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Previous: VSI LIQUIDATION CORP, 10-K, EX-27, 2000-09-29 |
Next: KANSAS TAX EXEMPT TRUST SERIES 42, 485BPOS, 2000-09-29 |
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1 to
Annual report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the fiscal year
ended December 31, 1999
-----------------
Commission File Number 0-19150
-------
WISCONSIN CENTRAL TRANSPORTATION
CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3541743
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6250 North River Road, Suite 9000
Rosemont, Illinois 60018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (708) 318-4600
--------------
This Amendment No. 1 amends Registrant's Annual Report on Form
10-K by adding the consolidated financial statements of
English Welsh & Scottish Railway Holdings Limited pursuant to
Rule 3-09 of Regulation S-X.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
AND SCHEDULES
PAGE
----
INDEPENDENT AUDITORS' REPORT............................................. 27*
FINANCIAL STATEMENTS
Consolidated Balance Sheets..................................... 28-29*
Consolidated Statements of Income............................... 30*
Consolidated Statements of Changes in Stockholders' Equity...... 31*
Consolidated Statements of Cash Flows........................... 32*
Notes to Consolidated Financial Statements...................... 33-46*
FINANCIAL STATEMENTS OF ENGLISH WELSH & SCOTTISH RAILWAY HOLDINGS LIMITED **
Auditor's Report................................................. A-4
Consolidated Profit and Loss Account............................. A-5
Consolidated Balance Sheet....................................... A-6-7
Reconciliation of Movements in Shareholders' Funds............... A-8
Consolidated Cash Flow Statement................................. A-9
Notes to Consolidated Financial Statements .................... A-10-31
Note *: The page numbers indicated are those under which such information
was filed as part of the Company's Report on Form 10-K filed on March
22, 2000. Such information is not being amended by this Report on Form
10-K/A.
Note**: The amounts shown in the English Welsh & Scottish Railway Holdings
Limited financial statements are stated in pounds sterling. At March
31, 2000, each pound sterling equaled US $1.5913.
A-1
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as a part of this Report:
PAGE
----
(a)(1) Financial Statements
Consolidated Balance Sheets................................ 28-29*
Consolidated Statements of Income........................... 30*
Consolidated Statements of Changes in Stockholders' Equity.. 31*
Consolidated Statements of Cash Flows....................... 32*
Notes to Consolidated Financial Statements................. 33-46*
(2) Schedules
Financial Statements of English Welsh & Scottish Railway Holdings Limited **
Auditor's Report............................................ A-4
Consolidated Profit and Loss Account........................ A-5
Consolidated Balance Sheet.................................. A-6-7
Reconciliation of Movements in Shareholders' Funds.......... A-8
Consolidated Cash Flow Statement............................ A-9
Notes to Consolidated Financial Statements ............... A-10-31
(3) Exhibits
The exhibits set forth in the Index to Exhibits in the
Report on Form 10-K filed on March 22, 2000 are not being
amended by this Report on Form 10-K/A.
(b) Reports on Form 8-K filed during the quarter ended December 31, 1999.
The information provided on the Report on Form 10-K filed
on March 22, 2000 is not being amended by this Report on
Form 10-K/A.
Note *: The page numbers indicated are those under which such information
was filed as part of the Company's Report on Form 10-K filed on March
22, 2000. Such information is not being amended by this Report on Form
10-K/A.
Note**: The amounts shown in the English Welsh & Scottish Railway Holdings
Limited financial statements are stated in pounds sterling. At March
31, 2000, each pound sterling equaled US $1.5913.
A-2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
WISCONSIN CENTRAL TRANSPORTATION
CORPORATION
(Registrant)
By: /s/ Ronald G. Russ
Ronald G. Russ
Executive Vice President
Chief Financial Officer
Date: September 29, 2000
A-3
<PAGE>
Independent Auditors' Report
To the Board of Directors and Shareholders of English Welsh & Scottish Railway
Holdings Limited:
We have audited the accompanying consolidated balance sheets of English Welsh &
Scottish Railway Holdings Limited and subsidiaries as of 31 March 2000 and 31
March 1999 and the related consolidated profit and loss accounts,
reconciliations of movements in shareholders' funds and consolidated cash flows
for each of the years in the two year period ended 31 March 2000. These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated
financial statements.
We conducted our audits in accordance with generally accepted auditing standards
in the United Kingdom which are substantially consistent with those in the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of English Welsh &
Scottish Railway Holdings Limited and subsidiaries as of 31 March 2000 and 31
March 1999 and the results of their operations and their cash flows for each of
the years in the two year period ended 31 March 2000 in conformity with
generally accepted accounting principles in the United Kingdom.
Generally accepted accounting principles in the United Kingdom vary in certain
significant respects from generally accepted accounting principles in the United
States. Application of generally accepted accounting principles in the United
States would have affected the results of operations for the years ended 31
March 2000 and 31 March 1999 and shareholders' equity at 31 March 2000 and 31
March 1999 to the extent summarised in supplemental note 26 to the consolidated
financial statements.
KPMG
London
Chartered Accountants 1 September 2000
Registered Auditors
A-4
<PAGE>
<TABLE>
<CAPTION>
Consolidated profit and loss account
for the year ended 31 March 2000
in millions Note 2000 1999
---- ------ ------
<S> <C> <C> <C>
Turnover 2 520.6 523.9
Operating costs (excluding exceptional costs) 3 (480.7) (474.1)
Exceptional costs 4 (14.3) -
------ ------
Total operating costs (495.0) (474.1)
Operating profit before exceptional costs 39.9 49.8
------ ------
Operating profit 25.6 49.8
(Loss)/profit on sale of fixed assets (0.2) 2.0
Net interest payable and similar charges 7 (13.0) (13.2)
------ ------
Profit on ordinary activities before taxation 4 12.4 38.6
Tax on profit on ordinary activities 8 (1.9) (5.8)
------ ------
Retained profit on ordinary activities after taxation for the year 19 10.5 32.8
====== ======
</TABLE>
There are no recognised gains or losses in the year other than the profit for
the year. There were no differences between the profit and loss account shown
above and that prepared on a historical cost basis.
All of the group's activities are continuing.
