arriva plc annual report and accounts 2005 contents
delivering the
vision
arriva’s vision is to be recognised as the leading transport
services group in europe
arriva is already one of the leading providers of public
transport in the uk our strategy is to build on this position
and to capitalise on the range of opportunities resulting from
the increasing pace of market liberalisation in mainland
europe a constant drive to improve our existing businesses
selective investment in targeted acquisitions and a clear focus
on winning and retaining contracts underpin our record of
consistent delivery
arriva delivered a strong performance in the year we made
further acquisitions in mainland europe and have achieved
organic growth including contract wins in the countries in
which we operate building relationships with stakeholders
and contract awarding authorities often national or local
governments has established a strong base for the future
in 2005 we continued to make significant progress towards
achieving our strategic goals and achieving our vision we are
working to deliver further progress in 2006
01 highlights of the year
02 chairman’s statement
06 group development across europe
08 chief executive’s review
14 financial review
20 corporate responsibility review
26 board of directors
28 directors’ report
30 statement of directors’ responsibilities
31 directors’ remuneration report
38 corporate governance
43 independent auditors’ report on the
group financial statements
44 financial statements
48 accounting policies
52 notes to the accounts
76 group fiveyear financial summary
77 extracts from the report on transition to
ifrs
80 parent company financial statements
88 statement of directors’ responsibilities on
the parent company financial statements
89 independent auditors’ report 
on the parent company financial
statements
90 financial calendar registered office and
advisors arriva plc  annual report and accounts 2005  1
wwwarrivacouk
highlights of the year
• strong performance from mainland europe
operations 
– 37 per cent increase in operating profit 
with revenue up 18 per cent 
– contract wins and acquisitions provide a
platform for continuing growth
• uk bus operating profit increased by 7 per cent
despite cost pressures
• improved strategic focus and additional 
resources for core business growth provided 
by vehicle rental disposal
• adjusted eps at 450p 2004 451p
• basic eps increased to 437p 2004 426p
• ebitda excluding vehicle rental up 8 per cent 
• final dividend up by 5 per cent to 1477p 
giving a total dividend for the year of 1984p 
excluding goodwill impairment intangible asset
amortisation and exceptional items
basic earnings 
per share p
ebitda £m
dividend per share p
operating
profit £m
450p
£1274m
£2468m
1984p 2 arriva plc  annual report and accounts 2005
chairman’s statement
progress
delivering arriva delivered a strong performance in 2005
firm management of our businesses and continued
growth from our operations in mainland europe
ensured that profits were maintained in the first
full year without our northern rail franchise and
despite rising fuel costs at the same time we won
new contracts and made further acquisitions that
will underpin sustained growth 
our ability to grow our core business in the future
was enhanced by the disposal of our vehicle rental
division which further focused the group on its core
strategy and strengthened the balance sheet
group revenue in 2005 was £16268 million 
2004 £1759 million and group operating profit
was £1231 million 2004 £1263 million as
expected revenue was lower after the loss of the
£285 million contributed in 2004 by the arriva trains
northern franchise but it has been substantially
replaced by growing turnover and profits from our
investment in mainland europe 
basic earnings per share increased to 437p 
2004 426p we have maintained earnings per
share excluding goodwill impairment intangible
asset amortisation and exceptional items at 450p 
2004 451p 
“as market liberalisation gathers 
pace in mainland europe we are
benefiting from our established
market positions on the ground we
believe that mainland europe will
continue to provide opportunities 
for us to grow profitably”
sir richard broadbent chairman arriva plc  annual report and accounts 2005  3
wwwarrivacouk wwwarrivacouk
excluding our vehicle rental operations ebitda
earnings before interest tax depreciation goodwill
impairment and intangible asset amortisation rose
eight per cent to £2131 million 2004 £1978 million
the board is recommending a final dividend of
1477p per share together with the interim dividend
of 507p per share paid in october 2005 this makes
a total dividend of 1984p per share five per cent
higher than last year maintaining our policy of stable
dividend growth the final dividend will be paid on 
2 may 2006 to shareholders on the register at the
close of business on 31 march 2006
in my report last year i identified three areas of focus
first our strategic goal of being recognised as the
leading transport services organisation in europe
second the reorganisation of our senior management
to reflect this focus and third ensuring good
corporate governance to support arriva’s growth 
we have made progress in all three areas 
strategy
our strategy of selective investment in operations
outside the uk has increased our resilience and
provided us with further growth in mainland europe
during 2005 we won significant bus and rail contracts
in germany the netherlands and scandinavia and 
we have made acquisitions in germany and italy
consolidating our existing position in january 2006
we won our first rail contract in sweden we now 
run bus services in seven mainland european countries
and have rail operations in three with a fourth
sweden in the pipeline as market liberalisation
gathers pace in mainland europe we are benefiting
from our established market positions on the ground
we believe that mainland europe will continue to
provide opportunities for us to grow profitably
in the uk we continue to be a major public transport
operator arriva is the largest bus operator in london
with its growing populations of residents and
commuters we have continued to invest both in
london and in the uk regions to maintain our leading
position we have a longterm presence in uk rail with
arriva trains wales operating the wales and borders
franchise and we are seeking to develop our rail
portfolio in the uk as well as mainland europe we
have prequalified for the south western passenger
rail franchise which will be awarded later in 2006
arriva has a strong balance sheet our substantial cash
generation combined with the recent vehicle rental
disposal gives us the flexibility to continue to take
advantage of high quality investment opportunities
arriva has a strong balance sheet our 
substantial cash generation combined with 
the recent vehicle rental disposal gives us the
flexibility to continue to take advantage of 
high quality investment opportunities 4 arriva plc annual report and accounts 2005
chairman’s statement
continued
management 
i reported last year how in march 2005 we
reorganised the senior management team under 
the chief executive bob davies including the
appointment of david martin as deputy chief
executive and group managing director – operations
in addition to aligning the management of the
business with our strategic goals the changes paved
the way for succession at chief executive level 
in december we announced that bob would retire 
at the agm in april 2006 after more than seven 
years in post to be succeeded by david 
bob’s vision and leadership over the last seven years
have transformed arriva giving the company both 
a focused strategy and a record of consistent 
delivery he has led arriva to be one of the leaders
within its sector and he has developed an excellent
management team which will ensure continuity
under david’s leadership  the board wishes to place
on record its appreciation of bob’s outstanding
contribution to arriva plc
the management development process continued
during the year with a number of additional senior
appointments being made below board level 
our intention is to continue to strengthen our
management team to take the group forward
governance
as arriva grows it is important that corporate
governance develops in line with best practice to
support ambitious and wellcontrolled business
development in 2005 we appointed two new non
executive directors with the result that 
from april 2006 the board will have three executive
directors and four independent nonexecutive
directors in addition to me as chairman
nick buckles chief executive of group 4 securicor
plc joined the board in july he has extensive
experience of operating businesses in the uk and
mainland europe which has already enabled him 
to make a valuable contribution to the group steve
williams company secretary and general counsel 
of unilever joined the board in september as our
senior independent director he brings a wealth of
experience of both corporate governance and
operations across a wide range of markets 
in june michael allen retired as a nonexecutive
director having served on the board for eight years
the board wishes to thank him for his contribution 
to the group arriva plc annual report and accounts 2005  5
wwwarrivacouk
during 2005 we also reviewed the terms of reference
and membership of all the board committees the
new terms of reference are available on our website
we reviewed the financial and other authorities of
the board making changes where appropriate to
reflect the scale and complexity of our current
business following an internal board evaluation
exercise the board’s agenda was reorientated to 
give more emphasis to strategic issues central to
arriva’s business development
this is an exciting time for arriva as we strive for
further profitable growth and development in
markets where increasing liberalisation provides both
opportunities and competitive challenges we are very
aware that public transport is a service business and
ultimately it is the quality of the service we provide
that will underpin our leadership in the transport
sectors we serve 
to meet these challenges our employees work hard
to meet our customers’ needs the events of 7 july in
london showed again the quality and commitment of
arriva’s employees and i would like to express the
board’s appreciation and thanks to all our employees
for their contribution to another successful year for
the group 
sir richard broadbent chairman
ultimately it is the quality of the service we
provide that will underpin our leadership in the
transport sectors we serve
“this is an exciting time for arriva as we
strive for further profitable growth and
development in markets where increasing
liberalisation provides both opportunities
and competitive challenges”
sir richard broadbent chairman 6 arriva plc  annual report and accounts 2005
group development across europe
1999
2000
2001
2002
2003
2004
2005
our route to becoming europe’s leading
transport services operator started in 1997
when the company entered mainland europe
with the acquisition of unibus denmark in the
same year the arriva name was introduced
arriva acquires bus
danmark building
on its position in
scandinavia after
gaining 20 per
cent of the dutch
bus market in
1998 it enters 
the dutch rail
sector through
noordned a joint
venture with the
state operator 
it also enters 
the spanish bus
market and
disposes of 
arriva automotive
solutions in 
the uk
arriva acquires
mtl in the 
uk with bus
operations and
two rail franchises
in the north of
england it enters
the portuguese
bus market
acquiring four
familyowned
businesses in the
north west of the
country
arriva acquires 
a third danish 
bus company
combus and
wins the first two
passenger rail
franchises in
denmark under
new legislation 
to privatise the
industry
arriva announces
the decision to
dispose of its 
uk motor 
retail business 
it consolidates 
its position in
portugal with a 
51 per cent stake
in tst and
acquires a bus
operator in
mallorca it also
acquires sab
making a
significant entry 
in the italian bus
market
arriva commences
operation of the
new wales and
borders rail
franchise in the
uk and the two
danish rail
franchises in
jutland it takes
100 per cent
control of both
tst in portugal
and of noordned
its dutch bus and
rail joint venture
arriva enters the
german transport
market acquiring
rail companies peg
and regentalbahn
it also consolidates
its position in the
danish bus
market with the
acquisition of
wulff and in italy
with a 49 per cent
stake in bus
operator saf 
and an option to
purchase a further
11 per cent
arriva enters 
the german bus
market with its
acquisition of
sippel group 
in italy the
shareholding in
saf is increased
from 49 per cent
to 60 per cent
and an 80 per
cent stake in
italian bus
company sadem
is acquired
significant bus and
rail contract wins
are announced in
germany the
netherlands and
scandinavia arriva plc  annual report and accounts 2005  7
market overview
wwwarrivacouk
united kingdom
bus
17700 employees
6000 vehicles
rail
1900 employees
116 trains
bus and coach 
50 employees
outside the capital bus services are deregulated and
operate commercially in london all bus services are
regulated and arriva operates as a contractor to transport
for london in uk rail the government awards passenger
rail franchises through a competitive bid process the bus
and coach business provides distribution sales rental and
finance services for the bus and coach market in the uk
germany
bus
400 employees
200 vehicles
rail
600 employees
115 trains
tendering of regional rail services by federal states is
becoming established in the german bus market
tendering has started in the rhinemain region 
iberia
bus
2000 employees
1100 vehicles
the portuguese and spanish bus markets are
fragmented with longterm concessions granted to local
operators without a formal tendering process in lisbon
and porto competitive tendering by new metropolitan
authorities is expected
italy
bus
2700 employees
1700 vehicles
italy has a public transport market similar in size to the
uk public tendering for urban and regional bus services is
being progressively introduced throughout the country
netherlands
bus
2100 employees
1300 vehicles
rail
350 employees
78 trains
competitive tendering is a key feature of the dutch bus
market all regional bus transport must be awarded to
contractors through competitive tendering by 2010
scandinavia
bus
4200 employees
1600 vehicles
rail
360 employees
44 trains
both the danish and swedish bus markets are fully open
to competition local authorities which manage
contracts through competitive tendering provide the
funding for contracts competitive tendering for rail
services is being progressively introduced 8 arriva plc  annual report and accounts 2005
chief executive’s review
operating review
we have achieved strong results across the
group as a whole delivering consistently in line
with our strategy increased fuel costs and the
oneoff reduction in revenue and profit from the
loss of the arriva trains northern franchise have
been substantially offset by growth elsewhere
demonstrating the resilience that our strategy
gives us we made further progress in mainland
europe winning significant contracts in northern
europe and acquiring businesses in germany
and italy achieving the european growth that
we planned 2006 has started well with a further
european rail tender win
uk bus
our uk bus operations achieved an operating 
profit of £68 million before exceptional items 
2004 £636 million on revenue of £6975 million
2004 £6515 million maintaining margins at just
under 10 per cent and increasing absolute profits
despite cost pressures in the business including a fuel
cost increase of more than £6 million for 2005
arriva’s policy is to fix fuel prices 12 to 15 months
ahead we have now fixed the price for our fuel
requirements for 2006 and this will result in additional
costs for this division of approximately £14 million 
we are working to offset this as far as possible 
through further revenue growth underpinned by
effective marketing and strong partnerships with local
authorities combined with effective cost management
delivering
performance
“arriva has an excellent portfolio of
growing cashgenerative businesses
our acquired businesses are
delivering profitable growth and 
we have significant opportunities
for further strategic investment”
bob davies chief executive arriva plc  annual report and accounts 2005  9
wwwarrivacouk
regions
it has been a year of significant change for our uk
regional business following the reorganisation early
in 2005 we have restructured the business to reduce
overheads and embarked on a drive for innovation 
in the way we approach the market we continue 
to develop our techniques for indepth analysis of
population and neighbourhood profiles to find how
we can meet demand more effectively we are also
running trials of fresh marketing and information
initiatives to improve services and make it easier 
and more convenient to travel by bus 
for the first time in several years we are seeing
industry consolidation with a number of smaller
operators being acquired by major groups we
acquired operations in stevenage at the beginning of
2005 and in july we bought the assets of blue bus
operating in bolton and north of manchester in
february 2006 we acquired premier buses operating
in milton keynes we also recently contracted to
acquire an operation in bishop auckland 
the reliability of services is vital in broadening the
appeal of buses to the public in january 2006 the
secretary of state for transport alastair darling
called on the industry to develop partnership schemes
which deliver a new way of planning and operating
bus networks in big urban areas with local
authorities and bus operators working together to
improve services we fully support this approach 
arriva is committed to working in partnership with
local authorities in 2005 we delivered the first year 
of a fiveyear programme to develop services on
merseyside further partnership schemes in durham
thurrock and medway have seen the introduction of
new network designs new and refurbished vehicles
and improved information and facilities at bus stops
passenger numbers have increased as a result of
improved travel experiences and reduced delays
the introduction in april 2006 of free offpeak local
bus travel in england for passengers who are over 60
or who have disabilities is an important initiative on
the basis of similar experience in scotland and wales
we expect this initiative to stimulate growth we are
currently in detailed discussions with local authorities
to establish how the individual schemes will operate 
2005 has been an important year in the development
of our uk regional business the action we have taken
positions the business well to absorb future cost
increases and we believe the outlook is favourable 
2005 has been an important year in the
development of our uk regional business 10 arriva plc  annual report and accounts 2005
london
arriva is the largest bus operator in london
accounting for more than 19 per cent of the 
network at the end of 2005 improved operational
performance led to better service delivery and
enhanced our revenue under quality incentive
contracts over the last five years we have invested 
a total of £159 million in new vehicles for london
substantially renewing and expanding the fleet
we expect to see continuing increases in usage of 
the overall london bus network transport for london
continues to predict longterm growth as london’s
residential and commuting populations increase 
the actual and attempted bombings in july had a 
big effect on public transport in london passenger
numbers for our london tourism and sightseeing
operation the original tour fell by 40 per cent in the
peak tourist months but the business is well placed to
regain its position as confidence increases and tourist
numbers return to previous levels
uk trains
our uk trains division achieved an operating profit 
of £149 million before intangible asset amortisation
2004 £319 million on revenue of £2394 million
2004 £509 million operating profit includes some
residual income from the arriva trains northern
franchise that ceased in december 2004 arriva 
trains wales atw was our only uk trains business
operating in 2005 
our atw franchise runs until december 2018 and 
is supported by the welsh assembly government
wag which in partnership with arriva is
committed to bringing forward innovation and
investment in january 2005 the wag announced
funding of £50 million over the life of the franchise to
allow the leasing of additional trains to accommodate
high demand for peak time services in the valley line
network in partnership with the wag arriva
announced a £3 million station upgrade programme
in north wales and the installation of cctv on
trains during 2005 arriva made further investments
in stations to improve the service for our customers
and enhance revenue 
in december 2005 following extensive consultation
we introduced a new timetable adding 950 services 
a week across the network and providing more seats
on peak time train services among other benefits 
passenger numbers particularly in south wales’
valleys are continuing to grow significantly the 
new timetable has started to deliver improvements 
in operating performance we remain focused on
delivering continued improvements listening to our
customers and working with stakeholders to ensure
the franchise has the resources needed to respond to
growing demand
we see opportunities to grow our position in uk rail
and are pleased to have prequalified for the south
western passenger rail franchise we have the
resources in place to develop robust bids for franchises
which may be tendered in the coming months
chief executive’s review 
continued
arriva works positively
to promote accessible
public transport as a
travelling choice
to improve services 
for our customers we
continue to invest in
new ticket machines
barriers and station
facilities and security  arriva plc  annual report and accounts 2005  11
wwwarrivacouk
mainland europe
our mainland european division delivered an excellent
performance increasing operating profit by 37 per
cent to £48 million before goodwill impairment
intangible asset amortisation and exceptional items
2004 £351 million on revenue of £6212 million
2004 £5256 million included in the results are 
£19 million of revenue and £2 million of operating
profit from acquisitions in the year indexation on
contracts and stateapproved fare increases helped 
to limit the impact of increased fuel costs 
revenue from our mainland european operations 
has doubled over the last three years we have
consistently maintained that local authorities in
mainland europe would introduce competitive
tendering to reduce the cost of providing public
services in response to legislative and economic
pressures we see this as the key driver for growth 
for arriva outside the uk as the volume of contract
work available to private operators increases 
this view has been confirmed clearly during the year
across our businesses in northern europe where we
have seen a number of significant contract wins in the
netherlands arriva won the contract to operate all
regional rail services for the next 15 years in the
northern provinces of friesland and groningen with
projected total revenue of around £500 million we also
won a 120 bus sixyear contract in waterland north of
amsterdam worth £120 million in lifetime revenue
in germany there is now an accelerating programme
of tendering of regional rail services as we
anticipated when we entered this market in 2004 
in november we won a tenyear contract with total
revenue of some £150 million to operate rail services
in bavaria between munich and towns close to the
border with the czech republic
the german bus market is also introducing tendering
although the pace is slower than in the rail sector in
february we acquired sippel a bus company with
operations in the rhinemain area where a fiveyear
programme of tendering has been established sippel
is part of a consortium that will operate the team and
fifa official coaches for the world cup in germany in
2006 it will also operate additional buses for
spectators
our operations in scandinavia have also increased
through tender wins we won new contracts in the
swedish towns of helsingborg trelleborg and malmö
and remain the largest bus operator in denmark with
a good rate of contract retention building on our uk
experience of introducing technology has significantly
helped us to win these tenders where we are
adopting ‘black box’ journey recorders similar to
those we have introduced in the uk passenger
information systems and cctv systems 
our new train timetable 
in wales introduced in 
december 2005 is delivering
improved performance 
for customers 12 arriva plc annual report and accounts 2005
chief executive’s review 
continued
in january 2006 we won our first rail contract in
sweden to operate the pågatåg regional rail services
in the south of the country the nineyear contract is
initially worth approximately £15 million of revenue
per annum and has considerable potential for
growth with no significant capital expenditure
more rail tendering in denmark is expected in 2006
we expect to participate fully building on our
reputation for excellent delivery our train punctuality
averages 975 per cent and we have received bonuses
for reliability and customer satisfaction throughout
the year
in southern europe we have highlighted italy as
another key area for development as the italian public
transport market is one of the largest in europe in
october we completed the acquisition of eighty per
cent of the sadem bus businesses which operate in
the piemonte and valle d’aosta regions of northern
italy to the west of our other operations sadem 
comanaged with gtt of turin all transport for the
2006 winter olympics this involved procurement and
planning of an operation which ran up to 1000
coaches and buses a day for competitors and
spectators
our other bus operations in italy sab and saf have
been excellent investments we now own 60 per cent
of saf having purchased a further 11 per cent in
december 2005 we have also increased our
shareholding in other italian businesses
in november the portuguese competition authority
denied clearance of our proposed joint venture with
barraqueiro group to combine the lisbon public
transport operations of the two companies we are
appealing the decision 
in the summer we sold part of our spanish operation
in galicia for £77 million in line with book value 
the sale of the more rural operations has allowed the
business to focus on working with the metropolitan
transport authorities to develop our operations in 
la coru

na and ferrol
as we expand our operations in mainland europe we
continue to innovate and gain valuable experience
which strengthens the management of arriva as a
whole we were the world’s first transport company
to use palm oil based biodiesel for rail services on
several of our trains in germany our introduction of
contactless ‘smart card’ ticketing in portugal went
well and is enabling us to gather valuable market
information to tailor services more closely to market
requirements our introduction of new trains into
denmark and germany was on time and notably free
of teething problems we are providing experimental
‘on demand’ bus services in some of italy’s high
mountain valleys such as alta valle brembana 
as the pace of liberalisation picks up across europe our
proven expertise and innovative thinking make us well
placed to achieve further growth and market success
“as we expand our operations in mainland
europe we continue to innovate and gain
valuable experience which strengthens the
management of arriva as a whole”
bob davies chief executive arriva plc annual report and accounts 2005  13
wwwarrivacouk
bus and coach
bus and coach achieved an operating profit of 
£3 million 2004 £32 million on revenue of 
£131 million 2004 £138 million the business
continues to match its resources closely to the needs of
the market place and has once again achieved a solid
profit performance with little new capital requirement
vehicle rental
our vehicle rental business achieved an operating
profit of £101 million before exceptional items
2004 £126 million on revenue of £556 million
2004 £59 million in common with the rest of the
sector we experienced downward pressure on daily
hire rates as well as lower residual values and reduced
profits in february 2006 we sold the business to
northgate plc
outlook
we are driving the business forward with a clear vision
of becoming the leading transport services organisation
in europe we expect strong growth to continue
through acquisitions and tendering opportunities we
have businesses in seven mainland european countries
and are confident that with our established presence
arriva is in a strong position to benefit from the
increasing liberalisation of european transport markets
we see further opportunities for our uk bus operations
and are committed to bringing forward innovative
approaches to developing this market 
arriva has an excellent portfolio of growing cash
generative businesses our acquired businesses are
delivering profitable growth and we have significant
opportunities for further strategic investment
bob davies chief executive
we have invested in easy
access buses night bus
services and improved
security to grow and
develop regional bus
services in merseyside 14 arriva plc  annual report and accounts 2005
financial review
financial review
the group delivered a robust financial
performance in 2005 against the background 
of substantially higher fuel prices and the end 
of a significant uk rail franchise arriva trains
northern atn in december 2004 earnings per
share excluding goodwill impairment intangible
asset amortisation and exceptional items were
broadly maintained at 450p 2004 451p 
the improvement in basic earnings per share 
at 437p 2004 426p demonstrated the
financial resilience of the group the increasing
contribution from our growing mainland europe
operations and reflected a reduced tax charge 
