27th Jun 2007 07:01
Stagecoach Group PLC27 June 2007 27 June 2007 Stagecoach Group plc - Preliminary results for the year ended 30 April 2007 Business highlights • Delivering excellent performance and value to shareholders o Continued growth in earnings per share+ - up 10.4% o Underlying revenue growth in all core divisions o Around £700m in value returned to shareholders in May/June 2007 o Dividend increased by 10.8% • Partnerships and innovation driving growth at UK Bus o Continued organic passenger growth - like-for-like volumes up 6.6% o Strong revenue growth- like-for-like revenue up 10.3% o Like-for-like operating profit up 26.9% o Strong marketing, competitive fares strategy and concessionary travel schemes underpin growth o Named UK Bus Operator of the Year • Excellent performance in UK Rail o Strong start to new South Western rail franchise o Revenue up 12.8% o Contract wins: East Midlands; Manchester Metrolink • Strong growth in North America o Operating margin up from 7.1% to 7.9%, excluding Megabus o Continued strong revenue growth in both scheduled services and leisure markets - constant currency like-for-like revenue up 9.1% o Expansion of budget inter-city coach service, megabus.com, in United States • Growth at Virgin Rail Group o Continued revenue growth on West Coast and CrossCountry franchises o Winning market share from airlines o Good prospects for re-negotiated West Coast franchise • Stagecoach Group Board appointment o Appointment of Garry Watts as non-executive director Financial highlights • Revenue from continuing businesses* up 8.9% • 10.4% increase in earnings per share+ • Full year dividend up 10.8% at 4.1 pence +excluding intangible asset expenses and exceptional items (refer to definitionof exceptional items contained in note 3 to the preliminary financialinformation) * excluding 2005/6 acquisitions of Glenvale and Traction Year ended 30 April As reported Excluding intangible asset expenses and exceptional items 2007 2006 2007 2006Revenue from continuing 1,504.6 1,343.9 1,504.6 1,343.9operations (£m)Total operating profit (£m) 180.9 112.5 161.3 133.0Profit before taxation (£m) 184.1 91.5 162.0 117.1Earnings per share (pence) 25.4p 10.7p 11.7p 10.6pProposed final dividend (pence) 2.9p 2.6p 2.9p 2.6pFull year dividend (pence) 4.1p 3.7p 4.1p 3.7p Commenting on the results, Chief Executive, Brian Souter said:"Stagecoach has achieved another excellent operational and financialperformance, delivering strongly on our growth strategy for the UK and NorthAmerica, and providing further excellent returns for our shareholders. Theplatform for our success has been strong partnerships, market-leading innovationand targeted investment. Combined with bolt-on purchases in our existingmarkets, we have attracted significant numbers of new passengers to our publictransport services. "We have strengthened our position as a leading rail operator over the past yearwith new contract wins in both trains and trams. Our excellent partnerships withstakeholders across our UK bus operations have produced consistent organicgrowth. "In North America, we have achieved further growth in scheduled services andleisure markets, with the launch of new products and the expansion of our budgetinter-city coach service, megabus.com. "I am pleased to report that we have made a strong start to trading in the newfinancial year in line with our expectations and we are excited by the potentialfor future growth." Enquiries to: Martin Griffiths, Stagecoach Group +44 (0) 1738 442111Steven Stewart, Stagecoach Group +44 (0) 1738 442111 or +44 (0) 7764 774680John Kiely, Smithfield Consultants +44 (0) 20 7360 4900 Note to Editors:High resolution photographs are available to the media free of charge at:www.newscast.co.uk (telephone +44 (0) 207 608 1000). Stagecoach Group is a leading international transport company with bus and railoperations in the UK and North America. The Group employs around 27,000 peopleand runs around 11,000 buses and trains. Chairman's statement Stagecoach has delivered a year of strong growth in its bus and rail operationsin the UK and North America, providing further excellent returns to ourshareholders. We continue to achieve impressive passenger growth by providing a high qualityand 'green' alternative to the car. Across the business, we have achieved stronglike-for-like revenue growth and, while cost pressures remain a challenge, wehave been able to further improve the operating profit margin. Capitalising on its industry leadership and entrepreneurial flair, the UK Busdivision is continuing to perform strongly. The Group's North Americanoperations are benefiting from good revenue growth, and a rigorous focus oncontrollable costs. In Rail, both South West Trains and the Group's jointventure, Virgin Rail Group ("VRG"), are experiencing strong passenger volume andrevenue growth and we are excited by the prospects for the new East Midlandsrail franchise that we will begin operating in November 2007. Group revenue from continuing operations for the year ended 30 April 2007 was up12.0% at £1,504.6m (2006: £1,343.9m). Operating profit from continuingoperations before intangible asset expenses and exceptional items* was £161.3m(2006: £133.0m). Earnings per share before intangible asset expenses andexceptional items were 11.7p (2006: 10.6p). In addition, there were netexceptional gains before tax of £169.6m, principally arising from the profit of£132.2m on the sale of the Group's London bus operations, which was completed inAugust 2006. We are proposing a final dividend of 2.9p per share (2006: 2.6p), giving a totaldividend for the year of 4.1p (2006: 3.7p). This is an increase of 10.8% and wewill look to continue to grow the dividend progressively. The proposed finaldividend is payable to shareholders on the register at 31 August 2007 and willbe paid on 3 October 2007. In March 2007, the Board announced plans to return approximately £700m toshareholders in view of the proceeds from the sale of the New Zealand and Londonbus businesses and continuing strong cash generation across the Group. Theproposals, approved by shareholders on 27 April 2007, give the Group a moreefficient capital structure. The return of value, which equated to 63.0p perordinary share, was completed in June 2007. In February 2007, a Virgin Rail Group Pendolino train traveling from LondonEuston to Glasgow was derailed near Lambrigg in Cumbria. We were deeply saddenedat the incident, and our condolences go to the family of the passenger who losther life and those who were injured. The Rail Accident Investigation Board hasidentified the cause of the accident as a faulty set of points. Responsibilityfor maintaining the points rests with Network Rail. Virgin Rail Group has beenworking with Network Rail to ensure lessons are learnt from this seriousincident. Network Rail responded quickly to the incident and with a clear chainof command. Precautionary checks on similar sets of points suggested the faultat Lambrigg was an isolated one. It is clear that the quality of the trainitself prevented further loss of life. Customers can remain assured that thesafety and security of our passengers and our people is paramount for the Groupand all its businesses, and this is underpinned by a proactive safety culture. During the year, Russell Walls stepped down from the Board of Directors and SirGeorge Mathewson joined the Board as a non-executive director. The Groupbenefited significantly over six years from Russell's skills and experience, andI thank him for his strong contribution. In addition, I am pleased that GarryWatts will join the Group as a non-executive director with effect from 1 July2007. Garry brings a wide range of experience and I am sure he will make astrong contribution to the Board. I would again like to thank our employees across our international operationswho have ensured that our strategy has been delivered on the ground. Puttingpassengers first is at the heart of what we do every day and we can look forwardwith confidence to growing our public transport operations further in the yearahead. We have made a strong start to the new financial year and current trading of theGroup remains in line with our expectations. Robert SpeirsChairman27 June 2007 Chief Executive's review Financial overview Stagecoach Group has produced an excellent set of results for the year ended 30April 2007. Revenue from continuing operations (excluding acquisitions duringthe prior year) increased by £116.8m (8.9%) from £1,305.4m to £1,422.2m.Operating profit before exceptional items and intangible asset expenses hasincreased from £133.0m to £161.3m. Revenue by division (excluding discontinued operations) is summarised below: REVENUE 2007 2006 Currency 2007 2006 Growth £m £m Local currency % (m) Continuing Group operations UK Bus 608.0 551.1 £ 608.0 551.1 10.3% North America - like-for-like excluding megabus & closed units 238.0 235.3 US$ 454.6 417.6 8.9% North America - megabus 2.4 Nil US$ 4.7 Nil North America - closed 2.3 12.3 US$ 4.3 21.9 units UK Rail 571.5 506.7 £ 571.5 506.7 12.8% 1,422.2 1,305.4 Acquisitions during 2005/6 UK Bus - Glenvale 21.3 17.4 £ 21.3 17.4 UK Bus - Traction 61.1 21.1 £ 61.1 21.1 82.4 38.5 Total Group revenue 1,504.6 1,343.9 Operating profit/(loss) by division (excluding discontinued operations) issummarised below: OPERATING PROFIT/(LOSS) 2007 2006 Currency 2007 2006 £m % of £m % of Local currency revenue revenue (m)Continuing Group operations UK Bus 82.5 13.6% 65.0 11.8% £ 82.5 65.0North America - excluding megabus 19.1 7.9% 17.7 7.1% US$ 36.6 31.5 North America - megabus (1.0) (41.7)% (0.8) n/a US$ (2.0) (1.5) UK Rail 58.8 10.3% 58.9 11.6% £ 58.8 58.9 Group overheads (11.1) (10.0) Restructuring costs (3.2) (1.5) 145.1 129.3 Acquisitions during 2005/6 UK Bus - Glenvale (0.3) (2.3) UK Bus - Traction 2.3 0.4 Joint ventures Virgin Rail Group 13.5 5.5 Citylink 0.9 0.1 Splash Tours (0.2) Nil Total operating profit before