A-5
<PAGE>
<TABLE>
<CAPTION>
Consolidated balance sheet
at 31 March 2000
in millions Note 2000 1999
---- ----- -----
<S> <C> <C> <C>
Fixed assets
Intangible assets
Goodwill 11 4.8 5.1
Negative goodwill 11 (105.8) (136.2)
----- -----
(101.0) (131.1)
----- -----
Tangible assets 9 418.5 469.7
Investments 10 3.2 1.3
----- -----
320.7 339.9
----- -----
Current assets
Stocks 12 22.1 20.3
Debtors due in more than one year 13 75.5 79.8
Debtors due within one year 13 111.9 127.0
187.4 206.8
Cash at bank and in hand 9.5 18.4
----- -----
219.0 245.5
Creditors: amounts falling due within one year 14 (129.1) (146.9)
----- -----
Net current assets 89.9 98.6
----- -----
Total assets less current liabilities 410.6 438.5
Creditors: amounts falling due after more than one year 15 (151.9) (185.6)
Provisions for liabilities and charges 16 (46.7) (57.1)
Deferred income 17 (12.1) (10.9)
----- -----
Net assets 199.9 184.9
===== =====
Capital and reserves
Called up share capital 18 104.6 100.2
Share premium account 19 2.0 1.9
Profit and loss account 19 93.3 82.8
----- -----
Equity shareholders' funds 199.9 184.9
===== =====
</TABLE>
These financial statements were approved by the board of directors on 24 July
2000 and were signed on its behalf by:
P.R. Mengel
Chief Executive
A-6
<PAGE>
<TABLE>
<CAPTION>
Company balance sheet at 31 March 2000
in millions Note 2000 1999
---- ----- -----
<S> <C> <C> <C>
Fixed assets
Investments 10 147.6 131.0
Current assets
Debtors 13 235.9 195.7
Cash at bank and in hand 47.6 -
----- -----
283.5 195.7
Creditors : amounts falling due within one year 14 (79.5) (85.3)
----- -----
Net current assets 204.0 110.4
Total assets less current liabilities 351.6 241.4
Creditors: amounts falling due after more than one year 15 (151.7) (56.5)
----- -----
Net assets 199.9 184.9
===== =====
Capital and reserves
Called up share capital 18 104.6 100.2
Share premium account 19 2.0 1.9
Revaluation reserve 19 102.3 87.6
Profit and loss account 19 (9.0) (4.8)
----- -----
Equity shareholders' funds 199.9 184.9
===== =====
</TABLE>
These financial statements were approved by the board of directors on 24 July
2000 and were signed on its behalf by:
P.R. Mengel
Chief Executive
A-7
<PAGE>
<TABLE>
<CAPTION>
Reconciliation of movements in shareholders' funds
for the year ended 31 March 2000
in millions 2000 1999
---------------------- ---------------------
Group Company Group Company
----- ------- ----- -------
<S> <C> <C> <C> <C>
Profit/(loss) for the year 10.5 (4.2) 32.8 (2.2)
New share capital subscribed 4.4 4.4 0.8 0.8
Share premium arising on new share capital 0.1 0.1 0.4 0.4
Revaluation of investment in subsidiaries - 14.7 - 35.0
----- ----- ----- -----
Net addition to shareholders' funds 15.0 15.0 34.0 34.0
Opening shareholders' funds 184.9 184.9 150.9 150.9
----- ----- ----- -----
Closing shareholders' funds 199.9 199.9 184.9 184.9
===== ===== ===== =====
</TABLE>
A-8
<PAGE>
<TABLE>
<CAPTION>
Consolidated cash flow statement
for the year ended 31 March 2000
in millions Note 2000 1999
----- ----- -----
<S> <C> <C> <C>
Net cash inflow from operating activities 22 33.0 50.2
Return on investments and servicing of finance 23 (10.5) (18.3)
Taxation received / (paid ) 0.9 (0.9)
Capital expenditure and financial investment 23 (2.0) (44.8)
Acquisitions and disposals 23 - (3.2)
----- -----
Net cash inflow / (outflow) before financing 21.4 (17.0)
Financing
Issue of ordinary share capital 4.5 1.2
Long term loans raised 95.8 40.0
Costs of raising long term loans (1.4) -
Repayment of long term loans (127.3) (25.0)
Movement in cost of investment in own shares (1.6) (0.9)
Repayment of finance leases (0.3) (0.5)
----- -----
Net cash (outflow) / inflow from financing (30.3) 14.8
----- -----
Decrease in cash and cash equivalents 24 (8.9) (2.2)
===== =====
</TABLE>
A-9
<PAGE>
Notes
(forming part the financial statements)
1 Accounting Policies
The following accounting policies have been applied consistently in
dealing with items which are considered material in relation to the
group's financial statements.
Basis of Preparation
The financial statements have been prepared in accordance with
applicable accounting standards and under the historical cost
convention modified to include the revaluation of investments in
subsidiaries within the financial statements of the company.
Basis of consolidation
The group accounts consolidate the accounts of English Welsh & Scottish
Railway Holdings Limited and all its subsidiary undertakings and
participating interests. These accounts are made up to 31 March 2000.
The consolidated accounts are based on accounts of subsidiary
undertakings, all of which are coterminous with those of the parent
company, and on the accounts of the parent company.
The acquisition method of accounting has been adopted. Under this
method, the results of subsidiary undertakings and participating
interests acquired in the period are included in the consolidated
profit and loss account from the date of acquisition.
In the company's accounts, investments in subsidiary undertakings are
revalued to reflect the underlying book value of the net assets of the
subsidiaries. The result for the year dealt with in the financial
statements of English Welsh & Scottish Railway Holdings Limited is
disclosed in Note 19 to these accounts. The company has taken advantage
of section 230(4) of the Companies Act 1985 and has not presented its
own profit and loss account.
Goodwill
Goodwill whether negative or positive is disclosed as an intangible
asset. Negative goodwill up to the fair value of non - monetary assets
acquired is amortised to the profit and loss account in periods in
which these assets are recovered. Negative goodwill in excess of the
fair value of the assets acquired is amortised over the period in which
the losses to which it relates are expected to accrue. Positive
goodwill is amortised over 20 years.
Fixed assets and depreciation
Tangible fixed assets are stated at original cost less accumulated
depreciation. In the case of assets constructed by the Group, finance
costs as defined by FRS 15 are included in costs. Depreciation is
provided by the company to write off the cost less the estimated
residual value of tangible fixed assets by equal instalments over their
estimated useful economic lives from the time assets come into service
as follows:
o Freehold buildings 40 years
o Leasehold land and buildings life of lease
o Plant, machinery and equipment 3 to 10 years
o Rolling stock 20 to 50 years
o Infrastructure 10 to 30 years
No depreciation is provided on freehold land.
A-10
<PAGE>
Notes continued
1 Accounting Policies continued
Leases
Where the group enters into a lease which entails taking substantially
all the risks and rewards of ownership of an asset, the lease is
treated as a `finance lease'. The asset is recorded in the balance
sheet as a tangible fixed asset and is depreciated over its estimated
useful life or the term of the lease, whichever is shorter. Future
instalments under such leases, net of finance charges, are included
within creditors. Rentals payable are apportioned between the finance
element, which is charged to the profit and loss account, and the
capital element which reduces the outstanding obligation for future
instalments.
All other leases are accounted for as `operating leases' and the rental
charges are charged to the profit and loss account on a straight line
basis over the life of the lease.
Government grants
Capital based government grants are included within accruals and
deferred income in the balance sheet and credited to trading profit
over the estimated useful economic lives of the assets to which they
relate. Revenue based government grants are credited to trading profit
in the period in which the expenditure to which they relate is
incurred.
Stocks
Stocks are stated at the lower of cost and net realisable value.