this report represents the first set of annual results
prepared using international financial reporting
standards ifrs the transition to ifrs has not had 
a material impact on cash flow or reported profits
except for changes to amortisation of goodwill and
intangible assets adjustments to the balance sheet
particularly in respect of accounting for pension
schemes were more substantial
we have continued to make substantial investments
for future growth making use of the strong cash
generation that our business provides the financial
position of the group remained strong at year end
whilst the £129 million disposal of the vehicle 
rental division in february 2006 has provided
additional resources to assist the future development
of the group
delivering
financial strength
“the group’s strong balance sheet at the
year end has been further strengthened
by the proceeds of the disposal of the
vehicle rental division in february
2006 the group is therefore well
positioned to take advantage of
opportunities to invest through both
organic growth and acquisition”
steve lonsdale group managing director – finance arriva plc  annual report and accounts 2005  15
wwwarrivacouk
results
revenue in 2005 decreased by 8 per cent to 
£16268 million 2004 £1759 million the
reduction was due to the expiry of the atn franchise
which had contributed £285 million to revenue in
2004 but was partially offset by increased revenue
from recent german and italian acquisitions group
operating profit post goodwill impairment intangible
asset amortisation and exceptional items was 
£1231 million 2004 £1263 million largely
reflecting the impact of these changes
the interest cost for the year was £152 million
2004 £17 million the reduction principally reflects
the inclusion in the preceding year of the £4 million
cost of prepaying us private placement loan notes 
in december 2004 net debt was higher in 2005 
due to capital expenditure and investment through
acquisitions however the underlying average cost 
of debt fell the result of an increased proportion of
euro denominated debt in the overall debt structure 
before goodwill impairment intangible asset
amortisation and exceptional items operating profit
decreased to £1274 million 2004 £1328 million 
an analysis of this operating profit by division is shown
in the segmental results the increased charge for
goodwill impairment and intangible asset amortisation
of £66 million 2004 £32 million was largely the result
of the fullyear impact of acquisitions made in 2004
exceptional profits of £23 million 2004 £1 million
arose from the disposal of properties there were 
no exceptional costs in 2005 2004 £43 million
restructuring costs
profit before taxation fell slightly to £1079 million
2004 £1093 million the taxation charge was
£216 million 2004 £26 million an effective rate of
20 per cent the effective rate of tax is reduced from
the standard rate by tax losses brought forward and
release of provisions for taxation no longer required
from prior periods profit for the year increased 4 per
cent to £863 million 2004 £833 million
cash flow
ebitda earnings before interest tax depreciation
goodwill impairment and intangible asset
amortisation increased by five per cent to 
£2468 million 2004 £2355 million contributing to
net cash inflow from operating activities for the year
of £2079 million 2004 £2546 million the increase 
in ebitda is the result of increased investment in
profitable growth through acquisitions and capital
expenditure and was achieved despite the loss of
contribution from atn settlement of trading
balances following the end of the atn rail franchise
caused a significant working capital outflow early in
the year and a reduction in reported net cash inflow
we have continued to make substantial
investments for future growth making use of the
strong cash generation that our business provides 16 arriva plc  annual report and accounts 2005
we increased net capital expenditure to 
£1959 million compared with £1255 million in the
previous year expenditure on new buses in the uk
was £651 million 2004 £478 million including
£422 million 2004 £25 million invested in new
buses in london during the year overseas capital
expenditure on vehicles increased to £956 million
from £42 million in the previous year as the scale of
the group’s mainland europe activities increased
nearly half of this expenditure was incurred in the
netherlands following major bus and rail contract
awards net capital expenditure on shortterm rental
vehicles decreased from £299 million in 2004 to
£253 million reflecting the harder trading
environment during the year
acquisition expenditure in the year was £463 million
and included
• bus company sippel in germany purchased for
£116 million with an additional maximum
performancerelated consideration of £21 million
up to 2008
• an increased shareholding in our businesses in
italy from 49 per cent to 60 per cent in saf in
december 2005 for £43 million saia from 
51 per cent to 88 per cent in february 2005 for
£52 million and additional consideration for sab
of £43 million
• an increased shareholding in rag in germany
from 898 per cent to 967 per cent for 
£38 million
• the acquisition of 80 per cent of bus company
sadem in italy for £95 million
• two acquisitions of smaller bus businesses in the
uk for £69 million 
the increased shareholding in saf has created an
additional intangible asset amounting to £19 million
in line with the acquisition of the initial shareholding
in 2004 provisional goodwill arising on the
transactions was £225 million
servicing the debt and equity through interest and
dividend payments absorbed £529 million 
2004 £526 million whilst there were corporation
tax payments during the year of £258 million new
shares issued on exercise of share options generated
£38 million there was an increase in net debt to
£4359 million 2004 £350 million mainly reflecting
the increased acquisition activity and increased
investment in trains and buses arising from tender
awards the ratio of net debt to ebitda at the end 
of the year was 18 times
on 3 february 2006 the group completed the
disposal of the vehicle rental business for a total
consideration of £1293 million comprising 
£539 million for the equity in the business and
£754 million in reduced debt £42 million of 
the consideration is deferred to june 2006 the
transaction represents a £23 million surplus over net
assets before any adjustments arising from the
completion accounts process and selling expenses
financial review 
continued
expenditure on new buses in the uk was 
£651 million 2004 £478 million including 
£422 million 2004 £25 million invested in 
new buses in london during the year
across our businesses
we develop innovative
travel campaigns which
offer value for money
and encourage greater
use of public transport
we are an experienced
european rail operator
delivering services in four 
eu countries in early 2006 
we also announced our first
rail contract win in sweden arriva plc  annual report and accounts 2005  17
wwwarrivacouk
following the disposal on a proforma basis the 
net debt at the year end would have been reduced 
to £3066 million
ifrs
the main impacts of ifrs on the group’s reported
results as compared with the results for 2004
reported under previous accounting standards are 
as follows
• an increase in profit before tax for the
comparative year ended 31 december 2004 of
£109 million principally the result of acquired
goodwill no longer being amortised
• basic earnings per share for the same period
increased from 362p to 426p principally the
result of not amortising goodwill earnings per
share excluding goodwill impairment intangible
asset amortisation and exceptional items
increased marginally from 449p to 451p
• net assets at 1 january 2004 decreased by 
£1078 million mainly arising from
–recognition of obligations in respect of 
defined benefit pension schemes decrease 
£1748 million and a related intangible 
asset increase £12 million
–recognition of fair value of uk land and
buildings as deemed cost increase £246 million
–elimination from liabilities of 2003 final
dividends increase £261 million
• net debt decreased by £34 million at 
31 december 2004 due to the proportional
consolidation of joint venture cash
the transition to ifrs is the latest in a series of
changes in financial reporting in recent years that
have had a material impact on the group’s reported
balance sheet
the most significant has been in respect of defined
benefit pension schemes whereby anticipated
liabilities are under ias19 discounted at highlyrated
quoted bond rates rather than at the expected rate of
return on the assets invested to pay those liabilities in
the future the result is the significant retirement
benefit obligations now recorded in the group’s
balance sheet
notwithstanding this accounting change the true
cost of providing pensions has irrefutably increased
over recent years primarily due to extended life
expectancy this is resulting in greater contributions
from both the group and members to the schemes 
there was a further change in accounting for
deferred taxation with the result that the group 
now carries a provision for deferred taxation of 
£899 million in respect of accelerated capital
allowances and revaluation surpluses on properties
we consider it unlikely that any material amount of
this provision will ultimately be payable 
goodwill on acquisition which prior to 1998 was
largely written off immediately to reserves is now
included on the balance sheet but is no longer
amortised being instead subject to an annual
impairment review the group now carries 
£2775 million of goodwill on the balance sheet
the changes to financial reporting on adoption of
ifrs have no impact on the cash flows of the group’s
businesses and therefore no impact on the underlying
value of the group 18 arriva plc annual report and accounts 2005
financial review 
continued
capital structure
total shareholders’ equity was £4874 million 
2004 £4276 million at the end of the year retained
profits contributed £482 million to distributable
reserves representing the bulk of the increase
gearing at 31 december 2005 was 87 per cent 
2004 81 per cent the 2005 interest cover the ratio
of ebitda to net finance costs excluding goodwill
impairment intangible asset amortisation and
exceptional items was over 16 times 2004 14 times 
at the year end the ratio of net debt to ebitda 
was 18 times 2004 15 times this reduces on a 
proforma basis to 15 times on the disposal of arriva
vehicle rental the group recognises that at debt
levels above two times ebitda the cost of debt
increases for companies with similar characteristics to
arriva taking this into account we do not intend to
allow net debt to exceed these levels on a sustained
basis arriva remains comfortably within the principal
financial covenants set by its lenders the principal
covenants being that the ratio of ebitda to net
finance costs is not less than 31 and the ratio of 
net debt to ebitda is not more than 351
borrowing facilities
a large proportion of available finance for the group 
is provided by the £310 million fiveyear syndicated
loan facility whilst much of the group’s bus fleet is
financed on mediumterm hire purchase or finance
lease arrangements the typical duration of these
arrangements is three to five years as part of the uk
rail franchising arrangements the group has provided
guarantees of £13 million 2004 £19 million 
the rolling stock of the uk netherlands danish 
and german rail businesses that is provided through
operating leases has annual commitments of
approximately £48 million all material commitments
will cease on expiry of the franchises bonds
amounting to £13 million have been provided in
respect of our danish and netherlands rail businesses
letters of credit amounting to £29 million are provided
as part of the group’s uk insurance arrangements
the group’s working capital and ancillary
requirements are mainly provided by our principal
bankers and reviewed annually
treasury
the group’s financial risks are managed by the 
group treasury function in accordance with a formal
treasury policy approved by the board in july 2005
the policy sets a range of formal targets for
managing the group’s exposure to interest rate
changes currency movements and fuel prices these
targets are achieved through the use of interest rate
and exchange rate swaps forward fuel price fixes
and fixed rate finance in addition foreign operations
the group is well positioned to take advantage 
of opportunities to invest through both organic
growth and acquisition arriva plc annual report and accounts 2005  19
wwwarrivacouk
are funded in local currency where possible the
result of this policy has been to reduce to insignificant
levels the foreign exchange risk when translating
overseas assets and liabilities into sterling and to
maintain fuel fixes at least 12 to 15 months ahead 
on a rolling basis the requirement to fix fuel is
determined after taking into account the extent to
which businesses are protected from fuel price
volatility through contract price indexation 
taxation
the taxation charge was £216 million 
2004 £26 million representing an effective rate of 
20 per cent 2004 24 per cent the reduction in 
the effective rate arises from a review of group tax
liabilities as a result of agreeing prior year issues and
also from the utilisation of tax losses
the effective rate of tax might be expected to
increase in future periods as an increasing proportion
of the group’s profits is derived from territories with
higher corporate tax rates than the uk rate
total shareholders’ equity
total shareholders’ equity was £4874 million 
2004 £4276 million at the end of the year
representing 248p per share 2004 218p per share
total shareholders’ equity excludes goodwill 
previously written off to reserves of £2363 million
2004 £2363 million 
summary
a significant typical feature of the group’s finances 
is the upfront investment in new vehicles or
acquisitions followed by strong cash flows arising
from those investments this allows the group to
readily fund its growth
in addition the group’s strong balance sheet at 
the year end has been further strengthened by the
proceeds of the disposal of the vehicle rental division
in february 2006 the group is therefore well
positioned to take advantage of opportunities to
invest through both organic growth and acquisition
steve lonsdale group managing director – finance
we continue to research
the needs of our customers
and communities so we can
develop and deliver services
that meet their needs
over 3200 arriva bus
drivers successfully
completed nvq and
btec qualifications
in customer care
training in 2005 20 arriva plc  annual report and accounts 2005
corporate responsibility review
our full corporate responsibility report 
policies and practices can be viewed on our
website wwwarrivacouk
corporate responsibility at arriva is about
recognising the contribution we can make to
communities and the impact we have on our
environment
we play a vital role in the social and economic lives 
of the communities we serve across eight european
countries we take our responsibilities as a large
business seriously and we work hard to build positive
relationships with all of our stakeholders
our board of directors recognises that our longterm
success depends on these positive relationships and
our values being embedded into the culture of our
company
we established our corporate responsibility working
group in 2004 which consists of representatives from
each arriva business reporting directly to the board
at regular intervals this group reviews best practice
reports on new initiatives and works on corporate
responsibility benchmarking
we have continued to work closely with business in
the community to embed best practice throughout
the business and to help us report to our stakeholders
in a meaningful way
our policies which are published at wwwarrivacouk
set out our approach to the wider community
delivering
responsibl y arriva plc  annual report and accounts 2005  21
wwwarrivacouk
safety
the safety of our customers and employees always
comes first
our groupwide practices are reviewed regularly by
the board safety committee which is chaired by a
nonexecutive director nick buckles
this committee reviews the key safety performance
indicators across the group and the operation of the
selfcertification programme reporting to the board
the committee also reviews arriva’s inhouse safety
management system and supports the group’s health
and safety policy
each of the group’s businesses is accountable for its
own safety performance and follows selfcertification
and selfauditing processes which reflect best practice
guidelines for successful health and safety
management
as part of the selfcertification process arriva managers
conduct annual reviews of their business to ensure that
they meet group safety standards the reviews are
subject to external verification 
the selfcertification process which is underpinned by
the audit procedure ensures that safety is reviewed
regularly by senior management 
we have an extensive portfolio of inhouse 
training initiatives ranging from the institution of
occupational safety and health iosh approved
programmes in the uk to courses that develop
competence in risk assessment fire safety display
screen equipment manual handling and first aid 
in 2005 we received further recognition of our
commitment to health and safety with a total of six
safety awards the royal society for the prevention 
of accidents rospa gold award for managing
occupational road risk the rospa merit award for
occupational health and safety the institute of
transport and logistics excellence in safety award
the brake best risk managed company of the year
award supported by highly commended rankings in
the safety in vehicle maintenance and road safety 
in the community awards
we were the first public transport company to sign
up to support the european road safety charter
which aims to achieve a 50 per cent reduction in 
road accidents by 2010 we have contributed to 
the development of the road safety debate at 
events throughout 2005
in denmark we have received the prominent
european certificate of working environment –
dsoh 18001 standard for occupational health 
and safety management systems
we play a vital role in the social and economic
lives of the communities we serve across eight
european countries
arriva is london’s largest
bus operator with more
than 1400 vehicles
operating under contract
to transport for london 22 arriva plc  annual report and accounts 2005
corporate responsibility review
continued
environment
our environmental policy is in place across all of the
group’s operations and in determining this policy 
we sought advice from external consultants the
policy complies with all legal requirements and
incorporates industry best practice
our three key areas are the promotion and use of
public transport the reduction of waste emissions
and the efficient use of water and energy
we continue to research ways of reducing further 
the level of harmful emissions we release into the
environment during 2005 we made progress in
several ways we invested over £130 million in new
buses all of which meet euro iii environmental
requirements some of our older buses have been
fitted with euro iii compliant engines in denmark we
operate 29 new coradia lint trains which have euro
iii compliant engines we announced plans to buy 43
new stadler dieselelectric trains worth around £95
million when we won a 15 year extension of our rail
franchise in the north of the netherlands these trains
also comply with euro iii standards in italy several
arriva companies use ‘white diesel’ – a water in
dieseloil emulsion which can be used in diesel
engines without the engines being modified this has
led to a reduction in emissions of fine particulates
and nitrogen oxides
we are working hard to reduce the environmental
impact of our business by using different fuels
including ultra low sulphur diesel and compressed
natural gas
in some parts of arriva innovative trials of alternative
fuels are taking place arriva peg in germany is the
world’s first transport company to use palm oil based
biodiesel to operate several of its trains in late 2005
representatives from the business were invited by the
malaysian german chamber of industry and
commerce in kuala lumpur to talk about the trials
we are now exploring opportunities as to how we
can use this biofuel elsewhere
across the group we aim to dispose of all waste
using environmentally sympathetic means waste is
segregated at source and is stored pending the most
appropriate and effective disposal by relevant specialist
contractors this includes recycling and reducing the
amount of waste being sent to landfill sites
employees
we have more than 30000 employees across eight
european countries who are key to arriva’s success
we are committed to creating a working environment
where everyone has the opportunity to learn and
develop and where we share many common values
over the past few years we have grown our
transport business significantly and developed
through contract wins and acquisitions we have
established a series of policies and procedures to help
employees integrate and to ensure that their training
needs are addressed 
we manage the environmental impact of our
operations and encourage the sustainable
development of public transport
our reputation for
excellent service
delivery in denmark
continues with high
customer satisfaction arriva plc  annual report and accounts 2005  23
wwwarrivacouk
leadership management and supervisor
development
we are committed to developing our people and
provide development opportunities for employees
across arriva
in 2005 we launched our graduate development
programme the first phase of which will be a
recruitment drive across europe to encourage
graduates to work in the passenger transport industry
to encourage people to apply we have launched our
graduate website wwwwheredoyouwanttobecom
other development programmes within arriva
include mastering people skills for supervisors and
middle managers in uk bus operations the institute
of leadership and management programme for
middle managers in arriva trains wales a
management development programme for head
office managers and arriva’s nvq in customer care 
our danish business continues to develop its
programme to train bus drivers to be managers within
the organisation following a 12 month training period
vocational training
our uk vocational training programme is a major 
part of our investment in developing arriva people
in our uk bus operations dedicated development
managers provide support to businesses by focusing
on basic skills and vocational training
meanwhile in denmark we provide our drivers and
mechanics with advanced training covering areas such
as dealing with conflict service and quality and
computer skills
in portugal our vocational training programmes
deliver great results in lisbon we offer drivers
refresher training to adopt better defensive driving
techniques we measure fuel consumption during
training showing environmental and safety benefits
as well as clear cost savings
in portugal and in italy we have been awarded the
iso9001 quality standard
valuing difference
arriva aims to acknowledge understand and value
differences in people whether they are our customers
or employees
we introduced the ‘arriva approach to diversity’ to
create an environment that maximises the potential 
of all current and future employees
as part of this approach and highlighting arriva’s
commitment to the diversity agenda we have a
diversity committee and diversity best practice forum
committee members include senior managers from
across our businesses who meet regularly and report
to the board annually
in the uk we have recently run awareness workshops
for 2060 employees utilising 90 trained internally
appointed facilitators
we continue to invest 
in employee training
to empower our people 
to deliver for our
customers and the group 24 arriva plc annual report and accounts 2005
corporate responsibility review
continued
valuing employees
we value the work of our employees and the
contribution they make towards the successful
development of arriva and periodically seek their
feedback
the arriva learning and development gateway aldg
gives employees access to an extensive range of online
courses and provides them with the opportunity to
further their learning and development the popularity
of the gateway has grown and in 2005 there were
around 12000 visits to the site by our employees
community
we know that we are an important part of the
communities we serve by the very nature of our
business we have a responsibility to these
communities across the uk and mainland europe
for that reason our community relations activities 
are at the heart of our commitment to corporate
responsibility
our community relations committee which is
chaired by an executive director steve clayton
includes representatives from across the group and it
continues to work towards the vision we established
in 2004
“as a people business we value encourage and
celebrate the contribution our employees and others
make to the communities we serve”
arriva has worked hard to establish a series of long
term partnerships giving not only financial but also
practical support one such partnership is with 
age concern as part of this developing partnership
in 2004 we supported age concern’s information
technology it project in hertfordshire to help older
people take part in computer training a facility was
established to help them use it in a number of areas
including keeping in touch with family and friends
finding out information such as bus and train
timetables and ordering shopping for home delivery
arriva’s support has meant that this project was able
to continue throughout 2005
we have joined forces with the wales deaf rugby
union as official sponsor of the team in another
successful partnership in addition to supporting the
development of deaf rugby in communities right
across arriva’s rail network the partnership is also
helping us to understand better the needs of people
who are hard of hearing and ensure we offer the 
best possible service to all our customers
employees in the community 
our employees are involved in our community
relations programme and vote each year for their
‘charity of the year’ for the uk this has been
running for six years and provides employees with 
the opportunity to select a charity that they would
like the group to support for 12 months
our employees voted for cancer research uk as the
2006 charity of the year for the third year running arriva plc annual report and accounts 2005  25
wwwarrivacouk
in the netherlands some of the charities we have
supported during 2005 include ‘doo een wens’ 
the dutch make a wish foundation whose aim is to
grant the wishes of children with lifethreatening
illnesses around the world ‘cool flevoland’ a youth
panel initiative which aims to improve young people’s
interest in politics and social themes and ‘dance4life’
which has been set up by young people to fight the
spread of aids 
many of our employees across the uk and mainland
europe make valuable contributions to their local
communities outside of their working life with arriva
we value this and we recognise many of their 
efforts through our community action awards
employees are encouraged to tell us about their
charitable work in return they are put forward for
consideration of an award which is donated to the
organisation they support in 2005 we presented 57
cash awards to our employees for their chosen causes
business in the community
we are a national member of business in the
community bitc and we actively support some 
of its initiatives
bitc is a charitable organisation which helps
businesses contribute to the social and economic
regeneration of local communities
during 2005 arriva employees from the north east 
of england took part in a reading programme with 
a local primary school which selected pupils it felt
would benefit from extra support they listened to
the children read and helped with the reading
process the project proved enjoyable and worthwhile
for both the children and volunteers
we were also named as one of bitc’s top ten overall
performers in the race for opportunity awards this
recognises efforts that organisations make to ensure
that their workforce is diverse and that differences 
are valued and understood 
we are committed 
to developing public
transport through
innovation and
working in partnership
with our stakeholders 26 arriva plc  annual report and accounts 2005
board of directors
1 sir richard broadbent kcb
chairman 
aged 52 sir richard was appointed to the
board in july 2004 and was appointed
chairman in november 2004
sir richard is the senior independent director 
of barclays plc and was executive chairman
hm customs and excise from 2000 to 2003
he started his career with hm treasury in
1975 in 1986 he joined schroders plc where
he held a number of senior positions including
head of european corporate finance 1995
and group managing director corporate
finance 1998
as chairman sir richard chairs the
nomination committee of the board and is
also a member of the safety committee
2 bob davies llb fcma
chief executive
aged 57 bob joined the board as chief
executive in december 1998 having
previously held the same position at east
midlands electricity plc before which he 
had been finance director of ferranti
international plc 1991–1993 and 
waterford wedgwood plc 1988–1991 
bob had earlier held various senior positions
with the ford motor company over a period
of 15 years in the uk in the usa with ford
motor credit and at ford’s spanish operation
as director of finance he is currently a 
nonexecutive director of barratt
developments plc and is chairman of the
board of governors of the university of
sunderland
as announced on 14 december 2005 
bob will retire as a director and as chief
executive following the conclusion of the
annual general meeting on 19 april 2006
3 david martin ba fcma mimgt 
group managing director – operations 
 deputy chief executive
