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, 1996


                         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 (847) 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.............................................    30*


FINANCIAL STATEMENTS

Consolidated Balance Sheets.............................................. 31-32*
Consolidated Statements of Income........................................    33*
Consolidated Statements of Changes in Stockholders' Equity...............    34*
Consolidated Statements of Cash Flows....................................    35*
Notes to Consolidated Financial Statements............................... 36-50*


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 Movement in Shareholders' Funds.......................     A-8
Consolidated Cash Flow Statement........................................     A-9
Notes to Consolidated Financial Statements.............................. A-10-32


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 21, 1997. 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, 1997,
each pound sterling equaled US $1.6395.



                                      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...................................     31-32*
       Consolidated Statements of Income.............................        33*
       Consolidated Statements of Changes in Stockholders' Equity....        34*
       Consolidated Statements of Cash Flows.........................        35*
       Notes to Consolidated Financial Statements....................     36-49*


   (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 Movement in Shareholders' Funds..............       A-8
       Consolidated Cash Flow Statement...............................       A-9
       Notes to Consolidated Financial Statements.....................   A-10-32

      
   (3) Exhibits

       The  exhibits  set  forth  in the Index to Exhibits in the Report on Form
       10-K  filed  on  March  21, 1997  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, 1996.

       The  information  provided  on the Report on Form 10-K filed on March 21,
       1997 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 21,
          1997.  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, 1997, each pound sterling equaled US $1.6395.



                                       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 Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.


                                                WISCONSIN CENTRAL TRANSPORTATION
                                                CORPORATION
                                                (Registrant)

Date: September 29, 1997                        By:  /s/ Walter C. Kelly
                                                   ---------------------
                                                         Walter C. Kelly
                                                         Vice-President, Finance

                                                       





                                       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 sheet of English Welsh &
Scottish  Railway  Holdings Limited and subsidiaries as of 31 March 1997 and the
related  consolidated  profit and loss account,  reconciliation  of movements in
shareholders'  funds  and  consolidated  cash  flows  for the  period  from  the
company's  incorporation on 16 October 1995 to 31 March 1997. 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 1997 and the
results of  their  operations  and  their  cash  flows  for  the period from the
company's incorporation  on 16 October 1995 to 31 March 1997 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  effected the results of  operations  for the period from the
company's  incorporation  on 16 October 1995 to 31 March 1997 and  shareholders'
equity at 31 March 1997 to the extent  summarised in supplemental note 25 to the
consolidated financial statements.




KPMG
Chartered Accountants                                                     London
Registered Auditors                                            30 September 1997





                                      A-4

<PAGE>



Consolidated profit and loss account

for the period ended from 16 October 1995 to 31 March 1997
<TABLE>
<CAPTION>


                                                                        Before
                                                                     Exceptional           Exceptional
                                                                        Items                 Items                Total 
                                                     Note                1997                 1997                 1997
                                                     ----            -----------          -----------          -----------  
                                                                          '000                 '000                 '000

<S>                                                   <C>               <C>                   <C>                 <C>    
Turnover                                              2                  609,044                    -              609,044
(acquisitions & continuing operations)

Operating costs                                       3                 (530,851)             (63,010)            (593,861)
(acquisitions and continuing operations)
                                                                        --------             --------             --------
Operating profit
(acquisitions and continuing operations)              4                   78,193              (63,010)              15,183
                                                                        ========             ========

Other interest receivable and similar income                                                                         2,404
Interest payable and similar charges                  7                                                            (20,313)
                                                                                                                  --------

Loss on ordinary activities before taxation           4                                                             (2,726)
Tax on loss on ordinary activities                    8                                                                900
                                                                                                                  --------
Retained loss on ordinary activities after
taxation for the period                                                                                             (1,826)
                                                                                                                  ========
</TABLE>


There were no gains or losses other than the loss for the period.

There were no  differences  between the profit and loss account  shown above and
that prepared on a historical cost basis.




                                                      A-5

<PAGE>



Consolidated balance sheet

at 31 March 1997
<TABLE>
<CAPTION>

                                                                     Note               1997
                                                                     ----      -----------------------
                                                                                  '000           '000
<S>                                                                   <C>      <C>            <C>
Fixed assets:
Tangible assets                                                        9                       274,121

Current assets:
Stocks                                                                11          8,969
Debtors due in more than one year                                     12         66,817
Debtors due within one year                                           12         99,055
Cash at bank and in hand                                                         28,096
                                                                               --------

                                                                                202,937

Creditors: amounts falling due within one year                        13       (106,326)
                                                                               --------

Net current assets                                                                              96,611
                                                                                              --------
                                                                                               370,732
Total assets less current liabilities

Creditors: amounts falling due after more than one year               14                      (137,106)
Provisions for liabilities and charges                                15                      (110,068)
Deferred income                                                       16                        (4,352)
                                                                                              --------

Net assets                                                                                     119,206
                                                                                              ========

Capital and reserves
Called up share capital                                               17                        98,603
Share premium reserve                                                 18                         1,187
Capital reserve                                                       18                        21,242
Profit and loss account                                               18                        (1,826)
                                                                                              --------

Equity shareholders' funds                                                                     119,206
                                                                                              ========
</TABLE>


These financial statements were approved by the board of directors on 18 July
1997 and were signed on its behalf by:





E A Burkhardt
Chairman



                                                      A-6

<PAGE>



Company balance sheet

at 31 March 1997
<TABLE>
<CAPTION>


                                                                     Note              1997
                                                                     ----     ------------------------
                                                                                  '000           '000
<S>                                                                   <C>      <C>            <C>
Fixed assets:
Investments                                                           10                        67,062

Current assets:
Debtors                                                               12        110,094
                                                                               --------

                                                                                110,094

Creditors: amounts falling due within one year                        13         (2,786)
                                                                               --------

Net current assets                                                                             107,308
                                                                                              --------

Total assets less current liabilities                                                          174,370


Creditors: amounts falling due after more than one year               14                       (55,164)
                                                                                              --------

Net assets                                                                                     119,206
                                                                                              ========

Capital and reserves
Called up share capital                                               17                        98,603
Share premium reserve                                                 18                         1,187
Revaluation reserve                                                   18                        20,622
Profit and loss account                                                                         (1,206)
                                                                                              --------

Equity shareholders' funds                                                                     119,206
                                                                                              ========
</TABLE>


These financial statements were approved by the board of directors on 18 July
1997 and were signed on its behalf by:





E A Burkhardt
Chairman



                                                      A-7

<PAGE>



Reconciliation of movements in shareholders' funds

for the period from 16 October 1995 to 31 March 1997
<TABLE>
<CAPTION>


                                                                                          1997
                                                                              -----------------------------
                                                                                 Group             Company
                                                                              ---------           ---------
                                                                                  '000                '000

<S>                                                                            <C>                 <C>    
Loss for the financial period                                                    (1,826)             (1,206)

New share capital subscribed                                                     98,603              98,603
Share premium arising on new share capital                                        1,187               1,187
Capital reserve arising on acquisition                                           21,242                   -
Revaluation of investment in subsidiaries                                             -              20,622
                                                                               --------            --------

Net addition to shareholders' funds                                             119,206             119,206
Opening shareholders' funds                                                           -                   -
                                                                               --------            --------
Closing shareholders' funds                                                     119,206             119,206
                                                                               ========            ========
</TABLE>




                                                      A-8

<PAGE>



Consolidated cash flow statement

for the period from 16 October 1995 to 31 March 1997
<TABLE>
<CAPTION>


                                                                     Note              1997
                                                                     ----     ------------------------
                                                                                  '000           '000

<S>                                                                   <C>      <C>            <C>   
Net cash inflow from operating activities                             21                        74,635

Return on investments and servicing of finance                        22                       (13,646)

Capital expenditure and financial investment                          22                       (28,503)

Acquisitions and disposals                                            22                      (243,847)
                                                                                              --------
                                                                                              (211,361)
Net cash outflow before financing

Financing:
  Issue of ordinary share capital                                                99,790
  Long term loans raised                                                        185,000
  Costs of raising long term loans                                              (11,720)
  Repayment of long term loans                                                  (32,403)
                                                                               --------

Net cash inflow from financing                                        22                       240,667
  Taxation paid                                                                                 (1,210)
                                                                                              --------
Increase in cash and cash equivalents                                 23                        28,096
                                                                                              ========
</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.  These
       accounts are made up to 31 March 1997.

       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  and  associated  undertakings  acquired in the
       period are included in the consolidated  profit and loss account from the
       date of acquisition.  Goodwill arising on consolidation  has been written
       off to  reserves.  Any excess of the  aggregate  of the fair value of the
       separate  net assets  acquired  over the fair value of the  consideration
       given (negative goodwill) is credited directly to reserves.

       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  amount  of the  loss  for the  financial  period  dealt  with in the
       financial statements of English Welsh & Scottish Railway Holdings Limited
       is  disclosed  in  note 18 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.


       Fixed assets and depreciation

       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:

       -   Freehold buildings                     40 years

       -   Leasehold land and buildings           life of lease

       -   Plant, machinery and equipment         3 to 10 years

       -   Rolling stock                          20 to 50 years

       -   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.


       Stocks

       Stocks are stated at the lower of cost and net realisable value.


       Pensions and other post-retirement benefits

       The group  participates in a pension scheme  providing  benefits based on
       final  pensionable pay. The assets of the scheme are held separately from
       those of the group in an independently  administered fund.  Contributions
       to the scheme are charged to the profit and loss  account so as to spread
       the cost of pensions over employees' working lives with the group.

       In addition  the group  participates  in a defined  contribution  pension
       scheme.  The assets of the scheme are held  separately  from those of the
       group in an independently  administered  fund. The amount charged against
       profits represents the contributions  payable to the scheme in respect of
       the accounting period.

       Details of the pension scheme are provided in note 20.


       Taxation

       The credit 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.



                                      A-11

<PAGE>



Notes continued

1      Accounting Policies continued

       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.


       Research and Development

       Research and development  expenditure is written off as incurred,  except
       that development expenditure incurred on an individual project is carried
       forward  when its future  recoverability  can  reasonably  be regarded as
       assured.  Any  expenditure  carried  forward  is  amortised  in line with
       expected future sales or cost savings from the related project.


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 costs
<TABLE>
<CAPTION>

                                                                Before
                                                             Exceptional          Exceptional
                                                                 Items                Items                Total
                                                                 1997                 1997                 1997
                                                              ---------            ---------            ---------
                                                                 '000                 '000                 '000

       <S>                                                      <C>                  <C>                  <C>  
       Change in stock of spares                                  2,069                    -                2,069
       Other operating income                                     (262)                    -                (262)
       Raw materials and consumables                             83,315                    -               83,315
       Other external charges                                   236,813                3,312              240,125
       Staff costs (Note 6)                                     193,788               59,698              253,486
       Depreciation and other amounts written
         off tangible and intangible fixed assets                15,128                    -               15,128
                                                                -------              -------              -------
                                                                530,851               63,010              593,861
                                                                =======              =======              =======
</TABLE>

       The exceptional item is a provision for redundancy and restructuring
       costs of which 28,331,000 had been spent by the end of the period.




                                      A-12

<PAGE>



Notes continued

4      Loss on ordinary activities before taxation

       The operating loss dealt with in the accounts of the parent company was
       339,187.


                                                                           1997
                                                                           ----
                                                                           '000
       Loss on ordinary activities before taxation
       is stated after charging:
       Auditors' remuneration:
           Audit                                                            350
           Other services                                                   460
       Depreciation and other amounts written off 
       tangible fixed assets:
           Owned                                                         13,436
           Leased                                                         1,692
       Loss on sale of fixed assets                                         194
       Hire of plant and machinery - rentals payable
       under operating leases                                               192
       Other operating leases                                             1,618
       Hire of plant and machinery - finance charges
       under finance leases                                                  16

       after crediting:
       Grants credited to profit and loss account                           272
       Rents receivable from property                                     8,510


       In  addition  to  the  above,  the auditors received 1,931,000 during the
       period in relating to the  acquisition of subsidiaries.  These costs have
       been capitalised.


5      Remuneration of directors


       Aggregate emoluments of directors                                 168,970
       Number of directors for whom retirement benefits are                    1
       are accruing under a money purchase scheme
       Number of directors for whom retirement benefits are                    1
       accruing under a defined benefits scheme
       Number of directors eligible for shares under a long                    1
       term incentive scheme

       Directors  interests  in the  ordinary  share  capital of the company and
       options granted during the year are disclosed in the Director's Report.

       1,453,772 was paid to  Wisconsin  Central  Transportation Incorporated in
       relation to a  management  contract incorporating among other things, the
       provision of the services of EA Burkhardt, R Henke and TF Power.