Pensions and other post-retirement benefits
The expected cost of providing pensions, as calculated periodically by
professionally qualified actuaries, is charged to the profit and loss
account so as to spread the cost over the service lives of employees in
the scheme in such a way that the pension cost is a substantially level
percentage of current and expected future pensionable payroll.
Differences between the amount charged to the profit and loss account
and payments made to schemes are treated as assets or liabilities in
the Balance Sheet. Further details are given in Note 21 to the
accounts.
Taxation
The charge for taxation is based on the profit for the period and takes
into account taxation deferred because of timing differences between
the treatment of certain items for taxation and accounting purposes.
Provision is made for deferred tax only to the extent that it is
probable that an actual liability will crystallise within the
foreseeable future. Partial provision is also made for timing
differences arising on the pension fund prepayment.
Foreign Exchange
Transactions in foreign currencies are recorded at the rate ruling at
the date of the transaction or at the contract rate if the transaction
is covered by a forward exchange contract. Monetary assets and
liabilities denominated in foreign currencies are translated at the
rate of exchange ruling at balance sheet date or, if appropriate, at
the forward exchange contract rate. All differences are taken to the
profit and loss account except to the extent that they are recoverable
from a third party in which case they are recorded as a debtor.
Hedging
Gains and losses on hedge contracts are recognised in the profit and
loss account as they arise.
A-11
<PAGE>
Notes continued
2 Turnover
Turnover is stated net of value added tax and represents amounts
invoiced to third parties and estimates in respect of amounts not
invoiced.
Turnover and operating profit is attributable to one activity, the
haulage of freight and mail by rail and other related services
throughout England, Wales and Scotland.
3 Operating expenditure
<TABLE>
<CAPTION>
in millions 2000 1999
----- -----
<S> <C> <C>
Raw materials and consumables 54.9 58.8
Other external charges 227.0 211.0
Staff costs (Note 6) 187.1 195.1
Depreciation and other amounts written off tangible and intangible fixed assets 11.7 9.2
480.7 474.1
===== =====
</TABLE>
4 Profit on ordinary activities before taxation
<TABLE>
<CAPTION>
in millions 2000 1999
---- ----
<S> <C> <C>
Profit on ordinary activities before taxation is stated after charging
Auditors' remuneration:
Audit - group 0.2 0.2
Other services - group 0.1 0.1
Depreciation and other amounts written off tangible fixed assets:
Owned 41.7 17.5
Leased 1.0 0.9
Amortisation of positive goodwill 0.3
Rentals payable under operating leases - hire of plant and machinery 8.6
- other operating leases 1.2
Year 2000 costs 2.5 1.8
Exchange losses 0.6 0.2
after crediting
Government grants credited to profit and loss account 3.2 0.4
Rents receivable from property 9.4 9.4
Amortisation of negative goodwill 30.4 9.5
</TABLE>
Charges amounting to 14.3 million have been classified as exceptional
items in the profit and loss account. These charges comprise the
termination of an IT project (12.5 million) and the write down of
wagons (23.5 million), the latter being offset by 21.7 million write
down of negative goodwill.
The operating loss dealt with in the accounts of the parent company was
0.3 million (1999:0.3 million).
A-12
<PAGE>
Notes continued
5 Remuneration of directors
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Aggregate emoluments of directors 246,974 180,277
Number of directors for whom retirement benefits are accruing under a money - 1
purchase scheme
Number of directors for whom retirement benefits are accruing under a - 1
defined benefits scheme
Number of directors eligible for shares under a long term incentive scheme 1 1
</TABLE>
Highest Paid Director
The highest paid director received emoluments of 135,216 (1999:164,277)
in the year.
Director's interests in the ordinary share capital of the company and
options granted during the year are disclosed below.
45,652 (1999: 32,000) was paid to Wisconsin Central Transportation
Corporation, a shareholder in the company, for the provision of the
services of E A Burkhardt, T F Power, T Rissman and R H Wheeler, who
were also directors of Wisconsin Central Transportation Corporation
during part or all of the year. A further 1,446,399 (1999: 1,315,516)
was paid in relation to the provision of consultancy and advisory
services under a management contract amongst other things.
32,000 (1999: 119,200) was paid or is payable to Berkshire Partners, a
shareholder in the company, for the services of C Ferenbach and
R K Lubin.
16,000 (1999: 22,267) was paid or is payable to Fay Richwhite, a
shareholder in the company, for the services of D M Richwhite.
Nil (1999: 26,600) was paid or is payable to McLachlan Rissman & Doll
for the services of T W Rissman, a partner in the above practice.
7,385 (1999: 8,615) was paid or is payable to BIL Consultants for the
services of R O H Morley.
I K Braybrook received 415,492 in compensation for loss of office,
383,750 of which was in cash.
Transactions involving directors
McLachlan Rissman & Doll, a partnership in which T W Rissman has an
interest, was paid 28,706 (1999: 72,436) during the period for the
provision of legal and other professional services.
The shares and options held by directors were as follows.
<TABLE>
<CAPTION>
Ordinary Shares of 1 pound each Share Options
held in the company
1 April 31 March 1 April 31 March
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
T.F. Power 200,000 200,000 100,000 100,000
C. Ferenbach 200,000 200,000 100,000 100,000
Lord B. Griffiths of Fforestfach 200,000 200,000 100,000 100,000
R.K. Lubin 200,000 200,000 100,000 100,000
D.M. Richwhite 200,000 - 100,000 78,036
T.W. Rissman 200,000 200,000 100,000 100,000
I.K. Braybrook 150,000 - 319,538 -
E.A. Burkhardt 200,000 - 100,000 -
</TABLE>
A-13
<PAGE>
Notes continued
5 Remuneration of directors continued
Except as detailed below, the options are exercisable at (pound)1.00
each no sooner than 10 September 1999 and no later than 10 September
2003 and no options were granted to or exercised by the directors
during the year.
The Board deemed the market value of the shares to be 3 pounds
throughout the year.
E.A Burkhardt disposed of 200,000 shares and 100,000 options to
Wisconsin Central International Inc. on 17 August 1999.
I.K. Braybrook exercised all options available to him and the resultant
shares were purchased by the EWS Employee Share Trust.
D.M. Richwhite disposed of 200,000 shares to Fay Richwhite UK Limited
on 30 June 1999.
D.M. Richwhite transferred 3,240 options to Goldman Sachs and 18,724
options to Wisconsin Central International Inc. on 30 June 1999.
D.M. Richwhite, in addition to the shares and options above, has a
disclosable interest in 13,390,203 of the issued ordinary share capital
of the company.
A.T. Gibbs has a disclosable interest in 1,262,000 of the issued
ordinary share capital of the company.
6 Staff numbers and costs
2000 1999
No. No.
----- -----
Average number of people employed:
Management and operation of rail freight services 6,221 6,866
===== =====
At 31 March 1999 6,564 people were employed by the group which total
had reduced to 5,917 by 31 March 2000.