aged 54 david qualified as an accountant 
in 1977 after graduating in business studies 
he held a variety of general management
positions before joining the bus industry in
1986 after leading a management buyout of
an east midlands based bus company he was
involved in the acquisition of national express
and subsequent management buyouts leading
to the creation of british bus group limited
david joined the arriva group in 1996 on the
acquisition of british bus becoming a member
of the board in february 1998 with specific
responsibility for the group’s international
operations and development 
in march 2005 he was appointed group
managing director – operations and deputy
chief executive with responsibility for all
group operations and on 14 december 
2005 it was announced that david would
succeed bob davies as chief executive on
bob’s retirement immediately following the
annual general meeting on 19 april 2006
4 steve lonsdale ba fca
group managing director – finance
aged 48 steve graduated from the university
of newcastle upon tyne with a degree in
economics and accounting before joining
coopers  lybrand in 1978 he qualified as 
a chartered accountant in 1981 and spent
eight years working in the profession in the
uk and overseas steve joined the group in
1987 where he worked as group accountant
until 1991 when he was appointed to the
board as group finance director
in march 2005 he was appointed group
managing director – finance with
responsibility for all finance legal and
company secretarial matters 
2
3
4
1 arriva plc  annual report and accounts 2005  27
wwwarrivacouk
5 nick buckles
nonexecutive director
aged 45 nick was appointed to the board 
as an independent nonexecutive director 
on 19 july 2005 and on 18 october 2005
was appointed as chairman of the safety
committee nick also sits on the nomination
and remuneration committees
he was appointed to the board of securicor
plc in 2000 having joined the group in 
1985 and became its chief executive in
january 2002 following the merger between
securicor plc and the security businesses of
group 4 falck in july 2004 he was appointed
deputy chief executive and chief operating
officer of the merged company group 4
securicor he was appointed chief executive
of group 4 securicor in july 2005
6 steve clayton ba fcit mimgt 
group managing director – corporate affairs
aged 52 after graduating from london
university in 1975 steve held various
management positions with london
transport he was managing director of
leaside bus company limited from 1988
which was acquired by the group in 1994
steve was appointed to the board in 
february 1998 with responsibility for the
group’s uk bus operations in march 2005 
he was appointed group managing director –
corporate affairs with responsibility for
human resources health safety and the
environment corporate communications
and all government relations activities 
across the group he sits as a member of 
the safety committee and is chairman of 
the community relations committee 
steve was president of the confederation 
of passenger transport uk in 2005
7 simon batey ma fca 
nonexecutive director 
aged 52 simon joined the board as an
independent nonexecutive director on 
1 october 2003 and since 1 january 2004 
he has been chairman of the audit
committee he also sits on the remuneration
and nomination committees 
after he graduated from oxford simon
worked for armitage and norton now part
of kpmg where he trained and qualified 
as a chartered accountant and worked in 
a number of management posts 
he joined the board of united utilities plc 
as group finance director in 2000 before 
this appointment he was group finance
director of amec plc from 1992 and prior 
to that was deputy finance director
on 8 february 2006 it was announced that
simon would leave united utilities on 31 july
2006 it was also announced that he would
be appointed as a nonexecutive director 
of thus group plc on its acquisition of your
communications from united utilities
8 veronica palmer obe 
nonexecutive director
aged 65 veronica was appointed to the
board as an independent nonexecutive
director in september 2001 and since 
june 2005 has chaired the remuneration
committee of the board she also sits on the
audit and nomination committees of the
board prior to this she had held the position
of director general of the confederation of
passenger transport uk from 1989 until june
2001 earlier she worked in the brewing
industry’s trade association as parliamentary
secretary following a successful career in the
royal air force and work as an employment
consultant in europe veronica has an mbe
for military services and an obe for services
to the transport industry she is chairman 
of the northern ireland transport holding
company board
9 steve williams llb
nonexecutive director
aged 58 steve was appointed to the board
as an independent nonexecutive director on
1 september 2005 and on 18 october 2005
was appointed senior independent director
steve also sits on the nomination audit and
safety committees
steve is general counsel and joint company
secretary of unilever plc and unilever nv
prior to joining unilever steve spent 11 years
at imperial chemical industries plc in the legal
and company secretarial departments and
served for nine years as a nonexecutive
director of bunzl plc relinquishing that post 
in 2004
8
7
6
5 9 28 arriva plc annual report and accounts 2005
directors’ report
the directors submit their report and the audited accounts of arriva plc for the year ended 31 december 2005
principal activities of the group
the principal activities of the group at 31 december 2005 comprised
passenger services 
operation of bus and train services in the uk and seven countries in mainland europe coach
commuter services and private hire
vehicle rental
corporate vehicle rental and personal selfdrive hire this business was subsequently disposed of on 
3 february 2006 further details are given below
bus  coach
bus and coach distribution rental and finance
review of operations
a review of operations together with an indication of future prospects is given in the chief executive’s
review on pages 8 to 13
results and dividends
the profit for the year amounted to £863 million 2004 £833 million the directors recommend the
payment of a final dividend on the ordinary shares of the company of 1477 pence per share 2004 1407
pence which together with the interim dividend of 507 pence 2004 483 pence represents a total of
1984 pence per ordinary share 2004 189 pence the proposed final dividend if approved will be
payable on 2 may 2006 to shareholders on the register of members at the close of business on 
31 march 2006 the total amount paid and proposed to be paid is £391 million in respect of 2005 
2004 £371 million
share capital
the movement in the share capital during the year is detailed in note 22 to the annual report and accounts
directors
the names and biographies of the present directors appear on pages 26 and 27
mr s g batey and mrs a v m palmer retire by rotation and being eligible offer themselves for reelection
at the annual general meeting on 19 april 2006
mr n p buckles was appointed to the board on 19 july 2005 and mr s g williams was appointed on 
1 september 2005 resolutions to approve their appointments will be proposed at the annual general
meeting 
mr a m saxton resigned from the board on 2 march 2005 and mr m j allen retired from the board on 
30 june 2005
no director was interested in any contract or arrangement which was significant in relation to the group’s
business
directors’ interests
the interests of the directors including their family interests at the end of the year including details of
directors’ share options and interests under the long term incentive plan appear in the directors’
remuneration report on pages 31 to 37
purchase of own shares 
no shares were purchased pursuant to the authority granted to the directors at the annual general meeting
held on 20 april 2005 renewal of this authority will be sought at the annual general meeting to be held
on 19 april 2006 
acquisitions and disposals
in january 2005 the purchase of the assets of sovereign bus and coach company limited was completed
for a consideration of £41 million
in february 2005 the company acquired german bus company sippel group for £116 million with an
additional maximum consideration of £21 million payable against performance targets up to 2008
an agreement was announced in july to acquire 80 per cent of sadem a bus operator in italy for 
£95 million and an option to acquire the remaining 20 per cent in 2008 for a maximum of £32 million
completion of the purchase of the initial 80 per cent was announced in october 2005 arriva plc annual report and accounts 2005  29
wwwarrivacouk
in july 2005 the company acquired the assets of blue bus and coaches of bolton which operated
commercial and tendered services to the north of manchester in and around bolton and to manchester city
centre for a cash consideration of £28 million 
the company announced in january 2006 the disposal of its vehicle rental division to northgate plc for an
estimated consideration of £129 million representing a surplus over net assets of approximately £23 million
the disposal was completed on 3 february 2006 
on 13 february 2006 it was announced that premier buses limited the holding company of mk metro
limited of milton keynes had been acquired for a net cash consideration of £56 million 
the consideration consisted of £68 million less inherited cash in the company of £12 million
charitable and political donations
during the year the group made charitable donations for a variety of charitable purposes amounting to 
£201426 2004 £157515 there were no political donations 2004 nil
annual general meeting
the annual general meeting will be held on 19 april 2006 details of business to be considered at the
meeting can be found in the notice of annual general meeting which has been sent to all shareholders
with the annual report and accounts
employees
the group’s approach to diversity means valuing differences in our staff and customers diversity is about
recognising and accepting that all types of people can be successful at work and arriva positively welcomes
all types of staff and customers the board has confirmed its commitment to diversity and its objective is to
achieve a workforce profile to reflect future demographics and create an environment in which differences
are genuinely valued
the group continues to give full and fair consideration to applications for employment by disabled persons
having regard to their respective aptitudes and abilities the group’s policy includes where applicable the
continued employment of those who may become disabled during their employment 
a female network event was held during october 2005 to support the development of female leadership
potential and to maximise contribution to business performance the event was attended by around 50 of
the group’s female managers from across its uk and mainland european operations feedback from this
event will inform future approaches to recruitment development and retention of female managers 
an arrivawide employee survey was conducted during 2005 feedback from which has been shared with
the board and management team during 2006 local feedback will be communicated to every employee
and will include a number of corporate commitments in response to the employee survey feedback these
are to conduct regular surveys provide honest feedback and take consistent actions to improve
communications across the business each business will also review its employee feedback and commit to
take local actions
during 2005 certain new employee benefits were introduced including the arriva share incentive plan sip
as outlined below the arriva childcare vouchers scheme and the arriva computershome scheme
childcare vouchers and home computing arrangements are governmentled salary sacrifice initiatives 
the group has continued its policy of employee involvement by making information available to employees
on a regular basis regarding recent and probable future developments and business activities in order to
facilitate this an arriva plc information and consultation committee was set up in october 2005
arriva recognises the value and benefits of employee share ownership and in 2005 the company
implemented a share incentive plan sip approved by shareholders at the annual general meeting in 2004
the sip enables eligible uk employees to buy shares in arriva plc subject to monthly limits out of pretax
pay resolutions approving replacements for the existing discretionary share option scheme and amendments
to the long term incentive plan will be considered at the annual general meeting on 19 april 2006 further
details can be found in the notice of annual general meeting accompanying this annual report and
accounts
policy regarding payment of suppliers 
the group’s policy regarding the payment of suppliers is either to agree terms of payment at the start of
business with each supplier or to ensure that the supplier is made aware of the payment terms and in
either case to pay in accordance with its contractual or other legal obligations at 31 december 2005 the
company’s trade creditors outstanding represented approximately 30 days’ purchases 2004 49 days 30 arriva plc annual report and accounts 2005
directors’ report
continued
substantial shareholdings
as far as the directors are aware the notifiable holdings equal to or in excess of 3 per cent of the issued
ordinary capital as at 20 february 2006 are

barclays plc 1091
legal  general 316
deutsche bank ag 300
corporate governance
a review of the company’s application of the principles and provisions of the combined code appears on
pages 38 to 42
health safety and environment
details of the company’s approach to health safety and environmental issues appear within the corporate
responsibility review on pages 20 to 25
auditors
a resolution to reappoint pricewaterhousecoopers llp as auditors to the company and to authorise the
directors to fix their remuneration will be proposed at the annual general meeting
by order of the board
d p turner
secretary
1 march 2006
statement of directors’ responsibilities
company law requires the directors to prepare group financial statements for each financial year that give 
a true and fair view of the state of affairs of the group and of its profit or loss for that period
in preparing those financial statements the directors are required to
• select suitable accounting policies and then apply them consistently
• make judgements and estimates that are reasonable and prudent
• state that the financial statements comply with ifrs
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the group will continue in business 
the directors confirm that they have complied with the above requirements in preparing the financial
statements
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy
at any time the financial position of the group and to enable them to ensure that the financial statements
comply with the companies act 1985 they are also responsible for safeguarding the assets of the group
and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities
• the directors are responsible for the maintenance and integrity of the website
• legislation in the uk concerning the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions arriva plc annual report and accounts 2005  31
wwwarrivacouk
1 introduction
the remuneration committee is responsible for reviewing and making recommendations to the board on all
matters relating to the remuneration arrangements applying to the executive directors the management
population occupying roles immediately below those of the board and to any other employee within the
group whose salary plus bonus potential exceeds a specified amount currently £180000 per annum
during the year under review the committee met on six occasions and each committee member attended
all meetings
membership of the remuneration committee is limited to the independent nonexecutive directors and
following the retirement of mr m j allen on 30 june 2005 has been chaired by mrs a v m palmer the
other current members of the committee are mr s g batey and mr n p buckles who was appointed to the
committee on 18 october 2005 following his appointment as a nonexecutive director on 19 july 2005 
sir richard broadbent sat as a member of the committee until may 2005 in his capacity as senior
independent director mr s g williams appointed to the board on 1 september 2005 and appointed senior
independent director on 18 october 2005 may attend any meeting of the committee during the year
under review sir richard broadbent and mr r j davies have attended meetings of the committee as
invitees
the committee’s terms of reference are available on the company’s website wwwarrivacouk
2 remuneration review
the committee decided in 2005 to undertake a comprehensive review of executive remuneration which
had operated within the same framework since 2000 in addition to ensuring that its remuneration practices
remained competitive the committee was asked by the board to ensure that the remuneration structure
was fully aligned with the company’s business goals the committee appointed kpmg llp uk as advisors
to assist in the review when undertaking the review the remuneration committee has consulted with
certain of the company’s major shareholders as well as with the association of british insurers
the objective of the board’s remuneration policy is to ensure that senior management of appropriate calibre
and experience are attracted motivated and retained to provide the best possible opportunity for the
company to deliver sustained shareholder value in support of this objective the remuneration review
confirmed the company’s policy of paying basic salary at the median of the peer comparator group and to
reward outstanding performance with upper quartile total remuneration
the review based its conclusions on a peer comparator group comprising a representative sample of ftse 250
companies of a similar size and complexity to that of the company from the transport and other sectors
the main conclusions of the review were as follows further details are provided in section 3 below
• the salary of the group managing director – finance should be realigned by 16 per cent to bring it
in line with the median of the peer group 
• the annual performancerelated bonus opportunity should be increased to 100 per cent of salary with
70 per cent dependent on financial performance and 30 per cent on personal targets
• the maximum number of shares conditionally awarded under the long term incentive plan ltip
should be increased to an amount equivalent to 200 per cent of salary  based on stretching new
performance targets linked to total shareholder return tsr performance and earnings per share
eps growth in line with our strategic ambitions
• share retention guidelines for executive directors should be introduced requiring retention of 50 per
cent of any share award until a holding equivalent in value to annual base salary has been achieved
the effect of these changes is to ensure that compensation opportunity matches the comparator peer group
subject to achieving stretching performance in line with our strategic goals
for the purposes of this remuneration report eps means basic earnings per share before goodwill impairment
and intangible asset amortisation calculated under international financial reporting standards adjusted for
exceptional items
directors’ remuneration report  32 arriva plc annual report and accounts 2005
directors’ remuneration report 
continued
3 remuneration structure
31 base salary
following its review of remuneration the committee concluded that the base salary of the group managing
director – finance was below that of the median of the peer comparator group and that the remaining
executive directors’ base salaries were appropriately positioned accordingly the following salaries proposed
by the committee effective from 1 january 2006 were approved by the board
salary
£000 pa
r j davies 447
d r martin 312
s p lonsdale 290
s j clayton 260
mr r j davies will retire from the board on 19 april and there are no exceptional arrangements applying to
his retirement mr d r martin will assume the role of chief executive on 19 april 2006 and his base salary
will be increased to £447000 pa in line with that of mr davies’ final salary
32 performancerelated bonus
321 year to 31 december 2005
for the year under review each of the executive directors participated in a performancerelated bonus
scheme mr r j davies was targeted on group profitability performance against budget with performance
equal to budget delivering a bonus of 50 per cent of base salary and profit performance up to 10 per cent
in excess of budget delivering bonus pro rata up to a maximum of 70 per cent of basic salary performance
of 90 per cent–100 per cent of budget delivering pro rata bonus of 25 per cent–50 per cent of base salary
the bonus arrangements for messrs clayton lonsdale and martin are based on both group profitability and
the achievement of personal objectives and for outstanding performance could deliver a maximum bonus of
60 per cent of basic salary the financial element was based on a single objective of group performance by
reference to budgeted earnings per share eps and for the year under review was targeted to deliver 30 per
cent of base salary at eps of 43 pence and capped at a maximum of 40 per cent of basic salary on the
achievement of eps of 46 pence below eps of 43 pence linearly from 0 per cent of basic salary at 40
pence to 30 per cent at 43 pence
the personal objectives element which was agreed with each director at the beginning of the year had 
the potential to deliver a maximum bonus of 20 per cent of basic salary in the year under review 
these nonfinancial objectives set for each director focus on the key themes of strategy organisational
development business growth the establishment and maintenance of effective relationships and leadership
322 arrangements from 1 january 2006
following the results of the remuneration review the annual bonus opportunity will increase to 100 per 
cent of base salary with 70 per cent being determined by group financial performance and the balance
reflecting performance against personal objectives agreed with each director at the beginning of the year
performance will be measured against budget and personal objectives with ‘on target’ performance delivering
50 per cent of base salary as bonus profit performance exceeding budget by 10 per cent coupled with
outstanding personal performance will deliver a maximum bonus of 100 per cent of basic salary 
the performance measure will generally be eps although the remuneration committee will review the
measure each year to ensure it remains appropriate
33 long term incentive plan ltip
331 year to 31 december 2005
the existing ltip was introduced in 2000 and provides for the conditional award of shares at the discretion
of the board as advised by the remuneration committee the market value of any conditional award is
restricted such that it may not exceed 100 per cent of a director’s basic salary as at the date of grant the
vesting of the conditional share awards will depend upon the performance of the group’s eps before
goodwill impairment intangible asset amortisation and exceptional items when compared with the growth
in the retail price index and also of the total shareholder return tsr of the group when compared with
the tsr of the peer comparator group comprising the constituent companies of the ftse 250 excluding
the group and investment companies over a period of three years  arriva plc annual report and accounts 2005  33
wwwarrivacouk
the degree of vesting is on a sliding scale of 25 per cent to 100 per cent with no share vesting unless the tsr of the group is at least equal to
the median tsr of the peer comparator group however irrespective of tsr performance no share shall vest in any event unless the growth in
the group’s eps over the three year measurement period exceeds the growth of the retail price index in the same period by at least 6 per cent
the awards were originally made with performance targets based on accounting standards prevailing at the time and in particular before the
introduction of international financial reporting standards the remuneration committee has made appropriate adjustments to target eps to
ensure proper comparability
with regard to the conditional share award made on 6 march 2003 the performance measurement period is the three years ended 31 december
2005 in that period the growth in the group’s eps was 286 per cent compared with the growth in the retail price index of 9 per cent the
group’s tsr for the same period fell between the tsr of the bottom company in the upper quartile and that of the top company in the second
quartile delivering a conditional award vesting level of 9975 per cent
332 proposed arrangements post 1 january 2006 subject to shareholder approval
• it is proposed that the maximum ltip award an employee may receive in any year be increased from 100 per cent to 200 per cent of the
participants annual salary the remuneration committee believes that this amendment is necessary to ensure that participants are
provided with upper quartile reward opportunity for upper quartile performance to ensure that the performance targets are sufficiently
stretching and are in line with the companys business strategy it is also proposed that the performance condition attaching to new ltip
awards be amended 
• currently the performance condition attaching to ltip awards is based on the total shareholder return tsr when compared to the ftse
250 excluding investment companies and earnings per share although tsr is an important measure of shareholder value the
remuneration committee also believes there should be a direct link between the efforts of the management team and the delivery of the
business strategy to achieve this link it is proposed that 50 per cent of the ltip award be based on the companys tsr performance
referred to as the “tsr element” and 50 per cent of the ltip award be based on the companys growth in earnings per share eps over
the performance period the “eps element”
• the tsr element will not vest if when compared to the group of comparator companies the companys tsr is less than median 25 per
cent of the tsr element will vest if when compared to the group of comparator companies the companys tsr is at median 100 per cent
of the tsr element will vest if when compared to the group of comparator companies the companys tsr is in the upper quartile the
tsr element will vest on a straight line basis if the companys tsr is between median and upper quartile vesting will also be subject to the
remuneration committee confirming that there has been a sustained improvement in the underlying financial performance of the
company over the performance period
as at 31 december 2005 the interests of the directors in conditional share awards made under the ltip were as follows audited information
movement in conditionally awarded shares
awards subsisting at awarded during year vested during year lapsed
1 january 2005 in year
no of date share no of date share no of date of value of
shares shares price at shares price at shares vesting shares at
awarded date of date of date of
award p award p vesting £
r j davies 105311 301002 30075 78467 14305 54800 105311 3305 574998
115283 6303 28300
105140 8304 37450
total 325734 78467 105311 298890
s j clayton 59933 301002 30075 45620 14305 54800 59933 3305 327234
65636 6303 28300
61682 8304 37450
total 187251 45620 59933 172938
s p lonsdale 58221 301002 30075 45620 14305 54800 58221 3305 317887
63781 6303 28300
60280 8304 37450
total182282 45620 58221 169681
d r martin 59933 301002 30075 54744 14305 54800 59933 3305 327234
65636 6303 28300
61682 8304 37450
total187251 54744 59933 182062
a m saxton 54796 301002 30075 nil  54796 3305 299186
retired 2 march 60071 6303 28300
2005 57477830437450 57477
total 172344 54796 57477 60071
balance at
31 dec 2005
or date of
leaving 34 arriva plc annual report and accounts 2005
directors’ remuneration report 
continued
• the eps element will not vest if the compound annual growth rate in eps over the performance period is less than compound annual
growth in the retail prices index rpi plus 4 per cent 10 per cent of the eps element will vest if the compound annual growth rate in eps
over the performance period is equal to the compound annual growth in rpi plus 4 per cent 100 per cent of the eps element will vest if
the compound annual growth rate in eps over the performance period is equal to the compound annual growth in rpi plus 13 per cent or
more the eps element will vest on a straight line basis for compound annual growth in earnings per share over the performance period
which is between i compound annual growth in rpi plus 4 per cent and ii compound annual growth in rpi plus 13 per cent
34 share options audited information
since the introduction of the ltip in 2000 the executive directors have not participated in any of the company’s share option schemes and it is not
envisaged that there will be any change to this policy in the future
as at 1 january 2005 mr r j davies had residual interests in the company’s share option schemes which had been awarded to him in 1998 and
were exercised during the year as follows
the exercise of the share options held by mr davies was subject to the achievement of performance targets which require the company’s
earnings per share over a period of three consecutive years prior to exercise to exceed the retail prices index by a minimum of 2 per cent per
annum the targets are set by the remuneration committee and may be varied from time to time 
no other director held any interest in any of the share option schemes other than the ltip during the course of the year
35 remuneration details for year ended 31 december 2005 audited information
emoluments
performance benefits in
related kind prior
fees salary bonus allowance
†
total year
££ £££ £
sir richard broadbent appointed 2 july 2004 120000    120000 60000
