessment of equipment with embedded chips is
also in progress. The costs associated with achieving compliance are
being determined and funding is being resourced from within existing
development budgets. Plans are in progress to contact key customers,
suppliers and business partners to assess and seek assurances as to
their progress on year 2000 compliance.
AGM resolutions
At the Annual General Meeting (AGM) held on 1 May 1997, shareholders
gave the Directors general authority under Section 80 of the
Companies Act 1985 to allot unissued share capital up to an aggregate
nominal amount of £1,677,920. That authority expires at the
conclusion of the forthcoming AGM. An ordinary resolution will be put
to shareholders to grant the Directors authority to allot shares to
an aggregate nominal amount of £1,860,766. This authority will,
in general, continue to be utilised for the allotment of shares in
connection with the Company's various share option and incentive
schemes. This resolution appears as Resolution 6 in the Notice of Annual General
Meeting.
The power given to Directors at the 1997 AGM to allot shares for cash, otherwise than in accordance with statutory pre-emption rights, also expires at the conclusion of the forthcoming AGM. The Directors believe that, in the interests of flexibility, this power should be renewed. Accordingly, the Directors will, under Resolution 7 in the Notice of Annual General Meeting, seek power until the conclusion of the next AGM to allot shares for cash, otherwise than in accordance with statutory pre-emption rights, either in connection with a pre-emptive offering, or otherwise, up to an aggregate nominal amount of 5% of the issued share capital at 19 March 1998, equivalent to 5,582,300 shares. The proposal conforms with the guidelines issued by the institutional investment protection bodies to ensure that existing shareholders' interests are safeguarded.
In addition, at the 1997 AGM the shareholders gave authority for the Company to purchase its own shares. That authority expires at the conclusion of the forthcoming AGM. A special resolution will be put to shareholders at the forthcoming AGM to renew this authority. Accordingly, under Resolution 8 in the Notice of Annual General Meeting, authority will be sought to enable the Company to make market purchases of up to 10% of the issued share capital at 19 March 1998. In accordance with the requirements of the London Stock Exchange, the maximum price for shares purchased in the market will not exceed an amount equal to 105% of the average middle market quotation taken from the Stock Exchange Daily Official List for the five business days before the purchase is made. The minimum price per share will be not less than 5p, being the nominal value of the shares. The Directors have no current intention to utilise this authority and would only do so if satisfied that this was in the best long term interests of the shareholders. Any shares purchased in this way would be cancelled and the number of shares in issue reduced accordingly. The authority given at the 1997 AGM was not used during the year.
Going concern
It should be recognised that any consideration of the foreseeable
future involves making a judgement, at a particular point in time,
about future events which are inherently uncertain. Nevertheless, at
the time of preparation of these financial statements and after
making enquiries, the Directors have a reasonable expectation that
the Group has adequate resources to continue operating for the
foreseeable future. For this reason they continue to adopt the going
concern basis in preparing the accounts.
By order of the Board
C N Armstrong
Secretary
19 March 1998
Reproduced from annual report by Hemmington Scott
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