The aggregate payroll costs of these persons were as follows:
in millions 2000 1999
----- -----
Wages & salaries 156.7 163.3
Social security costs 12.8 13.1
Other pension costs (see note 21) 4.4 2.4
Other staff costs 13.2 16.3
----- -----
187.1 195.1
===== =====
A-14
<PAGE>
Notes continued
7 Net interest payable and similar charges
<TABLE>
<CAPTION>
in millions 2000 1999
----- -----
<S> <C> <C>
Other interest receivable and similar income 0.4 0.6
Other interest payable and similar charges:
On bank loans and overdrafts repayable within five years (13.2) (18.4)
Finance charges payable in respect of finance leases and hire purchase contracts (0.2) -
----- -----
(13.4) (18.4)
Interest capitalised - 4.6
----- -----
Total other interest payable and similar charges (13.4) (13.8)
----- -----
Net interest payable and similar charges (13.0) (13.2)
===== =====
</TABLE>
8 Taxation
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
UK corporation tax at 30% (1999: 30%) on the profit on ordinary activities for the
year to 31 March 2000 - -
Deferred Taxation (1.9) (5.8)
---- ----
(1.9) (5.8)
==== ====
</TABLE>
The group has a low effective tax rate due to the current and
prospective availability of substantial capital allowances.
The exceptional items reduced the tax charge by 1.9 million.
A-15
<PAGE>
Notes continued
9 Tangible fixed assets
<TABLE>
<CAPTION>
Plant,
in millions Machinery Assets in
Land & Rolling & Infra- course of
buildings stock equipment structure construction Total
------------ ------------- --------------- ------------- --------------- ------------
Group
Cost
<S> <C> <C> <C> <C> <C> <C>
At 1 April 1999 65.8 325.4 30.6 9.5 97.5 528.8
Additions 1.5 5.3 7.7 2.3 50.5 67.3
Disposals (1.6) (3.8) (0.3) - (71.2) (76.9)
Transfers 1.9 3.3 7.1 4.7 (17.0) -
----- ----- ----- ----- ----- -----
At 31 March 2000 67.6 330.2 45.1 16.5 59.8 519.2
===== ===== ===== ===== ===== =====
Depreciation and
diminution in value
At 1 April 1999 (3.4) (39.1) (15.5) (1.1) - (59.1)
Charge for the year (1.4) (13.6) (4.3) (0.8) - (20.1)
Accelerated - (22.6) - - - (22.6)
depreciation
On disposals 0.1 0.7 0.3 - - 1.1
----- ----- ----- ----- ----- -----
At 31 March 2000 (4.7) (74.6) (19.5) (1.9) - (100.7)
===== ===== ===== ===== ===== =====
Net book value
At 31 March 2000 62.9 255.6 25.6 14.6 59.8 418.5
===== ===== ===== ===== ===== =====
At 31 March 1999 62.4 286.3 15.1 8.4 97.5 469.7
===== ===== ===== ===== ===== =====
</TABLE>
The net book value of land and buildings at 31 March 2000 comprises:
in millions Group Company Group Company
2000 2000 1999 1999
----- ------- ----- -------
Freehold land and buildings 36.8 - 34.8 -
Long leasehold 24.1 - 25.5 -
Short leasehold 2.0 - 2.1 -
---- ---- ---- ----
62.9 - 62.4 -
==== ==== ==== ====
Included in freehold land and buildings is land valued at 4.8 million
which is not depreciated.
A-16
<PAGE>
Notes continued
9 Tangible fixed assets continued
Assets held under finance leases
in millions Plant,
machinery
Rolling and
stock equipment Total
------- ----- -----
Cost:
At 1 April 1999 and 31 March 2000 22.6 1.0 23.6
---- ---- ----
Depreciation:
At 1 April 1999 (8.1) (0.9) (9.0)
Charge for the year (0.9) (0.1) (1.0)
---- ---- ----
At 31 March 2000 (9.0) (1.0) (10.0)
---- ---- ----
Net Book Value
At 31 March 2000 13.6 - 13.6
==== ==== ====
At 31 March 1999 14.5 0.1 14.6
==== ==== ====
10 Fixed asset investments
in millions Own Participating Trade
Shares interests Investment Total
------ ------------- ---------- -----
Group
Cost
At 1 April 1999 1.7 0.6 0.6 2.9
Additions 1.9 - - 1.9
Disposals (0.3) - - (0.3)
---- ---- ---- ----
At 31 March 2000 3.3 0.6 0.6 4.5
---- ---- ---- ----
Provisions
At 1 April 1999 (1.6) - - (1.6)
Utilised during the year 0.3 - - 0.3
---- ---- ---- -----
(1.3) - - (1.3)
---- ---- ---- -----
At 31 March 2000
Net Book Value
31 March 2000 2.0 0.6 0.6 3.2
==== ==== ==== ====
31 March 1999 0.1 0.6 0.6 1.3
==== ==== ==== ====
A-17
<PAGE>
Notes continued
10 Fixed asset investments - company continued
EW & S Employee Share Trust, was created on 14 November 1996. The
trustee, EWS Trustees Ltd, at its absolute discretion determines which
directors and employees are to participate in a bonus share plan in any
fiscal year. All costs incurred in the administration of the trust are
charged to the profit and loss account as incurred.
At 31 March 2000, the trust held 1,608,039 (1999: 1,188,005) shares of
which 863,754 (1999: 1,070,520) were under option to employees and
directors. The historic cost of these shares is 3.3 million.
in millions Own Value of shares in
shares subsidiaries Total
------ ------------------ -----
Company
Cost/Valuation
At 1 April 1999 1.7 130.9 132.6
Additions at cost 1.9 - 1.9
Disposals (0.3) - (0.3)
Revaluation - 14.7 14.7
---- ----- -----
At 31 March 2000 3.3 145.6 148.9
---- ----- -----
Provisions
At 1 April 1999 (1.6) - (1.6)
Utilised during the year 0.3 - 0.3
---- ----- -----
(1.3) - (1.3)
---- ----- -----
Net Book Value 31 March 2000 2.0 145.6 147.6
==== ===== =====
Net Book Value 31 March 1999 0.1 130.9 131.0
==== ===== =====
Investments in group companies have been revalued to reflect the
underlying book value of the net assets of the subsidiaries. This
revaluation is eliminated on consolidation.