w g cooper retired 31 october 2004      92083
r j davies  423958 255000 35835 714793 703818
s j clayton  246833 130000 22969 399802 376178
s p lonsdale  245958 130000 21086 397044 371641
d r martin  288500 160000 24398 472898 378568
a m saxton retired 2 march 2005  35875  3794 39669 343928
m j allen 12016    12016 31500
s g batey 38083    38083 31500
n p buckles appointed 19 july 2005 15167    15167 
a v m palmer 34333    34333 31500
s g williams appointed 1 september 2005 11333    11333 
total 230932 1241124 675000 108082 2255138 2420716
a pension of £5000 2004 £5000 was paid to a former director
†
benefits in kind comprise a company carcar allowance fuelfuel allowance medical insurance and telephone costs
 as reported last year a payment of £434334 was made to mr saxton representing the company’s contractual obligations arising from the termination of his service contract on 
2 march 2005
options at 1105                                                                                           market value
number
exercised options as at date as at
date of exercise during the at of exercise date of
number grant price p year 311205 p grant p
8021 301298 37400 8021 nil 57850 37800
212834
†
301298 37400 i 100000 54775 37800
ii 112834 nil 57850
 executive share option scheme
†
share incentive scheme arriva plc annual report and accounts 2005  35
wwwarrivacouk
36 nonexecutive directors’ fees
the nonexecutive directors’ fees are currently limited by the articles of association to £400000 per annum in the aggregate and the articles
permit the directors to increase this cap annually in line with the index of wage inflation within the aggregate cap the annual fee for each non
executive director is determined by the board the nonexecutive directors taking no part in the deliberations with effect from 1 march 2005 the
fee payable to each of the nonexecutive directors excluding the chairman was increased by £4000 to £32500 per annum these changes
were made to ensure that the fees remained in line with fees paid by comparable companies responsibility for chairing a board committee or
occupying the role of senior independent director attracts a further annual fee of £3000 except for the audit committee chairmanship where
the additional annual fee is £7500 since march 2005 there have been no changes to the fees payable to the nonexecutive directors the fee
for the chairman has also remained unchanged
each of the nonexecutive directors is appointed for a fixed term not exceeding three years the appointments are renewable with the agreement
of both parties again for terms not exceeding three years 
4 directors’ share interests
the interests of the directors including their family interests in the share capital of the company at the beginning and at the end of the year are
shown below
1105 311205 20206
r j broadbent 17702 27246 27246
r j davies 335210 460521 460521
s j clayton 60000 70000 70000
s p lonsdale 231610 289831 289831
d r martin 384963 420238 420238
s g batey nil 3818 3818
n p buckles appointed 19705 na nil nil
a v m palmer nil nil nil
s g williams appointed 1905 na nil nil 36 arriva plc annual report and accounts 2005
directors’ remuneration report 
continued
5 pensions audited information
r j davies s j clayton s p lonsdale d r martin a m saxton
retired 
2305
scheme 43 1 2 4 1 4
normal retirement age 65 65 65 65 65 65 65
director’s contribution nil nil nil nil nil nil nil
increase in accrued pension during the 
year allowing for indexation £ pa 12786 16447 32954 1761
gross increase in accrued pension £ pa 14336 19466 35881 1983
accrued pension at 31122005 £ pa 71716 131304 156123 10200
accrued pension at 31122004 £ pa 57380 111838 120242 8217
value of net increase in accrual over period £ 123353 138116 350196 17804
transfer value of accrued pension at 31122004 £ 474084 792958 1107357 70120
transfer value of accrued pension at 31122005 £ 692279 1104476 1690955 103096
total change in value during period £ 218195 311518 583598 32976
company contribution to furbs andor 
personal pension during the year £ 209084    3600  5927
premium for additional life cover 
paid in the year £ 6566      976
1 arriva pension scheme  2 arriva passenger services pension plan  3 arriva london north and arriva london south pension scheme  4 furbs andor personal pension plan
since 1 january 2000 messrs clayton lonsdale and martin have subject to inland revenue limits been accruing benefits in their respective schemes
at 130th of basic annual salary for service after 31 december 1999 bonus ceased to be taken into account when computing pension benefits 
with effect from 6 april 2006 the basis on which pension benefits are taxed will change with the introduction of lifetime and annual allowances
the remuneration committee has reviewed the position and having taken advice from kpmg llp uk has established the following policy
• any change to the taxation of pensions benefits remains the responsibility of the individual concerned and the company should not incur
any additional cost as a result of the change
• all future executive director appointees to the board will not be eligible for a final salary based pension but will receive a cash contribution
equivalent to 25 of their base salary
6 service contracts
messrs clayton lonsdale and martin each have rolling service contracts which are subject to 12 months’ notice from the company and six
months’ notice from the director mr lonsdale’s contract is dated 5 september 1997 and the contracts for messrs clayton and martin are dated
19 november 2001 each of their contracts contains an explicit provision for compensation payment on termination except in the case of
misconduct with the severance payment being calculated as the sum of the following
i basic annual salary at the date of termination
ii the amount of bonus estimated to be payable to the director in the year notice is served 
iii the amount representing the value of 12 months’ benefit in kind as recorded in the audited accounts of the company for the financial year
immediately preceding the date of termination
additionally the company will secure a further 12 months’ service credit in respect of the directors’ pension scheme membership
should the director give notice to the company within the period of six months following a change of control of the company to terminate the
contract one half of the payments referred to above shall be payable by the company
mr davies will retire from the board on 19 april 2006 following the conclusion of the annual general meeting there are no compensation
payments that will be made to mr davies in this regard mr davies receiving salary and pro rata bonus up to the date of retirement arriva plc annual report and accounts 2005  37
wwwarrivacouk
7 external appointments
the board is generally happy for executive directors to accept one appointment outside the company before
accepting such appointments the director involved must receive the prior approval of the board in
considering such cases the board will always satisfy itself as far as is possible that such appointments will
not detract from the executive directors’ expected contribution to the company or create any conflict of
interest any fees earned by an executive director in such a capacity will be assigned to the company as in
the case of mr r j davies’ appointment as a nonexecutive director of barratt developments plc where the
annual fee of £34320 £33000 to 30 june 2005 is paid directly to the company on a quarterly basis
8 total shareholder return graph
in accordance with the provisions of schedule 7a to the companies act 1985 detailed below is a graph
charting the performance of the company’s total shareholder return share value growth plus reinvested
dividends over the past five years compared with that of
a the ftse 250 
b the ftse 350 transport sector
total return indices – arriva ftse 250 and ftse 350 industrial transportation
9 remuneration report approval
an ordinary resolution to consider and if thought fit approve this remuneration report will be proposed at
the annual general meeting to be held on 19 april 2006
for and on behalf of the board
a v m palmer
chairman remuneration committee
300
250
200
150
100
50
31122000 31122001 31122002 31122003 31122004 31122005
arriva return index ftse 250 return index ftse 350 industrial transportation return index 38 arriva plc annual report and accounts 2005
corporate governance 
arriva plc is listed on the london stock exchange and as such is required to comply with the listing rules 
of the uk listing authority and to make a statement on corporate governance this includes how the
principles set out in section 1 of the combined code have been applied and whether or not the company
has complied with its provisions
the directors of arriva plc consider that the company has substantially complied with the provisions of
section 1 of the combined code the requirement that at least half the board excluding the chairman
should comprise nonexecutive directors determined by the board to be independent code provision a32
was achieved in september by the appointment of two independent nonexecutive directors 
the board
the board is responsible for the strategic direction of the company and has a specific schedule of matters
reserved for its decision covering the approval of financial statements longterm objectives and commercial
strategy treasury policy health and safety policy major capital investment and all matters concerning the
maintenance and development of good corporate governance practice
the board is made up of the nonexecutive chairman four independent nonexecutive directors and four
executive directors further details of the directors including their biographies and committee memberships
are given on pages 26 to 27
the board met 12 times during 2005 including one meeting devoted to a strategy discussion at each
meeting the board receives reports from the chief executive and from executive directors as well as reports
from board committees in addition to matters related to the strategy finances and business of the
company the board considers reports on matters relevant to the transport industry and receives updates on
corporate governance regulatory and other compliance matters
the board has a balance of executive and nonexecutive directors with the nonexecutive directors
providing an independent voice and valuable skills and experience steve williams is the senior independent
director and his responsibilities include providing an additional channel of communication for shareholders
should they feel it necessary to express any concerns outside the normal methods of communication with
the company
the board has four committees – audit remuneration nomination and safety the audit committee met
four times during the year the remuneration committee six times and the nomination committee and the
safety committee each met four times a table showing attendance at board meetings and board
committee meetings is given on pages 40 and 41 a copy of the terms of reference of the board
committees is available on request or can be accessed by visiting the company’s website wwwarrivacouk
the roles of both chairman and chief executive are clearly divided and set out in the board’s corporate
governance manual the chairman is responsible for ensuring the smooth and effective operation of the
board including the flow of information to the board for board membership and succession and for
facilitating relationships between the company and investors the chief executive is responsible for running
the business and implementing the decisions of the board in particular the chief executive formulates and
keeps under review proposals for the strategic direction of the business ensures that appropriate
operational resources are available promotes the company to the investing community and potential
investors and accounts to the board for the financial performance of the company bob davies will retire as
chief executive at the conclusion of the annual general meeting on 19 april 2006 to be succeeded by
david martin currently group managing director – operations and deputy chief executive
one third of the directors are required to submit themselves for reelection each year and all directors will
have submitted themselves for reelection every three years newly appointed directors will be subject to
election by the shareholders at the first opportunity after their appointment a resolution to approve the
appointments of nick buckles and steve williams as directors of the company will be proposed at the
annual general meeting to be held on 19 april 2006
all directors have access to the advice and services of the company secretary who administers the board 
and board committee meetings regularly updates the board on matters of corporate governance and
ensures that relevant procedures and regulations are adhered to there is an established procedure for 
any of the directors both executive and nonexecutive to obtain independent professional advice at the
company’s expense 
an induction programme applies for all new appointees to the board which incorporates full briefing on
the arriva approach to corporate governance and a review of the business and board and corporate issues
the induction programme also includes site visits in the uk and mainland europe and onetoone meetings
with key senior managers existing directors also receive regular business updates and make site visits as
appropriate opportunities to further develop board skills and knowledge are also considered as part of the
board evaluation process arriva plc annual report and accounts 2005  39
wwwarrivacouk
board evaluation
the board undertakes an annual evaluation of its own performance the 2005 evaluation was an internal
process based on confidential questionnaires completed by each director and reviewed by the chairman
the primary focus of the 2005 evaluation was on the role of the board in providing strategic direction
sound governance and successful senior management succession as part of the 2005 evaluation process
steve williams consulting other directors of the board undertook an evaluation of the performance of 
sir richard broadbent in his role as chairman
audit committee
the audit committee comprises simon batey veronica palmer and steve williams all independent non
executive directors to assist it in performing its duties the committee may invite other members of the
board the head of internal audit any member of the company’s senior management team and any
representative of the company’s external auditors to attend its meetings however no invitee has any right of
attendance the committee met four times in 2005 it is the responsibility of the committee members to
ensure that they are regularly briefed and receive training on matters concerning financial reporting
developments and associated skills
the committee is chaired by simon batey a chartered accountant and group finance director of united
utilities plc
the committee’s terms of reference require it to monitor the integrity of all the company’s financial
statements and any other statements which may be issued relating to the company’s financial performance
or financial standing this review will include an assessment of financial reporting judgments applied 
it is the responsibility of the committee to review and report to the board on the company’s internal
controls and risk management systems including risk transfer and risk retention the committee reviews
reports by group internal audit and reports to the board on action being taken to address issues arising
from the reports it also monitors the effectiveness of both the internal and external audit functions and is
required to satisfy itself as to the continuing independence and objectivity of the external auditors
during 2005 the committee undertook a review of the objectivity resources and independence of the
auditors pricewaterhousecoopers llp pwc and has considered the appointment of the auditors for 2006
following this review the committee believes that pwc continues to deliver a satisfactory service and has
recommended to the board that pwc’s reappointment as auditors be proposed at the annual general
meeting the board has endorsed that recommendation
as part of its process for ensuring continued audit independence the audit committee reviews and
approves the level and nature of nonaudit work performed by the auditors for the year under review the
value of nonaudit work was £09 million against an audit fee of £07 million the committee also
approved policy documents relating to i nonaudit work performed by the auditors and ii the
employment of exemployees of the external auditors
also during 2005 the committee conducted an appraisal of the role of group internal audit and how
effectively that role is discharged the committee concluded that the group internal audit function was
performing well and represents a significant and effective unit in both the monitoring of the group’s
internal controls and the quality reliability and integrity of the group’s accounting records
remuneration committee
full details of the work of the committee appear in the directors’ remuneration report on pages 31 to 37
nomination committee
the nomination committee comprises the nonexecutive directors and is chaired by sir richard broadbent
it is responsible for keeping under review the structure size and operation of the board and its committees
and for forming an assessment and making appropriate recommendations regarding the resourcing of the
board it also monitors and reviews senior management succession planning and during the year a
comprehensive succession exercise covering senior management at and immediately below board level was
begun and is expected to be completed during 2006 in relation to new board appointments the
committee in consultation with the chief executive and relevant external advisors will consider and approve
the particular skill set personal attributes and characteristics that are necessary to fulfill the role review an
appropriate job description and be directly involved in the recruitment process it is also the responsibility of
the committee together with the chairman of the board to ensure the effective application of the board
evaluation procedure 40 arriva plc annual report and accounts 2005
corporate governance 
continued
the committee met four times in 2005 areas that the committee focused on included the succession to
bob davies as chief executive and the appointments of nick buckles and steve williams as nonexecutive
directors where the committee was assisted in its recruitment process by external recruitment consultants
spencer stuart
safety committee
the board recognises the fundamental importance of safety within the business and the safety committee
exists to ensure that the appropriate board level attention and overview is devoted to this subject
the safety committee is required to identify and address key issues that may impact on the company 
to review the key safety performance indicators to advise the board of directors on the adequacy and
effectiveness of the overall safety policy of the group and review and report on the company’s internal
safety management system the committee is chaired by nick buckles nonexecutive director and its
members are sir richard broadbent steve williams senior independent director and the group managing
director – corporate affairs steve clayton the group safety and environment manager sean forster
supports the committee in its work the committee met on four occasions during the year
in december 2005 the board approved a revised safety policy statement as developed by the safety
committee which reflects the arrangements in place for successful safety management across all arriva
businesses the safety policy statement can be found on the arriva website wwwarrivacouk
board and board committee attendance
board
possible actual
sir richard broadbent 12 12
r j davies 12 12
d r martin 12 11
s p lonsdale 12 12
s j clayton 12 12
a v m palmer 12 12
s g batey 12 12
n p buckles 6 6
s g williams 5 5
m j allen 6 6
a m saxton 1 1
audit
a v m palmer 4 4
s g batey 4 4
s g williams 1 0
m j allen 2 2
nomination
sir richard broadbent 4 4
a v m palmer 4 4
s g batey 4 4
n p buckles 2 2
s g williams 1 1
m j allen 2 2
remuneration
a v m palmer 6 6
s g batey 6 6
n p buckles 3 3
m j allen 2 2 arriva plc annual report and accounts 2005  41
wwwarrivacouk
safety
sir richard broadbent 4 4
s j clayton 4 4
n p buckles 1 1
s g williams 1 1
m j allen 2 2
whistleblowing
the group operates a ‘whistleblowing’ policy and procedure whereby employees can in confidence report
on matters where they feel a malpractice is taking place or if health and safety standards are being
compromised areas that are addressed by this procedure cover financial malpractice criminal activities
dangers to health and safety improper or unethical behaviour and risks to the environment 
the procedures allow for employees to raise their concerns with line management or if this is inappropriate
to raise them on a confidential basis a confidential telephone mailbox and confidential email facility are
provided to protect the identity of employees in these circumstances the complaint will be investigated in 
a confidential manner and after a decision is made as to what further steps should be taken feedback is
given to the person making the complaint an official written record is kept of each stage of the procedure
and a report of the outcome of all investigations is made to the board
the ‘whistleblowing’ policy and its operation is subject to periodic review by the audit committee the last
review was in february 2006
dialogue with shareholders
the company has an established programme of communication with shareholders and the corporate
communications department organises presentations for analysts and investors it is the board’s intention 
to ensure that these arrangements subject to any statutory or regulatory requirements continue and are
developed in a way designed to provide a helpful and constructive dialogue between the company and the
major investors
a procedure has been established for the nonexecutive directors to receive direct feedback from the
company’s stockbrokers of the investing community’s perception of the board’s performance and strategy
annual general meeting
the annual general meeting is an important opportunity for the board to communicate with shareholders
particularly private shareholders a presentation on the progress and performance of the business is made
prior to the formal business of the meeting and the chairmen of the audit remuneration nomination and
safety committees are available to answer questions
following each resolution the meeting will be informed of the number of proxy votes submitted in respect
of each resolution this information will also be published on the company’s website following the meeting
accountability and audit
companies are required to report to shareholders that they have conducted an annual review of the
effectiveness of the system of internal control the review required extends beyond financial controls to
encompass operational and compliance control and risk management
internal control
the directors are responsible for the group’s system of internal control while no system can provide
absolute guarantees and protection against material loss the systems are designed to give the directors
reasonable assurance that problems can be identified promptly and remedial action taken as appropriate
an ongoing process for identifying evaluating and managing the significant risks facing the group has been
in place throughout the year under review and continues to remain in place
the board has reviewed the effectiveness on an ongoing basis of the system of internal control for the
accounting period under review
the key features of the internal control system are
a organisation structure
the structure of the organisation is so designed to minimise as far as possible the complexity of the
reporting arrangements commensurate with the commercial demands made on the group the
structure focuses on the core businesses of the group and stringent reporting procedures are applied
to ensure that performance is closely monitored so that effective and prompt action can be taken if
the need arises certain of the group’s key functions including company secretarial legal taxation
internal audit treasury insurance and health and safety are undertaken centrally 42 arriva plc annual report and accounts 2005
corporate governance 
continued
b financial reporting
the group operates a comprehensive financial control system with each operating division’s
performance being closely monitored against both budget and prior period performance monthly
management accounts are prepared for consideration by the board as a whole
c group internal audit
the internal control systems are comprehensively supported by the group internal audit department
group internal audit is responsible for advising all levels of management and the board of directors
through the audit committee on the quality of the operational systems of control for all parts of the
group this review and appraisal function does not relieve line management of its responsibility for
effective control
group internal audit functions by conducting independent appraisals in a professional manner
leading to reports detailing findings and agreed actions group internal audit undertakes annual
financial reviews of the balance sheets of all of the group’s material trading subsidiaries and engages
in a cycle of operational and risk reviews both on scheduled and random bases the head of internal
audit reports directly to the audit committee
the group internal audit department is staffed by appropriately qualified and experienced auditors
d risk assessment and risk control
an essential element of good internal control is the continual process of risk assessment and the
implementation of appropriate controls designed to eliminate or mitigate the effects of the
crystallisation of identified major risks
the approach adopted by the board involves a process which is designed to encourage divisional
operational staff to critically examine their responsibilities and identify those risks which are of such a
nature that their crystallisation would have a material impact on their business in order for this
process to succeed it is essential that ‘ownership’ of risk awareness risk identification and risk control
is fully embraced by line management as an essential ingredient of its normal responsibilities
in implementing its risk assessment programme the board has devolved to the audit committee the
task of implementing and maintaining an appropriate risk assessment and control programme and
works closely with the head of internal audit in engaging in a formal review of the key business risks
to the group
in the development of this programme there are a number of fundamental issues that the board has
identified as being absolutely critical to the success and effectiveness of the risk management and
control programme and in formulating its approach has structured the programme around the key
areas of
• clear leadership from the board
• the need for risk management to be seen as part of everyday activity and to be embedded in
line management culture
• clear communication of the principles involved
• active support and involvement of the group internal audit function
• regular review of the process and continual assessment of the changing nature of the risks
presenting themselves to the business
as part of the risk management regime a disaster recovery plan has been developed and tested for the
group’s key locations and provides for recovery procedures for all the primary business functions 
going concern
the directors confirm that after having made appropriate enquiries they have a reasonable expectation that
the group and the company have adequate resources to continue in operational existence for the foreseeable
future accordingly the directors continue to adopt the going concern basis in the preparation of the
accounts this approach was endorsed by the audit committee at its meeting held on 23 february 2006 arriva plc annual report and accounts 2005  43
wwwarrivacouk
independent auditors’ report to the members of arriva plc
we have audited the group financial statements of arriva plc for the year ended 31 december 2005 which
comprise the group income statement the group balance sheet the group cash flow statement the
group statement of recognised income and expense and the related notes these group financial
statements have been prepared under the accounting policies set out therein
we have reported separately on the parent company financial statements of arriva plc for the year ended
31 december 2005 and on the information in the directors’ remuneration report that is described as
having been audited
respective responsibilities of directors and auditors 
the directors’ responsibilities for preparing the group financial statements in accordance with applicable law
and international financial reporting standards ifrss as adopted by the european union are set out in the
statement of directors’ responsibilities in addition the directors are responsible for preparing the annual
report and directors remuneration report
our responsibility is to audit the group financial statements in accordance with relevant legal and regulatory
requirements and international standards on auditing uk and ireland this report including the opinion
has been prepared for and only for the company’s members as a body in accordance with section 235 of
the companies act 1985 and for no other purpose we do not in giving this opinion accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing
we report to you our opinion as to whether the group financial statements give a true and fair view and
whether the group financial statements have been properly prepared in accordance with the companies
act 1985 and article 4 of the ias regulation we also report to you if in our opinion the directors’ report
is not consistent with the group financial statements if we have not received all the information and