       32,000 was paid or is  payable to  Berkshire Partners for the services of
       C Ferenbach and RK Lubin

       16,000  was  paid  or  is  payable  to  Fay Richwhite for the services of
       DM Richwhite.

       12,000 was  paid  or  is  payable  to  McLachlan Rissman & Doll  for  the
       services of T W Rissman.



                                      A-13

<PAGE>



Notes continued

5      Remuneration of directors continued

       Transactions involving directors

       Clarke & Co. a  business  owned by RJG Clarke  was paid 59,208 during the
       period for the provision of consultancy and other professional services.

       McLachlan  Rissman  & Doll a  partnership  in  which  TW  Rissman  has an
       interest,  was  paid 137,888 during the period for the provision of legal
       and other professional services.


6      Staff numbers and costs

                           Number of         Number of          Average Number
                         employees at     employees at 31        of Employees
                         acquisition         March 1997        during the period
                         -----------        -----------           -----------

       Executive                  74                106                    90
       Management                673                510                   591
       Other Staff             7,005              5,765                 6,385
                         -----------        -----------           -----------
                               7,752              6,381                 7,066
                         ===========        ===========           ===========

       The aggregate payroll costs of these persons were as follows:

                                     Before        Exceptional          Total
                                   Exceptional         Items
                                      Items
                                       1997             1997             1997
                                  -----------      -----------      -----------
                                       '000             '000             '000

       Wages & salaries               159,125                -          159,125
       Social security costs           12,524                -           12,524
       Other pension costs              3,037                             3,037
       (see note 20)
       Other staff costs               19,102           59,698           78,800
                                  -----------      -----------      -----------
                                      193,788           59,698          253,486
                                  ===========      ===========      ===========


7      Interest payable and similar charges

                                                                          1997
                                                                    -----------
                                                                          '000
       On bank loans, overdrafts and other loans
       repayable within five years                                       15,650
       On bank loans repayable in more than five years                    4,273
       Finance charges payable in respect of finance
       leases and hire purchase contracts                                  (279)
       Exchange loss on monies on deposit                                   669
                                                                    -----------
                                                                         20,313
                                                                    ===========




                                      A-14

<PAGE>



Notes continued

8      Taxation

                                                                         1997
                                                                    -----------
                                                                         '000
       UK corporation tax at 33% on the profit for the period on
       ordinary activities from incorporation to 31 March 1996           (2,125)
       Deferred Taxation                                                  3,025
                                                                    -----------
                                                                            900
                                                                    ===========

       Deferred taxation includes a credit of 1,319,000 resulting from the
       reduction in the rate of corporation tax from 33% to 31% announced in
       the budget on 2 July 1997.

9      Tangible fixed assets
<TABLE>
<CAPTION>

                                                                        Plant,                         Assets in
                                                                      machinery                        course of
                                     Land &           Rolling             &              Infra-           cons-
                                    buildings          stock          equipment        structure        truction           Total
                                    ---------        ---------        ---------        ---------       ----------        ---------
                                        '000             '000             '000             '000             '000             '000
       <S>                            <C>              <C>              <C>              <C>              <C>              <C>
       Group:

       Cost (or valuation):
       Acquisition of subsidiaries     30,094          224,341           16,278              680              819          272,212
       Additions                           40            2,201               68               14           27,967           30,290
       Disposals                         (126)          (1,104)            (276)               -                -           (1,506)
       Transfers                          452                -              194                -            (646)
                                      -------          -------          -------          -------          -------          -------
       At 31 March 1997                30,460          225,438           16,264              694           28,140          300,996
                                      =======          =======          =======          =======          =======          =======

       Depreciation and diminution
       in value:

       Acquisition of subsidiaries          -                -          (11,604)            (401)               -          (12,005)
       Charge for period               (1,057)         (12,673)          (1,360)             (38)               -          (15,128)
       On disposals                         9               10              239                -                -              258
                                      -------          -------          -------          -------          -------          -------
       At 31 March 1997                (1,048)         (12,663)         (12,725)            (439)               -          (26,875)
                                      =======          =======          =======          =======          =======          =======

       Net book value
       At 31 March 1997                29,412          212,775            3,539              255           28,140          274,121
                                      =======          =======          =======          =======          =======          =======
</TABLE>



                                      A-15

<PAGE>



Notes continued

9      Tangible fixed assets continued

       On  acquisition  of the  companies  detailed in Note 10 to the  financial
       statements,  fair values were assigned to the assets and  liabilities  in
       accordance with FRS 7.

       The net book value of land and buildings at 31 March 1997 comprises:

                                                    Group              Company
                                                     1997                1997
                                                  --------            --------
                                                     '000                '000

       Land                                              -                   -
       Freehold Buildings                           18,806                   -
       Long leasehold                               10,426                   -
       Short leasehold                                 180                   -
                                                  --------            --------
                                                    29,412                   -
                                                  ========            ========


       Included  within the amounts for fixed assets are the  following  amounts
       relating to leased assets.  These assets are held on subleases granted by
       the  British  Railways  Board  to  subsidiary  companies  prior  to their
       acquisition  by the  company.  The  headleases  are finance  leases which
       continue to be held by the British Railways Board. The subleases transfer
       all the benefits and obligations of ownership  inherent in the headleases
       to the subsidiaries. All future liabilities arising under the headleases,
       and  included  within  the  subleases,  were  discharged  to the  British
       Railways Board on acquisition of the  subsidiaries.  In addition,  within
       the analysis below are assets with a net book value of 174,000 for  which
       liabilities continue to exist.


       Assets held under finance leases

                                                          Plant,
                                                        machinery
                                           Rolling         and
                                            stock       equipment        Total
                                         ---------      ---------     ---------
                                             '000           '000          '000
       Cost:
       Additions on acquisition             27,616            237        27,853
                                         ---------      ---------     ---------
       At 31 March 1997                     27,616            237        27,853

       Depreciation:
       Additions on acquisition                  -              -             -
       Provided in the period               (1,629)           (63)       (1,692)
                                         ---------      ---------     ---------
       At 31 March 1997                     (1,629)           (63)       (1,692)
                                         ---------      ---------     ---------

       Net Book Value
       At 31 March 1997                     25,987            174        26,161
                                         =========      =========     =========




                                      A-16

<PAGE>



Notes continued

10     Fixed asset investments - company

                                      Cost of shares
                                            in          Loans to
                                       subsidiaries   subsidiaries       Total
                                         ---------      ---------     ---------
                                             '000           '000          '000

       Company:
       Additions at cost                    46,440         32,650        79,090
       Repayment of loans                        -        (32,650)      (32,650)
                                         ---------      ---------     ---------
       At 31 March 1997                     46,440              -        46,440

       Revaluation                          20,622              -        20,622
                                         ---------      ---------     ---------

       At 31 March 1997                     67,062              -        67,062
                                         =========      =========     =========

       Investments  in  group  companies  have  been  revalued  to  reflect  the
       underlying book value of the net assets of the subsidiaries.