The companies in which the company's interest is 10% or more are as
follows:
<TABLE>
<CAPTION>
Class and
Country of percentage of
registration or Principal activity shares held
incorporation Group & company
--------------- --------------------------- ---------------
Subsidiary undertakings
<S> <C> <C> <C>
Boreal & Austral Railfreight Limited England & Wales Holding company 100% 1 Ordinary
New Locomotive Finance Limited England & Wales Acquisition and leasing 100% 1 Ordinary
of rolling stock
RES (December) Limited England & Wales Holding company 100% 1 Ordinary
Rail Express Systems Limited England & Wales Transportation and allied 100% 1 Ordinary
services
Loadhaul Limited England & Wales Dormant 100% 1 Ordinary
English Welsh & Scottish Railway England & Wales Haulage of freight 100% 1 Ordinary
Limited
Mainline Freight Limited England & Wales Dormant 100% 1 Ordinary
NPJV Limited England & Wales Dormant 100% 1 Ordinary
</TABLE>
A-18
<PAGE>
Notes continued
10 Fixed asset investments - company continued
<TABLE>
<CAPTION>
Class and
Country of percentage of
registration or Principal activity shares held
incorporation Group & company
--------------- --------------------------- ---------------
<S> <C> <C> <C>
LGJV Limited England & Wales Dormant 100% 1 Ordinary
EWS Finance Limited England & Wales Acquisition and leasing 100% 1 Ordinary
of rolling stock
East & West Limited England & Wales Holding company 100% 1 Ordinary
English Welsh & Scottish Railway England & Wales Haulage of freight 100% 1 Ordinary
International Limited
EW & S Trustees Limited England & Wales Trustee of employee share 100% 1 Ordinary
trust
Locomotive 6667 Limited England & Wales Dormant 100% 1 Ordinary
Participating interests
Allied Continental Intermodal
Services Limited England & Wales Railfreight 25% 1 Ordinary
Autotrax Limited England & Wales Terminal management 24% 1 Ordinary
Intermodal Wagon Systems Limited
England & Wales Railfreight 25% 1 Ordinary
Combined Transport Limited England & Wales Railfreight 10% 1 Ordinary
Unilog NV Belgium Railfreight 45% 1 Ordinary
</TABLE>
The investments in participating interests are unlisted. In the opinion
of the directors, the aggregate value of these investments is not less
than the amounts at which they are stated in the balance sheet.
11 Goodwill
Intangible assets consist of goodwill arising on the acquisition of
businesses acquired by the group. No goodwill is recorded in the books
of the company.
<TABLE>
<CAPTION>
in millions Negative Positive Total
Goodwill Goodwill Goodwill
------------ ------------ ------------
<S> <C> <C> <C>
Gross Value
At 1 April 1999 and 31 March 2000 (150.2) 6.0 (144.2)
------ ----- ------
Accumulated amortisation
At 1 April 1999 14.0 (0.9) 13.1
Amortisation of goodwill during the year 8.7 (0.3) 8.4
Accelerated release of negative goodwill 21.7 - 21.7
------ ----- ------
At 31 March 2000 44.4 (1.2) 43.2
------ ----- ------
Net Book Value
At 31 March 2000 (105.8) 4.8 (101.0)
====== ===== ======
At 31 March 1999 (136.2) 5.1 (131.1)
====== ===== ======
</TABLE>
(pound)38.6 million of the negative goodwill is being amortised over
the period from the 22 November 1997 to 30 April 2005 for the reasons
detailed in note 20(vii). The remaining negative goodwill is amortised
over the life of the assets to which it relates. The accelerated
release of negative goodwill arises on the write down of the carrying
value of certain wagons.
A-19
<PAGE>
Notes continued
12 Stocks
Stocks held by the group comprise spare parts held for the maintenance
of the group's assets. No stocks were held by the company.
13 Debtors
<TABLE>
<CAPTION>
in millions Group Company Group Company
2000 2000 1999 1999
----- ------- ----- -------
Amounts falling due within one year
<S> <C> <C> <C> <C>
Trade debtors 71.5 - 62.6 -
Amounts owed by group undertakings - 234.4 - 194.4
Amounts owed by participating interests 7.2 - 10.6 -
Other debtors 17.8 1.5 37.1 1.3
Prepayments and accrued income 15.4 - 16.7 -
----- ----- ----- -----
111.9 235.9 127.0 195.7
===== ===== ===== =====
Amounts falling due after more than one year
Pension fund prepayment 75.5 - 79.8 -
===== ===== ===== =====
</TABLE>
14 Creditors: amounts falling due within one year
<TABLE>
<CAPTION>
in millions Group Company Group Company
2000 2000 1999 1999
----- ------- ----- -------
<S> <C> <C> <C> <C>
Bank loans and overdrafts 25.0 - 23.3 6.9
Trade creditors 43.0 - 52.4 -
Amounts owed to group undertakings - 77.8 - 77.7
Obligations under finance leases and hire purchase contracts 0.6 - 0.3 -
Other creditors including taxation and social security:
Corporation tax 5.6 - 4.7 -
Other taxes and social security costs 11.4 - 8.7 -
Other creditors 6.7 - 2.3 0.1
Accruals 36.8 1.7 55.2 0.6
----- ----- ----- -----
129.1 79.5 146.9 85.3
===== ===== ===== =====
</TABLE>
15 Creditors: amounts falling due after more than one year
<TABLE>
<CAPTION>
in millions Group Company Group Company
2000 2000 1999 1999
----- ------- ----- -------
<S> <C> <C> <C> <C>
Bank loans (net of unamortised financing costs) 150.8 151.7 183.9 56.5
Obligations under finance leases and hire purchase contracts 1.1 - 1.7 -
------ ----- ----- -----
151.9 151.7 185.6 56.5
====== ===== ===== =====
</TABLE>
A-20
<PAGE>
Notes continued
Interest Rates and Security on Loans
The Group renegotiated the terms of its bank loans in November 1999.
The bank loans now include:
A senior revolving credit facility of 150M. Borrowers include EWS
Holdings, EWS Railway Limited, Loadhaul Limited, Mainline Freight
Limited, Rail Express System Limited; The loan is secured by a first
fixed and floating charge over the tangible and intangible assets of
the Group except certain assets of EWS Railway which are subject to a
prior charge in favour of the Post Office under the terms of a contract
for the carriage of mail, and the shares of New Locomotive Finance
Limited, English Welsh & Scottish Railway International Limited, and
East & West Limited which are charged on a subordinated basis. The
facility has cross-guarantees from the all material members of the
group. The loan is repayable in full on 30 September 2003, and attracts
interest of Libor plus a margin of between 75 basis points and 150
basis points. At 31 March 2000 there was 93.8 outstanding net of
unamortised financing charges. (1999: 73.6M)
A term loan of 60M; The borrower is English Welsh & Scottish
Railway Holdings Limited. The loan is secured and guaranteed in the
same manner as the senior revolving credit facility, but ranks after it
in order of preference and is repayable in full in February 2004. The
loan attracts interest of Libor plus a margin of 65 basis points. At 31
March 2000 there was 57.2m outstanding net of unamortised financing
costs. (1999 56.5M)
A revolving credit facility of 25M; The sole borrower is EWS Finance
Limited. The loan is secured by a fixed charge over the borrower's
tangible assets financed or refinanced through the facility, a first
priority charge over the shares of EWS Finance, and a general
floating charge. EWS Holdings Limited provides a subordinated guarantee
of lease payments due from EWS Railway Ltd to EWS Finance Limited. The
loan is repayable in full on 30 September 2003, and attracts interest
of Libor plus a margin of between 75 basis points and 150 basis points.