explanations we require for our audit or if information specified by law regarding director’s remuneration
and other transactions is not disclosed
we review whether the corporate governance statement reflects the company’s compliance with the nine
provisions of the 2003 frc combined code specified for our review by the listing rules of the financial
services authority and we report if it does not we are not required to consider whether the board’s
statements on internal control cover all risks and controls or form an opinion on the effectiveness of the
group’s corporate governance procedures or its risk and control procedures
we read other information contained in the annual report and consider whether it is consistent with the
audited group financial statements the other information comprises only the highlights of the year the
chairman’s statement the group development across europe the chief executive’s review the financial
review the corporate responsibility review the directors’ report the unaudited part of the directors’
remuneration report the corporate governance statement the fiveyear financial summary and the
extract from the report on transition to ifrs we consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies with the group financial statements our
responsibilities do not extend to any other information
basis of audit opinion 
we conducted our audit in accordance with international standards on auditing uk and ireland issued by
the auditing practices board an audit includes examination on a test basis of evidence relevant to the
amounts and disclosures in the group financial statements it also includes an assessment of the significant
estimates and judgments made by the directors in the preparation of the group financial statements and of
whether the accounting policies are appropriate to the group’s circumstances consistently applied and
adequately disclosed 
we planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
group financial statements are free from material misstatement whether caused by fraud or other irregularity
or error in forming our opinion we also evaluated the overall adequacy of the presentation of information in
the group financial statements
opinion
in our opinion
• the group financial statements give a true and fair view in accordance with ifrss as adopted by the
european union of the state of the group’s affairs as at 31 december 2005 and of its profit and cash
flows for the year then ended
• the group financial statements have been properly prepared in accordance with the companies act
1985 and article 4 of the ias regulation
pricewaterhousecoopers llp
chartered accountants and registered auditors
newcastle upon tyne
13 march 2006 44 arriva plc annual report and accounts 2005
financial statements
group income statement
for the year ended 31 december 2005
2005 2004
notes £m £m
revenue 1 16268 17590
net operating expenses before exceptional items goodwill impairment and 
intangible asset amortisation 14994 16262
exceptional items 1 23 33
goodwill impairment and intangible asset amortisation 1 66 32
total net operating expenses 3a 15037 16327
group operating profit 1231 1263
finance income 34 54
finance costs 186 224
net finance costs 2 152 170
profit on ordinary activities before taxation 3 1079 1093
tax on profit on ordinary activities 5 216 260
profit for the year 863 833
attributable to
equity holders of the parent 859 832
minority interests 04 01
863 833
dividends per ordinary share 6 1984p 189p
basic earnings per share 7a 437p 426p
diluted earnings per share 7a 433p 421p
basic earnings per share before goodwill impairment
intangible asset amortisation and exceptional items 7b 450p 451p arriva plc annual report and accounts 2005  45
wwwarrivacouk
group balance sheet
at 31 december 2005
2005 2004
notes £m £m
noncurrent assets
goodwill 8 2775 2667
other intangible assets 9 408 456
property plant and equipment 10 10928 9626
investments 11 79 62
derivative financial instruments 19 150 
14340 12811
current assets
inventories 12 278 262
trade and other receivables 13 2094 1674
cash and cash equivalents 14 941 817
derivative financial instruments 19 75 
3388 2753
total assets 17728 15564
current liabilities
trade and other payables 15 3886 3600
tax liabilities 16 298 306
obligations under finance leases 17 182 152
bank overdrafts and loans 17 1454 1313
5820 5371
noncurrent liabilities
bank loans 17 2038 826
other loans 17 933 1557
retirement benefit obligations 20 2074 1934
deferred tax liabilities 21 443 379
obligations under finance leases 17 693 469
other noncurrent liabilities 18 690 730
6871 5895
total liabilities 12691 11266
net assets 5037 4298
equity
share capital 22 98 98
share premium account 25 191 153
other reserves 24 750 609
retained earnings 25 3835 3416
total shareholders’ equity 25 4874 4276
minority interest in equity 25 163 22
total equity 5037 4298
r j davies
directors
s p lonsdale
approved by the board on 1 march 2006 46 arriva plc annual report and accounts 2005
financial statements
continued
group cash flow statement
for the year ended 31 december 2005
2005 2004
notes £m £m
cash flows from operating activities
cash generated from operations 26b 2079 2546
interest and finance charges paid 152 170
tax paid 258 155
net cash generated from operating activities 1669 2221
cash flows from investing activities
acquisitions of businesses 27a 463 635
net cash assumed on acquisitions 27a 73 119
disposal of businesses 27d 120 
investment in joint venture  206
cash assumed on joint venture  105
purchase of shortterm rental vehicles 651 732
purchase of other noncurrent assets 1874 1134
disposal of shortterm rental vehicles 398 433
disposal of other noncurrent assets 168 178
net cash used in investing activities 2229 1872
cash flows from financing activities
proceeds from issuing ordinary share capital 38 37
purchase of own shares  44
decreaseincrease in loans due within one year 18 500
increasedecrease in loans due after one year 614 12
increasedecrease in finance lease obligations 263 485
dividends paid to the company’s shareholders 377 356
net cash generatedused in financing activities 520 360
net decrease in cash cash equivalents and overdrafts 40 11
cash cash equivalents and overdrafts at the beginning of the year 766 770
exchange lossesgains on cash cash equivalents and overdrafts 10 07
cash cash equivalents and overdrafts at the end of the year 26c 716 766 arriva plc annual report and accounts 2005  47
wwwarrivacouk
group statement of recognised income and expense
for the year ended 31 december 2005
2005 2004
£m £m
net foreign exchange adjustments offset in reserves net of tax 19 18
cash flow hedges net of tax 92 
actuarial lossesgains on defined benefit schemes net of tax 45 121
net income recognised directly in equity 28 139
profit for the year 863 833
total recognised income and expense for the year 891 972
adoption of ias39 net of tax 37 
total recognised income and expense 928 972
attributable to
equity holders of the parent 923 971
minority interests 05 01
928 972 48 arriva plc annual report and accounts 2005
accounting policies
basis of preparation
as an eu listed company arriva plc is required to prepare its group accounts using international financial
reporting standards ifrs as adopted by the european union with effect from 2005 these financial
statements are the first full year statements to be prepared in accordance with ifrs the disclosures required
by ifrs1 ‘firsttime adoption of international financial reporting standards’ are set out below comparatives
for 2004 are restated to ifrs where applicable
the financial statements are prepared on the historical cost basis of accounting other than for certain items
of property plant and equipment that have been stated at deemed cost under the transitional rules of ifrs
and sharebased payment charges and derivative financial instruments which are measured at fair value
the principal ifrs accounting policies of the group are set out below
firsttime adoption of ifrs
in accordance with the requirements of ifrs1 ‘firsttime adoption of international financial reporting
standards’ the group is subject to a number of voluntary and mandatory exemptions from full restatement
of comparatives to the requirements of ifrs which have been applied as follows 
• ias32 ‘financial instruments disclosure and presentation’ and ias39 ‘financial instruments 
recognition and measurement’ were adopted with effect from 1 january 2005
• the group has elected to use fair value as deemed cost for uk land and buildings at the date of
transition 1 january 2004
• the group has not applied ifrs3 ‘business combinations’ retrospectively to business combinations that
occurred before the transition date
• the group has set cumulative translation differences to zero at the transition date for all subsidiaries
from the date of transition onwards foreign exchange differences on the retranslation of foreign
subsidiaries are recognised in a separate reserve within equity
• ifrs2 ‘sharebased payment’ has been applied to all grants of equity instruments after 7 november
2002 that had not vested at 1 january 2005 
the transitional information required to be disclosed by ifrs1 is included on pages 77 to 79 of the annual
report and accounts
basis of consolidation
the consolidated financial statements incorporate the financial statements of arriva plc and its subsidiaries
made up to 31 december each year subsidiaries are entities over which the group has the power to govern
the financial and operating policies generally accompanying a shareholding of more than one half of the
voting rights
subsidiaries are fully consolidated from the date on which control is transferred to the group and 
deconsolidated from the date control ceases 
the group’s interests in jointly controlled entities are accounted for by proportional consolidation combining
its share of the joint ventures’ profits assets liabilities and cash flows on a linebyline basis with those of
the group
associates are those entities over which the group can exercise significant influence but not control or joint
control associates are accounted for using the equity method
all business combinations are accounted for by applying the purchase method on acquisition the assets
liabilities and contingent liabilities are measured at their fair values at the date of acquisition the excess of
the cost of acquisition over the fair value of the group’s share of net assets acquired is recorded as goodwill
if the cost of acquisition is less than the fair value of the group’s share of the net assets of the subsidiary
acquired the difference is recognised directly in the income statement
intercompany transactions balances income and expenses are eliminated on consolidation
revenue recognition
revenue is measured at the fair value of the consideration received or receivable revenue is recognised
either on receipt of consideration or in the case of the provision of contractual services on a percentage of
completion basis the percentage of completion method is calculated either with respect to the proportion
of services provided compared with the total contracted service or to the proportion of costs incurred on a
contract compared with total expected costs proceeds from the disposal of property plant and equipment
including shortterm rental vehicles are excluded from revenue
exceptional items
exceptional items are those items which because of their nature and materiality merit separate presentation
to allow a better understanding of the group’s financial performance
segment reporting
the group’s primary risks and rates of return are determined by both the business and the geographical
areas in which it operates disclosure of results by business segment is used as the basis for primary
segment disclosures in line with the group’s internal management reporting structure arriva plc annual report and accounts 2005  49
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government grants
government grants relating to capital expenditure are included as deferred income and are credited to the
income statement over the expected useful economic life of the assets concerned revenuerelated grants
are credited to the income statement when the related expenditure is expensed
foreign currency translation
the trading results of overseas subsidiary undertakings are translated into sterling using average rates of
exchange foreign currency assets and liabilities are translated into sterling at the rates of exchange ruling at
the balance sheet date
differences on exchange arising from the retranslation of the opening investment in subsidiary undertakings
and the associated borrowings or hedging instruments where hedge accounting is permitted are taken to
the statement of recognised income and expense
property plant and equipment
land and buildings held for use in the delivery of passenger transport services and for administration
purposes are stated in the balance sheet at cost or deemed cost they are not subject to a valuation
depreciation is calculated using the straightline method to allocate the cost of each asset less its residual
value over its estimated useful life as follows
buildings 50 years
fixtures fittings plant and machinery 3–10 years
motor vehicles – shortterm rental vehicles up to 7 years
motor vehicles – buses and coaches up to 15 years
rail rolling stock up to 35 years
major refurbishment work on rail rolling stock is capitalised and depreciated over the interval to the
subsequent related major refurbishment interest costs incurred in financing the construction of certain
assets are capitalised where they are considered significant in relation to the asset being constructed and the
asset necessarily takes a substantial period of time to be prepared for its intended use rail rolling stock
undergoing postconstruction acceptance testing is not depreciated until the commencement of full
operational service
goodwill 
goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the
net identifiable assets liabilities and contingent liabilities at the date of acquisition goodwill on acquisition
of subsidiaries and joint ventures is disclosed separately in noncurrent assets goodwill on acquisition of
associates is included in investments
goodwill is not amortised but tested annually for impairment and carried at cost less accumulated
impairment losses gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold
goodwill previously eliminated against reserves has not been reinstated
intangible assets
intangible assets are recognised when acquired as part of business combinations where customerrelated
contractual cash flows and obligations exist and their fair value can be measured reliably intangible assets
purchased separately are measured at cost intangible assets that have a finite life are amortised annually
over their expected useful lives
impairment
at each balance sheet date the group reviews the carrying amount of its tangible and intangible assets to
determine whether there are any indicators of impairment if indicators of impairment exist then the
recoverable amount of an asset or cash generating unit is estimated 
where individual assets do not generate cash flows independent from other assets the group reviews the
carrying value and recoverable amount of a cash generating unit this is the smallest group of assets where
independent cash flows are produced 
if the recoverable amount of an asset or cash generating unit is less than its carrying amount the difference
is recognised in the income statement as an impairment loss 
inventories
inventories are stated at the lower of cost and net realisable value 50 arriva plc annual report and accounts 2005
accounting policies
continued
borrowings
borrowings are recognised initially at fair value net of transaction costs incurred borrowings are subsequently
stated at amortised cost any difference between initial carrying value and the redemption value is recognised
in the income statement over the period of the borrowings using the effective interest method 
borrowings are classified as current liabilities unless the group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date
taxation
current tax assets and liabilities are measured at the amount expected to be recovered from or paid to
taxation authorities
deferred tax is provided in full using the liability method on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements however
deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting nor taxable
profit or loss
deferred tax is determined using the tax rates and laws that have been enacted or substantially enacted by
the balance sheet date and which are expected to apply when the related deferred tax asset is realised or
the deferred tax liability is settled 
deferred tax assets are recognised to the extent that it is probable that future taxable profits will be
available against which the temporary differences can be utilised 
deferred tax is provided on temporary differences associated with investments in subsidiaries and associates
except where the timing of the reversal of the temporary difference is controlled by the group and it is
probable that the temporary difference will not reverse in the foreseeable future
pensions
the group operates retirement benefit schemes both defined benefit and defined contribution schemes
the group also participates in a number of multiemployer retirement benefit schemes and a number of
statemanaged retirement benefit schemes 
the liability recognised in the balance sheet in respect of the group’s defined benefit pension plans is the
present value of the defined benefit obligation at the balance sheet date less the fair value of the plan
assets together with adjustments for unrecognised past service costs the defined benefit obligation is
calculated using the projected unit credit method formal actuarial valuations are carried out on a triennial
basis with updated calculations being prepared at each balance sheet date the present value of the
defined benefit obligation is determined by discounting the estimated future cash outflows using interest
rates of highquality corporate bonds that are denominated in the currency in which the benefits will be
paid and that have terms to maturity approximating to the terms of the related pension liability
the cost of providing future benefits service cost is charged to the income statement in net operating
expenses the return on scheme assets and interest obligation on scheme liabilities comprise a pension
finance adjustment which is included in net operating expenses actuarial gains and losses arising from
experience adjustments and changes in actuarial assumptions are charged or credited to equity and shown
in the statement of recognised income and expense in the period they arise
contributions payable under defined contribution schemes and certain overseas defined benefit schemes
that are accounted for as defined contribution schemes under ias19 are charged to the income statement
as they arise
sharebased payments
the group issues equity settled sharebased payments to certain employees which are measured at fair
value at the date of grant the fair value is expensed on a straightline basis over the vesting period based
on the group’s estimate of shares that will eventually vest the impact of revising original estimates if any is
included in the income statement with a corresponding adjustment to equity
the proceeds received net of any directly attributable transaction costs are credited to share capital nominal
value and share premium when the options are exercised
provisions
provisions are recognised when the group has a present legal or constructive obligation as a result of past
events it is probable that an outflow of resources will be required to settle the obligation and the amount
can be reliably estimated  arriva plc annual report and accounts 2005  51
wwwarrivacouk
leases
leases of property plant and equipment where the group has substantially all the risks and rewards of
ownership are classified as finance leases finance leases are capitalised at the lease’s inception at the lower
of the fair value of the leased asset and the present value of the minimum lease payments each lease
payment is allocated between the liability and finance charges so as to achieve a constant rate on the
finance balance outstanding the corresponding rental obligations net of finance charges are included in
other liabilities the interest element of the finance cost is charged to the income statement over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each
period the property plant and equipment acquired under finance leases are depreciated over the shorter of
the asset’s useful life and the lease term 
leases where the lessor retains a significant portion of the risks and rewards of ownership are classified as
operating leases payments made under operating leases net of any incentives received from the lessor are
charged to the income statement on a straightline basis over the period of the lease
use of estimates
the preparation of financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting
period actual results could differ from those estimates 
cash and cash equivalents
cash comprises cash in hand and demand deposits cash equivalents are shortterm highly liquid
investments with a maturity of less than 90 days that are readily convertible to known amounts of cash and
subject to insignificant risk of changes in value 
derivative financial instruments
the group uses derivative financial instruments to reduce exposures to foreign currency exchange risk
interest rate risk and changes in fuel prices to acceptable levels all derivatives are initially recognised at fair
value and are subsequently remeasured to fair value at each reporting date
derivatives designated as hedging instruments are accounted for in line with the nature of the hedging
arrangement derivatives are intended to be highly effective in mitigating the above risks and hedge
accounting is adopted where the relevant test criteria are met changes in the fair value of any derivative
instruments that do not qualify for hedge accounting are recognised immediately in the income statement
foreign currency exchange risk
derivatives are entered into to hedge exposure to foreign currency exchange risk the group also uses
foreign currency debt to hedge foreign currency exposures both the derivatives and debt are designated as
hedges of net investments in overseas subsidiaries
interest rate and fuel price risk
derivative instruments are used to manage the group’s exposure to changes in cash flows arising from
movements in interest rates and fuel prices the derivatives are designated as cash flow hedges and hedge
accounting is used where it is demonstrable that the hedge relationship is highly effective
when a hedging instrument expires or is sold or when a hedge no longer meets the criteria for hedge
accounting any cumulative gain or loss existing in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in the income statement when a forecast transaction
is no longer expected to occur the cumulative gain or loss that was reported in equity is immediately
transferred to the income statement
dividend distribution
dividend distribution to the company’s shareholders is recognised as a liability in the group’s financial
statements in the period in which the dividends are approved by the company’s shareholders 52 arriva plc annual report and accounts 2005
notes to the accounts
1 segmental reporting
primary reporting format – business segments
year ended 31 december 2005
passenger services
mainland bus  vehicle
uk bus uk trains europe coach rental central group
£m £m £m £m £m £m £m
revenue 6975 2394 6212 131 556  16268
ebitda 1162 163 894 51 337 162 2445
depreciation 482 14 414 21 236 04 1171
operating profit 680 149 480 30 101 166 1274
net finance costs 152
profit on ordinary activities before taxation 1122
goodwill impairment and intangible asset amortisation 66
exceptional items
– profit on the disposal of properties 23
profit on ordinary activities before taxation 1079
segment assets 6682 548 8051 228 1298 20 16787
segment liabilities 3167 997 2793 86 198 150 7391
3515 449 5258 142 1100 170 9396
unallocated liabilities
– corporate borrowings 4359
total net assets 5037
other segment items
capital expenditure excluding acquisitions 784 40 1047 37 616 01 2525
goodwill impairment and intangible 
asset amortisation  08 58    66
profit on the disposal of properties 07  07  01 08 23
 before goodwill impairment intangible asset amortisation and exceptional items
a included above is £190 million of revenue and £20 million of operating profit before goodwill impairment intangible asset amortisation
and exceptional items relating to the acquisitions made by the mainland europe division during the year there is £72 million of revenue and
£04 million of operating profit relating to acquisitions made by the uk bus division
b operating profit in the above analysis represents operating profit of £1231 million as disclosed in the income statement plus goodwill
impairment and intangible asset amortisation of £66 million less exceptional items credited to operating profit of £23 million
c segment assets in the above analysis of £16787 million represents total assets as disclosed in the balance sheet of £17728 million less cash
of £941 million 
d segment liabilities in the above analysis of £7391 million represents total liabilities as disclosed in the balance sheet of £12691 million less
£5300 million of borrowings
e vehicle rental revenue includes £521 million in relation to rentals receivable under operating leases arriva plc annual report and accounts 2005  53
wwwarrivacouk
1 segmental reporting continued
primary reporting format – business segments
year ended 31 december 2004
passenger services
mainland bus  vehicle
uk bus uk trains europe coach rental central group
£m £m £m £m £m £m £m
revenue 6515 5090 5256 138 590 01 17590
ebitda 1085 338 663 56 377 131 2388
depreciation 449 19 312 24 251 05 1060
operating profit 636 319 351 32 126 136 1328
net finance costs 170
profit on ordinary activities before taxation 1158
goodwill impairment and intangible asset amortisation 32
exceptional items
– profit on the disposal of properties 10
– restructuring costs 43
profit on ordinary activities before taxation 1093
segment assets 5983 501 6648 227 1252 136 14747
segment liabilities 2759 1228 2196 93 201 472 6949
3224 727 4452 134 1051 336 7798
unallocated liabilities
– corporate borrowings 3500
total net assets 4298
other segment items
capital expenditure excluding acquisitions 612 24 478 35 715 02 1866
goodwill impairment and intangible 
asset amortisation  08 24    32
profit on the disposal of properties   09   01 10
restructuring costs   43    43
 before goodwill impairment intangible asset amortisation and exceptional items
a included above is £502 million of revenue and £40 million of operating profit before goodwill impairment intangible asset amortisation
and exceptional items relating to the acquisitions made by the mainland europe division during the year 
b operating profit in the above analysis represents operating profit of £1263 million as disclosed in the income statement plus goodwill
impairment and intangible asset amortisation of £32 million plus exceptional items charged to operating profit of £33 million
c segment assets in the above analysis of £14747 million represents total assets as disclosed in the balance sheet of £15564 million less cash
of £817 million 
d segment liabilities in the above analysis of £6949 million represents total liabilities as disclosed in the balance sheet of £11266 million less
£4317 million of borrowings
e vehicle rental revenue includes £551 million in relation to rentals receivable under operating leases 54 arriva plc annual report and accounts 2005
notes to the accounts
continued
1 segmental reporting continued
secondary reporting format – geographical segments
the group’s operations are located in the uk and mainland europe the uk is the home country of the parent
revenue segment assets capital expenditure
2005 2004 2005 2004 2005 2004
£m £m £m £m £m £m
uk 10056 12334 8736 8099 1478 1388
mainland europe 6212 5256 8051 6648 1047 478
16268 17590 16787 14747 2525 1866
2005 2004
£m £m
interest expense
– interest payable on bank and other borrowings repayable within five years 104 62 
– interest payable on bank and other borrowings repayable after five years 06 05 
finance lease charges 32 60 
hire purchase charges 44 57 
charge arising on early settlement of us private placement loan notes  40
interest payable and similar charges 186 224 
interest income
net interest receivable on other financing items 34 54
net finance costs 152 170
during the year the group has capitalised interest of £03 million 2004 £nil the rate used for capitalisation purposes was 25 per cent
2 net finance costs  arriva plc annual report and accounts 2005  55
wwwarrivacouk
3 profit on ordinary activities before taxation
2005 2004
a net operating expenses £m £m
operating costs 12875 14276
distribution costs 85 71
administrative expenses 2077 1980
15037 16327
2005 2004
b the following items have been included in arriving at operating profit £m £m
staff costs note 4 8253 8337 
depreciation of property plant and equipment 1171 1060 
amortisation of intangible assets 51 26 
impairment of goodwill 15 06 
profit on disposal of properties 23 10
operating lease rentals payable
– plant and machinery 1253 2087 
– property 151 249 
restructuring costs  43 
during the year the group including its overseas subsidiaries obtained the 
following services from the group’s auditors and network firms at costs as detailed below 2005 2004
£m £m
audit services – statutory audit 07 06
tax services 03 03
consultancy 04 
other services 02 01
16 10
included in the group’ s audit fees and expenses paid to the auditors is £01 million 2004 £01 million in respect of the parent company
4 employee information
2005 2004
a average number of employees by business number number
passenger services
– uk bus 17717 17512
– uk trains 1930 4488
– mainland europe 11994 10371