       The  companies  in which the  company's  interest is more than 10% are as
       follows:
<TABLE>
<CAPTION>

                                                                                                         Class and
                                                  Country of                                           percentage of
                                               registration or                                          shares held
                                                incorporation            Principal activity           Group & company
                                               ---------------       ---------------------------      ---------------
       <S>                                     <C>                   <C>                              <C>
       Subsidiary undertakings:

       Boreal & Austral Railfreight Ltd        England & Wales             Holding company            100% 1 Ordinary
       New Locomotive Finance Ltd              England & Wales       Acquisition and leasing of       100% 1 Ordinary
                                                                            rolling stock
       Res (December) Ltd                      England & Wales             Holding company            100% 1 Ordinary
       Rail Express Systems Ltd                England & Wales       Haulage of mail by rail and      100% 1 Ordinary
                                                                        provision of charter
                                                                         passenger services
       Loadhaul Ltd                            England & Wales       Haulage of freight by rail       100% 1 Ordinary
       English Welsh & Scottish                England & Wales       Haulage of freight by rail       100% 1 Ordinary
       Railway Ltd
       Mainline Freight Ltd                    England & Wales       Haulage of freight by rail       100% 1 Ordinary
       NPJV Ltd                                England & Wales             Invoicing agent            100% 1 Ordinary
       LGJV Ltd                                England & Wales             Invoicing agent            100% 1 Ordinary
       EWS Finance Ltd                         England & Wales                 Dormant                100% 1 Ordinary
       East & West Ltd                         England & Wales                 Dormant                100% 1 Ordinary
</TABLE>

       At the date of  signing  of these  accounts  the  company  had  exchanged
       contracts with British  Railways Board for the acquisition of Railfreight
       Distribution  Limited. The completion of the acquisition is subject to an
       approval   being   granted  by  the  European   Commission.   Railfreight
       Distribution Limited has not been consolidated on the grounds that it was
       neither owned nor controlled by the company at the date of the accounts.


                                      A-17

<PAGE>



Notes continued

10     Fixed asset investments continued

       On 9 December 1995 the  company  acquired all of the 1 Ordinary shares of
       Res (December) Ltd  and  90%  of  the 1 Ordinary  shares  of Rail Express
       Systems Ltd (the remaining 10%  being  held  by Res (December) Ltd).  The
       cash consideration given was 11,930,000 and the discharge of an overdraft
       of 8,152,000  owed  by  Rail  Express  Systems Limited. Acquisition costs
       incurred  at 31 March 1997  totalled 865,303. The estimated fair value of
       the net assets acquired  was 15,347,000 (see table  below). The resulting
       goodwill of 5,600,303 was  written off on acquisition to capital reserve.
       On 24 February 1996, the  intercompany  loan  of 8,152,000 resulting from
       the discharge of the overdraft, was discharged by issuing 8,152,000 fully
       paid  ordinary  shares  of 1 to English Welsh & Scottish Railway Holdings
       Limited.  In addition, at 31 March 1996  a  further 3,600,000  fully paid
       ordinary shares of 1 were  issued  to  discharge working capital advances
       from the parent company to Rail Express Systems Limited.

       Acquisition of Res (December) Ltd and Rail Express Systems Ltd
       --------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                               Change in     Fair value
                                      Book          Re-                        accounting      to the
                                     value       valuation      Provisions      policies        group
                                  ---------      ---------      ---------      ---------      --------
                                      '000           '000           '000           '000          '000
       <S>                          <C>            <C>            <C>            <C>           <C>
       Fixed assets:
       Tangible                       7,756         11,703              -              -        19,459
       Current assets:
       Stock                            960              -              -              -           960
       Debtors                       10,121              -              -              -        10,121
       Pension prepayment                 -              -              -          7,291         7,291
                                    -------        -------        -------        -------       -------
       Total assets                  18,837         11,703              -          7,291        37,831
                                    -------        -------        -------        -------       -------
       Liabilities:
       Provisions:
       Other                          2,140              -            650          2,699         5,489
       Creditors:
       Trade creditors                7,497              -              -              -         7,497
       Other creditors                8,455              -              -              -         8,455
       Accruals                       1,043              -              -              -         1,043
                                    -------        -------        -------        -------       -------
       Total Liabilities             19,135              -            650          2,699        22,484
                                    -------        -------        -------        -------       -------
       Net assets                      (298)        11,703           (650)         4,592        15,347
                                    =======        =======        =======        =======       =======

</TABLE>

       Included in group loss for the period is a profit of 3,134,000 relating
       to the above acquisition.  The acquired group made a loss of 10,638,000
       from 1 April 1995 to the date of acquisition.


                                      A-18

<PAGE>



Notes continued

10     Fixed asset investments continued

       On 24 February 1996 the  company acquired all of the 1 Ordinary shares of
       Boreal & Austral Railfreight Ltd  which owned the entire share capital of
       Loadhaul Ltd, Mainline Freight Ltd  and  Transrail Freight Ltd.  The cash
       consideration  given was  215,544,000.  Acquisition costs incurred  at 31
       March 1997 totalled 7,355,697. An amount of 2,789,000 being the estimated
       post tax value of claims for  employee injuries indemnified by the vendor
       remains outstanding and is  subject  to  the  final  resolution  of these
       claims. The fair value of the  net  assets  acquired was 246,953,000 (see
       table below). The resulting negative  goodwill  of 26,842,303 is included
       in the consolidated balance sheet as a capital reserve.