intangible asset expenses and exceptional items 161.3 133.0 Share of VRG exceptional gain on Trainline 5.4 Nil Pension past service adjustment 28.9 Nil Intangible asset expenses (14.7) (20.5) Total operating profit 180.9 112.5 UK Bus Our UK Bus division connects communities in more than 100 towns and citiesacross the UK on networks stretching from the Highlands of Scotland tosouth-west England. These include major city bus operations in Liverpool,Newcastle, Hull, Manchester, Oxford, Sheffield and Cambridge. Revenue in our UK Bus division, excluding acquisitions during 2005/6 anddiscontinued operations, increased by 10.3% to £608.0m (2006: £551.1m) andequivalent operating profit* was £82.5m, compared to £65.0m in the previousyear. Operating margin was 13.6% compared to 11.8% in 2006. The increased profitand margin reflects the benefits of continued strong revenue growth, stableinsurance and claims costs, returns on additional pension contributions andclose control of costs generally. We have invested £58.5m in the continuing modernisation of our UK bus fleet,delivering more low-floor accessible buses and a more comfortable travellingenvironment for passengers. Stagecoach was named Bus Operator of the Year for the second year running at the2006 UK Bus Awards for its West Scotland operations. Our strong track record inoperating high-quality bus and coach services has delivered a fifth successiveyear of like-for-like passenger volume growth in our UK Bus division. Newproduct development, investment and tailored marketing initiatives, combinedwith concessionary travel schemes in Scotland, England and Wales, has driven a6.6% growth in like-for-like passenger volumes. We estimate that underlying fullfare passenger volume growth was around 2.4% with the remaining growth comingfrom concessionary travel schemes. In August 2006, Stagecoach completed the sale of its London bus operations toMacquarie Bank Limited for £267.8m. The sale of the London bus business willallow the UK Bus division to focus on its successful growth strategy outsideLondon. The integration of Glenvale Transport Limited and Traction Group Limited, theregional bus operations we acquired in 2005, is progressing well. Revenue forthe year ended 30 April 2007 for these businesses was £82.4m (2006: £38.5m) andthe operating profit was £2.0m (2006: operating loss of £1.9m). Our market-leading budget inter-city coach service, megabus.com, has achievedfurther revenue growth this year, while our joint venture with ComfortDelGro toprovide inter-city coach services in Scotland has attracted significant numbersof new passengers following the introduction of an improved network of services. Stagecoach continues to develop productive partnerships with local authoritiesand this approach has produced good passenger volume growth at our regional buscompanies in the UK. We welcome the UK Government's review of bus services andhave been working closely with the Department for Transport ("DfT") and otherstakeholders to ensure partnerships between bus operators and local authoritiesare strengthened as a result of the Draft Local Transport Bill. Buses can play akey role in tackling the twin challenges of congestion and climate change. Ifthe legislation is right, we believe we can build on the growth in bus use wehave seen in many towns and cities across the UK and deliver a furtherstep-change in services. North America Stagecoach, principally through its Coach USA and Coach Canada brands, is amajor provider of transport services in North America. Our businesses includecommuter services, tour and charter, sightseeing and school bus operations. North American trading continues to be encouraging and has benefited from goodrevenue growth. While the claims environment in the United States remainschallenging, we anticipate growth will continue in the year ahead. Revenue for the year was US$463.6m (2006: US$439.5m). On a like-for-like basis,excluding closed businesses, constant currency revenue was up by 9.1%. Operatingprofit was US$34.6m (2006: US$30.0m), resulting in an operating margin of 7.5%,compared to 6.8% the previous year. Converted to sterling, revenue for the yearwas £242.7m (2006: £247.6m). Operating profit for the year was £18.1m (2006:£16.9m). Excluding the early-stage North American megabus.com operations, whichreported an operating loss of US$2.0m (2006: US$1.5m) on revenue of US$4.7m(2006: £Nil) for the year, the operating margin was up from 7.1% to 7.9%. Our highly successful sightseeing businesses in New York and Chicago continue toexperience strong revenue growth, up 12.7% on the prior year. We have continuedto invest in the quality of our fleet, strong marketing and the development ofnew and innovative tours. Through our Splash Tours joint venture with PortImperial Duck Charters, a new amphibious bus tour is being added to our productoffering in New York for the current season. We have seen continued revenue and passenger growth in our express, commuter andscheduled airport services. Revenue growth has been particularly strong in ourUS scheduled service businesses, with a like-for-like increase of 9.8% over theprior year. Charter revenue growth also continues to be encouraging. Our budget coach operation, megabus.com, was launched in the United States inspring 2006. It has now carried around 400,000 passengers, attracted by fares aslow as US$1, and has generated more than US$4.7m in revenue. Student transportation services in Wisconsin have continued to perform well andwe have been awarded a number of district contract renewals for an additionalthree years. In Canada, Canadian dollar revenue has grown by 10.7% despite a very competitiveenvironment. During the year, we secured a nine-year contract to provideemployee transport at Trudeau International Airport in Montreal. Charter andscheduled service revenues have seen satisfactory growth. UK Rail Our principal wholly-owned rail business is South Western, incorporating theSouth West Trains and Island Line networks. South West Trains runs around 1,600trains a day in south-west England out of London Waterloo railway station, whileIsland Line operates on the Isle of Wight. The South Western franchise isexpected to run until February 2017. We also operate Supertram, a 28km lightrail network incorporating three routes in the city of Sheffield, on aconcession running until 2024. In May 2007, we signed a contract with GreaterManchester Passenger Transport Executive ("GMPTE") to operate and maintain theManchester Metrolink tram network and expect to commence operations under the10-year contract in July 2007. The Group's rail division has had another excellent year. Revenue from our UKRail subsidiaries for the year ended 30 April 2007 was up by 12.8% to £571.5m(2006: £506.7m), which includes some recovery from the impact of the terroristbombings in London in July 2005. Operating profit was £58.8m (2006: £58.9m),giving an operating margin of 10.3% (2006: 11.6%) - this includes 12 weeks'results from the new South Western franchise where, as we expected, theoperating margin is less than that we earned under the previous franchises. Rail bid costs of £13.0m (2006: £11.7m) were expensed during the year inarriving at the UK Rail operating profit of £58.8m (2006: £58.9m). Stagecoach Group was delighted to win the new South Western rail franchise,which started in February 2007. We have transformed services to passengers overthe past 10 years by investing in new trains, driving up punctuality andimproving customer satisfaction. The new 10-year franchise has started well andwe look forward to building on our achievements. Passenger volumes at South West Trains are continuing to grow strongly and wereup 8.9% in the year. UK rail has continued to benefit from a strong economy, newhousing developments, modal shift as passengers prefer the train to their carsand from the impact of inward migration to the UK. We are continuing to deliver high operational performance across what isarguably the most complex rail network in the UK. The delay minutes caused bySouth West Trains are now less than half the level they were before the GNERtrain accident at Hatfield in 2000. It is disappointing that delay minutescaused by Network Rail to South West Trains services remain above thepre-Hatfield level. In the year to 30 April 2007, while South West Trains' delayminutes fell 16.3%, Network Rail's increased 13.9%. We will continue to workclosely with Network Rail to help deliver the improvements to infrastructureperformance that allow our customers to experience the high level of servicethey deserve. South West Trains has already taken a number of initiatives to improve servicesto passengers in line with its commitments under the new franchise. The plansinclude £20m of car parking improvements, refurbishment of 14 major stations,installation of ticket barriers at 13 more stations, and the introduction ofSmartcard ticket technology, compatible with the Oyster system in the Londonarea. We are also committed to providing 21% more mainline peak seats and a 20%increase in peak suburban capacity. megatrain.com, the Group's innovative budget rail initiative, has now attractedmore than 200,000 passenger bookings. Up to 1,000 customers a day are takingadvantage of the bargain off-peak fares from £1 on the South West Trains andVirgin CrossCountry rail franchises, covering around 20 destinations across theUK. The website has also been integrated with megabus.com to make access tolow-cost bus and rail travel even easier for customers. We plan to extendmegatrain.com to the new East Midlands franchise, which we will begin operatingin November 2007. Passenger volumes at Sheffield Supertram continue to grow and the tram operationis now carrying a record 14 million people a year. We are delighted to have been awarded the new East Midlands rail franchise,which is planned to run from November 2007 to March 2015. We are excited by theopportunities