total passenger services 31641 32371
vehicle rental 622 661
bus  coach 50 54
central 91 100
total 32404 33186
2005 2004
b staff costs £m £m
wages and salaries 7067 7127
social security costs 789 741
pension costs 397 469
8253 8337 56 arriva plc annual report and accounts 2005
notes to the accounts
continued
5 taxation
2005 2004
analysis of charge in the year £m £m
current tax 216 238 
deferred tax  22 
taxation 216 260 
2005 2004
tax on items charged to equity £m £m
adoption of ias39 16 
current tax chargecredit on exchange movements offset in reserves 27 09
deferred tax charge on cross currency swaps 08 
deferred tax charge on cash flow hedges 40 
deferred tax creditcharge on actuarial lossesgains on defined benefit schemes 13 47
total tax on items charged to equity 78 38
the tax for the year is lower 2004 lower than the standard rate of corporation tax in the uk of 30 per cent 2004 30 per cent 
the differences are explained below
2005 2004
£m £m
profit on ordinary activities before tax 1079 1093 
profit on ordinary activities multiplied by the standard rate of corporation tax in the uk of 30 per cent 2004 30 per cent 324 328
effects of
– adjustments to tax in respect of prior years 103 63
– income not subject to tax 19 19
– expenses not deductible for tax purposes 21 22 
– utilisation of previously unrecognised tax losses 40 19
– tax losses arising where no deferred tax asset has been recognised 14 08 
– different tax rates of subsidiaries operating in other jurisdictions 30 18 
– other 11 15
total taxation 216 260  arriva plc annual report and accounts 2005  57
wwwarrivacouk
6 dividends
2005 2004
per share earnings shares per share earnings shares
a basic and diluted earnings per share p£m m p£m m
profit attributable to ordinary shareholders 859 832
weighted average number of shares 1965 1952
basic earnings per share 437 859 1965 426 832 1952
performancebased share option schemes
– additional shares for earnings contingency 26 41
– number of shares that would have been issued at fair value 08 16
diluted earnings per share 433 859 1983 421 832 1977
b basic earnings per share before goodwill impairment 2005 2004
intangible asset amortisation and exceptional items p p
basic earnings per share 437 426
earnings per share relating to
– goodwill impairment and intangible asset amortisation 25 13
exceptional items
– profit on the disposal of properties in continuing operations 12 08
– restructuring costs  20
basic earnings per share before goodwill impairment intangible asset amortisation and exceptional items 450 451
7 earnings per share
2005 2004
£m £m
final dividend paid for the year ended 31 december 2004 of 1407p 
2004 final dividend paid for the year ended 31 december 2003 of 134p per share 277 262 
interim dividend paid for the year ended 31 december 2005 of 507p 
2004 interim dividend paid for the year ended 31 december 2004 of 483p per share 100 94 
amounts recognised as distributions to equity holders in the year 377 356 
in addition the directors are proposing a final dividend in respect of the financial year ending 31 december 2005 of 1477p per share which will
absorb an estimated £291 million of shareholders’ funds it will be paid on 2 may 2006 to shareholders who are on the register of members on
31 march 2006 58 arriva plc annual report and accounts 2005
notes to the accounts
continued
8 goodwill
2005 2004
£m £m
cost
at 1 january 3169 2796
additions 209 356
hindsight adjustment 16 
disposals 68 
currency translation adjustments 53 17
at 31 december 3273 3169
impairment
at 1 january 502 495
impairment in the year 15 06
disposals 14 
currency translation adjustments 05 01
at 31 december 498 502
net book amount at 31 december 2775 2667
details of acquisitions and disposals in the year are shown in note 27 during the year goodwill was reviewed for impairment in accordance with
ias36 for the purposes of this impairment review goodwill has been valued on the basis of discounted future cash flows arising in each relevant
cash generating unit 
9 intangible assets
2005 2004
£m £m
cost
at 1 january 482 120
additions 19 352
hindsight adjustments 05 
currency translation adjustments 11 10
at 31 december 485 482
amortisation
at 1 january 26 
amortisation for the year 51 26
at 31 december 77 26
net book amount at 31 december 408 456
all amortisation charges in the year have been charged through net operating expenses intangible assets relate to identifiable assets purchased
as part of the groups business combinations and to the right to operate the arriva trains wales franchise intangible assets are amortised on a
straightline basis over their expected useful economic lives arriva plc annual report and accounts 2005  59
wwwarrivacouk
10 property plant and equipment
plant
company
vehicles railway shortterm
land  fixtures  buses  rolling rental
buildings fittings coaches stock vehicles total
as at 31 december 2005 £m £m £m £m £m £m
cost
at 1 january 2005 2431 1021 9406 988 1529 15375
acquisitions 227 67 589   883
additions 81 186 1324 283 651 2525
disposals 102 88 723  676 1589
currency translation adjustments 17 18 111 26  102
at 31 december 2005 2654 1204 10485 1245 1504 17092
accumulated depreciation
at 1 january 2005 316 618 4230 140 445 5749
acquisitions 26 43 225   294
charge for the year 42 111 718 47 253 1171
disposals 23 62 645  278 1008
currency translation adjustments 01 07 44 04  42
at 31 december 2005 360 717 4484 183 420 6164
net book amounts
at 31 december 2005 2294 487 6001 1062 1084 10928
the net book amount of assets held under hire purchase and finance lease contracts included in plant company vehicles buses and coaches is
£2958 million 2004 £3198 million the depreciation provided in the year in respect of these assets was £344 million 2004 £351 million
the gross cost of assets held for the purpose of letting under operating leases amounts to £1504 million 2004 £1529 million the
accumulated depreciation on these assets was £420 million 2003 £445 million
plant
company
vehicles railway shortterm
land  fixtures  buses  rolling rental
buildings fittings coaches stock vehicles total
as at 31 december 2004 £m £m £m £m £m £m
cost
at 1 january 2004 2266 966 8574  1488 13294
acquisitions 211 113 497 936 16 1773
additions 72 164 872 26 732 1866
disposals 131 225 575 02 707 1640
currency translation adjustments 13 03 38 28  82
at 31 december 2004 2431 1021 9406 988 1529 15375
accumulated depreciation
at 1 january 2004 295 655 3856  444 5250
acquisitions 26 59 226 126 06 443
charge for the year 39 102 638 12 269 1060
disposals 45 204 513 01 274 1037
currency translation adjustments 01 06 23 03  33
at 31 december 2004 316 618 4230 140 445 5749
net book amounts
at 31 december 2004 2115 403 5176 848 1084 9626 60 arriva plc annual report and accounts 2005
notes to the accounts
continued
11 investments
2005 2004
fixed asset investments all unquoted £m £m
cost
at 1 january 62 52
additions 58 09
disposals 43 
currency translation adjustments 02 01
at 31 december 79 62
12 inventories
2005 2004
£m £m
raw materials consumables and work in progress 209 198
finished goods and goods for resale 69 64
278 262
the group consumed £1649 million 2004 £1464 million of inventories during the year there was no material write down of inventories
during the current or prior year
13 trade and other receivables
2005 2004
£m £m
current assets
trade debtors 835 813
less provision for impairment of receivables 33 47
trade debtors – net 802 766
prepayments and accrued income 474 346
other debtors 818 522
instalment credit agreements  40
2094 1674
10 property plant and equipment continued
2005 2004
£m £m
net book amount of land and buildings comprises
– freehold 2264 2080
– long leasehold 12 18
– short leasehold 18 17
2294 2115 arriva plc annual report and accounts 2005  61
wwwarrivacouk
14 cash and cash equivalents
2005 2004
cash cash equivalents and overdrafts in the cashflow statement comprise £m £m
cash and cash equivalents 941 817
bank overdrafts note 17 225 51
716 766
15 trade and other payables
2005 2004
£m £m
current liabilities
trade payables 1021 650
payments received on account 16 15
other taxation and social security payable 299 288
other creditors 1024 876
accruals and deferred income 1526 1771
3886 3600
16 tax liabilities
2005 2004
£m £m
current tax liabilities 298 306
17 financial liabilities – borrowings
2005 2004
£m £m
current liabilities
– shortterm loans 1229 1262
– bank overdrafts 225 51
1454 1313
– finance leases 182 152
1636 1465
noncurrent liabilities
– syndicated loans 2038 826
– other loans 933 1557
– finance leases 693 469
3664 2852
2005 2004
£m £m
loan capital and other borrowings repayment statement
– within one year or on demand 1636 1465
– between one and two years 817 654
– between two and five years 2526 1910
– over five years 321 288
5300 4317
the total of the loans any part of which falls due for repayment after 5 years is £917 million 2004 £660 million £423 million 
2004 £560 million represents bank loans in the mainland europe division with varying repayment dates and interest rates £494 million
2004 £100 million represents fixed interest finance lease funding of the mainland europe bus fleet with varying repayment dates and interest
rates ranging between 41 per cent and 66 per cent
the us private placement of £1040 million was prepaid in december 2004 with early settlement costs incurred of £40 million 62 arriva plc annual report and accounts 2005
other other
finance financial 2005 finance financial 2004
debt leases liabilities total debt leases liabilities total
£m £m £m £m £m £m £m £m
in more than one year but 
not more than two years 314 340 163 817 367 115 172 654
in more than two years but 
not more than five years 2205 152 169 2526 1268 341 301 1910
in more than five years 120 201  321 275 13  288
2639 693 332 3664 1910 469 473 2852
maturity of financial liabilities
the maturity profile of the carrying amount of the group’s noncurrent liabilities at 31 december was as follows
notes to the accounts
continued
17 financial liabilities – borrowings continued
security and guarantees
borrowings amounting to £1515 million 2004 £2156 million principally relating to the bus fleet are secured by charges over the related assets
as part of the uk rail franchising arrangements the group has provided guarantees of £13 million 2004 £19 million the group has provided
£13 million 2004 £12 million of bonds in respect of its rail operations in denmark and the netherlands
at 31 december 2005 letters of credit amounting to the value of £29 million 2004 £29 million are provided by the group’s bankers
guaranteed by arriva plc in favour of the group’s insurers
syndicated loans are secured by debentures giving fixed and floating charges over the assets of certain subsidiaries of the group and by
guarantees given by arriva plc
2005 2004
the effective interest rates at the balance sheet dates were as follows  
bank overdraft 55 58
bank borrowings 33 37
finance lease 40 45
other financial liabilities 56 52
2005 2004
the carrying amount of the groups borrowings are denominated in the following currencies £m £m
sterling 1828 2009 
euro 2202 1935 
danish krone 974 104 
swedish krone 308 153 
currency swaps
– euro 1567 1815 
– danish krone 193 590
– sterling asset 1772 2289
5300 4317 
fair value of financial assets and financial liabilities
due to the shortterm nature of financial assets and financial liabilities or the floating rate nature of noncurrent financial liabilities the group
considers there to be no material difference between the fair value of financial assets and financial liabilities and their carrying amount in the
balance sheet arriva plc annual report and accounts 2005  63
wwwarrivacouk
2005 2004
£m £m
expiring within one year 199 943
expiring in more than two years 1071 2288
1270 3231
finance leases
the group typically enters into finance leases of no more than five years’ duration on an amortising basis given the shortterm nature of this
funding the group considers there to be no material difference between the fair value of finance leases and their carrying amount in the balance
sheet
finance lease obligations included in current liabilities amount to £182 million 2004 £152 million and in noncurrent liabilities amount to 
£693 million 2004 £469 million
borrowing facilities
the group has the following undrawn committed floating rate borrowing facilities available at 31 december in respect of which all conditions
precedent had been met at that date
18 other noncurrent liabilities
2005 2004
£m £m
accruals and deferred income 682 702
payments received on account 08 28
690 730
19 derivative financial instruments
financial instruments disclosures are set out below additional disclosures are set out in the accounting policies
2005
£m
noncurrent assets
interest rate swaps – cash flow hedge 07
fuel derivatives – cash flow hedge 142
cross currency swaps – net investment hedge 01
150
current assets
interest rate swaps – cash flow hedge 01
forward foreign currency contracts – cash flow hedge 01
fuel derivatives – cash flow hedge 50
cross currency swaps – net investment hedge 23
75
in accordance with ias39 ‘financial instruments recognition and measurement’ arriva plc has reviewed all contracts for embedded derivatives
that are required to be separately accounted for if they do not meet certain requirements set out in the standard all embedded derivatives were
found to be closely related to their host contracts and therefore no fair value exercise was required to be undertaken the group has taken the
exemption from applying ias39 to comparative information for the year ended 31 december 2004 64 arriva plc annual report and accounts 2005
the calculations used to assess the ias19 liabilities of the retirement benefit schemes are based on the most recent actuarial valuations updated
to 31 december 2005 by qualified independent actuaries the schemes assets are stated at their market value at 31 december 2005 the
principal actuarial assumptions at the balance sheet date are
2005 2004
 
discount rate 49 54
inflation rate 26 26
increases to deferred benefits during deferment 26 26
increases to pensions in payment 26 26
salary increases 38 38
weighted average expected longterm rate of return at 31 december after deduction for scheme expenses 70 73
weighted average life expectancy for mortality tables to determine benefit obligations 2005 2004
years years
member age 65 current life expectancy male 18 18 
female 21 21 
member age 45 life expectancy at age 65 male 19 19 
female 22 22 
notes to the accounts
continued
20 retirement benefit obligations
at 31 december 2005 the group operated a number of retirement benefit schemes both defined benefit and defined contribution which are
financed through separate trustee administered funds managed by independent professional fund managers on behalf of the trustees
contributions to the defined benefit funds are based upon actuarial advice following the most recent of a regular series of valuations of the
funds by their representative independent actuaries certain employees of arriva merseyside limited participate in the local government pension
scheme this is a defined benefit scheme funded by payments to the merseyside pension fund the latest formal actuarial valuation of the
merseyside pension fund was carried out as at 31 march 2004
certain employees of arriva trains wales limited and the former employees of arriva trains northern limited participate in funded defined
benefit sections which form part of the overall railways pension scheme rps  
total pension cost
the total pension cost for the group was £397 million 2004 £469 million the pension costs in respect of the group’s defined contribution 
schemes was £171 million 2004 £229 million including £56 million in respect of arriva trains northern limited
defined benefit plans
the directors believe that separate consideration should be given to the rps under ias19 as the group has no rights or obligations in respect of
sections of this scheme following the expiry of the franchises the amounts relating to the rail schemes are therefore shown separately and relate
to sections in respect of arriva trains wales limited only
19 derivative financial instruments  continued
net fair values of derivative financial instruments
the fair values of derivative financial instruments designated as cash flow hedges were
31 december 1 january
2005 2005
£m £m
contracts with positive fair values
– interest rate swaps 08 
– forward foreign currency contracts 01 01
– fuel derivatives 192 70
contracts with negative fair values
– interest rate swaps  02
the fair values of derivatives have been supplied externally by the respective counterparties to the derivative and by banks using market rates
prevailing at the balance sheet date arriva plc annual report and accounts 2005  65
wwwarrivacouk
group
schemes rps total total
2005 2005 2005 2004
the amounts recognised in the balance sheet are determined as follows £m £m £m £m
present value of funded obligations 7257 1306 8563 7298
fair value of plan assets 5315 1087 6402 5253
deficit 1942 219 2161 2045
deficit relating to scheme members  87 87 88
1942 132 2074 1957
rail franchise adjustment    23
deficit recognised in the balance sheet 1942 132 2074 1934
no rail franchise adjustment was required in 2005 2004 £23 million
2005 2004
the amounts recognised in the income statement are as follows £m £m
current service costs 203 208
interest cost 372 347
expected return on assets 349 315
226 240
2005 2004
movements in the present value of defined benefit obligations were as follows £m £m
at 1 january 7298 6808
member contributions paid 116 108
current service cost 203 208
interest cost 395 365
benefits paid 198 234
actuarial loss 749 43
at 31 december 8563 7298
movements in the fair value of plan assets were as follows
at 1 january 5253 4579
expected return on plan assets 373 338
total contributions 319 375
benefits paid 198 234
actuarial gains 655 195
at 31 december 6402 5253
before rps shared cost adjustment
the movements in the present value of defined benefit obligations and in the fair value of the plan assets do not take into account the shared
cost nature of the rps the income statement includes 60 per cent of the relevant rps amounts 66 arriva plc annual report and accounts 2005
notes to the accounts
continued
20 retirement benefit obligations continued
2005 2004
plan assets  
the weighted average asset allocations at the year end were as follows
equities 77 76
bonds 21 22
other 2 2
history of experience gains and losses 2005 2004
experience adjustments on scheme liabilities
– amounts £m 749 43
– percentage of scheme liabilities 87 06
experience adjustments on scheme assets
– amounts £m 655 195
– percentage of scheme assets 102 37
21 deferred tax
2005 2004
the movement on the deferred tax account is as shown below £m £m
at 1 january 379 177
adoption of ias39 16 
exchange differences 05 
acquisition of subsidiaries 18 133
income statement charge  22
tax charged to equity 35 47
at 31 december 443 379
deferred tax assets have not been recognised in respect of tax losses and other temporary differences giving rise to deferred tax assets because 
of the uncertainty regarding the recoverability of the resulting deferred tax assets deferred tax is not provided on the unremitted earnings of
overseas subsidiaries where the group has control over the timing of remittance and it is probable that remittance will not take place in the
foreseeable future deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to
settle the balances net arriva plc annual report and accounts 2005  67
wwwarrivacouk
accelerated 
tax depreciation revaluation intangibles derivatives other total
deferred tax liabilities £m £m £m £m £m £m
at 1 january 2004 668 183   06 857
exchange differences 01  01   
acquisition of subsidiaries   133   133
income statement charge 24 09 06  01 10
at 31 december 2004 693 174 126  07 1000
adoption of ias39    16  16
exchange differences 01  04   05
acquisition of subsidiaries   05  13 18
income statement charge 37 04 16  05 22
tax charged to equity    48  48
at 31 december 2005 729 170 111 64 25 1099
the deferred tax liability due after more than one year is £1061 million 2004 £981 million
the movements in deferred tax assets and liabilities during the period are shown below
retirement
benefit
obligations provisions other total
deferred tax assets £m £m £m £m
at 1 january 2004 619 60 01 680
income statement charge 06 13 07 12
tax charged to equity 47   47
at 31 december 2004 566 47 08 621
income statement credit 07 15  22
tax credited to equity 13   13
at 31 december 2005 586 62 08 656
the deferred tax asset due after more than one year is £576 million 2004 £547 million
authorised allotted – fully paid
2005 2004 2005 2004
ordinary shares of 5p each £14500000 £14500000 £9846118 £9787495
number of shares 290000000 290000000 196922357 195749903
reconciliation of movement in issued share capital
shares in issue 1 january 195749903 195035046
share allotments on exercise of options 1172454 1849857
shares purchased  1135000
shares in issue 31 december 196922357 195749903
consideration of £38 million was received in respect of share allotments in the year ended 31 december 2005 at 31 december 2005 there
were outstanding options to receive allotments of 2846467 ordinary shares under the executive share option scheme the share incentive
scheme and the long term incentive plan the price for the vested share for the long term incentive plan is nil the option exercise prices for
the other schemes range from 1750p to 5480p the options are exercisable up to march 2015 at 31 december 2005 the middle market
quotation of the ordinary share as derived from the stock exchange official list was 5824p the highest price attained by the ordinary share
in 2005 was 5984p and the lowest level during 2005 was 5050p
22 called up equity share capital 68 arriva plc annual report and accounts 2005
notes to the accounts
continued
23 sharebased payments
the group operates an executive share option scheme esos share incentive scheme sis and long term incentive plan ltip 
the esos is an inland revenue approved discretionary employee share option scheme with options granted to certain senior employees
excluding directors and exercisable between three and ten years from date of grant subject to performance criteria having been satisfied
the sis is an unapproved discretionary employee share option scheme with options granted to certain senior employees excluding directors and
exercisable between three and seven years from date of grant subject to performance criteria having been satisfied
the ltip is a discretionary share scheme providing incentives in the form of conditional awards of shares to selected senior employees including
executive directors there is a performance period of not less than three years before any of the shares may vest with vesting of any of the
shares subject to performance criteria having been satisfied further details of the ltip and performance criteria are given in the directors
remuneration report on pages 31 to 37
in accordance with the transitional provisions of ifrs the following disclosures relate only to awards made after 7 november 2002 that have not
vested before 1 january 2005
the fair value per option granted and the assumptions used in the calculation of fair values are as follows
executive share option scheme share incentive scheme long term incentive plan
march march march march march march march march
2003 2004 2003 2004 2005 2003 2004 2005
share price at grant date £283 £373 £283 £373 £548 £302 £375 £548
exercise price £283 £373 £283 £373 £548 £000 £000 £000
number of employees 12 46 44 54 95 34 4 4
shares under option 73000 206162 254500 197338 442500 1042308 345261 224451
vesting period years 3 3 3 3 3 3 3 3
expected volatility 32 24 32 24 24 32 24 24
option life years 10 10 7 7 7 3 3 3
expected life years 3 3 3 3 3 3 3 3
riskfree rate 4 45 4 45 4 4 45 4
expected dividends 
expressed as a dividend yield 58 51 58 51 36 58 51 36
expectations of 
meeting performance criteria 100 100 100 100 100 100 25 0
fair value per option £0470 £0504 £0470 £0504 £0835 £2537 £3215 £4919
the expected volatility is based on historical volatility over the last three years the expected life is the average expected period to exercise the
riskfree rate of return is the yield on zerocoupon uk government bonds of a term consistent with the assumed option life a reconciliation of
option movements for each of the above schemes over the year to 31 december follows arriva plc annual report and accounts 2005  69
wwwarrivacouk
2005 2004
weighted weighted
average average
number exercise number exercise
‘000 price £ ‘000 price £
outstanding at 1 january 279 349 73 283
granted  206 373
forfeited 38 328 
exercised 9 324 
outstanding at 31 december 232 354 279 349
exercisable at 31 december  
a executive share option scheme
2005 2004
weighted weighted
average average
number exercise number exercise
‘000 price £ ‘000 price £
outstanding at 1 january 442 322 255 283
granted 442 548 197 373
forfeited 51 320 
exercised 6 525 10 328
outstanding at 31 december 827 442 442 322
exercisable at 31 december  
b share incentive scheme
weighted weighted
range average average
of exercise exercise number of exercise number of
prices price shares expectedcontractual price shares expected contractual
£ £ ‘000 years years £ ‘000 years years
283–373 354 232 10 80 349 279 20 90
the weighted average share price during the period for options in the esos exercised over the year was 5734p the total charge for the year
relating to the scheme was £nil 2004 £nil 
weighted average
remaining life
weighted average
remaining life
2005 2004
weighted weighted
range average average
of exercise exercise number of exercise number of
prices price shares expectedcontractual price shares expected contractual
£ £ ‘000 years years £ ‘000 years years
283–548 442 827 15 55 322 442 13 53
the weighted average share price during the period for options exercised in the share incentive scheme over the year was 5734p 
2004 5216p the total charge for the year relating to the scheme was £02 million 2004 £01 million all of which related to equitysettled
sharebased payment transactions after deferred tax the total charge was £01 million 2004 £nil
weighted average
remaining life
weighted average
remaining life
2005 2004 70 arriva plc annual report and accounts 2005
notes to the accounts
continued
capital
redemption special hedge other
reserve reserve reserve reserves
£m £m £m £m
at 1 january 2004 17 591  608
purchase of own shares 01   01
at 31 december 2004 18 591  609
adoption of ias39 net of tax   49 49
cash flow hedges net of tax
– fair value gains in the year   262 262
– transfers to net profit   170 170
at 31 december 2005 18 591 141 750
24 other reserves
2005 2004
weighted weighted
average average
number exercise number exercise
‘000 price £ ‘000 price £
outstanding at 1 january 1204  917 
granted 224  346 
forfeited 90  
exercised  59 
outstanding at 31 december 1338  1204 
exercisable at 31 december  
c long term incentive plan
weighted weighted
range average average
of exercise exercise number of exercise number of
prices price shares expectedcontractual price shares expected contractual
£ £ ‘000 years years £ ‘000 years years
000 000 1338 080 080 000 1204 2 2
the weighted average share price for the ltip awards exercised in the year was 4527p the total charge for the year relating to the scheme was
£12 million 2004 £06 million all of which related to equitysettled sharebased payment transactions after deferred tax the total charge was
£08 million 2004 £04 million
weighted average
remaining life
weighted average
remaining life
2005 2004
23 sharebased payments continued arriva plc annual report and accounts 2005  71
wwwarrivacouk
26 notes to the group cash flow statement
2005 2004
a reconciliation of net debt £m £m
at 1 january 3384 2967
decrease in cash cash equivalents and overdrafts 40 11
decreaseincrease in loans due within one year 18 500
increasedecrease in loans due after one year 614 12
increasedecrease in finance lease obligations 263 485
loans acquired 120 461
finance leases acquired 08 11
currency translation adjustments 52 47
at 31 december 4359 3500
on 1 january 2005 net debt was adjusted by £116 million on adoption of ias39
2005 2004
b reconciliation of operating profit to net cash inflow from operating activities £m £m
operating profit 1231 1263
depreciation 1171 1060
goodwill impairment and intangible asset amortisation 66 32
ebitda after exceptional items 2468 2355
increasedecrease in stocks excluding acquisitions 08 39
increasedecrease in debtors excluding acquisitions 307 398
decrease in creditors excluding acquisitions 74 246
net cash inflow from operating activities 2079 2546
total
share share other retained shareholders minority total
capital premium reserves earnings equity interests equity
£m £m £m £m £m £m £m
at 1 january 2004 98 95 608 2838 3639  3639
arising on issue of shares  58   58  58
sharebased payments    07 07  07
purchase of own shares   01 44 43  43
t otal recognised income and expense for the year    971 971 01 972
dividends    356 356  356
minority share of acquisition      21 21
at 31 december 2004 98 153 609 3416 4276 22 4298
adoption of ias39 net of tax   49 12 37  37
arising on issue of shares  38   38  38
sharebased payments    14 14  14
t otal recognised income and expense for the year   92 794 886 05 891
dividends    377 377  377
minority share of acquisition   136 136
at 31 december 2005 98 191 750 3835 4874 163 5037
the cumulative goodwill amortised through retained earnings and written off directly to reserves in prior years is £2833 million 2004 £2818 million
25 statement of changes in shareholders’ equity 72 arriva plc annual report and accounts 2005
notes to the accounts
continued
26 notes to the group cash flow statement continued
a analysis of the net cash outflow in respect of current year acquisitions £m
cash consideration including expenses 463
cash acquired 73
net cash outflow in respect of acquisitions 390
provisional
acquired fair value
book value adjustments net cost
b current year acquisitions £m £m £m
intangible assets 34 15 19