       Acquisition of Boreal & Austral Railfreight Ltd
       -----------------------------------------------
<TABLE>
<CAPTION>


                                                                               Change in      Fair value
                                      Book          Re-                        accounting       to the
                                     value       valuation      Provisions      policies         group
                                  ---------      ---------      ---------      ---------       --------
                                      '000           '000           '000           '000           '000
       <S>                          <C>            <C>            <C>            <C>            <C>
       Fixed assets:
       Tangible                     227,602         13,146              -              -        240,748
       Current assets:
       Stock                         10,081              -              -              -         10,081
       Debtors                       77,500              -           (634)             -         76,866
       Pension prepayment                 -              -              -         58,681         58,681
                                    -------        -------        -------        -------        -------
       Total assets                 315,183         13,146           (634)        58,681        386,376
                                    -------        -------        -------        -------        -------

       Liabilities
       Provisions:
       Other                          6,034              -         34,711         20,348         61,093
       Creditors:
       Trade creditors               43,401              -              -              -         43,401
       Other creditors               26,030              -              -              -         26,030
       Accruals                       8,899              -              -              -          8,899

       Total Liabilities             84,364              -         34,711         20,348         39,423
                                    -------        -------        -------        -------        -------
       Net assets                   230,819         13,146        (35,345)        38,333        246,953
                                    =======        =======        =======        =======        =======
</TABLE>


       Included in group loss for the  period is a loss of 3,275,000 relating to
       the  above  acquisition.  The  acquired group made a profit of 17,599,000
       from 1 April 1995  to  the  date  of acquisition.  On 13 October 1996 the
       assets, liabilities and  trade  of  Loadhaul Limited and Mainline Freight
       Limited transferred  to  Transrail Freight Limited which changed its name
       to English Welsh & Scottish Railway Limited.


11     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.


                                      A-19

<PAGE>



Notes continued

12     Debtors

                                                       Group            Company
                                                        1997              1997
                                                     --------          --------
                                                        '000              '000
       Amounts falling due within one year:
       Trade debtors                                   84,245                 -
       Amounts owed by group undertakings                   -           107,264
       Other debtors                                    8,127             2,830
       Prepayments and accrued income                   6,683                 -
                                                     --------          --------
                                                       99,055           110,094
       Amounts falling due after more than one year:
       Pension fund prepayment                         66,817                 -
                                                     --------          --------
                                                      165,872           110,094
                                                     ========          ========

13     Creditors: amounts falling due within one year

                                                     Group             Company
                                                      1997               1997
                                                   --------           --------
                                                      '000               '000

       Bank loans and overdrafts                      7,500                672
       Obligations under finance leases
       and hire purchase contracts                       46                  -
       Trade creditors                               60,384                  -
       Other creditors including taxation
       and social security:
       Corporation tax                                  915                  -
       Other taxes and social security costs         15,203                  -
       Other creditors                               10,160              1,080
                                                   --------           --------
                                                     94,208              1,752
       Accruals and deferred income                  12,118              1,034
                                                   --------           --------
                                                    106,326              2,786
                                                   ========           ========

14     Creditors: amounts falling due after more than one year

                                                     Group             Company
                                                      1997               1997
                                                   --------           --------
                                                      '000               '000

       Bank loans                                   136,971             55,164
       Obligations under finance leases
       and hire purchase contracts                      135                  -
                                                   --------           --------
                                                    137,106             55,164
                                                   ========           ========



                                      A-20

<PAGE>



Notes continued

14     Creditors: amounts falling due after more than one year continued

       Interest Rates and Security on Loans

       The bank loans include  89,307,000 attracting interest at LIBOR  plus 2%.
       The loans are secured by a first  fixed and floating  charge over all the
       assets and  shares of  the Group, except  for  those  to  which a  charge
       attaches under the terms of the contract for the carriage of mail for the
       post  office and  the assets of New Locomotive Finance Ltd. Cash balances
       include  an  amount  of  11,048,000  on  deposit as cash collateral for a
       letter of credit facility.

       The bank loans also include  55,164,000 attracting interest at LIBOR plus
       0.65% and is secured in the same manner as the Term Loans but ranks after
       them in order of preference.

       Creditors payable by instalments:
<TABLE>
<CAPTION>

                              Instalments           Instalments
                                payable                payable              Instalments
                              between one            between two           payable after
                             and two years         and five years           five years                  Total
                                   1997                   1997                   1997                    1997
                              -----------            -----------            -----------             -----------
                                    '000                   '000                   '000                    '000

       <S>                        <C>                    <C>                    <C>                     <C>
       Group:
       Bank loans                   5,000                 76,807                 55,164                 136,971
                                  =======                =======                =======                 =======
       Company:
       Bank loans                       -                      -                 55,164                  55,164
                                  =======                =======                =======                 =======
</TABLE>


       The  maturity  of  obligations  under  finance  leases and hire  purchase
       contracts is as follows:

                                                     Group             Company
                                                      1997               1997
                                                   -------             -------
                                                     '000                '000

       Within one year                                  46                   -
       In the second to fifth years                    135                   -
       Over five years                                   -                   -
                                                   -------             -------
       Less future finance charges                       -                   -
                                                   -------             -------
                                                       181                   -
                                                   =======             =======




                                      A-21

<PAGE>



Notes continued

15     Provisions for liabilities and charges
<TABLE>
<CAPTION>

                                                                               Redundancy
                                      Contaminated          Deferred                & 
                                          Land                 Tax            Restructuring            Other              Total
                                       Provision            Provision           Provision            Provisions         Provisions
                                          1997                 1997                1997                 1997               1997
                                      -----------          -----------         -----------          -----------        -----------
                                           '000                 '000                '000                 '000               '000
       <S>                               <C>                  <C>                 <C>                  <C>                <C>
       Group:
       On acquisition                     16,375               21,771               4,217               24,219             66,582
       Utilised during period               (309)                   -             (32,548)              (2,534)           (35,391)
       Charge/(credit) for the
       period in the profit and
       loss account                            -               (3,025)             66,594                5,308             78,877
                                         -------              -------             -------              -------            -------
       At 31 March 1997                   16,066               18,746              38,263               36,993            110,068
                                         =======              =======             =======              =======            =======
</TABLE>


       The amounts  provided for deferred  taxation and the amounts not provided
       are set out below:


                                                                 1997
                                                       Provided       Unprovided
                                                      ---------       ---------
                                                          '000            '000
       Difference between accumulated depreciation
       and amortisation and capital allowances                           52,009
       Timing difference on Pension fund surplus         20,714               -
       Timing difference on provision for
       redundancies and restructuring                    (1,968)         (4,841)
       Other timing differences                               -          (9,562)
                                                      ---------       ---------
                                                         18,746          37,606
                                                      =========       =========


       Deferred  taxation  has not  been  provided  for on  accelerated  capital
       allowances  as  significant  fixed  asset  purchases  will be made in the
       foreseeable   future  which  will  prevent  the  deferred  taxation  from
       crystallising.


