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Financial highlights
A detailed commentary on the financial results can be found in William Rollason's report on pages 30 to 33. The year presented a number of significant challenges for our businesses as described in our October 2001 trading statement. The tragic events of 11 September, operational issues within our Australian train and tram businesses and the continuing reduction in train subsidies all affected our performance for the year. At the same time our UK trains business continued to be impacted by network disruption. We are, however, pleased to report that since the year end we have reached agreement with both the Victorian Government in Australia and the SRA in the UK to address some of these issues as follows:
In the UK, we are pleased with the consistency in performance of our bus business and its ability to adjust services to meet changing passenger needs. In view of its lack of critical mass, we sold Bronckaers, our Belgian bus business, in October. Our UK train operations continue to be impacted by the underperformance of Railtrack. We had and still have a disproportionate number of emergency speed restrictions ("ESRs") on our network which have anegative impact on the punctuality and reliability of our services. Whilst we are working with Railtrack and their contractors to address this, we have developed a range of internal initiatives designed to improve passenger journeys. In September, we received £16m from Railtrack in full and final settlement to mitigate the revenue shortfall incurred as a result of the ESRs following Hatfield. In addition, the late delivery and poor performance of our new trains over the last 18 months has been offset by liquidated damages from the manufacturers. Our GoByCoach.com brand continues to drive the progress of the coach division. The growth in internet sales has been encouraging, with nearly 10% of total bookings now online. Also over 50% of our sales are now direct through our customer contact centre and our own sales outlets. We completed the integration of the businesses acquired during the last couple of years, particularly within the USA where since 1999 we have increased turnover from £65m to £400m. We are pleased with the progress of this division and see further opportunities for growth,both organically and through acquisition. Our Australian bus operations continue to progress well. In December we acquired the Glenorie Bus Company in Australia for A$23.5m (£8.5m). This well-established business, based in the north-west of Sydney, brings the Westbus fleet to around 500 buses and gives Westbus greater critical mass and exposure to a key growth market. As highlighted in October, following 11 September, our insurance premia have doubled to £30m for the year ending 31 October 2002. Safety The safety of our passengers and our people is of paramount importance. We aim to ensure that all our operations embrace safety as a key component of their culture. Health and safety performance continues to be reviewed by the Board Safety Committee at its quarterly meetings. During 2001 we developed measures to be applied across the Group, as follows:
Board changes since the last Annual General Meeting In May Sue Lyons OBE joined the Board as a Non Executive Director. Sue has spent her career in engineering and manufacturing culminating in her appointment as Managing Director, Defence (Europe) at Rolls Royce. She brings valuable industrial experience to the Board. At the beginning of December Richard Brown resigned as a Director of the Group. He had played an important role in the development of the Group's trains division and we thank him for his contribution over the years. Outlook and current trading 2001 was a challenging year for the Group particularly within our UK and Australian train and tram operations. We were pleased to announce after the year end that agreements were reached with the SRA in the UK and the Victorian Government in Australia which help address some of our areas of concern. The agreements, which have been achieved through a partnership approach, give us greater confidence to develop these businesses further. We are continuing to work with the Victorian Government to reach a successful conclusion for the long-term viability of the franchises. UK train patronage has recovered to pre-Hatfield levels but there is still no real evidence of growth returning. However, we intend to play an integral part in rebuilding consumer confidence in UK rail. Our bus businesses worldwide continue to perform well and we intend to grow these operations both organically and by acquisition. Current trading for the Group is in line with market expectations. Michael Davies Chairman |