property plant and equipment 536 55 591
investments 29 26 55
inventories 11 02 09
trade and other receivables 119 05 114
cash and cash equivalents 73  73
finance lease obligation 08  08
trade and other payables 269 03 272
loans 120  120
deferred tax 08 28 20
other noncurrent liabilities 44 07 51
369 21 390
minority interest 136
goodwill 165
satisfied by cash 419
in february 2005 the group acquired the german bus company sippel for £116 million with an additional maximum performancerelated
consideration of £21 million up to 2008 resulting in goodwill of £64 million during the year the group also increased its shareholding in rag
in germany from 898 per cent to 967 per cent for £38 million resulting in goodwill of £36 million 
in october 2005 the group acquired 80 per cent of sadem for £95 million resulting in goodwill of £32 million with an option to acquire the
remaining 20 per cent in 2008 for a maximum consideration of £32 million 
following the acquisition of a 49 per cent interest in the italian bus operator societa autoservizi fvg spa in may 2004 the group has
increased its shareholding by 11 per cent to 60 per cent in december 2005 for £43 million resulting in goodwill of £04 million in addition in
february 2005 the group increased its shareholding in the italian bus operator saia from 51 per cent to 88 per cent for £52 million resulting in
goodwill of £30 million and also paid additional consideration relating to the sab group in northern italy of £43 million originally acquired in
july 2002 resulting in goodwill of £43 million 
in addition smaller acquisitions were made in the year in mainland europe the total cost of which was £07 million resulting in goodwill of £02 million 
smaller acquisitions were made in the uk within the bus division the total cost of these acquisitions was £69 million resulting in total goodwill
of £14 million 
the fair value adjustments in the table above relate mainly to the alignment to group accounting policies the fair value adjustments are
provisional depending on the final determination of the value of the related assets and liabilities
27 acquisitions and disposals
acquisitions
1 january excluding exchange 31 december
2005 cash flow cash  ods differences 2005
c analysis of net debt £m £m £m £m £m
cash cash equivalents and overdrafts 766 40  10 716
loans due within one year 1146 18 120 19 1229
loans due after one year 2383 614  26 2971
finance leases 621 263 08 17 875
3384 899 128 52 4359 arriva plc annual report and accounts 2005  73
wwwarrivacouk
c prior year acquisitions
the total cost in the year relating to acquisitions from prior years was £44 million including the additional consideration of £43 million relating
to the sab group as noted above in addition hindsight fair value adjustments were made in the year resulting from the final determination of
the assets and liabilities as follows
£m
hindsight period adjustments
property plant and equipment 02
intangible assets 05
investments 03
trade and other receivables 05
deferred tax 02
other noncurrent liabilities 19
decrease in fair values 16
additional consideration paid 44
60
goodwill based on provisional values 356
goodwill based on final fair values 416
d current year disposals
in june 2005 the group sold part of its spanish operation in galicia transportes finnisterre for a consideration of £77 million and in december
2005 the 50 per cent shareholding in the italian bus operator autostradale was sold for £43 million the assets disposed of were
£m
goodwill 54
property plant and equipment 15
investments 43
trade and other receivables 04
116
directly attributable costs of disposal 04
profit on disposal 
satisfied by cash 120 74 arriva plc annual report and accounts 2005
notes to the accounts
continued
28 group undertakings
detailed below is a list of those subsidiaries which in the opinion of the directors principally affect the amount of the profit or the amount of the
assets of the group the group percentage of equity capital is 100 per cent and the country of registration is england and wales in each case
except where indicated all subsidiaries operate within england and wales except where indicated
passenger transport
arriva croydon  north surrey limited
arriva cymru limited
arriva derby limited
arriva durham county limited
arriva east herts  essex limited
arriva fox county limited
arriva international trains leasing limited
arriva kent  sussex limited
arriva kent thameside limited
arriva london north limited
arriva london north east limited
arriva london south limited 
arriva manchester limited
arriva merseyside limited
arriva midlands north limited
arriva noroeste sl
2
arriva north east limited
arriva northumbria limited
arriva north west limited
aps leasing limited
arriva personenvervoer nederland bv
3
arriva portugal transportes lda
6
arriva scotland west limited
4
arriva skandinavien as
1
arriva southern counties limited
arriva sverige ab
5
arriva tees  district limited
arriva teesside limited
arriva the shires limited
arriva trains limited
arriva trains walestrenau arriva cymru limited
arriva trains northern limited
arriva yorkshire limited
arriva yorkshire west limited
autobus sippel gmbh
8
london pride sightseeing limited
prignitzer eisenbahn gmbh
8
regentalbahn ag
11
sab autoservizi srl
7
società autoservizi fvg spa
9
sadem spa
10
stevensons of uttoxeter limited
the original london sightseeing tour limited
transportes sul do tejo sa
6
wulff bus as
1
rental and distribution of buses and coaches
arriva bus and coach rental 1 limited
arriva bus and coach rental 2 limited
arriva bus and coach rental 3 limited
arriva bus and coach rental 4 limited
arriva bus and coach limited
investment
arriva findiv limited
arriva insurance gibraltar limited
12

arriva international limited
arriva motor holdings limited
arriva passenger services limited
british bus group limited
mtl services limited
distribution repair service and rental of motor vehicles
arriva vehicle rental limited
property
british bus properties limited
except where marked by  shares are held by a subsidiary company
1
registered and operates in denmark
2
registered and operates in spain
3
registered and operates in the netherlands
4
registered and operates in scotland
5
registered and operates in sweden
6
registered and operates in portugal
7
registered and operates in italy
8
registered and operates in germany
9
registered and operates in italy 60 owned
10
registered and operates in italy 80 owned
11
registered and operates in germany 967 owned
12 
registered and operates in gibraltar arriva plc annual report and accounts 2005  75
wwwarrivacouk
2005 2004
land  land 
buildings other total buildings other total
£m £m £m £m £m £m
within one year 03 108 111 02 140 142
later than one year and less than five years 21 74 95 25 112 137
after five years 165 15278 15443 182 16478 16660
189 15460 15649 209 16730 16939
29 commitments
capital amounts contracted for but not provided amount to £255 million 2004 £232 million for the group at 31 december 2005 the group
had total commitments under noncancellable operating leases including access charges to the rail infrastructure and leases for rail rolling stock
expiring as follows
30 post balance sheet events
on 3 february 2006 the group completed the disposal of arriva vehicle rental limited avr for a total consideration of £1293 million
comprising £539 million for the equity in the business and £754 million in reduced debt £42 million of the consideration is deferred to june
2006 the transaction represents a £23 million surplus over the net assets before any adjustments arising from the completion accounts process
and selling expenses following the disposal on a proforma basis the net debt at the year end would have been reduced to £3066 million in
accordance with ifrs5 noncurrent assets held for sale and discontinued operations avr has not been treated as a discontinued operation for
the year ended 31 december 2005 and will be classified as such for the year ending 31 december 2006 76 arriva plc annual report and accounts 2005
fiveyear financial summary
2001 2002 2003 2004 2005
assets employed £m £m £m £m £m
goodwill 1520 1983 2262 2667 2775
other intangible assets    456 408
property plant and equipment 6913 7367 7615 9626 10928
other net liabilities 303 369 646 3817 3410
quoted investments 32    
unquoted investments  57 52 62 79
8162 9038 9283 8994 10780
financed by
share capital 103 100 98 98 98
reserves 4129 4546 4619 4178 4776
minority interests  62  22 163
bank overdrafts 256 434 137 51 225
syndicated loans    826 2038
other loans 1964 2040 1986 1557 933
shortterm loans 501 626 660 1262 1229
obligations under finance leases 596 660 1091 621 875
deferred liabilities 613 694 692 379 443
8162 9038 9283 8994 10780
trading
revenue 19984 20844 17511 17590 16268
profit before taxation 760 806 838 1093 1079
taxation 277 16 260 260 216
profit after taxation 483 790 578 833 863
statistics
funds attributable to shareholders 4232 4646 4717 4276 4874
equity shareholders’ funds per ordinary share 2060p 2327p 2419p 2184p 2475p
basic earnings per share 231p 380p 287p 426p 437p
dividends per ordinary share 164p 172p 180p 1890p 1984p
 the financial information for 2001 2002 and 2003 has been prepared under uk generally accepted accounting practice details of the 
nature of the adjustments required for international financial reporting standards are included in the report on transition to international
financial reporting standards extracts of which follow this fiveyear financial summary arriva plc annual report and accounts 2005  77
wwwarrivacouk
summary
the main impacts of ifrs on the group’s reported results for the year ended 31 december 2004 are shown
below
• an increase in profit before tax for the year ended 31 december 2004 of £109 million principally the
result of acquired goodwill no longer being amortised
• basic earnings per share for the same period increases from 362 pence to 426 pence principally the
result of not amortising goodwill earnings per share excluding goodwill impairment intangible asset
amortisation and exceptional items increases marginally from 449 pence to 451 pence
• net assets at 1 january 2004 decreased by £1078 million mainly arising from
– recognition of obligations in respect of defined benefit pension schemes decrease £1748 million
and a related intangible asset increase £120 million
– recognition of fair value of uk land and buildings as deemed cost increase £246 million
– elimination from liabilities of 2003 final dividend increase £261 million
• net debt decreases by £79 million at 30 june 2004 and by £34 million at 31 december 2004 due to
the proportional consolidation of joint venture cash
impact of key changes
employee benefits defined benefit pension schemes ias19
the group has previously accounted for pensions under uk gaap using ssap24 in addition the group
has previously made disclosures in its notes to the accounts required by the transitional rules of frs17 
the group will not be adopting frs17 for measurement purposes and has moved directly from ssap24 to
ias19 for the year ending 31 december 2005 and restated comparatives for 2004 the pension charge for
the year ended 31 december 2004 was £01 million lower under ias19 than ssap24
group defined benefit schemes
ias19 requires the recognition on the balance sheet of the assets and obligations of the group’s defined
benefit schemes in accordance with its own requirements and the derecognition of balances relating to
ssap24 this represents a significant change in balance sheet treatment and at 1 january 2004 results in 
a reduction in net assets of £1628 million net of deferred tax
subsequent to the initial recognition above the pension deficit will be calculated at each year end the
profit and loss account will be charged with the estimated cost of providing current service benefits
together with a pension finance charge or credit representing the difference between the expected return
on the schemes’ assets and the interest charged on the schemes’ liabilities both the service cost and
pension finance chargecredit will be reported as part of net operating expenses movements in the pension
deficit arising from actuarial gains and losses and changes to actuarial assumptions will be charged or
credited in the statement of recognised income and expense in the period in which they arise
railways pension scheme
most employees in our uk trains business are members of certain sections of the railways pension scheme
the agreement under which the group operates the arriva trains wales franchise states that all pension
obligations to the scheme will cease on expiry of the franchise and therefore the obligations recognised on
the balance sheet under ias19 should only be those arising during the franchise term the amended
obligation will be made by way of a ‘franchise adjustment’ to the pension obligation
the group’s current franchise commenced operation in december 2003 at the time the anticipated
contribution levels and investment returns were sufficient to reduce the ias19 pension deficit to £nil by the
end of the franchise accordingly there is no franchise adjustment made on transition at 1 january 2004
and the full ias19 liability of £120 million is reported in the balance sheet also on transition an associated
intangible asset has been recognised of the same amount this is considered further under the heading
‘intangible assets’ below
at 31 december 2004 the full ias19 liability is calculated as £131 million the franchise adjustment which
represents the present value of the ias19 liability at the end of the current franchise is £23 million resulting
in a reported pension obligation of £108 million
uk properties revaluation ifrs1
the group has elected to use the fair value of the uk land and buildings at 1 january 2004 as deemed cost
this has resulted in an increase in net assets at transition of £246 million net of deferred tax and an
increase in depreciation for the year ended 31 december 2004 of £04 million 
no adjustment has been made to the carrying value of nonuk land and buildings
dividends proposed ias10
ias10 ‘events after the balance sheet date’ does not permit the recognition of a liability for dividends until
they have been approved on this basis dividends approved after the year end cannot be recognised as a
liability in those year end accounts
the final dividend declared for the year ended 31 december 2003 was approved in april 2004 and
therefore requires reversing in the transitional balance sheet at 1 january 2004 net assets are increased on
transition by £261 million and at 31 december 2004 by a further £14 million
extracts from the report on transition to ifrs
press release dated 8 september 2005 78 arriva plc annual report and accounts 2005
business combinations ifrs3
on transition the group has taken the option under the transitional arrangements not to apply ifrs3
‘business combinations’ retrospectively to business combinations that occurred prior to the transition date
accordingly except for the adjustment required to negative goodwill noted below the goodwill carried in
the balance sheet under uk gaap at 31 december 2003 has become the opening balance of goodwill
under ifrs at 1 january 2004
ifrs3 does not permit the annual amortisation of goodwill but does require an annual impairment review
of carrying values impairment reviews have been conducted on the carrying value of goodwill arising on
business combinations at the transition date and 31 december 2004 goodwill amortisation charged to the
income statement in 2004 of £153 million is reversed under ifrs
negative goodwill arose on an acquisition prior to the transition date the book value of the negative
goodwill at 31 december 2003 was £39 million and has been fully released in the transitional balance
sheet at 1 january 2004
intangible assets ifrs3 ias38 ifrs1
for business combinations made after the transition date the group has applied the criteria set out in ias38
‘intangible assets’ in identifying and measuring the value of intangible assets customer contracts to provide
bus and rail services have been identified on the 2004 acquisitions of saf peg and regentalbahn the 
total value of intangible assets purchased on these business combinations was £348 million and is being
amortised over the lives of the contracts to which they relate resulting in a charge in 2004 under ifrs of
£18 million to the extent of the identification of these intangible assets goodwill previously disclosed 
on the acquisitions has been adjusted downwards accordingly deferred tax has been provided on the
intangible assets arising from the business combinations resulting in additional goodwill reported of 
£128 million this additional goodwill was reduced when the annual impairment test was applied to it
together with an associated release from the deferred tax provision as the contracts unwound in the year
ended 31 december 2004 the impairment charged to the income statement was £06 million
as noted earlier the group has recognised a pension deficit in respect of the railways pension scheme of
£120 million at 1 january 2004 a detailed consultation process has taken place with our peer group in the
uk rail industry as to how to recognise such a deficit whilst also reflecting the position where there is no
obligation to fund pensions beyond the expiry of the franchise the outcome is the recognition of an
intangible asset on transition of £120 million reflecting the right to operate the arriva trains wales
franchise the group has followed the initial recognition criteria of ias38 which requires the retrospective
assessment of the value of the intangible asset as at the date it was created the intangible asset is being
amortised over the life of the arriva trains franchise resulting in a charge of £08 million in the year ended
31 december 2004
sharebased payments ifrs2
ifrs2 ‘sharebased payments’ requires the group to charge its income statement with the fair value of
equity settled sharebased payments in accordance with the transitional provisions ifrs2 has been applied
to all grants of equity instruments after 7 november 2002 that had not vested at 1 january 2005 the
group has used the black scholes model to measure the fair value of options granted profit before tax for
the year ended 31 december 2004 is reduced by £02 million
joint ventures ias31
under ias31 ‘interests in joint ventures’ proportional consolidation is the preferred basis for representing
interests with equity accounting permitted as an alternative
the group has used proportional consolidation to account for joint ventures this has led to the restatement
of 2004 comparatives for saf and certain other smaller joint venture arrangements whilst there is no impact
on net assets or profit before tax the inclusion of balance sheet items on a line by line basis has reduced net
debt by £34 million at 31 december 2004 principally representing the cash balances held in saf 
proceeds from the disposal of fixed assets ias16
under uk gaap  the reported turnover for the vehicle rental and bus and coach distribution businesses
included proceeds from the disposals of rental fleet held in fixed assets ias16 ‘property plant and
equipment’ does not permit the recognition of revenue on disposal of noncurrent assets accordingly
reported revenue for the year ended 31 december 2004 is reduced by £520 million
financial instruments ias32 ias39
the group uses various derivative financial instruments to hedge its exposures to foreign exchange
translation risk interest rate exposure and fuel prices
the group has opted to take advantage of the exemption in ifrs1 not to prepare comparative information
under ias32 and ias39 the date of transition for ias32 and ias39 is therefore 1 january 2005 with net
assets increasing by £37 million net of deferred tax reflecting the fair value of the derivatives at that date
extracts from the report on transition to ifrs 
press release dated 8 september 2005 – continued arriva plc annual report and accounts 2005  79
wwwarrivacouk
firsttime adoption ifrs1
in accordance with the requirements of ifrs1 ‘firsttime adoption of international financial reporting
standards’ the group is subject to a number of voluntary and mandatory exemptions from full restatement
to the requirements of ifrs which have been applied as follows 
• ias32 ‘financial instruments disclosure and presentation’ and ias39 ‘financial instruments 
recognition and measurement’ have been adopted with effect from 1 january 2005
• the group has elected to use fair value as deemed cost for uk land and buildings at the date of
transition
• the group has not applied ifrs3 ‘business combinations’ retrospectively to business combinations that
occurred before the transition date
• the group has set cumulative translation differences to zero at the transition date for all subsidiaries
from the date of transition onwards foreign exchange differences on the retranslation of foreign
subsidiaries are recognised in a separate reserve within equity
• ifrs2 ‘sharebased payment’ has been applied to all grants of equity instruments after 7 november
2002 that had not vested at 1 january 2005 
2004 2003
reconciliation of total equity £m £m
previously reported at 31 december 5106 4717
employee benefits 1513 1628
uk land and buildings revaluation 243 246
adjustment to dividends proposed 275 261
business combinations 177 39
sharebased payments 10 04
restated position at 31 december 4298 3639
financial instruments at 1 january 2005 37
restated position at 1 january 2005 4335
2004
reconciliation of reported profit for the year ended 31 december 2004 £m
profit on ordinary activities after taxation as previously reported 708
employee benefits 06
uk land and buildings revaluation 03
business combinations 135
sharebased payments 01
restated profit for the year under ifrs 833 80 arriva plc annual report and accounts 2005
company balance sheet at 31 december 2005
prepared using uk generally accepted accounting practice uk gaap
2004
2005 as restated
notes £m £m
fixed assets
tangible assets 2 81 84
investments 3 7269 7242
7350 7326
current assets
debtors 4 937 1053
cash at bank and in hand 985 193
1922 1246
creditors
amounts falling due within one year 6 189 245
net current assets 1733 1001
total assets less current liabilities 9083 8327
creditors
amounts falling due after more than one year 6 5427 4693
provisions for liabilities and charges 5  03
net pension liability 11 71 103
3585 3528
represented by
capital and reserves
calledup equity share capital 7 98 98
share premium account 9 191 153
capital redemption reserve 9 18 18
special reserve 9 591 591
profit and loss account 9 2687 2668
equity shareholders’ funds 10 3585 3528
r j davies
directors
s p lonsdale
approved by the board on 1 march 2006
parent company financial statements arriva plc annual report and accounts 2005  81
wwwarrivacouk
basis of preparation
the separate financial statements of the company are presented as required by the companies act 1985 they have been prepared in accordance
with applicable united kingdom generally accepted accounting practice the company prepares its financial statements on the historic cost basis
of accounting as modified by the revaluation of certain tangible fixed assets
changes in accounting policy
the company has adopted frs17 ‘retirement benefits’ frs20 ‘sharebased payments’ frs21 ‘events after the balance sheet date’ frs25 
‘financial instruments disclosure and presentation’ and frs26 ‘financial instruments measurement’ the adoption of each of these standards
represents a change in accounting policy and the comparative figures have been restated accordingly except where the exemption to restate
comparatives has been taken details of the effect of the prior year adjustments are given in note 9
tangible fixed assets
tangible fixed assets are stated at cost or valuation net of depreciation and any provision for impairment
depreciation is calculated using the straightline method to allocate the cost or valuation of each asset to its residual value over its estimated useful
life as follows
freehold properties 2 per annum on cost or valuation
plant company vehicles fixtures  fittings 3–10 years
investments
fixed asset investments in subsidiaries and associates are shown at cost less provision for impairment
impairment
at each balance sheet date the company reviews the carrying amount of its tangible assets to determine whether there are any indicators of
impairment if indicators of impairment exist then the recoverable amount of an asset is estimated 
if the recoverable amount of an asset is less than its carrying amount the difference is recognised in the profit and loss account as an impairment loss 
pensions
the company operates retirement benefit schemes both defined benefit and defined contribution schemes 
the liability recognised in the balance sheet in respect of the company’s defined benefit pension plans is the present value of the defined benefit
obligation at the balance sheet date less the fair value of the plan assets together with adjustments for unrecognised past service costs the
defined benefit obligation is calculated using the projected unit credit method formal actuarial valuations are carried out on a triennial basis
with updated calculations being prepared at each balance sheet date the present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of highquality corporate bonds that are denominated in the currency in
which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability
the cost of providing future benefits is charged to the profit and loss account as required the return on scheme assets and interest obligation on
scheme liabilities comprise a pension finance adjustment which is included in interest costs actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to reserves in the period they arise
contributions payable under defined contribution schemes are charged to the profit and loss account as they arise
sharebased payments
the company issues equity settled sharebased payments to certain employees which are measured at fair value at the date of grant the fair
value is expensed on a straightline basis over the vesting period based on the company’s estimate of shares that will eventually vest the impact
of revising original estimates if any is included in the profit and loss account with a corresponding adjustment to reserves
the proceeds received net of any directly attributable transaction costs are credited to share capital nominal value and share premium when the
options are exercised
dividend distribution
dividend distribution to the company’s shareholders is recognised as a liability in the company’s financial statements in the period in which the
dividends are approved by the company’s shareholders
deferred taxation
the company accounting policy is to provide for deferred tax on all timing differences except those arising on the revaluation of fixed assets for
which there is no binding agreement to sell or on the undistributed profits of overseas subsidiaries deferred tax is calculated at the rates at
which it is estimated the tax will arise the tax rates are those expected to arise based on tax rates and laws that have been enacted or
substantially enacted by the balance sheet date the deferred tax provision is not discounted to net present value
parent company accounting policies 82 arriva plc annual report and accounts 2005
notes to the parent company accounts
1 arriva plc profit and loss account
arriva plc has not presented its own profit and loss account as permitted by section 230 of the companies act 1985 the profit for the financial
year dealt with in the accounts of arriva plc is £351 million 2004 restated £265 million
2 tangible fixed assets
plant
company
freehold vehicles
land  fixtures 
buildings fittings total
£m £m £m
cost or valuation
at 1 january 2005 92 24 116
additions  01 01
disposals 01  01
at 31 december 2005 91 25 116
comprising
cost 83 25 108
valuation 1997 08  08
91 25 116
accumulated depreciation
at 1 january 2005 12 20 32
charge for the year 02 01 03
at 31 december 2005 14 21 35
net book amounts
at 31 december 2005 77 04 81
at 31 december 2004 80 04 84
3 investments
shares in
shares in subsidiaries
subsidiaries net book
at cost impairment amount
fixed asset investments £m £m £m
at 1 january 2005 7389 147 7242
additions 27  27
at 31 december 2005 7416 147 7269
particulars of fixed asset investments are detailed in note 28 to the group financial statements arriva plc annual report and accounts 2005  83
wwwarrivacouk
4 debtors
as restated
2005 2004
£m £m
amounts falling due within one year
trade debtors 04 04
deferred tax note 5 02 
prepayments and accrued income 02 05
other debtors 407 115
415 124
amounts falling due after more than one year
amounts owed by group undertakings 522 929
937 1053
5 deferred taxation
as restated
2005 2004
£m £m
accelerated capital allowances 18 18
other timing differences 20 15
deferred tax excluding that relating to pension liability 02 03
deferred tax on pension liability 31 44
deferred tax 33 41
at 1 january 2005 as previously reported 18
prior year adjustments
frs17 56
frs20 03
at 1 january 2005 as restated 41
deferred tax credited in profit and loss account 05
deferred tax charges taken to reserves 13
at 31 december 2005 33
deferred tax excluding deferred tax on pension liability
at 1 january 2005 as previously reported 06
prior year adjustment
frs20 03
at 1 january 2005 as restated 03
deferred tax credited in profit and loss account 05
at 31 december 2005 02
factors that may affect future tax charges 
no deferred tax asset is provided in respect of the unremitted earnings of overseas subsidiaries unless a binding agreement exists at the balance
sheet date to remit such earnings in the future no assets have been recognised in respect of tax losses carried forward because of uncertainty
regarding the recoverability of the resulting deferred tax assets  84 arriva plc annual report and accounts 2005
notes to the parent company accounts
continued
6 creditors
as restated
2005 2004
£m £m
amounts falling due within one year
shortterm loans  02
trade creditors 05 09
creditors for taxation and social security 29 67