16     Deferred Income

                                               Government                Total
                                                capital                 deferred
                                                 grants      Other       income
                                                  1997        1997        1997
                                                -------     -------     -------
                                                  '000        '000        '000

       Additions arising on acquisition           1,732       3,327       5,059
       Receivable during period                       -          85          85
       Credited to profit and loss account          (98)       (694)       (792)
                                                -------     -------     -------
       At 31 March 1997                           1,634       2,718       4,352
                                                =======     =======     =======


                                      A-22

<PAGE>



Notes continued

17     Called up share capital

                                                      Number of        Group and
                                                        Shares          Company
                                                         1997             1997
                                                     -----------        --------
                                                          No              '000
       Authorised:
       Ordinary shares of 1 each

       At incorporation                                    1,000               1
       Increased on 8 December 1995                    6,000,000           6,000
       Increased on 24 February 1996                 118,999,000         118,999
                                                     -----------         -------
                                                     125,000,000         125,000
                                                     ===========         =======

       Allotted, called up and fully paid:
       Ordinary shares of 1 each

       At incorporation
       Shares issued on 8 December 1995 at par         6,000,000           6,000
       Shares issued on 24 February 1996 at par       85,000,000          85,000
       Shares issued on 2 August 1996 at par           2,300,000           2,300
       Shares issued on 10 September 1996 at par       1,346,500           1,346
       Options exercised on 21 February 1997 at a
       premium of 0.30.                                3,956,522           3,957
                                                     -----------         -------
                                                      98,603,022          98,603
                                                     ===========         =======

       As  at 31  March  1997  options  and  warrants  totalling  3,565,747  and
       7,546,521 respectively had been granted but not exercised.  Subsequent to
       the balance sheet date a further 716,513 options were granted giving rise
       to an entitlement to a further 66,913 warrants.


18     Reserves
<TABLE>
<CAPTION>

       Group:                               Group &              Group                Company               Group
                                            Company                                                         Profit
                                         Share premium          Capital             Revaluation            and loss
                                            Account             reserve               reserve               account
                                             1997                 1997                  1997                 1997
                                            ------               ------                ------               ------
                                             '000                 '000                  '000                 '000
       <S>                                  <C>                  <C>                   <C>                  <C>
       At incorporation                          -                    -                     -                    -
       Premium on options
       exercised during the period           1,187                                          -
       Retained loss for period                  -                    -                     -               (1,826)
       Arising on acquisition                    -               21,242                     -                    -
       Revaluation surplus                       -                    -                20,622                    -
                                            ------               ------                ------               ------
       At 31 March 1997                      1,187               21,242                20,622               (1,826)
                                            ======               ======                ======               ======
</TABLE>

       Company:

       The company's loss for the financial period was 1,365,000.


                                      A-23

<PAGE>



Notes continued

19     Commitments

       (i)    Capital  commitments  at the end of the  financial  year for which
              no provision has been made.

                                                    Group              Company
                                                     1997                1997
                                                 --------             --------
                                                     '000                '000

              Contracted                             1,054                   -
              Authorised but not contracted            300                   -
                                                 ---------            --------
                                                     1,354                   -
                                                 =========            ========


       Amounts  contracted  for but not  provided for in the accounts to acquire
       new rolling stock totalled not less than 133.4 million.

       (ii)   At the end of the financial year neither the company nor the group
              had entered  into  commitments  in respect of finance  leases (and
              similar hire  purchase  contracts),  the inception of which occurs
              after the year end.

       (iii)  Annual commitments  under  non-cancellable operating leases are as
              follows:
                                                                    1997
                                                           ---------------------
                                                           Land and
                                                           buildings      Other
                                                           --------     --------
                                                              '000         '000
              Group:
              Operating leases which expire:
              Within one year                                 1,481          132
              In the second to fifth years inclusive          4,159          211
              Over five years                                 8,270            -
                                                           --------     --------
                                                             13,910          343
                                                           ========     ========

              The company  did  not  have  any commitments under non-cancellable
              operating leases.

       (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 1998.  The  quantity  hedged is  equivalent  to eleven weeks
              consumption.

       (v)    Foreign Currency Contracts

              As  indicated  in the  capital  commitments  note  the  group  has
              significant  commitments  denominated  in US dollars.  In order to
              reduce  exposure to  exchange  rate  fluctuations  the company has
              entered into a number of contracts to purchase  US$190  million in
              total.  These contracts mature between 2 March 1998 and 2 November
              1998 at various rates ranging between 1.57 and 1.636.


                                      A-24

<PAGE>



Notes continued

19     Commitments continued

       (vi)   Interest Rate Contracts

              English  Welsh &  Scottish  Railway  Ltd  entered  into a contract
              commencing  on 17 January  1997 of three years  duration to pay or
              receive as  appropriate  the  difference  between  interest  on 25
              million at a fixed rate of 7.08%  and  3  month LIBOR on the first
              day of each three month period commencing on 17 January 1997.

       (vii)  On 12 March 1997 the company exchanged  contracts with the British
              Railway  Board  to  acquire  Railfreight   Distribution   Limited.
              Consideration for  the  acquisition  has  been  agreed  as 500,000
              subject  to  any  adjustments  which  arise  as  a  result  of the
              completion process. Completion of  the  acquisition  is subject to
              approval being obtained from the European  Commission. If approval
              is not forthcoming  from the European Commission by 30 August 1997
              the  company  is   under  no   obligation  to  continue  with  the
              acquisition.


20     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 1 April 1996.  The  assumptions  adopted by the pension
       fund's actuary which have the most  significant  effect on the results of
       the valuation are detailed below.

       These assumptions are:

       -   Salary inflation has been assumed to be 6.5% per annum.

       -   Pensions growth has been assumed to be 4.5% per annum.

       -   Return on investments has been assumed to be 8.5% per annum.

       The most recent  actuarial  valuation showed that the market value of the
       scheme's  assets was 348.2  million and that the actuarial value of those
       assets represented 152% of the liabilities for benefits that had  accrued
       to members, after allowing for expected future increases in earnings. The
       contributions  of  the  group and employees will remain at 7.5% and 5% of
       earnings respectively.

       In addition,  the group  operates a defined  contribution  pension scheme
       which requires the employer to match employees  contributions  on a pound
       for pound  basis.  The  pension  cost  charge for the  period  represents
       contributions   payable  by  the  group  to  the  fund  and  amounted  to
       3,037,000.