to grow our rail portfolio, along with our partners, Virgin. Wehave submitted joint bids for the New Cross Country and InterCity East Coastrail franchises and we look forward to the Government's announcement of thesuccessful bidders in due course. Virgin Rail Group Stagecoach Group has a 49% shareholding in Virgin Rail Group ("VRG"), whichoperates the West Coast and CrossCountry rail franchises. The other shareholderin VRG is the Virgin Group of Companies. Our share of VRG's profit after tax for the year was £18.9m (2006: £5.5m), aftertaking account of costs associated with VRG's bid for the New Cross Countryfranchise. This includes an exceptional gain of £5.4m in relation to our shareof the gain on disposal of Trainline. Our share of operating profit, excludingthe exceptional credit, was £12.4m (2006: £5.3m), our share of finance incomewas £3.7m (2006: £1.7m) and our share of taxation charges was £2.6m (2006:£1.5m). We were pleased that in December 2006 VRG and the DfT agreed new commercialterms for the West Coast franchise through to March 2012. Passengers willbenefit from a new timetable and enhanced frequencies, continued focus onfurther improvements to punctuality, as well as extra seats and a major increasein daily train services from December 2008. Separate proposals being discussedwith the DfT would provide further extra seats by lengthening VRG's 53 nine-carPendolino trains. VRG has launched a major marketing campaign to attract more travellers,emphasising its value-for-money fares and the environmental benefits oftravelling by rail compared to car and air. This has resulted in significantgrowth, with customers taking advantage of lower cost advance purchase tickets. Passenger volumes on Virgin West Coast have increased by a further 11.1% overthe past year. During 2006, Virgin's Pendolino services have continued to winmarket share from the airlines, particularly on the London-Manchester andLondon-Liverpool routes. Similarly, the Virgin CrossCountry franchise has grownpassenger volumes by 11.0% over the past year and now handles in excess of 23million passenger journeys a year. Scottish Citylink Coaches Limited In Scotland, Stagecoach has a joint venture (Scottish Citylink Coaches Limited)with international transport group, ComfortDelGro, to operate megabus.com andScottish Citylink coach services. Stagecoach owns 35% of the share capital ofScottish Citylink Coaches Limited and ComfortDelGro owns the remaining 65%. Thejoint venture is the leading provider of express coach services in Scotland. Our share of Citylink's profit after tax for the year was £0.9m (2006: £0.1m).The improvements made by our inter-city coach joint venture have marked thereturn of the coach as a real alternative to the train and the car. Citylink hasachieved significant passenger growth on its inter-city coach service inaddition to new journeys under the Scottish Executive's national concessionarytravel scheme. This is as a result of better connections, faster services andlower fares. Total like-for-like passenger volume growth in the year was 36%(compared to the equivalent period last year including the period prior to theformation of the joint venture), which we estimate represents full farepassenger growth of 20% with the remainder coming from growth in theconcessionary travel scheme. Although it has a minimal financial impact for the Group, we were extremelyconcerned about the principles of the decision of the Competition Commissionrequiring the divestment of some routes operated by the joint venture. Thefindings were out of step with the majority of evidence presented to theCommission by a range of independent parties, inconsistent with a number ofprevious inquiries into the Scottish public transport market, and contrary toScottish Executive transport policy. While we continue to disagree with theruling, we are now working with the Commission to implement its decision. Depreciation and intangible asset expenses Earnings from continuing businesses before interest, taxation, depreciation,intangible asset expenses and exceptional items (pre-exceptional EBITDA)amounted to £229.6m (2006: £194.0m). Depreciation from continuing businesses forthe year was £68.3m (2006: £61.0m). The income statement charge for intangibleassets decreased from £20.5m to £14.7m. This reduction of £5.8m principallyreflects the £8.0m decrease in the goodwill charge for Virgin Rail Group, whichtotalled £5.1m (2006: £13.1m) for the year. The reduced goodwill charge forVirgin Rail Group is because the prior year amount included additional goodwillcharges due to the status of negotiations on VRG's franchises. Exceptional items Net exceptional gains before taxation of £169.6m (2006: £17.4m) were recognisedin the year. This included a gain of £132.2m on the disposal of the Group'sLondon bus operations, an adjustment to the gain on the prior year sale of theGroup's New Zealand operations of £0.6m, a non-cash gain of £28.9m relating to apast service pensions adjustment on the Stagecoach Group Pension Scheme, a £5.4mgain being our share of VRG's gain on the disposal of its investment inTrainline Holdings Limited and £1.1m of other losses relating to disposedoperations. Also, a gain of £3.6m (2006: £0.8m) was recognised on the sale ofproperties. A tax charge of £8.7m (2006: credit of £2.8m) was recognised in respect ofexceptional items resulting in a net exceptional gain after tax of £160.9m(2006: £20.2m). Net finance income/costs Net finance income from continuing operations was £0.7m compared to net financecharges of £15.9m in the previous year, because of a lower average net debtduring the year principally as a result of the disposal of our London busbusiness. As a result of the recent return of value, the Group now has a moreefficient capital structure that has resulted in a lower number of ordinaryshares in issue but will mean a significant increase in finance charges in theyear ending 30 April 2008. Taxation Including the tax charge that is presented as a component of the share of profitfrom joint ventures but excluding any tax in relation to the discontinued Londonbus and New Zealand operations, the tax charge for the year of £46.6m (2006:£21.8m) represents an effective tax rate of 24.9% (2006: 23.4%). The equivalenteffective tax rate before intangible asset expenses and exceptional items is24.7% (2006: 22.6%). The above tax charge is reconciled to the reported tax charge of £43.6m (2006:£20.3m) by the reclassification of the tax of £3.0m (2006: £1.5m) in respect ofjoint ventures. Earnings per share Overall earnings per share before intangible asset expenses and exceptionalitems increased by 10.4% to 11.7p, compared to 10.6p in 2006, reflecting thestrong trading performance at each of our core divisions. Basic earnings pershare increased sharply from 10.7p to 25.4p, reflecting the net exceptionalgains in the year. Shares in issue The weighted average number of ordinary shares during the year used to calculatebasic earnings per share was 1,091.7m (2006: 1,075.8m). The number of sharesranking for dividend at 30 April 2007 was 1,094.8m (2006: 1,088.3m), with afurther 6.2m (2006: 5.3m) of ordinary shares held by employee trusts and notranking for dividend. Taking account of a consolidation of the ordinary shareson 11 May 2007 in connection with the return of value, the number of sharesranking for dividend at 31 May 2007 was 703.9m with a further 4.0m ordinaryshares held by employee trusts. Net assets Net assets at 30 April 2007 were £512.3m (2006: £211.6m) with the increaseprincipally reflecting the strong results for the year, which include the gainon sale of the London bus business. The recent return of value resulted in anapproximate decrease of £696m in consolidated net assets during May/June 2007,including the impact of related costs incurred subsequent to the year-end. Retirement benefit obligations The reported net assets of £512.3m (2006: £211.6m) are after taking account ofnet liabilities for retirement benefit obligations of £36.2m (2006: £222.2m) andthe related deferred tax assets of £10.9m (2006: £64.3m). Of the total pre-taxretirement benefit obligations, £27.3m (2006: £176.3m) relates to the main Groupscheme, Stagecoach Group Pension Scheme ("SGPS"). During the year, we have made significant progress working in close consultationwith our employees, trade union representatives and the scheme trustees toprotect the accrued benefits of the SGPS for the current members whilst managingincreasing costs and risk of volatility. We agreed with the trustees to retainthe final salary section of the SGPS for current members although this is nowclosed to new entrants (other than those employees currently serving out awaiting period). We also agreed a number of benefit and contribution changesconsidered necessary to retain the scheme and to protect accrued pensionbenefits. These changes included increases in the main employee contributionrate from 9.25% to 12.8% of pensionable salaries. In addition, increases inpensionable salaries are to be capped at 3.5% per annum. The benefit and contribution changes along with special employer contributionsof £57.0m in August 2006 and £20.0m in April 2007 and the impact of the sale ofour London bus operations, have helped to reduce the pre-tax deficit on the SGPSfrom £176.3m at 30 April 2006 to £27.3m at 30 April 2007. Further specialemployer contributions of £30.0m were paid to SGPS in June 2007. Cash flows The strong cash generative nature of the Group is once again highlighted by netcash from operating activities after tax of £162.3m (2006: £175.5m). Net cashinflows from investing activities were £232.9m (2006: net outflow of £9.9m),including £267.0m (2006: £104.4m) of cash inflows from the disposal ofsubsidiaries and other businesses, which for the year ended 30 April 2007primarily relates to the disposal of our London bus operations. Net funds/debt Net funds of £186.4m at 30 April 2007 