other creditors 74 98
accruals and deferred income 81 69
189 245
amounts falling due after more than one year
other loans 600 
amounts due to group companies 4461 4273
accruals and deferred income 366 420
5427 4693
2005 2004
loans are repayable as follows £m £m
in one year or less or on demand  02
in more than two years but not more than five years 600 
600 02
the company provides cross guarantees in respect of the bank borrowings of a number of the groups subsidiaries syndicated loans are secured
by debentures giving fixed and floating charges over the assets of certain subsidiaries of the company and by guarantees given by the company
fair value of noncurrent liabilities
the company considers there to be no material difference between the fair value of noncurrent liabilities and their carrying amount in the
balance sheet
borrowing facilities
the company has the following undrawn committed floating rate borrowing facilities available at 31 december in respect of which all conditions
precedent had been met at that date
2005 2004
£m £m
expiring within one year 199 943
expiring in more than two years 1071 2288
1270 3231
6 creditors arriva plc annual report and accounts 2005  85
wwwarrivacouk
capital share profit
redemption premium special and loss
reserve account reserve account total
£m £m £m £m £m
at 31 december 2004 as previously stated 18 153 591 2520 3282
prior year adjustments
frs17    131 131
frs20    04 04
frs21    275 275
at 1 january 2005 as restated 18 153 591 2668 3430
arising on issue of shares  38   38
profit for the year    351 351
dividends    377 377
actuarial gain on pension deficit    44 44
movement on deferred tax relating to pension    13 13
sharebased payments    14 14
at 31 december 2005 18 191 591 2687 3487
8 sharebased payments
the grants and related accounting treatment adopted by arriva plc under frs20 sharebased payment are identical to that adopted by the
group under ifrs2 ‘sharebased payment’ for details please refer to note 23 in the group financial statements
9 reserves
authorised allotted – fully paid
2005 2004 2005 2004
ordinary shares of 5p each £14500000 £14500000 £9846118 £9787495
number of shares 290000000 290000000 196922357 195749903
reconciliation of movement in issued share capital
shares in issue 1 january 2005 195749903 195035046
share allotments on exercise of options 1172454 1849857
shares purchased – 1135000
shares in issue 31 december 196922357 195749903
consideration of £38 million was received in respect of the above issues at 31 december 2005 there were outstanding options to receive
allotments of 2846467 ordinary shares under the executive share option scheme the share incentive scheme and the long term incentive
plan the price for the vested share for the long term incentive plan is nil the option exercise prices for all of the other schemes range from
1750p to 5480p the options are exercisable up to march 2015 at 31 december 2005 the middle market quotation of the ordinary share as
derived from the stock exchange official list was 5824p the highest price attained by the ordinary share in 2005 was 5984p and the lowest
level during 2005 was 5050p
7 called up equity share capital  86 arriva plc annual report and accounts 2005
notes to the parent company accounts
continued
2004
2005 as restated
£m £m
profit for the year 351 265
dividends 377 356
26 91
new share capital subscribed 38 58
purchase of own shares  43
actuarial gain on pension deficit 44 03
movement on deferred tax relating to pension deficit 13 01
sharebased payments 14 07
net addition toreduction in shareholders’ funds 57 67
opening shareholders’ funds as previously reported 3380
prior year adjustments
frs17 131
frs20 04
frs21 275
opening shareholders’ funds as restated 3528
closing shareholders’ funds 3585
10 reconciliation of movements in shareholders’ funds
11 pensions
at 31 december 2005 the company operated a number of retirement benefit schemes both defined benefit and defined contribution which 
are financed through separate trustee administered funds managed by independent professional fund managers on behalf of the trustees
contributions to the defined benefit funds are based upon actuarial advice following the most recent of a regular series of valuations of the
funds by their representative independent actuaries 
for the purpose of arriving at the pension cost charged in the accounts the defined benefit funds were last assessed on 5 april 2003 by their
respective actuaries using the projected unit method the principal actuarial assumptions were that i the annual rate of return on investment
would be 275 per cent higher than the annual increase in total pensionable remuneration of 375 per cent and where relevant ii there would
be no variation from a scheme’s rules to pensions in payment on the basis of these assumptions the actuarial value of the funds at 5 april 2003
was sufficient to cover 85 per cent of the benefits then accrued to members
total pension cost
the total pension cost for the company was £04 million 2004 restated £06 million the pension costs in respect of the company’s defined
contribution scheme was £02 million 2004 £02 million
frs17 ‘retirement benefits’
the calculations used to assess the frs17 liabilities of the retirement benefit schemes are based on the most recent actuarial valuations
updated by wm mercers to 31 december 2005 the schemes’ assets are stated at their market value at 31 december 2005 the following
financial assumptions have been used for each of the schemes arriva plc annual report and accounts 2005  87
wwwarrivacouk
2005 2004 2003
 
valuation method projected unit projected unit projected unit
discount rate 49 54 54
inflation rate 26 26 25
increases to deferred benefits during deferment 26 26 25
increases to pensions in payment 26 26 25
salary increases 38 38 375
expected longterm rate of return at 31 december before deduction for scheme expenses 
equities 755 785 74
bonds 42 455 46
other 38 41 44
weighted average expected longterm rate of return by scheme at 31 december 67 70 66
2005 2004
the amounts recognised in the balance sheet are determined as follows £m £m
equities 354 307
bonds 126 119
other 01 01
total market value of assets 481 427
present value of liabilities 583 574
deficit 102 147
related deferred tax asset 31 44
net pension liability 71 103
2005 2004
the costs of the scheme for the year ended 31 december were as follows £m £m
analysis of the charge to operating profit
– current service costs 03 03
total operating charge 03 03
analysis of the finance creditcharge
– expected return on assets 29 29
– interest on liabilities 28 30
total finance creditcharge 01 01
total charge before tax 02 04
2005 2004
analysis of movement in deficit in the scheme for the year ended 31 december £m £m
gross deficit in the scheme at 1 january 147 150
contributions paid 03 04
current service cost 03 03
total finance creditcharge 01 01
actuarial gain 44 03
gross deficit in the scheme at 31 december 102 147 88 arriva plc annual report and accounts 2005
notes to the parent company accounts
continued
2005 2004
analysis of amounts recognised in reserves £m £m
difference between expected and actual return on assets 40 07
experience gains arising on the scheme liabilities 58 04
effect of changing the financial assumptions 54 08
actuarial gain recognised in reserves 44 03
2005 2004
actuarial gain as a percentage of scheme assets and liabilities at 31 december  
difference between expected and actual return on assets as a percentage of scheme assets 83 16
experience gains arising on the scheme liabilities as a 
percentage of the present value of scheme liabilities 99 07
total actuarial gain recognised in reserves as a percentage of 
the present value of scheme liabilities 75 05
statement of directors’ responsibilities
company law requires the directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs of
the company and of the profit or loss of the company for that period the directors are required to prepare the financial statements on the going
concern basis unless it is inappropriate to presume that the company will continue in business
the directors confirm that suitable accounting policies have been used and applied consistently with the exception of the changes arising on the
adoption of new accounting standards in the year as explained in the company accounting policies on page 81 they also confirm that
reasonable and prudent judgements and estimates have been made in preparing the financial statements for the year ended 31 december 2005
and that applicable accounting standards have been followed
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of
the company and enable them to ensure that the financial statements comply with the companies act 1985 they are also responsible for
safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities
• the directors are responsible for the maintenance and integrity of the website
• legislation in the uk concerning the preparation and dissemination of financial statements may differ from legislation in other jurisdictions
11 pensions continued arriva plc annual report and accounts 2005  89
wwwarrivacouk
independent auditors’ report to the members of arriva plc
we have audited the parent company financial statements of arriva plc for the year ended 31 december
2005 which comprise the company balance sheet and related notes these parent company financial
statements have been prepared under the accounting policies set out therein we have also audited the
information in the directors’ remuneration report that is described as having been audited
we have reported separately on the group financial statements of arriva plc for the year ended 31 december 2005
respective responsibilities of directors and auditors 
the directors’ responsibilities for preparing the parent company financial statements in accordance with
applicable law and united kingdom accounting standards united kingdom generally accepted accounting
practice are set out in the statement of directors’ responsibilities in addition the directors are responsible
for preparing the annual report and directors remuneration report
our responsibility is to audit the parent company financial statements and the part of the directors’
remuneration report to be audited in accordance with relevant legal and regulatory requirements and
international standards on auditing uk and ireland this report including the opinion has been prepared
for and only for the company’s members as a body in accordance with section 235 of the companies act
1985 and for no other purpose we do not in giving this opinion accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing
we report to you our opinion as to whether the parent company financial statements give a true and fair
view and whether the parent company financial statements and the part of the directors’ remuneration
report to be audited have been properly prepared in accordance with the companies act 1985 we also
report to you if in our opinion the directors’ report is not consistent with the parent company financial
statements if the company has not kept proper accounting records if we have not received all the
information and explanations we require for our audit or if information specified by law regarding directors’
remuneration and other transactions is not disclosed
we read other information contained in the annual report and consider whether it is consistent with the
audited parent company financial statements the other information comprises only the highlights of the
year the chairman’s statement the group development across europe the chief executive’s review the
financial review the corporate responsibility review the directors’ report the unaudited part of the
directors’ remuneration report the corporate governance statement the fiveyear financial summary and
the extracts from the report on the transition to ifrs we consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the parent company financial
statements our responsibilities do not extend to any other information
basis of audit opinion
we conducted our audit in accordance with international standards on auditing uk and ireland issued by
the auditing practices board an audit includes examination on a test basis of evidence relevant to the
amounts and disclosures in the parent company financial statements and the part of the directors’
remuneration report to be audited it also includes an assessment of the significant estimates and
judgments made by the directors in the preparation of the parent company financial statements and of
whether the accounting policies are appropriate to the company’s circumstances consistently applied and
adequately disclosed
we planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
parent company financial statements and the part of the directors’ remuneration report to be audited are
free from material misstatement whether caused by fraud or other irregularity or error in forming our
opinion we also evaluated the overall adequacy of the presentation of information in the parent company
financial statements and the part of the directors’ remuneration report to be audited
opinion
in our opinion
• the parent company financial statements give a true and fair view in accordance with united kingdom
generally accepted accounting practice of the state of the company’s affairs as at 31 december 2005
• the parent company financial statements and the part of the directors’ remuneration report to be
audited have been properly prepared in accordance with the companies act 1985
pricewaterhousecoopers llp
chartered accountants and registered auditors
newcastle upon tyne
13 march 2006 90 arriva plc annual report and accounts 2005
financial calendar 200607
annual general meeting
meeting date 19 april 2006
final ordinary dividend
record date 31 march 2006
payment date 2 may 2006
results for 6 months to 30 june 2006
announcement date 7 september 2006
interim ordinary dividend
record date 15 september 2006
payment date 2 october 2006
results for the year ended 31 december 2006
announcement date 8 march 2007 – subject to confirmation
registered office and registrar details
secretary  registered office
david turner ba fcis
arriva plc
admiral way
doxford international business park
sunderland
sr3 3xp 
tel 0191 520 4000
wwwarrivacouk
company no 347103
registrar and shareholder information
computershare investor services plc
po box 82 
the pavilions
bridgwater road
bristol
bs99 7nh
tel 08707 020 000
wwwcomputersharecouk
auditors
pricewaterhousecoopers llp
89 sandyford road
newcastle upon tyne
ne1 8hw
solicitors
dickinson dees
st ann’s wharf
112 quayside
newcastle upon tyne
ne99 1sb
field fisher waterhouse
35 vine street
london
ec3n 2aa
herbert smith
exchange house
primrose street
london
ec2a 2hs
stockbrokers
abn amro hoare govett
250 bishopsgate
london
ec2m 4aa
citigroup global markets
citigroup centre
33 canada square
canary wharf
london
e14 5lb
merchant bankers
n m rothschild  sons limited
new court
st swithin’s lane
london
ec4p 4du
financial public relations
tulchan communications
sixth floor
kildare house
3 dorset rise
london
ec4y 8en
advisors wwwarrivacouk
notes notes  arriva plc
registered office
admiral way
doxford international business park
sunderland
sr3 3xp
united kingdom
tel 44 0191 520 4000
fax 44 0191 520 4001
wwwarrivacouk
designed and produced by 
flag communications
printed by reed print  design


Summary:
 8 arriva plc  annual report and accounts 2005
chief executive’s review
operating review
we have achieved strong results across the
group as a whole delivering consistently in line
with our strategy increased fuel costs and the
oneoff reduction in revenue and profit from the
loss of the arriva trains northern franchise have
been substantially offset by growth elsewhere
demonstrating the resilience that our strategy
gives us we made further progress in mainland
europe winning significant contracts in northern
europe and acquiring businesses in germany
and italy achieving the european growth that
we planned 2006 has started well with a further
european rail tender win
uk bus
our uk bus operations achieved an operating 
profit of £68 million before exceptional items 
2004 £636 million on revenue of £6975 million
2004 £6515 million maintaining margins at just
under 10 per cent and increasing absolute profits
despite cost pressures in the business including a fuel
cost increase of more than £6 million for 2005
arriva’s policy is to fix fuel prices 12 to 15 months
ahead we have now fixed the price for our fuel
requirements for 2006 and this will result in additional
costs for this division of approximately £14 million 
we are working to offset this as far as possible 
through further revenue growth underpinned by
effective marketing and strong partnerships with local
authorities combined with effective cost management
delivering
performance
“arriva has an excellent portfolio of
growing cashgenerative businesses
our acquired businesses are
delivering profitable growth and 
we have significant opportunities
for further strategic investment”
bob davies chief executive arriva plc  annual report and accounts 2005  9
wwwarrivacouk
regions
it has been a year of significant change for our uk
regional business following the reorganisation early
in 2005 we have restructured the business to reduce
overheads and embarked on a drive for innovation 
in the way we approach the market we continue 
to develop our techniques for indepth analysis of
population and neighbourhood profiles to find how
we can meet demand more effectively we are also
running trials of fresh marketing and information
initiatives to improve services and make it easier 
and more convenient to travel by bus 
for the first time in several years we are seeing
industry consolidation with a number of smaller
operators being acquired by major groups we
acquired operations in stevenage at the beginning of
2005 and in july we bought the assets of blue bus
operating in bolton and north of manchester in
february 2006 we acquired premier buses operating
in milton keynes we also recently contracted to
acquire an operation in bishop auckland 
the reliability of services is vital in broadening the
appeal of buses to the public in january 2006 the
secretary of state for transport alastair darling
called on the industry to develop partnership schemes
which deliver a new way of planning and operating
bus networks in big urban areas with local
authorities and bus operators working together to
improve services we fully support this approach 
arriva is committed to working in partnership with
local authorities in 2005 we delivered the first year 
of a fiveyear programme to develop services on
merseyside further partnership schemes in durham
thurrock and medway have seen the introduction of
new network designs new and refurbished vehicles
and improved information and facilities at bus stops
passenger numbers have increased as a result of
improved travel experiences and reduced delays
the introduction in april 2006 of free offpeak local
bus travel in england for passengers who are over 60
or who have disabilities is an important initiative on
the basis of similar experience in scotland and wales
we expect this initiative to stimulate growth we are
currently in detailed discussions with local authorities
to establish how the individual schemes will operate 
2005 has been an important year in the development
of our uk regional business the action we have taken
positions the business well to absorb future cost
increases and we believe the outlook is favourable 
2005 has been an important year in the
development of our uk regional business 10 arriva plc  annual report and accounts 2005
london
arriva is the largest bus operator in london
accounting for more than 19 per cent of the 
network at the end of 2005 improved operational
performance led to better service delivery and
enhanced our revenue under quality incentive
contracts over the last five years we have invested 
a total of £159 million in new vehicles for london
substantially renewing and expanding the fleet
we expect to see continuing increases in usage of 
the overall london bus network transport for london
continues to predict longterm growth as london’s
residential and commuting populations increase 
the actual and attempted bombings in july had a 
big effect on public transport in london passenger
numbers for our london tourism and sightseeing
operation the original tour fell by 40 per cent in the
peak tourist months but the business is well placed to
regain its position as confidence increases and tourist
numbers return to previous levels
uk trains
our uk trains division achieved an operating profit 
of £149 million before intangible asset amortisation
2004 £319 million on revenue of £2394 million
2004 £509 million operating profit includes some
residual income from the arriva trains northern
franchise that ceased in december 2004 arriva 
trains wales atw was our only uk trains business
operating in 2005 
our atw franchise runs until december 2018 and 
is supported by the welsh assembly government
wag which in partnership with arriva is
committed to bringing forward innovation and
investment in january 2005 the wag announced
funding of £50 million over the life of the franchise to
allow the leasing of additional trains to accommodate
high demand for peak time services in the valley line
network in partnership with the wag arriva
announced a £3 million station upgrade programme
in north wales and the installation of cctv on
trains during 2005 arriva made further investments
in stations to improve the service for our customers
and enhance revenue 
in december 2005 following extensive consultation
we introduced a new timetable adding 950 services 
a week across the network and providing more seats
on peak time train services among other benefits 
passenger numbers particularly in south wales’
valleys are continuing to grow significantly the 
new timetable has started to deliver improvements 
in operating performance we remain focused on
delivering continued improvements listening to our
customers and working with stakeholders to ensure
the franchise has the resources needed to respond to
growing demand
we see opportunities to grow our position in uk rail
and are pleased to have prequalified for the south
western passenger rail franchise we have the
resources in place to develop robust bids for franchises
which may be tendered in the coming months
chief executive’s review 
continued
arriva works positively
to promote accessible
public transport as a
travelling choice
to improve services 
for our customers we
continue to invest in
new ticket machines
barriers and station
facilities and security  arriva plc  annual report and accounts 2005  11
wwwarrivacouk
mainland europe
our mainland european division delivered an excellent
performance increasing operating profit by 37 per
cent to £48 million before goodwill impairment
intangible asset amortisation and exceptional items
2004 £351 million on revenue of £6212 million
2004 £5256 million included in the results are 
£19 million of revenue and £2 million of operating
profit from acquisitions in the year indexation on
contracts and stateapproved fare increases helped 
to limit the impact of increased fuel costs 
revenue from our mainland european operations 
has doubled over the last three years we have
consistently maintained that local authorities in
mainland europe would introduce competitive
tendering to reduce the cost of providing public
services in response to legislative and economic
pressures we see this as the key driver for growth 
for arriva outside the uk as the volume of contract
work available to private operators increases 
this view has been confirmed clearly during the year
across our businesses in northern europe where we
have seen a number of significant contract wins in the
netherlands arriva won the contract to operate all
regional rail services for the next 15 years in the
northern provinces of friesland and groningen with
projected total revenue of around £500 million we also
won a 120 bus sixyear contract in waterland north of
amsterdam worth £120 million in lifetime revenue
in germany there is now an accelerating programme
of tendering of regional rail services as we
anticipated when we entered this market in 2004 
in november we won a tenyear contract with total
revenue of some £150 million to operate rail services
in bavaria between munich and towns close to the
border with the czech republic
the german bus market is also introducing tendering
although the pace is slower than in the rail sector in
february we acquired sippel a bus company with
operations in the rhinemain area where a fiveyear
programme of tendering has been established sippel
is part of a consortium that will operate the team and
fifa official coaches for the world cup in germany in
2006 it will also operate additional buses for
spectators
our operations in scandinavia have also increased
through tender wins we won new contracts in the
swedish towns of helsingborg trelleborg and malmö
and remain the largest bus operator in denmark with
a good rate of contract retention building on our uk
experience of introducing technology has significantly
helped us to win these tenders where we are
adopting ‘black box’ journey recorders similar to
those we have introduced in the uk passenger
information systems and cctv systems 
our new train timetable 
in wales introduced in 
december 2005 is delivering
improved performance 
for customers 12 arriva plc annual report and accounts 2005
chief executive’s review 
continued
in january 2006 we won our first rail contract in
sweden to operate the pågatåg regional rail services
in the south of the country the nineyear contract is
initially worth approximately £15 million of revenue
per annum and has considerable potential for
growth with no significant capital expenditure
more rail tendering in denmark is expected in 2006
we expect to participate fully building on our
reputation for excellent delivery our train punctuality
averages 975 per cent and we have received bonuses
for reliability and customer satisfaction throughout
the year
in southern europe we have highlighted italy as
another key area for development as the italian public
transport market is one of the largest in europe in
october we completed the acquisition of eighty per
cent of the sadem bus businesses which operate in
the piemonte and valle d’aosta regions of northern
italy to the west of our other operations sadem 
comanaged with gtt of turin all transport for the
2006 winter olympics this involved procurement and
planning of an operation which ran up to 1000
coaches and buses a day for competitors and
spectators
our other bus operations in italy sab and saf have
been excellent investments we now own 60 per cent
of saf having purchased a further 11 per cent in
december 2005 we have also increased our
shareholding in other italian businesses
in november the portuguese competition authority
denied clearance of our proposed joint venture with
barraqueiro group to combine the lisbon public
transport operations of the two companies we are
appealing the decision 
in the summer we sold part of our spanish operation
in galicia for £77 million in line with book value 
the sale of the more rural operations has allowed the
business to focus on working with the metropolitan
transport authorities to develop our operations in 
la coru

na and ferrol
as we expand our operations in mainland europe we
continue to innovate and gain valuable experience
which strengthens the management of arriva as a
whole we were the world’s first transport company
to use palm oil based biodiesel for rail services on
several of our trains in germany our introduction of
contactless ‘smart card’ ticketing in portugal went
well and is enabling us to gather valuable market
information to tailor services more closely to market
requirements our introduction of new trains into
denmark and germany was on time and notably free
of teething problems we are providing experimental
‘on demand’ bus services in some of italy’s high
mountain valleys such as alta valle brembana 
as the pace of liberalisation picks up across europe our
proven expertise and innovative thinking make us well
placed to achieve further growth and market success
“as we expand our operations in mainland
europe we continue to innovate and gain
valuable experience which strengthens the
management of arriva as a whole”
bob davies chief executive arriva plc annual report and accounts 2005  13
wwwarrivacouk
bus and coach
bus and coach achieved an operating profit of 
£3 million 2004 £32 million on revenue of 
£131 million 2004 £138 million the business
continues to match its resources closely to the needs of
the market place and has once again achieved a solid
profit performance with little new capital requirement
vehicle rental
our vehicle rental business achieved an operating
profit of £101 million before exceptional items
2004 £126 million on revenue of £556 million
2004 £59 million in common with the rest of the
sector we experienced downward pressure on daily
hire rates as well as lower residual values and reduced
profits in february 2006 we sold the business to
northgate plc
outlook
we are driving the business forward with a clear vision
of becoming the leading transport services organisation
in europe we expect strong growth to continue
through acquisitions and tendering opportunities we
have businesses in seven mainland european countries
and are confident that with our established presence
arriva is in a strong position to benefit from the
increasing liberalisation of european transport markets
we see further opportunities for our uk bus operations
and are committed to bringing forward innovative
approaches to developing this market 
arriva has an excellent portfolio of growing cash
generative businesses our acquired businesses are
delivering profitable growth and we have significant
opportunities for further strategic investment
bob davies chief executive
we have invested in easy
access buses night bus
services and improved
security to grow and
develop regional bus
services in merseyside