       The  Chancellor of the  Exchequer  announced in his Budget on 2 July 1997
       that  pension  schemes  would no longer be able to  reclaim  tax  credits
       arising on dividends form UK shares.  The  implications of this are being
       assessed and will be dealt with in the 1998 accounts in  accordance  with
       the provisions of SSAP24.



                                      A-25

<PAGE>



Notes continued

21     Reconciliation of operating profit to net cash inflow from operating
       activities

                                                                        1997
                                                                    ---------
                                                                        '000

       Operating profit                                                14,514
       Depreciation charge                                             15,128
       Profit on sale of tangible fixed assets                           (539)
       Decrease in stocks                                               2,069
       Increase in debtors                                            (10,124)
       Increase in creditors and provisions                            53,587
                                                                    ---------
       Net cash inflow from operating activities                       74,635
                                                                    =========


22     Analysis of cash flows for headings netted in the cash flow statement
<TABLE>
<CAPTION>

                                                                                         1997
                                                                                 ---------------------
                                                                                  '000           '000
       <S>                                                                     <C>            <C>
       Returns on investments and servicing of finance:
       Interest received                                                                         2,404
       Interest paid                                                                           (16,050)
       Interest element of finance lease rental payments
                                                                                              --------
       Net cash outflow for returns on investments and servicing of finance                    (13,646)

       Capital expenditure and financial investment:
       Purchase of tangible fixed assets                                                       (30,290)
       Sale of tangible fixed assets                                                             1,787
                                                                                              --------
       Net cash outflow for capital expenditure and financial investment                       (28,503)

       Acquisitions and disposals:
       Acquisition of subsidiaries                                                            (243,847)
       Net cash acquired with subsidiaries                                                           -
                                                                                              --------
       Net cash outflow for acquisitions and disposals                                        (243,847)

       Financing:
       Issue of ordinary share capital                                                          99,790
       Debt due within one year                                                   7,500

       Debt due after one year                                                  145,097
       Financing costs                                                          (11,720)
                                                                               --------

       Capital element                                                                         140,877
                                                                                              --------
       Net cash inflow from financing                                                          240,667
                                                                                              ========
</TABLE>



                                      A-26

<PAGE>



Notes continued

23     Analysis of net debt
<TABLE>
<CAPTION>

                               At                                                       Non cash            At 31 March
                         incorporation         Cash flow         Acquisition            changes                 1997
                            --------            --------           --------             --------              --------
                                '000               '000                '000               '000                   '000

       <S>                  <C>                 <C>                <C>                  <C>                   <C>
       Cash at bank                -              28,768                  -                   -                 28,768
       Overdraft                   -                (672)                 -                   -                   (672)
                            --------            --------           --------             --------              --------
                                   -              28,096                  -                   -                 28,096

       Debt due after              -            (133,377)                 -              (3,594)              (136,971)
       one year
       Debt due within             -              (7,500)                 -                   -                 (7,500)
       one year
       Finance leases              -                   -               (181)                  -                   (181)
                            --------            --------           --------            --------               --------
                                   -            (140,877)              (181)             (3,594)              (144,652)
                            --------            --------           --------            --------               --------
       Total                       -            (112,781)              (181)             (3,594)              (116,556)
                            ========            ========           ========            ========               ========
</TABLE>


                                                                          1997
                                                                      ---------
                                                                          '000
       Reconciliation of net cash flow to movement in debt:

       Increase in cash in the period                                    28,096

       Cash inflow from increase in debt and lease financing           (140,877)
                                                                      ---------
       Change in debt resulting from cash flows                        (112,781)

       Finance leases required with subsidiaries                           (181)

       Amortisation of finance costs                                     (3,594)
                                                                      ---------
       Movement in net debt in period                                  (116,556)

       Net debt at incorporation                                              -
                                                                      ---------
       Net debt at 31 March 1997                                       (116,556)
                                                                      =========


24     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-27

<PAGE>


Notes continued

25     Supplemental US GAAP information

       As at 31 March 1997, Wisconsin Central Transportation Corporation (WCTC),
       a US  company  registered  with the US Securities and Exchange Commission
       (SEC),  held  an  approximate  34%  interest in English  Welsh & Scottish
       Railway Holdings Limited (EWSRH).

       a.)  Basis of analysis:
            In  compliance  with  UK  legislation,  the  first accounts of EWSRH
            covered  a  period from  incorporation to 31 March 1997, a period of
            approximately seventeen and a half months.  Set out below (to comply
            with  the  SEC's  rule  that precludes audited financial  statements
            covering  periods  in excess of twelve months) is a summary of those
            results   analysing  how  they  arose   between   the   period  from
            incorporation to 31 March 1996 and the year ended 31 March 1997.
<TABLE>
<CAPTION>

                                                                     5 1/2 months       Year ended       Period ended
                                                                        ended 31         31 March          31 March
                                                                       March 1996          1997              1997
                                                                       ---------        ---------         ---------
                                                                          '000             '000              '000
            <S>                                                          <C>             <C>               <C>
            Profit and loss account:
            Turnover                                                      73,500          535,544           609,044

            Change in stock of spares                                     (1,527)            (542)           (2,069)
            Other operating income                                           135              127               262
            Raw materials and consumables                                 (3,355)         (79,960)          (83,315)
            Other external charges                                       (36,695)        (200,118)         (236,813)
            Staff costs                                                  (21,144)        (172,644)         (193,788)
            Redundancy and restructuring costs                                 -          (63,010)          (63,010)
            Depreciation                                                  (1,447)         (13,681)          (15,128)
                                                                         -------         --------          --------
            Operating costs                                              (64,033)        (529,828)         (593,861)
                                                                         -------         --------          --------

            Operating profit                                               9,467            5,716            15,183
            Other interest receivable and similar income                     605            1,799             2,404
            Interest payable and similar charges                          (1,980)         (18,333)          (20,313)
                                                                         -------         --------          --------
            Profit/(loss) on ordinary activities before taxation           8,092          (10,818)           (2,726)
            Current taxation                                              (3,188)           1,063            (2,125)
            Deferred taxation                                                  -            3,025             3,025
                                                                         -------         --------          --------
            Retained profit/(loss) for the period                          4,904           (6,730)           (1,826)
                                                                         =======         ========          ========