compares to net debt of £135.9m at 30April 2006, a movement of £322.3m. This change reflects the benefit of ongoingcash generation from our core operations coupled with the disposal of our Londonbus operations. Net cash inflows from operating activities for the year ended 30 April 2007 were£185.2m (2006: £203.0m) and can be further analysed as follows: 2007 2006 £m £m EBITDA of Group companies before exceptionals: - continuing 215.4 188.4 - discontinued 7.7 39.8 Loss on disposal of property, plant & equipment 0.2 1.9 Impairment of available for sale investment 1.3 NilShare based payment expense 2.0 2.2 Working capital movements 26.3 (3.6) Net interest paid (3.9) (19.4) Dividends from joint ventures 31.1 Nil Net cash from operating activities before excess pension contributions 280.1 209.3 Pension contributions in excess of pension costs (94.9) (6.3) Cash generated from operations (before taxation) 185.2 203.0 Excluding the additional pension contributions shown in the table above, netcash from operating activities rose 33.8% from £209.3m to £280.1m. The net impact of purchases of property, plant and equipment (excluding thoseacquired as part of business combinations) for the year on net debt was £93.5m(2006: £102.6m). This primarily related to expenditure on passenger servicevehicles, and comprised cash outflows of £44.5m (2006: £91.9m) and new hirepurchase debt of £49.0m (2006: £10.7m). Capital Expenditure Additions to property, plant and equipment for the year were: 2007 2006 £m £mUK Bus- continuing 66.7 64.0- discontinued 0.8 9.2North America 22.2 25.5UK Rail 2.8 1.9New Zealand (discontinued) Nil 3.2Other 0.1 Nil 92.6 103.8 The differences between the amounts shown above and the impact of capitalexpenditure on net debt arose from movements in fixed asset deposits andcreditors. Figures for 2006 exclude the prior year additions acquired as part ofbusiness combinations. Disposals On 30 August 2006, the Group completed the disposal of its entire London busbusiness to Macquarie Bank Limited. The cash received for the disposal was£267.8m before disposal costs. After transaction costs, the disposal resulted ina net profit on disposal of £132.2m. Return of value Following the Group's disposals of its New Zealand and London bus operations inNovember 2005 and August 2006 respectively, and the Group's continued strongcash generation, net debt was eliminated during the first 6 months of thefinancial year and the Group was subsequently left in a net cash funds positionat 31 October 2006. At that point, the Board announced it would be reviewing itscapital structure and intended to return not less than £400m. A thorough reviewof the Group's position and prospects ensued during which time the West Coastmainline rail franchise (in which the Group has a 49% interest via VRG) had beenrenegotiated, fuel prices had decreased and continued strong revenue growth hadbeen experienced in the Group's UK Bus and Rail divisions. These factors coupledwith the ability of the Group to borrow at attractive rates led the Board toannounce on 14 March 2007 that Stagecoach would return approximately £700m toshareholders, which equates to 63 pence per ordinary share in issue at theRecord Date, being 11 May 2007. The return of value was approved by shareholdersat an Extraordinary General Meeting on 27 April 2007, and was completed in June2007. Fuel Hedging The Group's UK and North American bus operations consume the equivalent of 1.6mbarrels of diesel fuel per annum. As a result, the Group's profit is exposed tothe movement in the underlying price of crude oil, which is the major driver ofdiesel prices. The Group manages the volatility in its fuel costs by maintainingan ongoing fuel-hedging programme whereby derivatives are used to fix or cap thevariable unit cost of a percentage of anticipated fuel consumption. If the Grouphad no hedging in place, a movement of US$10 in the price of a barrel of crudeoil would affect the Group's fuel costs by approximately US$16m. The Group's fuel hedging levels are summarised below: Financial year ended / ending 30 April 2006 2007 2008 2009 Proportion of actual/forecast fuelconsumption hedged:- Hedged by fuel swaps 85% 20% 37% -- Hedged by fuel collars - 76% 51% 44% Current trading and outlook The current financial year to 30 April 2008 has started strongly and trading isin line with our expectations. There are a number of exciting opportunitiesacross the Group and we are confident of achieving our objectives for the year. Brian SouterChief Executive27 June 2007 CONSOLIDATED INCOME STATEMENT Audited Audited Year ended 30 April 2007 Year ended 30 April 2006 Performance Intangibles Results Performance Intangibles Results pre and for the pre and for the intangibles exceptional year intangibles exceptional year and items and items exceptional exceptional items (note 3) items (note 3) Notes £m £m £m £m £m £m CONTINUING OPERATIONS Revenue 5 1,504.6 Nil 1,504.6 1,343.9 Nil 1,343.9 Operating costs (1,571.0) 19.3 (1,551.7) (1,422.2) (7.4) (1,429.6)Other operating income 4 213.5 Nil 213.5 205.7 Nil 205.7 Operating profit of Group companies 5 147.1 19.3 166.4 127.4 (7.4) 120.0 Share of profit/(loss) of joint ventures after finance income and taxation 14.2 0.3 14.5 5.6 (13.1) (7.5) Total operating profit: Group operating profit and share of joint ventures' profit after tax 5 161.3 19.6 180.9 133.0 (20.5) 112.5 Gain on sale of properties Nil 3.6 3.6 Nil 0.8 0.8 Loss on disposed operations and sale of investments 3 Nil (1.1) (1.1) Nil (5.9) (5.9) Profit before interest and taxation 161.3 22.1 183.4 133.0 (25.6) 107.4 Finance costs 6 (20.7) Nil (20.7) (23.6) Nil (23.6) Finance income 6 21.4 Nil 21.4 7.7 Nil 7.7 Profit before taxation 162.0 22.1 184.1 117.1 (25.6) 91.5 Taxation 7 (37.8) (5.8) (43.6) (25.3) 5.0 (20.3) Profit for the year from continuing operations 124.2 16.3 140.5 91.8 (20.6) 71.2 DISCONTINUED OPERATIONS Profit for the year from discontinued operations 8 4.0 132.8 136.8 21.7 22.5 44.2 TOTAL OPERATIONS Profit after taxation for the year attributable to equity shareholders of the parent 128.2 149.1 277.3 113.5 1.9 115.4 Earnings per share from continuing and discontinued operations - Adjusted/Basic 10 11.7p 25.4p 10.6p 10.7p - Diluted 10 11.6p 25.1p 10.4p 10.6p Earnings per share from continuing operations - Adjusted/Basic 10 11.4p 12.9p 8.5p 6.6p - Diluted 10 11.2p 12.7p 8.4p 6.5p Dividends per ordinary share 9 - Interim paid 1.2p 1.1p - Final proposed 2.9p 2.6p The accompanying notes form an integral part of this consolidated incomestatement. Interim dividends of £13.1m were paid during the year ended 30 April 2007. Afinal dividend of £20.4m has been proposed for approval in respect of the yearended 30 April 2007. CONSOLIDATED BALANCE SHEET Audited Audited As at As at 30 April 2007 30 April 2006 £m £mASSETS Non-current assets Goodwill 92.8 100.1 Other intangible assets 20.9 17.3 Property, plant and equipment 599.2 708.8 Interests in joint ventures 39.1 52.0 Interest in associate Nil 1.0 Financial assets: Available for sale and other investments 1.1 4.2 Retirement benefit assets 16.6 NilDeferred tax asset 6.8 8.4 Other receivables 3.1 1.6 779.6 893.4 Current assets Inventories 11.7 13.2 Trade and other receivables 142.1 179.9 Financial assets: Derivative instruments at fair value 1.7 3.7 Foreign tax recoverable 0.3 NilCash and cash equivalents 513.3 198.5 669.1 395.3 Total assets 1,448.7 1,288.7 LIABILITIES Current liabilities Trade and other payables 347.8 341.3 Current tax liabilities 24.6 29.0 Financial liabilities: Borrowings 70.9 66.3 Financial liabilities: Derivative instruments at fair value 3.7 1.6 Provisions 50.7 63.2 497.7 501.4 Non-current liabilities Other payables 9.1 9.2 Financial liabilities: Borrowings 272.4 291.2 Financial liabilities: Derivative instruments at fair value 2.6 1.2 Deferred tax liabilities 44.1 5.2 Provisions 57.7 46.7 Retirement benefit obligations 52.8 222.2 438.7 575.7 Total liabilities 936.4 1,077.1 Net assets 512.3 211.6 EQUITY Ordinary share capital 7.0 6.9 Share premium account 179.4 174.8 Retained earnings 91.8 (212.1) Capital redemption reserve 243.0 243.0 Own shares (7.3) (6.1) Translation reserve 3.0 4.0 Available for sale reserve Nil 1.9 Cash flow hedging reserve (4.6) (0.8) Total equity 512.3 211.6 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Audited Audited Year ended Year ended 30 April 2007 30 April 2006 £m £mIncome and expense recognised directly in equity Foreign exchange differences on translation of foreign operations (net of hedging) (1.0) 4.7 Actuarial gains on Group defined benefit pensionschemes 79.4 13.9 Share of actuarial gains on joint ventures' defined benefit pension schemes 5.0 5.2 Net fair value (losses)/gains on cash flow hedges (9.2) 9.2 Net fair value (losses)/gains on available for sale investments (1.9) 1.9 72.3 34.9 Transfers to the income statement Foreign exchange differences on disposal of foreign operations Nil (3.9) Cash flow hedges reclassified and reported in profit for the year 5.4 (17.3) 5.4 (21.2) Tax on items taken directly to or transferred from equity Tax on foreign exchange differences on translation offoreign operations (net of hedging) (0.3) (0.2) Tax effect of actuarial gains on Group defined benefit pension schemes (20.3) (4.2) Tax effect of share of actuarial gains on joint ventures' defined benefit pension schemes (1.5) (1.5) Tax effect of share based payments 3.8 2.9 (18.3) (3.0) Net income not recognised in income statement 59.4 10.7 Profit for the year attributable to equity shareholders of the parent 277.3 115.4 Total recognised income and expense for the year attributable to equity shareholders of the parent 336.7 126.1 Effect of changes in accounting policy: Balances recognised on the adoption of IAS 32 and IAS 39, net of taxation n/a (7.7) CONSOLIDATED CASH FLOW STATEMENT Notes Audited Audited Year ended Year ended 30 April 30 April 2007 2006 £m £m Cash flows from operating activities