At 31 March 2000 there was Nil outstanding. (1999: 33M)
A term loan made to New Locomotive Finance Limited. The loan is secured
a first priority charge over the shares of NLFL , and fixed and
floating charges over the tangible and intangible assets of NLFL . The
timing of the repayment of the loan depends on the dates on which the
final class 66 and class 67 locomotives are delivered. It is expected
that the loan will be extinguished during the year ending 31 March
2001. The loan attracts interest of Libor plus a margin of 125 basis
points. At 31 March 2000 there was 25m outstanding net of unamortised
financing costs. (1999 44.1M)
Bank loans payable by instalments:
<TABLE>
<CAPTION>
in millions Group Company
2000 1999 2000 1999
---- ---- ---- ----
Amounts falling due:
<S> <C> <C> <C> <C>
In more than 1 year but not more than 2 years - 36.7 - -
In more than 2 years but not more than 5 years 150.8 145.5 151.7 56.5
In more than 5 years - 1.7 - -
----- ----- ----- -----
150.8 183.9 151.7 56.5
===== ===== ===== =====
</TABLE>
A-21
<PAGE>
Notes continued
15 Creditors: amounts falling due after more than one year continued
<TABLE>
<CAPTION>
The interest rate and currency profiles of bank loans are as follows:
Total Weighted Weighted Fair value
borrowings average average time of
millions interest rate for which rate borrowings
is fixed millions
--------------- -------------- ---------------- --------------
Group
<S> <C> <C> <C> <C>
Sterling
Variable rate 143.2 - - 143.2
Fixed rate 25.0 7.9% 5 Years 25.2
US Dollars
Variable rate - - - -
Fixed rate 12.8 7.3% 27 Months 12.8
----- -----
181.0 181.2
=====
Less unamortised finance costs (5.2)
-----
175.8
=====
Company
Variable rate 131.0 - - 131.0
Fixed rate 25.0 7.9% 5 Years 25.2
----- -----
156.0 156.2
=====
Less unamortised finance costs (4.3)
-----
151.7
=====
</TABLE>
The fair value of borrowings has been determined by marking interest
rate swaps to market at 31 March 2000.
The maturity of obligations under finance leases and hire purchase
contracts is as follows:
in millions Group Company Group Company
2000 2000 1999 1999
---- ---- ---- ----
Within one year 0.6 - 0.5 -
In the second to fifth years 1.1 - 1.3 -
Over five years - - 0.2 -
--- --- --- ---
1.7 - 2.0 -
=== === === ===
A-22
<PAGE>
Notes continued
16 Provisions for liabilities and charges
<TABLE>
<CAPTION>
in millions Environmental Deferred Tax Redundancy Claims Other Total
Provision Provision Provision Provision Provisions Provisions
------------- ------------ ---------- --------- ---------- ----------
Group
<S> <C> <C> <C> <C> <C> <C>
At 1 April 1999 6.2 14.5 14.9 11.2 10.3 57.1
Utilised during year (0.2) - (12.3) (4.6) (0.5) (17.6)
Unutilised amounts
released in the year - - - (4.1) (1.9) (6.0)
Provisions created in
the year - 1.9 - 5.6 5.7 13.2
---- ---- ---- ---- ---- ----
At 31 March 2000 6.0 16.4 2.6 8.1 13.6 46.7
==== ==== ==== ==== ==== ====
</TABLE>
The environmental provision represents the anticipated future costs of
rectifying potential pollution at sites occupied by the group. The
redundancy provision reflects the anticipated future costs of
implementing plans to restructure the group. The claims provision
represents the anticipated costs of claims made by third parties
against group companies to the extent they are not recoverable from the
group's insurers.
The amounts provided and not provided for deferred tax are analysed
below:
<TABLE>
<CAPTION>
in millions 2000 1999
Provided Unprovided Provided Unprovided
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Difference between accumulated depreciation and
amortisation and capital allowances (3.5) 43.3 (2.8) 56.4
Timing difference on pension fund surplus 22.7 - 23.9 -
Timing difference on provision for redundancies (0.8) - (4.5) -
Other timing differences (2.0) (2.2) (2.1) (1.9)
---- ---- ---- ----
16.4 41.1 14.5 54.5
==== ==== ==== ====
</TABLE>
17 Deferred Income
in millions 2000 1999
---- ----
Government capital grants 8.2 4.9
Other deferred income 3.9 6.0
---- ----
12.1 10.9
==== ====
Government capital grants
At 1 April 1999 4.9 1.8
Receivable during the period 4.8 3.5
Credited to profit and loss account (1.5) (0.4)
---- ----
At 31 March 2000 8.2 4.9
==== ====
A-23
<PAGE>
Notes continued
18 Called up share capital
<TABLE>
<CAPTION>
Number of shares Group and Company
2000 1999 2000 1999
----------- ----------- --------- --------
millions millions
Authorised
<S> <C> <C> <C> <C>
Ordinary shares of 1 each 125,000,000 125,000,000 125.0 125.0
Allotted, called up and fully paid No millions
----------- --------
Ordinary shares of(pound)1 each
At 1 April 1999 100,155,951 100.2
Shares issued at par 4,411,522 4.4
Shares issued at a premium of(pound)2.00 36,667 -
----------- -----
At 31 March 2000 104,604,140 104.6
=========== =====
</TABLE>
At 31 March 2000 options totalling 6,336,312 (1999: 7,941,521) were in
issue exercisable at the prices and over the time frames detailed
below.
Exercisable between Exercise Number
price options
-------- ---------
10 September 1999 and 10 September 200 1.00 2,245,000
10 September 1999 and 10 September 2006 1.00 810,000
16 September 2000 and 16 September 2004 1.30 100,000
16 September 2000 and 16 September 2004 1.69 179,498
18 November 2000 and 18 November 2004 1.69 35,000
18 September 2001 and 18 September 2005 1.69 85,502
18 September 2001 and 18 September 2005 3.00 30,000
18 September 2001 and 18 September 2008 3.00 10,000
8 March 2002 and 8 March 2006 1.69 35,000
13 July 2002 and 13 July 2006 3.00 19,500
12 October 2002 and 12 October 2006 3.00 1,667
31 August 2002 and 31 August 2009 3.00 5,000
13 September 2002 and 13 September 2009 3.00 5,000
12 October 2002 and 12 October 2009 3.00 10,000
24 November 2002 and 24 November 2009 3.00 2,765,145
---------
6,336,312
=========
At 31 March 2000 warrants totalling 3,726,682 (1999: 3,631,181) were in
issue which are exercisable at the warrant holders discretion at a
price of 0.01 each.