            Reconciliation of movement in shareholders' funds:
            Retained profit/(loss) for the period                          4,904           (6,730)           (1,826)
            New share capital subscribed                                  91,000            7,603            98,603
            Share premium arising on new share capital                         -            1,187             1,187
            Capital reserve arising on acquisition                        23,156           (1,914)           21,242
                                                                         -------         --------          --------
            Net addition to shareholders' funds                          119,060              146           119,206
            Opening shareholders' funds                                        -          119,060                 -
                                                                         -------         --------          --------
            Closing shareholders' funds                                  119,060          119,206           119,206
                                                                         =======         ========          ========
</TABLE>

                                      A-28

<PAGE>


Notes continued

25     Supplemental US GAAP information continued
<TABLE>
<CAPTION>
                                                                     5 1/2 months       Year ended       Period ended
                                                                        ended 31         31 March          31 March
                                                                       March 1996          1997              1997
                                                                       ---------        ---------         ---------
                                                                          '000             '000              '000
            <S>                                                         <C>              <C>               <C>
            Cash flow statement:
            Operating profit                                               9,467            5,716            15,183
            Depreciation charge                                            1,447           13,681            15,128
            Profit on sale of fixed assets                                   (44)            (495)             (539)
            Decrease in stocks                                             1,527              542             2,069
            (Increase)/Decrease in debtors                               (45,389)          35,265           (10,124)
            Increase in creditors                                         43,092            9,826            52,918
                                                                        --------         --------          --------
            Net cash flow from operating activities                       10,100           64,535            74,635

            Interest received                                                605            1,799             2,404
            Interest paid                                                 (1,980)         (14,070)          (16,050)
                                                                        --------         --------          --------
            Net cash outflow from returns on investment and
            servicing of finance                                          (1,375)         (12,271)          (13,646)

            Purchase of fixed assets                                      (2,465)         (27,825)          (30,290)
            Sale of fixed assets                                           1,367              420             1,787
                                                                        --------         --------          --------
            Net cash outflow from capital expenditure and
            financial investment                                          (1,098)         (27,405)          (28,503)

            Acquisitions of subsidiaries                                (244,237)             390          (243,847)

            Financing:
            Issue of ordinary share capital                               91,000            8,790            99,790
            Long term loans raised                                       180,000            5,000           185,000
            Costs of raising long term finance                            (8,711)          (3,009)          (11,720)
            Repayment of long term loans                                       -          (32,403)          (32,403)
                                                                        --------         --------          --------
            Net cash inflow from financing                               262,289          (21,622)          240,667
            Taxation paid                                                      -           (1,210)           (1,210)
                                                                        --------         --------          --------
            Increase in cash and cash equivalents                         25,679            2,417            28,096
                                                                        ========         ========          ========

</TABLE>

                                      A-29

<PAGE>


Notes continued

25     Supplemental US GAAP information continued
<TABLE>
<CAPTION>

                                                                                        31 March             31 March
                                                                                          1996                 1997
                                                                                        --------             --------
                                                                                          '000                 '000
            <S>                                                                         <C>                  <C>
            Balance sheets:
            Fixed assets:
            Tangible assets                                                              259,020              274,121

            Current assets:
            Stocks                                                                         9,850                8,969
            Debtors due in more than one year                                             66,298               66,817
            Debtors due within one year                                                  136,364               99,055
            Cash at bank and in hand                                                      26,930               28,096
                                                                                        --------             --------
                                                                                         239,442              202,937
            Creditors: amounts falling due within one year                              (143,291)            (106,326)
                                                                                        --------             --------
            Net current assets                                                            96,151               96,611
                                                                                        --------             --------
            Total assets less current liabilities                                        355,171              370,732

            Creditors: amounts falling due after more than one year                     (165,626)            (137,106)
            Provisions for liabilities and charges                                       (65,351)            (110,068)
            Deferred income                                                               (5,134)              (4,352)
                                                                                        --------             --------
            Net assets                                                                   119,060              119,206
                                                                                        ========             ========

            Capital and reserves:
            Called up share capital                                                       91,000               98,603
            Share premium reserve                                                              -                1,187
            Capital reserve                                                               23,156               21,242
            Profit and loss account                                                        4,904               (1,826)
                                                                                        --------             --------
            Equity shareholders' funds                                                   119,060              119,206
                                                                                        ========             ========
</TABLE>


                                      A-30

<PAGE>


Notes continued

25     Supplemental US GAAP information continued

       b.)  Summary of significant differences between UK and US GAAP

            Set  out  below  is  a   reconciliation  of  the  profit/(loss)  and
            shareholders'  funds as set out above  under  UK GAAP to those under
            US GAAP to comply with SEC requirements.
<TABLE>
<CAPTION>
                                                                                          5 1/2 months       Year ended
                                                                                            ended 31          31 March
                                                                                           March 1996           1997
                                                                                            --------          --------
                                                                                               '000             '000

            <S>                                                                              <C>               <C>    
            Net profit/(loss) in accordance with UK GAAP                                       4,904            (6,730)

            Redundancy and restructuring costs (a)                                                 -            63,010
            Expenditure on rolling stock (b)                                                   6,452            21,838
            Pensions (c)                                                                         275             1,410
            Capitalisation of interest (d)                                                         -             2,366
            Taxation (e)                                                                      (2,219)          (29,246)
            Amortisation of goodwill (f)                                                        (167)           (1,736)
                                                                                             -------           -------
            Net profit in accordance with US GAAP                                              9,245            50,912
                                                                                             =======           =======
</TABLE>
<TABLE>
<CAPTION>
                                                                                              As at             As at
                                                                                            31 March          31 March
                                                                                              1996              1997
                                                                                            --------          --------
                                                                                              '000              '000

            <S>                                                                              <C>               <C>    
            Shareholders' funds in accordance with UK GAAP                                   119,060           119,206

            Restatement of pension fund surplus in accordance with SFAS 87 and 88 (c)        (13,903)          (15,038)

            Restatement of deferred taxation (e)                                              (9,253)           (6,204)

            Adjustments to results as set out above                                            4,341            61,983
                                                                                             -------           -------
            Shareholders' funds in accordance with US GAAP                                   100,245           159,947
                                                                                             =======           =======
</TABLE>

            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 138,000 and 2,810,000 of  amortisation, for the
                periods ended  31 March 1996 and 1997  respectively, of  certain
                expenditures relating  to rolling stock and track renewals 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  SFAS  88: "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;


                                      A-31

<PAGE>


Notes continued

25     Supplemental US GAAP information continued

            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.  The  Group  prepares its  Consolidated  Statements of  Cashflows
                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 FRS 1 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
                movement  on  such  short  term  borrowings  to  be  shown under
                financial activities.




                                      A-32