Cash generated by operations 12 158.0 222.4 Interest paid (21.4) (24.4) Interest received 22.0 8.3 Interest element of hire purchase contracts and finance lease payments (4.5) (3.3) Dividends received from joint ventures 31.1 Nil Net cash flows from operating activities 185.2 203.0 Tax paid (22.9) (27.5) Net cash from operating activities after tax 162.3 175.5 Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired (0.1) (27.7) Disposals and closures of subsidiaries and other businesses, net of cash disposed of 267.0 104.4 Purchase of property, plant and equipment (44.5) (91.9) Disposal of property, plant and equipment 11.0 8.2 Purchase of intangible assets (1.7) (0.6) Purchase of other investments (0.4) (2.8) Disposal of other investments 0.2 0.6 Movement in loans to joint ventures 1.4 0.3 Purchase of investments in joint ventures Nil (0.4) Net cash inflow/(outflow) from investing activities 232.9 (9.9) Cash flows from financing activities Issue of shares 4.7 7.0 Redemption of 'B' shares Nil (13.9) Investment in own ordinary shares by employee share ownership trusts (2.1) NilSale of own ordinary shares by employee share ownership trusts 0.9 0.7 Repayments of hire purchase and lease finance (28.2) (35.1) Proceeds of sale and leaseback transaction Nil 49.5 Repayment of borrowings (11.6) (73.9) Dividends paid on ordinary shares (41.5) (36.6) Sale of tokens 6.8 7.4 Redemption of tokens (9.1) (11.4) Net cash used in financing activities (80.1) (106.3) Net increase in cash and cash equivalents 315.1 59.3 Cash and cash equivalents at the beginning of the year 198.3 138.5 Exchange rate effects (0.9) 0.5 Cash and cash equivalents at the end of the year 512.5 198.3 Cash and cash equivalents at the end of the year comprises: Cash and cash equivalents included within current assets 513.3 198.5 Bank overdrafts included within financial liabilities: borrowings (0.8) (0.2) 512.5 198.3 The accompanying notes form an integral part of this consolidated cash flowstatement. Consolidated statement of changes in shareholders' equity Notes Ordinary Share Retained Capital Own Translation Available Cash Total share premium earnings redemption shares reserve for sale flow capital account reserve reserve hedging reserve £m £m £m £m £m £m £m £m £mBalance at 1 May 2005 6.8 163.4 (295.3) 229.1 (6.8) 3.2 - 7.3 107.7Profit for the year - - 115.4 - - - - - 115.4Foreign exchange differences on - - - - - 4.7 - - 4.7translation of foreignoperations (net of hedging)Actuarial gains on Group - - 13.9 - - - - - 13.9defined benefit pension schemesShare of actuarial gains on - - 5.2 - - - - - 5.2joint ventures' defined benefitpension schemesNet fair value gains on cash - - - - - - - 9.2 9.2flow hedgesNet fair value gains on - - - - - - 1.9 - 1.9available for sale investmentsForeign exchange differences on - - - - (3.9) - - (3.9)disposal of foreign operationsCash flow hedges reclassified - - - - - - - (17.3) (17.3)and reported in profit for theyearTax on items taken directly to - - (3.0) - - - - - (3.0)equity (for split seeConsolidated statement ofrecognised income and expense)Own shares sold - - - - 0.7 - - - 0.7Redemption of 'B' shares - - (13.9) 13.9 - - - - -Arising on new ordinary share 9 0.1 11.4 - - - - - - 11.5issuesCredit in relation to share - - 2.2 - - - - - 2.2based paymentDividends paid on ordinary 9 - - (36.6) - - - - - (36.6)shares Balance at 30 April 2006 and 1 6.9 174.8 (212.1) 243.0 (6.1) 4.0 1.9 (0.8) 211.6May 2006Profit for the year - - 277.3 - - - - - 277.3Foreign exchange differences on - - - - - (1.0) - - (1.0)translation of foreignoperations (net of hedging)Actuarial gains on Group - - 79.4 - - - - - 79.4defined benefit pension schemesShare of actuarial gains on - - 5.0 - - - - - 5.0joint ventures' defined benefitpension schemesNet fair value losses on cash - - - - - - - (9.2) (9.2)flow hedgesNet fair value losses on - - - - - - (1.9) - (1.9)available for sale investmentsCash flow hedges reclassified - - - - - - - 5.4 5.4and reported in profit for theyearTax on items taken directly to - - (18.3) - - - - - (18.3)equity (for split seeConsolidated statement ofrecognised income and expense)Own ordinary shares purchased - - - - (2.1) - - - (2.1)Own shares sold - - - - 0.9 - - - 0.9Arising on new ordinary share 0.1 4.6 - - - - - - 4.7issuesCredit in relation to share - - 2.0 - - - - - 2.0based paymentDividends paid on ordinary 9 - - (41.5) - - - - - (41.5)sharesBalance at 30 April 2007 7.0 179.4 91.8 243.0 (7.3) 3.0 Nil (4.6) 512.3 NOTES 1 BASIS OF PREPARATION These results have been prepared in accordance with International FinancialReporting Standards ("IFRS"), International Financial Reporting InterpretationsCommittee ("IFRIC") interpretations and with those parts of the Companies Act1985 applicable to companies reporting under IFRS. The financial information hasbeen prepared in accordance with IFRSs as adopted by the European Union andtherefore complies with Article 4 of the EU IAS Regulation. These results have been prepared using the accounting policies set out in theGroup's 2006 Annual Report. The Board of Directors approved this announcement on 27 June 2007. 2 FOREIGN CURRENCIES The principal rates of exchange used to translate the results of foreignoperations are as follows: Principal rates of exchange 2007 2006US Dollar:Year end rate 1.9999 1.8176Average rate 1.9103 1.7751Canadian Dollar:Year end rate 2.2102 2.0368Average rate 2.1738 2.1079New Zealand Dollar:Period end rate -as at date of disposal n/a 2.4606Average rate -average up to date of n/a 2.5641disposal 3 EXCEPTIONAL ITEMS AND INTANGIBLE ASSET EXPENSES There is no definition of "exceptional items" in IFRS. Where applicable, theGroup intends to continue to highlight amounts before intangible asset expensesand exceptional items as well as clearly reporting the results in accordancewith IFRS. This is intended to enable the users of the financial statements todetermine more readily the impact of intangible asset expenses and exceptionalitems on the results of the Group. For this purpose, "exceptional items" areitems which individually or, if of a similar type, in aggregate, need to bedisclosed by virtue of their nature, size or incidence in order to allow properunderstanding of the underlying financial performance of the group. The items shown in the column headed "Intangibles and exceptional items" on theface of the consolidated income statement for the year ended 30 April 2007 canbe further analysed as follows: Audited Year ended 30 April 2007 Exceptional Intangible Intangibles items asset and expenses exceptional items £m £m £mOperating costsPast service adjustment - pension scheme 28.9 Nil 28.9Amortisation of intangible assets Nil (9.6) (9.6) 28.9 (9.6) 19.3 Share of profit of joint venturesGain on sale of VRG's investment in Trainline 5.4 Nil 5.4Goodwill charge on investment in joint ventures Nil (5.1) (5.1) 5.4 (5.1) 0.3 Gain on sale of properties 3.6 Nil 3.6 Loss in respect of other disposed and closed (1.1) Nil (1.1)operations Profit for the period from discontinuedoperationsGain on sale of London bus business (note 8) 132.2 Nil 132.2Gain on sale of New Zealand operations (note 8) 0.6 Nil 0.6 132.8 Nil 132.8 Intangible asset expenses and exceptional items 169.6 (14.7) 154.9Tax effect (8.7) 2.9 (5.8) Intangible asset expenses and exceptional items 160.9 (11.8) 149.1after taxation 3 EXCEPTIONAL ITEMS AND INTANGIBLE ASSET EXPENSES (CONTINUED) The items shown in the column headed "Intangibles and exceptional items" on theface of the consolidated income statement for the prior year comparatives can befurther analysed as follows: Audited Year ended 30 April 2006 Exceptional Intangible Intangibles items asset and expenses exceptional items £m £m £mOperating costsAmortisation of intangible assets Nil (7.4) (7.4) Share of profit of joint venturesGoodwill charge on investment in joint ventures Nil (13.1) (13.1) Gain on sale of properties 0.8 Nil 0.8 Loss in respect of other disposed and closed (5.9) Nil (5.9)operations, and gain on sale of otherinvestments Profit for the period from discontinuedoperationsGain on sale of New Zealand operations 22.5 Nil 22.5 Intangible asset expenses and exceptional items 17.4 (20.5) (3.1)Tax effect 2.8 2.2 5.0Intangible asset expenses and exceptional items 20.2 (18.3) 1.9after taxation 4 OTHER OPERATING INCOME Audited Audited Year ended Year ended 30 April 30 April 2007 2006 £m £m Miscellaneous revenue 50.3 49.8Rail liquidated damages Nil 0.7Rail franchise support, excluding incentive payments 130.9 111.1Rail incentive payments 32.3 44.1 213.5 205.7 In addition to the above other operating income for continuing businesses, £1.1m(2006: £5.2m) was recognised in relation to miscellaneous revenue of ourdisposed New Zealand and London bus businesses. Miscellaneous revenue comprises revenue incidental to the Group's principalactivity. It includes advertising income, maintenance income and propertyincome. Rail liquidated damages of £Nil (2006: £0.7m) relate to amounts received bySouth West Trains for the late delivery and reliability of trains.Rail franchise support is the gross amount of financial support receivable fromthe Department for Transport ("DfT") in respect of rail franchises. Partlyoffsetting this, the UK Rail division recognised amounts payable to the DfTunder revenue and profit share agreements totalling £74.0m (2006: £66.7m), whichare included in operating costs. Rail incentive payments comprise receipts from/payments to the DfT in respect ofthe operational performance of our rail companies measured against benchmarksset by the DfT. Payments are made to the DfT when performance is worse than thetarget benchmarks and conversely payments are received from the DfT whenperformance is better than the benchmarks. 