A-24
<PAGE>
Notes continued
19 Reserves
<TABLE>
<CAPTION>
Group & Company Company Group Company
in millions Share premium Revaluation Profit and loss Profit and loss
Account reserve account account
-------------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
At 1 April 1999 1.9 87.6 82.8 (4.8)
Premium on shares issued 0.1 - - -
Retained profit for year - - 10.5 (4.2)
Revaluation of investment in - 14.7 - -
subsidiaries
---- ----- ---- ----
At 31 March 2000 2.0 102.3 93.3 (9.0)
==== ===== ==== ====
</TABLE>
20 Commitments
(i) Capital commitments at the end of the financial year for which
no provision has been made.
In millions Group Company Group Company
2000 2000 1999 2000
---- ---- ---- ----
Contracted 28.1 - 123.4 -
==== ==== ===== ====
(ii) There were no commitments at the year end to enter into
finance leases starting after the year end.
(iii) Annual commitments under non-cancellable operating leases for
land and buildings and equipment delivered by the year end are
as follows:
<TABLE>
<CAPTION>
in millions 2000 1999
Land and Land and
buildings Other buildings Other
000's 000's 000's 000's
--------- ------- --------- -------
Group
<S> <C> <C> <C> <C>
Operating leases which expire:
Within one year 0.2 3.8 0.2 4.1
In the second to fifth years inclusive 0.2 4.8 - 1.7
Over five years 0.6 26.6 0.8 12.1
---- ---- ---- ----
1.0 35.2 1.0 17.9
==== ==== ==== ====
</TABLE>
On the 26 August 1998 the New Locomotive Finance Limited, a
wholly owned subsidiary, agreed to novate to Angel Trains the
right to acquire 250 Class 66 and 30 Class 67 locomotives. On
the same date English Welsh & Scottish Railway Limited, a
wholly owned subsidiary, entered a contract to rent the same
locomotives under an operating lease of 15 years duration from
following the delivery of the last locomotive. The additional
annual rental payable on those locomotives which had not been
delivered by the year end is estimated to be 3.8 million
all of which would fall into the over five years category
in the above table.
A-25
<PAGE>
Notes continued
20 Commitments continued
(iv) Fuel Hedge Contracts
English Welsh & Scottish Railway Ltd has entered into a number
of fuel hedge contracts for gas oil, none of which extend
beyond 31 March 2001. The quantity hedged is equivalent to 19%
of the projected annual consumption.
(v) Interest Rate Contracts
English Welsh & Scottish Railway Holdings Ltd entered into a
contract commencing on 4 September 1997 of five years duration
to pay or receive as appropriate the difference between
interest on 25 million at a fixed rate of 7.269% and 3 month
LIBOR.
On 15 January 1998 New Locomotive Finance Limited, a wholly
owned subsidiary, entered a contract of 27 months duration to
pay or receive as appropriate the difference between interest
on US$52 million at a fixed rate of 6.07% and 3 month US$
LIBOR.
(vi) Foreign exchange
On 17 March 2000, EW&S Railways Limited entered into a forward
contract on $18 million at a rate of 1: $1.5734 to be
credited between 1 June and 30 June 2000.
vii) Channel Tunnel Access
On 22 November 1997 EWS completed the acquisition of 100% of
the share capital of English Welsh & Scottish Railway
International Limited ("EWSI"), formerly Railfreight
Distribution Limited, from the British Railways Board ("BRB").
In connection with that acquisition:
o BRB has agreed that EWSI will not be required to pay toll
charges for access to the Channel Tunnel until 30 April
2005, such charges being met by BRB.
o In the event that freight operations through the Channel
Tunnel are terminated, EWSI may be required to sell
certain tunnel related assets to a publicly owned railway
company and to pay a 5m penalty. A provision was
raised for this penalty on the acquisition of EWSI.
o EWSI intends to continue its Channel Tunnel operations
after April 2005, but will not be able to do so unless
Eurotunnel materially reduces its charges. The present
contractual arrangements do not compel Eurotunnel to do
this, and there is no certainty that it will. Full
provision is therefore made for all liabilities that
would arise if EWSI discontinued Channel Tunnel
operations after April 2005. Consequently, negative
goodwill arising on the acquisition is being amortised
over the period to this date.
o BRB has paid a restructuring grant of (pound)25 million
to EWSI. The amount of the grant received during the year
was (pound)12.3 million. The grant is potentially
repayable over 10 years from 2007 if average total access
charges fall below and volumes exceed specified levels.
No provision has been made for repayment of grants
received to date.
21 Pension scheme
Contributions to the group's defined benefit pension scheme are charged
to the profit and loss account so as to spread the cost of pensions
over employees' working lives with the group. The contributions are
determined by a qualified actuary using the projected unit method. The
most recent valuation was at 31st December 1999. The assumptions
adopted by the pension fund's actuary which have the most significant
effect on the results of the valuation are;
A-26
<PAGE>
Notes continued
21 Pension scheme continued
o Salary inflation has been assumed to be 4.5% (1999: 6.5%) per annum.
o Pensions growth has been assumed to be 3.0% (1999: 4.5%) per annum.
o Return on investments has been assumed to be 7.25% (1999: 9.0%) per
annum.
The most recent actuarial valuation showed that the market value of the
scheme's assets was 640.4 million (1999: 580.1 million) and that the
actuarial value of those assets represented at least 119% of the
liabilities for benefits that had accrued to members, after allowing
for expected future increases in earnings. Since acquisition a surplus
has arisen of 10.3 million which is being amortised to the profit and
loss account over the estimated working lives of the employees.
On 15 October 1997 the trustees of the Railway Pension Scheme agreed a
package of benefit improvements for members. At the same time it was
agreed that employer contributions, previously 7.5% of pensionable pay,
would cease for three years and that employee contributions would
continue at 5% of pensionable pay.
On 22 June 1998 the trustees of the Railway Pension Scheme, agreed the
same package of benefit improvements for EWSI employees. Similarly it
was agreed that employer contributions, previously 7.5% of pensionable
pay, would cease for three years and that employee contributions would
continue at 5% of pensionable pay.
In addition, the group operates a defined contribution pension scheme
under which members contributions are matched on a pound for pound
basis.
The total pension cost charge for the period amounted to 4.4 million
(1999:(pound)2.4 million).
