The Directors are pleased to present their Annual Report and the audited accounts for the year ended 31 December 2001.

Principal activities

The principal activity of the Group is the provision of mass passenger transport services.

Review of the business

A review of the Group’s activities, the principal events during the year and the future development of the Group is given in the Chairman’s statement, the Chief Executive’s statement, the Review of operations, and the Finance Director’s report set out on pages 6 to 33.

Profit and dividends

The profit on ordinary activities before tax for the year ended 31 December 2001 was £95.5m and retained profits of £65.8m were transferred to reserves.

The Directors recommend a final net dividend of 14.7p per share, which, together with the interim net dividend of 7.3p per share paid on 19 October 2001, gives a total net dividend for the year of 22p per share (2000: 20.7p). If approved by shareholders, the final dividend will be paid on 3 May 2002 to shareholders on the register at 5 April 2002.

Directors

The Directors of the Company who served during the year are listed below:

Michael Davies
Phil White
Richard Brown (resigned 7 December 2001)
Barry Gibson Sue Lyons (appointed 23 May 2001)
Clive Myers (resigned 2 May 2001)
Ray O’Toole
William Rollason
David Ross (appointed 1 February 2001)
Tim Stevenson (appointed 1 February 2001)
James Watson (resigned 2 May 2001)

Barry Gibson and William Rollason will retire by rotation at the Annual General Meeting, and, being eligible, will offer themselves for re-election. Sue Lyons, who was appointed a Director on 23 May 2001, will stand for election at the Annual General Meeting.

The names and brief biographies of the current Directors appear on page 35. Details of the remuneration of the Directors, their interests in shares of the Company and service contracts are contained in the report on Directors’ remuneration on pages 40 to 43.

Employment policies

The Group strives to meet its business objectives by motivating and encouraging its employees to be responsive to the needs of its customers and continually to improve operational performance. The Group is committed to providing equality of opportunity to employees and potential employees. This applies to appropriate training, career development and promotion for all employees, regardless of physical ability, gender, sexual orientation, religion or ethnic origin.

Full and fair consideration is given to applications for employment received from disabled persons, according to their skills and capabilities. The services of any existing employee disabled during their period of employment are retained wherever possible.

Employee involvement

The Group seeks to enhance the level of employee involvement in its affairs. Subsidiary companies produce a range of internal newsletters and circulars which keep employees abreast of developments. In addition, the Group-wide “Express” magazine is aimed at keeping employees in touch with the worldwide activities of the Group. Senior management within the Group meet regularly to review developments within the Group and matters of current concern. Employees are encouraged to discuss matters of interest to them and subjects affecting day-to-day operations of the Group with management. Dialogue takes place regularly with the trade unions and other employee representatives 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. National Express Group PLC

Environmental policy

Details of the Group’s environment policy and environmental initiatives are to be found in the Group’s separate Environmental Report issued with these Report and Accounts.

Charitable and political contributions

Charitable donations made during the year totalled £218,840. It is the Group’s policy not to make political contributions and accordingly none were made in the year.

Creditors’ payment policy and practice

It is the Company’s policy to agree terms of payment prior to commencing trade with any supplier and to abide by those terms based on the timely submission of satisfactory invoices. Trade creditor days of the Company for the year ended 31 December 2001 were 36 days (2000: 38 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 Company has 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 11 March 2002:

*percentage as at date of notification

Annual General Meeting

The Annual General Meeting will be held on 2 May 2002. Shareholders will be asked to approve six items of special business, details of which are given in the Notice of Meeting accompanying this report.

Going concern

It should be recognised that any consideration of the foreseeable future involves making a judgment, at a particular point in time, about future events which are inherently uncertain. Nevertheless, at the time of preparation of these accounts 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

Tony McDonald Secretary 21 March 2001