Consolidated profit and loss account - Stagecoach Group

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Notes to the accounts 2003 Note 5 (Loss)/profit on ordinary activities before taxation (Loss)/profit on ordinary activities before taxation is stated after charging/(crediting): 2003 2002 »m »m Materials and consumables 208.9 215.8 Depreciation and amounts written off ^ Tangible fixed assets (owned) 87.3 95.1 ^ Tangible fixed assets (on HP or lease) 18.0 17.6 ^ Impairment losses 162.7 9.7 Amortisation of goodwill ^ Subsidiaries 28.6 41.7 ^ Joint venture and associates 9.0 8.8 Impairment of Coach USA goodwill 386.8 Nil Losses/(gains) on property disposals 0.5 (0.5) Losses on other asset disposals 2.7 0.1 Operating lease rentals ^ PSVs and rolling stock 95.9 93.4 ^ Network Rail charges 101.5 103.4 ^ Land and buildings 10.1 10.2 Auditors’ remuneration ^ audit (Group) ^ Andersen Nil 0.3 ^ PricewaterhouseCoopers 0.7 0.5 Auditors’ remuneration ^ audit (Company) ^ PricewaterhouseCoopers ^ ^ Payments for non-audit services of »0.2m (2002 ^ »0.3m) were made to PricewaterhouseCoopers in the UK during the year. Payments for non-audit services of »0.4m were made to Andersen in year ended 30 April 2002 while auditors of the Company. The following items have been treated as exceptional: 2003 2002 »m »m Provision for losses on operations to be terminated or sold at Coach USA (7.7) (9.9) Impairment of tangible fixed assets at Coach USA (162.7) (9.7) Write-down of current assets to net realisable value at Coach USA (17.8) Nil Impairment of goodwill at Coach USA (386.8) Nil Profit on disposal of overseas operations Nil 4.8 (Loss)/profit on sale of properties (0.5) 0.5 (575.5) (14.3) Tax effect of exceptional items Nil 5.6 (575.5) (8.7) Management undertook a review of its North American business, Coach USA, in the six months to 31 October 2002. The outcome of this review resulted in a significant change to the Group’s North American strategy, further details of which are given in the Chief Executive’s Review. As at 30 April 2002, the Group undertook an impairment review of Coach USA. The Directors concluded that at that time, no impairment write-down was required but announced that a review of Coach USA’s business would be undertaken. The recovery in revenues for the six months ended 31 October 2002 was less than expected and trading conditions in North America continued to be difficult. As a result of the change in strategy for Coach USA and the absence of a significant recovery in revenues, the Group undertook a further review of the carrying value of Coach USA’s assets as at 31 October 2002. The commercial assumptions used in reviewing the carrying value of Coach USA at that time are consistent with the current strategic plans for that business. The carrying values of current assets within Coach USA were also reviewed to ensure those were properly valued. Appropriate write-downs were recorded in the six months ended 31 October 2002. These write-downs included adjustments to the carrying value of taxicab inventory and receivables, where the realisable value had fallen reflecting market conditions at that time. The remaining goodwill and tangible fixed assets of Coach USA were reviewed for impairment. In accordance with FRS 11, ‘‘Impairment of fixed assets and goodwill’’, Coach USA was divided into appropriate ‘‘Income Generating Units’’ or ‘‘IGUs’’. The carrying value of each IGU as at 31 October 2002 was compared to its estimated recoverable amount, being the higher of its value in use and net realisable value to the Group. The value in use of each IGU was derived from discounted cash flow projections that covered the period to 30 April 2007. After 30 April 2007, the projections used a long-term growth rate compatible with projections for the US economy. The average discount rate used to arrive at the value in use was 13.0% on a pre-tax basis. The remaining tangible fixed assets and goodwill of each IGU are being amortised over their estimated useful economic lives, which in the case of goodwill is 16.25 years from 30 April 2003. 49
Notes to the accounts 2003 Note 5 (Loss)/profit on ordinary activities before taxation (continued) The Group closed a number of businesses in the USA as a consequence of the review. Specific provision has been made for losses associated with the closure of these businesses over and above the write-down of asset values described above. These additional losses include employee redundancy payments, operating lease termination payments and professional fees directly attributable to the closures. To the extent the written-down values as at 31 October 2002 were based on projected cash flows, the actual cash flows for the six months ended 30 April 2003 have been compared to the projections. Actual cash flows were not significantly different to those projected. The aggregate exceptional charges across all of the IGUs were as follows: Year ended 30 April 2003 »m Provision for losses on operations to be terminated (7.7) Write-down of current assets to net realisable value (17.8) Impairment of tangible fixed assets (162.7) Impairment of goodwill (386.8) (575.0) The residual written down values of Coach USA’s net assets as at 30 April 2003 were as follows: As at 30 April 2003 »m Goodwill 108.0 Tangible fixed assets 231.0 Net current liabilities (8.5) Net assets before debt and tax balances 330.5 Net assets for Coach USA included in note 2(d) totalled »323.2m. This includes net tax liabilities of »7.3m excluded above. Details of disposals of fixed asset investments in the year are given in note 13. Note 6 Staff costs and employees 2003 2002 »m »m Staff costs Wages and salaries 788.8 774.6 Social security costs 60.6 61.3 Other pension costs (note 26d) 31.2 18.0 ESOP provided for 0.2 1.8 880.8 855.7 2003 2002 »m »m Summary directors’ remuneration Aggregate emoluments 1.8 1.8 Compensation for loss of office 0.5 Nil Sums paid to third parties for directors’ services 0.2 0.1 2.5 1.9 Further information on directors’ remuneration, share options, incentive schemes and pensions is contained in the Remuneration report on pages 30 to 34. The average monthly number of persons employed by the Group during the year (including executive directors) was as follows: 2003 2002 number number UK operations 21,292 20,856 UK administration and supervisory 1,945 1,884 Overseas 15,639 16,043 38,876 38,783 50
Page 1 and 2: Consolidated profit and loss accoun
Page 3 and 4: Company balance sheet As at 30 Apri
Page 5 and 6: Consolidated statement of total rec
Page 7 and 8: Notes to the accounts 2003 Note 1 S
Page 13: Notes to the accounts 2003 Note 2 S
Page 17 and 18: Notes to the accounts 2003 Note 8 D
Page 19 and 20: Notes to the accounts 2003 Note 12

Consolidated profit and loss account - Stagecoach Group

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