22 Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
in millions 2000 1999
---- ----
<S> <C> <C>
Operating profit 25.6 49.8
Depreciation charge 42.7 18.4
Amortisation of goodwill (30.1) (9.2)
Exceptional write downs 13.4 -
Provision against shares held by EW&S Employee Share Trust (0.3) 0.9
(Increase) in stocks (1.8) (2.0)
Decrease in debtors 19.4 14.6
(Decrease) in creditors and provisions (35.9) (22.3)
---- ----
Net cash inflow from operating activities 33.0 50.2
==== ====
</TABLE>
A-27
<PAGE>
Notes continued
23 Analysis of cash flows for headings netted in the cash flow statement
<TABLE>
<CAPTION>
in millions
For the year ended 31 March 2000 1999
---- ----
<S> <C> <C>
Returns on investments and servicing of finance
Interest received 0.4 0.6
Interest paid (10.9) (18.9)
---- ----
Net cash outflow for returns on investments and servicing of finance (10.5) (18.3)
==== ====
Capital expenditure and financial investment
Purchase of tangible fixed assets (67.3) (86.9)
Sale of tangible fixed assets 65.3 42.1
---- ----
Net cash outflow for capital expenditure and financial investment (2.0) (44.8)
==== ====
Acquisitions and disposals
Acquisition of subsidiary - (3.2)
---- ----
Net cash outflow for acquisitions and disposals - (3.2)
==== ====
</TABLE>
24 Analysis of net debt
<TABLE>
<CAPTION>
in millions At 1 April Cash flow Non cash At 31 March
1999 changes 2000
---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Cash at bank 18.4 (8.9) - 9.5
----- ----- ----- -----
Debt due after one year (183.9) 34.6 (1.5) (150.8)
Debt due within one year (23.3) (1.7) - (25.0)
Finance leases (2.0) 0.3 - (1.7)
----- ----- ----- -----
(209.2) 33.2 (1.5) (177.5)
----- ----- ----- -----
Total (190.8) 24.3 (1.5) (168.0)
===== ===== ===== =====
</TABLE>
A-28
<PAGE>
Notes continued
24 Analysis of net debt continued
<TABLE>
<CAPTION>
in millions
2000 1999
---- ----
Reconciliation of net cash flow to movement in debt
<S> <C> <C>
Decrease in cash in the year (8.9) (2.2)
Cash outflow/(inflow) from decrease/increase in debt and lease financing 33.2 (14.5)
----- -----
Change in debt resulting from cash flows 24.3 (16.7)
Amortisation of finance costs (1.5) (1.5)
----- -----
Movement in net debt in the year 22.8 (18.2)
Net debt at 31 March 1999 (190.8) (172.6)
----- -----
Net debt at 31 March 2000 (168.0) (190.8)
===== =====
</TABLE>
25 Ultimate parent company and parent undertaking of larger group
The company has no parent undertaking and therefore its results are not
consolidated in the accounts of any other entity.
A-29
<PAGE>
Notes continued
26 Supplemental US GAAP information
As at 31 March 2000, Wisconsin Central Transportation Corporation
(WCTC), a US company registered with the US Securities and Exchange
Commission (SEC), held an approximate 42% interest in English Welsh
& Scottish Railway Holdings Limited (EWSRH).
Setout below is a reconciliation of the profit and shareholders' funds
as set out above under UK GAAP to those under US GAAP to comply with
SEC requirements.
<TABLE>
<CAPTION>
in millions Year ended Year ended
31 March 31 March
2000 1999
---------- ----------
<S> <C> <C>
Net profit in accordance with UK GAAP 10.5 32.8
Expenditure on rolling stock (b) (2.0) 7.8
Pensions (c) 1.3 2.0
Taxation (e) 0.3 (4.3)
Amortisation of goodwill (f) (22.4) (1.7)
Application of negative goodwill to
fixed assets (g) 24.1 2.2
Provision releases (h) (0.6) (7.2)
---- ----
Net profit in accordance with US GAAP 11.2 31.6
==== ====
</TABLE>
<TABLE>
<CAPTION>
in millions As at As at
31 March 31 March
2000 1999
-------- --------
<S> <C> <C>
Shareholders' funds in accordance with UK GAAP 199.9 184.9
Redundancy and restructuring costs (a) 63.0 63.0
Expenditure on rolling stock (b) 47.1 49.1
Pensions (c) 7.0 5.7
Capitalisation (d) 0.2 0.2
Taxation (e) (46.9) (47.2)
Amortisation (f) (27.8) (5.4)
Application of negative goodwill to fixed assets (g) 27.1 3.0
Provision releases (h) (7.8) (7.2)
Shares repurchased under an employee share
ownership plan (i) (2.0) -
----- -----
Shareholders' funds in accordance with US GAAP 259.8 246.1
===== =====
</TABLE>
A-30
<PAGE>
Notes continued
26 Supplemental US GAAP information contd
The material adjustments made for US GAAP purposes as analysed above
are as follows:
a) Redundancy and restructuring costs in connection with the
acquisition of businesses which must be expensed under
FRS 7: "Fair Values in Acquisition Accounting" in the UK,
but treated as fair value adjustments in the acquisition
balance sheet for US GAAP purposes, provided certain
criteria are met ;
b) Deferral, net of 9,958,000 and 8,291,000 amortisation,
for the periods ended 31 March 2000 and 1999 respectively
of certain expenditures relating to rolling stock which
has been expensed in the UK GAAP accounts;
c) Difference in calculation of pension surplus and charge
between SSAP 24: "Accounting for Pensions" in the UK and
SFAS 87: "Employers' Accounting for Pensions" and SFAS88:
"Employers Accounting for Settlements and Curtailments
of Defined Benefit Plans and for Termination Benefits"
for US GAAP purposes;
d) Capitalisation of interest costs relating to the purchase
of fixed assets which have been expensed in the UK GAAP
accounts;
e) Full provisions for deferred taxation under US GAAP for
the consequences of all temporary differences between
carrying values for financial reporting and tax purposes
(UK GAAP only recognises deferred tax assets and
liabilities to the extent that they relate to timing
differences which are expected to reverse in the
foreseeable future ) and taxation adjustments for other
items included in the reconciliation above;
f) Goodwill has been adjusted as a result of certain US/UK
GAAP differences, notably being increased by the
redundancy and restructuring costs resulting in the
elimination of the capital reserve (negative goodwill)
arising under UK GAAP. Goodwill is amortised over a 40
year period for US GAAP purposes;
g) Under acquisition accounting for US GAAP the capital
reserve (negative goodwill) arising under UK GAAP is
partially eliminated against fixed assets;
h) 552,000 of eurotunnel provision charges were credited
to the profit and loss account for UK GAAP but were
treated as adjustments to Goodwill for US GAAP purposes;
i) Shares repurchased from ex-employees by a trust over
which the company exercises effective control under UK
GAAP as defined by UITF 13 are disclosed in the balance
sheet as a fixed asset investment. Under US GAAP these
would be accounted for as treasury stock and have been
deducted from shareholders funds;
j) The group prepares its consolidated statements of
cashflow under Financial Reporting Standard No. 1
"Cashflow Statements" (FRS 1). Its objectives and
principles are similar to those set out in the US
Statement of Financial Accounting Standards No. 95:
"Statement of Cash Flows" (SFAS 95). The principal
difference between the standards relates to
classification under FRS 1. The group presents its
cashflows from (a) operating activities; (b) returns on
investments and servicing of finance; (c) taxation; (d)
investing activities and (e) financing activities. SFAS
95 requires only three categories of cashflow activities:
(a) operating (b) investing and (c) financing. Cashflows
from taxation and returns on investments and servicing of
finance shown under FRS1 would be included as cashflow
from operating activities under SFAS 95. In addition,
under FRS 1, cash and cash equivalents include short term
borrowings with original maturities of three months or
less. SFAS 95 requires movements on such short-term
borrowings to be shown under financial activities.
A-31
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