5 SEGMENTAL ANALYSIS The Group is managed, and reports internally, on a basis consistent with itsthree continuing business segments, which consist of UK Bus, North America andUK Rail. The Group's IFRS accounting policies are applied consistently, whereappropriate, to each segment. The segmental information provided in this note is on the basis of three primarysegments, and gives the details for both business segments and geographicalsegments as follows: Segment name Business segment Geographical segmentUK Bus Coach and bus operations United KingdomNorth America Coach and bus operations North AmericaUK Rail Rail operations United Kingdom UK Bus and North America provide coach and bus services while UK Rail providesrail services. The Group's New Zealand operations that were formerly a separate segment weredisposed of during the year ended 30 April 2006. Therefore there is no segmentincome statement information provided for the New Zealand operations. Due to the nature of the services the Group provides, the primary and secondarysegments coincide. The Group's London bus operations were disposed of during the year ended 30April 2007. These operations were formerly part of the UK Bus segment but havebeen reclassified as "discontinued". The Group has interests in three joint ventures: Virgin Rail Group that operatesin UK Rail, Citylink that operates in UK Bus and New York Splash Tours thatoperates in North America. The profits and losses of these joint ventures areshown separately in note 5(C). (A) REVENUEDue to the nature of the Group's business, the origin and destination of revenueis the same in all cases. As the Group sells bus and rail services toindividuals, it has few customers that are individually "major". Its majorcustomers are typically public bodies that subsidise or procure transportservices - such customers include local authorities, transport authorities andthe UK Department for Transport. No material part of each segment's revenue shown below relates to transactionswith other segments. Audited Audited Year ended Year ended 30 April 30 April 2007 2006 £m £m Continuing operationsUK Bus- Excluding acquisition impact 608.0 551.1- 2005/06 acquisitions 82.4 38.5North America 242.7 247.6 Total bus continuing operations 933.1 837.2UK Rail 571.5 506.7 Group revenue 1,504.6 1,343.9 5 SEGMENTAL ANALYSIS (CONTINUED) (B) OPERATING PROFIT Audited Audited Year ended 30 April 2007 Year ended 30 April 2006 Performance Intangibles Results Performance Intangibles Results pre and for the pre and for intangibles exceptional year intangibles exceptional the and items and items year exceptional exceptional items items £m £m £m £m £m £mContinuing operationsUK Bus- Excluding acquisition impact 82.5 28.9 111.4 65.0 Nil 65.0- 2005/06 acquisitions 2.0 Nil 2.0 (1.9) Nil (1.9)North America 18.1 Nil 18.1 16.9 Nil 16.9 Total bus continuing 102.6 28.9 131.5 80.0 Nil 80.0operationsUK Rail 58.8 Nil 58.8 58.9 Nil 58.9 Total continuing operations 161.4 28.9 190.3 138.9 Nil 138.9Group overheads (11.1) Nil (11.1) (10.0) Nil (10.0)Intangible asset amortisation Nil (9.6) (9.6) Nil (7.4) (7.4)Restructuring costs (3.2) Nil (3.2) (1.5) Nil (1.5) Total operating profit of 147.1 19.3 166.4 127.4 (7.4) 120.0continuing Group companiesShare of profit/(loss) of 14.2 0.3 14.5 5.6 (13.1) (7.5)joint ventures after financeincome and taxation Total operating profit: Group 161.3 19.6 180.9 133.0 (20.5) 112.5operating profit and share ofjoint ventures' profit aftertax (C) JOINT VENTURES Audited Audited Year ended 30 April 2007 Year ended 30 April 2006 Performance Intangibles Results Performance Intangibles Results pre and for the pre and for intangibles exceptional year intangibles exceptional the and items and items year exceptional exceptional items items £m £m £m £m £m £mContinuingVirgin Rail Group (UK Rail)Operating profit 12.4 5.4 17.8 5.3 Nil 5.3Finance income (net) 3.7 Nil 3.7 1.7 Nil 1.7Taxation (2.6) Nil (2.6) (1.5) Nil (1.5) 13.5 5.4 18.9 5.5 Nil 5.5 Citylink (UK Bus)Operating profit 1.3 Nil 1.3 0.1 Nil 0.1Taxation (0.4) Nil (0.4) Nil Nil Nil 0.9 Nil 0.9 0.1 Nil 0.1 New York Splash Tours LLC(North America)Operating loss (0.2) Nil (0.2) Nil Nil Nil Goodwill charged on Nil (5.1) (5.1) Nil (13.1) (13.1)investment in continuingjoint ventures Share of profit/(loss) of 14.2 0.3 14.5 5.6 (13.1) (7.5)joint ventures afterfinance income and taxation 6 FINANCE INCOME AND COSTS Audited Audited Year ended Year ended 30 April 2007 30 April 2006 £m £mFinance costs:Bank loans, overdraft interest payable and other 2.4 3.6facility costsHire purchase and finance lease interest payable 4.4 2.5Interest payable on bonds and notes 11.0 14.2'B' share dividends Nil 0.2Unwinding of discount on provisions 2.9 3.1 20.7 23.6Finance income:Interest receivable (21.3) (7.4)Fair value gains on financial instrument notqualifying as hedges- interest rate swaps (0.1) (0.2)- foreign exchange forward contracts Nil (0.1) (21.4) (7.7)Net finance (income)/costs (0.7) 15.9 In addition to the above net finance (income)/costs for continuing businesses, £0.6m (2006: £Nil) of net finance income was recognised in relation to ourdisposed London bus and New Zealand businesses. 7 TAXATION The taxation charge comprises: Audited Audited Year ended 30 April 2007 Year ended 30 April 2006 Performance Intangibles Results Performance Intangibles Results pre and for the pre and for the intangibles exceptional year intangibles exceptional year and items and items exceptional exceptional items items £m £m £m £m £m £m Current tax:UK corporation tax at 30% 21.2 (0.6) 20.6 13.9 Nil 13.9(2006: 30%)Prior year (over)/under (0.9) Nil (0.9) 1.4 Nil 1.4provision for corporation taxForeign tax (current year) 1.2 Nil 1.2 Nil Nil NilForeign tax (adjustments in (0.6) Nil (0.6) 2.4 Nil 2.4respect of prior years) Total current tax 20.9 (0.6) 20.3 17.7 Nil 17.7 Deferred tax:Origination and reversal of 17.0 6.4 23.4 7.8 (5.0) 2.8timing differencesAdjustments in respect of (0.1) Nil (0.1) (0.2) Nil (0.2)prior years Total deferred tax 16.9 6.4 23.3 7.6 (5.0) 2.6 Tax on profit before taxation 37.8 5.8 43.6 25.3 (5.0) 20.3from continuing operations In addition to the above tax charge for continuing businesses, £1.8m (2006:£7.4m) of tax charges were recognised in relation to our disposed London bus andNew Zealand businesses. 8 DISCONTINUED OPERATIONS The Group disposed of its London bus business during the year ended 30 April2007. The business was disposed of on 30 August 2006 to Macquarie Bank Limited.The Group also disposed of its New Zealand operations on 29 November 2005 toInfratil Limited and therefore the year ended 30 April 2006 comparatives includethe results of the New Zealand business as discontinued. The results of the discontinued London bus and New Zealand operations, whichhave been included in the consolidated income statement, were as follows: Audited Year ended 30 April 2007 Year ended 30 April 2006 London New Total London New Total bus Zealand £m bus Zealand £m £m £m £m £m Revenue 76.1 Nil 76.1 224.6 37.4 262.0Operating costs (72.0) Nil (72.0) (205.0) (33.1) (238.1)Other operating income 1.1 Nil 1.1 4.0 1.2 5.2 Operating profit 5.2 Nil 5.2 23.6 5.5 29.1Finance income/(costs) (net) 0.6 Nil 0.6 (0.1) 0.1 NilTaxation (1.8) Nil (1.8) (6.1) (1.3) (7.4) Profit for the year before gain 4.0 Nil 4.0 17.4 4.3 21.7on disposalGain on disposal 132.2 0.6 132.8 Nil 22.5 22.5 Profit for the year from 136.2 0.6 136.8 17.4 26.8 44.2discontinued operations A gain of £132.2m arose on the disposal of the London bus operations, being thenet proceeds from disposal less the carrying amount of the disposed business'net assets at the date of disposal. No tax arose as a result of this gain. The gain of £0.6m relating to New Zealand for the year ended 30 April 2007arises from the release of a liability that was previously recorded for amountspotentially owing to the disposed business, which is now no longer payable. Discontinued operations resulted in £13.2m of cash outflows (2006: inflows of£26.5m) from operating activities that included £30.0m (2006: £Nil) of one-offpension contributions, £0.8m (2006: £13.2m) of cash outflows from investmentactivities and £9.6m (2006: £10.8m) of cash outflows from financing activities. In respect of the businesses disposed of, the consideration, net assets disposedand profit on disposal for the year ended 30 April 2007 were as follows: London bus Other Total £m £m £m Net assets disposed and liabilities for future costs 133.8 (0.6) 133.2associated with the disposalsProfit on disposal 132.2 0.6 132.8Net consideration 266.0 Nil 266.0Consideration received in the year 267.8 Nil 267.8Costs of disposal (1.8) Nil (1.8)Net consideration received in the year 266.0 Nil 266.0Net cash disposed of (0.8) Nil (0.8)Net cash inflow: disposals in the year 265.2 Nil 265.2Net cash inflow: deferred consideration in respect of Nil 1.8 1.8businesses disposed of in prior years 265.2 1.8 267.0 9 DIVIDENDS Dividends on ordinary shares are analysed as follows: Audited Audited Year ended Year ended 30 April 30 April 2007 2006 £m £mAmounts recognised as distributions in the yearDividends on ordinary sharesFinal dividend paid of 2.3p per share for the year ended 30 Nil 24.6April 2005Interim dividend paid of 1.1p per share for the year ended 30 Nil 12.0April 2006Final dividend of 2.6p per share for the year ended 30 April 28.4 Nil2006Interim dividend paid of 1.2p per share for the year ended 30 13.1 NilApril 2007 Amounts recognised as distributions to equity holders in the 41.5 36.6year Dividends proposed but neither paid nor included as liabilitiesin the financial statementsDividends on ordinary sharesFinal dividend paid of 2.6p per share for the year ended 30 Nil 28.4April 2006Final dividend proposed of 2.9p per share for the year ended 30 20.4 NilApril 2007 20.4 28.4 The proposed final dividend in respect of the year ended 30 April 2007 issubject to approval by shareholders at the Annual General Meeting and has notbeen included as a liability in the financial statements. If approved, the finaldividend will be payable on 3 October 2007 to shareholders on the register atclose of business on 31 August 2007. 10 EARNINGS PER SHARE Basic earnings per share ("EPS") have been calculated by dividing the profitattributable to equity shareholders by the weighted average number of ordinaryshares in issue during the year, excluding any ordinary shares held by employeeshare ownership trusts and not ranking for dividend. The diluted earnings per share was calculated by adjusting the weighted averagenumber of ordinary shares outstanding to assume conversion of all dilutivepotential ordinary shares in relation to share options and long term incentiveplans. In respect of share options, a calculation was done to determine thenumber of ordinary shares that could have been acquired at fair value(determined based on the average annual market share price of the Company'sordinary shares) based on the monetary value of the subscription rights attachedto outstanding share options. The number of ordinary shares calculated as aboveis compared with the number of ordinary shares that would have been issuedassuming the exercise of the share options. The difference is added to thedenominator as an issue of ordinary shares for no consideration and noadjustment is made to earnings (numerator). Audited Audited Year ended Year ended 30 April 30 April 2007 2006 Basic weighted average ordinary share capital (number of 1,091.7 1,075.8shares, million)Dilutive ordinary shares (number of shares, million)- Executive Share Option Scheme 7.4 14.7- Employee SAYE Scheme 2.2 0.8- Long Term Incentive Plan 2.3 Nil- Executive Participation Plan 1.0 NilDiluted weighted average ordinary share capital (number of 1,104.6 1,091.3shares, million) £m £m Profit after taxation including discontinued operations 277.3 115.4(for basic EPS calculation)Intangible asset expenses (see note 3) 14.7 20.5Exceptional items (see note 3) (169.6) (17.4)Tax effect of intangible asset expenses and exceptional items 5.8 (5.0)(see note 3)Profit for adjusted EPS calculation 128.2 113.5 Earnings Earnings per share per share pence pence Basic 25.4 10.7Adjusted basic 11.7 10.6Diluted 25.1 10.6Adjusted diluted 11.6 10.4 10 EARNINGS PER SHARE (CONTINUED) The basic and diluted earnings per share can be further analysed as follows: Audited Audited Year ended 30 April 2007 Year ended 30 April 2006 Earnings Weighted Earnings Earnings Weighted Earnings average per share average per share number of number of shares shares £m Million pence £m Million pence Basic- Continuing operations 140.5 1,091.7 12.9 71.2 1,075.8 6.6p- Discontinued operations 136.8 1,091.7 12.5 44.2 1,075.8 4.1p 277.3 1,091.7 25.4 115.4 1,075.8 10.7pAdjusted basic- Continuing operations 124.2 1,091.7 11.4 91.8 1,075.8 8.5p- Discontinued operations 4.0 1,091.7 0.3 21.7 1,075.8 2.1p 128.2 1,091.7 11.7 113.5 1,075.8 10.6pDiluted- Continuing operations 140.5 1,104.6 12.7 71.2 1,091.3 6.5p- Discontinued operations 136.8 1,104.6 12.4 44.2 1,091.3 4.1p 277.3 1,104.6 25.1 115.4 1,091.3 10.6pAdjusted diluted- Continuing operations 124.2 1,104.6 11.2 91.8 1,091.3 8.4p- Discontinued operations 4.0 1,104.6 0.4 21.7 1,091.3 2.0p 128.2 1,104.6 11.6 113.5 1,091.3 10.4p 11 CALLED UP SHARE CAPITAL Audited Audited As at 30 April 2007 As at 30 April 2006 £m £m Authorised1,456,666,666 (30 April 2006: 9.2 9.21,456,666,666) ordinary shares of 12/19pence each Movements in shares for year ended 30 April 2007 No of shares £mAllotted, called-up and fully-paidOrdinary shares of 12/19 pence eachAt 1 May 2006 1,093,600,313 6.9Allotted under share option schemes 7,398,394 0.1 At 30 April 2007 1,100,998,707 7.0 The balance on the share capital account represents the aggregate nominal valueof all ordinary shares in issue. The Group operates two Employee Share Ownership Trusts: the Stagecoach GroupQualifying Employee Share Ownership Trust ("QUEST") and the Stagecoach GroupEmployee Benefit Trust ("EBT"). Shares held by these trusts are treated as adeduction from equity in the Group's financial statements. Other assets andliabilities of the trusts are consolidated in the Group's financial statementsas if they were assets and liabilities of the Group. As at 30 April 2007, theQUEST held 369,399 (2006: 628,285) ordinary shares in the Company and the EBTheld 5,825,879 (2006: 4,690,333) ordinary shares in the Company. 12 RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOWS FROM OPERATINGACTIVITIES Audited Audited Year ended Year ended 30 April 30 April 2007 2006 £m £m Operating profit of Group companies 166.4 120.0Operating profit of discontinued operations 5.2 29.1Depreciation- continuing operations 68.3 61.0- discontinued operations 2.5 10.7Loss on disposal of plant and equipment 0.2 1.9Intangible asset expenses 9.6 7.4Impairment of available for sale investment 1.3 NilShare based payment expense- continuing operations 2.0 1.8- discontinued operations Nil 0.4 Operating cashflows before working capital 255.5 232.3Decrease/(increase) in inventories 0.5 (0.9)Decrease/(increase) in receivables 14.9 (24.4)(Decrease)/increase in payables (2.8) 14.9Increase in provisions 13.7 6.8Non-cash past service pensions adjustment (28.9) NilDecrease in retirement benefit obligations (94.9) (6.3) Cash generated by operations 158.0 222.4 During the year, the Group entered into hire purchase arrangements in respect ofnew assets with a total capital value at inception of the contracts of £51.6m(2006: £11.3m). After taking account of deposits paid up-front, new hirepurchase liabilities of £49.0m (2006: £10.7m) were recognised. 13 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT) Audited Audited Year ended Year ended 30 April 30 April 2007 2006 £m £m Increase in cash 315.1 59.3Cash flow from movement in borrowings 40.9 59.5 356.0 118.8New hire purchase (49.0) (10.7)Other movements 15.3 (8.5)Borrowings acquired as part of business combinations Nil (20.9)Decrease in net debt 322.3 78.7Opening net debt (UK GAAP definition - see note 14) (135.9) (214.6)Closing net funds/(debt) (UK GAAP definition - see note 14) 186.4 (135.9) 14 ANALYSIS OF NET FUNDS/DEBT IFRS does not explicitly define "net funds/debt". The analysis provided belowtherefore shows analysis of net funds/debt as UK GAAP defines it. The analysisbelow further shows the other items classified as net borrowings in theconsolidated balance sheet. Opening Cashflows New hire Foreign (Charged)/ Closing purchase exchange credited movements to income statement £m £m £m £m £m £m Cash 164.5 315.5 Nil (0.9) Nil 479.1Cash collateral 33.8 (0.4) Nil Nil Nil 33.4Hire purchase and finance (101.5) 28.2 (49.0) Nil Nil (122.3)lease obligationsBank loans and loan stock (49.1) 11.6 Nil 0.5 Nil (37.0)Bonds (183.6) 1.1 Nil 15.8 (0.1) (166.8) UK GAAP net (debt)/funds (135.9) 356.0 (49.0) 15.4 (0.1) 186.4Accrued interest on bonds (7.3) 15.3 Nil 0.5 (15.1) (6.6)Reclassification of 0.1 (1.1) Nil 1.0 Nil Nilforeign exchange forwardcontractUnamortised gain on early (15.9) Nil Nil Nil 6.1 (9.8)settlement of interestrate swaps Net (borrowings)/funds (159.0) 370.2 (49.0) 16.9 (9.1) 170.0 The net total of cash and cash collateral of £512.5m (2006: £198.3m) isclassified in the balance sheet as £513.3m (2006: £198.5m) in cash and cashequivalents and £0.8m (2006: £0.2m) as bank overdrafts within borrowings. Thecash collateral balance as at 30 April 2007 of £33.4m (2006: £33.8m) comprisesbalances held in trust in respect of loan notes of £32.3m (2006: £33.0m), £0.4m(2006: £Nil) held in Escrow in relation to the sale of businesses and NorthAmerica restricted cash balances of £0.7m (2006: £0.8m). In addition, cashincludes train operating company cash of £96.2m (2006: £89.2m). Under the termsof the franchise agreements, train operating companies can only distribute cashout of retained profits. 15 RETIREMENT BENEFIT OBLIGATIONS The Group contributes to a number of pension schemes. The principal definedbenefit occupational schemes are as follows: • The Stagecoach Group Pension Scheme ("SGPS"); • The South West Trains' section of the Railways Pension Scheme ("RPS"); • The Island Line section of the Railways Pension Scheme ("RPS"); • A number of UK Local Government Pension Schemes ("LGPS"); • The Yorkshire Traction Company Limited Pension Plan ("YTC") and; • The Strathtay Scottish Omnibuses Limited Pension and Life Assurance Scheme("SSO"). These schemes are devised in accordance with local employment terms andconditions. Each scheme is administered independently of the employers and theschemes' assets are held in trusts that are managed by investment managersappointed by the schemes' trustees. The Directors believe that separate consideration should be given to RPS as theGroup has no rights or obligations in respect of sections of the schemefollowing expiry of the franchises. Therefore, the liability recognised forthese sections of RPS only represents that part of the net deficit of thesections that the employer is obliged to fund over the life of the franchise towhich each section relates. In addition, the Group contributes to a number of defined contribution schemescovering UK and non-UK employees. 15 RETIREMENT BENEFIT OBLIGATIONS (CONTINUED) The net pre-tax liabilities recognised in the balance sheet as at 30 April 2007were as follows: SGPS RPS LGPS YTC SSO Other Unfunded Total £m £m £m £m £m £m Plans £m £mAt 1 May 2006 (176.3) (6.1) (23.6) (9.2) (2.9) (0.5) (3.6) (222.2)Current service cost (16.4) (14.2) (3.4) (1.3) (0.5) (0.3) Nil (36.1)Past service adjustment 28.9 Nil Nil Nil Nil Nil Nil 28.9Defined contribution Nil Nil Nil Nil Nil (0.4) Nil (0.4)costsInterest cost (33.7) (12.9) (13.8) (2.8) (0.5) Nil Nil (63.7)Expected return on plan 38.4 18.2 17.7 3.4 0.5 Nil Nil 78.2assetsUnwinding of franchise Nil 0.3 Nil Nil Nil Nil Nil 0.3adjustmentOne-off employers' 77.0 Nil Nil Nil Nil Nil Nil 77.0contributionsOther employers' 17.3 15.2 4.2 2.1 0.3 0.4 0.1 39.6contributionsActuarial gain/(loss) 43.0 16.0 20.7 (0.5) 0.2 Nil Nil 79.4Franchise charges Nil (11.7) Nil Nil Nil Nil Nil (11.7)Disposal (5.5) Nil Nil Nil Nil Nil Nil (5.5) At 30 April 2007 (27.3) 4.8 1.8 (8.3) (2.9) (0.8) (3.5) (36.2) Assets Nil 4.8 11.8 Nil Nil Nil Nil 16.6 Liabilities (27.3) Nil (10.0) (8.3) (2.9) (0.8) (3.5) (52.8) The related deferred tax on the liabilities is £10.9m (2006: £64.3m) resultingin post-tax retirement benefit obligations of £25.3m (2006: £157.9m). The netliability of £36.2m (2006: £222.2m) is classified in the balance sheet as £16.6m(2006: £Nil) of assets and £52.8m(2006: £222.2m) of liabilities. The amounts shown in the above table include discontinued operations for theperiod for which they were part of the Group. In particular, the incomestatement items include the London bus business up until its disposal in August2006. 16 CONTINGENT LIABILITIES (i) A performance bond backed by a bank facility for £44.3m (2006: £44.3m), aseason ticket bond backed by a bank facility for £Nil (2006: £33.7m) and aholding company guarantee of £15.7m (2006: £15.7m) have been provided to theUK's Department for Transport in support of the Group's franchise obligations atSouth West Trains Limited at 30 April 2007. The franchise agreement for SouthWest Trains Limited expired on 4 February 2007, however, the performance bond,and holding company guarantee remain in place for a period of 6 months beyondthe franchise expiry date. At 30 April 2007, a performance bond backed by a bank facility for £10.7m (2006:£Nil), a season ticket bond backed by a bank facility for £34.5m (2006: £Nil)and a holding company guarantee of a £25.0m intercompany loan facility (2006:£Nil) have been provided to the UK's Department for Transport in support of theGroup's franchise obligation in relation to the Stagecoach South Western TrainsLimited obligations under the new South Western franchise which commenced on 4February 2007. These contingent liabilities are not expected to crystallise. (ii) The Group and its joint venture, Virgin Rail Group Holdings Limited, havein the normal course of business, entered into a number of long term supplycontracts. The most significant of these relate to track, station and depotaccess facilities, together with new train lease and maintenance arrangements. (iii) Under UK Rail franchise agreements, the Group and its joint venture,Virgin Rail Group Holdings Limited, have agreed with the UK's Department forTransport annual amounts receivable or payable in respect of the operation ofrail franchises for future periods. Under these agreements, there is arequirement to comply with a number of obligations. Failure to comply with theseobligations would be a breach of the relevant franchise. (iv) The Group and the Company are from time to time party to legal actionsarising in the ordinary course of business. Liabilities have been recognised inthe financial statements for the best estimate of the expenditure required tosettle obligations arising under such legal actions. As at 30 April 2007, theaccruals in the consolidated financial statements for such claims total £2.6m(2006: £4.4m). (v) The Group provides details of guarantees and other financial commitments inits Annual Report. 17 CAPITAL COMMITMENTS Capital commitments are as follows: Audited Audited As at As at 30 April 30 April 2007 2006 £m £m Contracted for but not provided: 74.3 55.4For delivery in one year 18 RELATED PARTY TRANSACTIONS Details of major related party transactions during the year ended 30 April 2007are provided below, except for those relating to the remuneration of theDirectors and management. (i) Loan to Virgin Rail Group Limited At 30 April 2006, the Group had loan notes receivable of £3.3m from Virgin RailGroup Limited, which is a wholly owned subsidiary undertaking of Virgin RailGroup Holdings Limited. The Group holds 49% of the share capital of Virgin RailGroup Holdings Limited and accounts for its investment in Virgin Rail GroupHoldings Limited as an interest in a joint venture. During the year ended 30 April 2007, Virgin Rail Group Limited settled all ofthe outstanding loan notes together with all accrued interest. The Group earnedinterest of £0.2m on the loan notes in the period from 1 May 2006 to settlement(2006: £0.3m.) (ii) Virgin Rail Group Holdings Limited - Non-Executive Directors Two of the Group's managers are non-executive directors of Virgin Rail GroupHoldings Limited. During the year ended 30 April 2007, the Group earned fees of£25,000 (2006: £25,000) from Virgin Rail Group Holdings Limited in this regard. (iii) ScotAirways Group Limited Until September 2006, Brian Souter (Chief Executive) and Ann Gloag(Non-Executive Director) controlled 93.8% of the shares of ScotAirways GroupLimited. Brian Souter was also Chairman of ScotAirways Group Limited. BrianSouter and Ann Gloag disposed of their entire shareholdings in ScotAirways GroupLimited in September 2006 and Brian Souter stepped down as Chairman at thattime. ScotAirways Group Limited therefore ceased to be a related party of theGroup in September 2006. During the period from 1 May 2006 to the time ScotAirways Group Limited ceasedto be a related party of the Group, the Group purchased airline flights fromScotAirways Group Limited totalling £43,871 (2006: £76,168). (iv) Noble Grossart Limited Ewan Brown (Non-Executive Director) is a former executive director and currentnon-executive director of Noble Grossart Limited that provided advisory servicesto the Group during the year. Total fees payable to Noble Grossart Limited inrespect of the year ended 30 April 2007 amounted to £20,000 (2006: £20,100). At30 April 2007, Noble Grossart Investments Limited, a subsidiary of NobleGrossart Limited, held 6,354,443 (2006: 6,354,443) ordinary shares in theCompany, representing 0.6% (2006: 0.6%) of the Company's issued ordinary sharecapital. 18 RELATED PARTY TRANSACTIONS (CONTINUED) (v) Alexander Dennis Limited On 21 May 2004, Brian Souter and Ann Gloag together gained control of 39.3% ofthe shares and voting rights in Alexander Dennis Limited. They now collectivelyhold 37.7% (30 April 2007: 37.2%; 30 April 2006: 39.3%) of the shares and votingrights. Noble Grossart Investments Limited (see (iv) above) controls a further28.3% (30 April 2007: 27.9%; 30 April 2006: 29.5%) of the shares and votingrights of Alexander Dennis Limited. None of Brian Souter, Ann Gloag or EwanBrown is a director of Alexander Dennis Limited nor do they have any involvementin the management of Alexander Dennis Limited. Furthermore, they do notparticipate in deciding on and negotiating the terms and conditions oftransactions between the Group and Alexander Dennis Limited. For the year ended 30 April 2007, the Group purchased £42.8m (2006: £46.5m) ofvehicles from Alexander Dennis Limited and £3.9m (2006: £2.9m) of spare partsand other services. For new orders placed with Alexander Dennis Limited for vehicles, the Group hasconsulted with the UK Listing Authority and taken the appropriate measures toensure that the transactions with Alexander Dennis Limited comply with theListing Rules. (vi) Pension Schemes Details of contributions made to pension schemes are contained in note 15. (vii) Robert Walters plc Martin Griffiths became a non-executive director of Robert Walters plc in July2006 and received remuneration of £29,000 in respect of his services from thedate of appointment to 30 April 2007. (viii) Loan to New York Splash Tours LLC An interest bearing long-term loan of £1.9m (2006: £Nil) was outstanding fromNew York Splash Tours LLC as at 30 April 2007. 19 POST BALANCE SHEET EVENTS The Board announced on 14 March 2007 that the Company would return approximately£700m to shareholders, which equates to 63 pence per ordinary share in issue atthe Record Date, being 11 May 2007. The return of value was approved byshareholders at an Extraordinary General Meeting on 27 April 2007. Since thebalance sheet date, 277,777,735 B shares and 823,220,972 C Shares were issued inconnection with the return of value. 253,584,435 B Shares were redeemed at 63pence and the remaining 24,193,300 B Shares are redeemable in the future at 63pence each. A special dividend of 63 pence per C Share was paid or waived on458,001,388 C Shares, which then converted to Deferred Shares of negligiblevalue. The remaining 365,219,584 C Shares were bought by Credit Suisse for 63pence each and were later bought by the Company for 63 pence each andimmediately cancelled. For every 14 Ordinary shares held on the Record Date(being 11 May 2007), shareholders received 9 new ordinary shares and 14 B or Cshares. 20 STATUTORY FINANCIAL STATEMENTS The financial information set out in the preliminary announcement does notconstitute the Group's statutory financial statements for the year ended 30April 2007 within the meaning of Section 240 of the Companies Act 1985 and hasbeen extracted from the full financial statements for the years ended 30 April2007 and 30 April 2006 respectively. Statutory financial statements for the year ended 30 April 2006, which receivedan unqualified audit report, have been delivered to the Registrar of Companies. The report of the auditors on the financial statements for the year ended 30April 2007 is unqualified and does not contain a statement under either section237(2) or section 237(3) of the Companies Act 1985. The financial statements forthe year ended 30 April 2007 will be delivered to the Registrar of Companies andforwarded to all shareholders in due course. These financial statements willalso be available on the Group's website and from the registered office of theCompany at 10 Dunkeld Road, Perth PH1 5TW. The Board of Directors approved this preliminary announcement on 27 June 2007. --------------------------* Exceptional items are defined in note 3 to the preliminary financialinformation.* References to the operating margin, profit or loss of a particular business inthe Chief Executive's review refer to margin, profit or loss before interest,taxation, restructuring costs, intangible asset expenses and exceptional items. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SGC.L